EX-2 3 d716053dex2.htm EX-2

EX-2

Exhibit 2

2014

FIRST QUARTER RESULTS

Stock Listing Information

Colombian Stock Exchange S.A.

Ticker: CLH

Investor Relations

Patricio Treviño Garza

+57 (1) 603-9823

E-mail: patricio.trevinog@cemex.com

CEMEX LATAM HOLDINGS

CEMEX LATAM HOLDINGS

OPERATING AND FINANCIAL HIGHLIGHTS

January – March First Quarter

2014 2013 % Var. 2014 2013 % Var.

Consolidated cement volume

(thousand of metric tons) 1,967 1,691 16% 1,967 1,691 16% Consolidated domestic gray cement volume (thousand of metric tons) 1,734 1,505 15% 1,734 1,505 15% Consolidated ready-mix volume (thousand of cubic meters) 819 708 16% 819 708 16% Consolidated aggregates volume (thousand of metric tons) 1,947 1,547 26% 1,947 1,547 26% Net sales 423 383 10% 423 383 10% Gross profit 208 213 (2%) 208 213 (2%) Gross profit margin 49.2% 55.6% (6.4pp) 49.2% 55.6% (6.4pp) Operating earnings before other expenses, net 118 118 0% 118 118 0% Operating earnings before other expenses, net, margin 27.9% 30.7% (2.8pp) 27.9% 30.7% (2.8pp) Controlling interest net income 55 26 108% 55 26 108% Operating EBITDA 141 141 0% 141 141 0% Operating EBITDA margin 33.4% 36.7% (3.3pp) 33.4% 36.7% (3.3pp) Free cash flow after maintenance capital expenditures 80 51 57% 80 51 57% Free cash flow 75 40 86% 75 40 86% Net debt 1,234 1,514 (18%) 1,234 1,514 (18%) Total debt 1,292 1,582 (18%) 1,292 1,582 (18%) Earnings per share 0.10 0.05 107% 0.10 0.05 107% Shares outstanding at end of period 556 556 0% 556 556 0% Employees 4,382 3,561 23% 4,382 3,561 23% In millions of US dollars, except percentages, employees, and per-share amounts. Shares outstanding at the end of period are presented in millions.

Consolidated net sales in the first quarter of 2014 increased to US$423 distribution expenses as well as by the effect of the reclassification of million, representing a 10% growth when compared to the first quarter distribution expenses related to cement and aggregates sales to our of 2013. The increase in net sales is mainly explained by higher ready-mix concrete unit, from operating expenses to cost of sales. construction activity driving volume growth in several of our markets.

Operating EBITDA during the first quarter reached US$141 million, Adjusting for additional working days and foreign exchange remaining flat compared to the first quarter of 2013. Adjusting for fluctuations in 1Q14, net sales increased by 15% compared to 1Q13. additional working days and foreign exchange fluctuations in 1Q14, Cost of sales as a percentage of net sales increased by 6.4pp during the operating EBITDA increased by 5%. first quarter of 2014 compared to the same period last year, from Operating EBITDA margin during the first quarter of 2014 declined by 44.4% to 50.8%. This increase is explained by higher maintenance costs 3.3pp, compared to the first quarter of 2013. This decline is explained in Colombia, Panama and Costa Rica. In addition, operating expenses in mainly by higher maintenance costs in Colombia, Panama and Costa 1Q13 included distribution expenses related to cement and aggregates Rica. sales to our ready-mix business, which in 1Q14 are presented as cost of sales. Controlling interest net income during the first quarter of 2014 reached US$54.6 million, increasing by 108% compared to the first Operating expenses as a percentage of net sales during the first quarter of 2013. quarter of 2014 declined by 3.6pp from 24.9% to 21.3% compared to the same period a year ago. This decline is explained by lower Total debt at the end of the first quarter of 2014 was US$1,292 million. Please refer to definition of terms and disclosure for presentation of financial and operating information.

2014 First Quarter Results Page 2

CEMEX LATAM HOLDINGS

OPERATING RESULTS

Colombia January – March First Quarter 2014 2013 % Var. 2014 2013 % Var.

Net sales 242 209 16% 242 209 16% Operating EBITDA 93 87 6% 93 87 6% Operating EBITDA margin 38.2% 41.7% (3.5pp) 38.2% 41.7% (3.5pp)

In millions of US dollars, except percentages.

