Good morning, everyone. Thank you for being here with us today to discuss our second quarter results. My name is Carolina Velásquez . I am Cementos Argos Investor Relations Officer, 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, Carlos Yusty, the VP of the Colombia Division, and Gustavo Uribe, the Leader of Central America. 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 webpage. It is now my pleasure to turn the call over to Juan Esteban.
Thank you, Carolina, and welcome to everyone joining us today. Since our last conference call, we achieved three key milestones, and I would like to start by highlighting them. First, we completed the spin-off of Cementos Argos portfolio in Grupo SURA. With this strategic decision, Cementos Argos becomes a pure player in the heavy business materials industry, concentrating all its investments and resources on it. Furthermore, as we have mentioned before, this distribution of COP 1.4 trillion added to the COP 1 trillion in cash dividends that are being distributed this year represents a dividend yield of 18%, well above the industry average of 2% and the highest among our peers. Finally, this transaction, in conjunction with Grupo SURA and Grupo Argos' simultaneous spin-offs, was a breakthrough in Colombia's business history. We are hopeful that it will increase liquidity and investors' interest in our company and in our capital markets.
The second milestone is a major advancement in the first of the two-phase journey to reenter the U.S. market, which is an essential part of our long-term growth strategy. In this first phase, that refers to the consolidation of the aggregates platform, we acquired a 60% stake and took control of the operations of a major aggregates asset in the Caribbean, with significant reserves and access to a deepwater port, a long-term concession with more than 50 years remaining, and the potential to produce 8 million short tons by 2030. Moreover, we secured a strategic lease option for a deepwater port location on the southeastern U.S. coast. With these two assets and others to come, according to our plan, we will serve the southeastern coastal region that has an estimated and met demand by local supply of 93 million short tons.
Our goal is to generate between $100 million and $150 million in additional EBITDA by 2030. Finally, we are pleased to share that we were selected again to be part of the FTSE4Good Index, demonstrating strong environmental, social, and governance practices aligned with the highest global standards. In summary, we start the second semester with solid accomplishments in our plan to create sustainable value for our shareholders with clear strategic focus and long-term vision. We are confident that with all the different initiatives across the organization carried out with our expertise and best-in-class capabilities, we are in a strong position to continue Cementos Argos' growth and profitability path. Now, I would like to invite Felipe to discuss further the execution of our spring program.
Thank you, Juan, and good morning, everyone. With Grupo SURA portfolio distribution, we reached a total shareholder return of 480% in U.S. dollars and 380% in Colombian pesos. Over the last few months, we've achieved three key milestones, as Juan Esteban mentioned, and made relevant progress on the other pillars. Regarding our first pillar, in terms of financial results, we remain committed to our guidance towards achieving an EBITDA margin above 25% over the next two years. In this second quarter, we delivered a consolidated margin of 22%, driven by a consistent pricing strategy and efficiency initiatives to counteract the challenges experienced in volumes in the different markets. We also reached a return on capital of 14.8%, which is within our end-of-year guidance range of 14%- 15%.
As part of the second pillar related to distributions to our shareholders, we've paid out COP 385 per share in dividends so far, for a total of COP 500 billion, which is 50% from the COP 1 trillion to be distributed this year, as approved in the last shareholders' meeting. Moving into the third pillar, which considers our share buyback program, we've executed 68% of the COP 500 billion authorized under the current phase, equivalent to approximately COP 340 billion. With respect to the fourth pillar, improving liquidity and market visibility, we keep advancing on our goal to be included in the MSCI Emerging Markets Standard Index. Given that trading volumes have been increasing consistently, we believe we are well-positioned for this to happen in the shorter term.
Now, turning to the fifth pillar, we concluded a historical transaction, in which Cementos Argos is a spin-off of Grupo SURA's share portfolio worth around COP 1.5 trillion. This transaction marks another milestone in value creation for our shareholders, delivering around COP 1,200 per share for a consolidated dividend yield of 18% for 2025. It also enables the company to continue strengthening its strategic focus on the building materials industry. Also, reinforcing his words, this operation benefits Colombian capital markets by promoting greater liquidity and improved price discovery. Finally, on the sixth pillar, tied to our growth strategy, we acquired a prime export-oriented aggregates asset in the Caribbean and secured a lease option for a port in the U.S. southeastern coast. This marks a significant step forward in a strategy to reestablish a presence in the U.S.
market that comprehends both inorganic and organic initiatives, aiming at rebuilding a sustainable asset-light operation capable of generating $300 million in annual EBITDA within the next three to five years. The concrete steps taken so far reflect our commitment to investing the proceeds from the Summit Materials stake sale in a disciplined, thoughtful, and value-driven manner. In light of this, we've been investing those proceeds through a number of global asset managers in low-risk liquid investments based on our Board of Directors' mandate to have a maximum one-year duration portfolio as we prepare for redeployment. We expect to generate around $110 million in financial income from this portfolio over the next 12 months. Before concluding, I'd like to emphasize that we remain firmly on track to achieve the milestones included in each pillar based on a disciplined and focused execution of our strategy.
