GCC, S.A.B. de C.V. ($GCC)

Good morning, and welcome to GCC's First Quarter 2026 Earnings Results Conference Call. Before we begin, I'd like to remind you that this call is being recorded. [Operator Instructions] Please also note that a slide presentation accompanies today's webcast. The link is available on the company's IR website at gcc.com. I would now like to turn the call over to your host, Sahory Ogushi, Head of Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining. With me today are Enrique Escalante, our Chief Executive Officer; and Maik Strecker, Chief Financial Officer. The earnings release detailing this quarter's results was released yesterday after market close and is available on GCC's IR website. This conference call is also being broadcast live within the Investors section at gcc.com. And both the webcast replay of the call and transcript will be available on the same site approximately 1 hour after the end of today's call. Before we begin, I would like to remind you that our remarks today will include forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are set forth in yesterday's press release and in our quarterly report filed with the Mexican Stock Exchange. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. With that, let me now turn the call over to Enrique.

Thank you, Sahory, and good morning, everyone. The first quarter was a strong start to the year and a good example of how GCC performs when market conditions and execution come together across the network. We delivered strong top and bottom line growth, supported by favorable weather and strong project activity across both the United States and Mexico. More importantly, the quarter reinforces the strength of our business model, a flexible network, diversified customer base and the ability to allocate volumes where demand is strongest while continuing to serve customers reliably. That execution begins with the capabilities we build across the organization. Our people strategy reinforces operations consistency, capability building and readiness that underpin the business. Safety remains our top priority and we continue to make progress across the company with no serious injuries recorded during the quarter. This reflects the consistency of our safety culture and the discipline which is applied across the organization. We also continue to invest in developing our teams with training programs focused on strengthening operational capabilities across our cement and ready-mix operations. During the quarter, we advanced training plans across key areas such as maintenance, production, quality and raw materials with a wide range of topics within each of these teams. This focus of strength, stable day-to-day operations. and ensures our teams are prepared to integrate new capacity as we move into the next phase of growth. Under our [ planet ] strategy, we continue to make progress through a pragmatic approach, focused on improving efficiency, strengthening operations and managing costs. During the quarter, we increased the share of biomass in our fuel mix and continue to expand the use of blended cement across our network. Blended cement production now represents approximately 76% of total cement volumes, reaching 84% in Mexico, reflecting steady progress in optimizing our product mix. We are also strengthening our fuel flexibility by building natural gas pipeline infrastructure at select cement plants, improving access to lower-cost energy sources and enhancing supply reliability. These efforts support a more efficient and flexible operating model and position us to manage fuel price volatility more effectively over time. Turning now to growth. This is where our focus on execution and [indiscernible] our key markets. The quarter in the United States benefited from favorable weather conditions in our regions, allowing the construction season to begin earlier than usual. This supports the activity across our markets where customers continue to report healthy backlogs, providing visibility into the coming months. By segment, infrastructure remains at a sustained level of activity. We continue to participate in multiple projects across our footprint. And during the quarter, we added an additional interstate highway project in Texas, further strengthening our position in this segment. Residential activity remains under pressure. Mortgage rates increased during the quarter and affordability continues to be a constraint, which is reflected in current activity levels. Ready-mix was again a key driver of performance in the quarter and continues to illustrate the strength of our integrated operating model. In energy-related construction, wind farm activity continues at a strong level this year. While we're comparing again an exceptional level of activity in 2025, we continue to participate in significant projects across Texas, Colorado and North Dakota. During the quarter, we no longer had the contribution from the SunZia project, which was completed last year. But activity in other segments allowed us to offset that volume, reinforcing the diversification of our demand base. We continue seeing growing interest in data center development across our markets. At this stage, we are supplying products for 2 projects and tracking a broader pipeline of opportunities. While most projects are still in early