CX

Good morning, and welcome to the CEMEX first quarter 2026 conference call and webcast. My name is Becky, and I will be your operator today. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. If at any time you require operator assistance, please press star followed by zero, and we'll be happy to assist you. Now, I will turn the conference over to Lucy Rodriguez, Chief Communications Officer. Please proceed.

Good morning, and thank you for joining us for our first quarter 2026 conference call and webcast. We hope this call finds you well. I am joined today by Jaime Muguiro, our CEO, and by Maher Al-Haffar, our CFO. We will start our call with some brief comments on our current views on the immediate ramifications of the Iran war, and then review our first quarter results, followed by our expectations and guidance for full year 2026. We will be happy to take your questions. In relation to the recent portfolio rebalancing transactions that we have announced, I would like to clarify the relevant accounting treatment.

With respect to the announcement of the sale of some of our operating assets in Colombia, which we expect to close by the end of the year, as a partial sale of an operation, we will continue to fully consolidate these operations in our P&L until the transaction close. In addition, we announced the purchase of Omega on February 26th, and began consolidating the business as of April 1st. Now I will hand the call over to Jaime.

Thank you, Lucy, and good day to everyone. Before turning to our quarterly results, let me share a few thoughts on the global backdrop. I last spoke to you at our Analyst Day in late February, just days before the Iran war began. First and foremost, our thoughts are with those affected by the war. We have colleagues, customers, and partners in the region, and our priority is, and will continue to be, ensuring their safety and well-being. The war adds another layer of uncertainty to an already complex global environment. Once again, it reinforces the importance of focusing on what we control, and those levers are working. Over the past several quarters, our transformation has delivered a structurally stronger cost base, higher margins, and improved free cash flow generation, positioning CEMEX to navigate increased volatility well.

To date, we have seen limited direct impact from the war on our business. Our operations in Israel and the UAE together represent around 4% of consolidated EBITDA. While we experienced some temporary disruptions at the outset of the war, construction activity has largely normalized. The most relevant immediate exposure is energy, where we benefit from a comprehensive strategy that limits our risk to volatile markets. Approximately 60% of our total energy spend in 2025 has been hedged for 2026 through a combination of financial derivatives, yearly contracts, and regulated pricing frameworks. Maher will go into more detail on this. In addition, operationally, we have flexibility to adjust the fuels we use in our kilns, allowing us to switch between petcoke, natural gas, coal, and alternative fuels when economically attractive.

We also typically maintain two to three months of fossil fuel inventories across our network, further limiting short-term sensitivity to market disruptions. Consequently, we believe our direct exposure to energy price volatility this year is significantly contained. We also have dusted off our Ukraine war playbook to help cushion us more medium term. We have already begun implementing fuel surcharges on our ready-mix, reviewing additional pricing increases for this year throughout the portfolio. The war is disrupting cement supply chains, making some import sources more expensive. We expect that over time, this will increase pressure on U.S. cement importers, leading to relevant pricing opportunities in several U.S. markets. Finally, our transformation mindset has allowed us to identify additional structural savings and self-help initiatives that should provide important support in an increasingly volatile environment.

While we have a currency hedge in place to protect our leverage ratio, the Mexican peso has been resilient and remains stronger than the FX assumption embedded in our 2026 EBITDA guidance. While volatility will persist, with our approach to date and our strong first quarter performance, I remain confident in our ability to deliver our full year EBITDA guidance. With that, let me turn to our results. I am very pleased with our first quarter results that continue to benefit from our transformation efforts. Record quarterly EBITDA of $794 million, a 34% increase, serves as a great start to achieve our full year plan. EBITDA growth was broad-based, with Mexico, EMEA, and South Central America, and the Caribbean all delivering solid results. EBITDA margin expanded meaningfully with a more than 300 basis point increase year-over-year.

Cost of sales and operating expenses as a percentage of sales improved significantly. Importantly, a large part of this margin gain is structural and sustainable, driven by improved operating efficiency and a leaner cost base. These efforts were complemented by disciplined pricing and the benefit of operating leverage in some markets. As you know, through our regional review process, we have identified a number of facilities that do not meet our return requirements. At CEMEX Day, we highlighted both the size of this opportunity and that it would take time to realize it. Since launching this effort in 2025, while not yet material in scope, we have already disposed of approximately 60 of these facilities. Free cash flow from operations grew at a multiple to EBITDA, increasing by about $300 million. The trailing 12-month conversion rate reached 51% after adjusting for severance and discontinued operations.

Our Mexico operations delivered strong EBITDA growth on margin expansion, with a recovery gaining traction on cement volumes posting year-over-year growth for the first time since mid-2024. During the quarter, CEMEX was upgraded to AAA, the highest MSCI ESG rating, placing us among the leaders in our industry. This upgrade reflects our continued progress on sustainability and our commitment to decarbonize through value-accretive levers. We continued advancing on our portfolio rebalancing during the quarter with the announced divestment of selected assets in Colombia in a transaction expected to close by year-end. We also acquired Omega, a leading stucco and mortar player in the western U.S., which offers significant synergies to our existing business and serves as an important foundation to expand this product line throughout the U.S. These transactions, of course, adhere to our new capital allocation framework.

Regarding our commitment to bolster shareholder return, we repurchased approximately $100 million in shares during the quarter. In addition, at our annual shareholder meeting in March, the annual dividend was approved with an increase of almost 40%. In short, our quarterly results and activities reinforce a key point. We are delivering on the commitments of our Project Cutting Edge Plan we introduced a year ago, centering on operational excellence and best-in-class shareholder returns. There is more still to be done. We are actively working on dimensioning the next phase of our savings program and continued reorganization. I intend to share more detail on this in our second quarter earnings call. First quarter performance reflects a structurally stronger CEMEX with a more resilient earnings profile and clear momentum heading into the rest of the year.

Despite challenging weather in the U.S. and EMEA, net sales grew 3%, supported by higher consolidated prices and cement volume recovery in Mexico. What really stands out is how effectively revenue growth translated into EBITDA, EBIT, and free cash flow generation. On a like-for-like basis, EBITDA increased 23%, driven by operational efficiencies and pricing. EBIT, a key metric in our transformation, expanded 40%. Our free cash flow from operations increased by nearly $300 million and was positive in a quarter that has historically generated negative free cash flow due to our working capital cycle with a significant investment in the first half of the year. Adjusting for severance payments and discontinued operations, free cash flow from operations conversion rate reached 51% on a trailing 12-month basis, reflecting a structurally stronger cash generation, up from 31% a year ago.

Additional Project Cutting Edge savings and transformation initiatives, coupled with operating leverage as volumes in our core markets recover, should increasingly translate into higher margins and a stronger cash conversion. Adjusting for the effect of the one-off gain from the sale of our operations in the Dominican Republic in 2025, first quarter net income would have almost doubled. At the consolidated level, cement volumes reflect continued recovery in Mexico, which, along with improvement in South, Central America, and the Caribbean, as well as in the Middle East and Africa, more than offset weather disruptions in the U.S. and Europe. U.S. volumes were impacted by adverse weather in the Mid-South and Texas. In aggregates, volumes benefited from our Couch acquisition on our recently completed expansion projects, which more than offset the weather impact.

In Europe, volume performance also reflected difficult winter conditions throughout the portfolio, which were further exacerbated by a prior year comparison base with very benign weather. For the full year, our consolidated volume guidance of low double-digit growth across our three core products remains unchanged, with only slight regional adjustments. With our focus on operational efficiency and available capacity, we remain well-positioned to capitalize on the strong operating leverage in our business as volumes recover. Consolidated prices across cement, ready-mix, and aggregates increased at a low to mid-single-digit rate on a sequential basis, supported by positive pricing dynamics in most of our markets. In Mexico, cement prices rose 5%, while in the U.S., aggregates prices increased mid-single digits. In Europe, mid-single-digit pricing gains were supported by the introduction of a Carbon Border Adjustment Mechanism, together with tightening of free CO2 allowances under the EU ETS system.

Our pricing strategy seeks to compensate for input cost inflation. With recent sudden moves in energy prices, we have moved to implement fuel surcharges in most markets, as well as evaluating subsequent pricing increases to offset energy cost inflation. EBITDA in the quarter was supported by positive contributions across all levers. Importantly, nearly half of EBITDA growth came from self-help initiatives, underscoring our focus on the things we can control, particularly in a volatile environment. Pricing and FX, driven primarily by a large year-over-year peso rate differential, were also important factors in EBITDA growth. Finally, organic growth in our core products and urbanization solutions portfolio also made an important contribution. EBITDA margin expanded by 3.3 percentage points, reflecting a combination of structurally lower costs, pricing discipline, and operating leverage. A year ago, I laid out the priorities of our transformation centered on operational excellence and best-in-class shareholder returns.

Since then, we have worked relentlessly to execute on our plan, focusing on operational efficiency, elimination of overhead, and enhanced free cash flow generation. We have clear evidence of progress in the quarter, with $60 million in incremental recurring savings under Project Cutting Edge, as well as improved EBITDA margins across our regions. Our efforts to reduce overhead, along with our operating initiatives, are paying off, with important reduction in cost of goods sold and SG&A as a percentage of sales. We still have more to deliver, with an additional $105 million in savings expected during the rest of this year under our announced $400 million Project Cutting Edge commitment. Importantly, three-quarters of the savings relate to overhead reduction decisions taken last year.

As I have mentioned, there are additional transformation opportunities we're identifying, and you should expect that the $400 million in Project Cutting Edge cost savings from 2025-2027 will be upsized when I address this in July. In March, we announced the divestment of several assets in Colombia, including cement operations and a portfolio of ready-mix concrete, aggregates, mortars, and admixtures for total proceeds of approximately $485 million. We are currently in discussions to divest related non-operational assets in the country for around $70 million. We expect these transactions to close by the end of the year, representing a combined multiple of 10x 2025 EBITDA. In line with our strategy to grow our U.S. business, we recycled a portion of the future proceeds into higher return opportunities in the U.S.

At MX Day, we announced the acquisition of Omega, the leading stucco producer in the western U.S. with the number one brand at a post-synergy multiple below 7x. The acquisition was completed on March 31st. This transaction is highly accretive, with significant direct synergies driven by vertical integration, as the stuccos and mortars use cement, sand, and admixtures as key raw materials. In fact, Omega's cement requirements are equivalent to those of approximately eight average size ready-mix plants, and it has already begun to direct their raw materials needs to CEMEX in first quarter. Direct synergies are expected to amount to close to 50% of Omega's 2025 EBITDA of roughly $23 million. Beyond direct input synergies, the acquisition also unlocks cost efficiencies across procurement and R&D, as well as cross-selling opportunities through our existing customer base.

With a free cash flow conversion rate of around 65%, Omega will enhance our overall cash generation and improve our earnings quality. More importantly, leveraging Omega's expertise provides us with a strong platform from which to expand our mortars and stucco business in the U.S., consistent with our focus on adjacent high return growth opportunities. I would also like to take a moment to warmly welcome the Omega team to CEMEX. We're excited to have you join us and look forward to learning from your solid capabilities, strong culture, and market leadership as we build this platform together. With that, back to you, Lucy.

Thank you, Jaime. Mexico delivered strong results supported by continued cement volume recovery, relevant operational efficiencies, pricing, and operating leverage, reinforcing the momentum built over recent quarters. For the first time in six quarters, year-over-year cement volumes inflected positively as the government accelerated the rollout of their social programs. Demand to date has largely benefited from self-construction and government-backed social programs such as railroads and housing, supporting bagged cement volumes. The social housing program, targeting 1.8 million units through 2030, is also ramping up. We are currently participating in the construction of approximately 120,000 units, double the level of fourth quarter, and are in negotiations for an additional 110,000 more. In infrastructure, while conditions remain relatively soft, activity on the ground is improving and our ready-mix backlog is trending higher.

We are currently participating in the construction of relevant projects, including the elevated viaduct in Tijuana and rail line projects such as Querétaro, Irapuato, and Saltillo Nueva Lourdes, with additional projects expected in the near term. Going forward, we expect the main drivers of growth to come from resilient housing demand and, while timing remains difficult to pinpoint, infrastructure activity. Cement volume performance was also supported by a temporary market share gain as a few competitors experienced outages in the central part of the country in the quarter. EBITDA grew 47%, benefiting from a significantly stronger peso as well as important cost savings driven by our transformation, including a new organizational structure. Margin expanded by nearly five percentage points to 36.1%, returning to levels last achieved in first quarter of 2021, driven by Project Cutting Edge.

Performance also benefited from lower maintenance activity, which we expect will normalize throughout the rest of the year. On a sequential basis, cement prices increased mid-single digits. As in our other markets, we will look to adapt our pricing strategy to offset cost inflation. Due to our large exposure to petcoke, which cannot be efficiently hedged in our fuel mix, we do anticipate that Mexico will experience the largest headwind from energy inflation this year. We are moving already to increase our alternative fuel usage, which should partially offset some of the cost impact. Regarding our decarbonization efforts, we achieved a new clinker factor record in Mexico, averaging 62.9% for the quarter, underscoring our commitment to reducing CO2 emissions properly. The ongoing recovery in volumes, the structural improvements we have implemented over the last year, better infrastructure visibility, and disciplined pricing should continue to support strong results in Mexico.

We expect some normalization in EBITDA growth as we go through the year as the comps become more difficult, energy inflation accelerates, and growth relies more on formal construction, which is more difficult to time. Our U.S. operations delivered resilient results in a challenging operating environment, supported by Project Cutting Edge, higher cement production, and continued growth in our aggregates business. Adverse weather conditions in January and February weighed on activity, particularly in Texas and the Mid-South. Despite these headwinds, ready-mix volumes grew 2%, marking the first year-over-year increase since mid-2022. Aggregate volumes increased 9%, reflecting the consolidation of Couch Aggregates and other investments that have recently come online. Adjusting for winter storms, we estimate that cement, ready-mix, and aggregate volumes would have increased by 1%, 5%, and 10% respectively, reflecting a slight improvement in underlying market demand.

