Q3 2025 Grupo Mexico SAB de CV Earnings Call
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Natalia Ortega: Good afternoon, and thank you for holding, and welcome to Grupo México, S.A.B. de C.V.'s third quarter earnings conference call. With us this afternoon are all of Grupo México, S.A.B. de C.V.'s top executives, who will discuss the financial performance of the company during the third quarter 2025 results, giving you a summary of the latest news and addressing any questions you may have at the end of the call. Before we begin, I would like to remind you that information discussed on today's call may include forward-looking statements regarding the company's results and prospects, which are subject to risk and uncertainties. Actual results may differ materially, and the company cautions not to place undue reliance on these forward-looking statements. Grupo México, S.A.B. de C.V. undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Good afternoon, and thank you for holding and welcome to Grupo Mexico's third quarter earnings conference call with US. This afternoon, and our oldest group of Mexico's top executives, who will discuss the financial performance of the company during the third quarter 2025 or so.
Giving you a summary of the latest news and addressing any questions. You may have at the end of the call.
Before we begin I would like to remind you that information discussed on today's call may include forward looking statements regarding the company's results and prospects, which are subject to risks and uncertainties.
Actual results may differ materially and the company cautions not to place undue reliance on these forward looking statements critical make undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information future events or otherwise.
Natalia Ortega: All results are expressed in full US GAAP. The presentation may be followed through our webcast, but if you wish to ask a question during the Q&A session, you will need to do so via a phone call by pressing star 11. A copy of the slides that the company will be reviewing today is available on the website at grupomexico.com. At this moment, I would like to remind everyone that your lines must be in listen-only mode until the question and answer session. Now, I will begin with Natalia Ortega with Investor Relations. Please go ahead. Natalia, your line may be muted.
Our results are expressing full U S. GAAP. The presentation may be followed through a webcast, but if you wish to ask a question during the Q&A session you will need to do so via phone call by pressing star one one a.
A copy of the slides that the company will be revealing today is available on the website at Grupo Mexico Dot com at this moment I would like to remind everyone that your line must be in listen only mode until the <unk> and answer session now I'll begin with Nathalia Ortega with Investor Relations. Please go on.
Hey.
And Italia your line may be muted.
Marlene Torre: Sorry. Good afternoon, everyone, and thank you for joining us today for Grupo México, S.A.B. de C.V.'s third quarter earnings conference call. Sitting with me today are the top executives from our three divisions. During our call, we will be following a presentation that can be downloaded from our website or followed by accessing the webcast. Today's detailed program can be found on slide number three. I'll kick off with Grupo México's ESG highlights, followed by the quarter scorecard and financial highlights. Then, Leonardo Contreras will provide detailed information regarding our mining division's main highlights, project updates, and comment on the industry's economic environment. He will then be followed by Alberto Vergara, who will go through the financial results and main events of our transportation division. Lastly, Mario Chavez will comment on the infrastructure division's relevant events.
Sorry, good afternoon, everyone and thank you for joining us today for a group will make a good third quarter earnings conference call sitting with me today are the top executives for Mercury Division during our call. We will be following a presentation that can be downloaded from our website followed by accessing the webcast.
Todays detailed program can be found on slide number three.
Pick up with Grupo Mexico's ESG highlights followed by the quarter scorecard and financial highlight.
You'll note that the data will provide detailed information regarding our mining division's main highlight project update you comment on the industry's economic environment.
He will then be followed by a good way to go that will go through the financial results and main events of our transportation Division.
Lastly, Mario Chavez will comment on the infrastructure division's relevant event.
Marlene Torre: As usual, at the end, the line will be open for questions and answers. With that being said, let's go through our main ESG highlights on slide number five. Here you can see that we made progress in our sustainability ratings, increasing 9 points over the previous year. This result places the company at the top of the performance ranking in the mining sector, with a score well above the industry average. Next, with the electricity supply that the Fenicias Wind Farm is providing to our underground mines, we have been able to avoid the emission of 180,000 tons of greenhouse gases so far in the year, equivalent to supplying electricity to 40,000 homes in Mexico. In 2025, we restored 67 hectares at Buenavista in Sonora and nearly 10 hectares at the Ita Wetland in Peru, reintegrating areas previously impacted by our operations and providing environmental services.
As usual at the end the language would be opened for questions and answers.
With that being said, let's go through our <unk> highlights on slide number five.
Here you can see that we make progress and I used to think ability ratings, increasing nine points over the previous year did result places the company at the top of the performance ranking in the mining sector with a score well above the industry average next with the electricity.
Like can you just win pardon me, providing two underground mines, we have been able to avoid the admission of 180000 tons of greenhouse gas. It so far in the year equivalent to supplying electricity to 40000 homes in Mexico.
25, we restored 60000 hectares, but let me think to know that in nearly 10 years at the ether wetland ebay reintegrating areas previously infected by your operation and provided environmental services.
Marlene Torre: Additionally, we prepared streams and terraces and installed assisted irrigation systems on almost 200 hectares in Sonora, which will be reforested this year. Moving on to slide number six, we can see that Fundación Grupo México's health training offered over 20,000 free consultations in Sonora, making it the most impactful visit in its history. Furthermore, on its nine previous visits, it provided 59,000 consultations and 70,000 medicines. This solidifies Doctor Bagon as a key traveling health project in Mexico. Lastly, for the 11th year, Fundación Grupo México's Volunteer Day brought together over 6,000 volunteers in Mexico, Peru, and the U.S., benefiting 42 institutions focused on food security, children, and nutrition. Six tons of food were collected for local community kitchens in the regions where the company is present. These actions show Grupo México's commitment to social participation, solidarity, and community well-being.
Digitally we prepared strengthened terraces and installed.
Irrigation systems, and almost 200 hectare things, you'll know that which will be reported this year.
Moving on to slide number six.
We can see that that's younger could make it go tell stream upward over 20000 free consultation fees are not making it the most impactful busy in its history.
They're more on the nine previous visit it provided 59000 consultations and 70000 Medicaid This solidifies the Paragon as a key traveling health project in Mexico.
Lastly for the 11th year in that younger people make you could volunteer day brought together over 6000 volunteers in Mexico, Peru, and the United States benefiting 42 institutions focused on food security children and nutrition.
Six tons of food were collected for local community kitchens in the regions, where the company is present.
These actions show Grupo Mexico's commitment to social participation solidarity and community wellbeing.
