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

Good afternoon, everyone, and welcome to Grupo Bimbo's fourth quarter and full year 2025 results conference call. If you need a copy of the press release issued earlier today, it is available on the company's website at grupobimbo.com. Before we begin, I would like to remind you that this call is being recorded and that the information discussed today may include forward-looking statements regarding the company's financial and operating performance. All projections are subject to risks and uncertainties, and actual results may differ materially. Please refer to the detailed note in the company's press release regarding forward-looking statements. I will now turn the call over to Mr. Alejandro Rodriguez, Chief Executive Officer of Grupo Bimbo. Please go ahead, sir.

Good afternoon, everyone, and thank you for joining us today. Connected on the line today are CFO Diego Garciola, BDU President Greg Kersen, along with several members of our finance team. I'm very excited and deeply honored by the opportunity and the trust placed to lead this extraordinary company as CEO. I would like to extend my sincere gratitude to Rafa Pamias for his leadership and dedication to Grupo Bimbo. Under his guidance, the company strengthened its strategic positioning and operational discipline, always driven by a long-term vision. My commitment? is to build on this trajectory and continue positioning Grupo Bimbo as a beloved company in households around the world by driving growth through our powerful brands and expanding our global presence. Together with the leadership team, we will maintain a constant focus on our associates, customers, and consumers while preserving and strengthening our culture and philosophy of building a sustainable, highly productive, and deeply humane company. Before we move forward, I would like to recognize the recent retirement of Tony Gavin and Mark Bendix in the near future. Tony served as president of Bimbo Bakeries USA, completing an extraordinary 42-year career with the group. And Mark will be concluding more than 12 years in the company, serving most recently as executive vice president of Grupo Bimbo. were deeply grateful for their leadership, commitment, and lasting contributions to Grupo Bimbo. As part of a planned leadership transition, Greg Kersen was appointed president of Bimbo Bakeries USA and joined our steering committee in January 2026. Greg brings more than a decade of leadership experience with Grupo Bimbo. He has held several senior positions across the organization, most recently leading BBU's transformation journey. We're pleased to have Greg leading the continued evolution of BDU. He will join us on all future conference calls and will be available to address questions regarding the North America business. Now turning into the year in 2025. We proudly celebrate our eighth year anniversary. Over at least eight decades, We have grown from a small bakery in Mexico into the world's largest baking company and a relevant player in snacks with a global footprint and deeply humane culture that continues to define who we are. As part of this milestone, we inaugurated Mi Bimbo in Mexico City, an interactive museum that honors our journey and brings our story closer to the community. we warmly invite everyone to visit. Celebrating our history also reinforces our commitment to innovation, long-term value creation, and to nourishing a better world over the next 80 years. In 2025, we advance these commitments through discipline and execution, and deliberate actions. Despite the complex global environment marked by microeconomic volatility, inflationary pressures, and shifting consumer behaviors, our performance demonstrated underlying strength and resilience of our business model. We delivered record financial results and market share gains across multiple categories supported by continued investment in our brands, expanded distribution, and a robust innovation pipeline. We also achieved solid profitability gains driven by discipline, operational performance across regions. Further supported by productivity gains in North America, where we're capturing the early benefits of the transformation initiatives launched in 2024, with notable efficiencies across manufacturing, administrative, and logistics operations. As a result, we achieved margin expansion for the full year. All while continuing to execute with discipline our strategic bolt-on acquisitions in attractive, high-growth markets, including Eastern Europe. These actions strengthened our global footprint, expanding our presence to 93 countries. enhanced our capabilities, and improved our ability to serve evolving consumer needs. Building on this foundation, as consumption habits and locations continue to diversify, innovation remains key to our strategy. Our innovation rate now exceeds 12%, reflecting our ability to translate consumer insights into differentiated offerings. By leveraging the strength of our trusted brands together with the prior CapEx investments, operational excellence initiatives, and recent acquisitions, we have reinforced our competitive position to further strengthen our market leadership. This integrated approach provides a strong platform for the long term, sustainable growth, supporting incremental volume gains, enhancing profitability, and creating enduring value across our markets. On our ESG journey, 2025 marked a milestone year in advancing our commitments. Aligned with our purpose of nourishing a better world through our Bake For You initiatives, 98% of our bread, buns, and breakfast portfolio deliver positive nutrition. We remain on track to eliminate all artificial colors by 2026. and continue to strengthen our core portfolio with around 48% of sales meeting or exceeding the 3.5 star benchmark under the health star rating system, demonstrating optimal nutritional quality in every bite. Our environmental agenda, through our beg for nature initiatives, have achieved 100% reuse of treated water versus our 2020 baseline, while exceeding our generative agriculture target with more than 500,000 