Golden Cariboo Resources Ltd.

Good morning and welcome to GCC's third quarter 2025 Earnings Results Conference call. Before we begin, I would like to remind you that this call is being recorded and that all participants will be in listen-only mode. Please also note that a slide presentation accompanies today's webcast. The link is available on the company's IR website at gcc.com. I would now like to turn the call over to Sohori Ogushi, Head of Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining. With me today are Enrique Escalante, our Chief Executive Officer, and Mike Trecker, Chief Financial Officer. The earnings release detailing this quarter's results was released yesterday after market close and is available on GCC's IR website. This conference call is also being broadcast live within the investor section at gcc.com. and both the webcast replay of the call and transcript will be available on the same site approximately one hour after the end of today's call. Before we begin, I would like to remind you that our remarks today will include forward-looking statements. Actual results may differ materially from those contemplated by this forward-looking statement. Factors that could cause these results to differ materially are set forth in yesterday's press release and in our quarterly report filed with the Mexican Stock Exchange. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update this statement as a result of new information or future events. With that, let me now turn the call over to Enrique.

Thank you, Saori, and good morning, everyone.

Over the past year, we have listened carefully to our teams, customers, and partners. That dialogue sharpened our long-term direction our vision, mission, and anchor strategies. Our new 2030 vision is clear, to improve quality of life by creating a better tomorrow. We will deliver it by executing on our mission to be the supplier of choice of high-quality construction materials, building stronger communities, and creating lasting value for all stakeholders.

and we will do so through our three anchor strategies, people, growth, and planet. With that framework in place, let me turn to the choir.

3Q25 unfolded against a mixed macro backdrop. Both the U.S. and Mexico cut interest rates, and while the costs today are not yet sufficient to fully restore activity, they are an encouraging signal for improvement in some segments. At the same time, great rhetoric continued to influence project timing and investment decisions in some markets. Against this backdrop, we delivered 10% revenue growth. For context, the third quarter of 2024 set a high bar with record margin. and marked the launch of our proactive cost and expense program, which created a tough comparison this year. Margin compression was cheaper than what we expected in the quarter. However, we're executing targeted commercial and cost measures to support profitability in the fourth quarter and to set a healthier run rate as we enter 2026. This improved run rate will also be supported by the absence of a couple of one-offs that are not expected to recur next year. Operationally, our plans run normal throughout the quarter, an important proof point following the isolated disruptions we experienced the first half of the year.

As part of our people's strategy, we continue to invest in safety and training

We continue investing in strengthening our safety culture, guided by the vision of becoming a world-class safety organization. During the first nine months of the year, we reduced our record of incidents, including lost time incidents, by 18% compared to the same period in 2024. We certified 75% of our safety professionals in our serious injuries and fatalities, prevention system, enabling them to internally train and coach more than 450 GTC leaders. This initiative is now integrated into our formal training program. Additionally, we began implementing new enabling modules focused on safety, environment, and sustainability. These modules supported standardization of key processes and enhance the integration and analysis of information, helping us strengthen our decision-making capabilities.

Through the Disease Assessment Training Institute, we have dedicated close to 12,000 hours of training year-to-date and are assessing needs to build more tailored plans for next year. Turning to our planned strategy.

Our alternative fuel distribution increased three percentage points in the quarter, led by our Pueblo plant, which reached 18.7% year-to-date through optimized use of tire dry fuel. We also expanded the share of blended cement, driven by pozzolanic cement production at our Tijeras plant, where blended products now account for 83% of plant volume, up 55% points year-over-year. As a result, our clean-care factor improved by 1% each point, and we reduced our Scope 1 CO2 emissions by 2.2% year-over-year.

Finally, turning to our growth strategy.

