Earnings Call: Q1 2021

Apr 30, 2021

Welcome to Alsea's Earnings Conference Call. With us are Alberto Dorado, Executive President of Alsea Rafael Contreras, Chief Financial Officer and Salvador Villasenor of Investor Relations. Our speakers will present the results for the Q1 of 2021. At the end of the presentation, we will have a Q and A session. As a reminder, all forward looking statements on this call are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions discussed today. This may be due to a variety of factors, including the risks outlined in ANCEA's most recent annual report. At this time, I will now turn the conference over to Mr. Alberto Toretto. Please go ahead. Good morning, everybody, and thank you for being with us. Welcome to Althea's Q1 2021 earnings conference call. We will be discussing the most significant events from the Q1 of the year. As you all know, we have faced important challenges since the start of the COVID-nineteen pandemic relating to lockdowns and social distancing measures enforced throughout all our geographies. This challenge remain as we enter the New Year with several Mexican states subject to strict COVID-nineteen restrictions, Europe suffering from 2nd and third waves in different countries with accompanying government sanitary measures, and all countries in South America still under various forms of lockdowns and other restrictions. These restrictions put in place by the authorities in each country mean that many units were closed for some of the period and the rest operated at a reduced capacity and or with limited opening hours. Despite the impact of these restrictions, we were able to achieve MXN 10,200,000,000 in sales compared to MXN 12,100,000,000 in the Q1 of 2020, reaching 84.4 percent level of sales versus the one reported during the Q1 of 2020 and about 75% of the sales of the Q1 of 2019. Obviously, 2020, a quarter which was largely unaffected by the pandemic, sees the closure of units due to the contingency measures that began on March 15 in Europe and towards the end of the same month in Latin America. As in previous quarters, we were able to mitigate the impact of the store closings through deliveries at counter pickups and implementation of our digitalization strategy. As we mentioned last quarter, we continue to invest strength our information analysis area and carry out direct marketing to increase the number of online orders. Our marketing shared services department continues to improve our digital marketing strategy, enabling us to reach a greater and more target audience in an efficient and cost effective manner. Our loyalty programs continue to grow successfully with approximately 690,000 active users of Wow! Plus and more than 478,000 active users of Starbucks Rewards at the end of the Q1 of 2021, which represents an increase of 6.2% and 1.3% respectively quarter over quarter. Transactions via our own apps are also growing strongly. Orders through the Domino's Pizza Mexico online ordering, which includes both app and website, increased by 50% in the Q1 of 2021 when compared to Q1 of 2020. And Starbucks ReGuard registered more than 4,000,000 transactions in Mexico during the quarter. In addition, we strengthened our digital strategy during the Q1 by implementing Starbucks Model Order and Pay and Wow! Pros, which is our own delivery platform recently launched in March. Another highlight for the quarter was achieving 65% growth in delivery sales compared to the Q1 of 2020, reaching a 31% share of sales in Mexico, and we were able to sell through delivery, and this obviously includes Domino's Pizza. The same amount of sales that we achieved in the whole year of 2019 was achieved in the Q1 of the year. This was enabled by our own delivery capacity as well as throughout our agreements with our aggregators. In terms of brands, during the Q1, Domino's once again led the way with sales close to 2019 levels in Spain and growing 10% in Mexico and more than 40% in Colombia. All this compared to the Q1 of 2019. Starbucks and Burger King also posted strong sequential results. And for example, Starbucks Mexico recovered 94% of the level of sales reported in the Q1 of 2019. However, some of our brands which rely more in on premises consumption such as Italianis and Bibs continue to suffer due to the restrictions in place. Nevertheless, we began to see a sequential improvement with people starting to feel more confidence in returning to the restaurants as the vaccination program will roll out. In addition, during the Q1, we worked with Mexican authorities to enable the safe return to our customers to use indoor spaces at all our stores as well as to increase the outdoor space availability for seating, thereby increasing our capacity in some of our restaurants. With respect with respect to our geographies, Mexico reached sales of 81.1% and Europe by 84.2% versus Q1 of 2020. And finally, in South America, sales remained flat versus the Q1 of 2020. However, if we break these down by month month by month on a consolidated basis, sales in January amount ARS 3,200,000,000 in February ARS 3,100,000,000 and in March ARS 3,900,000,000. Sales in March were boosted by Easter week at the end of the month and we are observing this upward trend continue in the second quarter. In response to the sustained disruption to operations, we have continued to control cost expenses. Year over year, we reduced our expenditure on rent, advertising, operational cost and other net cost significantly, as well as making efficiencies in our workforce manager, thereby reducing labor costs. During the quarter, as a result of the consolidation of our South America back office in Colombia and administrative process for the South Cone in Chile, we were able to lower our operational expenses in the region by ARS 143,000,000 year over year. Despite the drop in sales caused by the negative impact of temporary unit closes and limitations on operating hours, we managed to achieve a consolidated EBITDA of over ARS 