Good morning to all participants, and welcome to the Grupo Comercial Chedraui's third quarter 2023 conference call. Participating in the conference call today will be Mr. José Antonio Chedraui, CEO of Grupo Comercial Chedraui, Mr. Carlos Smith, CEO of Chedraui USA, Humberto Tafolla, Grupo Comercial Chedraui CFO, and Arturo Velázquez, IRO for the company. We will begin the call with the initial comments on Grupo Comercial Chedraui's third quarter financial results by the company's CEO, Mr. José Antonio Chedraui. Good morning to all, and welcome to our presentation of Grupo Comercial Chedraui's third quarter 2023 results. I am pleased to report that we continued to thrive in Q3 due to better than expected private consumption trends in Mexico and the U.S. This is despite the foreign exchange impact on our consolidated sales, caused by the appreciation of the Mexican peso against the U.S. dollar in the last 12 months. Nonetheless, our profitability continues to improve as a result of a strong focus on cost control, operational efficiencies, and inventory management in both Mexico and the U.S. At the same time, we continue to grow organically by opening 23 stores in Mexico and 1 in the U.S., and we are on track to reach our target of 60 store openings in Mexico and 4 in the U.S. during 2023. We will now review the results for the third quarter of 2023, starting with the highlights of our consolidated performance, continuing with the performance of each region, and ending with a review of the financial results. On slide 4, our consolidated sales show a slight decline of 0.7%, mainly explained by a 15.6% foreign exchange impact on Chedraui USA sales when converted to Mexican pesos. Sales in the U.S. represented 53% of consolidated sales in the current quarter. However, our cost control and operating efficiency strategy has proven effective and mitigated the currency translation impact. As a result, consolidated EBITDA margin grew 56 basis points versus the prior, representing 8.9% of sales. This 8.9% is close to the peak level of 9%, reached in Q2 of 2023. On slide five, our cost control and operational efficiencies, along with strong working capital management and reduced bank debt, led to improved net income and profitability levels. The four-year compound annual growth rate for net income is 59.3%, with total net income in the quarter totaling MXN 1,935 million. Profitability, viewed through return on equity, stands at 18.5% and represents a 360 basis point increase compared to the third quarter of 2022. In the following slides, we will review operations in Mexico and in the U.S. As we can see on slide six, customers continue to prefer the value proposition offered by Chedraui through its various store formats, as we aim to provide our customers the products they desire at the best possible price without sacrificing customer service. This unwavering commitment to the customer has allowed our same-store sales to grow above on top since 2022. On average, in 2023, we've grown with a positive spread of 287 basis points. Another positive factor in Mexico, guided by our strict cost control strategy, is seen in our EBITDA growth, especially in EBITDA margin, which stands at an all-time high of 9%. In the next slide, slide seven, are some of the key highlights for Mexico's retail business during the quarter. 9.5% same-store sales growth, which outperforms ANTAD's 6.6% increase. Total sales continued to grow at double-digit levels. In this quarter, 17.3% above Q3 of 2022. All regions are growing, with the South and Southeast continuing to outperform the rest of the country. 23 store openings during the quarter and 88 in the last twelve months, including the Arteli acquisition. This growth has resulted in an expansion in our sales floor area of 5% compared to the third quarter of 2022. As we commented in the previous conference call... During the second quarter of 2023, we launched the Por Ti Cuesta Menos Todo el Verano campaign, which concluded during the third quarter of 2023. We observed favorable reception from our customers from this campaign, which can be seen in the positive figures released in this quarter. Finally, on slide 8, it's noteworthy to comment once again that our EBITDA margin continues to improve, reaching an all-time high levels. Our operating leverage and continuous focus on cost and expenses has allowed us to report a 9% EBITDA margin for this third quarter of 2023. Regarding the real estate division, we continue with positive trends as revenues grew 13.4% in the quarter compared to the same period of last year, reaching MXN 337 million. EBITDA grew 9.5%, increasing from MXN 201 million in 2022 to MXN 220 million in the quarter. Noteworthy to mention that in the past 12 months, our leasable area grew by 2.3%. Now, I will turn the meeting over to Carlos Smith, CEO of Chedraui USA, so he can comment on relevant aspects of our U.S. operation. Carlos, please go ahead. Thank you, Antonio. Please turn to slide 9. Chedraui USA continued to perform well in the last quarter. Customer count continues to grow, boosted by an attractive price offering and our store remodeling program, which have compensated for a slowdown in economic activity, a reduction of government aid, and deflation in some categories that have impacted sales. As a