Earnings Call: Q1 2026

May 19, 2026

Summary

Q1 revenue rose 7.1% YoY, while EBITDA fell 17.9% amid the TGP outage and U.S. plant overhauls; excluding the pipeline impact, EBITDA would have grown 4.1%. Most Latin American markets posted stronger volumes, and FY 2026 CapEx is budgeted at ~$320 million.

Greetings. Welcome to Grupo UNACEM First Quarter 2026 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. You can also ask questions via the webcast. Send your questions, and they will be answered accordingly. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Monica Paucar Toranzo, Investor Relations Manager. Thank you, Monica. You may begin. Thank you, Cheryl. Good morning, everyone, and welcome to our earnings conference call. This morning, Pedro Lerner, our CEO, will discuss the latest developments that affected our operations during the first quarter of the year. Later, Álvaro Morales, Grupo UNACEM's Corporate CFO, will present the first quarter financials in detail. Please note that we might disclose some forward-looking statements related to Grupo UNACEM based on currently known facts, expectations, and forecasts, circumstances, and assumptions regarding future events. Many factors could cause the future results, performance, or achievements of Grupo UNACEM to be different from those expressed or assumed herein, so this should be considered for reference only. Pedro, you may begin. Thank you, Monica. Ladies and gentlemen, good morning. It is a pleasure once again to share with you our performance this past quarter. Our consolidated EBITDA for the quarter reached PEN 320 million, which represents a 17.9% decline compared to the first quarter of 2025. However, there is a main one-time effect that impacted negatively our result. The TGP gas pipeline incident, which caused a stoppage in our thermal generating capacity from March 1st to March 14th and forced us to supply our clients through the spot market at the national average marginal generation cost of $63.35 per megawatt hour. Were it not for this external factor, our consolidated results for the quarter would have been 4.1% above year-over-year, which would have been even higher if the shutdown of our U.S. cement operation kiln had not been scheduled during the first quarter, but in the second quarter as last year. Having said this, we see most of the markets in which we operate with positive trends, both in volume and pricing. In Peru, our cement and precast units recorded double-digit volume growth, while ready-mix volumes have declined given the completion of large infrastructure projects last year. Ecuador and Chile operations posted strong volume growth driven by market momentum, which is also reflected in better pricing. Furthermore, in Chile, we have entered an agreement with Cementos Transex, which allows us to manufacture cement using the installed capacity at the Puente Alto plant in Santiago de Chile's Región Metropolitana as of April. All in all, we remain optimistic in the perspectives of our Latin American markets. Unacem North America also recorded a sound volume performance, although pricing still remains challenging given the market slowdown. Under the new management, we are confident that our focus on the value proposition of our portfolio and our customer centricity, together with a more integrated approach of doing business, will bear fruit in the coming months. Finally, I would like to highlight that Grupo UNACEM is now part of the Dow Jones Sustainability MILA Pacific Alliance Index. Like our recent inclusion to the S&P Global Sustainability Yearbook in the top 10% distinction category in the construction materials industry, this is once again a recognition of our thorough efforts to incorporate sustainability as a key element of our decision-making and strategy. We are honored by both recognitions. That will be all on my side. Thank you very much for your attendance this morning, and now I will pass it over to Álvaro for a detailed analysis of our financial results. Thank you, Pedro. Good morning, everyone. Thank you for joining us today. I am going to present our first quarter results. As Pedro mentioned, this period reflected two one-time effects that significantly impacted our results. Nevertheless, the trend in most of our markets remains solid. Our consolidated revenues increased by 7.1% year-over-year in the first quarter of 2026. Our portfolio volumes performed well across the board, with the exception of ready-mix in Peru. Cement dispatches registered 1.5 million tons, an increase of 10.9% versus the first quarter of 2025, which reflect both cement sold and internal transfer for ready-mix production. This confirms the positive trend in self-construction demand that we started to see the second half of last year. On the other hand, clinker exports through the Conchán terminal reached 143,000 tons, 21.5% lower than those of the first quarter 2025, in line with our commitment to clients this year. Our ready-mix business in Peru recorded 519,000 cubic meters compared to 588,000 cubic meters in the first quarter 2025. A decrease of 11.7% due to lower demand in the mining segment and the completion of infrastructure projects. This was partially offset by dispatches to housing and private projects, which remain strong in Lima. Celepsa consolidated volume was 23.6% higher than in the first quarter 2025. Energy sales reached 1,300 gigawatt hours. As we announced last year, we incorporated Minera Tantauco contract this quarter. Our higher demand had to be supplied by