Business Context and Reporting Period
Loma Negra Compania Industrial Argentina Sociedad Anonima (NYSE: LOMA), the leading cement producer in Argentina, reported financial results for the three-month period ended December 31, 2021 (4Q21) and the full fiscal year 2021. The filing, submitted on March 7, 2022, highlights the company's operational recovery post-pandemic, the inauguration of the second production line at the L'Amalí plant, and the release of its first Sustainability Report.
Key Financial Metrics
Revenue and Profitability
- 4Q21 Net Revenue: Ps. 19,257 million (US$ 187 million), a 3.8% decrease year-over-year (YoY).
- FY21 Net Revenue: Ps. 73,668 million (US$ 655 million), a 17.3% increase YoY.
- 4Q21 Adjusted EBITDA: Ps. 6,416 million (US$ 63 million), down 10.0% YoY. Margin contracted 231 basis points to 33.3%.
- FY21 Adjusted EBITDA: Ps. 23,124 million (US$ 215 million), up 15.4% YoY. Margin was 31.4%.
- 4Q21 Net Profit: Ps. 2,795 million, a 37.4% decrease YoY.
- FY21 Net Profit: Ps. 6,344 million, a 32.8% decrease YoY, primarily due to income tax rate changes and the absence of discontinued operations income from the prior year.
Debt and Liquidity
- Net Debt: Ps. (2,760) million (net cash position) as of December 31, 2021, compared to Ps. 3,117 million debt in 2020.
- Net Debt / LTM Adjusted EBITDA: -0.12x (improved from 0.16x in 2020).
- Cash and Equivalents: Ps. 5,271 million (including investments) as of year-end 2021.
- Operating Cash Flow (FY21): Ps. 15,050 million, down from Ps. 17,189 million in FY20 due to higher tax payments.
Material Changes vs. Prior Period
- Revenue Mix: While Cement sales volumes increased 3.5% in 4Q21, revenue declined due to price dynamics. Conversely, Aggregates revenue surged 51.9% YoY driven by volume and price recovery.
- Profitability Compression: 4Q21 Adjusted EBITDA margin contracted significantly (35.6% to 33.3%) compared to the prior year, driven by margin compression in the Cement segment and higher SG&A expenses (up 20.9% YoY) due to bad debt provisions in the Railroad segment.
- Financial Results: Net profit declined sharply in both 4Q21 and FY21. The FY21 decline was exacerbated by the one-time gain from the sale of Yguazú Cementos S.A. in FY20, which is not present in the current period.
- Capital Structure: The company transitioned from a net debt position to a net cash position, reducing total debt from Ps. 9,722 million in 2020 to Ps. 2,511 million in 2021.
Outlook, Commentary, and Risks
Management Commentary
CEO Sergio Faifman highlighted that construction activity boosted cement demand to near-record levels in 2021. The company achieved a record FY21 EBITDA of US$ 215 million. Management emphasized the strategic importance of the L'Amalí plant expansion, which increased production capacity by 40% and incorporated sustainable technologies.
Share Repurchase Program
The company initiated its fourth share repurchase program in December 2021 with a maximum budget of Ps. 900 million. As of the filing date, Ps. 643 million (71.5% of the program) had been utilized.
Risks and Contingencies
- Macroeconomic Volatility: Results are heavily influenced by Argentine inflation, exchange rate fluctuations, and changes in the income tax rate.
- Segment Specifics: The Railroad segment faced margin pressure due to bad debt provisions and higher operating costs. Concrete volumes remain below pre-pandemic levels due to a lack of large infrastructure projects.
- Forward-Looking Statements: The filing includes standard disclaimers regarding risks related to economic conditions, inflation, and raw material prices that could cause actual results to differ from projections.
Investor Verification Checklist
- Verify the impact of the Argentine income tax rate change on FY21 net income versus operating performance.
- Confirm the sustainability of the net cash position given the high inflation environment and currency devaluation risks.
- Monitor the Railroad segment's recovery following the recognition of bad debt allowances in 4Q21.
- Assess the utilization rate and completion timeline of the L'Amalí plant expansion and its effect on future depreciation costs.
- Review the remaining budget and execution status of the Ps. 900 million share repurchase program.