EX-99.2 3 d278735dex992.htm EX-2

EX-2

Exhibit 2

2016

THIRD QUARTER RESULTS

Stock Listing Information

Colombian Stock Exchange S.A. Ticker: CLH

Investor Relations

Jesús Ortiz de la Fuente +57 (1) 603-9051

E-mail: jesus.ortizd@cemex.com

OPERATING AND FINANCIAL HIGHLIGHTS

    January—SeptemberThird Quarter

2016    2015% var20162015% var

Consolidated cement volume    5,666 5,4973%1,8921,8771%

Consolidated domestic gray cement    4,976 5,035(1%)1,6701,728(3%)

Consolidated ready-mix volume    2,355 2,629(10%)795876(9%)

Consolidated aggregates volume    5,547 6,548(15%)1,8692,179(14%)

Net sales    1,012 1,102(8%)340354(4%)

Gross profit    496 521(5%)1681651%

as % of net sales    49.0% 47.3%1.7pp49.3%46.6%2.7pp

Operating earnings before other    

276    281(2%)92903%

expenses, net    

as % of net sales    27.2% 25.5%1.7pp27.1%25.3%1.8pp

Controlling interest net income (loss)    143 11722%433523%

Operating EBITDA    340 346(2%)1141103%

as % of net sales    33.6% 31.4%2.2pp33.4%31.0%2.4pp

Free cash flow after maintenance    

181    188(4%)5451N/A

capital expenditures    

Free cash flow    73 79(7%)221290%

Net debt    969 1,060(9%)9691,060(9%)

Total debt    1,016 1,118(9%)1,0161,118(9%)

Earnings per share    0.26 0.2123%0.080.0626%

Shares outstanding at end of period    556 5560%5565560%

Employees    4,724 4,947(5%)4,7244,947(5%)

Cement and aggregates volumes in thousands of metric tons. Ready-mix volumes in thousands of cubic meters. In millions of US dollars, except volumes, percentages, employees, and per-share amounts.

Shares outstanding are presented in millions.

Consolidated net sales during the third quarter of 2016 declined by 4% compared to the third quarter of 2015. This decline is explained mainly as a result of lower cement volumes from our operations in Colombia, Panama and Costa Rica.

For the first nine months of 2016 consolidated net sales decreased by 8%, compared to the same period in 2015.

Cost of sales as a percentage of net sales during the first nine months of the year decreased by 1.7pp from 52.7% to 51.0% on a year-over-year basis.

Operating expenses as a percentage of net sales during the first nine months of the year was 21.8%, which was the same value in the first nine months of 2015.

Operating EBITDA during the third quarter of 2016 increased by 3% compared to the third quarter of 2015. This increase is mainly explained by higher cement volumes in Rest of CLH, operational

efficiencies in Panama, Nicaragua and Guatemala, more favorable exchange rates against the US dollar, and lower maintenance works during the quarter compared with the same period in 2015.

During the first nine months of the year operating EBITDA decreased by 2%, compared to the same period last year.

Operating EBITDA margin during the third quarter of 2016 increased by 2.4pp, compared to the third quarter of 2015. During the first nine months of the year operating EBITDA margin increased by 2.2pp compared with the same period last year.

Controlling interest net income during the third quarter of 2016 increased by 23% reaching US$43 million compared to the third quarter of 2015. During the first nine months of the year we registered a Controlling interest net income of US$143 million, increasing by 22% compared to the same period a year ago.

Total debt during the third quarter reached US$1,016 million.

2016 Third Quarter Results                 Page 2

OPERATING RESULTS

Colombia

January—September    Third Quarter

2016    2015% var20162015% var

Net sales    512 551(7%)173177(2%)

Operating EBITDA    176 189(7%)6061(1%)

Operating EBITDA margin    34.4% 34.2%0.2pp34.9%34.4%0.5pp

In millions of US dollars, except percentages.    

