Gcc Sab De Cv · BMV:GCC
Gcc Sab De Cv — Q3 2022 Earnings Presentation
27 slides from Gcc Sab De Cv's earnings presentation, Oct 26, 2022
Slide 1: Q3 2022 Earnings Conference Call
Q3 2022 EARNINGS CONFERENCE CALL ENRIQUE ESCALANTE, CEO LUIS CARLOS ARIAS, CFO OCTOBER 26, 2022
Slide 2: Safe Harbor Statement
This presentation has been prepared by GCC, S.A.B. de C.V. (together with and other results to be materially different from the results expressed or its subsidiaries, “GCC”). Nothing within this presentation is intended to be implied by such projections. taken by any person as investment advice, a r
Slide 3: Highlights
HIGHLIGHTS Producing as quickly and consistently as possible • Strong Q3 and 9M performance • Noteworthy as this compares to considerable growth delivered in 2021 • Extremely tight supply-demand balance continues in the U.S. cement market Logistics headwinds continue • Demand is pushing supply to it
Slide 4: Pricing
PRICING Third price increase: Mitigate the impacts of Accepted in all our markets Construction cement today's extraordinary US$6 per ston inflation Effective October 1 Construction cement and oil well cement 2023 potential increase in PRICING US$12 per ston mid-year Effective January 1 4
Slide 5: U.S. Overview
U.S. OVERVIEW Sales increased 10% during Q3 Q3 22 vs. Q3 21 9M 22 vs. 9M 21 76% Volumes Prices Volumes Prices of sales Cement 2% 12% 5% 11% Concrete 8% 4% 5% 2% 5
Slide 6: Residential
Growth driver in the last two years RESIDENTIAL Residential growth rates have Solid backlog not diminished to date for 2022 Residential segment Expect oil well cement and industrial PCA forecasts a 13% represents only manufacturing demand to partially offset decrease in 2023 27% homebuilding constru
Slide 7: U.S. Overview: Infrastructure Investment and Jobs Act
INFRASTRUCTURE INVESTMENT AND JOBS ACT • No recent relevant updates U.S. OVERVIEW • States and DOTs are preparing for funding • Projects are running at a steady but slower pace • Expect to have more visibility in Q4 2023 • Timing remains on schedule • PCA has softened the impact, but not the timing
Slide 8: Oil Well Cement
Capacity expansion in Odessa, TX New production line OIL WELL and investments in Drove volume CEMENT increase in Q3 logistics +1 million metric Flexibility to switch to tons construction cement 8
Slide 9: Mexico Overview
MEXICO OVERVIEW • Strong industrial real estate construction in Juarez • Bagged cement 24% • Unfavorable comparison of sales • Q3 2021 spike due to pandemic DIY projects • Reached pre-pandemic levels • Decreased mining sector activity • Nature of the industry • Variations in need for our products •
Slide 10: Fuel Costs
FUEL COSTS Natural gas hedge • Switch to new reserve at our coal mine 100% of • Decreased coal production during H1 2022 Odessa’s consumption • Burning natural gas and purchased third party coal in below market prices Chihuahua, Juarez and Samalayuca • Taking longer than expected • Began using coal
Slide 11: Renewable Energy
RENEWABLE ENERGY ODESSA RAPID CITY TRIDENT 100% 50% 75% fixed cost fixed cost fixed cost solar power wind power hydropower 11
Slide 12: Sustainability
SUSTAINABILITY 2021: GCC's first time reporting based on SASB standards GCC joined the industry’s race to zero • Reaffirmed our Science Based Target to the well below two-degree curve Senior management compensation now tied to sustainability goals • Quickly adapting to regulatory and market requirem
Slide 13: GCC is well positioned to reach its 2030 and 2050 targets
