Zabka Group Aktie

Good afternoon, and welcome to the Q3 2026 financial results of Zabka Group. [Operator Instructions]

This webcast will be recorded, and an archive of the webcast will be posted on the company website. By participating in the Zoom call, you are agreeing that recordings made during the event may be shared with Zabka Group. [Operator Instructions]

I'd now like to hand the call over to Filip Paszke.

Thank you very much. Good morning or good afternoon, and welcome to our Q3 2026 earnings call. My name is Filip Paszke. I'm the Director responsible for Corporate Development and Investor Relations. We have about 20-minute presentation followed by a Q&A session.

Now I'd like to hand over to Mr. Tomasz Suchanski, CEO and Chairman of the Board of the Zabka Group.

Thank you, Filip. Good morning or good afternoon, everyone, and thank you for joining us. I'm joined today by Marta Wrochna-Lastowska, our CFO; and Tomasz Blicharski, our Chief Strategy and Development Officer, and my successor in the role of the CEO.

I will now start with the key highlights from the third quarter. Zabka again delivered consistent growth and improved profitability.

Sales to end customers reached PLN 9.6 billion, up 12.3% year-on-year. Like-for-like growth was 3.5%, below what we reported in the previous quarter, but still ahead of the broader market.

We continue to expand the network. At the end of September, we operated 13,405 stores across Poland and Romania with 1,410 gross openings over the last 12 months.

Profitability continued to improve. Adjusted EBITDA increased to nearly PLN 1.5 billion, up 16.5% year-on-year, while the adjusted EBITDA margin rose by 0.6 percentage points to 15.6%.

Our balance sheet also remains strong. Net debt to adjusted EBITDA stood at 0.7x, improving by 0.4x year-on-year. These results reflect continued progress across the business. We are expanding the network, growing ahead of the market and improving profitability while maintaining strong cash generation and disciplined approach to costs.

Tomasz will now take you through the market environment and our strategic execution in more detail.

Thank you, Tomasz, and hello, everyone. It's a pleasure to meet you again. The market environment was more difficult in the third quarter.

We observed rather subdued grocery spend. Inflation increased moderately, partly due to the higher fuel prices. At the same time, real wages continued to grow.

However, the growth stalled and is at the lowest rate in a number of quarters. This growth, however, still supported household purchasing power.

As you can see at the top chart here on the slide, the inflation lately has been outpacing the wage growth. Consumer confidence remained relatively resilient, although consumers continue to be selective in their spending. This is also visible in the retail data. Total retail sales grew by 3.3% in September, while growth in food, beverages and tobacco was only 1.4%. This confirms that the environment for food retail is somewhat subdued.

Against this backdrop, Zabka continued to outperform and gain market share. On a rolling 12-month basis, our share increased from 10.4% a year ago to 11.3% at the end of September.

So while external conditions provided limited support, our relative performance remained strong. We continue to grow ahead of the market, supported by network expansion and the performance of our strategic categories.

Moving to our strategic pillars. We continue to make progress across each of them. On expansion, we remain on track with our upgraded ambition. Over the last 12 months, we opened 1,224 stores in Poland and 186 in Romania.

This brought the total network to 13,405 stores and strengthened our footprint across both markets. On like-for-like, we want to be ever closer to the customer and increase the lifetime value as well as drive loyalty and increase engagement.

Therefore, we are launching initiatives aiming to use the data to engage customers in a more targeted way. Our so-called customer growth loop connects insights from the Zabka app, retail media and stores. This allows us to identify specific customer groups, reach them with personalized communication and measure the impact against the control group.

Alongside our core business, new growth engines also continue to expand the reach as we continue to test and develop new growth initiatives that strengthen customer engagement and broader customer access to our ecosystem.

During the quarter, this included the further development of Triki, the expansion of Jush! and delio into Katowice metropolitan area and the continued rollout of our vending network, which reached 275 machines and generated almost 1 million transactions 1 year after launch.

And with that, I will hand over to Marta, who will take you through the financial performance in more detail. Thank you.

Thank you, Tomasz, and hello again, everyone. I will start with the key financial highlights for the third quarter. Sales to end customers reached PLN 9.6 billion, up 12.3% year-on-year.

Growth was supported by continued network expansion, solid performance from newly opened stores as well as like-for-like growth of 3.5%. We opened 365 stores in Poland and Romania during the quarter, bringing the total network to 13,405 locations, as Tomasz mentioned. With 1,410 gross openings over the last 12 months, we remain on track to deliver our full year expansion ambition.

Profitability improved further. Adjusted EBITDA reached almost PLN 1.5 billion, up 16.5% year-on-year. Margin increased by 0.6 percentage points to 15.6%, and it was supported by operating leverage, continued efficiency improvements and disciplined cost management.

Adjusted net profit increased by 13.2% to PLN 572 million. This predominantly reflects stronger operating performance of our business in the third quarter. Cash generation also remained strong.

Free cash flow reached PLN 736 million, while net debt to adjusted EBITDA stood at 0.7x at the end of September. The third quarter, therefore, brought continued double-digit sales growth, further margin progression and robust cash generation despite a subdued market environment.

The 3 points are worth discussing when talking about our key financial metrics. First, gross profit increased by 17.3% in the quarter with the margin improving by 0.8 percentage points. This was supported by positive category mix, better terms of trade, and continued efficiency improvements.

Second, adjusted EBITDA grew by 16.5% and the margin increased to 15.6%, up 56 basis points. On the year-to-date basis, the margin reached 13%, reflecting operating leverage and strong performance in our core Polish business. We are firmly on track to deliver our full year guidance in terms of profitability.

Franchisee margin increased to 16.7% of sales to end customer in the quarter and 17.3% year-to-date. As we have highlighted before, this metric should be addressed over a longer period given the phasing between quarters.

The year-to-date increase reflects our continued investment in relationship with our franchisees. And finally, net profit increased by 13.2% in the quarter. For the first 9 months of 2026, it grew by 36.6% with the margin improving by 60 basis points to 3.4%.

This was supported by stronger operating performance and lower financing costs. Those costs fell in line with the trend observed throughout the year, but the dynamic was affected by the fact that in the third quarter 2025, as you may recall, we recognized an incremental gain on loan modification under IFRS, reflecting the improved margin on the refinanced facilities.

The EBITDA bridge shows continued margin expansion, driven by top line growth and stronger profitability in Poland. We continue to demonstrate strong discipline in driving operating efficiency.

Our store cost and logistics costs fell year-on-year as a percentage of sales. We have also seen improved efficiency in our support functions. This allowed us to keep the costs flat as we scale our business at a rapid pace, and at the same time, to reinvest in growing our presence in Romania visible within the new growth engine.

Our adjustment reached PLN 51 million in the third quarter, mostly related to noncash long-term incentive plan costs. In the end, both EBITDA as well as EBITDA margin increased significantly year-on-year.

On cash flow, we continue to convert operating performance into strong cash flow generation while funding the growth of the business. Free cash flow reached PLN 736 million in the third quarter, up 15% year-on-year, while conversion remained above 60%.

For the first 9 months, the free cash flow increased to almost PLN 2 billion. CapEx increased as we continue to invest in the network expansion, including the accelerated rollout of our stores in Romania. Working capital reflected the usual seasonal outflow after the summer peak with the year-to-date movement mainly related to the timing of inventory purchases and cash settlements.

Strong cash generation continues to translate into further balance sheet strengthening. The net leverage was at 0.7x at the end of September, flat from the end of second quarter, following the dividend payment of PLN 530 million in July this year.

This represents an improvement of 0.4x on year-on-year basis. Given our strong liquidity position, we also made an additional PLN 400 million of repayment under the current SFA facility. This leaves us with a strong balance sheet and continued financial flexibility to invest in the growth of our business.

And to conclude, let me reaffirm our midterm expectations. We continue to target over 1,300 new stores opening in 2026 and 1,300-plus openings per year in the medium term across Poland and Romania.

For like-for-like sales, we continue to expect mid- to high single-digit growth for the midterm with current trends suggesting an outcome in the lower end of the range this year. On profitability, we expect adjusted EBITDA margin to remain stable at the top of the end -- at the top end of 12%, 13% range.

And on the bottom line, we continue to expect a gradual improvement in adjusted net income margin towards around 4.5% in the medium term.

I will now pass on to Tomasz for his concluding remarks.

Yes. Thank you, Marta. Ladies and gentlemen, as you all know, this has been my final results call as CEO of Zabka Group. I would like to thank you all for the discussions, questions and support over the years. I'm proud of what we have achieved together, and I'm confident that Zabka is ready for the next chapter.

And with that, we are now ready for your questions.

[Operator Instructions] Okay. Well, it appears we don't have any questions today. So that concludes today's call.

No, I believe -- sorry, operator, I believe we have a question. We can see the question on screen at least, right?

Okay. We'll hand back to you for the written questions. Thank you.

Yes. We've got a question from [indiscernible]. Do you consider raising number of openings target for 2026?

Yes. I mean, we have, I think, disclosed the pace of expansion and our target is to open more than 1,300 stores for this year, and we are confident we'll meet the target as described and as confirmed during today's session.

[Operator Instructions] Okay. I don't see any -- I see questions coming in now. We have a question from Jakub Krawczyk with ODDO BHF.

Okay. We are not getting any audio. So I'm going to move on to Richard Trainor with Bernstein.

So my first question is about the higher margins. I was wondering, have you seen an impact in margins from fuel costs yet? Or is that still to come?

Yes. So we have seen some, but for us, it is not the major driver for our results. So we were able to fully offset the negative impact with other efficiencies, as you have seen within our results.

Fantastic. And my second and last question, I'm just trying to understand whether the deflation in the wider grocery market has had any impact on your like-for-like growth? It sounds like you think that the main reason for lower like-for-like growth was about weather and footfall. If that's right, has Zabka become more expensive relative to supermarkets? And if so, is that impacting customer behavior?

Yes. I mean, we're not playing in the same -- kind of in the same -- exactly the same sector as supermarkets. The missions that we serve are different. They are impulse missions and only 30% of products overlap with discounters, for example, right?

And on some of these products such as tobacco, the prices are regulated within this 30%, right? So therefore, this is not directly comparable. And what we have seen, though, over the summer period is a mix of a few factors that you have raised, but we see that, generally speaking, the market is somewhat subdued in terms of the growth, right?

The Nielsen data showed the market growing at around 1%. But it doesn't reflect, as you have described on footfall, it's more like a mix of different things. Having said that, if you look at our trends over the last few quarters, generally, the like-for-likes that we have seen in the quarter 3 are in line with prior quarters.

That's great. And Tomasz, thank you for your kind comments about us analysts and congratulations and good luck with the next step.

Our next question will come from Volodymyr Shkuropat with Kepler Cheuvreux.

So I have 2 questions. I'll go one by one. My first question is about the consumer demand, just to follow up. As you mentioned, there is a subdued food-related demand currently. Where did you see this in your own stores? Was it more in how often customers visit, how many items they buy or in specific categories?

I mean, certainly, when we look at the -- I mentioned that the overall growth, I think, was recorded by our statistical office at a little bit more than 1%. Nielsen had it at 1% as well.

Historically, Nielsen data was somewhat higher. Now if you look at what is working very well with us, certainly --

[Audio Gap]

-- which we continue to develop. We are very strong on daily ready meals, so lunch box type of offer where we sell up to 1 million per day on our kind of promotional day. There are categories which are kind of weather-related and that's kind of dependent on the weather.

The summer weather wasn't very stable this year. But generally speaking, there isn't one particular area where you could kind of point it down and say that that was certainly performing much worse than the others.

Okay. And on the like-for-like guidance, which you cut to mid-single digit now. My estimates point to around 5% in the fourth quarter in order to reach 4% for the full year. Do you see any acceleration of like-for-like in October so far? I think the weather is warmer, so this should support.

I think we're confident we'll reach the 4% for the year.

Okay. Okay. Clear. And my last question is about suppliers, as fuel, transport, and production costs are higher now. Are suppliers already asking for higher prices because of that? If not, have they mentioned possible increases later this year or from 2027?

We typically have annual contracts with the suppliers, most of -- well, actually all of them pretty much. And we have just entered the renegotiation process for the next year, and it's kind of too early to say exactly where things will settle, but we have things under control.

And our next question will come from Janusz Pieta with mBank. [Operator Instructions] Okay. We'll move on to Michal Potyra.

Maybe if you could break down the like-for-like sales for us between volume and pricing? That's the first question. The second is on the gross margin.

If you could maybe comment what were the key drivers of this pretty substantial gross margin expansion. And the third one is perhaps you could comment a little bit more on the competitive environment, especially around pricing.

Maybe I will start with the margin. So I think that we do have seen the margin expansion for the last 9 months. So like from the beginning of the year, we were able to like increase the margin.

And the reason for that, there are many different reasons for that. So first of all, as you know, we like increased the scale of our operations, and it gives us a positive -- like a positive -- it gives us an opportunity to receive better terms of trade from our suppliers.

So effect of scales, it's working for us positively. We also improved a lot in terms of like logistics operations, the processes, which helped us to decrease logistics cost as a percentage of sales in the last quarter -- in the third quarter of 2026.

We also use technology like data to drive pricing and promo. And also, we use our app for increase -- to increase the efficiency of our promotions. It helps us also to build the margin.

And finally, we were also able to improve the -- to decrease the consumption of energy for our stores on our main operations. And given that, it impacts also positively the store costs, which decreased as a percentage of sales as well and also improved some processes of the headquarter.

And given that the support functions, cost of percentage of sales, they went down as well. So I would say that there are many different components which support the margin expansion visible like in this year from the beginning of this year.

In terms of competitive dynamics, we -- well, our -- we don't have direct competition per se, right? We're the leaders in modern convenience space in Poland. But obviously, we compete for the wallet even though the missions of the consumers are different and the products that we sell in our stores are kind of largely differentiated, right?

Only 30% of products, as I mentioned, overlap with the discounters. And there hasn't been much change in the competitive environment in the summer. I mean, still in the discount sector, there is fierce competition between the discounters and supermarkets and hypermarkets, but that is impacting mostly that part of the market.

In terms of the like-for-like, the composition, I think we never kind of share details on this, but what I can say is that it is similar to what we have seen in the prior quarters.

We'll return to Jakub Krawczyk with ODDO BHF. [Operator Instructions] Jakub, you may have to switch the audio source of your microphone. I will come back to you again shortly. We can hear you now.

I just wanted to build on this gross margin question. That's one I had actually. And how do you forecast the gross margin trend going forward? I mean, are these -- you mentioned a laundry list of important initiatives, which I think had a very nice effect.

How many of these are still -- were these the low-hanging fruit sort of or is there still stuff you can work on? Or has most of the effect already been now recorded? I mean, of course, the scale thing will keep working, right? So I guess we can expect still some upward trend.

So I think that, as you mentioned, so increasing the scale of the business, usually like the company benefits from that, and we can do that as you have seen. What I can say that we are like certain that we will deliver the guidance in terms of the profitability.

So we don't expect any different trends in terms of the fourth quarter compared to what you have seen in the year-to-date data.

Okay. I kind of was thinking about the future years, like '27, for example, is that something we can still expect some minor increase or...

I think we're still kind of believing in our guidance that we gave some time ago. And we always have -- especially given that we're living in a relatively volatile global and macro environment, let's call it this way, there is a lot of uncertainties.

And I think we gave a balanced guidance 2 years ago when we did the IPO, and we reiterated it a year ago, and we're following that guidance. And I think there is no reason for us to kind of change it, at least from where we sit now.

And if I could just ask one more on the like-for-likes, how much of this positive effect would you say is this QMS? I mean, how much of a premium to the broader market is related to your differentiated offering, including QMS?

I mean, certainly this is one of the fastest, if not fastest growing and one of the biggest contributing categories in our offer. But obviously, it's difficult to understand fully what other players have in their kind of mix and what they do in certain areas.

So I think what I can only say is that for us, we see benefits of investing, and it is an important differentiating factor for us, a reason for many customers to visit our stores, and we will continue investing in this for years to come.

Our next question will come from [indiscernible] with [ Generali Pension Fund ].

I have a question about expansion. Romania seems to be on track. Balance sheet is pretty strong. Do you consider adding new geographies in 2027 or maybe 2028?

That's a great question. As we -- as you know, we're in the process with Couche-Tard and certainly our strategy, should that process be successful, which we have all the reasons to believe it will be, we'll be under discussion with them.

Our next question will come from Janusz Pieta with mBank. [Operator Instructions] Okay. We'll come back to you in just a moment. We'll move on now to Volodymyr Shkuropat from Kepler Cheuvreux.

Sorry, one more question on the gross margin. I think part of this improvement was supported by higher inventory being sold to franchisees, which are part of your revenue, but not part of your sales to end customers.

And I'm just wondering what was the reason for this higher store inventory change in the third quarter compared to last year, but also compared to the second quarter because last year, you saw there was a decline quarter-on-quarter in the store inventory change, but this time, we have an increase.

I recall that in the first quarter, you had a restocking before Easter, and this was the reason for higher inventory sold to franchisees, but what happened in 3Q?

Thank you for this question. So as we discussed, I think the best way to like look at the inventory change is to look for the longer period of time. So there may be some like movements between the quarters or months depending on calendar and many other promotional activities, the marketing agenda, and many different things.

So the best way is to look from the longer-term perspective and assume as you -- as we discussed previously, the inventory -- store inventory change depends on -- or is driven also by the inflation, which is positive for us this year and also the new stores opening. So the drivers in this quarter were very similar, the same as we have seen historically. So I would say the usual trends observed in the year-to-date period.

[Operator Instructions] Okay. That concludes today's call. Thank you, everyone, for joining. You may now disconnect.

Good morning. My name is Joelle, and I will be your conference operator today. [Foreign Language]

I will now introduce Mr. Mathieu Brunet, Vice President, Investor Relations and Treasury at Alimentation Couche-Tard. [Foreign Language]

[Interpreted] Good morning. I would like to welcome everyone to this web conference presenting Alimentation Couche-Tard's agreement to acquire a controlling stake in Zabka Group. [Operator Instructions] This webcast presentation will be available on our website for a 30-day period. Also, please remember that some of the issues discussed during this webcast may be forward-looking statements which are provided by the corporation with its usual caveats. These risks and uncertainties are outlined in our financial reporting and in our press release of July 31, 2026, announcing the transaction and in the presentation materials made available today.

Such documents also contain important information relating to historical and pro forma financial details being shared today in respect to Zabka Group and the corporation. Our speakers today are Mr. Alex Miller, President and Chief Executive Officer; Mr. Filipe Da Silva, Chief Financial Officer; and Mr. Tomasz Blicharski, Group Chief Strategy and Development Officer and incoming Chief Executive Officer of Zabka.

Alex, you may begin your conference.

Thank you, Mathieu. Good morning, everyone, and thank you for joining us today. This is a transformational investment for Couche-Tard and one of the most important milestones in our growth journey. I'm particularly pleased to be joined today by Tomasz Blicharski who will become the incoming CEO of Zabka Group. Tomasz is here with us today, and I'm excited about what our teams can build together.

We are uniting 2 exceptional organizations with a shared passion for customers, innovation, operational excellence and growth. For Couche-Tard, this is a unique opportunity to invest in a business we deeply admire, one that is already operating at the leading edge of convenience in areas such as food, digital engagement, supply chain and innovation. This partnership represents the largest acquisition in our company's history, bringing together a high-quality business, talented people and capabilities that fit naturally with our Core + More ambitions. Today, Zabka operates approximately 13,000 stores with roughly 4.3 million transactions every day and has established itself as Poland's leading convenience retailer with a strong track record of growth.

What makes this opportunity particularly attractive is that many of the capabilities we believe will define the future of convenience already exist at scale within Zabka. At its core, Zabka has built a business that consistently delivers anchored by highly productive stores, and engaged customer base and an entrepreneurial franchise model with solid economics. What truly sets Zabka apart is the depth of its More. Zabka excels across food, loyalty, digital engagement, advanced data and analytics and retail media. More than 10 million customers engage with its digital ecosystem annually and approximately 1 in 5 transactions includes a quick meal solution product.

Zabka has become Poland's leading provider of warm snacks and street food, selling more than 16 million pizzas annually and continually expanding its proprietary food offer. Supporting those capabilities is a highly sophisticated operating engine. Zabka manages approximately 99% of store distribution through its own network, supported by more than 90% automated replenishment, 8 distribution centers, 19 cross-docking facilities and industry-leading service levels. In many respects, Zabka is a real-world example of where Core + More can go.

It brings complementary capabilities that can advance our strategy, which is why we view this opportunity as much more than simply adding stores. But ultimately, what gave us the greatest confidence in this partnership was the people and culture behind the business. Throughout this process, we developed tremendous respect for the Zabka team and its franchisees. Their entrepreneurial mindset, customer focus, speed of execution and passion for innovation are qualities we deeply admire. At Couche-Tard, we have always believed the best partnerships start with great people and a shared focus to customers. This is not about one company teaching another. It is about bringing together complementary strengths and a common ambition to better serve our customers and make their lives a little easier every day.

