Gcc Sab De Cv · BMV:GCC
Gcc Sab De Cv — Q1 2023 Earnings Presentation
28 slides from Gcc Sab De Cv's earnings presentation, Apr 26, 2023
Slide 1: Q1 2023 Earnings Conference Call
Q1 2023 EARNINGS CONFERENCE CALL ENRIQUE ESCALANTE, CEO MAIK STRECKER, CFO APRIL 26, 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 and 2025 Vision
HIGHLIGHTS 2025 VISION To be the best cement company • Solid first quarter results in North America with the proper balance of people, profit and the • Consistently outstanding service despite planet headwinds • Challenging operating environment • Significant weather disruptions across the U.S. • In
Slide 4: People
PEOPLE Significant non-residential construction opportunity driven by the Infrastructure Track record of anticipating Investment and Jobs Act Record demand for challenges and mitigating entry-level laborers adverse effects Deepening labor shortage GCC CEMENT TRAINING INSTITUTE Proactively investing
Slide 5: GCC Cement Training Institute
GCC Cement Training Institute Operations employees completed the required assessments Ensures well-trained Important incentive labor force can deliver 14 high-priority for new hires operational excellence training programs for +180 employees Significant competitive Finalizing 2023 annual advantage i
Slide 6: Safety Strategy Plan
SAFETY STRATEGY PLAN Completed the diagnostic phase Identified projects that will enable safety excellence Began the second phase Goal: become a World Class Safety Company through proactive identification and control of exposure to hazards Implementation: training and coaching for 400+ leaders, also
Slide 7: Profit
• Continue to see strong volume demand • Focused on improving margins: • Prudent but necessary price increases to offset continued inflationary pressure PROFIT • Operational excellence • Intentional programs and technology to optimize operational productivity • Running plants at the highest possible
Slide 8: Planet
PLANET Rapid City ramp up completed in Q1 • Now burning alternative fuels 24/7 • Combination of landfill waste streams and local forestry industry biomass Increase in alternative fuel usage at the Samalayuca plant • Debottlenecking project enables plant to increase the co-process capacity • Will eve
Slide 9: U.S. Overview
U.S. OVERVIEW • U.S. construction spending again fell in February Extreme weather • Decreased spending on residential projects Late start to season • Non-residential construction continues to strengthen; GCC anticipated this trend Volume demand remains strong • Continued construction work on Denver
Slide 10: U.S. Overview: Inflation Reduction Act
The Inflation Reduction Act (IRA) U.S. OVERVIEW • Combines a wide array of clean energy tax incentives into a single bill • Estimated US$369 billion directed towards energy security and climate change • US$6 billion in funding to speed decarbonization projects • To be implemented over the next 10 ye
Slide 11: Pricing
Second price increase: Construction cement • Achieved pricing growth across product lines US$7 per ston • Offset rising expenses, inflationary impact Effective July 1 PRICING • OPEC announced a cut in oil production • +1.6 million barrels a day starting in May • Brent crude futures and WTI up ∼6% Se
Slide 12: Record Snowfall in GCC Markets
RECORD SNOWFALL IN GCC MARKETS • Brought railcar transport to a standstill U.S. OVERVIEW • Don't expect snowmelt flooding or river flooding at terminals • Will continue to monitor spring • Monitor weather daily, anticipate and offset any potential impacts • Stage product to terminals potentially imp
Slide 13: Mexico Overview
MEXICO OVERVIEW 34% • Significantly benefit from nearshoring's impact of sales • Global companies relocating production closer to North America • This trend is still in very early stages of its potential • Cement demand for industrial manufacturing facilities and related infrastructure • Hotels and
