Gcc Sab De Cv · BMV:GCC
Gcc Sab De Cv — Q2 2024 Earnings Presentation
25 slides from Gcc Sab De Cv's earnings presentation, Jul 24, 2024
Slide 1: Q2 2024 Earnings Conference Call
Q2 2024 EARNINGS CONFERENCE CALL ENRIQUE ESCALANTE, CEO MAIK STRECKER, CFO JULY 24, 2024
Slide 2: Safe Harbor Statement
This presentation has been prepared by GCC, S.A.B. de C.V. (together with other results to be materially different from the results expressed or its subsidiaries, “GCC”). Nothing within this presentation is intended to be implied by said projections. taken by any person as investment advice, a recom
Slide 3: Highlights
HIGHLIGHTS 1% Sales Dynamic and complex 37.1% demand environment EBITDA margin 0.9% EBITDA Continued cost discipline throughout the organization 3
Slide 4: People
PEOPLE Strengthen safety through GCC’s Safety Strategy 14% YoY decrease in LTM recordable injuries H1 2024 Increased team participation in GCC’s Serious Injury and Fatality Prevention System Improved focus on exposure control Second phase of the safety leadership training program Q2 2024 Increase aw
Slide 5: Profit
PROFIT Target Flexible fuel strategy • Focused on overall margin management and power contracts 36% as levers for cost • Focused on proactive cost management containment EBITDA margin • Monitor business progress and by 2025 recalibrate as the year unfolds GCC’s competitive advantage of quickly pivot
Slide 6: Planet
Progress in GCC’s first pilot solar blended cement project in the U.S. at production and the Trident plant 22% of the plant’s PLANET commercialization required electricity To be completed Increased in H2 2024 alternative fuels Analyzing scalability of substitution smaller-scope projects capacity 6
Slide 7: Planet: Integrated Report and emissions reduction
PLANET Inaugural report Highlights: published in May • Financial success • Meaningful progress on ESG initiatives 2023 Significant • GCC’s alignment to international standards INTEGRATED milestone in GCC’s sustainability REPORT journey Progress towards 2.5% YTD 2030 reduction CO2 gross emissions tar
Slide 8: U.S. Overview
U.S. OVERVIEW • Interest rate environment • Construction cost inflation 70% • Pressured demand for residential and light-commercial of sales projects industry-wide • Adverse weather in northern region Q2 24 vs. Q2 23 H1 24 vs. H1 23 Volumes Prices Volumes Prices Cement -7.1% 5.3% -1.3% 5.4% Concrete
Slide 9: U.S. Overview
U.S. OVERVIEW PCA preliminary data Progress on infrastructure projects YTD 3% decrease in U.S. cement consumption due to: • Denver airport • Warehouse market saturation • Next phase of El Paso I-10 • Slowing commercial real estate • Paving project in Texas • High mortgage rates • Restart of SunZia W
Slide 10: U.S. Overview
U.S. OVERVIEW Oil and gas • Cement demand remains strong • Offsetting volume shortages in other segments in Q2 • US$15 per ston price increase effective July 1 Infrastructure Investment and Jobs Act (IIJA) • Infrastructure demand remains consistent with normal levels • No significant increase as the
Slide 11: Mexico Overview
MEXICO OVERVIEW 30% of sales • Favorable fuel and power costs • Solid margins in Q2 • Demand influenced by Mexico elections • Deceleration in industrial projects • Continued power supply constraints • Ongoing construction of Terranova power Q2 24 vs. Q2 23 H1 24 vs. H1 23 substation in Juarez Volume
Slide 12: Continued cost efficiency measures and commercial strategy