Domestic gray cement Ready-mix Aggregates Year-over-year percentage January – March First Quarter January – March First Quarter January – March First Quarter variation 2014 2014 2014 2014 2014 2014

Volume 34% 34% 23% 23% 38% 38% Price (USD) (12%) (12%) (9%) (9%) (11%) (11%) Price (local currency) (2%) (2%) 2% 2% (1%) (1%)

In Colombia, during the first quarter our domestic gray cement, ready-mix and aggregates volumes increased by 34%, 23% and 38%, respectively, compared to the first quarter of 2013.

Construction activity in the first quarter was driven by formal housing, benefiting from the government-sponsored subsidy program for middle-income housing and the 100-thousand free-home program. Infrastructure was also an important driver for demand of our products with several ongoing projects that were awarded in past years.

Panama January – March First Quarter 2014 2013 % Var. 2014 2013 % Var.

Net sales 76 72 5% 76 72 5% Operating EBITDA 32 34 (5%) 32 34 (5%) Operating EBITDA margin 42.5% 46.8% (4.3pp) 42.5% 46.8% (4.3pp) In millions of US dollars, except percentages.

Domestic gray cement Ready-mix Aggregates Year-over-year percentage January – March First Quarter January – March First Quarter January – March First Quarter variation 2014 2014 2014 2014 2014 2014

Volume (17%) (17%) 7% 7% 6% 6% Price (USD) 16% 16% 2% 2% 0% 0% Price (local currency) 16% 16% 2% 2% 0% 0% In Panama during the first quarter our ready-mix and aggregates volumes increased by 7% and 6%, respectively, while our cement volumes declined by 17%, on a year-over-year basis.

The residential sector, along with several commercial and ongoing infrastructure projects like Corredor Norte, supported demand of our products during the quarter. Our cement volume decline was attributed to lower consumption from the Panama Canal expansion project.

Please refer to definition of terms and disclosure for presentation of financial and operating information.

2014 First Quarter Results Page 3

CEMEX LATAM HOLDINGS

OPERATING RESULTS

Costa Rica

January – March First Quarter 2014 2013 % Var. 2014 2013 % Var.

Net sales 35 35 2% 35 35 2% Operating EBITDA 15 15 (3%) 15 15 (3%) Operating EBITDA margin 41.6% 43.7% (2.1pp) 41.6% 43.7% (2.1pp)

In millions of US dollars, except percentages.

Domestic gray cement Ready-mix Aggregates Year-over-year percentage January –March First Quarter January – March First Quarter January – March First Quarter variation 2014 2014 2014 2014 2014 2014

Volume 14% 14% (17%) (17%) (11%) (11%) Price (USD) (2%) (2%) 2% 2% (2%) (2%) Price (local currency) 5% 5% 9% 9% 5% 5%

In Costa Rica, our cement volumes in the quarter increased by 14%, while our ready-mix and aggregates volumes decreased by 17% and 11%, respectively, on a year-over-year basis.

During the first quarter our cement volumes continued with a solid performance driven by highway infrastructure projects. Our ready-mix and aggregates volumes in the quarter were affected by the conclusion of several projects.

Rest of CLH

January – March First Quarter 2014 2013 % Var. 2014 2013 % Var.

Net sales 70 71 (2%) 70 71 (2%) Operating EBITDA 19 19 (3%) 19 19 (3%) Operating EBITDA margin 27.1% 27.3% (0.2pp) 27.1% 27.3% (0.2pp) In millions of US dollars, except percentages.

Domestic gray cement Ready-mix Aggregates Year-over-year percentage January – March First Quarter January – March First Quarter January – March First Quarter variation 2014 2014 2014 2014 2014 2014

Volume 3% 3% (2%) (2%) (2%) (2%) Price (USD) (6%) (6%) 2% 2% (1%) (1%) Price (local currency) (1%) (1%) 3% 3% 4% 4%

In the Rest of CLH region, which includes our operations in Nicaragua, Guatemala, El Salvador and Brazil, during the first quarter of 2014 our domestic gray cement volumes increased by 3%, while both our ready-mix and aggregates volumes declined by 2%, compared to the first quarter of 2013.

The positive performance in our cement volumes in Nicaragua, Guatemala and El Salvador compensated weak demand conditions in Brazil. The infrastructure and the industrial-and-commercial sectors remained the main drivers for demand of our products.

Please refer to definition of terms and disclosure for presentation of financial and operating information.

2014 First Quarter Results Page 4

CEMEX LATAM HOLDINGS

.

