Firm steps towards Globalization March, 2017
SAFE HARBOR STATEMENT This presentation and discussion may contain forwardlooking statements, which are subject to risks, and uncertainties that could cause the Company s actual results to differ materially from management s current expectations. Those risks and uncertainties include, without limitation: new product development and commercialization; demand and acceptance for the Company s products; competitive products and pricing; economic conditions in the Company s product and geographic markets and foreign currency fluctuations. FINANCIAL FORECAST The financial forecasts and forward-looking statements discussed during this presentation reflect the current belief of the Company as of the publication of this presentation and the Company undertakes no obligation to update these forecasts and forward-looking statements for events or circumstances that occur subsequent to such date.
PROFILE & EVOLUTION
WHO ARE WE? GIS is a Mexican company, with over 8 decades of experience in 3 sectors: AUTO PARTS CONSTRUCTION HOUSEWARES Iron and Aluminum auto parts for brake, engine, suspension and transmission systems for the Automotive industry. Ceramic and porcelain floor tiles, water heaters and plastic and ductile iron pipe fittings. Diverse products for tableware, kitchenware and electronic appliances. FOCUSED DIVERSIFICATION
STRATEGIC REPOSITIONING USD $50 million San Luis Potosi Auto Parts facility Acquisition USD $65 million to double the installed capacity of SLP Plant Up to USD $50 million JV Fagor Ederlan for iron auto parts machining USD $308 million Infun Acquisition design, foundry and machining of engine, transmission and suspension components for the automotive industry Plants: Spain, Italy and China 2011 2012-2013 2015 2010 2012 2014-2015 2016 USD $30 million Capacity expansion Auto Parts Saltillo e Irapuato USD $439 million Divestiture Iron Blocks and Heads Business Unit USD $120 USD $93 million million JV ZF-TRW for iron foundry and machining of auto parts for brake system Acquisition of ACE Facilities in Spain, Poland and Czech Republic. Iron casting and Aluminum casting and machining. Top brake system player in European Market From 2010 to 2016 Foundry Capacity Expansion: 78 to 525 K Annual Tons
GLOBAL FOOTPRINT Americas Europe Asia Revenue per geography (2016) Income per currency (2016) Pre Infun Acquisition Pro-forma Pre Infun Acquisition Pro-forma Europe 17% Europe 30% Asia 4% EUR 17% USD 39% EUR 30% RMB 4% USD 32% 83% Americas 66% Americas 44% MXN 34% MXN
STRATEGIC ACQUISITION RATIONALE A M H M ** H H H H M ** H M H H * H H M * Joint Venture - ZF TRW ** Joint Venture - Fagor Ederlan H H Horizontal Iron Vertical Iron H Horizontal & Vertical Iron A M Aluminum Machining
REPOSITIONED FOR GROWTH Revenue per Sector (2016) Pre Infun Acquisition Pro-forma HOUSEWARES HOUSEWARES 10% AUTO PARTS 8% AUTOPARTS 44% 46% CONSTRUCTION 34% 58% CONSTRUCTION Operations in México, Spain, Czech Republic, Poland, Italy and China. Trading presence in US. Oriented to design and generate comfort and safety solutions for our consumers in the world. Over 8,000 associates in 25 production facilities.
BUSINESS PORTFOLIO
AUTO PARTS SECTOR With 5 Business Units and facilities in Mexico, Spain, Italy, Poland, Czech Republic and China, we supply iron and aluminum components to our customers at the most important regions in the world. Mexican and European leaders in the production of calipers for brake systems and engine crankshafts.