Slide 14: Samalayuca Debottlenecking
SAMALAYUCA DEBOTTLENECKING Tie-in process and related plant shutdown Fired up the kiln and began production 9 additional trains to Shipments from the transport product Concluded in Tijeras and Pueblo plants to support April Southern network +200k US$3 million million metric tons one-time impact on U
Slide 15: Three key strategic pillars: People, Profit and Planet
Three key strategic pillars underpin GCC's 2025 vision: People, Profit and Planet We have the strategy in place to navigate GCC’s path forward 15
Slide 16: Financial Results
FINANCIAL RESULTS MAIK STRECKER, CFO
Slide 17: Consolidated Net Sales
CONSOLIDATED NET SALES +18% Q1 23 vs. Q1 22 244 Volumes Prices* Cement 207 96 United States -10% 21% 71 Mexico 11% 13% Concrete 135 148 United States 27% 6% Mexico 11% 11% Q1 22 Q1 23 (US$ Million) United States Mexico * Prices in local currency 17
Slide 18: Cost of Sales and SG&A
COST OF SALES SG&A % of sales % of sales 74.1% 72.2% 10.7% 11.4% - 190 BPS + 60 BPS 176 28 153 22 Q1 22 Q1 23 Q1 22 Q1 23 (US$ Million) (US$ Million) 18
Slide 19: EBITDA
EBITDA 26.4% 25.8% margin - 50 BPS Committed to regaining and increasing EBITDA +16% margins EBITDA Operational excellence and pricing strategy 63 enable GCC to offset the 55 impact of inflation Q1 22 Q1 23 (US$ Million) 19
Slide 20: Net Financial Income and Net Income
NET FINANCIAL US$3.7M NET FINANCIAL US$14.2M INCOME Q1 2023 EXPENSES Q1 2022 NET INCOME (146%) Net income as % of sales Q1 2022 13 EPS = US$0.0396 6.3% + 690 BPS Q1 2023 32 EPS = US$0.0988 13.3% (US$ Million) 20
Slide 21: Cash Flow
CASH FLOW US$ million Q1 23 Q1 22 Var EBITDA 63 55 16% Interest (expense) 12 (7) n.m. Decrease (increase) in working capital (21) (9) 131% Taxes (1) (0) 155% Prepaid expenses 2 2 8% Accruals and other accounts (55) (26) 110% Operating leases (IFRS 16 effect) (3) (4) -19% Operating cash flow (2) 11 n
Slide 22: Cash, Total Debt and Net Leverage Ratio
US$808M cash and equivalents NET LEVERAGE RATIO Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 -0.43x -0.44x -0.69x US$500M -0.93x -0.86x total debt 22
Slide 23: Sustainability-Linked Bond
SUSTAINABILITY-LINKED BOND The Science-Based Target initiative affirmed GCC’s 2030 GHG emissions reduction target This metric is the sustainability performance target of our bond Will be annually verified by an independent reviewer The annual performance results will be available on GCC’s website 23
Slide 24: 2023 Shareholders' Meeting: Dividend and Share Buyback
2023 SHAREHOLDERS’ MEETING DIVIDEND $1.3364 Payment date 15% PAYMENT Mexican pesos May increase per share SHARE BUYBACK PROGRAM Increase to US$75 million These Board of directors’ recommendations will be submitted to voting at our Annual Shareholders’ Meeting 24
Slide 25: Questions
QUESTIONS CONTACT: Maik Strecker, Chief Financial and Planning Officer mstrecker@gcc.com WWW.GCC.COM Sahory Ogushi, Head of Investor Relations soguship@gcc.com +52 (614) 442 3176 + 1 (303) 739 5943 2 5
Slide 26: Appendix
APPENDIX &}scc
Slide 27: Income Statement
INCOME STATEMENT US$ million Q1 23 Q1 22 Var Net sales 243.9 206.9 17.9% Cost of sales 176.0 153.3 14.8% SG&A 27.7 22.2 24.8% Other expenses, net 0.3 0.0 n.m. Operating income 39.9 31.4 27.2% Operating margin 16.4% 15.2% Net financing income (expenses) 3.7 (14.2) n.m. Earnings in associates 0.3 0.7
Slide 28: Balance Sheet
BALANCE SHEET March 2023 March 2022 Variation Total assets 2,485.1 2,203.3 12.8% Current assets 1,129.2 928.3 21.6% Cash and equivalents 807.7 640.3 26.1% Other current assets 321.5 288.0 11.7% Non-current assets 1,355.9 1,275.0 6.3% Plant, property and equipment 1,031.9 940.3 9.7% Goodwill and inta