We look forward to supporting Zabka's continued growth while also learning from the capabilities it has built across food, digital engagement, loyalty, supply chain, private brand and innovation. Together, we believe we can further advance Core + More, strengthen both organizations and create lasting value for customers, franchisees, employees, business partners and shareholders.

With that, I'll turn it over to Filipe.

Thank you, Alex. This partnership represents a unique opportunity to advance our long-term growth strategy through high-quality platform that complements and strengthens Core + More. From a financial perspective, we believe the transaction is attractive for 3 reasons, the quality of the business, the long-term value creation opportunity and the disciplined framework supporting the investment.

First, the quality of the underlying business. Zabka is one of the strongest retail growth stories in Europe. For more than 25 years, it has consistently expanded its network, evolved its customer proposition and deliver strong track record of growth. Today, it generates approximately USD 7.4 billion in revenues, approximately USD 1.1 billion in adjusted EBITDA and approximately USD 300 million of net profits. What stands out to us is a combination of growth, profitability and capital efficiency. The franchise model support attractive unit economics, strong cash generation, scalability and significant runway for continued expansion. It is supported by a diversified set of growth drivers across retail, food, digital capabilities, sophisticated supply chain network and customer engagement.

Second, this transaction strengthens our long-term growth profile. As Alex mentioned earlier, we are not simply acquiring a store network. We are adding a differentiated platform with trends that directly complement and advance Core + More. On a pro forma basis, the combination will represent nearly USD 84 billion in revenue and approximately USD 7.8 billion in adjusted EBITDA, excluding the impact of synergies. It also expands our European scale and increase our exposure to higher-margin merchandise and service revenues, further diversifying the business. Importantly, we believe this combination is well aligned with the ambitions outlined at our business strategy update. It adds a highly complementary platform and capabilities that can support sustainable long-term earnings growth.

Third, we see meaningful value creation opportunities. We have identified more than $250 million of run rate synergy opportunities across cost and revenue with the ability to fully achieve by the third year following closing as we assume the gradual acquisition of Zabka Group. These synergies span across procurement, logistics, private label, loyalty, food program, digital data and technology.

At the same time, one of the most attractive aspects of this combination is the opportunity to leverage the strength of both organizations. Zabka has built advanced capabilities in digital engagement, loyalty and analytics, while Couche-Tard brings scale, mobility expertise, procurement leverage and a proven global operating model, together with the opportunities that extend well beyond the initial synergy plan. As always, we will remain disciplined. The transaction is fully funded through committed financing and supported by a disciplined capital allocation. While leverage will increase following closing to approximately 3x net debt to EBITDA, we have a clear path towards deleveraging and expect to maintain the financial flexibility that has long been a hallmark of Couche-Tard's capital allocation approach. In fact, we expect our leverage to return within our framework range of 2 to 2.5x by the second year following closing.

The transaction is expected to be EPS accretive and to generate double-digit return on invested capital within a short period of time, while supporting a clear path back towards our long-term leverage objectives. Considering acquisition-related costs, higher depreciation and incremental financing, we expect the combination to be dilutive to our earnings per share in the first year, but accretive by the second year following closing. We also expect the return on invested capital to reach double-digit return by the third year following closing.

This is based on a few assumptions today, including the ownership percentage we will acquire in Zabka Group and at which pace we do so based on the voluntary tender offer. As such, when this completes, we'll be able to firm up the impact on our earnings per share. Finally, we see that the overall framework is entirely consistent with how we have always approached capital allocation. We look for opportunities that strengthen the business, improve our long-term growth profile and create attractive returns for shareholders. We believe this transaction accomplishes all 3.

With that, I turn it over to Tomasz.

Thank you, Filipe, and thank you, Alex. Good morning, everyone. This is a special moment for me personally. I first got involved with Zabka more than 16 years ago when it was a much smaller business with roughly $25 million of EBITDA. In fact, my kids were born after I joined the company, so my wife always jokes that Zabka is actually my first child. And watching this company grow has been one of the great privileges of my career.

I'm incredibly proud of what we achieved together. But what excites me most is what is ahead of us, the next chapter and opportunities ahead. For nearly 3 decades, our team, franchisees and partners have worked to build a business focused on making everyday life easier for millions of customers. What makes this partnership important for Zabka is that it brings us together with a company that understands retail, understands operators and understands the importance of serving customers every day. From our first conversations with Couche-Tard, what stood out was the respect they showed for our business, our brand, our franchisees and our people. Their approach was humble, curious and highly collaborative.

We felt that the Couche-Tard team came in not only to understand what Zabka is, but also to listen carefully how and why we built the business the way we have. That was very important to us. I remember meeting Alain and Alex for the first time and these guys are a lot of like us. We're both obsessed with customers and focused on making everyday life a little easier. In fact, we discovered that our companies have independently landed on almost exactly the same mission about making life easier.

When businesses on different continents arrive at the same idea on their own, it usually says something about the values behind them. For me, that was an early sign that our teams would work well together and that we have a real opportunity to build something special together. Zabka has a very strong identity. Our brands, franchise model, customer relationship, innovation, culture and local expertise remain at the heart of our business.

At the same time, becoming part of the Couche-Tard family gives us access to broader global platform, additional expertise and new opportunities to accelerate the growth further. We see many areas where both organizations can learn from each other. Zabka brings deep experience in digital engagement, loyalty, food service, analytics and the new retail formats. Couche-Tard brings global scale, operating expertise, mobility leadership, supply chain reach and proven ability to grow across many markets.

Together, we believe we can create even more value for the customers, franchisees, employees, partners and shareholders. Most importantly, this partnership allows us to continue building on what has made Zabka successful while opening new possibilities for the future. We are proud of where we are and energized by what we can achieve together.

I thank you all for your attention. I will turn the call over again to Alex.

Thank you, Tomasz. I'll leave you with a few final thoughts. This is a growth partnership. It accelerates Core + More, expands our European platform and brings together 2 organizations with complementary strengths and a shared ambition to better serve our customers. Together, we believe we can create long-term sustainable value for customers, franchisees, employees, business partners and shareholders. We are excited in the opportunity ahead and look forward to sharing more as we move through the process.

With that, let's open up the line for questions.

[Operator Instructions] Your first question comes from Irene Nattel with RBC Capital Markets.

Congratulations on the transaction. Just wondering, clearly, you've been looking at a lot of things for quite a while. I understand what you've outlined with respect to Zabka in terms of the appeal. Can you just talk about how long you've been speaking in the background, how the transaction came together? And then how to think about -- it's going to be operated independently, but there's a lot of things to learn over time. So how should we think about the integration and the evolution over the next, let's say, 2 to 3 years?

Irene, thanks for the question. I think Alain and Brian and I have been looking at Zabka for 15 years, at least. And so over the years, we have seen the journey they've been on. And I can tell you recently, within the past couple of years, Alain visited here, when he was on vacation, and he came back and he said, you guys need to go look at Zabka again. And so from our perspective, in our Core + More strategy, I just -- I don't think there's a better fit for the more part and the enablers, the growth trajectory that they've shown and delivered on many -- over many, many years, there was nothing that was more attractive to us.

So when we understood that private equity was potentially looking to exit, we engaged with Tomasz and the private equity companies, and we worked through that process arriving today with this announcement and very pleased to get to that state. I think when you talk about the tender offer, I think we have irrevocable commitments for 57% of Zabka exists today. We'll put the tender offer out. Obviously, we don't know the outcome or the timing of that. But I think regardless, whether it's through arm's length agreement with Zabka continuing to run as a public company on the Polish market or whether we reach the 95% threshold and delist them and bring them inside of Couche-Tard, I think we will get after -- I don't really view this as integration like we normally would, Irene. This is really about capabilities and how we share those capabilities and bring value to both Zabka and into Couche-Tard.

Timing, you asked for timing?

Yes, please.

As for timing, Irene, I think we've got time between now and our December close. I can tell you we're going to spend that time to further hash out our priorities and where we see the best benefits. And then we'll have a plan together. And I think in upcoming quarters and calls, as we get closer to that date, we'll be able to provide you some more specificity.

But just to build on Alex, Irene, you have heard us talking about the $250 million synergies -- we are clearly taking into account what Alex was saying about the voluntary tender offer and the fact that, yes, we are taking control, but we don't know at which level will be in terms of sales, but the synergies actually ramp up, take that into account. So with, I would say, a slow start and ramping up and expecting to deliver the $250 million synergies on year 3. That's how we see also the combination of the 2 platforms.

Your next question comes from Chris Li with Desjardins.

Congrats on the deal. I was wondering if you can please talk a little bit about how the business has operated in the last few years through the macroeconomic and geopolitical challenges. And then what is sort of the outlook going forward? And maybe a related question is, if you can also talk a little bit about the competitive dynamics within the Polish market. I know Zabka is #1, but who are your key competitors? And how has that evolved over the years?

Thanks for the question, Tomasz here. So if you look at the entire history of the company, so last 28 years now, we always grew top line double digit, and we always increased our EBITDA. We've been very consistent in growth in the last well, the whole 28 years, but also in the last several years. Throughout COVID, we continue to expand, continue to open new stores, continue to grow like-for-likes on average and continue to increase our EBITDA. During the inflationary period that followed the COVID and also the energy crisis a few years ago, we always managed to come out on top. I mean there are multiple reasons behind it, but we're effectively one of the most known and loved brand in Poland, like 90-plus percent brand recognition.

We touched millions of lives on a daily basis with millions of customers coming to our stores for their small shopping or their hot food or their services on a daily basis. And of course, we've executed incredibly well throughout the years. Two years ago, when we IPO-ed on Warsaw Stock Exchange, we gave out a midterm guidance as to the growth, which was to more than double the sales of the company within the next 5 years, so 3 years to come on top of that and to slightly increase our profitability and obviously, to invest capital with the benchmarks that we historically have.

And 2 years on that forecast, we are exactly bang on, on all the key aspects -- in fact, we have managed to accelerate slightly the growth pace in terms of store numbers. Last year, we opened more than 1,300 stores. This year also, we're going to open a similar figure. Our original forecast was roughly 1,000 per year. So in summary, we are a predictable growing business with very stable business model, and we are on track to achieve our forecast that we gave.

And to finalize maybe the last part of your question was around the competition. So certainly, we have close to 13,000 stores in Poland in modern convenience. The second closest competitor, which is Carrefour, has less than 500, and it is actually not opening stores. If you look at our broader competitive peer set, it's certainly the mom-and-pop store operators, which still roughly 40,000 to 50,000 of them exist in the marketplace. And I think that's a fair summary of -- and hopefully, that answers your questions.

And I hope to be able to visit your stores one day.

Thank you. We very much welcome you to do so.

Your next question comes from Derek Lessard with TD Cowen.

Echo the congratulations on the deal. Maybe just more of a strategic question to start. Just wanted to get your view on whether Zabka remains sort of a highly successful local platform? Or is it really a potential playbook that you guys think you can export across the network? And then maybe how should we think about the franchise economics and some additional color maybe on the franchisee profile and the prospective pipeline of franchisees you have?

So I'll take the first part. And Tomasz, why don't you take the second part? Zabka has been growing very consistently over many years, as you heard Tomasz say, and they recently entered Romania in 2024. I believe they just hit their 250th store in Romania. So they have quite a bit of runway, both still here in Poland and in Romania. But to answer your question, we absolutely believe the model will travel as do they. So I think part of what we'll do over the coming months is determine that plan and how we might be able to accelerate the growth of Zabka and the plans that they have today.

And with that, Tomasz, I'll hand it over to you on the franchise model.

Yes. One of the things that we really have in common with Couche-Tard is a growth mindset. We're -- as I mentioned before, we've always been growing and we've always been developing and trying to improve our business, never satisfied with the status quo. And I think that really is a complementary and same mindset that we share. That's why we're so excited about this partnership because you rarely find someone that has very similar ethos to your business.

And specifically answering your question around the franchisees, obviously, for us, the success of franchisee is effectively -- is fundamental for success of the business. Inside of our company, we have a saying for employees saying that we have 2 hearts. One is beating for the customers and the other one is beating for the franchisees. And we're very mindful about creating a win-win model with our franchisees. And over the years, we have done a lot to do so last few years, especially. The churn has been declining churn of franchisees has been low single digit voluntary churns around 7% per annum. And we see that the pipeline of franchisee candidate is high. It's sufficient for our growth plans and more. And in fact, the situation there is favorable and conducive to achieve our plans.

The model that we have, just to give you a bit more color with the franchisees is that typically a franchisee has 1 store or sometimes 2 stores if they're close to each other. So these are like micro operators. The model is not dissimilar to what you see in some convenience operators in Asia, generally speaking. But effectively, it relies on the franchisee being present part of the time in the store. And with their engagement, with the training that we provide to them, with the support that we have them throughout the digital tools, Alex mentioned about the automated replenishment, but we have apps for them to run the store. I think we create a great support and a great combination for them to drive.

Your next question comes from Luke Hannan with Canaccord Genuity.

I'll echo the congratulations as well. It seems like a really good deal. I just wanted to unpack if we can, the levers for the like-for-like growth that Zabka would have seen over the course of the last 2 or 3 years?

And then also just for my second question as well here is if we can just unpack the new growth engine segment, what exactly is in there? And then how do you plan to leverage the 2 entities rather Couche-Tard and the history, the information, the data, et cetera, to be able to leverage that in order to accelerate that growth trajectory going forward?

Yes. Great questions. So you -- if you look at the -- first, let's touch upon like-for-likes. So if you look at our long-term like-for-like trends, we always grew like-for-likes in most -- almost all the quarters other than maybe 1 or 2 in the last 10 years ahead of inflation.

Now when you analyze last few years, we've been coming off inflationary period. The inflation in Poland, 2023 was closer to 3%, which obviously -- and then it's been coming down to 2% in the last quarter or so. So effectively, you've seen a period that makes analysis of like-for-like more challenging than the regular moment because there was a lot of noise in the numbers. But having said that, in all these quarters, we have been able to grow the volumes. and grow ahead of the inflation. And the main reason behind this is really our push with quick meal solutions. I mean this is something that we started 10 years ago. It's effectively fresh daily food as well as the hot food and fast food combined into one kind of name that we use, quick meal solutions.

We started from 0 10 years ago or roughly 0, and we're now getting to a level of every fifth transaction is about this assortment, right? So that's been -- that enabled us to grow ahead of the wider market, so to say. And that is effectively a derivative of changing consumer megatrends, people are not cooking at home, anymore eating out. There is obviously a correlation between the wealth and convenience and Poland has been the fastest-growing country in Europe in the last 20, 30 years, right? So I think of the bigger global country only second to China. So in fact, we've benefited from that. We benefit from the changing trends. And we benefited, obviously, from the actions that we took, especially in this side of the assortment.

The other thing that we're very well known for in the market is product innovation. We introduced a lot of new products, several hundred last year, I think, 600 new products, and we have 2,500 products on average in any given store. So think about it like we always innovate with respect to new products. We have private brands that we develop constantly. We have exclusive products that we bring in from other markets. We've worked with CPGs. We've branded CPGs to create new products. We're trying to create excitement for the customers to come more often. And I think these 2 are really the key. And both of them are leveraged through our digital capabilities.

Our app is one of the most downloaded and used app overall, up to 2 million people on a daily basis use the app for the loyalty program, for individualized promotions, for the service that we have in the app. So all of that enables us to grow the like-for-likes faster than what the market sees. And the second part of the question was around, I think -- let me just -- you maybe because there was a second part around I can't recall now what it was, sorry.

Yes. It was just on new growth engines and how...

New growth engines. Yes. Got it. Sorry. So new growth engines is a business -- separate business units that effectively are focused on driving longer-term bets or businesses that we grow with a view for -- to stimulate growth of the entire organization in the longer term. And these comprise of 2 buckets at the moment. So one bucket is the Romania business. So as Alex mentioned, we opened the first international country for us 2 years ago, Romania, which we now operate 250 stores after 2 years. We accelerate the growth there. with a view in the very long term to get to roughly 7,000 stores in the market. So that's number one.

And number two is the digital retail businesses that we have. So we're one of the leaders in e-commerce and the rapid delivery commerce in Poland, certainly in terms of number of orders. And secondly, we're the leaders in meals. And we produce our meals, so we're actually vertically integrated, but we also sell the meals in a subscription basis, ready meals for customers that want to come to stores. I mean this is a bit of a specific business for Poland, but it enables us into vertical integration. And those businesses are growing fast, and we believe that in the longer term, they create a lot of value for us.

Your next question comes from Martin Landry with Stifel.

I just want to touch on the financing. From what we can read, I assume this is all debt. If you can confirm that if there's -- is there an intention at some point to issue equity or if this is all going to be financed with debt? And then for our modeling purposes, is it fair to assume that you're going to repay all of Zabka's debt and you're going to use your own credit facilities? And if that's the case, what kind of interest rate should we assume on the new debt?

Filipe, you got that?

Yes, yes, I have it. I was on mute. So we are, yes, fully financing this transaction through debt, Martin. So as I mentioned earlier, so we expect at closing to have our leverage close to 3x. And I would say, within the 2 years, we will come back to our leverage comfort zone between 2 and 2.5. We -- on your question regarding the debt at Zabka level, -- we'll continue to refine our strategy there. The idea for now is to keep it at Zabka level, and we'll see if we refinance it at Couche-Tard or at Zabka level in the future. But for now, I don't expect any change there. More to come, I would say, in the next coming months in that respect.

Okay. And just to be clear, what interest rate should we use in our modeling to -- for your new debt that you're going to issue?

I would say it's in line with what we have done in the last quarter or a few quarters. So it's roughly in line with that. You should not expect something very different to that.

Your next question comes from John Zamparo with Scotiabank.

I kind of wonder thinking more holistically, sometimes on Couche-Tard's deals historically, elements of the acquired business that are considered best-in-class move across the rest of the Couche-Tard business. And I wonder if there are components of the Zabka deal that you see that are ripe for that strategy either across Europe or across North America, whether it comes to foodservice or digital. I wonder if you could share thoughts you've had on that. I know it's early, but any color would be helpful.

Yes, sure. There's a number that we will be exploring and that we see opportunities to move across the broader Couche-Tard geography, both certainly here in Europe, but also it's very relevant for North America. We talked about food, and you heard Tomasz talk about quick-serve meals. So their food delivery is not dissimilar to our Fresh Food Fast. And there is some differences in how they create products and how they procure products, a little bit in their oven settings, but the core base is very similar. We think we have plenty to learn there and to apply there. They're ready-serve meals and the way they produce them, the way they create them, the way they work with suppliers, we see as potential large upside both within our European business as well as our North American business.

Private brand, private label, right? We've talked with you about that for many years. We have more to do in that space. Zabka is absolutely winning in own brands and private label. You heard Tomasz reference those. I think how they go about that practice is absolutely applicable, again, here in Europe and in North America. You heard me in Core + More talk about our desire to take ownership of our merchandise supply chain. Zabka has full control of their entire merchandise supply chain, supplying well over 99% of their own products to their stores.

Here, we think we have applicability and learnings across both Europe and North America. And then I think digital tech data, another area you hear me speaking to often in our quarterly calls and in our results. I'm very proud of the progress we've made. Zabka is very good at those things, has some very strong tools that they are leveraging in that space. And I think we're both really excited to get our digital, our data, our AI tools together and see where best practice lies and how we can apply those across our broader business.

That's very helpful. I appreciate the color. I had just one other one. I wonder if you could talk a bit about the sales mix difference at Zabka versus Couche-Tard business. I know there's not much of a fuel component. I wonder how you think about that? And can you share the exposure to some of your higher growth categories, in particular, nicotine and energy?

Yes. So I think, obviously, Zabka has no fuel, and we like that diversification. Zabka, you heard Tomasz say that 1 in every 5 transaction includes a quick-serve meal. So they skew much higher on food and food service. You heard Tomasz talk about innovation, which you've heard me talk about. A lot of that is in thirst, which is in our core. So those are very applicable to us. Their product mix is different than us. They skew much younger on the consumer side than we do. That is because of the innovation and the digital tools and how they're attracting young customers. Some of it's also the geographies and the urban density that they have. But they skew much more heavily towards food than we do, heavier towards thirst and a younger customer profile.

I'll let Tomasz kind of give you their breakdown by large category, if you can provide that, Tomasz.

Yes. So we look at it on a kind of a mission basis, right? So what brings the customers in. And certainly, obviously, historically, for us, we were first good in our traditional convenience categories. I mean we've transformed the business over the last years. So historically, if you asked this question 20 years ago, it was more towards the tobacco and beer and alcohol type of situation with grocery products. But we've evolved the business tremendously. We built the [ green ] solutions, we've added product innovation, private brands ready solutions like bakery products, grocery, breakfast type of solution as well.

