Loma Negra pania Industrial Argentina Sociedad Anonima(LOMA) - 2024 Q4 - Annual Report

Performance Overview The company navigated a challenging year, achieving significant EBITDA margin expansion and net profit turnaround while improving leverage CEO Commentary CEO Sergio Faifman highlighted resilience and market leadership in a challenging 2024, noting significant 4Q24 EBITDA margin expansion and anticipating gradual recovery - The company navigated a challenging 2024 characterized by a downturn in the construction industry, reaffirming its resilience, adaptability, and leadership in Argentina's cement market[5] - In 4Q24, the company achieved a significant EBITDA margin expansion of over 600 basis points, driven by a focus on improving efficiency amidst declining volumes[6] - Management views 2024 as a transition year, with the most difficult period concluded and an expectation of gradual recovery strengthening alongside the overall economy[7] Key Highlights FY24 saw revenue and EBITDA declines but margin expansion and net profit turnaround, with 4Q24 showing EBITDA growth and margin surge, improving leverage to 0.89x FY24 Key Financial Metrics (YoY) | Metric | FY24 | % Change YoY | | :--- | :--- | :--- | | Net Revenue | Ps. 699,179 million | -23.9% | | Adjusted EBITDA | Ps. 180,987 million | -17.2% | | Adjusted EBITDA Margin | 25.9% | +211 bps | | Net Profit | Ps. 153,627 million | +628.8% | 4Q24 Key Financial Metrics (YoY) | Metric | 4Q24 | % Change YoY | | :--- | :--- | :--- | | Net Revenue | Ps. 174,173 million | -19.5% | | Adjusted EBITDA | Ps. 50,589 million | +2.4% | | Adjusted EBITDA Margin | 29.0% | +623 bps | | Net Profit (Loss) | Ps. 22,118 million | n/a (vs. Loss of Ps. 43,963M) | - The Net Debt/LTM Adjusted EBITDA ratio significantly improved, decreasing to 0.89x from 1.40x in FY23, reflecting a US$20 million reduction in indebtedness during the quarter[8][9] Operational Performance This section analyzes sales volumes across key segments, highlighting declines in construction materials and growth in the Railroad segment Sales Volumes Analysis 4Q24 saw declines in Cement, Concrete, and Aggregates volumes, with bagged cement showing resilience and Railroad volumes growing, while FY24 experienced broad-based declines Sales Volumes by Segment (YoY % Change) | Segment | 4Q24 % Chg. | FY24 % Chg. | | :--- | :--- | :--- | | Cement, masonry & lime | -14.1% | -23.7% | | Concrete | -14.4% | -31.8% | | Railroad | +3.1% | -13.4% | | Aggregates | -3.1% | -24.8% | - In 4Q24, bagged cement showed stronger resilience, declining less than the industry average, while bulk cement was more affected by low activity in large private construction projects and public works[12] - The Railroad segment's volume increased by 3.1% in 4Q24, as higher transported volumes of grains and fracsand more than offset the decline in construction materials[14] - For FY24, the decline in volumes was most pronounced in Concrete (-31.8%) and Aggregates (-24.8%), heavily impacted by the economic slowdown and halt in public works[16] Detailed Financial Review This section provides an in-depth analysis of the company's profit and loss, financial position, and cash flow performance Profit & Loss Analysis Despite revenue drops, 4Q24 gross profit remained stable with significant margin expansion due to cost controls, leading to a net profit turnaround Net Revenues 4Q24 net revenue fell 19.5% YoY, primarily due to declines in Cement, Concrete, and Aggregates, with FY24 also seeing a significant overall decrease - 4Q24 net revenue decreased 19.5% YoY to Ps. 174,173 million, mainly from the Cement segment's performance[19] - By segment, 4Q24 YoY revenue changes were: Cement -19.9%, Concrete -26.9%, Aggregates -34.2%, and Railroad -3.2%[20][21][22] - FY24 net revenue declined 23.9% to Ps. 699,179 million, driven by weaker performance in the core Cement business amid an economic contraction[24] Cost of Sales and Gross Profit 4Q24 cost of sales decreased significantly, outpacing revenue decline due to lower volumes and strict cost management, resulting in substantial gross profit margin expansion - Cost of sales in 4Q24 fell 26.5% YoY, driven by lower sales volumes, reduced depreciation, and strict cost management, including favorable energy contracts and lower freight and salary expenses[25] - Gross profit margin in 4Q24 expanded by 640 basis points to 32.6%, despite the decline in sales volumes[27] - For the full fiscal year 2024, gross profit margin expanded by 166 basis points to 26.7%[27] Selling and Administrative Expenses (SG&A) 4Q24 SG&A expenses decreased due to cost reductions, but increased as a percentage of sales due to lower revenue, with FY24 also showing a decrease - 4Q24 SG&A decreased 3.9% to Ps. 