Q4 2020 Loma Negra Compania Industrial Argentina SA Earnings Call
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Good morning, and welcome to Loma news at our first quarter 'twenty 'twenty conference call and webcast.
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Please note. This event is being recorded I would now like the turn the conference over to Mr. Gosh pumping and head of Investor.
The relations. Please go.
Go ahead.
Thank you and good morning, and welcome to illuminate us fourth quarter and fiscal year, 2020 earnings Conference call.
By now everyone should have boxes for earnings press release, and the percentage of for today's call.
Both of which were distributed yesterday after market close.
Joining me on the call. This morning will be six of the pipeline, our CEO and Vice President of the board of directors and our CFO Marc already.
Both of them would be available for the Q&A session.
Before I turn the call of where to set of Q I would like to make the following the safe Harbor statements. Today's call will contain forward looking statements and I refer you to the forward looking statements sections of our press release, our recent filing with the SEC.
We assume no obligation to update or revise any forward looking statements to reflect new or changed events or circumstances.
This conference call will also include discussion of non-GAAP financial measures the.
The full reconciliation to the corresponding financial measures is included in the earnings press release.
Now I would like to turn the call over to Sacha.
Thank you with him Hello, everyone and thank you for joining us today.
I Hope you and your families are safe and healthy.
It's the old way and going to mention a few highlights of the fourth quarter, and then medical who Worldview two hour Mark of the view of the 19th decided instead of that and we provide some tightening of the model and then we will open the call two of the question.
So from our release.
Yesterday, and the full quarter, we achieved an outstanding impact for months on the back of our stem and business. The momentum is quiet and quality of the bulk of statements of showing the bug of Simmons on the volume expansion and the center of months.
The recovery, but the weight of Sim and dispatch was consolidate of cement demand in the fourth quarter experienced a strong sequence citigroup and.
And overall volume increase of around 20 per cent.
And your vision of the country undergoing similar dynamics.
Couple of week.
Volume increased our diligence on cost control and our pricing discipline in the us.
And to grow our EBITDA ex.
Spun out of marching bite for kind of 15 basis points and beat our record high EBITDA per tonne I would of settlement EBITDA in the quarter was 58 million BOE net with an expansion of cities three per cent compared to the same quarter last year.
For the full fiscal year, 'twenty, and 'twenty and bidding mine and suddenly we spaces along the year of unite.
To highlight the resilience and determination of our organization Chugai debt, we were able to deliver the again excellent assets.
And EBITDA of.
$171 million with Madison of 33% weighted telephony and part of it our solid balance sheet and executing our strategy led by the expansion projects. We expect to start producing clinker later this month and to be fully operation by middle of the 20th any.
And what.
Although we are getting to put six with the baidu and we need.
And just stay alert and Polish as our country and the World continued to the battle. The COVID-19 pandemic, we face additional challenges as such and Tina economic and vitamin remains delegate and with several of the picture yet with the us that.
The REIT, the stimulus and seniors who are bidding. Additionally, the none.
For the economy, I think one and the construction sector in particular.
And we know one of the calling for Michael and Eddie.
Who will walk you through our month of the view on Peanuts episodic. Please Marcos go ahead.
Thank you so the kids with day, everyone. As you can see on slide for leaving besides the fears of Trump of beginning of 2020 day under the refund and that she might GDP drop of $4 12 per cent and the fourth quarter of two posted 20.
And the 40, a drop of 10%.
For the full year 2020 of the seventh the industry dropped by 11, 5% to $9 75 million tons.
Needed to go back almost a decade to fund similarly industry volumes.
And the last quarter of two plus and 20 with all the surplus of 10 recovery of momentum and the construction activity on the 17 months.
There's a lot of the expansion of 24.1 per cent promising III and the first couple of months of 2021 of the industry posted the similar positive growth dynamics of January and February volumes expanded by 20 and by 18% respectively.
The main driver because of distressed is about 10 months of which you had posted a record high level in October and which is explained by a search and self construction and retail demand and positively.
It seems the level of about seven started to contribute to positive.
For the year of growth.
Certainly the economy is a host of places different test, particularly of the macroeconomic outlook expectation of our team to be ROE for the wasn't could do one.
The revolve around a mid single digit expansion.
And at the pump from pre pandemic levels in the sense, we carefully watch the strength of different economic sectors as the el reopening for businesses.
