Good morning, everyone. My name is Daniela and I will be your conference operator. Welcome to Tiendas 3B's second quarter 2026 conference call. All lines have been placed on mute to prevent any background noise. There will be a question and answer session after the speaker's 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 to edit your display name Also note that this call is for investors and analysts only Questions from the media will not be taken, nor should the call be reported on Any forward-looking statements made during this conference call are based on information that is currently available to us Today we are joined by Tiendas 3B's Chairman and Chief Executive Officer Anthony Hatoum and Chief Financial Officer Eduardo Pizzuto. I will now turn the call over to Anthony. Please go ahead.

Good morning and thank you for joining us today. I will begin with a review of our operating results for the quarter and will be followed by our CFO, Eduardo Pizzuto, who will provide an overview of our financial performance. We will conclude with our Q&A session. We delivered another strong quarter, sustaining and even building on the momentum we achieved in the first quarter. Here are the key highlights from our second quarter results. We opened 155 net new stores during the quarter, bringing our total store count to 3,624 as of June 30th, 2026. Over the last 12 months, we've opened 593 net new stores. We also opened one new distribution center, expanding our network to 21 regions as of the end of June. Same store sales grew 20% compared to the second quarter of 2025. Total revenue increased 39% year over year to 26 billion pesos. Reported EBITDA reached 960 million pesos. Excluding non-cash share-based compensation, EBITDA increased 44% to 1.6 billion pesos. For the first half of the year, cash flow generated from operating activities reached 4.3 billion pesos, representing 119% growth compared to the first half of 2025. Let's now turn to our operational performance. As I mentioned, we opened 155 net new stores during the second quarter. Over the last 12 months, we've opened 593 net new stores, representing 20% growth in our store base compared to June 2025. Our expansion strategy remains unchanged. We continue to balance densifying our presence in existing regions while selectively expanding our footprint in others. Our revenue growth remained exceptionally strong, and we believe 3B continues to be amongst the fastest growing retailers globally. Total revenue reached 26 billion pesos in the second quarter, up 39% year over year. Same store sales increased 20%, reflecting another quarter of outstanding performance. This strong growth continues to be driven by ongoing improvements to our value proposition, increasing brand awareness, and growing customer loyalty. Our same-store sales performance continued to significantly outperform the market. During the quarter, we maintained a gap of more than 20 percentage points versus Antad, while our internal inflation remained very low. I will now pass the microphone to Eduardo.

Thank you, Anthony. Good morning, everyone. Sales expenses as a percentage of revenue decreased by 56 basis points to 10% year over year in the second quarter of 2026. Most of the expense lines showed operating leverage, including labor. Admin expenses, excluding share-based payment, increased by 57 basis points year-over-year. As seen in previous quarters, admin expenses reflect our continuing investment in talent and expansion into new regions to support our accelerated growth. In the second quarter of 2026, admin expenses reflects a one-time cash expense of 37 million pesos related to the equity follow-on offering in May 2026. With respect to the share-based payment expense, these are non-cash and already reflected in our fully diluted share count. Additional details are available in the appendix of this earnings release, where we also provide projections for this non-cash expense. EBITDA for the second quarter of 2026, excluding non-cash share-based payment expense, increased 44% to 1.6 billion pesos. driven by strong sales growth, improved gross margin, and operational efficiencies. The adjusted EBITDA margin increased by 21 basis points year over year. EBITDA in the second quarter of 2026 includes a one-time cash expense of 37 million pesos related to the equity follow-on offering in May 2026. Excluding this impact, the adjusted EBITDA margin in the second quarter of 2026 was 6.2%. As you know, we don't drive to an EBITDA. It will naturally continue to increase over time, driven by our disciplined execution. Our business model generates strong operating cash flow through our structurally negative working capital model. As of June 2026, adjusted negative working capital reached 10.2 billion pesos compared to 7.1 billion pesos in 2025, excluding IPO and follow-on proceeds. This represents approximately 11.2% of total LTM revenue also exploiting IPO and follow-on proceeds. Our operating cash flow fully funds our organic expansion. I will now turn the call back over to Anthony for final remarks.

Thank you all for joining us today and for your continued interest in Tiendas 3B. We delivered a strong first half of 2026 with consistent and solid execution across our key operating and financial metrics. Our high-growth business model has continued to demonstrate its resilience across different economic environments. It delivers attractive unit economics, generates strong cash flow, and becomes even more competitive as we scale. We remain confident in the significant long-term growth opportunity for Tiendas 3B. Thank you and we will now open the call for your questions.

