CX

Image source: The Motley Fool. Thursday, July 23, 2026 at 11:00 a.m. ET Chief Communications Officer - Lucy Rodriguez Chief Executive Officer - Jaime Dominguez Chief Financial Officer - Maher Al-Haffar Operator: Good morning. Welcome to the CEMEX Second Quarter 2026 Conference Call and Webcast. My name is Jenny, and I'll be your operator for today. And now I will turn the call over to Lucy Rodriguez, Chief Communications Officer. Lucy Rodriguez: Good morning, and thank you for joining us for our second quarter 2026 conference call and webcast. We hope this call finds you well. I'm joined today by Jaime Muguiro, our CEO; and by Maher Al-Haffar, our CFO. We will start our call by reviewing our second quarter results, followed by our expectations for the full year. and updated guidance. And then we will be happy to take your questions. As a reminder, we expect to close the announced sale of some of our operating assets in Colombia by the end of the year. Until such time for accounting purposes, the transaction will be treated as a partial sales and operation, and we will continue to fully consolidate these operations in our P&L. In addition, following our acquisition of Omega earlier in the year, we began consolidating the business as of April 1. And now I will hand the call over to Jaime. Jaime Dominguez: Thank you, Lucy, and good day to everyone. I am pleased to be here today to present strong second quarter results, reflecting significant progress in our ongoing transformation as well as organic growth in most markets. What stands out most is the clear evidence of that progress in our results, with meaningful gains against our new KPIs and at a pace that is running ahead of our own expectations. I would like to recognize my colleagues who have embraced this transformation and remain open to the profound cultural change it requires. Our transformation is well underway and is already delivering on our goal of a structurally higher earnings quality as reflected in margins and free cash flow. We still have much work to do and continuing to uncover new opportunities under Project Cutting Edge, which I will elaborate shortly. Consolidated EBITDA in the quarter exceeded $1 billion and included a favorable one-off settlement of an outstanding claim in Europe of $42 million. As our efficiencies compound, the benefits become increasingly evident across the P&L and cash flow, pointing to a significant improvement in our earnings quality. Adjusting for the one-off sales grew 11%, while EBITDA expanded 19%, almost twice as fast, and EBIT, a key metric of our transformation grew 29%, almost 3x the pace of sales growth. Again, adjusting for the one-off, consolidated EBITDA margin expanded 1.4 percentage points to 21.4%, while EBIT margin rose almost 2 percentage points. Free cash flow is also benefiting from these higher quality earnings stream. Our free cash flow from operations reached a second quarter record of $651 million, up more than $400 million year-on-year after adjusting for severance and discontinued operations. This lifted our trailing 12-month free cash flow from operations conversion rate to 60% and also on an adjusted basis. Turning to our decarbonization pathway. We continue to advance profitably reducing growth CO2 emissions by 1% year-to-date, supported by a lower clinker factor. And with that, let me discuss our results in more detail. EBITDA grew 18% on a like-to-like basis, driven by Project Cutting Edge efficiencies during the quarter of $60 million and organic growth in most regions. Performance was broad-based with three of our four regions contributing double-digit EBITDA and EBIT growth and boosting margin expansion in excess of 2 and 3 percentage points, respectively. For the second quarter in a row, Mexico led regional results with continued volume recovery, efficiency gains and an easy prior year comparison. In the U.S., disruptions in our operations related to bad weather in Texas, together with rising materials and freight costs wane on EBITDA and margin in the quarter. In EMEA, despite softer demand in Europe, the region continued to benefit from pricing and project cutting-edge savings. South Central America and the Caribbean rounded out the picture with significant margin inflation related to cost efficiencies. As a result of Project Cutting Edge, Free cash flow from operations tripled year-over-year, lifting our trailing 12-month conversion rate to 60% on an adjusted basis. At the consolidated level, volumes were broadly stable with performance in Mexico, largely offsetting lower volumes in EMEA. In Mexico, the recovery continued to build posting the second consecutive quarter of year-on-year cement volume growth. In the U.S., despite unseasonable weather in some key markets, that brought operational disruptions, volumes remain resilient across all products. In Europe, country volume performance was mixed, calling into question the recovery we were expecting in certain markets. Volumes were further impacted by the severe heat wave through much of Europe which resulted in restrictions on work at construction sites in many markets. Within South, Central America and the Caribbean, both Colombia and Jamaica, saw higher cement volumes, which offset performance in other markets. Building on the low to mid-single-digit sequential price increases secured in first quarter, consolidated prices for our three core products advanced an additional 1% in second quarter. In both EMEA and Mexico, year-to-date pricing gains continue to offset increasing inflationary costs. And in the case of Europe, rising carbon costs for the industry. In the U.S., our cement prices rose sequentially, led by increases in the mid-South, while ready-mix prices climbed 2%, reflecting fuel surcharges. With limited visibility, of a clear end to be run war, we remain vigilant on closely monitoring and offsetting over time any persistent input cost inflation through our pricing strategy. For the second consecutive quarter, EBITDA growth was supported by positive contributions across all levers. Incremental savings under Project Cutting Edge accounted for approximately of our like-to-like EBITDA growth. These self-help measures, factors that are under our control are serving as an important cushion against macroeconomic volatility and delayed cyclical recovery in several of our markets. Pricing was another important contributor while organic growth in our core products as well as our urbanization solutions portfolio also supported EBITDA. Finally, we continue to benefit from a more favorable FX environment which resulted in a $50 million tailwind in the quarter. Prior year effects comparables will become more challenging as we move into the second half. EBITDA margin expanded by 2.1 percentage points, reflecting structural efficiencies, pricing discipline and benefit from operating leverage as volumes recover in Mexico. I am pleased with the progress we have achieved on our $400 million cost savings program with 80% of the initial target already achieved. In the first half, cost savings under the program have supported a 1.6 percentage point improvement in our consolidated operating expenses as a percentage of sales with all regions contributing. Cost of sales as a percentage of sales also declined approximately 1.4 percentage points. Following up on the commitment I made in our last earnings call, we are confident today in raising our overall savings target under Project Cutting Edge from $400 million to $475 million. We expect most of the new savings to be realized in 2027. In terms of composition, a small portion relates to further overhead optimization. While the majority comes from procurement as we fundamentally transform how we approach third-party spend across our business. Subject to potential slippage resulting from possible cost headwinds from the Iran war that may impact some previously identified savings. I strongly believe that we will continue to find new savings initiatives going forward. It has been 1 year since I laid out our transformation plan, and I would like to give you an update on where we stand. Project Cutting Edge is a multiyear transformation effort designed to reduce overhead, achieve operational excellence, improve earnings quality and enhance asset efficiency in line with best-in-class performance in our industry. In the first year, we moved quickly to eliminate overhead and improve operational efficiency through our cost savings program. These efforts help jump start our results where we laid the groundwork for more time-consuming transformation initiatives. We also introduced a new capital allocation framework designed to keep shareholders at the center of our decision-making while revamping our growth strategy. As we move into 2027, other initiatives under Project Cutting Edge should support progress towards our transformation goals. Our asset pruning exercise designed to improve the quality of our earnings should begin to pay off in material ways. Additionally, some of our recent bolt-on acquisitions should also support this goal. In the quarter, we continue to move forward on our asset pruning exercise by disposing of an additional 12 facilities. Efforts to reduce certain elements of our free cash flow spend should also take hold as we move to lower growth CapEx and intangible investments, while aligning our maintenance spending to best-in-class performance. We estimate a potential opportunity space of $300 million in free cash flow. We also are actively pursuing additional savings afforded by the introduction of AI into our operations. And we believe these efforts will be an important lever for growth in 2028 and beyond. We see particular benefits in planned management, energy efficiency and the way we work. Our Balcones plant in Texas has been the pilot for the use of AI in our operations and we're making important advances. Our success there will then be scaled globally. Since we launched Project Cutting Edge last year, I have been impressed by the engagement and creativity our teams continue to demonstrate in identifying new opportunities to improve efficiency and performance. And with that, back to you, Lucy. Lucy Rodriguez: Thank you, Jaime. Mexico continued to build on recent momentum, delivering solid results on the back of cost efficiencies, improving demand, operating leverage and the pricing strategy designed to offset cost inflation. For a second consecutive quarter, cement volumes posted year-over-year growth. Self-construction and government-backed social programs such as rural roads and housing continued to underpin bag cement demand with bulk cement volumes largely driven by residential. During the quarter, our cement volumes continued to benefit temporarily from competitor outages in the central part of the country. This situation is expected to normalize in the second half. Prices on a sequential basis increased by low single digit for our three core products, reflecting our strategy to recover input cost inflation. Over the past year, our team in Mexico has worked relentlessly to identify efficiencies and rethink our business not to achieve best-in-class operations. They have consolidated our operations and overhead while implementing important changes in logistics, freight and energy strategy. These structural improvements are a large contributor to the EBITDA growth and margin expansion we are experiencing. Our results also benefited from more transitory factors, including lower-than-expected energy costs and FX failed during the quarter. The social housing program continues to scale and is a meaningful lever of growth in our business. With a target of 1.8 million units through 2030, our participation keeps expanding. To date, we have been awarded approximately 135,000 units up 12% from the prior quarter, and we are in active negotiations for an additional 145,000 units. Infrastructure is becoming an encouraging part of the story for 2027. We have seen a significant increase in contracted volumes in our ready-mix order book tied to large-scale projects such as railroads, highways and dams. But project execution has been slowed today. We are already participating in some of these projects, such as Prasa El Nuveo in Nepal, the elevated viaduct in Tijuana and the Saltillo Nueva Nonato railroad. Given their scale and complexity, however, they will take time to translate into meaningful demand and we, therefore, expect infrastructure to become a more relevant drive next year. With regard to our decarbonization efforts, we achieved another clinker factor record in Mexico of 62.6% in the quarter. Underscoring our ongoing commitment to profitably reduce CO2 emissions. As we move into the second half of the year, we do expect some normalization in growth rates. As prior year comparisons become more demanding, temporary market share gains due to competitor outages reversed and growth relies increasingly on form construction which is inherently more difficult to time. In our U.S. operations, demand remained resilient despite