Cementos Argos (CEMARGOS) Q2 2024 earnings summary

Executive summary

• SPRINT 2.0 initiative and efficiency strategies drove a 20%+ share price increase and a sixfold rise in trading volumes since February, with a 31% dividend increase and a COP 500 billion share repurchase program underway.

• Integration with Summit Materials advanced, capturing $17.5 million in H1 synergies and targeting at least $40 million for 2024, with Summit reiterating its 2024 adjusted EBITDA guidance.

• Adjusted EBITDA margin reached 21.5% YTD, up 249 bps year-over-year, with Q2 margin at 20.7%, driven by cost discipline and efficiency across regions.

• Net profit for the quarter was COP 127 billion ($32 million), down 6% year-over-year, and 1H24 net income was COP 200 billion, down 21.5%, impacted by Summit seasonality and hedging premiums.

• Shareholder returns enhanced by a 31% dividend increase and ongoing share buyback program, with COP 251 billion repurchased since September 2023.

Financial highlights

• Quarterly adjusted EBITDA reached COP 279–280 billion ($71 million), up 10.7–11% year-over-year, with margin expansion to 20.7%.

• Year-to-date adjusted EBITDA margin at 21.5%, up 249 bps; net profit at COP 200 billion, down 21% year-over-year.

• Colombia's Q2 EBITDA up 13.9–14% to COP 168 billion, margin expanded 332 bps to 22.6%.

• Caribbean & Central America Q2 EBITDA up 12.5%, margin at 25.1%; Caribbean region Q2 EBITDA up 36.2% year-over-year.

• Market cap at $2.8 billion, float-adjusted market cap at $1.3 billion.

Outlook and guidance

• 2024 EBITDA guidance reaffirmed at $970–$1,010 million, targeting a consolidated EBITDA margin above 22% by year-end.

• ROCE expected at 11–12%; net debt/EBITDA guidance at 2.5x.

• Expectation of stable prices and challenging demand in Colombia for the rest of 2024, with a potential uptick in 2025–2026.

• Central America and Caribbean expected to maintain stable or slightly growing demand.

• Medium-term goal to increase share liquidity to USD 3–5 million ADTV.