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Hello and welcome to the AMREST Q3 2024 results conference call. My name is Harry and I'll be your operator today. All lines are currently in listen-only mode and there'll be an opportunity for Q&A after management's prepared remarks. If you would like to enter the queue for questions, please dial star followed by one on your telephone keypad. If you are streaming the call online, you may submit written questions using the Q&A button found on your screen. I would now like to hand the conference over to Jarek Tomczynski with Wood and Company. Thank you. Please proceed.

Hello, everyone. On behalf of AMRES, we would like to welcome you to the conference call with the management to present and discuss the results of the third quarter. The company will be represented by Eduardo Zamarripa, the chief financial officer, and Santiago Camarero Aguilera, IR and strategic planning director. Let me please hand over to the management.

Good morning and thank you for joining us today in this third quarter 2024 AMBRIS results presentation. It is always my pleasure to share with you an update on AMBRIS results and situation at the end of the quarter. So let's start with today's presentations. If we go to slide two, please. As we usually do, let me remind that AMBRIS is Europe leading restaurant operator with a portfolio of almost 2,200 restaurants in 22 countries across Europe, Middle East, and China. We keep a balanced portfolio of franchisee and proprietary brands that cover a wide range of consumption locations. As a result, more than 30 million customers visit our restaurants every month, where they find a distinctive service provided by over 44,000 passionate Ambrestees. Let me also point out that from October 31st, this map has suffered a relevant change, as Ambreste and Pizza Hut Europe Limited have agreed the early termination of the master franchise agreement for France. Therefore, starting from November 1st, Ambreste does not operate any Pizza Hut restaurant in the French market anymore. Ambrest was managing 120 sub-franchises Pizza Hut restaurants and won equity at the end of the quarter. If we move now to slide three, we can see that Ambrest sales during the third quarter of 2024 reached almost 660 million euros. 4.2% higher than those achieved during 2023. This revenue figure, which represents another all-time high for ACQUADR, supports the group's growth strategy and is particularly relevant in a context where several countries are experiencing an important moderation in household consumption. In terms of profitability, The EBITDA generated during the third quarter of the year amounted more than 125 million euros, representing a margin of 19% and an increase of 13% compared to the same period of 2023. In terms of operative profit, the generation reached at 60 million euros. This is 14% higher than a year ago. This profitability increase has been translated into a higher cash flow generation that resulted into cash accumulation and a further deleverage of the group. At the end of the third quarter, the leverage ratio stood at 1.8 times. This is at the low end of of the target range that we have shared on several locations with all of you. Finally, during this period, we opened 21 new restaurants. Now moving to slide four, let's review the commercial position of our brands where the common theme is the clear focus on value across geographies. Let me start with the quick service and coffee brands in this slide four. In KFC, we have continued with our aim of delighting our customers, offering them totally new products. In these occasions, from California-inspired flavors through refreshing bubble tea drinks. In addition, a promotional mega box where a set of five items is offered for 20 Polish Slotties has been an important push to our restaurant sales. Similar offers have been launched in other markets. For Burger King, the new mobile app is getting enhanced with additional solutions and an increased number of users. At the same time, the marketing focus has been on value and premium offers with King deals. In Starbucks, our focus is on coffee expertise, especially in iced coffee. Global trends, but especially Generation Z consumers, consider well-being a top priority, thus preferring lighter, low-calorie beverages. In this regard, iced coffee is offering a balance of taste and indulgence. Now moving to the fast, casual, and