CEMEX, S.A.B. de C.V. (NYSE:CX) Q4 2023 Earnings Call Transcript February 8, 2024
CEMEX, S.A.B. de C.V. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning, and welcome to the CEMEX Fourth Quarter 2023 Conference Call and Webcast. My name is Brika, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] And now I will turn the conference over to Lucy Rodriguez, Chief Communications Officer. Please proceed.
Lucy Rodriguez: Good morning. Thank you for joining us today for our fourth quarter 2023 conference call and webcast. We hope this call finds you in good health. And even though it’s already February, let us take this opportunity to give you our best wishes for 2024. While we are here to talk about 2023, we hit the ground running in January and are optimistic about the opportunities that 2024 presents. I am joined today by Fernando Gonzalez, our CEO; and Maher Al-Haffar, our CFO. As always, we will spend a few minutes reviewing the business, and then we will be happy to take your questions. And now, I will hand it over to Fernando.
Fernando Gonzalez: Thanks, Lucy, and good day to everyone. Thank you for joining our call today, and I would like to extend my best wishes for a healthy and successful 2024. I am pleased to present to you today the results of what was an exceptional year where we delivered not only record results, but achieved our goal of recovering from the extraordinary inflationary pressures over the last few years. This performance is a testament to the focus and commitment of our employees around the world. 2023 results were achieved despite a challenging demand backdrop in most markets. Full year EBITDA grew 20%, reaching a record $3.35 billion. Growth investments contributed to 13% of incremental EBITDA, while organization solutions grew on the double-digit area.
With margin expansion of 2 percentage points, driven by strong pricing and decelerating cost inflation, we reached our goal of recovering 2021 margins. Free cash flow after maintenance CapEx of $1.2 billion was a highlight, growing $655 million on the back of higher EBITDA and a turnaround in working capital investment. Our leverage ratio declined by 0.8x of a turn to 2.06x already within investment-grade credit parameters. And finally, our return on capital for the full year expanded by 1.5 percentage points to close to 14%, excluding goodwill. Importantly, our 2023 results add to several years of resiliency in EBITDA leverage and strength in free cash flow generation. This new foundation allow us more flexibility going forward for deleveraging, accelerating our existing bolt-on growth strategy as well as allowing us to propose the initiation of a sustainable shareholder return program.
On the customer centricity front, we closed the year with an important improvement in our already high Net Promoter Score, a new record and a benchmark for the industry. In climate action, 2023 represents another year of important progress against our decarbonization road map with the achievement of another 4% reduction in CO2 emissions. Finally, CEMEX was once again recognized by CDP on its prestigious A list for transparency on climate change disclosure. Full year net sales increased 8%, while EBITDA grew 20%, reflecting not only the strong pricing momentum of our products and decelerating input cost inflation, but also the success of our growth investment strategy. EBITDA margin expanded by 2 percentage points, driven by the U.S. and Europe.
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