Cementos Argos Sa · BVC:CEMARGOS
Cementos Argos Sa — Investor Presentation (2017)
57 slides from Cementos Argos Sa's investor presentation, 2017
Slide 1: Cementos Argos S.A Corporate presentation
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 Emerging and Developed 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 Interconnected Markets
#1 or #2 Positions in Key Emerging and Developed Interconnected Markets 1 in the Americas USA 51% of 3M17 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 3M17 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 51% 31% 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 29% 26% 9.1M tons Of 3M17 Of 3M17 Sogamoso Plant, Colombia 3.8M m 3 Best Positioned to Capture the Infrastructure and Sole producer with nationwi
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 strategic interconnection of all regions Panama, with 52% and 46% market share (YE16) Revenues EBITDA Installed capacity Only cement producer in Haiti, Suriname and 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 provides flexibility
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 Potential to supply Caribbean and Central Rob
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 284 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 Me
Slide 16: Government and private investments to drive growth through 2024
… addressed by government and private investments are expected to drive strong growth through 2024 Infrastructure: Argos, the indisputable leader of awarded functional units of the 4G Program Cem ent RMC Total FU Argos FU Argos FU FU FU aw arded Market Aw arded Market Aw arded Aw arded to Argos Shar
Slide 17: Argos plants positioned to serve 4G concession program
Argos plants, best positioned to serve phase I, II and III of 4G concession program Phase I Capex Kms 1 Conexión Pacifico 2 FC 1.4 98 2 Honda - Girardot - Puerto Salgar FC 1.6 190 310 3 Conexión Pacífico 1 FC 2.1 50 bridges 4 4 Cartagena - Barranquilla FC 1.7 159 5 Conexión Pacifico 3 FC 1.9 146 6 P
Slide 18: Private public partnerships driving infrastructure growth
Private public partnerships driving infrastructure growth with minor public funding requirements 4 COP 22.8 Tn* 6 (USD 7.3 Bn) 9 privately funded road infrastructure projects awarded in 2016 9 5 7 Public Private Partnerships Capex Kms 1 2 1 Ibagué - Cajamarca 1.8 225 2 Chirajara - Villavicencio 5.1
Slide 19: Colombia Repunta: government plan
“Colombia Repunta”: recently released ambitious government plan The program will create ~765 k new jobs and will contribute ~1.3% to the total GDP in 2017 4G: Expected investment of COP 9.2 tn and 313k jobs generated in 2017 Tertiary roads: Expected investment of COP 1.3 tn for 11.6 k kms, gener
Slide 20: CCA: Positive market dynamics with infrastructure projects underway
CCA: Positive market dynamics with significant infrastructure projects underway Honduras Panama Public core investments for 2017: Public core investments for 2017: Public Projects Private projects Metro Housing Free Trade Zone USD 90 M USD 1,100 M USD 660 M USD 320 M USD 230 M Tegucigalpa San Pedro
Slide 21: Strategic Investments to Enhance Efficiency and Competitiveness
Undertaking Strategic Investments to Further 4 Enhance Efficiency and Competitiveness Argos’ Innovation Center
Slide 22: BEST Program: 5 areas of focus
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 23: BEST Program: Tangible Results for 1Q17
4 BEST Program to Further Enhance Efficiency and Competitiveness Tangible Results for 1Q17 Expected savings in fix Transformation of the costs of The Shared Service Center Expected savings for 2017 Sabanagrande´s and San Gil´s plants ~COP 30 Bn/year started operations ~USD 3.5 M Expected savings in
Slide 24: Track Record of Successfully Implementing Disciplined Growth Strategy
Track Record of Successfully Implementing 5 Disciplined Growth Strategy
Slide 25: Disciplined growth strategy driving EBITDA growth and value creation
Disciplined growth strategy driving EBITDA growth and value creation Revenues (COP Bn) EBITDA (COP Bn) 8,517 EBITDA EBITDA Margin 7,912 1,800 1,652 29.0% 1,600 1,519 1,400 27.0% 5,817 425 4,968 1,200 25.0% 2,213 978 968 4,380 1,000 2,077 23.0% 3,668 791 800 682 274 3,023 19.4% 21.0% 539 19.7% 19.2%
