Good morning. Welcome to the CEMEX First Quarter 2024 Conference Call and Webcast. My name is Elliot, and I'll be your operator for today. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions]. And now I will turn the conference over to Lucy Rodriguez, Chief Communications Officer. Please proceed.

Good morning. Thank you for joining us today for our first quarter 2024 conference call and webcast. We hope this call finds you in good health. I am joined today by Fernando Gonzalez, our CEO; and Maher Al-Haffar, our CFO. As always, we will spend a few minutes reviewing the business, and then we will be happy to take your questions. And now I will hand it over to Fernando.

Thanks, Lucy, and good day to everyone. I am pleased with our first quarter results, which outperformed our expectations underlying our 2024 guidance. In fact, EBITDA represents a first quarter record for the company. Despite fewer working days and difficult weather conditions in many markets, EBITDA grew 5%. Three of our four regions markets accounting for 90% of consolidated EBITDA, experienced a combined growth rate of 15%. Mexico deserves special mention, setting a record in terms of quarterly EBITDA generation. EBITDA margin expanded year-over-year and sequentially, driven by a favorable price cost dynamic. Our prices rose mid-single digits, while input cost inflation slowed. Growth investments and urbanization solutions continue to materially support EBITDA growth. Net income grew 13%. Our return on capital 2.4%, was slightly higher relative to the same period last year despite the impact of the Spanish tax fine that we recognized in fourth quarter 2023. In other highlights, last month, we achieved an important milestone with the receipt of an investment-grade rating of BBB- from Standard & Poors. This rating action was recognition of our medium-term financial strategy as well as consistent financial performance. In late March, we hosted our 2024 CEMEX Day presenting additional insights into our regions, decarbonization progress and goals, capital allocation and strategy. I would encourage you to access the replay on our website. This month, we refinanced our Eurobank facility, further improving our maturity schedule and liquidity position. In March, we published our eighth integrated report as we continue to set the pace for our industry towards a profitable climate action transition. As part of our portfolio rebalancing efforts, we have announced an agreement to divest our interest assets and operations in the Philippines for a total enterprise value of $800 million. We currently expect to finalize this transaction before the end…

Thank you, Fernando. Our Mexican operations once again delivered strong results with EBITDA growing to record levels, supported by higher prices for our products strong volumes and decelerating input cost inflation. Despite two fewer working days, volume performance was strong. Bulk cement and aggregate volumes grew double digit on an average daily sales basis. while ready-mix volumes rose mid-single digits, reflecting the dynamism of formal construction in the country. Infrastructure and nearshoring with particular strength in the North and Southeast remain the principal growth drivers. We continue to see improvement in bag cement volumes with mid-single-digit growth resulting from increased social spending, lower inflation and a favorable comparison base. Based on our first quarter performance, we are raising our cement and ready-mix volume guidance from low single digits to low to mid-single-digit growth for the full year. Sequential prices for our cement, ready-mix and aggregates rose low single digits, reflecting the traction of our January price increases implemented to offset the ongoing cost inflation of the business. On a year-over-year basis, our double-digit ready mix and aggregate price increases and a mid-single-digit cement increase as well as decelerating energy costs led to an expansion in EBITDA margin of 0.5 percentage point. In the U.S., quarterly performance was significantly affected by bad weather in much of our portfolio. Despite these weather challenges, EBITDA rose 3%, while EBITDA margins expanded almost 1 percentage point. Margin growth was driven by higher prices and lower cost inflation, largely in the form of fuel, freight and imports. In aggregates, where volumes are less impacted by weather conditions. Volumes grew 9% on the back of increased base material sales for infrastructure work. Cement and ready-mix volumes declined high single digit and mid-teen percentage, respectively, due to heavy precipitation or deep free conditions in much of our…

