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Operator: "
Christianne Ibañez: "
Marco Sparvieri: "
Antonio Zamora Galland: "
Alejandro Fuchs: " Itaú Corretora de Valores S.A., Research Division
Alvaro Garcia: " Banco BTG Pactual S.A., Research Division
Axel Giesecke: " Actinver
Fernando Froylan Mendez Solther: " JPMorgan Chase & Co, Research Division
Operator: Good day, ladies and gentlemen. Thank you for joining Genomma Lab's Third 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 Ibáñez, Genomma's Head of Investor Relations. Please go ahead.
Christianne Ibañez: Thank you, Daniel, 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, assets, 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.
Marco Sparvieri: Good morning, everyone, and thank you, Chris. I would like to begin today by addressing a clear reality. The company is going through a challenging period, and the results I will present today are not the ones I wish to report nor the ones we are used to delivering as a company. However, I hope that by the end of today's presentation, I can convey the same confidence and reassurance I personally have that our plan to reignite growth is solid, well-structured and entirely focused on rebuilding our top line. My expectation is that after reviewing the next slides, you will share the same confidence that I have. Let me begin with a message of strength. Over the past few years, Genomma Lab has achieved remarkable progress. Sales have grown nearly 70%. EBITDA has more than doubled. Free cash flow has surged 152% and EPS is up 46%. I don't mention this growth only to highlight results, but to demonstrate that we have successfully transformed the company from a deep restructuring phase into high growth, more profitable and more capable organization. We are better than ever positioned to emerge stronger from the current slowdown. This performance is underpinned by 6 strategic assets that we have built over time. Assets that every few -- very few companies possess and which would take any new entrant, decades and hundreds of millions of dollars to replicate. The first is our powerful brand portfolio of over 40 brands, many of which were built during a period when television played a dominant role in influencing consumer purchasing decisions. Today, these brands enjoy exceptionally high awareness and strong positioning in consumers' mind. Brands such as Cicatricure with its medical heritage, Asepxia with its strong dermatological credentials, Goicoechea in leg treatments and OTC leaders like Next, XL-3 and Tukol in Mexico as well as Tafirol in Argentina, where we hold a 40% market share. All these brands form part of this invaluable portfolio. Equally important is our team. Building this leadership structure has taken time and effort of years. Having spent over 20 years at P&G, I can confidently say that our executive and managerial team match and in many cases, exceed those of our multinational competitors. We have also developed an extraordinary distribution network in the highly resilient traditional channel and all the channels across, reaching over 890,000 points of sale across Mexico and Latin America every week. This is a core capability that would take any pharma or personal care competitor decades and a massive capital to replicate. We can launch a product and have it distributed to all the channels and nearly 890,000 points of sales across Latin America simultaneously. This is not only a true competitive advantage, but also a clear growth avenue for the company. In addition, our decision to integrate our own manufacturing facility has proven highly strategic. Despite the complexity of regulatory and operational integration, it now provides us with stronger cost control and greater product quality assurance while allowing for further productivity in the company. Our company culture rooted in speed and agility is also a major asset. While many of our competitors operate with more bureaucracy and slower decision-making, we have a structure that allow us to move faster and respond quicker to consumer needs. Finally, we have established a solid foothold in two key markets with profitable operation, the U.S. Hispanic segment and Brazil. Although current results in the U.S. market warrant review, our presence there represents a valuable long-term asset. Today, our products reach more than 50 million Hispanic households with distribution in major retailers such as Walmart, Walgreens and Amazon, generating close to $100 million in annual sales. Establishing this level of penetration and relationships from scratch would take any company years and significant investment and the same holds true for our footprint in Brazil. All-in-all, this company has penetrated high barriers of entry and is positioned to continue consolidating its position to increase market share in a $3 trillion size industry, the largest in the world, $13 trillion. Let me now turn to the current