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Hello everybody and welcome to the AMREST Q1 2025 results. My name is Elliot and I'll be your coordinator for today. If you'd like to register a question during today's event, please press star 1 on your telephone keypad. Alternatively, you can submit your recent questions via the Q&A box found on your screen. I'd now like to hand over to Lucas Wachalko with Wooden Company. Please go ahead.

Good afternoon ladies and gentlemen. My name is Lucas Wachalko. I am representing Wooden Company. And I have again the pleasure of moderating the call with AMRES, the components represented by Mr. Eduardo Samaripa, CFO, and Santiago Camarillo Aguilera, head of IR. Gentlemen, the mic is yours.

Thank you, Lucas. Good morning and thank you for joining us in today's first quarter 2025 AMRES result presentation. It is always a pleasure to have the opportunity to share with you AMBRIS results and also our views on our fantastic sector. During the first quarter of the year, economic activity in Europe expanded at a more moderate pace than in previous quarters. And once again, with evident divergence across countries. Similar to 2024, the good performance recorded in AMBRIS' main market, Poland and Spain, contrasted with the declines in activity in Germany and France. One of the causes of the slowdown in economic activity was the moderation in private consumption observed in most markets, as a result of increased uncertainty and despite the solid performance of the labor markets. Despite this volatile macroeconomic environment, and the cumulative effect of inflationary pressures over the last two years, our revenues grew at a healthy level during the quarter and with an accelerating trend. But let's see all this in the presentation that we have prepared for you. Starting with today's presentation, if we go to slide two, please. As you know, Amrest is Europe-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. 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 Ambrose cheese. If we move now to slide three, I'm going to summarize in six points the most relevant events for this first quarter of the year. First, AMBRIS generated revenues of more than 620 million euros. During this period, a growth of 4.7% compared to the same period in 2024. Second, the ordinary results of the group represented by the adjusted EBITDA that excludes extraordinary results amounted to 87.8 million euros, up 6.5% versus the same period of 2024, which puts the margin at 14.2%. Third, the Operative Profit EBIT stood at 13 million euros, That represents a margin of 2.1%. This figure has been affected by extraordinary results booked during the quarter. Fourth, the group's leverage ratio defined as net financial debt versus EBITDA ex IFRS 16 stood at two times. Therefore, continuous stables at the low end of the largest leverage range defined for the group. Next, the number of new restaurants opening amounted 15 new units. In addition, we closed 18 restaurants during the period. And finally, I would like to call your attention on determination of the collaboration agreement between AMBREST and SEM, together with the disposal of 51% stake in the AMBREST held in SEM. The result of the deconsolidation of this business reported as other operating costs stood at 5 million euros due to effects that rose with the deconsolidation. But what is more important, this transaction is enabling Ambrose to conduct all supply chain management and product quality assurance services internally going forward. providing an opportunity to identify potential additional synergies to leverage future business growth. In the following slides, we will go into more depth in detail on these points. But let's start first with what we are doing in our different brands on slide number one. The commercial position of our brands plays a crucial role in the value generation of Ambrose. Let me start with the quick service and coffee brands in this slide four. At KFC, we are enhancing the appeal of our beloved products and continue with the exploration of new flavor territories. As a result, a set unique products are offered in our restaurants. This included the reintroduction of the famous warming cheeses with a fresh communication strategy. new flavors inspired by Caesar salad, and innovative products tests like hot dogs, tacos, and the pancake burger. This strategy aims to provide excellent quality at great prices to both regular and new consumers. At Burger King, we are excited to introduce our new premium chicken line, Chicken Crunch. This range features exceptionally crunchy and delicious products made from full-mussel chicken, sure to win the hearts of chicken lovers from the first bite. At Starbucks, our business strategy emphasizes personalization and innovation. This quarter, we introduced new beverage flavors like pistachio and lavender, enhancing our offering with various forms of flavored cream called foams. Despite economic challenges, Starbucks maintains providing affordable luxuries that demonstrate value for money. Now, moving to the fast, casual, and dining brands in slide five, please. At Pizza Hut this quarter, we launched a new edition of our iconic Pizza Festival, offering three new pizza flavors inspired by social media trends. Additionally, Pizza Hut continues to maintain a strong and diverse menu that appeals to a wide range of customers in which we have introduced in this period new products as the Mac and Cheetos pasta. In Blue Frog, we just launched a spring menu inspired by the Chinese tradition of eating spring freshness. And spring-summer set lunch menu designed to meet diverse lunch needs with flavor and flair. At La Tagliatella, since initiating our rebranding process during the second half of 2024, we have successfully renovated over 10 restaurants with a new image. The new image is improving brand satisfactions and increasing the frequency of consumer visits. This transformation is... Juvenating our target audience, making our brand more appealing and relevant to both existing and new consumers. And finally, in SushiShop, we are launching new premium offers as the Umami Box, created for the first time by our own sushi chefs. But we are also devoting our efforts to enhance our delivery capacity and consumer experience in our restaurants. If now we move to slide six, please. As I mentioned, despite the volatile macroeconomic environment and the cumulative effects of inflationary pressures over the last two years, revenues grew at a healthy level. Sales increased by 4.7% to 620.2 million euros. At the same time, you can find on the right-hand chart the evolution of the 12-month trailing average revenue per store that is growing steadily for the last three years, providing a good indication of both the health of our business and the level of exploitation of economies of scale through the sales leverage. Moving to slide seven, we have discussed on several occasions the prominent role that the technological innovation is having in the transformation of the restaurant industry. In this slide, we provide the evolution of two key indicators that explain this statement. First, on the left-hand graph, you can find an increasingly wide channel between the growing total sales and the part of the sales coming from the dining channel. This is the space occupied by the alternatives. takeaway and the drive-through distribution channels. Secondly, in the graph on the right, you can see how sales through the digital channels have continued to grow, reaching 62% of total orders received. This figure excludes our casual dining brand. Nonetheless, the importance of these orders come from the higher value that we are able to extract from them. If we go to slide eight, here we can find our restaurant portfolio evolution and adjustments executed during the latest years. As I discussed previously, we opened 15 new restaurants and during the quarter, we closed 18 units. With this, AMBRIS had a portfolio of 2,096 restaurants, units, and the end of the period. You can see the big effort made during the latest year in terms of getting rid of non-performing businesses combined with a steady growth in the number of units in our core business. In other words, this portfolio has undergone structural changes during the last years in order to provide a better and more efficient capital allocations, which resulted in the transfer and closure of underperforming businesses, which together with a relevant organic growth of restaurants has shaped our current portfolio. With this, Santi, if you can cover the main financial highlights, please.

