Thank you for joining us today. During 2025, we remained committed to what has always defined Rotoplas: creating solutions that solve real water challenges and make a meaningful difference in people's lives. At the same time, this was a year where we stayed focused on efficiency, discipline, and execution across the business. During the year, we navigated a challenging operating environment, particularly in Argentina and in Mexico. In Argentina, market conditions remained depressed, while in Mexico, we faced strong rainfall and softer construction activity, alongside continued regional volatility. Yet, the fourth quarter showed resilient sales, improved profitability, and a stronger performance overall. Revenue stabilized, margins expanded, and we exited the year with better momentum than we had entering it. That discretionary improvement is important because it did not depend on a macro recovery. It came from structural changes in how we run the business.
Throughout the year, we made a deliberate choice to focus on what we control, strengthening our operating model, improving efficiency, and allocating capital toward businesses that generate higher quality and more predictable returns. I'll walk you through the progress, through that progress using the evolution of our four strategic pillars that we presented in December, because this framework explains how we are reshaping the company and why we are confident about the trajectory we're seeing. The first pillar is profitable growth and core expansion. Here, the focus was straightforward: reinforce the foundation of the business and make it structurally more efficient. For example, during the quarter across Mexico and Central America, we focused on gaining share through more targeted commercial strategies and region-specific pricing, while strengthening execution and maintaining strict cost control. We simplified processes, reduced operational complexity, and aligned our organizational structure with current demand and dynamics.
The objective was not to do more, but to do better. At the same time, we continued developing better solutions centered on the end user, always prioritizing quality of life and ensuring that our products directly improve the daily experience of people. A good example of of this approach is Peru, where we advanced our blow molding capabilities. By modernizing production technology and improving plant efficiency, we lowered unit costs and enhanced our ability to differentiate in the market. Over time, this has created a leaner and more productive organization. The business today operates with greater focus on consistency, and that is showing in stronger commercial execution and better performance in our core markets, particularly as we moved through the second half of the year. The core is healthier, more agile, and generates the cash flow that supports the rest of the portfolio.
That operating discipline gives us flexibility regardless of market conditions. The second pillar, water innovation and market disruption, is where a great transformation is taking place. We are steadily evolving from being primarily product manufacturing manufacturer into a solutions and services company, with recurring relationships and greater revenue visibility. This shift is strategic because services, while improving customer experience, they reduce cyclicality and improve the quality of our earnings. More importantly, these solutions are designed around the customer journey, helping us understand adoption, retention, and long-term needs, so we can create better businesses by staying closer to the customer. During the year, our services platform continued to gain scale and operational maturity. Bebbia closed the year with more than 168,000 subscribers, strengthening its position in the residential segment.
Through Bebbia, we're not only providing purified water, but also improving the overall customer experience by simplifying access, eliminating the need for single-use plastic and uncomfortable water jugs, and making safe water more convenient and reliable for families. Also, the business improved in its economy, reflecting better efficiency and operating leverage as the platform scales. This confirms that the model is not only growing, but doing so in a disciplined way. At the same time, RSA continued to build momentum in water treatment and recycling. The business delivered strong growth in the quarter and is increasingly supported by recurring maintenance and long-term service contracts. That creates deeper customer relationships and much better visibility compared to one-off project work. These solutions also help our customers reduce their environmental impact, comply with regulations, and operate more efficiently while addressing water scarcity through the treatment and reuse.
In doing so, not only strengthen our business, but it also create measurable positive impact in the communities we serve. Together, Bebbia and RSA are shifting our mix towards recurring revenues and more stable cash flows. That is why we continue directing a growing share of our investment towards these platforms.... The third pillar is tech and talent enablement. We view technology as an operational capability, not a support function. Through the year, we embedded digital tools and AI directly into day-to-day workflows across sales, planning, service, and finance. These initiatives are helping us remove friction, automate repetitive tasks, and improve the speed and quality of decisions.
