Hello, and welcome to FEMSA Fourth Quarter 2025 Conference Call. My name is Augier, and I will be your moderator for today's event. Please note that this conference is being recorded. I would now like to hand the call over to Mr. Juan Fonseca, Investor Relations Director at FEMSA. Please go ahead, Juan.

Good morning, everyone, and welcome to FEMSA's Fourth Quarter and Full Year 2025 Results Conference Call. Today, we are joined by Jose Antonio Fernandez Garza, FEMSA's CEO; Martin Arias, our CFO; and Jorge Collazo, who heads Coca-Cola FEMSA's Investor Relations team. The plan is for Jose Antonio to open the conversation with some high-level comments on performance, followed by a strategic overview and an update on our priorities. Next, Martin will provide more details on the results. And finally, we will open the call for your questions. Jose Antonio, please go ahead.

Thank you, Juan. Good morning, everyone. Today, I would like to divide my comments into two sections. First, we will discuss operational results and trends, highlighting key points and takeaways. Then we will tackle more strategic topics, including an update on our priorities and some structural changes we are implementing as we get ready for the next phase of growth. Let’s start with the performance of our business during the fourth quarter, particularly OXXO Mexico. Back in October, during our previous quarterly call, we noted an inflection point in same-store sales and traffic trends that gave us optimism for the fourth quarter and beyond. As the numbers show, this positive trend continued through the end of the year, allowing us to close 2025 on a high note with same-store sales for Proximity Americas nearing mid-single-digit growth at 4.4%. Although traffic remained negative at 0.6%, it was significantly better than what we had experienced earlier in the year. We are not fully content with the year's performance, but reflecting on 2025 has provided us valuable lessons. We’re encouraged that initiatives implemented in the latter half of 2025 have started yielding results. We began 2025 facing challenges, particularly with traffic at OXXO Mexico declining by mid-single digits, not following the expected cyclical recovery. Initially, we attributed this to the economy and the typical post-election downturn, which made diagnosing the root causes take longer. However, once we recognized a competitiveness issue against traditional trade in some core categories, our team developed and executed a wide-ranging set of affordability-focused initiatives. These included increasing our mix of returnable beverage packages, expanding multi-serve options, negotiating more competitive promotions and packaging with suppliers, and agreeing with them to introduce low-price SKUs in essential categories such as snacks and tobacco. This strategy proved effective; we quickly began recovering market share, and today’s results show our numbers are trending closer to our long-term expectations. It's important to acknowledge that we don’t operate in a vacuum. Earlier this year, we noted abnormally poor weather across much of the country as a factor in our traffic struggles, but conditions were more favorable in the fourth quarter, which contributed positively. We also mentioned a soft consumer environment and overall lackluster macroeconomic sentiment regarding investment and economic activity in Mexico. While these variables haven’t significantly improved recently, they have appeared to stabilize. By concentrating on the factors we can control, our efforts yielded successful outcomes. This serves as a reassuring reminder of the OXXO platform's strength and resilience. Moreover, 2025 underscored that the core consumer occasions we serve best—trust, impulse, and gathering—still present substantial opportunities to broaden the number of occasions where OXXO can enhance relevance and create value. The year also made clear that we need to focus on a few bold initiatives that will generate significant value. Additionally, as mentioned in our last call, we began addressing the need for a leaner, fit-for-purpose organizational structure, which has been fully established at OXXO Mexico and is currently being rolled out at Proximity Americas and FEMSA Corporate. More details will follow. Looking ahead to 2026, we aim to restore growth and relevance at OXXO Mexico with a concentrated effort on improving traffic and same-store sales through a stronger value proposition, enhanced customer experience, and robust operational execution. In the short to medium term, our team is diligently working to maximize our core categories, enhancing our competitive position on impulse while prioritizing our offerings in food premiums, specifically coffee and breakfast items. We are conducting several tests already yielding promising results, such as making our regular coffee offering more affordable while adapting our successful food propositions from Colombia and Brazil to cater to the Mexican consumer, hoping to provide an appealing and convenient breakfast alternative. Moreover, we believe we can target new mission opportunities such as daily replenishment by improving our pantry essentials offerings at great value and strengthening our beyond-trade opportunities with incremental payments and financial solutions. In various future forums, I will begin sharing more details on these long-term initiatives. Currently, we represent about 10% of all categories we participate in, revealing a substantial opportunity to grow our business in Mexico by capturing a larger share of consumer spending, increasing our store base by over one-third over the next decade, and leveraging that additional scale to fuel growth while maintaining high returns. In fact, across FEMSA in 2025, we invested over $1 billion in CapEx for organic growth in Mexico across our business units for the third consecutive year, despite a consolidated reduction compared to 2024, reflecting our capacity and willingness to adjust the pace of investment in challenging conditions. I want to briefly highlight some standout operations during the quarter, starting with OXXO Colombia, where our value proposition has matured, resulting in positive EBITDA for the first time over the full year and nearly breakeven EBIT in the fourth quarter. Bara also displayed strong momentum in the discount segment, achieving double-digit growth in same-store sales, while we continue refining its value proposition and increasing the mix of private label offerings to around 30% for all of BADA. In Europe, Valora set a record for operating income in 2025, driven by strong retail performance in Switzerland and effective expense management. As Juan detailed during his call, at Coca-Cola FEMSA, we are concentrating on three key priorities: first, driving volume by enhancing our core, bolstering execution, and reinforcing our portfolio; second, advancing Juntos+ with AI and advanced analytics to create more value for our customers and enhance decision-making; and third, nurturing a customer-centric culture of empowerment. However, it’s essential to recognize challenges when things don’t unfold as planned. Particularly in the fourth quarter, our Health division faced a provision for uncollectible accounts totaling MXN 487 million from the institutional segment in Colombia, mirroring provisions from 2023, as that market segment continues to experience difficulties. Meanwhile, the business in Mexico is only beginning to stabilize after significant downsizing, leading