Q3 2019 Earnings Call

Good morning, and welcome to the woman Negra third quarter 2019, a conference call and webcast all participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

After today's presentation, there will be an opportunity to ask questions.

Also Mr. Sergio face men will be at responding in Spanish immediately following an English translation.

Ask a question you May press Star then one on your telephone keypad to withdraw your question. Please press Star then too.

Please note that this event just being recorded I would now like to turn the conference over to Mr. guest on Pinedale head of IR. Please go ahead.

Thank you hi, good morning. Thank you for day yesterday, we appreciate your but the bridge in this conference call.

I know everyone should have access to our earnings grid Beach I do they scores presentation, both of which were distributed yesterday after market.

Let's begin during today's call we'd be set your apartment I worked C O one vice president of the board of directors.

Yeah, Michael Barry.

Both will be available for the cure rates actually right after the presentation.

Before we begin I would like to make that always safe Harbor statements. Today's call will contain forward looking statements. When I refer you to the forward looking statements section early release.

Richard <unk>.

Yes, you have no obligation to update or revise any forward looking statements to reflect your James events or circumstances, now I would like to turn the call over to our CEO .

Right.

Thank you left on it already one I'd say good strong enough to date.

I'm pleased to welcome you are going to dominate up how to what it doesn't do anything I mean, kalkan, it's going well.

Well, we design our presentation, we did not show the highlights what I'm, Dan Michael will take you through all what am I going to view.

Hello.

Well I guess Shelly.

But I am I know they yet.

Really what opened to go delinquent him.

Nothing because they city.

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Well that that'd be another study said.

Lead Gen. She context.

Like people to cut in Dallas, the ammonia lets you need to how you financial economics, when I believe that you know deep beat you'd be untypical that even if you need upset.

Some of their mclachlan body areas.

Especially at the state it shouldn't be any potential set today, I think deemed not de leverage and they'll take week, but okay donation.

Just like I was tenant demand by 7.5 cents eat yet on IATA bases.

My anything like daughter public water.

Consumption no about what it improved unquoted bully I did the economy landscape go model it's Kevin.

I wouldn't be a grew by 2.7% Mcewen at Batu <unk> dual comedy denying basic one.

What I need to control our goals.

Got you didn't benefit companies if he chance you use a deep.

During the quarter, we continued weak I would've thought.

I'm lying I would have production could be.

Do you see that Vslam why would a comeback deep based on one facility into a good idea I mean do we show center.

In this quarter, we achieve something maybe be a 52 million border.

I'm going its green. They noted we're going to go if he would I get speech.

You put in New York going up as most equal to the headquarters building up here.

That's helpful. One of them I eat lung.

On top.

I see a key elements of our long term strategy and we completed two hour electronic <unk> profitability.

<unk> you said like due to be up then basically what data next year.

Finally, our so on balance sheet should enable us to walk through and what that you're not yet and vitamin Shoppe Dino.

No pun <unk>, Michael got even.

It's a lot of course warhead.

But just trying to kill good day, everyone turning to slide well, let me start by providing a quick overview of them up for environment I mean, just retrench in Argentina.

The rather a phone seen.

Neither of US primary election outcome in the feeling she'd been signs of stabilization that we have observed you bring this month.

The title financial and political stability during the period, triggering a sharp vessel depreciation.

On the higher than expected inflation that both impacting the economy general construction activity, but the good.

During this quarter, the 70 industry declined by a rate of 2.9% year on year.

That's a bunch on day. She is the first quarter search by almost 9.5 per cent compared to the second quarter. This year.

Mostly explained by the seasonality effect in our industry.

Taking a closer look I'd, just seven demand unlikely feels Florida, the Bucks segment declined less than the bugs segment.

Lux segment declined by 2.4% bugs decreased by 3.2%.

Consequently, the shelf cement sold in bulk remained almost unchanged.

42% when compared with the same period, one year ago.

Looking to what the but the last budget, yes, we expect industry to continue suffering from a weak economy on a high volatility environment.

This dynamic going on we downgraded GDP growth expectation for two flights in the game to minus 3% put them up but he bus so that about a 1.4%.

Additionally, economy set the foundation for it to Boston Joint you also the do it did drastic.

So much bunching up 2.2% government production of 1.7%.

In December at this moment do we just to be more cautiously.

