Cementos Argos Sa · BVC:CEMARGOS
Cementos Argos Sa — Investor Presentation (2017)
61 slides from Cementos Argos Sa's investor presentation, 2017
Slide 1: Cementos Argos S.A Corporate presentation 2017
Cementos Argos S.A Corporate presentation 2017
Slide 2: Disclaimer
DISCLAIMER This document contains forward-looking statements and information related to Cementos Argos S.A. and its subsidiaries (together referred to as “Argos”) that are based on the knowledge of current facts, expectations and projections, circumstances and assumptions of future events. Various f
Slide 3: Cementos Argos at a Glance
Cementos Argos at A Glance Leading pure cement player in the United States, Colombia, Caribbean and Central America ▪ Installed capacity: ▪ Cement 24 M tons* ▪ RMC 18 M m3 ▪ 6-year CAGR (2010-2016) of 19% in revenues and 21% in EBITDA ▪ Included in the Dow Jones Global and Emerging Markets Sustainab
Slide 4: Leading Growing Multinational Cement Company Focused on Value Creation
Argos: Leading Growing Multinational Cement Company Focused on Value Creation #1 or #2 Positions in Key Emerging and Developed 1 Interconnected Markets in the Americas Flexible Operations with Vertical Integration and 2 Extensive Logistics Network 3 Operating in Countries with Significant Growth Pot
Slide 5: #1 or #2 Positions in Key Interconnected Markets in the Americas
#1 or #2 Positions in Key Emerging and Developed 1 Interconnected Markets in the Americas Mixer trucks in the US
Slide 6: #1 or #2 Positions in Key Emerging and Developed Markets
#1 or #2 Positions in Key Emerging and Developed Interconnected Markets 1 in the Americas USA 53% of 9M17 revenues ▪ #2 RMC producer in the US ▪ #4 cement producer in the US ▪ Capacity: 9.9 M tons cement and 13 M m3 RMC ▪ ~42% of Argos’ cement capacity ▪ ~74% of Argos’ RMC capacity CCA 20% of 9M17 r
Slide 7: USA Regional Division
USA Regional Division Cement Plants RMC Areas Grinding Facilities Ports/Terminals Demand recovery driving operating leverage Newberry Plant, Florida and EBITDA margin normalization ▪ Strategically located plants close to high growth Revenues EBITDA Installed capacity and demand centers 53% 42% 9.9M
Slide 8: Colombia Regional Division
Colombia Regional Division Strategically located plants with nationwide coverage offer a strong competitive advantage Revenues EBITDA Installed capacity 27% 25% 9.1M tons Of 9M17 Of 9M17 Sogamoso Plant, Colombia 3.8M m 3 ▪ Sole producer with nationwide network serving Best Positioned to Capture the
Slide 9: Caribbean and Central America Regional Division
Caribbean and Central America Regional Division High long term growth prospects and ▪ Operations concentrated in Honduras and Panama, with 52% and 46% market share strategic interconnection of all regions (YE16) ▪ Only cement producer in Haiti, Suriname and Revenues EBITDA Installed capacity French
Slide 10: Flexible Operations with Vertical Integration and Extensive Logistics Network
Flexible Operations with Vertical Integration 2 and Extensive Logistics Network Newberry Plant, Florida, USA
Slide 11: Broad logistics and distribution network from strategically located assets
Broad logistics and distribution network provides flexibility from strategically located assets… One Interconnected Region USA plants and logistics network provide Martinsburg additional flexibility ▪ Efficient cement plants with access to rail and sea Roberta Harleyville ▪ Potential to supply Carib
