Grupo Traxión, S.A.B. de C.V.

Greetings and welcome to , fourth quarter 25 and 2025 conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to Abby Lashane, Executive President And co-founder, thank you. You may begin.

Thank you. Welcome, everyone. There are many positive matters to discuss despite the challenging and complex year that ended. Perhaps the most important milestone of the year is the acquisition of Solistica. This is a tremendously accreted transaction that has transformed the asset-light profile of the company and is also remarkably strategic as we set even higher the barriers of entry to the logistics and transportation sector in Mexico. and traction further emphasizes its leadership in the industry. The integration was fully completed within 2025, and synergy started to become apparent in operations, finance, and most importantly, in the commercial front. Moreover, as you know, we took debt to pay for the acquisition, which has proven to be effective as our leverage ratio ended the year exactly at the same level it was just before the transaction took place. that we were able to create additional value as we integrated such a successful company into our platform. Just to put some context, this is exactly the level at which we invest for organic growth below four times EBITDA. In summary, we bought a large successful company which has proven to be a perfect fit, perhaps the best in our history. Moving on, we achieved our guidance figures and did so taking care of operating cash flows while maintaining a healthy leverage ratio well within our comfort zone. As usual, we released our guidance for 2026, which considers a growth of approximately 10% in both revenue and EBITDA, with a capex of around 2.4 billion pesos. This basically means two things. First, there is a small margin expansion implicit in those figures, which could lead to lower leverage. And second, while the absolute number of capex might seem high, It is not when we look at it as a percentage of revenue, which is a significantly lower figure compared to other years, especially 2023 and 2024. We are starting to see stabilization in our business, and many investment and expansion decisions that were on standby are materializing. We definitely see a better outlook this year compared to 2025. Nonetheless, we will be conservative and proceed with caution this year, reducing capex and preserving cash flows. Finally, please be advised that since the asset-like component will become increasingly more relevant in 2026, accounting for a majority portion of revenues, EBITDA margin should be around 16% moving forward. This is the new standard for our margin from now on. Even though this new level is lower compared to past years, there are also significantly lower CAPEX requirements to grow with a higher contribution to profitability. With that, I end my remarks today. I will now hand over to the others for a deeper dive in operating and financial matters.

Thank you, Avi. Good morning, everyone. I will now walk you through the most relevant operating details. The cargo division continued with disruptions in some circuits. Such phenomenon has been caused mainly by instability in the demand driven by peaks and valleys in both cross-border and regular services. This resulted in a 7.9% decrease in kilometer volume and 7.5% in revenue per kilometer. In the period, however, for 2025, we experienced an overall increase in revenue per kilometer with 8.2% less volume with some efficiency in costs. Moving on to mobility of people, we posted a smaller growth rate that was planned like that. As you know, for 2025, we decided to be more conservative towards expansion in this division. We carried out a plan to increase our clients' profitability And for the first time, there is a fleet renewal program in place in this segment. This basically means that we are increasing the asset utilization rate to reduce CAPEX requirements. All that resulted in a marginal growth in the average fleet, a reduction in kilometer volume, and a niche moderate single-digit growth in virtually all relevant metrics, despite the challenges and complexities we experienced throughout the year. Moreover, such efforts have started to pay off and we will see results as soon as the first quarter of this year. We continue to implement and upgrade our proprietary technologies, increase the utilization of artificial intelligence, and broaden several best practices guidelines that have resulted in a stronger commercial and human capital backbone. Finally, in the logistics and technology division, we experienced greater than usual revenue this quarter. Traction participated in the large vaccine distribution business in November and December, which generated more than 2 billion pesos of revenue in the period. Despite having a lower than usual margin, it was a profitable business because of its zero capex nature and is proof of the company's large operating capabilities and highly specialized service. As you can see, even though there were disruptions and challenges this year, Direction was able to deliver once again. Having said that, I will now hand over to Wolf.

