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

Good afternoon everyone and welcome to Groupo Bimbo's third quarter 2026 results conference call. Before we begin we kindly ask all participants to update their Zoom display name to include their name and the organisation they represent as this will help facilitate the Q&A session later. We will be using automated subtitles during today's presentation. You can turn this feature on or off through your Zoom settings. If you would like to ask a question during today's call please use the raise hand feature When invited to speak, please unmute your microphone, identify yourself and your organization, and then proceed with your question. 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 the presentation, 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. or 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'll now turn the call over to Mr. Alejandro Rodríguez Bas, Chief Executive Officer of Grupo Bimbo. Please go ahead, sir.

Good afternoon, everyone, and thank you for joining us today. With me today are our chief financial officer Diego Gaxiola and the president of Bimbo USA, Greg Koehrsen, along with members of our finance team. Before we begin, I want to recognize our more than 152,000 associates around the world. Their commitment to serving our consumers and customers every day is what drives our performance, and I want to thank them for another strong quarter. The third quarter demonstrated the strength and resilience of our business. Excluding foreign exchange, net sales increased 3.6% supported by price mix, positive volume and, to a lesser extent, recent acquisitions. Importantly, that growth translated into stronger profitability, adjusted EBIT EBITDA margin reached 15.7%, an expansion of 100 basis points, while net margin increased 80 basis points to 3.9%. We delivered these results despite a consumer environment that remains challenging in several markets. Inflation continues to pressure household budgets, but our performance reinforces what we have long believed. Bakery and snacking are resilient. Everyday categories and our scale, brands, geographic diversification, and execution capabilities are powerful competitive advantages. Our focus is not simply on growing. It's on growing profitably, consistently, and sustainably. Let me turn to our regions. In North America, the recovery continues to gain momentum. Net sales grew in U.S. dollars for a third consecutive quarter, providing further evidence that our transformation is delivering results. Volumes remain soft as consumers continue to manage their spending carefully. At the same time, our sales trajectory is clearly improving, supported by stronger revenue growth management and a better marketplace execution. We're also seeing progress where it matters most. We gained share in four of our six categories and margins improved for a fifth consecutive quarter. Our productivity agenda continues to deliver across the value chain. We're reducing waste, improving recipes and packaging. Operating our plants more efficiently, optimizing our manufacturing footprint and routes, strengthening, sourcing and simplifying the organization. The important point is that these improvements are structural, not temporary. We're building a more competitive, efficient and agile North America business. We are encouraged by the progress, but we are not declaring victory. The transformation will not be completed until North America returns to sustained profitable volume growth. That remains our objective. Mexico delivered another outstanding quarter. The business continued to grow profitably while strengthening consumer preference with contributions across categories and channels. Adjusted EBITDA margin expanded 200 basis points to 22.4%, driven primarily by a strong top-line performance and a lower cost of sales, supported by a stronger exchange rate and lower waste. EAA also delivered an excellent quarter. Almost every business in the region grew in local currency despite a demanding comparison base. While adjusted EBITDA, margin expanded 110 basis points to 12.3%. So, particularly strong performance across Bimbo QSR, India, the Balkans and the UK. Complemented by a small contribution from our recent acquisition Bonel in Tunisia. Latin America was more mixed. Most of our markets continued to show healthy sales momentum while profitability was affected primarily by Brazil. Brazil remains our priority. We're taking targeted actions to strengthen commercial execution and advance the integration of Wikibold and we expect those efforts to increasingly contribute to performance. As a reminder, beginning next quarter, Wikibold will no longer be included in our inorganic growth contribution following its acquisition in October 2025. Let me close with how we see the business going forward. We remain confident, but we're also clear about what comes next. Our priority is to build volume momentum while continuing to protect and expand profitability. As we move forward in 2027, we remain mindful of a more inflationary environment. But we enter it with significant strengths, a diversified geographic and category portfolio, Leading brands, a strong innovation agenda, a meaningful productivity pipeline, and above all, exceptional people. Those advantages give me the confidence in our ability to navigate what comes next and continue delivering profitable, sustainable growth over the long term. With that, let me turn the call over to Diego to take you through the financial results in greater detail.

Thank you Alejandro and good afternoon to everyone. We appreciate you taking the time to join us today. This quarter represents one of the clearest demonstrations of the strength of our business model in recent years. We deliver broad-based growth across geographies, continued margin expansion, strong cash generation, and further deleveraging, all while continuing to invest behind our brands, operations, and long-term growth agenda. Throughout the year, we have consistently delivered growth Through both volume and price mix, demonstrating not only the resilience of consumer demand for our brands, but also our ability to capture growth while maintaining pricing discipline. We believe this combination is the strongest indicator of the quality and sustainability of our growth profile. We reached a record EBITDA margin at 15.7%, a 100 basis point expansion versus last year, which is the largest third quarter improvement we have seen in more than a decade. This also marks our fifth consecutive quarter with EBITDA margins above 14%, providing further evidence that the improvements we have made across our network, manufacturing footprint, revenue management capabilities, and operational execution are becoming embedded in the business. One of the standout highlights of the first nine months of the year was our free cash flow generation. The strong EBITDA performance, together with improvements in working capital, allows to generate approximately 17 billion pesos of free cash flow, even after investing approximately 12 billion pesos in CAPEX. This strong cash generation also allows us to further deleverage the company, bringing net debt to EBITDA down to 2.4 times, even after returning 6 billion pesos to our shareholders. Moving on to our guidance, it's worth taking a step back for a moment. We started the year expecting slight EBITDA margin expansion. and as our results came in consistently ahead of our expectations, we have raised our guidance quarter after quarter throughout the year. Today, we are raising our guidance once again, marking the third upward revision this year and reflecting both the strength of our year-to-date performance and our increasing confidence in the trajectory of our business. So we're raising the lower end of our full year adjusted dividend margin guidance from 70 to 85 basis points, resulting in a new range of 85 to 120 basis points of expansion as compared to 2025. On the top line, we continue to expect net sales, excluding FX, to grow at a mid-single digit rate, which translates into flat to a low single digit decline in pesos. Looking ahead to 2027, we see a number of encouraging drivers across the portfolio. We expect continued benefits from the transformation initiatives underway in North America, sustained profitable growth in Mexico, improving performance across Latin America, and a continued momentum in EAA. At the same time, the investments we have made in capacity, distribution, automation, and digital capabilities over the last several years position us well to support future growth while enhancing productivity. As every year, we will provide formal guidance on our fourth quarter conference call. On CAPEX, for 2026, our guidance remains in the range of $1 to $1.2 billion. As we mentioned on prior calls, we made the decision to push certain projects into 2027. And as a result, we now expect CAPEX next year to come in somewhat above the level we will see in 2026. As we look to the future, we remain focused on the same priorities that have served us well, driving profitable growth, expanding margins, generating strong cash flow, and creating long-term value for our shareholders. We appreciate your continued interest in Grupo Bimbo and look forward to updating you on our progress in the coming quarters. Thank you for your time. Operator, please open the line for questions.