Many thanks, Eduardo, for sharing your experience. Good afternoon, everyone. As always, I appreciate this opportunity to share with you how things have been going at Antwerp in the last quarter. our views for the future, and overall receive your questions and feedbacks at the end of the presentation. I would like to start with a brief reflection. The macroeconomic environment remains extremely complex in many of the regions where we operate. On the other hand, consumer confidence is severely affected by the geopolitical events that we are seeing around us, and on the other hand, the accumulative effect of high inflation rates over a long period of time that continues to influence our customers' purchase decisions. Despite this, we have achieved another quarter of positive growth, with sales increasing at mid-single-digit rates and also with an improvement on the group's ordinary profit. However, the bottom line has been affected by the booking of extraordinary impacts that, as I would like to try to explain, should be understood as the effect of opening a very interesting venue opportunity for future growth, as we have fully internalized supply chain management since the 1st of April. With this, let me now jump to slide 10, with the main financial highlights of the quarter. During the first quarter of the year, revenues amounted to more than 620 million euros. This is almost 5% higher than in the same period of 2024, with a same store sales level of 109. And in terms of transactions, the aggregate growth was 2.3%. In this regard, the most up-to-date information for 2025, first week of May, appoints to a level of 101.5 in the same store sales index. Therefore, an acceleration of sales during the latest weeks. The adjusted EBITDA generation, that is without extraordinary non-operative results, increases by 6.5% to almost €88 million, with a margin of 14.2%. Total EBITDA stood at almost €82 million, with a slight increase versus last year. And we have also greened the non-IFRS 16 EBITDA that reached This figure is €3.8 million lower than in 2024. However, without the booking of the extraordinary results, we have a growth in this non-IFRS 16 EBITDA of more than 3%. Finally, CAPEX stood stable at almost €31 million during the quarter, where we open 15 new restaurants and we close 18 restaurants. Moving to the slide 11, you can find quarterly sales and same store index evolution. The upward trend in terms of revenue generation continues with the usual seasonality of our business. where always the first Q is the weakest of the year. In terms of semester sales, the index has stabilized. But as I mentioned earlier, we are seeing an activity acceleration on the latest weeks. In slide 12, you can observe the EBITDA and margin evolution figures once more very affected by the seasonality of the quarter. In this regard, I would like to call your attention that in addition to the seasonality, some quarters' payment execution could be a bit volatile, as it has been this quarter. This is relevant because it has an effect on the operative cash flow generation reported, but it has been impacted by the adjustments that should be normalized on the next quarters. Now, moving to slide 13, please. Here, we are providing the operating profit evolution EBIT that stood at 13 million euros with a margin of 2.1%. However, taking out the extraordinary adjustment, the operating profit is almost flat versus last year's reading. In the slide 14, you can find the whole P&L account reporter and the comparability versus last year numbers. First, we have decreased by 73 units the total restaurant count, mainly due to the transfer of over 120 suit franchisees Pizza Hut restaurants executed last year. In terms of equity restaurants, we have a steady net growth of 56 units. In terms of net profit, for the first quarter of the year, we recorded losses of 8.7 million euros, compared to losses of 2.1 million euros in 2024. Besides the fact that average quarterly results are highly seasonal, with the first quarter of the year usually recording the lowest levels of commercial activity, during this period, we have booked extraordinary negative results following the sale of our stake in ACM. And also, we have an increase in terms of the tax charges. Moving now to the slide 