the system injection at higher months marginal cost, given the TGP pipeline incident. In Ecuador, cement volumes increased by 11.2% to 306,000 tons sold, compared to 275,000 tons sold in the first quarter 2025. Additionally, ready-mix volume was 57,000 cubic meters, up to 16.4%. Overall, we are seeing a pickup in activity in the market after the national strike that took place in the fourth quarter of 2025. U.S. operations. UNACEM North America reported 326,000 metric tons of cementitious materials during the first quarter of 2026, versus 282,000 metric tons in the first quarter 2025, 15.9% higher. Drake volumes grew by 23.7%, while the Tehachapi's grew by 9.2%. Ready-mix operations recorded 255,000 cubic meters sold, 10% higher than in the first quarter 2025. Aggregates volumes were higher by 7.4%, amounting to 388,000 metric tons. Prices in cement and ready-mix declined, while in aggregates remained stable. Despite that, the market is still slowing down. Chile. Cement dispatches recorded 137,000 tons during the quarter, which is 8.2% higher year-over-year. Ready-mix dispatches were up by 13.4%, with 294,000 cubic meters dispatched. Average prices for both were higher. Consolidated cost of goods sales were 15.7% higher in the first quarter 2026, an increase above the growth in revenues. The main driver behind this was the TGP pipeline incident, which limited Termochilca's injection capacity between March 1st and March 14th, leading to greater exposure to the spot market to meet contractual commitments, with significantly higher operating costs. Likewise, our U.S. cement operation reported temporarily higher maintenance costs recorded during the quarter due to the overhaul of both plants. Last year in the first quarter, only Drake Cement's overhaul was recognized in March. The Tehachapi plant maintenance was executed in the second quarter of 2025. Our administrative expenses in the first quarter were 9% lower than in the first quarter of 2025, due to lower advisory and third-party services incurred during the period, and the effect of some accounting reclassifications to cost of sales. Selling expenses were higher by 5.6%, as we strengthen our sales force across all markets and in line with the higher volumes in most of our geographies. In the first quarter, other income and expenses net recorded an expense of PEN 12 million, compared to an income of PEN 5 million in the first quarter 2025. Last year, we recorded non-recurring incomes such as proceeds from the sale of land in Ecuador, PEN 2.3 million, insurance recoveries in UNACEM Perú, PEN 1.3 million, and tax processes in UNACEM Corp, PEN 3.9 million. On the other hand, this quarter we recorded severance payments to employees as part of the implementation of our global business services unit. Consolidated EBITDA for the quarter was PEN 320 million, 17.9% lower than the EBITDA of PEN 319 million in the first quarter 2025. The main driver of this result was the TGP pipeline incident in the impact in the energy platform. Excluding this event, EBITDA for the first quarter 2026 would have been 4.1% higher year-over-year. Also, lower economies of scale for the quarter due to the maintenance stoppage for both plants in the U.S., which lead to higher costs. This offset the better volumes, prices, and operating margins of UNACEM Perú, Ecuador, ready-mix in Chile, and our precast operations in Peru. EBITDA margin for the first quarter 2026 reached 17.9% versus 23.3% achieved in the first quarter 2025. EBITDA for the last 12 months was PEN 1,316 million, compared to PEN 1,631 million in the first quarter 2025. Last 12 months EBITDA margin was directly impacted by the first quarter 2026 results, at 21.5% compared to the 23.6% in the same period of last year. Excluding TGP pipeline incident effect, last 12 months EBITDA margin would have been 26.3%, 4.8% higher. Financial expenses were slightly lower by 0.2% in the first quarter 2026 compared to the first quarter 2025, with favorable market conditions. Foreign exchange in the quarter shifts from a gain of PEN 28.3 million in the first quarter 2025, to a loss of PEN 21.4 million, as the Peruvian soles devaluated against the US dollar. For the quarter, we recorded a net loss of PEN 1 million, lower than the PEN 112 million of the first quarter 2025. Net income was impacted by lower operating margins due to the two one-off events, FX losses, and non-recurring other income in the first quarter 2025. We are confident that in the following quarter, our performance will translate into improved results and mitigate these effects to the greatest extent possible. Consolidated net debt was PEN 5.3 million, higher compared to the end of last year. This comes on the back of a new debt for the construction of Calcem, our new lime plant in the Condorcocha area, and non-recurring events that affected our cash flow generation during the quarter. The net debt EBITDA ratio was 3.29 times above the figure at the end of the previous year. In terms of CapEx, disbursements totaled PEN 168 million, compared to the PEN 202 million of last year. Our main investments are mostly related to the projects in Peru, namely the new primary crusher, the roofing of the clinker fuels, and the reduction system kiln in kiln number one at the Atocongo plant. We have also invested in new mixer trucks and pumps at UNICON Peru, as well as a maneuvering dispatch yard in Ecuador, and equipment upgrades to existing facilities in the U.S. Thank you. That will be all from my side. Now we will open the microphone for your questions. Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For a participant choosing speaker equipment, it may be necessary to pick up your handset before pressing the star keys. You may also type your questions in on the web platform. One moment while we poll for phone questions. There are no phone questions at this time. I would like to turn the floor back over to Monica for questions via the webcast. Thank you. We have our first question from Mariana Egona from Credicorp Capital. I will read the question. EBITDA was down across all segments this quarter, excluding one-off. Should we expect some pressure going forward? How should we think about the margin recovery in the U.S. segment? I am going to pass it over to Álvaro for answer that, Mariana. Okay. Thank you for the question. Yeah. EBITDA was down only in Celepsa results, due to the TGP pipeline incident. If we get out this pipeline incident, we will have a positive EBITDA higher for the quarter in 4.1%. The other thing is that in the U.S. operations, it is a temporary effect that we register a maintenance all in the first quarter. Last year, only Drake Cement was registered. One of the plants was registered in the first quarter, and the other plant, Tehachapi, was recorded in the second quarter. It is a temporary effect that really do not affect the real EBITDA that we should achieve. So, in that sense, we think that this quarter is better than last quarter, because if you get out of the pipeline incident. Thank you, Álvaro. The next question comes from Julio César Palacio from Nuam. I will try to translate. I will do my best. He wants to know if we want to incorporate a market maker for our share, considering that we have some space to improve liquidity and valuation multiples. Pedro? Thank you, Julio César. For the time being, we have not considered incorporating a market maker. This is something that may change in the future, but at this point, no decision has been taken in that regard. Thank you, Pedro. Thank you. The next question comes from Mariana again, a follow-up question regarding the progress of the Calcem project and whether it will remain on track to start on the second half of 2027. If we can share some guidance respective regarding the annual revenue generations once fully ramped up. I will let Álvaro answer that question. About Calcem. Yeah. Sorry. About the Calcem project. Thank you for the question. About the Calcem project, we are on track. We expect to start operations at the middle of 2027. The total investment is around $770 million. In this moment, we are close to $35 million, half of the investment. We are on track, and we do not see any problems to complete this important project for the group. Okay. The next question comes from Giovanni Sánchez from Prima. How much were the maintenance costs incurred in the U.S. in the first quarter of 2026? Is there any remaining cost to be recognized by the second quarter of 2026? If so, how much? It comes with another question: what is the strategy that we are considering to mitigate further risk related to the dependence on the TGP infrastructure in the future, such as insurance coverage or anything else? Giovanni, the first question, I am going to pass it over to Álvaro, and the second question, Pedro is going to answer that to you. First, we are going to the maintenance cost in the U.S. Okay. Thank you for the question. About maintenance, last year, the total maintenance registered in the first quarter was $11 million. In 2026, the first quarter, we registered $26 million. It is $15 million less than last year. In the second quarter, the remaining maintenance is in Drake. That is going to be $6 million additional. So in total, we will have $17 million for 2025 and $26 million for 2026. We made a deeper overhaul of the equipment, mainly in the Tehachapi plant, and that is going to allow us to have a good operation in the future, and stable operation in the future. Thank you, Álvaro. Pedro, can you help us answer the second question regarding the dependence on the TGP infrastructure? Sure. Our strategy to mitigate further risk is to increase our generation base with renewable energy. We are developing a pipeline of renewable projects, and we also are purchasing energy from renewable power developments. At this point, we have already secured a PPA with Zelestra for the Babilonia project to back up our contracts with end users. We are also developing a large photovoltaic power plant, which is called the Solimana project, as well. So we will be backing up our commitments with our own generation portfolio, mainly renewable energy, that will reduce our dependence on the TGP infrastructure. Thank you, Pedro. Okay, next question from Gerard Ford from Sura. Could you share your CapEx expectations for the remainder of the year? Álvaro. Thank you for the question. Last year, our CapEx totaled $263 million. For this year, our budget for CapEx is around $320 million. An increase from last year. Of that amount, 20%-25% is maintenance costs. It also includes $55 million of our Calcem project, Calcem project. Line. Sorry, the Calcem project. Thank you. Okay, Cheryl, we don't see any further questions in the works. There are no further phone questions. This will conclude today's conference. Do you have any closing remarks? Well, thank you very much for your time this morning. Please do not hesitate to reach out to Monica should you have any follow-up questions. Have a great day. Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.