Cementos Argos S.A.

Good morning. My name is Manuela Ramirez, I’m Cementos Argos IRO and I welcome you to the Fourth Quarter Results Call.

On the call today are Juan Esteban Calle, our CEO; Carlos Yusty, our CFO; Rafael Olivella, the VP of Legal Affairs; Bill Gardner, the VP of the U.S. Division; and Tomas Restrepo, the VP of Colombia.

Please note that certain forward-looking statements and information during the call or in the report and presentation are uploaded at www.argos.co/ir. are related to Cementos Argos S.A.

and its subsidiaries, which are based on the knowledge of current facts, expectations, circumstances, and assumptions of future events. Various factors including if an unexpected situation presents itself may cause Argos future results, performance or accomplishments to differ from those expressed.

The forward-looking statements are made to-date, and Argos does not assume any obligation to update said statements in the future as a result of new information, future events, or any other factors. Please note that after the initial remarks there will be a Q&A session.

[Operator Instructions] It is now my pleasure to turn the call over to Mr. Calle.

Thank you, Manuela, and good morning everyone. As part of our business strategy, I want to highlight that during the fourth quarter of last year we completed the sale of the cluster of ready-mix plants in the U.S for close to $34 million, following our plan to concentrate our concrete business in large metropolitan markets.

We also sold real estate as it's in Colombia for $3.8 million and completed the transport of the Cairo inside the fence power generation plant in Colombia for $9.5 million to Lufussa. Altogether, during the year, we raised close to $142 million from divestments of non-core, non-strategic assets that allow us to reduce leverage and get closer to our target.

In the sale of the ready-mix cluster in the U.S., we signed long-term cement supply agreement that will help us to continue growing cement volumes making the transaction value generating in terms of return on capital employed. Before moving on to discuss our results, I want to give an update regarding our digitalization strategy.

Argos ONE is already operational in Colombia, the U.S., Panama, Honduras and the Dominican Republic with an important adoption level and excellent comment from our clients. Moving on to present our consolidated figures, we closed 2018 with a quarter marked by improvements in the demand in Colombia, the continuation of unfavorable weather affecting volumes in the U.S and stability in our markets in the Caribbean and Central America.

Cement dispatches reached 3.9 million tons, decreasing 3% when compared to the fourth quarter of 2017. And the ready-mix dispatches posted a 7% reduction.

Both cement and ready-mix volumes reflect the impact of adverse weather in the U.S that was partially offset by improving demand in the Colombian market. In consolidated terms, energy prices increased 11% or $2 per ton in our operations, explained mainly by the already mentioned situation in Colombia and the higher utilization of our Puerto Rico plant with one of the highest energy cost in our network and that was almost inoperated in 2017 because of the hurricane.

This was partially offset by the reduction on energetics in the U.S which we will explain later. Now to start with our results in each region, I will like to invite Bill to share the performance of the business and our view for the U.S region.

Thank you, Juan, and good morning, everyone. Volumes struggle for both our cement and ready mix business units in the fourth quarter of 2018.

For our ready mix business, in particular, the drop in volume was due greatly to the seemingly unrelenting wet weather. We saw record amounts of rain across our footprint in the fourth quarter with National Oceanic and Atmospheric Administration or the NOAA, claiming that during the period between September and November 2018 above average participation fell across Maryland, New Jersey, North Carolina, Rhode Island, Texas, Virginia and West Virginia, each one experiencing its wettest autumn on record.

In addition, extensive areas in North and Central Georgia, North and South Carolina and Virginia reported more than 200% of normal participation during November. Texas was hit hardest of all with rainfall increasing by almost 340% in October, and by almost 150% in November when compared to the same period in 2017.

And our other states did not fare much better. In November, North Carolina saw an increase of almost 300%, South Carolina an increase of 440%, Florida had an increase of more than 170% and Georgia had more than 400% increase when compared to the same time in 2017.

In addition to the weather, there was a minor explosion that occurred in the bag house of our Martinsburg plant. No employees were heart and no environmental releases were experienced.

