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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Cape, would you like to add some brief comments?

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

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

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

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

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

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

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

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

The next question comes from Pablo Monsivais with Barclays.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Operator, we are now ready to take questions.

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

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

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

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

The next question comes from Joao Barichello with UBS.

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

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

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

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

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

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

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

The next question comes from Hernan Kisluk with MetLife.

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

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

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

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

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

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

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

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

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

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

Jim, do you want to take the other question?

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

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

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

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

[Operator Instructions]

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

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

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

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

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

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

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

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

"

" Head of Investor Relations

" Chief Executive Officer

" Chief Financial Officer

" Citigroup Inc., Research Division

" UBS Investment Bank, Research Division

" Morgan Stanley, Research Division

" BofA Securities, Research Division

" Payden & Rygel

" Golman Sachs

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Okay, Thank you very much.

Thank you.

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

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

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

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

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

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

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

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

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

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

That’s very clear, Thank you very much.

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

Thank you.

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

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

Jim, do you want to take this question?

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

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

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

Jim... Go ahead.

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

EBITDA, please.

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

Thank you very much. That’s it from me

Thank you Jeff

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

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

[Audio gap]

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

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

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

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

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

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

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

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

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

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

Got it. Understood, thank you very much.

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

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

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

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

Good day, and welcome to Orbia's Second Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I will now turn the conference over to Diego Echave, Orbia's Vice President of Investor Relations. Please go ahead.

Thank you, operator. Good morning, and welcome to Orbia's Second Quarter 2025 Earnings Call. We appreciate your time and participation. Joining me today are Sameer Bharadwaj, CEO; and Jim Kelly, CFO.

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

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

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

Turning to Slide 3. I will share a high-level overview of our second quarter 2025 performance. Revenues of $2 billion were flat year-over-year and EBITDA of $300 million decreased 10% compared to the prior year period. Our performance this quarter reflects the ongoing headwinds from challenging global markets in nearly all of our businesses. However, most of our markets seem to have stabilized at current levels and in some cases, are showing early signs of improvement with pockets of growth emerging in certain areas. As a result, we are reaffirming our 2025 EBITDA guidance adjusted for nonoperating items of between $1.1 billion and $1.2 billion.

As communicated in prior quarters, our strategic focus remains on executing initiatives that fortify the balance sheet and position Orbia for long-term value creation. In today's environment, we are concentrating on the factors within our control, addressing customer needs, sharpening our market positioning and driving robust free cash flow generation to reinforce financial strength.

During the quarter, we successfully extended all material debt maturities to 2030 and beyond, raising approximately $1.4 billion to refinance existing obligations. This proactive capital structure management enhances our financial flexibility and reduces near-term refinancing risk. Our disciplined cost management, combined with the ramp-up of recently completed growth investments is expected to significantly expand our EBITDA generation capacity. Concurrently, we are advancing the divestiture of noncore assets to sharpen our strategic focus and unlock additional value.

In parallel, we have made changes at the Board level and continue to make changes at the management level to sharpen focus on performance and strengthen accountability throughout the organization. We remain confident in the compelling growth opportunities across all our business segments and are committed to delivering sustainable returns for our shareholders. I will now turn the call over to Jim to go over our financial performance in further detail.

Thank you, Sameer, and good morning, everyone. I'll start with a discussion of our consolidated second quarter results on Slide 4. Net revenues of $2 billion were flat year-over-year. Market conditions remain challenging with lower prices in Polymer Solutions and lower volumes in certain countries within building and infrastructure. These factors were offset by increases in Fluor & Energy Materials, connectivity solutions and Precision Agriculture compared to the prior year quarter. I'll provide a more comprehensive description of these items in the business section of my comments.

EBITDA was $300 million in the quarter, a decrease of 10% year-over-year which was largely driven by lower revenues and prices in Polymer Solutions, unfavorable product mix and Building and Infrastructure and generally higher input costs. Operating cash flow of $47 million increased by $43 million compared to the prior year quarter, and free cash flow in the quarter was negative $82 million, an improvement of $48 million year-over-year. The improvements were mainly due to lower interest expense and a lower cash impact from incentive compensation payments and accruals, partially offset by lower EBITDA.

Net debt to EBITDA increased from 3.67x to 3.98x in the quarter. The increase in the ratio during the quarter was driven by an increase in total debt of $189 million and a decrease in the last 12-month EBITDA of approximately $34 million. Net debt to EBITDA at the end of the second quarter, using adjusted EBITDA for nonoperating items to better reflect underlying earnings increased from 3.23x to 3.51x. As a reminder, this increase was anticipated due to the normal seasonality of Orbia's business activity and the ratio is expected to decrease over the second half of the year.

During the second quarter, Orbia completed 2 debt offerings which extended the maturity profile of our long-term debt. On April 11, 2025, Orbia issued long-term notes in the Mexican debt market for approximately $300 million, split evenly between 3- and 10-year notes. The proceeds of the notes were used to refinance short-term maturities in the local market. On April 30, 2025, Orbia issued senior notes due in 2030 and 2035, for approximately $1.1 billion. The proceeds of the notes have been used primarily to refinance a previous senior note due in 2026 and 2027. Orbia has regained and canceled its 2026 senior notes and a portion of the 2027 senior note and plans to regain the remaining 2027 senior notes on the next eligible redemption date in accordance with the underlying indenture.

Turning to Slide 5. I'll review our business performance. In Polymer Solutions, second quarter revenue of $616 million was down 4% year-over-year, largely driven by lower resin pricing and an operational disruption in derivatives, which was addressed by the end of the quarter. Second quarter EBITDA of $79 million declined 26% year-over-year with an EBITDA margin of 13%. The year-over-year decline in EBITDA was driven primarily by lower revenues, the operational disruption in derivatives as well as higher input costs.

In Building and Infrastructure, second quarter revenue was $629 million, a decline of 5% year-over-year, driven by lower volumes in India related to the divestiture of the tanks business, weakness in Mexico and an unfavorable product mix, partly offset by stronger performance in the U.K. and increased volumes in Indonesia. Second quarter EBITDA was $63 million, a decrease of 19% year-over-year with an EBITDA margin of 10%. The lower EBITDA was driven by an unfavorable product mix in Western Europe and lower revenue in Mexico and India, partially offset by the U.K., Indonesia, Eastern Europe and Brazil and continued benefits from cost savings initiatives.

Moving to Precision Agriculture. Second quarter revenue was $288 million, an increase of 2% year-over-year. The increase in revenues for the quarter was primarily driven by Brazil, the U.S. and Peru, partially offset by declines in Mexico, Chile and lower greenhouse project activity. Second quarter EBITDA was $40 million, which increased marginally year-over-year with an EBITDA margin of 14%. The increase in EBITDA was driven by higher revenues and a favorable product mix.

In Fluor & Energy Materials, second quarter revenue was $247 million, an increase of 7% year-over-year, driven by slightly more favorable prices in upstream minerals and a favorable product mix. These gains were partially offset by lower upstream minerals volumes and an unfavorable refrigerant gas mix. Second quarter EBITDA was $72 million, a decrease of 11% year-over-year with an EBITDA margin of 29%. The lower EBITDA was due primarily to higher input costs across key raw materials and unfavorable currency fluctuations, partly offset by a favorable product mix and the benefits from cost savings initiatives.

Finally, in our Connectivity Solutions segment, second quarter revenue was $246 million, an increase of 4% year-over-year. The increase in revenues for the quarter was driven by higher volumes, supported by increased demand in North America telecommunications and data center markets as well as a favorable product mix, partially offset by lower prices. Second quarter EBITDA increased 1% year-over-year to $41 million with an EBITDA margin of 17%. The increase was primarily driven by higher revenues and favorable costs, partially offset by lower prices.

