LOMA Q1 2026 Earnings Call

Operator (AI Assigned): Good morning, and welcome to the Loma Negra Q1 2026 conference call and webcast. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. Mr. Sergio Faifman will also be responding in Spanish immediately following the English translation. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Mr. Diego Jalón, head of investor relationsPlease. , Diego, go ahead.

Diego Jalón (Head of Investor Relations): 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. 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.

Diego Jalón (Head of Investor Relations): 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.

Sergio Faifman (CEO and Vice-President of Board): Thank you, Diego. 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 results. Following that, I will share some final remarks before opening the call to your questions. Starting with slide 2. We began the year with renewed expectation, although industry volume was relatively subdued at the start of the year, reflecting a slower exit from the summer season. March showed a more encouraging level of activity, allowing the quarter to close on a positive note, with cement volume growing 1.8% and consolidated net revenue up 1.1% year-over-year. In term of quarterly performance, with delivery improvement in margin and EBITDA generation per ton, both sequentially and year-over-year.

Sergio Faifman (CEO and Vice-President of Board): Consolidating adjusted EBITDA margin reached 24.9%, expanding 94 basis points year over year and 528 basis points sequentially. EBITDA generation per ton stood at $37.6, up 5% year over year. As previously indicated, the actions we have been implementing are beginning to be reflected in our results, positioning us well as we await a more sustainable recovery in demand. During the quarter, we successfully issued our Class 6 corporate bond for a total of $60 million, further strengthening our balance sheet and extending our debt maturity profile. As of quarter end, net debt stood at $186 million, representing a net debt to adjusted EBITDA ratio of 1.3x. I will now hand off the call to Marcos Gradin, who will go through our market review and financial results. Please, Marcos, go ahead.

Marcos Gradin (CFO): Thank you, Sergio. Good morning, everyone. Please turn to slide 4. The most recent economic data paints a mid picture at the start of 2026. The EMAE, Argentina's monthly economic activity indicator, registered a 2.1% year-over-year decline in February, with industry and commerce posting the sharper contraction, down 8.7% and 7% respectively. This interrupted a 2-month streak of positive readings recorded in December and January. Growth continues to be driven by sectors linked to the external front: mining, agriculture, and financial intermediation, while domestic demand-driven sectors remain under pressure. Construction has shown greater resilience. The ESIC posted 0.7% year-over-year decline in February. On a cumulative basis, the first 2 months of 2026 show a slight increase of 0.3% versus the same period last year.

Marcos Gradin (CFO): Leading indicator points in the same direction. Registered private sector employment in construction grew 3.6% year-over-year in January, and building permits authorized in the same month expanded by 3.1%. The sector is not yet accelerating, but it is holding its ground. Within this context, the cement industry dispatches follow a similar pattern throughout the Q1. January and February were soft, weighed down by a later-than-usual exit from the summer season and still cautious activity levels. March, however, has significantly stronger, increasing by 11% year-over-year and allowing the Q1 to close broadly in line with the prior year. In terms of product mix, bulk segment outperformed, supported by larger scale projects, while bag segment, which represents 56% of the industry mix, remained relatively weak, consistent with more cautious behavior in the retail and small contractor segment.

Marcos Gradin (CFO): Looking ahead to the near term, April dispatches figures are expected to reflect the impact of an unusually rainy month. Persistence and intense rainfalls across much of the month disrupted construction activity in the country's main urban centers. We view this as a transitory weather-related effect and do not see it as indicative at any change in underlying demand trends. Turning to slide 5 for overview of our top-line performance by segment. Q1 revenues increased by 1.1% year over year, reversing the trend of previous quarters. The performance was mainly driven by stronger top-line results in the cement business, followed by the bulk segment, partially offset by lower revenues in the concrete and aggregate segments. In the cement, masonry cement and lime segments, revenues increased by 0.8% year over year.

