Grupo Industrial Saltillo (GISSA A) Q4 2023 earnings summary

Executive summary

• Q4 revenue grew 3% YoY, with sequentially improved profitability amid launch and capacity ramp-up costs and Mexican peso appreciation.

• 2024 priorities include ramping expanded capacity, improving productivity and efficiency, recovering margins, and pursuing nearshoring and electromobility opportunities.

Financial highlights

• Q4 revenue was US$244M, up 3% YoY; FY23 revenue was US$1.032B, up 6%.

• Consolidated Q4 EBITDA was US$20M, up 18% QoQ; FY EBITDA was US$79M with an 8% margin.

• Adjusted FY23 EBITDA was US$97M versus US$101M in 2022; 2023 figures exclude a non-cash goodwill impairment and extraordinary compensation effects.

• Draxton FY23 revenue rose 7% to US$932M; Q4 revenue was US$217M, up 3% YoY.

• Draxton Q4 EBITDA was US$22M, down 35% YoY with a 10% margin; FY23 EBITDA was US$87M, down 28% with a 9% margin.

Outlook and guidance

• Management expects a double-digit EBITDA margin in 2024, supported by higher volumes, price increases, value-added processes, efficiency, and productivity; no formal EBITDA guidance was issued.

• New business wins totaled US$180M in annual sales, with revenue expected to materialize over 18–24 months.

• Price negotiations to pass through inflation and FX impacts were advanced; new prices were in effect for some products, with negotiations expected to conclude by Q2 2024.

• 2024 cash flow is expected to improve mainly on higher EBITDA, without a major working-capital increase.

• Line 7 is expected to reach peak capacity by year-end 2024; casting expansions are expected to add 60,000 annual tons.