CEMEX (CX) Q3 2026 Earnings Call Transcript

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DATE

Mon, Oct 26, 2026

CALL PARTICIPANTS

• Chief Communications Officer - Louisa Page Rodriguez
• Chief Executive Officer - Jaime Muguiro Domínguez
• Executive Vice President and Chief Financial Officer - Maher Al-Haffar

TAKEAWAYS

• Net Sales -- 8% growth, supported by higher consolidated prices and improving cement volume trends across most markets.
• EBITDA and EBIT Growth -- 12% and 19% increases, respectively, marking the fifth consecutive quarter of double-digit growth for both metrics.
• Project Cutting Edge Savings -- $60 million in incremental savings achieved during the quarter, with the company reaching 80% of its $475 million total target.
• Free Cash Flow Generation -- $723 million in the quarter, representing a 34% increase driven by higher EBITDA and lower maintenance capital expenditures.
• Free Cash Flow Conversion -- 62% adjusted trailing 12-month rate, a 16 percentage point increase from one year ago.
• Asset Pruning Proceeds -- $200 million in estimated cash proceeds from completed and announced transactions since the program launched, involving more than 140 facilities.
• Mexico Performance -- double-digit EBITDA growth and a margin expansion of nearly 4 percentage points, aided by residential demand and government social programs.
• United States Volumes -- 4% increase in cement and aggregate volumes, while ready-mix volumes declined 1% due to softer market demand and project delays.
• AI-Related Demand -- high single-digit percentage of year-to-date ready-mix volumes in the U.S., which more than doubled the full-year 2025 volumes in this segment.
• EMEA EBITDA -- 4% increase, as strong pricing and efficiencies from Project Cutting Edge offset rising energy costs in the region.
• Energy Cost Management -- 2% decline in year-to-date energy cost per ton of cement produced, driven by a double-digit drop in alternative fuel costs.
• Diesel Hedging Gains -- $82 million year to date, offsetting higher transportation and diesel costs.
• Debt Reduction -- $1.7 billion reduction in total debt plus subordinated notes since December 2025.
• Net Financial Leverage -- 1.8x at the close of the quarter, representing a decline of nearly half a turn since December 2025.
• Mexico Social Housing -- 35% of the 1.8 million housing unit target has been contracted to developers, according to government figures cited by management.
• Working Capital -- $40 million lower investment year to date compared to last year, with average working capital days standing at minus nine.
• Full Year 2026 Guidance -- 16% to 17% expected EBITDA growth, based on a fourth-quarter peso exchange rate of 25 to 68.
• U.S. Infrastructure Funding -- 40% of funds from the Infrastructure Investment and Jobs Act remain unspent, providing a project pipeline into 2027.
• Decarbonization Progress -- 1% reduction in year-to-date gross CO2 emissions, supported by a lower clinker factor.
• Asset Pruning Outlook -- $100 million to $150 million in estimated incremental recurring free cash flow expected from the program starting in 2027.

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RISKS

• Muguiro Domínguez warned that the company expects to face higher energy costs going into 2027, which it aims to mitigate through its pricing strategy.
• Rodriguez stated, "As we move into the fourth quarter, we anticipate some incremental headwinds primarily from higher energy and maintenance as well as increased FX volatility," noting a projected $80 million maintenance headwind.
• Muguiro Domínguez noted that "sequential cement price performance reflected geographic and product mix effects, as well as price erosion in certain markets," specifically citing difficult dynamics in Texas and Northern Florida.
• Rodriguez warned that management is "monitoring new capacity in Central Mexico and are preparing for a scenario where our volumes could grow less than the national market."

SUMMARY

CEMEX, S.A.B. de C.V. (NYSE:CX) reported third-quarter results characterized by double-digit EBITDA growth and significant expansion in free cash flow conversion. Management attributed the performance to the continued execution of Project Cutting Edge, a transformation initiative focused on cost savings, asset pruning, and operational efficiency. The company reported a structural shift toward higher earnings quality, with EBITDA and EBIT growing faster than revenue for five consecutive quarters. While demand remained uneven across global markets, Mexico and the United States saw volume growth in key segments, supported by infrastructure projects and social housing initiatives. Management indicated that the company has achieved 80% of its multiyear cost savings target and is preparing for a subsequent phase of transformation driven by digitalization and artificial intelligence.

• Management reported that the second phase of transformation will focus on AI deployment in supply chain, production, and back-office domains to drive further efficiencies.
• The company announced the divestiture of ready-mix assets in Atlanta and entered exclusive negotiations for the sale of assets in Southeast France as part of its asset pruning strategy.
• CFO Al-Haffar noted that 80% of direct diesel consumption for 2027 is already hedged, providing protection against energy price volatility.
• The company is targeting total capital expenditures of $1.15 billion to $1.2 billion by 2028 and beyond to optimize its free cash flow profile.
• CEO Muguiro Domínguez stated that the divestiture of operations in Colombia to Holcim for approximately $485 million is expected to close around the second quarter of 2027.
• Management noted that Mexican ready-mix concrete backlogs have nearly doubled compared to the prior year, indicating potential for increased infrastructure activity in 2027.