dining brands in slide 5, please. At Pizza Hut, we relaunched the takeaway channel in CE markets under the Take It Easy umbrella. based on three main pillars, easy online and offline experience, easy for your pocket, and new communications with the main message, every day, easy, take away. At Blue Floor, we are increasing the occasion of use of our restaurants with our freshly launched new brunch menu, featuring a delightful fusion of flavors that will surely set the tone for a delightful day ahead. At Lata Glatela, we are modernizing the brand with the active participation of customers and employees. This participation has been decisive in building the chain's new identity. The project is culminating with an unveiling of the first refurbished restaurant with a new image in the Madrid area. Finally, at Sushi Shop, we just launched a new website and app e-commerce delivery and click and collect with a new and enhanced user experience and interaction features. So far, we have seen an increase in conversion rates and higher average guest checks from all channels. This enhanced system ability and the new features will deliver new and fresh products from sushi shops to current and potential customers. If now we move to slide six, please. As I mentioned, AMBRIS generated revenues of almost €660 million during the quarter, with a growth of over 4% compared to the same period in 2023. This revenue figure, which represents another all-time high, supports the growth strategy, and is particularly relevant in a context where several countries are experiencing an important moderation in household consumption. As on previous occasions, on the right-hand chart, you have the evolution of the 12-month trailing average revenue per store that continues with steady growth for the last three years, providing a good indication of both the health of our business and the level of utilization of economies of scale through sales leverage. Moving to slide three, we can see the evolution of consumption patterns. The trend of moderation in the growth of delivery sales continued, which now accounts for 17% of the group total sales. On the other hand, dining sales continue to show the highest levels of activity and now account for 47% of the total sales. This is highest percentage recorded since COVID period. In addition, the digital innovation continues to be at the center of our priorities. The result is that more than half of our sales are placed through the digital channels. Digital menu boards, kiosks, enhancement of mobile applications that now join by friendly robots in some of our Pizza Hut restaurants that serve and help to tidy up tables in our restaurants. Now moving to slide eight. The number of restaurants managed by AMRIS reached 2,185 units at the end of the third quarter, after the opening of 21 new restaurants and the closing of 13. As I mentioned before, we have been working on further portfolio adjustment in France. As a result, we have agreed an early termination of the master franchisee agreement for Pizza Hut France. Therefore, starting on November 1st, Ambrose does not operate any Pizza Hut restaurant in the French market anymore. Just to remind you that Ambrose was managing 120 sub-franchises restaurants and one equity restaurant at the end of September for Pizza Hut France. The EBITDA accumulated for this business during the first three quarters of the year was almost 2 million euros negative on pre-IFRS basis. We have also shared with you the figures of the latest portfolio adjustments executed, both in terms of restaurant count and the VITA contribution. If we go to slide 9, the VITA generated during the third quarter of the year amounted more than 125 million euros. This is an increase of 13% compared to the same period in 2023 and represents a margin of 19% that expanded by 1.5 percentage points. The EBITDA shift includes refunds collected during the month of August in the amount of almost 9 million euros. In terms of operating profit, EBIT, the generation reached more than 60 million euros. This represents an increase of 14% and a margin of 9.1%, 0.7 percentage points higher than in 2023. For another quarter, the main factors behind these margin expansions are lower cost pressures and the positive effect of generated by the increase in average sales per restaurants as the continuous progress in efficiency. With this, Santi, if you can cover the main financial highlights, please.

