Financial Data and Key Metrics Changes - Consolidated volume declined 0.6% to reach 1.04 billion unit cases, showing sequential improvement compared to the second quarter [8] - Total revenues grew 3.3% to $71.9 billion pesos, with a currency-neutral increase of 4.7% [9] - Gross profit increased 0.9% to $32.4 billion pesos, leading to a margin contraction of 100 basis points to 45.1% [9] - Operating income rose 6.8% to $10.3 billion pesos, with operating margin expanding 50 basis points to 14.3% [9] - Adjusted EBITDA increased 3.2% to $14.4 billion pesos, with EBITDA margin remaining flat at 20.1% [10] - Majority net income slightly increased to $5.9 billion pesos, driven mainly by operating income growth [10] Business Line Data and Key Metrics Changes - In Mexico, volumes declined 3.7% due to a soft macroeconomic backdrop, while Coca-Cola Zero grew 23% year on year [10][12] - Guatemala saw a volume increase of 3.2% to 50.8 million unit cases, with Coca-Cola Zero growing 16.9% [16] - In Brazil, volumes increased 2.6% year on year, with Coca-Cola Zero growing volumes by 38% [18] - Colombia's volumes grew 2.9%, reflecting a gradually recovering economy [20] Market Data and Key Metrics Changes - Mexico faced a soft macroeconomic environment impacting consumer preferences and demand [7] - South America enjoyed a more resilient macro and consumer environment, supporting positive volume performance [7] - In Argentina, volumes increased 2.9%, despite a complex environment [22] Company Strategy and Development Direction - The company focuses on a sustainable growth model, RGM affordability initiatives, and cost control measures to navigate challenging operating conditions [7][16] - The company plans to continue incentivizing low and non-caloric products in response to the new excise tax in Mexico [15] - The strategy includes enhancing affordability, accelerating single-serve mix, leveraging digital initiatives, and maintaining a lean cost structure [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in adapting to challenging conditions, including the impact of the beverage excise tax increase in Mexico [7] - The company anticipates a challenging year for volume performance in Mexico due to the excise tax and modest economic growth [15] - Management highlighted the importance of maintaining household penetration and volume base amid economic pressures [78] Other Important Information - The company is rolling out a new digital tool, Juntos Plus Advisor, in Mexico to support share improvements [12] - The federal revenue law in Mexico includes an 87% increase in the excise tax on soft drinks, effective January 2026 [14] Q&A Session Summary Question: Insights on profitability improvement in Mexico and Central America - Management noted that profitability improvements were driven by savings initiatives and operational adjustments, despite ongoing gross profit pressures [37][39] Question: Strategies for Argentina, Colombia, and Guatemala - Management discussed the importance of maintaining household penetration and adapting strategies to local market conditions, emphasizing a sustainable long-term growth model [40][44] Question: CAPEX plans for next year - Management indicated a rethinking of CAPEX, primarily delaying investments in distribution centers due to expected volume declines [50][52] Question: Volume outlook for Mexico next year - Management provided a preliminary outlook of low to mid-single-digit volume declines for Mexico, considering the impact of the excise tax [62][67] Question: Pricing strategies in light of new taxes - Management plans to pass through the excise tax starting in January, with adjustments to pricing strategies to maintain consumer choice [85][86]

Financial Data and Key Metrics Changes - The company's third quarter net sales were $2.8 billion, reflecting a 1.4% increase as reported and flat on a constant basis compared to the prior year [5][10] - Adjusted EPS for the quarter was $2.67, influenced by productivity and restructuring initiatives, favorable currency exchange, and lower interest expense, but offset by higher input costs and temporary plant shutdowns [5][10] - Gross profit margin was reported at 23.7%, with an adjusted margin of 25.3%, impacted by higher input costs and lower volume [10][11] Business Line Data and Key Metrics Changes - Global Ceramic segment sales exceeded $1.1 billion, a 4.4% improvement as reported, with adjusted operating income at 8.1% [12] - Flooring North America reported sales of $937 million, a 3.8% decrease, with adjusted operating income at 7.2% [12][13] - Flooring Rest of the World had sales of $716 million, a 4.3% increase as reported, with adjusted operating income at 8.3% [13][14] Market Data and Key Metrics Changes - Consumer uncertainty continues to limit discretionary spending, particularly affecting