Good morning. Welcome to the CEMEX Second Quarter 2025 Conference Call and Webcast. My name is Becky, and I will be your operator today. And now I will turn the conference over to Lucy Rodriguez, Chief Communications Officer. Please proceed.

Good morning, and thank you for joining us for our second quarter 2025 conference call and webcast. We hope this call finds you well. I'm joined today by Jaime Muguiro, our CEO; and by Maher Al-Haffar, our CFO. We will start our call with an update on the progress made so far on our strategic priorities, followed by a review of our business and outlook for the second half of the year, and then we will be happy to take your questions. I will now hand the call over to Jaime.

Thanks, Lucy, and good day to everyone. In our last earnings call in April, I presented a forward-looking vision for CEMEX, focusing on two primary objectives: attaining best-in-class operational excellence and delivering industry-leading shareholder returns. Since then, we have developed a comprehensive road map to achieve these goals and embarked on the first phase of implementation. Our first actions were focused on transforming our corporate structure by streamlining overhead, fostering agility and empowering our regional teams to drive results. This process has involved difficult decisions that are necessary to support the company's long-term growth and competitiveness. Today, I'd like to provide more detail regarding our strategic plan, highlight the actions we have taken thus far and outline what you can expect from us in the future. I will, of course, then review our second quarter performance, which once again exceeded internal expectations. Our strategic framework is based on six guiding principles: effectively transforming our organization to achieve operational excellence and sustainable best-in-class shareholder return. These principles aim to improve profitability, increase our free cash flow conversion rate, boost asset efficiency and deliver compelling returns over cost of capital. In the quarter, we moved quickly on the first lever, simplifying our operating model and empowering our regional operations to make more agile decisions. These actions are intended to promote an ownership mindset with a culture of increased accountability, responsibility and collaboration. At the core of this transformation is the reorganization of corporate areas to support operational excellence in our business units. We also carried out the initial performance reviews of our regional businesses. I was joined by several members of my team conducting a thorough review of key performance indicators at the individual facility level in each of our regions. Based on these reviews, areas for potential improvement have been identified and detailed action plans have been developed so that underperforming assets meet predetermined return benchmarks. These action plans will support further strategic decisions regarding our footprint evolution at a local level with the goal of increasing profitability and free cash flow. We have also examined in detail our ongoing growth CapEx pipeline to validate that every investment is on track to generate an appropriate and timely return. Execution of ongoing profitable projects will continue, but we intend to make a strategic shift towards prioritizing small to midsized M&A transactions in the U.S., aiming for immediate positive impact on earnings. Finally, we have also introduced a new more structured and balanced capital allocation model to guide future capital deployment decisions. We are committed to progressively grow our shareholder return program. This effort should accelerate as profitability and free cash flow generation are boosted by our actions to date. Since its introduction in February, we have further expanded our Project Cutting Edge program, a foundational element of our organization's transformation. In our efforts to develop a leaner operating model and empower our regions, we have merged several centralized functions into our operations, while some corporate initiatives have been eliminated altogether or reorganized to better support the business. As a result of the expansion of Project Cutting Edge and the steps we took in second quarter, we now expect EBITDA savings for this year to reach $200 million, up from our initial expectation of $150 million. And we anticipate a run rate of EBITDA savings of about $400 million by 2027. Included in these estimates are approximately $200 million of corporate headcount reduction on an annualized basis. While this effort is largely behind us, there are still some additional actions expected in the second half. I am confident that this transformation will help us advance towards our goals, further strengthening CEMEX's position as an industry leader. And now allow me to review our second quarter performance. Our second quarter results are aligned to our February guidance, which assumed a challenging first half, driven by difficult prior year comparison in Mexico. We expected and continue to believe that the back half of the year would bring year-over-year growth as we lap prior year pre-electoral spending in Mexico with an improvement in peso FX rate. As in the first quarter, consolidated EBITDA once again outperformed our internal expectations. The EMEA region delivered impressive results, driven by volume recovery and operating leverage, extending its four consecutive quarters of earnings recovery. Consolidated EBITDA margin, even with volume decline remained relatively resilient with a stable to improved performance in three of our regions. Variation of consolidated margin is largely driven by the effect of geographic mix. Net income in the quarter increased by 38% on the back of strong FX rates as well as lower interest expense. The variation in free cash flow from operations is explained by EBITDA, working capital and severance payments as well as the one-off contribution from discontinued operations in the prior year. Importantly, adjusting for severance and discontinued operations, free cash flow in the quarter would in fact be growing on a year-over-year basis. I expect free cash flow generation to improve in the second half with higher profitability and the typical seasonal reversal of working capital investment. Consolidated prices are stable to positive on a sequential basis with ready-mix and aggregate prices up 1% and 2%, respectively. In cement, consolidated prices were relatively flat on a year-over-year basis, largely explained by geographic mix as volumes declined in Mexico and grew in EMEA. Pricing in Mexico has been particularly resilient despite softer volumes. Since the beginning of the year, cement, ready-mix and aggregates prices have increased by 5%, 6% and 8%, respectively. In the U.S., aggregate prices adjusting for product mix increased by 5% in the first half compared to the fourth quarter of 2024. In EMEA, the Middle East and Africa region, along with several markets in Europe experienced sequential pricing gains. Our pricing strategy continues to achieve its goal of at least recovering cost inflation in our markets. Consolidated volume performance is largely explained by weaker volumes in Mexico and the U.S., partially offset by continued recovery in EMEA. We expect volumes in Mexico to improve in the second half as we lap difficult prior year comparison base and the new government accelerates its infrastructure and social housing plans. In the U.S., volumes in the quarter reflect the soft trend in residential activity, along with increased precipitation in most of our markets. We are encouraged by the positive trend in Europe as this is the fourth consecutive quarter with cement volume growth on a year-over-year basis. The Middle East and Africa region is also showing robust volume growth. Consolidated EBITDA performance is largely explained by volumes, partially offset by cost improvements as well as a tough comparison base with a record high second quarter EBITDA in the prior year. Volume decline in Mexico and the U.S. was partially offset by growth in the EMEA region. Costs contributed positively, largely due to energy and distribution. Energy costs on a per ton of cement basis declined 14%. The Mexican peso remained a relevant headwind, which was partially offset by the appreciation of other currencies in our portfolio. Importantly, even with a significant volume decline and lower operating leverage, our EBITDA margin remained resilient at a level slightly above the historical 10-year second quarter average. And now back to you, Lucy.

Thank you, Jaime. As expected, second quarter results in Mexico continued to be challenged by the difficult prior year comparison driven by preelection social and infrastructure spending and the FX level as well as the first year of a new administration. Volumes were further hampered by record national precipitation levels in June, which primarily impacted the central region. Significantly, we saw average daily cement sales in the quarter stabilized with low single-digit sequential growth. Demand in the Northeast region continues to outperform the rest of the country, both in terms of cement and ready-mix. This dynamic has been supported by ongoing industrial projects as well as state-driven infrastructure works. We continue to see positive pricing performance for our products, rising by a low single-digit rate sequentially. Since the beginning of the year, cement, ready-mix and aggregate prices are up 5%, 6% and 8%, respectively, as we work to offset prior year's input costs inflation. Additionally, we recently announced a high single-digit price increase for cement effective July. Despite the volume headwind and resulting loss of operating leverage, margins were remarkably resilient, roughly flat to the prior year. This performance was driven by a combination of higher prices, favorable energy and Project Cutting Edge efforts. While FX impact moderated in the second quarter, it still accounted for about 40% of the variation in EBITDA. Going into the second half of the year, we are optimistic as we lap the difficult comparison base in volumes and peso FX rate. In fact, assuming for the back half, the same level of average daily cement sales as second quarter, it would imply a 4% year-over-year decline in the second half. Additionally, we do expect a pickup in construction activity, driven by the start of some railroad works as well as projects under the social housing program. Our ready-mix backlog is improving, mainly in the central region with relevant industrial projects expected to begin in the following months. Distribution centers and logistics developments are gaining momentum. In the U.S., EBITDA declined by a mid-single-digit rate due primarily to lower volumes, given high levels of precipitation in many of our markets and continued weakness in the residential sector. Ready-mix volumes adjusted for asset divestitures declined by a mid-single-digit rate in line with cement and aggregates performance. Sequential pricing was stable in cement and ready-mix with aggregates increasing by 1%, adjusting for product mix. Since the beginning of the year, aggregates prices adjusted for product mix are up 5%. EBITDA margin remained relatively stable, just shy of last year's record high. This performance is explained by higher prices and lower costs due to continued gains in operational efficiency with increased domestic production replacing imports. Margin continues to improve in our two main products, cement and aggregates, which account for about 80% of our EBITDA. As part of our transformation efforts, we recently restructured our operations in the U.S., transitioning from a regionally based model to one organized by product line. We believe this change will encourage best practice sharing across regions, increase transparency in our business and provide a more comprehensive view of our asset footprint. We are investing in our aggregates business and are already seeing the benefits of completed projects such as the Balcones quarry upgrade in Texas. Balcones is one of the largest quarries in the U.S. and the project is contributing to increased margins. We are also expecting completion by year-end of another ongoing aggregates project, Four Corners at Sand Mine in Orlando, Florida. For 2025, we expect demand to be driven by infrastructure as IIJA transportation projects continue to roll out. Close to 50% of funds under IIJA have been spent and we expect to reach peak spending in 2026. We remain optimistic about the outlook through the industrial and commercial sector, which is gaining momentum with data centers and chip manufacturing projects being planned in our markets as well as relevant works in Cape Canaveral. In addition, the recently approved U.S. budget bill includes some relevant provisions that are expected to bring forward investment in manufacturing facilities. While there is continued pressure on the single-family home segment with slightly better performance in multifamily, we see strong potential in residential over the medium term once mortgage rates and market sentiment improve. The EMEA region continued to deliver strong performance, leading to the highest first half EBITDA in recent history with solid margin expansion of almost 3 percentage points. In Europe, strong volume growth in the quarter was driven by improved conditions in most markets with the exception of France, where we continue to see a soft macro backdrop and in Poland with weather and delays in infrastructure works impacting volumes. Infrastructure activity supported by EU funding increased, along with a modest improvement in the residential sector in most markets. Demand conditions in the Middle East and Africa remained strong, expanding by double-digit rates. Construction activity in these markets is recovering, fueled by housing and nonresidential projects and in the case of Egypt, also by large infrastructure. Sequential cement and ready-mix prices in EMEA increased 4% and 1%, respectively, while aggregates prices declined by 1%. On a cumulative basis, cement and ready-mix prices increased by 4%, while aggregates prices are up 3% compared to the fourth quarter of 2024. Higher volumes and prices, coupled with lower costs, primarily in power, led to a significant margin expansion. Our operations in Europe continue progressing on decarbonization with net CO2 emissions in the quarter, reaching a new record low of 418 kilograms per ton of cement equivalent. This is an important milestone as CEMEX Europe has now surpassed our consolidated target for 2030, further reinforcing our position as an industry leader. We believe that the implementation of the carbon border adjustment mechanism along with the gradual phaseout of free EU ETS allowances should be supportive of cement prices in 2026 and beyond. We remain optimistic on the outlook for the region with a continued positive trend in infrastructure and further recovery in residential. In our South Central America and the Caribbean region, adjusting for business days in the quarter, cement volumes actually increased by 1%. Demand in Colombia is being driven by the informal sector with a rebound in bag cement volumes and the Metro project in Bogotá. In Jamaica, tourism-related developments, along with improved bag cement sales are driving activity. Sequential prices in cement and ready-mix in the region were relatively stable after the mid-single-digit increase achieved in the first quarter. In Jamaica, we recently concluded a significant debottlenecking project. The increased capacity will allow us to address market demand without relying on lower-margin imports. As we worked to complete the expansion project in the quarter, we increased import volumes to meet market demand. These imports temporarily impacted margin in the quarter. We expect a recovery in the second half, driven by higher profitability as we ramp up the incremental capacity. On the operations front, higher kiln efficiency, along with lower clinker factor continued to improve across the region. And now I will pass the call to Maher to review our financial development.