Slide 12: Leveraging vertically integrated operations
... leveraging vertically integrated operations Strategic resource Limestone ▪ ~25% of the production cost Energy ▪ USA ~9.6% of alternative fuels ▪ Honduras ~17% of alternative fuels Geographical integration to supply our needs according Clinker to our market size ▪ 4th in installed capacity in the
Slide 13: Operating in Countries with Significant Growth Potential
Operating in Countries with Significant 3 Growth Potential Mixer trucks in USA
Slide 14: USA: Rapidly recovering cement market
USA: Rapidly recovering cement market Cement Plants Grinding Facilities Ports/Terminals ▪ USA demand per capita of 285 kgs still below pre-bubble levels of 433 kgs Martinsburg (YE15) ▪ Argos is well-positioned to satisfy Wilmington import requirements as demand Atlanta Harleyville normalizes Roberta
Slide 15: Colombia: Strong infrastructure and housing deficits
Colombia: Strong infrastructure and housing deficits Infrastructure deficit Residential and commercial construction deficit Ranking 2014/15 2012 estimated Growing and young population Spain 13 Housing deficit (units) Panama 40 Chile 50 ▪ Quantitative deficit: 0.6 M 80 + 75-79 +60% 70-74 below 35 Mex
Slide 16: 4G concession program to address Colombia's infrastructure needs
4G concession program to address Colombia`s infrastructure needs... Phase I Capex Kms 1 Conexión Pacifico 2 1.4 98 2 Honda - Girardot - Puerto Salgar 1.6 190 310 3 Conexión Pacífico 1 2.1 50 bridges 4 4 Cartagena - Barranquilla 1.7 159 5 Conexión Pacifico 3 1.9 146 6 Perimetral del Oriente de Cundin
Slide 17: Infrastructure development under public private partnerships
Infrastructure development under private public partnerships, with minor public funding requirements 4 COP 22.8 Tn* 6 (USD 7.3 Bn) 3 privately funded road infrastructure projects under construction in 2017 9 5 7 Public Private Partnerships Capex Kms 1 2 1 Ibagué - Cajamarca 1.8 225 2 Chirajara - Vil
Slide 18: Colombia: growth expectation for 2018 driven by infrastructure and housing
Colombia: growth expectation for 2018 driven by infrastructure and regular housing segment Infrastructure: dispatches for 4G projects Bogotá in the mid-term, source of growth continue growing steadily and opportunities in infrastructure 25,000 20,000 15,000 10,000 5,000 - 1Q16 2Q16 3Q16 4Q16 1Q17 2Q
Slide 19: CCA: positive outlook driven by fiscal health
CCA: positive outlook driven by fiscal health Honduras: improvement in fiscal balance supports stable market dynamics Fiscal deficit (2011 – June 2017) Recent Moodys rating upgrade B2 B1 2011 2012 2013 2014 2015 2016 jun-17 Fiscal deficit -5.7% -1% -1.1% -1.0% -0.7% 2013 2017E improvement -2.5% -3.7
Slide 20: Undertaking Strategic Investments to Further Enhance Efficiency and Competitiveness
Undertaking Strategic Investments to Further 4 Enhance Efficiency and Competitiveness Argos’ Innovation Center
Slide 21: BEST Program to Further Enhance Efficiency and Competitiveness
4 BEST Program to Further Enhance Efficiency and Competitiveness BEST Program Building Efficiency and Sustainability for Tomorrow 5 areas of focus 1 2 3 4 5 Operational Improve Clinker / Alternative Administrative Reduce our Non- Transformation: Cement Ratio: Fuels: Synergies: Operating Asset Base:
Slide 22: Track Record of Successfully Implementing Disciplined Growth Strategy