Domestic gray cement    Ready-MixAggregates

January -    January -January -

    Third QuarterThird QuarterThird Quarter

September    SeptemberSeptember

Volume    2% (5%)(9%)(8%)(15%)(12%)

Price (USD)    (6%) 1%(8%)6%(1%)12%

Price (local currency)    7% (1%)5%4%13%10%

Year-over-year percentage variation.

In Colombia, during the third quarter our domestic gray cement, ready-mix and aggregates volumes decreased by 5%, 8% and 12%, respectively, compared to the third quarter of 2015. For the first nine months, our domestic gray cement volumes increased by 2%, while our ready-mix and aggregates volumes decreased by 9% and 15%, respectively, compared to the same period in 2015.

During the third quarter volumes were affected by weaker demand as well as a transportation strike. Adjusting for the effect of the strike, our quarterly cement volumes declined by around 3%. During the quarter, our cement market position improved versus the third quarter of last year and remained stable sequentially. For the first nine months of this year, our cement prices in local currency increased 7% versus the same period of 2015.

Panama

January—September    Third Quarter

2016    2015% var20162015% var

Net sales    200 224(11%)7073(4%)

Operating EBITDA    90 92(1%)32308%

Operating EBITDA margin    45.3% 40.9%4.4pp46.4%41.3%5.1pp

In millions of US dollars, except percentages.    

Domestic gray cement    Ready-MixAggregates

January -    January -January -

    Third QuarterThird QuarterThird Quarter

September    SeptemberSeptember

Volume    (16%) (5%)(8%)(2%)(9%)(9%)

Price (USD)    2% (0%)(4%)(2%)(2%)0%

Price (local currency)    2% (0%)(4%)(2%)(2%)0%

Year-over-year percentage variation.    

In Panama during the third quarter our domestic gray cement, ready-mix and aggregates volumes decreased by 5%, 2% and 9%, respectively, compared to the third quarter of 2015. For the first nine months of the year, our domestic gray cement, ready-mix and aggregates volumes decreased by 16%, 8% and 9% ,respectively, compared to the same period in 2015.    The decline during the third quarter in our cement volumes is mainly explained by sales to the Panama Canal expansion project in 3Q16 and a high comparison base in the Industrial and Commercial sector. Adjusting for the effect of the dispatches to the Canal expansion project, our quarterly cement dispatches are 1.6% lower.

2016 Third Quarter Results                 Page 3

OPERATING RESULTS

Costa Rica    

January—September    Third Quarter

2016    2015% var20162015% var

Net sales    120 131(9%)3841(9%)

Operating EBITDA    49 54(10%)1415(6%)

Operating EBITDA margin    40.7% 41.3%(0.6pp)36.8%35.7%1.1pp

In millions of US dollars, except percentages.    

Domestic gray cement    Ready-MixAggregates

January -    January -January -

    Third QuarterThird QuarterThird Quarter

September    SeptemberSeptember

Volume    (13%) (10%)(5%)0%13%32%

Price (USD)    (4%) (5%)4%(4%)3%11%

Price (local currency)    (3%) (2%)6%(1%)5%14%

Year-over-year percentage variation.    

In Costa Rica, during the third quarter our domestic gray cement declined by 10%, our ready-mix volumes remained flat and our aggregates volumes increased by 32%, compared to the third quarter of 2015. For the first nine months of the year, our domestic gray cement and ready-mix volumes declined by 13% and 5%, respectively, while our aggregates volumes increased by 13%, compared to 2015.

The decline in our cement volumes during the third quarter and the first nine months of the year reflects a high comparison base related to dispatches to infrastructure projects in 2015, and a lack of execution of new public works this year.

Rest of CLH    

January—September    Third Quarter

2016    2015% var20162015% var

Net sales    197 209(5%)6467(5%)

Operating EBITDA    65 5713%201816%

Operating EBITDA margin    32.8% 27.5%5.3pp31.8%26.2%5.6pp

In millions of US dollars, except percentages.    

