Hello, and welcome to FEMSA's Third Quarter 2024 Results Conference Call. My name is Melissa, and I will be your coordinator for today's event. Please note, this conference is being recorded, and for the duration of the call, your lines will be in a listen-only mode. [Operator Instructions] I'll now turn the call over to Juan Fonseca, Director of Investor Relations. Please go ahead.

Good morning, everyone. Welcome to FEMSA's third quarter 2024 results conference call. Today, we are joined by José Antonio Fernández Garza-Lagüera, CEO of our Proximity and Health division; Martin Arias, our CFO; and Jorge Collazo, who heads Coca-Cola FEMSA's Investor Relations team. The plan for today is for José to open the conversation with some comments on the performance of Proximity and Health during the third quarter, and then to move on to a more strategic set of topics that follows and provides an update to some of the messages he shared with you six months ago during our first quarter call, including some preliminary views on our expectations for 2025. After José's remarks, Martin will provide more detail on the broader business and our quarterly results. Finally, we will open the call for your questions. José, please go ahead. José Antonio Fernández Garza-Lagüera: Thank you, Juan. Good morning, everyone. During the third quarter, Proximity and Health delivered a solid set of results. As you look at our financials, you see growth almost everywhere and margin expansion in all the right places. This is certainly positive and a testament to the strength of our business platform, the skill of our teams and the permanent effort to grow and improve quarter after quarter, year after year. But Martin will go over the results in some detail in a few minutes. I want to focus particularly on what did not go that well, particularly the dynamics of same-store sales at Proximity Americas, which came in flat for the quarter. First, let's discuss average traffic, which contracted 5.7%, reflecting a wetter and cooler third quarter, with its negative effect on some of our most important consumption occasions, thirst and gathering. The greatest contraction was in key categories such as beer, soft drinks and…

Thank you, José. Good morning, everyone, and thank you for joining us today. Let's begin with FEMSA's consolidated [second] (ph) quarter results. In the third quarter, we achieved total revenue growth of 8.3%, while operating income rose 14.6% compared to the same period last year, reflecting a strong performance across business units. Net consolidated income decreased 27.5% to MXN9.2 billion, driven by: a higher interest expense of MXN4.4 billion, net of interest gains, reflecting a tough comparison base gains on derivative instruments in the third quarter of '23; a lower non-cash foreign exchange gain of MXN4.2 billion compared to last year related to FEMSA's US dollar denominated cash position positively impacted by the depreciation of the Mexican peso, which was more than offset by a foreign exchange loss due to our debt positions in all of our currencies; and finally, a higher loss in net income from discontinued operations, which includes an impairment of MXN3.9 billion from our divestment in Solistica. Turning to our operational results, José already discussed the overall performance of Proximity Americas and the same-store sales figures. So, let me take it from there. Total revenues grew by 4.8%, driven primarily by a steady growth in our store base. Gross margin, once again, expanded above trend by 300 basis points to reach 44.2%. As has been the case recently, this was driven by healthy dynamics in commercial income and a positive contribution from financial services. Operating income increased 5.9%, while the operating margin expanded 10 basis points to 9% of sales, reflecting a modest reduction in the growth in operating expenses relative to the first half of the year. This includes initiatives to mitigate the impact of higher labor costs and lower variable costs due to the slowdown in sales, partially offset by ongoing investments in capability…

Thank you very much. [Operator Instructions] Our first question is from Ricardo Alves with Morgan Stanley. Please go ahead.

