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Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Guma's fourth quarter 2025 earnings conference call. During today's call, all parties will be in a listen only mode. Following the speaker's remarks, the conference will be open for questions. If you have a question, please press the star key followed by the number one on your touchstone phone. Please press star zero for operator assistance at any time. For participants using speaker equipment, it may be necessary to pick up your handset before making your selection. I would now like to turn the conference over to Mr. Adolfo Fritz, GRUMA's Investor Relations Officer, who will present earnings results. And then we will open up the Q&A session where Mr. Raul Cavazos, GRUMA's Chief Financial Officer and team, will be available to answer additional questions. I would now like to turn the conference over to Mr. Fritz, Investor Relations Officer. Please go ahead, sir.

Thank you.

Good morning and welcome to our fourth quarter 2025 conference call. We're pleased to have you on the line and thankful for the opportunity to share results with you. With me today, as always, I'm Mr. Raul Cavazos-Morales. I'm a CFO at Rogelio Sanchez Martinez. I'm a corporate finance VP. To start, we'll take a few minutes to discuss the highlights and results for the quarter, and then we'll open it up to any questions you may have. To start, we want to highlight the demand for tortilla worldwide remains strong due to its nutritious and healthy qualities. People continue to switch to lower-carb and lower-caloric diets to lead healthier lifestyles or to improve their medical condition. A testament to this is the success and resilience of Better For You products it's had in the U.S., which continue to perform very well during the fourth quarter of the year and the innovation that was introduced in the latter half of 2025 in Europe. In Asia and Oceania, operational leverage is improving as our plant enforcement increases production capabilities and the amount for our products keeps growing. Nonetheless, there are ongoing challenges in the environment that continue to impact our performance, namely the current immigration policy, consumer sentiment in the U.S., and its effects in the food service industry in particular, and the consumer industry overall. This continues to affect our food service channel as well. We're now seeing some positive signs of future recovery during 2026. With these fundamentals as background, we reported a 4% decline in tortilla volumes as a result of the performance of the food service channel in the U.S. In the cornflower business, Mexico continued to see solid demand in the fourth quarter, although it was a tough comparative base, which meant that absolute volume performance didn't reflect the demand we're seeing. Central America continued to deliver solid performance, introducing more innovation to the markets and meeting scoring demands. Corn flour volumes grew by 1% in the fourth quarter in line with the fundamentals I just mentioned. Overall, consolidated volumes remained flat in the fourth quarter while sales grew by 2%. This, however, was not enough to offset the rise in raw material costs, mainly at HINSA, our Mexican subsidiary, which led to a decrease of 5% in consolidated EBITDA and with an EBITDA margin compression of 130 basis points. Our balance sheet remains robust with working capital needs in line with expectations and a leverage ratio of 1.3 times of net debt to EBITDA. Our healthy cash flow generation has enabled us to issue a $100 million dividend and run a very attractive stock or purchase program given our current valuation levels. These two components were effectively giving approximately 5% of market cap in the form of total shareholder returns, and it is a practice we'll continue going forward. In terms of CapEx, we invested $74 million over the quarter, primarily allocated to equipment replacement in the U.S., maintenance and operational upgrades, particularly the HMSA, capacity expenses in Europe, and new production lines in China. Furthermore, we closed the year with $225 million in invested capital, which we will primarily use in the U.S., Europe, both for equipment replacements and upgrades in addition to maintenance work at HMSA and the construction of a new mill from work in Milo. In the U.S., as I alluded to a minute ago, consumer sentiment and the economy has not allowed for a