Cementos Argos S.A.

Good morning, everyone. Thank you for being here with us today to discuss our second quarter results. My name is Carolina Velasquez. I am Cemento Zargo's Investor Relations Officer, and I will be hosting today's call. On the call today are Juan Esteban Calle, our CEO, Felipe Aristizabal, our CFO, Marisabel Echeverry, the VP of Legal Affairs, Carlos Yusti, the VP of the Columbia 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 1.4 trillion pesos added to the 1 trillion pesos 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, these transactions. in conjunction with Grupo Sur 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 re-enter the U.S. market, which is an essential part 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. reserves and access to a deep-water port, a long-term concession with more than 50 years remaining, and the potential to produce 8 million shore tons by 2030. Moreover, we secured a strategic lease option for a deep-water 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 unmet demand by local supply of 93 million short tons. Our goal is to generate between $100 and $150 million in additional EBITDA by 2030. Finally, We are pleased to share that we were selected again to be part of the FTSE for Good 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 cemented our growth and profitability path. Now I would like to invite Felipe to discuss further the execution for spring program.

Thank you Juan and good morning everyone. With Grupo Usura 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 tricky 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 to 15%. As part of the second pillar, related to distributions to our shareholders, we've paid out 385 pesos per share in dividends so far, for a total of 500 billion pesos, which is 50% from the 1 trillion pesos 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 500 billion pesos authorized under the current phase, equivalent to approximately 340 billion pesos. 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 short term. Now, turning to the fifth pillar, we concluded a historical transaction in which Cementos Argos spun off Grupo SuperSure portfolio worth around 1.5 trillion pesos. This transaction marks another milestone in value creation for shareholders, delivering around 200 pesos per share for a consolidated even 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 list 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 Onalimida within the next three to five years. The concrete steps taken so far reflect our commitment to investing the proceeds from the summit materials take sale in a disciplined, thoughtful, and value-driven manner. In light with 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.