Loma Negra Compania Industrial Argentina Sociedad Anonima (LOMA) Q1 2026 Earnings Call Transcript

Good morning, and welcome to the Loma Negra First Quarter 2026 Conference Call and Webcast. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Mr. Sergio Fifeman 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. And 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 Jalen, Head of Investor Relations. Please, Diego, go ahead.

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 Feifman, our CEO and Vice President of the Board of Directors, and our CFO, Marco 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 earnest 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. The full reconciliation of the corresponding financial measures is included in the earnest press release. Now I would like to turn the call over to Sergio.

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. Then, Marcos will take you to our market review and financial results. Following that, I will share some final remarks before opening the call to your question. Starting with slide two. We began the year with renewed expectations, and through 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 consolidating net revenue up 1.1% year over year. In terms of quarterly performance, we deliver improvement in margin and FBDA generation per ton, both sequentially and year-over-year. Consolidating assessment FBDA margin reached 24.9%, expanding 94 basic points year-over-year and 528 basis points sequentially. EBDA generation per ton stood at 37.6 dollars, up 5% year over year. As previously indicated the action, we have been implementing a beginning to the reflecting in our results, positioned as well as a weight and more sustainable recovery in demand. During the quarter, we successfully issued our Class 6 corporate bond for a total of $16 million, future establishing our balance sheet and extending our debt maturity profile. As of quarter end, net debt stood at $186 million, representing a net debt to health me the assessment every day ratio of 1.3 times. I will now hand off the call to Marcos Radin, who well grew through our market review and financial result. Please Marcos, go ahead.