Thank you, Lucy, and good day to everyone. As Fernando mentioned, we are pleased with our first quarter performance. with growth in sales, EBITDA and EBITDA margin. This was a record first quarter for CEMEX and a record for our operations in Mexico. As we noted earlier, this quarter had fewer working days than last year. Adjusting for this difference, our EBITDA would be higher by approximately $20 million or an additional 3 percentage points on both a reported and like-for-like basis.. The 0.5 percentage point increase in EBITDA margin was driven primarily by pricing, easing inflation and disciplined cost management. Our improved performance speaks to the success of our pricing strategy, cost containment efforts and the result of our growth investment and urbanization solutions business. On the cost side, we saw a 20% decline in fuel cost per ton of cement, driven by a decline in the market price of fuels as well as our efforts to increase the proportion of lower cost and lower carbon fuels. On a sequential basis, consolidated fuel cost per ton declined 11%. Free cash flow after maintenance CapEx was about $160 million lower than prior year. This is due primarily to higher taxes paid in Mexico and currency tax gains from a strong Mexican peso. Due to the seasonality of our working capital cycle, First quarter free cash flow is typically negative and turns around in subsequent quarters. Last year, we started implementing targeted actions to improve working capital, optimize our inventories and turns of trade throughout the company. While first quarter working capital investment was substantially similar to the prior year, we expect to see a positive trend throughout the remainder of the year and remain on track to achieve our previously stated guidance of reducing more than $300 million in working…

I'm happy with our performance in the first quarter and believe it sets us up well for the rest of the year. Our full year guidance has always assumed more EBITDA growth in the second half of the year. And as I said previously, first quarter outperformed our expectations. In Europe, the biggest headwind in the quarter, we do expect better performance going forward. We continue to expect favorable price to cost dynamics for the rest of the year. We also are expecting and already seeing volumes recovering in the U.S. with better weather. In addition, we expect more pricing traction from second quarter pricing increases. Despite better performance to date, as this is only the first quarter, we are maintaining our full-year guidance for EBITDA of a low to mid-single-digit increase as well as maintaining guidance for all free cash flow items. This assumes FX rate as of March 31 levels for the remaining of the year. And now back to you, Lucy.

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 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 the prices for our products. And now we will be happy to take your questions.

[Operator Instructions]. And the first question comes from Alejandra Obregon from Morgan Stanley. Ale?

Hi, good morning, CEMEX team. Thank you for taking my questions. And congratulations on the record quarter. I guess my question is on the Philippines asset sale. That's a very positive for your free cash flow. So I was just wondering if you can help us understand with this transaction. Of course, you've approved means for you in terms of cash inflows. How much of your debt is in your balance sheet from this operation today? And maybe there's some details with regards to what it means for working capital and CapEx. I mean anything that can help us assess the positive impact for free cash flow here? And anything on the timing you mentioned year-end, but would it be fair to assume fourth quarter? Or is that something potentially before that? Anything -- any color here would be very helpful. Thank you.

Thank you, Alejandra. Fernando, would you like me to take a stab at that?

Yes.

Yes, Alejandra, we're very pleased with announcing the transaction, and we're expecting closing by the end of the year. In terms of the impact, I mean, of course, you saw in the press release that we issued, the implied enterprise value is about $800 million. And if we take a look at based on last year's valuation. We're talking about a little bit over -- in terms of multiples, a little bit over 20x -- 21x, 22x. And in terms of impact on us, I mean we have debt that will be assumed around $345 million, $350 million and then cash of about $360 million, $365 million. And so you're talking about the total amount about $708 million. Again, we don't know what the impact on leverage is going to be by the end of the year. But Ceteris Paribus kind of conditions by the end of the year, this should have about 0.2 of a turn positive impact, assuming everything is impacting leverage, of course, without taking into consideration what the use of proceeds would be in all of that. In terms of working capital from a trading perspective, it should be fairly limited because of the relatively low operational level that the business has at this point. And of course, closing is subject to customary regulatory approvals by the end of the year.

Perfect. Maher, just to make sure I got it right. What was the impact on potential impact on leverage. You mentioned 0.2 turns. How much for that, I'm sorry?