In parallel, we invested heavily in our people, training more than 1,500 employees and delivering close to 5,000 hours of targeted upskilling in digital analytics and operational capabilities to ensure our teams can fully leverage these tools in their daily work. We believe our collaborators are our greatest asset, and we are committed to preparing them for the future by continuously developing their skills and creating an environment where they can grow alongside the company. In parallel, we continue evolving our talent base toward more specialized and analytical roles. The objective is to create an organization that can scale without adding complexity or fixed costs. What we see today is a company that is more data-driven, faster in execution, and structurally more productive.
These capabilities are becoming a competitive advantage because they allow us to grow efficiently and respond quickly to changing conditions. Our fourth pillar is sustainability and efficiency through capabilities. For us, sustainability is not a separate program or a reporting exercise. It is embedded in how we operate. The same actions that improve efficiency also reduce environmental impact. When we optimize logistics, we lower emissions. When we digitize processes, we reduce waste. When we use resources more intelligently, we improve both cost and footprint. At the core of this approach is our commitment to creating solutions that solve water challenges, help customers operate more sustainably, and ultimately improve lives through better access, treatment, and the use of water. This approach is already translating into measurable outcomes.
During the year, we reduced Scope 1 and Scope 2 carbon intensity by 26% and lowered absolute water consumption by 6%, reflecting the operational efficiencies we're building in our plants and our processes. Also, if you join our water, our Água Day, you know that we launched our Agua strategy . This new strategy strengthens standards across our operations and supply chain and deepens engagement with customers and communities. The important point is cultural. Sustainability is part of everyday decision-making. That positions us to remain relevant and trusted over the long term as expectations from regulators, customers, and investors continue to evolve. We can look, especially at the fourth quarter, we see our four pillars coming together. The external environment did not change materially, yet performance improved across several parts of our business.
Execution was sharper, services gained traction, and the organization operated with greater discipline. That combination translated into better results and confirms that the improvements we are seeing are structural. As we close the year, Rotoplas is more focused, more efficient, and increasingly service-oriented company. We strengthen the foundation first, and that positions us to convert the future into profitability much more effectively. Thank you for your continued trust. I will now turn it over to Andrés to walk you through the financial results.
Thank you, Charlie. Good morning, everyone. Let me walk you through the PNL for the quarter, and then I will briefly touch on regional and solutions performance before moving to the balance sheet. Starting with revenues, as Charlie mentioned, we returned to positive top-line growth, driven primarily by recovery in product sales in Mexico and a strong momentum in our services platform. This performance helped partially offset the challenging macro environment in Argentina. During the quarter, services revenue grew 83% year-over-year, while product sales declined 3%. It's important to highlight that excluding Argentina, product sales would have grown 13%, reflecting a solid performance in the U.S., Peru, and Central America, even in the context of a stronger peso, as well as a gradual recovery in Mexico during the fourth quarter.
Given the uncertainty and volatility across the region, our focus has remained firmly on variables we can control, particularly cost discipline, expense management, and cash flow generation. Our operating mindset continues to be centered on operational discipline and doing more with less. On costs and expenses during 2025, we executed a strategic workforce restructuring aimed at increasing productivity per employee. This process was supported by training initiatives and the integration of AI-enabled tools, allowing us to evolve our operating model towards more specialized and higher-value profiles. At the gross margin level, the fourth quarter margin does not yet reflect the full benefits of these initiatives. This is mainly due to the impact of MXN 101 million from hyperinflation accounting in Argentina, which resulted in a non-cash increase in cost of sales, driven by the measurement of beginning inventory.
Where the impact of our efficiency initiatives is most evident is in SG&A. Operating expenses declined meaningfully. As a percentage of sales, they went from 38%-33%, reflecting tighter cost control and stronger execution. The main efficiency drivers included: marketing optimizations with improved segmentations and higher return on investment across campaigns, the implementation of a formal budget control framework, requirement structured review, and approval for incremental spending, strict control of travel expenses, prioritizing only business-critical travel, optimization of digital soft and software-related expenses, including better contract management and allocations of IT costs. Overall, operating expenses remain under strict control, resulting in a leaner and more sustainable cost structure that positions us well to expand margins as market conditions improve. At the same time, we continue to strengthen our operational base while selectively building new capabilities to support long-term growth.