Domestic gray cement    Ready-MixAggregates

January -    January -January -

    Third QuarterThird QuarterThird Quarter

September    SeptemberSeptember

Volume    9% 6%(38%)(48%)(66%)(75%)

Price (USD)    (3%) 0%(2%)(0%)(12%)(5%)

Price (local currency)    (0%) 0%(0%)0%(8%)(0%)

Year-over-year percentage variation.    

In the Rest of CLH region, which includes our operations in Nicaragua, Guatemala, El Salvador and Brazil, during the third quarter of 2016 our domestic gray cement volumes increased by 6%, while our ready-mix and aggregates volumes declined by 48% and 75%, respectively, compared to the third quarter of 2015. During the first nine months of the year, our domestic gray cement volumes increased by 9%, while our ready-mix and aggregates volumes decreased by 38% and 66%, respectively, compared to same period in 2015.

Cement volume growth during the third quarter reflects positive demand dynamics in the industrial and commercial sector in Guatemala, as well as the infrastructure sector in Nicaragua.

2016 Third Quarter Results                 Page 4

OPERATING EBITDA, FREE CASH FLOW AND DEBT RELATED INFORMATION

Operating EBITDA and free cash flow

    January—SeptemberThird Quarter

2016    2015% var20162015% var

Operating earnings before other expenses, net    276 281(2%)93902%

+ Depreciation and operating amortization    64 652120

Operating EBITDA    340 346(2%)1141103%

- Net financial expense    49 582017

- Capital expenditures for maintenance    32 261013

- Change in working Capital    (17) (24)52

- Taxes paid    85 872124

- Other cash items (Net)    10 1143

Free cash flow after maintenance capital exp    181 188(4%)54516%

- Strategic Capital expenditures    108 1093239

Free cash flow    73 79(7%)221290%

In millions of US dollars, except percentages.    

Information on Debt    

    Second

    Third QuarterThird Quarter

    Quarter

2016    2015% var201620162015

Total debt 1, 2    1,016 1,1189%1,034Currency denomination

Short term    27% 13%25%U.S. dollar97%99%

Long term    73% 87%75%Colombian peso3%1%

Cash and cash equivalents    47 58(19%)51Interest rate

Net debt    969 1,060(9%)984Fixed76%78%

    Variable24%22%

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.    

2016 Third Quarter Results                 Page 5

OPERATING RESULTS

Income statement & balance sheet

CEMEX Latam Holdings, S.A. and Subsidiaries

in thousands of U.S. Dollars, except per share amounts

January—September    Third Quarter

INCOME STATEMENT    2016 2015% var20162015% var

Net sales    1,012,153 1,102,080(8%)340,077354,481(4%)

Cost of sales    (516,042) (580,765)11%(172,302)(189,130)9%

Gross profit    496,111 521,315(5%)167,775165,3511%

Operating expenses    (220,552) (239,849)8%(75,691)(75,558)(0%)

Operating earnings before other expenses, net    275,559 281,466(2%)92,08289,7933%

Other expenses, net    (2,707) (12,907)79%(2,433)(5,792)58%

Operating earnings    272,852 268,5592%89,64984,0017%

Financial expenses    (49,329) (58,272)15%(19,951)(17,708)(13%)

Other income (expenses), net    12,443 (17,922)N/A882(15,893)N/A

Net income before income taxes    235,966 192,36523%70,58050,40040%

Income tax    (92,047) (74,826)(23%)(27,531)(15,594)(77%)

Consolidated net income    143,919 117,53922%43,04934,80624%

Non-controlling Interest Net Income    (518) (415)(25%)(205)(108)(90%)

Controlling Interest Net Income    143,401 117,12422%42,84434,69823%

    00

Operating EBITDA    339,583 346,283(2%)113,532109,9353%

Earnings per share    0.26 0.2123%0.080.0626%

    as of September 30

BALANCE SHEET    2016 2015% var

Total Assets    3,376,607 3,267,7483%

Cash and Temporary Investments    46,761 58,448(20%)

