Genomma Lab Internacional, S.A.B. de C.V. (LABB) Q4 FY2025 Earnings Call Transcript & Summary

Good day, ladies and gentlemen. Thank you for joining Genomma Lab's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this meeting is being recorded and will be available for replay from the Investor Relations section of Genomma's website following the call. I'll now turn the call over to Christianne Ibanez, Genomma's Head of Investor Relations. Please go ahead.

Thank you, and welcome, everyone. On today's call are Marco Sparvieri, Chief Executive Officer; and Antonio Zamora, Chief Financial Officer. Before we get started, I'd like to remind you that the remarks today will include forward-looking statements such as the company's financial guidance and expectations, including long-term objectives and forecasts as well as expectations regarding Genomma's business, products, strategies, demand, and markets. These statements are subject to risks and uncertainties that could cause actual results to differ materially. They are also based on assumptions as of today, and the company undertakes no obligation to update them as a result of new information or future events. Let me now turn the call over to Mr. Marco Sparvieri.

Thank you, Chris, and thank you, everyone, for joining our fourth quarter and full year 2025 earnings call. I would like to begin by expressing my sincere gratitude to our investment community for your continued trust and support. We remain fully committed to delivering strong, sustainable, valuable results, and I am confident that our growth plans will translate into meaningful results. We have maintained close and open communication with our investors, and we'll continue to operate with the highest level of transparency. Please do not hesitate to reach out with any questions beyond this call. We value our ongoing dialogue and look forward to strengthening our relationship with you. Let me address 5 key messages. First, 2025 was a challenging year that tested our fundamentals. The Mexican consumption environment decelerated significantly and our own execution gaps impacted results. We take full responsibility. Second, the 2025 downturn follows 8 years of consecutive and consistent growth in both sales and margins. That track record reinforces our conviction that this downturn is cyclical and we can emerge stronger. Third, the Q4 sell-in contraction in Mexico was deliberate. It was a decision to normalize elevated retailer inventories following 2 weak OTC and beverage seasons. Sellout remained relatively stable, both in Mexico and in a consolidated basis, confirming that underlying consumer demand remains resilient. Fourth, we responded decisively. We protected the core of the business and unlocked over MXN 1 billion in productivity savings to reinvest in growth initiatives. And fifth, 2026 represents for us a disciplined reset, positioning the company to return to sustainable growth and expand into new revenue streams. Let me now address our long-term trajectory. Over the past 5 to 8 years, consolidated net sales grew at a 7.9% CAGR, while EBITDA grew at an 11.6% CAGR. The faster EBITDA expansion reflects the benefits of vertical integration, manufacturing efficiency, cost containment, and sustained productivity initiatives across the organization. This team has been able to restructure the company, build new go-to-market and manufacturing capabilities from scratch, and delivered significant value. We plan to maintain our track record with a clear and disciplined plan. Turning to full year 2025 performance. Consolidated sell-in underperformed sell-out for the full year, primarily driven by Mexico. In Mexico, full year sell-in declined minus 7%, while sell-out declined a more moderate minus 3.7%. The Q4 destocking decision explains most of this gap. Outside Mexico, performance was more resilient. LatAm continued to grow. Argentina expanded ahead of inflation. In the U.S., although the Hispanic consumer environment remains disrupted, the beverage category delivered strong sell-out results with growth, reflecting the company efforts to expand distribution in the region. On a like-for-like basis, consolidated sales declined minus 4.3%, while sell-out increased 1.3%. Let's now double-click into the Mexican market. This slide represents growth trends in the Mexican categories where Genomma Lab competes. Over the past 3 years, these categories expanded strongly, supported in part by elevated federal social spending, which decelerated following the 2024 election cycle. Combined with broader macro pressures, this led to a marked slowdown in 2025. The isotonic beverage category experienced a clear pendulum effect. In 2024, severe drought conditions and high summer temperatures drove nearly plus 60% market growth. In contrast, 2025 saw an unusual rainy and cold summer, resulting in a minus 5% market contraction. This sharp reversal materially disrupted our summer sell-out projections versus actual demand. Let me go quickly over the macro factors affecting the Mexican categories. First, precipitation. Mexico Central region experienced the highest historical rains within decades. Second, remittances. Mexican remittances decreased minus 5% in U.S. dollars during 2025, which affected most by the second half of the year with the appreciation of the Mexican peso. And third, public investment. Mexican public investment has declined over the past 3 years, reaching its lowest level in 2025. Consumer spending continued to grow through 2024, supported by elevated