stages, we are following this segment closely and are well positioned to participate as activity advances. In oil and gas, customer sentiment is improving, supported by the current price environment. Customer conversations suggest a more constructive outlook and they are accelerating activity that was originally planned for the second half of the year. We continue to monitor how conditions evolve, but remain prudent. And at this stage, we are not changing our full year outlook for the segment. Operationally, volumes also benefited from the contribution of our new terminals in Texas and Arizona, which were not present in the prior year period. These assets continue to enhance our ability to serve customers more efficiently and expand our reach across the network. From a commercial standpoint, pricing in the U.S. continues to reflect product, projects and geographic mix dynamics, consistent with what we discussed last quarter. Pricing actions originally planned for the start of the year are now being implemented progressively through the second quarter. Overall, performance in the United States reflects the effectiveness of our commercial strategy and our ability to capture opportunities across multiple segments, supporting continued momentum into the year. Turning to Mexico. The first quarter show a clear improvement compared to last year, with volume growth supported by stronger activity across segments and a normalized comparison basis. What we're seeing in the market is a broader recovery in activity, particularly in housing, self construction and infrastructure, which gives us a constructive view of the year. In housing, private demand remains strong. The federal housing initiative has also started in certain regions. And while execution has progressed more gradually than initially anticipated, we are prepared to scale shipments as activity expands, particularly in key markets such as Juarez and Chihuahua, where a significant portion of the program within the state will be concentrated. Nonetheless, important projects are [indiscernible]. Infrastructure is also showing solid momentum. We are currently participating in a broad set of bridge projects and additional paving projects have been announced at the state level, supporting a favorable outlook as execution accelerates through the year and into 2027. In the Industrial segment, activity remains in the early stages of recovery, but customer behavior is moving in the right direction. Land preparation, permitting and early development work continues to advance. I'm confident that land activity in the coming months is improving. There are approximately 20 new industrial buildings and warehouses as visibility improves. As discussed in our last call, our price increase was announced at the beginning of the year and it has been successfully implemented mostly in every segment and region across the states. Overall, we are optimistic about the outlook in Mexico and are positioning the business to capture the opportunities that are developing across housing, infrastructure and industrial activity. Turning to operations and cost management. Fuel costs are increasing at some of our plants in line with our expectations. However, our flexible fuel strategy continues to be a key advantage in managing this environment. We actively optimize our fuel mix across operations to support cost efficiency. Turning to growth and capital allocation. The Odessa expansion is nearing completion. We are approaching the start-up phase with commissioning activities on their way as we prepare to fire up the kiln and begin ramping up production. As we have discussed, 2026 represents a transition into the next phase. The ramp-up will introduce incremental freight cost during the second quarter as we ship additional cement from Pueblo and Samalayuca into the markets to maintain uninterrupted supply and protect customer service as new capacity is brought online. This initial temporary increase will be offset by network [indiscernible] strategic and financial criteria. In the current environment, our priority is to remain patient with greater emphasis on both on opportunities that strengthen our downstream presence and expand our footprint in attractive markets. We also continue actively searching for aggregate opportunities, both organic and inorganic, to further grow and enhance our presence in these segments. During the quarter, we completed the acquisition of aggregates, asphalt and ready-mix operations in El Paso, Texas and Southern New Mexico, reinforcing our presence in key markets and expanding our downstream capabilities. This transaction enhances our ability to serve customers more efficiently, supports long-term supply to high-quality reserves, positioning us better for opportunities in the data center space. These acquisitions are expected to contribute positively to cash flow generation during the second half of the year. In summary, the first quarter reflects a good start to the year, supported by favorable operating conditions, strong execution and improving activity across our markets. Our focus remains on delivering reliable service to customers, bringing Odessa online successfully and positioning GCC to capture the opportunity developing across our network. With that, let me now turn the call over to Mike for a review of financial results.

