Good morning, and welcome to everyone to FEMSA's second quarter 2022 financial results conference call. All lines have been placed on mute to prevent any background noise. After the presentation, there will be a question-and-answer session. During this conference call, management may discuss certain forward-looking statements concerning FEMSA's future performance and should be considered as good faith estimates made by the company. These forward-looking statements reflect management expectations and are based upon currently available data. Actual results are subject to future events and uncertainties, which can materially impact the company's actual performance. At this time, I will turn the conference over to Mr. Juan Fonseca, Director of Investor Relations. Please go ahead, sir. Good morning, everyone. Welcome to FEMSA's second quarter 2022 results conference call. Today, we're joined by Daniel Rodríguez, our CEO, and Eugenio Garza, our CFO. As always, we also have Jorge Collazo on the line, who leads Coca-Cola FEMSA's investor relations team. Today, the plan is to have Daniel start with some higher-level strategic considerations, followed by an overview of performance trends during the quarter, and then Eugenio will provide more granular comments on the quarter results. After the remarks, we will open the call to Q&A as we always do. Daniel, please go ahead. Thank you, Juan, and hello to everyone on the call. I hope you and your families are doing well. As you already saw in our results released earlier today, FEMSA delivered another strong set of numbers for the second quarter, reflecting sound plans and solid execution at every business unit, and continuing with the good momentum that began at the end of last year and has accelerated through the first half of this year. Most of our operations continued to show strong growth and profitability trends during the second quarter as consumers continued to resume pre-COVID behaviors while making modest adjustments required by the shape of our new normality across our different markets. Before diving into our recent performance trends, let me share some reflection on higher level considerations. We have established three clear strategic priorities for the coming years. First, deliver accelerated growth. This means not only increasing our growth trajectory in both revenues and earnings, but also ensuring that this growth is reflected in shareholder value. Second, that as we grow faster, we selectively expand our geographical footprint. This is consistent with a balanced investment approach that further strengthen our presence in Latin America, while also allocating incremental resources to new markets where we can find pockets of growth and bring to bear the strengths of our core business verticals and create value. Finally, that this growth is enabled and enhanced by becoming more digital. This is already beginning to happen. For example, at Coca-Cola FEMSA, as an enabler of the commercial and multi-category initiatives, but our aspiration is that digital will become a core element of our customer-centric value propositions and permeate every aspect of our activities as it becomes a competitive advantage for FEMSA. Expanding on the subject of growth and value creation, we are making progress on our long-term strategic planning review across the company. This is a month-long process that started by challenging each business unit and FEMSA as a parent company to come up with with the strategies, both organic, inorganic, and structural, that will put them in a position to catapult their scale while achieving an attractive level of risk-adjusted returns over a sustained period. Historically, there have been several periods during which this objective has been met, as well as some where we have come up a bit short. I'm happy to share with you that the long-term plans we are putting in place now are compelling and realistic, and they all include selectively expanding our footprint and becoming more digital. Still at the strategic level, I would like to talk about two big topics that are on the minds of everyone on this call. The first one is the very material gap that exists between our share price and what we would consider fair value. Historically, we at FEMSA have focused on driving operational success, and the share price has taken care of itself over time. For the past couple of years, however, that has increasingly not been the case. Right now, the divergence is especially stark given the strong momentum and outlook at every one of our business units and the sound performance of the investments we have made in the last couple of years. This makes it clear that this topic requires special attention from all of us, not only at the management level, but from our board of directors. The strategic planning review currently underway involves significant analysis to help us define the strategies to achieve our ambitious long-term growth objectives, but also how best to work towards reducing and eventually eliminating that valuation gap. In the meantime, we are working to improve our disclosure further, particularly around the newer or less understood parts of our business, such as Envoy Solutions, our Health Division, OXXO International, and our Digital initiatives. We will keep you posted as these efforts advance. The second big strategic topic I want to discuss now is the tender offer to acquire Valora Holding AG that we announced a few weeks ago, which is of course related to our long-term growth priorities, as I just described it. Valora is the leading convenience and food business operator in Central Europe, and it offers a high strategic fit with our Proximity operations. As well as an excellent platform on which to build our core Proximity business in Europe. We believe we can help Valora accelerate its growth trajectory, bringing to bear not only our larger scale, but our understanding of convenience and Proximity models and our expertise in driving organic growth, leveraging Valora's strong brand portfolio and management team. In particular, within Valora's current markets, we believe Germany presents attractive potential for organic growth, and in time, we will evaluate expanding to additional markets. On the other hand, we will benefit from Valora's convenience and multi-format expertise to further develop the value propositions in our high-potential core markets in Mexico and Latin America. Having said that, as you know, Valora is a listed company in the SIX Swiss Exchange, and the tender offer process must run its course. We will keep you posted as the process moves along. Now, moving on to our businesses and beginning with Proximity, same-store sales at OXXO continue to show remarkable strength despite challenging macro conditions. As the months go by, it is increasingly clear that the pandemic generated some seemingly longer-lasting changes to consumer patterns and the drivers of like-for-like growth. Our average ticket is now structurally higher in real terms, reflecting an increase in categories like spirits, wine, and some replenishment items, while our traffic keeps improving, but more slowly, and remains below 2019 levels. There is plenty of evidence that people are consuming more at home, reducing their trips outside the home and shifting some of their purchasing habits. Consequently, we're gathering and using data to generate insights that are already informing adjustments to our commercial and segmentation strategies as well as our expansion priorities, allowing us to gain market share during the first half of the year. On this topic, we are adjusting well to changing dynamics. It is encouraging to see that OXXO can grow earnings by double digits and reach record operating margins even with structurally lower traffic levels, as demonstrated again in the