GMéxico Transportes, S.A.B. de C.V. (VIST) Earnings Call Transcript
July 29, 2025
Earnings Call Speaker Segments
Good day, and thank you for holding, and welcome to Grupo Mexico Transportes Second Quarter Earnings Conference Call. With us today is Mr. Alberto Vergara, Mr. Fernando Ezquerro, Mr. Genaro Guerrero and other executives who will discuss the financial performance of the company during the second quarter 2025 results, giving you a summary of the latest news and address any questions you may have at the end of the call. Before we begin, I would like to remind you that information disclosed on today's call may include forward-looking statements regarding the company's results and prospects, which are subject to risks and uncertainties. Actual results may differ materially, and the company cautions not to place undue reliance on these forward-looking statements. Grupo Mexico Transportes undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise. The presentation may be followed through our webcast. [Operator Instructions] A copy of the slides that the company will be reviewing today is available on the website at gmxt.mx. Now it's my pleasure to pass the call to Alberto Vergara. Please go ahead.
Welcome, everyone, to GMXT's Second Quarter Earnings Conference Call. Let's begin with a brief overview of our second quarter results. Despite 2.7% quarter-over-quarter contraction in volume measured in ton kilometers, we achieved a 10% increase in revenue and a 17% growth in EBITDA, reaching MXN 7.3 billion for the quarter. These results reflect the continued success of our investment programs and our strategic focus on gaining market share and improving operational efficiency. We're also pleased to announce that our Board of Directors has approved a dividend of MXN 0.50 per share, reinforcing our commitment to deliver value to our shareholders. To continue with the commercial highlights of the quarter, I will hand it over to Fernando Ezquerro.
Hello, everyone. To review the revenue for the second quarter of 2025, income for the second quarter increased by 10% compared to 2024, totaling MXN 16.6 billion, driven by good results in agricultural, minerals and automotive sectors. Volume was down by 6.5% in cars relative to the previous year, although we were able to move longer hauls from minus 2.7 in net ton kilometers. We also had a positive exchange rate effect from our dollar-denominated rates of 8%. Next slide, please. In this slide, we will check the main variations of each of the segments or sectors that we move. We had 4 segments with double-digit income growth. The first one is automotive, which saw a rise of 24% compared to last year's second quarter, mainly due to improved network fluidity that allowed us to gain market share from ships and other railroads. The second segment was minerals with a surge of 19% because of an increase in mineral imports and longer hauls. The third one was agricultural with a 12% gain due to an increase in grain shuttle trains from the U.S. that allowed us to recover from a down year in local crops in Mexico and low volumes during the first quarter because of weather conditions. And finally, intermodal up 10%, boosted by strong cross-border and domestic U.S. volumes. Other segments with medium growth were chemicals with a rise of 4%, driven by additional market share of ethanol and plastic resins and lastly, energy with a growth of 2% compared to the previous year. Moving on to the sectors that had a negative result in earnings. First is industrials with a decrease of 3%. This is due to a cyclical lower demand of new railcars and the demand contraction of beer in the U.S. Finally, is cement and metals with a reduction of 6% and 9%, respectively, because of a decrease in infrastructure projects in Mexico compared to previous years. I'll turn the presentation to Alberto so we can check the financial breakdown.
Please, Genaro, go ahead with the financial breakdown.
Sure. Thank you, Alberto. Good afternoon or good morning, everyone. Revenue for the second quarter were MXN 16.6 billion, a 10% increase quarter-over-quarter and 7.6% year-over-year. The operating cost in the second quarter increased 4.3% and 6.1% as of June, which I will break down on the next slide. The administrative expense for the second quarter includes profit sharing provision, resulting in an increase of 16.9% and 15.8% in accumulated basis. The other income for the sales of obsolete has been MXN 74 million in this quarter and MXN 107 million so far. Total operating cost of MXN 9.3 billion for the quarter, 4.8% higher than second quarter '24 and 6.6% for the first semester. Despite increases in operating costs and the currency exchange rate effects during the quarter, GMXT's EBITDA is 17.2% above the second quarter 2024 and 9% accumulated as of June. Consequently, the EBITDA margin of 44.2% reports an increase of 270 basis points for the quarter and 50 basis points so far this year. Net profit this quarter recorded MXN 2.8 billion, an increase of 23.2% quarter-over-quarter and MXN 5 billion as of June, 7.6% increase year-over-year. The earnings per share reported this quarter is MXN 0.65 and MXN 1.16 for the first 6 months. Then on the next slide, please, we have our cost breakdown. Breaking down the main items to contribute to the 4.2% cost increase in the quarter are MXN 185 million of locomotives and car maintenance. MXN 176 million for equipment damage and rescue operations in accidents, MXN 147 million of growth in accordance with the labor contracts and MXN 333 million offsetting the cost increase by cost reduction of lease equipment and other costs. After this, I will return the presentation to Alberto. Thank you.
