Grupo Argos SA (XSGO:GRPARGOSUS) (Q2 2026) Earnings Call Highlights: Strategic ACE 1. ...

Negative Points

• Grupo Argos SA ( XSGO:GRPARGOSUS ) faces potential operational risks from the El Nino phenomenon, which could impact its energy business Celsia's hydroelectric generation and extend into the first quarter of 2027, despite having thermal backup and high reservoir levels.

• The company's consolidated EBITDA saw a 2% drop in the first half of 2026, partly due to higher non-recurring overhead expenses associated with its operational and structural transformation processes.

• Celsia's power generation volumes decreased by 19% year-over-year in the second quarter, a direct result of the decision to conserve reservoir levels ahead of El Nino, which could impact short-term revenue.

• The company's airport business in Quiport experienced a 14% decline in net income due to the expiration of a Free Trade Zone tax benefit in November 2025, highlighting a headwind for that segment.

• Grupo Argos SA ( XSGO:GRPARGOSUS ) is exposed to social and political dynamics in its operating regions, as evidenced by a 2% decline in traffic at Autopistas del Cafe due to temporary social issues during the election period and the ongoing inability to collect tolls at the Libertad toll plaza.

• The company's financial results are affected by significant one-time events and portfolio changes, such as the monetization of its US investment and the spin-off of Grupo Agros, which complicates period-over-period comparability and may obscure the underlying recurring performance.

Q & A Highlights

Q: Regarding the consolidation of Grupo Argos' role in Asset Management, which assets would be sold eventually, given the discussion about selling infrastructure assets like C2 Energy and Atera? A: The company representative explained that Celsia has a deleveraging commitment of COP1 trillion in 2026 and is exploring the divestment of some assets, including the C2 and Caoba platforms. This is an open and competitive process seeking to maximize value for all shareholders. Grupo Argos Asset Management will have infrastructure verticals, including energy, within its action universe, but the process remains completely open to achieve the best value.

Q: What is the schedule for the new Odinsa projects in the pipeline, and how will they enter the new Argos Asset Management structure? A: Jean Pierre Serani, CEO of Odinsa, stated that there are four private initiatives: the expansion of El Dorado Airport, Cartagena Airport, Conexion Centro, and Perimetral de la Sabana. All are in the feasibility phase, with the goal of reaching allocation by the end of next year. Juan Esteban Calle added that Grupo Argos will act as an anchor LP alongside Macquarie Asset Management, with Odinsa's team responsible for raising capital from local and international investors.

Q: What are the expectations for the second half of the year regarding ACE program advancements, and when will the shopping malls sale be executed? A: Juan Esteban Calle mentioned expectations for continued positive results, including two refinancing opportunities within Odinsa that will bring important flows, and the placement of a couple of mature assets. Maria Clara Aristizabal detailed that the Pactia shopping malls transaction with Mallplaza is due by September 30, with a minimum payment of 50%. Grupo Argos will receive approximately COP260 billion in cash, and the fund's loan-to-value ratio could fall below 20%.

Q: Were any of the group's assets affected by the earthquake in Colombia, and what was the discount versus book value for the Pactia divestments? A: Juan Esteban Calle confirmed there were no significant impacts on company assets, only marginal effects at the Yumbo cement plant. The main impact was on the homes of over 200 collaborators, who received support. Maria Clara Aristizabal stated the discount on the Pactia sale was close to 3% versus book value, which is significant given that similar listed assets have traded at up to 50% discounts, signaling the sum of parts is properly valued.

Q: Has the company made any estimations about a possible blackout in Colombia given the El Nino phenomenon and energy deficiency? A: Juan Esteban Calle responded that all efforts are concentrated on finding gas for thermal plants, particularly for Celsia, to avoid a possible blackout. He reiterated that the company is well prepared to face the El Nino phenomenon, as explained during the Celsia call.

Q: Can you provide more details on the ACE 1.0 program's initial reception and its impact on the stock price? A: Juan Esteban Calle noted that the initial reception of ACE 1.0 was positive, with analysts highlighting the clear roadmap for closing the value gap. Following the announcement, common stock rose 6% and preferred stock 5.3% on the first trading day. From August 5 to date, common stock has risen 30% and preferred stock 21%, reflecting a favorable initial reaction and vote of confidence.

Q: What are the specific targets for Argos Latam's EBITDA growth under the ACE framework? A: Felipe Aristizabal explained that Argos Latam aims to organically increase EBITDA by more than $75 million over the next 12 to 24 months, raising generation from approximately $350 million to $425 million. This growth is driven by cost leadership, profitable volume growth, and greater volume capture per marginal metric ton, with Colombia being the main driver, accounting for 55-60% of Argos Latam's EBITDA.

Q: What progress has been made in the re-entry into Venezuela and expansion in Guatemala? A: In Venezuela, the company exceeded the initial target of 5,000 metric tons per month, completing the first phase of re-entry through land-based exports. The next step is scaling up supply by sea from Cartagena. In Guatemala, volumes tripled compared to Q2 2025, approaching 10,000 metric tons per month, driven by exports from the Rio Blanquito plant in Honduras, marking the first phase of an expansion strategy.

Q: What are the key financial metrics for Celsia under the ACE program, particularly regarding deleveraging and margin expansion? A: Celsia aims to expand EBITDA margin from 30.9% in 2025 to above 40% by 2020, supported by operational excellence, investment consolidation, and disciplined capital allocation. The target is to reduce debt by COP1 trillion over the next 12 months. As of June, net debt stood at COP4.85 trillion with a net debt to EBITDA ratio of 3.22%, down from 3.56% a year ago.

Q: Can you provide details on the Pactia transaction and its impact on the fund's financial structure? A: Maria Clara Aristizabal confirmed the sale of eight Gran Plaza shopping centers to Mallplaza for COP1.2 trillion, close to book value. The transaction provides liquidity of COP689 billion for the fund, with Grupo Argos receiving approximately COP260 billion. The sale is expected to reduce the loan-to-value ratio below 20% by end of 2026 and improve interest coverage to 3.1 times in 2027.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .