Alpek, S.A.B. de C.V. (BMV:ALPEK/A) Q4 2025 Earnings Call

0:00 Good morning, everyone. Welcome to Alpex for quarter 2025 earnings webcast. I am Barbara Amaya, Alpex IRO, and I am pleased to be here today with Jorge Young, our CEO, and Jose Carlos Pons, our CFO, who will be presenting today's material. Today, we'll be covering the following topics. First, Jorge will walk us through the key highlights for 2025. Second, Jose Carlos will cover the financial results for the quarter. Third, Jorge will discuss our outlook for 2026, followed by Jose Carlos who will delve into our guidance figures. Then, Jorge will outline our strategic priorities for 2026.

0:45 And finally, we will conclude with a Q&A session. Please note that the information discussed today may include forward-looking statements regarding the company's future financial performance and prospects, which are subject to certain risks and uncertainties. Actual results may differ materially and the company cautions the market not to rely on dueling on these forward-looking statements. Alpec undertakes no obligation to publicly update or revise any forward-looking statements, whether it is as a result of new information, future events, or otherwise. We express our financial results in US dollars unless otherwise specified. For your convenience, this webcast is being recorded and will be available on our website.

1:33 Jorge, I'll turn the call over to you. Good morning, everyone. Thank you for joining us today. Throughout 2025, amid the continuation of a challenging environment for the chemical industry, our teams worked diligently on actions within our control to strengthen our financial position and solidify our global operations. Altec's financial and operating results were largely impacted by global overcapacity, resulting in a difficult year, particularly for our polyester business. We also executed several planned but longer than expected maintenance outages. By contrast, our plastics and chemicals businesses delivered a more stable performance.

2:23 As a result, our full year comparable EBITDA totaled $489 million, down 30% from last year. I would like to emphasize that our focus on strengthening our financial position has led to a sequential improvement in our operating free cash flow, which was 163 million, a considerable improvement of 57% from previous year, demonstrating the company's resilience and financial discipline. We continue to execute our previously outlined four strategic pillars. which play a key role in reinforcing the company's competitiveness. First, strengthen our core business.

3:10 We advanced on our targeted footprint optimization by seizing PT operations at the Cedar Creek facility and relocating that capacity to more competitive, larger assets. As a result of this initiative, we expect to realize a benefit of approximately $20 million in 2026. which will partially offset broader microeconomic headwinds. Second, financial flexibility. We maintain discipline, capital allocation, optimize our networking capital, and executed debt refinancing. This action strengthened our liquidity and extended our maturity profile.

3:55 Additionally, we also suspended the dividend and made progress in the monetization of non-strategic assets, which are expected to materialize in 2026. Third, boosting growth. We advanced the development of high margin solutions in our PET thermoform and EPS businesses, and continued expanding our specialty products in our polypropylene businesses. This supports portfolio differentiation while providing incremental EBITDA over time. And fourth, capitalizing on opportunities. Beyond the developments already discussed, we have been selectively expanding outside the petrochemical industry, mainly through our energy commercialization business.

4:44 Particularly by expanding recently to the power sector, which we expect will support growth over the coming years. Finally, the major milestone in 2025 was the successful spin-off and merger with Controladora Alpec, fully establishing Alpec as an independent entity with a streamlined corporate structure. Now, I will turn the call over to Jose Carlos to provide our financial performance in greater detail. Good morning, everyone. Let me walk you through our quarterly results. Starting with our polyester segment, volume was 836,000 tons, down 10% both sequentially and year over year, reflecting softer demand and longer than expected plant maintenance outages at several of our sites.

5:39 These operational factors weighted in on production in the short term. However, we have since resumed most of our operations. On an annual basis, seasonal effects were stronger alongside the strategic decision to exit low margin PTA and PTA exports. Polyester comparable levidad total 41 million, a 53% decrease versus the third quarter. Pressure by lower volumes, weaker margins, and historically low ocean freight. On a year-over-year basis, oversupply, trade-related dynamics, and global freight costs impacted performance. By contrast, the plastics and chemical segment continued to deliver stable results.