The contribution from higher ready-mix and aggregates volumes was offset by pricing and higher freight costs, resulting in stable EBITDA and EBITDA margins. Aggregates sequential prices rose mid-single digits as a result of our January price increase in certain sectors. In cement and ready-mix, prices declined 1% sequentially, reflecting continued competitive pressure following multiple years of soft industry demand. In this environment, most of the April price increases were deferred to mid-year. Importantly, fuel surcharges are already in place. In the current global context, marked by rising maritime freight rates, tariffs, supply chain disruptions, and increasing energy and logistics costs, we expect progressively stronger pricing support as the year unfolds. Demand continues to be primarily driven by infrastructure, supported by the ongoing rollout of IIJA projects, with about 50% of allocated funds already spent and peak activity expected this year.

Industrial and commercial projects, particularly large data centers and chip manufacturing facilities, continue to drive construction activity. Importantly, 40% of mega data center projects, investments that exceed $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. With the current geopolitical situation, we expect recovery in the residential sector to be further delayed due to the higher rate environment and expected incremental inflationary pressures. However, pent-up demand and favorable demographic trends should be supported over the medium term. As volumes recover, operational leverage, combined with our structurally leaner cost base and expanding aggregates business, position the U.S. business for stronger profitability.

Our operations in EMEA delivered a solid first quarter, driven primarily by our new leaner cost structure and pricing, with EBITDA in both Europe and the Middle East and Africa expanding at double-digit rates. Margin improvement in the region mostly reflects recurring cost savings and higher prices, with some temporary benefit from lower maintenance activity in the quarter. In Europe, demand was impacted by adverse winter weather and precipitation early in the quarter. With weather conditions largely normalizing in March, cement volumes grew 14% year-over-year, while ready-mix and aggregate volumes increased at low single-digit rates. Supported by the implementation of the Carbon Border Adjustment Mechanism and the tightening of free CO2 allowances under the EU ETS system, cement prices increased 4% sequentially. First quarter price announcements covered approximately one-third of total European volumes. We have announced price increases in Poland, Germany, and Croatia, effective April.

As Jaime explained, we have introduced fuel surcharges or additional price increases in several markets to offset energy inflation. Residential activity across much of Europe remains muted, and higher interest rates point to a slower recovery. The notable exception is Spain, where housing activity has been supported since 2024. In contrast, infrastructure continues to be the most resilient segment across the region, particularly in Eastern Europe, and we expect it to remain a key driver of demand this year. Middle East and Africa outperformed our internal pre-war expectations, with EBITDA growth of 27%, driven by Project Cutting Edge and improved pricing. Despite heightened geopolitical tensions, the impact of the Iran conflict during the quarter was limited. Average daily sales declined significantly at the outset of the war, but have largely recovered as of early April.

While we remain cautious on the outlook, given the war, we are pleased with the resilience of our operations in the region to date. Our operations in South Central America and the Caribbean delivered double-digit EBITDA growth and meaningful margin expansion, driven by improved cement volumes and the continued benefits of our transformation. Performance was also bolstered by the debottlenecking project completed last year in Jamaica, which is allowing us to fully supply the local market, domestic production. Cement demand across the region was supported by growth in the informal sector in Colombia, as well as reconstruction efforts following Hurricane Melissa and tourism-related projects in Jamaica. Cement prices increased by 5% sequentially, reflecting our disciplined pricing strategy. Looking ahead, we remain optimistic on the outlook for the region, supported by improving consumer confidence and continued activity in informal construction.

With that, I will now turn the call over to Maher Al-Haffar to review our financial development.

Thank you, Lucy, and good day to everyone. Given the current environment, I would like to provide additional details on our energy strategy and our exposure to market volatility before turning to our financial highlights. As Jaime mentioned, we estimate approximately 60% of our total 2025 energy exposure of $1.65 billion has been hedged for 2026 through a combination of derivatives, annual contracts, and regulated pricing frameworks for the full year. Roughly two-thirds of this amount is related to fuel and electricity in cement production, and one-third to diesel in transportation. Approximately 75% of our expected 2026 diesel consumption, direct and indirect, through our third-party haulers is hedged. In addition, we have already started implementing fuel surcharges across our regions. In cement production, our energy exposure is evenly split between electricity and fuels. In electricity, about 70% of our needs are fixed or are in regulated markets.

As you can see on this slide, our kiln fuel mix, measured on a calorific value basis, which is primarily sourced locally, is well diversified. We estimate that approximately 35%-40% of our fuel use for cement production is hedged via contract for 2026. Two to three months of inventories provide some protection for petcoke while our natural gas exposure is primarily in the U.S., where we have seen far less price volatility. Importantly, we also have flexibility to adjust our kiln fuel mix in our operations, switching among the various alternatives based on relative economics. Where possible, we are working to switch to alternative fuels that are generally cheaper and carry little correlation to fossil fuel prices. Together, these levers provide a meaningful buffer in the short term during periods of high volatility.

To date, we have seen little impact from energy inflation, with energy costs per ton of cement in the quarter stable, with declines in fuel costs offset by higher electricity costs. While our energy strategy provides meaningful protection in the short term, we expect to face inflationary pressures in energy later in the year. As such, we are downgrading our full year guidance and now expect energy costs per ton of cement produced to rise mid- to high-single-digit rate, up from our prior mid-single-digit guidance. Moving to our financial highlights, our self-help measures are delivering exceptional results, driving record quarterly EBITDA, the highest first quarter EBITDA margin in five years, and significant improvements in free cash flow from operations.

Free cash flow from operations increased by nearly $300 million, reaching $29 million in a quarter that has historically generated negative free cash flow due to significant working capital investment. This growth is explained by exceptional EBITDA growth, along with important reductions in CapEx, working capital, interest, and other cash expenditures. The working capital investment during the quarter, $31 million lower than prior year, is expected to largely reverse throughout the rest of the year. Working capital days for the quarter stood at negative 11 days, two additional days versus first quarter of 2025. Excluding severance payments and discontinued operations, our free cash flow from operations conversion rate for the trailing 12 months reached 51%, compared to 46% for the full year 2025. Project Cutting Edge is delivering tangible results in our cost structure.

As Jaime mentioned, cost of goods sold and operating expenses as a percentage of sales are down 175 basis points and 148 basis points year-over-year, respectively. The decline in net income is explained by the gain on the sale of our Dominican Republic operations during the first quarter of 2025. As we work to transform our liability profile through proactive liability management and reduce the overall debt burden, we repaid a EUR 400 million euro-denominated bond and a MXN 6 billion peso loan during the quarter. We funded these payments with the issuance of MXN 5.5 billion, or approximately $300 million, in a five-year certificados bursátiles and cash on hand. To drive the interest rate savings, we swapped the newly issued certificados bursátiles into euros, locking in rates inside our euro curve. As a result of these transactions, our total debt plus subordinated notes decreased by around $540 million sequentially.

Net debt plus subordinated notes, however, increased by $590 million over the same period, primarily due to cash uses related to the Omega acquisition, growth CapEx, share buybacks, dividends, and other items. As we generate additional free cash flow in the coming quarters, we expect to end the year with a lower level of net debt plus subordinated notes relative to 2025. Our net financial leverage, including $2 billion of subordinated perpetual notes, stood at 2.3 times, unchanged sequentially. With improved free cash flow generation and higher EBITDA, we remain confident in our ability to continue deleveraging toward our target range of 1.5-2 times. We aim to further improve our risk profile with a solid BBB rating, bolster our growth potential, and maximize value creation for our shareholders.

In fact, yesterday, Fitch Ratings reaffirmed our BBB- global rating and raised the outlook to positive from stable. Additionally, they upgraded our long-term national scale ratings from AA+ to AAA, the highest credit quality on the Mexican national scale. This should further strengthen our credit profile and reinforce external confidence in our long-term financial strategy. Consistent with our commitment to strengthening our shareholder return platform, a nearly 40% dividend increase was approved by shareholders at our recent shareholder meeting. This will raise the annual dividend to $180 million from $130 million approved last year. Complementing our cash dividend, we also executed $100 million of share buybacks during the quarter. As we discussed in our fourth quarter results, our intent is to buy back up to $500 million in shares over the next three years.

You should expect gradual improvement in shareholder return as free cash flow continues to grow in subsequent years. Now back to you, Jaime.

Thank you, Maher. I am proud of the results and achievements my team delivered this quarter, incremental evidence of the power of our transformation efforts. I recognize that there is still important work ahead as we continue executing on our plan. We remain constructive on the demand environment across most of our markets this year, with continued recovery expected, particularly in Mexico, where we are modestly adjusting our volume guidance upward. Our focus remains on capturing the announced savings under Project Cutting Edge, identifying and securing new recurring savings, and moving quickly to reflect the new energy headwinds in our pricing strategy for the rest of the year. We will also continue to advance on our portfolio alignment plan coming out of our business performance reviews designed to improve the quality of our earnings and free cash flow generation.

Let me reiterate what I said at the beginning of this call. While volatility will persist, with our self-help measures delivering as intended and our strong first quarter performance, I remain confident in our ability to deliver our full year EBITDA guidance. Now back to you, Lucy.

Before we go into our Q&A session, I would like to remind you that any forward-looking statements we 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. Now, we will be happy to take your questions. In the interest of time and to give other people an opportunity to participate, we kindly ask that you limit yourself to one question.

The first question comes from Alejandra Obregón from Morgan Stanley.

Hi. Good morning, CEMEX team. Thank you for taking my question. 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. When and where have they been implemented today, and whether there are differences across the regions and products in this dynamic, and to what extent is this dynamic already embedded in your guidance? Thank you.

Alejandra, good morning. Thanks for your question. I separate pricing from surcharges, particularly fuel surcharges. Regarding fuel surcharges, we have had them for years in the U.S. in our contracts. To give you more detail. In ready-mix, those fuel surcharges cover around 90% of our dispatches. On aggregates, it's around 85% of our deliveries. In the case of cement, it's around 80% of our deliveries. It's a mechanism that offsets volatility in diesel, and we saw that working very well when the Ukraine war began back in 2022, 2023, when we faced inflation in that line. Also, we do have fuel surcharges in Europe. There our strategy is twofold. There are markets where we see more resilience and stickiness in fuel surcharges. That will be the case in the U.K. and Germany, where we are introducing them.

In other markets where we see strong pricing characteristics, we're going to go ahead with incremental pricing beyond what we were planning for because of expected inflation. That is the case of Spain, Croatia, Czech Republic, and Poland, for example. Regarding the U.S., we are expecting to see material inflation in shipping and therefore we expect import parity cost to increase. That should build some momentum for better pricing environment going forward. In the rest of the portfolio, we are ready to react to inflation in Mexico from petcoke with future price increases if needed to offset input cost inflation and the same applies to most of our markets in SCAC. I hope that I answered the question, Alejandra.

Very clear. Thank you.

Thanks, Ali. The next question comes from Jorel Guilloty from Goldman Sachs. Jorel?

Good morning, everyone. Thank you for taking my question. Really quickly from my end, I just wanted to understand the relative bullishness on your U.S. volumes guidance. It remains unchanged even though there's ongoing softness on residential. Just want 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 softening residential. That's my question. Thank you.

Thanks, Jorel, for your question. Well, first of all, as we highlighted earlier, adjusted by the weather impact, mainly in Texas and the Mid-South, our pro forma weather volumes would have been cement +1%, ready-mix around +5%, and aggregates +10%. There was some momentum out there that was affected by the weather. Going forward, we are paying special attention to markets where we're highly vertically integrated with very strong resilient upstream margins in cement and aggregates. In those micro markets, we are gaining more work, particularly in infrastructure and in the industrial sector, things such as some data centers and chip manufacturing facilities. That's the reason why we kept our guidance unchanged despite the softness in residential and the weather impact in the first quarter. I hope that I answered your question, Jorel.

It's mainly driven by expected incremental work that we are gaining in the segments that are performing better.

Thank you.

The next question comes from Francisco Suarez from Scotiabank. Paco? Paco, are you there?

Pardon me. Sorry. Thank you for the call. Apologies for that. 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. The question relates 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 United States, that would be very helpful. Congrats again for the great delivery that you guys have done so far.

Francisco, thanks for your question. I'll extend your recognition to the team who is doing a good job executing what we said we would. Regarding your specific question about import parity, what we've seen is the following. Regarding FOB export pricing, we haven't seen yet any sequential increase from February to March. I expect that to happen later in the year as exporters face inflation on energy, and they're going to feel it. If you think about what happened back in 2022, 2023, that's exactly what happened. It took a bit of time, but we saw FOB prices increasing. What has changed though, sequentially from February to March, was freight rates, so maritime rates, and they have increased substantially. In the case of the West California, our number is that freight went up by around 37% per ton.

In the case of the East Coast, an example, Florida, by 31%. In the case of Texas, the Gulf, that's around 26%. When you think about CIF all combined, you're talking about spot import prices going up between 10%-12% sequentially. As importers write a contract volume on the basis of new shipping rates and they're going to feel the impact. That's how things are evolving so far.

Very clear. Thank you, and congrats again. Take care.

Thanks, Paco. The next question comes from Carlos Peyrelongue from Bank of America. Carlos?

Thank you, Lucy, for taking my question. Hi, my question is related to free cash flow and capital allocation. 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? Thank you.

Thanks, Carlos, for your question. We continue to strengthen the pipeline of M&A targets, mainly in the U.S. We're proactively engaging with a larger number of potential targets. We're going to be very patient because we want to be very disciplined, right, and only pursue where we can create value. There is nothing imminent right now on the table, but plenty of conversations. In addition to that, Carlos, when we look at our opportunities to allocate capital, we still see accretive to shareholders uses of capital when we think about debt to reduce interest expenses and boost free cash flow. We are also committed to a progressive improvement on the shareholders' returns, right? Dividends and share buybacks. As you know, the shareholders approved the $500 million share buyback program. We have creative options to allocate capital to shareholders beyond M&A.

Let's be patient, and when the right time comes, we will be executing those. Thanks for the question, Carlos.

Thank you, Jaime, and congratulations on the strong results.

The next question comes from Adrian Huerta from JPMorgan. Adrian?

Thank you, Lucy. Hi, everyone. Jaime, congrats on the results, first of all. My question has to do with the guidance. I understand that 1Q is a seasonally small quarter, but I want to understand what was the process you're thinking, the rationale on keeping guidance unchanged. I mean, the beat was quite strong this quarter. The outlook is improving. I understand the pressure on energy cost, but the improvements on margin was huge. What was the thinking and the rationale to keep the guidance unchanged?

Adrian, thanks for the question. The main reason is the lack of visibility on where the war is heading. With that situation and the volatility we're facing, I thought that it was better to wait at least until July call once we see 2Q. I also wanted to understand better the level of incremental structural recurring savings that we will be committing to as we have begun executing those additional levers. With more visibility on the war, on where inflation is heading, and how our pricing and fuel surcharges are sticking, and then the incremental savings, we will be in a better position to think about changes to guidance. That's the main reason why we believe that today the best is to be consciously optimistic, but still conservative.

Thank you, Jaime.

Thanks, Adrian. The next question comes from Anne Milne from Bank of America via the webcast. Congratulations on the Fitch positive outlook upgrade. When do you believe is the timing around a possible upgrade to BBB? Maher, I think this is yours.

Thanks a lot, Lucy. Yeah. Thank you, Anne, for the question. One thing that I would like to highlight is that if you take a look at our net financial leverage, we're expecting it to converge fairly rapidly throughout the year, given our expectations for full-year performance towards the Fitch level that they defined in their release yesterday, which is 1.5 times. Maybe a little bit higher than that. That is the kind of BBB level that they expect. In the case of S&P, we are already within their BBB leverage ratio. For S&P, the real metric for that is what they call free cash flow from operations as a percentage of debt. I'm not going to give you the definition of that. You can look it up from S&P website.

Again, based on our expectations and the guidance that we're giving, their metric to go into BBB is more than 30%. We feel reasonably confident that we should be well inside, well above, let's say, that metric by the end of this year. Bottom line, based on the performance and the de-leveraging that we are delivering and the heightened quality of earnings that we're delivering through free cash flow conversion, we think that both rating agencies are going to be giving a very hard look to a potential upgrade sometime in the first half of 2027. Of course, we'd be super happy if that happened sooner, but I would say that from my perspective, I'm looking for a first half potential rating action from the rating agencies. I hope that answers the question.

Thanks, Maher.

Thank you.

The next question comes from Benjamin Theurer from Barclays. Ben?

Yeah, good morning, Jaime, Lucy, Maher, congrats on those very strong results on Q. Quick question on the performance in Mexico in particular. Maybe help us understand a little bit better that 470 basis points margin expansion, how much of that was really driven one time, things like maintenance related, et cetera, and how much of that would you describe as being a recurring margin improvement? Thank you very much.

Ben, thanks for the question. Well, the first thing to understand is where the expansion happened. A lot has to do with the transformation, where CEMEX Mexico is contributing quite materially together with EMEA in the quarter. Therefore, we saw a margin expansion, contributions from variable cost around 160 basis points. Freight was very material, around 1 percentage point. SG&A and corporate expenses as well, followed by a bit from volumes, but more so from prices, around 2 percentage points. With that in mind, yes, there were a few positive one-offs that wouldn't be recurrent, we think. The first one is, as I highlighted before, the temporary market share gain of around, we've calculated around 2% of volumes. If we agree with 6%, maybe 4% is what will be there going forward. The other 2 percentage points would be a one-off.

It's correct that we had some maintenance timing, which will increase going forward. The other aspect, Ben, is the product mix in cement. This quarter, we had a strong bagged mix, 60/40%, 60% bags, 40% bulk. As we expect to see infrastructure ramp up, we should see a different product mix. In addition to that, also the petcoke. We are expecting a rise in petcoke price for the rest of the year. All of these combined suggest that you should expect a lower margin. Having said that, the margin will be solid because of the transformation. That will stick, and I cannot provide you more specifics on that, for obvious reasons. That's the way I like to answer your question, Ben.

Perfect. Jaime, thank you very much.

The next question comes via the webcast from Paul Roger from BNP Paribas. How ambitious is your plan for U.S. aggregates? What makes CEMEX the partner of choice for targets, and how big could this product line ultimately become in a group context?

Paul, thanks for the question. In 2025, our aggregates business accounted for 40% of CEMEX USA EBITDA. In the first quarter, aggregates contributed 45%. Aggregates was accountable for 45% of CEMEX USA EBITDA. It would be great to see U.S. aggregates accounting for around 60% of our EBITDA in the U.S. Now, regarding your second part of the question, right, whether CEMEX is a partner of choice for targets. That remains to be seen, but please note that as a large ready-mix, we buy a lot of aggregates from long-term partners with whom we have strong relationships. That's a nice start. The other thing is that unlike in the past, we are very flexible and open-minded on different ways to partner with potential targets. Couch was an example, right?

We see very favorably entering with a minority position, right, and growing that up to a controlling interest in years to come, while partnering with family-owned operators who are great operators to continue running their businesses for longer. Maybe that flexibility could help us be seen as the partner of choice for the right targets. That's what we're working on, and we're excited and again, expanding our pipeline of potential targets, and we continue working on that. We're gonna be patient. The other aspect is our new investment projects. Right? We are taking advantage of Immokalee in Florida, Four Corners is also in Florida, our exports from Canada, to mention a few. There are more investments underway right now from our growth CapEx pipeline. That should continue contributing to enlarging the U.S. aggregates business in the U.S. Thanks for your question.

Thanks, Jaime. The next question comes from Yassine Touahri from On Field. Yassine.

Thank you very much for the question. My question would be around your free cash flow conversion. Would you consider moving your definition of free cash flow conversion closer to peers, including strategic CapEx, intangible investment, pension contribution, securitization, coupon on subordinated notes and other financial fees? Because I think that on that basis, your 2026 guidance seems to imply a free cash flow conversion of around 20%-25%, which is improving a lot, but still less than half of the level of your best-in-class peers at 50%. I think what I'm trying to understand is whether you can get closer to that best-in-class level of 50% as soon as 2027. For example, could the total CapEx come down from $1.4 billion in 2026 to $1.1 billion as soon as next year?

Yassine, thank you very much for your question. The first thing I want to tell you is that I see no reason why we wouldn't be as good as performers as our peers on your definition of free cash flow. We just need to continue doing our homeworks, and we are fully committed to delivering on that. What's different is that, yes, do expect already for 2027 a material reduction in strategic CapEx, intangibles. In addition to that, I have assigned an ExCo member becoming responsible and owner of every of the lines of free cash flow that you mentioned. Today we are developing roadmaps to materially optimize every line. Therefore, do expect that we will make significant progress in 2027 and even more in 2028.

Also, please note that we have begun executing our efforts to improve earnings quality by deconsolidating operations that do not meet our free cash flow targets, among other KPIs. As I mentioned earlier, we've let go of, as a matter of example, 60 ready-mix concrete facilities in our portfolio. That's just an example, but we are accelerating the transformation of our portfolio. As we let go of many of these operations that did not generate free cash flow, you're going to see a higher free cash flow conversion and a higher earnings quality in terms of free cash flow to sales. Regarding your question, whether we're going to move to that other definition, the answer is yes, we will at the right time. We're working on it, and we'll let you know when we would be introducing that definition.

Whether we do that short-term, mid-term, what matters is that we're going to be improving free cash flow under all definitions. Thanks for your question, Yassine.

Thanks for this.

Thanks, Yassine. The next question comes from Andres Cardona from Citi. Andres.

Hi, good morning, Jaime, Maher, Lucy. Congratulations on the solid results. My question is regarding Mexico outlook in the context of President Sheinbaum housing initiative and the newly announced highway infrastructure plan. To what extent could these programs drive demand growth in 2026, 2027? You already mentioned that you are negotiating some 100,000 more housing. If you could help us to understand when the infrastructure plan could already yield incremental demand. If I may, a very quick one regarding Colombia, is there any reason why you decided to do a partial divestiture of the assets there? Are the remaining assets considered core? Thank you.

Andres, thanks for the question. Allow me to start with the second question first. In Colombia, the right time to divest what's within the scope of the announced transaction was this year. The rest of the portfolio in Colombia need to increase activity as the demand improves in those micro markets where we have the rest of our portfolio, particularly as we commissioned Maceo cement plant up north of the country. That's the reason why we decided to carve out the current perimeter under that transaction. The team, post-transaction, will be focused on maximizing free cash flow and EBITDA from the remaining assets, and it remains to be seen our next move regarding the rest of our business in Colombia. Regarding your first question, yes. What we see is this.

In our current guidance for volumes for Mexico for 2026, we've already included our expectations on infrastructure, which includes trains and highways, on social housing. I think that the contribution from the recently announced plan from government would be more materially felt in 2027 because it will take time to break ground. We also need to understand the fiscal conditions of public accounts in light of what's happening on potential inflationary effects to budget. I say that I don't expect much for 2026 on the newly announced infrastructure plan beyond what was in the budget, but that's already embedded in our guidance. I do think that being everything equal, and if things don't worsen for the fiscal accounts, we might see momentum in 2027, particularly on infrastructure. It is too early to provide our views on 2027 cement volumes for CEMEX Mexico.

Andres, thank you for your question.

We have time for one last question, and it is coming from Gordon Lee from BTG Pactual. Gordon?

Hi. Thank you, Lucy. Good morning, everybody, and congratulations on a very good quarter. This is a bit of more of just a clerical question for Maher. Maher, I noticed that you sort of formally changed the way that you present the leverage ratio and the relief, and now you include the totality of the subordinated debt. One, I just wanted to see whether there was any particular rationale for that. Two, just to confirm that when you refer to the one and a half times long-term leverage target, that's the measurement that you're using for that. Thank you.

Yeah. Thanks, Gordon, for leaving the clerical questions for me. It's good to hear from you. Just kidding. The rationale is very simple, okay? When we issued these perps, we were BB-. As you have seen, we have been working very aggressively to reduce gross debt, including the subordinated notes, very rigorously over the last few years. Now we're in a different position. The other thing is, as a consequence of the rating action that happened last year by S&P, the 5.125 subordinated note already started receiving full debt treatment from their side. Based on yesterday's Fitch rating, that also happened on the side of Fitch. Now we're really left with essentially one of the notes, the 7.2%, that has 50% equity treatment.

From our perspective, we feel, from an investor perspective, we believe it's a much more conservative and cautious leverage ratio to use the net financial leverage, including subordinated notes to the extent that we have them. We are looking at de-leveraging, including the levels that are included through the subordinated notes. The answer is yes. When we talk about 1.5 times, we're talking about net financial leverage, including potential subordinated notes that are on the balance sheet. That's the way, in the future, the rating agencies will look at it. It's going to push the company, it's going to push us in our capital allocation decisions also to make sure that we're taking all of the elements of potential liability on the balance sheet. I hope that answers the question.

Perfect. Makes a lot of sense. Thank you very much.

Thank you.

Thanks, Gordon. We appreciate you joining us today for our first quarter results. We hope you will join us again for our second quarter 2026 earnings call on July 23rd. If you do have any additional questions, please feel free to reach out to the investor relations team. Many thanks.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day

Hello. Good morning, and welcome, everyone, to the CEMEX Fourth Quarter 2025 Conference Call and Webcast. My name is Becky, and I will be your operator for today. [Operator Instructions] And now I will turn the conference over to Lucy Rodriguez, Chief Communications Officer. Please proceed.

Good morning, and thank you for joining us for our fourth quarter 2025 conference call and webcast. We hope this call finds you well. I am joined today by Jaime Muguiro, our CEO; and by Maher Al-Haffar, our CFO. We will start our call with a review of our fourth quarter and full year results, followed by an update on the progress made so far on our strategic plan as well as our expectations and guidance for 2026. And then we will be happy to take your questions. We will host our CEMEX Day on February 26, where we will be providing additional details on our value creation strategy and medium-term financial targets. There will be a live video webcast available. And now I will hand the call over to Jaime.

