Q1 2021 Loma Negra Compania Industrial Argentina SA Earnings Call

May 13, 2021

Good morning, and welcome to Loma news about.

First quarter 2021 conference call and webcast.

Defense will be in listen only mode.

And do need this system price.

The conference specialist by pressing the star key followed by zero.

Today's presentation there'll be enough puts and it seems to ask question also.

Five men will be responding and Spanish immediately following and English translation and ask a question you May Press Star then one on your telephone and keep that to withdraw your question. Please press Star then two.

Please note that this event is being recorded I would now like to turn the conference over to Mr Got something and head of Investor Relations. Please go ahead.

Thank you good morning, and welcome to illuminate US first quarter earnings conference call by now everyone should have access to our earnings press release and the presentation for today's call both of which were distributed yesterday after market close.

Joining me on the call. This morning will be sacrificed one our CEO and vice President of the board of directors and our CFO, Michael and I mean.

Both of them would be available for the Q&A session.

Before I turn the call over to <unk> I'd like to make the following safe Harbor statements. Today's call will contain forward looking statements on and I refer you to the forward looking statements section of our earnings release and recent filing with the S E T.

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 on non-GAAP financial measures. 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 Hello, everyone and thank you for Chilean assets to date.

I hope you and your families and cell phone calls.

That's all wait and I am going to mention a few highlights of the first quarter and then medical who will you flow what might cause a view on peanuts episodes. After that I will provide some final remarks, and then we will open the call total question.

And you could flow from our leased Houston yesterday in the first quarter, we've got a great performance, mainly on the back of our cement business.

The strong momentum experience and same insane seen less yes, bottone, snow disintegrating and volume and tabulating, Alabama pre pandemic levels.

And then liberate us together with good performance in production input from late two world class profitability levels and enable us to grow our EBITDA by 49.6% and expand our margin by 341 basis points.

Our assessment EBITDA in the quarter was $52 million compared to 36 million boiler and the first quarter 2020, when COVID-19, pandemic lockdown where establishing.

Our top tier profitability levels, and our published on our working capital management and our ascent deleveraging that's tied into a strong cash flow generation and solid capital structure with the net debt that you all sito point Sito four times.

Finally, we continue to move towards completion of our statistical Emily expansion project, which we expect to have started producing clinker in the upcoming days full commissioning of the second line is programming for the next months and.

We know one of the COVID-19 to Michael Binetti, who will walk you through our market review on Peanuts empathetic. Please marcos.

Thank you sort of feel good day, everyone. As you can see on slide four leaving behind a fierce double digit drops of the gaining of surplus on 'twenty.

And that would be one estimate GDP drop of four 3% and the fourth quarter of 2020 and and the first two months of 251, the economic activity constructed around two 4%.

And the case on the southern National industry sales, there and salary was much stronger, especially in the back four months after debt increasing sales volumes since the collapse of the month of the first and second quarter last year, the amount seems to have stabilized around pandemic theaters.

First quarter to positive 21 posted a total volumes of two points on Liza thumbs up a D eight 6% higher debt.

First quarter surplus and 'twenty, but only 2% lower.

First quarter 2019.

And the main driver behind this trend is Buxton and says, which both posters and briefs offer the five 6% year on year and almost nine percentage when compared to first quarter 2019.

Bulk segment, which started to contribute with positive year on year growth is still lagging because first COVID-19 previous by around 16%.

Consequently, the share of seven months old and bulk increased by almost 200 percentage basis points from 36% in the first quarter 'twenty total, 38% and first quarter 'twenty one.

We expect these breakdowns to remain rather stable on the following month with another REIT.

Bulk recovery there.

And the macroeconomic context to Ela with COVID-19, and second what could increase on Saturday and affect major construction.

Projects were assumption.

And that's only with total industry from gross adds compared to last year March and April presented on outstanding 94% and work on the 35% respectively.

Those months were the most affected by the initial lockdowns.

Certainly the economy as a whole still faces different tests, particularly on the macroeconomic outlook expectation about GDP growth for 2021 revolves around a mid single digit expansion deposits.

Philippa for Brent pandemic levels.

And the SaaS with GAAP only watch defense of different economic sectors.

They are reopening for businesses.