2,000,000,000 in the Q1, reaching 82% of the EBITDA level achieved during the Q1 of 2020, 74% of the EBITDA that we achieved in 2019 and more on the total EBITDA that we achieved in the whole year of 2020. All our regions posted EBITDA in the quarter and we are very pleased with this result in view of the broader economy context. During the quarter, we were able to successfully negotiate the extension of our covenant waivers until June 30, 2022 and this demonstrates the bank's continued confidence in Alsaid's success and our future. It strengthens our positions to continue facing the impact of the COVID-nineteen pandemic and ensure the continuity of our strategic projects, keeping our restaurants operating in optimal conditions as well as enabling the continued organic growth of the company. We'll ease meeting our loan payments and amortizations in timely matter. We are complying with all the bank's requirements including the minimum levels of indemnities, liquidity, stockholders' equity and CapEx set out in the waiver agreement. We continue to focus on maintaining a strong balance sheet and preserving liquidity. Rafael will discuss our balance sheet in more detail shortly. But it is worth noting that our cash balance is now ARS 3,400,000,000 above the minimum level agreed with our creditors. Moving on to ESG. This year, we have included more sustainability metrics in our integrated annual report, demonstrating our focus on improving our commitment to ESG. On this regard, the Alsea Foundation whose mission On this regard, the Alsea Foundation whose mission is to help ensure the food security of vulnerable communities, inaugurated the 1st food center that operates under a sustainable model in Cancun, Mexico, with which we will be adding 500 people to the now more than 7,000 that benefit from the daily nutrition food program aiming to ensure proper physical and mental development. With this opening, the Bapolmi Quinta program now has 13 dining rooms at his first food center in 7 states of Mexico. In relation to corporate governance, yesterday in our general shareholders meeting, we incorporated Leticia Jauregi as our newest member of the Board as an expert in innovation and strategies and exponential technologies. With this appointment, the company Board strengthens its commitment to continue building an inclusive community and to have a greater representation of women in relevant functions. We do not know for sure when the situation will return to normal, but we are encouraged by the positive trend showing month by month sales from January into April and are pleased with the continuous strong performance of delivery and counter pickups. As we have mentioned before, we believe that our sales is strong brand position, digitalization, financial flexibility, scale and technology position scale and technology positions us well for the future, especially versus our small and less well known competitors. In our view, as vaccination programs progress and COVID cases continue to decline, we will see an important rebound in our on premises dining since we are more than prepared to operate back at 100% as soon as authorities allow traffic normalization. At the same time, we believe we will be able to maintain much of the increase in on premise sales, given the convenience of digitalizations and delivery. This should enable Alsea to report a strong increase in cash flow and profitability as we go into the second half of the year and the first part of 2022. We also believe that many of the cost efficiencies we have implemented over the past year will continue to bear fruit in the future. In short, after a very difficult 12 months, we look forward to a much better future. And now Rafael will give you more detailed overview of our financial results. Thank you. Thank you, Alberto. Good morning, everyone, and thank you for joining. To begin, I want to clarify that since this quarter on, all the explanation and notes reported in our earnings release include the effect from the statements related to the hyperinflation in Argentina as well as IFRS 16. These two factors are also included in the financial statement issued to the corresponding authorities. We also made a reclassification on the cost line by registering all the logistic expenses of the Alsea Mexico operation that previously were reported in operating expenses, which now will be reported in the cost line. This is the reason why the consolidated cost as a percentage of sales of the Q1 2020 increased to 32.2% versus the one presented last year of 29.8%. On April 14, our external auditors issued our audited financial statements for 2020. The two main differences compared to the information reported as of Q4 2020 are a negative effect related to the impairment of intangible and other assets for approximately BRL70 1,000,000 in addition to the BRL150 1,000,000 initially recognized for a total impairment amount of €220,000,000 in the full year. In accordance with IFRS International Financial Standards, all long term credits were presented in the audited financial statements as short term liabilities since the first waiver had not been agreed for the 12 months ahead covering all 2021. Now that the current waiver deadline covers more than 12 months, these credits have been reported once again as long term loans in our Q1 2021 financial statements. Since the start of the Q1, we have been able to increase capacity in Mexico and some of Europe. Also, South America has referred to some restrictions given COVID cases increased in some regions. Sales in the Q1 of 2021 reached €10,200,000,000, 15.6 percent lower than the same period of 2020. Important to consider a €250,000,000 impact from unit closures last year. Even though we have been operating at the end of the quarter with around 90% of our units in Mexico, 90 for South America and finally 91% in Europe. In every geography, we had been impacted by the restrictions during the whole quarter, not being able to operate at normal capacity. However, we