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Operator: Ladies and gentlemen, good morning. My name is Abby, and I would like to welcome everyone to the JetBlue Airways Third Quarter 2025 Earnings Conference Call. As a reminder, today's call is being recorded. [Operator Instructions] I would now like to turn the call over to JetBlue's Director of Investor Relations, Koosh Patel. Please go ahead, sir. Koosh Patel: Thanks, Abby. Good morning, everyone, and thanks for joining us for our third quarter 2025 earnings call. This morning, we issued our earnings release and a presentation that we will reference during this call. All of those documents are available on our website at investor.jetblue.com and on the SEC's website at www.sec.gov. In New York to discuss our results are Joanna Geraghty, our Chief Executive Officer; Martin St. George, our President; and Ursula Hurley, our Chief Financial Officer. During today's call, we'll make forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, without limitation, statements regarding our fourth quarter and full year 2025 financial outlook and our future results of operations and financial position, including long-term financial targets, industry and market trends, expectations with respect to tailwinds and headwinds, our ability to achieve operational and financial targets, our business strategy and our plans for future operations and the associated impacts on our business. All such forward-looking statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in these statements. Please refer to our most recent earnings release as well as our fiscal year 2024 10-K and other filings for a more detailed discussion of the risks and uncertainties that could cause the actual results to differ materially from those contained in our forward-looking statements. The statements made during this call are made only as of the date of the call, and other than as may be required by law, we undertake no obligation to update this information. Investors should not place undue reliance on these forward-looking statements. Also, during the course of our call, we may discuss certain non-GAAP financial measures. For an explanation of these non-GAAP measures and a reconciliation to the corresponding GAAP measures, please refer to our earnings release, a copy of which is available on our website at www.sec.gov. And now I'd like to turn the call over to Joanna Geraghty, JetBlue's CEO. Joanna Geraghty: Thank you, Koosh. Good morning, and thank you for joining JetBlue's Third Quarter 2025 Earnings Call. As Hurricane Melissa makes landfall today, I'd like to begin by extending my thoughts to our JetBlue crew members, their families and the communities that we serve in Jamaica. As the largest airline in Jamaica, we are focused on caring for our crew members and resuming operations when we can safely do so. Our crew members are at the heart of providing the reliable and caring service that makes the JetBlue experience so special and I'd like to thank them for their dedication throughout the challenging summer travel season. Thanks to your hard work, we are continuing to make meaningful progress on our JetForward plan while taking care of our customers and each other. Throughout the year, our team has worked with urgency to adapt to the evolving demand environment, adjusting supply, implementing new revenue initiatives and pursuing self-help measures to continue reducing costs. Our results this quarter are an outcome of these efforts. We ended the period at the better end of our guidance ranges across all metrics, including unit revenues and costs, realizing meaningful margin improvement compared to initial expectations. The whole industry took a step back this year. But despite these challenges, we are gaining momentum from JetForward and making progress on our plan, operating a stronger airline every day and delivering on or beating our commitments. Building on the progress since we've announced JetForward 5 quarters ago, our operational metrics and customer satisfaction scores continued to improve in the quarter. We improved completion factor and on-time performance versus last year with A14 up 2 points, successfully navigating a challenging July in which air traffic control programs impacted operations nearly every day. As a result, customers are more satisfied with their JetBlue experience as demonstrated by improvements in our Net Promoter Scores, both in the quarter and throughout the year, and I'm proud of the team for achieving double-digit NPS gains year-to-date. Even though our operation has consistently been challenged by external factors, our results demonstrate that the investments we've made in reliability are working. This fall, airfield construction at both Boston Logan and JFK is negatively impacting on-time performance, but we expect that to improve in November when this phase of construction wraps up. Regarding the government shutdown, we have not yet seen any material impact to demand or our operation. From TSA and air traffic control to Customs and Border Protection, it's truly a team effort. We are grateful for their dedication in keeping us safely moving, and we also thank Secretary Duffy for being a strong partner as we navigate this situation. By delivering a reliable operation and improving customer satisfaction as part of JetForward, we are building a greater customer loyalty and generating more repeat customers. Last quarter, for example, our TrueBlue attachment rate was up 7 percentage points year-over-year and our loyalty members are increasingly choosing JetBlue for multiple trips per year. At the same time, we continue to modernize our fleet to drive efficiencies across our operation and enhance the customer experience on board. During the third quarter, we retired our remaining Embraer E190 aircraft, marking nearly 2 decades of service. We want to thank Embraer and GE for their partnership over the years. This completes our transition to a more customer-friendly onboard product and cost-efficient all-Airbus fleet, allowing us to take full advantage of additional network opportunities from our East Coast focused cities. Along those lines, in support of building the best East Coast leisure network, we are taking deliberate steps to deepen our presence in Fort Lauderdale. This expansion, which mostly launches in the fourth quarter, enables us to further strengthen our position in this highly valuable focus city, adding more leisure destinations for our South Florida customers and increasing connectivity to the Caribbean and Latin America. JetBlue has deep roots in Fort Lauderdale. It's where our first revenue flight landed from New York, New York's JFK, on February 11, 2000. And now, 25 years later, the opportunity is ripe to reaffirm our leadership position there. With our far better customer experience and competitive low fares and now more destinations, we are pleased to bring even more value and choice to customers in Fort Lauderdale and across South Florida. Looking ahead to the fourth quarter, we remain optimistic that the environment will continue to improve. And as Marty will discuss further, we are pleased by the overall health of bookings. Demand for peak period travel remains strong, led by the resilience of the premium leisure segment, which aligns well with our new premier card, our plans to open our first lounge this quarter as well as domestic first class launching next year. We've built a strong foundation with JetForward and we are on track to generate a cumulative $290 million of incremental EBIT this year. Our efforts to boost reliability, recalibrate our network, enhance our products and services, supercharge our loyalty program and execute on costs have fueled transformational change, delivering double-digit NPS gains and industry-leading operational improvements. Blue Sky implementation is on track with last week's loyalty launch, marking the first major milestone of our collaboration, and domestic first class is scheduled to launch next year, both expected to be meaningful drivers of incremental earnings in 2026 and beyond. We are encouraged by the progress so far and we are confident we are on the right path to restore profitability, building a stronger JetBlue for our customers, crew members and our owners. Over to you, Marty. Martin St. George: Thank you, Joanna, and thank you to our crew members for a strong summer. We continue to make meaningful strides on JetForward to refresh our commercial strategy and drive incremental revenue by refining our network, expanding our reach through partnerships, increasing the value and utility of our loyalty program and enhancing our products and perks. Turning to Slide 6 in the presentation. As Joanna mentioned, we have reestablished our position as the largest carrier in Fort Lauderdale, a market where our differentiated product and robust network resonate well with customers. As previously announced, we plan to launch 17 new routes and increase frequency on 12 high-demand markets, with our schedule now representing a 35% year-over-year increase for the IATA winter season. Our schedule also features over 25 daily flights touching Fort Lauderdale with our award-winning Mint service, offering more transcontinental lie-flat seats from South Florida than any other carrier. To support continued growth in premium flying, we also announced our intent to establish a Mint base for in-flight crew members in Fort Lauderdale, alongside growing the size of our overall crew base, bringing more jobs to the region. These investments reaffirm our leadership in Fort Lauderdale and leverage our caring service, differentiated product, premium Mint experience and robust network. Turning to Slide 7. Implementation of Blue Sky, our collaboration with United Airlines, is progressing as planned and has already begun delivering value to our customers. Last week, we enabled point accrual and redemption across our loyalty ecosystems, enhancing the utility of each program. We are already seeing significant customer interest. And since announcing Blue Sky at the end of May, we've seen a sustained double-digit increase in average daily card acquisition growth across geographies, particularly in non-focus city markets. We expect to continue the momentum into the first quarter as we begin cross-selling each other's flights on all digital channels. This industry standard interline agreement is expected to expand distribution reach for both airlines and provide customers with more choices to travel across the globe on our complementary networks. Loyalty reciprocity and cross-selling are 2 of the largest drivers of value from Blue Sky, and we expect the successful implementation of both to generate significant earnings momentum for JetForward. Later, in 2026, we plan to launch reciprocal loyalty benefits and Paisly integration, driving high-margin growth and additional value for the partnership. As we improve our customers' network options, we are also enhancing the customer experience on board and at the airport. In September, we became the first airline to partner with Amazon's Project Kuiper to provide faster and more reliable connectivity to our onboard Wi-Fi, furthering our leadership in onboard connectivity. JetBlue launched Fly-Fi in 2013 to become the first and still only major U.S. airline to offer free high-speed Wi-Fi on every aircraft in its fleet. The rollout is expected to begin in 2027. We continue to build on our decade-long commitment to premium and are progressing our plans to further capitalize on the demonstrated industry shift to the segment. This month, we enhanced merchandising EvenMore, and now customers can book on a single transaction through the GDS and online travel agencies. Previously, purchasing the product required 2 separate transactions on our third-party channels, and the simplicity and increased visibility is expected to support buy-ups and higher yields. In addition to EvenMore, preferred seating continues to outperform expectations. Finally, we remain on track to launch domestic first class in 2026, with the first equipped aircraft expected to begin flying in the second half of the year. The domestic first fleet modification is planned to include our entire non-Mint fleet. By the end of '26, we anticipate having approximately 25% of the retrofit complete, with the vast majority of the fleet expected to be completed by the end of 2027, over which time we expect to see meaningful EBIT contribution. On the ground, we are on track to open our first airport lounge at JFK by the end of this year, while our Boston lounge is set to open in 2026. The lounges will offer complementary access to transatlantic Mint customers, premium credit card holders, where signups have already exceeded 2025 targets, and TrueBlue Mosaic members. Passes will also be available for purchase on days where space allows. Alongside our construction of the JFK lounge, we are in the middle of a total refresh of Terminal 5, which is set to bring more than 40 new concessions and a redesigned center concourse. Moving to third quarter results. Over the summer, the demand environment continued to show signs of recovery characterized by strong close-in bookings, healthy demand for peak travel and the sustained strength in premium. As a result, unit revenues ended the quarter down 2.7% year-over-year, just above the midpoint of our revised guidance range and more than a point better than our initial guidance midpoint. Premium continued to outperform core, and year-over-year, premium RASM growth was up 6 points relative to core. Our managed corporate yields also showed strength, with yields up high single digits. And while our domestic flying saw the most sequential RASM improvement quarter-over-quarter, its relative margin performance still lagged international. We continued our string of double-digit loyalty growth in the quarter with co-brand remuneration up 16% and TrueBlue revenue up 12%. The card and TrueBlue trends are evidence of our improved customer satisfaction scores, recalibrated network of product as well as the strong benefit we are already seeing from the Blue Sky collaboration announcement. For the fourth quarter, we expect unit revenues to be between flat and down 4% year-over-year on capacity of up to 3/4 of the midpoint. Third quarter demand trends are forecasted to largely continue into the fourth with continued robust demand for premium products. Peaks are expected to remain healthy, while troughs continue to see challenges, which we have and will continue to actively manage through capacity adjustments. We are seeing the booking curve normalize, and we expect the same trend to continue throughout the fourth quarter. We expect continued macro-related tailwinds going forward in addition to the ramp of our JetForward commercial initiatives. On the network side, our capacity investment in Fort Lauderdale will be in its early stages of ramp after launching in November, December. And coupled with the step-up in domestic competitor capacity are expected to be just over a point of headwind to RASM for the quarter. Lastly, it's too early to size the impact of Hurricane Melissa on our operations in Jamaica, so our guidance does not contemplate any impact. Jamaica represents about 2.6% of our capacity in the fourth quarter. As we look ahead, we know there's still more work to do, but JetForward is the right plan. The initiatives we outline today from our Fort Lauderdale growth to Blue Sky and enhancing our premium products will be key to getting us back to sustained profitability. I'll now turn it over to Ursula to provide more detail on our cost and financial performance. Ursula Hurley: Thank you, Marty. We ended the quarter with an operating margin 3 points better than what was implied by our July guidance ranges, supported by a more reliable operation, greater close-in demand for our products and our team effectively controlling costs. Despite a tough air traffic control and weather environment in July, completed capacity growth of 0.9% was above the midpoint of our revised guidance. This, coupled with strong execution, helped to deliver excellent cost performance for the quarter. We ended the quarter with CASM ex fuel up 3.7% year-over-year, beating the midpoint of our initial guidance by over 1 point, marking yet another quarter of cost execution. It is clear the investments we are making in our operation are increasing efficiencies across the business. Over the year, the team has demonstrated solid cost execution, and we are improving our full year CASM ex-fuel guidance from up 5% to 7% to up 5% to 6% year-over-year, lowering the midpoint by half a point despite less capacity than initially planned. For the fourth quarter, we expect CASM ex fuel growth of up 3% to 5%. For the third quarter, fuel price came in at $2.49 in the lower half of our revised guidance range. We expect fourth quarter fuel to be between $2.33 and $2.48. Our fuel guidance is based on the forward curve as of October 10. As we work through our budgeting process for 2026, we expect our unit cost next year to be low single digits, underpinned by low to mid-single-digit capacity growth. We plan to grow capacity through new aircraft deliveries as well as the return of a sizable number of parked aircraft to service. As we get back to growing once again, we're doing so with our balance sheet in mind by adding capacity despite reducing CapEx. We expect our capital expenditures to be at or below $1 billion next year and each year through the end of the decade, supporting our balance sheet and our return to positive free cash flow over time. We ended the quarter with a healthy liquidity level of $2.9 billion in cash and marketable investments, excluding our $600 million revolver, representing 32% of trailing 12 months revenue. At the end of 2025, we expect to carry liquidity in excess of our 20% liquidity target. Looking forward to 2026, we expect to raise a modest amount of capital to maintain our liquidity target, driven by the maturity of $325 million of our 2021 convertible notes and new aircraft deliveries. I believe our healthy unencumbered asset base of over $5 billion will provide us flexibility to meet our funding needs. Finally, JetForward remains on track to hit its target of $290 million of incremental EBIT by year-end, and I am confident we are also on the path to meet our $850 million to $950 million 2027 commitment. The exciting commercial initiatives Marty detailed, including Blue Sky, domestic first and lounges are expected to drive significant earnings momentum for JetForward in 2026 and into 2027. And alongside these efforts, we plan to remain focused on cost discipline and managing our fleet to preserve liquidity and drive capital-light growth. Taken together, we are confident we have the right initiatives in place to drive meaningful profitability improvement in 2026. And while we are still in the early innings of our budget process, it is our intention to build a plan that gets us to breakeven or better operating margin for 2026. We look forward to sharing more details during our January call. We will now open it up to your questions. Back over to you, Abby. Operator: [Operator Instructions] And our first question comes from the line of Dan McKenzie with Seaport Global. Daniel McKenzie: Thanks for the preliminary outlook for 2026. But backing up, JetForward didn't factor in the Chapter 11 filing of one of your toughest competitors. And so I'm wondering if you can talk about what that means to the Fort Lauderdale operation and what that means to revenue upside to the JetForward plan? Martin St. George: Dan, it's Marty. Well, I'm not going to go into detail about our competitor's action, but most important thing is our reaction. And frankly, we have been hamstrung in Fort Lauderdale because of our lack of access to international gates in the middle of the day. And it's a relatively constrained customs facility at the airport and we have multiple carriers haul trying to fly at the same time. What's worked out very well for us is that as our competitor has done some pretty significant pull-downs in Fort Lauderdale, we have seen a lot of opportunity to move flights into that custom facility at a time when it's actually good for our local customers and also very good for generating connections to markets to the north. So if you look at the growth that we have put into Fort Lauderdale, it is notwithstanding our reputation as being a Northeast airline, the growth is very much focused to markets in the Southeast and south of Fort Lauderdale. I'm actually very optimistic about the opportunity this creates. I mean I use the word generational about this. I mean our ability to get such significant growth for international services in such an important market for us is something we're absolutely going to take advantage of at the time. As I mentioned in the script, in the very short term, it's going to create a bit of a headwind in the fourth quarter, but we perform very well in Fort Lauderdale today as is shown by the fact that we have such a big Mint operation there. We compete very well against our competitor, which is probably one of the reasons why they are going through the restructuring they're going through. And we are very bullish on Fort Lauderdale. So thanks for the question. And I think it's actually one of the good parts of the story. With respect to the impact of JetForward, there are an awful lot of puts and takes in there. There was a big chunk of network rebuild in there. We have made the commitment to investors that we'll update every 6 months on JetForward. And I don't want to give an update now, but that's something we'll probably talk about at the end of the year. Daniel McKenzie: Yes. Very good. And then if I can just kind of go back to the end of the year and kind of how we're closing out the year. It looks like the government shutdown probably cost JetBlue maybe $500 million in lost revenue. And please correct me on that. But is it right to think that this is lost revenue that comes back in 2026? And then on top of this, all of the JetForward initiatives that you've outlined? And I'm really just going back to -- well, the first quote in the release from Joanna just about the momentum into 2026, if you can just help flesh that part out a little bit more. Joanna Geraghty: Yes. I think first I just want to emphasize, we hit every guidance metric since April and improved 3Q margins versus internal expectations. And that was against an industry-wide setback due to volatility involving customer confidence in the airline space. And so really proud of the work the team has done to make up for some of that lost ground. JetForward, it's a multiyear plan. We remain on track to hit the $290 million of EBIT this year. We launched it 5 quarters ago. We are making excellent progress. I think when you read through the numbers, what you see is a 4-point impact to full year operating margin relative to our initial full year guidance. And our analysis shows that is squarely tied to our premium mix versus other carriers' premium mix. We've done an analysis that shows those who have more premium exposure have actually been less impacted. And when you look at JetForward, it is all about leaning into premium, and we are well on the way, whether it's the Premier Card this year, whether it's the lounges opening up, whether it's preferred seating. You pivot to next year and you look at more lounges. You've got our launch of the domestic first class. So we are squarely in the middle of execution and ramp, and I could not be more excited about the trajectory as we move into 2026. Our NPS score -- you can't have a premium customer if you don't have strong NPS scores. We're back at the top of the industry. So as we look forward to 2026, we do need to continue to see an improving macro environment, but that, coupled with JetForward and the momentum we have, that gives me a lot of confidence that we're going to build a plan, breakeven or better, get us back on track and regain that which we lost this year. Operator: And our next question comes from the line of Savi Syth with Raymond James. Savanthi Syth: I wonder if I could ask Dan's question in a slightly different manner. Just I was wondering if you could kind of give us an understanding of like the incremental contribution in '26, '27 from JetForward. And