Cemex Sab De Ord

Good morning and welcome everyone to the CEMEX fourth quarter 2025 Hope this call finds you well.

I am joined today by Jaime Muguero, our CEO, and by Maher Alhafar, our CFO. We will start our call with a review of our fourth quarter and full year results, followed by an update on the progress made so far on our strategic plan, as well as our expectations and guidance for 2026. And then we will be happy to take your questions. We will host our CEMEX Day on February 26th, where we will be providing additional details on our value creation strategy and medium-term financial targets. There will be a live video webcast available. And now, I will hand the call over to Jaime.

Thanks, Lucy, and good day to everyone. From a results perspective, my first year as CEO has been marked by sharp contrasts as we embarked on our transformation process. As expected, our first half performance was challenged by headwinds in Mexico related to the first year of a new government administration and a weaker peso, coupled with soft demand conditions in the U.S. In contrast, the significant second half improvement was predicated on Mexico's recovery as well as early results from our ambitious and disciplined transformation announced in the second quarter. As I assume my role as CEO in April, we moved quickly to introduce a multi-year strategic plan that included significant self-help measures designed to address the challenging market conditions. I want to recognize our teams across the organization 2025 was a demanding year of transformation for our company, one that required discipline, resilience, and a strong execution mindset at every level. Our people delivered on operational excellence, maintained a strong focus on safety and customers, and executed important structural changes while continuing to run the business day to day. These results reflect their commitment and professionalism, and I want to thank them for their hard work and dedication. Under Project Cutting Edge, our cost efficiency program, we fully realized our 2025 EBITDA recurrent savings target of $200 million, leading to improved margins in all markets in the back half of the year. Importantly, This effort should continue to reap substantial benefits in 2026 and beyond. Our free cash flow from operations reached $1.4 billion in 2025, with a 46% conversion rate, adjusting for one-off items such as severance and discontinued operations. We continue progressing on our portfolio rebalancing and growth strategy. We divested most of our operations in Panama while investing in targeted businesses in the U.S. The consolidation of couch aggregates materially strengthened our aggregates position in the Southeast. We will continue seeking potential divestments in non-core markets to expand our presence primarily in the U.S. through disciplined capital allocation, with a clear focus on aggregates and adjacent businesses such as mortars, stuccos, renders, and plasters. In decarbonization, our consolidated gross CO2 emissions declined 2% in 2025, mainly driven by further reduction in clinker factor. Our operations in Europe continue to lead the way. having reached the Cement Europe Association's 2030 gross CO2 emissions reduction targets five years ahead of schedule. But it was not just Europe. Notably, our operations in Mexico and South Central America and the Caribbean profitably achieved record clinker factor levels in 2025. Finally, we're making important strides on our commitment to deliver enhanced shareholder returns. In our upcoming general shareholders meeting in late March, our board of directors will propose an annual cash dividend close to 40% higher than the one announced in 2025. Complementing our cash dividend and subject to annual approval by shareholders and other formalities, we will activate usage of our buyback program with the intent to buy back up to $500 million in shares over the next three years. I am proud of what we have accomplished so far and expect even better results in 2026, supported by improved market demand, operating leverage available to us in most markets, and continued cost and efficiency measures. In EarthMX Day on February 26, we will dive into more detail on what you should expect from us in future years. With momentum building in the second half on recovery in Mexico and solid results from EMEA, full-year consolidated sales and EBITDA rebounded. Indeed, Fourth quarter sales and EBITDA increased by a double-digit rate supported by project cutting edge savings and Mexico. EBITDA margin was stable for the full year again with a significant expansion in the second half as cost efficiencies began to materialize. All regions reported flat improved EBITDA margin in 2025. I am most proud of our performance in free cash flow from operations, a key metric of our transformation. Excluding one-offs from severance payments and discontinued operations, free cash flow from operations grew by 50% to $1.4 billion. With a goal to achieve 50% conversion rate of EBITDA to operational free cash flow, We achieved 46% in 2025 after adjusting for one-off cash expenses. After incorporating growth capex, intangible assets, and other expenses, total adjusted free cash flow increased by more than $550 million in 2025 compared to prior year. These achievements underscore our focus on the levers we can control to ultimately deliver more cash to shareholders. For 2026, you should expect additional improvements on these metrics as we make further progress on our strategic initiatives. Finally, we recognized $538 million in goodwill impairment and asset write-down in 2025. Adjusting for this effect, net income would have increased by 41% to $1.5 billion. Consolidated cement and aggregates volumes in the fourth quarter grew by 1% and 2% respectively. The continued growth in EMEA cement volumes more than upset volume performance in the U.S. and the slight decline in Mexico. Demand conditions in Mexico improved, with average daily sales for our three core products growing on a sequential basis. Double-digit growth in aggregates volumes in the U.S. reflects the consolidation of Couch aggregates. As construction activity is expected to increase in all of our regions, we anticipate a better demand outlook in 2026. With our focus on operational efficiency, as well as available capacity, we are well positioned to capitalize on the strong operating leverage in our business as volumes begin to recover. Consolidated cement ready mix and aggregates prices increased by a low single digit in 2025, with positive performance in most markets. In Mexico, despite adverse demand conditions, and in South, Central America, and the Caribbean region, prices rose mid-single digits in 2025. As demand is expected to improve in all regions in 2026, we aim to continue recovering input cost inflation throughout our portfolio and see particular strength in continental Europe. The carbon border adjustment mechanism, along with a gradual phase-out of free CO2 allowances under the EU ETS, should support favorable pricing dynamics as the industry looks to recover the rising carbon emission costs. Full-year EBITDA performance was mainly explained by project cutting edge, cost efficiencies and higher prices. Despite ongoing cost inflation, we were able to reduce our total cost base by close to $100 million. Consolidated margins were supported by margin expansion of close to two percentage points in both Mexico and EMEA. Significant FX headwinds in the first half were almost fully upset by a reversal in the second half. In our urbanization solutions portfolio, higher EBITDA in the admixtures business in EMEA partially compensated for soft performance in Mexico and the US. 2025 marked a year of profound transformation for Themex, centered on achieving operational excellence and delivering shareholder return. To that end, we defined a set of strategic priorities focused on enhancing profitability, increasing free cash flow conversion, improving operational efficiency, and ensuring returns above our cost of capital in every asset we manage. As I explained earlier, in 2025, we made significant progress on our plan. First, we expanded our cost reduction program project cutting edge to recurring savings of $400 million by 2027. Importantly, Half of this amount is related to overhead actions already taken in 2025. These actions should deliver additional savings of $125 million in 2026. The $200 million savings realized in 2025 drove a decline in cost of goods sold and operating expenses as a percentage of sales in most regions, with higher EBITDA margin across our portfolio. We introduced EBIT, free cash flow conversion, and a spread of ROIC over WAC as new performance metrics for our operations. We also advanced on the implementation of operating initiatives, such as the improvement in kiln efficiency in the U.S. and the optimization of fuel mix in Mexico. These efforts drove a 17% increase in EBITDA in the second half and a 25% jump in EBIT, a key metric of our transformation. With regard to free cash flow, we adjusted our maintenance capex spend and reviewed all projects under our growth capex pipeline. We conducted a detailed evaluation of every asset in our portfolio, defining a clear action plan for those underperforming assets. This plan is expected to positively contribute to our results in the future. And we also revamped our viable compensation plan effective January, to reflect these new metrics and to better align with long-term value creation and shareholder return. I am confident that as we continue working on our strategic plan, we will identify additional opportunities to further support margins while aiming to increase free cash flow conversion and return on capital. And now, back to you, Lucy.