However, as a result, the plant was not operational for 43 days. Despite the strain that we felt on our cement supply due to the average, we are very proud of how quickly we adapted our supply chain to ensure that we were able to continue serving our customers, which is a true testament to our logistics network and the team that works so hard to support it.

With stable prices and the explained behavior in volumes, revenue fell 9.8% and EBITDA fell by 15.3%. Despite these results, I believe we will have a more positive future for 2019.

As long as we can keep the rainy day and the economic day that is supporting that sentiment as well, because what is now reflected in our 2018 results is how strong the U.S economy is. We're seeing healthy indicators in terms of growth.

The labor market and consumer confidence, despite a slight deceleration in the housing market, reflecting mortgages rate high, in addition, the Southern United States where most of our operations are located, separate from the aforementioned severe weather condition. Nevertheless, better performance of our construction industry for 2019 is on the horizon and for a few reason.

Despite the deceleration of the leading indicators of the residential segment in 2018, the U.S market have seen great momentum in the commercial sectors and infrastructure is beginning to ramp up even more. Commercial and infrastructure project have been gaining great traction within our company as well, which reaffirms this expectation.

This outlook has even been supported by the American Institute of Architects and [indiscernible] who have reported that the commercial and industrial segment will continue performing well based on their index read. In addition, the average overall backlog of projects confirm this trend as did the strong buildings and new project enquiry reported by firms.

In terms of the public sector, specifically infrastructure, the outlook is incredibly positive. In 2018, the Department of Transportation made more than US$63.9 billion available in transportation investment through grant programs including the better utilization investments to leverage development, which is build infrastructure for rebuilding America, INFRA and the Airport Improvement Program, AIP.

And later releasing an additional US$900 million to the INFRA grant program and US$205 million to the AIP program. Now funded, these programs will begin construction in 2019, which will be great for our business.

Lastly, because of the cost pressure in 2018 and the positive outlook we have for 2019, we feel confident about price increases in January and April. We have big plans for our operations, including launching our BEST USA 2.0 program where we’ve identified US$71 million in savings by 2021.

For this program, we will concentrate on five areas of focus. First, the optimization of our ready mix network, which has room for improvement of utilization of the delivery capacity, supply chain, and even further potential divestment.

Second is to increase the utilization of our cement plant, driving operational average. This refers mainly to our Martinsburg and Newberry plants, which are running below the industry average at 70%.

For this, we will have to improve the reliability factor, strengthen our commercial efforts and ensuring that we can reach new markets through our third pillar on supply chain and vertical integration. Also, the other two areas respond directly to the two greatest challenges the industry faces today in terms of cost pressures.

On one hand, we highlight the importance of flexibility, base energetics cost moment, including a strategy to increase the use of alternative fuels in the operation, which as you know is a key piece of the way we reach our goals of CO2 per ton reduction for 2025. On the other hand, it's a plan that ensures that we are able to attract and retain the best drivers for our ready mix operation in a context where driver shortage is becoming more and more common.

Thank you, Bill. It is important to point out that in spite the positive challenges we face in the U.S region during 2018, mainly due to the adverse weather as I was explaining in great detail.

We finish the year with a flattish like-to-like EBITDA when compared to 2017, taking into account that the figures for 2017 include the EBITDA of developed business. I'm especially optimistic about the execution this year of BEST 2.0 and the potential efficiencies we are targeting in the region.

We are in [indiscernible] for instance by the increase of 2.3% in the cost of energy present like [indiscernible] accomplished in our U.S operations during last quarter. Moving on to Colombia, we are pleased to have finished the quarter reporting volume growth in both cement and ready mix, as the market reported five consecutive months of cement demand growth and with basically no imports of cement and decreasing imports of clinker, we are seeing a much better competitive environment.

Therefore, we increased prices between 2% and 3% of our inflation in January and the price increase is sticking. Tomas Restrepo, our VP of the Colombian Operation will now comment on the results.

Thank you, Juan, and good morning. We close the year satisfied with the results in terms of BEST, and our leadership in the market.

We are now a more competitive player with cost that compete with any plant here or in Turkey where most of the imports came from. We see a completely different momentum in the market at this point with strong demand coming from infrastructure project.

