Good morning to all participants, and welcome to Grupo Comercial Chedraui third 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 Tafur, CFO, and Arturo Velázquez, IRO for the company. We will begin the call with initial comments on Grupo Comercial Chedraui third quarter financial results by the company's CEO, Mr. José Antonio Chedraui. Thank you. You may begin. Good morning to all, and welcome to our presentation of Grupo Comercial Chedraui's third quarter 2024 results. I want to recognize the continued dedication of our employees to effectively execute the three main pillars of our strategy: providing our customers with the products they want, offering the lowest price, and delivering an exceptional customer experience. The commitment to these pillars has been the key driver of our market share gain during the third quarter. In Mexico, our customers continue to prefer shopping at our stores, as evidenced by our same-store sales performance, which has exceeded ANTAD results for the seventeenth consecutive quarter. In the US, El Super and Fiesta Mart continue to drive same-store sales growth for Chedraui USA. These formats achieved combined mid-single digit growth compared to the previous year. For Chedraui USA, we're pleased to announce that in July, we began operations of our new distribution center located in Rancho Cucamonga, California. We're currently in the process of migrating five legacy distribution centers into the state-of-the-art 1.4 million sq ft facility. This new facility will provide a critical long-term foundation for Chedraui USA, as it will allow us to grow El Super and Smart & Final in the medium and long term, while making our supply chain more efficient. To start our presentation, please turn to slide four, where I will highlight key achievements of the third quarter. Consolidated sales growth was driven by positive trends in all business segments. Same-store sales in Mexico grew by 4.9%, outperforming ANTAD's 3%. Chedraui USA's same-store sales increased 0.5% in dollar terms, maintaining a positive trend. Consolidated EBITDA, excluding one-time costs associated with our new DC, was in line with Q3 of 2023. EBITDA margin in Mexico continues to expand, benefiting from operating leverage and cost efficiency strategies. Net debt to EBITDA ratio stood at 0.02 times. CapEx for the first nine months of 2024 totaled MXN 7,293 million, and represented 3.6% of consolidated sales. In the following slides, I will comment with more detail on these key highlights. Please turn to slide five. All businesses had positive sales trends in the quarter, which translated into an 11.8% consolidated sales increase compared to the third quarter of 2023. The currency impact on Chedraui USA's sales was positive, 13.1% when translating into Mexican pesos. Our consolidated EBITDA increased by 3.5%, and our EBITDA margin stood at 8.2%, and this result was impacted by duplicate distribution center costs at Chedraui USA. If we exclude these duplicate costs, consolidated EBITDA would have increased by 11.1%, while EBITDA margin would have been 8.8% of sales, which is in line with the third quarter of 2023. On slide six, consolidated net income continued to show a positive long-term growth trend, even when considering duplicate costs in the quarter. The compound annual growth rate over the last four years is 22.8%, and if we exclude supply chain duplicate costs, growth is 34%. We are committed to improving our profitability levels and at the same time, investing in the CapEx needed for medium and long-term growth. In the quarter, ROE was impacted by these duplicate supply chain costs. We're very confident that our profitability will return to normalized levels in the second half of 2025, as our new Rancho Cucamonga distribution center reaches full operations. In the following slides, we will review the main highlights of our businesses in Mexico and the U.S. On slide seven, in Mexico, same-store sales exceeded ANTAD results for the seventeenth consecutive quarter, growing by 4.9% compared to ANTAD 3%. Our Mi Chedraui loyalty program is an essential element of our value proposition by delivering our customers tailored promotions in our various store formats, especially during the highly competitive summer period. We continue to focus on increasing the penetration of our customers in our Mi Chedraui loyalty program, as evidenced by the 6% customer growth in the last twelve months to 12.6 million members. This allowed us to recognize 74% of our sales from loyalty program customers, which is a record level for the company. Please turn to slide eight. Positive same-store sales and a 2.5% increase in sales floor area drove consolidated sales growth by 7.8% compared to the third quarter of 2023. EBITDA grew 9.8% compared to the same period last year. This increase is explained by improved inventory management and better promotions to customers, which offset higher labor costs. EBITDA margin ended at 9.1%, a 17 basis point improvement versus the prior comparative quarter. Finally, on slide nine, we will review the highlights of our real estate division. The occupancy rate increased to 98.3% from 97.3% in the third quarter of 2023. Sales continued to show positive trends with a 13.1% increase compared to the same quarter