Gcc Sab De Cv · BMV:GCC
Gcc Sab De Cv — Q2 2023 Earnings Presentation
33 slides from Gcc Sab De Cv's earnings presentation, Jul 26, 2023
Slide 1: Q2 2023 Earnings Conference Call
Q2 2023 EARNINGS CONFERENCE CALL ENRIQUE ESCALANTE, CEO MAIK STRECKER, CFO JULY 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
HIGHLIGHTS GCC team’s hard work and relentless focus • 9th consecutive quarter delivering year on year on operational excellence double-digit topline growth • Continue to capture opportunities • Benefitting from the favorable momentum in Mexico Further optimize operations Leverage close relationship
Slide 4: Highlights
• Weather-related headwinds continued • Prolonged wet spring within many markets • June 2023 was Colorado’s wettest month in recorded history HIGHLIGHTS • Exceeding Colorado’s annual rainfall • Impacted projects and slowed down shipments in some regions 4
Slide 5: U.S. Operations
U.S. OPERATIONS Decreased spending on residential projects The pandemic and post-pandemic’s uncharacteristically high demand for construction materials will be forced to moderate GCC has a demonstrated ability to quickly pivot the business to capture opportunities Ensuring year on year improvements
Slide 6: U.S. Operations: Residential Construction
RESIDENTIAL CONSTRUCTION • The decision to pivot GCC’s business away continues to prove insightful • Rising interest rates are slowing residential construction U.S. OPERATIONS • Non-residential construction spend remains strong • Construction spending data • Federal Reserve Economic data for May 202
Slide 7: Highlights
• Further strengthened the variable costs management across plants Positioning the company for • Took additional steps forward to better serve strong long-term growth, cash HIGHLIGHTS customers and deliver for stakeholders flow generation, profitability • leveraging enhanced cost controls and shareh
Slide 8: People
PEOPLE In Q2, GCC achieved the fewest Result of prioritizing and Across all sectors open positions within the last 5 years investing in the team’s labor continues to be well-being, skill-building a concern in the US and training Ensuring our team’s safety through two important strategies 8
Slide 9: Safety Strategy Plan
SAFETY STRATEGY PLAN Began the implementation phase Goal: become a World Class Safety Company through proactive identification and control of exposure to hazards Implementing safety governance practices to strengthen our communication, resource allocation and empower our employees Putting in place a
Slide 10: GCC Cement Training Institute
GCC Cement Training Institute Identify gaps within the operations Build technical Fully deployed with capacity, increase Rolled out training work plans in place professional programs tailored to each plants knowledge and accelerate careers Strength stability Programs based on a Enhanced efficiency l
Slide 11: Profit
PROFIT Volume decreased offset by price • Positive developments in U.S. volumes strength and by stable operations • Committed to pushing for maximized production and delivery efficiency • Slower first half of the year • Robust inventory at our plants and terminals Normalized rail transport strengthe
Slide 12: Profit: Flexible fuel strategy
• Flexible fuel strategy • Most plants can burn natural gas, coal and alternative fuels PROFIT • Switch between fuels when cost effective • Converted the plants in Mexico to natural gas • Benefit from favorable natural gas prices • Accelerating coal sales to third parties • Taking advantage of marke
Slide 13: Planet
PLANET 7.7% alternative fuels substitution 15% of energy consumed 2022 was derived from renewable sources 40% in Juarez 86% Clinker ratio 18% in Samalayuca SUSTAINABILITY On track to achieve the 80% target by 2030 REPORT 18% in Pueblo 6% in Chihuahua Renewable energy agreements for the Rapid City, M
Slide 14: Planet
PLANET 26% 1.7% scope 2 CO2 emissions compared to 2015 scope 1 CO2 emissions Solar projects at other compared to 2021 2022 Mexico facilities Installed a pilot solar SUSTAINABILITY plant at the REPORT Samalayuca plant 3.4% Gain insights into the scope 1 CO2 emissions technology and its compared to 20
Slide 15: Montana's Solar Project
MONTANA’S SOLAR PROJECT 11% of the plant’s electricity needs Solar plant construction began during Q2 and will be completed in early 2024 Newest and most cutting-edge equipment available in the US market Aligns with the Solar Investment Tax Credit (ITC) 15
Slide 16: U.S. Overview
U.S. OVERVIEW • Weather-related disruptions • Strong windfarm project-related demand in South Dakota 70% • I-10 project at El Paso, Texas of sales • Working at full capacity • Demand from infrastructure and oil and gas clients remains strong • Revenues increased by 6.6% Q2 23 vs. Q2 22 H1 23 vs. H1
