Cemex Sab De Ord

Good morning, welcome to the CEMEX first quarter 2024 conference call and webcast. My name is Elliot and I'll be your operator today. At this time, all participants are in listening 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 will be happy to assist you. And now I will turn the conference over to Lucy Rodriguez, Chief Communications Officer. Please proceed.

Good morning, thank you for joining us today for our first quarter 2024 conference call and webcast. We hope this call finds you in good health. I am joined today by Fernando Gonzalez, our CEO, and Mafer Al-Haffar, our CFO. As always, we will spend a few minutes reviewing the business, and then we will be happy to take your questions. And now, I will hand it over to Fernando.

Thanks, Lucy, and good day to everyone. I'm pleased with our first quarter results, which outperform our expectations underlying our 2024 guidance. In fact, EBITDA represents a first quarter record for the company. Despite fewer working days and difficult weather conditions in many markets, EBITDA grew 5%. Three of our four regions, markets accounting for 90% of consolidated EBITDA, experienced a combined growth rate of 15%. Mexico deserves special mention, setting a record in terms of quarterly EBITDA generation. EBITDA margin expanded year over year and sequentially driven by a favorable price-cost dynamic. Our prices rose mid-single digits while input cost inflation slowed. Growth investments and urbanization solutions continue to materially support EBITDA growth. net income grew 13%. Our return on capital, plus 0.4%, was slightly higher relative to the same period last year, despite the impact of the Spanish tax fine that we recognized in fourth quarter 2023. In other highlights, last month we achieved an important milestone with the receipt of an investment grade rating of triple B minus from Standard & Poor's. This rate in action was recognition of our medium term financial strategy, as well as consistent financial performance. In late March, we hosted our 2024 CEMEX Day, presenting additional insights into our regions, the carbonization progress and goals, capital allocation and strategy. I would encourage you to access the replay on our website. This month, we refinanced our Eurobank facility, further improving our maturity schedule and liquidity position. In March, we published our eighth integrated report as we continue to set the pace for our industry towards a profitable climate action transition. As part of our portfolio rebalancing efforts, we have announced an agreement to divest our interests, assets, and operations in the Philippines for a total enterprise value of $800 million. We currently expect to finalize this transaction before the end of year. Aligned to our strategy, the majority of divestment proceeds would be repurposed to fund our growth strategy in the U.S. market. Net sales rose 3% with increases in Mexico and SCAC, partially offset by volume declines in the U.S. and EMEA. EBITDA rose mid-single digit, reflecting growth in Mexico, SCAC, and the U.S. We estimate that the impact of fewer working days in the quarter amounted to an additional $20 million in EBITDA, or 3% in year-over-year growth. EBITDA margin increased half a percentage point as our pricing strategy effectively outpaced input cost inflation. Free cash flow after maintenance capex was negatively impacted by higher taxes, maintenance, as well as lower fixed asset sales. The decline in consolidated volumes results from difficult weather conditions in the US and Europe, fewer working days, and slowing economic growth in several EMEA countries. In the case of the US, we have seen volumes improve with better weather conditions in March and year-to-date April. In Europe, we also have seen volumes pick up over the last six weeks, and we expect volumes to continue to improve over the next few quarters with better economic conditions, the possibility of interest rate cuts, and easier year-over-year comparisons. Mexico stood out in the quarter with strong volume performance, driven by improved back cement activity and continuous strength in the infrastructure and industrial segments. Despite the challenging volume backdrop, our consolidated prices were up year over year and sequentially. Sequential pricing was up in all markets and for all products except for cement in the U.S. In the U.S., on a like-to-like basis, excluding a year-end adjustment, cement prices rose 1% sequentially. The sequential pricing achievement results from successful execution of first quarter pricing increases, reflecting the ongoing but decelerating input cost inflation. We continue to execute on our commercial strategy, designed to reflect input cost inflation in our prices, recalibrating always to current inflation levels with the goal of maintaining or improving margins. Our commercial strategy, along with our growth investments and urbanization solutions, were instrumental in driving EBITDA growth in the quarter. The effectiveness of our pricing strategy is visible in the favorable price-cost dynamics in the quarter, where the ratio of our pricing contribution to cost increased to two times, about 0.3 times higher than in 2023. The accelerating costs are also supportive with cost of goods sold as a percentage of sales declining 1.6 percentage points. Margin increase on a year-over-year and sequential basis in a quarter where the trend behavior is for a decline in margins from fourth to first quarter. Our bolt-on investments continue to be an important component of growth. accounting for 10% of total EBITDA and 26% of incremental. EBITDA was impacted by lower volumes as a result of bad weather, fewer working days, and difficult demand conditions in EMEA. We expect better overall volume performance in the following quarters. In March, we published our eighth annual integrated report covering 2023, which details how our strategy, governance, sustainability, and financial performance intersect to create value for our stakeholders. Some of our main accomplishments presented in this report related to climate action are, since the creation of our Future in Action program in 2020, we have reduced scope one and two CO2 emissions by 13% and 12% respectively. a pace that previously would have taken 15 years to accomplish. We repurpose close to 28 million tons of waste and byproducts through the Regenera business line. We increase alternative fuel substitution rate to 37% and reduce clinker factor to 72%, both at record levels and contributing to the profitability of our business. In 2023, We increase the adoption of our low carbon bed to a brand currently a more than $7 billion brand to 56% for cement and 48% for concrete. I encourage you to access our integrated report on our website. Urbanization Solutions, our fastest growing business continue its double digit EBITDA growth rate with important margin expansion in the quarter. Now accounting for 12% of consolidated EBITDA, this business is now reaching scale as a core segment for the company and material contributor to growth. Mexico, with its dominant regenerative waste management business, is currently the largest regional contributor. Main drivers of growth in the quarter were pavement services and admissions related to the high level of former construction activity in Mexico. Additionally, EMEA is leading the development of our construction, demolition, and excavation materials vertical. And now back to you, Lucy.