environment and our plan to return the company to growth. We are operating in a complex consumption environment and navigating a difficult situation, particularly in Mexico, driven by two consecutive failed seasons. A weaker winter season due to unfavorable weather conditions and a summer season that practically did not materialize. These dynamics have affected roughly 50% of our Mexican portfolio, primarily our OTC products during the past winter season and roughly 20% of our portfolio with Suerox during the summer season. Despite these top line headwinds, our EBITDA margin remains resilient with stability around 24%, underscoring the strength of our cost discipline and efficiency programs. I am fully confident that this EBITDA margin level is both solid and sustainable going forward. So what we're doing to offset this slowdown? At a certain point, we were facing two possible path, either we sacrifice margin to invest more aggressively in the business and accelerate the top line or we preserve margins and identify additional resources to fund our growth strategies without compromising profitability. We initially set a productivity target of MXN 1.8 billion in savings by 2027. Given the current top line environment, we challenge ourselves to find additional resources to invest in growth without compromising margins. As a result, we have identified and already secured an additional MXN 1.1 billion in efficiencies, bringing our total accumulated savings to MXN 3 billion by 2026. These resources have been secured and are reinvesting MXN 1.1 billion directly into the business to drive top line growth. Our 2026 investment plan focuses on three pillars: product innovation, go-to-market and distribution and emerging channels. Altogether, we estimate these initiatives could generate up to MXN 5 billion in incremental sales opportunities between 2026 and 2027. While some cannibalization is expected, these projects represent our North Star, a clear road map to reignite growth starting in the first half of 2026. With these actions, I am confident we can restore top line growth to prior levels while maintaining a healthier margin and cash flow structure than ever. Now moving to the third quarter results. On a like-for-like basis, sales declined 2.9%, which is translated to a 12.8% decrease in reported Mexican pesos. Approximately 80% of the impact stems from accumulated noncash hyperinflationary accounting effects in Argentina, following a 53% depreciation of the Argentine peso during the quarter. Our real operating indicator like-for-like performance reflects a 2.9% decline, while EBITDA margins remained strong at 23.7%, consistent with our 24% average target. Adjusted net income, excluding noncash hyperinflation effects declined 3% to MXN 632 million. Free cash flow reached nearly MXN 1.6 billion, down 35%, mainly due to lower net income and three days increase in the cash conversion cycle also related to hyperinflationary accounting effects. As mentioned, we have accelerated our productivity program, delivering the initial MXN 1.8 billion savings by 2025 and adding another MXN 1.1 billion for 2026. These resources are already identified and in execution, not a plan, but a reality. We have already secured resources for our investment projects. We will reinvest MXN 1.1 billion across five strategic areas: product innovation, go-to-market and distribution, communication, e-commerce and pricing. These initiatives represent approximately MXN 5 billion in growth opportunities for 2026 and 2027. While some may overlap and cannibalization is expected, a significant portion will translate into incremental sales and long-term top line expansion. Let me provide a few examples. In innovation, we have a robust pipeline across all key categories. In skin care, we are reformulating and relaunching products with cleaner formulations and more accessible price points. For example, a consumer who today pays MXN 350 in Mexico for a premium hyaluronic acid serum will soon be able to purchase the same product from Teatrical for around MXN 90. In hair care, we are fully relaunching Tio Nacho, strengthening its treatment positioning with second and third routine steps while revitalizing the entire product line with clean formulas, improved packaging, and competitive pricing. In beverages, Suerox will devote a renewed image and expand into new consumption occasions. In OTC, we expect 25 new pharma registration approvals to be launched between 2026 and 2027, allowing us to enter new segments. All of this innovation will be supported by a renewed communication strategy. We are shifting from functional frequency-driven advertising to more emotional storytelling that resonates and engage consumers emotionally. Let me show you an example. [Presentation] The company is entering a completely new communication strategy. We are investing in mass micro influencers, partnerships and brand ambassadors on TikTok and