Cementos Argos S A : Report 1Q23

Highest recorded EBITDA in our history for a first quarter marks an

EBITDA margin expansion of 386 basis points

Cementos Argos S.A. (Argos) is a geographically diverse rapidly growing cement and ready-mix concrete (RMC) company with presence in 16 countries and leading market positions in the US, Colombia, Caribbean & Central America (CCA) and total annual capacity of approximately 23.1 million tons of cement.

BVC: CEMARGOS, PFCEMARGOS

SANTIAGOX: CEMARGOSCL

ADR LEVEL 1: CMTOY / ADR 144A: CMTRY - Reg-S: CMTSY

We continued to advance in our comprehensive work frame SPRINT:

1. Focus on providing strong operational and financial results, with a special emphasis on profitability, results in EBITDA margin expansion of 368 basis points during the first quarter of the year.
2. A first portion of dividends for 128 billion pesos was approved on our General Shareholders meeting and was full paid during April. Regarding the additional dividend payment of 317 billion pesos and the share buyback program of 250 billion pesos, we reaffirm our commitment with our shareholders to distribute these funds before our 2024 General Shareholders Meeting and continue to work on the alternatives that will allow us to execute the program
3. We continue to be ready to list our US operations in NYSE once market conditions are appropriate.
4. As of April 17th, our ordinary share is again eligible for repo operation in the Colombian market as a result of better liquidity conditions of our stock.

Consolidated Results

For the first quarter of 2023, the adjusted EBITDA stood at COP 597 billion, increasing 70.8% on a comparable basis versus 2022. These results are based on a strong pricing strategy mainly in Colombia and USA, besides the continuation of cost control initiatives. Adjusted EBITDA margin stood at 17.7% for the quarter, increasing 368 basis points versus 2022 on a comparable basis.

In terms of volumes, total cement dispatches reached 3.9 million tons, with a slight contraction of 0.6%, caused by the minor volume decrease in Colombia and the CCA region. Ready-mix volumes, stood at 1.8 million m3, decreasing 2.3% on a like for like basis versus 2022, mainly due to weather conditions in the US and market contraction in Colombia during the quarter.

Volumes - Adjusted				QUARTER			YTD
		2022.Q1	2023.Q1	Var	2022.Q1	2023.Q1	Var
Cement	000 TM	3,949	3,925	-0.6%	3,949	3,925	-0.6%
RMC	000 M	3	1,798	1,756	-2.3%	1,798	1,756	-2.3%
Key Figures - Adjusted				QUARTER			YTD
		2022.Q1	2023.Q1	Var	2022.Q1	2023.Q1	Var
Revenue	COP Bn		2,501	3,382	35.2%	2,501	3,382	35.2%
EBITDA	COP Bn		350	597	70.8%	350	597	70.8%
Margin EBITDA	%		14.0%	17.7%	368 pbs	14.0%	17.7%	368 pbs
Owners of the parent co. Adjusted	COP Bn		-4	102	2,236%	-4	102	2,236%
Net Income	COP Bn		12	118	898.6%	12	118	898.6%
Net Margin	%		0.5%	3.5%	302 pbs	0.5%	3.5%	302 pbs

For a detailed reconciliation of the adjustments please refer to the annex.

Results Per Region

USA

FOB prices increased 15.2% in cement and 21.3% in ready mix on the first quarter of 2023, as we announced a price increase to our cement and ready-mix clients at the beginning of the year, aiming at fully offsetting the inflationary pressures that have been affecting our costs since last year.

Cement volumes increased 7.1% and ready mix decreased 2.5% on a like-for-like basis, when compared to the first quarter of 2022, mostly due to rainy weather conditions. Nevertheless, the demand in our states remained positive, despite the deterioration of some macro indicators and the bad weather conditions experienced specifically in Georgia.

Adjusted EBITDA was 76.6% higher year over year on a comparable basis and the Adjusted EBITDA margin expanded 483 basis points compared to the same period of last year in line with our commercial efforts and the overall market trends.

Volumes - Adjusted				QUARTER			YTD
		2022.Q1	2023.Q1	Var	2022.Q1	2023.Q1	Var
Cement	000 MT	1,401	1,501	7.1%	1,401	1,501	7.1%
RMC	000 M3	1,091	1,064	-2.5%	1,091	1,064	-2.5%
Key Figures - Adjusted				QUARTER			YTD
		2022.Q1	2023.Q1	Var	2022.Q1	2023.Q1	Var
Revenue	USD M	340	416	22.2%	340	416	22.2%
EBITDA	USD M	37	65	76.6%	37	65	76.6%
Margin EBITDA	%		10.9%	15.7%	483 pbs	10.9%	15.7%	483 pbs

For a detailed reconciliation of the adjustments please refer to the annex.