result, same-store sales grew by 3.2% in dollar terms, with total sales growth of 3.7%, with particular strength at El Super and Fiesta Mart. When consolidating sales, the 15.6% foreign exchange impact related to the appreciation of the Mexican peso versus the U.S. dollar resulted in a 12.5% decline in Chedraui USA sales for the quarter compared to previous year. Despite this currency impact, EBITDA performance in the quarter remained solid, achieving a 55 basis points margin expansion to 8.3% of sales. It is noteworthy to comment that all banners increased EBITDA margins compared to the previous year as a result of operating efficiencies and improved inventory management. During the quarter, we opened one new El Super store in Las Vegas, Nevada, with three more stores expected by year-end. Our debt reduction plan is on track, with a $136 million reduction through September 2023. Our U.S. operation remains committed to driving profitable growth, delivering value to our customers, and further expanding our presence through these successful banners as we deploy different strategies to continue to drive sales at all formats. That concludes our report on the U.S. operations. Thank you, Carlos. We turn to the consolidated financial results on slide 11. In the third quarter of the year, we recorded consolidated sales of MXN 64,294 million, a 0.7% decline year-over-year, as Chedraui USA sales were impacted by the Mexican peso appreciation. Gross profit increased 1.9% with a 61 basis point expansion in gross margin, while operating expenses without depreciation and amortization decreased 0.4%. Due to this, consolidated EBITDA grew 6% to MXN 5,712 million and represented 8.9% of sales. During the quarter, financial expenses decreased 13% to MXN 1,118 million, driven by lower debt in the quarter, the foreign exchange impact, and higher interest earned by a favorable cash position in Mexico. Moving on to the consolidated net income for the quarter, the result increased 31.9% versus the prior comparative period, reaching an amount of MXN 1,935 million and representing 3% of sales. Please move to slide 12. Our financial leverage decreased from 0.42 times in the same period of 2022 to 0.09 times in this quarter. This results from the company's ability to generate free cash flow over the last 12 months. Finally, the year-to-date CapEx invested reached MXN 5,297 million, which is equivalent to 2.7% of sales. Now, if you allow me, we will move on to the question-and-answer session. Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. If you'd like to ask a question, you may press star one on your telephone keypad. The confirmation tone will indicate your line is in the question queue.... You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Bob Ford with Bank of America. Please proceed with your question. Hey, good morning, Antonio, Carlos, Humberto, and Arturo, and congratulations for the quarter. Antonio, can you discuss the performance of your Supercito units? How are you thinking about the pace of new store openings for Supercito and the white space for the concept? And then, Carlos, can you also discuss what's behind the gap in performance between Smart & Final and the Hispanic divisions, and how we should think about the same store growth as we move forward? Thank you. Hi, Bob. Thank you for your question. Well, Supercito keeps outperforming our projections. We're very happy with the format. At the moment, now we have 113 Supercito stores, and we're doing really, really well. Return on invested capital is higher than our bigger stores, so we're very happy with the format. We plan to open this year 50 stores. We have opened already, I believe, 33 at the moment. So, the format keeps doing really, really good. We think that in the coming years, we could double the number of openings in this format year by year. That means that by 2024, we would be opening over 100 stores, and then we'll try and do over 200 and keep growing with this format. Maybe, Carlos, you can help us answer the next question. Thank you. Absolutely. Good morning, Bob. Yeah, so, as we discussed in our comments, customer count was really solid during the quarter, including our customer count growth at Smart & Final, which was north of 2% during the quarter. As you know, about 30% of our sales in at Smart & Final come from what we call our business customer, which includes several business customer-specific items as well as club packs. And typically, those are, you know, high ticket items. And we've seen a decline in the sale of those items. As you know, the economic backdrop today is complicated. A lot of consumption is food at home. Restaurants are beginning to see less trips. So I think that's impacting us a little bit there. But, you know, we're fortunate that we've got the household consumer, that hedges that on the Smart & Final side. So the important part there for us is to continue to execute really, really well, changing some of our in-store merchandising techniques, to get, you know, a lot more value-type items into the basket. And, that's really our focus. Our focus is to take advantage of this customer count growth that we're seeing in all three banners, and maximizing units per transaction. So, as you've heard me say before, I think that, during difficult times, our formats are