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

Thank you, Jim. Turning to Slide 6. I'd like to provide an update on our progress in improving earnings and strengthening our balance sheet as outlined in our October 2024 business update and reviewed again last quarter.

First, our cost reduction program continues on track to deliver cumulative annual savings of $160 million by the end of 2025 relative to the end of 2023, achieving 70% of our target to reach a savings level of $250 million per year by 2027. Second, we are focused on ramping up revenues from recently completed and soon to be completed organic growth investments in 2025. These include new product launches and the Indonesia investment in Building and Infrastructure, the completed capacity expansions in North America in Connectivity Solutions and in India in Polymer Solutions, the new custom electrolyte production facility for batteries in the U.S. in Fluor & Energy Materials, among others.

Finally, we have signed agreements that will generate proceeds of over $35 million from noncore asset divestments as of the end of the second quarter of 2025. We anticipate reaching at least $75 million in proceeds by the end of the year and continue to target $150 million or more by the end of 2026.

Turning to Slide 7. I will now provide an update to our outlook for the current year. The underlying assumptions for the most recent guidance remain generally unchanged. Therefore, we reaffirm the full year 2025 adjusted EBITDA guidance range of approximately $1.1 billion to $1.2 billion. We also reaffirm the 2025 capital expenditures guidance of approximately $400 million or less with a continued focus on investments to ensure safety and operational integrity, completing growth projects under execution that are close to revenue and being extremely selective on any new growth investments.

Now looking ahead in each of our business segments for the coming quarter and remainder of the year. Beginning with Polymer Solutions, persistent soft market dynamics driven by excess supply and lower export prices out of China and the U.S. are expected to continue for the remainder of the year. The full year performance is expected to be lower than last year due to the one-off impacts of the raw material supply disruption and operational challenges and derivatives experienced during the first half of the year.

With these issues behind us, we expect that second half results will improve compared to the first half results. In this environment, we remain focused on realizing the benefits of cost-saving initiatives and disciplined cash management. For our Building & Infrastructure segment, we expect modest growth from new product launches and stabilization across key markets despite continued challenging market conditions in Western Europe and Mexico. The business will continue its focus on realizing operational cost efficiencies to improve profitability.

In Precision Agriculture, market conditions are expected to remain stable to slightly improving, supported by recent positive momentum in Brazil, the U.S. and Turkey. The company anticipates strong performance in parts of Latin America and projects in Africa. The business will remain focused on driving growth through deeper penetration in extensive crops while maintaining a consistent emphasis on cost management and working capital improvements.

In Fluor & Energy Materials, we expect continued strength in fluorine markets with demand and pricing expected to remain stable or show modest improvement through the remainder of the year, helping offset input cost increases. To support margins, cost control initiatives will remain a priority alongside active product portfolio management focused on maximizing value creation.

In Connectivity Solutions, volumes are expected to continue growing throughout the year, supported by sustained momentum in network deployment, data center demand and investment in the power sector. Profitably growth will be driven by increased demand, along with benefits from cost-saving initiatives and higher utilization of manufacturing facilities, partially offset by a weak pricing environment.

In closing, Orbia's near-term priorities are to deliver, delever, simplify and focus on our core business. We will drive EBITDA improvement through achieving cost savings initiatives and from recently completed growth project investments in addition to generating cash from the sale of noncore assets. These actions are designed to reduce our leverage to approximately 2.5x by the end of 2026 without considering potential market recovery and to simplify our businesses. Our ongoing commitment remains on proactively meeting customer needs and generating long-term value for our shareholders.

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

[Operator Instructions] Our first question comes from Pablo Monsivais of Barclays.

I was wondering about your adjusted net debt-to-EBITDA result this quarter. My question is whether this is the peak level that we are supposed to see. And going forward, we should see a gradual decline. And if so, what would be the level that is likely to see on adjusted net debt to EBITDA by year-end?