Thank you. On the financial side, there are several financial metrics worth elaborating. First, one of the most relevant figures this period is operating cash flow. It more than doubled during the quarter, mainly because of much better working capital management. For the year, such metric posted a 33.2% growth compared to 2024. Then we posted a 2.2 times leverage ratio, which as Avi just mentioned, is especially relevant since it is basically the same ratio we reported just before acquiring Solistica, which translates into a very accretive transaction, as we typically deploy organic capex at such levels. Since we took debt to pay for a great portion of Solistica, it is important to bear in mind that such amount was fully reflected in the balance and in the cash flow of the company, with the caveat that Solistica only reflected six months of results in 2025. So cash flows should look better if we look at a performer with 12-month basis. Moving on, I want to comment on net income as the annual figure came down more than 24% than in 2024 and was mainly driven by higher interest expense due to investments executed during the year that will reflect the full benefit in 2026 together with a negative effect of foreign exchange and tariff uncertainty. resulting in fluctuation in customer demand and volumes, both in cross-border circuits and regular services, which led to less kilometers driven and lower prices, mainly impacting temporarily our mobility of cargo and logistics businesses. Despite this, both our gross profit and operating income remain virtually unchanged, which is good news. In terms of CapEx, our guidance for this year is 2.4 billion pesos, with approximately 60% allocated to fleet renovations in both cargo and mobility, 25% for organic growth, and the rest is for technology and innovation. Please bear in mind that this absolute figure is significantly lower than in other years, as a percentage of revenue. Also, we expect the beta margin for 2026 to be around 16%, which will be mainly driven by a higher contribution of the asset-like business lines to consolidated revenues. All that is part of our strategy to proceed with caution this year, privilege cash flows, and organic growth mainly through our asset-light business and take more care of leverage as we have some initiatives this year to improve company profitability. Thanks for your attention. I will now hand over to Tonya.

Thank you, Wolf. I will now walk you through some relevant ESG milestones and other tech-related developments. For the second year in a row, traction was included in the Global Sustainability Yearbook of S&P, which is one of the most prestigious and comprehensive rankings in terms of sustainability. This achievement represents the most compelling proof of the company's commitment to best ESG practices and of the transparency of our communications and disclosure. This inclusion gains a special relevance if we consider that there are more than 9,200 companies from 59 industries assessed globally, and only 848 were selected as part of this year's edition. which positions Traction as one of only two Mexican companies of the transportation and infrastructure sectors to be included. Moving on, during the fourth quarter, Traction received its corporate sustainability assessment ranking for 2025, which came in eight points higher compared to 2024, and places Traction within the top four percentile and in the 11th place of best-ranked companies in the industry globally and number one in Mexico in the sector. This assessment allows an accurate comparison of the performance of all companies within a broad range of ESG-related criteria, is available to an ever-growing universe of investors, and represents the most renowned sustainability database within global indices. Finally, another important sustainability milestone is that this period we incorporated data regarding renewable electricity generation from solar panels installed in our facilities. This is indeed very good news, and a tremendous step in terms of emissions reduction and energy efficiency as we continue to expand our logistics footprint and presence. Thanks for your attention. With this, we conclude management remarks and open the floor to Q&A.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Your first question comes from Pablo Montsivais with Barclays. Please say your question.

Hi. Thanks for taking my question. I have two questions. The first one is if you can provide more detail on increasing revenues in the logistics sector We saw that you project in the farmer sector, but would love to have more visibility on that. And my second question is on your guidance. If we account for the contribution of Solistica for 2026, and we compare your guidance for 2025, it seems that implicitly cargo revenues are still negative, or that cargo will have a tough year in 2026. What's going on in that business if you could provide more color would be very helpful.

Thank you. Hi, Pablo. This is Tony. Good morning. Can you repeat the first question? It wasn't very clear. We didn't catch it well.

On the increasing revenues in the logistics sector and the project that you have on the pharma side.

Thank you. It was a vaccine distribution operation. We were able to participate mainly because of the out-large operating infrastructure that we had on the high-quality service in the Parma Division. It was the first time for us. It was a particular event, and we believe that we delivered a better-than-expected service, and we feel very confident that there is a high chance of repeating it this year. However, that business in particular is not included in the guidance.

Hi, Pablo.

How are you? Good morning. And regarding your second question in terms of the guidance, basically, as Tony just mentioned, we didn't include in the guidance to repeat this particular project, even though we think that that could be repeated by the end of maybe 2026. So, if you consider that, let's say, without putting in the base of 2025, basically, the growth that we are projecting for 2026 in terms of revenue, it will be close to 17%. So that's what's basically moved the company back to the margins and back to the regular track that we had in the previous years. Perfect.

Thank you. Thank you, Pablo.

Your next question comes from Martin Lara with Miranda Global Research. Please say your question.

Hi. Good morning. Thank you for the call. What can we expect in terms of EBITDA margins in mobility of cargo and mobility of personnel this year? And could you please provide the capex breakdown between maintenance and growth? And how do you see the fleet performing in cargo and personnel?

