Grupo Cementos de Chihuahua, S.A.B. de C.V. announced its results for the second quarter of 2018. The company delivered growing sales and EBITDA as well as a higher EBITDA margin, with solid operating results in both the United States and Mexico. GCC also completed the acquisition of a cement plant in Montana, increasing its U.S. production capacity 11 percent; sold non-core, ready-mixed assets; and refinanced its bank debt, reducing interest expense significantly.
For the first six months of 2018, GCC increased sales 11.4 percent and generated $115 million in EBITDA, with a margin of 28.8 percent. Income from continuing operations was $40.0 million. Ready-mixed assets sold in Oklahoma and Arkansas were reclassified as discontinued operations, and generated an accounting loss of $40.6 million, mostly for the difference between book value and sale price. This resulted in a small net loss for GCC for the first half of the year.
The company refinanced all its bank debt with a new $400 million, five-year term loan agreement; the lower interest rate is expected to generate savings of approximately $10 million per year. The banks are also providing a $50 million unsecured, revolving line of credit.
“GCC’s operating results continue the steady improvement in sales and margins that we’ve delivered since 2013,” said Enrique Escalante, GCC’s chief executive officer. “We also took a number of strategic actions that will help us achieve our long-term goals effectively. “The new cement plant in Three Forks, Mont., extends our market footprint and integrates well with our existing cement network. The asset sale removes some non-core assets that were a drag on our performance. The debt refinancing significantly lowers financial costs and further strengthens our capital structure and leverage profile.
“Our first half operating performance and the M&A and financial transactions will help make 2018 another benchmark year in GCC’s transformation,” Escalante concluded.