to a disappointing result for the quarter. Our new management team in the Health division has completed its initial evaluation and initiated several initiatives focused on more disciplined capital and commercial practices, emphasizing cash flow generation and returns. This will be a challenging year for results in this division, especially concerning our institutional business in Colombia and the need for the Mexico operations to stabilize. Martin will provide further details shortly. Now, let me shift to the second part of my comments. Beyond our quarterly results and operational trends, I want to share a broad update on our strategic priorities and the changes we are making to our organizational structure for better alignment with those priorities, aimed at increasing efficiency and effectiveness. As we’ve mentioned before, our goal is to create value by generating returns above our cost of capital. This requires us to use our investment capacity precisely and purposefully on initiatives that can yield the most value, as well as assembling our strongest team and deploying our best talent where it’s most needed. Simultaneously, alongside Martin and the finance teams across our business units, we are focusing on cash flow rigor, encouraging teams to adopt an owner’s mentality regarding cash and maintaining thorough control over the cash drivers, including a dedicated focus on managing working capital and exercising discipline in CapEx investment. I will briefly touch on expansion, which remains a critical pillar of our long-term growth strategy. During 2025, we adopted a more rigorous approach to store base growth across the portfolio, particularly in Colombia and Brazil. We closed several underperforming stores as we refine our value proposition, resulting in a more measured number of net additions. This was a deliberate adjustment rather than a structural shift in our ambition, and we are well positioned to ramp up growth moving forward. Our top priorities remain consistent with our previous discussions. The Mexican market maintains its preeminent position on our list. OXXO Mexico is our foremost priority as we continue tapping into the white space opportunity while enhancing our value proposition by consistently adding layers of value to ensure we remain relevant to a changing Mexican consumer. Mexico is also Coca-Cola FEMSA's largest market, and we are continuing to formulate and apply the right strategies to grow our core and adeptly navigate a challenging regulatory landscape. At Bara, we are now empowered by two growth engines, having opened our second distribution center in Monterrey. Together with our Bajio and Jalisco sales growth, we will continue fine-tuning our value proposition and increasing our private label mix beyond current levels. In 2026, we anticipate accelerating our pace of store expansion with plans to increase our store base by about one-third. In Brazil, our second-largest market, we now have full strategic control of OXXO and will continue refining our value proposition while also speeding up growth in the State of Sao Paulo. Specifically, we will persist in developing our successful prepared food offerings while enhancing our focus and execution. For 2026, our target for store expansion is around 100 net new stores, indicating a little over 15% growth as we strive to build scale in this promising market. Brazil is also a high priority for KOF, where there lies an exciting opportunity for continued business growth, supported by advanced digital capabilities within Juntos+. In Colombia, we have established robust unit economics at the OXXO store level, anchored by our successful prepared food value proposition. Consequently, we are poised to scale operations in a disciplined manner, planning a 20% increase in our store base for 2026. Beyond Latin America, we are enthusiastic about our operations in the U.S. and Europe. In the U.S., we remain focused on refining our value proposition with an emphasis on prepared food, experimenting with different alternatives, and continuing the conversion of our store base to the OXXO banner with positive outcomes. Valora, on its part, has outperformed expectations, particularly due to the strength of our retail platform in Switzerland and the management team's ability to operate with increasing efficiency. To better support these priorities and prepare for sustained, long-term profitable growth, we have redesigned our organizational structure, integrating the leadership at FEMSA corporate with those in the Proximity and Health divisions, consolidating them at the corporate level. Consequently, in addition to Coca-Cola FEMSA, I will oversee four large retail divisions: OXXO Mexico through Carlos Arroyo, Proximity Americas and Mobility through Constantino Spas, Health and Multi-Formats through [name], and Europe through Michael Mueller. All corporate functions, including finance, strategic planning, human resources, corporate affairs, and sustainability will also be consolidated at the FEMSA level. This consolidation will allow us to operate a leaner, more streamlined organization while achieving significant synergies and efficiencies. Another vital aspect of this restructuring relates to Spin and OXXO Mexico. Over the past five years, as we've developed the Spin value proposition, we've realized that the physical growth path of OXXO and the digital growth path of Spin converge rather than diverge. Digital enhances our stores rather than replaces them. And stores are not barriers to digital; they serve as its greatest competitive asset. As a result, we have redefined our ecosystem model to focus on OXXO Mexico, fostering greater alignment between Spin and OXXO. The approach is clear: one client, one strategy, and one aligned P&L. This means narrowing our focus and emphasizing Spin's role within the OXXO store network, such as delaying the application for a full banking license while we clarify the lending opportunity through the right partnerships. This deeper alignment between Spin and OXXO will allow us to blend digital and physical talent, capabilities, and operational styles to strengthen our omnichannel value proposition where payments, services, loyalty, and data are woven into the store experience, generating significant savings and efficiencies. Spin has already reduced its negative EBIT for 2025 by almost 30%, and we estimate further improvement of nearly 20% in 2026. Amid these strategic adjustments, I wish to recognize Juan Carlos Guillermety's leadership in fostering our digital capabilities essential for FEMSA. Under his guidance, our ecosystem has strengthened its value proposition, consolidated strategic partnerships, and defined our financial ambitions, laying the groundwork for this new integration phase. Juan Carlos will shift to an advisory role, and Rodrigo Garcia Jacques will take over leadership of Spin with a clear mandate: to solidify execution, ensure ongoing alignment with OXXO Mexico, and uphold operational discipline. We anticipate that the collective impact of these restructuring efforts, alongside the continued performance improvements from Spin, will positively affect our bottom line by about MXN 1 billion annually, mainly benefiting our corporate results. These efficiencies are expected to escalate through 2026 and realize their full impact in 2027 and beyond. Martin will delve into the specifics of these changes shortly. With that, I’ll turn it over to Martin for a detailed overview of the numbers.