unusually wet conditions in Texas and parts of the Mid-South. Adjusting for weather-related disruption, we estimate that cement and ready-mix volumes would have both grown 1%, while aggregates would have expanded 7%. Cement volumes were supported by the integration of our new mortars business, Omega, for 2 months in the quarter. Cement prices improved 1% sequentially. The reflecting successful price increases across micro markets and geographic mix. In ready-mix, prices increased 2%, reflecting effective implementation of fuel surcharges. In aggregate, adjusted for mix, prices have increased at a mid-single-digit rate compared to year-end 2025. Disruptions in our operations related to bad weather in Texas, together with rising materials and freight costs weighed on EBITDA and margin in the quarter. Demand continues to be led mainly by infrastructure, supported by the ongoing rollout of IIJA projects with about 50% of allocated funds already spent. Activity levels remain healthy, and we continue to see a solid pipeline of infrastructure opportunities across our footprint. We are encouraged by the proposed Build America 250 Act, which contemplates funding levels for streets and highways slightly up compared with the current program, while increasing investment in cement-intensive areas such as bridges more significantly. We expect IIJA funds as well as rising state highway funding in our key states to continue to support demand in the foreseeable future, as we await passage and implementation of new transportation bill. Industrial demand, particularly not related to large data centers, semiconductor chip facilities and manufacturing continues to grow. We estimate that about 35% of mega data center projects, which are investments exceeding $500 million currently planned or under construction are located within our footprint. Rising investment in the power sector to meet growing AI electricity needs should also support demand. Residential construction remains challenged by affordability constraints and elevated housing inventories in certain markets. However, pent-up demand a chronic housing deficit and favorable demographic trends should be supportive of residential recovery over the medium term. Against this backdrop, we remain focused on the factors we can control, operational excellence, higher kiln productivity and asset efficiency, positioning the business to benefit from operating leverage when volume recovery accelerate. Our operations in EMEA delivered positive results, driven by cost efficiencies and pricing. As Jaime mentioned, we had a positive one-off in the quarter of $42 million related to the favorable resolution of an outstanding commercial claim in Europe. Adjusting for the one-off benefit, EMEA EBITDA expanded 9% with margins flat year-over-year as lower volumes weighed on results. In Europe, country volume performance reflected meaningful divergence with recent seat ways, project delays and slower demand recovery impacting construction activity across several markets. Continued growth in cement volumes in Spain and the Czech Republic partially offset softer performance in other countries. Residential activity across much of Europe remains tepid, with higher interest rates still pointing to a more gradual recovery. Spain continues to be the notable exception where housing remains a source of strength. Infrastructure has been resilient, albeit with delays in some markets, but the medium-term potential is clear. With Poland expected to benefit from EU funds and Germany from its infrastructure stimulus. Turning to prices, while sequential variation across our three core products shows a muted performance. This is largely explained by a geographic mix of test as most of our markets saw stable to higher prices. On a cumulative basis, compared to fourth quarter 2025, net and ready mix prices are up 3% and aggregate prices are up 7%. The implementation of fuel surcharges or price increases on the majority of our ready-mix volumes in Europe is further helping to offset energy cost inflation. We remain optimistic on pricing in Continental Europe, the introduction of the carbon border adjustment mechanism together with the gradual reduction of free CO2 allowances under the EU ETS has been and should continue to be supportive of higher prices going forward. We believe the recently announced proposed modifications to the EU ETS and continue to provide a favorable framework for our decarbonization pathway in Europe. The Middle East and Africa region continued delivering strong results with EBITDA growing 34% and driven by Project Cutting Edge and improved pricing. Encouragingly, our operations in Israel and the UAE remain resilient amid regional tension, with ready-mix and aggregate volumes up 14% and 5%, respectively. In Egypt, while cement volumes were pressured in the quarter, you're beginning to see signs of stabilization and remain optimistic on market dynamics into the second half of the year. In South, Central America and the Caribbean, we posted another strong quarter with EBITDA growing double digits, driven largely by disciplined cost management. These efforts translated into a robust margin expansion of more than 4 percentage points. Region was led by the informal sector with Jamaica also benefiting from a pickup in reconstruction efforts related to last year's Hurricane Melissa as well as from tourism-related projects. Higher cement volumes in Colombia and Jamaica are offsetting softer performance in other markets. Looking ahead, we remain optimistic on the fundamentals of the region supported by resilient informal construction. And with that, I will now turn the call over to Maher to review our financial belt. Maher Al-Haffar: Thank you, Lucy, and good day to everyone. As Jaime noted, our self-help measures continue to deliver record results with quarterly EBITDA exceeding $1 billion, EBITDA margin improving by 2.1 percentage points to its highest level since 2008, and free cash flow generation accelerating at a significant pace. Free cash flow from operations for the first half increased by more than $730 million to $666 million as we continue to make our operations and administrative functions more efficient. Excluding severance payments and discontinued operations, our free cash flow from operations conversion rate for the trailing 12 months reached 60% compared to 33% for the same period a year ago. This growth is explained by exceptional EBITDA growth along with important reductions in working capital, CapEx, net interest expense paid and other cash expenditures. Year-to-date, investment in working capital was $175 million lower than last year, driven by improvements in Mexico and the U.S. Working capital days for the first half stood at negative 9 days, 1 additional day versus the first half of 2025. Project Cutting Edge continued delivering tangible results in our cost structure. Cost of sales and operating expenses as a percentage of sales during the quarter were down 106 basis points and 167 basis points year-over-year, respectively. Energy cost per ton of cement produced declined 6% in the quarter compared to last year, driven by a double-digit reduction in fuel loss, partially offset by slightly higher electricity costs. Our diesel hedging program helped offset $32 million of diesel costs year-to-date, underscoring the value of our risk management strategy in a volatile market environment. As of today, about 80% of our 2027 diesel consumption is hedged. Taking into account the more favorable energy cost trend year-to-date and expectations for the second half, we are improving our full year outlook and now expect energy costs in cement to increase by only a low single-digit percentage versus last year. Controlling net income for the quarter was 9% higher. The year-to-date decline in net income is due to the gain on the sale of our Dominican Republic operations during the first quarter of 2025. Excluding this effect last year, first half net income would have been more than 40% higher year-over-year. During the quarter, we executed several transactions aimed at reducing our interest expense and lengthening our average life of debt. We repaid approximately $1.5 billion of bank term loans denominated in dollars and euros, and we redeemed our $1 billion 5.125% subordinated notes. We funded these repayments with cash on hand and a $1.5 billion 10-year senior note carrying a 5.75% coupon, our first SEC registered notes offering priced at the tightest spread to U.S. treasuries in our history. $500 million of these new notes were swapped to euros to better align our debt currency mix with our cash generation profile. In addition, to improve our liquidity, we replaced two revolving credit facilities denominated in dollars and euros totaling $2.3 billion with a new $3 billion revolving credit facility with a 5-year bullet maturity, featuring pricing linked to our credit rating and tied to CO2 reduction targets. Despite strong free cash flow generation in the first half of the year, net debt plus subordinated notes increased approximately $270 million since December due to the Omega acquisition, share buybacks and dividends. Importantly, these capital allocation decisions reflect our commitment to disciplined and progressive shareholder returns and value-creating acquisitions, underscoring our confidence in the sustainability of our improved cash generation. As we generate incremental free cash flow in the second half of the year, benefiting from the expected reversal of most of our year-to-date working capital investments and other factors, we expect to end the year with a lower level of net debt plus subordinated notes than at the year-end 2025. Our net financial leverage, including the subordinated perpetual notes stood at 2.08x, and a decrease of 0.22x relative to first quarter. Our goal is to further improve our capital structure to reach a solid BBB rating, continue improving our free cash flow and free cash flow conversion and maximize value for our shareholders. Due to stronger free cash flow generation and our continued liability management, we now expect to pay lower interest this year than we had guided before. We expect interest paid plus coupons on our subordinated notes to decline by about $40 million versus last year for a total of about $455 million this year. We are a structurally stronger and more cash entry CEMEX, and we are confident there is more to come. And now back to you, Jaime. Jaime Dominguez: I am proud of the results and achievements in the quarter, incremental evidence of the power of our transformation efforts. Based on first half performance, our expectations for the remainder of the year and the continued contribution from Project Cutting Edge, I am confident in raising our full year EBITDA guidance to a range up 16% to 17% year-over-year growth. Importantly, our guidance is based on a peso FX rate of MXN 18.25 to MXN 18.50 for the second half of the year. Our updated EBITDA guidance together with the expectation for lower interest expense should support higher free cash flow generation for the year. Looking ahead, we remain committed to advancing our transformation, capturing the recently announced savings under Project cutting edge and identifying new opportunities. We will also continue to execute on the action plans arising from our asset reviews and free cash flow initiatives with a focus on improving earnings quality, asset efficiency and cash generation. While macroeconomic volatility is likely to persist, the progress we've made to date, coupled with a critical role, self-help measures play in our strategic plan reinforces my confidence in our strategy and our ability to reach our transformation KPIs. Our transformation is still ongoing, and I remain excited about the opportunities ahead. And now back to you, Lucy. Lucy Rodriguez: Before we go into our Q&A session, I would like to remind you that any forward-looking statements we will make today are based on our current knowledge of the markets in which we operate, and could change in the future due to a variety of factors. In addition, unless the context indicates otherwise, all references to pricing initiatives, price increases or decreases refer to our prices for our products. And now we will be happy to take your questions. The first question comes from Adrian Huerta from JPMorgan. Adrian Huerta: My question has to do with the Project Cutting Edge program, where you announced this additional $75 million in savings, which is a positive surprise. And in addition to that, you also announced an opportunity for additional savings at the free cash flow level of $300 million plus other initiatives such as reduce AI benefits, et cetera. And you mentioned a couple of things on this, but can you elaborate a bit further on these efforts and what is next on the Project Cutting Edge? Maher Al-Haffar: Thank you for your question. So first, Cutting Edge is a holistic full transformation that is driven by three pillars, operational excellence, changing culture, endless