Marcos Gradin (CFO): Volumes growth was partially offset by pricing, although its performance remained broadly in line with inflation. Volumes grew by 1.8% year-over-year, with bulk segment maintaining a strong performance, supported by higher activity from concrete producer, larger scale projects, and public works. Conversely, bag cements volumes remained under pressure, reflecting softer retail demand and more cautious behavior among small contractors. However, March show a more favorable dynamic in bag cement dispatches, helping to narrow the year-over-year gap for the quarter. Concrete revenues decreased by 1.9% year-over-year, despite a 14% increase in volumes. Volume growth was primarily supported by private developments related to logistic infrastructure and larger scale residential projects, while sustained public works activity in the province of Santa Fe supported dispatches in Rosario.

Marcos Gradin (CFO): On the other hand, pricing remained under pressure amid a highly competitive environment. Aggregate revenues remained broadly stable, declining by 0.2% year over year. Sales volumes fell by 18.3%, driven by lower demand from concrete producers and construction companies. However, this negative volume impact was offset by improved pricing and a favorable sales mix. A reduced demand from road construction projects lowered the share of fine aggregates, which carry a lower average price. Railroad revenues increased by 2.2% in the quarter as higher transported volumes, up 14.8%, were partially offset by softer pricing conditions. Volume performance was mainly supported by increased transportation of granitic aggregates, cement, and chemicals.

Marcos Gradin (CFO): Moving on to slide 7, consolidated gross profit remained broadly in line, declining slightly by 0.3%, where gross margin contracted by 37 basis points year over year to 26.1%. However, margins show a sequential recovery of 256 basis points compared to the previous quarter. Cost of sales increased by 1.6% year over year, mainly reflecting higher cost in the Cement segment, partially offset by lower cost of sales in the concrete and aggregate businesses. Additionally, there was a greater impact from depreciation following the completion of the 25 kg bagging project. In the Cement segment, cost of sales increased by 3.8% year over year and by 2% on a per ton basis. Higher depreciation impact the segment following the completion of the 25 kg bagging project.

Marcos Gradin (CFO): Additionally, packing related to the implementation of the 25 kilos bag and maintenance put upward pressure on the cost base. On the other hand, energy inputs, freights, and salaries contributed to cost containment efforts. The other segments contributed positively to the consolidated results, posting gross margin expansion. Finally, SG&A expenses decreased by 3.9%. This decrease was mainly driven by lower salary and freight expenses, partially offset by higher IT and marketing expenses. As a percentage of sales, SG&A stood at 11.1%, decreasing by 58 basis points compared to Q1 2025. Please turn to slide eight. Consolidated adjusted EBITDA for the quarter stood at $45 million, while in ARS it reached 54.6 billion, reflecting a 5.1% year-over-year improvement. This increase was driven by improved results across all segments.

Marcos Gradin (CFO): As a result, the consolidated EBITDA margin expanded to 24.9%, representing a 94 basis point increase year over year. On a sequential basis, it improved significantly, rising 528 basis points quarter over quarter. In the cement segment, adjusted EBITDA margin stood at 28.8%, remaining broadly in line with the Q1 2025. Higher cost of sales and softer pricing were offset by a lower impact from SG&A expenses. The concrete segment adjusted EBITDA margin expanded by 424 basis points, but remained negative at -1.2%, compared to -5.5% in the Q1 2025. The recovery in sales volumes, coupled with improved cost of sales, helped reduce the loss, although it continued to be affected by softer pricing dynamics in a highly competitive environment.

Marcos Gradin (CFO): Similarly, the aggregate segment improved its margin by 643 basis points, although it remained in negative territory, reaching -18.3% in the quarter from -24.7% in the same period last year. The contraction in volumes and cost pressures were partially offset by improved pricing, mainly driven by a favorable product mix. In the railroad segment, adjusted EBITDA margin improved by 160 basis points year over year, reaching -3.9% in Q1, compared to -5.5% in the same period as 2025. Transported volumes increased, contributing to the dilution of fixed cost, although it was partially offset by a higher impact from SG&A and lower gains in the other gain and losses. Pricing continues to weigh on the segment's results amid a still challenging environment.