Trade Accounts Receivables    115,804 105,04510%

Other Receivables    42,953 47,950(10%)

Inventories    70,867 91,687(23%)

Other Current Assets    13,563 15,248(11%)

Current Assets    289,948 318,378(9%)

Fixed Assets    1,247,216 1,053,68018%

Other Assets    1,839,443 1,895,690(3%)

Total Liabilities    1,869,004 1,924,171(3%)

Current Liabilities    575,949 404,60242%

Long-Term Liabilities    1,284,515 1,509,945(15%)

Other Liabilities    8,540 9,624(11%)

Consolidated Stockholders’ Equity    1,507,603 1,343,57712%

Non-controlling Interest    5,938 5,21414%

Stockholders’ Equity Attributable to Controlling Interest    1,501,665 1,338,36312%

2016 Third Quarter Results                 Page 6

OPERATING RESULTS

Income statement & balance sheet

CEMEX Latam Holdings, S.A. and Subsidiaries

in millions of Colombian Pesos in nominal terms, except per share amounts

January—September    Third Quarter

INCOME STATEMENT    2016 2015% var20162015% var

Net sales    3,075,558 2,952,3714%1,008,3851,073,967(6%)

Cost of sales    (1,568,061) (1,555,817)(1%)(510,904)(573,004)11%

Gross profit    1,507,497 1,396,5548%497,481500,963(1%)

Operating expenses    (670,175) (642,533)(4%)(224,436)(228,917)2%

Operating earnings before other expenses, net    837,322 754,02111%273,039272,0460%

Other expenses, net    (8,225) (34,577)76%(7,213)(17,549)59%

Operating earnings    829,097 719,44415%265,826254,4974%

Financial expenses    (149,892) (156,106)4%(59,158)(53,649)(10%)

Other income (expenses), net    37,809 (48,012)N/A2,615(48,150)N/A

Net income before income taxes    717,014 515,32639%209,283152,69837%

Income tax    (279,698) (200,452)(40%)(81,636)(47,245)(73%)

Consolidated net income    437,316 314,87439%127,647105,45321%

Non-controlling Interest Net Income    (1,574) (1,111)(42%)(608)(327)(86%)

Controlling Interest Net Income    435,742 313,76339%127,039105,12621%

Operating EBITDA    1,031,867 927,66011%336,641213,25658%

Earnings per share    786.01 566.1639%229.43189.6121%

    as of September 30

BALANCE SHEET     20162015% var

Total Assets     9,724,45910,201,715(5%)

Cash and Temporary Investments     134,670182,470(26%)

Trade Accounts Receivables     333,510327,9452%

Other Receivables     123,702149,697(17%)

Inventories     204,093286,241(29%)

Other Current Assets     39,06247,604(18%)

Current Assets     835,037993,957(16%)

Fixed Assets     3,591,9203,289,5269%

Other Assets     5,297,5025,918,232(10%)

Total Liabilities     5,382,6386,007,148(10%)

Current Liabilities     1,658,7051,263,14231%

Long-Term Liabilities     3,699,3374,713,959(22%)

Other Liabilities     24,59630,047(18%)

Consolidated Stockholders’ Equity     4,341,8214,194,5674%

Non-controlling Interest     17,10116,2795%

Stockholders’ Equity Attributable to Controlling Interest    4,324,720 4,178,2884%

2016 Third Quarter Results                 Page 7

OPERATING RESULTS

Operating Summary per Country

in thousands of U.S. dollars

Operating EBITDA margin as a percentage of net sales

January—September    Third Quarter

2016    2015% var20162015% var

NET SALES    

Colombia    511,785 551,323(7%)172,804177,065(2%)

Panama    199,609 223,916(11%)69,82772,973(4%)

Costa Rica    119,535 130,959(9%)37,87141,476(9%)

