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

Good day and welcome to the group of Bimbo second quarter 2026 results and conference call. All participants will be in 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 would now like to turn the conference over to Alejandro Rodríguez Bas, CEO of Grupo Bimbo. Please go ahead.

Good afternoon, everyone, and thank you for joining us today.

With me on the call are our Chief Financial Officer, Diego Gaxiola, and the President of Bimbo USA, Greg Koehrsen, together with several members of our finance team. Before turning into the numbers, I would like to express our deepest solidarity with the people of Venezuela and all those affected by the recent earthquakes, including members of our Bimbo family. Our hearts go to everyone affected by this tragedy. To our alliance with Save the Children, we are helping channel humanitarian aid to the affected communities and we have launched a campaign We encourage anyone who wishes to contribute to do so through this initiative. Grupo Bimbo will match contributions up to $1 million to help extend the reach of this support. To all our friends and colleagues in Venezuela, we stand with you and we will continue supporting you through the recovery process. I also want to extend my heartfelt appreciation to our more than 152,000 associates across the globe. Their dedication, their passion for our brands, and their day-to-day commitment serving consumers are what continue to power the growth of this company. These results belong to them. Now, turning into the results, we carried our momentum forward this quarter, delivering solid net sales growth on a current neutral basis and further expansion of our adjusted EBDA margin reaching 14.4%. What is most exciting is the quality of this growth. Even against demanding backdrop in some of our markets, both price mix and volumes moved in the right direction. Growth and margin expansion were led by our two largest markets, North America and Mexico, with EAA also delivering strong contribution. North America continued to build on its own recovery, posting a second consecutive quarter This sustained return to year-over-year growth confirms that the region is improving even as consumers remain under pressure, supported by a strong revenue growth, management strategy, and sharper execution. Perhaps the most encouraging data point this quarter is that we have gained market share across every category in the U.S. This is particularly noteworthy, given that several industry categories continue to face volume pressure. The fact that we're gaining share across all categories, and in most cases growing sales, highlights the effectiveness of our commercial execution, innovation pipeline, and revenue growth management strategy. Combined with a double-digit EBDA margin and another quarter of margin expansion, These results clearly demonstrate that our transformation initiatives are delivering tangible and sustainable benefits and are resonating with consumers. Mexico delivered another standout quarter, showing that we can keep growing profitably even as consumers tighten their spending. The momentum was broad-based across nearly every category and channel. Underpinned by the best-in-class service levels, discipline execution, and the enduring power of our brands. Results in both North America and Mexico were in part supported by incremental consumption associated with the World Cup. EAA continued to shine. Growth was broad-based across the region, with nearly every organization growing local currency despite a top comparison base complemented by the contribution of the Dondon and Bonell acquisitions. It is worth noting that this will be the last quarter in which Dondon generates an inorganic effect on our numbers, as we acquired in May of 2025. Latin America delivered mixed results. Net sales grew in local currencies, and profitability held up well across nearly every country. The one exemption was Brazil, which, as we anticipated, is still reflecting the effect of the Wikibold integration process. The related efficiencies will take time to fully materialize. Looking ahead, we remain mindful of the volatility and uncertainty in the global environment, including ongoing geopolitical tensions. That said, we have strong conviction in the resilience of our businesses. In the strength of our people and in the effectiveness of our strategy, we are well positioned to navigate this environment and to continue delivering strong, consistent and sustainable results for our shareholders. With that, let me turn the call over to Diego, who will walk you through the financial details. Diego, over to you.

