Titan S.A. (TITC) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I am Gelly, your Chorus Call operator. Welcome, and thank you for joining the Titan Cement Group Conference Call and live webcast to present and discuss the Full Year 2024 Results. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Marcel Cobuz, Chairman of the Group Executive Committee, and Mr. Michael Colakides, Group CFO. Mr. Cobuz, you may now proceed.

Thank you, and hello, everyone. We have a large number of participants today, both in the conf call as well the on the webcast. Thank you for your interest. Very happy to be here and speak about results on a very good 2024 performance as well as share some highlights on our Strategy 2026 execution. So maybe three introductory remarks before I pass the floor to Michael. The first one is that we are announcing today record results for Titan in 2024, marked by top line growth over proportional EBITDA plus 9.6% in a year where we outperformed the market, despite some adverse weather impact in the last quarter. We also have achieved margin expansion. At the same time, is a year where we continued investing at a high pace. And Michael will give you more details on supply chain, capacity investments and logistics optimization, the use of alternative fuels, which proved to be highly accretive in terms of value creation, but also our progress in digitalization and innovation prepared in the future. The second introductory message is on our strategy execution, which picked up an accelerated pace in 2024, and we are on track to reach targets of 2026 in advance. And on this one, at least two points to retain. One is active portfolio management as well as strengthening our assets and positions. We have conducted, completed 4 bolt-ons acquisitions, particularly in the aggregates. We have added 100 million tonnes to the reserves in aggregate. We have entered joint ventures in India and Europe on supplementary cement issues materials. And we have announced at the beginning of the year, also the divestment of our Eastern Turkey asset and concentrating on the western part. But of course, a milestone for us -- strategic milestone was the completion of the IPO and New York Stock Exchange listing of our U.S. subsidiary, which is meant to unlock even more value. The second is the progress on time to market of new products as well as profitable decarbonization moves, here you will see that we have achieved a record level in alternative fuels, we have progress on cement issues strategy. We have achieved, again, a continuous improvement in the CO2 footprint. And as per our press release, we have also announced that our carbon capture and storage project, which is there to mitigate a large part of our Scope 1 is well on track as we move to the next phase of pre-feasibility. The third message is creating value for shareholders. Michael will go into details, but we have at the Board in its meeting yesterday, is proposing to the shareholders' approval in May, a special ad hoc increase in dividend by EUR 2 per share in addition to the regular one, which moves to EUR 1 per share compared to EUR 0.85 in 2020 -- in the past year. So strong momentum at Titan across all operations and markets, while we are pursuing initiatives to grow, expand margin and commercial excellence. So I'll pass the floor now to Michael for more granular views on the financials and key highlights before speaking about the outlook and then taking your questions. Michael?