Marlene Torre: Now, let's continue with our scorecard on slide number seven. Our cumulative revenues for the first nine months of the year totaled over $13 billion, representing an increase of 5.7% when compared to the first nine months of 2024 and 11.3% higher versus the third quarter of 2024. These increases were mainly driven by our mining division's excellent performance. Our EBITDA showed an increase for the first nine months of the year of 9.4% when compared to the same period of last year. This increase is even higher when compared to the third quarter of 2024, with an improvement of 15.3%, reaffirming our corporate cost control perspective. Our net cash cost amounted to $0.92 per pound, a 17.9% improvement compared to the first nine months of 2024, reflecting a reduction of $0.20 and a 24.9% improvement compared to the third quarter of 2024, with a $0.26 reduction.
Now, let's continue with our scorecard on slide number seven.
Our accumulated revenues for the first nine months of the year totaled over $13 billion, representing an increase of five 7% when compared to the first nine months of 2024, and 11, 3% higher versus the third quarter of 2024.
These increases were mainly driven by our mining division excellent performance.
EBITDA showed an increase for the first nine months of the year of nine 4% when compared to the same period of last year. This increase is even higher when compared to the third quarter of 2024 with an improvement of 15, 3% reaffirming our corporate cost control perspective.
Our net cash cost amounted to 92 tenths of a dollar per pound of $17 nine improvement compared to the first nine months of 2024, reflecting a reduction of 20 <unk>.
And a 24, 9% improvement compared to the third quarter of 2024 with a 26% reduction.
Marlene Torre: Our copper production reached close to 799,000 tons of copper during the first nine months of the year, 2.6% lower when compared to last year's first nine months. Our board approved a dividend of $1.50 per share during this quarter, which translates into a 4% dividend yield and around a 50% payout ratio. As usual, you can find a summary of our financial highlights on slide eight, which is there for you to have in case you need it at any point during the presentation. Now, let me continue with slide number nine. Grupo México continues to have a solid balance sheet with over $630 million generated during the quarter. As you might already know, our debt is mainly issued in U.S. dollars, representing 78% of the total debt, while the rest is denominated in Mexican pesos, and 91% of our total debt was issued in a fixed rate.
Copper production reached close to 799000 tonnes of copper during the first nine months of the year to 26% lower when compared to last year's first nine months. Our board approved the dividend of one baseline 50 cents per share during this quarter, which translates into a 4% dividend yield and around their fifth.
3% payout ratio.
As usual you can find the summary of our financial highlights on slide eight which is there for you to have in case you need it at any point during the presentation now.
Now, let me continue with slide number nine.
Mexico continues to have a solid balance sheet with over $630 million generated during the quarter.
You already know our debt is mainly issued in U S dollars, representing 78% of the total debt while the rest is denominated in Mexican pesos and 91% over total debt was issued at a fixed rate.
Marlene Torre: Our stock had an excellent performance during the first nine months of the year. It increased just shy of 84% in U.S. dollars and over 61% in pesos. On this slide, you can also see the dividends paid in 2024 and 2025, the payout ratio, and the implied dividend yield, including the $1.50 dividend approved for the quarter, which will be paid on December 1, 2025. On the next slide, number 10, we show that we continue to have a comfortable maturity schedule with no payments over $1 billion until 2032, while our cash position ended the quarter at $9.6 billion. With this, I'll let Leonardo Contreras comment on the mining division's performance.
So I'll kind of excellent performance during the first nine months of the year. It increased just shy of 84, presenting you with others and over 61% in fiscal <unk>.
On this slide you can also see the dividends paid in 2024 and 2025, the payout ratio and the implied dividend yield, including the $1 56.
Dividends approved through the quarter, which will be paid on December one 2025 on.
On the next slide number 10, we show that we continue to have a comfortable maturity schedule with no payments over 1 billion until 2032, while our cash position ended the quarter at 19 6 billion.
With this I will let <unk> comment on the mining division for one.
Leonardo Contreras: Thank you, Natalia. Good afternoon, everyone, and thank you again for joining us today. I will start today with a brief remark on the current copper market on slide 12. As you can see here, the LME copper price increased over 6% from an average of $4.17 per pound in the third quarter of 2024 to $4.44 this past quarter. For the COMEX market, we saw a 14% increase during the same period. Based on current supply and demand dynamics, which include the negative production effects that we are seeing in Indonesia and Chile, we are currently estimating a copper market deficit of around 400,000 tons. On the other hand, at the end of September, copper inventories worldwide stood at 609,000 tons. We estimate that this inventory covers around eight days of global demand. Additionally, recent U.S. tariff policy changes have thus far had a limited impact on our results.
Thank you and Italia.
Afternoon, everyone and thank you again for joining us today.
I will start today with a brief remark on the current copper market on slide 12.
As you can see here.
<unk> copper price increased over 6%.
From six.
As you can see here the <unk> copper price increased over 6% from $4 <unk> 17 cents per pound in the third quarter of 2024 to $4 44 since this past quarter for the Comex market, we saw a 14% increase during the same period.
Based on current supply and demand dynamics, which include the negative production effects that we're seeing.
Indonesia in Chile, we're currently estimating our corporate market deficit.
Of our 400000 pumps on.
On the other hand at the end of September copper inventories worldwide stood at 609000 tons. We estimate that this inventory covers around eight days of global demand.
Additionally, recent U S tariff policy changes, thus far has a limited impact on our results.
Leonardo Contreras: Therefore, we are confident that the long-term fundamentals of prices of copper and other metals will remain very positive going forward. Now, let's continue with the mining division's financial highlights on slide 13. Our accumulated sales reached $10.3 billion, a 9.6% increase versus the first nine months of last year due to an increase in the volume of molybdenum, silver, and zinc, along with higher copper, silver, molybdenum, and zinc prices. Sales showed a 14% increase compared to the third quarter of 2024. Our EBITDA totaled $5.7 billion for the first nine months of the year, which is 12% higher than the same period of 2024, with a margin of 55.4% and a 17% increase compared to the third quarter of 2024. Now, let's move on to production.
Therefore, we're confident that the long term from my mouth does the price of copper.
Another metals will remain very positive going forward.
Now, let's continue with the mining division's financial highlights on slide 13.
Our accumulated sales reached $10 3 billion a.
A nine 6% increase versus the first nine months of last year the 20.
