Cementos Argos (CEMARGOS) Q2 2024 earnings summary

Executive summary

• Advanced SPRINT 2.0 initiative, including 99.8% share conversion, expanded buyback, and 31% dividend increase, driving a 20%+ share price rise and sixfold trading volume growth since February.

• Integration with Summit Materials progressing, capturing $17.5M in synergies YTD and targeting at least $40M for 2024.

• Adjusted EBITDA margin reached 21.5% YTD, up 249 bps YoY, with strong cost discipline and efficiency strategies.

• Net income for 1H24 was COP 200B, down 21.5% YoY, impacted by Summit seasonality and one-time items.

• No major M&A planned; focus remains on core business profitability, debt reduction, and export platform expansion.

Financial highlights

• Q2 adjusted EBITDA: COP 279–280B (about $71M), up 10.7–11% YoY; Q2 adjusted revenue: COP 1.34T, down 3.4% YoY.

• Q2 net profit: COP 127B, net margin 9.5%; 1H24 net profit: COP 200B, net margin 7.5%.

• Central America/Caribbean Q2 adjusted EBITDA: $38M, up 12.5% YoY; margin at 25.1%.

• EBITDA margin YTD: 21.5%, Q2 at 20.7%, on track to surpass 22% by year-end.

• Net debt to EBITDA: 2.06–2.1x at end of June, within guidance.

Outlook and guidance

• 2024 EBITDA guidance reaffirmed at $970–$1,010M; margin target raised to above 22%.

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

• Dividend distribution of COP 585B approved (+31% YoY); share repurchase program of COP 500B ongoing.

• Expect stable prices and demand in Central America/Caribbean; Colombia demand to remain challenging in 2024, with potential improvement in 2025–2026.

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