Colombia

The continuation of our pricing and cost control strategy and the constant quest for profitability, were the main drivers of the strong evolution evidenced in the first quarter of 2023. Local cement prices posted a 24.2% year over year increase, while ready-mix prices rose 24.4% year over year.

In terms of cement volumes, exports from Cartagena increased 15.9%, reaching 345 thousand tons during 1Q23. The local market, on the other side, decreased 9.8% when compared to the same period of last year, due to the total market contraction, the closure of the road from Pasto to Popayan, and a market share loss experienced in January that was rapidly recovered on the following months. On a similar trend, our ready-mix volumes decreased 4.3% on a year-to-year basis.

Total EBITDA increased 39.4% during the quarter reaching COP 181 billion, when compared to the same quarter of last year, mostly due to the price increases and cost control initiatives in both the cement and the ready-mix business, generating an expansion of 488 basis points versus the same quarter of last year. Total EBITDA margin reached 25.4% for the quarter. The EBITDA attributable to exports was 4x the one evidenced during 1Q22, in line with volumes expansion and improved profitability.

	Volumes		QUARTER			YTD
	2022.Q1	2023.Q1	Var	2022.Q1	2023.Q1	Var
Cement	000 MT	1,468	1,400	-4.6%	1,468	1,400	-4.6%
Local Market	000 TM	1,170	1,056	-9.8%	1,170	1,056	-9.8%
Exports	000 TM	297	345	15.9%	297	345	15.9%
RMC	000 M3	649	621	-4.3%	649	621	-4.3%
Aggregates	000 MT	402	313	-22.0%	402	313	-22.0%
	Key Figures		QUARTER			YTD
	2022.Q1	2023.Q1	Var	2022.Q1	2023.Q1	Var
Revenue	COP Bn	632	712	12.6%	632	712	12.6%
EBITDA	COP Bn	130	181	39.4%	130	181	39.4%
Margin EBITDA	%	20.5%	25.4%	488 pbs	20.5%	25.4%	488 pbs

CCA

Local market cement dispatches were 4.9% higher, due to the positive dynamics in Panama, where cement volumes recovered satisfactorily with a 21.3% growth when compared to the same quarter of last year; and the Dominican Republic market, that continued to exhibit solid dynamics resulting in a 14% expansion of dispatches. Trading volumes decreased 31.9% year over year due to our strategy to maximize the usage of our export capacity from Colombia. Average cement prices increased 8.2% when compared to the same period of last year.

In terms of financial performance, we continued to observe a positive evolution during the first quarter of the year, with EBITDA expansion of 2.2% and EBITDA margin steady versus the same quarter of 2022. EBITDA stood at USD 30 million, and EBITDA margin reached 20.6%.

Volumes			QUARTER			YTD
	2022.Q1	2023.Q1	Var	2022.Q1	2023.Q1	Var
Cement	000 TM	1,080	1,024	-5.2%	1,080	1,024	-5.2%
Central America	000 TM	387	414	7.2%	387	414	7.2%
Caribbean	000 TM	398	408	2.6%	398	408	2.6%
Trading	000 TM	296	201	-31.9%	296	201	-31.9%
RMC	000 M3	58	71	22.1%	58	71	22.1%
Central America	000 M3	31	49	57.3%	31	49	57.3%
Caribbean	000 M3	27	22	-18.0%	27	22	-18.0%
Key Figures			QUARTER			YTD
	2022.Q1	2023.Q1	Var	2022.Q1	2023.Q1	Var
Revenue	USD M	137	145	5.4%	137	145	5.4%
Central America	USD M	58	67	15.4%	58	67	15.4%
Caribbean	USD M	63	71	12.6%	63	71	12.6%
Trading*	USD M	17	7	-55.8%	17	7	-55.8%
EBITDA	USD M	29	30	2.2%	29	30	2.2%
Central America	USD M	17	18	0.9%	17	18	0.9%
Caribbean	USD M	8	9	10.8%	8	9	10.8%
Trading	USD M	4	3	-9.5%	4	3	-9.5%
Margin EBITDA	%	21.3%	20.6%	-65 pbs	21.3%	20.6%	-65 pbs
Margen EBITDA Central America	%	30.1%	26.3%	-378 pbs	30.1%	26.3%	-378 pbs
Margen EBITDA Caribbean	%	12.7%	12.5%	-20 pbs	12.7%	12.5%	-20 pbs

*Does not include sales to related companies.

Indebtedness and coverage indicators:

Net debt to EBITDA plus dividends ratio slightly increased, closing at 3.1x due, to the sharp Colombian Peso revaluation at the end of March.

Cash Flow as of March 31st, 2023 (COP Billion1):

Investment Portfolio as of March 31st, 2023:

Company	% Stake	Price per Share	Value	Value
(COP)	(COP million)	(USD million)
Grupo Sura	6.08%	40,500	1,149,995	249
Total			1,149,995	249

1* FX Rate as of March 31st, 2023: COP 4,627.27/ USD