One increasing the volume of molybdenum silver and zinc along with higher copper silver molybdenum and zinc prices.
Sales showed a 14% increase compared to the third quarter of 2024.
Our EBITDA totaled $5 7 billion for the first nine months of the year, which is 12% higher than the same period of 2024 with a margin of 55, 4% and a 17% increase compared to the third quarter of 2024.
Leonardo Contreras: As Natalia mentioned, our copper production totaled just shy of 799,000 tons, a decrease of 2.6% versus the first nine months of 2024, due to decreased production in Mexico and Peru as a result of lower ore grades and having given preference to silver and molybdenum production, together with perfecting our mine plants for silver, molybdenum, and zinc in order to maximize economic value. In cumulative terms, zinc, silver, and molybdenum production grew 50%, 14.6%, and 6.7%, respectively. Our net cash cost showed an 18% improvement compared to the first nine months of 2024, standing at $0.92, mainly due to lower treatment and refining charges, which decreased as a result of market conditions, as well as higher by-product credits for molybdenum, zinc, and silver.
Now, let's move on to production.
I mentioned, our copper production totaled just shy of 799000 tons of.
A decrease of two 6% versus the first nine months of 2024.
Decreased production in Mexico, and Peru, as a result of lower ore grades and having given preference to silver and molybdenum production.
Together with perfecting our mine plans for silver molybdenum and zinc.
In order to maximize economic value.
In cumulative terms.
Zinc silver and molybdenum production group, 50% 14, 6% and six 7% respectively.
Our net cash cost showed an 18% improvement compared to the first nine months of 2024 standing at 92 cents.
Mainly due to lower treatment and refining charges, which decreased as a result of market conditions as well as higher byproduct credits for molybdenum zinc and silver.
Leonardo Contreras: Compared to the third quarter of 2024, net cash cost was 25% lower, a $0.26 reduction mainly due to higher by-product credits as a result of higher sales volumes and increased prices. In terms of CAPEX, we invested $996 million during the first nine months of the year. I would like to continue talking about our projects and their progress in the following slides. Starting with our Peruvian project on slide 14, we're happy to share that in October, Tía María received an authorization to initiate exploration activities from the Ministry of Energy and Mines. These activities will be carried out in the La Tapada pit. Consequently, we will soon initiate pre-stripping activities in La Tapada and begin building main project components.
Compared to the third quarter of 2024 net cash cost was 25% lower.
At 26 cents reduction mainly due to higher byproduct credits as a result of higher sales volumes and increased prices.
In terms of Capex, we invested $996 million during the first nine months of the year.
I would like to continue to talking about our projects under progress and slides.
In the following slides starting with our Peruvian projects on Slide 14, we're happy to share that in October <unk> received an authorization to initiate exploration activities from our ministry of energy and mines. These activities will.
It will be carried out in the latter part pit. Consequently, we will soon initiate pre stripping activities in Butler and begin building main project components.
Leonardo Contreras: As per our Los Chancas project, as of September, social and environmental management programs are underway in the communities directly influenced by the project, in accordance with the framework agreement signed between the Tiapato Peasant Community and the Los Chancas Mining Project. Also, necessary actions are being undertaken to regain control of the project in response to the presence of illegal mining, control that is essential to continue advancing the development of our Los Chancas project. Lastly, as of Michiquillay, the geological information obtained from drilling programs has been used to develop models required to estimate the deposit's mineral resources. These models are currently audited by a third party under SEC's Mining Disclosure Standards. Also, a conceptual study is underway to determine the best location for a conventional or filtered tailing storage facility. Finally, hydrological, hydrogeological, and geotechnical studies are also being conducted.
As for our <unk> project.
As of September social and environmental management programs are underway.
In the community is directly influenced by the project.
<unk> with the framework agreement signed between the product the apparel piece of Pearsons community and the last chunk of mining project also necessary actions are being undertaken to regain control of the project in response to the presence of illegal mining.
Control that is essential to continue advancing the development of our let's chunk of project.
Lastly, as of <unk>. The geological information obtained from drilling programs have been used to develop models required to estimate the deposits mineral resources.
These models are currently audited by a third party under Sec's mining disclosure standards also a conceptual studies on their way to determine the best location for a conventional or filtered tailings storage facility. Finally, hydrological Hydrogeological and geotechnical studies are also being conducted.
Leonardo Contreras: Now, continuing on slide 15 with our project in Los Frailes in Spain. This deposit is located within the Aznalcóllar Mining District in the Iberian Pyrite Belt, a metallurgical zone of worldwide importance. The project consists of an underground mine with a milling plant of over 8,000 tons per day that will produce zinc and copper concentrates, with a reserve-based mine life of 19 years and exploration potential. Silver will also be obtained as a by-product. As a reminder, Los Frailes was awarded to Grupo México in early 2015. In May 2025, we obtained a mining permit from the Junta de Andalucía. With this permit, the final engineering work started in order to begin construction in 2026, and we hope to begin production by 2029. It is estimated to require an initial investment north of $400 million.
Continuing on slide 15, with our project.
Most of our lessees, Spain. These deposits located within the courtyard Miami district in the eye.
And part of the belt and metallurgical stone of worldwide importance.
<unk> consists of an underground mine with a milling plant of over 8000 tonnes per day, but will producing copper concentrates with a reserve based mine life of 19 years and exploration potential.
Silver will also be obtained before byproduct.
As a reminder, last Friday was awarded to Grupo Mexico in early 2015.
In May 2025, we obtained the mining permit from the hometown Lucia with this permit the final engineering work started in order to begin construction in 2006.
We hope to begin production by 2029.
It's estimated to require an initial investment north of $400 million.
Leonardo Contreras: As a first step, a water treatment plant will be built to ensure the quality of the water that is currently in the pit. Now, let's move to our Mexican projects. We have El Arco, where detailed engineering is still underway for the mill, the FXCW plant, water desal, logistics infrastructure, and power delivery. Lastly, El Pilar, that is a project that is 45 kilometers away from our Buenavista mine, will operate as a conventional open pit with an annual production capacity north of 35,000 tons of copper cathode. This operation will use a highly cost-efficient and environmentally friendly FXCW technology. Please, if you happen to have any follow-up questions, we will be happy to address them during the Q&A session. Now, I will let Alberto comment on our transportation division.
As a first step a water treatment plant will be built to ensure the quality of the water that is currently in the pit.
