GCC S A B de C V (GCC) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales decreased 1% year-over-year to $360.3M, but EBITDA rose 0.9% to $133.9M with a 37.1% margin, and net income increased 9% to $89.6M, driven by cost control and flexible fuel mix.

• H1 2024 net sales rose 4.1% year-over-year to $633.2M, with EBITDA up 10.8% to $216.8M and net income up 20.9% to $138.5M.

• Free cash flow for Q2 2024 was $29M, up 41.3% year-over-year, supported by lower cash taxes and working capital needs.

• Safety initiatives led to a 14% year-over-year reduction in recordable injuries, and sustainability progress included a 2.5% year-to-date decrease in CO2 intensity.

• CEO highlighted steady bottom-line growth and margin expansion despite challenging market conditions.

Financial highlights

• U.S. cement and concrete volumes declined by 7.1% and 14.3% year-over-year, respectively; Mexico volumes fell 7.1% (cement) and 12.4% (concrete), but prices increased in both regions.

• Cost of sales as a percentage of sales dropped to 60.9% in Q2 2024, aided by lower fuel and production costs.

• SG&A as a percentage of sales increased by 70 basis points to 8.7%, mainly from exchange rate effects and corporate investments.

• Net financial income rose to $15.2M from $4.5M year-over-year, driven by higher cash balances.

• Cash and cash equivalents stood at $879.4M as of June 2024, with a net debt-to-EBITDA ratio of -0.99x.

Outlook and guidance

• U.S. cement and Mexico concrete volumes are now expected to finish the year flat or slightly down, revising previous low single-digit growth guidance.

• EBITDA growth guidance for the year remains unchanged, with continued focus on cost efficiency and margin improvement.

• Targeting a 36% EBITDA margin by 2025, leveraging flexible fuel strategies and power contracts.

• Maintenance CapEx for 2024 is guided at $70M, with execution on track.

• Management remains focused on operational excellence and sustainability, targeting further CO2 emissions reductions.