Please standby. We're about to begin. Good morning and welcome everyone to FEMSA Fourth Quarter 2021 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the presentation there will be a question and answer session.

During this conference call, management may discuss certain forward-looking statements concerning FEMSA's future performance and should be considered as good faith estimates made by the company. These forward-looking statements reflect management expectations and are based upon currently available data.

Actual results are subject to future events and uncertainties which can materially impact the company's actual performance. At this time, I will now turn the conference over to Juan Fonseca, FEMSA's Director of Investor Relations. Please go ahead, sir..

Thank you. Good morning, everyone. Welcome to FEMSA's Fourth Quarter 2021 results conference call. Today, we have Daniel Rodríguez Cofré, Chief Executive Officer; Paco Camacho, our Chief Corporate Officer; and Eugenio Garza, our CFO. As always, we are also joined by Jorge Foyaso (ph) who heads Investor Relations Center.

The plan for today is to have Daniel comment on some higher-level strategic topics. And then Paco will talk about the evolution of our governance profile and certain changes that FEMSA is proposing for the upcoming shareholders meeting in line with feedback we have received from investors.

That should enhance our board's accountability, composition, and function. Next, Eugenio will walk us through the numbers followed by Q&A. So the call will probably be a bit longer than usual, but hopefully it will prove to be a good use of your time. So, with that, let me turn it over to Daniel. Thank you, Juan and good morning, everyone.

Let me begin by thanking and recognizing Eduardo Padilla once again. We all know that he was instrumental in leading the effort that turned also into the powerhouse it is today, creating enormous value for FEMSA and its stakeholders and setting the foundation for compelling gross revenue going forward.

We're also familiar with Eduardo 's self adopted role at FEMSA, Chief Central Officer, focusing on the development of a positive culture of trust and agile collaboration that has enabled over broader organization on over hundreds of thousands of colleagues to pull together towards a common purpose.

Now, allow me to make a quick recap of how I see FEMSA in terms of its potential for long-term growth and value creation. At Coca-Cola FEMSA, we have in place a new long-term relationship model with our partner, the Coca-Cola Company. That significantly increased system alignment and created compelling opportunities for future consistent growth.

In our Health Division, we acquired the large minority stake from our former partner in Chile, allowing FEMSA Comercio to finally integrate our operations across the four countries where we operate.

With Heineken we reach agreements to extend Coca-Cola FEMSA distribution partnership in Brazil while we navigated the gravel opening of our OXXO stores in Mexico to sell other beer brands in addition to the Heineken portfolio.

Finally, we have made significant ingrown developing our business in the United States with our investment in Jetro Restaurant Depot and the creation of MBOED solution our specialized distribution platform. As I begin the journey at FEMSA CO and take a close look at our company. I truly believe everyone of FEMSA 's operations are in great shape.

We have faced and overcome challenges big and small, including of course, navigating the COVID pandemic. I would like to talk a little bit about where we are today in our core business units and then discuss some of the opportunities we see going forward. Starting with the proximity division, in 2021, we surpassed 20,000 store milestone.

And importantly, we believe there is potential to add 10,000 more stores in Mexico over the next decade. At the same time, our South American operations are getting into high growth year, including our joint venture in Brazil.

In a few years, it is entirely possible that OXXO international could be generating unit growth figures comparable to those in Mexico. Today, as consumers gradually return to their normal activities and having our value proposition is as relevant as ever and our comparable Sales are now above pre -pandemic levels.

These combined with a leaner construction and improving commercial income activity is driving structural profitability gains. This means that OXXO and proximity of retail more broadly, will continue to be a key engine for FEMSA's long-term growth.

We're also looking at our proximity format with different characteristics suitable for different consumer environments. And we're always looking to grow not just in number of units but in profitability and returns.

Beyond physical formats, as you are aware, we are in the early stages of developing our digital strategy, been by OXXO our digital wallet and OXXO Premia, our loyalty program is off to a very promising start and we have biggest duration to become relevant players in Mexico's digital ecosystem.

These digital opportunities are so important and relevant to our long-term strategy that we have created a business unit, focus on them pursue and development. These dedicated unit reports directly to me. While we are on the subject of digital, let me give you an update on the regulatory front for Spin.

We have now received from the regulator the authorization with certain conditions. We're in the process of addressing these conditions and the Spin brand is operating under this authorization. This is a very positive development and we will keep you posted of any incremental news.

On the broader topic of our digital strategy, we are deploying the necessary resources, including in terms of organizational structure and talent. While it is a tight market, we have managed to attract key industry hires for our Spin and Premier platforms and the effort is ongoing.

We're also interacting with potential partners that could contribute their expertise or resources at different levels through commercial or equity structures, with a view to maximize value creation.

And while there is a natural focus on developing the ecosystem and pursuing the opportunity in Mexico, everything we'll learn and develop here will serve us well in other markets and other parts of our operation, such as the Health Division.

Moving on the Health Division, we are now able to transfer best practices across territories and we're growing rapidly in Colombia, Mexico, and Ecuador, leveraging the scale and execution-driven result of the Court Julian (ph) operation beyond commercial and operational improvements that should allow us to gradually narrow the margin gap relative to Chile.

We're also growing our digital offerings across the platform in terms of e-commerce, loyalty, and other related opportunities. On the expansion front, we're focused on consolidating and growing our work current operations but we remain vigilant for inorganic opportunities.

Organizationally, we have evolved and simplified our structure a bit to better reflect the evolution of our business units and to allow me to be closer to the operations. Therefore, proximity, digital, and healthy divisions now report to me, allowing us to remove our corporate layer at FEMSA Comercio.

This means we will not have a CEO of the retail businesses, but rather the retail businesses will be closer to the FEMSA leadership team. Moving on, our logistics and distribution operations are growing rapidly, driven by our successful acquisition strategy in the United States. That is allowing us to execute our game plan faster than expected.

We are well on our way to achieving our objective of creating a national platform and we are already capturing meaningful synergies from our enhanced scale and from cross-selling opportunities across territories. We have added almost $1 billion in revenue through 12 acquisitions in the past 14 months.

There is significant integration and further synergy capture work ahead of us, but there are also a few important markets in the U.S. where we still need to strength our presence. This is a business that is very attractive and one that is already delivering solid returns.

With potential to increase margins over time, we are committed to continue playing a relevant role in the consolidation of this market. For its part, Coca-Cola FEMSA keeps focus on profitable growth, both organic and through targeted acquisition, such as the recently announced transaction with CVI in Brazil.

