Morning to all participants, and welcome to Grupo Comercial Chedraui's first quarter 2025 conference call. Participating on the conference call today will be Mr. José Antonio Chedraui, CEO of Grupo Comercial Chedraui; Mr. Carlos Smith, CEO of Chedraui USA; Humberto Tafoya, CFO; and Arturo Velázquez, IRO for the company. We will begin the call with initial comments on Grupo Comercial Chedraui's fourth quarter financial results by the company's CEO, Mr. José Antonio Chedraui, and Chedraui USA CEO, Carlos Smith. Good morning to all, and welcome to our presentation of Grupo Comercial Chedraui's first quarter 2025 results. I want to express my sincere appreciation for the dedication of our employees, whose commitment to our strategy of offering the lowest price, the best assortment by store, and delivering an outstanding customer experience is key to driving our continued growth in market share. I am excited to share that in Mexico, our same-store sales have outperformed ANTAD for the 19th consecutive quarter, exceeding them by 90 basis points. This achievement is especially impressive given the negative impact of the Easter holiday calendar shift and considering our strong presence in the tourist-heavy southern region. Our profitability at Chedraui Mexico also saw a notable improvement, with our EBITDA margin reaching 9.5% in the first quarter of the year, an increase of 19 basis points. At Chedraui USA, El Super and Fiesta Mart continue to exceed our expectations, with strong same-store sales growth. At Smart & Final, our marketing and pricing strategies for perishables, initiated in the second half of 2024, translated into positive same-store sales growth this quarter, driven by a strong increase in customer count of nearly 4%. Overall, we're pleased to report a 2.8% increase in same-store sales in dollar terms compared to the first quarter of 2024, marking four consecutive quarters of positive sales trends. Finally, I am excited to share that the transition of our legacy distribution centers in California to our new RCDC is nearing its completion, in line with our expectations, and will be fully operational in the second quarter of this year. Please turn to slide 4, where I will highlight key achievements of the quarter. Consolidated sales saw double-digit growth driven by positive trends in Mexico and in the U.S. Retail Mexico same-store sales growth of 1.2% for the first quarter surpassed ANTAD's for the 19th consecutive quarter. Chedraui USA same-store sales posted an increase of 2.8% in dollar terms, which represents the fourth consecutive quarter of growth. Consolidated EBITDA grew 8.8% compared to the first quarter of 2024 and 12.8% without RCDC transition costs. Consolidated EBITDA margin of 8.4% and 8.7% without RCDC transition costs. Net debt to EBITDA stood at 0.03x. We continue with our organic growth strategy as 15 stores opened in the first quarter in Mexico. In the following slides, I will comment in more detail on these key highlights. Turn to slide 5, please. In the first quarter of the year, consolidated sales grew by 14.8% in MXN, reflecting positive performance across all businesses and a favorable currency impact on Chedraui USA's sales. The positive currency translation resulted from a 20.3% depreciation of the MXN compared to the U.S. dollar. Consolidated EBITDA for the quarter grew 8.8% to MXN 6,256 million compared to the first quarter of 2024. EBITDA margin of 8.4% was impacted by RCDC transition costs and Smart & Final's pricing strategy. Excluding transition costs, consolidated EBITDA would have totaled MXN 6,481 million, with an 8.7% EBITDA margin compared to the 8.9% in the first quarter of 2024. On slide 6, consolidated net income continued its positive trend despite transition costs of the new RCDC. Over the past four years, net income's compound annual growth rate has been 20.8%. When excluding transition costs, net income compound annual growth rate was 23.8%. Our return on equity was impacted by RCDC transition costs and Smart & Final's pricing strategy. However, even when accounting for these items, our long-term strategic focus has driven ROE improvement, rising to 13.5% in the first quarter of this year. This highlights our commitment to creating long-term value for our shareholders. In the following slides, we will review the main highlights of our businesses in Mexico and the U.S. On slide 7, same-store sales growth slowed in the quarter, which was explained by softer economic activity in Mexico and the negative Easter calendar shift. Despite this, we continued to gain market share for the 19th consecutive quarter, even when considering our strong presence in tourist areas in southern Mexico. As mentioned, same-store sales exceeded ANTAD's results, growing by 1.2% compared to the 0.3%. Our Chedraui Loyalty Program continues to offer our clients a strong value proposition by delivering tailored promotions across all store formats and strengthening our understanding of customer preferences and needs. We continue to increase customer participation in our Chedraui Loyalty Program, as evidenced by the 5.6% customer growth in the last 12 months to 13.3 million members. This allowed us to recognize 75% of our sales from loyalty program customers, a new record level for the company. Please turn to slide 8. Positive same-store sales and a 