Thank you, Lucy, and good day to everyone. Free cash flow from operations for the quarter was slightly over $200 million. The variation versus last year is driven mainly by combination of severance payments related to Project Cutting Edge, lower EBITDA, higher investment in working capital and last year's benefit from discontinued operations. This was partially offset by lower taxes and interest expense. Adjusting for severance payments and discontinued operations, free cash flow in the quarter increased by 3% despite EBITDA performance. Our tax payments are significantly lower due to the payment of the Spanish tax fine in 2024, plus other effects. While investment in working capital during the first half was higher than last year, the average working capital days declined by 4 days, driven by continued improvement efforts. In line with our normal seasonality, we expect working capital to reverse throughout the rest of the year. On the cost side, energy costs on a per ton of cement basis declined by 15% in the first half, driven by lower power and fuel prices and a continued improvement in clinker factor and thermal efficiency. Record net income of $1.05 billion for the first 6 months of the year was driven primarily by the sale of our operations in the Dominican Republic and a favorable FX effect. Given the volatility in the Mexican peso, I would like to remind you of our ongoing Mexican peso hedging strategy, fully covering our operating cash flow from Mexico. This program effectively lowers the volatility of the exchange rate at which we convert pesos into dollars for tenors of up to 2 years. During the quarter, we replaced the 9.125% of $1 billion subordinated perpetual notes with new 7.2%, $1 billion subordinated perpetual notes issued at a tighter spread than our last 2 perpetual notes. This transaction is not only enhancing our free cash flow by reducing the coupon, but it also marked a successful return to the international capital markets since regaining our investment grade. Our leverage ratio stood at 2.05x in June, a quarter return higher compared to December. We expect the leverage ratio to decrease during the second half as we improve EBITDA and generate more free cash flow from operations. We have a comfortable debt maturity schedule with no need to access the capital markets and we remain committed to further strengthening our capital structure, as Jaime mentioned in his remarks. Considering the financial initiatives carried out in the first half, along with current market conditions, we now expect net interest paid, including coupons on subordinated perpetual notes to decline by $125 million in 2025. And now back to you, Jaime.

