Earnings call transcript: LPA’s Q2 2025 results show revenue growth but EPS decline

Logistics Platform of the Americas (LPA) reported its Q2 2025 earnings, revealing a mixed financial performance. The company posted a loss of $2.62 per share, with actual revenue reaching $25.12 million. The market reacted negatively, with LPA’s stock falling by 5.34% to $6.20 during the open market session. According to InvestingPro data, the company’s last twelve months show concerning trends with a -49.66% revenue decline and negative earnings, though it maintains a significant 15.23% dividend yield.

Key Takeaways

• LPA reported a significant EPS loss of $2.62, impacting investor sentiment.
• Revenue increased by 6.4% year-over-year to $11.7 million in Q2.
• Strong demand in Central and South American markets continues to drive logistics real estate growth.
• Expansion into the Mexican market is underway, with strategic partnerships forming.
• The company’s stock price fell by 5.34% following the earnings announcement.

Company Performance

LPA’s performance in Q2 2025 was characterized by solid revenue growth but a significant EPS decline. The company’s rental revenue increased by 6.4% year-over-year, reaching $11.7 million. Operating cash flow also saw a substantial increase of 23.5% compared to the previous year, amounting to $8.9 million. Despite these positive trends, the company’s earnings per share fell to a loss of $2.62, a factor that weighed heavily on investor sentiment. InvestingPro analysis reveals concerning financial health metrics, with a current ratio of 0.17 indicating potential liquidity challenges.

Financial Highlights

• Revenue: $11.7 million, up 6.4% year-over-year
• Earnings per share: -$2.62
• Operating cash flow: $8.9 million, up 23.5% year-over-year
• Net operating income: Increased by 3.7% in the quarter

Earnings vs. Forecast

LPA’s EPS of -$2.62 was below market expectations, contributing to a negative surprise for investors. The company’s revenue, however, reached $25.12 million, reflecting growth despite the earnings miss. The market’s reaction was swift, with LPA’s stock declining by 5.34% during the open market session.

Market Reaction

Following the earnings release, LPA’s stock experienced a 5.34% drop, closing at $6.20. This decline reflects investor concerns over the company’s earnings performance, despite its revenue growth. The stock’s current price is near its 52-week low of $5.898, indicating a challenging market environment for LPA. However, InvestingPro Fair Value analysis suggests the stock may be undervalued at current levels, with additional insights available in the comprehensive Pro Research Report, part of the analysis covering over 1,400 US equities.

Outlook & Guidance

LPA is optimistic about its expansion into the Mexican market and continues to focus on institutional-quality assets. The company expects its earnings power to accelerate in late 2025 and into 2026 as new facilities come online. Future EPS forecasts for FY2025 and FY2026 are $1.14 and $1.40, respectively, indicating potential growth. With a market capitalization of $653 million and a price-to-book ratio of 0.83, the company trades below book value. Subscribers to InvestingPro can access 7 additional key insights about LPA’s valuation and growth prospects.

Executive Commentary

CEO Esteban Salteriaga emphasized the strong demand for Class A logistics facilities, stating, "Demand from these companies continues to exceed the region’s supply of Class A EDGE certified logistics facilities." He also highlighted the company’s strategic approach, saying, "We will deploy capital with discipline and patience."

Risks and Challenges

• Economic uncertainties in Central and South America could affect demand.
• The company’s high debt levels, with a net debt to investment properties ratio of 42.2%, may pose financial risks.
• Potential supply chain disruptions could impact construction timelines for new facilities.
• Market saturation in some regions may limit rental growth opportunities.
• Currency fluctuations in the Latin American markets could affect financial results.

Q&A

During the Q&A session, analysts inquired about the decrease in other income, which was explained as a one-time fee from a lockup release when the company went public. This clarification addressed concerns about the sustainability of income sources moving forward.

Full transcript - Two (LPA) Q2 2025:

Jim, Call Operator: Good morning, and welcome to LPA’s Second Quarter twenty twenty five Earnings Conference Call. My name is Jim, and I will be the operator for today’s call. And at this time, all participants are in a listen only mode. And please note that this call is being recorded. There will be an opportunity for you to ask questions at the end of today’s presentation.

