Q1 2026 CEMEX SAB de CV Earnings Call

April 23, 2026

Speaker #1: Hey, and I will be your operator today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session.

Speaker #1: If at any time you require Operator assistance, please press start followed by 0 and we'll be happy to assist you. And now, I will turn the conference over to Lucy Rodriguez, Chief Communications Officer.

Speaker #1: Please proceed.

Speaker #2: Good morning, and thank you for joining us for our first quarter 2026 conference call and webcast. We hope this call finds you well. I am joined today by Jaime Muguero, our CEO, and by Maher Al-Haffar, our CFO.

Operator: Good morning, and welcome to the CEMEX Q1 2026 Conference Call and Webcast. My name is Becky, and I will be your operator today. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. If at any time you require operator assistance, please press Star followed by zero, and we'll be happy to assist you. Now I will turn the conference over to Lucy Rodriguez, Chief Communications Officer. Please proceed.

Speaker #1: Good morning and welcome to the CEMEX first quarter 2026 conference call and webcast. My name is Becky, and I will be your operator today.

Speaker #2: We will start our call with some the immediate ramifications of the Iran war, and then review our first quarter results followed by our expectations and guidance for full year 2026.

Speaker #1: At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. If at any time you require operator assistance, please press start followed by zero, and we'll be happy to assist you.

Speaker #2: And then we will be happy to take your questions. In relation to the recent portfolio rebalancing transactions that we have announced, I would like to clarify the relevant accounting treatment.

Speaker #1: And now, I will turn the conference over to Lucy Rodriguez, Chief Communications Officer, please proceed.

Speaker #2: With respect to the announcement of the sale of some of our operating assets in Colombia, which we expect to close by the end of the year, as a partial sale of an operation, we will continue to fully consolidate these operations in our P&L until the transaction closes.

Speaker #2: Good morning and thank you for joining us for our first quarter 2026 conference call and webcast. We hope this call finds you well. I am joined today by Jaime Muguero, our CEO, and by Maher Alhazar, our CFO.

Lucy Rodriguez: Good morning, and thank you for joining us for our Q1 2026 Conference Call and Webcast. We hope this call finds you well. I am joined today by Fernando A. González, our CEO, and by Maher Al-Haffar, our CFO. We will start our call with some brief comments on our current views on the immediate ramifications of the Iran war, and then review our Q1 results, followed by our expectations and guidance for full year 2026. We will be happy to take your questions. In relation to the recent portfolio rebalancing transactions that we have announced, I would like to clarify the relevant accounting treatment.

Speaker #2: In addition, we announced the purchase of Omega on February 26 and began consolidating the business as of April 1. And now I will hand the call over to Jaime.

Speaker #2: We will start our call with some brief comments on our current views on the immediate ramifications of the Iran war, and then review our first quarter results followed by our expectations and guidance for full year 2026.

Speaker #3: Thank you, Lucy, and good day to everyone. Before turning to our quarterly results, let me share a few thoughts on the global backdrop. I last spoke to you at our Annelies Day in late February just two days before the Iran war began.

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

Speaker #3: First, and for most, our thoughts are with those affected by the war. We have colleagues, customers, and partners in the region, and our priority is and will continue to be ensuring their safety and well-being.

Speaker #2: In addition, we announced the purchase of Omega on February 26th and began consolidating the business as of April 1st. And now I will hand the call over to Jaime.

Speaker #3: The war adds another layer of uncertainty to an already complex global environment. Once again, it reinforces the importance of focusing on what we control.

Speaker #3: And those levers are working. Over the past several quarters, our transformation has delivered a structurally stronger cost base, higher margins, and improved free cash flow generation positioning CEMEX to navigate increased volatility well.

Speaker #3: Thank you, Lucy. And good day to everyone. Before turning to our quarterly results, let me share a few thoughts on the global backdrop. I last spoke to you at our Annaliese Day in late February just two days before the Iran war began.

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

Speaker #3: First, and for most, our thoughts are with those affected by the war. We have colleagues, customers, and partners in the region on our priority is and will continue to be ensuring their safety and well-being.

Speaker #3: To date, we have seen limited direct impact from the war on our business. Our operations in Israel, and the UAE together represent around 4% of consolidated EBITDA.

Speaker #3: While we experienced some temporary disruptions at the outset of the war, construction activity has largely normalized. The most relevant immediate exposure is energy. Where we benefit from a comprehensive strategy that limits our risk to volatile markets.

Speaker #3: The war adds another layer of uncertainty to an already complex global environment. Once again, it reinforces the importance of focusing on what we control.

Speaker #3: And those levers are working. Over the past several quarters, our transformation has delivered a structurally stronger cost base, higher margins, and improved free cash flow generation, positioning CEMEX to navigate increased volatility well.

Speaker #3: Approximately 60% of our total energy spend in 2025 has been hedged for 2026 through a combination of financial derivatives, yearly contracts, and regulated pricing frameworks.

Speaker #3: To date, we have seen limited direct impact from the war on our business. Our operations in Israel and the UAE together represent around 4% of consolidated EBITDA.

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

Speaker #3: Maher will go into more detail on this. In addition, operationally, we have flexibility to adjust the fuels we use in our kilns. Allowing us to switch between Petco, natural gas, coal, and alternative fuels when economically attractive.

Speaker #3: While we experienced some temporary disruptions at the outset of the war, construction activity has largely normalized. The most relevant immediate exposure is energy, where we benefit from a comprehensive strategy that limits our risk to volatile markets.

Speaker #3: We also typically maintain 2 to 3 months of fossil fuel inventories across our network, further limiting short-term sensitivity to market disruptions. Consequently, we believe our direct exposure to energy price volatility this year is significantly contained.

Speaker #3: Approximately 60% of our total energy spend in 2025 has been hedged for 2026 through a combination of financial derivatives, yearly contracts, and regulated pricing frameworks.

Speaker #3: We also have dusted off our Ukraine war playbook to help cushion us more medium term. We have already begun implementing fuel surcharges on our reviewing additional pricing increases for this year throughout the portfolio.

Speaker #3: Maher will go into more detail on this. In addition, operationally, we have flexibility to adjust the fuels we use in our kilns. Allowing us to switch between PEPCOG, natural gas, coal, and alternative fuels when economically attractive.

Speaker #3: The war is disrupting cement supply chains making some import sources more expensive. We expect that over time this will increase pressure on US cement importers leading to relevant pricing opportunities in several US markets.

Speaker #3: We also typically maintain two to three months of fossil fuel inventories across our network, further limiting short-term sensitivity to market disruptions. Consequently, we believe our direct exposure to energy price volatility this year is significantly contained.

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

Speaker #3: Finally, our transformation mindset has allowed us to identify additional structural savings and self-help initiatives that should provide important support in an increasingly volatile environment.

Speaker #3: We also have dusted off our Ukraine war playbook to help cushion us more medium-term. We have already begun implementing fuel surcharges on our reviewing additional pricing increases for this year throughout the portfolio.

Speaker #3: While we have a currency hedge in place, to protect our leverage ratio, the Mexican peso has been resilient and remains the stronger than the FX assumption embedded in our 2026 EBITDA guidance.

Speaker #3: While volatility will persist, with our approach to date, and our strong first quarter performance, I remain confident in our ability to deliver our full year EBITDA guidance.

Speaker #3: And with that, let me turn to our results. I am very pleased with our first quarter results that continue to benefit from our transformation efforts.

Speaker #3: Record quarterly EBITDA of $794 million a 34% increase serves as a great start to achieve our full year plan. EBITDA growth was broad-based, with Mexico, EMEA, and South Central America and the Caribbean all delivering solid results.

Fernando A. González: While we have a currency hedge in place to protect our leverage ratio, the Mexican peso has been resilient and remains stronger than the FX assumption embedded in our 2026 EBITDA guidance. While volatility will persist, with our approach to date on our strong Q1 performance, I remain confident in our ability to deliver our full year EBITDA guidance. With that, let me turn to our results. I am very pleased with our Q1 results that continue to benefit from our transformation efforts. Record quarterly EBITDA of $794 million, a 34% increase, serves as a great start to achieve our full year plan. EBITDA growth was broad-based, with Mexico, EMEA, and South Central America and the Caribbean all delivering solid results. EBITDA margin expanded meaningfully with a more than 300 basis points increase year on year.

Speaker #3: While volatility will persist, with our approach to date and our strong first quarter performance, I remain confident in our ability to deliver our full-year EBITDA guidance.

Speaker #3: EBITDA margin expanded meaningfully with a more than 300 basis point increase year on year. Cost of sales and operating expenses as a percentage of sales improved significantly.

Speaker #3: And with that, let me turn to our results. I am very pleased with our first quarter results that continue to benefit from our transformation efforts.

Speaker #3: Importantly, a large part of this margin gain is a structural and sustainable driven by improved operating efficiency and a leaner cost base. These efforts were complemented by disciplined pricing and the benefit of operating leverage in some markets.

Speaker #3: As you know, through our regional review process, we have identified a number of facilities that do not meet our return requirements. At CEMEX Day, we highlighted both the size of these opportunity and that it would take time to realize it.

Speaker #3: EBITDA margin expanded meaningfully with a more than 300 basis point increase year on year. Cost of sales and operating expenses as a percentage of sales improved significantly.

Speaker #3: Since launching these efforts in 2025, while not yet material in scope, we have already disposed of approximately 60 of these facilities. Free cash flow from operations grew at a multiple to EBITDA.

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

Speaker #3: Importantly, a large part of this margin gain is the structural and sustainable driven by improved operating efficiency and a leaner cost base. These efforts were complemented by disciplined pricing and the benefit of operating leverage in some markets.

Speaker #3: As you know, through our regional review process, we have identified a number of facilities that do not meet our return requirements. At CEMEX DE, we highlighted both the size of these opportunity and that it would take time to realize it.

Speaker #3: With the recovery gaining traction and cement volumes posting year-over-year growth for the first time since mid-2024, during the quarter, CEMEX was upgraded to AAA the highest MSCI ESG rating placing us among the leaders in our industry.

Speaker #3: This upgrade reflects our continued progress on sustainability and our commitment to decarbonize through value-accretive levers. We continue advancing on our portfolio rebalancing during the quarter.

Speaker #3: Increasing by about 300 million dollars. The trailing 12-month conversion rate reached 51% after adjusting for severance and discontinued operations. Our Mexico operations delivered a strong EBITDA growth and margin expansion, with a recovery gain in traction and cement volumes posting year-over-year growth for the first time since mid-2024.

Speaker #3: With the announced investment of selected assets in Colombia, in a transaction expected to close by year-end. We also acquired Omega, a leading stucco and mortar player in the Western US.

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

Speaker #3: Which offers significant synergies to our existing business and serves as an important foundation to expand this private line throughout the US. This transactions, of course, adhere to our new capital allocation framework.

Speaker #3: During the quarter, CEMEX was upgraded to AAA, the highest MSCI ESG rating, placing us among the leaders in our industry. This upgrade reflects our continued progress on sustainability and our commitment to decarbonize through value-accretive levers.

Speaker #3: Regarding our commitment to bolster shareholder return, we repurchased approximately $100 million in shares during the quarter. In addition, at our annual shareholder meeting in March, the annual dividend was approved with an increase of almost 40%.

Speaker #3: We continue advancing on our portfolio rebalancing during the quarter. With the announced investment of selected assets in Colombia, in a transaction expected to close by year-end.

Speaker #3: In short, our quarterly results and activities reinforce a key point. We are delivering on the commitments of our project cutting-edge plan we introduced a year ago.

Speaker #3: We also acquired OMEGA, a leading stucco and mortar player in the Western US, which offers significant synergies to our existing business and serves as an important foundation to expand this private line throughout the US.

Speaker #3: Centering on operational excellence and best-in-class shareholder returns. And there is more still to be done. We are actively working on dimensioning the next phase of our savings program and continued reorganization.

Speaker #3: These transactions, of course, adhere to our new capital allocation framework. Regarding our commitment to bolster shareholder return, we repurchased approximately $100 million in shares during the quarter.

Speaker #3: I intend to share more detail on this in our second quarter earnings call. First quarter performance reflects a structurally stronger CEMEX with a more resilient earnings profile and clear momentum heading into the rest of the year.