Now, let's move to our Mexican projects, we have a large pool were detailed engineering fill underway for the meal Sx EW plant water default.
<unk> infrastructure and power deliver.
And lastly, <unk>.
Bladder.
That is a project that is 45 kilometers away from our Buena Vista mine will operate as a conventional open pit with annual production capacity north of 35000 tons of corporate capital.
This operation will use a highly cost efficient and environmentally friendly Sx EW technology.
Please if you happen to have any follow up questions, we'll be happy to address them during the Q&A session.
Now I will let <unk> comment on our transportation Division.
Yeah.
Alberto Vergara: Thank you, Leonardo, and good afternoon, everyone. Thanks again for joining us. Continuing with the transportation division results on slide 18, I would like to talk about our financial highlights for this quarter. Our sales reached $2.5 billion at a 2.6% decrease versus the first nine months of 2024, driven mainly by an FX effect. Mexican pesos sales increased 7.5% on a cumulative basis. Our accumulated EBITDA by the end of the quarter totaled just shy of $1.1 billion, 2.3% lower than the first nine months of 2024, but it came in 8.1% higher versus the third quarter of 2024. The EBITDA margin stood at 42.9%. The accumulated transport volume was down 4.6% and 4.4% in net tonnage kilometers and car loads, respectively, ending the first nine months of the year with 1,475,000 cars hauled.
Thank you Donato and good afternoon, everyone.
Thanks again for joining us.
With the Transportation Division results on Slide 18, I would like to talk about our financial highlights for this quarter.
Our sales reached $2 5 billion to six.
Decrease yes through the first nine months of 2024, driven mainly by an FX effect in Mexican peso sales increased seven 5% on a commodity basis.
Hi, welcome David.
You bet.
Hi, David.
Strike one.
$1 billion $2, 3% lower than the first nine months, excluding Venezuela.
Okay.
One person.
Versus the third quarter of 2024.
EBITDA margin.
42, 9%.
Yes commodity transport volume.
Does that four 6%.
One 4%.
Vectors and card loan spectrum.
The first Lady models.
475 cash holdings.
Alberto Vergara: As for our net income, it totaled $374 million during the first nine months of the year, 3.7% lower than the same period of 2024, again impacted by it as it ended the first nine months of the year with a 7.9% increase in Mexican pesos. Lastly, as you might already know, a dividend of $0.50 per share was approved by Grupo México. Continuing with the main variation of our revenue on slide 19, as a reminder, these variations are considered resulting in Mexican pesos, so this may vary to send a different currency. I will start with a segment that delivered the stronger revenue growth. The automotive segment led with a 35% increase, driven by additional volume on longer hauls and a production increase. Following that, the agricultural segment grew by 15% due to an increase in border imports, compensating for lower local crops.
For our net income.
Three quarter uncertainty.
Yes.
First night moderately Kim.
7% lower than the street.
Again impacted by it.
And then the first part of it.
Seven nine increase in Mexican pesos.
Lastly, as you've made the way I'd give you there.
DCF per share was approved.
Paul.
Continuing with the main variation of our revenue.
Pete.
As a reminder, these are always just like the theater and we slipped in Mexican pesos so differently.
Alright.
Correct.
I will start with the second.
The stronger revenue growth dilutive.
Some of this segment.
35% increase driven by additional volume lower costs and a production increase.
That agricultural segment.
10%.
And quarterly reports.
For lower local crops.
Alberto Vergara: In the middle range, the intermodal segment showed a 3% growing revenue due to increasing cross-border volumes. This was partially offset by maritime trains. On the other hand, we saw revenue decline in a few segments. Cements and metals showed a 3% and a 7% decrease, respectively, both due to MX market contraction during this year. The chemical segment had a 6.6% decrease, mainly due to a low demand for raw materials used for beer production. The energy segment showed a 10% reduction due to an increase in fuel oil frames. The segment with a higher decrease was the industrial segment, with a 16% decrease, mainly due to low demand in the new rental market and beer demand contraction in the U.S. Now, let's take a look at our operating metrics shown on the slide 20. In general, metrics show consistent improvement in performance during this quarter.
In the Middle range, the intermodal segment show, a 3% drop in revenue due to an increasing first quarter volumes was partially offset by Kevin change.
On the other side, we saw revenue decline in a few segments.
So it makes Amit chawla chief percent, 7%, respectively.
Due to a mix market contraction during this year.
The chemical segment.
Four 6% decrease led to a low demand for raw materials.
For a bit of production.
The energy segment show, a 10% reduction due to an increase in fuel oil right.
The segment with a higher decrease was infrastructure segment with a 16% decrease mainly due to low demand and then you really kind of market.
Building medical infection in the U S.
Now, let's take a look at the operating metrics shown on slide 20.
In general metrics showed consistent improvement in performance during this quarter.
Alberto Vergara: As we saw, an increase in average train speed of 16% and a 25% decrease in dwell time resulted in a considerable improvement of over 24% in car velocity. As for the rest of the metrics, there was a 1% improvement in average train length, reaching 1.8 kilometers, a decrease of 2% in gross tonnage per train, and a 3% increase in crew starts. Please go to slide 21, and you can see our expected CAPEX for 2026. GMXT board approved an investment budget of roughly $473 million for maintenance, special programs, and the acquisition of locomotives. This allowed GMXT to maintain a strategic and steady improvement. Approximately 70% of our annual CAPEX will be dedicated to rail infrastructure, equipment, bridges, and locomotives and machinery overhauls. Another 77% of our CAPEX will be for track and equipment, focusing on sidings, enlargement, and a yard reconfiguration.
We saw an increase in leverage during this period of 16% and 25% decrease in dwell time, resulting in a considerable improvement over 24% and Kevin dosage.
As for the rest of the metrics there was one.
A 1% improvement in average train length, reaching one eight kilometers a decrease of 2% and gross tons per train and a 2% increase in crew starts.
Please go to slide 31.
When you can see our expected capex for 2026, GM mix deepwater program investment budget of royalty for that sort of get $10 million for me. Thanks Dennis.
And the completion of locomotives.
Hello, Jim excuse to maintain our strategic improvement.
Approximately 70%.
Capex will be dedicated to rail infrastructure.
Equipment, Richmond reaches a locomotive machinery for vehicles and another 75% of the network Capex will reach fork truck and equipment focusing.
Sightings and management, Jack with profit emulation.