second quarter. Regarding the store-based expansion, we are maintaining our full-year target of approximately 100 new stores for OXXO in Mexico, even as growth was still below trend this quarter. We should note that our efforts to focus only on the highest potential location is bearing fruit. The quality of the new stores, as measured by our historical store maturity curves, is the highest we have achieved in many years. We're opening stores at a lower cost per unit and generating materially higher sales and profit per new store than before we made the adjustment to our expansion processes. Furthermore, we continue to replenish our pipeline after the shocks of 2020, and we are putting conditions in place to accelerate the pace next year with a target closer to 1,000 new stores in Mexico for 2023. On top of this, we're increasingly excited about OXXO's opportunities in South America in general and Brazil in particular, where after three years operating Grupo Nós, our joint venture with Raízen, we are already ramping up our growth plan to add over 250 stores per year and potentially more. Moving on to our Health Division, our operations continued to perform well in the second quarter, even as the comparison base is getting tougher, particularly in the key Chilean market, where high levels of consumer liquidity helped us achieve very strong results the last couple of years. Having said that, we again saw good growth trends in Colombia and Mexico, where we continue to drive material gross margin expansion by applying some of the commercial strategies developed at Cruz Verde. For its part, our logistics and distribution business had a good quarter, driven by the continuation of a secular trend at Envoy Solutions in the facility supply business. As people continue to return to office in larger numbers in the U.S., we're also making incremental gains in our cross-selling efforts among the three core business verticals, which represent an attractive opportunity to drive growth. I also want to talk a little bit about our Digital platforms. Both Spin and OXXO Premia, our loyalty program, have continued to grow their users and, more importantly, their active user base. Together, they now have more than 50 million acquired users and more than 12 million active users. We are working hard to expand each product's value proposition and use cases to drive engagement and further accelerate the network effect of the entire ecosystem. As you may imagine, user data is coming in fast, and we are rapidly scaling up our analytics capabilities to improve the data's utility and potential monetization. We will continue to keep you posted on this exciting topic. Before I turn it over to Eugenio, regarding Coca-Cola FEMSA, as Constantino mentioned last Tuesday, they achieved a solid second quarter set of results, building on a positive momentum despite the inflationary environment that is affecting industries worldwide, substantially mitigating margin pressures by leveraging their hedging initiatives and doubling down on expense efficiencies while accelerating the rollout of their omnichannel platform, which now reaches 645,000 active monthly buyers. With that, let me turn the call over to Eugenio. Thank you, Daniel. Good morning to everyone on the line. Beginning with FEMSA's consolidated quarterly numbers, total revenues during the second quarter increased 22.2%, while income from operations increased 9.9% compared to the second quarter of 2021. On an organic basis, total revenues increased 18.9%, and income from operations increased 8.6%. FEMSA's net income increased 45.4% and reached MXN 7.6 billion, reflecting higher income from operations, a decrease in net interest expense, and a non-cash foreign exchange gain related to FEMSA's U.S. dollar-denominated cash position as impacted by the depreciation of the Mexican peso, which represented a positive swing of MXN 2.5 billion during the quarter. This was partially offset by a decrease in our participation in associates results, reflecting the recognition of our best estimate, extraordinary impairment, and other non-cash exceptional charges announced by Heineken in connection with their decision to exit their operations in Russia. By a MXN 799 million negative swing in other non-operating expenses, which reflect a demanding comparison base that included dividends received during the second quarter of 2021 from our investment in Jetro Restaurant Depot. Moving on to discuss our operations, beginning with Proximity. During the quarter, we added 168 units to reach 834 net new stores for the last 12 months. This includes 120 stores from our OK Market acquisition in Chile. As Daniel mentioned, we are maintaining our year-end target of 800 net additions from Mexico, even though we are still behind schedule as of the first half of 2022. OXXO same-store sales were up 15.6% for the second quarter, driven by an increase of 11.8% in average customer ticket and a 3.4% growth in traffic. This reflects the sustained recovery of mobility and the gas and convenience locations that have continued to accelerate throughout the second quarter. When compared to the second quarter of 2019, same-store sales are up 15%. Gross margin for the quarter contracted by 40 basis points to reach 41.2%, reflecting lower commercial income as some of our key suppliers curtailed their commercial and marketing activities as a response to reduced inventory levels, driven by the scarcity of certain raw materials. Income from operations increased 33.7%, while operating margin increased 120 basis points compared to the same period of 2021 to reach 10.2%, a record for comparable quarters, driven by a structurally leaner expense structure and the resulting operating leverage. At OXXO Gas, revenues increased 32.5%, and same-station sales grew by 25.2% relative to the second quarter of 2021, as vehicle mobility continued to recover and gradually approached pre-pandemic levels. During the quarter, gross margin was 12.3%, while operating margin reached 4.3%, reflecting continued tight expense controls and improved operating leverage. Moving on to FEMSA's health operations. During the second quarter, we expanded our drugstore count by 144 net additions to reach a total of 3,862 units across our territories at the end of June, and 403 total net new stores for the last 12 months. This represents a significant acceleration in our growth rate, driven mainly by Mexico and Colombia, and puts us in a great position to meet our target for 2022. Revenues increased 2.5%, while same-store sales increased an average of 0.5%. However, it is important to note that on a currency-neutral basis, revenues grew 12.5% and same-store sales increased 9%, a solid performance across our operations, even as the comparison base becomes more demanding, particularly in Chile. Gross margin decreased 110 basis points in the quarter, mostly reflecting a one-off inventory write-off at our Chilean operations, partially offset by improved operating efficiencies and a more effective collaboration and execution with key supplier partners in Mexico. As a result, operating margin contracted 80 basis points as tight expense controls across our territories was not enough to fully offset the impact from the slightly lower gross margins. Regarding our logistics and distribution businesses, revenues increased 50.2% relative to the second quarter of 2021, reflecting the steady pace of acquisitions made in the past 12 months by Envoy Solutions. On an organic basis, total revenues increased 17.3%, reflecting strong performance across Envoy Solutions segments, especially in the retail and facility supply segments, coupled with good demand dynamics in our operations in Latin America, particularly in the warehousing space. Operating margin contracted by 30 basis points, reflecting a higher