Fernando A. González: Regarding our commitment to bolster shareholder return, we repurchased approximately $100 million in shares during the quarter. In addition, at our annual shareholder meeting in March, the annual dividend was approved with an increase of almost 40%. In short, our quarterly results and activities reinforce a key point. We are delivering on the commitments of our Project Cutting Edge plan we introduced a year ago, centering on operational excellence and best-in-class shareholder returns, and there is more still to be done. We are actively working on dimensioning the next phase of our savings program and continued reorganization. I intend to share more detail on this in our Q2 earnings call. Q1 performance reflects a structurally stronger CEMEX with a more resilient earnings profile and clear momentum heading into the rest of the year.

Speaker #3: In addition, at our annual shareholder meeting in March, the annual dividend was approved with an increase of almost 40%. In short, our quarterly results and activities reinforce a key point: we are delivering on the commitments of our project cutting-edge plan we introduced a year ago.

Speaker #3: Despite challenging weather in the US and EMEA, net sales grew 3% supported by higher consolidated prices and cement volume recovery in Mexico. But what really stands out is how effectively revenue growth translated into EBITDA EBIT and free cash flow generation.

Speaker #3: On a like-to-like basis, EBITDA increased 23% driven by operational efficiencies and pricing. EBIT, a key metric in our transformation expanded 40%. Our free cash flow from operations increased by nearly 300 million dollars and was positive in a quarter that has historically generated negative free cash flow due to our working capital cycle with a significant investment in the first half of the year.

Speaker #3: I intend to share more detail on this in our second-quarter earnings call. First-quarter performance reflects a structurally stronger CEMEX, with a more resilient earnings profile and clear momentum heading into the rest of the year.

Speaker #3: Despite challenging weather in the US and EMEA, net sales grew 3%, supported by higher consolidated prices and cement volume recovery in Mexico. But what really stands out is how effectively revenue growth translated into EBITDA, EBIT, and free cash flow generation.

Fernando A. González: Despite challenging weather in the US and EMEA, net sales grew 3%, supported by higher consolidated prices and cement volume recovery in Mexico. What really stands out is how effectively revenue growth translated into EBITDA, EBIT, and free cash flow generation. On a like-to-like basis, EBITDA increased 23%, driven by operational efficiencies and pricing. EBIT, a key metric in our transformation, expanded 40%. Our free cash flow from operations increased by nearly $300 million and was positive in a quarter that has historically generated negative free cash flow due to our working capital cycle with a significant investment in H1 of the year. Adjusting for severance payments on discontinued operations, free cash flow from operations conversion rate reached 51% on a trailing 12-month basis, reflecting a structurally stronger cash generation, up from 31% a year ago.

Speaker #3: Adjusting for severance payments and discontinued operations, free cash flow from operations conversion rate reached 51% on a trailing 12-month basis. Reflecting a structurally stronger cash generation up from 31% a year ago.

Speaker #3: On a like-for-like basis, EBITDA increased 23%, driven by operational efficiencies and pricing. EBIT, a key metric in our transformation, expanded 40%. Our free cash flow from operations increased by nearly $300 million and was positive in a quarter that has historically generated negative free cash flow due to our working capital cycle, with a significant investment in the first half of the year.

Speaker #3: Additional project cutting-edge savings and transformation initiatives coupled with operating leverage as volumes in our core markets recover should increasingly translate into higher margins and a stronger cash conversion.

Speaker #3: Adjusting for the effect of the one-off gain from the sale of our operations in the Dominican Republic in 2025, first quarter net income would have almost doubled.

Speaker #3: Adjusting for severance payments and discontinued operations, free cash flow from operations conversion rate reached 51% on a trailing 12-month basis, reflecting a structurally stronger cash generation, up from 31% a year ago.

Speaker #3: At the consolidated level, cement volumes reflect continued recovery in Mexico. Which, along with improvement in South, Central America, and the Caribbean, as well as in the Middle East and Africa, more than offset weather disruptions in the US and Europe.

Speaker #3: US volumes were impacted by adverse weather in the mid-South and Texas. In aggregates, volumes benefited from our couch acquisition and are reasonably completed expansion projects, which more than offset the weather impact.

Fernando A. González: Additional Project Cutting Edge savings and transformation initiatives, coupled with operating leverage as volumes in our core markets recover, should increasingly translate into higher margins and a stronger cash conversion. Adjusting for the effect of the one-off gain from the sale of our operations in the Dominican Republic in 2025, Q1 net income would have almost doubled. At the consolidated level, cement volumes reflect continued recovery in Mexico, which, along with improvement in South Central America and the Caribbean, as well as in the Middle East and Africa, more than offset weather disruptions in the US and Europe. US volumes were impacted by adverse weather in the mid-South and Texas. In aggregates, volumes benefited from our Couch acquisition on our recently completed expansion projects, which more than offset the weather impact.

Speaker #3: In Europe, volume performance also reflected difficult winter conditions throughout the portfolio which were further exacerbated by a prior year comparison base with very benign weather.

Speaker #3: Adjusting for the effect of the one-off gain from the sale of our operations in the Dominican Republic in 2025, first quarter net income would have almost doubled.

Speaker #3: For the full year, our consolidated volume guidance of low single-digit growth across our three core products remains unchanged. With only a slight regional adjustments.

Speaker #3: At the consolidated level, cement volumes reflect continued recovery in Mexico, which, along with improvement in South, Central America, and the Caribbean, as well as in the Middle East and Africa, more than offset weather disruptions in the US and Europe.

Speaker #3: With our focus on operational efficiency and available capacity, we remain well positioned to capitalize on the strong operating leverage in our business as volumes recover.

Speaker #3: Consolidated prices across cement, ready mix, and aggregates increased at a low to mid single-digit rate on a sequential basis. Supported by positive pricing dynamics in most of our markets.

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

Speaker #3: In Mexico, cement prices rose 5%, while in the US, aggregates prices increased mid single digits. In Europe, mid single-digit pricing gains were supported by the introduction of a carbon border adjustment mechanism together with tightening of free CO2 allowances under the EU ETS system.

Speaker #3: For the full year, our consolidated volume guidance of low single-digit growth across our three core products remains unchanged, with only a slight regional adjustments.

Speaker #3: With our focus on operational efficiency, unavailable capacity, we remain well positioned to capitalize on the strong operating leverage in our business as volumes recover.

Speaker #3: Our pricing strategy seeks to compensate for input cost inflation. With recent sudden moves in energy prices, we have moved to implement fuel surcharges in most markets as well as evaluating subsequent pricing increases to offset energy cost inflation.

Speaker #3: EBITDA in the quarter was supported by positive contributions across all levers. Importantly, nearly half of EBITDA growth came from self-help initiatives. Underscoring our focus on the things we can control.

Speaker #3: Particularly in a volatile environment. Pricing and effects driven primarily by a large year-over-year peso rate differential were also important factors in EBITDA growth. Finally, organic growth in our core products and urbanization solutions portfolio also made an important contribution.

Speaker #3: Our pricing strategy seeks to compensate for input cost inflation. With recent sudden moves in energy prices, we have moved to implement fuel surcharges in most markets, as well as evaluating subsequent pricing increases to offset energy cost inflation.

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

Speaker #3: EBITDA margin expanded by 3.3 percentage points reflecting a combination of the structurally lower costs pricing discipline and operating leverage. A year ago, I laid out the priorities of our transformation centered on operational excellence and best-in-class shareholder returns.

Speaker #3: Since then, we have worked relentlessly to execute on our plan. Focusing on operational efficiency, elimination of overhead, and enhanced free cash flow generation. We have clear evidence of progress in the quarter with 60 million dollars in incremental recurring savings under project cutting edge as well as improved EBITDA margins across our regions.

Speaker #3: Pricing and effects driven primarily by a large year-over-year peso rate differential were also important factors in EBITDA growth. Finally, organic growth in our core products and urbanization solutions portfolio also made an important contribution.

Speaker #3: EBITDA margin expanded by 3.3 percentage points, reflecting a combination of the structurally lower costs pricing discipline and operating leverage. A year ago, I laid out the priorities of our transformation centered on operational excellence and best-in-class shareholder returns.

Speaker #3: Our efforts to reduce overhead along with our operating initiatives are paying off. With important reduction in cost of goods holds and HG&A as a percentage of sales.

Speaker #3: We still have more to deliver. With an additional 105 million dollars in savings expected during the rest of this year under our announced 400 million dollars project cutting edge commitment.

Speaker #3: Since then, we have worked relentlessly to execute on our plan, focusing on operational efficiency, elimination of overhead, and enhanced free cash flow generation. We have clear evidence of progress in the quarter with 60 million dollars in incremental recurring savings under project cutting edge, as well as improved EBITDA margins across our regions.

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

Speaker #3: Importantly, three quarters of the savings relate to overhead reduction decisions taken last year. As I have mentioned, there are additional transformation opportunities we are identifying and you should expect that the 400 million dollars in project cutting edge cost savings from 2025 to 2027 will be upsized when I address this in July.

Speaker #3: Our efforts to reduce overhead along with our operating initiatives are paying off, with important reduction in cost of goods holds and HG&A as a percentage of sales.

Speaker #3: In March, we announced the divestment of several assets in Colombia. Including cement operations and a portfolio of ready mix concrete, aggregates, mortars, and add mixtures for total profits of approximately 485 million dollars.

Speaker #3: We still have more to deliver, with an additional $105 million in savings expected during the rest of this year under our announced $400 million Project Cutting Edge commitment.

Speaker #3: We are currently in discussions to divest related non-operational assets in the country for around 70 million dollars. We expect this transactions to close by the end of the year representing a combined multiple of 10 times 2025 EBITDA.

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

Speaker #3: In line with our strategy to grow our US business, we recycled a portion of the future profits into higher return opportunities in the US.

Speaker #3: At the next day, we announced the acquisition of Omega, the leading stucco producer in the Western US with the number one brand at a post-energy multiple below 7 times.

Speaker #3: In March, we announced the divestment of several assets in Colombia, including cement operations and a portfolio of ready mix concrete, aggregates, mortars, and admixtures for total profits of approximately 485 million dollars.

Speaker #3: The acquisition was completed on March 31st. This transaction is highly accredited with significant direct synergies driven by vertical integration as stuccos and mortars use cement, sand, and add mixtures as key raw materials.

Speaker #3: We are currently in discussions to divest related non-operational assets in the country for around 70 million dollars. We expect this transactions to close by the end of the year, representing a combined multiple of 10 times 2025 EBITDA.

Speaker #3: In fact, Omega cement requirements are equivalent to those of approximately eight average size ready mix plans. And it has already begun to direct their raw materials needs to CEMEX in first quarter.

Speaker #3: In line with our strategy to grow our US business, we recycled a portion of the future profits into higher return opportunities in the US.

Speaker #3: Direct synergies are expected to amount to close to 50% of Omega's 2025 EBITDA of roughly 23 million dollars. Beyond direct input synergies, the acquisition also unlocks cost efficiencies across procurement and R&D as well as cross-selling opportunities through our existing customer base.

Speaker #3: At CEMEX DE, we announced the acquisition of Omega, the leading stucco producer in the Western US, with the number one brand at a post-energy multiple below 7 times.

Fernando A. González: At CEMEX Day, we announced the acquisition of Omega, the leading stucco producer in the Western US with the number one brand at a post-synergy multiple below 7x. The acquisition was completed on 31 March. This transaction is highly accretive, with significant direct synergies driven by vertical integration as the stuccos and mortars use cement, sand, and admixtures as key raw materials. In fact, Omega's cement requirements are equivalent to those of approximately 8 average size ready-mix plants, and it has already begun to direct their raw materials needs to CEMEX in Q1. Direct synergies are expected to amount to close to 50% of Omega's 2025 EBITDA of roughly $23 million. Beyond direct input synergies, the acquisition also unlocks cost efficiencies across procurement and R&D, as well as cross-selling opportunities through our existing customer base.

Speaker #3: The acquisition was completed on March 31st. This transaction is highly accredited, with significant direct synergies driven by vertical integration as stuccos and mortars use cement, sand, and admixtures as key raw materials.

Speaker #3: With a free cash flow conversion rate of around 65%, Omega will enhance our overall cash generation and improve our earnings quality. More importantly, leveraging Omega's expertise provides us with a strong platform from which to expand our mortars and stucco business in the US consistent with our focus on adjacent high return growth opportunities.