Track Record of Successfully Implementing 5 Disciplined Growth Strategy
Slide 23: Disciplined growth strategy driving EBITDA growth and value creation
Disciplined growth strategy driving EBITDA growth and value creation Revenues (COP Bn) EBITDA* (COP Bn) 2,111 2,194 EBITDA EBITDA Margin 398 8,517 7,912 1,800 1,652 29.0% 1,600 1,519 407 1,400 27.0% 5,817 4,968 2,189 1,200 25.0% 439 2,154 978 968 4,380 1,000 23.0% 3,668 791 800 682 19.4% 21.0% 370 3
Slide 24: Disciplined growth strategy driving EBITDA expansion: acquisitions
Disciplined growth strategy driving EBITDA expansion and value creation Acquisitions for WV, USA – Heidelberg Investment +USD1.9 Bn USD 660M (Asset acquisition) Since 2013 New assets: Cement plant 2.2 M tons Port/Terminal 8 +33% Cement volume Florida, USA – Vulcan Cement Investment +19% USD 720M (As
Slide 25: Healthy Financial Position and Flexibility to Pursue Growth
Healthy Financial Position and Flexibility to Pursue 6 Growth Harleyville Plant, USA
Slide 26: Strong balance sheet and adequate currency mix
Strong balance sheet and adequate currency mix Net Debt / (EBITDA + Dividends) EBITDA / Financial expenses 6.0x 5.9x Leverage reflects the acquisition 5.0x of Martinsburg 4.4x 4,5x 3.9x 4.2x 3.7x 3.6x 3.8x Negotiated waiver with banks and 3.7x 3.8x 3.3x ongoing divestment plan to reach 3.8x 3.2x 3.0
Slide 27: Investment portfolio provides financial flexibility to grow
… together with investment portfolio provide financial flexibility to grow organically and pursue strategic acquisitions Price per Share Value Value Company % Stake (COP) (COP million) (USD million) Grupo Sura 6.01% 40,880 1,152,132 392 Cartón de Colombia 2.14% 5,400 12,468 4 Total 1,164,600 397 * A
Slide 28: Focus on Innovation and Sustainability
7 Focus on Innovation and Sustainability Argos’ Innovation Center, Colombia
Slide 29: Innovation: pillar for our sustainable growth
Innovation Pillar for our sustainable growth ~16% offrom ‘16 revenues came innovation Innovation Research and Alternative New management development resources businesses Technological routes for ▪ Safe, clean and final Corporate the future disposals entrepreneurship ▪ Use of resources leveraged in t
Slide 30: Sustainability Policy
Sustainability Policy Profitability + Social development + Environmental impact Year 2017 Included for 5th Received Gold Class Argos is 1 of 3 Argos is members of: consecutive year as distinction for 1st time (2016) cement companies Siam Cement Group that are part of the Global Index 5 Colombian com
Slide 31: Financial Highlights
Financial Highlights Sogamoso Plant, Colombia
Slide 32: Consolidated cement and RMC volume growth
Consolidated cement and RMC volume growth… Cement volume (mm MTPA) 4,151 YTD17 14.3 14.0 3,557 12.6 11.4 CCA 10.8 31% Colombia 9.3 4,169 32% 7.8 3,536 USA 37% 3,447 3,842 2016 2017 2010 2011 2012 2013 2014 2015 2016 1Q 2Q 3Q RMC volume (mm m3) YTD17 11.5 2,840 11.1 11.3 2,666 9.4 8.5 Colombia 7.0 28
Slide 33: EBITDA, EBITDA margin and capital investments
…drive operating leverage and efficiencies supporting EBITDA growth, as we continue to invest in the business… EBITDA and EBITDA Margin (COP Bn) EBITDA EBITDA Margin 1,800 1,652 29.0% 398 YTD17 1,600 1,519 1,400 27.0% 407 1,200 25.0% 978 968 Colombia 1,000 23.0% 439 791 USA 25% 800 682 19.4% 19.7% 2
Slide 34: In Summary: Why Argos?