I'm going to keep guidelines are defined by the new administration.

Now please turn to slide five four to view of our topline performance by segment.

Revenues were down 7.6%.

For the quarter seven revenues dropped by 4% he but by sales volume.

Up of 7.5%.

Partially compensated by real price increases.

He bought a lot <unk> revenues were down 1.7% with volumes declining 1.1% affected by a slower than expected public works execution on but Oh.

Oh set by the brother check because the month prices remain practically unchanged.

I'm good checking that's presented a decline of 37.7% in revenues.

As both says volumes and prices went down when compared to the strong third quarter.

The year ago period, several large infrastructure projects that have commensurate with the elsewhere in completion pace I'm doing this year or other new lots brlsix way to go slow down or even put on hold.

Well the railroad check, but that's done volume just bought it contributed positively to revenues, however, let's not enough to compensate the drop in bringing much either.

Because volumes, resulting in total declined 9.4%.

By contrast, aggregates revenues were up 2% year on year during that period.

I haven't by improving Buddy.

Moving onto slide six consolidated gross profit for the quarter less up 7.3% year on year without much an expansion of 368 basis points, reaching 26.6% in the quarter.

Reflecting that reduction goals to under control and the benefits from that footprint I think what she efforts.

Given the second quarter this year.

Nonrecurring costs rise digital that conducting so one account at approximately.

<unk> 61 million barrels or $1.2 million. He such good gross profit would have grown by 10% with margin expansion of 435 basis points June 27.2%.

I see an expensive <unk> revenues decreased by 22 basis points to 6.6%.

Yes, it can be impacted by commercial.

When you strip team structure like what she'd Michelle.

Previously I love to the first quarter of 2000, <unk> deep together with other further reduction in defective stocks right.

Please turn to slide seven despite the softer demand will reach consolidated adjusted EBITDA growth of 2.7% in the quarter.

Well look 2.6 billion pesos or $52 million with margin expanded 289 basis points to 28.8%, mainly driven by some and further supported by growth in revenue.

Excluding the nonrecurring charges Debbie yeah margin would have been 29.5%, reaching $53 million asking the same buda at one year ago.

When excluding application another patient accounting adjusted EBITDA for the seven segment, you know didn't Greece.

52% percent Deanna Ya under margin expanded by 90 basis points to 41%.

Excluding the nonrecurring costs would have been 31.8%.

Likewise, but I was supposed to their own 57% growth in adjusted to be D.A. with emerging of more than 45%, improving well have that 56 basis points compared to third quarter 2018.

Our concrete segment reported an increase in adjusted EBIT da reaching 47.8, Amelia who's the emerging expansion of 73 basis points.

From football well, probably 1% to 4.8% that's we adopted that brother DVT structure to the new the month level.

We continue to boast margin expansion in our regular segment.

With adjusted EBITDA margin up more than 357 basis points, you don't yet.

<unk>, 14.5%. That's a result of structure that go see efforts.

Okay that segment adjusted EBITDA margin reached 4.1%.

Oh seven business as if you know remained relatively stable situation does have a recurrent ever did but.

Don measured in the U.S. photos are up $58, but Don.

For sent over the year ago quarter.

Please turn to slide eight that's not Jody income for the broader reach 50 million pesos.

Total final results presented a loss of one point.

6 billion pesos compared to a loss of 1.4 billion in the third quarter last year. The effects appreciation resulted in a foreign exchange loss of 1.5 billion pesos.

Or 200 million business tighter than a year ago.

Interest rate environment, or something that I had net finance expense of 34 million.

Then it budget do then that passive monetary policy show resulted in a gain of 276 million.

Moving onto the balance sheet as you can see on slide nine our balance sheet enable us to move ahead with meaningful investment blood.

We continue to make progress in our capital expenditure plan was investment for the quarter, reaching 3.1 billion pesos or approximately $59 million.

We finished this quarter with a net debt to adjusted EBITDA ratio. So <unk> point 87 times compared to zero point 43 times.

The beginning of this year, our net debt at the end of the quarter loss walk on the 57 million. This delta was up gross that breakdown by currency of 47%.

Because currency, 28% did well and he has entered the 6% emerging business.

Well no handle the cold, but just sort of Hugh.

Thank you Michael Noblest down to a slight then.

<unk> properties presentation I'd like to leave you if you be messy she's.