3.5% increase in sales floor area drove sales growth of 3.7% compared to the first quarter of 2024. Chedraui Mexico's EBITDA for the quarter reached MXN 3,183 million, increasing by 5.8% compared to Q1 of 2024. EBITDA margin grew by 19 basis points to 9.5% of sales due to improved inventory and promotion management, which offset higher labor costs. I will now turn the meeting over to Carlos Smith, CEO of Chedraui USA, for his comments on our U.S. operations. Please, Carlos, go ahead. Thank you, Antonio, and good morning, everyone. I'd like to start by providing an update on the status of our distribution center in Rancho Cucamonga, California, also known as RCDC. As of the first quarter of this year, we successfully closed four out of five legacy distribution centers, and we are on track to complete the transition process during the second quarter of 2025. The new RCDC is now responsible for distributing both dry and frozen products, and we are currently working on completing the transition of perishable products. As mentioned in previous meetings, RCDC is critical to support our long-term store growth strategies. The total capital investment in our RCDC will be approximately $120 million. I would also like to give an update on the perishable pricing strategy launched in the fourth quarter at Smart & Final. This initiative aims to increase customer traffic, and we're seeing positive results, as evidenced by a 3.8% increase in customer count and positive same-store sales for the quarter. As commented on in previous calls, we believe this pricing plan is the right long-term strategy for Smart & Final, and we expect margins to gradually improve and realize the expected efficiencies at RCDC. Please turn to slide 9. Chedraui USA's same-store sales in the quarter increased 2.8% versus a prior comparative quarter. This growth was driven by better-than-expected performance at El Super and Fiesta and an increase in Smart & Final's same-store sales. It is important to note that this is the first increase in Smart & Final's same-store sales since the fourth quarter of 2023 and is driven by higher customer count resulting from our perishable pricing strategy, which more than compensated for a decline in the average ticket. Chedraui USA's sales increased by 4.7% in U.S. dollar terms, supported by both same-store sales growth and a 1.7% sales floor expansion over the past 12 months. The depreciation of the Mexican currency against the U.S. dollar by 20.3% contributed to a sales increase of 25.9%. Please turn to slide 10. The pricing strategy at Smart & Final, combined with RCDC transition costs, continued to impact operating leverage. However, this was partially compensated for by El Super and Fiesta Mart's positive EBITDA performance, resulting in a 6.8% EBITDA decline in dollar terms. Chedraui USA's EBITDA in Mexican pesos grew 12.2% and 20.4% without RCDC transition costs, driven by favorable currency translation effects. The EBITDA margin in the U.S. stood at 7.5% and 8.1% when excluding RCDC transition costs. El Super and Fiesta Mart continued to achieve strong results, with EBITDA margins of 9.3% in the quarter and 9.8% when excluding transition costs, compared to 9.6% in the prior comparative quarters. Our unique perishable offerings at El Super and the completion of Fiesta store remodels continued to deliver these favorable results. Smart & Final's EBITDA margin, excluding transition supply chain costs and expenses, was 6.5% for the quarter. We are confident that the ongoing pricing strategy initiatives and the efficiencies from RCDC will contribute to its recovery in the coming quarters. We are committed to having the RCDC fully operational in the second quarter and aim to achieve the planned synergies for El Super and Smart & Final by the end of 2026. This concludes our report on U.S. operations. Thank you, Carlos. We now turn to the consolidated financial results on slide 11. The consolidated sales amounted to MXN 74,441 million, a 14.8% increase year- over- year, driven by positive sales trends in all businesses and a positive foreign currency translation. Gross profit rose 15.4% and 16.8% without RCDC transition costs, mainly due to favorable inventory and promotion management in Mexico, which compensated for RCDC and Smart & Final's pricing strategy at Chedraui USA. Gross profit, as a percent of sales, stood at 23.4% in the first quarter and 23.7% without transition costs, compared to 23.3% in the prior comparative quarter. Consolidated operating expenses, excluding depreciation and amortization, increased by 19.3% and 19.2% without the supply chain transition costs. This increase was mainly due to higher labor costs in Mexico and the U.S., higher store count in both countries, and the depreciation of the Mexican peso. Consolidated EBITDA increased 8.8%, which represented 8.4% of sales, and a 12.8% increase after adjusting RCDC transition costs. The EBITDA margin, excluding these costs, represented 8.7% of sales. Financial expenses increased by 36.8% to MXN 1,458 million, explained mainly by higher interest expense due to the capitalization of new property rents in accordance with IFRS 16 and a decline in interest income from our cash position in Mexico due to lower interest rates. Consolidated net income totaled MXN 1,567 million and represented 2.1% of sales. This result