Good morning to all participants, and welcome to Grupo Comercial Chedraui's second quarter 2024 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, CFO, and Arturo Velazquez, IRO for the company. We will begin the call with initial comments on Grupo Comercial Chedraui's second 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 second quarter 2024 results. I want to begin by expressing my gratitude to all our employees for their dedicated efforts in executing our strategic initiatives of offering the lowest prices, the best assortment by store, and an exceptional customer experience. These efforts combined to drive our outstanding success in the quarter. The preference of our customers in Mexico played a major role in driving our same-store sales growth, which exceeded ANTAD for the 16th consecutive quarter. El Super and Fiesta Mart also contributed significantly by achieving mid-single-digit growth and helping Chedraui USA achieve a 1.4% increase in same-store sales in dollar terms. To start our presentation, please turn to slide four, where I will highlight key achievements of the second quarter. Consolidated sales growth was driven by all business segments. Same-store sales in Mexico grew by 5.5%, outperforming ANTAD's 3.5%. Chedraui USA's same-store sales increased 1.4% in dollars, rebounding after two negative quarters. Consolidated EBITDA margin improved by 9 basis points, driven by higher margins in Mexico, El Super, and Fiesta Mart. Net cash debt to EBITDA ratio improved to -0.02x. Return on equity improved by 43 basis points. In the following slides, I will comment with more detail on these key highlights. Please turn to slide five. Sales for all our businesses grew during the quarter, which translated into a 4.5% consolidated sales increase compared to the second quarter of 2023. The currency impact on Chedraui USA's sales, when translated into Mexican pesos, was marginal in this period, at only -0.6%. Our consolidated EBITDA increased 5.5%, and EBITDA margin was higher by 9 basis points to 9.1%, a record level for the company. This EBITDA increase is explained by improved inventory management and an efficient promotion strategy in Mexico and the U.S., which combined to compensate for higher labor costs. On slide six, consolidated net income continued to show a positive long-term growth trend, with a compound annual growth rate over the last four years of 31.2%. Higher EBITDA levels and lower financial expenses explain this result. As I previously shared, we're committed to improving our profitability levels, which can be observed by a return on equity result of 18.5%, a 43 basis points increase compared to the second quarter of 2023. In the following slides, we will review the main highlights of our businesses in Mexico and the U.S. On slide seven, Chedraui's same-store sales in Mexico exceeded ANTAD's level for the 16th consecutive quarter, growing in the second quarter by 5.5% compared to ANTAD's 3.5%. This result considers the adverse calendar effect related to the Easter period in April. We believe our Mi Chedraui loyalty program is an essential element of our value proposition to our customers by delivering the best promotions in our various store formats. This loyalty program allows us to personalize customer promotions based on their individual preferences and consumption trends. Over the last 12 months, Mi Chedraui experienced 12.8% customer growth, and 71% of our sales now come from loyalty program customers. Please turn to slide eight. The positive results in same-store sales and a 2.8% increase in sales floor area drove to a 7.6% consolidated sales growth compared to the second quarter of 2023. EBITDA posted a 10.4% increase compared to the same period last year, as operating leverage, improved inventory, and promotion management mitigated the impact of higher labor costs. EBITDA margin ended at 8.7%, a 23 basis point improvement versus the prior comparative quarter. Finally, on slide 9, we will review the highlights of our real estate division. Our occupancy rate increased to 98.2% from 96.6% in the second quarter of 2023. Sales continued to show positive trends with a 9.6% increase compared to the same quarter of 2023, amounting to MXN 359 million. Over the last 12 months, 15,002 square meters of leasable area were incorporated, representing 3.5% annual growth. EBITDA increased 3.8% and represented 62.6% of sales. I will now turn the meeting over to Carlos Smith, CEO of Chedraui USA, for his comments on our U.S. operation. Carlos, please go ahead. Thank you, Antonio. Please turn to slide 10. Our employees' dedication to executing our strategy of providing our customers with the products they want at the best possible prices, together with our store remodeling initiatives, drove higher customer count, particularly at our El Super and Fiesta banners. This focus drove positive same-store sales in the quarter after two negative quarters, as sales at El Super and Fiesta Mart more than compensated for the decline in same-store