Moreover, we are growing above the market in geographical areas where we can display our value proposition with a lower cost to tariff in order to take advantage of the market growth and face new competitors. Examples of these include the South West part of the country, near Cali, the Northern Department such as Caesar and Bogota where our Sogamoso plant is located.

As Juan mentioned, during the quarter, volume growth and a better price environment resulted in a 6.6% growth in revenues. Our adjusted EBITDA after subtracting the gain on the divestments, fell 15% on a year-to-date basis as a result of a $2.6 per ton or 16% rise in fuels and electricity prices mainly due to a 38% increase in coal prices, costing us 215 basis points in EBITDA margin.

To offset the situation, we have already secured coal contracts for the next three years for the Central region of the country and in the second half of 2019, we will increase the usage of natural gas and pet coke in Cartagena to optimize our energy metrics. The decrease in EBITDA is also partially explained by a reclassification of SG&A expenses that used to be reported in our corporate and other EBITDA and are now reported in Colombia region.

Regarding our outlook going forward, the leading indicators in the construction industry gives time for a more dynamic 2019 driven by a recovery of the residential market and advantages in infrastructure projects. Social housing in Bogotá and Cali powered the housing market recovery with a successful government subsidy program Mi casa Ya, which will continue in 2019 with 60,000 new subsidies.

The regular housing segment of the market is still carrying above average levels of inventory is, but has begun to experience a unit sales recovery improving turnover especially in Bogotá and Cali. Lastly, the cement market increased 2.6% year-over-year in December closing flat for the whole year and completing five months of consecutive growth with very good momentum in the civil works segment and the retail segment where we will launch new products like dry motors, Meisel cement and structural cement.

In the same line, the ready mix market reduced a slowdown driven by the improving pace of infrastructure construction for a 4G projects contributed to a 32.6% increase year-over-year as of November completing eight months of consecutive double-digit growth.

Thank you, Tomas. Colombia finished 2018 with an adjusted EBITDA of R$413 billion, also flattish on a like-to-like basis and with a strong position in both in the ready mix and the cement markets.

Moving onto the Caribbean and Central American region, I want to highlight the steady result of the year and the stable outlook that we have for 2019. This view is supported by the geographical diversification of our operations.

We have been successful of setting the challenges we are facing in the markets such as Panama, that hasn't record its dynamic since last year's construction strike. With a strong results in the Dominican Republic, Puerto Rico and the Eastern Caribbean Island.

Cement volumes in our local operation posted a 2.6% reduction as a result of the challenging conditions in Panama that have remained after the construction strike in the second quarter of 2018, and the impact of the political turmoil that continues to affect Haiti. Despite these markets such as the Dominican Republic and the Eastern Caribbean presented solid volume growth of 19% and 16%, respectively.

Our ready mix volume decreased 6.9% explained by a lower performance in Panama, which represents more than 70% of the total volume of the region and was partially offset by the positive dynamic in the Dominican Republic. Regarding financial performance, EBITDA and EBITDA margin grew 2.1% and 169 basis points respectively in line with our stability expectations for this region.

As mentioned before, our Caribbean and Central American markets provide us with a stable outlook for 2019. While the slowdown in Honduras and Panama and the political instability in Haiti affected the performance in 2018, the Dominican Republic and Puerto Rico remains strong and we believe that we will maintain the positive trend during 2019.

The Dominican Republic economy grew close to 7% in 2018. The highest in the region, boosted by the construction industry that increased 10.6% according to the Central Bank.

Moreover, in Puerto Rico, cement consumption posted an impressive double-digit growth during the year, driven by the government reconstruction plan that will continue during the next 10 years with funds close to $80 billion. Mid-term will remain positive regarding Panama.

The International Monetary Fund foresees a 6% growth of the economy for 2019 levered by construction and mining industries and hopefully a very dynamic in the execution of the infrastructure project. Finally, we are very pleased with the EBITDA figure of $178 million in 2018 for this region, an increase of 3.4% on a like-to-like basis, especially taking into account the challenges we faced in Panama and Honduras, our two most important markets.

