Gcc Sab De Cv · BMV:GCC
Gcc Sab De Cv — Q4 2022 Earnings Presentation
28 slides from Gcc Sab De Cv's earnings presentation, Feb 1, 2023
Slide 1: Q4 2022 Earnings Conference Call
Q4 2022 EARNINGS CONFERENCE CALL ENRIQUE ESCALANTE, CEO MAIK STRECKER, CFO FEBRUARY 1, 2023
Slide 2: Safe Harbor Statement
This presentation has been prepared by GCC, S.A.B. de C.V. (together with and other results to be materially different from the results expressed or its subsidiaries, “GCC”). Nothing within this presentation is intended to be implied by such projections. taken by any person as investment advice, a r
Slide 3: 2022 Opportunities & Challenges
2022 Opportunities & Challenges: Ensure high-quality product availability • Our teams exhibited outstanding performance: • Took advantage of pricing opportunities • Adapted to offset cost pressures Unprecedented demand dynamics, • Supported customers and communities logistics, energy and fuel challe
Slide 4: Q4 Highlights
• EBITDA: US$91 million (+13%) • Continued energy market volatility with enduring inflation Q4 HIGHLIGHTS • Third U.S. price increase effective October 1st • US$6 per short ton for construction cement • Pricing growth across all markets and product lines • Increased blended cement production & shipm
Slide 5: U.S. Overview
Odessa plant Strong start to Oil-well cement running at full Q4; initially demand U.S. OVERVIEW capacity shipping ahead strengthened of budget Remain focused on increased efficiency and are on track on Supplemented with capacity expansion cement from the Affected by Solid drilling activity Chihuahua
Slide 6: Mexico Overview
MEXICO OVERVIEW NEARSHORING • Juarez and El Paso (growth across the border region) Samalayuca expansion advancing well • Popular destinations for near-shoring manufacturing facilities • Steady stream of projects entering our pipeline Purchased crusher for aggregates business • Confident this will co
Slide 7: Self-Construction Mining Sector
SELF-CONSTRUCTION MINING SECTOR • Bagged cement reached pre-pandemic levels • Q4 activity remained weak • Year-on-year shipment declines • Cement demand fluctuates • 2021 pandemic-driven spike • Changes in mining processes • Inflation has forced consumers to allocate • Normal part of production cycl
Slide 8: Continued Progress Towards Sustainability Goals
CONTINUED PROGRESS TOWARDS SUSTAINABILITY GOALS… Reduce clinker factor and expand product range - Accelerated push towards blended cements in Q4 - Will shift to 100% Portland limestone cement (PLC) by 2024 • Trident plant fully converted in 1H 2022 • Pueblo and Rapid City plants fully converted to P
Slide 9: Carbon Disclosure Project (CDP)
Carbon Disclosure Project (CDP) Awarded GCC a "B" rating in December 2022 Environmental performance and management Recognition of environmental performance and management to address environmental impacts Further validation of progress in driving our decarbonization agenda Highest rating in GCC's his
Slide 10: SBTi Validated Targets
SBTi VALIDATED TARGETS SCOPE 1 SCOPE 2 SCOPE 3 30.7% 57% 37.5% GHG GHG GHG emissions emissions emissions from use of sold products Per-ton targets for cementitious materials reduction by 2030 (compared to 2015 base year) Verified annually by an independent reviewer, with the annual performance publi
Slide 11: GCC Technical Training Institute
Certifications tailored to GCC TECHNICAL TRAINING INSTITUTE operational requirements • Investing in employees through education programs • Partnership with The Cement Institute • Assessments for employees in all operational positions Standardize competencies and training processes for all cement pla
Slide 12: Financial Results
FINANCIAL RESULTS MAIK STRECKER, CFO
Slide 13: Consolidated Net Sales
CONSOLIDATED NET SALES +13% Q4 22 vs. Q4 21 2022 vs. 2021 1,169 Volumes Prices* Volumes Prices* 1,039 Cement +12% 329 -5% 16% 3% 12% United States 288 Mexico -2% 13% -3% 13% Concrete 290 841 258 750 United States -3% 13% 3% 4% 74 91 184 198 Mexico 10% 10% 9% 9% Q4 21 Q4 22 2021 2022 (US$ Million) Un
Slide 14: Cost of Sales and SG&A
