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Good morning, and welcome to Orbia's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I will now turn the conference over to Diego Echave, Orbia's Vice President of Investor Relations. Please go ahead, sir.

Thank you, operator. Good morning, and welcome to Orbia's Second Quarter 2026 Earnings Call. We appreciate your time and participation. Joining me today are Sameer Bharadwaj, CEO; and Cristian Capellino, CFO. Before we continue, a friendly reminder that some of our comments today will contain forward-looking statements based on our current view of our business, and actual future results may differ materially.

Today's call should be considered in conjunction with cautionary statements contained in our earnings release and in our most recent Bolsa Mexicana de Valores report. The company disclaims any obligation to update or revise any such forward-looking statements. Now I would like to turn the call over to Sameer.

Thank you, Diego, and good morning, everyone. Before we begin discussing this quarter's results, I would like to thank our global employees for their continued commitment to improving business performance and staying customer-focused in these evolving market conditions. Turning to Slide 3. I would like to share a high-level overview of our second quarter 2026 results. For the quarter, revenues of approximately $2.4 billion increased 20% and EBITDA of $467 million increased 56% compared to the prior year's quarter. Orbia's second quarter results reflect the continued benefits of the company's multi-year focus on strategic commercial execution, cost optimization, capital allocation discipline and cash generation.

Our agility in responding to shifting market dynamics arising from recent geopolitical events, capturing higher prices in Polymer Solutions and increasing margins supported by our largely advantaged cost position while swiftly offsetting higher input costs across our downstream businesses underscores the strength of our operating platform. The strong contributions from Fluor & Energy Materials and Connectivity Solutions reflect robust fundamentals in the fluorine chain as well as growing demand in Connectivity Solutions for telecom, AI data center and power grid infrastructure.

Taken together, these results demonstrate that Orbia is well positioned to capitalize on improving market conditions, drive profitability, strengthen the balance sheet and delever. I will now turn the call over to Cape to go over our financial performance in further detail.

Thank you, Sameer, and good morning, everyone. I will start by discussing our overall second quarter results. Turning to Slide 4. On a consolidated basis, net revenues of $2.4 billion increased 20% year-over-year with growth coming from all business groups. I will provide a more comprehensive description of these items in the business section of my comments. EBITDA of $467 million for the quarter increased 56% year-over-year, driven primarily by higher resin prices in Polymer Solutions, proactive commercial actions and favorable product mix in Building and Infrastructure, recovery and strength in key markets in Precision Agriculture, commercial strength in Fluor and Energy Materials and strong demand in Connectivity Solutions. Operating cash flow of $62 million in the quarter increased by $15 million compared to prior year period, mainly due to higher EBITDA, partially offset by higher cash outflow from the seasonal buildup in working capital, which was amplified by higher selling prices and raw material costs resulting from the Middle East dynamics.

Free cash flow of negative $73 million, improved by $9 million year-over-year. Improvement in free cash flow was driven by higher operating cash flow. Working capital increase of $185 million in the second quarter of 2026 compares to an increase of $111 million in the same quarter of 2025, reflecting higher business activity and the impact of higher selling prices and input costs associated with Middle East market dynamics. This working capital build is consistent with historical seasonal trends and typically reverses during the second half of the year. Capital expenditures of $100 million in the quarter increased by $3 million over the prior year quarter and included ongoing maintenance spending and investments to support the company's targeted growth initiatives. Net debt-to-EBITDA decreased from 3.64x to 3.28x compared to the previous quarter. Improvement was driven by an increase of approximately $168 million in the last 12 months EBITDA, partially offset by an increase in net debt of $157 million to fund the seasonal buildup of working capital.

Adjusting for nonrecurring items that are not reflective of ongoing business performance, net debt to adjusted EBITDA decreased from 3.55x to 3.24x during the quarter. Turning to Slide 5. I will go through our performance by business group. In Polymer Solutions, second quarter revenues were $773 million, an increase of 25% year-over-year. The increase was primarily driven by higher resin prices due to market dynamics in the Middle East, favorable pricing conditions in certain strategic markets and higher derivatives volumes compared to the prior year, which had been affected by operational disruptions. Second quarter EBITDA was $144 million, an increase of 82% year-over-year with an EBITDA margin of 18.6%. Improvement was driven primarily by elevated resin prices and the resulting margin expansion, supported by Orbia's significant production exposure to relatively low-cost U.S. Gulf Coast ethane feedstock and natural gas. These gains were partially offset by higher input and energy costs in Europe and adverse currency fluctuations.

Building & Infrastructure, second quarter revenues were $725 million, an increase of 15% year-over-year. Growth was driven by proactive commercial actions implemented early in the period to offset higher input costs stemming from the Middle East dynamics. Higher volumes in Latin America and favorable currency fluctuations. This was partially offset by the absence of revenue from noncore assets divested during 2025. Second quarter EBITDA was $113 million, an increase of 79% year-over-year with an EBITDA margin of 15.7%, driven by margin expansion from proactive commercial actions and a favorable mix supported by growing adoption of recently launched value-added solutions. EBITDA also benefited from a timing lag between price increases and rising input costs as the business drew on raw materials procured ahead of the Middle East events, together with the continued impact of cost reduction initiatives. In Fluor & Energy Materials, second quarter revenues were $329 million, an increase of 33% year-over-year.

Growth was driven by commercial strength across all major product categories, particularly refrigerants as well as favorable product life cycle dynamics in part of our medical propellant product portfolio. This was partially offset by lower volumes in Minerals and Chemical Intermediates. Second quarter EBITDA was $114 million, an increase of 58% year-over-year with EBITDA margin expanding 554 basis points to 34.7%. Improvement was driven by strong commercial performance across the portfolio, a continued favorable product mix and partially offset by higher sulphur and logistics costs and adverse currency fluctuations. Moving to Precision Agriculture. Second quarter revenues were $325 million, an increase of 13% year-over-year, mainly driven by growth in the U.S., Turkey, Peru and Australia as well as higher project revenues in Middle East and Africa and proactive pricing actions implemented to offset raw material cost increases stemming from the Middle East market dynamics, partially offset by lower volumes in India. Second quarter EBITDA of $47 million increased 19% year-over-year and EBITDA margin expanded 72 basis points to 14.5%.

Improvement was driven by the growth previously discussed and strong pricing discipline, partially offset by adverse currency fluctuations. Finally, in Connectivity Solutions, second quarter revenues were $319 million, an increase of 30% year-over-year. Growth was driven by strong demand across U.S. telecommunications, data center build-out and U.S. electric power grid modernization. Disciplined pricing actions were implemented to offset higher raw material costs stemming from the Middle East market dynamics. Second quarter EBITDA increased 33% to $54 million, and EBITDA margin expanded 39 basis points to 16.9%. Improvement was driven by higher volumes, a favorable product mix shift towards value-added solutions serving the data center market and the impact of cost reduction initiatives.

With that, I will now turn the call back over to Sameer.

Thank you, Cape. Turning to Slide 6. I will now provide an update to our outlook for the current year. Based on strong second quarter results and fluid market dynamics for the second half of the year, Orbia now expects full year 2026 EBITDA of at least $1.2 billion. The company recognizes that the favorable effects observed in the second quarter may not be sustained at the same level during the second half of 2026 and remains watchful regarding demand trends in the latter part of the year and will manage operations accordingly. The company expects 2026 capital expenditures of approximately $400 million with a focus on maintenance and asset integrity and selective strategic growth projects, primarily in the Fluor & Energy Materials business group. Now let's look ahead to the coming quarter and the remainder of the year across each of our business segments. Beginning with Polymer Solutions, Resin prices have trended downward during the start of the second half as global supply and demand dynamics have evolved.

Nevertheless, experts anticipate that prices will stabilize above the levels observed in the second half of last year. The business will continue to prioritize strict cost control, operational safety and asset integrity as well as cash generation and profitability growth. In Building & Infrastructure, the business remains vigilant about the potential impact of higher prices on demand, particularly in Europe. The business will continue to focus on profitability, underpinned by new product introductions, rationalization of its manufacturing footprint and cost optimization initiatives. In Fluor & Energy Materials, positive fluorine pricing trends are expected to persist through the second half of the year, partly offset by seasonal volume adjustments. Business will proactively implement strategic pricing actions to offset higher raw material and logistics costs while ensuring safe and stable mining and chemical operations and maximizing the value of fluorine across its portfolio. Growth investments will target mining infrastructure, next-generation medical propellants and battery materials.

In Precision Agriculture, positive momentum is expected to continue across key markets, led by Brazil and Peru and sustained improvement in the U.S. This is complemented by solid project backlog in the Middle East and Africa. Growth will be further supported by the ramp-up of recently launched products, including the new direct pressure regulator with integrated valve, the new Orchard cooling solution and GrowSphere FLEX Beta, among others. That said, the business will continue to monitor potential impact on demand as a result of higher input costs for farmers. And finally, in Connectivity Solutions, the business expects continued strong demand across its main markets. Supported by the renewal and expansion of broadband networks, the accelerating build-out of AI and data center infrastructure and the modernization of the power grid. Profitability is expected to improve, driven by high plant utilization and a greater contribution from higher value-added products within the portfolio.

We continue to prioritize our rigorous implementation of the strategic actions we undertook to delever the company, including cost optimization, earnings contributions from recently completed capital projects and cash generation from the divestiture of nonstrategic assets. We are actively tracking the effects of geopolitical developments in the Middle East on prices, raw material costs and end market demand taking preemptive measures to protect our margin profile while capitalizing on our differentiated competitive positioning and operational capabilities.

Operator, we are ready to take questions at this time.

[Operator Instructions] The first question today comes from Ben Isaacson with Scotiabank.

Sameer, I'd like to ask a couple of questions one by one, if I may. The first question is you talked about preemptive measures. Can you talk -- can you explain what those preemptive measures are? But as part of that, and I think actually my main first question is, you've talked a lot about how the conflict in the Middle East is giving you a short-term benefit. And as this conflict looks like the duration is lengthening, I assume that the short-term benefit will also lengthen as well in duration. But -- in the midterm, isn't this building and deferring inflationary pressure on some of your downstream businesses? In other words, is there going to be a bit of payback in 2027 for what the businesses are enjoying right now in the short term?

Ben, so let me take your question in terms of preemptive measures. I mean what we mean by that is our ability to respond to these situations. This is not something that happens overnight. So over the last several years, we've been building the capability to respond to various crises, right, from COVID to the Ukraine war, to the Gaza war to now the Iran war, the tariff war. And the processes and systems we put in place with respect to pricing, with respect to working capital management, inventory control, cash generation and just plain operating discipline is actually what enabled us to respond with agility to these dynamic market conditions. And as you can see, because the supply curve for PVC became very steep because of the increase in prices of oil and naphtha, and we had a cost structure off of the U.S. Gulf Coast, largely off of the U.S. Gulf Coast. So we benefited significantly during that period in that business.

Now for the downstream business, it was a significant increase in input costs, and we had to act once again, with agility to pass those cost increases through and faster in some businesses than others because we have some contractual obligations. But we've been largely able to recover input cost increases. Now you are absolutely right that this will create inflationary pressures and potentially, if it continued for a very long time, impact demand over the long term. But we are watching that very closely, right, and which is also the reason for our cautionary guidance. And as of now, we haven't seen significant impact. We see some short-term moderation of demand as customers may hold off purchases in anticipation of decreased raw material costs. But once again, now with the conflict escalating in the last 10 days, we are seeing oil prices go back up again. So it's really hard to predict. What I can say is all of our preparation has enabled us to respond to these situations quite effectively.

My second of 3 questions is on the connectivity business. Can you talk about the AI data center infrastructure? How important is that to connectivity? Is there a margin difference from everything else? Is it a few chunky projects that you're trying to tender for? Is this improving the overall segment's operating rate, and we're seeing unit costs come down?

It's a very good question, Ben, and probably it deserves a proper response. Historically, Connectivity Solutions business, our primary markets were in the traditional telecom market where much of our business was focused on fiber to the premises. So that's our bread-and-butter business. And what we are now seeing is a significant growth in the long-haul part of the telco segment, which is a lot of the fiber in the ground is old and 20, 25 years old, needs to be replaced. And so we are seeing significant growth in that segment as the networks replace the fiber in the ground. Now your question about AI data centers. There are 2 subsegments within AI data centers where we participate. One is on-campus, and this is where we provide pathway solutions for both fiber and power. And we are working with all the major hyperscalers and their engineering contractors and designing engineered solutions for their long-term use. And the amount of material that is used is quite significant, and it's growing at double-digit growth rates.

