Gcc Sab De Cv · BMV:GCC
Gcc Sab De Cv — Q1 2022 Earnings Presentation
23 slides from Gcc Sab De Cv's earnings presentation, Apr 27, 2022
Slide 1: Q1 2022 Earnings Conference Call
Q1 2022 EARNINGS CONFERENCE CALL ENRIQUE ESCALANTE, CEO LUIS CARLOS ARIAS, CFO APRIL 27, 2022
Slide 2: Safe Harbor Statement
This presentation has been prepared by GCC, S.A.B. de C.V. (together with securities, exchange rates, interest rates, inflation, foreign trade its subsidiaries, “GCC”). Nothing in this presentation is intended to be restrictions, and market conditions, which may cause the actual financial taken by a
Slide 3: Highlights
HIGHLIGHTS • Excellent start • Encouraging market trends Vertical integration of our raw • Results above expectations, despite challenges faced materials and coal lowers costs and reduces fuel price volatility • High inflation levels • Interest rate hikes • Supply chain & labor shortages • Continuin
Slide 4: U.S. Overview
U.S. OVERVIEW Q1 22 vs. Q1 21 • Better than expected performance Volumes Prices and market conditions Cement 10% 10% • Sales increased 21% Concrete 16% 1% • Operations teams’ efforts increased inventory • Plants planned outages for maintenance to ensure consistent production levels • Preparation for
Slide 5: U.S. Overview: Infrastructure
INFRASTRUCTURE • Projects running at a steady, but lower, pace U.S. OVERVIEW • States and DOTs preparing for additional funding from the U.S. Infrastructure Investment and Jobs Act • More selective in supplying these projects • Switching shipments to more profitable segments • Upside in the mid-term
Slide 6: Residential, Non-Residential and Commercial, Oil Well Cement
RESIDENTIAL • Hike in interest rates will slow down the housing market • More emphasis in 2023 • Demand remains strong • Buyer demand surpassing housing inventories NON-RESIDENTIAL AND COMMERCIAL OIL WELL CEMENT • Main drivers • Oil price increases • Distribution centers • Strong drilling activity •
Slide 7: Pricing
PRICING • Price increases have been well received by customers • Cement prices rose 10% in the quarter Construction cement • Cost inflation pressures and market conditions 6% - 8% per ston effective January 1 • Second price increase of US$8 per short ton in construction cement • Effective July 1 • O
Slide 8: Improve EBITDA margins in a high-inflation environment
Improve EBITDA margins in a high-inflation environment Implement cost savings and higher efficiencies in fuel mix Increase usage of alternative fuels Continue to optimize the distribution network Maintain a high plant utilization to improve fix cost absorption 8
Slide 9: Mexico Overview
MEXICO • Double-digit price increase in Mexico effective January 2022 OVERVIEW • Motivated customers to build up inventory at year’s end • Bagged cement volumes were affected • High demand driven by: • Industrial warehouse construction • Commercial and housing projects Q1 22 vs. Q1 21 • Strong minin
Slide 10: Financial Results
FINANCIAL RESULTS LUIS CARLOS ARIAS, CFO
Slide 11: Consolidated Net Sales
CONSOLIDATED NET SALES +16% Q1 22 vs. Q1 21 207 Volumes Prices* Cement 179 71 United States 10% 10% 66 Mexico -5% 12% Concrete 135 112 United States 16% 1% Mexico 9% 8% Q1 21 Q1 22 (US$ Million) United States Mexico * Prices in local currency 11
Slide 12: Cost of Sales and SG&A
COST OF SALES SG&A % of sales % of sales 74.6% 73.9% 11.1% 10/9% - 70 BPS - 20 BPS 153 133 23 20 Q1 21 Q1 22 Q1 21 Q1 22 (US$ Million) (US$ Million) 12
Slide 13: EBITDA
EBITDA 27.7% 26.4% margin - 130 BPS +10% EBITDA Lower depreciation and amortization as a percentage of sales 55 50 Q1 21 Q1 22 (US$ Million) 13
Slide 14: Net Financial Expenses and Net Income
NET FINANCIAL US$14.2M Prepayment of 2024 notes EXPENSES Q1 2022 and bank debt NET INCOME (14%) Net income as % of sales Q1 2021 15 EPS = US$0.0463 8.6% - 230 BPS Q1 2022 13 EPS = US$0.0396 6.3% (US$ Million) 14
Slide 15: Cash Flow
CASH FLOW US$ million Q1 22 Q1 21 Var EBITDA 55 49 10% Interest (Expense) (7) (1) 500% (Increase) Decrease in Working Capital (9) (8) 15% Taxes (0.3) (1) -79% Prepaid expenses 2 3 -18% Accruals and other accounts (26) (15) 77% Operating Leases (IFRS 16 effect) (4) (5) -13% Operating Cash Flow 11 23
Slide 16: US$640M Cash and Net Leverage Ratio
NET LEVERAGE RATIO Reduced days in net working capital from 49 to 41 (8 days) 0.2x 0.1x Q3 21 Q4 21 Q1 22 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 US$640M -0.2x cash and equivalents -0.4x -0.4x 16
Slide 17: Organic Growth and Dividend Payment
Increase cement capacity ORGANIC GROWTH • 1.3 million metric tons ~ US$500M • 20% above current capacity Next 3 years Working closely with technology and equipment developers DIVIDEND $1.1621 Payment date 15% PAYMENT Mexican pesos May 17 increase per share 17
Slide 18: GCC Shares
GCC SHARES The stock price While we don’t manage GCC based on the share price in the short term, in the has increased long-term our share price is a measure of the progress we have made ~300% since 2014 We will reactivate our share buyback program and expect to make additional opportunistic share pu
Slide 19: 2022 Guidance
United States and Mexico Volumes Cement Low- to mid-single digit Concrete Prices Cement Mid- to high-single digit 2022 GUIDANCE Concrete Consolidated EBITDA growth High-single to double digits FCF Conversion Rate > 60% Total CapEx US$260M Strategic & growth US$180M Maintenance US$65M 2020 carry over
Slide 20: Questions
QUESTIONS CONTACT: Luis Carlos Arias, Chief Financial Officer larias@gcc.com WWW.GCC.COM Ricardo Martinez, Head of Investor Relations rmartinezg@gcc.com +52 (614) 442 3176 + 1 (303) 739 5943 2 0
Slide 21: Appendix
APPENDIX &}scc
Slide 22: Income Statement
INCOME STATEMENT US$ million Q1 22 Q1 21 Var Net sales 206.9 178.8 15.7% Cost of sales 152.9 133.4 14.6% SG&A 22.6 19.9 13.7% Other expenses, net 0.0 0.0 0.0% Operating income 31.4 25.5 23.1% Operating margin 15.2% 14.3% Net financing expenses (14.2) (5.4) 162.9% Earnings in associates 0.7 0.5 37.3%
Slide 23: Balance Sheet
BALANCE SHEET March 2022 March 2021 Var Total assets 2,203.3 2,116.6 4.1% Current assets 928.3 824.5 12.6% Cash and equivalents 640.3 556.9 15.0% Other current assets 288.0 267.6 7.6% Non-current assets 1,275.0 1,292.1 -1.3% Plant, property and equipment 940.3 943.5 -0.3% Goodwill and intangibles 27