Ladies and gentlemen, thank you for standing by, and I'd like to welcome you to SMU's Q1 2023 Conference Call. At this time, all participants' lines are in listen-only mode. The format of the call today will be a presentation by the management team, followed by a question-and-answer session. Without further ado, I would now like to pass the line to Miss Carolyn McKenzie, Head of Investor Relations at SMU. Great. Thank you. Thank you all for joining us today. I'm here today with our CFO, Arturo Silva. As usual, we have some slides describing some recent business highlights, as well as financial results for the first quarter of the year, and then Arturo will be happy to take any questions at the end of the call. You can send your questions by chat or raise your hand, and we'll give you those instructions also at the end. An audio recording of this call will be available on our website later today. Also, please note that we may be making some forward-looking statements today. As always, please remember to take a look at the caution regarding forward-looking statements on slide number two of our presentation. We've structured the business highlight slides around our three-year strategic plan for 2023 to 2025, with its four key pillars, starting with omnichannel growth on slide three. In the year to date, we've opened two Unimarc stores, one in Puerto Montt and one in Rancagua, and we also inaugurated our fifth Super 10 store, which we converted from a Mayorista 10. We're also on track with our store opening plan for the remainder of the year, moving forward with the construction of the stores that were in our own pipeline, which include four more Unimarc stores and one Alvi store in Chile, as well as five Maxi Ahorro stores in Peru. We have good news regarding the Montserrat project, because just last week, we received the first two stores that meet all the conditions for us to be able to start remodeling, and we expect to receive another seven stores over the next couple of months. Assuming that happens on time and these stores meet the conditions we've defined with Montserrat, such as having the permits in order, we should be able to open those stores over the course of the second half of this year, and the total openings for the remainder of the year would match the plan we have on the slide, an additional four Unimarc stores, two Alvi stores, and three Super 10 stores. In the second half of the year, we should also continue to receive more Montserrat stores to remodel, and those will be opened in 2024. With respect to our online business on slide four, we've continued to ramp up the utilization of the Robotic Micro Fulfillment Center or MFC that we inaugurated last November and adding new municipalities to the coverage zone so that we are now serving 42% of the target Santiago Metro region area using the MFC. This means that a greater number of orders are benefiting from this technology, which increases the completeness and accuracy of orders, thereby improving the customer experience. It also optimizes the picking process, adding efficiency to the operation, as having robots do the work allows us to pick orders much faster than having a person going up and down the aisles of the store. We've also been adding click and collect pickup points to select stores. As we said when we launched the 2023-2025 plan, our goal isn't to have click and collect everywhere. We're targeting locations where we think customers will benefit from having this option. In recent months, we've added click and collect at five new Unimarc stores, and we're also piloting the system with Alvi. On the next slide, we move on to the customer experience pillar of our plan. Understanding our customers and serving their needs is essential to our business. The core commercial strategy that we have defined to differentiate ourselves from the competition is a high-low strategy, intense high-frequency promotional activity. We defined this strategy nearly 10 years ago, and we have built up a deep expertise in designing and implementing promotions in a way that benefits both customers and participating suppliers. This expertise allows us to adapt our promotional strategy depending on customer needs, which is something that we definitely saw over the course of the pandemic with rapid changes in preferences. This year, we continue to see that consumers are highly sensitive to price as they aim to maximize their family budget. Therefore, we continue to apply our expertise by innovating in our promotional strategy. Last year, we launched the Path to Savings or Ruta del Ahorro campaign to help customers identify savings on basic products. That campaign gained traction, and we are building on it in order to give more visibility to savings across different types of promotions. We're also leveraging our multi-format strategy and adding promotions at MiDi service that at times mirror the Unimarc campaigns. For example, one of the iconic campaigns at Unimarc is Red Friday, which focuses on meat and wine. We've added a similar promotion for MiDi service. On the next slide, another example of how we seek to improve the customer experience is a recent event we held for Alvi's B2B customers, the Encuentro de Socios Alvi or the Club Alvi Expo, as I've decided to call it. Over 6,000 members of Club Alvi came to the event, and they were able to meet with over 35 suppliers and 80 major brands. By giving our B2B customers these benefits, we aim to build loyalty to Alvi while we create value for these customers, helping them to discover new products and assortments so they can grow their businesses. On slide seven, another element of our customer experience strategy is to continue