Gcc Sab De Cv · BMV:GCC
Gcc Sab De Cv — Q2 2021 Earnings Presentation
23 slides from Gcc Sab De Cv's earnings presentation, Jul 28, 2021
Slide 1: Q2 2021 Earnings Conference Call
Q2 2021 EARNINGS CONFERENCE CALL ENRIQUE ESCALANTE, CEO LUIS CARLOS ARIAS, CFO JULY 28, 2021
Slide 2: Safe Harbor Statement
This presentation has been prepared by Grupo Cementos de Chihuahua, securities, exchange rates, interest rates, inflation, foreign trade S.A.B. de C.V. (together with its subsidiaries, “GCC”). Nothing in this restrictions, and market conditions, which may cause the actual financial presentation is i
Slide 3: Highlights
HIGHLIGHTS • Economic growth and recovery • Positive momentum in our industry • Construction activity expected to remain robust • High and pent-up demand of our products An excellent first half of the year, with a sound beginning to the U.S. • Substantial backlog construction season • Cement demand
Slide 4: U.S. Overview
Q2 21 vs. Q2 20 H1 21 vs. H1 20 Volumes Prices Volumes Prices U.S. OVERVIEW Cement 11% 8% 3% 6% Concrete -17% 6% -21% 6% • U.S. market remains very strong • Sales grew 10% • Performance and market conditions better than expected • Shipping at strong levels • Labor shortages continue to influence the
Slide 5: Capital Allocation
CAPITAL ALLOCATION Decided to invest in strategic CapEx to add cement capacity 1 Upgrade and expand one cement plant • Analysis and recommendation was presented to the Board • New ~1.1 mmt calcination line US$450M – US$500M • Final decision will be informed in the coming months Next three years 2 Lo
Slide 6: U.S. Overview: Pricing and Infrastructure
PRICING • Strong cost inflation pressures • Second price increase - US$6/s ton effective in August U.S. OVERVIEW • Cautiously optimistic that market conditions will continue to tighten up INFRASTRUCTURE • Upside in the short and midterm • Projects running at a steady pace with more in the pipeline •
Slide 7: Residential, Non-Residential and Oil-Well Cement
RESIDENTIAL NON-RESIDENTIAL & COMMERCIAL • Strong cement consumption result of • Mixed demand again • Imbalance of housing supply and demand • Some projects were helped by the pandemic while others remain on hold • Low interest rates • Favorable demographics OIL-WELL CEMENT • Negative demand-supply
Slide 8: Mexico Overview
Q2 21 vs. Q2 20 H1 21 vs. H1 20 MEXICO Volumes Prices Volumes Prices OVERVIEW Cement 17% - 12% - Concrete 41% 7% 23% 5% • Strong results, high-volume growth • Easier comparisons • Customers remained closed in Q2 2020 • Market dynamics remain similar to Q1 • Industrial maquiladora plants • Mining pro
Slide 9: Sustainability
SUSTAINABILITY • Reduce net CO2 emissions by 22% by 2030 supported by the SBTi • Industry ambition for carbon neutral concrete by 2050 • Organizational changes • Created a department for our alternative fuels' strategy and sourcing • Added a Corporate Vicepresident of Sustainability and Environmenta
Slide 10: Embracing our part of the challenge to build a more sustainable planet
• Pueblo and Rapid City plants earned EPA’s ENERGY STAR® certification • Great Place to Work designation Embracing our part of the challenge to build a more • Second time in the U.S. sustainable planet • Increased ranking in Mexico to 7th and 3rd in time of crisis • Formed a Diversity and Inclusion
Slide 11: Financial Results
FINANCIAL RESULTS LUIS CARLOS ARIAS, CFO