6:24 Volume was 184,000 tons, decreasing 6% quarter-over-quarter and 7% year-over-year, reflecting softer demand in both periods. Plastic and chemicals comparable levidad total 55 million, up 17% sequentially and 50% lower year over year, as steady margins help offset softer volumes and typical seasonal effects. Together our segment resulted in a volume of 1.02 million tons, decreasing 9% versus the previous quarter and year over year. A reporte de vida total 70 million, a 40% decrease quarter on quarter, as a reduction in commodity prices and feedstocks resulting in a 29 million inventory adjustment. Primarily in the polyester segment, as paraxylene saw a 7% sequential decrease.

7:18 Relevant reference margins for our polyester segment saw more stability compared to last quarter, yet remained pressure. For our plastic and chemical segments, reference margins were steady. Finally, comparable EBITDA was $100 million, a 27% decline versus the previous quarter. Looking at our full year free cash flow and capital allocation, we saw a net working capital recovery of $50 million, supported by optimizations and lower volatility in raw material prices. These efforts are aligned with our cash generation goals. CapEx for the quarter total 51 million, consisting of 41 million in maintenance and 10 million in strategic cap ex, aligned with a priority and planned maintenance across multiple sites.

8:07 This resulted in an annual cap ex of 170 million. Full year operation free cash flow total 163 million, a significant improvement of 57% on an annual basis, demonstrating solid cash generation and Alpex resilience amidst a challenging environment. Moving to our balance sheet and financial position, leverage ended at 4.4 times net debt debita, reflecting lower last 12 months reported debita amid sustained low margin debts. The company is implementing additional measures to strengthen its balance sheet as a prolonged cycle recovery is expected and the leveraging continues to be a top priority. Notably, proforma leverage would have resulted in 3.9 times, adjusting for footprint optimization and restructuring costs.

8:58 Net debt was $1.8 billion flat versus the previous quarter, yet we were able to decrease it by $44 million versus 2024, a solid accomplishment in the current market context. We remain financially flexible entering 2026, given the successful debt refinancing, solid cash generation, available community credit lines, and disciplined capex management. I'll turn the call back to Jorge to discuss our 2026 outlook. We approach 2026 with a cautious outlook, as we expect microeconomic conditions from last year to persist. Global oversupply continues to weigh on the industry. Although recent years have seen the initial progress towards capacity rationalization, further actions will be needed to improve the market balance.

9:52 In parallel, we expect demand to remain soft. We also anticipate ocean freight costs to remain at relatively low levels, consistent with the significant reductions observed towards the end of 2025. Notably, we expect greater operational and financial stability in our polyester business in 2026, forecasting a modest improvement and relative stability in reference margins. Turning to our plastics and chemical businesses, we expect profitability in this segment to be somewhat constrained in 2026. This is primarily due to capacity additions in North America. particularly tied to polypropylene.

10:40 Coupled with continued softness in EPS demand as construction markets have yet to show meaningful signs of recovery. Lastly, we expect our emerging business to remain on a growth trajectory with continued expansion and additional contribution to EBITDA in 2026. We remain confident this segment's potential Now we're targeting a doubling of its size over the next three years. With that in context, Jose Carlos will walk you through the detailed assumptions and guidance ranges for 2026. Our base case projects comparable levy that in the range of 450 to 500 million based on the following assumptions.

11:27 Pet reference margins average $145 per ton, a 2% increase over last year's average. Ocean freight costs for South America at $75 per ton, a 40% reduction from 2025. Polypropylene reference margins at 13 cents per pound, a 7% margin compression. And an exchange rate of 18 pesos per dollar, a 6% appreciation. and minimal benefits from US pet reciprocal tariffs. It is also worth noting that our base cases assume minimal contribution from non-strategic asset monetization. The acceleration or successful closing of any of these transactions will represent upside to our expectations.

12:15 Moving to the rest of the metrics, CapEx is set at 130 million, following our disciplined approach and commitment to operational efficiency. For the first time ever, we're now introducing a guidance figure for operating free cash flow, which is expected to be between 100 and 150 million. This figure is further supported by our continuous efforts in cost control, capital allocation, and networking capital optimizations. And volume is expected to reach around 4.5 million tons. Given the prolonged industry low cycle, we expect our leverage ratio to stabilize around 3.5 times over the next 12 to 18 months, subject to market conditions. Our long-term target remains at 2.5 times, and we will continue executing our leveraging strategy to reach it.