Thank you, Marcel. Good morning, good afternoon to everybody from me as well. Following on what has been covered by Marcel, I'm very happy to walk you through the financial results of 2024, which present another year, the fourth year in sequence of record financial performance. Group sales were up 3.8%, closing at EUR 2.64 billion, recording again, the fourth consecutive year of top line growth driven by increased volumes across all product lines and sustained pricing. All our regions posted sales growth with the U.S. and Europe at the forefront, contributed more than 90% of group sales. Group EBITDA reached a record EUR 592 million like-for-like, up by 9.6% with gains from operational efficiencies in energy cost management and digitalization coupled with lower solid fuel costs and higher use of alternative fuels leading to the expansion of the EBITDA margin by 120 basis points to 22.4% like-for-like. Net profit after taxes and minorities increased by 17.3% at EUR 315 million, and earnings per share reached EUR 4.2 per share compared to EUR 3.6 per share last year, both on a like-for-like basis. At this point, let me clarify that the commentary in this presentation, which is done on a like-for-like adjusted basis, it refers to EBITDA, which is adjusted for EUR 12 million of nonrecurring one-off costs related to the preparation of the U.S. IPO, and the small early retirement program in Greece. And then the commentary on net profit and earnings per share is additionally adjusted for a EUR 17 million adjustment for goodwill impairment charge in Turkey. I will be referring to the adjusted figures in my commentary as it depict better the evolution of the core business and compare apples to apples versus last year. Both adjusted and reported figures can be found on the slides and in the press release issued earlier today. Thanks to solid cash generation and the reduction of net debt by EUR 38 million to EUR 622 million, the group's leverage ratio dropped further to 1.02 -- 1x EBITDA. Within the year, Titan's credit rating was upgraded to BB+ with a stable outlook by S&P, reaching the same rating that has been given to us since last year by Fitch. In terms of CapEx, in 2024, we have invested EUR 251 million, marking a 15-year high with prioritization given to growth projects across the supply chain, digitalization, decarbonization and innovation, committed to a large-scale carbon capture project investors that they plant near assets. We have signed a front-end engineering design contract in the second half of 2024. And an important point to repeat. Thanks to the high profitability achieved by the group and coupled with the liquidity raise through the successful IPO of Titan America and our low leverage, the Board of Directors is proposing to the Annual General Assembly of Shareholders that will take place on May 8, a special outlook increase of the annual dividend by EUR 2 per share to a total dividend of EUR 3 per share, both will be paid on the third of July of this year. Now turning to the next slide with regards to our operational achievements in 2024. We developed new digital solutions and further accelerated the existing real-time optimizers, leading to increased production and energy consumption savings, while we remain on track to digitalize 100% of our plants by 2026. On the decarbonization front, we recorded a significant reduction of CO2 emissions, an 11% decrease since 2020, while for the fourth consecutive quarter -- year, Titan was awarded leadership status by CDP on climate change as well as more recognitions by The Financial Times and the TIME magazine. The execution of our Strategy 2026 has been accelerated, and we remain on track to reach the target set in advance with bolt-on investments in the U.S. and Greece, and expansion of our supplementary cementitious material sources by forming new joint ventures. In addition to this, our corporate venture capital fund proceeded with investments in 4 new material start-ups within 2024. Two significant post-balance sheet events occurred within February, with the group completing the major strategic move with Titan America's IPO and listing on New York Stock Exchange, raising gross proceeds of $393 million. Furthermore, within the same month, Titan Group entered an agreement to divest its 75% share in Adocim in East Turkey. For 2025, we hold a positive outlook. You will hear the closing remarks by Marcel, thanks to our attractive positions in both the U.S. and Europe anticipating growths in sales and profitability through volume growth and residual pricing, while controlling cost increases in production and distribution. Now turning to the next slide on top, you can see the graph of the full year figures, which I just commented on exhibiting that 2024 marked a record year for the group, exceeding the results achieved in 2023 across sales, EBITDA and net profit. And EBITDA also grew -- EBITDA margins also grew by 120 basis points on a like-for-like basis. Looking at the charts at the bottom of the slide with regards to the fourth quarter, which is a seasonally lower quarter for the industry. Sales did grow by 1% year-over-year, reaching EUR 660 million, despite the poor weather in the U.S., but supported by firm pricing and robust volumes at group level with significant volume increases deriving from downstream products. EBITDA recorded a small drop of 4%, EUR 258 million as persistently adverse weather temporary delayed projects in the U.S. Just a couple of words on the following slide. Taking a look at it to see the continuous growth since 2020 across our main financial KPIs and the much higher levels of profitability that we are now operating on. Moving to the P&L slide, where there is more detail, we show how sales growth have paced the increase of cost of goods sold, increasing margins. Lower fuel costs contributed to this improvement benefiting from energy savings, higher use of alternative fuels as well as lower fuel nominal costs. The increase in SG&A includes the EUR 12 million one-off, while in the fourth quarter, we capitalized some of the costs related to the U.S. IPO. Finance cost declined, but taxes increased due to higher profitability. Net profit after tax increased by 17% resulting to the adjusted earnings per share of EUR 4.2. In the next slide, we invite you to compare our performance to peers in both Europe and the U.S. in terms of annual growth in sales as well as in EBITDA. As you will very likely notice and this happens now for the third year in a row, our performance stands out consistently above most or all of our peers. Titan continues to demonstrate top-tier performance within the industry. This consistent success highlights our ability to not only navigate volatile market conditions, but also to deliver robust results. Taking a look at our volumes. Significant growth was achieved at the group level in 2024 across all product categories on the back of solid demand and despite adverse weather in the U.S., and the decline of the construction activity in Western Europe. The group's domestic cement sales increased by 2% to 17.8 million tonnes. All groups' exports were directed to Titan's terminals mainly to Titan America in the U.S. with lower exports directed to European terminals in France, U.K. and Italy, reflecting the slowdown in construction activity in Western Europe. Export to third parties from Egypt picked up significantly. Ready-mix volumes exhibited good momentum for another year with increased demand from both the U.S. and Greece, growing by 6% and reaching 6.3 million cubic meters. Lastly, aggregates grew by a significant 10% to 21.9 million tonnes, driven by substantial demand volumes infrastructure in Greece. Now moving to our cash flow. As you can see from the blue tower at the center of the slide, the robust EBITDA performance of EUR 580 million and the focus on tight operating working capital resulted in a strong operating free cash flow of EUR 299 million, despite being a year of record CapEx. Notwithstanding increased taxes and high returns to shareholders, net debt was reduced by EUR 38 million. Moving on to CapEx. 