Cementos Argos S.A. (CEMARGOS) Earnings Call Transcript & Summary

Good morning. My name is Indira Diaz, Cementos Argos IRO, and I welcome you to our fourth quarter results release. On the call today are Juan Esteban Calle, our CEO; Felipe Aristizabal, our CFO; María Isabel Echeverri, the VP of Legal Affairs; Bill Wagner, the VP of the U.S. division; Carlos Yusty, VP of the Colombia division; and Camilo Restrepo, the VP of the Caribbean and Central America division. Please note that certain forward-looking statements and information during the call or in the reports and presentation 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 may cause Argos future results, performance or accomplishments to differ from those expressed herein. The forward-looking statements are made to date, and Argos does not assume any obligation to update such statements in the future as a result of new information, future events or any other factors. Today, after the initial remarks, there will be a Q&A session. [Operator Instructions] We will record this Q&A session and upload it in our webpage. It is now my pleasure to turn the call over to Mr. Calle.

Thank you, Indira, and good morning, everyone. The year 2021 marks a milestone in the history of Cementos Argos with a full year adjusted EBITDA of around COP 2 trillion, the highest figure ever displayed by our company, and an adjusted EBITDA margin of 20.2%, a record since 2005 when the internalization of Cementos Argos began. These strong results allow us to significantly decrease the leverage ratio of the company from 4.5x net debt to EBITDA plus dividends at the beginning of 2021 to below 3x by the end of the year. I am extremely proud of these achievements, which are the result of a disciplined strategy of expansion, efficiencies and customer centricity that has been carried out based on a long-term vision of sustainability, growth and profitability, aiming and delivering increasing value to our shareholders. I would also like to highlight the fact that Fitch Ratings has recently announced its decision to improve the outlook of our long-term local rating from neutral to positive based on these outstanding results and expectations of future cash flow generation arising from the positive performance of the markets where we operate. Now referring to our consolidated results. I will start by mentioning that all the reference made to EBITDA, ready mix and cement volumes under percentage evolution versus last year are made on a comparable basis, excluding the adjustments that I explained in more detail in the presentation that is currently being displayed and in the report that is available on our IR website. Cement dispatches reached 4.2 million tons during the quarter with a year-over-year increase of 9.5% on a like-for-like basis, while ready-mix dispatches stood at 1.9 million cubic meters with a comparable year-over-year increase of 9.9%. Good market conditions in most of our markets, together with a more aggressive commercial strategy in Colombia and good work conditions in the U.S., were the main contributors of this positive performance. On a full year basis, cement and ready mix dispatches accounted for 17.1 million tons and 7.8 million cubic meters, respectively, increasing 18.3% in cement and 2.7% in ready-mix versus 2020 on a comparable basis. Revenues accounted for COP 2.5 trillion during the quarter, posting an increase of 9.3% versus last year. Full year revenues stood at COP 9.8 trillion during 2021, growing 9.1% versus 2020 and achieving a record high in Cementos Argos history. Now to start with our results in each region, I would like to invite Bill to provide more context about the performance of the U.S. region and our view for the market.

