Q3 2025 Loma Negra Compania Industrial Argentina SA Earnings Call
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Also Mr. Sergio five men will be responding in Spanish immediately following an English translation.
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Please note that this event is being recorded I would now like to turn the conference over to Mr. Diego J lawn.
Head of IR. Please Diego go ahead.
Thank you good morning, and welcome to illuminate US earnings conference call by now everyone should have access for earnings press release and the presentation for today's call both of which were distributed yesterday after market close Jamie.
Joining me on the call. This morning will be social five months, our CEO and Vice President of the board of directors and our CFO medical having both of them will be available for the Q&A session.
Before we proceed I would like to make the following safe Harbor statements.
This call will contain forward looking statements and I refer you to the forward looking statements section of our earnings release and recent filings 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 a discussion on non-GAAP financial measures. The full reconciliation of the corresponding financial measures is included in the earnings press release.
Now I would like to turn the call over to Sergio.
Hello, everyone and thank you for showing us this morning.
Like just suddenly presentation basically cutting the highlights of the quarter Dan Michael Thank you for what market view.
At this time.
Hello.
I will share some final remarks before opening the call to your questions.
Starting just late.
During the third quarter he industry activity lost momentum as the global economies lower the electoral process and uncertainty around the sustainability of the economic framework.
Combined with higher interest rate in pesos ended up negative affecting shifting the 11th.
For both the industry and for Roma, which declined 5% year over year.
But what I can recall in September and October provide and clinician science as we look at it.
In terms of profile in this more challenging context, our consolidated.
EBITDA margin contracted to 28% in the quarter. However, its remaining almost doubled versus the previous quarter. Despite the higher cost pressure, but the typical books in the third quarter.
Is there in mind.
As it goes obsessionally affects I think winter period are.
Certainly that would be like.
$36 million, reflecting.
23, 7% reduction with emission and basis.
On the balance sheet side, net debt declined by $9 million quarter over quarter to $206 million.
In addition, following the classified bond insurance, we are seeking to improve our maturity profile and our leverage metric combine at a comfortable level for the company.
No problem.
The call to my colleague, who will walk you.
Through our market review emptiness episodic police Medical's board.
Thank you Sergio and good morning, everyone. Please turn to slide four.
After a solid first half of the year forecast for the third quarter nine point to a weaker performance of the Argentine economy, I'm courtyard broker expectations were revised down to around three or four 9%.
This dynamic is fully reflected in construction and it sounds like the industry.
The recovery trend began to loosen hmm, maybe due to uncertainty around the election process.
About the sustainability of the economic program.
After two quarters of growth seven dispatches for around 1% in the quarter.
Largely explained by a soft July.
Although September volumes I guess, it could be two months there weren't enough to offset the core go directly.
<unk> remained the most impactful month.
More tied to retail.
Three months.
On the other hand, but this bunch has continued to perform well in.
In line with what we saw in the second quarter, a rich 44% of total industry. This budget.
Looking at the most recent data October volumes showed renewed strength with a seven 4% year over year increase.
And year to date volumes are also up seven 4%.
Now with the election behind us.
We expect uncertainty to start easing the outcome of the election could we see a stabilization of the government's policy direction.
To help unlock investment projects that have been waiting for a more favorable pro work.
So overall, we remain optimistic that this renewed confidence was the clarity for the industry recovery back on track.
Turning to slide five for a review of our top line performance by segment.
Current quarter top line declined by 12, 5%.
Primarily due to weaker performance in the semi segment, followed by softer results across our remaining segments.
Revenue in the semi is measured in the $7 nine segment declined 13, 2% year over year.
Driven by a five 4% contraction in volumes are softer pricing year over year.
We mentioned this quarter, we saw coke in the recovery trend that started in the first half.
About 70 Spuds has continued to be the spuds remote showing the vet dynamics.
Supported by industrial and commercial projects and by larger couch It in development in there.
Asian provincial level public works began to gain momentum, adding volume to this batch mode.
But semis remain more pressure as we go over our consumption continues to impact retail unless you actual demand.
When converting Lama pro forma for the industry, our bogus purchased route below the industry this quarter.
It is also important to note that our segment includes smasher 711 online would.
Would you have more similarly, two bucks a month, while industry statistic disclose volumes.
C exclusively for Grace in that.
In the same sense top line was also affected by softer pricing conditions peso vessel fleet third Q2 thousand 24.
Although southern prices in peso to leave a positive quarter over quarter performance when adjusted by inflation.
Concrete revenues remained broadly flat versus first quarter 'twenty four as a 47, 8% decrease in volumes offset softer pricing dynamics in a highly competitive environment.
Volume growth was supported by a private development, mainly in logistics infrastructure all of us here several structure.
So benefit from higher activity in public infrastructure projects across that much of what you've done when I say this area.
The process that Duffy.
Similar similarly, the aggregate segment also remained flat.
Operator: 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 Faifman will be responding in Spanish immediately following an English translation. To ask a question, you may press star, then one on your telephone keypad. 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. Diego Jalon, Head of IR. Please, Diego, go ahead.
In our slide 0.8% revenue decline.
Sales volumes Rose 26, 3% driven by kind of activity and road construction and road projects.
To make more pressure as we go over our consumption continues to impact retail and residential demand.
When comparing Lomas performance with the industry, our bank dispatches grew below the industry. This quarter
Partially offsetting the impact of softer pricing.
Pricing was also affected by the sales mix.
As road construction projects primarily.
<unk> require fine aggregates, which carry a lower unit price are really just the overall average.
