Cementos Pacasmayo (CPAC) Q3 2026 Earnings Call Transcript

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DATE

Tuesday, Oct. 27, 2026

CALL PARTICIPANTS

• Investor Relations Managing Director - Claudia Bustamante
• Chief Executive Officer - Humberto Nadal
• Chief Financial Officer - Ely Hayashi

TAKEAWAYS

• Revenue -- PEN 667.4 million, representing 16.3% growth year over year driven by higher sales volumes of bulk and bagged cement.
• Consolidated EBITDA -- PEN 233.1 million, an increase of 45.1% due to top-line growth and structural cost efficiencies.
• EBITDA Margin -- 34.9%, expanding 7 percentage points reflecting lower electricity rates and a reduced clinker factor.
• Net Income -- PEN 121.4 million, representing an increase of 69.8% resulting from higher operating profits.
• Sales Volume -- 14.2% increase across cement, concrete, and precast products driven by mining infrastructure and self-construction demand.
• Cement Segment Revenue -- PEN 571.6 million, increasing 21.3% supported by improved selling prices and volume growth.
• Cement Gross Margin -- 50%, an expansion of 2 percentage points facilitated by a new long-term energy contract.
• Concrete, Pavement, and Mortar Revenue -- PEN 65.6 million, a decrease of 19.7% following the completion of major airport and road projects.
• Concrete Gross Margin -- 19.8%, expanding 21 percentage points due to a disciplined commercial strategy and cost savings.
• Precast Segment Revenue -- PEN 11.3 million, rising 23.1% behind demand for concrete pavers in public and private projects.
• Administrative Expenses -- PEN 71.2 million, decreasing 6.9% primarily due to lower personnel expenses and collective bargaining bonuses.
• Selling and Distribution Expenses -- PEN 27 million, increasing 9.8% reflecting higher personnel compensation costs.
• Nine-Month Revenue -- PEN 1,781.9 million, an increase of 14.4% compared to the prior year period.
• Nine-Month EBITDA -- PEN 585.8 million, growing 37.7% year over year.
• Net Debt-to-EBITDA Ratio -- 2x as of Sept. 30, 2026, which management characterized as maintaining a healthy balance sheet.
• Earnings Per Share -- PEN 0.28 for the quarter, compared to PEN 0.17 in the prior year quarter.
• Gross Profit -- PEN 299.4 million, increasing 33.7% due to improved selling prices and cost structures.
• Operating Profit -- PEN 194.2 million, up from PEN 121.3 million in the third quarter of 2025.
• Volume Growth Guidance -- 4% estimated for 2027, though management noted this remains contingent on weather conditions.
• Cash and Cash Equivalents -- PEN 387.7 million as of Sept. 30, 2026, increasing from PEN 53.6 million at the end of 2025.
• Financial Obligations -- PEN 1.3 billion total, including PEN 569.5 million in Senior Notes and PEN 349.2 million in a corporate loan.
• Finance Costs -- PEN 20.9 million for the quarter, representing a decrease from PEN 23.6 million in the prior year.

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RISKS

• Nadal stated, "we all expect to see what's going to happen with El Nino... it's all going to depend on the strength of El Nino," indicating that regional weather patterns could impact cement demand and volume projections.

SUMMARY

Cementos Pacasmayo S.A.A. (NYSE:CPAC) reported a period of significant expansion in profitability and volume, particularly within its core cement business. Management reported that the consolidated EBITDA margin reached nearly 35% as a result of a new long-term energy contract and a more efficient clinker factor. While the concrete segment saw a revenue decline due to the expiration of several large infrastructure projects, profitability in that unit improved substantially through a strategy focused on higher-margin specialized solutions. The company remains focused on its strategic integration with Holcim and its digital ecosystem to support regional construction talent while maintaining a leverage ratio of 2x net debt to EBITDA.

• Management confirmed that the company is currently in the early stages of its integration with Holcim and has not yet reflected procurement or operational synergies in its financial results.
• The company secured an additional 4.4 kilometers of concrete sheet piles for the Piura River Defense project, highlighting a specialized high-precision product line for aggressive environments.
• A tender offer launched for company shares is currently active and is scheduled to remain open until Nov. 20, moving according to regulatory timelines.
• The Construye Experto digital ecosystem has grown to include more than 5,000 foremen, with a 157% monthly growth rate in loyalty point accumulation.
• The Board of Directors has not yet made a decision regarding the distribution of dividends or potential buybacks for investment shares.
• The Juntos contra la Anemia initiative reported a reduction in childhood anemia prevalence from 17% to 9% in the Elias Soplin district.
• The company maintained its leadership in the cement sector for 11 consecutive years, reaching the ninth position nationwide in the Merco business reputation ranking.