15, please. Here you can find the cash and debt evolution. The gross financial debt amounted to almost 651 million euros at the end of the quarter, while net financial debt stood at 528 million euros, representing an increase of almost 60 million euros. As a result, the grouped financial debt profile and leverage remains largely unchanged at two times, at the lower end of the target range defined by the company of being between two and two and a half times leverage. So this is fully compliance. with all the financial covenants established in our financial agreements, which, I remind you, establishes that consolidated net debt adjusted is beta, but must be maintained below 3.5 times, and the debt service coverage ratio must be greater than 1.5 times. On the other hand, the group's liquidity at the end of the quarter amounted to 123 million euros after decreasing by 30 million during the quarter. This change in balance is due to normal seasonality in cash generation from the business during the first quarter and also to the disconsolidation of the liquidity coming from SEM and the execution of CAPEX. I would like to emphasize that we consider this level of liquidity together with the additional liquidity lines and credit facilities available to us that amounts to 120 million euros to be an efficient level in lines with the group's needs. In the slide 16, you can find our financial debt structure and maturity profile. Basically, no changes with respect to the previous quarters. We maintain a smooth debt profile over the coming years, where 91% of the current financial debt is long-term debt. Next, let's focus on the results by different segments. On slide 17, you 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. As we mentioned before, where we have observed very different commercial dynamics depending on the markets. In slide 18, as usual, we will start with Central and Eastern Europe, our more relevant region from the business perspective. This segment recorded a strong sales growth of 9% to reach 366 million euros. In terms of EBITDA, the generation amount to over 62 million euros with a growth of 6%. This implies a need with a margin of 17%. This is 1.5 percentage points lower than last year. Andres has 1,237 restaurants in the region at the end of the first quarter after the opening of 14 new units. In the slide 19, you can find the latest quarter evolution on these metrics. Perhaps only highlight the strong growth observed in Poland, our largest market, where sales increased by 11% and EBITDA by over 12%. Let's continue now in slide 20 with Western Europe, please. Quarterly revenues. achieved in this region amounted to 210 million euros. This is a decrease of more than 4% year-on-year. However, the EBITDA generated amounted almost 30 million euros, representing a year-on-year increase of more than 6% and an EBITDA margin of 14.7%. This is 1.4 percentage points of expansion. And this margin expansion has been particularly notable in Spain, where although revenues decreased by 2.1%, affected by abnormal weather conditions during the latest months, the EBITDA margin growth by almost two percentage points to reach 21.5%. In terms of restaurants, at the end of the quarter, Ambrose maintained a portfolio of 777 restaurants in the region, after opening one unit and closing eight during the quarter. In the slide 21, we are providing the latest quarter evolution on the metrics mentioned. Finally, if we go to the slide 22, please, we have China. During the quarter, the economy showed solid quarterly growth, exceeding official expectations, supported by a rebound in manufacturing activity and consumption. despite the positive activity figures recorded during the period, consumers remained very cautious on discretionary spending. In this context, our sales in the country during the period amounted to almost 22 million euros, representing an increase of 1.4%. EBITDA stood at 4 million euros, practically the same level as in 2024. This represents an EBITDA margin of 18.4% and a decline of 0 percentage points. The number of restaurants in the country at the end of the first quarter was 82, following the closure of five restaurants. In the slide 23, you can find for your convenience the metric evolutions. With this, back to you.