Many thanks, Eduardo. Good afternoon, everyone. As always, it is my pleasure to have the opportunity to present our quarterly financial results to you all. A few ideas before starting. The results that we are presenting today are, once again, in line with the expectations that we shared at the beginning of the year, that have the objective of making Andres a bigger and, above all, a better company. We landed this vision in terms of certain KPIs, targeting mid-high single-digit growth in sales and double-digit growth in individual generation. Besides, a severe discipline in terms of leverage control. further steps for improving the quality of our restaurant portfolio, growing decisively with the opening of new units, keeping the existing restaurants in the optimal conditions, and making progress in optimization of resources and capital allocation, which in this quarter have resulted in the early termination of our MFA agreement for Pepsi Hut in France. We are fully aware of the challenges of generating business across 22 different economies, which is why we have managed to turn UNRISE into an integrated group, no an accumulation of businesses and brands in different geographies. We are now a highly integrated group with a clear vocation for generating a profitable growth. So with this, if we can go to the slide 11, please. Here, we can see the main financial data for the third quarter of the year. Fundraise sales during the third quarter of 2024 reached almost 660 million euros, 4% higher than those achieved during 2023. In aggregated terms, transactions increased by 2%, while the increase in the average ticket accounts for the difference. This revenue figure represents another all-time high for a quarter, however, with significant differences in the evolutions of sales generated among countries. While revenues generated in the Central and Eastern Europe region grew at double-digit rates, the Western Europe and China regions showed contraction. On an aggregated basis, the comparable store sales index closed the quarter at 99.2. The most up-to-date reading year-to-date is 100.4 at the beginning of November. In terms of profitability, as Eduardo explained before, the EBITDA generation reached almost 125 million euros, with a growth of 13%. Finally, the CAPEX was in line with previous year's reading at 44 million euros. Moving now to slide 12, please. We have already stressed that we continue to set new all-time highs in quarterly sales. Despite this, the same store sales has been reduced to 99.2. However, I would like to share with you a reflection about this indicator on how to reconciliate with previous figures. Although it may be a little bit obvious, the semester sales is an important indicator for measuring the momentum of consumption in the geographical area analyzed, but it does not reflect the great effort made in terms of growth. During the first nine months of the year, we have refurbished a total of 194 restaurants. When the refurbishment period is longer than four weeks, these stores, which usually have strong sales after reopening, are excluded from the comparison group. The same obviously also happened with the new openings. Moving now to slide 13, please. Again, in this slide, we have the quarter EBITDA evolution, only to a point that this quarter we have reached also an all-time high in terms of nominal EBITDA generation. I think that all these points have already been well covered, so let me jump to slide 14, where we are plotting the quarterly operating profit evolution. For a better understanding of the EBIT evolution, we have drawn up the results generated in an ordinary operating business, excluding extraordinary impacts. This is the adjusted operating profit that excludes the extraordinary sushi shot goodwill impairments book. In this regard, excluding impairments, year-to-date, the accumulative operating profit reached 125 million euros with a growth of more than 20% year-on-year and a margin of 6.6%. This is 0.8 percentage points higher than a year ago. Moving to slide 15, please. In this slide, we can see how this profitable growth has been translated into a strong operative cash flow generation that reached over 122 million euros during this quarter. This is an increase of more than 30% versus last year. If we go to the slide 16, please. I would like to point a couple of things in this slide. We opened 21 new restaurants during the quarter, and we closed 13 units. And second, we have a net increase of 75 faculty restaurants during the last 12 months. And in terms of franchisees, the number has been reduced by five. This is due to the decrease in the portfolio of Pizza Hut France, but as we mentioned before, it has already been transferred. Moving now to slide 17, please. Here we have the cash and debt devolution. The group's net debt amounted 465 million euros at the end of the quarter. This is 11 million euros less than in the previous quarter. This net debt decrease is due to the growth in accumulated liquidity which amounted almost 158 million euros after accumulating more than 21 million euros during the quarter. This is the result of the strong generation of operating cash flow that I mentioned before, and this is despite an investment cash flow of more than 51 million euros, that is 18% higher than from the previous quarter. Let me also point that in addition to the 158 million euros of liquidity that we consider is a prudent but efficient level according with our needs, we have available and used credit lines for another 213 million euros. In the slide 18, you can find our financial debt structural maturity profile. basically no changes with respect to the previous quarter. More than 90% of the current financial debt is long-term debt. Moving to the slide 19, please. In this slide, we can find the breakdown of revenue, EBITDA, and the number of restaurants that we have in each segment. These segments comprise businesses across 22 countries, that as we have said are showing very different dynamics during the last months. In the slide 20, let's start as usual with Central and Eastern Europe. Our more relevant region from business perspective that currently represents 59% of the group's revenues. Revenues generated during the quarter in the region reached 391 million euros. This is an increase of 10.4% over the previous year. For another quarter, remark the excellent performance of the Polish market, with revenues increasing by more than 15%, partly due to the micro tailwinds, where rising rail wages and improved consumer confidence have boost household spending, but also to the excellent commercial management of our team. EBITDA generated in the region during the quarter was more than 94 million euros, representing a margin of 24%. This figure includes 9 million euros in refunds. and disclosed the quarter with a portfolio of 1,202 restaurants in the region after the opening of 16 units and the closure of three. This brings to 33 new restaurants open and it closed for the year.