Thank you, Maher. Considering our year-to-date results as well as progress made under Project Cutting Edge, we expect consolidated EBITDA to be flat versus 2024 with potential upside, subject to evolution of microeconomic conditions in our key markets. While we are confident in our self-help measures taken to date, we must recognize the volatility and lack of visibility in our main markets. As we go into the back half of the year, if FX rates in our portfolio remains stable at the end of June level, we would see a tailwind of about $60 million in consolidated EBITDA compared to the second half in 2024. We remain focused on the implementation of our strategic plan, delivering EBITDA savings under Project Cutting Edge, higher free cash flow conversion rate and returns above cost of capital. We will keep you updated as we continue making progress towards these objectives. And now back to you, Lucy.

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

Congrats on the results. So just a quick one as for Project Cutting Edge. You've clearly upped already the target for this year by $50 million as well as for 2027. So the question really is in what area have you identified those additional savings? And as you look to 2027, if you would have to give a guess on how conservative your thoughts on a target of $400 million is, how confident are you with that? Or do you think there's risk to the upside here as well?

Thank you for your question, Ben. The additional $50 million primarily stems from our organizational transformation efforts, especially regarding reductions in overhead headcount. I am confident that we will achieve the $200 million in overhead headcount reductions over this year and next. This year, we expect about $85 million in savings, and next year, approximately $111 million to $115 million, totaling $200 million. To ensure that my target of $400 million in run rate savings for 2027 is not overly ambitious, I have carefully reviewed all our initiatives and am only considering those that are genuinely recurring. Out of the $400 million in savings, $200 million is related to direct overhead personnel. Additionally, we have indirect and overhead non-personnel savings to add. There are also operational savings of about $150 million from improving procurement and optimizing third-party spending. Therefore, the $400 million target does not include speculative savings that rely on annual negotiations.

Thanks, Ben. The next question comes from Gordon Lee from BTG Pactual. Gordon?

Just quickly on strategy, and it's a 2-part single question, which is I was wondering if you could elaborate a little or provide a little bit more color on what you mean by building a shareholder return platform. And the second question, is it still safe for us to assume that you see the U.S., Mexico and Europe as core and SCAC as core niche but something that you would consider divesting if the opportunity presented itself?

Gordon, thanks for the question. The meaning of building a shareholder return platform is simple. It's around our capital allocation efforts. We are subjecting any capital allocation decisions to shareholder returns. We will not proceed with a CapEx or M&A that does not deliver a return above our thresholds for shareholder returns. In addition, we are planning to progressively increase dividends and we will also consider as early as potentially next year opportunistic share buybacks. That's what it basically means. Regarding your second part of the question, the answer is yes. That's what we're doing. We will concentrate in the U.S., Mexico and Europe and there will be additional divestitures in our SCAC portfolio between the end of this year and next year. And yes, you said it core niche, and that's how we see SCAC.

