Loma Negra Reports 3Q21 Results

BUENOS AIRES, Argentina–(BUSINESS WIRE)–Loma Negra, (NYSE: LOMA; BYMA: LOMA), (“Loma Negra” or the “Company”), the leading cement producer in Argentina, today announced results for the three-month period ended September 30, 2021 (our “3Q21 Results”).

3Q21 Key Highlights

• Net revenue increased by 8.5% YoY to Ps. 17,800 million (US$176 million), mainly explained by the recovery in Concrete, the increase in Cement and the improvement in the Railway segment
• Decrease in our Consolidated Adjusted EBITDA of 9.1% YoY to Ps. 4,696 million (US$51 million)
• The Consolidated Adjusted EBITDA margin decreased 512 basis points YoY from 31.5% to 26.4%, mainly due to the normalization of seasonal costs. For the 9-month period ending in September, the margin expanded 55 basis points to 30.7% from 30.2% in the same period of 2020
• Net Profit of Ps. 1,490 million, showing a reduction of 84.9% versus the same period of the previous year, mainly explained by the extraordinary result in 3Q20 due to the divestment in Paraguay
• Net Debt /LTM Adjusted EBITDA ratio of -0.02x from 0.27x in 3Q20 and 0.16x in FY20

The Company has presented certain financial figures, Table 1b and Table 11, in U.S. dollars and Pesos without giving effect to IAS 29. The Company has prepared all other financial information herein by applying IAS 29.

Commenting on the financial and operating performance for the third quarter of 2021, Sergio Faifman, Loma Negra’s Chief Executive Officer, noted: “We are pleased to announce a very good quarter in which we observe a consolidation of cement demand close to historical highs, with world-class profitability margins supported by our high operating standards and a recovery in the other business segments.

The post-pandemic operational normalization and the sustained recovery of demand, led to this quarter, unlike what happened in the same period last year, to include the usual annual maintenance costs, as well as an increase in energy inputs, typical of the winter months.

Despite the seasonal effects on margins, our EBITDA in dollars was US $ 51MM, exceeding what was achieved, both in the same period of 2020 and in the previous quarter.

As for the L’Amalí expansion project, it already shipped cement during the month of October. We are very satisfied with the first results that already show its operating benefits and we hope to begin to see its impact in the coming quarters. This new line, with its production capacity and operational efficiency, provides us with a robust platform on which Loma can support its development. Likewise, it will allow us to advance on the path of sustainability, maximizing the use of energy with low environmental impact.

Finally, I would like to highlight the committed contribution of all our people and stakeholders, which they make to the operational excellence of Loma and without which these results would not have been possible. Together with the support of our strong productive structure and a solid balance, they are the pillars to keep Loma on a prosperous path of growth.”

Overview of Operations

Sales Volumes

Sales volumes of cement, masonry, and lime in Argentina during 3Q21 increased 8.4% to 1.7 million tons mainly leveraged by the recovery of bulk cement, a segment that had been more restricted during the pandemic. Bagged cement sales remain strong due to sustained demand from the retail sector. Considering that bagged products had a more accelerated recovery in 3Q20, in this quarter there is a normalization of the share in this dispatch mode compared with bulk.

Likewise, the volume of concrete showed strong YoY growth of 110.8%, still below pre-pandemic levels, mainly due to the lack of large infrastructure projects, both private and public. Aggregates had an increase of 7.2% with a more moderate growth due to the fact that in 3Q20 it already showed some recovery.

The volumes of the Railway segment experienced an increase of 8.2% compared to the same quarter of 2020, mainly explained by the recovery in the transported volumes of granite stone and frac-sand.

Review of Financial Results

Net Revenues

Net revenue increased 8.5% to Ps. 17,800 million in 3Q21, from Ps. 16,399 million in the comparable quarter last year, driven by the recovery of the Concrete segment, the growth in cement and the recovery of the Railway and Aggregates segment.

Cement, masonry cement and lime segment was up 2.4%, with volumes expanding 8.4% impacted by price dynamics.

Concrete posted a revenue increase of 116.6% because the recovery in volume was coupled by an improvement in prices. The Aggregates segment registered a strong increase in revenues of 47.5% due to the fact that the higher volume was combined with a good price performance and a positive sales mix.

Railroad revenues increased 25.4% in 3Q21 compared to the same quarter of 2020, mainly explained by an increase in transported volumes of granite stone, and frac-sand that positively boosts sales due to their impact on average transported distance.