And on top of that, we also have services and every customer is actually coming for the services, parcel pickup and return, potential services, these kind of things. So overall, if you look at our mission business, I think closer to 20% is emission solutions is tobacco and alcohol, around 20% is beverages. And then there is grocery. I can't recall off the top of my head, but grocery, there we still have some traditional groceries and I mentioned on the service.

Your next question comes from Vishal Shreedhar with National Bank Financial.

Congrats on the deal. I just have one question with 2 parts. And the first part is, if this deal is debt financed, why isn't it accretive in the first year, if it isn't? And the synergies relative to the EBITDA generated are lower than historically Couche-Tard has generated. Is that because the fuel mix is different? Or is there just more upside as we look forward?

Filipe, why don't you take the first one, and I'll take the second one.

Yes. So the reason why it's not immediately accretive is for a couple of reasons. The first one, it's fully financed through debt. So you have the financing cost, you have the transaction cost on year 1, but you have also the purchasing account and the fact that you need to take those impacts on year 1 related to intangibles, depreciation and so on. So I would say that's quite typical to M&A transactions. What we expect is in year 2 already being accretive and this accretion will continue to accelerate on year 3 and year 4, that's what we envision.

And from synergies, you're right. Actually, yes, today, we are talking about EUR 250 million synergies. We believe that there's potentially more, and Alex can elaborate on that. But to your question, yes, with that there, there is definitely upside. We need to continue to learn the business and reverse synergies, particularly, we believe that there is a huge potential there. Alex, do you want to go further on this space?

Yes, sure. Thank you, Filipe. I think your comment that there is no fuel. And traditionally, we do realize fairly significant synergies on fuel is accurate. But this transaction candidly is like none I've ever done in the 14 years I've been here and that this capability set that Zabka and that we see and you've heard us talk about, we see tremendous -- usually, it's us looking in what we can bring to someone. In this example, we see a lot of things that we think can be brought to us.

To really hash that out, we need teams to spend time together to do that. But I'd just highlight that it's 25% rough, rough on Zabka's EBITDA. The $250 million is 4% on our EBITDA. So we remain -- we're always conservative in our financials and in our estimates, and I think you guys know that. But we remain highly optimistic in our ability as we get our teams together to be able to identify additional synergies. And hopefully, we will. And if we can, we will update you on what we're learning as we go.

Your next question comes from Jacob Aiken-Phillips with Melius.

Congrats on the acquisition. So a 2-parter. So first, you could end up owning a range from 57% to 100%. How would like EPS accretion, synergies, other economics, access to cash flow change given the difference in the ranges? And then could you help bridge the path to that double-digit ROIC in year 3, like between Zabka's earnings, the synergies, financing costs, et cetera? And then I guess, what would the return be before synergies?

Filipe?

Yes, yes. So let's start with the returns. So I would say this transaction is quite typical in terms of return financial discipline that Couche-Tard has deployed throughout its history. So we expect this -- as we mentioned earlier, this transaction and this deal to generate double-digit returns by year 3. Actually, the returns will start to be quite interesting on year 2. That's the reality as we'll be ramping up the synergies. And as Vishal was pointing out, I think, just before, we are being quite conservative on the synergy side.

So even if you exclude the synergies, the profile and the financial framework of this transaction remains quite attractive for us. So feeling good. And again, this transaction is really within the financial discipline that you have seen Couche-Tard delivering across the year and believe that we are on the conservative side with very attractive returns for our shareholders and a lot of value creation opportunity across the year.

From a ramp-up and on the synergies, I was mentioning earlier that considering that we are still uncertain what will be the level of stake -- ownership stake that we will get on this company. We have been actually also conservative in the way that we're approaching the ramping up of the synergies. So with a low level of synergies expecting on year 1, starting to accelerate on year 2. But I would say where we believe that we'll be reaching the 1% synergy will be more on the year 3. So think about a very low start and acceleration of synergies across the 3 years.

To your question about EPS and how does that look like following -- depending on the ownership stake, I would say let's see where we land after the VTO. I think it's too early here to tell you that because we need to understand where we land, and we'll provide, I would say, as we get more visibility on that, we'll provide you the exact impact on our financials. Here, all the things that we are providing to you are based on a 57% ownership, and we'll see how it evolves across the next coming quarters.

Your next question comes from Chris Li with Desjardins.

I noticed that Zabka has very high free cash flow conversion of more than 100%. Is that mostly a function of the franchise structure, which makes it quite capital light?

I'll take this. So effectively, the way we operate is we do not own real estate. So we don't own the real estate, but we do fund the entire CapEx of the store. So the reason why we're so successful in our cash flow generation is that the return on the CapEx on the store is very, very quick, right? So the stores are profitable from month 1. And the payback on the capital invested, so the payback on CapEx that was the fit out of the store, et cetera, is around 1 year and it's very consistent, right? So in a way, we have a very efficient engine, and we drive that engine very fast, opening more than 1,300 stores, right? So that is the source of this strong cash flow generation, just the payback on the stores.

Yes. Perfect. Yes, that's my segue to my other question is just when I look at the state of your stores and your supply chain, it sounds like it's pretty modernized. So is it fair to assume there won't be any sort of big incremental investments that Couche-Tard will need to make to kind of bring them on par with Couche-Tard standard?

Well, I'd have to ask Alex for -- to give their perspective. But from our perspective, I can tell you that we invested a lot in our stores. We don't neglect the maintenance. We remodeled 5, 6 years ago, we remodeled the entire chain into new formats. So we spent several hundred millions dollars of that. And then most other stores is less than 5 years old because we opened 1,300 stores per year, and now we have 13,000. So if you think about it from a mathematical perspective, most of the stores were opened in the last 5 years. The distribution centers are pretty new as well. So majority of them were opened in the last 5, 6 years as well. Some of them are fully automated, actually state-of-the-art automation. So I believe that we have very well-invested asset base. But Alex, I think...

I concur.

Perfect. And my last question, just a follow-up. You mentioned that Zabka has been growing sort of double-digit growth for many years. Is that mostly organic and new store openings? Or was there some M&A in between that supported that double-digit growth?

99% of that was organic, so like-for-like plus organic store openings, 99% of that growth. And we had -- we've made 1 or 2 M&As, small ones in the last 10 or 15 years, but we have opportunity to deploy the capital at 100% return on capital employed from new stores that I described, like 1-year payback and utilize it to the maximum, right? And then on top of it with the actions that we do, we increase through like-for-like sales increase.

Your next question comes from Derek Lessard with TD Cowen.

Just a couple for me. How is the $250 million synergy split between like your cost and revenue opportunities? And maybe just highlight some of the bigger buckets there. And the other one is, how do you guys position the nearly, I guess, 400 Circle K sites alongside Zabka?

How about I take the second, Filipe, and you take the first, if that works, we definitely see value in Zabka's capabilities in the store applying into our 400-store network in Poland. All the things you've heard us talk about, the supply chain, the food, the enhanced digital solutions. So we definitely see value there, and that is in our synergies. Filipe, you want to provide kind of a high-level breakdown of the synergies in the buckets?

Yes, definitely. So on the synergy side, we see this file as really synergistic on the revenue and the COGS side. It's not really a cost takeout integration. It's more about how we can accelerate Zabka revenue. And here, we can -- we are convinced that we can help them in some of the categories. But there is also -- and we have been talking about at length about that during the call is all the capabilities also that Zabka can bring to us. So we believe that there are opportunities on the food, on the digital capabilities as well, the -- how to engage digitally with customers. Of course, supply chain. So Alex was mentioning earlier and Tomasz as well. So we have been very impressed by the supply chain capabilities. And you know that during our Core + More strategy update, we want to accelerate our supply chain integration.

So we see a lot of synergy happening in that side as well. And the other component also would be on the private level. There Zabka have been doing a great job there, and that's a piece of offer that we believe that, yes, we can do better on ACT. And of course, there are the most classical, I would say, synergies buckets that's just related to the scale. And on the procurement side, so both GFR and GNFR, we believe that, yes, there is significant synergy and value creation opportunity there. So that would be today the big buckets that we've identified. And of course, more to come as we'll continue to learn and to work together with Tomasz and the team there.

This concludes the Q&A portion of the conference. Mr. Brunet, back over to you.

Thank you, Alex, Filipe and Tomasz. That covers all the questions for today's call. We thank you all for joining us, and we wish you a great day and look forward to discussing our first quarter 2027 results in September.

[Foreign Language]

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Good afternoon, and welcome to the Couche-Tard and Zabka creating the next-generation convenience retail platform. [Operator Instructions] This webcast will be recorded, and an archive of the webcast will be posted on the company website.

By participating in the Zoom call, you are agreeing that recordings made during the event may be shared by Zabka Group.

[Operator Instructions]

I'd now like to hand the call over to Filip Paszke.

Thank you. Hello, everyone, and welcome. My name is Filip Paszke. I'm the Director of Zabka Group responsible for Corporate Development and Capital Markets. This call was initially scheduled to discuss our Q2 results, though we intend to spend most of our time today on the transformative transaction that was just announced this morning.

We are pleased to be joined by the senior leadership from Couche-Tard, who will be sharing their perspectives on the announced transaction.

I would now like to hand over to Mr. Tomasz Suchanski, CEO of Zabka Group.

Thank you, Filip. My name is Tomasz Suchanski. I'm CEO and Chairman of the Board of Zabka Group, and I'm joined today by Marta Wrochna, our Group CFO; Tomasz Blicharski, our Chief Strategy and Development Officer; and my successor in the role of the CEO.

We are very pleased to be joined today by Alex Miller, CEO of Couche-Tard, who in a few moments will share his perspectives on the highly strategic combination between our 2 companies that we announced this morning.

Before we move on to the transaction, I would like to invite our CFO, Marta, to share a brief update on our strong Q2 results.

Thank you, Tomasz. Good morning, everyone. Let's start with the key financial highlights for the second quarter of 2026.

We delivered another solid quarter with growth across sales, profitability, cash flow and net profit. Sales to end customers reached PLN 9.2 billion, up 13.2% year-on-year. Like-for-like growth was 4%, improving versus the first quarter. We also continued to expand the network. At the end of June, we operated more than 13,000 stores across Poland and Romania, with 1,368 gross openings over the last 12 months, including 303 new stores opened in Poland and 40 stores opened in Romania in the second quarter of this year.

Like-for-like growth ahead of the market in Poland and traffic expansion helped us to accelerate our market share growth even further. Profitability also improved. Adjusted EBITDA exceeded PLN 1.2 billion, up 16.2% year-on-year and the margin increased to 13.3% by 34 basis points. This reflects continued efficiency improvement, disciplined cost management and the strong performance of our Polish operations.

Reported EBITDA was PLN 1.163 billion, also up 16.1% year-on-year after the recognition of PLN 51 million of noncash LTIP-related costs. Finally, we delivered a strong free cash flow of over PLN 1.2 billion, and we continue to strengthen the balance sheet. Net debt to adjusted EBITDA decreased to 0.7x, down 0.5x year-on-year.

Looking on the key financial metrics, I would highlight a few points. First, the top line growth remained solid. Sales to end customers increased by 13% in the second quarter and 12.6% in the first half of this year. This was supported by continued network expansion and an improvement in like-for-like versus the first quarter.

Second, gross profit and adjusted EBITDA both grew faster than sales, more than 16% with the gross margin up 47 basis points and EBITDA margin up 36 basis points versus the last year. This improvement was driven mainly by stronger terms of trade, growing sales of QMS and continued efficiency gains in logistics and store openings.

And third, on franchisee margin, we see a year-on-year decrease in the second quarter. And as you recall, there was an increase in the first quarter of this year. As we have discussed before, quarterly movements in franchisee margin may be affected by seasonality, calendar effects and inventory phasing. Therefore, the year-to-date view is more representative of the underlying trends. For the first half of this year, franchisee margin has slightly -- was slightly above last year, reflecting the growing share of QMS, our strategic category and commitment to build relationship with our franchisees.

The last point is net profit. Below EBITDA, we also saw a clear improvement. Net financial costs declined year-on-year, supported by lower leverage and improved margin on our debt following bond issuance last year and refinancing completed in September last year. This helped adjusted net profit increase to PLN 366 million in the quarter, up 66% year-on-year.

On cash flow, the second quarter again shows the strength of our cash generation. Free cash flow reached PLN 1.2 billion in the second quarter with conversion above 130%. This was supported by higher EBITDA, disciplined CapEx and a strong working capital inflow. As you remember, Q2 is structurally and seasonally a strong quarter from a working capital and cash flow generation perspective, which contributed to these results. CapEx remained focused on growth and efficiency projects with capital allocation staying disciplined.

And finally, strong cash generation translated into further balance sheet improvement. Net debt to adjusted EBITDA, excluding leases, decreased to 0.7x as at the end of June compared to 1.2x a year ago, on the back of higher EBITDA and stronger working capital dynamics in the quarter. As a result, net financial debt, excluding leases, decreased by almost PLN 1 billion year-on-year to PLN 2.3 billion. Our liquidity position also remained very strong with cash of more than PLN 1.6 billion as at the end of the quarter. And given this position, we decided to accelerate the repayment of PLN 100 million under the SFA loan, which was originally scheduled for the fourth quarter of this year.

So to wrap up, the key takeaway is that our cash generation continues to support growth, financial flexibility and further deleveraging. Given this strong balance sheet position, we feel confident and fully ready to proceed with dividend payment, which is planned for today.

I will now hand over to Tomasz to cover the transaction in more details.

Thank you, Marta. Before we move to the transaction, I would like to take a moment to share my reflections on the remarkable journey Zabka has taken to date.

I'm incredibly proud of what we have achieved at Zabka. Over the past 25 years, we have transformed the business from a single chain of corner stores to Poland leading convenience ecosystem, growing our sales at 23% CAGR. We have over 13,000 modern convenience stores today, and we are continuing to expand our network, adding 1,300-plus new stores per annum. We have delivered significant innovation in our modern convenience proposition, including our recent street food rollout. We have added successfully to our digital offering across e-grocery, meals and our consumer application.

In 2024, we entered Romania, our fifth international market. And currently, we have 250 stores and growing. I'm very proud of what we have built at Zabka, and I think today's announcement with Couche-Tard is a recognition of the strength of our business. This would not have been possible without the commitment, passion and hard work of everyone who has contributed to this journey. A special thanks goes to our employee base here in Poznan and across all of Poland and Romania as well as Zabka franchisees who deliver excellent service to the consumer day in and day out.

We also thank CVC and Partners Group, who have been excellent partners over many years as we have grown and transformed the company to the European leader it is today.

I will now pass it to Tomasz Blicharski to share a few remarks. Tomasz?

Thank you, Tomasz. I'm Tomasz Blicharski, Chief Strategy and Development Officer and incoming CEO of Zabka Group. Pleased to be here with you.

Zabka today is Europe's leading convenience retail platform, serving time-sensitive customers across physical and digital channels and designed around one simple mission, helping our customers free up their free time. We have a network of over 13,000 modern convenience stores in Poland and Romania. We're adding over 1,300 stores per year with a disciplined payback of roughly 1 year, and our estate generates a robust mid- to high single digit like-for-like. More importantly, we see a long runway for continued expansion and plan to sustain this pace of growth, targeting more than 1,300 new stores opening annually over the medium term.

In our current markets, our business has generated $8.5 billion in sales and $1.1 billion in adjusted EBITDA in the 12 months to March '26. And our ambition remains exactly as it was at IPO, to double sales to end customers between 2023 and 2028. Now at the halfway point, we are firmly on track to deliver on that commitment. Today, almost 18 million customers live within 500 meters of Zabka store, and we serve approximately 4.3 million customer missions every day. Importantly, Zabka is much more than just the physical store network. Over the years, we have built a powerful digital platform, including e-grocery and meals. We have the Zappka app at the center of how we engage with our customers.

As a management team, we're very excited for the next chapter of Zabka in partnership with Couche-Tard. I echo Tomasz's sentiment that today's announcement is a powerful recognition of the strength of the Zabka business, the power of our brand and our people. We believe the combination of Zabka and Couche-Tard will create a leading pan-European convenience platform with aligned strategic priorities. Our partnership will allow us to accelerate the delivery of long-term ambitions, benefiting from the enhanced scale, capabilities and growth opportunities.

Having spent time with the Couche-Tard team, I believe we have a highly complementary culture built on a commitment to innovation, convenience and customer centricity. The quality and dedication of our people have been core to the success of Zabka. We are committed to continue investing in our people and creating even greater value for customers, franchisees and the communities we serve. We're excited about the opportunities ahead and look forward to working closely with our partners in Couche-Tard.

With that, it is my great pleasure to welcome Alex, who will share their perspective on the transaction and the opportunities we see together going forward. Over to you, Alex.

Thank you, Tomasz. What you've just heard from the Zabka team captures exactly why we're here. This is a transformational investment for Couche-Tard, the largest acquisition in our history and one of the most important milestones in our growth journey. For us, this is a unique and extraordinary opportunity to invest in a business we deeply admire, one that is already operating at the leading edge of where we believe convenience is heading.

What stands out most is the quality of the platform, the strength of the people and how closely Zabka aligns with the future we're building through our Core + More strategy. They are strong at their core, highly productive stores, deep customer relevance, high frequency and an entrepreneurial franchise model with solid economics. But what makes this combination especially powerful and compelling for us is their leading capabilities in food, digital engagement, loyalty and personalization. In many respects, Zabka embodies the true potential of Core + More. And culture matters here, too. Part of our DNA is welcoming strong businesses into our organization while preserving what made them successful in the first place. That mindset is very much at the heart of this partnership.

So for the next few moments, I'll walk you through 5 things. First, an introduction to Couche-Tard, followed by an overview of the transaction and the rationale behind it. We'll discuss the financial framework, our approach to execution and integration, and then we'll open it up for questions. Many of you know us as Circle K through the nearly 400 service stations we've operated across Poland since 2012. What you may not know is that Circle K is part of a much larger global network.

Today, we operate roughly 17,300 sites across 27 countries and 29 business units, coast-to-coast in Canada, in 48 of the 50 U.S. states and with leading positions across many European markets. That global scale, reach and operating expertise is part of what we bring to the partnership. That global network you just saw didn't happen by accident. It was built through partnership over 4 decades.

And a defining chapter in that journey was 2012 when we expanded into Europe with the acquisition of Statoil Fuel & Retail, a leading Scandinavian fuel and convenience retailer. That's the acquisition that first brought us to Poland, and those stores were later rebranded to Circle K, the global brand we launched in 2015. We've continued that momentum ever since. We acquired Topaz in Ireland and more recently, TotalEnergies across Germany and the Benelux.

But the key to our success has never been simply adding stores. It's that we bring on the best leadership, talent and ideas from each of these businesses and scale them across our network. That same approach, humility, respect for local expertise and a commitment to learning in both directions is exactly how we'll approach Zabka.

This is about bringing together 2 complementary convenience leaders that share the same priorities: convenience leadership, digital innovation, operational discipline, a growth mindset and a focus on value creation, but that bring different complementary strengths. Couche-Tard adds global scale, mobility expertise, procurement leverage and a proven global operating model.

What Zabka brings is genuinely best-in-class. Food, an expanded quick meal solutions offer accounting for roughly 1 in 5 transactions, which is a level of food penetration that's rare at this scale. Digital and loyalty, a digital-first data-rich ecosystem anchored by the Zappka app and a leading loyalty program and advanced personalization and retail media capabilities. Innovation from Zabka Nano, autonomous stores to AI-enabled operations. They built the kind of tech-powered convenience experience that's driving the industry forward. Put those together and you have a platform positioned to accelerate growth and innovation across Europe and beyond.

Let me summarize the key terms. This is an all-cash offer for up to 100% of Zabka at PLN 32 per share, implying an equity value of roughly USD 8.6 billion. We'll proceed through a voluntary tender offer expected to launch in August, and we already have irrevocable commitments from CVC, Partners Group and a key Zabka managers representing approximately 57% of shares. So we are establishing control upon completion. We're targeting close by end of Q4 2026, subject to customary conditions and regulatory approvals.

The case for this combination really comes down to 3 things. First, Zabka is an established leader in a large, growing Central and Eastern European market and its geographies and capabilities complement our own. But this isn't simply about adding stores. It's about adding a differentiated growth platform that accelerates exactly where we want to go.

Second, a historically strong financial profile with a pathway for continued compounding, a capital-efficient franchise model with attractive unit economics, 25-plus years of consistent growth and meaningful white space still ahead.

And third, disciplined execution, a high-quality management team with a deep bench and a proven operating model powered by data, scale and AI across the value chain. Taken together, these are what give us real confidence in the value this creates over the long term.

The scale of the opportunity really comes through in the numbers. A few summary points drawn from the pro forma and key takeaways. Significantly expanded footprint. The combination would operate roughly 30,300 stores, extending our reach into dense neighborhood convenience formats we don't have today. A step change in European presence and scale. Europe and other regions jumps to about 60% of the combined store base, up from roughly 30% for Circle K alone, a genuine step change in a priority region. Increased diversification outside of fuel, a meaningfully higher share of merchandise and service revenue, which strengthens the resilience and quality of our earnings mix.

