Good day, everyone, and welcome to the BBB Foods fourth quarter 2023 results. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask questions by pressing the star and one on your telephone keypad. You may withdraw yourself from the queue by pressing star two. Please note this call is being recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Anthony Hatoum, CEO. Please go ahead. Good morning, everybody. Welcome to our first earnings conference call. We will begin by reviewing our key accomplishments from our fourth quarter of last year, and we will review 2023. We will next look at the important operational milestones. Eduardo Pizzuto, our CFO, will follow, presenting our financial results and outlining our guidance for 2024. We will conclude with a Q&A session to answer as many questions as we can. As expected, we delivered strong results in the fourth quarter and for the full year 2023. Sales grew by 30.8% for the fourth quarter and by 35.3% for the full year. We opened a record 396 stores in the year and 153 alone in the last quarter. In terms of cash flow from operations, in 2023, they reached MXN 3.1 billion, a growth of 48% for the year. This, driven by improvements in our EBITDA and our favorable working capital dynamics. Post-IPO, we have a very robust balance sheet, having fully repaid our outstanding dollar debt. Let's turn to operational performance. In terms of store expansion, 2023 was a landmark for our company. We opened a record-breaking 396 new stores, bringing our total to 2,288 stores. That is a growth of 21%. Of these 396 stores, we opened 153 in the fourth quarter alone. That's 39% of the total. We have been very consistent with our growth. From 2019 to 2023, we have maintained a compound annual growth rate of new stores opened of 20+%. For those of you with whom I spoke during our roadshow, you know that we have significant runway to sustain these growth rates for the next 10 years, and we maintain our view that Mexico offers a potential market of no less than 12,000 3B stores. Moving on to revenues and margins. For 2023, revenues reached MXN 44 billion. That's a 35% growth over 2022. To break it down, of this 35%, 29% is from stores opened before 2022 and 7% from the new stores of 2023. Our gross margins increased by 86 basis points over the last year, largely explained by our increase in scale and negotiating better terms with our suppliers. Some of you are familiar with the positive sales trend for 2005-2022 store vintages. What you see on this chart are the sales curves of each of our vintage of stores since inception, and this is adjusted for inflation. I note three things: All our vintages continue to grow their sales. No vintage has yet flattened out. Each vintage, each newer vintage has a steeper sales curve than the one preceding it, and the starting sales points of each new vintage are getting higher. In other words, our stores are breaking even faster, and what drives that is the continuous improvement in our value proposition to our customers, which, for example, is far superior today to what we offered customers five years ago. We have more private labels, we have better quality private labels, and we're giving our customers more value for money. That, in turn, builds trust, existing customers will buy more, and we continue to get more customers. And it also helps that the 3B brand is getting stronger. It's also true that as we have more stores, word of mouth on our value proposition spreads further and faster. And although we are not showing it here on this chart, as we don't have yet full year numbers, our 2023 vintage appears to be following the same trend. So if I had to summarize, I would say we continue to increase penetration of private labels, which went from 43%-47% of our sales. In turn, these private labels are offering tremendous value to our customers. That, in turn, will drive, and is driving, increasing traffic to our stores and the positive trends in our average ticket size. So we're generating this virtuous circle. Outstanding value proposition generates higher traffic, generates higher sales, generates increasing cash flow, then in turn, in turn finances our growth. I'll pass the mic now to Eduardo, who will go over the financial results for the fourth quarter and for the full year. Thank you, Anthony. Good morning, everyone. Our EBITDA continues to grow exponentially. As seen in the chart, our EBITDA grew 32.9% in the fourth quarter and 44.3% during 2023. Let me give you a few highlights to better appreciate the context of the quarter. 40% of our total store openings happened in the fourth quarter. Therefore, we show full expenses, but we had yet to show full revenues. Admin expenses were affected by the hiring of talent to support our growth and to fulfill our obligations as a public company. And finally, we reported a number of non-recurrent expenses, specifically, MXN 80 million related to Hurricane Otis in Acapulco and MXN 14 million in pre-IPO expenses in the fourth quarter. As illustrated in the graph, if we exclude the expenses from the IPO and the impact of Hurricane Otis, EBITDA would have been approximately 17% and 5% higher for fourth quarter 2023, respectively. Therefore, adjusted EBITDA margins would stand at 5.3% and 4.5%, respectively. It's important to know that over time, we expect expenses to decrease as a percentage of sales. As our revenues base grows, fixed costs are spread out, and the one-off costs do not recur. Hard Discount is a unique business model. It generates a significant amount of cash through changes in negative working capital. We are not the exception. We turn our inventories 3 times before we pay suppliers. As you can see in this chart, negative working capital represents 10% of revenues. We generated MXN 1.4 billion during 2023, given this dynamic. This trend will continue as long as we continue to increase our sales. Finally, let me give you some