INDUSTRY GLOSSARY

• Alternative Fuels: Non-fossil fuel sources, such as biomass or processed waste, used to provide energy for cement kilns.
• CBAM: Carbon Border Adjustment Mechanism, a European Union policy that puts a carbon price on imports of certain goods.
• Clinker Factor: The ratio of clinker, the primary ingredient in cement, to the total amount of cement; a lower factor reduces CO2 intensity.
• EBITDA Margin: A measure of a company's operating profit as a percentage of its revenue.
• IIJA: Infrastructure Investment and Jobs Act, a United States federal statute providing funding for various infrastructure sectors.
• Project Cutting Edge: The internal name for CEMEX's comprehensive transformation and cost-efficiency program.
• Urbanization Solutions: A CEMEX business segment that provides materials and services for urban development beyond core cement and concrete.

Full Conference Call Transcript

Operator: Good morning. Welcome to the CEMEX Third Quarter 26 Conference Call and Webcast. My name is Jenny, and I will be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. If at any time you require operator assistance, please press star followed by zero, and we will be happy to assist you. And now I will turn the conference over to Lucy Rodriguez, chief communications officer. Please proceed.

Louisa Page Rodriguez: Good morning, and thank you for joining us for our third quarter 2026 conference call and webcast. We hope this call finds you well. I am joined today by Jaime Muguiro Domínguez, our CEO, and by Maher Al-Haffar, our CFO. We will start our call by reviewing our third quarter results, followed by our expectations for the remainder of the year. And then we will be happy to take your questions. As a reminder, the previously announced sale of some of our operating assets in Colombia has not closed. Until the transaction closes, for accounting purposes, this will be treated as a partial sale of an operation.

And we will continue to fully consolidate these operations in our P and L. In addition, during the quarter, we completed the sale of certain ready mix and recycled concrete assets in the Atlanta region in the US. With these operations deconsolidated as of September 30. In France, in connection with the proposed sale of certain ready mix and aggregate assets, we shall continue to consolidate these operations in our P&L until the transaction closes. And now I will hand the call over to Jaime.

Jaime Muguiro Domínguez: Thank you, Lucy. And good day to everyone. I am pleased to be here today to discuss our third quarter results. Despite a volatile macro environment marked by higher interest rates, energy costs, and reduced economic visibility. Our teams have remained agile, and focused on what we can control. Delivering on our transformation plan, while identifying further opportunities for improvement. With Project Cutting Edge, as our foundation, we achieved another quarter of solid performance and sustainable progress on our strategic priorities. What I find particularly encouraging is that our results continue to reflect the structural changes we are making in our drive to become more efficient, profitable, and customer centric.

While recovery across our markets remains uneven, we continue delivering on our objective of structurally higher earnings quality. The operational improvements under project cutting edge are increasingly evident in our results. With EBITDA and EBIT once again growing faster than revenue. And free cash flow from operations expanding at even stronger pace. In fact, for the second consecutive quarter, our adjusted trailing 12 month free cash flow from operations conversion rate reached approximately 60%. Our asset pruning efforts under Project Cutting Edge are delivering the first tangible results with completed, and announced strategic divestitures. Largely focused on ready mix assets in the US and Europe in the quarter. Furthermore, we have made good progress towards our 2027 targets.

Set out at the Investor Day earlier this year. With expansion in year to date EBITDA and EBIT margins, as well as free cash flow conversion rate. Ahead of our 2027 targets. All of this is happening at a faster pace than we originally expected. Turning to our decarbonization pathway. We have profitably reduced our year to date gross CO2 emissions by 1%. Supported by a lower clinker factor. Taken together, these results reinforce our confidence that the actions we are taking today are building a stronger and more resilient CEMEX better prepared to weather this volatile macro environment. At the same time, our work is far from complete. We still have important elements of Project Cutting Edge.

To deliver and are continuing to identify new opportunities to improve operational performance and asset efficiency. As we advance these efforts, we are also preparing for the next phase of our transformation. Driven by digitalization and AI. And with that, let me discuss our results in more detail. Our results once again reflect the benefits of our transformation. Translating into stronger profitability and cash generation. Net sales grew approximately 8%, supported by higher consolidated prices and improving cement volume trends in most markets. As project cutting edge efficiencies continue to build, and operational improvements gain traction, EBITDA and EBIT increased 12% and 19%, respectively. This performance marks our 5th consecutive quarter of double digit EBITDA and EBIT growth.

As well as margin expansion, underscoring consistency of the progress we are making across the business. Mexico remained a key contributor to consolidated growth. During the quarter. As demand recovery continued to gain momentum. Further supported by our transformation initiatives. The steps we are taking under project cutting edge are producing materially stronger cash generation. Year to date, free cash flow from operations increased by more than $900 million year over year. On a trailing 12 month basis, adjusted free cash flow from operations reached a record level of $2.2 billion with an adjusted conversion rate of approximately 62%. Consolidated cement volumes increased 3% year-on-year, supported by improving demand trends across most of our markets.

In Mexico, residential demand supported by government sponsored social programs and continued competitor outages drove cement growth. In the United States, cement volumes increased driven by the acquisition of Omega and specific project works. In Europe, severe heat waves and a fragile recovery in several markets weighed on volumes across all products. Within South, Central America, and The Caribbean, cement volume growth was supported by demand in Colombia and Jamaica. Consolidated prices for our 3 core products increased by a low single digit percentage, year over year. Supported by pricing actions implemented in the first half of the year. On a sequential basis, cement price performance reflected geographic and product mix effects, as well as price erosion in certain markets.