Hi, everyone. Thanks so much for the call. My first call -- my first question on the OXXO same-store sales, kind of the hiccup that you saw in the third quarter. Can you elaborate on that from a couple of different angles? First, maybe prospects for OXXO getting back to the mid-single-digit expansion, if that's something that we can expect already for the fourth quarter? If you have any expectations with regards to December, for example, a very key month or if you see some of the headwinds that we saw in the third quarter [Technical Difficulty] the weather improving in a better same-store sales direction? And second, still related to OXXO, while the same-store sales came below what market expected, the 6% increase in average ticket was certainly a very positive highlight. Can you expand on that? We suspect that financial services is still there, but the preliminary remarks were quite interesting in terms of the management reiterating the new revenue management initiatives, revenue segmentation strategies. Can you talk about that, those pricing initiatives, revenue management, can you give us some examples of the good stuff that you're implementing within OXXO retail media and so forth that is probably maybe misunderstood by the market at this point? Thank you so much. José Antonio Fernández Garza-Lagüera: Thank you, Ricardo. Let me start. So, first on the -- obviously the third quarter had very disappointing traffic numbers in particular. It does come with our most -- our toughest quarter in terms of comparison. So, in the fourth quarter, we do have a better comparison number, but to me to make a prediction on how the market is going to behave given so how uncertain the weather and how volatile the weather has been all this year, it's hard for me to…

That does answer. Super helpful. I just had a final follow-up on the digital side. When we look at the others, I think that the negative contribution on EBITDA was actually lower than expected, so meaning the number was better. I suspect that some of that could be driven by lower cash consumption at digital. I just wanted to confirm if that's the case if digital is already turning the corner. I think that would take a little bit longer. But given how much we've been talking about digital, the loyalty program, new fintech capabilities, we have been talking about credit, for example. There's a lot going on at digital that we analysts in the market, we don't have enough visibility. I just wanted to understand if there is a relevant new update that you care to share with the market or if maybe indeed it's consuming less cash. Thank you very much again.

Thank you for your question, Ricardo. Yes, in effect, on a sequential basis, the cash burn from digital has been lower. As I mentioned in my statement, there is a renewed focus on the part of digital on leveraging and taking advantage of the scale we already have and focusing a little bit less on simply customer acquisitions, particularly on some of the more expensive digital channels that have been used last year and at the beginning of this year. So generally, digital has had a better improvement in terms of its cash burn. And again, one of the challenges of measuring digital is that there are a lot of the benefits from digital that are hard to measure. For example, despite our clear conviction that the loyalty program has had a significant improvement in sales at both OXXO Gas and at OXXO, reality is very difficult to measure in a scientific precise way. Obviously, we do measure it, but it's a little bit hard to publish those numbers because of the lack of sort of accounting standard to them. And so, what you see in digital and its burn rate, really is just the cost of all the initiatives that they're doing. There is some revenues that they charge OXXO and so on, but it does not reflect the increase in sales of both OXXO Gas. And if you calculate the breakeven point of what you have to believe in terms of improved sales, it's actually quite low. So, we're highly confident that digital is doing its job, it's quite productive and that it's making progress. You still don't see these numbers, any big numbers associated with the credit opportunity. We're still at the very early stages of that, and our expectation is that that be included within the total cash burn and that that be rolled out as we make progress on some of the other initiatives. I hope that answers your question.

It does, Martin. Thank you so much.

Thank you. Our next question is from Bob Ford with Bank of America. Please go ahead.

Thank you. Good morning, everybody, José and Martin and Juan. How do you feel about your activation capabilities within Premia? And how does Premia change the way you're thinking about further upside to commercial revenue? And Martin, you were talking a little bit about the focus on expenses in digital, but in the press release, you also mentioned a greater focus on transaction base -- or I should say on greater profitability, right, on recurring revenue. And how do you think about the balance between fee and transaction-based revenue over the coming year? And where do you think the monetization opportunities will be over the next 12 months? José Antonio Fernández Garza-Lagüera: So, I got your first question -- your first part on Premia, but I didn't get your second. Can you repeat that?