20,847 million due to lower turnover tax, freight, and insurance costs[28] - As a percentage of sales, SG&A rose by 195 basis points to 12.0% in 4Q24, a consequence of the lower top line[28] Adjusted EBITDA & Margin 4Q24 Adjusted EBITDA grew with significant margin expansion, primarily driven by the Cement segment, despite negative margins in Concrete and Aggregates, with FY24 also seeing margin expansion Adjusted EBITDA & Margin (4Q24 vs 4Q23) | Metric | 4Q24 | 4Q23 | % Chg. | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | Ps. 50,589 million | Ps. 49,385 million | +2.4% | | Adjusted EBITDA Margin | 29.0% | 22.8% | +623 bps | - The Cement segment's Adjusted EBITDA margin expanded by 815 basis points to 33.7% in 4Q24[31] - The Concrete and Aggregates segments' Adjusted EBITDA margins contracted to -6.1% and -8.9% respectively in 4Q24[32] Finance Costs-Net and Net Profit The company reported a significant net financial gain in 4Q24, reversing a prior-year loss due to lower exchange rate impacts, leading to a substantial net profit for the quarter and full year - A net financial gain of Ps. 857 million was reported in 4Q24, compared to a loss of Ps. 81,281 million in 4Q23, mainly due to a lower impact from exchange rate differences[36] - 4Q24 Net Profit was Ps. 22,118 million, reversing a Ps. 43,963 million loss in 4Q23, driven by improved operational performance and a better financial result[39] - FY24 Net Income Attributable to Owners rose to Ps. 153,810 million from Ps. 22,441 million in FY23, primarily due to lower net financial costs and exchange rate impacts[41] Financial Position and Cash Flow Loma Negra significantly strengthened its balance sheet by reducing net debt and improving its leverage ratio, while generating substantial operating cash flow Capitalization and Debt At year-end 2024, total net debt decreased significantly, leading to a substantial improvement in the Net Debt/LTM Adjusted EBITDA ratio, with a well-balanced, primarily USD-denominated debt Debt Profile (as of Dec 31, 2024) | Metric | Value | Comparison (vs. Dec 31, 2023) | | :--- | :--- | :--- | | Total Net Debt | Ps. 162,348 million | -47.0% | | Net Debt / LTM Adj. EBITDA | 0.89x | from 1.40x | - As of December 31, 2024, 91% of the company's total debt was denominated in U.S. dollars[42] - The company's debt maturity profile is well-balanced, with no bond maturities until the fourth quarter of 2025[45] Cash Flow Analysis 4Q24 operating cash flow decreased slightly due to working capital changes, with significant cash generated from operations for FY24, alongside substantial capital investments - Cash generated from operating activities in 4Q24 was Ps. 47,776 million, compared to Ps. 57,040 million in 4Q23[46] - In 4Q24, Ps. 21,429 million was used for investing activities (primarily maintenance CAPEX) and Ps. 31,193 million for financing activities (mainly debt repayments)[47] - For FY24, capital investments totaled Ps. 72,004 million, while cash flow generated by operating activities was Ps. 124,718 million[48] Appendix This section provides supplementary information including conference call details, definitions of key financial measures, and detailed financial statements Conference Call Information This section provides logistical details for the 4Q24 earnings conference call, including dial-in numbers, webcast link, and replay information - The earnings conference call was scheduled for 10:00 a.m. U.S. ET on March 7, 2025, with dial-in and webcast details provided[50] Definitions This section defines key non-GAAP financial measures used throughout the report, including Adjusted EBITDA and Net Debt - Adjusted EBITDA: Calculated as net profit plus financial interest (net), income tax expense, depreciation and amortization, exchange rate differences, other financial expenses (net), and tax on debits and credits to bank accounts[51] - Net Debt: Calculated as total borrowings less cash, cash equivalents, and short-term investments[52] Financial Statements This section contains detailed, unaudited condensed interim consolidated financial statements for the periods ended December 31, 2024 and 2023 - The report includes the Condensed Interim Consolidated Statements of Financial Position as of December 31, 2024 and 2023[58] - The report includes the Condensed Interim Consolidated Statements of Profit or Loss for the three and twelve-month periods ended December 31, 2024 and 2023[60] - The report includes the Condensed Interim Consolidated Statement of Cash Flows for the three and twelve-month periods ended December 31, 2024 and 2023[62] - The report provides a table with Financial Data by Segment (excluding the impact of IAS 29) for the three and twelve-month periods ended December 31, 2024 and 2023[64]