of 2023, amounting to MXN 381 million. Over the last twelve months, 8,102 square meters of leasable area were incorporated, representing 1.9% annual growth. EBITDA increased 9% and represented 62.9% of sales. I will now turn the meeting over to Carlos Smith, CEO of Chedraui USA, for his comments on our operation in the U.S. Carlos, please go ahead. Thank you, Antonio. As Antonio commented, this is a transformational year for Chedraui USA. In July, we started operations in our new distribution center in Rancho Cucamonga, California, which will replace five existing distribution centers in Southern California. This investment will lay the foundation for future growth opportunities for El Super and Smart & Final. Such a big project comes with challenges. However, I'm very confident that our employees' dedication and commitment will allow us to successfully complete this transition process and begin the implementation of operational efficiencies in our supply chain. Please turn to slide ten. As shown in this slide, the total investment will be approximately $120 million, of which nearly $80 million has already been deployed. The total size of the new facility is 1.4 million sq ft, and from it, we will source dry, chill, and frozen products for El Super and Smart & Final stores. Currently, we are sourcing dry products for the stores, and we are under construction for the chill and frozen spaces. Please turn to slide 12. Chedraui USA same-store sales in the quarter remained in positive territory, growing 0.5%, as mid-single-digit growth at El Super and Fiesta Mart continue to compensate for lower than expected same-store sales at Smart & Final. Total sales increased 1.9%, driven by same-store sales growth and sales floor expansion of 1.4% over the last 12 months. In Mexican pesos, due to the 13.1% Mexican currency depreciation, Chedraui USA's total sales increased by 15.3%. We continued with our organic growth program by opening one El Super store in the quarter, for a total of four stores in the first nine months of 2024. As commented, combined El Super and Fiesta same-store sales grew mid-single digit, fueled by an increase in customer count and above expectations. Smart & Final sales continue to be affected by lower average transaction size, particularly with our business customers. We continue to work on value-add strategies to turn around sales in the coming quarters, focusing on pricing and our perishable offering to position the Smart & Final brand as a primary store for the consumer. This initiative is supported by our marketing strategy, which was launched in Q2 with the tagline of: Smart & Final, Where Else? Please turn to slide 13. In this third quarter, EBITDA was affected by duplicate occupancy costs and operating expenses within our supply chain operations, which impacted operating leverage at Smart & Final, resulting in lower EBITDA in dollar terms and a 2.8% decline in MXN. EBITDA margin represented 7% of sales in the period, but when adjusted for duplicate supply chain costs, EBITDA increased 12.5% in MXN and represented 8.1% of sales. Similarly, without the duplicate costs, El Super and Fiesta Mart reached a combined EBITDA margin of 8.9%, a 26 basis point increase compared to the same quarter of 2023, explained by continued operational efficiencies and expense control. Excluding duplicate supply chain costs, Smart & Final's EBITDA margin stood at 7.3%, impacted by diminished operating leverage due to lower sales. This concludes our report on the U.S. operations. We now turn to the consolidated financial results on slide 14. Consolidated sales amounted to MXN 71,886 million, an 11.8% increase year-over-year, driven by positive sales trends in all our businesses. Gross profit rose 9% and 11.6% without the duplicate supply chain expenses. Gross margin benefited from effective inventory and promotion management in Mexico. Consolidated operating expenses, excluding depreciation and amortization, increased 12.2% and 11.9% without the duplicate supply chain expenses. This increase was mainly due to higher labor costs in Mexico and the U.S. Consolidated EBITDA grew 3.5%, representing 8.2% of sales and 11.1% growth after adjusting for duplicate supply chain expenses. EBITDA margin, excluding these one-time costs, represented 8.8% of sales, which is in line with the third quarter of 2023. Financial expenses increased by 30.4% to MXN 1,458 million, explained mainly by higher interest expense due to the capitalization of new property rents and the new distribution center, in accordance with IFRS 16. When excluding the impact of duplicate costs, the financial cost would have increased by 5.8%. Consolidated net income posted a 24.8% decline to MXN 1,456 million and represented 2% of sales. This decline is once again explained by duplicate supply chain costs. When eliminating this impact, net income grew by 6.6% to MXN 2,063 million and represented 2.9% of sales. Finally, please move to slide 15. Our financial leverage in the quarter was 0.02 times, compared to the 0.09 times in the same period last year. Fiscal year to date, CapEx investment reached MXN 7,293 million, equivalent to 3.6% of sales and 37.7% higher than the previous year. This is explained by an increase in the opening stores in Mexico and the United States, as well as the investment made in the new distribution center. It is important to highlight that cash generated by our operation allowed us to fund this higher CapEx and improve our cash position versus the previous year. Now, if you allow me, we will move on to the question and answer section. Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation 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 poll for questions. Our first question comes from Ben Theurer with Barclays. Please proceed with your question. Yeah, good morning, and thank you very much for taking my question. Just a couple quick ones. So on the U.S., on the replacement of the DCs and with the new one, you laid out the CapEx and the impact, as it relates to the subsequent quarters. So just wanted to understand a little bit, when you kind of like roll down these other five DCs, how should we think about it from a timing perspective, and what the impact is going to look like, for the fourth quarter and then maybe one and two Qs? So that would be like really my first question, to kind of understand the rollout of the new DC. Good morning, Ben. This is, Carlos. Yes, so at our current state, we are operating with our five legacy DCs, in addition to the Rancho Cucamonga 1.4 million sq ft DC. We're currently about to finalize the full integration of our dry operation here in the next several weeks, and that portion will be complete. As we begin to shed legacy DCs, we expect that to go through Q2 of 2025. So what we should expect to see in Q4 and then Q1, and subsequently in Q2, is a diminishing rate of impact from these transition costs that you're seeing here in Q3. Okay, perfect. And then, just on the performance in Mexico and the outperformance that you guys were able to achieve against ANTAD. Can you maybe share a little bit more insights as to what's been driving it? Is it across the different sub-segments that you're having in Mexico? Is there something in particular you would highlight from a format perspective, just given the strength and the consistency over so many quarters, and if there are any regional differences as well that you would potentially highlight? Good morning, Ben. Thank you for your question. Well, I think we've always said that there are basically three important pillars of what we do. One is our pricing strategy, which we do store by store, and it's very efficient. Then it's the assortment, which is also done store by store. And finally, the ambience and the comfort that we create, the image as well, for every segment that we try to serve in every region. And those particular adjustments done store by store, I think have been working successfully and has allowed us to keep gaining market share, but most of all, customers. We keep seeing our customer growth in every region in Mexico, and now it's pretty much I would say, leveled in all regions. We had experienced in the past a very important growth in the touristic areas of Mexico. Now, it's pretty much leveled in all regions. There's not any particular peak that we're seeing at the moment. Okay, perfect. Thank you very much. Our next question comes from Antonio Hernández with Actinver. Please proceed with your question. Hi, good morning. Thanks for taking my question. On Smart & Final, regarding your performance, I mean, it was expected, based on the performance, but what are you expecting going forward? I mean, your marketing strategy, and all of that, you've been implementing that for a couple of quarters as of today, but what are your expectations for next year? And then, I have a quick follow-up. Thanks. Yes, thank you, and good morning, Antonio. So let me take this opportunity to talk a little bit about our sales in the U.S. in general terms, if I may. I think we're very encouraged, obviously, with the continued sales strength on our Hispanic banners, driven primarily by solid customer count growth. Smart & Final sales stayed on trend in Q3, which was a bit disappointing, given we expected a stronger second half of the quarter. The market has gotten very promotional, so we've had to make some adjustments to our strategy. Favorably, I think that October trends look much better with strengthening customer counts, which is promising. So we think we're on the right track to show some sales improvements in Q4 and forward into fiscal year 2025. Perfect. That's very helpful. Just a quick follow-up regarding Mi Chedraui. I mean, that's quite solid, and I've been following that growth trend, quite impressive. What's next for this program? Is there something else that you're planning there? Thanks. Yes, Antonio. Mi Chedraui has become an extraordinary tool that is helping us know our customers better. We are, at this moment, being able to offer specific promotions to groups of customers. We keep developing the tool so that it will allow us to offer particular promotions to every particular customer that we have currently in our stores or buying online from us. There is a very optimistic future for this program. We now have 12.6 million customers, and it keeps growing. I think it's a very helpful tool, and strategically, it will allow us to connect with these customers, probably giving us the capability to increase sales by customer, to increase the