Instagram while driving traffic to e-commerce and direct conversion. Let me show you some user-generated content examples for our Asepxia relaunch. [Presentation] We are also leveraging artificial intelligence to produce high-quality, cost-efficient content. Let me show you an example of advertising spots produced by one person with no actors, no cameras for as little as USD 500 investment. [Presentation] This slide illustrates the depth of our product innovation pipeline, entering new categories, introducing new packaging sizes and formulations, all with clear and ambitious relaunch time lines. On the distribution front, we currently have nearly 3 billion sales operations in the traditional channel, where we plan to expand our coverage from 730,000 to over 1 million points of sales, targeting almost MXN 2 billion in incremental sales over the next two years. Our e-commerce business is set to reach MXN 1.2 billion in sales by 2025. We plan to add MXN 500 million in 2026 and another MXN 500 million in 2027, bringing the channel to MXN 2 billion by 2027, supported by strong communication investments to drive traffic and conversion. In hard discounters and convenience stores, two of the fastest-growing channels in Mexico and Latin America, our MXN 420 million operation is set to coverage from 35,000 to 57,000 points of sales and reaching roughly MXN 1 billion in annual sales by 2027. In summary, Genomma Lab is facing a challenging environment, particularly in Mexico, driven by two consecutive weak consumption seasons. Nevertheless, our EBITDA margin remains resilient. Our resources are secured and our growth plan is clear and fully actionable. We are confident that after weathering the next quarters and by executing this plan, the company will return to growth by the first half of 2026, reaching and potentially exceeding its historical growth rates supported by a stronger, more efficient and more profitable structure. Before turning the call over to Tonio, I would like to thank our investors for their continued trust and the entire Genomma Lab team for their unwavering commitment to driving the company towards its next stage of growth. Tonio, please go ahead.
Antonio Zamora Galland: Thank you, Marco, and thank you, everyone, for joining us today. As Marco mentioned, third quarter net sales decreased 12.8%. Results were mainly impacted by ForEx headwinds from a stronger Mexican peso as well as hyperinflationary accounting effects following the Argentine peso depreciation during the quarter. On a like-for-like basis, sales declined only 2.9%, primarily due to the impact of a cooler and rainer summer season in Central Mexico and a softer consumption environment in our country. These effects were partially offset by strong sales growth in Brazil, Chile, Central America and the Andean cluster. Genomma's third quarter EBITDA margin closed at 23.7%, representing a 2 basis point increase year-over-year and reflecting the ongoing benefits from manufacturing cost efficiencies as we deliver our targeted EBITDA margin of around 24%. Pro forma net income for the quarter, excluding noncash FX-related effects decreased 3%, reflecting the strong EBITDA margin performance and lower net interest expenses during the period. Moving on to our regional results, third quarter net sales in Mexico declined 6.4%, mainly due to a weaker summer season that impacted sales performance. This decline was partially offset by strong OTC performance, driven by market share gains in the cough and cold and infant nutrition categories. As you can see in this chart, there is a high correlation between climate and beverage sales in Mexico. Besides this headwind, competition significantly lowered their prices during the quarter, adding more pressure to this particular category. On the right side are the growth initiatives that Marco described earlier. We'll increase our geographical presence to other areas of the country next year, and this effort is expected to drive renewed momentum in 2026. EBITDA margin for Mexico improved by nearly 300 basis points, reaching 27% despite the consumption headwinds and deleveraging pressures previously mentioned. This strong performance reflects the accelerated impact of our company-wide productivity initiatives. Moving on to the U.S. business, the U.S. dollar declined 1.6% versus the Mexican peso compared to the same quarter last year. U.S. sell-in net sales decreased 24% in U.S. dollar terms, reflecting ongoing disruption in the U.S. Hispanic retail market, which continues to weight on sell-in performance. However, sell-out declined only 8%, showing early signs of recovery led by Suerox and Haircare, both of them gaining market share despite the challenging environment. The difference in this quarter between sell-in and sell-out comes from customer returns of some cough and cold products due to the past weak winter season of 2024, 2025, as Marco described earlier. EBITDA margin