focus on the levers that we can talk, no destruction to the line empowerment, accountability and relentless pursue improvement on earnings quality expressed in terms of free cash flow conversion and free cash flow margin to sales. Regarding the savings side of our transformation, I was pleased to see that our innovation and our relentless focus on operational excellence is driving incremental savings. The $475 million are by 2027 are split into two significant chapters. Number one is overhead count reduction. But this is only overhead, including corporate everywhere, in and overheads in the regions. That will be around $230 million by end of the program. And then the rest is $245 million, which is operating efficiencies. For 2026, the total number is $185 million. Allow me to remind you that last year, we captured $200 million. And then for the full year '27, we're expecting around $90 million. What are we doing there? Where the incremental savings are coming from. It's our transformation and how we address third-party addressable spend. And that is on the procurement leadership but also outside. We're app skilling, strengthening the team, using more AI technology, so on and so forth. So that's an exciting aspect of it. And the other aspect is on operating strength on operational excellence, things such as energy management, the logistics supply chain cement operations efficiencies in the U.S., so on and so forth. So that's one element of it. The other very relevant aspect of our transformation is our asset pruning. This means not only asset pruning. One is asset pruning. The other one is managing assets. So here, Adrian, we're looking at all lines of the business, not just EBITDA but also EBIT, ROIC and free cash flow. So going back to EBIT, now our teams are accountable for their asset base. They are properly incentivized through proper compensation incentives to get rid of idle assets. In addition, right, we are doing our pruning, which will contribute from 2027, but most of contributions will happen in 2028 and beyond because it takes time. We will do a few interesting moves this year but we need to be patient. What does this mean? It means that we are deconsolidating by different ways of disposing of unprofitable underperforming businesses, particularly a few ready-mix operations in the U.S., a few quarries and the bulk is in Europe in ready-mix. And we're doing it without putting at risk our vertical integration strategy. As we do asset pruning, this means that we have lower asset base of businesses that were consuming CapEx and burning cash. So that will lead to optimization of CapEx and an increase in free cash flow conversion. That's how relevant that is. Now when you think about the rest of the free cash flow, we are the -- what we're doing right now is appointing a leader at the ExCo level reporting to me accountable for every line of free cash flow. I think I said in a previous call that eventually, we will move to a new free cash flow metric of total free cash flow. I just need to decide with the team when to do that. But what we're aiming is add -- getting to the benchmarks of the best-in-class peers in our industry on total free cash flow conversion and total free cash flow margin to sales. And elements of it is optimization of platform CapEx, right, and significantly less strategic CapEx as we pivot our growth strategy to bolt-on M&A. Now on AI, we are just beginning to tap that opportunity. All of our overhead savings are unrelated to AI, but we do see opportunities on further transformation on AI. It takes time, because we need to focus on whole domains, but we already know where we're going to start. And then we have the AI, particularly in cement operations, starting in the U.S. because we have a significant upside to continue improving operational efficiencies in that business that can be -- that can contribute materially to future incremental EBITDA starting in '28 and beyond. So it's a comprehensive plan. Adrian is a full transformation that encompasses as well a cultural transformation. Having the right conversations, candid discussions, relentless focus on operational excellence, automatic operating metrics, business performance reviews, accountability and so on and so forth. So I hope that I answered your question, Adrian. Adrian Huerta: I was glad to see margins potentially for this year, reaching above 20%. And hopefully, with additional initiatives by 2028, we can be talking about mid-20s. Thank you, Jaime. Jaime Dominguez: That's the goal. Operator: And the next question comes from Gordon Lee from BTG Pactual. Gordon Lee: A quick question on Mexico, Jaime. The performance has been impressive year-to-date and I think particularly because it's been bucking overall -- what seems like overall macro weakness. So I was wondering if you could give us a sense looking at your backlog, how confident you are that both the volume trend and the expansion in margins in Mexico is sustainable as we go into the second half and into 2027? Jaime Dominguez: Thank you, Gordon. Our expectation is that our operations in Mexico in the second half of the year will not operate at that margin level. We see a small drop. However, it will continue to be very solid. Now the reason for that is because, as we highlighted before, we did benefit from a temporary market share gain due to operating disruptions by a few competitors. I don't expect to keep that for the second semester light along for next year. The other thing, Gordon, is that we have a very favorable bag to bulk mix in the first semester. And as the formal sector in infrastructure begins to pick up, which is the segment that has been, I'll say, disappointing because of delays in breaking grounds on infrastructure jobs we shall see an increase in the bulk volume. Therefore, the mix will be less favorable. And we also have to complete a few more annual maintenance outages in the second semester. So those things will soften a bit in the margins. And finally, right, I think that we're going to have a less strong energy tailwind on fuel cost, which in the first half was very, very impressive. So I hope that I answered your question. Lucy Rodriguez: Thanks, Gordon. The next question comes from Ben Theurer from Barclays. Benjamin Theurer: Just a quick one on EMEA and in very particular Europe here. So clearly, you had that onetime benefit on margins does give or take, $42 million. Adjusting for that, margins would actually have been a little bit softer, somewhat like flattish. So maybe help us understand and explain a little bit more the drivers of that and how much maybe of some headwinds were more of a short-term nature, thinking of energy, heat wave. You've mentioned it versus what were on the other side, the benefits from Project Cutting Edge that we're supposed to start to come in more meaningful, particularly in Europe in 2026. Maher Al-Haffar: Look, in the first semester, we were unable to fully realize the benefit from operating reach, because in the first quarter, we had a very difficult winter. And then, right, in the second quarter. On one hand, we saw some of our markets softening. And on the other hand, we had these dramatic hit wave that restricted hours on job sites and that affected volume. So the -- I think that, that could be a temporary short-term impact, provided that we have a normal weather pattern, right, in the third and fourth quarter. I also have to say that there is a little bit of lack of visibility on where the demand is heading due to the geopolitical situation. I'm not concerned about our Project Cutting Edge savings in EMEA. They are happening, and they're happening quite materially. I also must share with you that in the second quarter, we did have a negative one-off of $6 million of a write-off of engineering projects of OpEx investments that we decided to cancel because they do not need our new financial thresholds. That is a temporary effect on profitability. So overall, if weather normalizes, we should see a bit more of operating leverage out there. Project Cutting Edge would deliver in the region, and we shouldn't have incremental write-offs that should surprise us in the margin. I hope I answered your question, Ben. Operator: The next question comes from Alejandra Obregon from Morgan Stanley. Alejandra Obregon: It actually relates to the key upside and downside risks to your outlook, especially in Europe and Mexico. And to be more specific, in Europe. I was hoping if you could share your latest thoughts on the ETS review proposal announced last week. And in Mexico, if you can talk a little bit about the current competitive dynamics and your outlook for new capacity coming back online here. Maher Al-Haffar: Alejandra, thank you for your question. I mean to start with the latter part of your question, which relates to a new capacity in Mexico. We're closely monitoring that potential increase in capacity. This is a plan that was shut down years ago. And we -- the very static information that the plant might come back in the last quarter of this year. How I see it is this on one hand, we do expect volumes to continue growing as infrastructure begins to gain traction in Mexico, while the informal and formal sector stays resilient, and that should help absorb partially that new capacity. And the other aspect is that we're monitoring is that when that plant was shut down a few years ago, we didn't see in our case, nor with public data on others, significant changes in internally calculated with public data or market shares. And that is because the one who lost that plant reshuffled their operations to continue supplying the market. So I do expect some responsible recommissioning of that capacity going forward. The second part of your question is Europe ETS. And I'm pleased with the European Union proposal. There are a few things that could be improved. We will be working on it on advocacy. But overall, it's very supportive of value creation in Europe, particularly for the leaders who have done the job and continue seriously to profitably decarbonize and we are one of them. In fact, right? As of last year, we have the lowest CO2 kilos per tonne of cement in Europe. And I say this because of the following. On one hand, right? The current the new system widens the gap in the CO2 cost curve between the leaders and the laggards, including local producers in Europe and importers. The new system incentivizes the leaders to raise even at higher speed with much more financing granting type of support. And that should continue to widen the differences in the CO2 cost curves, which means that we will have a lower CO2 cost relative to competitors. The other thing is that I think that the system is supportive of mid- high single digit -- sorry, mid-single-digit compound the price increases to sustain margins. And that's an important aspect. The other aspect is that although there could be a 1-year delay, due to the very small reduction percentage winds of pre allowances removals for '28, '29. But the point is that by '29 -- 2029 or at the latest 2030, there will be no reason to keep some capacity running trading for the hole to get free allowances because the fixed cost relative to that equation will not justify that strategy unlike in the past. So that's also very positive. So overall, I think that the -- that we're just gaining 4 years for hard-to-abate industries to decarbonize the European Union continues to commit to Net Zero by 2050, right? And I was positively surprised by the post reform. I hope that I answered the question, Alejandra. Lucy Rodriguez: The next question comes from Paul Roger from BNP Paribas, and this is via the webcast, so I will read it. What underpins confidence that energy costs will now only be up low single digit in 2026, despite geopolitical uncertainties and rising oil prices. Jaime Dominguez: Paul, thank you for your question. The reason is this is really based on the very good performance on fuel costs in the first semester of the year and particularly in the second quarter. So fuels in the second quarter were down 12%. For the first half of the year, fuel is down on a cost per ton basis by 10%. So we do have a strong carry forward that led us to update in such a way the guidance. But we're not excluding -- and we know that, that in the second semester, we will face a much less favorable fuel cost. But overall, when you do the math, we feel comfortable with our guidance. There is also something else, which is which is that we can ramp up alternative fuels as a hedge to increases in primary fuels. And particularly, we can do that, right, in Mexico. So the low single-digit increase guidance implies a 4% growth in the second semester with a negative impact of around $20 million. But the math is the math, and we're happy with what we delivered in the first semester of the year. Lucy Rodriguez: The next question comes from Daniel Rojas from Bank of America. Daniel Rojas Vielman: I have a bit of a follow-up on Gordon question on Mexico. Looking at the