BBB Foods, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights:

• Store Openings: Accelerated store openings with 117 net new stores in Q1 2025, compared to 94 in Q1 2024. Last 12 months, 507 stores opened vs 416 in 2024.
• Financials: Total revenues MXN17.1 billion (+35.1% YOY), same store sales grew 13.5%. EBITDA MXN705 million (+12.7% YOY). Sales expenses as % of revenue increased to 10.3% from 10.2%, admin expenses as % of revenue rose to 4.1% from 3.5%.
• Operational Leverage: Unit level cost as % of sales decreasing, but consolidated level affected by accelerating store openings. Negative working capital at MXN6.5 billion in March 2025, ~10.5% of total revenue.

Segment Performance:

• Stores: Opened 117 net new stores in Q1 2025, totaling 2,889 stores. Compared to Q1 2024 (94 stores), there's an increase. Over the last 12 months, 507 stores opened vs 416 in 2024.
• Sales: Total revenues increased by 35% to MXN17 billion. Same store sales grew by 13.5%.
• Profitability: EBITDA increased by over 12% to MXN705 million. Cash flow from operating activities reached MXN1.1 billion, a 49% YOY increase. Ended with a net cash position of ~MXN1.6 billion and $150 million in cash.

Guidance:

• Continued acceleration in store openings and growth, expecting continued market share gains.
• Will continue to invest in future growth, including talent and distribution centers.
• Growth is self-funded with robust cash flows from operating activities.

Risks:

• Consumer spending pressures in Mexico, though company's value proposition is resilient.
• Potential impact of Mexico-U.S. trade agreements, but company believes it is resilient and may benefit in turbulent environments.
• Share-based payments impact expenses, but seen as an investment for future growth.

Question and Answer: Q: Thoughts on talent investments and distribution centers?

A: Investments for future growth, return on investment key. Distribution centers based on store locations to increase logistics efficiency.

Q: Sales expenses timing and share-based expenses?

A: Sales expenses timing due to accelerating store openings, share-based expenses ongoing as new normal.

Q: Gross margin and personnel expenses?

A: Gross margin driven by scaling, personnel expenses due to accelerated growth and training.

Q: Same store sales breakdown and free cash flow?

A: Same store sales 50/50 in traffic and ticket growth. Free cash flow driven by negative working capital, expected to continue.

Q: Impact of reduced working week and YEMA strategy?

A: Wiggle room to comply, YEMA to be rolled out with slower pace than Tiendas Tres B stores.

Q: Comp spread vs ANTAD and consumer environment?

A: Better value proposition and basic goods assortment drive comp spread. Consumer environment pressure not impacting sales due to high value proposition.

Q: Supplier conversations and tariff impact?

A: Strong supplier relationships, scaling benefits split fairly. Tariffs expected to be passed on, but company benefits.

Q: Stock-based comp and dilution?

A: Stock-based comp as investment, dilution example available on website.