In the U.S., cement volumes increased by 6.4% and our concrete operations delivered a 52.7% gain. Momentum in wind farm projects continued, and our ready mix plants ran at capacity to support demand. During the third quarter, we supplied four wind farm projects across North Dakota, Colorado, and Texas, with additional projects scheduled to begin next year. Importantly, The projects in our pipeline are funded and proceeding, which gives us certainty in the durability of this work stream into 2026. These energy generation projects connect to the grid investment now underway. In Colorado, we are participating in the Power Pathway, a US $1.7 billion program designed to enhance reliability and enable future renewable developments. Activity is expected to run through 2026. Taken together, wind installation and transmission upgrades create a cohesive multi-year opportunity set for our cement and concrete businesses across the region. Infrastructure demand remains steady. We continue to work on interstate highways near Odessa and El Paso, Texas. and advanced construction at the Denver International Airport. We're wrapping up Loop 88 in Lubbock and beginning activity on Highway 27 near Amarillo, Texas, positioning the network well for a solid close to the year.

By contrast, the residential segment remains under pressure.

Affordability is still considered constrained with a 30-year mortgage rate around 6.3%. Permits and starts remain to do, and we do not expect a meaningful rebound throughout the first half of that of 2026. Recent rate cuts in the U.S. are a constructive signal, but they have not yet translated into the level of affordability needed to re-accelerate housing. Within oil and gas, activity softened as lower oil price and recounts did not support higher production. As a result, oil well cement declined as a share of U.S. cement volume by roughly three percentage points, reducing the contribution of a higher value product in our mix. That mix shift, combined with softer underlying demand and increased availability in certain markets, weighted on price realization, resulting in an average cement price decrease of 3% year-over-year for the choir. Looking ahead to 2026, we're maintaining a disciplined focus on offsetting cost increases and improving margins. We have notified customers of an $8 per ton price increase for construction cement

effective January 1st. At the same time, our recent aggregate acquisitions have been integrated.

They are performing as planned, and our focus on operational and commercial excellence is lifting synergies.

Turning to Mexico, conditions were mixed throughout the quarter.

Industrial demand remains subdued and macro uncertainty kept decision-making cautious. Industrial developers are largely in a holding pattern for the same reasons we outlined earlier in the year. This is most visible in Juarez, where customers have still yet to allocate available inventories built in prior years. While activity in Chihuahua has held broadly stable, We're staying close to customers and have positioned ourselves to move quickly as confidence returns. Amid that backdrop, cement volumes improved in September as the mining comparison base began to normalize. The segment performed in line with expectations. One customer's end-of-life mine closed in August 2024. is the year-over-year comparison in the third quarter.

With a second closure in November 2024, we will still affect part of the fourth quarter.

Importantly, we are nearing the end of that high base as we head into 2026.

Despite this headwind, and in contrast with our U.S.

market, Residential demand in the state of Chihuahua remained very robust, delivering high single-digit growth year-to-date, even before any impact from the new federal housing initiative. Projects under that new program are now moving from planning into execution and should provide incremental growth on top of an already solid residential backdrop. We expect activity to begin in Ciudad Juarez before year end, with Chihuahua following next year. On infrastructure, we sustain activity on the Babispe Highway connecting Sonora and Chihuahua State, and the City of Chihuahua advanced the preparation phase for three bridges. We expect initial work to start in the fourth quarter. with a larger share concentrated in 2026 at execution scales. The bagged cement remains robust and continues to contribute good margins to our Mexico results. Overall, our focus in Mexico is on discipline preparation for the next year, positioning GCC to capture an eventual recovery in industrial,

while continuing to leverage strength in residential and the visibility created by this year's infrastructure programs. From a capital allocation standpoint, the Odense expansion remains fully on track.

Today, we have deployed approximately 518 million of the total investment. The new line is expected to begin shipping cement in December of 2026. The new production line has the flexibility to switch between oil well cement and construction cement as market conditions evolve, an important capability given oil price dynamics. Drawing on our experience adding capacity to the market, especially under adverse economic conditions, as was the case during our Pueblo plant startup in 2008, we will enter the market slowly and deliberately dispersing new sales through multiple small terminals across several Texas markets, capturing savings in trade and distribution costs by shipping closer to the plant. In this way, we avoid market disruption and enhance value creation mid-term. Odessa will assume lanes currently served by Samalayuca into West Texas and through Trenton, Texas. This redeployment expands our logistics network and unlock trade efficiencies across the footprint. Finally, on M&A, let me be explicit. It is a top priority. We remain active in evaluating opportunities in both cement and aggregate that enhance our network within conservative leverage thresholds. Our approach is disciplined. We will deploy capital where it strengthens the network and meets our strategic and financial criteria. However, let me add, as we have been commenting, we no longer will limit our growth strategy to the region where we currently operate. We are now open to grow in other U.S. markets where we can start building a new network capturing value based on our current experience. We are prepared to move decisively when the right assets are available.