is once again explained by the impacts of RCDC transition costs. When eliminating this impact, net income totaled MXN 1,729 million and represented 2.3% of sales. Finally, please move to slide 12. We closed the year with a net debt position of MXN 640 million, and our financial leverage was 0.03x compared to the minus 0.1 times in the same period last year. CAPEX invested for the quarter reached MXN 1,340 million, equivalent to 1.8% of sales, and is below the previous year, given the investment made in the new distribution center during 2024. Now, please allow us to move on to the question and answer section. Thank you. We'll 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 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 pull for questions. Thank you. Our first question is from Bob Ford with Bank of America. Hey, Antonio. Hey, Carlos. Thanks for taking my question. Carlos, can you comment a little bit on the ramp of new or improved functionalities at Rancho Cucamonga and any specific enablers of further improvement for Smart & Final and knock-on benefits for El Super? I was just curious if there are any long-haul implications for operations in Texas and how you're thinking about existing logistics there. With respect to Mexico, Antonio, maybe can you comment a little bit about the relative performance between large and small box concepts in Mexico, how you may be changing merchandising to respond to more sluggish consumption, higher price elasticities, as well as your expectations over the balance of the year, please? Thank you. Hey, Bob. Carlos here. I guess I'll start with your first question. Yes, excited to let you know that this is our first week of operating the RCDC fully integrated. All five DCs, legacy DCs, are now closed, and we're operating fully at RCDC. I think I've mentioned this before, but this facility is going to allow us to change a lot of the things that we're doing from a purchasing standpoint. We've got a lot of common SKUs that we sell at both chains and then some unique chain SKUs. Certainly, the private label strength that we have at Smart & Final will bleed into our operations at El Super, which I think will be beneficial from a cost of goods standpoint as well as from a sales standpoint. We're excited about that. There is no ability for us to long-haul into Texas from the RCDC. Our Texas operation has its own logistics operation, very unique, but that does not mean that we do not use our leverage as Chedraui USA when it comes to dealing with our vendor partners. As we continue to grow in Texas, we will be evaluating what our own distribution looks like rather than relying so heavily on our wholesaler partner. Carlos, you touched on produce, saying that's yet to come, right? Can you talk a little bit about in-stocks, shelf lives of produce as being part of a kind of a more integrated central infrastructure, I guess, and what the implications of that are for Smart & Final relative to the value proposition that exists today? Sure. I think that you touched on a great point. We're fully integrated with produce as of this week. It is common purchasing, which certainly brings value. Freshness is a key component. I think our quality standards are improving, and it certainly will impact both chains. When we extend a little bit further from produce, and let's talk a little bit about dairy and deli, there is a tremendous amount of focus on use-by dates so that the level of freshness and quality standards at both chains increases. Win-win here for both chains and obviously for our customers, which is our primary focus. Good to hear. Any estimates in terms of where, I don't know, maybe wastage was or other elements of shrink and how that might have an impact for the business? Yeah. Obviously, the fact that we're buying on a combined basis out of this facility, product is moving in and out quite fast. That should definitely have a positive impact on our perishable shrink. Now, going back to another one of your comments, let me give you a data point. Right now, our in-stock position at Smart & Final is probably the best it's been in years since we migrated the dry portion into RCDC. Very positive news there. Good to hear. Bob, first, hello, good morning, Bob, and about Mexico. It is clear that we are seeing, besides the high comparison basis of last year, where we were able to grow same-store sales close to double-digit numbers and the calendar effects of losing one day in February plus the Easter that was moved to April. Besides that, we are seeing consumption slowing down since last quarter of last year. It was actually very bad for ANTAD that reported in December, for example, negative comps on the self-service or supermarket segment. January was negative again, and the same thing for February, that including, of course, the day that we lost. It is clear that we're seeing consumption slowing down and weakening. We are being probably one of the most successful retailers to be able to grow besides this particular situation. Talking about the formats that you were asking about, the Selecto is the one that is delivering the best comps for us at the moment. If you see the regional growth, you'll clearly see that probably we would be the most affected ones because in the southern region is where ANTAD is reporting negative comps for the whole