Speaker #3: In fact, Omega Cement requirements are equivalent to those of approximately eight average size ready mix plans. And it has already begun to direct their raw materials needs to CEMEX in first quarter.

Speaker #3: I would also like to take a moment to warmly welcome the Omega team to CEMEX. We are excited to have you join us and look forward to learning from your solid capabilities strong culture and market leadership as we build this platform together.

Speaker #3: Direct synergies are expected to amount to close to 50% of Omega's 2025 EBITDA of roughly 23 million dollars. Beyond direct input synergies, the acquisition also unlocks cost efficiencies across procurement and R&D, as well as cross-selling opportunities through our existing customer base.

Speaker #3: And with that, back to you, Lucy.

Speaker #1: Thank you, Jaime. Mexico delivered strong results. Supported by continued cement volume recovery, relevant operational efficiencies, pricing, and operating leverage. Reinforcing the momentum built over recent quarters.

Speaker #3: With a free cash flow conversion rate of around 65%, Omega will enhance our overall cash generation and improve our earnings quality. More importantly, leveraging Omega's expertise provides us with a strong platform from which to expand our mortars and stucco business in the US, consistent with our focus on adjacent high-return growth opportunities.

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

Speaker #1: For the first time in six quarters, year-over-year cement volumes inflected positively. As the government accelerated the rollout of their social programs. Demand to date has largely benefited from self-construction and government-backed social programs.

Speaker #3: I would also like to take a moment to warmly welcome the Omega team to CEMEX. We are excited to have you join us and look forward to learning from your solid capabilities, strong culture, and market leadership as we build this platform together.

Speaker #1: Such as rural roads and housing. Supporting bagged cement volumes. The social housing program targeting 1.8 million units through 2030 is also ramping up. We are currently participating in the construction of approximately 120,000 units.

Speaker #3: And with that, back to you, Lucy.

Speaker #1: Thank you, Jaime. Mexico delivered strong results, supported by continued cement volume recovery, relevant operational efficiencies, pricing, and operating leverage. Reinforcing the momentum built over recent quarters.

Lucy Rodriguez: Thank you, Jaime. Mexico delivered strong results supported by continued cement volume recovery, relevant operational efficiencies, pricing, and operating leverage, reinforcing the momentum built over recent quarters. For the first time in six quarters, year-over-year cement volumes inflected positively as the government accelerated the rollout of their social programs. Demand to date has largely benefited from self-construction and government-backed social programs, such as rural roads and housing, supporting bagged cement volume. The social housing program, targeting 1.8 million units through 2030, is also ramping up. We are currently participating in the construction of approximately 120,000 units, double the level of Q4, and are in negotiations for an additional 110,000 more. In infrastructure, while conditions remain relatively soft, activity on the ground is improving, and our ready-mix backlog is trending higher.

Lucy Rodriguez: Thank you, Ferne. Mexico delivered strong results supported by continued cement volume recovery, relevant operational efficiencies, pricing, and operating leverage, reinforcing the momentum built over recent quarters. For the first time in six quarters, year-over-year cement volumes inflected positively as the government accelerated the rollout of their social programs. Demand to date has largely benefited from self-construction and government-backed social programs, such as rural roads and housing, supporting bagged cement volume. The social housing program, targeting 1.8 million units through 2030, is also ramping up. We are currently participating in the construction of approximately 120,000 units, double the level of Q4, and are in negotiations for an additional 110,000 more. In infrastructure, while conditions remain relatively soft, activity on the ground is improving, and our ready-mix backlog is trending higher.

Speaker #1: Double the level of fourth quarter. And are in negotiations for an additional 110,000 more. In infrastructure, while conditions remain relatively soft, activity on the ground is improving and our ready mix backlog is trending higher.

Speaker #1: We are currently participating in the construction of relevant projects including the elevated viaduct in Tijuana and rail line projects such as Carretero Irazpato and Saltilla Nueva Loredo with additional projects expected in the near term.

Speaker #1: Such as rural roads and housing, supporting bagged cement volumes. The social housing program, targeting 1.8 million units through 2030, is also ramping up. We are currently participating in the construction of approximately 120,000 units, double the level of fourth quarter, and are in negotiations for an additional 110,000 more.

Speaker #1: Going forward, we expect the main drivers of growth to come from resilient housing demand and well-timing remains difficult to pinpoint infrastructure activity. Cement volume performance was also supported by a temporary market share gain as a few competitors experienced outages in the central part of the country in the quarter.

Speaker #1: In infrastructure, while conditions remain relatively soft, activity on the ground is improving and our ready mix backlog is trending higher. We are currently participating in the construction of relevant projects, including the elevated viaduct in Tijuana and rail line projects such as Carretero Iracuato and Saltilla Nuevo Loredo, with additional projects expected in the near term.

Speaker #1: EBITDA grew 47% benefiting from a significantly stronger peso as well as important cost savings driven by our transformation. Including a new organization structure. Margin expanded by nearly 5 percentage points to 36.1%.

Lucy Rodriguez: We are currently participating in the construction of relevant projects, including the elevated viaduct in Tijuana, and rail line projects such as Querétaro, Irapuato, and Saltillo-Nuevo Laredo, with additional projects expected in the near term. Going forward, we expect the main drivers of growth to come from resilient housing demand and, while timing remains difficult to pinpoint, infrastructure activity. Cement volume performance was also supported by a temporary market share gain as a few competitors experienced outages in the central part of the country in the quarter. EBITDA grew 47%, benefiting from a significantly stronger peso as well as important cost savings driven by our transformation, including a new organization structure. Margin expanded by nearly five percentage points to 36.1%, returning to levels last achieved in Q1 2021, driven by Project Cutting Edge.

Speaker #1: Returning to levels last achieved in first quarter of 2021. Driven by project cutting edge. Performance also benefited from lower maintenance activity which we expect will normalize throughout the rest of the year.

Speaker #1: On a sequential basis, cement prices increased mid-single quarters. As in our other markets, we will look to adapt our pricing strategy to offset cost inflation.

Speaker #1: EBITDA grew 47%, benefiting from a significantly stronger peso as well as important cost savings driven by our transformation. Including a new organization structure. Margin expanded by nearly 5 percentage points to 36.1%.

Speaker #1: Due to our large exposure to Petco, which cannot be efficiently hedged in our fuel mix, we do anticipate that Mexico will experience the largest headwind from energy inflation this year.

Speaker #1: We are moving already to increase our alternative fuel usage which should partially offset some of the cost impact. Regarding our decarbonization efforts, we achieved a new clinker factor record in Mexico.

Speaker #1: Returning to levels last achieved in first quarter of 2021, driven by project cutting edge. Performance also benefited from lower maintenance activity, which we expect will normalize throughout the rest of the year.

Speaker #1: Averaging 62.9% for the quarter. Underscoring our commitment to reducing CO2 emissions profitably. The ongoing recovery in volumes is structural improvements we have implemented over the last year better infrastructure visibility and discipline pricing should continue to support strong results in Mexico.

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

Speaker #1: On a sequential basis, cement prices increased mid-single quarters. As in our other markets, we will look to adapt our pricing strategy to offset cost inflation.

Speaker #1: We expect some normalization in EBITDA growth as we go through the year. As the comps become more difficult, energy inflation accelerates and growth relies more on formal construction which is more difficult at times.

Speaker #1: We are moving already to increase our alternative fuel usage, which should partially offset some of the cost impact. Regarding our decarbonization efforts, we achieved a new clinker factor record in Mexico.

Speaker #1: Our US operations delivered resilient results in a challenging operating environment supported by project cutting edge. Higher cement production and continued growth in our aggregates business.

Speaker #1: Averaging 62.9% for the quarter. Underscoring our commitment to reducing CO2 emissions profitably. The ongoing recovery in volumes, the structural improvements we have implemented over the last year, better infrastructure visibility, and discipline pricing should continue to support strong results in Mexico.

Speaker #1: Adverse weather conditions in January and February weighed on activity particularly in Texas and the Mid-South. Despite these headwinds, ready mix volumes grew 2% marking the first year-over-year increase since mid-2022.

Speaker #1: Aggregate volumes increased 9% reflecting the consolidation of couch aggregates and other investments that have recently come online. Adjusting for winter storms, we estimate that cement ready mix and aggregate volumes would have increased by 1, 5, and 10% respectively.

Speaker #1: We expect some normalization in EBITDA growth as we go through the year, as the comps become more difficult, energy inflation accelerates, and growth relies more on formal construction, which is more difficult at times.

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

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

Speaker #1: Our US operations delivered resilient results in a challenging operating environment, supported by project cutting edge, higher cement production, and continued growth in our aggregates business.

Speaker #1: Reflecting a slight improvement in underlying market demand. The contribution from higher ready mix and aggregate volumes was offset by pricing and higher freight cost resulting in stable EBITDA and EBITDA margins.

Speaker #1: Adverse weather conditions in January and February weighed on activity, particularly in Texas and the Mid-South. Despite these headwinds, ready mix volumes grew 2%, marking the first year-over-year increase since mid-2022.

Speaker #1: Aggregates sequential prices rose mid-single digits. As a result of our January price increase in certain sectors. In cement and ready mix, prices declined 1% sequentially reflecting continued competitive pressure following multiple years of soft industry demand.

Speaker #1: Aggregate volumes increased 9%, reflecting the consolidation of couch aggregates and other investments that have recently come online. Adjusting for winter storms, we estimate that cement ready mix and aggregate volumes would have increased by 1, 5, and 10 percent respectively.

Speaker #1: In this environment, most of the April price increases were deferred to mid-year. Importantly, fuel surcharges are already in place. In the current global context, marked by rising maritime freight rates, tariffs, supply chain disruptions, and increasing energy and logistics costs, we expect progressively stronger pricing support as the year unfolds.

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

Speaker #1: Aggregates sequential prices rose mid-single digits, as a result of our January price increase in certain sectors. In cement and ready mix, prices declined 1% sequentially reflecting continued competitive pressure following multiple years of soft industry demand.

Speaker #1: Demand continues to be primarily driven by infrastructure supported by the ongoing rollout of IIJA projects. With about 50% of allocated funds already spent and peak activity expected this year.

Speaker #1: Industrial and commercial projects particularly large data centers and chip manufacturing facilities continue to drive construction activity. Importantly, 40% of mega data center projects investments that exceed $500 million currently planned or under construction are located within our footprint.

Speaker #1: Rising investment in the power sector to meet growing AI electricity needs should also support demand. With the current geopolitical situation, we expect recovery in the residential sector to be further delayed due to the higher rate environment and expected incremental inflationary pressures.

Speaker #1: Demand continues to be primarily driven by infrastructure supported by the ongoing rollout of IIJA projects, with about 50% of allocated funds already spent and peak activity expected this year.

Speaker #1: However, pent-up demand and favorable demographic trends should be supported over the medium term. As volumes recover, operational leverage combined with our structurally leaner cost base and expanding aggregates business position the US business for stronger profitability.

Speaker #1: Industrial and commercial projects, particularly large data centers and chip manufacturing facilities, continue to drive construction activity. Importantly, 40% of mega data center projects investments that exceed $500 million currently planned or under construction are located within our footprint.

Lucy Rodriguez: Industrial and commercial projects, particularly large data centers and chip manufacturing facilities, continue to drive construction activity. Importantly, 40% of mega data center projects, investments that exceed $500 million, currently planned or under construction, are located within our footprint. Rising investment in the power sector to meet growing AI electricity needs should also support demand. With the current geopolitical situation, we expect recovery in the residential sector to be further delayed due to the higher rate environment and expected incremental inflationary pressures. However, pent-up demand and favorable demographic trends should be supportive over the medium term. As volumes recover, operational leverage, combined with our structurally leaner cost base and expanding aggregates business, position the US business for stronger profitability.

Speaker #1: Our operations in EMEA delivered a solid first quarter driven primarily by our new leaner cost structure and pricing. With EBITDA in both Europe and the Middle East and Africa, expanding at double digit rates.

Speaker #1: Margin improvement in the region mostly reflects recurring cost savings and higher prices with some temporary benefit from lower maintenance activity in the quarter. In Europe, demand was impacted by adverse winter weather and precipitation early in the quarter.

Speaker #1: However, pent-up demand and favorable demographic trends should be supported over the medium term. As volumes recover, operational leverage, combined with our structurally leaner cost base, and expanding aggregates business, position the US business for stronger profitability.