With that, let me turn the call over to Mike for his financial review. Thank you, Enrique, and good morning to everyone.

Starting with consolidated sales, we reported a 10% increase compared to the third quarter of last year, supported by volume growth in the United States and positive pricing trends in our US concrete operations. In the US, revenues grew 14%, driven by a 6.4% increase in cement volumes, and what continues to be a record year in concrete, where volumes rose 52.7%. RedMix performance remained closely tied to renewable energy work and related infrastructure. Pricing dynamics in cement were more challenging. Average prices decreased 3%, reflecting a lower proportion of higher value Orwell cement and in the mix and competitive conditions in several of our markets. By contrast, concrete pricing increased 11% year over year, supported by disciplined execution of our commercial strategies. In Mexico, revenues declined 2.1%, primarily on lower volumes. Cement volumes decreased 3.3%, and concrete volumes were down 7.3%. Pricing was essentially flat for both products, consistent with market conditions during the quarter.

Turning to cost.

Our cost of sales represented 63.7% of revenues, an increase of 5.3 percentage points versus prior year. The main drivers were higher production costs and expenses, a greater share of concrete in our sales mix, which carries a higher cost-to-sales ratio, softer cement price realization, and higher transfer freight related to the Rapid City incident earlier in the year. The comparison was also affected by the absence of the natural gas hedge benefit recognized in the third quarter of 2024, and by higher fuel prices versus an unusually low base last year. SG&A expenses were 6.9% of revenues, an improvement of 15 basis points year over year, reflecting lower third-party consulting and a shift in work in-house where possible. limiting non-essential travel via effective virtual collaboration, and trimming discretionary spend. Our expense optimization efforts have momentum and will continue to prioritize simple and efficient ways of working. As a result, EBITDA for the quarter totaled $157.4 million. with a margin of 35.9%. By segment, the U.S. delivered an EBITDA margin of 38%, and Mexico reported 28.3%, each reflecting the mixed dynamics noted a moment ago. Net financial income was $9 million. lower year over year due to a reduced average cash balance partially offset by interest capitalization associated with the odessa plant expansion consolidated net income was 100 100.9 million dollars translating to earnings per share of 31 cents Free cash flow totaled $132.4 million, up 8.9%, driven by lower cash taxes and deferral payments, partially offset by higher working capital needs and maintenance capex as we normalized plant operations during the quarter. On capital allocation, we were more active in the share repurchasing program, deploying $7 million in buybacks. We will remain opportunistic and disciplined as we focus on overall shareholder returns. We also continued to fund strategic projects throughout the quarter, allocating $86 million primarily to the Odessa plant expansion and our terminal network. we closed the quarter with a strong balance sheet. Cash and equivalents were $853.7 million, and net debt to EBITDA remained solid at negative 0.55 times, providing flexibility to continue executing our strategies. To sum up, we delivered top-line growth stable operations, and disciplined cost control in a mixed environment. We're acting on the levers within our control, cost and expense discipline, and focused capital deployment while preparing the network for Odessa's ramp up and the associated commercial and logistics benefits.

With that, I will hand the call back to Enrique for his closing remarks. Let me close with three quick thoughts. First, the direction is clear.

We refresh our vision and mission and are executing to people growth and planning. You can see that in this way, our plans operated reliably this quarter in the discipline of our commercial posture and in the progress we have been making on decarbonization.

We're investing to strengthen our network for the long term.

Trenton is online and serving growing markets, while several smaller terminals are in the planning and erection stages, and Odessa remains on schedule. Third, we're staying disciplined on cost and capital, pushing our cost and expenses program, investing where the returns are clear, and remaining disciplined on M&A leverage and expected returns. I want to thank our teams for this focus and execution, our customers for their trust, and our shareholders for their continued support. We are realistic about the environment, but confident in our plan and our ability to create more value over time. With that, this concludes our prepared remarks. I will return the call over to your questions. Operator, please begin with the first question.