social transfers. As this support plateaued in 2025, consumption weakened accordingly. In this slide, you can see the Mexican household consumption trend. In 2025, Mexican households faced an economic deceleration with plateaued social spending, high leverage and lower savings. Let me now explain how Genomma faced this challenging environment in 2025. First, it is important to note that nearly 40% of our Mexican business is executed in seasons, and seasons require preparations several months in advance, based on demand forecast derived from historical trends and forward expectations. Following several years of strong growth, ranging from high single digits to low teens, we planned 2025 using our most conservative sell-out assumption in 4 years, at 7% growth, already anticipating post-election softness. Actual demand declined materially beyond those expectations at minus 3.7%. As I mentioned before, seasonality is critical to our model. 38% of Mexico sales are concentrated in beverage and OTC seasons. Winning requires early warehouse positioning, shelf dominance, and strong opening inventory to secure market share. In Q2, we preloaded beverage based on higher demand expectations. Excessive rainfall led to a contraction in sell-out, creating elevated trade inventories. In Q3, we preloaded OTC categories, expecting a strong season to offset beverage weakness. However, we entered the season with already elevated inventories from a flat prior cough and cold season, while the current cough and cold season improved versus prior year, it was insufficient to close the gap. As a result, trade inventories increased further. In Q4, we made the disciplined decision to halt sell-in to actively destock the channel. Mexico sell-in declined minus 22.1% in the quarter to normalize inventories in the trade. I would like to highlight the following important points. First, underlying consumer demand remains resilient. Mexico sell-out declined a moderate minus 2.2% during Q4. Second, accounts receivables remain healthy. Third, trade inventories are now close to normalized levels. Fourth, a minor correction remains in Q1 2026, but the bulk of the adjustment was completed in Q4. And fifth, and currently, Q4 sell-out trends improved sequentially versus the first 3 quarters, and we continue to see improving trends at the start of 2026. Let me now turn over to our market share performance in the region. Amid Mexico's slowdown, competitive intensity increased. During 2025, we maintained share in OTC and hair care, which represents 58% of our Mexico business. However, we lost share in skin care and more significantly in beverages, areas that will be a priority for our recovery in 2026. In beverages, we lost one point of market share to our main competitor who also faced elevated trade inventories. They implemented an aggressive price reduction from MXN 25 to MXN 20 per bottle. We chose to protect margins in Q3, expecting only a slight decrease in share. The brand didn't hold and by the time we reduced Suerox price from MXN 25 to MXN 18 per bottle, the season was largely over, limiting our ability to recover lost share. We own that mistake. We have maintained this price into early 2026. Meanwhile, our competitor has begun raising prices as they absorb the impact of the new sugar tax. We have a clear plan to regain shares in beverage, supported by product innovation, brand relaunch initiative, expanded distribution, stronger in-store execution, cooler placement in strategic routes, all supported by enhanced communication. Let me now focus on what is coming next for the company. 2026 represents for us a disciplined test, positioning the company to return to sustainable growth. Our recovery plan started with productivity. Despite 2025 top line pressures, the company delivered a resilient year-end 23.4% EBITDA margin, underscoring the strength of our operating model, disciplined execution, and cost containment across the organization. This slide shows our productivity program, which started in 2023 with an initial target of MXN 1.8 billion in accumulated savings by 2027. We reached the target ahead of schedule in 2025. Importantly, we responded decisively to the sales downturn by unlocking an additional MXN 1.1 billion in productivity savings to organically reinvest in our 2026 growth initiatives. These resources are already secured and currently fueling our top line growth initiatives. This slide shows a snapshot of our growth initiatives. Our OpEx allocation is concentrated on initiatives within our control, product innovation, distribution expansion, deeper penetration into emerging channels, stronger in-store execution, and enhanced brand communication. We estimate these initiatives could generate up to MXN 2.8 billion in incremental sales. When incorporating macroeconomic and execution risk of up to MXN 2.4 billion, our risk-adjusted incremental sales opportunity stands at approximately MXN 1.4 billion. Let me now dig deeper into our growth pillars. On the distribution front, we have a solid track record of expanding our traditional channel network, and we are increasing efforts to accelerate expansion. We currently have a MXN 3 billion sales operation in the traditional channel across Mexico and LatAm markets. We plan to further expand our coverage from 730,000 to 860,000 points of sales by 2026 with the opening of 430 new routes. We will further support this growth by introducing in-store media within 314,000 points of sales within the channel. Let me double check into the