And last, higher margin, higher growth and focused on Core + More. Pro forma revenue of $83.9 billion and adjusted EBITDA of approximately $7.8 billion before synergies with a stronger blended margin.

Finally, I want to close on what matters most in all of this, and that is people. Our guiding principle through integration is continuity, and that starts with keeping employees, franchisees and customers at the center of every decision we make. Practically, that means Zabka will continue to operate independently with no disruption to day-to-day business, led by its existing management team who are reinvesting alongside us and remain responsible for executing Zabka's strategy and growth.

We deeply respect the expertise, innovation and customer focus of the Zabka team and its franchisees. And we see this partnership as creating new opportunities for them, not disruption. We'll support that with a clear governance structure that preserves local accountability and dedicated integration teams focused on capturing best practices and long-term value on both sides. But through the line is simple: protect what makes Zabka special and keep its people and customers front and center.

Thank you, Alex. That concludes our presentation. We will now move to Q&A.

[Operator Instructions] Our first question will come from Richard Trainor with Bernstein.

First question on the deal. Is the price being offered high enough for the public market shareholders of Zabka?

I guess we'll determine if it is, Michael -- or excuse me, Richard. That's for them to decide.

Fantastic. And one more, if I may. Where will the synergies come from in this deal?

The synergies are going to come from all the things you just heard us describe. We see Zabka, for us in our Core + More strategy, we talk about more, which food, own brands, private brands, merchandise supply chain, digital solutions, all the things you heard me reference in the commentary. Those are things that Zabka is extremely good at and I think leading in our industry. We will be looking to apply those things across the Couche-Tard base.

Our next question will come from Michal Potyra from UBS.

I have 2 questions, if I may. So the first one is, I understand there is a commitment from shareholders representing 57% of the shares committed to the tender. I wanted to ask, is there a level of additional shareholder acceptance for the offer to succeed? And are you considering to buy a controlling stake in Zabka, but to keep it listed as well or only 100% is what interests you?

Yes. I think as we outlined, we have irrevocable commitments for 57% ownership of Zabka, which gives us a controlling stake. We will then proceed with the tender offer, and we will see what percentage tenders in that process. We are open to continuing to run Zabka as a public company listed here on the Polish Stock Exchange. And we are also open to taking -- to tendering all of those shares and bringing Zabka inside the broader Couche-Tard Group.

So there is no clear answer, I understand, right, from what you just said.

I mean, Michal, there is no conditions, no conditions are planned for, in terms of thresholds other than Alex just described. Irrevocables for 57% and then it's up for the market to decide whether to tender the shares or not.

One more, if I may, just to make things clear because you mentioned, but I didn't got that really, about the dividend. So the bid price will be PLN 32 after the dividend is paid, right? So the dividend is on top.

Yes, we will pay the dividend as planned today and the share price as announced.

[Operator Instructions] Our next question will come from Elena Jouronova with JPMorgan.

Well, congrats on this, first and foremost. Secondly, a bit of a follow-up from Michal's question. So in the event that minority investors choose not to tender shares and remain the shareholders of Zabka, is it more likely that Couche-Tard would prefer to increase the price on the tender offer? Or you're very happy to just, as you said, run it as a public business and reconsider in the future?

What's your appetite to potentially increase that tender offer price if no one wants to sell it, no one except for the 57% that you've already secured?

The tender offer will be done at PLN 32 per share, and we will let shareholders decide if they wish to tender. As I stated earlier, we are open and willing to continue to run Zabka as a public company listed here on the Polish Stock Exchange. We're also very open to -- should the tender come in over the threshold, we would delist Zabka and bring them inside the Couche-Tard Group.

Understood. How do you plan to change the Board of Directors? How many Board seats will Couche-Tard have post the acquisition of the controlling stake? And what are your initial thoughts about capital allocation and financial leverage of Zabka as it stands currently?

Elena, I think it's way too early to answer these questions. Obviously, some of the things that you mentioned are conditional on the shareholding percentage that Couche-Tard holds after the tender is done. So we'll surely come back on this at a kind of later stage.

Well, that's fair. But then on financial leverage from how the balance sheet looks like right now, does Couche-Tard consider this as adequate financial leverage or potentially consider levering up more in order to fund growth expansion?

Yes. I think just coming back to it, I think that really depends on the outcome of this situation. I think, obviously, Couche-Tard very well knows our kind of current leverage, and they feel comfortable with the current leverage, given they decided to proceed with the transaction. And I think it's fair to kind of stop at this moment.

And sorry, one more for me, probably more a question to Zabka's management team. So with the change of core shareholder for the company, how does that change the appetite for growth? Should we be thinking that the company may consider expansion outside of the Eastern European region? And I appreciate you might say it's too early to tell, but I guess for those investors who will decide to tender or not tender the shares, this is an important question.

Yes. I mean one thing that we identified early on in our discussions with Couche-Tard colleagues is that they have very similar values and also approach to business and growth is certainly one of the key features that both them and us effectively share. And that's on one hand.

Secondly, I mean, obviously, with our international expansion, we continue with our strategy on focusing at the moment on Romania and putting as many stores with good quality in that market. We just crossed 250th store in Romania, I think, today or something around that day. And we continue to be committed to Romanian market and growing that.

We'll certainly also continue growing the business in Poland. We still kind of open approximately 1,300 stores in the last 12 months, and I don't see that changing. As to future plans, I think I will answer as you suggested. So this is relatively too early to say.

[Operator Instructions] We have another question from Michal Potyra with UBS.

Maybe just switching gears a little bit and looking at your second quarter numbers. If you could perhaps comment a little bit more, firstly, on the gross margin expansion drivers, like what was causing that? And should we expect that sort of momentum to continue? And the second question, also, if you could comment a little bit more on the changes in the franchisee margin, which dropped.

Michal, thank you for this question. In terms of the gross margin, I think the drivers are in line with what we have seen over the recent quarters. So we have seen improvement in terms of trade with our suppliers given the increasing scale of our business. We have seen also the efficiencies across the entire organization. We have improved the processes within the logistics, the store costs. We have lower cost of store maintenance given that we in-source some of our store maintenance operations.

And in general, the scales also help us. As you know, inflation is also lower in terms of cost. So it also impacts positively our gross margin. So in terms of the guidance for the full year, we do not change it. So we expect to -- and we expect to deliver comfortably the guidance on the EBITDA margin, which we shared with you previously.

In terms of the franchisees, I think that we should, as I mentioned during the presentation, and you know that there are some movements like related to the seasonality and also the calendars related to the margin and the level of stock at stores -- at our stores. And given that, it is much better, as we explained, to look from the longer-term perspective. So therefore, like we look more for year-to-date figures. And when you look on that, you see that there is an increase of approximately 10 basis points in the franchisee costs in the first half of 2026 compared to last year.

And we believe that -- and this results from 2 things. First of all, is the increase in the QMS. So you know that we pay more for QMS to our franchisees given that this is a strategic category for us and also requires more labor from the franchisees. And secondly, we make sure that franchisees feel comfortable and we keep -- we are focused also on their engagement. So given that, we expect that we may see similar like values for the second half of this year as we have seen for the first half of the year.

Am I still on? Not sure.

Yes, we can hear you.

Yes. Great. Great. If I have maybe just 2 other questions. I know it's early, but perhaps you could give a little bit color on the July trading, please. I mean, I remember the weather was not very helpful last year, but seems to be very supportive this year. So it would be nice to have -- to hear some color on that.

And then perhaps also more of a question regarding your full year outlook. Looking at the first 6 months, it seems that you were able to improve your EBITDA margin quite a bit and the run rate is kind of visibly ahead your full year range. So I'm wondering, is there room for you to upgrade that or no changes at this stage?

Michal, thanks for the question. I think at this stage, what we can certainly confirm is our -- we maintain our full year guidance, both in terms of like-for-like for the year and in terms of profitability that we shared before. That's all we can comment at this stage.

Anything about July, please?

I think July was included in my comment previously.

Our next question will come from Janusz Pieta with mBank.

Two questions, one strategic one. When it comes to international expansion, so is it like a story for 2, 3 years from now? Or is it like a more medium-term story? Looking -- excluding Romania.

And the second one on the Q2 results and incentive program. I guess the costs went up a bit quarter-on-quarter. So could you give us a bit more color on that and how it should evolve in the next quarters?

Yes. From the perspective of the second question is like the second quarter was a little bit different due to some of the accounting reasons, and we can explain that, Janusz, offline, if you wish. But like in the next quarters, we expect to have similar costs as we used to have. So this increased costs are more a one-off in the second quarter of this year and will be not recurring for the next quarters.

Yes. And on strategic international expansion plans. So the first question you've asked, I think I can only repeat my comment from prior -- answering prior questions. So effectively, we're fully committed to making Romania grow as fast as possible at this stage, and we'll determine on the next steps in our international journey at a later stage.

So with the international expansion, you will be waiting till Romania is on the breakeven and then you will look at other markets? Or is it something that you can do at the same time?

I think at this stage, what I want to say is that our full focus at the moment is in Romania, and we really want to expand in Romania as fast as possible. I think we have early success there. We mentioned that a few times during the last quarters. We see very positive momentum there. We operate close to 250 stores. We have a positive momentum both in terms of sales and profitability of these stores. But we understand that it is very important for us at this stage to make sure that we get to the next level before we kind of commit to any additional plans. And I think we maintain here our prior position that we have taken on that matter.

Our next question will come from Volodymyr Shkuropat with Kepler Cheuvreux.

On the New Growth Engines segment, your adjusted EBITDA loss was lower quarter-on-quarter. Could you explain how much of that improvement came from Romania? Or was it mostly the Digital Customer Offering segment? Also, could you give us some indication of the current Romania loss run rate and the level of the segment losses we should assume for the second half of this year?

Yes. So in terms of like the segment, as you may expect, we continue to invest in Romania. So Romania is -- and it is very important for us. So therefore, like as you can imagine, given the higher number of stores and the fact that most of the stores are in the ramp-up period, there is like higher investment in Romania this year compared to last year.

In terms of the guidance, I think that the guidance for the group in terms of both sales as well as margin and net profit results, it includes both segments, Poland and Romania, and New Growth Engines. And we do not guide specifically for each of them.

And one more, if I may. On the like-for-like, could you give us more color about monthly progression of like-for-like in the second quarter? I understand that April was weaker and May was stronger, but also what was the exit rate in June in the second quarter?

I think we have had some variability in Q2, mostly on the back of weather and different weather patterns that we had compared to the prior year. So I think that drove a lot of the variability. In terms of the exit rate, I think what we see on our end is that we are in line or we are expecting to meet the full year guidance, mid- to high single digit. And we obviously make this confirmation based on what we already know, right?

And to clarify this mid-single digit to high-single digit, in your terms, this mid-single digit, it starts from 4%. Am I right?

I'm not sure if we ever gave this clarification. I think it's up to you to determine where mid starts. But -- yes, I think that's difficult to get more detail than this given that we have never, I think, clarified it more than this.

Well, this concludes today's call. Thank you, everyone, for joining. You may now disconnect.

Good morning, and welcome to the Q1 2026 Financial Results of Zabka Group. [Operator Instructions] This webcast will be recorded, and an archive of the webcast will be posted on the company website. By participating in the Zoom call, you are agreeing that recordings made during this event may be shared by Zabka Group. [Operator Instructions]

I'd now like to turn the call over to Filip Paszke.

Thank you very much, and hello, everyone, and welcome to our Q1 2026 earnings call. My name is Filip Paszke, and I'm a Director responsible for Corporate Development and Investor Relations. We have an about 25-minute presentation, followed by a Q&A session. I'd like to hand over now to Mr. Tomasz Suchanski, CEO of Zabka Group. Thank you.

Thank you, Filip. Good morning or good afternoon. My name is Tomasz Suchanski. I'm CEO of Zabka Group. And as usually, I'm joined today with 2 of my colleagues from the Board, Marta Lastowska, the Group CFO; and Tomasz Blicharski, the Group Chief Strategy and Development Officer.

So let's start with the headline numbers for the first quarter of 2026. Zabka recorded another quarter of growth, supported by both sales development and strong operating performance. Sales to end customers reached PLN 7.4 billion, up 12% year-on-year. Like-for-like growth was 3.2%.

We also continue to expand the network, the main pillar of our strategy. As of the end of March, we operated 12,750 stores in Poland and in Romania, which is 1,393 more than a year ago. Profitability remained resilient. Adjusted EBITDA increased to PLN 674 million, up 13.1% year-on-year, and the adjusted EBITDA margin improved to 9.1%, up 0.1 percentage points. And finally, we further maintain a strong balance sheet. Net debt to adjusted EBITDA stood at 1.1x, improving by 0.4x versus 31st of March last year. So overall, we delivered solid top line growth, continued network expansion and stable profitability.

Quick word on how the first quarter fits into our strategic priorities. The external backdrop at the start of 2026, as was the case throughout 2025 as well, has been mixed. Consumer sentiment has remained broadly neutral with some mixed signs linked to geopolitical situation. However, from our perspective, the key swing factor in Q1 was the weather. January and February brought unusually low temperatures and heavy snowfall, which had an adverse impact on footfall. In March, the performance has been fully on track.

Against that backdrop, we continue to execute on our growth pillars. First, network expansion remained very strong. We remain on track to deliver our ambition of 1,300-plus stores openings per year in Poland and Romania.

Second, like-for-like performance improved as the quarter progressed with the underlying trajectory consistent with our full year ambition of mid- to high single-digit like-for-like growth.

Third, we continue to develop our new growth engines. In Romania, we reached 204 stores at the end of March with very satisfactory performance and expansion into 2 new cities. And in DCO, we continue to introduce new services and solutions that strengthen our ecosystem that Tomasz will give you more information in just a few moments. So overall, we continue to move forward across expansion, like-for-like initiatives and new growth engines.

And with that, I will hand over to Tomasz, who will take you through the market environment and our strategic execution in more detail. Thank you.

Thanks, Tomasz. Hi, everyone. So starting with on the environment. In Q1 of this year, the broader environment remained broadly supportive to the growth in terms of -- especially in terms of household financial situation assessment, continued positive real wages growth and other matrixes.

Having said that, at the end of the quarter, there is some increased uncertainty coming from the situation in the Middle East, which impacted the customer confidence. And also the energy price increase resulted in a slight uptick of inflation.

Having said that, the theme for Q1 was what Tomasz mentioned, I also mentioned during the last call for the annual call was the weather. The weather contributed to lower entire -- to lowering of the entire market growth with Q1 growth of 2.5% as compared to the 5% more or less recorded in the last year as per the Nielsen data.

On that backdrop, we continue to be the strongest growing channel and one of the strongest growing players. And our market share similarly to all prior quarters have continued to increase this time to close to 11% at the end of the quarter.

We decided in the -- given the kind of the weather kind of impact, we decided to share a bit more data on like-for-likes during the quarter, as you can see here. And those for you who do not live in Poland, the first roughly 45 days in the month -- sorry, in the quarter were effectively what can be described as a winter of the century with very low temperatures, snowfall, ice, et cetera. That resulted in the traffic on the street, foot traffic on the streets and had a negative impact on our sales, as you can see here.

Once the weather materialized normalized, we have seen the return of people on the street and our sales returned on track, as you can see here in March. And we see that when the weather is comparable to prior periods, the sales dynamics is in line with our expectations.

Having said that, for the Q1 of this year, 70% of the days had materially lower temperature compared to last year, which had an overall impact in terms of the like-for-like sales. It is worth remembering, though, that the first quarter is typically the slowest -- the lowest sales quarter in the year with on average 21% of sales coming in that quarter.

Moving back to assessment of our growth, we continue to -- our strong expansion of network in the quarter. For the last 12 months, in Poland, we opened close to 1,300 stores, one of the record periods ever, if not the record one. Similarly, we accelerated our growth in Romania with 121 stores opened in the last 12 months.

We also expanded to new geographies beyond Bucharest and beyond the existing cities, which shows that we are on track to increasing the scale there. Overall, our network at the end of the quarter was close to 13,000 stores. And for the entire 12 months ending in March, we opened close to 1,400 stores, and we remain one of the fastest-growing retailer in -- not only in Poland and in the region, but also in Europe.

In terms of like-for-like, I mentioned about the overall weather impact, but obviously, we also continued with our strategic initiatives. And QMS is one of the strategic category for us. This quarter, we launched a very successful campaign promoting lunch meals sales on Thursday.

In that day, during this period, the sales of lunch meals have grown to more than 500,000 units per day. And the customers were not only coming during that day for these products, but also returning in other days and after the promotion was over. And QMS was the fastest-growing category that we have observed in Q1.

In new businesses, we opened a test of new sales channel as smart vending solution. We installed first 40-plus machines, vending machines which in many markets, vending machine is a complementary format to convenience. For us, it's a first phase of test. The machines that we have sell QMS and beverages, they have a big screen and are integrated with our app. You can earn Zabs there. And we are observing how -- what's going to be the customer reaction to it. We're fine-tuning the operations model for this. And we'll come back to you with an update on how material this can be in the coming periods. In our existing businesses, we have had a very good growth of light e-commerce, both for Y and -- do in the quarter, 9 million deliveries so far. And Light remains the fastest percentage-wise, at least, or one of the fastest-growing companies within the group.

Finally, in terms of Maczfit performance, so direct-to-consumer businesses, we have initiated at the end of the quarter, a long-term strategic cooperation with Jamie Oliver, which is a well-known cook globally, who became a co-author of the meals. And we use this long-term strategic partnership to leverage and increase the growth of the business forward.

And with that, in terms of results, I'm going to pass the word to Marta to go through financials. Thank you.

Thank you, Tomasz. I will start with the key financial highlights for the first quarter of 2026. We delivered solid top line performance as both my colleagues already shared with you. Sales to end customers reached PLN 7.4 billion, up 12% year-on-year. Like-for-like growth was 3.2% for the quarter. As Tomasz already outlined, performance strengthened as the quarter progressed, positioning us well to deliver against our near-term like-for-like growth guidance.

We opened 435 new stores in Poland and Romania in the quarter, supporting our annual ambition over 1,300 openings with a steady pipeline of newly recruited franchisees.

Moving to profitability, adjusted EBITDA reached PLN 674 million, up more than 13% year-on-year, with the margin improving to 9.1% from 9.0% last year. Reported EBITDA was PLN 648 million, up 19%, and it includes PLN 26 million noncash recognition related to the long-term incentive plan.

As expected, for the first quarter, reflecting our seasonality, the group recorded a net loss. The adjusted net results amount minus PLN 51 million, an improvement of PLN 26 million year-on-year. This was driven by continued improvement in operating performance and a more efficient financing structure, resulting in lower financial costs versus the prior year.

Turning to cash flow and leverage, we generated positive free cash flow of PLN 28 million, supported by disciplined capital expenditure execution and effective cost management despite unfavorable working capital movements related to store restocking.

Net debt to EBITDA stood at 1.1x EBITDA as at the end of March, demonstrating the usual seasonal pattern with first quarter affected by the repayment of year-end liabilities, changes in store assortment and the inventory buildup ahead of the spring and Easter season.

Now key points to highlight in terms of our financial metrics. We opened 403 stores in Poland and 32 stores in Romania, putting us at 204 stores in this new market. For those of you who know Romania, we are now in Craiova and Brasov.

We are happy with the performance of stores in Romania. As we have already informed you, the number of tickets in this country has already reached the level we observed in Poland and is still growing. We are also particularly pleased with the performance of office location. And as you may imagine, we are consistently fine-tuning our offer to best serve our customers in Romania.

When you look on the table, the franchisee margin was 50 basis points higher than in the previous year, and that's a result of 2 factors. First of all, provisions for future payments related to inventory in the stores and also our support to the franchisees in seasonally lowest first quarter.

The improvement in gross margin -- gross profit margin was supported by, among other factors, strong logistics execution and disciplined cost management, driven primarily by lean transportation practices and continued optimization of order processes.

Another factor was improvement of energy efficiency in stores, which allowed for lower usage of energy as well as lower energy rates.

Adjusted EBITDA margin was up 10 basis points, and the solid performance of our business allowed us to absorb investment into promo campaigns such as Thursday launches that Tomasz described.

We are pleased to see the benefits of our improved financing structure starting to materialize. Following the refinancing last year, lower debt margins have translated into a meaningful reduction in financing costs. It is visible in the profit and loss.

Interest expenses on our debt declined by more than 30%, excluding store lease interest, falling from almost PLN 150 million last year to PLN 104 million this year.

Like now moving to the EBITDA bridge. Our EBITDA profitability held up well despite a challenging environment, as you have heard in the first quarter. Main factor taking the EBITDA up were sales growth, adding PLN 95 million and a gross margin effect of approximately PLN 40 million, reflecting stronger profitability in Poland.

The cost increase you see on this slide is a natural consequence of business growth contemplated by some phasing effects between the reporting periods. The new growth engine result of minus PLN 32 million reflects an investment phase into Romania.