The second subsegment for AI data centers is what we call interconnect, which is connecting different cities for the hyperscalers with dedicated lines and which is -- which has some parallels with the long-haul telco market. So these are both growing quite nicely. And just a year ago, they were a small part of the business. And quite rapidly, the data center market is growing to 15%, 20% of our revenues. We always had a small portion of our business in the Power segment, roughly 20%. And that is seeing very good growth now. With the modernization of the power grid, it's expected to grow at high single-digit rates over the next decade. So hopefully, that answers your question on the various segments. And as far as utilization is concerned, we are operating at very high rates. And so obviously, when you operate at high rates, you get benefits of unit costs are optimized, and that's reflected in the business performance.

Perfect. And then just a quick one. On the Netafim business, I'm very aware that there is a crop input cost pressure rising and compressing farmer budgets and margins. But my question is, are you seeing any demand deferral as a result of El Nino? Are you starting to see farmers that are nervous and maybe kind of deferring the spend that they would have otherwise done on Netafim and kind of more wanting to wait it out and see what happens over the next 6 months?

So no, with respect to El Nino, I would say no. One would have thought that the war, Iran war and its impact on fertilizer production could have had some impact on near-term demand, but we haven't seen that either. And so in fact, if you look at year-over-year performance, year-to-date, the business performance is running at a run rate of $8 million to $10 million higher EBITDA per year. And we see that momentum continue with recovery in our traditional heavy ball market in the United States, recovery in Turkey, exceptionally strong performance in Brazil and growth in Brazil, driven by citrus, coffee, cocoa. And then the strength of projects in Africa and a very strong performance in Peru and Australia. So we haven't quite seen any slowdown in the near term in that business. And then El Nino, I would say, is a longer-term thing, but we haven't felt that yet.

The next question comes from Tasso Vasconcellos with UBS.

Sameer, I think it's very clear the better momentum when we look at the spreads as a whole. But on the other side, there remains some several uncertainties on the markets, oil prices increasing, its volatility and potential implications on inflation, global interest rates and so on. How is the company thinking about all of these moving parts right now? And how to position, how to better prepare what's ahead? If I may put the same question in other words, what would you say to be the main capital allocation priorities at this moment? And when or what are the key metrics to watch for that would make you more confident in improving new projects, increasing investments or on the other side, to resume paying dividends? And then if I may ask here a second question, I'd like to take advantage of the global footprint from Orbia operating in several regions, several countries and get your insights on what's the main challenge that you're seeing given the Middle East conflict that we're seeing right now, which regions are being impacted the most either because of a shift or some constraints on the product outflow? And the other part of this question, which regions would you see the biggest opportunities for Orbia following, let's say, some normalization on everything we are experiencing right now? Those are my 2 questions.

Tasso, thanks for your questions. Let me respond with how we are dealing with the dynamic situation. We cannot predict what's going to happen in the world with respect to conflicts or oil prices or interest rates and demand. What we can do is focus on what's within our control. And we were already operating in a weak market environment for building and construction in most markets. And if you have higher interest rates for longer, you would expect that environment to continue in that fashion. However, having said that, if you actually go business by business, the dynamics are quite different. So in Polymer Solutions, we are indeed beneficiaries of improving spreads because of the geopolitical situation. And -- but we do believe that this is going to take a while to unwind.

And even though PVC prices have come back down in a very significant way, largely due to Chinese exports and some reduction in oil prices, it's still going to be volatile. And we do believe that it will eventually settle at better levels than the second half of last year. And we are focused on running our assets with efficiency at full utilization and maximizing our spreads with the markets, our advantaged markets in which we place our material. in Building and Infrastructure, we've been living with weak market conditions for a while. But there, for the last 3 years, we've been focused on optimizing our costs, restructuring our footprint, reducing our working capital, building operating leverage and introducing new products. And all of these are contributing to results. And regardless of the market conditions, we should continue to see sequential improvement.

We have also been very conservative with respect to our financial policy and capital allocation and the teams are highly focused on cash generation. Continuing on to the other businesses, Connectivity Solutions, as we just talked about, the market dynamics there are very different. It's all driven by growth in telco, AI data centers and the grid modernization. Fluor and Energy Materials, the fundamentals remain exceptionally strong. with growth in batteries, semiconductors, refrigerants and medical propellants. And so that business is doing well. And then finally, even within Polymer Solutions, our compounds business, which has exposure to the AI data center market and the medical segment is doing quite well. And so it's hard to paint a broad brush and say that with higher interest rates, demand will get real suppressed across all of the portfolio.

But each of the businesses have their unique dynamics, and we have strong levers of resilience in each of the businesses that will help us navigate the next couple of years. In terms of -- you talked about dividends. And our capital allocation policy right now is our #1 objective is to generate free cash flow year-over-year and use that to lower our debt and strengthen our balance sheet, okay? And until we get to a point where we feel comfortable with our leverage, of course, it's not my decision. It's the Board's decision to decide when and how we pay out dividends. But I think our objective will be to delever before we resume paying dividends. In terms of our global footprint and what has been impacted, and so by and large, all of our operations are running fine and have not been impacted by the conflict. In fact, every -- all of our operations in Israel are operating very smoothly. We've had some disruptions in terms of cost of inputs, for example, sulphur costs in our fluorine chain where the sulphur costs went up from -- to up to $700 per tonne.

And we are now seeing that subside. And this is because a lot of the sulphur comes from refineries that were in the Middle East. And we are also passing that cost increase down the value chain. And given the strength in that value chain, we are able to recover the cost increases. But other than that, we don't have any material disruptions in any of our operations.

The next question comes from Mario Simplicio with Morgan Stanley.

Congrats on the results. I have one on the Fluor division. I wanted to understand better and if you could give us more color on what are the drivers for the strong performance in the divisions. Maybe share more about the dynamics between price and volumes across categories. And also provide more details on how are the dynamics on the rock, if you're losing market share, gaining market share. And if we should consider this strong result as something recurring and sustainable for the next quarter? Or what should we expect ahead?

Thank you. So let me talk about the Fluor business in a more broader context. if you look at the fluorine chain, it's good to -- for everybody to understand our position in the fluorine chain. Orbia produces somewhere between 15% and 20% of the world's fluorine based on its strategic access to its mine in Mexico and which is the world's largest reserve of fluorspar and the highest concentration reserve of fluorspar. About 60%, 65% of the world's fluorine comes from China, and that has been on the decline. And with growth within China, most of the fluorine within China stays in China or is exported as more value-added products. In that context, as demand for each of the fluorine segments grows, the current conventional segments include use of fluorine for steel manufacturing, cement manufacturing, aluminum manufacturing, refrigerant gases, medical propellants, pharmaceuticals, agrochemicals, and then the new sectors include batteries and semiconductors.

As you see these sectors grow over the next decade, fluorine supply will continue to become tight. And as it becomes tight, our pricing -- ability to price products and get fairly paid for the value we create will increase over time, right? Now in terms of near-term dynamics, we look at the segments as Minerals and Chemical Intermediates and minerals includes metallurgical fluorspar for steel and cement. It includes acid spar, which is used to make hydrofluoric acid and aluminum fluoride. And it also includes aluminum fluoride and hydrofluoric acid, which we sell to customers who use it to make products downstream in the value chain. We've had -- we've seen some shifts in terms of where the product goes. So typically, what we do is we maximize the value of the fluorine atom by placing it in segments. where we get the most value, okay? And there have been some shifts with the impact of the Middle East on aluminum producers in the Middle East. We are selling less acid spar and more aluminum fluoride. So the product mix may change, but we are focused on maximizing value.

As far as refrigerant gases and medical propellants go, our pricing power remains robust. And the -- we are one of the largest owners of F-Gas quota in the world. And our objective in placing that quota is to maximize value. And we continue to do that while we work on introducing the next-generation medical propellant and next-generation refrigerants. We've had some negative impact from illegal imports in Europe, and we continue to work with the European authorities and seeking their cooperation in mitigating the impacts of these illegal imports. And then, of course, we are working towards building the first plant for battery materials for LiPF6, which is expected to come online in 2029 and will be a material contributor to earnings at that time. Now in terms of -- there is one product that contributed disproportionately to our earnings this year. And this is a medical propellant 227 EA, which is at end of life. And when you -- when a product is at end of life, we run special campaigns for our customers.

And this has been a very significant contribution to our earnings this year, which will not repeat itself next year, but will be substituted partially with the next-generation medical propellants. Hopefully, that addresses your questions, [ Mario. ]

The next question comes from Leonardo Marcondes with Bank of America.

So my first question is regarding the war in the PVC market. So how does the war have been affecting the PVC market from the capacity perspective? I mean, have you seen any permanent shutdown more recently or any postponement of new capacity or maybe some companies giving up on building new capacity? And my second question is regarding the Building & Infrastructure business, which was one of the highlights of the quarter in your view, right? So I was wondering if you could break down what was the timing lag effect? And what was actually the proactive commercial actions and more favorable mix impact just to understand the sustainability of those strong margins.

Leonardo, let me talk about PVC supply, right? And I think when you look at PVC supply, we should keep aside the short-term noise created by the war. -- if you look at -- if you take a long-term view, PVC demand is growing at roughly 2.7%, 2.8% a year. And that's a 50 million, 48 million tonne market. And what that means is the world needs 1.2 million, 1.3 million tonnes of PVC every year, and there is no substitute. And over a 5- or 6-year period, you're talking about a demand increase of 5 million or 6 million tonnes. In terms of supply, the only supply we have line of sight into in terms of new plants coming online is about 2 million tonnes or 2.1 million tonnes of capacity in India from Reliance and Adani and maybe 300,000, 400,000 tonnes of capacity in Southeast Asia from [ Asahi. ] It's about 2.5 million tonnes.

That is it, okay? And so there is no other new capacity coming online in the next several years. And so if you look at what the market experts like CMA say is that the operating rates today, which are at 77%, will gradually climb to 83% and which is when we had the previous peak of the cycle. So that's long-term supply for PVC. Now in terms of the carbide-based producers in China, if you recall, China introduced an anti-involution policy according to which they stopped paying a rebate of about 13%, which is about $80 to $90 per tonne to PVC producers in China, which the intent of that policy was to enable a consolidation or shutdown of uncompetitive carbide-based capacity in China. Having said that, given what happened with the Iran war, it gave a bit of a lease of life to some of these carbide-based players, and they might stay open for longer. But long term, about 3 million to 4 million tonnes of carbide-based capacity is expected to come out of China, okay?

So if you keep that in context with steady growth in demand about 2.7% a year and with only 2 million tonnes of capacity additions with demand growing by 6 million over the next several years, the supply-demand dynamics are favorable. So what happened in the last 3 months? It's not that there wasn't enough supply of PVC. So basically, the Asian producers who are dependent on naphtha to make ethylene and PVC did not have access to naphtha, but the carbide-based producers were able to address the gap and the U.S.-based producers were able to export more as well. So there was no problem with supply of PVC. What changed was the steepness of the supply curve. Because of the increase in the price of naphtha, the marginal cost of PVC went up substantially and which is why PVC prices went up a lot, okay? So hopefully, that addresses your question on the supply-demand fundamentals of PVC. As far as B&I is concerned, look, in Building and Infrastructure, it's a dynamic market. We stay on top of our input cost increases, and we swiftly are able to pass them on to the customers.

And our objective is to be fair to our customer base and make sure we recover our input costs. And sometimes there are lags. And so in B&I, we've been beneficiaries because we've had inventories at lower cost and higher pricing on the products. This will normalize to some extent in the third quarter and not in a very significant way, but it should normalize a bit. And we remain agile and dynamic with respect to pricing and fair with respect to pricing with respect to our long-term customers.

[Operator Instructions]

Before we close, I would like our CFO, Cristian Capellino, to provide a brief update on our leverage and the efforts we are making to delever.

Thank you, Sameer. So as we have seen, we have reduced the leverage during this quarter to 3.24x net debt to EBITDA. And as we also said, we are going to continue to focus on free cash flow generation and use all the proceeds to reduce our debt. Our forecast for this year is to get leverage to very, very close to 3. And so this is driven by the expansion of earnings and also our disciplined control of working capital. So this quarter, we saw a significant increase in input costs, and then we increased prices as well, and we have increases in volumes. So all of this means that the buildup of working capital is an important factor for this quarter. we have been really efficient in reducing the days of working capital, more than 10 days of reduction versus last year. And this has been an important contributor to cash, right?