Sure. I apologize for that, José. It was long. In the press release, there was a reference to greater focus at digital or [indiscernible] on recurring revenue. And I was wondering how we should think about Spin in the balance between fee and transaction-based revenue for the coming year. And you mentioned remittances in your comments, but I was wondering how you're thinking about the monetization opportunities there within the financial services over the next 12 months? José Antonio Fernández Garza-Lagüera: No, that's a great question. Thank you. I would start with -- so for Spin Premia, I would say we're still on very early days on understanding the amount of power that data that is delivering us. We are very -- we are shifting our capability of understanding elasticity by SKU with our analytics in a very dramatic way on a store-by-store basis. With Premia, we will be able to do it on a per person basis, and that really keeps me excited about the ability to tailor promotions that -- and really bring the best of OXXO to each consumer. And so, we have a lot of work to do yet, but the early show -- the early promise is -- start is very promising. Already this year, it's still a small fraction of our retail media efforts, most of it is still the digital screen that we're putting in OXXO, but already almost a 10% or so of the revenues is coming from Spin Premia initiatives and that should take a much bigger share in the next few years. So, I'm very excited about that. On Spin and obviously, Juan Carlos, my colleague, could comment much more and hopefully, he'll be here in another call, but I do see and what we've been talking together about the evolution of Spin and Spin by OXXO, a big chunk of his recurring revenue comes with more financial services. A big chunk of it would be remittances, but there's many other things that we see in the pipeline, obviously credit being one regardless or -- I mean still I think Juan Carlos is analyzing many alternatives of how to start credit within Spin by OXXO. So, it's still early to comment on a specific route, but I do know it's part of the plan for him in the next medium term or 12 to 18 months, I would say.

Very exciting, José. Thank you so much.

Thank you. Our next question is from Antonio Hernandez with Actinver. Please go ahead.

Hi, good morning. Thanks for taking my question. My question regarding the Health division. Same-store sales outperformed our estimate. So, if you could please provide some light on the drivers, also maybe a little bit on the same-sale trend in Mexico that would be really helpful. Thanks. José Antonio Fernández Garza-Lagüera: Yes. So, Antonio, as you know, Health, it's a business that operates in four markets and each market has very different dynamics. I would say, first of all, there are some currency dynamics that really helped this division this quarter. So, some of that revenue growth comes from currency dynamics, although there are some interesting things that are coming in. One is Colombia. Colombia, the health sector -- the government health sector is going through some tough issues and the private sector is taking a much bigger share of the market. And with that, we are the -- I would say the best pharmacy chain in terms of the amount of growth in same-store sales, the amount of expansion of stores that we are overseeing all over the country and the results have been outstanding. That, coupled with our business in wholesale distribution, which we've done it in Chile very successfully, that is really helping us offset our struggles with the institutional business. Chile is seeing some moderate growth. We're stable in share. We're already by far the largest player, and we haven't lost share in Chile. And we are still growing same-store sales. We're growing in some store expansion as we begin to see more competition, but we are confident that Chile will continue to be a very healthy source of profit. Ecuador is doing well. Unfortunately, the country is going through some issues. We have some energy disruptions that were not only for us, all through the country, and that affected some of our last few weeks sales. Other than that, Ecuador had been performing well. We have a small chain business or SanaSana chain, which we are converting to franchise to lower our capital invested in Ecuador as much as possible. And as we've been very upfront, Mexico has been a struggle for us. It's been a very intense competition. And I think we needed to have a much stronger value proposition. I'm optimistic of what we're doing with our new flagship stores. We have some in Mexico City and we're doing in our core regions in the Southeast and in the Pacific region and the results so far have -- it's been too early. We've opened maybe 40 and we are set to open a few hundred, but the results so far are promising, I would say cautiously optimistic. Does that answer you, Antonio?

Yes. That's very helpful. Thanks a lot. Have a nice day.

Thank you. Our next question is from Rodrigo Alcantara with UBS. Please go ahead. Mr. Alcantara, your line is open. Please go ahead.

I think we can move on and maybe Rodrigo gets back in the queue.

Thank you. Our next question is from Ben Theurer of Barclays. Please go ahead. Mr. Theurer, your line is open. Please go ahead.

I think they might be having some issues.

Can you hear me now?

Yes. Who is this? This is Ben?

