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Operator: Good morning, and welcome to the Loma Negra Fourth Quarter 2022 Conference Call and Webcast. All participants will be in a listen-only mode. . After today’s presentation, there will be an opportunity to ask questions. Also Mr. Sergio Faifman will be responding in Spanish immediately following an English translation. . Please note that this event is being recorded. I would now like to turn the conference over to Mr. Diego Jalón, Head of IR Please, Diego, go ahead.

Diego Jalón: Thank you. Good morning, and welcome to Loma Negra’s earnings conference call. By now, everyone should have access to our earnings press release and the presentation for today’s call, both of which were distributed yesterday after market close. Joining me on the call this morning will be Sergio Faifman, our CEO and Vice President of the Board of Directors; and our CFO, Marcos Gradin. Both of them will be available for the Q&A session. Before we proceed, I would like to make the following Safe Harbor statements. Today’s call will contain forward-looking statements and I refer you to the Forward-Looking Statements section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances.

This conference call will also include discussion on non-GAAP financial measures. The full reconciliation of the corresponding financial measures is included in the earnings press release. Now, I would like to turn the call over to Sergio.

Sergio Faifman: Thank you, Diego. Hello, everyone, and thank you for joining us today. As always, I would like to begin my presentation with the discussion of the highlights of the quarter. And then Marcos will take you through our market review and financial results. After that, I will provide some final remarks, and then, we will open the call to your question. Starting with slide two. We are satisfied to share another solid quarter that lead to closing a year that challenging macroeconomic environments from the industry setting a new record in volume term on the back of the dynamics shown by the construction sector. In this context, our result showed that Loma was up to the challenge not only with the volumes growing more than the industry setting a record in shipping, but also reaching an all time high fee rise in terms of EBITDA generation.

These results will have not been possible without the strong commitment to invest in greater capacity and efficiency that the company has carried out in recent years. As you could see from our release news yesterday, our adjusted EBITDA for the quarter reaching $91 million compared with $63 million in the fourth quarter of 2021. When measured in pesos, it showed an increase of 5.4% compared with fourth quarter of 2021 assessment by inflation. Please note that the result of the quarter was boosted by the sale of non-strategic property for $19 million. When looking for our annual figure, we reached $289 million for the fiscal year 2022 from $215 million in 2021, achieving a new record for our company. We are focused to continue delivering strong results and maintain a world-class EBITDA margin.

Despite the turbulence that we face this year in term of energy inputs and high inflation scenario. In the sense, the U.S. Dollar EBITDA per ton reached $39 in the fourth quarter excluding the property sale, 2.4% above 2021’s fourth quarter. In this fiscal year, with a mild expansion in capacity conclude, we focus our capital allocation on maximizing value to our shareholder. Basis on this, in 2022, we distribute dividends for $126 million and complete share buybacks for $10 million, always maintaining a strong balance sheet with low indebtedness ratio. Please turn to slide four, for a review of our ESG highlights for the year. We have a clear purpose that sets our goals. We transformed life by fostering sustainability growth. That is why we are very pleased to present the second edition of Loma Negra’s Sustainability report, maintaining our commitment to inform and share with our stakeholder the impact of the company along with our goals and expectations.

Regarding the environmental aspect, our direct greenhouse gas emissions intensity stood at 503 kilograms of CO2 per ton of cement, improving 2.3% year-on-year. The incidence of the second line of L’Amalí in our operational efficiency lead to better electrical and thermal intensity, both improving 3% year-on-year. Thermal energy intensity was also favorable due to an increased participation of natural gas in our energy metrics. Clinker factor stood at 69%, slightly above 2021. Our emission and the methodology used to calculate them were revised by third parties, and we are convinced to be in the right tracks to achieve the goal of 470 kilograms of CO2 per ton by 2030. On the social side, I would like to highlight three of the more relevant projects that we carry on in 2022.

