Good morning, and welcome to the CEMEX Fourth Quarter 2022 Conference Call and Webcast. My name is Daisy, and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Now, I will turn the conference over to Lucy Rodriguez, Chief Communications Officer. Please proceed.

Good morning. Thank you for joining us today for our fourth quarter 2022 conference call and webcast. We hope this call finds you in good health, and let us take this opportunity to give you our best wishes for 2023. I'm joined today by Fernando Gonzalez, our CEO; and Maher Al-Haffar, our CFO. As always, we will spend a few minutes reviewing the business, and then we will be happy to take your questions. And now I will hand it over to Fernando.

Thanks, Lucy, and good day to everyone. 2022 was a year of unexpected challenges for many businesses, as inflation spiked to 40-year highs. I'm pleased with how we responded and expect to continue to see the benefits of our strategy in 2023. Now let's move to the fourth quarter. Our top line growth grew double-digit driven by strong pricing performance. EBITDA was higher in three of our four regions. In fact, the U.S. reported record fourth quarter results. As you know, our top priority has been to recover 2021 margins. Importantly, after several quarters in which we have been able to offset inflation in dollar terms, I'm seeing growing evidence that actual margin recovery is underway. We continue to roll out our growth investment strategy with the recent announcement of the acquisition of Atlantic Minerals, which will increase our U.S. aggregate reserves by approximately 20%. The growth strategy has proven to be quite accretive with an approximately $100 million contribution to EBITDA in 2022. We continue our work on rebalancing the portfolio with divestments of more than $600 million during the year. Achieving an investment-grade rating remains a top priority. During the quarter, Standard & Poor's upgraded our rating to BB+, one notch away from investment-grade. In Climate Action, we led the industry in validating our new 2030 targets and 2050 net zero goals with the SBTi under the newly announced 1.5-degree scenario. And even more importantly, we continue to achieve record reductions in CO2 emissions. Since we introduced our Future in Action program in 2020, we have reduced emissions by 9% to date. We continue to explore new ways to take our existing decarbonization levers even further in our sustainability journey. During the quarter, we launched our new business, Regenera, which is devoted to waste management and circular solutions and the latest addition to our Urbanization Solutions segment. Net income after adjusting for a non-cash impairment of goodwill rose 36%. Finally, our return on capital remains in the double-digit area, well above our cost of capital. For the full year, net sales rose double-digit due to strong pricing momentum. With the sudden spike in inflation in the second quarter attributable to energy and distribution costs and exacerbated by supply chain disruptions stemming from the Ukraine war, margin declined by 2.5 percentage points. Largely due to our effective pricing strategy, we were able to contain the impact on EBITDA to a 3% drop. Free cash flow after maintenance CapEx declined due primarily to working capital and maintenance. Fourth quarter sales growth continued to reflect significant pricing contribution from all regions. Inflationary headwinds, particularly in energy, were significant, but our year-long effort to offset rapidly rising costs is paying off with stable year-over-year EBITDA. While EBITDA margin declined, the contraction was the lowest of the year and sequential margins stabilized in the quarter where we historically see a significant decline due to seasonality. As is typical for the fourth quarter, we experienced strong free cash flow conversion, generating close to $60 million more than the prior year. The decline in fourth quarter consolidated cement volumes results from difficult weather conditions in the U.S., weak back-cement demand in Mexico, and slowing growth in Europe. We continue to see strong growth from the formal sector in Mexico and SCAC, but not sufficient to completely offset the informal sector decline. Consolidated prices accelerated in the fourth quarter with cement prices rising between 12% and 35% across all regions. Europe remains the standout performer with price increases that have compensated for much of the margin pressure. The 2% sequential growth in consolidated prices speaks to the strength of our fourth quarter price increases executed in select markets. We are implementing price increases in the first quarter that will reflect the cumulative input cost inflation we have experienced across our portfolio. I am pleased that the January price increases covering more than 70% of our volumes are evolving well despite weaker demand dynamics in some markets. Pricing, however, is not the only lever, and we remain focused on managing costs with our energy diversification, supply chain, and climate action strategies. The decline in EBITDA continues to be largely explained by a lower margin caused by persistent input cost inflation. We are seeing an important inflection point, however. In the fourth quarter, the net contribution of pricing over cost was the highest in the year. The evolution of the net price contribution as well as the outperformance of fourth quarter year-over-year margins versus full year gives me confidence that margin recovery is happening. In our effort to recover margins, we monitor progress on a product basis. Cement, due to its energy intensity, has been the product most impacted by inflation and the biggest headwind to margins. Since the second quarter, we have successfully offset input cost inflation in cement in dollar terms. By the fourth quarter, we began to see actual margin recovery. EBITDA margin for cement reached its highest level in the year driven by the U.S. and EMEA. We still have work to do to return to 2021 margin. In 2023, with easing cost pressures and pricing momentum, I expect to see further margin improvement, particularly in the second half. Progress, however, will not be linear due to seasonality and timing differences on maintenance and pricing increases. This has been another important year in our sustainability efforts. CEMEX was among the first companies in our industry to receive validation from the Science-Based Target initiative of our 2030 and net zero CO2 goals under the 1.5-degree scenario, the most aggressive pathway for our industry, covering Scope 1, 2, and 3 emissions. But it is not about goals; it's about performance. And in that regard, CEMEX has also delivered. In the two years since we first rolled out our sustainability program, Future in Action, we have achieved a record reduction in carbon emissions driven largely by an expansion in alternative fuel usage and a lower clinker factor. During this period, our CO2 emissions declined by more than 9%, a reduction that in the past took more than a decade to achieve. This is equivalent to the annual emissions of approximately 700,000 cars that run on gasoline. In 2022, alternative fuels hit a record 35% of total fuel usage. The introduction of innovative hydrogen technology in more than 40% of our plants accelerated our progress. Record alternative fuels is occurring at an opportune moment and serves as an important hedge to elevated fossil fuel prices. Clinker factor declined 1.5 percentage points, opening up capacity in highly constrained cement markets. Critical to our journey is customer acceptance. And in three short years, our Vertua family of sustainable products and solutions has gained widespread acceptance across all regions. Vertua sales now account for 41% of cement volumes and 33% of our concrete sales. As I watch CEMEX transform, I am more convinced than ever that our products are essential to society, our goals are achievable, and the path to get there is profitable. Over the last three years, our Urbanization Solutions business has been focused on the products and services to serve the needs of growing sustainable cities of the future. It includes four verticals and one of these verticals, circularity, received a big push in the fourth quarter with the launch of our new business, Regenera. Regenera will focus on recovering, managing, recycling, and co-processing three waste streams: first, municipal and industrial; second, construction, demolition, and excavation waste; and finally, third, byproducts of industrial processes. The business will leverage CEMEX's global footprint and our more than 20 years of experience in managing non-recyclable refuse and industrial pipe products as well as identifying more sustainable substitutes for fossil fuels and natural raw materials. We are already making big strides. For example, in Mexico, we are processing around 25% of Mexico City's municipal waste. And on a global basis, we are recovering municipal waste equivalent to the combined annual total produced by the cities of Paris and Berlin. And now back to you, Lucy.