Thank you, Juan, and good morning, everyone. I'd like to start by highlighting the fact that the U.S. region achieved during 2021 a full year adjusted EBITDA of $274 million and an adjusted EBITDA margin of 18.9%, representing the highest figures in the entire history of Argos. These results reinforce the importance of the strategy that Argos has deployed in the U.S. since 2005, including the acquisitions and the recent optimization of the ready-mix operation with the purpose of improving profitability and achieving a better use of capital for our investors. Quarterly figures also represent an all-time high for our company. EBITDA reached $84 million, and EBITDA margin stood at 23.5% during the fourth quarter of 2021. The year-over-year EBITDA growth of 36.2%, together with a margin expansion of 10.5%, are the result of a positive evolution in volumes for both cement and ready-mix as well as the favorable pricing dynamics of the market. Volumes exhibited a year-over-year increase of 9.3% in cement and 6.2% in ready-mix during the quarter on a comparable basis due to strong market conditions in Florida and the Carolinas, which posted double-digit growth in cement and high single-digit growth in ready-mix. Good weather conditions on the fourth quarter, together with strong market fundamentals, were the main catalyst for these results. Volumes for the full year reached 6.1 million tons of cement and 5.2 million cubic meters of ready-mix. In terms of pricing, the average prices for the last quarter of the year fully captured the second increase carried out during the third trimester, increasing 5.3% in the ready-mix segment and 2% in the cement segment when compared to the average prices of the same period last year. In that same line, variable costs associated to both cement and ready-mix production exhibited important increases versus the same quarter of 2020. In the ready-mix segment, we estimate an impact of $6.6 million for the quarter, mainly due to higher aggregates and fuel cost. In the cement segment, the main cost headwinds were associated to energetics, electric energy, raw materials and distribution costs for an estimated $15 million, of which approximately 70% was offset by better cost dilution resulting from higher production and efficiencies in fixed costs. The process of assets and inventories cleanup was finalized in December of 2021, as anticipated on the last earnings call, with the final net nonrecurring income of $10 million registered on the fourth quarter of the year, resulting mainly from land appraisals. For the full year, the net effect of this process was a net income of $3.8 million, which includes assets and inventory write-offs as well as land appraisals. As part of our sustainable and innovation product portfolio, we launched a new super UHPC, a cutting-edge ultra high-performance concrete. This product is composed of a series of special cementitious materials and fibers, providing outstanding characteristics in terms of mechanical and durability properties, all making it suitable for a wide range of applications. We are currently working with the Florida Department of Transportation on 2 bridge joint projects with UHPC, aiming at contributing to the rehabilitation of thousands of deteriorated bridges and roads and the construction of new highly durable and resilient infrastructure. Regarding market dynamics, the residential segment remained as the main growth driver during the last quarter of 2021. Both building permits and housing starts continue to exhibit the upward trend that started during the pandemic with month-over-month increases on December equivalent to 9.1% and 1.4%, respectively. Our growth expectations for 2022 are mostly based on the continuation of this positive trend in the residential market with demand far exceeding supply. Additionally, the commercial segment as well as the infrastructure segment will likely play an important role during the current year but, in our opinion, will not exhibit significant increases versus 2021. We continue to be optimistic about the infrastructure bill and its potential impact on the country's cement consumption derived directly from the projects funded by the bill and indirectly from the overall growth of the economy. We firmly believe that this initiative, together with the macro fundamentals development, will leave us ample room for growth in the future.

Thank you, Bill. These solid results for the U.S. business reinforce our belief in its potential and importance within our footprint. Now moving to Colombia, I would like to highlight the excellent performance of the Colombian market, which achieved a record high of 13 million tons of cement dispatched during 2021 and the relevant performance of our volumes in this country, which increased 23.1% in cement and 18.3% in ready-mix versus 2020. Carlos will now provide additional color on this region.

Thank you, Juan, and good morning. Over the last 3 months of 2021, demand conditions in the country remained strong, supported by the solid performance of the retail segment and a stabilization in infrastructure projects, leading to record quarterly cement dispatches for the industry. As a result of the strong market environment and the successful deployment of our commercial initiatives throughout the year, cement dispatches grew 8.3% versus the same period of 2020 and reached the highest level since 2018, allowing us to reach a 39% market share in December, 3.2% higher than the same month of last year. Similarly, on the ready-mix business, volumes grew 17% year-over-year due to a stronger demand in formal residential construction and infrastructure projects. Prices in the cement and ready-mix business were relatively flat compared to the third quarter of 2021, increasing 0.2% and 0.4%, respectively. During the quarter, inflationary pressures continue with an estimated impact of COP 19 billion in variable costs, arising mainly from the high cost of energetics, which were partially mitigated with a strict control over both fixed and variable costs. Despite the persistence of inflationary pressures and flat prices, the solid volume performance in both segments led to an EBITDA growth of 9.7% year-over-year in the fourth quarter. EBITDA margin stood at 22% with a slight decrease of 20 basis points versus last year. For the full year, EBITDA margin reached 21.7%, 147 basis points higher than 2020. Regarding market dynamics, I would like to highlight the residential segment in Colombia in which social and nonsocial housing sales grew 30% and 24%, respectively, year-over-year, reaching an all-time high during 2021. In the same direction, in the past year, housing starts achieved the highest level in 7 years as a result of the strong housing sales that have been observed in the market since the reopening of the economy. On the chart, [ at midterm ], expectation for the market continued to be strong based on the record level of cement dispatches in the industry for 2021 plus the gross macro fundamentals of the country and pipeline of projects in formal construction for both residential and infrastructure. We are particularly positive regarding the announcements from the government related to their willingness to accelerate the finalization of 14 4G projects during 2022 as well as the tender offer for the 5G projects and the initiatives comprised in the infrastructure package that has been named Compromiso por Colombia, which should support future demand growth once the 4G projects are completed. We are confident that the strong market conditions evidenced in the second semester of 2021 will carry on to 2022 with the residential and infrastructure segments as pillars of the continuation of economic recovery in the country. Additionally, we expect a better pricing dynamic for the year ahead based on cost inflation and higher import parity prices arising from higher freight rates and lower economy cement trading dynamics.

