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]

Financial Reporting - BBB Foods Inc. filed its Annual Report on Form 20-F for the fiscal year ended December 31, 2023, on April 30, 2024[4] Company Overview - The company is a leading grocery hard discounter in Mexico, recognized for its rapid sales and store growth rates[5] - Tiendas 3B was listed on the New York Stock Exchange in February 2024 under the ticker symbol "TBBB"[5]

Business Expansion and Growth - The company has expanded its private label offerings to 95 different brands and over 422 SKUs, representing 46.5% of total sales for 2023[57]. - The company has experienced rapid growth since its inception in 2005, primarily in 15 densely populated states in Mexico, but future growth rates are uncertain[47]. - The company became the leading hard discount retailer in Mexico with 2,288 stores and 21,924 employees as of December 31, 2023[174]. - The number of stores increased from 1,249 as of January 1, 2021, to 2,288 as of December 31, 2023, representing a CAGR of 35.3%[184]. - In 2023, the company averaged a new store opening every 22 hours, indicating rapid expansion capabilities[195]. - The company has an estimated white space for at least 12,000 additional Tiendas 3B stores in Mexico, indicating significant growth potential[195]. Financial Performance and Risks - From 2021 to 2023, the company's total revenue grew at a compounded annual growth rate (CAGR) of 38.2%, reaching Ps.44.1 billion (US$2.6 billion) for 2023[184]. - The company maintains a negative working capital position, which is a significant driver of cash flow from operating activities and is used to finance store expansion[67][69]. - If revenues decrease materially or key suppliers change payment terms, the company may not have enough available cash to meet obligations or fund expansion, potentially requiring delays or reductions in business development efforts[70]. - The company faces significant risks related to competition in the fragmented retail food industry, characterized by narrow profit margins and intense pricing pressures[52]. - Economic factors such as unemployment, inflation, and changes in disposable income may adversely affect customer spending and profitability[42]. Supply Chain and Operations - The company relies on a distribution network that is critical for timely and cost-effective delivery of goods, and any disruptions could negatively impact sales and profits[76]. - As of December 31, 2023, all 14 distribution centers were leased, and any delays in opening new facilities or lease terminations could adversely affect financial performance[77]. - The company’s operational results may be impacted by the introduction of new product categories, particularly perishables, which require substantial investment and effective supply chain management[59]. - The company has experienced threats to its information systems, which could result in data loss, litigation, and reputational harm if security breaches occur[80][81]. - The logistics operation is managed by a Distribution Center manager who oversees all logistics and fulfillment matters[228]. Regulatory and Compliance Challenges - The company must navigate various regulatory requirements and potential changes in labor laws that could increase operational costs[55]. - Changes in governmental regulations could materially increase the cost of doing business, with potential penalties for noncompliance that could adversely affect financial performance[89]. - The company is subject to the provisions of the Mexican Industrial Property Law, which may impose additional compliance costs that could adversely affect operations and financial condition[101]. - The company may face increased regulatory and compliance costs if it loses its foreign private issuer status, requiring adherence to more extensive U.S. reporting requirements[149]. Market and Economic Conditions - The company's operations are entirely based in Mexico, making its financial condition and results of operations highly dependent on the economic conditions prevailing in Mexico[105]. - Recent downward revisions of Mexico's sovereign debt rating by major rating agencies could adversely affect the Mexican economy and, consequently, the company's business and financial condition[106]. - The Mexican peso's fluctuations against the U.S. dollar may materially impact the company's earnings, assets, and cash flows, especially since most suppliers' raw materials are dollarized commodities[126]. - Political instability in Mexico, including upcoming presidential elections in June 2024, could significantly affect the company's business operations and financial results[119]. - High inflation rates in Mexico, currently exceeding those of key trading partners like the U.S. and Canada, may negatively impact the company's operations and financial condition[133]. Customer Demographics and Behavior - Approximately 85.0% of the customer base consists of women, primarily aged 30 to 60, with homemakers making up 46.0% of the demographic[219]. - Customers typically visit stores three to four times a week, purchasing enough for a maximum of two days[220]. - The company maintains a no-questions-asked return policy to enhance customer confidence in private label products[222]. Corporate Governance and Structure - The company's principal shareholder, Bolton Partners Ltd., holds approximately 46.4% of the voting power, significantly influencing corporate decisions[135]. - The company does not anticipate paying cash dividends in the foreseeable future, focusing instead on retaining earnings for growth[142]. - The multiple class capital structure may lead to exclusion from major indices, potentially affecting the trading price and market activity of the company's Class A common shares[143]. Internal Controls and Reporting - The company identified material weaknesses in its internal control over financial reporting, which could impact the accuracy of its financial results and trading price of its securities[152]. - The company is in the process of implementing the Internal Control—Integrated Framework (2013 Framework) and aims to remediate identified weaknesses by 2024 without incurring material costs[155]. - The company has been subject to reporting requirements under the Exchange Act and the Sarbanes-Oxley Act since its IPO, which may strain its management and operational resources[156].