Yes. This is Ben. Yeah. Does this work? Okay. All right. Usually, they say don't use the speaker, but in this case, speaker works. No, my question is related to the plans of breaking out some of the other formats, particularly Bara in Mexico. Help us understand a little bit size of the business right now. How many stores within that 20,000-plus OXXO stores is actually already a Bara format? And what's the value proposition? What's the differentiating factor of Bara versus OXXO? And how should we think about like the drivers, the consumer drivers into those stores? What's different in particular to kind of understand this as we think about how to model it going forward? Thank you. José Antonio Fernández Garza-Lagüera: Well, I wish I could -- I try to hide Bara as a secret for longer, but...

You can't. José Antonio Fernández Garza-Lagüera: The honest answer is Bara has been performing incredibly well the last two or three years, I would say. For the last at least six quarters, we've been outgrowing other players in the space in terms of same-store sales. Today, Bara is a 420 store count. It's not counted in Proximity Americas. We don't count it when we give you the number of OXXOs. That's not in the number. And Bara, it's really transforming into a -- going from a soft to a hard there. I wouldn't say still a hard, hard discount, but going to a harder discount type of format. And we are very pleased with the evolution of Bara so far. We've been bringing talent from the hard discount place into the concept, and we've been slowly adapting the concept very well. So far, it has grown mainly in the Bajío region with some expansion in Jalisco. And I would say -- what you will -- I would say Bara has the help of that still -- about 25% of its revenue comes from convenience categories and that gives it an extra set of margin that compensate the hard discount gross margin that we tend to have in the rest of the categories, especially grocery and food and frozen food and et cetera. It's been a very pleasant surprise how big is -- how fast it's growing, how fast it's growing same-store sales. And we are planning to accelerate the store expansion of Bara, but being very careful. As you know, as we go out of the Bajío region, the stores are less well known. So, we need to prove ourselves that we can expand geographically outside of that region, with very good results so far in Jalisco, but I expect the Pacific and the North eventually to be a very good source of growth. The big challenge for Bara the next couple of years is still the same POS as OXXO the same [sociedad anónima] (ph) or it's still the whole infrastructure of OXXO operationally and not in talent. It has its own CEO, but we need to be able to separate all the systems and the processes out of Bara. That will cost us a little bit the next especially in cost, in extra layer of cost, but I'm very excited about the future of Bara in the coming years.

Perhaps just to add, Ben, this is Juan, some of the differences that drive this decision to segregate the organizations having to do with supply chain, the SKUs are not the same as OXXO, the mix of products that come from DSD suppliers that go to the store versus people that go to distribution centers is different. And to your -- part of your question about kind of headroom or size of -- potential size of this business, we definitely think that it will be measured in the thousands. So, early days still, but as José said, it's looking very promising.

Great, fantastic. Thank you very much.

Thank you. Our next question is from Thiago Bortoluci with Goldman Sachs. Please go ahead. Mr. Bortoluci, your line is open. Please go ahead. José Antonio Fernández Garza-Lagüera: We can't hear you.

Yeah, no, there seems to be some issue. I don't know if...

Can you hear me?

There you are, Thiago. Yeah.

Yes. Good morning, everyone. Thanks for taking the questions. We have two here. The first one operationally regarding traffic at OXXO, right, we understand there is some seasonality and all the election stuff, but this is the second quarter in a row that we're delivering negative traffic, right? Obviously, there is these ongoing tailwinds from all the changes and improvements you have done into the operation, but my question is, assuming your traffic base remains where it is lower, do you see any risks of having more challenges to drive operating leverage going forward on a 12-months horizon? This is the first one. And the second one on capital allocation, you just completed your second ASR. Your leverage is below 1 times EBITDA. When should we expect more news regarding capital allocation? Is there a chance you could do something prior to the Annual Shareholders Meeting, or should we expect this to be a milestone to define what you do next? Thank you very much. José Antonio Fernández Garza-Lagüera: So, I will answer the first and I'll pass to Martin for the second one. Obviously, the traffic is a very big concern of mine. I do -- I mean as much as I hate that excuse from my team, it's been raining here. I don't have official numbers and I don't want to use it, but it's been one of the most rainiest years in a long time at least in the north of Mexico, and that had really had a big impact on us. So, I don't think it's structural. And as you see, most of our decline is in cold beverages, almost half of it. However, obviously, I think there's a lot of things that we need to work in terms of making sure our stores are well staffed, shifts are open and that the team has been doing fantastic job in making sure no corner of the region has an OXXO that is not servicing properly. But obviously, there we will be fighting within in terms of supply chain in operations to make sure it's not on us, but it's just on the consumer demand. I don't see any structural. I do think it will be medium term, because next year is still part of the election and that the election aftermath always creates some softening of demand, but I'm convinced that certain of the -- some of the value levers that we're playing and putting in place will get us back to traffic growth.