2025 was a record year of investments, just over EUR 250 million in pursuit of the group's ambitious growth and transformation strategy. Most of the funds were diverted to the U.S. with in total more than $500 million invested in the U.S. over the last 4 years. Extensive capital allocation aiming at the optimization of our supply chain continued in 2024, including the establishment of new ready-mix units and the modernization and expansion of our ready-mix fleet in the U.S. and in Greece, and the installation of ready-mix units in strategic locations in Greece. We have accelerated the execution of the 2026 strategy, targeting improved logistics capabilities and completing bolt-ons in the U.S. and Greece, including 4 new aggregate quarries and one new clay quarry, securing supplementary cementitious materials reserves, while a new joint venture has recently been formed in India. The bolt-ons complement our 2023 investments in supplementary cementitious materials over Aegean Perlites on the Greek island of Yali and of the “Vezirhan Pozzolana Quarry” in East Marmara in Turkey. Turning the page and looking at our debt and liquidity picture. The group's leverage declined as of last December with net debt standing at EUR 622 million, a reduction of the leverage to marginally over 1x EBITDA. Taking into account the funds raised from the IPO of Titan America and the announced payout of the EUR 3 per share dividend in December of 2025, we expect the group's net debt to drop below EUR 500 million and subsequently the leverage ratio to drop well below 1, hence further strengthening our balance sheet and allowing ample firepower to further growth opportunities. At the end of 2024, 50% of group debt was in bonds, 35% in bank loans and 11% in lease liabilities, while no significant maturities are expected -- are scheduled for the next couple of years. Now turning to slide with the regional performance and before moving to each region individually. It is worth noting that sales growth was recorded across all the regions, as you can see on the left pie chart. While in terms of EBITDA, which is the pie on the right, U.S. and Europe drove EBITDA growth and contributed 96% of the total, while East Med contributes only a small percentage at this point. Starting with the U.S., a review of our biggest market, where Titan America, by now, a listed company on New York Stock Exchange as of February 7, has delivered another year of record sales and EBITDA profitability. Latin America sales increased by 3% reaching $1.64 billion, while EBITDA reached $368 million, up by 15% compared to $319 million in '23, adjusting for $9 million one-off costs related to the U.S. IPO preparations. The fourth quarter was more challenging due to adverse weather conditions that hit the Eastern seaboard, including severe hurricanes, heavy rainfall and even snow. Despite the negative impact of weather reduced work disruptions and project delays, our sales market to outperform the market. Our vertically integrated business model allowed us to reliably supply our customers with high-quality products with the use of our extensive high-capacity logistics network. As a result, the year saw increased sales in the downstream market with an expansion in ready-mix, blocks and flyer sales. Pricing momentum remained strong with a pricing contribution and the lower fuel energy costs more than offsetting increased maintenance and labor costs, eventually improving EBITDA margins. EBITDA margins also benefited from operational efficiencies, investments in digitalization and automation and hence, lower production costs. Weather effects notwithstanding, underlying market trends remain solid, with materials consumption being driven by projects continuing to rollout under the Infrastructure Investment and Jobs Act and nonresidential private projects. The industrial sector continued to benefit from large investments in our states as manufacturing and onshoring investments and more data warehouses progressed at an accelerated pace. Residential demand weakened in the second half of the year, especially in Q4, as the interest rate reduction expectation remain are fulfilled. In 2024, we forced ahead of further strengthening our U.S. operations by progressing on several projects. We finalized acquisition of aggregates and supplementary cementitious materials quarries in Virginia, which expanded our reserves and increased our capacity and strengthened our ready-mix business by growing our distribution fleets and by adding new production units. The group completed the IPO of Titan America in February, raised a total amount of $393 million. As of today, Titan Group, Titan Cement International owns 86.7% of the total outstanding common shares of Titan America. Moving now to Greece, where sales operation for Western Europe in 2024 increased by 9% to EUR 444 million. Performance in Greece was reflected in another very strong year with cement sales volume growing in double digits. Greek domestic growth dynamics have also flowed downstream, translating into a multiplier in the construction of aggregates, ready-mix and mortars, which also increased double-digit and contributed positively to margins. Domestic cement pricing held firm during the year with price increases realized in the downstream segments. Growth was balanced across all main construction segments and maintained strong momentum throughout the year. The Residential segment continued to drive demand together with the private nonresidential segment with investments across various types of commercial and industrial projects. After another record year for Greek tourist preparations are in full swing for the upcoming season and construction activities are ongoing across the Greek Islands. Within Q4, major infrastructure projects picked up pace across mainland Greece, such as the Thessaloniki Flyover, established Canellopoulos Foundation Hospital of Thessaloniki and the Patras-Pyrgos highway in the Peloponnese. EBITDA reached EUR 58.2 million compared to EUR 65.4 million last year, the reduction coming primarily due to the lower export prices in line with international cement export prices dropping with the hikes of 2023. Investments in Greece continue with an agreement to acquire an aggregate quarry already finalized and other opportunities in this area being in process and a couple of projects very close to completion. Thermal substitution rates increased to 39% from 32% in 2023, thanks to the operation of the pre-calciner at the Kamari plant. Continuing these efforts, our subsidiary INTERBETON introduced a new range of ready-mix concrete products, VELTER, which offers superior durability while reducing carbon emissions by up to 30% compared to the standard products currently available in Greece. The group has been installing more silos across the plants to support the growing use of awider range, including lower-clinker products and enhance the efficiency of its logistics network. On top, we have installed additional ready-mix units in strategic commercial locations in Greece and increase the use of alternative fuels and cementitious materials. Now turn to Southeast Europe, where sales increased by 2.3% to EUR 432 million, while EBITDA grew by 15%, closing the year at EUR 167.6 million compared to EUR 146 million the year before. Following a slowdown in the third quarter