Q1 2020 Earnings Call
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[music].
Good morning, welcome everyone to some sort of first squash or Twentytwenty financial results conference call.
All lines have been placed on mute to prevent any background noise.
After the presentation that would be a question answer session.
During this conference call my husband May discuss certain forward looking statements concerning Sanchez future performance and should be considered as good faith estimates made by the company.
These forward looking statements reflect managements expectations are based upon currently available dasha.
Actual results, so subject to future events, I'm, sorry to cheese, which may materially impacts the companys actual performance.
At this time I would now like to turn the conference over to Mr. Eduardo I do Yeah that says Chief Executive Officer. Please go ahead Sir.
Good morning, everyone I work I'm, comparing first quarter really great results conference call.
Oh, great work, where else are old go online today.
We hope that you and you're not work or help me I'm, Dave <unk> <unk>.
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Are you might expect based school will decide where do you burn for how are you sure why did equals certain Marie will discuss our work grading I'm not sure <unk> goals for the first quarter. We note that you are old for people, who know how difficult emergency department or work really well.
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However by the Middle of March you got a meaningful Bolton consumer.
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Great work and that's really great.
We also began working leveraging the scale I know were reduced to provide health broker music.
And then go your bigger and the effect of these documents are good for a company.
Extraordinary.
I'm very proud of what we're geared outreach.
Granger at every level, taking advantage of what's going on execution capabilities are you are good like big you're wearing a good news you're not only do another good.
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Let me mention some of the mix your views on merger, we have things again, so far.
Our first priority ensuring that you're taking care of ever be blood work are granted you gonna say the whole more than 25000 wearable employees with great or we have a neighbor work from home or babies were possible.
My name is up.
We have rewards sunny very practical some stores Richard but he.
During the availability of upgrades jokes I know, but your where people.
We're making her great guys your widely available or with stores performing temperature tricks.
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Like dreams, and working with our worth more more wearable buyers crept into the crisis.
Moving on from Scorecard becomes a day to acquire the numbers corporate revenues during the first weren't agreed part one part person working hard abrasions grew 6%.
Regarding basis for programming has agreed to bleed then present I think over Brazenness degrees for postal workers there.
Net income encouraging new forgot the reflecting a noncash foreign exchange gain related to parents are dollar denominated passport feature.
Income from operations or grow bigger our journey upset by high good experience and a degree.
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Our effective tax rate was 35%.
During our work girlfriend, they didn't that there could be Karen.
This quarter decreased <unk> million pairs with what breakthrough <unk> water to reach a level of 62, because that's just at the end of March.
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Moving onto the school celebration in some beginning with <unk>, we open up right I think good net new ultra stores during the first quarter mid June 1009 at the five net store openings were good luck Vermont.
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In America.
Ultra thin girls were up five <unk>, you burdened by what might be one present never go through the good parts you know said by at the present degreed door dropping.
On a consolidated during the second half from March when they're not down because the start their number of Mexico.
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Brazil me on the armed to go out.
Constructed significant thing that somebody never customers have stayed at home.
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Gross margin expanded by 160 basis points, reflecting Kelsey Grammer general commercial income or <unk>.
When a concrete Greece or more thinking from what your burn.
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Im comfortable grade you good 0.4 prepared.
Operating margin expanded.
80 basis points, even as we continue our Governor <unk> Commission based work in a broad today.
And we also the all in Britain Nike.
Regarding the Pinnacle American companies. Your we got it doesn't degree drug stores during the quarter RIV 2234 units are <unk> at the end of March our neighbor Island don't <unk> net yields door locks per month.
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Revenues increased 9.9, Verizon wireless or gardening basis, they agreed they decreased 1% <unk>.
Same store sales degrees at an average of wonder if it doesn't make your business where degrees board on good reason I agree.
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The second Perfect example corporation has increased scope of work is driven by the old Colby emergency provided a mother.
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Gross margin are constructed by 60 basis points in deepwater perfect in order to fight pregnant or when they disagree on beer or upgrading not where might go get these girls pregnancy junior.
These were partially offset by Google <unk> I'm worried if I could go to bridge your execution, we eat girls Grps and drives in Mexico.
Operating margin was stable that's got to <unk>.
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Right, Okay, moving on being gone quite apparent during holiday to get that they boarded were stable and then you're crazy neuberger degrees.
They are significant brinci headwinds.
And the border.
They were able to extend their margins are the gross.
Operating levels I regard the garbage in magnitude.
The Oxyrub open Peregrine amazing that's you know what parts of our company. There are bracing expertise is doing very helpful.
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Well pad like everyone else, we are facing an uncertain environment, our great years, I've worked hard putting together analyzing for picture of scenario with varying degrees of straight.
