Gruma Aktie

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Gruma's Third Quarter 2026 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mr. Adolfo Fritz, Gruma's Investor Relations Officer, who will present earnings and results. And then we will open the call to the Q&A session where Mr. Raul Cavazos, Gruma's Chief Financial Officer and team will be available to answer additional questions.

I would now like to turn the call over to Mr. Fritz, Investor Relations Officer. Please go ahead, sir.

Good morning, and welcome to our third quarter 2026 conference call. We're pleased to have you all on the line and thankful for the opportunity to share results with you. With me today, as always, are Mr. Raul Cavazos Morales, Gruma's CFO; Rogelio Sanchez Martinez, Gruma's Corporate Finance VP. The start of the call will take a few minutes to discuss the fundamentals and results for the quarter, and then we'll open it up to any questions you may have.

The tortilla market overall continues to see pressure in the U.S. as a result of record low consumer sentiment in conjunction with uncertain economic outlook based on looming high interest rates and uncertain job market and geopolitical events in different parts of the world that have contributed to additional inflation in most raw materials. Gruma's performance has been consistent with the overall performance of the tortilla category in the U.S., which remains under pressure with the perception of much weaker consumer purchasing power and added selectivity. Gruma continues to execute the strategy that we've communicated in the past to adapt ourselves to these circumstances, which we consider temporary in nature rather than permanent structural changes until consumer confidence again reflects a perception of future purchasing power and job security.

In Europe, we continue with our strategy of expanding retail, which has been optimized by the introduction of value-added tortillas in the market and well received in all the European distribution networks the subsidiary serves.

In Asia and Oceania, the trends remain positive overall, extending their solid performance both in Asia, mirroring the growth in food service industry and Australia, where tortilla retail presence has increased.

In corn flour, lower government-sponsored programs have led to temporary declines in Mexico, while the corn milling business has added volatility given the nature and seasonality of the industries it serves, coupled with geopolitical events. Central America is in great shape and with plans to further expand its existing production capacity to satisfy growing demand. On a consolidated level, given these market dynamics that I just mentioned, volumes declined by 2.1%, primarily due to contraction in food service channel in the U.S. and lower government programs in Mexico. Because of the effect of the current sales mix, coupled with the appreciation of the Mexican peso in this period, this actually led to a 1% rise in revenue.

That said, inflationary pressures were evident in the quarter, resulting in a 1.5% increase in COGS, which coupled with a 4.3% growth in SG&A led to an EBITDA contraction of 4.2%. This translated into an EBITDA margin of 17%.

From a balance sheet perspective, working capital decreased in line with lower inventories. The lower accounts payable also partially mitigated the benefit of free cash flow generation. Both our cash generation and balance sheet balance remained robust with total net leverage of 1.3x, down from 1.5x last quarter after paying down some debt.

Capital allocation remains the same with $100 million in dividends per year, and we will continue to be as active as we've been with our repurchase program. At least for now, we don't see any additional uses of capital in the form of M&A activity.

In the U.S., in the quarter, we continued seeing the same trends we saw where the consumer sentiment is still at all-time lows in conjunction with an uncertain economic outlook. Both of these fundamentals have created a decline in the overall tortilla category in the U.S. over the last 10 months of the year. However, within the category, the competitive landscape has changed and has drifted towards greater growth in private label rather than market share growth for a specific brand player in the market on the retail side for the first time in a few quarters. We've now been able to outperform the category overall and have started a market share gain trajectory currently standing at 59.6%.

There are still several variables we're tracking to see how they develop over time, not the least of which is the future inflation in raw materials next year and how that will further affect the consumer overall. However, with the situation as it stands today, we can confidently say that there are already signs of improvement compared to where we were a few months ago. It is important to note, however, that our endgame objective with our strategy is to create volume as an additional driver of absolute EBITDA growth and in the future with a specific price mix from which we can grow with a better and more balanced structure in years to come.

We have, of course, not reached a point yet, and we'll continue to work towards that end. But in the meantime, the results reflect the effects of this strategy, and we'll continue adapting to future circumstances as they may arise.

Inflation has also hit the cost structure, particularly in the form of transportation costs, which have been impacted on 2 fronts. On the one hand, there are fuel surcharges related to high energy prices arising from the conflict in the Middle East. On the other, there is a shortage of transportation services, which has led to additional inflation on the cost structure. We expect these factors to continue going forward.

Volumes declined by 4.1% again, just as in the last quarter, led by dynamics I just mentioned in the food service channel, while revenues also fell proportionately. Although we did find some efficiencies in the cost structure in the U.S., the decline in volumes, coupled with high inflationary pressures on other items such as labor and transportation, as I mentioned a minute ago, offset those savings, putting pressure on EBITDA for the quarter and resulting in an 18.9% decline, which was equivalent to an EBITDA margin of 17.9%.

In Mexico, GIMSA's core businesses remain healthy and continue to deliver growth, which translated into positive performance. Nevertheless, outside of the core business, lower government programs yielded 2% lower volumes relative to a year ago. Given the type of product and its current mix, net sales decreased proportionately and in line with its volume concentration declining by 1.2%.

Please remember that as these results are under convenience translation accounting, they do not reflect the effects from the appreciation of the peso compared to a year ago. Although inflationary pressures were also present, particularly in the form of freight costs, GIMSA still delivered EBITDA growth of 4%.

Volumes in Europe were impacted by a decline in the cone milling business due to the effects of the war in Ukraine, which centered around ports in the region, coupled with seasonality effects from clients. The performance on this side of the business overshadowed single-digit growth in the tortilla operation, which continues to operate as usual, expanding its retail presence across Europe and optimizing sales mix. As a matter of fact, expansion that we've experienced in retail has led to a 60% composition in this market with the added benefit of having progressively put private label production in a downward trend, helping both our brand and the introduction of new products into this market. We will continue to move forward with our plans for this subsidiary despite a few headwinds around transportation and overall logistic costs as a result of the conflict in the Middle East.

Volumes declined by 6.5%, while net sales remained flat. This resulted in EBITDA growth of 2.4%, reaching an EBITDA margin of 15.1% for the quarter in this subsidiary.

Our subsidiary in Central America has had a remarkable run over the last few quarters, positioning itself as an important contributor to profitability. The third quarter of the year was no exception as the healthy demand we have been serving drove volume growth of 2%, while the sales mix that we have been able to create over time resulted in a 6.4% higher net sales.

As with our subsidiary, inflation remained a common theme in the subsidiary as well, especially around materials, which prompted COGS to grow by 6.6% with additional pressure on freight costs.

This quarter, it is important to note that we had an extraordinary gain from an insurance claim in the amount of $9 million, which benefited results. EBITDA increased by 46.9% and EBITDA margin stood at 28.4% in the quarter. Asia and Oceania's momentum continues to deliver results in line with both the food service evolution in Asia and a greater retail presence in Australia.

In the quarter specifically due to the geopolitical conflict in the Middle East, operations in Malaysia were temporarily hindered given some exports that are delivered to the Middle East in the regular course of business. This volatility will be a reality as long as the conflict is ongoing, but the overall health of the operation cannot be better and with a very positive outlook for years to come.

Volumes declined by 2% as a result of the performance that I just mentioned in Malaysia, while sales grew by 10.3% on the back of a much healthier contribution from the retail market in Australia. Both of these fundamentals drove EBITDA to grow by 22.2% and yielding EBITDA margin of 15.2% for the quarter.

We're very pleased with the performance of this operation has achieved thus far. And currently, we don't see immediate challenges that can compromise the revenue-generating dynamics that have led to this performance.

Now that we've covered the subsidiaries in concert with the performance of the company overall, we'd like to bring your attention to our guidance again as we'd like to adjust it accordingly to the trends that we've been seeing and the changes in the marketplace that have taken place in the last 4 months of the year.

Given the circumstances that we described in the U.S. and the way we've been adapting to them to restructure EBITDA-generating capabilities, we're adjusting our guidance downwards for the U.S., where EBITDA margin is forecast to decrease by 250 basis points instead of 200 basis points we guided on in our first call. This is just to give you more of an insight of what we're expecting given additional production of private label products that are being placed in the market in addition to any other trade downs that may occur along our SKU offering as consumer sentiment continues in the low end of the spectrum.

Adjusted EBITDA margin in the U.S. to decrease by 250 basis points, coupled with a better performance in the rest of the subsidiaries also means that on a consolidated basis, EBITDA should decrease by 120 basis points instead of 160 basis points we've guided on during the first -- during our last call. We hope that this gives the market a clear sense of the impact of the market dynamics in the U.S. and where we think we're going to be as we adapt ourselves to these circumstances going forward.

Although we realize these are challenging times, we're pleased to see that our strategy that we laid forth at the beginning of the year has been materializing in line with our expectations. We've managed to increase our market share in the U.S. with a full recovery to the levels we saw in 2025 as well as outperforming the category as a whole.

As you can probably see from our results, the headwinds ahead have more to do with the economy in the U.S. and its effects on the consumer rather than the structural shift of the prevailing preference for tortilla over some other carb-intensive foods.

Given the nature of this challenge, we're confident that this is a transitory environment through which we will have to adapt ourselves to later have a better structured and more balanced approach to EBITDA generation once the operation for our U.S. subsidiary has normalized. Until then, we'll be adapting and adjusting to the dynamics of the market as we've done in the past quarters to accommodate ourselves to the current demands and needs of the consumer during these challenging times and be in the best position as possible in the short term for the benefit of our long-term goals.

