Nov 12, 2021
Operator
Good morning, and welcome to Loma Negra Third Quarter 2021 Conference Call and Webcast. All participants will be in 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 third quarter 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 will lead you through our market review and financial results.
After that I'll provide some final remarks and then we'll open the call to your questions. As you can see from our release issued yesterday, we're pleased to share our third quarter results where we observed solid demand in higher historic as we keep our core business margin at world-class level.
start the strong momentum experienced in cement sales since the start of the recovery in mid 2020 has reached level of most equivalent of the two seen in record industry years. Our high efficient production has enabled us to deliver another robust quarter, despite the impact of the normalization of operation and the subsequent effect of regularly seasonality maintains cost and the higher energy input in our assessment EBITDA margins.
Despite these effects, when measured in US dollar, our segment EBITDA increased to $51 million from $48 million in third quarter 2020, even improving the result from last quarter, keeping the use dollar per ton above $30. Finally, regarding the expansion project of L’Amalí, we are delivering cement to the market and not really seeing promising result from the first production budget.
We expect to show its benefits in the coming quarters. I will now hand off the call to Marcos Gradin who will walk you through our market review, our financial results.
Please Marcos, go ahead.
Marcos Gradin
Thank you, Sergio. Good day, everyone.
As you can see on Slide four, leaving behind the steep drops of GDP in 2020, we saw a sharp recovery in the second quarter and an improvement in 2021 GDP estimated growth reaching 8.3%. Construction activity measured by the ISAC also had a strong performance in recent months, started to present more and more growth us third quarter 2020 showed the start of the both pandemic recovery.
Regarding seventh national industry sales, they had kept on growing strongly, even above our previous expectation. Consolidated in high figures with 10 months accumulated volumes, almost reaching industry's year record less than 1% down from the same period of 2017.
Although we do not see large private infrastructure project recovered mostly on the back of smaller projects. So when breaking down the consumption by dispatch mode, we observed figures in line with historical pre-pandemic coverage.
Certainly the economy as a whole still faces different challenges, particularly on the macro-economic outlook that may impact our future growth expectations. Turning on to Slide five for our review of our top line performance by segment, consolidated revenues increase year on year by 8.5% mainly reflecting the continued recovery of the other segments, more effected by the pandemic restriction and the growth of our core seventh business.
Segment measure on Lime segment was up 2.4% with volumes expanding 8.4% with softer pricing dynamic. Concrete and aggregates showed sharp revenues recovery of 117% up 47% year on year respectively.
As we mentioned before, these segments suffer more deeply defects of the pandemic restrictions. In the case of concrete volume expansion of 111% was underpinned by a positive pricing recovering performance.
Regarding aggregates, the segment volume was up 7.2% boosted by a recovery pricing and a positive pricing mix. Finally, railroad revenues increased by 25.4% in this quarter versus the same quarter in 2020 as the higher transported volumes were coupled with a good pricing performance and a positive product mix.
Moving on to Slide seven, consolidated gross profit for the quarter slightly recovered 0.1% year on year with margin constructed by 222 basis points, mainly impacted by the normalization of seasonality cost and higher energy inputs. Seventh gross margin contracted by 577 basis points from 35.5% to 29.8% with the comparison affected by regular add-on maintaining costs this quarter, I guess the third quarter of 2020, we saw maintenance schedule affected by the pandemic restriction.
We also experienced some pressure from seasonal energy charges as winter production in 2020 was abnormally low due to the sharp drop in the month of last year. For the next year, the brand new line built in L’Amalí plant will give us a flexibility to maximize production out of the winter months, avoiding higher energy charges.
SG&A expense as a percentage of revenues remain almost flat decreasing by five basis points to 7.6% from 7.7% mainly due to cost dilution from higher sales volume. Please turn to Slide eight.
Our adjusted EBITDA was down 9.1% in the quarter reaching Ps.4.7 million with consolidated EBITDA margin contracted by 512 basis points to 26.4% mainly explained by a lower segment adjusted EBITDA and the impact of the recovery of the other segment, which had lower margins contributed negatively to the consolidated margin. On a nine month basis, adjusted EBITDA margin expanded 55 basis points to 30.7%.
When measured in US dollars, our third quarter EBITDA reached $51 million up 6.5% from $48 million in the same quarter a year ago and sequentially. Seventh segment adjusted EBITDA margin contracted by 484 basis points to 29.5% mainly due to the impact of regular seasonality maintenance and winter energy cost coupled by a softer pricing dynamic, partially offset by the increase in sales volume.
In a per ton basis, EBITDA remains at a top notch level of $30. Concrete adjusted EBITDA increased Ps.42 million compared to third quarter '20 explained by a recovery in sales volume and a positive performance.
Yet margins remains at negative 4.0%. Aggregate adjusted EBITDA improved sharply from negative Ps.64 million in third quarter '20, to Ps.1 million in third quarter '21 with margin of 0.3% as better pricing mix and volumes at weighted cost increase.