Yeah, I would add one thing, Thiago. Hi, this is Juan. Sometimes it's hard to look at traffic, especially when you look at the long-term series and look at it in isolation from the number of stores that we've been adding every year, right? So, you're adding close to 5% new store base every year and that has to play a role in the equation, because at the end of the day, consumers are satisfying their needs. If you would have gone five times to a store in a week, now maybe you go the same five times or maybe you go six times, except you split it between the two stores, the old one and the new one. So, we're going to start looking into ways to try to come up with an aggregate measure as well, because the part of your question that talks about operating leverage, I mean, at the end of the day, we are getting a lot bigger every day from a transactional standpoint, the absolute traffic number gets bigger every day regardless of what happens at the average store level. So anyway, we'll keep talking about this going forward with you guys, and we'd love to pick your brains, but you can't just not bring into the equation the fact that the speed at which we add stores because it plays a role.

As to your second question relating to capital allocation, as I mentioned, of the MXN50 billion that we committed to distributing in the form of extraordinary capital return to shareholders, we've done about 60% of that, about MXN30 billion. Our expectation is, as a matter of discipline, all I can speak to is as to our current plans and our current plans is not to launch another ASR, in part because just discipline we tell you we should pace this out over time and not get ahead of ourselves. We have a US election coming up. So, if that were to cause volatility, we will reserve the right and the flexibility to move or to launch something. That's not our current plan. We don't expect anything significant to happen associated with the elections other than as everyone were curious to what the result will be. And then, I would expect towards the first quarter, the end of first quarter of next year that we'll start thinking about what we need to do with regards to the Shareholders Meeting to announce any additional extraordinary dividends. And as we've said in the past, we're always -- we're agnostic as to whether we return capital through extraordinary dividends or through buyback of shares. It's really just a function of where we may see opportunities and for the most part, they're small opportunities, like all of these questions aren't easy to answer at any given moment because you have to take into account a whole bunch of information. So, I don't expect any announcements until then.

That's clear. Thank you very much everyone.

Thanks, Thiago.

Thank you. Our next question comes from Alvaro Garcia with BTG Pactual. Please go ahead.

Hi. Can you hear me?

Yes. José Antonio Fernández Garza-Lagüera: Yes. Hello.

Great. Two questions. One, just a pretty easy follow-up on, you mentioned you want to deemphasize some of the OXXO Latam -- some OXXO Latam markets. If you could just clarify which ones? I wasn't able to catch which ones. And then, the second question, a bigger picture question on your payments business, sort of in the context of Coface's fintech report from last week and your great banking correspondence business. What sort of pushback, if any, have you seen from banks that pay you for access to your platform? Given the growth of Spin, given your aspirations there, how do you envision these agreements to evolve over time? Thank you. José Antonio Fernández Garza-Lagüera: So, yeah, thank you for your question, Alvaro. I would say first on the Latam market, we remain very excited on the region in general, but we are much closer to very -- to accelerated growth and profitability in Colombia. We want to emphasize Colombia and Brazil. Brazil, the evolution of the store and with same-store sales growth on the double-digits over the last -- at least through the year, keep me excited that we're close to have a good plan. Obviously, that has to be aligned with our partner, but I think continue to evolve the value proposition especially in Brazil, fix some operational stuff in terms of filling out the stores well, reducing turnover in the stores, reducing shrinkage. So that will -- we will do it by not expanding outside of Sao Paulo and concentrating on expanding maybe 100 to 125 stores. Again, this has to be approved and agreed by with my partner -- with our partner. But Brazil and Colombia are the ones that keep us excited. Chile and Peru are much behind in the curve towards profitability and particularly…

Yeah. And I would just add that I mean people regularly underestimate the cost and complexity of what it involves for OXXO, administering, transporting, counting, depositing the money, the complexity it adds to lines in the store and so on. So, I would generally say and emphasizing what José said, we're providing an amazing service to the community, we're very proud of it. And just check the return on equity of the financial institutions to see they're doing just fine.

