Lucy Rodriguez: Good morning, and thank you for joining us for our Q3 2026 conference call and webcast. We hope this call finds you well. I am joined today by Jaime Muguiro, our CEO, and by Maher Al-Haffar, our CFO. We will start our call by reviewing our Q3 results, followed by our expectations for the remainder of the year. Then we will be happy to take your questions. As a reminder, the previously announced sale of some of our operating assets in Colombia has not closed. Until the transaction closes, for accounting purposes, this will be treated as a partial sale of an operation, and we will continue to fully consolidate these operations in our P&L.
Lucy Rodriguez: In addition, during the quarter, we completed the sale of certain ready-mix and recycled concrete assets in the Atlanta region in the US, with these operations deconsolidated as of 30 September. In France, in connection with the proposed divestment of certain ready-mix and aggregates assets, we shall continue to consolidate these operations in our P&L until the transaction closes. I will hand the call over to Jaime.
Jaime Muguiro: Thank you, Lucy, and good day to everyone. I am pleased to be here today to discuss our Q3 results. Despite a volatile macro environment marked by higher interest rates, energy costs, and reduced economic visibility, our teams have remained agile and focused on what we can control, delivering on our transformation plan while identifying further opportunities for improvement. With Project Cutting Edge as our foundation, we achieved another quarter of solid performance and sustainable progress on our strategic priorities. What I find particularly encouraging is that our results continue to reflect the structural changes we are making in our drive to become more efficient, profitable, and customer-centric. While recovery across our markets remains uneven, we continue delivering on our objective of a structurally higher earnings quality. The operational improvements under Project Cutting Edge are increasingly evident in our results.
Jaime Muguiro: With EBITDA and EBIT once again growing faster than revenue, and free cash flow from operations expanding at even stronger pace. In fact, for the second consecutive quarter, our adjusted trailing 12-month free cash flow from operations conversion rate reached approximately 60%. Our asset pruning efforts under Project Cutting Edge are delivering the first tangible results with completed and announced strategic divestitures, largely focused on ready-mix assets in the US and Europe in the quarter.
Jaime Muguiro: Furthermore, we have made good progress towards our 2027 targets set out at CEMEX Day earlier this year, with expansion in year-to-date EBITDA and EBIT margins, as well as free cash flow conversion rate ahead of our 2027 targets. All of this is happening at a faster pace than we originally expected. Turning to our decarbonization pathway, we have profitably reduced our year-to-date gross CO2 emissions by 1%, supported by a lower clinker factor.
Jaime Muguiro: Taken together, these results reinforce our confidence that the actions we are taking today are building a stronger and more resilient CEMEX, better prepared to weather this volatile macro environment. At the same time, our work is far from complete. We still have important elements of Project Cutting Edge to deliver and are continuing to identify new opportunities to improve operational performance and asset efficiency. As we advance these efforts, we are also preparing for the next phase of our transformation, driven by digitalization and AI. With that, let me discuss our results in more detail. Our results once again reflect the benefits of our transformation, translating into stronger profitability and cash generation. Net sales grew approximately 8%, supported by higher consolidated prices and improving cement volume trends in most markets.
Jaime Muguiro: As Project Cutting Edge efficiencies continue to build and operational improvements gain traction, EBITDA and EBIT increased 12% and 19%, respectively. This performance marks our fifth consecutive quarter of double-digit EBITDA and EBIT growth, as well as margin expansion, underscoring the consistency of the progress we are making across the business. Mexico remained a key contributor to consolidated growth during the quarter, as demand recovery continued to gain momentum, further supported by our transformation initiatives.
Jaime Muguiro: The steps we are taking under Project Cutting Edge are producing materially stronger cash generation. Year to date, free cash flow from operations increased by more than $900 million year over year. On a trailing 12-month basis, adjusted free cash flow from operations reached a record level of $2.2 billion, with an adjusted conversion rate of approximately 62%. Consolidated cement volumes increased 3% year on year, supported by improving demand trends across most of our markets.
Jaime Muguiro: In Mexico, residential demand, supported by government-sponsored social programs and continued competitor outages, drove cement growth. In the United States, cement volumes increased, driven by the acquisition of Omega and specific project works. In Europe, severe heatwaves and a fragile recovery in several markets waned in volumes across all products. Within South/Central America and the Caribbean, cement volume growth was supported by demand in Colombia and Jamaica.
Jaime Muguiro: Consolidated prices for our three core products increased by a low single-digit percentage year over year, supported by pricing actions implemented in the H1 of the year. On a sequential basis, cement price performance reflected geographic and product mix effects, as well as price erosion in certain markets. In the case of ready-mix, prices continued to benefit from fuel surcharges in US and Europe, and a strong price increase in traction in Middle East and Africa.