Thank you, Enrique, and good morning to everyone. Starting with consolidated performance. We delivered sales of $295 million in the first quarter, an increase of 19.8% compared to the same period last year, reflecting strong activities across both the United States and Mexico. In the United States, [indiscernible] weather conditions and volume growth in both cement and concrete, 9%. Cement pricing declined by 2.6%, consistent with the product, project and geography mix dynamics we discussed previously. Overall, the quarter reflects stronger activities, the contributions from new terminals and continued execution across multiple demand segments. In Mexico, revenues increased 28.2%, supported by volume growth in both cement and concrete. Cement volumes increased 12.8% while concrete volumes increased 5.9%. Cement pricing decreased slightly, reflecting a lower share of specialty products while ready-mix pricing increased 1.2%. Results reflect a stronger comparison base and improving activity across housing and infrastructure segments. From a cost perspective, cost of sales as a percentage of sales increased by 70 basis points, reflecting higher fuel and power costs, a lower contribution from our Oil Well segment [indiscernible], that's a ramp-up as well as additional transfer rates associated with the new terminals. As Enrique mentioned, these logistics costs are part of delivered efforts to maintain uninterrupted supply to customers, while new capacity is brought online in a controlled manner and as we continue expanding our reach across the network. SG&A expenses increased by $3 million, driven primarily by the appreciation of the Mexican peso against the U.S. dollar and the annual salary adjustments. As a result, EBITDA for the quarter totaled $87 million, an increase of 18.3% compared to the prior year period with an EBITDA margin of 29.5%. As expected, margins declined slightly year-over-year, reflecting the cost and mix effects we discussed earlier. Free cash flow for the quarter totaled negative $10 million, primarily driven due to working capital requirements and higher cash taxes. In terms of capital allocation, we continued to fund strategic investments with capital expenditures totaling $38 million during the quarter, related mainly to the Odessa expansion. We also returned $5 million to shareholders through our share buyback program. We ended the quarter with a strong balance sheet with cash and equivalents of $857 million and a net debt-to-EBITDA ratio of negative 0.47x, preserving flexibility to support growth investments and maintaining disciplined capital allocation. In summary, the quarter confirms that volume growth, expense discipline and capital deployment are supporting the next phase of growth, even as the Odessa transition introduces temporary cost pressure. With that, I will turn the call back to Enrique.

As we look ahead, our expectations for the full year remain unchanged. The first quarter was a good start to the year. And our forecast for 2026 continues to reflect the same market assumptions we outlined previously. Our focus now is executing the priorities already in front of us with Odessa representing the most important operational milestone for the year, bringing this new capacity online successfully while continuing to support customers and manage the network. It's central to how we are building the next phase of growth. With clear levers within our control, we remain confident in our ability to execute through the remaining of the year. Thank you for your continued support. We will now open up the call for your questions.

[Operator Instructions] Our first question comes from Marcelo Furlan.

So I have 2 questions. The first is related to the -- if you guys could provide a little bit detail regarding the overall impact from the war that you guys have seen in the companies like in the company some fundamentals like potential higher costs and also [indiscernible] the dynamics impact as we see expectations of maybe higher oil well cement consumption or maybe lower cement imports in the state of the company's operation in the U.S. So that's my first question regarding the overall impact from the conflict. And my second question is related to the free cash flow. So you guys still have the guidance of $200 million in growth for this year, but you guys disbursed $38 million in the first Q. So I'd like to understand if you could expect some acceleration for CapEx moving forward? And also if you guys could provide a little bit more detail regarding the accrual cash needs in the Q. So that's pretty much it from my end.

Marcelo, thank you for your question. This is Enrique Escalante. Impact on war, obviously, I mean, a little bit difficult to understand exactly what the visibility we have and the changing conditions every day. But I will say that, I mean, overall, we are obviously experiencing some cost inflation. I mean, the right permit. As I mentioned, we have some fuel -- an increase in some of the plants. Fortunately, our fuel mix is still very adequate and very competitive. But cost inflation in other areas such as freight, it's obviously an impact. We implemented a future charge already for our ready-mix concrete deliveries. So we're trying to offset as much as we can all those fuel increases -- fuel surcharges. On the import side, obviously, we're in the central part of the state and a little less subject [indiscernible] imports. But ocean freight, of course, has been increasing significantly. I don't think that even though it's increasing it will, I mean, decrease significantly the imports into the country because obviously, I mean, it's a good component of it. But I mean the [ FOB ] price in Asia is still very low compared to what we have in the U.S. So I don't feel a lot of change there, except for, I mean, availability of freight and vessels and delays on shipments. But I think as the war, I mean, concludes, I mean, the factor of imports is still going to be, I mean, a part of the industry dynamics. I will turn the mic here to Mike for -- to answer the second question on the CapEx.

