Financial Data and Key Metrics Changes - Total revenues increased by 38.3% year-over-year, reaching 18.8 billion pesos [7][9] - Same store sales grew by 17.7%, compared to 10.7% in the same quarter last year [7][9] - EBITDA increased by 22.5% to 844 million pesos, with a potential increase of 32% when excluding non-cash share-based payment expenses [7][15] Business Line Data and Key Metrics Changes - The company opened 142 net new stores in Q2, bringing the total to 3,031 stores [6] - In the first half of the year, 259 stores were opened compared to 215 in the same period last year [8] - On a twelve-month basis, 528 stores were opened versus 460 in the previous twelve months [9] Market Data and Key Metrics Changes - The company continues to be one of the fastest-growing retailers in Mexico and possibly globally [9] - Cash flow generated by operating activities reached 1.9 billion pesos, a 56% increase compared to 2024 [8] Company Strategy and Development Direction - The company is focused on accelerating store openings and investing in new regions, with plans to open four new distribution centers in the second half of the year [6][19] - The management emphasizes a value proposition that continuously improves product quality, price, and assortment to drive customer traffic [23][24] Management Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about sustaining same store sales growth, with no immediate signs of moderation [87] - The company plans to continue its growth strategy, focusing on internal funding from increasing cash flows [19][90] Other Important Information - The company has a net local cash position of approximately 1.1 billion pesos and a cash position of $150 million from IPO funds [8] - The management team has been expanded with new members to enhance operational capabilities [5] Q&A Session Summary Question: What do you attribute the acceleration in same store sales to? - Management attributes the acceleration to an improved value proposition, leading to increased customer traffic and higher ticket sizes [23][24] Question: How are the meat and produce pilots developing? - Management is cautiously optimistic about the pilots but emphasizes that they are still in the testing phase and not yet impacting overall sales [26][28] Question: What are the implications of opening new regions? - Management stated that opening new regions is done strategically to mitigate risks and ensure efficient logistics, with no significant changes in ramp-up times expected [34][36] Question: How is private label penetration evolving? - Management noted a significant increase in private label penetration, which is a key driver of same store sales growth [45] Question: What is the outlook for gross margin pressure? - Management acknowledged gross margin pressure due to new regional expansions but expects to grow into these expenses as sales materialize [70][73] Question: Is there a plan for marketing to increase brand awareness? - Management indicated that word-of-mouth and social media have been effective marketing tools, but formal marketing spending is not currently prioritized [88][90] Question: How are private label suppliers keeping up with expansion? - Management confirmed that suppliers are being managed long-term to ensure they can meet the growing demand as the company expands [96] Question: What will happen to management compensation after the 2024 equity incentive plan ends? - Management stated that equity-linked compensation will continue to be a key strategy for attracting and retaining talent [101][102]

Financial Data and Key Metrics Changes - Total revenues increased by 38.3% year over year, reaching 18,800,000,000 pesos [6][8] - Same store sales grew by 17.7%, compared to 10.7% in the same quarter last year [6][8] - EBITDA increased by 22.5% to 844,000,000 pesos, with a potential increase of 32% when excluding non-cash share-based payment expenses [6][14] - Cash flow from operating activities reached 1,900,000,000 pesos, a 56% increase compared to 2024 [7] Business Line Data and Key Metrics Changes - The company opened 142 net new stores in Q2, totaling 3,031 stores, with an acceleration in the store opening rate [5][6] - In the first half of the year, 259 stores were opened compared to 215 in the same period last year [7] - On a twelve-month basis, 528 stores were opened versus 460 in the previous twelve months [8] Market Data and Key Metrics Changes - The company continues to be one of the fastest-growing retailers in Mexico and possibly globally, with strong same store sales growth rates [8] - The growth in same store sales is attributed to improvements in the value proposition, leading to an increase in the number of tickets and items per ticket [9] Company Strategy and Development Direction - The company is focused on accelerating store openings and investing in new regions, with plans to open four new distribution centers in the second half of the year [5][6] - The management emphasizes a strategy of self-funding growth through increasing cash flows, aiming to maximize shareholder value [18] Management's Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about future same store sales growth, noting no signs of moderation [83] - The competitive landscape in Mexico