As a result of this discipline, we achieved a significant year-over-year increase in quarterly EBITDA. More importantly, we closed the full year with a 1% increase EBITDA, despite a 1% decline in sales, underscoring the resilience of our operating model. Finally, at the net income level, financial expense declined 60% year-over-year in the quarter, mainly due to the positive effect of hyperinflation accounting in Argentina. As a result, we reported a net income of MXN 91 million for the quarter, compared to a loss in the fourth quarter of 2024. Let me provide more color by region. Mexico, which represents 59% of group sales, delivered a recovery in product volumes during the quarter. This was supported by a more competitive regional commercial strategy designed to strengthen our market positioning in a challenging demand environment.
The strategy focused on gain greater regional competitiveness, complemented by seasonal promotional campaigns, including Ofertas Azules in November, which helped accelerate volumes. Importantly, this pricing and promotional strategy was executed without sacrificing margins. Moving to Argentina, the country represents 17% of total revenues, and demand remains very weak, with inflation dynamics continuing to pressure margins as price pass-through remains limited. In this context, the company prioritized cash discipline over growth, ensuring sustainability of operation through internal generated cash. Throughout the year, we implemented productivity improvements, zero-based budgeting, and workforce restructuring. However, persistently weak demand limited recovery, resulting in a negative EBITDA for the year. Additionally, in accordance with IAS 29 , we recorded a non-cash hyperinflation accounting adjustment in the fourth quarter that reduced EBITDA by MXN 75 million, driven mainly by inventory remeasurement. This adjustment has no impact on cash flow or operational cash generation.
In the United States, which represents 10% of sales, quarterly revenues were almost flat in MXN, but increased 9% year-over-year in $, driven by stronger performance in the municipal and chemical verticals. EBITDA was positive for the third consecutive quarter, supported by SG&A productivity initiatives and continued gross margin expansion. On a full year basis, EBITDA was positive, reflecting a sustained turnaround driven by operational productivity and improved inventory management across branches. In our other markets, Peru, Central America, and Brazil, which together represent 13% of group revenues, we delivered a double-digit growth and margins improvement, underscoring the strengthening of our diverse portfolio. We continue advancing these markets with steady, disciplined, and profitable execution. Turning to segment performance, we have already covered products, so I will focus on services.
The services segment represented 15% of quarterly sales and continued to deliver double-digit growth, with a clear acceleration in the fourth quarter, mainly driven by water treatment and recycling projects in Mexico. This acceleration was largely supported by year-end budget executions across corporate customers. Within services, Bebbia continued to scale, adding 9,000 net subscribers during the quarter, reflecting a sustained demand and improving unit economics. During the year, we completed the migration of our full technology platform, including e-commerce, field services, and CRM systems. We also rolled out new functionalities to enhance the customer experience, such as online appointment scheduling and real-time technician tracking, strengthening service levels and operational efficiency. In Brazil, our water treatment operations maintained solid momentum. Quarterly services EBITDA was positive, with a 5% margin, reflecting continued improvements in unit economics, mainly across Bebbia and wastewater treatment plants.
As a result, the full-year EBITDA margin improved from negative 38% in 2024 to negative 8% in 2025. Still negative, but we're clearly on the path toward profitability. Overall, the segment made tangible progress, supported by scale and improved operational efficiency. Moving to the balance sheet, financial discipline and cash flow generation remained key priorities for the company. Ongoing cost control and working capital discipline strengthened our balance sheet during the year, resulting in a 9% reduction in net financial debt and a 23-day improvement in cash conversion cycle. As a result, net financial debt to EBITDA improved from 3x to 2.7x year-over-year. This performance was supported by a reduction in debt, tight cash management, more efficient working capital practices, and a selective approach to strategic CapEx.
Operating cash flow increased 81% year-over-year, reflecting stronger execution and disciplined expense management. From a liquidity perspective, our cash position, our cash position increased 18%, reinforcing our focus on maintaining a sound and flexible financial profile. Total financial debt closed the year at MXN 4.5 billion, a 5% decrease versus December 2024. This includes MXN 463 million in short-term debt, mainly related to working capital needs, and approximately, approximately MXN 4 billion in long-term debt corresponding to our fixed-rate sustainable bond. Finally, the blended cost of debt remained stable at 8.6%. Capital expenditures represented 4% of annual sales, reflecting a 25% year-over-year reduction consistent with our focus on capital discipline.