Thank you. Before we get to the first question, if you'd like to join the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Alejandra Obregon, with Morgan Stanley. Please proceed with your question.

Hi, good morning, GDC team. Thank you for taking my question. I actually have two. The first one is on your initiative. So you mentioned you're implementing some initiatives to improve profitability run rates. So I was just wondering if you could elaborate on these, how much room for optimization have you identified, where it might come from, and when do you expect to see some results start flowing into the P&L. So that would be the first question. And then the second one is on the Beautiful Bill Act. So I was just wondering if the bill could bring some fiscal or depreciation benefits, perhaps related to your latest acquisition or maybe the investments. I mean, I'm not sure if these assets would qualify or maybe any other and if this could potentially trigger an acceleration on your M&A activity. So anything that you could be seeing here, that would be very helpful.

Thank you. Good morning, Alejandra. This is Enrique Escalante. Thank you for your question.

I'll give you a couple of examples on your question on where our run rate will improve in 2026. Obviously, and we already mentioned it, of course, I mean, we have at least three one-offs that shouldn't repeat next year. The one on the conversion with the natural gas price and then two, I mean, incidents that we have at the Rapid City plant and at the Odessa plant earlier in the year. All of those situations were obviously corrected and the second half of the year will run in very well in both plants. So that's one source of the margin improvement for next year. I can give you a couple of additional examples of where we are, I mean, focusing a lot on energy and power, specifically in the Samalayuka plant. I mean, we just switched. Now we're currently switching during October the supply of power to the Samalayuca plant to a market, I mean, a provider different than CFP, that we have been using the Chihuahua plant now for several years, and we have realized significant savings in our power costs in Chihuahua that we expect will repeat in Samalayuca next year. We're also working in the construction of a new gas pipeline for the Samarayuka plant that will connect us and give us the ability, I mean, to buy gas on the Waha Index, which is more or less a third of the cheap channel index currently. So we don't know exactly yet because we're, I mean, about to start, I mean, construction of the pipeline in which month. but we should start realizing those savings next year. And the third source of margin improvement, of course, is going to be with the entry of the Odessa plant. Obviously, we're going to try to produce a capacity in that new kiln to obviously realize the lower variable cost that the plant will have compared to the other lines that are currently producing there. And, of course, to optimize our freight and logistics costs by selling as much as we can closer to the plant with local product and taking some Malayuka shipments back, I mean, to its source. So we're going to be obviously saving on the freight that we pay today from San Malayuka to Odessa to the Permian Basin and from San Malayuka all the way to Trenton, Texas and north of Dallas. So those are, I mean, three sources of improvement for our contribution margin next year.

Yeah, Alexandre, to add, you know, we continue also, of course, to look at our admin and SG&A costs. As I mentioned, we're very disciplined, you know, what we can actually do in-house instead of outsourcing and consultants and third parties. We're reviewing kind of programs, initiatives that, you know, if they don't have immediate kind of impact value, we're looking at, you know, pushing them out or optimizing how we work those. And in general, right, we're trying to be very disciplined when it comes to hiring and new positions. So, you know, all of that will support, you know, regaining some of the share points, you know, margin share points we lost this year going into 26. Regarding your second question on the big, beautiful bill, You know, we have kind of from a project perspective, which is driving, you know, our business this year already very nicely. You saw that in our concrete volume increases, really participating in energy projects, wind energy projects. We see that continuing. We have some good projects in the pipeline. They are funded, so we're going to execute on those. Secondly, what we see really driven by the kind of push in the United States is data center, AI driven data centers. We're fortunate many of those are in our footprint and we're working hard to participate in those projects, not only through our concrete operations, but of course, through cement with third party customers. now for our aggregate operations that we have. So you should see some good activity there. And then regarding your last point, M&A, independent of the big beautiful bill, as Enrique mentioned, it's top priority. We are active. And as you also mentioned, we're looking much broader today, geographically and also from a product perspective. As we've shown last year, we invested in aggregates. We plan to continue to do that. We have a good pipeline on projects. It's now just a matter of, again, it's always two parties to get to a final deal. But we have a very focused, you know, small team but focused, dedicated team to make these deals happening. So that's how I would kind of give a look at the voiceover, what we see, you know, driven by the big, beautiful bill.