cost and labor transportation environment in certain markets. Finally, moving on to Coca-Cola FEMSA, volumes grew 11.9%, with all markets contributing to the growth. Revenues increased 19.9%, and gross profits grew 12% despite supply chain disruptions and cost pressures on certain raw materials. Operating income increased 5.6%, reflecting solid top line and favorable raw material hedging strategies, coupled with operating expense efficiencies. All in all, Coca-Cola FEMSA delivered a very strong set of results amidst a challenging cost environment. You can listen to the webcast of their quarterly call that took place last Tuesday. Before we open up the call up for questions, let me turn it back to Daniel for some final comments. Thank you, Eugenio. Wrapping up halfway through the year, our business units are in great shape, and we feel good about our chances to meet our ambitious plans for the full year and beyond, always driven by our outstanding team of colleagues. We will continue to push ourselves to create value through profitable growth. But as I mentioned before, we are also working to ensure that the value we create is shared by all of our stakeholders. With that, let us open the line for questions. Operator, please. Thank you. Ladies and gentlemen, if you'd like to ask a question, please signal by pressing the star key followed by the digit one on your touchtone telephone. If you are using a speakerphone, please make sure that your mute function is turned off to allow your signal to reach our equipment. Once again, that is star one to signal for a question. We'll take the first question from Ricardo Alves of Morgan Stanley. Hi, everyone. Thanks for the call. Very impressive same-store sales at OXXO. My first question is on that. Just a little bit more granularity on the evolution throughout the months, but maybe more important, how are things trending into July? We were surprised at the upside, of course, with the strong same-store sales in the mid-teens. So just wondering how you're seeing things into July, if any signs of deceleration or not. Second question, kind of related to the last point that Daniel touched on, capital allocation. This has been a key and recurring question from investors, given the cash generation, strong balance sheet, and also considering the current stock performance. Does it make sense for you to be more active on buyback at this juncture? Just an update on your thoughts on this front, perhaps in conjunction with the potential or eventual sale of Heineken. Any thoughts that you can share on that front? My final question, just quickly, on the corporate structure, kind of related to the point below, at least as it pertains to Heineken, but any updates or thoughts on the corporate structure of the company, given the, again, the ongoing discussion that we have with investors, the complexity of the conglomerate, the discount valuation that you guys also touched upon. Not sure if the studies you're conducting, maybe if you can share already some early insights or learnings that you had. Any qualitative comments here would also be helpful. Appreciate the time. Thank you. Sure. Thank you, Ricardo. I'll start off with the first one on same-store sales for OXXO. We're seeing a continuation, Ricardo, of the patterns that we've seen sequentially, as we obviously troughed in the middle part of 2020 with the peak of the pandemic, which is a couple of things. First is we've seen an average ticket that's resiliently growing at a very high level. We're still kind of in the mid-teens, up from 2019 levels, mostly driven by changing consumer habits as they're finding also a place to get a reasonably priced bundle of pantry products as well as alcohol, I mean, hard liquor and other categories that were traditionally not part of what the consumer thought the OXXO store could fulfill their needs. We're seeing, I mean, a continuation and of that trend, and that continues to positively affect the ticket. That on the other hand, as you know, was severely contracted, so severely curtailed by the contraction in traffic that we experienced through the pandemic. We're still not back. We're still from 2019 levels. We're still down in the mid-teens in terms of traffic, although it's coming up. As you saw, this quarter was up 3.4% as mobility continues to regain. That is a mix of factors. Again, it has to do with the store locations that we discussed before, but also some changing consumer patterns, as Daniel mentioned in his comments. Consumers especially are looking more towards in-home options rather than on-the-go options as they change their pattern of, I mean, working from home and others. We're seeing certain categories gain in the supermarket segment vis-à-vis the convenience segment. Again, that's more than offset by other categories which were lower in the past for OXXO and are now introducing into a higher ticket. We still see some upside on the traffic number and we see the ticket remaining the same as strong. Overall, I think there's still some upside to the same-store sales number in the future, and we're optimistic about that. Yeah. Ricardo, regarding the corporate structure, I mean, as I mentioned in my comments, definitely we are working with the long-term plan for each of the business. Our intention, because we recognize that definitely there is a gap, I mean, between the share price and what we consider the fair value of the company. I mean, all the options are on the table. We have not excluded anything. To be honest, obviously that is something that it will take some time. Our intention is that toward year-end, we will be in a better position to share where we stand in terms of the particular action plans. That is something that obviously, as I also mentioned, requires involvement of the board. It's not only the management, but also the board. We're working very closely with the board in order to come with a more clear, if you want, directional update towards the end of the year. To your specific point on buyback, I mean, that is one of the alternatives that we're looking at as part of the overall strategic plan that entails also capital structure, not only corporate structure. Buyback is clearly one of the tools that is available and that is being considered, as Daniel said, as one of the many tools that we have in the arsenal to address this corporate conglomerate discount. Very clear. Thank you so much. Thanks for all the details. Thank you, Ricardo. Thank you. Ladies and gentlemen, in the interest of time, please limit yourself to one question to ensure that everyone has the opportunity to ask a question. Our next question will come from Bob Ford of Bank of America. Thank you very much. Good morning, Daniel, Eugenio, Juan, and thanks for taking my question. How much did Premia weigh on Proximity results in the quarter? You know, how do you expect that to trend over the very near term? What needs to happen to transform Premia from a cost center into a revenue stream and data asset, and how should we think about the timetable for that? Well, I mean, thank you for the question, Bob. I mean, regarding our loyalty program, I mean, we are very, very excited about the results that we are seeing today. I mean, not only about the acquisition, but also the number of active users. As I mentioned, I mean, we are in the early stage in order how we can really monetize that information in order that we can see how we can create value going forward. I mean, today the tender is in the range of 15%, which is very, very high. I mean, if you see that we just started a few months ago with the program. As I said, we're very excited. I mean, even though that we have several millions, I think we are in the early stage, but we are very optimistic about the future of the loyalty program and, I mean, how much more