Pablo, this is Jim. Thanks for the question. Yes, as we've talked about in prior quarters, there is a normal seasonality to our business, where typically in the first half of the year, largely with increases in working capital. We do see the leverage increasing. And so that has been the case. And yes, we do expect that the end of Q2 here is the maximum for the year. And as you would have seen in prior years, we have significant reductions and significant generation of cash flow from operations in the second half of the year. That is expected to happen again this year.

In terms of where we would expect to end the year. At this point in time, I would say, at a level slightly over 3 in terms of the net debt to adjusted EBITDA as you called out, making sure that you're noting it's the adjusted EBITDA.

The next question comes from Ben Isaacson of Scotiabank.

I have 2 questions. First one is on Building and Infrastructure. In your outlook, you talk about new product launches. Can you just give some examples of what those product launches are? And how should we think about the stability of those new product launch margins versus regular margins in the segment?

And then my second question, if I can ask it is on precision agriculture. You talked about market conditions expected to remain stable or slightly improving. That was a little bit surprising to me because from what I understand, lots of articles out over Indian farmers really, really struggling right now as prices are not keeping up with cost inflation, corn, wheat and soy farmer economics in the U.S. are almost at a 10-year low.

Brazilian farmers are struggling with 15%, 20% cost of borrowing. Europe has a one in a century drought and tariffs are increasing for fertilizer imports. So I was actually thinking a farmer was struggling. So I just wanted to kind of bridge that gap.

Very good, Ben. Let me take your question on B&I, the new product launches. So in fact, a fair amount of capital investments went into that business over the last 2 or 3 years, and those investments are now nearing completion, and we are beginning to ramp up revenues from those investments. And so the first one I want to talk about is the Hep20, G5 product launch in the U.K. This is the push fit fitting that is incredibly popular with our customers and numbers in the U.K.

The previous generation G4 was a significant part of our portfolio and has very good margins. And with G5, we have introduced a product that doesn't require a key for the plumber to use the fitting. And it's far more efficient for us to produce. And therefore, it will have as good or better margins. So that product launch has gone well and it was launched a couple of months ago, and we expect to see decent revenue ramp-up of that product over the course of the year.

The second one in the pipeline is the Tegra below ground system. And the next-generation Tegra is being launched in the next few months. That is also a good margin product on the higher end of our portfolio, and that is expected to contribute significantly as well.

We also have the investments in Biax in the Netherlands that have been -- that are now ramping up to revenues and already contributing. And of course, the Indonesia plant was completed at the end of last year and revenues are ramping up there nicely as well. And so overall, we expect these investments to ramp up. They're all on schedule and should contribute meaningfully in the second half of the year and next year.

Your next question was on Precision Agriculture. And actually, it's not -- the comparisons with commodity crops. You have to be very specific about what crops you're looking at when you look at market conditions for the Precision Agriculture business. In fact, just to give you some numbers, we have seen 12% growth year-over-year in Q2 in the U.S., okay? And so if you remember, the U.S. Central Valley of California is a very big market for us. We are very big in almonds, pistachios, walnuts, fruits, vegetables, wine, grapes, and those markets have been depressed for the last couple of years, and we are beginning to see some signs of recovery and a 12% growth there is encouraging.

While that's not -- nowhere close to what it was at the peak, but it's a positive encouraging sign. Turkey is up 7% year-over-year, quarter-over-quarter, which is quite encouraging as well. Last year, Turkey took a big hit because of high inflation and high interest rates and that has stabilized, and we are beginning to see demand come back. And Brazil is absolutely fantastic in terms of performance. The quarter-over-quarter growth is extraordinary, but we -- it's about 70%. But year-over-year, we are expecting 30% growth in Brazil, and we expect another 20% growth in 2026, right? So it really depends on what parts of the world you're looking at and what crops you're looking at. We continue to have weakness in some of our other markets, particularly in Europe, excluding Southern Europe.