Thank you, Carlos. Moving on to the Caribbean and Central America region, I would like to highlight the historical figures achieved during the year in terms of volumes. Camilo will provide additional information on this subject.

Thank you, Juan, and good morning, everyone. During the fourth quarter of 2021, the CCA region exhibited a continuation of solid commercial dynamics in most of our markets derived from the economic reactivation evidenced throughout the year. For the full year, cement volumes reached 6 million tons, a historic record for the region. During the fourth quarter, cement dispatches increased 10.9% compared to the same period of last year, mainly influenced by a strong performance in Honduras, Dominican Republic and the export and trading volumes. Honduras continued exhibiting positive market conditions in both pricing and volumes, partially due to the constructive dynamics surrounding the presidential elections held in November, a significant improvement versus the social unrest experienced in the past in this type of situations. Cement dispatches in the country grew 16% versus the same quarter of last year and closed 2021 on an all-time high level. Dominican Republic continued its steady growth trend evidenced in 2021 in prices and volumes, which grew 7% year-over-year. There is a positive outlook for demand conditions in the country as the market continues to accept positive commercial dynamics, and there have been announcements from the government that indicate investments for more than $800 million in road infrastructure construction. Panama experienced a mid-single-digit volume decrease compared to the same quarter of last year. The industry has faced challenges associated to high housing inventories and the lack of infrastructure projects in construction phase, which has affected the pricing environment. Over the last months, there has been advances on some of the major infrastructure projects such as the third line of the Panama Metro, which, together with the expectation of economic growth above the LATAM average for 2022, provides a better outlook for the market dynamics in the country during the current year. Our operations in Haiti continued to exhibit improving prices during the quarter with cement dispatches remaining at low levels due to political and social instability in addition to fuel shortages in the country, which generated technical challenges in the plant and in the distribution of cement market. In Puerto Rico, prices also maintained their positive trend, while cement volumes decreased 7.8% year-over-year due to a tough comparison between -- comparison base that included the pent-up demand of the economic reopening from the second half of 2020 as well as the interruptions in the supply chain from other construction materials affecting housing construction in the island. As a result of the strong demand conditions in the region, trading volumes increased 86% during the quarter as shipments to Dominican Republic, Puerto Rico and third parties improved significantly compared to the same period of 2020. When analyzing the full year, trading volumes doubled when compared to 2020 due to the strong demand evidenced in most countries of the CCA region and the U.S. Pricing dynamics in the region were flat sequentially in cement and remain at the highest level since 2018, resulting from the economic recovery and the increase in import parity prices over the last months derived from higher price and production costs. Cost inflation also impacted the CCA region during the fourth quarter of the year. The increase in variable cost had an estimated impact of $1.7 million in our main operations. In Honduras, we experienced higher solid fuel prices as well as an increase in the cost of electrical energy of more than 30%, ratifying our strategy of moving to solar generated energy and reaching a fuel substitution rate of 12% by 2030 in order to reduce CO2 emissions and fuel costs. Costs in the region were also impacted by higher cost of imported cement and clinker in Dominican Republic and Puerto Rico. This cost increase was completely offset with a combination of higher volumes and prices, resulting in a total EBITDA of $29 million during the fourth quarter and an improvement of 2.9% year-over-year. Year-to-date EBITDA accounted for $146 million with an increase of 25.3% when compared to 2020 and fully recovered versus prepandemic levels. For this year, we are expecting the continuation of both inflationary pressure on costs and solid market conditions across all countries, which should lead to positive results in the following quarters.

