This summary is based on the fourth quarter fiscal 2006 earnings call conducted by Cemex (CX) on January 30, 2007.
Management:
Chief Financial Officer: Rodrigo Trevino
Executive VP, Planning and Finance: Hector Medina
Investor Relations: Jorge Perez
Key Investor Issues:
- Full year consolidated net sales were up 19% to $18.2 billion versus last year.
- Full year 2007 EBITDA is anticipated to be $4.3 billion.
- Integration of the RMC Group was completed during the year.
- The fiscal 2006 marked the 100th anniversary for the company.
Fourth-Quarter Financial Highlights
The free cash flow after capital expenditures for the quarter was $570 million, an increase of 53% from $373 million in the same quarter of 2005.
- The full year 2006 free cash flow after maintenance capital expenditures increased 22% to $2.7 billion versus $2.2 billion in fiscal 2005.
- The achievement is primarily based from the consolidation of the RMC operations and the related synergies as well as some higher domestic volumes and favorable supply dynamics in most of the markets in the company portfolio.
The operating income for the quarter rose 21% to $611 million from the same period last year.
- The full year operating income of $2.9 billion, representing an increase of 18% from $2.5 billion in fiscal 2005.
In the fourth quarter, majority net income increased 55% to $377 million from $244 million in the fourth quarter of fiscal 2005.
- The quarterly increase in majority net income was due to lower depreciation and amortization expense and higher foreign-exchange and financial-instrument gains.
- The majority net income increased by 13% to $2.4 billion for the full year 2006 aided by the strong operating performance.
The net debt at the end of the quarter was $5.8 billion, representing reductions of $1.33 billion during the quarter and $2.85 billion for the full year 2006.
- The net-debt –to-EBITDA ratio decreased to 1.4 times from 1.8 times at the end of the third quarter of fiscal 2006.
- The interest coverage was 8.4 times during the quarter, an increase from 6.8 times a year ago.
The company’s consolidated EBITDA margin for the fourth quarter was 20.9%, a decrease from 22.7% in the past year quarter.
- The decrease resulted from higher energy and transportation costs which were partly offset by productivity gains through Cemex.
- The margin was also affected by the continued change in the product mix into less capital intensive businesses.
During the year, the company announced the full integration of the RMC Group and the realization of the resulting synergies.
- The company reached its target return on capital employed in the RMC acquisition of greater than 10% a year earlier than originally expected.
- During the year, the company captured $240 million in incremental synergies from the integration of RMC. By December, the company forecasts to reach a round rate level of integration synergies of $360 million, also one year earlier than anticipated.
- Resultantly, the management anticipates achieving net incremental synergies of $60 million in fiscal 2007.
The management advised of the extension of the deadline for the Rinker Group offer to March 30.
The offer was made last October and approved by shareholders in December. The deadline extension is due to management awaiting the necessary approvals from the Australian and the U.S. governments.