Thank you, Fernando. 2022 brought new challenges for our Mexican operations. Our business experienced significant cost pressures, mainly in the form of higher fuel and distribution costs, coupled with a post-pandemic rebalancing of bagged cement volumes. While pricing increases were some of the highest on record, it was still not sufficient to recoup margins. In the fourth quarter, with continued inflation pressuring retail demand, bagged cement volumes moderated while bulk cement grew high-single digits. The formal sector benefited from near-shoring investments in border states, tourism construction, and distribution and logistics activity in the central part of the country. As our pricing strategy continued to make inroads in catching up to inflation, year-over-year EBITDA rose for the first time in five quarters. While margins declined due to higher energy, raw materials, freight, and wages as well as product mix, the decline moderated versus full year performance. We remain committed to recovering margins. And with that objective, we announced price increases for all of our products effective January 1. As part of our cost containment and decarbonization efforts, we have moved aggressively in Mexico to substitute fossil fuels with alternative fuels for our accounts. In the quarter, alternative fuels exceeded 40%, a record, representing a 12 percentage point year-over-year increase. For 2023, we expect cement volumes to remain flat while ready-mix and aggregates grow at mid and high-single digits, respectively. The industrial and commercial sector, driven by near shoring and tourism, should remain the driving force behind 2023 volumes, while government social programs should help offset continued weakness in household demand. In the U.S., despite significant weather challenges impacting much of our markets, EBITDA grew mid-teen percentage points to a record fourth quarter result. Growth was fueled by price gains in excess of 20% that more than offset lower volumes. We estimate that weather impacted EBITDA by approximately $18 million in the quarter. Year-over-year EBITDA margin expanded for the first time since early 2021, while sequential margins also improved for the second straight quarter, benefiting from higher prices, lower maintenance, and lower imports. Full year EBITDA was driven by mid-teen percentage point growth in pricing and low-single digit volume growth. We remain focused on regaining margins lost due to the significant levels of inflation of the past year. We announced a price increase effective January 1, and to date, we are seeing good traction. In January, we signed an agreement to purchase Atlantic Minerals Limited in a transaction that will expand our U.S. aggregate reserves by 20%. We expect this deal to close shortly and to be accretive in 2024. For 2023, we expect low-single digit volume decline across all products, driven by the residential sector. We remain optimistic on growth in industrial and commercial and infrastructure sectors, underpinned by near shoring trends along with funding available under the CHIPS Act, the Inflation Reduction Act, and the Infrastructure Investment in Jobs Act. As of December, trailing 12-month contract awards in our key states for highways and street and industrial and commercial were up 16% and 29%, respectively. In EMEA, sales and EBITDA grew double-digit in 2022. In the fourth quarter, while sales continued to show strong growth driven by pricing, EBITDA growth slowed due primarily to energy costs, declining volumes, and higher maintenance. Pricing remained strong with sequential increases in cement and ready-mix, reflecting fourth quarter price increases in several markets. Europe showed strong cement pricing traction with a 5% sequential increase and 35% year-over-year growth. We are in the process of executing additional price increases, which will roll out over the next few months. In Europe, EBITDA growth of 9% in the fourth quarter largely reflected our pricing efforts while volumes declined as a result of recessionary fears. Margin declined by less than 1 percentage point due primarily to energy costs. During the year, our European operations continued to lead the way on climate action, achieving a 41% reduction in carbon emissions since 1990. The region is well on its way to achieving the EU emissions reduction target of at least a 55% decline by 2030. For 2023, we expect cement volumes in Europe to decline mid to high-single digit, with ready-mix volumes falling low to mid-single digits and aggregate volumes relatively flattish to down. Over the medium term, volumes should be supported by public and private projects worth more than EUR2 trillion related to transportation, climate adoption, and energy reconfiguration as well as onshoring investment opportunities. In the Philippines, cement volumes declined as the country transitions to a new government and macro challenges impact demand. Margin was impacted primarily by higher energy costs and major maintenance. For this year, we expect volumes to perform between flat and a low-single digit decline. For more information, please see our CHP quarterly earnings, which will be available this evening. Our operations in Egypt and Israel continued to show strong top line and EBITDA growth. For Israel, while demand remains robust, we expect ready-mix and aggregate volumes to decline low-single digit, reflecting our capacity constraints. Net sales in our South, Central America and the Caribbean region slowed in the fourth quarter. Pricing remained the driver of top line growth with cement prices up 12% year-over-year. Similar to Mexico, cement volumes in the region have been pressured by the rebalancing of bagged cement post-pandemic. Bulk cement, ready-mix, and aggregate volumes continue to grow, supported by formal sector demand, mainly in the industrial and residential sectors. The decline in EBITDA and EBITDA margin reflects energy, freight, and raw materials cost headwinds. In Colombia, cement volumes rose slightly in the quarter, driven by social housing. For 2023, we expect cement volumes in Colombia to be flat while ready-mix volumes to increase high-single digit. Construction activity should continue to be supported by social housing and infrastructure projects, particularly in the Bogota area. In the Dominican Republic, cement volumes declined in the quarter due to a drop in retail cement demand that was partially offset by higher bulk cement related to tourism projects. For the year, we expect cement volumes in the Dominican Republic to remain flat to slightly down. Activity should be supported by tourism and industrial investments. In Panama, we continue operating as an export hub, sending record cement volumes to nearby markets within the region, reducing dependency from third-party suppliers. I invite you to review CLH's quarterly results, which were also published today. And now I will pass the call to Maher to review our financial developments.