Turning on to slide five for a review of our top line performance by segment and consolidated revenues increase year on year by 35, 4%, mainly reflecting the positive momentum experienced by our core semi business, which is now stabilizing around pre pandemic levels.

Additionally, and bearing in mind debt by the end of the quarter last year. It was established the lockdowns to contain the COVID-19 outbreak in the first quarter all segments sales volumes experienced a strong recovery.

Seven nine storey seven day loan segment.

That's up 38, 4% with volume expanded 48%, we just David on pricing concrete posted a revenue increase of 64, 8% continuing with demand recovery bump in sales volume yet this time from pre pandemic levels, but with a negative pricing environment by contrast.

Aggregate posted a revenue increase of 47, 3% CAGR volume sales, coupled with a positive price and mix.

Railroad revenues decreased by 12, 7% in first quarter 'twenty, one versus the same quarter in 2020, and the fact that transport the volume as well most of them said plugged web pricing performance.

Moving on to slide seven consolidated gross profit for the quarter was up 61% year on year with margin expanded by 577 basis points. A result from enforced by the bulk of our score seven and Vista.

Seven gross margin expanded and the Buck of cargo operational leverage on <unk>.

Fitting from cost discipline and.

Energy input benefits from early prices, where negotiations together with improvement in unitary energy consumption.

SG&A expenses and non percentages of revenues decreased by 57 basis points to eight 2% from eight 8% mainly due to cost dilution from Congress sales volume and kind of level of cost compared to last year's level.

Please turn to slide eight our adjusted EBITDA was up 49, 6% and Nevada, reaching $52 million and because it does EBITDA margin expanded by 314 basis points to 45, 7%.

And defense to margin expansion and our core business.

The segment expanded by 352 basis points to a best in class for depot and 10%.

Mainly due to an increase in sales volumes and improved energy inputs and.

And our bolt on basis, EBITDA increased compared with the same period last year or sequentially.

<unk>, six and 5%, respectively and stood at $38.

Railroads adjusted EBITDA margin deteriorated to my friends at seven basis points, mainly impacted by price and performance and partially upset by size and transported volumes.

Concrete adjusted EBITDA decreased 63% compared to first quarter 'twenty as of the price and our cargo SG&A cost avoided ingredient sales volumes and the reduction and unitary cost of sales.

Finally aggregate adjusted EBITDA margin improved to minus 11, 2% from minus 25, 2% with better pricing got weighted but still depressed sales volumes and lower operational leverage.

Moving on to the bottom line on slide 10, driven by EBITDA growth and net finance gain net profit surged by 104% to $40 million to $47 million compared to first quarter 'twenty levels a delay initial lockdowns.

Total finance gain stood at 141 million pesos and first quarter 'twenty, one compared to a net loss of 170 million pesos and first quarter of 'twenty as our net monetary position and presented a gig of flight Congress 58 million based on us in first quarter 'twenty, one compared to a walk on that.

76 million loss on fourth quarter 'twenty.

Additionally, the exchange rate difference also presented a gain of 21 million pesos were working a loss of 249 millions and fourth quarter 'twenty and finally, our net financial expenses expenses declined by 17 million to 448 million.

Based on loss compared to same quarter last year, driven by lower total financial debt.

Measured in U S dollars, our net income for the quarter was 37 million.

And that's one 7 million compared to $10 million and first quarter, two plus and Twitch.

Moving on to the balance sheet as you can see on slide 11, our top tier profitability level, our focus on our working capital management and our recent deleveraging, resulting into a strong cash flow generation and solid capital structure. We.

We ended the quarter with a cash position of 6 billion pesos and total debt at $6 7 billion pesos. Consequently, our net debt to EBITDA ratio stood at Europe on two of four times compared to two zero on 16 times at the end of 2020.

During the quarter, we made capital expenditure four 1 billion pesos.

Which one third was dedicated to the La <unk> expansion project.

Additionally, we canceled 443 million bushels of financial debt.

And repurchase share for a total amount of 255 million pesos.

Now for our final remarks, I would like to hand on the pullback just out of here.

Thanks Marcos.

And now to wrap up the presentation I. Please ask you to Teng just later on.

Though we are abating, two cooks Heath, we debated and debated nation plan. He said progressing same and demand seems to be stabilizing at around pre pandemic level, and we expect and moderate growth, but a big theme for the remained of day, yes.

