Financial Data and Key Metrics Changes - The company reported earnings per share of $1.19 for Q3 2025, down from $1.36 in the previous quarter and $1.32 in Q3 2024 [4] - Return on average assets was 1.11% and pre-provision return on average assets was 1.61% [5] - Net interest income increased by $5.5 million compared to the previous quarter, reaching $158 million, while net interest margin improved by two basis points to 4.23% [5][25] - Non-performing assets increased by $22 million, resulting in a ratio of 83 basis points compared to 71 basis points in the linked quarter [20][28] Business Line Data and Key Metrics Changes - Loan growth for the quarter was 6% or $174 million, net of $22 million in guaranteed loan sales [6][14] - Deposit growth was exceptional, with an increase of $240 million in the quarter, leading to a total year-over-year increase of approximately 7% [7][18] - Specialty deposits grew by $189 million in the quarter and $681 million year-over-year, reflecting a 22% increase [18] Market Data and Key Metrics Changes - The company experienced strong loan origination in the Southwest markets, particularly in Dallas and Las Vegas [6][13] - Growth in deposits was observed across all regions year-over-year, with non-interest-bearing accounts representing over 32% of total deposits [18] Company Strategy and Development Direction - The company is focused on integrating new branches acquired in Arizona and Kansas City, which will enhance its market presence [3][11] - The strategy emphasizes organic growth and maintaining a balanced approach to lending and deposit generation [11][58] - The management is optimistic about the economic environment, with expectations of continued loan production and client onboarding [12][13] Management's Comments on Operating Environment and Future Outlook - Management noted that clients are showing increased confidence due to recent economic developments, including interest rate cuts and clarity in trade policies [12][13] - The company expects to maintain or slightly accelerate loan production levels moving forward [12] - There is confidence in returning non-performing assets to historical levels in the coming quarters [10][21] Other Important Information - The company increased its quarterly dividend by $0.01 to $0.32 per share for Q4 2025 [9][31] - The acquisition of branches is expected to be accretive to net interest margin, despite recent interest rate cuts [27] Q&A Session Summary Question: Can you provide clarity on the resolution timeline for the Southern California credits and the life insurance premium finance loan? - Management indicated that the resolution for the Southern California loans may take longer than anticipated due to a secondary bankruptcy filing, while the life insurance loan is expected to be resolved through litigation, with full principal coverage assured [36][38] Question: What is the company's exposure to non-depository financial institutions (NDFIs)? - The company has approximately $260 to $270 million in balances across 18 to 20 relationships with private lenders, primarily secured by first mortgages on residential real estate [39][40] Question: What are the expectations for non-interest expenses in the fourth quarter? - The company anticipates total expenses to be around $112 million, factoring in branch acquisition costs and normalizing for non-recurring items [67] Question: How does the company view its capital priorities moving forward? - The focus remains on organic growth, with potential for share buybacks if suitable M&A opportunities do not arise [58][76] Question: What is driving the growth in specialty deposits? - The company has invested in people and systems, leading to a variable cost model that is profitable and allows for market share growth [77]

Financial Data and Key Metrics Changes - Total revenue for Q4 was $7.5 million, down 1.5% year over year, with Zedge Marketplace revenue up mid-single digits but offset by an 11% decline at Emojipedia and a 39% drop at GuruShots [14][15] - Subscription revenue increased by 21% year over year, with nearly 1 million active subscribers, a 47% increase compared to Q4 of fiscal 2024 [5][15] - Deferred revenue reached $5.4 million, up 10% sequentially and 73% year over year, indicating future revenue potential with high gross margins [15][17] - GAAP loss from operations was $0.7 million, compared to a loss of $0.1 million last year, primarily due to restructuring costs [16][17] Business Line Data and Key Metrics Changes - Zedge Marketplace performed well, while GuruShots showed signs of plateauing, with a 39% year-over-year revenue decline [5][14] - Advertising revenue was slightly up for the quarter, but total ad revenue was softer than expected due to a decline at Emojipedia [5][14] - Zedge Premium's GTV grew by 7% year over year, and ARPMAU increased by 17%, reflecting a shift towards higher-value users [15] Market Data and Key Metrics Changes - The introduction of a new Google search feature allowing users to copy emojis directly from search results has diverted traffic away from Emojipedia, impacting its performance [6][32] - The competitive impact of AI search has also affected