13:04 Now, in addition to the base case, there are potential drivers that could improve performance if they materialize. These include Pet reference margins stabilizing at $155 per ton. I'd like to highlight that in January, the spreads averaged $171 per ton, recently reaching up to $190 per ton. While we view the current price discipline in China as a supportive factor, it is still early to assess whether it will hold. We will continue to track market dynamics and provide updates as appropriate. Ocean Frights Cost at or above $85 per ton for South America, an exchange rate closer to 19 pesos per dollar, the successful monetization of non-strategic asset sales, and greater capitalization from US pet reciprocal tariffs.

13:55 Together, these represent a potential estimated upside of approximately 50 million to comparable EBITDA. It is important to highlight that these factors are not meant to be additive. and they will not occur simultaneously. Instead, they represent key variables that we recommend you track and they could contribute incremental value if conditions evolve in our favor. We will continue monitoring these elements throughout the year and we'll update our expectations accordingly as visibility improves. Now, Jorge will continue with our priorities for 2026. With our 2026 guidance now established, I'd like to wrap up by sharing how we will plan to execute. We're building on the same strategic foundations that served us well in 2025 and remain firmly aligned with our long-term strategy.

14:47 In our polyester business, we're taking a differentiated approach across the portfolio. In the commodity segment, which includes PETA and PET resins, our focus is on integrating scalable assets serving attractive domestic markets, primarily in the United States, Brazil, and Mexico. As such, we will continue to work on footprint optimization, A clear example, this year is our decision to suspend operations at the Reading Recycling Facility. Following the shift in demand towards virgin materials, we are relocating capacity to Richmond Facility, which offers a more cost-competitive platform. In higher other-value polyester, which includes PET sheets and thermoforms, we're advancing targeted low-capacity investment to the bottleneck operations in the Middle East and strengthening our product development capabilities.

15:46 Effectively, we're scaling our position in a fast-growing segment and increasing our exposure to higher-margin applications. Turning to our plastics and chemical segment, Our strategy is to fully leverage our most competitive regional assets while expanding into higher performance and specialty solutions. We will start ramping up investments made last year, particularly for EPS specialties. And we will also start a multi-year growth project focused on differentiated polypropylene. We believe these opportunities will become key EBITDA contributors moving forward.

16:33 The emerging business continues to improve, particularly in energy commercialization. We view this as a promising path to diversify our portfolio and reduce exposure to the petrochemical cycle. Financial flexibility remains the core enable of our strategy. We remain committed to discipline capital allocation, rigorous working capital management, and the monetization of non-strategic assets. Over the past year, we made meaningful progress on this front, and we expect to finalize the first phase of sales during the first half of 2026. We have identified additional properties in our region for potential sales.

17:22 We will share further updates as we advance. In summary, 2026 will be a year of focused execution, delivering on near-term priorities while continuing to invest in long-term value creation. I would like to conclude by mentioning that Alpek has experienced difficult cycles over the past 50 years, and we have been successful at adapting and evolving the business as required. A good example of this is how we were able to exit the fiber businesses while moving into PET sheet business, which reflects a more attractive margin profile and value creation potential. We are confident that we will emerge from this low cycle successfully and that our focus on higher value added products and specialty products will bring greater opportunities and growth over the following years.

18:16 Bárbara, I'll turn the call back to you. Before we start the Q&A, a brief reminder, materials and the webcast recording will be available on our website. We will now proceed with Q&A. To ask your question live, please raise your hand. We will call in participants in the order they appear. You may also type your question through the Q&A function. We will attempt to cover as many questions as time allows. Our first question comes from Leonardo McCunder. Leo, please proceed with your question. Hi, everyone. Hi, Jorge. Hi, Jose Carlos, Barbara, and Ale.

19:01 Thank you for picking my questions here. I have two from my side. The first one is regarding your guidance. Correct if I'm wrong, but I believe there was extraordinary OPEC spending in 2025 uh to improve operational efficiency that we should not see uh in 2026 right so if you could walk us through your expectations in terms of opex for this year and if the lower expectation for freight rates have fully offset uh these lower packs that we were that we here uh were expecting for for for this year Also, there is a discussion regarding the HAKE benefit in Brazil that is going on right now, right? So if you could all also help us to understand a bit better of how much it could impact your guidance for this year, this potential improvement in HAKE.