Let's continue now with the slide 21, Western Europe, please.

Quarterly sales in the region total 225 million euros, a decrease of 2.4% compared to 2023. Once again, there are marked differences among countries. While sales in Spain grew at a rate of 5.6%, The figures for Germany showed a decline of 10%, and for France, almost 6%. Just to mention that Spain is the second biggest market for unrest after Poland, and the Spanish economy is enjoying about average growth due to the good performance of the tourist sector and to the increasing foreign investment among other factors. that once more are generating a nice tailwind for our business in the country. In terms of profitability, at aggregated level for the region, the EBITDA reached 33 million euros, representing a margin of almost 15% and a decrease of 3% compared to the previous year. The number of restaurants in the region reached 896 units at the end of the third quarter, when three units were open while nine were closed. This implies 21 new openings for the year and the closure of 23. And finally, if we move to slide 22, we have the performance of China. At market level, the country continues to face major challenges, such as the real estate crisis and the fall in consumption. The government has approved significant aid packages aimed at supporting the economy. But so far, these measures have not had an impact on consumer confidence. For now, consumers continue to prioritize savings over spending. which is resulting in a decline in discretionary consumption. In this context, unrest cells in the region fell by 13% to 22 million euros during the quarter. Despite the revenue decline, in terms of profitability, the EBITDA generated amounted 4.4 million euros, representing a healthy margin of almost 20%. The number of restaurants in the region reached 87 units after the opening of two and the closure of one. The cumulative number of openings stands at seven and the closures to eight. And this is all from my side. Back to you, Eduardo.

Thank you, Santi. Let's open the session for questions, please.

Thank you. If you would like to ask a question, please dial star followed by 1 on your telephone keypad now. If you are streaming the call online, then please submit written questions using the Q&A button found on your screen. As a reminder, please dial star 1 for any verbal questions if you're dialed in over the phone. And if you are streaming the call online, please submit a written question using the Q&A button on your screen. Our first question has been submitted by . with Trigon, who asks, what are the reasons for weak performance in Germany, both in terms of revenue and EBITDA margin? Is it only consumer sentiment in the country affecting Starbucks?

Thank you. Thanks, Peter, for the question.

In the countries of Western Europe, we are facing quite big challenges, being one of the most important ones, as you pointed out, Germany. Particularly, Starbucks is having a challenging time on that, as well as KFC. But the important thinking here is what we are doing in terms to revert these positions. As we were saying, particularly in Starbucks, we are enhancing the service that we have. We have a new POS in place since last year in Germany, which is helping us to drive the perception of the consumer. We have increased the offering of prepared food in Starbucks. So it's increasing the experience that our consumers had. And of course, some seasonal products that are having an impact on that in order to reduce the impact that we are having in terms of consumption. As you have seen, Germany in terms of trends in general economically is facing a challenging time. The savings that the population is having are relevant and the stop that they have in terms of consumer demand is also that. Also, I would say it's a mix of what is happening in the economy and the initiatives that we have in order to decrease the impact that we have on that market.

That's great. Thank you. We currently have no further questions in the line, but as a reminder, please submit any written questions using the Q&A button on your screen. Alternatively, if you're joining us over the phone, dial star 1 now. And we'll pause here for any further questions to come in.

We touched on Germany.

If you look at Poland and Germany, the two were on the opposite ends of the performance spectrum. In Poland, was that only related to macro trends or were there any sort of company-specific aspects that drove Polish business strength? Perfect.

