Slide 1: Q3 2021 Earnings Conference Call
Q3 2021 EARNINGS CONFERENCE CALL ENRIQUE ESCALANTE, CEO LUIS CARLOS ARIAS, CFO OCTOBER 27, 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 • Robust construction activity • Tight supply & demand in the U.S. cement market • Positive price environment On track to meet our full-year updated guidance • Economic growth and steady recovery • Substantial backlog materialized • Supply chain challenges, higher energy costs and labor s
Slide 4: U.S. Overview
U.S. OVERVIEW • Slow start of Q3 Q3 21 vs. Q3 20 9M 21 vs. 9M 20 • Gained traction during the second half Volumes Prices Volumes Prices • U.S. market continues to develop Cement 10% 10% 6% 8% • In line with guidance Concrete -23% 5% -22% 6% SALES +12% quarterly +7% year-to-date 4
Slide 5: U.S. Overview
WEST TEXAS • Continue to build customer loyalty in the Permian Basin • Surge in oil prices boosted demand for oil well cement U.S. OVERVIEW • Almost reached pre-pandemic levels • Volumes returned much faster than expected COLORADO • Remains very good • General economic growth • Residential activity
Slide 6: Salt Lake City, Utah; Dakotas & Iowa; Montana
SALT LAKE CITY, UTAH • Cement volumes have grown two-fold against 2020 • One of the hottest markets in the U.S. • Will build a new cement terminal to strengthen our distribution and storage capacity DAKOTAS & IOWA MONTANA • Main drivers • Sold out • Meat processing plants • To increase profitability
Slide 7: Pricing
• Robust construction activity • Our distribution network allows us to increase shipments Favorable pricing conditions • Leverage availability from the Rapid City Plant expansion and imports from Mexico Tight supply & demand dynamics PRICING • Second price increase - US$6/s ton effective in August H
Slide 8: Sustainability Strategy
SUSTAINABILITY STRATEGY Primary Goal: reduce net CO2 emissions 22% by 2030 Montana Plant will fully convert to Portland Limestone Cement (PLC) Target supported by SBTi • High-quality cement Improve combustion and energy practices • Lowers carbon footprint • Provides the strength, workability and dur
Slide 9: Implement sustainability best practices and strengthen profitability
Implement sustainability best practices and strengthen profitability Reduce GCC’s exposure to energy-price fluctuations 14% On track to increase clean energy use of GCC’s total energy consumption Increase renewable comes from renewable sources electricity consumption ODESSA PLANT 10-year 100% Effect
Slide 10: Carbon Neutrality
CARBON NEUTRALITY GCC joined an ambitious journey to Signed onto the PCA roadmap to achieve carbon neutrality across the carbon neutrality and the Global cement and concrete value chain Cement and Concrete Association Roadmaps demonstrate how the cement and concrete industry can collectively address
Slide 11: Mexico Overview
Q3 21 vs. Q3 20 9M 21 vs. 9M 20 Volumes Prices Volumes Prices Cement 1% 4% 8% 1% Concrete 18% 8% 21% 6% MEXICO • Strong results, high-volume growth in ready mix OVERVIEW • Hard comparison in cement • Bagged cement sales increased in 2020 due to quarantines and work-from-home • Chihuahua cement plant
Slide 12: Financial Results
FINANCIAL RESULTS LUIS CARLOS ARIAS, CFO
Slide 13: Consolidated Net Sales
CONSOLIDATED NET SALES +11% Q3 21 vs. Q3 20 9M 21 vs. 9M 20 781 Volumes Prices* Volumes Prices* +12% 705 Cement 214 177 United States 10% 10% 6% 8% Mexico 1% 4% 8% 1% 315 281 Concrete 72 528 567 64 United States -23% 5% -22% 6% 217 244 Mexico 18% 8% 21% 6% Q3 20 Q3 21 9M 20 9M 21 (US$ Million) Unite
Slide 14: Cost of Sales and SG&A
