CEMENTOS PACASMAYO S.A.A. 2026 Q3 Earnings Call

Thank you, Roberto. Good morning, everyone. Joining me on the call today is Mr. Humberto Nadal, our Chief Executive Officer, and Mr. Ely Hayashi, our Chief Financial Officer. Mr. Nadal will begin our call with an overview of the quarter, focusing primarily on our strategic outlook and operational highlights. Mr. Hayashi will then follow with additional commentary on our financial results. We will then turn the call over to your questions. Please note that this call will include certain forward-looking statements. These statements relate to expectations, beliefs, projections, trends, and other matters that are not historical facts and are therefore subject to risks and uncertainties that might affect future events or results. Descriptions of these risks are set forth in the company's regulatory filings. With that, I would now like to turn the call over to Mr. Humberto Nadal.

Thank you, Claudia. Welcome everyone, to today's conference call, and thank you for joining us to discuss our third quarter results. Through the third quarter of 2026, our operational performance remained exceptionally solid. We experienced a 14.2% increase in the sales volume of cement, concrete, and precast. This robust demand, particularly for bulk cement in mining, structural works, and bagged cement for self-construction, directly contributed to a 16.3% rise in revenues, which reached PEN 667 million. We successfully leveraged this growth alongside higher selling prices and cost efficiencies to achieve a consolidated EBITDA of PEN 216 million, an outstanding 45% increase compared to the third quarter of last year. Consequently, our consolidated EBITDA margin expanded by 7 percentage points to reach an impressive 34.9%. Complementing this strong performance, our net income rose by almost 17% to PEN 121.4 million.

In addition to our strong financial performance, we are driving growth through high-margin specialized construction solutions. A key success factor has been our prefabricated concrete sheet pile, which offers faster project delivery, high precision, full control of the construction process, and enhanced durability in aggressive environments. Demand for these solutions, we secured an additional 4.4 kilometers of concrete sheet pile for the ongoing Piura River defense project. We also recognize that great infrastructure is built by people. To support the talent in northern Peru, our Construye Experto digital ecosystem continues to thrive. We now have more than 5,000 foremen with access to benefits and learning opportunities, alongside a 157% dramatic growth in accumulation of Construye Puntos. When our foremen grow, what we build together grows as well. Finally, we continue to build trust and generate a positive impact in the country.

We're immensely proud to announce that we reached the ninth position nationwide in the Merco ranking, maintaining our position as leaders in the cement sector for 11 uninterrupted years. We also received significant recognitions for our community initiatives, including winning the first edition of the Premios Socios En Salud 2026 Award for Juntos contra la Anemia. Thanks to this collaborative effort, we successfully reduced the prevalence of mild anemia in the district of Elías Soplín Vargas from 17% to 9%. Maintaining this leadership and achieving these community milestones is the direct result of hard work and resilience of an extremely committed team of Pacafies. I will now turn the call over to Ely to go into more detail on our data.

Thank you, Humberto, and good afternoon, everyone. For the third quarter of 2026, our revenue growth was very strong, reaching PEN 667.4 million, up 16.3% compared to the third quarter of 2025. This brought our revenue for the first nine months of the year to PEN 1,781.9 million, representing a 14.4% increase year-over-year. This performance was primarily driven by higher sales volumes of bulk cement for the public and private segment, as well as bagged cement. Gross profit for the quarter increased by 33.7% to PEN 299.4 million, mainly due to improved selling prices and a better cost structure. Turning to operating expenses, administrative expenses decreased by 6.9% in the third quarter of 2026 to PEN 31.2 million, and by 5.1% for the first nine months of the year.

This reduction across both periods was mainly driven by lower personnel expenses, primarily reflecting a lower collective bargaining bonus compared to last year. On the other hand, selling expenses for the quarter increased by 9.8% to PEN 27 million, mainly driven by higher personnel expenses and other compensation costs. Moving to overall profitability, our consolidated EBITDA reached PEN 233.1 million for the quarter, an outstanding 45.1% increase. For the first nine months of the year, EBITDA rose 37.7% to PEN 585.8 million. Consequently, our EBITDA margin expanded by seven percentage points to 34.9% in the third quarter of 2026. This remarkable profitability was driven by top-line growth, but also by lower electricity rates secured through a new long-term energy contract, combined with a lower clinker factor. Breaking down our results by business segment, cement revenues grew 21.3% to PEN 571.6 million in the third quarter of 2026.

In terms of margin, our gross margin for cement in the third quarter of 2026 expanded by 2 percentage points to 50%, highly supported by new energy contracts that lower our average cost, as well as a cost efficiency from a lower clinker factor mentioned before. For the concrete, pavement, and mortar segment, quarterly revenues decreased by 19.7% to PEN 65.6 million. This decline is due to reduced volume following the finalization of deliveries for the Yanacocha, Mocupe, and Piura Airport projects. However, despite lower volumes, gross margin expanded significantly by 21 percentage points in the third quarter of 2026 to reach 19.8%. This notable expansion was driven by a disciplined commercial strategy focused on profitability, along with cost savings following the completion of the Piura Airport project. Our precast segment also delivered solid progress.

Revenues rose 23.1% to PEN 11.3 million in the third quarter of 2026, primarily due to stronger demand for concrete pavers for public and private projects, particularly in Piura, Trujillo, and Chiclayo. Gross margin expanded by 5.1 percentage points to 16.1% in the quarter, reflecting higher sales volumes and lower cost of sales per ton. Finally, our consolidated net income for the third quarter increased by 69.8% to PEN 131 million. This strong bottom-line growth stems directly from higher operating profits. Additionally, we maintain a very healthy balance sheet with our net debt to EBITDA ratio reaching 2.0x as of September 30, 2026. To summarize, our third quarter performance reflects a successful execution of our commercial strategy and structural cost efficiency, allowing us to expand our margins significantly across our segments. Operator, can we now open the call for questions?

Yeah. Regarding the projections, we all expect not to see what will happen with El Niño, but we still believe that next year we will see a growth of approximately 4% of volumes. But like I said before, it's all going to depend on the strength of El Niño.