quarter, for example. Of course. We were not negative, but that's our weakest region, of course, at this moment. Understood. Just as a follow-up to that, Antonio, are you seeing much difference? I mean, are you seeing a migration towards smaller concepts and greater frequency within your footprint in Mexico? Yes, but that's also supported because we're expanding faster on the smaller formats. We see that proximity is a huge opportunity. We are seeing that the consumer is giving a lot more value to proximity than they were giving to that factor in the past. We are growing faster there, but we are also investing more in those particular formats. At the moment, we see positive trends about the Supercitos and Súper Ches that we have in operation at the moment. That's super helpful. Thank you so much. Thank you, Bob. Thank you, Bob. Our next question is from Antonio Hernandez with Actinver. Please proceed with your question. Hi, good morning. Thanks for taking our question, on the results. Just a follow-up on that consumer slowdown that you're seeing in Mexico, in the U.S., and what you already commented regarding the regional and format perspective. How much of maybe the private label strategy, how much of importance does it gain in this context? If you could provide an update on that for both Mexico and the U.S., that would be helpful. Thanks. Thank you, Antonio, for your question. Yes, we're seeing a slowdown in consumption in Mexico, not necessarily in the U.S. Actually, in the U.S., as Carlos already shared, we are exceeding our guidance, or not exceeding at the moment, but we think we would exceed our guidance because we are on the higher end of our guidance that we set up at the beginning of the year. We were able to grow 2.8% in dollar terms. We're seeing a positive trend in the U.S., and we are happy to show positive numbers on our Smart & Final division. About private label, it is very important. At the moment, it represents 8% of our sales in Mexico and close to 30% of our sales in the U.S. Our private label in the U.S. is, I would say, very well developed. They produce an extraordinary brand, not only one brand, but three brands that we are already taking advantage of that and those importing those brands into Mexico with extremely good results, particularly in the higher-end formats. In the lower end, we're more focused on the basic items such as beans, oil, rice that we present in the, for example, Supercito format, close to 30% of our sales. Okay. That's very helpful. Is there any target that you have here, for example, for the Supercito format, especially within this consumer environment in Mexico? Any target in terms of private label penetration? I think we have a very high penetration at the moment, at least 30%, but we are more focused in developing exclusive items, products that are focused to serve the needs of the particular consumer that we service in terms of presentation sizes, packaging, flavors, focusing more in that particular customer that has a different consumption occasion, I would say, than the typical customer that we service in our bigger formats three times a month or two times a month. We are focusing mostly in those exclusive items more than private label. Okay. Thanks for the call. Have a great day. Our next question is from Alvaro Garcia with BTG Pactual. Hi, how are you? Thanks for the space, for questions, Carlos Antonio. My first question is for Carlos. I was wondering, I was trying to sort of picture or envision the end of or the potential end to the price investment in Smart & Final. I'd imagine it can be pretty addicting as you start to see this recovery in traffic, which congrats, by the way, on that recovery in traffic. How should we think about when this price investment might normalize? What sort of key KPIs do you look to say, "Hey, we're comfortable with the value prop is now"? Any color on timing would be appreciated. Sure. Good morning, Alvaro. I wouldn't look at it as an end to our pricing strategy. I think it's important to recognize that our goal here is to position Smart & Final properly from a price perspective so that we can grow our customer base, okay? That is going to happen throughout. We're going to continue making the right calls in terms of having the right price in the right market to be competitive and to position Smart & Final so that it becomes a first choice for many consumers rather than a fill-in trip. We do that by positioning our produce and fresh categories in such a way that it creates additional traffic. That is our goal. Now, initiating a new pricing strategy takes time, right? We are seeing the fruits of that investment. As you know, our traffic grew at Smart & Final by nearly 4% in the quarter. We are seeing continued traffic improvements in the early stages of Q2. I want to point out, as you already know, 30% of our sales are what we call business customers at Smart & Final. In March, our business customers' traffic count increased by 6%, and in April, it increased by 8%. Some very, very encouraging trends on the top line. What we are doing also is tweaking some of the investments that we are making in price, by market, understanding what has worked, what has not worked, and obviously working with our vendor partners because our volume has increased 6% in the first quarter. That is a tremendous benefit