Thank you. That was very clear. Thank you.

Our next question comes from the line of Adrian Huerta with JPMorgan. Please proceed with your question.

Thank you. Good morning, everyone. Thank you for taking my question. I wanted just to see if we can get a rough idea as of now what we could expect for next year. I mean, you mentioned that residential is not likely to, especially in the U.S., residential is not likely to pick up yet in 2026. But I would like to know your views on infrastructure demand for 2026. And more importantly, how should we think about oil well cement? If oil prices remain at the current levels until the end of next year, what we could expect in terms of demand for oil well cement? Just wanted to get a little bit of sensitivity with oil prices, etc., what we could expect from that segment as well. And finally, if you can just share some comments on the non-RES, especially with all these data centers, AI, et cetera, if you're having any exposure to that and if that's adding something significant or not really yet for volumes, especially for you.

Thanks. Hi, Adrián. This is Enrique. How are you?

Thanks for the questions. We're being conservative, Adrian. You know us. I mean, we don't expect neither residential nor oil well cement demand to significantly change next year. As we mentioned, especially on the residential side, at least not in the first half. These oil prices, we would expect demand to continue to basically constant where it is, which is a good ball.

Ladies and gentlemen, one moment. Please stand by while we experience some technical difficulties. Ladies and gentlemen, we're now reconnected. Please continue.

Sorry, I mean, so we got disconnected. But I don't know if you heard me, Adrian. I was saying that at the current oil prices, we expect more or less a constant demand at the levels we have, which is still robust. I mean... It's not as high as it has been the last couple of years, but it will continue at a very good volume for us. And, of course, with the startup of the new plant, I think that we're going to draw more confidence from customers in terms of that we're going to be, I mean, obviously the major producer in the area. However, given the strategic design of the plan to be able to, I mean, switch back between construction and oil well cement, I think we're very well positioned, I mean, to take advantage of the cyclicality of the oil well industry. That is, I mean, as we know, always there. So we feel very comfortable with that. We would like to have a higher volume, yes, but we're going to be open in 2025. I think our brightest spot is going to continue on the infrastructure segment, as Mike already, I mean, alluded to. And we see more projects coming online from the Big Job Act and through the DOTs. I mean, they have still, I mean, this bill, a couple more years, and the funding, it's constantly coming. So we're... cautiously optimistic that that will continue to support us pretty well. But the icing on the cake is what you mentioned. I mean, this new segment of data centers and related infrastructure for that, including power plants, we have been hearing that in the regions where we are specifically, El Paso, Santa Teresa, New Mexico, I mean, Abilene, of course, I mean, there are several very large projects coming Some of them we know have already been signed. And so that's going to be, I mean, a very, very large and constant demand for several years that we're very well positioned to capture. So we don't have any more detail at this moment in terms of potential volumes year after year, but we're working precisely on trying to, I mean, get that information to be able to put that in our projections.

Yeah. And Adrian, what I would add is, What also is evolving for us, our participation in those infrastructure projects. Where in the past, you know, our main focus was supplying cement through, you know, contractors and ready mix partners. Today, the capabilities that we have built with our mobile ready mix division, being able to really take on more challenging projects, technically, you know, sophisticated projects, that's a benefit. And as I already mentioned, adding the aggregate opportunity to be really a broader product solution provider allows us to really participate at a much larger share in those projects. So we're excited about that, and we're working hard to get these across our footprint. Enrique mentioned Texas, but we're also working on projects further north, Colorado, in the Dakotas, So we are actually very positive around this topic of infrastructure.

Thank you, Mike. And Enrique, if I may just start a quick question on that on the ReadyMix. Where are you primarily right now on ReadyMix, and where are the markets where you could be growing on that?

