Welcome to the Chedraui Conference Call for the results of the third quarter of 2021. With us are Mr. Antonio Chedraui Eguía, CEO of Grupo Chedraui, Mr. Carlos Smith Matas, CEO of Bodega Latina, Mr. Humberto Tafolla Núñez, CFO of Grupo Chedraui, and Mr. Arturo Velázquez, Head of Investor Relations of Grupo Chedraui. As a reminder, all forward-looking statements on this call are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions discussed today. This may be due to a variety of factors, including the risks outlined in Grupo Chedraui's most recent annual report. At this time, I will now turn the conference over to Mr. Antonio Chedraui Eguía. Please go ahead. Thank you. Good morning. It is my pleasure to be with you today in this conference call regarding Grupo Chedraui's third quarter 2021 results. Thanks to our operational discipline and our ability to execute, we closed the third quarter with great results in both of our markets. In Mexico, we continue to grow above our market levels by leveraging on our competitive advantages, meeting the profitability objective that we defined and communicated at the beginning of the year, and achieving growth in our banners despite the highly comparable basis. In the U.S., we closed the acquisition of Smart & Final during the third quarter, and we see that the operation has hit the ground running due to its solid foundations. With this, we approach the last quarter of the year with enthusiasm, determined to continue creating value for Grupo Chedraui and its shareholders. Now, if you allow me, we will review the results for the third quarter of 2021, starting with the highlights of the quarter, and then we will review the financial results. In this call, I will be mentioning reported and comparable figures. The latter refers to figures that exclude the consolidation impact of Smart & Final within Grupo Chedraui's results. This quarter, we achieved 9.1% same-store sales growth in Mexico, exceeding the 5.4% increase reported by ANTAD. 7.5% consolidated EBITDA margin at 46.5% year-on-year increase in reported figures, and an 11.7% increase on a comparable basis. 40% increase in consolidated net income and net debt to EBITDA pro forma ratio of 0.91x in Q3 2021. As I mentioned earlier, I want to emphasize that on July 28th, we closed the acquisition of Smart & Final. As of that date, the results began to be consolidated into Grupo Chedraui. We are delighted to have the operation within Grupo Chedraui, as this allow us to reach a new customer base due to the strong complement it has with our existing banners. Now we will continue with financial results, starting with the top line. In the third quarter of the year, we registered consolidated sales of MXN 52,473 million, equivalent of a growth of 48.2% year-on-year. Excluding the consolidation of Smart & Final operation, we achieved comparable sales of 3.9%. This quarter, we had a negative 9.3% exchange rate impact on the revenues of the U.S. division. For retail Mexico, we achieved a 9.1% increase in same-store sales growth, which exceeds the 5.4% result reported by ANTAD for the same period. Sales for this division reached MXN 21,950 million, with double-digit growth in the South and Southeast, highlighting strong performance in the tourist areas and a moderate increase in sales in the center and the metropolitan regions of Mexico City. I would like to highlight the great result we obtained in the omni-channel operation, which achieved a 4% share of Mexico's total sales in the quarter. This is due to the growth in both internal and third-party channels. Total Mexico sales grew 12.5%. In this quarter, we added four stores, raising net operations to 19 in the last 12 months, equivalent to a 1.2% increase in the sales floor for this particular division. Regarding the real estate division, revenue grew 27.1% to MXN 250 million for the third quarter of 2021. In relation to the leasable area, it increased 7.8% year-over-year. Gross profit and operating expenses. On a consolidated level, gross profit reached MXN 11,835 million in the quarter. This represented a gross margin of 22.6%, which is a slight year-over-year contraction due to the competitive pressure in the grocery and perishable categories. In relation to the operating expenses, we continue to maintain strict control across all business lines. However, this quarter, we had one-time transaction expenses of MXN 283 million related to the acquisition of Smart & Final. These expenses are non-operating and non-recurring and fully accounted for this, in this quarter. With that said, in the quarter, we recorded expenses of MXN 7,912 million, which represented 15.1% of consolidated sales. Regarding EBITDA, in the third quarter of 2021, we achieved a 46.5% growth on our consolidated result, reaching MXN 3,933 million, which represents 7.5% of sales. This growth was primarily driven by the consolidation of Smart & Final. Excluding extraordinary non-operating expenses, the result amounted to MXN 4,206 million with a margin of 8% for the whole group. On the other hand, on a comparable basis, EBITDA increased 11.7% to MXN 2,991 million with a margin on sales of 8.1%, resulting in an expansion of 60 basis points year-on-year. In Mexico, EBITDA grew 15.9% to