Hello, and welcome to the FEMSA First Quarter 2026 Conference Call. My name is Sophia, and I'll 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.

Good morning, everyone, and welcome to FEMSA's First Quarter 2026 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 the quarter's performance and trends, followed by Martin, who will provide more granular details on the results. Finally, we will open the call for your questions. Jose Antonio, please go ahead.

Thank you, Juan. Good morning, everyone. Before we get into the numbers, we should talk a bit about the changes we have made to improve our disclosure. As you saw in our release, we are now reporting OXXO Mexico on its own, given how important its performance and trajectory continue to be for our investors and analysts. At the same time, we are reporting a new segment, Americas & Mobility, which comprises our OXXO operations outside of Mexico as well as our fuel business in those markets where we participate in fuel, namely Mexico and the United States. This new segment contains some of our fastest-growing operations. So hopefully, it will allow you to track our progress as we work to gradually capture the growth opportunity in places like Brazil and Colombia. These are the main changes to our reporting segments with Europe, Health and Coca-Cola FEMSA remaining as they were. Moving on to the quarter results. Most of our operations delivered a strong performance, and the first highlight is the continued recovery at OXXO Mexico. Building on the positive trends we first saw during the final quarter of last year, OXXO delivered 8.3% revenue growth driven by same-store sales that beat the industry despite the disruptions in late February that led to many store closures, a few of which remain today. In particular, we saw revenue growth in the tobacco and soft drink categories, reflecting the pass-through effect from the application of new excise taxes. But we also saw positive revenue dynamics in almost all other categories, except snacks, sweets and alternative beverage. We believe that these revenue trends reflected our continued focus on affordability through promotional activity and price package initiatives, which in turn helped drive improvements in traffic. Beyond the top line, however, the team also delivered gross margin expansion through continued cooperation with our suppliers, increases in distribution income and warehouse cost savings. On the selling expense front, OXXO Mexico achieved selling expense containment with growth in line with expansion plus inflation. This reflects the impact of our efforts to increase efficiency. As a result of all these factors, operating income growth was well into the double digits. Just as relevant as the growth in numbers themselves, in a consumer environment that remains challenging, we believe we have continued to gain market share in recent months against the traditional trade, while bigger box retailers were stable as a whole. However, as encouraging as these results are, we recognize there is still work to do. Average traffic remained slightly negative during the quarter, but improved significantly versus the declines we faced last year, reflecting clear progress and the early benefits of our commercial initiatives. While we are encouraged by this trajectory, we are not being complacent and remain firmly focused on continuing to improve traffic. As we mentioned on our last call, we aspire to restore OXXO Mexico sustained growth and relevance through a clear focus on recovering traffic and further improving same-store sales by sharpening our value proposition and enhancing the customer experience while delivering strong operational execution. Next, I would like to talk a little about Americas & Mobility. During the first quarter, the business delivered strong growth across most of its income statement. We should note that this segment includes 2 months of the recently consolidated operations of OXXO Brazil, and therefore, the comparable column is particularly useful to understand the rest of the segment's year-on-year growth. Here, we are especially proud of the same-store sales growth in LatAm ex Brazil of more than 20% in local currency, a very encouraging sign of OXXO's on-the-ground momentum in Colombia, Chile and Peru. For each part, Brazil posted same-store sales growth of 6.9% in local currency, reflecting continued progress in strengthening the value proposition, while the U.S. business delivered same-store sales growth of 1.7% in local currency. In terms of store expansion, growth was moderate on a last 12-month basis. In Colombia, this reflected our decision to prioritize operational improvements and strengthen key capabilities to support a stronger pace of expansion starting this year. While in Brazil, expansion was impacted during most of 2025 by our focus on unwinding our joint venture. Looking ahead, this is a segment that should gradually improve