Thanks, Lucy, and good day to everyone. From a results perspective, my first year as CEO has been marked by sharp contrasts as we embarked on our transformation process. As expected, our first half performance was challenged by headwinds in Mexico related to the first year of a new government administration and a weaker peso, coupled with soft demand conditions in the U.S. In contrast, the significant second half improvement was predicated on Mexico's recovery as well as early results from our ambitious and disciplined transformation announced in the second quarter. As I assume my role as CEO in April, we moved quickly to introduce a multiyear strategic plan that included significant self-help measures designed to address the challenging market conditions. I want to recognize our teams across the organization. 2025 was a demanding year of transformation for our company, one that required discipline, resilience and a strong execution mindset at every level. Our people delivered on operational excellence, maintained a strong focus on safety and customers and executed important structural changes while continuing to run the business day-to-day. These results reflect their commitment and professionalism, and I want to thank them for their hard work and dedication. Under Project Cutting Edge, our cost efficiency program, we fully realized our 2025 EBITDA recurring savings target of $200 million, leading to improved margins in all markets in the back half of the year. Importantly, this effort should continue to reap substantial benefits in 2026 and beyond. Our free cash flow from operations reached $1.4 billion in 2025 with a 46% conversion rate adjusting for one-off items such as severance and discontinued operations. We continue progressing on our portfolio rebalancing and growth strategy. We divested most of our operations in Panama while investing in targeted businesses in the U.S. The consolidation of Couch Aggregates materially strengthened our aggregates position in the Southeast. We will continue seeking potential divestments in noncore markets to expand our presence primarily in the U.S. through disciplined capital allocation with a clear focus on aggregates and adjacent businesses such as mortars, stuccos, renders and plasters. In decarbonization, our consolidated gross CO2 emissions declined 2% in 2025, mainly driven by further reduction in clinker factor. Our operations in Europe continued to lead the way, having reached the Cement Europe Association's 2030 gross CO2 emissions reduction targets 5 years ahead of schedule. But it was not just Europe, notably, our operations in Mexico and South, Central America and the Caribbean profitably achieved record clinker factor levels in 2025. Finally, we're making important strides on our commitment to deliver enhanced shareholder returns. In our upcoming General Shareholders' Meeting in late March, our Board of Directors will propose an annual cash dividend close to 40% higher than the one announced in 2025. Complementing our cash dividend and subject to annual approval by shareholders and other formalities, we will activate usage of our buyback program with the intent to buy back up to $500 million in shares over the next 3 years. I am proud of what we have accomplished so far and expect even better results in 2026, supported by improved market demand, operating leverage available to us in most markets and continued cost and efficiency measures. In our CEMEX Day on February 26, we will dive into more detail on what you should expect from us in future years. With momentum building in the second half on recovery in Mexico and solid results from EMEA, full year consolidated sales and EBITDA rebounded. Indeed, fourth quarter sales and EBITDA increased by a double-digit rate, supported by project cutting-edge savings in Mexico. EBITDA margin was stable for the full year, again with a significant expansion in the second half as cost efficiencies began to materialize. All regions reported flat to improved EBITDA margin in 2025. I am most proud of our performance in free cash flow from operations, a key metric of our transformation. Excluding one-offs from severance payments and discontinued operations, free cash flow from operations grew by 50% to $1.4 billion. With a goal to achieve 50% conversion rate of EBITDA to operational free cash flow, we achieved 46% in 2025 after adjusting for one-off cash expenses. After incorporating growth CapEx, intangible assets and other expenses, total adjusted free cash flow increased by more than $550 million in 2025 compared to prior year. These achievements underscore our focus on the levers we can control to ultimately deliver more cash to shareholders. For 2026, you should expect additional improvements on these metrics as we make further progress on our strategic initiatives. Finally, we recognized $538 million in goodwill impairment and asset write-down in 2025. Adjusting for this effect, net income would have increased by 41% to $1.5 billion. Consolidated cement and aggregates volumes in the fourth quarter grew by 1% and 2%, respectively. The continued growth in EMEA cement volumes more than offset volume performance in the U.S. and the slight decline in Mexico. Demand conditions in Mexico improved with average daily sales for our 3 core products growing on a sequential basis. Double-digit growth in aggregates volumes in the U.S. reflects the consolidation of Couch Aggregates. As construction activity is expected to increase in all of our regions, we anticipate a better demand outlook in 2026. With our focus on operational efficiency as well as available capacity, we are well positioned to capitalize on the strong operating leverage in our business as volumes begin to recover. Consolidated cement, ready-mix and aggregates prices increased by a low single digit in 2025, with positive performance in most markets. In Mexico, despite adverse demand conditions and in South, Central America and the Caribbean region, prices rose mid-single digits in 2025. As demand is expected to improve in all regions in 2026, we aim to continue recovering input cost inflation throughout our portfolio and see particular strength in Continental Europe. The carbon border adjustment mechanism, along with the gradual phaseout of free CO2 allowances under the EU ETS should support favorable pricing dynamics as the industry looks to recover the rising carbon emission costs. Full year EBITDA performance was mainly explained by project cutting edge, cost efficiencies and higher prices. Despite ongoing cost inflation, we were able to reduce our total cost base by close to $100 million. Consolidated margins were supported by margin expansion of close to 2 percentage points in both Mexico and EMEA. Significant FX headwinds in the first half were almost fully offset by a reversal in the second half. In our Urbanization Solutions portfolio, higher EBITDA in the admixtures business in EMEA partially compensated for soft performance in Mexico and the U.S. 2025 marked a year of profound transformation for CEMEX, centered on achieving operational excellence and delivering shareholder return. To that end, we defined a set of strategic priorities focused on enhancing profitability, increasing free cash flow conversion, improving operational efficiency and ensuring returns above our cost of capital in every asset we manage. As I explained earlier, in 2025, we made significant progress on our plan. First, we expanded our cost reduction program, Project Cutting Edge to recurring savings of $400 million by 2027. Importantly, half of this amount is related to overhead actions already taken in 2025. These actions should deliver additional savings of $125 million in 2026. The $200 million savings realized in 2025 drove a decline in cost of goods sold and operating expenses as a percentage of sales in most regions with higher EBITDA margin across our portfolio. We introduced EBIT, free cash flow conversion and a spread of ROIC over WACC as new performance metrics for our operations. We also advanced on the implementation of operating initiatives such as improvement in kiln efficiency in the U.S. and the optimization of fuel mix in Mexico. These efforts drove a 17% increase in EBITDA in the second half and a 25% jump in EBIT, a key metric of our transformation. With regard to free cash flow, we adjusted our maintenance CapEx spend and reviewed all projects under our growth CapEx pipeline. We conducted a detailed evaluation of every asset in our portfolio, defining a clear action plan for those underperforming assets. This plan is expected to positively contribute to our results in the future. And we also revamped our variable compensation plan effective January to reflect these new metrics and to better align with long-term value creation and shareholder return. I am confident that as we continue working on our strategic plan, we will identify additional opportunities to further support margins while aiming to increase free cash flow conversion and return on capital. And now back to you, Lucy.

Thank you, Jaime. We are encouraged by the volume recovery in the second half in Mexico as well as the contribution from our cost and efficiency initiatives. Sales growth accelerated in the quarter, marking the first quarter of year-over-year growth since the election in Mexico in 2024. EBITDA increased by 20% like-to-like and margin expanded by an impressive 5 percentage points. Importantly, EBITDA also increased sequentially, contrary to historical seasonality patterns, further underscoring our recovery trend. Demand conditions in Mexico continued to improve with average daily cement sales increasing by 8% sequentially, again outperforming historical seasonality patterns. As anticipated, public spending on social programs and infrastructure is beginning to gain momentum, albeit from a low base. Rural road projects in which we typically have a large participation rate as well as other programs show early signs of increased activity, benefiting bagged cement volumes. In infrastructure, while conditions are still soft, we began construction works on projects such as the Quer�taro to Irapuato rail line, along with the continuation of the AIFA Airport to Pachuca line with other projects expected in the near term. In addition, we see increased activity in projects related to the 2026 World Cup in Mexico City, Monterrey and Guadalajara. The social housing program with the goal of constructing 1.8 million units through 2030 is also beginning to pick up speed. In the fourth quarter, while off a small base, we doubled our participation in projects under construction to 58,000 units. Additionally, we have also seen an important pickup in projects under negotiation for the program, currently 105,000 units. Last year, prices for our 3 core products increased by mid-single digits. For 2026, we will continue with our strategy to at least recover input cost inflation. In that effort, we recently announced a 10% price increase in cement and ready-mix effective January. Our transformation program is leading to a more agile and efficient organization in Mexico. As Jaime mentioned, last year, we achieved important cost savings in the country, driving material increases in our cement and ready-mix margins despite the challenging market backdrop. As demand conditions improve, operating leverage, along with cost initiatives should support further margin expansion. In 2026, we expect that volume recovery, pricing and cost savings will be important drivers of growth. Our U.S. operations posted a record fourth quarter EBITDA with margin near record highs, underscoring the resilience of our business in challenging market conditions. Performance was driven by project cutting edge, facilitating higher operating efficiency, along with the consolidation of Couch Aggregates. Demand continues to reflect strength in infrastructure with some bright spots in the industrial sector, offset by continued softness in residential. The 10% increase in aggregate volumes was driven by investments coming online in fourth quarter as well as the effect of Couch Aggregates. With three consecutive years of cement volume declines, we have seen increased competitive pressure in select markets in our footprint, explaining the slight decline in sequential cement prices. In aggregates, prices rose 4% in the year on a mix-adjusted basis. Adjusting for the Couch acquisition, sequential prices in aggregates remained flat in the fourth quarter. The expansion in quarterly margin was primarily due to Project Cutting Edge, where we saw a material reduction in cost of goods sold as a percentage of sales. The slight decline in full year margin is largely explained by disruptions from difficult weather conditions in the first half. As Jaime mentioned, our efforts to improve cement kiln efficiency as part of Project Cutting Edge continued to pay off with domestic production expanding by 500,000 tons last year. This increase in domestic production replaced lower-margin imports, leading to relevant EBITDA margin expansion. We expect domestic productivity to further increase in 2026. Our aggregates business continues to grow through both organic and inorganic means. The 39% contribution of the aggregates business to U.S. EBITDA is almost equal to that of cement. We continue to focus on initiatives to drive additional efficiencies in our aggregate operations as well as expand our reserve base. Examples include the recent consolidation of Couch Aggregates, along with expansion projects in Florida and Arizona, which will come online later this year. These additions support volume guidance of mid-single-digit increase for aggregates in 2026. We will be drilling down in more detail on the drivers of our U.S. aggregates business at our Analyst Day in late February. Looking ahead, we expect infrastructure to drive demand as IIJA transportation projects continue to roll out. About 50% of funds under IIJA have been spent with peak spending levels expected this year. We are encouraged by the December release of highway awards, the strongest on record with most markets reporting positive momentum. The industrial and commercial sector continues to benefit from data centers, energy investments and chip manufacturing facilities in our markets. While single-family residential remains soft, we see demographic tailwinds boosting demand over the medium term as affordability and market sentiment improve. With a better demand outlook for 2026, we have announced mid-single-digit price increases in cement, ready-mix and aggregates in several markets, aiming to at least recover input cost inflation. It is important to highlight that as in the case of Mexico, operational leverage once volumes recover, should lead to higher profitability. In the EMEA region, EBITDA and EBITDA margin achieved records in 2025, led by higher volumes and prices as well as cost efficiencies under Project Cutting Edge. Pro forma for a number of one-off adjustments in the fourth quarter, EBITDA in EMEA grew by a double-digit rate with margin expansion of 1 percentage point, supported by positive performance in both Europe and Middle East and Africa. Demand conditions continued with a positive trend with cement and ready-mix volumes growing by 7% and 3%, respectively, and by a mid-single-digit rate for the year. Full year cement and ready-mix prices in EMEA increased by low single digits. On a sequential basis, cement price variation in fourth quarter is mainly explained by a geographic mix effect. In Europe, despite difficult weather conditions, we posted high single-digit growth in cement volumes. Performance was primarily related to infrastructure projects in Eastern Europe and sustained housing activity and infrastructure investment in Spain. On a sequential basis, prices in Europe were stable in the fourth quarter. Price dynamics for full year 2025 are explained by geographic mix and limited competitive pressure in specific markets. Going forward, construction activity in Europe is expected to be supported by infrastructure investment backed by EU funding, the German infrastructure bill providing some tailwinds along with the gradual recovery in the residential sector. In the Middle East and Africa, cement and ready-mix volumes in the fourth quarter expanded by 11% and 9%, respectively. Construction activity across these markets is recovering on the back of housing and nonresidential projects with Egypt also benefiting from large-scale infrastructure projects and the start of mega tourism development. Our operations in Europe remain at the forefront of our decarbonization efforts, reaching a level of 507 kilograms of CO2 gross emissions on a per ton of cement equivalent basis in 2025, representing a 19% reduction versus 2020. This level is already surpassing Cement Europe Association's 2030 emissions target for cement production, further reinforcing our position as an industry leader. The implementation of the carbon border adjustment mechanism in Continental Europe, along with the gradual phaseout of free EU ETS allowances this year should be supportive of cement pricing in 2026 and beyond. Our operations in South Central America and the Caribbean delivered full year EBITDA growth in 2025 for the third consecutive year, driven by pricing discipline and continued benefits from Project Cutting Edge. Fourth quarter EBITDA performance reflects the impact of Hurricane Melissa in Jamaica as well as increased maintenance in Colombia and Trinidad and Tobago. In Colombia, cement volumes continued to recover, growing 7% in the quarter, driven by the informal sector with bagged cement benefiting from stabilizing macroeconomic conditions. Jamaica posted record full year EBITDA with cement volumes growing by 7%, driven by tourism and self-construction. The completion of our kiln de-bottlenecking in third quarter 2025 should allow us to profitably substitute imports with local production to meet rising domestic demand and better serve export markets. Sequential pricing for cement and ready-mix in the region is relatively stable with variation explained by geographic mix. We remain optimistic about the medium-term outlook for the region, where improved consumer sentiment and formal construction are expected to drive demand. And now, I will pass the call to Maher to review our financial developments.

