Grupo Bimbo, S.A.B. de C.V.

and welcome to the first quarter 25 Group by BIMBO results and conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I will now like to hand the conference over to Rafael Palmeas, CEO of Grupo Bimbo. Please go ahead.

Good afternoon, everyone. Thank you for joining us. Connected on the line today are our CFO, Diego Bajuela, Executive Vice President, Mark Bendix, along with several members of our finance team. We kicked off 2025 with solid trends in most markets and facing some challenges and areas of opportunity in others. while navigating highly volatile macroeconomic and political landscapes in the world's leading economies. Despite these hurdles, our exceptional diversification and global presence enable us to achieve record-breaking sales in the first quarter at a consolidated level and for Mexico and EAA as well, which led to positive volume contribution on a global basis. Furthermore, we experience a high single-digit growth in EBITDA, and in our most profitable region, Mexico, we reached a 19% EBITDA margin, showcasing the remarkable strength and unwavering commitment of our frontline teams. We're also pleased to report that the continued positive evolution in Latin America led us to achieve a 50 basis point increase in EBITDA. As a baking industry leader and relevant player in snacks, our continued success is built on innovation, operational excellence, and our commitment to meet customers' and consumers' needs across all markets. We remain confident in our ability to fire up sales volume everywhere and drive long-term value. On our ESG journey, I am proud to share that we have been named one of the world's most ethical companies for the most consecutive year. Also, 45% of our sales meet or exceed the 3.5-star benchmark under the Health Star Rating System, demonstrating optimal nutritional quality and delivering positive nutrition in every bite. Now, looking into the results by region, in Mexico, sales improved by nearly 2%, mainly due to the positive mix effect. Despite a sequential softening in the consumption environment, we continue to see growth across most channels and geographies and categories, excuse me, with particularly strong performance in buns and rolls, sweet baked goods, cookies, and snacks. We are encouraged by the resilience of our business and its continued ability to generate value in a challenging environment. The expansion of our margins under these conditions highlight the extent and flexibility of our operating model, reaching a record high of 19%, driven by a favorable mix lower commodity costs, and disciplined control of administrative expenses. Despite the slowdown in the consumer, we have maintained a strategic investment approach throughout the period, positioning the business for sustainable long-term growth. In North America, excluding the FX effect, sales decreased 4.9% due to an industry-wide self-consumption environment in the U.S., where consumers continue to seek pricing and value. We're also lapping the impact of last year's strategic efforts from certain non-branded clients. We remain focused on enhancing our revenue growth management strategy and strengthening our overall value proposition with innovation efforts closely aligned to the needs of key consumer demographics. We have recently launched a price value portfolio in the bread category to proactively address the slowdown in consumption trends through targeted and decisive strategies, while continuing to drive growth in artisanal breads. At the same time, we are maintaining our market share across retail goods, brands and rolls, and snacks, reflecting the resilience and competitiveness of our portfolio. Additionally, we are actively broadening our distribution footprint to meet consumers where they shop, leveraging channels of specific price tag architectures to deliver compelling value across the board. On the other hand, in Canada, we saw a good performance where we had shared gains in bread, sweet baked goods, and snacks. Despite lower commodity costs and productivity gains, our adjusted EBITDA margin contracted by 130 basis points. This was primarily due to the stock line performance and the continued strategic investment in the transformation project aim at optimizing our go-to-market capabilities in the long term and increasing saturation with improved execution to enable growth as we serve more effectively our customers and consumers. Moving forward, we will remain focused on proactively seeking opportunities to improve productivity, expand distribution, and grow market share by connecting with consumers at every shopping opportunity. Moving on to Latin America. Excluding effect-to-effect, net sales increased 5.2%, mainly because of strong trends across the region, highlighting double-digit rates in Brazil and the Latin Sur division, as well as solid growth in the Central America region. Argentina continues to deliver strong sales growth. And Chile and Colombia confirmed the change in trend seen in the back half of 2024, due to our ability to quickly implement an effective revenue growth management strategy. As a result, adjusted EBITDA margin expanded 50 basis points. The acquisitions of Panific and La Farcereña also contributed to the inorganic growth of the region. Please be advised that we're still waiting for the authorization of the acquisition of Wikibold in Brazil, which we expect in the second half of the year. In Europe, Asia, and Africa, excluding effect-to-effect, sales increased 4.5%. This was mainly due to growth in