second half of the year, I was curious what to expect on the industrial and commercial side and formal residential. This is especially in a context where we've seen Mexican corporates report a picture of weak consumer growth. And I'm interested to see what the outlook is for the second half? Jaime Dominguez: Daniel, thank you for your question. Well, that's an interesting point when you talked about a weaker and mixing incorporates reports, when you think about Mexico and you think about what happened last year. Last year, the -- our industry construction and heavy building materials suffered very materially. So while the rest of the economy could be struggling, the construction is recovering from a very low base. Unlike other industries last year on value chains, which were not as distracted, so we're benefiting from that. The other aspect is that in Mexico uses construction as a lever to drive growth in Mexico, around energy and infrastructure, which lacked somehow and also social housing. So it's an economic lever that the government is using to improve the Mexican GDP. And that's what's happening. So right now, we continue to see social housing is strong. We continue to improve and increase our backlog around social housing. Very disappointing the speed at which we see the deployment on infrastructure, particularly rail projects. But we have a leading indicator, which is the backlog in concrete that is improving. And when you look at our ready-mix volumes, they've been disappointing, driven by that lack of infrastructure and also because we've done some asset pruning also in Mexico, but we're taking a better outlook in the second semester as we see, I think, at the very end of the year, finally, some of those infrastructure projects happening. And I think that, that's the one that is going to be more resilient next year as those job sites to start breaking ground. And for the time being, I also -- I'm also positive about the informal sector. Salaries, wages are increasing, and that's also helping on remittances, although they've been softer, they continue to be at very good levels. The Mexican economy continues to export very materially to the U.S. So I feel confident that we -- there is good momentum right now in construction. Lucy Rodriguez: The next question comes from Francisco Suarez from Scotiabank. Francisco Suarez: Congrats on the results at for the call. I think that thinking ahead on your -- on this remarkable transformation at CEMEX, how do you think that investors should read your free cash flow conversion ratio achieved at 60%, excluding severance payments. In other words, can savings earmark under your program comes and higher prices, including surcharges, make this metric sustainable? Can you elaborate a little bit more on what to expect? Jaime Dominguez: Francisco, thanks for your question. What we are pursuing operational excellence is by looking at best-in-class operators. Some outside the industry. And for sure, the likes of Heidelberg, Halpin, CRH and other is with much stronger levels of free cash flow conversion, the whole transformation Francisco aims at improved earnings quality. And that must happen by measuring less cyclicality of our portfolio but also much stronger free cash flow conversion. And in our transformation, we introduced two key metrics, which is the total free cash flow, that is free cash flow before we pay debt, we return cash to shareholders or we do M&A. And that's the one that really matters to me. And that's the one that has a great potential to improve. And the other metric is free cash flow to sales. And when I look at our years and I do an average, if they deliver consistently around between 36% to 40% of model free cash flow conversion. And their margin, if I do the average as well, it's around 8%. I don't think we should do any worse than that. And that's the goal of the transformation. It will take time Francisco, but that's where we're heading. And we are demonstrating that we're making progress, not only on free cash flow conversion to operations as reported right now, but also on total free cash flow and free cash flow margin. And one very important aspect of that is going to be, of course, margin expansion at the EBITDA level as we do our asset pruning and we use bolt-ons to reshape our portfolio, only doing bolt-ons M&A when we improve earnings quality, not growth and growing revenue for the sake of but rather margin expansion. And the other aspect is that, again, we had too many underperforming businesses for too long using CapEx and burning cash. And that's not happening anymore. But that takes time. So all these combined makes us very -- feel very excited that we should pursue and we should deliver the best-in-class metrics, and that's what we're working for But be patient it will take a little bit of time. Lucy Rodriguez: The next question comes from Arnaud Pinatel from On Field, and I'm going to read it from the webcast. Outlook in H2 for the U.S.? Do you see an improvement in better performance than in H1? Have your price increases announced in July been executing with success. Do you have any news on tariffs or potential new tariffs on imports from Vietnam, Turkey following the 301 investigation. Jaime Dominguez: Arnaud. Thank you very much for your questions. So let me start with the latter part of it, about the 301. I don't have any news, news on that effort. We continue to see that process unfolding nicely because we have provided feedback, the American Cement Association -- through the American Cement Association. And we're also engaging on, right antidumping processes again some of the sources from countries that you've mentioned. The -- but no news for the time being. The other thing about prices, we did increase prices in the mid south in the second quarter. will benefit from -- and that includes Gulf Coast, Tennessee and the Carolinas and will benefit from a bit of carry forward there. And we did announce a mid-single-digit price increase in Southern California and Arizona July onwards. It remains to be seen how much traction we get there. But I think that the most important part, thinking about outlook for H2 in the U.S.A. is on cost. And if you think about our second quarter performance, right, the volumes despite weather we're pretty resilient on prices even improved sequentially. And that is because of our fuel surcharges doing the job in cement, ready-mix and aggregates. But the issue basically were on variable cost. And that was because of a few things. Number one, for very good reasons in Arizona, where we gained a significant job on a semiconductor project, we had to temporarily purchase aggregates to support selling to retail and increase our inventories to be ready to supply larger volumes of ready-mix concrete and with our own aggregates to that semiconductor project. So that did affect margins in aggregate. The other thing was a timing of cement import consumptions, which in the second quarter increased by 7% and I don't expect that to happen for the rest of the year in that manner, right? And definitely, the weather. So Arnaud, excluding any negative impact from the hurricane season, we did have a major disruption in weather in Texas in our quarry in Balcones which also disrupted our operations in aggregates. And obviously, volumes. So had not that happened, our aggregate volumes were up grown by around 7%, and that would have made a big difference. And what happened was that we were not selling, but because of our backlog, we agreed that we decided to move rock to yards to be ready to supply as the weather improved. So that also had an impact on freight, which we will recover. So I am expecting a better margin in our performance in the second half, provided that we don't have any dramatic impact on -- in the hurricane season. Thanks for the question, Arnaud. Lucy Rodriguez: The next question comes from Jorel Guilloty from Goldman Sachs. Wilfredo Jorel Guilloty: Yes. So I wanted to ask about AI infrastructure opportunity. So you highlighted data centers, chip plans, rising power sector investments noted that there was 35% of planned mega projects sitting in your footprint. What I wanted to understand, though, is how do you actually stand to benefit here? Are there any rough thumb for how much cement or aggregate these projects consume? And also practically speaking, when do you expect them to start moving the needle for you? And where specific markets are they mostly landing in? Jaime Dominguez: Yes, we have estimated, internal estimates though, that the data centers, U.S. data centers, it could lead to an increased of around 2% of annual national cement consumption between 2026 and 2030. Now when you think about where it's happening, it all began in Virginia. But then the projects are extending elsewhere. And we see an annualized construction spend if it continues, of around $50 billion. And we see a significant size of projects in Texas, California, Arizona. We also see some in Washington at North where we don't participate in Georgia also in the mid-South, where we do participate and up North, in Ohio and so on and so forth. So how we benefit, obviously, is by that figure that I gave you, which again is internal estimates of 2% to -- for national demand growth. But the way we benefit is through our ready-mix concrete value propositions. And we began supplying very little in 2024. In 2025, that volume grew by 185% but still not material. And so far this year, we've doubled the volume. And the trend, it looks positive. And so far, the team is achieving a 60% project win rate on every bid. So how it works is that we gain ready-mix volume and we gained the upstream throughput of cement, aggregates and admixtures. So I hope that I answered your question. Lucy Rodriguez: We have time for one last question, and it is coming from Anne Milne from Bank of America. Anne Milne: Thanks very much for the call and for the great results. It was very impressive. I sort of checked my old models. And I hadn't seen an LTM EBITDA number like you reported this quarter, except for before the global financial crisis, which I can barely recall at this point in time, it was so long ago. But anyway, my question is probably for Maher. I'm looking at your debt profile, which continues to evolve. I see that as of the same quarter, you mostly have outstanding now leases and fixed income, which I assume is the bond market. So it looks like only 10% of your total is now with your bank agreements. I was just wondering if you could talk about if this is -- well, first of all, I'm very happy to see you extending out your debt profile because I think that was always something that I won't call it a weakness, but I think having a longer profile is definitely healthier for a company the size of CEMEX, so that's positive. Is this a strategy going forward? Does it depend on cost? Were your banks upset because you didn't have as much outstanding for them. Is it a smaller facility now? And then just if you -- I know you mentioned during the call that it's linked to -- your pricing is linked to some sustainability indicators. Could you provide any indication on what that sort of the range of that pricing looks like? Maher Al-Haffar: Yes. Thank you, Anne, for the question. And yes, I mean, we have a very concerted strategy that is targeting at increasing our average life from the current level of close to 6 years to probably out as long as we can take it. I mean -- and I would say, in the near term, next 12 to 24 months, we should expand that probably by a year to 2 years, hitting around the 8-year mark. Of course, we're always conscious of pricing. But clearly, improving tenure and pushing out and terming out our maturities is a goal. So I would definitely look to see more bond market participation. We have some potential liability management coming up next year in our 5.45% notes. As you know, they become callable at par next year. The following year, we have another note that comes due at par, the 5.2%. And we're also looking at reducing interest expense as a percentage to be deduct. So clearly, the type of instruments, the type of market, the currency mix that we're looking at will also drive our strategy. So it's a dual-pronged strategy, extending tenors, reducing interest expense, improving, as Jaime said, focusing on improving quality of earnings as measured by free cash flow conversion and interest expense is a very important part of that. Today, we are probably the highest in terms of percentage of EBITDA going to interest expense and we'd like to bring it down probably a couple of percentage points down from where we are right now. Now of course, interest rates, especially looking at them today are not helping on the fixed rate side. But remember also, we are roughly 85% fixed, 15% floating. So as the interest rate cycle evolves, there may be possibilities to start maybe switching a little bit away from being so overweight in fixed to floating, and that should also positively impact our cost. And we think there are very interesting possibilities for longer-term solutions in that direction. So yes, you should be expecting to see us continuing to push maturities out you should continue to see us relying more on the capital markets. Yes, the banks were a little bit disappointed that we've reduced our exposure so materially to them. Of course, as you know, we swapped our revolving credit facility from a shorter -- from a smaller revolving credit facility to a $3 billion revolving credit facility with a grid pricing. And it has a sustainability linkage. It's a plus 5 basis points, minus 5 basis points, depending on the targets. Targets are CO2 emissions essentially. So it's not very aggressive, but we do also look forward to meeting those targets. So we don't expect that to hit us in any negative way. And under that facility, any drawdowns all the way down to the maturity of the facility can become a 5-year bullet maturities at the pricing of the facility, which is SOFR -- for current rating SOFR plus $100 million it could get better if we go to BBB, of course, it also could get worse if our rating gets downgraded from the BBB minus. So I hope I answered that question, Anne. Lucy Rodriguez: Thank you for joining us today for our second quarter results. We hope that you will come back since third quarter 2026 earnings call that's scheduled for October 26. If you have any additional questions, please feel free to reach out to the Investor Relations team. Many thanks. Bye-bye. Operator: Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day. 