remains stable, with no significant changes observed in the dynamics of the market [63][64] Other Important Information - The company has a significant negative working capital model, which generates substantial cash flow [16] - The increase in administrative expenses is partly due to non-cash share-based payment expenses related to the equity incentive plan [12] Q&A Session Summary Question: What do you attribute the acceleration in same store sales to? - Management attributes the acceleration to an improved value proposition, leading to increased traffic and ticket sizes [22] Question: How are the meat and produce pilots developing? - Management is cautiously optimistic but notes that these pilots are still at a test level and not yet impacting overall sales [25] Question: What are the implications of opening new regions? - New regions are opened next to existing ones to mitigate branding risks and ensure efficient logistics [33] Question: How is private label penetration evolving? - Private label penetration has increased significantly and is a key driver of same store sales growth [43] Question: What is the outlook for same store sales performance? - Management does not foresee a decrease in same store sales but cannot predict exact future percentages [83] Question: Are suppliers keeping up with expansion? - Suppliers are being managed long-term to ensure they can meet the demand as the company expands [92]

Core Insights - BBB Foods (TBBB) reported revenue of $963 million for the quarter ended June 2025, reflecting a year-over-year increase of 22.2% [1] - The earnings per share (EPS) was -$0.13, a decline from $0.17 in the same quarter last year, with an EPS surprise of -225% against the consensus estimate of -$0.04 [1] Financial Performance Metrics - The reported revenue was slightly below the Zacks Consensus Estimate of $967.94 million, resulting in a revenue surprise of -0.51% [1] - BBB Foods' shares have returned +5.1% over the past month, outperforming the Zacks S&P 500 composite's +2.7% change [3] - The company has a Zacks Rank 5 (Strong Sell), indicating potential underperformance in the near term [3] Store Performance - Total stores reached 3,031, exceeding the average estimate of 3,022 by two analysts [4] - Same Store Sales Growth was reported at 17.7%, surpassing the average estimate of 15.4% [4] - The number of stores opened was 142, compared to the average estimate of 133 by two analysts [4]

Financial Data and Key Metrics Changes - Total revenues increased by 35% to COP 17 billion, with EBITDA rising over 12% to COP 705 million [6][8] - Cash flow generated by operating activities reached COP 1.1 billion, a 49% increase year over year [6] - Same store sales grew by 13.5%, indicating strong performance in existing locations [6][8] Business Line Data and Key Metrics Changes - The company opened 117 net new stores, bringing the total to 2,889 stores, compared to 94 stores opened in the same quarter last year [6][7] - The total number of stores opened in the last twelve months increased to 507 from 416, reflecting a growth of roughly 100 stores [7] Market Data and Key Metrics Changes - The company continues to be one of the fastest-growing retailers globally, with same store sales growth significantly outpacing competitors [8][9] - The gap in same store sales performance compared to Antad is notable and increasing, indicating a competitive advantage [9] Company Strategy and Development Direction - The company emphasizes a robust business model that is resilient and focuses on increasing market share through consistent execution and attractive value propositions [14][106] - Investments in talent and technology are prioritized to support future growth, with a focus on operational efficiency and logistics [11][27][29] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a challenging consumer environment but believes the company's value proposition will continue to attract customers [80][81] - The company is well-positioned to benefit from economic pressures, as its offerings are essential goods that consumers are less likely to cut back on [80][82] Other Important Information - The company maintains a net cash position of approximately COP 1.6 billion, with additional cash in U.S. dollars [6] - Share-based compensation is viewed as a high-return investment, driving growth and maintaining a strong entrepreneurial spirit within the company [95][96] Q&A Session Summary Question: How should the company think about investments in talent and distribution centers? - Management emphasizes that investments are made with a focus on return, and increasing talent density is seen as a competitive advantage [18][20] Question: Can you comment on sales expenses and their impact on margins? - Management explains that sales expenses are expected to increase due to the pace of store openings, but leverage is still seen at the unit level [34][36] Question: What are the dynamics behind gross margin in the first quarter? - Management states that gross margin remains stable, driven by scaling and the benefits of both commercial and private label products [46] Question: How does the company view its relationship with suppliers amid current economic conditions? - Management indicates strong relationships with suppliers and a long-term planning approach to ensure efficiency and supply [87][88] Question: What is the company's perspective on stock-based compensation and potential dilution? - Management defends stock-based compensation as a necessary investment for growth, clarifying that it is a non-cash expense [95][102]