With that, I'd like to open the call for questions from the listeners today. Can you help us with that, operator, please?

[Operator Instructions] Our first question comes from the line of Fernando Olvera with Bank of America.

Adolfo, regarding the U.S., I understand that food service comparisons were expected to become easier starting this third quarter. So can you comment on what explains the volume weakness? And what should we expect from food service in coming quarters? That's the first one.

And the second one regarding your change of guidance for the EBITDA margin in the U.S., we have seen a contraction or that the contraction has worsened sequentially. And in fact, year-to-date, you have a margin contraction of 250 basis points. So -- which I understand is what you are expecting for the whole year. So my question here is, I mean, it seems that this sequential contraction should reduce in the fourth quarter. I mean, is that correct? Is it something to assume?

Thank you, Fernando, for your question. Yes, we expected a stabilization of volumes in the food service channel during the third quarter that we're still expecting it. It's going to be probably at some point in the fourth quarter. Right now, the dragging effect, if you will, is twofold. One is that the expectations of the consumer has worsened progressively over time as new economic data has been put out there in the U.S. They've become even more selective and the flow that our clients were expecting is lower than usual during these times, if you will.

In addition to that, the cyclospora effect has also taken a toll on the speed of recovery that we were expecting. So overall, the conclusion is that you will see a stabilization for sure. It will be obviously later than we were expecting, but it will be at some point in the fourth quarter as far as we can see right now.

In regards to the sequential decline in margin, that is really the result of 2 variables, additional private label production that we've put in place and also this decline in -- a continuous decline, if you will, in food service, which has been really the main factor because of how much volume it's represented in revenue generation. So I would expect it that, that will stabilize in line with what I just commented in regards to the food service situation and the stabilization of volumes.

However, as we've talked about in the past, and as I mentioned a minute ago, the whole purpose of our strategy is to keep on generating value alongside the private label growth in the U.S. and provide our clients with solutions in terms of private label given the circumstances. So overall, the strategy is intended for margins to readjust so that we may grow once we hit a specific margin target in the future once our clients receive their targeted volume of private label that they are requiring today. So once we see that, we're hoping that we can see some volume inflection once we get that margin target in place and from there grow as we've grown alongside the category once the economy and the consumer sentiment changes.

Our next question comes from the line of Alejandro Fuchs with Itau BBA.

I have 2 quick ones, if I may. The first one is also on the U.S. Adolfo, you mentioned maybe a little bit better trends in the short term that you guys are seeing, and it seems that the 2027 prospect looks a little bit more constructive. I wanted to see if maybe you can elaborate a little bit on which specific channels are you seeing this? Is it more food service recovering? Is it more the retail and maybe Better For You, but if you could give us a little more color on where are you seeing the improvements?

And then the second one, just very quickly, I wanted to see if you could touch up a little bit on the cost side. What are you guys expecting for 2027 when you look at corn and any hedging position that you guys would have also on the FX, that would be also very helpful.

Thank you for your question, Alejandro. Yes, the first one, in terms of better trends, you can also see that publicly in the Nielsen data out there. But for the first time, I think, in the last, I'm going to say, 18 months, we've been able to have a smaller decline in volumes relative to the category itself. As you know, the category has been declining overall from where it was a year ago.

And our -- the volumes that we've seen in the past have been greater in terms of their decline relative to the category. Since this is Nielsen, this is speaking exclusively only about retail. So for the first time, those declines from our side have been lower than the category overall after we started implementing the strategy that we laid out at the beginning of the year. So that, for us, in addition to the fact that we've recovered market share to be today at 59.6% -- we were at 58% prior to that. Speaks to the better trends that I was referring to a minute ago. We hope that this is the start of the trend and not a single data point. But that will be, again, dependent on the consumers' outlook on the economy and their purchasing power in the future. So we are expecting, hopefully, that we will continue to see some improvement, but we don't want to be overly confident in that regard given the economy as it stands today.

In regard to your other question, 2027 will be, by all means, a challenging year for everyone. I don't want to generalize here. Everyone has its own challenges. But I think it's no mystery that raw materials have gone up considerably, energy costs have gone up considerably. Transportation costs as a result, have gone up considerably in addition to other challenges within the transportation industry and logistics. So as you pointed out, we've been known for having very effective hedges and throughout the years. But we'll be experiencing inflation nevertheless. The growth that, for example, diesel prices have experienced relative to last year are just too much and wheat as well. So -- we do have hedges in place, obviously, as you know, but we'll still experience inflation that we'll have to deal with next year.

Our next question comes from the line of Henrique Morello with Morgan Stanley.

Maybe a quick one in the Mexico division, Adolfo. One thing that caught our attention was the gross margin expansion in Mexico despite the lower volumes. I know that that may be some comp effect from last year as well. But if you could just dive a bit deeper on the dynamics around profitability in that region. You mentioned efficiencies in the release. So if you could explore a bit more about those efficiencies and also if you see any effects on raw materials pricing and how should we think about that in the context of higher energy and raw material costs that you mentioned into the next quarter and next year as well?

Thank you, Henrique. You cut off a little bit. So please let me know if I'm responding all your questions. I'm just going to respond to ones that I actually heard. But first and foremost, in Mexico, we were able to pass on some of the inflation during the second quarter of the year. So in that regard, that's why you could see an improvement in gross margins. We also see demand being very stable in Mexico. The one variable there, as we've talked about in the past as well, are government programs, which are very, very unpredictable year-to-year, and this year has been no exception. So that itself represents approximately 6%, I want to say, of volumes in the Mexican operation, and that is what's causing that effect -- the effect that you see there on volumes and on gross margins as your question was referred to that.

And then in addition to that, in terms of costs, I would say that for this year, you should be confident about the costs during the fourth quarter. I don't think they will differ too much from the trends that you've been seeing or that you saw in the third and second quarter of the year. I'd be more cautious about 2027. As I mentioned, inflation is extremely high in items that are important for us in terms of raw materials and other products that we use in the day-to-day operations. So I would be very cautious with that given that, as you know, the timing of that inflation is unfortunate because of the economy in the U.S. and how it's behaving. But now we'll have to see at the end of the year how we make our budget for that and how we adjust to that inflation during 2027 to give you a clear picture of how that will unfold, not only in Mexico or in the U.S. but worldwide.

Our next question comes from the line of Antonio Hernandez with Actinver.

Private label, how much growth are you seeing in this category? I mean you're already participating there, but how much of a growth opportunity do you see there? And how much do they represent right now of total sales?

Thank you for your question, Antonio. Yes, private label is now the fastest-growing player in the market. Right now, contrary to other times in the past, private label has got a very solid number of SKUs out there. So it has more SKUs being offered than in the past. And we expect that trend to continue going forward. Right now, we also gave you in the past the number of 13% as a threshold. That's the highest number that private label has been ever been at in terms of market share.

In the latest Nielsen report, you can see that private label now is now at 13.5%. So they already went over the historical threshold. Now we're living a new normal, if you want to call it that. And it will be growing continuously until the economy and the purchasing power of the consumer changes. Right now, it represents approximately 7% of our retail sales, and it's growing at around 10%. So how much that can get to is an unknown based on -- or depending on the consumer. But we're definitely right now navigating a new normal. We don't see that growing to the extent of Europe, obviously, which is private label dominant. But I would assume we will probably see it at the highest levels that we've seen it historically in the U.S. We are right now at the highest point that we've seen it so far, and it will keep growing.

And just a quick follow-up regarding that. How much are the margins differ between private label and of course, Better For You at higher margin, but overall versus consolidated margins?

They're substantially different, right? It's a branded product versus a private label. So as I said, there are various SKUs right now in private label. But the conclusion, which I'm assuming is what you're trying to get to is margins will be adjusted proportionately with the higher production or additional production of private label going forward to as much as it need be in order for the request of our clients to be fulfilled to answer the challenges that they're experiencing themselves with this situation. I mean we're all in the same boat and we're all experiencing the same pressures from the economy overall.

Our next question comes from the line of Ben Theurer with Barclays.

Just 2 quick ones. One is a follow-up on Alejandro's question earlier on in terms of corn, which has been obviously very volatile. But I think we're not -- we haven't received much of an answer just yet as to where you are in terms of hedges. So how should we think about just the cost environment for the next couple of quarters, maybe on a rolling whatever, 6 to 12 months basis forward. It's still higher, but have you done anything on the hedge side? So just to get an understanding how much more of corn cost we should anticipate. So that would be just the first one I wanted to follow up on.

No problem. So yes, we've -- throughout the year, we've done hedges, of course, which is our custom to get the optimal cost, inventory cost that we can get when harvest takes place. We layered in different costs, obviously, because we started from the beginning of the year, and we left some of the requirements on the spot market. So on the one hand, we hedged at the beginning of the year, having some benefits given the cost at that point. But then when corn spiked and we didn't want to wait a lot for it to get even higher than that. So we covered another 40% of our needs. So we have approximately 70% of our needs covered and 30% in the spot market. So that is for corn.

In regards to the other raw materials, we've been able to hedge just well the first quarter of next year, given the volatility in prices, we want to be opportunistic as possible. But again, as I mentioned, even with that, we are expecting inflation, and we are expecting that inflation to potentially hit margins next year.

Yes. And that's actually my follow-up question on that and the real question. So as you have this input cost inflation, you clearly have to kind of like find the balance as to what you can and cannot pass on to the customers. So have you had initial talks with your key customers, be it in retail or food service in the U.S. as to where prices might go and a little bit of a preliminary indication as how much of a margin pressure it could potentially bring if pricing does not offset the cost inflation?

