GCC SAB de CV

BMV:GCC

Earnings Call Analysis

GCC Q3 Earnings: Robust Sales Growth and Margins

In the third quarter, GCC reported an 18% year-over-year increase in net sales to $416 million, thanks to successful pricing and a 3.5% increase in concrete volumes in Mexico. Despite a 4% volume decline in the U.S., this was balanced by a 3% rise in Mexico. The cost of sales improved remarkably, resulting in a two-decade low of 60%, while SG&A expenses slightly edged up to 7.5%. EBITDA soared 35% to $159 million with margin expansion to 38.1%, led predominantly by U.S. operations. Net income escalated by 52% to $106 million, along with free cash flow growth of 17%. The company remains committed to its full-year expectations without revising guidance, reflecting confidence in its strategic direction and operations.

Consistent Double-digit Growth and Achievements in Safety

Striding into the 10th consecutive quarter of double-digit growth, the executive team highlighted a momentous occasion as the company secured over $1 billion in sales by the third quarter, outpacing the previous year's milestone by a full quarter. This robust performance is attributed to a shrewd pricing strategy and strong customer relationships. The company's dedication to safety and operational efficiency, coupled with recognition through prestigious awards, underscored their commitment to their workforce and operational excellence, driving a remarkable 38% EBITDA margin.

Proactive Approach to Logistics Challenges and Market Diversification

Amidst external market pressures, including logistic hurdles at the U.S.-Mexico border and contraction in the mining sector, the company remains agile. Investing in 11 new trucks, with more on the way, GCC ensures robust delivery capacity to meet growing demand. An eye on diversifying their operations features the introduction of 44 ready-mix trucks over the past two years, with an additional 37 expected over the next year, aiming to bolster capacity utilization from 80% to 83-84% in 2024.

Financial Resilience and Shareholder Value

Financially, the company stands on solid footing. Net sales rose by 18% year-over-year to $416 million, fueled by strategic pricing and an uptick in concrete volumes, particularly in Mexico. Operational efficiency and reduced production costs translated to a 700 basis point decrease in the cost of sales, the lowest in two decades. Sustained by U.S. operations—which amounted to 79% of the EBITDA—a stellar 35% growth to $159 million in EBITDA was reported, alongside a 52% leap in net income to $106 million.

Strategic Investments and Expansion Plans

GCC's leadership shared details on strategic capital allocation, having invested $149 million over the past year, focusing on projects that strengthen infrastructure and growth prospects. While navigating the volatility of costs, efforts are made to optimize expenditure on significant projects like Odessa and Samalayuca. Complementing this, GCC's Board expanded the M&A scope to potentially include aggregate business opportunities in the U.S., signaling strategic growth intentions.

Price Dynamics and Future Outlook

Discussing pricing, the company has enacted an $8 price increase per short ton for construction cement across U.S. markets, effectual from January 2024. Coupled with a recent $15 increase for oil well cement, GCC stands vigilant in the current inflationary environment to gauge the necessity for further adjustments based on market feedback, inflation trends, and economic conditions. Flexibility in pricing strategy is maintained as the company prepares for any requisite response.

Engagement and Expectations for the Upcoming Year

In closing, the GCC team extends appreciations for investors' focus and participation, confidently looking ahead to continued engagement and progression while steadfastly pursuing strategic objectives without revisions to the full-year guidance.

Earnings Call Transcript 2023-Q3

[Operator]

Good morning, and welcome to GCC's Third Quarter 2023 Earnings Results Conference Call. Before we begin, I would like to remind you that this call is being recorded [Operator Instructions] Please also note that a slide presentation accompanies today's webcast. The link is available on the company's IR website at gcc.com.At this time, I would like to turn the call over to Sahory Ogushi, Head of Investor Relations. Please go ahead.

[Sahory Ogushi, executive]

Good morning, everyone, and thank you for joining. With me today are Mr. Enrique Escalante, our Chief Executive Officer; and Maik Strecker, Chief Financial Officer. The earnings release detailing our 2023 third quarter results was released yesterday after market close and is available on the company's website. This conference call is also being broadcast live within the Investors section of the company's website at gcc.com, and both the webcast replay of the call and transcript will be available on the same site approximately 1 hour after the end of today's call.Before we begin, I would like to remind you that our remarks today will include forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are set forth in yesterday's press release and in our quarterly report filed with the Mexican Stock Exchange.Any forward-looking statements that we make on this call are based on assumptions as of today and we undertake no obligation to update these statements as a result of new information or future events.With that, let me now turn the call over to Enrique.