Thank you, Jose Antonio. Good morning, everyone. Let me begin by walking you through FEMSA's consolidated financial results for the fourth quarter of 2025. During the fourth quarter, total revenues increased by 5.7% year-over-year, reflecting a combination of improved trends in Proximity Americas and continued growth outside of Mexico, particularly in Coca-Cola FEMSA and Valora. Operating income increased by 8.5% as cost containment initiatives offset gross margin pressure. These results reflect, for the most part, a recovery in the fourth quarter relative to the first three quarters. Net consolidated income for the quarter amounted to MXN 12.7 billion, representing a 33.6% increase compared to the fourth quarter of last year, driven mainly by an increase in income from operations of 8.5%, non-operating expenses that fell by 62.7%, and a decline of 26.6% in income taxes due to nonrecurring items, which were partially offset by MXN 830 million of foreign exchange loss from our U.S. dollar-denominated cash position compared to a gain of MXN 2.7 billion in the comparable period and lower interest income as a result of a reduced cash position during the period. Turning to our operating results, starting with Proximity Americas. During the fourth quarter, total revenues increased by 5.3% or 6.3% on a comparable basis, mostly driven by same-store sales growth in Mexico as well as top-line growth in OXXO Colombia and Peru. Gross margin stood at 48.1%, reflecting a 40 basis point expansion as a result of an improvement in OXXO LatAm, driven by increased scale and more disciplined commercial negotiations with suppliers. Operating income increased by 7.7%, while operating margin was 12%, reflecting the initial benefits of our overhead reduction and productivity initiatives, along with disciplined expense management, which allowed us to translate most of the gross margin expansion all the way to the operating level. During the quarter, Proximity Americas added 209 net new stores, closing the year with a total of 1,125 stores. At the same time, we have been prioritizing a rigorous evaluation of our entire store base. And as part of this process, we closed a number of underperforming stores in LatAm, particularly in Colombia. These actions allowed us to enter 2026 refocusing growth on profitability and strong unit economics at the store level. Moving on to OXXO USA. We ended the year with 50 converted stores under the OXXO banner. We continue to make progress in our foodservice strategy, expanding our hot food and coffee offerings as well as assortment expansion. All these initiatives are part of a learning process as we continue to refine the value proposition in the region. Finally, at Bara, we added 63 net new stores during the quarter and 157 during the full year, remaining on track with our long-term growth ambitions while continuing to optimize the discount offering. In Europe, Valora delivered revenue growth of 2.5% in pesos in the fourth quarter. Gross margin was 37.9%, and operating income increased by 10.8%, reflecting continued cost discipline and a favorable mix in Swiss retail while navigating a challenging macro environment in Germany and a softer performance in foodservice B2B. The decline in gross margin of 550 basis points is a result of the reclassification of full-year 2025 distribution expenses from SG&A to cost of sales, all in the fourth quarter. On a comparable year-over-year quarterly basis, the fourth quarter 2025 gross margin would have expanded by 70 basis points. There is no impact on operating income as a result of this reclassification. Moving to the Health division. Fourth quarter revenues increased by 4.6% or 6.7% on a comparable basis, driven by strong growth in Colombia and Ecuador, complemented by flat performance in Chile, while Mexico remained under pressure, primarily due to lower store base compared to last year, following the closure of underperforming locations as part of our restructuring efforts. Additionally, during the quarter, we reclassified the full-year 2025 distribution expenses from SG&A to cost of sales, all in the fourth quarter. This change was made purely for accounting presentation purposes to better align the classification of distribution costs with the nature of the expense. There is no impact on operating income because of this reclassification. However, as a mechanical effect of this change, gross margin was impacted by approximately MXN 1.8 billion, reflecting the proportional shift of those expenses into cost of sales. This is the full amount for the year 2025, which we are recording in the fourth quarter. If we only recorded the amount corresponding to the fourth quarter, the impact to gross margin would have been a reduction of 110 basis points relative to the comparable period. Additionally, during the fourth quarter, we reclassified certain administrative expenses into selling expenses for the full year. For comparability purposes, we suggest focusing on the sum of selling and administrative expenses. Operating income from the quarter was MXN 573 million with an operating margin of 2.5%, largely reflecting a deteriorating environment in the Colombian institutional business, where we took a charge of MXN 487 million for uncollectible accounts. Excluding this effect, operating income would have been MXN 1 billion with an operating margin of 4.6%. At OXXO GAS, same-station sales increased by 8.7% during the quarter, supported by higher wholesale volumes, which is allowing us to leverage our scale and optimize logistics. Operating margin stood at 4.8%, maintaining profitability levels compared to last year, reflecting disciplined cost management and operational efficiency. Turning briefly to Coca-Cola FEMSA. During the fourth quarter, the company delivered revenue growth of 2.9%, supported by growth across geographies, particularly outside Mexico. Operating income increased by 13.3%, reflecting continued focus on efficiency and disciplined execution. As always, we encourage you to refer to Coca-Cola FEMSA's earnings call for a more detailed discussion of the results. As Jose Antonio mentioned in his remarks, we continued advancing our restructuring process. The initial phase began late last year with the fit-for-purpose initiative, which was focused on OXXO Mexico and Health, and we expect to generate more than MXN 800 million on an annualized basis and has recently been put into place. We are now extending that discipline across Proximity and Health, FEMSA Corporate, and Spin, including the consolidation of overlapping structures between the Proximity and Health division and FEMSA Corporate and between OXXO Mexico and Spin to generate additional savings. These initiatives will generate approximately an additional MXN 1 billion on an annual run rate basis beginning in 2027, most of which will be reflected at the FEMSA corporate level. Due to the timing of the transition and the implementation of the new structure, we will not begin to see the full run rate benefit until the end of 2026. These efficiencies are primarily driven by headcount optimization, the simplification of the organizational structure, as well as improving results at Spin, supported by underlying business momentum and an organizational restructure in that business. Importantly, in the fourth quarter of 2025, we recorded provisions related to this restructuring process, which will temporarily offset a portion of the savings before the full benefits are reflected in our results. Before closing, let me briefly address capital allocation. During the fourth quarter, we deployed MXN 14.2 billion in CapEx, bringing full year CapEx to MXN 45.3 billion, focused primarily on store expansion, manufacturing, supply chain infrastructure, and strategic capabilities across the company. That said, full year CapEx came in below 2024 levels, mainly driven by three factors. First, in Mexico, a softer macro environment allowed us to prudently postpone certain capacity and infrastructure investments without compromising service levels or long-term growth plans. Second, as we just mentioned, we implemented a measured slowdown in expansion in selected markets, particularly in OXXO LatAm, where we prioritize profitability and unit economics over the pace of growth. Third, this outcome also reflects a renewed discipline in capital allocation, ensuring that every peso deployed meets our return thresholds and strategic priorities. On this point, we are increasingly linking expansion decisions to clear visibility on traffic recovery, margin sustainability, and cash generation. Importantly, none of these adjustments alter our long-term growth runway. Instead, they demonstrate our ability to be flexible on investment timing in response to market conditions while preserving financial strength and return discipline. In terms of shareholder remuneration, for the full year from March 2025 to March 2026, total capital returned to shareholders through ordinary and extraordinary dividends and share buybacks amounted to $3.1 billion at the exchange rates at the time of payment. Importantly, this past January, we completed the deployment of our extraordinary dividend for 2025, totaling $1.7 billion at the exchange rates at the time of payment. Regarding our previously announced $900 million share repurchase objective, we executed approximately $600 million with the remaining $300 million pending execution. This delay was primarily driven by blackout periods during most of the second half of last year, which limited our ability to execute buybacks. Consistent with the roadmap we presented a year ago, our plans from March 2026 to March 2027 include extraordinary returns of approximately $1.3 billion. Tomorrow, we will present our recommendation to the Board of Directors regarding both ordinary and extraordinary returns of capital, and we will communicate the Board's resolutions accordingly. We expect that by the end of this year, we will be slightly below our target of 2x net debt to EBITDA, excluding Coca-Cola FEMSA, which will require us to consider additional returns. However, given how close we will be to the target and the potential inorganic projects that we are currently evaluating, we want to retain the flexibility to execute on such projects or to announce extraordinary capital returns, including buybacks later this year. It goes without saying that the performance of our business this year will also inform any additional extraordinary decisions. As we look at the year that begins, we are confident in the resilience of our portfolio, the actions we have taken to unlock further value across each of our divisions, and our ability to continue executing with discipline. Our focus is clear: improving returns on capital, strengthening the fundamentals of our core businesses, and allocating capital thoughtfully to continue to create value for our shareholders. And with that, we can open the call for your questions.