residential remodeling, while the commercial sector remains stronger [7][8] - Central banks have lowered interest rates to stimulate economic growth, which is expected to benefit the U.S. housing market [7][8] - European consumers are experiencing lower inflation rates, which should encourage greater discretionary spending [8] Company Strategy and Development Direction - The company is executing targeted actions to drive performance, including operational enhancements and cost structure reductions, aiming for annualized savings of approximately $32 million [6][25] - The focus remains on optimizing supply chains and implementing price adjustments to address tariff impacts [8][25] - The company is leveraging its product portfolio and distribution advantages to expand relationships with customers [25] Management's Comments on Operating Environment and Future Outlook - Management noted that while economic conditions have weakened, they believe the company has outperformed in most markets [5][7] - The expectation is for fourth quarter EPS to be between $1.90 and $2.00, with market volume anticipated to remain soft through the end of the year [26][27] - Management highlighted the importance of addressing the housing shortage and the potential for increased home sales and remodeling as interest rates decline [24][27] Other Important Information - The company generated approximately $310 million in free cash flow during the quarter and repurchased 315,000 shares for about $40 million [6][14] - The balance sheet remains strong, with cash and cash equivalents at $516 million and gross debt of $1.9 billion [14][15] Q&A Session Summary Question: Changes in fourth-quarter EPS expectations - Management noted that conditions weakened since the last update, with elevated interest rates and declining consumer confidence affecting remodeling [30] Question: Outperformance in product categories and regions - Management indicated that ceramic sales grew more than the market due to improved product and channel mix, with strong performance in the commercial sector [31] Question: Impact of price increases related to tariffs - Management confirmed that previously announced price increases are flowing through, with additional increases to recover tariffs and inflation [37][38] Question: Raw material and energy cost declines - Management stated that raw material prices are easing from their peak, but energy and wages will remain higher than the previous year [45] Question: Visibility on inflation into 2026 - Management indicated that it typically takes three to four months for cost changes to cycle through inventory, with continued inflation expected in input costs [50] Question: Cumulative tailwind from cost savings initiatives - Management expects approximately $110 million in savings from restructuring actions, with an additional $60 million-$70 million favorable impact anticipated in 2026 [52] Question: Commercial segment performance - Management confirmed that the commercial channel continues to outperform residential, with stable backlogs led by government and education sectors [105]

Financial Data and Key Metrics Changes - The company reported earnings of $8.25 per share for Q3 2025, doubling the earnings from the same quarter last year [4] - Revenue for Q3 2025 was $2.5 billion, an increase of $639 million or 35% compared to the previous year [6] - EBITDA for the quarter reached $414 million, a 74% increase from $238 million in Q3 2024 [9] - Free cash flow for Q3 2025 was $519 million, contributing to a year-to-date total of $632 million [9] Business Line Data and Key Metrics Changes - The electrical segment revenue grew by 71%, while mechanical revenue increased by 26% [6] - Gross profit for Q3 2025 was $608 million, up $226 million from the previous year, with a gross profit percentage of 24.8% [7] - Service revenue increased by 11%, now accounting for 14% of total revenue [14] Market Data and Key Metrics Changes - Industrial customers represented 65% of total revenue in the first nine months of 2025, with technology accounting for 42% of revenue, up from 32% the previous year [12][13] - The backlog at the end of Q3 2025 reached a record $9.4 billion, a 65% increase year-over-year [11] Company Strategy and Development Direction - The company announced the acquisition of two contractors, FZ Electrical and Meisner Electric, expected to generate over $200 million in incremental annual revenue [5][10] - The company plans to continue investing in its workforce and expanding its modular business, aiming for 3 million sq ft of space by early 2026 [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continuing growth and strong results in 2025 and 2026, driven by solid bookings and high demand [6] - The company noted that the current market conditions are favorable, with a robust pipeline