Again, Ceteris Paribus conditions, meaning everything is being applied to either cash or reduction in debt, the impact on leverage would be around 0.2 of a turn.

Got you. Perfect. That's very clear. Thank you very much and congratulations again.

Thank you, Alejandra. Great to hear from you.

Thanks, Ale.

And the next question comes from Pablo Ricalde from Santander. Pablo?

Hello, Lucy, Fernando and Maher. Thanks for taking my questions. I don't know if you can provide more color on the U.S. volume performance we saw in the quarter. I know you explained there were like less working days in the quarter, but maybe talking a little bit about market share or regional performance, that would be super useful.

Thanks, Pablo. Yes, we did have a reduction in the decline in volumes in both cement and ready-mix, while we had an increase in volumes in aggregates. The weakness in cement and ready mix is why the difference in product. It's primarily because, first of all, footprint. The footprint that we have in ready-mix was heavier hit by precipitation in those markets and the same in cement. It really reflects our footprint. Aggregates, the reason why we're seeing growth there is because, first of all, it's less vulnerable to weather because, of course, you can inventory aggregates, you can also even lay them without much impact if it's raining. And also in terms of the actual geography. The growth in ags that we're seeing came from infrastructure, particularly, it's primarily base material. Now in terms of what's responsible for the volume decline, it's not an exact science, but we do believe that about 50% of the decline relates to weather. In states that represented 75% of our cement volumes, we saw an average 35% increase in precipitation in the quarter. I'm going to highlight Texas, in particular, where we're exposed in the South in the Houston area. In Texas, it was a 45% increase in precipitation year-over-year. And if you look at just January in the Houston market for ready-mix, there were only eight days in that entire month that weren't affected by weather. And then to your point, we did see probably about 30% of the volume decline that came from a market softening, primarily in commercial and residential in places like San Francisco and in Arizona, we have seen some softening in terms of market demand. And of course, we also did have market share loss that we highlighted last year. That is pretty much stabilized, but we're still seeing the year-over-year impact. And of course, we have said that we will -- we are aiming to responsibly recover that market share. And finally, we also had some projects that were ending for about 20% of the volume decline. Arizona, in particular, there were two chip manufacturing, semiconductor chip manufacturing facility projects that have paused there. As Maher mentioned -- no, I guess, Fernando mentioned in the call. Since February, we have seen an improvement. Volumes have been recovering both on a sequential and a year-over-year basis. And in fact, March was actually positive year-over-year. So we are optimistic going forward in terms of demand. But hopefully, that covers it for you, Pablo.

Perfect. Lucy, thanks.

Okay. Great. And the next question then comes from the web. It's from Paul Roger from Exane. CEMEX has previously said carbon capture is a 2030 story. Is that still the view despite some big peers now suggesting it will come earlier this decade?

Well, Paul, thanks for your question. Let me clarify our position on carbon capture. Maybe the reason why you're saying is a 2030 stories because the way we have defined our road map to Net Zero and the emphasis that we are making in different steps in the process. We've been since we started our newer strategy, the Future in Action strategy launched in 2020. We've been focused on reducing our carbon emissions scopes at a much faster speed than we used to do it before. The reduction that we have done is about 13%. And every year, it continues reducing or we've been reducing like three and fraction close to four percentage points. We are highly focused on traditional levers to comply with our 2030 commitment. Commitment that is aligned with the scenario of the 1.5 degrees already certified by SBTI, meaning our target by 2030 for the time being is not assuming a contribution from carbon capture. Now at the same time, we've been developing carbon capture and storage or use projects, we have publicly announcing -- we have already announced six projects, four in Europe and two in the U.S. At an industrial level, with proven technologies and with already on in most of the cases already with the consumptions needed to capture to transport and to start or use. If we can do or develop or put in place these projects before 2030, and we are trying to do that, it will be much better. But again, regarding our commitments as of right now, we are not including this carbon capture contribution. Now the -- at least the way we see it all over the world, the traditional levers can be applied in the cement industry. There might be some rules and regulations to be improved in Global South, but it can be done. But what we see -- and in your question, you are referring to big peers suggesting that it's coming earlier and it's coming earlier. But it seems like that is coming in Europe and the U.S. And that's about 10% of total cement capacity all over the world. So we are all interested in reducing carbon capture, reducing even more and reducing it faster. But we are very pleased with the strategy of reducing almost 50% using 1990 base by 2030 without those contributions. So reduction is extremely important, as you can imagine, if you reduce up to 50%, the projects needed to capture the rest should be smaller and more convenient. And so -- we are one of the ones developing this type of projects as fast as possible. And again, but this is a European and U.S. proposition for the time being. Canada, maybe three or four countries. But we need to find a solution for our company in other geographies and for our industry in other geographies. So that's what I can comment on your question.