Our first question comes from Thiago Bortoluci from Goldman Sachs.

Antonio, congrats for the results. Martin, thank you very much for your time. I have two questions here, right? The first one is on the balance between growth and profitability, particularly in OXXO Mexico, right? I remember last earnings call, Jose Antonio, you mentioned a number of initiatives to improve traffic and protect demand. Obviously, a lot of this has been already playing out. But still in this quarter, you had better gross margins and lower traffic at OXXO Mexico, right? So my question is, going forward, how ready do you think the assortment and the value proposition in Mexico is already set? And if there is any low-hanging fruit or any clear initiatives yet to be done, if you could help us just understanding particularly in which category that might come from? And then my second question, maybe for you both on the initiatives and restructurings, right? Obviously, we understand directionally what you're trying to do here. But just on the magnitude, right, this is relevant. Martin mentioned like MXN 800 million plus another MXN 1 billion from the fit for purpose and Spin. This is like almost 3% of your net income, right? So I think the question here is, what are those low-hanging fruits and how possible can these efficiencies exist in a company as efficient as FEMSA? Why hasn't this been done before? And what makes you confident that going forward, this could be fully executed on track? Those are the questions.

Thank you, Thiago, for your comprehensive questions. I'm glad to address them. First, regarding growth and profitability for the full year of 2025, I must say I was disappointed, although the second half of the year showed significant improvement. I'm pleased with the turnaround we've managed to achieve, but my primary focus is on attracting profitable traffic and increasing market share in our key consumer segments rather than just short-term profitability. The positive trend in the fourth quarter and the strong start to this year give me hope that this momentum will continue. Our focus isn't solely on profitability; rather, we currently cater to about 10% of the consumer occasions in a market that has vast potential. OXXO should remain a preferred choice for Mexican consumers not only in our main categories like impulse purchases, tobacco, beer, and soft drinks but also in other areas such as breakfast and coffee where we are present but not fully capitalizing on opportunities. While it's challenging to quantify this potential, I see significant room for margin growth with our core suppliers, much of which will need to be passed on to consumers to encourage them to shop profitably in our stores. A year with a decline in same-store sales traffic is unacceptable for us; we must increase traffic on a same-store sales basis, and we will remain dedicated to that goal. Now, regarding the second question, from the start of my tenure, we have focused on becoming leaner and more efficient, which we've accomplished in Health and OXXO Mexico. Recently, we've implemented efficiency measures in Spin and have finished similar initiatives with FEMSA. On a full-time equivalent basis, we feel we have reached our restructuring goals and have the right team in place. However, there are still chances for non-FTE restructuring as we evaluate every expense and eliminate anything we find unnecessary that does not contribute to increased store traffic. This includes scrutinizing every consultant and law firm we engage. While there are further opportunities mentioned by Martin, it's premature for me to provide specific numbers. Now, I’ll turn it over to Martin.