then what type of headwinds -- you talked about some of the tailwinds like macro that will kind of come on top of that. Just trying to understand like how to think about an EBIT bridge as you kind of look out to kind of '27 and kind of get to solidly profitable footing there? Ursula Hurley: Yes. So we've always said that in terms of the JetForward breakout at $850 million to $950 million, it's really coming through 1/3, 1/3, 1/3 pretty equally. And that just happens to be -- I mean, there's 200-plus initiatives, but the way that they level up, it's 1/3 per year. As Joanna mentioned and what I said in my prepared remarks is next year we have a goal of building a 2026 plan with op margin breakeven or better. So we are going to make up some ground that clearly we lost this year given the macro step back. The puts and takes, I'm pleased with the progress that we're making in general across all JetForward initiatives. Obviously, the premium initiatives are performing well year-to-date. But we're also -- we have a lot more to come between lounges, the premium credit card and also domestic first next year. And I would say I'm also really excited about domestic first. I think this is going to allow us to better compete compared to where we are today. I would say at a macro level, we need the macro backdrop to continue to improve. So we do have that assumption baked into our 2026 guide. But all in all, we feel like we have a lot of good momentum and JetForward is tracking exactly where we thought it was and we look forward on delivering further details on our 2026 plan next year. Savanthi Syth: That's helpful. And may I just –- another question for you is just kind of how are you thinking about liquidity and leverage and kind of what type of financing needs you kind of anticipate over the next 12 to 18 months? Ursula Hurley: Yes. Listen, we did the strategic capital raise back in August of 2024. So that's really provided a strong liquidity runway for us through the end of 2025. We're projected to end the year above our 20% liquidity target. We are going to need a modest amount of capital next year just to support the new aircraft deliveries that we have coming as well as we do have a convertible debt maturity of $325 million in the April time frame. By no means will the capital raise be anywhere near the size that we did in August of 2024. In terms of what assets will we use, I mean, we're in a pretty powerful position in terms of having over $5 billion of unencumbered assets, about 40% of that $5 billion is aircraft and engines, and then the remainder includes our slots, gates and routes as well as our brand. I would say we'll look at all markets. I mean we're clearly focused on the level of interest expense and obviously the debt level that we have currently on the balance sheet. So we're going to try to be super thoughtful and strategic just given market availability with all the different types of unencumbered assets that we have. Operator: And our next question comes from the line of Michael Linenberg with Deutsche Bank. Shannon Doherty: This is Shannon Doherty on for Mike. Just for start, I apologize if I missed this, but can you quantify any impact that you're seeing today from the government shutdown since we're about a month in? I wouldn't typically think of JetBlue as having much government exposure, but since you called it out in the release, it's probably worth asking. Joanna Geraghty: Sorry, I missed a little bit at the tail end of your question, but we haven't seen any meaningful impact with regard to the government shutdown. We obviously are monitoring it closely. And the longer it goes on, obviously, for the industry, I'd say there's more acute concerns. But we have not seen anything and are just really appreciative of all of the government workers showing up, doing their job and keeping the national airspace and our industry running safely. Shannon Doherty: That's great. And maybe one for Marty. With domestic seemingly improving, do you expect domestic RASM to outperform international this quarter? Maybe you can just give us an update on demand by region? Martin St. George: So we don't do a lot of color as far as demand by region. And what we said in general is that international is better than domestic and premium is better than the back of the airplane. And that continues to stand. I'd say if you look at our overall RASM performance and recognize that -- I mean, this is a math issue of weighted average. If international is better and domestic is worse, domestic has some ways to go. I would say, in general, the thing that gets me most excited about improving our domestic RASM is the continued introduction of premium products. As we do a competitive look at our RASM, sort of coach-to-coach, we actually do fine on RASM. The challenge is that we're missing that whole front of the airplane, which is a pretty good revenue kick to our competitors. So we do extremely well against the ULCCs of the world who have premium products that are not really premium, but we see a lot of upside for the premium products that we're adding as far as getting us up to where the legacies are -- close to where the legacies are. So it's not something I'm predicting in the fourth quarter. And again, when we go to '26, we can probably talk in more detail about that. Operator: And our next question comes from the line of Jamie Baker with JPMorgan. Jamie Baker: So Ursula, building on Savi's question earlier, modest cash raises next year. Can you -- where do you think the incremental cost of debt is today? And if we do accept that aircraft debt is typically the lowest, are you leaning more towards sale leasebacks or just borrowing against aircraft? Ursula Hurley: Yes. Listen, I think the benefit of the assets that we have unencumbered is that we can look at all markets and hone in on what is, quite frankly, most cost effective. I think the other priority we look at is building in prepayment flexibility. I mean our #1 priority is getting the business back to consistent operating margin positive. Then it's delivering free cash flow so that we can start to delever. Clearly, the most cost-effective money you can raise right now is with aircraft. So given we are focused on the level of interest expense, that could be a likely path. So how we do the aircraft, it will be what's the most attractive market. Is it bilateral bank loans? Is it capital markets? Is it sale leaseback? We'll look at everything. Jamie Baker: Okay. Fair enough. And following up on that, if memory serves, it was this call last year that I remember first hearing you reference approaching breakeven from a forward year operating margin basis. And look, 2025 kind of went off the rails. I'm not going to hold that against you. But here we are a year later and you're reintroducing that narrative. So I guess the question is for you or -- Marty's color would be appreciated as well. But compared to how you were thinking this time last year, do you think that industry fundamentals are more or less aligned with getting JetBlue back on track? After all, given what you shared on capacity and cost for next year, it's a really high RASM hurdle to get you to breakeven or better. Joanna Geraghty: Jamie, let me take that. So we think industry fundamentals are more aligned with where we're headed. And I fully recognize that it feels a little bit like Groundhog Day and that we were sitting in this room last year around this time with the same commitment. Thanks for recognizing the industry took a step back, and we're all now trying to recover out of that. But leaning into the premium customer is absolutely the right strategy. We've been doing this for 10 years with Mint. We see it in our Mint performance. And we're a year later and we've actually launched a number of initiatives already that support that. And so the progress we made since last year is actually execution on JetForward and continuing to make sure we remain laser-focused on delivering the initiatives we laid out so that as the economy recovers we can take full advantage of those in a later stage of ramp, whether it's the preferred seating, whether it's the even more space changes, launching the JFK lounge this December. We've got Boston next year. We're that much closer to launching the domestic first class. And then as I mentioned in the first question, our analysis this year showed that carriers who have greater exposure to premium had less of a margin impact from the step back. And so that reconfirms that JetForward is the right path. And we're excited about getting closer to profitability and continuing this momentum. And so that's -- from my perspective, the industry fundamentals actually support where we're going and excited to see that come to fruition this year. Operator: And our next question comes from the line of Duane Pfennigwerth with Evercore ISI. Duane Pfennigwerth: Just on the GTF impacts, do you have any update on the grounded aircraft and the forecast for next year embedded in your preliminary '26 comments? And can you remind us, is there any compensation that's actually baked into the results this year? Ursula Hurley: Sure. So the GTF challenges has improved. So if you recall, back in January, we thought we would have mid to high teens number of aircraft on the ground. The average for 2025 is going to be 9. We currently have 6 on the ground today. 2025 is the peak in terms of AOG. So that number will come down next year. So the projected AOG that we'll have on the ground in 2026 is low- to mid-single digits. So this is going to position us to actually be able to grow again, which we mentioned in our prepared remarks. In regards to our 2025 full year controllable cost guidance, it does not assume any Pratt & Whitney compensation. We continue to be in constructive conversations with Pratt. And just given the magnitude of impact it's had on our business, we will settle when we get to the right place. I would say the other last comment from me is this is putting us in a position where we're growing in a capital-light way. So obviously, we've previously paid for these aircraft with the GTF engines, and having them return to service is great. This is definitely a tailwind for us and we're happy with where we're at in terms of getting these aircraft back up in the air. Duane Pfennigwerth: And then maybe just for the follow-up, can you remind us for your domestic business class or first class -- or I forget what you're calling it. Can you just remind us of the implementation timing of that? Like where will you be from a kind of year-end '26 and when you expect to complete that? Ursula Hurley: Sure. So just to give you some context. So we are outfitting all of the non-Mint aircraft that we have. So it's about 250 airplanes. Marty mentioned in his prepared remarks that by the end of 2026, we'll have about 25% of the fleet complete. And then by the end of 2027, we'll have the overwhelming majority complete. So very much looking forward to rolling out the first aircraft in the back half of next year. Operator: And our next question comes from the line of Atul Maheswari with UBS. Atul Maheswari: We are getting pushback that profit decline ex JetForward is accelerating just based on the fourth quarter guidance. So why do you think that is the case? And what needs to happen for the portion of profits not touched by JetForward to start improving again such that JetForward can truly be all incremental? Ursula Hurley: Yes. Listen, as we look at the fourth quarter, we do see an improvement in fuel year-over-year. But you have to remember, we're still operating from a much lower base in terms of the overarching demand environment. While it's improving, and we've seen that along with the rest of the industry, we're still operating way below where we had anticipated this year. We are showing RASM progression from Q3 to Q4. Our JetForward initiatives continue to ramp up. And you've heard us in our prepared remarks as well as in the Q&A highlight all of these premium initiatives that are coming to market. So we are seeing progress. I will remind you yet again, like if it were not for the macro setback earlier this year, which was 4-point impact to JetBlue, we would have hit our full year breakeven or better operating margin. So we believe we're on track and we've got solid momentum as we head into 2026. Joanna Geraghty: Atul, if I can also mention, we've announced very close-in capacity and launch for Fort Lauderdale in Q4. So that's pressuring RASM a bit. Hence, the 1-point step forward in RASM. But that's a really great opportunity for JetBlue and absolutely the right long-term decision for this company because of the opportunity to really reclaim Fort Lauderdale as the third leg of our stool. Atul Maheswari: Right. That makes sense. And just as my quick follow-up on the fourth quarter guidance, can you share some color on booked yields quarter-to-date or some color on what portion of fourth quarter is booked and what's your yield assumption for the portion that is unbooked? Martin St. George: So as far as booking levels, we're about 90% booked for our forecast in October, 55-ish or so for November and I think 35%, 38%, something like that for December. So very, very focused around peaks for November, December. We don't really guide specifically the difference between yield and load factor, but I think the guidance we laid out is based on what we're seeing right now. I think that to give you some more color, if you look at the demand environment as it exists right now, the booking curve is not fully back to sort of 2024 distribution as far as advanced purchase dates, but it's very, very close. And the trend of peak versus trough has really continued. We have very good strength in the peaks and still challenges in the trough. So to me, that is the last piece of the puzzle. That I think when that comes back, we'll be in a much better spot to recover sort of the 2024 demand levels. But again, the line we use is people are still taking that one vacation at Thanksgiving and Christmas. They're not all taking the second vacation. They may take. And I think that's sort of what we're seeing in general. Atul Maheswari: Good luck for the rest of the fourth quarter. Operator: And our next question comes from the line of Catherine O'Brien with Goldman Sachs. Catherine O'Brien: So I realize it's still early, but can you speak to how the impact of Fort Lauderdale adds is shaping up for 1Q? Guessing since you add that capacity so close into year-end should be less of a drag in the first quarter. And then maybe a bigger picture, a bit of a follow-up to Savi's question earlier. Could you just walk us through high level what the biggest tailwind from JetForward to be in '26? Blue Sky kicks in a more meaningful way, domestic first on 25% of the fleet by year-end. Just trying to get a sense of what the unique JetBlue revenue tailwinds are into next year, like as you see them in the biggest buckets. Martin St. George: Okay. First of all, with respect to the Fort Lauderdale, if you look at a lot of the capacity we added, it is going to be good first quarter capacity. I mean a lot of beach destinations. I think seasonality is our friend. Again, we'd like to have the full 300 days booking window, but we're going to be more at that point more like 130, 140 booking day window for that period. So I don't think the sort of headwind will be gone, but I think we're -- certainly seasonality is our friend at this point. I will also say that the -- again, with the ability to add more international arrivals in the peak in Fort Lauderdale, we are going to have a lot of opportunities for customers to connect from the north into the Caribbean and Latin America. And actually, we're really excited about that because I think -- again, we're a low-cost airline, we don't really build hubs, true hub-and-spoke networks, but we certainly carry internal connections. And I think based on the sort of the local timing of when flights are good for Fort Lauderdale and then when they've been good for the beach markets, we're actually getting a lot of good connectivity opportunities. So we're actually very bullish about this. I know historically we talked about a 3-year ramp. We are not in any way forecasting anything close to a 3-year ramp. Joanna Geraghty: And maybe I'll take the second part of your question, Catie. So there are several key and big initiatives ramping into next year. I'd say Blue Sky is probably one of the biggest, all the significant drivers. So we just announced, obviously, earn and burn, so reciprocity loyalty for JetBlue and United last week. We've got Interline sales launching next year, Paisly launching next year and then recognition of loyalty launching next year. So that's -- all of those will be delivered -- implemented and delivering value in 2026. The network continues to ramp. I mean we've moved 20% of the network around. Most of those changes went in about a year ago. And so given the ramp time frame, those will continue to ramp into 2026. We're returning to growth next year. So that's going to be, I think, a nice tailwind for JetBlue, buttressing our cost control. And then when you think about operational reliability, lounges, domestic first, we're really trying to create this flywheel for that premium customer where they want to come back to JetBlue because we have the full product offering that they would like. And that's underpinned by this fantastic improvement in our operations, specifically around Net Promoter Score and winning the hearts and minds of customers again. Marty touched on Fort Lauderdale and that ramping into '26. But those are the big buckets. Catherine O'Brien: That's really helpful. May I just ask one quick follow-up on Mint? You're adding the new Mint crew base in Fort Lauderdale and some new flights to the West Coast. Can you talk about where you think there are further opportunities to add more Mint flying, if any, just given the focus on adding premium products? And can you just remind us the margin uplift of the Mint versus non-Mint flight or RASM, however you want to talk about it? Martin St. George: Okay. So first of all, we are coming to the end of the line of Mint delivered –- of airplanes with Mint on them. I think '26 and '27 really focus on domestic first class. We have a few more Mint airplanes coming. But in general, we're out of the Airbus 321 business until 2030 or 2031. So we're going to reach a plateau for Mint flying. I think what's been the most exciting for us about Fort Lauderdale is how incredibly helpful it is as far as being counter seasonal. We have very good results across the Atlantic in the summer. Frankly, we could probably use some more lift in the summertime if we can get it. But obviously, you need to fly the airplane 12 months a year. And where Fort Lauderdale has really come into its own is with fantastic demand in the winter. So having airplanes in markets like Dublin and Edinburgh, which are great summer markets, maybe not so great in the winter, and having those airplanes move to Fort Lauderdale is a major, major win for us. And frankly, I don't think any of us expected to see that good -– the demand that strong in Mint out of Fort Lauderdale, but it's been a very happy surprise for us. And then obviously, the demand goes down in the summertime because it's hot down there, and that's a very good time for the planes to move across the Atlantic. So we love the ability to swing these airplanes back and forth. And frankly, we will get a nice little cost benefit by having a Mint base down there as far as having -- not having to have Boston and New York crews fly the Fort Lauderdale West Coast services. So we're really bullish about that. With respect to Mint overall, it continues to be extremely successful. And I think the combination of quality, fantastic service delivery by our crews and really good prices has been a great winning formula for us. The 321 has proven to be a very good low-cost airplane platform for us. So I think it's worked out extremely well for us. We haven't really gotten into individual profitability numbers, but certainly the Mint network is the best of our domestic network right now. I think I'll leave it at that. Operator: And our next question comes from the line of Tom Fitzgerald with TD Cowen. Thomas Fitzgerald: I was just wondering if you could speak to what you're seeing in terms of reliability and time on wing on your A220 fleet and how you're thinking about that as you go into 2026 planning? Ursula Hurley: Yes. So starting high level, we provided capacity indications for 2026 being in the low to mid-single digits next year. I would say that's really driven by 2 things. Number one, the number of new deliveries that we have coming next year in terms of the 220. And then the second driver is really all of these aircraft returning from AOG. So I mentioned going from an average of 9 this year to low to mid-single digits next year. We do have some reliability challenges on the A220 that we're working collaboratively with Airbus Canada on. But it is impacting us. It's just the materiality when you look at the capacity growth next year isn't as large. It's really the new deliveries and the return from AOGs. Thomas Fitzgerald: Okay. That's really helpful. And then -- so I'm kind of curious how you're thinking about -- I know the technology was a big part of how you -- the operational and reliability improvements. I'm just wondering how you're thinking about that on the distribution side and any levers to drive more direct channel sales? Martin St. George: First I'll start by saying we are 3/4 direct booked right now. So we've got very, very strong penetration in direct channels. And we have -- we've taken a different strategy with OTAs than some of our competitors. We do not work with all the OTAs. We work with a very select number, and we've got very preferential distribution relationships with them. So I think the benefit of some of the technology solutions is not quite the same for us as it is for others. That being the case, we are in the process of adding NDC as a technology for JetBlue and we expect to -- I don't think we've given a date for it, but the team is working on that right now. And frankly, I think the thing that I'm most excited about is the potential it has for continuous pricing. It's very clear that airlines pricing 26 letters or 26 buckets or 26 booking codes is a technology of the 70s. And I think with what we have seen elsewhere in the world as far as the benefits of continuous pricing, I think is a great opportunity for us, and you really need NDC to make that happen. So nothing to report yet, but hopefully when we have some more firm dates, we'll come back and talk about it a little bit. And frankly, I'm having -- used continuous pricing in my previous place. I think it's going to be a great opportunity for our customers. I think there's a stereotype that continuous pricing is a trick to have price increases. When I did this before, half the prices were price cuts and half the prices were price increases. All you're really doing is trying to benefit the demand curve. And it will absolutely include lower prices as much as it could include higher prices. So we're very bullish on it. No date to report yet, but it's very much on our radar. Operator: And our next question comes from the line of Scott Group with Wolfe Research. Scott Group: So we've got lower CapEx starting next year. Any other puts and takes to be thinking about with free cash flow? I guess if we're getting back to operating income breakeven, do you think we can get back to positive free cash flow in '27? Is that the right way to think about it? Ursula Hurley: Yes, it is. As you recall, we did a $3 billion aircraft deferral last year. Really we did that in order to give us the runway to deliver free cash flow. Priority #1 is positive op margin. Priority #2 is free cash flow. And I still believe that there is a path to achieve that at the culmination of this JetForward program in 2027. We're making good progress. I'm pleased with the momentum across the initiatives. And once we hit free cash flow, priority #1 is going to be improving the balance sheet and delevering where we can because we still want to get our metrics, quite frankly, back down to pre-COVID like levels. Like that is a priority of this leadership team. And