Loma Negra Cia Industria Q3 2026 Earnings Call Transcript

Loma Negra Cia Industria (NYSE:LOMA) reported third-quarter financial results on Friday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Loma Negra Cia Industria reported a 6.3% year-over-year decline in cement volume and a 3.2% decrease in consolidated net revenue for Q3 2026, attributed to unfavorable weather conditions.

Consolidated adjusted EBITDA stood at Ps. 54.2 billion, down 6.7% year-over-year, despite an increase in EBITDA per ton to $32.5, highlighting strong cash generation.

Net debt was reduced to $145 million, with a net debt to adjusted EBITDA ratio of 1.0x; the company issued a $150 million corporate bond to refinance upcoming debt maturities.

The cement segment showed resilience with a slight margin improvement, while the concrete and railroad segments faced declines due to lower volumes and higher costs.

Management highlighted the potential for volume recovery driven by improved weather and large-scale projects under the RIGI regime, with a positive outlook for 2027.

Full Transcript

OPERATOR

Good day and welcome to the Loma Negra Cia Industria third quarter 2026 conference call and webcast. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. Also, Mr. Sergio Faifman will be responding in Spanish immediately following an English translation. To ask a question, you may press star then one on your telephone keypad.

To withdraw your question, please press star then two. Please note that this event is being recorded. I would like now to turn the conference over to Mr. Diego Halon, Head of IR. Please, Diego, go ahead.

Diego Halon (Head of Investor Relations)

Thank you. Good day and welcome to Loma Negra Cia Industria’s earnings conference call. By now everyone should have access to our earnings press release and the presentation for today’s call, both of which were distributed yesterday after market close. Joining me on the call today are Sergio Faifman, our CEO and Vice Chairman of the Board of Directors, and Marcos Gradin, our CFO. Sergio and Marcos will be available for the Q&A session. Before we proceed, I would like to make the following safe harbor statements. Today’s call will contain forward-looking statements and I refer you to the forward-looking statements section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances. This conference call will also include discussion on non-GAAP financial measures.

The full reconciliation to the corresponding financial measures is included in the earnings press release. Now I would like to turn the call over to Sergio.

Sergio Damian Faifman (Chief Executive Officer)

Thank you, Diego. Hello everyone and thank you for joining us today. I would like to start my presentation by discussing the highlights of the quarter. Then Marcos will take you through our market review and financial results. Following that, I will share some final remarks before opening the call to your questions. Starting with slide 2. Industry volume remained soft during the third quarter as July and August were affected by still soft activity levels and heavy winter rainfall. September, however, showed a significant improvement on the back of more favorable weather, which we view as a encouraging sign for the months ahead. In this context, our cement volume decreased 6.3% year over year while consolidated net revenue declined 3.2% to Ps. 270.1 billion. In terms of profitability, consolidated adjusted EBITDA reached Ps. 54.2 billion, down 6.7% year over year, with margin contracting 74 basis points to 20.1% as our other businesses weighed on the overall result. Our cement business, on the other hand, slightly improved its margin both year over year and sequentially, despite the third quarter typically being our lower-margin quarter due to seasonal costs. In dollar terms, EBITDA per ton stood at $32.5, up 24% year over year, highlighting the strength of our cash generation even in a still challenging demand environment.

We also continued to strengthen our balance sheet. As of quarter end, net debt stood at $145 million, $40 million lower than in the second quarter, bringing our net debt to adjusted EBITDA ratio down to 1.0x. In addition, after the close of the quarter we successfully issued a $150 million corporate bond to refinance an upcoming structured debt maturity. I will now hand off the call to Marcos, who will go through our market review and financial results.

Please, Marcos, go ahead.

Marcos Isabelino Gradin (Chief Financial Officer)

Thank you, Sergio. Good day everyone. Please turn to slide 4. On the macro front, recent data points to a softer activity trajectory. GDP grew 2% year over year in the second quarter, while the EMAE, Argentina’s monthly economic activity indicator, declined 1.5% year over year in July and 1.7% in August, leaving cumulative growth at 1.2% through the first eight months of the year. Market expectations, according to the Central Bank’s REM survey, point to growth of 1.5% for 2026 and 2.5% for 2027.