And we are seeing some great order intake and new projects that we have signed up on in Africa. And India, it's a timing issue. It's the -- there was an early monsoon this year, which disrupted Q2 to some extent. But otherwise, long term, the business there is stable, okay. So hopefully that answers your question on Precision Agriculture, yes.

The next question comes from Tasso Vasconcellos of UBS.

First one, Sameer, you mentioned the earnings release that you view early signs of recovery in the market. Can you please give us some additional details on what exactly are designs? And what are the key indications? And how you expect this to evolve in the second half of this year and also 2026? And maybe actually a follow-up on this question, what would you link as the top upside and downside risks to the scenarios what could happen from now on for us to view much lower pricing or spreads in the market.

The second question maybe for Jim, in terms of deleveraging efforts, what are the top alternatives that you have here. I know that the company has been rationalizing expenses, CapEx, you mentioned about some fundraising with some sales. But looking at other alternatives, in other top priorities that you might have selling a business as a whole is an alternative selling parts of business, doing an IPO on each 1 of the business. Just trying to think here at stronger alternatives in case the market headwinds persist for much longer. Those are my 2 questions.

Okay. Tasso, that's a great question. I anticipated at least somebody asking about these early signs of recovery, okay? So let me go business by business. And hopefully, people get a flavor for what's going on in the market. If you look at the PVC business, we are at the bottom of the cycle. Things can't go any lower and even the marginal players from China lose money at these prices. And here are some of the encouraging signs. Number one, Brazil has imposed a very significant antidumping duty on PVC of 45% on top of the 20%, which directly benefits us as we can export from Colombia to Brazil with no import duties.

The second notable piece of news is there has been a significant capacity reduction of PVC in Europe to the tune of around 400,000, 450,000 tonnes from Vynova, from Dow and a few others in Eastern Europe, and this is almost 8% to 10% of capacity and has a direct impact on the stability of the business in Europe, in addition to the fact that Europe has 65% to 70% antidumping duties on U.S. PVC. And so I was just in Marl, our German operations last week. And we believe we are in a strong position to be one of the cost efficient producers and survivors in Europe as we go forward.

The third interesting piece of news is Mexico has finally applied antidumping duties on caustic. And that is going to benefit us in the second half of the year. We have also submitted an application for antidumping duties on US PVC within Mexico. And that application is currently under consideration. There's more recent news from China, where the Chinese government is cracking down on coal mines that are not safe or overproducing and causing a distortion in the market. As a result of which coal prices are going up, and therefore, we have seen significant increases in spot prices of coal-based PVC from China over the last few weeks, okay? So the pricing has gone up from $650 a tonne upwards of $690 to $700-plus per tonne, which is an encouraging sign.

And then finally, in our PVC business, much of the operational disruptions we experienced in the first half of the year are behind us. And so we will experience the benefit of running our operations at full steam in the second half of the year, right?

So hopefully, that gives you a sense for the recovery for the PVC business. In Building and Infrastructure, unfortunately, demand remains weak in certain parts of the world, particularly Western Europe and Mexico. We do expect a stronger second half of the year in Brazil. But having said that, that business is performing as well as it can because of all the efforts we have put in to optimize our operations, both manufacturing costs, SG&A costs, and we are beginning to see the impact of the growth investments, which I talked about earlier. And moreover, we have taken steps to simplify and focus our portfolio within the Building and Infrastructure business with the divestiture of the clay business in the U.K. And as you will see from the recent announcements, we have reached a landmark partnership deal with Supreme Industries in India, where Supreme will take over Wavin's India assets and enter into a long-term technology licensing agreement.

And keep in mind, Supreme is the #1 player in India. They have extraordinary scale and reach, and we have the best-in-class technologies. And as India's GDP triples over the next decade, we hope to have massive growth and participate in that growth together, okay. A note of mention about our AlphaGary business, which is in Polymer Solutions, once again, as I talk about bright spots, while we do have weakness in Mexico, we have now established a leadership position in medical compounds in the U.S. okay? We are also beneficiaries of the strong growth in data centers in the U.S. as we have a significant presence in the data cable market. And our India joint venture is performing extremely well, okay.