Thank you, Lucy, and good day to everyone. As we all saw, financial markets experienced unprecedented volatility, with inflation reaching levels not seen in decades and central banks implementing monetary tightening measures globally. In our industry, this volatility played out largely in the form of rising energy and transportation costs as well as continued supply chain disruptions. Our pricing and energy hedging strategies were able to offset much of the inflationary impact. Of course, this is an ongoing effort, and you should expect continued execution of our pricing strategy in 2023 to regain our 2021 margins. Additionally, we remain focused on several initiatives to improve efficiency and lower the cost of managing our business. The stable year-over-year EBITDA in the quarter, the first in three quarters, speaks to the success of our pricing strategy. The improving EBITDA trend, coupled with a higher turnaround in working capital and lower maintenance CapEx, delivered approximately $60 million more in free cash flow after maintenance CapEx than last year's fourth quarter. On a full year basis, free cash flow after maintenance CapEx was $553 million, down from the prior year due to a higher investment in working capital and maintenance CapEx. The investment in working capital reflects strong revenue growth and the inflationary impact on inventory, as well as the need to run higher inventories to address persistent supply chain issues. On the collections front, the credit quality and the turnover efficiency of our receivables are at record levels, leading to a significant improvement in our receivables collection cycle. The increase in maintenance CapEx for the year relates primarily to some catch-up maintenance as well as the delayed delivery of mobile equipment and spare parts in 2021, which pushed our maintenance calendar into 2022. The decline in quarterly net income results from the non-cash impairment of goodwill for $365 million, primarily in the U.S. and Spain. Adjusting for this impairment, net income for the quarter would have been $266 million, 36% higher than last year's fourth quarter. Last year, we took advantage of market volatility to conduct several accretive transactions. We bought back about $1.2 billion of our bonds at an attractive discount, resulting in an NPV of approximately $160 million. We partially funded these bond purchases through the closing of a EUR500 million sustainability-linked loan with similar terms and conditions as our current bank credit agreement. Overall, we reduced total debt by $409 million during the year. Also, we maintained robust risk management strategies that in 2022 partially shielded us from the impacts of rising interest rates, a stronger dollar, and higher energy costs. As a consequence and despite market volatility, our leverage ratio stood at 2.8 times, relatively flat to December 2021. In 2022, we further aligned our funding strategy with our Climate Action agenda. During the year, we linked our new EUR500 million loan and migrated our accounts receivable securitization program to our sustainable finance framework. This is, of course, the same framework linked to our umbrella $3.5 billion credit agreement. The price under these programs will now be indexed to certain sustainability KPIs. With the inclusion of these programs, we now have approximately 42% of our debt linked to sustainability KPIs, and we remain on track to reach our goal of 50% by 2025 and 80% by 2030. We will continue to undertake strategies that bolster our capital structure and remain focused on achieving investment grade in the short term. With the recent upgrades from S&P and Fitch, we are now only one notch away from our goal. And now back to you, Fernando.