GCC is well positioned to reach its 2030 and 2050 targets PLC - Portland limestone cement Q3 2022 Pueblo plant will Rapid City began shipping PLC be converted to PLC to the Minnesota market by November Trident plant fully converted to PLC cement production All our construction cement exports from Me
Slide 14: Proud of our Q3 performance and ability to deliver year on year EBITDA growth
Proud of our Q3 performance and ability to deliver year on year EBITDA growth Focused on running the business towards profitability 14
Slide 15: Financial Results
FINANCIAL RESULTS LUIS CARLOS ARIAS, CFO
Slide 16: Consolidated Net Sales
CONSOLIDATED NET SALES +13% Q3 22 vs. Q3 21 9M 22 vs. 9M 21 880 Volumes Prices* Volumes Prices* 781 Cement +12% 237 214 United States 2% 12% 5% 11% Mexico -3% 14% -3% 13% 353 Concrete 315 84 642 72 567 United States 8% 4% 5% 2% 244 269 Mexico 2% 8% 8% 8% Q3 21 Q3 22 9M 21 9M 22 (US$ Million) United
Slide 17: Cost of Sales and SG&A
COST OF SALES SG&A % of sales % of sales 65.5% 66.9% 68.2% 69.3% 7.5% 6.7% 8.3% 7.9% + 140 BPS + 110 BPS - 80 BPS - 40 BPS 70 65 610 532 236 24 24 207 Q3 21 Q3 22 9M 21 9M 22 Q3 21 Q3 22 9M 21 9M 22 (US$ Million) (US$ Million) 17
Slide 18: EBITDA
EBITDA EBITDA 32.9% 34.9% 33.3% 30.9% margin - 160 BPS - 200 BPS +6% +7% 257 271 110 117 Q3 21 Q3 22 9M 21 9M 22 (US$ Million) 18
Slide 19: Net Financial Expenses and Net Income
NET FINANCIAL US$0.1M US$5.7M EXPENSES Q3 2022 Q3 2021 NET INCOME (18%) Net income as % of sales Q3 2021 59 EPS = US$0.1771 18.6% + 110 BPS Q3 2022 70 EPS = US$0.2111 19.7% (US$ Million) 19
Slide 20: Share Buyback
SHARE BUYBACK 600,000 shares during Q3 and 3,440,000 shares during 2022 equivalent to US$3 million equivalent to US$21 million 20
Slide 21: Cash Flow
CASH FLOW US$ million Q3 22 Q3 21 Var 9M 22 9M 21 Var EBITDA 117 110 7% 271 257 6% Interest (Expense) 6 0 n.m. 1 (9) n.m. (Increase) Decrease in Working Capital 8 5 53% (22) (29) -25% Taxes (2) 0 n.m. (10) (10) 6% Prepaid expenses (5) (2) 223% (1) 2 n.m. Accruals and other accounts (1) (1) -9% (28)
Slide 22: Net Leverage Ratio
NET LEVERAGE RATIO Reduced days in net working capital by 11 days; to 43 from 54 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 -0.2x US$732M -0.4x -0.4x -0.4x cash and equivalents -0.7x 22
Slide 23: Guidance
United States Consolidated Volumes EBITDA growth High-single to double digit Cement Mid-single digit FCF Conversion Rate > 60% 2022 Prices Concrete Low- to mid-single digit Total CapEx US$140M GUIDANCE Cement Double digit Strategic & growth US$60M Maintenance US$65M Concrete Low single digit Mexico
Slide 24: Questions
QUESTIONS CONTACT: Luis Carlos Arias, Chief Financial Officer larias@gcc.com WWW.GCC.COM Sahory Ogushi, Head of Investor Relations soguship@gcc.com +52 (614) 442 3176 + 1 (303) 739 5943 2 4
Slide 25: Appendix
APPENDIX &}scc
Slide 26: Income Statement
INCOME STATEMENT US$ million Q3 22 Q3 21 Var 9M 22 9M 21 Var Net sales 352.8 315.4 11.8% 879.0 780.9 12.7% Cost of sales 236.0 206.7 14.2% 609.9 532.5 14.5% SG&A 23.6 23.6 -0.2% 69.7 64.6 7.9% Other expenses, net 0.2 0.2 15.2% 0.5 0.6 -22.5% Operating income 93.0 85.0 9.4% 199.7 183.2 9.0% Operating
Slide 27: Balance Sheet
BALANCE SHEET September 2022 September 2021 Variation Total assets 2,372.1 2,227.6 6.5% Current assets 1,064.5 944.0 12.8% Cash and equivalents 732.0 632.1 15.8% Other current assets 332.5 311.9 6.6% Non-current assets 1,307.6 1,283.5 1.9% Plant, property and equipment 971.2 937.4 3.6% Goodwill and