Speaker #1: With weather conditions largely normalizing in March, cement volumes grew 14% year over year. While ready mix and aggregate volumes increased at low single digit rates.

Speaker #1: Supported by the implementation of the carbon border adjustment mechanism and the tightening of free CO2 allowances under the EU ETS system, cement prices increased 4% sequentially.

Speaker #1: Our operations in EMEA delivered a solid first quarter, driven primarily by our new leaner cost structure and pricing, with EBITDA in both Europe and the Middle East and Africa expanding at double digit rates.

Lucy Rodriguez: Our operations in EMEIA delivered a solid Q1, driven primarily by our new leaner cost structure and pricing, with EBITDA in both Europe and the Middle East and Africa expanding at double-digit rates. Margin improvement in the region mostly reflects recurring cost savings and higher prices, with some temporary benefit from lower maintenance activity in the quarter. In Europe, demand was impacted by adverse winter weather and precipitation early in the quarter. With weather conditions largely normalizing in March, cement volumes grew 14% year-over-year. While ready-mix and aggregate volumes increased at low single-digit rates. Supported by the implementation of the Carbon Border Adjustment Mechanism and the tightening of free CO2 allowances under the EU ETS system, cement prices increased 4% sequentially. Q1 price announcements covered approximately one-third of total European volumes. We have announced price increases in Poland, Germany, and Croatia effective April.

Speaker #1: First quarter price announcements covered approximately one-third of total European volumes. We have announced price increases in Poland, Germany, and Croatia effective April. As Jaime explained, we have introduced fuel surcharges or additional price increases in several markets to offset energy inflation.

Speaker #1: Margin improvement in the region, mostly reflects recurring cost savings and higher prices, with some temporary benefit from lower maintenance activity in the quarter. In Europe, demand was impacted by adverse winter weather and precipitation early in the quarter.

Speaker #1: With weather conditions largely normalizing in March, cement volumes grew 14% year over year. While ready mix and aggregate volumes increased at low single digit rates.

Speaker #1: Residential activity across much of Europe remains muted and higher interest rates point to a slower recovery. The notable exception is Spain where housing activity has been supported since 2024.

Speaker #1: Supported by the implementation of the carbon border adjustment mechanism and the tightening of free CO2 allowances under the EU ETS system, cement prices increased 4% sequentially.

Speaker #1: In contrast, infrastructure continues to be the most resilient segment across the region, particularly in Eastern Europe. And we expect it to remain a key driver of demand this year.

Speaker #1: Middle East and Africa outperformed our internal pre-war expectations with EBITDA growth of 27% driven by project cutting edge and improved pricing. Despite heightened geopolitical tensions, the impact of the Iran conflict during the quarter was limited.

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

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

Speaker #1: Residential activity across much of Europe remains muted and higher interest rates point to a slower recovery. The notable exception is Spain, where housing activity has been supported since 2024.

Speaker #1: Average daily sales declined significantly at the outset of the war but have largely recovered as of early April. While we remain cautious on the outlook given the war, we are pleased with the resilience of our operations in the region today.

Speaker #1: In contrast, infrastructure continues to be the most resilient segment across the region, particularly in Eastern Europe. And we expect it to remain a key driver of demand this year.

Speaker #1: Our operations in South Central America and the Caribbean delivered double digit EBITDA growth and meaningful margin expansion. Driven by improved cement volumes and the continued benefits of our transformation.

Speaker #1: Middle East and Africa outperformed our internal pre-war expectations, with EBITDA growth of 27%, driven by project cutting edge and improved pricing. Despite heightened geopolitical tensions, the impact of the Iran conflict during the quarter was limited.

Speaker #1: Performance was also bolstered by the debottlenecking project completed last year in Jamaica which is allowing us to fully supply the local market domestic production.

Speaker #1: Cement demand across the region was supported by growth in the informal sector in Colombia, as well as reconstruction efforts following Hurricane Melissa and tourism-related projects in Jamaica.

Speaker #1: Average daily sales declined significantly at the outset of the war but have largely recovered as of early April. While we remain cautious on the outlook, given the war, we are pleased with the resilience of our operations in the region today.

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

Speaker #1: Cement prices increased by 5% sequentially reflecting our disciplined pricing strategy. Looking ahead, we remain optimistic on the outlook for the region supported by improving consumer confidence and continued activity in informal construction.

Speaker #1: And with that, I will now turn the call over to Maher to review our financial development.

Speaker #1: Performance was also bolstered by the debottlenecking project completed last year in Jamaica, which is allowing us to fully supply the local market, domestic production.

Speaker #2: Thank you, Lucy, and good day to everyone. Given the current environment, I would like to provide additional details on our energy strategy and our exposure to market volatility.

Speaker #2: Before turning to our financial highlights. As Jaime mentioned, we estimate approximately 60% of our total 2025 energy exposure of 1.65 billion dollars has been hedged for 2026.

Speaker #1: Cement prices increased by 5% sequentially, reflecting our disciplined pricing strategy. Looking ahead, we remain optimistic on the outlook for the region, supported by improving consumer confidence and continued activity in informal construction.

Speaker #2: Through a combination of derivatives, annual contracts, and regulated pricing frameworks for the full year. Roughly two-thirds of this amount is related to fuel and electricity in cement production and one-third to diesel in transportation.

Speaker #1: And with that, I will now turn the call over to Maher to review our financial developments.

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

Speaker #2: Approximately 75% of our expected 2026 diesel consumption direct and indirect through our third-party haulers is hedged. In addition, we have already started implementing fuel surcharges across our regions.

Speaker #2: Thank you, Lucy, and good day to everyone. Given the current environment, I would like to provide additional details on our energy strategy and our exposure to market volatility.

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

Speaker #2: Before turning to our financial highlights, as Jaime mentioned, we estimate approximately 60% of our total 2025 energy exposure of 1.65 billion has been hedged for 2026.

Speaker #2: In cement production, our energy exposure is evenly split between electricity and fuels. In electricity, about 70% of our needs are fixed or are in regulated markets.

Speaker #2: As you can see on this slide, our kiln fuel mix measured on a calorific value basis which is primarily sourced locally is well diversified.

Speaker #2: We estimate that approximately 35 to 40% of our fuel use for cement production is hedged via contract for 2026. Two to three months of inventories provide some protection for petcoke while our natural gas exposure is primarily in the US where we have seen far less price volatility.

Speaker #2: Importantly, we also have flexibility to adjust our kiln fuel mix in our operations. Switching among the various alternatives based on relative economics. Where possible, we are working to switch to alternative fuels that are generally cheaper and carry little correlation to fossil fuel prices.

Speaker #2: In cement production, our energy exposure is evenly split between electricity and fuels. In electricity, about 70% of our needs are fixed or are in regulated markets.

Speaker #2: As you can see on this slide, our kiln fuel mix measured on a calorific value basis, which is primarily sourced locally, is well diversified.

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

Speaker #2: Together, these levers provide a meaningful buffer in the short term during periods of high volatility. To date, we have seen little impact from energy inflation with energy cost per ton of cement in the quarter stable.

Speaker #2: We estimate that approximately 35% to 40% of our fuel use for cement production is hedged via contract for 2026. Two to three months of inventories provide some protection for petcoke while our natural gas exposure is primarily in the US, where we have seen far less price volatility.

Speaker #2: With declines in fuel costs offset by higher electricity costs. While our energy strategy provides meaningful protection in the short term, we expect to face inflationary pressures in energy later in the year.

Speaker #2: As such, we are downgrading our full-year guidance and now expect energy cost per ton of cement produced to rise mid to high single-digit rate.

Speaker #2: Up from our prior mid-single-digit guidance. Moving to our financial highlights, our self-help measures are delivering exceptional results, driving record quarterly EBITDA, the highest first-quarter EBITDA margin in five years, and significant improvements in free cash flow from operations.

Maher Al-Haffar: To date, we have seen little impact from energy inflation, with energy costs per ton of cement in the quarter stable, with declines in fuel costs offset by higher electricity costs. While our energy strategy provides meaningful protection in the short term, we expect to face inflationary pressures in energy later in the year. As such, we are downgrading our full year guidance and now expect energy costs per ton of cement produced to rise mid- to high-single-digit rate, up from our prior mid-single-digit guidance. Moving to our financial highlights, our self-help measures are delivering exceptional results, driving record quarterly EBITDA, the highest Q1 EBITDA margin in five years, and significant improvements in free cash flow from operations.

Speaker #2: Free cash flow from operations increased by nearly 300 million dollars reaching 29 million dollars in a quarter that has historically generated negative free cash flow due to significant working capital investment.

Speaker #2: With declines in fuel costs offset by higher electricity costs, while our energy strategy provides meaningful protection in the short term, we expect to face inflationary pressures in energy later in the year.

Speaker #2: This growth is explained by exceptional EBITDA growth along with important reductions in capex, working capital, interest, and other cash expenditures. The working capital investment during the quarter 31 million dollars lower than prior year is expected to largely reverse throughout the rest of the year.

Speaker #2: As such, we are downgrading our full-year guidance and now expect energy cost per ton of cement produced to rise at a mid- to high-single-digit rate.

Speaker #2: Working capital days for the quarter stood at negative 11 days, two additional days versus first quarter of 2025. Excluding severance payments and discontinued operations, our free cash flow from operations conversion rate for the trailing 12 months reached 51% compared to 46% for the full year 2025.

Speaker #2: Free cash flow from operations increased by nearly 300 million dollars, reaching 29 million dollars in a quarter, that has historically generated negative free cash flow due to significant working capital investment.

Maher Al-Haffar: Free cash flow from operations increased by nearly $300 million, reaching $29 million in a quarter that has historically generated negative free cash flow due to significant working capital investment. This growth is explained by exceptional EBITDA growth, along with important reductions in CapEx, working capital, interest, and other cash expenditures. The working capital investment during the quarter, $31 million lower than prior year, is expected to largely reverse throughout the rest of the year. Working capital days for the quarter stood at negative 11 days, two additional days versus Q1 2025. Excluding severance payments and discontinued operations, our free cash flow from operations conversion rate for the trailing 12 months reached 51%, compared to 46% for the full year 2025. Project Cutting Edge is delivering tangible results in our cost structure.

Speaker #2: Project cutting edge is delivering tangible results in our cost structure as Jaime mentioned, cost of goods sold and operating expenses as a percentage of sales are down 175 basis points and 148 basis points year over year respectively.

Speaker #2: This growth is explained by exceptional EBITDA growth, along with important reductions in CAPEX, working capital, interest, and other cash expenditures. The working capital investment during the quarter, 31 million dollars lower than prior year, is expected to largely reverse throughout the rest of the year.

Speaker #2: The decline in net income is explained by the gain on the sale of our Dominican Republic operations during the first quarter of 2025. As we work to transform our liability profile through proactive liability management and reduce the overall debt burden, we repaid a $400 million euro denominated bond in a $6 billion peso loan during the quarter.

Speaker #2: Working capital days for the quarter stood at negative 11 days, two additional days versus the first quarter of 2025. Excluding severance payments and discontinued operations, our free cash flow from operations conversion rate for the trailing 12 months reached 51%, compared to 46% for the full year 2025.

Speaker #2: We funded these payments with the issuance of five and a half billion pesos or approximately $300 million in a five-year certificados bursátiles and cash on hand.

Speaker #2: Project Cutting Edge is delivering tangible results in our cost structure. As Jaime mentioned, cost of goods sold and operating expenses as a percentage of sales are down 175 basis points and 148 basis points year over year, respectively.

Maher Al-Haffar: As Jaime mentioned, cost of goods sold and operating expenses as a percentage of sales are down 175 basis points and 148 basis points year over year, respectively. The decline in net income is explained by the gain on the sale of our Dominican Republic operations during Q1 2025. As we work to transform our liability profile through proactive liability management and reduce the overall debt burden, we repaid a EUR 400 million euro-denominated bond and a MXN 6 billion peso loan during the quarter. We funded these payments with the issuance of MXN 5.5 billion pesos, or approximately $300 million, in a five-year Certificados Bursátiles and cash on hand. To drive the interest rate savings, we swapped the newly issued Certificados Bursátiles into euros, locking in rates inside our euro curve. As a result of these transactions, our total debt plus subordinated notes decreased by around $540 million sequentially.