I agree with you. That is the question that many of you have. However, to answer that question, we would need to -- first of all, we need to get together and see what level of inflation we're actually experiencing with different layers of inventories that we're calling on for next year, and that will be during our budgeting season at the end of the year. But -- I mean, we haven't talked about this at all with our clients, and we will intend to talk about it with them whenever we have a very good understanding of what that inflation looks like for us in the cost structure. And we'll try to get an adequate price for all our clients, ourselves and the consumer given the circumstances that we're living through. But so far, I cannot give you a detailed explanation in that regard.

Our next question comes from the line of Alvaro Garcia with BTG Pactual.

I have a question on the category itself. I was wondering if you could sort of delve deeper into what you guys are seeing in terms of category weakness overall relative to the past. And within that, how Better For You is performing year-to-date within your portfolio?

Sure. No problem. So the categories overall, let's start with the value-add portion. The Better For You, which, as you know, represents approximately 32% of retail sales, that's been slowing down. That is -- there's no question about it. In the past, as we reported, we have been growing at around 15% per year, and that slowed down probably 8% today. So it is a category that is slowing down, and it's been trading down to either, I want to call it, plain value-add tortilla or even standard tortilla given the circumstances. That portion of value-add tortilla is growing. Potentially, I would say that it could grow in line with Better For You. But right now, it's growing a little bit lower than Better For You. It's growing at around 5% to 6%.

Private label, as I mentioned, which is outside of those categories overall, obviously, is growing at 8%, more or less. And the rest of the categories, which are more standard in nature are the ones being hit the most on the retail side of the business. And those are the categories that have to do with corn, which are aimed to Hispanics more so than anything else. They are standard wheat, which are aimed to people that may have more price sensitivity along the SKU or along the clients that buy different SKUs or the consumers that buy different SKUs. So those that are more prone to have that price sensitivity within the category, which are more or less 35% of retail sales are the ones that are trending down to private label.

Now within private label, the interesting part is that there are now levels of private label. There is also the standard one and now the value-add ones as well. So we will have, without a doubt, an environment where private label will have a lot more SKUs, while margins will be different between each of them. It won't be at the same margin for the private label product. And we'll see where that gets us. At the end of the day, once the consumer response to that. But that's more or less how these things have been moving overall.

That's super helpful color. That's great. And then just one follow-up on the guidance. You mentioned 250 basis point contraction in the U.S., and I believe you said 120 basis point contraction on a consolidated basis. And my question is, if that's right? And then two, does that include the $9 million gain within that [ cal ] from this quarter?

No, no, no, that doesn't include the [ $1 million ] gain. It's just an assumption that we're making that the other subsidiaries will have an accretive effect on margins that will make the consolidated margins have a better adjusted margin than the one we gave before in our guidance in our last call.

Great. So it's 120 basis points on a consolidated basis, just to check that.

Correct. Correct. Yes.

Our next question comes from the line of Froylan Mendez with JPMorgan.

Just curious, I'm sorry, you've talked a lot about this, but it seems that it's the retailers, the ones that are pushing the private label further, right? They are the ones that are driving, let's say, a little bit of the demand. What will happen if at some point, you see that the push that they are making is well beyond your optimal on their own, let's say, mix between private and branded, particularly given the margin dilution. How willing are you to follow the retailers on their own goals on private label? And how far do you think they are on their own mind as of how much private label should represent? That's the first question.

And second, on Europe, can you just give some a little bit more granularity on how the tortilla business is performing in terms of volume and retail penetration? And if the, let's say, favorable mix that you're seeing will offset the challenges you're seeing in the mill business? Will that continue?

Of course, I'm going to ask you -- I'm going to start with the second question, the first one. You cut out a little bit. So I'm going to ask you to repeat that after I answer the second question, if that's okay. But in regards to the second question, Europe, things have been evolving quite favorably for us since we started adding more distribution outside of the U.K. The retail presence that we've been able to create there has been really outstanding. Right now, as I mentioned in the comments, is 60% retail today, which is something really incredible relative to where we were because as you probably know, this is a -- or was a food-centric -- food service-centric subsidiary.

Now that being said, within that retail presence of 60%, 30% or close to 30% of our sales are private label. That gives you a perspective of how different the market is there relative to the U.S. The other 70% is a combination of what we call the nostalgia market, which is -- with tortillas that are targeted to people that are living outside of their home countries. And they can have these options to buy tortillas that are in line with their traditional cuisine in addition to standard tortilla or value-add tortilla today, which is something that will add or that is adding a lot of accretion to our margins in addition to the higher retail distribution.

In addition to that, which is interesting is that we've been able -- because of the acceptance that we've been able to generate in Europe, the composition of private label or the growth, I would say, of private label has been diminishing over time. So you can clearly see a preference or a trend line that points out to a clear preferences -- clear preference sorry, of branded products, namely our brand Mission relative to private label over time. So we hope that this strength continues. We're doing all that we can in our control to continue that trend.

As I mentioned, there are challenges also ahead. The conflict in the Middle East is something that affects us all globally. Diesel prices are challenging and logistics overall are challenging. But given the nature of the revenue-generating dynamics of that business, I think that, that subsidiary will be fine. I mean, we don't see any meaningful challenges that would compromise the trend that I was talking about.

This quarter specifically, you probably don't see how well the tortilla channel is growing because of the volatility in the corn milling business, which does represent a lot of volume in that subsidiary. In spite of the growth that retail has had in time into the tortilla business overall has had during all this time, the cone milling business volume-wise still represents a considerable amount of tonnage. So any volatility present there will affect the volumes, but that doesn't mean that the tortilla business is passing through a challenging time or anything of the sort. It's growing quite favorably.

And I will ask you now if you can repeat the first question, please.

I'm sorry, it seems that he has dropped from the queue.

Our next question comes from the line of [ Luis Terzariol with Citi ].

We have 2 from our side here. The first one, if you can please share how food service volumes have evolved throughout the quarter. I think that would help us understand how far into 4Q, we should expect a stabilization in volumes. And also the second one in the U.S., if you could please break down the pressures between the higher logistic costs and higher marketing would be very helpful.

Yes. Thank you for the question. So in regards to your first question, the food service channel has experienced declines of around 15% over the last 18 months that we've been operating. And this quarter was no different. This quarter, we experienced also probably a 17% decline in that respect. So that is obviously accentuated by the cyclospora effect that I mentioned a minute ago.

In terms of -- in the U.S., marketing and logistics, marketing, I would say it's been an important factor. But as you all probably know, we are not a company that has a product that needs a lot of advertising in a traditional way. We do some advertising, in-store advertising when it need be, and we've engaged in that to promote the brand and to promote the different products that we have and newer products that we have. But in reality, out of the entire SG&A, I would say, 85% this quarter was logistics. The freight costs there have accentuated. And this quarter specifically was not so much because of the spike in diesel, more so than the availability of transportation services overall, which has been challenging and that has spiked freight costs a lot. So within logistics, freight is the challenge. And as I said in my comments, that will continue being a challenge going forward.

[Operator Instructions] Our next question comes from the line of Regina Carrillo with GBM.

I just wanted to know as far as you can see, how should we think about free cash flow and therefore, leverage in 2027, particularly around CapEx and working capital needs.

Thank you for your question, Regina. Free cash flow, we're fine. We are generating close to $400 million per year that's not bound to change even more so with the requirements of CapEx that we have today, which are not many and will not be many in the short term or medium term really, unless we build a new plant in the U.S.

But in terms of CapEx for the future, I think the plan that we have at least right now on the white board is we need some additional storage capacity in Europe. We need to invest for that, some additional production capacity as well. We're going to probably going to invest in Central America further. As you know, that's one of the main priorities right now because demand is just too much for the capacity that we have installed there.

In addition to that, also some storage capabilities in Australia. So that will be really it as of now in terms of our immediate needs. That will probably translate into $200 million in terms of CapEx for next year, which will ease further capital in the form of free cash flow.

Net working capital, we normally -- since we have a priority of having enough corn and wheat every year, we normally grow at around, I would say, between $80 million to $100 million per year. So given the circumstances today, we'll probably also be saving in that, but just not as much as in CapEx. So in all senses, we will have a better picture, a much better picture in terms of free cash flow. It is already great, but it will be even better with these little adjustments. And I don't see at least right now something that would challenge that in the future. So free cash flow is perfectly fine.

That is very clear. And just to clarify because I think I didn't hear you well when you answered a few questions ago. You said you were -- you had 17% of your needs of corn hedged for next year. Is that right?

70% for next year's...

Our next question comes from the line of Nicol Helm with MetLife.

It was actually answered, but I did want to follow up on this last point that you mentioned. If I understood correctly, you're expecting working capital to be positive despite the higher raw material prices. If you can clarify that? And if there was anything specific or if you can comment if there was anything unusual on the big release in inventory this quarter that we should -- or what we should expect for next quarter?

Yes. The release that you saw in inventories was -- had more to do with seasonal reasons rather than anything else. We're coming off of the harvest season in Mexico, and you had that spike last quarter there. So in this quarter, you have that release.

In terms of net working capital, yes, I mean, that is the whole point, right? I mean we have to -- we still have needs in terms of working capital, and we will pay more for them relative to the hedges that we may or may not have relative to inflation and other adjustments in costs. So we cannot let go of increasing or growing our net working capital based on just inflation given that it is our main raw material to produce our product.

Our final question comes from the line of Felipe Ucros with Scotiabank.