It is also important to note that our segment includes measurement and line and line which you have more similarly to back cement while industry statistics disclose volumes exclusive exclusively for Grayson.
Railroad revenues declined 14, 9% in the quarter, a pretty poor newport's integration and transported volumes only partially mitigate the effect of weaker pricing.
In addition, the ongoing disruption of the robot lining by Yahoo, Lanka continues to affect long longer haul traffic, mainly grace gypsum Brookside.
In the same sense, Top Line was also affected by software pricing conditions versus free 2024. Although some prices in pesos delivered a positive quarter-over-quarter performance when adjusted for inflation.
Diego Jalón: Thank you. Good morning and welcome to Loma Negra's 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 Sergio Faifman, our CEO and Vice President of the Board of Directors, and our CFO, Marcos Gradin. Both of them will be available for the Q&A session. Before we proceed, I would like to make the following safe harbor statements. Today's call will contain forward-looking statements, and I refer you to the forward-looking statements section of our earnings release and 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 on non-GAAP financial measures.
But are you seeing don't kilometer transported.
Because of what the revenue generation.
Concrete revenues remain, broadly flat versus for quarter 24, as a 47.8% increase in volumes of sets of the price Dynamics in a highly competitive environment.
Moving onto slide seven consolidated gross profit declined 32, 5%, while gross margin contracted by 524 basis points year over year, reaching 17, 3%.
In the semi segment cost of sales decreased 817% year over year with a three five reduction in unit cost.
Volume growth was supported by a private development. Mainly in logistic infrastructure and residential construction and also benefit from higher activity in public infrastructure projects across the Metropolitan when Osiris area and in the province of Santa Fe
Despite the seasonal impact of HEICO winter energy costs.
Similar. Similarly, the aggregate segment. Also remained flat both in a slight 0.8%, Revenue decline.
Depreciation associated with the completion of the 25 kilos project.
Effective cost management helped offset the weaker pricing environment.
Sales volumes Rose 26.3% driven by higher activity in road construction and road projects.
Partially upsetting the impact of software pricing.
Lower maintenance costs and improved thermal energy input prices also supported the quarterly cost structure.
Pricing was also affected by the sales mix.
Continuing the trend from previous quarter from an energy contracts signed last year, which included E O where your tariff reduction together with short term agreements linked to oil production at a rate below one dollar per billion Btu.
Diego Jalón: The full reconciliation of the corresponding financial measures is included in the earnings press release. Now, I would like to turn the call over to Sergio.
As road construction projects, primarily require require fine Aggregates which carry a lower unit price and reduce the overall average.
Sergio Faifman: Hello everyone, and thank you for joining us this morning. I would like to start my presentation by discussing the highlights of the quarter. Marcos will take you through our market review and financial result. Following that, I will share some final remarks before opening the call to your questions. Starting to slide two. During the third quarter, key industry activity lost momentum as the broader economy slowed, the electoral process, and uncertainty around the sustainability of the economic framework, combined with higher interest rates in pesos, ended up negatively affecting shipping and leverage for both the key industry and for Loma, which declined 5% year over year. That's why volume recording in September and October provides encouraging signs as we look ahead. In terms of results, in this more challenging context, our consolidated assessment, EBITDA margin contracted to 20.8% in the quarter.
All contained variable costs.
Railroad revenues declined, 14.9% in the quarter, a 3.9%, increase in supported volumes, only partially mitigate the effect that weaker pricing.
On the electrical energy test site lower consumption have upset Chicago depreciated tariffs as the company continued to face the impact of increased transmission and distribution cost.
The contraction in seventh was a company by.
While a decline across our remaining business segment finally, SG&A expenses decreased.
In addition the ongoing disruption of the railroad line in Via Blanca continues to affect long longer, hold traffic, mainly grains gypsum and fraction, we're using 10 kilometers transporter and consequently Revenue generation.
11, 7%, mainly due to lower freight and sales tax expenses resulted from reduced sales volumes as.
As well as a lower impact from salaries and professional consulting fees.
Moving on to slide 7 Consolidated of profit declined. 32.5% while gross margin contracted by 524 basis points year-over-year reaching 17.3%.
As a percentage of sales SG&A stood at nine 1% remaining flat year over year.
In the 7th cost of sales decreased 8.7% year-over-year with a 3.5 reduction in unit cost.
Please turn to slide eight consolidated adjusted EBITDA for the quarter stood at $36 million, while ambitious rich 43 billion, reflecting a 23.7 year over year decline.
Despite the seasonal impact of higher winter energy costs, there was a higher depreciation associated with the completion of the 25th project.
Effective cost management helps upset, the weaker prices in environment.
This increase was primarily driven by lower EBITDA generation in the SME sector.
Followed by weaker results in the concrete and railroad.
Sergio Faifman: However, it remained almost stable versus the previous quarter, despite the higher cost pressure that the typical OPEX in the third quarter. Please bear in mind that energy costs are seasonally affected by the winter period. Adjusted EBITDA reached $36 million, reflecting a 23.7% reduction with emission in pesos. On the balance sheet side, net debt declined by $9 million quarter over quarter to $206 million. In addition, following the classified bond insurance, we significantly improved our maturity profile, and our leverage metric remained at a comfortable level for the company. I will now hand over the call to Marcos Gradin, who will walk you through our market review and financial result. Please, Marcos, go ahead.
Lower maintenance costs and improve thermal energy. Inputs prices also supported the quarterly cost structure.