Totally agree, by the way. And just had to ask and super helpful, and thank you for those answers. José Antonio Fernández Garza-Lagüera: Thank you, Alvaro.

Thank you. Our next question is from Rodrigo Alcantara with UBS. Please go ahead.

Hi. Good morning, guys. Can you hear me now?

Yes. José Antonio Fernández Garza-Lagüera: Yes. Hello, Rodrigo.

Yeah, awesome. Hey, thanks. Hi, José. Thanks. Hi, Martin, Juan. So, my question would be here for José, if you can perhaps comment on the price and income elasticity of OXXO, please? And how comfortable you are with current OXXO's price competitiveness relative to the mom and pops and the self-service formats in Mexico? That would be my first question on price competitiveness. And second one very quickly also if you can comment more on what you mentioned in the press release about commercial capabilities driving higher OpEx at OXXO. If you can comment more about that, it would be also very helpful. Thank you very much. José Antonio Fernández Garza-Lagüera: Yes. These are great questions. So, I think on pricing, when we are proud of our pricing and using our AI model to optimize price, we are not talking about raising prices. It's actually a blended mix. We are reducing prices on certain categories that have high elasticity and we're reducing or increasing prices in others. So, pricing is up and down and we will continue to monitor that. We monitor the share on the other channels and we want to remain a significant portion of the fulfillment of the Mexican consumer. And I would say we've been seeing very healthy growth in share for the traditional trade. A big chunk of it is recovering after COVID. I think pre-COVID, they had a higher share and they lost a bunch of it during COVID and they are slowly recovering and we welcome that. I think it's a very healthy channel. It's healthy for the FMCGs. We like to have a healthy traditional trade. In Mexico, we are not concerned. We have not been losing share on the measurements we made. We've been seeing that evolution of the traditional trade…

Awesome. Thanks for the answers, José. José Antonio Fernández Garza-Lagüera: Thank you.

Thank you. Our next question comes from Carlos Laboy with HSBC. Please go ahead.

Yes. Good morning, everyone. José, maybe you can take a step back and give us some historic context on the strategy for bringing traffic into the OXXO stores over time, how has this evolved? And how much of a reacceleration that you see looking forward over the medium term can be digitally enabled? If you can help us with some granular examples, it would help. Thank you. José Antonio Fernández Garza-Lagüera: Thank you, Carlos. I'll try not to extend myself to many decades in the past, but you know the story of OXXO as well as me. And obviously, OXXO started as a beverage-first channel and that was the big value lever for many years. Then, it got into more and more value levers in grocery, tobacco expansion. And it has always been this fantastic machine of adding levers and extracting levers. And some things have -- we used to sell -- a big chunk of our business was selling Ladatel or the...

Phone cards. José Antonio Fernández Garza-Lagüera: ...phone cards, that moved away and other services came. Then, financial services started with municipal permits and paying your fines and then that evolved into a fantastic business, and that business obviously is evolving faster than other ones. I'm not too concerned about the financial services. Obviously, a big chunk of them will eventually go digital, but we see a very interesting evolution of more services coming in and others -- so maybe people are buying less airtime in OXXO, but people are buying, paying their online shopping with their all these ecommerce not only the Amazon and MercadoLibre, but the Temu and SHEIN are growing dramatically, and people love to go and pay at the OXXO, people that are banked and they just don't want to lose their financial services and rather pay cash. And I see there it's too early, but I've always been doing numbers on when we can really become a part of the fulfillment sector. And OXXO team is studying that hard and we see an interesting evolution of becoming a much more omnichannel presence where we own -- we can help on the first and the last mile of products. We are already doing incredibly well with Amazon. We are starting to do some stuff with MercadoLibre, but I'm much more eager to be able to help the Facebook Marketplaces and people use the OXXO for pickup -- for drop or pickup or for reverse logistics. I would say that's one that's too early to say if it's going to come, but I'm very eager on that. And I would say the other one that's obviously a big one that we need to upgrade dramatically is foodvenience. We've been playing a good role in Mexico with food, but…