its profitability as it gains scale, strengthens operating leverage and continues to mature across markets. With our updated reporting structure, you will now be able to monitor that progress more closely on a regular basis. Since we're discussing some of our fast growers, we should also mention Bara and the fact that during the first quarter, it increased its same-store sales by double digits, driven equally by traffic and ticket, while opening 38 net new stores and reaching almost 30% of private label in its revenue mix. All in all, a solid quarter for Bara. In Europe, Valora again delivered strong growth in operating income even as they continue to face soft traffic trends, particularly outside the core Swiss retail and foodservice business. For its part, the Coca-Cola FEMSA team remains focused on executing its playbook of strengthening affordability, expanding refillable to defend household penetration and continuing to deploy state-of-the-art digital tools and revenue growth management initiatives, particularly important in Mexico, where softer consumer demand has been further pressured by this year's excise tax increase. On the other side of the ledger, our Health operations again delivered a lackluster set of results. Top line was driven by Colombia retail, Chile and Ecuador in local currency with revenue growth and market share gains. However, results were pressured by soft margins in Chile, reflecting an unfavorable product mix shift towards lower-margin pharma products such as GLP-1 treatments and by continued losses in Mexico. Let me also discuss recent developments on our institutional business in Colombia. As you know, our health business in Colombia includes a significant institutional segment in which we distribute medicine and provide highly specialized medical services on behalf of private health care providers, intermediaries known as EPS. The institutional component represents a bit more than half of our business in Colombia, although it has been growing much more slowly than our retail business and is significantly less profitable. In recent years, this part of the business has become increasingly challenging due to funding gaps, which have impeded the ability of such EPS to reimburse their service suppliers, including us. Accordingly, we have been gradually reducing our exposure, although our total outstanding receivables to the EPS have continued to grow. As part of our strategy to reduce exposure at the beginning of April, we notified EPS Sanitas, our largest counterparty in this channel by a significant margin, that we will not renew our agreement upon its expiration in September. The current environment in the Colombian health care system would result in the insolvency of certain EPS, thus creating a credit risk for us with regards to such receivables. We will continue to actively manage this exposure, remain disciplined in our capital allocation and keep the market informed of any relevant developments as we continue to prioritize our retail drugstore business, which has stronger profitability, cash generation and more attractive long-term returns. Finally, Spin had a good quarter. Today, Spin by OXXO sits at the center of the digital consumer evolution in Mexico with 11 million active users and more than 100 million monthly transactions. Spin is already one of the fastest-growing participants in e-wallet and peer-to-peer transfers across fintechs. As we mentioned on our last call, Spin is focusing on becoming a structurally omnichannel platform, aiming to amplify OXXO's ability to solve and serve daily consumption needs and occasions for the Mexican consumer and change how they experience convenience in their daily lives. Before turning the call over to Martin, I would like to reflect on some of the changes we have made in our organization during these first few months. The work has been intense and challenging, but having the right team in place is fundamental to our long-term success. At this point, we have finished almost all of the organizational changes we need to make. We completed the combination of the overhead structures of FEMSA Corporate and the Proximity & Health divisions, including the top reductions in headcount required by this new structure. For its part, OXXO Mexico has a renewed senior leadership team that brings additional capabilities and the revamped team at Spin now has a more aligned reporting line with OXXO Mexico to ensure maximum alignment. We still have some work to do to review our corporate non-FTE expenses, but I believe we have assembled a strong world-class team that will help me lead this extraordinary company through the next stage of growth. I want to take this opportunity to thank everyone on our team at every level for continuing to deliver a top-notch performance even as we made meaningful adjustments to the lineup. And with that, let me turn it over to Martin to go over the numbers in more detail.