Maher Al-Haffar: As Ferne mentioned, cost of goods sold and operating expenses as a percentage of sales are down 175 basis points and 148 basis points year over year, respectively. The decline in net income is explained by the gain on the sale of our Dominican Republic operations during Q1 2025. As we work to transform our liability profile through proactive liability management and reduce the overall debt burden, we repaid a EUR 400 million euro-denominated bond and a MXN 6 billion peso loan during the quarter. We funded these payments with the issuance of MXN 5.5 billion pesos, or approximately $300 million, in a five-year Certificados Bursátiles and cash on hand. To drive the interest rate savings, we swapped the newly issued Certificados Bursátiles into euros, locking in rates inside our euro curve. As a result of these transactions, our total debt plus subordinated notes decreased by around $540 million sequentially.

Speaker #2: To drive the interest rate savings, we swapped the newly issued certificados bursátiles into euros locking in rates inside our euro curve. As a result of these transactions, our total debt plus subordinated notes decreased by around 540 million dollars sequentially.

Speaker #2: Net debt plus subordinated notes, however, increased by 590 million dollars over the same period. Primarily due to cash uses related to the Omega acquisition, growth capex, share buybacks, dividends, and other items.

Speaker #2: We funded these payments with the issuance of 5.5 billion pesos or approximately $300 million in a five-year certificados bursátiles and cash on hand. To drive the interest rate savings, we swapped the newly issued certificados bursátiles into euros.

Speaker #2: As we generate additional free cash flow in the coming quarters, we expect to end the year with a lower level of net debt plus subordinated notes relative to 2025.

Speaker #2: Our net financial leverage including $2 billion of subordinated perpetual notes stood at 2.3 times unchanged sequentially. With improved free cash flow generation and higher EBITDA, we remain confident in our ability to continue deleveraging toward our target range of one and a half to two times.

Speaker #2: Locking in rates inside our euro curve. As a result of these transactions, our total debt plus subordinated notes decreased by around 540 million dollars sequentially.

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

Speaker #2: We aim to further improve our risk profile with a solid triple B rating bolster our growth potential and maximize value creation for our shareholders.

Speaker #2: In fact, yesterday Fitch Ratings reaffirmed our triple B minus global rating and raised the outlook to positive from stable. Additionally, they upgraded our long-term national scale ratings from double A plus to triple A, the highest credit quality on the Mexican national scale.

Speaker #2: As we generate additional free cash flow in the coming quarters, we expect to end the year with a lower level of net debt plus subordinated notes relative to 2025.

Speaker #2: This should further strengthen our credit profile and reinforce external confidence in our long-term financial strategy. Consistent with our commitment to strengthening our shareholder return platform, a nearly 40% dividend increase was approved by shareholders at our recent shareholder meeting.

Speaker #2: We aim to further improve our risk profile with a solid BBB rating, bolster our growth potential, and maximize value creation for our shareholders. In fact, yesterday, Fitch Ratings reaffirmed our BBB minus global rating and raised the outlook to positive from stable.

Speaker #2: This will raise the annual dividend to $180 million from $130 million approved last year. Complementing our cash dividend, we also executed $100 million of share buybacks during the quarter.

Maher Al-Haffar: In fact, yesterday, Fitch Ratings reaffirmed our triple B minus global rating and raised the outlook to positive from stable. Additionally, they upgraded our long-term national scale ratings from double A plus to triple A, the highest credit quality on the Mexican national scale. This should further strengthen our credit profile and reinforce external confidence in our long-term financial strategy. Consistent with our commitment to strengthening our shareholder return platform, a nearly 40% dividend increase was approved by shareholders at our recent shareholder meeting. This will raise the annual dividend to $180 million from $130 million approved last year. Complementing our cash dividend, we also executed $100 million of share buybacks during the quarter. As we discussed in our Q4 results, our intent is to buy back up to $500 million in shares over the next three years.

Speaker #2: As we discussed in our fourth quarter results, our intent is to buy back up to $500 million in shares over the next three years.

Speaker #2: Additionally, they upgraded our long-term national scale ratings from AA plus to AAA, the highest credit quality on the Mexican national scale. This should further strengthen our credit profile and reinforce external confidence in our long-term financial strategy.

Speaker #2: You should expect gradual improvement in shareholder return as free cash flow continues to grow in subsequent years. And now back to you, Jaime.

Speaker #1: Thank you, Maher. I am proud of the results and achievements my team delivered this quarter. Incremental evidence of the power of our transformation efforts.

Speaker #2: Consistent with our commitment to strengthening our shareholder return platform, a nearly 40% dividend increase was approved by shareholders at our recent shareholder meeting. This will raise the annual dividend to $180 million, from $130 million approved last year.

Speaker #1: I recognize that there is still important work ahead. As we continue executing on our plan, we remain constructive on the demand environment across most of our markets this year.

Speaker #1: With continued recovery expected, particularly in Mexico, where we are modestly adjusting our volume guidance upward. Our focus remains on capturing the announced savings under project cutting edge identifying and securing new recurring savings and moving quickly to reflect the new energy headwinds in our rising strategy for the rest of the year.

Speaker #2: Complementing our cash dividend, we also executed $100 million of share buybacks during the quarter. As we discussed in our fourth quarter results, our intent is to buy back up to $500 million in shares over the next three years.

Speaker #2: You should expect gradual improvement in shareholder return as free cash flow continues to grow in subsequent years. And now back to you, Jaime.

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

Maher Al-Haffar: You should expect gradual improvement in shareholder return as free cash flow continues to grow in subsequent years. Now back to you, Ferne.

Speaker #1: We will also continue to advance on our portfolio alignment plan coming out of our business performance reviews designed to improve the quality of our earnings and free cash flow generation.

Speaker #1: Thank you, Majer. I am proud of the results and achievements my team delivered this quarter. Incremental evidence of the power of our transformation efforts.

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

Speaker #1: I recognize that there is still important work ahead as we continue executing on our plan. We remain constructive on the demand environment across most of our markets this year.

Speaker #1: Let me reiterate what I said at the beginning of this call. While volatility will persist, with our self-help measures delivering as intended, and our strong first quarter performance, I remain confident in our ability to deliver our full-year EBITDA guidance and now back to you, Lucy.

Speaker #1: With continued recovery expected, particularly in Mexico, where we are modestly adjusting our volume guidance upward. Our focus remains on capturing the announced savings under project cutting edge, identifying and securing new recurring savings, and moving quickly to reflect the new energy headwinds in our rising strategy for the rest of the year.

Speaker #3: 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.

Speaker #3: In addition, unless the context indicates otherwise, all references to pricing initiatives, price increases, or decreases referred to our prices for our products. Now we will be happy to take your questions.

Speaker #1: We will also continue to advance on our portfolio alignment plan, coming out of our business performance reviews designed to improve the quality of our earnings and free cash flow generation.

Fernando A. González: Let me reiterate what I said at the beginning of this call. While volatility will persist, with our self-help measures delivering as intended. On our strong Q1 performance, I remain confident in our ability to deliver our full year EBITDA guidance. Now back to you, Lucy.

Speaker #3: In the interest of time and to give other people an opportunity to participate, we kindly ask that you limit yourself to one question. If you wish to ask a question, please press star followed by one on your touchstone telephone.

Speaker #3: If your question has already been answered or you wish to withdraw your question, press star followed by two. Please press star one to begin.

Lucy Rodriguez: Before we go into our Q&A session, I would like to remind you that any forward-looking statements we make today are based on our current knowledge of the markets in which we operate and could change in the future due to a variety of factors. In addition, unless the context indicates otherwise, all references to pricing initiatives, price increases or decreases refer to our prices for our products. Now, we will be happy to take your questions. In the interest of time and to give other people an opportunity to participate, we kindly ask that you limit yourself to one question. If you wish to ask a question, please press star followed by one on your touchtone telephone. If your question has already been answered or you wish to withdraw your question, press star followed by two. Please press star one to begin.

Speaker #3: And the first question comes from Alejandra Obregon from Morgan Stanley.

Speaker #3: In addition, unless the context indicates otherwise, all references to pricing initiatives, price increases, or decreases referred to are prices for our products. Now we will be happy to take your questions.

Speaker #4: Hi, good morning. CEMEX team thank you for taking my question. My name is regarding a pricing and how to think about it for the remainder of the year, more in particular on the surcharges that you mentioned.

Speaker #4: Where have when and where have the been implemented today and whether there are differences across the regions and products in this dynamic? And to what extent is this dynamic already embedded in your guidance?

Speaker #4: Thank you.

Speaker #3: If your question has already been answered or you wish to withdraw your question, press star followed by 2. Please press star 1 to begin.

Speaker #1: Alejandra, good morning. Thanks for your question. I separate pricing from surcharges, particularly fuel surcharges. Regarding fuel surcharges, we have had them for years in the US.

Lucy Rodriguez: The first question comes from Alejandra Obregon from Morgan Stanley.

Speaker #3: And the first question comes from Alejandro Obregón from Morgan Stanley.

Lucy Rodriguez: The first question comes from Alejandra Obregon from Morgan Stanley.

Speaker #1: In our contracts, to give you more detail, right? In ready mix, those fuel surcharges cover around 90% of our dispatches. On aggregates, it's around 85% of our deliveries.

Speaker #4: Hi, good morning. CEMEX team, thank you for taking my question. My name is regarding a pricing and how to think about it for the remainder of the year, more in particular on the surcharges that you mentioned.

Alejandra Obregon: Hi. Good morning, CEMEX team. Thank you for taking my question. Mine is regarding pricing and how to think about it for the remainder of the year, more in particular on the surcharges that you mentioned. When and where have they been implemented today, and whether there are differences across the regions and products in these dynamics, and to what extent is this dynamic already embedded in your guidance? Thank you.

Speaker #4: Where have when and where have they been implemented today and whether there are differences across the regions and products in this dynamic? And to what extent is this dynamic already embedded in your guidance?

Speaker #1: And in the case of cement, it's around 80% of our deliveries. And it's a mechanism that offsets volatility in diesel. And we saw that working very well when the Ukraine war began back in 22, 23 when we faced inflation in that line.

Speaker #4: Thank you.

Speaker #1: Alejandra, good morning. Thanks for your question. I separate pricing from surcharges, particularly field surcharges. Regarding field surcharges, we have had them for years in the US.

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

Speaker #1: Also, we do have fuel surcharges in Europe. There are strategies twofold. There are markets where we see more resilient and stickiness in fuel surcharges.

Speaker #1: In our contracts, to give you more detail, right, in ready mix, those field surcharges cover around 90% of our dispatches. On aggregates, it's around 85% of our deliveries.

Speaker #1: That will be the case in the UK and Germany, where we are introducing them. But in other markets where we see strong pricing characteristics, we're going to go ahead with incremental pricing.

Speaker #1: And in the case of cement, it's around 80% of our deliveries. And it's a mechanism that offsets volatility in diesel. We saw that working very well when the Ukraine war began back in '22, '23, when we faced inflation in that line.

Speaker #1: Beyond what we were planning for because of expected inflation, those are the case of Spain, Croatia, Czech Republic, and Poland, for example. Regarding the US, we are expecting to see material inflation in shipping.

Speaker #1: And therefore, we expect import costs, import party costs to increase that should build. Momentum for better pricing environment going forward. In the rest of the portfolio, we are ready to react to inflation in Mexico from PEPCOC.

Speaker #1: Also, we do have field surcharges in Europe. There are strategies twofold. There are markets where we see more resilient and stickiness in field surcharges.

Speaker #1: With future price increases, it needed to offset input cost inflation. And the same applies to most of our markets in SCAC. So I hope that I answered the question, Alejandra.

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

Speaker #1: Those are the case of Spain, Croatia, Czech Republic, and Poland, for example. Regarding the US, we are expecting to see material inflation in shipping.

Speaker #4: Very clear. Thank you.

Speaker #3: Thanks, Holly. The next question comes from Yareli Goy from Goldman Sachs. Yareli.

Speaker #1: And therefore, we expect import costs, import party costs to increase that should build some momentum for better pricing environment going forward. In the rest of the portfolio, we are ready to react to inflation in Mexico from PEPCOC.

Speaker #5: Good morning, everyone. Thank you for taking my question. So really quickly from my end, I just wanted to understand the relative bullishness on your US volumes guidance.