OPERATING EBITDA, FREE CASH FLOW AND DEBT RELATED INFORMATION

Operating EBITDA and free cash flow

January – March First Quarter 2014 2013 % Var 2014 2013 % Var

Operating earnings before other expenses, net 118 118 0% 118 118 0% + Depreciation and operating amortization 23 23 23 23 Operating EBITDA 141 141 0% 141 141 0% —Net financial expense 24 29 24 29 —Capital expenditures for maintenance 9 3 9 3 —Change in working capital 7 40 7 40 —Taxes paid 21 18 21 18 —Other cash items (net) 0 (0) 0 (0) Free cash flow after maintenance capital expenditures 80 51 57% 80 51 57% —Strategic capital expenditures 5 11 5 11 Free cash flow 75 40 86% 75 40 86%

In millions of US dollars.

The free cash flow generated during the quarter was used to reduce debt.

Information on Debt

Fourth First Quarter First Quarter Quarter % 2013 2014 2013 2014 2013 Var

Total debt (1)(2) 1,292 1,582 (18%) 1,381 Currency denomination Short- term 27% 13% 19% US dollar 98% 95% Long -term 73% 87% 81% Colombian peso 2% 5%

Cash and cash equivalents 58 68 (15%) 77 Interest rate Net debt 1,234 1,514 (18%) 1,304 Fixed 80% 80% Variable 20% 20%

In millions of US dollars, except percentages. (1) Includes capital leases, in accordance with International Financial Reporting Standards (IFRS). (2) Represents the consolidated balances of CLH and subsidiaries. Please refer to definition of terms and disclosure for presentation of financial information.

2014 First Quarter Results Page 5

CEMEX LATAM HOLDINGS

OPERATING RESULTS

Income statement & balance sheet

CEMEX Latam Holdings, S.A. and Subsidiaries

(Thousands of U.S. Dollars, except per share amounts)

January – March First Quarter 2014 2013 % Var. 2014 2013 % Var.

INCOME STATEMENT Net Sales 422,753 383,342 10% 422,753 383,342 10% Cost of Sales (214,748) (170,330) (26%) (214,748) (170,330) (26%) Gross Profit 208,006 213,012 (2%) 208,006 213,012 (2%) Operating Expenses (89,939) (95,504) 6% (89,939) (95,504) 6% Operating Earnings Before Other Expenses, Net 118,067 117,508 0% 118,067 117,508 0% Other expenses, Net (224) (2,432) 91% (224) (2,432) 91%

Operating Earnings 117,843 115,076 2% 117,843 115,076 2% Financial Expenses (24,403) (29,400) 17% (24,403) (29,400) 17% Other Income (Expenses), Net 854 (2,437) NA 854 (2,437) NA

Net Income Before Income Taxes 94,294 83,239 13% 94,294 83,239 13% Income Tax (39,474) (56,724) 30% (39,474) (56,724) 30% Consolidated Net Income 54,820 26,515 107% 54,820 26,515 107%

Non-controlling Interest Net Income 200 233 (14%) 200 233 (14%) CONTROLLING INTEREST NET INCOME 54,620 26,282 108% 54,620 26,282 108% Operating EBITDA 140,999 140,736 0% 140,999 140,736 0%

Earnings per share 0.10 0.05 107% 0.10 0.05 107% As of March 31 As of March 31 BALANCE SHEET 2014 2013

Total Assets 3,812,871 3,935,352 Cash and Temporary Investments 57,906 67,880 Trade Accounts Receivables 172,965 107,883 Other Receivables 92,248 79,000 Inventories 113,215 93,398 Other Current Assets 29,553 32,001

Current Assets 465,887 380,162 Fixed Assets 1,182,463 1,209,858 Other Assets 2,164,521 2,345,332

Total Liabilities 2,454,102 2,666,545 Current Liabilities 686,128 522,469 Long-Term Liabilities 1,755,529 2,125,096 Other Liabilities 12,446 18,980 Consolidated Stockholders’ Equity 1,358,769 1,268,807 Non-controlling Interest 5,660 5,702 Stockholders’ Equity Attributable to Controlling Interest 1,353,109 1,263,105 Please refer to definition of terms and disclosure for presentation of financial information. 2014 First Quarter Results Page 6

CEMEX LATAM HOLDINGS

OPERATING RESULTS

Income statement & balance sheet

CEMEX Latam Holdings, S.A. and Subsidiaries

(Millions of Colombian Pesos in nominal terms, except per share amounts)