guidance for 2024. We plan to open anywhere from 380-420 new stores. We expect our revenue to grow anywhere from 28%-32%, and same-store sales, we are expecting it to grow mid-teens. I will now, I will now turn back the call back to Anthony for some final remarks. Ours is a very powerful and resilient business model, and we are executing it with discipline and consistency. We continue to be the leaders in this segment. Every year, we get stronger, and we increase the value offer to our customers. That's what is at the core of our growth that you have seen, both in terms of total and same-store sales. So for us, it boils down to this: It's more of the same, better and faster. We continue to open stores, we continue to increase the value that we offer our customers by developing new products and strengthening the relationships with our suppliers, and scaling up helps a lot. We continue to improve the efficiency of our operations as we have done over the last years, and we continue to generate cash that we will use to grow, invest in price, and in projects that have high ROICs. In conclusion, I'm very excited for 2024, and thank you for listening. We'll now start the Q&A session. So please go ahead, operator. Thank you. And at this time, if you would like to ask a question, please press star and one on your telephone keypad. You may withdraw your question at any time by pressing star two. Once again, to ask a question, please press star and one on your telephone keypad. I will take our first question from Andrew Ruben with Morgan Stanley. Please go ahead. Hi. Thanks very much. Congratulations, Anthony, Eduardo, and to all of the BBB team. I have two questions, if I may. The first is on gross margin. It looked like a strong quarter in Q4, so I'd be curious versus the year, if there was anything incremental on the supplier negotiations to call out. And then as it pertains to 2024, how you think about the balance of letting the scale benefits, the negotiations, flow through to margins versus being reinvested in price? And then second, quickly on the store guidance for the year, I'm curious how you think about the timing. I know you mentioned 40% of the 2023 openings were in the fourth quarter. Just curious if we should consider any similar cadence for the year ahead. Thanks very much. Hi, Andrew, good to hear from you. Let me start with the margin question. This is quite a dynamic process, negotiating with suppliers as we scale up, and you have to think about it that this is something that happens on a product-by-product basis. Typically, what happens as we scale up, we're negotiating better terms and conditions across the board. Then the decision is what goes into price and what gets retained, that gets reflected in, in gross margin, as you see. The end result is what you've seen, which is a 16% gross margin in the fourth quarter. That's a very dynamic number, and I wouldn't be surprised if it fluctuates, as it's trending or stabilizing at some point. Your second part of the question, if I'm not mistaken, had to do with store openings and the concentration of store openings in the last quarter. Again, a very dynamic process. My expectations for 2024 is that it's better spread out throughout the year. Great, very helpful. Thank you for the color. Thank you. Our next question comes from Robert Ford with Bank of America. Please go ahead. Thank you, and good morning, everybody, and congratulations on the quarter. Anthony, can you talk a little bit about your price gaps? I know there's some concern when people look at this gross margin, that some of this is pricing and they have some difficulty accepting that these are actually vendor term improvements. And then, Eduardo, you touched on the increase in SG&A, but can you give a bit more detail on how you expect to leverage that administrative cost line as you move forward? And then on the hurricane Otis charges, you know, are you done? And is that net of insurance? And then how are you thinking about Acapulco over the intermediate to longer term? And then lastly, how should we think or how do you think about long-term equity-based compensation in terms of annual dilution from this point forward? Thank you so much. Okay, Bob, I'll start with the first part of the question, which was: Do our gross margins come from price increases or increase in unit sales? And I would say the latter. When we look at our internal inflation numbers, we have seen a significant drop in inflation, and I would say even deflation in the fourth quarter. So all driven by better negotiations on costs from our supplier, and a portion of that gets actually put in the prices of our products. Yeah. Hi, Bob, Eduardo- Oh, the price. You had a question about price gaps. Price gaps. Yes. Yep. All of our data, extensive data, shows that we're the price leader in the market today. Some of you have gone out and done their own price checks, and I would encourage everybody to do the same and reach your own conclusions. But, you know, when you come visit us, we'll be happy to share oodles of data about pricing, in a vast geographic area. Hi, Bob, this is Eduardo. Your first question on SGNA and how to leverage moving forward. Yeah, we had a particular Q4, as I explained, we had a number of stores, about 40% of our openings during Q4. Then we had additional hires in different areas, some strategic areas for 3B moving forward. We also had preparation for new regions. But as we move forward, yes, you should expect leverage from on SGNA, mainly from coming from store expenses, also from efficiencies in logistics. As we have mentioned before, we continue to do a lot of work in terms of efficiencies. We look at hours worked, and we're always constantly looking for ways to continue to drive our costs down. So yes, you should expect that SG&A will continue to go down as a percentage of sales. Then on- How much of that would you say is fixed versus