Hi, My name is what actually if we will need to date.
Need scale with the goal of ensuring that were beaten Voyager we've had a good levels of degrees.
You know a big part of the great here and have to do with how long does will last.
How did the quicker.
Most of our regimes are deemed adventure and therefore works doors are open and go for him to take upgrading.
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Right now and they are not had happening as Mark you Dave.
Let me just license important anchored center here I mean look beer when those kinds of buyers will be allowed garden production.
Oh, no perfecting children I wouldn't know brings your girlfriend will be greater was to reduce your perjuring our numbers.
And yet as I mentioned before we got moved corporate expenses, you burn business and they do quite a German whether.
You didn't need.
Even you love our wire.
They like Leap for example, but we will be are unable to open as many new stores, we expected at the beginning of the year.
So some preferred method, we suffer pergo consistent with big lump you. Therefore, there are some indeed, we are not going darn good thing everything they have to do it would be driven and you're right I've got a big thing.
We will continue to work hard so that when just gone faster, we came up a stronger more humane whenever its union and better position company.
Or would that be kept up with the goal for your questions.
Operator.
[noise] [noise]. Thank you the question and answer session Beacon at this time, if he would like to ask a question. During this time simply press stack them number one on your telephone keypad. If he would like type withdraw your question press the pound King your question.
And maybe take Andy ordered that it is received in the interest of time, we ask that you. Please limit yourself to one question at a time in order to allow for the maximum number of corollaries to ask their questions.
Well now take our first question from you can see Katz from Goldman Sachs. Please.
Sorry. Your line is open if you have your mute function the neighborhood.
[noise] no.
Oh, Yeah, you how many congrats.
Yes, hi.
Good morning.
For the thinking about which I've tried to squeeze into real quick one.
On your comments about April would you be able or willing to put some numbers around ones or maybe the type of impact for us.
Well, so simple sales.
To get a sense on though the.
The trend has a as in particular, what we should factoring for.
For a full the quota and they've got full openings.
Page as well.
Okay, I understand that yet.
As I said to be able to open up maybe but even in that respect could you give a sense helpful. How big of any thought that could be a if you quantify it will give us some changes just.
To get a degree of the impact.
The defense, especially in the segment both general you.
Venture and that's always seen smoked pick that up.
I'm not looking what that.
I'd like it's when it comes to capital allocation to being central.
Actually I would like to bugs.
I think that the decision, making process will need more towards simplification or conservative in small or maybe be more opportunistic assuming that there will be assets I want to kind of getting organic growth that may come up for.
So grab or openings.
Moving in Mexico, whether it's Brad so.
You know the said how should we think about that through these eating.
Well, maybe some projects.
And then it will be sold but does that more more more visible.
Okay, Let me start with with the second question first.
Yes, you know we after described here.
A lot of learning what we can do even better I think there will be some without doubt that moving some we have to.
Adopt the new by defendable position dissolve the stores all the nickel the pope into offering and I think we have to adopt the new environment and I believe bake.
Lot of time, and and and I think I will may never used to.
We we Irene calibrations, Megan piece, and again and started growing oldani plant and gaining share.
In terms of all of the a couple things you're left with aegis, a bench and the opportunity.
We bought we are not going to pursue in these good time, I'd, probably add a andy any because Ah Ah I will leave you with brokers have what's that will do what we have dawn and I'm going to start operating efficiency and come up with as I said with a REIT connection and to adopt the new.
What's your needs.
And and I think we should be up into opportunities I mean, there might be smoke would you need to what we will be not a hockey looking for them I don't know you run if you'd like to.
With the very first thought.
No I I know you Hey look I just want a I think on day on the capital deployment.
We were probably already done anyway, I mean, having dawned to the six transactions that we did in the last a you know 12 to 18 months definitely it's a stage for digestion and stepping a station and capturing of synergies and I know there do you guys have other Sachin mccarran.
Right.
It's even more the case that that we we are not actively looking having said that I I guess, we we should also say that yeah. You know seems pricing beat opportunities if something I came along that was just a touch opted not to take a look up we would but I don't think that's a high probability or current seem to show.
John.
Yeah.
I think that.
He pick the than it did first question that's tied to do with.
Okay, and what we're seeing in April.
You know if I, if I look at more than that whole months. If I just look up to maybe the last couple of weeks. So I think paper that was a it's a tricky yeah. If you look at the whole month, it shouldn't be tricky because holy week is sitting there and even though this year Holy week, a Washington in neighboring in both cases a 2019.
Got to us on 20 become part of something this is not ideal given that Holy week. He said imports on theories on so.