are looking forward for capacity increases in the 2nd quarter, given the vaccination rollout is picking up speed and COVID cases are falling. We have made an extraordinary effort to reduce from January to March the number of negative units from 988 in the beginning of the year to 3 37 in March, achieving 8.80 1,000,000 in savings on expenses versus the previous year. At the end of the quarter, we had an extraordinary income from the sale of our BIIPS unit with a profit of ARS 36,000,000, which was offset by the extraordinary expenses in Europe from severance payments and expenses related to the LTE program of approximately $130,000,000 reaching at the end of the quarter an EBITDA of ARS 2,000,000,000. Our net debt to EBITDA ratio rose to 8.2 times at the end of the Q1, as EBITDA declined and debt levels grew following pandemic related losses. Nonetheless, the agreements with our main banks regarding waivers to our current covenants have given us the financial flexibility we need for the rest of the year. The debt structure at the end of the quarter was 87% long term with 58% in Mexican pesos, 42% in euros and less than 1% in Chilean pesos. Regarding the covenants in our debt waiver agreements, it is worth mentioning that these do not contemplate IFRS 16 effects. Taking this into consideration, we reported our pre IFRS ARS 8,700,000,000 equity in the Q1 of 2021, well above the minimum consolidated equity of ARS 6,900,000,000 that we have in the covenants. As we have mentioned before, we maintain our conservative approach to CapEx without sacrificing needed investment, especially in digitalization. Total CapEx in the quarter reached ARS312,000,000 mainly focused on maintenance of our stores. In terms of liquidity, at the end of the core quarter, we had ARS 3,400,000,000 in cash, well above the agreed ARS 3,000,000,000 minimum liquidity level required by the new waiver terms. Thank you. We will now like to open the call to Q and A. We will now start the Q and A session. The first question is from Mr. Ben Thoreau from Barclays. Please go ahead. You hear me? Yes. Okay. Perfect. So first of all, thank you very much once again for the very detailed breakdown on a monthly basis and how performance has been within the different regions, different formats. It's very helpful and very much appreciated. Now, two things I wanted to touch base on. So first, can you elaborate a little bit on what you've been seeing, particularly within the last, call it, 3 to 4 weeks, depending on what you have data on around the Easter break season, obviously, that is usually a relatively strong one. What your expectations are into May around Mother's Day, obviously, in Mexico is an important one comparing that versus last year. So just a little bit like the weekly trends Mexico as well as in the other regions, that would be the first question. And then the second question, I guess, is more for Rafael. Could you elaborate a little bit, and I've tried to understand it, but now as you report everything within IFRS 16 versus what was last year not, a little bit of those reclassifications on how to think about what the base for operating income was before you used IFRS and now using it, Because it seems there was a little bit of a discrepancy from an operating income perspective. So what might be treated as what within costs just to better understand because it was quite a magnitude? Thank you. Thank you. I'll take the first one. I'll leave the second one to Rafael. I'm Alberto. First of all, I'm glad you asked the question because we are very well surprised about what is happening in Mexico. As I mentioned and as you guys know, there is a lot of restrictions now because of 3rd wave in Europe. We are almost close there. And as the same in Latin America, even in Chile where we where the vaccination procedure is supposed to be doing very well, We have the shopping malls closed and a lot of restrictions. So Mexico is performing very well. So my expectation, and I'll give you some numbers, is that we continue this way. We have been always, obviously, tracking the numbers of people that have been affected by this. And we have not seen a trend that is growing, not the official numbers, but also the internal numbers and the benchmark we do with other companies we work with. So I'm positive that the numbers are going to be continue growing and because we are having these events like the Kids Day to Day, May 10 and some others that you mentioned. But let me give you some numbers. We normally do a ARS 1,000,000,000 in sales in a week. This week so far, we have averaged about ARS 760,000,000. But the last 4 weeks, we are ahead about ARS 800,000,000 a week. And that includes that Europe is really not helping us a lot. So Mexico is going Just quickly, that's consolidated at all regions, that $1,000,000,000 sales per week? Yes. Yes. Okay. Just to give you an example, the average of 2019 was $1,026,000,000 that's average weekly sales of the company. Obviously, this is all Alsea and this has exchange rates, everything. The average in 2020 was about 6.90. But right now, we are averaging already even with the situation about 760. And as I was telling you, the last weeks, we've been over 800. So I am very positive that if the markets in Europe and Latin America start opening, we were having talks yesterday with our team in France and the government already issued some dates that they will be opening the economy. Actually, they will be opening by May 15. So I have high expectations personally that as soon as they open, as you know, we have seen in the past, the recuperation of sale is immediately. So I'm positive about the number that we're going to see this quarter even with this third wave that is happening. Okay, perfect. Thank you very much. In the second part, yes, a lot of people ask us to make all the explanation with IFRS 16. That's why this Q1 we made explanation with IFRS 16. But also a lot of people right now asked me to open the pre IFRS 16, so you can make a better