Cemex Q2 Earnings Call Highlights

Key Points

• Cemex posted strong Q2 results, with consolidated EBITDA above $1 billion and management raising full-year EBITDA growth guidance to 16% to 17%. Excluding a one-time Europe settlement, sales, EBITDA and EBIT all rose sharply, and free cash flow from operations hit a second-quarter record.
• The company increased its Project Cutting Edge savings target to $475 million from $400 million, with most of the added savings expected in 2027. Management said the program is driving overhead reductions, operating efficiencies and better free cash flow conversion, especially in the U.S.
• Regional performance was mixed but generally improved: Mexico led on volume growth and pricing, the U.S. remained resilient despite weather, and EMEA was held back by lower volumes. Cemex also improved its balance sheet by refinancing debt, extending liquidity and targeting lower interest expense for the year.

Cemex NYSE: CX reported what executives described as strong second-quarter 2026 results, with consolidated EBITDA exceeding $1 billion and management raising its full-year EBITDA growth outlook as cost savings and operational initiatives continued to support margins and free cash flow.

Chief Executive Officer Jaime Muguiro said the quarter showed “clear evidence” of progress under the company’s ongoing transformation, including gains in margins, EBIT and cash generation. Consolidated EBITDA included a favorable one-time settlement of an outstanding claim in Europe totaling $42 million. Adjusting for that benefit, Muguiro said sales rose 11%, EBITDA increased 19% and EBIT grew 29%.

Adjusted for the one-time item, consolidated EBITDA margin expanded 1.4 percentage points to 21.4%, while EBIT margin rose nearly two percentage points, according to Muguiro. He said free cash flow from operations reached a second-quarter record of $651 million, up more than $400 million year over year after adjusting for severance and discontinued operations.

Project Cutting Edge Savings Target Raised

Cemex raised its savings target under Project Cutting Edge to $475 million from $400 million. Muguiro said 80% of the initial target has already been achieved, with most of the incremental savings expected to be realized in 2027.

Project Cutting Edge is Cemex’s multi-year transformation program focused on reducing overhead, improving operational efficiency, enhancing asset productivity and improving free cash flow conversion. Muguiro said the program generated $60 million in efficiencies during the quarter and accounted for roughly 40% of like-for-like EBITDA growth.

In response to a question from JPMorgan’s Adrian Huerta, Muguiro said the $475 million savings target includes about $230 million from overhead headcount reductions and $245 million from operating efficiencies. He said incremental savings are coming largely from procurement, energy management, logistics, supply chain improvements and cement operations efficiencies, particularly in the U.S.

Muguiro also said Cemex sees a potential $300 million opportunity in free cash flow through efforts including lower growth capital expenditures, reduced intangible investments and alignment of maintenance spending with best-in-class performance. He said asset pruning will become more material beginning in 2027 and 2028, including the disposal or deconsolidation of underperforming ready-mix operations, quarries and other assets, particularly in the U.S. and Europe.

Regional Results Show Mixed Volume Trends

Mexico led Cemex’s regional performance for the second consecutive quarter, supported by cement volume growth, cost efficiencies, operating leverage and pricing actions. Lucy Rodriguez, chief communications officer, said cement volumes in Mexico grew year over year for a second straight quarter, supported by self-construction, government-backed social programs such as rural roads and housing, and residential bulk cement demand.

Rodriguez said Mexico also benefited temporarily from competitor outages in the central part of the country, a factor management expects to normalize in the second half. She said Cemex has been awarded approximately 135,000 units under Mexico’s social housing program, up 12% from the prior quarter, and is negotiating for an additional 145,000 units.

In the U.S., Rodriguez said demand remained resilient despite unusually wet weather in Texas and parts of the Mid-South. Adjusting for weather-related disruption, Cemex estimated that cement and ready-mix volumes would each have grown 1%, while aggregates would have increased 7%. Cement volumes were supported by the consolidation of Omega, a mortars business Cemex acquired earlier in the year and began consolidating on April 1.

Management said U.S. demand continues to be led by infrastructure, supported by the rollout of Infrastructure Investment and Jobs Act projects, with about 50% of allocated funds already spent. Industrial demand tied to data centers, semiconductor facilities and manufacturing also continues to grow, while residential construction remains constrained by affordability and elevated inventories in some markets.