I just look at let's say the last 10 days of them until the last week, what we're seeing is.
No no a team.
Construction in a sales.
I'd also.
And they think if you if you look at for example, the health Division made it really varies a lot by country.
The most Ah restricted country in terms of Ah customer mobility, and and so on its just Colombia.
If you look at a if you get that cheating for example, I think we're looking.
Also kind of a a low teen contraction I I would make the caveat, though in terms of Auxel.
It wasn't mentioned in the opening remarks that beer supply is they set it's an issue right now we are still stocks or both or suppliers Heineken and I'm available, we're able to to give us a fair amount of product a few weeks ago bought out there now.
Producing as far as we can tell and ER. So when we you know what if and when we run out of beer, which could happen. The you know in the next couple of weeks a that it would that would be negative four four sales as well, but in terms of what we've seen the last few days as I said kind of low teens is the number.
And and acquiring second.
Something that has become a battery and in the wake up to me that using email or beating the oxo. During this period and they'd be somewhat counterintuitive that you any any take away maybe in behavior. What changes that you know 10, oakfield maybe more of it.
[laughter] CBD advantage destination is there anything that you have led so far I'm with you know more generally we forgot to that.
Oh, I mean, certainly I said a lot of mentioned we have seen a very you know a ball normal gross in into categories. So today, what we would consider Dalian replenishment roshe, we type of transactions Ah pantry loading.
Type of over items.
But unfortunately for us about that represents a small small proportion of our mix and even from some uplift I think if you standpoint, you know our margins are generally better in the on the go kind of single serve cold beverages, Ah snacks and that sort of staying so.
Yes, definitely I think some consumers are looking up to spoil the appeal to store, that's a place where they can maybe a you know we feel the French for for the short term, but we are not nearly as I said benefited the big box supermarkets, which of course are having a.
Hey, good time.
Right.
Great. Thank you. Thank you very much.
Thank you.
Thank you and Dean cast of time, we ask that you. Please limit yourself to one question other time in order to about that maximum number I call us to ask their questions well now take our next question from Bob Farnam Bank of America. Please go ahead.
Thank you a good morning, everybody is worried about one metric I hope you penetrate shaping healthy.
Yeah, I had question with respect to mix gross margin.
[laughter], particularly when it comes to the strides strides you've made in commercial income transaction income [laughter].
Corresponded banking fees it remittances.
And I was just wondering how you're thinking about that and how those services or are behaving kids.
Due to the point to see a greater relevance in this kind of environment.
I can see that evolving over the course thier.
Well I'm not sure Hey, Bob Yeah, I mean, if you look at even what happened in the first quarter trends are still very very strong right are we had a gross margin expansion I believe it was 160.
Basis points.
When we talk about the drivers for that and I'm talking about Auxel basically the drivers for that are a little bit different from what we've seen the last two three years in the sense of that.
Financial services are no longer growing double digits I mean, we had so many quarters when we were looking at.
20% type of growth for a financial services.
I think a a lot of consumers and I'm talking.
Before the crisis right. So it was just kind of up until like a you know a few weeks ago.
The consumer that we're going to adopt.
Banking to walk so.
We'll probably already doing it.
And so most of the most of the gross margin expansion that I. Just described has really been driven by commercial income.
Ah promotional activity our own I think enhanced.
Oh abilities to offer.
Oh, you know, let your promotions on top of each other a shorter term a song for.
Different parts of the country. So we would become a lot better at a catering to suppliers needs to use socks off an extension up their marketing arms.
I'm of course that should also said well you know we are making progress on the on the Fintech and the noted at the site and we're not slowing down through the crisis and this is something that.
I expect later in the year towards the fourth quarter, hopefully we'll have.
More tangible news to share with you guys in terms of how that effort is going.
Hey, especially in in terms of the LT OXXO digital platform on a putting together the loyalty program and then some kind of a fintech offering that begins to take shape.
Right now I would say what kind of into middle. So you knows financial services not growing anymore, but you know getting close to the point, where maybe there there can be another interesting leg of our development enabled by the by the syndicate platform.
Hey, one when it comes to remittances had efforts been under.
It's been.
In place for Awhile, and I know that maybe a flat contracting pie, but is there an opportunity there for you to take greater market share.
I mean remittances, we've been working with Western Union and with other providers now for a few quarters, obviously, you've got because that moves.
In line with whatever is happening in the U.S. economy, and you know, we we do benefit probably but not as much as of the you know the bigger or kind of a durable goods stores in terms of when people who received or the remittances I'm a big chunk of that money logically we'll go to a you know.
Sure drives on TV, some things like that maybe just a small portion will go to a two grocery store to you know, giving them sell something a bit of Oh. The luxury was there at the store at our store.