Thank you, Jose Antonio. Good morning, everyone, and thank you for joining us today. As Jose Antonio mentioned, starting in the quarter, we are reporting under new segment structure, OXXO Mexico, Americas & Mobility, Europe, Health and Coca-Cola FEMSA. We have included the comparable base numbers for the first quarter of 2025. Among other benefits, we believe this structure will make it easier for you to track and monitor operations that are in different stages of development and evolution. Let me begin with FEMSA's consolidated financial results for the first quarter of 2026. Total revenues increased 6.1% year-over-year, while operating income grew 5.5%, reflecting the continued recovery in OXXO Mexico, contributions from our international operations and the early benefits of our cost restructuring initiatives, but offset by currency headwinds due to a stronger peso and the softer performance of Health and Coca-Cola. On a comparable and currency-neutral basis, total revenues and operating income grew 8.5% and 12.1%, respectively. Net consolidated income amounted to 17.6 billion Chilean peso, representing an increase of 97.3% compared to the first quarter of 2025. This increase was driven by a one-time non-cash accounting gain related to the BradyPLUS and Imperial Dade combination. Eliminating this noncash gain, net consolidated income would have been 5.7 billion pesos or a decline of 36.4% year-over-year. This decline was mainly explained by higher net financing expenses, reflecting: one, a foreign exchange loss compared to a gain in 2025, representing a swing of 883 million pesos, driven by the appreciation of the Mexican peso against the U.S. dollar-denominated cash positions; two, an expense of 189 million pesos related to financial instruments compared to a gain of 1.1 billion last year for the favorable valuation of the convertible bond associated with Heineken shares; and three, lower interest income as a result of a lower cash position and lower interest rates. Additionally, income from discontinued operations contributed 2.5 billion in the first quarter of last year, but not this year. The effective tax rate for the quarter was 17.1%, including the impact of the one-time accounting gain relating to our investment in BradyPLUS. The gain was recognized as part of a share exchange transaction that for accounting purposes, required fair value recognition similar to a sale, resulting in a book gain with no current tax effect. Excluding this noncash item, the effective tax rate would have been 37.9%. The difference between the statutory corporate tax rate of 30% and our effective tax rate of 37.9% is mainly explained by certain nondeductible items, including labor-related expenses in OXXO Mexico as well as losses at Spin that while diminishing currently do not generate a tax yield. We expect these losses to decline beginning next quarter. Turning to our operating results. OXXO Mexico delivered total revenue growth of 8.3%, driven by same-store sales growth of 6% and continued net new store additions of 158 units during the quarter. Gross margin was 46.2%, expanding 140 basis points year-over-year, reflecting solid income from key suppliers and the resilient performance of financial services. Selling expenses grew in line with store expansion plus inflation despite a double-digit growth in labor costs, reflecting our multiple initiatives to contain costs and drive efficiencies. Administrative expenses increased by 13.9% to represent 2.9% of revenues, driven by a change in the phasing of provisions for year-end bonuses and profit sharing that in the past were more heavily provisioned later in the year and greater expected bonuses and profit sharing due to projected better financial performance this year. As a result, operating income grew 20.9% with operating margin expanding 80 basis points to 7.6%. The Americas & Mobility segment delivered total revenues of 25 billion pesos, increasing 12.9% or 10.5% on a comparable and currency-neutral basis. The segment's top line benefited from strong performance across OXXO LatAm, which saw average weighted currency-neutral same-store sales growth of 13.1% in Chile, Peru and Colombia and the consolidation of OXXO Brazil. Gross margin of merchandise was stable at 31.8% of revenues, while in the fuel division, it increased 120 basis points to 13%, driven by a more favorable sales mix with the higher retail volumes in OXXO Gas relative to wholesale, which carried higher margins, together with the benefit of higher fuel prices and improved CPG margins in the U.S., partially offset by lower volumes in the U.S. Operating income was 281 million pesos with an operating margin of 1.1%, which represented an increase of more than 100% on a comparable basis, excluding currency translations and the consolidation of OXXO Brazil. The operating margin reflects the recent consolidation of OXXO Brazil, which generates an operating loss at this stage, partially offset by strong fuel performance and narrowing losses across the remainder of OXXO LatAm. Our operations in