Yes. I mean, as to your broader question of this, why now? And look, I've been around the block a long time with different types of companies. This tends to happen like this in terms of waves. You go through phases where you're making best and you're expanding and you're building capabilities. And as you begin to see the results of that, you naturally prune. And with Jose arriving at the seat of the CEO, he wanted to give us a renewed focus on this issue that he had already started at Proximity. Also with his arrival and given that the structure we ultimately decided to implement, which was to collapse the P&H division with FEMSA Servicios, that also created a new opportunity that didn't exist before when we had decided to maintain that division. As to the figures and the numbers, it's just very important to note, there're two numbers. There's one that will tend to be reflected more in Proximity Americas, which has to do with the fit for purpose, which was announced and we discussed for the first time last year. And then that should be impacting in Proximity Americas generally throughout this year as it gets implemented and rolled out. And some of that also gets reflected in Salud because I also mentioned it was in Salud, so some of that will be seen in the overhead expenses of Salud. The part that is at FEMSA Corporate is a combination of two things. It's a combination of the reduction in costs. Definitely, there has been a net reduction in FTEs throughout the organization, particularly relating to the merger of P&H and FEMSA Corporate. Some of this has to do with Spin. So it will be reflected also at FEMSA Corporate because FEMSA Corporate is the one that consolidates the results of Spin. And in the case of Spin, it's not only a significant tightening of costs, which is directly related to the narrowing and focusing of the strategy and the ambition of Spin. As we mentioned on the call and in the press release, we're postponing the license. Premia will no longer be offered to third parties outside of the OXXO ecosystem and...

...the FEMSA ecosystem. And we've also narrowed some of our efforts on payment platforms in small mom-and-pop stores. Some of these things have been delayed or postponed for the foreseeable future until we have greater visibility about the payment platform in the store, the credit initiatives. So also part of what's included in that figure is our expectation that the losses at Spin should be coming down. because of all these cost reductions, but also because we expect the momentum of the business with this renewed focus and alignment to improve. Obviously, that is a sort of a view about what will be the improvement in the top line performance of Spin. So it's a little bit harder to rely on because it depends on a lot of external things going right as well.

Our next question comes from Ricardo Alves from Morgan Stanley.

My first question on OXXO. I think that another impressive performance on the gross margin. It's great to see that. In our conversations, we've seen some people more concerned about financial services in the long term. So I wanted to think about your gross margin performance and financial services in taking advantage of all these long-term strategic initiatives. I wanted to think about that in the long term. Are there main initiatives that you're already working for 2026 as we speak to kind of defend your position and to remain relevant? The two main components of the gross margin that we always discuss, commercial income and financial services, I think that commercial income is easier for us to understand given your physical presence, given the World Cup this year, etc. But—so perhaps my question is more directed to your strategy around cash in and cash out. We've been talking about remittances for the past couple of quarters. So an update here would be great. And then I’ll ask my second question later.

Commercial income is still in its early stages and growing, representing a significant source of growth. We are just beginning to explore the potential of retail media and other commercial income initiatives. In terms of financial services, it is also experiencing growth, particularly in traffic. When you combine factors like cell phone top-ups, we see this driving growth and increasing traffic at same-store sales levels. The addition of Banorte to our network has significantly contributed to this growth. There is a clear consumer demand for payments, and the ability to use the OXXO network as an ATM remains relevant and will likely continue to be for the foreseeable future. Long-term, there is still great potential in the remittance space, and we are actively installing cash machines in more locations. This presents a substantial opportunity for us to capture market share in remittances. Over time, as people shift more towards digital solutions, some services will decline, like cell phone top-ups moving towards digital payments. Spin plays a crucial role in this transition within OXXO, and we made the decision to integrate it back into the OXXO ecosystem. Spin is an impressive fintech, but we haven't maximized its potential as a tool to drive store visits. The real value of Spin lies in combining its fintech capabilities with OXXO's advantages. However, there are many features of Spin that we have not effectively promoted, such as using a Spin QR code to make payments or send money to others, which can then be conveniently picked up at an OXXO store. We believe that combining a digital application with a physical network of over 25,000 stores will unlock many opportunities. We have several initiatives in the pipeline, such as working with e-commerce players, and I believe we are only beginning to explore the services that will replace those moving entirely to digital. I'm optimistic that the pace of change will allow us to adapt successfully in the long term, though there will be challenges along the way. Does that address your question, Ricardo?

It does. Should I ask my follow-up now or return to the question queue?

Yes. Please go ahead.

Yes. Yes. The other one is probably for Martin. I think that a helpful summary, Martin, that you gave on shareholder distribution, strong year in 2025. Congrats on the execution there. As we're thinking about 2026, however, we've run a couple of sensitivities and we get easily to a potential excess cash beyond $3 billion. I'm not saying that this is the number that FEMSA is going to be distributing to shareholders, but it seems to us that the excess cash balance by the end of this year could be significantly higher unless some of the basic assumptions that we saw in 2024 and 2025 could have changed. For instance, I don't know if maybe the potential ticket for M&A is higher than before or maybe if the 2x target of leverage, maybe if we stay below 1.5, 1.7, that would be okay in the longer term. So I just wanted to provoke you a little bit more here. We seem—it seems to us that the excess cash position could be significantly higher. So I just wanted to hear your thoughts on that.

Sure. I mean without trying to understand your number on this call in real time, which would probably not be prudent or helpful, I would remind you that given the extraordinary $1.3 billion that we've already committed to distribute, the $300 million in buybacks—and let's just assume the Board approves, which I don't think is a difficult assumption to make, that the dividend—ordinary dividend will be consistent with what we paid last year. We're talking about easily $2.4 billion, $2.5 billion being paid out this year, March to March. That's nothing else happening. So if for some reason, we do spectacularly—so my estimate of excess cash is less than yours. And number two, if for any reason, it is what I expect and/or even better than I expect, and we will reserve the right during the year to do more buybacks, announce another extraordinary dividend. So we're not foreclosing the possibility. It just seems given how close I expect to get to the 2x net debt to EBITDA that now we're just really, to be honest, playing with some decimal book points as opposed to—and I don't need to be that precise because I have the flexibility and the company has the flexibility during the year to buy back more shares or call a special meeting—shareholders' meeting and declare another extraordinary dividend. But I'd be happy offline to talk through numbers and try to understand where your $3 billion comes from.

Our next question comes from Rodrigo Alcantara from UBS.