I would like to finish our call talking of our debt level and financial position. The focus for 2018 as you know, was to improve our free cash flow generation in order to reduce our leverage.

Finishing the year with a 3.74x debt to EBITDA ratio is a testimony of the success we are having with the execution of BEST to improve our efficiency, record EBITDA generation and improve grossing. We have been reducing our working capital cycle, while we remain disciplined in our capital allocation and committed to divesting non-core assets.

We closed 2018 leveraging $122 billion in working capital, a tremendous efforts from our operations. CapEx was also reduced over 32% versus 2017 and we collected over $140 million from our divestment plan during the year.

As a result, our total debt was $2.19 billion as of December 31 with a reduction of $195 million compared to the previous quarter. We are on target to reach a net debt to EBITDA ratio of around 3.2x by June 2020.

Our focus on operational efficiency reducing leverage and lowering our working capital cycle is improving our financial flexibility and increasing return on investment capital. This will continue to be our priority for 2019.

Please allow me to spend a few minutes referring to our outlook for the year. In the U.S., our efforts will be on deploying BEST 2.0 and achieving operational leverage by increasing the utilization of Newberry and Martinsburg.

The ready-mix business is where we see the largest potential in terms of the network efficiency. For this region, our EBITDA guidance is between $270 million and $290 million, which will translate to around $300 million to $320 million under IFRS 16.

BEST 2.0 will generate opportunities of around $40 million in 2019 towards reaching that goal. In Colombia, EBITDA recorded will be driven by price increases above inflation, while further efficiencies with the commissioning of the [indiscernible] project in Apri1 will [indiscernible] cost pressure from fuels.

We forecast our low to mid single-digit growth in volumes with margin expansion of 20%. In the Caribbean and Central America, we continue to guide for a stability based on the [indiscernible] of that region.

Overall, our consolidated EBITDA guidance is between COP1.7 trillion to COP1.8 trillion, which together with continuing efforts to leverage cash from positive working capital. And similar to last year CapEx close to $150 million will allow us to increase free cash flow and therefore be closest to our mid 2020 goal of 3.2x net debt to EBITDA.

With these consolidated guidance, our grossing will improve to 7.17% in 2019. Now, I would like to close the call thanking you for your attention on all of these report during 2018.

We reaffirm our commitment to continue transforming Argos to deliver on our goals and the development to the markets where we operate. Operator, we may now continue with the Q&A.

Hi. Good morning, everyone, and thanks for the call.

I have two questions. My first one is regarding your U.S operation and I was wondering if you could share with us your growth perspectives for this region in terms of volumes and prices this year?

And my second question is regarding your EBITDA guidance and I wanted to know if these includes potential divestments of non-core assets? Thank you very much.

Juliana, thank you for the questions. I will start by answering your second question.

In our guidance for 2019, we are not including any sales of non-strategic, non-operating assets. However, we still have some assets that we will try to sell during 2019, but the figures are not including the guidance.

In terms of a little bit of more color about our U.S operations for 2019, I would like Bill Gardner to answer that call.

Sure. Thank you, Juan.

As far as volumes and prices go, I think we look to be flat to up a little on the volume side, so we think demand will be okay, maybe slightly lower in residential, but not much higher in infrastructure and commercial. So our backlog looks really strong going into 2019.

Prices -- we have announced price increases in all of our markets, some in January and some taking effect April 1, and as of now we feel pretty optimistic about successful implementation there as well.

I think a little bit of more color to that answer, Bill, I'm taking into account that we had a lot of bad weather days in the U.S during 2018. I mean the reality is that we are expecting an increasing volumes in the ready mix business.

We lost close to 500,000 yards of -- cubic yards of sales in 2018, because of the bad weather. So the reality is that for 2019, we expect to recover those volumes.

Great, perfect. Thank you very much.

Hi, everyone. Good morning.

Thanks for taking my questions. My first question is on the competitive dynamics in Colombia in 2019.

Again the one hand it's starting to be clear that volume dynamics has been improved indeed since the second -- let's the second half of last year. But on the other hand there is a competitor that will start a new plant in the second half of this year and its capacity is relatively big versus the current market demand.