Slide 26: Acquisitions and investments driving growth
Estrategia de crecimiento disciplinada impulsando el crecimiento del EBITDA y la generación de valor 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
Slide 27: Healthy Financial Position and Flexibility to Pursue Growth
Healthy Financial Position and Flexibility to Pursue 6 Growth Harleyville Plant, USA
Slide 28: Strong balance sheet and healthy maturity profile
Strong balance sheet and healthy maturity profile… Net Debt / (EBITDA + Dividends) EBITDA / Financial expenses Increasing leverage 6.0x 5.9x reflects 5.0x 4.4x Martinsburg 3.9x 4.2x 4.0x 3.8x 3.8x acquisition 3.5x 3.2x 3.8x 3.9x 3.7x 1.9x 3.0x Ongoing divestment plan will recover ratios to 2010 2011
Slide 29: Investment portfolio provides financial flexibility
… 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 6.0% 39,080 1,101,402 382 Cartón de Colombia 2.1% 5,300 12,237 4 Total 1,113,639 387 * Arg
Slide 30: Focus on Innovation and Sustainability
7 Focus on Innovation and Sustainability Argos’ Innovation Center, Colombia
Slide 31: Innovation: pillar for 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 32: Sustainability Policy
Sustainability Policy Profitability + Social development + Environmental impact Year 2016 Included for 4th 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 33: Financial Highlights
Financial Highlights Sogamoso Plant, Colombia
Slide 34: Consolidated cement and RMC volume growth
Consolidated cement and RMC volume growth… Cement volume (mm MTPA) 1Q17 14.3 14.0 12.6 11.4 CCA 10.8 30% 9.3 3,842 Colombia 7.8 35% 3,447 USA 35% 2010 2011 2012 2013 2014 2015 2016 2016 2017 1T RMC volume (mm m3) 1Q17 11.5 11.3 11.1 9.4 8.5 Colombia 7.0 30% USA - SE 2,805 42% 5.9 2,638 CCA 4% USA -
Slide 35: Strong revenue performance and cost savings
… result in strong revenue performance, which together with cost savings initiatives…, Revenues (COP Bn) 8,517 7,912 1Q17 5,817 4,968 Colombia 4,380 30% 3,668 2,213 USA 3,023 2,077 50% CCA 20% 2010 2011 2012 2013 2014 2015 2016 USD M 1,710 2,075 2,437 2,656 2,833 2,881 2,790 2016 2017 1T Operating C
Slide 36: EBITDA and EBITDA Margin; 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% YTD16 1,600 1,519 1,400 27.0% 1,200 25.0% 425 1,000 978 968 CCA Colombia 23.0% 26% 791 800 682 19.4% 43% 19.7% 19.2%
Slide 37: 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 38: 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 39: Appendix
Appendix Modern Art Museum, Medellin, Colombia
Slide 40: 1Q17 Highlights
1Q17 Highlights • A quarter of firsts: 1st large-scale pouring of RMC in the Flandes bridge gives a flag start to 4G project dispatches (Honda- Puerto Salgar) 1st complete quarter consolidating Martinsburg's operation: Argos becomes the 4th largest cement producer in the US with a privileged foo
Slide 41: 1Q17: US region, our main division in terms of revenues
1 1Q17: US region, our main division in terms of revenues 1Q 2016 2017 Var Key Figures Revenues COP Bn 2,213 2,077 -136 -6.1% EBITDA COP Bn 425 274 -151 -35.5% EBITDA margin % 19.2% 13.2% -601.3 Net Income COP Bn 100 -46 -146 n.a Net Margin % 4.5% -2.2% n.a Challenging quarter, offset by a positiv
Slide 42: Consolidated volume: US volumes gaining importance
1 Consolidated volume: US volumes gaining importance 1Q YTD 2016 2017 Var 2016 2017 Var Cement 000 MT 3,447 3,842 395 11.5% 3,447 3,842 395 11.5% Colombia 000 MT 1,231 1,357 127 10.3% 1,231 1,357 127 10.3% USA 000 MT 935 1,341 406 43.4% 935 1,341 406 43.4% CCA * 000 MT 1,281 1,143 -137 -10.7% 1,281
Slide 43: USA: Cement volumes growing above the market
2 USA: Cement volumes growing above the market 1Q YTD 2016 2017 Var 2016 2017 Var Volumes Cement 000 MT 935 1,341 406 43.4% 935 1,341 406 43.4% RMC 000 m3 1,902 1,737 -165 -8.7% 1,902 1,737 -165 -8.7% Argos’ cement volumes +43.4%; excluding Martinsburg: +14% (whole US market +1,7% Feb YTD) +160
Slide 44: USA: Residential recovery and infrastructure catalyst
USA: Residential recovery and infrastructure catalyst 2 to drive market to normalization 1 Residential sector: main driver for cement demand recovery 000 MT Imports Production Housing inventories & months of turnover (2006-Feb´17): 200 Ut Rate 120.0% 180 98% 98% 97% 95% 92% 92% 100.0% 4,500 12 SMA (
Slide 45: Colombia: Regaining market share