January – March First Quarter

2014 2013 2014 2013 INCOME STATEMENT % Var. % Var. Net Sales 849,516 692,809 23% 849,516 692,809 23% Cost of Sales (431,532) (307,835) (40%) (431,532) (307,835) (40%) Gross Profit 417,984 384,974 9% 417,984 384,974 9% Operating Expenses, net (180,731) (172,603) (5%) (180,731) (172,603) (5%) Operating Earnings Before Other Expenses, Net 237,253 212,371 12% 237,253 212,371 12%

Other Expenses, Net (449) (4,395) 90% (449) (4,395) 90% Operating Earnings 236,804 207,975 14% 236,804 207,975 14% Financial Expenses (49,038) (53,134) 8% (49,038) (53,134) 8% Other Income (Expenses) Financial, net 1,716 (4,405) NA 1,716 (4,405) NA Net Income Before Income Taxes 189,482 150,437 26% 189,482 150,437 26%

Income Tax (79,322) (102,517) 23% (79,322) (102,517) 23% Consolidated Net Income 110,161 47,920 130% 110,161 47,920 130% Non-controlling Interest Net Income 402 421 (4%) 402 421 (4%) CONTROLLING INTEREST NET INCOME 109,759 47,499 131% 109,759 47,499 131% Operating EBITDA 283,335 254,350 11% 283,335 254,350 11%

Earnings per share 198.11 86.18 130% 198.11 86.18 130% As of March 31 As of March 31 BALANCE SHEET 2014 2013 Total Assets 7,493,512 7,210,352 Cash and Temporary Investments 113,805 124,369 Trade Accounts Receivables 339,931 197,664 Other Receivables 181,298 144,744 Inventories 222,503 171,124 Other Current Assets 58,081 58,631

Current Assets 915,617 696,532 Fixed Assets 2,323,918 2,216,703 Other Assets 4,253,977 4,297,117 Total Liabilities 4,823,096 4,885,643 Current Liabilities 1,348,461 957,267 Long-Term Liabilities 3,450,176 3,893,601 Other Liabilities 24,459 34,775 Consolidated Stockholders’ Equity 2,670,416 2,324,709 Non-controlling Interest 11,125 10,447 Stockholders’ Equity Attributable to Controlling Interest 2,659,292 2,314,262 Please refer to definition of terms and disclosure for presentation of financial information. 2014 First Quarter Results Page 7

CEMEX LATAM HOLDINGS

OPERATING RESULTS

Operating Summary per Country

In thousands of U.S. dollars. EBITDA margin as a percentage of net sales.

January – March First Quarter

2014 2013 2014 2013

NET SALES % Var. % Var.

Colombia 242,394 208,897 16% 242,394 208,897 16%

Panama 76,115 72,453 5% 76,115 72,453 5% Costa Rica 35,467 34,890 2% 35,467 34,890 2% Rest of CLH 69,830 71,129 (2%) 69,830 71,129 (2%) Others and intercompany eliminations (1,051) (4,026) (74%) (1,051) (4,026) (74%)

TOTAL 422,754 383,343 10% 422,754 383,343 10%

GROSS PROFIT

Colombia 127,598 130,897 (3%) 127,598 130,897 (3%)

Panama 35,269 37,070 (5%) 35,269 37,070 (5%) Costa Rica 18,124 18,798 (4%) 18,124 18,798 (4%) Rest of CLH 23,972 24,040 (0%) 23,972 24,040 (0%) Others and intercompany eliminations 3,043 2,207 38% 3,043 2,207 38%

TOTAL 208,006 213,012 (2%) 208,006 213,012 (2%)

OPERATING EARNINGS BEFORE OTHER EXPENSES, NET

Colombia 84,550 79,426 6% 84,550 79,426 6% Panama 28,142 29,450 (4%) 28,142 29,450 (4%) Costa Rica 13,006 13,395 (3%) 13,006 13,395 (3%) Rest of CLH 17,814 18,167 (2%) 17,814 18,167 (2%)

Others and intercompany eliminations (25,446) (22,930) (11%) (25,446) (22,930) (11%)

TOTAL 118,066 117,508 0% 118,066 117,508 0%

OPERATING EBITDA

Colombia 92,617 87,202 6% 92,617 87,202 6% Panama 32,344 33,912 (5%) 32,344 33,912 (5%) Costa Rica 14,748 15,263 (3%) 14,748 15,263 (3%) Rest of CLH 18,890 19,402 (3%) 18,890 19,402 (3%)

Others and intercompany eliminations (17,600) (15,043) (17%) (17,600) (15,043) (17%)

TOTAL 140,999 140,736 0% 140,999 140,736 0%

OPERATING EBITDA MARGIN

Colombia 38.2% 41.7% 38.2% 41.7% Panama 42.5% 46.8% 42.5% 46.8% Costa Rica 41.6% 43.7% 41.6% 43.7% Rest of CLH 27.1% 27.3% 27.1% 27.3%

TOTAL 33.4% 36.7% 33.4% 36.7%

Please refer to definition of terms and disclosure for presentation of financial information.

