Release Date: April 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Orbia Advance Corp SAB de CV (MXCHF, Financial) demonstrated resilience with a 3% increase in adjusted EBITDA compared to the previous year, despite challenging market conditions.
- The company successfully resolved a raw materials disruption in its Polymer Solutions business, which had previously impacted performance.
- Orbia is on track with its cost reduction program, aiming for cumulative annual savings of $160 million by the end of 2025.
- The company has made significant progress in non-core asset divestments, expecting to generate at least $75 million in proceeds by the end of the year.
- Orbia's Connectivity Solutions segment showed a 12% increase in EBITDA, driven by higher volumes and cost reductions.
Negative Points
- Revenues for the first quarter decreased by 3% year-over-year, with significant declines in the Polymer Solutions and Building & Infrastructure segments.
- EBITDA for the quarter decreased by 21% year-over-year, primarily due to non-recurring costs and lower revenues in key segments.
- Free cash flow was negative $155 million, although it showed an improvement compared to the previous year.
- Net debt to EBITDA increased from 3.3 times to 3.67 times compared to the year-end 2024, reflecting higher debt levels and lower EBITDA.
- The Building & Infrastructure segment faced weakness in parts of Continental Europe and Mexico, leading to a 43% year-over-year decrease in EBITDA.
Q & A Highlights
Q: Can you elaborate on the strategic review and how it aligns with your expectations so far? Also, how comfortable are you with your liquidity position given the current market conditions?
A: We are on track with our strategic review, focusing on cost reduction, growth investments, and non-core asset sales. We aim for $250 million in savings by 2027 and are progressing well. Regarding liquidity, we have $860 million in cash and a $1.4 billion revolving credit facility, ensuring financial stability despite market headwinds. – Sameer Bharadwaj, CEO; James Kelly, CFO
Q: Could you provide more details on the non-core asset sales and their impact on EBITDA?
A: Most non-core asset sales are from the Building & Infrastructure segment, resulting from footprint optimization. These assets have minimal EBITDA contribution, allowing us to generate cash with little impact on earnings. – Sameer Bharadwaj, CEO
Q: With lower EBITDA guidance, is there flexibility to reduce CapEx further if market conditions worsen?
A: Yes, we are prepared to adjust CapEx dynamically. Our maintenance CapEx is around $250 million, and we will complete ongoing growth projects. We will be selective with new investments, focusing on market conditions. – Sameer Bharadwaj, CEO
Q: How does the trade war and tariff situation impact your guidance and market outlook?
A: Our guidance considers potential economic slowdowns due to trade tensions. We are shielded by USMCA compliance, but a prolonged trade war could affect demand and pricing. Our guidance range reflects this uncertainty. – Sameer Bharadwaj, CEO
Q: What is the outlook for Connectivity Solutions given the AI and data center market trends?
A: We see month-over-month demand improvement in traditional telecom spending. The data center market, though a small part of our business, shows significant activity with hyperscalers. We haven't seen a slowdown impact yet. – Sameer Bharadwaj, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