Looking for what the but do you guys talked T shirt seem to be able you in an orderly way.

No the key factor will be the policies that they know how many patients you said well you two adult individual store, if you're not going to really be an economic itself.

I'm going to its context, you have to bleeds to continue delivering strong competitive on the block of how would he study neither cheap and determination index had its great that at the baby.

Good good on that what do you have to priorities in this line.

Headquartered data, we booked or whatever for inside of that but I'm lining our production being in that we should mission.

I think on that our one plan to get ending on distribution center.

Now many plant expansion is part of <unk>, <unk> and will allow us to continue increasing production efficiency and profitability.

I will let Todd.

In the future.

The sale of our prepared remark you have now ready to pay question, but eight total lease hoping that goal was to go.

Thank you we will now conduct a question and answer session.

If he would like to ask a question. Please press Star then one on your telephone keypad, a confirmation 10 will indicates that your line is in the question Q.

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Lease.

If you have additional questions you may recall Q for those questions and they will be addressed.

Also please note that Mr search Youre facing then we'll be responding and Spanish immediately following an English translation.

Please hold momentarily, while we assemble a roster.

[noise].

Our first question comes from Eric.

News, we liked with Bank of America. Please go ahead Sir.

Hi, Good morning, Thank you for the for the call I'd like to know if there was more visibility in terms of actually infrastructure spending during feldman's administration.

Coffee bean vocal about his plans and how do you see 2020 coming on after after that.

[noise] when do you already have to lever to wind up.

Good morning, everyone. Thank you for your question.

I wouldn't look at minimally the media had looked a phenomenal D N mechanical and you can do agricultural either big Dole I want to short form in Dundee blending in the important they get anybody MPS, Adam will not be I mean there.

So so far what we have.

Eric from I got to fund. This you do these measures are the doors incident to incentivize the they consumption.

Regarding the construction.

And housing plan that they they are to put in place.

Picked up maybe yes order they tend to do though blondo pent up I don't want me to maintain nothing Amador you anyone ocean.

So regarding other measures are concerning infrastructure within and have a additional information.

Got it.

Our next our next question comes from our Leandro Opregen with Morgan Stanley . Please go ahead.

Hi, Good morning, Thank you for the calling for taking my question.

I just have one <unk> on the cost side. So just wondering if you could help us understand how should we think of that footprint adequacy program going forward and in that same line and whether there are some nonrecurring cost that we should consider for the next quarter. Thank you.

When do you have recovered I kept bought a lot, but it will end up.

Good morning on a kind enough. Thank you for your question.

But it looks like what is done on another study will be in learning one notable rented.

For the next quarter, we're not expecting any any nonrecurring costs.

And not then it will soon be spending Wuhan not to put US you already so nice and they'll be good annual wonder why did well still have bloody who has had and wish you mean that it but at what it does he and.

On for the rest of the year, we do not foresee any further footprint I think what see so the cost should be sooner than the.

Previous quarters.

[laughter].

Thank you very helpful and just a follow up if I may on I think you mentioned earlier, how Balkan back were performing could you. Please.

Repeat that for me I wasn't sure I got that right and if you could kind of elaborate how is that performing going into the fourth quarter.

Very helpful. Thank you.

And it does have worked out a little them on that those <unk> like I am I showed it because it anyway, even I mean noted guy you I'd also.

In the third quarter, what we of served he's got the bulk degrees.

Slightly higher than that and goodbye.

It didn't go up on go no go eat element that I mean, if you're going to run like a you put it through Buddha you know I leave that it will get us young can be someone so that in Asia the medical Enbridge.

This has to do that a somewhat.

Infrastructure plan.

Got to completion face on VR and a slight run popping the in goodbye they consumption.

And not an add on north made either they they tell you I don't know and production will be I look at AMAK is how to fill up and then second to out because you want Montana.

So until we don't have new measures from the New administration, we expect this trend to continue.

Thank you very much that's very helpful.

[noise] everywhere.

This concludes our question answer session I would like to turn the conference back to guess Don Pepino for closing remarks.

[noise]. Thank you for doing yesterday or we appreciate your interest in our company and we look forward to me do more if you over the coming month, I'm, providing financial and business updates next quarter.

In the meantime, the team remains available to answer any questions that you may have on again. Thank you very much for the risks or I enjoy the rest of it.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

[noise].