Good morning. Welcome to the CEMEX First Quarter 2014 Conference Call and Video Webcast. My name is Lorraine, and I will be your operator for today. [Operator Instructions] Our hosts for today are Fernando González, Executive Vice President of Finance and Administration; and Maher Al-Haffar, Vice President of Corporate Communications, Public Affairs and Investor Relations. And now, I will turn the conference over to your host, Fernando González. Please proceed. Fernando A. González: Thank you, operator. Good day to everyone, and thank you for joining us for our first quarter 2014 conference call and video webcast. After Maher and I discuss the results of the quarter, we will be happy to take your questions. We are pleased with our operating EBITDA generation during the quarter, with a growth of 15% on a like-to-like basis, adjusting for the higher number of business days during this quarter, as well as higher maintenance and negative inventory drawdown effect, which Maher will explain later in the call. Consolidated cement, ready-mix and aggregate volumes increased by 8%, 8% and 12%, respectively, during the quarter. Adjusting for the higher number of business days, all of our regions enjoy higher cement volumes with the exception of Mexico, where we had a decline of 1%. We expect Mexican volumes to gradually pick up throughout the rest of the year. In the case of our Northern Europe and South/Central America and the Caribbean regions, adjusted cement volumes enjoyed double-digit growth. On a sequential basis and in local currency terms, our consolidated prices for cement, ready-mix and aggregates increased by 3%, 2% and 6%, respectively, during the quarter. Cement prices are up in most of our major countries, with the exception of Spain, Colombia and Germany, where sequential pricing was flat. We continue with the implementation of our value-before-volume strategy…

Thank you, Fernando, and hello, everyone. Net sales increased by 9% on a like-to-like basis and adjusting for the number of business days. Operating EBITDA margin declined by 0.8 percentage points. The decline in margin is mainly due to 2 seasonal factors, which should revert throughout the rest of the year. First, we took advantage of the bad weather in the U.S. to bring forward some of our scheduled kiln maintenances. In addition, we had higher cement maintenance activity during the quarter in the Northern Europe and South Central America and Caribbean regions than in the first quarter of last year. Second, favorable weather in Northern Europe and higher maintenance work in the U.S. translated into an inventory drawdown effect in these regions, which also affected margins. These 2 effects resulted in a negative impact of $54 million in our quarterly EBITDA. Adjusting for these effects and for business days, EBITDA on a like-to-like basis increased by 15%, with an increase in EBITDA margin of 0.8 percentage points. Cost of sales as a percentage of net sales decreased by 0.1 percentage points despite the higher maintenance and inventory drawdown effects. The decline also reflects a reduction in workforce. Operating expenses, also as a percentage of net sales, decreased by 0.2 percentage points during the quarter. Our kiln fuel and electricity bill on a per-ton-of-cement-produced basis decreased by 4% during the first quarter. Alternative fuel substitution reached 28% during the quarter. The savings achieved for using alternative fuels instead of fossil fuels during the quarter reached $28 million or about 28% of the total cement bill in the same period. During the quarter, our free cash flow after maintenance CapEx was negative $454 million, compared with negative $483 million in the same period in 2013. During the quarter, we had higher…

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

[Operator Instructions] And our first question comes from Carlos Peyrelongue from Merrill Lynch.

Two questions on Mexico, if I may. First one, related to pricing. You were able to increase, on a sequential basis, 6% cement prices in Mexico. But ready-mix prices were up 1%. Should we expect there's some catch-up? Or is there any reason why the increase in ready-mix was lower than that of cement? If you could you provide some color on the ready-mix market would be great. And the second question is related to volumes in Mexico. We look at the macro figures in Mexico and see that government spending is up 20% year-to-date. But we still haven't seen that in the construction sector. Can you provide any color as to whether you're starting to see movement in bidding projects infrastructure? Anything you can comment would be helpful. Fernando A. González: Okay, so starting with your first question, Carlos, particularly on ready-mix or comparing ready-mix to cement. What I can tell you that, so far, in the first quarter, we had 2 price increases in cement and only 1 in ready-mix. So it might be a matter of timing. And as you know, and as we continue saying, we would like at least to recover inflation in all our products. So prices of ready-mix should continue going up, more or less the same way that cement prices have already gone. Regarding your second question, I didn't get specifically the number you were providing. What was it? Can you repeat it, please?