explanation of the operating expenses and the operating profit. So we are going to be able to open again this pre IFRS sixteen numbers. And for this quarter, we're going to send you the open lines without IFRS 16 and we can talk about it in a 1 on 1 call. Perfect. That will be much appreciated. Just to better understand. Thank you very much for the offer. I'll take you on that one, Rafael. Thanks and congrats. Thank you very much for your question. Our next question is from Mr. Robert Ford from Bank of America. Please go ahead. Good morning, everybody, and thank you for taking my question. But I was wondering how much did government programs in temporary concessions from unions and landlords help in the quarter? And given all the improvements that you've made to the cost structure, how should we think about that going forward in terms of being much leaner as we start to see a more pronounced recovery? [SPEAKER JOSE RAFAEL FERNANDEZ:] How are you, Bob? Well, first, we just had our meeting yesterday. And in the quarter, we have about ARS 300,000,000 in sales Versus priority. Versus priority quarter in rents. We expect in this quarter, we're aiming and we are negotiating every day with our landlords. So we expect another similar amount, a little less for this quarter because things are getting better. And that was the first question. The second question was what? It was really up about just not it's landlords, it's unions, it's governments. But how should we think about that going forward, both in terms of occupancy and your labor costs? Because you're going to some of this is temporary, but some of it's recurring too, right? And I guess I'm trying to understand what was temporary in the period and how we should think about the more permanent cost structure moving forward? I got it. Well, we are with our landlords, we are really trying and we've been successful in some of them to get into variability. And they understand that's I would say the new normal, if I may. So we have about 600 new lease agreements just in Mexico to negotiate this year. And we're doing well. I do believe and it's my expectation, Rob, that the numbers for a normal year, we will be saving in rents, not only because we are negotiating better and they are willing to negotiate with us because also we have not had almost 2 years increase because of inflation, right? So I do believe that we will going to get better numbers as a percent of sales. 2nd, in terms of government support, as you know, in Mexico, we don't have any government support. We continue with labor support in all our geographies, including Spain, which is our biggest market with the ERP, which is still there, and we are taking obviously that. In terms of labor, we are a lot more efficient than we were in the past, especially in Mexico because we are taking all the knowledge, as I said before, of the way that we used to do our store labor schedules based upon Europe. So I think you will see the efficiency that you will see in the P and Ls through all the way through all the year. And we believe we will maintain that. The only thing that we see in our P and L that it's a new I will say a new line that is increasing is aggregators, of course, because their participation is so high now that they are getting 1 or 2 points in our P and L, which is quite big. I mean, we're selling, as I said, MXN 40,000,000 a week of delivery without dominoes. So that's a big number. That's the only line that I see will increase. Labor, I don't think it will increase even with the new law of outsources that we see consideration even with that we already put the incrementally minimum salary wage. So I really believe that you will see an efficiency labor going on. And in Europe, Vierte ends in June. But right now, we have around 22% of our staff inside Vierte in Spain. That's very helpful, Alberto. Thank you very much. Thank you very much for your question. Our next question is from Mr. Alvaro Garcia from BTG Pactual. Please go ahead. Hey, Alberto, Rafael. Hope you're well. Couple of questions. My first one is on Wow! Wow! Plus, I mean, we've you reported sort of in the release you mentioned active users of 690,000 from 650,000 last quarter. I feel like there's a little bit more stickiness there. So if you could talk about some of the strategies you're taking there to make sure active users remain active because in the past I know that was a bit of an issue. And then my second question, a little bit more strategic regarding your balance sheet. The stock's obviously done quite well. I know you're in the process of potentially launching a bond, but just given that the stock has done well, my question is on the sort of pressure you might be feeling from some of your top brands to really grow and maybe if it makes sense to issue equity here? Just would love to hear your thoughts on that here. Thank you. [SPEAKER JOSE RAFAEL FERNANDEZ:] Thank you. We just launched our new Wow! Plus program, as you know, and I hope you guys try it because I think it's a very good tool and very unique. We measure our active users 90 days. Obviously, our list or our inventory of users is huge, but we only measure 90 days. So as I mentioned, it's growing about between 6% to 7% every quarter with very good results. So we have close to 700,000 active users of Wow! And also in Starbucks Rewards, we have approximately a 1.3%, 1.5% growth, which actually is different members from 1 to the other one. But we continue to do both. We have an expectation to keep growing at this rate all the way to the end of the year. But I guess the change in numbers is because we are measuring them with 90 days use. They have to be using the application at least in the last 90 days. Nice to hear. Nice to hear. And then on the second question? The second question, yes, we are going to work this Q2 with the rating agencies trying to have an international rating and trying to make a bond, a higher bond in the U. S, maybe for the Q3 and depending on the rating that we achieve