hectares cultivated under these practices. We also reached 99% recyclable packaging. We continue to progress in renewable energy and fleet electrification with more than 40,000 electric vehicles. Looking ahead, we remain fully focused on advancing our medium and long-term ESG ambitions. While challenges remain, celebrating RUPOS Bimbos 80th anniversary with record results and the ongoing commitment of our people highlights the strength of our operational model and culture with discipline execution at the core of all our efforts. We're well positioned to continue delivering consistent performance, driving profitable growth, enhancing returns, and creating sustainable value in 2026 and beyond. Now, taking a look at the regional results of the fourth quarter. In Mexico, we delivered 4.8 sales growth, reaching an all-time high for a fourth quarter. This solid performance reflects our ability to grow despite a softer consumer environment, delivering positive results across all categories with particularly strong performance in sweet baked goods, cakes and buns, and rolls. Results were also driven by favorable product mix and positive execution across all channels, with convenience standing out, positioning double-digit growth. This positive momentum accelerated towards the end of the quarter, including a record sales week in December, marking the strongest weekly performance in the region's history. This robust top-line growth, combined with the distribution efficiencies, productivity gains, and disciplined cost control, resulted in an adjusted EBITDA, margin expansion of 40 basis points to robust 22%, reflecting the strength and flexibility of our operational model. Looking ahead, we remain encouraged by the resilience of our portfolio and the strength of our commercial execution. Through initiatives focused on prioritizing volume performance and delivering an attractive value proposition across both price and product mix, supported by innovation, we expect to maintain positive momentum. In North America, excluding FX, four-quarter sales declined by 3%, reflecting a still sub-consumption environment. That said, our top-line trends continue sequentially, supported by the actions taken throughout the year to strengthen revenue growth management. In more refined price pack architecture, and bring differentiated innovation to market, or to enhance our value proposition to consumers. We are particularly encouraged by recent innovation launches that address evolving consumer needs, including satellite house loads designed to serve smaller households and more accessible price points, and Thomas protein bagels, which resonate with health-conscious consumers. Our actions in 2025 are reinforcing our confidence that we have and continue to improve a portfolio of attractive, consumer-centric products that positions us well to drive sustainable growth. Our efforts have resulted in market share performance improvements across all branded categories, with positive gains in buns and rolls, mainstream bread, and salty snacks. On profitability, thanks to the record productivity benefits captured throughout our transformation initiatives, we deliver a strong 330 basis points EBITDA margin expansion to 9.2%. This performance demonstrates how our team's discipline and focus are translating into structural improvements, strengthening efficiency and competitiveness across the operation. Looking ahead. While external headwinds remain, the improving momentum across key categories, coupled with the operational strength built throughout the transformation initiatives, position us well to continue progressing and to support a more balanced path toward growth and profitability over time. Moving on to Latin America, excluding effects, Net sales grew 15.4% to a record four-quarter level, driven by positive momentum across every organization as a reflection of a strong focus on execution and effective price mix strategy. Sales results also benefited from the acquisition of WigWall, completed in October 2025. WigWall is a leading bakery player in Brazil. that complements our brand portfolio and expands our presence in key categories, further strengthening our leadership position in the market. This acquisition offers meaningful synergy potential, including commercial opportunities and scale efficiencies that will enhance profitability over time. During the quarter, integration-related expenses led to a contraction of 420 basis points on the EBITDA margins. These investments are focused on capturing future synergies and strengthening the long-term value of the business, while additional integration costs are expected in the coming quarters. They are strategic in nature and aim at unlocking efficiencies and commercial opportunities. As integration advances, we expect margins to progressively improve. Excluding integration expenses, adjusted EBITDA margin for Latin America contracted 180 basis points due to higher raw material costs in Brazil attributable to the FX impact, as well as increased general expenses from strategic investments for future growth, mostly related to improvements in Chile's commercial operating model. across the supply chain, including benefits from the transformation project in North America and past accretive acquisitions. In Europe, Asia, and Africa, excluding effects, sales increased 17.8%, reaching an all-time high. This performance was primarily driven by the consistent strength of BIMBO QSR Romania, UK, and India, which posted double-digit growth rates, coupled with a contribution from the acquisition completing during the year, including Caramolegos in Romania and Dondon in the Balkans. The remarkable adjusted EBITDA margin expansion of 420 basis points resulted from the solid sales performance productivity initiatives, lower administrative and restructuring expenses related to last year's bakery closure in Spain, and the accredit contribution from the past acquisitions. This performance led to a record double-digit margin of 13.8%. With this, I would like now to turn over the call to Diego, who will walk you through our financials. Please, Diego, go ahead.