value we can bring to OXXO. Just the cost in the quarter for the Proximity unit of Premia, just to understand how it may have had an adverse impact initially, and how should we think about that evolving? I think so far, Bob, to be honest, the impact on gross margin of Premia is still. I mean, given some lack of commercial programs that we're partnering with some of their CPG partners as well. Although the tender is high, I think the impact on gross margin is still negligible at this point. We'll start to break down more of that impact as we move forward. In the early stages, we are confident that the Premia program overall will be accretive to the value of the Proximity Division. No doubt. Thank you so much. Thank you. We'll now move to Sergio Matsumoto of Citigroup. Yes. Hi, good morning, Daniel. Eugenio, thanks for taking my question. I wanted to ask about the Envoy Solutions growth. You have a lot bigger scale now, and it appears that there's both revenue and efficiencies growth opportunities. Would you say right now you're more focused on these revenue opportunities or, if you can, you know, kind of give us some color around that. Also, how is the competition in this space, you know, against the other large player in this space, and what are the differences in the strategy between you two? Thanks. Sure. Thanks for the question, Sergio. I mean, as you said, we're very pleased with how Envoy is growing, both on an organic basis and how successful the inorganic activity has been. To be honest, we're focused on both. I think we've got a dedicated team that's looking obviously at different regional territories, which we don't have a strong presence in, to be able to increase our coverage and take advantage of the scale, the purchasing scale, which is where most of the synergies come from, and be able also to deliver to national accounts in territories we're not in. I mean, the core team that's focused just on the day-to-day operations, keeping the efficiencies where they are, optimizing well to market, playing around with pricing, and segmentation. Again, most importantly, also integrating the acquisitions into common systems and common SKU sets so that we can take advantage of the scale. We are running the plane and building the plane as we fly it, but we are overall very happy. The industry itself, if you look at food service disposables and if you look at Jan-San and packaging, which are the three main segments that we're focused on, is over $80 billion-$100 billion in size. We're still in $2 billion-$3 billion sales range. There are, as you mentioned, two other players that are playing the same role of strategy that we are in. We are literally competing in every market with regional players, local distributors, and at this point really not bumping up into each other. I think there's plenty of runway for all these platforms to continue to grow and thrive. I think it's a space with very attractive secular trends in which we are already seeing the fruits of value very soon after we bought the original platform two years ago. We continue to see a big runway for additional capital deployment and value creation for the years to come. If I may, if I kind of, like, dig in deeper here. Would your customers at Envoy how would they decide, you know, whether to buy from you or the competitors? Is it, you know, the service or, you know, maybe it's like split by geographically? You know, any color on the differences in strategy or offering, if you have? Thanks. Yes. Sergio, well, you know that it. I mean, there are a combination of elements. I mean, in order to, for the customer, we're talking about B2B customer, how they made their decision. I mean, obviously price is a key one, but also, I mean, the fact that now, as you mentioned we have three, if you want, categories or main categories that we were able to sell, I mean, that combination also is very powerful. I mean, the fact that we can provide a service and we can come with the three categories if that is the case. So I think price, services, I mean, and the quality of the products are the main key decisions that the customer take into account in order to buy our company. The fact that we are growing, obviously we're in a good position to come with a very competitive price structure to them. Thank you. Thank you. Our next question will come from Luis Yance with Compass. Hi Daniel, Eugenio, Juan, thanks for taking my questions. Just to follow up on the complexity and I guess capital allocation concerns. It's great that we hear that hopefully by year-end we'll get more clarity, so we look forward for that. I was wondering, you know, there was, you know, over the past couple of months we've been talking about peak complexity, I guess, right? A lot of the things that you did were towards that, right? You know, kind of making some verticals bigger and bigger. While you're still doing this strategic review, it seems to me that with the acquisition or with the entrance of Europe, complexity has gone up another leg in that sense. Not in terms of formats, but in terms of, you know, geographies in particular, right? While, you know, it was a billion-plus acquisition, when I look at the stock price, you guys have lost three times that. The reaction was even worse than in previous things. As you go through this strategic review, is it fair to assume that perhaps complexity or additional deals in kind of new areas could be on hold while you come up with something? Or just help us understand, you know, a little bit more, you know, the rationale and how do you guys take those market signals into consideration? Thanks. Yeah. Well, thank you for the question. Luis, first of all, I mean, this strategic review was started before we made the decision to acquire Valora. I think that is an element that for me is important to reinforce. As you can imagine, obviously that requires time, it requires because we are analyzing several alternatives and we need obviously the involvement of the board. That is one element. Second, I mean, regarding the business complexity, I mean, the way that we see the acquisition in Europe is that we are investing in one of our key core businesses, which is Proximity. We strongly believe that there is an opportunity for us to create value for Valora in Europe. I mean, as you know, we have been looking for Proximity opportunities in developed markets for many years, and we find, I mean, that investment to be very attractive. Not only about what we can grow there, but also we strongly believe that we can learn as well from the way that they run the business, I mean, convenience. I mean, there are elements that we recognize that we can also bring into our core markets in Latin America and maybe create also value here. That for me is important because that decision was made inside the key markets. On top of that, I mean, also one element that I would like to mention that, I mean, over the last couple of years, and I think you will share that with me, I mean, the trends in Latin America are not as they were in the past, I mean, in terms of growth, I mean, when you think about risk return of our investment. Definitely, I know that when you compare the return that we have with Valora, it's very, very difficult to compare with the returns that we have in OXXO. I think we strongly believe that thinking in the future in the Proximity business that was a good decision. We are working hard, I mean, in order to come with the right answer or options, I mean, in terms of the structural solution. As I said, we hope that we can come with a much more clear answer towards the year-end, Luis. Maybe just to complement with, again, I mean, as you know, in M&A, the timing is not always ideal. Would we have loved to finish our LRP and come up with a strategic plan before this opportunity