But you know I I think we're going to learn in the next few weeks and months.
One thing that I I want to see personally is a Andy said it'd be too Lucas question, a few minutes ago, if people begin to privileged proximity a little bit more.
Because you know getting on public transportation is a little bit risky or because they just don't want to be out of the house for as long I'm. So then they start looking at the corner store.
I see more to satisfy even more needs that they have so far so well when we're going to learn a lot about about consumer behaviors on whether or not we can take an opportunity by leveraging the proximity into coming in the coming months.
Understood. Thank you.
Thanks, Bob.
Thank you well now take our next question from Alan Atlanta from Santander. Please go ahead.
If you take missile much hobby.
Your families.
On the Waldorf everyone around Jewish good and I Hope you can can you hear me correct.
Yes, you have got.
Perfect Okay.
Good question, one of them I would love the how to think about same store sell some of the pharmacy division that deal was a bit surprised by the weakness there.
Given everything that is happening.
You mentioned.
Some some differences between countries. So if you could extend them down that's up but your question in a more strategic question.
For both of you.
From two very good or thinking about consumer behavior, and how to much value proposition in terms of consumer behavior. How how's your your your preliminary thoughts with how consumer behavior will change outs or after this crisis what are the French of references bird you're using for Mike.
Article perspective or from other industries.
Did you can share we thoughts in terms of how you're thinking about the to true up the whole comes up lots for political thank you.
Well, let me, let me try to start with the second one Oh yeah.
Without people are will be avoiding crowd.
People, we be avoiding public transportation.
Well, we'll be a more sensitive to what traveling and everywhere like moving as much as wherein the past.
Well I think being closed as opposed to the customer having so many outlets everywhere, having the quick whatever the regional because these are not massive dilution that will be quick the everywhere.
We are into position to do a very sensible <unk>. The these new behavior changes of the consumer and start adopting a without doubt.
We don't know exactly I mean, we don't have many self serving things I, probably the hub the the a bigger English.
That will be Oh, I'm, sorry, you skills hurting stuff, but we do other type deals have or doctoral with these GERD a warren.
And by someone would you already has already they.
Then buried proceeds you deserve or with customers that grow too so I think we.
With me.
Things happening and as window we.
Things might get better, but I think people, who will be very sensible to those social lead the teachers.
I don't know we will be doesn't go and I think we'll be very bugs are sensitive to what things might change I.
I mean, we are you understand that.
Social business in Mexico will be I'd be thing because we've been to do they close Hercules speaking well probably some of the park.
So I don't know I think we just have to some degree.
You might happen very good ideas, Helen that remote [laughter]. Thank you well I mean, I mean, it's not an idea, but it's something that is very evident and it's unfortunately, it's not what a good thing it's kinda south.
They were going to one of the most massive economic recession that we've seen in Mexico. So I would think that people have to buy more on a daily leases and they went through that would be possibly blocks.
But it's too soon because of adult Unfortunately, that's that's something that we're expecting as part of this works on the back of so good magazine for the economy, but.
But we'll see what we think there's so much of drugs into some older.
Yes.
Why do you want it to come in from Department.
Yeah, Hi, Alan.
I mean basically the the exchange rates the way that the Chilean peso and the Colombian peso moved relative to the Mexican peso made it made a big difference I mean that the figures. We have for example for for revenues for the Health Division on of course, South America is about 80% of that.
I reported is basically 20% increase but if we had just where currencies, it's actually 36% increase.
And we look at same store sales I saw was reported.
They decreased 6.8.
Well, yeah adjusting for currency. They actually grew by 3.1. So that's a basically have pinpoint shift in same store sales.
Once you control for foreign exchange rates. So I mean as you as you said I missed it would be logical into current environment for drugstores to perform well.
Bought a the FX stuff did Ah distorts the data but.
The trends are fine in terms of you know that the local operations are doing well and then we just need to deal with the FX once we consolidate information.
Thank you so much one centseight. Thank you.
Of course thing.
Thank you. Your next question comes from mass that I read <unk> from Credit Suisse. Please go ahead.
Hi, Thank you for taking my question. My question is more related to the reason that could be shows.
Last in Brazil.
Right you understand I, she can give us some color on how the integration of these assets has been a how you are you know a pent up they talked about the integration of these assets into seem to find yourself and also if you can have some.
Maybe upswing you should start disclosing some of these numbers for fall for the market. Thank you very much.
Yeah.
I would your cards I were very personal board meeting and he went very well and unfortunately no the.
The green environment is it really bringing all or everything all upside down so but I think we're very happy we are very much the same way of thinking on how Google or make progress.
The market.
