BBB Foods Inc. Q4 FY2025 earnings call

• Store Expansion: The company accelerated store expansion, opening 184 net new stores in the fourth quarter and 574 net in 2025, representing a 21% growth year over year. The expansion strategy continues to densify existing regions while gradually expanding into new ones, and 4 new distribution centers were opened in 2025. - Revenue Growth: Revenue growth remained very strong. Total revenue in the fourth quarter was MXN22 billion, a 34% increase year over year, and for the full year, it reached MXN78 billion, a 36% growth compared to the previous year. The revenue CAGR for the last four years has been 35%. - Same-Store Sales: The gap in same-store sales performance with competitors remains significant, over 15 percentage points despite low internal inflation. Newer stores open with higher initial sales levels, and all store cohorts grow healthily. - Operating Metrics: For stores with five or more years of operation, the average number of transactions per store per month increased by 2.5%, and the average ticket size increased by 11% due to more items per ticket and an improved product mix

During the fourth quarter, BBB Foods Inc. opened 184 net new stores, with a full-year total of 574 net openings, exceeding the guidance of 500 to 550 stores. Same-store sales grew 0.6% in the fourth quarter compared to the same quarter last year and 18.3% for the full year. Total revenues in the fourth quarter increased 34% to MXN22 billion, and for the full year, revenues grew 36% to MXN78 billion. Reported EBITDA in the fourth quarter was MXN79 million, and excluding non-cash share-based compensation and a one-time asset write-off, EBITDA increased 23% to MXN1.2 billion. For the full year, reported EBITDA was MXN1.2 billion, and excluding non-cash share-based compensation and the asset write-off, EBITDA increased 30% to MXN4.4 billion. Cash flow generated from operating activity for the twelve months ending December 2025 reached MXN4.7 billion, a nearly 25% increase year over year. Private label represented 58% of total merchandise sales in 2025, compared to 54% in 2024. For stores with five or more years of operations, the average number of transactions per store per month increased by 2.5%, and the average ticket size increased by 11%

The company expects same-store sales growth between 13% and 16%, a range of 590 to 630 net new stores, and revenue growth between 29% and 32%. The target unit economics include an average CapEx of approximately MXN5.5 million per store, with a targeted payback period of about 26 months and a cash-on-cash return of roughly 55% by year three. These target unit economics are based on the performance trends of newer stores and do not include potential incremental revenue from higher CapEx initiatives

• Impact of Store Openings on EBITDA: The significant number of stores opened in the fourth quarter and new distribution centers led to lower than expected EBITDA. - Leasing Costs: Increase due to the number of stores and distribution centers opened, including equipment for distribution centers. - Share-Based Compensation Dilution: Tied to the company's share price, the impact on dilution depends on share price movement

Q: On stock-based compensation, if the new grants make up around 2% of outstanding shares versus approximately 1% in the previous year package, where is the delta coming from?

A: Simply from growth and an increase in the number of people. The option plan aligns incentives, attracts talent, and is likely to continue and expand with the company's growth.

Q: Regarding traffic and ticket dynamics, the trajectory of transaction counts as stores mature and thoughts on innovation?

A: Same-store sales growth is two-thirds volume and one-third price. The 2.5% increase in ticket size for stores five or more years old is good. Innovation is ongoing with 60 new products being tested, and new products perform well.

Q: Concerning EBITDA after leases, the timing of openings in the fourth quarter and its impact on margin, and leasing costs from the new store format?

A: The significant pace of store openings in the fourth quarter and new distribution centers led to lower than expected EBITDA. Leasing costs increased due to the number of stores and distribution centers opened, including equipment for distribution centers.

Q: The difference in same-store sales between 2025 (over 18%) and the guidance for 2026?

A: The 2025 result exceeded expectations, and it's difficult to pinpoint the exact reason, but the guided same-store sales are still strong.

Q: Regarding the space for refrigeration, larger stores, and their relation to fresh categories, as well as the size of new stores and the decision to build some from scratch?

A: Slightly larger stores affect capital expenditure. The mix for 2026 is adjusted with more stores built from scratch based on the real estate master plan. It's related to refrigeration equipment for expanding categories.

Q: The impact of the new payment provider on transaction fees and sales expenses?

A: There is no impact, and the company is even more competitive with the new provider.

Q: About new regions expansion, which ones excite the most and which may be underperforming expectations?

A: There is extremely consistent performance across all regions, and the company is excited across the board, with no regions significantly underperforming