came up and do it within the context or the construct of the new strategic plan? Of course. At this point we felt that the timing was right to do this deal at a valuation that both made sense for the Valora shareholders and still allowed us ample room for value creation by following our own strategy. We understand the frustration in the stock reacting to this complexity. Again, the good news is that the LRP plan and the structural alternatives that we have to kind of capture these or eliminate these conglomerate discounts are the same that they were one month, two months, or six months ago even. Again, timing was not ideal, but we are still kind of focused and committed to attacking that gap. Great. Thanks, Daniel and Eugenio for the detailed answers. We'll now move on to Alvaro Garcia with BTG. Hi, gentlemen. Thanks for the space for questions. Hope you're well. Congrats on the digital front. Three questions on OXXO. You know, is there a link between the higher ticket we're seeing at OXXO and the greater penetration of Premia? That's my first question. Yeah. I mean, not a direct link at this point, Alvaro. I wouldn't say that, I mean, Premia is growing. I think it's too early to tell whether the higher ticket size. There's no direct link at this point between the higher ticket and Premia. Clearly, the heavy users are spending more, but it's not directly related. I think the bigger part of the higher ticket has to do with the changing consumer patterns that we described in the earlier question. Great. Clear. Just, you mentioned in the release, and you mentioned in your prepared remarks this gross margin element at OXXO on lower commercial income. I was wondering if you could just give us a little bit more color there. Is that? I mean, obviously, you know, we're worried about, you know, significantly lower traffic, and I don't wanna think that's structurally lower sort of traffic impacting that business. If you could just give us more color on those one-offs, let's say, or if they are a one-off or not this quarter. Thank you. Yeah. I mean, in the case of the gross margin, there are several elements, Alvaro. One, I mean, definitely as we mentioned, and most probably you also hear that from Coca-Cola FEMSA, I mean, there is a pressure in supply chain. I mean, and obviously based on that, I mean, many of our suppliers, they have made the decision in order to reduce or be much more selective, I mean, in terms of the delivery of their product. Hence, I mean, lower, if you want, incomes or commercial income. But I would say that is something that we don't see as a trend. I mean, definitely that has been the case in other years before, and we expect that to recover in the future. I think to round that up, Alvaro, hi, this is Juan. If you have, you know, suppliers in key categories, let's talk about beer for a second, and you're having some issues with certain type of packaging, for example, which means you're not gonna. You're pushing less product, right? That means you're gonna engage in less promotional activity, which at the end of the day is where commercial income comes from. As those bottlenecks resolve in terms of these packaging materials and other inputs that have been hard to come by, we assume that this problem is gonna go away. As you know, commercial income is a big driver of gross margin expansion historically for OXXO, and that's why we highlighted it, because this is something that is happening because of the supply chain shocks, not because of anything structural. In fact, I would say for that particular category, as we head into the second half of the year and World Cup and all of that, it should be interesting, I think, as we get closer to the fourth quarter, the activity in a number of CPG categories, hopefully will ramp up. That's very helpful color. Just the last one's a very quick one just on Valora. Is the idea to staple it into Proximity, or is the idea to maybe leave it as a standalone entity? That's my last question. Thank you very much for the time. I mean, first of all, I mean, we need to continue or finish the process in Switzerland. I mean, so that's. I think it's important to mention. Our intention is that at least for the first couple of years, we will run that on a standalone basis with an advisory board and with representative of FEMSA, but also with board members from the European market. That's the intention. Yeah. I think, Alvaro, maybe part of your question I think probably comes from how are we gonna disclose that and whether or not you're gonna be able to track it, and the answer is yes. I mean, we still have to fine-tune, and I think, you know, there's a lot of work being done on how can we improve disclosure, and we've spoken with some of you in the past about increasing access to Daniel and Paco and Eugenio and the management teams of the operations. Daniel mentioned in his remarks a few minutes ago, you know, Envoy, Digital, OXXO International, obviously Valora is a part of that, you know, once we finish the tender offer process, that we would hold, you know, investor seminars, where you guys can talk to the CEOs and the management teams and, importantly ask questions. The other part of it is actually the numbers that we disclose, you know, every quarter. Whatever shape I think probably for the first quarter of next year, we will have an enhanced, you know, proposal, and you're gonna see more data along several parts of our press releases. In a nutshell, you will be able to track the performance of Valora, so it's not just going to disappear into Proximity. Thank you very much. Our next question will come from Thiago Bortoluci with Goldman Sachs. Yes. Hi, good morning, everyone. Thanks for the presentation and for taking our questions. We have two. I think the first one is about OXXO in Brazil, right? For sure, you are growing very highly from a low base and very fast way. And the guidance of at least 250 stores per year is very welcome. But I'd like to understand in a broadly long-term view, what is the potential number of stores you believe you could get in the region? How competitive you are seeing the format versus other Proximity formats and bakeries? And what is the marginal return you are aiming to pursue over this kind of investment? This is the first question. The second one regarding Chile. Obviously, we know there is a very hard comp base that you are facing going forward, but also it's true that the underlying macro fundamentals are deteriorating, especially inflation is high, GDP growth is very limited, and the political environment is very volatile in the region. Apart from the comp base, what is the underlying status of the consumption background, and how do you see the region trending over the next 12 months? That is the questions. Thanks. Let me start, Thiago, with OXXO Brazil. I mean, definitely we as you know, there is a joint venture which we have with Raízen. I mean, before we signed the JV agreement, we developed a long range plan. I mean, that was part of the agreement when we put together the joint venture, and we know that we will grow with OXXO on a standalone basis, but also continue to develop the Shell Select brand inside of the gas station of the Shell brand in Brazil. I mean, so far, over the last almost three years that we have started the JV in Brazil, we are very excited by the results that we have seen with OXXO. Today, we are mainly concentrated in the São Paulo area. Our intention, I mean, if you compare the population of Brazil with Mexico, definitely there is room to grow. I mean, we should not I mean, in the long term, we should not expect that the numbers could be very different from what we have seen here in Mexico. Definitely, I mean, our intention is to grow in key or relevant big cities in Brazil, and from there decide, I mean, if there