sales at Smart & Final. Same-store sales grew 1.4% in dollar terms, while total sales increased by 2.4%. The total sales increase was aided by a 1.5% increase in sales floor expansion over the last twelve months. In Mexican pesos, due to the marginal foreign exchange impact of -0.6%, Chedraui USA's total sales increased by 1.8%. As part of our continued organic growth program, we opened 3 new stores in the quarter, 1 at each banner, including the first Fiesta Mart store opening since 2015. El Super and Fiesta growth continued to exceed expectations, posting mid- to high-single-digit growth for same-store sales, fueled by strong increases in customer count. Smart & Final sales continued to be impacted by lower average transaction size, mainly in our sales to small businesses, which represent 30% of total sales. However, we started to see sales improvements compared to the 2 previous quarters due to the various sales initiatives. Please turn to slide 11. In the quarter, EBITDA increased by 2.6% in dollar terms and 1.7% in Mexican pesos. EBITDA margin was flat, representing 8.9% of sales. It's noteworthy to mention that El Super and Fiesta Mart reached a combined EBITDA margin of 9.4%, a 72 basis point expansion compared to the same quarter of 2023, explained by continued operational efficiencies and leveraging our controlled cost structure. These results compensated for the decline in Smart & Final's EBITDA margin to 8.6%, as this banner was affected by diminished operating efficiencies due to lower sales and some expenses related to the start of operations for our new distribution center, which started receiving and shipping limited quantities at the end of Q2. During the quarter, we paid down $22.5 million in debt, ending the quarter with long-term debt of $449.5 million and short-term debt of $14.75 million, for a total debt balance of $464 million. This concludes our report on the U.S. operation. Thank you, Carlos. We now turn to the consolidated financial results on slide 12. Consolidated sales amounted to MXN 67,453 million, a 4.5% increase year-over-year, driven by higher sales in all our businesses. Gross profit rose 7.6%, with a 70 basis point improvement in gross margin. This is due to effective inventory and promotion management in Mexico and the US. Consolidated operating expenses, excluding depreciation and amortization, increased 8.9%, mainly resulting from an increase in labor costs in Mexico and in the U.S. Consolidated EBITDA grew 5.5% to MXN 6,136 million, representing 9.1% of sales and up nine basis points from Q2 2023. Financial expenses increased 0.6% to MXN 1,190 million, as higher interest income was offset by an increase in credit and debit card fees. as well as higher interest on the capitalization of income of new properties. Moving on to consolidated net income, it increased 8.3% to MXN 2,017 million, and represented 3% of sales, compared to 2.9% in the second quarter of 2023. Finally, please move to Slide 13. Due to a positive net cash balance, our financial leverage in the quarter was -0.02x, compared to 0.12x in the same period last year. This improvement includes the impact of a MXN 1,146 million ordinary dividend paid to our shareholders on April sixteenth, which calculates to MXN 1.1889 per share. Fiscal year to date, CapEx invested reached MXN 5,036 million, equivalent to 3.8% of sales and 63% higher than previous year. This is explained by an increase in the opening of stores in Mexico and the United States, as well as the investment made in the new distribution center in California, United States. It is important to highlight that the resources generated by our operation allowed us to fund this higher CapEx and improve our cash position to the previous year. Now, if you allow me, we will move on to the question and answer section. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A conference tone will indicate your line is in the question queue. You may press star two if you'd 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 keys. One moment please, while we pull for questions. Thank you. Our first question is from Rahi Parikh with Barclays. Please proceed with your question. Awesome. Thank you. Thanks for the space for questions. Just first, Smart & Final. Within your PR, you mentioned a better sales trend starting to come up. Just wondering how much of the improvement is from the large scale ad campaign for Smart & Final that you mentioned last quarter, which would start in May? And what's the outlook for the format second half? Should we see continued improvement sequentially? I have a follow-up for after. Yes, good morning. Yes, so as you saw, Q2 showed significant improvement in our sales trend at Smart & Final, although not necessarily where we want to be. We expect that continued improving trend in Q3. We're very hopeful that we'll be close to flat and begin to see some positive comps in Q4. The brand awareness campaign that started on 5.1 has been launched. We think it's going to be a very successful