MXN 1,759 million and represented 8% of sales. The result is 24 basis points higher than the prior year and is in line with the full-year profitability target. In the real estate division, EBITDA showed a growth of 40%, 40.2 actually, to reach MXN 175 million in the quarter, with the margin on sales of 69.8%. This result was due to the progressive normalization in the operation of this division. Now, Carlos, if you may please comment the results obtained in the U.S. Yes, thank you, Antonio. Good morning, everyone. Just as a quick reminder, like Antonio mentioned, the acquisition of Smart & Final closed on July 28, so the results presented here account for only two months of operation of this banner in the quarter. During the quarter, total sales in dollar terms for the retail U.S. business grew 112% after the consolidation of the Smart & Final operation. Despite a high comparative base, total and comparative sales grew 2.3% and 2.7% respectively. This strong result continues the strong momentum we experienced in previous months. In pesos, total sales grew 92.5% year-over-year, accounting for MXN 30,307 million, and this result includes an impact due to appreciation of the exchange rate in the period, of 9.3% versus last year. Regarding EBITDA, the divisions result, which is inclusive of the Smart & Final acquisition, EBITDA grew 92.1% to almost MXN 2,000 million in the quarter. For the total operation, the reported margin was 6.6% of sales. On a comparable basis, EBITDA grew 2.1%. However, the increase in dollar terms was 12.7%. By format, El Super continues to demonstrate its resilience by expanding its margin 62 basis points to 8.7% of sales in period. The U.S. side, the EBITDA margin increased 74 basis points up to 5.2% of sales and in line with our long-term profitability expansion plan. For Smart & Final, it is appropriate to distinguish an operating EBITDA margin from the reported one, given that we had, as Antonio mentioned, one-time transaction expenses resulting from the acquisition. Operationally, the result in these two consolidated months was MXN 1,215 million, with EBITDA representing 7.7% of sales. We believe that this margin is structural and sustainable and does not include potential synergies. After accounting for the non-recurring expense, EBITDA margin represented 5.9% of sales. Thank you, Antonio. Thank you, Carlos. Going over the financial expenses during Q3 2021. The financial expenses reached an amount of MXN 1,207 million, resulting in an increase of 61.1% compared to the same period of previous year. This is explained by the increasing debt after the incorporation of Smart & Final and the cost of its operating leases accounted under IFRS 16 after the consolidation. Net income. Consolidated net income for the quarter grew 40% compared to that achieved in the same period of 2020, reaching MXN 896 million, representing 1.7% of sales. This amount includes transaction expenses related to the acquisition of Smart & Final. Excluding these non-recurring expenses, net income grew almost 70% year-on-year and 261% in the last two years. Those numbers compared to 2020 and 2019. Demonstrating the company's ability to improve its profitability. Financing and capital expenditures. Regarding leverage, the company recorded net debt of MXN 15,366 million. The pro forma net debt to EBITDA ratio, which includes estimating 12 months of Smart & Final results, closed at 0.91 times, while the reported figures closed at 1.26 times. Finally, the accumulated invested CapEx, including the investment in the purchase of Smart & Final, amounted to MXN 15,224 million. Now, if you allow me, we will move on to the Q&A session, please. Antonio, I'm sorry, I'm back on. I got disconnected. Thank you, Carlos. Well, I explained the financing and the net income. If it's okay with you, we will move to Q&A section. I apologize. I didn't mean to cut you. Thank you. No, thank you. We will now start the Q&A session. If you have a question, please enter star eight on your telephone. In case your question has been answered, you may cancel it by pressing star eight again. The first question is from Mr. Bob Ford from Bank of America. Please go ahead. Thank you and congratulations on the quarter. You seem to be making some very good progress in Texas. You know, that said, there's still a pretty big gap with other divisions in terms of the EBITDA margin. I was wondering how we should think about that. Is Texas just a tougher and lower margin market structurally or there's still mix and other opportunities that you can develop? I think, you know, the margin improvement that you have more broadly in the context of what, you know, appears to be a very difficult labor market, is even more impressive. I was wondering if you could just comment generally on, you know, the labor market in the Southwest of the U.S. and your expectations going forward. Lastly, you know, Carlos, you made a mention of synergies, right? Then lastly, Carlos, I think I got cut off, but you know, you've had a little bit more time with the asset. You made a reference to synergies, and I was wondering what your synergy expectations are, if you could just help us dimension kind of the scope and the magnitude of the opportunities that you see