Congratulations on the results. So two questions. The first one on the fit for purpose, amazing what you are doing there. Just for the sake of the conversation, I know that you of course have been in the road talking to investors. And as a frequent answer that you have—a frequent question that you have received is in relation on how KOF fits into this new structure that you are envisaging. So my question is precisely to hear from you now in the call like what you are answering when you receive this question about KOF within this fit for purpose. And my other question would be, very quickly, do you have any early comments on the unfortunate events that we have seen in terms of security arising from what happened two days ago in Jalisco, right? We have seen some news flow there about x number of stores being affected. So any commentary on that would be helpful.

Thank you, Rodrigo. These are, as you say, very relevant questions. The first one being a very frequent one. The second one, I hope it's not—it's never asked again. But on the Coca-Cola FEMSA side, as you know, we are always evaluating possibilities for all of our businesses. And we do not see ourselves as a conglomerate. We are very focused on what we bring value. We love these two—our businesses, our main businesses where we are, and we see huge future ahead of them. And we've proven to you guys that we are pragmatic. We are a 135-year-old company or that we started with beer. And we don't—other than the huge amounts of beer we sell from many brewers in OXXO, we are not into beer anymore, and we will remain ourselves very pragmatic going forward. If these two companies, Coca-Cola FEMSA and Proximity or retail were two separate companies, would you consider merging them? The answer is absolutely no. Now the possibilities of separating has a lot of implications, a lot of things that we're going through, a lot of analysis that has gone through our minds. So I would let the comments there. For now, the structure that we have works great for us. And if something changes, we would address it at the appropriate level. On the second thing, Rodrigo, obviously, it was a very sudden and unfortunate event in the last couple of days. I do want to take a minute first to recognize the heroic and incredible work done by many of our employees and frankly, customers. We've received dozens of videos, comments, memories of people filming, protecting our stores, protecting our collaborators. We have a heroic employee that basically tried to put her life at risk to save one of the stores. I just want to say, first, no customer at all was even injured during these disruptions by organized crime. Our employees suffered minor injuries. All of them are out of danger. And I was incredibly moved and touched by the amount of customers and employees that through themselves to save some of the stores that we were in danger. On the grand scheme of things, we were not as harmed as much. We had to close for one day up to 6,000 of our stores. Yes, precautionary—but a day after, we had opened over 90% of them. And today, only about 300 stores remain closed. If you look at the amount of damage that the country received, it's—I mean, we had about 200 stores with some level of affection. It could be a loading, or all the way to a store burned. But I would say most of those stores in a week or so will be up and running. But the fact is that we are everywhere. We are in every town in Mexico. We are—and so it's not that we haven't seen anything against us. It's just that given that we are all over the place, we tend to be the first ones targeted, but there were other supermarkets, other convenience stores, other pharmacy chains affected. It's just that we tend to get the most coverage. I also do want to recognize the incredible closeness and collaboration with the security personnel, Army officers, Guardia Nacional; the authorities have been incredibly close to us and helpful in monitoring the situation and giving us feedback, and we've been able to give feedback. So I am very impressed by the security authorities, both Army, Marines, and Guardia Nacional, and the response has been tremendous. So I was also very thankful for that incredible back-to-normal that came quickly. So I really hope these things don't happen again. And we have protocols in place that have made my team very proud of how we were able to respond and have no incidents on customers and some minor injuries on employees that are out of danger. Thankfully for addressing that question and thanks for letting me give these comments.

Our next question comes from Alvaro Garcia from BTG Pactual.

I have two questions. The first one on the restructuring. Martin, I know you've run through it. I just kind of wanted to walk through the numbers. In the past, you've mentioned a cash burn at the corporate level of almost $200 million, a cash burn at the Spin level of around $150 million. So—and then today, you mentioned the MXN 1 billion and the MXN 800 million. So I was wondering if you could just clarify if it's MXN 1 billion—if it's MXN 1 billion plus MXN 800 million. I know some of that might be at Proximity Americas. But I guess at the corporate level specifically, how should we think of what used to be that cash burn? What might that look like on a pro forma basis into 2027? That would be very helpful. And then will Spin formally be merged into OXXO? I know that has relevant sort of fiscal implications. So that's my first question. And then I have a very, very quick follow-up, which I can ask after very quickly.

Sure. Spin will not be merged into OXXO. There will be activities that were undertaken at OXXO and Spin that will be centralized in one of the two businesses. But Spin will remain as a separate distinct operating unit with its own budget, its own routines for management, and its own support functions in order to ideally protect the unique capabilities that have been built around that business. Number two, as to the cash burn of Spin, in effect, there are—the way we account for the cash burn of Spin is in a very conservative fashion. So that $200 million figure coming down to $150 million is a figure, which is Spin stand-alone. And what does that mean? Given our—the transfer pricing rules and allocation of revenues and so on, there is a formula pursuant to which Spin has to share the revenues that are generated from certain service offerings that Spin provides that use the store. And it has to pay for certain services that are executed in the store by the store employee. So that number, just to put it in its context, is a very conservative way of measuring the cash burn of Spin on a stand-alone basis. On an ecosystem basis, it's significantly lower than that. And I'll give you a prime example. Spin by OXXO generates a cash burn at Spin. But when you look at the ecosystem of all the payments that are executed in the store through Spin by OXXO, which arguably might never be executed had not Spin by OXXO existed. When you look at it, that business, for example, is breakeven, is easily breakeven. We do expect that cash burn to decline. So from the $200 million to $250 million, you should continue to see it come down. Some of this will be difficult to account because when you see it in others, there will be eliminations, accounting eliminations, which will counteract some of the effects. And we will do everything we can to give visibility and transparency on this as we progress throughout the year, and you ask us the follow-up question, how we're undergoing on this. And yes, the two figures are complementary of each other. In other words, there are some. There's MXN 800 million at P&H—I'm sorry, Proximity Americas, which relates primarily to OXXO Mexico, but also includes—and I should have been maybe a little bit clearer, it does include an amount for Salud, which is basically cost reductions across the businesses, but very focused on overhead, but it also included savings within the operations. And the MXN 1 billion refers primarily to savings at FEMSA Servicios, FEMSA Corporate from the collapse of the two structures, P&H division and FEMSA Servicios. It also includes the momentum we expect from Spin at its top line. It includes also significant savings at Spin from the narrowing and focusing of our ambition.