is room to grow in more medium and smaller sized cities. The potential is there. I mean, in terms of the marginal, if you want, returns, I mean, I don't see very difficult that they would be very different from the one that we have in Mexico. That's what I can comment regarding that point. Just to round off on Brazil, you asked about kind of the competition and the value prop. I think the store is coming in with a very interesting value prop because the store is smaller than your Carrefour Express or any of the other small formats in urban cities. It's more attuned to the padarias. But I think it has a value proposition and a mix of products that are uniform across. You know what you're getting each time you go to a different OXXO. And it's more like a mini market or a mini mercado format that is taking on for both food as well as convenience uses. I think the value proposition is kind of hitting the sweet spot. We're actually growing much faster than we originally anticipated because of that. Your second question was with regards to Chile and the Health Division. I mean, clearly, as you mentioned, we are facing difficult comps. Nonetheless, the mix in format that we have, the loyalty program in Chile, and I think the resiliency of the space in the categories that the Health Division is serving in Chile, I think are allowing us to maintain, I mean, solid unit economics, good traffic and good profitability. Yes, I mean, you will probably not see the same store sales growth that we experienced over the course of the past 24-48 months. Having said that, the marginal economics there continue to be very, very attractive. Then Chile also provides us with a very strong base and supplier leverage that is helping us expand in Colombia and Mexico with very attractive commercial terms that are making the unit economics at Colombia and Mexico I mean, a lot better than they otherwise would have. I think if you look at the entire portfolio of Health I mean, notwithstanding the fact that we might see a slowdown of growth in Chile, the value creation road for the division itself is I think, on a very positive trend. That's clear. Thank you very much. Our next question will come from Leandro Fontanesi with Bradesco. About the holding discount. So you mentioned you plan to launch a plan by the end of the year. Just to understand a little bit about this plan, what's your ultimate goal? Is it really to address to reduce the holding discount in the perspective of the stock price and the investor to a level that you think is fair? Or is more broadly speaking or looking for ways for FEMSA as a group, as a company to be more efficient? Then as a result, maybe reducing the holding discount as part of those measures. Just to understand if when you hired the strategic review, the ultimate goal is really reducing this holding discount, or is a more broad strategic review thinking for FEMSA as a group? There are two elements, and then Eugenio and Juan, you can complement me. I mean, first of all, as I mentioned during the call, Leandro, we are running this what we call strategic review, and that is on a business by business basis in order to see what is the potential in terms of growth for each of the business units. That is one element that clearly will take into account obviously revenue growth, I mean, how we can be more efficient and definitely can be more profitable. That is one part of the exercise. On top of that, obviously, I mean, as the structure review, the intention is based on those strategic plan, what we can do in order that ideally that value that we feel very comfortable that we will create at each of the business units, we can transform into shareholder value. We recognize that to do that, we need to review our structure, and that is what we are doing here. I mean, it's a, as I said, it's a combination of what we are doing in each of the business and how, by reviewing the structure and what are the options in order that ideally we can convey that value creation in each of the business into the stock price. That I would say in a nutshell, the intention of this exercise. Yeah, nothing to add to what Daniel said. I mean, basically it's bottom up, what's the best plan for each one of the businesses to maximize their own value? Then in the middle is how we allocate capital and the constraints of capital within FEMSA to fund all of these different initiatives. And then finally, is what is the right. Is the FEMSA structure today the right enabler to implement that capital deployment strategy? Or is there another one that is able to, again, habilitate this value creation on the one hand, but on the other hand, also allow the shareholders to make this value creation transparent to all shareholders through either the current structure or different structures going forward. It's those three levers that we're looking at concurrently. Understood. Thank you very much. If I may, just a second question, which is not related to the first one. We have been seeing, you know, traffic at Proximity Division catching up. I understand it's still below the pre-pandemic. Then when we look at, for example, beverage volumes for the listed players, it's above the pre-pandemic. That means that likely supermarkets, for example, as a channel, still have a higher share of those volumes of beverages. Just to understand if you think maybe you could recover to the pre-pandemic levels, or there's some structural change in which maybe supermarkets or other channels will have a higher percentage of the market, such as, for example, maybe consumers learn the benefits of storing and doing purchases at supermarkets, and maybe they won't need to go as much to convenience stores. Just understand if you see any potential structural changes or you're confident that you'll be able to recover to pre-pandemic levels? I think it's a mix, Leandro. We are definitely seeing, especially in single serve and personal snacking categories, that trend that you mentioned with supermarkets gaining share in some of that, especially through multi-pack strategies as the consumer, because of inflation, is looking to get the optimal per unit price. Again, there's two things. One is how quickly or not do you believe this stay at home phenomenon and whether we are at the peak or not of that. The other one is we are also making changes to our own product mix at the different OXXO categories to be able to compete efficiently with these cost-effective multi-packs in the personal snacking category. It's a mix of both. I think, I mean, clearly there was a structural shift. Having said that, I think, it's still being sorted out and there's still things from a commercial perspective and from a market segmentation perspective that we can do to get back some of that, underlying traffic and gain in other categories as well. I would just add on that, you know, when we look at our own data that comes from the market, and of course, we do some of that ourselves, some of that we get outside help, we are gaining share versus certain other channels. Yes, you know, the overarching trend is as we've been discussing the past few minutes, but we've been able, and that's why I think Daniel mentioned in the beginning, that we're pretty confident that we're actually coming out in better shape, right? Even if in the aggregate, people are doing a little bit more in-home consumption, and fewer trips of the new dynamic, assuming this stays, we are getting a bigger chunk of the pie than we were before, right? That's, I think, very encouraging. Yeah. Maybe only one additional comment. I mean, I think Juan mentioned that earlier, is the fact that, I mean, as we learn, I mean, what are the structural changes, we obviously are incorporating those learnings into our processes, for example, expansion, where, I mean, we have been