of projects and strong demand for services [12][93] Other Important Information - The company increased its quarterly dividend by 20% to $0.60 per share [6] - The effective tax rate for the year is expected to be around 23% [9] Q&A Session Summary Question: On technology side, does bidding activity match bookings and revenue growth? - Management confirmed that the pipeline remains robust with more opportunities than can be handled [18] Question: Thoughts on capital allocation and free cash flow? - Management indicated a preference for deploying cash into acquisitions and share buybacks, while also considering accumulating cash if necessary [20][23] Question: Insights on cash flow and any material advance payments in Q3? - Management clarified that the strong cash flow was not due to extraordinary events but reflected good payment terms and ongoing operations [28] Question: Backlog growth and its relation to modular and traditional construction? - Management stated that most new bookings are slated to start within the next year, with modular bookings extending further out [30][31] Question: How critical have internal recruiting efforts been to support growth? - Management emphasized the importance of a good work environment and ongoing recruitment efforts to sustain growth [46] Question: Update on automation investments in modular? - Management highlighted ongoing investments in automation and technology to improve productivity and efficiency [76][80] Question: Insights on pharma project pipeline and onshoring opportunities? - Management noted strong planning and upcoming projects in the pharma sector, particularly in the Mid-Atlantic region [82] Question: Changes in electrical or mechanical scope with large data centers? - Management indicated that the shift to DC power does not materially impact their operations, as the need for skilled electricians remains constant [87]

Financial Data and Key Metrics Changes - Total income for Q3 2025 reached $72.4 million, a 13.7% year-over-year increase, while total income excluding energy reached $69.9 million, a 14.5% increase [5][17] - Adjusted net operating income increased 14.7% to $66.1 million, with an adjusted NOI margin of 94.4%, reflecting higher operating leverage as revenue growth outpaced costs [17] - Adjusted EBITDA totaled $59.7 million, a 15% increase year-over-year, with a margin expansion of 34 basis points to 85.3% [17] - FFO, including current tax, increased 16.5% year-over-year to $47.4 million [17] - The company revised its full-year 2025 guidance, expecting EBITDA margin to reach 84.5% and revenue growth between 10% and 11% [15][17] Business Line Data and Key Metrics Changes - Total leasing activity for Q3 2025 reached 1.7 million square feet, with 597,000 square feet in new leases and 1.1 million square feet in renewals [5] - The retention rate remains high, and rents on rollovers continue to trend upward, indicating strong tenant relationships [5] - The overall portfolio occupancy dipped slightly to 89.7%, while stabilized and same-store occupancy reached 94.3% and 94.8% respectively [6] Market Data and Key Metrics Changes - In Monterrey, the company completed construction of Apodaca Park, with strong interest from advanced manufacturing and logistics companies [6] - Ciudad Juárez saw a market turnaround with a 130 basis point contraction in overall vacancy and 1.3 million square feet of net absorption during the quarter [9] - Tijuana is experiencing slower recovery due to high vacancy from recent supply influx, but early signs of reactivation are noted [10] - Guadalajara maintained a healthy 2.8% vacancy rate, while Mexico City reported record absorption year-to-date, with a low vacancy of just 2% [11] Company Strategy and Development Direction - The company is focused on its Route 2030 growth strategy, prioritizing markets with visible tenant demand and ensuring capital allocation is tied to quality and market visibility [15] - The company is highly selective in determining future tenants, particularly in Monterrey, which is a key nearshoring destination [7] - The company aims to maintain a conservative capital allocation strategy, focusing on asset recycling and reinvesting in higher growth opportunities [15] Management's Comments on Operating Environment and Future Outlook - Management noted encouraging signs of improvement in leasing momentum and tenant demand, indicating a normalization of the market [4] - The company is confident in its ability to capture anticipated demand in 2026, supported by improving demand indicators [6] - Management emphasized the importance of energy supply and collaboration with federal authorities to enhance reliability for industrial users [12][13] Other Important Information - The company successfully completed a $500 million senior unsecured notes offering, enhancing