We have saved hundreds of millions of dollars through these effective actions of reducing working capital, working on inventories, SP&A processes, our collection processes, also working with supply chain finance elements to work on the extension of our payables days. So all these efforts are going to continue. And our capital allocation also to CapEx is very disciplined. And it's a continuation of the effort that we started some years ago when we laid out our organic strategy to reduce leverage. We continue with efficiency efforts to reduce SG&A, manufacturing costs, we continue with the process of divestitures of noncore assets, small assets that are not being used that are in part of the effort of reducing costs that released some assets, and we are selling them as well as the execution of the projects that were close to revenue generation, and now we are starting to enjoy the benefits and all of this is appearing in our results.

So all these efforts are going to continue, and we are going to keep all the financial community updated on our progress. And importantly, we have the revolver credit facility, an important liquidity backstop of $1.4 billion that we are not drawing any funds from there. We have it available. We have the reduction of our leverage and the improvement of our interest coverage puts us very well in compliance with all the covenants that we have, and we are operating with headroom. The maturities, as you know, has been extended to 2030 and beyond, all material maturities. So we have the flexibility to operate and focus on value creation, continue the deleveraging program and serving our customers with a strengthening balance sheet.

Thank you very much, Cape. So as you can see, we remain focused on our strategy of delivering results and operating performance, delevering and strengthening our balance sheet and simplifying and focusing our portfolio. Through preparation and discipline, we have demonstrated resilience and the ability to respond to dynamic market conditions with good outcomes. We will continue along that path. Look forward to talking to you at the end of the third quarter. Thank you very much.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, and welcome to the Orbia First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded. I will now turn the conference over to Diego Echave, Orbia's Vice President of Investor Relations. Please go ahead, sir.

Thank you, operator. Good morning, and welcome to Orbia's First Quarter 2026 Earnings Call. We appreciate your time and participation. Joining me today are Sameer Bharadwaj, CEO; Jim Kelly, CFO; and Cristian Capellino, CFO Designate.

Before we continue, a friendly reminder that some of our comments today will contain forward-looking statements based on our current view of our business, and actual future results may differ materially. Today's call should be considered in conjunction with cautionary statements contained in our earnings release and in our most recent Bolsa Mexicana de Valores report.

The company disclaims any obligation to update or revise any such forward-looking statements. Now I would like to turn the call over to Sameer.

Thank you, Diego, and good morning to all. Prior to reviewing this quarter's results, I want to express my sincere gratitude to our global workforce for their unwavering dedication and relentless focus on addressing our customers' needs amid challenging market conditions. I also extend my appreciation to our customers for their continued partnership and trust in us. Business conditions shifted in early March following geopolitical and macroeconomic developments.

We are managing these shifts proactively and we'll provide more detail later in this call. More importantly, all our colleagues are safe and accounted for. We have implemented comprehensive safety measures and remain vigilant, ensuring stakeholders are updated on any significant changes.

Turning to Slide 3. I would like to share a high-level overview of our first quarter 2026 results. For the quarter, revenues of approximately $2 billion increased 8% and EBITDA of $259 million increased 31% compared to the prior year's quarter. EBITDA for the current quarter was flat compared to adjusted EBITDA of the prior year quarter.

Our first quarter results reflect the sustained resilience of our businesses across market cycles amidst an evolving global economic and geopolitical landscape.

The favorable trends that emerged across 2025 in our Fluor & Energy Materials, Connectivity Solutions and Precision Agriculture segments have carried over into 2026, while our Polymer Solutions and Building & Infrastructure segments continue to experience challenging end market conditions.

We began to incur higher input and logistics costs late in the quarter, driven by current global geopolitical events, and we are responding quickly and proactively to this dynamic.

Our teams are taking disciplined commercial actions to offset increases in costs and leverage our operational strengths. Despite generally soft building and infrastructure investment, disruptions caused by the war have resulted in higher PVC prices driven by an upward shift in the supply cost curve. This, combined with a stable U.S. Gulf Coast feedstock and cost position, creates advantageous conditions in the coming quarters while the disruptions last.

Having said that, an extended conflict could have an impact on inflation and demand. In this environment, we remain focused on optimizing costs, strengthening the balance sheet, generating cash and simplifying the portfolio in line with our long-term strategic objectives. I will now turn the call over to Jim to go over our financial performance in further detail.

Thank you, Sameer, and good morning, everyone. I'll start by discussing our overall first quarter results. Turning to Slide 4. On a consolidated basis, net revenues of $1.96 billion increased 8% year-over-year, with growth coming from all business groups, led primarily by Fluor & Energy Materials, Connectivity Solutions and Building & Infrastructure. I'll provide a more comprehensive description of these items in the business section of my comments.

EBITDA of $259 million for the quarter increased 31% year-over-year, driven primarily by the absence of legal and restructuring costs that were incurred in the prior year. Current quarter results were flat with the adjusted EBITDA reported in the year ago quarter, with increases in pricing in Fluor & Energy Materials and volumes in Connectivity Solutions, offset primarily by a decrease in selling prices in Polymer Solutions.

Operating cash flow of $1 million in the quarter improved by $23 million compared to the prior year period as higher EBITDA and lower taxes paid were partially offset by higher cash outflow from a seasonal working capital increase driven by higher sales and higher raw material costs caused by the recent Middle East conflict.

Free cash flow was negative $130 million, an improvement of $25 million year-over-year. The working capital increase of $212 million in the first quarter of 2026 compared to an increase of $169 million in the prior year quarter. This seasonal increase aligns with historical operational trends and typically reverses during the later half of the year. A higher increase in 2026 is due to a higher level of business activity as well as higher input costs resulting from the Middle East conflict. Despite the increase in dollars, working capital days declined by 5 days in the quarter and 9 days year-over-year as ongoing disciplined management continued to yield results.

Free cash flow benefited from higher operating cash flow and lower capital expenditures year-over-year with capital expenditures of $95 million in the quarter, which was $10 million lower than the prior year quarter.

Net debt-to-EBITDA decreased from 3.70x to 3.64x compared to the year-end 2025. The decrease was driven primarily by an increase of $60 million in the last 12 months EBITDA, partly offset by a decrease in cash and cash equivalents of $156 million and an increase in total debt of $2 million to fund the seasonal buildup of working capital. On an adjusted basis, net debt-to-EBITDA increased from 3.40x to 3.55x during the quarter for the same reasons.

Turning to Slide 5, I'll go through our performance by business group. In Polymer Solutions, first quarter revenues of $602 million were essentially flat year-over-year. Revenues benefited from higher resins and derivatives volumes compared to the prior year, which was affected by a raw material supply disruption and operational disruptions in our derivatives business, offset by lower resin prices.

First quarter EBITDA of $38 million, a decrease of 33% year-over-year and a 45% compared to adjusted EBITDA. EBITDA margin in the quarter was 6.4%. The year-over-year decrease in EBITDA was driven primarily by lower resin selling prices, higher raw material costs and unfavorable currency fluctuations.

Building & Infrastructure, first quarter revenues were $622 million, an increase of 6% year-over-year. The increase in revenues for the quarter was driven by higher volumes, primarily in the Andean region, favorable pricing and currency fluctuations. These factors were partially offset by soft demand in Western Europe, primarily driven by adverse weather conditions early in the quarter. Revenues also declined due to noncore asset divestments completed during 2025. First quarter EBITDA was $62 million, an increase of 69% year-over-year with an EBITDA margin of 10%, driven by the absence of last year's restructuring costs. The slight decrease compared to 2025 adjusted EBITDA of $64 million was driven by higher raw material costs, offset by favorable pricing and continued benefits from cost reduction initiatives.

Moving on to Precision Agriculture. First quarter revenues were $290 million, an increase of 7% year-over-year, driven primarily by strength in Turkey and Brazil, complemented by higher project revenue in Africa.

First quarter EBITDA of $34 million increased 2% year-over-year and EBITDA margin increased 58 basis points to 11.8% versus the prior year period, with the increase driven by the absence of last year's restructuring costs. The decrease compared to 2025 adjusted EBITDA of $37 million was driven by higher fixed costs due to the appreciation of the Israeli shekel compared to the U.S. dollar, partly offset by higher revenues.

In Fluor & Energy Materials, first quarter revenues were $274 million, an increase of 27% year-over-year. Revenue growth was fueled by strong pricing across all major product categories, especially in refrigerants and medical propellants.

First quarter EBITDA was $91 million, an increase of 43% year-over-year, with an EBITDA margin of 33.3%, an increase of 376 basis points. The higher EBITDA results for the quarter were driven by favorable pricing and product mix, partially offset by higher raw material and logistics costs.

Finally, in Connectivity Solutions, first quarter revenues were $238 million, an increase of 23% year-over-year. The increase in revenues for the quarter was driven by strong volume growth, supported by increased demand in the U.S. telecommunications and data center markets, partially offset by lower prices.

First quarter EBITDA increased 34% to $35 million with an EBITDA margin of 14.9%, an increase of 124 basis points. The year-over-year increase in EBITDA was driven primarily by higher volumes, a favorable product mix, higher plant utilization and benefits from cost reduction initiatives, partially offset by higher input costs and lower selling prices. Before handing the call over to Sameer, I want to address the recent development regarding our credit ratings.

During March, Fitch Ratings revised our debt rating from BBB- to BB+, while Moody's adjusted its rating from Ba1 to Ba2. Following these rating changes, we finalized discussions with our revolving credit facility syndicate and secured modifications to the underlying financial covenants of our $1.4 billion revolver.

With that, I'll now turn the call back over to Sameer.

Thank you, Jim. Turning to Slide 6. I will now provide an update to our outlook for the current year. The company reaffirms its expectation that 2026 EBITDA will be in the range of $1.1 billion to $1.2 billion, trending towards the high end of the range. The company anticipates that the current market dynamics will have a favorable effect on its second quarter results. However, the company remains cautious regarding longer-term pricing trends and the potential impact of higher prices on market demand in the latter part of the year, particularly within its downstream businesses.

The company continues to actively monitor market conditions and will continue to provide updates as appropriate in a timely manner. The company also reaffirms its 2026 capital expenditures guidance of approximately $400 million with a primary focus on investments to ensure safety and operational integrity as well as selective strategic growth projects, particularly in the Fluor & Energy Materials business group.

Now looking ahead in each of our business segments for the coming quarter and the remainder of the year. Beginning with Polymer Solutions, the conflict in the Middle East has temporarily altered global PVC cost dynamics, driving prices higher. The business expects that prices will remain elevated over the next several months before stabilizing in the second half of the year at levels above those at the start of 2026. The business expects a better result compared to its previous outlook, supported by strategic low-cost position and will continue to prioritize strict cost control, cash generation and profitability growth.

In Building & Infrastructure, market conditions are expected to remain subdued in Europe and moderate growth is anticipated in Latin America. The business has been proactively focused on strategic pricing to offset the higher input costs driven by the Middle East conflict. The business expects incremental growth and profitability, supported by its manufacturing footprint rationalization, new product introductions and cost optimization initiatives.

In Precision Agriculture, the business expects continued strong momentum across key markets, led by robust demand in Brazil, Peru and improvement in the U.S. as well as solid project revenue growth, particularly in Africa. The business has been proactively implementing price actions to offset raw material cost increases driven by the Middle East conflict. The business will continue focused on capturing additional benefits from ongoing operational and cash generational efficiency projects and the ramp-up of recently launched new products and features, including the new direct pressure regulator with an integrated valve, the new orchard cooling solution and GrowSphere FLEX Beta, among others.

In Fluor & Energy Materials, the business expects positive fluorine market trends to continue throughout the year with strong demand and pricing. The business has also been proactively implementing price actions to offset raw material cost increases driven by the Middle East conflict. The business will continue its strategy based on ensuring safe and stable mining and chemical operations and maximizing the value of Fluorine across its product portfolio.

Growth investments will focus on mining infrastructure, battery materials and next-generation medical propellants. And finally, in Connectivity Solutions, the business anticipates continued growing demand driven by broadband expansion, new data center investments and the modernization of the U.S. electric power grid.

Profitability is projected to improve, supported by higher plant utilization and growing the contribution from the higher-value products within its portfolio. The business has been proactively implementing price actions to offset raw material cost increases driven by the Middle East conflict.

We remain committed to meeting customer needs and driving shareholder value through the disciplined execution of the initiatives we launched to strengthen our balance sheet, including cost savings, profitability from recently completed investments and cash proceeds from noncore asset sales. We are closely monitoring the impact of Middle East events on PVC pricing, input costs and demand across businesses, responding proactively to manage our margins, leveraging our competitive advantages and operational strengths.

Before turning the call over to Q&A, as this will be Jim's last quarterly call with us, I would like to thank him for his contributions during his nearly 5 years as Orbia's CFO and for the strong relationships that he has developed with our investor and analyst communities. I would like to congratulate Cape on his appointment to the CFO role, and he, Diego and I will continue to ensure that we have robust communications with all of our stakeholders.