In line with this performance the consolidated EBITDA margin contracted to 28% represent enough for 315 basis point declines year over year.
While Romania broadly in line quarter over quarter. Despite the typical cost pressure of the third quarter.
continue the trend from previous quarter from an energy contract signed last year, which included year over year charge reduction to together with short-term agreements linked to World production at tariffs below, $1 per billion BTU help contain variable cost,
In the SME segment, adjusted EBITDA margin contraction was more moderate.
Reaching 24, 2% down 129 basis points year over year, mainly due to a softer price pricing environment.
On the electrical energy Side, Lower consumption Health observed higher electricity tariffs at the company continued to fight the impact of increased submission and distribution cost.
The contraction is 7, was a combined.
Which despite showing an improved sequential trend still act on the year over year basis.
By the client across the remaining business segments. Finally, SG&A expenses decreased.
Cost on a per ton basis, excluding depreciation.
11.7%, mainly due to lower Freight and sales tax expenses resulted from reduced sales volumes.
<unk> seeks to one 5% supported by lower for a mother energy prices and maintain our cost which partially offset.
As well as a lower impact on salaries and professional Consulting fees.
The weaker top line.
The concrete segment saw its adjusted EBITDA margin declined by 1093 basis points, reaching minus six 8% versus.
Marcos Gradin: Thank you, Sergio. Good morning, everyone. Please turn to slide four. After a solid first half of the year, forecast for the third quarter, 9.2, a weaker performance of the Argentine economy, and fully our growth expectations were revised down to around 3.9%. This dynamic is fully reflected in construction and the cement industry. The recovery trend began to lose some steam, mainly due to uncertainty around the election process and questions about the sustainability of the economic program. After two quarters of growth, cement dispatches were around 1% in the quarter, largely explained by a soft July. Although September volumes were the highest in 22 months, they were not enough to upset the quarterly decline. VAC cement remained the most impact format, as it is more tied to retail and residential demand.
As a percentage of sales, SG&A stood at 9.1%, remaining flat year-over-year.
For 2% in the first quarter of 2024.
As cost controls our cargo volumes were not sufficient to offset softer pricing dynamics in a highly competitive environment.
Is turn to slide 8 Consolidated, adjusted FDA for the quarter 2013 million while in pesos to reach 43 billion, reflecting a 23.7, year-over-year decline, this increase of primary driven by lower FDA generation in the 7.
In the aggregates segment adjusted EBITDA margin improved by 46 plus basis points to minus 16, 7% compared to minus <unk> 17 in the same quarter of last year.
Followed by weaker results in the concrete and reduced.
Well those born here continue to improve during the quarter.
The persistent market challenges and a further product mix continued to work on this segments profitability.
In line with this performance, the Consolidated, the beta margin, contracted to 20.8% representing a 315 basis point declines year by year where remaining broadly in line quarter of a quarter despite the typical cost pressure of the third quarter.
Regarding the Revlon segment, the adjusted EBITDA margin contracted two 920 basis points to three 4% third quarter 25.
Marcos Gradin: On the other hand, VAC dispatches continued to perform well, in line with what we saw in the second quarter, and reached 44% of total industry dispatches. Looking at the most recent data, October's volumes show renewed strength with a 7.4% year-over-year increase, and year-to-date volumes are also up 7.4%. Now, with the election behind us, we expect uncertainty to start easing. The outcome of the election could be seen as a validation of the government's policy direction, which may help unlock investment projects that have been waiting for a more stable framework. Overall, we remain optimistic that this renewed confidence will gradually put the industry recovery back on track. Turning to slide five for our review of our top-line performance by segment, second quarter top-line declined by 12.1%, primarily due to weaker performance in the cement segment, followed by softer results across the remaining segments.
$12 six a year ago.
These points here over here, mainly due to a softer price, pricing environment.
Transported volumes improved safety slightly mainly driven.
By further shipments of guaranteed teak aggregate, however, I'm glad disruption of the world rely on anybody or Blanka continues to affect.
Which despite showing improved sequential Trend still lacks on the year-over-year basis.
Cost on aberton basis. Excluding depreciations
Longer haul traffic.
Primarily grants gypsum Brookside.
decline of 615% supported by lower thermal energy prices and maintaining costs, which partially offset the weaker top line.
Are you seeing ton kilometer transported consequently revenue generation.
This impact partially offset by cost reductions.
Moving to the bottom line on slide 10, net loss attributable to the owner of the company totaled 815 billion peso.
the concrete segments saw it adjusted, the DM margin, the decline by 1,093 basis points, reaching minus 6.8% versus
4.2% in the first quarter of 2024.
For the quarter compared to a net gain of 27.9 billion pesos in the first quarter of last year.
As cost controls are higher volumes were not sufficient to upset software price and Dynamics in a highly competitive environment.
This decline was primarily driven by a lower financial result, reflecting a more moderate inflationary effect on a highway but from FX exposure.
In the aggregate segment, the Justice BDM margin improved by 36 basis points to minus 16.7%.
Compared to minus 17 in the same quarter of last year.
Combined with weaker operational performance.
Greece was partially upset.
Lower income tax expenses.
Marcos Gradin: Revenue in the cement, measured in cement and lime segment, declined 13.2% year-over-year, driven by a 5.4% contraction in volumes and softer pricing year-over-year. As we mentioned this quarter, we saw a halt in the recovery trend that has started in the first half. VAC cement dispatches continue to be in dispatch mode, showing the best dynamics, supported by industrial, commercial projects, and by larger housing developments. In addition, provincial-level public works began to gain momentum, adding volume to the dispatch mode. VAC cement remained more pressured as weaker overall consumption continues to impact retail and residential demand. When comparing Loma's performance with the industry, our VAC dispatches grew below the industry this quarter. It is also important to note that our segment includes mainstream cement and lime, which behave more similarly to VAC cement, while industry statistics disclose volumes exclusively for gray cement.