So by simply the shelves of mental and bug increased by almost 680 percentage points of crops at two 1% in first COVID-19, two almost 68 per cent and this quarter.
We expect this breakdown to remain rather stable and the following month, we expect but demand continues to catch up of theaters the restriction on larger private construction works and public works.
Our making the segment to gain some momentum again.
Turning to slide five for a review of our top line performance by segment consolidated revenues increase year on year by 26% on the bulk of our of course cement masonry and loan business, which expanded revenues by 26, one net percent due to kind of the month hydro backup at the hip.
And <unk> together with stable pricing.
As mentioned before <unk> seven continues to be the main driver behind this and Arctic recovery.
Rolling and this quarter around 39% compared to the same quarter last year and bulk segments grew model the around 7% as previous COVID-19 restrictions and presence works we're being lifted.
Concrete segment was also positively impacted by execution of the Metropolitan airports expansion project and the women side of the city.
The sales volumes increased by 12, 8% you and yet the first positive figures since for.
First quarter 2019, yet compete revenues declined by 17% of softer pricing and such.
The <unk> volume.
Railroad revenues decreased by 19, 1% year on year versus the comparable of quota and jumbos and indeed, the hydro transported volumes will more than offset by lower price and mix.
And finally aggregate decreased by $4 seven for Seth as price and performance, partially compensate the nine 5% volume decline.
For the fiscal year 2020, net revenues increased 12, 8% to 41 6 billion pesos from $47 7 billion pesos into flows and M D.
With revenues the clients across all segments.
Our core semi business suffering a milder and decline of four 7%.
Moving onto slide six consolidated gross profit for the quarter was up $46 one per cent deal and year with margin expansion.
632 basis points and the extraordinary result, underpinned by the strength of our core semi business.
<unk> gross margin expanded and the bulk of hydro says volume and <unk>.
Benefiting from cost discipline and.
Energy inputs of benefit from early prices, where the negotiation together with improvement in unitary and energy Consumptions.
SG&A expenses as a percentage of revenues decreased by 115 basis points for them.
9% to seven 9%, mainly due to higher sales volume.
Please turn to slide seven and our adjusted EBITDA was up 48% in the quarter, reaching $58 million and our consolidated EBITDA margin expanded by 514 basis points to 45, 6%, that's the margin expansion and our coal business.
The segment expanded by 640 basis points to one of standing 40.4%, mainly due to the increase and says volume and improve energy inputs.
And our per ton basis EBITDA.
Stood at $47.
Hosting a record high level and increasing around 11% compared with the same period last year and above 17% and a sequential.
Sequential basis versus third quarter.
Adjusted EBITDA margin deteriorated to minus 0.6%, mainly by the by price and mix and partially upset by cargo transported volumes.
But with the adjusted EBITDA decline compared to fourth quarter, 19, with margin and worsening too and 19, 2% negative a softer pricing and kind of cost of the weighted decrease in sales volume.
Finally aggregate adjusted EBITDA margin decreased to minus 9% from minus four 6% with better pricing begin of the weighted by lower sales volume of Covid costs.
EBITDA into force and 'twenty was a walk of the $71 million compared to 172 million dosage of Boston and D.
Which included.
$9 million of nonrecurring costs associated to administrative commercial umbrella of team structure and equity efforts.
Moving onto the bottom line on slide eight driven by EBITDA growth and net finance gain net income search by 93, 9% to $46 million.
Income from continuous operation was 3 billion pesos compared to a loss of 1.2.
The pesos, mostly explained by the adjusted EBITDA expansion and lower financial expenses.
Driven by lower total financial debt.
By contrast, the foreign exchange rate to us for Covid, 19, 9 million pets of lower due to lower debt position denominated in foreign currency and the real depreciation of the peso.
Michelle and U S dollars, our net income for full fiscal year, 2020 was $189 million compared to $15 million interest carrier to of Boston and D.
When excluding the income from discontinued operations related to the sale of our stake is of interest Russell and his.
As profit reached $97 million each of us in 'twenty.
Or 60 million of tire that into fossil and indeed.
Moving onto the balance sheet and you can see on slide nine our higher profitability at the weighted the higher working capital needs for the quarter, resulting in the healthy operation Gaslog generation of 4 billion pesos.