across the banners. Thank you. Yeah. Good morning, Bob. A couple things on the Texas market in terms of margin. Our cost of goods aren't where we want them to be. We know what we need to do in terms of addressing that delta between El Super and Fiesta. As you know, it's part of the built-in strategic plan we have for that asset. We knew it was gonna take us a little bit of time, but we have clarity as to what our strategic plan is, and I think we're going to be able to execute that in the next you know, 24 months or so. I'm comfortable about that side. One of the issues that we've had is that, we still don't have the perishable mix, where we want it to be, and a lot of that is due to, the, drops in traffic that we've seen post-COVID. That's been a category that's, had a more difficult time ramping up. Now, having said that, certainly Texas is different from California. There's a lot more prevalence of, Walmart and H-E-B, and it's, you're kind of stuck in the middle of the sword fight that those two guys are in. That's always a challenge. We feel very good about, the investments that we've made in the asset. We continue to bring up that fleet to standard. Remember, there hasn't been a lot of CapEx there since, you know, the late seventies. That was part of our plan as well as we commented. We feel good about where we are and where we're going, and we're very aware of how we're going to bridge that gap, but we think that there's great profitability potential there. The labor market is still tight. I would say that's in the Pacific in the West Coast as well as the Southwest. There has been a little bit of relief in the Texas market as some of these unemployment benefits have faded away. However, structurally, we've got higher labor costs across all the banners, same for our competition, same for our vendor partners. A lot of these price increases that we've been able to pass along to consumers, I think are here. You know, I think many of them are here to stay. On synergy side, in the new banner, Smart & Final, lots of work to do. We believe that there is tremendous opportunity in the procurement side. We've got some benefits that go both ways. I mean, Smart & Final has synergies for the El Super banner and the Fiesta banner, and these other two banners have synergies for them, particularly on the perishables side. We're slowly identifying more and more opportunities on the corporate side, insurance, in the operation side, all of the non-merchandise categories like supplies, bags, security, all of these other expenses that are important on the P&L. We underwrote our plan with $25 million in synergies, and I think they're more than achievable. That's very encouraging. Do you see any costs to achieve those or is that net expenses? No, I think that. No, I don't think that we have a lot of costs associated with achieving those synergies. Great to hear. Again, congratulations and thank you for the questions. Yeah. Thank you. It's, we've got a very exciting platform here in the U.S. Thank you very much for your question. As a reminder, if you have a question, please enter star eight on your telephone keypad. Our next question is from Mr. Rodrigo Alcántara from UBS. Please go ahead. Hi. Good morning, guys, and thanks for taking my question. I have one in the U.S. and one in Mexico, if I may. In the U.S., Carlos, I just was wondering if you could walk us through the plans over the next few months with the Smart & Final, right? I mean, at some point, but to some extent, it will be a different process than in Fiesta, right? Just curious about what should we expect about, you know, your plans in terms of synergy creation, commercial initiatives added to Smart & Final? That would be my first question. The question in Mexico would be related to the promotional and competitive environment. I mean, how do you see the consumer reacting to inflation? Are you seeing some slowdown in terms of volume? Just curious if you can comment a bit about that in for the case of Mexico, perhaps performance by region. That would be helpful. Thank you. Maybe you can start with the U.S. and then I take Mexico. Thank you, Rodrigo. Sure. Good morning, Rodrigo. Yes. So as we've said, as we've commented in previous calls, unlike previous acquisitions that we've made, the Smart & Final acquisition is one that's very interesting and was very attractive to us because it is a company that's operating very, very well with a very strong management team. We don't want to interrupt all of the momentum that they have. Our plan of integrating that is we will be running two distinct banners, right? You've got the Smart & Final banner that intersects the traditional supermarket with the club, and then you've got the Hispanic division of the El Super and Fiesta Mart banners. Everything related to operations, to merchandising, to HR, all of that, to logistics, all of those pieces stay within the banner. We see tremendous opportunity in consolidating some back office activities such as IT, such as real estate, finance and accounting. Those activities can be consolidated, and they provide a platform for future acquisitions where you can plug and play. That is our plan. I think, we're gonna be moving forward with some corporate consolidation