of 2024, the Southeast Europe region regained momentum in the last quarter of the year, and closed with improved sales and profitability, while full year volumes remained stable at high levels and mixed performance across countries and different market segments. Given diverse market trends, the combination of overall price resilience that drop in energy costs as well as the efficiency gains obtained by the group's recent investments in renewable energy sources and alternative fuels improve the group's cost structure that led to increase margins. New lower carbon cements have also been launched, while key initiative is, of course, to further expand the green product offering eventually leading to further drop in the clinker-to-cement ratio. The region of East Med next recorded full year sales of EUR 250 million, up by 4.4%, thanks to increased domestic volumes in both Egypt and Turkey, coupled with much higher export from Egypt. EBITDA reached EUR 25.7 million with profitability having been hit by the devaluation in both currencies, while the price increase in local currencies were not sufficient to offset this effect. Initial domestic cement consumption remained stable as the production quarter regime remained in place. Our operations in Egypt recorded a good performance, while our exports have increased significantly in the year, exceeding the 1 million tonnes mark. In Turkey, where domestic cement consumption grew for another year and group sales followed the market growth. In the absence of public works, the largest portion of cement consumption in the country continue to be drawn by the earthquake rebuilding activities. Our export from Turkey to the U.S. have decreased accounting for the decline in the region's profitability. The group continued to develop sales out of its recently acquired pozzolana quarry, in addition to the quantities consumed terminally, while introducing blended cements with lower carbon footprints. And as we announced -- as we commented before, in February, we announced the sale of 75% stake in Adocim against cash proceeds of $87.5 million. Finally, a couple of words on Brazil, where, as a reminder, the consolidated figures are on an equity basis. Domestic cement consumption increased by 4.2%, thanks to the expansion of the real estate market from the second quarter onwards and to the resumption of construction work among others under the extensive affordable housing program. In the northeast, the region where our joint venture operates a 7.5% volume increase was recorded. Apodi sales reached EUR 115 million, mainly due to pricing pressures or intense market competition. It's worth mentioning that with sales volumes bolstering in the second half of the year, Apodi recorded in October, the highest monthly sales volumes in its history. EBITDA reached EUR 29.5 million compared to EUR 24.4 million, so 20% up year-on-year, driven by cost efficiencies, including energy and decarbonization cost reduction initiatives. Now some words on our digital transformation and the decarbonization. In 2024, Titan accelerated the pace of rolling out AI-based real-time Optimizer solutions for the cement manufacturing lines after the group's target to digitize 100% of its cement manufacturing by the end of next year. Currently, RTOs are installed across plants in our region, while new ones are also being developed. These RTOs sourced from both external partners and develop in-house allow for increased output and reduce energy consumption. Since 2023, Titan has also completed the installation of its machine learning-based failure prediction system in all cement plants of the group, increasing reliability and reducing the cost of unplanned maintenance. Additionally within 2024, Titan operated the [ U AI-based ] digital solution for cement quality prediction that have been piloted in the U.S. in 2023, generating a fast payback with a solution expected to be rolled out to more plants in 2025. CemAI, the spin-off digital company established by Titan in 2022, offering machine learning based failure prediction as a service to other cement manufacturers continue to grow its customer base in 2024, while also expanded its portfolio of AI and machine learning offerings by providing a new process optimization solution, CemAI process optimizer. In the integrated supply chain domain, building on its expertise in forecasting sales demand, distribution network optimization and cement spare parts inventory optimization, Titan continued the development of its AI-enabled dynamic logistics solution for its concrete operations, while completing the rollout of the solution to all its ready-mix operations in the United States, improving the efficiency of the supply chain and of the customer experience. As part of Titan's target to digitize its concrete logistics by 2026, Titan invested in telematic solutions for its truck fleet in the U.S. and Europe. And in the customer experience domain, Titan is working on improving customer experience and by the end of 2024, Titan has developed digital customer applications in more than 60% of its business units, mainly in the U.S. and Europe, with a target to reach 100% to be covered by the end of 2026. Aggressive climate change remains a top priority for the group, and we are on track to meet our 2026 and 2030 targets. In 2024, we reduced our specific Scope 1 net emissions to below 600 kilos per tonne of cementitious product, breaking this threshold for the first time in the group's history, achieving an 11% reduction since 2020. In more detail, in 2024, the group progressed with its decarbonization pathway across multiple areas. We have reached a record high use of alternative fuels of 21.3% as a historically low clinker content in our cement products of 76.6%. We have also launched a partnership with Ecocem to product development technology in low carbon cement products, currently the lower carbon products and solutions offer to customers represent 29.8% of our total cement production. Following a $62 million grant from the U.S. Department of Energy, Titan is developing a calcined clay production line in the Roanoke plant in Virginia, while continuing to mature its carbon capture project, IFESTOS at the flagship Kamari plant benefiting from a grant of EUR 234 million through the innovation fund, among others, by signing a front and engineering design contract. Titan was awarded the leadership status of Climate Stage Change by CDP for the fourth consecutive year, while we have recognized among Europe's Climate Leaders by the Financial Times or our leadership on climate-related risk and decapitalization efforts and by TIME magazine named us as one of the world's most sustainable company. And finally a comment on our innovation efforts. In 2024, we advanced our Venture Capital initiative, launched in 2023, with a strategic plan to invest EUR 40 million over a 3-year period. We intensified our efforts, broadened our portfolio, and made three additional investments in innovative funds. C2CA, Concrete.ai, and Optimitive. Additionally, we participated in Fifth Wall’s REACT Fund, a prominent U.S.-based venture capital firm specializing in real estate technology. These partnerships underscore our commitment to supporting pioneering technologies and startups that enhance industry competitiveness. Our collaborations are designed to expose us to disruptive technologies that support our growth strategy. Aligning with our objective to integrate innovative products, services and materials, while accelerating our sustainability and digitalization initiatives. This covers my broad description of the highlights of our activities in 2024. And I would now turn you to Marcel for some words on the outlook we have for the year.