In the case of ready mix, prices continue to benefit from fuel surcharges in the US and Europe, and a strong pricing traction in the Middle East and Africa. With limited visibility, on a clear resolution to the Ukraine war, we remain vigilant and focused on preserving margins and offsetting input cost inflation through our pricing strategy over time. EBITDA increased 12% year-over-year, reflecting the combined benefits of our transformation. Alongside higher pricing growing cement volumes, and favorable FX movements. We estimate that Project Cutting Edge contributed approximately $60 million in incremental savings in the quarter. Pricing remained the main contributor to EBITDA growth offsetting increased costs and expenses largely related to higher maintenance and distribution costs.

While pricing was sufficient to offset costs, for the first time in 6 quarters, we are seeing an increase in year-on-year total costs reflecting a pickup in inflation. On energy, despite the significant hike in global energy prices, year to date energy costs in cement production declined 2%, well within our full year guidance of a low single digit increase. This is a result of our comprehensive energy strategy protecting us in the short term from volatility in fuels and electricity. Going forward into 2027. While we have already put in place relevant hedges, we do expect to face higher energy costs which we aim to mitigate through our pricing strategy.

Beyond these factors, EBITDA growth was also supported by our urbanization solutions business where EBITDA increased 25% year-on-year. Mainly driven by mortars in the US following the acquisition of Omega. Together, these levers drove another quarter of margin expansion and further demonstrate the sustainable improvements we are delivering across the business. I am pleased with the continued execution of our cost savings program. This quarter, we achieved $60 million in recurring savings, including $20 million originally expected in the fourth quarter and beyond. We have now achieved 80% of our $475 million cost savings target. With the remaining $95 million expected to primarily benefit 2027 results.

Year to date, this initiative has supported a tangible improvement in our cost of sales and operating expenses as a percentage of sales, with both declining by 1.6 and 0.8 percentage points, respectively. As we near completion, of our cost savings program, we will enter a new phase in our transformation. Focused on unlocking additional value digitalization and AI. We have made important advances on our asset pruning initiative. As you know, this effort is designed to enhance asset efficiency focusing on our 3 key metrics. EBIT, free cash flow, and return on cost of capital. Since we launched Project Cutting Edge, we have reviewed every asset in our portfolio.

Identified those not meeting our return criteria, and established action plans for remediation. This process takes time, as each asset requires a detailed assessment including its cyclical performance, micro market dynamics, and vertical integration implications. The actions coming out of this review may include performance plans, disposals, closures, or an optimization of our operating network which also can take time. The actions taken on assets will bring different benefits to these metrics. As some may improve free cash flow, while others focus on return on capital. We estimate the potential benefit from this initiative to be between $100 million to $150 million in incremental recurring free cash flow. We also have advanced faster than we anticipated.

And during the quarter, we made some important progress. We divested ready mix assets in the Atlanta market, with a long term cement and a mixture supply agreement. We also initiated exclusive negotiations with VCAT Group for the proposed sale of certain ready mix and aggregates assets in Southeast France. Since launching this initiative last year, estimated cash proceeds including both completed and announced transactions total more than $200 million and include more than 140 facilities. While these actions deliver immediate improvement in EBIT, free cash flow, or return on invested capital the proceeds can also be recycled into more strategic and accretive investment opportunities in the future.

All of this is further evidence that we are increasingly disciplined about where we deploy our capital ensuring our investments generate attractive returns. As we move into 2027. Our focus remains on advancing project cutting edge and the variables we can control to improve earnings quality, cash generation, and shareholder returns. And with that, back to you, Lucy.

Louisa Page Rodriguez: Thank you, Jaime. Our operations in Mexico delivered another solid quarter. Driven by recovering cement demand and cost efficiencies. EBITDA increased at a double digit rate while margin expanded by nearly 4 percentage points. Year on year cement volume growth remains supported by a healthy residential sector and government backed social programs. Including housing, and rural roads. Competitor outages during the quarter again provided an unexpected and temporary boost to volumes. The social housing program a flagship initiative of the current administration, has been a meaningful lever of growth in our business and continues to scale.

According to government figures, about 35% of the 1.8 million housing unit target has been contracted to developers who then bid out the building materials requirements. Given progress in contract awards to date, we expect government focused to shift towards accelerating construction under the signed contracts. While ready mix volumes continue to lag cement recovery, we are encouraged by the strength of our order book. It should support volumes in 2027. Contracted ready mixed volumes tied to infrastructure have increased materially. Supported by large scale projects such as railroads, highways, and dams. We also saw a material pickup in contracted volumes for domestic industrial projects. Although it is still too early to assess whether this trend is sustainable.

Cement prices were stable sequentially, after adjusting for mix effect while ready mix prices increased 2%. We announced a mid single digit price increase in bag cement which became effective early October. We will continue to pursue pricing actions as needed to offset inflationary pressures going into 2027. While cost efficiencies and other structural initiatives under Project Cutting Edge were the primary drivers of EBITDA growth and margin expansion in the quarter. Our results also benefited from more transitory factors including better than expected energy costs. As we move into the fourth quarter, we anticipate some incremental headwinds primarily from higher energy and maintenance as well as increased FX volatility. Looking ahead to 2027.

We expect demand to remain constructive supported by higher infrastructure execution and continued momentum in residential At the same time, we are monitoring new capacity in Central Mexico and are preparing for a scenario where our volumes could grow less. Than the national market. In the US, cement and aggregate volumes increased 4%, while ready mix declined 1%, the growth in cement volumes was driven by positive dynamics across most of our markets. As well as the contribution from Omega. On a sequential basis, aggregates volumes grew 9%, underscoring recovery from the adverse weather conditions in Texas during the second quarter.

