Gcc Sab De Cv · BMV:GCC
Gcc Sab De Cv — Q3 2023 Earnings Presentation
32 slides from Gcc Sab De Cv's earnings presentation, Oct 25, 2023
Slide 1: Q3 2023 Earnings Conference Call
Q3 2023 EARNINGS CONFERENCE CALL ENRIQUE ESCALANTE, CEO MAIK STRECKER, CFO OCTOBER 25, 2023
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 Double-digit topline growth for 10th consecutive quarters US$1B in accumulated sales Successful pricing strategy, unwavering focus on client service and strong client relationships 3
Slide 4: 2025 Vision
GCC’s team continues to 2025 VISION navigate market conditions Continued traction on To be the best cement company to strengthen margins measures to improve in North America with the proper operational efficiency balance of people, profit and the planet 38% Strong execution on EBITDA margin cost opt
Slide 5: People: Safety Is Central to Operations
SAFETY IS CENTRAL TO OPERATIONS • GCC was recognized as industry leaders • PCA Safety Innovation Award PEOPLE • 2023 Chairman’s Safety Performance Award • Underscore GCC’s industry best practices and commitment to safety • Lack of reportable injuries and illnesses at the plants 5
Slide 6: Safety Strategy Plan
SAFETY STRATEGY PLAN Commitment to continued improvement and ongoing evaluation Trained 450+ supervisors and managers Prioritizing investments in responsible and safe operations Furthered the Serious Injury & Fatality Prevention System with additional controls to reduce the probability of serious in
Slide 7: GCC Cement Training Institute and Leadership Program
GCC CEMENT TRAINING INSTITUTE • Strengthen the workforce’s technical skills • Training employees through 14 high-priority training programs • Dedicated 7,700+ hours training 350+ employees • Strong favorable feedback from employees enrolled GCC LEADERSHIP PROGRAM • Investing in GCC’s next generation
Slide 8: Great Place to Work
• Initiated the annual survey • Identify potential areas for improvement GCC’s proprietary programs GREAT PLACE • Goal: high level of retention of talent prove to be invaluable and TO WORK • GCC benefits from: an important differentiator • Very stable workforce • Low turnover levels • No labor press
Slide 9: Profit
PROFIT Completed the new terminal north of Minneapolis COMPREHENSIVE MAINTENANCE AT THE CHIHUAHUA PLANT • Update key components of the cement mill, preheater and kiln • Enhance operational stability • Increase efficiencies and a more robust pyro processing system Strengthens GCC’s position in the •
Slide 10: Fuel Costs
FUEL COSTS • Fuel prices remained stable during Q3 Natural gas hedge for • Continue leveraging GCC’s flexible fuel strategy the Odessa plant • Switch fuels at the operations • Take advantage of economic opportunities and the alternative fuels market • Important driver of margin improvement A base fo
Slide 11: Planet: Alternative Fuels
On schedule to achieve 2023 CO2 reduction commitments Switching to natural gas further enables us to deliver on plan PLANET ALTERNATIVE FUELS • The Pueblo plant is burning ∼23% alternative fuels, the most significant steady increase of all plants to date • Working on Rapid City sourcing by assessing
Slide 12: United States Pricing
UNITED STATES SECOND PRICE INCREASE Effective July 1 US$8 per ston 2024 Construction cement PRICING Construction cement US$7 per ston Effective January 1, 2024 Oil-well cement US$15 per ston Potential mid-year increase based on cost inputs and inflation 12
Slide 13: U.S. Overview
U.S. OVERVIEW • Cement demand declined during Q3, particularly in the residential segment • Building permits and starts decreased 7% compared to September 2022 • Metropolitan areas were the most impacted 72% • Oil and gas-driven cement demand remained strong of sales • Denver International Airport e
Slide 14: Strong Customer Relationships
STRONG CUSTOMER RELATIONSHIPS Outstanding customer service Proactive approach in collaborating closely Better solutions for their with customers construction projects Show the Customers have voiced their appreciation Seminars with benefits and for GCC’s response to their needs GCC’s advantages of te
Slide 15: Odessa Expansion
• Remains on schedule • Signed all contracts relevant to the critical path • Equipment arriving at the plant • Construction is underway as planned ODESSA • Working on the civil and construction aspects EXPANSION • Substantial progress in terms of site, utility preparation and foundation construction