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

I have a question about free cash flow generation and the factors that influence it. Specifically, I would like to understand what milestones we should focus on. Should we be looking at profitability, improvements in working capital, disciplined capital expenditures, asset sales, or debt management? I'm trying to gauge the timing of these elements, what may happen first, and what might take longer to develop in terms of free cash flow from a structural viewpoint. Additionally, I'm interested in identifying the biggest opportunities we might encounter.

Thank you for your question, Alejandra. We are addressing multiple areas simultaneously, and I will explain in detail shortly. The portfolio rebalancing, which focuses on underperforming assets at a micro market level, will take longer. This is because these assets are not meeting our new targets for free cash flow conversion, and we've completed a thorough review of our portfolio, including cement plants, ready-mix plants, and quarries. We've identified opportunities to enhance free cash flow conversion, which may involve turnaround efforts or divestitures. This will guide the future direction of our portfolio. Additionally, we anticipate a decrease in capital expenditures as we normalize platform CapEx and significantly cut back on strategic CapEx. We are also focusing on generating incremental savings that will positively impact both EBITDA and free cash flow, aiming for $400 million in steady-state savings by 2027. We expect to see an extra $300 million of EBITDA from our approved strategic CapEx initiatives by 2029 or 2030, which should also help bolster free cash flow. In terms of working capital, we aren't focusing on that area to maximize free cash flow since we are already performing well. We're also working to significantly lower interest expenses, with $125 million in savings expected this year. Part of our capital allocation strategy includes reducing our debt principal, though there is no rush to do so. Finally, we are dedicated to operational excellence, which means we are analyzing every aspect of our costs to expand our margins, which is why our cutting-edge strategies are yielding the expected results. I hope this addresses your question, Alejandra.

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

Just one question on the new corporate structure, new operating model that you're announcing today. Could you explain a little bit what it is and how it could support an improved free cash flow conversion? And another question that I think I already asked is that Holcim, Amrize, Heidelberg materials, they're targeting an EBITDA to free cash flow conversion rate of close to 50%. Is it something that you believe CEMEX can achieve as well? And if so, what would be the time frame and the level that you would be working on?

Thank you for your question, Yassine. To address the latter part first, I believe we can achieve a free cash flow conversion rate from operations that is comparable to what Holcim, Amrize, and Heidelberg are currently achieving. I expect we'll be closer to that goal next year, and I'm confident that by 2027 we will reach it. In the meantime, I anticipate that we will divest some assets that do not generate sufficient free cash flow. We have integrated EBIT ROIC above WACC and free cash flow conversion from operations into our management KPIs, and we are aligning our compensation scheme accordingly. We are committed to improving free cash flow conversion rates. I want to emphasize that many of our cost-saving initiatives will directly increase free cash flow, such as the $200 million in annualized savings from headcount reductions. This ties back to the first part of your question regarding the transformation of our corporate structure and operating model. We are discontinuing centrally-led initiatives that were previously successful but no longer require centralized management. Additionally, we are decentralizing our operational excellence initiatives to be handled by the line teams focusing on commercial, supply chain, and customer centricity. This decentralization, coupled with a focus on collaboration, will drive innovation and improve efficiency by sharing effective strategies across regions more rapidly. This approach will optimize resources, streamline headcount, and reduce costs while positively impacting operational excellence and margins. I want our teams and all employees to adopt an owner mindset as we move forward with agility, reduced bureaucracy, and faster execution. I hope that clarifies things, Yassine.

And the next question comes from Adam Thalhimer from Thompson Davis. And I'm going to read it, it's a bit repetitive of what Yassine just asked. Jaime, maybe you want to talk a little bit of some of the organizational changes in the U.S. as well. But the question is, can you please discuss some of the structural changes you are making at CEMEX? I am particularly interested in the relationship between corporate and regional managers. Is it fair to say that regional managers are being given more autonomy?