Yes. Thank you, Michael. And I think it was important in addition to the financials to spend a little bit of time on our other fronts of digitalization, decarbonization and overall improvement on commercial excellence. You have seen what we have published in the press release. Of course, the year started with increased volatility on the geopolitical and geoeconomic context. More specifically on the markets, the year started with some extreme weather as we are well into quarter 1. However, looking at the backlogs and our commercial performance, we maintain a positive outlook for the year with sales volume growth, top line expansion and increased margin. And this is supported by our efforts of commercial performance as well as cost performance. More specifically, in the U.S. and for those who listened yesterday to our results of Titan America, we consider that the key growth drivers for the year continue to be federal and infrastructure spending and manufacturing onshoring as well as nonresidential, while affordability of housing is increasing expecting moderating inflation and adjustments to monetary policy at a later time in the year. Our exposure to high-growth regions in U.S. is a proxy for the growth in the year. The Greece economy, same pace of transformation as Michael mentioned, filing from all the engines, both on infrastructure, private consumption, real estate and hotels industry. So high volumes growth expected and strong pricing. And that's somehow similar for -- as we hold a positive outlook for Southeast region where we see increased public and private investments, which articulates in solid infrastructure, nonresidential as well as residential based on foreign remittances. Egypt, we invest in silo capacity to boost the competitiveness of our exports. One, we also witnessed increased public spending this year. So we'll continue on holding this positive outlook. At the same time, this is a year where we entered the year with a strong balance sheet that allows for moves to create short and long-term value, but also allocating capital to growth CapEx, which as we have proven in the past, it was well invested and produced results. As we speak, we are also working on our strategy going forward, and I have already announced that we are well on track to deliver in advance our Strategy 2026. So we are working on our strategic directions for 2029, both in terms of capital allocation, but also strengthening the profile of Titan as a regionally vertically integrated materials supplier. So at a later stage in the year, we may share the strategic directions with you as part of an Investor Day. Thank you for listening to us. So I think Spyros, we are opening for question-and-answers.