Thank you, Fernando. The next question comes from Adrian Huerta from JPMorgan. Adrian?

Hi, thank you, Lucy. And hi everyone. My question has to do with Mexico, both on volumes and on prices. In the case of prices, you tried to increase prices in January in Mexico, but it seems that prices were flat sequentially in local currency, but peers actually didn't had a 4% increase in the quarter. So if you can make any comments on that and if we should expect given that you did not have a price increase in the first quarter, expect one in the coming quarters? And regarding volumes, how much was in the first two months of the year started to be strong. We don't have data yet for March volumes. And in the new guidance that you have, what type of deceleration are you assuming for the second half of the year on -- especially from infrastructure?

Would you like me to explain it that or...

Yes, go ahead.

Go ahead.

Yes, Adrian. I think if we take a look at sequential pricing in local currency terms for Mexico, actually like up 3%. So we did put a -- announced in January a national pricing increase for bags, 12% for bulk, 15%. And it was -- we believe, quite successful given the demand dynamics that we've had. As you saw volumes in the first quarter for cement were up 7%, and that's before you start adjusting for the two less working days. If we take a look at average daily sales, volumes in cement are up 10%. And this was, of course, what -- between that and decelerating inflation is what drove the record performance. And definitely, volumes did get better towards March. And we think certainly the first part of April continued to be doing quite well as well. So we're happy about that. And so we believe that the success of our pricing strategy in Mexico should continue. And then if we take a look at margins, as you saw, we had a very positive expansion in margins because of the pricing and because of the cost deceleration. Bag cement grew by like 5% on an average daily sales basis on back of lower inflation, easier comps, more remittances, the formal sector was really was -- what was really driving growth enormously. I mean we saw the formal segment, bulk cement demand up 16%. And then if we take a look at ready-mix and ags, we were up 5% and it's almost more than double that on an average daily sales basis. So I think the demand dynamics are very positive. The cost dynamics are quite positive. And we're expecting them, frankly, to continue to do that. And as we see, some conclude -- potential conclusion of some of the large infrastructure projects by the middle of the year, we continue to see other projects that are actually starting and should continue to give us very good momentum into the back half of the year. So right now, we're not looking at any major deceleration during the rest of the year. And bag cement should continue to with -- in the rest of the year, we're expecting it to be actually a little bit better. Of course, coming from a much higher level because of the disproportionate growth in infrastructure and industrial and commercial. That's the other segment that also continues to do extremely well because of the onshoring and near-shoring. I mean if we take a look at industrial, it's roughly 60% of our demand, infrastructure, I didn't mention, but it's about 15% of our demand. And those two businesses continue to do extremely, extremely well. And that's why we if you take a look at our implied volumes for the rest of the year, it's significantly higher than what we saw -- what the total guidance is.

And significantly, I mean, our implied guidance for the rest of the year is 1% to 4%, right, versus the 7%, just to be clear. Okay. Adrian, does that answer your question?

Yes, that's fine. Yes, thank you.

