Good morning, everyone. Thank you for being here with us today to discuss our first quarter results. My name is Indira Díaz. I am Cementos Argos Financial Manager for the Colombia division, and I will be hosting today's call. On the call today are Juan Esteban Calle, our CEO; Felipe Aristizábal, our CFO; María Isabel Echeverri, the VP of Legal Affairs; Gustavo Uribe, the Leader of Central America; and Carlos Yusty, the VP of the Colombia division. First, I would like to ask you to carefully read the legal disclaimer that is currently being projected on the screen, which is also available on the presentation that is posted on our website. Please consider that all the discussions of the financial and operational results held during the call will be based on the adjusted figures, excluding non-recurring and non-core operations.
For a detailed reconciliation of the adjustments, please refer to the annexes of our presentation. Today, after the initial remarks, there will be a Q&A session. If you have a question, please raise your hand by pressing the icon at the bottom of your screen at any time during the conference. We will record this session and upload it to our web page. It is now my pleasure to turn the call over to Juan Esteban.
Thank you, Indira, and welcome to everyone joining us today. During the first month of the year, we continue advancing on the pillars of our Sprint 3.0 program, reaffirming our commitment to generating sustainable long-term value for our shareholders. One of the most significant milestones of the quarter was the unanimous approval by both our bondholders and shareholders of the spinoff of Cementos Argos portfolio Grupo SURA during the meetings held on March 21 and March 25, respectively. As a result, and in conjunction with the approval of this year's dividend distribution plan, Cementos Argos will distribute approximately COP 2.2 trillion to its shareholders, consisting of COP 1 trillion in cash dividends and COP 1.2 trillion in shares of Grupo SURA, which entails a dividend yield of 17%, significantly above the industry average of around 2%, and the highest among its peers.
This transaction will allow our shareholders to directly capture the value of an asset that is not reflected in the price of our share. It was supported not only by our stakeholders but also by credit rating agencies such as Fitch, which issued a report confirming that the transaction would have no impact on our credit rating and performance. Moreover, as part of our long-term strategy and after receiving an offer to acquire 100% of the outstanding shares in Summit Materials, in which we held a 31% stake, we announced during last quarter's result our firm intention to re-enter the U.S. market by building a new and sizable platform with the commitment to generate significant value to our shareholders. This decision is fully aligned with our strategic vision, which focuses on value creation and sustainable long-term growth in markets where we have proven capabilities and competitive advantages.
Aligned with this vision, we are advancing in the consolidation of an aggregate platform in Central America and the Caribbean in assets with unique export capabilities driven by the high quality of their materials, proximity to the water, which significantly reduces logistical costs, and a sufficient reserve base to meet the growing demand in key coastal U.S. markets estimated at approximately 640 million tons per year in this business line. This initiative would mark an important step forward in our international growth strategy, with the potential to significantly contribute to both volume and EBITDA in the medium term. It forms part of a broader roadmap that combines organic and inorganic opportunities, including the possible incorporation of complementary assets such as port terminals positioned in Cementos Argos for sustainable expansion and significant exposure to the U.S. market.
In summary, we begin this new phase with solid fundamentals supported by a robust balance statement, strong execution capabilities, and a clear strategic focus. Our disciplined use of capital and long-term vision reflects our firm commitment to creating sustainable value for our shareholders. With the right structure, expertise, and priorities in place, we are well-equipped to continue driving Cementos Argos' growth throughout 2025 and beyond. Now, I would like to invite Felipe to discuss further the execution of the third version of our Sprint program.
Thank you, Juan, and good morning, everyone. This quarter, we continued making significant progress in the execution of Sprint 3.0. Since launching the first version of our strategic plan, our total shareholder return in dollar terms has reached approximately 380%, on the back of higher trading volumes and the successful execution of key initiatives to address frictions preventing the stock price from converging to its fundamental value. Regarding our first pillar of profitability, we remain focused on our goal of achieving an EBITDA margin above 25% over the next two years. In this first quarter, we delivered a consolidated margin of 21%, despite a challenging environment demonstrating the effectiveness of our cost optimization initiatives and our strategic focus on higher margin projects. We also remain committed to reaching a return on capital of between 14% and 15% by the end of the year.