And below adjusted EBITDA, reported EBITDA, as you see was PLN 648 million, mainly due to EUR 26 million of noncash long-term incentive plans. Those costs are lower in the first quarter this year compared to the first quarter last year. And considering the IFRS recognition of LTIP costs, we expect to see those costs lower also over the following quarters of 2026.

And now moving to cash flow. On cash flow, we delivered positive free cash flow in the first quarter. Working capital was the main year-on-year swing factor with a net outflow of PLN 48 million in first quarter this year versus an inflow last year. It was -- the difference was driven by higher promotional activity this year and the deliberate buildup of inventory in the Zabka stores ahead of the Easter season, which this year was in the first days of April.

Due to timing of Easter, the inventory buildup in 2025 took place only in the beginning of second quarter instead of end of first quarter as was the case this year. This had, as you may imagine, an impact on our net working capital results. Consequently, looking at the table, free cash flow reached PLN 28 million compared to PLN 91 million a year ago.

And now in terms of balance sheet strength, -- we continue to support further deleveraging year-on-year. Net leverage, excluding leases, improved materially over the last 12 months. It moved from 1.6x at the end of March 2025 to 1.1x as at the end of first quarter 2026. The slight step-up versus year-end is consistent with the typical pattern -- quarterly pattern.

Last year, the leverage increased similarly, as you remember, in the beginning of the year. We expect it will continue to improve in the following quarters given the expected cash flow generation in the main season in summer.

And finally, to summarize, let me reaffirm our medium-term expectations. On network expansion, we aim to open over 1,300 new stores in 2026, and we continue targeting more than 1,300 openings per year in the medium term across Poland and Romania. On like-for-like, we anticipate mid- to high single-digit growth for the full year 2026 with normal variability between quarters and the same range in the medium term.

On margins, our expectations are unchanged. We expect stable adjusted EBITDA margin development at the top end of the 12%, 13% range in the near term and in the medium term.

And on the bottom line, we continue to expect a gradual improvement in adjusted net income margin towards our medium-term target of around 4.5% with a stable near-term outlook following the step-up delivered last year.

And now I will pass on to Tomasz.

Thank you, Marta. To sum up, the past quarter demonstrates the strength of our business and give us confidence as we look ahead to the coming months. And with this, we end our presentation, and we are ready to take your questions.

[Operator Instructions] Our first question will come from Michal Potyra from UBS.

Congrats on the strong results. I have 3 questions, please. So the first one, maybe you could provide more color what were the main factors behind the gross margin improvement this quarter?

The second question is, again, I know you commented, but perhaps you can provide a little bit more detail on the increase in inventory per store this quarter? And should we expect that to reverse in the following quarters?

And then perhaps the last question is on the new growth engines. The losses have increased according to the segment reporting. So I'm just wondering if you could provide some commentary on what level of peak losses should we expect in this segment? And when does the management anticipate a shift towards a positive momentum in that segment? Actually, any color on Romania, like [ 4-wall ] EBITDA on the store level would be highly appreciated at this stage.

Thank you, Michal. So I will start with the gross margin. As I commented during the presentation, the main drivers of the margin increase in the first quarter were efficiency gains. So we have seen better efficiency in terms of logistics, our process improvements as well as energy.

But -- and there were also -- it is also important that there was also some savings like some phasing between the quarters in terms of costs. And given that, I would like to reaffirm our guidance in terms of the profitability for the whole year. So we expect that the EBITDA margin for the whole year will be stable in line what we -- on the top end of 12%, 13% range is in line with what we have seen last year.

In terms of inventory, there may be movements in the inventory at our stores between quarters. And this results primarily from -- and it may happen, especially before holiday or weekends. So as you may expect, the franchisees need to be to prepare themselves for higher sales during the holidays, and therefore, they increase inventory. It is ordinary course of business, usual practice and this may -- this will not change the trajectory of our results like from the longer term. You've seen probably last year that from the longer-term perspective, the dynamics of both revenue and sales to end customers is similar.

And in terms of new growth engine

Yes, maybe a few words. So obviously, what we are at the relatively early stage of development in Romania, right? We have 200 stores, and we're kind of still building our presence and building out the functions and the required backbone to serve the growing operations in Romania. But obviously, we're also very much focused not only in the growth, and we mentioned about the sales development, but also on building a profitable business, right?

It's imperative for us. It's always our mindset to look at the growth in the context of building the business that is profitable. Last year, as we have shared, the mature -- more mature stores have reached and crossed the store positive contribution. We see the positive momentum in other stores as well.

Having said that, to get to full profitability on a kind of consolidated basis, including the headquarters, marketing, et cetera, it will take some time for us, as we have mentioned in the past.

Now that doesn't mean that the losses will continue to materially grow. And -- so that's, I think, important to mention, right? Because overall, I think we are triangulating towards more stores, higher proportion of mature or more mature stores in the mix of the stores that we operate at and gradual buildup of the backbone. So from that perspective, I think you can draw some conclusions as to the trajectory.

At the same time, in the NGO, we also have digital businesses that grow as well. And there are different characteristics in these businesses. But overall, this format as we have as we have kind of pointed out earlier, this part of the segment is a profitable segment and will continue to grow in terms of profitability.

So there are kind of a little bit of a complicated kind of tendencies there, but we do not expect this to be a material burden to our results. And therefore, we continue to maintain our midterm forecast as to the overall profitability of the group on an EBITDA level in terms of margin.

Our next question will come from Elena Jouronova with JPMorgan.

I have a few, if I may, please. So let's start with like-for-likes and pricing. We understand the weather effects and everything else, but you would have had some positive contribution to your like-for-like from the increasing share of the QMS category. Can you comment about what could have been the positive impact on like-for-like or what your like-for-like would have been without the effect of increasing share of QMS category?

Yes. I think the QMS continues to be a very strong growth driver for us. I mentioned that it was the fastest-growing category overall in Q1. And obviously, difficult to kind of get into more details given our reporting, but we can say that in almost all the quarters that we have seen, if not all the quarters in the last few periods, what I said now for Q1 was also the case, right?

It doesn't mean that QMS is a complete product, so to say, i.e., that the growth is finalized there, no. We still kind of continue to improve our offering, both in terms of the hot food, as we have discussed in many other quarters, but also in terms of the food ready-to-heat type of foods that I described now. And what we forecast now is that this higher growth rate for this category will continue to be the case in the coming periods as well.

I think what I'm trying to allude to is that you probably have pretty negative like-for-likes in some other categories. And do you think that your pricing in general is adequate? Because if I try to square that with the very strong improvement in your gross margin, it's -- if we take your franchisee gross margin and your own gross margin, it's like 31.8%, meaning 120 basis points increase year-on-year. Do you think that you're probably not investing enough in pricing in the stores or your price checks suggest that it's all good?

I mean we don't see a challenge with respect to the pricing positioning that we have and our strategy with respect to the pricing. We obviously -- the convenience channel is very much differentiated versus all other channels, including the discounters. There's only 30% of overlap of SKUs between us and the others. And we're very sophisticated in the way we price.

We're using different methodologies, including differentiated pricing depending on the kind of stores, different promo mechanisms. And all of that suggests that we're on a good track. Bear in mind that this quarter, when there is minus 15 or minus 20 Celsius degrees on the street, there is no kind of price that would bring people on the street. I mean this is the nature of the convenience business, right? A big part of the sales is related to impulse, right, to people being on the street and walking and being hungry of thirsty and popping in for small purchases. It's not completely unplanned.

This part of shopping missions is, I would say, impossible to kind of come back if the weather is very unfavorable as we have kind of had during this Q1. And that is really a big difference compared to the big basket shopping where with the planned shopping, it is kind of -- as we many times discuss, it's a different business.

No, that's fair. And then again, on your like-for-like, so you've shown us the bars for January, February, March without specifying the numbers. But at least qualitatively, is April trending similar to March so far on the like-for-like?

Look, I think when we see when the weather is normalized compared to the last year, we see similar trends to what we have seen in March. And that gives us the confidence for the full year.

Yes. Good. And I wanted to clarify the question that Michal was asking before. So we have seen that the contribution of your other revenue to total revenue, which is basically the inventory you have at the franchisee level, which hasn't been sold to the end customers yet, it increased significantly to like 6% of total revenue. And we understand that this has been related to Easter, but is it logical to assume that then in Q2, we're going to see a significant reversal so that your revenue growth is likely to be below the sales to end customers?

Yes, Elena, I think that it is very hard to predict the revenue -- the value of stocks like -- which is held by the franchisee stores. But when you look from the longer-term perspective, usually, what we see given our expansion is that we have similar trends in terms of revenue and sales to end customers.

We do not expect them. And there is also like inflation, which impacts especially the revenue. So we do not expect that there will be a significant difference, but there may be some difference. And given that we had like higher growth in revenue this time, we may have a slightly lower growth next quarter.

But as I mentioned already, we are confident in terms of delivering the guide out in terms of like both sales and especially EBITDA, which is important from this perspective.

Yes. And just 2 more questions to you, please. The reverse factoring as a percent of sales to end customers, have you changed anything there? Because I think the cost of reverse factoring was unusually low. So maybe you started using that less.

No. I think, Elena, that you may assume that we have increased sales. So we increased the lines of reverse factoring as well, and it was in line with the past trends. You may see lower costs because we have the margin related to reverse factoring, which is based on LIBOR, so the Polish reference rate. And we're still working on -- we continue to work on the margin and try to make it as low as possible. So yes, there -- and those may be the reasons why the cost of reverse factoring were lower this year. But our strategy is the same.

And then with regards to cost inflation you're seeing in Q2, can you please comment so far? Have you been seeing increased transportation costs or anything coming from your suppliers about price increases, obviously, considering the geopolitical situation elsewhere?

Yes. Elena, for us, the most important, like taking into account our cost structure, energy is the most important. And as I mentioned during the last call is the majority of the energy cost is hedged.

In terms of other cost lines, we do not see very significant impact, which may have impact on our profitability. And as we have seen historically, given the nature of the business and nature of the retail business in general, we are usually able to pass through the pricing -- the cost increase to the final customers. And when we see that, we will continue to do that as we have done historically.

Yes. Just maybe to add there is -- the government introduced in the last few weeks, some control over the prices of the fuel in Poland. So the impact on overall economy is kind of buffered by the government actions compared to other countries.

Our next question comes from Jakub Krawczyk with ODDO BHF.

Hopefully, can you confirm you can hear me?

Yes Jakub, we can hear you well.

So congrats on the figures, quite a nice print. I think you partially addressed my first vision, my first question, but can you please give some color on the promotions? And how does the very competitive environment in Poland affect your corner of the market? I know you're trying to make the point or you're making a point. But of course, you only share 30% of the SKUs with other formats. However, is this on the 30% that you have this increased promotions, I presume they are perhaps related to the Easter season. I'm just wondering about whether the perhaps price elasticity of the consumer is changing and maybe the premium you're charging somehow getting diminished or the willingness to pay a premium perhaps is getting diminished by some very active other formats.

Yes. I mean -- yes, we kind of started answering your question earlier on, but maybe to get a bit deeper. We have a very sophisticated "machinery" that we use and know how to price because obviously, the situation with respect to the Polish market hasn't really changed in the last quarter. I mean, it's been in a bigger format. So the big box format has been a competitive market for the last 28 years, right, since the company started to exist.

And obviously, the differentiation game that we mentioned has been developed in the context of this market situation, right? So we have different prices. We have different promotion types. We have many different mechanisms that we use to effectively be able to attract and retain the customers.

One thing that is -- the way we do it is actually to -- in some products, which are kind of important for the customers, we maintain some distance to the market -- price market leaders. But that's one of the tools. We have not seen material change in the customer behavior in the last quarter or a few quarters, certainly not recently.

But that doesn't say that -- it doesn't mean that we don't -- we don't develop new kind of ways of promoting both in-store, but increasingly so using the app and different promotional mechanisms within the app, which are targeting the customer segments or even the individual like micro segments of the customers, right? So we still kind of spend a lot of our effort and energy to do that.

Okay. That's very helpful indeed. Okay. Just a second one quick. Do you see any effect in Romania of the weaker macro sort of political challenges and maybe the slightly less confident consumer. Are you seeing this? Of course, it's very early days to talk about any like-for-likes, but are you seeing anything maybe on the newer stores, maybe very ramping up slower than the earlier vintage, earlier expansion initiatives?

I mean we're -- I mean, even though we're -- I think, the fastest-growing retailer in Romania now with -- especially with respect to the expansion, we have relatively small compared to Poland business there. And also, we are relatively new. So most of our stores are -- or if not all of our stores, stores are still kind of on a ramp-up phase.

Even those that were opened 1.5 years ago or close to 2 years ago when we opened the first stores, they are still growing considerably ahead of what would the mature kind of growth be for these kind of stores. This is because we continue to significantly improve the commercial model there in Romania, improve the assortment, improve our pricing tactics as well as we add services and many other factors, right?

So we see strong momentum. Of course, it's difficult to talk about the like-for-likes. But what I can tell you that for these stores, which are opened more than a year ago, so the oldest one, the like-for-like is very strong and strongly double digit. So we don't -- so kind of in a word, we don't see it.

But of course, it's early days for our business in Romania. So it's more difficult to kind of grasp full kind of impact of what's going on there because the growth path is very steep, right?

There are no further questions. This concludes today's call. Thank you, everyone, for joining. You may now disconnect

Good afternoon, and welcome to the full year 2025 financial results of Zabka Group. After the speakers' remarks, there will be a question-and-answer session. This webcast will be recorded, and an archive of the webcast will be posted on the company website. By participating in the Zoom call, you are agreeing that recordings made during the event may be shared by Zabka Group. [Operator Instructions]

I'd now like to hand the call over to Filip Paszke.

Thank you very much. Hello, everybody, and welcome to our full year 2025 earnings call. My name is Filip Paszke. I'm a Company Director responsible for Corporate Development and Investor Relations. We have about 35-minute presentation followed by a Q&A session. And I will now hand over to Mr. Tomasz Suchanski, CEO of Zabka Group.

Thank you, Filip. Good morning or good afternoon. My name is Tomasz Suchanski, and I'm CEO of Zabka Group. And as usual, I'm joined today with 2 of my colleagues, Marta Wrochna, our CFO; and Tomasz Blicharski, Chief Strategy and Development Officer. 2025 was an important year for Zabka with good progress across our strategic priorities and a number of milestones that further advanced the business. During the year, we continued to develop our customer proposition in both physical and digital channels. We continue to build our in-store retail media network, which reached almost 6,000 screens across more than 4,000 stores by the end of the year.

We also introduced Zabka Jush to Wroclaw, which means that now the service is available in 3 biggest cities in Poland. We also invested in the capabilities that support future growth. We opened a new logistics center with a low emission solution supporting our ESG goals. We made great progress relating to our financial structure as we secured new long-term financing on improved terms and completed our first sustainability-linked bond issue. We were also pleased to receive the highest possible MSCI ESG rating, AAA, placing Zabka among the top companies in our sector. In addition, we continue to evolve our customer offer, including the launch of Good Mood, our new entry price owned brand.

And finally, during our Investors Day in October, we shared an updated strategy for the next phase of growth. This included a higher pace of store openings and a new capital allocation policy. So overall, 2025 was a year of solid strategic progress with a number of steps that solidified our platform for future growth.

Let me now turn to our financial performance for 2025. Overall, this was another year of continued growth for Zabka supported by both sales development and stronger profitability. Sales to end customers reached PLN 31.1 billion, up over 14% year-on-year. Like-for-like sales increased by 5.3% in 2025, which was well within the guidance for the year. At the same time, we continue to expand the network and ended the year with 12, 339 stores following 1,394 openings in Poland and Romania, ahead of the 1,300-plus stores openings we guided for. Profitability also improved. Adjusted EBITDA increased to PLN 4 billion with margin rising to 13.1%, which is 0.2 percentage points up year-on-year. Adjusted net profit reached PLN 1 billion, which means over 40% growth versus last year.

And finally, we continue to deleverage. At the end of December, net debt to adjusted EBITDA stood at 1x compared with 1.5x a year earlier and reached our long-term goal. So overall, 2025 brought solid top growth -- line growth, further margin improvement and stronger balance sheet. Within this in mind, we look at the 2025 as a whole as well as longer time horizon, we believe the business continued to develop in line with the direction we set for the group. We made good progress across our main growth pillars. We continue to grow the network. We delivered healthy like-for-like growth, and we further developed the digital side of the business.

We did that in a year of external backdrop, which was not always straightforward, as Tomasz will describe in more details in a short while. Consumer sentiment was broadly neutral, leaning towards positive for most of the year with some mixed signals coming from the market. Unfavorable weather was also the headwind for the traffic for the most important quarters for our business seasonality.

And with that, I will hand over to Tomasz, who will discuss these topics in details.

Hi. Good morning or good afternoon, everyone. So let me deep dive into many of the aspects that Tomasz just briefly touched upon. And let's start with the market environment. So throughout 2025, we have seen some positive signals from the customer. Most notably, the confidence index has been one of the highest recorded ever towards the end of the year and considerably higher than in 2024. The household financial assessment was actually on the uptick as well. On the other hand, we had seen some slowdown in real wages, which was in line with the decreasing inflation. Some of that wasn't fully reflected in the market -- in the consumer spending because the spendings, which is not here on this slide, have grown considerably throughout the year. But overall, if you look at the retail market in Poland, the growth of 4.6% as per the Nielsen data was actually pretty much in line with the prior years.

On that backdrop, we have actually done remarkably well. We have continued to increase our market share to 10.8% towards the end of the year. You can see that on the right-hand side. And we -- and that was yet another year of consistent performance faster than the market. We grew by more than 13% in Poland, and we continue to be one of the fastest-growing retailers in the market. As you see on the left-hand side, similarly to prior years, the discounters continued to grow faster than the market and grab the market share, but overall slower than us. And other channels had much slower performance. Some continued to slightly increase, some continued to actually decline. And how did that translate it into our performance, our actions? So firstly, before we get into details, let me stop for a while and let's kind of reiterate what you have discussed as our mid- and long-term guidance and how we fared in 2025 on that backdrop.

So we told you before the IPO that we will double our business within the 5 years, so from '23 to '28 in terms of the sales. We'll do it on the back of increasing the sales -- sorry, the store count, increasing the sales from mid- to high single digit and growing our digital businesses 5x in that period. And we have achieved and we were in line with our guidance in 2025. We opened more than almost 1,400 stores. We grew our like-for-likes to 5.3%, and we increased our digital businesses by 25% in 2025. Let's spend a bit more time in each of these pillars.

So if you look at the store opening, 2025 was by far the best year ever for Zabka. That was both in case of Polish expansion with close to 1,300 stores as well as on the back of increased Romanian expansion where we opened close to 120 stores, and we doubled the pace from -- compared to the early year of 2024. All together, we have increased the pace of expansion from 1,100 to 1,400 stores. But actually, that didn't affect our pipeline. In fact, to the contrary, this acceleration is on the back of increased pipeline that we have seen, especially in the last few quarters. We have now more than 1,300 stores signed to be opened, so effectively going into execution phase. And that is the number that is considerably higher than we had in the past. It is fueled by a number of different sources, but also on the back of declining traditional trade in Poland. You can see it in the middle on the lower slide here.

In terms of Romanian business, this was a breakthrough year for us. We have continued to build the business there from -- in terms of the customer offering, in terms of adjusting to local Romanian taste. And as you can see on the right-hand side, that resulted in the traffic in stores getting to a level that is very similar to Polish level, which is, in fact, very encouraging for us. On top of it, this traffic is coming for what we like the most, which is the QMS. 35% plus of sales of these stores are actually QMS products, which is in line with the benchmarks of top Japanese, which is in convenience, the most mature and most advanced market, so top Japanese convenience operators.

In terms of like-for-like, Tomasz touched upon the fact that the weather didn't help us in 2025, and we had some headwind in our key summer months. But nonetheless, we executed successfully on our key initiatives that brought higher like-for-likes than the market. And on that backdrop, we have effectively finalized our Zabka Cafe 2.0 remodeling. So we have installed Merrychef oven in all of our stores. And we grew the offering and we grew the sales of the products -- hot food products through this additional equipment. We've become the biggest seller of the hot food items in Poland. Key bestsellers were pizza, but also coffee continued to grow strong and several other products. We see that this is a project that hasn't been completed yet, and we see continued strong growth in this area in the coming period as well.

What we did as well in 2025 was product innovation. We launched 622 new products in 2025. Just to remind you, an average Zabka store has roughly 2,500 products. So that's a significant innovation that we brought to our stores. And that was both in case of private brands that included the new private brand Good Mood, which was launched in beverages and sweet categories. But also importantly, we launched more than 100 new healthy products, which effectively contributes to the growing trend of healthiness among the certain customer groups. But our stores are not only the services, not only the products and hot food, but also the services, people come for services. And also, we drive like-for-likes using technology and digital app in particular.