Alberto Vergara: A $49 million investment is planned for special projects focusing on key infrastructure such as the Laia bypass, Monterrey bypass, and our safety program. An investment of $70 million is planned for the acquisition of locomotives. On slide 25, you will find that 2026 outlooks imply between 5% and 7% volume growth, along with an 8% and 10% revenue increase. This concludes the general overview of the transportation division. I will now let Mario Chavez comment on the infrastructure division.
A $49 million investment plan for especially.
Focusing on key infrastructure, such as the night Youre right Thats one thing.
Our safety program.
I mean.
<unk> 70.
The strength of our acquisition of locomotives.
25.
You will find out.
Thanks, Jason.
It looks like.
At five mbps.
Five our ferrous volume growth alone.
Eight.
Revenue increase this conclude.
This concludes my general overview of the Transportation Division.
No Nick.
Charlie's comments of the infrastructure Division.
Mario Chavez: Thank you very much, Alberto, and good afternoon, everyone. I'll start by going through the financial highlights of the infrastructure division shown in slide 24. Our sales reached $496 million for the first time for the first nine months of this year, a 13.9% decrease when compared to the first nine months of 2024. This was due to the suspension of four out of six oil rigs since the beginning of the year in our drilling business line and negative exchange rate effects, partially offset by the operation of Fenicias Wind Farm in our energy business line and the integration of the new K8 Puebla portfolio into the real estate business. Our EBITDA totaled $237 million, a decrease of 28.5% versus the first nine months of 2024, with EBITDA margins standing at 47.7%. Lastly, net income totaled $45 million, 55.1% lower when compared to the first nine months of 2024.
Thank you very much and good afternoon, everyone.
I'll start by going through the financial highlights of the infrastructure Division.
Slide 24.
Our sales reached $486 million for the first time through.
Nine months, although this year.
On a 13, 9% decrease when compared to the first nine months of 2024.
It wasn't to the suspension of four out of six weeks since the beginning of the year.
In our drilling business line.
Negative exchange rate effects.
Partially offset by the operation of <unk>.
Which business line and integration of the new.
Okay.
Portfolio into our real estate business.
Our EBITDA totaled $237 million, a decrease of $28 five with soup.
Through the first nine months of 'twenty 'twenty four.
Is there any doubt margins standing at 47, 7%.
Lastly, net income totaled $45 million.
<unk> 50, 541% lower when compared to the FERC nine months of 2024.
Mario Chavez: To complement the infrastructure division highlights, I would like to go through some of our most relevant events on slide 25 and 26. Our energy business unit continued to deliver double-digit growth with cumulative net sales of $234 million and EBITDA of $122 million. This represents an increase of 22.9% and 8.7%, respectively. These results were primarily driven by La Cavidad combined cycle plant due to higher generation output and better operational efficiency, along with outstanding performance of Fenicias Wind Farm that produced 533 gigawatt-hours of clean energy and generated $27 million in EBITDA. This sustained performance highlights the segment's ability to combine profitability, sustainability, and energy security across the portfolio. Now, the real estate business unit continues to post strong results, closing the quarter with $71 million in revenue and $45 million in EBITDA, up 22% and 24.7% year-over-year, respectively.
The complementary infrastructure division highlights I would like to go through some of our most relevant events.
Slide 25 and 26.
Our energy business unit continued to deliver double digit growth.
Can you repeat net sales of $234 million.
EBITDA of 102 2 million.
This represents an increase of $22 nine and eight 7% respectively.
These results were primarily driven by the carryback combined cycle plant due to higher generation output and better operational efficiency.
Along with outstanding performance of the new sales wind farm that produced 532 gigawatt hour of clean energy and generated $7 million.
You bet.
This is great performance highlights the segment's ability to combine repeatability and sustainability and energy security across the portfolio.
Look this business unit continues to grow stronger towards closing the quarter with 71 million in revenue and 45 million maybe back.
Up, 22% and 24, 7% year over year, respectively.
Mario Chavez: The performance was led by the successful integration of K8 Puebla portfolio, adding nine power centers, as well as higher lease rates and occupancy, reaching 93.9%. On a peso-denominated basis, revenues and EBITDA rose 35.6% and 36.6%, respectively, reflecting solid demand, efficient asset management, and the segment's ability to capture upside from Mexico's expanding consumer base. The real estate portal platform continues to be a reliable growth driver, contributing with healing income and long-term value creation across the company's diversified portfolio. Going to slide 26, our construction and engineering business remains focused on disciplined project execution, posting cumulative revenues of $89.6 million and EBITDA of $15.3 million. While these represent increases of 5.4% and 29.1% year-over-year in dollar terms, the results were mainly affected by the completion of large-scale projects and exchange rate impacts. In Mexican pesos, however, the revenues increased 3.2%, underscoring stable operational performance and efficient resources management.
The performance was led by the successful integration of <unk>.
Elsewhere in our portfolio, adding nine power centers as well as higher lease rates and capacity.
Reaching $93 nine too soon.
On a peso denominated basis revenues rose 3%.
Five, 6% and 36, 6% respectively.
Solid.
Efficient asset management, and the segment's ability to capture upside from Mexico, expanding consumer base.
So it will fit with our platform continues to be a.
<unk> growth drivers continue to be weak.
Killing eve alone bring value to create jobs and grow the company's diversified portfolio.
Going to slide 26.
Our construction and engineering business remain focused on disciplined project execution.
Firstly commercial revenues.
$89 6 million and EBITDA of $53 million.
These represent increase of five.
4% and 39, 1% year over year in dollar terms.
So were mainly affected by the completion of large scale projects and exchange rate impacts.
In Mexican pesos, however, revenues increased three 2% underscoring stable operational performance.
The soldiers management the business line continues to demonstrate clinical expertise.
Mario Chavez: The business line continues to demonstrate technical expertise and delivery consistency. It also has built a strong pipeline and is well-positioned to capture future opportunities in infrastructure development. Our toll roads business line delivered resilient performance during the quarter, with an average daily traffic of 2.4% year-over-year, reaching 22,760 equivalent vehicles. Commuting revenues reached $52.8 million and EBITDA totaled $36 million, with only a slight decrease of 2.4% and 1.1% in U.S. dollars due to FX translation effects. For measured pesos, revenues and EBITDA increased 8.1% and 10%, respectively, reflecting sustained demand, solid cost controls, and consistent network usage. With this, I conclude a review of the main highlights of the infrastructure division. Now, I'll let Natalia give her closing remarks.
