EM LATAM CREDIT: Mexico's GCC (GCCAM; NR /BBB- /BBB) 1Q 2025 Earnings Missed

“GCC 1Q Net Income Misses Estimates” – BBG

Neutral for spreads

• Mexico building materials company GCC reported poor results led by weakness in Mexico but still managed to generate free cash flow and has more cash than debt so no impact on the credit profile.

• Revenues fell 9.6% and Mexico sales were down 20% YoY with weakness in both cement and concrete. Fortunately, about 70% of EBITDA comes from the U.S. where the company has a landlocked business away from seaborne competition, so sales were only down 3%.

• EBITDA dropped 11% to USD73.6mn YoY while EBITDA margin compressed to 29.8% from 30.4%. Debt rose 20% to USD600mn while cash fell 11% to USD873mn due to an increase in strategic and growth capital expenditures. Reported leverage was -.56x vs -.67x at 2024-year end.

• U.S. tariffs should not have a major impact on GCC as the company has significant operations locally with 5 cement plants and 24 cement terminals among others throughout the Southwest, Midwest and Northwestern U.S.

• GCCAM 2032s were last quoted T+183bps, 15 bps wider MTD. Much larger Mexico based global supplier of building materials Cemex (CEMEX; Baa3 /BBB- /BBB-) have 2031 bonds that were last quoted T+ 218bps, 25 bps wider MTD.