Investment during the year was highly selective and primarily allocated to services platform in Mexico, mainly supporting the development of water treatment plants and the acquisition of Bebbia systems . Our capital allocation approach remains anchored in strengthening the businesses while preserving flexibility. Within services, most investments are tied to secure contracts or committed customers, which allow us to redeploy capital with clear visibility and disciplined return thresholds. Let me briefly review how we closed our 2025 ESG targets. Overall, we met or exceeded two targets, two closely broadly in line, and two finished below our original ambition. We achieved or surpassed our goals on people with access to sanitation and CO2 intensity, Scope 1 and Scope 2 per ton of processed resin.
We're particularly proud of our emissions performance, driven by renewable energy sourcing, manufacturing efficiency initiatives, and the transition to new storage production technologies, which resulted in a 26% reduction year-over-year and a 32% reduction versus our 2021 intensity baseline. Our customer experience, we closed the year with an eNPS of 81 in products and 60 in services, resulting in a weighted average of 79, while 98% of Tier One suppliers were assessed on sustainability criteria. We fell short on female representation in the workforce and cubic meters of purified water, which remain focus areas as we move into the next strategic cycle. Looking ahead, as Charlie mentioned, the Agua strategy marks the next phase of our sustainability agenda, building on past progress and providing the framework to define priorities, set targets, and report progress going forward.
To highlight a few milestones in the fourth quarter. In fourth quarter 2025, Rotoplas achieved an A rating in CDP Climate Change, placing us among a very small group of companies in Mexico and globally. We also expanded sustainability training for distributors in Peru, strengthening community access to water in Mexico through our Rotogotas de Ayuda program, and closed the year with more than 1,000 IoT-enabled rainwater harvesting systems installed in schools through Escuelas con Agua. This program, a partnership with the Coca-Cola Foundation and other organizations, now benefits more than 330,000 students. Before moving to Q&A, I would like to reiterate that we remain focused on what is within our control, guided by a clear, do more with less operating mindset.
Despite the challenging external environment, fourth quarter performance showed sequential improvement, allowing us to close the year with higher EBITDA, alongside with a stronger leverage ratio and an improved cash position. Looking ahead, we continue to operate with the same level of financial discipline, reinforcing a solid foundation that supports sustainable growth and margin improvement over time, while maintaining a prudent leverage profile. Thanks once again for your time and interest. We're now happy to take your questions.
Thank you, Andrés, and thank you, Charlie. We have a couple of questions already. The first one from Orlando Alcántara, who also has a couple more, but I'll read the first one first. He says, "Hi, Rotoplas team. Congrats on the results. My first, first question goes on the side of Mexico. We could observe substantial acceleration in the product segment on this quarter, breaking the negative growth we observed through the year. I imagine some strategies have been implemented to achieve this milestone. Can you elaborate more on this?
Hi, Orlando. Hey, thanks for joining. Yeah, there definitely some strategies have been implemented. We've evolved both the attractiveness of our offer and we've also evolved our pricing strategies. We're able to do pricing in a more specific way.
... regionally. And so we did see both improvement because of pricing and because of volume, but volume not necessarily because market growing. And it was more generated by us. Yeah. Anything else, Andrés?
No.
Okay, so I'll move to the second question from Orlando. My second question goes on the surprisingly breakeven of the service segment, observing the first positive EBITDA margin since 4Q20. Should we consider this milestone in our model as a structural shift for the following quarters and years? What was done exactly to structurally shift OpEx and COGS this quarter?
Yeah. So thanks also for that question, Orlando. As you know, we've been working for a long time on the services segment. It's a segment that we started from the ground up. It required a lot of investment, and it's gotten to that point where it's breakeven now. I think the trend was fairly clear. We will continue to prioritize, to some extent, growth of the services business. So, we expect for the services segment to stay very close to breakeven going forward. And as we grow this segment as much as we can, the opportunities are for us to take, and so we will make our best effort to take as much of it as possible. Anything else, Andrés?