Construction activity also showed a softer performance during the quarter. The ISAC declined 4.5% year over year in July and 4.4% in August, the latest available data, although it posted a 0.4% sequential improvement in August on a seasonally adjusted basis. Building indicators were broadly flat. Registered private sector employment in construction declined 0.3% year over year in July, and building permits authorized in the same month were also down 0.3%, although they remained up 7.5% on a cumulative basis for the first seven months of the year.

Against this backdrop, industry cement dispatches declined 3.9% year over year during the quarter. July and August were both down 8.2% year over year, affected by still soft activity and heavy rainfall, while September rebounded strongly, growing 4.5% year over year and 18% sequentially on the back of more favorable weather. In terms of product mix, bulk cement continues to outperform, growing 2% year over year, while bagged cement declined 8%, still weighed down by the consumption environment.

As a result, although bagged cement still represents a majority of the industry mix, bulk cement continues to gradually gain share. Looking ahead, while the recovery remains uneven, September’s performance suggests underlying demand is there and reacts once weather conditions normalize. This, together with RIGI-related projects beginning to move forward toward the end of the year, supports a more positive perspective for the coming months. Turning to slide 5 for a review of our top-line performance by segment. Third quarter consolidated revenues decreased by 3.2% year over year. The decline was primarily driven by weaker performance in the concrete business, followed by the cement and railroad segments, while higher revenue in aggregates provided a partial offset. Revenues from the cement, masonry cement and lime segment decreased by 1.8% year over year. Cement volumes declined by 6.3%, mainly due to the adverse weather conditions discussed earlier.

Our performance relative to the industry was also affected by masonry cement and lime, which followed a trend similar to that of bulk cement. Positive pricing dynamics mitigated part of the volume impact. Performance across the export channels remained mixed, with bulk cement supported by more resilient demand, while bagged cement continued to underperform. Concrete revenues decreased by 23.2% compared with the third quarter of 2025, reflecting a 24.9% decline in sales volume. This was mainly attributable to a lower contribution from special projects, weaker demand related to public works, and reduced activity in industrial and architectural projects. Better pricing partly cushioned the impact of lower volumes.

Railroad revenues decreased by 2.2% year over year in the third quarter of 2026. Favorable pricing dynamics were not sufficient to offset a 7% decline in transported volumes, mainly due to lower shipments of grain, frac sands and granitic aggregates. This was partially compensated by higher volumes of chemicals and gypsum, supported by the resumption of services to Bahía Blanca from the repair of the rail section that had been damaged by last year’s storms.

Revenues in the aggregates segment increased by 3.7% year over year as a strong pricing environment and an improved sales mix more than compensated for a 16.1% contraction in volumes. Volumes were affected by similar factors to those in concrete, particularly weaker demand from public works and construction companies. Moving on to slide 7, consolidated gross profit decreased by 4% year over year, with gross margin barely contracting 14 basis points to 17.2%, mainly reflecting lower net revenues, partially mitigated by also lower cost of sales. Cost of sales decreased by 3% year over year, primarily reflecting lower costs in the cement and concrete segments, partially offset by higher cost of sales in the railroad and aggregates businesses. In the cement segment, cost of sales increased on a per-ton basis and suffered a minor increase mainly driven by higher depreciation.

Excluding this effect, unit costs remained broadly in line with last year. The use of clinker produced during the warmer months, together with the planned kiln shutdowns, helped mitigate seasonal energy pressures alongside lower fuel, electricity, packaging and contractual costs. In railroad, the increase of cost of sales was mainly related to higher track maintenance costs and, to a lesser extent, higher third-party services and payroll costs. The concrete segment narrowed its gross loss compared with the third quarter of 2025, although it still remained in negative territory.

Finally, SG&A expenses increased by 16.1% year over year, mainly driven by higher advertising and promotional spending as well as consulting and IT services. As a percentage of sales, SG&A reached 11.1%, up 184 basis points compared to the third quarter of 2025. Please turn to slide 8. Consolidated adjusted EBITDA for the quarter reached $42 million, up 16.2% year over year, while in pesos it stood at Ps. 54.2 billion, representing a 6.7% decline. The decrease in pesos was primarily driven by weaker performance in the railroad segment and, to a lesser extent, lower contribution from other businesses, partially offset by improved results in cement and concrete. As a result, the consolidated adjusted EBITDA margin contracted by 74 basis points year over year to 20.1%, while remaining broadly stable compared with the previous quarter.