So how this price is evolving? How do you see prices right now in Colombia versus the import parity levels?

We also remember that during 2018, Argos and its competitors try to increase prices a few times during the year, but some of those were not successful. So if you could comment a bit on the competitive dynamics in Colombia that would be great.

Second question, if you allow me, in terms of the sectors in Colombia that could be more active in terms of demand, how are you seeing the distribution of the volumes in 2019? Is there any recovery at all in the non-residential sector that was being a drag in the previous quarters?

So if you could give us more color on your demand that would be great. Thank you.

Thank you, Daniel for the questions. In terms of the competitive dynamic in Colombia, the reality that we’re seeing are more constructive scenario.

Prices in January, FOB prices in January in our case, we’re already $6 above the prices that we had in December of 2018. So the reality is that with increasing demand, we see a scenario in which it will be foreseeable to continue recovering prices.

Our [indiscernible] FOB prices in Colombia is still well below import parity. And the realities are we don't see any reason why the price structure can continue going forward.

Demand is coming from the social housing segment of the market, infrastructure and civil marks is increasing double digits and it will continue during 2019. So the reality is that competitive scenario taken into account the deep reduction in import is going to be quite favorable, taking into account that we will have a new competitor by the end of the year, but in any case with the steep decrease in imports in our opinion, the scenario will continue being extremely constructive.

In terms of -- a little bit of more color for the segments of the market, Tomas if you would like to add a little bit more to the question.

Juan, as you said, we’re seeing a great momentum on the infrastructure. This year and next year, so 2019 and 2020 will be the peak years of consumption in ready mix and cement for the 4G project.

And as you know -- you all know, we are very well poised for delivering cement and ready mix to these projects. We are seeing new projects coming online like Bucaramanga, Barranca [ph], [indiscernible].

For example, [indiscernible] is taking speed. So we are seeing very good dynamics in infrastructure as you said.

In non-residential, as Daniel asked, we are seeing licenses coming back on track and these all depends on consumer confidence and a investors ready to go and build their projects. And as Juan said, social housing is -- has a lot of momentum as well and with Mi casa Ya program we will have a lot of boost.

In terms of the retail business, which accounts for half of the consumption of cement in Colombia, it's always flat and a little positive overall and we see a very solid base for that. So this year we are confident that we have been for five months on a continuous growth in cement consumption and there is no reason why this trend shouldn't be continuing for the next of the -- the remaining of the year.

Perfect. Very clear.

Thank you.

Hi. Good morning.

Thank you for taking my questions. And the first one is regarding the relevant information you published last Friday that mentioned a new adoption of new -- of accounting policy and I would like to confirm if the reported COP59 billion of net gain is it part of the four quarter adjusted EBITDA?

And my second question is if you could maybe comment about your expectations regarding EBITDA margins for Panama and the apparent entrance of [indiscernible] to this market? Thank you.

Thank you, Rodrigo. Carlos Yusty will take your first question.

Hi, Rodrigo. Yes, the adoption of the new policy about the measuring of the investment properties in the last quarter of 2018 is included about COP50 billion, no EBITDA adjusted, no, I think it is adjusted in the EBITDA.

It's included in the normal EBITDA. And it's part of it we’re reflecting an appraisal of very important real estate property that we have in Panama, and that property is right now in the process of selling.

And that's right, it has -- it includes COP50 billion.

About your second question, margins in Panama, the reality is that we have been seeing so many imports into Panama and Honduras this starting last year, still the volumes are fairly marginal. In Honduras less than 2% of the market, in Panama more or less 4% of the total market.

We are deploying BEST in Honduras and in Panama and we have been able to compensate the slight price pressure that we're seeing in both markets. The reality is that we will continue deploying our strategy and we are fairly confident that in Central America and the Caribbean we will be able to continue getting extremely good results overall.

Excellent. Thank you.

Good morning. Thank you for the presentation.

My question is regarding your guidance. First I would like to understand, I believe, you mentioned during the remarks that you expect about 20% EBITDA margin in Colombia and this will be a significant improvement versus the 17% Argos reported in the fourth quarter of 2018.

