Grupo Comercial Ched Ord

Good morning to all participants, and welcome to Grupo Comercial Cheddaray, third quarter 2024 conference call. Participating in the conference call today will be Mr. Jose Antonio Cheddaray, CEO of Grupo Comercial Cheddaray, Mr. Carlos Smith, CEO of Cheddaray USA, Umberto Tafu, CFO, and Arturo Valesquez, IRO for the company. We will begin the call with initial comments on Grupo Comercial Cheddaray, Third quarter financial results by the company's CEO, Mr. Jose Antonio Chedera. Thank you. You may begin.

Good morning to all.

and welcome to our presentation of Grupo Comercial Chedraui's third quarter 2024 results. I want to recognize the continued dedication of our employees to effectively execute the three main pillars of our strategy, providing our customers with the products they want, offering the lowest price, and delivering an exceptional customer experience. The commitment to these pillars has been the key driver of our market share gain during the third quarter. In Mexico, our customers continue to prefer shopping at our stores, as evidenced by our same-store sales performance, which has exceeded Antat's results for the 17th consecutive quarter. In the U.S., El Super and Fiesta Mart continue to drive same store sales growth for Chedraui USA. These formats achieved combined mid single digit growth compared to the previous year. For Chedraui USA, we're pleased to announce that in July, we began operations of our new distribution center located in Rancho Cucamonga, California. We're currently in the process of migrating five legacy distribution centers into the state-of-the-art 1.4 million square foot facility. This new facility will provide a critical long-term foundation for Chedraui USA as it will allow us to grow El Super and Smart & Final in the medium and long term while making our supply chain more efficient. To start our presentation, please turn to slide four, where I will highlight key achievements of the third quarter. Consolidated sales growth was driven by positive trends in all business segments. Same-store sales in Mexico grew by 4.9%, outperforming in TADS 3%. Chedraui USA's same-store sales increased 0.5% in dollar terms. maintaining a positive trend. Consolidated EBITDA, excluding one-time costs associated with our new DC, was in line with Q3 of 2023. EBITDA margin in Mexico continues to expand, benefiting from operating leverage and cost efficiency strategies. Net debt to EBITDA ratio stood at 0.02 times. CapEx for the first nine months of 2024 totaled 7,293 million and represented 3.6% of consolidated sales. In the following slides, I will comment with more detail on these key highlights. Please turn to slide five. All businesses had positive sales trends in the quarter, which translated into an 11.8% consolidated sales increase compared to the third quarter of 2023. The currency impact on Chedraui USA's sales was positive 13.1% when translating into Mexican pesos. Our consolidated EBITDA increased by 3.5%. and our EBITDA margin stood at 8.2%. And this result was impacted by duplicate distribution center costs at Chedraui USA. If we exclude these duplicate costs, consolidated EBITDA would have increased by 11.1%, while EBITDA margin would have been 8.8% of sales, which is in line with the third quarter of 2023. On slide six, consolidated net income continued to show a positive long-term growth trend, even when considering duplicate costs in the quarter. The compound annual growth rate over the last four years is 22.8%. And if we exclude supply chain duplicate costs, growth is 34%. We are committed to improving our profitability levels and at the same time, investing in the capex needed for medium and long-term growth. In the quarter, ROV was impacted by these duplicate supply chain costs. We're very confident that our profitability will return to normalized levels in the second half of 2025 as our new Rancho Cucamonga distribution center reaches full operations. In the following slides, we will review the main highlights of our businesses in Mexico and the US. On slide seven, in Mexico, Same-store sales exceeded Antat's results for the 17th consecutive quarter, growing by 4.9% compared to Antat's 3%. Our Michedraui loyalty program is an essential element of our value proposition by delivering our customers tailored promotions in our various store formats, especially during the highly competitive summer period. We continue to focus on increasing the penetration of our customers in our Miche Draui loyalty program, as evidenced by the 6% customer growth in the last 12 months to 12.6 million members. This allowed us to recognize 74% of our sales from loyalty program customers, which is a record level for the company. Please turn to slide eight. Positive same-store sales and a 2.5% increase in sales floor area drove consolidated sales growth by 7.8% compared to the third quarter of 2023. EBITDA grew 9.8% compared to the same period last year. This increase is explained by improved inventory management and better promotions to customers. which offset higher labor costs. EBITDA margin ended at 9.1%, a 17 basis point improvement versus the prior comparative quarter. Finally, on slide nine, we will review the highlights of our real estate division. The occupancy rate increased to 98.3% from 97.3% in the third quarter of 2023. Sales continue to show positive trends with a 13.1% increase compared to the same quarter of 2023, amounting to 381 million pesos. Over the last 12 months, 8,102 square meters of leaseable area were incorporated, representing 1.9% annual growth. EBITDA increased 9% and represented 62.9% of sales. I will now turn the meeting over to Carlos Smith, CEO of Chedraui USA, for his comments on our operation in the US. Carlos, please go ahead.