Thanks. Thank you for the question. And as you point out, exactly those are like the two poles of difference that we have at this moment. As I was mentioning in the previous question, Germany is suffering in terms of economy. It's a different situation, the one that we have in in Poland. And as we pointed out, one of the things that we are seeing across Europe is that same store sales are suffering. But we have a very different approach in terms of what has happened. The one that is suffering more is Germany. And we have been able with the approach that we have had in Poland to keep a healthy growth in terms of same store sales in the polish market now being kfc the stronger brand that we have over there and the consumption in in in that brand continue continue strong but it's not different for starbucks pizza hot is also having a very good a very good result a very good result over there so the entire portfolio in poland is is having positive results. And as one of the topics that we were mentioning, at this moment we have to be very sensitive in terms of the traffic that we have in the different countries. So that's why for us it's very relevant to have value offers, which also is important in order to to attend the consumers that are more sensitive to pricing, but also we have premium products or offering that also is relevant. So we try to combine the entire offering for our consumers so that we can increase the value that we give to them.

If I may add also over here, you were asking about the brands. Of course, the brands play a very important role here. In the case of Germany, 84% of the business that we have is buyers towards Starbucks. So Starbucks is a coffee chain, as you know. In the case of Poland, what we have is a distribution that is very biased towards QSR. So the QSR is a segment that is very resilient to the economic cycles that behaves pretty well under different economic conditions. This is not the case for the coffee. The coffee is much more sensitive to the macroeconomic situation. And this is part of the reflection that we have in the case of Germany. So it is a very fair question, what is important also, and let me to emphasize this point, as we were mentioning before, we are an integrated groups, 22 different countries implies that we have markets that are going to be in good conditions, market that are not going to be so well placed, but overall more than 60% of the business right now of the group is balanced toward QSR. So Poland is more representative of the overall dynamics that we have across the group.

Thank you.

Maybe one more thing just to follow up on Germany. So is there anything that you see you could do? Any actions that you could improve the situation there in the meantime? Of course, the macro is not helping. the more macro sensitive parts like coffee obviously not feeling great in that environment but are there any I'm not saying quick fix but any thoughts on how to improve that the focus the focus that we have as as you mentioned the macroeconomic is

It's the same for everybody, but where the difference is in the approach that the different companies have. So for us, particularly in Germany, the offering that we are giving in terms of the consumer, as we were saying, is part in terms of the mix that we offer and the experience that we offer. So having different price points for the different kind of consumers that we have and increasing the number of visits, the number of consumption occasions for our consumers. Coffee is a matter of experience, it's a matter of getting together, it's a matter of having a nice and good moment. And what we are doing is how we can provide the better experience for our consumers. So one is in terms of since they are going in the app, that they can skip the line if they are heavy users so that they find their experience in case that our locations continue giving the value for them. That's why we are also an important topic for us is we're investing in renovations. so that all the places in which you are there, you feel comfortable and you have the nice ambience. But I would say the most important focus is on service to the consumer and commercial activities focus to them in terms of offering of products, even drinks and food that we offer in that market.

Thank you. Thank you.

And we have had a follow-up question submitted by of Trigon, who asks as follows, could you further explain refunds collected in the quarter in the amount of 11.3 million euros? Thank you.

Thanks for the question. And on this topic, this is mainly related to taxes paid in excess. in previous periods. So that's what we are showing in this quarter, that recovery of those taxes.

Thank you. And next question is submitted by Jelena Rosenfeld with Trigon asking, what were the main drivers behind a 40% year-on-year growth in Poland EBITDA and 450 BPS margin expansion? Thank you.

There are two topics. The top line in Poland continues being healthy in terms of sales and transactions. So that's one. And that's across all the brands. So that helps to increase the sales and increase the profitability of the market. And the other effect is this one-time effect of a recovery of funds.

If I can expand a little bit over here. So there is a combination really of factors here behind. So we mentioned before about the increase that we have in terms of real wages in the economy and how the consumption is performing better in other countries. So we have a macro tailwind that is helping. When we translate into Europe, we have also currency appreciation in the country. So it's another factor that is helping us. We have the refunds that Eduardo mentioned before for third factor. The fourth one also is that we are heavily investing in the country in terms of growth. So the combination of all these factors is translating in this successful achievement of results.