Thank you, Adam, for your question. I would like to add to what I mentioned earlier. The center's role is to support our operations. We conduct comprehensive regional business performance reviews to enhance operational efficiency, which is a crucial part of our strategy. We have already completed three of these reviews, with one more scheduled, and I plan to conduct two each year. During these reviews, we evaluate all aspects of our business, identify best practices, and implement new technology in a coordinated and efficient manner. We focus on innovation and continuously seek ways to optimize costs. Additionally, in response to your good suggestion, Lucy, we have reorganized our operations in the U.S. to emphasize operational excellence and growth. We have appointed three leaders to oversee profit and loss in cement, ready-mix, and aggregates. This structure will facilitate the sharing of best practices and enhance margins across all business lines and regions. By having these dedicated P&L leaders, we are enabling Jesus Gonzalez, our U.S. President, to dedicate more time to growth initiatives in the U.S. As you know, we are significantly reducing strategic capital expenditures and prioritizing our capital allocation towards responsible mergers and acquisitions in the U.S., particularly in aggregates and urbanization solutions. Lucy, I hope I have addressed Adam's question by building on my previous remarks.

Thank you, Jaime. The next question comes from Jorel Guilloty from Goldman Sachs. Jorel?

I would like to change topics and ask about pricing trends. If I remember correctly, at the start of the year, there was an expectation that pricing in Mexico for both cement and aggregates might rise into the teens. However, year-to-date, you've only seen about a 5% increase. You also mentioned that you sought a price increase in July. I want to get a sense of your outlook for pricing hikes through the end of the year for Mexico and the U.S. Specifically, I'm interested in cement, but additional information on ready-mix and aggregates would be appreciated.

Thank you for the question, Jorel. In Mexico, we implemented a price increase on July 1, which was approximately $15 per ton. We anticipate that this will bring in an additional $8 to $10 per ton, and we expect continuous improvement in our cement pricing in Mexico for both bags and bulk. For ready-mix, we are actively exploring price increase opportunities in various micro markets. On a year-on-year basis, our ready-mix prices have increased by 7%, and from the second quarter of 2025 to the fourth quarter of 2024, there is a 6% increase in our ready-mix prices. In aggregates, we are seeing an 8% increase both year-on-year and sequentially from the average of the second quarter of 2025 to the fourth quarter of 2024. In the U.S., I do not anticipate any price increase in cement before the end of the year. Ready-mix prices are expected to remain stable, while aggregates might see a sequential increase of 5% to 6% from the average of the second quarter of 2025 to the fourth quarter of 2024. Looking ahead to 2026, we plan to continue our pricing strategy to at least counterbalance inflation in input costs. If we maintain the second quarter of 2025 prices for the remainder of the year, we can expect a price increase in U.S. dollars of around 4% for cement, 6% for ready-mix, and 7% for aggregates. I hope that answers your question. Back to you, Lucy.

Thank you, Jorel. The next question comes from Adrian Huerta from JPMorgan. Adrian?

My question is related to EMEA. We have seen a tremendous performance year-to-date EBITDA of 32% almost $350 million in the first half. How do you see this region in the medium term, let's say, over the next 18 months? What is, let's say, on volumes and also on margins? And what could we expect out of this region in 2 to 3 years?

Thanks, Adrian. I'm very excited about our operations in EMEA, including Europe. Let me start outside of Europe. We see significant potential for free cash flow and EBITDA growth in Israel, supported by solid fundamentals like population growth and strong demand in construction. We're well positioned in that region. While Egypt may face volatility, we are currently experiencing strong volumes and pricing. In Europe, I'm optimistic about the growth in markets such as Spain and Germany due to changes in fiscal policy and increased infrastructure investments. Eastern Europe also shows promise, particularly with potential reconstruction efforts in Ukraine once peace is established. This will lead to significant volumes and will affect our operations positively in the region. Also, Poland is likely to accelerate infrastructure projects using EU funds next year, and the U.K. is expected to continue its infrastructure investments and see a recovery in housing in the midterm. I'm also excited about our efforts in CO2 decarbonization, where we are leading the industry. By 2026 and 2027, we will face two developments: the CBAM and the withdrawal of CO2 allowances starting in 2027. We have a surplus of CO2 credits, which is not the case for the industry as a whole. As we assess the CO2 emissions from imports, this will give us a competitive edge in our pricing strategy. Additionally, I anticipate cement capacity closures, which we are analyzing as we adjust our operations to produce less clinker. This will help manage excess capacity. Overall, we expect better volumes and industry rationalization to support our pricing strategy and help close any gaps between European and U.S. markets. I hope that answers your question, Adrian.