In defence current macroeconomic context, together with potential protection related to our second wave pool increase then suddenly and affect large construction project and helping them.

Yet I would look less profitability 11, our focus on our working capital management and I would have sent deleveraging result into a strong cash flow generation and solid capital structure.

Did you get that with capital expenditure and laminate plant, which will start producing clinker in the next day, and which will be purely commission in the next months ought to flow.

A solid blown to rely on day yet to come.

Yes, but not least I would like to thanks, all our people and our stakeholders without whom this set of solid result, hoon Habib maybe difficult.

We are now ready to take questions.

<unk>. Please open the call up for questions.

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

If you would like to ask a question. Please press star one.

And then one on your telephone keypad.

A confirmation tone will indicate that your line is and the question Kent.

Net press Star then two if you would like to win on the line.

All participants.

And they grew equipment and may be necessary to pick up your handset price suppressing the key once again Star then one on your telephone keypad.

We would like also go assets you limit yourself to one question and one follow up. Please if you have additional questions and then thank you for these questions and they will be addressed.

Please note that Mr. Stefano price mine will be responding and Spanish and need at least Halloween and English translation. Please.

Please hold momentarily, while we assemble our roster.

Our first question comes from Nikolaj Lippmann from Morgan Stanley Go ahead.

Thank you Thanks protection and my question here and congratulations on on both the results and also on finishing the planned out and Luckily My my question on and just talk just to go down to one but my question is you're generating a lot of cash and it looks likely and you will continue to generate a lot of cash.

And.

And what can you do what are the potential M&A opportunities I don't know if you had and you see and anything in aggregate. So what is the thinking around your your balance sheet and and and and the use of cash over the next couple of years. Thank you very much and again congrats.

Hi, and good luck. Thank you for your question.

And I think total Alex it and to recapture most of it.

And when do some of it off on the intra and commentary if he noticed us input and without them up but maybe a commodity level platform.

Regarding the cash.

Excluding cash.

And are working assets, we mentioned before we're working on the board of directors under the committee of finance into a long.

A long term plan.

And and it really came on the infomercial and telco and.

And dove, and coconut and Randall.

<unk> <unk> per day.

And I think here.

But on my neighborhood, and Guangdong <unk> on Vodafone dose et cetera, and this.

And.

The last time two to now we have been working with two banks.

In order to think about and to strengthen our our strategy and to see what to do with this exceeding cash.

Its analysis and blue shade, almost any tangible you're hitting on a political issue on the DVD and those daily.

But and data she on LOE guidance or what other cases, Q&A and index videos.

So under this analysis.

Moving on a more aggressive dividend policy.

We see.

No continue on.

Or or something and I.

One they want and not anymore.

If you need to look and see if someone else. He invoiced would you decide on.

And it's going to plateau.

But on to you and it came on and silo.

And she and her Brooks you momentum demolition and he's on the formal pointing a lot of ownership at all of them.

So yes, the strategy is not defined.

Yes.

And the shortcomings, we are using our resources for debt repurchase plan.

Coming to it and by the end of the month.

Yes.

Got it thank you very much.

Okay.

Yeah.

Our next question is from my lens Goodbye, ladies and Youll from UBS go ahead.

Hi, everyone I got strong share Hugh and.

Muscles and congrats on the results.

The better results measured channel market ever.

I'd like to ask you on additional folder on margin gains.

It was will shoot three three and a half percentage year over year and.

Even well we did.

Right.

Its terms a draw from Europe.

If you could provide additional color would be very helpful. On the margin mix changes.

Okay.

Sorry, I got it okay.

And we were in a period, we understood. The question is regarding the margin expansion.

Exactly I guess on.

Could you just provide additional color Hollywood <unk>, 30%.

Also of each of the margin.

On the street.

5%.

And your extension from first party Pleasant and train.

Okay.

Hi, Thank you for your question.

And I think to the day, let me what are the American Davita kidney care vertical and commodity authorities and Daniel helped anymore and impact the medisoft.

Look down day.

D E F and <unk> and Microsoft.

So regarding the margin expansion there are a few factors playing in.

First we have.

Remember the lockdown and that happened in March last year.

And so looking I mean did do and impact on and you'll see on the cost of equaled by day stay on yogurt than out on my shoulder volume and it will turn out and let me quote on the cost of Eco Port Botany latter.

