Gcc Sab De Cv · BMV:GCC
Gcc Sab De Cv — Investor Day (September 2019)
29 slides from Gcc Sab De Cv's investor day presentation, Sep 20, 2019
Slide 1: GCC Analyst Day
GCC ANALYST DAY SEPTEMBER 20, 2019
Slide 2: Safe Harbor Statement
This presentation has been prepared by Grupo Cementos de cause the actual financial and other results to be materially different Chihuahua, S.A.B. de C.V. (together with its subsidiaries, “GCC”). from the results expressed or implied by such projections. Nothing in this presentation is intended to b
Slide 3: Leadership Team
LEADERSHIP ENRIQUE ESCALANTE CHIEF EXECUTIVE OFFICER TEAM LUIS CARLOS ARIAS CHIEF FINANCIAL OFFICER 3
Slide 4: Agenda
Keynote Speaker 1 Ed Sullivan, Portland Cement Association SVP & Chief Economist AGENDA 2 Strategy and Key Milestones Enrique Escalante, CEO 3 Break Financial Overview 4 Luis Carlos Arias, CFO Closing Remarks 5 Enrique Escalante, CEO 4
Slide 5: Keynote Speaker
KEYNOTE SPEAKER ED SULLIVAN, PORTLAND CEMENT ASSOCIATION SVP & CHIEF ECONOMIST
Slide 6: Strategy and Key Milestones
STRATEGY AND KEY MILESTONES ENRIQUE ESCALANTE, CEO
Slide 7: Investment Highlights
INVESTMENT 1 Leading position in attractive U.S. regional markets and in Chihuahua, Mexico HIGHLIGHTS Mexico operations also provide a strong base and add 2 operational flexibility with export capacity TICKER: BMV: GCC Vertically integrated, with state of the art production facilities 3 and logistic
Slide 8: GCC at a Glance: A Unique Market Presence
• 5.8 MMT cement production capacity 1 •3.5 MMT in U.S. + 2.3 MMT in Mexico • #1 or #2Landlocked share in core markets CEMENT AND READY-MIX CONCRETE GCC AT A GLANCE: • states, insulated from seaborne competition OPERATIONS ACROSS THE “CENTER A UNIQUE MARKET CUT” OF NORTH AMERICA PRESENCE • 8centers
Slide 9: Stakeholder Value Creation: Strengthen Profitability
STRENGTHEN PROFITABILITY •EBITDA margin increased from 17.3% in 2013 to 28.3% LTM •Target: achieve GCC’s 2007 34% EBITDA margin •Strengthened assets portfolio •One of the industry’s healthiest balance sheets with a comfortable maturity profile OFFER CUSTOMERS EXCEPTIONAL TECHNICAL AND LOGISTICS SERV
Slide 10: Stakeholder Value Creation: Expand Operations and Footprint
EXPAND OPERATIONS AND FOOTPRINT THROUGH DISCIPLINED CAPITAL ALLOCATION • Well positioned for growth • Be prepared to quickly capitalize on growth opportunities STRATEGIC PRIORITIZATION AND EVALUATION OF ALTERNATIVES STAKEHOLDER Seek out VALUE Cement opportunities Rapid Odessa CREATION Case by City c
Slide 11: Progress Toward Key Milestones
PROGRESS TOWARD KEY MILESTONES GROW CORE HIGH-PROFIT BUSINESSES, CEMENT • Odessa, TX: +514 k mton, synergies extracted: switched to fully dedicated to produce oil well cement, boosted Samalayuca from 56% to 96% of capacity utilization in one year. Restarted kiln 2 at Chihuahua plant to export oil we
Slide 12: Progress Toward Key Milestones
PROGRESS TOWARD KEY MILESTONES INCREASE CLEAN ENERGY USE AND REDUCE ENERGY COSTS • Mexico: a new long term power generator is in the final negotiation stage, 15yr agreement, 100% renewable, expected ~20% rate reduction starting in 2021, ~US$ 140 million in savings in that period • Odessa: renewable
Slide 13: GCC Joined the Global Cement and Concrete Association
GCC JOINED THE GLOBAL CEMENT AND CONCRETE ASSOCIATION SDG MAIN GOAL REDUCE NET CO2 EMISSIONS 9% BY 2020 AND 31% BY 2030 CO2 emissions reductions are compared to our 2005 baseline 14
Slide 14: Compensation Plan
COMPENSATION PLAN GOAL: CLOSELY ALIGN PAY WITH PERFORMANCE AND VALUE CREATION OVER THE SHORT AND LONG-TERM FIXED PAY VARIABLE PAY BASE SALARY ANNUAL INCENTIVE Smallest component of target TDC Based on EBITDA: CEO: ~31% • Budgeted growth Key executives: 40% - 62% 2018 TOTAL • EBITDA margin DIRECT Pay
Slide 15: Vision: Five Years and Beyond