Government spending is up 20%, and I believe, with regards to investments in infrastructure, it's even more than that. This is national figures, no? So we see some figures that point to our recovery, but we still haven't seen much in both infrastructure, cement demand, housing, et cetera. So just to get an idea of whether you're starting to see projects that -- on the pipeline that would support volume growth in the second half, any color you can provide would be helpful. Fernando A. González: Yes, we definitely have seen, let's say, movement in the public sector. There are specific projects that are already in the mode of either assigned and ready to be started. What we can comment is that we have already won important infrastructure projects ourselves. And, for instance, there is a dam in the state of Sonora called Pilares, the Pilares dam. We've won that work and we are about to start. And then we have also won a couple of highways, the Guadalajara-Colima highway and the Acapulco-Chilpancingo highway. So we -- definitely, we do see movement in infrastructure. And what also we have seen, this is not on a specific project, but public investment in infrastructure is more than 50% higher. So that, at some point in time, and you know, we have commented more in the second half than in the first half, but those -- or that additional investment, for sure, will translate in additional infrastructure projects. Another indicator, it might help a little bit, is that ready-mix volumes to infrastructure are up 4% when we adjust that for business days. This year, we have this Holy Week effect between March and April. So we do see very positive indicators of infrastructure works, new additional infrastructure works already been assigned and starting to be executed.

And our next question comes from Vanessa Quiroga from Crédit Suisse. Vanessa Quiroga - Crédit Suisse AG, Research Division: I wanted to ask you about the notes -- a comment that you make on your notes saying the last part of the press release regarding a reorganization in CEMEX Mexico. And we were wondering if that is, at all, related to making your organization in Mexico more tax efficient and whether you could see any change in the payments that you have to make regarding the taxes going forward? And then the other question would be more generally on pricing and your comment about currently having very constructive conversations with customers about services and surcharges. If you could provide any more specific comments about the feedback that you have received from customers and whether you see other competitors following that same strategy. Fernando A. González: I will take that -- those 2 questions. The first question, Vanessa, regarding the organization, the objective of this reorganization is that it's part of a commercial strategy that we are executing, and we are taking steps on that commercial strategy. And what we would like or, let's say, the change, what is it that we do today and what is it that we would like to do in the future, is that we do approach the market product-by-product, and what we would like to do is to sort of reorganize the way we approach the market and approach the market by sectors but including or offering to our sector all our products and services. So that's the main point in our reorganization in Mexico. Now regarding your second question about prices and surcharges or the conversations and feedback. The way I see it, Vanessa, is that when -- let's say, if in a market,…

And our next question comes from Gordon Lee from BTG.

Just 2 quick questions. The first on the U.S. -- well, assuming it's the U.S. In the -- is it fair to assume that the U.S. was where all of the anticipated maintenance work was concentrated? And so, therefore, that, that foregone EBITDA would be primarily applicable to the U.S.? And then the second question is in Europe. Is there any way of giving us, more or less, a rough breakdown for how much of that rebound you think was related to weather on the volume front and how much to underlying improvements in economic activity in Northern Europe?

Yes, sure. On the total amount, as you recall, we mentioned was $54 million maintenance and inventory effect. And it's roughly -- on a consolidated basis, it's half-and-half, half maintenance, half inventory effect. The bulk of the inventory effect was in the U.S., and much less is in Northern Europe. And so we expect that most of that, if not all of that, frankly, to revert during the course of the year. I don't know if that makes -- I don't know if there's a follow-up to that or if that addresses your...

Just whether you would say that the -- most of the anticipated maintenance, so that half that's maintenance, was that mostly in the U.S. as well?

Yes. A big chunk of that was in the U.S. I mean, in the... Fernando A. González: 2/3?