Adrian, I would also just add that we've already seen some momentum in Europe in terms of pricing. If you exclude Germany, pricing for our three core products is already up 2% to 3% versus the fourth quarter this year. So I think that, that's important to note, anyway. And the next question comes from Paul Roger from BMP. I'm going to read it via the webcast. Guidance mentions potential upside, where could this come from?

Thanks, Paul, for the question. Let me elaborate a little bit about it. First, as part of our cutting-edge effort, we count on around $100 million that I haven't yet even included in our estimates that works as a cushion, but there is some upside as we continue executing those savings. Also think about it this way. In the first semester, we did $1.424 billion. So if we were to do the same thing, meaning second semester, $1.4 billion, that will be a flat second semester growth, that will lead to $2.850 billion. But then you need to add tailwinds on FX. If the FX stays around MXN 18.75 to the dollar, that's going to add at least $40 million in the second semester. And then we have our Project Cutting Edge savings, and we're counting on the $85 million of headcount overhead reduction savings that I'll be firming up in future calls as we completed the labor consultation process in Europe. But beyond $85 million of headcount savings, we haven't yet even considered the indirect savings from eliminating those positions. That could be between 3% to 6% more savings and those relate to licenses, traveling expenses, so on and so forth. And then we count on around $100 million of the rest of Cutting Edge because it's fully loaded in the second semester. So I think that that's where the potential upside comes from really.

Thanks. The next question comes from Paco Suarez from Scotiabank. Paco?

Congratulations on the impressive transformational changes at CEMEX and the execution to date. My question pertains to the overall conditions in the United States. I've noticed that prices for aggregates in the U.S. are performing significantly better than those for cement. Do you believe that this higher performance in aggregate prices, combined with the interest from multiple players in acquiring these types of assets, might impact your plans to acquire operations at favorable values? Additionally, could you connect your response to what you've mentioned about the new model for capital allocation?

Francisco, thank you very much for the question. You have a good point that many companies are interested in investing in the aggregates space in the U.S. The first thing I want to tell you is that we have a great aggregates team in the U.S. and they know our business very well. The second thing is that because we purchase aggregates in some markets in our ready-mix operations, when we do not consume our own, we do have an extensive network of family-owned aggregate players with whom we have had years and years of relationships, and we're nurturing them and those should potentially, if we do the right things, give us at least a bit of an advantage in certain markets. But you're right. The competition is going to be tough. But what I can commit to and that's the new company's commitment on capital allocation is that we will not do any acquisition that does not deliver on the targeted metrics. And this means, obviously, NPV must be above 0. We want from a free cash flow per share to be accretive in year 1. We want ROIC above WACC plus 100 basis points. We will do only acquisitions with synergies of around 3% of sales. We want to do acquisitions that by those synergies, will reduce multiples to high single digits. And as you can imagine, Francisco, we are anchoring to preserve our investment credit rating status. And definitely, looking at shareholder returns, the ROIC from these investments are worse than otherwise paying down principal of the debt or returning cash to shareholders, we will do the latter. So it's going to be competitive. We're ready, but we're also going to be very responsible. And this will be small to medium-sized acquisitions. And a final thought. The reason also why we're looking at mortars, stokers, renders is because we see great synergies with what we do today, and we will broaden a little bit the breadth of accretive investment opportunities in the U.S. on a space that we know pretty well and where we are well positioned to take advantage of a fragmented industry. So I hope that I have answered your question, Francisco.

Thank you, Paco. The next question comes from José Espitia from BBVA. José?

Can you hear me?

Yes.

Yes, José, I can hear you.

So my question is considering the upgrade in volume expectations, if you can elaborate on the demand outlook in Mexico and the U.S. for the second half of the year, given the uncertainty scenario and challenging economic context.