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 construction, down 8.7% and 7% respectively. This interrupted a two-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, but on a cumulative basis the first two months of 2026, show a slight increase of 0.3% versus the same period of last year. 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 quarter. January and February were soft, weighed down by a latent and 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 quarter to close broadly in line with the prior year. In terms of product mix, bulk segment outperformed, supported by larger-scale projects, while bulk segment, which represents 56% of the industry mix, remained relatively weak, consistent with more cautious behavior in the retail and small-contractor segment. Looking ahead to the near term, April dispatches' figures are expected to reflect the impact of an unusually rainy month, persistent 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 of any change in underlying demand trends. Turning to slide 5 for a review of our top-line performance by segment. First quarter 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 record segment partially upset by lower revenues in the concrete and aggregate its segments. In the cement, measuring cement and lime segments, revenues increased by 0.8% year-over-year. Volumes' growth was partially upset by pricing, although its performance remained broadly in line with inflation. Volumes grew by 1.8% year-over-year, with all segments maintaining a strong performance, supported by higher activity from concrete per user, larger-scale projects, and public works. Conversely, back-sement's volumes remain under pressure, reflecting softer retail demand and more cautious behavior among small contractors. However, March shows a more favorable dynamic in back-sement dispatches, helping to narrow the year-over-year gap for the quarter. Concrete revenues decreased by 1.9% year-over-year. Despite a 14% in recent 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. 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. Regular revenues increased by 2.2% in the quarter, as Kiger transported volumes up 14.8% were partially upset by softer pricing conditions. Volume performance was mainly supported by increased transportation of granitic aggregates, cement, and chemicals. Moving on to slide 7, consolidated gross profit remained broadly in line, declining slightly by 0.3%, where a 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, merely reflecting higher cost in the seventh segment, partially upset by lower cost of sales in the concrete and aggregate businesses. Additionally, there was a greater impact for depreciation following the completion of the 25 kg bagging project. In a cement segment, cost of sales increased by 3.8% year-over-year and by 2% on a per-tone basis. Higher depreciation impacted the segment following the completion of the 25 kg bagging project. Additionally, packing related to the implementation of the 25 kg bag and maintenance put outward 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 fresh expenses, partially offset by higher IT and marketing expenses. As a potential of sales, SG&A stood at 11.1%, decreasing by 58 basis points compared to first quarter of 2025. Please turn to slide 8. Consolidated adjusted EBTA for the quarter stood at $45 million, while in pesos it reached $54.6 billion, reflecting a 5.1% year-over-year improvement. This increase was driven by improved results across all segments. 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 segment segment, adjusted EBITDA margin stood at 28.8%, remaining broadly in line with the first quarter of 2025. Higher cost of sales and softer pricing were observed by a lower impact from SG&A expenses. The concrete segment adjusted BTA margin expanded by 424 basis points, but remained negative at minus 1.2%, compared to minus 5.5% in the first quarter of 2025. The recovery in sales volumes, coupled with improved cost of sales, have helped reduce the loss, although it continued to be affected by softer price and dynamics in a highly competitive environment. Similarly, the aggregate segment improved its margin by 643 basis points, although it remained in negative territory, reaching minus 18.3% in a quarter from minus 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. Finally, in the railroad segment, the chatted EBITDA margin improved by 160 basis points year-over-year, reaching minus 3.9% in the first quarter, compared to minus 5.5% in the same period as 2025. Transported volumes increased, contributing to the dilution of fixed costs, although this was partially upset by a higher impact from SG&A and lower gains in the other gain and losses. Additionally, pricing continues to wait on the segment's results amid a still challenging environment. Moving on to the bottom line of slide 10. Net profit attributable to the owners of the company totaled 41 billion pesos for the quarter, compared to 28.5 billion pesos in the first quarter of 2025. The improvement was mainly driven by higher financial gains, coupled with improved operating performance. However, this increase was partially upset by higher income tax expenses. On the financial side, the company reported a net financial gain of 32.4 billion pesos for the quarter, compared to a net financial gain of 11.8 billion pesos 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% in the quarter on our US dollar-denominated liabilities. Additionally, net financial expenses increased by 19% to P12.5 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 259 billion pesos and a net debt to a BTA of 1.3 times, down from 1.47 at the end of 2025. Cash flow for operating activities totaled 19.7 billion pesos in the quarter, compared to a cash flow of 1.8 billion pesos in first quarter of 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. This came despite the quarter being one of the most working capital intensive of the year, as we concentrated clean care production during the summer to avoid higher energy costs in the winter. On the other hand, tax liability advance from customers and receivables partially upset this positive effect. Regarding investing activities, the company used 12 billion pesos with capex totaling 11 billion pesos down following the completion of a 25 kilogram bagging project. On the financial side, the company generated 16 billion pesos during the quarter when it 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 $16 million Class 6 corporate bond with a 36-month tenor. 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 maturity 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 a year. As of the quarter, 85% of the total debt was denominated in US dollars while the remaining in pesos. Now for our final remark, I will hand the call back to Sergio. Thank you.

Thank you, Marcos. Now to finalize the presentation, I please ask you to time to slide 13. After a slow start to the year for the industry, March showed improved dynamic, 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 dignites should have a positive impact in the coming quarter, with great expected to regain positive momentum. In this context, we remain confident in sometimes the positive trend in Martian recovery that began to materialized this quarter the expansion in assessment every day margin reflects the tangible results of our ongoing focus on cost discipline operational efficiency and our leadership position in the history we expected these efforts to continue supporting performance as the year progresses looking ahead we maintain a casually optrismic outlook key growth driver remain in place In fractured investments linked to rigid projects, 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 sustainable improvement taking shape. We are well positioned to capture the opportunity this recovery will bring. Our operational platform, financial discipline, and the stick taken to earn our capacity and efficient level as well prepared to respond as volume consolidating in the coming quarter. Finally, the completion of the restructing process of our indirect controlling shareholder marks the beginning of the new chapter for LOMA. I would like to welcome the new shareholder of InterCement and the new member of our Board of Directors. To expect these new phase to future strength, our leadership position and reinforce our commitment to the sustainability development of the country. This is the end of our prepared remark. 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 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 to ask a question. We also 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. Also, please note that Mr. Sergio Feifman will be responding in Spanish immediately following an English translation. Please hold momentarily while we assemble our roster. And the first question will come from Sofia Berta with Latin Securities. Please go ahead.

Hi, Lomanera, Tim. Thank you for taking my question. Regarding the cement dispatches and given that April is likely to come in week, what are the trends you are seeing in May and how do you expect volumes for the rest of 2026? Thank you.

