Arca Continental, S.A.B. de C.V.

Good day, everyone, and welcome to the ARCA Continental Second Quarter 2025 Conference Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. You may register to ask questions by pressing the star and 1 on your telephone keypad. You may remove your question by pressing star 2. Please note this will be being recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Melanie Carpenter of IDL Advisors. Please go ahead.

Thank you, operator. Good morning, everyone. Thanks for joining the senior management team of Arca Continental to review the results for the second quarter and first half of 2025. Their earnings release went out this morning and it's available on the company website at arcacontal.com in the investor relations section. It's now my pleasure to introduce our speakers. Joining us from Monterey is the CEO, Mr. Arturo Gutierrez, the CFO, Mr. Emilio Marcos, and the Executive Director of Planning, Jesus Garcia. They're going to be making some forward-looking statements, and we just ask that you refer to the disclaimer and the conditions surrounding those statements in the earnings release for guidance. And with that, I'm going to go ahead and turn the call over to the CEO, Mr. Arturo Gutierrez, who is going to begin the presentation. So please go ahead, Arturo.

Thank you, Melanie. Many thanks to everyone for being with us this morning. We appreciate the opportunity to share an update on our second quarter and first half 2025 results. Let me begin by saying that our strategic initiatives and solid execution have enabled us to deliver a solid financial performance and recover value share, even in the face of a softer consumer sentiment in some of our markets. The first half of the year has brought a particularly complex landscape. The macroeconomic backdrop remains uncertain, shaped by evolving trade dynamics and ongoing cost volatility across key input categories. Nonetheless, our business has remained resilient. We responded swiftly to these challenges, protecting margins, investing in high potential growth platforms and commercial capabilities, strengthening our manufacturing footprint and supply chain, and effectively executing the levers within our control. Moving now to our consolidated results halfway through the year. Total consolidated volume declined 2.7% in the quarter and 2.9% year to date. Despite softer volumes, Total consolidated revenue increased 8% in the quarter, driven by effective pricing strategies and favorable FX effects. Year-to-date, consolidated revenue increased 10.1%. Consolidated EBITDA rose 8.1% in the quarter and 9% year-to-date, with corresponding margins of 20.7% and 19.8% respectively. This strong EBITDA performance was driven by solid contributions from our U.S. operations and further supported by the ongoing recovery and improving momentum across our markets in South America. Remarkably, we have delivered EBITDA growth in every second quarter over the past 15 years. Let me now walk you through a brief overview of our performance across our five markets, beginning with Mexico. During the quarter, unit case volume, not including jug water, declined 4.8% as we cycled three consecutive years of strong growth in the same period. On a year-to-date basis, unit case volume, not including jug water, declined 4.8%. Importantly, the second quarter of last year marked the highest volume performance in any year in Mexico since our merger in 2011, creating a particularly challenging comparison base. Volume performance in the quarter was partially impacted by unseasonably adverse weather conditions. including below-average temperatures and persistent heavy rainfall across most of our territories, which weighed on overall consumer demand. This impact was partially offset by a better performance in still beverage categories, particularly energy drinks, tea, and fruit beverages, driven by continued momentum in the modern trade channel, mainly in supermarkets. Coca-Cola Zero delivered sequential double-digit growth, supported by the successful launch of the new 450-milliliter format and a continued expansion across our territory. Total net sales in Mexico were flat, both in the quarter and year-to-date. Average price per case in the quarter, not including jug water, rose 5.1%. EBITDA declined the quarter by 3% for a margin of 24.6%. On a year-to-date basis, EBITDA decreased 4.3% with a margin of 22.9%. Importantly, this quarter we announced the opening of our largest distribution center in Mexico. Located in Tonala, Jalisco, this new facility will serve over 40,000 customers and significantly enhanced our operational footprint in Guadalajara's metropolitan area. Turning to our various operations in South America, total volume increased by 2.2% in the second quarter, reflecting sequential volume improvement in Peru and Ecuador, along with a strong performance in Argentina. Total revenue for the quarter grew 11.8%, while EBITDA increased 29.2%, with a margin of 17.3%. Year-to-date, revenue was up 18.8%, and EBITDA rose 33%, representing a margin of 18.7%. South America's economic landscape presents a mixed but improving outlook. Collectively, the region is showing renewed momentum, and overall consumption shows signs of recovery, although disparities prevail. In Peru, total