Marcos Gradin (CFO): Moving on to the bottom line on slide 10, net profit attributable to the owners of the company totaled ARS 41 billion for Q1, compared to ARS 28.5 billion in Q1 2025. The improvement was mainly driven by higher financial gains, coupled with improved operating performance. However, this increase was partially offset by higher income tax expenses. On the financial side, the company reported a net financial gain of ARS 32.4 billion for Q1, compared to a net financial gain of ARS 11.8 billion in the same period of last year. The year-over-year improvement was mainly attributable to foreign exchange gains resulting from the appreciation of the peso, approximately 5% during Q1 on our US dollar-denominated liabilities.

Marcos Gradin (CFO): Net financial expenses increased by 819% to ARS 12.5 billion, primarily driven by lower finance income and higher financial expenses. Moving on to the balance sheet, as you can see on slide 11, we ended the quarter with net debt of ARS 259 billion and a net debt to EBITDA of 1.3x, down from 1.47 at the end of 2025. Cash flow from operating activities totaled ARS 19.7 billion in the quarter, compared to a cash flow of ARS 1.8 billion in Q1 2025. The year-over-year improvement was mainly driven by lower working capital requirements and improved operating results. We saw improvements in account payables and other receivables, while inventory grew at a lower pace than last year, supporting cash generation.

Marcos Gradin (CFO): This came despite the quarter being one of the most working capital-intensive of the year, as we concentrate clinker production during the summer to avoid higher energy costs in the winter. On the other hand, tax liability, advance from customers, and trade receivables partially offset this positive effect. Regarding investment activities, the company used ARS 12 billion, with CapEx totaling ARS 11 billion, down following the completion of the 25 kilogram bagging project. On the financial side, the company generated ARS 16 billion during the quarter related to the issuance of the Class 6 bond and the subsequent repayments of borrowing. In January 2026, the company completed the issuance of a $60 million Class 6 corporate bond with a 36 month tenor.

Marcos Gradin (CFO): This transaction was well received by the market, attracting strong investor demand, allowing the company to secure a 6.5% interest rate. With this issuance, the company has fully covered its US dollar maturities for the year and extended the duration of its debts, maintaining a comfortable maturity profile. In US dollars, net debt stood at $186 million, with an average duration of 1.4 years. As of the quarter, 85% of the total debt was denominated in US dollars, while the remaining in pesos. For our final remark, I will hand the call back to Sergio. Thank you.

Sergio Faifman (CEO and Vice-President of Board): Thank you, Marcos. To finalize the presentation, I please ask you to turn to slide 13. After a slow start to the year for the industry, March showed improved dynamics, allowing us to maintain our expectation for the year, subject to the evolution of the economy. The decline and stabilization in interest rates, along with easing of monetary tightness, should have a positive impact in the coming quarter, with grades expected to regain positive momentum. In this context, we remain confident in sustaining the positive trend in margin recovery that began to materialize this quarter. The expansion in adjusted EBITDA margin reflects the tangible results of our ongoing focus on cost discipline, operational efficiency, and our leadership position in the industry. We expect these efforts to continue supporting performance as the year progresses. Looking ahead, we maintain a cautiously optimistic outlook. Key growth drivers remain in place.

Sergio Faifman (CEO and Vice-President of Board): Infrastructure investment linked to recent project, the housing deficit, road concession, and the broader construction cycle continue to support medium-term demand. While the pace of recovery has been somewhat slower than initially anticipated, we see conditions for a gradual and sustained improvement taking shape. We are well-positioned to capture the opportunity this recovery will bring. Our operational platform, financial discipline, and the steps taken to improve our capacity and efficiency levels are well prepared to respond as volumes consolidate in the coming quarter. Finally, the completion of the restructuring process of our indirect controlling shareholder marks the beginning of a new chapter for Loma. I would like to welcome the new shareholder of InterCement and the new member of our board of directors. We expect this new phase to further strengthen our leadership position and reinforce our commitment to the sustainable development of the country.

Sergio Faifman (CEO and Vice-President of Board): This is end of our prepared remark. We are now ready to take question. Operator, please open the call for question.

