BBB Foods, Inc. Q4 FY2024 earnings call

• Strong year with 138 net new stores in Q4 and 484 full year, exceeding original guidance. - Same store sales growth despite notable decrease in inflation. - Opened 2 new distribution centers in 2024. - SG&A: Sales expenses rose 40 basis points (including non-recurring non-cash expenses), admin expenses increased 56 basis points (including non-recurring cash expenses). - EBITDA for Q4 2024 was MXN845 million (5.2% margin), full year EBITDA MXN2.8 billion (5% margin), both up 51% year-over-year. - Negative working capital strong, adjusted to 10.6% of total revenue as of Dec 31, 2024.

For the fourth quarter, total revenues increased by 32.7% to MXN16.3 billion. Full year revenues increased by 30.3% to MXN57.4 billion. Same store sales growth for the fourth quarter was 11.8% compared to 4Q 2023, and full year was 13.4% compared to last year. Opened 138 net new stores in the fourth quarter and 484 net new stores for the full year, a 21% increase over 2023. Private labels represent 54% of sales, up from 47% in 2023.

• 2025 same store sales guidance: 11% - 14%. - Total revenue growth guidance: 26% - 29%. - Plan to open between 500 and 550 new stores in 2025.

Q: How should we think about the balance of growth across new and existing trade areas, and capabilities for 2025?

A: Real estate strategy is decentralized with regional CEOs handling store search, focusing on density in current areas and expanding to new geographies. Capabilities focus on hiring talent, compliance, and continuous improvement of value propositions.

Q: What factors enabled exceeding store opening guidance in 2024?

A: Availability of real estate, capital, and human resources; mitigating permit issues by increasing store pipeline; decentralized real estate operations with regional teams.

Q: Elaboration on gross margin and competition?

A: Gross margin improves with scaling, purchasing power, and efficiency; competition in Mexico is healthy, and the company thrives in downturns.

Q: Drivers behind private label penetration increase?

A: Continuous improvement in private label value proposition (quality, features, packaging) leads to increased penetration.

Q: Expenses as a percentage of sales and tax rate?

A: Selling expenses come down as a percentage of sales with scaling; tax rate can be estimated by stripping non-Mexican expenses and applying 30% rate.

Q: Impact of ultra-fresh category on hard discount model?

A: Launch would require meeting value proposition and operational efficiency criteria; currently testing, and if launched, would follow private label approach.

Q: Fresh products in private label sales?

A: Fresh products would be considered part of private label as they follow same value proposition and operational efficiency criteria as private label products.

Q: Supplier planning and remittances?

A: Planning with suppliers already done for 2025; remittances are a potential service on the table if meeting value and efficiency criteria.