Sequential cement prices declined 3%, reflecting price erosion in some markets as well as higher internal freight as we continue replacing imports with domestic production. Ready mix prices increased 1% sequentially and 3% versus fourth quarter of 2025. Supported by the implementation of fuel surcharges. Adjusting for product mix, aggregate prices were stable sequentially after a mid single digit increase in the first half. Of the year. EBITDA and margin in the quarter were impacted by an unplanned outage in our Brooksville plant, higher raw material cost inflation in ready mix and cement, and lower cement prices. Demand continued to be led primarily by infrastructure.

While IIJA expired at the end of September, we estimate that approximately 40% of the funds remain to be spent supporting a healthy project pipeline into 2027, as we await the passage and approval of a new transportation bill. In the industrial sector, demand related to the AI ecosystem including large data centers, semiconductor facilities, and manufacturing. Continued to grow. With rising investment in the power sector providing further support over the medium term. We estimate that AI related demand represents a high single digit percent of our ready mix volumes year to date more than double our full-year 2025 volumes in this segment. Residential construction remains challenged by affordability constraints. And elevated housing inventories in certain regions.

We expect markets to recover at varying pace as inventory levels and affordability improve over the medium term. In aggregates, which currently represents about 40% of our US EBITDA, volumes have increased year to date. But less than initially anticipated. This reflects delays in some of our new aggregate projects coming online as well as softer market demand. We now expect these investments to contribute to incremental volumes in 2027. In this environment, we continue to strengthen our operations through higher kiln efficiency, higher asset returns, and a continued focus on operational excellence. These efforts should allow us to capture the benefits of high operating leverage once volumes recover.

Going into the fourth quarter, we expect some incremental headwinds, primarily due to the timing of maintenance and energy costs. For 2027, with spot natural gas prices lower year over year, we expect energy headwinds to be, to a large extent, related to diesel cost. Our operations in EMEA delivered favorable results. With EBITDA increasing 4%, supported by strong pricing and efficiencies from Project Cutting Edge. Which offset rising energy costs across the region. Both the Europe and Middle East and Africa subregions contributed EBITDA growth of mid to high single digits. In Europe, volumes were affected by persistent heat waves, project delays in infrastructure, and the industrial and commercial sector, along with a fragile construction recovery.

Cement volume growth in Germany the first in over a year, together with continued growth in Spain, partially offset softer volumes elsewhere in the region. Residential demand across much of Europe remains subdued due to elevated interest rates. While Spain remains an important exception. Despite delays, infrastructure has been more resilient with additional medium term support expected from EU funding in Poland, and fiscal stimulus in Germany. Sequential pricing was broadly stable in Europe across our 3 products. Importantly, prices are up low to mid single digits since fourth quarter of 2025. Reflecting successful first half pricing increases in markets affected by the introduction of the cross border adjustment mechanism this year.

Across Europe, fuel surcharges and price increases covering the majority of our ready mix volumes, are helping mitigate higher diesel costs. We remain constructive on pricing in Continental Europe. Supported by the carbon border adjustment mechanism and the continued phase out of free CO2 allowances under the EU ETS. We are awaiting the introduction of the CBAM in the UK as well in first quarter 27. At the same time, we remain particularly vigilant on rising cost inflation. And shall continue seeking to offset these pressures through our pricing strategy. On decarbonization, year to date, our European operations have reduced gross CO2 emissions by 2%. Reaching 497 kilograms of CO2 per ton of cement equivalent.

Mainly driven by a lower clinker factor. In the Middle East and Africa region, double digit cement volume growth was driven by the recovery of market share lost in Egypt in the second quarter of 2026. Our operations in Israel and The UAE remain resilient. Amid geopolitical tensions. With ready mix volumes increasing in both markets. In Israel, aggregate volumes were impacted in the quarter by the transition to a new quarry which will be 1 of our largest in the country. Operations are currently ramping up and are expected to normalize in first quarter of 27.

Despite a sequential decline in cement prices in Egypt, overall pricing in Middle East and Africa remained solid compared with fourth quarter of 2025. With cement ready mix and aggregates up 11, 11, and 8%. Respectively. Our results in South Central America and The Caribbean were impacted by higher cement purchases in Jamaica, reflecting annual maintenance costs, and stronger than expected demand. Along with higher energy costs in the region. While operations in Jamaica have since stabilized, we anticipate additional cement purchases in fourth quarter which should then normalize in 2027. Cement demand in the region remains solid supported by robust performance in Colombia and Jamaica. With the informal sector driving activity in both markets.

In Jamaica, demand also benefited from increased reconstruction activity related to last year's hurricane Melissa, and continued investment in tourism related projects. Looking ahead, we remain optimistic on the fundamentals of our portfolio in the region, supported by resilient informal construction. And with that, I will now turn the call over to Maher to review our financial developments.

Maher Al-Haffar: Thank you, Lucy, and good day to everyone. Our self help initiatives continue to deliver this quarter. EBITDA grew 12% to $998 million. Margin expanded 80 basis points, and free cash flow generation and conversion continued to accelerate. Project cutting edge continues to drive meaningful improvements in our cost with a reduction in cost of sales and operating expenses as a percentage of sales. As Jaime pointed out, energy cost volatility has been a key theme this year. Our strategy combines fuel diversification, long term contracts, hedging disciplined inventory management, lower clinker factors, and higher energy efficiency. And this strategy is paying off year to date, energy cost per ton of cement produced declined 2%.