2% year on year race.
During the quarter, we made capital expenditure for one 7 billion pesos 45 per cent of which whether the catered to them at least a bunch of brokers.
Additionally, we paid out of an extraordinary dividend of approximately $41 million relative to the same and Paraguay.
In February we announced our share repurchase program was the purpose of sufficient to be applying a portion of the company's got the position and expecting to generate a greater return of value for our shareholders given the current attractive budget for this year.
During the year.
Our financial situation of what further strength the strength.
We ended 2020 with a net debt reduction of work of the $62 million, reaching $25 million.
As of yearend, we for a net debt to EBITDA ratio of.
Sure of <unk>, 16 times compare to us who appointed free times by the end of the false and indeed.
Now for our final remarks, I would like to handle the call back to substitute.
Thanks, Marcos now to ramp up of the presentation a piece of Q2 just late day.
Definitely the 2020 will be the amendment as one of the most challenging yet in the guidance.
We are proud of the actions taken to look after our people our community and our customers.
Since the beginning of the crisis, our priority has been the health and safety of our people and their families that is why we quickly put them and are both committed to minus and the monitoring the situation.
Firstly, we temporarily suspended production and our plan as well as the Heck would you and of our expansion project need Union. The situation, we never lost focus on the importance of security and working capital needs.
The Miocene coating and he said I mean, our capital spending priorities.
Under this context and supported by the affinities and sense of proposed of our organization, we were able to deliver the again excellent. Besides the strong EBITDA generation in 2020.
One can be 71 million bond at it with the multitude of 33%.
Our solid balance sheet and the approaching completion of our strategic and Malia expansion project and the you feel confident that we are ready to face new challenges.
For the cash for the Argentine economy to the GDP growth of around five 5% Elo and yet for <unk>.
And in 'twenty, one, which we beat of parity and pre Covid. After the sharp decline in 2020 in top of line could be expect the construction sector will experience a strong out of committee in the first semester, leaving the second and submit the top subject to how the economy and sanitary situation of the country in boots.
One could say debt up to some extent, we're getting use to quick six with the baidu, yet we need to remain alert unfolds and our country and the world continued to the battle the COVID-19 pandemic and.
Argentina, we face additional challenges as the economic and vitamins remains daily and.
And we see a bit of a distinction have you can say that with the that's the.
And the rate of stimulus and SR will bring additional damage to the economy as a world and the construction sector. In particular, we are confident that we position ourselves for the sustainable growth and cash flow generation in the future.
Finally, I would like to thank all of our people and the stakeholder with the who and the set of fully the cells will have been made the difficult, particularly during this amplitude and times.
We are now ready to take what you operate the please open the call for questions.
Thank you we will now conduct the question and answer session. If you would like to ask a question. Please press Star then one on your telephone keypad.
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Please hold momentarily why we assemble our roster.
Our first question is from Nicolai.
Lippmann from Morgan Stanley go ahead.
So very much and thanks for taking my and my questions. Congrats on the very solid strong numbers there.
My questions really relate to costs, so sort of two elements of that first the sustainability of this cost reduction.
Out of cash cost level for U S. S winter approaches to what degree do you think that you can rely on local gas vis vis buying pet coke and.
And related and and a similar question related to the lemon and the expansion.
To what degree do you think that any cost production that you will have there will be basically and addition to you our true EBITDA per tonne now and then.
And we'll keep that and to what degree the are you thinking of trying to invest some of that back into the market. Thank you very much and again congrats on the numbers.
Hi, Nicole and thanks for your question.
Tim.
For the cost us CLO and will the end of August one so and even.
And as Gamble, but Atlanta.
And regarding our cost yes, we believer.
They are of a sustainable and looking forward if Daniel afternoon of them shut important and cost of audio lean in and out of it yet that would be getting the electrical.
And this year, we had a considerable reduction and environment now where one of the cost and energy I'd like to go there and as you of a thermal energy.
And the most of and I mean, that's.
The important April silicon that Madison and Bristol.
One is the goal.
We have an advantage to produce using natural gas and comparing to pet coke.
For now and Doug and Needful Doodle.
And one of the number of like Carpathia, Alisha, and Adelaide and yellow globally.
The advantage is going to be further inquiries in the future. Once we have the normally second line. So again, it's more of the walmarts have already filled demis adipose tissue of capital.