[Hector Enrique Escalante Ochoa, executive]

Thank you, Sahory, and good morning, everyone. GCC again delivered double-digit top line growth for the third quarter of 2023, which marks our 10th consecutive quarter of double-digit growth. It's also important to note that by the quarter's end we have achieved more than $1 billion in accumulated sales, one quarter earlier than when we achieved this last year.This has been driven by a successful pricing strategy as well as our unwavering focus on client service and the strong client relationship, which have proved to be an enduring competitive advantage for our company. I want to thank the entire GCC organization for your focus on our key priorities. The team continues to navigate market conditions enabling us to strengthen margins.We achieved 38% EBITDA margin, reflecting continued traction on our measures to improve overall operational efficiency, with strong execution on our cost optimization across the organization. Let me share some highlights regarding the 3 pillars aligned with our 2025 vision: our people, profit and planning.People. Starting with our people pillar, our team's safety is central to our operations. I'm pleased to share that GCC was recognized as industry leader during the third quarter through both the PCA Safety Innovation Award and the 2023 Chairman's Safety Performance Award.These prestigious awards underscore our industry best practices and commitment to safety, as evidenced by the lack of recordable injuries and illness at our plants year-to-date. While we are proud of our track record, excellence in safety requires a commitment to continue improvement and ongoing evaluation. These are a core concept of GCC's strategic plan.As part of this program, we have trained over 450 supervisors and managers, prioritizing investments in responsible and safe operations. We also furthered our serious injury and fatality prevention system, establishing additional controls to reduce the probability of serious injury or fatality.GCC's training and development focused not only on safety. We continue to strengthen our workforce technical skill through the GCC Cement Training Institute. We are currently training employees to 14 high-priority programs. And to-date, we have dedicated over 7,700 hours training 350 employees. While it's still early to quantify the results, we have received strong favorable feedback from employees enrolled.We're also investing in building our company's next generation of leaders through a 2-year leadership program that's unique to GCC. As part of this talent development initiative, we have partnered with [ EKAMI ], the Mexican center for integral training and management development to ensure a holistic approach that encompasses strategic, operative and tactical training. This month we have finished selecting candidates for the first cohort that will start the program in January 2024.Also of note, we initiated the Great Place to Work annual survey this week to identify potential areas of improvement with the goal of keeping a high level of retention of our talent. The programs and strategies I've described are particularly relevant in today's labor environment.While GCC benefits from a very stable workforce with low turnover levels and without labor pressure, our priproate -- excuse me, our proprietary programs prove to be invaluable and an important differentiator.Profit. Turning to our profit pillar. During the quarter, we launched a comprehensive maintenance program to update key components of the cement mill preheater and kiln at our Chihuahua plant. This initiative will result in enhanced operational stability, increase efficiencies and a more robust pyro-processing system, with improved mean time between failures and decreased work stoppage that would otherwise result in time spent on maintenance and low production.In addition, we completed our new terminal in north of Minneapolis, enabling us to strengthen GCC's position in the Minneapolis-Saint Paul area, while securing an outlet for Rapid City's expanded capacity.Fuel prices remained stable during the quarter and we continued levering the flexible fuel strategy we have established over the last few years across our network to switch fuels at our operations, taking advantage of economic opportunities and the alternative fuels market. This strategy has proven to be an important driver of margin improvement.Now, we have therefore been delivering on the savings we had expected at the beginning of the year. Further, GCC hedges natural gas price opportunistically on a monthly basis for the Odessa plant. A base amount of 2024's consumption has already been hedged 4% below 2023 average cost.Let me turn to planning. As a brief update on prioritizing our planet, GCC remains on schedule to achieve our year-end CO2 reduction commitments. Our flexible fuel strategy is again playing an important role here. Switching to natural gas further enables us to deliver on our planned emissions reduction.We are committed to alternative fuels use with the Pueblo plant already burning almost 23% alternative fuels, representing the most significant steady increase of our plans to-date resulting from an improvement in fuel quality and our investment in the alternative fuel injection system at the plant. We're also working on sourcing for Rapid City and the team has been assessing various technologies to increase