Emojipedia's traffic, as users can now obtain emojis without visiting the site [6][32] Company Strategy and Development Direction - The company aims to expand and diversify its revenue base, focusing on innovation and optimizing monetization strategies [9][12] - Plans include further integration of audio AI capabilities into products and evaluating the future direction of GuruShots [9][11] - The company is committed to improving operational efficiency and executing a balanced capital allocation strategy, including share repurchases and dividends [12][8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's cash flow generation and balance sheet, initiating a quarterly dividend of $0.016 per share [8] - The completed restructuring is expected to provide greater operating flexibility and improved cash flow and profitability in fiscal 2026 [4][12] - Management is optimistic about the potential of early-stage products like Dataseeds.ai, TapeDeck, and SyncAt, which are evolving and positioned for growth [12][13] Other Important Information - The company repurchased approximately 640,000 shares in Q4 and a total of 1.3 million shares for the full year, reflecting a disciplined capital allocation strategy [7][8] - Cash and cash equivalents at year-end were approximately $19 million, with no debt [17] Q&A Session Summary Question: Actions regarding TapeDeck and Dataseeds.ai - Management highlighted that TapeDeck aims to support indie artists and will evaluate its future based on performance metrics, while Dataseeds.ai focuses on providing datasets for AI companies [21][23] Question: Sequential improvement in monthly active users - Management attributed the improvement to discerning marketing spend and seasonal dynamics, ensuring high-value customer acquisition [27][28] Question: Focus of restructuring savings - Management indicated that restructuring savings were reinvested in marketing and user acquisition, with plans to continue prioritizing these areas if growth opportunities arise [29][30] Question: Changes affecting Emojipedia - Management explained that Google's new search feature has impacted Emojipedia's traffic, and they are exploring strategies to mitigate this effect [31][32] Question: Deferred revenue recognition - Management clarified that deferred revenue is recognized over 30 months, and maintaining a steady subscriber pool will help level up revenue recognition [35] Question: SG&A expenses outlook - Management suggested that SG&A may decline slightly going forward as spending on user acquisition and consulting for new projects is expected to decrease [37]

Financial Data and Key Metrics Changes - The company reported a net income of $621,000 or $0.01 per diluted share for Q3 2025, with core FFO at $26.4 million or $0.31 per diluted share, and AFFO at $28 million or $0.33 per diluted share, reflecting a 3.1% increase year-over-year [10][12] - Total recurring G&A increased to $5.1 million, representing 10.6% of total revenues, down from an 11.1% average last year, indicating improved efficiency [10][12] - The company’s adjusted net debt was $623.5 million, with a pro forma adjusted net debt to annualized adjusted EBITDAre ratio of 3.6 times, below the targeted range of 4.5 to 5.5 times [11][12] Business Line Data and Key Metrics Changes - The company closed $203.9 million in investments across 50 properties at a blended cash yield of 7.4%, with an average lease term of 13.4 years [5][6] - Disposition activity included the sale of 24 properties for $37.8 million at a 7.2% cap rate, allowing reinvestment into higher yielding opportunities [6][12] - The portfolio consisted of 721 investments with 114 tenants across 28 industries, generating over $183 million in ABR [6][7] Market Data and Key Metrics Changes - The company noted that over 62% of its ABR comes from tenants with investment grade ratings, with only 2.7% of ABR expiring through 2027, ensuring stable cash flows [7][12] - The company experienced a decline in its top five tenancy from 28.9% to 22.9% year-to-date, indicating successful diversification efforts [4][6] Company Strategy and Development Direction - The company is increasing its 2025 net investment guidance to a range of $350 million to $400 million, up from $125 million to $175 million, reflecting confidence in market opportunities [4][12] - The focus remains on acquiring high-quality, necessity-based retail properties, with a strategy to maintain a diversified tenant base [9][12] - The company aims to return to normal disposition volumes focused on credit risk and opportunistic sales after a period of elevated activity [6][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the current investment landscape, noting it is the most attractive opportunity set seen since going public [9][12] - The company anticipates continued growth in 2026, driven by improved cost of capital and a robust acquisition pipeline [12][54] - Management acknowledged some softness in the lower and middle-income consumer segments but remains focused on resilient sectors [9][12] Other Important Information - The board declared a quarterly cash dividend of $0.215 per share, payable on December 15 to shareholders