Yes, about 2/3. And we roughly did about 85% of the maintenance for the year in the quarter compared to last year, it was around 40% of the maintenance. So it was a significant amount of bringing forward effect of the maintenance, and that's because of the weather. Now in the U.S., in Europe, the second question was the... Fernando A. González: Yes, final comment on maintenance and the effective inventories because most of the effect -- I think it was like $34 million out of the $54 million is the U.S. So most of the effect is coming from the U.S. And the reason why it's much higher than last quarter is because of -- basically, it's weather. You have bad weather. You are prepared for maintenance for the first half. Your inventories -- if you continue producing, your inventories go high, whatever. So they took the opportunity and they ended up making more than 80% of the yearly maintenance. Of course, that is affecting our first quarter materially in the U.S. Without this effect, the U.S. -- EBITDA in the U.S. should have been $34 million higher during the quarter, but on the other hand, is an effect that is 100% reversible. I mean, we will recuperate that because maintenance was going to be done during the year. And inventories were taken and inventories will be built. Not all facilities are properly maintained to work for the rest of the year. Now on your second question on Northern Europe, I don't have a way to really -- we don't have a way to really divide how much of it is weather and the markets, but what we have seen is that the markets are behaving better than what we expected. And on the other hand, it is true and it is known that this winter in Europe was a dry winter with no snow or not that much. And there were no extreme low temperatures. So the working days compared to previous quarter were much higher. But we don't have a way to specify how much of it was weather and how much of it was the market.

And also, if I can add, Fernando -- I mean, Gordon, I don't know if you noticed, but also, we've improved our volume guidance in the Northern European -- most of the Northern European region on back of the performance of the first quarter. So it was not just a timing issue, there was definitely an underlying better economic activity in most of the countries in the Northern European region.

And now we will have a question from the webcast.

The question from the webcast is from Jose Bernal from BBVA. And the question is about EBITDA margins in the Mediterranean and our South, Central and the Caribbean regions. Can you please give us more color why the margins deteriorated and if the company expects to see going forward EBITDA margins below 20% in the Mediterranean and 35% in South/Central America and the Caribbean? Fernando A. González: Well, in the case of Mediterranean, there is one impact, which is less amortizations of CO2 in the first quarter of 2013 for about $9 million. And in the case of South America, we do have an effect, which is, again, maintenance -- the impacts on margins, either a consolidated level or in South America or in the case of the U.S., are typical of first quarter in the cement business. So in the case of South America, just to mention, we -- this year, during the first quarter, we made -- we did maintain 3 large kilns, 1 in Colombia, 1 in Panama and 1 in Costa Rica, and that compares to none in first quarter of 2013. So that translates to a reduction in margins for the rest of the year. No, it does translate to maintenance expenses done in different periods. Cement kiln is maintained, in average, every 12 months, but sometimes, it's a little bit less, sometimes it's a little bit more, assuming they work all year long. So there is not -- we don't have these precise comparison in the same periods of time. So again, in South America, this 3 kilns compared to none in the same quarter last year. On the other hand, in South America, we also had the impact of the dollar strengthening. The peso devaluated for a little bit more than 10% and the colon for about 7% and another -- [indiscernible] was also affected [ph].

Our next question is from Benjamin Theurer from Barclays.

It's actually a follow-up on South and Central America, Maher and Fernando. The question is -- what we've seen is the relatively flattish pricing in local currency terms. I know that the margins were somehow affected by the currency depreciation, et cetera. But usually, what you used to do in Mexico is trying to offset currency depreciation by increasing in local currency terms. Taking into consideration the investigation ongoing in Colombia because of price agreement and whatever we know that's still somewhere out there, are you somehow hindered to raise prices in local currency terms? And then basically, you're more exposed to FX volatility now just because you cannot catch up on pricing in Colombian peso terms, to be specific here [ph]. And that's why we saw that impact here because volumes were pretty decent in the region. What's your pricing strategy in Colombia basically?