Finally, railroad adjusted EBITDA improved Ps.34 million to Ps.110 million for the quarter with margin expansion from 6.3% to 7.3% mainly explained by higher transported volume, positive product mix and good pricing performance. Moving on to the bottom line on Slide 10, our profit before tax to the Ps.2.6 billion with a comparison to third quarter '20 affected by an extraordinary result in such quarter.
Total finance cost stood at Ps.0.3 billion in first quarter '21, compared to a net gain of Ps.3.1 billion in third quarter '20 due to an extraordinary result in foreign exchange gain of Ps.3.1 billion during that quarter. Gain on net market position was Ps.0.3 billion in third quarter '21 compared to Ps.0.2 billion for the third quarter '20.
As a result, our net financial expense increased by Ps.79 million to Ps.0.3 million compared to same quarter of last year, driven by lower effects of recession effect compared to the evolution as inflation rate. Finally, during the quarter, we recognize a non-cash impairment of Sierras Bayas asset facility of Ps.141 million due to its obsolescence and the future higher efficient production scheme of Loma.
Moving on to the balance sheet, as you can see on Slide 11, we ended the quarter with a cash position of Ps.4.3 billion and a total debt of Ps.4.0 billion because our net debt to EBITDA ratio stood at minus 0.02 times compared to 0.16 times at the end of 2020. In third quarter '21, we reduced our debt in $16 million standing at $40 million, 83% of which is nominated in US dollars.
Additionally, as we continue with our third share repurchase program, we acquire share for a total amount of Ps.600 million in the quarter. Our operating cash generations stood at Ps.5.4 million with a positive seasonal working capital effect.
Regarding capital expenditures, we spent the Ps.1.5 billion fix of which were the L’Amalí line expansion project. As a second line, it's already the delivering segment a couple of requirements are almost completed.
Now for our final remarks, I would like to hand over the call back to Sergio.
Sergio Faifman
Thank you, Marcos. Now to finalize the presentation, I please ask you to turn to Slide 13.
To wrap up, I would like to highlight the strong evolution of the cement demand with accumulate volume until October almost reaching industry record. Even through, we expect this trend to continue in the fourth coming quarter.
We'll remain cautious for the medium term as time phase macroeconomic and political changes that could affect the evolution of the economic activity. Regarding our new line at L’Amalí, we're glad about the advance in the project as we are already delivering cement to the market.
We are into segment with the preliminary results and expect to start seeing the better efficient and economic benefit in future quarters. Other, this additionally capacity, will allow us to minimize production in winter, avoiding the sustainability higher energy inputs, and also reducing the need of solitude that will lead to a more environmental friendly energy metrics.
will remain our main source of thermal energy, giving us flexibility and avoiding the hike in petcoke international price. We continue to work analyzing alternatives for the near future to support a suitable growth for Loma Negra and by our highly efficient operation is standard and solid capital structure.
Last but not least, I would like to thank all our people and stakeholder for the commitment to Loma Negra operational excellence, without whom the set of solid result would have been much harder to achieve. We're now ready to take your question.
Operator, please open the call for question.
Operator
Thank you. We will now conduct a question-and-answer session.
The first question today comes from Alejandra Obregon with Morgan Stanley. Please go ahead.
Alejandra Obregon
Hi, good morning Loma Negra team. Thank you for taking my question.
Congratulations on the results. I have two questions.
I'll ask the first. I was just wondering if you can comment please on the different trends that you're seeing across the different verticals, residential, infrastructure, formal and informal housing.
If you can help us understand how that's developing as we go into 2022. Thank you.
Sergio Faifman
Hi, Alejandra, thank you for the question. So regarding the trends for next year, we're serving a similar levels with a moderate growth In the last few months we had observed some announces regarding infrastructure projects, which did not started yet.
So for the he next month, we are optimistic regarding the housing demand, residential demand to start some infrastructure projects, which has been approved to start the ramping up in the next future.
Alejandra Obregon
Thank you. That was very clear.
I have another question if I may, and this one is regarding the , I was just wondering if you can comment on whether the , is supplying limestone normally to Loma Negra, and if you have seen any stop ups supply over materials in the area or whether this is just operating at normal capacity, thank you.
Sergio Faifman
So the conflict in Loma Negra was through supplier of us. It was regarding a small difference of criteria, which has been solved already.
So it's not illogical to foresee similar conflicts, but the company is prepared to deal with these kind of conflicts. So we've decided to stop our production for around three days.
We did not have any other impact in the L´Amalí plant.
Alejandra Obregon
Thank you very much. This was very clear,
Operator
Ladies and gentlemen, at this time, there are no further questions. So this will conclude our question and answer session.
I would like to turn the conference back over to Diego Jalón for closing remarks.
Diego Jalón
Thank you for joining us today. We appreciate your participation and interest in our company.
We look forward to meeting you again on our next call, the coming quarter. In the meantime, the team remains available to any questions that you may have.
Thank you.
Operator
The conference has now concluded. Thank you for attending today's presentation.
You may now disconnect.