• Revenue: MXN180.7 billion, a 21.2% decrease in the quarter.
• EBITDA: $55 million or MXN43 billion, down 18.5% year-over-year.
• EBITDA Margin: 24%, an improvement of 78 basis points year-over-year.
• Net Debt: $177 million, with a net debt to EBITDA ratio of 1.03 times.
• Net Profit: MXN20.9 billion, compared to MXN22.9 billion in the third quarter of 2023.
• Cash Flow from Operations: MXN64 billion, up from MXN45 billion in the same period of 2023.
• Capital Expenditure: MXN17.4 billion, with 40% invested in the 25 kg project.
• Concrete Revenue: Decreased by 29.7% in the quarter.
• Aggregate Segment Revenue: Declined by 42.7% with sales volume down by 29%.
• Railroad Revenue: Modest decline of 4.7% in the quarter.

• Warning! GuruFocus has detected 9 Warning Signs with LOMA.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Loma Negra Cia Industria Argentina SA (NYSE:LOMA) reported a strong sequential improvement in industry volume, increasing by 25% compared to previous quarters.
• The company's EBITDA margin improved by 78 basis points year-over-year, reaching 24%, despite challenging market conditions.
• Net debt was reduced to $177 million, with a net debt to EBITDA ratio of 1.03 times, indicating a strengthened balance sheet.
• The company successfully managed energy costs by utilizing clinker production during warmer seasons, contributing to lower energy expenses.
• Loma Negra Cia Industria Argentina SA (NYSE:LOMA) increased the share of renewable energy in its energy matrix to 66%, up from 39% in the previous year, further reducing energy costs.

Negative Points

• Top line revenue decreased by 21.2% due to lower cement dispatches, impacting overall financial performance.
• Concrete revenues fell by 29.7% in the quarter, primarily due to a 22% drop in dispatches, reflecting struggles in gaining traction for central projects.
• The aggregates segment experienced a significant decline, with sales volume down by 29%, indicating a challenging competitive landscape.
• SG&A expenses increased as a percentage of sales, rising to 9.2% due to the decline in revenues.
• The company's adjusted EBITDA in pesos decreased by 18.5%, reflecting the impact of lower volumes and challenging economic conditions.

Q & A Highlights

Q: With inflation slowing, how do you see pricing dynamics moving forward, and what effect could it have on volumes and revenues? Also, what catalysts are necessary for larger construction projects to begin and for demand in the bulk cement segment to pick up? A: (Sergio Damian Faifman, CEO) We continue to adjust prices monthly despite lower inflation. If inflation stabilizes at 1-2% monthly, we might consider quarterly adjustments. Bulk cement demand is tied to larger projects and public works, which are expected to pick up with economic stability and new public-private partnership schemes.

Q: Given your current financial position, could there be an improvement in dividends in the near future? A: (Sergio Damian Faifman, CEO) We have no plans for dividends this year. We are evaluating capital allocation alternatives for the benefit of our shareholders, considering our strong financial position.

Q: Does the current debt situation impose any covenants on Loma Negra if there is a change in control? Would a control shift trigger a tender offer for shares? A: (Sergio Damian Faifman, CEO) There are no covenants related to a change of control that would impact the company. Any tender offer would follow NYSE and CNV regulations if such an operation occurs.

Q: Can you provide more details on the 25 kg bag project and its strategic importance? Also, could you elaborate on the recovery of cement volumes? A: (Sergio Damian Faifman, CEO) The 25 kg bag project aims to optimize pricing strategies. Cement volumes have shown a 30% increase since July, indicating a strong recovery trend that could lead to double-digit growth next year.

Q: What are your observations on the potential recovery of the mortgage market in Argentina, and how might it impact construction activity? A: (Sergio Damian Faifman, CEO) There has been a recovery in real estate sales, which could boost future construction projects. Continued growth in this area is expected to positively impact future sales and construction activity.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.