Jaime Muguiro: With limited visibility on a clear resolution to the Iran war, we remain vigilant and focused on preserving margins and offsetting input cost inflation through our pricing strategy over time. EBITDA increased 12% year over year, reflecting the combined benefits of our transformation alongside higher pricing, growing cement volumes, and favorable FX movements. We estimate that Project Cutting Edge contributed approximately $60 million in incremental savings in the quarter.
Jaime Muguiro: Pricing remained the main contributor to EBITDA growth, offsetting increased costs and expenses, largely related to higher maintenance and distribution costs. While pricing was sufficient to offset costs, for the first time in six quarters, we are seeing an increase in year-on-year total costs, reflecting a pickup in inflation. On energy, despite the significant hike in global energy prices, year-to-date energy costs in cement production declined 2%, well within our full-year guidance of a low single-digit increase.
Jaime Muguiro: This is a result of our comprehensive energy strategy, protecting us in the short term from volatility on fuels and electricity. Going forward into 2027, while we have already put in place relevant hedges, we do expect to face higher energy costs, which we aim to mitigate through our pricing strategy. Beyond these factors, EBITDA growth was also supported by our Urbanization Solutions business, where EBITDA increased 25% year on year, mainly driven by mortars in the US following the acquisition of Omega. Together, this leverage drove another quarter of margin expansion and further demonstrate the sustainable improvements we are delivering across the business. I am pleased with the continued execution of our cost savings program. This quarter, we achieved $60 million in recurring savings, including $20 million originally expected in the Q4 and beyond.
Jaime Muguiro: We have now achieved 80% of our $475 million cost savings target, with the remaining $95 million expected to primarily benefit 2027 results. Year to date, this initiative has supported a tangible improvement in our cost of sales and operating expenses as a percentage of sales, with both declining by 1.6 and 0.8 percentage points respectively. As we near completion of our cost savings program, we will enter a new phase in our transformation, focused on unlocking additional value through digitalization and AI.
Jaime Muguiro: We have made important advances on our asset pruning initiative. As you know, this effort is designed to enhance asset efficiency, focusing on our three key metrics, EBIT, free cash flow, and return on our cost of capital. Since we launched Project Cutting Edge, we have reviewed every asset in our portfolio, identified those not meeting our return criteria, and established action plans for remediation.
Jaime Muguiro: This process takes time as each asset requires a detailed assessment, including its cyclical performance, micro-market dynamics, and vertical integration implications. The actions coming out of this review may include performance plans, disposals, closures, or an optimization of our operating network, which also can take time. The actions taken on each asset will bring different benefits to these metrics, as some may improve free cash flow, while others focus on return on capital.
Jaime Muguiro: We estimate the potential benefit from this initiative to be between $100 and $150 million in incremental recurring free cash flow. We also have advanced faster than we anticipated, and during the quarter we made some important progress. We divested ready-mix assets in the Atlanta market with a long-term cement and admixture supply agreement. We also initiated exclusive negotiations with Vicat Group for the proposed sale of certain ready-mix and aggregates assets in southeastern France.
Jaime Muguiro: Since launching this initiative last year, estimated cash proceeds, including both completed and announced transactions, total more than $200 million and include more than 140 facilities. While these actions deliver immediate improvement in EBIT, free cash flow or return on invested capital, the proceeds can also be recycled into more strategic and accretive investment opportunities in the future. All of this is further evidence that we are increasingly disciplined about where we deploy our capital, ensuring our investments generate attractive returns. As we move into 2027, our focus remains on advancing Project Cutting Edge and the variables we can control to improve earnings quality, cash generation, and shareholder returns. With that, back to you, Lucy.
Lucy Rodriguez: Thank you, Jaime. Our operations in Mexico delivered another solid quarter, driven by recovering cement demand and cost efficiencies. EBITDA increased at a double-digit rate, while margin expanded by nearly four percentage points. Year on year, cement volume growth remains supported by a healthy residential sector and government backed social programs, including housing and rural roads.
Lucy Rodriguez: Competitor outages during the quarter again provided an unexpected and temporary boost to volumes. The Social Housing program, a flagship initiative of the current administration, has been a meaningful lever of growth in our business and continues to scale. According to government figures, about 35% of the 1.8 million housing unit target has been contracted to developers who then bid out the building materials requirements. Given progress in contract awards to date, we expect government focus to shift towards accelerating construction under the signed contracts.