Thanks, Adrian.

Okay. And the next question comes from Alberto Valerio from UBS. Alberto?

Thank you, Lucy and CEMEX team. My question is about the Philippines divestment. I would like to know if you have -- you mentioned that you leverage the [indiscernible] that if you have any other options for the use of proceeds of this transaction? And if you can see the stellar movement for the Colombia assets where you made our offer for the shares and we may be best following the strategy that you mentioned in the CEMEX Day of trending one, you cannot mistake when you say that we want to be more focused on developing world and the emerging markets.

I'm not sure I listened to the whole question, but let me try and let me know. I think as you mentioned in our CEMEX Day recently, we reaffirmed our strategy, a strategy that we started developing in 2020, and we have been communicating it, meaning with the idea of making up, let's say adjustments or changes to our portfolio, willing to growth, mainly our first priority in the U.S., we also mentioned Europe and to some extent in Mexico. And that's what we've been doing. So this divestment in the Philippines, we see it pretty aligned to that strategy in the same way when we did other divestments from 2000 to 2003. And all the -- or most of the proceeds of those divestments have been used in our bolt-on growth strategy. Little by little, but in this three years and a half, let's say, or two years in the quarter. We have divested already about $2.5 billion, and all of it or most of it have been repurposed to investments, again, U.S. sales priority and also part of it to reduce our leverage ratio. So again, this divestment is aligned with that strategy. This is the last piece that we usually have in Southeast Asia. So our Asian chapter has been also, it's going to be closed once we perfect or execute the transaction by year-end. Again, maybe there is another part of the question that I didn't get. I don't know if Maher or Lucy have a comment on it.

I would just say that the other part of the question was about Colombia that we see the same way that we see Philippines.

I think Alberto is asking at about -- it's about Colombia and because we've delisted the company there and I was wondering if that something the same as Philippines would occur. Am I correct? Alberto, that was your question?

Exactly that, Maher. Thank you very much.

Okay. Sorry, I didn't understood it. Well, we -- again, as I said, we have a clear strategy properly communicated and we are executing. We do not comment on potential future either acquisitions or divestments. But what you can expect in the future is that we will continue with the same note. Even in our CEMEX Day, we shared a new piece of info, let's say, on our strategy with the target of the U.S. to be up to 40% of CEMEX portfolio, currently being around 30%. And so again, as you can see, all pieces are moving forward according to that idea, what you can expect in the future is that we will continue with the same process.

Fantastic. Makes sense. Thank you for the answers.

Thank you.

The next question comes from Yassine Touahri from On Field Research. Yassine.

Just a question on your volume outlook for Europe. You increased a little bit your volume forecast. But the cement demand was quite weak in Q1. Can you comment a little bit about the trends in March and maybe at the beginning of April? Do you start to see a recovery in volume in Europe? And then maybe a second question on the 9% volume growth that you delivered in aggregate in the U.S., it's like exceptional compared to what many other companies have reported. Is it something which is specific to CEMEX? Is it your -- is it some specific infrastructure project? Or is it something which is a one-off? Or do you see this strong growth continuing for the rest of the year?

I will take the second one. Just saying specifically the case of the volume growth in aggregates in the U.S. it is specific to CEMEX. Well, that might be a similar effect in other players. But in our case, it's a product mix effect. We are selling more based materials. That means infrastructure is playing a role in that volume. It is not referred to all volumes, I mean, to all products, but very specific on base materials, which we interpret as good news because it could also suggest and activity in infrastructure already in development. But it's product specific.