Thank you. We will now conduct the Q&A session with Anthony Hatoum and Eduardo Pizzuto. If you would like to ask a question, please press the raise your hand button that is located at the bottom of the screen. We remind you that all lines have been placed on mute. So when it is your turn to ask a question, you will be given permission to speak and you will then be able to unmute yourself and ask your question. Our first question comes from Andrew Rubin at Morgan Stanley.

Hi, thanks very much for the question. I'm interested to understand a bit more about the gross margin performance. And just thinking about some of the drivers, you mentioned stronger commercial margins, so trying to understand what might have changed, if anything, quarter on quarter there. And then second, I think this is the first time you've mentioned that in a while, despite the DC build-out. So trying to understand these drivers, how much they contributed, and how that pertains to any forward outlook on gross margin would be very helpful. Thank you.

I'll take the gross margin question. Andrew, as you know, It's a dynamic process in a sense that this is a sum, what you're seeing here is a sum of the gross margins of all the SKUs we currently carry. In large part, let's say the main driver is we scale, we are much more efficient in terms of buying or in terms of manufacturing a good. We get better input conditions. We improve the logistics of moving that good over. and that fundamentally basically gives you a bigger pie that if it's a private label product you've divided in a very equitable way with your producer and then you turn around and you say okay now I have a bigger pie let's decide you know at what price do we put it and it's mostly a very ongoing adjustment of prices which where we try to optimize volumes and dollar margin and and then we sum it all up and you see that yes it's improved but it's the result of all these little improvements that we see across the whole portfolio. Will the trend continue? Very likely you'd see this improving as we scale and as we are just getting better at what we do. There comes a point where in terms of percent margin, you're basically passing more into price than necessarily retaining it. But end result, the most important thing is to look at is the dollar margin generated. And as long as this continues to grow healthily as we see it here,

I'll take the second portion, Andrew. Good morning. In terms of transportation expenses, I guess overall, there's no doubt that as we continue to grow and gain scale, we become more efficient in all our operating line items. Specifically on logistics for Q2, two things played in our favor. One is we have ongoing efforts to optimize our transportation costs, not only for new regions, but all of our regions. And the second one is specifically for the distribution center that we opened in Q2, we did a better job in managing the pre-operating expenses of this region. So, of course, that is something that we will apply in future regions. And I'll take advantage of your question just to give you an update on distribution centers. We have, in addition to the one we opened in Q2, in the past few weeks we opened an additional two distribution centers, and we expect to open a third one in October. Thank you so much.

Thank you. Our next question comes from Bob Ford at Bank of America.

Hey, thank you very much. Good morning, Anthony, Eduardo, and again, congratulations as well. With respect to same-store sales, how much of the growth is ticket versus traffic? And how should we think about the year-on-year improvements that you're seeing in terms of item counts per transaction? And I was also curious, you've got some phenomenal innovation. How much of that growth is coming from new SKUs? And additionally, could you give us a little update on the progress with the ERP rewrite? There's been a revolution in programming over the last 12 months. How is that speeding up development or maybe allowing you to run a little leaner than you expected? And should we think about or how should we think about deployment, both in terms of functionality in the system, as well as any complementary changes you may need in logistics or the point of sale?

Hi Bob, good to hear from you and many questions. Let me start with the first one regarding to where is same-store sales growth coming from. We have about two-thirds of the growth is explained by volume, one-third is explained by price, and within price the large impact is coming from better mix. We remain with a very low amount of inflation in our price number. There was a second part to your question that was talking about categories and category growth. When we look at all our current categories, they're all growing at various rates, but they're all growing. When we look at maybe one or two commodity categories where we're relatively well penetrated, they're still growing, but... and many more. We've been extremely careful about introduction of new products or categories. As you know, we like to keep our SKU count on the low side. It brings a lot of benefits to us. So every time we put in an SKU, we have to make sure that it does rotate, that it's highly accepted. And many times we just drop an SKU that is less accepted. and this will continue I don't see a stop to that and as you know our stores can handle a significantly higher number of SKUs but we're extremely conservative in introducing new ones One last part to your question is, you know, 3B is a platform, and we've said that many times. We touch a client very frequently, and this client not only needs groceries, so then you can basically say whatever this client needs is something that you can potentially offer as long as you don't violate your core principles. On the second part of your question, which had to do with our ERP, I'm very pleased with the progress on our new ERP system. We are testing phase one, and I think it's going quite well. AI tools have definitely accelerated our ability to program. And what I've noticed, though, is that we've just brought forward a lot of stuff that we had planned to do a little bit later. And we've even added more features that we thought we would put in a bit later. So net-net, we're on track and it's going quite well. There was a last part to your question, but maybe I missed it.