On the financial Bronc, the main driver of the ear wary of a ratio plus a reduced gains from the net monetary position.
All those bonuses continue to improve during the quarter, the persistent Market challenges and an unfavorable product. Mix continue to wait on the segments profitability.
Inflationary effect of monetary liability was significantly lower than in the same period last year. In addition, the state great defense had a higher impact due to devaluation of the peso during the period.
Regarding the relevant segments, that just be a martian constructed to 920 racist points to 3.4% in third quarter 25.
From 12.6 a year ago.
Transported volumes improved site slightly, mainly driven.
As a result, the company reported a net financial loss of 20 817 billion pesos for the quarter compared to a gain of 16.
6 billion peso for the same period of 2024.
Additionally, net financial expenses reached seven 5% reached.
By Hagar shipments of granite thick aggregate, however, the ongoing disruption of the regular line in by a Blanca continue to affect longer, hold traffic, primarily range gypsum, approximately 10 kilometers transported at consequently Revenue generation.
This impacts were partially upset by cost. Reductions
Reaching 17 billion pesos, primarily due to higher interest rate in pesos during the quarter.
Moving onto the balance sheet as you can see on slide 11, we ended the quarter with a net debt of 251 billion pesos and as a debt to EBITDA ratio of 149 times up from zero point 89 times at the end of your closer to 54, while still maintaining a comfortable level.
Moving to the bottom line on slide 10, the net loss attributable to the owners of the company is a total of 815 billion pesos.
For the quarter, compared to a net gain of $27.9 billion pesos in the third quarter of last year.
Marcos Gradin: In the same sense, top-line was also affected by softer pricing conditions versus Q3, Q4 2024, although cement prices in pesos deliver a positive quarter-over-quarter performance when adjusted by inflation. Concrete revenues remained broadly flat versus Q3, Q4, Q4, as a 37.8% increase in volumes, except softer pricing dynamics in a highly competitive environment. Volume growth was supported by private developments, mainly logistic infrastructure and residential construction, and also benefited from higher activity in public infrastructure projects across the metropolitan Buenos Aires area and in the province of Santa Fe. Similarly, the aggregates segment also remained flat, posting a slight 0.8% revenue decline. Sales volumes rose 26.3%, driven by higher activity in road construction and roadway projects, partially offsetting the impact of softer pricing.
For fly.
This decline was primarily driven by a lower Financial result, reflecting a more moderate inflationary effect and a higher impact from FX exposure.
Cash flow generation prohibition activities totaled 42 billion pesos compared to 84 billion pesos in third quarter 24, this mainly reflected higher working capital requirements and lower operational results.
Combined with, with weaker operation and performance. However, the decrease was partially upset, but lower income tax expenses.
On the working capital side.
The economic uncertainty during the quarter and the higher interest rate environment increased working capital needs. This was coupled with higher income tax payments since the company did not make a broad statement during 2024.
On the financial front, the main driver of the Year where he aberration was a reduced gain from the net monitoring position at inflationary effect of monitored, liability was significantly lower than in the same period last year. In addition, the exchange rate difference had a higher impact due to the evaluation of the peso During the period.
On the other hand inventories decreased during the quarter due to seasonality. That's clinker production is minimized during the winter months, while the inventory consumption increases.
As a result, the company reported a net Financial loss of 28.7 billion pesos for the quarter compared to a game of 16.
Regarding embarrass him activities. The company allocated 62 billion visits in the quarter, primarily due to the short term allocation of the process from the class five bond issuance on the other hand capex decreased by $14 6 billion pesos. Following the completion of his 25 kilo run bugging projects.
6 billion pesos for the same period of 2024.
Additionally, net Financial expenses. Increase 7.5%
Reaching 17 billion pesos primarily due to higher interest rates in pesos during the quarter.
Marcos Gradin: Pricing was also affected by the sales mix, as road construction projects primarily require fine aggregates, which carry a lower unit price and reduce the overall average. Railroad revenues declined 14.9% in the quarter. A 3.9% increase in transported volumes only partially mitigates the effect of weaker pricing. In addition, the ongoing disruption of the railroad line in Bahía Blanca continues to affect longer-haul traffic, mainly grains, gypsum, and frac sand, reducing ton-kilometer transported and consequently revenue generation. Moving on to slide seven, consolidated gross profit declined 32.5%, while gross margin contracted by 524 basis points year-over-year, reaching 17.3%. In the cement segment, cost of sales decreased 8.7% year-over-year, with a 3.5% reduction in unit cost, despite the seasonal impact of higher winter energy costs and higher depreciation associated with the completion of the 25 kilogram project. Effective cost management helped offset the weaker pricing environment.
During the quarter the company generated 74 billion peso from financing activities, mainly from the bond issued in July.
<unk> five corporate bonds amounted to walk on it $14 million with like Georgia, Tennessee, and then 8% interest rate.
Moving on to the balance sheet. As you can see on slide 11, we entered the quarter with a net debt of 251 billion pesos and other debt to Aid. The ratio of 1.49 times up, from 0.89 times, at the end of 20134 was still maintaining a comfortable leverage profile.