Lucy Rodriguez: While ready-mix volumes continue to lag cement recovery, we are encouraged by the strength of our order book, which should support volumes in 2027. Contracted ready-mix volumes tied to infrastructure have increased materially, supported by large scale projects such as railroads, highways, and dams. We also saw a material pickup in contracted volumes for domestic industrial projects, although it is still too early to assess whether this trend is sustainable. Cement prices were stable sequentially after adjusting for mix effect, while ready-mix prices increased 2%. We announced a mid-single digit price increase in bag cement, which became effective early October. We will continue to pursue pricing actions as needed to offset inflationary pressures going into 2027.
Lucy Rodriguez: While cost efficiencies and other structural initiatives under Project Cutting Edge were the primary drivers of EBITDA growth and margin expansion in the quarter, our results also benefited from more transitory factors, including better than expected energy costs. As we move into Q4, we anticipate some incremental headwinds, primarily from higher energy and maintenance, as well as increased FX volatility.
Lucy Rodriguez: Looking ahead to 2027, we expect demand to remain constructive, supported by higher infrastructure execution and continued momentum in residential. At the same time, we are monitoring new capacity in central Mexico and are preparing for a scenario where our volumes could grow less than the national market. In the US, cement and aggregate volumes increased 4%, while ready-mix declined 1%. The growth in cement volumes was driven by positive dynamics across most of our markets, as well as the contribution from Omega.
Lucy Rodriguez: On a sequential basis, aggregates volumes grew 9%, underscoring recovery from the adverse weather conditions in Texas during Q2. Sequential cement prices declined 3%, reflecting price erosion in some markets, as well as higher internal freight as we continue replacing imports with domestic production. Ready-mix prices increased 1% sequentially and 3% versus Q4 2025, supported by the implementation of fuel surcharges. Adjusting for product mix, aggregate prices were stable sequentially after a mid-single digit increase in the H1 of the year. EBITDA and margin in the quarter were impacted by an unplanned outage in our Brooksville plant, higher raw material cost inflation in ready-mix and cement, and lower cement prices. Demand continued to be led primarily by infrastructure.
Lucy Rodriguez: While IIJA expired at the end of September, we estimate that approximately 40% of the funds remain to be spent, supporting a healthy project pipeline into 2027 as we await the passage and approval of a new transportation bill. In the industrial sector, demand related to the AI ecosystem, including large data centers, semiconductor facilities, and manufacturing, continued to grow, with rising investment in the power sector providing further support over the medium term. We estimate that AI-related demand represents a high single-digit percent of our ready-mix volumes year to date, more than double our full year 2025 volumes in this segment. Residential construction remains challenged by affordability constraints and elevated housing inventories in certain regions. We expect markets to recover at varying pace as inventory levels and affordability improve over the medium term.
Lucy Rodriguez: In aggregates, which currently represents about 40% of our US EBITDA, volumes have increased year to date, but less than initially anticipated. This reflects delays in some of our new aggregate projects coming online, as well as softer market demand. We now expect these investments to contribute to incremental volumes in 2027. In this environment, we continue to strengthen our operations through higher kiln efficiency, higher asset returns, and a continued focus on operational excellence. These efforts should allow us to capture the benefits of high operating leverage once volumes recover. Going into the Q4, we expect some incremental headwinds, primarily due to the timing of maintenance and energy costs. For 2027, with spot natural gas prices lower year-over-year, we expect energy headwinds to be, to a large extent, related to diesel cost.
Lucy Rodriguez: Our operations in EMEA delivered favorable results, with EBITDA increasing 4%, supported by strong pricing and efficiencies from Project Cutting Edge, which offset rising energy costs across the region. Both Europe and Middle East and Africa subregions contributed EBITDA growth of mid to high single digits. In Europe, volumes were affected by persistent heat waves, project delays in infrastructure in the industrial and commercial sector, along with a fragile construction recovery.
Lucy Rodriguez: Cement volume growth in Germany, the first in over a year, together with continued growth in Spain, partially offset softer volumes elsewhere in the region. Residential demand across much of Europe remains subdued due to elevated interest rates, while Spain remains an important exception. Despite delays, infrastructure has been more resilient, with additional medium-term support expected from EU funding in Poland and fiscal stimulus in Germany. Sequential pricing was broadly stable in Europe across our three products.
Lucy Rodriguez: Importantly, prices are up low to mid-single digits since Q4 2025. Reflecting successful H1 pricing increases in markets affected by the introduction of the carbon border adjustment mechanism this year. Across Europe, fuel surcharges and price increases covering the majority of our ready-mix volumes are helping mitigate higher diesel costs. We remain constructive on pricing in continental Europe, supported by the carbon border adjustment mechanism and the continued phaseout of free CO2 allowances under the EU ETS. We are awaiting the introduction of the CBAM in the UK as well in Q1 2027. At the same time, we remain particularly vigilant on rising cost inflation, and CEMEX continues seeking to offset these pressures through our pricing strategy.