liquidity and extending maturity profiles [18] - The company sold an 80,604 square feet building in Ciudad Juárez for $5.5 million, approximately 10% above appraised value [15][19] Q&A Session Summary Question: Long-term development pipeline acceleration - Management indicated positive demand signals across most markets, with a focus on mid to long-term plans for Route 2030, analyzing demand trends carefully [22][24] Question: Demand from existing vs. new tenants - Demand is coming from both existing tenants and new tenants, with interest from various industries including electronics and aerospace [25][26] Question: Update on leasing activity in October - Management confirmed leasing activity in various regions, including logistics operations in Ciudad Juárez and Tijuana [29][30] Question: Sustainability of improved EBITDA margins - Management expressed confidence in maintaining strong EBITDA margins due to a focus on expense control and operational efficiency [35][36] Question: Indicators for launching new developments - Decisions are based on internal data, occupancy trends, and direct communication with clients, ensuring alignment with market demand [53][56] Question: Trends in real estate taxes and insurance costs - No major adjustments in insurance costs or real estate taxes were noted, with costs being competitive for tenants [73][75]

Financial Data and Key Metrics Changes - Funds from operations (FFO) per share for Q3 2025 was $2.27, representing a 6.6% increase compared to the same quarter last year [7][13] - Quarter-end leasing was at 96.7% with occupancy at 95.9%, while average quarterly occupancy was 95.7%, down 100 basis points from Q3 2024 [7][8] - Cash same store revenue rose by 6.9% for the quarter and 6.2% year to date [8] - The company has a diversified rent roll, with the top 10 tenants accounting for only 6.9% of rents, down 60 basis points from the previous year [8] Business Line Data and Key Metrics Changes - Quarterly releasing spreads were 36% GAAP and 22% cash for leases signed during the quarter, with year-to-date results slightly higher at 42.7% GAAP and cash respectively [7][8] - The retention rate for tenants rose to almost 80%, indicating a cautious nature among tenants [10] Market Data and Key Metrics Changes - The market remains somewhat bifurcated, with improved activity in smaller spaces (50,000 square feet and below) but larger spaces experiencing delays in leasing [9][10] - The company is reforecasting 2025 starts to 200,000,000 due to current demand levels and a decline in the supply pipeline [11] Company Strategy and Development Direction - The company aims to capitalize on development opportunities earlier than private peers, leveraging its balance sheet strength and existing tenant expansion needs [12] - The focus is on geographic and tenant diversity as strategic paths to stabilize earnings regardless of economic conditions [8] - The company is excited about acquiring properties in Raleigh, North Carolina, and new development land in Orlando [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about macroeconomic conditions improving, which could strengthen consumer and corporate confidence [16] - The company is positioned to benefit from long-term trends such as population migration and evolving logistics chains [18] - Management noted that while construction costs have come down, demand remains a critical factor for development starts [33] Other Important Information - The company has a strong balance sheet with a debt to total market capitalization of 14.1% and an unadjusted debt to EBITDA ratio of 2.9 times [14] - Tenant collections remain healthy, with uncollectible rents estimated to be in the 35 to 40 basis point range as a percentage of revenues [15] Q&A Session Summary Question: Can you expand on leasing and the development pipeline? - Management noted that conversations regarding leasing have improved since May, with a high retention rate benefiting the portfolio [22][24] Question: How have construction costs trended recently? - Construction pricing has come down by about 10% to 12%, but demand remains the primary constraint on starting new projects [31][33] Question: What is the outlook for releasing spreads? - Management believes they can maintain releasing spreads in the mid-30s, with low supply and high demand expected to drive future rent increases [48][50] Question: How are different regional markets performing? - The Eastern Region, particularly Florida and Raleigh, has shown strength, while California and Denver have been slower markets [58][60] Question: What is the current status of bad debt and tenant watch lists? - Bad debt remains low at around 30 to 35 basis points relative to total revenue, with no significant changes in the tenant watch list [84] Question: What interest rate would prompt a change in leverage levels? - Management indicated that they are monitoring interest rates and equity opportunities, with plans to potentially issue $200,000,000 to $250,000,000 in unsecured term loans [85][86]