In terms of services, we grew our service offering during the year. We also improved the existing services. One of the examples that I can give you is that we have launched Izidrop, which is our virtual courier that is aimed at improving the service, the parcel pickup, return in our stores. We have also relaunched during 2025 or actually early 2005, the app, we added several new functionalities into the app, including the product personalization, better communication of hot food products, and we integrated all digital businesses within the app, and that resulted in significant uptick of active shoppers, but also daily active users, which is now counted in the millions. Finally, looking at the third pillar of our growth, so digital customer offering. Here, we had continued growth of our existing businesses on one hand, and we launched 2 new businesses on top of it.

Looking at the existing businesses first, our e-commerce have continued to rapidly gain scale with more than 50% growth year-on-year. Here, we have been very active in existing cities, and that contributed to the growth, but also launched towards the end of the year, a new city, which is aimed at boosting the growth going forward. Furthermore, we have effectively significantly changed the business model of delio. We have increased the SKU count, so number of products sold to 10,000 from roughly 5,000, and that contributed to very positive momentum for that business. In terms of Maczfit and Dietly, here, we grew in line with the market for these businesses. This is direct-to-consumer businesses. But on top of it, we have continued to expand production capacity for these businesses and Maczfit products and Maczfit produced products, ultra-fresh products are now seen in Zabka stores.

In terms of Nano, we have focused on getting the cost down so that the profitability of the business effectively and the return on capital invested is in line with our core format, we got there or close to get there. And that means that we will continue to grow the Nano stores in select product -- select catchment areas on the back of a good capital return. In terms of new businesses, we have continued to scale Zabka ads, so something that we launched toward the end of 2024, but really kind of scaled up in 2025. We now have close to 6,000 screens in more than 4,000 stores. We see, in fact, a few benefits of this. So firstly, these screens, when we display our products there, they impact positively the customer behavior, and we see incremental like-for-likes there.

Secondly, we see that when we cooperate with B2B clients, so both either suppliers or the third-party companies that display their products in these stores, we get additional margin. This is a high-growth business for us and very profitable. Izidrop, I touched upon that a little bit. So this is a new courier service for e-commerce. It is just launched at the end of the year, and it's targeted at improving the parcel return and pickup experience within our stores. And last but not least, our -- another pillar of our strategy, which is the ESG. Here, what I can say, and Marta will say much more about it, we have reached most of our goals or exceeded most of our goals in all the pillar -- strategic pillars as confirmed by AAA rating that we have received from MSCI during the year.

And with that, I will pass the mic to Marta.

Thank you, Tomasz. Good morning, everyone. It will be my pleasure to walk you through our financial results after such a good year for us, for our company. Starting with the key financial highlights for the full year, then I will describe fourth quarter. I will share with you the key drivers for our sales and EBITDA. I will share a snapshot of our nonfinancial results, as Tomasz mentioned. And finally, as a last point, I will also refer to our guidance for this year. Let me start with walking you through the key financial results for 2025. We delivered solid top line performance despite a more mixed external backdrop, as Tomasz has described. Revenue reached PLN 27.2 billion and sales to end customers PLN 31.1 billion, both increasing by 14.1% year-on-year. This growth was driven by network expansion, healthy like-for-like and continued development of our digital businesses and our business in Romania.

The gross profit increased to PLN 5.1 billion, growing by 16.1% and the gross margin expanded by 28 basis points to 16.4%. Adjusted EBITDA reached PLN 4.1 billion, up 16% year-on-year, and the margin increased by 21 basis points to 13.1%, landing above the 12%, 13% range we guided for. The improvement reflects scale effect. So our like-for-like sales growth outpacing inflation, improved terms of trade with our suppliers, disciplined cost control and efficiency gains across logistics, energy and entire operations. Adjusted net profit stood at more than PLN 1 billion, an increase of more than 40% year-on-year. The margin rose to 3.2%, which is ahead of our guidance. This result reflects the improvement in EBITDA we discussed, our efforts throughout the year to reduce financing costs, including refinancing and the bond issue as well as the improved effective tax rate.

Looking at reported net profit, it was PLN 1.057 billion, up almost 80% year-on-year, and it was supported by the factors which I have already described as well as corporate income tax refund recognized in 2025. Earnings per share increased also almost 80% to PLN 1.1. The free cash flow reached PLN 1.7 billion, growing 13.7%, driven by higher EBITDA, stable capital expenditure and positive working capital dynamics. Overall, looking at 2025, it was a year of robust delivery across all key profitability and cash flow metrics, enabling us to enter this year 2026 with a strong financial position and consistent momentum.

Now before moving to the details on the full year results, let me briefly walk you through our fourth quarter financial performance. And in fourth quarter, we delivered another set of consistent results, and we increased our growth dynamics across sales, EBITDA and most importantly, reported net profit versus the previous quarters. Revenue increased to PLN 6.9 billion, up 18% year-on-year. Sales to end customers reached PLN 7.9 billion, growing slightly faster, 14.3%. Growth was supported by continued network expansion, stable like-for-like performance and further scale-up of our new growth engines. Gross profit rose to PLN 1.4 billion and increased 18.7% year-on-year, and the gross margin improved by 69 basis points to 18.4%.

Adjusted EBITDA was PLN 1.1 billion in the last quarter, up 14.9% with a margin of 14.4%. Adjusted net profit amounted to PLN 354 million, up almost 21%, supported by lower leverage and the improved effective tax rate. We reached our goals in terms of leverage. The net debt to adjusted EBITDA reached, as Tomasz mentioned in the beginning, 1x EBITDA as at the end of the year, reflecting continued cash generation and the strong profitability growth.

Let's now take a look on the key drivers behind our performance. Starting with the operating metrics. The number of stores increased by more -- to more than 12,300 stores at year-end, outpacing our guidance. Like-for-like growth for the whole year 2025 reached 5.3%, within the range of our guidance for the year. The franchisee margin increased to 17%, driven by higher share of QMS and the increase in the minimum wage in Poland. As you remember, it was 8% this year. And we decided to share part of our profits with our franchisees as we continue to invest in the relationship with them as they are our key business partners.

Moving on to costs. Cost of sales increased by 13.6%, and the growth was below the sales growth. Adjusted EBITDA increased to PLN 4.1 billion, up 16% year-on-year, and the margin improved to 13.1%, so slightly above the 12%, 13% range we guided for. And the improvement was driven by like-for-like sales growth, which was, as I mentioned, above the inflation, strong operational delivery in the Ultimate Convenience segment, supported by efficiencies across the store base, logistics and energy as well as the better results of our digital operations. Finally, adjustments and reclassification, which you see on the EBITDA level amount PLN 190 million, and they mostly relate to IPO bonus and a long-term incentive plan.

Now moving to the net profit performance. I'm exceptionally proud to announce that for the first time in our history, both reported and adjusted net profit crossed the PLN 1 billion mark with an adjusted net profit margin increasing to, as I mentioned, to 3.2%, so 20 basis points above our near-term guidance of 3%. We achieved these extraordinary results on the back of our disciplined execution and operational efficiency gains. There are 4 main drivers of such a great improvement. Firstly, we have already -- as I have already mentioned, we have achieved a strong EBITDA growth driven by both top line growth as well as the cost discipline. Secondly, our capital expenditure was under control, falling as a percentage of sales and supporting fall in depreciation. So depreciation as a percentage of sales, as you see, has declined.

Thirdly, we have worked hard last year to significantly improve our financing structure. As you remember, in May last year, we have concluded our first PLN 1 billion bond issue based on the margin of 150 basis points, which was significantly below our historical financing costs. In autumn, we have also managed to refinance our senior facility agreement, reducing our credit margins and extending the maturity. All of these moves gave us more flexibility, contributed to lowering cost of debt, especially combined with the lower base interest rate following a series of cuts from the National Bank of Poland.

And lastly, as you see, we also improved our effective tax rate. Therefore, in the end, the adjusted net profit was PLN 1.003 billion, up more than 40% versus last year. And our reported net profit was even higher. It reached PLN 1.057 billion, and it was driven by a lower effective tax rate of 4.4% compared to 26.2% last year. And this reflects the impact of the corporate income tax refund, approximately PLN 200 million recognized by the main entity by Zabka Polska following the final court ruling we have informed you about lastly. The refund was treated by us as one-off, and therefore, it does not impact adjusted net profit. For clarity, we included the bridge between adjusted and reported net profit in this presentation and the details you may find in the annual report in the financial statements.

Now moving to the sales, a quick word how -- what drove sales to end customers in 2025. The growth was driven by 3 building blocks. So we see the store expansion, which was the most important factor, which contributed over PLN 2 billion, 54% of the increase, and it was on the back of our upgraded rollout ambition of more than 1,300 stores per annum in both our geographies. Opening almost 1,400 stores, we have exceeded this goal in 2025. Like-for-like growth contributed PLN 1.4 billion or 35% with a stronger performance in our strategic categories, including QMS, soft drinks and sweets. Our like-for-like was negatively impacted this year by significantly weaker weather conditions compared to 2024, particularly during the summer months, which are, as you know, seasonally the most important period for us.

As mentioned during Investor Day, we estimated the weather impact reduced our like-for-like by approximately 1 to 2 basis points in the third quarter, so our most critical trading period. And the last, the new growth engines contributed over PLN 400 million or 11%. In 2025, we achieved 25% growth in sales of our digital convenience offering and more than 50% increase in Romania. A brief reminder on our seasonality profile. It is important to understand our results dispersion throughout the year as well as the difference with other retailers who are more impacted by holiday seasons rather than weather-driven traffic in stores as we are. As you can see on this page, the first quarter is the least important for us with only 21% of sales being generated in this period. The rule of thumb is that the warmer the month, the more bearing it has on our top line. Therefore, the third quarter summer months generates over 27% of our annual sales.

Similarly, if those months are affected by the weather, our sensitive categories like ice cream or cold drinks suffer as it was the case this year. However, in this context, we delivered results that keep us well on track to achieve our midterm goal of more than doubling our sales between 2023 and 2028. And therefore, we remain confident in maintaining our guidance. A quick update on the franchisee economics. In 2025, franchisee margin increased by 15% year-on-year to more than PLN 5 billion. And as a percentage of sales to the end customers, it increased to 17%. At the same time, the annual margin per store grew to PLN 446,000, 5% year-on-year. The growth was driven by favorable mix shift. So we sold more higher-margin categories, which under our payment system are incentivized. So this is clearly positive for us and for our franchisees as we -- the incremental margin we generate is shared equally between us and our franchisees.

As you know, maintaining an attractive franchisee proposition is very critical for us. We, therefore, consistently benchmark our offer and adjusted to the changing environment. As you know, in 2025, the minimum wage in Poland increased significantly by 8.5%, which meant that the labor cost for the franchisees also rose. And therefore, we provided additional support to help them manage this pressure. Engagement, as you see on this page, remained strong and voluntary churn fall even further, which we take as a sign of a good and stable relationship we have with our franchisees and our capacity to recruit enough franchisees to cover our expansion needs. In 2025, we onboarded, as you see, more than 2,600 franchisees, confirming the attractiveness and the scalability of our offer.

Now moving to the EBITDA bridge and discussing key drivers that allowed us to generate a 16% year-on-year growth with the margin, which is slightly above our guided range. So higher sales and stronger gross margin within our main business, Ultimate Convenience were the key drivers of this improvement, and it was supported by expansion in like-for-like, as I mentioned. We also achieved strong cost efficiencies in logistics, store maintenance and within energy costs, they were driven by lower energy prices this year compared to last year as well as the initiatives aimed at reducing energy consumption across our store network. As mentioned earlier, part of the improvement was offset by higher franchisee costs. So we share an additional margin as we usually do with our franchisees.

Marketing, G&A and technology costs increased in absolute terms, but they remained broadly stable at around 1% of sales to end customers. The increase mainly reflects the higher corporate costs following the IPO. The new growth engines remain in the investment phase. However, as previously communicated, this digital convenience offering has reached breakeven and has remained EBITDA positive since while continuing to improve operationally. Romania is still in early buildup phase, and that is reflected in the new growth engine contributing to the bridge.

Now moving to our capital expenditure. When you look at this chart, it is visible that spending remained disciplined and focused on growth. Total CapEx amounted to PLN 1.6 billion in 2025, representing a decline both in absolute terms as well as a share of sales to end customers to 5.2%. This reflects our continued disciplined approach to investment. Ultimate Convenience remained the largest contributor with nearly PLN 1.2 billion invested split across 2 main areas: store expansion and the investment in the existing store network. Over PLN 0.5 billion was allocated to new store opening in line with our most ambitious expansion plans, while CapEx per store decreased. Investment in the store network focused primarily on driving like-for-like growth and enhancing our customer experience. In 2025, this included store remodeling with Merrychef rollout and as well as other improvements in assortment, technology, data capabilities as well as our mobile app.

We also invested in the deposit system machines designed not only to support the bottle returns to Zabka, but also to drive incremental in-store purchases. The second key area looking at this chart was the efficiency and were the investments which drive the efficiency and productivity improvements. And those include the energy-efficient equipment stores, logistics upgrades and the strengthening of our field force. The new growth engine CapEx amounted to PLN 276 million, up year-on-year, reflecting the accelerated rollout of new stores in Romania and targeted investment in the digital businesses, including retail media expansion of Maczfit production capacity as well as launch of our eGrocery service in Wroclaw.

Finally, corporate and strategic leadership CapEx exceeded PLN 150 million, broadly stable year-on-year and focused on core software development and maintenance and supporting long-term scalability, robotization as well as deployment of the advanced analytics and AI to further automate and digitalize our operations. When looking at the cash flow, 2025 was another year of very strong cash flow generation with a conversion nearly 60% Working capital contributed almost PLN 400 million, benefiting from our structurally negative working capital profile. And this very strong cash flow generation helped us to decrease our leverage to 1.1x EBITDA from 1.5x last year. And the net financial debt was over PLN 3 billion as at the end of 2025, and it was PLN 731 million reduced compared to last year.

Now moving to our nonfinancial performance. So while we have continued to scale our business, and we also were very focused to deliver on our ESG targets. In 2025, as Tomasz mentioned before, we exceeded most of our objectives across our 4 strategic ESG pillars. Sales value of own brands products supporting a sustainable lifestyle was higher than PLN 2 billion for the first time in our history. 2025 was another year when we maintained exceptionally high employee engagement level, placing Zabka among the most engaged organizations globally according to Gallup Institute. We met our circularity target by reducing the share of virgin plastic in own brand packaging by over 36%. In 2025, recyclable materials used in our own brand products weighted to nearly 800 tons, which is the equivalent of 3 fully loaded Boeing 787 Dreamliners.

We exceeded our plan at emission reduction target, achieving a 35% decrease comparing with 2020 baseline. Since launching our decarbonization strategy, we have reduced emissions by nearly 8,500 ton CO2, which is an equivalent of driving around the earth more than 1,500x. The full 2025 sustainability statement prepared voluntarily in accordance with our CSRD requirements is included in our 2025 annual report, which I am pleased to present to you today. It may be found on our website.

And finally, moving on to our guidance for the year. We reiterate the expectations we shared at our 2025 Investor Day in October. We aim to open over 1,300 new locations in Poland and in Romania in 2026 and maintain a similar pace over the medium term. For 2026, we anticipate like-for-like growth in the mid- to high single-digit range with variability between quarters. A similar range is expected also over the medium term. We expect stable development of our adjusted EBITDA margin at the top end of 12%, 13% range, supported by scale and disciplined cost management. And in terms of net income margin, we expect a gradual improvement towards approximately 4.5% in the medium term and the near-term outlook remains stable following a step-up delivery in 2025. So the framework of our growth is unchanged. Strong rollout, steady like-for-like, stable margins and progressive bottom-up improvement.

And now I will pass on to Tomasz for his concluding remarks.

Yes. So that's right. We are almost in the end of our presentation. So it's time to wrap up. So 2025 was a solid year for Zabka. Like-for-like came in at 5.3% and sales to end customers grew 14% to PLN 31.1 billion. Adjusted EBITDA increased to just over PLN 4 billion, and we crossed PLN 1 billion of net profit for the first time. We combined growth with further efficiency gains and strong free cash flow, which supported deleveraging. We opened 1,394 stores across Poland and Romania with a good momentum and good quality. The core Poland stores delivered another year of resilient performance. New growth engines scale further with a strong progress in digital customer offering and a fast developing business in Romania. Lastly, our medium-term guidance is unchanged. We aim to open 1,300-plus stores per year across our geographies. We expect mid- to high single-digit like-for-like growth. We see adjusted EBITDA margin stable at the top end of the 12% to 13% range and a gradual improvement in adjusted net income margin towards around 4.5% over time.

So thank you for your attention to these matters. And now we are ready to take your questions.

[Operator Instructions]

Our first question will come from Michal Potyra from UBS.

Congratulations on strong results. I have 4 questions, if I may. Maybe starting just with the first one. Maybe you could provide some commentary around the trading in the first quarter. It's almost over now. I'm particularly interested in the impact of the harsh weather conditions. Perhaps you can also add a little bit about the bottles deposit system, how disruptive that is. And lastly, maybe just the recent events, are you seeing any early impact from the higher oil prices? That's the first question.

Yes. Michal, thank you for your question. So I presume you -- as many other Poles on the call have experienced the harsh weather conditions in the first part of Q1. So -- but for those who are not from Poland on the call, just to remind the first month of the year was actually one of the coldest, I think, in the last 25 years. It was 7 degrees on average colder than last year, and it was described as a winter of century by some with persistent snow. So certainly, that didn't help our convenience business that relies on impulse, relies on people leaving on -- sorry, leaving -- I'm sorry, walking and transporting throughout the streets. And effectively, that is something that is inherent in our business.

Having said that, already in February and especially in March, we see very encouraging signs and from the customer standpoint. And there is a variance between the months, but we are encouraged by what we see now. In terms of the deposit system, so your second part of the question, certainly, we see very strong pickup in a number of packagings that are being returned. We view this as positive for our business overall. It is obviously additional aspect of the business that we had to incorporate in our stores, although again, for the benefit of a wider audience, it is not mandatory for vast majority of our stores actually to have this service included because of the size because it is mandatory for stores above certain size to have it. Most of our stores are below this size.

Having said that, we prepared for a number of years for this because we believe that this would be incremental traffic driver to our stores, and we could rely on cross purchasing from this. And we see that these are early days again, but we see pickup in number of packagings that are being returned. And we are dealing with this in our stores. Obviously, not always perfectly yet because these are early days, but installed machinery in some of these stores, around 4,000 plus stores have some automated machines for collection as well as the hand collection that we have in the remaining part of the stores see increased demand from customers, and we view this overall as encouraging.

In terms of the third bucket of your -- third part of your question, so the increased oil price into products, we don't see that yet. We don't see any impact from this at this stage in terms of sales and input costs. Bear in mind that most products that we sell are transformed and therefore, any impact from inflation is -- the volatility from it is much lower than some other sources, but also the time to receive impact is somewhat prolonged compared to some other channels.

But I would like -- before I go further, I would just like to clarify some answers because I was actually -- when I asked about the bottle deposit system, I was thinking, are you seeing any impact on volumes of beverages as clients now need to pay more? And also about the oil prices, what I really meant is like are you seeing any changes in consumer behavior driven by that price shock?

So the short answer to those is no.

All right. So maybe a second question about the franchisee margin. I mean, it was up for the year, but slightly down in the quarter. I mean, is that a new trend? Or was it just like it happened to be just -- I would like to understand like what's the dynamic here?

I think we discussed once during the call. It is much better to look at the profitability of our franchisees from the longer period of time as the quarterly changes may result from the calendar effect or seasonality. So you've seen that for the whole year, we slightly increased the profitability, the margin, which we shared with our franchisees. And like the trend has not changed. So you know that for this year, we expect to have lower increase in the minimum wage, and it will impact also our costs positively for 2026. But the trend will not change and the strategy remain the same as historically.

I have 2 more, if that's okay. Maybe I'll just combine them because they're, I hope, pretty straightforward. So the first is about your EBITDA margin sustainability. I mean it was slightly above your guided range. So I'm wondering, is this something you are willing to continue or you just don't want your margin to be too high? So that's the first question. And the second is around the tax refund. Maybe you could give us a little bit more color on what was driving that? And maybe help us understand how big was the cash component so far?

So in terms of EBITDA margin, we expect, as I've always said, like stable EBITDA margin for 2026. So we -- and this is the expectation for the whole group. There will be impact for Ultimate Convenience as well as the DCO and of course, our early-stage business in Romania. In terms of tax refund, like the recognition within the profit and loss in line with the IFRS was almost PLN 200 million, and it was positive impact on our net profit. So far -- and what was the reason? The reason was that historically, as we discussed, we treated a portion of our financial costs as not tax deductible. And based on positive court decision, we were set it was confirmed that we -- it is possible to -- it was even possible to treat those costs as tax deductible.