with the rating agencies. And with banks, after we can have this month because it's going to be part of all the loans or indebtedness that we have. We have to refinance all the long term maturity with banks trying to push them maybe for a 5 year maturity long term debt. Right now, we are not thinking about making a follow on or something like that in terms of equity. And we don't have any pressure from our client companies of making the openings or the number of openings that we have under the contracts. We have a waiver and we can open the number of restaurants that we can open with the free cash flow that we're going to have this year. Awesome. Great. Thanks for the color. Thank you very much for your question. Our next question is from Mr. Andres Ortiz from Credit Suisse. Please go ahead. Hi, hello, Alberto and Ferro. Thank you for taking my question. My question is related to cash flow perspective for the Q2. We saw, well, an important cash flow this quarter. You are MXN 400,000,000 away from your covenant. And we'd like to hear your thoughts about this, particularly because you have this also limit on CapEx that you can put up ARS 800,000,000 each quarter, right? So basically, at this moment, you will be limited to the amount of CapEx you can deploy for at least the next quarter. Is that correct, I assume? Yes. Even though we have MXN 800,000,000 limited CapEx per quarter, we're using or we are putting in our CapEx the free cash flow that we generate quarter by quarter. So last quarter, even though we have ARS 800,000,000, we invest around ARS 312,000,000 in CapEx mainly to maintain some of these digital platforms. So for this second quarter, we think we're going to be around ARS 300,000,000, ARS 400 million in terms of CapEx. In terms of free cash flow before the amortization that we have in the long term credits, we're going to be without cash burn in the Q2, but we have to pay around ARS 300,000,000 with long term amortization that we have in the long term credits. So at the end of the quarter, we are going to be in our projection around ARS 3,100,000,000 in cash, but the covenant is ARS 3,000,000,000 plus the ECOS that we have in Spain that is around ARS 1,800,000,000. So at the end of the quarter with the covenant, we're going to be around Ps. 4,900,000,000 in terms of cash if you compare with the covenant that we have with us. So we have a lot of room. Understood. Thank you very much. And my second question is regarding Europe, considering the sharp restrictions that you are currently seeing there. Could you give us a sense of what levels of sales are you currently seeing, particularly in Spain and France? [SPEAKER JOSE HUMBERTO ACOSTA MARTIN:] Well, in Europe, as I told you, because of all the first, because in Spain, as you know, at the beginning of the year, we have this big storm in Madrid, which Madrid is our biggest market. So we didn't have good sales in the Q1. Europe right now is doing about 70% of the sales that we did in 2019, the Q1 of 2021 and about 70% of what we did in 2020. Understood. Thank you very much. It's the only geography where really we are not reaching budget. The rest we are doing okay even in Latin America with the effects. Thanks, Alberto. Thanks. Very useful. Thank you very much for your question. Our next question is from Mr. Thiago Bartolucci from Goldman Sachs. Please go ahead. Yes. Hi, good morning, Alberto, Rafael, and Salvador. Thanks for taking our questions. We had 2. The first one is on mobility and top line momentum. Obviously, all regions have been negatively impacted by the pandemic, but high frequency data actually suggests that mobility in Mexico has been performing relatively better than in the rest of LATAM, right? If you had to compare the potential upside from the economic reopening for Mexico, Sao Joao Tan and Europe? How would you rank each one of those regions just for us to get a sense on where the upside really relies on? This is the first question. And the second one is actually a follow-up from the last quarterly results call. We would just like to hear from you if you have any updates on the overall strategy for your Vicks brand in Mexico. Did there are questions? Thank you very much. I was telling you, I'm actually, as I said, very surprised of what is happening in Mexico because Mexico is, as I was telling you, performing very well. We have brands like Starbucks and Domino's and even Burger King reaching 90%, 95% of sales of 2019, even with the restrictions that we're facing and the close downs that we have in January. And I really believe this is going to continue. I think we can have different opinions how Mexico has done the vaccination, but it's been quite successful. And I've been talking with some people. I think that this is due to that Mexico decided not to close everything in 2020. And that's why we are not seeing that peak in infections in this moment. My opinion is that as soon as as I said, as soon as they start opening and in France, they say they will do in May, the same they say in Spain. So we cannot control what the government decide to do. But the only thing I can tell you as I mentioned is that we are ready for when they let us do business. And we are prepared and we are seeing that as soon as they open, the levels open, sales immediately get to normal levels, not 100% or 85%, 90%. So we are thinking that the Q2 of the year will be doing sales close to 80%, 85% of what we were doing in 2019. We're actually not comparing anymore our sales to 2020. We are only focusing in 2019 for obvious reasons. And if you compare inside Mexico, out of Mexico City, we are reaching more than 95% in terms of sales versus 2019. So when they allow us to change the orange light to yellow light, we think in Mexico City, we're going to reach around 90%, 95% in terms of sales. Right now, we are in 80% because we are in orange and with a lot of restrictions here in Mexico City. And we have around 50% of our restaurants in Mexico City. Yes. And this has also to do