Great. And maybe just on Europe. Yes, Yassine seen Europe, obviously, there was a drop in EBITDA year-over-year in first quarter. I think it's important just to remind everyone what I know you know that first quarter typically is the most seasonally impacted quarter, and Europe is the region where we see that most. Typically, first quarter is about 11% to 12% of full-year EBITDA for Europe. So we shouldn't read a lot into what we saw. The first quarter was impacted by two fewer working days in Europe, which explains about 10% of the EBITDA drop. We had bad weather in a number of geographies, particularly the U.K., which is our largest market in Europe and where we saw quite a bit of precipitation. Germany also was impacted primarily from the economic slowdown. But on the other hand, we saw great growth in places like Poland, where we're seeing increased confidence coming out of the elections and the expectation of EU funding going forward. France also has been an important source of the decline. As you know, we're only ready mix in France. But of course, because of the Olympics, there has been a ban on large projects that's going to go through kind of early summer, early mid-summer. But we are expecting that, that will get better as, of course, construction opens up again post Olympics. In the quarter, I think it's important to note that even with the decline in volumes that we saw, which was anywhere between 8% to 15% on our products, we actually saw very resilient pricing sequentially. So local currency prices were up between 1% to 5%, depending on the product. Another headwind that we had in the quarter was obviously, with volumes down, we had higher fixed costs as well. We expect that will turn around as we go through the year. We have seen a seasonal pickup in terms of volumes. In the case of Europe and April has been looking quite good as well as we saw sequentially the normal seasonal pickup that occurs. So I think that we're -- as we look at Europe going forward, we have better comps as we move into the last three quarters of the year because the declines we experienced in Europe really started in second quarter. We believe we'll have improving fixed cost dynamics. The Olympics will be -- that will be behind us, and we'll have a more supportive economic environment as well going forward, we believe, and the promise of infrastructure is picking up in Poland. So that is kind of it in terms of Europe. Hopefully, that answers your question.

It does. Thank you so much.

Okay. Thank you, Yassine. And the next question comes from Anne Milne from Bank of America. Anne?

Yes, good morning Fernando, Maher, Lucy. Thank you for the call.

Good morning.

Good morning. I know that we've talked about this in previous calls. By the next quarterly conference call, Mexico will look at presidential elections, and you will know who the new President is even though the polls do give us some good suggestions. I know we've talked about the impact on business and volumes in Mexico that maybe will tend to decline. But given some of the dynamics that are going on right now, both near-shoring and right now, an increase in bag cement. Could you just give us an idea of some of your thoughts, if anything, if nothing more on how this time might be different and what you might expect post elections in the second half of '24?

Yes. Well, let me start and then Maher or Lucy can complement. I think this year is an election year. What we see is, let's say, a good performance in different sectors in our industry. Perhaps the one impacted this format housing because of high interest rates, although at least in the case of Mexico, seems like the first adjustment was made, let's see how that continues moving forward. But I think the informal economy is doing well. Mexico is growing. So on that side, growth in the market could be reasonable and stable for the rest of the year. On the other hand, industrial and commercial impacted by the near shoring effect is also evolving in an attractive manner, particularly in the north of the country. And the other piece is going on that is positive, which is infrastructure in public works, meaning public infrastructure, everything that is going on in the central part of the country and in the Southeast, meaning the trains that rural roads, the airports. Most of the -- with some exceptions like the airport in Mexico City, the projects are not finished yet, and they're not going to finish in election time. So they are going to be -- continue being developed for the rest of the year and who knows maybe also early next year. So that that shouldn't be a, let's say, a material factor or a reason why demand can suffer materially. So we see stable volumes for Mexico during the whole year despite the election in mid-year.

And if I can add maybe just some more granular color and I'm sure if you visited Monterrey or Mexico recently, you would see a lot of these projects that are just beginning. We think there's a very strong project pipeline for the second half of the year that is likely to kind of substitute or, let's say, ease the demand situation in the second half of the year. You have the cross-border terminal in Dejana. There's a very extensive metro expansion in Monterrey. I mean on the way to the -- from the airport, you can see enormous amount of concrete being poured and expected to continue to be poured for quite a bit of the year, major highway construction in on a plateau and there are many, many others, right? And then on the housing side, I mean we do expect, as Fernando said, as rates get a little bit better inflation gets to be easing in the second half of the year. We do expect some improvement in demand there. Remittances continue to be very positive and impacted and Mexico as a whole, frankly, continue to benefit from the fiscal stimulus from the U.S. through the remittances and to others. And of course, the nearshoring process also continues to happen, especially in the northern part of the country, and it's starting to make its way further south. And so -- and supply/demand dynamics continue to be fairly favorable. So second half of the year is looking reasonably good, I would say.

