Good morning, and welcome to the Loma Negra Second Quarter 2022 Conference Call and Webcast. . Please note that this event is being recorded. I would now like to turn the conference over to Mr. Diego Jalon, Head of IR. Please, Diego, go ahead.

Thank you. Good morning, and welcome to Loma Negra's 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 Gradin. Both of them will be available for the Q&A session. Before we proceed, I would like to make the following safe harbor statements. Today's call will contain forward-looking statements and I refer you to the Forward-Looking Statements section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances. This conference call will also include discussion of non-GAAP financial measures. The full reconciliation of the corresponding financial measures is included in the earnings press release. Now I would like to turn the call over to Sergio.

Thank you, Diego. Hello, everyone, and thank you for joining us today. As usual, I will begin my presentation with a discussion of the highlights of the quarter, and then Marcos will take you through our market review and financial results. After that, I will provide some final remarks, and then we will open the call to your questions. Starting with Slide 3. We ended the quarter with another solid set of results, supported on the positive trend of cement demand that is surpassing historical records. As you could see from our release yesterday, our adjusted EBITDA for the quarter reached $63 million compared with $48 million in the second quarter of 2021. When measured in pesos, this shows an increase of 2.6% year-on-year, sustained by our production efficiency and increased flexibility supported to a large extent by the recent investment in capacity. LOMA is also fully coping with the complex situation of the global energy market that has diminished cement profitability worldwide. In this context, we keep delivering solid results with consolidated adjusted EBITDA margin of 29% and a sound U.S. dollar EBITDA per ton of 36.58% above 2021's second quarter. Finally, following the dividend that we paid in April and leverage on our solid balance sheet and cash flow generation, we decided to distribute a second dividend of $81 million, totalizing $126 million for the year, reaching an outstanding dividend yield of 17%. I will now hand off the call to Marcos Gradin, who will lead you through our market review and financial results. Please, Marcos, go ahead.

Thank you, Sergio. Good morning, everyone. As you can see on Slide 4, the GDP forecast for 2022 was slightly increased in the last Market Expectation Report from the Central Bank, reaching 3.4% from the previous 3.2% as the first quarter showed a 6% growth. In this context, construction activity measured by the ISAC shows a strong momentum following the general economy growth as figures from the sectors are above consolidated economy level, showing its robustness in this moment of political and economic uncertainty. Regarding cement national industry sales, the first half of the year has exceeded all initial expectations. After a strong first quarter that showed a 7% increase year-over-year, the second quarter surged growing almost 16% year-on-year. We've seen (inaudible) accumulated figures reaching 11.5%. This tendency continued in July that registered an increase of 9%, which makes us optimistic that this trend is going to continue and that we are on track to surpass the annual historical record of 2015. Bulk cement volumes remain solid on the back of the residential demand showing a more resi growth. But in the last few quarters, growth came especially from the bulk shipment, driven by a higher level of activity in private, residential and infrastructure projects and coupled by a moderate recovery in public works, particularly at the municipal provision level. We can see this dynamic in the breakdown by dispatchment where bulk shows a participation of 43% against the previous 40% in the second quarter of 2021. As we said before, we are cautiously optimistic for next quarter, taking into consideration that the challenging current political and macroeconomic situation could negatively affect future growth. Turning to Slide 5 for a review of our top line performance by segment. Top line was up 8% in the second quarter, mainly due to…

Thank you, Marcos. Now to finalize the presentation, I please ask you to turn to Slide 13. As we mentioned before, the construction activity in general and in particular, the cement market is showing a great dynamic, consolidating the tendency shown in the first quarter and on track to settle a new historic record. On the other hand, we are going through a complex political and macroeconomic situation. The scope and outcome of which are still difficult to determinate. In this context, we are very satisfied with the result that we have just presented to you that LOMA'S operational efficiency and flexibility and the commitment to always keep improving as we state in one of our principles. We constantly challenge ourselves and it's time like this when we can show that we really stand by it. Looking ahead and considering that some volatility could be expected due to the macroeconomic situation and recent FX tension, we are optimistic that the positive trend for the cement is going to continue, and LOMA is up to face the challenges. As always, I would like to thank our people and stakeholders, very important pillars where we support our sustainability growth. This is end of our prepared remarks. We are now ready to take questions. Operator, please open the call for questions.

