Release Date: February 21, 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) achieved a benefit of approximately $108 million from ongoing cost reduction initiatives in 2024.
- The company reported a 21% increase in adjusted EBITDA for the fourth quarter compared to the previous year.
- Precision Agriculture segment showed strong performance with a 6% increase in full-year EBITDA, driven by cost-saving efforts and improved operational efficiencies.
- The company maintained a strong position in the fluorine value chain, with significant reserves and output of fluorspar, supporting long-term business stability.
- Orbia Advance Corp SAB de CV (MXCHF) is focused on reducing leverage and enhancing profitability through cost optimization, capital expenditure control, and divestment of non-core assets.
Negative Points
- Full-year revenues decreased by 9% to $7.5 billion, and EBITDA decreased by 25% compared to the previous year.
- The company faced challenging market conditions with lower revenues across all business groups due to higher interest rates and global economic factors.
- Fluor & Energy Materials segment experienced a 34% decrease in full-year EBITDA, driven by lower refrigerant volumes and higher raw material costs.
- Connectivity Solutions segment reported a 67% decrease in full-year EBITDA, primarily due to lower volumes and prices.
- The effective tax rate for the full year was 132%, significantly higher than the previous year, impacted by currency depreciation and valuation allowances.
Q & A Highlights
Q: Can you provide more details on the share buyback program and the metrics you will use to evaluate it?
A: Sameer Bharadwaj, CEO, clarified that Orbia is not engaging in a share buyback program. James Kelly, CFO, explained that the company has a historical process of authorizing potential buybacks for tax advantages but has no intention of a programmatic buyback plan this year. The focus remains on generating cash from operations and reducing debt.
Q: What are your thoughts on the new US administration's stance on energy transition and infrastructure spending?
A: Sameer Bharadwaj, CEO, noted that while there is uncertainty with the new administration's policies, the transition to electric vehicles and energy storage remains driven by market forces. Orbia is well-positioned to benefit from these trends, regardless of policy changes, and is awaiting further clarity from the administration on DOE grants.
Q: Can you explain the rationale behind the restructuring and if there are more one-time charges expected in 2025?
A: Sameer Bharadwaj, CEO, stated that the restructuring aims for a more efficient corporate structure without changing operational segments. The company achieved $104 million in cost reductions in 2024 and is on track for $250 million by 2027. The focus is on optimizing assets and reducing costs across all business functions.
Q: What are the expectations for the petrochemical division and potential upcycle indicators?
A: Sameer Bharadwaj, CEO, indicated that recovery in global building and construction activity, particularly in China, would be a significant catalyst. The company is optimizing its manufacturing footprint and focusing on markets with better pricing to position itself for an upcycle, although no significant upcycle is expected this year.
Q: What progress has been made on asset divestment and how does it relate to the 2025 EBITDA guidance?
A: Sameer Bharadwaj, CEO, mentioned that Orbia is exploring portfolio optimization to sharpen focus, reduce leverage, and create shareholder value. The 2025 outlook assumes stable market conditions with no significant recovery, and the company remains focused on cost optimization and strategic growth investments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