Operator (AI Assigned): Thank you. We will now conduct a question-and-answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line in the question queue. You may press star 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 to ask a question. We would like to ask that you please limit your questions to one question and one follow-up. If you have additional questions, you may re-queue for those questions, and they will be addressed. Please note that Mr. Sergio Faifman will be responding in Spanish immediately following an English translation. Please hold momentarily while we assemble our roster.

Operator (AI Assigned): The first question will come from [Sofia Berto] with Latin Securities. Please go ahead.

Sofia Vatta (Analyst): Hi, Loma Negra team. Thank you for taking my question. Regarding the cement dispatches, given that April is likely to come in weak, what are the trends you are seeing in May, and how do you expect volumes for the rest of 2026? Thank you.

Diego Jalón (Head of Investor Relations): Hi, Sophia. Thank you for your question. Efectivamente los números de abril van a ser un poco inferiores a lo que veníamos viendo en marzo. As you mentioned, the volumes for April are going to be coming lower than what we have been seeing before. Claramente, esto tiene que ver con algunos impactos de lluvia que tuvimos durante el mes. Clearly this has to be due to the impact of weather. Seguimos siendo confiante con los volúmenes para mayo y para el resto del año. We are still optimistic for the volumes for May and the remains of the year. Creemos que muchos de los proyectos que están anunciados y que están por comenzar en minería, rutas y demás deberían traccionar volumen.

Diego Jalón (Head of Investor Relations): We believe that many of the projects that have been announced should start boosting volumes ahead. Seguimos pensando en un crecimiento para el año de un dígito alto. We are still thinking of growth for the year of one high single digit.

Sofia Vatta (Analyst): Perfect. Thank you.

Operator (AI Assigned): The next question will come from Andres Cardona with Citi. Please go ahead.

Andres Cardona (Analyst): Hi. Good morning, everyone. Thanks for the opportunity. With the change in the shareholders base of InterCement and a healthier balance sheet nowadays, how do you see Loma Negra's business plan changing because of this new outlook for both, right? InterCement, but in particular concerned about how your strategy could change going forward.

Diego Jalón (Head of Investor Relations): Hi, Andres. Thank you for your question. Loma Negra siempre tuvo un plan de negocio pensando en Loma Negra, no en InterCement. Loma always have had a business plan, thinking about Loma and not InterCement. Lógicamente, este cambio en los accionistas controlantes nos hace sí pensar en que el nuevo directorio y nuevos accionistas nos puedan aportar una visión más de largo plazo. Logically, this change in our indirect controlling shareholder brings us some opportunities of thinking on longer terms. Eso nos trae a más desafíos y oportunidades de crecimiento para los próximos años. This probably can bring us more opportunities to keep on growing in the coming years. Lógicamente, pensando en accionistas que no tienen problemas de patrimonio ni de deuda para adelante.

Diego Jalón (Head of Investor Relations): Logically thinking about controlling shareholders that have a more healthy financial situation.

Operator (AI Assigned): The next question will come from Daniel Rohan with Bank of America. Please go ahead.

Daniel Rojas (Analyst): Good morning. Thank you for taking the question. I wanted to take a step back and try to look at your commercial strategy now in a context of a lower inflation environment. You're probably having to shift your paradigm as you try to look at other competitors and how they look or think about pricing and how you look at pricing yourself. I was just curious as to this change, can you give us any color on how you're thinking about pushing price increases through your portfolio, aggregates, cement, or concrete? How should we as analysts start thinking about the cement industry in Argentina as you normalize and your commercial strategy starts to look more like other countries? Thank you.

Diego Jalón (Head of Investor Relations): Hi, Daniel. Thank you for your question. Sí, en este escenario seguimos con la misma estrategia comercial de Loma. In this scenario, we continue our commercial strategy. Donde intentamos maximizar precio y rentabilidad. Where we try to maximize price and profitability. Lógicamente, en un escenario con menor inflación, con mucho más foco de lo que veníamos en costos. Logically, with this new context, we keep a close eye on costs. Ese control de costos y mejora de precios, seguir mejorando rentabilidad a futuro. With this cost management and price increases keep on improving profitability ahead. Tenemos confianza en los precios de este último cuarto y rentabilidad para mantener y continuar mejorando esa rentabilidad en lo que queda de año. We are confident to keep the pricing power and profitability shown in this Q1 for the upcoming quarters.