COST OF SALES SG&A % of sales % of sales 66.2% 65.5% 69.7% 68.2% 6.8% 7.5% 8.4% 8.3% - 70 BPS - 150 BPS + 70 BPS - 10 BPS 532 491 65 59 207 186 24 19 Q3 20 Q3 21 9M 20 9M 21 Q3 20 Q3 21 9M 20 9M 21 (US$ Million) (US$ Million) 14
Slide 15: EBITDA
EBITDA EBITDA • Inflationary environment 35.5% 34.9% 32.2% 32.9% margin • High energy costs - 60 BPS + 70 BPS • Controlling cost of sales and SG&A +13% • Compensate for US$14 million of costs and expenses saved in 2020 • Coal mine in Colorado +10% • Significant source of fuel for our plants 257 227
Slide 16: Net Financial Expenses and Net Income
NET FINANCIAL US$6M EXPENSES Q3 2021 NET INCOME (12%) Net income as % of sales Q3 2020 53 EPS = US$0.1587 18.7% - 10 BPS Q3 2021 59 EPS = US$0.1771 18.6% (US$ Million) 16
Slide 17: Cash Flow
CASH FLOW US$ million Q3 21 Q3 20 Var 9M 21 9M 20 Var EBITDA 110 100 10% 257 227 13% Interest (Expense) (0) (2) -81% (9) (13) -31% (Increase) Decrease in Working Capital 5 12 -53% (29) (26) 15% Taxes (0) (1) -95% (10) (13) -24% Prepaid expenses (2) (2) -8% 2 2 26% Accruals and other accounts (1) 10
Slide 18: Balance Sheet Ready for Growth
BALANCE SHEET READY FOR GROWTH NET LEVERAGE RATIO US$632 cash and equivalents US$56 net cash 0.6x 0.2x 0.2x Achieved our full-year guidance of 0.1x negative net leverage Q3 21 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 -0.2x Remarkable leverage and debt ratios 18
Slide 19: Organic Growth
• Positive market trends, regions reaching full capacity • Some customers in allocation, forced to pass on projects • Tight supply & demand • Flat funding in the surface transportation programs ORGANIC • Without a new infrastructure bill GROWTH Infrastructure Investment and Jobs Act • Portland Cemen
Slide 20: Preparing for a New Phase of the Industry's Cycle
PREPARING FOR A NEW PHASE OF THE INDUSTRY’S CYCLE 1 New ~1.1 mmt* cement line • Final stage of defining the project location US$450M – US$500M • New capacity coming online by 2024 Next three years 2 Debottlenecking project at Samalayuca plant • +200,000 mt** of cement per year by Q1 2023 All project
Slide 21: Inorganic Growth and 2024 US$260 million bond
INORGANIC GROWTH 2024 US$260 million bond If we don’t find an appropriate • Became callable in June asset that can be plugged into • Analyze the global bond market our connected system in the • Strengthen GCC’s balance sheet near future, we will pay down debt in the first half of 2022 • Lower the co
Slide 22: GCC is well positioned to take advantage of the positive momentum
• Pleased with the results despite cost pressures and supply chain challenges • In line with full-year guidance • Achieved net debt/EBITDA target • Expect robust performance to continue in Q4 • Assuming favorable weather conditions remain • Our cement business looks promising across the board • The
Slide 23: Questions
QUESTIONS CONTACT: Luis Carlos Arias, Chief Financial Officer larias@gcc.com WWW.GCC.COM Ricardo Martinez, Head of Investor Relations rmartinezg@gcc.com +52 (614) 442 3176 + 1 (303) 739 5943 2 3
Slide 24: Appendix
APPENDIX &}scc
Slide 25: Income Statement
INCOME STATEMENT US$ million Q3 21 Q3 20 Var 9M 21 9M 20 Var Net sales 315.4 281.1 12.2% 780.9 705.3 10.7% Cost of sales 206.7 186.2 11.0% 532.5 491.3 8.4% SG&A 23.6 19.2 23.0% 64.6 59.4 8.8% Other expenses, net 0.2 6.5 -99.7% 0.6 11.5 -94.6% Operating income 85.0 69.2 22.8% 183.2 143.1 28.0% Operat
Slide 26: Balance Sheet
BALANCE SHEET US$ million September 2021 September 2020 Var Total assets 2,227.6 2,126.0 4.8% Current assets 944.0 817.5 15.5% Cash and equivalents 632.1 510.9 23.7% Other current assets 311.9 306.5 1.7% Non-current assets 1,283.5 1,308.6 -1.9% Plant, property & equipment 937.4 941.2 -0.4% Goodwill