Yes, Ben, thank you. No, I don't think our behavior has anything to do with the pending situation in terms of the market. I mean, prices, sequentially -- I mean, if we take a look at prices sequentially on cement in local currency terms, we're actually up in the region and the same thing for ready-mix and the same thing for aggs. And so certainly, we don't think that prices are behaving differently because of any of the investigations that are taking place. I mean, we do have, obviously, new capacity that has a grinding capacity that has come on stream, the 0.5 million tons that we brought in the North. But again, it's market dynamics, and whether that will change during the course of the year will remain to be seen.

Okay. But you also focus on your pricing before volume strategy in the region? Or is that a specific area where you say, okay, we first need to get volume out because of the new capacity and don't focus that much on pricing as you're, for example, doing in Mexico, as you're doing in Europe, as you're doing in the United States?

No. The focus on the value-before-volume strategy is definitely being focused on -- in the region as well, and we're looking at certainly growing the buy to achieve that. We're looking at having the conversations with our customers regarding services and fees, and we're getting there. So definitely, as we mentioned, certainly, in cement, we've implemented the strategy or we're in the process of rolling out the strategy on a global basis. So there was not a specific region where we say, "Because of a certain effect, we're not doing that." But one thing that needs to be -- I think one thing that is important to comment on here is that we do have specific price maps per country, per local market, and that is the case for every market. And those price roadmaps are different from market-to-market. And so you will see different dynamics, but the focus and the concentration on value-before-volume is definitely throughout all of our markets.

Okay. Perfect. And actually, one follow-up on the question from Gordon Lee, just to make the calc right on what you have in the U.S. with that maintenance impact. So, Fernando, you mentioned it was $35 million out of $54 million was actually in the U.S. So if we were to adjust the U.S. EBITDA, it would have been actually $63 million instead of $28 million. And with that in mind, the operating leverage would have been clearly much higher than it seems like right now because there was a big jump in sales expanding close to $60 million, but EBITDA went up only $10 million. So if we were to include that $35 million, it would be more like as it was in the fourth and first quarter last year. Correct? Fernando A. González: It is correct. The amount I mentioned was $34 million. It was not $35 million, but really, it's okay. Yes. And operating leverage, if you add that number to the reported EBITDA, yes, operating leverage is around 80% or so.

Also, Ben, if I can just add, and it has less to do with the maintenance, but the performance of the quarter also had something to do with pricing dynamics in the U.S. Last year, we raised prices in close to 60% -- on 60% of our sales, pretty much everywhere, except for Texas and the Southeast region. This year, that number is 20% of sales. And as you recall, the January pricing increases were only in Florida and Colorado. And the rest of the price increases are going to happen in April. So that's another reason why you see the operating leverage broadly defined different.

And our next question comes from Marcos Assumpção from Itaú BBA. Marcos Assumpção - Itaú Corretora de Valores S.A., Research Division: My first question, you just started to comment a little bit, but if you could provide further update on the price increase implementation in the U.S., how much you are expecting for the coming quarters. And also, if you could comment specifically on the month of April how the operations, how they are looking in the U.S. and in Mexico as well, given the expected improvement in both operations. Also, you did a good job on the cost side as well, like when we look at the results on a year-on-year basis. If you could comment on further opportunities to reduce cost of sales and also operating expenses will be great. And lastly, if I can, how you're expecting volumes to be in Spain. We already started to see lower year-on-year declines. If you're starting to see volumes are starting to bottom in Spain. And if you could comment, the pricing environment in the Mediterranean region, which seems to be quite healthy as well.