In Summary: Why Argos? A Leading Growing #1 or #2 Positions in Key Emerging and Developed 1 Interconnected Markets in the Americas Multinational Cement Company 2 Flexible Operations with Vertical Integration and Focused on Value Extensive Logistics Network Creation 3 Operating in Countries with Sign
Slide 35: Contact Information
CONTACT INFORMATION IR TEAM MANUELA RAMIREZ [email protected] CATALINA RICAURTE [email protected] www.argos.co/ir This recognition, called Reconocimiento Emisores – IR is given by the Colombian Stock Exchange, Bolsa de Valores de Colombia S.A. It is not a recognition that certifies the qual
Slide 36: Appendix
Appendix Modern Art Museum, Medellin, Colombia
Slide 37: Cementos Argos Results 3Q17
Cementos Argos Results 3Q17 37 Rioclaro plant, Colombia
Slide 38: Disclaimer
DISCLAIMER This document contains forward-looking statements and information related to Cementos Argos S.A. and its subsidiaries (together referred to as “Argos”) that are based on the knowledge of current facts, expectations and projections, circumstances and assumptions of future events. Various f
Slide 39: Highlights
Highlights For 5th consecutive year, recognized as one of the most sustainable companies in the world ▪ We are the 2nd most sustainable cement company Selected to be part of the Dow Jones Sustainability Mila Pacific Alliance Index ▪ Best sustainability practices in: Colombia, Chile, Mexico and Peru
Slide 40: Consolidated Results
Cementos Argos present in the US highways 1 Consolidated Results
Slide 41: 3Q17: results improvement amid a quarter with harsh weather
3Q17: results improvement amid a quarter with harsh 1 weather 3Q YTD 2016 2017 Var 2016 2017 Var Key Figures Revenues COP Bn 2,111 2,194 3.9% 6,513 6,426 -1.3% EBITDA* COP Bn 398 407 2.3% 1,275 1,060 -16.8% Adjusted EBITDA** COP Bn 398 428 7.5% 1,275 1,104 -13.4% EBITDA margin % 18.9% 18.6% -30.4 19
Slide 42: Consolidated volume: growth in cement volumes across three regions
Consolidated volume: growth in cement volumes across 1 our three regions 3Q YTD 2016 2017 Var 2016 2017 Var Cement 000 MT 3,557 4,151 16.7% 10,539 12,162 15.4% Colombia 000 MT 1,314 1,335 1.6% 3,781 4,014 6.2% USA 000 MT 1,012 1,513 49.4% 3,005 4,399 46.4% CCA 000 MT 1,231 1,303 5.9% 3,753 3,749 -0.
Slide 43: USA Region
Newberry Plant, USA 2 USA Region 43
Slide 44: USA: positive outlook after the storm
2 USA: positive outlook after the storm 3Q YTD 2016 2017 Var 2016 2017 Var Volumes Cement 000 MT 1,012 1,513 49.4% 3,005 4,399 46.4% RMC 000 m3 1,924 1,814 -5.7% 5,837 5,393 -7.6% ▪ Argos’ cement volumes +49.4%; excluding Martinsburg: +5.7% (whole US market +3.4% QTD as of August, without considerin
Slide 45: USA: housing sector supports market growth
2 USA: housing sector supports market growth New housing sales reached in September maximum levels since 2008 1600 1400 1200 1000 800 667 Thousands units 600 400 200 0 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 +18.3% September 2017 YoY Around USD 50 Bn in reconstruction funds after Infrastru
Slide 46: Colombia Region
Sogamoso plant, Colombia 3 Colombia Region 46
Slide 47: Colombia: EBITDA recovery driven by focus in efficiency
3 Colombia: EBITDA recovery driven by focus in efficiency 3Q YTD 2016 2017 Var 2016 2017 Var Volumes Cement 000 MT 1,314 1,335 1.6% 3,781 4,014 6.2% RMC 000 m3 809 742 -8.3% 2,444 2,291 -6.3% ▪ Cement and ready-mix markets still slow, but better prospects for demand recovery in 2018 ▪ Cement imports
Slide 48: Colombia: growth expectation for 2018 driven by infrastructure and housing