with offices, obviously because offices are not yet there. And I'm quite surprised as I was telling you that even in the Starbucks where we depend a lot of offices, We are around 95% already even with the situation that Rafael mentioned in Mexico City. So I'm quite positive. You might be surprised, but I'm quite positive of what's going to happen in the future. That's clear guys. And on Vipps, any update? Yes. In Vipps, we're facing a problem. I've been open and telling you guys, we're facing a problem because Bibs is a it's one of those brands that depends strongly in a very high traffic, low ticket and a lot of people in the restaurants, right? And that's exactly the opposite to what is happening today because we cannot get a lot of people in the restaurant because our customer is really C class and that's the and other people and that is a problem. We are seeing better results. We are doing correct me, Rafael, if I'm wrong, around 50% of sales right now that we were doing in 20 19, which is quite low. So that's a challenge. We are working on that. But we are seeing, especially in Dario, as Rafael said, this is very concentrated in Mexico City. So we are seeing this outside Mexico City performing a lot better because our restrictions are not there. So I really believe bps will see a change not only because everything we're doing to operate better and safe and promotions, but also as soon as we can get to a different restriction from the government because outside terraces is not something that we can do a lot in bps. We don't have those spaces. But I promise you guys that next time Salvador remember me, we'll bring a complete a better deep explanation of how bibs is doing. But because with no doubt this is our most challenging brand right now in Mexico. That's clear guys. Thank you very much for the clarification. Thank you very much for your question. Our next question is from Mr. Rodrigo Echagarei from Scotiabank. Please go ahead. Thank you, everyone, and good morning. Rafael, just a couple of follow ups. Can you repeat the remarks from earlier in the call with regards to the impairment changes? And also, you just mentioned a few minutes ago that there is additional cash that accounts towards the minimum established by the covenants, but I couldn't quite understand what you said. And then the third question is more strategic. I'm just curious if you are starting to see market share opportunities in the marketplace, perhaps more medium to long term? Obviously, many other restaurants have closed, including restaurants from chains such as Subway. So just wondering if you have any thoughts on that. Thank you. Yes. At the end of the year, we talked with our auditors and we were we've talked MXN 150,000,000 in terms of impairments. But last year, we made this calculation store by store or restaurant by restaurant. That increased impairment from $150,000,000 to $220,000,000 in all of the geographies. That's why we had to increase from $150,000,000 to $220,000,000 the impairment, the audit financial versus the Q1 reported numbers. And then I'm going to explain in the covenant, that is Ps. 3,000,000,000 in terms of cash. The covenant mentioned that is the cash that I have plus the credit that I have in Europe that I don't use it yet because we don't need it. And I have Ps. 1,800,000,000 in ecos credit that I can use if I need it. So right now at the end of the quarter, we have 3.3 plus 1.8 for the covenant with banks. And regarding the first question about market share, well, today because we have so many restrictions, it's very hard to do an analysis of what's our market share. We are working on making sure that we have the information as soon. But I'll give you some information that I think will show how much market share we are getting. Just in the Starbucks for the Q1 in Mexico compared to 2019, we have almost a 5% same store sales. And that includes about 60 stores that we still have closed because of their offices or other type of nontraditional locations. And in Domino's, we are doing close to 14% same store sales comparing to 2018. So I really believe that as soon as this finish and we can open, we will measure that and we will take that advantage. What we are seeing also is that in the convenience side of the business, obviously, delivery, carry outs, ride through and things like that, I think Alsea has been leading the way with the brands that we have, with the deals we have done in aggregators and with our own platforms. And that's why our estimation is that we do about 12% of the total restaurant business in the country, which is quite a big number if you take in consideration that all the aggregators are playing very hard in that industry. Got it. Thank you. I also said, if you remember, I said that in week 14 of this year, we achieved all the delivery sales that we did in all the brands in 2019 in just 14 weeks. That's a big number. Got it. Thank you. Thank you very much for your question. Our next question is from Mr. Armando Survia from Banco Next. Please go ahead. Thank you. Yes, congratulations for the results for this Q1, Alberto, to you and your team. Regarding to the total debt of Alsea, we have been informed that your company is making arrangements to extend the maturities of this 2021 to the next 2 years. So my question here is, what is the status of your negotiations for the creditor banks regarding extension of these maturities? And what's your expectation of the month of this year in which you will be completing these arrangements? Well, in the waiver, we have to extend the short term credit maturity until June 2022. Right now, we are signing the contracts with the 3 banks that has short term credits, that is Vebe Ubea, Scotia, Santander, Aforvax and Sumitomo. We already have the agreement. We are signing that. And I think I don't know if next week or what in 15 days, we're going to have all the short term credits extended until June 2022. Thank you very much for your question. Our next question is from