As part of the second pillar, focused on shareholder distributions, as Juan just mentioned, we held our annual shareholders' meeting on March 25th, during which we approved COP 1 trillion dividends, split evenly between a base dividend and an extraordinary dividend funded by the proceeds from the sale of our 31% stake in Summit Materials. This represents a 71% increase compared to 2023, and when combined with the Grupo SURA portfolio to be distributed, this implies a total dividend yield of 17%, which reinforces our commitment to maximize shareholder returns. In terms of the third pillar related to our share repurchase program, we have executed approximately 60% of the COP 500 million authorized under the current phase, equivalent to approximately COP 300 million. With respect to the fourth pillar, improving liquidity and market visibility, we've made tangible progress.
Trading volumes continue to rise, and we believe we are well-positioned for potential inclusion in the MSCI Emerging Markets Index Standard section in the short term. Now, turning to the fifth pillar, as Juan mentioned before, we achieved a key milestone with the approval of the spinoff of our Grupo SURA shares during the extraordinary shareholders' meeting held on March 25th. Under this structure, our shareholders will receive approximately two Grupo SURA shares for every 100 shares of Cementos Argos, likely toward the end of 2025 or early 2026. This portfolio is currently valued at around COP 1.2 trillion and represents a significant step in allowing shareholders to directly realize the value of this asset, which, in our view, is not currently reflected in the price of our shares.
Finally, aligned with our sixth pillar of growth, as we mentioned at the beginning of the call, we are in the final stages of acquiring a prime aggregate asset in the Caribbean. This marks a significant step forward in our strategy to re-establish a presence in the U.S. market. The asset is part of a broader series of strategic acquisitions aimed at strengthening our logistics and export platform, capitalizing on geographic advantages and the growing demand in key U.S. coastal markets. This transaction also reflects our disciplined approach to capital allocation, deploying the proceeds from the Summit Materials divestment in a thoughtful and value-driven manner. Phase one of our redeployment of capital in the U.S. market is comprised of organic growth opportunities and bolt-on acquisitions to complement our aggregate export platform.
This strategy is designed to build a sustainable, asset-light, and export-oriented platform that will be later complemented with inorganic growth. Ultimately, all these efforts are aligned with our ambition to create a business capable of generating around $300 million in annual EBITDA over the next three to five years. Before concluding, I'd like to highlight that we are executing this strategy with discipline, focused, and a clear long-term vision, backed by strong progress across all strategic fronts and a robust financial position. We are confident in our ability to meet the goals we've set. Based on our performance so far this year, we remain firmly on track to achieve a 400% total shareholder return in dollar terms by the end of this year.
Thank you, Felipe, for your intervention. Before moving into the regions, I would like to share a few insights from our consolidated results for the first quarter of 2025. During the quarter, revenues reached COP 1.23 trillion and an adjusted EBITDA that totaled COP 258 billion, with a margin of 21%. While this reflects a contraction compared to the same period of last year, it highlights the company's operational resilience and the positive impact of our efficiency initiatives across key regions. The 121 basis points compression in EBITDA margin is mainly explained by Honduras that included a biannual scheduled key stoppage in our Piedras Azules plant and a challenging market in Panama. Adjusted net income reached COP 137 billion, representing a 7.5% increase versus the first quarter of 2024.
This figure excludes the one-time gains from the sale of our stake in Summit Materials and adjustments related to the equity method, making it fully comparable to this year's results, which no longer include the U.S. operations. From an operational perspective, Cementos Argos' volumes declined by 6.3% and 19.4%, respectively, impacted by a combination of local demand dynamics and adverse weather conditions that disrupted our export flows to the U.S.. Nonetheless, we observe solid progress in initiatives such as the mine-to-market program in Colombia, as well as strong performance in some countries of Central America and the Caribbean, particularly in the Dominican Republic, Honduras, and Puerto Rico, which helped mitigate the effects of softer volumes in other geographies. The ready-mix volumes decline is mainly explained by the transformation of the model of our ready-mix business in Panama that took place in the third quarter of 2024.