Cape, would you like to add some brief comments?

Thank you, Sameer. I'm honored to step into the role of CFO of Orbia and continue to drive the disciplined execution of our strategic priorities. I've had an opportunity to meet some of you already during my onboarding process, and I'm looking forward to meeting many more of you in the coming months through various conferences and investor meetings. Thank you, Jim, for your support during the transition period.

Operator, we are ready to take questions at this time.

[Operator Instructions] The first question comes from Andres Cardona with Citi.

Sameer, I have a question about capital allocation. I'm just wondering if the Middle East conflict has become a great challenge to close any potential divestiture of some of the noncore assets that you have in previous calls? And also a second one, I understand the level of uncertainty because of the conflict is relatively high, but maybe if you could signal like if you are already seeing benefits on the Polymer Solutions side of the business and where could be the main risk that could offset those benefits in what business lines in particular, you think there could be a risk that is worth to monitor?

Very good, Andres. Let me take both of your questions. I think your first question is around the impact of the Middle East crisis on our stated objectives of taking a hard look at our portfolio as far as noncore asset sales are concerned. And what I can say is, of course, there's always an impact from a war, but our efforts continue as expected. And so we are -- there is a number of noncore asset sales, smaller ones that we are proceeding as planned. And as far as the big portfolio reviews are concerned, we've talked about that before, and those efforts continue as well. And when there is something material to report, we will share that publicly, okay?

As far as Polymer Solutions is concerned, we are actually going to be beneficiaries of what's going on in the Middle East in a fairly significant way for as long as this situation persists. And so just to clarify, the impact on oil supply and consequently, naphtha supply from the Middle East is quite severe with respect to the Asian producers of PVC and in particular, the Chinese ethylene-based producers, Japan, Korea, Taiwan. And this has resulted in them operating at lower rates and some of the carbide place players in China trying to offset the gap that has been created.

Net-net, what we see is that the supply curve has -- the slope of the supply curve has increased sharply, leading to a significant increase in PVC prices, and we will be significant beneficiaries of that in the second quarter. And the obvious question is, how long do we expect the situation to last?

And most experts that we see out there say that even if the war were to end soon, the supply chain logistics disruptions that have been caused would take a minimum 3 months to 6 months to unwind. And in our outlook, we normally go by the CMA forecast and their experts follow the industry and they make projections on oil supply, ethane supply, gas supply as well as all the polymers. And as of now, their outlook is to see a gradual decline in Q3 and further decline in Q4 with prices stabilizing in the $800 per ton range for PVC. And so that's what's reflected in our outlook as well. And the longer this conflict persists, the longer we will have the benefit because we have a structural advantage with our cost base largely being on the U.S. Gulf Coast and based on ethane from the U.S. Gulf Coast, and that hasn't changed materially during this period for us.

The next question comes from Pablo Monsivais with Barclays.

I have another question also on the Polymer Solutions side. May I ask you about the tariffs that the Mexican government imposed on imported PVC. What is the potential benefit that you estimate of that at your EBITDA level?

Very good, Pablo. Let me comment on that. So as you may have been aware, there has been a significant dumping of PVC in the Mexican markets, largely from U.S. producers. at fairly low prices, much lower than what they are selling in the domestic markets in the United States. And there had been antidumping -- an antidumping case had been filed. And the antidumping duties of $630 per ton went into effect a few weeks ago, okay?

Now of course, there is a beneficial impact on Orbia because roughly 20% of the PVC that we produce in Mexico and Colombia is sold in Mexico. However, we need to be competitive with global prices. And we price our PVC competitive with landed cost of PVC from other parts of the world.

And we also value our long-term customer relationships and make sure we take our actions that provide for a sustainable long-term business in Mexico.

The next question comes from Leonardo Marcondes with Bank of America.

I have 2 from my end here. The first one is also related to the current environment that we're seeing for petrochemical prices, right? I mean we know that one of the main components of the costs of your downstream businesses are polyethylene and PVC, right, I mean for polyethylene and Dura-Line. So in this regard, could you provide some color on how have you been able to pass through the higher costs to the customers?

My second question is also regarding -- is actually a follow-up regarding our capital allocation strategy, right? I mean we have seen many news regarding a potential divestment, right? So given the improvement in the scenario for PVC, right, which could improve a lot the performance of Vestolit, how do you assess the probability of divesting from some assets? Also, at what level of leverage would you consider to keep your entire portfolio as is?

Leonardo, let me take your first question on the impact of increased polymer prices on our downstream businesses. So as you can imagine, with polymer prices going up by 50% to 60%, whether it's PVC or polyethylene, the downstream businesses have had to be very surgical and analytical about how to pass on the cost increases through. It's not just raw material cost. It's also logistics costs that have been impacted. The freight costs have been impacted. And these are unprecedented times where no producer in the downstream business will absorb these costs because it's not known how long these higher costs will persist. And so we have had a very systematic effort and very surgical effort to pass on all cost increases and be -- at the same time, be fair to our customer base. And our expectation is we should be able to keep up with the raw material cost increases and maintain our margins during this period.

As far as your second question is concerned, the impact of potentially improved results on our divestment plans, I go back to our long-term strategy. Our strategy is to deliver operational results, delever our balance sheet, focus on our core businesses and optimize our portfolio, and that has not changed. And so our efforts to explore portfolio options for some of our larger noncore businesses continue without any change.

Leonardo, this is Jim. So just to address your third question regarding our leverage target. So historically, we've maintained always having a position of wanting to maintain a strong balance sheet and low leverage. And back -- if you go back to the October 2024 plan for delevering that we announced, we talked about getting back down below a level of 2.5x net debt to EBITDA. And getting to and below that level would continue to be the target that we would have in mind.

[Operator Instructions] The next question comes from Joao Barichello with UBS.

I have 2 from my side. So first, as a follow-up on leverage. So what is the leverage level that would leave you comfortable in resuming dividends at some point? Is the 2.5x level? Additionally, so could you provide more color on your view on potential implications for the PVC spread cycle if the disruptions in Middle East persists for longer in that scenario, like could we see an increase in guidance at some point if you don't see a escalation in the very short term? That's it.

Yes. Joao, in terms of capital allocation, priorities. Our first priority is to reduce leverage. And until we get leverage down to a comfortable level, which is below 2.5x, ideally, a few tenths of a point below 2.5x, somewhere between 2.2x and 2.5x. I don't think dividends would be a priority. I think getting down to that lower leverage would take priority more. Jim, do you want to say more?

Yes. Just I'd like to add to that, that's really a Board and shareholder vote decision. That's not management's decision. But I would say that we are aligned in terms of the Board's view and management's view that getting to 2.5x and below is the immediate target and our entire focus.

Yes. And then in terms of the PVC cycle, I think it's important to understand global supply and demand. Demand has been at generally low levels, driven by slowdown in building and construction around the world. What we have now seen is a supply shock. And so -- and because of the supply shock, the supply curve slope has increased, and that's what has resulted in higher PVC prices. There is adequate -- if you globally look at the amount of PVC that's available, PVC is available. The prices are going to be high because the supply curve is steep. And so it all depends on where oil settles down in a few months. If oil stays well above $60 a barrel, then we are not likely to see the low prices of $600 per ton, $700 per ton again. But if oil stays in the $70 per barrel to $90 per barrel range, you would expect PVC to settle somewhere in the $800 per ton, over the longer period, which is actually a good thing, okay?

Now keep in mind that the difference between the bottom of the cycle and the top of the cycle in terms of operating rates is not that much, okay? The bottom of the cycle is at about 76% operating rates and the top of the cycle is around 82%, 83% operating rates. And so the biggest catalyst for the PVC cycle to actually improve would be the end of the wars in the world and a resumption in building and construction demand, which would very rapidly result in an up cycle for PVC, okay? And so -- which is -- at this point, it's hard to predict. Yes.

This concludes our question-and-answer session. I would like to turn the conference back over to Sameer Bharadwaj for any closing remarks.

Thank you very much. I know a lot of the questions on this call have been related to the war as well as the impact on the Polymer Solutions business. What I'd like to highlight is the strong performance in some of our other businesses. So the Fluor & Energy Materials business continues on a very strong trend. The entire value chain for fluorine remains tight, and the business is doing well across the board in each of the segments.

The Connectivity Solutions business also continues to do very well and driven by not only growth in the telecom sector, but also significant growth in the data center and power markets. And despite the challenges that we are encountering in building and construction activity, our Building & Infrastructure business continues to benefit from the restructuring, footprint optimization, cost reduction programs and winning new business with new customers and are generating significant amounts of cash for Orbia.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, and welcome to Orbia's Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions]

Please note this event is being recorded. I would now like to turn the conference over to Diego Echave, Orbia's Vice President of Investor Relations. Please go ahead.

Thank you, operator. Good morning, and welcome to Orbia's Fourth Quarter and Full Year 2025 Earnings Call. We appreciate your time and participation. Joining me today are Sameer Bharadwaj, CEO; and Jim Kelly, CFO. Before we continue, a friendly reminder that some of our comments today will contain forward-looking statements based on our current view of our business, and actual future results may differ materially.

Today's call should be considered in conjunction with cautionary statements contained in our earnings release and in our most recent Bolsa Mexicana de Valores report. The company disclaims any obligation to update or revise any such forward-looking statements.

Now I would like to turn the call over to Sameer.

Thank you, Diego, and good morning, everyone. Before we begin discussing this quarter's results, I would like to thank our global employees for their ongoing efforts through 2025 and their continued focus on solving our customers' challenges in difficult market conditions. I would also like to thank our customers for their ongoing partnership and trust.

Turning to Slide 3. I will share a high-level overview of our fourth quarter and full year 2025 performance. Full year revenues of $7.6 billion increased 2% year-over-year and EBITDA of approximately $1.02 billion decreased by 7% compared to the previous year. Full year EBITDA included onetime items of approximately $90 million. Excluding these onetime items, full year adjusted EBITDA was $1.11 billion.

Overall, global market conditions across Orbia's businesses were mixed but remained generally challenging in 2025, particularly across construction and infrastructure-related activities and regionally in much of Europe and Mexico. We did, however, see favorable trends emerge during the year in our Fluor & Energy Materials, Connectivity Solutions and Precision Agriculture businesses.

In this environment, we remain relentlessly focused on exercising strong financial discipline. We continue to strengthen our leading market positions and to drive results through effective commercial and operational execution with a focus on both earnings and cash generation. Our cost optimization programs are on track and making important contributions as is our initiative to generate cash from noncore asset sales.

We continue to look for more opportunities to simplify our business, further strengthen our balance sheet and drive cash generation to support our long-term strategic objectives. As we begin 2026, we expect market dynamics to remain challenging in some businesses with continued improvements in others.

I will now turn the call over to Jim to go over our financial performance in further detail.

Thank you, Sameer, and good morning, everyone. I'll start by discussing our overall fourth quarter results. Turning to Slide 4. Net revenues of $1.9 billion increased by 5% year-over-year, with growth coming from all business groups except Polymer Solutions. The increase was led primarily by higher volumes in Connectivity Solutions and better product mix in Fluor & Energy Materials.

I'll provide a more comprehensive description of these factors in the business-by-business section. EBITDA of $227 million for the quarter increased 2% year-over-year, primarily driven by higher volumes and lower onetime costs in Fluor & Energy Materials and in Building and Infrastructure, partially offset by a decrease in Polymer Solutions. Adjusted EBITDA of $236 million declined 14% compared to last year, primarily driven by Polymer Solutions.

Operating cash flow of $349 million increased by $67 million or 23% compared to the prior year quarter, driven by efficient working capital management and the absence of last year's unfavorable currency impacts, partially offset by net interest paid and higher taxes. The operating cash flow conversion rate for the quarter was 154%. Free cash flow in the quarter was $204 million, an increase of $80 million year-over-year, driven by an increase in operating cash flow and a decrease in capital expenditures.

Turning to Slide 5. I'll now review our full year results for 2025. On a consolidated basis, net revenues were $7.6 billion, an increase of 2% year-over-year. Higher revenue came from all business groups with the exception of Polymer Solutions. The increase was led primarily by higher volumes in Connectivity Solutions and better product mix in Fluor & Energy Materials.

EBITDA of $1.02 billion decreased 7% year-over-year with an EBITDA margin of 13.4%, a decrease of 124 basis points. These decreases were primarily due to lower volumes and prices in Polymer Solutions and onetime costs for Building and Infrastructure. These were partially offset by the absence of prior year onetime costs in Fluor & Energy Materials and higher revenues in Connectivity Solutions and Precision Agriculture.