Speaker #5: I mean, it remains unchanged even though there's ongoing softness on residential. So just wanted to understand if the thought here is that whatever you're expecting from, say, infrastructure or private investments is enough to outweigh the impact of softening residential.

Speaker #1: With future price increases needed to offset input cost inflation—and the same applies to most of our markets in SCAC—so I hope that I answered the question, Alejandra.

Speaker #5: That's my question. Thank you.

Speaker #1: Thanks, Yareli, for your question. Well, first of all, as we highlighted earlier, adjusted by the weather impact, mainly in Texas and the Mid-South, our performance weather volumes would have been cement plus 1%, ready mix around plus 5%, and aggregates plus 10%.

Alejandra Obregon: Very clear. Thank you.

Speaker #4: Very clear. Thank you.

Speaker #3: Thanks, Ali. The next question comes from Jerrel Gilotti from Goldman Sachs. Jerrel.

Lucy Rodriguez: Thanks, Ale. The next question comes from Yareli Tal Goya from Goldman Sachs. Yareli?

Yareli Tal Goya: Good morning, everyone. Thank you for taking my question. Really quickly from my end, I just wanted to understand the relative bullishness on your US volumes guidance. It remains unchanged even though there's ongoing softness on residential. Just want to understand if the thought here is that whatever you're expecting from, say, infrastructure or private investments is enough to outweigh the impact of softening residential. That's my question. Thank you.

Speaker #5: Good morning, everyone. Thank you for taking my question. So, really quickly from my end, I just wanted to understand the relative bullishness on your US volumes guidance.

Speaker #1: So there was some momentum out there that was affected by the weather. Going forward, we are paying a special attention to markets where we're highly vertically integrated with very strong resilient upstream margins in cement and aggregates.

Speaker #5: I mean, it remains unchanged even though there's ongoing softness on residential. So I just wanted to understand if the thought here is that whatever you're expecting from, say, infrastructure or private investments is enough to outweigh the impact of softening residential.

Speaker #1: And in those micro markets, we are gaining more work, particularly in infrastructure and in the industrial sector. Things such as some data centers, and cheap manufacturing facilities.

Speaker #5: That's my question. Thank you.

Speaker #1: Thanks, Jerrel, for your question. Well, first of all, as we highlighted earlier, adjusted by the weather impact, mainly in Texas and the Mid-South, our performance—weather volumes would have been: cement plus 1%, ready-mix around plus 5%, and aggregates plus 10%.

Fernando A. González: Thanks, Yareli, for your question. Well, first of all, as we highlighted earlier, adjusted by the weather impact, mainly in Texas and the Mid-South, our pro forma weather volumes would have been cement +1%, ready-mix around +5%, and aggregates +10%. There was some momentum out there that was affected by the weather. Going forward, we are paying special attention to markets where we're highly vertically integrated with very strong resilient EBITDA margins in cement and aggregates. In those micro markets, we are gaining more work, particularly in infrastructure and in the industrial sector, things such as some data centers and chip manufacturing facilities. That's the reason why we kept our guidance unchanged despite the softness in residential and the weather impact in Q1. I hope that I answered your question, Yareli.

Speaker #1: And that's the reason why we kept our guidance on unchanged despite the softness in residential and the weather impact. In the first quarter, so I hope that I answered your question, Yareli.

Speaker #1: So, there was some momentum out there that was affected by the weather. Going forward, we are paying special attention to markets where we're highly vertically integrated, with very strong, resilient upstream margins in cement and aggregates.

Speaker #1: So it's mainly driven by expected incremental work that we are gaining in the segments that are performing better.

Speaker #5: Thank you.

Speaker #3: And the next question comes from Francisco Suarez from Scotiabank. Paco. Paco, are you there?

Speaker #1: And in those micro markets, we are gaining more work, particularly in infrastructure and in the industrial sector—things such as some data centers and cheap manufacturing facilities.

Speaker #6: Pardon me. Sorry. Thank you for the call. Apologies for that. The question that I had relates because you have a generally benign outlook on pricing trends in the United States, but you have some exposure to imports.

Speaker #1: And that's the reason why we kept our guidance unchanged, despite the softness in residential and the weather impact in the first quarter. So, I hope that I answered your question, Jerrel.

Speaker #6: So the question relates with to what extent and if you can give a little bit of color on what the differences might be that we should be aware of on import party prices between the Mid-Atlantic, the Southeast, and perhaps the West of the United States that would be very helpful.

Speaker #1: So, it's mainly driven by expected incremental work that we are gaining in the segments that are performing better.

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

Speaker #5: Thank you.

Yareli Tal Goya: Thank you.

Speaker #3: And the next question comes from Francisco Suarez from Scotiabank. Paco. Paco, are you there?

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

Speaker #6: And congrats again for the great delivery that you have guys done so far.

Speaker #1: Francisco, thanks for your question, Alex, and your recognition to the team who is doing a good job executing what we said we would. Regarding your specific question about import party, what we've seen is the following.

Speaker #6: Pardon me. Sorry. Thank you for the call, please, for that. The question that I had relates because you have a generally benign outlook on pricing trends in the United States, but you have some exposure to imports.

Francisco Suarez: Pardon me. Sorry. Thank you for the call. Apologies for that. The question that I have relates to, because you have a generally benign outlook on pricing trends in the United States, but you have some exposure to imports. The question relates with, to what extent, and if you can give a little bit of color on what the differences might be that we should be aware of on import parity prices between the Mid-Atlantic, the Southeast, and perhaps the West of the United States, that would be very helpful. Congrats again for the great delivery that you guys have done so far.

Speaker #1: Regarding FOB export pricing, we haven't seen yet any sequential increase from February to March. I expect that to happen later in the year, as exporters face inflation on energy.

Speaker #6: So the question relates to what extent—and if you can give a little bit of color on what the differences might be that we should be aware of on import parity prices between the Mid-Atlantic, the Southeast, and perhaps the West of the United States—that would be very helpful.

Speaker #1: And they're going to feel it. If you think about what happened back in 22, 23, that's exactly what happened. It took a bit of time, but we saw FOB prices increasing.

Speaker #6: And congrats again for the great delivery that you have guys done so far.

Speaker #1: What has changed, though, is sequentially from February to March, was freight rates. So maritime rates. And they have increased substantially. So in the case of the West California, our number is that freight went up by around 37%.

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

Speaker #1: And peaceful. Thanks for your question, Alex, and your recognition to the team who is doing a good job executing what we said we would.

Speaker #1: Regarding your specific question about import party, what we've seen is the following. Regarding FOB export pricing, we haven't seen yet any sequential increase from February to March.

Speaker #1: In the case of the East Coast, an example, Florida, by 31%. And in the case of Texas, the Gulf, that's around 26%. So when you think about CIF, all combined, you're talking about spot import prices going up between 10 to 12 percent sequentially.

Speaker #1: I expect that to happen later in the year, as exporters face inflation on energy. And they're going to feel it. If you think about what happened back in '22, '23, that's exactly what happened.

Speaker #1: So as importers contract volume on the basis of new shipping rates, they're going to feel they're going to feel the impact. And that's how things are evolving so far.

Speaker #1: It took a bit of time, but we saw FOB prices increasing. What has changed, though, is sequentially from February to March, was freight rates.

Speaker #1: So maritime rates. And they have increased substantially. So in the case of the West California, our number is that freight went up by around 37% per ton.

Speaker #6: Very clear. Thank you. And congrats again. Take care.

Speaker #3: Thanks, Paco. And the next question comes from Carlos Peyrelongue from Bank of America. Carlos.

Speaker #7: Thank you, Lucy, for taking my question. Hi, my question is related to free cash flow and capital allocation. So free cash flow conversion is increasing materially, as a result of CEMEX's efforts to reduce costs and also growth capex.

Speaker #1: In the case of the East Coast—for example, Florida—by 31%. And in the case of Texas, the Gulf, that's around 26%. So, when you think about CIF, all combined, you're talking about spot import prices going up between 10% to 12% sequentially.

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

Speaker #7: Can the company accelerate M&A this year versus last year, considering this? And do you have enough prospects that you're looking at in order to be able to increase your M&A deployment of capital?

Speaker #1: So as importers contract volume on the basis of new shipping rates, they're going to feel the impact. And that's how things are evolving so far.

Speaker #7: Thank you.

Speaker #1: Thanks, Carlos, for your question. We continue to strengthen the pipeline of M&A targets mainly in the US. We are proactively engaging with a larger number of potential targets.

Francisco Suarez: Very clear. Thank you, and congrats again. Take care.

Speaker #6: Very clear. Thank you. And congrats again. Take care.

Speaker #3: Thanks, Paco. And the next question comes from Carlos Perlong from Bank of America. Carlos.

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

Speaker #7: Thank you, Lucy, for taking my question. Hi, my question is related to free cash flow and capital allocation. So, free cash flow conversion is increasing materially as a result of CEMEX's efforts to reduce costs and also growth capex.

Carlos Peyrelongue: Thank you, Lucy, for taking my question. Hi, my question is related to free cash flow, and capital allocation. Free cash flow conversion is increasing materially as a result of CEMEX's efforts to reduce costs and also growth CapEx. Can the company accelerate M&A this year versus last year considering this? And do you have enough prospects that you're looking at in order to be able to increase your M&A deployment of capital? Thank you.

Speaker #1: But we're going to be very patient because we want to be very disciplined and only pursue what we can create value. There is nothing imminent right now on the table, but plenty of conversations.

Speaker #1: In addition to that, Carlos, when we look at our opportunities to allocate capital, we still see accredited two shareholders use the capital when we think about debt.

Speaker #7: Thank you.

Speaker #1: Thanks, Carlos, for your question. We continue to strengthen the pipeline of M&A targets mainly in the US. We are proactively engaging with a larger number of potential targets.

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

Speaker #1: To reduce interest expenses and boost free cash committed to a progressive improvement on the shareholders' returns, right? Dividends and share buybacks. And as you know, the shareholder's approved the $500 million share buyback program.

Speaker #1: But we're going to be very patient, because we want to be very disciplined and only pursue what we can create value. There is nothing imminent right now on the table, but plenty of conversations.

Speaker #1: So we have accredited options to allocate capital to shareholders beyond M&A. Let's be patient. And when the right time comes, we will be executing those.

Speaker #1: In addition to that, Carlos, when we look at our opportunities to allocate capital, we still see accredited to shareholders' use of capital when we think about debt.

Speaker #1: Thanks for the question, Carlos.

Speaker #6: Thank you, Jaime, and congratulations on the strong results.

Speaker #3: And the next question comes from Adrian Huerta from JPMorgan. Adrian.

Speaker #1: To reduce interest expenses and boost free cash flow. And we are also committed to a progressive improvement on the shareholders' returns, right? Dividends and share buybacks.

Speaker #8: Thank you, Lucy. Hi, everyone. Jaime, congrats on the results, first of all. And my question has to do with the guidance. I mean, I understand that 1Q is a seasonally small quarter, but I want to understand how you what was the process you were thinking, the rationale, on keeping guidance on change?

Speaker #1: And as you know, the shareholders approved the $500 million share buyback program, so we have accretive options to allocate capital to shareholders beyond M&A.

Speaker #8: I mean, the beat was quite strong this quarter. The outlook is improving. I understand the pressure on energy cost, but the improvements on margins was huge.

Speaker #8: So what was the thinking and the rationale to keep the guidance on change?

Speaker #1: Let's be patient. And when the right time comes, we will be executing those. Thanks for the question, Carlos.

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

Speaker #1: Adrian, thanks for the question. The main reason is the lack of visibility on where the war is heading. And with that situation and the volatility, we're facing I thought that it was better to wait at least until July call once we see 2Q.

Speaker #6: Thank you, Jaime. And congratulations on the strong results.

Carlos Peyrelongue: Thank you, Jaime, and congratulations on the strong results.

Carlos Peyrelongue: Thank you, Ferne, and congratulations on the strong results.

Lucy Rodriguez: The next question comes from Adrian Huerta from JPMorgan. Adrian?

Speaker #3: And the next question comes from Adrián Huerta from JPMorgan. Adrián?

Lucy Rodriguez: The next question comes from Adrian Huerta from JPMorgan. Adrian?