20:01 My second question is regarding the supply and demand balance in China. I think it was in November when the Chinese government organized a meeting with PT and PTA companies to understand the issues of the market, right? So my question is, what have you heard from the Chinese market and companies regarding this meeting? And if there was any change Thank you, Leonardo. Thank you for your two questions. Yes, regarding guidance in 2026, Yes, we're factoring some improvement in our operations. As we explained in 2025, we had some extended maintenance and some operational issues earlier in the year in 2025.

21:03 But as you mentioned, some of that recovery is partially offset. So that's the that in general would answer your your first questions. Part B of your first questions regarding the rake benefits in in Brazil. I think that's an important development. First and foremost Recently, those incentives for the chemical industry, especially for those companies consuming basic petrochemicals, which in our case our polyester business applies, those benefits were confirmed for the period 2027 through 2031. So that's a significant accomplishment or The support and participation in the chemical industry association was very meaningful.

22:15 We are very happy that those were confirmed and those are important and meaningful. 2026 was not initially included in the package of benefits. But right now there is an effort that might result in 2026 also receiving benefits for the chemical industry. We don't have those incorporated in the guidance and as you know these programs of REIC and PRESIC have a combination of support on on the acquisition of raw materials through reduced taxation and also support on selected capital investments.

23:06 And the second question on China and yes, the efforts from the Chinese government and in general to adapt from this, what we call cutthroat competition that are driving margins to unsustainable levels. I think the positive thing that we get at this moment is that there is more acknowledgement of the issue. And as Jose Carlos explained, some actions are already happening to begin 2026. We're not counting on those yet to be sustained. But that's where we are. So at least on the positive, there is acknowledgement Some actions on the overcapacity needs to be taken.

23:59 And as, again, this is not only in our industry, right? In the industries that we participate, like polyester and plastics and chemicals, this is in general a petrochemical and polymer situation that applies to many, to many products. Yes, I just want to follow up regarding the Hague. Do you have any estimate on how much your EBITDA could improve for this year in case they approve the benefit of 5.8 to the fiscal fees payment? We are still working on those Calculations because I mean, it could be perhaps rounding maybe another 10 million to that guidance for 2026.

24:54 Hopefully it's a little bit more than that. um the um we're just working on the calculations to make sure the final percentage percentages are defined and then if you know the details there is also an an overriding cap on on how much of the benefit applies for the whole industry so once all those details settled we will have a more detail but i would say order of magnitude uh for us Maybe 10, around 10. That's clear. That's clear. Thank you very much. And that's for 2026, right? And again, we would expect potentially similar or even slightly higher benefits for the period 2027 through 3031.

25:43 I think this was a major accomplishment for A portion of the petrochemical industry in Brazil, especially the one that consumes very basic petrochemical feedstocks like it is the case for us on paraxin. Got it. Thank you very much. Our next question comes from Tiago Cascado from Morgan Stanley. Tiago, please proceed with your question. Hey, good morning. Thank you, Jorge, Jose, Barbara, and Ale. I have two questions here from my side. The first one, I mean, I know it has been a very challenging environment for the petrochemical industry and that the key goal of the company is to reduce leverage towards the 2.5 times in the long term. But I would like to understand when would the company start like the Discussing the possibility of paying dividends this year, if this opportunity appears in the future, obviously, would it be only when leverage target is reached or it could be discussed before that?

26:51 Because despite all this pressure, the pressured environment we see right now, we also see that the free cash flow profile for the year looks quite healthy. And the second question is related to protectionist measures. So kind of a follow up on Leo's question. Well, we have seen in Brazil some government actions aimed at protecting domestic industry and preserving competitiveness recently, also with HAKE. So beyond the potential upside from the USPT tariffs that you mentioned in the release and today in the webcast. Are there any other items on the government agenda, either in the US or in Mexico that could represent additional upside to the guidance you provided?