Thank you, Alejandro, and good afternoon to everyone. We appreciate you taking the time to join us today. This was, without a doubt, an exceptional second quarter. A strong validation of how well we are executing our strategy across the company. The strength of our business model, the operating efficiencies embedded in many of our operations, and the breadth of our geographic and category diversification. We are especially pleased with these results Given the complexity of the operating environment in several regions and the ongoing geopolitical headwinds, despite the backdrop, we deliver strong performance across several key financial metrics, propelled by healthy organic growth in local currencies, strong operating execution, and continued margin expansion. Stripping out the FX translation effect, net sales grew 4.5%, marking our strongest second quarter performance since the second quarter of 2023. The adjusted dividend margin reached 14.4%, reflecting solid execution, the productivity benefits of our long-term strategic investments, including the North American Transformation Project, Continuous Supply Chain Efficiencies, and a Discipline GMA Expenses Management. One of the highlights of the first quarter was our free cash flow generation. Strong ERIDA performance, together with improvements in working capital, allows to generate approximately 12 billion pesos of free cash flows. Even after investing approximately 7 billion pesos in capex. This strong cash generation also allows us to deliver the company at the same time that we return more than 5 billion pesos to shareholders through dividends and share buybacks. Finally, we're raising our full-year guidance. Even though we're expecting a higher inflationary environment impact for the year, as a result of the ongoing geopolitical developments, our business has performed better than what we expected. The strong results delivered during the second quarter, together with the continued benefits from our transformation and productivity initiatives, and the strong operating execution across the organization give us more confidence in our ability to generate additional efficiencies during the remainder of the year. Therefore, we are raising our EBITDA margin expansion guidance to the range of 70 to 120 basis points for 2026. And we continue to expect net sales, excluding the FX, to grow at a mid-single-digit rate, which translates into a flat to a low single-digit decline in Mexican pesos. On CapEx, while we remain fully committed to our long-term strategic priorities, we are refining our full-year outlook Based on the facing of certain investments in line with evolving volume trends and market conditions, we now expect CAPEX to be in the range of $1 to $1.2 billion for the year, compared to our previous guidance of $1.2 to $1.4 billion. While we're not providing guidance for 2027 at this stage, let me share a few thoughts on the environment we are currently seeing. We do expect the inflationary environment to remain challenging. We have seen upward pressure across several key inputs, including wind, resins, and energy. And current market conditions suggest that some of these pressures could persist into next year. That said, we believe we are well positioned to navigate this environment.

Our productivity pipeline remains strong, supported by automation initiatives, supply chain efficiencies, and disciplined cost management.

Combined with our revenue growth management capabilities and the continued growth of the business, we expect these actions to help mitigate the inflationary pressures of the site. Thank you. And with that, let's move on into the Q&A. So, operator, please go ahead.

Thank you. We will now begin the question and answer session. If you ask a question, you may press star then 1 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 2. The first question comes from Ben Purer with Barclays. Please go ahead.

Good afternoon, Alejandro, Diego, Greg. Thanks for taking my question. Just a quick one following up and maybe that one's for Greg. Looking into the U.S. business, which kind of like kept a relatively good momentum, so I wanted to understand, similar to what you provided a quarter ago, Yeah, absolutely. Thanks, Ben, for the question. Appreciate it.

We were very happy with our performance during the second quarter. As Alejandro and Diego mentioned, we were share positive in all the categories in which we played. And what I would say is that the foundation for that was our continued improved commercial execution, both in terms of how we go to market with our DSD system, and then also how we have remained disciplined around pricing and promotion activities. So we feel like we have really established ourselves well in the second quarter and carry momentum going forward. You also asked about private label. Private label we see is not just a threat. It's actually an opportunity. We value the offerings within our branded portfolio but we're also a producer of private label as well and we use it strategically with some of our key customers. So we continue to see positive momentum in both our branded business and also our private label business.

Okay, perfect. And then, Diego, just if you could clarify real quick, I remember first quarter when you gave the EBITDA margin guidance, initially it was 60 to 110, but it included like that 20 basis point headwind from the Iran conflict. Is it fair to assume that the now increase of margin by 10 basis points is just because of less of an impact from Iran, or is there something else that helps you offsetting What's the 20 basis points that you've mentioned about three months ago as a headwind? How should we think about it? What's driving the increase here?

Yes, very good question, Ben. Yeah, in fact, I mean, at the end of the first quarter, we did anticipate like a $50 million impact in inflation for the remaining nine months of 2026. As the conflict has continued and we have seen additional inflation than what at that time we were expecting, we now have a higher impact. It's more in the range of $70 to $90 million for the year. Of course, this is including what we already faced during the second quarter. So this basically translates to something around So if we were to exclude this additional inflationary impact, our guidance would have been even more positive. So I don't know if I was clear then.

Yes, that basically would have been 30 basis points if it would have been unchanged, but now it's only 10, correct? Yeah. Have to think about it. Give or take.

Yes. Okay. Super cute. Thank you very much, Diego, and congrats.

The next question comes from Renata Cabral with Citigroup. Please go ahead.

Hi, everyone. Thank you so much for the space for questions here. My question will be towards the Mexican operations and we saw volumes growing and there's some nations about the World Cup. So I'd like to understand if you can give some color on how much the World Cup helped here. On the same line, if you can give some color on if you see any signs of consumer improvement in the quarter and related to the margin in Mexico, if those levels you think are sustainable.