variable, Eduardo? Well, the fixed, if you look at a store basis, our fixed cost is pretty much the rents, electricity. Most of it is fixed cost in terms of stores. We have a variable cost, which is personnel, but it doesn't grow linear with sales. It grows marginally with sales. So again, we have a pretty good runway in terms of efficiencies moving forward. On the admin side, you know, I would assume that's largely fixed. Is that fair? Correct. Again, as I mentioned, we had some hires at corporate level, in some areas, like in purchasing, IT, and of course, finance, to meet our IPO company obligations. But as we move forward, that is an obvious one in terms of leverage moving forward. Then your second question on- East Coast On Acapulco, Bob. Yeah, we pretty much have expensed everything in 2023.... We don't expect anything, any additionals in 2024. This is not net of insurance, which we're still pending to get claims from insurance, and that will happen within the next weeks or even a few months still. And I believe that was your question on Acapulco, Bob. Great. So this is, this is gross of insurance, so you could see some reversal of these charges. And then it was more about, you know, I'm just reading some horror stories coming out of Acapulco in terms of how depressed the environment is, and I'm just wondering how the market is behaving for you and what your expectations are over the intermediate to the longer term. We've We've reopened almost all our stores, and they're doing extremely well. I mean, the rebound was fantastic. Oh, great to hear. And then the last thing was the equity-based compensation in terms of annual dilution and how you're thinking about that. Okay. So we've inherited our existing ESOP, and if you look at the F-1, this represents about 43 million options outstanding, not fully vested yet. But, you know, you can come to your own dilution number if you net the strike prices, the average strike price, which is published in the F-1, and you can get a number, and that's one fixed number for share dilution. Now, going forward, we have an authorized new plan of about 8.4 million options that have yet to be distributed and that will be distributed over the course of several years. It has an evergreen function attached to it. But again, going forward, you know, you issue options, you issue them at market price, and you get diluted only if, you know, we've created value that's superior to the strike prices we've set. So I don't see a significant impact to that dilution going forward. It will only come because we've created significant value for all shareholders. No, agreed, that's what we're thinking of, just from this point forward, you know, the benchmark we're using is about a point, based on our expectations, which seems in line with this incremental- Yeah, and I think that- Okay that's a reasonable assumption. Great. Thank you very much, and again, congratulations on the quarter. Thanks, Bob. Good hearing from you. Thank you, Bob. Thank you. Our next question comes from Héctor Maya with Scotiabank. Please go ahead. Hi, Anthony. Eduardo, thank you very much for taking my questions, and congratulations on your first quarterly report and the positive results. I just have one strategic question for Anthony. Could you please tell us your view on competition? I mean, we have seen that other players have responded to the growth of Tiendas 3B with plans to increase private label penetration and accelerate opening. So just wondering if you are considering to become even more aggressive in new stores outside of Mexico's central region, to potentially avoid, for example, Bara from FEMSA getting stronger before you in the northern region or Bodega Aurrerá Supermercados becoming stronger in the southern region and Veracruz. Thank you. Sure. Hector, Mexico has always been a very competitive market in grocery retail, and today it's no exception. We've been competing in this market as a significantly smaller company over time. While it's true that our entry as a public company has created noise, we haven't seen to date any significant changes at the competitive level. It's still as competitive as ever, and we're still all competing healthily against each other. So no material changes in the competitive environment that we've noticed. We remain the price leaders today, and we don't see anybody consistently undercutting us. In terms of, you know, expansion, do we see anything different as we move out forward? No, it's been fairly consistent in terms of competitive environment. You know, will, let's say, competitors, you know, turbocharging their growth or doing something different really affect our business model? I think it's healthy. I think there is plenty of runway for two or three or even four very strong competitors in this market. When we look at Mexico as a whole, we just see so much opportunity, and, as such, you know, as long as we do our job well, we focus on offering significant value to our customers, which is always improving, I think we will carve out our niche and be very successful. Excellent. Thank you very much. Very clear, and congratulations again on the results. Thank you. Thank you. Thank you. Our next question comes from Froylan Mendez with J.P. Morgan. Please go ahead. Hello, James, and thank you very much for taking my question. Could you give us some color on the same-store sales trends of mature stores during the quarter? And if you could give us- little light on what's embedded in your same-store sales guidance, but for the mature stores. Thank you. Thank you for that question because I was gonna raise it myself. I think if you refer to that spaghetti chart in the presentation that we shared with you, you can see that every single vintage is posting very strong same-store sales growth, and that's on a inflation adjusted basis. What we see is continued very strong same-store sales growth across the board, and every time we