Financial Data and Key Metrics Changes - Sales increased by 1% sequentially and year-over-year to $532 million, with operating income at $78 million and earnings per share at a record $1.55 for the third quarter [4][18] - Cash flow was strong, up 24% year-over-year, and the company returned $20 million to shareholders while announcing a 9% increase in the quarterly dividend [4][28] Business Line Data and Key Metrics Changes - Consumer and Specialties segment sales were $277 million, flat sequentially and down 1% year-over-year, with household and personal care sales up 2% sequentially [22][23] - Specialty Additives sales decreased by 2% sequentially, driven by lower demand in residential construction [19][23] - Engineered Solutions segment sales increased by 2% sequentially and 4% year-over-year, with strong demand from steel customers in North America [24][25] Market Data and Key Metrics Changes - The pet litter market in North America and Europe remained stable, while Asia, particularly China, showed strong growth [6][12] - Demand in the residential construction market was flat, with signs of softening late in the third quarter [8][10] - The environmental and infrastructure markets experienced slow commercial construction activity, but there was increased demand for infrastructure drilling products [9][10] Company Strategy and Development Direction - The company is focusing on higher growth markets and investing in technologies to drive growth, particularly in pet care and natural oil purification [11][12] - Recent investments include expanding manufacturing capabilities in North America and establishing a new facility in China to meet growing demand [12][13] - The company expects these investments to generate $100 million in incremental revenue over the next 12 to 18 months [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged mixed market conditions but expressed confidence in long-term growth, particularly in the pet care market [5][12] - The company anticipates continued growth in household and personal care, with expectations for a strong fourth quarter driven by cat litter sales [29] - Management noted potential challenges in the residential construction and foundry markets due to customer inventory levels and production adjustments [30] Other Important Information - The company is navigating temporary cost increases due to plant upgrades, which are expected to improve margins in the future [20][55] - Litigation expenses related to talc have increased, with management working on establishing a trust to resolve ongoing issues [75][76] Q&A Session Summary Question: Outlook for pet care business growth - Management highlighted a challenging market but noted a long-term growth rate of 3% to 4% in North America and 6% to 8% in Asia, with investments supporting future growth [35][36] Question: Margin performance in Consumer and Specialties - Management explained that temporary costs from plant upgrades and discounting strategies impacted margins, but they expect to return to last year's margins as these issues resolve [54][56] Question: Investments in Turkey for renewable fuel - The company is expanding its facility in Turkey by about 30% to meet growing demand, with an investment of $9 million to $10 million [58][59] Question: Working capital dynamics and inventory levels - Management indicated that while inventory levels are slightly elevated, they expect to return to typical levels by year-end, with strong cash flow anticipated in the fourth quarter [63][64]

Financial Data and Key Metrics Changes - The company reported earnings of $8.25 per share, doubling the earnings from the same quarter last year [4] - Revenue for Q3 2025 was $2,500,000,000, an increase of $639,000,000 or 35% compared to the previous year [8] - EBITDA reached $414,000,000, a 74% increase from $238,000,000 in Q3 2024 [13] - Free cash flow for Q3 was $519,000,000, with year-to-date free cash flow at $632,000,000 [13] - Net income for Q3 2025 was $292,000,000 compared to $146,000,000 in Q3 2024 [13] Business Line Data and Key Metrics Changes - The mechanical business saw a 26% increase in revenue, while the electrical segment revenue grew by 71% [8] - Gross profit for Q3 was $620,000,000, with a gross profit percentage of 24.8%, up from 21.1% in Q3 2024 [10] - Service revenue increased by 11%, now accounting for 14% of total revenue [18] Market Data and Key Metrics Changes - Industrial customers accounted for 65% of total revenue, with technology representing 42% of revenue, up from 32% the previous year [16] - The backlog at the end of Q3 reached a record $9,400,000,000, a 