Cost of sales, and Gross profit

Cost of sales increased 11.9% YoY reaching Ps. 13,213 million in 3Q21, mainly as a result of the higher volumes, impacted by higher seasonal costs of thermal and electrical inputs and higher maintenance costs in line with normalized third quarter operation. Typically, during the winter season, we undertake our annual scheduled maintenance, which last year was abnormally affected by the pandemic situation.

Gross profit decreased slightly 0.1% YoY to Ps. 4,587 million in 3Q21, from Ps. 4,590 million in 3Q20, with a gross profit margin that contracted 222 basis points year-on-year to 25.8%, reflecting the impact of higher winter production costs and the maintenance period, together with lower price dynamics.

Selling and Administrative Expenses

Selling and administrative expenses (SG&A) in 2Q21 increased by 7.8% YoY to Ps. 1,361 million, from Ps. 1,262 million in 3Q20, mainly as a consequence of the higher impact of sales on taxes and freight, and higher labor costs compared to last year. As a percentage of sales, SG&A show a slight improvement compared to 3Q20, reaching 7.6%.

Adjusted EBITDA & Margin

Adjusted EBITDA decreased 9.1% YoY in the third quarter of 2021 to Ps. 4,696 million. Typically, in the third quarters we have the incidence of higher production costs, as we incurred in winter energy costs and we undertake most of our annual schedule maintenance. These effects were abnormally softer in 3Q20 due to the pandemic situation.

Likewise, the Adjusted EBITDA margin decreased 512 basis points to 26.4% compared to 31.5% in 3Q20, mainly due to the impact of cement margins. For the 9-month cumulative period, the margin expanded 55 bps to 30.7 from 30.2 in the same period last year.

In particular, the Adjusted EBITDA margin of the Cement, Masonry and Lime segment decreased 484 bps to 29.5%, mainly due to the seasonal increase in costs and lower price performance.

The Adjusted EBITDA margin for Concrete recovered considerably compared to 3Q20, but still registering a negative margin of 4.0%, as the recovery of volumes is still below pre-pandemic levels.

The adjusted EBITDA margin of the Railroad segment improved 97 basis points, mainly supported by an increase in transported volumes and a positive effect from the product mix.

Finally, the aggregates adjusted EBITDA margin improved to 0.3% from a negative margin in 3Q20, due to a strong recovery in revenues as a result of a better sales mix and higher operating leverage.

Finance Costs-Net

During 3Q21, the Company reported a total net financial cost of Ps. 322 million compared to a total net financial gain of Ps. 3,051 million in 3Q20, this variation is primarily due to an extraordinary exchange rate difference gain in the third quarter of 2020.

Net Profit and Net Profit Attributable to Owners of the Company

Net Profit for 3Q21 it reached Ps. 1,490 million compared to Ps. 9,833 million in the same period of the previous year. 3Q20 was strongly impacted by the sale of the Company’s stake in Yguazú Cementos.

Additionally, considering the start-up of the new L’Amalí line and taking into account other factors, a non-monetary loss was recognized on the assets of the Sierras Bayas Plant that amounted to Ps. 141 million.

Net Profit Attributable to Owners of the Company reached Ps. 1.4 billion. During the quarter, the Company reported earnings per common share of Ps. 2,3081 and an ADR gain of Ps. 11.5407, compared to earnings per common share of Ps. 16.4634 and an ADR gain of Ps. 82.3171 in 3Q20.

Capitalization

As of September 30, 2021, total cash and cash equivalents were Ps. 4,289 million compared with Ps. 6,583 million as of the September 30, 2020. Total debt at the close of the quarter stood at Ps. 3,959 million, composed by Ps. 3,480 million in short-term borrowings, including the current portion of long-term borrowings (or 87.9% of total borrowings), and Ps. 479 million in long-term borrowings (or 12.1% of total borrowings).

As of September 30, 2021, 83.2% (or Ps. 3,295 million) Loma Negra’s total debt was denominated in U.S. dollars, 9.5% (or Ps. 377 million) in Euros, and 7.3% (or Ps. 288 million) in argentine pesos. The average duration of Loma Negra’s total debt was 0.4 years.

As of September 30, 2021, Ps. 3,280 million, or 82.9%, of the Company’s total consolidated borrowings bore interest at rates based on Libor, and Ps. 679 million of borrowings bore interest at a fixed rate.