And now I would like to turn the call over to Mr. Kamilo Ulloa, Investor Relations. Please go ahead, sir.

Camilo Joao, Investor Relations, LPA: Welcome to LPA’s Second Quarter twenty twenty five Earnings Conference Call. My name is Camilo Joao with LPA’s Investor Relations team. Joining me on today’s call are Esteban Salteriaga, our Chief Executive Officer and Paul Smith, Chief Financial Officer. Before we proceed with our review of LPA’s financial and operating results, please note that information presented during this call is intended for informational purposes only and does not constitute an offer to buy or sell any securities. Forward looking statements made during this call are subject to a number of risks and uncertainties, which are discussed in LPA’s filings with the SEC.

Our actual results, performance and prospective opportunities may differ materially from those expressed or implied in these statements. We undertake no obligation to update or revise any forward looking statements after this call. We have prepared supplemental materials that we may reference during the call. We encourage you to visit our website, ir.lpamreco.com, to download these materials. Please also note that all comparisons that we will discuss during today’s call are year over year, unless we note otherwise.

Esteban will begin today’s review. Esteban, please go ahead.

Esteban Salteriaga, Chief Executive Officer, LPA: Thanks, Camilo, and good morning, everyone. Thank you for joining our call. LPA’s regional platform continued growing at a solid pace in the second quarter, during which we continue to lay the groundwork to expand our property portfolio further to capture more growth in our target markets, where barriers to entry remain elevated in highly strategic locations. During the second quarter, rental revenue increased 6.4% to $11,700,000 and grew 9.6% on a six month basis. This growth was led by properties in Colombia and Peru during the quarter, at the end of which our entire operating portfolio was 98% leased, a commitment that we made when going public last year and which reflects the strength of our customer relationships in the region.

Net operating income increased 3.7% in the quarter and 4.8% during the first half, While certain onetime factors impacted our growth, as Paul will elaborate later, it is important to emphasize that LPA’s underlying fundamentals are in line with our expectations and that our growth trajectory continues to strengthen, both with regard to near term opportunities and over the long run. On the expense side, you’ll note that second quarter SG and A grew at a far slower pace as we have now achieved a steadier base and the costs related to taking LPA public in the 2024 are now mostly behind us. Because of this, our cost base should remain fairly stable going forward, and therefore, we expect to benefit from significant operating leverage as we expand the regional platform to our fourth country, Mexico, generate additional rental income as well as increase our growth optionality. That expansion includes the ongoing construction of Building 300 at Parque Lohistico Callao in Lima. This new building is comprised of two modules, A and B.

Coming online in the fourth quarter of this year, Module A, which is currently under construction, will be fully occupied and is expected to contribute materially to our company’s near term growth. It represents 239,000 square feet or 65% of the total building and will be leased by a major food and beverage brand under a ten year dollar based agreement as previously announced. This will also be the first lead gold facility in our portfolio. During the second quarter, we also began construction of Building 200 in the same logistics park, the strategic location of which provides seamless connectivity to the shipping port of Callao and to Jorge Chavez International Airport in Lima. At just over 227,000 square feet and already 76% pre leased, this building will be another source of significant dollar denominated revenue beginning in the second quarter of next year, further ramping up our growth as we enter 2026.

As we announced last month, we appointed Eduardo Naques, Country Manager for Mexico, and he has hit the ground running. He shares our entrepreneurial drive and passion for operational excellence and will spearhead LTA’s penetration of this key market, where mid to long term demand for premium logistics and industrial real estate is expected to remain as relevant or even more so as it has been for the last twenty five years. The LTA brings a wealth of experience in real estate investment and development with a strong track record of originating and executing high value projects. As we have emphasized before, success in real estate requires deep local awareness. His extensive understanding of the country is critical to our strategy of selectively acquiring and building a core portfolio of institutional quality logistics assets, which will strategically extend LPA’s regional platform into this highly important and dynamic industrial real estate market.