steps, let's call it phase one, here at the beginning of 2022, which we're very excited about. In general terms, the divisions will operate independently. Now, when I say independently, that doesn't mean that the purchasing teams from each banner, they're sitting down together evaluating best practices and sharing on those best practices to obtain some of these synergies. For instance, we have our purchasing teams from the Smart & Final banner and from the El Super and Fiesta Mart banner sitting with Coca-Cola, Pepsi, and all these important vendors together, right? They execute independently. That's exactly the process that we're following in operations, loss prevention, IT, and in many cases, we're doing it together with the Chedraui group. I'm very happy to report that the way the teams have been working and the progress that we're making, we're very, very encouraged by. Thanks, Carlos. That's very clear. Thank you. Thank you, Carlos. Thank you, Rodrigo. In Mexico as well as in the U.S., we continue to have tailwinds. In the U.S., we were able to grow same-store sales in dollars by 2.7%. In Mexico, same-store sales 9.1%. We have been able to beat our competition on a nationwide basis, but region by region as well. We have tailwinds in particular regions like the tourist areas such as the Southwest, for example, growing double digits. The Northwest, which is Cabo San Lucas, growing double digits, and we're benefiting from that. We're above the inflation. We're happy to report that our customer base is returning to our stores. We have been able to grow on transactions 9.2% in the quarter. The customers continue to return to our stores as well as sustain our online sales on a 4% basis. Tailwinds keep flowing and we're happy to report that. October looks very, very good with higher numbers than what we had in the quarter. We expect that the tailwinds should continue for the fourth quarter of the year. That's great. Just a final question here. Are you experiencing any material or did you foresee any material disruptions here coming from the ongoing supply chain crisis that we are experiencing? Yes. Is it difficult? Sure. Yes, we are seeing in all of our imports coming from abroad. Some of our vendors are struggling, for example, on the electronics, on the TVs, for example, on the telephones, on the cell phones, some hard goods. We're struggling to get the products we need to reach the demands that we're seeing. We're struggling on that. On the general merchandise side, imports that are coming from China, for example, we are struggling a little bit with that. We're being able to substitute some of these and still hold our sales growth that we're showing at the moment. Yes, we are seeing some problems to get the products we need to meet the demand that we're having in Mexico. That's very clear. Thank you very much. Thank you, Carlos. Thank you, Rodrigo. Thank you very much for your question. Our next question is from Paahi Creed from Barclays. Please go ahead. Great. Thank you so much for taking my questions, and congrats again. I guess for us, we are wondering maybe more numbers or growth or the store openings for the U.S. operations, especially with Smart & Final, and maybe any CapEx plans for U.S. operations again. Thank you. Yes. Good morning. Yes, we're currently in our budgeting process across all banners. Yes, typically, we've been looking at two to three stores on the El Super side. As you know, we've halted that growth as we integrated the Fiesta banner. We're back on track. We are aggressively looking for new sites. We have several in the pipeline. Unfortunately, the lead times for equipment and construction material is quite long, so we're already building in our pipelines through 2023 to 2024. We're doing the same thing for opportunities on the Fiesta side as well as opportunities on the Smart & Final. Smart & Final has been in a non-growth stage for a few years and happy to report to the team that we're already including two new sites for 2022, restarting our remodel program has been Smart & Final as well, with a little bit more aggressive growth plans for 2023 and 2024. Okay, great. Great. Thank you so much. Do you have any, like, projections for CapEx maybe in either region? Well, typically our typical CapEx ranges from 1%-2%. I think you'll get more guidance here in the coming months as we finalize our plans for 2022. That's where it's been in the past. Okay, great. Thank you so much. Thank you very much for your question. Our next question is from Rodrigo Echagaray from Scotiabank. Please go ahead. Thank you. Just a couple of questions from my end. Could you talk about the breakdown of online sales between third party and internal channels, both in Mexico and the U.S.? The second question is related to the low liquidity in the shares and the fact that U.S. is now over half of EBITDA. Do you consider listing shares in the U.S., as a means to increase liquidity and perhaps attract a different set of investors given your business mix? Thank you. Thank you, Rodrigo, for your question. Well, in Mexico, around 50% of our online sales come from third-party platforms, such as Cornershop, Rappi, and Carlos, can you comment on the U.S.? Which is basically Smart & Final, and that