very, very well positioned given their strong value proposition. Smart & Final is no different, even though it's got a broader competitive set that we have to deal with. But we're bullish on continuing to drive customer count and executing well by putting more items in the basket. Okay. And Carlos, is this trend sufficiently pronounced to, you know, consider a mix shift toward, you know, more items that are tailored for that, that final retail consumer? Yeah, well, it's a combination of both, okay? So it's, you know, you have to tweak the merchandising to our business customers as well as our households. So it goes both ways. Super helpful. Thank you very much. Our next question comes from the line of Luis Willard with GBM. Please proceed with your question. Hi, guys. Good morning. Thanks for taking my question, Antonio and team. So, well, first of all, congrats on the results. And second, the question, I hope it comes out as politically correct as possible. But I wanted to pick your brain regarding the Walmex investigation by PROFECO. In particular, do you see any opportunity that might arise, which I guess are so a bit, for example, I don't know, perhaps having Walmex focused on something else than day-to-day operations? Thank you. I'm aware of the investigation, just for the news. I understand that it comes from potential vendors that are not happy with the pressure that they receive from Omnex, but I'm not sure about it. I don't think it's gonna change much the commercial strategy that they use in Mexico, but that's my personal feeling. So I think it's gonna take long, and the short term, I don't see, and I have not seen any changes in their pricing strategy, for example, that will show us that they will reduce the pressure that they put on the vendors to support their strategy. I have not seen any changes at the moment on this. Thank you, Antonio. So, it's just wait and see at this point in time, correct? Yes, yes, I think we just have to wait and see. All right. Thank you. Our next question comes from the line of Alvaro Garcia with BTG Pactual. Please proceed with your question. Hi, gentlemen. First of all, hope your team stayed safe throughout Hurricane Otis. Two questions. The first one on Mexico, sort of a bigger picture question, on the proximity format. We've obviously seen a lot of new stores from you guys with Supercitos. I've seen a lot of new stores from Tres B's, from Tiendas Neto. It's a bigger picture question on sort of where you think this demand is coming from. What's driving that demand in the sense... Do you think that the average Mexican family might be, you know, making their despensa purchase at these type of formats more frequently going forward? Or is it a different occasion altogether? Sort of perhaps you're trying to get more color on what's driving that demand and whether it's eating into some of the market share of some of the larger formats. That's my first question. Thank you. Thank you, Alvaro. Well, I believe that first of all, the consumption occasion for this format is basically reposition. I think that the customer continues to visit the bigger formats once every 15 days, probably three times a month. I believe that we are also gaining share against the informal market, which at the moment covers probably 50%-55% of the total market. So, yes, I believe there's a huge opportunity for this proximity format. We have seen the growth, as you mentioned, of Neto, Tres B, ourselves, as well as Bodega Aurrerá Express. So, we think there is huge opportunity for this format in most of the metropolitan areas of the bigger cities around Mexico. Great. Thank you. And then my second question, just a quick one on the U.S. Just be curious to hear your thoughts on, on Albertsons, Kroger, potential asset sales. I'm not sure if that story is sort of over, or if you think there might still be an opportunity there. Thank you. Yes. Hi, Alvaro. No, well, I think that what we know is what everybody knows from news reports, and it's been reported that C&S, one of the largest wholesalers in the U.S., will be taking on several of their stores as part of a divestiture, and we'll see where this lands. But, you know, we're just gonna be on standby. Cool. Thank you very much. Our next question comes from the line of Ulises Argote with JP Morgan. Please proceed with your question. Hey, guys. Good morning. Thanks for the space for questions here. So I just wanted to kind of pick your brains there on the capital allocation strategy. So we see the net debt, EBITDA, kind of trending closer to zero, improving kind of favorably sequentially there. So just wanted to get your thoughts there, given the free cash flow generation, what's kind of the priorities, right? Maybe if you can comment on M&A, extraordinary dividends, a step up on the ordinary, or how are you thinking on that part of the company? Thank you. Thank you for your question, Ulises. Well, for this year, we are focused in meeting our projection of 3% of sales in CapEx. And the CapEx is going for new store openings, maintenance, and technology. And we are right on track, and we will hit the plan that we projected from the beginning of the year. For next year, if we don't find consolidation opportunities in Mexico and the U.S., yes, we would be thinking of increasing probably the