27:36 Thank you. Thank you for your question. Regarding your first question in terms of leverage, I would say that we would like to devote the free cash flow that we will have this year to the leverage in the company. That will be our top priority. We want to get closer for the 2.5 times that it's our target. And therefore, we are not expecting to have a dividend this year. I mean you know this industry this situation and the circumstances could change all of a sudden if we get closer to our leverage target and an improved performance in the company well certainly with that could be on the table but we will devote the majority of our efforts to the leveraging now.

28:28 Jorge if you like you can say that. On your second question that pertains to what you mentioned when you define protectionist measures. Well, I think the efforts, I mean, that's a very important area of focus for us. And we have efforts pretty much in all the countries where we participate. And again, it's not only something that we do as ALTPEC only, right? I mean, this is something we're doing. In conjunction with relevant industry on each country and you see significant activity happening across other other petrochemicals as well.

29:15 Just to comment on the one on USPET tariffs, because there's still some uncertainty. I think, as Jose Carlos mentioned, we are yet to see more benefits. There is something that we were able to capture going into 2026. Somewhat is masked by your assumptions on, you know, Margin's remaining relatively low levels or ocean freight still coming down. But even without uncertainty, I think we see interest on the current administration in the United States to protect local manufacturing. And I think even if the Supreme Court comes with A ruling that doesn't confirm the tides. I think there will be parallel mechanisms.

30:11 Again, we as industry and as ALPEC continue to work in evaluating other paths in parallel in pretty much all the countries where we're participating. So some of these details, you know, we will share as information becomes public. But as I mentioned, this is a very important area of focus across all our key relevant markets. Thank you very much. You're welcome. Our next question comes from Ben Isaacson from Scotia. Ben, please proceed with your question. You hear me okay? I just have one question only. And the question is, is there a strategic or financial rationale for having both the polyester and the PNC segments together?

31:10 Do you think that your stock suffers from a discount that could be improved if those businesses were separate? What are the reasons to keep them together? Thank you. Thank you, Ben. Thank you for your question. This is Jose Carlos. Very good question. Certainly, we believe that as of today, we see benefits in having a larger company merging or having both divisions together. We have efficiencies in SG&A and other operational metrics.

31:58 So clear at this moment, the rationale and the benefits are better than having two split companies. But certainly we're doing work in 2026 to review our portfolio and see if there are opportunities for us to divest, which implies that your question is certain portions of our portfolio, certainly with the key objective of the leveraging the company. Great. Thank you very much. Our next question comes from Andres Cardona from Citi. Andres, please proceed with your question. Good morning, Jorge, Jose Carlos, Barbara. I have a quick question of the guidance.

32:45 If you could help me to understand the polyester segment, how much of the volume has been contractualized for 2026? If I remember correctly, in an average year, it's around 60%. So just trying to understand how Thank you. Normally, I would say 70 to 80 percent, especially in North America. You know, and perhaps also in South America is a little bit less and the Middle East a little bit less in those percentages. So maybe all in all, it's about 660%.

33:37 But coming back to North America, in that range of 70 to 80%, probably we're still more towards the lower end of the range again, because of the some level of uncertainty on what will happen the visibility that what will happen with that is um So, yes, I mean, potentially in a more favorable environment on tariffs, there could be still some upside. And we did capture that together with other variables in the additional range that Jose Carlos described. As you know, we provided the guidance, like in a base case. We see this year more upsides than downsides on the guidance and we encompassed all of them together in that second bucket.

34:30 Thank you, Jorge. And thank you for the scenarios that you present. It's something that I find very helpful. You're welcome. Our next question comes from Taso Vasconcelos from UES. Taso, please proceed with your question. Hi everyone, thanks for taking my questions. I have to hear one Jorge, moving back to the asset sales, can you remind us exactly what assets would you be willing to divest the most and if you have an expected amount that you would be targeting to raise considering all of these divestments? And the second question is on that sensitivity that you released for the guidance for the year, the incremental EBITDA.

35:17 In your view, what would need to happen in the industry so those assumptions become a reality for the year? I have these two questions here. Thank you. Sure. So here on the first question about the asset sales, right now we have four pieces of property in the United States that are all of them in different degrees of negotiations or document preparation. You know, to complete the sale. I mean, these are four again, four assets where we had operations in the past. We had been working on those throughout last year and I would say pretty much the four of them are converging right now into Let's call it the stretch time to finish the process.