The new bond was partially subscribe through exchanges with a holder of class two and class three bonds.
It will be primarily used to repay the remaining balance.
As a class two bonds maturity.
Cash flow generation from operating activities totaled $42 billion pesos compared to $84 billion pesos in the third quarter of 2024. This reflected higher working capital requirements and lower operational results.
In December.
In U S dollar terms net debt stood at $206 million.
On the working capital side.
Our ratio of close to one year.
And the end of the quarter dollar nominated debt represents 81% of total debt, while the remaining issue basis.
Now for our final remarks, I will turn the call back to Serge. Thank.
The economic uncertainty is on the quarter and the higher interest rate environment increase working capital needs. This was coupled with higher income tax payments. Since the company did not make a bad payment during 2024
Thank you.
Thank you Marcos now Christina Lake its foundation at least a few slides.
on the other hand inventories decreased during the quarter due to seasonality a screener production is minimized during the winter months while inventory consumption increases.
Life's upkeep.
During the third quarter, the volume recovery trends lost momentum.
I'm, sorry for the length to the electoral process.
Regarding investment activities. The company located 62 billion pesos in a quarter primarily due to the short-term allocation of the process.
Nick already experienced a temporary slowdown, but they believe the underlying would drive up the main impact.
From the class 5 bond issuance, on the other hand, capex decreased by $14.6 billion.
Marcos Gradin: Lower maintenance costs and improved thermal energy inputs prices also supported the quarterly cost structure. Continuing the trend from the previous quarter, thermal energy contracts signed last year, which included year-over-year tariff reduction, together with short-term agreements linked to oil production at tariffs below $1 per billion BTU, helped contain variable costs. On the electrical energy side, lower consumption helped offset higher electricity tariffs as the company continued to face the impact of increased transmission and distribution costs. The contraction in cement was accompanied by a decline across the remaining business segment. Finally, SG&A expenses decreased 11.7%, mainly due to lower freight and sales tax expenses resulting from reduced sales volumes, as well as a lower impact from salaries and professional consulting fees. As a percentage of sales, SG&A stood at 9.1%, remaining flat year-over-year. Please turn to slide eight.
You can pull what medicine electric outcome.
Following the completion of the 25g. Bagging projects.
You could take that issue of the government economic plan.
The stability needed to unlock investment project.
In July.
Beyond oncology.
Enel true many of the economic and political change combined inflates the election, the sub growth can you you optimist, which was.
The class 5 corporate bond amounted to 114 million with a 2 year Turner and an 8% interest rate.
You see it affecting.
Activity levels.
Also like to highlight that during the quarter, we begin to achieve the new 25 kiloton box.
The new Bond was partially subscribed through exchanges with holder of Class 2 and class 3. Bonds proceeds will be primarily used to repay the remaining balance of the Class, 2 bonds maturity in December.
Uh huh.
Our navy investing any fault, the new pack formats he'd come out.
In US dollar terms. Net debt is stood at 206 million with collaboration, close to 1 year.
Really well.
Maybe wanted to see if they bought our customer on final customer.
Congratulations everyone involved in the project.
And the end of the quarter dollar, denominated debt represents 81% of total debt. While the remaining is in pesos,
As you approach then of the very challenging transition.
now, for our final remarks, I will hand the call back to Surge
Thank you.
We remain optimistic about the outlook for more brokers and <unk>.
Continuing to focus on optimizing that for months and being excited to support the country developing and condition normalized. This is end of our prepared remarks, we are now ready to take questions, but please open the call for questions.
Thank you, Marcos. Now, keeping a 90% presentation, I please ask you to turn to slice our key.
Marcos Gradin: Consolidated adjusted EBITDA for the quarter stood at $36 million, while in ARS 43 billion, reflecting a 23.7% year-over-year decline. This decrease was primarily driven by lower EBITDA generation in the cement segment, followed by weaker results in the concrete and railroad segments. In line with this performance, the consolidated EBITDA margin contracted to 20.8%, representing a 315 basis point decline year-over-year, while remaining broadly in line quarter over quarter, despite the typical cost pressure of the third quarter. In the cement segment, the adjusted EBITDA margin contraction was more moderate, reaching 24.2%, down 129 basis points year-over-year, mainly due to a softer pricing environment, which, despite showing an improved sequential trend, still lags on the year-over-year basis. Cost on a per ton basis, excluding depreciations, declined 6.5%, supported by lower thermal energy prices and maintenance costs, which partially offset the weaker top line.
During the third quarter, the volume recovery Trend last momentum, I mean, trans lanking to the electoral process, take recovery experience at temporary slow down but they believe the underlying growth driver of mine. In fact,
Thank you we will now conduct a 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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That has sent electoral outcome under the dictation of the government. Economic plan, could provide the stability needed to unlock investment project that have been on. Hold.
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Anil through many of the economic and political challenges. The mining place the election, the subpro continuing optimist,
which respect to see reflecting in higher activity levels.
Once again star one on your telephone keypad.
I would call like to highlight that during the quarter. We Begin dispatching, the new 25 kilogram bags.
We would also like to ask you to please limit your questions to one question and one follow up please.
If you have additional questions you may re queue for those questions and they will be addressed.
Also please note that Mr. Sergio five men will be responding in Spanish immediately following an English translation.
Hard work and meaningful investment the new pack format. Hit the marker successfully and was very well received by both our customer and final customer. I would like to congratulation everyone involved in the project.
As you approach them of the very challenging transition here.
Please hold momentarily lobbies to assemble our roster.