We expect low-single digit growth in EBITDA in 2023, as we assume continued pressure on volumes due to global recessionary concerns. While we acknowledge moderate risk to volumes, we believe that markets will remain supportive of pricing. We do expect continued headwinds on cost, particularly in electricity, but the impact should be less than what we experienced in 2022. Energy cost per ton of cement produced is expected to ease, estimating a 10% increase for this year. Our efforts to recover to 2021 margins will continue. And while I expect progress, it will not always be linear. Total CapEx is expected to be lower than the prior year at approximately $1.25 billion. We continue to expect an investment in working capital in 2023, reflecting the higher sales, but overall days working capital should improve. Cash taxes are expected to increase by approximately $50 million. Finally, our cash cost of debt, including the coupons of our subordinated notes, is expected to increase around $70 million, reflecting the repricing of our limited floating rate debt exposure. As always, our guidance is based on like-to-like assets as well as the foreign exchange at the time of guidance. And now back to you, Lucy.

Before we begin our Q&A session, I want to remind you that any forward-looking statements made today are based on our current understanding of the markets we operate in and may change in the future due to various factors outside our control. Additionally, unless stated otherwise, any references to pricing initiatives or changes in price pertain to our products. Now we are ready to take your questions. The first question comes from Carlos Peyrelongue from Bank of America. Carlos, please go ahead.