for the region was 13.6%, down 150 basis points, mainly to the operational deleverage and higher advertising investments during the quarter. Going to Latin America, net sales, excluding Argentina, increased 10.6% for the quarter, driven by strong performance in Brazil, Chile, Central America and the Andean cluster. EBITDA margin, including Argentina, was 21.7%, down approximately 360 basis points, mainly reflecting the impact of hyperinflationary accounting adjustments. However, if we exclude Argentina, EBITDA margin increased by 90 basis points during the quarter. Net sales for Argentina, obviously because of all the hyperinflationary accounting effects, declined 49% in Mexican peso terms, and this is a reflection of a 53% depreciation in the Argentine pesos. However, and this is very important for everybody to know that in local currency terms, sales grew 35% during the quarter in Argentina. This is in line with inflation, actually above inflation and driven by strong unit sales share gains in some of our key brands like IBU 400, Treg, Suerox and among other brands. Just as a reminder of what happened with hyperinflationary accounting, the depreciation of the Argentine peso versus the Mexican peso needs to be taken into account when we report figures in our reporting currency, which is the Mexican peso. Likewise, we also take into account inflation. And while inflation in Argentina has been declining, hyperinflationary accounting is mandatory when cumulative inflation exceeds 100% in the previous 36 months. So we'll have to deal with it for a while. So just to help us understand a little bit better of these IFRS rules, the company's performance in the region has to be reevaluated every quarter. When the difference between accumulated inflation and FX depreciation is negative, this will result in a noncash decrease in accordance with hyperinflationary accounting rules. Last year, however, the effect was a positive 13% difference. But this quarter, we had to cope with a 47% negative delta. Thus, a huge 60% impact on our Argentine results for the quarter and Q1 and Q2. That is what explains, again, what we are reporting. The good news for the future is that historically, high levels of --of inflation tends to follow significant currency devaluations. So we expect this positive effect in the short-term future. Turning back to our financials, cash conversion cycle reached 120 days. And Mexico DSO has been in line with historic averages despite the tough consumer environment that we are facing in 2025. Genomma ended the quarter with a leverage ratio of 1.2x net debt to EBITDA, which is in line with the same quarter last year, and this is notably a historical low in financial leverage, not only for Genomma, but for most companies in the industries where we participate. Free cash flow totaled approximately MXN 1.8 billion over the trailing 12 months, representing a 31% decline, mainly due to lower net income and higher capital expenditures related to our growth projects. It's worth mentioning that during the quarter, we converted 9% of our net sales into free cash flow. Capital allocation during the quarter included our 13th consecutive quarterly dividend payment of MXN 200 million, which is $0.20 per share, and we also repurchased --1.4 million shares. In closing, this quarter highlighted both the challenges and the resilience within Genomma's portfolio as well as our company's strong fundamentals. Over many years, Genomma has been built on a foundation of sustainable growth, and we continue to advance with a long-term perspective. We remain encouraged by the solid fundamentals across our core markets and the traction of our strategic projects that Marco described, and we look forward to capitalizing on opportunities once these challenging conditions ease. With that, let's now turn on to Q&A.
Operator: Thank you Marco, Antonio. We will now begin the question and answer session. [Operator Instructions] Our first question comes from Alejandro Fuchs from Itaú. Alejandro please turn on your microphone and proceed with the question.
Alejandro Fuchs: Thank you operator. I have 2 very quick ones. First for Marco. I want to see, Marco, if you can maybe walk us through your expectations for next year, right? Maybe a little bit better consumption in Mexico, but we also have some headwinds in terms of now it seems that we have more color on potential taxes for beverage companies. So maybe if you can tell us what do you see and expect for next year in Mexico, that would be very helpful. And then the second one is for Tonio very quickly. In terms of working capital, I saw a big decrease in accounts of days payables -- in days payables this quarter and then an increase in receivables in Mexico. I wanted to see maybe, Tonio, if you can walk us through if there is something unusual that is occurring this quarter, we should expect this to normalize? Or is this just business as usual? Thank you.