Quick couple on my side today. On the U.S., given that food service has been on a different track than the rest of the tortilla business, has the composition of the business materially changed? Where is the composition today after this divergent trends that you're seeing on Better For You on one angle than food service declining on the other angle?

And then the second one on Central America. Obviously, you'll be adding new capacity because the segment is performing very well. Just wondering on whether you expect a quick deployment of that capacity and whether we should imagine an impact on margins initially as you ramp up and you start diluting the new fixed costs?

Thank you for your question. So in the U.S. right now with all the declines in volumes in food service, we're approximately at 84% retail and 16% food service. Obviously, the mix in that retail portion, I gave it a minute ago has changed and also the growth rate for each one of those components of retail. So that will keep on changing relative to the consumer in the U.S. and the U.S. economy overall.

And food service, I think that once volumes stabilize, you will have a much clearer picture of what is happening in retail and the evolution of retail going forward.

In terms of Central America, the deployment of that, I mean, the deployment of capital for the new mill that I just mentioned, we're going to be investing in it next year. So I would say that the deployment will have -- will take place next year. But in reality, the actual benefit of -- in margins of that new mill will not be immediate. I would say, at the end of next year, probably first quarter of the following year.

Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Fritz for final comments.

Thank you so much, everyone, for being with us this morning, and we hope to see you in future market events. Take care, everyone. Bye.

Thank you. This concludes today's Gruma Third Quarter 2026 Earnings Conference Call. Thank you for your participation. You may now disconnect your lines.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Gruma's Second Quarter 2026 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Mr. Adolfo Fritz, Gruma's Investor Relations Officer, who will present earnings results, and then we will open the call for the question-and-answer session, where Mr. Raul Cavazos, Gruma's Chief Financial Officer and team will be available to answer any additional questions.

I would now like to turn the conference over to Mr. Fritz, IRO. Please go ahead, sir.

Thank you. Good morning, and welcome to our second quarter 2026 conference call. We're pleased to be here and thankful for the opportunity to share our results with you. With me today, as always, are Mr. Raul Cavazos Morales, Gruma's CFO; and Rogelio Sanchez Martinez, Gruma's Corporate Finance VP.

To start, we'll take a few minutes to share the fundamentals and results for the quarter, and then we'll open it up to any questions you may have. During the second quarter, performance was very solid and promising in our tortilla business and subsidiaries outside of the U.S. In Asia and Oceania, we significantly benefited from the revamped activity in Malaysia, a stellar performance in China with an improving operating leverage, combined with greater retail concentration in Australia.

In Europe, our operations exceeded our initial expectations with a wide acceptance of value-added products as we continue to grow our retail distribution footprint throughout the continent. However, in the U.S., our main subsidiary, the overall trend we've been seeing in the tortilla category continued, primarily spurred by price sensitivity and weak consumer sentiment. It was mainly felt in the food service channel, which was the main driver of volume contractions during past quarters. We are estimating, however, that the volume runoff rate in this channel will stabilize by the third quarter so that we may see results on a more even comparative basis once this happens.

Additionally, it will allow the market to see with more clarity the evolution in the retail market, which has remained considerably more resilient after the strategy we're implementing. In the corn flour market in Mexico, the core operation remains as stable as always, although experiencing mild volatility from sales to the government during the period, while the solid footing and innovation has positioned Central America as our second most profitable subsidiary.

With these fundamentals in place, volumes contracted by 1% due to factors in the food service channel in the U.S. we just mentioned. However, sales increased by 3%, supported by net sales growth in Europe, Asia and Oceania and Central America in addition to the relative strengthening of the Mexican peso against the U.S. dollar. As a result, EBITDA contracted 5%, also reflecting the effects of these dynamics. In our balance sheet, we increased our indebtedness levels up to 1.5x in terms of net debt to EBITDA due to the seasonality of the summer harvest in Mexico. Therefore, most of the additional debt incurred was in short-term debt, some of which will be paid off in the future with the cash we have available.

Continuing with our debt profile. During the quarter, we refinanced the peso-denominated note in the amount of $250 million by extending and increasing the amount of existing revolver facilities. The total of these 2 revolver facilities is $425 million and will be maturing in 2031. In the U.S., we continue to navigate a challenging operating environment shaped by weak consumer sentiment and uncertainty in the broader economic outlook. These conditions have affected our commercial channels in different ways and to varying degrees. In the food service channel, customers have returned, which is encouraging.

We renewed contracts at lower volumes due to ongoing market uncertainty, which is closely linked to both consumer sentiment and current expected inflation levels, which is impacting household purchasing behavior. As we communicated before, and as I mentioned earlier, we expect this runoff rate to stabilize as we complete the cycle of anticipated client adjustments. Once this progress is behind us, we believe year-over-year comparisons should become more balanced and easier to evaluate. At the same time, the same price sensitivity and consumer behavior has driven stronger demand for private label production, which has reshaped the competitive landscape since 2025 in the first half of this year.

In response, we've been executing the strategy we outlined at the beginning of the year, designed specifically to address this more value-oriented market environment. But we had a strong month during the quarter, volatility reemerged in June, underscoring that the market has not yet fully normalized. That said, our strategy remains on track. And as we continue to execute, our objective is to build greater stability over the coming months. As a matter of fact, we can already see this happening. On a sequential basis, net sales were flat, while volumes grew by 1.3%. So it's just a matter of keeping ourselves disciplined and on track with our current strategy.

Importantly, because most of the recent volume pressure has been concentrated in food service channel, we believe the third quarter will be a key transition period. As execution of our strategy overlaps with the end of the expected runoff, we should begin to see the foundation for more positive results going forward. The U.S. operation closed the quarter with volumes contracting 3% and sales also contracted by a similar amount in line with volumes. EBITDA contracted by 15% in the second quarter, although higher freight and overall distribution costs had an impact in the quarter. The main driver for this change was the volume performance stemming from the food service channel.

In Mexico, that has historically been the case, the core operation remained stable with demand from both retail and industrial clients. We did experience some temporary volatility on the back of slower activity in the government programs in addition to a change in mix relative to a year ago, which is gradually improving from what we saw in the first quarter of 2026. As such, volumes remained flat in 2Q '26, while sales contracted marginally. EBITDA and EBIT saw an improvement of 1% and EBITDA margin rose to 10.9%, up 20 basis points from last year.

In Europe, we continue to expand distribution with retailers across the continent and with the sale of value-add products where we're seeing growing demand. As you already know, the corn milling business in this subsidiary is highly volatile given fluctuating demand and dynamics in this market that change quarter-over-quarter. During the second quarter of the year, this business experienced lower volume than a year ago and thus hindered the solid performance of the tortilla business in the subsidiary. Therefore, volumes were flat during the quarter despite mid-single-digit growth for the tortilla business on the back of the dynamics I mentioned.

Sales grew by 5%, which speaks to the rich mix that is being sold today and the efforts being carried out in the retail channel in the subsidiary. Moreover, the same mix for EBITDA growth of 17% year-over-year, reaching an EBITDA margin of 14.8%. Central America also continues with excellent news with the only constraint being capacity as we've communicated previously. Currently, we're increasing utilization rates and are addressing this challenge with the construction of our new mill in Guatemala, which will help us with the increasing demand we're seeing for Gruma's innovative and high-quality products.

We're also contemplating building a new mill for next year, assuming demand remains at its current high level. It is because of these products and our team's excellent commercial efforts that we've been able to expand efficiently across the entire region that this subsidiary serves with volumes and sales rising 3% and 7%, respectively. In turn, this yielded EBITDA growth of 12% and an EBITDA margin of 19%, positioning the subsidiary a strong profitability center for Gruma going forward. In Asia and Oceania, the operation also yielded great results, while Asia recovered from a year ago and both Australia and China are operating at optimal levels.

More specifically, Australia has successfully carried out more aggressive commercial efforts in retail space, while China is now benefiting from a new facility in Foshan, which has improved our operational leverage there. Volumes grew by 4%, while sales expanded by 15%. The growth in sales, coupled with our disciplined approach on costs allowed for a significant 47% rise in EBITDA with the region delivering an EBITDA margin of 16.2%. In light of these results and the current market environment, we believe it is appropriate to revisit the guidance we provided at the beginning of the year and adjusted accordingly.

We now see a low single-digit volume and revenue decline in the U.S. subsidiary. Given the strategic actions we're taking to accelerate growth in standard and private label products in the United States, particularly in response to current economic conditions, we're also revising our EBITDA margin guidance downward by approximately 200 basis points. Therefore, our guidance for our consolidated results will also be adjusted proportionately to a fractional decline in revenue and volume, and an EBITDA margin contraction of approximately 160 basis points.

Given that our principal subsidiary continues to operate in an uncertain and rapidly evolving economic environment, we remain focused on adapting our commercial strategy in the U.S. while executing it with discipline. Our priority is to support sustainable volume growth and further strengthen our competitive position. We believe the actions we're taking today will make the business structurally stronger once the current economic cycle normalizes. Supported by the continued strong performance of our smaller subsidiaries, we're confident the company will be well positioned to achieve new levels of financial performance over the long term.

With that, I'd like to open up the call for questions, please. Operator, can you help with that, please. Thank you.

[Operator Instructions] Our first question is from Henrique Morello with Morgan Stanley.

Adolfo, maybe a follow-up and diving deeper on the U.S. trends that you mentioned regarding the channels. So breaking down by channels, if you could provide just a bit more color on what you're seeing in terms of food service and retail and perhaps if you're seeing any encouraging signs in food service already in June or in early July that make you think that things are stabilizing or if it's more a matter of comps in the food service side?