As for parts of would agree I I would say I think we are in dark.
Going to be as aggressive as we've talked with them so of expansion because of the green super expensive, but I think.
We are very happy with the relationship that same sharing the same objectives and brokers of green beans in Brazil.
I think we're we're very happy I don't know you would rather than having one.
Yes, no I mean, as specifically talking about the AGV the warehousing operation, which I think is he was the first one of them are said I was referring to ones that you just explained I I think generally Oh, it's has exceeded our expectations in terms of of the quality of the assets under management them to process either they had in place and so I would say, though.
He's done you know, bringing that didnt seem to into our platform has having been a better than expected or faster than expected I also would like to comment I think on the drop storefronts in Ecuador, I'm also very quickly.
You know a expanding profitability and and are performing perhaps a little bit ahead of schedule.
In what is a very complicated context, because they think of Oh, the different countries, where we operate pick what autos hasn't been a especially shipped.
By the by the pandemic.
I I think I'd go to the second part of the question.
Having to do with disclosure.
Definitely we're.
Already working with our so he's because there's been logistics business, which is the one that but really bought the AGV, which has now been kinda you know, it's basically round numbers, but it's about a billion dollar revenue company.
We're working with them so that were already to start disclosing their numbers are probably a year from now so we're shooting for first quarter of 2021.
I think the acquisition that we are also in the process of making in the U.S. of a waxy a north American corporation to especially like distribution platforms that were creating in the U.S.
Also a we should be in a position I think that's a transaction that has not closed yet but it did will close soon and also I think we will be ready.
To start disclosing those results are the same time assess I used to care Kinda you know first the first quarter of 2021. So you could think about it a year from now we are going to start.
Showing that the performance of the income statement today, the operating metrics.
Oh for businesses that basically represent a combined to about $2 billion.
Today, you are not you're not seeing so so where we're working on that embodies our expectation right now or send.
Excellent. Thank you very much.
Thank you.
Thank you. Your next question comes from our viral Garcia from the Ti keep pace.
Okay.
Hi, guys, thanks to the call.
Okay well.
Hello.
My questions on the balance sheet, you mentioned, you're thinking about this floating the dividend.
But I was wondering if you did.
You mentioned that really tells me you drilled some credit loan and if you could just remind US said you're gonna might have some you know what that amount was and if you get about is or what your net debt position is.
At FEMSA sort of on a pro forma basis, assuming waxy.
With Janssen transactions close that'd be helpful. Thank you.
Hi, other Oh. This is one let me let me take a walk at that so on the on the dividend or what we what we're saying is I mean normally in the way that we've been paying the dividend for a number of years now has been into installments. One in early may one in early November.
And what do we did this time around was too just given the flexibility to two rather than pay something up <unk> in may which would basically be next week.
We are giving ourselves the flexibility to do it later in the year and in all likelihood I think there's going to go to November right. The way that the that the shareholder meeting resolution ended up being drafted a it says a dividend will be paid no later than November 15, 2020. So so it's not I mean, it's I guess it's.
Following the first half of the payment and I'm moving it it getting I I don't think it's been decided but in my view would be that it's gonna be basically doors in November.
But it will be paid during 2020 in terms of I mean, they have the figures.
I have the figures on a per share basis, but I I mean, looking we can give you the.
Total number.
And then later you couldn't you can calculate that Uh huh.
Does that make the name the name to the question is whether or not.
That's that's clear that it right will be.
One of that this though in that.
Thanks.
Okay, Okay and in terms I mean to the Jim's the watch North American transaction, that's basically a.
900 million dollar investments so.
The numbers that were disclosing today, a in terms of of our press release, our over the three that's the problem is that we made that it wasn't made on his remarks about the you know the bond issuance someday drawing of the credit lines, you would need to substract $900 million that it will be paid for.
Before that transaction in the coming probably in the.
Certainly the into next month or so.
A couple of months.
Great.
[music].
Thank you again.
Thank you next question comes from Carlos Laboy from Hate Test DC. Please go ahead your.
Yes, good morning, everyone.
Well I love. The can you. Please comment on the sustainability of the Coke FEMSA dividend and your expectation of that dividend going forward.
And also perhaps share a little bit more insight on recent transaction.
Well I regarding to the study deal via a they didn't have no parago Susan Largo No. We don't have any bill I mean, you use a buckets green and I can do we go prints, they really coming up.
These are gonna be graces.
They are doing just fine I didn't go we are.
I think we're very happy with the way the company's performing the way they had been adjusting their various doctor who TV news using an environment. So I think we are happy or the way we being a go can do better and I think in it for the long term where were working to set up a better.