campaign, but as you can as many of you know, a brand awareness campaign takes time. So, we're being patient, but I think it's going to do what we want. It's gonna meet its objectives, which is to reintroduce the Smart & Final brand to new consumers, which is an important component of our strategy to relift sales at Smart & Final. Yeah, it makes total sense. And then also for the quarter, what product categories do you see that showed overall strength, and then which ones do you think showed weakness? Any signs? Thank you. Yeah, I think that, in the quarter, we started seeing the recovery of our dairy categories at Smart & Final. We're seeing some improved penetration in the produce category, which is very important for another one of our key strategies at Smart & Final, which is to get folks that are already in the store as event shoppers or stock-up shoppers to convert to everyday shoppers. And for us, that strategy begins with strengthening our produce departments and our meat departments, basically our perishables, which is how you drive frequency into the store. And we're gonna do that through a combination of pricing initiatives, freshness and quality, and obviously very focused assortment and good merchandising techniques in store. Is there a difference within, like, the Mexican, your other markets? Do you see any other weakness beyond the US in certain categories, in the Mexican market? No, as you saw, the Hispanic markets, El Super and Fiesta performed very, very well. They did so through primarily a very strong customer count increase, which I think speaks strongly to the strength of our value proposition at those, at those banners. As we've talked about before, we've spent a lot of time and effort in improving our perishable sales mix at Fiesta, similar to what we're doing at Smart & Final. And you're seeing some of those, the fruits of that labor. It's not overnight, and we're being recognized by the strength of those categories and the pricing and value that we offer our consumers, something that has been entrenched over many years at El Super. And at a time when consumers are very focused on stretching their dollar and are very cautious, those types of formats do well. Our expectation is that those two banners will also have a strong third quarter, and we understand that we're going up against some very difficult comps in Q4, but we're very bullish on both quarters at those banners. Great. Thank you so much for the color. Thank you. Our next question is from Thiago Bortoluci with Citi. Please proceed with your question. Hello, good morning. Thank you for taking my questions. I wanted to discuss a bit the Mexico environment, the consumer environment, right? So maybe if we could discuss the same store sales dynamic, if there's anything worth mentioning here between traffic and ticket. And how did you see the dynamic for the quarter throughout the different months, right? And yeah, I mean, maybe wanting to understand what's the outlook here, specifically for traffic inside the same store sales going forward on a mid to long term? And that would be it. Thank you very much. Good morning, Thiago. Thank you for your question. Well, it is important to mention that, we had difficult, comps due to, Easter season that moved up to first quarter this year, and we had it, in the second quarter last year. So we had those difficult comps. We keep gaining market share, same store sales. We, we beat ANTAD, by, 200 basis points, so, we keep gaining market share, and that's throughout, all regions. We suffered, the effect of the movement of the Easter season, mostly in the, tourist areas where we have a big presence. We grew very strong in those areas, last year, so we had a very difficult comparison base, and that's probably affecting us more than any other, retailers. But I think we achieved quite good results because, even with those comparison bases, we were able to beat ANTAD again in Mexico. Our growth have been in both concepts. I mean, we grew traffic, and we were able to grow ticket as well, both. And that happens in every region where we participate. So I think that we had, in terms of sales, due to those reasons that I explained, a very reasonable good quarter. Looking forward, we see that consumption still positive. We keep beating our difficult comps, month by month, day by day, so we still feel bullish about it. So that's what I would say about the Mexico environment and same store sales growth. I don't know if that clarifies your question, Thiago. Absolutely. Very clear. Thank you very much. Thank you. Thank you. Our next question is from Fernando Herrera with Compass Group. Please proceed with your question. Hi, guys. First of all, congrats on the turnaround we're starting to see in the U.S. operations. I was just wondering if you can provide any more color regarding the strike situation that is going on in the U.S., and how it has impacted the logistics part of the business, and also how much has been the impact of that situation? Yes, Fernando, good