And how are you seeing retail competition and retail performance as well? And talking about -- more specifically about retail, if you could break down as well, how is your private label portfolio performing versus your branded part of the portfolio? And how is your head or the company's head around the mix between the 2 in the retail segment, that would be very helpful as well.

1

Sure. Thank you for your question, Henrique. Well, the first part, in terms of the food service channel overall, the stabilization we're talking about is more an end of a cycle. In other words, the comparative basis will be similar year-over-year. As I mentioned just a minute ago, it is everyone that we expected to come back after the adjustments we did has come back, but they've come back wanting contract for lower volume amount. So that has been the case every quarter since this started happening.

Now if you remember, it all started with an inflation situation taking place almost 1.5 years ago or almost 2 years ago. And that's spiraled into what's happening today with everything that's going on in the world, where the consumer is just extremely anxious. So that's led them to ask for lower volumes, and that's where we're at. And that's where -- that's why we feel that during the third Q, we'll be able to have a more stable base. That doesn't mean that it will be an inflection point of growth, specifically for the food service channel in specific.

In terms of retail, competitive landscape has slowed down. We haven't seen competitors in the landscape as aggressive as they were before. Right now, it's just a matter of being subject to all these outside forces that are not in our control, which is just how the consumer is feeling relative to everything else that's happening around. We believe that the actions we're taking are -- as a response to this effect, and it is something that we're monitoring very closely. As I mentioned a minute ago also, we're pleased to see that on a sequential basis, that inflection point happened during the quarter.

We need to see if this is, in fact, a trend going forward and that will evolve into further improvement. But so far, the strategy worked. We know that on a year-to-year comparison basis, it is -- we still have work to do. But the overall trend seems evolving positively. So we're very pleased with that given the context that we're operating under.

In terms of private label portfolio, I mean, right now, it's growing probably at around 7%. It is something that we've seen before. I mean we've been accelerating growth in that as you know. We've been seeing also a lot more restraint from the Hispanic community, as we've talked about also in buying or being as proactive buying at retail spaces. So that's also been a challenge for us. I would say that, that which encompasses standard tortilla overall has been the primarily factor behind what we're seeing in retail. Retail right now, probably -- we were accustomed to grow at around mid-single digits, even high single digits. Right now, we're probably growing or flattish even in retail, while in food service, that's where all the contractions are taking place.

And in food service, the contractions are in double digits. So that is what is overshadowing what's happening in retail. But in retail specific, that flat behavior that I was talking about earlier is more of a result of the standard tortilla, a.k.a. Hispanic products not being sold as sufficiently as they were before. That's the picture I can give you. Again, in spite of everything that we're seeing in the economy in the U.S., I think the inflection point on a sequential basis is good news.

Our next question is from Ben Theurer with Barclays.

Just staying on the topic a little bit. I would also like to understand to a degree, obviously, with that and the margin guidance being a little bit more softer in the U.S. business. Can we talk about the cost side of the equation? So one, obviously, there was raw material costs, but then there's a second piece around just energy, transportation, et cetera. You've flagged these higher marketing and higher distribution expenses already in the second quarter.

So as we look into the second half, first of all, how should we think about the raw material input cost outlook? And then second, beyond that, what are your expectations right now as it relates to these distribution costs that have gone up, but also the marketing costs? How much mix in spending versus not spending? So what's the balance here? And how should we think about the go-forward trajectory on those 3 items?

Ben, I would say that overall, the one challenge that every company, every sector will have is the inflation specifically related to oil derivatives overall. Going forward, it is something that we have accounted for in the guidance, fortunately. Obviously, to a certain degree, if oil shoots up to $150 per barrel, obviously, that's just not being contemplated at this point. But certainly, margin is being contemplated with high fuel prices. These prices are just -- our surcharges over the freight rates that we normally pay. So the variability that you will see during the second half and maybe going forward, depending on how long this lasts will be on the SG&A front.

We'll have to see how much inflation that creates, and that would be there and also probably on the packaging front as well in terms of -- within COGS -- so far, at least for the second half of the year, we'll have to see how the year ends with everything that's happened geopolitically and how inflation behaves in light of everything that's also taking place in terms of monetary policy in the U.S. But I would say that for the second half, those 2 items are the ones that we're taking care of.

Our next question is from Renata Cabral with Citibank.

My question is related to the Mexican operation. So the organic growth remained below your long-term algorithm despite the stable pricing. So I would like to ask if you could elaborate on whether demand weakened sequentially through the quarter or if trends were more to stabilize in the end of the quarter and the performances in different channels across Mexico as you gave some color related to the U.S.?

And just adding to that related to Mexico is about pricing and pricing has remained disciplined despite soft consumption. Do you still see room for pricing realization going forward or we should expect the revenue mix to become volume driven?

Sure, Renata. Thank you so much for your question. In general terms, Mexico is stable. We -- as you know, we're trying to be in line with the traditional method. So there are no arbitrages in place. However, we've been protecting the prices that we give our products on over a substantial period of time, if I'm not mistaken, over the last 36 months or so. So with everything that's taking place, we have adjusted prices slightly. However, those -- the effect of that price increase, you won't see that until the next quarter and going forward. You didn't see that this quarter.

And it was just in line with the inflation that we're feeling at this point. We don't see maybe what you see in other companies or assets that you look or that you report on and you analyze, we haven't seen a pullback from the consumer. What you're seeing there is just one, the change in mix and lower government programs that are in place each year. So whether it's for humanitarian purposes or others, there are certain government programs in place each year that had a little bit of volatility on the volume side and the mix also affects on this front.

We did have, as we announced a quarter ago relative to a year ago, we did have a change in -- a slight change in mix in our industrial portion of the business. That mix has evolved positively. So it's returning back to where it was. But on a comparative basis year-to-year, it still changed. So we are estimating that by the third and fourth quarter, we'll have the mix back in place. And also, we'll have some positive effect coming in from the price adjustments that we carried out.

Our next question is from Diego Serrano with HSBC.

So you gave a pretty good color on the food service business, and you pretty much answered my question. I just wanted to understand a bit more what's driving the weakness. I mean, trying to get a sense if it's mostly weaker consumer sentiment or if you are still seeing any impact from immigration issues affecting the Hispanic consumer.

It's really both. In food service, I mean the Hispanic consumer effect is more in retail rather than food service. It has some effect in food service, obviously, for the same reasons that it's taking place in retail, but it's more weighted on retail. In food service, what we're seeing is just much inflation relative to the purchasing power of the average consumer. The flow in all restaurants or QSRs in the U.S. is not as it used to be. And whoever goes or whoever is part of this flow will tell you that prices in the U.S. are not a little bit are way higher than what they used to be.

So the regular people are just taking lunchboxes to work now instead of heading out for a quick lunch outside of the office. For example, they're not dining out at the end of the day. They're heading back home or having something at home with friends and family. So it's the environment has changed the social dynamic from maybe venue-oriented dynamics to at-home dynamics when it comes to socializing with friends or families. And that is something that we've been grappling with, not only us, but everybody else in the industry just because overall flows are down, and that is obviously not good for anybody in the sector overall. So that is -- what is -- what took place or what is taking place in the food service channel.

Our next question is from Froylan Mendez with JPMorgan.

Can you hear me?

Yes, we can hear you.

Can you maybe help us make a simple bridge for the U.S. margin contraction this quarter? I want to understand what were the biggest drivers, if it was mix, pricing or it was more on the gross margin side? Can you help us size the top 2, 3 items in the contraction this quarter?

Sure, no problem. Well, I mean, if you look at the gross margins themselves, they were not -- I mean, there was an effect there, but it wasn't as drastic as an EBITDA margin or EBIT margin. The overall effect of what's happening is you have 2 points of pressure. One is the volumes at the food service channel, which obviously drive down revenues proportionately. And secondly, on the retail channel, you're producing more private label and more standard value-add products to have an answer to the sensitive consumer.

And in addition to that, we're also increasing shelf space in value-add and Better For You products. So in retail, you have a dynamic where, yes, you're producing more private label overall, trying to offset that with more Better For You value-add products. But in reality, in the grand scheme of things, you will have more private label production to incentivize volume growth. So that additional increase of private label in addition to the volumes that were lost in food service are the drivers behind both volume decline, obviously, revenue decline, which is in line with volume decline and also margin decline.

As you already know, private label has a substantial lower margin than other products in the market. So that is the effect right there of what you're seeing. So everything that you're seeing margin-wise is just a reflection of the strategy that we're carrying out in order for us to cater to the sensitive consumer in the context that we're living under.

And in that sense, Adolfo, how easy is to go back to the previous mix, talking about just retail because food service, I understand that it's more of a base reset. But on the retail side, if at some point, the consumer comes back, is it really feasible to think that the private label penetration will go lower. So you'll start -- you'll produce less in private label and go more to the higher-end product or the stickiness of the consumer once it tastes that the private label is good, et cetera, stays there. I mean, how feasible is it for us to understand how fast that could revert if the consumer comes back?

Well, without a question, the consumer will come back. The U.S. is an economy that is driven by branded products relative to other economies like Europe, it's more private label-driven economy. You see the market share in Europe of private label is around 31%. The private label market share in the U.S. has always been between 12% and 13%. It's fluctuated that way depending on the economic cycle that you find yourselves on. For example, what was it 2 years, 3 years ago, private label had -- was as low as 11.9%. And right now, it's gone up to 12.9%.