DIFFERENTIATED VALUE PROPOSITION Global Platforms Co-participation in design solutions of Engineering Development Strategic Geographic Location (MEX-EUR-CHINA) Product Specialization (6 strategic components) Value Chain Integration Machining Process Competitive Pricing through Operations, Product Engineering and Process efficiency Customer-Focused
NAFTA - Cifunsa 84% Sales to Tier 1 & 2 16% Direct Sales to OEMs Clutch Plates Transmission / Gray and Ductile Iron Ford Focus Dodge Challenger Crankshafts Engine / Ductile Iron Knuckles Suspension / Ductile Iron Calipers Brake / Ductile Iron Chrysler RAM Mazda 2 Brackets Brake / Ductile Iron Rotor Disk Brake / Gray Iron VW Tiguan Lincoln MKZ
Europe - ACE Iron and Aluminum components for light vehicles braking systems. Audi A4 & A6 Mercedes Benz Clases A,B,C & E Opel Astra Audi Q5 Ford Focus BMW Series 3,5 & 7 VW Passat
Europa / China - INFUN Design, foundry and machining of engine, transmission and suspension components for the automotive industry. Engine Suspension Land Rover Lincoln MKX Renault Megane Volvo Truck Renault Trafic Mercedes Truck
70% GIS / 30% ZF-TRW Ductile Iron Foundry for brake system components US$120 million Investment Annual Foundry Capacity of 52 K tons in 2 lines, machining capacity up to 7 million units 2nd Line SOP (26K tns) in 1Q17 Incursion in Machining process Value added Successful SOP and positive EBIT since 4Q15
Feb-15 Sign of JV Agreement to establish machining facility with Fagor Ederlan (50% each partner) Up to US$52 million of Investment Iron components machining for the auto industry Platforms from customers incoming 2017 - SOP in San Luis Potosi
STRATEGIC FOCUS Capture new projects and substitution of imports Define portfolio: product / systems / geography Consolidate ACE & Infun Acquisitions and achieve synergies Vertical integration through machining Diversification to other processes / materials / globalization
CONSTRUCTION SECTOR Ceramic Tiles 60% Water Heaters 40%
VITROMEX Manufacture and market ceramic and porcelain tiles for residential and commercial sectors, sold mainly in Mexico & US through distributors and home centers.
ENFOQUE ESTRATÉGICO Customer and product portfolio segmentation Turn Around EBITDA margin expansion Capacity transformation larger formats, strengthening product mix to luxury and premium Technological Update Digital process for decoration and design
WATER HEATERS Commercial and Residential solutions for water heating, mainly in Mexico and US
STRATEGIC FOCUS Accelerated growth in US Continue our leadership in the Mexican Market Technological advances in our products Increasing speed of new product development and launch (Speed to Market) Integration of Fluida pipe fitting business unit to achieve commercial and administrative synergies, as well as a lean structure
HOUSEWARES SECTOR Manufacture and market diverse cookware & dinnerware products. Also trade kitchenware accessories & appliances.
STRATEGIC FOCUS Improve profitability Growth Aluminum category Leadership in Enamel Steel and Ceramic, through traditional channels Dynamic and profitable growth in US
FINANCIAL & STOCK PERFORMANCE
SUSTAINED GROWTH $ USD Million NET SALES CAGR 2013-2016 + 13.2% EBITDA CAGR 2013-2016 + 31.3% 1,006 168 693 730 711 780 74 80 90 113 2013 2014 2015 2016* 2013 2014 2015 2016 * EBITDA Margin 10.7% 10.9% 12.7% 14.5% 16.7% AUTO PARTS CONSTRUCTION HOUSEWARES INFUN * 2016 Proforma Basis: 2016 GIS + 2016 Infun
feb.-13 may.-13 ago.-13 nov.-13 feb.-14 may.-14 ago.-14 nov.-14 feb.-15 may.-15 ago.-15 nov.-15 feb.-16 may.-16 ago.-16 nov.-16 feb.-17 MARKETABILITY GISSA 40 Double stock transactions from July 2016 to February 2017 Market Maker service signed on Dec-16 Improving on Marketability Ranking (6 positions) from November 2016 to February 2017 Analyst Consensus 2017 Price Target $43 MXP/Share 38 36 34 32 30 28 26 24 22 20
Why GISSA? Auto Parts Differentiated Value Proposition Sustained Growth and EBITDA Margin Expansion Strategic Diversification to Europe & Asia Leading and Well-Known Trademarks Solid Corporate Governance GISSA s share attractive valuation and potential upside (Infun Group Acquisition)
Firm steps towards Globalization March, 2017