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 second quarter of 2025. During the quarter, we reached revenues of COP 1.28 trillion and an EBITDA of COP 295 billion. This represents a 23% EBITDA margin and an expansion of 225 basis points in comparison to 2024. Although we experienced a challenging construction environment where both our cement and ready-mix volumes decreased by 4.4% and 19.7% respectively, this margin improvement was achieved by a solid pricing strategy and our consistent execution of efficiency initiatives. Net profit accounted for COP 245 billion, representing a 19.1% margin. The results for this first half of the year totaled COP 2.5 trillion in revenues and COP 554 billion in EBITDA, with a margin of 22%, demonstrating Cementos Argos' resilience to endure complex market dynamics and macroeconomic ambiguities.
Net profit reached COP 381 billion, almost two times the net profit of the same period of 2024, mainly explained by lower financial costs. As we move into the regions, we find mixed results with an overall positive balance. They include, on one side, the recovery in volumes in June in Colombia, the continuous market growth of Puerto Rico and the Dominican Republic, and on the other side, the unmet demand in Guatemala due to lower exports from Honduras derived from the kiln stoppage and the still lagging Panamanian market. 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, the second quarter, although challenging as the beginning of the year, finished with a promissory recovery. April marked the lowest point in volumes, while June recorded the highest daily average sales of the year so far, a trend that has continued into July. We reached revenues of COP 691 billion for the quarter and COP 1.34 trillion for the semester, a decrease of 9.5% versus 2023, mainly explained by lower volumes in cement, ready-mix concrete, and aggregates. Dispatches were 1.23 million tons in cement and 518,000 cubic meters in ready-mix concrete. These results occur in the context of a stagnant local industry as a consequence of higher interest rates and lower subsidies. EBITDA accounted for COP 172 billion in the quarter and COP 343 billion year to date.
The latter represented a margin of 25.5% and an expansion of 95 basis points versus the first half of 2023. This margin improvement was possible due to our focused pricing strategy carried out in conjunction with our go-to-market strategy, mind-to-market, to deliver our clients' superior experience, added to the operational excellence program that has brought efficiencies in the cost of goods sold of around COP 20 billion. This looks even more meritorious considering that part of the improvements was offset by higher-than-expected maintenance costs in our Cartagena plant and certain non-recurring expenses, including organizational adjustments aimed at strengthening our long-term efficiency. Lastly, we reached the highest last 12 months free cash flow conversion ratio since 2021 over EBITDA and 21.5% over revenues, well above global industry peers' average of around 8%.
Looking ahead, we expect improved market conditions in the second half of the year, supported by a stronger performance on two fronts. First, some commercial and infrastructural projects that are carried out at a city level, especially in the center and northern area of the country. To support this improving demand, we are considering some capacity expansions in our ready-mix concrete business that entail minor CapEx investment and interesting returns. Second, the continuation of key infrastructure projects along the country, such as Hidroituango and Bogotá's Metro, and the activation of others like Quora and Arena Primavera. Moreover, in the midterm, we continue to envision improved dynamics in housing based on the increase of 25% in national housing sales versus the first semester of 2023.
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 second quarter of the year, we exhibited a slight improvement in our cement volumes, having an overall year-to-date growth of 1.9%, totaling 2.1 million tons. Revenues were $141 million for the quarter and $278 million for the semester, with EBITDA margins of 26.9% and 24%, respectively. The expansion of 184 basis points in the margin this quarter was mainly due to initiatives implemented to lower the cost of cement, SG&A, and fixed costs all across all our operations. Starting with Central America, revenues for the quarter accounted for $59 million, with an EBITDA of $18 million. The EBITDA margins stood at 30.4%, achieving an expansion of 175 basis points versus the same quarter of 2024. This significant improvement was a consequence of disciplined execution of right-sizing and efficiency initiatives.