Our next question comes from Hector Maya from Scotiabank.

Congrats on the results. Jose Antonio, Martin, I just wanted to understand from the excess cash right now and the planned deployments, the cash deployments, about $1.5 billion might be set aside still for M&A, correct? And on this, how has the appetite for M&A changed in the U.S.? I mean, has it changed a bit due to political uncertainty or the current immigration policies may be affecting traffic in states close to the Mexican border? And on the ongoing work to adapt the value proposition in the U.S., how long do you think you would still need to reach a point in which you feel comfortable enough to now go on a more aggressive growth path by organic expansion or more M&A in the U.S.?

I will address it briefly and I'll let Martin and Juan complement. Thank you, Hector. So we are not saving that money exclusively for inorganic M&A. I think Martin expressed it very well. We want to be—we are evaluating a lot of opportunities throughout FEMSA. Not all of them are inorganic M&A. There are other things. And all those things are put into the equation, and we want to be cautious before we pronounce whether we give this cash in either buybacks or other opportunities to even considering another extraordinary dividend. So it's not exclusively that we are hunting for inorganic M&A. Having said that, we have a lot of things coming our way, some of them in the U.S. for convenience stores. But to be honest, none, we have been surprised by the expectations of the sellers, and we want to be very cautious. We are not concerned about traffic in the Texas region for immigration or stuff. We have a very long-term view for the U.S. The U.S. still has a long way to go to consolidate. And we are learning a lot from our little operation in Texas. We're getting more and more relevant in the El Paso region. We want to be the winners and win share and gain the confidence of the El Paso one, the Midland citizen, the Odessa. So that's where we're concentrated. When we see we can gain share against the QuickTrips and the other local players, we will become more aggressive in growing our footprint. We are already—we bought a couple of stores here and there in El Paso, and we're very happy with that. So we're looking more at tuck-ins, small chains, the bigger chains. I'm very surprised about their expectations for multiples that are outrageous. Some of it has to do that everyone wants to think that they're the next Casey's. And to be honest, not all of them deserve those valuations. But credit to Casey's that they've done a tremendous job. But no, we have a long-term view, and we're still looking at opportunities in the U.S., but we're being very cautious with our returns.

Yes. I mean very little to add. We have—our interest has not diminished. It's been—we have been unable to find an entry point with the right risk reward in a reasonable period of time that made us willing to pull the trigger. So as we have said, the entry into the United States is a function of finding the right opportunity. It's not an unconditional need that we have. It has to be based on being able to find value-creating opportunities.

Our next question comes from Renata Cabral from Citi.

I have two follow-ups here, one on Brazil and Bara. My question is, are Brazil and Bara already seen as scalable platforms? I know it was already discussed here as a great opportunities. But just to understand from your view today that's durable—there's durable economics or they are seeing a proof of concept in terms of the proposition that they can offer to the clients compared to OXXO, obviously, already consolidated and very clear for everyone. And in terms of capital allocation, timing allocation, especially, we are seeing the company much focused on the strategy. Now you have just discussed about the Health business that the company are working towards that. So we see the company much more focused, and we discussed it here 3 and more really important opportunities such as opportunities to grow in the U.S., Brazil, Bara. We have a top two that maybe in the next five years, you see more opportunity than the others. If you can shed some light qualitatively, I would really appreciate.

I got your question on Bara and OXXO Brazil very clearly, and I'm happy to add some comments, but I didn't understand very well the second question. Can you repeat it? Renata?

Sure. Yes. In terms of the big opportunities that we already discussed it here in the call, for instance, Bara, OXXO, expansion in the U.S. Can we have one of them should be bigger in the next five years? Or the company today is allocating more time in which of those initiatives?

Okay. Okay. I think I get it. Okay. obviously, Bara and Brazil are—our obsession is OXXO Mexico and Coca-Cola FEMSA Mexico. Those are the motors and have huge growth opportunities that are our priorities. Then what keeps me very excited and frankly, come with a smile to work every day is OXXO Brazil and Bara. OXXO—Bara is much more advanced in readiness to hyperscale. We've been tailoring the value proposition for the last probably five years. And today, we have a value proposition that we love; we are happy. We opened a distribution center in Monterrey, and we are ready for hyperscaling. And in Mexico is where it's easier to transfer capabilities of hyper growth. So you should expect a faster growth in unit numbers in Bara than in OXXO Brazil. OXXO Brazil first is a Sao Paulo bet. It still has a lot of room to cover in Sao Paulo. And we've focused much more on quality versus quantity. So we are ready to open about 100 stores in 2026. That is a low number to what we would love to, but we much rather mature the right processes in place, the category management in place, the commercial income capabilities in place, the categories that really are going to move the needle and the process control that would allow us for OXXO Brazil to become a very valuable bet. If you do the DCF type of OXXO Brazil growing around 100 stores a year versus growing 1,000 stores a year moves exponentially the value of OXXO Brazil going forward. So 100 stores a year is not enough for us to call OXXO Brazil the second wave of FEMSA. But we're working hard on solving the operational things that we need to solve so that OXXO Brazil can grow at, I don't know if 1,000, but a store a day. That's still a few years down the line. So I think it's behind us. In terms of other bets, I think we have our plate full with OXXO Mexico, OXXO Brazil. But I would say we are incredibly surprised, and I don't want to scare you guys, but we're incredibly surprised about what we are beginning to see as opportunities for growth in Europe, mostly organic. But it's Europe—the management team in Europe has done a tremendous job in getting more value. And we are still in very early stages of OXXO USA. And we think—I think we shouldn't call it OXXO USA. We should call it OXXO Texas, New Mexico and that region, and we see huge opportunities for growth there as soon as we are able to refine our value proposition. That's where we are right now. I think those things are further down the road and not in the near future.