Way of understanding between <unk> company, So, we're making progress out of that and I think we're happy that long run will be a better prepared to do sort of these new a girl many gun consumer environment.
And regarding the you said regarding the acquisitions that we made a well I think we're very happy with the.
Within the Jason the right in the Glint isn't the right Victor and I think we are just.
Understanding how to.
Goes the view by not being able to double the number being able to connect as much as we good but I think the grinned don't manage enough of the both companies Wuxi in North American.
We're very happy, but then and I think they're very much delaying the grades of goes this deal somewhere during May I don't know you would like to have one about the older.
Acquisition, it's got to sublease, referring to.
Yeah, I think on <unk> I mean generally and this is something that I think we've discussed with all of you on the line in the past you know there there is certainly an appetite.
In order returns driven a appetite to continue to grow a the retail component of FEMSA.
And of course, some of the transactions that we've announced a into next year or so.
I'm missing that direction, whether it's the JV.
For OXXO in Brazil for for proximity in Brazil.
Whether it's the investment in cash and carry into U.S. and to the Optionality that gives us to develop that platform in Latin America in Mexico, and then beyond.
Obviously, the especially distribution is another.
Part of the strategy, where we are a into parts of growing where we think it will you know these are businesses that will.
I'm going to satisfy our requirements a in terms of ROIC.
ROI to her whack spreads so to speak I'm, sorry, I think directionally, where we're moving in that in that direction.
Obviously also thinking about this the way that you know if you go kind of back a little bit go back in history.
You know when when Coke FEMSA went into you know in acquired who was thereby game or something like that I kind of expanding the scope a little bit of what they did I'm a win win from took a man of steel went into drug stores I think our incursions into the U.S. and these two acquisitions or investments that we have many of the U.S.
Follow the saying the same logic, which is you know they see as you know there there's a lot of things about these companies that we're familiar with it's just you know that that they're operating in the U.S. as opposed to Latin America, and and we need to learn how to do that and of course and leverage local or you know existing management.
She is the case in both of these transaction so directionally moving towards a you know retail and especially distribution geographically looking up at a whole a continent as places where opportunities might might arise but of course. These are these are things that into current environment. Our.
For our Ah, taking kind of a backseat two to kind of getting to the current situation you know as best as we can and then we can we take that.
Expansion face more more actively.
Thank you.
Thank you Carlos.
Thank you. Our next question comes from Gil Sensei, DRD know from JP Morgan. Please.
Hi, good morning, everyone on thanks for taking my classical.
Yeah, Hi, safe and healthy here.
Just like they basically here on the digital initiatives implemented by the company. So I'll, let to this end like or how they will allow them to auxel taking place.
Good luck engagement that you would see looking constant does and what they're becoming challenges here I think like a little bit beyond the Colgate outbreak.
How do you see that copper to needs to further connecting like that the opposite platform and also the logistics and distribution stricter 18 had a company.
With that or their ecommerce operated so basically becoming more like a service provider.
But also like and powering those OXXO stores.
She pump storms have capabilities that I can't you mean like to put the shell.
You need some possible beat and so she social seats.
I don't like our mindset that shouldn't be any here and then like walking away from from the technology pull apart like that isn't like what's the view from you guys on put they show up with duties to further expand a into Latin American I'd say here.
Articulate in Brazil in light of that [noise] economic downturn is maybe seeing here. So maybe you have like a thing is available good location, that's like feedstocks and stores.
My question thinking.
[noise] [noise] Hi, Joe. This is one you know it's picking the first part of your.
Question in terms of digital.
Certainly you know we probably.
Were little bit late out of the gate on the whole fintech development or at least heavy other other players, but we are I think we're catching up a this is going to be a very interesting year, where I think both on the loyalty.
Program on the I'm just thinking about from we are we're going to to make a lot of progress are there a fair amount of resources being deployed into those efforts not necessarily financially I mean, there's some some investment obviously, but also human and and in terms of management time and focus.
We are currently testing if they loyalty program in a number of markets.
You know for many years social did not have a a real loyalty program, but obviously a it now now it's become I think a more attractive and never because it brings with it the the information be consumer insights.
Oh Fulfils, knowing you know who is who is buying what and the the opportunities that then present, a four for potential monetization of data.
I don't see pick side I'm also as I mentioned, a few minutes ago.
I think this is going to be an interesting year, where hopefully by the by the fourth quarter, a we have more and more tangible information to share with you in terms of of our product and then on what it can do I mean, obviously, we approach. This a with the benefit of I know that I would say a structural advantage that is unique to walk.
So which is the you know the 19000, plus a physical stores or where people are you know in terms of.
