BBB Foods Inc (TBBB) Q2 2024 Earnings Call Highlights: Robust Revenue Growth and Strategic Expansion

GuruFocus News
3 min read

In This Article:

  • Total Revenue: MXN13.6 billion, a 27.5% increase year on year.

  • Same-Store Sales Growth: 10.7% increase.

  • EBITDA: MXN689 million, a 43.2% increase year on year.

  • Gross Profit Margin: Improved by 60% to 16.7% for the second quarter.

  • Net New Stores Opened: 121 in the second quarter, total store count at 2,503.

  • Net Cash Position: Approximately MXN1.2 billion.

  • Short-term Bank Deposits: MXN2.8 billion.

  • Operating Cash Flow: MXN1.256 billion for the first half of the year, a 25% increase year on year.

  • EBITDA Margin: Improved to 5.1%, up 56 basis points from the same period last year.

  • Admin Expenses: Increased by 45.8% due to expansion and investment in talent.

  • Adjusted Negative Working Capital: 10.2% of total revenue.

Release Date: August 22, 2024

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

Positive Points

  • BBB Foods Inc (NYSE:TBBB) opened 121 net new stores and one new distribution center in the second quarter, bringing the total store count to 2,503.

  • Same-store sales grew by 10.7%, and total revenues increased by 27.5% year on year, reaching MXN13.6 billion.

  • EBITDA grew by 43.2% year on year, reflecting strong sales growth and gross margin expansion.

  • Net cash flows from operating activities rose by 25% year on year, reaching MXN1.256 billion.

  • The company maintains a strong net cash position of approximately MXN1.2 billion, with an additional MXN2.8 billion in short-term bank deposits.

Negative Points

  • Administrative expenses rose by 45.8%, driven by higher personnel expenses and investments in IT, purchasing, HR, and finance.

  • Same-store sales growth showed a slowdown compared to the second quarter of the previous year due to factors like Easter timing and election-related impacts.

  • The company faces challenges in maintaining consistent gross margins due to dynamic pricing strategies and market conditions.

  • The expansion into new regions and increased store openings may lead to higher operational costs and potential inefficiencies.

  • The peso depreciation could impact cost of goods sold if it persists, potentially affecting profitability.

Q & A Highlights

Q: Can you elaborate on the dynamics of gross margin improvements and whether this is a new normal? A: Kamal Anthony Hatoum, CEO, explained that scaling has led to cost benefits in purchasing, which may not stop. The decision to pass these benefits to customers or retain them as gross margin is dynamic and product-specific. The gross margin is likely to fluctuate over time, and continuous elasticity testing helps optimize pricing.

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