Hi, Martin. How are you? Regarding your first question considering the margins in the cargo and mobility of people divisions, I would say basically we are looking for something similar. As you can see, usually in the mobility of personnel division, we are something close to a 26% margin. And regarding the cargo division, it was at the end something between 18 and 19%. So we are expecting something close to that considering the effects rate as of now. and even though it could be better maybe in the second half of this year in particular. And regarding the details of the CAPEX for 2026, it is basically the renewal CAPEX will be almost 50% of the CAPEX that we are expecting. We're going to be going a little bit on the mobility of people division, basically, and renewal CAPEX only for the rest of the asset-heavy divisions.

Okay, and what can we expect in terms of free cash flow generation?

Considering in particular this guidance, and as you can see also in 2025, we're privileging more the cash flow generation. As you can see, in particular for 2025, the operating cash flow, pump up over 30% for the previous year. So this is part of the strategy of the company to privilege the cash flows and even though to get a free cash flow in an organic way for 2026.

Okay. Thank you very much.

Thank you, Martin.

Your next question comes from Enrique Cantu with GBM. Please state your question.

Hi, everyone. Thank you for taking my question and the results.

So, as part of your evaluation of potential M&A opportunities in the U.S., could you elaborate on the type of assets you are currently assessing? And additionally, how should we think about the expected timing for a potential transaction?

Hi, Enrique. Thank you for your question. Good morning. What we're looking at for M&A in the U.S. is we want to participate in the cross-border business, which we believe is a very attractive market currently. And that's where we are focusing our efforts.

Okay, perfect. And then do you have an expected timing for this transaction?

No, we don't have anything defined yet. We have some targets. We've been working, analyzing, but we don't have anything definite as of today.

Perfect. Thank you.

Thank you. Just a reminder, to ask a question, press star 1 on your phone. Your next question comes from Arturo Leal with Inverco Asset Management. Please do your question.

Hi. Good morning, everyone. Arturo Leal. Thank you for taking my question. My first question relates to shareholder valuation. While we recognize the company has been executing on its growth strategies, remains focused on MMA, the stock price has declined by nearly 70%, which appears to reflect meaningful investor concern. Could you elaborate on what you attribute this decline to, and more importantly, what concrete actions have been taken or plan to enhance shareholder value? At what point do you expect balance acquisition driven growth with a clearer and more measurable return framework for investors? And secondly, regarding foreign exchange dynamics with the passive strengthening relatively to the U.S. dollar, how does that impact to the company, positively or negatively? Thank you. Hi, Arturo. This is Tonio. Thanks for your question this morning. I'm going to answer your second question first. The foreign exchange has two effects basically in the company. The first one is that a portion of the trucking revenues are denominated in U.S. dollars, basically the portion that we do in cross-border services. That has an impact and has had an impact historically with a stronger vessel. What we are looking at this year to offset that negative effect is that we are adjusting the prices to reflect a more accurate exchange rate, which is on the 17.2 range. And the second effect of foreign exchange in the company is that we hold a position in U.S. dollars. And when we do the mark-to-market, we record either a profit or a loss, depending on what's happening on the markets. And regarding your first question, We are very worried about the share price as well as you, and that's a matter that is of utmost importance for the company. One of the things that we are doing to revert that situation first is obviously improve the results of the company for 2026. In 2025, we face a very challenging year, but we were able to protect the balance to privilege cash flows. If you see, for example, operating cash flow in the quarter, in the quarter, it went up more than 100%, and in the year, more than 33%. That's a very, very, very meaningful milestone for the company. In 2026, we're going to reduce capex. We are going to be more conservative towards investments in growth, and that naturally privileges cash flows and protects the balance. We are expecting a normalization, stabilization, and then a recovery this year. And then we are always striving to be close to our investors, to our research analysts, to be able to respond quickly to their concerns so that they have information to make their decisions. So those are the actions that we're taking towards more value creation for shareholders.

Thank you.

Just a follow-up, if I could. Do you guys expect to do any share buybacks at this price, considering the price and the value of the company, or maybe distributing some dividends to investors, or the sole focus is to continue growing the company and maybe paying back some debt? Thank you, Arturo. Yes, we have been doing some buybacks at this level. We think it's a very strong message to the market that they see us participating at this level. We think it's a ridiculously cheap evaluation right now. And in terms of dividends, we are not looking at that right now. The company is in a growth mode, and we are using all the cash. that we generate to grow and to be able to maintain the operations of the company. Thank you, Antonio, and thanks to all the industrial relations team. I know that you have been really communicative, so thank you and keep up the good work.

Your next question comes from Daniel Rojas with Bank of America. Please state your question.