of record as of December 1 [12] - The company has over $1.1 billion in total liquidity, including cash, available credit, and undrawn term loan capacity [12] Q&A Session Summary Question: Can you elaborate on the attractive opportunity set mentioned? - Management indicated they are focusing on convenience stores, quick service restaurants, and grocery sectors, expecting to maintain a high acquisition pace [16][18] Question: Why didn't the guidance for 2025 AFFO per share change despite high activity? - The timing of investments was heavily weighted towards the end of the quarter, impacting revenue recognition, and there is uncertainty regarding treasury stock dilution [21][22] Question: What are the expectations for investment grade acquisitions? - Management noted a 50 basis point difference in cap rates between investment grade and non-investment grade assets, with a focus on risk-adjusted returns [32][33] Question: How is competition from private equity affecting the company? - Management stated that while there is competition, it primarily targets larger transactions, which do not directly impact the company's strategy [38][39] Question: What is the outlook for cap rates and spreads? - Management expects cap rates to remain stable, with potential slight compression, and believes the current spreads are healthy for future growth [48][50]

Financial Data and Key Metrics Changes - In the fourth quarter, net income increased by 7% to $87 million or $1.7 per diluted share [7] - For the full year, net income totaled $167.9 million or $3.29 per diluted share [8] - Revenues for the fourth quarter increased by 22% to $670.5 million, while annual revenues grew by 10% to $1.7 billion [8][4] - Book value per share increased by 11% to $34.78, reflecting a 92% increase over the last five years [5][17] Business Line Data and Key Metrics Changes - In the fourth quarter, the company sold 4,891 lots with an average sales price of $115,700, while for the year, 14,240 lots were sold at an average price of $108,400 [8] - The gross profit margin for the fourth quarter was 22.3%, down 160 basis points from the previous year [9] - The pretax income for the fourth quarter increased by 4% to $113.1 million, with a pretax profit margin of 16.9% [10] Market Data and Key Metrics Changes - The company noted slower new home sales due to affordability constraints and cautious consumer sentiment, but builder incentives are helping to bridge the affordability gap [12] - The availability of contractors and materials remains solid, with stable land development costs [12] Company Strategy and Development Direction - The company plans to continue executing its strategic plan by investing for future growth, maximizing returns, and consolidating market share in the lot development industry [6] - Forestar aims to maintain a minimum 15% pretax return on average inventory and a return of initial cash investment within 36 months [15] - The company expects to invest approximately $1.4 billion in land acquisition and development in fiscal 2026 [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term demand for finished lots despite near-term headwinds from home affordability constraints [21] - The company anticipates delivering between 14,000 to 15,000 lots and generating $1.6 billion to $1.7 billion in revenue for fiscal 2026 [20] Other Important Information - The company ended the quarter with $968 million in liquidity, including $379 million in unrestricted cash [17] - Total debt was $803 million with no senior note maturities until fiscal 2028, resulting in a net debt to capital ratio of 19.3% [17] Q&A Session Summary Question: Why is growth expected to be in line with Horton? - Management indicated that growth is tied to the size of Horton and their market entry, with the potential for mid-single-digit growth depending on market conditions [25] Question: What is the outlook for headcount and SG&A leverage? - The company expects headcount to remain flat or slightly decrease in fiscal 2026, following a significant increase in fiscal 2025 [26] Question: Are there any pushbacks on lot prices or extended takedown schedules? - Management confirmed successful renegotiation of terms but noted minimal pushback on lot pricing, managing it project by project [29] Question: What trends are observed in Texas and Florida? - Management noted some pressure in Texas and Florida markets but still sees good absorption at affordable price points [32] Question: What is the expected cadence of deliveries in 2026? - The company projects a similar delivery cadence to 2025, with larger deliveries expected in the second half of the year [33]