Financial Data and Key Metrics Changes - Total revenues increased by 35% to COP 17 billion, with EBITDA rising over 12% to COP 705 million [5][7] - Cash flow from operating activities reached COP 1.1 billion, a 49% year-over-year increase [5] - Same store sales grew by 13.5%, indicating strong performance in existing locations [5][7] Business Line Data and Key Metrics Changes - The company opened 117 net new stores, bringing the total to 2,889 stores, compared to 94 stores opened in the same quarter last year [5][6] - The total number of stores opened in the last twelve months increased to 507 from 416, reflecting a significant acceleration in growth [6] Market Data and Key Metrics Changes - The company continues to be one of the fastest-growing retailers globally, with same store sales growth significantly outpacing competitors [7] - The gap between the company's same store sales and Antad's performance is notable and increasing [7] Company Strategy and Development Direction - The company emphasizes a robust business model that is resilient and focused on increasing market share through consistent execution and attractive value propositions [4][13] - Investments are being made in talent and technology to support future growth, with a focus on operational efficiency and logistics [9][25] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a challenging consumer environment but believes the company's value proposition will continue to attract customers [78] - The company is well-prepared for potential impacts from changes in labor regulations and trade agreements, indicating resilience in its business model [60][79] Other Important Information - The company maintains a net cash position of approximately COP 1.6 billion, with additional cash in U.S. dollars [5] - Share-based compensation is viewed as a critical investment for attracting and retaining talent, despite concerns about potential dilution [95][96] Q&A Session Summary Question: How should the company think about investments in talent and distribution centers? - Management emphasizes that investments are made with a focus on return, and increasing talent density is seen as a competitive advantage [17][18] Question: Can you comment on the timing of sales expenses and growth investments? - The company is increasing the pace of store openings, which impacts sales expenses, but expects to see leverage on older stores [33][35] Question: What are the dynamics behind gross margin and customer environment? - Management states that gross margin dynamics remain stable, driven by scaling, and the company does not see pressure to drop prices [45][46] Question: How is the company managing supplier relationships amid current economic conditions? - The company maintains strong relationships with suppliers and plans for long-term efficiency, ensuring stability in supply and pricing [86][87] Question: What is the outlook on stock-based compensation and potential dilution? - Management views stock-based compensation as a high-return investment and has provided clarity on dilution expectations [95][97] Question: How does the company plan to address potential impacts from labor regulations? - The company is prepared to adapt to changes in labor regulations and believes that increased sales will help stabilize labor costs as a percentage of sales [60][78]

PART I [ITEM 3. KEY INFORMATION](index=11&type=section&id=ITEM%203.%20KEY%20INFORMATION) This section outlines the principal risks associated with the company's business, its Mexican operations, BVI corporate structure, and publicly traded shares [Risk Factors](index=11&type=section&id=D.%20RISK%20FACTORS) - The company's business is significantly exposed to economic factors affecting its low-to-middle-income customer base, such as unemployment, inflation, and changes in government subsidies, which can reduce disposable income and decrease sales[38](index=38&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) - BBB Foods faces intense competition from a fragmented market including hard discounters, large retailers, informal vendors, and government-run stores, competing on price, location, and product assortment[49](index=49&type=chunk) - The success of private label products, constituting **53.6% of 2024 sales**, is crucial for growth and margins but also exposes the company to product liability and supply chain risks[54](index=54&type=chunk) - The company operates with a negative working capital position, a key driver of operating cash flow for store expansion, but faces cash shortage risks from revenue decreases or changes in supplier payment terms[64](index=64&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) - All operations are based in Mexico, making the business highly dependent on the country's economic conditions, political stability, and currency fluctuations, with recent political changes potentially introducing