In an environment where further system consolidation is always possible, Coca-Cola FEMSA enjoys ample cash generation and a strong balance sheet that support not just a healthy dividend stream, but its own growth optionality. Operationally, cost continuous advancing in its own digital and omnichannel initiatives.

Its Juntos platform continues to make progress in Brazil and Mexico with a fast-growing number of customers now enabled to place orders digitally, and the percentage of digital orders reached a new high.

And following the increased system alignment with a Coca-Cola company, we are finding more ways to maximize the productivity of Coke FEMSA distribution platform through load sharing, pilot test on our own feed, as well as through the new FEMSA business. Now, let me talk a little about some higher levels strategic considerations.

As you know, FEMSA has evolved over time, as we have developed certain key capabilities to allow us to pursue business verticals that shirt certain characteristics. We participate in mass market mainstream industries by providing highly scalable products and services.

We developed high levels of capillarity, allowing us to reach and serve our customers through frequent interactions and we rely on effective operations and processes, enabled efficient logistics and distribution capabilities. All of our business units required and benefit from these key capabilities.

However, our operations are at different launch in their development curve. They have different capital requirements and different growth rates and potential.

Therefore, when it comes to FEMSA's capital allocation and deployment, we will privilege those operations that have the best opportunity to generate a positive spread between their return on capital under cost of capital. Obviously, adjusted for risks.

Lately, the assessment driven the growth of our retailed platform as well as our resin investment in the United States. We're convinced this is the right approach and therefore, you should expect us to continue deploying our capital along those verticals.

Finally, let's talk about our two large minority investments, Heineken and Jetro Restaurant Depot. Regarding Heineken, we have obtained very good financial return from these investments since 2010, and we have nothing but respect for Heineken.

It is a well-managed, well-diversified company and we continue to be as we have said in the past, happy holders of their shares. However, we're constantly benchmarking this investment against potential alternative investments like those we have recently made in the United States.

We have funded such investment in the past with proceeds from a partial divestiture of our Heineken stake and we may do that again in the future. And that brings me to Jetro Restaurant Depot. This is primarily a strategic investment. Over time it is a regional business to which we would like to our exposure.

And as you know, there is also the potential to explore and eventually bring their Cash & Carry Mall to Mexico. JRD is a very compelling from a financial standpoint and we're happy holders of their shares as well. Let me close with the following. There are many moving parts in FEMSA and right now all of them are moving in the right direction.

We truly believe the future is bright and full of promise. Our company is always evolving as we direct our resources towards the opportunities that we believe represent the most compelling long-term value-creation potential, and we're moving as fast as we can.

I am fortunate to lead such an extraordinary team, more than 320,000 strong and the best in the business, attracting and developing the best people is a keystone of any business that aims to thrive in the long term, and it is a high priority for us.

Together, I have no doubt that we will achieve great results and write a few more pages in the long history of our remarkable company. And while we do that, I look forward to engaging with you frequently in the months and years ahead. Now, let me turn it over to Paco..

Thank you, Daniel. And hello everyone. I want to talk a little bit about what we have been doing on the corporate governance front, particularly with regards to the structure and functioning of our Board of Directors.

As you might be aware, we circulated a press release a few days ago with daily several relevant changes aimed at increasing the accountability and independent oversight supported board.

Our first objective is enhancing the board accountability, and to that end, our shareholders will be able to vote on directors’ individuals, rather than necessarily for the first time this year. We believe we are among the first Mexican companies to do this, and hopefully this will become a trend.

Second, we want to increase the influence of our independent directors. Back in 2018 our board had 21 directors, by 2021 we had reduced the number to 18 directors. In 2022, we are reducing it further by one or two directors, and we're making the commitment of reaching a final target between 14 and 16 directors next year.

Importantly, at least 40% of those directors will be independent when we achieve our target. Third, we are increasing the oversight role of independent directors and key committees. The outage and corporate practices committees will continue to be composed, solidly of independent directors.

And beginning this year, the corporate practices committee will also evaluate and nominate candidates for independent directors and ensure the entire board is composed of directors with the skills, experience, and capabilities required to provide effective oversight.

For its part for planning and finance committee will add operational oversight to its preview and which will be renamed as the Strategy and Operations Committee, composed of a majority of independent directors.

These committees will oversee transformational initiatives, further increasing the involvement and time commitment of directors on operational matters, and complementing the role of senior management. Beyond 2022, we have also set three governance priorities.

First, we will continue enhancing our boards goals and effectiveness by balancing institutional knowledge with fresh perspective, by adding new independent directors.

We will add incremental expertise on relevant new business areas such as digital and e-commerce and we will further enhance the board gender diversity beyond our current level of 22% and seek backgrounds in alignment with census focused on, commitment to and leadership in ESG matters important to our success.

Second, we will ensure we're focused on responsiveness by adopting limits on the outside commitments of directors. And third, we will bolster outreach to shareholders to gather their input as we continue to enhance our governance. On a related topic and before turning the call over to Eugenio, let me elaborate a little on the subject of ESG.

Beyond evolution of where board to better address these needs, we have established an internal ESG board to focus, drive, and continuously assess our commitment and performance according to our ESG framework. As you know, we have put our money where our mouth is.

And we have issued sustainability link bond with ambitious targets that will become more expensive -- we failed to reach our objectives on important metrics like the use of renewable energy or the elimination of operational waste to landfill within certain time frame.

ESG now permeate every aspect of our company, and we are eager to be part of the solution. And with that, let me turn it over to Eugenio..

Thank you Paco and good morning to everyone on the line. As we have done in the past several quarters, we will provide fourth quarter 2019 comparisons where we consider this to be helpful, as the 2020 comparison base reflects the impact of the pandemic and does not always tell the full story.

Starting with FEMSA 's consolidated quarterly numbers, total revenues during the fourth quarter increased 16.3%, while income from operations increased 18% compared to the fourth quarter of 2020. When we compare against the fourth quarter of 2019, total revenues increased 14.6% while income from operations increased 14%.

FEMSA 's net income increased significantly in which 10 billion pesos, reflecting higher income from operations, a non-cash FX gain related to FEMSA 's U.S.

dollar-denominated cash position, a decrease in net interest expense, and an increase in our participation in associates results, which mainly reflects the improved results of our investments in Heineken. Moving on to discuss our operations, beginning with FEMSA's Proximity Division.

We opened 434 net new OXXO stores during the fourth quarter, to which 865 net openings for the year, reflecting a strong push by the team to close 2021 with strong momentum.

