Alsea S.A.B. de C.V

Good morning everyone and welcome to Alsea second quarter 2026 earnings data conference. My name is Gerardo Lozoya and I'm a head of investor relations and corporate affairs. Today you will hear from our chief executive officer Christian Gurria and Federico Rodriguez our chief financial officer. Before we continue our friendly reminder that some of our comments today will contain forward-looking statements based on our current and that future results may differ materially from these statements. Today's call should be considered in conjunction with disclaimers in our earnings release and most recent Bolsa Mexicana de Valores report. The company is not obliged to update or revise any such forward-looking statements. Please note that unless specified otherwise, the earnings numbers referred to are based on pre-IFRS 16 standards. I will now hand it over to Christian for his initial remarks. Please go ahead, Chris.

Thank you, Gerardo. Good morning and thank you all for joining us in ALCEA's second quarter 2026 earnings video conference. I will begin with an overview of our performance during the quarter, highlighting key operating trends across regions and brands, as well as our progress in digital expansion and ESG initiatives. Federico, our CFO, will then walk you through our financial results in more detail. Before going into quarterly figures, I would like to briefly step back and provide some context on how the quarter evolved. As anticipated at the start of the year, consumer demand remained uneven across our markets and became more challenging during the second quarter, particularly in Mexico. April was the softest month, reflecting weaker discretionary spending and lower traffic across much of the industry. Conditions improved slightly in May and further in June, but the overall environment remained more cautious than we had initially expected. The FIFA World Cup generated additional customer traffic during June, particularly across Chili's and Domino's Pizza. While the impact was relatively in line with our expectations, it helped partially offset the weakness observed in April and represented a positive contribution in the quarter. While the operating environment was challenging during the quarter, we maintained disciplined execution, supported by the strength of our brands and our continued focus on profitability, customer experience, and cash flow generation. With that context, let me provide an overview of our quarterly performance, including our financial results, regional highlights, and key brand developments, along with updates on our digital advancements, ESG initiatives, and expansion strategy. In the second quarter, we reported a 0.9% year-over-year decrease in total sales, reaching 21 billion pesos, or a 3.5% increase. Excluding foreign exchange effects, same-store sales grew by 2.6%. EBITDA decreased 6.2% in the second quarter, reaching 2.8 billion pesos with a margin of 13.5%, decreasing by 70 basis points year-over-year. Regarding brand performance in the second quarter, Starbucks Alcea same store sales increased by 0.6% versus the same period a year ago for Starbucks Mexico same store sales decreased by 2% reflecting a challenging environment combined with a deliberate reduction in promotional activity as we prioritize profitability and an enhanced customer experience across our stores and two comparison based in April of last year due to the peanuts campaign For Starbucks Europe, same-store sales increased by 2.2%, with solid performance in Spain and the rest of the markets, while France continued to lag, but with trends improving toward the end of the quarter and double-digit growth in the Netherlands and Belgium. Finally, in South America, same-store sales rose 10.5%, driven primarily by Argentina. Excluding Argentina, same-store sales increased 3%. supported by strong performance in Colombia. Domino's Pizza Alsea posted a 2.7% increase in same-store sales. In Mexico, Domino's same-store sales increased 3%, reflecting a gradual improvement over the course of the quarter, partially in June, supported by FIFA World Cup. In Spain, same-store sales increased by 1.6%, supported by continued solid commercial execution. In Colombia, Domino's same-store sales increased 6.9%, sustaining the strong momentum seen in recent quarters. Burger King Alcea's same-store sales, excluding Argentina, decreased 2.5%, showing a slight improvement over the course of the quarter. In Chile, same-store sales decreased 5.7% due to an economic slowdown across the country. The full-service restaurant segment delivered a 3.6% same-store sales growth, remaining one of the most consistent performers during the quarter. Full-service restaurants in Mexico increased by 5.4%, led by outstanding performance at Chili's, with a particularly strong June, growing double digits. driven by the FIFA World Cup, while also Bips also delivers solid growth, maintaining its consistent execution and its attractive value and innovating offerings. Same-store sales for full-service restaurants in Spain grew 1.3%, reflecting growth growth base across most of the portfolio. During the second quarter, we opened 30 new stores, 20 corporate units, and 10 franchises. continuing to expand our presence across our key markets while maintaining a disciplined approach to capital allocation. Although the operating environment has become more challenging, our expansion strategy remains unchanged as paybacks and returns of the new openings remain healthy. We continue to prioritize opportunities that meet our return thresholds. balancing new unique growth with investments in our existing store base. Store remodels remain an important part of the strategy as they continue to renovate attractive returns while enhancing and elevating customer experience. We also continue advancing our portfolio optimization efforts. During the quarter, we completed a divestment of arches in Colombia, allowing us to further concentrate our resources on the brands and markets where we see the greatest growth S.A.B. de C.V We are encouraged by the initial customer response and remain excited about the opportunity to continue developing the brand in Mexico. Our digital platforms continue to be key drivers of growth. By the end of the quarter, loyalty sales increased 8%, reaching 5.5 billion pesos, representing 24.3 million orders and contributing 27.9% of total sales. We also surpass 8.4 million active users across our loyalty programs, confirming the strength of our digital engagement. Additionally, we serve 34.7 million digital orders in the quarter, totaling 8 billion pesos, which represents 40.7% of our total sales. Turning to our ESG initiatives, During the quarter, we published our 25th Integrated Annual Report, reaffirming our commitment to creating long-term sustainable value through our sustainability model. As always, the report is available on our website for those interested in a more detailed review of our ESG initiatives and performance. We also completed a global climate risk assessment covering more than 3,600 sites across Mexico, South America, and Europe, representing approximately 73% of our portfolio. This strengthens our ability to identify and manage climate-related risks across our operations and supply chain. Finally, through Fundación Alcea, we continue to expand our social impact, As of the end of the quarter, we have donated more than 53 million pesos and delivered over 490,000 meals, benefiting more than 16,000 people through our initiatives focused on food safety, food security, education, and employability. In Europe, our five brands also participated in the Producto con Corazón, so product with a heart, raising more than 100,000 euros to support nutrition and well-being projects through Fundación ASEA in Spain. Let me now turn it over to Federico, our CFO, who will provide further insight on the financial performance.