This reduction was driven by a double digit decline in the cost of alternative fuels more than offsetting single digit increases in fossil fuels and electricity. With Alternative fuels now represent about 28% of our fuel mix. Our diesel hedging program covering owned and third party freight generated gains of $82 million year to date. Offsetting higher diesel and transportation costs. We are also well protected for 2027, about 80% of our direct diesel consumption is hedged. While the hedge level is higher compared to 2026. The diesel prices remain at current levels we expect the hedging benefit to be broadly similar to this year.

In addition, in Europe, we have already contracted about 60% of our electricity needs at fixed prices, only 4% above this year's levels. Free cash flow from operations reached $723 million in the quarter. up 34%. Year-to-date, it nearly tripled to $1.4 billion from a year ago. More than half of this increase came from EBITDA growth. The rest came from lower maintenance CapEx, net interest, and other cash expenditures. Lower working capital investment, and higher fixed asset sales. Excluding severance payments and discontinued operations, our trailing 12 month free cash flow from operations conversion rate reached 62% up 16 percentage points from a year ago. Year to date, investment in working capital was $40 million lower than last year.

Driven by Mexico and The US. Average working capital days stood at minus 9 compared to minus 10 last year. We remain on track to meet our working capital full year guidance of an incremental investment between $50 million to $100 million. Controlling net income rose 55% in the quarter. Year to date, it is lower, reflecting last year's onetime gain on the sale of our Dominican Republic operations. Excluding that gain, year to date net income would have risen 47%. Since December, we have reduced total debt plus subordinated notes by $1.7 billion. and net debt plus subordinated notes by about $535 million. Net financial leverage closed the quarter at 1.8x.

A nearly half a turn decline since December, and already within our midterm target. Looking ahead, we remain focused on further strengthening our capital structure towards a solid BBB rating. While continuing to grow free cash flow and conversion rate. And now back to you, Jaime.

Jaime Muguiro Domínguez: Thank you, Maher. I am pleased with our results this quarter. And encouraged by the continued benefits we are seeing from our transformation. Which are particularly relevant under the current macroeconomic backdrop. Based on our year to date performance and expectations, for the fourth quarter I am confident in our ability to deliver on our full year EBITDA guidance of 16% to 17% year-over-year growth. Our guidance is based on a peso FX rate of 25 to 68 for the fourth quarter. Our energy strategy is paying off in 2026, and we believe we are well positioned to address continued energy volatility in 2027.

We remain committed to advancing our transformation delivering on our cost savings target, executing on our asset pruning effort, and strengthening free cash flow. While uncertainty is likely to remain part of the operating environment, our focus remains firmly on execution. By continuing to improve what we can control, we are well positioned to further strengthen earnings quality, cash generation, and shareholder returns over time. And now back to you, Lucy.

Louisa Page Rodriguez: Before we go into our Q&A session, I would like to remind you that any forward looking statements we make today are based on our current knowledge of the markets in which we operate and could change in the future due to a variety of factors. In addition, unless the context indicates otherwise, all reference to pricing initiatives price increases, or decreases refer to our prices for our products. And we will now be happy to take your questions.

Operator: In the interest of time, and to give other people an opportunity to participate, We kindly ask that you limit yourself to only 1 question. If you wish to ask a question, please press star followed by 1 on your touch tone telephone. If your question has already been answered, or you wish to withdraw your question, press star followed by 2. Press 1 to begin. And the first question comes from Benjamin Theurer from Barclays. Benjamin?

Benjamin Theurer: Hi, good morning and thanks for taking my question. Congrats Jaime, Lucy, Maher, another good quarter in here. Wanted to pick up on some of the comments you already gave, but as we look into 2027, how should we think about the sustainability of the margin improvement that you have achieved in 2026, especially as we look at less favorable FX, higher raw material costs you talked a little bit about that. So what are the offsets from productivity price mix and the operating leverage as you think for the coming quarters? Thank you.

Jaime Muguiro Domínguez: Good morning, Benjamin. Thank you for your question. Biggest offsets softened demand could be on inflation. But look. The margin we are achieving in 2026 is structural. We committed to a 21% EBITDA margin for 2020 CEMEX during CEMEX Day, and that is the floor. And the reason for that is because we will continue transforming CEMEX with the second phase of our transformation. On potentially bringing incremental savings beyond the $470 million that we have committed to by the end of 2027. And the other aspect is because we are not done with our asset pruning efforts. And those should be accretive to margins. EBITDA EBIT, free cash flow conversion, and ROIC.

We are making progress, but we are not there yet. And finally, when we think about capital allocation, 1 lever is m and a. And anything we do on capital allocation should be conducive of a structurally stronger portfolio that should deliver accretive margin expansion. So the point, Benjamin, is that we think it is sustainable, and it is the floor. And we need to go for more. Thanks for your question, Benjamin.

Louisa Page Rodriguez: Thank you.

Operator: And the next question comes from Alejandra Obregon from Morgan Stanley. Ale?

Alejandra Obregon: Hi. Good morning. Hi, Jaime. Hi, Lucy. Thank you for the call and for taking my question. I guess mine is very similar to Benjamin, but to Benjamin's question, but this time on free cash flow. I mean, there are many moving pieces and moving in the right direction. You have interest expense trending lower, CapEx, working capital. So my question is how much of that improvement should we think of as structural and repeatable into 2027, how much of that is seasonal or timing driven? How much is it linked to asset pruning? If you can help us think of free cash flow generation and conversion into 2027. Thank you.