Under the new model, our ready-mix plants and trucks are operated by our allies in the business, and we supply all their cement needs. Overall, the company continues to operate with discipline, efficiency, and a strong balance statement. We remain focused on capturing midterm growth opportunities across our core markets while leveraging our solid cash position to drive long-term value for our shareholders. Now, I would like to invite Carlos to discuss further on the performance of Colombia and our strategic view for the market.
Thank you, Juan. In Colombia, although the year began with significant challenges, we are seeing signs of the positive impact from the transformation we started a couple of years ago, aimed at building a more flexible and resilient operation through our mine-to-market program. Despite tough market conditions, we consider our first quarter performance solid. As the quarter progressed, we began to see signs of recovery. Inflation has stabilized, and interest rates are beginning to decline, slowly reactivating investment, especially in the housing sector. A clear sign of this is the 35% year-over-year increase in new home sales, which has already surpassed the monthly average seen in 2024. This rebound is a positive signal that supports our outlook for the rest of the year, where we see the greatest growth potential. Market recovery is also reflected in our operations.
Cement volumes have shown consistent month-over-month growth, with a 25% increase from January to February and 12% from February to March. That said, total local market volumes for the quarter were down 10% compared to last year. Regarding exports, volumes declined by 21.4%, mainly due to disruptions at the Savannah port caused by adverse weather conditions, which limited product storage capacity and caused lower demand from our supply agreement in the U.S.. In our ready-mix business, volumes increased by 25% and 6.5% in February and March, respectively, although they ended the quarter with a 15.5% decrease compared to last year's result. Our financial figures reflect our continued focus on operational efficiencies through the mine-to-market program. This has allowed us to maintain an EBITDA margin of around 26%, despite incurring one-off expenses related to the profitability optimization program and a challenging external environment.
This result was achieved thanks to the program philosophy of prioritizing profitability, combined with an effective pricing strategy that has allowed us to maintain a leadership position in industrial and large-scale projects. Additionally, the ongoing cost flexibilization strategy we have developed over the past few years has enabled us to navigate the current complex environment successfully. Looking ahead, we remain optimistic about the Colombian market. We expect an improved performance in the second half of 2025, supported by major projects such as Quora, a COP 2 trillion development currently under construction in Bogotá, which stands as the most important urban renewal project in the country, and the Bogotá Metro, where a key workfront we have been actively progressing since February, as well as by the strong backlog of the ready-mix business, which in total accounts for more than 1.4 million cubic meters for the upcoming months.
Moreover, housing starts, which are a fundamental driver for our industry, are expected to recover towards the end of 2025 and into early 2026, adding further momentum to the sector's recovery and reinforcing our positive outlook.
Thank you, Carlos. Now, I would like to invite Gustavo to comment on the results of Central America and the Caribbean.
Thank you, Juan, and good morning, everyone. During the first quarter of the year, we once again saw the value of having a geographically diverse footprint. Even with ongoing challenges in markets like Panama and Haiti, and the scheduled kiln maintenance in Honduras, we managed to grow our local cement volumes by 2.8%, totaling 792,000 tons. That growth was mainly fueled by our strong performance in the Dominican Republic and Puerto Rico. Starting with Central America, quarterly results were mainly impacted by an ongoing market slowdown in Panama and a 33-day kiln shutdown in Honduras. These factors drove a 29% EBITDA decline, with a margin of 20.7% down, 680 basis points year- over- year. Honduras explains approximately 365 basis points of the decline in the EBITDA margin, mainly driven by the scheduled kiln stoppage.