Marco Sparvieri: Thank you, Alejandro. On Mexico, I would say that my expectation, although I don't have the crystal ball, but I do expect a few more quarters -- difficult few more quarters in a very difficult environment from a consumption point of view. But as I said, regarding of the overall context in the market, categories and competitors, I am very, very confident that the plans that we are currently putting in place, I am presenting the whole plan today, but we have started working and implementing many of these strategies several months ago. So I am very confident that we are going to see a gradual recuperation of the top line at some point in the first half of 2026. And I am very confident that with the investments that we are making in the business, the additional resources that we have secured, the MXN 1.1 billion that I just mentioned, reinvesting that money thoroughly and intentionally in the business to reignite the top line growth. I am very confident that we are going to put this company to grow again at least at the same levels that we have been growing over the past 6, 7, 8 years. You asked also about the EPS. Look, the EPS right now, the way it stands based on all the public information that you all have access to, it's impacting both our competitors, okay, and ourselves. And when I say competitors, I mean all the competitors, isotonic beverages and electrolyte beverages in the same category, okay? But we have an advantage right now because we don't sell our product Suerox with sugar. So the current situation as it stands today based on the public information that we know is that the EPS that will be applicable to Suerox is half of what will be applicable to our competitors in isotonics and electrolytes. So that put us in an advantage. There's two scenarios here that we have fully accounted in the plans for next year is -- one is if our competitors increase prices and do not absorb the EPS, we will follow and the EPS will have no impact in our margins. But if our competitors do not increase prices, we will have to absorb and that impact, it's already in the financials and the plans for 2026.
Alejandro Fuchs: Thank you very much Marco.
Antonio Zamora Galland: Alejandro, this is Antonio. Thank you for your question regarding working capital. So in terms of days payables, the 93 days that we presented for the Q3 are pretty much in line with the 96 for Q2 or the 94 for Q4 2024. As we all know, when you transition from third-party contracting, the [indiscernible] to our own facilities, the kind of suppliers that we have are different. We are now buying raw materials directly. And so it's a new game. And I would say that this range of around 90-something days for payables at this moment, that's going to be the new normal. Obviously, we are working with suppliers. We're negotiating as they get to know us better and as we can get to better negotiations, we hope that in the future, this is going to improve. But that's part of the reason why in the past, when we were buying finished products, we have better terms. But those products were costlier. I mean that's why the COGS was higher, significantly higher. So I think it's a lot better to have productivity, the kind of productivity in terms of COGS, while we have to work -- we still have to work on payables. But this is going to be around the new normal. And if you see Q4, Q2, Q3, you will see that the numbers are pretty much around mid-90s in terms of DPO. In terms of DSO in Mexico, that's why I presented a chart with the historical DSOs. Yes, in 2024, we were improving our DSO. Obviously, last year, it was a different year. Everything was more optimistic. This year has been more challenging. So there's two reason. One is, obviously, the market is a little bit slower for everybody, and you can see this in most companies in the consumer landscape in Mexico. But also, it's a little bit tricky because it's part of the accounting formula of DSO because you divide the ending balance of receivables by a denominator, which is the past sales from a certain period, whether it's 90 days or 360 days. So if sales have been declining, lately, unfortunately, in the case of Mexico. From a mathematical point of view, that increases artificially the number of days in DSO. If sales start growing faster, it's going to be the opposite. So you will see that effect. So what I can tell you in terms of DSO, I think that considering the very tough consumer environment that we are facing, we are pretty much in line with average and what we should expect this year. Obviously, if for 2026, as you very well pointed out, the expectations for the consumer market is a little bit better. We obviously are going to work to improve that ratio. I don't know if I was able to answer your question, Alex.
Alejandro Fuchs: Thank you very much.
Operator: Our next question will now be from Álvaro García with BTG Pactual.
Alvaro Garcia: One question we've gotten quite a bit is how is it that your EBITDA margin is so stable considering pretty significant sales decline we saw this quarter. So I was wondering if you could kick it off with that one.
Marco Sparvieri: Yes. Thank you, Alvaro. This is Marco. It's really the -- a huge amount of efficiencies and productivity that we are generating behind the plan we put in place a few years ago. Most of the impact of the efficiencies we are seeing today of the plans that we implemented like 2 years ago with CapEx, like integrating our packaging, manufacturing and so on. So -- but short answer is its basically that.
Alvaro Garcia: Great. And two more. One, bigger picture, just I can't remember a time with so many sort of relaunches sort of renewed images across all your different brands. So I was curious, Marco, how your clients are taking this, especially maybe the larger retailers? How are they sort of digesting all of this? And sort of what's the prospect or what's the outlook for the uplift in sales you'd expect from all of these relaunches?