2014 First Quarter Results Page 8

CEMEX LATAM HOLDINGS

OPERATING RESULTS

Volume Summary

CLH volume summary

Cement and aggregates: Thousands of metric tons. Ready-mix: Thousands of cubic meters.

January – March First Quarter

2014 2013 % Var. 2014 2013 % Var.

1 1,967 1,691 16% 1,967 1,691 16% Total cement volume Total domestic gray cement volume 1,734 1,505 15% 1,734 1,505 15% Total ready-mix volume 819 708 16% 819 708 16% Total aggregates volume 1,947 1,547 26% 1,947 1,547 26%

Per-country volume summary

January - March First Quarter First Quarter 2014 Vs. DOMESTIC GRAY CEMENT VOLUME 2014 Vs. 2013 2014 Vs. 2013 Fourth Quarter 2013

Colombia 34% 34% 4% Panama (17%) (17%) (16%) Costa Rica 14% 14% (4%) Rest of CLH 3% 3% 7%

READY-MIX VOLUME

Colombia 23% 23% 3% Panama 7% 7% 8% Costa Rica (17%) (17%) (10%) Rest of CLH (2%) (2%) (3%)

AGGREGATES VOLUME

Colombia 38% 38% (0%) Panama 6% 6% 9% Costa Rica (11%) (11%) (3%) Rest of CLH (2%) (2%) 11%

1 Consolidated cement volume includes domestic and export volume of gray cement, white cement, special cement, mortar and clinker.

Please refer to definition of terms and disclosure for presentation of operating results.

2014 First Quarter Results Page 9

CEMEX LATAM HOLDINGS

OPERATING RESULTS

Price Summary

Variation in U.S. Dollars

January - March First Quarter First Quarter 2014 Vs. DOMESTIC GRAY CEMENT PRICE 2014 Vs. 2013 2014 Vs. 2013 Fourth Quarter 2013

Colombia (12%) (12%) (6%) Panama 16% 16% 15% Costa Rica (2%) (2%) (0%) Rest of CLH (*) (6%) (6%) 0%

READY-MIX PRICE

Colombia (9%) (9%) (4%) Panama 2% 2% 2% Costa Rica 2% 2% (6%) Rest of CLH (*) 2% 2% 6%

AGGREGATES PRICE

Colombia (11%) (11%) 2% Panama 0% 0% 1% Costa Rica (2%) (2%) (5%) Rest of CLH (*) (1%) (1%) 14%

Variation in Local Currency

January - March First Quarter First Quarter 2014 Vs. DOMESTIC GRAY CEMENT PRICE 2014 Vs. 2013 2014 Vs. 2013 Fourth Quarter 2013

Colombia (2%) (2%) (1%) Panama 16% 16% 15% Costa Rica 5% 5% 7% Rest of CLH (*) (1%) (1%) 1%

READY-MIX PRICE

Colombia 2% 2% 1% Panama 2% 2% 2% Costa Rica 9% 9% 1% Rest of CLH (*) 3% 3% 5%

AGGREGATES PRICE

Colombia (1%) (1%) 7% Panama 0% 0% 1% Costa Rica 5% 5% 2% Rest of CLH (*) 4% 4% 16%

(*) Volume weighted-average price.

Please refer to definition of terms and disclosure for presentation of operating results.

2014 First Quarter Results Page 10

CEMEX LATAM HOLDINGS

OTHER ACTIVITIES AND INFORMATION

Tax Regime

In accordance with article 118 of the Royal Legislative Decree 4/2004 of March 5, which approves the consolidated text of the Corporate Income Tax Law, CEMEX Latam Holdings, S.A. (“CLH” or the “Company”) notifies its shareholders that as of March 31, 2014, the Company maintains its status as an Entity Holding Foreign Securities

(Entidad de Tenencia de Valores Extranjeros), therefore being subject to the special tax regime regulated in Chapter XIV of said Law which was adopted by the Company on November 28, 2012.