VISION: FIVE YEARS AND BEYOND CEO’S VISION FOR THE MEDIUM AND LONG TERM WE WILL MAINTAIN THE COURSE: GROW AND STRENGTHEN OUR CORE - CEMENT • Expand to adjacent markets: generate synergies, solidify leadership position • New opportunities in North America: new regions, new system • Mexico, Central an
Slide 16: Q&A
Q&A 17
Slide 17: Financial Overview
FINANCIAL OVERVIEW LUIS CARLOS ARIAS, CFO
Slide 18: Financial Performance
FINANCIAL PERFORMANCE SALES (US$ MILLION) EBITDA (US$ MILLION) FREE CASH FLOW (US$ MILLION) 5yr CAGR 5yr CAGR 4yr CAGR +6.1% +17.7% +15.1% 883 824 754 752 748 657 256 240 112 108 189 165 86 154 114 61 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 2015 2016 2017 2018 19 Free cash flow e
Slide 19: Debt and Capital Efficiency Indicators Steadily Improving
DEBT AND CAPITAL EFFICIENCY INDICATORS STEADILY IMPROVING EBITDA MARGIN ROIC (NOPAT / Avg. Invested Capital) 9.7% 9.0% 29.0% 8.0% 7.0% 5.8% 3.1% 17.3% 2013 2014 2015 2016 2017* 2018 2013 2014 2015 2016 2017 2018 NET LEVERAGE RATIO (Net Debt / EBITDA) WORKING CAPITAL 107 3.45x 2.57x 91 2.28x 1.86x 82
Slide 20: Optimizing Operations for Value Generation
OPTIMIZING OPERATIONS FOR VALUE GENERATION 13.3% 11.5% ROIC 10.3% Value generated 9.7% 9.1% 9.0% WACC 8.9% 9.0% 9.8% 9.4% 9.2% 9.1% 8.8% 8.0% 7.0% 5.8% 2014 2015 2016 2017 2018 2019e 2020e 2021e Any projections have been prepared based on GCC’s views as of the date of this presentation and include e
Slide 21: GCC Generates a Higher ROIC Than Most of Its U.S. Peers
GCC GENERATES A HIGHER ROIC THAN MOST OF ITS U.S. PEERS... 11.5% GCC EXP 10.3% 10.6% 9.7% 9.6% MLM 9.0% VMC 8.0% 7.0% 7.0% SUM 2015 2016 2017 2018 2019e 2020e Source 1: see appendix 22
Slide 22: ... As Well as Its LatAm Peers
… AS WELL AS ITS LATAM PEERS 11.5% GCC 10.3% 9.7% 9.0% 8.6% CPAC 8.0% 7.0% 5.4% CX 4.3% CMTOY 4.2% CLH 2015 2016 2017 2018 2019e 2020e Source 2: see appendix 23
Slide 23: Strengthened Margins and Lower Indebtedness Than Most Peers
STRENGTHENED MARGINS AND LOWER INDEBTEDNESS THAN MOST PEERS 2019 ESTIMATED NET DEBT/EBITDA MULTIPLES LatAm Average 2.9x US Average 2.1x 3.5x 3.5x 3.5x 3.2x 3.2x 3.0x 3.0x 2.8x 2.8x 2.0x 2.2x 1.9x 0.9x 0.8x GCC EXP VMC MLM SUM Cemex Elementia CLH Argos Pacasmayo 2019 ESTIMATED EBITDA MARGINS US Avera
Slide 24: Growth Potential
LEVERAGE RATIO: 3.0X EV/EBITDA: 10X ASSUMPTIONS Million dollars 2019 2021 2023 GROWTH • Net leverage ratio 3.0x Acquisition value $756 $1,572 $2,320 POTENTIAL • Acquisition EV/EBITDA multiple 8x or 10x ∆ EBITDA $76 $157 $232 • The acquisition occurs at the end of the period • All scenarios are mutua
Slide 25: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES GIVEN THE STRONG CASH GENERATION AND THE HIGH CONVERSION RATE 1 CASH ON BALANCE SHEET ENABLES FUTURE GROWTH (OPTIONS) • Organic: Chihuahua plant Samalayuca plant } ~ 1 mmton additional capacity Investment ~US$ 120 - 140 million } Both to serve mainly southern U.S. marke
Slide 26: Q&A
Q&A 17
Slide 27: Closing Remarks
• Focused on stakeholder and shareholder value • Important progress on key milestones to focus on CLOSING high-profit business-cement REMARKS • Strengthened profitability, balance sheet and assets portfolio - position GCC for growth with disciplined TRIPLE capital allocation BOTTOM • Prioritize huma
Slide 28: Thank You!
THANK YOU! CONTACT: Luis Carlos Arias, Chief Financial Officer larias@gcc.com Ricardo Martinez, Head of Investor Relations WWW.GCC.COM rmartinezg@gcc.com +52 (614) 442 3176 + 1 (303) 739 5943
Slide 29: Sources
1.- Company and J.P. Morgan estimates. US Construction Materials. North America Equity Research (March 21, 2019) 2.- Company and UBS estimates (August 23, 2019) SOURCES 3.- UBS Estimates. Only Cemex numbers are IFRS16 adjusted U.S.: J.P. Morgan estimates. US Construction Materials. North America Equ