It was actually kind of plugging into... Maybe you're signaling this when you talk about the broader platform opportunity, but I was asking you a little bit too about how you're thinking about complementary changes to the supply chain or the point of sale systems and just trying to get a better sense for the calendar of deployment and maybe the functionality that we'll expect over time.

There's no doubt that in this new generation of ERP that you're seeing our point of sale is a much more potent point of sale that has the ability to deliver more than just ringing up a product. And that's the whole idea of giving us optionality to offer more services to the client down the road. And in terms of logistics, again, as you get bigger, suddenly you have many more doors opening for optimizing your logistics. As you know very well, we don't do much on the backside of logistics, and that's quite an interesting opportunity for us to explore.

Very helpful. Thank you, and again, congratulations. Thanks, Bob. Thanks, Bob.

Thank you. Our next question comes from Joseph Giordano at JP Morgan.

Hi, good morning, everyone. Good morning, Anthony. Thanks for taking my question. So I want to explore a little bit, Eduardo, sorry, to explore a little bit the upgraded store format you guys have been talking about. So it's a little bit larger, more stores for refrigerated goods. So I'd like to understand, like, what's the percentage of new stores that are coming under the new format? So it's 100%. And second, what's the typical sales uplift we are seeing from those locations? And last, if I may, how should we think about the ramp up? So it looks like the ramp up of the new stores are much faster than in previous vintages. Thank you very much.

Hi Joe, good to hear from you. Yeah, 100% of our new stores open under the new format. We'd like to try and keep as much format discipline as we can going forward. And there's no doubt that we chose this upgraded format because it has much better performance than our older stores, having said that, our older stores are still performing extremely well. Eduardo, do you want to touch on the others?

Yeah, I would just add, you asked also on the ramp-up, Joe, and what I can say is that, I mean, we're very happy to see how these stores are performing. So if you remember, we updated our unit economics Thank you.

All right, our next question comes from Ulises Arbote at Santander.

Hi, Anthony, Eduardo, thanks for the space for questions. I had kind of a follow up to a point you made earlier, Eduardo, but you guys opened close to 280 stores in the first six months of the year. And this came with only one additional distribution center. So just wanted to get some color if this is more related to some temporality effects there on the opening of distribution centers. You already said, Eduardo, there will be three new ones on the quarter, but wanted to get a sense there if you're finding any efficiencies being able to serve a broader store base from each distribution center, given what we saw in the first half of the year. Appreciate any thoughts there. Thank you.

Hi, Ulises. Thank you. I mean, we are on track in terms of our openings as what we had planned in the beginning of the year. As we've discussed in previous calls, every time we open a new distribution center, we, of course, benefit from two things. One is we continue to increase our footprint in the country. And the second one is we do become more efficient because our transportation expenses increase. Thank you very much.

I think it was just to understand if there was kind of any temporality into what we saw in the expansion on the first half with just one DC being added.

Well, yeah, as I mentioned earlier, we were benefited this quarter by those two factors that I mentioned and transportation expense and the fact that we were I guess smarter in the pre-opening expenses for the region that will be applied for the next regions that we open. But just a heads up on, as I said, might be some pressure on logistics expense in Q3 just because we're opening three additional DCs. But in the longer run, eventually these will become even more efficient. So Nothing very different from what you've seen in the past.

That's very clear. Thanks, Eduardo. Gracias. Gracias. Thank you.

Thank you. Our next question comes from Hector Maya at Scotiabank.

Hi Anthony, Eduardo, congrats on the strong results. Just wondering if you saw any tailwind from the World Cup and if so, how much do you think it contributed to Semster sales? And also, I wanted to know how you are thinking about the increase in the pace of G&A investments in the second half or if the level we saw in Q2 could be a good run rate. Thank you very much.

Hi. No, World Cup did not have a relevant impact on our sales. I mean, it was even hard to tease out anything, if at all. In terms of G&A expenses, Eduardo, you have a better handle on that.

Sure. I think it's, Hector, as you know, we don't guide on these metrics, but I think it's fair to assume that, and we will continue to invest in talent just because we are convinced that it drives value, strong value, actually. So we will continue to do so for the back half of the year. So I think it's fair to assume and expect something very similar to what happened in Q2. So let's say three-ish. Our next question comes from Ergma Skars at Goldman Sachs.