Financial Data and Key Metrics Changes - Consolidated EBITDA rose sharply, increasing at a double-digit rate, with significant margin gains driven by cost savings and higher prices [5][6][8] - EBITDA margin expanded by 2.5 percentage points, reaching its highest level for a third quarter since 2020 [7][11] - Free cash flow from operations improved significantly, reaching approximately $540 million, an increase of over $350 million year-over-year [25][26] Business Line Data and Key Metrics Changes - In Mexico, EBITDA grew by 11%, driven by a leaner cost base and higher prices despite lower volumes [16] - The U.S. operations achieved record third-quarter EBITDA and margins, supported by increased cost efficiencies and higher prices [18][19] - The EMEA region saw strong performance, with new records in EBITDA and margins, particularly in Eastern Europe and the Middle East [22][23] Market Data and Key Metrics Changes - Demand conditions in Mexico are showing signs of improvement, with average daily cement sales volume outperforming historical patterns [16] - In the U.S., infrastructure demand remains strong, while residential sector weakness persists [19][52] - The South Central America and Caribbean region posted impressive results, with EBITDA rising by 54% [24] Company Strategy and Development Direction - The company is focused on operational excellence and delivering industry-leading shareholder returns, with a strategic plan aimed at enhancing profitability and free cash flow conversion [4][13] - Project Cutting Edge aims for annualized recurring EBITDA savings of $400 million by 2027, with significant progress already made [11][12] - The company is prioritizing small to mid-size acquisitions in the U.S. and divesting non-core markets to strengthen its position [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in demand conditions, particularly in Mexico and the U.S., with expectations for volume growth in 2026 [18][39] - The company anticipates continued improvements in free cash flow conversion and operational efficiency as it progresses with its strategic initiatives [26][29] - Management highlighted the importance of maintaining a disciplined approach to capital allocation while pursuing growth opportunities [13][66] Other Important Information - The company completed the divestment of its operations in Panama and consolidated Couch Aggregates into its U.S. business [2][3][14] - The company is committed to decarbonization efforts, having surpassed the European Cement Association's 2030 CO2 emissions target [6][23] Q&A Session Summary Question: What should we expect for cash conversion next year and 2027? - Management targets around 45% free cash flow conversion from operations in 2026, with further improvements expected beyond that [32] Question: Can we expect a recovery in Mexico's demand volumes? - Management is confident that demand volumes in Mexico should grow by at least 2.5% to 3% next year, driven by infrastructure projects [38] Question: What contributed to the EBITDA margin expansion in Mexico? - The 500 basis points improvement was driven by price increases, reductions in SG&A, and lower variable costs, including energy [42] Question: How does the company view CCUS initiatives? - Management emphasized that CCUS remains a mid-term priority, but will only be pursued if it is accretive to value creation [45][46] Question: What is the outlook for U.S. M&A? - The company is actively looking at family-owned aggregate targets in the U.S. and is strengthening its team for bolt-on acquisitions [73]

Financial Data and Key Metrics Changes - Total revenue growth for the third quarter of 2025 was 9.1%, driven by solid trends outside Mexico and currency tailwinds, particularly in Europe [30] - Operating income increased by 4.3% year over year, reflecting inflationary effects on costs and expenses, partially offset by efficiency efforts [30] - Net consolidated income decreased by 36.8% to 5.8 billion pesos, primarily due to a non-cash foreign exchange loss of 1.3 billion pesos [31][32] Business Line Data and Key Metrics Changes - Proximity Americas reported same-store sales growth of 1.7%, with average ticket rising 4.9% and average traffic contracting 3.1% [19][34] - Total revenues for Proximity Americas grew 9.2%, driven by the expansion of the store network and strong performance in LATAM markets [35] - Operating income for the health division declined by 4%, with same-store sales growing 0.8%, primarily due to strong performance in Chile and Colombia [39][40] Market Data and Key Metrics Changes - In Mexico, OXXO continues to experience a decade of continuous store growth, with a leadership transition to Carlos Arroyo [10] - Coca-Cola FEMSA showed gradual improvement in volume, particularly in South America, despite a slight decline in Mexico [41] - Valora in Europe reported total revenues increased by 10.1% in pesos, driven by higher Swiss retail sales [38] Company Strategy and Development Direction - The FEMSA Forward strategy focuses on maximizing long-term value creation by concentrating on core verticals: retail and beverages, supported by digital initiatives [8] - The company plans to distribute approximately $7.8 billion in capital through dividends and share buybacks between March 2024 and March 2027 [8] - Future growth opportunities are seen in OXXO Brazil, OXXO Colombia, and Bara, with significant potential for value creation [11][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of business units despite a sluggish year in Mexico, with positive signs of recovery in traffic and market share gains [9][20] - The company is cautiously optimistic about the upcoming year, anticipating improvements in the