On another note, the conclusion of our purchase of two logistics facilities in Puebla, Mexico is taking longer than expected. This has been a result of administrative delays that trustees have been dealing with since Mexican regulators intervened a major bank trustee that serves the country’s real estate industry. We have no doubts about filling this transaction, which remains as attractive as ever, if not more. These strategically located assets will be the cornerstone of a key component of our long term growth strategy. It will enable us to serve in Mexico many of the top global and regional companies that currently occupy LPA facilities in our foundational markets as well as provide premium logistics solutions to other high quality companies operating in Mexico.

The foothold that we are establishing there will be underpinned by our strategic partnership with Allos, a company that has been operating in Mexico for over sixty five years. In addition to their deep knowledge of the country’s real estate market, Alles has extensive relationships with Mexico’s key landowners as well as a solid network of corporate clients and property developers. Our local partner also has significant design build expertise. To be clear, we are acutely aware of the continued uncertainty surrounding U. S.

Tariff policies, which are still in flux and the potential impact of which is unknown. Accordingly, we will remain disciplined and highly selective when investing further in Mexico, whether that’s acquiring properties or building them. We will continue avoiding sectors that are heavily reliant on certain exports, investing in facilities that serve the country’s key submarkets, where demand is primarily driven by domestic consumption such as that found in our foundational markets. Importantly, demand in our target markets continues to outstrip supply for premium industrial real estate like that of LTAs. I’ll now hand over the call to Paul, who will review our second quarter results in more detail.

Paul Smith, Chief Financial Officer, LPA: Thank you, Stephen. Good morning, everyone. Colombia led the quarter’s revenue growth increasing 19%, followed by Peru, where rental revenue grew 10.7% while decreasing 1% in Costa Rica. These results were largely in line with our internal projections, although there were several nonrecurring items that partially offset our growth in the quarter, as I will explain. Colombia’s growth primarily reflects two new lease agreements with Porsche and DSD that were signed in the 2024.

These high quality tenants subsequently occupied just over 125,000 square feet of total space that have been vacant. We also achieved a 28% increase in average rent for this space. Peru’s growth mainly reflects new leases also signed in the third quarter of last year with the logistics company, Sharp and Signia, for a little more than 92,000 square feet of combined space in our Parque Los Chitico Callao in Lima. This additional rental revenue was partially offset by the reimbursement of an above standard tenant improvement loan to another tenant, a onetime year over year effect. Although our portfolio in Costa Rica benefited from the stabilization of Building 400 in LPA’s La Verbena Park, this was offset by the early termination of a lease at Aracollo 4 Logistics Park as well as by a decrease in interest income from another tenant’s lump sum prepayment of the tenant improvement loan they have with us.

This also affects same store growth figures, but is consistent with our customer electing to prepay. The growth of LTA’s property portfolio remains solid, with operating GLA increasing 6.6% year over year to 5,300,000 square feet and development GLA expanding 48% to 478,000 square feet, with our total GLA increasing 9.1% to 5,800,000 square feet. This expansion is expected to be a foundation for the next cycle of LPA’s NOI growth even before acquisitions are factored in. Average net effective rent per square foot during the quarter was $8.07 an increase of 2.5% versus second quarter twenty twenty four. Our operating expenses increased 21.7%, mainly due to deferred maintenance last year and the stabilization of Building 400 in LTA Zabrebena Park in Costa Rica.

The OpEx increase also stemmed from two buildings that became operational in April 2024 in Peru as well as higher real estate taxes there. Another notable contributor to the quarter’s increase in OpEx was a provision that we took in relation to the financial condition of a customer in Colombia. As Gisela pointed out, the growth in SG and A was substantially slower than last year’s quarter. Now that we’ve been a public company for a full year and no longer have the unfavorable year over year comparisons related to higher compliance, auditing and reporting expenses. The 0.5% increase in SG and A was primarily due to higher compensation related to restricted stock units and, to a lesser extent, due to higher ROICs.

