• Total Revenue: Increased by 29.8% to MXN14.8 billion.
• Same-Store Sales Growth: 11.6% year-on-year increase.
• EBITDA: Increased by 54% to MXN688 million.
• Net Cash Flows from Operating Activities: Increased by 22.4% to approximately MXN2.3 billion for the first nine months.
• Net Cash Position: Approximately MXN1.3 billion.
• Store Openings: 131 net new stores in Q3, totaling 2,634 stores.
• Gross Profit Margin: Remained flat at 15.8%.
• SG&A as Percentage of Revenue: Decreased by 51 basis points to 13.4%.
• Adjusted Negative Working Capital: 10.3% of total revenue as of September 30, 2024.

• Warning! GuruFocus has detected 4 Warning Sign with WDAY.

Release Date: November 26, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• BBB Foods Inc (NYSE:TBBB) reported a strong quarter with the opening of 131 net new stores, bringing the total to 2,634 stores.
• Same-store sales grew by 11.6% year-on-year, contributing to a total revenue increase of 29.8% to MXN14.8 billion.
• EBITDA increased by 54% year-on-year to MXN688 million, showcasing strong operational efficiency.
• The company remains self-funded despite a 42% increase in store openings compared to the previous year.
• SG&A as a percentage of total revenue decreased by 51 basis points, reflecting ongoing efforts to optimize expenses.

Negative Points

• Gross profit margins remained flat at 15.8% compared to the same quarter last year, indicating no improvement in margin efficiency.
• There was a sequential decline in gross margin, which may raise concerns about pricing strategy and competitive pressures.
• The company did not provide specific guidance on future dividend plans, leaving investors uncertain about potential returns.
• The impact of external factors such as currency fluctuations and supplier pricing pressures remains a concern.
• The company faces competition from Neto, with 1,500 Neto stores located near existing BBB Foods Inc (NYSE:TBBB) stores, potentially impacting market share.

Q & A Highlights

Q: Can you explain the sequential gross margin decline and the increase in operating leverage? Also, how should we think about the pace of new store openings for 2025? A: The gross margin fluctuation is due to individual pricing decisions and is not indicative of a trend. We continue to price products to maximize volumes and operating profit. Regarding store openings, we are on track to meet our guidance and believe the market can sustain up to 20,000 stores over time. We are comfortable with our current pace but will focus on increasing it over time. - K. Anthony Hatoum, CEO

Q: With 130 store openings this quarter, you're not burning cash. What is the long-term outlook for dividends? A: It's too early to discuss dividends, but as the business generates significant cash, we will consider the best use of excess cash, which could include dividends. - K. Anthony Hatoum, CEO

Q: Can you provide an update on the productivity of newer stores and any changes in the spaghetti chart? A: We refresh the spaghetti chart annually, and all store vintages continue to perform solidly. Newer vintages are performing strongly, and the trend remains positive. - K. Anthony Hatoum, CEO

Q: How do you manage pricing changes at the product level, and what impact do they have on sales? A: The impact of pricing changes varies by category, with some responding immediately and others over several quarters. We optimize pricing to maximize unit volumes and peso margin, and any gross margin changes reflect this strategy. - K. Anthony Hatoum, CEO

Q: Can you discuss your relationship with suppliers and how it evolves with scale? A: As we scale, our relationships with suppliers improve, allowing for better terms. We work closely with FMCG companies and private label suppliers to ensure we offer the best value proposition to our customers. - K. Anthony Hatoum, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.