uncertainty[105](index=105&type=chunk)[120](index=120&type=chunk)[122](index=122&type=chunk) - The principal shareholder, Bolton Partners Ltd., holds approximately **44.7% of the voting power**, giving it significant influence over shareholder approval matters and potentially limiting other shareholders' influence[133](index=133&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) - Management identified four material weaknesses in internal control over financial reporting as of December 31, 2024, including reliance on outside advisors, inadequate segregation of duties, and ineffective risk assessment and monitoring, risking inaccurate financial reporting[151](index=151&type=chunk)[604](index=604&type=chunk) [ITEM 4. INFORMATION ON THE COMPANY](index=38&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) This section details the company's history, hard discount business model, decentralized organizational structure, and primarily leased physical assets in Mexico [History and Development of the Company](index=38&type=section&id=A.%20HISTORY%20AND%20DEVELOPMENT%20OF%20THE%20COMPANY) Founded in 2004, BBB Foods Inc. pioneered the hard discount model in Mexico, expanding to 2,772 stores and 16 distribution centers by 2024, and went public in February 2024 Company Growth Trajectory (2020-2024) | Metric | 2020 | 2021 | 2022 | 2023 | 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Number of Stores** | 1,249 | 1,547 | 1,899 | 2,288 | 2,772 | | **Total Revenue (Millions of Mexican Pesos)** | 22,891 | 32,580 | 44,078 | 57,439 | N/A | | **Same Store Sales Growth (%)** | 13.1% | 14.1% | 14.9% | 13.4% | N/A | - As of December 31, 2024, the company developed over **108 private label brands**, representing over **458 SKUs**[172](index=172&type=chunk) [Business Overview](index=41&type=section&id=B.%20BUSINESS%20OVERVIEW) BBB Foods pioneered the hard discount model in Mexico, offering a limited assortment of high-value products, emphasizing private labels, low-cost operations, and rapid, self-funded, decentralized expansion Sales Mix by Product Type (Percentage of Sales) | Product Type | 2024 Sales (%) | 2023 Sales (%) | | :--- | :--- | :--- | | **Private Label** | 53.6% | 46.5% | | **Branded** | 40.6% | 47.5% | | **Spot** | 5.7% | 5.8% | - The company's total revenue grew at a **35.5% CAGR** from 2021 to 2024, reaching **Ps.57.4 billion (US$2.8 billion)** in 2024[186](index=186&type=chunk) - The store network expanded at a **22.1% CAGR** from January 1, 2021, to December 31, 2024, reaching a total of **2,772 stores**[186](index=186&type=chunk) - The business model achieved a high ratio of **3.1 Payable Days to Inventory Days** in 2024, contributing to a negative working capital dynamic that helps fund expansion[192](index=192&type=chunk) - In 2024, the company averaged a new store opening every **18 hours**, outpacing other Mexican grocery retailers, with an estimated potential for at least **12,000 additional stores**[199](index=199&type=chunk) [Organizational Structure](index=56&type=section&id=C.%20ORGANIZATIONAL%20STRUCTURE) BBB Foods Inc. is a BVI holding company with Mexican operations, where the principal shareholder, Bolton Partners Ltd., holds **44.7% voting power**, significantly influencing the company - The company is a holding company incorporated in the British Virgin Islands, with substantially all operations conducted through its Mexican subsidiary[264](index=264&type=chunk) - Bolton Partners Ltd., the principal shareholder, controls approximately **44.7% of the combined voting power** of the company's outstanding common shares[266](index=266&type=chunk) [Property, Plants and Equipment](index=57&type=section&id=D.%20Property%2C%20Plants%20and%20Equipment) The company's asset strategy is primarily lease-based, with **2,771 of 2,772 stores** and all 16 distribution centers leased, supported by a standardized logistics fleet - As of December 31, 2024, the company leased **2,771 of its stores** and all office space, owning only one operational property[268](index=268&type=chunk) - The company operates **16 distribution centers**, each serving approximately **150 stores**, with an average size of **11,850 square meters**[269](index=269&type=chunk)[270](index=270&type=chunk) - The company's fleet consists of **367 standardized trucks** and **971 utility vehicles**, monitored in real-time for security and performance management[275](index=275&type=chunk) [ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS](index=58&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) This section analyzes the company's financial performance, highlighting **30.3% revenue growth** to **Ps.57.4 billion** and a shift to **Ps.334.4 million net profit** in 2024, driven by expansion and IPO proceeds [Operating Results](index=60&type=section&id=A.