65% increase year-over-year [15] - Construction accounted for 86% of total revenue, with new building projects representing 61% [17] Company Strategy and Development Direction - The company plans to continue growth and strong results into 2025 and 2026, supported by solid bookings and high demand [7] - Recent acquisitions include FZ Electrical and Meisner Electric, expected to provide over $200,000,000 in incremental annual revenue [6][14] - The company is focused on maintaining strong margins and operational efficiency while expanding its service offerings [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, citing strong demand and a skilled workforce [19] - The company anticipates continued same-store revenue growth in the low to mid-teens for 2026 [10] - Management highlighted the importance of maintaining good relationships with existing customers while exploring new opportunities [70] Other Important Information - The company increased its quarterly dividend by 20% to $0.60 per share [6] - SG&A expenses for the quarter were $230,000,000, or 9.4% of revenue, down from 9.9% in the previous year [12] - The company has a net cash position of $725,000,000 as of September [13] Q&A Session Summary Question: Does the bidding activity match the bookings and revenue growth seen in Q3? - Management confirmed that the pipeline remains robust, with no slowdown in opportunities [22] Question: How is the company thinking about capital allocation given strong free cash flow? - Management indicated a focus on acquisitions and share buybacks, while also considering cash accumulation [24] Question: Can you speak to backlog growth and its relation to modular versus traditional construction? - Management noted that backlog growth is driven by both modular and traditional construction, with modular projects often booked further out [33] Question: How critical have internal recruiting efforts been to support growth? - Management emphasized the importance of a good work environment and ongoing recruitment efforts to sustain growth [55] Question: What is the status of the service revenue growth? - Management highlighted broad strength in the service business, driven by execution and collaboration [84] Question: What is the outlook for the pharma project pipeline? - Management indicated strong planning in the pharma sector, with significant opportunities expected in the future [96]

Financial Data and Key Metrics Changes - The company's third quarter net sales were $2.8 billion, reflecting a 1.4% increase as reported and flat on a constant basis compared to the prior year [3][10] - Adjusted earnings per share (EPS) were $2.67, benefiting from productivity and restructuring initiatives, favorable currency exchange, and lower interest expenses, despite higher input costs and temporary plant shutdowns [4][12] - Gross profit margin was reported at 23.7%, with an adjusted margin of 25.3%, impacted by higher input costs and lower volume [11] Business Line Data and Key Metrics Changes - Global Ceramic segment sales were over $1.1 billion, a 4.4% improvement as reported, driven by favorable price mix despite lower unit volume [12] - Flooring North America segment sales decreased by 3.8% to $937 million, with residential new construction and remodeling under pressure [13] - Flooring Rest of the World segment sales increased by 4.3% to $716 million, supported by growth in insulation and panels business [13][19] Market Data and Key Metrics Changes - Consumer uncertainty continues to limit discretionary spending, particularly affecting residential remodeling and new construction [6][18] - Central banks have lowered interest rates to stimulate economic growth, which is expected to benefit the U.S. housing market [7][26] - European consumers are experiencing lower inflation rates and have accrued record savings, which may encourage discretionary spending [8] Company Strategy and Development Direction - The company is focused on lowering its cost structure without impacting long-term growth potential, identifying additional restructuring opportunities to streamline operations [5][28] - The strategy includes optimizing the supply chain and implementing price adjustments to mitigate the impact of tariffs on imported products [9][28] - The company anticipates that market volume will remain soft through the end of the year, with a focus on product innovation and operational productivity to capitalize on future market recovery [30][31] Management's Comments on Operating Environment and Future Outlook - Management noted that while economic conditions have weakened, the company has outperformed in most markets due to strong product offerings [4][26] - The company expects fourth quarter EPS to be between $1.90 and $2.00, considering one additional shipping day and excluding restructuring charges [29] - Management