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Empresas ICA Management Discusses Q4 2013 Results - Earnings Call Transcript

Feb. 27, 2014 5:44 PM ET | About: ICA
Empresas ICA S.A. DE C.V. (ICA) Q4 2013 Earnings Conference Call February 27, 2014 10:00 AM ET

Operator

Good morning. My name is Charice [ph] and I will be your conference operator today. At this time I will like to welcome everyone to the Empresas ICA’s Fourth Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions). Thank you. I would now turn the conference over to Victor Bravo, ICA’s Chief Financial Officer.

Victor Bravo
Good morning and thank you for joining us for ICA’s fourth quarter 2013 conference call. Joining me are Gabriel de la Concha, our Chief Investment Officer and Head of our Investor Relations, and the IR team including Ana Paulina Rubio, Elena Garcia and Rebeca Avalos. I will discuss three main topics today; ICA’s fourth quarter and full year results, the strategic transactions with CGL comp for social infrastructure, and the continued reduction in debt. After this, we will open the call to your questions.

ICA’s sustained to trends, we have strong Q2 2013. We delivered fully operating performance even with a difficult environment for construction in Mexico. We meet our target for EBITDA generation through revenue was low expectations. Adjusted EBITDA reached 1.3 billion pesos for the fourth quarter and 4.7 billion pesos for the year. The EBITDA margin was 16.3% in fourth quarter, and 16% for the full year. Last year we witnessed an economic slowdown combined with the approval of new economic reforms by Congress that are expected to substantially increase investment in infrastructure. Therefore, we are positioning ourselves to take advantage of the increase in opportunities, and improving our execution capabilities in financial position, as well as bringing concession projects into operation that will improve our cash flow and revenues limit.

The positive performance of concessions in airports offset in our part [ph] the decrease in construction revenue in terms of cash flow generation. Profit volumes on operating construction highways grew 62%, principally because of the increasing traffic on the Rio de Los Remedios and the start of operations of the La Piedad Bypass, in the Rio Verde – Ciudad Valles highways in late 2012.

Airports had 6% increase in annual profit volumes, and continued rapid growth of non-aeronautical revenue source. The fourth quarter marked 25th – 23rd quarter in a row of growth in non-aeronautical revenues. At the same time, we have been able to sustain construction backlog in our target brands. Construction backlog in the long-term services contracts were through totaling 36 million pesos at the year-end 2013. In addition, ICA’s non-consolidated affiliates in joint ventures had another 11 million pesos in backlog.

Looking at the results of our business segments in fourth quarter, Construction revenue was 5.7 billion pesos. The operating margin grows to 4.8%, and the Adjusted EBITDA margin reached 10.5%, well above the prior year. MItla-Tehuantepec, La Yesca completion work, San Martin Construction, Peru; and Avenue Domingo Díaz in Panamá; were the largest sources of revenue.

The 20% decrease in construction revenues in fourth quarter despite a forceful accelerated execution of covering projects is explained d by delays in the delivery of rights of way, slow payments by some clients, the lenient working capital, and under execution by the Government of the 2013 public works projects.

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