Regarding the CapEx, so no changes. Our guidance remains. We started on the maintenance side, kind of as planned, a little bit of timing effect. But overall, that guidance of $70 million in maintenance remains and similar to the growth, as expected, it's a little bit slower this year because Odessa is coming to completion. Nevertheless, our guidance of the $200 million in growth remains. So no changes on that.

Next question comes from Alejandra Obregon with Morgan Stanley.

I guess the first one is on the ready-mix front. The performance was clearly outstanding. And I was wondering if you can explain a little bit more what's behind it. Wondering if it's just a function of portable ready-mix plants, is the diesel surcharge that you just mentioned or simply downstream catching up on pricing after multiple years of pricing in aggregates and cement, if you can talk about this a little bit? And then on this surcharge for diesel, is this something that you're applying for all the products or only ready-mix? Do you think this is perhaps a practice all across industry and something that perhaps is explaining why your guidance is unchanged, right? Like costs are up, but then your guidance and change means that you're perhaps a little bit more constructive on the cost discipline front, volumes, pricing and everywhere. So those are my 2 questions.

Alejandra, thank you for your question. This is Enrique. First, on the ready-mix, I mean, demand and the performance of [indiscernible], as you mentioned, it's been a shining star for us last year and this year. And it's basically a result of demand for projects that we have been participating on, I mean, with farms, as we have said in the past, and we continue participating in 3 large projects ending this year. So this is one capability that we have developed for years in terms of shaping projects with this model in ready-mix plant. So it just mean that we have been at the right place at the right time with these projects. Importantly, too, is, of course, I mean, the paving projects that we have had in Basel, Texas, there's a little bit less activity this year compared to last year. But still, we're going to a new phase [indiscernible] that has some significant volumes there. So it's obviously, I mean, an overall demand effect and for both motor plants and fix plants. The fuel surcharge, it's a practice that it's well ingrained in the industry. Obviously, I mean, suppliers also passed on to us, I mean, fuel surcharges in the transportation of raw materials and other goods. And we, in turn, try to pass it along in the same way, I mean, to ready-mix and freight on projects. So that's again something that's well established and offset somehow at least partially the effect of the price increases. In terms of pricing in the U.S., we're going according to our guidance. Basically, if you remember last year, we said we were going to be basically flat even though we are increasing -- we announced and [indiscernible] price increase for the first quarter of the year that's been delayed to the second quarter. It's going, I mean, okay, according to guidance and the main reason for us ending up with flat prices, the mix of our product segments, geographies and of course, a lot more project work in our pipeline that carries a little bit lower price than cement [indiscernible] to, I mean, the permanent concrete and producers. So again, I mean, we feel pretty comfortable with it and we're going again according to guidance, and we don't see a big change in either direction here. So pretty stable.

And if I may follow up on that last comment. So you mentioned that your expectations for -- your expectations for a flat price mix for the year. But you also mentioned earlier in the call that you were seeing a shift in conversations and sentiment in oil well cement. So I guess the question is, what would you need to see to change your demand assumptions looking forward on the oil well cement front and therefore, on the price mix as well?

Yes. Thank you. Yes. And we also mentioned, yes, we're being prudent here in trying not to, I mean, not too much, I mean, ahead of time here with decisions on the world industry segment. So thank you.

Our next question comes from Adrian Huerta with JPMorgan.

My question has to do with margins in the U.S. where we saw some pressure in the quarter. Will it be okay to assume that second Q -- we should expect somewhat the same given that probably this increase in prices from these surcharges is also impacting margins and also the expenses that you are having related to Odessa. So once during the second half, then you have Odessa operating, et cetera, should we see margins -- does it make sense just to margin should be at least flattish in the second half and down in the first half in the U.S.?