In the cement segment, the adjusted EBITDA margin expanded by 67 basis points year over year to 24.9%, primarily reflecting firmer pricing dynamics. This more than offset the pressure on unit costs from lower volumes, which limited the dilution of fixed costs, as well as higher SG&A expenses. In the concrete segment, the adjusted EBITDA margin improved 220 basis points to negative 4.6% compared with minus 6.8% in the third quarter of 2025, supported by better pricing.

However, the segment remains in negative territory as current volumes are still too low to adequately cover its cost structure. In contrast, the railroad segment adjusted EBITDA margin turned negative, reaching negative 11% in the third quarter compared with positive 3.4% in the same period of 2025, mainly driven by the higher costs discussed in the previous slide, partially offset by lower SG&A expenses. The aggregates segment also recorded margin contraction, with its adjusted EBITDA margin declining to 19.4% from 16.7% in the same period last year.

A stronger pricing environment partially mitigated the impact of lower volumes, while higher costs continue to weigh on the segment’s profitability. Moving to the bottom line on slide 10, net income attributable to owners of the company amounted to Ps. 15.2 billion in the quarter compared with a net loss of Ps. 11.3 billion in the third quarter of 2025. The improvement was primarily attributable to a net financial gain in the quarter compared with a net financial loss in Q3 2025, despite weaker operating performance. This improvement was partially offset by higher income tax expenses as the company recorded a net tax expense in Q3 2026 compared with a net tax benefit in the same period of the previous year.

On the financial side, the company recorded a net financial gain of Ps. 8.5 billion in the quarter compared to a net financial loss of Ps. 38.3 billion in the same period of 2025. This year-over-year improvement mainly reflects a more moderate pace of peso depreciation as well as lower net financial expenses, which declined to Ps. 7.9 billion from Ps. 23.3 billion in the third quarter of 2025, primarily due to lower financial expenses. Moving on to the balance sheet, as you can see on slide 11, we ended the quarter with net debt of Ps. 220 billion and a net debt to adjusted EBITDA ratio of 1.0x, a significant improvement from 1.39x a year ago and 1.47x at the end of 2025. Cash flow from operating activities totaled Ps. 86.3 billion in the quarter, more than doubling the Ps. 42.6 billion generated in the third quarter of 2025. This year-over-year improvement was mainly driven by favorable working capital dynamics, reflecting an improvement in trade and other receivables together with lower inventory levels and higher tax payables.

Regarding investing activities, the company used Ps. 18.8 billion, with capex totaling Ps. 18.1 billion compared to Ps. 19.5 billion in the same quarter of last year. On the financing side, the company used Ps. 25 billion during the quarter, mainly related to loan repayments, compared to net cash generated in Q4 of 2025 when the company issued its Class 5 corporate bonds. In US dollar terms, net debt stood at $145 million with an average debt maturity of 1.2 years. As of quarter end, 91% of the total debt was denominated in US dollars, while the remaining balance in pesos. As Sergio mentioned, after the close of the quarter on October 22, we issued our Class 7 corporate bond in the local market for $150 million with a 30-month fixed tenor and a 6.25% interest rate. The transaction was very well received by the market, and we would like to thank all the investors who, as in each of our issuances, continue to place their trust in the company.

Proceeds will be used mainly to refinance upcoming structured debt maturities, extending the average maturity of our debt and further strengthening our debt profile. Now, for our final remarks, I’ll hand the call back to Sergio. Thank you.

Sergio Damian Faifman (Chief Executive Officer)

Thank you, Marcos. Now to finalize the presentation, I please ask you to turn to slide 13. Industry volumes continue to come in below our expectations, still heavily affected by a particularly rainy winter. September showed that demand responds quickly when the weather conditions are supportive, which we see as a positive sign as we look ahead. At the same time, many of the large-scale projects linked to the RIGI regime, whose filings and approvals until recently were only news, are now becoming a reality, with several of them already getting underway even before year end. We expect their contribution to demand to gradually build as months go by. Bagged cement, in turn, is a segment where the outlook remains less clear and which recovery will depend more closely on the evolution of the real economy, real wages and the return of credit.