Yeah, I would just add, and Carlos, it's Juan, to José's reference to the cash infrastructure just for the benefit of everybody listening, we are rolling out these cash recycling machines that -- we've had the conversation with many of you, but these machines allow us to increase significantly the amount of cash that can be disbursed at the store without increasing the risk profile. And that's how we can play in remittances where the average remittance is somewhere between $400, $500, which is way more than what we have in a traditional store. So, the cash machines so far looking really good in the places where we've rolled them out. And I will also make just one kind of reflection on your question and everything that José just said. I think at the end of the day what OXXO has done remarkably well over the decades is identifying consumer needs and finding a way to serve them, right? And obviously, in the past, all of them required physical exchange of cash or exchange of goods. Now, obviously, there's -- some of those are spilling over to the digital realm, but the capillarity of the -- excuse me, the capillarity of the store base, the trust level, what the brand means now for people, if you think about a lot of what José said, none of that will be happening if we were just everywhere, right, and kind of a part of people's lives. And so, it's really been a story of people doing more, making -- from our side of the equation, it's making their lives easier, but it really is about finding other things. José talked about Temu and SHEIN, and those e-tailers that weren't present in Mexico a couple of years ago, and now they're everywhere and we have found a way to play a role and make it easier for people to buy from them without increasing their risk, if you will. So, I think that's part of the story, Carlos. It's kind of a through line from beer to soft drinks to tobacco to snacks to services to ecommerce. It's just being everywhere and finding a way to make people's lives easier every day.

Yes. Thank you. And just a comment, Juan, Martin, José, the step up in the quality and the insight of these calls is really phenomenal. Thank you for helping us with all the insights you're giving us. José Antonio Fernández Garza-Lagüera: Thank you, Carlos. We enjoyed them. Really thank you for your question.

Thank you, Carlos.

Thank you, Carlos.

Thank you. Our next question is from Hector Maya with Scotiabank. Please go ahead.

Hi, thank you very much for taking my questions. First, if you could please go deeper on details regarding the line of non-cash charges at OXXO that helped to drive the EBITDA margin? Just to confirm, what was the main change in the digital platform that resulted in the lower cash burn there and how sustainable this could be going forward? And also, if you could give us more details on the decision to suspend the Pronto initiative? It would be interesting to know what plans remain in place to empower the traditional channels with the digital platform, particularly to understand if the company is still thinking about being a supplier of the channel or if this is over and FEMSA will just focus on B2B payments. Thank you.

Thank you, Hector. Give me just one minute.