%20OPERATING%20RESULTS) In FY2024, BBB Foods achieved a **Ps.334.4 million net profit** on **Ps.57.4 billion revenue** (up **30.3%**), driven by new stores, **13.4% Same Store Sales growth**, and reduced financial costs post-IPO Consolidated Results of Operations (Thousands of Mexican Pesos) | Metric (Thousands of Mexican Pesos) | 2024 (Thousands of Mexican Pesos) | 2023 (Thousands of Mexican Pesos) | % Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | 57,439,019 | 44,078,459 | 30.3% | | **Gross Profit** | 9,376,106 | 7,039,917 | 33.2% | | **Operating Profit** | 1,328,509 | 793,863 | 67.3% | | **Profit (Loss) Before Income Tax** | 717,546 | (100,905) | (811.1)% | | **Consolidated Net Profit (Loss)** | 334,422 | (306,153) | (209.2)% | - Revenue from sales of merchandise increased by **30.3% in 2024**, with **24.0% of growth** attributed to **484 net new stores** opened[302](index=302&type=chunk) - Same Store Sales for the year ended December 31, 2024, increased by **13.4%**[302](index=302&type=chunk) - Administrative expenses rose **43.3% in 2024**, primarily due to growth-related hiring, public company readiness costs, and non-recurring IPO fees[308](index=308&type=chunk) - Financial costs decreased by **17.7% in 2024**, primarily due to the repayment of Promissory and Convertible Notes in February 2024 using IPO proceeds[313](index=313&type=chunk) [Liquidity and Capital Resources](index=67&type=section&id=B.%20LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Liquidity is driven by **Ps.3.7 billion** operating cash flow and negative working capital, with the February 2024 IPO raising **US$459.0 million** for debt repayment and **Ps.3.7 billion** budgeted for 2025 CAPEX Consolidated Cash Flow Summary (Thousands of Mexican Pesos) | Cash Flow Activity | 2024 (Thousands of Mexican Pesos) | 2023 (Thousands of Mexican Pesos) | 2022 (Thousands of Mexican Pesos) | | :--- | :--- | :--- | :--- | | **Net cash flows provided by operating activities** | 3,748,537 | 3,140,349 | 2,116,335 | | **Net cash flows used in investing activities** | (4,907,296) | (1,778,789) | (1,111,350) | | **Net cash flows obtained from (used in) financing activities** | 1,288,113 | (1,095,692) | (1,027,115) | - The company relies on positive cash flow dynamics and **Ps.2.6 billion** negative working capital in 2024 to finance operations and expansion[322](index=322&type=chunk) - In February 2024, the company repaid all outstanding Promissory Notes (**US$261.1 million**) and Convertible Notes (**US$22.5 million**) using IPO proceeds[323](index=323&type=chunk)[344](index=344&type=chunk) - Capital expenditures for 2025 are budgeted at approximately **Ps.3.65 billion**, including **Ps.2.55 billion** for new stores and **Ps.360 million** for four new distribution centers[339](index=339&type=chunk) [Trend Information](index=74&type=section&id=D.%20TREND%20INFORMATION) Performance is influenced by economic conditions, product mix, infrastructure investment, supply chain management, inflation, and natural disasters like Hurricane Otis in 2023 - The business model is resilient to economic downturns as consumers seek affordability, but is also affected by macroeconomic factors like employment, inflation, and interest rates[356](index=356&type=chunk) - The ability to develop and offer a compelling product assortment, particularly private labels, is crucial for attracting and retaining customers[357](index=357&type=chunk) - Hurricane Otis in October 2023 led to the temporary closure of **51 stores** in Acapulco, resulting in **Ps.42.4 million** in impairment losses, **Ps.7.6 million** in sales expenses, and **Ps.30.4 million** in inventory obsolescence for 2023[362](index=362&type=chunk) [ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES](index=76&type=section&id=ITEM%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) This section details the company's nine-member staggered board, executive compensation plans, and human capital management, including **25,300 employees** and internal training programs [Directors and Senior Management](index=76&type=section&id=A.%20DIRECTORS%20AND%20SENIOR%20MANAGEMENT) The company is led by founder K. Anthony Hatoum, with a nine-member board divided into three staggered classes, supported by an experienced executive team - The board of directors is composed of **nine members** and is divided into three staggered classes, with each class serving a three-year term[369](index=369&type=chunk) - K. Anthony Hatoum is the founder, Chairman of the board, and Chief Executive Officer of the company[373](index=373&type=chunk) [Compensation](index=80&type=section&id=B.%20COMPENSATION) Executive compensation includes fixed salaries, cash bonuses, and equity awards, with **Ps.748.9 million** aggregate compensation in FY2024, supported by the 2004 Option Plan and the new 2024 Equity Incentive Plan - For the year ended December 31, 2024, the aggregate compensation for the board of directors and executive officers was **Ps.748.9 million**[397](index=397&type=chunk) - As of the report date, **38,232,812 Class C common shares** are issuable upon the exercise of options granted under the 2004 Option Plan[401](index=401&type=chunk) - A new 2024 Equity Incentive Plan was adopted with an initial reserve of **8,400,000 Class A common shares** for future awards to attract and retain key personnel[411](index=411&type=chunk)[412](index=412&type=chunk) - The Liquidity Event Share Plan allocated **7,500,000 Class C common shares** for the CEO and his direct reports, while the Bolton Partners Share Allocation entitled an affiliated vehicle to **4,224,960 Class C shares**, both contingent on the IPO[407](index=407&type=chunk)[408](index=408&type=chunk) [Employees](index=86&type=section&id=D.