operating environment and benefiting from the FIFA World Cup [42] - Management acknowledged challenges from a recent tax increase in Mexico but believes adjustments can be made to maintain return on investment [12] Other Important Information - The company distributed a total of 11.8 billion pesos in dividends during the quarter, with no share buybacks executed [41] - The effective tax rate for the quarter improved to 29.3%, following a spike in the first half of the year [32][33] Q&A Session Summary Question: Insights on same-store sales performance and traffic dynamics at OXXO - Management noted a reversal of trends in OXXO Mexico, with improved traffic performance compared to the first half of the year, and expressed optimism for the fourth quarter [46][49] Question: Details on gross margin performance at OXXO Mexico - Management indicated that gross margin improvements were driven by commercial income growth and a favorable service mix, with expectations for continued gains [54][57] Question: Update on the health business in Mexico and Chile - Management reported strong growth in Chile despite a competitive environment, while acknowledging challenges in Mexico and the need for operational improvements [70][71] Question: Corporate restructuring and SG&A reduction plans - Management discussed ongoing efforts to streamline corporate overhead and indicated potential for significant savings, with further details expected in future calls [78][79] Question: Interest expense increase and its drivers - Management explained that the increase in interest expense was primarily due to lease accounting under IFRS and the consolidation of U.S. operations [95][96]

Financial Data and Key Metrics Changes - In Q3 2025, the company reported net operating revenues of $5.3 billion, with consolidated adjusted EBITDA growing 12% year-over-year to $1.1 billion, resulting in an adjusted EBITDA margin of 20.8%, a 170 basis points improvement from the previous year [5][11] - The company raised its full-year 2025 adjusted EBITDA guidance to a range of $4.47 billion to $4.57 billion, reflecting an increase of $445 million or 11% at the midpoint from initial guidance [7][15] - Free cash flow for Q3 was $778 million, totaling $2.16 billion year-to-date, which is a 22% increase over the same period last year [14] Business Line Data and Key Metrics Changes - The USPI segment generated $492 million in adjusted EBITDA, representing a 12% year-over-year growth, with same-facility revenues increasing by 8.3% [5][11] - The hospital segment's adjusted EBITDA grew 13% to $607 million, with same-store hospital admissions up 1.4% and revenue per adjusted admission increasing by 5.9% [6][12] Market Data and Key Metrics Changes - The company opened a new hospital facility in Port St. Lucie, Florida, aimed at expanding capacity in a rapidly growing area [6] - Exchange business accounted for 8.4% of total admissions and 7% of total consolidated revenues in Q3, showing a slight increase from Q2 [24][77] Company Strategy and Development Direction - The company is focusing on higher acuity services, which has led to improved margins and strong earnings growth [9] - The strategy includes continued M&A and de novo development, with a robust pipeline for future acquisitions [6][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's performance, citing healthy patient demand and stable operating conditions for 2026 [8][9] - There is uncertainty regarding enhanced premium tax subsidies and their impact on reimbursement and enrollment in exchanges, but management is prepared for various scenarios [8][9] Other Important Information - The company has invested nearly $300 million in M&A activities year-to-date and plans to continue this trend [6] - The company has no significant debt maturities until 2027, providing financial flexibility [14] Q&A Session Summary Question: Q4 guidance and utilization expectations - Management has not built in expectations for higher utilization due to exchange subsidies expiring, and they are confident in their capacity to meet typical demand [19][21] Question: CapEx inputs and allocation - The increase in CapEx is focused on clinical program infrastructure and high-acuity service offerings, with specific investments in cardiac care and surgical programs [26][28] Question: Free cash flow sustainability - Management highlighted improved cash collections and operational efficiencies as key drivers of free cash flow, emphasizing a focus on sustainability [30][32] Question: USPI Q4 guidance and growth - The implied Q4 guidance for USPI suggests year-over-year growth of over 8%, which is consistent with historical trends [35][36] Question: Labor environment and inflationary pressures - The labor environment remains strong, and management does not foresee significant changes or inflationary pressures impacting operations in 2026 [39][41] Question: Conifer's contribution and enrollment capabilities - Conifer is performing well, assisting with patient eligibility and enrollment, and is prepared to support potential changes in exchange enrollment timelines [45][47] Question: Service line performance in Q3 - Growth in USPI was driven