Lucy Rodriguez: On decarbonization year to date, our European operations have reduced gross CO2 emissions by 2%, reaching 497 kilograms of CO2 per ton of cement equivalent, mainly driven by a lower clinker factor. In the Middle East and Africa region, double-digit cement volume growth was driven by the recovery of market share lost in Egypt in the Q2 2026. Our operations in Israel and the UAE remain resilient amid geopolitical tensions, with ready-mix volumes increasing in both markets. In Israel, aggregate volumes were impacted in the quarter by the transition to a new quarry, which will be one of our largest in the country. Operations are currently ramping up and are expected to normalize in the Q1 2027.
Lucy Rodriguez: Despite a sequential decline in cement prices in Egypt, overall pricing in Middle East and Africa remains solid compared with Q4 2025, with cement, ready-mix, and aggregates up 1%, 11%, and 8% respectively. Our results in South Central America and the Caribbean were impacted by higher cement purchases in Jamaica, reflecting annual maintenance costs and stronger than expected demand, along with higher energy costs in the region. While operations in Jamaica have since stabilized, we anticipate additional cement purchases in the fourth quarter, which should then normalize in 2027.
Lucy Rodriguez: Cement demand in the region remains solid, supported by robust performance in Colombia and Jamaica, with the informal sector driving activity in both markets. In Jamaica, demand also benefited from increased reconstruction activity related to last year's Hurricane Melissa and continued investment in tourism-related projects. Looking ahead, we remain optimistic on the fundamentals of our portfolio in the region, supported by resilient informal construction. With that, I will now turn the call over to Maher to review our financial developments.
Maher Al-Haffar: Thank you, Lucy, and good day to everyone. Our self-help initiatives continued to deliver this quarter. EBITDA grew 12% to $990 million. Margin expanded 80 basis points, and free cash flow generation and conversion continued to accelerate. Project Cutting Edge continues to drive meaningful improvements in our cost structure with a reduction in cost of sales and operating expenses as a percentage of sales. As Jaime pointed out, energy cost volatility has been a key theme this year.
Maher Al-Haffar: Our strategy combines fuel diversification, long-term contracts and hedging, disciplined inventory management, lower clinker factors, and higher energy efficiency. This strategy is paying off. Year to date, energy costs per ton of cement produced declined 2%. This reduction was driven by a double-digit decline in the cost of alternative fuels, more than offsetting single-digit increases in fossil fuels and electricity. Alternative fuels now represent about 28% of our fuel mix.
Maher Al-Haffar: Our diesel hedging program, covering owned and third-party freight, generated gains of $82 million year to date, offsetting higher diesel and transportation costs. We are also well protected for 2027. About 80% of our direct diesel consumption is hedged. While the hedge level is higher compared to 2026, if diesel prices remain at current levels, we expect the hedging benefit to be broadly similar to this year.
Maher Al-Haffar: In addition, in Europe, we have already contracted about 60% of our electricity needs at fixed prices, only 4% above this year's levels. Free cash flow from operations reached $723 million in the quarter, up 34%. Year to date, it nearly tripled to $1.4 billion from a year ago. More than half of this increase came from EBITDA growth. The rest came from lower maintenance CapEx, net interest, and other cash expenditures, lower working capital investment, and higher fixed asset sales.
Maher Al-Haffar: Excluding severance payments and discontinued operations, our trailing 12-month free cash flow from operations conversion rate reached 62%, up 16 percentage points from a year ago. Year to date, investment in working capital was $40 million lower than last year, driven by Mexico and the US. Average working capital days stood at -9 compared to -10 last year. We remain on track to meet our working capital full-year guidance of an incremental investment between $50 to $100 million. Controlling net income rose 55% in the quarter. Year-to-date, it is lower, reflecting last year's one-time gain on the sale of our Dominican Republic operations. Excluding that gain, year-to-date net income would have risen 47%. Since December, we have reduced total debt plus subordinated notes by $1.7 billion, and net debt plus subordinated notes by about $535 million.
Maher Al-Haffar: Net financial leverage closed the quarter at 1.8 times, a nearly half a turn decline since December, and already within our midterm target. Looking ahead, we remain focused on further strengthening our capital structure towards a solid BBB rating, while continuing to grow free cash flow and conversion rate. Now back to you, Jaime.
Jaime Muguiro: Thank you, Maher. I am pleased with our results this quarter, and encouraged by the continued benefits we're seeing from our transformation, which are particularly relevant under the current macroeconomic backdrop. Based on our year-to-date performance and expectations for the Q4, I am confident in our ability to deliver on our full-year EBITDA guidance of 16% to 17% year-over-year growth. Our guidance is based on a peso FX rate of 18.25 to 18.50 for the Q4. Our energy strategy is paying off in 2026, and we believe we're well-positioned to address continued energy volatility in 2027.