Thank you, Lucy. Good morning, Fernando and Maher. My question is on costs. On your total costs COGS (ph) plus SG&A, what is the most relevant energy input cost? Is it diesel or pet coke? And can you comment last year what percentage of these two costs were hedged just to get a sense of the impact for this year? Thank you.

Thank you, Carlos. I'll address that question. Last year, around $1.7 billion, or 12% of our cost of goods sold, was attributed to fuel and electricity. We are guiding for a 10% increase this year, mostly driven by electricity, which makes up 90% of that growth. To provide context, diesel accounted for approximately $340 million, or 2% of our COGS. For diesel, we currently have about 75% hedged for 2023, which might lead to slightly higher costs due to our hedging activity from the latter half of last year. On the other hand, pet coke is primarily traded on the spot market, so we expect to benefit from the significant decline in pet coke prices towards the end of last year. I hope that answers your question, Carlos.

It does. Just one quick follow-up. On the hedge you deal on diesel, was that primarily done in the fourth quarter or second half of last year?

It was probably done closer to the fourth quarter.

And the next question comes from the webcast from Paul Roger from Exane BNP Paribas. Do you expect the 5% rate reduction to accelerate in coming years as new technologies play a role or could it get harder if a lot of the conventional solutions have already been widely adopted? And as a follow-on to that, what were the most exciting developments in the CEMEX Ventures portfolio last year?

Thank you for your question, Paul. Regarding CO2 reduction, we're aiming to maintain or even enhance the nearly 5% reduction we've achieved in both 2021 and 2022. To clarify, the reductions in our CO2 targets are based on conventional technologies and processes, excluding any potential benefits from CO2 capture and storage or utilization which may arise from ongoing pilots. In terms of conventional methods, we've seized existing opportunities to expedite progress. For instance, we have set a public target of 520 kilos of CO2 per ton by 2025, which represents a 9% reduction compared to 2022 figures. This translates to an annual decrease of about 3%, suggesting that our current reduction efforts of 5 percentage points will gradually shift to a range of 3% to 3.5% until 2030. This trajectory will help us meet our commitments, and potentially enable us to exceed our targets ahead of schedule. Additionally, I want to highlight that innovations within conventional reduction methods are enhancing their historical effectiveness. For example, we're seeing positive results from incorporating hydrogen and increasing the use of refuse-derived fuels. Last year, for the first time, alternative fuels matched our primary fuel source, pet coke, and in December that ratio was even more favorable. We believe we're reaching a turning point where alternative fuels may soon become the main fuel source in our plants, offering cost benefits and contributing to waste recovery. In Mexico City, we are processing about 25% of its waste for fuel use, and in Europe, we increased our alternative fuel consumption by 8 percentage points last year, equivalent to the waste generated by a city like Berlin. In 2022, we saw a 6 percentage point increase in alternative fuel usage, with a goal of an additional 5 percentage points by 2025. We expect to transition from the 4.5% to 5% reduction range down to 3% to 3.5% as we prepare to implement CO2 capture reductions. On to the second part, which is about exciting developments. It's not about a singular event that excites us, but rather the integration of various technologies through CEMEX Ventures into our cement production processes. We're particularly enthusiastic about the incorporation of hydrogen injections, with over 40% of our production now utilizing this approach. Additionally, we are exploring electrification in our processes and have announced a partnership with Synhelion to harness concentrated solar energy for clinker production. The array of technologies we plan to integrate into our production and distribution is what truly excites us, and the response has been very positive. Recently, we also introduced the first fully electric ready-mix truck capable of working all day with its battery. We are thrilled with these advancements and confident they will help us uphold our commitments.

Thank you, Fernando. And the next question comes from Ben Theurer from Barclays. Ben?

Yeah. Good morning, Lucy. Thanks for Fernando and Maher. My one question would be on the pricing traction, what you're seeing and how you think about pricing initiatives for 2023, particularly in key markets like the U.S. and Mexico. Any comment you have on the recently announced increases and how we should think about pricing throughout the year to offset these 10% cost headwinds? Thank you.