Thank you, Cristian, and good morning, everyone. The sales decreased by 0.9% in the second quarter, mainly due to weaker consumption in Mexico and a negative foreign exchange effect. excluding the foreign exchange effect, sales increased 3.8%. In the second quarter, sales in Mexico were up 4.2% to 12.2 billion pesos, mainly driven by the full-service restaurant segment. In Europe, sales decreased by 7.4% to 5.9 billion pesos, while in Europe terms, sales increased by 4%, mainly driven by the consistent performance in Spain. Finally, South America sales fell 6.9% to 2.9 billion pesos. Evita decreased by 6.2% with a margin contraction of 70 basis points, mainly due to a weaker consumption environment in Mexico and South America. A stronger peso that represents 65 million pesos of conversion and a one-off in the second quarter of last year related with the selling of 10 stores of Domino's Pizza to one of the franchisees. In Mexico, Adioset Evita increased 1.3% year-over-year with a margin contraction of 70 basis points. mainly due to reduced operating leverage resulting from slower same-store sales growth, partially offset by a positive impact of some dollarized input costs given the appreciation of the Mexican peso. In Europe, the adjusted EBITDA decreased by 10.5% year-over-year driven by the foreign exchange effect. Excluding this effect, adjusted EBITDA grew 8% reflecting lower cost of certain raw materials and efficient control in operating expenses. In South America, adjustability decreased by 15.1%, mainly driven by the foreign exchange effect, as well as pressure on certain input costs. Net income for the second quarter decreased 48.4% year-over-year, reaching 528 million pesos, reflecting a less favorable foreign exchange impact on the financing result, as this quarter recorded a foreign exchange loss of 81 million compared to the non-cash FX gain of 608 million pesos recognized in the same period last year due to the dollar bonds held in the balance sheet. The capex for the first six months of the year totaled 1.8 billion pesos. Out of this total, 78% was allocated to store development initiatives, including the opening of 20 new corporate units, the renovation and remodeling of existing locations, and equipment replacement across the branch. The remaining 22% was directed at digitalization projects. By the end of the second quarter, the pre-IFRS 16 total debt increased by 2.1 billion pesos year over year, reaching 35 billion pesos. The company's net debt, not accounting the impact of IFRS 16, was 29.5 billion pesos, which is 501 million pesos less than it was at the same time last year. This increase reflects the discipline in pre-cash flow through a more efficient CAPEX, a reduction on the cost of financing aligned with the refinancing of the different facilities, and a more predictable working capital. Consolidated net debt reached 44.9 billion pesos, including leases. At the end of the quarter, 99% of the debt was long-term, with 71% denominated in Mexican pesos and 29% in euros. We remain focused on maintaining a healthy capital structure supported by proven financial management. By the end of the quarter, the cash position stood at 5.5 billion pesos. Turning to the financial ratios, the total debt to post-IFRS 16 EBITDA ratio closed the quarter at 2.8 times, while the net debt to EBITDA ratio stood at 2.5 times. Since establishing the 2026 guidance, the consumer environment in Mexico has been more challenging than we initially anticipated, particularly during the early part of the second quarter. April was the softest month of the year from a consumer demand and traffic perspective and weighted meaningfully on our performance during the period. Encouragingly, trends improved progressively as the quarter advanced, with May performing better than April and June improving further. This sequential recovery was supported by the strength and relevance of the brands, targeted commercial initiatives, and the continued focus on delivering compelling value and customer experiences across the portfolio. While these improving trends reinforce the confidence in the resilience of the business, we believe it is prudent to reflect the current demand environment in the outlook. As a result, we have revised the 2026 guidance to allow single-digit growth for same-store sales, revenue, and evidence. Importantly, the capital allocation framework remains unchanged. We continue to expect approximately 5.5 billion pesos in capex between 180 and 220 store openings and leverage within the previously communicated range. This reflects the continued confidence in the long-term attractiveness of the growth opportunities and the returns generated by the investment pipeline. More importantly, the guidance revision should not be interpreted S.A.B. de C.V Looking ahead, the focus remains on the variables within our control, protecting profitable traffic, maintaining pricing discipline, strengthening the value proposition of the brands, leveraging our digital and loyalty capabilities, and accelerating productivity and efficiency initiatives across the organizations. We are not relying on a sharp recovery in the consumer demand. Rather, our expectations are supported by disciplined execution, continued cost management efforts, and the gradual improvement in trends we observe throughout the quarter. Free cash flow generation remains one of the highest priorities. Combined with disciplined capital allocation and a stronger balance sheet following the refinancing initiatives, we remain confident in the ability to generate solid pre-cash flow while continuing to invest behind the brand's long-term growth agenda. Ultimately, we believe the combination of improving sequential trends, a portfolio of category-leading brands, disciplined operational execution, a strong focus on cash generation, and unchanged long-term investment frameworks positions S.A.B. well to navigate the current environment and continue creating sustainable value for all the shareholders. I will now pass you over to the operator for the Q&A session. Please, operator.