dividend, the strategy that we have planned. We were targeting around 15% of our income. So, at the moment, that's what was projected. But, we think that we're generating an extra cash that we would probably use it and increase the dividend strategy that we have at the moment programmed. Okay, thank you very much. Super helpful, and congrats again on the results. Pleases. Our next question comes from the line of Rodrigo Alcantara with UBS. Please proceed with your question. Hey, hi. Good morning, afternoon, and thanks for taking my question, and Antonio. Yeah, so in Mexico, just curious on, on your view regarding the, the conversion of, of Selecto stores, have been very, very aggressive in the conversion of, to this format. So I was wondering if you can give us a sense of how many stores left could be converted into, into this format or in addition to, to new openings of the Selecto format? I believe that you also have a Supercito Selecto format, right? Is, is that correct? If you can comment also on how it has performed. And the second question would be, regarding, your profitability and how much more efficient you could get, in your view, in order to keep on expanding your, your, your EBITDA, margin in Mexico. You keep on surprising us there to the upside. The gross margin keeps expanding. So I was wondering if you can comment on until what point could at scale be an issue for you to, let's say, get an 11% EBITDA margin or so? Any thoughts regarding this would be very helpful. Thank you very much. For the Selecto format, we're very happy with the format. We have entered in with the Selecto in the three size format of our stores. We have Tienda Chedraui, 28 Selecto stores, Super Chedraui, 14 Selecto stores, and Supercito, five Selecto stores. In all the three size formats, we have been very successful. This year, we are converting, I believe, five stores into Selecto. We think that it's a format that can continue to grow. Probably very few to convert, but able to grow in other cities where we don't have, for example, a Selecto store at the moment. It's a very profitable format, with a very limited competition now that Superama has gone, and became more of a typical, I would say, supermarket concept, not high-end, has opened the door for us, as well as for La Comer formats to grow in this particular area. I see. Thanks. And about the profitability, yeah. Sure. On the margin expansion, as long as we keep growing our sales, same-store sales, close to double-digit numbers, there will be still margin expansion opportunities. Because in the end, our expenses are growing less than our sales, and that's always an opportunity. We believe that on the gross margin, there are still opportunities because we're being more efficient on inventory control, but that will be limited in the future. I think that the margin expansion will be coming from the ability to same-store sales growth, that we have proven to be able to sustain, close to double-digit numbers. I see. That, that's helpful. Thank you very much, Antonio. You're welcome, Rodrigo. As a reminder, it is star one to ask your question. Our next question comes from the line of Rahi Parikh with Barclays. Please proceed with your question. Great. Great. Thanks so much. My first question is just on labor costs. You mentioned it, just your outlook, on both regions, and also any trade down dynamics per region, per format, what you're, what you're seeing out there. Thank you. But as I already mentioned, our sales have been able to grow same-store sales higher than our labor costs, except for some particular regions where we compete with other industries. But overall, in Mexico, I would say that our labor cost expansion has been expanding lower than our same-store sales. When we analyze sales by region, mostly comes from South, East, and Southwest, and the central part of Mexico. And particularly in all of our formats, I would say that are growing pretty much at the same pace. And maybe, Carlos, you can comment about labor in the U.S. Yes, good morning. Look, we continue to see labor cost pressures in the US, albeit at a lower level than we have had in the last 24 months. But we don't certainly see them, you know, coming down. So, we think they're gonna be in a more controlled environment moving forward, but still high. Rahi, let me add to your question about the trade down. We've seen that the speed of growth in ticket has been reduced, and but we sustain a gain in transactions of customers. So yes, there's a trade down in the pesos that they are spending in the ticket, but we're gaining customer counts. So, in the end, we are able—we have been able to sustain the double digit growth or close to double digit growth in Mexico. Perfect. Thank you so much. As a reminder, it is star one to ask your questions. There are no further questions in the queue. I'd like to hand the call back to management for closing remarks. Well, I just want to thank everyone for joining, and hope to be talking to you again at the beginning of next year to comment about the fourth quarter results, where we don't expect any changes in the trend that we're seeing. So, we expect to close a very good year. Thank you so much, and well, happy holidays in advance to everyone. Thank you. Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day!