AmRest Holdings SE

Good afternoon everyone and thank you all for attending the AMREST full year 24 results call. My name is Brica and I will be coordinating your call today. During the presentation you can register to ask a question by pressing start followed by 1 on your telephone keypads if you have dialed in on the phone. Otherwise you can type a written question in the Q&A box provided. I will now hand over to your host Lucas Wachako from Wood and company. Please go ahead when you're ready.

Good afternoon ladies and gentlemen. My name is Łukasz Wachelko. I'm presenting Wooden Company and I have again a pleasure of moderating the call with Amres after the very strong fourth quarter 24 results. The company is being represented by CEO Mr. Louis Comas, by CFO Mr. Eduardo Samaripa and IR Strategic Planning Director Santiago Camara Aguilera. Guys, I don't want to steal too much of your time. The mic is yours.

Thank you very much, Lucas. Good afternoon, and thank you, all of you, for joining us today in this call. It's a pleasure to be with you today and to have the opportunity, together with our CFO, Eduardo Zamarripa, to present the results of the work we have done at Andres over the last 12 months, as well as to share our expectations, challenges, and opportunities that we see for 2025. Because if there is one thing we are convinced of is... is that we are laying the foundation for a great history of value generation that already this year has materialized with the first dividend payment in our history, maintaining the organic growth rate for a restaurant's portfolio and reducing the group's leverage. But let us start with the materials that we would like to share with you today. If we move to the presentation, as you know well, Ambrose is Europe's leading restaurant operator with a portfolio of almost 2,100 restaurants in 22 countries across Europe, Middle East, and China. We keep a balanced portfolio of franchise and proprietary brands that covers a wide spectrum of occasions of use. Nevertheless, almost half our restaurants are oriented towards the QSR segment, which shows the highest level of visibility in the face of economic cycles and a unique capacity for internalization. As a result, More than 30 million customers visit our restaurants every month, where they find a distinctive service provided by over 45,000 passionate employees, our umbrella staff. If we move to slide three, let me remark the most relevant milestones for 2024 that I would like to try to summarize in six points. First, we achieved all-time revenues record that reached almost 2.6 billion euros, with a remarkable growth of more than 5% versus 2023. We have also set a record in EBITDA generation that reached more than 430 million euros, and this is an increase of almost 14% compared to 2023. The operative profit also show a significant increase of more than 14% year-on-year, amounting 118 million euros, despite the booking of a substantial impairment back in June. As I mentioned earlier, for the first time in the group's history, we have distributed a dividend of $0.07 per share, a sign of the group's progress in the strategy of combining value generation in a growth company. In terms of new openings, during the 2024 financial year, we have opened 109 units, And we have also renovated 251 restaurants with the aim of offering the best possible experience to our customers. And finally, I would like to point out that we are continuing with the strategy of streamlining our portfolio of restaurants with a closure or transfer of non-strategic or unprofitable units. In this sense, at the end of October, we completed the transfer of the Pizza Hut business in France, which represents a reduction of 121 restaurants, of which 120 of them were sub-franchise. Moving to slide four, I would like to recapitulate on how we saw 24 just one year ago when we shared with you all our expectations for business evolution for this financial year, and finally, what the real evolution has been. We anticipated sales growth of high mid-single digits in a context of weak consumption in several of the markets where we operate. In the end, we have seen precisely that the economic growth of the countries where AMBRIS operates has shown significant divergences. In the Central and Eastern European markets, economic growth was robust, fueled by stronger consumption and increased purchasing power and lower interest rates. But in contrast, in Western Europe, growth has been much more modest, with some countries, such as Germany, facing negative growth rates or almost stagnation, as in the case of France, In this environment, Ambreth has set new historical records for revenues, $2,556 million, by increasing sales by 5.1% compared to 2023. Likewise, you can see how our focus on profitable sales has resulted in a higher than expected increase in profitability, with our EBITDA margin growing by almost 14%, while the level of investments and restaurant openings were in line with our expectations. Finally, the positive progress in cash flow and EBITDA generation has allowed us to reduce leverage while introducing a dividend payment. In summary, I believe that once again this year we humbly bring you the fulfillment of the commitment made. However, allow me to elaborate more on these ideas in the following slides. In slide five, we can see how the strong increases in revenue generation continue and how they affect the average sales per equity restaurant. In this sense, I would like to draw your attention to the yellow line from the right-hand graph, where you can see the significant increase in the portfolio of equity restaurants that Ambrest manages. I will address this issue later on, but I think that it's important to distinguish between equity, franchise, and sub-franchise restaurants. A large part of the adjustments we have made to our portfolio over recent years have been in the