36:13 I think we have interested or counterparts that are concluding their due diligence. All those four property combines could potentially represent $50,000,050,000,000. Again, we We feel very confident those will materialize in the first half. Maybe some of those in Q1, but I would say more likely most of them by the end of the first half of the year. It's a meaningful $50 million contribution to our cash flow. So that's more or less what we have. On top of that, this is taking longer, perhaps more than 12 to 18 months. It's a larger site in Monterey where we used to produce fiber.

37:11 because that potentially has more value but that is going to require is requiring us more time as we need to that was an industrial site that needs to be prepped for other you know for other potential uses so we we continue to make progress on that one but we don't see that yet within the 2026 timeline i mean we will push for that but that will likely And now we're focusing on these four assets in the United States. And on top of that, we have another couple in that are coming in Mexico and Brazil. And so there will be perhaps not as large, but another another bucket in for the second time.

38:00 And just to complement Jorge, we're planning to use all the proceeds of this sales to deleverage the company. That's our top priority and everything that we get on those sales, we will use it to come back to our 2.5 times target. Yes, I think on the other part of the question, I mean, we laid out the The key variables, right? What needs to happen? I mean, for example, in margins, global margins, again, the industries in general are under significant pressure. Again, as we mentioned in the previous question, it's a positive signal that in China, even in China, there is acknowledgement that the margins went to unsustainably low levels.

38:52 We see a small rebound to begin the year so if that stays and that that obviously that support for for the guidance and the other one important one um if the uncertainty on tariffs uh It's removed and there is more certainty on tariffs that will eventually drive more volume and margin opportunities that we will capitalize. That process, again, is taking longer, right, given the lower visibility on tariffs, but that's potentially the other one. We just mentioned the REIC benefit in Brazil. We didn't capture that in our range. But that's going through the chambers now. So that's the other one.

39:43 But more importantly for us is to focus on operating our assets very well. I mean, for us, operating our facilities very safely and with pristine reliability is how we can best help ourselves. So that's a very high priority. Again, that's to give you a flavor, right? So many variables combining into one range. That's more or less what we see today. That's clear. Thank you. Our next question comes from Alejandra Andrade from J.B. Morgan. Ale, please proceed with your question. Hey, how are you? Thank you so much for taking my question.

40:29 I just wanted to understand from you guys, what do you think the timeline could be to realistically get back to your target leverage? And also, I'm just curious if you've had discussions with the rating agencies given your current outlook on how patient they'll be in terms of your delivery to get leverage down to your target. Thank you. Thank you, Alejandra. Thank you for your question. To be completely clear, we don't expect to get to the level of 2.5 times this year. It's something that can happen in 2027, so we're working towards that. Of course, if we get some of the upsides that Jorge already pointed out, if we are successful in selling those non-strategic assets that are already mentioned, and there might be a second wave of other divestitures, well, that could speed up the process and maybe by year end this year.

41:28 But at this moment, our base case is that this could happen in 2027. In terms of our rating agencies, we've had a close conversation with all of them. We have updated them on the performance of the company on our perspective for 2026. Well, the conversation is fluid and we're working with them to see not only this year's performance, but all the things that we're doing to improve our leverage and the commitment that we do. So no decision from them and we will continue to work together with them to keep us updated. Thank you.

42:16 Our next question comes from Milena Carvalho from JP Morgan. Milena please proceed with your question. Hello, everyone. Thank you for taking my question. So I have two matters that I want to approach here. So first one is the diversification to power that you mentioned in the presentation. So what do you see as the benefit in this segment? How can you operate this? And is there any strategic capex forecasted for 2026 in the segment? And the second question is regarding severe weather conditions that we saw early this year. Is this somehow impacting your production? What should we expect in the first queue specifically into this situation? Thank you.

43:13 On diversification to power, I think for us this is a very significant opportunity. We have amassed over the last decades significant know-how in energy markets, especially in Mexico, but expanding into others like Brazil. But our focus has been mostly on being a very reliable supplier, but more than a producer, we commercialize energy, both in and more recently were incurring in electricity.