Thank you, Genaro. Please go to Page #7. Our operational metrics this quarter help explain the improvement in our results. Average train speed increased 15%, reaching 39 kilometers per hour, while the dwell time was reduced by 11%, resulting in a 25% improvement in the car velocity. Additionally, the average train length reached 1,833 meters, even tonnage per train decreased by 3%. Finally, crew starts were reduced by 1%. Please go to the next page. The GMXT Board of Directors has approved a 2025 CapEx program totaling $580 million, which will allow GMXT to continue growing and improving the service and optimizing the performance of our key productivity indicators. The 2025 CapEx will be allocated as follows: $414 million for rail infrastructure, including tracks, ties, bridge, the acquisition of new locomotives, overhauls and equipment, $82.3 million for expanding yard, terminals and sidings, $83.5 million for strategic projects such as bypass construction and a tunnel rehabilitation. This investment plan reflects our long-term commitment to strengthen our network and delivering greater value to our customers and shareholders. Please go to the next slide. Our outlook for 2025 remains conservative with expected volume growth between 2% and 3% and revenue growth between 5% and 6%. As previously mentioned, our CapEx program of $580 million will support these projections, enabling us to continue strengthening our infrastructure and service capabilities. With these final remarks, I will now ask the operator to open the Q&A session. Thank you all for joining.
[Operator Instructions] First question comes from the line of Valentina [ Bart-Magawan ] with GBM.
First of all, I'd like to congratulate you for your results. I have 2. The first one in regards to your CapEx. You've raised the 2025 investment to $580 million with a focus in locomotive, terminals and expansion works. Can you elaborate on how much of this will contribute to capacity versus efficiency? And the second question is about your EBITDA, which grew 17.2% in this quarter despite continued cost pressures from fuel, labor and equipment. So what efficiencies have you identified or planned to implement to support further margin expansion going forward?
Thank you, Valentina. Yes, we changed our CapEx because we buy some 60 locomotives that will be arriving in this year. So that's why we increased our CapEx in capacity. This will also allow us to be more efficient because these new locomotives has a better fuel consumption. Now that will help us also with your next question about the EBITDA. This will help us to improve our velocity -- our car velocity, and this will allow us to gain EBITDA margin points.
Our next question is from Alfonso Salazar with Scotiabank.
I have 3 questions, if I may. The first one is regarding the outlook for intermodal volumes in the second half of the year, what are you expecting? The second one is if you can provide any time line and the rationale for delisting the shares. So what are you expecting, especially the time line and the rationale behind? And the third one is a follow-up on the CapEx increase. I would imagine that you were expecting to buy these 60 locomotives later, not this year, but maybe later. So just wondering if that was the case. And if that means that in 2026, the CapEx figure will be lower? Or how this changed the CapEx figures, for '25, we already know, for '26 and '27?
Thank you, Alfonso. I'll answer the first question regarding intermodal volumes for the expectation for the rest of the year. We expect it to improve and to grow. Cross-border -- all the cross-border volumes are showing strong results and should remain the same. And we specifically had the maritime that comes to Manzanillo an issue during this quarter. But it was a onetime issue because the [indiscernible] or the customs changed the process. So we had to adapt to the new process, and that's already improving as we speak. So we expect to continue with good cross-border volumes and to recover the maritime volumes as well.
Thank you, Fernando. The decision to delist from the Mexican Stock Exchange was made following to a strategic review. It reflects our intention to optimize our capital structure, reduce regulation and administrative costs and gain greater flexibility in execution long-term plans. While we recognize the value of public markets, we believe that operating as a private entity better aligned with our current business objectives and growing strategy. We remain fully committed to transparency and to delivering value to our stakeholders. We think that in the middle of September, more or less, we will receive the approval of the Mexican government to have this program. So we think that in September or October, we will continue the plan as noticed. And in the third question that you asked for the CapEx, no, for the next year, our CapEx will be almost in the same pattern, that is between $415 million. These locomotives are arriving this year. And the next year, we are not seeing right now any or to have less CapEx for the next years.
That's very useful. So just a follow-up on the listing. So you say that you are expecting for the government approval and it could take place somewhere in September and October. What is -- if you can remind us what is the process, especially for the pricing that you -- of the listing price?
Yes. After we receive this approval of the government, we will have a Board meeting in order to have the price of the stock that we are going to buy. So we will have some -- so we will need to wait until this happen.
[Operator Instructions] Our next question is from Rodrigo Salazar with AM Advisors.
My question has been answered.
Next question comes from the line of Ernst Anton Mortenkotter Terrazas with GBM.
Mine is just related on your outlook for the year. You lowered the volume growth expectation but maintained revenues. I was just wondering what is the driver of this? Are you expecting any shift in the mix or maybe it's just a higher overall expectation on the FX rate? If you could provide some color there.
Yes. Thank you for your question. So regarding the volume, we did adjust it, we lowered a little bit. It was mainly because of the first quarter, we saw some volume complications, specifically in agriculture and some in intermodal in the second quarter. But we are expecting to recover some of that in the second semester, but the results or the lower volume in the first quarter did affect the outcome for the whole year.
And I'm not showing any further questions in the queue. I will pass it back to management for any final remarks.
Yes. Thank you very much for joining us to our conference call. I hope that we can see you in the next conference call, the next quarter. Thank you very much.
And thank you so much. This concludes today's program. You may now disconnect. Have a great day, everyone.
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