Europe reported total revenues of 12.9 billion pesos, stable in peso terms or up 1.5% on a currency-neutral basis as the start of the year was characterized by a solid Swiss retail and foodservice business, offset by a weak German retail and foodservice business, resulting from soft traffic across our consumer formats that improved during the month of March. We continue to see a weak B2B segment, driven by strong competition, and we have taken measures, including bringing in a new sales team to help us reignite growth in this business. Gross profit decreased by 1.3% with a gross margin of 41.5%, resulting from the reclassification of distribution expenses from SG&A to cost of sales. On a comparable basis, the gross margin would have expanded by 90 basis points. There is no impact on operating income from this reclassification. Operating income was 356 million pesos, a solid increase of 7.4% year-on-year, driven by strong cost containment, offsetting the weak top line growth. Operating margin was 2.8%, reflecting continued cost discipline against the volatile macro environment. For its part, the Health division delivered total revenues of 22.2 billion pesos, growing 0.9% year-over-year or 6.5% on a currency-neutral basis. On a same-store sales basis, performance was positive across Colombia, Ecuador and Chile in local currency, while Mexico continued to face headwinds. During the quarter and consistent with the adjustments made last quarter, we reclassified certain distribution expenses from SG&A to cost of sales. This change was made purely for accounting presentation purposes to better align the classification of distribution costs with the nature of the expense. As with Valora, 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 666 million pesos, reflecting the proportional shift of these expenses into cost of sales. Gross profit decreased by 10% with a gross margin of 26.2%. On a comparable basis, the first quarter gross margin would have declined by 20 basis points. Operating income reached 657 million pesos, a decline of 14.9% and 4.9% on a comparable basis with an operating margin of 3%. This result was supported by strong growth in Colombia and Ecuador, which was more than offset by a decline in Chile and continued losses in Mexico. For its part, Coca-Cola FEMSA delivered revenue growth of 1.1% and a decline in operating income of 2.3%. And on a comparable basis, revenue grew 6.3% and operating income also grew 2.1%, reflecting the benefits of its diversified geographic footprint as international operations offset a more challenging result in Mexico. Portfolio initiatives, strong marketplace execution and digital capabilities continue to support market share gains, while disciplined cost and expense management helped sustain stable consolidated margins. As always, we encourage you to listen to the earnings call posted yesterday. Before closing, let me briefly update you on capital allocation. In the first quarter, we deployed 6.2 billion pesos in CapEx, representing approximately 3% of total revenues and 29.5% lower than last year, primarily reflecting a slower start of the year in OXXO Mexico store openings and a conservative approach to capacity-related investments at cost. We expect CapEx deployment to accelerate through the remainder of the year, trending towards our more typical CapEx to sales ratio of approximately 5% to 6%. Our approach remains disciplined, linking investment decisions across markets to clear visibility on same-store sales and demand trends, margin evolution and cash generation. With respect to shareholder returns, in our recent Annual General Meeting of Shareholders, we voted to deploy 15.2 billion pesos in ordinary dividends between March 2026 and March 2027, an increase per share of 4.5% versus last year. In addition, shareholders also approved an extraordinary dividend for the year equivalent to 25.8 billion pesos. Taken together, the combination of ordinary and extraordinary returns represents total expected capital distributions of approximately 41 billion pesos on a March 2026 to March 2027 basis. Additionally, we continue to execute on our latest 300 million share repurchase program, which we expect to be completed during the second quarter. This program is part of our 2025 returns and therefore, incremental to the 41 billion pesos I just mentioned. As I look ahead, we are optimistic as we accelerate towards a busy summer that includes the FIFA World Cup while executing against our strategy across our business units. However, we temper our optimism with some caution, particularly towards the second half of the year as we continue to operate in a challenging and uncertain macro environment worldwide. We got some feedback about our last call being a bit long. We are mindful of your time, and we want to be fair in giving as many participants an opportunity to ask questions. We ask you to help us by asking one question at a time. Feel free to rejoin the queue if you have further questions. Thank you. And with that, we can open the call for your questions.