Colombia: Regaining market share with commercial 3 strategy and strong value proposition 1Q YTD 2016 2017 Var 2016 2017 Var Volumes Cement 000 MT 1,231 1,357 127 10.3% 1,231 1,357 127 10.3% RMC 000 m3 801 782 -19 -2.3% 801 782 -19 -2.3% Industry cement volumes 1Q17 +0.4%, Argos market share +320 b
Slide 46: Colombia: Our backlog supports positive outlook
3 Colombia: Our backlog supports positive outlook 70% of our RMC volume 1 Housing Sector 2 Commercial sector 3 Infrastructure 100% of all the malls to be built for 2017 is already in 2017 committed to: Housing Sector- Examples Commercial sector - Examples Ciudad Verde Mall El Edén Location: Soacha,
Slide 47: Colombia: infrastructure is finally a reality
3 Colombia: infrastructure is finally a reality Infrastructure: Argos, the indisputable leader of awarded 3 functional units of the 4G Program Cem ent RMC Total FU Argos FU Argos FU FU FU aw arded Market Aw arded Market Aw arded Aw arded to Argos Share to Argos Share 1st Wave 42 28 23 82.1% 20 14 70
Slide 48: CCA: Our largest contributor in terms of EBITDA
4 CCA: Our largest contributor in terms of EBITDA 1Q YTD Panama 2016 2017 Var 2016 2017 Var 14% 20% Honduras Volumes 12% Haiti Cement Dom.Rep. Total Cement 000 MT 1,281 1,143 -137 -10.7% 1,281 Volume 1,143 -137 -10.7% 22% Others Local markets 000 MT 772 838 67 8.6% 772 838 67 13% 8.6% 1Q17 Exports T
Slide 49: Honduras and Panama: attractive pipeline of projects for 2017
Honduras and Panama: attractive pipeline of projects 4 for 2017 Honduras Panama Public core investments for 2017: Public core investments for 2017: Public Projects Private projects Metro Housing Free Trade Zone USD 90 M USD 1,100 M USD 660 M USD 320 M USD 230 M Tegucigalpa San Pedro de Sula Educatio
Slide 50: Strong balance sheet and healthy maturity profile
5 Strong balance sheet and healthy maturity profile Net Debt / (EBITDA + Dividends) EBITDA / Financial expenses 6.0x 5.9x Increasing leverage reflects Martinsburg 5.0x 4.2x 4.4x 3.9x acquisition and 3.8x 3.8x 4.0x seasonality 3.2x 3.9x 3.5x 3.8x 3.7x 1.9x 3.0x Ongoing divestment plan will recover ra
Slide 51: Debt maturity profile as of March 31st, 2017
Strong balance sheet and healthy maturity profile 5 debt as of March 31st, 2017 Short term: USD 970 M 800 600 181 400 535 200 59 116 0 36 1 6 21 1 9 1 1 1 April 17 May 17 June 17 July 17 Aug 17 Sept 17 Oct 17 Nov 17 Dec 17 Jan 18 Feb 18 March 18 Bank Loans Bonds Long term: USD 1,469 M 500 24 400 300
Slide 52: Argos 2017 outlook
5 Argos 2017 outlook Consolidated EBITDA Guidance FY17: Expected CAPEX FY17: ~ USD 150 – 170 M Maintenance ~ USD 90 M Commitments (Sogamoso) ~COP 1.8 – 2.0 tn ~USD 280–300 M ~ USD 40 M Strategic USA: Colombia: CCA: Continuous recovery of market driven Construction sector, main driver Sta
Slide 53: Summary per regional division / other businesses
6 Summary per regional division / other businesses Revenues EBITDA 1Q16 1Q17 Var 1Q16 Mgn (%) 1Q17 Mgn (%) Var COP Bn Colombia 666 599 -67 -10.1% 205 30.7% 82 13.7% -122 -59.8% USA 1,092 1,057 -35 -3.2% 111 10.1% 95 9.0% -16 -14.4% CCA 455 421 -33 -7.3% 160 35.3% 132 31.4% -28 -17.5% Subtotal 2,213
Slide 54: Operating profit and EBITDA (COP and USD)
6 Operating profit and EBITDA (COP and USD) 1Q 2016 2017 Var 2016 20 Key Figures Revenues COP Bn 2,213 2,077 -136 -6.1% 2,213 2,0 COGS & SG&A COP Bn 1,951 1,997 46 2.4% 1,951 1,9 Operating Profit COP Bn 262 80 -182 -69.5% 262 8 EBITDA COP Bn 425 274 -151 -35.5% 425 27 EBITDA Margin % 19.2% 13.2% -60
Slide 55: Consolidated Cash Flow
6 Consolidated Cash Flow (COP Bn) Cash Flow at Jan. 2016 583 +252 Cash flow (COP Mill) Total Cash EBITDA Net Op. -56 EBITDA 274,030 Working Capital (+) No Cash Adjustments (18,052) Maintenance -134 Cash EBITDA 251,844 CAPEX (+) Net Op. Working Capital (56,324) Profitability -51 (-) Maintenance CAPEX
Slide 56: Investment portfolio improves financial flexibility
Investment portfolio improves Argos´ financial 6 flexibility Price per Share Value Value Company % Stake (COP) (COP million) (USD million) Grupo Sura 6.0% * 39,080 1,101,402 382 Cartón de Colombia 2.1% 5,300 12,237 4 Total 1,113,639 387 * Argos holds a stake of the common shares. 1% 99% Grupo Sura C
Slide 57: Cementos Argos S.A Corporate presentation
Cementos Argos S.A Corporate presentation 2017