Colombia: growth expectation for 2018 driven by 3 infrastructure and regular housing segment Infrastructure: dispatches for 4G projects Bogota in the mid-term, source of growth continue growing steadily and opportunities in infrastructure Cement volume (MT) 24,824 19,995 15,588 6,207 7,049 2,863 488
Slide 49: Caribbean and Central America Region
Comayagua Plant, CCA Region 4 Caribbean and Central America Region 49
Slide 50: Resilient volumes even with severe weather conditions
4 Resilient volumes even with severe weather conditions 3Q YTD 2016 2017 Var 2016 2017 Var Volumes Total Cement 000 MT 1,231 1,303 5.9% 3,753 3,749 -0.1% Local markets 000 MT 825 878 6.3% 2,434 2,607 7.1% Trading and Exports 000 MT 406 426 4.9% 1,319 1,141 -13.5% RMC 000 m3 108 110 1.7% 321 339 5.6%
Slide 51: CCA: positive outlook supported by fiscal health in Honduras and Panama
CCA: positive outlook supported by fiscal health in 4 Honduras and Panama Honduras: improvement in fiscal balance supports stable market dynamics Fiscal deficit (2011 – Jun 2017) Recent Moody's 2011 2012 2013 2014 2015 2016 jun-17 rating upgrade B2 B1 -1.1% -1.0% -0.7% Fiscal deficit -5.7% -1% impro
Slide 52: Balance Sheet
Argos Center for Innovation 5 Balance Sheet 52
Slide 53: Debt structure as of September 30th 2017
5 Debt structure as of September 30th 2017 Net Debt / (EBITDA + Dividends) EBITDA / Financial expenses 6.0 5.9 Leverage reflects the 5.0 4.4 4.5x acquisition of Martinsburg 4.2x 3.7x 3.6x 3.9x 3.8 3.7 3.5x 3.8x 3.3 Ongoing divestment plan 3.0 3.8x 3.2x to reach a leverage ratio 2.3 2.3 1.9x between
Slide 54: Debt profile as of September 30th 2017
5 Debt profile as of September 30th 2017 Short term: USD 736 M 350 300 250 200 181 150 100 152 122 33 50 76 53 57 1 1 19 9 2 1 0 28 oct-17 nov-17 dec-17 jan-17 feb-18 mar-18 apr-17 may-18 jun-18 jul-18 aug-17 sep-18 Banks Loans Bonds Long term: USD 1,730 M 500 24 400 300 200 428 316 100 32 102 143 1
Slide 55: Argos 2017 outlook
5 Argos 2017 outlook Consolidated EBITDA Guidance FY17: Expected CAPEX FY17: ▪ ~ USD 150 – 170 M Maintenance ~COP 1.65 – 1.75 tn ~USD 280–300 M ▪ ~ USD 90 M Commitments (Sogamoso) ▪ ~ USD 40 M Strategic (including divestments) USA: ▪ Continuous recovery of market driven by residential sector and inf
Slide 56: Appendix
Applied concrete 6 Appendix 56
Slide 57: Summary per regional division / other businesses
6 Summary per regional division / other businesses Revenues Adjusted EBITDA* 3Q16 3Q17 Var 3Q16 Mgn (%) 3Q17 Mgn (%) Var COP Bn Colombia 663 565 -14.8% 169 25.4% 113 20.1% -32.8% USA 1,036 1,199 15.8% 145 13.9% 218 18.2% 50.3% CCA 411 430 4.6% 140 34.1% 130 30.3% -6.7% Subtotal 2,110 2,194 4.0% 453
Slide 58: Operating profit and EBITDA (COP and USD)
6 Operating profit and EBITDA (COP and USD) Revenues Adjusted EBITDA* 2016 2017 Var 2016 Mgn (%) 2017 Mgn (%) Var COP Bn Colombia 1,993 1,726 -13.4% 543 27.3% 299 17.3% -44.9% USA 3,223 3,416 6.0% 422 13.1% 506 14.8% 20.1% CCA 1,295 1,282 -1.0% 460 35.5% 408 31.8% -11.3% Subtotal 6,511 6,425 -1.3% 1
Slide 59: Consolidated Cash Flow (COP Bn)
6 Consolidated Cash Flow (COP Bn) 59
Slide 60: Investment portfolio improves Argos' financial flexibility
6 Investment portfolio improves Argos´ financial flexibility Price per Share Value Value Company % Stake * (COP) (COP million) (USD million) Grupo Sura 6.01% 40,880 1,152,132 392 Cartón de Colombia 2.14% 5,400 12,468 4 Total 1,164,600 397 * Argos holds a stake of the common shares. Mixer trucks in C
Slide 61: Contact Information
Ready-mix textures CONTACT INFORMATION IR TEAM MANUELA RAMIREZ [email protected] CATALINA RICAURTE [email protected] www.argos.co/ir This recognition, called Reconocimiento Emisores – IR is given by the Colombian Stock Exchange, Bolsa de Valores de Colombia S.A. It is not a recognition tha