Understanding that the construction industry need to improve in term of gender equality. For the first time, we incorporate women as mixer trucks operators. In the same sense, 40% of our new employee were women, increasing 50% the participation of women in the payroll compared to December 2021. Regarding the government’s spec, we move forward on training our people on the company’s integrated programs, where we cover 100% of our employee reinforcing the commitments to ethics and transparency. Additionally, we felt the first edition of the compliance week where we’re discussing about the importance of following the good practice and analytical approach on decision making. We also held the program, Impulsar Loma, where we invited 43 companies within customer and supplier joining awareness days on ESG matters.

We know that in addition to knowing and managing, we must communicate in separate and clear way that impacts of our operation. For that, I invite you all to read Loma’s Sustainability Report. It shown us the challenge of improving every day for being a more sustainability company. I will now hand of the call to Marcos Gradin, who will walk you through our market review and financial results. Please Marcos, go ahead.

Marcos Gradin: Thank you, Sergio. Good morning, everyone. Please turn to slide six. As you can see on slide six, the GDP forecast for 2022 is expected to be about 5%, adjusted upwards from the listed Market Expectation Report from the Central Bank. As a preliminary figures for the third quarter stood at 5.9% growth. Construction activity measured by the ISAC increased 3.5% for 2022. With a reduction in December where the level of activity of the industry was mainly affected by less working days. Regarding seven national industry sales, despite the reduction shown in the last quarter, the solid demand pushed 2022 accumulated figures to record highs, growing 7% and almost reaching the 13 million tons mark. While the most — while the first month of results in 2023 shows again a strong figure.

While bulk cement remains strong, bulk cement is the dispatch modality showing greater dynamic and growth. On the back of concrete producers demand and private infrastructure projects, both residential and industrial, coupled with moderate level of activity in public works mainly at the municipal and provincial levels. When seeing the breakdown by dispatch mode, bulk shipments continues positive trend, showing a participation of 44% against 40% in the fourth quarter of 2021. Closing the year with a participation of 42% showing three percentage points growth from 2021. The first two months of this year are showing a margin growth. For the year, we remain cautiously optimistic as economic growth in Argentina faces many challenges in the short-term, while the election year may add more volatility to an already turbulent scenario.

Turning to slide seven, for a review of our top line performance by segment. Top line was down 2% in the fourth quarter, mainly due to the decrease in cement and variables revenues, partially compensated by the positive performance of concrete and aggregates. Cement, masonry segment and lime segment was down 4.8% with volumes almost flat growing 0.9% year-on-year with a softer pricing dynamic. Concrete revenues increased sharply 29.4% in the quarter. Volumes were up 17.5% in lime with the strong momentum of bulk cement coupled with good pricing performance. In the same way, aggregates show a great revenues expansion of 44.5%, volumes increased 30% primarily on the back of concrete demand, coupled with strong price performance. Finally, railroad revenues decreased 5.5% in the quarter year-on-year.

Transported volumes were down 3.2%, while the strong transported volumes of aggregates partially offset the decrease in cement and frac sand. The decrease in frac sand also impacted the price performance due to its negative impact on the average transported distance. For the fiscal year 2022, consolidated revenues were up 1.1% to Ps.145.1 billion and Ps.143.5 billion in 2021, while volumes expanded significantly across all segments. Moving on to slide nine. Consolidated gross profit for the quarter declined 24.9% year-on-year with margin contraction by 810 basis points to 26.5%, mainly impacted by a lower price performance of our core segment, higher costs related to higher thermal energy inputs mainly due to the stimulus plan to increase natural gas production, and increase in maintaining cost and a higher inflation scenario that was partially compensated with a decrease in electrical energy input.

The contraction in cement and concrete gross margin was slightly offset by the better performance of aggregates and a slight improve in railroad. SG&A expenses as a percentage of revenues decreased 119 basis points to 8.7% from 9.9%. For the year 2022 gross profit was down 13.6% with a margin contraction of 460 basis points. Please turn to slide 10. Our adjusted EBITDA for the quarter stood at $91 million, up 42.7% from $63 million in the same quarter a year ago. While the operational performance was boosted by the sale of a non-strategic property. In pesos, adjusted EBITDA was up 5.5% in the quarter, reaching Ps.13.2 billion with consolidated EBITDA margin of 45.8% expanded 252 basis points year-on-year. With other property sales adjusted EBITDA would have stood Ps.9.8 billion with an EBITDA margin of 26.7%, mainly affected by segment margin contraction and the higher participation in the top line of the other segments with lower margins.