Thank you so much. Thank you, Renata, for the question.

So let me divide it into pieces. So, it's really been our ability to service and Brie Crescent this summer. Now, the Mexican consumer. I think we have a resilient consumer environment in Mexico. Demand for our categories remains healthy and this summer have proven to be for the third time in consecutive quarters in a new single-digit sales growth and we have benefited from a favorable season So, what we see ahead is the ability to sustain this momentum. Now, the reality is our strategic initiatives are working, and despite that in some spaces there is softness, we continue to enhance our value proposition, we continue to capture seasonal opportunities, By being there at the moment of consumption, we're investing in driving engagement, reminding consumers that we're ready to serve, and finally, strongly executing at the point of sale. And that has helped us to reach a record dividend margin.

Hi, this is Diego. As regarding the commodities and also in terms of what we think on the sustainability of our margins in our operations in Mexico, in terms of commodities, as of the end of the second quarter, we haven't really seen still the impact that started to happen because of the conflict, generally speaking. Why? Because, as you know, we have a hedging strategy that provides Daniel Javier Servitje So, I think we will have some impact and some headwinds regarding inflation for 2027. Early to tell on more details, but as I said, we feel confident that we're going to be able to continue to generate efficiencies and productivity initiatives and continue with the transformation in the U.S. That will help us offset the potential impact that we're foreseeing In terms of Mexico being able to sustain the margin, I would say yes, and not only that, I mean, in fact, we're targeting with a long-term view to continue to have improvements in the margin of Mexico. Now, as of the end of June, on an accumulated basis, we have a hundred basis of incremental margin, which is Very positive. We have had a very good operating performance. We had the positive effect of the World Cup that contributed a little bit to the margin expansion in the second quarter. And also remember that in the first quarter we had the positive extraordinary income of selling the minority participation that we used to have in La Moderna. And this created an extraordinary positive effect. But even excluding these effects, we're seeing a good year, a strong performance, and we do not have a reason not to believe that we're going to be able to continue seeing improvements in our profitability in Mexico and, of course, in the other operations as well.

That was really helpful. Thank you so much for the call, and congrats on the results. The next question comes from Lucas Mussi with Morgan Stanley. Please go ahead.

Hi, everyone. Thanks for taking my question. Congrats on the results. Two quick questions. First one in the U.S. Maybe if you could share a bit more color on how much do you see your innovation pipeline, your lines the U.S. can use, maybe So a bit more color on innovation as it pertains to your top line growth, if you could share a bit. And then my second question to maybe to Diego is, We have seen that your eliminations EBITDA or your other EBITDA is slightly negative this quarter. It has been mostly positive for the last couple of years. So I don't know if it was an accounting issue or an accounting one-off, but if you could share some thoughts there just for us to understand a little bit better how to think about your eliminations or your others line going forward.

Thank you very much, gentlemen.

Absolutely. This is Greg.

Thanks for the question. As it relates to innovation, and specifically, I think your question was around health and wellness, we've been pretty pleased with the results of our innovation in the health and wellness space. Two things I think we've talked about in the past, but just to highlight them again, are Thomas's high-protein bagels and our Sara Lee half-loaves continue to Outperform our expectations that we've had, so it's given us an opportunity to really lean into consumer spaces that value, let's say, health and wellness and premium. I would say, too, you know, in addition to that, and just to go back to some of the things that we talked about earlier, is we're present in 83% of U.S. households. So we participate in a premium or health and wellness portion of the market. We participate in mainstream and we participate in a more value segment of the marketplace. And because of that, we have offerings that we can make to every consumer cohort within the United States, which we're very happy about. And so because of that... Our offerings of innovation, not only along health and wellness, but even around indulgence, have been performing in a way that we've met our expectations and even exceeded our expectations. And just to underline a little bit, the execution gains and improvement that we've made in our operation are really impacting The full breadth of our portfolio in the health and wellness and premium segment and also in mainstream and value. And I'll turn over to Diego for the second question.

So, Lucas, regarding the eliminations, I'm going to be completely honest. I'm not here. I do not have the color. But I will make sure that the IR team gets back to you and gives you a little bit more on the Potential accounting effects that we have during the quarter. I'm really sure that it's something unique for the quarter that would not necessarily prevail for the coming periods.

I appreciate it, Diego. Thank you very much, gentlemen.