highlighted the significant pent-up demand in the remodeling business, anticipating a strong recovery once consumer confidence improves [30][31] Other Important Information - The company generated approximately $310 million of free cash flow during the quarter and repurchased 315,000 shares for about $40 million [5][6] - The balance sheet remains strong, with cash and cash equivalents of $516 million and gross debt of $1.9 billion [14] Q&A Session Summary Question: What significant changes have occurred since July that lowered expectations for Q4 EPS? - Management indicated that conditions weakened due to elevated interest rates and declining consumer confidence affecting remodeling [35] Question: Which product categories and regions outperformed the market? - The ceramic sales grew more than the market due to improved product and channel mix, with a larger commercial business enhancing performance [36] Question: What is the status of price increases related to tariffs? - Price increases have been announced to recover tariffs and inflation, with an expected realization over time [42][44] Question: What is the impact of raw material and energy cost declines? - Raw material prices are easing, but energy and wages remain higher than last year, with continued inflation anticipated [51][52] Question: How is the company managing its sales force during this challenging period? - The company has specialized sales forces for different segments, focusing on optimizing business with each customer [116]

Financial Data and Key Metrics Changes - The company's Q3 2025 net sales were $2.8 billion, reflecting a 1.4% increase year-over-year but flat on a constant basis [4][10] - Adjusted EPS for the quarter was $2.67, influenced by productivity and restructuring initiatives, favorable currency exchange, and lower interest expenses, despite higher input costs and temporary plant shutdowns [4][12] - Gross profit margin was reported at 23.7%, with an adjusted margin of 25.3%, impacted by higher input costs and lower volume [10][11] Business Line Data and Key Metrics Changes - Global Ceramic segment sales exceeded $1.1 billion, a 4.4% increase as reported, with adjusted operating income at 8.1% [12][16] - Flooring North America reported sales of $937 million, a 3.8% decrease, with adjusted operating income at 7.2% [12][13] - Flooring Rest of the World had sales of $716 million, a 4.3% increase as reported, with adjusted operating income at 8.3% [12][14] Market Data and Key Metrics Changes - Consumer uncertainty continues to limit discretionary spending, particularly affecting residential remodeling, while the commercial sector remains stronger [6][18] - In Europe, consumer savings and lower inflation rates are expected to encourage discretionary spending, although the housing market remains constrained [8][19] - The U.S. housing market is anticipated to benefit from recent interest rate cuts, potentially stimulating home sales and remodeling [6][23] Company Strategy and Development Direction - The company is focusing on operational enhancements, administrative improvements, and technology advancements to lower costs without impacting long-term growth potential [5][24] - Additional restructuring opportunities have been identified, expected to yield annualized savings of approximately $32 million [5][24] - The company aims to leverage its product portfolio and distribution advantages to expand relationships with customers and mitigate pricing pressures [24] Management's Comments on Operating Environment and Future Outlook - Management noted that while economic conditions have weakened, they believe the company has outperformed in most markets [4][6] - The company expects Q4 EPS to be between $1.90 and $2.00, with one additional shipping day [24] - Management highlighted the ongoing housing shortage and the need for increased new home construction and remodeling to alleviate housing inflation pressures [23][25] Other Important Information - The company generated approximately $310 million in free cash flow during the quarter and repurchased 315,000 shares for about $40 million [5][14] - The balance sheet remains strong, with cash and cash equivalents at $516 million and gross debt at $1.9 billion [14][15] Q&A Session Summary Question: Changes in fourth-quarter EPS expectations - Management noted that conditions weakened since the last update, with elevated interest rates and declining consumer confidence affecting remodeling and construction [28] Question: Outperformance in product categories and regions - The company attributed growth in ceramic sales to improved product and channel mix, with a larger commercial business enhancing performance [29] Question: Impact of price increases related to tariffs - Management confirmed that previously announced price increases are flowing through, with additional increases to recover tariffs and inflation [32][33] Question: Visibility on inflation into 2026 - Management indicated that it typically takes three to four months for cost changes to cycle through inventory, with continued inflation expected in input costs [44] Question: Benefit from new product launches - Management highlighted ongoing product innovation across all segments, including new technologies in ceramic and laminate products [48] Question: Commercial segment performance - Management confirmed that the commercial segment continues to outperform residential, with stable backlogs in government and education channels [78]