Continued cost efficiency measures and commercial strategy Strong bottom-line results for for the first half of the year 12
Slide 13: Financial Results
FINANCIAL RESULTS MAIK STRECKER, CFO
Slide 14: Consolidated Net Sales
CONSOLIDATED NET SALES +4.1% Q2 24 vs. Q2 23 H1 24 vs. H1 23 633 Volumes Prices* Volumes Prices* 608 -1.0% Cement 207 206 United States -7.1% 5.3% -1.3% 5.4% 364 360 Mexico -7.1% 2.5% -8.3% 3.6% 111 108 Concrete 402 426 United States -14.3% 8.1% -8.6% 8.4% 253 253 Mexico -12.4% 6.4% -13.4% 7.4% Q2 2
Slide 15: Cost of Sales
COST OF SALES % of sales 62.0% 60.9% 66.1% 63.5% • Decreased fuel and production costs -110 BPS - 260 BPS • Absence of Samalayuca debottlenecking costs • Higher maintenance expenses 402 402 226 220 Q2 23 Q2 24 H1 23 H1 24 (US$ Million) 15
Slide 16: SG&A and EBITDA
SG&A EBITDA % of sales EBITDA margin 8.0% 8.7% 9.4% 10.1% 36.4% 37.1% 32.2% 34.2% + 70 BPS + 70 BPS + 70 BPS + 200 BPS +10.8% 0.9% 217 64 196 57 133 134 29 32 Q2 23 Q2 24 H1 23 H1 24 Q2 23 Q2 24 H1 23 H1 24 (US$ Million) (US$ Million) 16
Slide 17: Net Financial Income and Net Income
NET FINANCIAL US$15.2M US$4.5M INCOME Q2 2024 Q2 2023 NET INCOME Net income as % of sales Q2 23 82 EPS = US$0.2513 22.6% + 2.3 PPT Q2 24 90 EPS = US$0.2738 24.9% (US$ Million) H1 23 115 EPS = US$0.3499 18.8% + 3.0 PPT H1 24 139 EPS = US$0.4235 21.9% (US$ Million) 17
Slide 18: Cash Flow
CASH FLOW US$ million Q2 24 Q2 23 Var H1 24 H1 23 Var EBITDA 133.9 132.7 0.9% 216.8 195.7 10.8% Interest income (Expense) 7.1 3.7 90.6% 24.3 15.5 56.8% Decrease (Increase) in Working Capital (61.5) (66.0) -6.7% (75.9) (85.6) -11.4% Taxes (26.4) (32.7) -19.4% (31.6) (33.4) -5.3% Prepaid expenses 3.0
Slide 19: Dividend, Cash and Net Leverage Ratio
$1.5369 pesos per share NET LEVERAGE RATIO dividend paid on May 22 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 -0.69x US$879M -0.82x -0.99x -0.99x -0.78x cash and equivalents 19
Slide 20: Capital Allocation
CAPITAL ALLOCATION 2024 PRIORITIES 2024 PROGRESS • Focusing on general maintenance and • Executing on Odessa’s plant expansion reinvesting in GCC’s plants • Progress on sustainability focused projects: • Optimizing the distribution network • Expanding GCC’s carbon capture • Directing CapEx toward su
Slide 21: M&A
• Discussions with potential targets within the cement sector • Continue to identify potential targets in the aggregates sector • Aggregates-led companies with substantial reserves M&A • Companies located within GCC’s footprint • Scalable and connectable with other potential targets or existing faci
Slide 22: Questions
QUESTIONS CONTACT: Maik Strecker, Chief Financial and Planning Officer mstrecker@gcc.com WWW.GCC.COM Sahory Ogushi, Head of Investor Relations soguship@gcc.com +52 (614) 442 3176 + 1 (303) 739 5943 2 2
Slide 23: Appendix
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Slide 24: Income Statement
INCOME STATEMENT US$ million Q2 24 Q2 23 Var H1 24 H1 23 Var Net sales 360.3 364.1 -1.0% 633.2 608.0 4.1% Cost of sales 219.5 225.9 -2.8% 401.8 401.9 0.0% SG&A 31.5 29.1 8.1% 63.7 56.9 11.9% Other expenses, net 2.3 1.9 22.1% 4.0 2.2 86.1% Operating income 107.0 107.1 -0.2% 163.7 147.0 11.3% Operatin
Slide 25: Balance Sheet
BALANCE SHEET June 2024 June 2023 Variation Total assets 2,849.6 2,583.6 10.3% Current assets 1,301.9 1,167.9 11.5% Cash and equivalents 879.4 770.3 14.2% Other current assets 422.5 397.6 6.3% Non-current assets 1,547.7 1,415.7 9.3% Plant, property, and equipment 1,221.3 1,090.0 12.0% Goodwill and i