so I feel good about the path that we're on. Scott Group: Okay. And then, Marty, maybe it's way too early to ask, but any –- and we're just getting launched with Blue Sky, but what are you seeing so far, if anything? Anything different than you would have thought? Just any kind of color. Martin St. George: First of all, I'd say it's pretty much acting the way we expected it to. We've seen redemptions go both directions as far as JetBlue customers redeeming on United, United customers redeeming on us. If you look at the Os and Ds where they're doing it, I'd say, in general, it is more or less what we had expected. I will say our first redemption on United was Denver-Las Vegas from Mosaic in Denver. So that was a bit of a surprise. But to me, that's actually a good thing. And I'm happy that our customer in Denver, who's in Mosaic, is now getting utility of United. And to me, that is the fundamental goal for this, which is making sure that customers who align with TrueBlue have a full assortment of places where they can earn and burn. So as much as -- nobody had Denver-Vegas on the bingo card. I think I was really happy that that's who it was, because you have a customer who has raised his or her hand in Denver, has flown up till Mosaic, who now is getting some great utility. So to me, it's a big win. And I actually love this and this is exactly why we did this program. Operator: And our next question comes from the line of Brandon Oglenski with Barclays. Brandon Oglenski: And I don't mean to be too critical here, Ursula, but when you said modest capital next year and then in relation to the way you answered Scott's question there, maybe breakeven free cash flow by '27, I don't know -- I mean, is modest like maybe $1 billion, $1.5 billion ballpark, like the incremental capital you need to get there? Ursula Hurley: No, the number is not going to be that large. I mean I think I mentioned in one of the Q&A responses, we're not anywhere in the realm of the raise that we did in 2024 in terms of quantum. I think what I highlighted in my prepared remarks is we do have 10-plus deliveries next year, then we do have a convertible debt paydown of $325 million. So modest is much lower than what you foreshadowed. I will call out, clearly, we've seen fuel spike in the last 5 days. It's just something to be aware of. We are watching that closely, as well as the more general like macro like demand environment. But I still believe that we have a path, and we're trying to be very thoughtful about when and how we raise any level of debt just given where the balance sheet is today. Brandon Oglenski: Okay. I appreciate that clarity. And then on the outlook for growth next year, I get it, like you're getting AOGs back in the air. But is the cost structure already in place, meaning you've just been inefficient for the past 18 months and you're putting that back to good use? Or do you need to incrementally scale up crews and other infrastructure? Ursula Hurley: No, I would say that the capacity growth next year is going to be efficient for us. We've done a great job managing the cost structure as we've navigated this year, but we're not going to find ourselves in a position where we need to hire excessively to support next year's growth trajectory. So I think this is -- from a unit cost perspective, the growth next year is definitely a tailwind for us. Joanna Geraghty: And I'll just add maybe. I mean, our crew members have been great over the last year taking voluntary programs, agreeing to reduce hours. So we've really done a good job trying to reduce the costs we've had because of the grounded fleet as much as possible. And when we think about growth in general, it's really about making sure we grow responsibly. We will continue to manage the peaks and the troughs. As Ursula has mentioned, it's focused on capital preservation and capital-light growth. We're managing for returns and then obviously ensuring our unit costs remain in check. And so at the end of the day, I think we've navigated a very challenging period with these aircraft on the ground and we've navigated it as well as one can and our crew members have been a hugely important part of that. And we're looking forward to growing next year because that's ultimately going to get us back on the right path to sustained profitability. Operator: And our next question comes from the line of Ravi Shanker with Morgan Stanley. Ravi Shanker: Marty, you said that troughs continue to be challenging. Obviously, that's very understandable given the macro. But do you feel like that's cyclical or structural? And if it is more structural, then how are you thinking about 2026 capacity planning especially in 1Q, which tends to have more trough periods? And do you think you need to be more aggressive on taking out capacity there? Martin St. George: Ravi, a good question. I mean, here's what I would say. Troughs are always challenging as a leisure-focused airline. This is not new. I would say that having looked at previous economic slowdowns or I'm not sure what you want to call the 2025 situation, but previous times where revenue has gone down, this is a very, very common change and nothing that we were unprepared for when the time came. I think that we'll sort of be able to finally call this change in demand done when we see troughs get back to a little bit more normal level. But they will always be a challenge for us and that's just the status of being a leisure airline in general. Ravi Shanker: Understood. That's helpful color. And maybe a quick follow-up. Can you just expand on your corporate comments? I think you said that yield was pretty strong. What are you seeing in the East Coast in particular? I think there's some optimism about a pickup in activity clearly in that? Martin St. George: So just to be clear, Delta corporate business is a very small part of our business, I think very much given our network. And year-over-year -- Joanna talked about the changes we made to the network in 2024 and very early '25. That really pretty significantly reduced our presence in corporate markets. I mean, at a point in time, we had 50-something flights to LaGuardia. We're now in the teens. So a lot of our corporate supply has actually gone away. And frankly, I've been very, very happy with what we've seen on yields. I mean, yields up double digits in our Delta corporate markets. I think it's very clear to say, just to scale this, our total sales team, I can count on 2 hands. We don't have the incredible breadth of corporate contracts. And it's basically -- it's really based on our network. In New York, LaGuardia is the preferred airport. We have some good corporate customers in Boston and Fort Lauderdale. I'd say, by far, our biggest attractiveness for corporate has been Mint and our pricing. And I think overall, it will always be a part of our network, but leisure will still be the bread and butter for us. Operator: And our final question comes from the line of Conor Cunningham with Melius Research. Conor Cunningham: Just 2, if I may. Just on the RASM outlook for 4Q. Can you maybe parse out the -- what you're seeing on the U.S. domestic side versus Latin and transatlantic? And then I'll just squeeze my second question in. On maintenance next year, it seems like you have –- your maintenance is up 30-something percent this year. The E190s are gone. I think that there's a huge tailwind into 2026. Just trying to understand how that all flows through. Martin St. George: All right. Conor, I'll take the first half on the RASM. In general what we're seeing in RASM is -- from a regional perspective is more -- it is pretty consistent is what we're seeing overall, which is better numbers in international than domestic. So I don't think there's anything -- there's sort of no dramatic news there as far as any significant change in trend. And frankly, I think that what we're seeing as far as changes in capacity from the ULCCs will ultimately help that. It's very clear that as capacity has come out overall, that should put less pressure on the back of the airplane. But I think it's a little bit early to call that trend right now. And I'll leave the maintenance comment to... Ursula Hurley: Yes. Just on maintenance, Conor, I would say when you look across all the P&L cost line items, maintenance is still going to be a headwind next year. I mean, about half of our fleet is the A320. And that fleet is aging. It's not on a flight hour agreement. It's on a time and material agreement. So it is still going to be a headwind. Obviously, that's going to be offset by all of the JetForward cost initiatives, I think technology, I think productivity. So maintenance will be the one headwind. But as I mentioned in my prepared remarks, we are targeting a low single-digit CASM ex fuel next year. So I'm pleased with the overarching like trajectory and the team's ability as we navigated through this year to execute to the cost performance. We improved the midpoint of our full year guide, and that's really attributable to the teams. And that's despite a 1 point pull in capacity. So super pleased with the execution, and that's going to continue as we navigate through 2026. Operator: And ladies and gentlemen, that will conclude today's conference and we thank you for your participation. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Caesars Entertainment, Inc. Third Quarter 2025 Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Brian Agnew, Senior Vice President of Corporate Finance, Treasury and Investor Relations. Please go ahead. Brian Agnew: Thank you, Shannon, and good afternoon to everyone on the call. Welcome to our conference call to discuss our third quarter 2025 earnings. This afternoon, we issued a press release announcing our financial results for the period ended September 30, 2025. A copy of the press release is available in the Investor Relations section of our website at investor.caesars.com. As usual, joining me on the call today are Tom Reeg, our CEO; Anthony Carano, our President and Chief Operating Officer; Bret Yunker, our CFO; Eric Hession, President, Caesars Sports and Online; and Charise Crumbley, Investor Relations. Before I turn the call over to Anthony, I would like to remind you that during today's conference call, we may make certain forward-looking statements under safe harbor federal securities laws, and these statements may or may not come true. Also, during today's call, the company may discuss certain non-GAAP financial measures as defined by SEC Regulation G. Please visit our press releases located on our Investor Relations website for a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure. Our Q3 investor presentation has been posted to our website, and our Form 10-Q has also been issued as well. We experienced hold volatility in our reported results. Management will discuss hold normalized results in our call today, and a full reconciliation can be found in our earnings presentation posted on our website on Slide 21. I will now turn the call over to Anthony. Anthony Carano: Thank you, Brian, and good afternoon to everyone on the call. Our diversified portfolio delivered third quarter consolidated net revenues of $2.9 billion and adjusted EBITDA of $884 million. On a hold normalized basis, the company reported $927 million in consolidated EBITDA. During the third quarter, our Digital segment delivered strong volume growth in both sports and iCasino. Adjusted EBITDA in our Digital segment was negatively impacted by NFL hold in September and faced a difficult comparison to last year, which included WSOP results. Our Las Vegas segment posted solid results in the face of softer market-wide visitation and adjusted for poor table games hold. We are seeing sequential improvement in operating trends in Las Vegas as we enter the fourth quarter. Regional revenues were up year-over-year, driven by strong returns in Danville and New Orleans and same-store net revenue growth, resulting from continued strategic reinvestment in our Caesars Rewards customer database. Regional EBITDA grew 4% on a hold normalized basis during the quarter. Starting in our Las Vegas segment, we reported same-store adjusted EBITDA of $379 million and hold normalized EBITDA of $398 million. Segment results were driven by 92% occupancy versus 97% last year and ADR decreased 5% as a result of citywide visitation weakness during the quarter. As we progress through the quarter, trends improved sequentially with September delivering the strongest results of the quarter. During the quarter, the group room night mix was 13%, and the segment is on track to deliver a record EBITDA year in 2025 due to our strong Q4 booking pace, where group mix should increase to 17%. Recent CapEx investments at the Flamingo in Las Vegas, including a brand-new pool experience, Pinky's by Lisa Vanderpump, Gordon Ramsay Burger and Havana 57 continue to exceed return expectations. We are excited about upcoming CapEx projects in Las Vegas, including a new Omnia Day Club by Tao at Caesars Palace, the rebrand of the Cromwell to the Vanderpump Hotel and the recently announced Project 10 by Luke Combs that will transform the vacant Margaritaville space at the Flamingo. These exciting projects continue our commitment to reinvest in our assets while elevating our guest experiences. As we look to the fourth quarter in Las Vegas, we see trends improving sequentially, driven by positive leisure trends and a strong group and convention calendar. In our regional segment, we reported adjusted EBITDA of $506 million and hold normalized EBITDA of $517 million, driven by 6% net revenue growth. Early results from our strategic customer reinvestments are promising, driven by strong rated play trends in the quarter. We will continue to refine our marketing approach as we remain focused on delivering strong returns on these investments. Margins improved sequentially this quarter, driven by better flow-through on these investments. New projects in Danville and New Orleans continue to generate strong returns, and we look forward to completing Phase 2 of the master plan currently underway at Caesars Republic Lake Tahoe in mid-2026. I want to thank all of our team members for their hard work through the first 3 quarters of 2025. Their dedication to exceptional guest service has been the driving force behind our accomplishments this year. With that, I will now turn the call over to Eric for some insights into the third quarter for our Digital segment. Eric Hession: Thanks, Anthony. During the third quarter, Caesars Digital delivered net revenue of $311 million, adjusted EBITDA of $28 million and hold normalized adjusted EBITDA of $40 million. Recall that last year, in Q3 2024, we benefited from approximately $8 million of net revenue and EBITDA contribution from the World Series of Poker. The World Series of Poker was sold in Q3 of last year, and so now we fully annualize the impact of the sale on our EBITDA comparisons. In addition to the effect of the poor hold and the loss of the World Series of Poker revenues impact on flow-through, we had a number of other headwinds this quarter that included incremental state taxes, higher acquisition marketing spend and some bad debt. As we previously noted, there will be volatility across quarters, but we're on track to exceed our 50% target flow-through for the year. Our core KPIs remained strong during the quarter. Specifically in sports, total parlay mix improved approximately 210 basis points year-over-year, and we saw growth in average legs per parlay and a higher cash out mix versus the prior year period. In addition, we realized volume growth of 6%, a notable sequential improvement, which was unfortunately more than offset by the negative sports outcomes our industry experienced in September. In iCasino, we delivered 29% net revenue growth, driven by continued strength in volume and average monthly active users. We continue to evaluate or elevate our product offering during the 2 quarters to include new in-house games, improved bonusing capabilities and elevated live dealer product. We look forward to a redesigned Horseshoe Online casino update in Q4. Overall, in Q3, our total monthly unique payers increased 15% to 460,000. From a tech perspective, we continue to convert new jurisdictions to our universal digital wallet and proprietary player account management system, which is now live in 22 states. The enhancement gives our customers a significant upgrade to their wagering experience. Pending regulatory approval, we plan for the Missouri State sports betting launch in December of this year to be the first state where we offer a shared wallet experience to our customers from day 1. We continue to expect a complete rollout of our universal wallet product on our proprietary TAM by early 2026. As we head into Q4 and 2026, I'm pleased with the significant progress on the technology side of the business that's driving strong volumes in both sports and iCasino. The continued progress in all areas is showing up in our top line results, and our focus on spending efficiency will drive solid flow-through to EBITDA. We continue to see a business capable of driving 20% top line growth with 50% flow-through to EBITDA, which keeps us on track to achieve our long-term goals. I'll now pass the call over to Bret for comments on the balance sheet. Bret Yunker: Thanks, Eric. In addition to redeeming $546 million of senior notes during the quarter, we repurchased $100 million of stock, including October activity. We've now repurchased close to $400 million of stock since mid-'24, shrinking our share base by 6%. Our balance sheet remains in great shape with our nearest maturity in 2028 and a floating rate debt mix that will continue to benefit from interest rate cuts. Our weighted average cost of debt currently sits at just over 6%. We expect to continue using our strong and growing free cash flow to both reduce debt and opportunistically repurchase stock. Turning it over to Tom. Thomas Reeg: Thanks, Bret. To jump into a little more detail, we told you on the last call that Vegas was going to be a soft summer. It was a soft summer. Our ADR was down a little over 6%. Occupancy percentage -- occupancy was down about 5 percentage points. So that's about 90,000 room nights for us that flows through all of the non-gaming pieces of the business. On the gaming side, volumes held in pretty well. Slot handle was down only 2%, even though we had 90,000 less room nights. I hate talking about hold, but this is a quarter where you can't get away without talking about hold. Hold was down almost 600 basis points in Vegas in the quarter. On a year-over-year basis, it impacted us a little over $30 million. And it's -- and there were another -- a little over $10 million of onetime items that benefited us last year that don't repeat, the largest of those being cancellation of the sponsorship contract on the Planet Hollywood Live theater in Vegas. The quarter got better throughout. So July was the worst month of the quarter. August got better. September got better. What we told you when we talked to you in the beginning of the quarter was it would be soft. We would expect recovery in the fourth quarter. That is what we are seeing. Our cash room revenue forecast for the quarter is down just slightly. Cash room revenues in the third quarter were down a little over 11%. So that's considerable improvement. A lot of that is the group calendar that Anthony referenced. We have some Caesars-specific groups that benefit us, not necessarily the entire market. We had the Oracle conference that was in 3Q last year and was in early October this year. And then we have BravoCon coming up as the quarter continues. F1 for us is looking considerably better than it did last year -- than it performed last year, not as good as year 1, but up from last year. The headwind for the remainder of the year is New Year's Eve is middle of the week this year, which is not particularly helpful calendar-wise. But other than that, we see Vegas coming back strongly. I know that's a big question -- has been a big question. Again, what we laid out in July of soft summer recovery in the fourth quarter, continued recovery in the first quarter is still what we see today. Group should be, as Anthony said, a record in '25 versus '24. That's largely on the strength of the fourth quarter. And then first quarter should be a new all-time record ahead of '25 -- I'm sorry, '26 should be a full-time -- a new record for the full year ahead of '25, largely on strength in the first quarter of the year. So it was a difficult summer. There is definitely -- has been softness in leisure demand for Las Vegas in the summer months, particularly in properties that I would view as priced takers, those that are as you go down the customer spectrum or you move out from the center of the strip, demand for those were soft. Premium has held up better, but it's the return of group business in the fourth quarter and first quarter that allows rate compression that brings us back to a much healthier looking market as we look at this quarter and into '26. For regionals, we talked about how last quarter we'd embarked on increase in marketing reinvestment, starting in properties that were competitively impacted and moving beyond that as we saw what was working. As the quarters go by, I think I've said this to you a number of times, you'll see us refine that, take out what's not working, expand what is to more markets. We have a lot of test and control out all of the time. And you could see better flow-through. You would have seen even better flow-through if we had held both brick-and-mortar and Vegas hold percentage was the lowest that it's been in over 3 years, and that's particularly unusual in regional, regional pretty is pretty stable. But what we're seeing in regional is the flow-through of the marketing is improving. You should expect that to continue to grow -- to continue going forward and demand in regional is pretty solid. Like we have no complaints about what we're seeing in regional. In digital, obviously, we've got the sports outcomes that have been -- there's been a lot of conversation about those both here and elsewhere. So I won't belabor those. We're happy with where we are. Margin-wise, happy to see us growing handle. iGaming continues to perform quite well. So all of our goals remain in front of us in terms of what we've laid out for digital and fully expect that we'll get there. So we feel good about that story as well. And then in terms of free cash flow, you should expect that we'll remain balanced in using our free cash flow between paying down debt and repurchasing our stock. At current levels, our stock is attractive to us. You should expect us to be active as we go through the remainder of the year. And with that, I'll open it up to questions. Operator: [Operator Instructions]. Our first question comes from the line of Brandt Montour with Barclays. Brandt Montour: So Tom and team, I want to start with Las Vegas. And I want to just sort of dig into some of the comments that you made, Tom, specifically around leisure demand. And I heard positive leisure recovery, but I also heard that the group fill-in is most of the sequential improvement that you are looking for or seeing into the fourth quarter. And so maybe you could highlight some other metrics in terms of how we should think about the sort of very near-term sequential leisure recovery, whether that's bookings 4 weeks out, occupancy, et cetera, or anything else that might be helpful there? Thomas Reeg: Yes. So when we talked to you last quarter, we're looking at the same forward booking calendar that we can see. Now looking at that point, it looked particularly soft, which is why we told you we were expecting a soft summer. That came in when you adjust for hold about where we anticipated it would be as we sit -- and if you think about sequentially and the quarter that you're in, because it's the third quarter, it's a leisure-dominated quarter. There's not a lot of group business in Vegas when the weather is particularly hot relative to other quarters. And that leisure customer continued to get better during the quarter. July was the worst. August built on that and then September, October has continued, but that leisure customer is still softer on a year-over-year basis. The difference is what you get in group