44:00 For the most part, this does not require capex. Again, I think over the years, it's a matter of developing know-how and having the right Permits and certified experience because there are barriers of entry. And again, I think it's capitalizing on a strength that we have. And it's becoming a very interesting area of focus for us. Would you mind framing again the second question? Sure. So the second question was regarding the severe weather conditions that we saw earlier in 2026.

44:46 So there was a lot of activities across US that was just shut down. I wanted to understand if somehow this has compromised your production or first quarter expectations. Did not disrupt our operations. I think there were two waves of very cold weather. In one we took short proactive shutdowns in the United States, but they are not going to be very material for financial purposes. We will see though some impact on higher natural gas prices because the Well, the natural gas prices have already come down again to where they were before the cold weather waves. In the meantime, the February contract prices of natural gas in North America ended up on the high side.

45:42 I think we will see that impacting our energy cost in February. But I would say no. I mean, we weathered the storm fairly well. Perfect, thank you very much. Our next question comes from Federico Galassi from Rojetin Group. Feder, please proceed with your question. Hi, thank you for taking my question. Two quick questions. The first one is in your guidance and potential drivers you are using the effects at 19 pesos per US dollar. The question is how is the sensitivity to the Mexican peso or US dollar depreciation? This is the first one.

46:32 And the second one in the guidance, are you including all the positive impact for the increasing tariff in Mexico last year? That's our both questions. Thank you. Thank you, Fede. Thank you for your question. Quick answer on the exchange. One peso more or less, it's equivalent to $15 million of benefit or cost, depending on how you see it. And the impacts, yes, we're including a portion of what we saw in Mexico on the protection against Chinese and other imports. So yes, that's included already in our forecast. Okay, thank you so much.

47:19 Our next question comes from Chelsea Cullen from New Bean Asset Management. Chelsea, please proceed with your question. Hi, thanks for taking the questions. I just have a few quick ones. Firstly, to clarify, you mentioned around three and a half times net leverage by the end of this year. Does that consider that 50 million ish in asset sales? And also, is that calculated based on your comparable EBITDA guidance? No, the short answer is yes. The 3.5 times would require us to sell the non-strategic assets. And it's based on reported EBITDA because that's the way our banks measure our covenant compliance.

48:08 Okay, great. And then with regard to the emerging businesses that you mentioned, you're trying to double in size over the next three years. Can you provide some context as to how relevant So what does a doubling mean? How relevant is it? Yes, Chelsea, on that question on emerging business, when you look at our numbers, we have our two key segments, and then we have the line others. So it's commingled there, you know, with a few other corporate, smaller corporate adjustments that we have.

49:01 And it's our goal that maybe over the next four to five years that that line reaches closer to 50. So that will give you a good idea. I think we expect to be perhaps in the 20s this year of 2026 and again doubling for that That would be our goal for five years from now. Obviously, we will be more ambitious than that. This is to give you a flavor of what we are seeing and the magnitude, but that doesn't prevent us from pursuing that goal faster or at a higher level.

49:51 And maybe a portion of those emerging businesses are within the already the polyester and the polypropylene those the because it was presented by Jorge that we're also entering into high value added products within our core businesses. And that's not included in the other. So it's really just the power and some of the things that we're doing in the others. Okay, got it. Thanks for the clarification. And then lastly, I'm just curious, you with the closing of the Reading facility, you mentioned that there's more demand for virgin resin versus recycled. Can you just elaborate on like the reason for that? Is it just a cost issue for clients?

50:40 You know, recycling continues to be a very important priority for us and for our customers. You know, it's very important for the sustainability of PET packaging. But just recently, I mean, there are some, you know, issues that we observe, the prices of virgin ETR are low. And again, some of the there is a growing path towards increasing recycling content. But sometimes that comes in with some success and We see, at least in the medium term, the opportunity for us to, at least for our key customers, to supply that recycling content through our other facilities, which include, as we mentioned, our Richmond facility in Indiana, and also we have recently In increased our capability to add recycling content through a technology a technology we call single pellet technology where we add a recycling feedstock into a virgin PET plant and the final product is a PT with let's say 25 recycling content but we're using those two

52:10 tools or or assets to to continue this growth path. But to your questions, you know, there is also some shifts, small shifts back to Virgin, even the economic pressures that the industry is facing and that reflects also the decision of some of our customers. Okay, and at this stage, the idea to potentially reopen the renting facility at some point, or is that likely to be permanently closed? And then also, can you tell us how much you expect in cost savings from that? And also on the flip side, like any extraordinary costs related to the suspension, like severance and whatnot?