Next, in the Connectivity Solutions business, and we have mentioned this in the release, we are seeing record demand in that business with strength in the telco and data center markets. The power segment is also very strategic, and we see significant growth potential in that segment as they have to upgrade the power grid for artificial intelligence over the next few years. The challenge in that business has been spreads and margins with increased competition, okay. In the Fluor business, we are seeing stability and strength in pricing across the entire chain. And I've talked about this before.

In refrigerant gases, there was a quota step down last year, and we expect prices to go up with a lag of 12 to 18 months. And that has actually happened. We have seen a significant increase in refrigerant prices in the U.S. from the start of the year, and we expect that stability to continue.

In the Fluor business as well, another bright spot is the growth of our Pharma segment, where the adoption of 152a as the next-gen medical propellant is going very well. And as that ramps up, over the rest of the year and next year, we expect a significant contribution to earnings from the pharma business. And I've already talked about the bright spots in precision agriculture. But hopefully, this gives you a comprehensive view of what we meant by early signs of improvement, okay? I'll let Jim start with his response to the second half of your question and then -- and support his comments as well.

Sure. So I can start on the operational elements of the deleveraging. And then when it comes to the other portfolio moves that you asked about specifically, I'll turn it back to Sameer to discuss those. But just going back to the discussion we had last October in terms of the delevering plan. Remember, there were really 3 primary elements that we spoke of. So we talked about $250 million of cost savings relative to a 2023 base. And just in terms of an update on the progress on that, we are on track. We're making good progress. We expect that by the end of this year, we'll achieve approximately $160 million of that $250 million and honestly, we continue to work to increase that number of $250 million over the coming years.

So I do believe that there will be continued upside there. And again, we are seeing very strong performance in terms of execution on that plan. You may recall the second element was generating $150 million of EBITDA through the new product introductions, some of which Sameer spoke of, particularly with B&I in one of his prior responses here. Our expectation right now across all of the businesses, it will generate roughly $60 million of that $150 million by the end of this year. So again, things progressing well in terms of achieving that. And then the third element was the noncore asset sales. So this is pieces of land potentially that become excess land as we consolidate the manufacturing footprint and Building and Infrastructure and other businesses as well as the sale of nonstrategic portions of our current and existing businesses.

And on that, we have already signed agreements so far this year for approximately $35 million, and we expect to achieve between $75 million and $80 million by the end of the year of this $150 million that we've spoken of. We also continue to look at the businesses for our possibilities of increasing that $150 million number. So we'll be continuing to try to identify other nonstrategic assets that could be used to generate cash to further bring the leverage down.

I think it's also important to note the work that we'd be doing on capital expenditures. So recall that back in October, we said that CapEx would be about $450 million for both this year and next. We're now saying below $400 million for 2025 and 2026 will certainly be at that level or below. We're making considerable progress on working capital.

So while you see an increase in working capital dollars so far in this year, as I talked about in response to the very first question that Pablo had. If you were to look at that in terms of days, we've gone from 83 days of working capital a year ago or 80 at the end of last year, down to 76 days at the end of June, and we expect to continue to reduce those days as we go through the remainder of the year. And again, as a reminder of our cash flow trends, if you were to look at last year, we generated just under $600 million or thereabouts about $550 million, $560 million and operating cash flow in the second half of the year. And we expect that we'll have a similar trend in that regard this year.

So we will continue to have significant improvements in operating cash flow in the second half of the year. I'll remind you as well that back when we spoke in October, we talked about a general target of conversion of EBITDA to operating cash flow of 60% and our expectation is that we will be right around that area for this full year.