. And our first question today will come from Alejandra Obregon with Morgan Stanley.

Congratulations on the results, and thank you for the call. My first question is on your recently released sustainability report and your targets and perhaps some of the trends that we have seen in the last quarters worldwide. And by this, I mean, blended cement is gaining a lot of traction either to reduce clinker factor or to protect profitability. So I was wondering, if you could elaborate where your clinker factor is today, whether you see space to reduce it even more from where it is and whether blended cement is something that you are exploring and could gain some traction in Argentina as well.

Thank you for your question. Within our report, we are defining our target for the next few years. And we believe that regarding clinker factor, we have some space to improve. And clinker factor and another KPI is what we are targeting and focusing on to improve and to advance in the next few years.

Understood. That was very clear. And if I have -- if I may have a space for another question. I have a question on demand. So you mentioned that there's a greater contribution from private buildings, from industrial, continued strength in residential. So I was just wondering if you could provide some color on -- in terms of backlog, what you're expecting in terms of verticals for the back half of the year and for demand overall?

For the second half of the year, we believe that volumes are going to be similar of what we saw in the first semester. We observe the bulk cement represents almost 40% of the total market. With some variations between months, we think that this 60-40 breakdown is going to be sustained.

. And our next question will come from Rodrigo Nistor with AR Partners.

Congratulations on the results. So my question is regarding your pricing strategy. I expect the inflation for Argentina this year will likely exceed 90%. So were you planning to reduce the negative impact of rising costs?

Thank you for your question. As we always say, our price strategy is linked to inflation and to the evolution of internal cost of Loma Negra. And as you can see in this financial statements, there is also a very strong cost management. There's no doubt that inflation -- cost inflation is an issue for us that we care about. But in this quarter, you can see the impact of some of the winter costs that are the higher costs that the company is going to face during the year. And looking forward, even though we see that the pressure of the inflation is going to continue, we are going to have lower thermal energy costs.

. Our next question will come from Daniel Garcia with Bank of America.

This is actually Daniel Rojas from Bank of America. My question is regarding -- a follow-up from the previous question. Could you please drill down on the natural gas and the prices you've seen -- and the average prices you think you can see in the second half. And a follow-up on that one, the Néstor Kirchner gas pipeline. There has been a lot of talk on the potential benefit for the company. Do you have a time line or an outlook on these projects and how it can help margins for the company?

Thank you for question, Daniel. If you see the prices of natural gas are above 45% compared to the same period last year and some of the contracts that we closed for the second half of the year are above 30%. So we are seeing an increase regarding internal energy from last year but we should see it below the levels that we are seeing now. Regarding the pipeline, we are not seeing positive effects in the short term probably. And seeing the gas demand, we can expect to see some positive effects after the next winter.

Do you have some idea on the level of savings you'll be able to achieve on the pipelines online.

So we think it's going to be linked regarding the -- how many gas is going to be available for internal consumption and how much is going to be available for exports? And especially with the reference price of exports that is going to be -- is going to determine the savings that we are going to have with the internal consumption.

That's very clear. And a follow-up, if I may. Going forward, what do you think would be the running rate for your dividend in 2023 and going forward?

We didn't have a written dividend policy. Probably in 2023, we are going to continue focusing on maximizing value for our shareholders.

And this will conclude our question-and-answer session. I'd like to turn the conference back over to Diego Jalon for any closing remarks.

Thank you, Nicole. Thank you, everybody, for meeting us today. We really appreciate your participation and interest in our company. We look forward to meet you again in our next call. And in the meantime, we remain available for any questions that you may have. Thank you, and have a nice day. The conference has now concluded.

Thank you for attending today's presentation. You may now disconnect your lines at this time.