We're starting from a strong pricing environment. As you noticed, the contribution of pricing to our EBITDA for both the year and the quarter has exceeded inflation. However, we are still pursuing our pricing strategy because the rate of inflation has outpaced our ability to increase prices. This is one reason for the erosion in our EBITDA margin. So, we still have work to do on the pricing strategy, but we're making progress. The positive news is that we're seeing good momentum. We expect about a 5% tailwind assuming December 2022 prices in local currency, without any additional increases. Overall, we've observed significant price increases across all markets. More than 80% of our volume is being repriced early in the year. For example, in Mexico, we're implementing a pricing increase of 15% to 20%. In the U.S., we're looking at high-single-digit increases in January and March. Some of our European markets, like Spain, Poland, Czech Republic, and Croatia, are seeing mid to high-teens double-digit increases. The Philippines will also see increases in January and March, and Colombia is expecting double-digit hikes in the high-teens to 20% range. More than 80% of our volume is being repriced early in the year, and we believe there is significant traction. In Europe, the rising cost of carbon is contributing to pricing pressures. Nonetheless, we're optimistic that this momentum will persist despite some slower demand in certain markets where we operate. I hope that addresses your inquiry.

Perfectly. Yeah. Thank you.

Great. Thank you very much.

And the next question comes from the webcast from Adrian Huerta from JPMorgan. Regarding deleveraging, last year, you reduced $300 million in net debt, and the implied free cash flow for this year looks around $300 million to $400 million. Will this pose a risk for your deleveraging pace for 2023 and to obtain the investment-grade rating soon? Do you expect additional divestments and use proceeds to continue paying down debt?

Fernando, do you want me to start that and maybe you can weigh in? So again, I think it's very important to clarify to you and to everybody else on this call why investment grade is so important for us. Investment grade on its own is not the issue. It's what it implies, which is the strength of our capital structure, lower volatility, our ability to generate more free cash flow per dollar of EBITDA, and be able to eventually, as a consequence of that, but consider returning capital to shareholders. So for us, investment grade is not just getting an investment grade. It's really continuing this journey of strengthening and bulletproofing our capital structure and our business model. And so in that direction, my expectation is that yes, we will continue to reduce debt and potentially deleverage as well. Now I'm not going to comment on your number of free cash flow. But I will turn over the call to Fernando to kind of share with us potentially some ideas on where we're likely to be able to continue this journey to reducing debt and potentially deleveraging. Fernando?

Thank you, Maher. Thank you, Adrian. I have a few comments. What you have observed aligns closely with the adjustments to our strategy announced in early 2020. To remind everyone, we aimed to strengthen our portfolio in the U.S. and Europe by introducing Urbanization Solutions as a fourth component of our strategy, continuing to lower our leverage ratio, and making divestments in emerging markets. Over the past few years, we have executed divestments in Costa Rica, El Salvador, Neoris, and other smaller markets, which reflect this strategy. Our recent investments in the U.S. and aggregate business in Canada to support markets in Florida and generally along the East Coast, alongside ready-mix operations in Texas and another aggregate business in Europe, are all in line with this plan. We are also focusing on increasing our EBITDA through investments in alternative fuels, which have proven to be both useful and profitable. Last year, we concluded and initiated operations on four projects in Russeldorf, Rugby, Tepeaca, and another site in Mexico. Although these were not fully operational for the entire year, they significantly contributed to a 6 percentage point increase in alternative fuels and proved to be very profitable, especially given the current high costs of primary fuels, resulting in excellent paybacks. Overall, our strategy is well-aligned with what we have announced. However, we need to be mindful of the timing of our investments and divestments which may lead to differing proportions of debt reduction and growth investments in the short term. Over a couple of years, the use of proceeds for debt reduction and growth investments will be roughly equal, but this may vary year to year. We aim to keep strengthening our position in the U.S. and Europe, divest in some emerging markets, grow our Urbanization Solutions sector, and enhance our portfolio management. Currently, our leverage ratio is below three times, and we were upgraded to BB+ last year. Our goal is to achieve an investment-grade rating. We have ongoing investments in cement expansion projects such as those in solid, Marcel, or Tepeaca. The rest of our investments reflect the types initiated mid-2020, focusing on high returns and short paybacks related to our existing business. As mentioned last year, these investments have already contributed over $100 million to EBITDA, and we expect that contribution to increase this year. These investments will also support our deleveraging objectives in a different manner. That's what I wanted to share, Adrian. I hope this addresses your question.