Hi. On the non-cash charges, because of an automation process that we did with regards to the reporting from the different operations, we found that there were certain non-cash charges that were being treated as cash expenses in the past. And so, we tightened a little bit more of the definitions and the classifications and so on. And so, what you're seeing really is just a more detailed and a better way of classifying cash versus non-cash charges. And this happened not only in Proximity and Health, there was a little bit of that also in Coca-Cola FEMSA. José Antonio Fernández Garza-Lagüera: On Pronto, I could comment on that, Hector. So, I would say we have many initiatives to serve the traditional trade. The ones that are most exciting and we see much more promising are two. One is the one that our Coca-Cola FEMSA is doing with using their Coca-Cola truck with -- to supply other categories. That's evolving from what I hear. Interestingly, coupled with their Juntos+ program, which uses the loyalty infrastructure that Digital FEMSA provides. So that will continue. Secondly, Digital FEMSA has very interesting projects still on pilot, I would say, but evolving interestingly of using their payment infrastructure, the Spin Premia initiative to create a network of -- it's working on the traditional trade, but more in fonda, small restaurants, flower shops, et cetera. I think there, if I'm not mistaken, the trial is in Puebla and it's evolving interestingly well. The one where we performing well, but we had a good traction on that, but we saw the distance to profitability was so high that we thought we needed to refocus was the Pronto initiative. I mean, the Pronto initiative, the main business was creating routes where we will take certain OXXO products to the traditional trade. And I would say the cost to serve of that business was too high and these traditional trades are served by other wholesalers that have an infrastructure and costs that are much different than the ones we would need to provide a good service. I do see a service where we could provide an interesting service, but I would see -- I don't want to get ahead of myself, but eventually I think the cost to serve would need to be served on a cash-and-carry type of system where we leverage our distribution centers to create something different. But so for now, we are so encouraged by the Bara evolution that we much rather concentrate our resources in where we see a good opportunity to become a significant player in the market, and that is Bara and our other avenues, Caffenio and et cetera. So, we decided to put Pronto on hold and we're stopping that business, reducing the cash burn of that of Proximity significantly through that. And so that hopefully in the future, we can come back with a business that's not so high cost to serve.

And then you had a I believe a question about the cash burn of digital and what was causing the improvements, and just to get a little bit more specific than I did in my statement. One, now the digital ecosystem is connecting directly to SPEI, which is the Mexican payment system, that allows us -- has allowed us to save significantly on fees of third-parties that we were using to make that connection. Number two, we're negotiating better with credit card companies on some of the fees they were charging us. And number three, we're using some of the more -- we're using less some of the more expensive customer acquisition channels where with the guidance from Juan Carlos, the cost benefit analysis of some of those channels in terms of churn and the quality of customers you're acquiring wasn't as good. And so, there was a decision made to deemphasize those channels. I would tell you those are the three biggest things that have helped reduce the cash burn.

Perfect. Very, very clear. Thank you very much.

Thank you, Hector.

Thank you. And our next question is from Ulises Argote with Santander. Please go ahead.

Hi, guys. Thanks for the space for your question. I just want to hear from my side to José Antonio. So, on your remarks, you mentioned there the kind of organic growth reignition for Valora. I was wondering if you could give us a little bit more detail on what kind of potential are you seeing for openings and maybe on what formats or regions. You mentioned something there around Germany, but maybe if you could be a bit more specific on what the plans entail for this part of the business? Thank you. José Antonio Fernández Garza-Lagüera: Thank you, Ulises. Yes, that's a good question. So, we are very happy with the development of Valora, and I think by now it's not post-COVID recovery. The team has been doing a very solid set of results in the three businesses, but more importantly obviously the B2B business has been very healthy and I would say the [indiscernible] convenience business as well. We -- our long-range plan in Valora considers that we will expand in Germany, and we see an opportunity to serve through convenience stores outside of the high-traffic areas like airports and train stations. That is -- we see two avenues to do that. One is to partner with fuel providers that are -- that do not have a convenience platform or have an underserved convenience offering and there's a lot of them. I forget the number on top of my head, but a big chunk of fuel providers need to enhance the value and we're talking to big ones, medium ones and small ones about installing convenience stores in their fuel stations. And hopefully, we will have some updates some relevant info there. And the other one is in high street areas, and we are taking a longer time to really evaluate where do we put ourselves given the softening of the German consumer. We still we believe a big chunk of our projection to grow that business. We are opening certain stores in cities that are not as affected economically especially in the south of Germany, but so far, we will -- we're opening much less than what we thought, but eventually, we hope we can be able to open maybe 50 to 100 stores a year and have positive momentum. But it's early and we are more eager to see what we can do with fuel stations, which have proven demand and we know how to run them.

That's very clear. Perfect. Thank you very much.

Thank you very much. I would like to turn the call back over to Mr. Fonseca for any closing remarks.

Thank you. Obviously, we're around, my team and I, for follow-ups. You can obviously -- you all know where to find us. Thanks for participating in the call, and have a great week.

Thank you very much. That concludes today's conference. You may now disconnect.