Jaime Muguiro: We remain committed to advancing our transformation, delivering on our cost savings target, executing on our asset pruning effort, and strengthening free cash flow. While uncertainty is likely to remain part of the operating environment, our focus remains firmly on execution. By continuing to improve what we can control, we're well-positioned to further strengthen earnings quality, cash generation, and shareholder returns over time. Now back to you, Lucy.
Lucy Rodriguez: Before we go into our Q&A session, I would like to remind you that any forward-looking statements we 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 reference to pricing initiatives, price increases or decreases, refer to our prices for our products.
Lucy Rodriguez: 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 only 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. Press star one to begin. The first question comes from Ben Theurer from Barclays. Ben?
Ben Theurer: Hi. Yeah, good morning, and thanks for taking my question. Congrats, Jaime, Lucy, Maher. Another good quarter in here. Wanted to pick up on some of the comments you already gave. As we look into 2027, how should we think about the sustainability of the margin improvement that you've achieved in 2026, especially as we look at less favorable FX, higher raw material costs? You talked a little bit about that. So what are the offsets from productivity price mix and the operating leverage as you think for the coming quarters? Thank you.
Jaime Muguiro: Good morning, Ben. Thank you for your question. Biggest offsets, soft end demand could be on inflation. Look, the margin we're achieving in 2026 is structural. We committed to a 21% EBITDA margin for 2027 during CEMEX Day, and that is the floor. The reason for that is because we will continue transforming CEMEX, with the second phase of our transformation on potentially bringing incremental savings beyond the $475 million that we've committed to by end of 2027. The other aspect is because we're not done with our asset pruning efforts, and those should be accretive to margins, EBITDA, EBIT, free cash flow conversion, and ROIC. We're making progress, but we're not there yet.
Jaime Muguiro: And finally, when we think about capital allocation, one lever is M&A, and anything we do on capital allocation should be conducive of a structural, a stronger portfolio that should deliver accretive margin expansion. So the point, Ben, is that we think it is sustainable and it is the floor, and we need to go for more. Thanks for your question, Ben.
Ben Theurer: Thank you.
Lucy Rodriguez: And the next question comes from Ale Obregón from Morgan Stanley. Ale?
Alejandra Obregón: Hi. Good morning, Jaime, Maher, Lucy. Thank you for the call and for taking my question. I guess mine is very similar to Ben's question, but this time on free cash flow. There are many moving pieces and moving in the right direction. You have interest expense trending lower, CapEx Working capital. My question is, how much of that improvement should we think of as structural and repeatable into 2027? How much of that is seasonal or timing driven? How much is it linked to asset pruning? If you can help us think of free cash flow generation and conversion into 2027. Thank you.
Jaime Muguiro: Alejandra, good morning. Thank you for your question. Let's think about our free cash flow conversion, not just for 2027, but beyond. Everything we're doing is structural. There are no timing-related events in our free cash flow conversion transformation. We are working on all lines. Number one, improving EBITDA margin, which as I just commented, we will continue pursuing that.
Jaime Muguiro: We are optimizing structurally every line of free cash flow. This year we've paid significant gross debt, and I will pass the word to Maher in a minute to elaborate about that. We continue to see a material reduction of interest expenses, and we're not done, because when we do benchmark against best-in-class free cash flow operators in our industry, we still have a way to go to reduce interest expenses as a percent of EBITDA and as a percent of sales.
Jaime Muguiro: On working capital, I think it is structural. We're going to stay for long between -8, -9, -10 days, but we shouldn't expect any material investments in working capital through the cycle. Also, Maher and the team will continue to do liability management opportunities. When it comes to total CapEx, including platform CapEx, strategic CapEx, and intangible assets, we haven't yet gotten where structurally we need to be.
Jaime Muguiro: I've been committed to the market that we should be landing at around maximum of $1.150 billion to $1.2 billion of total CapEx, including the three concepts by 2028 and beyond. We're making significant traction. One element is the asset pruning. The asset pruning has not contributed much yet. We're just beginning to see traction. We are fully committed to delivering at least incrementally $100 million of incremental free cash flow, recurrently from that effort.
Jaime Muguiro: That's going to contribute from 2027 onwards. It's structural, it's happening, and I see no reason why we shouldn't be achieving the best-in-class free cash flow conversion at all levels, whether it's free cash flow from operation, total free cash flow, it doesn't matter. We're going to do better and we know who our benchmarks are, and we are going to get there. Thanks for the question, Alejandra.
Alejandra Obregón: Thank you very much, Jaime. That was very clear.
Lucy Rodriguez: The next question comes from Carlos Peyrelongue from Bank of America. Carlos?