Thank you.

And the next question is submitted by Adrian Gorniak with who asks, could you give us some color on 4Q24E performance and your expectations on 2025E regarding sales, cost pressure, including food cost and the profitability? Do you consider any M&As in 2025E? What may be the pace restaurant rollout in 2025E? Thank you.

Thank you for the question. I'm afraid that in this case, Adrian, there is only partial information that we can provide at this stage. As usual, our plan is that once that we have the full year result presentation, we will have the contribution of our CEO, of Luis Comar, but happily he will share with you all what is our guidance for 2025, what are the targets and KPIs that we set for this year. So you are going to allow me to respect this. We are in the process right now precisely of finalizing our budgeting for 2025. So precisely, we are working right now in providing the more accurate answer to all these questions. With respect to the M&A, it is something that we mentioned on previous occasions. Everything has different cycles. For us, the first one, it was to strengthen the balance sheet and to improve the financial profile of the company. This is something that has been accomplished. So we are vigilant. We are studying possible corporate transactions and M&A deals. So everything that you see announced in the market, we have previously analyzed. We have several contacts screening the market and looking for possibilities. To be honest, one of the points that usually I highlight with many investors is that under my experience, to have three years, four years in where it doesn't make sense to have a deal. And suddenly you have a year in where it makes sense to have a couple of deals. So we are working towards finding new brands, new concepts that could complement the existing portfolio that we have. And on due time, if we find something that is relevant, of course, we will share with you.

Thank you.

Thank you. The next question submitted by Gamza Alpar with Impera Capital is as follows. In terms of your restructuring, closures, exits, is it fair to say that is now almost done? How much more growth can be achieved in terms of store openings in CEE? When will CEE reach a mature stage? Thank you.

In terms of the growth that can be achieved in CEE, it's part of the analysis that, of course, every day, the development of every year, the development team works. And we still consider that the greenfield or white space available for growing the different formats and stores that we have continues being positive in this market. We take in place how the cities are growing. And of course, one of the topics that we need to consider is the white space plus the the different formats that we can experience depending on the area that we are attacking or we are trying to cover. But according to our numbers, in conclusion, still we feel positive of the white space that we have in the different countries of sea markets.

Thank you.

And as a quick reminder, if anyone would like to ask any further questions, please submit written questions using the Q&A button on your screen if you are streaming or dial star one if you're joining us over the phone. And the next question is a follow up from Piotr Czodra of Trigon, who asks, what tailwinds do you see for EBITDA margin in 2025? Food costs seem to be picking up. Labour costs will also increase, especially in Poland. Thank you.

The fourth quarter of the year, as you know well, we have a very strong seasonality during the quarters of the year. Usually the end of the year is always a strong quarter in terms of sales. That provides beneficial results in terms of sales leverage. This is what I can disclose at this stage with respect to the fourth queue. So in terms of the main dynamics, it's true that from a global perspective, there is a pressure from the cost of labour perspective, but this is not something attributable to one specific quarter. So the salaries increase is something that is done on an annual basis, so we should not expect to see any abnormal situation from that perspective. In terms of cost of sales, I think that part of the success that we are showing in terms of the margin expansion is to show that we are capturing the benefit of the most moderation cost of food and cost of sales across the globe. What is true is that the trend is starting to stabilize from that perspective. But we are working precisely on the fourth queue of the year. So as I was explaining before, our aim and our expectation is to comply with the expectations that we share with you at the beginning of the year. There is nothing really that lead us to change those expectations.

So thank you. Thank you, and we have no further questions in the queue at this time, so I'd now like to hand back to management for any closing remarks.

Thank you very much for attending this quarterly earnings call and for the questions that you are making. For all MRSTs, service is our recipe for winning, so that's why we hope to see you very soon in one of our restaurants. Thank you very much. Thank you.

This concludes today's conference call. Thank you all for joining. You may now disconnect your lines.