Financial Data and Key Metrics Changes - Consolidated volume declined 0.6% to 1,040 million unit cases, showing sequential improvement compared to the second quarter [8] - Total revenues grew 3.3% to MXN 71.9 billion, with a currency neutral increase of 4.7% [9] - Gross profit increased 0.9% to MXN 32.4 billion, leading to a margin contraction of 100 basis points to 45.1% [10] - Operating income rose 6.8% to MXN 10.3 billion, with operating margin expanding 50 basis points to 14.3% [10] - Adjusted EBITDA increased 3.2% to MXN 14.4 billion, with EBITDA margin remaining flat at 20.1% [11] - Majority net income slightly increased to ARS 5.9 billion, driven mainly by operating income growth [11] Business Line Data and Key Metrics Changes - In Mexico, volumes declined 3.7% due to a soft macroeconomic backdrop, while Coca Cola Zero grew 23% year on year [12][14] - Guatemala saw a volume increase of 3.2% to 50.8 million unit cases, with Coca Cola Zero Sugar growing 16.9% [17] - Brazil's volumes increased 2.6% year on year, driven by share gains and a successful Star Wars campaign for Coca Cola Zero [19] - Colombia's volumes grew 2.9%, supported by share gains in brand Coca Cola and flavors [22] - Argentina's volumes also increased 2.9%, with a focus on affordability and digital initiatives [26] Market Data and Key Metrics Changes - Mexico faced a soft macroeconomic environment impacting consumer preferences, while South America showed a more resilient consumer environment [7] - In Brazil, despite lower temperatures and slower growth, volumes increased due to share gains [19] - Colombia's economy is gradually recovering, driven by improving sectors such as commerce and agriculture [22] - Argentina's strategy focused on maintaining household penetration during economic challenges, leading to better positioning for recovery [48] Company Strategy and Development Direction - The company aims to adapt to challenging operating conditions, focusing on sustainable growth, affordability initiatives, and cost control measures [8][16] - Plans to install 125,000 coolers during the year to enhance market presence [14] - The company is committed to incentivizing low and non-caloric products in response to the new excise tax in Mexico [15][16] - Emphasis on maintaining household penetration and volume base despite expected declines due to tax increases [82] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the impact of the beverage excise tax increase in Mexico, anticipating a challenging year ahead [16] - Positive brand equity expected from the World Cup, which may offset some negative impacts [16] - The company is prepared for potential volatility in the trade environment but sees stability in key commodities [33][34] - Management highlighted the importance of maintaining a lean cost structure and focusing on productivity improvements [26] Other Important Information - The company is implementing a new digital sales tool, Juntos Plus Advisor, to enhance service levels and share improvements [14] - The recent passing of a board member was acknowledged, reflecting on their contributions to the company [6] Q&A Session Summary Question: Insights on profitability improvement in Mexico and Central America - Management noted that profitability improvements were driven by savings initiatives and operational adjustments rather than solely volume recovery [44][47] Question: Strategies for Argentina, Colombia, and Guatemala - Management discussed maintaining household penetration in Argentina during economic downturns and adjusting strategies in Colombia and Guatemala to capture growth opportunities [48][52] Question: CapEx plans for next year - Management indicated a rethinking of CapEx, delaying some investments due to expected volume declines [58][60] Question: Volume outlook for Mexico next year - Management provided a preliminary outlook of low to mid single-digit volume declines for Mexico, considering the impact of the excise tax [63][73] Question: Pricing strategies in light of new taxes - Management confirmed plans to pass through the excise tax and adjust pricing strategies to encourage consumer shifts towards non-caloric options [89]