%20EMPLOYEES) As of December 31, 2024, the company employed **25,300 people**, with **20,848 in stores**, fostering a culture of trustworthiness and investing in employee development through "University 3B" and promotions Employee Distribution as of December 31, 2024 | Location | Number of Employees | | :--- | :--- | | **Stores** | 20,848 | | **Warehouses & Distribution Centers** | 4,070 | | **Corporate Offices** | 382 | | **Total** | **25,300** | - The company promoted **4,970 employees** during 2024, highlighting its focus on internal career development[430](index=430&type=chunk) [ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](index=87&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) This section details the company's ownership structure, where Bolton Partners Ltd. holds **44.7% voting power**, and outlines related party transactions, including pre-IPO Promissory Notes repaid with IPO proceeds Major Shareholder Ownership (as of April 25, 2025) | Shareholder | Class A Shares (%) | Class B Shares (%) | Class C Shares (%) | Total Voting Power (%) | | :--- | :--- | :--- | :--- | :--- | | **K. Anthony Hatoum (via Bolton Partners Ltd.)** | — | 100.0% | 12.3% | 44.7% | | **QS 3B Aggregator Inc.** | — | — | 23.6% | 6.0% | | **Capital International Investors** | 10.8% | — | — | 3.6% | | **Capital Research Global Investors** | 8.6% | — | — | 2.9% | | **FMR LLC** | 5.6% | — | — | 1.9% | - The company's multi-class share structure grants **Class B shares 15 votes per share**, while Class A and Class C shareholders receive one vote per share[439](index=439&type=chunk) - Prior to the IPO, the company had significant related-party debt through Promissory Notes, which were fully repaid in February 2024 using IPO proceeds[444](index=444&type=chunk)[447](index=447&type=chunk) [ITEM 8. FINANCIAL INFORMATION](index=91&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) This section outlines the company's dividend policy, which prioritizes retaining earnings for growth and does not anticipate cash dividends in the foreseeable future, subject to legal requirements - The company does not anticipate paying any cash dividends in the foreseeable future, intending to retain earnings to fund growth[458](index=458&type=chunk) - Dividend payments are subject to legal restrictions in both the British Virgin Islands (solvency test) and Mexico (profitability and legal reserve requirements for the operating subsidiary)[460](index=460&type=chunk) [ITEM 10. ADDITIONAL INFORMATION](index=92&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section details the company's BVI corporate structure, multi-class share rights (Class A, B, C), governance, shareholder meeting procedures, and taxation considerations for various jurisdictions [Memorandum and Articles of Association](index=92&type=section&id=B.%20MEMORANDUM%20AND%20ARTICLES%20OF%20ASSOCIATION) The company's BVI governance defines three share classes (Class A, B, C) with varying voting rights, subject to a **24-month post-IPO "Liquidity Lock-Up Period"** and registration rights, alongside staggered board and BVI/Delaware law differences Share Class Voting Rights | Share Class | Votes per Share | | :--- | :--- | | **Class A Common Share** | 1 | | **Class B Common Share** | 15 | | **Class C Common Share** | 1 | - Class B and Class C shares are subject to a **24-month "Liquidity Lock-Up Period"** following the initial 180-day IPO lock-up, restricting their sale or transfer, with certain exceptions[475](index=475&type=chunk)[477](index=477&type=chunk)[480](index=480&type=chunk) - Class B shares automatically convert to Class A shares upon public sale or when their total number falls below **1.0%** of all outstanding common shares; Class C shares convert upon public sale or at the end of the Liquidity Lock-Up Period[476](index=476&type=chunk)[482](index=482&type=chunk) - The board of directors is staggered into three classes, with directors serving three-year terms, which can make it more difficult for shareholders to change the board's composition quickly[518](index=518&type=chunk) [Taxation](index=112&type=section&id=E.%20TAXATION) This subsection outlines tax implications, noting BBB Foods Inc. is exempt from BVI taxes, non-Mexican holders are exempt from Mexican taxes on Class A shares, and U.S. Holders' dividends may be qualified, with PFIC status assessed annually - The company is incorporated in the British Virgin Islands and is not subject to any income, corporate, capital gains, or withholding taxes in that jurisdiction[554](index=554&type=chunk) - For non-Mexican holders, capital gains and dividends from Class A common shares are not considered Mexican-sourced income and are not subject to Mexican tax[560](index=560&type=chunk) - For U.S. Holders, distributions are generally taxed as dividends, believed to be eligible for reduced rates as "qualified dividend income," provided the company is not classified as a PFIC[568](index=568&type=chunk)[570](index=570&type=chunk) [ITEM 15. CONTROLS AND PROCEDURES](index=118&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls were ineffective as of December 31, 2024, due to four material weaknesses in internal control over financial reporting, with remediation efforts ongoing through 2025 - Management concluded that the company's disclosure controls and procedures were not effective as of December 31, 2024, due to identified material weaknesses[599](index=599&type=chunk) - Four material weaknesses were identified in internal control over financial reporting as of December 31, 2024[604](index=604&type=chunk)[607](index=607&type=chunk] - High reliance on outside advisors for preparing IFRS financial statements and technical accounting[607](index=607&type=chunk) - Lack of controls for adequate segregation of duties, including user access to the ERP system[607](index=607&type=chunk) - Ineffective design and maintenance of the risk assessment process[607](index=607&type=chunk) - Lack of an independent department to monitor control activities and assess risks of material misstatement[607](index=607&type=chunk) - The company is undertaking remediation efforts, including hiring new staff, implementing new processes and software, and enhancing training, with these activities planned to continue throughout 2025[610](index=610&type=chunk) [ITEM 16. Corporate Governance and Other Disclosures](index=121&type=section&id=ITEM%2016.%20Corporate%20Governance%20and%20Other%20Disclosures) This section covers corporate governance, including the "audit committee financial expert," Code of Ethics, reliance on BVI governance as a foreign private issuer, and a cybersecurity risk management strategy - The board has designated Nicole Reich as the "audit committee financial expert"[611](index=611&type=chunk) Principal Accountant Fees (Thousands of Mexican Pesos) | Fee Type | 2024 (Thousands of Mexican Pesos) | 2023 (Thousands of Mexican Pesos) | | :--- | :--- | :--- | | **Audit fees** | 23,480 | 16,353 | | **Audit-related fees** | — | — | | **Tax fees** | — | — | | **All other fees** | — | — | | **Total** | **23,480** | **16,353** | - As a foreign private issuer, the company relies on exemptions from certain NYSE corporate governance standards, including requirements for a majority-independent board and a nominating committee[619](index=619&type=chunk)[621](index=621&type=chunk) - The company has a cybersecurity risk management strategy managed by a Chief Information Security Officer (CISO) and an internal Committee on Information Security and Technological Risk (COSIRT)[628](index=628&type=chunk) PART III [ITEM 18. FINANCIAL STATEMENTS](index=126&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) This section presents the audited consolidated financial statements for 2022-2024, prepared under IFRS, highlighting a 2024 financial turnaround with **Ps.22.8 billion total assets** and **Ps.4.0 billion positive equity** post-IPO [Consolidated Statements of Financial Position](index=134&type=section&id=Consolidated%20Statements%20of%20Financial%20Position) Key Balance Sheet Items (as of December 31, Thousands of Mexican Pesos) | Account | 2024 (Thousands of Mexican Pesos) | 2023 (Thousands of Mexican Pesos) | | :--- | :--- | :--- | | **Total Current Assets** | 8,554,139 | 4,393,160 | | **Total Assets** | 22,776,813 | 14,963,802 | | **Total Current Liabilities** | 11,187,416 | 8,951,941 | | **Total Liabilities** | 18,742,031 | 19,598,650 | | **Total Stockholders' Equity** | 4,034,782 | (4,634,848) | [Consolidated Statements of Profit or Loss](index=135&type=section&id=Consolidated%20Statements%20of%20Profit%20or%20Loss) Key Income Statement Items (Year ended December 31, Thousands of Mexican Pesos) | Account | 2024 (Thousands of Mexican Pesos) | 2023 (Thousands of Mexican Pesos) | 2022 (Thousands of Mexican Pesos) | | :--- | :--- | :--- | :--- | | **Total Revenue** | 57,439,019 | 44,078,459 | 32,580,397 | | **Gross Profit** | 9,376,106 | 7,039,917 | 4,924,754 | | **Operating Profit** | 1,328,509 | 793,863 | 520,269 | | **Consolidated Net Profit (Loss)** | 334,422 | (306,153) | (565,110) | Earnings (Loss) Per Share (Mexican Pesos) | Metric | 2024 (Mexican Pesos) | 2023 (Mexican Pesos) | 2022 (Mexican Pesos) | | :--- | :--- | :--- | :--- | | **Basic Earnings (Loss) per Share** | 3.06 | (25.51) | (47.09) | | **Diluted Earnings (Loss) per Share** | 2.40 | (25.51) | (47.09) | [Consolidated Statements of Cash Flows](index=137&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Key Cash Flow Items (Year ended December 31, Thousands of Mexican Pesos) | Account | 2024 (Thousands of Mexican Pesos) | 2023 (Thousands of Mexican Pesos) | 2022 (Thousands of Mexican Pesos) | | :--- | :--- | :--- | :--- | | **Net cash flows provided by operating activities** | 3,748,537 | 3,140,349 | 2,116,335 | | **Net cash flows used in investing activities** | (4,907,296) | (1,778,789) | (1,111,350) | | **Net cash flows from (used in) financing activities** | 1,288,113 | (1,095,692) | (1,027,115) | | **Increase (decrease) in cash and cash equivalents** | 129,354 | 265,868 | (22,130) | [Notes to the Consolidated Financial Statements](index=138&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes detail the February 2024 IPO's impact (**Ps.7.81 billion net proceeds**), the single operating segment, debt structure, share-based payment plans, lease accounting (**Ps.8.2 billion lease liabilities**), and critical audit matters like share-based payment valuation - In February 2024, the company completed its IPO, receiving net