has close to 4% online sales as well, and then El Super and Fiesta with very limited online participation. Got it. In terms of the listing of shares in the U.S., given your business mix, any thoughts on that? That's a real possibility that we might pursue in the future. At the moment, we're concentrated in the integration of our U.S. operation and obtaining the synergies that we projected, and we believe we are gonna be able to reach a higher number than the $21 million that Carlos just spoke about and that we projected at the beginning. We're concentrating on that and also taking advantage of growth opportunities in Mexico. We're seeing opportunities at the moment to grow in Mexico, not only organically, but maybe by acquisitions. There's something on the table that we're looking at. We're more focused on that. Of course, we have thought about the possibility to be able to add liquidity and increase the price of our stock. That's the opportunity that we're seeing. We're considering that, but it's not something that we will do in the very short term. In the very short term, we're focusing on what I just spoke about, Rodrigo. Thank you very much for your questions. That makes a lot of sense. Thanks, guys, for the feedback. Thank you. Thank you very much for your question. Our next question is from Anabel López from GBM. Please go ahead. Thanks. Good morning, everyone. I have some questions regarding the performance in Mexico, if I may. When it comes to omnichannel, what was the driver of the huge growth in e-commerce penetration? Regarding same-store sales in Mexico and the margin expansion, are those sustainable? Thanks. Those would be my questions. Congrats on the great results. Thank you, Anabel. I'll start with the same-store sales in Mexico. We have been able to sustain or not only to sustain, but to increase the EBITDA margin, and compared to what we achieved last year, we believe that it's sustainable. We think we are seeing some more opportunities to increase that margin. In the end, we expect to be even over our projected guidance that we projected at the beginning of the year. Yes, the answer is we can sustain same-store sales if the trends continue like that and be able to achieve even more margin, EBITDA margin that we projected. On the e-commerce side, I think that our strategy has been able to produce good results, not only with our own platform, but with the third party. That connected with our CRM program, which is our customer base that we have, where we know our customer, we know how to reach them, we know what they are buying. We are starting to do particular promotions to groups of customers, and that is producing an increase of sales. That's why we have been able, even with very, very high comparable basis to last year because of the pandemic, but to sustain the participation in sales of e-commerce. That I think makes something very particular about Chedraui, which is our CRM program. Thanks a lot. Very clear. Thank you. Again, congratulations on the results. Thank you. Thank you, Marianne. Thank you very much for your question. Our next question is from Miguel Ulloa from BBVA. Please go ahead. Hi. Good morning. Thanks for taking my question. I have a couple of those. The first one would be regarding the joint venture with Smart & Final in Mexico. Could you provide some color on the plans and progress so far of what you're planning to do in the short term? The second one would be regarding the potential impact of the energy reform in Mexico. Do you have calculated any numbers on that? Thank you very much. Thank you, Miguel. What about the joint venture. Yes, we have a joint venture with the Pimber's family, 16 stores in the Northwest. We're very happy with that joint venture. We plan to continue. Actually, we're opening one more store at the beginning of next year, and we believe there's a huge growth opportunity for this format in many cities in Mexico, not just in the Northwest where we have presence at the moment. It's a huge opportunity, and we believe we will pursue that opportunity that there is in the market. About the energy reform, we're still doing numbers about it. We believe there is a possibility that we are going to be able to sustain what we have in our base. A little over 70% of the energy that we use in our stores in Mexico, it's green energy coming from eolic and photovoltaic energy. We believe we will be able to sustain even that, even with the reform. If that changes, we are doing numbers about that, and for sure we will be affected. But we don't know exactly what the number will be. That depends a lot on the particularities of the reform. We still are not sure how the reform will end up, but yes, we will suffer probably some marginal effects that probably reach to maybe 2-3 basis points on the EBITDA margin. Thank you very much. Thank you very much for your question. That was the last question. I will now hand over to Mr. Antonio Chedraui Eguía for final comments. Well, I just wanna thank everyone for joining, and we were happy to report, I think, excellent numbers, and we think that the tailwinds will continue for the fourth quarter. Thank you, and I hope to be talking to you again at the beginning of next year. Please stay safe. Thank you.