Additionally and in accordance with the provisions of paragraph 3 of the abovementioned article, if requested, the Company will provide its shareholders with any information that is necessary for them to comply with the tax obligations set out in said article.

CLH to participate in the construction of 12,000 houses

On April 7, 2014, CLH announced it expects to participate in the construction of approximately 12,000 sustainable housing units in Latin America during 2014, as part of its continuous effort to strengthen its solutions-based commercial offer.

CLH will use innovative construction systems and specialty concrete products that contribute to increase energy efficiency translating into reduced energy costs for the families living in these houses. Additionally, these specialty concrete products help to optimize the use of natural resources by reducing water consumption in the construction process. The company will also continue working on its social programs focused on sustainable self-construction like Patrimonio Hoy and Bloqueras Solidarias.

Carlos Jacks, CEO of CLH, said: “We are committed with the development of our region and are convinced that by promoting the construction of sustainable housing we are fostering well-being and creating value for all of our stakeholders”.

CLH offers sustainable building solutions with a strategy focused on addressing the demands from society. With a solid commercial offer that combines innovative construction systems with specialty concrete products and an extensive experience in the industry, CLH has participated in important infrastructure and housing projects in the region, promoting the well-being of communities.

2014 First Quarter Results Page 11

CEMEX LATAM HOLDINGS

DEFINITIONS OF TERMS AND DISCLOSURES

Methodology for translation and presentation of results Consolidated financial information

Under IFRS, CLH reports its consolidated results in its functional When reference is made to consolidated financial information means currency, which is the US Dollar, by translating the financial statements the financial information of CLH together with its consolidated of foreign subsidiaries using the corresponding exchange rate at the subsidiaries. reporting date for the balance sheet and the corresponding exchange rates at the end of each month for the income statement. Presentation of financial and operating information Individual information is provided for Colombia, Panama and Costa For the reader’s convenience, Colombian peso amounts for the Rica. consolidated entity are calculated by converting the US dollar amounts Countries in Rest of CLH include Nicaragua, Guatemala, El Salvador and using the closing COP/US$ exchange rate at the reporting date for Brazil. balance sheet purposes, and the average COP/US$ exchange rate for the corresponding period for income statement purposes. The exchange rates used to convert: (i) the balance sheet as of March 31, 2014 and March 31, 2013 was $1,965.32 and $1,832.20 Colombian pesos per US dollar, respectively, and (ii) the consolidated results for the first quarter of 2014 and for the first quarter of 2013 were $2,009.48 and $1,807.29 Colombian pesos per US dollar, respectively. Per-country/region selected financial information of the income statement is presented before corporate charges and royalties which are included under “other and intercompany eliminations.” Exchange rates January – March January – March First quarter 2014 2013 2014 2013 2014 2013 Closing Closing Average Average Average Average Colombian peso 1,965.32 1,832.20 2,009.48 1,807.29 2,009.48 1,807.29

Panama balboa 1 1 1 1 1 1 Costa Rica colon 553.63 504.65 542.27 506.16 542.27 506.16 Euro 0.7259 0.7795 0.7310 0.7589 0.7310 0.7589 Amounts provided in units of local currency per US dollar. 2014 First Quarter Results Page 12

CEMEX LATAM HOLDINGS

DEFINITIONS OF TERMS AND DISCLOSURES

Definition of terms

Free cash flow equals operating EBITDA minus net interest expense, maintenance and strategic capital expenditures, change in working capital, taxes paid, and other cash items (net other expenses less proceeds from the disposal of obsolete and/or substantially depleted operating fixed assets that are no longer in operation).

Maintenance capital expenditures investments incurred for the purpose of ensuring CLH’s operational continuity. These include capital expenditures on projects required to replace obsolete assets or maintain current operational levels, and mandatory capital expenditures, which are projects required to comply with governmental regulations or internal policies.

Net debt equals total debt minus cash and cash equivalents.

Operating EBITDA equals operating earnings before other expenses, net, plus depreciation and operating amortization.

pp equals percentage points.

Strategic capital expenditures investments incurred with the purpose of increasing CLH’s profitability. These include capital expenditures on projects designed to increase profitability by expanding capacity, and margin improvement capital expenditures, which are projects designed to increase profitability by reducing costs.

Working capital equals operating accounts receivable (including other current assets received as payment in kind) plus historical inventories minus operating payables.

2014 First Quarter Results Page 13