proceeds of **Ps.7.81 billion**, which were used to repay all Promissory and Convertible Notes[666](index=666&type=chunk) - A critical audit matter identified was the accounting for share-based payments, due to significant management judgment required for fair value estimation using a binomial tree valuation model[649](index=649&type=chunk)[650](index=650&type=chunk)[651](index=651&type=chunk) - As of December 31, 2024, total lease liabilities amounted to **Ps.8.2 billion**, with corresponding right-of-use assets of **Ps.7.0 billion**[782](index=782&type=chunk)[820](index=820&type=chunk) Revenue by Product Category (Thousands of Mexican Pesos) | Product Category | 2024 (Thousands of Mexican Pesos) | 2023 (Thousands of Mexican Pesos) | 2022 (Thousands of Mexican Pesos) | | :--- | :--- | :--- | :--- | | **Branded** | 23,264,743 | 20,900,242 | 16,817,176 | | **Private label** | 30,737,804 | 20,466,545 | 13,859,748 | | **Spot** | 3,255,961 | 2,557,310 | 1,739,956 | | **Other** | 74,819 | 63,706 | 55,697 | | **Total** | **57,333,327** | **43,987,803** | **32,472,577** |

[Announcement of Form 20-F Filing for Fiscal Year 2024](index=1&type=section&id=BBB%20Foods%20Inc.%20Announces%20the%20Filing%20of%20its%20Annual%20Report%20on%20Form%2020-F%20for%20Fiscal%20Year%202024) BBB Foods Inc. announces the filing of its 2024 Annual Report on Form 20-F with the SEC [Filing Details and Availability](index=2&type=section&id=Filing%20Details%20and%20Availability) The 2024 Annual Report was filed with the SEC on April 29, 2025, and is available on company and SEC websites - BBB Foods Inc. filed its Annual Report on **Form 20-F** for the fiscal year ended December 31, 2024[5](index=5&type=chunk) - The filing was made with the U.S. Securities and Exchange Commission (SEC) on **April 29, 2025**[5](index=5&type=chunk) - The report is accessible on the company's website (https://www.investorstiendas3b.com) and the SEC's website (www.sec.gov)[5](index=5&type=chunk) [Company Overview](index=2&type=section&id=Company%20Overview) The company is a leading grocery hard discounter in Mexico and was listed on the NYSE in February 2024 - The company is a pioneer and leader of the **grocery hard discount model** in Mexico[7](index=7&type=chunk) - The business model focuses on offering great quality products at bargain prices, summarized by the motto **"Bueno, Bonito y Barato"**[7](index=7&type=chunk) - The company was listed on the New York Stock Exchange in **February 2024** with the ticker symbol **'TBBB'**[7](index=7&type=chunk) [Investor Information](index=2&type=section&id=Investor%20Information) Investors can request a free printed copy of the complete Annual Report, including audited financial statements - A printed copy of the Annual Report, including audited financial statements, is available to investors **free of charge** upon request[6](index=6&type=chunk) - To request a copy, investors should contact Andrés Villasis at **ir@tiendas3b.com**[6](index=6&type=chunk)[8](index=8&type=chunk)

Company Overview - BBB Foods operates Tiendas 3B, a small-box supermarket concept that combines elements of Aldi and Costco, focusing on providing good, pretty, and cheap products [2][3] - The company has rapidly expanded to 2,772 locations across North America, making it the fastest-growing player in its sector [1][3] Financial Performance - Revenue increased by 30% last year, reaching nearly $2.8 billion, with a further 33% growth in the latest quarter [5] - Same-store sales surged by 17.6% in 2023, building on a 13.3% increase from the previous year [5] - The company turned profitable last year, achieving operating free cash flow for the first time [6] Market Position - BBB Foods' net margin was 0.6% last year, which is low compared to industry leaders like Costco, but the company is expected to improve profitability as it scales [9] - The gross margin for BBB's stores is 16.3%, which is competitive compared to traditional supermarket chains [11] Growth Strategy - The company opened 484 net new stores last year, indicating a strong focus on expansion [5] - Private label products have increased from 46.5% to 53.6% of sales, suggesting growing consumer trust and negotiation power with suppliers [10] Valuation - BBB Foods' stock is trading at 79 times forward earnings and 55 times next year's target, indicating a premium valuation compared to traditional supermarket operators [13] - The market cap is roughly equivalent to its trailing sales, which is higher than traditional supermarkets but lower than Costco's valuation [13][14]

Core Viewpoint - Kroger may be riskier now than in many years, suggesting a shift in the grocery retail landscape that could impact investor confidence [1] Group 1: Company Analysis - Kroger's current risk profile is highlighted, indicating potential challenges that may affect its stock performance [1] - BBB Foods is presented as a more favorable grocery stock option for investors, implying a comparative analysis of growth potential and stability [1] Group 2: Market Context - The discussion reflects broader trends in the grocery industry, emphasizing the need for investors to reassess their positions in light of changing market dynamics [1]

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