Carlos Peyrelongue: Thank you, Lucy, and congrats on the strong results. The question is related to cost for next year. Maher made some initial comments. We just wanted to get further clarity on which costs you have already hedged on the energy front, and which ones you plan to negotiate in Q4, and if there is any part that you will not hedge as you go into next year. I got the 80% on diesel, but I missed a number on gas, the percentage that you have hedged. Any further info on cost for next year would be helpful. Thank you.
Jaime Muguiro: Okay, Carlos, thank you so much for your question. Before I pass the word to Maher, we do expect incremental cost next year, inflation on energy, potentially between mid to high single digit inflation. When you think about it, we have three buckets. We have fuel, we have electricity, and we have diesel. Regarding diesel, it is direct and indirect. Maher will elaborate more about the hedges. What is important is that regarding fuels, we will continue to ramp up using alternative fuels. We will also swing from coal to petcoke, from petcoke to coal to natural gas by market, depending on the different energy pricing dynamics in different parts of the region. For example, we have seen very good and competitive natural gas cost in the US, and we have been ramping up consumption of natural gas.
Jaime Muguiro: In the US, we do see higher alternative fuels usage in Europe after we completed two relevant CapEx in two of our plants. We also have great capacity to increase using alternative fuels in Mexico. Most of our alternative fuels, particularly in Europe, are under fixed contracts. Definitely to offset inflation next year, pricing is going to be key. Maher, could you please elaborate on the hedges, please?
Maher Al-Haffar: Yes. Thank you, Jaime, and hi, Carlos. From a strategy perspective, Carlos, our hedging strategy hasn't really changed materially. As you know, we roughly have energy as a percentage of COGS is around 12%. That's roughly about $1.5 billion, and it's roughly split, as Jaime said, in three equal parts, cement fuels, electricity, and diesel. On the cement fuels, we cannot hedge petcoke. We don't hedge coal. Alternative fuels are either fixed cost or under contract, so we benefit from that. Natural gas. The US consumes roughly half of the natural gas that we consume in the company, and this year we're up to around 28% of nat gas. For 2026, we hedged 75% of that. Into 2027, we're already close to about 75%, 80% of that. So we're hedged on that.
Maher Al-Haffar: Now, if you take a look at the forward curves for coal, for Brent, and for diesel, they're all in backwardation. The diesel I covered in my remarks. We've only hedged for next year, the direct diesel, and we're close to about 75%, 80% there in the position. Alternative fuels have dropped during the year. Nat gas is down by 28%, and the diesel, as you saw, we're gaining close to about $80 plus million. If diesel prices maintain as they are going into next year, we're likely to have a similar benefit next year in our diesel hedge as we had this year. So I don't know if that covers your question.
Carlos Peyrelongue: Yes, it does. Thank you very much, Jaime and Maher.
Lucy Rodriguez: Maybe if I could just add a quick complement, Maher. I think in total, about 50% of our energy exposure is hedged right now. Because we do not get the regulated market increases until Q4 in the United States, that should go up materially, I believe, going forward. Just to put that percentage out there.
Maher Al-Haffar: Yeah.
Lucy Rodriguez: Okay.
Maher Al-Haffar: Thanks, Lucy.
Carlos Peyrelongue: Thank you. Thank you, Lucy.
Lucy Rodriguez: Okay. The next question comes from Yassine Touahri from On Field. Yassine?
Yassine Touahri: Good morning, and thank you very much for taking my question. I think just one question on your full-year guidance. I think it implies broadly flat EBITDA growth in Q4, despite you delivering 12% growth organically in Q3. Have you seen any meaningful deterioration in activity or in margin in October across any of your region? Or if this is not the case, do you see any scope to do better than the upper range of your guidance? You feel it's like there is too much uncertainty regarding weather, energy, or geopolitical uncertainty to upgrade this guidance at this stage.
Maher Al-Haffar: Yassine, good morning. Thank you for your question. First of all, we're going to be landing very close to our 21% EBITDA margin target that we announced for next year, during the CEMEX Day, right, supported by our transformation. In Q4 of this year, on one hand, we have the normal seasonality impact, right? Normally from Q3 to Q4, that would be around -1.3 percentage points, right? Because of lower volumes, the winter, the weather, so on and so forth. But we do expect energy-related headwinds on one hand, and higher maintenance cost on the other hand. Regarding maintenance, we expect higher maintenance expenses in the US.
Maher Al-Haffar: In the US, we waited until Q4 to do an important outage in one of our plants where we are changing the control systems of the plant, the software that we use to run one of our plants, because of obsolescence. So that's going to have an impact on maintenance. We also have higher maintenance expenses in Mexico and Mexico. So overall, the headwind for Q4 in maintenance is around $18 million.