Slide 12: Consolidated Net Sales
CONSOLIDATED NET SALES +10% Q2 21 vs. Q2 20 H1 21 vs. H1 20 424 Volumes Prices* Volumes Prices* 465 +18% Cement 142 113 United States 11% 8% 3% 6% 243 287 Mexico 17% 0% 11% 0% 76 52 Concrete 311 323 211 United States -17% 6% -21% 6% 191 Mexico 41% 7% 23% 5% Q2 20 Q2 21 H1 20 H1 21 (US$ Million) Unit
Slide 13: Cost of Sales and SG&A
COST OF SALES SG&A % of sales % of sales 68.4% 67.2% 71.9% 70.0% 7.6% 7.2% 9.5% 8.8% - 120 BPS - 190 BPS - 40 BPS - 70 BPS 326 40 41 305 193 166 21 18 Q2 20 Q2 21 H1 20 H1 21 Q2 20 Q2 21 H1 20 H1 21 (US$ Million) (US$ Million) 13
Slide 14: EBITDA
EBITDA EBITDA 30.0% 33.7% 33.8% 31.5% margin + 10 BPS + 150 BPS • Control cost of sales and SG&A +15% • Compensate for US$14 million of cost and expenses saved in 2020 +19% • Focus on increasing profitability 147 127 97 82 Q2 20 Q2 21 H1 20 H1 21 (US$ Million) 14
Slide 15: Net Financial Expenses and Net Income
NET FINANCIAL US$10M EXPENSES Q2 2021 NET INCOME (44%) Net income as % of sales Q2 2020 33 EPS = US$0.1001 13.7% + 300 BPS 48 16.6% Q2 2021 EPS = US$0.1439 (US$ Million) 15
Slide 16: Cash Flow
CASH FLOW US$ million Q2 21 Q2 20 Var H1 21 H1 20 Var EBITDA 97 82 19% 147 127 15% Interest (Expense) (7) (9) -14% (9) (11) -22% (Increase) Decrease in Working Capital (27) (26) 3% (35) (37) -6% Taxes (8) (9) -6% (10) (12) -20% Prepaid expenses 1 2 -52% 4 4 8% Accruals and other accounts 4 6 -36% (1
Slide 17: Balance Sheet Net Leverage Ratio
BALANCE SHEET NET LEVERAGE RATIO • Reduced working capital days from 69 to 57 0.96x • Cash and equivalents totaled US$593M 0.61x On track to achieve a negative net leverage before year-end 0.24x 0.22x 0.06x Leverage and debt ratios better Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 than industry averages 17
Slide 18: Capital Allocation
CAPITAL ALLOCATION • Market trends remain positive • Some regions already reaching capacity If we do not find an • Balance sheet ready for growth appropriate asset that • Actively looking for inorganic growth opportunities fits our criteria, we will pay down debt • In addition to the projects alread
Slide 19: 2021 Guidance
2021 GUIDANCE United States Consolidated Volumes EBITDA growth 8% - 13% Cement 4% - 6% Concrete (15%) - (20%) FCF Conversion Rate > 60% Prices Total CapEx US$75M Cement 6% - 7% Concrete 4% - 5% Maintenance US$60M Mexico 2020 carry over US$15M Volumes Cement 4% - 6% Net Debt/EBITDA Negative Year end
Slide 20: Questions
QUESTIONS CONTACT: Luis Carlos Arias, Chief Financial Officer larias@gcc.com WWW.GCC.COM Ricardo Martinez, Head of Investor Relations rmartinezg@gcc.com +52 (614) 442 3176 + 1 (303) 739 5943 2 0
Slide 21: Appendix
APPENDIX cc
Slide 22: Income Statement
INCOME STATEMENT US$ million Q2 21 Q2 20 Var H1 21 H1 20 Var Net sales 286.7 242.8 18.1% 465.5 424.2 9.7% Cost of sales 192.8 166.0 16.1% 325.8 305.1 6.8% SG&A 20.7 18.4 12.5% 40.9 40.1 2.0% Other expenses, net 0.4 4.8 -90.7% 0.5 5.0 -90.6% Operating income 72.8 53.5 36.0% 98.2 73.9 32.9% Operating
Slide 23: Balance Sheet
BALANCE SHEET US$ million June 2021 June 2020 Var Total assets 2,200.6 2,067.2 6.5% Current assets 905.6 739.8 22.4% Cash and equivalents 592.9 422.3 40.4% Other current assets 312.6 317.5 -1.5% Non-current assets 1,295.1 1,327.4 -2.4% Plant, property & equipment 944.8 949.4 -0.5% Goodwill and intan
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