Excluding onetime items, adjusted EBITDA was $1.11 billion for the full year, representing a 7% decrease from the prior year and an adjusted EBITDA margin of 14.6% for the year. Operating cash flow and free cash flow were $645 million and $111 million, respectively, reflecting strong working capital performance and lower cash impacts from accruals, partially offset by lower EBITDA and higher taxes and net interest paid.

The operating cash flow conversion rate for the full year was 63%. Free cash flow increased by $175 million year-over-year, driven by higher operating cash flow and lower capital expenditures. Capital expenditures of $405 million declined by approximately 15% compared to the prior year. Spending for 2025 included ongoing maintenance and investments to support the company's targeted growth initiatives.

Orbia invested $144 million in strategic growth primarily dedicated to expanding capacity for medical propellants and custom electrolytes within our Fluor & Energy Materials business as well as advancing high-value product initiatives in Building and Infrastructure. The remaining $251 million was deployed to ensure operational safety and asset integrity. Net debt of $3.78 billion included total debt of $4.82 billion less cash of $1.04 billion.

The net debt-to-EBITDA ratio was 3.70x at the end of the year, which decreased from 3.85x at the end of the prior quarter, driven by a decrease in total debt of $82 million and an increase in cash and cash equivalents of $49 million and an increase in the last 12 months EBITDA of approximately $5 million during the quarter. The leverage ratio increased by 0.4x compared to 3.30x at the prior year-end due to an increase of $162 million in net debt of which $147 million was due to the appreciation of the Mexican peso against the U.S. dollar and a decrease of $76 million in the last 12 months EBITDA, partially offset by an increase in cash and cash equivalents of $31 million.

On an adjusted basis, net debt to EBITDA at the end of 2025 was 3.40x, which was a slight reduction from the level of 3.42x at the end of the prior quarter. For the full year, we recognized an income tax expense of $291 million compared to an income tax benefit of $127 million in the prior year. The change in the tax expense was primarily driven by the geographic mix of earnings, appreciation of the Mexican peso relative to the U.S. dollar, inflation-related adjustments and discrete items, including nonrecurring dividend repatriation and impairment charges.

Adjusted for these items, the effective tax rate for the year would have been approximately 25%. Turning to Slide 6. I'll review our performance by business group. In Polymer Solutions, fourth quarter revenues were $558 million, a decrease of 6% year-over-year driven by lower operating rates in derivatives and lower prices in resins. This was partially offset by higher volumes in resins and higher prices in derivatives.

Fourth quarter EBITDA was $33 million, a decrease of 55% year-over-year with an EBITDA margin of 5.9%, driven by lower prices and higher input costs. For the full year, Polymer Solutions had revenues of $2.4 billion, a 4% decline, driven by lower volumes in derivatives and lower prices in resins, partially offset by higher general resins volumes.

Full year EBITDA declined 30% versus the prior year to $248 million with an EBITDA margin of 10.2%, driven primarily by lower resin prices, operational disruptions in derivatives and a key raw material supply disruption during the first half of the year. This was partially offset by lower fixed costs from cost savings initiatives. Excluding onetime items, adjusted EBITDA was $39 million in the quarter and $279 million for the full year, representing a decrease of 53% and 26%, respectively.

Adjusted EBITDA margin was 7% for the quarter and 11.5% for the year. In Building and Infrastructure, fourth quarter revenues were $600 million, an increase of 4% year-over-year, driven primarily by higher volumes in Western Europe, Mexico and other portions of Latin America, favorable currency fluctuations and better pricing. This was partially offset by the impact of divestments of the India and Clay Pipe businesses that were completed earlier in the year.

Fourth quarter EBITDA was $71 million, an increase of 34% year-over-year with an EBITDA margin of 11.9%. The increase was driven by lower onetime restructuring costs, better margins favorable product mix and continued benefits from cost-saving initiatives. For the year, Building and Infrastructure revenues were $2.5 billion, a decline of 1% year-over-year. The decrease was driven by the impact of completed divestments and weak demand in Mexico, partially offset by growth in Brazil and EMEA.

Full year EBITDA of $246 million declined 10% year-over-year with an EBITDA margin of 10%, driven primarily by lower results in Mexico and Western Europe, higher material costs and higher onetime restructuring costs compared to last year. This was partially offset by better performance in the U.K. and Brazil and the benefit of cost savings initiatives. Excluding onetime items, adjusted EBITDA was $78 million in the quarter and $286 million for the full year, representing an increase of 20% and a decrease of 2%, respectively.

Adjusted EBITDA margin was 13.1% for the quarter and 11.6% for the year. Moving to Precision Agriculture. Fourth quarter revenues were $279 million, an increase of 5%, driven primarily by strength in Brazil, Europe and Israel, partially offset by India and Mexico. Fourth quarter EBITDA of $33 million was slightly lower year-over-year with an EBITDA margin of 11.8%. The slight decrease in EBITDA year-over-year was driven by lower performance in the U.S., Mexico and Central America, partially offset by better performance in EMEA, Brazil and Turkey.

For the year, Precision Agriculture reported revenue of $1.1 billion, an increase of 6%, driven by growth in Brazil, Peru and the U.S., partially offset by soft demand in Mexico. Full year EBITDA increased by 9% to $136 million with an EBITDA margin of 12.4%, primarily driven by Brazil, the U.S., Turkey and Peru, partially offset by negative impacts from currency fluctuations and Mexico. Excluding onetime items, adjusted EBITDA was $35 million in the quarter and $142 million for the full year, representing a decrease of 3% and an increase of 7%, respectively. Adjusted EBITDA margin was 12.5% for the quarter and 12.9% for the year.

In Fluor & Energy Materials, fourth quarter revenues were $268 million, an increase of 21% year-over-year. The increase was primarily driven by higher volumes from pharma and upstream minerals and favorable prices across most of the product portfolio, partially offset by lower volumes in refrigerants. Fourth quarter EBITDA was $68 million, an increase of 107% year-over-year due to higher revenue in the absence of prior year onetime legal expenses, partially offset by higher raw material costs. EBITDA margin was 25.2%.

For the full year, Fluor & Energy Materials revenues were $958 million, an increase of 11%, driven primarily by strong results across the product portfolio. EBITDA for the full year increased 14% to $267 million and an EBITDA margin was 27.8%. The full year increase in EBITDA was primarily driven by the absence of prior year onetime legal expenses, partially offset by higher raw material costs and higher operating costs in Mexico, driven by the appreciation of the Mexican peso against the U.S. dollar.

Excluding onetime items, adjusted EBITDA was $68 million in the quarter and $267 million for the full year representing an increase of 3% and a decrease of 1%, respectively. Adjusted EBITDA margin was 25.2% for the quarter and 27.8% for the year.

Finally, in our Connectivity Solutions segment, fourth quarter revenues were $226 million, an increase of 32% year-over-year. The increase in revenues for the quarter was driven by strong volume growth across all end markets and a favorable product mix, partially offset by lower prices. Fourth quarter EBITDA increased 61% year-over-year to $21 million with an EBITDA margin of 9.5%. The increase was primarily driven by higher revenues, higher capacity utilization and continued benefits from cost reduction initiatives, partially offset by lower prices.

For the full year, Connectivity Solutions revenues were $918 million, an increase of 9%, driven by strong volume growth and favorable product mix, partially offset by lower prices. For the full year, EBITDA of $131 million increased 21% and EBITDA margin was 14.2%, primarily due to higher revenues, higher capacity utilization and the continued benefits from cost reduction initiatives, partially offset by lower prices.

Excluding onetime items, adjusted EBITDA was $33 million in the quarter and $144 million for the full year, representing an increase of 105% and 23%, respectively. Adjusted EBITDA margin was 14.8% for the quarter and 15.7% for the year.

Turning to Slide 7. I'd like to provide an update on our plan to improve operating performance, strengthen our balance sheet and reduce leverage as first outlined in our October 2024 business update. First, our cost reduction program continues on track, having delivered cumulative annual savings of approximately $200 million by the end of 2025 relative to the end of 2023 cost base. We've achieved approximately 80% of our targeted $250 million in savings per year by 2027.

Second, the contribution from recently completed or close to complete organic growth initiatives, which are primarily focused on new product launches and capacity expansions, reached approximately $59 million of EBITDA during 2025. The goal is to achieve $150 million in incremental EBITDA from these investments by 2027. We expect an acceleration of these benefits in 2026, especially in Building and Infrastructure.

We have signed agreements that generated proceeds of approximately $90 million from noncore asset divestments as of the end of 2025. We anticipate reaching our targeted $150 million or more by the end of 2026. Finally, as we indicated in the second quarter of 2025 results presentation, we have successfully extended all material debt maturities to 2030 and beyond, raising approximately $1.4 billion to refinance existing obligations. This proactive capital structure management enhanced our financial flexibility and helped to reduce near-term financial risk.

With that, I'll now turn the call back over to Sameer.

Thank you, Jim. On Slide 8, I will cover a few key milestones regarding our efforts on sustainability. In 2025, we remain focused on expanding and delivering sustainable solutions across all our businesses, staying aligned with our long-term strategy and customer needs. In Fluor & Energy Materials, we expanded our custom electrolyte facility in the U.S. and continued growing our portfolio of low global warming potential refrigerant gases and medical propellants.

We also advanced construction of our new facility for next-generation medical propellant 152a in the U.K., which we expect to start production in early 2027. Within Building and Infrastructure, we enhanced our offering in urban water resilient solutions to address environmental challenges. We exceeded our 2025 sustainability-linked sulfur oxide emissions reduction target. Our progress was recognized once again by leading sustainability benchmarks in 2025.

We maintained our standing in the S&P Dow Jones best-in-class MILA Pacific Alliance, the S&P Sustainability Yearbook, the FTSE4Good Index and the BMV ESG Index. Finally, we will publish our 2025 impact report on March 9, where we will provide further detail on sustainability performance.

Turning to Slide 9. I will now discuss our outlook for 2026. The outlook for the year presents 2 distinct dynamics. We expect continued positive market momentum in Precision Agriculture, Fluor & Energy Materials and Connectivity Solutions. Meanwhile, Polymer Solutions and Building and Infrastructure end markets are expected to remain relatively weak. We expect growth in EBITDA from these segments due to the absence of the operational disruptions experienced in 2025 in the Derivatives business as well as from commercial initiatives and new product introductions in Building and Infrastructure.

For 2026, the company expects that full year EBITDA will be in the range of $1.1 billion and $1.2 billion with capital expenditures expected to be approximately $400 million. The primary focus of capital expenditures will be investments to ensure safety and operational integrity as well as selective strategic growth projects, particularly in the Fluor & Energy Materials business group.

Now looking ahead in each of our business segments for the year. Beginning with Polymer Solutions, the global PVC market is expected to experience continued excess supply. However, prices have recovered modestly compared to the trough levels seen in the second half of 2025. Recent governmental policy shifts, particularly in China and announcements of capacity rationalization in Europe and the U.S. should help support a firmer global pricing environment. The focus remains on maximizing production, maintaining strict control over fixed costs and cash and growing profitability.

In Building and Infrastructure, market conditions are expected to remain subdued in Europe and moderate growth is anticipated in Latin America. Orbia anticipates incremental growth driven by greater adoption of new products, contribution from value-added solutions and ongoing benefits from cost optimization initiatives.

In Precision Agriculture, we expect continued strong momentum across key markets led by robust demand in Brazil, solid project execution in Africa and the Middle East and sustained strength in U.S. permanent crops. The business will also advance growth initiatives through its new digital farming platform and new projects while capturing additional benefits from ongoing operational efficiency efforts.

In Fluor & Energy Materials, we expect positive fluorine market trends to continue with strong demand to help offset the impact of raw material and mining cost inflation. Our operating philosophy is to ensure safe and stable mining and chemical operations and maximize the value of fluorine across minerals and chemical intermediates, refrigerants and medical propellants. Growth investments will focus on battery materials, next-generation medical propellants and mining infrastructure.

And finally, in Connectivity Solutions, we anticipate growing demand driven by broadband expansion, new data center investments and the modernization of the U.S. electric power grid. Profitability is projected to improve, supported by these incremental volumes, higher plant utilization and the ongoing implementation of cost control initiatives. Consistent with our top priority to strengthen the balance sheet and the company's Board of Directors has resolved to approve and intends to propose to shareholders at Orbia's Annual General Meeting that no ordinary dividend be declared for 2026.

In summary, our near-term priorities are to deliver on our commitments, delever the balance sheet, simplify operations and focus on our core business. We aim to improve EBITDA and cash flow through cost savings initiatives and growth from recently completed project investments, complemented by cash generated from noncore asset sales. These actions will enable us to improve our leverage and strengthen our balance sheet by the end of 2026 without relying on potential market recovery or further benefits from business simplification.