Thank you, Camilo. Now referring to our balance statement. I would like to highlight one more time our net debt to EBITDA plus dividends ratio, which as of December 2021 slide to below 3x, in line with our year-end expectations. For the current year, we expect this ratio to maintain its downward trend, driven by the continuation of the favorable market dynamics in all 3 regions that will translate into further price improvements that will be partially offset by cost pressures derived from the economical activation. In line with this evolution, we expect our full year operational EBITDA to be above COP 2 trillion for 2022. In terms of CapEx, we will make investments during the current year of approximately $200 million. This amount includes around 45% of profitability CapEx, a similar amount of maintenance CapEx and about 10% strategic CapEx. The profitability CapEx will be mainly dedicated to renewal of the logistics network of the U.S. into imports and ready-mix trucks, the increase of export capacity in Colombia, the capacity increase in Honduras and the continuation of our CO2 reduction road map across the regions. Regarding the dividend payment, in line with the excellent financial results of 2021 and the positive outlook for the current year, the company will propose to the General Shareholders' Meeting a substantial increase in the dividend of the company, returning to prepandemic levels and implying an increase of 40% compared to last year's payment. Before finishing my intervention, I would like to thank each one of our stakeholders for the full support and commitment that made possible the historic results shipped last year. We are fully committed to exceeding this performance in the current year. Thank you all for your attention. Indira, we can now proceed with the Q&A section.

Thank you, Juan. We will proceed now with the Q&A session. [Operator Instructions] First question comes from Alejandra Obregon from Morgan Stanley.

Congratulations on the numbers. Actually, I have 2. The first one is related to the potential U.S. listing. If you can comment on how is the process advancing and where in the process are you at the moment. And then the second question is on the cost side, particularly in the U.S. There is a big improvement in the region. So I was wondering if you can comment on what's driving this and elaborate a little bit more on the energetics side for the quarter and whether it's a reasonable assumption to think of this profitability levels, especially for the Cement division in the U.S. for 2022.

Thank you, Alejandra, for your questions. I mean about the first one, the U.S. listing, giving you securities law restrictions at this point in time, we cannot comment any further. Regarding your second question, price inflation is a challenge, I mean, not only in the U.S. but in all of our markets. But we are confident that we will continue with the expansion of margins not only in the U.S. regions but, of course, all of our markets in 2022. The most challenging quarter last year was the fourth. Variable cost increased close to $10 per ton in the U.S. in the last quarter. But with the price increases that we have in place and the ones that we will do in 2022, we are fully confident that we will continue with the expansion of margins across all of our markets.

If I may follow up on that last answer. If you can comment on what type of price increases are you thinking in the different regions, especially in the U.S. for your full year guidance, that would be very helpful.

Yes, Alejandra. I mean we are not very specific about price increase, but the only thing that I can tell you is that we are planning price increases in all of our markets, offsetting cost inflation.

And if I may have an additional follow-up. In the U.S., can you comment whether the price increases are being done in January or April in the different regions where you operate, please?

Bill will give you a little bit more color about specific states in the U.S.

Yes. Thanks for the question, Alejandra. I mean as Juan said, we can't be very specific there, but we did have price increase announcements in all of our markets in January. And at this point, I think we're okay in both the ready-mix side and the cement side.

Next question comes from Yassine Touahri from On Field Research.

Yes. Can you hear me?

Yes, we can.

Yes. So just this -- I understand that the -- most of your competitors in the U.S. have announced price increase of approximately $10 per ton, which would be actually very close to the cost increase of $10 per ton that you're experiencing in Q4. Is it fair to assume that you will just offset the cost inflation with the price increase and that any EBITDA growth will have to come from volume? And then I would have a question as well about -- did you see before those price increase some client prebuying? And do you see any impact on the volume at the beginning of the year? Because what we've seen, for example, in Europe is that some purchaser of cement, they bought a lot of cement in December ahead of the price increase and they stopped buying in January. Are you seeing any decline in volume in the U.S. or in any of your other markets in January? Or is the beginning of the year good?