Marco Sparvieri: No, clients, they are like fascinated. I mean they like innovation, and that's what the categories where we compete actually need, not just to drive our growth, but to drive the total category growth. So like the Walmart skin care buyer is really fascinated with all the things that we are doing. And -- so -- and also, you have to remember that this is not just for one distribution channel. When you see like this, all the new sizes and all that, it doesn't necessarily impact just one channel all at the same time. Many of the things that we are doing are some for the traditional channels, some from the modern retail channel, clubs, hard discounters, e-commerce. So it's not that one single customer is going to have to absorb 50 different changes. I don't know if that makes sense.
Alvaro Garcia: Yes. That's helpful. And the last one, maybe for Tonio on CapEx. I have seen the uptick sort of year-to-date. I was wondering if you can maybe provide guidance for maybe this year and next year on what that is and what we should expect going forward in the context of free cash flow. Thank you.
Marco Sparvieri: Yes. I'm going to take that one, Tonio. I have the numbers pressure. The -- so we have this quarter, the quarter 3, quarter 4 and quarter 1 with some heavy CapEx investments there. We are paying for the new distribution center, which is spectacular. We are taking our levels from $7 million to $10 million and the distribution center is going to bring us savings of around $12 million per year. We are still paying for the second line of Suerox and several other CapEx investments in the plastic plant, okay? So I expect the next 2 quarters to be a little bit heavy on CapEx. But 2026, like overall, based on the current forecast that we have, both in terms of CapEx and operational cash flow, we expect that we are going to return to the levels of free cash flow that we have been reporting in the past few quarters, which is in the round of MXN 2.7 billion, MXN 3 billion per year annually.
Operator: Our next question will be from Axel Giesecke from Actinver.
Axel Giesecke: Just a quick one regarding the resilience of OTC in Mexico. I just want to know what share gains are you achieving in these categories? And how sustainable are they as we move into 2026 and looking forward?
Marco Sparvieri: Thank you, Axel. So first, I mean, OTC in general is very resilient, okay, a lot more resilient than personal care or even beverages, okay? And that is true for not only for Mexico, but also for all the markets. And basically, all the categories or subcategories within OTC. What we are seeing is that, first, from a total sell-out standpoint, regardless of the very difficult environment that we are seeing in general in Mexico from a consumption point of view, we were able to navigate in these categories with a lot more strength, okay? And just to provide a little bit of color in terms of numbers, we are -- recently, it's very early to say, but I think it's important that you guys know that the early signs that we have from the -- both execution and incidents of the cold and flu season for 2025 and 2026, the early signs that we are seeing are very encouraging. We are growing double digits in several of the brands that have to do with cough and cold. And so it remains to be seen what happens. But normally, when a season starts strong, it remains strong, hopefully. But yes.
Operator: Our next question will now be from Froylan Mendes from JPMorgan.
Fernando Froylan Mendez Solther: Thank you for taking my question. I was hoping you could illustrate on where are the MXN 1.1 billion productivity measures the incremental ones coming from? I'm just curious, I mean, if the weakness in the market is clearly a top-down and even weather-driven, why do you feel the need to invest more in growth levers today if the market is supposed to stabilize at some point? Or am I missing something in any of your markets that will require an extra boost of growth beyond this -- to offset this macro slowdown, maybe some change in competitive dynamics? That's my first question. And secondly, I wanted to understand better the performance in the U.S., the decline of almost 24%. You mentioned something about some returns from -- I guess, from the different channels. But what do you expect these productivity gains being invested in growth to translate into the United States? Should the U.S. react before other countries? Where does the U.S. stand in the recovery path that you foresee?