clear recovery in the food service channel, which saw continued declines. Going forward, however, we do expect a gradual recovery by mid-year, which would help volumes in 2026. In the retail channel, we closed the year with a slightly more positive environment, with new strategies being implemented to better cope with the consumer selectivity, leading to a gradual recovery in market share. The exception, of course, is the Better For You category, which continues with its historic growth trends and has not been meaningfully impacted by the current environment, showcasing its sustainability during challenging times. A way we will adapt to this environment is by focusing on a strategy of selling more product label and discounted products, while at the same time increasing our value at SKUs, which, just like the Better For You product line, have proven to be resilient and have a healthy demand momentum. As leaders in the private label market in the U.S. with more than 60% market share, coupled with a positive evolution of our overall value-add SKUs, but better for you product in particular, we're confident that our strategy, once implemented, will deliver positive results. For the quarter, volumes decreased by 4% as a result of the food server dynamics I just mentioned, which in turn impacted sales by 5%. This led to a 7% contraction in EBITDA and a 40 basis point decline in EBITDA margin to 20.7%. In Mexico, overall top line generating fundamentals remain in place and with a positive outlook. Preference and demand for our products continues to show remarkable stability and a positive outlook for the year ahead. Raw materials continue to be under pressure from ongoing farmer demands in Mexico. However, this should be transitory nature of negotiations take place between this group and the government. As I mentioned a minute ago, we did have a tough comparison relative to 2024, but despite this, we were still able to finish the year at a similar level. Volumes grew flat and sales finished the year a slight 1% below the year prior, and EBITDA was impacted by 6% on the back of the corn cost dynamics I just mentioned. One thing to add, however, is that for the whole year, we did experience volume growth, which speaks about the positive demand I was referring to a minute ago. In Europe, our relentless focus on retail expansion has paid off. As of today, we have only expanded our retail presence across the continent, but we have also started to introduce value-added SKUs, which help optimize sales composition. As a combination of innovation, distribution, and expansion, and diversification, this subsidiary has been very successful in its endeavor to reach new levels of profitability with a balanced growth of revenues and volumes. As of today, we continue to see promising outlook for Europe as we keep our effective strategy in place and with more innovation coming in the pipeline. This division reached volume growth of 1% during the quarter and 14% growth in sales. Higher costs on raw material in addition to elevated logistic costs partially diluted this benefit as EBITDA grew by 3%, but nonetheless resulted in a 90 basis point margin contraction. Further, Talking about innovation, Central America also experiences similar effects and results after introducing new innovative corn flour products and distributing them across target markets. As strong demand continues to rise, as you are aware, we started construction of a new mill in 2025, which has been operating since the start of February and will provide approximately 10% additional capacity in the subsidiary. Just as is the case in Europe, we see the positive evolution of this division to be ongoing. as demand keeps growing and we could diversify our product offerings in different markets. During the quarter, this led to a positive performance both in volumes and sales, growing by 5% and 2% prospectively. On the cost side, although there was an inflationary effect on cost of goods sold, our rise in distribution costs partially impacted the positive revenue generation. EBITDA grew by 26%, and EBITDA margin expanded by 400 basis points to 21.2%. Asian Oceania closed the year on a very solid note as well. The last two months of the year were particularly beneficial for the operation overall and gave footing for a strong start of the year. Here, too, we built new production capacity in China, which just started production in 3Q25. This will help EBITDA generation by having