BBB Foods (TBBB) Q1 2025 Earnings Call May 08, 2025 12:00 PM ET Speaker0 Good morning, everyone. My name is Leonor, and I will be your conference operator. Welcome to Tiendas Tresbe First Quarter twenty twenty five Conference Call. All lines have been placed on mute to prevent any background noise. There will be a question and answer session after the speakers' remarks, and instructions will be given at that time. Please ensure that your full name is displayed correctly on Zoom. If not, please take a moment ...

Table of Contents As filed with the U.S. Securities and Exchange Commission on April 29, 2025 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F (Mark One) ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2024 TABLE OF CONTENTS | | | | | Page | | --- | --- | --- | --- | --- | | | | PRESENTATION OF FINANCIA ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 For the month of April 2025 Commission File Number: 001-41954 BBB Foods Inc. (Exact name of registrant as specified in its charter) N/A (Translation of registrant's name into English) Av. Presidente Masaryk 8 Polanco V Sección, Miguel Hidalgo Mexico City, Mexico 11560 (Address of principal executive office) Indicate by c ...

Financial Data and Key Metrics Changes - Total revenues for Q4 2024 increased by 32.7% to 16.3 billion pesos, while full-year revenues increased by 30.3% to 57.4 billion pesos [5][8] - Same-store sales growth for Q4 was 11.8%, and for the full year, it was 13.4% [5][10] - Net cash flows generated by operating activity reached 3.749 million pesos, a 19.4% increase year over year [5] - The company ended the year with a net cash position of approximately 1.4 billion pesos and retained about 150 million USD since the IPO [6] Business Line Data and Key Metrics Changes - The company opened 138 net new stores in Q4 and a total of 484 new stores for the full year, representing a 21% increase over 2023 [5][7] - Private labels now represent 54% of total sales, up from 47% in 2023 [14] Market Data and Key Metrics Changes - The company significantly outperformed the Antad numbers, with Q4 same-store sales growth of 11.8% compared to Antad's 2.6% [10] Company Strategy and Development Direction - The company plans to open between 500 and 550 new stores in 2025, with same-store sales guidance between 11% and 14% and total revenue growth in the range of 26% to 29% [22] - The company continues to focus on enhancing its value proposition through continuous improvement in product quality and features [11][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience during economic downturns and anticipated a strong year in 2025 despite uncertain conditions [21][23] - The company has a robust strategy for real estate expansion, focusing on increasing store density in existing markets while exploring new geographies [31][32] Other Important Information - SG&A as a percentage of revenue increased by 96 basis points to 15.2% in Q4 2024, driven by sales and administrative expenses [15][16] - EBITDA for Q4 2024 reached 845 million pesos, representing a 51% growth year-over-year [19] Q&A Session Summary Question: Expansion strategy and balance of growth across new and existing areas - Management confirmed a decentralized approach to real estate, focusing on increasing store density and exploring new geographies [31][32] Question: Drivers behind the increase in private label penetration - The increase is attributed to improved value offerings in private labels, leading to higher sales [80] Question: Gross margin expansion and competition outlook - Management noted that gross margin improvements are driven by increased purchasing power and operational efficiencies, and they have not observed significant changes in competition [66][72] Question: Same-store sales growth sustainability - Management expressed cautious optimism about maintaining high same-store sales growth rates, driven by continuous improvements in the value proposition [51][52] Question: Store opening guidance and operational bottlenecks - Factors affecting store openings include real estate availability, capital, and human resources, with confidence in achieving the projected numbers for 2025 [59][62] Question: Optimal expense levels as a percentage of sales - Management indicated that expenses should decrease as a percentage of sales over time as the company scales [88][90] Question: Future of remittances and supplier relationships - Management confirmed that remittances are on the table as a potential service, and long-term planning with suppliers has mitigated current market uncertainties [113][118]

Group 1 - BBB Foods Inc. is well-positioned to benefit from the developing hard retail market in Mexico [1] - The company focuses on lower-income groups and has a strong portfolio of private label products [1]

