Cemex Sab De Ord

Good morning and welcome to the CEMEX second quarter 2024 conference call and webcast. My name is Drew and I'll be your operator for 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 start 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 second 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 Mahir Alhafar, 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 second quarter results where EBITDA grew year over year despite significant weather challenges in several key markets. Even with the decline in volumes and a strong prior year comparison, EBITDA margin expanded to the highest levels of the last eight years, marking five consecutive quarters of expansion. Our pricing strategy, adjusting to reflect decelerating cost inflation, continue to pay off with a widening price-to-cost ratio. Bolton growth investments, mainly in the US, and our urbanization solution business continue to support EBITDA growth. During the quarter, we achieved another important milestone with our second investment grade rating from Fitch Ratings. Our return on capital, in the double digit area remains comfortably above our cost of capital. In climate action, we are focused on delivering on our future inaction roadmap, reducing our scope 1 CO2 emissions by 3% in the first half of the year relative to the same period of 2023. During the quarter, we were recognized by the World Benchmarking Alliance a nonprofit organization that assesses and ranks the world's most influential companies on their contribution to the UN Sustainable Development Goals with the highest climate transition score. Net sales were flat, impacted by difficult weather conditions in several of our regions. Pricing growth offset the declining ready mix and aggregate volumes. EBITDA rose 2%, driven by strong growth in Mexico. Evidence margin expanded to the highest level since 2016, as our pricing strategy effectively outpaced input cost inflation. Free cash flow after maintenance capex declined slightly, driven by the timing of tax payments and lower fixed asset sales. Consolidated cement volumes were flat, while ready mix and aggregate volumes declined 9% and 3% respectively. The U.S. and Mexico experienced difficult weather conditions, which impacted volumes. Even with a weather headwind, Mexico again stood out in the quarter with strong volume performance, driven by improved back cement activity and continued strength in the infrastructure and industrial segments. U.S. volumes were impacted by weather, slowing demand in residential, and competitive dynamics in certain micro markets. In EMEA, volumes declined due primarily to the challenging demand environment in Germany, UK, and France, and geopolitical events in the Middle East. Despite the challenging volume backdrop, our consolidated prices rose mid-single digit year over year and were stable on a sequential basis. While price increases are moderating from the prior year, the increases continue to more than upset decelerating costs. In the U.S. and SCAC, cement prices rose sequentially due to price increases in the quarter, while a mass mid-single-digit increase is largely explained by geographic mix. Sequential declines in aggregate prices in Mexico and SCAC relate to geographic and product mix effects. I am excited to see the evolution of EBITDA in the quarter, where we clearly see the impact of our pricing approach and growth strategy. Our pricing contribution continues to exceed decelerating input cost inflation with the price-cost dynamic improving versus the prior year. The deceleration in cost is visible with cost of goods sold as a percentage of sales declining one percentage point. Bolton investments made since 2021 continue to be an important component of growth, now accounting for 10% of total EBITDA. EBITDA margin expanded to peak levels driven by our pricing and growth strategy. With a well-balanced geographic and product footprint, urbanization solutions maintain its trend of double-digit EBITDA growth and margin expansion. Main driver of growth came from our Regenera circularity business driven by the construction, demolition, and excavation materials activity in Europe. In Mexico, pavement services and admixtures continue their growth trajectory, driven by the high level of formal construction activity. Although global admixtures volumes decline in sympathy with lower cement and ready-mix sales in several regions, EBITDA increase on the back of double-digit pricing increases. Our efforts to expand the admixture business are meeting with success as sales to third parties continue to scale. We are very excited about our recently announced partnership with the Ellen MacArthur Foundation, the world's leading circular economy network, with the purpose to continue accelerating our circularity efforts in the built environment with our Regenera brand. On climate action, we continue to make steady progress in decarbonization with a 3% decline in scope one emissions year to date. Our continued success speaks to the effectiveness and profitability of traditional decarbonization levers in our industry and the validity of our Reduce Before Capture strategy. Since the launch of our Future in Action program in 2020, we have materially accelerated the pace of our decarbonization, reducing scope one emissions by 14%, a reduction that previously would have taken us more than 15 years to achieve. CEMEX Europe continues to lead the way in this transition with emissions within reach of our 2030 consolidated target six years ahead of time. CEMEX's Europe climate leadership stacks up globally as well with a carbon footprint already way below the European cement industry comparable 2030 target. Finally, I'm very pleased that Cemex was recognized as the industry top scoring company in the World Benchmarking Alliance 2024 Climate and Energy Benchmark. Cemex achieved the highest score among 91 heavy industrial companies within the cement, aluminum, and steel sectors, demonstrating our leadership in climate action and social impact, not only within the cement industry, but across several hard-to-abate sectors. And now back to you, Lucy.