• Net Sales: Resilient performance with pricing strategy partially mitigating volume declines in Mexico and the US.
• EBITDA Margin: Supported by higher prices, lower energy and freight costs, partially offset by volume impact and higher labor costs.
• Net Income: Record net income driven by the gain on divestment of Dominican Republic operations.
• Free Cash Flow: Impacted by lower EBITDA, severance payments, and discontinued operations; expected to improve throughout the year.
• Pricing Strategy: Cement and ready-mix prices rose 2%, aggregate prices increased by 4% sequentially.
• CO2 Emissions: Reduced net CO2 emissions per ton of cement equivalent by 1.6% year-over-year.
• Energy Costs: Declined by 17% per ton of cement, contributing to cost savings.
• Leverage Ratio: Stood at 1.9 times, slightly higher than December.
• Project Cutting Edge: Expected to realize recurring yearly EBITDA savings of at least $350 million by 2027, with $150 million expected in 2025.
• Urbanization Solutions Portfolio: EBITDA growth of 16% in South, Central America, and the Caribbean region, with margin expansion of more than 4 percentage points.

• Warning! GuruFocus has detected 3 Warning Sign with CX.

Release Date: April 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Cemex SAB de CV (NYSE:CX) appointed Jaime Muguiro as the new CEO, bringing nearly three decades of experience within the company.
• The company is implementing Project Cutting Edge, a cost savings program expected to deliver recurring yearly EBITDA savings of at least $350 million by 2027.
• Cemex SAB de CV (NYSE:CX) reported record net income, primarily driven by the gain on divestment of its Dominican Republic operations.
• The company achieved a 1.6% reduction in net CO2 emissions per ton of cement equivalent year-over-year, aligning with its decarbonization goals.
• Cemex SAB de CV (NYSE:CX) is focusing on enhancing shareholder returns through a balanced capital allocation policy, including potential share buybacks and progressive dividends.

Negative Points

• First-quarter results were impacted by peso depreciation, resulting in a $65 million headwind for the Mexican operations.
• Adverse winter conditions in the US and Eastern Europe negatively affected the company's results.
• The company faced a challenging demand environment in Mexico, with a significant decline in cement volumes due to a strong pre-election comparison base.
• Free cash flow was impacted by lower EBITDA, severance payments, and the effect of discontinued operations.
• The urbanization solutions portfolio experienced a 14% decline in sales, although EBITDA margin expanded slightly.

Q & A Highlights

Q: Jaime, could you provide more details on the cost reduction potential of Project Cutting Edge and your focus areas for geographical mix and investments? A: Jaime Muguiro, CEO: Yes, Project Cutting Edge is just the beginning. We are focusing on significant savings in supply chain, logistics, and procurement. We aim to reduce overheads and empower regions to improve margins. Geographically, we will continue focusing on Mexico, the US, and Europe, optimizing CapEx and potentially divesting assets that do not meet our return criteria.

Q: Can you elaborate on how Project Cutting Edge aligns with investor interests and any specific KPIs you plan to implement? A: Jaime Muguiro, CEO: Yes, we plan to introduce EBIT free cash flow conversion and ROCE over WACC as key performance indicators. These will be integrated into executive compensation and reviewed twice a year to ensure alignment with investor interests.

Q: Will there be any strategic changes in the urbanization solutions segment under your leadership? A: Jaime Muguiro, CEO: We see great potential in certain verticals like mortars, stuccos, and circularity, particularly in Europe. We aim to responsibly grow our urbanization solutions business, focusing on Mexico, the US, and Europe, and exploring light side solutions.

Q: Where do share buybacks rank in your capital allocation priorities? A: Jaime Muguiro, CEO: Share buybacks are part of our toolkit, approved for up to $500 million. We aim to enhance shareholder returns through progressive dividends and opportunistic buybacks, while also focusing on deleveraging and accretive acquisitions in the US.

Q: How do you plan to address the potential impact of tariffs on cement imports? A: Jaime Muguiro, CEO: We are prepared to introduce a tariff surcharge if necessary and have flexibility to switch import sources, leveraging our Mexican network. We are also improving operational efficiency in the US to reduce reliance on imports.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.