more efficient operational leverage and allowing the subsidiary to operate almost at normalized levels. Still, this dragging effect volume grew by 3%, while sales grew by 8%. Despite a rise in raw material costs, just as in other subsidiaries, EBITDA grew by 28%, reaching an EBITDA margin of 14.3%, representing a 220 basis point expansion. As well as, without a doubt, a year with a set of challenges, some of which were expected and some others presented a much higher intensity than previously thought. We ended the year, however, on a much more positive note than how we ended 2024 going into 2025. On the one hand, we expect a much lower impact on food service during the year, and on the other, our now proactive focus on market share recovery and protection should add to our brand recognition in the market to create positive momentum towards a gradual recovery of our regular standards of performance. Not only for us, but also for the category as a whole. Moving on to the guidance we want to provide for the market, we've prepared according to the carryover challenges and countermeasures we're taking in addition to opportunities we see in the upcoming year. In the U.S., we're expecting flat to fractional growth in volumes as we ward off the lackluster consumer sentiment with promotions and discounts on those items that are feeling the most pressure. These same discounts make us believe we can also see flat to a fractional decline in revenues in the subsidiary for 2026. The effects of discounts at this point are conceptually known. What is unknown, however, is the magnitude of these effects or those of the discounts that foster volume growth. As such, we're assuming a low single-digit contraction in EBITDA, which could lead to a 50 to 70 basis point contraction in EBITDA margins. In Mexico, we're expecting single-digit growth in volumes, pretty much in line with our historical performance, while sales should mirror the single-digit growth. As I mentioned a minute ago, there are challenges around the sale of corn locally, which we're mitigating, but should the price of corn still be at current levels, that could impact our EBITDA generation, just as it did during the third or fourth quarter of the year. This is why we're guiding on a 10 to 50 basis point contraction in margins for this subsidiary. In Europe, we're expecting to continue to deliver results with a low single-digit growth in volumes and a high single-digit growth in sales as we intensify our efforts to have a much better sales mix across the continent. With these numbers, we're assuming healthy EBITDA growth with 70 to 100 basis point expansion in EBITDA margins. Central America is also bound to continue its excellent performance with volumes expected to grow in high single digits while sales in low single digits, which should also create a positive expansion in EBITDA. EBITDA margins, therefore, should increase from 20 to 50 basis points. Finally, in Asia and Oceania, we're still counting on China's commercial activity to be volatile throughout the year, despite the signs of recovery we saw in the latter half of 2025. We're also still assuming higher costs given the gradually increasing production from the new client, Foshan, which will partially undermine EBITDA growth. For this subsidiary, we're assuming mid-single-digit growth in volumes accompanied by high single-digit growth in sales. Given the temporary pressure on the cost structure, however, EBITDA growth will be lower than sales growth yielding potentially a flat margin to a 50 basis point contraction. On a consolidated level, these dynamics will promote flat to fractional volume growth Sales should grow in low single digits, while the cost dynamics in Mexico, coupled with the consumer sentiment challenges in the U.S., make us assume that margins could contract around 40 to 60 basis points. For CapEx, this year we're estimated approximately $220 million. As I mentioned throughout this call, we're cautious given the circumstances around the main market, but at the same time optimistic about the trends we saw during the last few months of the year. We're entering the 2026 with a positive note and excited about the implementation of our adaptive strategy, which should help us structure the way we grow differently, but in a more balanced manner and make us even more resilient in the years to come. With that, I'd like to open up the call for questions, please. Could you help us with that, operator?