And delivery costs.
It also has to deal with strong pipeline.
Well positioned to capture future opportunities in infrastructure development.
Our toll road business lines delivered solid performance during the quarter.
And average daily traffic off.
4% year over year.
<unk> thousand 360 <unk> vehicles.
Revenues reached $52 8 million.
Total $36 million.
With only a slight decrease of two 4% and one 1%.
Due to FX inflation effects.
When measured in pesos revenues and EBITDA increased eight 1% and 10% respectively.
Selecting sustained demand solid cost controls.
Consistent network usage.
With this I conclude our review over the main highlights of the infrastructure Division now Natalia we'd for closing remarks.
Marlene Torre: Thank you, everyone, again for joining. Now we will open the line for Q&A, please.
Thank you everyone again for joining now we will open the line for Q&A.
Natalia Ortega: Thank you so much. As a reminder, if you do have a question, press star 11 on your telephone and wait for your name to be announced. To remove yourself, press star 11 again. One moment for our first question that comes from Francisco Barbosa with Jefferies. Please proceed.
Thank you so much and as a reminder, if you do have a question press star one on your telephone and wait for your name to be announced to remove yourself press star one again.
One moment for our first question.
Comes from Francisco <unk> with Jefferies. Please proceed.
Francisco Barbosa: Good afternoon, all. Francisco Barbosa here from Jefferies in for Alejandro de Miceles. I have two questions, if I may. First one, if you could give some color on what your capital allocation plans look like from now on. The second one on the railway business, if you are affected by the Union Pacific-Norfolk Southern merger. If you could give some color on these two, it would be great. Thank you.
Good afternoon, Francisco Wearables Ohara from Jefferies and for all of US on the regulatory of two questions. If I may 1st one if you could give some color on what your capital allocation plans look like from now on and the second one on the railway business.
You are affected by the Union Pacific Norfolk Southern merger.
If you could give some color on on these two would be great. Thank you.
Marlene Torre: Hi. Sorry. This is Marlene. We couldn't hear well your first question. I think it was a technical problem on our side. Could you repeat that? I understand the second one was regarding the transportation division. Are we right?
Hi, sorry.
We couldn't.
Well your first question I think so.
I think all problem on OE side could you repeat that and I understand the second one was regarding the transportation Division.
Francisco Barbosa: Yes. I'll repeat both. The first one, if you could please give some color on what your capital allocation plans look like. The second one, in the railway business, if you are affected by the Union Pacific-Norfolk Southern merger. If you could give some color on these two, it would be great. Thank you.
Mike.
Yes, I'll repeat both so the first one if you could please give some color.
What your capital allocation plans look like.
And the second one.
In the railway business.
If you are affected by the Union Pacific Norfolk Southern merger.
You give some color on these two it would be great. Thank you.
Marlene Torre: Sure. Thank you so much for your question. Regarding the capital allocation, we will continue further on our, as you know, we have on each and on our three divisions, we have our growth projects, and we will continue to work on that. We have Tía María. We are very excited about that. We will continue. Each division has an independent company that has to look for their own way of financing their projects. We have growth in each of our three divisions. Regarding in general, we will keep on looking for the opportunities of growth in the three divisions we are right now operating. I will let Alberto answer the question regarding the transportation division.
Okay.
Sure. Thank you so much for your question.
Turning to capital allocation, we will continue further in another as you know we have an hour.
Division.
Growth projects and we will continue.
To work on that we have and Maria.
Very excited about that and we will continue.
And this is an as an independent company that has to work for their own.
Yeah.
Financing the project.
And that's in the zone three visits.
Regarding in general we will keep on looking further opportunities of scale.
In the three divisions, we are right now operating.
I will let Andrew.
I will answer the question regarding the transportation Division.
Alberto Vergara: Yes. Yes. Thanks, Marlene. Now, the merger between Union Pacific and Norfolk Southern doesn't affect us. We will, as you probably know, Union Pacific is our partner in Ferromex. Also, this doesn't affect our market with all the cross-border segments that are growing. It doesn't affect us. No.
Yes. Thanks.
No.
Yes.
Yes.
Also in effect us.
We will.
Yes.
No.
Our partner in Telephonics.
And also this also.
Thanks.
And market.
Cross border all that first of all of our segments that are growing.
Does that affect us.
Francisco Barbosa: Okay, thank you very much.
Okay. Thank you very much.
Natalia Ortega: Thank you so much. One moment for our next question, please. It's from the line of Gabriel Barra with Citi. Please proceed.
Thank you so much one moment for our next question. Please.
And he is from the line of Gabrielle better.
With Citi. Please proceed.
Gabriel Barra: Hi, everyone. Thanks for taking my questions here. I have two from my side. The first one on GMXT, the leasing process. If you guys could give us more color on that, the next steps, and I know the timeline for this process would be. I'll talk about the capital allocation strategy here. I think that when you take a look at the company balance sheet today, you have a really deleveraged balance sheet with a lot of space to do, I don't know, any new capital allocation on M&As or even buy back shares or dividends. If you could give more color on that. As long as I have from the last sensor, it seems that the strategy here would be focusing the three sectors that you guys have already investments. We have seen different moves recently, right?
Hi, Brian.
Thanks for taking my questions here I have two from my side. The first one on the <unk> designation process. If you guys could visa is more more color on that next steps.
I know the timeline is for BD.
Okay.
Okay.
The capital allocation strategy, we are conduct will take a look at the company balance sheet today have.
Indeed, the leverage balance sheet with a lot of space to do.
Sure Anthony.
New capital allocation M&A or even buy back shares of deep dense if you could give more color Matt.
I was wondering I have.
The last the last answer it seemed out.
The strategy will be focused in the three factors that you guys have already investments.
But have seen different moves recently youre right. So.
Gabriel Barra: If you could give more color on that, it would be really, really helpful. The longest year on the questions, but my last one, I don't know if you guys could give us some color on how the holding discount discussion is evolving internally and how the company believes that the company could, in a certain way, decrease the holding discount in the future, any potential lease in the U.S. or even sponsor a different EDR program in the U.S. in order to have a kind of arbitrage between South Cooper and Grupo México. I don't know if you guys could give more color about that, if there's any discussion internally to decrease the holding discount in the future, and if it's something that's valuable for the company to discuss at this point. Sorry about the three questions, but that's my questions.