Thank you, Santi, for your insights. And now we can open the call for questions.

Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. And alternatively, you can submit your recent questions via the Q&A box found on your screen.

Okay, maybe I will start having the privilege of moderator. I wanted to understand a bit better the reasoning behind disposal of SEM. and the way you are approaching procurement of ingredients currently. So, if you could shed some light, why have decided to dispose it?

Okay.

Thank you, Lucas, for the question, and I think you raised a very relevant topic in this first part of the results. As we announced in the first quarter, we were in the process of doing this transition. And one of the topics that I want to mention here is that we need to separate a high-value process versus how that was structured. And one of the things that we were working on as procurement and supply chain services is a high priority process within the organization and similar organizations like AMREST, it was very important to have 100% of control of how this was addressed. So that's the reason of why we were doing this. Topics that we, of course, took into consideration. Now we're gonna aim to benefit by having a more efficient integrated global full service function, with increasing effectiveness on food and packaging procurement and quality assurance, and also putting important efforts in terms of the CAPEX procurement. If we see which are the topics that we are going to cover with this, of course, we had a transition in this process. Team is very important to this, so we already have that in place and we are very proud and happy to welcome a new team that is going to take care of this. We have certain value-added initiatives that we are going to put in place in the following quarters and years. better buying, B2B processes, capex. So that's what we were thinking on why we make this change.

Lucas. Okay, thank you.

And the next question of mine would be on same-store sales development. Last quarter was 1% growth currency. You claimed that you're growing at the pace of 1.5%, so still lagging behind CPI. Is it the weakness of markets in France and Germany only, or if you could shed some light on the performance versus the inflation across the other markets? Is it everywhere below CPI, or is it just the fault of some weaker markets overshadowing the growth otherwise?

In terms of same-store sales, we're happy to see a positive number, which is, let's say, one of the important highlights of this, because we stand out as being one of the groups that are able to have a positive same-store sales trend. And as you mentioned, our IE3 countries play a different role. Of course, within this 1%, we have countries that are performing better results and some ones that are lagging. And as you correctly said, in terms of same-store sales, CE in general is having a better performance than the rest. And the ones that we are lagging more, as you highlighted, is France and also Germany.

Okay, thank you. Are there any questions from the room?

As another reminder, if you'd like to ask a question, please press star 1 on your telephone keypad or alternatively submit your recent questions via the Q&A box found on your screen.

Okay, I don't want to monopolize the call, but it is as it is. Which stood out with strength for the first quarter was Poland and Spain. So if you could go through the drivers behind both markets, because both Germany and France, I think it's fully understandable. It's just a weakness of the consumer. But judging by the other companies operating in Poland, first quarter was rather tough, given the weather and later Easter. And also in Spain, the weather wasn't supportive. So I wanted to understand why actually those two countries stood out the positive.

Yes, thank you for the question, Lucas. In the case of Spain, as you mentioned before, whether it has been completely abnormal, we have a lot of rain during the latest months in Spain. This has a direct impact in terms of consumption. That is why one of the main reasons behind the decline that we have in terms of sales in the country, 2.1%, However, in terms of the profitability, you can see a big jump, almost two percentage points. So this is coming really from the economies of scale that we are reaching, investment in technology, the new image, as we were mentioning before, that we have for the new branding that we are putting in place with Leatela Tagliatella. So there is no one single factor that is explaining this. It's the combination of two different things, and also the support that we have in terms of the cost of sales in the country. In the case of Poland, once more, we have a combination of several factors behind it. Our biggest brand in the country is KFC. Things are going pretty well in terms of KFC in Poland. It's the lithium program. You know that we are introducing some unique products to having a very special approach into this market. This has been very well received by our customers and appreciated. And this is impacting the results of KFC. In the case of PepsiHat, we have also very good results. I think that we have explained this in the past. We have an approach very focused on promoting dining activity in terms of FIPSA hat that is also working very well. So I think that more that a macro reason behind this, what we have is a lot of work done that is supporting the trend in these two countries. I don't know if you want to add anything, Eduardo.

As we mentioned during our participation, the first quarter is the one that is softest in terms of volume. What we are seeing is that after the first quarter, the trend continues. There's even some recovery on that, but we need to play a very important and very detailed diagnosis of what is happening in the different countries and in the different brands. Economies in general, particularly in Poland, are having very good performance and that aim with the new products that we have and service that we give to the consumer, we are increasing the sales that we are having on that market. Also, we need to We need to continue pursuing that, but also in the countries that we are having a softer performance, mainly given to economy, we need to reinforce the works that we are doing that. In terms of France, enhancing the product disponibility that we have of products for our consumer, launch of new SKUs, having close collaboration with the aggregators and our distribution company in order to deliver to our consumer a higher value so we stand out as the option in terms of sushi. And the same happens for the case of KFC. How we can outstand the results of the company given the knowledge of the market that we have, given the segmentation of the consumer, given pricing segmentation, and how we can deliver more

value to our consumers.