Also, same-store sales were up 12.5% for the fourth quarter, driven by an increase of 10.4% in average customer tickets against 2020 when compared to the fourth quarter of 2019, same-store sales increased 4.4%. Gross margin increased 150 basis points to reach 46.1%, reflecting a recovery in commercial income from promotional programs.

Income from operations and operating margin increased significantly compared to the same period of 2020, reflecting improved operating leverage and strict expense discipline. Relative to the fourth quarter of 2019, operating income increased 15%, while operating margin increased 30 basis points.

These are encouraging numbers that highlight OXXO's resilience in an environment that remains still below pre - Covid levels in terms of customer mobility. Regarding our additional digital imaging initiatives, let me give you a quick update.

In the recent months, we made very good progress on the regulatory front, as Daniel mentioned, and Spin by OXXO continues at to grow at a rapid pace. As of last week, we had 1.6 million registered users on the platform.

On the loyalty front, things are moving even faster and as of the same date we had more than 4 million registered users on our OXXO Premia platform, which of course will play an important role in driving customer engagement and generating actionable data.

These are still very, very early days, but we are generally pleased with the trends we're seeing.

Moving on to FEMSA's Health Division, during the fourth quarter, we expanded our drugstore count by 112 net additions to reach a total of 3,652 units across our territories at the end of December, and 284 total net new stores for the Full year revenues increased 7.3%, while same-store sales increased an average of 5.7%.

On a currency-neutral basis, revenues grew 14.3% and same-store sales increased 10.3% as we continue to see good momentum across our operations. Gross margin remained flat in the quarter, reflecting channel and product mix headwinds mainly in our operations in South America.

Operating margin expanded 10 basis points, reflecting improved operating leverage. Moving onto OXXO gas, revenues increased 30.2% and same stations sales grew 23.3% relative to the fourth quarter of 2020.

During this quarter, Gross margin was 14.1% while operating margin remained flat against 2020, reflecting tight expense control that offset operating deleverage driven by the still recovering mobility. Regarding our logistics and distribution business, revenues increased sequentially reflecting positive dynamics overall. Having said that in the U.S.

we continue to see different speeds of recovery at certain categories, such as facility supplies, which are still lagging their historical pace while others such as packaging and food service have recovered a lot more quickly. On the logistics front, our operations again showed good trends across most of its Latin American markets.

Finally, moving on Coca-Cola FEMSA, volumes grew 5.4% over the last year and almost 7% over the 2019 benchmark with most markets contributing to the positive results. Revenues increased 8.5% and gross profit grew 9.3% despite supply chain disruptions and cost pressures on certain raw materials.

Operating income increased 7.6%, reflecting a one-time tax effect in Brazil. All-in-all book, FEMSA showed the resilience of the business and their ability to deliver results in challenging environments. You can listen to the webcast of their quarterly call that took place last Friday.

As you can see, we were able to close the year with good momentum across our platform and the strength seems to be carrying over into 2022 as the world continues to gradually reopen. We are excited and bullish about FEMSA's opportunity set as we begin this New Year. With that, we end the prepared remarks and can open the call up for your questions.

Operator..

We got first two. Bob Ford with Bank of America..

Thank you, and good morning everybody. And thanks for taking my question.

Daniel, how does the creation of a digital division impact the resource commitment and the expected pace of development of Spin and Premia? And what are the key KPIs for management in the digital division this year?.

Thank you both for your question. I mean -- and maybe then you guys can complement in the answer, but I mean -- as you well mentioned today, we are focusing two main areas in the digital scopes, so one is Spin, which is really up in the organization, and the second one is the loyalty program.

I mean, in terms of Spin and in terms of resources, we have been very active. Bringing people expert from the industry, and we have a leader who reports directly to me, as I mentioned before, and I would say that it's making my very good progress.

I don't know if we can show the numbers that we have today, in terms of customers?.

Certainly, I mean, we have more than 4 million on the loyalty side.

We have 1.6 in Spin and about 60% or 60 plus in terms of actives?.

Yes. And I would say that is where we are. I mean, we have made a lot of progress and I'm very fast over the last couple of months and we are very positive about the future.

And obviously also mentioned during the call, we are looking for different level of potential partnerships at different levels because we strongly believe that that could be an opportunity in terms of value-creation. So that I would say it's the most relevant thing in terms of the indicators.

Obviously, we're moving to the standards of the industries and that is how we're trucking the business. And internally, I would say that the fact that that division is reporting to me.

I mean, the FEMSA leadership team is very close to them and we are following all the evolution in terms of performance and value creation on a monthly and sometimes on a quarterly basis. I don't know.

Daniel Vargas would you like to other anything else?.

Yeah. Just to be more specific on KPIs, I mean, going forward -- internally, we're looking at these indicators and going forward we'll start to share some of this in the market, but we are looking at the stickiness of the platform via the churn, the average revenue per user, customer acquisition costs, and the likely metrics going forward.

And on the loyalty front. Again, we are looking at the tender in our stores, the stickiness of the platform and that data is also being shared internally to see what kind of monitor efficient opportunities exist going forward..

That's very -- sorry..

For my, repurchases standpoint sorry about -- I think that is important to mention that there is a consistent inflow of talent that is coming from relevant industries from outside that we are bringing into these projects so that native talent helps us to develop further..

And just as a follow-up, how should we think about the evolution of the functionality and the use cases on both sides?.

Both what we are doing is obviously applying the same methodologies of the industry applies. So with MBPs, agile teams and I think that the product is evolving as we speak. And I think the most relevant thing with can you just mention, we're very close about the stickiness of our product.

And that is something that we are improving and we will continue to improve going forward. So as I said, we're very positive about the product..

Thank you all very much..

One comment to add Bob. It does look like adding customers over the -- it's always a challenge. So the greater challenge is going to be keeping them engaged, right? I think, as you know, we are in an environment in Mexico where cash is still key, where there is a certain reluctance to embrace digital forms of payments. There's a learning curve.

And so we can add big numbers as we already mentioned. The additions per month are in the hundreds of thousands.

In the case of Premia, we're always probably almost adding a million per month, but we need to get people to really use the products and spend more time, and obviously, offering them rewards is going to be useful for that, but just to remind everybody of the headwinds that we and every other player is facing in Mexico, which is this deeply entrenched cash culture, which obviously for us, it's kind of -- we benefit from the cash side of things, obviously, but in terms of transitioning to digital, it's going to take a while..

Maybe -- I think you made a very good comment, Juan. But let me try to connect that with the ability that we have today that we know exactly who is doing what in terms of our customers.