by higher acuity services, with a noted recovery in GI services, while respiratory and infectious disease volumes were lower than expected [51][53] Question: DPP contribution and estimates for 2026 - The company recorded approximately $346 million in supplemental Medicaid programs in Q3, with $148 million being prior year adjustments [59][60] Question: Capital allocation and buyback strategy - The company remains active in share repurchases and is responsive to market conditions while continuing to pursue M&A opportunities [62][64] Question: Expense management and AI initiatives - The company is exploring opportunities for cost savings and efficiency improvements, including the use of advanced analytics and automation [66][68] Question: M&A environment for ASCs - The company continues to be a partner of choice in the ASC market, focusing on high-end specialties and maintaining a strong pipeline for growth [71][73]

Financial Data and Key Metrics Changes - Total revenue growth for the third quarter of 2025 was 9.1%, driven by solid trends outside Mexico and currency tailwinds, particularly in Europe [30][31] - Operating income increased by 4.3% year over year, reflecting inflationary effects on costs and expenses, partially offset by efficiency efforts [30][31] - Net consolidated income decreased by 36.8% to 5.8 billion pesos, primarily due to a non-cash foreign exchange loss of 1.3 billion pesos [31][32] Business Line Data and Key Metrics Changes - Proximity Americas' same-store sales increased by 1.7%, with average ticket rising by 4.9% and average traffic contracting by 3.1% [19][34] - Total revenues for Proximity Americas grew by 9.2%, driven by the expansion of the store network and strong performance in LATAM markets [35] - Operating income for the health division declined by 4%, with same-store sales growing by 0.8%, primarily due to strong performance in Chile and Colombia [39][40] Market Data and Key Metrics Changes - In Mexico, OXXO continues to experience sluggish growth, but there are signs of improvement in market share for key categories like beer and snacks [10][20] - Coca-Cola FEMSA showed gradual improvement in volume, particularly in South America, despite a slight decline in Mexico [41] - Valora in Europe reported a 10.1% increase in total revenues, driven by higher retail sales in Switzerland [38] Company Strategy and Development Direction - The company is focused on maximizing long-term value creation through its FEMSA Forward strategy, which includes divesting nearly $11 billion in assets and setting clear capital allocation targets [8][9] - There is a strong emphasis on expanding the OXXO platform in Brazil and Colombia, with significant growth opportunities identified [10][26] - The company aims to enhance its digital capabilities and improve the value proposition of its retail offerings, particularly in coffee and food categories [24][17] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the upcoming year, noting signs of improvement in October data and the potential positive impact of the FIFA World Cup [42] - The recent tax increase in Mexico is expected to present challenges, but management believes they can adapt and maintain return on investment [12][30] - The incoming CEO emphasized the importance of urgency and excellence in management to drive future growth [94] Other Important Information - The company distributed a total of 11.8 billion pesos in dividends during the quarter, with no share buybacks executed [41] - The effective tax rate for the quarter improved to 29.3%, following a spike in the first half of the year [32][33] Q&A Session Summary Question: Insights on same-store sales performance and traffic dynamics at OXXO - Management noted a reversal of trends in OXXO Mexico, with improved traffic performance compared to the first half of the year, and expressed optimism for the fourth quarter [46][49] Question: Gross margin performance at OXXO Mexico - Management indicated that gross margin improvements were driven by commercial income growth and a favorable service mix, with expectations for continued gains [54][57] Question: Update on health business in Mexico and Chile - Management reported strong growth in Chile despite a competitive environment, while acknowledging challenges in Mexico and the need for operational improvements [70][71] Question: Corporate restructuring and SG&A reduction - Management discussed ongoing efforts to streamline corporate overhead and indicated potential for significant savings in the future [78][79] Question: Interest expense increase and its drivers - Management explained that the increase in interest expense was primarily due to lease accounting under IFRS and the consolidation of U.S. operations [95][96]