activity allows us to compress rate much better than we were able to in the third quarter, and you don't have nearly the amount of miss in occupied rooms. We had 90,000 in the third quarter, about 500 basis points of occupancy. Our occupancy looks better and our rate looks better than it did third quarter. Brandt Montour: Great. And then maybe moving over to regionals. You guys put up a hold adjusted regional number that did show growth, and you had told the market that you were promoting more last quarter and perhaps rolling out promos to less or more impacted -- more non-supply impacted markets. But it looks like either that hasn't started yet or you're getting pretty good returns on those tactics. And so I guess the question is, are you -- is this the type of flow-through that we can expect from this program, whether it's supply impacted or nonsupply impacted markets as you sort of move through the evolution of those new programs? Thomas Reeg: Yes, Brandt, that's a great question. And we would expect as the quarters go by, we become more efficient in that marketing, you're dialing back more that's not working and expanding what does. And I want to be clear, there was a sense that we were getting into some sort of promo war. I heard that from a lot of investors. The way we look at it in most of our -- in all of our markets, Caesars Rewards is the most impactful customer program that there is among any operator. In many of our markets, we have a property as well that is better than others. So that's higher quality. So if you think about the way marketing works, you may lean on those advantages a little bit and say, I'm not going to be as generous in my giveback as others, and you're still going to perform quite well. I think that, that gap got to be a little larger than we needed it to be in properties that were not competitively impacted. So I would think of what we're doing is kind of taking up that slack, not entering into a promotional war. And we're not seeing significant response from competitors that suggest that this is going to keep going higher. What I'd expect you'd see going forward is what you saw this quarter where the flow-through from that revenue growth continues to look better as the quarters move on. Operator: Our next question comes from the line of Dan Politzer with JPMorgan. Daniel Politzer: I just wanted to go back to Vegas and that leisure customer. I mean it sounds like things are getting a little bit better. Just group is obviously helping in terms of compression. But I mean, how do you kind of look to stimulate that leisure customer? Do you think that there are structural issues in Las Vegas that need to be addressed in terms of pricing? And then it sounds like in terms of fourth quarter, things have gotten better. So I don't know if there's any way to kind of frame kind of that bouncing off of third quarter in terms of some kind of broad estimates. Thomas Reeg: Yes. So on the pricing question, we price hundreds, thousands of items across Vegas every day from obviously, rooms and restaurants to ATM fees to everything that you purchase in Vegas, and we're constantly adjusting them. What was interesting -- there's a few things that are interesting to me in that conversation. And I don't discount that there are areas in our business and in Las Vegas that got -- might have gotten over their skis pricing-wise. But to put it in context, we're in a quarter where while we're talking about pricing and degradation to demand, our occupancy percentage was over 90% in the quarter. It's stronger as we move into the fourth quarter. But most interestingly, while those stories were out there, most days that you read those stories, you could have gotten a room in Vegas for $29 plus a resort fee on the strip. So there's a value trade in -- what's great about Vegas is there's something for everybody. Sean McBurney, our Regional President out here who does such a fantastic job using the example of, you can come see Paul McCartney and pay $500 plus a ticket at the same weekend that you're going to see -- you can see Donny Osmond for $60. So there's something at every price point. And keep in mind, in a quarter where we're -- it was undeniably soft versus last year, and we're glad to see it coming back in the fourth quarter. It doesn't take a lot to turn that back the other way. You're talking about 5 percentage points of occupancy got us to a 10% decline in adjusted EBITDA. You don't need much to swing back the other way to where you're right back to where you were before. So -- and one more point, we're talking about a quarter where we did about $400 million of adjusted EBITDA in the third quarter, so the summer in Vegas. That quarter typically premerger was $300 million to $320 million of EBITDA. So this is still a very strong market. It offers something for every price point. And sure when you're pricing thousands of things every day as we are and our peers are, it's going to be easy to find things where you say, look at how much this bottle of water costs. But the value proposition in Vegas stacks up versus just about anywhere that you could want to travel. And what you can do while you're in town is the breadth of what's available, you cannot -- I line that up with any city in the world. So we feel fantastic about Vegas fundamentally. And we think it won't be very long until that's a story where we'll be talking about -- remember when -- remember the summer when we talked about $25 bottle of water, and that's not what was driving activity. Daniel Politzer: Right. Okay. No, that's really helpful detail. Just pivoting to regionals, this is more of a high-level one. But obviously, in terms of that more promotional strategy, and I get it's kind of more short-term oriented. But how did you kind of think through that versus maybe the puts and takes of putting more capital into the ground at some of these properties to improve the amenities if there would have been a return on that as opposed to just being more promotional? Thomas Reeg: Yes. I mean we -- since the merger, we have invested $3.1 billion in just our regional assets. $2.8 billion of that is in the 16 properties that generate 75% of our regional EBITDA. So the properties that have been less touched by capital and all of them have been touched are those that are pretty small, may not have hotel. I think the -- if you look at the regional capital investment across us and our peers, we've outpaced everybody in the last 5 years. And we're really in -- let's harvest those investments and let's give people a reason to come and see them. You spend the capital. Keep in mind, these are properties that are in somebody's neighborhood. They pass it or they pass a billboard every day for 10, 15, 25 years, if you put the money that we put into these properties over the past 5 years, the customer is not going to automatically know it unless you stimulate a visit, get them into the property. And that's what we see is as we reactivate customers that didn't know the money that was put in, New Orleans being a great example of, you start to see organic momentum build because you're showing customers a property that's different than they remember. And so that investment has been made. This is the message of, hey, come and see us and see what we've done. And what we see out of that is organic follow-through. And like I said, this doesn't happen neatly in 90-day periods. This stuff happens over a longer period of time. But we are particularly encouraged by the trends that we're seeing that suggests that what we're doing is working and driving more aggregate cash flow, which is the goal of this whole enterprise. Brian Agnew: Shannon, for Q&A, we've got a lot of people in the queue. Can we just have everybody ask one question and then circle back if possible? Operator: Our next question comes from the line of Steve Pizzella with Deutsche Bank. Steven Pizzella: Just wanted to ask on the regional performance. From the state level data, it looked like trends deceled a little bit in September from July and August levels. Did you see that in your business? And then how do you think about the fourth quarter from a comps perspective for regionals given we saw an acceleration in the data starting October of last year? Thomas Reeg: So the September question, recall that last year, Labor Day Sunday was in September, and this year, it was in August. So that's a -- that's one of the biggest weekends of the summer, and that's a significant calendar shift. So I would look at August numbers and September numbers together. The only market I can think of that saw a significant shift in demand in September was Atlantic City. The rest of the countries performed kind of as you'd expect. Cost side, I don't have anything in particular to call out on the regional side. What -- in terms of driving incremental margin, that will be a function of -- as we refine our marketing as we move through the quarters, you should expect flow-through and margin to increase. Operator: Our next question comes from the line of Lizzie Dove with Goldman Sachs. Elizabeth Dove: I guess big picture, longer term or for next year, specifically for Vegas, it's a lot of moving pieces. You've got the capital investments you mentioned, some good guys from conferences, but also maybe 1 or 2 conferences leaving the system, macro TBD. High level, I know it's early, but just curious how you're thinking about how those kind of puts and takes play out to Vegas next year. Thomas Reeg: Yes. The big question, Lizzie, is the consumer. Is this leisure demand -- are we going to see it continue to improve and recover? Or do we stall at some point that's shy of where we were before. That's a difficult question to answer. That's a macroeconomic question. I know that the mix will be better for us, in particular, recall that we have the State Farm conference early in the second quarter, which is a particularly large conference for us that drives significant EBITDA. And then you've got the market-wide stuff that's well understood. But the -- we're now, what, 4 months into this stepdown in leisure demand for Vegas. And we -- while we're better than we were in July, we're still not back to where we were on a year-over-year basis. So that will be the question in '26 in my mind is how quick does that recover. Operator: Our next question comes from the line of David Katz with Jefferies. David Katz: I just wanted to double back on digital, if I may, for the fourth quarter. I know that the sequential cadence can be tricky where there is some preseason spending in 3Q. I recall a comment, Tom, that indicated the fourth quarter should be super strong. We're still focused on kind of that run rate of $500 million by the fourth quarter. If you could just update us there, please? Thomas Reeg: Yes. The big swing factor there, David, is game outcomes. Obviously, we had a fourth quarter -- a third quarter that wasn't great. We're 4 of 13 weekends into the fourth quarter, those outcomes have not gotten substantially better. So we are hold for the first 4 weekends was above last year's hold, but below our budgeted hold. So that will have an impact on where the fourth quarter comes in. But the -- as you have seen, sports outcomes are particularly volatile. So I wouldn't take 4 of 13, whether it's positive or negative as determinative at this point, but that's where we stand as we sit here today. Operator: Our next question comes from the line of John DeCree with CBRE. John DeCree: Maybe, Eric, I wanted to circle back to your prepared remarks. I think you were kind of dissecting the quarter a little bit and had mentioned, if I heard correctly, some higher acquisition marketing spend in the quarter. If I heard that correctly, I'm wondering if you could elaborate a little bit. Was that kind of expected or unexpected? And was that more customers than you thought getting on board? Just curious if you could give us a little bit more color there. Eric Hession: Sure. Yes, it wasn't kind of unexpected. It was spend that as we went through the quarter, we steadily increased heading into football and heading into a strong acquisition period for the iCasino side. We acquired a lot more customers during the period as a result of that spend. We believe that over time, those -- that spend will come to fruition with the lifetime values of the customers. However, in the period in which we spent it, it shows up as a drag. And so because on a year-over-year basis, we did increase the spending, I wanted to call that out as one of the reasons why the flow-through was challenged in the quarter. Operator: Our next question comes from the line of Steven Wieczynski with Stifel. Steven Wieczynski: So Tom, I want to go back to the regional reinvestment and ask that question maybe a little bit differently. But it's one of the questions we get a lot from investors is the fact that when you were at Eldorado and you were out buying things like Isle of Capri, I mean, you were kind of known as the kind of the king of cutting promotions and basically getting your peers to kind of do the same thing and understand that was kind of a smart business decision. Now you're somewhat kind of pivoting away from that, and you mentioned a lot of that decision is tied to Total Rewards and the power of that platform. So I know you said that hasn't started a promotional war yet, but just trying to get a little more color as to what gives you the confidence that, that doesn't eventually happen. Thomas Reeg: Well, I mean, we can see -- we see it down to the granular customer level, what's the customer responding to, what are they not responding to. The point I was trying to make is in most markets, there's going to be a gap between what we're spending and what our peers are spending that we're going to be spending less. That gap in hindsight may have gotten too wide. And so what you're seeing is recovery in that, not one-upmanship. And when you change that, it's like when you make an investment, the customer notices that you're making an effort to win their business and all of the reasons that they came to the property before and into the rewards program are -- make them sticky when you get them back. So this is -- this evolves every day. You're competing in these markets all the time. I would say the level of discipline throughout the business is far better than it was before we started this, and we're not seeing anything that suggests that this needs to keep climbing higher and higher. And you should be able -- you should start to -- you can start to see that in the flow-through as we go through the quarters that this quarter was better than last quarter, and you'd expect -- I would expect that to continue. Operator: Our next question comes from the line of Barry Jonas with Truist. Barry Jonas: Some of your competitors are looking at the predictive markets. What's your view there for Caesars Digital? And have you seen any impact as these markets are starting to make inroads into sports? Eric Hession: Yes. To answer your second part first, so far, we haven't seen any impact. I suspect most of the volume that they're generating is coming from states that don't have legalized sports betting. And then there's probably some on the margin that is coming from the legalized states that we might not have been able to access anyway, like 18- to 21-year olds and that type of customer demographics. In terms of the overall plan, we're actively watching it. As we've said before, we can't be out on the lead on this one. We're going to monitor it, make sure that we're not left behind if there's regulatory clarity and that we have a good plan in place for -- should that outcome happen. But in terms of our current actions when there's still uncertainty, and I'm sure you've seen some of the letters from the regulatory agencies, our best approach at this point is to monitor it, put our plans in place, make sure that we're adequately resourced and be ready to move if there's a legalization definition in either direction. Thomas Reeg: Yes. We will not put any of our licenses at risk. We believe what's happening in prediction markets is sports gambling. If there is a -- if there's a path that develops where we can participate in a way that doesn't put licenses at risk, you should expect we would be -- we are preparing and would be prepared to go down that path, but we're watching it the same as you are. Operator: Our next question comes from the line of Shaun Kelley with Bank of America. Shaun Kelley: Tom or Eric, just wondering if we could get your thoughts or help on sort of both the seasonality of the digital segment as we kind of move into Q4 because it is a peak sports season. Obviously, you mentioned we appreciate there's some outcome headwinds, but just more broadly, how you'd expect that to trend? And then secondarily, if you could, Eric, given the lean in on marketing, this kind of -- in this period, your thoughts around customer acquisition as we move into next year, especially as digital wallet is kind of up and running and just you feel really good about the product. Thomas Reeg: So let me take the seasonality question. Obviously, fourth quarter is your highest volumes given that it's football season and football dominates sports betting. The way that we account for our partnerships is that those -- that spend hits during the season of play. So if you think about some of our large contracts that will roll off in '26, the bulk of that expense hits in the fourth quarter. So it makes volatility -- it makes volatility and hold -- sports hold outcomes more impactful because you're carrying a bigger fixed cost than we're carrying in any other quarter of the year, but then I'll let Eric take the rest. Eric Hession: Yes. And then in terms of the marketing spend, I would expect it to go back to normal levels for Q4 versus prior year. So nothing -- no incremental acquisition spend along those lines versus kind of where we were trending prior to that. But to your point about heading into next year, I would say the vast majority of our marketing spend has traditionally been earmarked towards the direct channels like Facebook, Google, Snap, those types of things and very more limited on the brand side. I think to your point, with the app in the shape that it is and with the shared wallet now being active in nearly every state and will be in the first quarter, there is an opportunity to do a little bit more of the top of funnel type advertising because the retention rates are going up and the customer response to the app is improving. So I would look at that mostly as a shift, though, not necessarily as an incremental spend, but we'll evaluate it as we go through. And if we're getting really short paybacks on certain spend, we might increase it slightly, but I wouldn't anticipate anything major next year. Thomas Reeg: And it's -- Shaun, that's similar to what I just talked about in regionals, right? I mean our -- we did our big brand campaign in '21 when sports betting kicked off and our app was not as competitive as it needed to be versus our peers, we've done a lot of work in getting the app up to par, culminating with share of wallet, as you pointed out, we need to give that customer a reason to take a look again. And so that's kind of the top of funnel that Eric is referring to. Operator: Our next question comes from the line of Stephen Grambling with Morgan Stanley. Stephen Grambling: Two quick follow-ups on digital. Just given you've seen a lot of moving parts in the regulatory environment across brick-and-mortar and digital, what do you see as the key milestones you're watching for to get comfort on the prediction markets? Is it really just waiting until we get maybe all the way to the Supreme Court? Are there other things that could happen between now and then? And then given the outsized wins on behalf of consumers, are you seeing any change in how much money is being kept in accounts that might be indicative of future wagers or strength further into the football season? Thomas Reeg: So I'll do the first one, have Eric do the second one. I wish there would be a point of clarity and certainty in the near term around prediction markets. It seems like the path this is going to go on will ultimately be decided at the court level, ultimately, the Supreme Court level. And I'd expect that there's going to be rulings that go in both directions along the way. And ultimately, if something gets appealed up to the Supreme Court, there is a state rights versus federal rights question here that's larger than just sports betting that might argue that the court takes it up relatively quickly. There's also the argument. There's a lot of stuff bubbling up to the Supreme Court and maybe this gets pushed back further than we'd like. But we -- I would expect we're going to be in this cloudy period for quite some time. Eric Hession: And then on the second part of the question, we -- after customers have a good weekend, we do see the balances higher. It doesn't necessarily persist all that much over time. They tend to either draw them down or recycle it throughout the week and into the next weekend. But there is definitely a loose correlation between the customer outcomes and the volume as you'd expect when the hold goes down. But I would say that the outcomes of the customers in Q3, while it was to their favor, our core volume growth was still much stronger than in prior periods. So that -- the entire result wasn't driven by the customer outcomes. Operator: Our next question comes from the line of Chad Beynon with Macquarie. Chad Beynon: During the quarter, I know the city ran a few ad campaigns. I'm not sure if that stimulated demand. So a, I wanted to ask about that. And then secondly, is this something that you think we could maybe continue -- could continue to see throughout 2026 to just help the perception of value for some of those customers that have fallen away? Thomas Reeg: Yes to both, Chad. So we participated in the sale that you're referring to. Our bookings picked up considerably during that sale. So it was effective. And we know that LVCVA intends this to be an ongoing campaign. So you should expect this not to be one shot in terms of the messaging around value in Las Vegas. Operator: Our next question comes from the line of Jordan Bender with Citizens. Jordan Bender: There's been some movement in the M&A market. As you think about your leverage and your footprint in Las Vegas, I just want to check your temperature around potential asset sales in Las Vegas and then also how you think about the Caesars Forum put call agreement outstanding. Thomas Reeg: The call option -- the put call option is -- you should expect that if that's exercised, it would be called by VICI. I'd anticipate that they'd be doing that toward the end of that period of time. And -- but I don't want to speak for them. We choose the rent, it would be -- we would choose the lowest rent that we're able to choose. In terms of M&A, we would -- we're never closed. So if there was something that made sense for us, I'd say we're open to talking about each and every asset, but we are not actively involved in marketing the Vegas asset. Operator: Our next question comes from the line of Daniel Guglielmo with Capital One Securities. Daniel Guglielmo: We've seen some OpEx pressure this quarter and last. And as you start budgeting for next year, are there certain expenses outside maybe the marketing that we've hit on that you all are going to spend more time thinking about for 2026? Thomas Reeg: I mean labor is always our biggest, and we're constantly looking to optimize labor across the enterprise. We're well into the union contracts in both Vegas and Atlantic City. So you're kind of at manageable increases as we move forward. There's nothing that stands out as you asked that question to me. Brian Agnew: But if you're looking at labor in the 10-Q, specifically in the regional segment, that's not exactly same-store because you've got Danville and New Orleans in there, and there were some onetime benefits in the prior year quarter. So it's not really a same-store number if you're looking at that labor line in the Q. Thomas Reeg: Yes. So Danville and New Orleans are both substantial integrated resorts that had -- Danville wasn't open, and New Orleans was much smaller last year. Operator: Thank you. And we've run out of time. I would now like to turn the call back over to Tom Reeg for closing remarks. Thomas Reeg: Thanks, everybody. We'll see you next time. Operator: This concludes today's conference. Thank you for your participation. You may now disconnect.