We remain committed to meeting customer needs and generating long-term value for our shareholders. We are aware of recent media reports and market speculation concerning a potential divestiture of our Precision Agriculture business. We continually engage in assessing opportunities to optimize our portfolio and create value for our shareholders. As a matter of policy, we do not comment on market speculation or rumors.

We are committed to providing material information to the market in accordance with our disclosure obligations and regulatory requirements. Any official announcements regarding Orbia's strategy, operations or financial structure will be made through press releases and filings in accordance with applicable law and stock exchange rules.

Before we move to Q&A, I would like to share an important leadership update. After nearly 5 years of dedicated service as Chief Financial Officer, Jim Kelly has decided to retire from Orbia. Since joining us in 2021, Jim has reinforced financial and capital allocation discipline, enhanced reporting and internal controls and guided the company through a complex global environment with a clear focus on balance sheet strength, cash generation and long-term value creation.

Importantly, Jim also built a high-performance finance function, developing leadership depth that positions us well for the future. He has been a trusted partner to our executive team and our Board. And as many of you know, he has played an outstanding role in engaging our external stakeholders, including debt and equity investors, analysts and ratings agencies. We are truly grateful for his contributions. He will remain with us through midyear to ensure a seamless transition internally and externally.

Following a structured Board-led succession process, I am pleased to announce that Cristian Cape Capellino, a senior leader within a global finance organization has been appointed Chief Financial Officer effective March 15, 2026. Cape is a seasoned executive with over 23 years of experience, spanning public accounting and finance leadership roles within global industrial and manufacturing organizations. Since joining Orbia in 2020, he has held senior leadership roles across controllership, tax, financial planning and analysis and finance transformation within the finance leadership team.

He worked in close partnership with Jim to strengthen governance, sharpen capital allocation rigor and modernize our global financial systems across more than 40 countries. Prior to Orbia, Cape spent more than a decade at Tenaris, an NYSE-listed global industrial company, where he held multiple senior finance and business leadership roles. Earlier in his career, he worked at Deloitte in audit and tax. He holds an MBA from the MIT Sloan School of Management and a public accountant degree from the National University of Cordoba.

Cape understands our portfolio, our capital framework and our performance drivers. He is highly regarded by our global teams. His appointment ensures continuity and execution. Our strategic priorities and capital allocation plans remain unchanged. The Board and I are confident that this transition positions us well for our next phase of performance and value creation.

Operator, we are now ready to take questions.

[Operator Instructions] The first question today comes from Andres Cardona with Citi.

Before I ask my question, I want to thank Jim for the partnership over the last 5 years and wish you very good luck in your next step. Sameer, the natural question at this point is the simplification idea of the business. Could you help us to understand the reach of this program if it is limited to noncore assets, relatively small divestitures? Or how can we think about this concept that seems to be at the center of the strategy of Orbia for the last year or so?

Thank you, Andres. Let me address that question. As we've said before, our focus at Orbia, first and foremost, is to deliver on our results with a focus on EBITDA and cash generation and use the proceeds to delever and then simplify and focus our portfolio. So in that context, as we've shared before, the outcome of our strategy session late last year is that we will focus on our core value chains, okay?

And there are potentially businesses that we see may not be directly linked with our value chains or not the best strategic fit, we will look for simplification opportunities. And as I have commented earlier, we continue to explore such opportunities in earnest. And if and when there is something material to report in accordance with our disclosure obligations, we will do so.

The next question comes from Joao Barichello with UBS.

I have 2 from my side here. So could you provide an update on [ Cora's ] new facility in the U.K. regarding how has been the project execution time line? What is the EBITDA contribution that you're expecting from it? And also, could you provide a little bit more of color on the main adjustments made in your adjusted EBITDA for the 4Q, but also for the full year of 2025? I mean, what were the main one-off events and how materially were they? That's it from my side.

Very good, Joao. Let me take the first question, and I'll let Jim answer the second question. The investment that we are currently making in the U.K. is to build a large-scale industrial scale medical-grade 152a plant to support the commercialization of this next-generation global warming -- lower global warming potential medical propellant. As we've disclosed before, we already have a 600 tonne per year pilot reactor running, supporting the industry at this time with their qualifications and their scale up.

And we have customer commitments to -- starting off early of 2027, where we will scale up this facility to 6,000 tonnes a year. And over time, as the industry transitions away from medical grade 134a to medical grade 152a, we have the asset required to serve the industry needs. So all the qualifications and scale-up is on track. We expect to complete construction of the facility towards the end of this year in time for the scale up at our customers. And the EBITDA contribution of this business, I do not want to talk about specific numbers right now, but is expected to grow very significantly over the next 2 or 3 years, okay?

Thank you, Joao, for the question regarding the onetime items, the nonoperating items, we're strict in our definitions of what those are. And I'd say the definition really typically falls into 3 categories, one being particularly given the initiatives that we have on our delevering at this point in time, the restructuring costs that we incur in order to execute on those plans then as well any legal settlement or extraordinary legal costs that we have in defending historical cases that exist around the company. And then if there are any other true nonoperating impacts in any of the businesses that occur over the course of the year from an operational perspective.

So let me go through in a little bit of detail on each of those. So for the full year, first of all, the number, as you would have seen, was $90 million. So that got us from the [ $1,020 million to $1,110 million ] going from reported EBITDA to adjusted EBITDA. The largest of the adjustments was in the restructuring area. That was about $45 million, and a lot of that was within our B&I business, where you've heard us speak about the footprint rationalization in Europe. So that -- we're in the middle of that process at this point in time. It's ongoing. And for that reason, we've incurred a number of restructuring charges there.

And then smaller ones across some of the other businesses. There was a little bit in Polymer Solutions, et cetera, but the vast majority in B&I. Next after that was about $30 million of legal related. And of that, about $20 million was related to a settlement that took place during the year and the remainder is legal costs that were incurred to address outstanding cases that are -- that generally have long histories, go back in time and have nothing to do with what's taking place in the business right now.

So again, in total, those were about $30 million and then on top of that, we had about $20 million that related to operational disruptions in one of our key suppliers in the Polymer Solutions business. We reported this back in the first quarter of the year. It was a little bit in first and second quarters that we incurred this. And again, that was about $20 million. So in total, those comprise the $90 million. If you're asking as well about Q4, the number was about $9 million in Q4, so not that material in the quarter. It was much more material in the earlier part of the year.

The next question comes from Hernan Kisluk with MetLife.

Congratulations to your career, Jim. So my question is on the revolving credit facility. I understand it has spring covenants that are not very far from being reached. So I'd like to understand if you are in conversations with the group of banks to amend waive or change the terms of the RCF, so you can maintain the availability?

Thank you for the question. So you're correct in terms of the commitments that we have to meet. So in terms of the net debt to EBITDA, it's 3.5x or below and then interest coverage above 3.0. We are within those covenants at this point in time. So -- and also, remember, as you said, they are springing covenants. So they don't come into effect until or unless we have 2 of the 3 rating agencies saying that we are not investment grade. So with 2 of the rating agencies still supporting an investment-grade rating, the covenants are not in force.

So right now, we are in a good situation. We have ongoing discussions with the banks that are part of the RCF. And should we get to a position where there is potential risk to the investment-grade rating, we would have discussions with them as to whether they would be willing to waive these covenants or not. Keep in mind, we do not draw on the RCF. We view it as, call it, an insurance policy for liquidity if or when we need it. But at this point, and it's been a while, a couple of years now since the last time we drew on the RCF.

Yes. The only other thing I would add, Jim, is we have a highly focused plan to delever with or without portfolio simplification opportunities. And so we feel confident in our ability to do so over time. And portfolio simplification just allows us to get there sooner.

The next question comes from Nicolas Barros with Bank of America.

I have 2 questions, right? The first one on your projects. Could you share the latest developments regarding the PVDF project and the same for the LiPF6, right, on time line, CapEx and EBITDA? And secondly, on tax reconciliation, right? So I would like just to clarify here the tax line, right? So taxes paid in 2025 were roughly $30 million, right, above 2024 despite your negative EBT, right? So should we interpret this as taxes coming from businesses that still generate positive EBT or I don't know, any further impact from the Mexican peso? And could you share expectations for cash taxes disbursement in 2026, please?

Thank you, Nicolas. Let me take your first question, and I will let Jim answer the second question. Specifically with respect to the PVDF project that is in partnership with Syensqo. That project is currently on hold, subject to market conditions, and we will reevaluate the merits of those projects as we go along.

With respect to the LiPF6 project, that project continues to proceed on track. And keep in mind, this is supported by a $100 million grant from DOE and close to $90 million in tax incentives from the state of Louisiana and federal tax credits. The total capital investment for the project, as we have said before and disclosed in our DOE grant materials is of the range of $400 million. And so the DOE grant as well as the tax incentive significantly reduce our upfront investment.

The EBITDA contribution of the project with conservative pricing is in the range of $100 million to $120 million, okay? Now the market conditions remain quite favorable. Even in the last 6 months, the market dynamics for LiPF6 have tightened and pricing has gone up significantly to the tune of $25 per kg. Chlorine is also on the list of critical minerals. And so from a security of supply standpoint, the facility that we are working on the engineering of at this moment is going to be very well positioned to be successful when the plant is built.

The market dynamics continue to strengthen with growth in energy storage, supported by the needs for stationary storage as well as EVs and hybrids. And given the fact that the industry is moving towards LFP-based cathodes, the amount of LiPF6 required for LFP-based cathodes is 50% higher than NMC-based cathodes. So all the dynamics are favorable for that project. And as I said, we are currently in the engineering phase, and this project will take about 3 years to execute.

Jim, do you want to take the other question?

Sure. So in terms of reconciliation of the tax rate, so as I discussed in my comments, you'd look at it on a normalized basis, you would look at a tax rate of about 25%. Now needless to say, the numbers you see are quite different from that, and there are a couple of factors that drive that. Operationally, where we earn income, so what we would call the geographic mix, of our earnings has a relatively material impact. And in fact, the issue there is that we have a lower share of our income in low tax jurisdictions. So that tends to have an upward effect on the rate.

The more dramatic impact, I would say, and you see this on a year-to-year basis is the impact of the change in the Mexican peso to the U.S. dollar. So there's an FX and inflationary impact based on that. And that is largely driven by the fact that we have a U.S. dollar debt. And when there is a change in the Mexican peso rate, the reductions or increases in the debt balance are essentially treated as being taxable in Mexico.

So with depreciation of 20% of the peso in '24 and an appreciation of 11% in '25, you see a dramatic swing in the effective tax rate year-to-year as a result of that. And then also internally, we had some cash movements, et cetera, some repatriations from other countries into Mexico, et cetera, that caused some rate implications as well. So that's the explanation on the rate.

You also asked about cash taxes. So I would expect that for 2026, our cash taxes wouldn't change significantly from where we were in 2025, maybe some increase as we see increases in our overall EBITDA that we mentioned. But there are a lot of factors there that one would have to forecast, whether that be the change in the Mexican peso, the geographic split of the earnings, et cetera. But I'd say I would not expect a dramatic change in the cash outflows from taxes during the year. I hope that addresses your question.

[Operator Instructions]

If there are no further questions, let me try and wrap up the key messages. So first and foremost, we ended 2025 despite being a challenging year, we ended the year on guidance. And even though we were short on EBITDA, the company did extremely well from a cash standpoint. And with all of the initiatives that we said we would deliver on from a cost reduction standpoint, realizing benefits from growth initiatives and noncore asset sales and the reduction of working capital, we were able to end the year strong from a cash standpoint.

Now looking into the year, even though Q4 was very challenging from a PVC pricing standpoint, we have seen a material change in Q1, and we will hopefully begin to see benefits in Q2 with China's elimination of VAT on PVC exported from certain types of facilities. And we've already seen the pricing of the various indexes go up by $60 to $70 a tonne. And eventually, that should start flowing through in our results as well.

We are also hopeful of antidumping duties being imposed in Mexico and Brazil, which should also benefit the Polymer Solutions business. The Building and Infrastructure business continues to suffer from weakness, particularly in Northern and Western Europe and in Mexico. And with the reduction in interest rates and resumption of building and construction activity, and especially infrastructure projects, the operating leverage that we have created in that business should begin to benefit us.

The other 3 businesses are bright spots. We are completely sold out in our Connectivity Solutions business running at very high utilization as demand from the telecom carriers as well as the growth in AI data centers and the power sector continue to drive demand growth. Fluor & Energy Materials, the supply chain is tight. The fluorine item is expected to remain tight over the course of the decade, and we are doing our best to optimize our production from the mine as well as place the fluorine into the highest value applications. And the pricing environment in that business continues to strengthen during -- over the course of the year.