So therefore, we have claimed the refund to the tax authorities. We have already received the refund for 1 year. It was disclosed already in the financial statement for 2025 of like less than PLN 20 million. And in early in January this year, we have also received the refund for another year, approximately PLN 25 million. And with time, we are expecting to receive the remaining portion this year or mostly this year. So, so far, most of that was noncash, and we expect to receive the cash in the following months.

Our next question will come from Janusz Pieta from mBank.

I have a question regarding your energy and transportation costs. So what is the share of transportation and energy costs in relation to your sales to end customer? The second one on your hedging. So you probably hedged some of the energy -- electricity prices. So how much volume do you have hedged?

Yes. So yes, in fact, yes, as you noted, we hedged the energy, and we have learned that after 2022 and '23, when you have seen that -- we have seen that the energy prices increased very significantly, we started to use the virtual PPA to manage the cost of electricity within our business. Currently, we have a vast majority of the energy required for 2026 hedged or already purchased and based on the price, which is similar to the last year. So from this perspective, we do not expect the energy cost to have significant impact on our profitability this year. A portion of our required consumption is also hedged for another 10 or 15 years. And the details are presented in the financial statements in the virtual PPA section of our balance sheet.

And regarding the transportation costs, so is it very material cost item?

No, no. Transportation cost is not a material cost for our business. It is actually a minor -- smaller cost already within the logistic costs. So in fact, that is -- we don't expect that to have a big impact.

Okay. So the last question regarding your like-for-like in full 2025 results and Q4. So what was the impact of the price inflation and volume growth? So is the growth only coming from inflation? Or do you see some volume rebound?

I think in the last year, there was a negative impact from the weather that came into the summer months. And it is actually visible, not only in the summer months, but mostly. It is actually visible in the full year figures, right? So that is impacting the volumes somewhat. But if you look at the broader picture, we both have inflation as well as the volumes increase in typical quarters.

Our next question will come from Grzegorz Balcerski from Trigon.

Congrats on the results. Really sound deliver in another quarter. A couple of questions from my side, if I may, please. First, on guided like-for-like. You have maintained your like-for-like guidance range. at a stable level since the IPO, although in 2025, performance landed at the lower end of that range. Your 2026 midpoint guidance appears to contrast with market expectation also from messages from other players on the market. Could you therefore elaborate on what gives you the confidence in maintaining this range? You mentioned the weather, but how we should think about the role of inflation? And could you phasing like-for-like growth across the quarters in terms of the budget?

Yes. Very thorough question. Thank you very much. So firstly, I think you mentioned about some other players. So I think it's worthwhile to mention that there is no other player in Poland, in fact, or maybe even in Europe as a listed one, like us, purely convenience pure-play operator. Our business is considerably different compared to the other channels, and we tried to kind of explain it over the last almost 2 years now since we have the discussions with you. So I'm not going to get into it in too much detail, but just maybe to emphasize 1 or 2 differences. It is only 30% of products that we sell overlap with, for example, discount channel. So I think there are some different drivers and some of the different characteristics compared to other channels. In our channel, in our business, we continue to see inflation. We don't expect actually deflation in under no scenario, in fact, for this year. So that's one considerable difference.

Secondly, I think we have quite a few tailwinds and quite a few initiatives from which we are benefiting compared to the wider kind of market trends. The trends -- obviously, trend towards convenience is one of them. It's a broad one. But more specifically, we will continue to benefit from the aggressive development of QMS, especially the hot food. Bear in mind that last year, we only kind of completed the remodeling throughout the year. And as we mentioned a few times, it is not the complete project. We are still developing the offering. We're still developing the way to market it. But also, we do not forget about other QMS products, so not the hot food products. And I'll maybe draw attention to one thing that we have started to do this. We started to market more significantly the ready-made meals in our stores with promotional activities geared at the older audience. That is bringing quite significant value to our sales. So that's one hand.

Secondly, we have quite a few initiatives planned for the other quarters from -- after Q1, which are completely new things, which is a combination of digital and convenience. Some of this, we believe, will have a very significant impact on our business, but it is too early to say today, obviously, in detail around this. And obviously, we'll continue to innovate. We have always been the most -- or one of the most innovative players on the entire market with hundreds of new products launched. So actually, we plan to increase that drive for this year. So based on these 3, based on also hopefully, the weather normalizing in the later part of the year, we see that we will be able to deliver the forecast as we guided.

Okay. I understand. The second question is on gross margin. We saw a sound improvement in Q4. To which extent this trend is sustainable? And what are your main near-term headwinds and tailwinds on that ground?

Yes. So when you look -- I think the trend in the fourth quarter was consistent with what we have seen like over the -- for the last quarters, number of quarters. And the growth in profitability, it came from, firstly, our like-for-like, which was above the inflation. And we -- as Tomasz mentioned, we expect that in the following year, we will have the similar trend. We were able to achieve in 2025, the terms of trade improvement, and it was based on higher volume of sales, but also based on the incremental services, which we provided to our suppliers. Tomasz mentioned within his presentation about retail media having a positive impact on our profitability. We also, as you know, exchanged the real-time data with our business partner, and it helped us also to build the value together. So we've seen a positive trend within the direct gross margin.

We've also seen -- over the 2025, and we've also seen the impact of efficiencies. So across the entire organization, as I mentioned, within the logistics, we improved the processes within the warehousing and transportation. We've seen the benefits coming from the new automated distribution center we opened like 2 years ago. We also have seen the positive impact of the digitalization and automation within our profit and loss and also the energy had a positive impact in 2025. We do not expect that the prices of energy like decreased between 2024 and '25, which gave us also the benefits for 2025. And for 2026, as I mentioned, we expect more stable prices based on the contracts, which we have already signed and based on the -- what we -- yes. So from this perspective, as we said, for the group, we expect the margin, which will be stable. For Zabka Polska, we may see some improvement. And we will continue the investments as we described like into our -- the development of our business -- our business in Romania.

Okay. Fine. Last from me is on store rollout. According to one of your -- today's slides, you have secured about 80% of store locations for this year. Could you provide some color on the distribution? I mean, to what extent is this similar to prior years? Or are there any notable changes?

Yes, it is similar to other years, similar to what we have guided towards. There's nothing major to kind of report here. The only thing to report is that we continue to see positive momentum with respect to be able to acquire these locations, acquire not directly, but sign the contracts. That's what I mean. And that we already see that it continues for in 2026. So we're kind of encouraged by this.

Okay. Maybe last one, sorry. Sorry, if I missed it, any guidance on CapEx in 2026 and changes to negative cash conversion cycle?

Yes. So in terms of CapEx, as we shared with you during the Investor Day, we plan to have a similar capital expenditures in the absolute terms in the following years. So we expect in the absolute terms, the value which is similar to 2025. As a percentage of sales, the CapEx for the group will decline. And from the perspective of working capital profile, we expect -- we do not expect any changes. So the impact will be comparable to what you have seen historically.

Our next question will come from [ Piotr Drozd ] from Verition Fund Management.

Thank you very much for the presentation. It's very comprehensive. I wanted to ask about capital allocation. So if we think about the guidance for the next year in terms of store openings, obviously, the company is on a growth mission. Given market volatility, I'm just wondering if you have the room to respond, should there be more share price volatility with perhaps a buyback? Is that something that is considered debatable and possible?

Yes. So as you know, we have shared with you the new capital allocation policy in October last year. And any further steps in this respect will be communicated before our Annual Shareholders' Meeting. And like with that, we will follow the usual practice, and we will follow the completion of the relevant corporate decision before the Annual Shareholder Meeting.

Building on this, though, as you kind of recall, our capital allocation policy, including obviously, the 2 elements of distribution. And if you look at the cash generation of the business and deleveraging, we'll have in the midterm, for sure, different tools in our kind of drawer.

There are no further questions. So this concludes today's call. Thank you, everyone, for joining. You may now disconnect.

Good afternoon and welcome to the Q3 2025 Financial Results of Zabka Group Conference Call. [Operator Instructions] This webcast will be recorded and an archive of the webcast will be posted on the company website. By participating in the Zoom call, you're agreeing that recordings made during the event may be shared by Zabka Group. [Operator Instructions]

I'd now like to hand the call over to Tomasz Suchanski.

Good afternoon and welcome to our meeting with the Zabka Group where we'll be discussing results of third quarter of 2025. My name is Tomasz Suchanski, I'm CEO of Zabka Group and I'm joined today with 2 of my colleagues from the Board: Marta Wrochna-Lastowska, the Group CFO; and Tomasz Blicharski, the Group's Chief Strategy and Development Officer.

I'm very pleased to inform you that in the third quarter of 2025, Zabka has delivered another strong performance, continuing to build momentum across key financial and operational metrics. Sales to end customers reached PLN 8.5 billion, up 14% year-over-year with like-for-like growth of 4.5% this quarter and 5.5% year-to-date. This result confirms the strength of our customer proposition and operational execution in the context of adverse weather conditions this summer. Marta will provide more details on our financial performance later during today's call.

Our store network expanded to 12,099 locations across Poland and Romania with 1,296 openings over the last 12 months. That means that in the last 12 months we have already achieved our upgraded guidance of 1,300 new stores annually in the projected horizon. This is facilitated by our increased rate of store conversion, which Tomasz will discuss later on. Profitability improved significantly in the third quarter. Gross profit was PLN 1.5 billion, up 13% year-over-year and adjusted EBITDA grew 14% to PLN 1.3 billion.

Our core businesses, Ultimate Convenience, stores in Poland delivered 0.2 percentage point margin improvement driven by disciplined cost management. Adjusted net profit reached PLN 505 million, a very strong 48% increase year-over-year mainly as a result of a strong operational performance and our successful refinancing efforts, which significantly decreased our financial costs. Finally, we continued to deleverage and achieved our goal of net financial debt to adjusted EBITDA to 1x, down 0.4x year-over-year supported by robust cash generation.

This is in line with what we have told you during our Investors Day when we announced that we will recommend to the Board of Directors for the freed up profits to be transferred to our shareholders in the form of dividends. Overall, the customer environment remains rather stable similar to the last few quarters. There are still a few cautionary signs in the retail sales data of fluctuating customer confidence readings, but at the same time customer confidence has been rising over the last few months. Tomasz will share more in that area later during the meeting.

Zabka has accelerated its store rollout pace in line with our upgraded guidance. We have just opened 12,000 stores in Poland. We opened 323 new stores in the third quarter alone bringing the 9-month total to 1,127 locations. We are firmly on track to deliver our revised target of 1,300-plus openings this year across Poland and Romania. Like-for-like growth reached 4.5% in third quarter and 5.5% year-to-date, which was heavily impacted by weather conditions.

As anyone who spends some time in the summer, this year in Poland knows that it was actually no summer at all and we assess the negative impact on our like-for-like from this to be between 1 percentage points to 2 percentage points. In Romania, our footprint expanded to 122 stores with brand awareness improving and traffic closing the gap to the levels observed in Polish stores. Our digital businesses continue to grow dynamically with sales to end customers up 22% year-over-year in the third quarter and we have several new initiatives in the pipeline.

I will now hand over to Tomasz, who will talk more about that and other matters related to strategic execution and will also, as usually, walk you through the market environment. Tomasz?

Good afternoon, everyone. Starting with the macro backdrop on the consumer. Compared to our previous meeting in August, we see the trends are similar. So we see continued real wages growth, we see inflation that has been slightly declining and we see that the customer confidence index has been increasing and is actually at the last reading the highest it's ever been. Having said that, we also see that the household assessment of financial situation has been fluctuating and not increasing similarly to the customer confidence index as well as we see that the labor market has somewhat behaved differently this summer compared to the prior summers and the unemployment has very slowly but grew in that period of time.

On that backdrop, the grocery market in Q3 increased as per Nielsen by 4.5%, which is slightly lower growth, but similar to the prior quarters that we've seen between 5% and 6%. We believe that that was partially caused by the unfavorable weather, which impacted especially our channel that is convenience, that is impulse channel. Having said that, on that backdrop, our growth of more than 12% has been actually not dissimilar to prior quarters.

We continue to increase the market share this time to 10.7% and this is the highest reading we ever had similar to prior quarters because as you see on the right-hand side, we consistently grow our market share over the last several quarters. If you look at the growth drivers that contributed to that growth. Firstly, starting with expansion. We have opened more than 1,100 stores in the first 9 months of the year, which is a significant acceleration compared to the prior year because we opened around 130 stores more compared to last year.

And in the LTM period so which includes the Q4 last year, our expansion reached close to 1,300 stores. And we are, therefore, on track to achieve what we have told you recently about so our revised opening targets of more than 1,300 stores in this year. It is also important that we reached yet another milestone and our network have crossed 12,000 mark recently. If you look at the sources of expansion so sources for the locations, what we see is that there is an increasing trend of direct conversions. That is true for all the types of locations, all the city sizes where these conversions have crossed 30%. They are currently at 32% of all the sources for all the stores.

But it is increasingly true for smaller locations, smaller cities where this ratio reaches close to 40% and has increased similarly to the whole network. And what is important to mention here is that that is in the context of still close to 50,000 of small independent or loose franchise network stores operating in Poland, which every year a few thousand disappears of them and, as I said, partially we convert them directly into Zabka store.

Obviously in order to open the store, we also need the franchisee and here we continued to successfully recruit the franchisees. In the last 12 months we recruited 2,600 franchisees, which is an ample number to both grow the network and be able to supply the rotation for when the rotation of a franchisee happened. What is important? As the success of a franchisee is important for the success of our business, we continue to provide favorable financial terms for the franchisees and the income of the franchisee have grown over that period of time.

During the last Investor Day, we shared more information about Romania and what I'm happy to say here during this meeting is that we are very satisfied with the performance in Romania. In the first 12, 15 months of operations, we opened more than 100 stores in Romania. We currently have more than 120 stores in the country and we were the fastest-growing retail chain in food-related retail over that period of time. What is also important is that these stores perform very well. In the last month the number of visits in Romanian stores have reached the average for Poland, which is above our expectations.

What is also important is that the customers choose our QMS products even more frequently that in Poland, the share of QMS is north of 30% and is on the same benchmark as the top Asian very mature convenience operators. What is also important is that the brand awareness has been growing and is now closing to 50% in Bucharest, which is the key market in which we started our expansion. And all of that compared with some data that we drew from the first 15 months of operation have made us to reassess our long-term white space potential for Romania and increase the potential for the long term from 4,000 to close to 8,000 stores that we will ultimately operate in this country.

Coming back to Poland and looking at other drivers of our growth so the like-for-like and digital businesses. Starting with like-for-like. We continued very positive growth of quick meal solutions and street food, which is not directly on the slide, but worth mentioning it. It was yet another quarter of this category being the biggest contributor to like-for-likes and growing as the fastest category. But I want to draw attention to 2 new initiatives that helped us in the last few months and will increasingly help us to grow our sales in the next few quarters.

So the first one is AI-based hyper-diversification of store formats. This is another phase of this project which we have been kind of using for the last several years. Effectively we use the data and the models to tailor the assortment to the location. What we did now is we have further adjusted the product categories as well as the products themselves to the location, which resulted in the increased growth of sales of the stores. And we'll continue to build on this in the next few quarters and further employ the next iteration of these models as well as supported by the commercial and operational actions to drive sales based on this methodology.

And secondly, we have increased the PoS assisted sales. We have been using a new tool, gamification, among the sales assistants in the last few months and based on that, they've increased their efforts and that resulted in increased sales of products which are recommended during the checkout time for the customers, especially for the snacking business. That resulted at double-digit like-for-like in this category in Q3, which was significantly higher than the market.

Moving on to the digital businesses. Here in terms of existing businesses, we've been expanding the e-grocery business to third city Wroclaw over this last quarter and we are very satisfied with adoption rate. That business has been growing very nicely. We also used vault platform on top of existing assets or on top of the apps as well as the Zabka app to support this first phase of growth and we see that that works very well with that market being at this stage very successful for this given this new kind of period and the new city.

But we also are launching 2 additional digital or digitally related services. First one is the Izidrop, that's the commercial name, which is the fully integrated but asset-light e-commerce courier that is available for the customers at Zabka stores. So when I'm a customer at Zabka, I can now order my online shopping and pick it up at Zabka. The logistics will be done by Izidrop or most importantly, return the parcel that I already bought at Zabka store using Izidrop logistics.

What is different between this service and some other services that are at the market is that it very much uses existing Zabka logistics so there is no incremental costs and the free space in the trucks and in the logistical centers that we have and that makes it highly synergetic and therefore, cheaper to operate. Therefore, this will be targeting economy sector of customers and use cases that do not require very fast delivery times; but at the same time, the price for the customer will be considerably cheaper than anything else in the market and that is possible because of the use of existing logistical assets and therefore, the synergies that we have with the core business.

The second new service, Zappo, which is our way of venturing into fintech world. It is a buy now, pay later service that we are currently testing among quite a wide group of customers. So effectively a service whereby using this service, you don't have to pay immediately a Zabka store. You have up to 30 days of no interest delay. And here we see that this test has very high adoption. There is 5x more users as compared to the similar phases of other services that we have seen before. And what is important, the way it impacts the customer behavior is such that the average basket of a customer that uses this increases significantly.

And with that, I'd like to pass the voice -- the microphone to Marta and move on to the financials. Thank you very much.

Thank you, Tomasz. As you see, we delivered a robust set of results in the third quarter of 2025 demonstrating strong execution across all strategic pillars despite the headwinds posted by an unusually cold weather in Poland this summer. To give you tangible data on this, all the months in the third quarter of 2025 were colder and there was more rain than in the third quarter of 2024 and the weather impact on our like-for-like was between 1 percentage points and 2 percentage points. In this context, we achieved a healthy like-for-like growth in the third quarter, which was pretty similar to the like-for-like which we achieved in the first half of this year.

When you look on this data, we also delivered double-digit year-on-year growth in all the key financial metrics including revenue, reported EBITDA and importantly, also net profit. Margin expansion continued across both our core Polish operations as well as digital convenience ecosystem reflecting disciplined cost management and operational efficiency. Sales to end customers reached PLN 8.5 billion in third quarter, up 14% year-on-year. Revenue growth remained strong as well with a double-digit pace of 13% year-on-year. This is a solid growth especially considering the base from third quarter last year and the drag from colder weather I mentioned.

In the third quarter, we delivered like-for-like 4.5% despite the challenges we have discussed. Our performance was supported by continued progress in QMS, the premiumization of our product offering. This momentum reflects the impact of recent strategic initiatives like further format diversification which was mentioned by Tomasz, marketing initiatives and new projects within the digital space including our app. Our strategic categories continue to perform in line with our expectation with QMS again leading the way.

Additionally, we accelerated our store rollout strategy in line with our new guidance of targeting 1,300 new locations in Poland and Romania annually, an ambitious step that underscores our commitment to market leadership and long-term growth. Over the first 9 months of 2025, we opened 1,127 new stores across Poland and Romania, 130 stores more than in the same period last year like it was shown already by Tomasz. Moreover, we are very proud of our performance in Romania.

As at the end of September, we had 122 stores in Romania and our most mature stores cohort are delivering already a positive contribution, which reinforces our confidence in continued expansion. We plan to open more stores later this year and also throughout the coming years. In the third quarter 2025, adjusted EBITDA reached PLN 1.3 billion with a margin expansion of 9 basis points. It was driven by strong performance in our Polish operations, disciplined cost management and continued improvement in profitability of our digital convenience offering.

As a result, adjusted EBITDA margin for the 9-month period increased by 26 basis points. As you may recall, our previous guidance for the adjusted EBITDA margin anticipated a stable outlook for 2025 mirroring the 12.8% margin, which we achieved in 2024. However, in light of our robust year-to-date results and the strong performance of our core business, we are now increasingly confident in delivering a modest improvement to our full year adjusted EBITDA margin. We now expect it to be at the upper end of 12% to 13% range.

Moreover, our adjusted net profit for third quarter reached PLN 505 million, an impressive 48% increase year-over-year. This growth reflects not only our strong operating performance, but also the successful execution of refinancing initiatives and improvement of our effective tax rate. I'm proud of our consistent progress in improving the bottom line. I'm now highly confident that this year we will achieve our near-term adjusted net profit margin target of 3% with continued growth in the coming years towards our midterm target of 4.5%.

Finally, when you look at our cash flows; strong operational momentum, disciplined capital expenditure and improved profitability helped us deliver free cash flow of over PLN 600 million in third quarter 2025. Many of you will recall our announcement during the investor presentation recently where we confirmed our readiness to initiate the dividend payments once the net debt-to-EBITDA ratio reaches 1x. I'm pleased to share that Zabka Group has once again delivered ahead of schedule. As you all can see on this page, we are already there. We have achieved the leverage ratio of 1x.

Looking at our profit and loss. Zabka delivered strong year-over-year growth in sales to end customers in third quarter with double-digit growth across all key metrics. We increased franchisee payout with franchisee margin rising from 16.7% to 17.1%. The increase was primarily driven by the group's continued investment in strengthening relationship with our franchisee partners, an area we remain committed to as a key pillar of our growth model. Our gross profit continues to highlight the strength and resilience of our business model.