Operator: Good afternoon. Welcome to Tigo Energy's Fiscal Third Quarter 2025 Earnings Conference Call.[Operator Instructions] Joining us today from Tigo are Zvi Alon, CEO; and Bill Roeschlein, CFO. As a reminder, this call is being recorded. I would now like to turn the call over to Bill Roeschlein, Chief Financial Officer. You may begin. Bill Roeschlein: Thank you, operator, and it's a pleasure to join you today. Also with us is Zvi Alon, our CEO. I'd like to remind everyone that some of the matters we'll discuss on this call, including our expected business outlook, our ability to increase our revenues and become profitable and our overall long-term growth prospects; expectations regarding recovery in our industry, including the timing thereof, statements about our demand for our products, our competitive position and market share; the impact of tariffs and our current and future inventory levels, charges and reserves and their impact on future financial results; inventory supply and its impact on our customer shipments, statements about the recovery of the solar industry, statements about our revenue and adjusted EBITDA for the fourth quarter of fiscal 2025 and our revenue for the full fiscal year of 2025; as well as statements about our existing backlog and bookings; statements about the anticipated benefits of our manufacturing and marketing partnership with EG4; and our ability to realize such benefits, as well as our ability to expand market share in the U.S. through power market; our ability to refinance our convertible debt prior to maturity; our ability to obtain funding that's acceptable to fund our working capital needs; our ability to penetrate new markets and expand our market share, including expansion in international markets, investments in our product portfolio are all forward-looking and as such, are subject to known and unknown risks and uncertainties, including, but not limited to, those factors described in today's press release and discussed in the Risk Factors section of our most recent annual report on Form 10-K, our quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2025, and other reports we may file with the SEC from time to time. These risks and uncertainties may cause actual results to differ materially from those expressed on this call. These forward-looking statements are made only as of the date when made. During our call today, we will reference certain non-GAAP financial measures. We include non-GAAP to GAAP reconciliations in our press release furnished as an exhibit to our Form 8-K. The non-GAAP financial measures should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP. Finally, I'd like to remind everyone that this conference call is being webcast, and a recording will be made available for replay on Tigo's Investor Relations website at investors.tigoenergy.com. And with that, I'd like to now turn the call over to our CEO, Zvi Alon. Zvi? Zvi Alon: Thank you, Bill. To begin today's discussion, I will highlight key areas in our recent financial and operational performance before turning the call over to our CFO, Bill Roeschlein. He will discuss our financial results for the third quarter in more depth as well as provide our guidance for the fourth quarter of 2025 and updated guidance for the full year of 2025. After that, I will share some closing remarks, tell you about our outlook and then open the call for questions from the analysts. I'm pleased to report that we ended the third quarter of 2025 with our seventh increase on sequential quarterly revenue growth. Quarter-to-quarter, we grew more than 27% -- and on a year-over-year basis, we grew 115%. We are pleased to see a return to growth similar to what we saw before the industry downturn and believe our top line growth and market share gains are evidence of the value that Tigo brings to the marketplace. Now to the numbers. In the third quarter of 2025, we reported total revenue of $30.6 million and shipped 795,000 units or 600 megawatts of MLPE. Importantly, we have also returned to GAAP operating profitability for the quarter, which we had guided towards the high end of our estimates on our last quarter call. And for the second time in a row, we are reporting positive adjusted EBITDA. I'm exceptionally proud of what our team here at Tigo has accomplished. To give some geographical color to our results, we saw strong growth in the EMEA and Americas region, which comprised 70% and 26% of our revenue. Noteworthy, we performed exceptionally well in the U.S. as sales grew by approximately 68% sequentially, making it our largest sales region this quarter on a country level. Contributing to this is our sustained effort in the U.S. repower market, where we continue to make significant inroads in these areas. During the third quarter, we also announced a domestic manufacturing marketing partnership with EG4 Electronics in the U.S. This partnership will allow Tigo and EG4 to offer an ITC and domestic content bonus tax credit Tigo-optimized inverters for the U.S. customers, along with the 45X tax credit for Tigo and EG4. Although analysts expect weakness in the U.S. market next year, we believe this partnership, combined with our repower initiative, may mitigate the macro headwinds in the U.S. market and potentially provide significant growth opportunities for us in 2026. And with that, I will turn it over to Bill. Bill? Bill Roeschlein: Thank you, Zvi. Turning now to our financial results for the third quarter ended September 30, 2025. Revenue for the third quarter of 2025 increased 115% to $30.6 million from $14.2 million in the prior year period. On a sequential basis, revenue increased 27.3% with improved results coming from many countries in the EMEA and Americas regions, including Italy, the United Kingdom, Czech Republic and the United States. By region, EMEA revenue was $21.6 million or 70.5% of total revenues, Americas revenue was $8 million or 26% of total revenues and APAC revenue was $1.1 million or 3.5% of total revenues. By product family, for the third quarter of 2025, MLPE revenue represented $26.8 million of revenue or 87.5% of total revenues, while GO ESS represented $3.1 million or 10.3% of total revenues and Predict+ and Licensing revenue represented $0.7 million or 2.2% of total revenues during the quarter. Gross profit for the third quarter of 2025 was $13.1 million or 42.7% of revenue compared to a gross profit of $1.8 million or 12.5% of revenue in the comparable year ago period. Sales of GO ESS, which included reserved inventories, had a positive 1.5% gross margin impact during the quarter. Operating expenses for the third quarter increased 1.8% to $12.4 million compared to $12.2 million in the prior year period. The increase was driven primarily by higher sales and marketing costs in the quarter. Operating income for the third quarter increased by 106.2% to $0.6 million compared to an operating loss of $10.4 million in the prior year period. GAAP net loss for the third quarter was $2.2 million compared to a net loss of $13.1 million for the prior year period. And adjusted EBITDA in the third quarter increased 134.3% to $2.9 million compared to adjusted EBITDA loss of $8.3 million in the prior year period. These results reflect both top line growth and operating expense management. As a reminder, adjusted EBITDA is a non-GAAP measure that represents net loss as adjusted for interest and other expenses, income tax expense, depreciation, amortization, stock-based compensation and M&A transaction expenses. Primary shares outstanding were 69.5 million at the end of the third quarter of 2025. During the quarter, we issued 6.5 million shares from our ATM program for gross proceeds of $10.9 million, representing an average purchase price of $1.69 per share. Subsequent to quarter end, we completed the ATM program with the issuance of 837,000 shares for gross proceeds of $2.2 million, representing an average purchase price of $2.61 per share. Now turning to the balance sheet. Accounts receivable net increased $5.4 million in the third quarter to $15.8 million compared to $10.4 million last quarter and $8.8 million in the year ago comparable period. Inventories net increased by $9.6 million or 50.8% to $28.5 million compared to $18.9 million last quarter and $46.8 million in the year ago comparable period. Our inventory buildup comes as a result of increased activity that we're seeing in our business. Cash, cash equivalents and short-term and long-term marketable securities totaled $40.3 million at September 30, 2025. Principal on our convertible debt due in early January 2026 is $50 million. We've been working diligently with certain financial parties regarding refinancing this debt. And while we have not entered into any binding agreements yet, we expect to complete this process in the fourth quarter. We further expect to utilize a combination of cash on hand and borrowing arrangements to complete the refinance and fund our working capital needs as we continue to grow the business in 2026. Turning now to our financial outlook for our fourth quarter of 2025 and full year 2025. As a reminder, Tigo provides quarterly guidance for revenue as well as adjusted EBITDA as we believe these metrics to be key indicators for the overall performance of our business. For the fourth quarter of 2025, which traditionally is a seasonally slow quarter in our industry, we expect revenues and adjusted EBITDA to be in the following range. We expect revenues in the fourth quarter ended December 31, 2025, to range between $29 million and $31 million. We expect adjusted EBITDA in the fourth quarter ended December 31, 2025, to range between $2 million and $4 million. For the full year of 2025, we anticipate revenue to be between $102.5 million and $104.5 million. That completes my summary. I'd like to now turn the call back over to Zvi for final remarks. Zvi? Zvi Alon: Thanks, Bill. As we look ahead, I'm happy to say that even against the backdrop of the economic uncertainty, we believe that our track record of 7 consecutive quarters with top line growth and disciplined expense management builds a strong foundation for profitable future growth as we near the end of 2025 and look into 2026. We firmly believe in the growth prospects of our business and look forward to providing additional updates in the coming quarters. With that, operator, please open the call for Q&A. Operator: [Operator Instructions] And our first question is going to come from Eric Stine with Craig-Hallum Capital Group. Eric Stine: So I'm wondering maybe we could just dig in on the improvement that you are seeing in the U.S. since that obviously was a highlight in the quarter. And then just curious, you've got this new arrangement with EG4. What kind of -- I know it's early, but early impressions, what you think that potentially can become here as we get into fiscal '26? Zvi Alon: So let me start with the first question on the improvements in North America. We, in the last couple of quarters, highlighted that we have identified a segment which is not very well served, and it's not necessarily new installations, it's the repowering of existing ones, and it's a very large installed base and we targeted it. We are very happy to say that it has been very successful. So we have seen a major increase in our revenue as we've just reported for North America, and we see a major continuation in the future. We have a unique solution that really is aiming at solving this problem. In addition, we have seen a very nice inroad with the new installations and new storage to the point where we actually are getting close to the depletion of all the inventory we actually had before. So it's all very positive indications in at least being able to address the growth in North America, unlike the general market, which is actually down. In Europe, since we are diversified and needless to say, Germany is still a fairly big chunk of our business, but we see very good inroads in Italy, the U.K., Czech Republic, which -- that diversification helps us quite a bit to actually eliminate some of the downside of some of the countries. So in general, this strategy has been really working well for us in trying to avoid the biggest downfall or shortcoming of the market -- as the market is recovering. Now on the EG4 for North America relationship and partnership, EG4 is a very well-known supplier that started with the off-grid and expanded well beyond that. And we have had that relationship with them for quite some time in complementing their inverter and storage solutions with our MLPE. What we have announced is that together, what we will bring to the market is a domestic content applicable solution, which will be an optimized inverter solution that includes obviously the inverter and optimizers as well. And this progress is actually continuing as planned. And the early indication we provided when we just made the announcement that we foresee an opportunity to start shipments early in Q1 or sometimes mid-Q1, and that has not changed so far. I believe that it will provide a significant increase in our footprint to new installations with that partnership and really providing a very competitive solution in the optimized inverter market. Eric Stine: Got it. That is helpful. And then maybe just sticking with part of that answer, when you talk about repowering. I mean, I would assume the open architecture setup of your optimizer is important going after that market opportunity and just competitively, I mean, is that -- does that mean that -- or I'm curious what you think that means in terms of how you stack up events against others who may be looking at repowering as well? Zvi Alon: So you're absolutely 100% correct. The open architecture is really very well positioned to address any repowering capability. But in addition, we have a very strong inverter solution that is also an open system and can work with pretty much any old installation in the market and can be easily adjusted with the power requirements to whatever power needs of that one specific system is, and that's really very unique. So the combination of these 2 is what's really very unique in the market. Needless to say, it also benefits from the fact that it's very easy to install. It pretty much is 100% compatible with all the other components that you have in the system. So you don't need to replace the whole system and provides all those benefits to the installer and to the owners of those systems. Operator: And the next question will come from Philip Shen with ROTH Capital. Philip Shen: I wanted to get some more clarity on the EG4 partnership. Sorry if I missed it because I'm navigating a couple of calls at the same time. But when do you expect your initial output to be available? Zvi Alon: So as we've indicated before, and I just repeated it, Phil, it will be sometimes in Q1, middle to the second part, but we don't now have the specific date, but we are targeting Q1 shipments. And we have a fairly good indication as to the potential for us next year, and it is significant. Philip Shen: Great. So how much of your overall volume of production could come from EG4 for 2026? I mean could it be half? Or do you think it's maybe 1/3? Zvi Alon: So in the U.S., it's a brand-new production capacity for us. So it would initially be the majority for EG4, but we plan to actually utilize it also beyond the EG4 as well. And so the initial production capacity will be really dedicated to the EG4 relationship. But it's a brand-new line, which we are just in the final stages of getting it up and running. Philip Shen: Right. Okay. So... Zvi Alon: This is additional capacity, which we did not have before. It's not replacing any. We are adding capacity. Philip Shen: Right. And do you think you could use this U.S. EG4 facility to ship units to Europe or elsewhere in the world? Zvi Alon: Correct. You're absolutely 100% correct, yes. And we do plan to get the maximum utilization we can, as you can imagine. Philip Shen: Right. Okay. Great. Shifting over, I know you have not provided any guidance for 2026, but I wanted to see if we could get a sense for what you're looking for. From a seasonality standpoint, would you expect Q1 to be similar to a past Q1, maybe which one might be a useful comparison? And then what kind of growth could we see in '26 year-over-year or maybe sequential growth? However you think you can describe the '26 outlook in a way that makes you feel comfortable, but can give the market color would be fantastic? Zvi Alon: Thank you. So you're absolutely right. We did not provide the guidance for '26 yet. We will do it early in Q1 as we traditionally have been doing at the beginning of the year. But I was trying to communicate that as you can see in Q3 and some of the guidance we provided to Q4, which normally is a down quarter, we actually provided guidance to a flat quarter, not down. And we feel fairly strong about the outcome and where we are. I don't want to unveil too much specificity, but I can tell you, we are very comfortable with that guidance that we just provided, which gives us a very good indication as to how we get into 2026. So we do believe it's going to be a growth year for us, and we will provide a bit more guidance as to the specificity, as I said, in early Q1. And as far as seasonality, normally, as you know, Q4 and Q1 are a little bit more challenged, but Q2 and Q3 are actually on the upside, and we have been demonstrating it also this year. So we do believe that we will see a very similar behavior in the market. I will tell you that we are happy with the results of the repowering in the North America market, and that has no seasonality at all. And so that's a little bit more comforting, and it might actually provide some more stability for us in North America as we move through the year. Philip Shen: Right. Okay. Interesting. And from a margin standpoint, as we get through '26, do you also feel very comfortable with the current levels, call it, 40-plus percent to actually remain steady through '26? Zvi Alon: Absolutely, Phil. Yes. Philip Shen: Great. Great. So that's good. And then one last one, I'll pass it on. You just mentioned the repowering initiative. And can you share what percentage of the market might be repowering -- or what percentage of your revenue could be repowering for next year? Zvi Alon: I'm not sure we're ready to actually share this number in more specificity. But I can tell you, in Q3, the North America results have been substantially impacted by the repowering. And that has demonstrated for us the depth and strength. So obviously, as we move into 2026, we believe it's going to gain much more momentum and can be much more significant. Philip Shen: So the boost in the North America business really was substantially positively impacted by the repowering efforts? Zvi Alon: It was a very strong addition, yes, absolutely. Philip Shen: Great. Okay, so that momentum can continue through Q4 and through '26 as well? Zvi Alon: Correct. And I will tell you, it does not suffer from the problems of the new installations that the whole market is going through, including us. Because when you do the repowering, it's installations that you have and they don't quite work and operate and you really have no choice but to repower it. Operator: And the next question comes from Amit Dayal with H.C. Wainwright. Amit Dayal: Congrats on another strong quarter. Zvi, just touching on just your last comments. I'm just trying to get a better understanding of what's driving sort of this repowering trend here in the U.S. Is this more market-driven? Or is there any regulatory element that is also supporting some of this repowering-related sales improvements? Zvi Alon: Amit, thanks for the question. So to be very, very clear to the point and focus, there is no regulation or government or anything that is impacting it. It's purely financially driven. Customers who installed in systems that are aging and they don't perform anymore and they did benefit from the solar installations they did want to continue, and they have no choice, either to rip it apart, start from scratch, which is very expensive, or to repower. So it is just a ready-made a problem that is looking for a solution, and we've identified it and aimed at this market, and we have a solution which is superior and is not relying on any benefits from any local government or any changes at all. It's a purely financial decision by the owners of those systems. Amit Dayal: Understood. That's very helpful. And do you get similar efficiencies from the post-repowered setup that you might have had before? Or are there even more improvements? Zvi Alon: There are actually more improvements because most of those aging systems have been suffering from a reduction in performance before they actually broke or about to break. And so yes, there is an uptick in performance for those. And in some cases, this is not yet a big phenomenon, but in some cases, customers opt to also add storage too. So that's an additional source that potentially is available for us. Amit Dayal: Interesting. And then this could -- this repowering trend could begin in other geographies for you in the future also, it looks like? Zvi Alon: That is absolutely correct. We started focusing here in the U.S., and it seems to be working for us well. But this phenomenon is a global phenomenon. And many of the systems are aging. They are 7, 8, 9, 10 years old plus. And in many cases, you cannot get replacement parts. It's just you have no choice. So it's a problem that has been created over time and now it is coming to fruition, and it's a ready-made market basically. Amit Dayal: Understood. Just one last one for me. This -- you have the EG4 sort of manufacturing setup here in the U.S. now. What is happening on the business development side, Zvi, to sort of take advantage of this? Are you making any investments in like sales teams over here or any other partnerships you may be looking to capitalize on the manufacturing setup you have over here now? Zvi Alon: The beauty of this relationship is such that it is relying on the strengths of the 2 entities. EG4 is a very good brand in a specific market, which is doing well and growing nicely. And the Tigo-MLPE optimization has been growing and very well known in our space. And so the combination of them do not require any additional new sales or marketing activities. It's utilizing the existing channels we have, and that's the beauty of the relationship. Operator: At this time, this concludes our question-and-answer session. I would like to turn the call back over to Mr. Alon for closing remarks. Zvi Alon: Thanks again, everyone, for joining us today. I especially want to thank our dedicated employees for their ongoing contributions as well as our customers and partners for their continued hard work. I also want to thank our investors for their continued support. Operator? Operator: Thank you for joining us today for Tigo's Third Quarter 2025 Earnings Conference Call. You may now disconnect.