Financial Data and Key Metrics Changes - Total revenues increased by 29.8% year-on-year to reach PS 14.8 billion in Q3 2024 [4][7] - EBITDA for Q3 reached PS 688 million, a 54% year-on-year increase [4][10] - Net cash flows from operating activities for the first nine months reached approximately PS 2.3 billion, a 22.4% increase year-on-year [5] - The company ended the quarter with a net cash position of approximately PS 1.3 billion [5] Business Line Data and Key Metrics Changes - Same-store sales grew by 11.6% year-on-year [4][7] - The company opened 131 net new stores in Q3 2024, bringing the total store count to 2,634 [4][6] - For the first nine months of 2024, the company opened 346 net new stores, a 42% increase compared to the same period last year [6] Market Data and Key Metrics Changes - The company reported flat gross profit margins at 15.8% compared to the same quarter last year [7] - Adjusted negative working capital was 10.3% of total revenue as of September 30, 2024, reflecting operational efficiency [11] Company Strategy and Development Direction - The company aims to meet its guidance of opening between 380 to 420 new stores in 2024 [6][25] - The management expressed confidence in the market's capacity to sustain up to 20,000 stores over time [25] - The company continues to focus on providing the best value for money to customers, which is a key driver of its success [7][21] Management's Comments on Operating Environment and Future Outlook - Management noted that the company continues to perform strongly despite industry deceleration, with same-store sales trends remaining robust [62] - The management emphasized the importance of continuously optimizing pricing strategies to enhance value propositions [80] - The company remains self-funded and is focused on growth without immediate plans for dividends [34][78] Other Important Information - SG&A as a percentage of total revenue decreased by 51 basis points year-on-year from 13.9% to 13.4% [9] - The company has not seen significant impacts from weather conditions, such as rain, on shopping behavior [108] Q&A Session All Questions and Answers Question: Sequential gross margin decline and operating leverage - Management explained that gross margin fluctuations are a result of individual pricing decisions and emphasized that their strategy remains unchanged [20] Question: Store base and competition with Neto - The company has about 1,500 stores near Neto locations and continues to perform strongly against competition [21] Question: Long-term outlook for dividends - Management stated it is too early to discuss dividends but acknowledged significant cash generation potential in the future [34] Question: Productivity of newer stores - Management confirmed that all store vintages continue to perform solidly, with newer stores showing strong trends [36] Question: Breakdown of same-store sales between ticket and traffic - Management indicated that the increase in same-store sales is primarily driven by a notable increase in transactions and average ticket size [44] Question: Impact of rain on demand - Management noted that while rain can affect shopping behavior, they have not seen significant impacts on their sales [108] Question: Relationship with suppliers - Management highlighted that scaling improves supplier relationships, leading to better terms and product offerings [100][101]

Company Overview - BBB Foods Inc. is a Mexican discounted grocery chain with over 2,500 stores across 15 states in Mexico [1] - The name "BBB" stands for "Bueno, Bonito y Barato," which translates to "Good, Nice and Affordable" [1] Investment Potential - The company has been identified as a potential investment opportunity due to its business model focusing on affordability and value [1] - Analysts typically look for companies with above-average dividend yields, undervalued companies, or struggling companies with turnaround potential, which may apply to BBB Foods Inc. [1]