morning. Allow me to give you some context. As we've mentioned before, we've known since day one that our distribution network of five DCs in the U.S., in California in particular, is at capacity. We've done a lot of work and we did a lot of work internally and with outside consultants to determine what the long-term solution is, and that is to operate out of a large facility that integrates our operations. That facility will allow us to add new stores, to improve service levels to the stores, and to lower transportation costs. However, this does imply closing down facilities, which is never easy. On June nineteenth, we had a work stoppage at two of our facilities, where not all, but a majority of our associates decided to strike. That, we implemented our contingency plans immediately with additional staffing, and we continued to receive product and ship product to our stores. So given that we continue negotiations with the union and, given the legal nature of these discussions, it's probably as much as I can say at this time. Okay. Yeah, super clear. Thanks. Thank you. Our next question is from Rodrigo Alcantara with UBS. Please proceed with your question. Hi, good afternoon, good morning, thanks for taking my question. And within Mexico, if I may, so next year, we know, minimum wage is likely to increase 11%, right? Which is better, right, than the twenties that we have seen over the last five years. So my question would be if for next year, you see OpEx pressures may be easing relative to current year and previous years, therefore, you know, you see the chances for you to expand your margins in Mexico higher? Yeah, that would be my question, Antonio. Thank you very much. Thank you, Rodrigo. Well, thank you for your question. If I understood well, we expect for next year an increase of 11% in the medium wage, therefore, OpEx would be easing a little bit compared to what we have experienced in the past two years. Is that the question, Rodrigo? Yeah, it is. Actually, the question is if you agree on or not on that premise, that maybe next year your labor expenses could be lower than what we have seen over the last five, six years. I do think that, yes, we have lived through a continuous wage growth very, very strong over inflation, and we expect that it will be reduced. Therefore, yes, we believe there would be probably less pressure than what we have had in the past two years. That being said, I think that Chedraui is very well positioned with a very efficient cost structure that even if pressures on the wage side continue, we have a pretty strong and efficient base that will allow us to sustain our profitability with the cost structure that we have put in place. Our sales by store, by square meter in every region allows us to reduce the participation of the fixed costs in our operation, and that reduces the pressure. So, I agree, we expect less pressure, but we're prepared with a very, very good and efficient cost structure, Rodrigo. Awesome. And lastly, on the gross margin, if you see room for further expansion of your gross margin in Mexico? That will be it. Thank you very much, and so on. No, you're welcome. Rodrigo, we keep expanding because we are operating better on the inventory side. We keep buying better, and every month we see a reduction in our old inventory that allows us to reduce markdowns. And I think it's a positive cycle that keeps benefiting on the gross margin without affecting the pricing strategy that keeps following our philosophy of operating with the best prices in every particular region that we service. This quarter was not the exception, even with the pressures on the sales side growth because of the hard comparison base that we had due to the movement of the Easter season, we still were able to grow our EBITDA margin by 23 basis. So we're very bullish about this and we think we're gonna be able to keep growing our EBITDA margins in the future. I see that. That was very clear. Thank you very much for the answer. Thank you, Rodrigo. Thank you. Our next question is from Bob Ford with Bank of America. Please proceed with your question. Thank you, and good morning, everybody, and congratulations on the quarter. Carlos, what were the big enablers to improvements in the perishables and the pricing at El Super and Fiesta? And how are competitors responding? And Antonio, how are you thinking about your value proposition in Mexico versus competition? And what are the biggest points of differentiation, and are you beginning to see any greater price elasticity or payroll cycle sensitivity in Mexico? Thank you. Hi, Bob. Look, I think that, as you know, El Super is well entrenched in the markets it's operating in as a price leader and a very strong perishable operator. We provide excellent value at a time where consumers are shopping more frequently. So the price gaps with our competition continue to be as wide as they were pre-pandemic, post-pandemic, and I think that has continued to help El Super position itself as a very