And then finally, the Precision Agriculture business ended the year strong and continues to have very positive momentum, especially in areas like Brazil and many of the excellent projects that we are doing in Africa, the business is on a continued improvement trajectory and should deliver stronger earnings year-over-year as well.

So in summary, we are doing everything we can in terms of driving the top line, having strong discipline on our manufacturing costs as well as SG&A costs, driving lots of initiatives to optimize cash through working capital initiatives and noncore asset sales so that we can deliver the results, delever the company and then simultaneously have a continued focus on portfolio simplification so that Orbia can be more focused going forward.

So with that, I'd like to wrap up the call and look forward to talking to you again on the April's earnings call.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

"

" Head of Investor Relations

" Chief Executive Officer

" Chief Financial Officer

" Citigroup Inc., Research Division

" UBS Investment Bank, Research Division

" Morgan Stanley, Research Division

" BofA Securities, Research Division

" Payden & Rygel

" Golman Sachs

Good morning, and welcome to Orbia's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Diego Echave, Orbia's Vice President of Investor Relations. Please go ahead, sir.

Thank you, operator. Good morning, and welcome to Orbia's Third Quarter 2025 Earnings Call. We appreciate your time and participation. Joining me today are Sameer Bharadwaj, CEO; and Jim Kelly, CFO. Before we continue, a friendly reminder that some of our comments today will contain forward-looking statements based on our current view of our business, and actual future results may differ materially. Today's call should be considered in conjunction with cautionary statements contained in our earnings release and in our most recent Bolsa Mexicana de Valores report. The company disclaims any obligation to update or revise any such forward-looking statements.

Now I would like to turn the call over to Sameer.

Thank you, Diego, and good morning, everyone. Before we begin discussing this quarter's results, I would like to thank our global employees for their continued commitment to improving business performance and staying customer-focused in difficult market conditions.

Turning to Slide 3. I will share a high-level overview of our third quarter 2025 performance. Revenues of $2 billion increased 4% year-over-year and EBITDA of $295 million increased 2% compared to the prior year period. Our performance this quarter reflects subdued end markets in some of our business groups with some positive signs in others. As a result, we are reaffirming our 2025 EBITDA guidance adjusted for nonoperating items of between $1.1 billion and $1.2 billion, with results likely falling in the lower half of the range. In this environment, we are intensely focused on strengthening our leading market positions, making important progress on cost reduction and cash generation, realizing incremental profitability from recently completed investments, executing noncore asset sales and taking proactive actions to simplify and strengthen our business and balance sheet for the long-term.

I will now turn the call over to Jim to go over our financial performance in further detail.

Thank you, Sameer, and good morning, everyone. I'll start with a discussion of our consolidated third quarter results on Slide 4. Net revenues of $2 billion increased by 4% year-over-year, reflecting higher sales across all business groups. Revenue growth was mainly driven by strong demand in Precision Agriculture and Connectivity Solutions. Higher volume in Polymer Solutions, favorable pricing across several regions in Building & Infrastructure and strength in Fluor & Energy Materials. I'll provide a more comprehensive description of these factors in the business by-business section.

EBITDA was $295 million in the quarter, a 2% increase year-over-year. Higher volume in Connectivity Solutions and a favorable product mix in Precision Agriculture were partially offset by lower resins pricing in Polymer Solutions, restructuring costs in Building & Infrastructure and higher input costs in Fluor & Energy Materials. Operating cash flow of $271 million decreased by $12 million compared to the prior year quarter and free cash flow in the quarter of $144 million improved by $2 million year-over-year. The decrease in operating cash flow was driven by lower cash generation from working capital. The increase in free cash flow was driven by lower capital expenditures, which more than offset lower operating cash flow.

Net debt to EBITDA decreased from 3.98x to 3.85x during the quarter. This decrease was primarily driven by an increase in cash and cash equivalents of $132 million and an increase in the last 12 months EBITDA of approximately $7 million, offset by an increase in total debt of $26 million. The increase in debt was entirely driven by the appreciation of the Mexican peso during the quarter and included a paydown of $7 million of debt in the quarter. Net debt to EBITDA at the end of the third quarter using adjusted EBITDA to better reflect underlying earnings decreased from 3.51x to 3.42x. On October 6, 2025, Orbia redeemed and canceled the remaining portion of its 2027 senior notes in accordance with their underlying indenture. This transaction represented the final step of the completion of the refinancing of our near-term debt maturities that was initiated in the second quarter.

Turning to Slide 5, I'll review our performance by business group. In Polymer Solutions, third quarter revenue of $647 million increased 2% year-over-year, largely driven by higher resins volume, partially offset by lower derivatives volume and lower resin pricing. Third quarter EBITDA of $78 million declined 13% year-over-year with an EBITDA margin of 12%. The decrease was primarily driven by lower resin pricing and higher ethane costs. In Building & Infrastructure, third quarter revenue was $647 million, an increase of 2% year-over-year, driven by better pricing across most of EMEA, Brazil and the Andean region, partly offset by lower volume and pricing in Mexico and Eastern Europe and the recently completed noncore asset divestments. Third quarter EBITDA was $76 million, a decrease of 3% year-over-year with an EBITDA margin of 12%. The decrease was driven by restructuring costs and an unfavorable product mix in Western Europe, partially offset by better results in the UK and Brazil and continued benefits from cost reduction initiatives.

Moving to Precision Agriculture. Third quarter revenue was $257 million, an increase of 11% year-over-year. The increase in revenues for the quarter was primarily driven by strong demand in Brazil and the U.S. as well as higher project activity in Africa and Peru. These improvements were partially offset by declines in Mexico and Central America. Third quarter EBITDA was $30 million, an increase of 28% year-over-year with an EBITDA margin of 12%. The increase was driven by higher revenues and a favorable product mix. In our Connectivity Solutions business, third quarter revenue was $253 million, an increase of 8% year-over-year. The increase in revenues for the quarter was driven by strong volume growth, supported by increased demand in telecommunications and data center markets as well as a favorable product mix, partially offset by lower prices. Third quarter EBITDA increased 36% year-over-year to $42 million with an EBITDA margin of 17%. The increase was primarily driven by higher revenues, higher plant utilization levels and benefits from cost reduction initiatives, partly offset by lower prices.

Finally, in our Fluor & Energy Materials business, third quarter revenue was $227 million, an increase of 3% year-over-year, driven by strong demand across most of the product portfolio, partially offset by constrained volume and shipment timing for upstream minerals and intermediates. Third quarter EBITDA was $64 million, a decrease of 3% year-over-year with an EBITDA margin of 28%. The decrease was driven by higher input costs across key raw materials, freight costs and unfavorable currency fluctuations, partly offset by strength in refrigerants and the benefits from cost savings initiatives.

Turning to Slide 6. I'd like to provide an update on our progress in improving earnings and strengthening our balance sheet as first outlined in our October 2024 business update and reviewed again last quarter. First, by the end of Q3 2025, our cost reduction program achieved $169 million in annual savings compared to 2023. This represents 68% of our target to reach a savings level of $250 million per year by 2027. Second, the contribution from recently completed or close to complete organic growth investments, which are primarily focused on new product launches and capacity expansions, reached approximately $35 million of EBITDA year-to-date. The goal is to achieve $150 million in incremental EBITDA per year from these investments by 2027. And finally, we have signed agreements that have generated net proceeds of approximately $83 million from noncore asset divestments as of the end of the third quarter of 2025, exceeding our full year target of at least $75 million. We continue to aim for total proceeds of approximately $150 million by the end of 2026.

Before I turn the call over to Sameer, I'd like to comment on a recent change in our credit rating. On Tuesday, Moody's announced the downgrade of our debt rating from Baa3 to Ba1, largely as a result of their more pessimistic view of the chemical sector trends and their belief that a market recovery does not appear imminent. We remain focused on our plan to generate cash and reduce leverage supported by the initiatives that we've been executing on since last year. As I previously indicated, all of these initiatives are on track. The business continues to show its resilience with year-to-date adjusted EBITDA margin slightly above 15%. We also have strong liquidity with cash on hand of $991 million and availability of $1.4 billion of committed funds on our revolving credit facility.

Finally, we extended all of our material debt maturities to 2030 and beyond, and we have healthy and stable cash generation from operations to service our debt commitments. We will continue to maintain an open dialogue with the credit rating agencies, investors, bankers and the general public, consistent with how we have done this over the last years, providing updates on our progress toward improving our financial ratios and strengthening our balance sheet.

With that, I will now turn the call back over to Sameer.

Thank you, Jim. Turning to Slide 7. I will now provide an update to our outlook for the current year. The underlying assumptions for the company's guidance reflect a continued subdued environment in Polymer Solutions and Building & Infrastructure, partially offset by improving conditions in Precision Agriculture, Connectivity Solutions and Fluor & Energy Materials. Therefore, we reaffirm the full year 2025 adjusted EBITDA guidance range of $1.1 billion to $1.2 billion, likely falling in the lower half of the range. The company also reaffirms its 2025 capital expenditures guidance of approximately $400 million with a continued focus on investments to ensure safety and operational integrity completing growth projects under execution that are close to revenue and being extremely selective on any new growth investments.

Now looking ahead in each of our business segments for the coming quarter and remainder of the year. Beginning with Polymer Solutions, persistent weak market dynamics driven by excess supply and lower export prices from China and the U.S. are expected to continue for the remainder of the year alongside rising ethane and ethylene input costs. While the first half was marked by raw material disruptions and operational issues in derivatives, the business has now stabilized operations and is focused on running at high utilization to improve profitability and cash management control.

In Building & Infrastructure, we anticipate modest growth driven by new product launches and margin expansion. This growth is expected despite persistently challenging conditions in Western Europe and Mexico. To navigate this environment, the business remains intensely focused on realizing operational cost efficiencies to further improve profitability. In Precision Agriculture, market conditions are expected to remain stable to slightly improving, supported by continued positive momentum in Brazil and the U.S. The company anticipates continued strong performance in parts of Latin America and from projects in Africa. The business will remain focused on driving growth through deeper penetration in extensive crops while maintaining a consistent emphasis on cost management and working capital improvements. In Connectivity Solutions, we expect continued volume growth throughout the year, supported by sustained momentum in network deployment, data center demand and investment in the power sector. Profitability is set to grow, driven by the benefits of cost-saving initiatives and higher facility utilization.

And finally, in Fluor & Energy Materials, we expect continued strength in Fluorine markets with resilient demand and pricing expected through the remainder of the year, which will help offset input cost increases. To support margins, the business is centered on prioritizing cost control initiatives complemented by active portfolio management -- product portfolio management to maximize value creation.

In summary, our near-term priorities are to deliver on our commitments, delever the balance sheet, simplify operations and focus on our core business. We aim to improve EBITDA and cash flow through cost savings and growth from recently completed project investments, complemented by cash generation from noncore asset sales. These actions will enable us to significantly improve our leverage and strengthen our balance sheet by the end of 2026 without relying on potential market recovery or further benefits from business simplification. We remain committed to meeting customer needs and generating long-term value for our shareholders.

Before I turn the call over for Q&A, I would like to note that we have issued a formal statement regarding recent market rumors about the Precision Agriculture business. As indicated in that statement, the company is continually engaged in assessing opportunities to optimize its portfolio and create value for its shareholders.

Operator, we are ready to take questions at this time.

[Operator Instructions] And your first question today will come from Andres Cardona with Citi.

Stay on the capital allocation front, I just wanted to ask a very straight question about the JV you have with OxyChem and if there is any tag right that you may eventually decide to secure to exit your investment in this particular business. And if it exists, if there is any time for you guys to trigger it?

Thank you, Andres. As you are aware, earlier this month, it was announced that Berkshire Hathaway had agreed to acquire the Occidental Petroleum's Chemicals business, including our joint venture with OxyChem in Ingleside, Texas. Now this joint venture is important and of significant value to both parties, and we are pleased that Berkshire Hathaway has decided to make this investment. Their long-term perspective and their commitment now at the bottom of the cycle validates the belief in the long-term prospects and value of the PVC chlor-alkali sector. And so on our side, we look forward to building a strong collaborative and productive relationship with our new partners, Berkshire Hathaway. And as far as any tag-along rights are concerned, no, there are no tag-along rights as such, and things continue as usual.

And your next question today will come from Tasso Vasconcellos with UBS.