Okay, thank you very much, operator. Do we have any questions from the line being opened or maybe from internet, from Q&A?

I believe we'll turn now to the text questions received.

Okay, please do. Yes, we have received several questions. Thank you very much. The first one is regarding to the impact of the disposal of SEM and to the internalization of the supply chain management. What is the expected headcount and impact in terms of the full sourcing of the supply chain management? I can't take this one at this point. I'm afraid that we are not in a position to make the disclosure of these figures at this stage. But as Eduardo was pointing before, this is a key theme for us in where we have been sharing 50% of the business originated through this business line that we wanted to incorporate. So going forward, we will provide more information and more insight on this very interesting venue that it was strategic for us, because this is not just the one of results that we have with these laws of 5 million euros that we have reported. This is about with any house, a key theme of development in terms of how to approach to the supply chain management. As I said, we will provide on the next quarters more information on the specific process. So right now, from the 1st of April, as we have explained, all this activity is performed in-house.

We have some additional questions.

What is the percentage of upgraded restaurants and how much capex it has been spent? I can take this one as well. During this first quarter of the year, we have upgraded 43 restaurants, and the distribution of the capex and what's more could be volatile in a specific quarter, but it has to be understood now on the long-term basis. Right now, around 40% of the capex that we are devoting is going towards the opening of new restaurants. Another 40% is going into the refurbishment of restaurants, and the remaining 20% is going mainly into IT projects and the utilization of them of the cloud. We have an additional question regarding to the free cash flow generation of the company. What is the free cash flow that you are expecting to generate in this year?

Well, on this, I think that is relevant. We are a highly cyclical business. And one of the topics that is relevant, the quarter which has a high volume is the fourth quarter, and being the first quarter of the year, the one that we generate the lowest sales. So we have a very cyclical cash flow in terms of that, an important generation of cash that is registered in the fourth quarter of the year, and also unwinding some of that cash working capital generation that we have for the fourth quarter. So we should see two topics that are going to have the cash flow within the following quarters. One coming from the operations and results of the company in terms of the EBIT and we will see a gradual recovery in terms of the working capital of the of the cash flow.

We have an additional question. What is the current cost of debt of the company? I can tell you that this is around 5.7%. All the debt that we have is floating, so we should start to see the benefit coming from the decrease in interest rates. The debt is denominated around 70% in Euros, 30% in Slotis. So in both metrics, we should be seeing the benefit of the rate decreases on the coming quarters. We have a further question regarding dividend prospects. What is the policy and outlook regarding this?

In terms of the dividend, as we had last year, was a decision made by the board during the fourth quarter, given the results that we have achieved during the year. And it's going to be exactly the same this year. Depending on the results that are achieved in the year, a board at some point can take a decision in terms of the dividend.

I don't know, Operator, if there's any further questions. We have one more text question that's come in.

Yes, we see here that we have an additional question. Do you see any new product offering at Starbucks after the new CEO took over?

Thanks for the question. Starbucks has been lately very proactive in terms of launching of new products. Of course, we know Starbucks as a coffee shop But one of the topics that Starbucks have put a lot of efforts is to increase the offering in terms of products that are given to the consumers. And the launch of new SKUs is quite relevant. And in fact, some of the initiatives that the CEO has made is in terms of evaluating the portfolio. Because we always have an interesting discussion in terms of that. the number of SKUs that you have versus the complexity that is in price for the supply chain of the company. In fact, what they have done is centered in terms of new products, in terms of the ones that really we consider that are going to have a high impact in terms of the consumer. And that's exactly what we are doing in terms of the offering that we have of our consumers. New flavors are introduced, but we also have to say that the vast majority of the new products are related to iced and fresh products. So there's a lot of initiatives that are taking as Starbucks as a company, but that we are also taking as Ambrest in how we give the best offering to our consumers. First, these products in terms of beverages. that we will see some surprises of new products coming into that, but also how we offer those distinctive products. And the other topic that we have been working on for quite some time and now also is an initiative taking this in terms of how the renovation of the of the Starbucks are taking place in order to be as efficient as possible in terms of the capex allocated to this and also the timing in which that renovation is taking place. So a lot of initiatives in terms to increase the Starbucks business for oil.

Ladies and gentlemen, we have no further questions. So this concludes our Q&A and today's AMREST Q1 2025 results. We'd like to thank you for your participation. You may now disconnect your lines.