alternative fuel substitution at this plant.U.S. Turning next to an update on our markets. Our U.S. third quarter results benefit from July price increases, which will continue to favorably impact our revenue for the remainder of the year. Moreover, this month we have advised customers of an $8 per short ton price increase for construction cement effective January 1, 2024, and potentially another midyear increase based on cost input and inflation.U.S. cement demand declined during the third quarter, particularly in the residential segment. According to the latest report from the U.S. Census Bureau, building permits and starts for residential construction in September were down 7% compared to September 2022. The metropolitan areas where GCC participates, such as Colorado and South Lake City, were the most impacted by the softer market.However, oil and gas-driven cement demand remained strong in the Permian Basin, and we continued to work on the Denver International Airport expansion and the I-10 project in El Paso. In response to changing market conditions, we have shifted our approach in the infrastructure segment and we are pursuing a broader range of projects to capitalize on larger volume opportunities.The agriculture and renewable energy-driven demand positively contributed to our Iowa and South Dakota operations. I'm pleased to report that our operations are running smoothly with no plant or rail disruption during the quarter.As I have previously noted, GCC's reputation for outstanding customer service and strong customer relationship is an important differentiator in our industry. We take a proactive approach in collaborating closely with our customers to help them with better solutions for their construction projects. To further enhance their knowledge, our technical teams are delivering seminars that show the benefits and advantages of our products.Importantly, our customers have voiced their appreciation for our proactive response to their needs. Our ongoing commitment to working alongside with them and delivering effective solutions continue to strengthen their trust and loyalty, aligned with our strong reputation in the industry.Talking of our Odessa plant expansion, we remain on schedule. All contracts relevant to our critical path have been signed, equipment deliveries to the plant have commenced and construction is underway as planned. Our teams have been diligently working on the civil and construction aspects of the project, making substantial progress in terms of site and utility preparation as well as foundation construction.In parallel, we are negotiating the remaining pending contracts. Disclosing an estimated CapEx at this time would compromise negotiations since we're actively working to optimize this investment. The Odessa plant expansion project represents significant value with anticipated benefits of synergies and logistics optimization across our Samalayuca, Pueblo and Tijeras plants as well as a substantial increase in our annual cement production capacity by more than 1 million metric tons.Further, our strategic position in this dynamic market coupled with the flexibility of the Odessa plant to produce construction cement when needed enhances our resiliency should we experience future market fluctuations. We will continue to provide updates on our progress as appropriate.Mexico. Turning to our Mexico operations. Third quarter results again reflected GCC's ability to capitalize on the nearshoring trend. Cement volumes increased 3%, while concrete volumes increased 6%. This growth in concrete demand was driven by 17% year-over-year increase in the industrial segment. The surge of demand for our products during the quarter was mainly driven by 25 industrial projects under construction in Juarez and 11 in Chihuahua.This heightened demand has also begun to positively impact the residential segment with 5 multifamily projects under construction in Juarez.During the third quarter, GCC took delivery of 11 more trucks to meet this incremental demand. It was in addition to the 44 new ready-mix trucks we received over the last 2 years. And we expect to receive another 5 trucks in the fourth quarter and 32 in '24.Mining continued to contract after 10 years of sustained growth. And while 2 of GCC's mining customers are reaching the end of their mine life cycle, with the proven reserves, we have partially offset this volume decrease with the volumes required by 2 other mining clients that are increasing their production. Price increases are also mitigating volume decreases.While we have visibility on new projects for the year-end and years ahead, we foresee the segment recovering by 2026. As we shift our attention to the situation in the U.S.-Mexico border, it is important to highlight that GCC's strategic network has been instrumental in addressing the logistical challenges arising from this immigration surge.Delays at the border crossings have impacted the ability to transfer product across the border. Nevertheless, our distribution network has the flexibility to ship product from alternative plants, allowing us to maintain uninterrupted customer supply. GCC's unique market presence positions us well to continue delivering a high level of service even in the face of these logistical challenges.With that, let me now turn the call over to Maik for some further financial highlights of the quarter and our latest outlook.