Operator: Good day, and welcome to today's FEMSA's Third Quarter 2025 Results Conference Call. My name is Serge, and I will be your coordinator for today's event. [Operator Instructions] And now I'd like to hand the call over to Juan Fonseca. Please go ahead, sir. Juan Fonseca: Good morning, everyone, and welcome to FEMSA's Third Quarter 2025 Results Conference Call. Today, we are joined by our CEO and Chairman, Jose Antonio Fernandez Carbajal, Jose Antonio Fernández Garza-Lagüera our current CEO of our Proximity and Health division and future CEO of FEMSA; Martin Arias, our CFO; and Jorge Collazo, who heads Coca-Cola FEMSA's Investor Relations team. The plan for today is a little different than usual. We will begin with our CEO and Chairman, who is traveling today and is therefore joining us remotely. Jose Antonio will share with us some thoughts on the past couple of years, where he sees our company today, and how he sees FEMSA position for the future as he gets ready to step down from the CEO role at the end of this week. He will not be able to stay for the remainder of today's call. Next, we will hear from Antonio Hernandez Velez Leija, still in his capacity as CEO of our Proximity and Health division. As you know, he will assume the role of CEO of FEMSA in a few days. But most of his comments today will focus on the performance and trends in our key retail operations during the third quarter, as well as some thoughts on the short- and long-term initiatives we are taking to address an evolving consumer. Next, Martin Arias, we'll discuss FEMSA's consolidated and operational results for the quarter in further detail. And finally, we will open the call for your questions. For the Q&A, please keep in mind that as of today, Jose Antonio is still the CEO of Proximity and Health, and there is a lot to discuss regarding those operations. If you would rather ask him about his views on the broader FEMSA platform, I'm sure he'll be happy to provide some high-level directional comments today, but these are early days as he onboards to his new role. Obviously, we'll be happy to dedicate ample time to this topic during our February call and beyond. And with that, let me turn it over to our Chairman, Jose Antonio, please go ahead. Jose Antonio Fernandez Carbajal: Thank you, Juan. Good morning, everyone. As you all know, in June of 2023, I returned to the role of CEO at a challenging moment because of our good friend, Daniel Rodriguez have fallen gravely ill, and we were in the thick of executing on our ambitious FEMSA Forward strategy. I committed at the time to where the 2 hats of CEO and Executive Chairman for a certain time with a clear plan to fill the CEO position and return to the separation of these key roles within that time frame. With the help of our Board, we've been able to deliver on that plan. And while I'm happy to hand over the keys to the incoming CEO next week, I appreciated the opportunity in these past 2 years to get close to the operations again, particularly through such a key process as FEMSA Forward. Today, I would like to share some thoughts on our recent past and on our future. FEMSA Forward was all about maximizing long-term value creation by focusing on our core verticals, retail and beverages, enabled by digital, and setting out very clear capital allocation target. In the past 32 months, we've been hard at work executing that plan, divesting nearly $11 billion of assets while in our core at the same time. In addition, the capital allocation framework we put in place in February of last year is guiding our actions and allowing us to move steadily toward our leverage objective by distributing between March of 2024 and March of 2027, and expected a total of approximately $7.8 billion of capital through [ ordinary ] and extraordinary dividends, and also through some share buyback. As I briefly recap these last 2 years, there are 2 message -- 2 messages I want to highlight. First, that everything we set out to do when we announced FEMSA Forward, we have delivered on. We told you what we were going to do, and then we did it. Second, that these actions have been driven by our share pursuit of long-term value creation for all of our stakeholders. Our purpose and interests are well aligned. Finally, I would like to quickly touch on how I see FEMSA position today. I feel very confident that our business units have never been stronger. I know this year has been sluggish in Mexico. And I know that the team has addressed this, and we will discuss this later during this call. But I also know that the last year was a banner year. So I am talking about the forest, not the trees. On the retail side, we have OXXO Mexico still with at least a decade of continued store growth at the current pace, world-class returns on capital, and a full range of levers to adjust as we ensure our value proposition continues to satisfy a growing number of needs for an always evolving consumer. In Mexico, we have successfully completed the leadership transition to Carlos Arroyo, an experienced retail operator with a decade -- with a decade's long track record, who is bringing a new set of capabilities that will serve us well for the challenges ahead. In the proximity convenience environment outside of Mexico and in the discount space in Mexico, we have a compelling set of higher growth opportunities that are ready to be scaled up, such as OXXO Brazil, OXXO Colombia and Bara among others. Any one of these opportunities has the potential to create billions of dollars of value over the next decade and beyond. In our other retail investment, specifically Health in Europe, we are laser focused on organic growth and on improving the returns on our invested capital. At Coca-Cola FEMSA, we are in the middle of an ambitious multiyear investment phase, continuing to increase our production and distribution capacity, as well as our long-term growth capabilities. Underscoring the strength and resiliency of this business even as we navigate a challenging short-term environment. On that note the recently announced tax increase in Mexico will present challenges, but we believe this will be the -- like the one we have faced in the past. And we will make the necessary adjustments in order to balance our return on investment capital while allowing us to take advantage of some growth opportunities. At Spin, we continue to grow our user base and engagement as we make steady progress in developing. Unknown Executive: Hello Jose Antonio? Excuse us while we try to reconnect to connect with Antonio. [Audio Gap] Operator: Ladies and gentlemen, we experienced a momentary interruption in today's conference. Please continue to stand by. [Audio Gap] And we've got -- we've back Jose Antonio. Please go ahead. Jose Antonio Fernandez Carbajal: Thank you. I'm very sorry. I don't know what happened and I kept talking, and I didn't notice when I left. Can you tell me where I... Unknown Executive: The paragraph of Spin Jose Antonio. Jose Antonio Fernandez Carbajal: Okay. So I will repeat that paragraph. Thank you. At Spin, we continue to grow our user base and engagement as we make steady progress in developing a digital ecosystem that will better enable our millions of users to navigate and improve their financial lives in a world that is increasingly digital. Although this is one of the longest term bets in our core verticals, we have a firm belief that the digital capabilities we are building are indispensable to OXXO Mexico, and will prove to be a source of value creation, creation for decades to come. Jose will certainly bring a fresh perspective to this business. I have been at FEMSA for nearly 40 years. During that time, I have lived through several reinventions of FEMSA. And today, I am as excited about our long-term growth opportunities as I have ever been, and I hope you are too. I will continue to work to capitalize on those opportunities in my role as Executive Chairman, but I will have fewer chances to speak with you. So I want to take this moment to thank every one of you for your interest in our company and for your full support through all these years. And with that, let me turn it over to our new CEO. Jose Antonio Garza-Laguera: Thank you, [indiscernible]. Good morning, everyone. Today, I want to structure my comments around three topics. First, the quarter's results with a particular focus on OXXO's Mexico same-store sales and traffic, where despite a still challenging environment, we are seeing some encouraging signs. Next, I want to talk about the actions and initiatives the team has put in place at both the short-term tactical level, but also some ideas about more strategic considerations and projects aimed at strengthening the value proposition and relevance of the OXXO store in the medium and long term. Finally, I will share with you some initial thoughts as I get ready to step into the FEMSA CEO role in a few days. So firstly, let's talk about the third quarter. As you saw in our release, same-store sales for Proximity Americas increased 1.7%, with average ticket rising 4.9%, and average traffic contracting 3.1%. This represents a clear improvement versus the first half, marking an inflection in our trend that seems to be improving further in October. This quarter was the first to show positive same-store sales growth since the middle of last year, and importantly, we believe a significant part of the improvement came not from a meaningful change in macro conditions, the weather or the consumer environment, but rather from adjustments we made to address category and channel-specific challenges. As a result, we improved our competitive position in several key categories like beer, soft drinks and snacks. And in terms of the channel, we believe we also improved our overall competitive position versus the traditional trade, reversing the trend we saw earlier in the year. Which brings me to my second topic regarding the short- and medium-term initiatives we have launched to improve performance. There is a long list of actions and initiatives designed to drive our short-term results which are aligned with our long-term strategic objectives. One of our most important such initiatives, which I want to highlight is pursuing affordability in our core categories of beer, soft drink, snacks and tobacco. To this end and working in tandem with our key supplier partners, we were able to improve our assortment and our price package architecture by adding presentations at both ends of the out-of-pocket spectrum. Larger multi-serves and returnable presentations in beverages, smaller packages for snacks and beverages, and lower-cost brands for cigarettes. In addition, we have implemented aggressive promotional campaigns in these categories and a variety of other categories. These initiatives are being supported by strong communication efforts, access to Premia related data, and a focus on store execution, and we are already seeing positive results, improving our competitive position during the quarter for most of these categories relative to the traditional trade. At the same time, we are executing ambitious initiatives to drive productivity and efficiency across the proximity and health organization aligned with our long-term strategy, including our recently launched fit-for-purpose corporate overhead efficiency program, which will make our organization leaner and achieved significant cost savings over the next several quarters, generating a reduction in SG&A. Beyond the short term, we are in the early stages of developing the strategy that will guide the evolution of our OXXO platform in the years to come. As powerful as our value proposition has been to satisfy certain consumer needs and occasions around thirst, gathering and impulse, we believe we can expand our relevance and increase the scope of our value proposition while ensuring affordability in a more integral manner. We also see that coffee and food categories are categories where we can win by making significant improvements. We have performed a deep diagnostic on our current value proposition and are currently in the experimentation phase to launch new offerings. We are excited by the opportunity and we will keep you posted as we advance on this ambitious multiyear effort. Finally, let me talk about FEMSA and my role as future CEO for a minute. As you might imagine, I have been rapidly getting up to speed in all the matters outside the scope of Proximity and Health. However, although it is still early, and I do not start the job until next week, I want to share an initial message of strategic continuity. Over the past few years, we achieved meaningful progress driven by the vision, courage and strategic clarity of those that came before me. They led a powerful transformation, streamlined our portfolio and positioned FEMSA to compete with greater focus and strength. I have the privilege of learning from them and their example continues to shape how I live and think about the future. As a member of the senior leadership team, I was informed and fully supportive of FEMSA Forward and the resulting focus on our core business verticals, and I am completely designed our capital allocation framework and strategy. I am convinced we have in Coca-Cola FEMSA and OXXO Mexico, two of the most remarkable and valuable assets in their respective global industry. Not just because of what they represent today, but just as importantly what they can become in the future. Our retail platform is poised for dynamic long-term growth through OXXO Brazil, OXXO Colombia, Bara and although still at an earlier stage of development, OXXO USA. Our other retail platforms, in particular, Health and Europe, our solid self-funding operations where our focus should be on maximizing the returns on our existing assets through efficiency and primarily organic growth. And I am a firm believer in the potential and optionality of the Spin ecosystem. I also want to take this opportunity to share with you that I am bullish on Mexico. We continue to deploy more than $1 billion in our CapEx in our home country every year. As attractive as some of our international long-term bets are, Mexico will continue to play an outsized role in the value creation at FEMSA for the foreseeable future. As for my management style, I favor thinking in decades while lasting in days, balancing a long-term view on value creation with a sense of urgency in setting the right conditions for execution. We will have plenty of opportunities to talk about these topics in the future. But I can share some examples with you of what I mean by that. Thinking in decades requires that we methodically consider our strategy, ensuring that we do not mortgage our future for short-term fixes and gains at the expense of our long-term growth and competitive position. We should always be driven by the objective of long-term value creation, instilling a relentless focus on sustaining or having an achievable and realistic path to ROIC over WACC. Acting in days requires us to rigorously tighten our grasp on actionable expense and cash flow levers, making it a daily habit across the organization. It includes getting the right people in the right seats right now, as well as testing frequently, learning quickly, moving on fast when we fail, and acting decisively when we find a new solution that serves our customer needs. I would also add that I'd like to communicate in a no nonsense straightforward way, and one thing I can offer you now is a commitment to be in touch with you, our investors and analysts more than in the past. Not just on these quarterly calls, but by meeting you on the road. We are already developing the plans for next year with Martin and Juan, and I look forward to seeing you all in the not-too-distant future. And with that, let me turn it over to Martin to go over the quarterly results in detail. Martin Arias Yaniz: Thank you, Jose Antonio. Good morning, everyone. Let me begin by discussing our consolidated results for the third quarter of 2025. During the quarter, we delivered total revenue growth of 9.1% despite a still challenging but improving environment in Mexico, impacting both Proximity and Coca-Cola FEMSA, which was offset by solid top line trends outside Mexico. Some currency tailwinds, particularly in Europe and the consolidation of the OXXO USA operation. Operating income increased by 4.3% year-over-year, reflecting inflationary effects on our costs and expenses, partially offset by expense efficiency efforts across multiple operations, especially at OXXO Mexico, Coca-Cola FEMSA Mexico, Health and Europe. Net consolidated income decreased by 36.8% to MXN 5.8 billion, driven mainly by a noncash foreign exchange loss of MXN 1.3 billion, compared to a gain of MXN 4.3 billion last year, a swing of more than MXN 5.5 billion. Related defense U.S. dollar-denominated cash position, which was negatively impacted by the sequential appreciation of the Mexican peso during the period. Two, higher interest expense of MXN 5.5 billion, compared to MXN 4.8 billion the previous year, reflecting higher debt at Coca-Cola FEMSA and higher lease obligations across our retail network. And three, lower interest income of MXN 1.9 billion compared to MXN 2.6 billion the previous year, reflecting lower interest rates and lower cash balances. Our effective tax rate for the quarter was 29.3%, showing a sequential improvement. We understand that the spike in the first half of the year in our effective tax rate 42.2% in the first quarter, and 40% in second quarter raised certain concerns. In that regard, I want to make several comments. The quarterly movement of our tax rate can be volatile and difficult to project on a quarterly basis, since it can be impacted in any given quarter by any of the following things. Extraordinary settlement of fiscal contingencies from the past in 1 quarter, reflecting issues from several years in the past. As the year progresses, we also make adjustments to provisions for tax payments given the performance of the business. Foreign currency gains and losses on our foreign currency cash balances and debt can cause important swings. We are requiring our tax rules to include or write-off deferred tax assets relating to NOLs based on adjustments to internal projections. Movements of accumulated cash, excess cash from our subsidiaries to Mexico, reflecting several years of profits can cause an increase in taxes. There are certainly structural reasons why our tax rate is higher than the 30% corporate income tax rate in Mexico, including nondeductibility of certain expenses, losses relating to Spin, and higher [ tax ] rates in countries outside of Mexico. We have guided investors towards a tax rate in the mid-30s range, and we continue to believe that this is the right number under current legislation. Turning to our operating results and beginning with the Proximity Americas division. Same-store sales increased modestly by 1.7%, once again reflecting a combination of a solid average ticket growing 4.9%, offset by a traffic decline of 3.1%. This is an improvement over the previous several quarters. And as Jose Antonio just said, it includes some encouraging information regarding the effectiveness of our tactical initiatives, and an incipient recovery in our competitive position in key categories. Total revenues for Proximity Americas grew 9.2%, or 4.8% on an organic and currency-neutral basis, mainly driven by the expansion of our network 1,370 stores year-on-year, a strong performance in our LatAm markets, which continue to grow at very attractive rates. The consolidation of OXXO USA, as well as favorable exchange rate effect in several of our operating currencies. Gross margin expanded by 80 basis points to 45%, reflecting a continued expansion in Mexico and LatAm, despite undertaking the affordability efforts mentioned previously in Mexico, and the consolidation of the U.S. operations which have a significant component of lower margin fuel. Operating income increased by 7.1%, while [indiscernible] 20 basis points to 8.8%, mainly due to the consolidation of the U.S. operations, which are slightly above breakeven. And despite the fact that Mexico's margin was flat, and OXXO LatAm continued to reduce its operating income losses relative to its revenues. The combined selling and administrative expenses grew at 12%, reflecting continued pressure on wages in Mexico, continued expansion-related expenses in LatAm and consolidation of the U.S. operating expenses. There were some reclassification of administrative expenses to selling expenses in LatAm, which makes comparison more difficult on a disaggregated line item basis. We expect, over the next few quarters, you should be able to see the effects on SG&A as we streamline corporate overhead through our fit-for-purpose initiatives. On the store expansion front, Proximity Americas added 198 new stores in the quarter, in line with our plan for the year. At OXXO USA, the conversion of DK stores into the OXXO banner continue to pace, reaching 50 converted stores in Midland-Odessa and Lubbock. We are making progress in food service with revamped hot food menus and offerings in the 50 OXXO stores, adding new partnerships aimed at driving consumer frequency and strengthening the overall food service value proposition, including clip-ins from our [indiscernible] and [indiscernible]. We are also initiating the conversion process in El Paso, as well as testing stand-alone nonfuel OXXO stores in certain locations. At Bara, during the quarter, we continued our accelerated store expansion opening with 40 new stores, and we remain on track to achieve or surpass a 30% growth rate in 2025. We continue optimizing our discount value proposition by scaling our private label strategy. Bara same-store sales grew 10.8%. In Europe, Valora delivered solid results as total revenues increased by 10.1% in pesos, or 3.3% on a currency-neutral basis, driven by higher Swiss retail sales, coupled with positive trends in Swiss B2C food service, partially offset by softer sales in B2B food service, particularly in the U.S. Gross profit grew 10.1% in pesos, or 3.4% currency neutral, in line with revenues and representing a stable margin compared with last year. Total operating expenses grew below revenues. However, selling expenses grew at almost the same rate as sales, reflecting wage pressures and inflation, but were offset by nearly flat administrative expenses. This reflects broad efforts to reduce corporate overhead expenses. Valora reported a 29.1% increase in operating income, 20.7% on a currency-neutral basis, representing a 70 basis point improvement in operating margin, and reflecting strong growth in Swiss retail, positive contribution from Swift B2C food service, and effective corporate overhead cost management offset by our B2B food service business. Now let me walk you through the performance of our Health division. Total revenues increased 2.9% in pesos with same-store sales growing 0.8%, mostly explained by strong top line performance in Chile and Colombia, offset by Mexico. On a currency neutral basis, total revenues grew 4.5%, evidencing currency headwinds relative to the U.S. dollar in Ecuador and the Chilean peso. Growth in revenues occurred despite the continued challenging environment in Mexico, which saw same-store sales declines and the closure of 423 underperforming stores versus the same quarter in 2024. Operating income declined 4%, and 1.3% on a currency-neutral basis, resulting in an operating margin dilution of 30 basis points to 4%. This reflects operating deleverage in Mexico and higher labor expenses in South America, particularly driven by the rapid expansion in Colombia. [indiscernible], same-station sales increased by 8.3%, and total revenues grew by 5%, reflecting growth in retail volume, offset by a decline in the wholesale business. Gross margin stood at 11.8% and operating margin at 4.6%. It is worth highlighting that during the quarter, selling expenses decreased 1.7% underscoring our continued effort to look for efficiencies and savings to support profitability in such areas as labor costs. Now moving to Coca-Cola FEMSA. During the third quarter, they delivered gradual sequential improvement amid a challenging environment. Total volume declined slightly, driven mainly by Mexico, or a softer macro environment continued to weigh on consumption. On the other hand, South America delivered a resilient performance with volume growth across most territories, demonstrating the adaptability of the business across regions. In terms of profitability, cost protected its margins, mainly through the implementation of mitigation actions, controlling expenses and generating efficiencies, recognizing a more difficult 2025 than expected. You can dive deeper into the results by listening to the webcast of their earnings call held last Friday. Finally, regarding capital returns to shareholders in the context of our capital allocation framework. During the quarter, we distributed a total of [ MXN 11.8 million ] in a combination of ordinary and extraordinary dividends. In terms of share buybacks, we were not active during the third quarter, so we are a bit behind schedule. As you know, whenever we become active, we will make the required filings and you will be able to follow. As we look ahead to the coming year, we are cautiously optimistic. As we mentioned before, we are beginning to see signs of improvement in the October data in Mexico. In terms of the levers and