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Interested in Cemex S.A.B. de C.V.? Here are five stocks we like better. Cemex posted strong Q2 results, with consolidated EBITDA above $1 billion and management raising full-year EBITDA growth guidance to 16% to 17%. Excluding a one-time Europe settlement, sales, EBITDA and EBIT all rose sharply, and free cash flow from operations hit a second-quarter record. The company increased its Project Cutting Edge savings target to $475 million from $400 million, with most of the added savings expected in 2027. Management said the program is driving overhead reductions, operating efficiencies and better free cash flow conversion, especially in the U.S. Regional performance was mixed but generally improved: Mexico led on volume growth and pricing, the U.S. remained resilient despite weather, and EMEA was held back by lower volumes. Cemex also improved its balance sheet by refinancing debt, extending liquidity and targeting lower interest expense for the year. The Housing Market Is in Trouble - What to Watch Out For Cemex (NYSE:CX) reported what executives described as strong second-quarter 2026 results, with consolidated EBITDA exceeding $1 billion and management raising its full-year EBITDA growth outlook as cost savings and operational initiatives continued to support margins and free cash flow. Chief Executive Officer Jaime Muguiro said the quarter showed “clear evidence” of progress under the company’s ongoing transformation, including gains in margins, EBIT and cash generation. Consolidated EBITDA included a favorable one-time settlement of an outstanding claim in Europe totaling $42 million. Adjusting for that benefit, Muguiro said sales rose 11%, EBITDA increased 19% and EBIT grew 29%. → Could Truth API Become Trump Media’s First Meaningful Revenue Driver? Trade War Bargain Stocks: Top 3 Picks Too Good to Pass Up Adjusted for the one-time item, consolidated EBITDA margin expanded 1.4 percentage points to 21.4%, while EBIT margin rose nearly two percentage points, according to Muguiro. He said free cash flow from operations reached a second-quarter record of $651 million, up more than $400 million year over year after adjusting for severance and discontinued operations. Cemex raised its savings target under Project Cutting Edge to $475 million from $400 million. Muguiro said 80% of the initial target has already been achieved, with most of the incremental savings expected to be realized in 2027. → 3 Photonics Companies Making Quantum Tech Possible Crane Stock Soars, But the Best Could Be Yet to Come: Here's Why Project Cutting Edge is Cemex’s multi-year transformation program focused on reducing overhead, improving operational efficiency, enhancing asset productivity and improving free cash flow conversion. Muguiro said the program generated $60 million in efficiencies during the quarter and accounted for roughly 40% of like-for-like EBITDA growth. In response to a question from JPMorgan’s Adrian Huerta, Muguiro said the $475 million savings target includes about $230 million from overhead headcount reductions and $245 million from operating efficiencies. He said incremental savings are coming largely from procurement, energy management, logistics, supply chain improvements and cement operations efficiencies, particularly in the U.S. → AeroVironment’s Stock Is Down, But Drone Demand Is Taking Off Muguiro also said Cemex sees a potential $300 million opportunity in free cash flow through efforts including lower growth capital expenditures, reduced intangible investments and alignment of maintenance spending with best-in-class performance. He said asset pruning will become more material beginning in 2027 and 2028, including the disposal or deconsolidation of underperforming ready-mix operations, quarries and other assets, particularly in the U.S. and Europe. Mexico led Cemex’s regional performance for the second consecutive quarter, supported by cement volume growth, cost efficiencies, operating leverage and pricing actions. Lucy Rodriguez, chief communications officer, said cement volumes in Mexico grew year over year for a second straight quarter, supported by self-construction, government-backed social programs such as rural roads and housing, and residential bulk cement demand. Rodriguez said Mexico also benefited temporarily from competitor outages in the central part of the country, a factor management expects to normalize in the second half. She said Cemex has been awarded approximately 135,000 units under Mexico’s social housing program, up 12% from the prior quarter, and is negotiating for an additional 145,000 units. In the U.S., Rodriguez said demand remained resilient despite unusually wet weather in Texas and parts of the Mid-South. Adjusting for weather-related disruption, Cemex estimated that cement and ready-mix volumes would each have grown 1%, while aggregates would have increased 7%. Cement volumes were supported by the consolidation of Omega, a mortars business Cemex acquired earlier in the year and began consolidating on April 1. Management said U.S. demand continues to be led by infrastructure, supported by the rollout of Infrastructure Investment and Jobs Act projects, with about 50% of allocated funds already spent. Industrial demand tied to data centers, semiconductor facilities and manufacturing also continues to grow, while residential construction remains constrained by affordability and elevated inventories in some markets. In EMEA, Cemex reported positive results driven by pricing and cost efficiencies, though European demand remained mixed. Adjusting for the $42 million one-time settlement, EMEA EBITDA grew 9% and margin was flat year over year, as lower volumes weighed on performance. Rodriguez said heat waves, project delays and slower demand recovery affected construction activity in several markets, while Spain and the Czech Republic delivered cement volume growth. South, Central America and the Caribbean posted double-digit EBITDA growth and margin expansion of more than four percentage points, driven largely by cost discipline. Rodriguez said cement demand in the region was led by the informal sector, with Colombia and Jamaica posting higher cement volumes. Chief Financial Officer Maher Al-Haffar said Cemex’s first-half free cash flow from operations increased by more than $730 million to $666 million. Excluding severance payments and discontinued operations, the trailing 12-month free cash flow from operations conversion rate reached 60%, up from 33% a year earlier. Al-Haffar said the improvement reflected EBITDA growth as well as reductions in working capital, capital expenditures, net interest expense paid and other cash expenditures. Working capital investment totaled $175 million year to date, lower than last year, driven by improvements in Mexico and the U.S. Cemex also updated its energy cost outlook. Al-Haffar said energy cost per ton of cement produced declined 6% in the quarter from last year, driven by lower fuel costs partly offset by higher electricity costs. He said the company now expects cement energy costs to increase by only a low single-digit percentage for the full year. During the quarter, Cemex repaid approximately $1.5 billion of bank term loans denominated in dollars and euros and redeemed $1 billion of 5.8% subordinated notes. The repayments were funded with cash on hand and a $1.5 billion 10-year senior note carrying a 5.75% coupon. Al-Haffar said Cemex also replaced two revolving credit facilities totaling $2.3 billion with a new $3 billion five-year revolving credit facility tied to credit rating and CO2 reduction targets. Net debt plus subordinated notes increased by about $270 million from December because of the Omega acquisition, share buybacks and dividends, but Al-Haffar said the company expects to end the year with a lower level than at year-end 2025. Net financial leverage, including subordinated perpetual notes, stood at 2.08 times. Based on first-half performance and expectations for the remainder of the year, Muguiro raised Cemex’s full-year EBITDA guidance to 16% to 17% year-over-year growth. He said the guidance assumes a peso exchange rate of 18.25 to 18.50 for the second half of the year. Muguiro said the updated EBITDA outlook, along with expected lower interest expense, should support higher free cash flow generation for the year. Al-Haffar said Cemex now expects interest paid plus coupons on subordinated notes to decline by about $40 million versus last year, to approximately $455 million. Management also discussed artificial intelligence as a longer-term efficiency opportunity. Muguiro said Cemex is piloting AI in operations at its Balcones plant in Texas, with potential applications in plant management, energy efficiency and work processes. He said any material EBITDA contribution from AI initiatives would likely begin in 2028 and beyond. In the Q&A session, Muguiro said Mexico’s second-half margins are expected to remain solid but below first-half levels due to the expected reversal of temporary market share gains, a less favorable bag-to-bulk mix, maintenance outages and reduced energy tailwinds. In the U.S., he said Cemex expects better second-half margin performance if the hurricane season does not create major disruptions. Muguiro said Cemex remains focused on factors it can control, including operational excellence, pricing discipline, asset efficiency and free cash flow conversion, while acknowledging continued macroeconomic volatility and uncertainty in several markets. Cemex (NYSE: CX) is a global building materials company headquartered in Monterrey, Mexico. The company produces, distributes and sells cement, ready-mix concrete and aggregates, as well as related building materials, to construction markets in more than 50 countries. Cemex's product portfolio also includes asphalt and mortar mixes, waste-derived fuels and other complementary construction solutions, supported by a network of production facilities, distribution centers and logistics operations. Founded in 1906 as Cementos Hidalgo, the company adopted the Cemex name in 1976 following a series of domestic mergers and expansions. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Cemex Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