Mexican traditional channels. We currently operate 500 routes in the country, primarily concentrated in the Central region. We are adding over 240 new routes across the most densely populated areas in the Northwest, Northeast and Bajio regions, while continuing to increase our central region footprint. These expansions will increase our direct coverage from 180,000 to over 270,000 points of sales in the traditional channel. We also expect incremental indirect coverage to follow naturally from this direct expansion. Let me now go into the details of our in-store execution plans. While we continue to ramp up the execution of our perfect store model, we are increasing the coverage of our pharmacist recommendation program across independent pharmacies, supported with improved visibility of our brands in the store. Additionally, we have a very aggressive in-store execution plan to improve our analgesics performance and preparing top-notch store execution for this year's summer and winter seasons. In innovation, we have a robust pipeline across all key categories. In 2026, our OTC business unit is launching 5 new products, Novamil Comfort, an infant formula soothing baby colic by reducing gas and digestive discomfort, Tukol [ MUC ] based on acetylcysteine molecule, better known as NAC. This is a potent antioxidant with mucolytic agent indicated in Mexico for respiratory conditions with thick mucus. We are launching a new pharmaceutical form, an antimycotic nail lacquer through our Lakesia brand. We are launching a sleep aid line, leveraging the higher recognition of our Dalay brand in Mexico. Genozol is a [indiscernible] molecule based relief for heartburn. In beverage, Suerox will debut a renewed image and expand into a new category. In hair care, we're fully relaunching Tio Nacho, strengthening its treatment positioning with second and third routine steps while revitalizing the entire product line with clean formulas, eliminating sulfates, parabens, [ phthalate ] while improving packaging at a competitive pricing. In skin care, we are democratizing high-end cosmetic formulations. We are reformulating and relaunching products with cleaner, higher-performing formulas at more accessible price points. This slide presents a preview of our Suerox new brand image. The refreshed design will launch for the upcoming beverage season in Mexico and will be supported by expanded distribution along with cooler placements in 27,000 points of sales. I am pleased to introduce a new chapter for Suerox, Suerox Mineral. This is a zero-sugar isotonic beverage that delivers a refreshing carbonated experience, a differentiated proposition within the category. We are confident in strong consumer acceptance as it brings a truly new experience to the market while reinforcing Suerox leadership in healthy hydration. For our emerging channels, deeper penetration plans, we aim at increasing sales in discounters and convenience stores by placing 1,200 coolers and 1,200 OTC end caps to drive performance in these channels. Let me share an example of our OTC end cap execution in discount stores across Mexico and Colombia. These end caps function as a mini-pharmacy within the store, securing premium retailers -- retail space for our brands. They combine strong brand visibility with dedicated inventory storage behind the display, enabling faster replenishment and more efficient in-store logistics. Another high-growth channel where we are deepening our focus is e-commerce. Today, we generate over 1 billion in sales through this channel. We are investing in traffic generation tools and digital capabilities to drive approximately 30% growth in 2026. Finally, we are increasing our media spend by 28% and optimizing our media strategy towards a more efficient and diversified mix. In 2025, our media investment was concentrated in TV, which represented 87% of spend with 13% allocated to digital. In 2026, we are rebalancing to a more diversified structure: 50% TV, 30% digital, and 20% across other formats, including out-of-home and spectacular placements. I would like to highlight the following points around our path to growth in 2026. Momentum is rebuilding, progressively returning to our historical growth rates as Mexico normalizing and executions ramp up. Q1 2026 is picking up. Like-for-like sales in growth is expected in the low single digits or closer to flat as we complete inventory normalization in Mexico. Healthy EBITDA at 23% to 23.5% in 2026. We expect higher OpEx and softer sales in the beginning of 2026, and we expect EBITDA margins in the range of 23% to 23.5%, while we step up growth investment. In 2027, we expect EBITDA to move back towards 24% as operating leverage kicks in. Strong cash generation. We expect an improved cash back by disciplined working capital, productivity, and lower CapEx. Before handing it over to Antonio, I would like to finalize by highlighting the following: 2025 was tough, driven by external shocks and execution gaps, and we own it. We learned from our mistakes. Our fundamentals remain strong. Eight years of sustained growth prove we can rebound. Mexico is showing early recovery signs with gradual growth expected from Q2 onward. Margins stay healthy in 2025, regaining -- ranging between -- sorry, in 2026, ranging between 23% and 23.5% and will trend back towards 24% in 2027. With over 1 billion in reinvested OpEx, sharper execution, and new revenue engines, I am confident in the company's future. Thank you for your continued support. Antonio, please go ahead.