Our first question comes from Alvaro Garcia with BTG.

Thanks very much for the new segment information. I think it's great. I have two questions, one for Martin, but I'll stick with one. On Others, it came down materially relative to last year. This is obviously the difference between your consolidated EBITDA and the EBITDA in all of your different segments. Could you help piece together why that came down in the context of the recent restructurings you announced last quarter?

Sure. I mean one big driver without doubt was the decline in losses in Spin. And again, generally, our efforts at cost containment. One has to be careful with the Others line because sometimes that includes all the forward things and businesses that are coming in and out. But generally, I think from last quarter to this quarter, the best progress that was made was on the reduction of the Spin. The benefits from cost reductions will probably begin to cycle in over the next 3 quarters. And you should continue to expect improvements also as we manage the Spin losses and find more efficient ways to manage those losses from a tax shield perspective.

Our next question comes from Ben Theurer with Barclays.

I'll stick to one as well. So you showed relatively strong performance in terms of traffic this quarter despite some of the security issues. So could you help us understand a little bit more just Jan, Feb, March and how issues in the Pacific area, Guadalajara, Jalisco have impacted traffic throughout the quarter and what the normalization looks like?

So Ben, I would say I'm still not satisfied with traffic. I expect OXXO is a growth platform. It's a growing company, and it should also grow on a same-store sales basis on a traffic level. And the strategies we have put in place, we are aiming towards profitable traffic growth on a medium-term level. Having said that, we are encouraged by seeing, compared to other players in the industry in figures and what we see from Nielsen on the traditional trade, we're encouraged by our traffic numbers which are relatively better. Especially considering the effects we had in February on the disruptions in the Jalisco region and really in a larger swath of the country. I would say we're seeing better-than-average traffic growth, especially in the North of Mexico, probably helped a little bit by weather, also maybe a little bit more economic momentum in that region and the Bajio region compared to a much more difficult traffic scenario in Jalisco and Nayarit and that region and obviously the Southeast, which I think has a negative effect after all these infrastructure projects from the last administration are not present anymore or not as relevant. I think adding to the lackluster performance in the south of the country, as you know, the states that are more exposed to remittances have seen remittances coming down and they're generating fewer pesos, and so I think that also contributes to the difference between the North and the rest of the country. We also saw a relatively weak vacation season, probably a little bit affected by international tourism news in Jalisco, plus a stronger peso relative to the dollar also affected the region around Cancun. So that didn't help as well. But there's a long way to go on profitable traffic growth, and we're working on lots of initiatives to improve it.

Our next question comes from Melissa B. with Bank of America.

I will try to keep this to one question or theme. On the OXXO gross margin, are you seeing a contribution from commercial income in anticipation of the World Cup yet? And how do you expect margins to evolve along the year?

So we are not yet seeing that as a large part of the incremental promotional income from this quarter, maybe a little bit in March, but I think we're going to see much more of that during the second quarter. There's a lot of excitement being built by many of the sponsor World Cup brands, and we're doing a lot of things behind that that should help. It's not necessarily promotional income. But today, with El Niño here in Mexico, we're launching El Panini, which is a collectible initiative in partnership with the Panini company, and we expect some tailwinds of traffic and revenues behind that. Part of the effect is commercial income. We're also seeing a lot of expansion in our retail media efforts gaining momentum. We have about almost 6,500 digital banners that are functioning and our network of sales for that channel is growing. And finally, some expansion in financial services. We're still seeing some services like top-ups decrease, but they're being more than offset by growth in cash withdrawals from new banks, fintechs and other players like Spin, frankly. So all of that has helped the gross margin.

Maybe I can complement, Jose, just on one slide. This quarter saw an improvement in distribution income. In other words, suppliers who choose to use us to deliver directly to our distribution centers and then we distribute on their behalf. And as we have gained scale and efficiency in our distribution, more suppliers see us as a better alternative relative to them directly distributing to the store. And just one final comment on this, Melissa. I mean, 140 basis points is a big number. And again, I think everything that was just discussed ahead of the World Cup, plus some long-term agreements that were recently renewed with some of our big suppliers, contributed. Some of that may not be present in the second half, right? I don't think we should assume 140 basis points for the second half of the year. Hopefully, I'm wrong. I've been wrong more often than not in the right direction, meaning margin expansion more than I thought. But just to be a little bit conservative because it was a big number.

Our next question comes from UBS. That's okay. Go ahead, Rodrigo.

So I have 3 questions. I was just joking. Jose, I mean I have you in the line. The affordability strategy 2025 worked quite well, right? How you recovering the lost traffic to mom-pops. It clearly worked well, that strategy. Still, I mean, the way I see this is kind of like a reactive strategy to what was happening there with the macro. Now the question is looking for 2026 and beyond the World Cup, what kind of active strategies would you highlight for OXXO for it to accelerate traffic? I mean you mentioned that you're working on a couple of stuff at the beginning of your remarks, right? But just wondering if you can help me understand the flagship strategies that you are working on to precisely accelerate the traffic trends beyond the World Cup. That would be my question.