We have much more powerful information and that I'm sure it will help us how we can improve the product and to Juan's point, how we can try to evolve with the Mexican in terms of the cash, if you want, culture that still is very relevant in Mexico..

Thank you very much.

Your next question comes from the line of Ricardo Ellis (ph) with Morgan Stanley..

Hi, everyone. Good morning. Thanks for the call. Thanks for being available. Couple of questions. On the OXXO same-store sales, Gross margin s well above expectations, as you highlighted in the initial remarks, just a quick question on SG&A.

Were there any major lines or anything that surprised you? I don't know, perhaps on the personal expenses side, we were a bit disappointed just a bit on the SG&A line. So any thought that you could give on that would be helpful. Now, more important than that is still on the OXXO.

How are you seeing mobility, and overall your numbers throughout February? We're headed to March. So just wanted to get your quick thoughts on the evolution of on mobility and same-store sales as we get eventually completely tack this new wave? That's my my first question on OXXO. And then, the second question, moving down to Brazil.

It seems that the GV is surprising to the upside.

So just wanted an overall update on what you're thinking about Brazil in 2022? And more broadly, this leads me to my broader question on growth outside of Mexico? So wanted to get your thoughts on how you're thinking about South America in terms of growth contribution? The growth contribution of the region is increasing a lot relative to Mexico as it pertains to the expansion of the company, as it pretends to your expansion in retail.

So any thought that you have going forward on ex Mexico? That will be helpful. Thank you..

Sure. Thanks, Riccardo. I'll start with the SG&A question and then turn it over to Daniel for the Brazilian JV progress. On SG&A really there's nothing specific to mention other than the fact that as you saw. We had a big number in the fourth quarter in terms of new store openings.

So we had an unusually heavy fourth quarter and some of -- some of these expenses are not capitalized, they're putting directly through the SG&A and that's why probably you saw a little bit of a higher bump on the SG&A. But other than that, I think we continue to see favorable deleveraging trends.

And as commercial income is coming back, that gross margin benefit is flowing through the bottom line in the way that we expected, but nothing specific to mention on the fourth quarter on the ESG front..

Yeah, and maybe just before moving to Brazil, regardless, in terms of mobility, which was your other question in Mexico. Well, as we mentioned, we are starting to feel a recovery, we are not there yet completely in terms of mobility. But so far, I'm in a very positive trend in the fourth quarter.

And then moving to Brazil, just a reminder to everyone, the JVs that we have there with which is a 50/50 JVs. We have three different models of operations. So, one we have the traditional franchise model with the select brand inside the gas station. Second, still inside the station with.

We offered to the dealers if they like that we will take the store and we will run us we normally do with an OXXO store here in Mexico. And third one is the OXXO deployment of stores outside of the gas station and I would say that we're very much align and even positive in terms of our original plan.

The most important thing is that the best customer value proposition that is proving to be very successful in Brazil is Softsoap. So we're very positive about what we have seen so far in OXXO in Brazil. And for this year, our plan is to open around 200 stores in 2022.

And obviously, that will help us to learn how we can keep that momentum or even increase going forward. So that is where we are at this stage in Brazil, but very positive and very happy with the results that we have seen so far..

I appreciate the comment. Thank you..

Thank you Ricardo..

Your next question comes from the line of Ben Cruz (ph) from Barclays..

Good morning. And thank you very much for taking my questions. So what I would like to understand a bit in regards to the most recent performance and the health position could you elaborate a little bit on the dynamics you think. Obviously you had some very good results during COVID and maybe things are just normalizing.

So where do you stand right now in both South America and Mexico, and particularly in Mexico, where do you stand in terms of getting those operating efficiencies from having gone through the of processes, ..

Let me talk first about South America. In terms of South America as we have mentioned our core market and most relevant in terms of contribution is the Chilean market. But we are moving very fast in order to improve the capabilities both in Ecuador and Colombia.

And in that regard these two markets based on the synergies that we're capturing from the commercial standpoint, we're able to speed up our organic growth. And that's what we're doing both in Ecuador and Colombia.

Particularly in the case of Ecuador, it's mostly relevant to mention that we are growing very fast as well with our franchise model, which is part of the EV one learnings that we're bringing from our core market in Chile to Ecuador. And then regarding Mexico, last year, we have made significant improvement in terms of the scale of our division.

The fact that now we own 100% of the business, really has helped us to do that much faster and that also is helping us to improve the speed in terms of the organic growth. And we're always looking for opportunities.

In Mexico, we can see for example, regional changed, etc., in order that also by using M&A as an optionality, see if we can go faster in this market. So that I will say in a nutshell is where we are.

In terms of the pandemic, I think that was another question that you raised, I think definitely we got the benefit at the beginning of the pandemic, but so far we're able that to compensate if you want the reduction in those components of our value proposition by the other ones.

And the fact that as I said, we have a much stronger commercial regional division that is helping really to be much more effective in terms of our value proposition in the markets that we're in and trying to be much more competitive in terms of price with our customers..

If I might add onto the Daniel's comment, I think some of the positive dynamics you see on the margin front have to do with that additional scale. And the way we are operating in Mexico by concentrating volume of key FKU's with less suppliers getting better terms. And that has achieved hundreds of basis points in margin improvement in Mexico.

That on top of the top-line growth is really helping the deleveraging effort provide solid results to the bottom line..

We're just coming from Chile. Many of these practices comes from the Chilean operation. And I would just add, in terms of segmentation, or the type of format that we operate for different reasons, some of our markets have a mix of institutional sales. So for example, Colombia has an institutional and so does Chile. Mexico is basically retail.

And even if you look at retail, our drugstores in Mexico cater to a certain segment. They're small, they're deeper within the neighborhoods, as opposed to Ecuador where we have two different formats, Fybeca, which is a bigger box, maybe a little bit higher-end. And then you have Sana which are smaller, lower socioeconomic segment.

And then in Chile, you have Cruz Verde, which is also a big box place, a little bit higher. I think we have had a lot of learnings in terms of what is the right value proposition, and can we have more than one in a given market? And I think that's also proven to be very profitable..

Perfect. Thank you very much..

Thank you, Ben..

Your next question comes from the line of Alan Alanis with Santander..

Thank you so much. Thank you for taking my question. Hey, Daniel, Paco and Juan. Actually I'm going to ask about an elephant in the room but I think it will be a benefit for everyone. You didn't mention the share price of FEMSA, in any of the remarks.