I do have a question on the CapEx side. You did reaffirm the $400 million in CapEx for this year. I'm just wondering how do you view this level of CapEx as being sustainable looking forward? Because we have been reducing the disbursements because of the low of the cycle. So I'm just wondering if the cycle turns or if it doesn't, maybe looking one, two or three years ahead, if you should do some kind of catch-up on this CapEx or if eventually, you'll be able to maintain the maintenance CapEx at this low level? That's my question.

Tasso, thank you for the question. In fact, the way we think about capital expenditures is our first and foremost priority is safety and asset integrity that allows business continuity. And so we will not compromise on that because that can have serious consequences both from a disruption standpoint as well as safety standpoint. And so our steady-state maintenance CapEx, it varies depending on the turnarounds for the different plants in various years, but it's somewhere in the range of $250 million to $270. And anything in addition to that is basically completing projects that we have already started so that they can get to revenue as soon as possible. And we would be extremely selective about any growth capital investment while we are going through the bottom of the cycle, right? And so our expectation would be to not compromise on maintenance CapEx and be super selective on growth CapEx going forward.

And your next question today will come from Alejandra Obregon with Morgan Stanley. Go ahead.

Hi. Good morning and thank you for taking my question. I actually have 2. The first one is on your optimization program. I was wondering if you can elaborate on what has been achieved so far? Where do you think there is more room for 2026? And if there's any region or any division that you believe could be optimized more for the coming year? And how should we think of it? And then the second one is on the Fluorspar division. I was just wondering if you have observed any recent change in the supply chain of fluorspar or maybe HF among your conversations or with your customers and competitors. This in the context of tightening export policies in China and of course, the increased scrutiny over critical minerals.

It's clear that fluorspar is gaining some recognition, I have to say, as a strategic resource. So just wondering if you think that Mexico and Orbia could emerge as a relevant partner or a more relevant partner for the U.S.

Okay. Well, look, I'll let Jim respond to the first question, and I can complement that as necessary, and I'll take the second question.

Thanks, Alejandra. Appreciate the question. In terms of the optimization efforts, as I mentioned during my comments, the 3 key legs of the program that we announced a year ago are very much on track. So the cost reductions of $169 million achieved cumulatively over the -- since 2023, so over the past couple of years, with $250 million. And I would say at this point, honestly, $250 million plus being the objective by the time we get to 2027. We continue to look for alternatives and are proactive about continuing to drive cost reductions across all areas of the business.

And secondly, we talked about the generation of EBITDA through already implemented or as Sameer calls it sort of near revenue growth projects that we've been driving, and that is on track to generate another $150 million of EBITDA by the time we get to 2027. And then the third element being the cash generation from the sale of noncore assets, where we've said we would generate approximately $150 million or potentially even more through 2025 and 2026, and we are ahead of schedule on that.

We mentioned already having achieved about $85 million on that so far through this year relative to our target of $75 -- so that is well on track. And I believe that there are additional alternatives that we can be executing as we go through the remainder of the period of the next couple of years to continue to drive the delivering plan that we've stated. And important to note that as you see the results of that is in the third quarter, we did see leverage come down, as I noted in my comments from 3.51 to 3.42, and we would expect that process to continue over the remainder of this year and through next year. So I think we are beginning to see the results of that, and we'll continue to be aggressive in finding ways to continue that process.

So as far as your second question is concerned, Ali, Fluorspar is on the list of U.S. critical minerals. -- and Orbia maintains its position as the global market leader in fluorspar supply. This competitive edge is difficult to replicate due to the unique assets Orbia controls and its exclusive rights to operate these critical resources in Mexico.

So in that context, we expect the fluorine chain to continue to remain tight through the course of the decade with growth in new applications such as lithium-ion batteries and semiconductors. And the Mexico-U.S. corridor will play a very important role in securing that value chain for the U.S. So you're absolutely right. This is very important to us, and we are very well positioned to take advantage of this.

And perhaps can you remind us of your utilization in your fluor plant in San Luis Potosi at the moment?

So the mine actually is running at -- we are basically producing at maximum output. There have been some constraints with respect to the optimization of the tailing circuit and the water circuit, and we have been optimizing that over the last year with new technologies, and that will allow us to increase the output even more next year.

But the bottom line is we sell every fluorine atom we produce. So we are completely maxed out. And our strategy is to place that fluorine atom in the highest value segments and the most profitable segments down the chain.

Okay, Thank you very much.

Thank you.

And your next question today will come from Leonardo Marcondes with Bank of America. Please go ahead.

Good morning, Thank you for picking my questions. I have 2 from my end and the 2 are regarding the Netafim, right? So you mentioned the noncore asset sales, right? But could you maybe provide a bit better color on what you're thinking about the sale of core assets, right? How relevant this is for you nowadays? If you guys -- if this is something that you guys are considering?

And the second question, this one is more related to Netafim, right? I mean when you bought the assets in 2018, right, and the first time you disclosed the company's EBITDA, I mean, Netafim's EBITDA was in 2019, the EBITDA was around $190 million, right? So if you guys could do a small analysis of what happened with Netafim over the past years that lead to a drop in profitability and drop in EBITDA as well. If you guys see any micro or macro trends there, I mean, this would be very helpful.

Okay. Leonardo, let me address both of your questions here. In terms of noncore asset sales, what we call noncore are these small sales of smaller businesses or segments that are not strategic to us long term or sale of land buildings and machinery. And these are relatively small amounts. And as Jim said, we executed on about $83 million of noncore asset sales this year. With respect to Netafim, right, we are aware of certain recent media reports and market speculation concerning a potential divestiture of the business. Now we are continually engaged in assessing opportunities to optimize the company's portfolio. And we don't comment on market rumors on speculation.

We are obviously committed to providing material information to the market in accordance with our disclosure obligations and regulatory requirements. We continue to assess ways in which potential changes to our portfolio could on our focus, reduce leverage and create significant shareholder value. And this includes considering divesting in whole or in part businesses that we determine are not an optimal fit within our portfolio or that would create more value under a different owner. Any such process would be done deliberately on a time line we determine.

Our focus remains building a strategically focused, highly synergistic portfolio going forward with a single-minded dedication to creating value for our shareholders, okay? Now in terms of what happened to Netafim over the last several years in terms of profitability, Netafim's profitability at its peak was around in the mid-180s, around $180 million, $185 million. And back then, the market, particularly in the U.S. for our traditional heavy wall market and also in Europe were very strong.

And these heavy wall crops typically are almonds, pistachios, walnuts, the entire greenhouse market in the Netherlands, where all the major greenhouses use Netafim equipment. And that took a significant hit after COVID, okay? So there were blockbuster years. There were huge inventories created, supply chain restrictions prevented exports of these materials. And then there was a significant slowdown in our traditional heavy wall markets. and that led to a decline in profitability.

And the breaking out of the war in Europe had energy costs go through the roof and that impacted the greenhouse market, the drip irrigation equipment that we sell into greenhouses in a very significant way. We compensated for that by growing in new areas, in particular, the thin wall market, which is used for a broader fruits, vegetables and seasonal crops. And we have had tremendous growth in volume in the thin wall segment, but that comes at a somewhat lower profitability and wasn't enough to offset the decline in profitability in the heavy wall segment.

Now what we have seen in the past 12 to 18 months, and you've seen a consistent improvement in Netafim's performance over the last couple of years, -- and we have also been focused on reducing costs, optimizing the footprint, focusing on cash generation. There's a huge focus on cash flow generation within Netafim. And you can see that in the results. And we are beginning to see some of our core markets like the United States, Mexico come back.

And in particular, Brazil is an exceptionally strong market, driven by growth in coffee, cocoa, oranges, citrus and a number of other crops, okay? So I think we are in a very good trajectory to continue the improvement that we see in Netafim and with a strong focus on cash generation. But essentially, that's what happened with that business over the last several years.

That’s very clear, Thank you very much.

Yes. And the thing to note is the thin wall market that we have created is completely complementary. So when the heavy wall market recovers, and we are beginning to see signs of that, that will be all additive. And so there is tremendous operating leverage in Netafim's earnings going forward.

Thank you.

[Operator Instructions] And your next question today will come from Jeff Wickman with Payden & Rygel.

Thank you for the call, Could you provide an update on where you think leverage will be at the end of this year and then at the end of 2026, please?

Jim, do you want to take this question?

Sure. I'd be happy to do that. Thanks for the question, Jeff. So as I mentioned, we do expect that we'll continue to see a reduction from where we were at the end of Q3. So this is -- normally, we have a seasonal reduction in working capital, in particular, on top of all the initiatives that we've been driving. So my expectation for the end of the year is we talk about the leverage based on our adjusted EBITDA.

That's the one that I talked about that went from 3.51 down to 3.42. I would expect that to end in the roughly 3.2 region by the end of the year. And we continue to drive significant reductions as we go through 2026. And I would expect to be in probably the kind of certainly between 2.5 and 3, probably around the middle of that range, 2.7ish, 2.8ish range, by the end of next year, based on what we see right now.

" Got it. Thank you. And then could you give us an update on what Netafim EBITDA is currently. [Audio gap]

Jim... Go ahead.

EBITDA for Netafim. So when you say what Netafim is currently in what regard in terms of their EBITDA or?

EBITDA, please.

So on a year-to-date basis -- just give me 1 second. 135... So on a year-to-date basis, we are at $103 million. And we would have an expectation to be in the -- close to the $130 million or slightly above $130 million range, I would say, for the full year in that business.

Thank you very much. That’s it from me

Thank you Jeff

And your next question today will come from Jaskaran Singh with Goldman Sachs.

Just a small clarification on the debt maturities that is there in the appendix. It shows a bank loan of $266 million in 2025. Is the expectation that this will be rolled?

[Audio gap]

Yes, I'm sorry. Yes, I did. the question now. So the expectation is, yes, that the bank debt that we have outstanding will be rolled over. We do not expect to have to pay that down. We'll speak with the banks and just roll that over. Although as we pay down our debt in the coming years, that may be one of the alternatives that we consider in terms of debt reduction, some combination potentially of that and the outstanding bonds. But the expectation right now, I would say, would be to roll that debt.

Got it. So second question is just on Moody's. You mentioned like you are in constant touch with the rating agencies. I see that ratings are still on a negative outlook, and Moody's looks at a downgrade trigger is gross leverage of around 3.5x. I think -- so within that, could we expect any divestment that you already that is rumored? And would that lead to basically redemption of bonds? Just if you can share any thoughts on that because gross leverage as of LTM is around 4.8x, which needs to be around 3.5x for Moody's to at least stabilize the ratings at Ba1.

I think you've already Go ahead, Jim. Go ahead,

No, I was just going to say that we can't predict necessarily what other rating agencies will do. Moody's has decided to downgrade based on their metrics and their view of what the chemical sector is going to look like in the coming years.

Their projections of leverage are through their model and how they view the world. We will continue to drive, as I mentioned during the comments that I made, the initiatives that we've had going that we talked about starting a year ago, but honestly, which we began considerably before the time that we had a public discussion about the sort of the 3 legs of the initiatives. We will continue to drive those things and the things that are within our control to bring our leverage down.

So in terms of whether we would be looking to divest of assets to help to drive this or whatever, I think Sameer addressed that. And any potential divestiture of assets, I would say, would be largely driven by shareholder value creation and focus of Orbia's portfolio and our ongoing strategy more so than being focused just to delever. So we'll continue on the things that we control. And as you have seen, we will continue to bring the leverage down as we've already begun to do. And that process will continue over the course of the next coming years.

Yes. But as Jim said, we have a strong plan to continue to delever as we generate earnings growth and free cash flow over the next 2 or 3 years. And any portfolio move only accelerates that effort. That's it.

And your next question today is a follow-up from Alejandra Obregon of Morgan Stanley.

If I can just piggyback on the prior question about the EBITDA for Netafim. If you can help us understand how much of that is the Netafim business and how much of that is Mexichem's legacy irrigation business? And if you were to explore alternatives around the division, would that include the whole thing? Or would that exclude Mexichem's irrigation legacy business?

I think there's some confusion around that. I mean, at this point of time, there is no -- I mean, there is only one irrigation business. And so a long time ago, all operations were merged. And as of today, there is only one irrigation business. And Netafim is what it is,

Got it. Understood, thank you very much.

Yes, there might be some confusion with PVC pipe we may have sold through Wavin into the Irrigation segment, but that is completely independent of the drip irrigation systems that we sell.

Okay, This will conclude our question-and-answer session. I would like to turn the conference back over to Sameer Bharadwaj for any closing remarks.

Thank you, Nick. Our business continues to show resilience in challenging market conditions. With all our actions, we have created meaningful operating leverage to increase profitability when market conditions normalize. Thank you for participating in today's call. I look forward to our next update in February.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.