thank you alejandro good afternoon everyone and thank you for joining us today 2025 demonstrated the value of our diversification discipline execution and long-term view despite a challenging operating environment we not only met our guidance achieving record levels of sales and adjusted pbda but exceeded our profitability outlook driven by a better than expected fourth quarter performance. As a result, adjusted dividend margin expanded by 30 basis points to 13.9%, the second highest annual margin in our history. Across our operations, performance was underpinned by notable strengths. Our EAA region, substantially increased profitability, reaching a record double-digit margin. Significant contributions came from our operations in Mexico, posting sustained growth and an all-time high adjusted EBITDA margin of 20.4%. These achievements helped offset the software consumption environment in North America and short-term headwinds that we face in LATAM. Furthermore, we continue to capture record productivity benefits from the transformation project in North America, driving a margin expansion of 60 basis points to 9% for the year, reinforcing our confidence in the path we have set. Alongside these efforts, enhanced revenue growth management capabilities lower raw material costs, and disciplined strategic investments also helped us surpass our original profitability outlook, despite continued volatility in the global operating environment. From a capital allocation perspective, the $1.2 billion in capex that Alejandro mentioned for 2025 came below both. prior year levels, and our initial guidance of $1.3 to $1.4 billion. Although investments were lower than expected, our capital allocation priorities remained unchanged, centered on productivity, growth initiatives, and long-term value creation. This same approach guided the acquisitions completed during the year. strengthening our platform in attractive markets, and supporting long-term returns. In addition, we also distributed 5.6 billion pesos through dividends and share buybacks. Moving on to the balance sheet, our total debt closed at 154 billion pesos. The increase compared to 2024 reflect the financing for capex and strategic investments, partially offset by the 11% appreciation of the Mexican peso. While we had originally anticipated a gradual deleveraging phase to start in 2026, our strong operating results Our focus on cash flow discipline allows us to start the beginning of this deleverage process in 2025, with our net debt to adjusted EBITDA ratio declining 0.2 times as compared to 2024, closing at 2.7 times. Also, three weeks ago, we issued 12 billion pesos in Mexican bonds in two tranches, four and nine years. It was a success. It attracted a remarkable demand of 19 billion pesos, which underscores the confidence investors have in our strategy, financial profile, and long-term objectives. Now, I would like to provide some visibility of what we are expecting for 2026. First, regarding top line, excluding the effect of the appreciation of the Mexican peso, we anticipate sales to increase in the low to mid single digit range. driven by growth across all regions in local currency, supported by continued investment behind our brands, value-accretive innovation for consumers, and a strong frontline execution. We also foresee a gradual improvement in the consumer environment, particularly in North America. Now, Incorporating our exchange rate assumption, where we are estimating an appreciation of the Mexican peso in 2026 as compared to 2025 of 1 peso and 50 cents, and given that approximately two-thirds of our sales are generated outside of Mexico, this appreciation represents an impact of more than 500 basis points on our expected top line growth. As a result, we expect net sales in peso terms to be flourished. Regarding our adjusted period of margin, we expect a slight margin expansion. Driven primarily by operational leverage, and efficiencies across the supply chain, including benefits from the transformation project in North America and past accretive acquisitions. As for our raw material costs, we expect stability to a slight tailwind throughout the year, as some commodities have experienced decreases. Finally, we expect CapEx investments to range between $1.2 to $1.4 billion, reflecting the carryover from 2025 as we close below the plan. This is just a timing effect as we continue to follow a focused and prudent investment approach centered on returns, efficiency, and strategic growth. As we look to 2026, we do so with confidence, supported by exceptional teams, a resilient business model, and a globally diversified platform that continues to deliver solid results. The progress achieved in 2025 has strengthened this foundation. positioning us to continue advancing on our long-term value creation path. Thank you all for your time. We can now proceed with the Q&A session, so please go ahead. Thank you.