Thank you, Marco, and good morning, everyone. As Marco said, 2025 was a challenging year in which we chose discipline over short-term optics. We operated in a softer consumer environment, deliberately reduced inventories in Mexico, absorbed significant ForEx volatility and continued investing in the structural capabilities of the company. Despite this, we expanded margins, generated strong cash flow, and maintained a conservative balance sheet. Consolidated net sales for full year 2025 reached MXN 17.5 billion, representing a 5.7% year-on-year decline. In constant currency terms and excluding the hyperinflationary subsidiary, like-for-like sales were down 4.3%. Fourth quarter net sales totaled MXN 4 billion, decreasing 13.9% versus prior year. On a like-for-like basis, sales declined 12.9%, largely reflecting ForEx pressure and our intentional 22% reduction in Mexico sell-in as we work to normalize retailer inventories. Importantly, Mexico sell-out only declined 2%. What changed was inventory, not brand co-equity, not marketing position, not competitiveness. Full year EBITDA margin expanded 43 basis points to 23.4% and Mexico expanded 174 basis points to 24.9%. These gains were not cyclical. They reflect structural improvements in manufacturing integration, cost discipline, procurement optimization and operational efficiency. The company is structurally more profitable today compared to a couple of years ago, even in a softer volume environment. That is the result of intentional operation decisions. Fourth quarter EBITDA reached MXN 887 million with 22.1% margin, while lower volumes in Mexico created operational deleverage. Disciplined cost management in COGS and SG&A helped mitigate the impact. Full year net income totaled MXN 1.6 billion, declining 23% year-on-year, primarily driven by higher noncash ForEx losses linked to the Argentine peso depreciation, which we have covered earlier. In the fourth quarter, net income was MXN 320 million, down 13% versus last year as higher advance tax payments more than offset the benefit from lower net interest expenses and reduced FX losses. Our fourth quarter cash conversion cycle reached a healthy 107 days, improving 2 days year-over-year. This reflects disciplined working capital management, particularly a 15-day reduction in inventory days, particularly offset by a 7-day decline in payable days associated with our strategic destocking in Mexico. Trailing 12 months free cash flow reached MXN 1.5 billion, even as we accelerated strategic CapEx to strengthen our long-term margin profile. Despite top line pressure during the year, we maintained disciplined capital allocation and continued funding strategic growth investments. Moving to a brief overview of our results by region. In Mexico, full year net sales declined 7% and fourth quarter sales decreased 22%, reflecting softer consumption and our planned sell-in reduction. Importantly, as I mentioned before, sell-out was down only 2% in the fourth quarter, which represents the resilience of our underlying consumer demand. For the full year, Mexico's EBITDA margin expanded 170 basis points to reach 24.9%, supported by manufacturing efficiencies and productivity gains. During the fourth quarter, the U.S. dollar depreciated against the Mexican peso. The exchange rate trended downward throughout the period, reflecting sustained peso strength. This ForEx movement created headwinds for the U.S. subsidiary. At our