GCC S A B de C V (GCC) Q3 2024 earnings summary

Executive summary

• Q3 2024 achieved a record EBITDA margin of 40.7%, up 2.6 percentage points year-over-year, with EBITDA rising 2.3% to $162.1 million, driven by proactive cost and expense management.

• Net income increased 1.5% year-over-year to $107.3 million, with EPS at $0.3276.

• Consolidated Q3 sales declined 4.3% year-over-year to $398.2 million, mainly due to lower cement and concrete volumes in both the U.S. and Mexico, partially offset by higher prices.

• Safety initiatives led to a 25% reduction in recordable injuries over the last 12 months, and over 9,000 hours of employee training were delivered year-to-date.

• Sustainability efforts advanced, with blended cements making up 73% of total cement sales and a 2.5% year-to-date reduction in CO2 intensity per ton.

Financial highlights

• U.S. sales grew 0.7% to $301.7 million, while Mexico sales fell 17.2% to $96.5 million, mainly due to lower volumes and peso depreciation.

• Free cash flow for Q3 was $121.5 million, with a 75% conversion rate; nine-month free cash flow increased 51.6% to $192.0 million.

• Cost of sales as a percentage of sales dropped to 58.4%, the lowest in over 20 years.

• Cash and equivalents totaled $897.2 million at quarter-end, with total debt at $500 million and net leverage at -0.81x.

• Net financial income for Q3 was $11.2 million, up 16.7% year-over-year.

Outlook and guidance

• Concrete volumes in both the U.S. and Mexico are expected to fall short of full-year guidance due to weather, project delays, and market uncertainty.

• U.S. cement demand showed signs of stabilization in September, with daily shipments in October up 5% over September.

• Anticipates demand recovery as interest rates decline and expects oil well cement demand to remain strong into 2025.

• Margins are expected to remain strong or improve in 2025, supported by price increases and ongoing cost initiatives.

• Federal infrastructure funding is expected to align with expanded Odessa plant capacity coming online in 2026.