And I would like to understand how much is that sustained by price increases, how much is operating leverage and how much is operating improvement?

Thank you, Andres. I mean the reality is that the results of our last quarter in Colombia were impacted by higher than expected energy prices.

As Tomas explained, we really have availability of natural gas in Cartagena and because of the exposure that we have to export coal prices specifically in our Cartagena plant, our results were adversely impacted. However, with the signing of the long-term contracts and the opportunity to use pet coke and natural gas in Cartagena in 2019, we are seeing a much better cost scenario overall in Colombia.

But in our figures and in our expectations for our EBITDA margins in Colombia for 2019, we are considering a good price recovery in our markets. So far we have record prices $6 per ton on an FOB basis, but we are still foreseeing that prices will continue increasing going forward.

Thank you. I understand.

And regarding leverage, you mentioned a medium-term target of 3.2x net debt to EBITDA. Based on your guidance and my numbers, I get that for 2019, you will be still at 3.9x net debt to EBITDA.

I would like to confirm is that is in line with what -- your expectations and or you’re expecting some additional deleveraging coming out of improving free cash flow, working capital or asset divestitures?

Yes, the 3.2x we plan to reach that level before June 2020. That is our goal.

But we plan to close December 31, 2019 at 3.5x more or less. That is without taking to account that we will try to continue selling noncore, non-strategic assets which are not embedded in our guidance.

So basically the difference between the, I guess, the 3.9x that I get -- with 3.5x is improving working capital. Are you expecting significant improvements in that front this year?

Carlos will answer that. We have been doing a fantastic job in terms of our working capital cycle and we will continue doing the same.

Andres, but it is not just the working capital improvement. We’re working to have by the end of this year.

Now this includes -- really increasing the EBITDA because we are moving the EBITDA for COP1.53 billion to the guidance we released is on [indiscernible]. Really with that increase in the EBITDA and with a reduction not as big as the reductions we get in the 2018, we can get at the level that Juan mentioning, 3.5x -- around 3.5x.

Perfect. Thank you so much.

Okay, Andres.

Yes, hi. Good morning.

Thank you very much for the call. Two quick questions.

One on the U.S., the other on Colombia. On the U.S., I was wondering if you can provide an estimate of what the margin would have been without the margins were closure, and just confirm that that is now fully operational?

And the question on Colombia was with the greater usage of pet coke and natural gas expected for 2019, could you give us a sense of how the energy mix which shift from what we saw in 2018 to what you expect in 2019? Thank you.

Thank you, Gordon. The impact of the stoppage in Martinsburg was close to $3 million in our EBITDA.

Bill can give a little bit of more color about the current status of the plant, which is fully operational.

Yes. Thank you, Juan.

Gordon, yes, and as far as the $3 million, that’s about 85 basis points of margin. The 43 days that we were down, what we decided we needed to do is, we moved a new VT of Operations to the Northeast, because we feel like that the plant needed some additional attention.

So we are back up and running. We feel good about the plant going forward.

So I think everything is in place and we should have a good year out of Martinsburg this year. So the goal was to make it more reliable and I think we have gone through the plant top to bottom, so we are ready to move into this year and be back.

In terms of the pet coke, I mean the reality is that our Cartagena plant consumes about a third of the energy of our plants in Colombia. So that shift to using more natural gas and pet coke will improve our cost base in a good way.

We are expecting $2 to $3 more or less total energy plus electricity cost overall in Colombia.

Perfect. Thank you very much.

If I could just have a quick follow-up on the U.S., just because this is an issue that competitors of yours have brought up. I was wondering what your view is on the risk or the problem that labor shortages represent both in terms of your clients ability to complete projects, particularly in the spring and summer months, which I guess given the volatile of weather of becoming more and more important?

And also in terms of your own ability to -- from the ready mix perspective, how much of an issue are the labor shortages that -- how much of a risk you think they pose for 2019? Thank you.

Sure. It's a good question.

I mean, it is a challenge, but at [indiscernible] opportunity. We have an extremely good strategy in place.

So I would like Bill to give us a little bit more color about our strategy.

Gordon, that’s an excellent question. I think you are obviously aware of the labor issues in the U.S.