Mr. Alan Alamere from Santander. Please go ahead. Thank you so much for taking my question. Alberto, I have a more strategic question regarding the future of the restaurant industry in the regions that you operate, specifically in Mexico. I mean, what are you seeing in terms of the evolution on 2 fronts, the dark kitchens? You have mentioned in the past that you were testing them. How's the level of success of those that you're seeing right now and in the future? And the second thing is, it has to do with partnerships. I mean, you already mentioned about the aggregators, which we assume I mean, which have been very strong supporters of your growth, but they take some of your profitability. And now we're seeing all of the banks in Mexico and retailers in Mexico launching their own e wallet. And as part of the attraction to those e wallets, they're adding promotions. How active and how interested are you in putting coupons and leveraging all of this explosion of e wallets across the banks and across the retailers in Mexico as an additional source of growth? Thank you. Well, let's first, dark kitchens. We're not spending a lot of time in dark kitchens. Let me tell you why. I think we have a lot of things to do today to get the business back where it should be. I think we have to focus on what we have. We have to get the customers back to our restaurants. We have to have our restaurants very well prepared. We have to have the teams ready. We have to do everything that we have to do, which the basic of our business. So we have a separate team that is analyzing the opportunities of dark kitchens. For a company as a size of Alsea, this will not move that needle. Even though we tried this in 2020 and we're still doing some of that, I really want my team to be focusing on our core. So we have taken this to a new group and we are analyzing what is the best way to work with our kitchens. As you know, we launched a brand, a digital brand, which is just wings from Chili's as they did in the U. S, and we are experiencing some results. We also are doing that Kitchens of P. F. Chang's, which has about 40% of sales in delivery in some of our bibs. And we also did some testing of cheesecakes in some of our bibs also. So we're taking that to a different group. And I do believe that when things get to normal, we should have a very aggressive strategy in dark kitchens, but first and then second. So I'm not I don't think really that we should today spend a lot of time on that, right? That's my personal opinion. 2nd, we are obviously doing a very good partnership with our aggregators. We are working with all of them. We are trying to get promotions with all of them. And this is because we believe that the consumer has to be the one that decides when they want the products, how they want the products and which products they want and they have to have the right to choose who they want to order from. So we want to be that first for the aggregators in every geography and in every category that the customer want to do. We also give our customers our own Arcea core because as you know, we have our own delivery not only in Domino's for the other brands. So we don't see a threat. I've been saying this many times. We don't see a threat in the aggregators. You mentioned that they are eating some margins. They are not because at the end this is a marginality opportunity as soon as our restaurants start opening full. And in terms of loyalty programs, e wallets and things like that, I mentioned that we did in the Q1 4,000,000 transactions in Starbucks Rewards, just in Starbucks. This is a very big numbers. And obviously, a lot of players in the e wallets and banks and others have been reaching us to talk about that. But again, I really believe that this is a huge opportunity that we're looking. But first, we want to do it right in terms of what our core business and then we will see the other opportunities that are there in the table. And I think Alcea will be a big player. With 500,000,000 transactions a year and because of the size of our transactions and the frequency of our consumers, I do believe that that's going to be a huge opportunity of business for us in the future. You probably guys heard what Kevin Johnson said about Starbucks a couple of days ago about reaching 40,000,000 digital customers and most of more than 50% of the sales are digital right now. So we're going there and we are following what our brands like Saros are doing globally and learning from them. Excellent. Thank you so much congrats. Good luck. Thank you very much for your question. Our next question is from Mr. Alvaro Garcia from BTG Pactual. Please go ahead. Thanks for the follow-up. You mentioned earlier, Alberto, the labor law in Mexico. I don't know if you or Rafael can clear up what the potential impact might be. I'm not sure how it works sort of internally for you guys, this cap on on minimum wages per se, which you pay to your employees. But if you can clarify any potential impact, that'd be great. Thank you. [SPEAKER JOSE RAFAEL FERNANDEZ:] We have analyzed in that sourcing law, which really will not affect us there because we don't play that game. So we have done an analysis. It will impact because of the pete woo, of course, But we have done the numbers, Rafa, and we actually just present that to our Board. And it's not going to be an impact that we are concerned. We know the numbers and the numbers are very reasonable. And actually I'm very happy. I have to tell you that I think that all our team members need a more competitive environment. And really the government in this sense with the work of the private sector, I think they did a great job in terms of how they did the outsourcing reform. And I think that this is going to help the country and our sector to be more I'm going to say, Masibales, the more equal. More equal, no, because in the Idusi, there were a lot of people playing that game and we are not. So that impact is not relevant. We have done the numbers and it's already included in our budget. Wonderful. Great to hear. Thank you very much. Thank you very much for your question. Our next question is from Mr. Federico Valazzi from Banco. Please go ahead. Carlo Alberto, Raffa, thanks for taking my question. Just a follow on from previous John, maybe to take a sensitive of what is happening with the reopening. In the last weeks in Mexico, you can go inside of the restaurants. This Monday, yes, maybe it's too early, but the people in the office has increased in Chile and Mexico to 20%. And we can compare with Chile with the population is huge, but there are some closing or lockdowns. How do you see the sensitivity in the brands with these movements, if you can say something? Thank you. Again, as I was telling you, offices is important part of our business, especially in Starbucks and in Bibs because that's the type of customer. And yesterday, we were reviewing the numbers when we see the different regions in the country. And that's exactly what is missing in Mexico. In Mexico, the mobility in offices, corregoreformas and cafe and other high density office areas are not reaching the sales that they normally do. And that's why, again, I believe that's an opportunity because they're going to have to come back soon. Even if they don't come back 100%, which they want, that will be that will increase our business. And taking this with the other question about market share, I mean, we're still there. We can have 50 stores closed and waiting for them to arrive, but our competition can't. So that's good for us. So I really believe that even if they don't not 100% of the people come, the competition is not going to be there as it was before. So we're going to get a bigger piece of the pipe. And we again, we have to wait and see because in any there's not one geography that offices have been there or opened. And Mexico is probably the one that is doing better. So again, I don't want to predict, but I'm positive that when they come back, we'll do very well. And we prepare for that. Thank you, Alberto. And the second and last question from my side is, in the last 4 quarters of last year, you closed some El Porto, now you close another bps. This is more related with landlords with profitability change to another brand? [SPEAKER JOSE HUMBERTO ACOSTA MARTIN:] No, no. As I said, we're cleaning the house since last year. We took this opportunity to take all the restaurants that were not profitable or were just in the line. We closed 120 restaurants last year, which is a big number. And we still have some more to close. We have not closed not many, but another 20 probably. And we have not done that because some arrangement with landlords and things like that. So in this Q1, we were still doing some negotiations. But really the main closings that we do is because they're not performing well and we don't want to carry restaurants that are not doing well. I think as we said efficiencies are here to stay and that's part of efficiencies. We still have we measure every month or every week negative EBITDA restaurants. So we still have an important number, but that's going down in a very impressive way since January to April. I would tell you and I won't give you exact number, but I think we have now about 20% of the restaurants that were negative EBITDA in January are now negative EBITDA. So that's a big, big down from where we started the year. Thank you so much, Alberto. Thank you very much for your question. Our next question is from Mr. Renato Donati from AM Advisors. Please go ahead. Hi, Alberto, LaFerna and Sotador. Thank you for taking my question. So we saw that March represented 50% of the quarter's EBITDA or around MXN 1,000,000,000. Do you think we can continue to see this run rate of MXN 1,000,000,000 per month going forward or March was a particularly good month? I have in front of me and I measure this every day. And the ARS 1,000,000,000 that I was mentioning is sales of course. The average that I was telling you that we have up to week 16 is about $760,000,000 And we have the last 4 weeks, we are higher than $800,000,000 So I do believe that we're going to be through the year an average of 900,000,000 dollars all the year. That will be the right number. Now that's taking in consideration the assumptions that we're taking in terms of openings in the different geographies around our country. But I can give you some other information. Mexico is representing about today 40% of the sales in March. So that's in growth. So that's a good number that we have. So it was at the EBITDA level. In your press release you mentioned the distribution per month. And it said like during March, you made almost Ps. 1,000,000,000 or 50% of the quarter only during March. My question was if this run rate of EBITDA per month was sustainable or March was particularly good at the EBITDA level? Of course, in month by month, the EBITDA is increasing because of the part increasing in terms of sales. And these also help us in March, but of course, but both month by month, not as a huge increase that we have from February to March, but month by month, we're going to be seeing better numbers in terms of EBITDA, growing in terms of EBITDA. But I can give you a little bit more information about. In the Q1 of 2021, Mexico were about $600,000,000 positive EBITDA. This is without IFRS, okay? Europe was negative and South America was $100,000,000 So again, Europe, which is about 35% of our business, it's actually not performing. But as soon as it's open, it's going to be quite good. Okay. Thank you. Thank you very much for your question. As you guys see, it's still a challenging environment, but I think the company has proved successfully in the past and this quarter. Up to April, we're seeing quite good numbers. And hopefully, we'll see you guys next quarter and continue giving you good news. Thank you for being with us and thank you for trusting in Alsea. Have a good day. This concludes the conference call. You may now disconnect.