Gcc Sab De Cv · BMV:GCC
Gcc Sab De Cv — Q4 2021 Earnings Presentation
29 slides from Gcc Sab De Cv's earnings presentation, Jan 26, 2022
Slide 1: Q4 2021 Earnings Conference Call
Q4 2021 EARNINGS CONFERENCE CALL ENRIQUE ESCALANTE, CEO LUIS CARLOS ARIAS, CFO JANUARY 26, 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: 2021 Highlights
2021 HIGHLIGHTS Extraordinary year, strong results Record high +US$1B sales EBITDA Supply chain, labor and energy cost headwinds Robust Long Strong trends customer construction in infrastructure, commercial, demand season oil well drilling and in global economic growth 3
Slide 4: Prioritizing meeting customer demand
Prioritizing meeting customer demand • Complex labor and supply chain environment • Developed growth drivers to position our businesses to capture this opportunity Continuing to invest in innovation, inventory, plants and logistics • Improve operational efficiency and enhance GCC’s social and enviro
Slide 5: Pricing
PRICING • Second price increase of US$6/ston Construction cement • Effective August 2021 6% - 8% per ston • Unusual for GCC and the industry effective January 1 • Not seen since the last cement demand peak • Capitalize on current opportunities and offset incremental costs • Trend could be permanent
Slide 6: Strong balance sheet, ready to capture the right opportunities
INFRASTRUCTURE INVESTMENT AND JOBS ACT • Passed in November 2021 Strong balance sheet • Portland Cement Association estimates US$550B in spending translates into ~ 48mmtons of cement over the life of the program Ready to capture the right • 9% increase in cement consumption vs. 2020 opportunities •
Slide 7: U.S. Overview
U.S. OVERVIEW Q4 21 vs. Q4 20 2021 vs. 2020 • Record high Q4 cement volumes Volumes Prices Volumes Prices • Considerable backlog Cement 5% 12% 6% 9% Concrete -8% 3% -19% 5% EL PASO, TX • Remains strong • Nearshoring demand and warehouse projects • Tight supply and demand 7
Slide 8: U.S. Overview: West Texas
WEST TEXAS • Drilling rebound continues • Both kilns at Odessa’s plant running U.S. OVERVIEW • Higher-than-expected demand at full capacity • One kiln at Chihuahua complements • Challenge to meet demand supply • Expect continued strength in 2022 • Price increases offset higher costs • US$15/ton pric
Slide 9: Colorado, Salt Lake City, Northern Midwest and Plains States
COLORADO SALT LAKE CITY, UTAH • Strong performance in every segment • 50% cement volume growth • Solid customer base • High consumer demand • One of the hottest market in the U.S. • E-commerce boom • Customers focused on ensured cement supply • Infrastructure projects NORTHERN MIDWEST AND PLAINS STA
Slide 10: U.S. Overview: Montana
MONTANA • Essentially sold out • Fully converted to produce only portland limestone cement (PLC) • High-quality cement U.S. OVERVIEW • Reduces our carbon footprint • Provides the strength, workability and durability of regular portland cement • Important milestone in our blended cements effort • Red
Slide 11: Carbon Capture
CARBON CAPTURE Developed internal targets to be close to technology developers, working to identify the right technology for each plant Part of our broad-based sustainability strategy and entails a long-term process 11
Slide 12: Minnesota Albertville Terminal
MINNESOTA ALBERTVILLE TERMINAL • Limited the volume shipped during 2021 • Solidify our important position in Minneapolis/St Paul • Ship to higher margin regions within the U.S. • Expand and strengthen distribution and • Expect to increase shipments to Minnesota in 2022 storage capacity • Pushing mor
Slide 13: Pricing; Strong Performance in 2021
PRICING • Encouraging percentage and frequency of increases during 2021 • One of the few companies to announce a second increase • Expect cost increases to continue in the short term • Freight, diesel and commodity prices • Goal: calibrate pricing to pass cost increases, improve margins, ensure we a
Slide 14: Mexico Overview