It's never gone over 13% historically speaking. But the main point here is that it is a brand-driven economy in the sense that as soon as people have the purchasing power, again, and the visibility in the economy to go and buy branded products, they will. The question is when will that happen? And unfortunately, for that, we do not have an answer. We know it's going to come back, but we don't know the exact timing. And that is why we're operating here very reactively based on what the consumer preferences are today.

But to answer your question broadly, yes, the mix will come back. We'll still be innovating. We'll still be selling Better For You products, Better For You has, in fact, not been affected by all of these dynamics taking place. It's slowed down, yes, but it's still a double-digit growth. The ones that have been affected in the retail channel are standard products, and those are the ones that have been traded down to private label. But it is something that is bound to change as soon as the consumer has the means to do so.

Right now, it's a situation where the consumer is no longer valuing quality, but rather pricing. And whenever the consumer feels more confident, whenever the sentiment changes, whenever there is more visibility in terms of its future economic -- the future of the economy in the U.S. and its future financial state, I would say that's when things will change back to where they were 3 years ago. So far, we're still under pressure.

Our next question is from Felipe Ucros with Scotiabank.

Adolfo, my questions were already answered. You just answered them in the last question. So I'll skip this one. You know what? Maybe on the repurchases, I did notice that you accelerated repurchases a little bit this quarter. Is that a pace that you hope to maintain throughout the rest of the year? Or is it kind of a one-off because you saw lower prices?

No, I think that the valuation of the stock overall is in the very, very low range. So what we are expecting. So as long as that is an attractive valuation for us to repurchase, we'll still repurchase it. We have a very thorough program in place that will continue for a year and then beyond. I mean, as long as liquidity is not compromised for funds to invest in our stock, we'll still have that in place.

Our next question is from Álvaro García with BTG.

In the release, you mentioned at one point that to build a healthier operating structure. And I wonder if that means there might be some cost savings in place in the U.S., just given the contraction of the business we've seen this year, if there's any plans on the SG&A front to sort of reduce the size of your platform.

Thank you for your question. No, it wasn't intended to mean that. What we mean by having a better structure is that if you look back at 2012, we've been more focused on price mix more than anything else. And then we went into a period where costs started being the next thing of focus in parallel to price/mix. But we haven't really taken care of the volume equation in the business. And what we want to see going forward is a business that does have price mix with the innovation and this Better For You tortillas that we are producing as part of the wellness trend taking place.

But in addition to that, we do want to have some volume growth as well in the mid -- the low to mid-single digits. So if you were to ask me what that picture will look like, what we call a better structure would be to have revenues grow by mid- to high single digits, volumes grow by low to mid-single digits and have EBITDA grow by high single digits. That would be the perfect -- the picture-perfect scenario for us where that the entire structure of how we -- of our P&L really changes based on the strategy that we're trying to implement this year.

Great. And just to clarify the new guidance on the U.S., you mentioned a 200 basis point contraction in EBITDA margin for the U.S. for this year. Is that right?

Yes, that is correct, yes.

Our next question is from Regina Carrillo with GBM.

I wanted to ask you about free cash flow generation and leverage. Could you maybe share with us your expectations for the second half of the year on working capital requirements? And maybe what leverage do you expect towards the end of the year?

Sure. Thank you for your question. So I mean, the business is really aside from the U.S. economy and that context that we just talked about, the business is really doing great financially and operationally. We're still producing a very healthy level of free cash flows. The net debt-to-EBITDA ratio increased this quarter just because of seasonality of the summer harvest here in Mexico. That is bound to decrease given that we already made the purchases that we needed. So working capital will be decreasing over time. We also had some receivables increase more than we necessarily needed to have an increased by.

So I think between the inventories and the receivables, those were the reasons why working capital increased so much. But going forward, that is bound to decrease as we take care not only of the inventory because the summer season will be over, but also as those receivables start materializing.

In terms of the leverage ratio itself, that should -- that is bound to decrease. As you know, our upper range for that ratio is where it's at right now, 1.5. So as long as it's between 1.2 and 1.5, we feel very comfortable in operating in that leverage range. But it will eventually -- to answer your question, by the end of the year, it will probably be 1.3 maybe as we operate for the second half. So that is our expectation, but there is nothing to be anxious about in terms of leverage or free cash flow generation or any of that sort of financial analysis.

Our next question is from Fernando Olvera with Bank of America.

The first one is related to the U.S. Maybe if you can share your thoughts about pricing given that costs are going up and the consumer environment continues to be soft. And my second question is related to the efficiencies that you highlighted in Mexico in the press release, that favored EBITDA margin expansion despite top line weakness and the insurance gain from last year. And also, if you can comment how sustainable are these efficiencies?

Thank you for your question. So -- in terms of pricing in the U.S. and inflationary pressures is something that we're taking day by day really, as I mentioned. We do feel the guidance incorporates that, as I also mentioned, in terms of those 2 variables, the packaging and the freight and the fuel surcharges and freight. So on that front, I think we're covered. We need to see how much inflation rises in the future. That's why I pointed out about monetary policy being a factor also. And that is just because we -- I mean, we're selling food here. So we don't -- we want to be as conscious as we can with the consumer, obviously.

But when inflation starts hitting our P&L drastically, we'll obviously -- or when we see a possibility of that, we'll always see the possibility to reach a fair agreement of price adjustments. So we'll have to wait and see, really. I hate to answer it like that, but we'll have to wait and see how it behaves. But that's how we operate. And in regards to your second question, we've been -- since the third quarter of last year, as you know, we had some spikes in the corn prices because of the agreements that are reached with local farmers in Mexico. It's gone down. We've been able to have fair pricing dynamics. That being said, we -- it's -- for the next harvest, well, right now, the corn price has increased. So we need to set a pricing in place for our agreements for the next harvest.

So we're trying our best to maintain the good momentum that we have in the purchases that we make for corn. We're constantly analyzing the corn market, and we're hoping that the price will decrease, but everything points out that the overall price of corn will keep increasing relative to all these news about weather issues around the world because of the El Niño. So as you know, we're very active on that front, and we're very proactive on that front. So we'll try to get the best pricing possible, both here and in the U.S.

There are no further questions at this time. I would now like to hand the floor back over to Mr. Fritz for any closing comments.

Thank you so much, everyone, for being here with us. We look forward to seeing you and meeting you again in future market events. Take care, and have a great day.

This concludes Gruma's Second Quarter 2026 Earnings Conference Call. Thank you again for your participation. You may now disconnect.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Gruma's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions].

I would now like to turn the conference over to Mr. Adolfo Fritz, Gruma's Investor Relations Officer, who will present earnings results and then we will open up the Q&A session where Mr. Raul Cavazos, Gruma's Chief Financial Officer; and team will be available to answer additional questions.

I would now like to turn the conference over to Mr. Fritz, Investor Relations Officer. Please go ahead, sir.

Thank you. Good morning, and welcome to our fourth quarter 2025 conference call. We're pleased to have you on the line and thankful for the opportunity to share our results with you.

With me today, as always, are Mr. Raul Cavazos Morales, Gruma's CFO; and Rogelio Sanchez Martinez, Gruma's Corporate Finance VP.

To start, we'll take a few minutes to discuss the highlights and results for the quarter, and then we'll open it up to any questions you may have. To start, we want to highlight the demand for tortilla worldwide remained strong due to its nutritious and healthy qualities. People continue to switch to lower carb and lower caloric diets to lead healthier lifestyles or to improve their medical condition.

A testament to this is the success in resilience of Better for You products have had in the U.S. which continued to perform very well during the fourth quarter of the year and the innovation that was introduced in the latter half of 2025 in Europe. In Asian Oceania, operational leverage is improving as our plan for an increase its production capabilities and demand of our products keeps growing.

Nonetheless, there are ongoing challenges in the environment that continued to impact our performance, namely the current immigration policy, consumer sentiment in the U.S. and its effects in the foodservice industry, in particular, in the Consumer industry overall. This continue to affect our foodservice channel as well. We're now seeing some positive signs of future recovery during 2026. With these fundamentals as background, we reported a 4% decline in tortilla volumes as a result of the performance of the foodservice channel in the U.S.

In the corn flour business, Mexico continued to see solid demand in the fourth quarter, although it was a tough comparative base, which meant that absolute volume performance didn't reflect the demand we're seeing. Central America continued to deliver solid performance, introducing more innovation to the markets and meeting growing demand.

Corn flour volumes grew by 1% in the fourth quarter, in line with the fundamentals I just mentioned. Overall, consolidated volumes remained flat in the fourth quarter, while sales grew by 2%. This, however, was not enough to offset the rise in raw material costs, mainly at GIMSA, our Mexican subsidiary which led to a decrease of 5% in consolidated EBITDA and with an EBITDA margin compression of 130 basis points.

Our balance sheet remains robust with working capital needs in line with expectations and a leverage ratio of 1.3x of net debt to EBITDA. Our healthy cash flow generation has enabled us to issue a $100 million dividend and run a very attractive stock repurchase program, given our current valuation levels.

With these 2 components were effectively giving approximately 5% of market cap in the form of total shareholder returns, and it is a practice we will continue going forward.

In terms of CapEx, we have invested $74 million over the quarter, primarily allocated to equipment replacement in the U.S., maintenance and operational upgrades, particularly to GIMSA capacity expenses in Europe and new production lines in China. Furthermore, we closed the year with $225 million in invested capital, which were primarily used in the U.S., Europe both for equipment replacements and operates in addition to maintenance work at GIMSA and the construction of the new mill in Guatemala.