Sure. Just probably add that, the strict cost and SG&A control that we have implemented has definitely benefit these two, well, wastewater treatment and Bebbia, mainly. So that was a significant push for them to reach profitability, and that will stay, right? So, those economies of scale start to be noticeable as we continue to grow. So that's structurally for sure. Thank you, Orlando, for your question.
I'll move to the third and final question from Orlando. He asks: "I observed some efficiency at the working capital level, especially on inventories for Argentina. Is something internally being done to soften macro uncertainty?
So thank you, Orlando. Inventories in Argentina were pretty high starting in 2025, so we did make a push to... Well, let me go back a second. So the main purpose for Argentina last year was for them to be cash flow neutral in for the year, right? So we prioritized the cash that they generated with their own resources. So they had a tough year because they had to basically be cash flow neutral with their own operations. And that had to be done mostly with working capital. So they made a lot of efficiencies in inventories. So they tried to reduce inventory significantly, reduce accounts receivable, and improve the accounts payable.
So, there were significant changes in those three lines of the balance sheet. That also happened in Mexico and other regions. In Mexico, we also were very efficient with inventories and very efficient with accounts receivable. So it was an additional effort this year to be very well or very lean in terms of working capital. I don't know, Charlie, if you want to add anything.
No.
Very good. So we'll move to the next one. Regina Carrillo from GBM. She has two questions, so I'll read the first one. 4Q showed positive EBITDA in services. Can we expect full year 2026 services EBITDA to return to positive?
Yeah. Hi, Regina. Thanks for joining, and thanks for your question. As I mentioned, we do expect services to continue to be at the breakeven level, as we will grow as much as we can, but we will do so while having the EBITDA of services as close as possible to breakeven.
And I'll read the second one. So after three consecutive positive quarters on EBITDA in the U.S., what do you think would be the long-term EBITDA margin target for this business?
The long-term EBITDA margin is very different from what we will have this year. This year, we expect it to be at similar levels we have today. So very, very slightly above breakeven. But we are developing a business for you know, generating closer to 15% EBITDA margins in the long-term future. We're identifying other opportunities that can drive that margin even further up. But the expected margin that at least for this business, is 15%, going forward, long term... right? At the moment, we're focusing similar to other new businesses, which is mainly services. We're focusing on growth. Andrés, anything else that you'd like to share?
No, thank you, Regina, for your questions.
I'm sorry. We'll move to the next one from Felix Garcia, from Apalache Research . Hi, thank you very much for taking my questions. Just two from my side. First, looking ahead to 2026, what would you say are your top priorities: growth, margins, or cash generation?
Hey, thanks for your participation and question, Felix. You asked a really tough one. It's a bit of a balancing act. I think we need to have always our purpose in mind of, you know, having the biggest impact we can with providing more and better water for people. This requires growth, but the macroeconomic situation also requires us to focus very much on strengthening our balance sheet. So cash is incredibly important at the moment. We are focusing on bringing net debt to EBITDA to levels below two times net debt to EBITDA ratio. As long as we can do that, the priority is always growth and the highest possible impact we can have. Andrés, what's your-
Well, I completely agree. Probably just to add that different businesses are in different stages, you know? So, as Charlie has mentioned, for services and Bebbia in particular, the idea is more on growth and, as opposed to the products businesses, which will be more on margins, for example. But overall, I agree with Charlie. The... I guess the short-term objective is cash generation, reduce leverage, and so we will work towards a balancing act, as Charlie mentioned.
Thank you. We'll move to Felix's second question, and he asked: Regarding Bebbia, how are you balancing commercial expansion with user quality and profitability per subscriber? Thanks again. Really appreciate the color.
Yeah, so regarding Bebbia, the time is much larger than what we're currently serving, so the opportunity is still very large. We are not in a position where we need to sacrifice subscriber quality. What's very important is that we focus on the promise that we make to our customers, for them to have a great experience and to have the best quality of water. And so as long as we can focus on being able to deliver on that with an increasing amount of subscribers, the amount of subscribers we can get is still very, very high, and this is only the Mexican market.