Thank you for your question. Even though, I mean, the highest inflation pressure that we faced wasn't in the fourth quarter in the U.S., for the whole 2021, I mean, the increase in cost because of inflation was more between $2 and $4 per ton. $10 was only in the fourth quarter. We are seeing that with the increasing volumes that we are forcing for '22 in the U.S. plus the price increases that we are planning to take into the market, we will be able to more than offset the inflation pressure that we are feeling in 2022. So we are expecting this expansion in the margins for the business in the U.S. both for cement and ready-mix. And January and the first 2 weeks of February, I mean, the reality is that it started very strong. We are not seeing like any change in the positive fundamentals in any of our markets.

Maybe 2 follow-up questions. One, we see in many -- everywhere in the world, we see -- because of the energy cost and because of the pandemic, we see a lot of cost inflation. Labor cost is going up a lot. So the cost of actually building is going to be substantially higher in 2022 than it was a couple of years ago. Do you see a risk that some projects might be delayed or that it might impact demand in the long term? Like let's say, for example, if households in the U.S. don't have an increase in salary, they might not be able to pay for a new house. Or maybe it could impact the amount of money which is available -- the number of projects that the government can carry out. Do you see any risk that the inflation on the construction industry could impact demand? And then second question, which is more on the U.S., could you give us an update on the limestone cement and the cement with additives? Have you seen any developments in terms of regulation? Or have you -- any developments in terms of marketing new products with blended cement with your clients?

Yes. I mean inflation is a challenge not only in the U.S. but in all of our markets, and the governments are taking measures to control inflation. And that is, from a macroeconomic standpoint, one of the top priorities of all the governments. But up to now, we haven't seen like any change in the positive fundamentals nor in the dynamics of the construction in any of our markets. Regarding the evolution of IL cement in the U.S., I would like Bill to give you more color.

Sure. Yes. Yassine, thank you very much for the question. So I don't know -- I'm sure you're aware that as PLC has kind of transitioned in the U.S. and is now accepted in all of the states where Argos operates, that's a pretty positive trend in our opinion. So given the tight production, being at almost full capacity or at full capacity in almost all of our plants, we've made some pretty strategic moves to move to a higher level of PLC. And our ambition this year is going to end around somewhere between 25% and 30% of our total production from cement volume, which I think is a good indication. And we just announced that our Roberta operation, we have a plan there to be 100% PLC by the middle of this year. So if that actually takes place, and we're pretty optimistic about that, those percentages could be on the higher end of the number that I just provided. So that's pretty exciting for our team.

And in terms of -- if we look at the PLC, what is the clinker factor of the PLC versus the same one? Is it a 5%, 10% reduction in clinker factor?

It's 10%.

So it means that essentially, if you add the Roberta cement plant, you would have an effective 10% increase in capacity for a very -- for a modest investment. Is it fair to...

Yes, that is correct.

And is it fair to assume that the cost of producing 1 ton of blended cement is not substantially different to the cost of producing 1 ton of same one?

Yes. No, in Roberta, we are adding 130,000 tons of cement with that switch to IL. I mean the cost of producing 1 ton of IL is lower than the cost of producing regular cement. So it is a positive from a sustainability standpoint, from an increasing capacity standpoint and from a cost perspective. So we are extremely happy with the evolution of the penetration of IL cement in the U.S.

Is it one of the reasons why you're confident to be able to maintain or increase margin, even considering the steep increase in costs?

Yes. Among other things, yes.

Thank you, Yassine. Next question comes from Gordon Lee from BTG.

Congratulations on the results. Two quick questions. The first is on the U.S. business. I was wondering if it'd be possible maybe to give us a sense of how much of the strong performance in the quarter, especially in Florida and the Carolinas, was from a catch-up on the back of good weather and how much was sort of underlying growth in demand. And then in Colombia, obviously, 2021 was a great year in terms of market share gains. Was there anything unique about the year that led to those market share gains that may lead to them being reversed in 2022? Or do you see those as permanent gains in market share?