In the U.S., as I alluded to a minute ago, consumer sentiment in the economy was -- has not allowed for a clear recovery in the foodservice channel, which saw continued declines. Going forward, however, we do expect a gradual recovery by the midyear, which should help volumes in 2026. In the retail channel, we closed the year with a slightly more positive environment with new strategies being implemented to better cope with the consumer selectivity leading to a gradual recovery in market share.

The exception, of course, is the Better for You category, which continues with historic growth trends and has not been meaningfully impacted by the current environment, showcasing its sustainability during challenging times. The way we will adapt to this environment is by focusing on the strategy of selling more private label and discounted products while at the same time increasing our value at SKUs, which just like the Better for You product line, have proven to be resilient and have a healthy demand momentum.

As leaders in the private label market in the U.S. with more than 60% market share, coupled with a positive evolution of our overall value-add SKUs, but Better for You products in particular, we're confident that our strategy once implemented will deliver positive results.

For the quarter, volumes decreased by 4% as a result of food service dynamics I just mentioned, which in turn impacted sales by 5%. This led to a 7% contraction in EBITDA and a 40 basis point decline in EBITDA margin to 20.7%. In Mexico, overall top line generating fundamentals remain in place and with a positive outlook.

Preference and demand for our products continues to show remarkable stability and a positive outlook for the year ahead. Raw materials continue to be under pressure from ongoing farmer demands in Mexico. However, this should be transitory in nature as negotiations take place between this group and the government.

As I mentioned a minute ago, we did have a tough comparison relative to 2024. But despite this, we were still able to finish the year at a similar level. Volumes were flat and sales finished the year a slight 1% below the year prior, and EBITDA was impacted by 6% on the back of the corn cost dynamics I just mentioned. One thing to add, however, is that for the whole year, we did experience volume growth, which speaks about the positive demand I was referring to a minute ago. In Europe, our relentless focus on retail expansion has paid off as today, we not only expanded -- have expanded our retail presence across the continent, but we have also started to introduce value-add SKUs, which help optimize sales composition.

With the combination of innovation, distribution, expansion and diversification, this subsidiary has been very successful in its endeavor to reach new levels of profitability with a balanced growth of revenues and volumes. As of today, we continue to see promising outlook for Europe as we keep our effective strategy in place and with more innovation coming in the pipeline.

This division reached volume growth of 1% during the quarter and 14% growth of sales. Higher cost on raw material in addition to elevated logistics costs partially diluted this benefit as EBITDA grew by 3%, but nonetheless resulted in a 90 basis point margin contraction.

Further, talking about innovation, Central America also experienced a similar effect on results after introducing new innovative corn flour products and distributing them across target markets. As strong demand continues to rise, as you are aware, we started construction of a new mill in Guatemala during 2025, which has been operating since the start of February and will provide approximately 10% additional capacity in the subsidiary.

Just as is the case in Europe, we see the positive evolution of this division to be ongoing, as demand keeps growing, and we further diversify our product offerings in different markets. During the quarter, this led to a positive performance both in volumes and sales growing by 5% and 2%, respectively. On the cost side, while there was a deflationary effect on cost of goods sold, our rising distribution costs partially impacted the positive revenue generation.

EBITDA grew by 26% and EBITDA margin expanded by 400 basis points to 21.2%. Asia Oceania closed the year on a very solid note as well. The last 2 months of the year were particularly beneficial for the operation overall and gave footing for a strong start of the year. Here, too, we built new production capacity in China, which just started production in 3Q '25. This will help EBITDA generation by having more efficient operational leverage and allowing the subsidiary to operate almost at normalized levels.

Still this dragging effect, volume grew by 3%, while sales grew by 8%. Despite a rise in raw material costs, just as in other subsidiaries, EBITDA grew by 28%, reaching an EBITDA margin of 14.3%, representing a 220 basis point expansion. This was, without a doubt, a year with a set of challenges, some of which were expected and some others presented a much higher intensity than previously thought.

We ended the year, however, on a much more positive note than how we ended 2024 going into 2025. On the one hand, we expect a much lower impact from food service during the year and on the other, our now proactive focus on market share recovery and protection should add to our brand recognition in the market to create positive momentum towards a gradual recovery of our regular standards of performance, not only for us but also for the category as a whole.

Moving on to the guidance we want to provide for the market. We prepared according to the carryover challenges and countermeasures we're taking in addition to opportunities we see in the upcoming year. In the U.S., we're expecting flat-to-fractional growth in volumes as we ward off the lackluster consumer sentiment with promotions and discounts on those items that are feeling the most pressure. These same discounts make us believe we can also see flat to a fractional decline in revenues in this subsidiary for 2026.

The effects of discounts at this point are conceptually known. What is unknown, however, is the magnitude of these effects or those of the discounts to foster volume growth. As such, we're assuming a low single-digit contraction in EBITDA, which could lead to a 50 to 70 basis point contraction in EBITDA margins. In Mexico, we're expecting single-digit growth in volumes, pretty much in line with our historical performance, while sales should mirror the single-digit growth.

As I mentioned a minute ago, there are challenges around the sale of corn locally, which are -- which we're mitigating, but should the price of corn still be at current levels, that could impact our EBITDA generation just as it did during the third and fourth quarter of the year. This is why we're guiding on a 10 to 50 basis point contraction in margins for this subsidiary.

In Europe, we're expecting to continue to deliver results with a low single-digit growth in volumes and a high single-digit growth in sales as we intensify our efforts to have a much better sales mix across the continent. With these numbers, we're assuming healthy EBITDA growth with 70 to 100 basis point expansion in EBITDA margins.

Central America is also bound to continue its excellent performance with volumes expected to grow in high single digits, while sales in low single digits, which should also create a positive expansion in EBITDA. EBITDA margin, therefore, should increase from 20 to 50 basis points.

Finally, in Asia and Oceania, we're still counting on China's commercial activity to be volatile throughout the year despite the size of recovery we saw in the latter half of 2025. We're also still assuming higher costs given the gradual increase in production from the new plant in Foshan, which will partially undermine EBITDA growth. For this subsidiary, we're assuming mid-single-digit growth in volumes accompanied by high single-digit growth in sales. Given the temporary pressure on the cost structure, however, EBITDA growth will be lower than sales growth, yielding potentially a flat margin to a 50 basis point contraction.

On a consolidated level, these dynamics will promote flat-to-fractional volume growth. Sales should grow in low single digits, while the cost dynamics in Mexico, coupled with the consumer sentiment challenges in the U.S. make us assume that margins could contract around 40 to 60 basis points. For CapEx this year, we've estimated approximately $220 million.

As I mentioned throughout this call, we're cautious given the circumstances around the main market, but at the same time, optimistic about the trends we saw during the last few months of the year. We're entering 2026 with a positive note and excited about the implementation of our adapted strategy, which should help us structure the way we grow differently, but in a more balanced manner and make us even more resilient in the years to come. With that, I'd like to open up the call for questions, please. Could you help us with that, operator?

[Operator Instructions] Our first question is from the line of Fernando Olvera with Bank of America.

Adolfo, very quickly, could you repeat the guidance for the U.S. before asking my questions?

Sure. No problem. So for the U.S. in terms of volumes, flat-to-fractional growth, sales flat-to-fractional decline and EBITDA margin would be from 50 to 70 basis points contraction.

Great. Perfect. Now maybe also I would like to explore? Or if you can give us more color about the market share performance during the year. And I mean, it seems that you lost some market share, right? So how are you thinking for this year? I mean how much of the market share that you lost last year, do you expect to recover -- any sense on that would be very helpful. And this in the U.S. and also in the U.S., how are you thinking about your pricing strategy for the year, given the weak demand that you face?

Thank you for your question, Fernando. Well, in terms of market share, as you very well mentioned, we did lose some market share at the beginning of the year. Thankfully, as I was alluding to during the opening remarks, we saw the landscape improving overall. We saw a lot more resiliency in these past few months of the year, of last year, I should say. And because of that, we ended up not regaining everything that we've lost so far. We lost around 150 basis points. But we gained approximately 25 basis points or 30 basis points out of that already.

Currently, we are -- we have a market share of approximately 59.3%. So we're still a bit behind of where we were before prior to all of this happening, prior to the consumer sentiment being as low as it is today. But I would say that based on the market dynamics that we ended the year with and what we're seeing right now at the beginning of the year, I think that we're in a good spot to keep improving market share going forward.

Again, we first need to determine how and our strategy that we're adopting will impact the market, how that will improve our different measurements, different key measurements in terms of performance. And based on that, keep adjusting so that we can progressively gain market share and improve our financial performance overall. In regards to the pricing -- I'm sorry, in regards to the pricing strategy, we don't -- I mean, right now, we're just continuing with the levels that we have today. We don't see right now the necessity to start thinking about that just yet. We're focused exclusively on adjusting the strategy that we have in place and let that run for a while.

And your next question comes from Henrique Morello with Morgan Stanley.

My question will be on Mexico. Results for the year are quite stable, right? And we understand the momentary higher raw material costs that you're facing there. But maybe looking more in the medium to the long term. When we think about the agreement announced with the CNA a couple of weeks ago on the changes on your contracts with the customers.

So just if you could touch and explore a bit on the changes in the contracts? And how does that affect your strategy, your pricing in the region? And if that has any immediate financial impact or impact on the guidance you just provided as well would be very helpful.

Sure. Thank you for your question. No problem. So in summary or to a 50,000-foot basis, the changes incorporate just having one type of contract in place in the marketplace for the machinery. That's one. Two, it involves regarding a lot more information to our clients so that promotes even more transparency and the clients know what they're entitled and not entitled to do within these contracts.

