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Empresas ICA S.A. DE C.V. (ICA)
Q4 2012 Earnings Call
March 1, 2013 10:00 AM ET
Víctor Bravo – CFO
Alonso Quintana Kawage – CEO
Carlos Pereylongue – Merrill Lynch
Javier Cayol – GBN
Lillian Starky – Morgan Stanley
Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Empresas ICA’s Fourth Quarter 2012 Earnings Conference Call.
(Operator Instructions) This conference call is being recorded today, March 1, 2013.
I would now like to turn the conference over to our host, Victor Bravo, Chief Financial Officer. Please go ahead, sir.
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I will go over each of fourth quarter and full year accomplishments, our financial results and the year-on-debt position and financial strategy. I also want to highlight some IFRS accounting that has been affected in 2013. After this we will open the call to your questions.
The fourth quarter demonstrates our continuing transformation as a company and highlights our efforts to create value at all points of the life cycle of long-live infrastructure. This is what we call a critical analysis. I want to highlight four major operating accomplishments in the quarter. First, we will need to fully execute the strong backing.
We guided more than 18 billion pesos to outlook in fourth quarter. The year-end total was more than 42 billion pesos, and this does not include two additional concessions that were awarded in fourth quarter with fiscal year. Our year-end backlog was four times larger than it was the last time there was a change in federal government, in December 2006. That’s when our backlog has decreased by 33% compared to the average of the prior eight quarters.
In contrast the December 2012 backlog is actually 7% higher than the average of the last eight quarters, and was up 3% from the end of 2011. We have also more than 8 million pesos in mining and other services contracts from our subsidiaries from our teams in Peru. These contracts are not included in backlog. This high level of backlog of services contract will help protect our revenue generated and cash flow until the new government parts for now need insurance.
Second, we completed a number of major multi-year projects. This required massive effort across the company, and in many different regions of Mexico. It is another demonstration of free cash commitments or planning, and for the people who are the ultimate beneficiaries of our deployment. We delivered the La Getza Survine after five years of work and received payment for more than $1 million. We delivered the net alliance portfolio after four years of construction. We also delivered five new contracts. This includes the Alto Rio Run Asus, the La Piedad Bypass and the RiÃ³ Verde-Cuidad Valles highway. I will speak, then opening of additional custom in this segment of the year, (inaudible).
Third, we opened up new services revenue and cash flow generation with the startup operations of the five concessions I just read. These made a modest contribution to fourth quarter results, and their contribution will start to grow in first quarter 2013. The SEC were only operational for part of the quarter. The highway projects only just started at the end of the quarter. There’s profits which is ramping up, and not all open segments were collection points.
Seven years ago, ICA had three concessions. Today, we have 11 operating concessions, over 13 NIA airports plus another seven under construction. This is a dramatic change in the competition of our business.
Fourth, we already signed out participation in the affordable housing sector in Mexico by managing our housing efforts with interest. We just received gross profit in Mexico proposition agents. This was the principal of military approval required. We expect the transactions to close readily in the second quarter of 2013.
Merging inflations were harder. The numbers do come from the INFONAVIT in Mexico, where the most impending our grade value from our 10 billion assets, of course with a full operating content.
In Empresas ICA, we concentrate on our core construction and with our total businesses. This accomplishment, along with acquisition of San Martin in Peru and the concessions we were awarded earlier made 2012 a landmark year of ICA.
Looking at the report of our business segment, city concessions revenue decreased 8% in the quarter as expected because of the completion of (inaudible). Bringing this to conclusion we are as I mentioned one of our main priorities. We started some provisions for the regional costs incurred in the metro. Given the dynamics in the city construction, operating loss in the fourth quarter. Like most large projects, this cost of the land sales included multiple same quarter and execution challenges. We are in constant discussions with clients on this issue. ICA and…
Ladies and gentlemen, please stand by.
Hello, again, and sorry for this technical problem.
We were discussing this year’s Construction results and concluding that actually Construction has just at EBITDA decreased 10% for the year, largely because of the provisions from the Metro authorities.
Electro construction revenues grew 13% with most of the growth coming from the clean fuels released for Pemex, Alda and Vies Voreno Tempers Petrochemical Company. Margins nica flur made good for the quarter and the full year because of the mix of projects. The rise you see there, also included the recognition of some costs increases by our clients we have boosted margins.