sub-franchise restaurant segment, where the amount of fees we collected did not cover the management costs of those businesses. However, we maintain a solid growth in the number of restaurants that we operate directly. In any case, coming back to this slide message, as we have pointed out in previous occasions, this positive evolution of sales per restaurant, in our opinion, is a good indicator of the health of our portfolio. Going into a slide C, please. A few more comments on sales and business dynamics. We have emphasized on several occasions that our commitment to technological innovation as a key factor for adapting efficiently new consumer needs and as a lever for maintaining competitiveness in a constantly changing environment. This is particularly relevant in a world dominated by omnichannel retailing where data appears everywhere. Thanks to this positioning, we have been prepared to run to price competitiveness and continue to strengthen the market position of our different brands. With regard to consumer trends, as we can see in the slide, the evolution of sales originated through digital channels continues to advance instantaneously, and during the year, they surpassed those originated through other channels. In terms of the channels used for consumption, there has been a stability in the distribution of consumption preferences over the last few quarters. In this sense, dine-in is the preferred option and accounts for practically half of the group sales. With respect to the delivery channel, it accounted for 18% of the sales generated during 2024, and practically it was the same proportion as in 22 and 23. If we move to slide seven, please. As I mentioned, we have generated an EBITDA of more than €430 million. Setting also a record in this regard, I'm posting a growth of almost 14% versus a year ago. This result implies that the EBITDA margin rose 1.2 percentage points to almost 17%. Expansion of margins results from the work carried out by optimizing processes, adopting technology-driven efficiencies, and also rethinking work and training models. Each of these efforts significantly impacts margins and enhances the customer experience. Nonetheless, for me, these figures represent a historical record that corroborates the results of the strategic approach that we have adopted of positioning towards sustainable and profitable growth. Moving to slide eight, please. Here, we bring the operating profit that reached 118 million euros after increasing by more than 14%. This represents an EBIT margin of 4.6%. This progress has been achieved despite having booked value corrections of 52 million euros during the year. Out of these 52, 41 million corresponded to the value correction on the goodwill associated with Sushi Shop, which was recorded at the end of the first half of the year. With this, the value of the goodwill of this investment stands at 70 million euros at the end of the year. And it has not been necessary to make any further corrections during the second semester as the profitability target set for the group have been met. In this regard, we also thought that it would be useful to show you the operating profit, excluding the impairment booked on SushiShop, to show the evolution of the EBIT coming purely from the evolution of operations. In this sense, the year-on-year increase reaches 20% and the margin sits above 6%. We go now to slide nine, please. Here we can see the bridge on how it has evolved the number of restaurants in our portfolio during the year. In 2024, the 121 Pizza Hut restaurants that Ambrose managed in France were transferred, 120 of them under a sub-franchise model. However, Ambrose has continued to focus on organic growth with the opening of 109 units, which together with the closure of 52 has led to the end of the 2024 financial year with a portfolio of 2,099 restaurants. In the slide 10, we would like to provide you with more insights of the latest strategic portfolio adjustments that we have performed during the latest quarters and their financial impact. Redefining the perimeter and portfolio of managed restaurants with a closure on our sale or non-strategic businesses has been a key pillar of value generation for the company. I can imagine that many of you are wondering if we are considering transferring or disposing of any other business units. To address this, I can say that we evaluate each business unit based on its strategic fit and long-term value generation potential. Therefore, we should view both the exit and entry of new businesses as an integral part to the efficiency allocation of our capital. And with this, Let me share with you how we do see 2025. If we move to slide 11, please. I will convey this perspective using some of our most relevant management KPIs to illustrate our expectation. First, we expect a mid-single-digit growth in terms of sales based on the assumption of a still challenging economic and political environment ahead for many European countries. In terms of profitability, we expect an EBITDA margin similar to this year level. Efficiency in gains and revenue management should offset cost of sales and cost of labor pressures across different geographies. Our level of investment and new store opening should also be similar to this year figures, and this corroborates our commitment to expanding AMBRIS footprint combined with an efficient usage of the resources that we are generating. And finally, we aim to maintain Leverage at the lower end of our management targets that I remind you that has been set between two and two and a half times, net financial debt versus EBITDA, which the group's management believe to be a prudent level to be able to face new investments, focus on accelerating growth, both organic and non-organic. And thank you very much. And with this, Eduardo, I will appreciate if you can help us to cover the main financial highlights, please.