Thank you, Gordon. I would like Bill to answer the first question and Carlos, the second one.

Sure. Gordon, thank you again for the question. I mean we did have some benefits from the weather in the fourth quarter. But I'd just like to point out, I mean, the demand is still really strong in all of our markets, specifically in Georgia, the Carolinas and Florida. And Florida is probably the most significant of the 3. So I think it's a combination of maybe a little bit better weather patterns, but the demand is still extremely strong.

And in the second question, Gordon, about Colombia, our goal is to maintain this market share. I think that we have made a lot of movements, very smart movements around Colombia, especially in the center zone of Colombia and the Southwest towns. And that is our goal, to move around 37% of market share for this year and in the coming year.

Next question comes from Rodrigo Sanchez from Davivienda Corredores.

The first one is if you could please comment on your expectations on margins regarding your additional export capacity in Cartagena, how different these margins could be compared to the margins achieved by your current operations. And the second question is, how many percentage points on EBITDA margin have you gained or expect to gain in your U.S. ready-mix operation due to the divestment completed in 2021?

Thank you, Rodrigo. We already posted a full year in excess of 20% of EBITDA margin. That was like our first goal. And the idea is to continue expanding our margins. In the U.S., we finished the year at 19%. Our goal is to increase at least 100 basis points that margin. In Colombia, we ended up close to 22%. With the good dynamics that we are seeing in the market, the growing demand and the execution of BEST and RESET that has been extremely successful in Colombia, we plan as well to, in the near term, to increase those margins at least to 25%. And that means that our consolidated margins should continue expanding going forward. In terms of our export capacity, our plan is to export 40% more volume out of Cartagena this year than last year. So the reality is that with the new expansion of the Cartagena port terminal, we are extremely excited with the opportunities that the Cartagena plant is going to play in our footprint going forward.

Next question comes from Vanessa Quiroga from Credit Suisse.

I have a couple. The first one is if the effect of assets and inventory cleanup that you mentioned of $10 million on net income, is that the same amount affecting EBITDA? And the second question is if we adjust EBITDA for $10 million, I obtained that quarter-on-quarter, total costs and operating expenses actually decreased quarter-on-quarter. So I was wondering if you could explain what were the strategies carried out that [ will lead to ] decline quarter-on-quarter.

Thank you, Vanessa. Felipe, our CFO, will answer your question.

So yes, these charges were -- or these adjustments that were included in the fourth quarter results both affect EBITDA and net income. And if we -- these are noncash charges, both of them. So they shouldn't -- yes, they don't have any effect on the actual cash generation of the company.

So that same -- to adjust EBITDA, I can just use the same amount, $10 million. Correct?

That's right, yes.

Okay. Yes. So if I adjust EBITDA quarter-on-quarter, it would seem as if costs actually declined in the U.S. in the fourth quarter versus the third quarter. So yes, I want to see if it's possible to get more details on how this was achieved, especially with the current environment of higher energy costs.

So we can -- I mean the actual effect -- or the actual effect was an increase in cost during the fourth quarter of the year. The net effect attributed to these noncash charges should not reduce the total cost experienced in the U.S. for the quarter.

Next question comes from Steffania Mosquera from CrediCorp. Steffania, I believe you're muted.

Can you hear me now?

Yes, we can.

Okay. Perfect. So my first question is regarding EBITDA guidance. You mentioned in your presentation that you're expecting COP 2.1 trillion roughly, which is similar to what we saw in 2021. However, I highlight that in 2021, we had some one-off effects that affected EBITDA, such as the sales of assets and the inventory cleanup. So are you expecting this to be fully nonrecurrent? Or are there any other -- sorry, are you expecting EBITDA to be recurrent? Or are you expecting any nonrecurrent items in 2022 EBITDA?

Thank you, Steffania. I mean the guidance figure is operational. So it doesn't include like any nonrecurring item. And it is an increase over the 1.93 to 1.95 operational EBITDA that we had in 2021. So we're hoping to exceed our operational EBITDA of 2021 in 2022.

My second question is regarding your guidance of CapEx. You mentioned that you would execute some CapEx in expanding the ports in Colombia. And just this news -- just this week, there was a news on the finishing on the expansion of the Cartagena capacity to 3.5 million tons. So my question is, what are your plans other than this expansion?