volume grew 1.8%, supported by strong growth in still beverages and water categories, up 3.7% and 9.3% respectively. This performance was led by a solid 30.4% expansion in the flavored water segment, with sports and energy drinks also contributing, up 10.5% and 5.1% respectively. Volume recovery continued at a steady pace across channels, with supermarkets leading the way, up 5.9%, driven by our price pack and cross-category strategies, and the momentum from high-impact marketing campaigns like Sheriff Coke and Inca Cola's 90th anniversary. Moving over to Ecuador, the environment remained difficult, with rising security concerns disrupting consumer mobility and weighing on shopping behavior. Nonetheless, we are beginning to see encouraging signs that the economic contraction is starting to ease. In this context, total volume declined 3.1% in the quarter. However, We are seeing early signs of a sequential moderation in the rate of volume decline, supported by our affordability strategy and continued investments in returnable bottles. Coca-Cola Zero stood out with 6% growth, driven by the strong performance of the 1.6 liter PET format. We gained value share in NAR2D beverages, supported by growth in the cola segment. The mix of returnable packages grew by 0.5 percentage points this quarter, a positive step in driving value and maintaining consumer relevance. Our beverage business in Argentina delivered another quarter of sequential volume improvement, up 11.6%. Nearly all categories contributed to this strong performance, reflecting solid consumer demand across our portfolio. Sparkling beverages increased 11.4%, with brand Coca-Cola delivering a solid performance of 13.5% and flavors up 3.4%. Silk beverages grew a strong 32.2%, led by Monster in energy drinks, Aquarius in flavored water, and Addis in the soy-based beverage segment. We achieved value share gains in NARTD beverages, driven by strong performances across channels and our initiatives to promote affordability. This quarter we acquired a second sugar mill in Argentina, expanding production capacity and strengthening our vertical integration in cane sugar. We are pleased with our performance and remain confident that improving economic conditions will support our continued growth in the second half of the year. Moving to our various operations in the United States, Coca-Cola Southwest Varages closed the second quarter with positive forward momentum, delivering sound financial results and a strong operating performance. These outstanding results were driven by our solid points of sale execution, ongoing refinement of our commercial strategies, effective management of our price pack architecture, and disciplined cost controls. Net revenues rose 3.9% in the quarter and 2.2% year-to-date. The average price per case increased 4.5% in the quarter. As a result, we achieved a 2.9% improvement in true rate and a 1.6% uplift in mixed rate. Volume for the quarter declined slightly, 0.6%. However, excluding the change in distribution model of the datanic case facts deployed last year, underlying volume grew 0.2%. This effect will be fully cycled in the next quarter. Key performances, including Coca-Cola Zero, up 8%, and Stills portfolio growing 2%, driven by Monster, Fairlife, and Body Armor. We continue to focus on high-profit per case packages, such as 10-pack SSD minicams, smart water, and vitamin water, which increased 22%, 11%, and 9.3% respectively. Our mix shifted towards single-serve packages, increasing by 0.3 percentage points. Our low-calorie portfolio grew 7.3%, driven by Coke Zero, Diet Coke, and Sprite Zero. EBITDA increased 9.1% in the quarter, representing a margin of 17.8%. Year-to-date EBITDA grew 6.7%, with a margin of 17%. Notably, this was our most profitable second quarter since taking over the U.S. Verich franchise in Texas and Oklahoma, and it also marks the 29th consecutive quarter of EBITDA growth. To wrap up the review of our operations, our Food and Snacks Division continues to deliver solid results with mid-single-digit sales growth. Performance was led by Inalexa in Ecuador, supported by a compelling price-value proposition, disciplined execution of productivity initiatives, and sharp focus on consumer-driven innovation. And now to close, let me provide a brief update on the progress of our sustainability agenda. This quarter, we achieved important milestones in our plastics collection and recycling systems. In Ecuador, we entered into a partnership with the National Recyclers Network to support financial inclusion through targeted training and capacity building efforts. And in Mexico, we expanded our PET collection center in San Luis Potosi. enhancing our infrastructure to recover and process over 380 million PET bottles annually. Moreover, we continue strengthening our sustainability risk management, achieving our most significant improvement since 2019 in the latest Sustainalytics Morningstar assessment. We are pleased to share that we are now ranked among the top 10 best-rated companies in the beverage industry. climbing five positions year over year. Our sustainability risk score outperformed both the industry and sub-industry averages, earning us the highest risk management rating. I will now turn the call over to Emilio. Please, Emilio.