Grupo Industrial Saltillo (GISSA A) Q1 2023 earnings summary

Executive summary

• Q1 revenue was $260M, up 7% YoY, and EBITDA was $28M, up 5%; record Draxton volumes supported results despite FX, input-cost and launch pressures.

• Q1 2023 results exclude Vitromex following its March 1 sale; 2022 comparisons reflect discontinued operations.

• New Draxton contracts signed in Q1 represent ~$40M in annual revenue, with launches planned over 18–24 months.

Financial highlights

• Consolidated revenue was $260M versus $242M a year earlier; higher indexed raw-material and energy costs were passed through in prices.

• EBITDA was $28M, up 5% YoY; incremental Draxton volumes and expense control offset peso appreciation, input inflation and launch costs.

• Draxton revenue rose 11% to $240M and EBITDA increased 3% to $26M; Cinsa revenue was MXN 427M, down 11%, and EBITDA was MXN 40M, down 2%.

• A $39M non-cash goodwill impairment was recorded in Q1 EBIT and excluded from EBITDA.

Outlook and guidance

• 2023 CapEx is estimated at $130M: $125M for Draxton and $5M for Cinsa.

• Casting expansion is designed to add 60,000 tons of capacity with $100M revenue potential; machining capacity is set to triple, with plating and other expansions progressing in 2023.

• Management expects North American vehicle production to rise 5%–6% in 2023 and another 5%–6% the following year; nearshoring may support evaluation of additional North American casting capacity.

• Cinsa plans U.S. sales growth, e-commerce expansion and improved productivity.