And you've done the Blue shield of India.
Because it isn't that the way, we're going to be able to optimize how we're working capital and to run more in the winter.
And the issue of the the lagging yeah lots of deal Emily.
And the benefits from the second line of globally.
And she can do like and mutually beneficial shallow for most implement though.
And Theres no doubt that most of those benefits we already implemented.
Yeah, but you didn't give out of gone.
And on cost of equal to the EMR chatswood own chocolate and it really shows.
The dose related too.
The structure and fixed cost were already implemented and you look and come in and out of 10.
She owned and per ton David of course story, now and yet that and we've got your leg Zika.
And the CTO for Lama short of Blue <unk>.
He thought of Halo.
And yellows, Sean sort of them below the mean.
Logically the them.
We already have improve our thermal and electrical costs and the benefits from a from a high year of productivity in the second line and are.
Or are less.
Independent of them and there is so she thought of yet Nokia gomorrah and officials gambling.
For the four months of the linear those big industrial Hartwell.
And and get them into the volume in total.
Good I forget the name of silly.
Looking for work.
And the independently from from what we what happened in the past, we're going to have a better performance and in the second line and.
And also the the hydro volumes are going to to be.
And we're gonna be able to produce them with the same structure.
Yeah.
You very much.
Okay.
Yeah.
Our next question is for my bedroom for about a day you from UBS go ahead.
Which is the go out to the edge of Marquis the ethanol.
My questions I have three for each one of my side.
The first one of both debt payments.
I saw the the maturity.
Next year.
And how warm up.
And it would be the some more.
And floating rate and all.
Good day, Jim Blome and get a few show the U S dollar spot for those payments of <unk>.
Most of all for the Blue dollar.
I look the.
Thank you for your question.
The.
The mud.
Jewelry deal of of our debt profile.
It's not concentrated on the on one only maturities out of several statements that we have to meet.
And we are relying on getting access to.
To the official FX, yes, it's.
And obviously the situation can change.
Net.
But we were confident that were going to use it like we are going to be able to obtain dose those statements and U S dollars.
Perfect and Michael.
Thank you very much and.
My second one.
And would be about the next steps for for Loma.
When the project has gone by mid of.
Yeah.
And the company, probably reaching the net cash and then the next water.
Paul how long are we use the firepower I mean increase the dividend issue can distribute the Dan all day and your expansion plan and M&A.
Hi, Thank you for Wolfcamp, a and that's also a tunnel handled internally the directorial guidance can be different in Seattle.
So currently we are working on on our board of directors.
Within the financial committee on the.
And what kind of lead time.
Who else has done and the U S. A both in by the sea on the land and Yellow Hill, the money, where we are analyzing all of the alternatives.
I'm going to present after the the expansion project in Oklahoma.
One of the largest show net demand more escape.
For the <unk> shaft and implement the shortfall came out of programmatic and Brad to you on it.
That's part of the session that was made that we took the last year at the end of the year is the.
The repurchase plan that piece.
Undertakes no lack of.
The rest has done at the USA.
The also the GAAP will do that I want it kind of that yet.
And that is handled and desktops and.
He kind of notice up but obviously the implant.
And they may the annual net of a plateau, but eliminated.
So the other alternatives debt.
For the use of cash, which has which have pros and cons.
And under analysis.
Thanks, Jason.
The good assets.
Hello, ladies and Pablo.
Okay.
Youre welcome and thank you very much.
This concludes our question and answer session I would like to turn the conference back over to Tom <unk> for closing remarks.
We have the need for light came back you want.
Nikolaj lippmann from.
Morgan Stanley has another question and Oh, we have another person.
Okay.
Go ahead and Nikolai.
Sorry, sorry for coming back and and thanks for taking another question here I was just wondering if you could do your rail concession will expire shortly.
And if you can provide a bit of and update on on sort of what's going to be the base case that you are seeing it right now and and how it potentially could affect some of your operations. Thanks.
And.
And Nicola.
She and the rest.
Total body been saying and let me to make the trip.
Yes.
The rate of weird concession.
Do you on 2020 three.
The champagne, yet nobody shouldn't and Apple Sheila Bair of law for the BSI and you'll lap.
One of the analysts shut the chaparral under the New Orleans Tarquinius, having nausea.