Maher Al-Haffar: We also expect higher energy cost, mainly petcoke in Mexico, electricity in Europe, a headwind of around $17 million. Let me remind everybody that we have a tough comparison base in EMEA. Because last year in Q4 2025, we had a positive one-off of around $12 million headwind. So that's the reason why we've been prudent. We're going to be landing very close to our EBITDA margin target of next year announced in CEMEX Day. So thanks for your question, Yassine.
Yassine Touahri: Thanks.
Lucy Rodriguez: The next question comes from Adrian Huerta from JPMorgan. Adrian?
Adrian Huerta: Thank you, Lucy. Hi, everyone. Just wanted to see if you can give us a little bit more color on prices in the US for both aggregates and cement. What you saw in Q3, what happened with mid-year efforts to increase prices, what have you done so far for the increases in H1 2027?
Jaime Muguiro: Adrian, good morning. Thank you for your question. Well, first, regarding cement, FOB prices that you saw declining quarter-over-quarter. The first thing is that one-third of that sequential price decline was due to higher internal freight cost as we continue replacing imports with domestic production. That is one aspect. Now, when you neutralize that effect, there are different competitive dynamics in different markets, but I would highlight that there is a difficult competitive dynamics in a few of our markets, particularly some markets in Texas and Northern Florida.
Jaime Muguiro: That is what drove the FOB price decline sequentially, excluding the impact of internal freight costs, which obviously, as we replace imports, we lower our variable costs. But you see then the effect elsewhere on FOB price. Our ready-mix price has been very resilient. We saw an uptick of 1% sequentially quarter-over-quarter, and year-over-year is 1% up. This is mainly driven by fuel surcharges, which are working very well offsetting diesel cost inflation. Then on aggregates, we continue to do well point to point for 3Q25, 3Q26 is up 3%, and it was flat quarter-on-quarter adjusted by mix. But we did not see an opportunity in the market to put any price increase around September on October on aggregates.
Jaime Muguiro: Now, when we think about 2027 in the US as all across our portfolio, as I highlighted, we do see inflation. I am expecting mid-single digit across the board between mid to high single digit in energy. We are going to target solid mid-single digit price increases across the board, across all products, to protect margins. That is what we need to achieve for next year. That is how we are thinking. Thanks for the question, Adrian.
Adrian Huerta: Thank you, Jaime.
Lucy Rodriguez: The next question comes from Jorel Guilloty from Goldman Sachs. Jorel?
Jorel Guilloty: Hello, everyone. Thank you for taking my question. I wanted to dig deeper on your comments on US residential. Specifically, how do you see US residential demand evolving? Is stabilization the most likely near-term outcome, but perhaps risks skewed to the downside, or are you seeing signs of recovery? Would this outlook differ by geography? What is the share of this demand that is coming from residential? Thank you.
Jaime Muguiro: Jorel, thank you for your question. Good morning. Regarding US demand for residential, I think industry is around 30%. Regarding CEMEX, I think we are between 30% to 35% exposure. That is because we are more exposed to the Florida market, where residential weighs more on that average for the industry. What we are doing is in agile commercial strategies, pivoting towards infrastructure, energy, industrial build-out projects, high-rise buildings, healthcare, schools, public jobs, so on and so forth. Of course, data centers. So we are growing our exposure for aggregates, ready-mix concrete and cement, both indirectly and directly on those segments. That is what is driving our volume growth in the US. Regarding 2027, I do not expect residential to improve. Again, it is an issue of affordability. I do not have to explain it. You know that very well.
Jaime Muguiro: We are not expecting, as of today, a collapse of the residential segment in the US, but it is not going to contribute at all. We do not see a massive downside to it as well. Definitely, single family homes and multi-family will behave differently because there is pent-up demand. There is household formation. People need to live somewhere. So either one or the other will hold. That is how we see it. Now, for the midterm, though, as soon as affordability improves, this is going to be a tailwind, and that is going to bring demand growth, and that is going to bring operating leverage for our US business. I look forward to it. But we are going to have to wait a little bit longer. So thanks, Jorel, for your question.
Jorel Guilloty: Thank you very much.
Lucy Rodriguez: The next question comes from Francisco Suárez from Scotiabank. Paco? Paco, are you there? Maybe what I can do is go on to the next question. We can come back to Paco if he connects. The next question comes from Gordon Lee from BTG, and it has been submitted via the webcast. The question is, as you look at your options of capital allocation tools, why have you not been more active buying back shares given the stock's underperformance over the past few months?