The Net Debt to Adjusted EBITDA (LTM) ratio decreased to -0.02x as of September 30, 2021 from 0.16x as of December 31, 2020 as a result of strong cash generation and debt reduction.

Cash Flows

In 3Q21, our operating cash generation was Ps. 5,391 million, benefited by lower seasonal working capital requirements.

During 3Q21, the Company used cash in financing and investing activities for a total of Ps. 2,377 and Ps. 1,441 million, respectively. Cash allocations to the expansion of production capacity of L’Amalí plant accounted for a total of Ps. 552 million, or 36% of total capital expenditures.

Expansion of L’Amalí Plant.

Loma Negra is moving ahead with the capital expenditure at its L’Amalí plant, which will add 2.7 million tons annually and drive higher profitability. This expansion involves a total capital expenditure, originally estimated at approximately US$350 million.

Having already completed the start-up of the main stages of the new line, at the end of September 2021, it is practically completed, going through the final fine-tuning process satisfactorily.

Share Repurchase Plan.

On September 24, 2021, the Company announced the approval of the third share repurchase program, in accordance with Section 64 of Law No. 26.831 (“LMC”) and the CNV Regulations. The purpose is to efficiently apply a portion of the Company´s cash position which may result in a greater return of value for its shareholders considering the current attractive value of the share.

The plan became effective as from September 28, 2021, the amount to invest will be up to AR$ 700.000.000 (Argentine Pesos Seven Hundred Million) or such lower amount that derives from the repurchase of up to 10% of Company’s capital stock. The maximum amount of shares or maximum percentage of the Company’s capital stock to be repurchased shall never surpass the limit of 10% of the capital stock in accordance with Section 64 of LMC.

A summary of current Share Repurchase Programs is shown below:

3Q21 Earnings Conference Call

Definitions

Adjusted EBITDA is calculated as net profit plus financial interest, net plus income tax expense plus depreciation and amortization plus exchange rate differences plus other financial expenses, net plus tax on debits and credits to bank accounts, plus share of loss of associates, plus net Impairment of Property, plant and equipment, and less income from discontinued operation. Loma Negra believes that excluding tax on debits and credits to bank accounts from its calculation of Adjusted EBITDA is a better measure of operating performance when compared to other international players.

Net Debt is calculated as borrowings less cash, cash equivalents and marketable securities.

About Loma Negra

Founded in 1926, Loma Negra is the leading cement company in Argentina, producing and distributing cement, masonry cement, aggregates, concrete and lime, products primarily used in private and public construction. Loma Negra is a vertically-integrated cement and concrete company, with nationwide operations, supported by vast limestone reserves, strategically located plants, top-of-mind brands and established distribution channels. Loma Negra is listed both on BYMA and on NYSE in the U.S., where it trades under the symbol “LOMA”. One ADS represents five (5) common shares. For more information, visit www.lomanegra.com.

Note

The Company presented some figures converted from Pesos to U.S. dollars for comparison purposes. The exchange rate used to convert Pesos to U.S. dollars was the reference exchange rate (Communication “A” 3500) reported by the Central Bank for U.S. dollars. The information presented in U.S. dollars is for the convenience of the reader only. Certain figures included in this report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be arithmetic aggregations of the figures presented in previous quarters.

Rounding: We have made rounding adjustments to reach some of the figures included in this annual report. As a result, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.

Disclaimer

This release contains forward-looking statements within the meaning of federal securities law that are subject to risks and uncertainties. These statements are only predictions based upon our current expectations and projections about possible or assumed future results of our business, financial condition, results of operations, liquidity, plans and objectives. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “potential,” “seek,” “forecast,” or the negative of these terms or other similar expressions. The forward-looking statements are based on the information currently available to us. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including, among others things: changes in general economic, political, governmental and business conditions globally and in Argentina, changes in inflation rates, fluctuations in the exchange rate of the peso, the level of construction generally, changes in cement demand and prices, changes in raw material and energy prices, changes in business strategy and various other factors. You should not rely upon forward-looking statements as predictions of future events. Although we believe in good faith that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur.

Contacts

IR Contacts
Marcos I. Gradin, Chief Financial Officer and Investor Relations

Diego M. Jalón, Investor Relations Manager

+54-11-4319-3050

investorrelations@lomanegra.com

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