GCC reports first quarter 2023 results

By GCC

Chihuahua, Mexico, April 25, 2023 – GCC, S.A.B. de C.V. (BMV: GCC*), a leading supplier and producer of cement and concrete in the United States and Mexico, today announced its results for the first quarter of 2023. 

Q1 2023 HIGHLIGHTS 

• Consolidated net sales increased 17.9% year-on-year, to US$243.9 million • U.S. sales grew 9.5% as concrete volumes increased 27%
• U.S. cement and concrete prices rose 20.6% and 5.6%, respectively • Mexico sales increased 33.8% reflecting an 11.1% and 11.2% increase in cement and concrete volumes, respectively
• Mexico cement and concrete prices increased by 12.6% and 11.1%, respectively • EBITDA increased 15.5% to US$63 million with a 25.8% EBITDA margin • Cash and equivalents totaled US$807.7 million 
• Net leverage (net debt/EBITDA) ratio totaled -0.86x as of March 2023 • Earnings per share increased 149.2% year-on-year, to US$0.0988 
• GCC repurchased shares in the net amount of US$6.3 million

Enrique Escalante, GCC’s Chief Executive Officer, commented: “GCC delivered solid results for the first quarter despite significant weather disruptions in the US. We remained focused on operational excellence and pre-empting headwinds.” 

Enrique continued, “Strong volume demand continues, and we’re leveraging all GCC facilities to ensure we’re deriving maximum benefits and strengthening our margins. We’re creating a more efficient and agile network to drive value in the years to come.” 

FINANCIAL RESULTS 

Consolidated net sales for the first quarter of 2023 increased by 17.9% year-on-year, to US$243.9 million from US$206.9 million in the first quarter of 2022. This was primarily due to increased concrete volumes in the United States, increased cement and concrete volumes in Mexico and a favorable price environment in both markets. These were partially offset by decreased cement volumes in the United States. 

For comparative purposes, consolidated net sales, excluding the appreciation of the Mexican peso against the U.S. dollar during the quarter, increased by 15.1%.

U.S. sales for the first quarter 2023 increased by 9.5% to US$148.3 million and represented 61% of GCC’s consolidated net sales.

This was due to a 27% increase in concrete volumes and a 20.6% and 5.6% increase in cement and concrete prices, respectively, partially offset by a 9.6% decrease in cement volumes. 

The oil and gas, commercial and industrial sectors were the quarter’s most dynamic market segments. Mexico sales increased by 33.8% in the first quarter 2023, to US$95.6 million, representing 39% of GCC’s consolidated net sales. 

This was due to an 11.1% and 11.2% increase in cement and concrete volumes, respectively and a 12.6% and 11.1% increase in cement and concrete prices, respectively. 

The appreciation of the Mexican peso against the U.S. dollar during the quarter increased sales by US$5.8 million. 

For comparative purposes, Mexico sales excluding the appreciation of the Mexican peso would have increased by 25.7%. 

Mexico sales during the quarter were primarily driven by demand related to industrial maquiladora plants and warehouse construction. 

Cost of sales totaled US$176 million for the first quarter 2023, representing 72.2% of total sales, compared to 74.1% in the first quarter of 2022; a 190 basis-point decrease. 

This decrease was primarily due to favorable cement selling prices and operating leverage. 

These were partially offset by increased cost of production and freight costs, as well as higher maintenance costs. Selling, general and administrative expenses totaled US$27.7 million in the first quarter of 2023, equivalent to 11.4% of consolidated net sales; a 60 basis-point increase. 

Operating income before other expenses increased 28% to US$40.2 million in the first quarter. 

Other expenses totaled US$0.3 million in the first quarter of 2023, compared to US$0.03 million in the first quarter 2022. 

Operating income increased 27.2% to US$39.9 million in the first quarter of 2023. As a result, first quarter 2023 EBITDA increased by 15.5% to US$63 million. 

First quarter 2023 EBITDA margin was 25.8%; a 50 basis-point decrease. 66% of first quarter 2023 EBITDA was generated by the Company’s U.S. operations and 34% by its Mexico operations. 

Net financial income totaled US$3.7 million in the first quarter 2023, compared to US$14.2 million of net financial expenses in the prior year period. This was due to increased financial income resulting from a higher cash balance, also with benefit of year on year increases in US and Mexico treasury rates. Additionally, financial expenses decreased due to costs