And the share price of FEMSA in dollars well, has done nothing in 10 years sustaining between whatever $78, $80 and $95. So -- well, how relevant is the share price in terms of all of the decisions that you're making. And specifically I think that the share price for them as much because of a lack of increase in earnings per share.

And behind that, the capital deployment and the structure of FEMSA. And in this case as you are announcing the digital initiatives, I think it would be good to hear how you're going to monetize the digital initiatives to not even in the near future, but in the longer term.

What are the options? So I guess the two concrete questions is the relevance of the share price in all of -- in everything that you're doing and the acknowledgment to the situation of the share price and. How are you going to monetize additional initiatives in the future? Thank you..

Thank you very much for your question, Alan. In terms of the strong performance of share price, as you know, a significant component of senior managers’ compensation and lap portion of the minority shareholders’ assets are in the form of FEMSA. So starting by myself, obviously, I'm very close on worry about the price of the South.

And of course we take care about that South performance. But I think maybe the difference and acknowledged that. We really manage our company for the long term. And I'm fully aware that at this period the market is not fully recognizing that potential. And so -- I'm aware of that.

But having said that, we are always evaluating alternatives that may optimize over corporate structure. And for us this is that dynamic exercise. So something that -- yes, we take care of it. We are analyzing on a permanent basis.

And but at the same time, we know that our main focus is how we can create volume in the long term, so that I would like to mention regarding the stock price.

In terms of digital, definitively, we see that as a future opportunity, as we mentioned earlier, during the call, the combination that we have in terms of forward capillarity across Mexico is showing us at one said before, that for us acquiring customers is not the main challenge, even though that is a challenge, but it's not the main challenge, is much more about how we make sure that we both as fast as we can, the value proposition than how we can take care in terms of the evolution of cash culture in Mexico, and in terms of are we monetize that business definitely is something that it will.

I'm sure that it will come at this stage we're much more focused in trying to grow the business as much as and fast as we can, and for that will recognize two key components of that. One is the need of expert digital talent, which is something that we are bringing very fast on board.

And second, we are permanently, and as we speak, assessing if there are opportunities to speed up and create more value by having partners at different level of the business. That is where we are at this stage..

I would add also in terms of the changes we're doing to attract this, this management. We are trying to adapt our standard compensation practices to bring digital talent into the organization to something that replicates the value creation opportunities that they would get at a startup.

And again, this value can hopefully be monetized internally through more disclosure as we go forward in terms of the progress of the value creation of these digital initiatives. And also through both commercial and potentially equity partnerships that Daniel mentioned going forward.

So, we do take that into consideration and hope that through all these mechanisms, that value will be a lot more transparent to you guys as shareholders..

Thank you so much, Daniel, thank you. Best of luck to all. Thank you..

Thank you and thanks everyone..

Your next question comes from the line of Alvaro Garcia from ..

Good morning, Daniel, Paco, Eugenio, Juan. Thank for the space. Two questions for me. The first one on average ticket at OXXO up 10% year-over-year.

I know you guys are very proactive on passing price, but I was also wondering if you can comment on what you're seeing on structurally higher average ticket coming out of the pandemic, and whether or not that's actually sticking or not from a mix standpoint? And then my second question, on governance, congrats on the changes, particularly on the nomination front.

Two questions. On 10 years specifically, what should we expect as far as the average 10 year for independent board members? And maybe if you could comment on the weight that the Corporate Practices Committee has had historically? And how you might expect that to change going forward? Thank you very much..

Sure. First on average ticket, there is an inflation component to that. No doubt.

We are trying to balance obviously the value proposition with the increases that we're seeing on the supplier front, but so far, I think that there's still a good chunk of the average customer ticket that has to do with changes that we believe will be permanent in terms of the average customer basket.

We're seeing a lot more hard liquor instead of beer, we're seeing more food consumed rather than just a snack. So overall, we're comfortable that as traffic continues to grow in the store that average ticket, at least for the customer that did change its habits will stick and be a permanent accretion to the value proposition of the store..

And let me complement on that because I think you're absolutely right. I would say that obviously, one of the things that we still -- it's evolving and will continue to evolve is what will be the new reality at the office space. And I think that is something that we are analyzing verticals.

And that could have a positive impact in terms of the particularly the traffic, but then the combination of the type of consumption that we have with people that go out and particularly go to work at the office that potentially on average because is going to change a little bit the mix of the size of the ticket could reduce the ticket average, but it will be more than compensated by the tropic.

So I think that's the only thing that I would like to add..

And if I may have made one additional thing, which is the consumer has changed it carries. A nice thing that the -- one things that will definitely stick is the ability of the OXXO teams to adapt to that. They have very quickly adapted the portfolio. They have very quickly adapted to how the mobility affected the consumer patterns.

And I think that you should expect the OXXO teams to continue doing that strongly moving forward. And on your question on governance, as you know, the Corporate Practices Committee and certain Board members use to take care of the nomination in any event.

Now we're making it official and they're going to be following established protocols based mostly on investor feedback and looking at stuff such as 10-year experienced and trying to strike the right balance between the corporate history of the company and the experience in the decisions that they made in the past together with fresh pairs of eyes that can look at the evolving topics such as digital ESG in other topics.

So rather than at this point, communicate what these specific targets are with regards to 10-year competition and skilled matrix elements, that will be playing out for the next few months and we'll communicate if need be. But we are going to be looking at number one, making it explicit as to the kinds of considerations that we're making.

And again, hopefully striking this right balance between institutional knowledge and history and fresh additions to the skill set of the board..

Very helpful. Thanks for answering too, thank you..

Our next question comes from the line of Luis Willard from GBM group..

Good morning and thanks for the space and comments of the results. I'm going to go a bit of script with my question then, and I hope you don't mind.

If you think of your characteristics and your track record and your capabilities, how do you see them aligning with the strategic vision that you have for FEMSA and where the company is standing in terms of its life cycle? That will be my question. Thank you..

Thank you, Luis. Well, definitively, I would say that in terms of the evolution, as I mentioned during my comment, I think the business units are in a great shape. And if you notice, I think there are maybe two or three key elements that -- I believe that my experience will contribute to that evolution. So one -- first is the international expansion.

As you know, before I jump FEMSA, I had experience both working at Shell and then later working at Cencosud with our relevant expansion outside the core markets.

And so far, I think particularly Brazil, I think it's a very nice growth that -- trying to combine our knowledge, our skills, then with the local knowledge of our partner in Brazil is proving to be a great element. Second, I would say also, the fact that we are exploring new avenues in the U.S.