attractive shopping locale for consumers. Over time at Fiesta, the same thing is beginning to happen. We spent a lot of money, as you know, remodeling and upgrading stores. We spent a lot of money on price initiatives that are taking hold in the market, and we're slowly seeing that same type of evolution at the Fiesta store, something that we're very happy about. But that journey is nowhere near completed. Having said that, you know, we have seen a little bit of inflation in meat and produce, and the formats that have more exposure from a sales mix standpoint tend to benefit during those times. The flip side is, when you have a lot of deflation in commodities, those formats tend to suffer. But overall, I think it's just a recognition of the value proposition, both in the perishable side and in center store. That's helpful. And I guess as things slow down, and you do see greater elasticity, one might think that you can still take, if, or the environment facilitates greater share shifts. Is that fair? Yes, it is fair, and our, you know, our Nielsen share gains at both of those formats have been very impressive when compared against the rest of the market. Thank you, Bob. About the differentiation, in Mexico, well, I think, Chedraui does probably the best job among retailers, adjusting assortment, shopping experience in our physical stores, price, and the use of Mi Chedraui by every format and every region that we operate. I think that, the shopping experience that we offer our customers, really adjusts, we believe, to their particular needs in every region. We are very flexible adjusting those, in those particular areas: assortment, shopping experience, pricing strategy, and the use of Mi Chedraui, that does not service the customers by groups or by areas, but by a particular customer with name and last name included and all the info that goes around it. So, we're very focused on that, makes us different from other retailers. That's very interesting, Antonio. And are you beginning to see any greater price elasticity or payroll cycle sensitivity? Well, we've seen some aggressiveness probably due to this particular summer season, where always our High-Low competitors become very strong with big offers that we compete against. But now, we see also Walmart, for example, being more aggressive than what they used to be participating in this particular season, and we are reacting to that. And maybe due to the change of the Easter season, it's difficult to evaluate the price elasticity from these promotional activities. But at the moment, without considering that particular queue, but mainly focusing probably in July, what I see it's a little bit the effect of having a weekend less, that means a Saturday and a Sunday that affects the month. Maybe that's putting a little bit more pressure and difficult to evaluate. But I don't see any big change from what has been going. Very helpful. Thank you again, and, and again, congratulations. Thank you. Thank you. Our next question is from Álvaro García with BTG Pactual. Please proceed with your question. Hi, Antonio. Thanks for the space, the questions. Congrats on results. I have two questions. One is, have you ever thought of entering Guatemala or operating in Guatemala? It's an economy that's done quite well over the last couple of years. There's obviously geographic proximity to some of your stores in the south, and was curious of your thoughts on that market. I'll stop there, and I'll ask my second question after. Thank you, Alvaro. Well, we've thought about Guatemala and Central America, but we decided to go the other way. We believe there is a bigger Mexican Hispanic consumer in the US with a bigger, larger buying power than the Central America. So we decided to focus on the US Hispanic market that is a lot bigger and keeps growing. We believe that retail is very local and that you always have to have local capabilities to be able to service properly the consumer. And that's probably the second reason, that even though it's very close, even though that we sell in our south border stores a lot to the Guatemalans, still a different type of consumer that needs to be serviced particularly. So we decided to focus the other way around, Alvaro. Great, thank you. And just zooming in to sort of a discussion we've had on Mexico throughout the call, you know, we see. We saw a nice gross margin gain. We've seen a lot of gross margin gains from a lot of your competitors. And everyone's sort of talking about better merchandising, better inventory management, you know, less discounts and whatnot. But you know, into the second half of the year, it just feels like we're in an environment where if you wanna gain traffic share, you might have to get a little bit more competitive on price. Do you think that's fair, or do you think pricing will be steady into the second half of the year? I think that we're experiencing. We probably will experience a reduction in the inflation trend, and that puts pressure on sales, and that puts pressure