So logical leap day.

And your volume this year.

And it comes together.

Hi, good cost dilution.

Tom.

And Youll Patel, and admittedly I would even Marshall I am considered nbn.

And Brad totally that go on.

On may hold out at the end.

Total sales ambience have you done in total.

On the oil and possibly and multiple of Delek and come up with and on the OTA.

So are these early last year between April may.

And we signed from natural gas contracts, which had an impact.

Only last year, but also in this and this first quarter.

And they sell directly I mean, that's what made us from nowadays Gucci and but its again muscles handle and total cost to how do you obviously see force shoe model. So we I mean, they are and what kind of political issues and alike.

So I'm finally.

Sure.

Performance.

And <unk>.

We improved.

So that's a continuous.

Operation and also.

So the pricing policy, which.

What's also positive.

Appreciate the just a follow up.

And Jim.

We have day level capacity at the moment is run that mom and dad and.

And what capacity.

If you'll be running out and what might be.

And statue to operating.

Thanks, that's all my questions.

Yeah.

A total Mindy Thomas.

And merchandise and global CNS agenda, Shane Doug and I talk about here.

Currently we are working at.

And 80% to 85% of our capacity.

The regular day market globally muscle mineral and yellow and.

And as you enter a mentally capacity yet.

And you should remember that.

And the expansion globally.

And represents at least amount and 40% of our total pick up on.

Yeah, I mean take on canal and yellow and now my knee alone.

Indeed, well laid out open up give me solder mask elaborate on Xi'an and it had been the and though the kind of emaciated and.

And that he had debt any guy and linked in Colombia.

Obviously, the second line.

And enable us to optimize to further optimize our production on.

And to amendment fees from from.

The costs.

And our costs.

Florida, which is good assets.

Our next question is from Nicole <unk> from balance capital go ahead.

Hi, good morning.

Hope youre doing well and congratulations on another.

Great quarterly results I have one question regarding your gas supply contract.

And how do you see the new price environment on the gas market impacting them on margins as you start to.

To renovate and contracts.

Meaningful maturities this year.

And trying to understand if this is sort of his choice for revolving on the contracts or.

Giving you a long standing relationship with the suppliers you show that you're able to perhaps negotiate some discount versus market prices.

Yes.

Thank you for your question.

And so to say almost doubling in Argentina.

And the Lima.

You mean until the last one I will not complete Laguna total base.

And so.

No.

I've seen some issues with the supplier and Thats right.

Yes.

David weighted from some contracts.

And that's where it got boxed into Argentina.

Total show you a muscle.

Marcelo and its EBITDA and modest volume more and a lot of dollar contract total on mutual fund wrap things up.

And I don't know Neil and Canada.

On debt, but unless I missed it.

What are you allowed and they got on yield.

And last month.

We had renovated.

Our natural gas contracts.

For the next 12 months.

What you'll hear from contract on no sorry, I don't view on it and Ed will not put a lemur hail academia and total reorders and convenient dosing up from <unk>.

Many of those contracts we were.

And did they raised the awareness that we may have some issues.

Supply due to day.

The supply problem that we mentioned before.

<unk> will host a Q&A, if and when Congress ashwin on Kadena Kalydeco on mainboard Apache on the pet Coke and coal.

But and in Vietnam, a tiny most had any of those Seattle and Toronto hate us buyout and direct oil and Neil.

On both.

Our Q on it no not getting on and battle.

And the important inventory.

So we're giving debt situation, we took two concrete actions.

One related to the to the importance of pet Coke, yes.

And to supply.

There were no.

To guarantee our winter.

Production and the other one to renew some of the contracts that we weren't made sure yes flow.

Total revenue you mean.

And like RCI, but on Xian and outer shell.

April market, and India, Mustain, no permit date and being at that.

And cleaned up and out the Simeon.

As a consequence, the other risk that wasn't mitigated is our capacity to produce and then during the winter.

Okay. Thank you and really clear.

The net.

This concludes our question and answer session I would like to turn the call back to talk about something else for closings on that.

Oh I'm sorry.

Q1 2021 Loma Negra Compania Industrial Argentina SA Earnings Call

Request a DemoDemo

LOMA

Loma Negra Compania Industrial Argentina

Earnings