Thank you, Steffania. Yes, we will expand the capacity of our import terminal in Houston. And we will invest some CapEx into the expansion of our terminals in the U.S., plus there is some CapEx related to the port expansion in Cartagena that it is going to be recorded in 2022. So mainly, we are going to dedicate CapEx to increasing capacity across all of our operations.

Great. And my final question is regarding the U.S. market. You mentioned in your presentation that the share or the mix of infrastructure decreased this year. I would like to understand why is this trend and if you expect the continuation of it going forward.

Yes, Bill can answer that question.

Sure. So I mean what we see as far as the infrastructure bill is concerned, I mean, I still think there's a lot of motivation around it. I think the timing of it and how the funds actually get allocated through the markets is a bit slower than expected. So we see it had been relatively flat with some very positive outlook in the future. But as far as impacting our operations, we think it's going to be, at the earliest, late this year, maybe late fourth quarter. And we have the biggest impact beginning in 2023. So I think we have reported before in the past to our focus in this segment. So from 2 years ago, our plan is to increase our shares. So we've done a pretty good job of increasing share in this segment. So we feel like we're ready for this to move forward and take advantage of it in 2023.

Just a final question, if I may. EBITDA margin dropped quarter-over-quarter in Central America and the Caribbean. Why is this trend?

Yes. Market was very good in Central America and the Caribbean. It's just that due to seasonality, I mean, the fourth quarter is not as strong as the third one. But Camilo Restrepo will provide you with more color. Camilo?

Thank you, Juan. Thank you, Steffania. Yes, that's the reason for it, as explained by Juan Esteban, quarter-on-quarter. And also, we are starting to see some of the cost inflation that was mentioned during the call. We are working on price increases. We did some at the fourth quarter last year, but we're also doing a price increases this year to offset cost inflation.

Next question comes from Juan Camilo Dauder from Bancolombia.

Can you hear me?

Yes, we can.

I have 2 questions. The first is in regards to the guidance you're providing us on margins, where you expect increases this year. Is that increase -- apart from the price increases in the overall industry raw materials, do you have to expect any kind of cost reduction strategy worth mentioning? That will be my first question. And if you can provide us a guidance on the size of the margin you expect for the consolidated numbers. I also have another question regarding volumes and if you have any kind of anticipated maintenance plan for this year. Where do you expect to get maintenance and when?

Thank you, Camilo. Margin expansions will be due to volume growth and price increases. All of our operations are at a cost level, and we are quite comfortable after the execution of BEST and RESET. We will continue looking to optimize our operations. But in general, the margin expansion will come mainly for volume expansion and price increases in excess of the cost inflation. In terms of the main schedule, I will give the floor to each of the regional VPs just to comment on that.

Yes. One from the U.S. perspective. I think that's a good question. We -- our plan is, from a maintenance standpoint, to be similar or up a little bit from 2021. I think there was a comment made already about trying to renew our fleet, especially in ready-mix. And I think that's going to -- as those trucks come in, will help the maintenance from prior year. So we probably have neutral to decrease in the ready-mix side, probably have some increase in the cement side. But overall, it's going to be similar to 2021.

From the Colombia standpoint, Juan Camilo, really the maintenance plan could be pretty similar to the 2021 because we are -- where we are expecting some increase in volume, but nothing comparable versus 2021 -- compared with 2021 versus 2020 for that reason, that is pretty similar than the previous year.

Same situation for Central America and Caribbean. We're going to have a very similar plan in terms of costs. It's as budgeted and will result in the budgeted or expected earnings and costs. We will have to move some of the maintenance -- major maintenance like the kiln in Honduras from the second quarter to the first quarter as we have gotten some of the materials that we were expecting last year for maintenance that were delayed with the problems that are -- still are in the supply chain, but nothing other than that.

Thank you, everyone. Before we finish, I'd like to invite you all to visit our corporate website. There's a section dedicated to sustainability. And we have published the main indicators for last year there, and there is a special summary for our investors. Juan, we have no more questions.

Thank you very much for attending our conference, and looking forward to our next one. Have a great day.