[Maik Strecker, executive]

Thank you, Enrique, and good morning to everyone. Starting with our financial results on Slide 19. Consolidated net sales for the third quarter increased 18% on a year-over-year basis to USD 416 million. This was mainly driven by successful pricing in both of our markets and a 3.5% year-on-year increase in concrete volumes, mainly driven by higher demand in Mexico.Third quarter 2023 cement volumes were softer compared to the same quarter last year due to a 4% decrease in our U.S. operations, which was partially offset by a 3% increase from our Mexico operations.Please turn to Slide 20. Cost of sales as a percentage of revenues decreased 700 basis points in the third quarter to 60%, the lowest level in 20 years. This was due to our successful pricing strategy, increasing operating leverage and lower fuel prices, as well as production costs.Please turn to Slide 21. SG&A expenses as a percentage of sales increased 80 basis points in the quarter to 7.5%. Our focus on prudent price increases and intentional operational initiatives have improved margins across the organization.Third quarter EBITDA increased by 35% to USD 159 million, with 480 basis point EBITDA margin expansion to 38.1%. 79% of third quarter EBITDA was generated by our U.S. operations and 21% by our Mexico operation.Moving down the income statement on Slide 22. Net financial income totaled USD 9.6 million in the third quarter of 2023 compared to net financial expenses of USD 0.1 million in the prior year quarter as we continue to benefit from a higher cash balance and higher levels of interest rates, both in the United States and Mexico.Consolidated net income increased 52% to $106 million in the third quarter and earnings per share increased 53% year-on-year. Please note that during the quarter we repurchased a net amount of 73,000 shares equivalent to USD 0.6 million under our current share buyback program.Turning to our cash generation on Slide 24. Free cash flow increased 17% to USD 124 million in the third quarter of 2023, reflecting higher levels of EBITDA generation and higher levels of interest income. These were partially offset by increased cash taxes and working capital requirements.With respect to our balance sheet, we ended the quarter with USD 857 million in cash and equivalents and USD 500 million in total debt from our sustainability-linked bond, unchanged when you compare to the prior year third quarter. Our net debt-to-EBITDA ratio stood at a negative 0.82x.I would like to provide some additional granularity on GCC's capital allocation. Over the last 12 months, we have invested $149 million in maintenance and growth capital, including $54 million for the Odessa expansion project and $30 million for the Samalayuca debottlenecking project, which we completed during the first half of 2023.We have returned USD 45 million to shareholders. We have a combination of $25 million in dividends and $20 million in share repurchases. A relevant update regarding GCC's mandate related to our M&A activities is that our Board has authorized a broader M&A scope.Moving forward, we will continue to actively pursue value-creating initiatives through acquisitions of cement assets in the United States that can be brought into our network and are aligned with our long-term strategic vision. However, we will also proactively explore aggregate business opportunities within the United States.With that, I will now hand the call back to Enrique to share his closing remarks.

[Hector Enrique Escalante Ochoa, executive]

Thank you, Maik. We are not revising our full year guidance. Although there are some variations in cement volumes in the U.S., we don't think this will materially change the overall expected results for the year.We remain steadfast in our pursuit of our strategic objectives. The dedication and the hard work of our teams have been instrumental to our success. And together, we will continue to innovate and adapt, driving the business forward.With that, I will now turn the call over to your questions. Operator, please begin with the first question.

[Operator]

[Operator Instructions] Our first question is from Pablo Ricalde with Santander, Mexico.

[Pablo Ricalde, analyst]

I have 2 questions. The first one is regarding the aggregate M&A that you're talking in the presentation. I don't know if you can provide more details on that?

[Hector Enrique Escalante Ochoa, executive]

Yes. So in aggregates we're, I mean, widening our scope of potential strategic investments in the U.S. market. And since we have always been focused on our core business on cement plants that can be plugged into our network, we are now opening up the scope to also look for potential aggregates, mainly in the same area at the beginning of this strategy that can be integrated with some of our operations again as a first step. So we start developing an aggregate business in the U.S. That doesn't mean that with time we would not look at other aggregate opportunities, I mean, countrywide.

[Pablo Ricalde, analyst]

Okay. Perfect. And my second question is regarding U.S. profitability. How should we see profitability in the U.S. going forward? Or how sustainable is this EBITDA margin above 40%?

[Maik Strecker, executive]

Pablo, this is Maik. Thanks for the question. So we feel pretty positive about the profitability in the U.S. specifically and to make this a sustainable journey. Again, we still see good momentum on the pricing front. We're very proactive on that and we work with customers. And as Enrique mentioned, it's not only about the price, but also the services that we provide, the products, the work with the customers.And therefore, we see -- pricing will continue to be a strong momentum. And then as I mentioned, we have some very specific operational initiatives really to optimize how we run the business and the plants. That is supported by -- we see some stable input cost, fuel cost. So all of that -- we're working hard to again continue to build on the profitability and make that really sustainable for the company.