It is important to highlight that we are still forecasting to close the year with an annual EBITDA margin similar to the 29% posted in 2024. By country, the results are as follows. In Honduras, strong market demand drove a 6.2% year-over-year increase in volumes, combined with stable average prices. This resulted in a solid top-line growth. However, EBITDA margin was impacted by a planned major kiln shutdown, part of a five-year maintenance cycle, which, in a high-demand environment, required us to purchase costly clinker from third parties. On a positive note, the Pozzolan Dryer project, which began operations earlier this year, is now in stabilization phase and set to deliver operational improvements, particularly in mill productivity. This validates our initial investment thesis and is expected to drive further efficiencies throughout the year.
Moving to Panama, the housing market continues to be impacted by the elimination of the social housing fund, which has significantly affected demand. It is estimated that over the past year, the construction sector may have lost around $300 million in related housing transactions. Overall, the country's grey cement market has declined by 15%, in line with our cement volumes. Anticipating a challenging year and in response to current market conditions, we continue to execute our fixed cost management program at the cement plant. The goal is to create a more flexible operation layout and allow us to efficiently navigate the decline in demand. That said, in March, we saw a recovery in volumes compared to January and February, and we expect this positive trend to continue in the coming months.
Finally, I would like to highlight the monetization of our port by Yarasminas, which, after the dredge carry-out last year, we are now able to offer more attractive services to third parties, which will serve as an additional revenue stream and a cost optimization lever throughout the year. Beyond that, it plays a key role as a complementary port for aggregates export platform. Moving to the Caribbean region, a 5.7% increase in volumes, EBITDA of $13 million, and a margin of 20.2% speak for themselves. Record monthly EBITDA in March, along with strong quarterly performance, was driven by solid dynamics in the Dominican Republic and Puerto Rico, and notably by positive EBITDA in Haiti, making the first time in 18 months that the operation has posted positive figures. In the Dominican Republic, market conditions continue to support strong results.
The additional volume from the capacity expansion that came online in January has been fully absorbed by the market. In March, we reached the record dispatch volumes, and for the quarter, volumes grew 14.4% year-over-year, driving a 26% increase in EBITDA and a 259 basis points margin expansion. A similar trend was seen in Puerto Rico, where the overall market grew by 9% during the quarter. Argos volumes increased by 6.7% year-over-year, with a notable margin expansion of 295 basis points. In summary, despite temporary pressures and a mixed market environment, our regional strategy continues to yield encouraging results. In Central America and the Caribbean, we remain committed to our long-term goals and are well-positioned to face current challenges. Our focus on operational excellence allows us to capitalize on opportunities and adapt effectively to changing market conditions.
Thank you, Gustavo. Now, moving to the balance statement, our net debt-to-EBITDA ratio stands at -7.6% for the first quarter, a reflection of the strong cash position generated from the Summit transaction. While we carefully evaluate the most strategic opportunities for deploying these resources, the funds have already generated $16 million in interest income year-to-date, with an average yield of SOFR plus 11 basis points. Looking ahead, we remain firmly committed to our 2025 guidance, supported by favorable market dynamics for the remaining quarters of the year, ongoing optimization efforts, and the flexibility built in our regional operations. Indira, we can proceed now with the Q&A section.
Thank you, Juan. We will proceed then with the Q&A session. Please remember that in order to ask a question, you need to raise your hand using the icon that is at the bottom of your screen. I will say your name and company, and we'll enable your microphone. Taking into account that you need to unmute your microphone before you speak. First question comes from Marcelo Furlan from Itau.
Hi, everyone. Thanks for taking my question here. I have two. The first is related to this goal to increase this export-oriented business to the U.S.. If you'd like to, I would like to have more details regarding what are the assets that the company has seen so far, and also regarding the U.S. specifically, if you guys have already advanced in some research regarding potential assets to be acquired in the U.S. region. This is my first question. My second question is related to the Colombia division. You mentioned that the housing market has improved so far. I'd like to understand how are the company's forecasts for the cement markets in the local cement markets in Colombia and ahead of this improved housing market. These are my two questions. Thank you.