We remain optimistic about the outlook for more Protestants Argentina.
Marcos Gradin: The concrete segment saw its adjusted EBITDA margin decline by 1,093 basis points, reaching minus 6.8% versus 4.2% in the first quarter of 2024, as cost controls and higher volumes were not sufficient to offset softer pricing dynamics in a highly competitive environment. In the aggregates segment, the adjusted EBITDA margin improved by 36.6 basis points to minus 16.7%, compared to minus 17% in the same quarter of last year. Although volumes continued to improve during the quarter, the persistent market challenges and an unfavorable product mix continued to weigh on the segment's profitability. Regarding the railroad segment, the adjusted EBITDA margin contracted 920 basis points to 3.4% in Q3, from 12.6% a year ago. Transported volumes improved slightly, mainly driven by higher shipments of granite aggregates.
The first question comes from Marcello Eula with Ito.
E <unk> BBA. Please go ahead.
Hi, Hi, everyone can you hear me.
And Loma continue to focus on optimizing performance and being ready to support the country development and condition. Normalize, this is end of our prepare remark. We are now ready to take question operator please open the call for question.
Yes, we can hear you well.
Oh, okay. Okay. Thank you back so thanks for taking my questions.
My questions related to pricing going forward. So we saw you towards Q actually friendships declined by almost 10, almost first time will be.
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So you guys made shifts back to Boston.
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Partially explained by the macro environment due to uncertainty related to a challenge more maintenance and so forth, but also due to competition. So I can understand that.
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Moving forward, our guys seem to be pricing approach for the company how could you see the evolution for prices in dollar terms.
Sure.
And my second question, just a follow up regarding capital allocation. So you guys mentioned.
We would also ask like to ask you to please limit your questions to 1 question and 1 follow-up please. If you have additional questions you may req for those questions and they will be addressed.
Marcos Gradin: However, the ongoing disruption of the railroad line in Bahía Blanca continued to affect longer-haul traffic, primarily grains, gypsum, and frac sand, reducing ton-kilometer transported, and consequently, revenue generation. These impacts were partially offset by cost reductions. Moving to the bottom line on slide 10, net loss attributable to the owner of the company totaled ARS 8.5 billion for the quarter, compared to a net gain of ARS 27.9 billion in the third quarter of last year. This decline was primarily driven by a lower financial result, reflecting a more moderate inflationary effect and a higher impact from FX exposure, combined with weaker operational performance. However, the decrease was partially offset by lower income tax expenses. On the financial front, the main driver of the year-over-year variation was a reduced gain from the net monetary position, as the inflationary effect of monetary liability was significantly lower than in the same period last year.
That leads to healthy financial structure and so on so far so I'd like to understand how does management see the opportunity or the likelihood of keeping distributions for this year.
Also, please note that Mr. Sergio fman will be responding in Spanish immediately following an English translation.
Please hold momentarily while we assemble our roster.
So thank you.
Yeah.
The final pillar one thank you for your question.
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The first question comes from, Marcelo Fula with ITA BBA, please go ahead.
You almost have them do it and it makes sense.
Hi. Hi, everyone. Can you hear me?
Regarding prices did dynamic is senior to the one that we spoke about last quarter.
Yes, we can hear you, yes.
Guys. Good morning, almost wholly dominated.
Call it come off but at the end of mental Paresh you wherever you are I think less young.
We talked about.
You mean, the second Q, we spoke about.
Adjusting prices above inflation. This second half of the year and if it worked out well now go to Q&A if people come to the why do we I mean the impact on <unk>.
Oh okay. Okay, thank you guys. So thanks for taking my questions. Uh, uh my my question is related to um, pricing moving forward. So we solved in the third skill, actually prices um declined by almost $10 per month when you looking to into Dollars specifically. So and you guys mentioned that it was
This quarter, we had a correction in the effects that it obviously impacted the price in dollar terms.
And of course monetize Hitachi on the continued unencumbered ratio, how do you like interferon and Sharepoint and people, who can be a market turmoil and a parochial Macy's.
Marcos Gradin: In addition, the exchange rate difference had a higher impact due to the valuation of the peso during the period. As a result, the company reported a net financial loss of ARS 28.7 billion for the quarter, compared to a gain of ARS 16.6 billion for the same period of 2024. Additionally, net financial expenses increased 7.5%, reaching ARS 17 billion, primarily due to higher interest rates in pesos during the quarter. Moving on to the balance sheet, as you can see on slide 11, we ended the quarter with a net debt of ARS 281 billion and a net debt-to-EBITDA ratio of 1.49x, up from 0.89x at the end of 2024, while still maintaining a comfortable leverage profile. Cash flow generation from operating activities totaled ARS 32 billion, compared to ARS 84 billion in Q3, Q4, Q4. This mainly reflected higher working capital requirements and a lower operational result.
Part of explained by the the macro environment and due to uncertain related to to, to a challenge moment and so on so forth, but also due to competition. So I would like to understand that moving forward, our guys seen the price and approach for the company. How could you see the Evolution for prices in dollar terms moving forward?
And then Pedro Depression, but island, but we expect to see the same tendency going forward Oh, increasing prices.
A lot of inflation.
And with a model with a more stable.
Thank you.
So no real on the effects, probably will we will recover prices seen better times.
Equally I think to a degree than those.
Thank you for your question.
And regarding dividends a lot of that gas contracts Hitachi on micro Argentina message when a mental he does so he can take talking on Seattle, given the situation the macro situation in Argentina with the with the hike in interest rates and the political Oh.