So the original the concession had a provision for an expansion for IV true 10 years and.
And the government is.
Starting this week.
And we knew it.
For them.
And as you on top of mind icons of the almost see yet and when you're only plenty of Ob I don't.
And no one cell lymphoma format.
So the information that we have and the meetings that we are having with the government did not.
And have a form of NTT, yet H T Dolan and sustained by the the open out of tests done day, one is consistent ideas and the.
<unk> total although it is exclusive of kind of family.
Illinois.
And the idea would be to go and open access scheme what are the.
The current concession east are going to able to operating day on the on the trucks.
And the current trucks the <unk>.
Hello.
To say God of war of the taller of embarrass G&A any predictor of two day like yes.
So and that's the way the Golar and mentor the nurses.
And our government.
Is it going to.
Sure.
Take care of the investment to maintain the the weighted waste heat.
Got up at all or the idea of mundane EMEA and traditional materials and they keep adding.
And we'll be asking policy the pull out of board of body shop of yet, but it looks really sorry, yes.
And each operator should take care of the maintenance of the wagons.
Wagons.
And then pay a fee to to operate on those trucks per day market.
And all that's true Buda, Boyd and illuminate piece, you and and and maybe your level of collateral, but I know my Niigata Dunton and of course, the Rocky Coke and wind up with the Xi'an The day in February.
So we expect that.
This new structure should.
Should have a that should be beneficial for Loma negra and not only of the logistic cost should be reduced but also the the investments.
Thank you and Matt you guys.
And what.
Yeah.
Our next question is from home and Clive from HSBC go ahead.
Hi, gentlemen, and thank you for taking my question I just had a quick one could you give us a little bit of color on the outlook for volume and price seen in 2020, one and obviously you finished the.
For the year and a very strong now on the on the volume side, how much of that momentum do you see carrying.
Through the year, and then as well in terms of of the bulk versus bag breakdown. Obviously, there is lot of things a lot more bag cement sales.
This year.
What kind of margin.
Benefit did that have this year and do you expect that reverse last year and do you expect that we're embracing and 2021.
And.
Hi, gentlemen, thanks for your question.
Right.
But of late but and you'll give me and animal he and the credit he mentally and you, but I'm getting into the GDP the.
And the teams who may you would see the boat of Shandong.
So for this year we are.
Respecting our GDP growth between five 5% and 7%.
I will not the name of we're not but EBIT on the medical the cement, but it's Daniel data tsunami the Dolby.
Equally almost of the medical issue mentally Saturday, though the adult basis, and you can see me and though the baby.
So we still do not have a provision for the industry growth. The there's so many of the industry growth, but taking a look to the history there has been and <unk>.
Multi play off of two times approximately and.
The liberation of bridge and turmoil in the Prestea and USA that anemia late last year.
And the cost of the my name is of that.
So our expectation for the price increases to be in line with the low my knee the cost inflation kick almost kimberly the chemo.
And don't mix and today and dream people who've got Neil Gagnon and wasn't archaic and I will know the cost of the illuminate us on and donate them yet.
And as we always mention.
This we consider a mix between inflation and the.
And the FX depreciation.
So we have part of our cost with that as a component of our U S dollars.
<unk> will not it will be assumed debt and medical Louise the dynamic of any of them.
Aneel we.
We do see a recovery in the bulk segment, which is coming from a lower.
The lower volumes and <unk>.
And we just announced the the order of poorly.
<unk> laboratory, and <unk> market and commit and Sandoz and.
Got it.
And also many announcements of the French public works and in the provinces and in.
And the other provinces are which are starting to be implemented.
Larry and David you and <unk> and <unk> segment, the whole ticket and Anda and we simulator for the quality and get them into the owner of the load at all.
The impact that Mike and Eric.
Yeah.
Profitability in both bulk and bag or are quite similar so the shouldn't have an impact in the and the consolidated profitability.
Okay.
Yeah.
Got it thank you very much.
And look.
This concludes our question and answer session I would like to turn the conference over to <unk> for closing remarks.
Okay.
Thank you for doing yesterday, and we appreciate your participation and your interest and our company. We always look forward meeting you.
Over the coming months and providing the financial and business updates next quarter and the <unk>.
And the team remains available to answer any questions that you may have thanks, again and stay safe.
The upfront the Apple.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.