Thank you, Marcelo, for your questions. I mean, in terms of our aggregate export platform, I mean, we're making significant progress. We have secured sources both in Central America and the Caribbean that allow us to have a complete portfolio of aggregates, both limestone and granite, with very interesting sources. We will be giving additional color in the second half of the year, but I can highlight that we will have plenty of reserves, high-quality materials, sources very close to the water, and very competitive operational costs. We are extremely happy with the progress so far. We are complementing that with securing import terminals in the U.S. Once again, we will be giving additional color, and we will explain more of the size and the scope of the effort in the second half of the year.
In terms of the market in Colombia, as Carlos mentioned, new housing sales have been improving, but the reality is that the still housing start at what we consider the bottom of the market. The last 12 months, I mean, the housing start had been close to 7.5 million sq m. At the peak of the market in 2022, they were in excess of 11 million sq m. We are foreseeing with the pickup in housing sales that the market has already bottomed, and that is why we are seeing better perspective for the second half of the year and for the remaining month of 2025 going into 2026. Overall, we are forecasting a total demand of cement in Colombia of close to 12 million tons for 2025.
Okay. Thank you so much, guys.
Next question comes from Adrian Huerta from JP Morgan.
Thank you. Good morning, everyone. Juan , congrats on the announcements and on the efforts to enhance shareholders' value. I understand you're going to give more details in the second half of 2025 on this aggregate export platform. What do you have today? I mean, in terms of vessels, in terms of, I guess, in terms of import capacity in the U.S., you don't have any. What is the size of total investments that you think will be required to generate this roughly $300 million on EBITDA?
Yeah. Thank you for your question, Adrián. The $300 million target is not only organic growth. I mean, it will include inorganic growth in the U.S. as well. The first phase of our effort, which is the aggregate export platform, will not use a significant portion of the resources that we have available, but we will be complementing that effort with the acquisition of terminals in the U.S. and bolt-on acquisitions in AXE to complement that export platform, plus more transformational inorganic opportunities going forward. Phase one is only the AXE export platform, and that will not require the use of a significant portion of the resources that we have available.
It will not require.
It will not require.
Okay. So this first phase, what you have in place already, it's a total capacity to export what size of volumes in a year?
What we are foreseeing is to reach at least 6 million-8 million tons of volumes by year five.
Okay. Under the first phase, and then the second phase will add into that?
Under the first phase, without including bolt-ons, plus more inorganic opportunities in the U.S., yeah, in the local market.
Fully understood. Thank you so much.
Thank you, Adrián.
Next question comes from Paco Suarez from Scotiabank.
Hi. Good morning. Thank you for taking my question, and congrats for all the major announcements. It's quite thrilling, to be honest. On your strategy to create this new platform from scratch, it is my understanding that the terminals that you may seek are considerably low-CapEx intensive compared to the typical specialized assets that are seen in cement, isn't it? My guess is that the overall likelihood to actually execute this in a creative way is higher compared to adding cement dedicated assets. Is that the case? In that question, if I may, just remind me, and apologies for the dumb question, but just to make sure, I wanted to make sure that the maritime terminal that you had in Houston was also part of the deal with Summit Materials, and that is out of the question at the moment.
Lastly, if there is any impact whatsoever on tariffs on your agreement to supply cement, in this case, to Quikrete. Thank you.
Thank you, Paco, for your questions. I mean, to build our AXE export platform, I mean, the reality is that we are leveraging on decades of presence in Central America and the Caribbean, on our local partners, and the extensive knowledge of the market that we have. The reality is that that is going to be a light-CapEx deployment. Plus, what you mentioned is certain. I mean, to build our own network of terminals in the U.S., in the markets that we are targeting, the reality is that you can secure very interesting import terminals without deploying a significant amount of capital. It will be very accretive in terms of generating value for our shareholders. You are totally right. I mean, when Summit was sold, it included our terminal in Houston. The reality is that we will not be using that terminal going forward.
Your third question in terms of tariffs, we have seen no impact on our supply agreement with Quikrete. Moreover, they are asking for more volumes. The reality is that we have not seen any impact in the supply of imported cement to the U.S. because of the tariffs, at least not impacting our Cartagena source.