Our financing costs decreased again this quarter, falling just over 15%. This was mainly due to interest rate reductions in Colombia, resulting from a lower interest rate environment. Also noteworthy was our operating cash flow, which increased 23.5% year over year to $8,900,000 Lastly, in addition to the strong fundamentals of our regional platform, we maintained a healthy debt maturity profile and a net debt to investment properties, or LTV, of 42.2% at the end of the second quarter. That concludes our review of our second quarter results. Operator, please open the call for any questions.

Jim, Call Operator: Ladies and thank you. And ladies and gentlemen in our audience today, we will open the floor for your questions at this time. And again to our phone audience, that is star and one, if you would like to signal for a question. And presently, have no questions from our phone audience. And I do not believe we have any questions from our web audience.

And if we have no questions, Mr. Saladriaga, I’m happy to turn it back to you, sir, for any additional or closing remarks that you have.

Esteban Salteriaga, Chief Executive Officer, LPA: Thank you, operator. I do think we received one question, so we’ll address that. Question is regarding the decrease of other income. I’ll turn it over to Paul to tackle that question.

Paul Smith, Chief Financial Officer, LPA: Thank you for that question, Johannes. This is Paul Smith. Last second quarter, we were having some other income from fees related to the lockup releases that we had. As you might remember, when we became public, some of our shareholders were subjected to a lockup re to to a lockup agreement. And in exchange for releasing that lockup, we received a fee, and that basically explains it.

We view it as a one time

Jim, Call Operator: And while we’re checking on more web questions again to our phone audience today that is star and one ladies and gentlemen. And gentlemen, thank you for your patience and as well to our audience, thank you for your patience today. We have no further questions in the queue. And once again, Mr. Sal Darriaga, I’m happy to turn it to you, sir.

Esteban Salteriaga, Chief Executive Officer, LPA: Thank you, operator. To summarize the quarter, we continue benefiting from solid domestic consumption trends that are behind the strong demand levels and leasing dynamics for logistics facilities in our foundational markets in Central And South America. And as we bring new facilities online later this year and into 2026, we expect to further capitalize from operating leverage as more fixed costs are diluted across a larger enterprise and revenue base. At the same time, we’re executing well against our value enhancing expansion strategy, which now encompasses Mexico. We ended the quarter with 98% of our GLA leased across our operating portfolio, underscoring the strength of our high quality consumption driven customer base, which includes many regional and global industry leaders.

Demand from these companies continues to exceed the region’s supply of Class A EDGE certified logistics facilities like ours. This supplydemand imbalance is also enriched by a clear flight to quality in our markets, reinforced by strong demographic trends and sector specific tailwinds such as the life sciences sector in Costa Rica, the mining sector in Peru, which continues to drive economic growth. A good example is the five year lease signed in June at one of our stand alone assets in Costa Rica’s key logistics sector, which achieved a 20% increase in net effective rent. This demonstrates our ability to capture premium pricing as we capitalize on market tightness. Looking ahead in core markets like Lima, Peru, where barriers to entry are material, we will continue to press our advantage.

In Mexico, our near term focus is on acquisitions and forward purchases of institutional quality assets as well as on customers that are aligned with our platform standards. As we deepen our presence and gain further traction in this market, we will progressively evaluate opportunities further out along the development spectrum. As always, we will deploy capital with discipline and patience, gradually building a portfolio of world class logistics and industrial assets that extends LPA’s platform into Mexico and enables us to grow alongside our clients. In conclusion, our platform’s earnings power is accelerated, with strong momentum expected to fully be reflected by late twenty twenty five and into 2026. Coupled with a robust pipeline of near and long term development opportunities, we are firmly positioned to generate durable compounding value for our shareholders.

Thank you once again for your time. We appreciate your support and look forward to delivering on the opportunities ahead. Have a great day.

Jim, Call Operator: Ladies and gentlemen, this does conclude today’s LPA conference call, and we thank you all for your participation. You may now disconnect your lines.

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