variables under our control, we are confident we are making the right adjustments and achieving the desired results across our platform. From the consumption side, we will have the additional tailwind from the FIFA World Cup to be held in our continent, with matches being played at the right time of day. And hopefully, we will also get a slightly better environment in which to operate in Mexico. We will provide a more detailed update in our next call. And with that, we are ready to open the call for questions. Operator: [Operator Instructions] The first question is from Ben Theurer from Barclays. Benjamin Theurer: Jose Antonio, congrats on the new job. And I actually have a question for you on the old jobs. So as it comes to retail, just wanted to understand a little bit and dig a little deeper into your commentary on the same-store sales performance. Well, clearly, traffic was down only 3% versus the give or take, 6% we saw in the first half. There was a very easy comp versus last year because of some of the hurricanes. But you did mention there is sequential improvement into October. So I wanted to kind of like understand if you could give us a a couple of more data points as to maybe how the performance was from July through September? And how that carried into October? And what we should expect here as we move throughout the fourth quarter and then maybe into next year, just with the closing remarks being slightly optimistic into next year? So I just want to understand a little bit the traffic dynamics at OXXO. Jose Antonio Fernandez Carbajal: Sure. This is great. I was expecting this one to be either the first or the second question. Unknown Executive: Fantastic. Be prepared for that. Jose Antonio Fernandez Carbajal: So -- I mean, obviously, I would say, I am glad that I see a reversing of the trends in OXXO Mexico on this quarter. And I do see better performance in traffic compared to last -- the first half of the year. But obviously, I'm not satisfied because we had, as you say, some easy comps. To the defense of my team and also there were some adverse effect in weather, especially obviously in September and especially in the Central of Mexico, but I -- and I mean what gives me some optimism is that the last couple of months, we've seen market share gains in beer, in soft drinks, and even in snacks, and even in tobacco, especially with the introduction of some lower-priced tobacco. I am -- October is still not over, but I am very encouraged by the results. So if that trend continues, I think we should be facing a much better end of the year. What else I can tell you? I can tell you some of the things that we've been putting in place that we think we're going to take effect much more -- or they were going to take longer to take effect. Like promoting coffee and some food items around coffee and breakfast are really beginning to shape up. Coffee is growing at double digits, and that gives me optimistic. And then the ability to be introducing multi returnable packages, affordability stuff in beer in soft drinks are really, really beginning to take place. And I would say in services, we're implementing new increasing services every, every quarter. And so even though, for example, we're growing a lot with the Asian e-commerce retailers, those things have now scaled back given some tariff restrictions. We're beginning to see other increases in traffic in services that are -- give us high expectations for growth. We're still waiting for the permit to get back into Banorte and other banks. But cash withdrawal with the main banks, some of the big fintechs and with Spin are growing double digits as well. So I would say still not satisfied because I wish we were going better in traffic, but very encouraging signs towards the fourth quarter. Does that help you? Benjamin Theurer: It does. And then obviously, into next year, we get the really easy comps, correct? Jose Antonio Fernandez Carbajal: Well, hopefully, yes. I do think there's a lot of things we need to still do on our part, and I am very encouraged by the obsession towards market share gains that we're following through in OXXO, and I think that's a discipline we will go forward. But we should get better comps. And I do think the World Cup should help as well. Benjamin Theurer: Congrats again on your new role as well. Jose Antonio Fernandez Carbajal: Thank you. Operator: We'll now take our next question from Alejandro Fuchs from Itau. Alejandro Fuchs: Congratulations on their new role to Jose Antonio. I have 2 quick ones, if I may. The first one on OXXO Mexico, another strong performance on gross margins this quarter. I wanted to see if you could maybe elaborate a little bit more into how much of this is the service mix continue to add to the business? How much of this is maybe a little bit of pricing? And where do you see just gross margins in Mexico continue to develop at OXXO in the future? And then the second, on Bara and also in Brazil and another also strong quarter of growth, so congratulations on that. I wanted to maybe Jose Antonio grab your thoughts on where do you see these 2 businesses in the next 10 years? How much of our priority are them to you and to the team? And then maybe if you could elaborate a little bit into what would be the best case scenario, sort of medium to longer term of Brazil and Bara. Jose Antonio Fernandez Carbajal: Yes. Thank you, Alejandro, for I would say, obviously, I've always said that OXXO Mexico has a lot of momentum and still a lot of gross margin to gain. If you look -- I think always the gross margin it's an incomplete number. And obviously, we don't have the full answer, but you would have to say, look, at the full profit pool all the way from the -- of our supplier partners all the way to the consumer. And I always like to see gross margin gains, and I think there's a lot to gain still. But some of that should be given back to our consumer in affordability. Obviously, some categories are more elastic than others. And so we have the smart data to play with that and give back to our consumers some of the gross margin gains. As to this quarter and the gross margin gain, it has a little bit to do with the commercial income that we continue to grow incredibly well. It has a little bit to do with mix. The affordability things allows us to even gain some gross margin as we implement some very profitable promotions in some of the affordable SKUs that we we are trying to promote. So the mix also helps sometimes with the broad margin. But I would say, mainly, it's -- that we continue to win commercial income. And as we grow what you can expect through the year I do expect that there's more gross margin to make, but some of it will be given back to the consumer in affordable promotion and price pack architecture. Afterwards -- afterwards Bara and OXXO Brazil, as I said in this forum, and I will say it in the future, those are 2 of the most exciting avenues for long-term growth for FEMSA. I am incredibly encouraged by the amount of progress that OXXO Brazil has been able to achieve in the last couple of years. We were -- just 2 years ago. We still needed to believe almost a quantum leap in gross margin expansion, in operating cost reduction, in top line goal. And now we are within arms reaching all of those areas. So we know we're going to have a profitable business in OXXO Brazil. We know where our next areas of growth beyond Sao Paulo will be. We're already mapping them. We're already starting them carefully. The big, big question to ask is, do you believe of that it will be a 40,000 store business in Brazil, or a 4,000 business in Brazil? I think it will be something somewhere between. Sorry for the wide margin. But it's up to us to really continue to perfectly engineer the whole process of the business to make it -- to be closer to the higher end belief. But it's one of my big, bigger ambitions for the next decade in FEMSA. Imbera, we are incredibly happy with the progress in terms of increasing our return on invested capital of new opening stores. We still need to polish and perfect the value proposition of Bara towards more -- towards -- closer towards harder discount. We're happy with the deployment and growth of our private label brand, but we still have a long, long way to go, but we are following closely and working with the private label manufacturers from other countries that are one to come and install in Mexico. And we're beginning to grow beyond our core region of El Bajio. And we're seeing very positive results in Guadalajara in Jalisco and we just opened in the north of Mexico. So we're very excited with the progress there. Operator: And we will now take our next question from Antonio Hernandez from Actinver. Antonio Hernandez: Congrats on the results and this new position. So question regarding an update on the health business, both in Mexico and Chile, some news also... Jose Antonio Fernandez Carbajal: Antonio can you be closer to the mic? I'm not being able to... Antonio Hernandez: Yes. Can you hear me there? Jose Antonio Fernandez Carbajal: Yes, better. Antonio Hernandez: Okay. Perfect. Just wanted to get an update on your health business. Both in Mexico and Chile saw some news -- recent news on a new format in Chile. Also, there's a very different trend in Mexico. So I wanted to get an update on that business in both countries. Jose Antonio Fernandez Carbajal: Yes. So in Chile, we were facing a very tough competitive environment in Chile for the last couple of years, and we are very happy that we continue to Gain market share. We're growing in all of our channels. As you know, Chile is a multichannel business. We are in the pharmacy. We're in the franchise business. We're in the distribution to independent pharmacy. And we continue to gain -- and we just even opened our discount pharmacy chain in Chile. And we are seeing incredible growth in sales and in market share, in all of that. Given that it's a very competitive market, sometimes that does not translate to bottom line growth. But even given the huge competitive environment that we see in Chile, we are happy that we are growing even in the income statement. So -- and we expect Chile, it's a mature market. We have very high market shares. But I do feel there's a lot of room for growth in even newer categories in the health and beauty space, in the premium and in the discount space, and we're beginning to get into other adjacencies in the elderly care, I mean the pet and veterinary care, and so we see new avenues for growth for Chile. Very different outlook for Mexico. In Mexico, we are the #6 player. I could obviously put as an excuse. A big chunk of our stores are in the Sinaloa region, which have been affected by security. But it's not enough to explain the drop. To be honest, we need to fix Mexico. We're working very hard to fix it. We have now the right talent in place. But we had to close many stores in Mexico, and we're still on working on fixing that operation, and we hope to fix it in the next few months. Thankfully, we have a very high-growth business in Colombia. And even in Ecuador, we're seeing market share and revenue and profit gains. So in general, health as a business we're happy except for Mexico. Operator: And we will now take our next question from Alvaro Garcia from BTG Pactual. Alvaro Garcia: All the best in your new role Jose Antonio. Two questions. One, the fit-for-purpose /corporate restructuring comments you mentioned earlier, the reduction in SG&A. In my head, I have this $100 million amount that you've typically guided for on the corporate front. Is that subject to change? And if you could just give us more color on how you're thinking on structuring the corporate expenses there? And then just one really quick one on interest expense. Martin, I don't know if you could expand on -- you saw a pretty big uptick at the FEMSA level, ex-cost. What explain that? Jose Antonio Fernandez Carbajal: So I would say, I would split the corporate overhead in 2 phases. The first one, the fit-for- purpose component is something that me and the OXXO team have been working on, and we are -- there were opportunities as we prioritize certain projects in OXXO Mexico and prioritize others. There was a good opportunity to reshuffle the overhead in OXXO Mexicos headquarters, and there will be some opportunities for savings, but also to leave some room for executives to dedicate to the big projects around food, around services, around the affordability that we want to invest. I do expect a big hit on savings. You will see the full number probably by the end of the year and as we start next year. As -- eventually, I would -- when I become CEO of FEMSA, I do plan to take a deeper look on -- and as always, with big changes in management, there are opportunities to look at the overhead in the full company, and I will comment more on that probably in February and beyond. Hopefully, that's what I can answer for now. Alvaro Garcia: The comments on -- fit for purpose for OXXO Mexico specifically at the moment? Jose Antonio Garza-Laguera: Yes, for now, yes. Martin Arias Yaniz: Alvaro, could you repeat your second question? I just want to make sure I got it right. Alvaro Garcia: Sure. On the interest expense, specifically, ex-KOF, we saw a pretty big sequential increase there. I was wondering if maybe there's some derivatives in there that's driving that? Or what drove that sequential uptick there? Martin Arias Yaniz: Well, looking at the total interest expense, KOF, actually went up from -- looking this correctly from [ $1.59 billion to $1.3 billion ] interest expense net and it was flat on interest expense. And so the interest expense went up by MXN 600 million. I don't -- I'd have to get back to you on the detail exactly in the context of everything, it's not that big a number. Interest income is certainly coming down as our cash balance has come down. As interest rates generally come down, particularly in Mexico, but to some degree in the United States. But specifically, that what appears to be a MXN 600 million increase in interest expense at FEMSA, I'll get back to you. Operator: We'll now take our next question from Thiago Bortoluci from Goldman Sachs. Thiago Bortoluci: First of all, best of luck on your expanded challenges. And also congrats to your father on another successful transition. We'll be looking forward to connecting more going forward. I have two questions. One is more conceptual, right? When you think about the one thing that you'd like to do differently in FEMSA going forward. What do you think this is the clear opportunity? This is more conceptual, right? But it still related to your vision for the company, and this is somehow also linked to the capital allocation strategy. How do you think the role that Coca-Cola FEMSA will have in the FEMSA overall portfolio going forward? Jose Antonio Garza-Laguera: Thank you, Thiago. Obviously, great question. I would say -- I will answer you with the second one. I would say, obviously, I am in love and have a huge appreciation for the KOF as a business and the talent. It's an incredible business, and it's an operation that has a lot of things going on for themselves to really keep growing, growing the core. I'm incredibly impressive what the opportunities that are -- we see for the digital transformation of the bottling platform. For growth opportunities, not only in their soft drink category, but in their non-KOF. And I see a lot of potential for organic growth in Brazil, Guatemala, Colombia and even in Mexico, with all the -- even with the taxes. So I'm very excited for Coca-Cola FEMSA. The relationship with the Coca-Cola Company is the best one we've had probably in decades, probably since the JV was formed. It's incredible that what the management team from both sides have been able to construct as a growing and fruitful relationship. I do think Coca-Cola FEMSA should play a part in a consolidation space through eventual M&A. And I am excited for the opportunity. I have huge respect for the bottlers in South America. And obviously, here in Mexico, I have a huge appreciation for all of them. And I do think there are opportunities to keep exploring possibilities with other families and bottlers in the space. I will comment more -- in more detail on what I see cost in the future, but that could give you some color of my excitement for Coca-Cola FEMSA. And from what I would say, I would do different? I think I let it be known in what -- in my earlier comments. I do think we need a bigger sense of urgency and a bigger sense of counting every penny. We have the ambition in FEMSA to be one of the best, or the best proximity retailer in the world. Obviously, with the Coca-Cola FEMSA company as part of it. As to do that, you have to have the best management team. You have to have a very demanding workforce, but also lead to the culture that you want to instill for the long-term growth of the company. So I would say my big, big focus on conceptually bigger demand for excellence in our corporate office, bigger demand for excellence throughout the channels in management, bigger speed in making big decisions on capital allocation. And I think that should give you the color on the sense of urgency that we plan to move versus previous years. Martin Arias Yaniz: And going back to Alvaro Garcia's question, the increase in interest expense, excluding Coca-Cola FEMSA, was slightly over MXN 600 million. 2/3 of that can be attributed to an increase in the financial expense associated with the lease accounting under IFRS, and likely the consolidation of the U.S. business is a big reason for you seeing the sort of uptick relative to other periods. For other periods, most of it is related -- all of it is related to organic growth of leases. Operator: We'll now take our next question from Bob Ford from Bank of America. Robert Ford: Congratulations on the promotion, Jose. Martin mentioned some reclassifications. Were there any reclassifications or onetime items that contributed to the gross margin improvement at OXXO Mexico? And Jose, where do you see opportunities to make further improvements in the value propositions at OXXO Mexico? And then one other question, if I could. Could you discuss the charge in discontinued operations, it was a little bit bigger than what we were looking for. We're just wondering how you're thinking about Solistica and the LTL business. Martin Arias Yaniz: Some of the reclassifications -- all the reclassifications that happen in Proximity Americas had to do with OXXO LaTam. None of them had to do with OXXO Mexico. And OXXO Mexico, even on a standalone basis did have an expansion of its gross margin. Juan Fonseca: In fact, I think Bob, expansion in Mexico was something like 130. Yes. Jose Antonio Garza-Laguera: Thank you, Bob. I would say if you look into also Mexico, we are, by far -- or we have a very important market share in what we call impulse gathering the beer, the soft drinks, the services category. But we still have a long ways to go in a couple of categories that OXXO right for winning. One is around food. We are the biggest sellers of coffee. And if you look at our LatAm operations, all of our coffee occasions go paired with very good tasty food. And I think we have a lot of opportunity to win in food around coffee. And obviously, that leads you to breakfast. And if you look at it, there's not really an affordable winning food opportunity. And that's a segment on that we have lower traffic than average. So we are very excited with increasing the opportunity for that. We still are very excited about the opportunities we see on segmentation. And I think we're going to go bigger and tougher on segmentation. We know all of the stores that are close to a discount store, or discount supermarket. And we have very clear actionable steps that we can put in place in the affordability space, not only in the categories that compete in the grocery space, but in the impulse and gathering. So we're beginning to do some of that and it's beginning to react incredibly. And there are things that will take longer to mature. But I am very excited about them. Some of them around the beyond trade and other services. And that requires working with team towards creating payment options that you can pay at Spin, but you can also send people money that they can withdraw at OXXO, and you can reward them for withdrawing at OXXO in a way. We're beginning to see some interesting things. We are still very excited about our growth in OXXO Nichos. They continue to outperform in terms of ROIC and we are continuing to accelerate that. This year, 25%, a little bit lower than what we planned, but still much bigger than previous year. 25% of our stores would be on the niche space, and that should just continue to gain momentum. I would leave it on that. Those are the things that we see are beginning to help us gain share beyond the inputs and gathering categories and towards food and groceries and others. Does that respond your question, Bob? Robert Ford: It certainly does. I just had that one follow-up with respect to the discontinued operations in Solistica. Jose Antonio Garza-Laguera: Martin, you'll take that one? Martin Arias Yaniz: Yes. So Solistica was -- the transaction was completed in early July. So you will see an impact from Solistica being removed from discontinued operations for that quarter. And it should not return. We've had so many transactions going -- going forward. We really have no major transactions to complete or close that should impact other than this quarter, we reconsolidated the only part of Solistica that we kept, which was less than truckload in Brazil, a very small business. But that's the only one that also got removed from discontinued operations and is now consolidated at the holding company level. Operator: We'll now take our next question from Rodrigo Alcantara from UBS. Rodrigo Alcantara: Jose, I would like to focus here a bit on food, right, which is a topic we also discussed back in those days. I mean, food is not a new thing, right? I mean, has been there for a while, remember Doña Tota, right? A couple of years ago, was part of the speech, right? Still ever since food as a percentage of sales in OXXO remains relatively low, right? I mean, kind of like it's on this front over the last decade has been relatively slow. So my question here for you is what makes you feel so excited about food again? Why this time could be different? Or could we expect faster adoption on this front presumably with Sbarro, what you're doing with Andatti, right? That would be my question. I mean, can we expect something faster on this front as opposed to previous years? And my second question would be as presumably, you will consolidate this operation, right, once the transaction is approved. Any indications on how the consolidation of OXXO Brazil may impact your consolidated or your proximity Americas margins once you consolidate these operations? That would be my -- those would be my two questions. Jose Antonio Garza-Laguera: I'll answer you first with the second one. Hopefully, by next year, we will give you more clarity, or a distinction between South American and our Mexico proximity business. So hopefully, that will not bring a lot of noise. Obviously, it's still our operation there. It's 600 stores. So even if we still combine it on the proximity of Americas, it shouldn't move the needle significantly. But our plan is to propose to you guys a different outlook when we show the proximity numbers. We're still working on that with Juan and Martin. On food, obviously, food is a very challenging topic, and we always get the question and what is different? What are you going to do that's really going to change? I would say one of the things that encourages me is that all of our South American operations are incredibly well -- really grew the operations since probably they didn't have the services business to rely on. They were very focused on being customer-centric in food first. And since we had a lot of Mexican executive there, they were very humble in asking really the consumer what you guys need and want? And Brazil, we sell a lot of powre [indiscernible]. We sell a lot of bread, our SKU bread is our #1 SKU. And it's twice in numbers than our second even in sales than our second SKUs. So it tells you a little bit of how big food can