In this context, Loma Negra Cia Industria remains focused on maintaining healthy pricing dynamics and strict cost discipline in order to preserve profitability. Finally, I would like to highlight the successful debt placement completed in October, which strengthened our financial position and reaffirmed investor confidence in our company. This is the end of our prepared remarks. We are now ready to take questions. Operator, please open the call for questions.

OPERATOR

Thank you. We will now conduct a question and answer session. If you would like to ask a question, please press star then one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star then two if you would like to remove your line. For participants using speaker equipment, it may be necessary to pick up your handset prior to pressing the keys. Once again, star one on your telephone keypad.

We also would like to ask that you please limit your questions to one question and one follow-up, please. If you have additional questions, you may requeue for those questions and they will be addressed. Also please note that Mr. Sergio Faifman will be responding in Spanish immediately following an English translation. Please hold momentarily while we assemble our roster. Our first question comes from Celcia Vacca of Latin Securities. Please go ahead.

Celcia Vacca (Analyst)

Hi Loma team. Thank you for taking my question. It’s regarding volumes and what are the main drivers you see for 2027 that were not present in 2026. Thank you.

Sergio Damian Faifman (Chief Executive Officer)

Hi Sophia, thank you for your question. The truth is that what we have seen is a change in the weather conditions that impacted severely during 2026. And when you see an improvement, like in September, when the weather was better, the volumes start to pick up. In October, again with some rain, volumes are again below. But when we see days with good climate, the difference is between 15 and 20% with these days, with these rainy days. And what we are seeing looking forward is some projects that we are participating in, tenders linked to the RIGI regime. For example, we communicated that Loma is going to be participating in the project of a plant of urea, and we are also participating in some other tenders and projects that should boost volumes. Looking forward to 2027, the sum of these two factors and also, coupled with a recovery of the economy, we are optimistic about the outlook for next year.

Celcia Vacca (Analyst)

Thank you. And sorry, you mentioned the project with Pampa, how much it represents in terms of dispatches for Loma?

Sergio Damian Faifman (Chief Executive Officer)

Individually there is no project that has a significant weight in terms of cement dispatches. It’s more the sum of these projects that will impact our volumes. But, punctually, this project is around 300,000 and 350,000 cubic meters of concrete.

Celcia Vacca (Analyst)

Thank you.

OPERATOR

Our next question comes from Andres Cardona of Citi. Please go ahead.

Andres Cardona (Analyst)

Hi, good morning everyone. Thanks for the presentation and the opportunity to ask questions. Maybe a follow-up from the RIGI evidence on your backlog. If you could share some color about how it’s looking like versus, I don’t know, one year ago, and if you see evidence of the RIGI—you kind of mentioned it—that is boosting demand, but how much it could drive demand in 2027. Also if you could share some outlook about pricing and margins for the 4Q26.

Thank you, Sergio.

Sergio Damian Faifman (Chief Executive Officer)

Hi Andres, thank you for your question. We don’t have exact figures in terms of tons and volumes regarding the RIGI for 2027. But what I can say is that we are participating in several tenders that are significant projects, and many of those have periods of 24, 30 months. And there are also projects linked with mining that we are seeing if they start. Probably these mining projects are a little bit backlogged due to the political atmosphere, but we are waiting to see the follow-up of that.

All the projects linked to oil and gas are advancing at a more accelerated pace. In terms of pricing, as you have seen, we are consolidating our strategy on pricing, and we are looking forward to consolidate this strategy and path. Con niveles similares, with similar levels of prices. And on the other hand, always looking for opportunities regarding fixed costs and variable costs to improve our profitability.

OPERATOR

And this concludes our question and answer session. I would like to turn the conference back to Diego Halon for closing remarks.

Diego Halon (Head of Investor Relations)

Thank you very much to you all for joining us this morning. We look forward to meeting you again in our next call for the upcoming quarter. And obviously, if you have any other questions, you can reach the IR team. Thank you very much.

OPERATOR

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.