Jaime Muguiro Domínguez: Alejandra, good morning. Thank you for your question. Let's think about our free cash flow conversion, not just for 2027 but beyond. Everything we are doing is structural. There are no timing related events in our free cash flow conversion transformation and we are. We are working on all lines. Number 1, improving EBITDA margin. Right, which as I suggest, commented, we will continue pursuing that But then we are optimizing structurally every line of free cash flow. So this year, we have paid significant gross debt and I will posit the word to Mark here in a minute to elaborate about that.

So we continue to see a material reduction of interest expenses, and we are not done because when we do benchmark against the best in class free cash flow operators in our industry, we still have a way to go to reduce interest expenses as a percent of EBITDA and as a percent of sales. On working capital, I think it is structural. We are going to stay for long between minus 8, minus 9, minus 10 days, but we should not expect any material investments in working capital through the cycle. Also, and the team will continue to do liability management opportunities Right?

And then when it comes to total CapEx, including platform CapEx, strategic CapEx, and intangible assets, we have not yet gotten where structurally we need to be. I have commented to the market that we should be landing at around maximum of $1.15 billion to $1.2 billion of total CapEx including the 3 concepts by 2028 and beyond, and we are making significant traction. And 1 element is the asset pruning. The asset pruning has not contributed much yet. We. We are just beginning to see traction. We are fully committed to delivering at least incrementally a $100 million of incremental free cash flow recurrently from that from that effort, but that is going to contribute from 2027 onwards.

So it is a structural it is happening, and I see no reason why we should not be achieving the best in class free cash flow conversion at all levels. Whether it is free cash flow from operation, total free cash flow, it does not matter. We are gonna do better. And we know who our benchmarks are and we are going to get there. So thanks for the question, Alejandra.

Alejandra Obregon: Thank you very much, Jaime. That was very clear.

Louisa Page Rodriguez: Okay.

Operator: And the next question comes from Carlos Peyrelongue from Bank of America. Carlos?

Carlos Peyrelongue: Thank you, Lucy, and congrats on the strong results. Question is related to cost for next year. Maher made some initial comments. We just I wanted to get further clarity on which costs you have already hedged on the energy front. And which ones you plan to negotiate in the fourth quarter and if there is any part that you will not hedge as you go into next year. I got the 80% on diesel. But I missed a number on gas, the percentage that you have hedged. So any further info on cost for next year would be helpful. Thank you.

Jaime Muguiro Domínguez: Okay, Carlos. Thank you so much for your question. Before I pass the word to Maher, We do expect, right, incremental cost next year inflation on energy. Right, potentially between mid to high single digit inflation Right? And when you think about it, we have 3 buckets. We have fuel, we have electricity, and we have diesel. And regarding diesel is direct, and indirect. So Maher will elaborate more about the hedges. But what is important is that regarding fuels, we will continue to ramp up using alternative fuels.

We will also swing from coal to pet coke from pet coke to coal to natural gas by market depending on the different energy pricing dynamics and different parts of the region. For example, we have seen very good and competitive natural gas cost in The US, and we have been ramping up consumption of natural gas in the US. We do see higher alternative fuels usage in Europe after we completed 2 relevant CapEx in 2 of our plants. Right? And we also have great capacity to increase using alternative fuels in Mexico. And most of our alternative fuels, particularly in Europe, are under fixed contracts. Right?

And definitely to offset inflation next year, pricing is going to be key. Maher, could you please elaborate on the hedges, please?

Maher Al-Haffar: Yes. Thank you. Jaime, and hi, Carlos. So from a strategy perspective, Carlos, our hedging strategy has not really changed, materially. As you know, we roughly have energy as a percentage of COGS is around 12%. that is roughly about a $1.5 billion, and it is roughly split, as Jaime said, in kind of 3 equal parts, cement fuels, electricity, and diesel. On the cement fuels we are. You know, we cannot hedge pet coke. And we do not hedge coal. Alternative fuels are either fixed cost or under contract and so that. We benefit from that. Natural gas, The US consumes roughly half of the natural gas that we consume in the company.

And this year, we are up to around 28% of nat gas. 2026, we hedged 75% of that. And into 2027, we are already close to about 75% to 80% of that. So we are hedged on that. Now the. If you take a look at the forward curves for coal, for Brent, and for diesel, they are all in backwardation. The diesel, I covered in my remarks, Now we have only hedged for next year the direct diesel. And we are close to about 75% to 80% there in the position. So that is the, and alternative fuels have dropped during the year.

Nat gas is down by 28%, and the diesel As you saw, we are we are gaining close to about $80-plus million. Now if we maintain. If diesel prices maintain as they are going into next year, we are likely to have a similar benefit next year in our diesel hedge as we had this year. So I do not know if that covers your question.

Carlos Peyrelongue: Yes. It was. Thank you very much, Jaime and Maher.

Louisa Page Rodriguez: Maybe if I could just add a quick compliment, Maher. I think in total, about 50% of our energy exposure is hedged. Right now. And because we do not get the regulated market increases until fourth quarter, that should. In The United States, that should go up materially, I believe, going forward. So just to put that percentage out there.

Maher Al-Haffar: Yeah.

Louisa Page Rodriguez: Okay. Thanks, Lucy.

Maher Al-Haffar: Thank you.

Louisa Page Rodriguez: Thank you. Very helpful. Okay.