U.S. operations, local currency sales decreased 11.6% for the year and 5.1% in the fourth quarter amid continued disruption in the Hispanic retail environment. Promisingly, Suerox sellout rose 77% for the full year and 48% in the fourth quarter, reflecting successful distribution gains for Suerox. U.S. EBITDA margin held at 14.7% for the full year and declined to 11.9% in the fourth quarter, reflecting lower operational leverage and increased advertising spend. During the fourth quarter, ForEx represented a challenge, most notably the 42% depreciation of the Argentine peso. In Latin America, excluding Argentina, on a like-for-like basis, net sales grew 3.6% for the full year, driven by strong performance in Brazil, Chile, Central America, and the Andean region. When we include Argentina, LatAm EBITDA margin was 23.6% for the year and 22.8% for the fourth quarter, reflecting the effects of hyperinflationary accounting. Local currency sales in Argentina increased 39.7% for the full year and 55.3% in Q4, clearly outpacing inflation in that country. However, when translated into Mexican pesos, reported net sales declined 20.1% for the year and 10.1% in the fourth quarter. We closed the year with net debt-to-EBITDA ratio of just 1.1x, just 1.1x. And debt service coverage is 5.1x. As you can see, liquidity is ample. Leverage is conservative and flexibility for Genomma is high. We also maintained our quarterly dividend, reinforcing a balanced capital allocation framework. We paid a cash dividend of MXN 0.20 per share, totaling MXN 200 million, and we regained committed -- and we remain committed to maintain quarterly dividend payments, reflecting our sustained confidence in our long-term outlook. Before closing, I would like to briefly address recent credit and financing developments that reinforce the strength of our financial position, particularly in the macro environment we discussed. Credit agencies reaffirm our long-term ratings, including a AA+ rating with stable outlook. HR Ratings also reaffirmed our short-term dual program rating of HR+1 and Fitch affirmed Genomma Lab local rating of AA+ with a stable outlook. These ratings highlight our resilient operational performance, steady cash flow profile, and prudent financial policy, allowing Genomma Labs to access the debt capital markets at competitive spreads, reflecting continued confidence in our financial discipline. During the fourth quarter, we remain active in our Cebures, our local bond issuances, placing over MXN 370 million in the Mexican market at competitive spreads. Importantly, our ability to raise capital under attractive terms even in a softer sales environment reflects market confidence in our margin resilience, productivity program, and long-term growth trajectory. In closing, in summary, we made deliberate decisions in 2025 to protect long-term value over short-term appearance. We strengthened our cost structure. We normalized our commercial base. We preserved financial flexibility. We continued investing in several growth platforms that Marco described earlier. And as we enter 2026, we do so with cleaner inventories, stronger margins, solid cash flow generation, a disciplined balance sheet, and most importantly, solid reinvestment initiatives to reignite growth that Marco described earlier. We are positioned not just to recover growth, but to expand profitability as volumes normalize. Thank you. And now I'll turn the call back to the operator.