be for the on-the-go consumer. It's no different to Mexico. And obviously, you would say, well, but Mexico is still eat on the street. That happens in Colombia, that happens in Peru. That happens in Chile. And so I think that's no excuse. What we're doing different is we are really starting with the coffee offering first. We see the opportunity for coffee. We've always treated coffee almost as a margin developer, and we still -- now we see it as a huge traffic. We still make money on coffee, but I think it should be a much more of a traffic driver. And where we do promotions on coffee, we instantly see the results. I'm very excited with preparing coffee with breakfast products. I would say that's the main thing we're experimenting. But obviously, I am a firm believer that OXXO is not a place for you to sell tacos. It is very complex to sell taco. That is a red ocean. That is taken over by the street. And to be honest, street tacos are very, very good. And so we are beginning to play around different things that our consumer wants, that they want to carry on their hands. They want to get in and out quickly out of the store. And we are beginning to try some things that excite me. Obviously, pizza and our Sbarro partners. It's too early to say. We have two restaurants here in Mexico, but we are incredibly impressed by the results. But that's, I would say -- I don't know if a decade away, but very few years away for being something that can really move the needle. We are doing some clippings in [indiscernible] Doña Tota and they are impacting well. But I think where you will see things moving fast is on affordability for breakfast. For on the road, the road warrior of Mexico, where we see a need where our consumers are really demanding more opportunities and where I think we can differentiate from the taco category. Hopefully, we will be proven right. Operator: We'll now take our next question from Ricardo Alves from Morgan Stanley. Ricardo Alves: Thank you, Jose Antonio, for all the support and all the interactions with the investor community over the past few years. We really appreciate that and wishing all the best to the new CEOs going forward. A couple of questions, guys. Actually, follow-ups. On the gross margin, when we exclude the U.S. in proximity, I think that we're getting to something like 46%. And my question initially was if we were close to a ceiling, but I think that from the commentary that was already made, you made it clear that the answer to that question is no. That you see more opportunity to continue to expand gross margin here. My question is, how is that possible when you compare your business to other convenience store business outside of Mexico globally in Asia. What do you think is going to be this next lag up driver for your gross margin to continue to expand? That's my first follow-up question. And the second one, I think that as Juan suggested, I will leave more strategic questions at the FEMSA level to next year, but taking advantage of the transition that is happening right now for the new CEO. I think that we can still talk about longer-term strategic issues at proximity. There's a lot of things going on there. You have full control of Brazil, now. Mexico, you're focusing on recovering traffic, all these efforts that we discussed here today. Colombia is growing, then you have the U.S. So there's a lot of things moving on going on, on the proximity alone. What do you think should be your focus and our focus to see what is really going to move the needle under your leadership as you think about the different regions for the next 2 or 3 years? Jose Antonio Garza-Laguera: Thank you very helpful. I would say -- on traffic, I mean, on margin, we are I always say the gross margin is a very incomplete number, and I know I said it before, but I think it's important to emphasize. You need to look at the CPG's gross margin, or margins, and the consumer let's say, relative or end price and the relative value. And in that respect, I do think Mexico is an outlier. And you see it in all the major CPG players that come to Mexico. Mexico is one of the most profitable markets for all of the guys that you guys know well, obviously, for the soft drink guys, for the snacks guys, for the beer guys. It's incredible the margins that they make here. And Mexico is an outlier because they do have a big love for brands. And I think the traditional trade still plays an incredibly large amount of -- which creates a moat for the CPG players. We have the added benefit of the commercial income. And as the discount players continue to gain -- grow and they will continue to grow off and others will continue to grow, the CPGs rely more on obviously, the traditional trade, but also on convenience, and they love to use us as a defensible place to promote -- and to promote their brands. And they do see a great benefit in return on promotional income from OXXO. And that's why we still see a lot of potential for growth. Going forward, as we try to gain share in categories where we're not huge, we're obviously beyond impulse, beyond gathering and beyond food, we will go into categories in groceries where we see an opportunity to gain share against the traditional trade and even against the supermarket. And some of that margin will be given back to the consumers. I don't know yet the amount, you will have to do -- a lot to do with elasticity. So I still -- it's very hard for me to say where the end game is. But when I see the margins of my CPG partners, which I love, and I love for them to do business with us, I do still see room for growth, both in promotional income and in gross margin fully in Mexico. So I would give it at that, and I will give -- you will see clearly how we evolve as we begin to get into other categories in groceries in OXXO where I see a big opportunity. Martin Arias Yaniz: I would also complement what Jose is saying with a couple of things. Comparisons with other players outside of Mexico, I think, is also difficult because there are very few players that have the weight of financial services. And the income that we earn on financial services is very high margin. Because the -- there are no COGs really associated with the commissions that we charge for our financial services. It's really more as G&A related to the transportation of cash, and technology that we need to have in place. Number two, the issue of our -- when you strip out financial services, the reality is the margin is different and more comparable to things that you may be looking at. Number two, there are very few players outside of Mexico that have such a scale and breadth as opposed to OXXO in meeting proximity needs, really, our competitors are the traditional mom-and-pop. And I think our value proposition is very, very specific and very distinct which allows us in certain categories, given the imports that we have, that Jose mentioned, to partner up with suppliers for any number of initiatives and work that we do with them. And then finally, it's an evolving thing. The waves of value at OXXO will also impact the margin as we go forward. Food, for example, is properly executed, should be an attractive margin business at the gross margin if you manage to control an issue of waste. So I will tell you, it's very hard. We don't look at the business sort of targeting a gross margin. We look at the entire ecosystem. There are things that can produce enormous gross margin, but that would destroy the economics of the store because of the complexity it would bring to distribution, or the complexity it would bring to the execution in the stores, so we pass on them. And then there are things that are lower margin but drive traffic are very simple to execute, and it may be very attractive. So each one of our categories is really judged on the merits of competitive dynamics, issues in the store, growth going forward, and so we spend a lot less time sort of trying to project what the total amount of gross margin is going to be as opposed to looking at each category, maximizing the value in that category, and let the chips fall where they may. Jose Antonio Garza-Laguera: And for opportunities for proximity, I would say, first and foremost, Mexico. And I would say even also Mexico, in terms of absolute value, an incredibly optimistic about the future. Even I know there's a lot of volatility and there's some of our categories where we have been having lower declines like tobacco and alcohol and others. But some categories go and some categories come. So I'm very optimistic. We just finished an analysis of how many stores fit and even if you put account a drop in services, a drop in tobacco, we still see thousands of stores. The number is so high that I'm scared to give it to you guys, but it's still at least a decade of growth at this rate. And obviously, beyond -- I mean, within Mexico, Sbarro is increasingly getting its act better and getting better and better with every cohort. And so we do see a few thousand Sbarro's in the foreseeable future. And obviously, that market is huge. It's very, very competitive, and the competitors are getting better by the year, but I think there's room for a few of us. So I'm very happy with our results and the expansion. And I would say Brazil is very top of my mind. We still need a lot of work to getting it better and better. But we are impressive by -- I mean, we've been growing same-store sales at double digits for the whole year and the business keeps accelerating. So I'm very optimistic on Brazil, Colombia. And I would say U.S.A hopefully, eventually, we will grow more confident and confident to keep growing it. But it's still on a very early stage there. But I would put my focus on that order. I would finally say, I'm incredibly impressed by the progress we've made in Europe. We have a superb management team. I've said it before. Our biggest challenge is to grow it, and we're beginning to see opportunities for growing -- especially organically. But we are very happy with the progress in Europe, and we are happy with the economic development of Europe in certain markets where we see opportunities. So we're happy there as well. Operator: We'll now take our next question from Renata Cabral from Citigroup. Renata Fonseca Cabral Sturani: Jose Antonio, congratulations on the new role, exciting times ahead and I wish you every success. My question is a follow-up on OXXO digital ecosystem or financial services. The markets in Mexico is quickly evolving on this front and recognizing that OXXO success on this digital front. My question is regarding -- looking ahead, what is Spin's ambition? And where do you see OXXO as distinctive in right-to-mean versus wallet, telco, fintech solutions. And what would be the top capabilities that the company are targeting to invest on those fronts? So that's my question. Jose Antonio Garza-Laguera: That's a very good question, Renata. Thank you. I would say for me Spin is a digital extension of OXXO's value proposition. That's how I see it. We see it as a lever to really enhance the lifetime value of our users. The Premia user average, or Premia users, which are our power users who have the loyalty program, do 3x the average consumption in OXXO in a month than the rest. But if you have a Spin, or your wallet, and the Premia the loyalty program, that's 42% above the Premia user. So I do think there is a lot of value in embedding the whole Spin ecosystem throughout our core missions. We can offer rewards, we can offer personalized promotions. We can offer frictionless experiences that really incentivize you to go more often to the store. So for me, we're in the very early stages on creating an ecosystem with Spin that strengthened the OXXO relevance in our customer lives. Obviously, that includes -- so what some people see as an apocalyptic scenario where everything will go digital like in Brazil with [ PIX ], which could happen. But for us, the potential value shift from in-store to digital, we don't see it as a value migration. We do see it as an opportunity for increasing dramatically the way people interact, and use OXXO almost as a place to cash in your rewards, your points. So we're still very focused on that. I do think at the end, it's about convenience and Spin is much more convenient than cash, but a lot of people need cash, and will need cash for the foreseeable future. Even if we go to a peak level ecosystem cash will still be important for a big sector of the economy. I am incredibly impressed now that I'm in the onboarding phase seeing how people are using Spin in ways that we even didn't imagine. Just to give you an example, people -- the way people are tipping, you're paying your waiter or your people at the gas station. People take a picture of the QR code, the QR code that you can just scan in OXXO and withdraw cash. And it's becoming the main source of people going to the OXXO store to withdraw cash. And it's easier than having to give someone else a Spin account or having to give them your WhatsApp account. You just take a picture of the QR and you scan it in OXXO. And so we see an enormous amount of little things like that, that can enhance the value ecosystem. So obviously, there will be -- there will be a lot of movement towards digital transactions. But digital transactions grow so massively, sometimes exponentially, that the percentage, even if it's 10%, that still means to withdraw cash will be enough to cover, I think, a big chunk of the services decline that we can see at the store. So to me, it's an optimistic angle. We'll see. Operator: We'll now move to our next question from Froylan Mendez from JPMorgan. Fernando Froylan Mendez Solther: Congrats on the new position, Jose. You spoke about that the pace of growth can be maintained for at least 10 more years. Can you go deeper into how the breakdown of this growth should be in terms of store expansion, same-store sales, incremental revenue from commercial income? And your thoughts on what is the adequate level of cannibalization that you can see at any point in time? And how do you feel on the ROICs of the new stores versus the more vintage space today? Jose Antonio Garza-Laguera: That's a very -- if I had a -- a crystal ball to be able to predict exactly that. I wouldn't be here. But I would say, obviously, I mean, if you look at the acceptance level of cannibalization that we take when every time we open a store, and we -- and you extrapolate that for the next 10 years at our expansion. We do think we have at least 10,000 stores to -- and about 60% of that should be normal stores and about 40% of that should be OXXO Nichos. Our numbers say that's even bigger. I would say -- but it's too early to say. So you cannot estimate the stores. How much of that growth would come from same-store sales? I don't know, but we are expecting same-store sales at least to be flat, or even growing slightly with inflation adjustment. So I think there's that. If we win on breakfast, we win on grocery and we win -- we continue to gain share on gathering. Obviously, that number could get higher. But hard for me to give you a precise number at this time. Juan Fonseca: I think, Froy, this is Juan. In terms of -- normally, we separate in terms of new stores. If you model 1,100 per year. Today, that's 4% and change. And over the years, that will probably get smaller into the 3. But then same-store sales, it's a separate part of the growth algorithm. And there, as you know, our kind of our long-term guidance has been to mid-single digits. If you assume an inflation of 4%, which is the upper band of the Central Bank for inflation and add a point from mix and pricing. It gets you to the mid-single digits. So that's usually what we use for kind of long-term broader expectation management, right? So what I'm talking about is, right now, we're almost at 10%. If you add the two together over the years, probably gets you to the very high singles. Geographically, as you know, there are also differences. It's very different for us. when we look at white space in Guadalajara or in the Bajío or even in Mexico City compared to Tijuana or Juárez, right? So a lot of the openings happening in Central Mexico. But yes, that's how I would -- if I were building a model, those are the numbers I would put in. Martin Arias Yaniz: Although you should expect that the type of stores -- this is Martin speaking, the type of stores will also shift over time. Nichos are becoming are about 15%, 20% of the stores that we're opening. Also Nichos our stores that are open within institutional contacts the factory, hospitals, universities. They tend to have significantly lower staffing. They have slightly different assortment because obviously, you're not going to be selling beer in a workplace. Over time, you could also see us -- we've been testing, although we're not ready to roll it out because we don't think there's yet an opportunity what are called OXXO Smart stores, which are unmanned stores. you can one day see OXXO smart stores and apartment buildings, or smaller offices that we meet needs. So the composition of the type of stores will probably shift over time creating new white spaces and new opportunities in the consumption occasions. Jose Antonio Garza-Laguera: And one data point that we provided in the past, having to do with cannibalization is that it probably represents something like 30 basis points of growth in the overall number. So I would also use that for my own modeling. Operator: We'll now take our next question from Hector Maya from Scotiabank. Héctor Maya López: Would love if you could give us your view, please, on how you are progressing on the banking license ambitions in Mexico and the role of Spin and Spin Premia for OXXO to have an edge with that? Also, if we think about innovation at Spin and Spin Premia, what do you think could move the needle in the next 2 years? And how could this help being to compete versus strong alternatives in Mexico that are accelerating the Nubank, Mercado Pago and potentially Cashi from Walmart? Jose Antonio Garza-Laguera: So I will let Martin answer you the first one, and I will defer to February to give you a more detailed outlook as I'm still on the re-onboarding faith on Spin, and I would love to give you more clarity but on February. But for now, Martin will give you some answers. Martin Arias Yaniz: I think we will not be presenting our banking license for a year now -- for a year. We've decided to start with a bigger focus on our credit part of it. That does not mean we're going to be increasing our credit. The pace of our credit business much quicker than we had. As I told you, and I promise we'll keep you informed and up to speed. We don't expect that to be more than a $20 million or $30 million deployment next year in terms of trying out new things. But we came to the conclusion that we want to have greater visibility and a sense of our ability to use our data to be successful in credit before we went for the full banking license. So I'd say we're about a year from making that decision of actually filing the banking license. It's already and prepared -- and we've done a lot of work on it, but we decided to just wait 1 year. Jose Antonio Garza-Laguera: We promise better details on February, Hector. Sorry. Operator: We'll now take our next question from Carlos Laboy from HSBC. Carlos Alberto Laboy: Congratulations Jose. And also thank you to Jose Antonio for really turning over the leadership of FEMSA at a moment in history when the business are really at their most dominant, their most focused, maybe the most talent-rich and fiscally sound position that we've seen, right? So it's a gift that we can get Jose Antonio to put his full focus on and growth and value creation here. So Jose, can you please give us more insights on affordability? Beyond, obviously, the savings aspect. Can you speak to what else is driving consumer sampling, repeat consumption and adoption, or maybe some of the more successful discount brands that you're running into in Mexico. And are there any specific categories where this is most evident? Kind of related to that also, is this pressure improving the differentiated proposition that OXXO is getting from its big branded suppliers to drilling foot traffic? Jose Antonio Garza-Laguera: I didn't hear the last part. Carlos Alberto Laboy: Yes. Is all this pressure, Jose, from discount brands, improving the differentiated proposition that OXXO is receiving from your larger branded suppliers to help you draw in foot traffic. Jose Antonio Garza-Laguera: Yes. It's still semi hypothesis. Obviously, it's an educated, not guess, because we've been talking to our CPG partners. And as they see the growth of the discount channel, they reinforce their partnership with OXXO with strength. I would say, first, if you look at the national level, how many stores are next through a discount of our stores are between 600 meters of a discount store, and it's still below 10% of our stores. So that tells you it's still not really moving the needle so much. But they will continue to grow, ours and others. So we -- where we are next to them, something interesting happens. Some -- we lose sales in some categories, and we even win traffic in some categories because people -- it's very easy to walk into one of our stores and to the other ones. And so you see people may be buying the ice with us or buying or buying the beer with us and then going to do their top-ups and their weekly grocery bill in the other one. So it's an interesting dynamic. But that said, it's an increasingly competitive dynamic. Affordability is here to stay in OXXO because the Mexico consumer is very -- is becoming much more price conscious. And we see the opportunity to really gain a much more relevance in what we call the replenishment occasions. And obviously, that has a role to play in beer where you are beginning to see more returnable glass, or the famous Caguamón, we're beginning to increase our coverage in Mexico, but also multipacks. And we're beginning to see that a lot in soft drinks. I think we were a little late in the game and getting into mini multipacks, or the mini cans, 6 pack or 12 pack, which we're beginning to introduce in the soft drink category. It's driving a lot of success for the bottlers, and we are beginning to introduce that in Mexico. So that's a top-up or a weekly type of consumer occasion, and that's where we're beginning to see affordability taking place. We're seeing it in tobacco. And interestingly enough, we're not seeing a lot of migration from the premium tobacco smoker to the brand -- about 70% of the value brand. About 70% of the -- given the information we have from the tickets and the Premia is that most of the value brand buyers in OXXO in tobacco are people that were not coming into the store that frequently. So we are beginning to lose our fear of cannibalization from premium products to mainstream or value. And so we are beginning to develop more and more assortment of affordable prices and sort of affordable SKUs. And our -- our supplier partners are collaborating with us to help us throughout the spectrum. Part of what I tell them is, if we're going to put a value beer in OXXO, which we didn't use to have for Barrilito, for example, let's also put Negra Modelo in a promotion in San Pedro. And so we like to play on both ends of the spectrum. And I think one of the beauties of our model is that we can really drive affordability in certain regions and corners of Mexico, and we can really drive premiumization in certain regions and corners of Mexico. So we will continue to play that gain. I would say that's all about what I can say for affordability now, but I will bring more information as we continue to gather more granular data about our progress there. Operator: That's all the time we had for today's question. With this, I'd like to hand the call back over to our host for closing remarks. Juan Fonseca: Thanks, everyone. Obviously, we're always available for follow-ups and incremental questions. But other than that, have a great rest of the week. Jose Antonio Garza-Laguera: Thank you, everyone, and we will be seeing each other here in every conference call. So looking forward to more interactions. Operator: This concludes today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.
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