Marco Sparvieri: Yes. Thank you, Froylan. Let me address one by one. Productivity is mainly coming from four key interventions. Number one is a very strong implementation of artificial intelligence across different functions and processes that before required a lot of headcount and now it doesn't. So that's one piece. Second is the strengthening of our COGS reduction original plan. So we had a plan -- a very aggressive plan to reduce COGS, and we strengthened that plan even further. So we stretched all the interventions that we are making even further to get more productivity there. So we expect the COGS to continue to go down. Third, we are eliminating a massive amount of administrative cost that was previously in the P&L. So we are cutting administrative costs by around 30%. And fourth, the fourth pillar is go-to-market spending. And with that, I mean, unproductive spending, okay? So like we made a very thorough analysis of all the money that we were spending in pricing and promotions, point-of-sale execution. We are closing distribution routes that are not profitable. So we made like a very thorough analysis of every spending that we have in that bucket, and we are cutting a huge amount of spending that was unproductive. All that adds up to $1.1 billion. The second question is why investing in the business? And the answer is, well, first, I don't know what's going to happen with the consumption market or environment or context in 2026, and I don't want to wait until the context saves us and we start growing the top line again. So we are deciding to invest a massive amount of money to reignite growth regardless of what's happening out there. And second, we want to be aggressive because we have a very strong portfolio of brands with very strong positioning. We have a very strong pipeline of innovation. And importantly, we have a very strong capabilities to execute, okay? So -- and we have the resources. So we have the pipeline, we have the capabilities, we have the resources, and we want to put this company back to growth. So that's basically the reason. And in terms of the U.S. decline, it's fairly simple. I mean, we -- we -- the sell-out is declining 8%. It's not great, but it's not a massive crisis. We have brands that are relatively healthy in the U.S. like Suerox and Tio Nacho and some of our OTC brands. But unfortunately, we had a very bad winter season across the U.S. as well as in Mexico last year. And what we are seeing now is that we loaded a huge amount of inventory of our winter season brands because we want to play big in the seasons. And the same we did in Mexico with Suerox this year, we loaded big time because who wins is the one with more inventory out there in the stores, and we want to play big and we play big in the U.S. And now after a season that didn't go so well, we are receiving customer returns in those brands that is impacting the top line in sell-in, but the sell-out is not declining as much as the sell-in. I don't know if that provides perspective on the question you asked.
Fernando Froylan Mendez Solther: Yes, Mark. Do you think that the channels are, let's say, more balanced today in terms of inventory so that the next season will be, let's say, more correlated to the actual demand? Or how do you see the inventory levels?
Marco Sparvieri: It's like moving pieces all the time because it's -- we play a lot in seasons. We play in the winter seasons with OTC and then we play big time in summer with beverages and some of our OTC categories for the summer. So the strategy we follow and has worked really well in the past is that we play very aggressive in terms of both point of sale execution, communication, innovation and also huge inventory at the stores, okay? So we -- it's a bet all the time, it's a bet, okay? And that's how it works. So you load big time upfront and then you expect for the best. And if it works, it's fantastic. And if it doesn't work, then you have to deal with the inventories and the product that you put out there. So for example, you are seeing a strong decline in Suerox this quarter in Mexico, in particular, in sell-in, that doesn't align with the sell-out numbers for the quarter because we had big inventories for the summer season. The summer season didn't work. Now we are not selling a lot of Suerox because customers still have inventory. But at the same time, we are we are playing a big bet for the winter season. And this quarter, we loaded a massive amount of OTC here in Mexico. And we're seeing early signs that this is working and that we are growing market share in some of these categories. And if it works well, we're going to have a great next quarters in OTC behind a good season, and we're all going to be happy. If it doesn't work, we're going to see the same dynamic that we are seeing today in the U.S. and in Mexico with beverages.
Fernando Froylan Mendez Solther: Marco, lastly, and thank you for the several questions. When you say that you expect growth to recover into the second half of 2026, do you expect beverage Mexico to come first, then cough and cold U.S. second? What's the timing on the different regions and products that you expect this reignited growth to come?
Marco Sparvieri: That's a difficult one. Let me think. I think OTC, we are going to see a better performance in OTC first, beverages second, hopefully, because if we -- if we have a better season in terms of weather next year, which we should because this year, we didn't have a summer, then we're going to sell a lot of Suerox, okay? So with a good winter season that we are starting to see for OTC, that's going to come first, second, Suerox. And third, most of the initiatives that I just presented for skin care and personal care are hitting the market in the second half of 2026. So third will come personal care. That's, I think, the order.
Operator: [Operator Instructions] This will conclude our third quarter results conference call. Thank you for your attention.