[Operator Instructions] Our first question comes from Alvaro Garcia with BTG Pactual.

I've got 3 questions. One, a bigger picture question on the shift towards digital media or the shift in your media spend away from TV. In the past, there's been some instances where you've tried this and some of your brands are relatively sensitive to seeing less TV spend. So just would love to hear your bigger picture thoughts on how this time is different and how this time maybe you have better targeting or just more productive media spend. Any discussion on that would be helpful. And then I'll ask my other questions after.

Thank you, Alvaro. On digital, the reason why I feel extremely confident this time, because as you mentioned, I mean, we've tried that in the past. I think that maybe one of the differences between us and many of our competitors is that we are extremely strict in measuring the ROI on every penny we invest in media, and we need to make sure that every peso that we spend or we invest has a return. And because we are very strict in digital, in general, is a lot harder to see a respond in consumer demand once you activate digital advertising. We have hired a director that is going to be in charge of all the digital projects throughout the company across all markets. And this person is probably the best with a very proven success track record of delivering growth behind digital advertising. And he started in his position in January and the very few interventions that we have already made, we are showing positive payouts, which is the first time that we have seen this in the company. So that's kind of like the answer.

Great. And then I'll cycle back in the queue, but I'll ask one more for now, which is on Argentina. We saw a 50% growth in local currency in the fourth quarter. I thought that was actually quite strong. And I was just wondering if that was a function of easier comps. I know in recent meetings, you've mentioned some heightened competitive pressures there. But obviously, I understand the result in pesos, but I felt like the result in local Argentine pesos was quite strong. So if you can give us some color on that would be helpful as well.

Yes, it's a combination of easier comps because we had a situation. I don't want to get too technical here, but we had a situation in which like one of the forms that we sell with Tafirol got out of PAMI, which is the social service in Argentina. And we had that like comparison for the past 12 months prior to the fourth quarter, and that ended in the fourth quarter. So one is easier comps, as you mentioned. And the other one is the ongoing plans that we have across the board with like this morning, I saw the Suerox data reaching the highest market share levels ever in Argentina. Tafirol also reaching a very high level of share by the end of the quarter 4. I think Argentina, in general, Alvaro, is in very good shape from a consumption standpoint and from a share point of view as well. So we -- I personally expect Argentina to continue to overperform inflation this year. And if the exchange rate continues to be controlled like it is right now, we will see a positive impact in our P&L driven by Argentina's share growth.

Our next question comes from Froylan Mendez with JPMorgan.

Given all the several growth initiatives and your thoughts on how much should that flow this year, 2026 versus 2027, can you give us some sense of top line growth expectations in peso terms for this year? Or what are you thinking so far? And secondly, if we were to see the -- where your confidence lies more, is it on top line growth for this year or maintaining margins in the levels that you have mentioned for the guidance? What has less risk to not be achieved given any changes in the macro FX, et cetera?

Okay. I am very confident that the plans that we are implementing are tangible, are within our control. And there is a pretty large amount of money being invested behind these plans, especially in Mexico. So from a top line point of view, I do expect the first quarter to continue to be soft. Even though we are seeing very clear signs, early signs of demand recovery, we are showing now sell-out growth in Walmart, for example, which is the largest customer for the company globally. We are starting to see our sell-out growth in the positive territory in the past few weeks. And that is directly related to the investments and to the plans that we are implementing in Mexico. Nevertheless, we do recognize that the Mexican consumer environment in general continues to be soft across the board. And so while we are extremely confident about the plans and the expectations for growth, I want to be cautious in the short-term because we do expect the first quarter to maybe decline in the single digits or be closer to flat. But we do believe with high level of confidence that in the second quarter and the third quarter, we are going to see a gradual recovery of the top line, reaching the levels of growth that we have showed in the past, okay? So it's going to be gradual. The short-term will continue to be a little bit painful. But we do expect that these initiatives will put the company back to growth by the second or the third quarter. And then 2027 should be a very good year for the company. On margin, I -- we will continue to operate this business in a very disciplined way. So I am very confident that the guidance that we are proposing for this year, that is in the range of 23% to 23.5%, will be delivered. We have the plans to deliver that. We are lowering a little bit the guidance on margin because we believe that we might need a little bit more investment to reignite growth in the top line. So we want to be a little bit more cautious on the expectations for margin, but that's going to be a short-living thing. 2027, as we see the top line continue to grow and to pick up, we will take the margin back to 24%. I don't know if that clarifies the...

Yes. Maybe just a follow-up. So last year, despite the top line deterioration, you still maintain very healthy levels of margins. Can that happen in 2026, if for any reason, we don't see this top line recovery that you're mentioning, especially in the second half? Can margins still be maintained at the guidance levels that you're expecting?

Yes. Yes, because the productivity program is very solid. I think that's one area that the company has handled extremely well. We have plenty of room in the P&L to support any surprises in the top line. I don't -- I hope we don't have to use it, but we have enough room to support any issues in the top line. We are being extremely cautious with our investments. We have a very financial-oriented mindset when it comes to investing back in the business. We are following a very disciplined approach to measure results and evaluate investments. And we are continuously making decisions in terms of where to invest, how to invest, and when to cut and stop investing if the financials are not good enough. So the answer is yes.