Even in a particularly challenging environment, the margin experienced only a slight decline entirely due to the recognition of our LTIP and IPO-related bonuses expenses in the current year. Excluding those one-off costs, our quarterly margin would have increased by 10 basis points reaching 18% instead of the reported 17.8%. Adjusted EBITDA rose by 14.3% with a 9 basis point margin improvement underscoring our ability to drive operational effectiveness. Reported EBITDA reached PLN 1.226 billion, 12.2% year-on-year growth negatively impacted by the recognition of PLN 51 million expenses related to LTIP and IPO award.

Our net financial results now clearly reflect the positive impact of our refinancing initiatives. In third quarter, we successfully concluded renegotiations on our main credit facility agreement and recognized a gain of approximately PLN 90 million from the loan modification driven by a reduction in the margin on our main credit facilities. As a reminder, in the second quarter, we recorded a noncash charge of around PLN 50 million related to early repayments of the previous loan. In the third quarter, we have improved our effective tax rate from 27% in the third quarter of 2024 to 22% in the third quarter of 2025.

Consequently, our adjusted net profit amounted to more than PLN 500 million in third quarter, up 48% year-over-year. When you look on the next slide, we highlight Zabka adjusted EBITDA, which increased by more than 14% rising from PLN 1.119 billion in third quarter 2024 to PLN 1.279 billion in the third quarter of 2025. Despite the challenging environment in the third quarter, growth was driven primarily by strong performance of our core business in Poland, Ultimate Convenience, supported by both like-for-like growth and continued store expansion alongside a modest gross profit margin improvement.

This margin expansion reflects improved terms of trade with our suppliers, higher volumes and more effective promotional activity particularly through our upgraded customer app. On the other hand, poor weather conditions, which we discussed, affected sales of the impulse categories and impacted negatively our product mix, especially sales of soft drinks. Operational discipline continues to be one of our key strengths. Over the past quarters, we have maintained a sharp focus on the cost efficiency. The inflationary pressure we had observed until recently have eased.

The inflation we are currently seeing in our cost base and the key CapEx expenditure remains below our like-for-like sales growth, which positively contributes, as you see, to our profitability. When you look on the central costs, including marketing, tech and G&A in the third quarter of 2025, they remain flat year-over-year as a percentage of sales. G&A and tech costs showed a slight higher dynamics in third quarter primarily due to catch-up effect following lower spending levels in the second quarter. So this is mostly phasing.

Turning to the New Growth Engines, which now includes both digital convenience offering, as you remember, and Romanian operations. The segment posted a minor negative impact of PLN 1 million in EBITDA and this reflects the early stage development of our Romanian business while digital convenience offering continues to generate positive and growing EBITDA demonstrating its operational maturity and consistent performance.

Finally, when you look on this page, the adjustment and reclassification, which you see on this bridge, PLN 52 million: they include PLN 20 million of noncash IPO award costs granted to the franchisees, our employees and B2B contractors; PLN 31 million of LTIP expenses; and PLN 1 million of reclassification primarily related to the minimum tax in Romania. As a result, the reported EBITDA was PLN 1.226 billion in the third quarter of 2025.

Now moving to cash flows. So as you may recall, our cash flow generation continues to follow a clear seasonal pattern. Historically, the first and the fourth quarter are the weakest quarters, the second quarter is structurally the strongest and the third is more neutral remaining cash flow positive as you see. In the third quarter of 2025, we generated over PLN 600 million of free cash flow, slightly below last year. The decline is due to a one-off sale and leaseback transaction of 123 stores in the third quarter 2024, which added around PLN 120 million to the last year's results.

Excluding this impact, the free cash flow year-on-year show growth driven by strong adjusted EBITDA growth and the disciplined CapEx as you see. Those includes investment in the store expansion, retrofits, MerryChef and digital development. We also saw a small net working capital outflow of PLN 17 million when you look on this chart, which is typical for third quarter. Last year third quarter was positively impacted by a calendar effect with more receivables repaid within the quarter as June 2024 so the end of second quarter ended on Sunday.

Overall, the results of the third quarter confirm our ability to generate positive cash flow while in the same time to continue invest in our growth. Now moving to the leverage. As you may recall, during our Investor Day meeting, we announced our dividend readiness subject to achieving a net debt-to-EBITDA ratio of 1x. I'm pleased to report that as of today, we have reached this level. Our successful deleveraging now will allow us to redirect the generated excess cash to our shareholders.

In line with our strategic guidance, we remain firmly committed to maintaining leverage around 1x over the medium term ensuring financial flexibility and supporting sustainable growth. That said, the 1x target is an indicative target and you might see some seasonal variations in the range of 0.1x. And the last point I would like to discuss today is the new capital allocation policy, which we announced during our Investor Day. As you recall, it is designed to deliver long-term value creation through growth. Growth is and always will be our key priority. This is our DNA.

We have revised our expectation guidance upwards as you have seen from 1,000 to 1,300 new stores annually across Poland and Romania between 2026 and 2028. We have the target leverage of 1x as I have already mentioned. This is on the pre-IFRS basis. And I would like to ensure you that the medium- and long-term plans, which we have prepared, are prepared while maintaining the net leverage of approximately 1x as well as retaining appropriate liquidity to maintain operational flexibility, which is very important for us.

We also will have the optionality to allocate capital to synergetic bolt-on M&A. Organic growth will always be our primary focus while we will continue to evaluate selective value-accretive M&A opportunities to expand our capabilities or geographic footprint. And the dividend distribution of surplus capital after funding our growth investments was introduced within the capital allocation policy. So as we already shared, starting from 2025 financial year, we intend to recommend a dividend payout of 50% of consolidated current year net profit.

And going forward, our policy is to distribute between 50% and 70% of net profit depending on our investment needs. The policy also allow us for incremental dividends in years with one-off earnings or temporary reduction in payout if the strategic investments such as M&A projects, for example, require it. Dividend recommendation will be made annually to the General Shareholders' Meeting based on the group's consolidated reported net profit. This framework gives us the flexibility to scale, invest and return capital to the shareholders while staying financially resilient and strategically agile.

When you look on our results, overall, we are very pleased with our results in the first 9 months of this year and I'm confident that we will deliver to our promises we shared with you over the recent meetings.

And with that, I would like to hand over to Tomasz, who will conclude the presentation with our updated midterm guidance.

Thank you, Marta. Let me turn to our updated midterm guidance, which reflects both the acceleration of our growth ambitions and the formalization of our shareholders' return strategy. Starting with growth. We have increased our store network target to 16,000 locations by the end of 2028, which is 1,500 more than previously guided. This translates into an annual rollout of 1,300-plus stores, up by 300 versus our initial plan.

Like-for-like sales are expected to remain in the mid-single-digit range for the full year of 2025 with a mid- to high single-digit trajectory over the medium term. On margins, we continue to operate with discipline. As Marta previously highlighted, for the full year of 2025, we now anticipate a modest improvement of our adjusted EBITDA margin toward the top end of our 12% to 13% range. Meanwhile, our adjusted net profit margin continues to strengthen, confidently on track to reach our near-term guidance of 3% this year with our medium-term target of 4.5% unchanged.

In terms of cash flow, we reaffirm our leverage target of 1x net debt to adjusted EBITDA post rent excluding leases. This remains a cornerstone of our financial strategy ensuring flexibility and resilience. Finally, on dividend payout, as said before, we formalized our policy to distribute 50% to 70% of consolidated net profit annually. This includes the potential for incremental payouts. Our goal and commitments are focused on consistently delivering these results and driving accelerated expansion in the convenience sector.

And with that, this actually concludes our presentation. Thank you for your attention and let us now go to Q&A session.

[Operator Instructions] Our first question will come from [ M J Wilkowski ] from Rockbridge TFI.

[Operator Instructions] We'll move on for now. We'll go to [indiscernible] General Pension Fund.

This is [indiscernible] from Generali Pension Fund. Could you share with us some data about tax implementation of sugar tax? What was impact on like-for-likes in your network? This is first question.

So I would say that every year what we can see on the Polish market recently is the increase in excise tax and increase in -- and recently also in sugar tax. It has some impact on our like-for-like, but it has not significant impact. As you may expect, there was some movement coming from the different volumes of sales. But in general, I would say it does not have a significant impact on our like-for-like.

Second question is about fourth quarter. This is more regular quarter in terms of weather as I think and as I would expect. Should we see acceleration in like-for-likes comparing to third quarter?

I mean we are in the middle so it's a little bit too early to say. That's the first thing. And surely, we will inform you about that at the beginning of next year when we will close the fourth quarter and the whole year. I don't know, Tomasz, if you want to add something on that?

No, I think it's even less in the middle, right, just the first month. And the trends that we see in this quarter are similar to what we see. The weather impact is yet unknown, right? So we haven't seen the weather for the full year obviously. But what is important is that the Q4 weather, generally speaking, has less of an impact on our business because, well, the weather is already worse as it is typical in Poland in that quarter.

We'll just try M J's line one more time. Okay. So we have a written question coming in. The question is what is the main reason for lowering the full year LFL guidance to mid-single digits, weaker LFL in Q3 '25 or weaker trends also observed in Q4 '25?

Well, after 3 quarters of 2025, our accumulated like-for-like is just north of 5%, right? So in fact it is mathematics. In order to get to high mid-single digits, the implied like-for-like for Q4 would have to be substantially double digit. And obviously if you look at the last few quarters, you see that our business is generally very stable and we didn't have -- since the inflation abated quarters with double-digit like-for-likes and we have not guided for that. So I would say the mathematics kind of have a lot to do with that.

Yes. And on the top of that, as you recall, like our seasonality implies the bigger impact of the second and third quarter on our sales. So especially the third quarter and like to be precise from May to September, those are the months which are from the sales perspective the most important for us as the traffic in Poland during the summer months is the highest. So given that we are already after the summer period in Poland, the impact of the fourth quarter on our like-for-like is of course lower than the impact of the third and second quarter.

[Operator Instructions] So we have another question from Michal Potyra from UBS.

I have 2 questions, please. So the first one, if you could comment on your marketing expenditure, that seems to be flat year-over-year or down as a percentage of sales. So I'm wondering if this is just like some movements or is it a new trend that the marketing expenses should not be growing in line with sales? So that's the first question.

And the second question is if you could give a little bit more color on this one-off gain in the financial income. I can see that you have not bothered to adjust your net profit for that thing, which seems to be a one-off to me. So if you can comment on that, please, and also perhaps share if your dividend will be paid from the reported net profit or adjusted net profit. How we should think about this payout ratio going forward?

Yes. So maybe I'll comment on the first one first and I'll let Marta do on the second and the third one. But generally speaking, the marketing in the last few years have been following our sales. Having said that, what is happening also is that, and this is a result of this, is the fact that there are some underlying changes in the way we spend the money. So first of all, as we discussed with you, we have, generally speaking, seen movement -- we've been rolling out the retail media to our own screens and we've been migrating content from third-party assets physical and digital into our screens as well as into our app.

So that is kind of like a structural shift that has been happening as we kind of grow our digital ecosystem and it helps us to kind of be more efficient from that perspective. Secondly, we generally see across the board in many aspects that inflation has been abating on the cost side and that's been happening, I would say, even a little bit faster than what we have seen before and that is also true for the marketing cost in some aspects. So I think these would be the 2 main factors that contribute to this.

Michal, thank you for the question in terms of financial costs. So when you recall our like meeting during the IPO, we promised that we will deliver the restructuring of our financing. And what we have done over the last 12 months, as you remember, we have adjusted our margin just after IPO on our main credit facility. Then in May we have issued the bonds, PLN 1 billion of Polish bonds with a lower margin compared to the main facility. And finally, in September this year, we have renegotiated successfully our senior facility agreement; extending the tenor of this agreement, but also agreeing with the bank's lower margin.

As a result, in line with the IFRS 9, we have recognized the gain on the modification of loan agreement. In fact what the gain represents is the expected profit coming from successful contract renegotiation. So the expected cash flow related to the new agreements are lower from our perspective so more positive on us compared to the old agreement and therefore, we see the positive impact on the profit and loss. So from our perspective, it is a very positive news. It is the delivery of commitment we have shared with you during the IPO.

We are very happy to have the financing, which is less expensive and very competitive I would even say currently on the market. We see continued support from our financing partners and I would say it is very positive news. We have not adjusted that because we have also not -- this is a standard, I would say, IFRS treatment of the amendment, significant amendment in the contract. When you recall in the first half of the year, in the second quarter we have recognized noncash costs related to early repayment of part of our facilities and we have not adjusted for additional costs.

The costs were approximately PLN 50 million in the second quarter of this year and right now we have a gain. But in general, I would say it is very positive. It impacts positively also our dividend capacity because we will pay the dividend based on the reported profit. So we are happy that this gain is supporting the expected dividend payment. So very positive news from our side, Michal.

If I may have 1 extra question, please. Maybe you could comment on the evolution of the franchisee margin that seems to be growing and actually that growth rate seems to be accelerating versus the first half of the year. So maybe you could comment what is your expectation for that margin in the medium term?

Thank you for this question. In fact the franchisee margin may fluctuate between quarters and this is visible this year as well. We see -- so it is better -- when you look at the margin, it is always better to look for the longer period of time so for the year-to-date period. This growth is more representative than the growth in a given quarter. In fact what we've seen this year, we see the very positive development and the dynamics of our QMS and fresh products and ready meals.

Those products for us have more positive margins and therefore, we also share with our franchisees the higher margin on sales of those products especially given that there are some losses also related to the fresh products as you may expect. What we also see like going forward is that the expected minimal wage salary increase next year is significantly smaller than for this year and for the last year, which should positively impact our franchisee cost next year.

And assuming the weather will be normalized, I would say, next year, we should not see the increase in franchisee cost next year similarly to this year. So we expect that the growth will be significantly smaller next year compared to what we see currently.

Our next question will come from Ryszard Miodonski from Insignis TFI.

I would like to ask you questions regarding the new legislation that is coming into Poland. The first one is regarding the ban on the sale of alcohol at petrol station, which is already in a draft bill. And the second that is potentially introduced in the big cities, the ban of sale of the alcohol between specific hours in the night. So the first question would be how do you see the probability of this legislation to be passed? And the second, of course assuming that you cannot answer the first one, what would be the theoretical impact of that ban on your net income? Some analysts are estimating that it will give you 10% to 15% of net income growth if it's passed.

So you're referring to 2 changes. First one is the ban of alcohol sales in petrol stations and the second is about the hours with the ban of alcohol sales overall between 10:00 to I think 6:00 o'clock, that what is in the pipeline. So probability, I mean I cannot give that answer. Of course we prepare ourselves to that, but you never know what the parliament will do and then what the President will do. So it's difficult to comment on that.

If you talk about impact, of course the first one, the petrol stations, the impact will be positive. The second one, not only we believe, we know that also will be positive or neutral and why we know that? Because 4,000 stores that we have from 12,000 that we have are already banned from selling alcohol between these hours, right? So it's Poznan, it's part of Warsaw and I think it's Krakow. So it's a lot of big cities that already introduced that and we see a positive or neutral impact on our sales of alcohol.

Yes. And the reason why this is, for those maybe that do not live in Poland is, that among the 50,000 mom-pop stores, there are also -- and I can't quote what the number is. I think in Warsaw alone, it's a few hundred stores that only sell alcohol and they are 24/7 and these stores, majority of their sales is at night. That's their business model. And obviously when the regulatory hour changes, they're impacted the most and we take over the business, but obviously only within the hours that we operate.

And our next question will come from Elena Jouronova from JPMorgan.

Congrats for the good results. A few questions, please. So you're quite still convinced that you can deliver around mid-single-digit like-for-like this year. Are you seeing any signs of acceleration of your like-for-like sales growth in October? And maybe you can walk us through the monthly performance of your like-for-like in Q3 and apologies if I missed it from the presentation.

I think we do not, we have shared the answer on the Q4. I think we see similar trends to what we have seen in the last few quarters in this quarter with the hindsight that obviously Q4 is generally a quarter that is less impacted by weather events given the weather is skewed anyway towards colder weather. And then on the -- I think what is fair to say on the last few quarters that the biggest impact, generally speaking, in month-to-month performance has been around the weather, right?

So any variance, which is generally limited compared to many other businesses, our business is very relatively more stable given our market situation and the nature of small but frequent purchases that we kind of do. So any variance between the months was typically caused by the weather factors, right? So you compare the weather between the different years and you had good weather last year and better weather this year or vice versa you had some variance.

But if you look at across the board across the last few quarters starting from Q3 last year, generally speaking, these quarters were relatively close to each other. And if you look at the variance like for the last quarter like what we mentioned, the variance was a large extent caused by the weather between 1% to 2% of negative impact on the weather front last quarter. So I think from that, you can get the feel.

Okay. And if we think about next year, you have wood inflation probably decelerating. As you've mentioned, there's been a lot of disinflation on the supplier side so ultimately it's going to translate to on-shelf prices. You have a 3% minimum wage hike as opposed to much stronger, what, 8% minimum wage hike this year. So how realistic is it that you can accelerate volume growth because we're running this year at 5%, 6% like-for-like best case? So how can you maintain this with probably a headwind from inflation? Where does the acceleration of like-for-like volume come from?

Yes. I think commenting on this on the inflationary front on part of our assortment, for example alcohol, there is excise increase that is planned and also on tobacco that is planned for the next year. Typically, what we are able to achieve given our scale is even though the excise increases, we are able to keep the margin and the sales on the value front increase as well. So if you look at the last several years of these kind of increases, which were frequent that, I would say, contributed mildly positively to our like-for-like sales and not negatively towards the margin front.

And secondly, we have quite a lot of things in our bag. One thing that is worth to mention is that QMS continues to be one of the strongest contributor to our like-for-like sales. On the retail market, it is a unique kind of offering that we have. We are still kind of developing it even though we have finalized the remodeling of the chain, but only at the middle of this year. So there will be kind of a period of time and part of the stores in the first part of the year that we historically didn't have this full offering and the next year we will.

So on that backdrop, I think we are able to kind of -- and historically, we've been able to have better like-for-likes in the market. And if you look at the average excluding inflationary periods, it was in the range of 5% to 6%. So if you combine these 2, some initiatives, the excise as well as the historical like-for-likes that we had; I think we see some positive signs on the -- or some positives on potential reacceleration next year.

Maybe to add to that, we were informing you that this year like-for-like was impacted by weather so the base for the next year like-for-like should be lower.

Yes, I appreciate that. But it's very difficult to model weather next year, to be honest. If I can touch a bit more on that.

We do it on the averages, right? We do it on the averages. And of course this year it happened. But when we do our models, we do based on the averages for the last years and that for surely, this year was unusual.

Yes, I agree. But I'm sorry, I need to push you a bit more on that because when you entered this year, your guidance range was from mid-single digit to high single-digit like-for-like and it's a very broad range from 5.5% to 9%. So the reality is that if we are coming at closer to mid-single digit and not high, there was something in the market that clearly did not go in line with expectations. And was it really just the weather effect in your opinion or is it something else in how the market is changing or the consumer is behaving that actually led to this situation and what of these factors could reverse next year?

I think we see this as a weather impact. If you look at this year compared to last year, I think it's fair the best is to compare the rainfall and the temperatures in a given month and majority of the month is actually negative, which is the first time it happened the last several years and as much as anyone, it surprised us. If you look at the -- if you exclude that and we run quite detailed models on this to exclude the impact on certain categories, you would see that the consumer has been average, right?

We have not included in our forecast and I think we even discussed it in some meetings a strong consumer rebound. We see that the consumer has been kind of average if you look at the last 10 to 15 years, right? I'm talking about this and also excluding, I would say, the inflationary time, which obviously distorts the situation and we see this from that perspective. And of course when you look at the like-for-likes for the last several years, this is what we were able to -- well, this is what we achieved other than the weather impact that I mentioned.

One final very quick one. So franchisee margin, the share-based payments that you started recording in Q3, can you remind us if this is one-off or it's going to sustain in Q4 and in future years?

The IPO bonus is a one-off. So the payment to the franchisee, B2B contractors and the bigger employee group is a one-off and it will be paid like in -- the shares will be given in November like on the first anniversary of IPO. And the LTIP is going to be recurring from the perspective of like the plan. But as we explained, Elena, I think like 6 months ago, I think that the impact from the P&L perspective is the highest in the first year based on IFRS treatment. So in the following years you will see the cost, but those costs will be lower compared to what you see this year. I think we provided details I think in one of the presentation.

But we're talking about what sits in gross margin not in OpEx?

This will be one-off because this relates to the franchisee mostly, yes.

Okay. Nothing in Q4 then?

Nothing in Q4. Yes, nothing substantial, yes.

Thank you. Well, there are no further questions so this concludes today's call. Thank you, everyone, for joining. You may now disconnect.

Thank you.