52:57 Yeah, I mean, this, let me just give you orders of magnitude. In the short term, it might represent, you know, maybe between five and 10, maybe closer to five, mid single digits, mid to high single digits in terms of savings. And yes, we remain with the possibility to restart the asset, but in part, not very significant shutdown costs, some, but not very significant. This is not a petrochemical plant and it's, So it doesn't have the same complexities. But it will also, our decision will come later and it will also depend on whether we can extract some value from those assets, right?

53:43 So we will assess our options. So what we chose right now is to suspend the operation, take on the savings, keep supplying our customers from the rest of the assets that include the other recycling plant, other avenues we have to deliver recycling content to the customers. including what we call our single pilot technology. Again, so we took the savings and we'll wrap up for more strategic decision later in the year. A good question. Great, thank you. Our next question comes from Andres Ortiz from BTG. Andres, please go ahead. Thank you very much. Hi, Jorge. Hi, Carlos.

54:30 I would like to have a follow up on Federico's question on the incremental EBITDA. I understand your disclaimer, but I just want to understand. You mentioned that one peso appreciation or depreciation is equivalent to $50 million impact. And you said that you see $50 million in incremental EBITDA for several reasons, and one of them was one peso. So I don't understand. If you are seeing more incremental EBITDA from all this happening together, or if every single one of that is $50 million, just to understand. Thank you. Thank you, Andrés. I'm sorry if I did not make the right number. One peso is equivalent to one five, $15 million of impact or benefit, depending on where we sit.

55:25 Understood. Thank you very much. And maybe just a clarification. We presented there several opportunities to improve our result. What you see here is an assessment probability weighted that they could materialize around $50 million. In a perfect world where every single line item would materialize, certainly there will be more than $50 million. Thank you, Carlos. Perfect. Thank you. We received a couple of questions through the Q&A. I will proceed. First question was from Rodrigo Salazar from AM Advisors.

56:11 Could you tell us where the spot metrics used in the guidance stand today? In our guidance, we set reference margins, which represent China PET margins at $145 per ton. Year-to-date, they are approximately 170, and the last data point is in the mid-180s. The next question that came to the Q&A comes from Pallavi Nagya from HSBC.

56:59 Could you please provide an update on refinancing plans, particularly for the debt due in 2028 and 2029? Thank you for your question. Yes, certainly we're exploring opportunities to refinance what we have in 28. We have a couple of proposals at this moment that we're exploring. There will be facilities that will take the maturities even further than 2032 or 2033. And that will again take out pressure on any maturity coming through in the short term. We remain one of the key pillars of our financial strength is to have strong liquidity, which we have, a strong amount of committed credit lines, which we have, and also not having any maturity due in the short term. So that's certainly one of the priorities we are targeting to have that refinanced in the first half of this year. We'll keep you updated.

58:01 And the next question Historically, increases in the oil price have led to improvement in margins and increasing international shipping costs. My question is, do you still see a correlation with the recent increase in oil price? Do you expect to have a positive in the EBITDA? it's a good it's a good observation um yes typically oil prices will lead into higher raw materials not necessarily shipping cost uh shipping cost yes oil is a variable that influences shipping cost for shipping cost freight rates are mostly supply demand in in that market but oil prices will generally push raw materials a little higher I think this is the first quarter in a while where we didn't have a significant inventory adjustment. We had been last year going through an environment of falling oil prices and falling raw materials.

59:07 So this year they stabilized and if this rebounding oil continues we should see again some support on higher raw material High raw material prices that will provide potentially some improvement or report the dividend on inventory restatements. However, our guidance excludes those effects, positive or negative. We are talking about comparable. But yes, definitely, it will be an influence of oil prices on influence high raw materials. Thanks everyone for your interest. That is all the time we have available for today.

59:52 The IR team remains also available if there are any questions. Thank you for joining our webcast. We look forward to seeing you soon at our shareholders meeting. Have a great day.