So we are also still on target in terms of operationally how we convert our EBITDA to operating cash flow. So I think overall, you can see that we are being very aggressive in terms of achieving the various elements of the plan that we've put in place and things are on track. And while I stated that by the end of the year, we expect to be at probably slightly north of 3x for the net debt-to-EBITDA on an adjusted EBITDA basis, we do remain committed to the 2.5 by the end of 2026. And we continue to remain committed to maintaining our investment grade rating on our debt, and we continue to have positive conversations with the rating agencies in that regard. With that, I'll turn it over to Sameer to talk about the portfolio side.

So thank you, Jim. I think Jim covered very well all the operating levers that we are pulling to get our leverage, to deliver results and to get our leverage to our desired levels. And these include the business optimization efforts, delivering growth from deployed capital and the noncore asset sales, smaller noncore asset sales within the businesses. And those should get us to our targets by the end of 2026. Having said that, we continue to assess ways in which potential changes to our portfolio at the Orbia level could help us sharpen our focus, further reduce leverage and create significant shareholder value. And earlier in the year, we had talked about we are considering divesting in whole or in part businesses that we determine are not an optimal fit within our portfolio or that would create more value under a different owner.

Now any such process will be done deliberately on a time frame we determine, especially given the challenging mergers and acquisitions environment, we do not want to take any decisions that are suboptimal from a large portfolio move standpoint. Our focus remains building a strategically focused highly synergistic portfolio going forward with a single-minded dedication to creating shareholder value. Hopefully, that answers your question, Tasso, it's a bit long, but hopefully, comprehensive.

And if maybe I can come back and just add one thing that I didn't mention that I think is important to note, and that is the liquidity that we have as an organization, Tasso. If you were to go back to the activities that we engaged in the second quarter, so you would have seen that we've now extended all of our debt maturities out significantly. Really the only one we have coming up now before 2030 is $150 million in 2028 related to the Mexican [ Subarus ] that we just refinanced. So I think we've significantly derisked our balance sheet by doing that. And then on top of that, you would have seen we continue to have $860 million of cash on hand.

And as well, we continue to have $1.4 billion of revolving credit facility that's committed and completely undrawn. So I thought it was also important just to ensure that from a liquidity perspective, that you recognize the availability that we have to get us through this period as well.

The next question comes from Mario Simplicio of Morgan Stanley.

I have one question. First one, on the Connectivity Solutions business. We have seen some sequential recovery in margins, now close to the 20% level. What do you think is the normalized margin in the business unit? How do you see the path to achieve this more normalized level of EBITDA margins? And then my second question is -- so on the second -- my second question is regarding the investments on the Fluor & Energy storage materials in the U.S. Can you just please provide an update on that?

Very good. So speaking about Connectivity Solutions margins, we have modeled the supply-demand curves for the telco segments, data center markets and power markets over the next several years. And as we are seeing the demand recover, there has been increased supply in the last couple of years, and that's the result why margins have been compressed. Having said that, in Q2, we EBITDA margins in the Connectivity Solutions. And long-term stable margins for this business are in the 20% in order of magnitude of 20% would be a margin for this business going forward, with the competitive dynamic going forward. And we expect continued increase in demand through '26 and '27 and as the supply demand balance closes, we would expect an improvement in the margins as that happens, okay?

In the Fluor & Energy Materials business, great question about our battery materials projects. We remain committed to the extraordinary opportunity that lies ahead of us in energy storage over the next decade. And keep in mind, this is broader than just EVs. There's a massive requirement for upgrading of the power grid for artificial intelligence and will require significant amount of grid level energy storage, not just for renewable energy, but also to stabilize the grid as these data centers consume a lot of energy.

And if you look at -- and there's a lot of noise out there around EV adoption and the removal of subsidies, et cetera. Our belief is that eventually market forces will determine the right adoption pace for EVs. So even though that might be slower than anticipated, overall energy storage growth is still expected to be robust by the end of the decade in the order of magnitude of 3 terawatt hours. And in that context, we are -- we continue to work on developing both of our projects, both the LiPF6 project and the PVDF project.