Adrian, this is Mike. Thank you for your questions. So regarding margins in the U.S., as we guided and explained, because of the introduction of the Odessa product and the early support that we have to give now to the network, again, will we support from Samalayuca, where we support from Pueblo, we are increasing some of the cost aspects, specifically around logistics. And you will see that in the second quarter as well. And then starting in the third quarter, I think you see a little bit of a normalization. So that's kind of really the guidance we have. Nothing has changed on that. In addition, again, the product mix dynamics, we still see that. Although Enrique mentioned, we see some positive signals on oil and gas. We're cautious there, as you said, what that really means from an overall pricing perspective for that segment. So again, you see a little bit of that mix effect. And therefore, again, guidance remains the same, first and second quarter, some pressure on the margins and then kind of normalization during the second half of the year.

And just a follow-up on the -- on ready-mix is that a strong increase that we saw in pricing pretty much related to these surcharges that you implemented in the quarter?

Yes. ready-mix pricing is totally related to projects that work out -- yes, that's also included in our guidance.

Our next question comes from Carlos Peyrelongue with Bank of America.

Congratulations on the strong results. My question is related to capital allocation. You -- as you mentioned, you've completed most of the CapEx for the Odessa expansion. You have close to $850 million in cash and a net debt -- net leverage of minus [ $0.47 million ]. Free cash flow is likely to be growing double digits going forward. So the question is, all the extra cash, you have ample room for acquisitions as well, are there other potential uses of your capital and more dividends, buybacks? Just trying to get a sense of with the CapEx of Odessa behind us, are you going to focus on a similar dividend policy? Or are you considering potentially paying more dividends as cash flow keeps on coming in actually, it's stronger going forward than in the last 18 months?

Carlos, this is Mike. Again, thank you for the question. So regarding capital allocation. So we continue to be, of course, finishing Odessa, there's still some capital to be spent. That's why you see that $200 million of growth for this year in the forecast. Also, we're continuing to work on network improvement. So we'll need a little bit of CapEx to take care of that. Then M&A, as Enrique mentioned, we were successful to close the one deal in the first quarter, but we have a few more deals in the pipeline, and they look very promising that we can actually action them during the remainder of the year. And the goal would be to utilize cash on hand to finance fees. So that's part of the growth strategy. Then regarding the share buyback program, you saw us a little bit more active. Again, we see an opportunity with our valuation. So you will see us continue being proactive with the share buyback program and we're going to allocate some capital there. And then finally, on the dividend policy, yes, so no changes expect us being very consistent on that front as well as we've done it over the last couple of years.

[Operator Instructions] Our next question comes from Yassine Touahri with On Field Investment.

I would just try to get an understanding of the volume that were absolutely excellent in cement in the first quarter. Is it fair to assume that you're trying to build a bit of market share in Texas ahead of the opening of your plants and your maybe like selling cement a little bit further away, let's say, in the Dallas Fort Worth area or in the San Antonio area? I see that, for example, your volume in Texas in Q1 were [indiscernible] when the rest of competitors that have published at volume only up 10%. So it looks like you're gaining market share. Is it fair that it's a strategy to prepare for the -- to prepare your market share for the launch of the Odessa plant? And my second question would be on your ready-mix pricing, which was amazing. Do you have a sense of what was the price excluding mix? So if you look at the price increase that you've announced, what was it approximately? I suspect it's not 20% plus?

Yassine, this is Enrique Escalante. Let me answer first on the volume of cement in the U.S. increased. No, I mean, I will not say that this comes from market share gains. I mean that's -- it's more [indiscernible] related to what I explained on the project work. Yes, we are getting a little bit more volume in Texas, as I mentioned. But we're being, I mean, very prudent in the way that we allocate the new volume from the startup of the Odessa plant. We know it's the difficult, I mean a market situation. So we don't intend on trying to gain a lot of market share here and then have a negative effect on the overall business. It's more, again, related to project work, but it's that we have been loading up the pipeline and it's been working pretty well for us. In terms of the [indiscernible], I will say, I mean, your question on the pricing, it's exactly the same. It's related to project work. If you exclude that project work, I would say that the prices in ready-mix are going according to precisely our guidance. So what the fix that you see now are I mean specific projects.