on the competitive environment. That's what we expect, and we're prepared for that. It's a very strong factor in our value proposition is the pricing strategy, and that's where we think we differentiate probably the most, and we think that we are prepared for probably a more aggressive pricing environment in the coming months. Yeah, makes a lot of sense. Thank you very much for your comments. Congrats again. Thank you, Álvaro. Thank you. Our next question is from Daniela Bretthauer with HSBC. Please proceed with your question. Hi. Good morning, and congratulations on the results. You know, we know that elections changed a little bit, the calendar of events, the promotions for several retailers. So I wanted, if you could comment on what is your expectation for the Q3 and in general, the second half of the year, given that there was this concentration of the government transfer payment in the first quarter, as well as PTU from companies. So can you give us a little color on whether, you know, elections may change or not, your commercial calendar, and just your overall, consumer sentiment for the second half of the year? Thank you. Thank you for your question, Daniela. Well, elections usually help on the consumption side because there is a government expenditure which already happened. But we do expect to be able to maintain our same-store sales growth in Mexico. At least that's the trend that is looking forward, and that has happened after the elections. So we project to maintain our guidance, being able to increase 7% same-store sales growth in Mexico, and we're pretty much in line with that. We feel we're gonna be able to achieve it. The most difficult quarter was this particular second quarter because of the compression base, As I already explained, the Easter season moved up to the first quarter. So, we feel pretty comfortable with the same-store sales growth that we are projecting. Thank you. Anyway, just as a follow-up question, I recently visited some of your Supercitos and a few in areas where you have a lot of competitors, not only 3B, but, you know, others. I know that, you know, it's still a smaller format for you in terms of sales representation, but what has been the, you know, the performance or results of the Supercito so far? Are you, like, happy with the way things are going? And is there a need to make any adjustments in the overall assortment given, you know, the rapid expansion, especially from Tiendas? Thank you. Mm-hmm. Thank you. Well, first of all, thank you for your question about Supercito. I think it's important. We believe that there is a proximity opportunity in the market. We believe that we really service a consumer need, and we decided to differentiate Supercito from the convenience stores and from the hard discounters. We have a better assortment than the typical hard discounters, a lot better. And we also have a better assortment against the convenience store and a huge price gap against the convenience store. So, being said that, we think that we have a format that is very, very efficient to service that proximity need. And we're seeing very good results on the Supercito, and we're also being able to adjust the Supercito to the particular communities that we service. We at the moment also have, for example, Supercito Selecto, with a differentiated assortment and shopping experience that allows the consumer to feel that they are really able to take advantage of the proximity and replenish their consumption needs for grocery and perishables. So we think we're doing a right efficient proposition to the consumer that it's doing well. It's also important to mention that, due to the elections, which you already talked about, it has been little before the elections, throughout the first and second quarter, and now until the new government takes place, we have had some complications about the permits and the authorizations needed by the local authorities to open the stores that we projected. So we're feeling that. So we're feeling or we are having some pressures that probably will not allow us to open the number of Supercitos that we planned for. We feel we're gonna be close to the objective, but we're seeing, or we suffered some of the change of governments that we're seeing throughout this first part of the year. Thank you so much for the update on Supercito, and good luck. Thank you. There are no further questions at this time. I would like to hand the floor back over to Mr. Antonio Chedraui for any closing remarks. Well, I wanna thank everyone for joining our conference, and well, I hope to be talking to you about our third quarter results that we feel very bullish about them because we're in the right path on our opportunities, which basically would be the Smart & Final format that it's looking in a positive trend for the near future. All the other retail formats are going really, really well, and feel very bullish about these three key. Thank you very much, and I hope to be talking to you again in October. Thank you.