CEMEX(US:CX)2025-10-28 16:02Financial Data and Key Metrics Changes - Consolidated EBITDA rose sharply, increasing at a double-digit rate, with a margin expansion of 2.5 percentage points, reaching its highest level for a third quarter since 2020 [6][9][12] - Free cash flow from operations was close to $540 million, an improvement of more than $350 million versus the third quarter of last year, with a conversion rate reaching 41% on a trailing 12-month basis [27][29] - Net income performance in the quarter grew by 8% when adjusting for discontinued operations, with record net income of $1.3 billion for the first nine months of the year [9][30] Business Line Data and Key Metrics Changes - In Mexico, EBITDA grew 11%, driven by a leaner cost base and higher prices, despite lower volumes [18] - The U.S. operations reached record third-quarter EBITDA and EBITDA margin, driven by increased cost efficiencies and higher prices [20] - The South Central America and Caribbean region posted impressive results, with EBITDA rising by 54% and margin expanding by 6.8 percentage points [25] Market Data and Key Metrics Changes - Demand conditions in Mexico are showing signs of improvement, while Europe continues with its volume growth trend [8][10] - In the EMEA region, cement volumes grew high single digits, driven by infrastructure throughout Eastern Europe, with ready-mix and aggregate volumes expanding by 13% and 1% respectively in the Middle East and Africa [24][25] - The U.S. market continues to reflect strengths in infrastructure, offset by persistent softness in the residential sector [22] Company Strategy and Development Direction - The company is focused on operational excellence, free cash flow conversion, and return on capital, with a strategic shift towards small to mid-size acquisitions [15][31] - Project Cutting Edge aims for annualized recurring EBITDA savings of $400 million by 2027, with significant progress already made [12][14] - The company is prioritizing growth in the U.S., Mexico, and Europe, while maintaining a disciplined approach to capital allocation [15][86] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in demand conditions, particularly in Mexico, with expectations of 2.5% to 3% growth in demand volumes next year [41] - The company anticipates continued improvements in free cash flow generation and conversion rates as strategic priorities are advanced [9][31] - Management highlighted the importance of infrastructure spending and potential benefits from the upcoming renegotiation of the USMCA trade agreement [20] Other Important Information - The company completed the divestment of its operations in Panama at an attractive multiple and reinvested in Couch Aggregates to strengthen its position in the U.S. [16] - The company is advancing its decarbonization agenda, having already surpassed the European Cement Association's 2030 consolidated net CO2 emissions target [25] Q&A Session Summary Question: Cash conversion expectations for next year and 2027 - Management targets around 45% free cash flow conversion from operations in 2026, with further improvements expected beyond that [34] Question: Outlook for Mexico's demand recovery - Management expects demand volumes in Mexico to grow by no less than 2.5% to 3% next year, supported by infrastructure projects [41] Question: Breakdown of EBITDA margin expansion in Mexico - The 500 basis points improvement in EBITDA margin was driven by prices, SG&A reductions, and lower variable costs, including a significant decrease in unitary fuel costs [47] Question: Urbanization solutions business performance - The decline in revenue and EBITDA is mainly due to weakness in residential and infrastructure activity, not project completions [67] Question: Debt profile and maturities - Management is considering extending maturities and is comfortable with a leverage range between 1.5 to 2 times, focusing on maintaining an investment-grade rating [75][79]