As for regional cement volumes, we reached 400,000 tons during the second quarter, suffering a decrease of 4.8% on a year-to-date basis, explained by a lagged Panamanian market and lower dispatches in Honduras derived from a kiln stoppage in the first quarter. Cement prices remained stable during the first half of the year. By country, we found the following results. In Honduras, despite having a continued market growth of around 13%, we had lower dispatches locally and to Guatemala derived from the kiln stoppage in the first quarter that led to lower inventory for the second quarter. We are already operating under normal conditions and expect to recover positive traction, also supported in the pozzolan dryer project, which will help with more stable production. Moving to Panama, we are still navigating a contracted market, which has had a decrease in demand of around 12%.
However, we have been strengthening and adjusting our business model to counteract this situation. As a result, we have the terminal experiencing a substantial growth in dispatch volumes, going from a negative EBITDA to $1 million in the first semester with a 40% margin. Businesses are already contributing to revenues, such as the aggregates. Moving to the Caribbean region, we experienced this year an impressive recovery after challenging post-pandemic years. Quarterly revenues reached $72 million, representing a growth of 6.9%. The EBITDA margins stood at 22.9%, which meant a 312 basis point expansion when compared to 2024. We observed an overall volume expansion of 1.7% for the quarter and 3.6% for the semester. This increase was driven primarily by solid market dynamics in the Dominican Republic, Puerto Rico, and a strong recovery from Haiti and Salos.
In the Dominican Republic, the market continues to experience a growth of demand of around 2%, supported in tourism and other services, and we continue to operate at full capacity with our expansion project financials exceeding the business case. Our year-to-date cement volumes grew 6.5%. In Puerto Rico, volumes continue to positively evolve, posting a 3.1% increase year to date, mainly driven by a booming touristic industry as well as a growing entrepreneurial ecosystem that is generating new employment. Finally, I would like to highlight the encouraging news regarding Haiti, where we managed to stabilize the operations with an alternative business model that reached break-even and has had positive results for the last three months. In summary, despite the challenges in the region, Cementos Argos has shown once more a resilient and flexible business model, able to adapt and maintain profitability despite the suboptimal market dynamics and unforeseen situations.
Thank you, Gustavo. Now, regarding our balance statement, our net debt-to-EBITDA ratio is -7x for the second quarter, reflecting our strong cash position derived from the Summit t ransaction. Looking ahead, we want to reiterate our firm commitment to our 2025 guidance, supported by improved market dynamics, continuous optimization efforts, and our focus on making sustainable and profitable investments. Carolina, we can proceed now with the Q&A section.
Thank you, Juan. We'll proceed now 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. Take into account that you need to unmute your microphone before you speak. First question comes from Mario Simplicio from Morgan Stanley.
Hi, Cementos Argos team. Thanks for taking my question. Congrats on the results. I have a question in Colombia. We are seeing some early signs of improvement in the market, as you mentioned in the remarks. I wanted to know what are the trends heading to the second half of the year and across which verticals are you seeing better trends? My second question is on the exports in Colombia. We saw a significant decrease on volumes there year over year. I just want to understand if this can be explained by the maintenance in the Cartagena plant and what should we expect for exports in the remaining of the year? Thank you.
Thank you, Mario, for your questions. We are seeing positive dynamics in Colombia. As Carlos mentioned, starting in June, we saw a change in the trend of demand in Colombia. Daily average sales are even better than in July. The consumer segment of the market continues performing well, and the reality is that we see a better trend in new housing sales, with a 20% increase in sales in the second half of the year. The trend in housing starts improving as well, and the reality is that local municipalities and local governments are starting to deploy more infrastructure projects. We are foreseeing a way better second half of the year in terms of demand in Colombia. In terms of exports, we made the decision to shut down a wet kiln in Cartagena last year.
The reality is that we have a lower export capacity now out of Cartagena because of the decision to shut down kiln number three. That was a wet kiln in Cartagena that we shut down for not only environmental reasons, but also to improve the cost profile of our export operation out of Cartagena.
Gotcha. That's clear. Thank you.
Next question comes from Simón Londoño from Bancolombia.
Good morning, everyone, and thank you for the presentation and for taking my question. I would like to ask if you could provide more details about the cement industry in Colombia, considering that key sectors are still lagging behind, and what you believe could be the catalyst that drives cement demand in the short to medium term regarding your prices strategy.
Thank you, Simón. Carlos will provide more color. What is helping is that, in my opinion, interest rates have been decreasing, and that has started to reflect in higher demand in the market. Carlos Horacio will provide more color on the expectations for Colombia the second half of the year. Go ahead, Carlos.