Thank you, Lucy, and good day to everyone. We are pleased with our performance in 2025 with our Project Cutting Edge program delivering important cost savings, primarily in the second half of the year, boosting our EBITDA growth, as Jaime outlined. Our full year free cash flow from operations was $1.2 billion, an increase of 15% versus 2024 on a reported basis. This growth is explained by an important reduction in taxes, interest expense and maintenance CapEx. Adjusting for the extraordinary payment of a fine in Spain in 2024, cash taxes declined by $170 million in 2025. Our interest expense in 2025, including coupons on our subordinated perpetual notes was $160 million lower than last year. This improvement was driven by lower average debt, lower base rates and the refinancing of one of our subordinated notes. In line with our normal seasonality, we saw a divestment of $529 million from working capital during the quarter, resulting in a marginal $16 million investment for the full year. Working capital days for 2025 stood at negative 11 days, an improvement of 4 days versus 2024. Excluding severance payments and discontinued operations, our free cash flow in 2025 reached $1.4 billion with a conversion rate of 46%, highlighting our free cash flow generation potential going forward. The initial benefits from our efforts to optimize our cost base under Project Cutting Edge are visible in our results, and we expect incremental benefits in 2026 and beyond. Energy costs on a per ton of cement basis declined by 12% for the full year, driven by lower fuel and power prices and a continued improvement in clinker factor and thermal efficiency. In the fourth quarter, cost of goods sold as a percentage of sales were 44 basis points lower year-over-year, while operating expenses as a percentage of sales were 62 basis points lower despite recognizing a one-off true-up provision related to variable compensation. Net income variation in the quarter is mainly explained by goodwill impairment and an asset write-down amounting to $493 million. For the full year, net income increased by 2% as the gain from the sale of our operations in the Dominican Republic, a favorable FX effect and lower financial expense offset the impact of higher income tax and impairments. As I have mentioned in prior occasions, our steady-state net total financial leverage target is between 1.5 to 2x. This ratio includes our net debt plus $2 billion of subordinated perpetual notes. At the end of 2025, this ratio stood at 2.26x. We aim to reach and maintain a solid BBB rating to further improve our risk profile, bolster our growth potential and maximize value creation for our shareholders. With a significantly improved leverage position, a high level of confidence in our transformation plan and our new more balanced and disciplined capital allocation framework prioritizing shareholders, we believe 2026 is the moment to begin to move on shareholder return. In this context, the Board of Directors will be proposing to our General Shareholders Meeting scheduled for late March, an annual cash dividend of $180 million. Subject to shareholder approval, this would represent an almost 40% increase in our dividends versus the prior year and represent an important advance in our progressive dividend program. The notice and agenda for the general shareholders' meeting, including information on the dividend proposal will be published tomorrow. Complementing our cash dividend and subject to annual approval by our shareholders and other formalities, we will activate usage of our buyback program with the intent to buy back up to $500 million in shares over the next 3 years. Importantly, as approved in last year's General Shareholders Meeting, we still have an outstanding approval for share buybacks of up to $500 million available to us through late March of this year. Execution will depend on business performance and free cash flow generation, cash needs and overall market conditions. You should expect gradual improvement in shareholder return as free cash flow continues to grow in subsequent years. And now back to you, Jaime.

Thank you, Maher. While we are pleased with our results and achievements in 2025, there is still much more work to be done as part of our transformation. For 2026, we anticipate a more favorable demand environment as construction activity continues to recover in most of our markets. In particular, we expect material contributions from Mexico and EMEA. We also expect a tailwind of $165 million in incremental savings under Project Cutting Edge, including $125 million related to overhead actions already taken in 2025. Finally, completed projects in our growth portfolio should generate $80 million in incremental EBITDA this year, half of which relies on volume recovery. Based on this, we're guiding to a high single-digit rate growth in EBITDA in 2026. Due to the relevant exposure to Mexico in our EBITDA, our guidance is subject to FX fluctuations. In the past, we assumed a current FX rate for the peso in our guidance. However, with the recent appreciation in the peso, we opted to use an FX estimate of a range of between MXN 18.25 to MXN 18.50 per dollar. Beginning this year, we are providing guidance for investments in intangible assets. Our flat guidance reflects the purchase of additional aggregates reserves and mining rights in 2026. All in, maintenance CapEx and growth investments, including growth CapEx and intangible assets are anticipated to result in a positive contribution to free cash flow of about $195 million in 2026 versus the prior year. We expect these savings, coupled with high single-digit EBITDA growth and a favorable comparison to $183 million in severance payments in 2025 should lead to incremental free cash flow and enhanced conversion rate, making progress towards our 50% target. Let me emphasize that I remain laser focused on operational excellence and shareholder return and we'll continue working relentlessly on improving the variables we can control. We have the right strategy and more importantly, the right team to continue delivering on our key priorities. And while we expect a better operating environment in 2026, much of our projected growth is still driven by self-help measures. And now back to you, Lucy.

Before we go into our Q&A session, I would like to remind you that any forward-looking statements we 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. [Operator Instructions] The first question comes from Gordon Lee from BTG Pactual. Gordon?

Just a quick question, Jaime, and you sort of mentioned this as an important driver in Europe and passing in your prepared remarks. But I was wondering if you could comment, you could share with us your view of some of the reports that we've seen from Europe suggesting that the EU will actually weaken or soften its ETS targets for this year and going forward. That's obviously had an impact on the sector stock prices globally. But I was wondering what your view is of those reports? And how do you think if this were to happen, it would impact your outlook for prices and profitability in Europe for CEMEX?

Gordon, thanks for the question. Although, as you know very well, that change -- potential change was not confirmed. The likelihood of it happening, right, is reasonable. But if it happens and when it happens, it's not going to change our pricing strategy in Europe. In the very short term, we are confident that on our mid-single-digit price increases targets for '26, '27, '28. If that regulation comes to place, it will flatten out the price increase curve, but it will not negate the need for industry mid-single-digit to high single-digit price increases over time. And at worst, it might just reduce by 1 percentage point, the need of price increases in the long term on a compounded annual growth rate basis. So I don't think it will be too material at all. The other thing that I see very positive, Gordon, is that it gives us time to continue our profitable decarbonization in Europe. We will continue using our traditional levers, particularly reducing clinker factor as fast as they can because we will continue reducing our CEMEX carbon cost curve, widening the gap between importers, some European cement players and us. And that will give us a competitive advantage. And by doing that, we might even positively influence the next benchmark in the next phase, which will widen the gap between our CO2 footprint and our cost curve and that of importers. And that's good. So -- and the final point is free cash flow, right, by postponing the target for 5 years, if that is what is -- it ends up happening, we're going to preserve more cash, and we will have more visibility on future CO2 prices, which will derisk capital allocation for more demanding decarbonization levers. So I hope that I have answered the question, Gordon.

And the next question comes from Adrian Huerta from JPMorgan. Adrian? Okay. So why don't we go on to the next question then. And the next question comes from Ben Theurer from Barclays. Ben?

Congrats on a good 2025, and let's move on to another good 2026. Quick one on your guidance. So you're kind of like assuming a low single-digit volume growth, as you pointed out within your slide deck. And from a pricing, it feels like another low single digits. So that would take us to something like a mid-single-digit sales growth. But obviously, additional savings from Project Cutting Edge. You talked about the operating leverage that you get from the better volume. Just wanted to understand and if you could elaborate more on the assumptions behind just the high single-digit EBITDA growth on a year-over-year basis? And what are the upside, downside risks you're seeing within that framework?

Ben, thank you so much for the question. What I can tell you is that I see more upsides than downsides. The first one is because of the FX. As you heard our comments, we decided to use a range of MXN 18.25 to MXN 18.50. So if the FX stays stronger, please note that for every peso of appreciation, right, we can increase EBITDA by around $75 million to $80 million. And the other aspect is that as part of our transformation and focus on operating excellence, we will continue to work on firming up new savings -- recurring savings. So that -- I'm very confident about our guidance, and there could be some upside potential. So thanks for the question, Ben.

Okay. I'm going to come back to Adrian Huerta from JPMorgan and see if he is online. Adrian, can you hear us? Okay. I'm going to move on then to the next question, which is via the webcast and is coming from Arnaud Pinatel from On Field. What are the one-offs mentioned for Europe in Q4? And could you quantify them?

Yes. Arnaud, how are you doing? Good morning. Had we excluded the one-offs, the EMEA margin would have been higher by 0.9 percentage points. And the one-offs were related to a few write-offs, the fact that in 4Q '24, we were giving an electricity reimbursement. And then we had a variation on the variable compensation provision at a consolidated level, but also affecting EMEA and Europe. This means that while in 2024, we reduced variable compensation provisions in the fourth quarter, in 2025 fourth quarter, we increased the provision. And there was a delta, and that affected Europe and it affected CEMEX fourth quarter margin at a consolidated level. And at a consolidated level, that effect was around 0.6 percentage points.

Okay. Thank you very much, Jaime. And I think we are going to take Adrian Huerta's question now by the webcast. So the question is the following. Just thinking about potential sources for additional free cash flow going forward coming from reduced expenses or CapEx. In the case of intangible investments, you are guiding to flat this year, but mentioned that some of this is due to mining rights. Will this type of investment on mining rights continue for a few years? What other items within intangibles were reduced? Other expenses that could be reduced going forward?

Adrian, thank you for the question. First, on intangibles, we have our process and IT investments. And then depending on how we procure, we acquire reserves, if those are mineral rights, that will be accounted under these intangibles. However, if we're acquiring purchasing reserves, not rights, it will be under strategic CapEx. Please note that we will continue reducing both strategic CapEx and intangibles. That's our plan for 2026 and is our plan for 2027 and beyond. It's part of our change in our capital allocation, and we will elaborate more about that during CEMEX Day. Nevertheless, when looking at 2026, we are already reducing IT investments by $61 million, which is a significant reduction from where we were in '25 and more so where we were in 2024. Do expect further reductions in 2027. Thanks for your question, Adrian.

The next question comes from Alejandra Obregon from Morgan Stanley. Ale?

Jaime, I have one for you. I think -- I mean, you've been close to a year in the role, and you've not only driven this very strong operational turnaround, but you've also reshaped the narrative and how the company tells the story. So I was just wondering if we can reflect on that first year, where do you think we could be underappreciating of the opportunities and risks of what you found? So meaning what are the biggest upsides that you found? And what are some of the challenges that you're facing now that you're -- I mean, you've been for a while in the job that will take you to the -- take CEMEX to the next chapter and to the long-term North Star. Like what are we missing? And what do you think are the upside and downside risks more -- I mean, beyond 2026?

Alejandra, thank you so much for the question. That's a great question that I'm very excited about it, and we will definitely elaborate a lot of it during the CEMEX Day. What I can anticipate to you is this, first opportunity and foremost is enhancing our shareholder returns. As we continue improving free cash flow conversion, right, we put at the center of our capital allocation strategy, the shareholders, that will lead to significant opportunity. The second thing is I continue to see as part of our transformation, further structural recurring savings on one hand, because we're not done yet, and we're working on it. And second, because we will responsibly deploy technology, including AI, right, to expand margins. And there are some use cases that look promising that could also boost margins and productivity. The other opportunity is to accelerate profitably our decarbonization in Europe to widen the gap of our cost carbon curve and therefore, CO2 footprint and that of importers and other European cement players. Not everybody is moving as fast as we or other leaders in the industry. And that will give us a competitive advantage in Europe, combined with resilient, mid-single-digit to high single-digit pricing expected for Europe. The other big opportunity is boosting free cash flow by reducing interest expenses, not only growth CapEx and intangibles. And that's a great opportunity. I also see bolt-ons M&A for the time being, first in the U.S. as an opportunity, but I recognize that, that could also be a challenge. I'm excited about gaining more exposure to infrastructure in the U.S., I also see opportunities to further rebalance our portfolio, not only between emerging and developed, but also unprofitable and profitable businesses. But I'll elaborate more about that in the CEMEX Day. Finally, challenges, the new normal, right, the geopolitical aspects that are out of our control and that make swings as we manage the business. That's why we will continue relentlessly focusing on the things that we control. So I hope that I have answered the question, Alejandra, but I look forward to seeing you in New York, and we will elaborate more about your question. Thanks, Alejandra.

The next question comes from Anne Milne from Bank of America.

So my question is really dedicated to Maher -- or directed to Maher. This year, almost -- most of your debt stack could either be -- is either maturing or callable with maybe 1 or 2 exceptions. You have, as you outlined in your press release, the bank facilities coming due. You have the EUR 400 million that's due. You have -- you can call the '29s at par, you can call the '30s and '31s above par, plus you have the perp that's also callable this year, the 5 and 8. You also talked about reducing your leverage and paying dividends. Could you talk about what your refinancing plans are? How much of this will get paid down? How much will you extend and what you're thinking in terms of the capital structure?

Yes. Thank you very much, Anne. Of course, as we said, we continue to aspire to a 1.5 to 2x net leverage level for the company through the cycle. which we believe that will take us into a solid BBB rating, which we think is very important for ourselves. So obviously, we will continue to use some of our free cash flow to further reduce debt, although priorities now are to return cash to shareholders, as we mentioned and also to focus on growth through M&A bolt-on transactions. Having said that, we do have exactly a number of opportunities for liability management. Number one, the subordinated notes actually come for reset in early September. The spread is -- the reset spread is 464 basis points over treasuries, which would make them prohibitively expensive. So that's one opportunity that we would like to address. As you know, we are also working on a transaction in the bank market that may come to the market in the next 2 or 3 -- couple of months, I will say, that may address some of the euro funding that we have that is callable already. And also, you're aware that we're in the market with a MXN 5 billion to MXN 7.5 billion CBORs, in the Mexican market, 5-year floating paper that is already publicly in the market, and we're expecting closing that transaction sometime in the middle of February, February 16, 17 and funding it. So there's a number of things that are happening that should give us the opportunity to do liability management in addition to, like we said, there are some bonds that are callable at an attractive -- already at a decent call rate -- call price. So we're looking -- we're constantly looking at NPV positive opportunities. And to the extent that happens, we will do that. We are guiding flat interest expense for the year, but there could be certainly a positive upside to that as a consequence of these transactions. Now having said this, and we are comparing ourselves to our peers, and we certainly would like to extend our average life, and we would like to create an even longer runway to future maturities. So we will be taking these opportunities to recalibrate our debt stack accordingly. I hope that answers your question.

Yes. On the subordinated perps, are you likely to replace them to get that equity treatment or that's under evaluation?

I can't say it is under valuation. It is under valuation.

The next question comes via the webcast and is coming from Paul Roger from BNP Paribas. Your U.S. cement prices were a little softer than the industry last year. Is that because you are quite coastal? Was there a particular region under pressure? And what's the pricing outlook for U.S. cement this year?