So the first one, just to address the pricing environment in the U.S., you can see from the pricing indication sequentially for the first quarter that our pricing increases in Colorado and Florida, actually, were successful, as we said. And that especially the southern part of Florida on the supply side is definitely getting quite tight. And that should further support the pricing environment in that market. The April pricing increases, just to remind everyone, we announced pricing increases for April 1, and they have been implemented between $8.80 per ton to $16.50 per ton in the Texas market, California market, Mid-South and Midwest. And we're -- we've gotten a fairly good response, I would say. We have a fairly high conviction that those pricing increases will and are getting traction in the markets, and we're seeing, certainly, other players follow similar type of pricing increases. We have also announced ready-mix pricing increases for April in California, West Texas and Mid-South. So we have a high degree of confidence on those numbers. In terms of the second set of pricing increases, the summer and fall pricing, as you recall, we did announce in October of last year some pricing increases, and those range between the $5.50 to $8.80. And they're -- depending on markets, some markets will get those pricing increases implemented in -- as of 1st of July, others in October, depending on historic pricing increases and supply demand dynamics in those markets. It's too early to tell, but we are optimistic and have seen others in our -- 2 of our biggest markets, Florida and California, follow similar strategies for the summer and fall pricing increases. And that's a positive indication from our perspective. Fernando A. González: Now regarding volumes in Spain, as we commented, volume -- volumes…

Was there any part of the question that we did not address? Okay.

We have time for one last question from Mike Betts from Jefferies.

I've got 2 areas of questioning, if I could. One is to come back to this maintenance question and to ask you if you could split the remaining $20 million, which I think you were in Northern Europe and South America, if you could split it between the two. And maybe also give me an indication of why it occurred. Obviously, in the U.S., it's understandable because of bad weather, but obviously, that wasn't the case in Northern Europe and South America. And then the second part on the maintenance. The 60% last year that wasn't in the first quarter, could you give us some indication of when it occurred, in which quarters, so that we can kind of take some judgments on when we might get this $34 million come back? And then the final question, if I could. Lafarge-Holcim, two-part question. I mean, clearly, one of their major arguments is that there's significant economies of scale even above their current levels in the cement industry. I mean, is that something that you would agree with? And would you expect further consolidation in the industry? And if you do look at any of these assets, I was not totally clear on the comment, I'm afraid, were you saying that you would look to do asset swaps to participate in any transactions or did I misunderstand that? Fernando A. González: Let me start with Lafarge and Holcim. I think, Mike, you were commenting on 2 specific issues. The first one is economies of scale. And, yes, we do believe that it is in the scale. And Holcim and Lafarge and us and other companies are to our level, to our size. We are always trying to obtain as much economies of scale as possible. So are they going to get…

And none -- there wasn't significant breakdowns or anything that caused this to happen? I mean, this was conscious decisions or... Fernando A. González: No, no, no. It is -- as I tried to explain, you have a kiln that operates 330 days per year, and you have to maintain it once a year. So if -- but you have variations. It could be 10, 11 months. It could be 13, 14 months. So if we made a maintenance, let's say, in Colombia to our biggest kiln, which is a real case, let's say that we made that maintenance in April 13, so the cost of the maintenance is in the second quarter. And then 11 months after -- I don't know exactly, but this is the exact example, but -- meaning it could have been done that maintenance the quarter before or the quarter after, but just to illustrate. And this year, let's assume 11 months after, we made the maintenance in March, so you have the impact of that maintenance during the first quarter. So this is the type of variances that most of them happen between first and second quarter of the year because most of major maintenance in kilns -- I'm always referring to cement -- in kilns are made in the first quarter and the second quarter. So most of these timing issues are characteristic of this time.

That would -- just final follow-up point. That would suggest then in the U.S., there should be a major positive in the second quarter of this year? Fernando A. González: Yes, second or third quarter, because as we mentioned, this year, and because of rains, there were almost like 10% more rainy days in the U.S. in our markets compared to last year, plus some very low temperatures, as you know. So this year, because of that specific reason, I think I mentioned before, it's about more than 80% of total maintenance for the year was done in the first quarter. So, yes, we can expect that in the second quarter, mainly for cement and then the rest of the year for cement, ready-mix and aggregates, we should see those -- that impact coming back to EBITDA. This is not maintenance referred to -- let's say, to a breakdown, to an anomaly or something that is not business as usual. This is just a major maintenance anticipated because of those reasons. Operator?

Thank you. I would now like to turn the call over to Fernando González for closing remarks. Fernando A. González: Well, in closing, I would like to thank you, all, for your time and attention, and we look forward to your continued participation in CEMEX. Please feel free to contact us directly or visit our website at any time. Thank you, and good day.

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