Q4 21 vs. Q4 20 2021 vs. 2020 Volumes Prices Volumes Prices Cement 4% 5% 7% 2% Concrete 14% 7% 19% 6% MEXICO OVERVIEW • Solid performance and a strong backlog • Demand remains strong • Industrial warehouse construction and plant expansions as benefits of USMCA nearshoring • High operating levels in
Slide 15: 2021 outstanding year; outlook for 2023 and 2024
• 2021 was an outstanding year, achieved updated guidance • Expect 2023 and 2024 to be even better with benefit of the US infrastructure bill • Several positive demand trends benefiting our businesses • Bullish on the residential and non-res construction markets, and on industrial recovery • Focused
Slide 16: Financial Results
FINANCIAL RESULTS LUIS CARLOS ARIAS, CFO
Slide 17: Consolidated Net Sales
CONSOLIDATED NET SALES +11% Q4 21 vs. Q4 20 2021 vs. 2020 1,039 Volumes Prices* Volumes Prices* +11% 938 Cement 288 245 United States 5% 12% 6% 9% Mexico 4% 5% 7% 2% Concrete 258 693 750 232 United States -8% 3% -19% 5% 67 74 165 184 Mexico 14% 7% 19% 6% Q4 20 Q4 21 2020 2021 (US$ Million) United St
Slide 18: Cost of Sales and SG&A
COST OF SALES SG&A % of sales % of sales 67.4% 67.8% 69.1% 68.1% 8.2% 9.9% 8.4% 8.7% + 40 BPS - 100 BPS + 170 BPS + 30 BPS 707 90 648 79 175 25 157 19 Q4 20 Q4 21 2020 2021 Q4 20 Q4 21 2020 2021 (US$ Million) (US$ Million) 18
Slide 19: EBITDA
EBITDA EBITDA 35.0% 31.5% 32.9% 32.5% • In line with guidance margin - 350 BPS - 40 BPS • Savings as a result of cost control initiatives +10% • Recover pre-financial crisis margins • Controlling costs and expenses • Coal mine in Colorado • Lowers costs and reduces exposure to gas and coke price hik
Slide 20: Net Financial Expenses and Net Income
NET FINANCIAL US$7M US$28M EXPENSES Q4 2021 FY 2021 NET INCOME (15%) Net income as % of sales 2020 130 EPS = US$0.3913 13.8% + 60 BPS 2021 150 EPS = US$0.4519 14.4% (US$ Million) 20
Slide 21: Cash Flow
CASH FLOW US$ million Q4 21 Q4 20 Var 2021 2020 Var EBITDA 81 81 0% 338 308 10% Interest (Expense) (7) (8) -14% (16) (21) -24% (Increase) Decrease in Working Capital 38 52 -27% 8 27 -68% Taxes (1) (2) -64% (12) (15) -23% Prepaid expenses (3) (2) 37% 0 0 n.m. Accruals and other accounts 3 (12) n.m. (
Slide 22: Net Leverage Ratio and Cash
NET LEVERAGE RATIO Reduced days in net working capital from 47 to 39 (8 days) 0.2x 0.2x 0.1x Q3 21 Q4 21 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 US$683 cash and equivalents -0.2x -0.4x US$143 net cash 22
Slide 23: Sustainability Linked Bond
SUSTAINABILITY LINKED BOND Maturity INVESTMENT 3.6% US$550M COUPON April GRADE by S&P and Fitch 2032 Redeem the full amount of the USE OF PROCEEDS Refinance bank debt GCC 5.250% notes due 2024 First cement company in the Americas to issue an SLB and the largest issuance by a cement company Positioni
Slide 24: Organic Growth and Inorganic Growth
ORGANIC GROWTH INORGANIC GROWTH ~ US$500M Looking for opportunities to acquire cement assets that can Next 3 years be plugged into our connected Increase cement capacity and system or eventually begin the improve our logistics and construction of a new system in distribution network the U.S. 24
Slide 25: 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 digit FCF Conversion Rate > 60% Total CapEx US$260M Strategic & growth US$180M Maintenance US$65M 2020 carry over
Slide 26: Questions
QUESTIONS CONTACT: Luis Carlos Arias, Chief Financial Officer larias@gcc.com WWW.GCC.COM Ricardo Martinez, Head of Investor Relations rmartinezg@gcc.com +52 (614) 442 3176 + 1 (303) 739 5943 2 6
Slide 27: Appendix
APPENDIX &}scc
Slide 28: Income Statement
INCOME STATEMENT US$ million Q4 21 Q4 20 Var 2021 2020 Var Net sales 257.9 232.5 10.9% 1,038.8 937.8 10.8% Cost of sales 175.0 156.6 11.7% 707.4 647.9 9.2% SG&A 25.4 19.2 32.9% 90.0 78.5 14.7% Other expenses, net 8.9 12.1 -26.6% 9.5 23.6 -59.8% Operating income 48.6 44.6 9.0% 231.8 187.7 23.5% Opera
Slide 29: Balance Sheet
BALANCE SHEET US$ million December 2021 December 2020 Var Total assets 2,224.5 2,136.0 4.1% Current assets 955.7 830.1 15.1% Cash and equivalents 683.0 562.1 21.5% Other current assets 272.7 268.0 1.8% Non-current assets 1,268.8 1,305.9 -2.8% Plant, property and equipment 934.1 955.6 -2.2% Goodwill