Arca Continental B de C : 27 April 2023EBITDA grew 12% and Revenue increased 10% in 1Q23

EBITDA GREW 12% AND REVENUE INCREASED 10% IN 1Q23

Monterrey, Mexico, April 27, 2023 - 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 first quarter of 2023 ("1Q23").

Table 1: Financial Highlights

DATA IN MILLIONS OF MEXICAN PESOS
	1Q23	1Q22	Variation %
Total Beverage Volume (MUC)	564.3	541.6	4.2
Net Sales	50,684	46,065	10.0
EBITDA	9,550	8,527	12.0
Net Income	3,731	3,094	20.6
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

1Q23 HIGHLIGHTS

• Net Sales increased 10% when compared to 1Q22, to Ps. 50,684 million.
• EBITDA grew 12% to Ps. 9,550 million for a margin of 18.8%.
• Net Income totaled Ps. 3,731 million, up 20.6% reaching a margin of 7.4%.

COMMENTS FROM THE CHIEF EXECUTIVE OFFICER

"We began 2023 with favorable results, delivering solid growth of 10.0% in revenues and 12.0% in EBITDA, thanks to the commitment of our associates to continue strengthening our commercial capabilities, execution with excellence at the point of sale, as well as the constant deployment of digital tools in accordance with market dynamics", stated Arturo Gutierrez, Chief Executive Officer of Arca Continental.

"For this year, we will continue working on the strategic priorities of our sustainable business model, aimed at improving the performance of all areas to better serve and grow with our customers, while maintaining our conviction to create shared value for our associates, shareholders and the communities we serve", he added.

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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
	1Q23	1Q22	Variation %
Volume by category (MUC)
Colas	281.7	273.7	2.9
Flavors	107.8	105.9	1.8
Sparkling Total Volume	389.5	379.6	2.6
Water*	67.4	59.4	13.6
Still Beverages**	51.8	49.3	5.1
Volume excluding Jug	508.7	488.2	4.2
Jug	55.6	53.3	4.2
Total Volume	564.3	541.6	4.2
Income Statement (M M M XP)
Net Sales***	50,684	46,065	10.0
EBITDA	9,550	8,527	12.0
EBITDA Margin	18.8%	18.5%	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

• Net sales for 1Q23 increased 10% (17.9% on a currency-neutral basis) to Ps. 50,684 million compared to 1Q22, due to strong volumes in Mexico and South America.
• Consolidated sales volume in 1Q23 grew 4.2%, excluding jug water, mainly driven by growth in the personal water and still beverage categories, up 13.6% and 5.1%, respectively.
• Cost of sales for the quarter increased 8.5% as a result of the increase in raw material prices, specifically PET, which was partially offset by a favorable hedging in FX.

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• In 1Q23, consolidated gross profit increased 11.9% to Ps. 23,057 million, reflecting a gross margin of 45.5% and an expansion of 80 basis points, mainly due to the price-pack strategy combined with better raw material prices.
• Selling and administrative expenses rose 9.7% to Ps. 15,923 million in 1Q23, reflecting our operating discipline and reducing expenses to sales by 10 basis points when compared to the previous year.
• In 1Q23, consolidated operating income was Ps. 7,386 million, 17.6% higher than 1Q22, representing an operating margin of 14.6% and an increase of 100 basis points.
• Consolidated EBITDA for 1Q23 increased 12% (19.6% on a currency-neutral basis) to Ps. 9,550 million, representing an EBITDA margin of 18.8%, 30 basis points higher than 1Q22.
• Comprehensive financing result for 1Q23 was Ps. 893 million, stemming mainly from a higher exchange loss from the appreciation of the peso versus the dollar and the monetary position in Argentina.
• In 1Q23, income tax reached Ps. 2,003 million, 22.3% higher than 1Q22, at an effective rate of 30.7%.
• Arca Continental reported net income of Ps. 3,731 million for 1Q23, 20.6% above 1Q22, reflecting a net margin of 7.4%
  BALANCE SHEET & CASH FLOW STATEMENT
• As of March 31, 2023, the cash balance was Ps. 27,673 million and total debt was Ps. 45,516 million, for a net debt position of Ps. 17,843 million. Net Debt/EBITDA ratio was 0.4x.
• Net operating cash flow reached Ps. 5,738 million as of March 31, 2023.
• CAPEX for the period totaled Ps. 2,310 million, mainly allocated towards improving execution at the point of sale with expanded cooler coverage, returnable packaging and strengthening our production capacity.

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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
	1Q23	1Q22	Variation %
Volume by Category (MUC)
Colas	167.0	159.3	4.9
Flavors	28.6	28.4	0.6
Sparkling Total Volume	195.6	187.7	4.2
Water*	30.9	27.5	12.2
Still Beverages**	18.9	18.5	2.0
Volume excluding jug	245.4	233.8	5.0
Jug	53.1	51.1	3.9
Total Volume	298.5	284.9	4.8
Mix (%)
Returnable	29.0	30.8	-1.8
Non Returnable	71.0	69.2	1.8
Multi-serve	56.7	56.9	-0.2
Single-serve	43.3	43.1	0.2
Income Statement (M M M XP)
Net Sales	21,651	18,279	18.4
EBITDA	4,720	3,969	18.9
EBITDA Margin	21.8%	21.7%	10 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 for 1Q23 increased 18.4% reaching Ps. 21,651 million driven by pricing and volume increases.
• Sales volume reached 245.4 MUC in the quarter, excluding jug water, driven by growth in the water category, up 12.2%. Average price per unit case, excluding jug, increased 10.9% to Ps. 80.83, as a result of our RGM initiatives as well as selective price adjustments.
• During 1Q23, EBITDA for Mexico rose 18.9% to Ps. 4,720 million and representing a margin of 21.8%, an expansion of 10 basis points.
• In 1Q23, Mexico posted 4.8% volume growth compared to 1Q22 as a result of capturing more consumption occasions as well as a balanced price-pack architecture.

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• The colas category continued generating solid results with 4.9% growth in the quarter, driven by the launch of Coca-Cola Move in collaboration with Grammy-award winning artist "Rosalia" in a limited edition.
• During the quarter, all channels performed well, namely the modern channel with 14.1% volume growth due to increases in the single-serve packages and the deployment of a dual strategy to boost colas and flavors. The traditional channel delivered 1.1% growth by continuing to optimize service models and frequency of visits, which generated incremental volume.
• During the quarter, the AC Digital platform reached a total of 262 thousand active customers, up 22.4% when compared to the previous quarter. 78% of total customers in the traditional channel utilize this platform.
• In 1Q23 we launched Coca-Cola in 235ml returnable presentation to continue promoting affordable returnable packages while strengthening the returnable pack strategy.
• Also in 1Q23, we launched Jack Daniel's and Coke with positive results, reaching 26% of sales in the alcoholic beverage category, with constant market share growth, maintaining a strong position in Monterrey and Guadalajara markets.
• Our snacks business in Mexico, Bokados, posted double-digit growth in sales during the quarter, due to positive performances in the traditional and modern channels, as well as optimization in promotion and discount management which allowed for better margins.

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