COST OF SALES SG&A % of sales % of sales 67.9% 67.0% 68.1% 68.7% 9.9% 9.1% 8.7% 8.2% - 90 BPS + 60 BPS - 80 BPS - 50 BPS 804 707 96 90 175 194 26 26 Q4 21 Q4 22 2021 2022 Q4 21 Q4 22 2021 2022 (US$ Million) (US$ Million) 14
Slide 15: EBITDA
EBITDA EBITDA 31.4% 31.5% 32.5% 31.0% margin Committed to regaining and increasing + 10 BPS - 150 BPS our EBITDA margins +7% • Pricing strategy • Cost saving initiatives Improve our fuel mix +13% • Optimize our distribution network 338 363 Reduce freight costs • Maintain a high plant utilization 81
Slide 16: Net Financial Expenses and Net Income
NET FINANCIAL US$0.1M US$7M EXPENSES Q4 2022 Q4 2021 NET INCOME (70%) Net income as % of sales Q4 2021 30 EPS = US$.0910 11.7% + 600 BPS Q4 2022 51 EPS = US$0.1562 17.7% (US$ Million) 16
Slide 17: Share Buyback
SHARE BUYBACK 900,000 net shares during Q4 4,000,000 net shares during 2022 2.1 million shares repurchased 5.3 million shares repurchased 1.2 million shares sold 1.3 million shares sold equivalent to US$6 million equivalent to US$26 million 17
Slide 18: Cash Flow
CASH FLOW US$ million Q4 22 Q4 21 Var 2022 2021 Var EBITDA 91 81 13% 363 338 7% Interest (expense) (6) (7) -12% (5) (16) -67% Decrease (increase) in Working Capital 46 38 21% 23 8 178% Taxes (10) (1) n.m. (20) (12) 69% Prepaid expenses 2 (3) n.m. 0 0 n.m. Accruals and other accounts 1 3 -70% (27) (8
Slide 19: Cash, ROIC and Net Leverage Ratio
Reduced days in net working US$832M capital by 11 days; to 28 from 39 cash and equivalents RETURN ON INVESTED CAPITAL NET LEVERAGE RATIO 15.2% Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 13.1% Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 12.4% 9.6% 10.0% 9.0% -0.44x -0.43x -0.44x 8.1% 7.0% -0.69x 5.8% -0.95x 2014 2015 2016 2017
Slide 20: Capital Allocation
CAPITAL ALLOCATION Fitch Ratings • Committed to delivering strong stakeholder value • Invest in the future growth of our business affirmed GCC’s credit rating at ORGANIC GROWTH BBB- • Samalayuca debottlenecking & expansion project • Odessa plant expansion while revising the outlook to • Increase pro
Slide 21: The Year Ahead
CHALLENGES AND OPPORTUNITIES IN THE CHANGING ENVIRONMENT • Demonstrated ability to respond and adapt THE YEAR AHEAD • Single-family homebuilding numbers have declined • Companies will continue to build out their backlog • New starts down year-on-year • Permits have plunged due to high borrowing cost
Slide 22: U.S. Projects
U.S. PROJECTS INFLATION REDUCTION ACT (IRA) • More funding available than projects under construction • Incentives reduce renewable energy costs • Construction work at Denver Airport • Booked two wind farm projects in South Dakota • Significant demand in South Dakota: • Completion expected in H2 202
Slide 23: U.S. Projects
U.S. PROJECTS PUBLIC WORKS • States and DOTs preparing for funding and holding off on projects • Anticipated a potential slowdown in other Strong signs for 2023 infrastructure projects market segments • Deepened focus on infrastructure projects bidding in 2022 No updates on the Infrastructure Invest
Slide 24: Guidance
United States Consolidated Volumes EBITDA growth High-single to low-double digit Cement Low-single digit FCF Conversion Rate > 60% 2023 Prices Concrete Total CapEx US$290M GUIDANCE Cement Strategic & growth US$220M Mid- to high-single digit Maintenance US$70M Concrete Mexico Net Debt/EBITDA year-end
Slide 25: Questions
QUESTIONS CONTACT: Maik Strecker, Chief Financial and Planning Officer mstrecker@gcc.com WWW.GCC.COM Sahory Ogushi, Head of Investor Relations soguship@gcc.com +52 (614) 442 3176 + 1 (303) 739 5943 2 5
Slide 26: Appendix
APPENDIX &}scc
Slide 27: Income Statement
INCOME STATEMENT US$ million Q4 22 Q4 21 Var 2022 2021 Var Net sales 289.7 257.9 12.3% 1,169.5 1,038.8 12.6% Cost of sales 194.0 175.0 10.8% 803.8 707.5 13.6% SG&A 26.4 25.6 3.1% 96.1 90.2 6.5% Other expenses, net 0.2 8.9 -97.8% 0.7 9.5 -92.9% Operating income 69.1 48.4 42.9% 268.8 231.6 16.1% Opera
Slide 28: Balance Sheet
BALANCE SHEET December 2022 December 2021 Variation Total assets 2,457.5 2,222.6 10.6% Current assets 1,121.2 953.9 17.5% Cash and equivalents 832.1 683.0 21.8% Other current assets 289.1 270.9 6.7% Non-current assets 1,336.6 1,268.7 5.3% Plant, property and equipment 1,002.3 934.1 7.3% Goodwill and