I think that -- again, the team and it's really more to recognize Eduardo and the guys that are here around me in the table today that have done a great job in trying to move very fast in acquisition and really create a new vertical for FEMSA in an area that is very familiar to us. So I think that also is a positive thing.

And then finally on the digital space, and I would say, my experienced before and I mean if you are familiar with the business in Chile, particularly, we had a very nice development in terms of the FinTechs of this world, but also which I think is very relevant.

I mean, my knowledge around the loyalty programs, which is something that we have developed very successfully down in Chile and that we have brought to other markets in Latin America. So that I will say that brought all the three main elements.

And finally, I think the most important thing for me is how we ensure that we have the right talent going forward in order that we can achieve and continued building the history of this great company..

Thank you, Daniel, that was very insightful..

The next question comes from the line of Rodrigo Alcantara with UBS..

Hi, good afternoon, good morning. Thanks for taking my questions. Two quick ones have here.

The first one on the digital front, you mentioned you're being in Thailand to build the platform, right? We have seen that bringing people for rapidly deployment of consent Antonio, my question share would be, how far do you think you are in terms of building these chain, this chain on the digital platform.

And also we do with cut light any investment there, did you cut out FEMSA adventurers that could potentially surface us as a partner for your digital platform. We know that you have a couple of investments there that would be my first question and the second one very quickly.

Just to make sure I understood correctly so, the Heineken is taking Heineken, traditionally dividends were passed through to invest that successes investor rate of segment of dividend payments. So right now with the U.S. So as you mentioned, is fair to say that the dividend for Heineken will be used to fund U.S.

acquisitions; is that correct? That would be my two questions. Thank you..

Thank you very much, Rodrigo. Regarding the digital front and FEMSA venture and then you guys can compliment me. First on the digital front, obviously, we have made a lot of progress in terms of bringing talent from outside, people that are if you want expert in the digital space. Having said that, we know that this world move very fast.

And that is something that we need to keep always in mind. So we need to move even faster. And that for me is like in three fronts. One, is all we make sure that we continue to improve the quality for our product, so the value proposition. At this point regarding the Geeknet.

Second, how we make sure that we have the right talent at the speed that we really need. And that is permanent. If you want, not concerned, but it's a permanent task that we were taking care of. And also I think it's important that we recognize that we need to change the way that we compensate this team and that is something that , already mentioned.

And the third one, which if you want, in some way it's a combination of the two first that I just mentioned is the fact that we are permanently assessing if there is an opportunity at different levels to have partners.

And to that is why -- when we connect very well to your comment or question regarding FEMSA venture, because FEMSA f venture rom a wider if you one perspective, our intention is that we can explore opportunities in FEMSA venture for investments that in some way can connect not only to the digital world in the future, but also that could be potential relevant for our other business units.

So that is what I would like to say regarding the digital, I don't know.

Maybe, can you Paco if you have any additional comments on FEMSA ventures?.

Sure. What I would add on FEMSA Ventures is that following the good practices of corporate VC funds we have a do no harm attitude towards the investments that we make. So although we do have investments in last mile companies and FinTechs companies that complement the FEMSA portfolio, again, we share learnings.

We make FEMSA properties available for them to do pilot testing, etc., to create value for themselves, and we try to share best practices. Having said that, we do let that the ventures flourish on their own and follow their own value creation process as well. So we again, we tried to do no harm and try to benefit mutually throughout the agreements.

And I think there has been a great value proposition for the entrepreneurs, as well as good learning outcomes for us, that are helping us not only develop our own digital platforms, but also figure out where -- how the landscape is evolving in each one of our countries..

And the one thing that I would like to add, Rodrigo, to your question on the trend challengers. The two things are very close together. So meaning they talk a lot, they work together a lot in things in which difference have interest that are outside looking to a lot of things. As you can imagine, they have learned a lot.

And these types of learnings they talked on the digital team and they shared learning. And also, let's face it, they looking for a lot of companies in which some of them we end up not investing and some of them actually they end up not moving forward with their own projects.

And in that regard, there is a lot of talent there, the better source available and eventually and that is also to Daniel's point before is something that we will look into as we tried to get more talent into the digital efforts..

And finally, Rodrigo, to your question regarding Heineken dividends, just want to be clear. Obviously, cash is fungible.

But traditionally, we've said around dividends based on -- the cash flow of dividends that we get from Heineken , now Jetro into certain standard cash flow provided by the Proximity Division, and that has always been the case and will continue to be the case going forward. I think the comment that Daniel made earlier referred to 3.5 years ago.

You might recall we sold off in a block trade about 5% of our original 20% holding in Heineken and used that capital to deploy into some of these nor verticals into the U.S. So, that's what he was referring to. So, from a dividend perspective, again, it's still to be determined over the course of the next few weeks.

But we would continue to follow the same mentality and recover hopefully the pre -pandemic levels of dividends this year..

So, it's basically a pass-through?.

Correct, yes..

That's great. Interesting comments on the venture side. Thanks for the clarifications about Heineken. Thank you, guys..

Thanks, Rodrigo..

Our next question comes from the line of Rodrigo Echagaray with Scotia Bank..

Thanks, everyone. And good morning. I guess my comment is with regards to the changes in the corporate structure beyond the creation of FEMSA 's Beutel division. Obviously cash is skiing in Mexico today, but I think there's obviously an acknowledgment of that may change over time and enhance the importance of Spin and Beutel in general.

And so I guess the question is, how to make sure that we -- that you guys had address whatever challenges that you might face in the past in terms of having the right priorities in KPIs and compensation for under the new structure like what examples perhaps can you share us to what's not necessarily working and what's the end result or the potential end result of these changes in the corporate structure?.

Well, let me make sure that I understand your question.

When you refer to corporate structure, you refer to the leadership team that is reporting to me, I'm correct?.

Correct. That and obviously the creation of FEMSA..

Fine. Well, as I mentioned, the fact that we are now eliminated one layer, was the role that I had in the past, which is the CEO of FEMSA Comercio or the retail business unit, for me reflects two -- if you want, two key elements.

First of all, I think the fact that the business, particularly will say the Health Division and now the digital area, they are growing very fast. They have to go. And I think that now they are at the level that really should report to the -- directly to the FEMSA CEO.

So that for me is the first thing and I think at the same time, because all the retail businesses are they want stuff in the path and we see that there is a big opportunity going forward in terms of value creation. I think it's very important for me that against keep very close to this business.