The dynamic is similar to the 1 that we spoke about last quarter.
Uncertainty normal times telecom compounding in the domain.
But at the end of subtle Athene, Danielle we didn't advance in paying dividends, so far and we are not expecting to do so in the remaining I'll tell ya <unk> enrollment take the macro or it can be and if you don't see it also with them in their demand.
As we talked about, um, in the during the second queue. Um, we spoke about
But he didn't understand what you like and with this new macro scenario on them.
Marcos Gradin: On the working capital side, the economic uncertainty during the quarter and the higher interest rate environment increased working capital needs. This was coupled with higher income tax payments since the company did not make advance payment during 2024. Inventories decreased during the quarter due to seasonality, as clinker production is minimized during the winter months, while inventory consumption increases. Regarding investment activities, the company allocated ARS 62 billion in the quarter, primarily due to the short-term allocation of the proceeds from the Class 5 bond issuance. CAPEX decreased by ARS 14.6 billion following the completion of the 25 kilogram bagging projects. During the quarter, the company generated ARS 74 billion from financial activities, mainly from the bond issued in July. The Class 5 corporate bond amounted to $113 million, with a two-year tenor and an 8% interest rate.
What we expect going forward.
We assume theyre thinking about paying dividends.
Yeah.
Yeah.
Okay. Thank you so much guys.
Sure.
The next question is from Andres Cardona with Citigroup. Please go ahead.
Hi, guys good afternoon.
To us.
Italy corridor, where volumes for the fourth Q we saw.
Uh, adjusting prices above inflation. This uh, second half of the Year this quarter. We had a a correction in the in the effects that obviously impacted the the price in dollar terms but we expect to to see the same tendency going forward. Oh um, increasing prices uh above above inflation. And with the models with the more uh stable uh scenario on the effects probably, will we? We will recover prices in the returns.
Nice Greenfield.
I would like to understand what drives that.
They're going to stick to the four months or do you see those dynamics.
Aileen place for new embedded Sim with.
Thank you.
Okay.
Hi, Andreas Thank you for the question.
Well you might hope to the commercial.
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Marcos Gradin: The new bond was partially subscribed through exchanges with holders of Class 2 and Class 3 bonds. Proceeds will be primarily used to repay the remaining balance of the Class 2 bonds maturing in December. In US dollar terms, net debt stood at $206 million, with valuation close to one year. At the end of the quarter, dollar-denominated debt represents 81% of total debt, while the remainder is in pesos. Now, for our final remarks, I will hand the call back to Sergio. Thank you. Thank you, Marcos. Now, to finalize the presentation, I'd please ask you to turn to slide 13. During the third quarter, the volume recovery trend lost momentum and means uncertainty linking to the electoral process. The recovery experienced a temporary slowdown, but they believe the underlying growth driver remained intact.
The volumes for October that were recently published a showed a recovery in the market.
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Our vision is that there were two main drivers there one was debt before the elections. So many people.
And because in dividends given the, the situation, the bankrupt situation in Argentina with a, with the site in in the interest rates and the and the political uh, uncertainty. We didn't advance in in in paying dividends, uh, so far. And we are not expecting to do so in the remaining of the year and with this new, uh, macro scenario. And and from what we expect, uh, going forward, we will uh, we assume the thinking about paying dividends next year.
Okay, thank you so much, guys.
You're welcome.
Hum.
And investing in infrastructure.
It won't be a miracle no mentor people who've gotten deal I, even appreciate those maybe cotton.
The next question is from Andre's Calona with Citi group? Please go ahead.
I cannot see the yellow.
Also with the adjustment in the indie effects with a lower cost in dollar terms. Some other projects are gaining pace it or we ended up alumina here do you need for an OEM. There's so much optimistic wondered what I'm interpreting what method and C&D volumes of October and November so far we are optimistic.
Hi guys. Good afternoon. I would like to ask about
Fairly colored for volumes for the for Q. We saw
Marcos Gradin: Looking forward, the recent electoral outcome and the ratification of the government economic plan could provide the stability needed to unlock investment projects that have been on hold, and, through many of the economic and political challenges remaining in place, the election result drove renewed optimism, which we expect to see reflected in higher activity levels. I would also like to highlight that during the quarter, we began dispatching the new 25 kilogram bags. After hard work and meaningful investment effort, the new bag format hit the market successfully and was very well received by both our customers and final customers. I would like to congratulate everyone involved in the project.
Looking ahead.
A nice print for October. I would like to understand what drive that better than expected performance. And if you see those Dynamics still in place for November December.
Okay.
Thank you.
And people, who can do that work and that the high interest in the contactor market at all.
I really see it show up but I mean, even with just embarrass unit commenced how to use a law, but I cannot but I know somebody got if we continue this scenario of low rates and stable effects.
Hi, Andreas. Thank you for your question.
On a more stable macro.
That should give you more of a dynamic too the investment project and increase the level of activity you said, what do I mean take a much higher we're not in a pizza tradition.
I will now.
All you got to get tangled anytime big if it would've been two antibodies how hard is it going to be honest is as is a public. He wishes use there are some also some public works going on that are going to add more volume and an increase that's delivered up activity as well.
Marcos Gradin: As we approach the end of the very challenging transition year, we remain optimistic about the outlook for more progress in Argentina, and Loma continues to focus on optimizing performance and being ready to support the country's development as conditions normalize. This is the end of our prepared remarks. We are now ready to take questions. Operator, please open the call for questions. Thank you. We will now conduct a question-and-answer session. If you would like to ask a question, please press star, then 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star, then 2 if you would like to remove your line. For participants using speaker equipment, it may be necessary to pick up your handset prior to pressing the keys. Once again, star, 1 on your telephone keypad.