to our vendor partners as well, and we are partnering with them. We are seeing some important improvements in our gross margin towards the tail end of Q1, and we expect that to continue and to improve in Q2, Q3, and Q4. I think this is an important strategy for Smart & Final as a whole in terms of how we want to position the company in the future. Great. That's clear. Just a second question on Mexico, on the loyalty program in Mexico. Your numbers continue to track higher there. I was wondering sort of what you're envisioning, Antonio, as the next steps for that platform in terms of data analytics, investment in that platform, and how you can leverage that a little bit better to target consumers better and to sort of have a better value prop via that loyalty program. Thank you. Alvaro, we're very happy with our Mi Chedraui program. We think it's a lot more than a loyalty program because we believe that it's a tool that allows us to know our customer better, offer them to their needs and particularities the best of what we have in terms of merchandise, promotions. It is also a very good communication tool that is allowing us to reduce costs in advertising. It is also a very important tool for us in the future that will allow us to sell probably advertising to our vendors. It is a lot more than just a loyalty program. To have more than 13 million customers with their names and data and being able to exploit them the way we are at the moment, at least on the sales side where they already represent 75% of our sales, I think it's a huge asset for Chedraui. It is more than a tool. It is an asset that will allow us to deliver value to our customers and efficiency to our operations in the near future. That is what we see, Alvaro. Is it fair to assume incremental investment into that platform going forward to sort of get to that advertising, let's say, future you want to see or to leverage data a bit more? Or are you comfortable with the level of investment you've seen up until today? When you mean investment, you mean CapEx on the technology side, or? Correct. Tech and talent to sort of manage that business. I think that at the moment, it's already producing great results. It keeps growing. It represents 75% of our sales. We believe that we're on the right track. If there would be any need of extra CapEx to achieve the goals and the projections that we have, you can be sure that we'll be ready to put money behind that project because we think it's a very, very valuable asset that we have developed throughout a long period of time, and we are now ready to explode. Great. Thank you very much. Our next question is from Froylan Mendez with JP Morgan. Hello. Thank you for taking my question. I wanted to dig a little bit into the competitive dynamics in Mexico. What are you seeing in terms of pricing and promotional efforts from the competition and how this compares to yours? If you're seeing a trade down to private label, to smaller formats, to hard discounts between what you see in your regions, a little bit more color on competitive dynamics would be appreciated. Lastly, your thoughts on overall guidance? You already mentioned that in the U.S., you could be ending in the higher end, if not a little bit even higher. How do you feel about Mexico and margin guidance at this point? Thank you so much. Thank you, Froylan. Even though we're seeing consumption slowing down, you would probably think that the pricing strategy and the competition would become a lot more aggressive. You have, on the other hand, pressure on the labor expense and other expenses that has made, I would say, a more cautious competitive environment. We recognize that there will be aggressive competition, but with certain limitations. The labor costs and the expenses growing as fast as we have seen are clearly a wall that will probably contain the aggressiveness of the market as we have seen in the past. The southern region, we're seeing a weakening market trend, probably with more aggressiveness that we've seen in the rest of the country, and in certain cities with a little more competitive pressures. As I said just before, with certain limitations due to the expense increases that I have already explained. That is what I see about consumption and pricing strategy. On the other hand, about the trends to private label or towards private label or proximity formats, it is clearly in certain parts of the consumption metrics, we are seeing pressures on the consumption side. Yes, private label is growing, and these low-end formats are expanding. On the other hand, we are seeing a very, I would say, not very aggressive, I would say, less affected consumption on the higher-end consumer. We are seeing the selectors growing quite strong compared to the rest of the formats that we operate. Thank you. On guidance, how do you feel on guidance? We feel that we'll be able to achieve our guidance. We've always thought that probably the most challenging quarter was this first one. We actually exceeded our goals in some metrics. We probably missed the same store sales, but not by far. We expected a complicated first quarter, but we exceeded expectations on the EBITDA margin. We believe that we would be pretty much in line with our guidance and projections, and we don't think there will be a need to change that. Thank you so much.