So we're primarily in the El Paso, Texas area, north-west Iowa and south-east, I mean, South Dakota and north-west Minnesota. So those areas there on the agricultural belt and, of course, a lot of dairy projects, swine projects. I mean, a lot of agricultural projects are constantly there that have been carrying us very nicely. all these energy projects that have been also, I mean, now traditional for us in that area. So we have built this specialty, I mean, concrete and ready-mixed crops that are mobile, and we're chasing these projects throughout the development in different states now. And as Mike mentioned, we're in North Dakota, in Texas, We've been in New Mexico and in other markets. So this mobile unit can chase projects very efficiently, and that's how we are planning to also tackle new projects like data centers and other large infrastructure projects like that. I mentioned power plants. I've been in meetings in those markets where they are talking about building these data centers and building the necessary power plants behind them to supply the power. So there is a lot of infrastructure that will be very positive about it.

Understood. Thank you, Mike and Enrique.

Thank you. Our next question comes from the line of Francisco Suarez with Scotiabank. Please proceed with your question.

Hey, good morning, Saori, Mike, and Enrique. Thank you for the call. You have guided us very well on the overall pathway on this year, and thank you for that, and particularly on the Permian region. I was wondering if you see any differences between drilling and completions in the Midland region compared to the Delaware Formation, and if perhaps looking ahead, Do you think that it's possible even at current prices to increase prices for oil well cement for next year?

Thank you. Thank you, Francisco, for your questions.

The difference between the Midland, I mean, the Permian Basin and the Delaware Basin, I'm not very privy about those specific geological differences. What I know, Francisco, is that the Permian has been traditionally the most competitive area, the most competitive basin in the U.S., and they have been very good at developing efficiencies and getting more cost advantages, and we don't hear or read any change in that regard. So as oil prices remain, I mean, low and tight, we still trust that the Permian is one of the first regions to continue producing across the U.S. In terms of, I mean, as oil welcome and price increase, of course, as I mentioned, we are very focused on recovering, I mean, cost inflation and maintaining better margins. So we'll be, I mean, during the year in continuous discussions with our customers there. We were not able to realize, I mean, the price increase that we have announced for that product in that market this year. And obviously, I mean, that's a result of this lower demand. But we think that with things more stable, there is some openness from our customers to have these discussions on pricing. So I believe that we will be able, I mean, to get some price increase.

Perfect. Thank you. And if I may, a second question. On your energy matrix, you have the ability to switch from, you know, you are increasing your fossil fuel substitution rates. Interestingly, you have the option to use your own coal in your mine in Colorado. Now you were talking about using more natural gas from Oaxaca. Can you guide us a little bit about the economics and the tradeoffs between using your own coal, the natural gas, and, of course, increasing the fossil fuel substitution rates?

Yes, Francisco. At these current gas prices, we're doing everything possible to switch all the coal to natural gas for our plants. And that's the duty of our internal hedge with that whole mine. That whole mine we've been operating now kind of in a variable way. I mean, we've had some furloughs to maintain our cost structure there, control inventories, and just to regulate the needs that we need in our funds, I mean, to complement the natural gas that we're buying. Again, today, the view is continue as long as the gas prices continue at those levels. That's why it's so important to have the new pipeline in the Samalayuta plant. And we'll continue, I mean, with all the options to purchase natural gas and obviously, I mean, do hedging on those prices and maintain our fuel cost as low as possible.

Great to hear about that flexibility.

Congrats on that. And thanks for the call once again. Thank you.

Thank you. Our next question comes from the line of Isabella Pacheco with Bank of America. Please proceed with your question.

Hi, team. Thank you for taking my questions.

I want to better understand your M&A strategy. So you said you are open for new regions. I need to understand if you're looking for opportunities in developed markets or undeveloped or even both. And the second question I have is if you could give more color on the size you're looking for, like the price you're willing to pay or capacity you're looking to buy, and how you plan to fund this through cash or externally. And I apologize if you have already answered this question.

I had technical difficulties and got disconnected from your call.

Yes, good morning, Isabella. This is Mike.

