Good morning, everyone, and welcome to Alsea's Fourth Quarter and Full Year 2022 Earnings Videoconference. Today our Chief Executive Officer, Armando Torrado; our Chief Financial Officer, Rafael Contreras; and myself as the company's IRO, will be presenting the results of the fourth quarter and full year.

Now, I would like to hand over to Armando for his initial remarks. Please Armando?

Thank you, Salvador. Good morning, everyone, and thanks for joining our fourth quarter and full year 2022 earnings videoconference.

I'm excited to talk about our results, our regional and brand performance and other strategic developments. For the full year, we are pleased to report an increase in total sales of 28.9% for a record high of MXN68.8 billion, which was MXN15.5 billion above 2021.

Same store sales for the full year increased by 34.8% compared to 2021. EBITDA post-IFRS 16 was MXN14 billion for the year, up MXN14.1 million compared to 2021, leading to an EBITDA margin of 20.4%.

And operation cash generation was healthy at MXN6.1 billion, allowing us to continue to deleverage and invest in new projects. Net sales, excluding the hyperinflation effects from Argentina, for the fourth quarter of 2022 were up 12.2% year-over-year to a record high of MXN18.4 billion.

Same-store sales for the same period were up 21.5%, while the pre-IFRS 16 EBITDA was up 3.4% reaching MXN2.5 billion. Now, before I get into post-IFRS numbers for the quarter, I would like to make a few comments about IFRS 16, which impacted our fourth quarter EBITDA margin.

First, as you well know, IFRS impacts how we account for our leasing contracts. It has fully non-cash effects that we don't consider internally for our metrics.

We prepare this as an accounted market requirement. During the COVID pandemic, we obtained reductions on our rent payments.

We have been working on many of our leases to be set to a variable rates, depending on our sales. Since our sales have increased, so have our variable lease payments were up.

In addition, measuring against a difficult comparative base from the fourth quarter of 2021 where post-IFRS results were especially fabulous. Rafael will get more in details regarding this topic later on.

That said, post-IFRS 16 net sales for the fourth quarter were up 14.4% year-over-year to a record high of MXN19.1 billion. And due to the aforementioned factors, EBITDA was down 18.4% to MXN3.5 billion versus the MXN4.5 billion reported in 4Q, 2021.

Our record sales in the quarter and full year show a strong demand for our brands. Our underlying profitability is also solid despite post-IFRS effects, which are largely non-cash and all of this despite the backdrop of challenging macroeconomic conditions, especially, that we lived in Europe.

In the second half of 2022, we were impacted by significant energy expenses increase in Europe, since at the end of June our fixed-price energy contract expired. In the second quarter of 2022, energy cost represents 2.3% of sales in Europe, rising to a 6.8 in the third quarter and falling to 4.3 in the fourth quarter of 2022.

Regarding electricity, the highest price point we witnessed in the year was €308 per megawatt hour in the third quarter, which was 580% higher than the historical cost of the month of August. Since then, electricity prices have been gradually falling, which was continued into 2023.

This year, we are expecting to pay in the range of €90 to €100 per megawatt hour. We have been watching the market for long-term electricity hedging contracts.

However, given the current market conditions and uncertainty of the situation in Europe, we prefer to be cautious and not close to a long-term deal now. In the short-term, we are implementing a strategy of partial electricity hedges in Europe on a month-to-month basis.

In the fourth quarter we are in 74 new corporate restaurants and 12 store franchises across all regions totaling 147 net corporate units and 38 net store franchises for the full year. Since we restarted our openings process a bit later than initially expected, we are not able to open all the project units within the year.

We are constantly evaluating every aspect of potential openings to reflect our focus in profitability. Among our openings this year, in France we opened 17 Starbucks locations in the year.

We see a potential portfolio growth in this market where we estimate to open between 400 to 500 stores in the future. In Uruguay, we have opened our first Domino's Pizza store.

And currently we have three more under construction. The entry of Domino's in this market has been very successful and we have been observing twice the demand we initially forecasted.

We ended the quarter passing a thousand of franchising market. We also have more than 4,400 stores and over 75,000 team members.

We continue to be in a strong position to take advantage of the market opportunities with our core brands in a market that we currently operate in. We will share our strategic plan and along with further guidance for the year at our upcoming Investor Day on March 30 in New York City at Citi Corporate offices.

Finally, I would like to give a quick overview of our main achievements in ISG matters. In 2022, we launched our goals for 2030 and made the following progress during this year.

We were able to help over 1.8 million people by delivering more than MXN 38.6 million and in kind donations for more than 70 tons of food. Also during the year, Alsea Foundation in association with World Vision Mexico created a Premio Alsea and [indiscernible] for food and nutrition related to research.

69 projects from Argentina, Colombia, Chile, Spain and Mexico participated and we gave $150,000 price to the winning research projects. In Mexico, we achieved 72% clean energy consumption.

Additionally in our four manufacturing centers, we were recertified as safe quality food in all our regions. We are being a baseline survey of the current state of our supplies regarding ISG issues.

At the end of 2022, Alsea remained at fifth position out of 95 companies that were evaluating in the restaurant category of the Standard & Poor's Global Corporation continued Assessment of the Dow Jones -- that's been of the Dow Jones Sustainability Index. Regarding advancements in gender equity and social inclusion, we are pleased to announce in January 2023 our newest Board members Christine Kenna and Gabriela Garza.

Now Alsea Board has a total of three women members and women make-up to 25% of the total Board and 43% of the independent Board members. Christine has over 22 years of experience as a technology investor identifying innovation trends, managing complex fund raising and M&A transactions, and driving global corporate strategy.

Christine is a partner at IGNIA Venture Capital and has previously held leadership position at Google, IT Education First and EY Parthenon. Gabriela is a Director for Family Office and a Strategic Executive Advisor.

She is a co-author of the first and second edition of Women Matter MX and is an expert in gender diversity and inclusion. Gabriela was a former consultant in McKinsey & Co.

In addition, 872 members of our global workforce come from these advantage groups and 23% of our management position are held by women. We know that much remains to be done regarding ISG to meet expectations and meet both of our stakeholders.

We are working on our plans to achieve key milestones and ultimately our 2030 goals. Now, I will pass it back to Salvador for him to give you a more detailed overview of our sales.

Perfect. Thank you, Armando.

As Armando mentioned, sales increased 14.4% for the quarter, and 28.9% for the full year, and we continue to see improved performance compared to pre-pandemic levels. Excluding foreign exchange effects, sales increase goes to 22.6% for the quarter, and 35.6% for the full year.

Our solid business model and the strategic decisions made over these past couple of years have proven to be effective. Customers have returned to dining in as pandemic-related restrictions have been removed across all our regions.

Despite this, and even as sales continue to increase, food delivery as a percentage of sales hasn't wavered. In the fourth quarter, it remained sequentially favored at 17% of total sales.

We serve over 12 million orders by home delivery in the quarter, which represents an increase of 13.2%, compared to the fourth quarter of 2021. Looking at the full year, delivery was up 13.8% compared to 2021 reaching MXN12.3 billion, which is over 46.6 million orders and represented 17.8% of Alsea's consolidated sales.

Our digital channels and technology-based solutions continue to be fundamental pillars of our long-term growth strategy. We are currently working on an innovative digital solutions for our Starbucks, Domino's and Burger King brands that will be rolled out over the next few quarters.

In Starbucks, for example, the all-encompassing digital platform called Starbucks Digital Solutions, which was already put in place in Europe, will expand e-commerce delivery loyalty programs, and payment methods. While at Domino's Pizza and Burger King, we're developing advanced in-store digital displays to help our customers better explore our menu options, boost conversion, and improve ticket size.

Especially, as labor costs have risen, we have seen the increased utility of these digital solutions. Regarding our core brands, the fourth quarter same-store sales growth year-over-year of Starbucks in Spain and France was in the low 20s range, while Chile and Mexico were in the mid to high 20s.

For the full year, all of those regions had same-store sales growth over 30%, with France reaching more than 50%. In 2022, out of the Starbucks units that we opened 40% were drive-thru locations, which reported outstanding results.

Even though these units are in average 30% more expensive than other formats, they have achieved more than 50% higher sales, and 30% more orders than traditional stores. Therefore, we plan to keep on developing this strategy by opening around 60%, of all Starbucks units, with drive-thru capabilities.

Domino's Pizza in Spain and Mexico have 11% and 7% comparable sales store, during the quarter respectively. Domino's in Colombia reported a mid-single-digit decrease in same-store sales compared to the fourth quarter of 2021, mainly due to a menu restructure and cutting out some aggressive promotions, which impacted orders, but improved margins.

Burger King posted increases in Chile, Spain, and Mexico of 10%, 7% and 6% respectively during this quarter. I'm also pleased to announce that Vips Mexico has now recovered to pre-pandemic 2019 levels.

In the fourth quarter, same-store sales were up 15% year-over-year, and 34% for the full year versus 2021. Vips in Spain in the fourth quarter also reported strong same-store sales increase of 20.8 versus the same period and 40% growth on a full year figure.

Despite cost increases, mainly due to inflationary pressures in raw materials and non-recurring benefits related to agreements negotiated with some of our strategic partners in the fourth quarter 2021, our pre-IFRS 16 EBITDA in the fourth quarter 2022 grew 3.4%, reaching MXN2.5 billion with a margin of 13.7%. Excluding the exchange rate effect, the EBITDA increased 11.4%.

For the full year pre-IFRS 16 EBITDA in 2022 grew by 33.3% reaching MXN8.7 billion, with a margin of 12.9%. In the fourth quarter, cost as a percentage of sales rose 260 basis points year-over-year, reaching 33.3%.

And for the full year, cost represented 32.7% of sales increasing 130 basis points. Given the ongoing inflationary pressures, we have demonstrated our cost control strategies such as inventory planning, negotiating long-term agreements with suppliers, and eliminating aggressive promotions are working.

Also, as we mentioned earlier, we are constantly monitoring input prices and evaluating potential overstocking agreements. Also throughout the year, we worked on carefully started price increases and using our dynamic display menus and apps to guide customers towards higher-margin offerings.

Looking to results by geography, Mexico's quarterly sales increased 19.1% year-over-year with adjusted EBITDA falling MXN153 million to MXN2.5 billion. Mexico's annual sales increased 28.6% year-over-year with adjusted EBITDA growing MXN1.7 billion to MXN9.8 billion.

We are pleased with Mexico's continued demand performance in the face of rising inflation and declining purchasing power in real terms. Sales in Europe grew 2.1%.

However, due to increased cost and expenses, adjusted EBITDA was MXN596 million lower for the quarter at MXN1.4 billion. For the full year, sales grew 19.3%.

And for the same reasons, adjusted EBITDA was MXN487 million lower at MXN5.4 billion. In the continued face of increased inflation and energy expenses, the sales numbers in this region showed resilient demand and consumer preference for our brands and products.

The contraction in adjusted EBITDA margins in the European region was also explained by the end of non-recurring benefits from the previous year related to agreements with our strategic partners, both on the cost side and in royalties, in addition to the foreign exchange effects. In 2022, our tourism was lower than usual due to China's COVID-19 restrictions, especially in France.

We expect a positive impact this summer from tourism now that Chinese citizens are traveling again. On a normal basis, tourism accounts for approximately 25% of Alsea sales in Europe.

And finally, in South America, we posted a strong 25% sales increase for the quarter with adjusted EBITDA at MXN899 million, representing a MXN70 million increase year-over-year. For the full year, sales increased 49% and adjusted EBITDA was MXN3 billion, representing MXN937 million increase.

South America's positive results were driven by strong demand, decreasing SG&A, successful product innovation and digital strategies. Now, I will leave you with Rafael to give you a more detailed overview of our results and balance sheet.

Rafa, please go ahead.

Thank you, Salvador. First of all, I would like to explain the main impact regarding IFRS 16 in our results.

We had rent negotiation related to the pandemic, where we paid less rent than what we had on the contracts. According to pre-IFRS 16, you have to register the paid amount on rents.

While on the post-IFRS 16, you discount the full amount of the rent under the contract. For example, in Europe during the quarter 2021, we paid rents for MXN423 million.

However, with a IFRS 16 methodology, we discounted MXN608 million less benefit in 2022. Another effect is the change in our leases' contracts from fixed to viable rents and the corresponding increase in sales reported.

For example, in Mexico during the quarter, we paid rent for MXN718 million. However, with a IFRS 16 methodology, we discounted MXN398 million, which corresponds to the fixed part of the rent, higher effect than last year.

Also, as a result of the USD bond issuance, we were required by banks to terminate a sale and leaseback agreement related to equipment on our operations center of approximately MXN 350 million. This transaction positively impacted the paid interest from financial leases in Alsea Mexico in the post-IFRS 16 figures for 2022.

Yet, another impact mostly in LatAm are the changes in lease contract conditions before their maturity, impacting other income expenses line in post-IFRS 16 figures. Our net income per IFRS for the fourth quarter increased 12.2% to MXN 771 million.

This increase was mainly due to a MXN 152 million increase in operating income resulting from the continuous positive trend in sales, commercial strategies, product innovation, developments in digital applications, as well as improved cost and expense control efficiencies. For the full year, pre-IFRS 16, net income increased 222% and post-IFRS 16 100% achieving a MXN 1.7 billion.

We have been able to keep up the strong recovery trend in the first quarter of the year, achieving a pre-IFRS 16 earnings per share of MXN 2.17 including IFRS 16, our EPS rose to MXN 1.96 per share versus MXN 0.94 in 2021. In January 2023, the General Shareholders Meeting approved the cancellation of 18.5 million ordinary shares that had been reported in market transactions during the year, representing 2.2% of the outstanding total shares.

As of December 31, 2022, we paid MXN 2.3 billion of amortizations during the year. Our gross debt pre-IFRS decreased MXN 3.9 billion year-over-year, closing at MXN 27.8 billion.

This reduction in debt corresponds mainly to the devaluation of the euro against the Mexican peso and debt amortizations that I already mentioned. Regarding our covenants.

In fourth quarter 2022, our minimum liquidity and CapEx covenants were removed with banks seeding our positive financial results. Looking to our pre-IFRS 16 gross debt-to-EBITDA ratio, we ended the quarter at 3.2 times and EBITDA to interest rate at three times.

Regarding liquidity, we posted a solid MXN 6.1 billion in cash at the end of the year. The debt structure at the end of the year was 95% long-term, with 64% in Mexican pesos and 36% in euros.

We expect to deleverage going forward and meet all of our debt covenants, thanks to our healthy and ongoing cash generation. Our full year CapEx for 2022 was MXN 4.2 billion, of which 35.8% was allocated to maintenance, 51% went to store openings and remodeling and 13.2% for IT and some other strategic projects.

We made solid and responsible investments through the year in profitable projects and locations. Out of the 179 corporate store openings in the year, 58% were Starbucks and 23% Domino's Pizza.

We are pleased with the 2022 full year and fourth quarter results. We achieved record sales with a strong underlying profit and continue to expand as strategic.

All in the face of a challenging macro environment. Thank you for your interest in Alsea.

I will now have today to call back to the operator to the Q&A session. Thank you.

Hi. Good morning, Armando, Salvador [ph] and Rafael.

Thanks for taking my question. I mean, I guess on the top line and brands, not much to say that we're impressed with the results.

Just curious here on the lease contracts, I mean, if you can clarify right now where do we standing? I mean, talking about averages right, what proportion is already -- I mean changed from fixed to variable?

And how this compares versus let's say, a year ago or before these changes -- for sure the accounting impact on IFRS 16? And the second question would be on labor expenses.

I mean it appears to be like Mexico is getting more like a structural thing. We have regulation in holidays, also increasing labor minimum wage et cetera et cetera.

So just curious to hear your thoughts Armando or Rafa compare labor in 2023 versus it was -- how it was like five years ago? How much more expensive it has for you guys?

Maybe if you can share that as a percentage of sales or something that would be useful. Thank you very much.

I'll take the first question about the leasing agreement that we have. We have before the pandemic lower than 50% of our contracts, has a fixed or variable rents.

Right now we try to have more variable leasing contracts. Right now it's higher than 60%.

As you know we have more than 4,400 contracts. And we have many different issues in each one of the contracts.

And for example, some things that impact us is when we remodel a unit. We will try to have five more years in our contract.

So that hit us also in the IFRS 16 numbers. And also if we end a contract or we close a unit also that impact us in the IFRS 16.

It's -- I tried to explain the most significant impacts that we have last year and when we compare with the 2021 numbers.

That helps. Thanks.

And about the labor, Rafa?

Yeah. I mean regarding the labor, yes, we are -- up to date what's been happening in the first four years with this government regarding a 20% increase of the minimum wage.

Fortunately, not all of our employees, all of our partners, all of our team members are in minimum wage. There's only a percentage that are there.

Anyway, we will achieve -- with ISG we are above that minimum wage. It do has an impact.

Also as you said -- as you mentioned there's 20 days of vacation now and before there was...

It was -- right now its 12 days. It was six days.

It was six days. That also have an impact.

I would tell you we fortunately to have these wins and increase sales and that and you tell me you told me what is exactly going to be the cost that represents? I will see about 0.3 points of our cost.

We are running around 16%, 16.3%. So, more what I will see in 0.3 points of our P&L this year?

And I think that's going to be getting down. I mean, we need to get the better sales in order to decrease that percentage of -- in a whole base.

And I'm not worried about the situation. Still we are focusing in south regions in the country that has more problems of hiring people and that is what we are doing a little bit better surgery work to get a better result in our labor cost.

That makes sense. Thanks.

I guess that some of it can be diminished by digitalization. Thank you, very much Armando for the clarification there.

Thanks.

Hi, good morning, Armando. Thanks for taking my question.

This is regarding Europe. Have you seen -- well -- you talked about the cost pressure that you've been facing energy and so on and how that is gradually improving.

But what about consumption? How are consumption trends?

Are you seeing any type of further slowdown of people going to your restaurants or maybe some improvement expected second half of the year? What are the consumption trends here?

We maintain -- of course, we are in comparison to last year in the first eight weeks, we were updated by omicron as much in Europe, not in Mexico. Europe was a little bit harder.

But since we are almost closing this February, we are not seeing a reduction in consumption. It's just a punctual details in the Domino's sector, all that -- we are seeing some slow trends when we achieving some other commercial strategies and promotions that has been doing well in the consumption, but we are not seeing any downsize.

And I will not see it in Europe. We don't see it in Europe.

We will not see it in Mexico and we don't see it in LATAM. Our sales are still quite strong all the way to last week.

That is the week number eight for us in sales.

For this two months, same-store sales in Europe, it's mid-20s same-store sales. So we -- and Mexico is strong too.

So all the way to last week that we've been seeing a solid demand in 2023 until now.

Yes. Just to add I can give you a little bit more color in some of the formats just to clarify the same-store sales figure year-to-date.

What we're seeing in Europe especially in cash and banning, it's been quite solid. So Foster's Hollywood we're around 20% same-store sales growth.

We have Bibbs [ph] in Spain with mid-20s like Rafa mentioned. Genius is the same mid-20s.

And Starbucks is still quite strong as well talking about probably low 30s in Spain. And in France, it's even close to 30%.

So it's been -- so far, we haven't seen any major slowdown in consumption.

Perfect. Thanks.

Thanks for the color and see you in some week. Thanks.

Good morning guys. Thanks for the space.

A couple of questions on my end. Firstly, on rents for Rafa.

Given the increased proportion of variable rents, would it make sense to see higher cash rents into next year in 2024 on a pre-IFRS 16 basis? So, if I were just to look at your P&L on a pre-IFRS 16 basis, would it make sense to see that rent as a percentage of sales climb higher, given what's going on, or is it solely a post-IFRS 16 accounting?

I think in terms of percentage of viable rent, I think we are already done with the agreements with the landlords. But for example in Mexico that sales increased 19% and around 60% is viable rent.

That increase of sales in the 60% of our rents will hit us in IFRS 16 figures. Because only -- we took out only the fixed rent.

The viable rental space as expansion in IFRS 16.

But into '23 and '24, it should be a similar level probably as a percentage of sales? Would that make sense?

Yes.

Okay. Okay.

And then you mentioned on the energy front in Europe 90 to 100-megawatt -- roughly 90 to 100 priced per megawatt hour. You mentioned obviously it was way lower than what you paid at some point in 2022.

How might that number compare to 2019?

It was around 40.

Okay. So double…?

We had a contract for five years signed. So I think it was…

40.

40. Between 35 and 40-megawatt hour, so we still -- I mean, in the range of 90 and 100 still…

Pretty high.

Pretty high.

Better than 300. Better than 300.

Better than -- fortunately.

And then lastly, on Domino's you mentioned some slow trends in Europe. Obviously, Domino's has been in the news a lot.

They didn't report that greater quarter at the global level, but I was wondering if maybe you could talk about how Domino's in your markets in Mexico specifically are sort of seeing different trends, or how you think your Domino's portfolio is maybe more resilient to what we're seeing?

Our Domino's portfolio is pretty healthy. I mean.

we -- in the same-store sales we are positive through week eight of this year. Still, we, of course -- that was I would say, the segment that was hit most, because of three things; cheese, of course, flour.

Those two goods really high impact by inflation. But I mean managing well digital platform, well digitalized the strategic of our marketing.

We've been able to achieve a positive sales for us. So we are not seeing the problem that other companies -- that are in the Domino's business sector and I know where you're talking about are seeing and a slowdown possibly.

We've been very cautious about it. And with that we are putting big attention on how we win the pizza war that we have a lot of competitors there, but I think we have the best run of all and some technology things that are going to sort of go through the I-cloud and post strategy that we are doing.

Like I said last quarter of GPS and DCS and there's piece of the pie is a loyalty program that we are also launching our app native app, native web, I think and some other new products that we are launching. We are keeping up with that with a good pace regarding the increase of sales.

Great. Thank you very much.

Thanks, Alvaro.

Hello there. And thanks guys for taking my question.

I have a few questions. The first one is if you could just explain the reason why you're seeing very strong same-store sales growth in Europe and in the rest of the regions?

That's the first question. The second one is on price increases.

Have you been able to increase prices in Q4 or in Q1 so far? And if so by what magnitude?

Also if you could talk about your input costs as well? I think last year you were saying that you were buying cheese and chicken wings in advance.

So just trying to understand how much worth of inventory do you have in advance? When -- and what are you seeing in terms of the prices of these input costs?

And then also if you could give guidance for your EBITDA margins CapEx leverage for 2023? Thank you.

Rafa, how we -- five questions there. Let's see how -- what do you want first?

First related to the guidance, I guess, we're going to be going full mode into more detail during our Investor Day. That it's going to be 30th March.

So probably we're going to be waiting until then to fully put out the 2023 year guidance overall. Regarding same-store sales performance, I guess, it's just been pretty much part of the resilience and the good operating company that we are -- that we're seeing customers preferring our products versus the competition.

And we are still taking advantage of some of the market opportunities that we're seeing since a lot of players are not there anymore post-pandemic. But overall I would say that we have the back-office processes, we have the operating know-how of each of the markets and we know exactly how to do and where to do it in each of our brands.

And that's pretty much talking about the resilience that we've been seeing so far. And even though we've been hearing from investor’s, economists that there's going to be a slowdown coming for sure at least probably since the second quarter of 2022.

So far we haven't seen it. And it's been quite a positive surprise that our brands are performing amazingly well.

Regarding price increase, I don't know if…

I just don't want to see. I mean, all -- I mean look at the numbers right now to week number nine, last week and all our geographies and all our brands are positive sales more like Salvador said some are in the low 20s in the high 20s, and we have on the 10th.

So everything is just -- for us is positive there in sales. Regarding the imports from the raw materials that you said, we are not seeing, we already have a good agreement with suppliers regarding dough.

We are a big consumption in dough for the Domino's Pizza brand. So we are steady there.

We have other stock on cheese for Mexico all the way to May 2023. It's also in dollars.

We are seeing an 18 -- right now the dollar is reporting $18.3. So that's also a headwind for us.

We are also regarding coffee as you know we rely on Starbucks' heading sourcing policies. But even though that coffee is right now running at 180 per -- $187 a pound in Chicago Stock Exchange.

So we are seeing a decrease in coffee that fortunately will come. It was in the second half of the year regarding our alignment with Starbucks Corporation.

Also in the beef or poultry, we see -- I mean there is an increase right now in poultry, but it's low -- in a low double digit -- in low digit. So certainly we don't see the inflation part of the problem that we had last year and that is positive.

And in terms of the overstock that we have with cheese and some other products, it's around 10 days of inventory but it's around MXN600 million of inventory with these products, no.

And regarding the price increases questions, I guess we've been able still to pretty much do business as usual. We're being really careful in not hurting as much demand, but taking prices on the high marginality products or more on the innovation side rather than the entry price, core products where you're going to be feeling it more if you put additional pressure to -- for example the everyday coffee of Starbucks.

You're probably not going to match with that, but you can go for the higher marginality products and/or the new products that you're going to be launching and there you can -- you don't have any reference, price reference as a customer. And, therefore, we get a higher profitability.

Thank you for that. I guess, what I just wanted to understand is when we're going to stop seeing the margin pressure that we've seen as a result of the input costs and also as a result of the change in the rent structure?

In terms of the rent structure as I mentioned, we already finished all the agreements with landlords, changing the fixed cost to variable cost. As I mentioned, the only impact that we will have for next quarters, will be the increase in sales and the increase in payment of the variable rent.

So as I mentioned, if we have an average 60% of our contracts with variable rent, 60% of that increase in terms of sales, which will hit us in terms of, the IFRS 16 figures.

And we are talking about, how we're seeing pressure. I think the worst part of the pressure of cost and inflation, I think is done.

The only uncertainty that we don't have is the energy cost. Rafael?

Mobile energy cost in Europe. That's the only thing that, we do not have that control over, yet.

But I think the rest, we've already seen what happened in Spain, with a minimum wage. We already have -- it was a 7% increase.

We already have the Mexican. We really have in Chile, what is that.

So regarding labor, we already know all the details how we're going to come. Regarding all our suppliers, we do have a close relation with them.

Sitting down at the table seems to see what is going to be happen, for the full year. And I think, we already are very clear with that.

The only uncertainty is the energy in Europe. Thanks -- as you know, we are entering to March.

So, I think all the weather there is not going to on probably -- and you know the gas also is in the lows...

In the lowest price.

In the lowest price of the curve. So, fortunately, we don't have anything else in Europe, with energy costs.

Margins we had to get established where we were before in the years, before that and then it happened.

Thank you very much.

Thank you.

Well, thank you very much for attending our quarterly review conference. I hope to see you all in the Investor Day, that we held on March 30, at the Citi's corporate office in New York.

We will have more details about these questions that you got – gave us and another interesting points of our company. Thanks, again.

Have a great day and we'll see you the 30th in New York. Thank you.

Thank you very much. Take care.