Froylan, this is Antonio. Good questions, both of them. I just wanted to add to what Marco described about top line and margins, a little bit of perspective on cash flow because in 2025, we have one-timers. One significant one-timer was the CapEx investment to expand the distribution center, okay, which we will not have in 2026 and beyond. So there's no significant -- I mean, there's maintenance CapEx, but not significant CapEx. So that's going to be a saving in terms of cash flow generation. #2, in 2025, we had to make higher advance tax payments, the pagos provisionales, which are calculated using the coefficient of the previous year. So the pagos provisionales were higher than what we required to pay for the full year. That's going to change for the next year, okay? So that's another one-timer or, let's say, it's going to be a positive for next year. And finally, we've all seen what happened with the strengthening of the Mexico peso -- Mexican peso, but I don't know how long this is going to be the case. So we don't know how ForEx will look like next year. What we know -- and we don't know what the weather is going to be next year. But what we had in 2025, it's a record in terms of torrential rains, especially in Mexico City in Central Mexico. So if we don't have that, obviously, that's going to be more positive for cash flow. So cash flow in 2026 is going to be better than what it was in 2025. Just to complement the question that you had. I don't know if this helps.

[Operator Instructions] Our next question comes from Alvaro Garcia with BTG Pactual.

A couple for Antonio. One on CapEx, it was still sort of elevated in the fourth quarter, and I was wondering what was behind that? And if you can maybe provide some guidance for '26 after this uptick we saw in the second half of '25. And then in the release, when you discussed margins in Mexico, you referred to discontinued operations and you provided an adjustment. If you can give some color on that, that would be helpful as well.

Yes. Thank you, Alvaro. One of the major projects that we had in 2025 is the expansion of our distribution center. It is -- it is strategic and it was required for the company to grow in the future, especially for certain categories like Suerox, they have been so successful that we run out of space for future growth. So this year, we decided to make -- sorry, 2025, we decided to make a significant investment in the Suerox, basically reinforcing the floor, adding new racks, new equipment to expand more than 40% of the capacity, of the storage capacity that we have. So it was a significant investment, and part of that came at the end of the year. So if you look at the total CapEx that we spent, it was significantly higher than what we usually do, and it was significantly higher than what we will have next year. Next year, it's going to be for the full year, the exact number could range between MXN 250 million, MXN 270 million. That's it. And that's going to be, as I said before, mostly maintenance CapEx as well as some CapEx for innovation, et cetera. But that's a normal level. So I don't know if I answered your question. And obviously, we invite everyone who is interested to go and visit the plant and go and see the new distribution center, which is -- we are very proud of it, and you will see what the kind of efficiencies we're going to be getting next year. And by the way, I also need to say that we incurred some additional OpEx in 2025 while we were doing this investment because we had to lease some outside warehouses, and that's not going to happen next year. So as Marco said, there's a number of productivity initiatives ongoing that will help us maintain the EBITDA margin that we mentioned. But that's mainly CapEx. I don't know if I was able to answer your question.

Super clear. Super clear there on the CapEx front.

And regarding your second question, and this is mostly based on what happened in 2024. Remember that we said back in 2024, the fourth quarter, that the EBITDA margin was going to be 24%, and it was 24%. However, during the audit process with the external auditors, there was some -- there was a one-timer that we had to record that was related to the discontinued operations of Marzam. So that's why we are presenting the adjusted EBITDA, which is the true performance of the business and the reported EBITDA that included that impact. But that's something from 2024, that's something related to the discontinued operations. Fortunately, by next quarter, we will not be reporting the discontinued operations anymore because the cycle of the 4 quarters had already passed. So that's -- so it was a one-timer charge that was recommended by the auditors in 2024. So nothing related to 2025 and beyond.

[Operator Instructions] This concludes Genomma's fourth quarter results conference call. Thank you for your attention.