The next question comes from Alejandro Fuchs with Itaú. Please go ahead.

Thank you, Operator. Hola, Alejandro, Diego.

Thank you for the space for questions and congratulations on the results. I just have one very quick one in terms of capital allocation, maybe for Diego. Now with the new guidance expected for CapEx and the very strong cash flow generation this year, what would be some of the priorities to allocate this better free cash flow generation? And if you could maybe elaborate a little bit which of the projects on the CAPEX side are you maybe pushing forward or why the lower CAPEX? Thank you.

Yes. Hi, Alejandro. Well, I mean, definitely cash generation has been better than what we expected, as I already mentioned, because of the operating performance and also some CapEx projects that are running behind schedule and it has been a little bit harder to execute the program. But I will say that the capital allocation of the company is not changing. I mean, we have had and we will continue to have the number one priority to put money back into the business. It's been the case, even though it's behind of what we thought it's almost $400 million dollars. In the first half, and as I said, we're expecting something between a billion to $1.2 billion. So it's going to be the highest use of our cash generation for the CapEx. And of course, this includes the three pockets. It's maintenance, growth, and productivity. So dividends, buybacks will continue to be More or less to the same extent, we already paid the dividend of 2026, so we do not see anything additional or extraordinary.

Super, Hugo. Gracias, Diego. You're welcome.

The next question comes from Antonio Hernandez with Santander. Please go ahead.

Luis Antonio Hernández from Aguimber.

Well, my congrats on your results, very, very solid. Just a quick one regarding food service. I mean, it wasn't mentioned this time, and I guess it's heading right now, but do you expect any recovery in the short to medium term, and maybe to contribute results as well?

Thanks.

We did mention

A little bit about it, Antonio.

In North America, we continue to reflect value-driven consumer behavior. And we're working hard to excel in this geography. In Europe and Asia, we have a healthy growth. Asia demands are strong and they remain strong. So we're growing. In the case of Brazil, we continue to perform well. And in overall, the QSR channel remains very, very healthy.

And, Jerry, let me probably compliment you a little bit, Alex. Regarding North America, I would say that even though it hasn't been the best couple of quarters, we're seeing this also as an opportunity to attack some other customers as the ones that we were serving have been closing some units. So, I think we're going to be able to capitalize and materialize this opportunity for 2027.

Perfect. Thanks a lot.

The next question comes from . Please go ahead.

Hi, Alejandro, Diego, Greg. Hope you're doing well. Thanks for the special questions. I have a question on the U.S., which I think could be extended to most of your geographies, but the questions on pricing, you know, we've been on this sort of multi-year battle to get sort of volume share back on the right track. It's been a difficult pricing environment. It's been very promotional. You had very clear commentary on having gained share this quarter across all categories. I was wondering, you know, given your comments on sort of Thank you. Yeah, absolutely. I mean, as you know, Alvaro, we don't provide specific guidance as it relates to pricing. But what I can share is that we've been pretty disciplined over the last year plus in terms of pricing.

on the pricing actions that we've taken and the promotional actions that we've taken and I think the team's let's say improvement and commitment to that has we've we've reaped benefits from that we're going to continue to do the same thing going forward and again this really is different by subcategory and sub-segment so we're going to think about this differently In, let's say, a premium in health and wellness environment where consumers are asking for certain things and potentially differently in a value proposition environment. So I know that doesn't fully answer your question, but I would say that we're looking at it very carefully across all subsegments to make sure that we have the right pricing and promotional actions across all of those segments.

But, Álvaro, we need to focus in another P, which is the one we can control internally, and that is productivity. We believe that consumers are facing challenging times around the world, and we need to be able to compensate within.

Great. Thank you very much. Appreciate it.

The next question comes from Diego Serrano with HSBC. Please go ahead.

Hi, everyone. Thanks for taking my question.

I just wanted to ask about Rafael and Wigvold. So you mentioned that the benefits will still take some time to materialize. So, with that in mind, could you talk about what's left to do there, what these efficiencies are, and when are you expecting them? And then maybe comment about the long term, maybe on how meaningful do you think this Brazil business can become for the group?

Thank you.

Let me start from the end. It's becoming very meaningful within the region, the LATAM region. Now, as much as we have identified several key initiatives, both in operation and commercial improvements, and we continue to keep a diversified, separated portfolio, we've decided to better understand the in and outs of Wikibold. So, rather than Materializing really fast, we believe that it's going to gradually be done over the coming quarters. It's a big company. We need to find good synergies, and it's going to take longer, but we'd rather do it slowly than at an accelerated pace that could put us in trouble.