Romania, Bibo QSR, the UK, India, and Morocco, and the inorganic contribution from the acquisitions we completed in the last 12 months, including Pei Brutari in Romania and Morandor in Tunisia. The adjusted EBITDA margin of 17.2%, remain unchanged from Q1 2024, supported by strong sales performance and lower cost of sales. However, these positive effects were mostly upset by the impact of the minimum wage increases and the phase-out of wage subsidies in Romania and weaker results in our branded business in China. In this region, we are also pending the acquisition of Dongdong in the Balkans, which we expect to complete in the next month. Earlier today, we closed the acquisition of Caramulegos Bakery in Romania, one of the country's leading baking brands in the retail channel, which enhances our presence and enables us to further grow in this category. With this, I would now like to turn over the call to Diego, who will walk you through our financials. Adelante, Diego. Thank you, Rafa. Good afternoon, everyone, and thank you for joining us today. After 15 years of dedicated service at Grupo Bimbo and six years in the investor relations team, Aulina Larrea will be leaving the company. We are deeply grateful for her valuable contributions and unwavering commitment throughout her time with us. We wish Aul all the best in her future endeavors. Now, moving into our quarterly results. We saw notable performance across three regions this quarter, with net sales reaching historic levels for our first quarter. This success was driven by our focus on innovation, productivity, and engaging both customers and consumers throughout most regions. As anticipated and shared during our last earnings call, our EBITDA margin contracted due to the challenging environment in North America and the continued strategic investments we're making to transform the business. As we navigate through this volatile year, we remain confident in our ability to deliver value to our shareholders in the long term. I would like to dive deeper into our illegal margin. Regarding the same exchange rate weighted by region, during the devaluation of the Mexican pesos, and considering that Mexico is our most profitable region, this has a negative impact in our regional mix, resulting in a consolidated margin delusion from this dividend mix effect of approximately 40 basis points. As for our capital allocation strategy, we executed approximately $260 million in capital during the quarter, which is 20% lower versus the first quarter of 2024. We generated almost 1 billion pesos in working capital. This improvement is related to our continuous implementation of projects to optimize working capital in all our geographies. Our total debt closed at 161 billion pesos. This 10 billion pesos increase when compared to 24 was because of the two French-Mexican bonds we issued early in the year for 15 billion pesos. And we reported the same net debt to adjusted EBITDA ratio as we did at the end of 2024 of 2.95. Reflecting our disciplined approach to financial management, we remain focused on navigating macroeconomic challenges with prudence. Despite external pressures, we have as a priority the operational efficiency, the cost discipline, and the strategic resources allocation to project margins and drive long-term value. Our strong financial foundation positions us to adopt to changing market conditions. while continuing to invest in growth. We also maintain a solid liquidity position, supported by our fully available, almost $2 billion committed revolving credit facility. As discussed during our last hearing call, we expect the first half of the year to remain challenging. driven by continued investments in our North America transformation project and persistent pressure on the region consumer environment. It's important to note that the bulk of these investments began in the third quarter of 2024, creating a difficult year-over-year comparison for this semester. And we are already seeing a sequential improvement as we expected of 150 basis points when compared to the fourth quarter of 2024. We do anticipate a gradual improvement in the second half as we begin to realize early benefits from the transformation project, so we feel confident that we will be able to deliver an area of growth in the second half of the year. we are revising our full-year guidance. We now anticipate a stronger peso of 20 pesos and 50 cents versus the 21 pesos previously expected. These 50 cents adjustments represent two percentage points of growth on a yearly basis for Grupo Dino. And second, we also expect a softer than anticipated consumption environment in North America. As a result, we're making corresponding adjustments to our outlook for the year. For sales, we now expect a high single-digit growth rate from the previous low double-digit growth rate. And for our adjusted EBITDA, we expect it to grow at a mid-single-digit rate. Consequently, we are expecting a slight margin contraction as compared to last year. While this is safe enough to be a challenging year with many moving parts and ongoing uncertainty in the macroeconomic environment of key markets, we remain confident in our long-term strategy. As a highly diversified global company and a leader in our industry, we are well positioned to navigate these headwinds. We are committed to continue to invest in our business, driving growth and creating sustainable value for our stakeholders. We can now proceed with the Q&A session, so please go ahead.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster.