Arca Continental B de C : 15 February 2022Revenue grew 15.2% with EBITDA up 5.7% in 4Q21

REVENUE GREW 15.2% WITH EBITDA UP 5.7% IN 4Q21

Monterrey, Mexico, February 15, 2022 - Arca Continental, S.A.B. de C.V. (BMV: AC*) ("Arca Continental" or "AC"), the second-largest Coca-Colabottler in Latin America, announced its results for the fourth quarter and twelve months of 2021 ("4Q21" and "12M21").

Table 1: Financial Highlights

DATA IN MILLIONS OF MEXICAN PESOS

	4Q21	4Q20	Variation %	Jan-Dec'21	Jan-Dec'20	Variation %
Total Beverage Volume (MUC)	593.6	561.1	5.8	2,279.7	2,154.8	5.8
Net Sales
49,138	42,665	15.2	183,366	169,314	8.3
EBITDA
9,127	8,633	5.7	35,406	32,147	10.1
Net Income	3,187	2,519	26.5	12,282	10,276	19.5

Total Beverage Volume includes jug water

Net sales not including Revenues outside the territory (OT) in USA

EBITDA = Operating income + Depreciation + Amortization + Non Recurring Expenses

4Q21 HIGHLIGHTS

• Net Sales increased 15.2% when compared to 4Q20, to Ps. 49,138 million.
• EBITDA rose 5.7% to Ps. 9,127 million, for an EBITDA margin of 18.6%.
• Net Income grew 26.5% to Ps. 3,187 million for a net margin of 6.5%.

12M21 HIGHLIGHTS

• Net Sales increased 8.3% when compared to 4Q20 to Ps. 183,366 million.
• EBITDA rose 10.1% to Ps. 35,406 million for margin of 19.3%, an expansion of 30 basis points.
• Net Income was Ps. 12,282 million, up 19.5% and representing a net margin of 6.7%.

COMMENTS FROM THE CHIEF EXECUTIVE OFFICER

"The ability of our great team of associates to face challenging times enabled us to grow annual sales in 2021 by 8.3% and generate volumes above pre-pandemic levels. This solid performance, combined with financial discipline focused on protecting the profitability of our business, led to a 10.1% increase in EBITDA and a 30-basis point margin expansion for the second consecutive year", stated Arturo Gutiérrez, Chief Executive Officer of Arca Continental.

"In 2022, our solid execution at the point of sale and permanent focus on operating efficiency will support our goal of maintaining positive sales trends, growing our EBITDA and creating sustainable value, while always striving to satisfy the needs of our customers and consumers, to grow stronger as a socially responsible company and an attractive investment option for the market."

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CONSOLIDATED RESULTS

The figures presented in this report were prepared in accordance with International Financial Reporting Standards ("IFRS").

TABLE 2: CONSOLIDATED DATA

	4Q21	4Q20	Variation %	Jan-Dec'21	Jan-Dec'20		Variation %
Volume by category (MUC)
Colas	313.6	297.7	5.3	1,187.4	1,142.0		4.0
Flavors	117.5	110.8	6.1	428.5	396.9		8.0
Sparkling Total Volume	431.2	408.5	5.5	1,615.9	1,538.9		5.0
Water*	60.0	55.1	8.8	239.3	215.4		11.1
Still Beverages**	49.6	43.8	13.3	197.6	170.1		16.1
Volume excluding Jug	540.7	507.3	6.6	2,052.8	1,924.3		6.7
Jug	52.9	53.8	-1.7	226.9	230.4		-1.5
Total Volume	593.6	561.1	5.8	2,279.7	2,154.8		5.8
Income Statement (M M M XP)
Net Sales***	49,138	42,665	15.2	183,366	169,314		8.3
EBITDA	9,127	8,633	5.7	35,406	32,147		10.1
EBITDA Margin	18.6%	20.2%	-160 bp	19.3%	19.0%		30 bp

• Includes all single-serve presentations of purified, flavored, and mineral water.
• Includes teas, isotonics, energy drinks, juices, nectars, fruit, and alcoholic beverages
• Net Sales not including Revenues outside the territory (OT) in USA

FINANCIAL ANALYSIS

INCOME STATEMENT

• Consolidated net sales for 4Q20 increased 15.2% to Ps. 49,138 million. In 2021, net sales rose 8.3% when compared to 2020, reaching Ps. 183,366 million.
• In 4Q21 unit case volume increased 6.6%, excluding jug water, mainly due to the recovery in still beverages and water categories, with increases of 13.3% and 8.8%, respectively. In the year, volume reached 2,052.8 MUC, excluding jug water, for an increase of 6.7%.
• Cost of sales in the fourth quarter rose 15.5%, primarily due to price increases in several key inputs. Consolidated gross profit increased 14.7% in the quarter to Ps. 22,553 million to reach a gross margin of 45.9%. In 12M21, gross profit reached Ps. 83,333 million, representing a gross margin of 45.4%, 10 basis points above 12M20.

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• Selling and administrative expenses in 4Q21 increased to Ps. 15,816 million, reflecting an expense to revenue ratio of 32.2%, 160 basis points higher than in 4Q20. In 2021, selling and administrative expenses rose 5.7% to Ps. 57,536 million, 31.4% with respect to revenues, 80 basis points below 12M20.
• Consolidated operating income increased 5.0% to Ps. 6,309 million in 4Q21, representing an operating margin of 12.8%. Operating income for 12M21 rose 18.1% to Ps. 25,361 million, an operating margin of 13.8%, up 110 basis points compared to last year.
• Consolidated EBITDA in 4Q21 increased to Ps. 9,127 million, representing a margin of 18.6% and growth of 5.7% when compared to 4Q20. In 2021, EBITDA increased 10.1% to Ps. 35,406 million, for a margin of 19.3%, up 30 basis points when compared 2020.
• Comprehensive cost of financing for 4Q21 was Ps. 864 million, 43.7% lower than 4Q20, mainly due to a lower FX rate loss versus last year. In 12M21, the cost reached Ps. 3,293 million, 5.3% lower than 12M20.
• In 4Q21, income tax reflected an effective tax rate of 31.8% to reach Ps. 1,771 million, 30.5% higher than 4Q20. In 2021, income tax was Ps. 6,983 million, 28.7% above the previous year and representing an effective tax rate of 31.6%.
• Net income for 4Q21 was Ps. 3,187 million, 26.5% higher than 4Q20, reflecting a net margin of 6.5%, while in 2021, it reached Ps. 12,282 million, for a net margin of 6.7%.
  BALANCE SHEET & CASH FLOW STATEMENT
• As of December 31, 2021, the cash balance was Ps. 32,117 million and total debt was Ps. 51,074 million, for a net debt position of Ps. 18,957 million. Net Debt/EBITDA ratio was 0.5x.
• Net operating cash flow reached Ps. 31,069 million as of December 31, 2021.
• CAPEX for 2021 totaled Ps. 7,176 million, mainly allocated towards coolers, returnable packaging and market execution capabilities.

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Mexico

Arca Continental reports its information for three regions: Mexico, United States and South America, (which includes Peru, Argentina and Ecuador). Each region includes results for both beverage and complementary businesses.

TABLE 3: MEXICO DATA

		4Q21	4Q20	Variation %	Jan-Dec'21	Jan-Dec'20	Variation %
	Volume by Category (MUC)
	Colas	185.4	177.2	4.6	730.6	713.3	2.4
	Flavors	34.6	33.4	3.5	136.7	132.0	3.5
	Sparkling Total Volume	220.0	210.6	4.5	867.3	845.3	2.6
	Water*	28.6	25.8	10.8	119.9	104.4	14.9
	Still Beverages**	19.0	16.6	14.3	75.8	66.4	14.0
	Volume excluding jug	267.6	253.0	5.8	1,063.0	1,016.1	4.6
	Jug	50.9	51.6	-1.5	219.2	222.4	-1.4
	Total Volume	318.4	304.7	4.5	1,282.2	1,238.5	3.5
	Mix (%)
	Returnable	30.6	32.7	-2.0	32.0	33.3	-1.3
	Non Returnable	69.4	67.3	2.0	68.0	66.7	1.3
	Multi-serve	58.1	60.4	-2.2	57.9	59.9	-2.0
	Single-serve	41.9	39.6	2.2	42.1	40.1	2.0
	Income Statement (M M M XP)
	Net Sales	20,252	17,924	13.0	78,642	70,174	12.1
	EBITDA	4,556	4,053	12.4	19,252	16,844	14.3
	EBITDA Margin	22.5%	22.6%	-10 bp	24.5%	24.0%	50 bp

• Includes all single-serve presentations of purified, flavored, and mineral water.
• Includes teas, isotonics, energy drinks, juices, nectars, fruit, and alcoholic beverages

OPERATING RESULTS FOR MEXICO

• Net sales for Mexico totaled Ps. 20,252 million in 4Q21, an increase of 13.0%. Volume reached 318.4 MUC, up 4.5% versus 4Q20. Average price per unit case, excluding jug water rose to Ps. 70.98 in 4Q21, up 6.5% as a result of selective price increases and a favorable mix. In 2021, net sales rose 12.1% to Ps. 78,642 million with volume of 1,282.2 MUC, up 3.5% when compared to 2020 and 1.8% above 2019.
• In 4Q21, EBITDA in Mexico reached Ps. 4,556 million, a 10 basis points dilution and a margin of 22.5%; this was largely due to the increase in raw materials, such as sweeteners and PET, combined with higher operating expenses. For the year, EBITDA reached grew 14.3% to Ps. 19,252 million, representing a margin of 24.5%, and expansion of 50 basis compared to 2020.

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• During the quarter, a new distribution center was open to serve a large number of customers and consumers in different municipalities in the state of Coahuila. With an investment of Ps. 216 million, this distribution center has the capacity to store 7,000 pallets of merchandise and 97 tons of chilled product.
• Coca-Colabrand recorded its sixth consecutive year of growth, up 2.8% increase in 2021, mainly driven by the relaunch of Coca-Cola Sin Azucar.
• During the quarter, single-serve mix grew 2.2%, as a result of the sustained recovery of relevant channels, such as entertainment and supermarkets.
• The traditional trade channel continued to show its resiliency with 1.9% growth versus 4Q20 and 10.9% when compared to 4Q19, explained mainly by the strong performance of colas, water and sport drinks categories. The actions that drove these results were the launch of Ciel in 1.2L, and the promotion "Comparte una Coca-Cola" (Share a Coke), which drove growth in single-serve presentations. Furthermore, the Christmas holidays season drove significant growth in multi-serve packages.
• AC Digital accelerated the expansion and captured 79 thousand customers in 2021, reaching 8% of total orders and allowing our sales team to invest more time in market execution and the development.
• The sparkling flavors category grew 3.5% driven primarily by cross promotions with Bokados. This combined with the launch of new flavors such as apple-peach flavor, coverage of key packages and strategies focused on developing the multi-serve presentations.
• In 2021, innovations and product launches yielded positive results. Topo Chico Hard Seltzer continued its positive momentum, sustaining solid second and third place position in key markets in Guadalajara and Monterrey, respectively. This was achieved as a result of our execution at the point of sale, investments in coolers, and exclusive plans for the on-premise channel. We also continued with the introduction of Costa Coffee products across our territories, while Topo Chico Twist achieved a relevant coverage in the traditional channel.
• Bokados posted double-digit growth in sales and EBITDA in the fourth quarter, mainly driven by the recovery of the modern channel and an efficient management of discounts and promotions. In addition, we carried out the launches of major brands, such as Prispas Queso Enchilado, Bokachitos Bites Queso and Topitos Chile Limon.

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