So according to guidance would be that prices in Q1 would be like up a little bit, like 1%, 2% like-for-like? Is it the right way to look at it?

In cement plus in ready mix a little bit around inflation.

Okay. And when you're saying that you're spending -- you have a logistical cost, isn't it that you're trying to sell cement a little bit further away, which means that you're entering market that you were not before?

Yes, I can take this. This is Mike. Again, when Odessa comes online, we will be able to kind of optimize the network. So the additional logistics costs really come using suboptimal distribution link to feed those markets and to manage demand because we have products available in the Samalayuca and Pueblo plants and to reach those markets that in the future will be serviced by Odessa, it costs us a little bit more. And that's just the cost effect there. And as we explained, once Odessa comes online, then the path for the team is to optimize that and then to bring the network into an optimized stage, which then helps us in the later part of the year from a margin perspective. So that's kind of the context on the logistics costs.

And then a very last question. So I think price increase of like $5 to $12 have been announced by most cement producers all across the U.S. Do you have any -- I think it's like the negotiation has probably started because those prices were effective on the 1st of April. Do you have any sense of the realization any push back? Or is it easier to have those price being -- those price increase being successful in a context where you've got a lot of oil-related inflation?

Our price increase was $8, if you remember, for the first quarter, and as I mentioned, it's been delayed. And that delays a little bit part of that then push back and adjusting to what other competitors are doing in the market. But I would say, mostly speaking, it's going according to guidance. And yes, there's always some push back, but there are other customers that are really aligned with us on the price increase. So overall, I mean, our mix effect, as I mentioned before, we are resulting in a flattish, I mean, price for us. But that includes increasing the price. I mean most of the customers in most of the regions, but the product mix, the geography mix and the project mix is what it's [indiscernible] resulting in a flattish increase for us.

But I think you were mentioning that prices in Texas would not increase this year, but that it would increase maybe like $4, $5 elsewhere? Is that the right way to think about it?

No, I would say that, I mean, it's going again according to what I mentioned. I mean, there have been increases in Texas, too. But it's the overall mix that it's not showing it directly. I mean, it's probably in the specific areas.

And sorry, the very last one on Mexico, the outlook looks for the -- like we've seen a nice recovery in the first quarter. Is it weather related? Or is it something that could continue for the rest of the year as the activity picks up?

No. In Mexico, we are very pleased to see, I mean, more activity than what probably than what we expected, not enough to change our guidance yet. But it's -- we're certainly more optimistic than what we were, I mean, the last quarter about Mexico. We are seeing increases across all segments in volume. And so that has also helped our price increase implementation. So Mexico is looking, I mean, I would say a pretty good.

Our next question comes from Francisco Suarez with Scotiabank.

Congrats on the great results. Two questions, if I may. The first one, is it fair to assume that overall drilling activity in the Permian is likely to remain flattish for the rest of the year? Is that a fair assumption?

Francisco, this is Enrique. Well, I mean, that's what we're assuming. I mean, so far, although as we mentioned, we're obviously staying very close to market dynamics there. We've talked to some, I mean, customers in the area, of course, and from the beginning of the conflict and asking them what could we expect. And all of the answers we get it, I mean, they need time to see where things stabilize, more medium term because they are not going to, I mean, overreact also, and they are also seeing what -- how things evolve. So that's why we're cautious there. I'm not changing our guidance. But I mean, if you ask me, I mean there may be the possibility of, I mean, a better outlook there, if things continue stabilized, and then we continue seeing a higher oil price compared to what we had last year, but consistent and with not a lot of swings in the market. So we need more time to see things -- how things have stabilized, in order to become a little bit more optimistic here.