Thank you for the question. So when we talk about M&A and we talk about, you know, geographical openness, we talk about the United States. That's our focus market. So that's what we focus on and we define that in our strategy. So, you know, as we're looking at that, we always start with cement opportunities. ideally close to our network so we can connect it and build out that network. But like we said, we're now looking a little bit broader in the United States, east, west, where there are opportunities from a cement perspective or cementitious materials perspective and so on. We're very clear now on aggregates. Aggregates, our starting point, is a little bit more closer to the network because we see, A, more opportunities there. The market is still very fragmented. And B, we can lift some immediate synergies because we have people, systems, networks already. And we don't have yet the scale compared to cement on aggregates. So that's where we say, The focus is kind of in network on aggregates where we can lift some synergies. And then the third aspect is, you know, where it makes sense, where we can pull through products. We would look at downstream, meaning, you know, ready mix or asphalt. On the ready mix side, if we can pull through cement aggregates, then we would consider that. And on asphalt, if we can pull through, you know, aggregate products, we would consider that as well. So that's kind of our very clear and defined strategy when it comes to M&A. You know, your question on the size of the deals, they're going to vary. You know, we're going to look at kind of all opportunities that make sense for us. And from a funding perspective, you know, we have a strong balance sheet, so we would use some of our cash available. And we have, you know, very good dialogue with our key banks for, you know, for financing, and we're very closely connected there. So we feel comfortable that the right opportunity, we can act fast, we have the right partners, and execute on our M&A growth strategy.

Thank you. If I could just add one more question. What is your minimal cash position you feel comfortable with?

You know, we typically look at about 15% of our net sales. That's a good guiding point. You know, that is, for our perspective, a conservative number.

So that's how we look at that. Okay. Thank you very much.

Thank you. Our final question this morning comes from the line of Marcelo Furlan with Itao BBA. Please proceed with your question.

Hi, GCC team. Thanks for taking my question. My question, I have two as a matter of fact. The first is just a follow-up for the previous questions regarding the cost initiatives that the company has tried to make so far. So I'd love to understand once these cost and expenses reductions initiatives are reached, how could you see or how could we expect in terms of margin revolutions for both the U.S. and Mexico going forward? And my second question is related to given the and change in the momentum, especially for the oil well cement, the very short term, but also with some resilient performance in other divisions like in Mexico or also in other segments in the U.S. specifically. How are you guys seeing the company's likelihood of meeting the EBITDA guidance for this year of mid-single-digit growth? So these are my two questions.

Thank you. Okay, Marcelo, good morning.

Thanks for the question. Regarding the cost measures, so as we explained, number one, we'll see these one-offs not going to happen, you know, going forward. So that has a big impact, and, you know, I'm going to repeat, but the whole logistics aspect of, you know, supporting our Rapid City network was very costly this year. You know, the Odessa, you know, small incident there in the beginning of the year with some of our equipment. So all of that will help to get the cost back on track and to support kind of that regaining of the margins. Secondly, like we said, we're working diligently through our overall kind of initiatives and programs to really, you know, streamline those and be much more focused on what makes an impact on the day-to-day, you know, what helps us to get more efficient in production, what helps us to get more efficient serving our projects and customers. So with that, the goal is really to regain the kind of the margin percentages that we lost this year. Also a reminder, we came off a record year last year. But that's the ambition. Let's get back to that – to that high level of margins. And we're going to work diligently, very systematically over the coming days, weeks, and months into 26 to get back on that margin level.

Marcelo, this is Enrique. Regarding the guidance, I mean, we're very comfortable to meet what we gave as guidance. September has been doing very well in shipments both in Mexico and the U.S., a little bit above our internal expectations. And October is going the same way. So the trend seems to confirm that we're going to meet our guidance. Of course, you know, in our market in the U.S. up north, we're always subject to how fast and how strong winter comes. But if we have just a normal, I mean, pattern here with winter, I mean, we will be okay.

So we confirm that what we said. Okay. Thank you so much, Enrique and Mike. Thank you.

Thank you. There are no other questions at this time. I'll turn the floor back to Ms. Okushi for any final comments.

Thank you again for your time and continued interest in GCC. We look forward to speaking with you again soon.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.