Thank you, Fernando. And the next question comes from Nik Lippmann from Morgan Stanley. Nik?

Thank you for taking my question. Could you give me some insight into how much you plan to import into the U.S. market? I recall your expectation of a third in 2022, and I would appreciate any updates for 2023. Additionally, any information on the maintenance work you've conducted in the U.S. and its continuation into 2023 would be helpful. Thank you.

Let me start by commenting on maintenance that is related to the works we are doing to improve efficiency in our cement plants in the U.S. In the last couple of years, we've been developing an initiative. It's cementing our future in order to improve the conditions of certain plants. There were some plants in the U.S. that, for many years, were not highly demanded. And now that we are at full speed, that there were and still are some investments needed to bring those plants to their highest capacity and highest possible reliability. So we think imports because meeting local production will be slightly higher this year. When you engage in these types of projects, and that was the case during last year, sometimes you need to make investments, and you need to shut down your plant more than 15 days, which is more or less the average of our regular annual shutdown, impacting production. This year will be in better conditions. So there will be two reasons for a moderate reduction in imports is markets potentially adjusting to lower figures and us being able to produce higher quantities of product locally. And what was the other part of your question, Nik?

Could you provide some clarity? Are you saying that the import levels are expected to decrease, possibly from 30 to around 2020?

Exactly.

And the next question comes from the webcast from Vanessa Quiroga from Credit Suisse. Does the 10% increase in energy cost per ton at the consolidated level already incorporate higher pet coke costs resulting from the PEMEX contract expiration?

Yes, thank you, Vanessa. It's unfortunate that you're not on the call so I could speak with you directly. In response to your question, the 10% increase in energy cost per ton that we've announced reflects the impact of the absence of those contracts. It's important to emphasize that these contracts were a significant part of our electricity generation business in Mexico, and that's where we expect to feel the effects. However, I would direct you to our guidance, which indicates a total energy cost increase of 10%, amounting to about $160 million for the entire company, with roughly 90% of that being electricity. Mexico accounts for approximately a quarter of that amount, and this figure includes any impact from the loss of those contracts. I hope that addresses your question, Vanessa.

Thank you, Maher.

Okay.

And the next question comes from Gordon Lee from BTG Pactual. Gordon?

Good morning. Thank you for the call. Vanessa already asked my question, so I'll move on to another one, Fernando. How do you feel about the adoption and speed of the infrastructure plan projects in the U.S.? When you discussed this with industry sources, they believed that by the fourth quarter of this year, there would be noticeable progress. Is that still the timeline you anticipate, or do you think the significant infrastructure advancements will be delayed until 2024?

I believe the outlook you've described remains accurate. It's evident that order books for the next three to six months aren't reflecting that level of volume yet, but progress is being made. We anticipate that by late this year, we will start to see changes. At this time, we don't have any additional insights or observations from the market.

Sorry, I was just going to add, unless you want to...

I was just going to add two points. Certainly, in contract awards for our footprint, we're seeing double-digit increases both on the infrastructure side as well as the industrial and commercial, which I think is very important to note. And the other thing that we haven't talked about much on the call is the impact of weather in the fourth quarter. We have seen residential slowing a little bit in some of our markets, particularly in Northern California is the one that we've been citing the most. But weather had a very large impact on our results, which were still very good in the U.S. And I think that's important to note. We attribute about an $18 million EBITDA headwind to the weather impact in the quarter. So that is not slowing demand so much as it was weather disruption. So I wanted to be clear about that. Sorry, go ahead, Maher.

Thank you very much, Lucy. I want to emphasize that our performance in the U.S. has been affected by slower-than-expected infrastructure spending, which has both upsides and downsides. We hope for higher spending and better volume performance. However, the positive takeaway is that this situation should benefit the U.S. business in the coming years due to significant pent-up fiscal stimulus from the infrastructure bill and the CHIPS and Innovation bill. The outlook for volumes looks quite promising for the next couple of years. In the industrial and commercial sector, which has performed best for us, growth in the fourth quarter was nearly 9%. This is driven by extensive reshoring and substantial projects underway in several markets. While infrastructure contributed less to growth in 2022, the pent-up demand in contract awards is strong, and there is a considerable amount of unspent funds under those contracts. Additionally, the fiscal health of the states where we operate is positive. Therefore, we anticipate a contribution in 2023 and 2024, though we will have to monitor the developments closely.