Hi, Sophia. Thank you for the question. Efectivamente, los números de abril van a ser un poco inferiores as you mentioned the volume 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. And clearly this has to be due to the impact of weather. Seguimos siendo confiantes con los volúmenes para mayo y para el resto del año. But 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. We believe that many of the projects that have been announced should start boosting volumes ahead. Y seguimos pensando en un crecimiento para el año de un dígito alto. and we are still thinking of growth for the year of one high single digit.

Perfect. Thank you.

The next question will come from Andres Cadones with Citi. Please go ahead.

Good morning, everyone. Thanks for the opportunity. With the change in the shareholder space 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?

Hi, Andres. Thank you for your question. Loma Negra siempre tuvo un plan de negocio pensando en Loma Negra, no Intercement. LOMA has always had a business plan thinking about LOMA and not InterSament. Lógicamente, este cambio en los accionistas controlantes nos hace sí pensar en que el nuevo director y los accionistas nos puedan aportar una visión más de largo plazo. Logically, this change in our indirect control insureholder brings us some opportunities of thinking on longer terms, and this probably can bring us more opportunities to keep on growing in the coming years.

The next question will come from Daniel Rohan with Bank of America. Please go ahead.

Thank you for taking my question. I wanted to take a step back and try to look at your commercial strategy now in a context of a lower inflationary 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. So 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, concrete, and how should we as analysts should start thinking about the cement industry in Argentina as you normalize and your commercial strategy starts to look more like like other countries thank you hi vaniel thank you for the question in this scenario we continue our 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. Y ese control de costos y mejoras de precios seguir mejorando rentabilidad a futuro. And 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 el año. We are confident to keep the pricing power and profitability shown in this first quarter for the upcoming quarters.

Thank you. If you might have a follow-up, 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 are going to be able to adapt to the new type of inflationary environment.

We come from scenarios where we are increasing prices on a monthly basis. Now, depending on the impact of inflation in our costs, those adjustments could be monthly, on a two-month basis or on a three-month basis. Pero no estamos viendo un cambio en la estrategia comercial de la compañía ni del mercado. We are not seeing a change in our commercial strategy or in the market. Okay.

And one last one, sorry. Are you seeing pressure from energy prices like diesel or gasoline, which your peers and other logistic or transportation sectors are seeing because of what's happening in the Middle East?

Sí, nosotros hemos tenido impacto básicamente en el tema de combustibles para fletes. We saw some impact regarding gasoline or diesel in regards of freight. Desde el comienzo de la guerra para acá, los combustibles han aumentado más del 20%. Since the beginning of the war, the gasoline has increased around 20%. And this has an impact on freight and the raw materials that also have an impact due to freight. It is important to have in mind that we use for our production natural gas. and the contracts that we used and the ones that we are going to start using on our next production cycle didn't suffer any increases furthermore we have signed contracts with lower terms.

Thank you. That's very curious.

The next question is a follow-up from Andres Condonis with Citi. Please go ahead.

I just wanted to try to get some color about how margins could look like into the second queue. It was a very positive surprise to see the performance during the first quarter. So I just wanted to understand if this number remained relatively flat, maybe improved more there, or we should see a deterioration because of the higher prices or anything. Just directionally speaking, how do you see margin second queue?

Hi, again, Andres. Thank you for the question. La verdad para nosotros no fue una sorpresa los márgenes. The truth is for us, margins were not a surprise. Nosotros continuamos trabajando en una presión y contención fuerte de los costos y una estrategia consistente en lo que tiene que ver con precio y con mercado. Quizás por diferentes situaciones, el año pasado tuvimos una caída importante en los márgenes. which we are reviving, and we are reverting that situation. And what we expect for the next months is to maintain these levels of margins or to get to improve them a little bit more. And for the upcoming months, we are expecting to maintain this level of margins or even improve them.

And this will conclude our question and answer session. I would like to turn the conference back over to Mr. Diego Jalen for any closing remarks. Please go ahead.

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.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.