Got you. The second question relates with the overall cost that we've seen for the year, and thank you very much for being very clear on the initial effect on the commissioning of the new [indiscernible] Odessa, that is very, very helpful. But what I want to understand a little bit better is to what extent that increase in cost related with the new shipments coming from Pueblo, Samalayuca and so on, is likely to mask the overall potential benefits or cost reductions in your -- in energy that you may have this year? Because you have been mentioning that not only you are adding more projects and the ability to substitute fossil fuels in your plants in the U.S., but you are also investing in ways that you will be having a cheaper source of natural gas in some of your plants. So can you elaborate a little bit more on isolating the initial effects on logistics on the ramp-up of your new capacity in all this compared to the overall pathways on your -- on energy cost on the back of these initiatives that you are taking -- making this year?

Francisco, this is Mike. Again, thank you for the question. So maybe a little bit on the production cost to build more context. It's a little bit dynamic there as well. So for example, on natural gas costs, they're relatively stable. In some plants, slightly better than last year and other plants slightly elevated. So there's a little bit of natural gas effect. On the power side, we see a little bit more pressure on increase in cost and we see that specifically in the U.S. network. So it's a little bit too early to exactly say where we land on that. But it has some impact on the cost structure. And of course, we're trying to mitigate that with the small projects that we have in place where we utilize solar power and so on. And again, it's a little bit too early for to say, here is the full segregation of the logistics impact versus the fuel and power impact. I think that's something, as we work through the year, we're going to continue to communicate around that and explain. Again, the big picture is in your models, think about the first half of the year with some pressure on the cost side, but really mainly driven by logistics, as already explained, and then kind of a normalization during the second half of the year.

Got you. Very clear. Congrats again.

Our final question is from Daniel Rojas with Bank of America.

Looking at the backlog you have [indiscernible] some construction for the rest of the year. It has been a very healthy source of construction work. I was wondering if this is going to tell us this year or I believe you were going to see that also into next year. And I was -- I just want to get a sense of how big the contribution is to work in the U.S. And my second question is on natural gas and maybe to follow up from the last question. [indiscernible] pricing, it's below $3 per [indiscernible] negative. So I'm trying to get a sense of if we extract and we take out all the logistics prices you've already talked a lot about, what would be the cash cost per ton? And what will be the benefit of having these very low pricing for natural gas?

Daniel, this is Mike. So regarding the backlog, we have a good strong backlog across the specifically the ready-mix business for this year. And fortunately, some of these projects actually start early with the weather conditions being nice. So back up is solid and really for this year, it's probably too early to talk about 2027. So all the backlog we're talking is really reflected in 2026 and that one is very solid. Regarding the natural gas, like I mentioned, it's still a little bit too early. I think the early indication for us, when you look at the key plant like Odessa, our gas costs are slightly below last year in Odessa, mainly driven by -- there's a good amount of gas available, there's probably some challenges to get all that natural gas out of the country. So we're benefiting from that. But it's too early to say where the kind of the final year settles when it comes to natural gas across the network. Generally speaking, we're expecting kind of flat to maybe some slight increases when you normalize the full year but nothing dramatic, nothing that puts us a concern at this stage for the natural gas or the plants.

Daniel, allow me to add a little bit on what Mike said and I agree with him, it's difficult to forecast it exactly to the penny at this moment. But we have some positive, I mean, effects also from the natural gas in the form of power here in Mexico with a lower power cost in Samalayuca definitely this year precisely coming from a change of suppliers in power that are now passing on to us -- the savings on natural gas. And as we mentioned with the [indiscernible] molecules sometimes being negative. So we're benefiting from all of those effects that are offsetting some of the increases that we may have in some parts of the U.S. And also, I mean, we're very actively hedging in a constantly part of our gas consumption to. So I think that we will be, I mean, very -- I mean, very close to, again, what we guided in terms of margins, and we're going to end up in the year, very close there.

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back over to Ms. Ogushi.

Thank you again for your time and continued interest in GCC. We look forward to speaking with you again soon.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.