very successful in order to now, I mean, our expansion obviously take into account those changes. We have been very effective in terms of being very profitable with our expansion over the last two years. I mean, that is an element that I think it's important to mention. On top of that, we know that we will get much more insight, I mean, from our OXXO Premia, the loyalty program, and that is something that will help. Also the OXXO team, they are doing a very good job in terms of store segmentation. In order to see how, I mean, based on those changes, how we can better, if you want, allocate the assortment for stores and recognize in which areas, I mean, those structural changes are more relevant and in which areas maybe they are less relevant. I mean, you can imagine with a store base of 20,000 stores, I mean, there are very different answers depending on which segment you are analyzing and the, I mean, these changes. I would add on that to something Daniel just said, which is on the expansion front, and we mentioned it, you know, quickly in the opening remarks, but I think it bears repeating. The new stores that we have opened over the past, let's call it 12 months, or even 18 months, I mean, basically the cohorts of new stores that we are opening under this more stringent process that we put in place during COVID, are performing, you know, twice as better relative to the, you know, new stores or comparable cohorts in the last 10 years. That is super encouraging. You know, because sometimes we get the question, you know, "You guys have 20,000 stores. Are you running out of room? It's very encouraging to see that with the right metrics and the right segmentation, you can open stores that are gonna perform right out of the gate, much better than stores that you opened, you know, three, five, 10 years ago. I just wanted to add that data point. Thank you. We'll move next to Carlos Laboy of HSBC. Yes, good morning, everyone. Does the scope of the BCG study include an analysis of how the board's structure, composition, and processes are impacting the stock's NAV discount? In other words, I guess what I'm asking is, will the scope of the BCG study include recommendations on how the board may affect a better capital strategy oversight? Related to that, can you discuss any changes that might be already happening to either at the finance committee this year or in their composition and processes? Yeah. Thank you, Carlos. I mean, definitely, the BCG scope is mainly related to what we call the strategic plan for each of the businesses. I mean, as you most probably are aware, there was some changes, I mean, in the governance that were communicated earlier this year. In that process, there are changes that will happen at the board level over time, which is obviously taking into account the composition and all the elements that are relevant from a governance point of view. I mean, those are the comments that I can make. Definitely, I mean, as part of this structural review that we are considering, I mean, definitely there are implications, I mean, in terms of how the governance will need to be implemented going forward. I mean, we will take this into account. I mean, as Eugenio said, we are looking at this moment, the three layers. I mean, the opportunities that we see inside of each of the businesses, both a mapping exercise, then how we allocate that portfolio, and then, I mean, what are the changes that potentially will require in terms of the structure. Based on that, then we will obviously need to decide, I mean, if some of these changes apply, how that will be managed, I mean, from a board point of view. Carlos, I mean, just to follow up, I mean, as you know, earlier in the year, we announced, I mean, a gradual set of changes to the board committee structure composition and the size of the board. Those changes started to be effective this year. We'll have more to come next year. But just as a reminder to everyone, I mean, the strategy and finance committee, which is the heart of most of the strategic decisions that get taken to the board, is made up primarily of independent directors and all these decisions or portfolio decisions, M&A decisions, whatever, are thoroughly reviewed in light of what makes sense from the long-term perspective for the FEMSA shareholder. That the composition and the makeup of that committee is starting to change with the changes that we implemented this year, will change also in the coming years as we bring to bear, I mean, more skills in this, in the sense of digital transformation, in the sense of other, call it, ESG topics and other of the agenda items that are on top of mind of shareholders and of the board. That effort continues to happen in parallel to what we're doing with BCG. Yeah. I would just add, Carlos, sorry, this one. I mean, obviously the BCG study, I mean, they reached out to some of you, some analysts, some investors. Among the things that they worked on, you know, kind of a perception study of what the market thinks. The BCG study is this very small, I mean, it's a small part of the overall very comprehensive process that is in place. I don't wanna take anything away from the BCG study, but it's just a part of everything that's going on. Thank you. We'll now move on to Rodrigo Alcantara of UBS. Hi. Hi, good morning, and thanks for taking my question. Just for the sake of not being very repetitive here. I mean, looking at the positive side of the complexity equation, I was wondering if you could foresee like more complementarity in the, let's say, like, distribution business in Brazil with AGV, Solistica and Coca-Cola FEMSA's enablement on the distribution side. Any sort of complementarities between your assets that you think that you would highlight, perhaps with the JV with Raízen, could also be another example of like higher, you know, a higher partnership between what you have in the logistics business in Brazil. Also very quick one, on if you can give us some update on the integration of drugstores in Brazil, because that topic has been forgotten a bit. Maybe if we can re-bring that topic again into the discussion, that would be helpful. Thank you very much. Yeah. We missed your second question. If you want, you wanna start with the first, and then we'll- Yeah. No, I'll start with the first. Sorry about the other one. Yeah, I think one area that we've been talking a little bit about where you see Coca-Cola FEMSA and the Proximity Division actually, you know, overlapping or converging has to do with the multi-category distribution platforms and an effort to enable traditional trade, you know, to be able to order digitally, participate from a, from a more efficient supply chain and, you know, just partner up with large, chunks of the traditional trade. These are efforts that both Coca-Cola FEMSA and OXXO have been working on. Increasingly they're coming together when you think about, you know, a digital payment solution for the mom and pops. You know, could that be the Spin platform that could then be applied for Coca-Cola FEMSA customers? I'm just spitballing here a little bit. That is a space where the two are converging, where I think there's opportunity for interesting synergies. On the other question, I don't know. To be honest, I mean, you mentioned something about integration, but I'm not really sure what business unit you were referring to. Yeah, sure. Well, first on the Solistica in Brazil, you know, and partnership with Cosan or with Raízen. On the drugstores in Mexico, I mean, if you can give us an update on where we stand in terms of the. You know, are we still going to continue with the three banners or are you going to, you know, integrate into one banner? If you could give us an update there on the drugstores in Mexico, that would be helpful. Oh, drugstores. Got