And in terms of the digital one and well, I so can have said we are taking all the knowledge of the of the industry in order to evolve our compensation package. Will that been in other that we can make over as attractive as we can.

And so far, to be honest with you, I think we have been very successful attracting talent, the market there already is very, very competitive, but the fact that we have such a nice -- if you weren't footprint with our -- in OXXO business..

I think everyone in the digital industry recognized that this study is a great opportunity and they see the value in terms of how we can evolve the business, but at the same time, which I think is more important, how the guys that are joining us, they see that, how they can evolve and develop their career and going forward.

So, as I said, I'm very positive, but at the same time, let me be very clear that we are permanently analyzing if there are other ways, particularly regarding potential partnership to even grow faster in that industry..

Let me add, I mean, just to follow-up on those comments. Number one, I think very importantly, we're no longer trading off our resource sets either on the OpEx level or on the capex level with the Proximity concept.

So we're funding this separately, looking at it separately, and having kind of cost of capital and opportunity cost discussion separately. And I think that clearly helps fund investments that on the other hand for probably not having funded, that's number one.

And number two and I think more importantly, we are being a lot more agile in figuring out what we can do internally, what we cannot do internally, and being open to outsource, certain elements of the development of the business and being a lot quicker in that respect.

So I think those two elements added to what Daniel already mentioned are helping us get distraction that we're getting in the market..

Got it. And then just one follow-up. So you obviously launched Spin without any partnership, the feedback side, or on the tech side.

What I guess seems to be changing in that, it sounds to me like you are now a little bit more open to seeking these partnerships around that division?.

Yes. I wouldn't say that we're more open. I think one of the very positive element of FEMSA is that we have a culture of partnership. So in that regard I don't see any, if you want, difference regarding that.

I think the only element that we are now focusing more than maybe we did in the past is the fact that we realized that with the speed that we are growing the business, and with the environment that we see there outside, I think if we can bring someone, or someone’s that can help us to do that even in a faster and more, if you want, effective way, we're open to do so.

And we are analyzing that as we speak. So that is something that we already started last year. We're doing different -- we're having different discussions with different people.

And potentially we're going to end up with different, if you want, partnership malls, which can be from a commercial point of view and can end up even to have a more, if you want, structural partnership that could also include equity. So that is what we are analyzing at this stage..

I will add, Rodrigo, if we think of just what Saldazo was in terms of originating the accounts, partnering with Visa, which of course is something that we've done and setting up peer to peer payments, that's something that's already happening.

For there are areas like analytics, that's something that we probably need some help in getting this state-of-the-art. So we need to be smart about where a partner adds value and where they wouldn't. And I think that compliments what Daniel was describing..

Great. Thanks a lot..

Your next question comes from the line of Thiago Bertolucci with Goldman Sachs..

Yes. Hey Daniel and team. Good morning, everyone. Thanks for taking our questions. We have two questions exploring the team of capital deployment. And the first one is about logistics in the U.S. right? The biggest unit is ramping up well, U.S. has added more assets to the platform.

And according to your opening remarks, we understand that there's potentially more to come over the next months, right? Back from the short acceleration on the P&L that we've saw in the first quarter, how we've perform ends up like and what should we expect for the very short-term having in mind that potential on organic activity should come from there going forward? This is the first one.

And the second one is on OXXO, you were able to pull some acceleration store openings in the first quarter. And you have been reiterating the structure space for heart penetration in Mexico going forward.

So I'll just have to hear from you, what should we expect in terms of expansion in Mexico for 2022, for OXXO? These are the question, thanks very much..

Sure. If you want I'll take the logistics question in the U.S. as you know, the entire strategy behind this is that we're looking at an industry structure that's our class model. So a lot of different suppliers, a lot of different customers. And being at the center as a distributor allows you to create a tonner value.

And as you create a national platform, get that good synergies and value capture from the scale. So from that perspective, we bought our original two companies, as you know, in the spring of 2020, we've brought we bought a total of 13 companies so far. And at this point they can say a couple of things.

One, most of the companies that we bought, bought they originally, as well as through the beginning parts of 2021, are already meeting there, right targets with the synergies and best practices that we have been able to deploy. And from our internal perspective, we're already valuing on a DCF basis based on the performance that we see so far.

I mean evaluation. I mean, well, above what we originally paid for these assets, so we're very, very happy about what we have achieved there so far and still feel that we have a long way to go in terms of capital deployment into that space that at these quick paybacks and quick our return on capital turnaround.

So we're happy to report that we think we made the right bet on this industry and it's playing out according to plan so far..

Let me take the second question. On the openings in Mexico. If you remember, last year, we made some adjustments in terms of raising the threshold for a new location in order to get approved for a new store.

We're now requiring a higher score in our internal metrics because we don't want to find ourselves again in the situation where we need to close stores because they weren't good enough, which is something that happened in 2020. So we've made it tougher to get approved for opening in Mexico. And we've been building the pipeline with that criteria.

So it was very good and encouraging even for us, that we were able to do so well in the fourth quarter, as you said, more than 400 stores. Going forward, I think we should think of an 800 number. We'll start with an eight probably. There's maybe a little bit of upside there, but let's think about 800 for Mexico for 2022.

But to answer your comment, let's also take that outside of Mexico, we're probably going to be approaching 400. So we're going to have 200 + in Brazil, something like 150, 160 in Chile and Colombia. We're almost going to be two to one Mexico versus international this year.

And that ratio is going to change quickly because Mexico is probably going to stay there, maybe grow a little bit, but South America for sure is going accelerate. So to the comments that Daniel made in the remarks, it's entirely possible that in a few years’ time we're going to be opening similar numbers in Mexico and outside of Mexico.

And complementing that comment, as you know, we've spoken about scale, and the benefits of scale, and what that does to your returns, obviously, to your relationship with suppliers.

As we're getting bigger in these other countries, obviously, the profitability there begins to supercharge and it begins to be a story about margins catching up -- catching up, it's an aggressive thing because in Mexico, obviously we have 20,000 stores.

But beginning to generate profits and beginning to narrow the gap, much in the way that we're seeing on the Health Division, where we're seeing the countries begin to narrow the gap vis-a-vis Chile, which is kind of OXXO in the Health Division, is Cruz Verde in Chile. So I hope that's helpful.

And Thiago, before we let you go, so you don't blame me withering away from the right question on the logistics. For most of the early acquisitions, we are looking at ROICs in the low double-digits, even a year, a year-and-a-half into their acquisition. So just to give you a sense of how powerful this business model is..