As part of our BEST 2.0 program, we’ve come up with a very, very detailed agenda as to how to attract and retain additional drivers particularly in our ready mix business and we are also focused on trying to have more committed contracts on the supply chain side just to get product to and from our locations basically guaranteeing that we have the ability to get trucks when we need them. So we have already seen in January some pretty good moment in our driver headcount.

So going into spring, it's critical for us to make sure that we pursue that strategy and gain the momentum because as you know on bad weather days when finally the sun comes back out we need that additional demand and that's basically through the driver side and ready mix. So we feel good about what we're doing and we think we've got a much better plan this year than we had last year, but we have to keep our eye on it, because you're absolutely right.

I mean, it's a situation that I think the whole market is trying to deal with. What we hear from our customers is they’re basically doing the same thing.

I think they're putting some programs in place to where they are guaranteeing a certain amount of time to be paid during any given week to protect the labor side of their business as well. So what we hear in our markets is they have kind of put a plan together and we’ve kind of put a plan together and that we just have to execute on that plan.

It's very helpful. Thank you very much.

Hi. Good morning and thank you for the call.

Just a quick follow-up on your U.S EBITDA guidance. You mentioned some pricing action in January and April in the U.S., so I was just wondering if you could help us quantify those potential increases and if you could please clarify that already baked in into the guidance?

And then you also mentioned several measures on the BEST side for the U.S. so trying to understand if that's all included in the $40 million in savings or is there any potential upside to that number?

Thank you.

Yes, Alejandra, thank you for the question. Yes, we increased prices as Bill mentioned in Florida [ph] in January and we will increase prices in our other markets in April.

We are foreseeing $6 to $8 of increasing prices overall in our U.S market. It is included in our guidance.

It is already in our guidance. Regarding the BEST 2.0, half of the $40 million are including in our guidance, we will try to find -- I mean, to execute the additional $20 million to have more room to hit the guidance.

Thank you. This is very clear.

Thank you. Good morning everyone.

Two questions. One, Juan, did you say energy cost for this year in Colombia to be up 2% to 3%.

Is that the expectation? And the second question is, if you can give us also more color on the utilization strategy that you have and the potential cost savings that you see that you can -- that could come out of this -- for this and for next year?

Thanks.

Thank you, Adrian. No, I mean, we are not expecting an increase in energy cost in Colombia in 2019.

The impact that we have in energy cost, I mean, we suffered that during the last quarter of 2018, but we are expecting flat energy price electricity costs in Colombia for 2019. So it will help us our -- it would help our results for sure.

In terms of our digital strategy, we are extremely happy with the deployment of Argos ONE. It has been real success in Colombia.

The adoption level in the U.S has been quite good as well similarly, in Panama and the Dominican Republic, but we are deploying Argos ONE in all of our markets. It is not only an strategy to improve the experience of our clients, it will help us in reaching the goals of BEST 2.0 in the U.S and the continuous execution of BEST in Colombia as well.

Thank you, Juan.

Hi, good morning. I have two questions.

The first one is related to Colombia. I want to know how much was Cementos 4G project volumes in 2018?

How much are you expecting for 2019? And my second question is related to Central America.

I want to know how much [indiscernible] market volumes came from Panama and Honduras in 2018? Thank you very much.

Thank you very much, Roberto. Our total dispatches to infrastructure projects in Colombia were 370,000 tons in 2018.

That was an increase of 30%, but that is total interest for project with dispatch more or less 150,000 tons to 4G project, increasing 20% of our dispatches as well. And for 2019, we are expecting an increase of more or less 10% on those volumes.

And my second question is related to Panama and Honduras, could you tell me how much where the market volumes from Central America that came from these two countries please?

Yes, the volumes from Honduras were close to 950,000 tons. The volumes from Panama close to 800,000 tons.

Thank you very much.

Hi, guys. Thank you so much.

Very quick question. How much of the corporate expenses were transferred to the Colombia operations and what should we expect going forward from the corporate and other business line going forward?

I mean, what Tomas mentioned in the -- in his remarks were about $1.5 million.