Great, thank you.

The next question comes from Regina Carrillo with GBM.

Please go ahead. Hi, good afternoon, and congratulations on the results. I just wanted to ask you, in the lower capex, does this raise your expectations for more precarious regeneration for the year, and maybe where do you see the leverage

Evolving towards the end of the year.

Yes.

Well, definitely we now strive to generate more cash than what we commented on the previous call because of two things. One, we're more or less living the same expectation on the top line, but we are increasing, as I said, the margin, and this will translate into a higher EBITDA. At the same time, we're lowering a little bit, probably $100 to $150 million, the guidance on the CAPEX, and that, of course, will also translate into additional cash flow. And part of this is already reflected on what we have seen during the first half, and that is why we are now 2.5 times net debt to EBITDA. Remember that we were at 2.7 at the end of 2025. We were at 2.9 a year ago. So the leverage of Grupo Bimbo has been fast, and it has been driven mainly by our operational results. We have continued to have as a priority the CAPEX, and as you also know, we have continued to do some acquisitions. Now, during the first half of the year's acquisitions, We do expect and we hope to be able to close some Bolton acquisitions during the second half It's hard to tell how many of the projects we're going to be able to conclude during this specific time period But again, we have a strong pipeline of Bolton acquisitions that make a lot of sense and have a very relevant strategic edge for the different operations of the company. Now, if we were to assume that we do not close any acquisitions, we will continue to see a deleverage. And I think you can do the math and the conclusion is Quite obvious, no? Both because of the cash generation, but also because of the growth of the EBDA.

Perfect. Thank you so much. The next question comes from Florian Mendez with JP Morgan. Please go ahead.

Thank you very much for taking my question. I have two, one on the U.S. Firstly, you're now back to positive sales growth, and you mentioned gain shares. Could you help us to understand what actually changed on the ground to drive this turnaround? Has to do with your pricing strategy, maybe the new distribution channels, or simply a category that is gain share against others? And a similar question, but in Mexico. We are seeing, let's say, a very weak consumer backdrop. You see the results from the retailers, big deceleration, but Bimbo seems to be a quite strong exception in that trend. What do you think explains that decoupling from the rest of the industry performance? And in that sense, Who do you think is funding more of the promotional activity today between suppliers or CPGs versus the retailers? So, three questions, in fact. Thank you so much.

Absolutely, thanks. I'll take the first question as it relates to the U.S. Yeah, fundamentally, and I think we, I mentioned this a couple of times, but the main driver, I would say, of our Improved share performance has been our commercial execution. And that impacts all of the categories in which we play. So it's really a credit to the team in terms of how we've done that. I would add to that, you know, we continue to be very disciplined around our pricing and promotion activities. And we believe that these are things that we can continue going forward. So we're excited about the momentum that we've built.

Now, in the case of Mexico, we remain focused on delivering the right value proposition through a balanced price pack architecture and well-targeted product mix. And we continue to leverage our innovation, but especially our best-class execution at the point of sale. And the reality is we continue to expand our distribution network of all our SKUs, and we're working really hard internally to develop a better, more precise sales and operation planning and sales and operation execution. So I think the result has been breathing in this difficult consumer environment for being there at the moment of truth, servicing our clients and expecting the response that has been positive from our customers and consumers. Now, you ask me, Who's spending more money? Is it the retailers or the manufacturers? Honestly, I don't have the answer. I haven't seen it. I know there's been softness, but at the same time there's a lot of opportunities, and that's where we're focused. We're focused in servicing better, in having things on time, and have the right assortment at the right place.

And what about the channel performance between the formal, informal, maybe the convenience? Can you give some color on how has that channel performed differently in Mexico so far?

Yep, in our case, all channels delivered growth. Now, coupled with the effect of the summer and with the enhancement of the World Cup, Convenience became stronger in this period, but everywhere we've seen this same growth. So we're trying to find our space everywhere. And I think for us, that's the name of the game, to be focused on what we do best, which is service.

Thank you so much.

This concludes the question and answer session.

I would like to turn the conference back over to management for any closing remarks. Please go ahead.

Thank you all for joining us today. Please feel free to reach out to our investor relations team with any additional questions or comments you may have, and we wish you a happy rest of your summer.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.