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…

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…

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…

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.