Cementos Argos Corporate presentation June, 2019 Growing - - PowerPoint PPT Presentation

Cementos Argos

Corporate presentation

June, 2019

Growing multinational, producer

• f building materials with focus
• n value creation

Successful track-record deploying a disciplined expansion strategy Value generation by closing efficiency gaps: BEST program Healthy financial position and flexibility to pursue growth The best footprint in the Americas Segmented value proposition for market differentiation

1 2 3 4 5

The best footprint in the Americas

23M MT

Cement installed capacity RMC installed capacity

17.3M M3

Colombia USA Caribbean and Central America

▪ Logistic synergies ▪ Balance between emerging and developed economies ▪ Markets with high growth potential ▪ Negative correlation between economic cycles

Interconnected footprint to maximize value generation

Operating EBITDA by region* Revenues by segment* Revenues by region*

Cement; 59% RMX; 41%

*LTM figures, EBITDA without IFRS 16

26% 45% 30%

74% 22% 0.9 M m3

RMC capacity

5%

Caribbean and Central America Region Colombia Region USA Region 13 Cement plants +312 RMC plants 9 Grinding facilities 33 Ports & terminals +2.480 Mixers 1.405 Rail cars

Our Footprint

Cement capacity

9.6 M MT 12.3 M m3

RMC capacity

1st cement, concrete, and aggregates producer

8.6 M MT

Cement capacity

3.8 M m3

RMC capacity

4.7 M MT

Cement capacity

1 of the 2 leading producers in the region

*LTM figures

42% 38% 20%

Cement plants RMC plants Grinding facilities Ports/Terminals

US Region: Recovery drives operational growth and EBITDA margin normalization

USD 79.6 M USD 407 M

2Q19 Revenues 2Q19 EBITDA*

19.5%

2Q19 EBITDA margin*

Strategic location close to growing demand centers Interconnected and privileged assets network: Imports potential: Leadership, with relevant market share

Focus on urban centers in RMC business

1.274 rail cars 36% cement sales to RMC operations 9 Ports 5.5 M Tons capacity Value generation through innovation 15 VASP** and/or LEED products

Construction drivers

Installed Capacity

Cement

13M M3 9.6M MT

RMC

Infrastructure Residential Commercial

Positive macro fundamentals and reduction in interest rates maintains market stability Plans at state level materializing Evident infrastructure needs Positive momentum in the segment with more relative importance for Argos

COLOMBIA Region: National coverage offers a strong competitive advantage to capture

infrastructure and housing growth

COP 113.9 Bn COP 566.5 Bn 20.1% 2Q19 Revenues 2Q19 EBITDA* 2Q19 EBITDA margin

Cement plants RMC plants Ports/Terminals

7 Cement plants 1 Port 48 RMC plants 8.7M MT 3.8M M3

Installed Capacity

Cement RMC

Multi-plant player, present across the country with the best logistic interconnection +9,000 clients in retail segment Presence in 801 municipalities (71% of the total territory) 15% of the country’s load is mobilized by Argos +5,700 hardware stores trust us Differentiated value proposition for the industrial and retail segment Efficiency and competitiveness Reduction of more USD 12/MT in 2017 through BEST

30% of revenues generated by innovative products in 2018

*Operating EBITDA y EBITDA margin under IFRS 16

Infrastructure drives construction for Argos strongest segment Government strategies seek to boost the social housing and reduce inventory levels in regular housing segment Leaders with more than 80 years of history and broad presence Reduced imports and macro stability support price recovery

Tailor made business model

Positive moment of the market in Dominican Republic: Puerto Rico Reconstruction Plan underway:

7% of GDP growth in 2018

Growth economic activity year to day

5.9% Feb-19 USD 20 Bn

Funds approved in 1Q19 for reconstruction. Reconstruction needs estimated at USD 139 Bn Trading and vertical integration through the Caribbean Sea

47% market share in clinker and cement trading

Transport synergies through an interconnected network

• f ports, terminals and grinding facilities

11 puertos y terminales

Logistic flexibility

Supply to the Region from plant in Cartagena Region with the highest ROCE (double digit)

Sources: Banco Central de la República Dominicana, US Department of Housing and Urban Development *EBITDA y EBITDA margin under IFRS 16

4.7M MT

Cement RMC

0.9M M3

Installed Capacity

Caribbean and Central America Region: Presence in diversified markets offers flexibility

USD 39 M USD 142.7 M 27.3%

2Q19 Revenues 2Q19 EBITDA* 2Q19 EBITDA margin

Cement plants RMC plants Grinding facilities Ports/Terminals

Value generation through efficiency:

BEST Program

BEST

Building efficiency and sustainability for tomorrow Operational transformation Alternative fuels Reduction of non core assets Administrative synergies Clinker to cement ratio Leaner and faster

Improve ROCE

Cost champions Sustainability leaders Customer centered

What have we done? What are we doing?:

+USD 530M

▪ Working capital optimization ▪ Capex optimization ▪ Additional divestments of non-core assets ▪ Growth through allies (Eg. Agregados Argos) ▪ Increase the operating free cash flow ▪ Fire power to grow ▪ ROCE improvement ▪ Focus on core assets

Goals:

divestments

BEST: Optimization of our assets base as a growth lever

Reduce leverage: 3.2x Net debt / EBITDA + dividends by June 2020

Logistics

BEST:

Next steps

Cement: Improvement of capacity utilization

RMC Network & Fleet optimization

Supply chain & logistics Drivers shortage

Building Efficiency and Sustainability for Tomorrow

BEST USA 2.0

Energetics

Segmented value proposition

for market differentiation

Differentiated value proposition

Value added for our customers

Experience and track record

+80 years of experience

Technical Know-how

Participation on emblematic projects in the Americas

Tailor-made service

Tailor-made products and processes

Innovative products

Microcement, advanced concrete, among others

Confidence and backup

Technical experts in high complexity projects

Customer centric

Constant focus on our customers needs

Knowledge transference

Constant training to our customers and suppliers

Accessibility

Presence in +15 countries, 14 states in the USA and

+800 municipalities in Colombia

Quality

High quality product portfolio

Reputation

DJSI and Merco Colombia supports our trajectory, responsibility and commitment

Industrial Segment Retail Segment

Customer ally Recognized brand Privileged and interconnected network of assets

+ +

v

...contributing to the productivity

• f our customers projects

Argos, at the forefront of the industry´s digital revolution.

▪

Self service from beginning to end

▪

Make online orders

▪

Track the delivery of orders

▪

Generate quality reports

▪

Visualize historical transactions

▪

Make online payments

Successful track-record deploying a

disciplined growth strategy

1.907 2.175 2.184 2.350

• 500

2018 2019 1Q 2Q

+USD 4.3Bn

invested in the last 10 years

13%

CAGR revenues 2012-2018

9%

CAGR EBITDA 2012-2018

EBITDA* (COP billion) Revenue (COP billion)

USD M 482 385 447 524 484 553 547

+ +

Organic growth

Colombia

competitivity

Disciplined growth strategy

Boosting the EBITDA growth and value generation

Puerto Rico USD 8 M West Virginia USD 660 M Puerto Rico terminal USD 18 M French Guiana USD 69 M Vulcan FL USD 720 M Lafarge Honduras USD 305 M Lafarge USA USD 760 M Holcim Caribbean USD 157 M RMCC USA USD 243 M Cemento Andino USD 192 M SSC USA USD 245 M

Acquisitions

Cartagena USD 560M Rioclaro USD 93M Energy plants in Colombia USD 68M Panama grinding facility expansion USD 65M Harleyville VCM USD 58M Cartagena´s distribution center USD 35M White cement conversion USD 23M Oil-well cement development USD 1M

USD M 2,437 2,656 2,833 2,881 2,790 2,892 2,848

4380 4968 5817 7.912 8.517 8.533 8.418

791 978 968 1.519 1.672 1.481 1.486 18,1% 19,7% 16,6% 19,2% 19,4% 17,2% 17,7%

*2Q18 EBITDA w/o IFRS 16: Includes the payment of the COP 73,772 M fine imposed by the SIC in April 2018

(organic and inorganic)

Focus and reorganization

371 322 328 405

• 100

2018 2019 1Q 2Q

Track record of successfully implementing a disciplined growth strategy

WV, USA – Heidelberg (2016)

USD 660M

Cement Plant 2.2 M MT Terminals 8

Florida, USA – Vulcan Cement Investment (2014) USD 720M

Cement Plant 1.6 M MT Ports Grinding facilities 1.9 M MT RMX 3.3 M m3 Blocks 109 M units / year 2

French Guiana – Lafarge (2014)

€50M

Grinding Facility 0.2 M MT

(100% ownership)

Port concession

€231 M

Cement Plant Grinding facility 1.0 M MT 0.3 M m3

(53% ownership)

Puerto Rico

2015: USD18.3M

Port

(60% ownership)

2017: USD 8M

(60% ownership)

Cement Plant 0.6 M MT

USA – Lafarge (2011) USD 760M Honduras – Lafarge (2013)

Colombia USA Caribbean and Central America

Ports & terminals Grinding facilities 1 RMX 79 plants 6 Cement Plant 2

Healthy financial position and

flexibility to pursue growth

Match between currencies and EBITDA generation and competitive cost of debt Extended debt’s average life for enhanced flexibility

Expedite access to the Colombian capital markets ▪ Recognized as a recurrent issuer Local and international banks Stock portfolio provides additional flexibility ▪ Two types of shares (CEMARGOS and PFCEMARGOS)

Debt Structure per currency (June 2019)

Access to diverse sources of financial flexibility

▪ Grupo Sura: 6% (Common share)

Flexible debt structure and access to funding sources to finance growth

Cost of debt: ▪ 7.3% COP ▪ 4.3% USD

102 51 305 300 97 94 66 131 38 95 49 97 121 57 39 125 50 100 150 200 250 300 350 400 450 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2038 2042 Banks Bonds

COP 55% USD 45%

Delivering on our plan to reduce leverage

▪ Non Core assets divestment plan ▪ Capex Optimization ▪ Working capital improvement ▪ EBITDA growth

3.2x Net debt / EBITDA

04x 04x 04x 02x 04x 03x 04x 05x 04x 04x 04x 04x 04x 04x 03x 04x 04x 06x 06x 05x 04x 03x 03x 003x 004x 004x 004x 003x 2010 2011 2012 2013 2014 2015 2016 2017 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Net Debt / (EBITDA + Dividends Received) EBITDA / Financial expenses

www.argos.co/ir ir@argos.com.co