[Operator]

Our next question is from Alejandra Obregon with Morgan Stanley.

[Alejandra Obregon, analyst]

Congratulations on the numbers. I have 2 questions. The first one is on capacity, if you can elaborate a little bit. As you put the backlog and your inventories together, if you can help us have a sense of where you see utilization landing towards 2024 -- I mean, end of 2023 perhaps and in the beginning of 2024? In your different sort of markets where do you see that going?And then the second question is, let's say, on this other category in Mexico, the wallboard, the blocks, this had a very significant -- I mean, solid performance during the quarter. If you can elaborate a little bit on what's driving that outperformance that will be very helpful?

[Hector Enrique Escalante Ochoa, executive]

Alejandra, this is Enrique. So in terms of capacity, I mean, we've seen a little bit of a slow, I mean, down this year because of what we commented on the residential market mainly. So on average, we're running at around 80% of capacity to-date. We expect, I mean, that to, I mean, come back up a little bit more next year based on some of our plants and the introduction of our new terminals that are, I mean, now, obviously, I mean, making an opportunity for customers to reach out further in terms of their cement shipments.So our target will be to raise that capacity to, I mean, 83%, 84% next year. And of course, that's also, I mean, predicated on what we expect from the infrastructure, I mean, build projects that should start hitting, I mean, next year. And that will also help increase, I mean, our utilization of capacity. Of course, that's the main reason why we're expanding, I mean, Odessa in Q3, because we see going forward that we'll stay at a very high utilization level.In Mexico, as you mentioned, I mean -- well, I guess, I mean, with the nearshoring effect, I mean, that has had a very direct impact on commercial construction, but a very robust also indirect impact in the rest of the economy, which drives a lot of, I mean, housing growth and some other commercial retail level, I mean, projects in the cities. And so, it's helping a lot in terms of, I mean, block, aggregates, precast, I mean you name it -- I mean, all segment except for the mining that we comment -- I mean that's a very different segment -- are being benefited by the nearshoring, I mean, effect and we expect that trend to continue.

[Operator]

Our next question is from Rafael Simonetti with UBS.

[Rafael Simonetti, analyst]

Congrats on the result. My question is regarding the disciplined expansion. You've stated that $54 million in CapEx was used in the last 12 months. If you could comment more about the CapEx pipeline and also about the total cost of the expansion? And if any material changes happened to it?

[Maik Strecker, executive]

So yes, we -- as we communicated, we had kicked off the construction in Odessa, and that's progressing very nicely over the last couple of months. And now that we have all the key contracts in place, we expect that, that will accelerate and we will see a lot of activities going into 2024. From an overall CapEx flow, 2024, 2025 will be the main years, the heavy years where we will spend most of the CapEx. Again, that's the natural flow of that project.And then regarding the overall number or the overall cost, as we said, we're still negotiating some of the elements. So giving a new number, we're not ready for that. What we communicated in the past that was really the high watermark. If you remember, that was driven during a time when inflation was really strong, when supply chain challenges, and we had to get these quotes in and work through our budget. And really, the goal is to optimize that, as we've said. And we're very positive that, that will happen over the coming couple of months and 2 years to get this project completed.

[Operator]

[Operator Instructions] Our next question is from Yassine Touahri with On Field Investment Research.

[Yassine Touahri, analyst]

Yes. Could you give us a little bit of color on the pricing development throughout the year? I think that there was a second price increase which was announced in the U.S. over the summer. Has it been successfully implemented? Are prices higher in the third quarter than in the second quarter? And then a second question. Have you already sensed a price increase later for 2024? And if so, what is the order of magnitude in the U.S.?

[Hector Enrique Escalante Ochoa, executive]

This is Enrique. So basically, what we did is obviously announce, I mean, what we mentioned, the $8, I mean, price increase per short ton of cement across all markets in the U.S. for construction cement. And there have been a lot of questions about a second price increase for the year. I mean I've received a lot of comments and questions asking me.And I think that we want to be prudent here and just stay very close to our customer base and to what the market behavior is in next year. And based on that, we will I mean decide if a second price increase during the summer is something that we will I mean go forward or not. And this is, of course, going to be based in customer feedback and how the economy is doing and what inflation is doing.As we all know, inflation now it's been referred as -- continue to be sticky. So, we're concerned with that, of course, and we're vigilant. And depending on that, we'll decide to do a second price increase or not. That's the plan we have planned so far.