INDUSTRY GLOSSARY

• Bagged cement: Cement packaged in bags, primarily utilized for residential self-construction and smaller-scale building projects.
• Bulk cement: Cement delivered in large quantities, generally used for major industrial, mining, and public infrastructure works.
• Clinker factor: The ratio of clinker used to the total amount of cement produced; lowering this factor improves cost efficiency and reduces carbon emissions.
• Clinker: An intermediate product in cement manufacturing produced by heating limestone and clay in a kiln.
• EBITDA: Earnings before interest, taxes, depreciation, and amortization, used to gauge operational profitability.
• Merco ranking: A recognized corporate reputation monitor that evaluates the performance and perception of companies.
• PEN: The Peruvian Sol, the national currency of Peru.
• Precast: Concrete components manufactured in a factory and transported to construction sites for assembly.
• Self-construction: A market segment where individuals or families build their own residential properties incrementally.

Full Conference Call Transcript

Operator: Good day, ladies and gentlemen. Welcome to Pacasmayo's Third Quarter 2026 Earnings Conference Call. [Operator Instructions] And please note that the call is being recorded. [Operator Instructions] I would now like to introduce your host for today's call, Mrs. Claudia Bustamante, Investor Relations Managing Director. Mrs. Bustamante, you may begin.

Claudia Bustamante: Thank you, Roberto. Good morning, everyone. Joining me on the call today is Mr. Humberto Nadal, our Chief Executive Officer; and Ms. 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. Ms. Hayashi will then follow with additional commentary on our financial results. We'll 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'd now like to turn the call over to Mr. Humberto Nadal.

Humberto Reynaldo Nadal Del Carpio: Thank you, Claudia. Welcome, everyone, to today's conference call, and thank you for joining us to discuss our third quarter results. During the third quarter of 2026, our operational performance remained exceptionally positive. We experienced a 14.2% increase in the sales volume of cement, concrete and precast. This robust demand, particularly for bulk cement in mining infrastructure 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 233.1 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 70% to PEN 121.4 million. In addition to a strong financial performance, we are driving growth through high-margin specialized construction solutions. A key success factor has been our prefabricated concrete sheet piles, which offer faster project delivery, high precision, full control of the construction process and enhanced reliability in aggressive environments. Demonstrating strong demand for these solutions, we secured an additional 4.4 kilometers of concrete sheet piles 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 and access -- with access to benefits and learning opportunities alongside a 157% monthly 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 Merco ranking, maintaining our position as leaders in the cement sector for 11 uninterrupted years.

We also received significant recognition for our community initiatives, including winning the first edition of the Socios En Salud 2026 Award for Juntos contra la Anemia. Thanks to this collaborative effort, we successfully reduced the prevalence of childhood anemia in the district of Elias Soplin from 17% to 9%. Maintaining this leadership and achieving these community milestones is a direct result of hard work and resilience of an extremely committed team of [Pacasmayo]. I will now turn the call over to Ely to go into a more detailed financial analysis.

Ely Hirahoka: Thank you, Humberto. Good afternoon, everyone. For the third quarter of 2026, our revenue growth was very strong, reaching PEN 667.4 million up 16.3 percentage compared to third quarter of 2025. This brought our revenue for the first 9 months of the year to PEN 1,781.9 million, representing a 14.4 percentage increase year-over-year. This performance was primarily driven by higher sales volumes of bulk cements for the public and private segment as well as bagged cement. Gross profit for the quarter increased by 33.7 percentage 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 percentage in the third quarter '26 to PEN 71.2 million and by 5.1 percentage for the first 9 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 percentage increase. For the first 9 months of the year, EBITDA rose 37.7 percentage to PEN 585.8 million.

Consequently, our EBITDA margin expanded by 7 percentage points to 34.9 percentage in the third quarter of '26. This remarkable profitability was driven by top line growth, but also by lower electricity rates secured through our new long-term energy contract, combined with a lower clinker factor. Breaking down our results by business segment. Cement revenues grew 21.3 percentage to PEN 571.6 million in the third quarter of '26. In terms of margins, the gross margin for cement in the third quarter of '26 expanded by 2 percentage points to 50 percentage, highly supported by new energy contract that lowered our average cost as well as the cost efficiency from a lower clinker factor mentioned before.

