Grupo Industrial Saltillo (GISSA A) Q2 2024 earnings summary

Executive summary

• Profitability recovery continued: Q2 EBITDA doubled YoY from a low base and remained stable QoQ as operational improvements and capacity expansions progressed.

• H1 iron-casting contract wins exceeded $75M, focused on electrification-agnostic parts and strategic components requiring machining and plating.

Financial highlights

• Consolidated Q2 revenue declined 4% YoY to $260M from $271M, mainly on lower casting volumes and lower raw-material and energy prices; figures exclude Vitromex.

• Consolidated EBITDA reached $28M, up 101% YoY and consistent with the previous quarter; cost controls and operational discipline supported profitability.

• Draxton Q2 revenue fell 5% to $235M; EBITDA rose 108% to $27M, with an 11% margin. Cinsa revenue was $25M, up 8%, and EBITDA was $1M.

• H1 revenue was $532M, flat YoY; Draxton revenue was $482M, down 1%, and Cinsa revenue was $50M, up 10%.

• H1 Draxton EBITDA rose 38% to $54M; Cinsa EBITDA was $2M, down 23%. 2023 EBITDA comparisons exclude goodwill impairment and non-recurring central-structure optimization compensation.

Outlook and guidance

• Priorities include consolidating profitability, leveraging operational strengths, offsetting macroeconomic impacts, and advancing capacity expansions and commercial negotiations.

• Management expects low double-digit EBITDA margins and significant growth against 2023, with stronger H2 results supported by capacity ramp-ups and updated customer pricing.

• The 2024 CAPEX plan is $100M, primarily for capacity expansion; $38M was spent in H1.

• Short-term priorities include accelerating North American improvements, ramping investments, and evaluating more North American casting capacity; longer-term plans emphasize machining, value-added processes, and EV-related process and materials innovation.

• Strategic expansions are ramping up, with more than $75M in new contracts cited for 2024.