Paul, thanks for the question. Last year, we did see some soft demand and some more difficult competitive dynamics in a few markets. One was Houston. The other one was Northern Cal and then some markets around the mid-South, particularly Atlanta. I saw some softening of cement prices in inland markets as well. And that could be because there might be some excess capacity. As demand begins to recover as expected, right, that will begin to balance out, and that should support pricing going forward. For us, for '26, we have announced $8 per short ton across all our markets, except Houston and effective April 1st. Thanks, Paul, for your question.

Great. And the next question comes from Marcelo Furlan from Ita�. Marcelo?

Question is related to capital allocation. So you guys mentioned the divestment made to $25 million in other months in support. So I'd like to understand...

Marcelo, Marcelo, I'm sorry, Marcelo...

We cannot understand...

Yes, we're having a difficult time understanding you. I don't know if you can either submit by the -- yes, let's try now. Go ahead.

Is it better now?

I think it's a little better. Let's try. Marcelo, we are here. Yes, okay, go ahead.

Okay. Let me try again. So my question is related to capital allocation. So I just would like to know what we expect in terms of further divestments for 2026? And also, you guys mentioned that 2025 was marked by the aggregates business, which is actually working with 40% of total EBITDA in the U.S. So I just would like to understand if you guys, you know, looking for further divestments, what is the company's goal in terms of EBITDA contribution from the aggregate business in U.S. market. So that's pretty much it, guys. Hope you guys...

Okay. Let me -- Marcelo, let me rephrase because I think we're having a difficult time. But I think your question is what would you expect from potential divestments in 2026? And what would that potentially mean for reinvesting in the U.S. aggregate space moving from the current 39% of EBITDA. And so I think the question really, Jaime, is around potential divestments, use of proceeds of those divestments and what it might mean for our U.S. aggregate presence.

Yes, that's it.

Okay, Marcelo. Okay. Great. Thanks, Lucy, because I was struggling to follow up Marcelo's question. Yes, we are working on some divestments. And we are planning to use profits if and when we complete those divestments to invest them responsibly and accretively in the U.S. first. And we are prioritizing aggregates, bolt-ons, followed by mortars, renders, plasters because those businesses have great synergies. Why upstream? Because those businesses consume our admixtures, our cementitious materials, our sand. Also, they enjoy the same customer base, and there are some synergies in distribution and supply chain. So that's the space we're thinking in the U.S. And if you think about our M&A, we will do that very disciplined, right? We approved a new framework, right? And we will pursue only acquisitions provided that it's accretive to shareholders. Otherwise, we won't do them. And that's part of the new capital allocation and scheme, our strategy, and we will elaborate much more of that during CEMEX Day. So Marcelo, thanks for your question.

And maybe if I could just complement that, we are seeing a benefit from some of the investments that we've made in U.S. aggregates already. I would just note that we are guiding to a mid-single-digit increase in volumes for 2026 and a significant piece of that is coming from the inorganic side. Okay. The next question comes from Daniel Rojas from Bank of America. Daniel?

My question is on Claudia Sheinbaum recently announced investment plan. It may be too early, but I was curious maybe you have had some contact with the government to get these projects up and running as quickly as possible and that we might see some upside to volumes in the back half of 2026.

Daniel, thanks for your question. We began to see progress in the fourth quarter of last year. Things are happening. As you saw, the average daily cement sales grew sequentially by 8%, and that is because we are beginning to enjoy incremental new social housing projects as part of the President's social housing efforts. We are beginning to see as well Caminos Rurales that is intensive with bagged cement, and that's also happening. And we are beginning to supply some important infrastructure railroad and highway projects, as Lucy highlighted in her remarks. So yes, things are happening and all those projects are already part of our guidance for CEMEX Mexico volumes. So thanks for the question, Daniel.

The next question comes from Jorel Guilloty from Goldman Sachs. Jorel?

So you mentioned that infrastructure and social housing are key drivers for Mexico volumes in 2026. However, I wanted to understand how you're thinking about potential changes in volumes contingent on USMCA outcomes. In other words, if we have a USMCA review completion this year, what could this potentially mean for volumes? If USMCA review goes to 2027, what could this mean?

Okay. So we have not incorporated to our volume guidance for Mexico a very positive outcome from the negotiation of the free trade agreement. Should that happen, then we do see upside to volumes, which I guess, will materialize in 2027 and beyond. When talking to investors, they're waiting. And we will see many manufacturing industrial projects resuming as soon as the clouds around the negotiation settle down. I think that is the uncertainty of what might happen, what is affecting that segment of the market. In our guidance for '26, we haven't included any driver from the USMCA negotiation. So I see that as an upside risk to volumes. But it will take time for those projects to hit the ground and break ground, right? So I guess that we might get some late this year if it happens, but much more in '27. Thanks for the question.

We have time for one last question, and it is coming from Francisco Suarez from Scotiabank. Paco?

Congrats on the wonderful milestones achieved so far, looking forward for the next ones. My question relates with your overall guidance in energy cost per ton that you expect to increase this year. And it kind of struck me to see that because we already see a favorable outlook on oil and petcoke costs. But can you elaborate a little bit more if this is driven more by electricity costs or perhaps even more importantly, how these pressures in energy costs are unfolding geographically and where those pressures are higher and where those pressures are lower, that might be very helpful.

Francisco, thanks for your question. Yes, your reading is correct. In our guidance, we're expecting fuels to go down fuel cost. It is electricity where we see the increase, and that's what's supporting our guidance. And this is happening in 2 markets, Mexico and the U.S. Most of the increase, I'll say, around 65% of it is in Mexico. And that is because in '25, there was a one-off incentive to migrate to the wholesale market, which we will not have in 2026. And then the rest is in the U.S. where some utility companies that supply us, but based on their fuel cost and their mix of generation are announcing some cost increases as well. So those are the 2 markets where we see that increase in electricity. Fuels is down.

We appreciate you joining us today for our fourth quarter and full year 2025 results. We hope you'll take the time to join us for our CEMEX Day video webcast on February 26th as well as for our first quarter 2026 earnings call on April 23rd. If you have any additional questions, please feel free to reach out to the Investor Relations team. Many thanks.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect.

Good morning. Welcome, everyone, to the CEMEX Third Quarter 2025 Conference Call and Webcast. My name is Becky, and I'll be your operator for today. [Operator Instructions] And now I will turn the conference over to Lucy Rodriguez, Chief Communications Officer. Please proceed.

Good morning and thank you for joining us for our third quarter 2025 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 with an update on the progress made so far on our strategic plan, followed by a review of our business and the outlook for the remainder of the year. And then we will be happy to take your questions. Please note that although the sale of our business in Panama was successfully completed on October 6, these operations were reclassified as discontinued as of the end of the third quarter and have been excluded from our results for both 2025 and 2024. As communicated previously, we retained our admixtures business in Panama, which we will continue to operate. In the case of Couch Aggregates, after increasing our holdings to a majority stake, we are fully consolidating these assets and their results in our U.S. business effective September 1. And now I will hand the call over to Jaime.

Thanks, Lucy, and good day to everyone. Six months ago, I outlined our vision for CEMEX with 2 core objectives: attaining best-in-class operational excellence and delivering industry-leading shareholder returns. I also presented our strategic framework and the guiding principles to drive our company's transformation. These levers aim to enhance profitability, increase free cash flow conversion, improve asset efficiency and generate returns that comfortably exceed our cost of capital. Since then, we have worked relentlessly bringing together and aligning our entire organization with these principles. This has required sustained commitment and a willingness to embrace change at all levels. By engaging our teams and fostering a shared vision, we are ensuring that everyone at CEMEX is dedicated and empowered to deliver on our strategic plan. Today, I am pleased to share with you that while we still have much work to do, we are making important progress on our key priorities. As anticipated in our full year guidance, which assumed a significant year-over-year recovery in the second half, we're now seeing an improved performance in the third quarter. Consolidated EBITDA rose sharply, increasing at a double-digit rate with solid growth across our portfolio. Substantive margin gains in every region were largely driven by cost savings under Project Cutting Edge and higher prices. In the quarter, we made significant headway in the implementation of Project Cutting Edge with the realization of approximately $90 million in EBITDA savings. This keeps us on track to reach our 2025 full year goal of $200 million in savings. We continued executing on our portfolio rebalancing and growth strategy by divesting our operations in Panama while investing in targeted businesses in the U.S. with the consolidation of Couch Aggregates, strengthening our position in the Southeast. Our operations in Europe remain at the forefront of our decarbonization agenda and point to our climate leadership with net CO2 emissions on a per ton of cement equivalent basis ahead of the European Cement Association's 2030 target. All of these achievements serve as important stepping stones, strengthening our resolve to continue working towards our long-term goals. Third quarter results surpassed our recovery expectations for the back half of the year. Consolidated net sales are growing for the first time since the first quarter 2024 on the back of a stable volume backdrop and higher prices. Demand conditions in Mexico, while still soft, are showing signs of improvement, and Europe continues with its volume growth trend. The increase in consolidated EBITDA was supported by all regions with EMEA, Mexico and South Central America and the Caribbean region recording double-digit growth. EBITDA margin expanded by 2.5 percentage points, reaching its highest level for a third quarter since 2020. The U.S. and Europe reached record third quarter margins, while Mexico and our South, Central America and the Caribbean region posted multiyear margin highs. Net income performance in the quarter was largely explained by the prior year one-off gain from asset divestments. Adjusting for discontinued operations, net income is growing by 8% in the quarter and by 3% year-to-date. Free cash flow from operations benefited from higher EBITDA, lower interest costs and cash taxes. Importantly, the free cash flow from operations conversion rate, a key operating metric for our strategic plan, reached 41% on a trailing 12-month basis despite severance payments of $135 million. I expect free cash flow generation and the conversion rate to continue improving as we make additional progress on our strategic priorities. Consolidated volumes in the quarter were stable with growth in EMEA compensating for dynamics in other markets. While demand conditions are still soft in Mexico, we saw the first signs of improvement in the quarter. In the U.S., while year-over-year volume performance improved versus the first half of the year, we attribute this change primarily to an easier prior year comparison base. We are pleased with the positive trend in our operations in Europe. Cement volume growth was driven by higher activity throughout Eastern Europe and Spain with relatively stable performance in Germany and the U.K. Overall, while we have faced challenging volume conditions in 2 key markets this year, we remain optimistic on fundamentals going forward. With our renewed focus on operational efficiency, we're well positioned to capitalize on the strong operating leverage in our business once volumes improve. Consolidated prices were stable on a sequential basis, reflecting the customary annual first half price increases that generally prevail in our industry. On a year-over-year basis, consolidated prices are up low single digits, in line with our pricing strategy for at least covering input cost inflation. In Mexico, despite the volume backdrop, prices remain resilient with cement, ready-mix and aggregates prices increasing by a mid-single-digit rate since December. In the U.S., adjusting for product mix, aggregate prices are up 5% since the beginning of the year. In EMEA, rising cement prices in the Middle East and Africa more than offset performance in Europe. EBITDA growth was largely driven by our self-help measures and higher prices. Costs across the various categories declined by close to $80 million, accounting for approximately 2/3 of the like-to-like increase in EBITDA. Consolidated margin expanded by 2.5 percentage points with all of our regions as well as our 3 core products recording relevant margin gains. After a year of FX headwinds, we're benefiting this quarter from stronger currencies versus the dollar. In our Urbanization Solutions portfolio, better results in admixtures are partially compensating for still challenging conditions in other businesses. Going forward, our Urbanization Solutions business will primarily focus on admixtures, mortars and concrete products, which we believe offer strong synergies with our traditional core business as well as high margins. Under Project Cutting Edge, we have committed to an annualized recurring EBITDA savings of $400 million by 2027, with half related to overhead reduction. Importantly, with most of the actions required to achieve the overhead savings already done, we anticipate this effort to deliver about $75 million in the second half of 2025 and $125 million in 2026. We achieved about 40% of the 2025 overhead savings in the third quarter. We're also making progress on the implementation of the operating initiatives, including fuel efficiency, optimization of fuel mix, improvements in logistics and supply chain, among others. As a result of these efforts, both cost of goods sold and operating expenses as a percentage of sales are declining throughout all regions, leading to an expansion in EBITDA margin. With total EBITDA savings captured in third quarter of $90 million, we remain on track to reach our full year 2025 target of $200 million. As we go into 2026, we expect additional progress on Project Cutting Edge to further support margins. Complementing Project Cutting Edge, our ongoing business performance reviews should provide more visible improvements in EBITDA, profitability and free cash flow during 2026 and beyond. I am confident that by working with a clear focus on our key priorities of operational excellence, free cash flow conversion and return on capital, we will continue to identify opportunities to further optimize our operations. We're also advancing on our portfolio rebalancing efforts, creating shareholder value through disciplined capital allocation. As our growth strategy shifts towards prioritizing small to midsized acquisitions, we will reallocate capital to opportunities that are immediately accretive. We will continue seeking potential divestments in non-core markets to strengthen our position in the U.S. with a clear focus on aggregates and building solutions such as admixtures and mortars, which strongly complement our cement and ready-mix businesses. Allow me to emphasize that we will be disciplined when evaluating potential growth opportunities, following our return criteria and protecting our investment-grade capital structure. A clear example of this value creation approach is the recently announced transactions in Panama and Couch Aggregates in the U.S. We completed the divestment of our operations in Panama at an attractive multiple of about 12x. At the same time, we allocated part of the proceeds to acquire a majority stake in Couch Aggregates, a leading player in the aggregates materials industry across the Southeastern U.S. with an implied valuation of a high single-digit multiple after synergies. We expect that in the short term, this investment will offset the loss of EBITDA from the sale of our operations in Panama. This transaction is strengthening our aggregates footprint in the U.S., providing significant synergies and allowing us to better serve customers with a more complete offering. I am highly encouraged by our achievements in the quarter, which confirm that we're moving in the right direction, setting a strong foundation to position CEMEX as a more focused, agile and high-performing company. And now back to you, Lucy.