It's a great question. As you say, working on a very good price architecture in OXXO in the impulse categories in terms of affordability has returned us to a growing share trend in tobacco, in beer, in soft drinks and in most of our key categories. I think we still have a long way to go in terms of our ambition of what we can do with impulse. Given our capillarity, given that we sell the coldest tier out there, we should still gain share and continue to do so. Cold and affordable for everyone is our goal. But going forward, it's not going to be enough to bring us where we want to go in terms of relevance for the Mexican consumer. We are very ambitious in our convenience agenda. One of the things we achieved over the quarter with still minor price and offering adjustments, we increased our coffee cups sold per store on the quarter from 28 cups in the first quarter of 2025 to 30 cups in 2026. We still have a long way to go. Coffee is a great product for a convenience store chain. It's 100% Mexican coffee in Mexico, 100% Colombian in Colombia and in Brazil, 100% Brazilian. It's a great product. We should promote it more. It's incredibly good coffee considering the price, and we still can go very aggressively on price given that we have our own supply chain and capacity for managing margins there. Coffee should be bundled with breakfast options and what we call hero products that can help with snacking and lunch, but especially breakfast, where we see a huge opportunity. You should see us grow in food and coffee over the next few quarters. We also see a huge opportunity in what we call daily replenishment — the traditional trade plays a very good game there with all the CPGs, and we have a strong idea of what the consumer needs in terms of what is sold at mom-and-pop stores. This is not a competition against other formats like discounters. This is helping the consumer in their daily replenishment for items they forgot on the way to work, those types of needs. We are piloting a few initiatives in Chihuahua and Veracruz to bring back affordability and highlight how much more convenient it is to get your beer and your daily essentials at OXXO. We are seeing encouraging progress, but there's still a long way to go. The traditional trade still represents a large share in Mexico, so we have a lot of share gains to achieve. There's also room for growth for Bara to capture share as well.

Our next question comes from Thiago Bortoluci with Goldman Sachs. I believe he's having some technical issues. We're going to go ahead with our next question from Alejandro Fuchs with Itau BBA.

Congratulations on the very strong start to the year. One question, more strategic for Jose Antonio: in the past FEMSA has simplified its portfolio with the FEMSA Forward strategy and improved efficiency in locations. Given the portfolio you have today and looking to the future, how do you feel about it? I sensed a bit more caution on the pharma side again. Do you feel comfortable today, or might we see more of the simplification strategy in the future as we have in the past?

I would say, in general, we are always studying parts of the portfolio that either perform better with someone else or should not be part of the group. Simplification is always on our mind. We see most of our growth focus in organic growth. Some of our operations in pharma have huge potential for organic growth, and that keeps us encouraged in those platforms. Unfortunately, it's not across all of our pharma businesses. Mexico is really underperforming, and we are analyzing all possibilities with that asset. Colombia has huge potential to grow. We continue to gain significant amounts of share in Colombia retail. Removing the institutional side, which I mentioned earlier, the Colombia private retail segment is growing and we are the fastest growers in that industry. That keeps a lot of momentum. Chile is gaining share as well. So overall, we are always thinking five to ten years out about how the portfolio should look and where we should go. Everything is on the table.

Very little to add. I would just remind everybody of FEMSA's history from the brewery to FEMSA Forward. The mandate we have as management from our Board and from our shareholders is to maximize value. So any opportunities that we have to find assets in the portfolio where we can maximize value will always be considered thoughtfully. These are delicate conversations because they impact people, employees, suppliers, and we have to be cautious in how we discuss them. Once you own an asset, you then have to make a judgment about what it is worth to you relative to what other players might offer. That debate happens regularly here at the company.

Next question from Thiago Bortoluci with Goldman Sachs.

Congrats on the solid sequential improvement and turnaround of the business. I would like to explore the productivity and traffic seen in Mexico from another angle: how your new stores are performing. You are opening at a run rate of 890 stores per year in Mexico. When we try to simplify your numbers, you are growing area by 3%, but the sales contribution of this growth is close to 2%. That might imply that the productivity of these new stores is not tracking in line with, or is a bit lower than, your same-store sales. I would like to understand if this is correct, what the plan is, how comfortable this makes you to keep up the growth pace, and how we should think about the incremental ROI of these new cohorts.