Operator: The next question comes from Yassine Touahri from On Field. Yassine?

Yassine Touahri: Good morning, and thank you very much for taking my question. I think just 1 question on your full year guidance. I think it implies broadly flat EBITDA growth in the fourth quarter. Despite you delivering 12% growth organically in Q3. Have you seen any meaningful deterioration in activity or in margin in October across any of your regions? Or if this is not the case, do you see any scope to do better than the upper range of your guidance? But you feel it is like there is too much uncertainty regarding whether energy or geopolitical uncertainty to upgrade this guidance at this stage?

Jaime Muguiro Domínguez: Yassine, good morning. Thank you for your question. First of all, we are going to be landing very close to our 21% EBITDA margin target that we announced for next year. during CEMEX Day. Right, supported by our transformation. Now in the fourth quarter, of this year, on 1 hand, we have the normal seasonality impact Right? Normally, from third quarter to fourth quarter, that would be around minus 1.3 percentage points, right, because of lower volumes, the winter, the weather, so on and so forth. But we do expect energy related headwinds on 1 hand and higher maintenance cost on the other hand. Regarding maintenance, we expect higher maintenance expenses in the US.

In The US, we waited until the fourth quarter to do an important outage in 1 of our plants where we are changing the control systems of the plan, the software that we use to run 1 of our plans because of obsolescence. So that is gonna have an impact on maintenance. We also have higher maintenance expenses in Mexico. So overall, the headwind for the quarter in maintenance is around $80 million. We also expect higher energy cost, mainly petcoke and electricity in Europe, a headwind of around $17 million.

And then let me remind everybody that we have a tough comparison based in EMEA because last year in the fourth quarter 25, we had a positive 1-off of around a $12 million headwind. So that is the reason why it would be important but we are going to be lending very close to our EBITDA margin target of next year announced during CEMEX Day. Thanks for your question, Yassine.

Yassine Touahri: Thanks.

Operator: And the next question comes from Adrian Huerta from JPMorgan. Adrian?

Adrian Huerta: Thank you, Lucy. Hi, everyone. Wanted to see if you can give us a little bit more color on prices in The US for both aggregates and cement. What you saw in the third quarter, what happened with midyear efforts to increase prices and what have you done so far for the increases in the first half of 27?

Jaime Muguiro Domínguez: Adrian, good morning. Thank you for your question. Well, first, regarding cement, FOB prices that you saw declining quarter over quarter the first thing is that 1 third of that sequential price decline was due to higher internal freight costs. As we continue replacing imports with domestic production. So that is 1 aspect. Now when you neutralize that effect, there are different competitive dynamics in different markets, but I would highlight that there is a difficult competitive dynamics in a few of our markets, particularly some markets in Texas and Northern Florida. that is what drove the FOB price decline sequentially, excluding the impact of internal freight cost.

Which, obviously, as we replace imports we lower our variable cost, but you see then the effect elsewhere on FOB price. Our ready mix price has been very resilient, We saw an uptick of 1% sequentially quarter over quarter, and year over year is up 1%. And this is mainly driven by fuel surcharges. Which are working very well offsetting diesel cost inflation. And then on aggregates, we continue to do well point to point from Q4 2025 to Q3 2026 is up 3% and it was flat quarter on quarter adjusted by mix. Right? But we did not see an opportunity in the market to put any price increase around September on October on aggregates.

Now when we think about 2027 in the U.S., as all across our portfolio, as I highlighted we do see inflation. I am expecting mid single digit, across the board and between mid to high single digit in energy. So we are going to target solid mid single digit price increases across the board, across all products, right, to protect margins. And that is what we need to achieve for next year, and that is how we are thinking. So thanks for the question, Adrian.

Louisa Page Rodriguez: Thank you, Jaime.

Operator: The next question comes from Wilfredo Jorel Guilloty from Goldman Sachs. Jarelle?

Wilfredo Jorel Guilloty: Hello, everyone. Thank you for taking my question. So I wanted to dig deeper on your comments on US residential. Specifically, how do you see U. S. Residential demand evolving? Is stabilization the most likely near term outcome? But perhaps risks to the downside? Or are you seeing signs of recovery? Would this outlook differ by geography? And what is the share of this demand that is coming from residential? Thank you.

Operator: Jorel, thank you for your question.

Jaime Muguiro Domínguez: Good morning. Regarding US demand, for residential, I think the industry is around 30%. Regarding CEMEX, I think we are between 30% and 35% exposure. That is because we are more exposed to the Florida market where residential weighs more on that average for the for the industry. What we are doing is agile commercial strategies pivoting towards infrastructure energy, industrial build out projects. High rise buildings, health care schools, public jobs. Right, so on and so forth. And, of course, data centers. So we are growing our exposure aggregates ready mixed concrete and cement both indirectly and directly on those segments. Right? And that is what is driving right, our volume growth. in the US.

Regarding 2027, I do not expect residential to improve. Again, it is an issue of affordability. I do not have to explain it. You know that very well. I. We are not expecting as of today a collapse of the residential segment in the US. But it is not gonna contribute at all. But we do not see a massive downside to it as well. And, definitely, single family homes and multifamily will behave differently because there is pent up demand. There is household formation. People need to live somewhere. So either 1 or the other will hold. that is how we see it.

Now for the midterm, though, right, as soon as affordability improves, this is going to be a tailwind and that is going to bring, right, demand, growth, and that is gonna bring operating leverage for our US business. And I look forward to it. But it is still. But we are going to have to wait a little bit longer. So thanks, Jorel, for your question.

