BBB Foods Inc. (Tiendas 3B) - 3Q24 Earnings Summary
Business Context and Reporting Period
BBB Foods Inc. ("Tiendas 3B"), a leading grocery hard discounter in Mexico, reported consolidated results for the third quarter of 2024 (ended September 30, 2024) and the nine months ended September 30, 2024. The company, listed on the NYSE (TBBB) since February 2024, operates a rapid expansion model focused on high-quality products at low prices. As of September 30, 2024, the company operated 2,634 stores.
Key Financial Metrics
| Metric (3Q24) | Value (Ps. Millions) | YoY Growth | Margin/Note |
|---|---|---|---|
| Total Revenue | 14,834 | 29.8% | 100.0% |
| Gross Profit | 2,344 | 29.7% | 15.8% |
| EBITDA | 688 | 54.0% | 4.6% |
| Net Profit | 258 | Turnaround | 1.7% (vs. -3.0% loss in 3Q23) |
| Cash & Equivalents | 1,269 | N/A | As of Sept 30, 2024 |
| Short-term USD Deposits | 2,964 | N/A | As of Sept 30, 2024 |
9M24 Cash Flow: Operating cash flow was Ps. 2,378 million (up 22.4% YoY). Investing cash flow was Ps. (4,172) million, driven by store expansion and short-term USD deposits. Financing cash flow was Ps. 1,748 million, primarily due to IPO proceeds.
Material Changes vs. Prior Period
- Revenue Growth: Driven by 131 net new stores opened in 3Q24 and 11.6% Same Store Sales (SSS) growth. Total revenue increased nearly 30% YoY.
- Profitability Turnaround: The company moved from a net loss of Ps. 339 million in 3Q23 to a net profit of Ps. 258 million in 3Q24. This was aided by a Ps. 210 million foreign exchange gain due to peso depreciation and the elimination of interest expenses on promissory notes paid off in 1Q24.
- Expense Management: Sales expenses as a percentage of revenue improved by 56 bps (10.7% to 10.1%) due to operational leverage, despite absolute costs rising 23.0% due to expansion and wage inflation. Administrative expenses rose 32.1% due to expansion into new regions and public company costs but remained flat as a percentage of revenue.
- Balance Sheet: Total assets increased to Ps. 20.9 billion from Ps. 15.0 billion year-over-year. Stockholders' equity turned positive to Ps. 3.9 billion from a deficit of Ps. 4.6 billion, largely due to capital stock increases from the IPO.
Guidance, Outlook, and Risks
Management Commentary: The CEO highlighted that SSS growth significantly outpaced the broader Mexican hard discount segment. The company remains focused on disciplined execution and rapid store expansion, with new stores performing well. Management expects these pillars to drive sustainable growth.
Outlook: No specific numerical guidance for 2024 or 2025 was provided in this release. The company continues to fund growth internally via negative working capital cycles.
Risks and Contingencies:
- Foreign Exchange: Results are sensitive to MXN/USD fluctuations; the 3Q24 gain was driven by peso depreciation.
- Expansion Costs: Continued rapid expansion increases administrative and sales expenses, requiring sustained operational efficiency to maintain margins.
- Forward-Looking Statements: The filing includes standard disclaimers that actual results may differ due to competitive position, regulation, and industry environment.
Investor Verification Checklist
- Store Count Accuracy: Verify the total store count of 2,634 and the net addition of 131 stores in 3Q24.
- EBITDA Reconciliation: Review the non-IFRS EBITDA calculation, specifically the treatment of lease costs under IFRS 16 and share-based payments (Ps. 126 million in 3Q24).
- Cash Position: Confirm the liquidity position of Ps. 1,269 million in cash equivalents plus Ps. 2,964 million in short-term USD deposits.
- Debt Status: Verify the full repayment of promissory and convertible notes in 1Q24 and the current status of lease liabilities (Ps. 7.3 billion total).
- Same Store Sales Definition: Note that SSS excludes stores closed for one month or more; verify if this definition aligns with peer comparisons.