Thank you for the opportunity to ask my question. Just picking up on that G&A point, as you've made clear on your previous answer, you're looking to continue to invest into talent. Can you just be a little bit more explicit in terms of which areas of the organization you're looking to add talent? Obviously, you've brought some important people onto the team that are market-facing over the last 12 months, but I'd be curious to just hear a little bit more on the back end, the part that we don't maybe directly see which areas of the organization you're looking to add, or is this more sort of retention of talent and sort of incentives and employee value proposition that you're investing in there on the G&A side? and then just curious, I know it's a bit nitty-gritty but I know you're testing in some stores to sort of go cardless and I know you have a lot of cash expenses actually or cash transactions in your stores but just curious if you could sort of tease out for us what you've learned there and if there's any meaningful sort of margin gain from that or even incremental margin gain that you envision. Thank you.

Let me start with the last question. What you're referring to is the cardless exercise is a test where we've basically taken out credit cards and debit cards to see what happens and I can Just give you a very high level answer saying that non-material impact. But it's a test and it doesn't mean we're going to expand it. And at any point in time, you're going to find several tests running on different topics, but they all have... The same kind of objective with either trying to generate more revenue or reduce costs or reduce risk. And it's always something where we're trying to create more value for the customer. So that's on the matter of G&A investment. It has much, much less to do with improving salaries and benefits to employees and much, much more to do. And that's where the core value is in adding talent and densifying talent in across the board critical areas. So you'll see it in purchasing. You'll see it in logistics, you'll see it in systems, you'll see it in specialty areas where, you know, one person can have a dramatic impact on creating value for the company. We're very aware that, you know, it adds to the GNA number, but we're also much more than convinced that, you know, it's a very valuable investment with very high returns.

And perhaps should we, as we think about 27, should we think of that as an ongoing process?

You said fresh, right?

No, in terms of talent.

Oh yeah, talent is an ongoing process. At this point in time, there is no limit to adding talent. But again, for us, it's... If we do add, for example, one new person, whatever they cost, what are they going to contribute? And the answer always has to be significantly more than what they're going to cost us. And it's been the case so far.

So the dilution that we should think about or the operating leverage should come more still through the selling expense line.

Exactly, exactly.

Thank you. Our next question comes from Jorge Izquierdo at BTG Pertual.

Hi, good morning, Anthony, Eduardo. Thanks for the space for questions and congrats on the results. I have a quick one regarding store size going forward. As basket size increases, how are you thinking about store sizes and the need to have parking availability in the future?

Interesting question. I think at this stage we're extremely comfortable with the current store size that you're seeing in the new generation of stores. And then the addition of parking or not boils down very simply to how suburban or urban are you. In urban areas, very difficult to have parking, so that sort of limits your ability to do so. But as soon as there is a need for parking and you've opened a store where there is parking, then absolutely we're putting parking in.

Okay, thank you very much, Anthony.

Thank you. Our next question comes from Antonio Hernandez at ActiMed.

Good morning. Congrats on your results. Just a quick one regarding working capital. Well, as new categories are being introduced or even piloted, how should we see working capital going forward? I mean, there's, of course, an improvement, but how much should we weigh in these new categories? Thanks.

Hi, Antonio. Thanks for your question. Let me take a step back. Our overall philosophy, as you know, is we only carry items that have very high rotation. By definition, what we look for in a new item, new category, whatever that is, is that... Thank you very much. with very fast rotation. And so there should be no material impact on working capital. In fact, if you look at our trends over the past, let's say a few years, you'll see that we've been improving, slightly improving our inventory days. So it's been on 20 days. So that's what we should expect going forward. So no changes really on that front.

Okay, perfect. Thanks a lot.

Thank you. Our next question comes from Joel Thomas at HSBC.

Good morning, Anthony and Eduardo. Thanks for the space and congratulations on the strong results. A couple of things, please. Firstly, same-store sales. As you pointed out, it was plus 20 on a comp. of Plus17 from last year. If you look at this on a two-year basis, there is a real meaningful acceleration. Given that the improvement is coming from, sounds like it's coming from volume more than anything else, is that sort of two-year momentum the best way to think about how to model this out into the future and the sort of performance that can be maintained? and secondly I had a question on competition because we're hearing a lot of noise in the market including from FEMSA about their rollouts and I just wondered what you're seeing about the what you're seeing in terms of the competitive intensity in the hard discounting space and what it is that you're doing to stay ahead of that competition specifically let me take that last one I mean

Regarding FEMSA, we don't see anything more than what we've already seen. It's good to keep in mind that we already operate in a very competitive market and that's been the case now for many years. And I continue to believe that the market potential in Mexico is significant and that there is room for several players to thrive in the sector that we call discount. So, from our side, nothing new, nothing that will change what we're doing at all. We continue to do what we're doing and I think that's going to continue to work extremely well. With regards to same-store sales growth, if you go back to some of the discussions we've had with the market earlier, it doesn't take much in our case to see an increase in same-store sales. All we need to do is sell one more item per customer and you can see that number significantly increasing. And so we see that increase in number of products we sell to a given existing customer as something that will happen naturally over time because our products are just getting better and the value that we're offering to the client is continuing to improve. The day that stops is probably the day you don't see any more expansion in same store sales. So I would be conservative, but I would still remain positive that that's going to happen.