Thank you, Jaime. We are encouraged by our third quarter performance in Mexico. EBITDA grew 11%, marking the expected inflection point in quarterly performance underlying our annual guidance. A leaner cost base and higher prices drove this double-digit growth despite lower volumes. After a challenging first half, volume trends suggest an improvement in demand conditions. Average daily cement sales volume outperformed historical sequential seasonality patterns in the quarter despite heavy rains in August and September. In bagged cement, we benefited from a gradual rollout in rural road projects as well as other social programs. While demand in the formal sector remains soft, there are promising signs of recovery in the near term. In infrastructure, contracted volumes in our ready-mix backlog have increased in each of the last 4 months with several rail projects expected to commence construction soon. We are seeing incremental activity in projects related to the 2026 World Cup in Mexico City, Monterrey and Guadalajara with investments in roads, metro lines, airport terminals, stadium renovations and hotels. The social housing program, which was recently expanded to a goal of 1.8 million units during the administration's 6-year term is accelerating. We are already participating in the construction phase of several projects, which represent about 26,000 units with a similar amount in the planning phase. Prices for cement continued their positive trajectory with a sequential increase of 1%. Over the first 9 months of the year, cement, ready-mix and aggregate prices are up by mid-single digits, working to offset input cost inflation. We recently announced a mid-single-digit price increase in bagged cement. Project cutting-edge initiatives are already delivering relevant operational improvements, reflected in the 5 percentage points of margin expansion in the quarter. We believe we have additional opportunities to further drive margins in 2026. Importantly, the 33.1% EBITDA margin achieved in the quarter was the highest level for our Mexican business since 2021. Going forward into 2026, as the government enters its second year in office, we expect to see the customary pickup in infrastructure spending as well as potential benefits from the upcoming renegotiation of the USMCA trade agreement. As demand conditions improve, operating leverage should continue supporting profitability in Mexico. Our operations in the U.S. reached a record third quarter EBITDA and EBITDA margin, driven by increased cost efficiencies and higher prices. While year-over-year volume performance improved in third quarter, this was largely due to an easy comparison base resulting from adverse weather conditions in the prior year. Adjusting for ready-mix asset sales and the consolidation of Couch Aggregates volumes for our 3 core products declined by 1%. Demand continues to reflect strength in infrastructure, offset by persistent softness in the residential sector. With 3 consecutive years of volume declines, we have seen increased competitive pressure in select markets within our footprint, explaining the slight decline in sequential cement prices. In aggregates, we continue to experience robust pricing with prices adjusting for product mix, rising 5% since December. Our efforts to improve cement kiln efficiency continue to pay off in the U.S. with domestic production replacing lower-margin imports leading to relevant EBITDA gains. In our aggregates business, which is responsible for about 40% of EBITDA within the U.S., we continue to focus on initiatives to make our operations more efficient as well as expand our production. The recent upgrade of our Balcones quarry in Texas, one of the largest quarries in the United States, is optimizing our cost structure and contributing to higher margin. The recent consolidation of Couch Aggregates, along with other expansion projects in Florida and Arizona are expected to increase our aggregate production capacity by about 10% in 2026. Going forward, we expect infrastructure to continue driving demand as IIJA transportation projects continue to roll out. About 50% of funds under IIJA have been spent with peak spending levels expected during 2026. We remain optimistic about the outlook for the industrial and commercial sector, which continues gaining momentum with health care projects, data centers and chip manufacturing facilities being planned in our markets as well as relevant works in the Cape Canaveral. While there is continued weakness on single-family residential, we see strong potential over the medium term as mortgage rates decline and market sentiment improves. It is important to highlight that as in the case of Mexico, operational leverage should result in additional benefits once volumes recover. Our EMEA region continued with its strong performance, reaching new records in EBITDA and margins in both Europe and the Middle East and Africa. In Europe, high single-digit growth in cement volumes was mostly driven by infrastructure throughout Eastern Europe, with housing activity also boosting demand in Spain. In the U.K. and Germany, volumes are stabilizing. Infrastructure activity driven by EU funding, along with a gradual recovery of residential should continue supporting construction in the region. In the Middle East and Africa, ready-mix and aggregate volumes expanded by 13% and 1%, respectively. The slight decline in cement volumes is explained by a temporary regulatory impact in Egypt with demand already improving on strong market fundamentals. Higher cement prices in the Middle East and Africa more than offset dynamics in Europe. While price performance in Europe is largely explained by geographic mix, we have also faced some limited competitive pressure in specific markets. For the full EMEA region, cement ready-mix and aggregate prices are up low single digits since year-end. Our European operations remain at the forefront of our decarbonization efforts, having already surpassed the European Cement Association's 2030 consolidated net CO2 emissions target, further reinforcing our position as an industry leader. The implementation of the carbon border adjustment mechanism in 2026, along with the gradual phaseout of the free EU ETS allowances should be supportive of cement prices next year and beyond. We remain optimistic on the outlook for the region with a continued positive trend in infrastructure and further recovery in residential. Our South Central America and the Caribbean region posted impressive results with EBITDA rising by 54% and margin expanding by 6.8 percentage points. This strong performance was driven by several factors. The completion of the debottlenecking project in Jamaica, allowing us to substitute low-margin imports with domestically produced cement, benefits from savings realized under Project Cutting Edge, improved demand conditions in both Colombia and Jamaica and a more favorable prior year comparison base. In Colombia, demand is being driven by the informal sector with a rebound in bagged cement volumes and the metro project in Bogota. In Jamaica, we are seeing tourism-related developments along with improved bagged cement sales supported by remittances. Sequential prices for cement and ready-mix in the region are broadly stable with variation explained by regional mix. We remain optimistic on the medium-term outlook for the region, where improved consumer sentiment and formal construction are expected to drive demand. And now I will pass the call to Maher to review our financial development.

Thank you, Lucy, and good day to everyone. We are very pleased with our performance in the quarter. On the back of single-digit growth in our top line, we delivered 19% growth in EBITDA. Free cash flow from operations was close to $540 million, an improvement of more than $350 million versus third quarter of last year. The year-over-year growth was driven by the initial effects of our cost-cutting efforts, lower maintenance CapEx, interest expense and taxes. Adjusting for extraordinary items such as the payment of the Spanish tax fine in 2024, discontinued operations and severance payments, this year, free cash flow for the quarter grew 29% to approximately $600 million. In line with our normal seasonality, we saw a divestment of more than $130 million for working capital during the third quarter, and we expect this favorable trend to continue in the fourth quarter. Our year-to-date average working capital days stood at negative 10 days, an improvement of 5 days versus the same period last year. Our free cash flow conversion rate reached 41% for the trailing 12 months ending in September versus 35% for the full year 2024. As mentioned earlier, we are seeing the initial benefits from our efforts to optimize our cost base under Project Cutting Edge. During the third quarter, cost of goods sold as a percentage of sales was 71 basis points lower year-over-year, while operating expenses as a percentage of sales were 164 basis points lower. Energy cost on a per ton of cement basis declined by 14% in the first 9 months, driven by lower fuel and power prices and a continued improvement in clinker factor and thermal efficiency. Record net income of $1.3 billion for the first 9 months of the year was driven primarily by the sale of our operations in the Dominican Republic, a favorable FX effect and lower financial expenses. Our leverage ratio under our bank debt agreements stood at 1.88x in September, moderately higher than at the end of last year. We expect our leverage ratio to end 2025 below last year's level. We have fine-tuned our full year guidance for working capital and now expect a range of $0 to $50 million in incremental investment compared to the prior year. In the case of cash taxes, we now anticipate $350 million in 2025, which is $100 million lower compared to our previous guidance. And now back to you, Jaime.

Thank you, Maher. In light of our year-to-date results and reflecting the progress achieved in Project Cutting Edge, we are maintaining our full year EBITDA guidance unchanged, expecting a flat performance versus 2024 with potential upside. Based on more visibility, we have made some small adjustments to elements in our free cash flow spend guidance that should positively impact 2025 free cash flow generation. We remain focused on the implementation of our strategic plan, delivering EBITDA savings under Project Cutting Edge, higher free cash flow conversion rate and returns above cost of capital. We will keep you updated as we continue making progress towards these objectives. And now back to you, Lucy.

Before we go into our Q&A session, I would like to remind you that any forward-looking statements we 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. [Operator Instructions]

First question comes from Carlos Peyrelongue from Bank of America.

Congratulations, Jaime, Maher and Lucy, on the strong results. My question is related to cash conversion. It improved materially in the last 12 months. What should we expect for next year and 2027 besides the cost-cutting that you mentioned as part of Cutting Edge, what else could drive higher cash conversion in the next 2 years?

In 2026, I'm targeting around 45% free cash flow conversion from operations, and you do expect further improvement beyond '26. We should be targeting around 50% free cash flow conversion from operations. What is driving and will drive this improved performance is basically a reduction in strategic CapEx and an optimization in platform CapEx. We will continue reducing interest expenses for the most part. So that's how we're going to do it, and I feel pretty comfortable about 2026 45% free cash flow conversion.

The next question comes from Adrian Huerta from JPMorgan.

Congrats on the results. You touched base a little bit on my question, which is regarding Mexico, especially for 2026. You mentioned the increased backlogs in the last 4 months on the infra side. We've seen different actions kind of happening but not being advertised on the infra side. In prior presidential changes, we saw volumes recovering 30%, 50% of the volumes lost in the prior year. It seems like this year; volumes are going to be down high single digits as you're expecting. Is that -- given what you're seeing so far, can we say that we could potentially at least see that type of recoveries closer to half of the volumes lost this year? And if you can give us additional color on what else you're seeing that is giving you confidence on that?

Adrian, thanks for your question. Well, first of all, I don't think I would be crazy if I told you that volumes -- the demand volumes in Mexico next year should grow by no less than 2.5% to 3% and when demand volumes grow, some of it driven by infrastructure, CEMEX tends to do very well because we do have an extensive technical and operating capability to serve complex infrastructure projects, both highways and rail. This means that most probably, we would be gaining some market share next year in the infrastructure sector as it gets back on track, potentially 1 percentage point market share, which is what we normally lose when infrastructure becomes weaker. So we're ready to see that unfolding next year, supported by infrastructure. To give you a little bit more of examples, right now, we're executing projects such as Escolleras, Dos Bocas, terminal de carga in Quintana Roo, Camino Real, Colima, [indiscernible] La Primavera in Sinaloa. And we do have an extensive number of projects in the pipeline, [indiscernible], so on and so forth. So definitely, we see a better outlook for Mexico for next year. To what extent, I'm comfortable saying that demand will grow by at least 2.5%, close to 3%. Please also note that we do see already the social housing unfolding. As Lucy highlighted, we are supplying already projects. And when I talk to our partners, customers, they are becoming more excited about the social housing program. And then I don't know what you think, Adrian, but if interest rates in Mexico continue dropping a bit, that should be supportive of a very resilient formal housing sector, which has been surprisingly good so far this year. I hope I have answered your question, Adrian.

Thanks, Adrian. And if I could just complement, we, of course, will continue fine-tuning our thoughts on next year, and we'll give guidance on Mexican volumes in early February, but we are quite positive. The next question comes from Francisco Suarez from Scotiabank.

Congrats on the wonderful execution, exciting times for sure. My question relates with the massive EBITDA margin expansion in Mexico in the quarter. Can you give us a little bit of color on the breakdown roughly of the 500 basis improvements between, say, Project Cutting Edge, how much of that was also driven by lower pet coke prices? How much was by thermal substitution, perhaps prices or any other thing that you can give us a little bit more color?

Francisco, thanks for your question. Well, yes, we had a solid 5-percentage-point expansion. It explains basically around the following: #1, prices close to 4-percentage-point. Then very pleased with our SG&A and corporate reductions that contributed with around 0.8-percentage-point improvement. variable cost, 0.9-percentage+point; fixed cost around 0.3-percentage-point. When you look at variable cost, energy continues to be a tailwind, both electricity, although there, I must acknowledge that last year, we had a one-off, but still it's tailwind as we take advantage of the wholesale electricity market, right? And then positive contribution of fuels, around 1.1-percentage-point. So that was also encouraging with a minus 18% decrease in unitary fuel cost. So I hope that I answered your question.

So that creates a wonderful foundation for further improvements in 2026 on your operating year-end, isn't it?

Well, in Mexico, particularly, we're targeting to be the most efficient operator in the country. We've done extensive benchmark with others, although we have a different business model Francisco, mainly in retailing, but we are seeking to be best-in-class in margins in Mexico.

Thanks, Paco. And to your point, Mexico is the region that probably has contributed the most to date in terms of Project Cutting Edge, and we do believe that next year a lot of that will continue. The next question comes from Anna Schumacher from BNP Paribas. Is the industry deprioritizing CCUS? I appreciate CEMEX has always taken a pragmatic approach. Could your schemes like Rudersdorf be delayed? And how will you decide?

Thanks for your question. You're asking me whether the industry is deprioritizing CCUS, among other things, I won't answer on behalf of the industry, but I'll give you a color on how we think in CEMEX. We've always prioritized first traditional delevers -- sorry, levers to decarbonize. And on that, we're doing pretty well. We continue to see a good runway to continue deploying traditional levers, particularly a significant reduction in clinker factor, further improvement in energy efficiency and beyond Europe, a ramp-up of alternative fuels with biomass content. CCUS continues to be a lever that CEMEX will need a midterm. And we will deploy CCS projects provided that they are accretive to value creation. And for the time being, for that to happen, we need 2 things: significant subsidies on both CapEx and OpEx and then green premium. And in that -- regarding the latter, we are excited about potential bilateral agreements with some offtakers under the book-and-claim scheme that we're working on. But again, although I recognize that CCUS is fundamental for net zero we will not deploy CCS that destroys value. We need to do more work on regulations, right? And we will not deploy CCS in an asset that we might not continue running long term. So as we speak, we're reviewing, particularly in Europe, right, our asset footprint because we do see opportunity to optimize our asset base. Some of our kilns might be converted to produce calcium clays, while we do micronization technologies to reduce clinker factor and introduce new blends. And our priority for decarbonization continues to be Europe, followed by California. And everywhere else, we're profitable and accretive to shareholder returns, we will continue decarbonizing because it continues to be a priority. Thanks, Anna, for the question.