[Operator Instructions] The first question is from the line of Ravi Ephrem with Citibank.

I have three questions. Firstly, can you talk about how you will service U.S. imports after the sale of the Eastern Turkish plant assume the Samsung terminal also goes with the asset. My understanding was that the supply from Greece was less attractive as you have to take on carbon costs there. So are there any alternatives for that? That's my first question.

Yes, Ravi, maybe you give us all three questions, please.

Okay. The second question, IFESTOS I understand that again, the front-end engineering and design has started. Can you give us a guidance to when the actual construction will start? And then how would the disbursement of the EUR 230 million from the EU work? Will you get a cash in advance, or would you have to spend first and get reimbursed from the EU? That's the second question. And thirdly, on your supplementary cementitious materials JV with JC in India, what does Titan get as a result of the JV? Would all the sourcing and sale of fly ash and blast furnace slag of JC internationally happened through the JV? Or is it more of a purchase agreement? Those are the three questions.

Thank you, Ravi. I'll start, Michael. These are spot on questions. Yes, so the Eastern Turkish plant is being divested. We are still in the process of obtaining the regulatory and customary approvals as we keep increasing our focus on the Western part of Turkey. We continue supplying on arms-length, the Titan America needs and generally, the U.S. market, which is a short market in terms of cement from the Greek plants, which are today competitive in the market. As we look at the introduction of the Carbon Border Adjustment Mechanism, this year is a trial year, the next -- as of next year, we will continue using this export outlet, but at the same time, we maintain the flexibility being a trading house since 1960s, we are well in the market to build optionality.

And we also have an option with the new buyers of the Adocim treatment plant. We have an option for purchase, of course, for the 3 years.

On the carbon capture and storage, we are in this pre-feasibility stage. We have a go, no-go or final investment decision planned for early 2026. By then, all staffs need to be aligned, both in terms of technical readiness of technology, normative and regulatory environment, including contracts for difference as well as the value chain build up with liquefaction transportation of CO2 and storage. This is a project, which practically is prefinanced, Ravi, half of it's close to 60% from a subsidy, a grant, which is given by European Commission in Brussels part of Innovation Fund. And practically, we are holding an element, which is off balance sheet, which is the unsold CO2 rights accumulated over the past years, which can be activated at any time. To your specific question, where the payments will be under disbursement, I think this will be roughly 2026, 2027 with the large part of disbursements at the end of the period. On the cementitious materials, we are very excited about this. It's not only the 130 million tons of [indiscernible] that's through joint ventures and outsourcing, we have secured in a joint venture here in Greece as well as in Turkey, but also the increased exposure to calcined clay, and we have a project in U.S. We have announced last year in Roanoke. We have long-term supply agreements with Indonesia and now this joint venture in India, which will start with volumes around 500,000 tons of fly ash and investments, which are ongoing, boosting that capacity to 2 million tons, which, again, is strengthening our capacity -- light asset capacity of being the trade and sourcing fly ash where it is produced.

The next question comes from the line of Athanasoulias, Nikos with Eurobank Equities.

I have three questions on my end, although the first one, I think, has already been answered. The first one was regarding a potential Investor Day to update the financial targets during 2026 ones are already obsolete. The second one is the reason behind the margin -- the EBITDA margin expansion, was this mostly based on the optimizations and cost controlling on your end? Or was there something market based as well? How would you split the impact between the two? And the third one is regarding your dividend policy, you have voiced before that your strategy that you want to increase it step by step. But if you continue having positive free cash flow of over EUR 100 million over the next years, will we be able to see such ad hoc payments to start becoming more frequent?