Wilfredo Jorel Guilloty: Thank you very much.

Operator: And the next question comes from Francisco Suarez from Scotiabank.

Louisa Page Rodriguez: Becca, are you there? Maybe what I can do is go on to the next question. We can come back to Paco if he connects. The next question comes from Gordon Lee from BTG. And it is been submitted via the webcast. So the question is, as you look at your options of capital allocation tools, why have you not been more active buying back shares given the stocks underperformance over the past few months.

Operator: Gordon, thank you for your question.

Jaime Muguiro Domínguez: Well, first, shareholder returns is 1 of our top priorities. Along with deleveraging and growth investments. We have been monitoring our stock and we are balancing using our free cash flow among the 3 priorities. So share buybacks, deleveraging, and growth investments. As market derates, we may have accretive growth opportunities compared to share buybacks. But we have already done a $100 million and we plan to repurchase up to the $500 million in shares through 2028, so we will continue tapping that opportunity and balancing that with deleveraging. Because we see opportunity to continue paying debt should be accretive. We wanna reduce interest expenses, boost free cash flow conversion structurally, and then look for some growth.

M and a growth opportunities as well for the question, Gordon.

Operator: And the next question comes from Andres Cardona from Citi. Andres?

Analyst: Hi. Good morning. Hi.

Louisa Page Rodriguez: Congrats on the results.

Analyst: Let me ask about Mexico What are your views for housing and infrastructure for 2027, and could you please remind us what is the cement intensity of the social housing program?

Jaime Muguiro Domínguez: Andres, thank you very much. Good morning. We see both housing and infrastructure resilient for 2027. I think what is been a little bit disappointing in 2026, has been infrastructure because it has moved slower than what we expected. But there is a good indicator that we are expecting best in. Much better in 2027. And that is how we have been building up our ready mix concrete backlog. And as of the third quarter, of this year, our ready mixed concrete backlog has increased by around. Almost doubled you know, by around 95% to 98%. So we are expecting dumps highways, and rail projects coming along finally in 2027. Now, housing is behaving well.

All leading indicators are looking good. Both the formal sector but also the housing social housing program, which is gaining steam. We have been nicely exposed to it. We continue to win projects They are pretty intense in concrete because of the way it was specified using concrete cast in place for not only foundations and pillars, but also slabs and even the cladding of the building. For this reason, we are estimating that around 6 to 7 tons of cement and 30 cubic meters of ready-mix concrete per unit. So I hope that I answer your question, Andres.

Louisa Page Rodriguez: Okay. And I am gonna try once more Paco Suarez from Scotiabank, are you there? Are you there? Okay. I do have his question, so I am just gonna go ahead and read it. Do you see upside benefits in the form of additional savings from the $80 million you see from Project Cutting Edge impacting in 2027.

Operator: Paco, thank you for your question.

Jaime Muguiro Domínguez: We continue with our transformation. And probably we will deliver higher savings than the $475 million that we committed by end of next year. And, yes, you are right. We are expecting incremental $80 million to finish these first part of the transformation. But the next phase is very exciting and it is powered. If you allow me to elaborate very quickly, it is powered by technology, including AI. We have chosen a few domains. 2 of them are back-office domains that would dramatically benefit from the deployment of digitization, automation, integration, including augmented AI. We wanna standardize more, right, automate more, and that is gonna drive efficiencies and savings. The other aspect is in the cement domain.

Where we see AI playing a role in supply chain, particularly in freight. And also in production and maintenance. Maintenance is midterm. Production will come sooner. And this is about deploying AI to manufacture so that augmented AI models run our rotaries, our kilns, and our cement mills and do that adjusting faster operating parameters delivering incremental yield and lower energy cost per ton. We are progressing with Balcones to deployment, and then we will start scaling in The US and then elsewhere. And that will be a 3 year program. So, also, very exciting. And finally, the way we address third-party addressable spend within procurement and outside of procurement.

So far, out of the $475 million, we are delivering around $80 million on recurring. Procurement savings. But our target is much higher, and we see great opportunities. So bottom line is we continue with our transformation. We are not done yet. And that should bring further efficiencies. And we will focus on business excellence combined with capital allocation and shareholder returns, and that is our transformation.

Louisa Page Rodriguez: Thank you, Jaime. We have time for 1 last question, and it is coming from Paul Rogers from BNP. Via the webcast. And the question is the following. Are more platform disposals likely or will future divestments be more about asset pruning?

Jaime Muguiro Domínguez: Thank you, Paul. Good morning. We are going to do both. We are not done yet with our platform disposals. As far as I remember, we announced in the past that we would bring proceeds of around $1 billion. We have not yet completed that platform disposal program. As you know, we should be completing the divestiture of parts of our operations in Colombia. That should happen around Q2 of next year. That is progressing. And you know as announced, that is a transaction with Holcim. That will bring around $485 million. But then we will continue divesting some energy businesses on land. On our corporate offices in Colombia, which will bring at least additional $70 million.

But we are not done, and there are a few other platform disposals that we should be completing in the next 18 months. And then we will continue with our asset pruning. Particularly in some parts of The US and Europe. Thanks, Paul, for the question.

Louisa Page Rodriguez: We appreciate you joining us today for our third quarter results. We hope that you will come back for our fourth quarter 26 earnings call on February 18, 2027. If you do have any additional questions, please feel free to contact the investor relations team Many thanks.

Operator: Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.

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