For the concrete, pavement and mortar segment, quarterly revenues decreased by 19.7 percentage to PEN 65.6 million. This decline is due to reduced volume following the finalization of deliveries for the Yanacocha, Motupe, and Piura Airport projects. However, despite lower volumes, gross margins expanded significantly by 21 percentage points in the third quarter '26 to reach 19.8 percentage. 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 percentage to PEN 11.3 million in the third quarter of '26, 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 percentage 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 percentage to PEN 121 million. This strong bottom line growth stems directly from higher operating profit. Additionally, we maintain a very healthy balance sheet with our net debt-to-EBITDA ratio reaching 2x as of September 30, 2026.

To summarize, our third quarter performance reflects a successful execution of our commercial strategy and structural cost efficiencies, allowing us to expand our margins significantly across our segments. Operator, can we now open the call for questions?

Operator: [Operator Instructions] Our first question comes from Gabriel Perez with CrediCorp Capital.

Gabriel Pérez Flórez: Thank you for the presentation. Do you hear me?

Humberto Reynaldo Nadal Del Carpio: Yes, we can hear you.

Gabriel Pérez Flórez: Okay. So my first question will be, given the strong volume growth in this quarter, how sustainable do you believe the current recovery in cement demand is heading into 2027? And my second question would be regarding the potential impact of El Nino on cement demand in the region.

Humberto Reynaldo Nadal Del Carpio: Yes. Regarding the projections, I mean, we all expect to see what's going to happen with El Nino. 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 Nino.

Operator: Our next question comes from Francisco Suarez from Scotiabank.

Francisco Suarez: The question that I have relates with -- it was a great improvement in overall margins this quarter, far more than we expected. Is there -- my question relates with the potential synergies between you and the network of operations within Holcim. Is that already taking place because it seems to me that it's -- we are at early stages of those synergies unfolding. But I would like to understand if already, you have been benefited from potential savings from procurement, for instance, or anything on that front?

Humberto Reynaldo Nadal Del Carpio: Francisco, thank you for your question. Nice to always hear from you. The answer will be no. I mean, we are still in a very early stages. So there's no reflection really of any synergies in our results.

Francisco Suarez: Fantastic. And also, perhaps this is actually a question for Holcim, but now Heidelberg, we have seen a move, similar move in the central market of Peru. Do you see potentially expanding yourselves in other regions within Peru?

Humberto Reynaldo Nadal Del Carpio: Like you said, Francisco, that's probably a question for Holcim. I mean, I cannot answer for...

Francisco Suarez: Perfect. And thanks again, and congrats for the results.

Operator: [Operator Instructions]

Humberto Reynaldo Nadal Del Carpio: Could you please go ahead with the questions that are already lining up?

Operator: Sure. Our next question is a text question from [Mario Velasquez]. Are you going to announce dividends in the next days? During the last 2 years, you announced them in October.

Humberto Reynaldo Nadal Del Carpio: Yes. As of today, the Board of Directors has not adopted any decision regarding dividend distribution.

Operator: Okay. The next question from [Mario Velasquez] as well, what is going to happen with the investment shares? Are you planning a buyback?

Humberto Reynaldo Nadal Del Carpio: There's no plan for buyback at this point.

Operator: Okay. We have a next question from [indiscernible]. Regarding the recent tender offer, could you provide more details on its current status and the next steps? Also, what are the potential implications for minority shareholders? And could this transaction eventually lead to a delisting?

Humberto Reynaldo Nadal Del Carpio: Sure. As you all know, I mean, we have a neutrality position in Pacasmayo. But based on public information, it was launched last week, it will last until November 20, and those steps are moving according to the regulators. That's all what I can comment at this point.

Operator: Okay. Thanks. So I'm not seeing any more questions. So perhaps I can hand it back to Mr. Humberto Nadal for closing remarks.

Humberto Reynaldo Nadal Del Carpio: Thank you. In closing, we conclude this quarter with confidence in our strategic momentum and operational strength. As we move forward alongside Holcim, our progress reflects a meaningful contribution to Peru's economic and social development. This is a journey that is just beginning, and I'm convinced that Holcim will only bring value to our company and to our country. Beyond the financial results, we are creating tangible opportunities through initiatives that aim to improve living standards for thousands of Peruvians while generating sustainable value for all our stakeholders. Running a responsible business is about building solid foundations of trust.

The future of Peru is built every day through decisions -- the decisions, hard work and commitment of millions, and we remain dedicated to doing our part. Thank you once again for your continued trust and support of our company. Have a nice day.

Operator: That concludes the call for today. Thank you. And have a nice day.

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