It's a very thoughtful question. It looks like you've done your math. First of all, we're still very pleased with the new cohorts of stores. A growing share of the mix is coming from what we call OXXO niche stores in special locations such as factories, apartment buildings or offices. Those stores tend to sell on average less than other stores and usually have some SKU restrictions like alcohol or tobacco, but they tend to have a higher ROIC. As that share of our OXXO stores goes from 10% to almost 25% this year, that impacts the aggregated productivity numbers. We are also looking not only at the numerator but also at the denominator and making sure we make smarter decisions to improve our ROIC and reduce the cost of each new store. So the return on invested capital of the new stores, even if they sometimes perform less or take more time to mature, remains in good shape. Compared to last year, we did make a pause to make sure we were continuing to maximize ROIC, and that led to a slower start of the year compared to last year. That should normalize throughout the year in terms of total openings. Also, every three or four years, and we haven't done a big pruning since the recovery from COVID, so this year we are being careful about which underperforming stores we should consider closing or canceling contracts. We think this year, while we're still going to open about 1,100 stores, the net new additions could be impacted by a few hundred stores being closed. We're finalizing that number and the OXXO team is being careful in deciding which stores should probably not exist. I will have a better number as the year progresses. Overall, we still see the opportunity for opening between 900 and 1,100 net new OXXO stores in Mexico in the coming years, not counting Bara which is also accelerating its expansion.

Yes, Thiago, this is Juan. I'd like to follow up on what Jose just said because we started actually last quarter closing more nonperforming stores. The reality is those stores are in the base of the same-store sales and they're probably selling more than some of the newest ones. The newer stores opened in the last few months are probably selling less than those we are closing, and that's happening more than it ever did before. That will probably continue as we continue to prune the store base.

Our next question comes from Hector Maya with Scotiabank.

Jose Antonio, Martin, Juan, congrats on the results. Could you please share with us how much of the ticket growth in Mexico in OXXO was driven mostly by the pass-through of the new taxes in cigarettes and beverages versus organic pricing or mix from the implementation of the affordability strategy?

I'm going to do some rough math here, but we have been trending at inflation or a little bit above inflation generally in the ticket. If you calculate the difference between the growth in the ticket and inflation, probably a significant portion of that was related to the tax pass-through. That would be my quick and dirty answer because I haven't actually calculated it precisely. Common sense leads me to that conclusion.

I would add some color: we were quite impressed by the relatively inelastic behavior of tobacco consumers with the tax, not so much on soft drinks. I would say it was a big portion of the ticket growth, though I don't think it was above 80%, but it was a large portion.

And depending on the territory, different soft drink brands decided to pass on more or less of the tax because they collect the tax and then choose the final price. So there is some variability across parts of Mexico depending on competitive dynamics among players.

Next question from Lucas Mussi with Morgan Stanley.

Congrats on the results. I have one for Martin, maybe about your current leverage excluding costs. I wanted to hear a bit more about how you expect that to progress through 2026. Regarding capital allocation, you announced dividends and buyback activity. How are you thinking about cash flow throughout 2026, and how should that shape up relative to your target of 2x net debt to EBITDA excluding costs by the end of the forward plan in the next 12 months or so? How comfortable are you with the announced shareholder remuneration, given what you saw in the first quarter and your early expectations for the second quarter, and if you see potential upside or gaps that could affect your target, any general comment given we're already four months into the year?

All other things being equal, I would expect that given the return of capital position we've taken, we will end up at the end of the year slightly below the 2x target. How much will ultimately depend on how well we do over the remaining three quarters. That leaves the question early next year of deciding whether we make a judgment of doing another extraordinary dividend, for example. We also have capacity under our share buybacks, so we can act if we see an opportunity to buy shares. And third, which is harder to discuss publicly, we constantly have M&A opportunities on our radar and there may be things this year that could close that gap. So without M&A, I suspect we will be slightly below 2x, and you can expect us to provide an update at the end of the year or beginning of next year about our decision.

Next question from Joseph Giordano with JP Morgan.

I'd like to ask a little bit about the expansion of Bara in the North region of Mexico. So just wanted to understand how you see the performance increasing private label and how are you evolving the model? I think it's like a beauty model.

We are very encouraged by what we are seeing on the expansion of Bara in the North, although Bajio continues to show very favorable momentum. We are seeing same-store sales growth driven by both traffic and ticket, and we like more traffic-driven growth. We are accelerating store expansion: we opened 38 net stores in the first quarter and we opened 30 stores in April alone. We plan to accelerate expansion and remain on target. Considering some stores in Northern Mexico do not yet sell alcohol, the results remain impressive. We are still fixing supply chain issues and the customer reception has been very positive. We plan to continue accelerating Bara's expansion.

Our next question comes from Henrique Brustolin with Bradesco BBI.