growing our private label offering, providing customers with excellent quality at attractive prices. In the first quarter of the year, we added over 50 new products in different categories and under different specialty brands. Following last year's strong performance, we continue to see strong sales growth with an increase of 27% over the first quarter of 2022. On slide eight, the third pillar of our strategic plan targets efficiency and productivity. In the year to date, we've continued to make progress on initiatives focused on in-store efficiency and logistics efficiency. Specifically, we've continued to roll out our efficient operating model to a third group of Unimarc stores for a total of 151 stores. This model contributes to better in-store product availability, with more frequent deliveries from our distribution centers and more efficient replenishment. We've also added more self-service modules, such as self-checkouts, as you can see in the picture on the slide. Customers enjoy the speedy checkout experience. In terms of logistics, we've expanded coverage of our Blue Yonder automated demand planning tool to cover new product categories. Last year, we were using this tool for fruits and vegetables, and now we've added meat. Our experience with Blue Yonder has been that this more accurate forecasting contributes to higher in-stock levels and lower shrinkage. Finally, as a result of our different initiatives, sales per full-time equivalent improved 8.2% in the first quarter, outpacing revenue growth and thereby demonstrating productivity gains. On slide 9, we thought we would highlight a couple of initiatives related to caring for the environment, which are part of the fourth pillar of our plan, committed and sustainable organization, but they also contribute to efficiency and productivity and to customer experience, which is why we've also included those little icons on the slide. Starting with the first picture, we recently obtained the Energy Sustainability Agency's Giro Limpio or clean business certification as a company that generates cargo. As part of our commitment to climate action, we've been encouraging the transport companies that we work with to adopt technologies to improve energy performance. We've been able to get 70% of the transportation fleet we hired in this program, and we've been helping them in their own certification process. The second picture relates to our private label strategy, where we're working to promote recycled packaging and getting more products certified under the ecolabeling seal. Under the Clean Production Agreement, we had set commitments and targets related to this initiative, and we've been meeting those targets, which is how we obtained this Estrella Azul or Blue Star certification. Going on to the numbers on slide number 10, we have revenue and same-store sales for the first quarter of 2023. We had top line growth of 5.9% in the period, 5.8% in Chile, in line with the Chilean food retail industry, which grew by 5.5%, according to the National Statistics Institute of Chile. The comparison base was challenging as in the first quarter of last year, consumer behavior was still reflecting the high liquidity that had characterized the year 2021. Customers tended to prefer more sophisticated product assortments. In the subsequent quarters, we saw a shift in consumer behavior where people became more sensitive to price due to higher levels of inflation. That was the situation in the first quarter of this year and continues to be the case today. This quarter, we continue to see a recovery in customer traffic and strong performance in soft discount and cash and carry stores, where revenue increased 11.5%. That's what was driving overall revenue growth. On the gross margin side, we had an increase of 130 basis points, which meant an increase of 10.3% in gross profit, reflecting improvements in commercial efficiency. On the right-hand side of the slide, we have our consolidated same-store sales growth for the first quarter of this year and last year, where the high comparison base was very clear. Same-store sales growth last year was 17.1%, and this year is 4.2%. On the next slide, we have operating expenses, which grew 13.6% in the quarter. The two main drivers behind the increase are the high minimum wage, which increased 17.1% year-over-year, affecting both personnel expenses and the cost of services, and accumulated annual inflation that also affects personnel expenses and the cost of services, as well as leases and distribution costs. Operating expenses as a percentage of revenue increased 150 basis points compared to the first quarter of 2022. Moving on to slide 12, we have EBITDA, which grew 3.7% in the quarter despite the high comparison base in the first quarter of 2022. We also had a very high comparison base for EBITDA margin, which was 9.8% in the first quarter of last year. The expansion in gross margin helped offset the growth in expenses, which means despite this tough comparison, EBITDA margin was 9.6% this year, only 20 basis points lower than last year, well above our 9% long-term target. On the next slide, we have net income, where the year-over-year comparison is basically entirely explained by two factors. First, the year-over-year comparison in net income was basically explained by the sale of OK Market, which was a CLP 20.8 billion impact, and that includes pre-tax and tax effects. Excluding that gain, our pre-tax income was CLP 4 billion higher this year. That's an improvement of 17%. That also means a higher income tax of approximately CLP 1.1 billion, 27% of that 4 billion peso improvement. The other factor behind the decrease in net income is the fact