Yes, I would add to what Jose just said. I mean if you just look at the numbers that we provided you in this call about how many stores we're going to be opening this year. Obviously, this is just one year, and it doesn't speak too much about the future. But we said for Bara, we are aspiring to grow it by 1/3 in 2026. For OXXO Brazil, we spoke about 15%. OXXO Mexico is less than 5%, right? Obviously, this has to do with how big the base already is, but it also has to do with how—what is our conviction about the value proposition and how many incremental tweaks we need to make. I do think that in Brazil, it feels like we've been in Brazil for just a little bit of time compared to how long we've been working on Bara. Never mind how long we've been working on OXXO, right? So there's nothing magical about this. It's—you just get to the point where you step on the gas at different points in time. But also to Jose's earlier comments where you begin to think about eventually thousands of stores in a way that is actually somewhat literal as opposed to just hypotheticals.

Our next question comes from Ulises Argote from Santander.

And all the details that you have shared this has been extremely helpful. So Jose, I actually had one for you and kind of taking advantage there as you kind of ramp up into the CEO chair. But on your opening remarks, you said you were not satisfied with the results that we saw in the year, right? I know there's always room to grow and always room to improve. But if we are here one year from now and specifically maybe 2 or 3 key things, but what has to change from where the company is today for you to start next year's remarks saying you see a successful 2026 in the books?

Great question, Ulises. I would love to see hitting our top line growth of mid-single digits in OXXO with profitable traffic growth in same-store sales, at least—I mean, for me, at least same-store sales growth in traffic, which is a tough, tough challenge because we have IEPS in soft drinks or taxes in soft drinks, added taxes in tobacco, the beer category with some struggles. But with the World Cup, with all of that we are doing with food, with all that we're doing in affordability and coffee, I should—for me, success should mean same-store sales growth in the OXXO Mexico level. That should be added with market share growth. And then obviously, I would love to see Colombia in an—at least EBIT breakeven and then Brazil hitting its targets of getting closer to a nice gross margin, opening 100 net new stores successfully. To me, that's what I would qualify as success. Europe should give us another strong year more because of efficiencies that they're still pulling out of the business, hopefully, with a couple of interesting deals that we're looking at partnering with some service stations. And then Coca-Cola FEMSA taking advantage of the World Cup and being able to transfer most of the price of the IEPS without any share loss gains, even with some gains in share and then gaining ROIC. All of them should be able to be gaining return on invested capital. Finally, if we are able to open a store a day in Bara, 1 store a day in Bara profitably, I will celebrate with champagne. That's success for me next year—I mean, this year, sorry.

Amazing. That's great to hear and super clear. And if you reach that Bara per day target, I'll send you the champagne myself, Jose.

Our next question comes from Henrique Brustolin from Bradesco BBI.

Jose Antonio, I wanted to circle back to your comments on OXXO Mexico about the opportunities you have for the new consumption occasions, right, or the large opportunity you see in breakfast, coffee, daily replenishment, which you're already present. But as you mentioned, you can effectively start to play to win on them. I just wanted to hear a little more what needs to change operationally in terms of assortment, pricing, or even store execution for this to start to gain more traction? And how do you see the transition in terms of timing and implementing all these initiatives taking place to reflect on the performance of OXXO stores in Mexico? That would be my question.

Great. Just to be clear—thank you, Henrique. But just to be clear, on regards to food or in general?

The question was in general, if there is anything specific that you can move the needle more or you are more focused at, it would be great to hear as well. But it was a category on food and the daily replenishment that you mentioned you can play to win.

Yes. So we've tried everything—I mean, we've really tried a lot of things on food over our history. And it always has been a struggle because of the huge level of complexity that it brought into the OXXO store. And we were able to simplify complexity first when we did this partnership with Caffenio and we brought the coffee, these Japanese thermos that were a huge advantage and simplified the store operations many years. Now we're moving beyond that towards automated coffee machines. I just—we all just came from a trip to Japan, and now our coffee machines look like 10-year-old coffee machines. So it's impressive how the coffee store infrastructure has evolved in developed markets. There's huge potential for us to bring coffee into our stores. Just to give you an example or just to give you some thoughts—some guidance on coffee. We sell about 28 cups per store per day in Mexico. Japan's convenience stores sell over 100. Colombian stores, which, by the way, Colombia and Mexico have similar per capita on coffee, are about 90 coffee per day per store. So we have a long way to go in becoming—and we have very good coffee. It's 100% Mexican coffee from Hidalgo, Oaxaca, and from Veracruz. And I think we need to really win the narrative on why the best coffee to start your morning is the coffee at OXXO. It's high quality. It's really affordable at a very convenient price, and we're considering even lowering the price. Now people do not go to OXXO just for the coffee; they want a good feeling hot breakfast option, and we are trying many different things, but we haven't delivered something that we can turn it into national. We are looking at this hero product, and we're trying a few things. But I think that also brings a lot of complexity to the store. How do you bring freshly baked products with some protein on it to start your morning in a fulfilling way? We are doing incredibly well in Colombia, where over 25% of our revenue is full. In Brazil, it's almost 20%. In Mexico, we have a long way to go to get to those numbers. But I am continuously impressed by what the OXXO team is bringing to the table in terms of evolution. And then we're also trying a lot of little things like that pizza program in Monterrey, which has been a huge success. I don't know if it's going to scale so much, but it's incredibly successful. The batch things we're trying. So I think there's a lot of things to develop on that. That will be just part of the story. The other one is we need to be more competitive on daily replenishment. And we need to continue to gain share in our impulse categories. So a lot of things moving on, but I think if we are able to win on the breakfast occasion and start moving the needle on daily replenishment, we should have a strong 2026.

This does conclude the Q&A section. At this time, I would like to turn the floor back to Mr. Juan Fonseca for any closing remarks. Thanks, everyone, for attending today. Obviously, you know what to find us. The IR team is always around to double-click on questions that maybe were not raised during the call. Thanks, and have a great rest of the week.

Thank you, everyone.

Thank you. This does conclude today's presentation. You may disconnect now, and have a nice day.