Segment adjusted EBITDA margin reached 39.1% expanding 170 basis points, without the property sales, this margin would cost stood at 28.7% affected mainly by a softer pricing dynamic and higher thermal energy inputs. In a per ton basis, EBITDA reached $39.1 per ton, net of the extraordinary property sale increasing 2.4% from fourth quarter 2021. Concrete adjusted EBITDA decreased Ps.67 million compared to fourth quarter 2021, mainly explained by extraordinary results in other gain that affected the quarterly comparison, while a positive price performance and higher volumes compensated the cost increase, margin contraction of 334 basis points, reaching 2.7%. Aggregates adjusted EBITDA improved Ps.278 million this quarter from negative Ps.9 million in fourth quarter 2021, reaching an margin of 25.9%, and showing a great recovery for the segment, while the good momentum of the sector is being accompanied by a great operational performance.

Finally, railroad adjusted EBITDA improved Ps.537 million to Ps.146 million for the quarter, with a margin of 5.1%, mainly explained by our recognition of an allowance for doubtful receivables that impacted the result in fourth quarter 2021. For the year 2022, adjusted EBITDA reached outstanding figure of $289 million, setting a new record behalf of the company and widely surpassing the previous record accomplished in 2021. Moving on to the bottom line, on slide 12, This quarter, we posted a net profit attributable to owners of the company of Ps.7. 5 billion compared with Ps.5. 7 billion of fourth quarter 2021, while operational results was posted by the sale of this non-strategic property coupled with positive financial results unless income tax effect.

Total financial gains stood at Ps.0.3 billion this from a total financial cost of Ps.0.3 billion the same quarter last year, primarily explained by the gain on the net monetary position that funds are compensated the higher financial expense and unchanged rate difference effect. For the full year, net profit attributable to owners of the company reached Ps.2.1 billion, decreasing from Ps.12.8 billion in 2021, mainly due to the impact in the financial result generated with the cancellation of U.S. dollar denominated debt with local funds in the third quarter of 2022. Moving on to the balance sheet. As you can see on Slide 13, we ended the quarter with a cash position of Ps.4.9 billion and total debt at Ps.20.8 billion, consequently, our net debt-to-EBITDA ranges to that 0.47 times compared to minus 0.12 times at the end of 2021, and also showing a sequential decline from 0.54 times at the end of the third quarter 2022.

Our robust operation cash generation stood at Ps.11.3 billion, while the performance of operational results was boosted by a positive effect of working capital. Regarding capital expenditure, we spent Ps.5.7 billion mostly for maintaining CapEx. During the quarter, we reduced our debt in US$40 million standing our net debt at US$90 million at the end of the quarter, breaking it out by currency, the dollar and denominated debt represents 52% of the total debt while the rest is in pesos. As we mentioned before, during 2022, we distributed dividends for $126 million that represents $1 per ADR outstanding. Additionally, with the share repurchase program and in December, we acquired shares for a total amount of Ps.0.8 million in the quarter and Ps.1. 9 billion for the whole year 2022.

Now for our final remarks, I would like to hand the call back to Sergio.

Sergio Faifman: Thank you, Marcos. Now to finalize the presentation, I please ask you to turn to slide 15. 2022 was a year of many challenge and opportunities. At the company level, we achieved historic, economic and operational results. And with the efforts and commitment of all our collaborators, we continue to consulate our position as a leader in Argentine cement markets. Looking ahead, we expect growth to continue in 2023. With a more moderate pace considering the high level of activity of the sector that we saw in 2022. Always subject to the outcome of local political and macroeconomic challenges that usually attend to in election years. In this context, we remain focused on delivering strong results and with our increased capacity we’re in an excellent position to capture future growth.