basket, but as well, to increase our gross margin, because we are saving waste of certain promotions that are not required for some customers, and on the other hand, probably save advertising expenses, since we're being able to connect directly with these customers, so there's a lot of future for our program. Perfect. Thanks again, have a nice day. Our next question comes from Melissa Byun with Bank of America. Please proceed with your question. Hi. Hi, Antonio, Carlos. Thanks for taking my question. Carlos, when it comes to the new distribution center, was the impact only on the cost side, or was there any disruption to sales or in stock levels? And what are the benefits that you expect, once the transition process is complete? Yes. So, the impact's really on two fronts. The majority of the impact is on additional occupancy costs, but there is some portion of additional labor costs in the startup, as well as some transportation costs as well. So, as I mentioned earlier, we're very excited about continuing the integration. In the first part of 2025, we'll continue with integrating our frozen operations then into our what we call our chill operations, which is produce and meat, which are very important categories for us. But the idea of having common inventory for both banners at the DC moving forward is a tremendous benefit from a cost of goods side. But the idea primarily comes from establishing a foundation for growing new stores, improving service levels to the stores, and lowering transportation costs. Our estimates right now project about a fifty basis point improvement to where we've been trending prior to Q3. So we'll have a little bit of disruption here, as you're seeing in Q3. It's gonna be less disruption in Q4, less in Q1, followed by less in Q2, and we'll start ramping up again in Q3 and Q4 of 2025, getting to materialize this benefit of fifty basis points that we're targeting. Thanks. And that fifty basis point benefit, will that be for the entire U.S. operations? Or, and then how do you expect that to be maybe impacting Smart & Final versus, or more- Yes, so- -of the cost bar versus Right. Right. -basis point. So, great point. For clarity purposes, the RC, what we call the RCDC, which is Rancho Cucamonga Distribution Center, is really focused on Smart & Final and El Super. And the breakout is approximately 70% Smart & Final, 30% El Super. So that 50 basis point improvement is allocated to these two banners. Great. Thank you so much. Our next question comes from Renata Cabral with Citigroup. Please proceed with your question. Hi, everyone. Good morning. Thank you so much for taking my question. I have two here. The first one is a follow-up about the store formats in Mexico, specifically the performance. If you can give us some color about which format is doing the best job, let's say, in terms of, say, same store sales, if you can rank or give any color on that, would be great. And my second question is related to the potential reform that can pass next year, sorry, towards the change in the number of working hours per week, and the plans that the company has to mitigate those impacts. Thanks. I'll try to answer the first question. Well, on the store format side, we are experiencing a very strong same-store sales growth, basically in Tiendas Chedraui, the big format, particularly on the lower income customers, the CD, what we call the CD, that would be our stronger format, as well as the Supercitos, which is the proximity format that I have already explained. In all of the formats we are growing, but particularly we see some peaks of growth in these two formats. And could you help us repeating, please, the second question, Renata? Sure. It's related to the potential change in the number of hours that the workers can do. That's currently forty-eight, and there is a proposal to reduce to forty hours per week. My question is, if the company thinks that it can pass in 2025, and if you can share the plans that the company has to try to mitigate those impacts? Thank you for your question again. Well, we have the lowest operating cost structure of the food retailers in Mexico, and that has allowed us to support all the labor increases that we have been seeing in Mexico. I personally do not think that the new labor how do you say? Labor week. Labor week is not. It's, we don't believe it's not going... Probably, it's not going to happen. But anyway, if that would be the case, we, as a company, would be probably the most prepared food retailer in Mexico to support that. Our sales and expenses are close to 14% of sales in Mexico, a little bit under that, and that will allow us to support any of these increases, even though we don't think it's going to happen. Super. Thanks so much for the color. Our next question comes from Daniela Bretthauer, HSBC. Please proceed with your question. Good morning, everyone. Thanks so much for taking my question. The first one is actually a follow-up on Melissa's question on the 50 basis points improvement. Is that a full year figure? And when exactly should we expect that? Is it like second half of 2025 or only like full year 2026? And then I have two more questions. Yes. Well, I think it's important to clarify that the fifty basis point improvement is our target, and there's