I would like to address the merchandise margins in the Americas. You mentioned the 31.8% flat gross margin. But when I look at the comparable figures from the release, it looks like there was a 5-point margin expansion year-on-year. So just to be clear, was there anything in the comparison base that we should be aware of when thinking about this margin expansion? And on this topic, when you look at the close to 32% gross margin, how is that compared to the target that you see for those operations outside of Mexico in terms of the profitability you can achieve thinking about the expense dilution as you grow, or if gross margin expansion is still potentially an important driver for growth to accelerate bottom line growth as well?

The comparable figures exclude Brazil, and Brazil still has a longer way to go to match the gross margins we see in Chile, Peru and Colombia, which explains most of the difference. We are encouraged by what we are seeing in Brazil in terms of margin expansion ambitions for the rest of the year. The momentum in Colombia, with double-digit traffic and same-store sales growth, is encouraging; Colombia should continue to dilute overhead and become very profitable. Brazil has a longer path but every new cohort of stores is maturing better and faster than expected. Food is a larger component in South America, and in Brazil store consumption of beer is allowed which helps drive traffic. We expect gross margins to improve, and while they may not match Mexico, they can rise meaningfully as scale increases. We plan to stay in Brazil and Colombia for decades.

I think so much of your gross margin depends on your positioning with your suppliers and your scale is a big part of that. So if we continue to grow as we hope, then our conversations with our suppliers will evolve and that gap will close versus Mexico.

There are two ways to prove scale in this business: be a very big player and extract more value, or grow very fast. We are still not growing very fast in Colombia and Brazil and hence are not a very big player yet in those countries. When we show faster profitable growth, which is the plan for the next couple of years, suppliers will see we are more serious in South America and it will become an attractive channel for them to launch products and campaigns.

Our next question comes from Antonio Hernandez with Actinver.

Congrats on your returns. Just a quick question regarding that very strong performance in OXXO Mexico. I mean you already mentioned that the 140 basis points expansion is maybe not sustainable, but you do expect some expansion ahead. Just wanted to get a sense on a disclosure of how much of that expansion was driven either from financial services, income from key suppliers, retail media and so on.

Generally, commercial income is the biggest contributor to the margin deltas, and that was the case again this quarter. We signed new agreements with some large suppliers ahead of the World Cup, and we moved some key SKUs into our distribution centers which drove distribution income. It's a mix of everything — commercial income, distribution income and improvements in financial services. As we remain ambitious on affordability, some of our margin expansion should be shared with consumers through selected SKUs where consumers are more price elastic and that will help drive traffic frequency, for example in categories like pantry items or coffee.

Next question from Renata Cabral with Citi.

Congrats on the results. My question is about Spin, maybe for Jose Antonio. As last quarter, you described Spin as a phenomenal fintech with the opportunity to bring more customers into the store. We saw in the release Spin tender now crossing 50% in Q1, a remarkable milestone. I would love to hear how you're actually putting the data at the transaction level to work across more than half of OXXO sales — opportunities for personalizing promotion, optimizing assortment or strengthening commercial negotiation with suppliers. If you have an example, that would be amazing. And just a follow-up on that: where do you see the natural savings for tender? Is 7% to 8% achievable over time?

It's a very good question. We are very encouraged by Spin's results. In March we added the highest number of active users in the past two years. Spin's weekly and monthly active users keep growing strongly. We're seeing double-digit month-on-month growth in monthly transactions. Spin is reducing costs and becoming more profitable—if you account for the OXXO commission we get, it's already making money. As Spin grows and becomes one of the biggest peer-to-peer payment systems in Mexico, many payments will commoditize but if we capture momentum we meet customers where they are. Once we have that relationship, we can add more services within Spin, and we can use Spin to invite customers to the store with promotions and gamification. We're studying how to offer other financial services, including credit, but we'll be cautious given regulatory complexity. We see an opportunity to raise Spin tender well above 50%. In our Chile pharmacy business we see above 90% digital tender, so while it will be tougher in convenience, getting towards two-thirds is an ambitious but achievable goal. Spin also supports our retail media channel, which should be an additional source of profitability for Spin.

This concludes the question-and-answer section. At this time, I would like to turn the floor back to Mr. Fonseca for any closing remarks.

Thanks, everyone. We appreciate the discipline with the one question policy. Obviously, any follow-ups, you know where to find me and Pamela and Alex, and we're always available. So thank you. And as we are getting closer to the weekend, have a good rest of your week.

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