Let me take the three questions. On Investor Day, Marcel already gave you a notice, we expect to have one in the autumn. No specific date set yet, but it's probably going to be around October. Regarding the margin expansion is not the same everywhere. You've seen margin expansion in most of our geographies. And it comes as a result, there have been relatively few price increases in 2024 not as much as prior years, but there has been significant improvement in efficiencies. Digitalization, as you said, is actually a key contributor as it is being introduced in plants. The eal-Time Optimizers once they go in, they produce a step down of cost, but then a relatively flat from their own performance. The maintenance, predictive artificial intelligence, again, brings cost savings, real cost savings, lower stoppages, cheaper repairs, on-time repairs. And of course, the investments that you see in our CapEx in alternative fuels, in logistics, again, bundle together, they are also financially beneficial. So the increase in margin is remains a constant target and we expect to see a further improvement in 2025 as well. And finally, on the dividend policy, we have already given the signal that a normal dividend in 2025 would have been EUR 1 per share. The step-up in profitability as well as the liquidity raised through the IPO drove the Board to recommend this special dividend. Our target is to primarily grow the business and not start distributing it out. So focus is for new organic, but also inorganic expansion of the business.

Yes. Maybe on the margins, just two other comments. One is related to the evolution of our product portfolio and the other one, the effort of commercial excellence. As our strategy is to source and use more supplementary cementitious materials, they are a proxy for using more blended cements. And usually, that comes with a lower cost of cementitious, replacing higher carbon, higher cost clinker. So overall, a better margin at like-for-like price, which brings me to the second topic, which is commercial excellence. Over the past 2 years, we have actively invested upgrading our sales capabilities, marketing by end use segment, training on value selling our salespeople, recruiting additional technical salespeople as well as introducing new products to the market. And we already see the results in 2024, where with very few exceptions, very local, we have maintained firm pricing, or we have achieved nice price increases. So that is an important driver for margin expansion going forward.

The next question is from the line of Cunningham [ Eason ] with On Field Investments.

So I have three questions on my end. The one is that you mentioned that in the fourth quarter in the U.S., you had adverse weather effects, is it fair to assume that these will follow into the next quarter? And if so, could you quantify first quarter next year this year? And then my second question is, how do you see the potential impacts on Middle Eastern reconstruction? And how would this impact your operations in Turkey and Egypt? And the third question is, do you have any updates on the implementation on the Carbon Border Adjustment Mechanism and the free allowance? Will this come in this year or next year? And when it does come in, in effect, how will it affect your operations in Greece and Europe?

Thank you for your questions. So yes, we have already commented on the impact of the three hurricanes on the fourth quarter in Latin America and the impact on volume. As you may have seen from the weather report, this continued in the first quarter. So it impacts it's particularly the Mid-Atlantic areas, but we hold a positive outlook for rebounds in volumes throughout the rest of the year. Regarding the participation to Middle East reconstruction, it's a slow process, there is a lot of expectation there. Again, we maintain our presence with assets in Western Turkey, and we will seize opportunities from there to these export markets or rebuilding a part of them or from Egypt, where -- thanks to the investments over the past 12 months, we have shifted from clinker exports to cement exports, which again find a nice destination in these markets. Regarding CBAM, at the beginning of this week, I was in Brussels with our Head of Europe meeting officials. CBAM is in an examination state, but it will become applicable as of 1st of January 2026. And that's good news for the wave of investments that generally the industry of cement is planning to have in Europe, acting both as a protective buffer, but also as a level playing field with assets in Northern Africa or Eastern Mediterranean, which are not at the same level of CO2 footprint. I hold the positive view on the impact of CBAM, again, on the investment and also on the pricing environment in Europe.

The next question is from the line of Woerner Tobias with Stifel.

A couple of questions from my side. Number one, when we look at the U.S., I'm with you on the housing optimism, I'm slightly more cautious on infrastructure. Generally, the argument is that the IIJA is only spent 30% or somewhere around that level and it will continue that way. But at the same time, we've got a new administration which wants to move from a fiscally driven economy to a privately driven economy, i.e., wants to get the bond yield down, which would be positive for housing, but not so positive for infrastructure if it wants to address deficits in and indebtedness. So my question to you is, where do you take that optimism from around the infrastructure side. When you talk about weather in Q4 in the U.S., where do you see that weakness in volumes coming from? Is it purely weather? Or is it also by subsector driven? And then secondly, on U.S. pricing been pushed out into Q2. Just remind us of the sequence when these pricing increases are going to go through from your perspective. And then just lastly, Greece, obviously benefiting greatly at this point in time, a very positive outlook there from my perspective with the next-generation recovery plan. But actually one angle, which is not yet priced in or -- and I'd like to get your view on is the defense spending coming out of Europe or the EU, will Greece participate in that? I know you spend more than the average NATO member at roughly 3% of GDP or slightly above, what's your view on that?