it. Got it. Yeah. Yeah. The first one, just to complement Juan. Solistica in Brazil is helping the Raízen joint venture with their distribution efforts. Again, as we've mentioned in the past, we believe distribution is a core element amongst all of our business units. We actually have an internal, call it, logistics best practices board across all of the business units that are getting together. At this point, part of the success that Solistica is having, sorry, that Raízen is having in Brazil is due to the Solistica partnership. With regards to the integration. Yeah. I mean, regarding the integration, I mean, referring to the brands that we manage in the Health Division, I mean, definitely the way that we have been able to create value has been more around how we escalate, I mean, our purchase capacity in order that we can transfer, I mean, those conditions to each of the brands. I mean, we don't have any explicit plan in order to consolidate under one brand. In the case of Mexico, I mean, as you know, in Mexico, we have today three brands. Obviously, the largest one is YZA. I mean, and in the new regions we are growing with that brand. I mean, normally those brands that are in the northwest part of the country, we are keeping those brands. We are developing as well private label products. In the case of Colombia and in Chile, we have Cruz Verde, because I mean, both, they were born with that brand. Also in Ecuador, we have a different brand, which is Fybeca and SanaSana. I mean, we don't have any particular plan in terms of consolidating or changing the brands. More we are focused on how we can create values with those brands, because I mean, those are, I mean the customer are very loyal to those brands. That is where the effort is. That's very clear. Thank you, Daniel, and for the long call. Thank you. Thank you, Rodrigo. Our next question will come from Alan Alanis of Santander. Hi, Daniel, Eugenio, Juan. Congratulations on the results, and thanks for taking my question. I'm not gonna ask about the complexity. I think already the text analyzers that record these calls will pick up that the word that was repeated, I guess, the most. I wanna ask, do a follow-up question on the pharmacies. Could you explain the divergence in same store sales between OXXOs and pharmacies? And you were very clear in saying that there's no integration into a single brand. But could you speak a bit about what the synergies between having pharmacies and convenience stores? What was the expectation and what should we be expecting going forward, both in terms of those synergies and the level of profitability of pharmacies, which still remains quite below convenience stores? Thank you. Yeah. Thank you for the question. I think there are different elements, I mean, in terms of potential synergies. I mean, first of all, normally if you think about, I mean, the layout of a pharmacy, you will have, I mean, convenience categories, you will have health and beauty, and obviously you will have, I mean, all the proper drugstore. In the case of convenience product, definitely, I mean, there is a synergy, I mean, in terms of the scale and how we can leverage the scale of OXXO, and that is something that definitely we're doing. And then secondly, I mean, also in terms of expansion and the skills that we have developed at OXXO is something that we are also using for the pharmacy business. Also related to expansion, we're already testing, I mean, some locations when we have next to an OXXO, I mean, a pharmacy, and that we are also doing that with our discount format in central Mexico. I mean, we see a lot of opportunities definitely about the way that each of the businesses grow is differently. I mean, you should remind that the way that we enter in the pharmacy business was through acquisitions. I mean, that is a very structural change compared with the fact that OXXO Mexico particularly, I mean, the growth is coming from purely organic growth. I mean, that is why we have those difference in terms of returns. Yeah. Hey, Alan, it's Juan. I would just add a couple of things. I mean, we should remember that when we're looking at relative performance right now of drugstore versus OXXO, drugstore actually is coming after two pretty good years, right? During COVID, the drugstore business actually thrived, whereas OXXO and many others suffered a lot with traffic. We're seeing OXXO still very much on the bounce. From those troughs. And we mentioned on the drugstore side, we're actually facing tough comps, especially in Chile. And the other point I would make is regarding margins, because, you know, the Health Division is basically operating at about a 10% EBITDA margin, which granted, it's not the 15 that we had at OXXO, which has, you know, 20,000 stores, but it's, we think it's a pretty respectable EBITDA margin, where you're getting into the double digits for the drugstore business. As we continue to scale up, we've spoken in the past, you know, Mexico is the one market where we are subscale. We are tiny in terms of market share. We have probably a low to mid-single digit market share, so we definitely would like more scale in Mexico. You know, driven by Chile, and I think Colombia also is growing very fast, so it's playing an increasingly large role. The Health Division is actually going through a very good phase. I would just leave that there. One final thing just on that. I think, if you look at the future digital ecosystem, I think also pharmacies in Mexico will play a large role in that. The ticket size for pharmacies and the drop size are probably more attuned to a home delivery mechanism via the loyalty program, especially for chronic ailments, is something that I think lends itself well to a Digital solution. I think this will also complement quite nicely the eventual digital ecosystem that we will be building out in Mexico soon. Those are very fair points. Good points. Thank you so much for taking my questions. Congrats again. Our final question will come from Antonio Hernández of Barclays. Hi, good morning. Thanks for taking my question. Congrats on the results. My question's regarding food service capabilities. I mean, you're entering the European market with a business called Foodvenience, and you've already had some exposure to foodservice market as well. Are you planning any or do you have any specific targets either as an organic or inorganic growth for this segment in Mexico or in Latin? Thanks. Yeah, thank you for your question, Antonio. I mean, in inorganic growth, no, we're not considering anything in particular. I would say we think that the Valora team has done a great job, I mean, on the Foodvenience side, and we see that there are opportunities there for us to bring that experience. I mean, also the multi-brand experience that they have to this part of the world. That is where we are mainly focused in terms of value creation from the food service point of view. I mean, as you know, we are doing also a good job here in Mexico, but I mean, they have done a pretty good job there in Europe. That's where we would like to learn from there, I mean, in the Foodvenience space. We can bring value here in terms of the organic expansion that we have been very successful, particularly in Mexico, but also in other markets in Latin America. Okay, thanks a lot. Have a great day. Thank you. At this time, I'll turn the conference back over to our speakers for any additional or closing remarks. I think that's all for today. Thanks, everyone, and have a great rest of the week. Thank you. Gracias. Thank you, ladies and gentlemen. If you wish to replay the webcast for this call, you may do so at FEMSA's Investor Relations website. This concludes our conference for today. Thank you for your participation, and have a nice day. All parties may now disconnect.