Also, we are very pleased to present the second edition of our Sustainability Report, maintaining our commitment to inform and share the impact or our organization, management on people, the environment and the economy. We know that we must frequently and clear communicate our operation on each part. So again, I would like to invite you all to read this report and showing us in the of building a sustainability portfolio. I would like to conclude by sharing our satisfaction with the results obtained in 2022. I thank all our people and stakeholders for their commitments and support. This is end of our prepared remark. We are now ready to take a question. Operator, please open the call for a question.

Operator: Thank you. We will now conduct a question and answer session. Also please note that Mr. Sergio Faifman will be responding in Spanish immediately following an English translation. Please hold momentarily while we assemble our roster. Our first question is from Alejandra Obregon with Morgan Stanley. Please go ahead.

Alejandra Obregon: Hi, good morning, Sergio, Marcos, Diego. Thank you for the call today. I have a question on the specific assets that was sold at Olavarría, whether you could elaborate on what was the asset? And if there could be any more non-core sale, asset sales of this kind in the future that could be worth considering? So that’s my first question.

Sergio Faifman: Hi, Alejandra. Good morning. Thank you for your question. The property that we sold, it was linked to our former facility in . Its a facility that we are not going to plan to use it in further expectation of our other property. The company has some other properties along the country. Some of those have potential results to be used in the future. And we are always analyzing if this context changes. If those properties could be add value in some other ways for the company.

Alejandra Obregon: Thank you. That was clear. And maybe a follow-up here. What does the sale and proceeds mean from a cash management perspective? Should we perhaps rethink the dividends and buybacks for the year or even your M&A strategy ahead as cash position grows for 2023?

Marcos Gradin: As always that we mentioned before, we keep looking for maximizing value for our shareholders. And we are always analyzing share buyback programs and further dividend. If we don’t have any other project demands, our cash flow generation, probably we are going to keep on focusing on maximizing value to shareholders. We think that that’s the way that we add more value to our shareholders.

Alejandra Obregon: Understood. That was very clear. And I have a second question if I still may. So, I’m very curious about the outperformance of the concrete and the aggregates division. So, I was wondering if you could provide some color on what are you seeing on the ground with regards to permitting infrastructure and enough non-resi construction head? And whether these could be something that could continue to contribute more than you were expecting for 2023? Thank you.

Sergio Faifman: By the end of last year, concrete and other rates were improving its performance. We have been seeing an increase in bulk cement demand. And that along with an increase in infrastructure projects that give us to those businesses a boost. With the last prices that we came through many small aggregates producers where growth or they decreased their production, and we kept on investing in those businesses. So we are taking advantage of that. In both businesses, we expect 2023 also better than what we saw in 2022.

Alejandra Obregon: Understood. That was very clear. So thank you again and congratulations on the numbers.

Sergio Faifman: Thank you. You’re welcome.

Operator: The next question is from Rodrigo Nistor with Latin Securities. Please go ahead.

Rodrigo Nistor: Hi, good morning. Congratulations on the results. I have a question regarding the dynamic between price and volumes for the year. I mean, given the high volatility of the selection here, do you believe that Loma can replicate or exceed last year’s volumes? And then, if you’ve seen a pickup in demand from the public sector already, And with regards to pricing, how are you adjusting your strategy to address the current high inflation environment? Thank you.

Sergio Faifman: Hi, Rodrigo. Good morning. Thank you for your question. Regarding volumes, we are expecting a level similar for what we saw in 2022 with some slight or moderate growth. Considering what happens in election years, we could expect some demand from the public sector principally at municipal or provincial level. We have many, many works in the pipeline basically in the bulk dispatch mode. Regarding our price strategy is following the same trend that we have been following in the past quarters, which is to maintain our price dynamics following the different variables that we have in our P&L, like inflation and devolution. In the last months the price has kept, wasn’t in line with the dynamics of inflation.

Rodrigo Nistor: That was really helpful. Thank you.

Sergio Faifman: You’re welcome.

Operator: Showing no further questions, this concludes our question and answer session. I would like to turn the conference back over to Diego Jalón for any closing remarks.

Diego Jalón: Thank you, Barry. Thank you all for joining us today. We really appreciate your interest in our company. And we hope to meet you again in our next earnings call. In the meantime, we remain available for any questions that you may have. Have a nice day. Bye.

Operator: The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.