Putting cashing out of out of a of an E wallet distorts, obviously very very relevant and also the fact that they also brand a already a it's a very broadly used and gotten much trusted platform before for cash payments today, and so I think of the Mexican consumers.
Gradually embraces cashless.
And digital transactions Ah that's about to we can leverage the strength of our brand and the ubiquity of our of our store network.
I'm not saying, we mentioned earlier in the into called I mean, I think the current environment. You know these are some of initiatives that we are not slowing down precisely because you know a there.
Thinking about how the consumer emerges from this crisis.
We believe a you know the read the reliance on on on a digital transactions probably will increase.
It's not theory. If this is gonna be the catalyst that finally, a you know a brings some most mexican seem to digital space probably no.
Certainly move move us in that direction.
Oh in terms of Brazil, or the second your second question I mean, obviously, we are you know our partners down there the that race and team is very very.
Knowledgeable and they already have them you know you know about 1000 stores in there in their gas stations, but also in terms of the of intelligence off where you know where should we start looking especially when we think about.
Oh, the Standalone stores, a which I think you're going to be the did the biggest challenge, but potentially the biggest reward in the long run.
Oh falls off a this effort we are obviously relying a lot on on the rice and team to help us decide.
You know what are the first wilshire going to go you know whether or not done at what point I'm aware or would we need some distribution capacity in terms of 'em <unk>.
So so there's probably just already taking place I think it's a little bit early for us to to disclose a you know with more and more detail what what the plants are bought in terms of the current environment and and expectations for Brazil, I mean, we I said automation in his opening remarks, we we'd see a true tend to take a long long view.
And so the current whatever's happening in the short run in Brazil or in any one of our markets doesn't really change the long term expectation on so we are asked excited us ever to finally have our.
Foot in the door in Brazil, and hopefully also out of the year progresses.
We'll be a in a position to share a little bit more about how is that a joint venture is going.
[laughter] thinking.
Thank you Jim.
Thank you. Our next question comes from Rodrigo I, let Ken Tyra from U.P.S. Please go ahead Jeff.
Hey, I thought a fine thanks for taking my question just a follow up on day, how submission. So what you need to get less clarity that effects.
And they got defect and which could potentially be back in Q2, and however, my question choice on that performance you have seen <unk> commerce drugstores.
And it goes matter They act.
Some of the industry numbers together these segments all mass is growing double digits. So so why don't you seen a.
Oh, Please help me scholars.
Hi, This is quite Oh, yes, I I, you're absolutely right.
You know looking at it not from an industry perspective, but just sticking with from from the crews that are that especially on of course, because where there is a large player in Chile.
I think the loyalty platform and the E commerce on the.
Home delivery platform are pretty pretty well advanced and I'm definitely the current the current juncture facilitates or you know provides extra incentives for people to do to Dubai from home, she Lacey Submarket, where mobility risk.
Frictions are already in place about our stricter than.
Then most all of our other countries I think maybe Colombia, the only place where they're at Columbia, Nick Why don't I also streak bought but certainly more than Mexico, right and so I think it it makes perfect sense.
For the consumers to be relying more on these type of Ah E commerce platforms, and I would say there's database.
Definitely well what position for that.
And any fever, and you can provide the revenue contribution Oh rose and meeting the last few weeks, but have said that that would be helpful. You know I don't have the breakdown of four for the last few weeks in terms of Ah He commerce versus a traditional but it's something that we can definitely look into and.
I'm getting back to your with a figure I apologize for that.
Hello, and thank you Glenn and just a follow up on this on Easter and <unk> just qualitatively speaking I mean, you. Besides fast how you also said for their playing offense. So if you can comment on that performance that that's an easy nishan, that's what needs to get back you can aren't making and Mexico has had.
In recent weeks and that that that would be helpful things.
I think in Socialistic I mean is itself a collection of.
Several different business units. So for example, there as to less than truckload operation the warehousing operation to dedicated carrier operation and and you know there they're performing a little bit differently I would say for example, our dedicated carrier operation in Mexico.
You know Heineken is a big client and so you know with with Heineken basically not not a operating right now but that is purely a problem for far so used to got team I think lives on truckload a in Brazil has also had some some weakness in their figures.
But are there other parts of the operation like Transportation management, which is performing.
Well, so so it varies a million into different businesses have different geography warehousing. For example, this is really not not impacted because you have long term contracts and I know you're managing the space and that is not something that changes you know from from week to week. It's it's it's much more sticky and that's it.
Ah, but directionally, yes, I would say so used to get has been has has been affected.
Probably.
Especially from direct a direct the fleet.
With the doors and with some other some other change, but I would highlight heineken because of what's happening in Mexico, and I would say less than truckload, Brazil also seeing some weakness as a economic activity from down.