Jaime Muguiro: Gordon, thank you for your question. Well, first, shareholder returns is one of our top priorities, along with deleveraging and growth investments. We have been monitoring our stock, and we are balancing using our free cash flow among the three priorities. Share buybacks, deleveraging, and growth investments. As market derates, we may have accreted growth opportunities compared to share buybacks. But we have already done $100 million, and we plan to repurchase up to the $500 million in shares through 2028. So we will continue tapping that opportunity and balancing that with deleveraging, because we see opportunity to continue paying debt. It should be accretive. We will want to reduce interest expenses, boost free cash flow conversion structurally, and then look for some M&A growth opportunities as well. Thanks for the question, Gordon.
Lucy Rodriguez: The next question comes from Andrés Cardona from Citi. Andrés?
Andrés Cardona: Hi, good morning, Jaime, Maher, Lucy. Congrats on the results. Let me ask about Mexico. What are your views for housing and infrastructure for 2027? Could you please remind us what is the cement intensity of the Social Housing program?
Jaime Muguiro: Andrés, thank you very much. Good morning. We see both housing and infrastructure resilient for 2027. I think what has been a little bit disappointing in 2026 has been infrastructure, because it has moved slower than what we expected. But there is a good indicator that we are expecting much better in 2027, and that is how we have been building up our ready-mix concrete backlog. As of the Q3 of this year, our ready-mix concrete backlog has increased by around, almost doubled, by around 95% to 98%. So we are expecting dams, highways, and rail projects coming along finally in 2027. Housing is behaving well. All leading indicators are looking good, both the formal sector, but also the Social Housing program, which is gaining steam. We have been nicely exposed to it. We continue to win projects.
Jaime Muguiro: They are pretty intense in concrete because of the way it was specified using concrete cast in place for not only foundations and pillars, but also as slabs and even the cladding of the building. For this reason, we are estimating that around 6 to 7 tons of cement on 30 cubic meters of ready-mix concrete per unit. I hope that I answer your question, Andrés.
Lucy Rodriguez: Paco Suárez from Scotiabank. Are you there? I do have his question, so I am just going to go ahead and read it. Do you see upside benefits in the form of additional savings from the $80 million you see Project Cutting Edge impacting in 2027?
Jaime Muguiro: Paco, thank you for your question. We continue with our transformation, and probably we will deliver higher savings than the $475 million that we committed by end of next year. Yes, you are right, we are expecting incremental $80 million to finish this first part of the transformation. The next phase is very exciting, and it is powered, if you allow me to elaborate very quickly, it is powered by technology, including AI.
Jaime Muguiro: We have chosen a few domains. Two of them are back office domains that would dramatically benefit from the deployment of digitization, automation, integration, including augmented AI. We want to standardize more, automate more, and that is going to drive efficiencies and savings. The other aspect is in the cement domain, where we see AI playing a role in supply chain, particularly in freight, and also in production and maintenance. Maintenance is midterm. Production will come sooner.
Jaime Muguiro: This is about deploying AI to manufacture so that augmented AI models run our raw mills, our kilns, and our cement mills, and do that adjusting faster operating parameters, delivering incremental yield and lower energy cost per ton. We are progressing with Balcones deployment, and then we will start scaling in the US and then elsewhere. That will be a three-year program. Also very exciting.
Jaime Muguiro: Finally, the way we address third-party addressable spend within procurement and outside of procurement. So far, out of the $475 million, we are delivering around $80 million on recurring procurement savings. Our target is much higher, and we see great opportunity. Bottom line is we continue with our transformation. We are not done yet. That should bring further efficiencies, and we will focus on business excellence combined with capital allocation and shareholder returns, and that is our transformation.
Lucy Rodriguez: Thank you, Jaime. We have time for one last question, and it is coming from Paul Roger from BNP via the webcast. The question is the following: Are more platform disposals likely, or will future divestments be more about asset pruning?
Jaime Muguiro: Thank you, Paul. Good morning. We are going to do both. We are not done yet with our platform disposals. As far as I remember, we announced in the past that we would bring proceeds of around $1 billion. We have not yet completed that platform disposal program. As you know, we should be completing the divestiture of parts of our operations in Colombia. That should happen around Q2 of next year. That is progressing. As announced, that is a transaction with Holcim that will bring around $485 million.
Jaime Muguiro: We will continue divesting some energy businesses on land on our corporate offices in Colombia, which will bring at least additional $70 million. We are not done. There are a few other platform disposals that we should be completing in the next 18 months. We will continue with our asset pruning, particularly in some parts of the US and Europe. Thanks, Paul, for the question.
Lucy Rodriguez: We appreciate you joining us today for our Q3 results. We hope that you will come back for our Q4 2026 earnings call on 18 February 2027. If you do have any additional questions, please feel free to contact the investor relations team. Many thanks.
Operator: Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.