Thank you. We will now begin the question and answer session. As a reminder, if you have a question, please press the star key followed by the number one on your touchstone phone. If you would like to withdraw your question, press the star key followed by the number 2. If you're using speaker equipment, you will need to lift the handset before making your selection. Our first question is from the line of Fernando Oliveira with Bank of America. Please state your question.

Hi. Good morning, everyone, and thanks for taking the question. Adolfo, very quickly, could you repeat the guidance for the U.S.? ? before asking my questions?

Sure, no problem. So, for the U.S., in terms of volumes, it's flat to fractional growth, sales flat to fractional decline, and EBITDA margin would be from 50 to some basis points contraction.

Ah, great. Perfect. Thank you. Now, maybe I would like to, and to explore or if you can give us more color about the market share performance during during the year and and i mean it seems that you lost some market share right so how are you thinking for for this year i mean how much of the market share that you lost last year do you expect to recover no any sense on that would be very helpful and my this in the us and also in the us How are you thinking about your pricing strategy for the year, you know, given the weak demand that you face? Thank you.

Thank you for your question, Fernando. Well, in terms of market share, as you very well mentioned, we did lose some market share at the beginning of the year. Thankfully, as I was alluding to during the opening remarks, We saw the landscape improving overall. We saw a lot more resiliency in these past few months of the year, of last year, I should say. And because of that, we ended up not regaining everything that we've lost so far. We lost around 150 basis points. But we gained approximately 25 basis points or 30 basis points out of that already. Currently, we are, we have a market share approximately 59.3. So, we're still a bit behind of where we were before prior to all of this happening, prior to the consumer sentiment being as low as it is today. But I would say that based on the market dynamics that we ended the year with and what we're seeing right now at the beginning of the year, I think that we're in a good spot to keep improving market share going forward. Again, we first need to determine how in our strategy that we're adopting will impact the market, how that will improve our different measurements and our different key measurements in terms of performance. And based on that, keep adjusting so that we can progressively gain market share and improve our financial performance overall. In regards to the pricing strategy, we don't, I mean, right now we're just continuing with the levels that we have today. We don't see right now the necessity to start thinking about that just yet. We're focused exclusively on adjusting the strategy that we have in place and let that run for a while.

Okay, perfect.

Thank you, Adolfo. Thank you.

Okay, and your next question comes from Enrique Morello with Morgan Stanley. Please state your question.

Hi, everyone. Hi, Adolfo. Thank you for taking my question. My question will be on Mexico. Results for the year were quite stable, right, and we understand the momentary higher raw material costs that you're facing there. But maybe looking more in the medium to the long term, when we think about the agreement announced with the CNA a couple of weeks ago on the changes on your contracts with the customers. So, just if you could touch and explore a bit on the changes in the contracts and how does that affect your strategy, your pricing in the region. And if that has any immediate financial impact or impact on the guidance you just provided as well, it would be very helpful. Thank you.

Sure. Thank you for your question. No problem. So in summary or to a 50,000-foot basis, the changes incorporate just having one type of contract in place in the marketplace for these projects. uh with the machinery that's one two um it involves regarding a lot more information to our clients so that promotes even more transparency um and the clients know what they're entitled and not entitled to do within these contracts um and i would say that that would those two would be the main changes um obviously there's more information that I was referring to a minute ago include, for example, issuing financial statements on a regular basis to our clients and just having a more formal, more transparent approach to this contract that we will have in place. In terms of financial impacts, we still have to determine that. The guidance does provide whatever impact there could be going forward. but if there was if there is an impact it should be just a one-time extraordinary item or extraordinary charge um at some point and in the first quarter or second or second quarter of the year depending on on when that happens uh but as the business as a whole going forward it's not changing businesses as usual and we don't see any any other meaningful change in that regard And obviously, whatever long-time charge event occurs, that won't have an impact on EBITDA, according to our projections. So it's not really something that we think the market should be too concerned about.

No, that's super clear, Adolfo. Thank you very much.

Thank you.

Your next question comes from Antonio Hernandez with Actinware. Please state your question.

Good morning. Thanks for taking a question. Just a quick one regarding food service. You mentioned that by mid-year, you expect U.S. volumes in food service to improve. Is there any leading indicator, or what are your thoughts about it, and what is the base of that assumption? And also in terms of food service, is this more of a regional issue or specific to some channels, or is this a problem overall throughout the country? Thanks.

Thank you for your question. There's definitely a contrary white problem. I don't know if you follow specifically the indicators of consumer sentiment, but consumer sentiment in the US is at historic lows, although thankfully improving in the last measurement. So, I would say that consumer sentiment improving signals us that the activity in the food service market overall is improving parallelly to this effect, and that is why we are projecting an improvement of food service, or at least a recovery of food service, I should say, by mid-year. We are following, obviously, those indicators pretty closely, and we've been following them for a long time, so that change in behavior is huge for us and it's a good indicator for this effect um that will give us a good solid footing for the rest of the operation because as you know food service has been the one channel um that has been dragging on the performance of of retail so by just taking away the variable off the table uh by having that being stable to being into recovering That gives us, you know, a much better outlook for this year than the one that we had starting in 2025. Okay.

Thanks for the call. Yep. Thank you.

And your next question comes from Alvaro Garcia with BTG Pactual. Please say your question.

Hey, Alvaro. How are you? Thanks for the space for questions. I have two. One, I was wondering if you could clarify your comments on sort of discounts and pricing you made alongside the guidance for the U.S. I think you kind of said that you were going to tone down discounts into 2026, but I just wanted to clarify that. That's my first question.