And I would say that those 2 would be the main changes. Obviously, the more information that I was referring to a minute ago include, for example, issuing financial statements on a regular basis to our clients and just having a more formal, more transparent approach to this contract that we will have in place. In terms of financial impacts, we still have to determine that. The guidance does provide whatever impact there could be going forward. But if there was -- if there is an impact, it should be just a onetime extraordinary item or extraordinary charge at some point in the first quarter or second quarter of the year, depending on when that happens.

But the business as a whole going forward is not changing, business as usual, and we don't see any other meaningful change in that regard. And obviously, whatever onetime charge event occurs, that wouldn't have an impact on EBITDA according to our projections. So it's not really something that I would think the market should be too concerned about.

Next question comes from Antonio Hernandez with Actinver.

Just a quick one. Regarding food service, you mentioned that by midyear, you expect U.S. volumes in food service to improve. Is there any leading indicator or what are your thoughts about it? And what is the base of that assumption? And also in terms of food service, is this more of a regional issue or specific to some channels? Or is this a problem overall throughout the country.

Thank you for your question. It's definitely a country-wide problem. I don't know if you follow specifically the indicators of consumer sentiment, but consumer sentiment in the U.S. is at historic lows, although thankfully improving in the last measurement. So I would say that consumer sentiment improving signals us that the activity in the food service market overall is improving parallelly to this effect. And that is why we are projecting an improvement of food service or at least a recovery of food service, I should say, by midyear.

We are following, obviously, those indicators pretty closely, and we've been following for a long time. So that change in behavior is huge for us, and it's a good indicator for this effect. That will give us a good solid footing for the rest of the operation because, as you know, food service has been the one channel that has been dragging on the performance of retail. So by just taking a weighted variable off the table and by having that being stable to recovering, that gives us a much better outlook for this year than the one that we had starting in 2025.

And your next question comes from Alvaro Garcia with BTG Pactual.

I have 2. One, I was wondering if you could clarify your comments on sort of discounts and pricing you made alongside the guidance for the U.S. I think you kind of said that you were going to tone down discounts into 2026, but I just wanted to clarify that. That's my first question.

No. Discounts are part of the strategy. discounts and promotions are part of the strategy. That's why we feel that it is a -- potentially sales could be flat to have or experience a fractional decline because of these discounts and promotions. However, those would be only in those items that are experiencing the most pressure at this point in time. It wouldn't be on other SKUs that have been growing in line with their historic trends.

So we have been identifying these products and these SKUs, and we will incorporate or we will put discounts on those to carry out our strategy during the year. Hopefully, that will yield the results we want in terms of volumes, but it remains to be seen whether that will be sufficient or not.

Great. And then I know you've sort of emphasized the food service side of the business, but I was wondering if you could maybe talk about -- and I get that in the context of tortilla specifically, but I was wondering if you could talk about your corn flour business in the U.S. and maybe the outlook for that and sort of a lower price point environment, how you're seeing that business evolve into'26?

Sure. In terms of corn flour in the U.S., we see that ramping up. We had some seasonality effects at the end of the year as it normally happens. But overall, the demand for corn flour as a commodity product is still there, the demand is still there growing. And we don't see a problem in that regard.

There has been a slowdown, if you will, a partial slowdown, not only because of seasonality, but also because of how the tortilla market has been growing, which has been slower than normal. This is totally as a result of the current environment in the U.S. and because of the consumer sentiment in the U.S. So for us, we take this is that, that will gradually be improving as the sentiment improves. But -- and on the other side of things in terms of the use of corn flour for other purposes outside of tortilla that's still in very good shape and should not -- we shouldn't see any slowdown at least as of now in that regard.

Great. And just one last one on -- you mentioned this 5% yield and the $100 million dividend, that would imply -- I think it would imply more buybacks relative to 2025 in 2026 to get to that 5% yield. Does that make sense, or it is just incremental...

Yes, it definitely makes sense. We are very proactive in that regard. As you know, we've been increasing the activity and the repurchase program year-over-year. This year will not be the exception. So we'll increase the activity there and the amount involved as well. So hopefully, that will help us get to that 5% for shareholder returns.

Your next question comes from Ulises Argote with Santander.

A couple from my side. So the first one, just with the strategy there that you mentioned in your remarks in the U.S., how should we think about the Better for You category there in terms of volumes and sales? Any kind of changes from the trend that we have been seeing in recent years or a bit more of kind of those stable trends?

And the other one, and this is more just to confirm, but with that announcement that you made a couple of weeks ago, you closed all outstanding issues there with the antitrust regulator? Or is there anything there outstanding? And then nothing left there on the potential divestments from plants and all of that, that was kind of floating out there at one point, correct? Just to make sure on these two points.

Thank you for your question. No, all items have been closed. There are no pending items with them. Like I said, as an answer to the previous question, I mean, it's business as usual for us going forward. We'll make the changes that were asked from us in terms of the contract for those -- for the machinery involved in these in the sales. But other than that, this is business as usual, no pending items. So we can consider the case as closed, if you will. And in terms of your first question, could you repeat it because you kind of cut off on my end, I'm sorry about that.

Yes, yes, of course. Just to understand there, if in the strategy that you were mentioning in your remarks related to the U.S., is there any kind of change for the expectations of volumes and sales for the Better for You category and kind of the composition thereof within the different categories?

No. I mean Better for You -- well, there is certainly going to be a change in composition. That's why we're expecting a 50 to 70 basis point contraction in the margin. And that is because as we implement the discounts and promotions and we also increased production in private label, that will dilute somewhat the margins, and that will change the composition.

However, looking at Better for You and the value-add products that we have, they will continue growing the way they've been growing. They haven't been impacted by all this at all, thankfully. And we're expecting the growth to continue as they have been growing. I mean we don't have -- we don't see challenges in that respect. Right now, it's just a matter of restructuring our production and the way we give discounts on those items that need the discounts so that we have a new composition and we may incentivize volume growth.

Obviously, the growth that we may have in terms of sales, if they end up being flat instead of experiencing a decline would be a result of the higher volume created and also because of the mix, if the mix keeps growing or even grows more than we expect. So that is all yet to be seen as we operate in this first quarter of the year. But like I said, we started the year in a much better footing compared to how we started the year in 2025.

[Operator Instructions] your next question comes from Froylan Mendez with JPMorgan.

I was wondering if you could dig a little bit into competitive dynamics in the U.S. If you are seeing some of the competitors backing off from the aggressive pricing strategy that was held last year. How is that going through the early start of the year? And if you can follow up also on your hedging strategy for 2026 and the FX assumptions that are implemented in your guidance?

Well, thank you for your question. In terms of competitive dynamics, just as we saw the consumer sentiment have been better or behaving a little bit better in the last couple of months and how we saw an improvement in the consumer sentiment overall, we also saw a mild slowdown in terms of the competitive landscape overall.

Things are apparently turning back to "normal" being prior to 2024, I would say. We have to see if this is a trend or not. So far it has been a trend. Things are still, I would say, challenging out of purely, I would say, economic conditions in the U.S. rather than a competitive landscape as they were coupled with each other all throughout 2025, at least so far in the year and the last few months of last year, we saw them decoupling.

And we saw both the consumer sentiment improving and the competitive landscape also improving. So we can only hope that this is just -- that this is a trend and that it will get better as we start implementing our strategy during the year.

In terms of the hedging that we have in place, like we always do, we try to hedge for the year, which we have for 2026. So we just -- we have our inventory set in that regard. And that's all that -- all the detail that I can share right now.

On the FX, Adolfo on the guidance, what are you assuming on the MXN for example?

No, we're not assuming FX in our guidance at any point. It's all dollar-based.

And your next question comes from Federico Galassi with TRG.

Some of the questions were answered by the Fritz before, but the question is in terms of revenues in U.S. in particular, how do you see the -- how is the relationship and negotiation with the supermarket for retailers, in particular in good for you? Are you gaining market share there? How is the structure? And the second one is just to confirm, when you talk about the contraction in margins, it's more related to all this change? Or are you having some pressure from raw material, SG&A, et cetera?

For asking the question. In regards to the first question, Better for You and how it's been evolving with our clients, it's been great, really. We've asked actually to have more shelf space for value-add products with our clients. So that will also happen.

Mind you, those efforts, obviously, right now, how things look are not going to be on the scale that probably the promotions and the discounts and the bigger production of private label will be. But still, it's something that talks about the positive evolution of Better for You with our clients and the potential it has to keep on growing. In terms of the market share that we have there, we have approximately 55% to 56% market share currently in terms of Better for You.

So I would say -- I would dare say that Better for You could be isolated from everything else that's been happening in the U.S., fortunately. And that goes in hand to your other question in terms of the contraction in margins. That's exclusively focused on the dynamics of discounts and the dynamics of the change in mix because of the higher volume -- potential higher volume produced out of those discounts and out of higher private label production. So we haven't -- we don't see, at least right now, challenges in terms of SG&A or raw materials outside from the temporary ones that are taking place in Mexico, which already accounted for in our guidance.

And there are no further questions at this time. So I'll hand the floor back to Mr. Fritz for closing comments.

Thank you, as always, for being part of our call, and we look forward to seeing you in future market events. Thank you very much.

Thank you. And with that, we conclude today's call. This concludes Gruma's Fourth Quarter 2025 Earnings Conference Call. Thank you for your participation. You may now disconnect.