ask ourselves, why? It just boils down to what we've said before. The value proposition to our customers is continuously increasing. What we offer you today has nothing to do with what we offered you several years ago in terms of, you know, better quality, better pricing, better assortment. Across the board, that generates basically more customers coming in and very solid support for increasing ticket sizes. There might be, and I'm suspecting because I glanced through some of the analyst reports that came out late last night and early this morning. I'm suspecting that our definition of same-store sales might not be the same as the street's definition of same-store sales. Just to be clear, we look at stores that have two years of sales and older to calculate our same-store sales ratios. That might be conservative, but we like it this way because our newer vintages are growing so fast that we think that distorts the same-store sales number. That's the way we do it. I think that's exactly where my question was coming from, because when you see the same-store sales number that you posted, the gap maybe versus what other retailers posted, it's not that large, in some sort of way. It probably has to do with... Of course, it has to do with the growth rate, but, I hear you. Yeah, I mean- Thank you so much. Just look at the slope of the curve in the spaghetti chart, and you see that in the early years, you're at 40+%. So we, we prefer not to include that and just to talk about stores that have come off this fast ramp. Thank you, Anthony. Thank you. Our next question comes from Rodrigo Alcantara with UBS. Please go ahead. Hi, guys. Rodrigo. Anthony, Eduardo. Hello. Hi. Hi, Anthony, Eduardo. Nice to hear from you. Yes, but just a very simple question on your plans on fresh, right? I mean, we discussed in the past about you guys adding the different categories. Just curious, is this in the pipeline for 2024, how advanced you are on this plan? And maybe, to leverage this question, if you perhaps we can comment on CapEx expectations, if you just for us to model accurately our generation for 2024. Thank you very much for that time. Okay, Rodrigo, hi. You were breaking up a little bit, but if I heard you correctly, your first question was, what are our plans for fresh? Yes. Yes. Okay. You know, a hard discounter will offer fresh, but we'll offer it with the same kind of principle and approach that we offer everything else. It has to be high rotation, it has to offer high value for money, and we're currently running tests to be able to achieve that. I mean, if you look at other countries like Turkey, BİM, they offer fresh, A101 offers fresh, and there is no reason why 3B can't offer fresh. So as long as, you know, as soon as we are satisfied that the fresh we can offer meets these criteria we put, we will have fresh. Now, when does that happen? It could happen in 2024, but it could also be in 2025. None of our looking forward projections include anything from this category. So when it happens, it's icing on the cake. Your second question was CapEx? I'm gonna let Eduardo answer that one. Yes, CapEx. Hi, Rodrigo, good to hear from you. Good morning. In terms of CapEx, it's pretty much what we had explained in our prospectus. No, no, no, no changes really there. Again, as we explained, our target is to invest MXN 3.9 million per store, particularly this year. In addition to stores, we're gonna be adding two additional regions, distribution centers. By the way, they both have already opened. And again, additional CapEx in terms of trucks and cars, that the majority, of course, will come from CapEx from the store. So no, no, no major changes there, and that's how we plan to execute 2024. Awesome. Thanks for the clarification, Eduardo. Congrats on your earnings results. Thank you, guys. Thank you. And just a reminder, it is star and one on your telephone keypad if you would like to join the queue, star and one. We will move next with Jorge Izquierdo with BTG Pactual. Please go ahead. Good morning. Congrats on the results, and thank you for taking my question. My question is on average ticket. We saw it went from MXN 50 in 2019 to slightly above MXN 82 in 2023. So I was wondering if you could provide more color on the main factors which are driving this increase, and what should we expect for the future? Thank you very much. Good to meet you. Fundamentally, what drives increase in tickets is our customer picking up one additional item in their visit, and that happens, as we increase the penetration of wallet because we're offering more, a bigger selection of better things, more value for money to our customer. And it's happening naturally, and it's a natural upward trend that we've been observing now for several years. Now, inflation that we've seen in the past has sort of created a little bit of noise in our number. We've seen high inflation, so in 2022, the ticket size got a little bit inflated. We've seen it in the first quarters of 2023, but we've seen internally a significant deflation in the fourth quarter of 2023. Now, going forward, I expect inflation to stabilize, and then I expect our ticket size to continue its upward trend as we've been experiencing it now for several years. Great. Thank you. Very clear. Thank you. We show no further questions at this time. I would like to turn the call back to the presenters for closing remarks. Again, thank you very much for attending our first meeting. This is very exciting for us. We were extremely nervous at the beginning of the call, but I think, you know, hearing familiar voices that have supported us all this time has made it very smooth and easy. And of course, we're happy to talk to you during our quiet periods about what's going on. So thank you again, and we look forward to talking again and seeing you in person. This does conclude today's program. Thank you for your participation. You may disconnect at any time.