Yeah, hi, Alberto. Discounts are part of the strategy. Discounts and promotions are part of the strategy. That's why we feel that it is a, you know, potentially sales should be flat to have or experience a fractional decline because of these discounts and promotions. However, those would be only in those items that are experiencing the most pressure at this point in time. it wouldn't be on other SKUs that have been growing in line with their historic trends. So we have been identifying these products and these SKUs, and we will incorporate or we will put discounts on those to carry out our strategy during the year. Hopefully that will yield the results we want in terms of volumes, but it remains to be seen whether that will be sufficient or not.

Great. And then I know you've sort of emphasized the food service side of the business, but I was wondering if you could maybe talk about, you know, and I get that in the context of tortilla specifically. I was wondering if you could talk about your corn flour business in the U.S. and maybe the outlook for that in sort of a lower price point environment, how you're seeing that business evolve into 26. Thank you.

Sure. In terms of corn flour in the U.S., we see that ramping up. We had some seasonality effects at the end of the year as it normally happens. But overall, the demand for corn flour as a commodity product is still there. Demand is still there growing. And we don't see a problem in that regard. There has been a slowdown, if you will, partial slowdown, not only because of seasonality, but also because of how the tortilla market has been growing, which has been slower than normal. This is totally as a result of the current environment in the U.S. and because of the consumer sentiment in the U.S., So for us, how we take this is that that will gradually be improving as the sentiment improves. But on the other side of things, in terms of the use of corn flour for other purposes outside of tortilla, that's still in very good shape and we shouldn't see any slowdown at least as of now in that regard.

Great. And just one last one on that. You mentioned this 5% yield in the $100 million dividend. I think it would imply more buybacks relative to 2025 and 2026 to get to that 5% yield. Does that make sense? Yeah, exactly.

Yes, it definitely makes sense. We are, you know, we're very proactive in that regard. As you know, we've been increasing the activity in the purchase program year over year. This year will not be the exception. So we'll increase the activity there and the amount involved as well. So hopefully that will, you know, help us get to that 5% for shoveled returns.

Great. Awesome. Thank you very much.

Thank you.

And your next question comes from Ulises Argote with Santander.

Please state your question. Thanks so much for the space for questions. A couple from my side. So the first one just with the strategy there that you mentioned in your remarks in the U.S. How should we think about the better for you category there in terms of volumes and sales? Any kind of changes from the trend that we have been seeing in recent years or a bit more of kind of those stable trends? And the other one, and this is more just to confirm, but with that announcement that you made a couple of weeks ago, you closed all outstanding issues there with the antitrust regulator, or is there anything there outstanding? And then nothing left there on the potential investments from clients and all of that, that was kind of floating out there at one point, correct? Just to make sure on this .

No, thank you for your question. No, all items have been closed. There are no pending items with them. Like I said, you know, as an answer to the previous question, I mean, business as usual for us going forward. We'll make the changes that were asked from us in terms of the contract for the machinery involved in the sales. But other than that, business as usual, no pending items. So we can consider the case as closed, if you will. In terms of your first question, can you repeat it? Because you kind of cut off on my end. I'm sorry about that.

Oh, yeah, yeah, of course. Just to understand there, if in the strategy that you were mentioning in your remarks related to the U.S., is there any kind of change for the expectations of volumes and sales for the better for you category, kind of the composition thereof within the different categories?

No, I mean, better for you – well, there is certainly going to be a change in composition. That's why we're expecting a 50 to 70 basis point contraction in – in the margin, and that is because as we implement the discounts and promotions and we also increase production and product label, that will dilute somewhat the margins, and that will change the composition. However, looking at Better For You and the value at products that we have, they will continue growing the way they've been growing. They haven't been impacted by all this at all, thankfully. And we're expecting their growth to continue as they have been growing. I mean, we don't see challenges in that respect. Right now, it's just a matter of restructuring our production and the way we give discounts on those items that need the discounts so that we have a new composition and we may incentivize volume growth. Obviously, the growth that we may have um um in terms of or in terms of sales if they end up being on a flood instead of experiencing a decline would be a result of the higher volume created and also because of the mix if the mix keeps growing or even grows more than we expect so that is all yet to be seen as we operate in this first quarter of the year but uh Like I said, we started the year in a much better footing compared to how we started the year in 2025. Perfect.