[Yassine Touahri, analyst]

But last summer there was no second price increase, last summer? In July, August 2023 did get a second price increase?

[Hector Enrique Escalante Ochoa, executive]

Yes. This year -- I mean, I think we informed -- I mean before -- I mean, we had a second price increase in July of $7 per short ton for construction cement. And I mentioned that it didn't -- we didn't increase it in a couple of our markets just because of local, I mean, economic conditions. But it mainly went well across, I mean, the rest of the market. And that's for construction cement.In oil well -- oil well cement price increase was $15 in July 1 also. And that was obviously, I mean, well received by the industry, I mean, wherever we ship oil well cement.

[Yassine Touahri, analyst]

And for next year have you announced -- have you already sent a letter for an increase of, let's say, $10, $15 or is it too early for January or April next year?

[Hector Enrique Escalante Ochoa, executive]

Yes. The $8 per ton that I mentioned, it's only construction cement. We have not decided at this moment, I mean, what's going to be our oil well cement price increase. That's something that is also under analysis at the moment.

[Yassine Touahri, analyst]

And $8 is for January 2024 or is it for April?

[Hector Enrique Escalante Ochoa, executive]

Yes, sir. January 1 across all markets for construction cement, correct.

[Yassine Touahri, analyst]

And just to sum up, the $7 that you put for construction cement at July, should we assume that half of it was successful, that overall you were able to increase prices by $3, $4 in July for the group as a whole?

[Hector Enrique Escalante Ochoa, executive]

I think that half is a very safe assumption at least.

[Yassine Touahri, analyst]

And again, congratulations for the very strong result.

[Operator]

Our next question is from Daniel Rojas with Bank of America.

[Daniel Rojas, analyst]

Most of my questions have been asked. Maybe just following up. Going forward -- we've seen a lot of good follow-through for concrete. What are you thinking for the rest of the year in terms of increasing prices sequentially? And what should we expect for next year?

[Hector Enrique Escalante Ochoa, executive]

We are, I mean, in concrete doing pretty well in price increases this year as we showed. And we're still, I mean, analyzing what's going to be the exact, I mean, announcement. That's more market-by-market in our case. We have different segments that we go through. For example, the wind farm projects, I mean, command a different price and price increase because they're moving from areas to areas. Now we're doing projects in Texas, for example, compared to South Dakota. So we have not, I mean, disclosed what the price increase for concrete is yet. So we'll keep you posted on that.

[Daniel Rojas, analyst]

But it's safe to assume that given the high demand for industrial projects in the southern part of the U.S. that this follow through should be very strong -- or relatively strong?

[Hector Enrique Escalante Ochoa, executive]

It is very safe to assume that and specifically to our markets. As I mentioned, the agricultural market is doing well in Iowa, South Dakota and the wind power generation is also doing well. We're following several projects now, I mean, moving from those areas to Texas, for example. So that's doing pretty well in terms of concrete.And as I said, we expect obviously some infrastructure, I mean, work coming online, I mean, next year that would, I mean, definitely support, I mean, a higher concrete price.

[Operator]

[Audio Gap][ Mathias ], are you with us?

[Unknown Analyst]

I am. Congrats on the results. I just wanted to hear some of your thoughts on the transaction between Summit and Argos, maybe what markets. That could mean increased competition like -- and also whether you are looking to approach any player with a similar proposition or maybe have been approached by a similar proposition? Just wanted to hear your ideas on that.

[Hector Enrique Escalante Ochoa, executive]

So no other comment. I mean, from our side in terms of the Summit-Argos announcement, I mean, I think the only thing I can say there is, I mean, we're in certainly different markets than Argos. So no direct impact for our business.And in terms of our M&A, I mean, the strategy continues to be, I mean, as we have said, priority around, I mean, our network. And we continue working hard with, I mean, potential prospects in that area. And as I said also in the past, we're opening up, I mean, the scope now to, I mean, starting another system in other parts of the U.S. if the opportunity arises. But there is nothing specific that I can talk to you about at this moment.

[Operator]

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I will turn the floor back to Ms. Ogushi.

[Sahory Ogushi, executive]

Thank you, everyone. We appreciate everyone taking the time today to join us and for your interest in GCC. We look forward to speaking with all of you soon.

[Operator]

Thank you. This will conclude today's conference. You may disconnect your lines at this time. And thank you for your participation.