Adrian Huerta: Thank you, Lucy. Hi, everyone. Jaime, congrats on the results, first of all. My question has to do with the guidance. I understand that Q1 is a seasonally small quarter, but I wanna understand what was the process you're thinking, the rationale on keeping guidance unchanged. I mean, the EBIT was quite strong this quarter. The outlook is improving. I understand the pressure on-

Adrian Huerta: Thank you, Lucy. Hi, everyone. Ferne, congrats on the results, first of all. My question has to do with the guidance. I understand that Q1 is a seasonally small quarter, but I wanna understand what was the process you're thinking, the rationale on keeping guidance unchanged. I mean, the EBIT was quite strong this quarter. The outlook is improving. I understand the pressure on-

Speaker #1: And I also wanted to understand better the level of incremental structural recurring savings that we will be committing to as we have begun executing those additional levers.

Speaker #8: I mean, the beat was quite strong this quarter. The outlook is improving. I understand the pressure on energy costs, but the improvements on margins were huge.

Speaker #8: So, what was the thinking and the rationale to keep the guidance on change?

Speaker #1: With those with more visibility on the war and where inflation is heading and how our pricing and future charges are sticking and then the incremental savings, I will we will be in a better position to think about changes to guidance.

Speaker #1: Adrián, thanks for the question. The main reason is the lack of visibility on where the war is heading. And with that situation and the volatility, we're facing I thought that it was better to wait at least until July call once we see 2Q.

Speaker #1: That's the main reason why we believe that today the best is to be consciously optimistic but still conservative.

Speaker #8: Thank you, Jaime.

Speaker #1: And I also wanted to understand better the level of incremental structural recurring savings that we will be committing to, as we have begun executing those additional levers.

Speaker #3: And thanks, Adrian. The next question comes from Anne Melny from Bank of America, via the webcast. Congratulations on the Fitch positive outlook upgrade. When do you believe is the timing around a possible upgrade to triple B?

Speaker #1: With those with more visibility on the war and where inflation is heading, and how our pricing and future charges are sticking, and then the incremental savings, I believe we will be in a better position to think about changes to guidance.

Speaker #3: Maher, I think this is yours.

Speaker #4: Thanks a lot, Lucy. Yeah. And thank you, Anne, for the question. One thing that I would like to highlight is that if you take a look at our net financial leverage, we're expecting it to converge fairly rapidly throughout the year, given our expectations for full-year performance.

Speaker #1: That's the main reason why we believe that today the best approach is to be consciously optimistic but still conservative.

Speaker #4: Towards the Fitch level that they defined in their release yesterday, which is one and a half times. Maybe a little bit higher than that.

Speaker #8: Thank you, Jaime.

Speaker #3: And thanks, Adrián. The next question comes from Anne Melny from Bank of America via the webcast. Congratulations on the Fitch positive outlook upgrade. When do you believe is the timing around a possible upgrade to BBB?

Speaker #4: So that puts and that is the kind of triple B level that they expect. In the case of S&P, we are already within their triple B leverage ratio.

Speaker #4: And for S&P, the real metric for that is what they call free cash flow from operations as a percentage of debt. And I'm not going to give you the definition of that.

Speaker #3: Maher, I think this is yours.

Speaker #4: Thanks a lot, Lucy. Yeah, and thank you, Anne, for the question. One thing that I would like to highlight is that if you take a look at our net financial leverage, we're expecting it to converge fairly rapidly throughout the year, given our expectations for full-year performance.

Speaker #4: You can look it up from S&P website. But again, based on our expectations and the guidance that we're giving, their metric to go into triple B is more than 30%.

Speaker #4: Towards the Fitch level that they defined in their release yesterday, which is one and a half times. Maybe a little bit higher than that.

Speaker #4: We feel reasonably confident that we should be well inside well above, let's say, that metric by the end of this year. So bottom line, based on the performance and the deleveraging that we are delivering and the heightened quality of earnings that we're delivering through free cash flow conversion, we think that both rating agencies are going to be giving a very hard look to a potential upgrade sometime sometimes in the first half of 2027.

Speaker #4: So that puts, and that is the kind of BBB level that they expect. In the case of S&P, we are already within their BBB leverage ratio.

Speaker #4: And for S&P, the real metric for that is what they call free cash flow from operations as a percentage of debt. And I'm not going to give you the definition of that.

Speaker #4: You can look it up from the S&P website. But again, based on our expectations and the guidance that we're giving, their metric to go into BBB is more than 30%.

Speaker #4: Of course, we'd be super happy if that happened sooner, but I would say that from my perspective, I'm looking for a first half potential rating action from the rating agencies.

Speaker #4: I hope that answers the question.

Speaker #4: We feel reasonably confident that we should be well inside, well above, let's say, that metric by the end of this year. So, bottom line, based on the performance and the deleveraging that we are delivering, and the heightened quality of earnings that we're delivering through free cash flow conversion, we think that both rating agencies are going to be giving a very hard look to a potential upgrade sometime in the first half of 2027.

Speaker #3: Thanks, Maher. The next question comes from Ben Thurer from Barclays. Ben?

Speaker #5: Yeah. Good morning. Jaime, Lucy, Maher. Congrats on those very strong results 1Q. Quick question on the performance in Mexico in particular. So maybe help us understand a little bit better that 470 basis points margin expansion, how much of that was really driven one-time things like maintenance-related, etc.?

Speaker #5: And how much of that would you describe as being a recurring margin improvement? Thank you very much.

Speaker #4: Of course, we'd be super happy if that happened sooner, but I would say that from my perspective, I'm looking for a first-half potential rating action from the rating agencies.

Speaker #1: Ben, thanks for the question. Well, the first thing to understand were the expansion happened. A lot has to do with the transformation where TEMEX Mexico is contributing quite materially together with EMEA in the quarter.

Speaker #4: I hope that answers the question.

Speaker #3: Thanks, Maher. The next question comes from Ben Thurer from Barclays. Ben?

Speaker #1: And therefore, we saw a margin expansion contributions from viable cost around 160 basis points, freight was very material, around 1 percentage points, SG&A and corporate expenses as well, followed by a bit from volumes, but more so from prices around 2 percentage points.

Speaker #9: Yeah. Good morning. Jaime, Lucy, Maher. Congrats on those very strong results 1Q. Quick question on the performance in Mexico in particular. So maybe help us understand a little bit better that 470 basis points margin expansion, how much of that was really driven one-time things like maintenance-related, etc.?

Speaker #1: So with that in mind, yes, there were a few positive one-offs that wouldn't be recurrent, we think. So the first one is, as I highlighted, before the temporary market share gain of around that's we've calculated around 2% of volumes.

Speaker #9: And how much of that would you describe as being a recurring margin improvement? Thank you very much.

Speaker #1: Ben, thanks for the question. Well, the first thing to understand where the expansion happened a lot has to do with the transformation, where CEMEX Mexico is contributing quite materially together with EMEA in the quarter.

Speaker #1: So if we grew 6%, maybe 4% is what will be there going forward. The other 2 percentage points would be a one-off. Also, it's correct that we had some maintenance timing which will increase going forward.

Speaker #1: And therefore, we saw a margin expansion contribution from variable cost, around 160 basis points; freight was very material, around 1 percentage point; SG&A and corporate expenses as well, followed by a bit from volumes but more so from prices, around 2 percentage points.

Speaker #1: The other aspect, Ben, is the product mixed in cement. This quarter, we had a strong backed mix 60/40%, 60 backs, 40% bulk. And as we expect to see infrastructure ramp up, we should see a different product mix.

Speaker #1: So, with that in mind, yes, there were a few positive one-offs that wouldn't be recurrent, we think. So the first one is, as I highlighted before, the temporary market share gain of around—that we've calculated—around 2% of volumes.

Speaker #1: So in addition to that, also the Pepco. We are expecting a rising Pepco price for the rest of the for the rest of the year.

Speaker #1: So, if we grew 6%, maybe 4% is what will be there going forward. The other 2 percentage points would be a one-off. Also, it's correct that we had some maintenance timing, which will increase going forward.

Speaker #1: And all of this combined suggests that you should expect a lower margin. Having said that, the margin will be solid. Because of the transformation.

Speaker #1: The other aspect, Ben, is the product mix in cement. This quarter, we had a strong bagged mix—60/40%, 60% bags, 40% bulk. And as we expect to see infrastructure ramp up, we should see a different product mix.

Speaker #1: That will stick. And I cannot provide you more specifics on that for obvious reasons. But that's the way I like to answer your question, Ben.

Speaker #5: Perfect. Jaime, thank you very much.

Speaker #3: The next question comes via the webcast from Paul Rogers from BMP Pariva. How ambitious is your plan for US aggregates? What makes CEMEX the partner of choice for targets?

Speaker #1: So in addition to that, also the pickup. We are expecting a rising pickup price for the rest of the for the rest of the year.

Speaker #3: And how big could this product line ultimately become in a group context?

Speaker #1: And all of this combined suggests that you should expect a lower margin. Having said that, the margin will be solid, because of the transformation.

Speaker #1: Paul, thanks for the question. In 2025, our aggregates business accounted for 40% of CEMEX USA EBITDA. In the first quarter, aggregates contributed 45%. So aggregates was accounted accountable for 45% of CEMEX US EBITDA.

Speaker #1: That will stick. And I cannot provide you more specifics on that for obvious reasons. But that's the way I like to answer your question, Ben.

Speaker #1: It would be great to see US aggregates accounting for around 60% of our EBITDA in the US. Now, regarding your second part of the question, right, whether CEMEX is a partner of choice for targets, that remains to be seen.

Speaker #9: Perfect. Jaime, thank you very much.

Speaker #3: The next question comes via the webcast from Paul Rogers from BNP Paribas. How ambitious is your plan for U.S. aggregates? What makes CEMEX the partner of choice for Target?

Speaker #1: But please note that as a large rating mixer, we buy a lot of aggregates from long-term partners with whom we have a strong relationship.

Speaker #3: And how big could this product line ultimately become in a group context?

Speaker #1: That's a nice start. The other thing is that unlike in the past, we are very flexible and open-minded and different ways to partner with potential targets.

Speaker #1: Couch was an example. Right? So we see very favorably entering with a minority position, right, and growing that up to a controlling interest in years to come.

Speaker #1: It would be great to see U.S. aggregates accounting for around 60% of our EBITDA in the U.S. Now, regarding your second part of the question—right—whether CEMEX is a partner of choice for targets, that remains to be seen.

Speaker #1: While partnering with family-owned operators who are great operators to continue running their businesses for longer. So maybe that flexibility could help us be seen as the partner of choice for the right targets.

Speaker #1: But please note that, as a large ready-mix producer, we buy a lot of aggregates from long-term partners with whom we have a strong relationship.

Speaker #1: So that's what we're working on. And we're excited. And again, expanding our pipeline of potential targets and we continue working on that. We're going to be patient.

Speaker #1: That's a nice start. The other thing is that unlike in the past, we are very flexible and open-minded on different ways to partner with potential targets.

Speaker #1: And the other aspect is our new investment projects. Right? So we are taking advantage of Immokalee, in Florida, Four Corners also in Florida, our exports from Canada.

Speaker #1: Couch was an example, right? So we see very favorably entering with a minority position, right, and growing that up to a controlling interest in years to come.

Speaker #1: To mention a few. And there are more investments underway right now from our growth CapEx pipeline. So that should continue contributing to enlarging the US aggregates business in the US.

Speaker #1: Thanks for your question.

Speaker #3: Thanks, Jaime. The next question comes from Yaseen Tuari from OnField. Yaseen?

Speaker #1: So that's what we're working on, and we're excited. And again, expanding our pipeline of potential targets, and we continue working on that. We're going to be patient.

Speaker #4: Thank you very much for the question. So my question would be around your free cash flow conversion. Would you consider moving your definition of free cash flow conversion closer to peers including strategic CapEx, intangible investment, pension contribution, securitization, coupon on subordinate notes, and other financial fees?

Speaker #1: And the other aspect is our new investment projects. Right? So we are taking advantage of Immokalee, in Florida, Four Corners also in Florida, our exports from Canada.

Speaker #4: Because I think that on that basis, your 2026 guidance seems to imply your free cash flow conversion of around 20, 25 percent, which is improving a lot, but it's still less than half of the level of your best-in-class peers at 50%.

Speaker #4: So I think what I'm trying to understand is that whether you can get closer to that best-in-class level of 50% as soon as 2027.

Speaker #1: Thanks for your question.

Speaker #3: Thanks, Jaime. The next question comes from Yaseen Touari from OnField. Yaseen?

