Grupo Rotoplas S A B

Good morning and welcome to Grupo Rotoplas' results conference call. Please note that today's call is being recorded and all participants are currently in listen-only mode to prevent background noise. The host will open the floor for questions later. Today's discussion contains forward-looking statements. These statements are based on the environment as we currently see it and as such there may be certain risk and uncertainty associated with such statements. Please refer to our press release for more information on the specific risk factors that could cause actual results to differ materially. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, further events or otherwise. Please allow me to remind you that the company issued its earnings press release yesterday after market close. It can be found in the investors section of its website. Also, the presentation for the call and the webcast link are in the investors section. Today's call will be hosted by Mr. Carlos Rojas Aboumrad, Chief Executive Officer, and Mr. Andrés Pliego, Chief Financial Officer. I will now turn the call over to the speakers.

Good morning, everyone. Thank you for joining us. Let me start with what matters most about this quarter. We saw a meaningful improvement in our performance. Sales grew almost 10%, our fastest pace in several quarters. EBITDA grew 35%, with a margin of 13.2%, 250 basis points above last year. Our net result was practically a break-even and leverage came down to 2.2 times from 3.2 times a year ago. We did it in an environment that did not help. Resting costs stayed elevated, consumer confidence was low, and construction remained weak in Mexico and Argentina. These results did not come from a better market. They came from better decisions we have made over the past months and from how our teams executed them. There is a concept we have been discussing a lot inside the company. Ambidextrity. A company that wants to last for decades has to do two things at once. It has to exploit what it already knows how to do. Run the core better, faster, and with fewer errors. And it has to explore what it does not know yet. Place bets today that become tomorrow's growth. Neither one is enough alone. This quarter we saw progress on both fronts. The core business operated more efficiently, while new products and services we have developed over the past few years started to contribute more meaningfully to our results. Let me walk you through what we saw across our four strategic priorities. All of our regions grew this quarter. In Mexico, sales grew close to 5% and EBITDA margin expanded to 150 basis points to 18% in a market that remains weak with low customer confidence, lower construction, and heavy rains. What made the difference In Mexico and Central America, these new solutions already count for close to 8% of Grupo sales. Resting costs did weigh on our gross margin, which contracted 60 basis points. We managed pricing with agility and our expense discipline more than offset that effect. The diversification we have been building is now showing up in the numbers. The United States grew double digits and posted its sixth consecutive quarter of positive EBITDA, supported by a vertical-focused commercial strategy and stronger demand in water storage and in industrial and chemical applications. In other countries, performance was solid, led by Peru and Central America. In Argentina, the operational improvements we have been implementing were reflected in the water. Despite very low demand, EBITDA was at break-even, an improvement from the loss reported last year. This reflects the work we have done on pricing and efficiency rather than the recovery in the market. Water innovation and market disruption is where the work we have done over the past few years is most visible. Services grew 10% and EBITDA was positive 4 million compared to a loss of 63 million a year ago. BEVIA passed 208,000 active subscribers, adding more than 14,000 new subscribers in the quarter, with its unit economics improving. Our water treatment plant business grew in Mexico and Brazil. In Mexico, stricter water regulation is also creating demand for compliance solutions. These are recurring higher value businesses. They are the explorer side of the company becoming real. We treat technology as operational capability. Andrés Pliego Rivero Borell, Carlos Roberto Rojas Mota Velasco, José Luis Mantecón García, Mauricio Romero Orozco, José Luis Mantecón García, Mauricio Romero Orozco, A more integrated digital experience for our customers and stronger data and AI capabilities. These projects are progressing according to plan. For us, growth and impact go hand in hand. The more people we serve with water and sanitation solutions, the greater the impact we can create and the greater the value we bring to the markets and communities where we operate. A recent example is Rotogotas de Ayuda, our campaign that started in Quetzalan, Puebla, together with our ambassador, Luz Valdez. This is the first delivery we, in this first delivery, we supported Masehual Siwameh, an organization of indigenous women artisans, benefiting more than 100 families facing water vulnerability. Let me show you a short video.

No one lives without water. That's our blood.