Financial Data and Key Metrics Changes - In Q3 2025, the company reported net operating revenues of $5.3 billion, with consolidated adjusted EBITDA growing 12% year-over-year to $1.1 billion, resulting in an adjusted EBITDA margin of 20.8%, a 170 basis points improvement from the previous year [5][11] - The company raised its full-year 2025 adjusted EBITDA guidance to a range of $4.47 to $4.57 billion, reflecting an increase of $445 million, or 11% at the midpoint from initial guidance [7][15] - Free cash flow for Q3 was $778 million, totaling $2.16 billion year-to-date, which is a 22% increase over the same period last year [14] Business Line Data and Key Metrics Changes - The USPI segment generated $492 million in adjusted EBITDA, representing a 12% year-over-year growth, with same-facility revenues increasing by 8.3% [5][11] - The hospital segment's adjusted EBITDA grew 13% to $607 million, with same-store hospital admissions up 1.4% and revenue per adjusted admission increasing by 5.9% [6][12] Market Data and Key Metrics Changes - The company reported that exchange admissions accounted for 8.4% of total admissions and 7% of total consolidated revenues in Q3, indicating a slight increase from Q2 [24][77] - The company noted that the exchange business at USPI has less exposure compared to the hospital segment, with exchange patients exhibiting consumption patterns similar to Medicaid [22][72] Company Strategy and Development Direction - The company is focusing on higher acuity services, which has led to improved margins and strong earnings growth over the past few years [9] - The strategy includes continued investment in M&A and de novo development, with a robust pipeline for future growth [6][9] - The company plans to invest $875 to $975 million in capital expenditures in 2025, a $150 million increase at the midpoint over prior expectations [7][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's performance, citing healthy patient demand and stable operating conditions for 2026 [8][9] - There is uncertainty regarding enhanced premium tax subsidies and their impact on reimbursement and enrollment in exchanges, but management is optimistic about a potential compromise [8][21] - The company is committed to maintaining a deleveraged balance sheet and generating strong free cash flow [14][15] Other Important Information - The company recognized a $38 million pre-tax impact for Medicaid supplemental revenues related to prior years in Q3 2025, totaling $148 million year-to-date [13][59] - The company has no significant debt maturities until 2027 and reported $2.98 billion in cash on hand as of September 30, 2025 [14] Q&A Session Summary Question: Q4 guidance and utilization expectations - Management has not built in expectations for higher utilization due to exchange subsidies expiration and is confident in USPI's capacity to handle typical demand [19][21] Question: CapEx inputs and allocation - The increased CapEx is focused on clinical program infrastructure and high-acuity service offerings, with specific investments in cardiac care and surgical programs [26][28] Question: Free cash flow sustainability - Management highlighted improved cash collections and operational efficiencies as key drivers for sustainable free cash flow generation [30][32] Question: USPI Q4 guidance and growth expectations - The implied Q4 guidance reflects typical seasonal growth patterns, with no significant changes in business demand anticipated [35][36] Question: Labor environment and inflationary pressures - The labor environment remains strong, with no significant changes expected, and the company is managing inflationary pressures effectively [39][41] Question: Contribution from Conifer and enrollment services - Conifer is performing well, and the company is preparing to utilize its capabilities for potential enrollment needs if exchange subsidies expire [45][47] Question: Service line performance in Q3 - Growth in USPI was driven by higher acuity services, with some lower-than-expected volumes in respiratory and infectious disease areas noted on the hospital side [51][53] Question: DPP contribution and estimates for the year - The company recorded approximately $346 million in supplemental Medicaid programs in Q3, with $148 million being out-of-period [59][60] Question: Capital allocation and buyback strategy - The company remains focused on M&A and de novo strategies while being active in share repurchases, adjusting based on market conditions [62][64] Question: Expense management opportunities for 2026 - The company is exploring various opportunities for cost savings and efficiency improvements, including labor and supply management [66][68] Question: Impact of the WISER model on USPI - The company is preparing for potential changes in pre-authorization requirements under the WISER model, with a capable revenue cycle function in place [80][81] Question: Inpatient-only list removal impact - The potential removal of the inpatient-only list could benefit the USPI segment, but quantification of the impact is still under discussion [85][86]

Fomento Económico Mexicano (NYSE:FMX) Q3 2025 Earnings Call October 28, 2025 10:30 AM ET Speaker4Good day and welcome to today's FEMSA's third quarter 2025 results conference call. My name is Serge and I will be your coordinator for today's event. Throughout today's recorded presentation, all participants will be in a listen-only mode. Later, we will conduct a question and answer session. You may register for questions at any time by pressing star one on your telephone keypad. Now I'd like to hand the call ...