that inflation was lower in the first quarter of this year, which meant lower inflation adjustments to deferred taxes. That accounts for about CLP 9.5 billion of the difference year- over- year. On slide 14, we continue to show a very attractive dividend yield of 11.6%, which is lower than the 2022 yield, because the share price went up about 25% in those three months, as you can see in the graph below. The return on equity was 12.9% for the 12 months to March 2023, also lower than 2022. In this case, due to the fact that net income for 2022 includes the one-off from the sale of OK Market, whereas the 12 months to March does not include that amount. However, we are still in the double digits. On the next slide, we have financial ratios, including as reported figures, as well as figures that are adjusted for store rental expenses. On the left, net financial liabilities to EBITDA, including store rentals, has improved from 3.9 times in 2021 to 3.3 times in March. The same downward trend is true when we adjust for store rentals, but in this case, the ratio was 2.7 times in 2021 and is now down to 2.1 times. On the right, net interest coverage as reported is up from 4.9 times. So, Hello? Hold on. One second. Hello? Are we okay to continue or not? Keep going? All right. We're gonna keep going. Okay, where was I? Net interest coverage. Right. We were up from 4.9 times in 2021 to 6.6 times in March of this year. When we make the adjustment for EBITDA and interest expense for the store rentals, we had coverage of 9.5 times in 2021, and that was up to 20.4 times in March. On slide 16, we have our bond covenants, where we continue to have plenty of flexibility. Net financial debt to equity is at 0.49 times, well below the 1.03 limit. Interest coverage is up to 6.6 times, well above the 2.5 times required. On slide 17, we have a summary of our cash flows for the first quarter of 2023. Our operating cash generation was CLP 73 billion, which enabled us to pay financial debt maturities and Capex without taking on new financing. Even so, we ended the quarter with a balance of CLP 136 billion pesos, which is an increase of approximately CLP 11 billion and well above the minimum cash balance that we'd like to have on hand, which is CLP 50 billion pesos. This solid cash position means that we're very comfortable with our debt maturity profile, which we've also included on the same slide. We should continue to pay down debt during this quarter, and we also have two dividend payments: the final dividend that we paid in April and the interim dividend that will be paid in June. The next slide, we have an update on our credit rating. Both of our credit ratings, ICR and Feller Rate, recently completed their annual review process following the publication of our 2022 financial statements, and they both decided to improve the outlook on our rating from stable to positive, confirming the A+ category. The reason they gave for the change in outlook was the sustained improvement in operating and financial results. As we saw on the preceding slides, we've continued to deliver on our strategic plan and to strengthen our financial position in the first quarter of this year. That's it for our presentation. Thanks for listening. If there are any questions, we'll be happy to take those now. Thank you. We'll now move to the question-and-answer section. If you'd like to ask a question, please press star two on your phone and wait to be prompted. If you're dialed in by web, you can either type your question in the box provided or request to ask a voice question. We'll now wait a moment or two for questions to come in. Okay, we have quite a few questions. We've got three questions. We have some chat questions, and we've got some hands raised. Start with Alonso? Yeah. Okay. All right. Alonso, we will unmute you. Okay, go ahead, Alonso. Thanks. Okay. Hi, good morning. Yes, two questions on my side. First, I wanted to ask you if you can give some color on your gross margin improvement. You talk about commercial efficiencies. Maybe you can give us some examples of what exactly you're doing. You know, the gross margin this quarter was, I think, the best gross margin you've had in a first quarter. So if you can give us some color on that. My second question is on your expectations for top line growth. Would comps be more difficult? What are you expecting on revenue growth? Is it this mid-single digits growth that you posted in the first quarter, or is it maybe potentially higher given the openings? Thank you. Okay. Hi, Alonso. First question about the gross margin. Indeed, we increased the gross margin in the first quarter. We explained in the fourth quarter as well that the gross margin of the company was increasing. We are expecting for the second quarter of this year to keep this level of gross margin, because it's absolutely possible, because we are financing the promotional activities through the suppliers. We are financing the promotion without problem because they can improve your sales as well. That is the main reason, including in this context of commercial efficiency. Okay. The second questions. Our expectation is to keep the level of gross margin of the first quarter. The second question about top line, the sales and growth. We're expecting in April and May the level of growth is similar to the first quarter with this. Also going more to the discount format, more than Unimarc. Probably we are expecting in May and June even a little bit better because the impulse of the government in delivering the winter bonus and also the basic food wallet for 1.5 million people in Chile will be a boost to receive more sales in May for the winter bonus and the wallet, the