This article first appeared on GuruFocus. Consolidated EBITDA: Exceeded $1 billion, including a $42 million one-off settlement in Europe. Sales Growth: Adjusted sales grew 11%, with EBITDA expanding 19% and EBIT growing 29%. EBITDA Margin: Expanded 1.4 percentage points to 21.4% after adjustments. Free Cash Flow from Operations: Reached a record $651 million, up over $400 million year-on-year. EBITDA Growth: 18% on a like-to-like basis, driven by efficiencies and organic growth. Cost Savings Program: Achieved 80% of the $400 million target, with a new target of $475 million. Net Debt: Increased by approximately $270 million due to acquisitions, buybacks, and dividends. Net Financial Leverage: Stood at 2.08x, a decrease of 0.22x from the previous quarter. Interest Expense: Expected to decline by about $40 million compared to last year. EBITDA Guidance: Raised to a 16% to 17% year-over-year growth range. Warning! GuruFocus has detected 10 Warning Signs with CX. Is CX fairly valued? Test your thesis with our free DCF calculator. Release Date: July 23, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Cemex SAB de CV (NYSE:CX) reported strong second quarter results with consolidated EBITDA exceeding $1 billion, reflecting significant progress in their transformation efforts. The company achieved a record free cash flow from operations of $651 million, up more than $400 million year-on-year after adjustments. Project Cutting Edge has delivered $60 million in efficiencies during the quarter, contributing to an 18% EBITDA growth on a like-to-like basis. Cemex SAB de CV (NYSE:CX) raised its full-year EBITDA guidance to a range of 16% to 17% year-over-year growth. The company is advancing its decarbonization efforts, achieving a 1% reduction in CO2 emissions year-to-date, supported by a lower clinker factor. Disruptions in operations due to bad weather in Texas and rising materials and freight costs negatively impacted EBITDA and margins in the US. In Europe, softer demand and a severe heat wave led to restrictions on construction work, affecting volumes and raising concerns about the expected recovery. The company anticipates a small drop in margins in Mexico in the second half of the year due to temporary market share gains and less favorable energy tailwinds. There is a lack of visibility on demand in Europe due to geopolitical uncertainties, which could impact future performance. Despite strong free cash flow generation, net debt plus subordinated notes increased by approximately $270 million since December due to acquisitions, share buybacks, and dividends. Q: Can you elaborate on the additional $75 million in savings announced under Project Cutting Edge and the $300 million opportunity at the free cash flow level? A: Maher Al-Haffar, CFO, explained that Project Cutting Edge is a comprehensive transformation focusing on operational excellence, cultural change, and improving earnings quality. The $475 million savings target by 2027 includes $230 million from overhead reduction and $245 million from operational efficiencies. The program also involves asset pruning and optimizing free cash flow, with AI playing a role in future improvements. Q: How sustainable are the volume trends and margin expansions in Mexico as we move into the second half of 2026 and into 2027? A: Jaime Muguiro Dominguez, CEO, noted that while margins in Mexico may see a slight drop in the second half, they will remain solid. Temporary market share gains due to competitor disruptions and a favorable bag-to-bulk mix contributed to first-half performance, but these factors may not persist. Additionally, energy cost tailwinds may weaken. Q: Could you explain the drivers behind the EMEA region's performance, particularly in Europe, and the impact of the $42 million one-off benefit? A: Maher Al-Haffar, CFO, stated that EMEA's performance was affected by difficult weather conditions and market softening. Project Cutting Edge savings are materializing, but a $6 million write-off of engineering projects impacted results. The region should benefit from operating leverage if weather normalizes and geopolitical uncertainties stabilize. Q: What are the key risks and opportunities in Europe and Mexico, particularly regarding the ETS review proposal and competitive dynamics in Mexico? A: Maher Al-Haffar, CFO, expressed optimism about the European Union's ETS proposal, which supports value creation for decarbonization leaders like Cemex. In Mexico, potential new capacity is being monitored, but infrastructure growth and resilient informal and formal sectors should help absorb it. Q: How confident are you that energy costs will only rise by a low single-digit percentage in 2026 despite geopolitical uncertainties? A: Jaime Muguiro Dominguez, CEO, attributed the confidence to strong first-half fuel cost performance, with a 10% reduction in fuel costs per ton. While less favorable fuel costs are expected in the second half, alternative fuels can hedge against primary fuel increases, supporting the low single-digit guidance. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus. Quarterly EBITDA: $794 million, a 34% increase year-over-year. EBITDA Margin: Expanded by more than 300 basis points year-on-year. Free Cash Flow from Operations: Increased by about $300 million, with a conversion rate reaching 51% on a trailing 12-month basis. Net Sales Growth: 3% increase, supported by higher consolidated prices and cement volume recovery in Mexico. EBIT Growth: Expanded by 40% year-over-year. Mexico EBITDA Growth: 47% increase, with margin expanding nearly 5 percentage points to 36.1%. Dividend Increase: Annual dividend increased by almost 40% to $180 million. Share Buybacks: Approximately $100 million in shares repurchased during the quarter. Net Financial Leverage: Stood at 2.3 times, unchanged sequentially. Energy Hedging: Approximately 60% of total 2025 energy exposure hedged for 2026. Debt Reduction: Total debt plus subordinated notes decreased by around $540 million sequentially. Warning! GuruFocus has detected 9 Warning Signs with CX. Is CX fairly valued? Test your thesis with our free DCF calculator. Release Date: April 23, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Cemex SAB de CV (NYSE:CX) reported a record quarterly EBITDA of $794 million, marking a 34% increase year-over-year. The company achieved a significant EBITDA margin expansion of over 300 basis points, driven by improved operating efficiency and a leaner cost base. Cemex SAB de CV (NYSE:CX) was upgraded to AAA, the highest MSCI ESG rating, reflecting its progress on sustainability and commitment to decarbonization. The acquisition of Omega, a leading stucco and mortar player in the Western US, is expected to provide significant synergies and enhance cash generation. Cemex SAB de CV (NYSE:CX) repurchased approximately $100 million in shares and increased its annual dividend by nearly 40%, demonstrating a commitment to shareholder returns. The ongoing Iran war adds a layer of uncertainty to the global environment, potentially impacting Cemex SAB de CV (NYSE:CX)'s operations. Energy price volatility remains a concern, with the company expecting mid- to high single-digit increases in energy costs per ton of cement produced. Adverse weather conditions in the US and EMEA regions negatively impacted cement volumes, particularly in Texas and the Mid-South. The residential sector in the US is expected to face delays in recovery due to higher interest rates and inflationary pressures. Cemex SAB de CV (NYSE:CX) faces competitive pricing pressures in certain markets, which could impact margins if not managed effectively. Q: Mine is regarding pricing and how to think about it for the remainder of the year, more in particular on the surcharges that you mentioned where have -- when and where have they been implemented today and whether there are differences across the regions and products in these dynamics? And to what extent is this dynamic already embedded in your guidance? A: Alejandra, thanks for your question. I separate pricing from surcharges, particularly fuel surcharges. Regarding fuel surcharges, we have had them for years in the US in our contracts to give you more detail. In ready-mix, those fields or charges cover around 90% of our dispatches is around 85% of our deliveries. And in the case of cement, it's around 80% of our deliveries. And it's a mechanism that offsets volatility in diesel. We also have fuel surcharges in Europe, particularly in the UK and Germany. In other markets, we are implementing incremental pricing due to expected inflation. Q: I just wanted to understand the relative bullishness on your US volume guidance. I mean, it remains unchanged, even though there's ongoing softness on residential. So I just wanted to understand if the thought here is that whatever you're expecting from, say, infrastructure or private investments is enough to outweigh the impact of South in residential -- that's my question. A: Thanks for your question. Adjusted by the weather impact, mainly in Texas and the Mid-South, our pro forma weather volumes would have been cement plus 1%, ready-mix around plus 5% in aggregates plus 10%. We are gaining more work, particularly in infrastructure and in the industrial sector, such as data centers and chip manufacturing facilities. That's why we kept our guidance unchanged despite the softness in residential and the weather impact in the first quarter. Q: The question that I have relates to because you have a generally benign outlook on pricing trends in the United States, but you have some exposure to imports. So the question relates with to what extent and if you can give a little bit of color on what the differences might be that we should be aware of on import parity prices between the Mid-Atlantic, the Southeast and perhaps the west -- of the next states that would be very helpful. A: Regarding import parity, we haven't seen any sequential increase in FOB export pricing from February to March, but we expect that to happen later in the year due to energy inflation. Freight rates have increased substantially, with the West Coast seeing a 37% increase per ton, the East Coast 31%, and the Gulf 26%. This results in spot import prices going up between 10% to 12% sequentially. Q: My question is related to free cash flow and capital allocation. So free cash flow conversion is increasing materially as a result of CEMEX's efforts to reduce costs and also growth CapEx. Can the company accelerate M&A this year versus last year considering this? And do you have enough prospects that you're looking at in order to be able to increase your M&A deployment of capital? A: We continue to strengthen the pipeline of M&A targets, mainly in the US. We are proactively engaging with a larger number of potential targets but will be patient and disciplined. There is nothing imminent right now, but plenty of conversations. We also see accretive options to allocate capital to shareholders beyond M&A, such as debt reduction and share buybacks. Q: My question has to do with the guidance. I mean, I understand that 1Q is a seasonally small quarter, but I want to understand how you -- what was the process you're thinking of the rational and keeping guidance unchanged. I mean the bit was quite strong this quarter. The outlook is improving. I understand the pressure on energy cost, but the improvement in margin was huge. So what was the thinking and the rationale to keep the guidance unchanged? A: The main reason is the lack of visibility on where the war is heading. With the current situation and volatility, we thought it was better to wait until the July call once we see 2Q results. We also want to understand better the level of incremental structural recurring savings that we will be committing to. With more visibility on the war, inflation, pricing, and savings, we will be in a better position to think about changes to guidance. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Record quarterly EBITDA: Cemex reported Q1 EBITDA of $794 million (+34% YoY) with more than 300 basis points of margin expansion and positive free cash flow of $29 million, lifting trailing-12-month FCF conversion to about 51%. Energy and geopolitical risk management: Management said the Iran war has had limited direct impact so far but emphasized energy exposure—roughly 60% of 2025 energy spend is hedged for 2026, with fuel inventories and fuel surcharges in place—while downgrading energy-cost guidance to a mid‑ to high‑single‑digit increase for the year. Cost savings, portfolio moves and shareholder returns: "Project Cutting Edge" delivered $60 million of recurring savings with more expected and an upsizing of the $400 million target signaled, while Cemex is selling Colombian assets (~$485M proceeds), closed the Omega acquisition, repurchased about $100M of stock in Q1 and raised the annual dividend by nearly 40% with intent to repurchase up to $500M over three years. Interested in Cemex S.A.B. de C.V.? Here are five stocks we like better. The Housing Market Is in Trouble - What to Watch Out For Cemex (NYSE:CX) reported a first-quarter 2026 performance management characterized as a strong start to the year, highlighting record quarterly EBITDA, margin expansion, and improved free cash flow generation, while also addressing the near-term uncertainty created by the Iran war and the company’s exposure to energy-price volatility. Chief Executive Officer Jaime Muguiro opened the call by noting the company had seen “limited direct impact” from the conflict to date. Cemex’s operations in Israel and the UAE together represent “around 4% of consolidated EBITDA,” Muguiro said, adding that after temporary disruptions early in the war, construction activity has “largely normalized.” → Credo Stock Flashes Strong Bullish Signal—Upswing Just Starting Trade War Bargain Stocks: Top 3 Picks Too Good to Pass Up The most immediate exposure is energy, where management emphasized its hedging and operational flexibility. Muguiro said approximately 60% of 2025 total energy spend has been hedged for 2026 using financial derivatives, annual contracts, and regulated pricing frameworks. Cemex also maintains “two to three months of fossil fuel inventories across our