Thank you, Tobias. So yes, indeed, we confirm our housing optimism. On the infrastructure, I think the backlog makes us optimistic. Our overall exposure, and I think this data that we published as part of our IPO and also equity story. We hold an exposure of 15% on infrastructure segment in the Florida market, which has a nice growth pattern and 45% on Middle Atlantic. So if that 45% of Mid-Atlantic is too high, I wouldn't say so. 25 data centers are in different stages of launch and preparation in Mid-Atlantic and Virginia is becoming the capital of data center investments. So on top of that, I think we published again and again, and we see projects in different stage of initiation that over 50 million short tons over the next 5 years with, I would say, equally distributed percentages between roads and bridges as well as water infrastructure and airports. So as long as we see these projects in the market, we have a good exposure like we published last year, how we are working with Amazon in Virginia, we maintain a healthy optimism on U.S. infrastructure as a growth driver.

It also the same subject, the state of -- for the state -- of the state finances, both Virginia and mostly Florida, very strong financial state. And Florida has a state budget for infrastructure, which is very large and very much committed, and it is a Republican government, by the way.

And 3 weeks ago, Florida has announced another boost plan on infrastructure. U.S. prices, you said it, yes, we have announced price increases in the market, some realized faster than others, we maintain our opinion that this will be resilient this year. Now on Greece, again, looking at the backlog of infrastructure projects as well as nonresidential and tourist industry from the 4 large content companies, more than EUR 7 billion in backlog over the next 3 years. And the key challenge here is rather labor scarcity than financing or capabilities of cement suppliers to participate in this project. Personally, I do not believe that the defense programs announced will impact the infrastructure boost across Europe. We have seen it in Germany, in France and the overall direction there is that there will be relaxed position on the deficits allowed by the European Commission, so that will allow for both pursuing the infrastructure projects and boosting them as well as the military spending, digital and education spending, which are now under discussion.

The next question is from the line of Katsios Nestoras with Optima Bank.

Just two questions from my side. The first one is about CapEx. What is your guidance for group CapEx this year? And the second one is about your share repurchase program. This one if I'm correct ends this June. Do you plan to launch a new one?

Okay. Group CapEx. We did mention that 2024 was a high spending year. Plenty of opportunities showing up. We're obviously beneficial with financial benefit behind them. So we expect that the group CapEx will exceed the EUR 300 million mark in 2025. And regarding share buybacks, it's still early days. We have maintained this pace for a couple of years now. So we'll most probably continue at similar levels. We will take one more question.

Yes. We will now move on to our written question from one of our webcast participants from Mr. Stathis Kaparis with Axia and I quote "On Egypt exports, can you please give us some color on export destination needs to debottleneck potential size of export from the current 1 million tonnes? Also post Turkey exit, what are areas of interest to expand business?"

Yes. So I thought that we partly answered this question. We are not speaking of a Turkey exit. We still have assets in the western part of Turkey in Marmara gagging stations, and we are an active buyer of clinker and cement producers. While we maintain a strong partnership with the operations divested in Eastern Turkey. As I mentioned, we will seize opportunities to further strengthen that position as well as improve our export capabilities, taking into account the potential growth in Middle East market. Regarding Egypt, we have identified a number of destination markets, which are not inside the group. And the largest market is around Israel, but we do have also healthy positions in other markets. And we actively invested in silo capacity, debottlenecking, but also lowering the cost through investments in alternative fuels. We have both plants operating at record high level of alternative fuels usage and that brings the overall delivery cost at the competitive levels with international markets.

I think we have to close now. It's well over the hour.

Yes. Thank you again for your interest, for your questions. As usual, at your disposal, Spyros Kamizoulis is here to answer any other questions you may have, and I think in the next couple of weeks, we will organize the usual roadshows. And of course, with the strategic direction of 2029, the Investor Day, we'll get a nice opportunity to exchange more. But please remember, it's a strong momentum of Titan across all operations, record performance in 2024 to be continued in 2025 with a strong outperforming of market, while we pursue initiatives, again, to grow, expand margins and improve our commercial excellence. Thank you.

And we'll be back with you on May 8 with the general assembly of the company as well as the first quarter results.

Yes. Thank you.

Thank you.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.