Okay. That's very good color. Thank you very much.

Thank you, Anne.

Thank you, Anne. And then next question comes from Gordon Lee from BTG.

Yes, hi. Can you hear me?

Yes, Gordon. How you doing?

Hey, how are you? Maher, this is a question, I guess, really for you, but just sort of thinking about capital allocation in the context of your sort of continuous enhancement in financial flexibility. I mean, I know, obviously, priority number one, you stated is to reduce the leverage ratio by 0.5 turn of EBITDA. But I wonder how you feel about the subordinated perpetual notes, whether -- because if you look at the coupon, that's sort of almost not quite a cost of equity type of coupon, but not far from it and particularly considering that you're now an investment-grade company. And I know that those don't impact the leverage ratio. But how -- do you see them as a permanent feature of your capital structure? And how would that stack up, let's say, versus buying back shares or increasing the dividend going forward?

Yes. Thank you very much, Gordon, on that question. I mean, first, in addition to the way that those two instruments are being -- we've got $2 billion just for the listeners of subordinated notes. One is on the high side of coupon, one is on the lower side of coupon, the one that was issued earlier is on the lower side because rates spiked when we issued the second one. Very importantly, Gordon, on both of those instruments when we issued them we were internally comparing them on a cash cost basis after tax. And we believe that the after-tax cost of those instruments is actually very comparable to our senior debt. So from a cost perspective, I don't see them costing us more. They just happen to also have the additional attribute of accounting for equity both on a total consolidated basis for CEMEX from leverage ratio calculation, but also half of those are considered as equity by the rating agencies for five years. Now the next call -- I shouldn't say call dates, but reset dates are in '26 and '28 and the rates will go up materially. So we need to kind of think about what we would do with them for '26 or '28 not any time sooner than that. I don't see us doing anything sooner than that. Do I see them as part of our permanent capital structure? I don't think so. I mean, I think as our EBITDA grows and our stock of debt goes down, leverage gets more and more comfortable. It is entirely possible that, to the extent that we don't need those that we would slowly blend them into our senior debt stack. Of course, if we need to reissue them whatever at that time, we would do that because upon reissuance, they would receive again, the equity treatment from both the rating agencies and from the leverage ratio. So that's how I think -- that's how we think about them, I mean, frankly, in terms of capital allocation.

Perfect. Thank you very much.

Thank you very much, Gordon.

Okay. Thanks Gordon. And the last question comes from Danielle Roha from Bank of America. Danielle?

Hi, Lucy, Fernando, Mehar. Thanks for taking my call and question. I wanted to jump back to the U.S. and maybe discuss pricing. I understand that back in January, you were able to reprice around 20% of the market with the 80% remaining sometime in April. Could you give us some feedback on how you're seeing pricing evolving into April and May? And given price volumes going down in the first quarter, a second potential increase still in the table.

Sure. Fernando, have do you want to handle that? Do you want to take it or...

Go ahead, Lucy. Go ahead.

Okay. Yes. Well, first of all, we did increase prices in Florida in January, and we saw a good traction in terms of pricing on that increase. We do have for April, the kind of another, I think 70% of our portfolio more or less [Technical Difficulty]. In terms of pricing and the kind of pricing outlook and what are our achievements have been? I don't know, Maher, if you want to add anything to that?

No, that's fine, Lucy.

All right. Okay. Thank you very much, Daniel. Okay. So that's it then. We appreciate you joining us today for our first quarter results, and we hope you will be back with us again for second quarter results on July 25. Many thanks, and have a good end of week.

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