So we're not yet concerned with any challenges in growing Bebbia in terms of having to sacrifice on the quality of the business for growth. Andrés-
We'll move-
Andrés, anything under?
Perfect. So we'll move to the next one from David Seaman, from [Alpha Signe]. Hi, can you elaborate on your plans to take Bebbia to additional markets?
Hey, David. Thanks for joining. Yeah, so again, the market size in Mexico is still very large, the total addressable market, and so we're still focusing on Mexico. We are looking at other markets, to start planting seeds, but the focus really has to be on developing the platform. The platform, there's more and more tools available to make sure that we can have, offer a great experience to customers in a much bigger amount of customers and geographical locations. So the focus still is on developing the platform. Andrés, anything else? Thank you, David.
Thank you, David.
So we'll move to Rodrigo Salazar's question from AM Advisory. His question is related to services. You already mentioned that growth was driven by water treatment plants, but could you help us understand what specifically changed in the quarter? Was it a significantly higher number of units added, the signing of a few unusually large contracts, or something more structural in the business? And should we view this level of sales and EBITDA as a sustainable going forward, or was there any one-time effect that boosted performance in the quarter?
Thank you, Rodrigo, for joining. Regarding the stability, water treatment plants is a fairly stable business. It has recurring revenues. There are sometimes projects that may bring some variability from quarter to quarter, but not from year to year. Then water treatment plants that supported this number were many different water treatment plants. So it wasn't one big one, and that it's a one-off. We are increasing our revenues by servicing new segments. And that will continue as we continue to understand better this business, we're identifying better opportunities. Now, we did mention that a big impact was from growth in water plants, water treatment plants, but we did see also growth, significant growth in Bebbia, no? Andrés, is there anything else that you'd like to share?
Yeah, probably just adding that no, no particular one-offs, no. So it's, it takes more time to close contracts, so I guess the push towards the end of the year was significant. But we do see these levels to continue, no? I mean, adding to what Charlie is saying, so nothing in particular.
Also, just taking on what Andrés had mentioned earlier, there were significant improvements in our expenses in this business, which is structured.
Thank you both. The next question comes from Martin Lara, from Miranda Global Research.
Mm-hmm.
Good morning. Thank you for the call, and congratulations on these results. Could you please provide the CapEx guidance for 2026 as a percentage of sales?
So thank you, Martin. So the CapEx guideline will be very similar to what we did in 2025. We will continue to be very strict, very return-oriented, cash-on-cash return-oriented. And also focusing on the sort of, how we call it, the pay-as-you-grow CapEx, which is mostly services, right? Which is mostly Bebbia and water treatment plants. So in terms of guidance as percentage of sales, it should be fairly similar, I would say. No non-material changes for this year. So we will continue to invest in the business, to do our maintenance CapEx, and to do the growth CapEx for the services business. So nothing in particular for the change as percentage of revenues.
Perfect. So we'll wait a couple of seconds to see if we have another question. So, this is a comment about the Rotogotas de Ayuda. "I congratulate you on continuing to implement the program and all those involved who make it possible. Bebbia , the increase in users is good news, and now the challenge is not only to increase it, but to keep them with a quality service, which we will evidently be doing so. RSA, I've noticed you continue to grow in your goals. I congratulate you." So I don't know if you want to make a comment on the Rotogotas de Ayuda or something else.
Thanks for recognizing that. It's a tremendous initiative. We're very proud of it because what we're developing, and it's becoming more clear that it's feasible, is that as we help more our communities, that generates demand. Customers show commitment to Rotoplas because of, obviously, the quality of our offer, but also because of our commitment to our communities. And so it's a value-generating group where we support communities, and customers support us, and that continues happening. So thanks for the recognition.
Yeah. Thank you very much for your comments and your questions. Andrés and Charlie, I don't know if you wanna say something else before we close the call, we finish the call?
No, thanks for-
Thank you for your support.
... joining. Yeah, thanks for joining, and I'll see you guys in a couple of months.
Thank you. See you soon, and you may now disconnect.