Okay, Juan. Hi, Simón. We think that the catalyst would be the interest rate, like Juan was mentioning, and the inflation as well. When you see in the past, when the inflation is really low, the retail segment would increase, and that is happening this year. In the last three months, the retail segment is increasing by low single digits, but it's increasing when you compare that to last year. The trend is changing, and it's because of the inflation and the interest rate as well. Like Juan mentioned, in the second half of the year, we're starting a lot of infrastructure projects in the municipalities and at the state level. For instance, here in Antioquia, the governor and the mayor of Medellín put some resources to finish the Tunnel del Toyo. In Bogotá, we are starting the service of a new project that is very important for Bogotá.
It's called Quora. It's a very important project in Bogotá. The same is happening in Cartagena as well, and at the level of Cartagena, but as well it will happen at the level of the Bolívar estate. For that reason, we are optimistic. Obviously, we have not tremendous optimism, but we are optimistic that the trend is changing for this region, Simón.
Okay. Thank you.
Thank you. Next question comes from Santiago Villanueva from Davivienda Corredores.
Hi, good morning. For the results, I have two questions. The first question is, could you please tell us more about the impacts on net income from non-recurring items and whether we should expect more non-recurring items in the coming quarters? We also see an adjusted net income for this quarter of COP 245 billion, but what should the adjusted attributable net income be? The second question is regarding this asset-light U.S. export platform. In what year should this EBITDA begin to be generated and how much should it be in the first year? What is the CapEx to reach that level of COP 150 million EBITDA on this platform by 2030? How will it be distributed by year?
Thank you very much, Santiago. Felipe, we'll answer your call regarding the adjustments and the net income question.
Hi, Santiago, and thank you for your question. Regarding the first one, we're constantly optimizing and reviewing opportunities to fine-tune our operations. In the process, some assets might be considered not necessary for operations, such as the case with the plant in Puerto Rico. This is what explains the adjustment over the second quarter of the year. This adjustment doesn't—we're not expecting any further adjustments coming from the Puerto Rico operation, and this has no impact on the—no negative impact on the cash flow of the company. Regarding your second question, we are expecting to reach this level of EBITDA over the next five years, and we expect that the total capital that is going to be needed to execute this plan is going to be well below the $0.5 million mark.
Okay, thank you.
Next question comes from Mariane Goñi from Credicorp Capital.
Hi, good morning. Thank you for the presentation. I have two questions. The first one is how much of the proceeds from the Summit sale went toward acquiring the new Caribbean platform? If you could give us more color about that acquisition. The second one is regarding financial expenses. Could you explain why financial expenses were higher compared to the first quarter of this year? Thank you.
Thank you for your questions, Marian. As Felipe was mentioning, we will deploy an insignificant portion of the profit from the sale of Summit to Quikrete in the first phase of our export platform to the U.S. With the acquisition that we completed in the Caribbean, we will have assets with export potential of aggregates to the U.S. now in Panama, Costa Rica, Colombia, and the Dominican Republic. In the first phase, we are foreseeing CapEx deployment of between COP 200 million and COP 250 million that will include several terminals in the U.S. for the imports. The last acquisition that we made is a significant property. It has massive reserves, close to 4,000 acres of land for the concession, very, very close to the ocean, access to deepwater ports, high-quality materials. The reality is that we have already conducted tests of the materials in U.S.
labs, and we will start shipping in September to start building inventory to secure DOT permits in a few states in the U.S. The reality is that we are extremely optimistic regarding the future of our export platform, but it will not require a significant amount of the resources that we received from the sale of Summit to Quikrete. Regarding the second question, Felipe will provide the answer about financial expenses.
Right now, we hold our gross level of indebtedness at COP 3.17 trillion. The gross cost of debt for us is right now close to 11.5%. That level has remained very stable recently, but the interest expense represents around 80% of financial expenses. The remaining 20% is associated to the recognition of other expenses. Half of those expenses do not require cash disbursements, and they are associated to the recognition on some pension fund liabilities and other expenses paid to banks and financial institutions. It is in this latter category that the main difference, which is what explains the main difference between the EBITDA of the first quarter of the year, is the payment of certain fees to financial institutions.
Thank you all. Juan, there are no more questions.
Okay. Thank you so much for participating in our second quarter conference call, and we look forward to providing results in our third quarter conference call coming soon. Thank you so much, and have a great day. Thank you for your interest in Cementos Argos.