electronic wallet for the food basic products for the rest of the year. Therefore, I think for this reason in May and June the growth in sales could be better. Until now the growth is very similar with the first quarter. Thank you, Arturo. Great. Thanks, Alonso. We also have a question from Eduardo Salvo. Unmute you. I'm having some trouble unmuting Eduardo. I don't know if Luis can help us. Sure, one moment. In the meantime, I guess maybe we can take a couple of other chat questions. We received two questions about the insurance payment. The current process in the insurance payment is we're in the arbitration process. We present the demand in the end of March. Now the counterpart will present the defense until May twenty-fourth. Our arguments are very good because we think that we have coverage and also the amount of the claim is higher than our number in the currency because it's in U.S. Therefore this amount has an adjustment every month for the inflation. It's another question, in fact. We are claiming the interest for the time of the delay in the payment. We think that we have a very good chance to receive this amount in the arbitration process. It's a long process of course, because it's very difficult to give an estimation of the timing or prediction timing. Could be in one year or more time depending on the arbitration process. Our chance to receive the money is very high. For this reason, we keep the amount in the country, but in Chilean pesos, not including the inflation adjustment. Another question is about the negative inflation. How possible is this for the inflation to decrease? In the history, never the food inflation in one year in the long period decreased. Probably in one month it's possible, like the general inflation as well. For this reason, we are not expecting decrease in the food inflation in general, but could be in some specific product. In fact, in February and March, we had a reduction of price in specific products, but not for the full assortment that we have. In general, the food inflation is one or two percentage points more than general inflation. Therefore, that is the regular behavior of the food inflation. We are not expecting the negative food inflation for 12 months. Another question is in terms of sales in Unimarc, yeah, decline. In fact, we are growing less than last year, because especially in the first quarter, we had an important effect in summer period because the lower liquidity of the people and also the fire in the south of the country affect the demand in the regions. The summer where the people enjoy the summer or the vacation in these areas. You know that Unimarc has more market share in these areas. Therefore in summer, we have more market share on average because people travel from Santiago to the northern or southern part of Chile in the vacation period. Most of the inflation and the income effect in the population, and also the higher effect in the southern part of Chile, affect the demand in these areas. For this reason, Unimarc in this year didn't receive this additional demand in the first quarter, and for this reason the same-store sales. We are expecting to recuperate part of the growth in the second quarter and the rest of the year. We still haven't been able to unmute Eduardo, but Eduardo, maybe you wanna send your question by chat, in the meantime, and then in the meantime we can take the- I will give you. Montserrat. Update on Montserrat. We are receiving the stores, and we received two stores in the last two weeks. We will receive another seven stores in May and June. The idea is to remodel these stores in the next three or four months, with the idea to have open Montserrat stores starting in the end of this year in the airport and boost sales and EBITDA in the next year. Also we will receive additional stores in the second half of this year, but probably we will finish the remodel of these stores in the first quarter of 2024. another store with the idea to complete 100% of the store renovation, and opening of the full amount of stores in the end of 2024, as we comment in the last meeting. Another question here from Peter about labor increases. Yes. Labor inflation. No doubt the labor inflation and the cost of the minimum salary increase. Of course, it produces an important pressure in our expenses. The company is investing in the technological tools in the stores and also in the distribution center logistics with the idea to compensate a bit the increase of salaries with productivity. In fact, we are reducing our headcount in the first quarter. In fact, we reduced our headcount. The idea is to mitigate this inflation of salary in the next months or through an increase in productivity. This impact also is for the industry, and it's not for SMU. Therefore, part of this cost will be passed through for the margin as well. Therefore, the idea is that it's possible to dilute part of these expenses with more sales, because the performance of the company in terms of sales is good, with the idea to keep the EBITDA margin. In fact, in the second quarter, we're expecting to keep the level of EBITDA margin of Q1. In this case, we'll be much better than the EBITDA margin of the second quarter of 2022. Because we think that it's possible to compensate with productivity and also with the dilution of expenses through the same growth. Great. It looks like that was our last question. Luis, are you seeing any more questions? I don't see any more, so I think that's it. Thanks everybody for joining us today. If you have questions we didn't get to here, please feel free to get in touch with us. Thank you everyone that has joined. This concludes the call. Have a nice day.