No, that's great. And if I make just a quick follow-op on one comments. Any structural difference in terms of unique economics in Mexico and out from Mexico going forward, we should have in mind when adding each of the models..

Not really. We are seeing as you know, different traffic and ticket patterns out throughout the portfolio. So depending on whether it's a tourist area or an urban area, or a residential area. We are seeing certain changes in terms of the traffic slash ticket mix.

But overall, we continue to see very, very high marginal returns on capital, similar to the ones we've been seeing in the recent past..

There's maybe a difference. If we just think about Chile, I would say from a value proposition standpoint, our stores in Chile are a little bit more convenience. I mean, if you think about the spectrum between convenience and just proximity in Mexico.

I think in Chile you have a slightly higher margins, the average ticket is higher in Chile than it is in Mexico at this point. But obviously, you need to have certain critical mass. It begins to influence whether you have distribution centers and how you build up your supply chain and logistics.

So at the end of the day, you're using the playbook from Mexico, you're just -- you're where Mexico was 30 plus years ago, but with a lot of knowledge that you didn't have in Mexico 30 years ago..

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

Our next question comes from the line of Sergio Matsumoto with Citi..

Good morning. It's Sergio Matsumoto from Citi. Thank you for taking my question. And my question is, on Mexico OXXO, and specifically on the assortment and the store footprint strategy. And you mentioned earlier, in response to one of the questions that the portfolio has adapted to the near consumption habits under the pandemic.

And that makes a lot of sense. But I seem to recall that in the past that you mentioned repeatedly that when you saw the municipalities that we opened, that the traffic came back, and that indicated that the business model was good, and that portfolio was good, so it didn't really need to make too many changes.

So I'm just wondering if this might be a change in narrative on your part? And if so, if you could help us reconcile and provide some color on how you would -- how we'd address the assortment and store footprint in Mexico in the near normal? Thanks..

Great Sergio. It's Juan. We've made the comment repeatedly about, in the very beginning of COVID. When we all kind of locked ourselves up in our homes and people disappeared from the sidewalks.

There were concerned certainly, outside of FEMSA in market observance, but also inside in terms of will there be structural changes, right? Obviously, e-commerce was growing handover phase.

And so some people would speculate, well, maybe people are never coming back to the streets, right? Or maybe e-commerce is going to be so dominant that the spur of the moment transactions is going to lose relevance. And so our comments when we've talked about, as people go back out and kind of resume their lives and their activities.

They go back to the store and they buy what they've always bought, and this has implications. For example, for mix, right? I mean, you saw a shift during COVID towards multi-service. And so would people come back and go back to buying at a single-serve of snacks or beverages.

And so our comments go to that to basically say, look when people, what we're seeing, when restrictions have come down, when the color code has gone to green, people go to the store and they buy their cup of coffee and their snacks and their tacos like they were doing before COVID. So we don't see a structural change.

Yes, Daniel mentioned a few minutes ago, probably we won't be opening many stores inside office buildings anytime soon. But by the same token, we are seeing higher revenue in stores that are in some residential areas because people are there during the week that didn't used to be there during the week.

And then the other comment which has to do with specifically, I would say spirits and the small supermarket replacement ticket, which we started talking about 18 months ago, those have remained and I think Eugenio commented to that a few minutes ago.

So we are seeing a legacy of running out of beer for a couple of months in the middle of 2020, people discovered that OXXO has a great assortment of spirits at very good prices. And that seems to have remained.

And then there's also that small supermarket replacement transaction for consumers that didn't realize that we either carry their favorite brands or that on a like-for-like basis, our prices were very similar to the supermarket. So that's how -- I don't think there is a -- I don't -- it's hard to reconcile like I don't know if I was clear.

Was that helpful?.

Yes, it is. It makes sense. If you could maybe update us on what you just mentioned about fewer OXXO in office buildings, that makes sense too. What was the ratio in the past and what you expect to -- where you expect to be in the future? You don't have to provide any time frame just like in general..

If you remember, we were talking a few years ago about niche locations. So we talked about opening a few stores inside office buildings, we talked about opening stores inside manufacturing facilities. I remember talking about Honda, for example, where we had some stores that they didn't charge us any rent.

Obviously, we've open more of those in more places, stores in airports. So these were always niche this wasn't a big part of the numbers. So I don't really -- of the top of my head, I don't have a percentage, but it was single-digit in terms of any given openings in any given year.

So this doesn't really move the needle, it's more of just reallocating to more traditional locations and on that front, actually we've made some further progress on segmentation, so I think we've gotten better at going. You remember we used to have just one kind of store, then we went to three types of stores.

Now we have six or seven kind of more finally segmented types of stores. But I wouldn't say losing the office building or reducing that significantly. I don't really think it moves the needle very much..

And I think that is important to mention that this is a fluid situation, meaning, as we come out of the pandemic then clearly, some decisions will be made by office buildings, by companies, etc. and how they're hybrid or not working situation is to going to be.

And then depending on that, then if everybody comes back to the offices, then evidently the opening of stores close to the office buildings will restart the same way it was before. So I guess that's what it's important needs to make sure that we keep our radar up and see how the situations evolve.

And then we'll act accordingly, I think that that's what is important..

I think that maybe the metric that can help you understand a little bit more internally, we obviously have return thresholds on any capital investment that we have for new stores and then we track according to the harvest like, January openings, February openings. We track how closely they are to the typical stock maturity curve.

And when we reduced our openings from the low, 1,200, 300 -- 1,300 to 800, that number moved up materially precisely by being a lot more judicious with regards to segmentation, with regards to where we put it, etc.

And now we're up in the 80's and 90's, percentage hit rate with regards to what store sitting their maturity in the early phases despite the pandemic. So I think we learned a lot of process and I think we'll continue to be judicious even as the changes in consumer patterns come up.

I mean, only in February now, I think we've seen a widespread coming back-to-school in the entire country, we're seeing it in the traffic numbers, we are seeing it just generally with regards to how long it takes to get to the office, and we'll continue to fine tune this formula, assuring that we -- that expansion stays or the assertiveness of the expansion stays at these levels..

Great thanks and thank you for the color..

Ladies and gentlemen, that is all the time we have for questions today. I will now turn this conference back to Francisco Camacho for closing additional remarks..

Well, thank you, everyone for attending the call and thank you for your continued support to FEMSA and the team. Have a good week. Thank you..

Ladies and gentlemen, if you wish to replay the webcast for this call, you may do so at FEMSA's Investor Relations website. This concludes our conference for today. Thank you for your participation and have a nice day. All parties may now disconnect..