I don't give more color on that would be really really helpful is here too.
Good to hear the questions, but my last one I don't know if you guys could give us some color on.
How are beholding to scout discussion.
It's evolving currently and how the company believes that the company grid and over a six or a decrease.
Holding discount in the future any potential leasing well sure event sponsored or different ADR program.
You asked not to have a product arbitrage between.
<unk> corporate.
Pricing in Gulf of Mexico.
You guys could give some more color about that.
There is any discussion internally.
Liquidity holdings call to the future.
If it's something that's it's.
For the corporate to discuss at this point, so sorry, sorry about the two questions.
My questions.
Leonardo Contreras: Gabriel, this is Leonardo. I didn't quite understand the first question regarding the U.S. Could you provide me more color on that, please?
I would add and this is this is not at all.
Quite barely understand the first question regarding the United States could you.
So any more color on that please.
Gabriel Barra: The last one is about how do you guys see the holding discount at this point for Grupo México. If you take a look at the level of holding discount for the company nowadays, it has decreased when you look at the historical numbers. How much does this concern the company, and how do you believe that this could be in a certain way, not solved, but decreased in the future? If you believe that there are some ways to decrease this level of holding discount in the future, maybe listing the company in the U.S. or even having a different EDR program, this is the question.
The last thoughts about how do you guys see the holding the staff at this point Paul group of Max's. So it would take a look on the latter.
<unk> for the company Nowadays have decreased.
When you take a look on the historical numbers.
How much of this concern as a company and how do you believe that this could be necessary.
But silver, but decreasing in the future as we believe that there are some ways to decrease these this level of holding this call in the future may be loosening the company <unk> have a different.
Our program.
So that is the question.
Leonardo Contreras: I will let Marlene and Natalia answer that question.
And then I will let marilyn upon to answer that question.
Okay.
Marlene Torre: Regarding the holding discount, Gabriel, I think at the time we have nothing additional to what we've mentioned in the past. As of now, there's nothing in place. We will continue to analyze different options and share as we see fit.
Regarding the holding discount and I think at the time, we have nothing additional to what we mentioned in the past.
I would now.
Nothing in place.
But we will continue to analyze different options and sure if he sees fit.
Marlene Torre: As you know, this is something that is very important for us and for the board as well. We have analyzed different options. We have to take into consideration all the tax implications one or the other could have. That's also something that we are analyzing and trying to work through. In the meanwhile, we think we have given a lot of, we have been very transparent with what's happening in all of our three divisions. In addition to that, I think the dividend yield and the payout ratio continue to be very good, as well as how the Grupo México share has been in the past this whole year, actually.
And as you know this is something that is very important loss incurred in Florida as well. So we have analyzed using different option.
We have to take into consideration all the tax implication one or the other could have so that's also something that we are analyzing and trying to work through.
In the Meanwhile, we think we have given a lot of work ahead.
We have been very transparent with what's happening in all of our three divisions.
In addition to that I think the dividend yield and payout ratio continued to be very good.
Sure.
Hello, Sir has been making goes here has been in the past this.
This whole year actually.
Marlene Torre: Gabriel, regarding your second question, was it about GMXT? We could barely hear you. Sorry.
<unk>.
And regarding your second question was it about.
<unk>, we can barely hear you sorry.
Gabriel Barra: Yeah. It's about the next business process. If you could give us more color about that, the timeline, and the next steps.
It's about the Houston process.
Could you give us more color about the timeline and then it stops.
Marlene Torre: Sorry. We can't hear you well. Can you move a little bit further from the?
Sorry, we can't we can't hear you well can.
Can you move a little bit.
Gabriel Barra: I'll try to talk slowly here. Yeah, it's about GMXT, the leasing process. If you guys could give us more color on the timeline.
So I'd start to slowly here.
Yes, it's about <unk> the listing process. So as you guys Guillermo.
Marlene Torre: GMXT, the leasing process.
Congrats on the timeline.
Gabriel Barra: Yes, yes.
Yes, yes.
Marlene Torre: Okay. Perfect. Yes, I'll let Alberto and Natalia answer this question. Thank you.
Okay perfect yes.
Maybe I'll answer the second thank you.
Alberto Vergara: Perfect. Yes. GMXT concludes, as you know, its tender offer for the lease and the company shares in the Mexican stock. The tender offer concluded on October 20. The shareholder participation was equivalent of around 5% of GMXT outstanding shares. With this completion of the tender offer, we will proceed with the cancellation of the registration in the National Security Registry and the delisting of shares from the Mexican Stock Exchange. Now, we're currently waiting confirmation from the authorities, while the exact timeline has not been disclosed. We anticipate that the process will be complete between December and January. Once confirmation from the authorities has been obtained, in compliance with regulation, a trust will be established with a six-month term to facilitate the purchase of shares at the delisting price from the shareholders who didn't participate in the tender offer. I know with that I answered your question.
Okay.
Perfect.
Yeah.
And genomics T conclusive.
The tender offer for the at least in the company shares in the Mexican stock.
The tender offer completed on October 20, the shareholder tissue.
Thanks, Sean lots of Q&A.
Around 5% of <unk> insurance.
We reduced.
The complication of the tender offer we will proceed with the cancellation of the registration in the National Security Registry.
Did at least kind of share that mexicali.
Yeah.
And now we're currently waiting confirmation upon the authority.
Expecting timeline has not been disclosed what dissipate that the process will be completed between December and January.
Last quarter, we measure from the authorities.
In compliance with regulation of trust will be established with a six month term to fluctuate.
Sure.
Listing price from the shared cordless, who didn't participate in the tender offer.
I know.
With that Greg.
Your question.
Gabriel Barra: Thank you, guys.
Thank you guys.
Natalia Ortega: Thank you. One moment for our next question, please. It comes from the line of Enrique Braga with Morgan Stanley. Please proceed.
Thank you one moment for our next question. Please.
It comes from the line of Zika Braga with Morgan Stanley. Please proceed.
Leonardo Contreras: Hello, everyone. Thanks for taking my question. The first one that I have is regarding the sale of the highway operations. When do you expect the closing to happen? Is the payment that you're going to receive going to be on the closing day of the operation, or is it going to be a different time? In the infrastructure division, can you give us more details on how the operations at the oil drilling are going? Do you expect to ramp up the operations at Chihuahua, Zacatecas, Campeche, Tabasco anytime soon? If you could give us any color or expected timeline for those, that would be very helpful. Thank you.