In EMEA, Cemex reported positive results driven by pricing and cost efficiencies, though European demand remained mixed. Adjusting for the $42 million one-time settlement, EMEA EBITDA grew 9% and margin was flat year over year, as lower volumes weighed on performance. Rodriguez said heat waves, project delays and slower demand recovery affected construction activity in several markets, while Spain and the Czech Republic delivered cement volume growth.

South, Central America and the Caribbean posted double-digit EBITDA growth and margin expansion of more than four percentage points, driven largely by cost discipline. Rodriguez said cement demand in the region was led by the informal sector, with Colombia and Jamaica posting higher cement volumes.

Cash Flow and Debt Management Improve

Chief Financial Officer Maher Al-Haffar said Cemex’s first-half free cash flow from operations increased by more than $730 million to $666 million. Excluding severance payments and discontinued operations, the trailing 12-month free cash flow from operations conversion rate reached 60%, up from 33% a year earlier.

Al-Haffar said the improvement reflected EBITDA growth as well as reductions in working capital, capital expenditures, net interest expense paid and other cash expenditures. Working capital investment totaled $175 million year to date, lower than last year, driven by improvements in Mexico and the U.S.

Cemex also updated its energy cost outlook. Al-Haffar said energy cost per ton of cement produced declined 6% in the quarter from last year, driven by lower fuel costs partly offset by higher electricity costs. He said the company now expects cement energy costs to increase by only a low single-digit percentage for the full year.

During the quarter, Cemex repaid approximately $1.5 billion of bank term loans denominated in dollars and euros and redeemed $1 billion of 5.8% subordinated notes. The repayments were funded with cash on hand and a $1.5 billion 10-year senior note carrying a 5.75% coupon. Al-Haffar said Cemex also replaced two revolving credit facilities totaling $2.3 billion with a new $3 billion five-year revolving credit facility tied to credit rating and CO2 reduction targets.

Net debt plus subordinated notes increased by about $270 million from December because of the Omega acquisition, share buybacks and dividends, but Al-Haffar said the company expects to end the year with a lower level than at year-end 2025. Net financial leverage, including subordinated perpetual notes, stood at 2.08 times.

Guidance Raised; Management Cites Self-Help Measures

Based on first-half performance and expectations for the remainder of the year, Muguiro raised Cemex’s full-year EBITDA guidance to 16% to 17% year-over-year growth. He said the guidance assumes a peso exchange rate of 18.25 to 18.50 for the second half of the year.

Muguiro said the updated EBITDA outlook, along with expected lower interest expense, should support higher free cash flow generation for the year. Al-Haffar said Cemex now expects interest paid plus coupons on subordinated notes to decline by about $40 million versus last year, to approximately $455 million.

Management also discussed artificial intelligence as a longer-term efficiency opportunity. Muguiro said Cemex is piloting AI in operations at its Balcones plant in Texas, with potential applications in plant management, energy efficiency and work processes. He said any material EBITDA contribution from AI initiatives would likely begin in 2028 and beyond.

In the Q&A session, Muguiro said Mexico’s second-half margins are expected to remain solid but below first-half levels due to the expected reversal of temporary market share gains, a less favorable bag-to-bulk mix, maintenance outages and reduced energy tailwinds. In the U.S., he said Cemex expects better second-half margin performance if the hurricane season does not create major disruptions.

Muguiro said Cemex remains focused on factors it can control, including operational excellence, pricing discipline, asset efficiency and free cash flow conversion, while acknowledging continued macroeconomic volatility and uncertainty in several markets.

About Cemex (NYSE:CX)

Cemex NYSE: CX is a global building materials company headquartered in Monterrey, Mexico. The company produces, distributes and sells cement, ready-mix concrete and aggregates, as well as related building materials, to construction markets in more than 50 countries. Cemex's product portfolio also includes asphalt and mortar mixes, waste-derived fuels and other complementary construction solutions, supported by a network of production facilities, distribution centers and logistics operations.

Founded in 1906 as Cementos Hidalgo, the company adopted the Cemex name in 1976 following a series of domestic mergers and expansions.

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