Financial Data and Key Metrics Changes - Total revenues increased by 27.5% year-on-year to reach PS 13.6 billion for the quarter [3][5] - EBITDA reached PS 689 million, reflecting a growth of 43.2% year-on-year [3][7] - Net cash flows from operating activities rose to PS 1.256 billion, an increase of 25% year-on-year [4] - The company ended the quarter with a net cash position of approximately PS 1.2 billion and PS 2.8 billion in short-term bank deposits [4] Business Line Data and Key Metrics Changes - Same-store sales grew by 10.7%, indicating strong underlying demand despite a slowdown compared to the previous year [3][5] - Gross profit margins improved by 60 basis points to reach 16.7% for the second quarter, driven by better supplier terms [5][7] Market Data and Key Metrics Changes - The company opened 121 net new stores in the second quarter, bringing the total store count to 2,503 [3][4] - The company aims to open between 380 and 420 new stores in 2024, with a total of 215 net new stores opened since the beginning of the year [4][9] Company Strategy and Development Direction - The company maintains a decentralized approach to store openings, which has proven effective [9] - The business model focuses on opening new stores, providing excellent value to customers, and continuously improving the value proposition [9] - The company is optimistic about growth opportunities in Mexico, indicating a strong runway for expansion [4][9] Management's Comments on Operating Environment and Future Outlook - Management noted that quarterly sales were slightly impacted by various factors, including the timing of Easter and government payments [5][9] - The company expects to maintain its guidance for sales growth of 28% to 32% [9] - Management emphasized that the strength of the business model lies in its simplicity and efficiency [9] Other Important Information - The company reported an increase in administrative expenses by 45.8%, primarily due to higher personnel costs related to expansion [7] - Adjusted negative working capital stands at 10.2% of total revenue, reflecting operational efficiency [8] Q&A Session Summary Question: Inquiry about gross margin dynamics - Management explained that scaling leads to cost benefits on purchasing, and pricing decisions are made on a product-by-product basis [10][12] Question: Performance of fresh and meat categories - Management stated that tests for meat and fresh produce are encouraging, but no official projections have been shared [16][17] Question: Details on dilution in selling expenses - Management clarified that as the number of stores and sales grow, there will be continued dilution of expenses across the base [20][22] Question: Impact of peso depreciation on cost of goods sold - Management indicated that the impact of peso depreciation on costs is typically a delayed effect [34][40] Question: Percentage of imports versus local production - Management noted that most raw materials are dollarized, and the non-dollarized costs are primarily labor-related [41][42] Question: Return on investment for new stores - Management expressed confidence that returns on new stores will continue to improve due to better brand recognition and value proposition [43][45] Question: Non-cash gains from exchange rate variation - Management confirmed that the company will maintain its overseas investments for the remainder of the year [47][48]

Group 1 - BBB Foods reported earnings per share of 17 cents, exceeding the analyst estimate of -5 cents [1] - The company achieved revenue of $788.12 million, which is 12.99% higher than the analyst estimate of $697.54 million [1]

Financial Data and Key Metrics Changes - In Q1 2024, revenues reached Ps. 12.7 billion, representing a 30.9% growth compared to the same quarter last year [7] - Same-store sales grew by 14.8% and operating cash flow increased by 36.4% [4] - EBITDA grew by 57.9% from Ps. 396 million to Ps. 626 million, with EBITDA margin increasing from 4.1% to 4.9% [9] - The company ended the quarter with a net cash position of Ps. 4.3 billion due to IPO proceeds and organic cash flow generation [4] Business Line Data and Key Metrics Changes - The company opened 94 new stores in Q1 2024, bringing the total to 2,382, a 27% increase in store openings compared to Q1 2023 [5] - The compound annual growth rate of store openings from 2019 to 2023 was maintained at over 15% [5] Market Data and Key Metrics Changes - The company maintains a view that Mexico has the potential for at least 12,000 successful 3B stores [6] - The minimum wage increases have positively impacted the target customer segments [11] Company Strategy and Development Direction - The company aims to continue its growth trajectory by opening between 380 and 420 stores in 2024 and increasing sales by 28% to 32% [11] - The business model focuses on a cycle of opening new stores, enhancing value for customers, and generating cash flow [13] - The company emphasizes maintaining operational efficiency and cost reduction as it scales [12] Management's Comments on Operating Environment and Future Outlook - Management noted a positive halo effect post-IPO, with increased motivation from suppliers and better terms being negotiated [17] - The management believes that the growth in older store vintages will continue due to improved value offerings [27] - The company is committed to organic growth, although it does not rule out potential M&A opportunities in the future [36] Other Important Information - The gross margin increased by 80 basis points, attributed to better supplier terms and scale [7] - The company is continuously testing new SKUs, with around 50 to 60 in pilot mode at any time [60] Q&A Session Summary Question: Are there any tangible benefits post-IPO? - Management noted a significant positive halo effect from suppliers and increased motivation [17] Question: Are there any concerns about the quality of new store openings? - Management stated that all new store openings are performing well and maintaining discipline in their approach [20] Question: Will gross margins trend upwards? - Management indicated that the increase in gross margin is a normal fluctuation and should not be over-interpreted [23] Question: What is the outlook for mature store performance? - Management confirmed that older vintages continue to perform well, driven by improved customer value [27] Question: Is there any change in the competitive landscape? - Management reported no notable changes from competitors adopting their discount model [35] Question: What is the strategy regarding new categories and fresh products? - Management stated that only fully tested products will be introduced, maintaining a disciplined approach [43] Question: How is the company addressing higher labor costs? - Management confirmed ongoing efficiency projects to offset costs, with no new initiatives specifically tied to the IPO [48]