And so -- and is that going to be in the Colombia operations going forward?

Yes, they will continue covering those SG&A and cost going forward in Colombia.

Thank you.

But it is just [indiscernible].

Hi, good morning. Just two questions.

The first one, you said that the new plant from [indiscernible] which is to be up in 2019. When do you expect it to come on stream?

And the second question is about the import cost parity in Colombia as it evolved recently and how do you see it evolving in regard of the recent decline in export prices from Asia and from Turkey?

Thank you, Paul. I mean, EcoCementos they have announced that their plant will be operational in the last quarter of 2019.

That is all the information we have. In terms of import parity prices, the import parity in the Northern Coast of Colombia it is between $80 and $90 per ton depending on where you are using [indiscernible] facility or you’re importing cement.

But the average import parity price in Colombia is much higher than that, because it cost more or less $20 -- $20 to $25 to move cement or clinker from the Northern Coast to their main markets in Colombia is just about our [indiscernible] Cali. So the reality is import -- or now it has the import parity price in Colombia should be closer to $110.

Okay. Thank you very much.

Hi, good morning. Thank you very much for the presentation.

My question is related to capacity in Colombia and it is related to the possibility of the incoming capacity of EcoCementos and maybe some additional capacity from PLH. My question is would you be or are you planning to possibly decrease your capacity in Colombia and how much of your capacity in Colombia is integrated?

Yes, thank you, Steffania for the question. I mean the reality is that our most cost efficient plants in Colombia are close to full capacity.

We would like to add more capacity in Cartagena because we need more capacity for exports, our Rioclaro plant is operating in almost full capacity. We will add 600,000 tons of additional capacity with the [indiscernible] project, which is going to start operating in April and our Sogamoso plant and our [indiscernible] plant are running at a good capacity utilization as well.

So once we enter the capacity, additional capacity in Rioclaro, we will have flexibility to replace all their plants with [indiscernible] still operating. Once the plant in EcoCementos entering to the market [indiscernible] enters into the market, in our opinion some imports will be replaced and the less competitive players we have a difficult time competing in the Colombian market.

But we are happy about is that in our opinion we really have the most cost efficient platform in the Colombian market to compete with EcoCementos and with [indiscernible] in the market.

Okay. Thank you very much.

Hi. Good morning.

A couple of questions. First one on U.S.

I want to know if you have a sort of an idea of a pipeline [ph] of further divestments to accelerate the deleveraging of the company? How much should we be thinking that could further sell in these operations?

And also on Colombia, just want to get a sense on how much -- where do you -- do you average prior to this [indiscernible] how much are you targeting to reach especially by the end of this year with the entry of a new competitor? Thank you.

Yes, thank you, Mauricio for the questions. I mean, in our guidance, we didn’t include any divestments, but the reality that we will continue looking at the streamlining of our ready mix operations in the U.S.

we would like to concentrate our operations in the major metropolitan market. So in reality we will continue looking at diverse -- divesting some ready mix close in the U.S., but will not provide a figure.

In terms of our current price in Colombia, as I mentioned before, prices are $6 higher than what they would at the end of 2018. And in our opinion they are still well below in property prices.

So we will continue increasing prices going forward. Nowadays FOB prices -- our FOB on average is more or less $88 per ton.

Okay. Thank you.

Hey, good morning, gentlemen. Thanks for the call.

I just have one quick question. It's about which market composition of the dispatches in Colombia.

For example, what percentage of dispatches are expecting to grow to infrastructure or social housing and so on? Thank you.

Yes. The segment of the market that has been performing the better is the infrastructure and civil works segment of the market.

We have an extremely strong position in that segment that we have in our opinion the best value proposition. That is the segment that we foresee going forward that will continue driving the increasing demand in the market.

However, social housing is performing extremely well and the consumer market has been healthy. The one segment that hasn’t been performing that well is the regular housing segment of the market.

However, when we look at the fundamentals, we are expecting a recovery of that segment for the second half of 2019 as well.

Perfect. Thank you.

I would like to thank everybody for joining our conference call and we look forward to the first conference call of 2019 fairly soon. So thanks a lot and have a great day.