Daniel Rojas (Analyst): Okay, thank you. When you think about this new strategy, are you pushing for prices on a quarterly basis, or should we continue to expect a monthly adjustment? I'm just trying to get a better sense of how you're gonna be able to adapt to the new inflation environment.

Diego Jalón (Head of Investor Relations): Sí, que claramente veníamos de escenarios de aumentos de precios mensuales. We come from scenarios where we were, you know, increasing prices on a monthly basis. Hoy depende la inflación y el impacto en nuestros costos, esos aumentos pueden ser mensuales o trimestrales. Now, depending on the impact of inflation in our costs. Those adjustments could be monthly on a 2-month basis or on a 3-month basis. No estamos viendo un cambio en la estrategia comercial de la compañía ni del mercado. We are not foreseeing a change in our commercial strategy or in the market.

Daniel Rojas (Analyst): Okay. One last one, sorry. Are you seeing pressure from energy prices like diesel or gasoline, which your peers or another logistic or transportation sectors are seeing because of what's happening in the Middle East?

Diego Jalón (Head of Investor Relations): Sí, nosotros hemos tenido impacto básicamente en el tema de combustibles para fletes. We saw some impact regarding gasoline or diesel in regards of freights. Desde el comienzo de la guerra para acá los combustibles han aumentado más de 20%. Since the beginning of the war, the gasoline has increased around 20%. Lo cual impacta en los fletes y obviamente en los fletes que tiene la materia prima que compramos. This has an impact on freights and the raw materials that also has an impact due to freights. Es importante recordar que Loma Negra utiliza para su producción gas natural.

Diego Jalón (Head of Investor Relations): It's important to have in mind that we use for our production natural gas. Tanto los contratos que teníamos como los nuevos contratos no han sufrido incrementos, sino al contrario, hemos tenido algunas reducciones en los costos de gas para los próximos meses y años. The contracts that we used and the ones that we are going to start using in our on our next production cycle, they didn't suffer any increases. Furthermore, we have signed contracts with lower terms.

Daniel Rojas (Analyst): Okay. Thank you. That's very clear.

Diego Jalón (Head of Investor Relations): You're welcome.

Operator (AI Assigned): The next question is a follow-up from [Andres Cardones] with Citi. Please go ahead.

Andres Cardona (Analyst): Hi, guys. Thanks. I just wanted to try to get some color about how margins could look like into Q2. It was a very positive surprise to see the performance during Q1. Just wanted to understand if this number remain relatively flat, maybe improve further, or we should see a deterioration because of the higher fuel prices or anything. Just, directionally speaking, how do you see margin Q2?

Diego Jalón (Head of Investor Relations): Hi again, Andres. Thank you for your question. La verdad para nosotros no fue una sorpresa los márgenes. The truth is for us, margins were not a surprise. Nosotros continuamos trabajando, digamos, en una presión y contención fuerte de los costos. We have been working on cost management very strongly. Una estrategia consistente en lo que tiene que ver con precio y con mercado. A consistent strategy regarding pricing and market. Quizás por diferentes situaciones, el año pasado tuvimos una caída importante en los márgenes. Due to different situations, last year we had a drop in margins. Lo cual estamos revirtiendo. We are reverting that situation. Lo que esperamos para los próximos meses es mantener estos niveles de márgenes o conseguir aún mejorarlos un poco más. For the upcoming months, we are expecting to maintain this level of margins or even improve them.

Operator (AI Assigned): This will conclude our question and answer session. I would like to turn the conference back over to Mr. Diego Jalón for any closing remarks. Please go ahead.

Diego Jalón (Head of Investor Relations): Thanks again for joining us today. We appreciate your continued interest and look forward to reconnecting with you in our next call. Thanks again and have a nice day.

Operator (AI Assigned): The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.