Thanks.

Thank you.

Thank you. Our next question comes from Isabella Lamas at UBS.

Hi, Anthony, Eduardo. Thank you for the opportunity for taking questions here. I have two questions. First one, I'd like to tap on also on your growth, but specifically on how could you think Thank you very much. I think customers share of wallet. Is this a trend that we should continue seeing from now on? and my second one is regarding your expansion specifically on the real estate front if you see if you continue to see solid availability for real estate for your pipeline and if you see better negotiation conditions with landlords or any change in that and also given that you have a very solid performance cash generation remains healthy I mean if you could be considering accelerating the expansion pace

Okay, let me start with the real estate question. And it's a fairly straightforward answer. There is no constraints on real estate. The runway is tremendous in Mexico for us. So we haven't seen any constraints on that front. On the matter of... Where's the growth going to come from? More penetration of wallet or more customers? It's always been a balance. And historically, if we look back and we look at our numbers, we see that it's been a mix of both. And it also depends on how old the store is. So you can imagine that older vintages will capture new clients at a slower rate, whereas, of course, our newer vintages are just slower. Thank you very much. More customers, but we get them faster at the initial part of a store opening and that has a very beneficial impact. But across the board, what you will see is an increase in penetration of wallet. An increase of penetration of wallet comes from two things. When you can add new SKUs and automatically you'll get something more there. But even without adding any new SKUs, and as I mentioned, we're super conservative on adding new SKUs. The existing portfolio is still not by any metric fully penetrated. There's still tremendous potential for existing customers with the existing portfolio to still see an increase in same store sales. And that we have pretty good data on and we continuously monitor that. So we're pretty confident that there is a lot more to do with what we have right now without adding anything new.

That's clear. Thank you.

Thank you. Our next question comes from Froilan Mendez at JP Morgan.

Hello, Eduardo. Anthony, thank you very much for taking my question. I just wanted to dig a little bit more on the gross margin. In the past, you have said not to really extrapolate a single quarter margin into the full year or the next quarters. It sounds that the Extra openings in the third quarter could lead to a get back on the gross margin that we saw this quarter. But is there anything also seasonal on the gross margin during this quarter? Maybe more, I don't know, World Cup campaigns or more people using your DC versus the past. Some more granularity on the gross margin into this quarter and what to expect into the next would be appreciated. And secondly, on the stock option plan, we know that... The employee stock option plan had this restriction period during the earnings season. I understand that it's liberated tomorrow after 48 hours of the earnings release. Any comments on any mechanism that avoids any disorderly sell from management that wants to obviously gain liquidity after many years of having received stock options? That would be highly appreciated.

Thank you. Let me answer the question of options. You would think that people will rush to the doors to sell their options, and I don't have a feeling that that's going to be the case. In any event, we do already have in place mechanisms to ensure that when naturally people want to sell some of their options, it's done in a very orderly and timely way. So that's already in place.

Your first question was around... Growth margins, Anthony, if there was something one-off.

Yeah, no, I mean, again, we don't see seasonality in our growth margins, really, and... Eduardo Pizzuto, Javier Suarez, Eduardo Pizzuto, Javier Suarez, Eduardo Pizzuto, Javier Suarez, I did answer Andrew's question on that saying that there is a natural moment in time where you basically say the percent gross margin maybe stabilizes, but your dollar gross margin basically continues to increase dramatically. It's all due to the fact that how much of this are you passing on to the customer in terms of price that then detonates more sales and then generates more dollar margin versus how much you're keeping and showing a better percentage gross margin. At the end of the day, what's most important is your dollar gross margin increasing healthily over time, which is the reflection of all the good things you're doing.

Thank you. Appreciate it.

Thank you. That is all the time we have for questions today, so that concludes our Q&A session. I would like to hand the call back over to Anthony Hatoum for his closing remarks.

As always, we appreciate very much and thank you very much for your interest and participation in our company. Thank you to the analysts covering us and thank you to all the shareholders who are participating here today. And of course, thank you to all the 3B employees and again, our customers who make all of this possible. Till next time, thank you very much.

Thank you all. You may now disconnect.