network” and can switch kiln fuels among petcoke, natural gas, coal, and alternative fuels depending on economics. Management said it has begun implementing fuel surcharges on ready-mix and is reviewing additional pricing actions across its portfolio to offset energy inflation. Muguiro also said supply-chain disruption is raising import costs and could create “relevant pricing opportunities in several U.S. markets” over time as pressures build on cement importers. → Allbirds Exits Shoes, Pivots to AI With NewBird Rebrand Crane Stock Soars, But the Best Could Be Yet to Come: Here's Why Muguiro said Cemex delivered record quarterly EBITDA of $794 million, up 34% year over year, with EBITDA margin expanding by more than 300 basis points. Net sales grew 3%, supported by higher consolidated pricing and a cement volume recovery in Mexico, despite difficult weather in the U.S. and Europe. On a like-for-like basis, Muguiro said EBITDA increased 23% and EBIT expanded 40%, which he described as a key metric in the company’s transformation program. He also said nearly half of the EBITDA growth came from “self-help initiatives,” with additional contribution from pricing and foreign exchange. → Amazon Stock Up 30%: Is AMZN Still a Buy Before Earnings? Free cash flow from operations increased by nearly $300 million and was positive at $29 million, a result management highlighted as notable for a quarter that has historically been negative due to seasonal working-capital needs. On a trailing 12-month basis, and adjusting for severance payments and discontinued operations, the company’s free cash flow from operations conversion rate reached 51%, up from 31% a year earlier, according to Muguiro. Chief Financial Officer Maher Al-Haffar said the cash improvement reflected “exceptional EBITDA growth,” along with lower capital expenditures, reduced working-capital investment, and lower interest and other cash expenditures. He added that the working-capital investment in the quarter was $31 million lower than the prior year and is expected to “largely reverse throughout the rest of the year.” Management repeatedly pointed to its “Project Cutting Edge” transformation program as a key driver of margin improvement. Muguiro said Cemex delivered $60 million in incremental recurring savings in the quarter and expects an additional $105 million in savings during the rest of 2026, as part of its previously announced $400 million savings commitment for 2025–2027. He said roughly three-quarters of those savings relate to overhead reduction decisions taken last year. Muguiro also told investors the $400 million savings target will likely be increased. “You should expect that the $400 million…will be upsized when I address this in July,” he said, adding that he plans to provide more detail on the next phase of savings and reorganization on the second-quarter call. Chief Communications Officer Lucy Rodriguez clarified accounting treatment for recent portfolio moves. Cemex expects to close the sale of certain operating assets in Colombia by year-end and will continue to fully consolidate those operations in its P&L until closing, she said. The company also announced the purchase of Omega on Feb. 26 and began consolidating the business as of April 1, Rodriguez said. On Colombia, Muguiro said Cemex announced the divestment of several assets for total proceeds of approximately $485 million and is in discussions to divest related non-operational assets for around $70 million. The transactions are expected to close by the end of the year and represent “a combined multiple of 10x 2025 EBITDA,” he said. Addressing why the Colombia sale is partial, Muguiro said the “right time” to divest the announced perimeter was this year, while the remaining portfolio “need[s] to increase activity as the demand improves,” particularly after commissioning the Maceo cement plant. He said it remains to be seen what the company’s “next move” will be regarding the rest of the business in the country. On Omega, Muguiro said the acquisition closed March 31. He described Omega as a leading stucco producer in the western U.S. with the No. 1 brand, acquired at a post-synergy multiple below 7x. He said direct synergies are expected to be close to 50% of Omega’s 2025 EBITDA of roughly $23 million, driven by vertical integration and raw-material sourcing. Muguiro also said Omega’s cement requirements are equivalent to those of approximately eight average-sized ready-mix plants. Rodriguez said Mexico delivered strong results with year-over-year cement volumes turning positive for the first time in six quarters, supported by self-construction and government-backed social programs. She said Cemex is participating in construction of approximately 120,000 social housing units—double the fourth-quarter level—and is negotiating an additional 110,000 units. Mexico EBITDA grew 47%, Rodriguez said, helped by a stronger peso and cost savings, with margin expanding to 36.1%. She cautioned that performance benefited from lower maintenance activity that is expected to normalize, and noted Mexico’s large exposure to petcoke could create the “largest headwind from energy inflation” this year. In the U.S., Rodriguez said adverse weather in January and February weighed on volumes, especially in Texas and the Mid-South, but ready-mix volumes still grew 2% and aggregate volumes increased 9%, reflecting the consolidation of Couch Aggregates and other investments. Pricing remained competitive in cement and ready-mix, where prices declined 1% sequentially, and many April price increases were deferred to mid-year, she said, while fuel surcharges are already in place. In EMEA, Rodriguez said EBITDA expanded at double-digit rates in both Europe and the Middle East and Africa, driven primarily by a leaner cost structure and pricing. In Europe, she cited weather as a headwind early in the quarter, with March volumes improving as conditions normalized. Cemex also pointed to mid-single-digit pricing gains supported by the Carbon Border Adjustment Mechanism and tightening free CO2 allowances under the EU ETS system. Al-Haffar said Cemex has hedged approximately 60% of its total 2025 energy exposure of $1.65 billion for 2026. He also said about 75% of expected 2026 diesel consumption, including indirect consumption through third-party haulers, is hedged, and that around 70% of electricity needs are fixed or in regulated markets. While energy costs per ton of cement in the quarter were stable—declining fuel costs offset by higher electricity costs—Al-Haffar said the company expects inflationary pressures later in the year. Cemex therefore downgraded its full-year guidance for energy costs per ton of cement produced, now expecting a mid- to high-single-digit increase, up from prior mid-single-digit guidance. Management highlighted shareholder returns and balance-sheet actions. Muguiro said the company repurchased about $100 million in shares during the quarter, while Al-Haffar said shareholders approved a nearly 40% increase in the annual dividend to $180 million, up from $130 million last year. The company’s stated intent is to repurchase up to $500 million in shares over the next three years, Al-Haffar said. On liability management, Al-Haffar said Cemex repaid a EUR 400 million bond and a MXN 6 billion peso loan, partially funded by issuing MXN 5.5 billion in five-year certificados bursátiles and cash on hand. Total debt plus subordinated notes declined by about $540 million sequentially, though net debt plus subordinated notes increased by $590 million due primarily to uses of cash including the Omega acquisition, growth CapEx, buybacks, and dividends. Net financial leverage, including $2 billion of subordinated perpetual notes, stood at 2.3 times, unchanged sequentially, Al-Haffar said. He added that Fitch reaffirmed Cemex’s BBB- global rating and raised the outlook to positive, while also upgrading its long-term national scale ratings in Mexico to AAA. Al-Haffar told investors he expects rating agencies to consider a potential upgrade “sometime in the first half of 2027,” based on deleveraging and improved cash generation. Looking ahead, Muguiro said the company kept full-year EBITDA guidance unchanged primarily due to limited visibility on the trajectory of the war and inflation. He said Cemex will reassess with more information after the second quarter, while remaining “confident” it can deliver its full-year EBITDA guidance. Cemex (NYSE: CX) is a global building materials company headquartered in Monterrey, Mexico. The company produces, distributes and sells cement, ready-mix concrete and aggregates, as well as related building materials, to construction markets in more than 50 countries. Cemex's product portfolio also includes asphalt and mortar mixes, waste-derived fuels and other complementary construction solutions, supported by a network of production facilities, distribution centers and logistics operations. Founded in 1906 as Cementos Hidalgo, the company adopted the Cemex name in 1976 following a series of domestic mergers and expansions. The article "Cemex Q1 Earnings Call Highlights" was originally published by MarketBeat.

This article first appeared on GuruFocus. EBITDA Recurring Savings: Achieved $200 million in 2025, with further savings expected in 2026. Free Cash Flow from Operations: Reached $1.4 billion in 2025 with a 46% conversion rate. Net Income: Adjusted net income increased by 41% to $1.5 billion, excluding goodwill impairment and asset write-downs. Revenue Growth: Fourth quarter sales and EBITDA increased by a double-digit rate. EBITDA Margin: Expanded significantly in the second half of 2025, with all regions reporting flat to improved margins. Aggregate Volumes: Fourth quarter growth of 2%, with double-digit growth in the US. Cement and Aggregate Prices: Increased by low single-digits in 2025, with mid-single-digit increases in Mexico and South, Central America, and the Caribbean. Energy Costs: Declined by 12% per ton of cement for the full year. Goodwill Impairment and Asset Write-Down: Recognized $538 million in 2025. Dividend Proposal: Annual cash dividend proposed to increase by nearly 40% to $180 million. Share Buyback Program: Plan to buy back up to $500 million in shares over the next 3 years. Net Total Financial Leverage: Stood at 2.26 times at the end of 2025. Warning! GuruFocus has detected 7 Warning Sign with CX. Is CX fairly valued? Test your thesis with our free DCF calculator. Release Date: February 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Cemex SAB de CV (NYSE:CX) achieved its 2025 EBITDA recurring savings target of $200 million, leading to improved margins in all markets. Free cash flow from operations reached $1.4 billion in 2025, with a 46% conversion rate, highlighting strong cash generation. The company made significant progress in decarbonization, with a 2% decline in consolidated gross CO2 emissions in 2025. Cemex SAB de CV (NYSE:CX) plans to propose an annual cash dividend close to 40% higher than the previous year, along with a $500 million share buyback program. The company reported double-digit growth in fourth-quarter sales and EBITDA, supported by Project Cutting Edge savings and recovery in Mexico. Cemex SAB de CV (NYSE:CX) faced challenges in the first half of 2025 due to headwinds in Mexico and soft demand conditions in the US. The company recognized $538 million in goodwill impairment and asset write-downs in 2025, impacting net income. Despite ongoing cost inflation, Cemex SAB de CV (NYSE:CX) had to reduce its total cost base by close to $100 million. The company experienced a slight decline in full-year margin due to disruptions from difficult weather conditions in the first half. Cemex SAB de CV (NYSE:CX) anticipates potential FX fluctuations affecting its 2026 EBITDA guidance due to its exposure to the Mexican peso. Q: Can you share your view on reports suggesting the EU might soften its ETS targets and how this could impact Cemex's outlook in Europe? A: Jaime Muguiro Dominguez, CEO: Although the potential change in ETS targets is not confirmed, if it happens, it won't alter our short-term pricing strategy in Europe. We remain confident in our mid-single-digit price increase targets. The change might slightly reduce the need for price increases long-term but won't be material. It also gives us time to continue our profitable decarbonization efforts in Europe, which will enhance our competitive advantage. Q: Could you elaborate on the assumptions behind the high single-digit EBITDA growth guidance for 2026 and potential risks? A: Jaime Muguiro Dominguez, CEO: We see more upside than downside risks. A stronger peso could increase EBITDA by $75 to $80 million per peso appreciation. Additionally, our focus on operational excellence and recurring savings provides confidence in our guidance, with potential upside. Q: What are the one-offs mentioned for Europe in Q4, and could you quantify them? A: Jaime Muguiro Dominguez, CEO: Excluding one-offs, the margin would have been higher by 0.9% points. These one-offs included write-offs, an electricity reimbursement in 4Q24, and a variation in the variable compensation provision, affecting Europe and Cemex's consolidated margin by around 0.6% points. Q: What are Cemex's refinancing plans for its debt stack, and how will it impact capital structure? A: Maher Al-Haffar, CFO: We aim for a 1.5 to 2 times net leverage level to achieve a solid BBB rating. We plan to use free cash flow to reduce debt, return cash to shareholders, and focus on growth through M&A. We have several liability management opportunities, including addressing subordinated notes and exploring bank market transactions. Q: How are you thinking about potential changes in volumes contingent on USMCA outcomes? A: Jaime Muguiro Dominguez, CEO: We haven't included a positive outcome from USMCA negotiations in our volume guidance for Mexico. If a favorable outcome occurs, it could lead to volume increases, likely materializing in 2027 and beyond, as industrial projects resume once uncertainties are resolved. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Cemex said its Project Cutting Edge met the 2025 target of $200 million in recurring EBITDA savings, with $1.4 billion of free cash flow from operations (a 46% conversion rate) and a $538 million goodwill impairment that, if excluded, would have lifted net income by 41% to $1.5 billion. Regional momentum showed a Mexico rebound (20% like‑for‑like EBITDA growth, sequential daily cement sales up 8%) and record U.S. and EMEA EBITDA, and the company guided to high single‑digit EBITDA growth in 2026 driven by roughly $80 million of incremental EBITDA from growth projects and material FX sensitivity using an 18.25–18.50 MXN/USD range. Cemex expanded its cost‑savings target to $400 million by 2027, proposed an annual cash dividend of $180 million (≈+40%) and plans to pursue up to $500 million in buybacks over three years while targeting steady‑state leverage of 1.5x–2.0x (year‑end 2025 leverage was 2.26x) and a "solid BBB" rating. Interested in Cemex S.A.B. de C.V.? Here are five stocks we like better. The Housing Market Is in Trouble - What to Watch Out For Cemex (NYSE:CX) executives used the company’s fourth-quarter 2025 earnings call to highlight a second-half rebound in key markets, progress on a multi-year transformation plan, and a shift toward higher shareholder returns supported by stronger free cash flow generation. CEO Jaime Muguiro said his first year in the role featured “sharp contrasts,” with headwinds in the first half tied to Mexico’s transition to a new government administration, a weaker peso, and soft demand conditions in the U.S. That environment improved materially in the second half, driven by a recovery in Mexico and early results from the company’s transformation program announced in the second quarter. → AMD’s Post-Earnings Dip Looks Like the Buying Window Bulls Wanted Trade War Bargain Stocks: Top 3 Picks Too Good to Pass Up Under its Project Cutting Edge cost-efficiency program, Cemex said it fully delivered its 2025 target of $200 million in recurring EBITDA savings, which management attributed to improved margins in all markets during the back half of the year. Muguiro added that Cemex expects the program to continue generating substantial benefits in 2026 and beyond. On cash generation, management emphasized that free cash flow from operations reached $1.4 billion in 2025, representing a 46% conversion rate after adjusting for one-off items such as severance and discontinued operations. Muguiro said the company is working toward a longer-term goal of 50% conversion. He also noted that total adjusted free cash flow increased by more than $550 million versus the prior year after factoring in growth capital spending, intangible assets, and other expenses. → 2 REITs That Look Attractive in a Stable Rate Environment Crane Stock Soars, But the Best Could Be Yet to Come: Here's Why Cemex also recorded $538 million in goodwill impairment during 2025. Muguiro said that excluding this effect, net income would have increased 41% to $1.5 billion. CFO Maher Al-Haffar said net income in the fourth quarter was mainly affected by goodwill impairment and an asset write-down totaling $493 million, while full-year net income rose 2% as lower financial expense and a gain on the sale of operations in the Dominican Republic offset higher income taxes and impairments. Management said consolidated cement and aggregates volumes in the fourth quarter increased 1% and 2%, respectively, while consolidated prices for cement, ready-mix, and aggregates rose by a low single digit in 2025. Cemex reported mid-single digit price increases in Mexico and in South, Central America and the Caribbean during the year, despite demand challenges earlier in 2025. Mexico: Chief Communications Officer Lucy Rodriguez said sales growth in the quarter marked the first year-over-year growth quarter since Mexico’s 2024 election period. Cemex reported 20% like-for-like EBITDA growth in Mexico and 5 percentage points of margin expansion. Average daily cement sales increased 8% sequentially, which management said outperformed typical seasonality. Cemex discussed early signs of pickup in public spending and activity in rural road projects, certain rail projects (including Querétaro–Irapuato and the AIFA Airport–Pachuca line), and work linked to preparations for the 2026 World Cup. Management also highlighted Mexico’s social housing program, noting Cemex doubled participation in projects under construction to 58,000 units and cited 105,000 units under negotiation. United States: Cemex said its U.S. operations produced a record fourth-quarter EBITDA with margins near record highs, helped by Project Cutting Edge and the consolidation of Couch Aggregates. The company described infrastructure demand as firm, with industrial “bright spots” offset by softness in residential. Aggregate volumes rose 10% in the year, driven by investments coming online and the acquisition’s impact. Cemex also cited competitive pressure in certain markets after three consecutive years of cement volume declines, which it said contributed to a slight sequential decline in cement prices. Management identified Houston, Northern California, and areas around the Mid-South (including Atlanta) as markets under pressure. For 2026, Cemex said it announced an $8 per short ton cement price increase across markets except Houston, effective April 1. EMEA: Cemex reported record 2025 EBITDA and margin in the region, citing higher volumes and prices and cost efficiencies. Cement and ready-mix volumes grew 7% and 3% in the fourth quarter, with mid-single digit cement and ready-mix volume growth for the year. Management said pro forma for certain one-off adjustments, EMEA EBITDA rose at a double-digit rate in the fourth quarter, with 1 percentage point of margin expansion. In response to a webcast question, Muguiro said that excluding one-offs, EMEA margin would have been 0.9 percentage points higher, with impacts including write-offs, an electricity reimbursement present in the prior-year quarter, and changes in variable compensation provisions. South, Central America and the Caribbean: Cemex said the region delivered full-year EBITDA growth for the third consecutive year, supported by pricing discipline and Project Cutting Edge, though fourth-quarter results were affected by Hurricane Melissa in Jamaica and higher maintenance activity in Colombia and Trinidad and Tobago. Colombia’s cement volumes increased 7% in the quarter, while Jamaica posted record full-year EBITDA with cement volumes up 7%. Cemex also pointed to the completion of a kiln debottlenecking project in the third quarter of 2025, which it said should allow profitable import substitution and better support export markets. → With New CEOs, Is Walmart or Target the Better Buy Going Forward? Muguiro said Cemex expanded Project Cutting Edge’s target to $400 million of recurring savings by 2027, with half tied to overhead actions already taken in 2025. Those actions are expected to generate $125 million of additional savings in 2026. He also said the company introduced new operating performance metrics including EBIT, free cash flow conversion, and ROIC spread over WACC, and cited operating initiatives such as kiln efficiency improvements in the U.S. and fuel mix optimization in Mexico. On portfolio strategy, Cemex said it divested most of its operations in Panama while investing in targeted U.S. businesses, including the consolidation of Couch Aggregates to strengthen its aggregates position in the Southeast. Management said it will continue to evaluate divestments in non-core markets to expand primarily in the U.S., with an emphasis on aggregates and adjacent businesses such as mortars, stuccos, renders, and plasters. On decarbonization, Cemex said consolidated gross CO2 emissions declined 2% in 2025, largely due to further reductions in clinker factor. Management said Europe reached the Cement Europe Association’s 2030 gross CO2 emissions reduction targets five years early, and noted record clinker factor levels in Mexico and in South, Central America and the Caribbean. Executives highlighted a greater focus on shareholder returns. Al-Haffar said the board will propose an annual cash dividend of $180 million at the general shareholders meeting scheduled for late March, representing an almost 40% increase versus the prior year. Cemex also said it intends to activate its buyback program with the goal of repurchasing up to $500 million in shares over the next three years, subject to shareholder approval and other formalities. Management noted an existing authorization for up to $500 million in buybacks remains available through late March. On leverage, Al-Haffar reiterated Cemex’s steady-state net total financial leverage target of 1.5x to 2.0x, which includes net debt plus $2 billion of subordinated perpetual notes. At the end of 2025, the ratio was 2.26x. He said the company aims to reach and maintain a “solid BBB rating.” In response to a question on upcoming maturities and callable debt, Al-Haffar outlined liability management opportunities, including subordinated notes that reset in early September at a spread he described as “prohibitively expensive” at 454 basis points over Treasuries. He also referenced work on a potential bank-market transaction that could address some euro funding and an ongoing offering of MXN 5 billion to MXN 7.5 billion in five-year floating-rate notes in Mexico, with closing expected in mid-February. Cemex guided to flat interest expense for 2026 but said there could be upside depending on execution. For 2026, Muguiro said Cemex expects a more favorable demand environment with material contributions from Mexico and EMEA. The company guided to high single-digit EBITDA growth, driven by incremental Project Cutting Edge savings, completed growth projects expected to add $80 million in incremental EBITDA (with about half dependent on volume recovery), and operating leverage as volumes improve. Management emphasized FX sensitivity given Mexico’s EBITDA contribution and said the company is using an assumed exchange-rate range of 18.25 to 18.50 pesos per dollar for guidance. Muguiro added that each peso of appreciation could increase EBITDA by roughly $75 million to $80 million. On capital spending, Cemex said it is providing guidance for intangible asset investments, with flat guidance reflecting purchases of additional aggregate reserves and mining rights in 2026. Muguiro said maintenance CapEx and growth investments (including growth CapEx and intangibles) are expected to contribute about $195 million positively to free cash flow versus the prior year. He also referenced a favorable comparison against $183 million in severance payments in 2025 as another driver of improved free cash flow conversion. Separately, in response to an energy cost question, management said 2026 guidance assumes lower fuel costs but higher electricity costs, with about 65% of the electricity increase expected in Mexico due to a prior-year one-off incentive that will not repeat, and the remainder in the U.S. based on utility cost increases. Cemex said it will provide additional details on its value creation strategy and medium-term financial targets at its CEMEX Day event on February 26. Cemex (NYSE: CX) is a global building materials company headquartered in Monterrey, Mexico. The company produces, distributes and sells cement, ready-mix concrete and aggregates, as well as related building materials, to construction markets in more than 50 countries. Cemex's product portfolio also includes asphalt and mortar mixes, waste-derived fuels and other complementary construction solutions, supported by a network of production facilities, distribution centers and logistics operations. Founded in 1906 as Cementos Hidalgo, the company adopted the Cemex name in 1976 following a series of domestic mergers and expansions. The article "Cemex Q4 Earnings Call Highlights" was originally published by MarketBeat.