Next question comes from Gabriel Pérez from Fedigorp.
Hello, guys. Good morning, and thank you for the presentation. Regarding the Colombian segment, can you tell us more about your participation in the construction of the Metro Bogotá? Do you have projected cement dispatches for this project for 2025?
Thank you, Gabriel. I would like Carlos Yusty to give you more color on our involvement in the construction of the Bogotá Metro. Go ahead, Carlos.
Thank you, Juan. Hi, Gabriel. Yes. Actually, we are, just to give you a lot more color, in the initials of the starting of the works in the Bogotá Metro, really, we offer a very interesting bet in terms of technical, with a lot of technical values. We just started to supply the Metro in January with an amount of about 2,000 sq m per month. Now we are delivering about 7,000 sq m per month. We are attending some fronts of the work. Probably we are increasing the volume month by month because, like you know very well, our value proposal is really, really good in comparison with other competitors for this kind of works.
Okay. Thank you.
Okay, Gabriel.
Next question comes from Nicolás Gómez from CORREDORES DAVIVIENDA .
Hi, everyone. Could you hear me?
Yes, Nicolás. Go ahead.
Thank you very much for the presentation. I have two questions for you. First of all, could you please share with us the detail of the values of the net income of the controlling estate for the first quarter of this year and the first quarter of 2024, please? The second question is, could you please tell us the date or the month in which the resources start to generate revenues as we see COP 121,000? Thank you very much.
Sure, Nicolás. Thank you so much for your questions. I will ask Felipe to give you all the details.
Of course. Good morning, everyone. Regarding your second question, we received the funds on February 11th. We have been generating financial income from these resources from that date. The results that we include in our financials correspond to around six weeks of returns from these resources. Regarding the net income of the controlling estate, remember that we have shareholders in some of our operations in Central America and the Caribbean. The net income of the controlling estate corresponds to the portion of the net income that we effectively own in each of these operations. We have minority stakeholders in Honduras. They own 47% of the company. We own 53%. In the Dominican Republic, we have a partner with a 20% stake, and so on and so forth.
The net income of the controlling estate corresponds to our effective participation in the net income of these operations.
How much does it represent for this year, for the first quarter and for the first quarter of 2024? Excuse me.
The adjusted value is around COP 110 billion.
Okay. Thank you very much.
Next question comes from Laura Ardila from Citibank.
Good morning. Can you hear me?
Yes, Laura. Very well.
Okay. Thank you. Good morning. Can you please explain what is the debt management strategy for the year and what is the total debt to EBITDA target for 2025?
Thank you, Laura. I will ask Felipe to give you more calls as well. Please, Felipe.
Of course. Of course. From a structural perspective, we're targeting a total indebtedness level of around two times EBITDA. Right now, as Juan mentioned, we're close to negative 8x . Over time, we're going to use these proceeds via organic and inorganic growth opportunities. In the long term, we are targeting a 2x leverage ratio. In the meantime, we're very active in optimizing the cost of our debt on a continuous basis. We actively manage both the FX and the interest rate risk. We're also very active in positioning our debt profile to take advantage of opportunities across the yield curve. We also actively manage the effective duration of our debt as a way to optimize the cost without incurring insignificant liquidity risk. Lately, we have reduced the average life of our debt.
I mean, our cash position, we have the ability to, yeah, diminish the amount of debt we can incur in the short term as a way to optimize the overall cost of our debt. As you can see in our financials, for the first quarter of the year, we have a positive net income, which means that the return on the cash almost fully offsets the cost of our debt. We expect that situation to remain around. I mean, in the short term, we expect that as a result of these financial income and revenues, our cost of debt is going to remain, our effective cost of debt is going to remain very low until the moment we start deploying the capital to pursue these growth opportunities.
Thank you all. Juan, we have no more questions.
Thank you so much to everyone connecting to our quarterly results. We look forward to presenting the result of the second quarter of the year. A very good day to everyone. Thank you so much.