obviously a ramp-up period as we get to that number. It implies a lot of work related to transportation efficiencies and moving forward with a new way of sourcing product on a common basis for both banners. So we understand that there is a tremendous amount of urgency on our part to get there, but we're gonna do it in a very thoughtful fashion, and we expect it to ramp up over a few quarters. That's very clear. Thank you so much. And my two questions are: the first one is on Supercitos. You mentioned earlier this year that your plan was to open 100 new stores in 2025, but so far you've opened, I believe, 22. So is there a change or an update on the Supercitos store opening strategy that you can share with us at this point? And the second question is on the holiday outlook, sales. Your competitor mentioned a soft consumer environment in Mexico, so I just wanted to hear your thoughts there, because you just mentioned that the low-income customers are performing well with Tiendas Chedraui and Supercitos. Yes. Thank you, Daniela, for your question. Yes, we projected 100 Supercitos. We'll be close to 70 Supercitos instead of 100. We have not been able to get all the permits, I think. The elections and the change of government has affected some areas where we want to open the Supercitos, because they wait usually for the new administration, and that has delayed our growth. Even though we have the plan, we have the places, we know where the Supercitos are going to be and which ones, it has delayed our speed of opening. We'll probably end up on the low 70s by the end of the year, in the number of Supercitos. About the holiday outlooks, yes, we have seen a slow rate of growth on the consumption side. We see that in ANTAD. We have seen it ourselves. We will be, by year-end, hitting our same-store sales target growth in Mexico offered in the guidance at the beginning of the year will hit that number. But yes, we're seeing a slowing on the consumption side in Mexico. That's very helpful. Thank you so much, and happy holidays. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment while we poll for questions. Our next question comes from Irma Sgarz with Goldman Sachs. Please proceed with your question. Yes. Hi. The majority of my questions were addressed, but just had two quick other questions. On the traffic side, could you just sort of characterize what you're seeing in terms of when you decompose the same-store sales between traffic and ticket, and how you're thinking about this into a year-end, perhaps? And then into 2025, how should we think about sort of expense? I know it's maybe early to think about guidance and budgeting, but just generally, what's on your radar in terms of when you think about expenses, operating expenses for 2025? Thank you. About the traffic, and sales in Mexico. Well, as we already mentioned, we were able to grow 4.9% same-store sales in Mexico, and close to 1% comes from traffic, and the rest is ticket, which is the value of ticket. Can you help me with the second question, please? Can you repeat that again, please? Thanks. So for the second question, I was thinking just generally operating expenses. When you think about, I heard your earlier comments about labor and labor week, and I know you're a very efficient operator, but when you think about 2025, do you think there's scope for operating leverage, or are there certain potential sources of expense pressures that are on your horizon? Thank you. We are at the moment we're not expecting that the reduction of labor hours on the weekly labor hours will happen. If that doesn't happen, we are projecting an increase in labor that we'll be able to support with the efficiencies that we have already put in place, and we don't believe we're going to see any negative effects on the EBITDA margin for next year. We don't know exactly what will be the minimum labor increase for next year. But from what we hear, if it's close to that 12% that they are mentioning, we would be prepared to support that and end up, if not being able to gain EBITDA margin, at least to sustain what we already achieved this year. Very clear. Thank you. Our next question comes from Daniela Bretthauer with HSBC. Please proceed with your question. Thank you so much for taking my follow-up question. I just wanted to also clarify. You mentioned that there is an impact on the ramp-up of the new DC, but can you share the figure? Because it was, like, $22 million in this Q3, and you mentioned that there will be an impact in Q4, Q1, Q2. Do you have a figure in mind, and how do you split that between the three quarters, upcoming quarters? That would be very helpful. Yeah, thanks, Daniela. Yeah, I don't have specific figures for you, as we move forward, but what you can account for is that this is a diminishing number moving forward, and I think the worst quarter is behind us from this perspective. Okay. Got it. Thanks. We have reached the end of the question-and-answer session. I'd now like to turn the call back over to management for closing comments. Does management have any closing comments? No. I just wanna thank everyone for joining, and happy holidays, and I hope to be talking to you again next year. Thank you so much. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.