Cementos Argos (CEMARGOS) Q2 2024 earnings summary

Executive summary

• SPRINT 2.0 and efficiency strategies drove a 20%+ share price increase and a sixfold rise in trading volumes since February, with enhanced dividends and share repurchases.

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

• Adjusted EBITDA margin reached 21.5% YTD, up 249 bps year-over-year, with Q2 margin at 20.7%.

• Net income for 1H24 was COP 200 billion, down 21.5% year-over-year, with most profits expected in 2H24 due to Summit seasonality.

• Operations in Colombia, Central America, and the Caribbean delivered solid results despite challenging demand in some markets.

Financial highlights

• Adjusted EBITDA for Q2 was COP 279 billion, up 10.7% year-over-year; YTD EBITDA reached COP 570 billion, up 5.9%.

• Adjusted revenue for Q2 was COP 1.34 trillion, down 3.4% year-over-year; 1H24 revenue was COP 2.66 trillion, down 6.4%.

• Net profit for the quarter was COP 127 billion, net margin 9.5%; YTD net margin at 7.5%.

• Market cap at $2.8 billion, float-adjusted at $1.3 billion; TSR up 300% since SPRINT launch.

• Trading unit EBITDA grew 7% in Q2; trading volumes up 46% in Q2, supported by Summit supply agreement.

Outlook and guidance

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

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

• Maintenance CAPEX: USD 110–130 million; growth CAPEX: USD 262–273 million.

• Expectation of stable prices and demand in Central America and the Caribbean; Colombia demand to remain challenging in 2024, with potential improvement in 2025-2026.

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