Speaker #4: For example, could the total CapEx come down from 1.4 billion in 2026 to 1.1 billion as soon as next year?

Speaker #10: Thank you very much for the question. So my question would be around your free cash flow conversion. Would you consider moving your definition of free cash flow conversion closer to peers, including strategic CapEx, intangible investment, pension contribution, securitization, coupon on subordinated notes, and other financial fees?

Speaker #1: Yaseen, thank you very much for your question. The first thing I want to tell you is that I see no reason why we wouldn't be as good as performers as our peers on your definition of free cash flow.

Speaker #10: Because I think that, on that basis, your 2026 guidance seems to imply your free cash flow conversion of around 20 to 25 percent, which is improving a lot, but it's still less than half of the level of your best-in-class peers at 50 percent.

Speaker #1: We just need to continue doing our homework. And we are fully committed to delivering on that. What's different is that, yes, do expect already for 2027, a material reduction in strategic CapEx, intangibles, in addition to that, I have assigned a Exco member becoming responsible and owner of every of the lines of free cash flow that you mentioned.

Speaker #10: So, I think what I'm trying to understand is whether you can get closer to that best-in-class level of 50 percent as soon as 2027.

Speaker #10: For example, could the total CapEx come down from 1.4 billion in 2026 to 1.1 billion as soon as next year?

Speaker #1: And today, we are developing roadmaps to materially optimize every line. Therefore, do expect that we will make significant progress in 2027 and even more in 2028.

Speaker #1: We just need to continue doing our homework. And we are fully committed to delivering on that. What's different is that, yes, do expect already for 2027, a material reduction in strategic CapEx, intangibles, in addition to that, I have assigned a exco member becoming responsible and owner of every of the lines of free cash flow that you mentioned.

Speaker #1: Also, please note that we have begun executing our efforts to improve earnings quality by deconsolidating operations that do not meet our free cash flow targets.

Speaker #1: Among other KPIs. As I mentioned earlier, we've let go as a matter of example on our progress, right, 60 rating mix concrete facilities in our portfolio.

Speaker #1: That's just an example. But we are accelerating our transformation of our portfolio. And as we let go many of these operations that do not generate free cash flow, you're going to see a higher free cash flow conversion and a higher earnings quality in terms of free cash flow to sales.

Speaker #1: And today, we are developing roadmaps to materially optimize every line. Therefore, do expect that we will make significant progress in 2027, and even more in 2028.

Speaker #1: Also, please note that we have begun executing our efforts to improve earnings quality by deconsolidating operations that do not meet our free cash flow targets.

Speaker #1: And regarding your question whether we're going to move to that other definition, the answer is yes. We will at the right time. And we're working on it.

Speaker #1: And we'll let you know when we would be introducing that definition. Whether we do that, short, mid-term, what matters is that we're going to be improving free cash flow under all definitions.

Speaker #1: Among other KPIs, as I mentioned earlier, we've let go, as a matter of example on our progress, 60 ready-mix concrete facilities in our portfolio.

Speaker #1: That's just an example. But we are accelerating our transformation of our portfolio. And as we let go of many of these operations that do not generate free cash flow, you're going to see a higher free cash flow conversion and a higher earnings quality in terms of free cash flow to sales.

Speaker #1: Thanks for your question, Yaseen.

Speaker #4: Thanks, Russ.

Speaker #3: Thanks, Yaseen. The next question comes from Andres Cardona from Citi. Andres?

Speaker #5: Hi, good morning, Jaime. Maher Lucy, congratulations on the solid results. My question is regarding Mexico Outlook, the context of President Sheinbaum. How is the initiative and the newly announced highway infrastructure plan?

Speaker #1: And regarding your question whether we're going to move to that other definition, the answer is yes. We will, at the right time, and we're working on it.

Speaker #5: To what extent could this program drive demand growth in 2026, '27? You already mentioned that you are negotiating some 100,000 more housing if you could help us to understand when the infrastructure plan could already yield incremental demand.

Speaker #1: Thanks for your question, Yaseen.

Speaker #10: Thanks, Russ.

Speaker #3: Thanks, Yaseen. The next question comes from Andres Cardona from Citi. Andres?

Speaker #5: And if I may, a very quick one, regarding Colombia, is there any reason why you decided to do a partial divestiture of the assets there?

Speaker #11: Hi, good morning, Jaime. Marcel Lucy. Congratulations on the solid results. My question is regarding the Mexico outlook in the context of President Sheinbaum. How is the initiative and the newly announced highway infrastructure plan?

Speaker #5: Are there remaining assets considered core? Thank you.

Speaker #1: Andrea, thanks for the question. Let me just start with the second question first. The in Colombia, the right time to divest what's within the scope of the announced transaction was this year.

Speaker #11: To what extent could this program drive demand growth in 2026 and 2027? You already mentioned that you are negotiating some 100,000 more housing units. If you could help us understand when the infrastructure plan could already yield incremental demand.

Speaker #1: The rest of the portfolio, in Colombia, need activity. As the demand improves, in those micro markets where we have the rest of our portfolio, particularly as we commissioned Maceo cement plant, up north of the country.

Speaker #11: And if I may, a very quick one, regarding Colombia, is there any reason why you decided to do a partial divestiture of the assets there?

Speaker #11: Are there remaining assets considered core? Thank you.

Speaker #1: And that's the reason why we decided to carve out the current perimeter under that transaction. The team will be post-transaction will be focused on maximizing free cash flow and EBITDA from the remaining assets.

Speaker #1: Andrea, thanks for the question. Allow me to start with the second question first. In Colombia, the right time to divest what's within the scope of the announced transaction was this year.

Speaker #1: And it remains to be seen our next move regarding the rest of our business in Colombia. Regarding your first question, yes, what we see is this.

Speaker #1: The rest of the portfolio in Colombia needs to increase activity. As the demand improves in those micromarkets where we have the rest of our portfolio—particularly as we commissioned the Maseo cement plant up north of the country—that's the reason why we decided to carve out the current perimeter under that transaction.

Speaker #1: In our current guidance for volumes for Mexico for 2026, we've already included the expectations on infrastructure which includes trains and highways. And social housing.

Speaker #1: I think that the contribution from the recently announced plan from government would be more materially felt in 2027. Because it will take time, right, to break ground.

Speaker #1: The team will be post-transaction will be focused on maximizing free cash flow and EBITDA from the remaining assets. And it remains to be seen our next move regarding the rest of our business in Colombia.

Speaker #1: And we also need to understand the fiscal conditions of public accounts in light of what's happening on potential inflationary effects. To budgets. So I say that I don't expect much for '26 on the newly announced infrastructure plan beyond what was in the budget.

Speaker #1: Regarding your first question, yes, what we see is this. In our current guidance for volumes for Mexico for 2026, we've already included the expectations on infrastructure, which includes trains and highways, right, and social housing.

Speaker #1: I think that the contribution from the recently announced plan from the government would be more materially felt in 2027, because it will take time, right, to break ground.

Speaker #1: But that's already embedded in our guidance. But I do think that being everything equal and if things don't worsen, for the fiscal accounts, we might see momentum in 2027, particularly on infrastructure.

Speaker #1: And we also need to understand the fiscal conditions of public accounts in light of what's happening on potential inflationary effects to budgets. So, I say that I don't expect much for '26 on the newly announced infrastructure plan beyond what was in the budget.

Speaker #1: And it is too early to provide our views on 2027 cement volumes for CEMEX Mexico. So Andres, thank you for your question.

Speaker #3: We have time for one last question. And it is coming from Gordon Lee from BTG Pactual. Gordon?

Speaker #4: I thank you, Lucy. Good morning, everybody. And congratulations on a very good quarter. This is a bit of more of just a clerical question for Maher.

Speaker #1: But that's already embedded in our guidance. But I do think that being everything equal, and if things don't worsen, for the fiscal accounts, we might see particularly on infrastructure.

Speaker #4: But Maher, I noticed that you sort of formally changed the way that you present the leverage ratio and the release. And now you include the totality of the subordinated debt.

Speaker #4: So one, I just wanted to see whether there was any particular rationale for that. And two, just to confirm that when you refer to the one and a half times long-term leverage target, that's the measurement that you're using for that.

Speaker #1: And it is too early to provide our views on 2027 cement volumes for CEMEX Mexico. So, Andres, thank you for your question.

Speaker #4: Thank you.

Speaker #5: Yeah, thanks, Gordon, for leaving the clerical questions for me. But it's good to hear from you. Just kidding. The rationale is very simple, okay?

Speaker #3: We have time for one last question, and it is coming from Gordon Lee from BTG Pactual. Gordon?

Speaker #5: I mean, when we issued these perps, we were double B minus. And we have been as you have seen, we have been working very aggressively to reduce gross debt including the subordinated notes very rigorously over the last few years.

Speaker #10: Hi, thank you, Lucy. Good morning, everybody, and congratulations on a very good quarter. This is a bit more of just a clerical question for Maje.

Speaker #10: Maje, I noticed that you sort of formally changed the way that you present the leverage ratio in the release, and now you include the totality of the subordinated debt.

Speaker #5: And the now we're in a different position. The other thing is as a consequence of the rating action that happened last year, by S&P, the five and an eighth subordinated note already started receiving full debt treatment from their side.

Speaker #10: So, one, I just wanted to see whether there was any particular rationale for that. And two, just to confirm that when you refer to the 1.5 times long-term leverage target, that's the measurement that you're using for that.

Speaker #10: Thank you.

Speaker #2: Yeah, thanks, Gordon, for leaving the clerical questions for me. But it's good to hear from you—just kidding. The rationale is very simple, okay?

Speaker #5: And based on yesterday's fitch, rating, that also happened on the side of fitch. So now we're really left with essentially one of the notes, the 7.2%, that has 50% equity treatment.

Speaker #2: I mean, when we issued these perps, we were double B minus. And as you have seen, we have been working very aggressively to reduce gross debt, including the subordinated notes, very rigorously over the last few years.

Speaker #5: From our perspective, we feel from an investor perspective, we believe it's a much more conservative and cautious leverage ratio to use the net financial leverage including subordinated notes to the extent that we have them.

Speaker #2: And now we're in a different position. The other thing is, as a consequence of the rating action that happened last year by S&P, the 5 1/8 subordinated note already started receiving full debt treatment from their side.

Speaker #5: We are looking at deleveraging including the levels that are included through the subordinated notes. So the answer is yes. When we talk about one and a half times, we're talking about net financial leverage including potential subordinated notes that are on the balance sheet.

Speaker #2: And based on yesterday's Fitch rating, that also happened on the side of Fitch. So now we're really left with essentially one of the notes, the 7.2%, that has 50% equity treatment.

Speaker #5: And that's the way the future way that the rating agencies will look at it. We think it's and it's going to push the company it's going to push us in our capital allocation decisions also to make sure that we're taking all of the elements of potential liability on the balance sheet.

Speaker #2: From our perspective, we feel, from an investor perspective, we believe it's a much more conservative and cautious leverage ratio to use the net financial leverage, including subordinated notes to the extent that we have them.

Speaker #5: I hope that answers the question.

Speaker #4: Perfect. Makes a lot of sense. Thank you very much.

Speaker #5: Thank you.

Speaker #3: Thanks, Gordon. We appreciate you joining us today for our first quarter results. We hope you will join us again for our second quarter 2026 earnings call on July 23rd.

Speaker #2: We are looking at de-leveraging, including the levels that are included through the subordinated notes. So the answer is yes; when we talk about 1.5 times, we're talking about net financial leverage, including potential subordinated notes that are on the balance sheet.

Speaker #3: If you do have any additional questions, please feel free to reach out to the investor relations team. Many thanks.

Speaker #2: And that's the way the future way that the rating agencies will look at it. We think it's going to push the company, it's going to push us in our capital allocation decisions also, to make sure that we're taking all of the elements of potential liability on the balance sheet.

Speaker #2: I hope that answers the question.

Speaker #10: Perfect. Makes a lot of sense. Thank you very much.

Speaker #2: Thank you.

Speaker #3: Thanks, Gordon. We appreciate you joining us today for our first quarter results. We hope you will join us again for our second quarter 2026 earnings call on July 23.

Speaker #3: If you do have any additional questions, please feel free to reach out to the Investor Relations team. Many thanks.

Q1 2026 CEMEX SAB de CV Earnings Call

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