Down there.
That's very helpful. Thank you Larry.
Thank you.
Do we have any more questions.
No.
Brian I think so I wouldn't describe it.
Yeah no.
Maybe lets give it a couple of minutes sees a lot of they want to action.
Well, yes.
Well now take our next question from I'm, telling you all Hernandez from Barclays. Please go ahead, Sir your line is open.
Hi, good morning, once will determine what's in the.
<unk>.
My question as well.
Good.
For a lie them on the break or the proportion of folks is that I would.
Police and area.
<unk> to <unk> Oh my.
Local for yet, but can be at that 32 cents I'll just mention them from work from home.
<unk>.
Yeah, I'm burner can do the person because we've had really good hardly hear your <unk>.
These are the rents and event.
So my question.
Oxalis.
The books, I break ground or something like that.
Some of.
And our liquidity <unk>.
Every as well that can be affected by walk from home.
Okay.
Thanks.
Oh, Yeah, let me tell you we the spectrum of we are really underwriting a store by store basis as you might imagine some stores, let's say in front of in income grew where the hotel Burma news.
They did have had a major gloves and scope.
What some others that we would probably are closer to hospitals are broken through a or.
Nerves and even though they have some of the medical division I would say that <unk> in terms of doing or would they be do vibrate prisons Robbie of the of the ARPU in but I think really of.
The major levy damage through a world who are still got room that we really need by beep blueberries and to go either that they're going to go but as John or by car that people would that be because that is moving and because it doesn't moving a window.
But they need anything else is very diversified then so I think.
Does that is really the the main factors and I will say that will be probably around 50 BP presented over 60% over stores out has.
These doctrine I I think as us when it when the garments that open but could be anywhere, but the end of may.
I think we would probably come.
Come up with a with a.
Better their understanding of the market.
I would say the older credibly, how these reviews of a we don't know yeah, there being some some deep friend or finding from development or the the movies, but they will be open up or they're not so I think they're still the the going to steal dear and we don't know.
Yes, he there will be allowed the amended productive year again.
In the near term I know you what drive anymore.
Yeah, I think in terms of a as you say err on the on the sale of beer and generally.
You know the link or liquor regulation.
The core sales regulation is very local and so we have seen of varying degrees of restrictions.
Front parts of the country some states or are you.
A you know a much fewer hours into shape for example, where where you can sell alcohol small proportion of the markets or were you. You you are not selling really alcohol at all.
Bought the big beer concern I said, rather was saying case that for a category that is is this one of our most important better we could better we could be running out of products into into English not too distant future.
Okay perfect. That's helpful. Thanks, a lot on still.
Thank you Anthony that is <unk>.
Thank you well now take I next question from a stab, though and that the I phone you P.S. Please go ahead.
Thank you know a after the protocol.
My question was really on the on the on the beer at supply and you could just a shadow even more like on when you think you're gonna be running out of inventory and then what is the discussion on the ground today for four for the supply in general do think he could normalize so well.
For CE Mark more problems on on that front going forward. Thank you.
You don't let me do my my didn't my own opinion, Lukas Lager speaking really bites any type of Cds beer makers have an excellent graco how.
Well, it's apparent I think died is the manufacturing, but anything so I think they're more turn to think about distribution and again what would we get concerns in your need more is that there are none of it turns out of those in Mexico that leave they said India.
And I do think those are being pretty dramatically. So I do anything that I hope the Didier or just losing comes up alive again, because there will be a lot of it turns out of that really leave because they do so be sure and again a people lose a major live event or for four or.
Social interaction and I think probably the government.
Might be afraid, but because the baby they do greenbrier it'll be more socially badger and throw I don't know really are I have my own opinion that I think the years should be done open in Uh huh.
Sometimes there are some of your my opening up a little bit more and more but I think we don't know yet how will leave and what are you on driving.
Yes, hi, who struggle with so I don't want people to just to get off the call lending and run to the store bought or right now we're probably looking at about 10 days of inventory.
Although there are some Americas doors.
Some open stores, that's done not blunder, having been very because then maybe sometime the beacon they've been doing something for the.
Lots of promoters.
Oh, it's very clear thank you very much.
Yes.
Thank you there are no further questions, Tim Mchugh, ladies and gentlemen, that's all the time, we have I haven't now turn the conference back to Mr., but yes, I probably thing at this.
Well. Thank you very much everybody for you probably basis today.
They paid and B wells look what we're doing the next conference call. Thank you.
Thanks, everyone.
Ladies and gentlemen, if you wish to repay the webcast for this call you may do so and says Investor Relations website.
I don't care at that conference for today. Thank you all see your participation and have a nice day, Oh patties may now disconnect.