Thank you guys.
Oh, okay.
This concludes our question and answer session.
Like to turn the conference back over to Dr ago, Jay Lown for closing remarks.
Yeah.
Hi, Thank you very much everyone for joining us this morning, it's always a pleasure.
And we are a well here if you have any other concerns some questions regarding the queue and we'll see you again for that for the upcoming quarter. Thank you very much.
Yeah.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Marcos Gradin: We would also like to ask you to please limit your questions to one question and one follow-up, please. If you have additional questions, we may re-queue for those questions, and they will be addressed. Also, please note that Mr. Sergio Faifman will be responding in Spanish immediately following an English translation. Please hold momentarily while we assemble our roster. The first question comes from Marcelo Furlan with Itaú BBA. Please go ahead. Hi, everyone. Can you hear me? Yes, we can hear you. Yes. Okay, okay. Thank you, guys. Thanks for taking the questions. My question is related to pricing going forward. We saw in the third quarter, actually, prices declined by almost $10 per ton when you look into dollars specifically.
Marcos Gradin: You guys mentioned that it was partly explained by the macro environment and due to certain things related to challenge momentum, so on and so forth, but also due to competition. I'd like to understand moving forward, how are you guys seeing the pricing approach for the company? How could you see the evolution for prices in dollar terms moving forward? My second question is just a follow-up regarding capital allocation. You guys mentioned these two healthy financial structures and so on and so forth. I'd like to understand how does the management see the opportunity or the likelihood of dividend distributions for this year or maybe for 2026. Thank you. Hi, Marcelo. Thank you for your question. Con respecto al precio, la dinámica viene similar a lo que veníamos hablando el trimestre anterior.
Marcos Gradin: Regarding prices, the dynamic is similar to the one that we spoke about last quarter. Tal como habíamos hablado en la última call, estábamos previniendo aumentar precios por arriba de la inflación. As we talked about during the second quarter, we spoke about adjusting prices above inflation this second half of the year. En este quarter, hubo una corrección en el tipo de cambio, lo cual, obviamente, impactó en el precio en dólares. This quarter, we had a correction in the FX that obviously impacted the price in dollar terms. Siguiendo con esta situación de continuar aumentando el precio arriba de la inflación y ya con un tipo de cambio más estable que estamos viendo en los próximos meses, estamos previniendo un recupero del precio en dólares para adelante. We expect to see the same tendency going forward, increasing prices above inflation.
Marcos Gradin: With a more stable scenario on the effects, probably we will recover prices in dollar terms. Y con respecto a dividendos, regarding dividends, la verdad es que con la situación macro argentina de los últimos meses, con aumentos de tasas y contexto financiero, given the macro situation in Argentina with the hike in interest rates and the political uncertainty. No hemos avanzado con pago de dividendos estos meses. No estamos previniendo hacerlo hasta fin de año. We didn't advance in paying dividends so far, and we are not expecting to do so in the remaining of the year. Y ya con este nuevo contexto, este macro argentino y financiero, seguramente retomaremos los dividendos el próximo año. With this new macro scenario and from what we expect going forward, we will reassume the thinking about paying dividends next year. Okay, thank you so much, guys. You're welcome.
Marcos Gradin: The next question is from Andres Caldona with Citigroup. Please go ahead. Hi guys. Good afternoon. I would like to ask about early call orders for volumes for the fourth Q. We saw a nice spring for October. I would like to understand what drives that better-than-expected performance, and if you see those dynamics still in place for November, December. Thank you. Hi Andres. Thank you for your question. Los volúmenes de octubre, como ya se han publicado, tuvimos una recuperación en el mercado. The volumes for October that were recently published showed a recovery in the market. Nuestra visión es que se encontraron dos elementos. Uno es, obviamente, una posición antes de las elecciones donde la gente paró algunas inversiones y buscó por ahí resguardo en dólar. Our vision is that there were two main drivers there.
Marcos Gradin: One was that before the elections, many people held on investing in infrastructure. En octubre hemos visto también que con un aumento del tipo de cambio, algunos proyectos debido a la baja en costo en dólares se han acelerado. Also, with the adjustment in the effects with a lower cost in dollar terms, some other projects are gaining pace. Pero viendo los volúmenes de octubre y inicio de noviembre, somos optimistas con el volumen para los próximos meses. Seeing the volumes of October and November so far, we are optimistic looking ahead. Seguramente en la medida que la estabilidad en el tipo de cambio, la baja en la tasa de interés y el contexto macro se estabilice, eso va a permitir muchas inversiones comenzar y eso va a traccionar para nuestro mercado.
Marcos Gradin: If we continue this scenario of low rates, stable effects, and a more stable macro, that should give more dynamic to investment projects and increase the level of activity. Y seguramente, como ya hay algunas noticias, esto se sumará a algunas obras públicas que ya están comenzando y que seguramente van a comenzar a salir también. As is public in recent news, there are also some public works going on that are going to add more volume and increase the level of activity as well. Thank you, guys. You're welcome. This concludes our question-and-answer session. I would like to turn the conference back over to Diego Jalon for closing remarks. Hi, thank you very much, everyone, for joining us this morning. It's always a pleasure, and we are here if you have any other concerns or questions regarding the queue.
Marcos Gradin: We'll see you again in the upcoming quarter. Thank you very much. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.