Hello, everyone. Thanks for taking my question.
First one that I have is regarding the sale of.
Highway operations. So when do you expect the closing to happen.
<unk> is a payment that you are going to receive is that going to be on the closing date of the operation.
There'll be a different time.
And also in the infrastructure Division. So can you give us more details on how the operations.
Okay oil drilling.
Going to expect to.
Ramp up the operation of the Chihuahua, Zacatecas, compatriot Tabasco and time, so if you could give us any color or expected.
Timeline for those that'll be very helpful. Thank you.
Mario Chavez: Sure, Enrique. Thank you for the questions. On the sale of the total business, the highway and the bypass that we are selling together, we are expecting to close this in the next months to come. We believe this should happen maybe the first quarter of next year. We are still pending on authorizations now to conclude the sale of the highway and the bypass. The payment, we're expecting to receive it once we get the permits and get the closure done. On the drilling business, I'll let Ricardo answer. He's here with us. He's the Chief Operating Officer of the division.
Sure.
Thank you for your questions.
On the sale of the.
All of our business.
Hi, Lee.
The bypass that were selling together.
Expected to close these EBIT.
Next.
Once again, we believe we should have been maybe the first quarter of next year.
We are building on.
It is.
The limitations.
To conclude the sale of the.
Highway and bypass.
The payment we are expecting to receive it once we get the permits and get the <unk> done well.
On the drilling business.
Literally got to answer without typically looking sort of the division.
Ricardo: Thank you. Thank you for the question. The relationship with Pemex is improving during this year, has been improving during this year. We currently have only two rigs in operation, as we mentioned during the conversation. Nevertheless, we just got a letter where they are requesting another of our rigs, the Chihuahua rig, to start operations during November. We don't have the exact date yet because we asked Pemex to ensure that they have in the asset that is requesting this rig the body that is required to be paid. Hopefully, this answer is going to be received during this week. Hopefully, during November, we will restart the operation of the Chihuahua rig.
Alright, thank you.
Question.
For gay in relationship with Pemex is improving during this year has seen improvement. This year. We currently have only two weeks in operations, we mention during the computation.
Nevertheless, we just got a leather.
They are requesting another four weeks each week to start operations during November.
We don't have the data.
Yes, because we are too.
To pemex to ensure that they have.
These requests in this.
Is this week.
What do you believe is required to be paid.
So hopefully.
<unk>.
I'm sure it's going to be received during this week.
Hopefully during November we will charge off ratio.
Ricardo: We also know that the other three rigs in this order, Zacatecas, Campeche, and Tabasco, are being considered by Pemex to restart operations during next year, hopefully early January with the Zacatecas rig and during the first quarter of the year, the other two. That's basically what we are looking at this point of time regarding the operation of the rigs.
Leo.
No the deal there can be a week.
We show here, Chuck or take us conviction that last call are being considered by a mixed.
Can we start operations early next year hopefully in early January with the fact that ticket.
During the first quarter of it gives the other two.
So thats basically what we are looking at this point to say regarding the operation of this.
Natalia Ortega: All right. As a reminder, ladies and gentlemen, if you do have a question, simply press star 11 to get in the queue. Our next question is from the line of John Tomasos with John Tomasos's Very Independent Research. Please proceed.
Alright, and as a reminder, ladies and gentlemen, if you do have a question simply press star one one to get in the queue.
Our next question is from the line of John Tumazos with John Tumazos very independent research. Please proceed.
John Tomasos: Congratulations on your announcements to restart operations in Arizona. Do you have an idea what the timing of the Ray Mine startup could be? The Silver Bell expansion, the Hayden Smelter expansion, and the Amarillo refinery work.
Congratulations on your announcements.
To restart operations in Arizona.
Do you have an idea of what the timing of the re mine startup could be.
The silver Bell expansion.
The Hayden smelter expansion.
And the Amarillo refinery work.
Leonardo Contreras: Sure, John. Thanks for your question. I think overall, we have a timeline of between three to five years, with the easy, the quickest one being the Ray expansion and probably along that, the Hayden smelter and the Amarillo refinery. Silver Bell will be the one that would take a little bit more time, probably that period of four to five years. We're still analyzing it, but things are underway, especially for the Ray expansion that will take us to double the capacity of what we're currently in at Ray.
Sure John.
Thanks for your question I think overall, we have a timeline of.
Three to five years.
The quickest one being the rate expansion.
Probably along the Hayden smelter.
And the Maryland refinery.
<unk> will be the one that will take on a bit more time prolia period of four to five years.
We're still analyzing it but.
Things are on their way, especially for the <unk>.
<unk> expansion that will take us to double the capacity of what we're currently in.
John Tomasos: Are there any technical uncertainties? Different ore zones, different grades, different metallurgies? Particular challenges in any of these projects?
Are there any technical uncertainties.
Or is it different groups different metal or juice.
Particular challenges in any of these projects.
Leonardo Contreras: I think that we're just waiting for resource confirmation and QA/QCs at Silver Bell. That's where a little bit of uncertainty could be, but let's say that it's less than 5% uncertainty, and Ray has no problem at all in that sense.
I think we're just waiting for resource confirmation.
<unk>.
So that's for a little bit of uncertainty could be let's say that it's less than 5% uncertainty and Ray has no no problem at all in that sense.
John Tomasos: Are there notable gold, silver, or molybdenum byproducts in the new zones you're targeting?
Are there notable gold silver or moly bio products and the new zones, you're targeting.
Leonardo Contreras: There is moly in Silver Bell, but we don't have the technical uncertainty to account it.
There is moly and silver.
But we don't have thank you congratulations.
Natalia Ortega: Thank you so much. This concludes our Q&A session for today. I will pass it back to Natalia Ortega for final comments.
Okay.
Thank you so much and this concludes our Q&A session for today I will pass it back to Natalie Ortega for final comments.
Marlene Torre: Thank you, everyone, again for joining our third quarter earnings call. We'll stay in touch. Have a great day.
Thank you everyone again for joining our third quarter earnings call, we'll stay in touch and have a great day.
Natalia Ortega: Thank you. This concludes today's conference. Thank you all for participating. You may now disconnect.
Thank you and this concludes today's conference. Thank you all for participating and you may now disconnect.
Okay.
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Okay.
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Yes.
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Yes.
Okay.
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