Slide 17: Pricing
Second price increase: Construction cement • Did not anticipate a second increase at the US$7 per ston beginning of 2023 Effective July 1 • Favorable impact on margins PRICING Second price increase: Oil-Well cement US$15 per ston Effective July 1 17
Slide 18: Odessa Expansion
• Continue strengthening margins • Reducing variable costs • High standards at the South Dakota and Pueblo plants • Running the plants more efficiently ODESSA EXPANSION • Signed the equipment purchase agreement • Expect to sign the construction agreement during Q3 • Continue to advance on site and u
Slide 19: Mexico Overview
MEXICO OVERVIEW • Continued to benefit from the nearshoring trend • Manufacturing projects underway: • 15 in Juarez 30% • 7 in Chihuahua of sales • Housing demand to support the flow of labor • Received 44 new ready-mix trucks in the last 18 months • During Q2, GCC purchased: • 48 new ready-mix truc
Slide 20: Strategic pillars: People, profit and planet
GCC continued to make meaningful progress on the strategic pillars People, profit and planet remain essential elements of the strategy 20
Slide 21: Financial Results
FINANCIAL RESULTS MAIK STRECKER, CFO
Slide 22: Consolidated Net Sales
CONSOLIDATED NET SALES +15% Q2 23 vs. Q2 22 H1 23 vs. H1 22 608 Volumes Prices* Volumes Prices* +14% 527 Cement 206 United States -11% 17% -11% 18% 154 364 320 Mexico 3% 12% 7% 12% 111 82 Concrete 373 402 United States 4% 17% 9% 14% 238 253 Mexico 9% 14% 10% 13% Q2 22 Q2 23 H1 22 H1 23 (US$ Million)
Slide 23: Cost of Sales
COST OF SALES LOGISTICS % of sales • Normalized railroad network 69.0% 62.0% 70.9% 66.1% • Relying less on trucks to deliver product - 7 PPT - 4.8 PPT • More cost-effective rail freight SAMALAYUCA PROJECT • Concluded in the second half of April 402 374 • US$0.5 million impact on the quarter US freig
Slide 24: SG&A and EBITDA
SG&A EBITDA % of sales EBITDA margin 7.3% 8.0% 8.7% 9.4% 31.1% 36.4% 29.2% 32.2% + 70 BPS + 60 BPS + 540 BPS + 300 BPS +27% +33% 57 196 46 154 133 29 24 99 Q2 22 Q2 23 H1 22 H1 23 Q2 22 Q2 23 H1 22 H1 23 (US$ Million) (US$ Million) 24
Slide 25: Net Financial Income and Net Income
NET FINANCIAL US$5M NET FINANCIAL US$4M INCOME Q2 2023 EXPENSES Q2 2022 NET INCOME (55%) Net income as % of sales Q2 2022 53 EPS = US$0.1606 16.6% + 6 PPT Q2 2023 82 EPS = US$0.2513 22.6% (US$ Million) 25
Slide 26: Cash Flow
CASH FLOW US$ million Q2 23 Q2 22 Var H1 23 H1 22 Var EBITDA 133 99 33% 196 154 27% Interest (Expense) 4 3 20% 16 (5) n.m. (Increase) Decrease in Working Capital (67) (18) 266% (80) (31) 159% Taxes (33) (8) 318% (33) (8) 312% Prepaid expenses 1 2 -8% 4 4 1% Accruals and other accounts 3 (6) n.m. (59
Slide 27: Cash, Debt and Net Leverage Ratio
US$770M cash and equivalents NET LEVERAGE RATIO Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 -0.44x -0.69x -0.69x US$500M -0.93x -0.86x total debt 27
Slide 28: Dividend Payment, Share Buyback and Inorganic Growth
DIVIDEND PAYMENT SHARE BUYBACK $1.3364 per share 900,000 net shares during Q2 declared in April 2.3 million shares repurchased paid on May 24 1.3 million shares sold 15% above last year equivalent to US$8 million INORGANIC Actively pursuing acquisitions of cement assets located in the U.S. that coul
Slide 29: Revised Guidance
United States Consolidated Volumes EBITDA growth Double digits increase Cement Mid-single digit decrease FCF Conversion Rate > 60% 2023 Prices Concrete Mid-single digit increase Total CapEx US$290M REVISED Cement Double digits increase Strategic & growth US$220M GUIDANCE Concrete High-single digit i
Slide 30: Questions
QUESTIONS CONTACT: Maik Strecker, Chief Financial and Planning Officer mstrecker@gcc.com WWW.GCC.COM Sahory Ogushi, Head of Investor Relations soguship@gcc.com +52 (614) 442 3176 + 1 (303) 739 5943 3 0
Slide 31: Appendix
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Slide 32: Income Statement
INCOME STATEMENT US$ million Q2 23 Q2 22 Var H1 23 H1 22 Var Net sales 364.1 320.1 13.7% 608.0 527.0 15.4% Cost of sales 225.9 220.9 2.2% 401.9 373.8 7.5% SG&A 29.1 23.5 23.9% 56.9 46.1 23.3% Other expenses, net 1.9 0.3 n.m. 2.2 0.3 n.m. Operating income 107.1 75.3 42.2% 147.0 106.7 37.8% Operating
Slide 33: Balance Sheet
BALANCE SHEET June 2023 June 2022 Variation Total assets 2,582.9 2,274.7 13.6% Current assets 1,167.2 978.2 19.3% Cash and equivalents 770.3 645.3 19.4% Other current assets 396.9 332.9 19.2% Non-current assets 1,415.7 1,296.5 9.2% Plant, property and equipment 1,090.0 957.5 13.8% Goodwill and intan