Yes, José. Regarding Mexico, I am anticipating a slight sequential volume improvement of around 2% from the first half of this year to the second half. However, we expect a 2% decline in cement by the second half of 2025. Keep in mind that last year, during the second half of 2024, demand had already decreased by 7%. Therefore, the baseline we are starting from last year was significantly worse than the first half of 2024, which saw substantial growth. For average daily sales, I am only expecting a minor increase quarter-over-quarter. I feel confident about this anticipated sequential growth for Mexico, as our discussions with customers indicate that the government is progressing with its social housing program. We expect to see some of these projects starting in the latter part of this year, along with some infrastructure spending on railroads. However, if we assume no sequential improvement in average daily sales, that would result in a 4% year-on-year decline in the second half and a full year decline of 9%. As for the U.S., this first half has been very rainy, and we are now entering hurricane season. Last year's hurricane season was quite challenging, but so far in July, we have not experienced the same hurricanes we saw last year. This is helping our volumes. Depending on weather conditions, I apologize for this external factor, but we anticipate a 1% increase in cement for the second half. This is due to ongoing infrastructure projects and increased activity at data centers, particularly in Arizona with the second phase of a semiconductor facility, and work in Cape Canaveral. Much of this will depend on the weather. Apologies again for the uncertainty. If we assume average daily sales remain the same as in the second quarter of 2025 for the second half, this would lead to a 1% year-on-year increase in the second half and a full year decline of 2%. I hope this answers your question, José.

José, if I could just complement with one additional point, and that is that in the case of Mexico, there are also five more working days in the second half than the first half, apart from the average daily sales analysis that we just gave you. So I think that, that also was...

You're right, Lucy. It is five days, I think.

Yes. So the next question comes from Daniel Sasson from Itaú. Daniel? Have we lost him? Okay, I'm going to move on. Yes, yes, Hi, Daniel.

Can you hear me right?

Yes.

I can hear you now, Daniel.

So my question is just a follow-up question of the previous ones made. So I just would like to understand first is regarding the share buyback program. You mentioned that this could be an opportunity for 2026. So I'd like to understand by how much are you guys thinking of? How much you guys have as a base case? And my second follow-up is regarding the divestments in Hong Kong regions like SCAC that you mentioned before. So you just could provide a little bit more color in terms of what countries or what regions specifically in SCAC, you guys believe could be under review. So these are my two follow-up questions.

Regarding your first question, Daniel, I'm not yet ready to disclose the specific amount we're considering. I want to remind you that shareholders approved a share buyback program of up to $500 million. While I’m not planning on that amount for next year, we will start alongside the dividend program. It may be too early to provide details, but I anticipate being able to share more during the fourth-quarter call early next year. You can expect gradual increases in both dividends and share buybacks as we adjust our capital allocation, with less focus on debt repayment and strategic capital expenditures, and more on accretive mergers and acquisitions in the U.S. The rest will be directed towards dividends and share buybacks. That's our plan. As for your second question about divestments in SCAC, I prefer not to give specifics for obvious reasons. However, I expect that we will proceed with further divestments between October this year and late next year. We will maintain some operations that demonstrate significant free cash flow conversion for now. I will provide more details as we move forward with current negotiations. I hope you understand that I can't reveal specific names at this time.

We have time for one last question, and it is coming from Anne Milne from Bank of America. Anne?

I think this question maybe is for Maher. I just wanted to ask you about your current thinking about the path to reach your previously stated goal of 1.5x net leverage. In the past, it seemed like it would or could be through primarily increases in EBITDA, not necessarily reductions in debt. But could you please give us an update on what you're thinking about timing of this? What additional levers you might use if necessary to reach this target? We know you have the maturity or I should say, the call date on one of your perps next year that could help on that. But any other thoughts would be much appreciated.

I want to emphasize that EBITDA growth is likely our most crucial lever, particularly after Jaime's comments regarding operational excellence and Project Cutting Edge, which we've increased to $400 million. The additional EBITDA from our growth investments will significantly contribute over the next 12 to 24 months. We're highly focused on free cash flow conversion, and we may allocate that based on the criteria Jaime described. This analysis excludes any potential organic growth from the natural dynamics of our portfolio. I believe that EBITDA and free cash flow are key factors in achieving deleveraging through a lower leverage ratio. I expect we should see a half-turn reduction in the next 12 to 24 months, driven by both a decrease in debt and significant improvements in EBITDA, which we can control and are not reliant on market factors. This gives me confidence that we can meet that target within the specified timeframe.

Thanks, Anne. So I think that's a wrap. We appreciate you joining us today for our second quarter results, and we hope that you will come back again for our third quarter 2025 webcast on October 28. If you do have any additional questions, please feel free to reach out to the Investor Relations team. Many thanks.

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