Great. That's very clear. Thank you very much.

Thank you for your question.

Thank you. And a reminder to the audience, to ask a question, press star 1 on your phone. Your next question comes from Fraulein Mendez with JP Morgan. Please, your question.

Hello, James. Thank you very much for taking my question. I was wondering if you could dig a little bit into competitive dynamics in the U.S. If you are seeing some of the competitors backing off from the aggressive pricing strategy that was held last year, how is that going through the early start of the year? if you can follow up also on your hedging strategy for 2036 and the FX assumptions that are implemented in your guidance. Thank you.

Well, thank you for your question. In terms of competitive dynamics, just as we saw the consumer sentiment have been better are behaving a little bit better in the last couple of months and how we saw an improvement in the consumer sentiment overall. We also saw a mild slowdown in terms of the competitive landscape overall. Things are apparently turning back to normal, quote-unquote, normal being prior to 2024, I would say. We have to see if this is a trend or not. So far, it has been a trend. Things are still, I would say, challenging out of purely, I would say, economic conditions in the U.S. rather than a competitive landscape as they were coupled with each other all throughout 2025. At least so far in the year and the last few months of last year, We saw them decoupling, and we saw both the consumer sentiment improving and the competitive landscape also improving. So we can only hope that this is a trend and that it will get better as we start implementing our strategy during the year. In terms of the hedging that we have in place, like we always do, we try to – hedge for the year, which we have for 2026. So we just, we have our inventory set in that regard. And that's all the detail that I can share right now.

On the FX, Adolfo, on the guidance, what are you assuming on the MXN, for example?

No, we're not assuming... at any point. It's all dollar-based.

Okay. Thank you.

Thank you. And your next question comes from Federico Galassi with TRG. Please, to your question.

Thank you, guys, for taking my question. Some of the question was answered before, but the question is in terms of revenues in U.S. in particular. How do you see the – how is the relationship and negotiation with the supermarket for retailers in particular in good for you? Are you getting market share there? How is the structure? And the second one is just to confirmation, when you talk about the contraction in margins, is more related to all this change or are you having some pressure from raw material, CNA, et cetera? Thank you.

Thanks for asking the question. In regards to the first question, better for you and how it's been evolving with our clients, it's been great really. We've asked actually to have more shelf space for Valiant products with our clients, so that will also happen. Mind you, those efforts, obviously, right now, how things look, are not going to be on the scale that probably the promotions and the discounts and the bigger production of private label will be. But still, it's something that talks about the positive evolution of Better For You with our clients and the potential it has to keep on growing. In terms of the market share that we have there, we have approximately – 55% to 56% market share currently in terms of Better For You. So I would say, I would dare say that Better For You could be isolated from everything else that's been happening in the U.S., fortunately. And that goes in hand to your other question in terms of the contraction and margins. That's exclusively focused on the dynamics of discounts and the dynamics of the change in mix because of the higher volume, potential higher volume produced out of those discounts and out of higher production. So, we haven't, we don't see, at least right now, challenges in terms of SG&A or raw materials outside from the temporary ones that are taking place in Mexico, which already, accounted for in our guidance.

Thank you. No, thank you for your question.

Thank you, and there are no further questions at this time, so I'll hand the floor back to Mr. Fritz for closing comments.

Thank you, as always, for being part of our call, and we look forward to seeing you in future market events. Thank you very much.

Thank you, and with that, we conclude today's call. This concludes GRUMA's fourth quarter 2025 earnings conference call. Thank you for your participation. You may now disconnect.