Perfect. That's super helpful. And I guess just, it's still fair to say that in your footprint in the U.S., sort of the sum of your non-residential segments is still around 70% of volumes, right?

Yeah. I mean, if residential was 35% in '22 and industrial and commercial is about 15%, and then infrastructure is about half.

Perfect. Thank you very much. Thanks, Gordon. And I think we have time for one more question. I believe Anne Milne, you're on deck from Bank of America.

Thank you. Good morning, Fernando, Maher, Lucy. Okay. What hasn't been asked yet. Can you hear me?

Yes, we can. Hi, Anne.

Yes. Okay. Hi. So I wanted to ask you, I think what your future expectations are for some of your new bolt-on investments. I think you indicated that previous ones added about $100 million in 2022. And was wondering if you have a range of what you think in the future. And as part of that, you just made an announcement recently about a fully electric vehicle joint venture with Volvo, and what your timing is for the rollout of that. Can that be something you do more globally?

Hi, Anne. Let me take the second part. I will ask Maher to take the first one. As somebody asked before on CEMEX Ventures and are we excited because of what's going on, Volvo is one of those partnerships agreements, collaboration agreements for us to integrate a number of technologies that traditionally has not been part of the cement or ready-mix technologies, meaning we think we know how to make cement and ready-mix and aggregates, but for sure, we needed to learn about how to use and to design and to use electric heavyweight vehicles, the same way we needed to learn about solar energy, the same way we needed to learn on hydrogen to be used in combination with RDF. So many technologies in which we are not the experts but there is knowledge, experience, and scale we can apply to other parties, other partners that are interested in working with us. So in the case of Volvo, I think is one of those examples. We put our experience in ready-mix. They put their experience in vehicles and electric vehicles. And at the end, they ended up producing these more than 20 tons vehicle fully electric, being able to work all day long with 1 battery charge. And of course, we are excited about that type of examples. Now having said that, the electric ready-mix truck is not the only solution we are working in, and it's not perhaps the short-term solution. The short-term solution is what we are already doing, which is switching from diesel to natural gas. That will reduce our CO2 emissions in Scope 3 by about 30%. So we are trying a number of different options, some of them commercial and available in the market, some others needing some additional development before being available for our use. So that's what I can comment on that part.

Thank you.

If I may continue, Anne, did you have a follow-up to Fernando, or can I proceed with the growth discussion?

Please go ahead.

On the growth side, as you saw in 2022, the growth component contributed a little over $100 million in incremental EBITDA from various projects announced throughout the year. For 2023, we expect that contribution to be a bit more than $125 million. We have a significant pipeline, which includes bolt-on investments in acquisitions. Alongside several projects I can mention, we are completing some legacy projects in cement production that will add over 4 million tons of additional capacity. Most of our investments will continue to focus on the U.S., Europe, and, to a lesser extent, Mexico. Our focused areas include aggregates, supply chain, and sustainability. A major part of sustainability is substituting alternative fuels and improving fuel efficiency in our kilns. We're also investing in operational efficiencies and Urbanization Solutions. These projects will generally be smaller, though the recent aggregates transaction in the U.S., while not huge, is quite significant as it increases our aggregates reserves by nearly 20%. We've executed a similar strategy in Germany, effectively doubling our aggregates business there. We are confident in the diversification of our investments, as they are situated in familiar markets that complement our existing business positions. We expect the internal rates of return to be well above 20%, with quick paybacks, particularly in the sustainability sector related to alternative fuel consumption and using hydrogen to complement our fuel usage. These typically offer shorter paybacks, especially given the increase in fuel costs. If you have any follow-up questions, I would be happy to respond.

Okay, Great. Thanks very much. Very helpful, Maher.

Thank you very much, Anne.

Great. Thanks, Maher. We appreciate you joining us today for our fourth quarter webcast and conference call. If you have any additional questions, please feel free to contact Investor Relations. And we look forward to seeing you again on our first quarter webcast that will take place on May 2. Many thanks.

Thank you for your participation in today's conference. This concludes the presentation, and you may now disconnect. Have a good day. Good-bye.