We are currently working on the engineering to optimize the capital. We still have the DOE grant. So there is no concerns about the DOE grant as of now for the PSV project. And we also have significant incentives from the state of Louisiana. As well as the 45X tax credit. And as we complete the preliminary work on engineering, we will take this to our Board for approval in the second half of this year. And we'll keep you posted on the developments as we go along, right?

The PVDF project, as we have said earlier, is going to be behind by a year or 2, okay? And that is driven by the pace of investment that is needed to meet market requirements. And we'll keep you updated if there's any news on that front to report, right? What I can say is we are in active conversations with customers for delivery contracts supply contracts towards the end of the decade for LiPF6. And there is a clear driver from the customers to domesticate the supply chain, right? As you might have seen, the U.S. government has imposed a 93% anti-dumping duty on graphite coming from China. And similar duties are expected on other battery materials. And we fall within the critical materials definition of the United States in all the fluorinated battery materials are critical materials for national security.

And so if you can get past the noise in the market and think harder about energy storage in the broader context, this is still an incredible opportunity for us. And we -- but we will be very deliberate in our choice when we choose to go ahead with the investment.

The next question comes from Pablo Ricalde of Itau.

I have a very quick question on your tax. I know you explained part of the increase on the tax report on the P&L was because of FX movements throughout the quarter. But I don't know if you can provide more details on how should we think on your tax payments for the second half of 2025. That's it.

Sure. So obviously, it's a very unusual tax results for the quarter. I'm sure everyone has noted that but there's a significant portion of the tax charge that you saw for the quarter that's related to what I would call unusual items. So if you take a combination of the impact of the appreciation of the Mexican peso, inflation impacts in Mexico and then also some impacts related to some intercompany dividends that were paid about $125 million of the tax charge that you see in the quarter is related to those. So it's a significant descriptor of the impact of tax in the quarter.

So it's also important, I think, to note, if you look at the cash flow statement that cash taxes were only about $40 million. So while we had a significant tax charge on the P&L that is not a cash tax. Cash taxes were more like 40. And then we also noted in our forecast or outlook for the year that you should think of a normalized tax rate of somewhere in the range of something like 27% to 32% for -- on an ongoing normalized basis, excluding all of these sorts of factors that I just talked about.

Now if you think about the remainder of the year, particularly, I think, your question was specifically around cash tax. So keep in mind that we tend to pay a lot of our cash taxes more in the first half of the year than in the second half of the year.

So I would say the expectation at this point in time would be that the second half of the year cash taxes would be considerably lower, I would say, than they were in the first half of the year. And that is a normal seasonality. If you were to look at our actual tax on a cash basis in prior years, you would see a similar phenomenon.

This concludes our question-and-answer session. I'd like to turn the call back over to Sameer for any closing remarks.

Thank you, Andrea. We are relatively stable at the bottom of the cycle and through our actions have created significant operating leverage to increase earnings when the markets recover. We also take performance and accountability very seriously. And in that context, we have mentioned that we have made a few changes at the Board level and the management level over the past few years in the spirit of continuing to drive performance and accountability. Three of our Board members have retired and we have added a new independent Board member who brings a lot of experience to the table and will bring in a fresh perspective.

We have talked about the significant management change that we had implemented in the Building and Infrastructure business. And subsequent to that, we now have a new leader in the Building and Infrastructure business and the entire management team there has been overhauled.

In addition, with the departure of Peter Hajdu, the leader of the Connectivity Solutions business, Gautam Nivarthy has taken on added responsibility for that business, bringing incredible hands on leadership and an intense new focus to drive a recovery and growth in that business. And there are many other changes we have implemented across the Board once again to drive performance and accountability. As we had said earlier, we are seeing early signs of improvement in certain parts of our businesses and are hopeful that these trends will continue. Thank you for participating in the call, and I look forward to speaking with you again in October.

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