The next question comes from Yassine Touahri from On Field.

Congratulations for the fantastic results. My question would be around the price for next year. Could you -- have you already sent a letter to your clients in the U.S. and Europe for 2026 price increase? Could you provide an order of magnitude of the price increase that you would like to deliver in those 2 regions? That would be very helpful. And could we see -- I think prices in the U.S. and Europe were a little bit muted in 2025. Could we see a change in direction next year?

Yassine, thanks for your question. We haven't yet sent our price increase letters to our customers. We're working on it but allow me to share with you the way I'm thinking -- the way we're thinking. Across all our markets, our pricing strategy should more than offset input cost inflation. We're excited about Europe because next year, we will begin to see the CBAM, which could add between EUR 5 to EUR 10 per ton when you think about what importers would have to start paying. In the case of CEMEX, right, we do have an advantage because in Europe, we have much lower CO2 footprint on clinker and cement terms. But the way we're thinking is we understand that competitors, local producers do not have enough CO2 surpluses, would need to buy CO2 credits at EUR 77, EUR 75 per tonne. And then you need to include the CBAM from imports because the Turks, the Algerians and others do have a CO2 footprint per tonne of clinker and cement that is much higher than the European benchmark. And next year, in 1Q, the European Union will publish the new benchmark. It could be as low as 650 kilos per tonne of clinker. So it means that we're going to have the CBAM. And if producers do the math the way I do it, which is thinking about the CO2 incremental cost, right? I'll say that there could be interesting pricing characteristics in Europe. As we speak, I'm reviewing macro market by macro market, but I'm excited about that. And in the U.S., we will -- unlike in 2025, 2026, we will, right, target price increases, hopefully to more than offset input cost inflation, recovering what the opportunity lost in 2025. Now what's new is tariffs, right, and potentially some FOB cement and clinker price increases out of the Med Basin, which could be positive for the Gulf Coast and the Eastern coastal U.S. markets. So I hope that I have answered your question.

And the next question comes from Ben Theurer from Barclays.

Jaime, congrats on the great execution here once again. I wanted to follow up real quick on the performance in the U.S., particularly as it relates to volume. Clearly, you've highlighted it was still down across all segments. But I wanted to understand if you're seeing any regional differences in the performance. And if you could maybe dig a little bit deeper into the subcategories, residential versus industrial, commercial and infrastructure as it relates to the U.S. volume in specific.

Ben, thanks for your question. Yes, as we speak, and I'm relating more to the third quarter, we saw weaker volumes in Florida and California and Arizona, partially compensated by growth in Texas, Colorado and the Mid-South. And the outlook looks like this. We do continue to see strong infrastructure. Nothing tells us that, that dynamics will change next year. On the contrary, because of what Lucy explained about the infrastructure bill and how it will -- the investment will peak in 2026. We continue to see data centers, chip factories, second phases and projects around chip factories, some high heavy commercial jobs, right? But what continues to be weak, and I don't think it will recover next year is single-family homes is residential. You know that mortgage rates are reducing, now around 6.3%. I think mortgage rates will stay for longer at around 6%. And I believe that we need to see the Americans who need to buy a house to emotionally understand that mortgage rates might not drop significantly sooner, and that might trigger the need to jump and purchase a house. But I don't think that's going to happen in the short term in '26. So I'm expecting still a -- stabling though, stabilizing, though, but a weak residential, and I hope to see that recovery in 2027. I do expect U.S. demand to grow next year low single digit, though.

The next question comes from Alejandra Obregon from Morgan Stanley. Can you elaborate on the evolution of your optimization plans and yield improvement initiatives at Balcones in Texas? And how can these translate into profitability improvements in Texas as you substitute imports with domestic production? Is there room for similar improvements in any other plant in the U.S.

Alejandra, thanks for your question. First, allow me to explain a little bit what we're doing in Balcones. We are using artificial intelligence to help operators run our raw mills, the kilns and the cement mills in autopilot, allowing the artificial intelligence to take on real-time decisions on operating parameters. And what we're finding is that we do see between high-single-digit to double-digit, low teens yield increases. Basically, the artificial intelligence uses good data much faster to adjust operating parameters that otherwise a human being will need to wait for days, particularly when it comes to adjusting chemistry because of quality adjustments of raw materials. So it's very exciting. And clearly, we do see the opportunity to expand and scale the technology to all our cement plants in the U.S. because all of them present opportunities for increased yield. This year, we've seen a solid improvement that led to so far, an increase in cement production of more than 500,000 short tons. And that's clearly expanding margins as we replace imports, but also as we operate in a stable environment, which leads to improved energy efficiency. Do expect more to come. The potential is simple. I'm targeting -- we are targeting, my U.S. folks are targeting incremental 1 million short tons more from our current asset base. Clearly, the technology will help. And that means that you should expect further cement margin improvement in the U.S. going forward. It could be as high as 2 to 3 percentage points midterm. Thanks for the question, Alejandra.

The next question comes from Gordon Lee from BTG Pactual.

Congratulations on the results. Just a quick question, Jaime, and you addressed this a little bit in your opening remarks, but I was wondering if you could speak a little bit more about the Urbanization Solutions business and specifically, the decline that we've seen year-to-date in revenue and EBITDA, is that a function of the completion of projects? Or should we interpret that as a strategic deemphasizing of its relevance within CEMEX or maybe also as a product of the implementation of Cutting Edge?

Gordon, thanks for the question. The reduction in sales and EBITDA are unrelated to completion of projects. The reason why you see a drop in sales and EBITDA is mainly twofold. It's concrete block Florida, for obvious reasons, weakness in residential and then is Mexico infrastructure because of our concrete paving solutions because of much lower infrastructure activity. Those 2 continue to be core to everything we do because as you can understand, it's very synergetic, right, upstream with raw materials, cement, admixtures, aggregates, but also distribution and downstream with a similar customer base. But because you're asking the question about deemphasizing, what I can tell you is that we are reviewing the umbrella of Urbanization Solutions. And I do see some businesses that will not remain under Urbanization Solutions as such businesses because most of what we report is on internal transactions. Let me give you an example that is New Line Transport business in Florida. So that's a good example, 98% of what we do is internal, and we do sell to third-party shippers, but we're not planning to grow that business. So any business that we are not planning to grow going forward would not be part of Urbanization Solutions. As we speak, we're very excited about admixtures. We will continue to be there. It's a very solid business. And next year, we will begin to share more data about every vertical. I'm very excited about mortars, stuccos, renders because it's very synergetic and we know it very well, right? And also recycling concrete, recycling aggregates, recycling construction demolition waste where it makes sense, micromarket by micromarket and concrete products such as sleepers, concrete block and infrastructure, which I see it is a vertical that we -- where I see significant opportunity for accretive growth. So I hope that I have answered the question, Gordon.

The next question comes from Anne Milne from Bank of America.

My question is on the debt profile. So you -- a couple of things. One, you have large maturities next year. It looks like most of that is in the debt market. And if you could just give us an idea, sort of some of the thoughts you have for that. But also your average life is 3.7 years, your yields on your bond now are pretty attractive. I mean, spreads on your 31 bonds are somewhere between 20% and 25% over Mexico, just about 100 and something, low hundreds over U.S. treasuries. Just wondering if you were thinking maybe, you could extend out a little bit from here. And then related to that, I like the number of net debt with a 5 handle, $5 billion or something. And I also like leverage with the 1.88 number. I also know that CEMEX is looking on doing some -- potentially some acquisitions. Do you have a range where you'd like to see leverage going forward? So it's all on the debt profile.

So I will pass the word to Maher to answer the first part of the question. So Maher, you'll take that. I just want to tell you about the leverage. Look, I'm more comfortable using the fully loaded leverage. I don't think that bank leverage has any meaning going forward. And the range I want to set up is between 1.5x to 2x, fully loaded. Back to you, Maher, you may answer the question.

Yes. Thank you, Jaime. And thank you, Anne, for the question. I -- we're totally aligned, and we definitely think that from the rating agencies' perspective and the debt markets, using the fully loaded leverage ratio makes a lot more sense. And to your question about balancing between investment grade versus potentially slightly higher leverage, we feel very comfortable with that, especially as our EBITDA improves. over the next 12 to 24 months and beyond. We think that, that will give us -- will -- definitely that plus cash on hand as a consequence of some of our portfolio rebalancing efforts, we should have more than adequate M&A capacity without really risking our ratings and in fact, maybe driving our ratings towards the BBB, solid BBB metrics. So we're very comfortable with that. We don't see any divergent kind of forces in that respect. Now in terms of the maturities, we definitely -- we agree with you. We like the yields that we see. Of course, we'd like them to be lower. And certainly, we'd like them to tend towards our peers, which are probably a good 15% to 20% lower than ours. And definitely, we are looking at extending maturities. One thing I would like to highlight to everybody is that if we include the 2 subordinated notes that we have, which is $2 billion into our debt profile structure, just hypothetically kind of giving them a 10-year tenor from issuance date, our average life would be closer to 5 years. Having said that, the market on the long end is very attractive. So definitely, we are thinking potentially about extending maturities. Of course, we're always balancing cost of debt versus tenor. But certainly, the positivity of the markets leads us to believe that that's something that perhaps we should consider next year. And as you know, there are some maturities coming up. There's the loan -- the term loan facility is getting closer. We have a EUR 400 million bond that is due next March. So we have a lot of flexibility in terms of liability management and our ability to take advantage of that. The other thing is one of the subordinated notes resets next year. The 5.125 resets next year to -- by quite a bit, which again gives us the opportunity to potentially do something with that as well. So thank you. I hope that answered your question.

Yes. I just have one clarification. When both you and Jaime mentioned fully loaded debt, are you talking about financial debt and leases or something in addition to that as well?

No, we're talking about adding the subordinated notes to the total debt outstanding.

Okay. So that would be in the 1.5 to 2 range figures.

Right.

And the next question comes from Jorel Guilloty from Goldman Sachs Goldman Sachs.

Mine is a more big picture question. So I was wondering if you could provide some color as to how you see the capacity of CEMEX after Project Cutting Edge is completed in 2027. In other words, given the leaner structure you're pursuing, what will be the capacity of the company that we see at the other end of this? Are you thinking that it's a lower yet more profitable volumes? Is it a larger company growing through acquisitions with a leaner base? Just to get a sense of this cost structure vis-a-vis your capacity going forward?

Jorel, thanks for the question. What we see going forward for the time being is a company that achieves excellence in operations and very strong best-in-class shareholder returns. This means that as volumes grow and markets recover, we have very significant operational leverage, which we will enjoy. We want to achieve -- we will have a very responsible capital allocation with very strict parameters and always credit investment rating no matter what we do and a company that does return cash to shareholders. Yes, we do want to do bolt-ons in the U.S. first around aggregates, mortars, renders for the most part, right? And a company that relentlessly looks at its portfolio to have businesses that deliver ROIC above cost of capital and free cash flow conversion at a consolidated level of no less than 50%. For the time being, we are prioritizing the U.S., Mexico and Europe as the regions where we want to grow. And finally, socially responsible, right, adding value to the communities where we do business, and doing so sustainably from a safety standpoint, right, attracting best talent in the industry and decarbonizing while also taking care of biodiversity and water management. So that's what I can tell you for the time being, Jorel. Thank you for your question.

We have time for one last question, and it's coming from Adam Thalhimer from Thompson, Davis.

Congrats on the strong Q3. And I was curious if you could update us, Jaime, on -- and you just touched on this a little bit, but the outlook for U.S. M&A. What are you looking at? What's ideal and potential time frame?

Adam, thanks for your question. We -- first of all, we are strengthening our team with a few key additions who are bringing great expertise and capabilities on bolt-on acquisition strategy and deployment, and that was important. At #2, we are strengthening the pipeline. So far, we are looking at 100 family-owned aggregate targets in the U.S. And we're beginning to engage with many of them with flexible approaches as we did in Couch, as an example, meaning we entered with a minority equity option to acquire a majority equity holding, so on and so forth or full acquisition. We're also looking at mortars, stuccos, renders because, Adam, those businesses, we know how to run, and they are very synergetic because upstream, right, those businesses consume our cement, our cementitious, some of our sand and our admixtures solutions. And it also brings distribution synergies, I mean, logistics and more importantly, customer base synergies. And then we do want to explore some niche opportunity in admixtures as well in the U.S. and elsewhere in Europe primarily. So that's what we're looking at for the time being. And allow me to take advantage of your question just to highlight that, again, we will anchor any decisions to preserve our IG rating. And we've got very clear metrics for acquisitions, such as, you know, free cash flow per share, which must be accretive in year 1, definitely ROIC over WACC plus 100 basis points in midterm, any acquisition we do with synergies with around 3% of sales so that we drive the multiple to high single digit. right? And again, focus is going to be on aggregates and mortars, renders, and stuccos. I hope I answered your question, Adam. So muscle is -- we're working the muscles, and we will be deploying as the opportunities come along, nurturing them in the U.S.

Thank you, Adam. We appreciate you joining us today for our third quarter results, and we hope that you will come back again for our fourth quarter 2025 webcast on February 5, 2026. If you have any additional questions, please feel free to contact the Investor Relations team. Many thanks.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect your lines. Good day.