Slide 16: Mexico Overview
MEXICO OVERVIEW • Capitalizing on the nearshoring trend 28% of sales • Industrial segment increased 17% YoY • Industrial projects under construction: • 25 in Juarez • 11 in Chihuahua • 5 multi-family projects in Juarez • To meet incremental demand, GCC received: • 11 new ready-mix trucks in Q3 Q3 23
Slide 17: Mining continued to contract
Partially offset by Mining continued to contract production increase of after ten years of sustained growth two mining customers US - MEXICO BORDER • GCC’s strategic distribution network • Flexibility to ship product from other plants • Uninterrupted customer supply Price increases are mitigating mi
Slide 18: Financial Results
FINANCIAL RESULTS MAIK STRECKER, CFO
Slide 19: Consolidated Net Sales
CONSOLIDATED NET SALES +16% Q3 23 vs. Q3 22 9M 23 vs. 9M 22 1,024 Volumes Prices* Volumes Prices* +18% 880 Cement 323 237 United States -4% 12% -8% 16% Mexico 3% 8% 6% 11% 416 353 Concrete 117 701 84 642 United States 1% 17% 5% 15% 269 299 Mexico 6% 17% 9% 14% Q3 22 Q3 23 9M 22 9M 23 (US$ Million) U
Slide 20: Cost of Sales
COST OF SALES % of sales RECORD PERFOMANCE 66.9% 59.9% 69.3% 63.6% • Lowest level in 20 years - 700 BPS - 570 BPS • Driven by: • Successful pricing strategy • Increased operating leverage • Lower fuel prices and production costs 651 610 236 249 Q3 22 Q3 23 9M 22 9M 23 (US$ Million) 20
Slide 21: SG&A and EBITDA
SG&A EBITDA % of sales EBITDA margin 6.7% 7.5% 7.9% 8.6% 33.3% 38.1% 30.9% 34.6% + 80 BPS + 70 BPS + 480 BPS + 370 BPS +31% +35% 354 88 70 271 159 31 117 24 Q3 22 Q3 23 9M 22 9M 23 Q3 22 Q3 23 9M 22 9M 23 (US$ Million) (US$ Million) 21
Slide 22: Net Financial Income and Net Income
NET FINANCIAL US$9.6M NET FINANCIAL US$0.1M INCOME Q3 2023 EXPENSES Q3 2022 NET INCOME (52%) Net income as % of sales Q3 2022 70 EPS = US$0.2111 19.7% + 5.7 PPT Q3 2023 106 EPS = US$0.3238 25.4% (US$ Million) 22
Slide 23: Share Buyback
SHARE BUYBACK 73,000 net shares during Q3 1,780,000 net shares during 2023 2.4 million shares repurchased 6.7 million shares repurchased 2.4 million shares sold 4.9 million shares sold equivalent to US$0.6 million equivalent to US$14 million 23
Slide 24: Cash Flow
CASH FLOW US$ million Q3 23 Q3 22 Var 9M 23 9M 22 Var EBITDA 159 117 35% 354 271 31% Interest (Expense) 15 6 165% 31 1 n.m. (Increase) Decrease in Working Capital (13) 8 n.m. (93) (22) 317% Taxes (25) (2) n.m. (59) (10) 473% Prepaid expenses (2) (5) -61% 2 (1) n.m. Accruals and other accounts 7 0 n.
Slide 25: Cash, Debt and Net Leverage Ratio
US$857M cash and equivalents NET LEVERAGE RATIO Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 -0.69x -0.69x US$500M -0.82x -0.86x -0.93x total debt 25
Slide 26: Capital Allocation
US$149 million • US$54 million for Odessa expansion Maintenance and growth • US$30 million for Samalayuca debottlenecking capital investments CAPITAL ALLOCATION Last 12 months US$45 million • US$25 million in dividends Return to shareholders • US$20 million for share repurchases 26
Slide 27: Inorganic Growth
Continue to actively pursue value creating initiatives through acquisitions US cement assets that could be plugged into GCC’s network INORGANIC GROWTH Aligned with the long-term strategic vision BROADENED M&A CRITERIA Explore aggregate businesses within GCC’s footprint and in other regions within th
Slide 28: GCC remains steadfast in the pursuit of strategic objectives
GCC remains steadfast in the pursuit of strategic objectives GCC will continue to innovate and adapt, driving the business forward 28
Slide 29: Questions
QUESTIONS CONTACT: Maik Strecker, Chief Financial and Planning Officer mstrecker@gcc.com WWW.GCC.COM Sahory Ogushi, Head of Investor Relations soguship@gcc.com +52 (614) 442 3176 + 1 (303) 739 5943 2 9
Slide 30: Appendix
APPENDIX ccc
Slide 31: Income Statement
INCOME STATEMENT US$ million Q3 23 Q3 22 Var 9M 23 9M 22 Var Net sales 416.1 352.8 17.9% 1,024.1 879.8 16.4% Cost of sales 249.4 236.0 5.7% 651.3 609.9 6.8% SG&A 31.2 23.6 32.3% 88.1 69.7 26.4% Other expenses, net 2.2 0.2 n.m. 4.3 0.5 795.9% Operating income 133.3 93.0 43.4% 280.4 199.7 40.4% Operat
Slide 32: Balance Sheet
BALANCE SHEET September 2023 September 2022 Variation Total assets 2,657.9 2,372.1 12.0% Current assets 1,226.8 1,064.5 15.2% Cash and equivalents 857.3 732.0 17.1% Other current assets 369.5 332.5 11.1% Non-current assets 1,431.1 1,307.6 9.4% Plant, property and equipment 1,098.6 971.2 13.1% Goodwi