Good morning, gentlemen. Thank you for taking my question. The first one is on your costs. Thank you for breaking down the items in your press release. I was seeing that you had an increase of around 124 to 125% due to facilities . I was hoping that you would, as you know, comment on that and drill down on what's happening there and if that will normalize going forward and then your other cost items, what we should expect going forward. And my second question is regarding the cargo division. You gave us guidance. Thank you for that, but I was hoping to get some color on what you expect as we move into the second half of the year and maybe we get a resolution of the USMCA. Are you seeing your clients getting prepared for that or is it too early? I'm trying to think of 2027 and it should be a recovery year or should the carbon emission numbers be more normalized to what we see in 2026? Thank you.

Hi, Daniel. How are you? This is Wolf. Good morning. So, regarding the cost level, basically, it was, let's say, affected by two particular things. First one was the particular project that Tony already mentioned about the pharma vertical. So, basically, that's one of them. And the rest of that, in terms of the facilities, basically, it's the inclusion of Solistica into the numbers of traction, and obviously, all of that related cost to the third-party unit that we use basically in the brokerage business. So that's basically the two main things that pick up the cost. So one, as of now, was a particular event in the fourth quarter that could be, again, repeated by the end of 2026. It's something that it comes with a system of that business. And the rest is basically the growth considering more in the asset-like business and expansion of the brokerage business. And regarding the second question, considering on the cargo side, basically, we're looking at a better economic for, let's say, for the second half of 2026. We're starting to see some clients that basically in 2025 postponed their investment decisions in several industries considering the tariff environment. And the thought that we have with them is basically that they're taking some of that decisions currently. So, we expect a stabilization in that demand, and obviously, with that, we can stabilize also the prices into that particular division. So, regarding that question, we're seeing a much better second half of the year in the cargo division.

Thank you.

Thank you. Your next question comes from Andres Radin with the Roja and group. Please say your question.

Hi, guys. Thanks for taking the question. Regarding the pharma project, could you repeat if it's a one-time thing, can we expect it for the next year? And also, if you could repeat if you made any adjustments in the guidance regarding this project.

Thank you. Hi, Andres. How are you?

This particular project, it comes with a seasonality of that particular need. So we operate for the first time of the company in the fourth quarter of 2025, and we are not projecting in our guidance for 2026, even though we think that with the work that we did in that particular project and it was successful, I think maybe we could be doing it again by the end of 2026, even though we didn't consider in this guidance.

Okay, you're right. Thank you.

Your next question comes from Federico Galassi with the Roe Hatten Group. Please say your question.

Hello, guys. Thank you for taking my question.

Two questions. The first one is a follow-up question. The question is, if I do the math for this particular project, in pharma, the margin of these pieces was almost flat, almost zero. It is okay. And if you can give you some more information about that. Thank you. This is the first question.

Hi, Federico. How are you?

So, as Tonya mentioned in particular and Rodo, this project, it was the first time that we executed in Tracción. The margin of this business was less than 5% with zero capex. So, it was basically all very for the company, even though we experienced the first time executing this kind of project, basically based on the infrastructure of the company. So if we are able, obviously, to repeat that by the end of 2026, hopefully we can get much better economics on that project. Okay, okay. It's a project that you can give you more revenues in the future. Thank you. And the second one, but the interest payments continue to be a big portion of the EBIT. How's your view for that for this year, in particular in the labor side? Thank you. So, regarding the interest expense for 2026, there's two different things that will be important to mention. The first one, it's obviously that the rates come down during the last 12 months. So, that will be basically affecting positive, let's say, the expenses in terms of interest. And the second one, as we mentioned also, putting less capex for this year. So, with that, we are delivering the company more than it was on average on 2025. So, with those two things, we're experiencing less interest expense for 2026. And that's basically what we are projecting as also maybe, you know, last week, we issued a new bond also in the market, so we continue looking for different strategies to make more efficiencies also in the debt side. You continue after Solitica with your net debt target for the year? More close to two times.

Okay, perfect. Thank you so much. Thank you, Federico.

Thank you. This now concludes our question and answer session. I would like to turn the floor back over to Abhi Lishain, Executive President and Co-Founder, for closing comments.

We are looking to a double-digit growth in the load teams for this year with much less capex while privileging cash flow generation and preserving the balance. The market is starting to stabilize. There are many clients across different sectors that put off their investment or expansion decisions in 2025 that are currently making such decisions and Mexico is still a very competitive destination for many industries. We are confident that 2026 will be a normalization and recovery year. Thanks for your attention and have an excellent weekend.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines and have a wonderful day.