Rest of CLH    197,161 208,549(5%)64,09267,208(5%)

Others and intercompany eliminations    (15,937) (12,667)(26%)(4,517)(4,241)(7%)

TOTAL    1,012,153 1,102,080(8%)340,077354,481(4%)

GROSS PROFIT    

Colombia    242,872 263,103(8%)82,89583,522(1%)

Panama    100,342 102,703(2%)35,98633,9796%

Costa Rica    62,056 68,767(10%)18,94019,134(1%)

Rest of CLH    80,535 75,2747%26,22124,3528%

Others and intercompany eliminations    10,306 11,468(10%)3,7334,364(14%)

TOTAL    496,111 521,315(5%)167,775165,3511%

OPERATING EARNINGS BEFORE OTHER EXPENSES, NET    

Colombia    156,487 168,556(7%)53,42354,847(3%)

Panama    76,834 77,549(1%)27,88025,40410%

Costa Rica    43,926 49,260(11%)12,31313,232(7%)

Rest of CLH    60,570 53,56913%19,00616,44916%

Others and intercompany eliminations    (62,258) (67,468)8%(20,540)(20,139)(2%)

TOTAL    275,559 281,466(2%)92,08289,7933%

OPERATING EBITDA    

Colombia    176,054 188,502(7%)60,27760,920(1%)

Panama    90,364 91,526(1%)32,42030,1438%

Costa Rica    48,615 54,066(10%)13,94314,814(6%)

Rest of CLH    64,745 57,24713%20,35117,59016%

Others and intercompany eliminations    (40,195) (45,058)11%(13,459)(13,532)1%

TOTAL    339,583 346,283(2%)113,532109,9353%

OPERATING EBITDA MARGIN    

Colombia    34.4% 34.2%34.9%34.4%

Panama    45.3% 40.9%46.4%41.3%

Costa Rica    40.7% 41.3%36.8%35.7%

Rest of CLH    32.8% 27.5%31.8%26.2%

TOTAL    33.6% 31.4%33.4%31.0%

2016 Third Quarter Results     Page 8

OPERATING RESULTS

Volume Summary

Consolidated volume summary

Cement and aggregates in thousands of metric tons Ready mix in thousands of cubic meters

January—September    Third Quarter

2016    2015% var20162015% var

Total cement volume 1    5,666 5,4973%1,8921,8771%

Total domestic gray cement volume    4,976 5,035(1%)1,6701,728(3%)

Total ready-mix volume    2,355 2,629(10%)795876(9%)

Total aggregates volume    5,547 6,548(15%)1,8692,179(14%)

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

Per-country volume summary    

January—September    Third QuarterThird Quarter 2016

2016 vs. 2015    2016 vs. 2015vs. Second Quarter 2016

DOMESTIC GRAY CEMENT    

Colombia    2% (5%)(1%)

Panama    (16%) (5%)8%

Costa Rica    (13%) (10%)(5%)

Rest of CLH    9% 6%(8%)

READY-MIX    

Colombia    (9%) (8%)(5%)

Panama    (8%) (2%)8%

Costa Rica    (5%) 0%1%

Rest of CLH    (38%) (48%)(23%)

AGGREGATES    

Colombia    (15%) (12%)(5%)

Panama    (9%) (9%)(0%)

Costa Rica    13% 32%(1%)

Rest of CLH    (66%) (75%)(14%)

2016 Third Quarter Results     Page 9

OPERATING RESULTS

Price Summary

Variation in U.S. dollars

January—September    Third QuarterThird Quarter 2016

2016 vs. 2015    2016 vs. 2015vs. Second Quarter 2016

DOMESTIC GRAY CEMENT    

Colombia    (6%) 1%(4%)

Panama    2% (0%)(0%)

Costa Rica    (4%) (5%)(4%)

Rest of CLH    (3%) 0%(1%)

READY-MIX    

Colombia    (8%) 6%1%

Panama    (4%) (2%)1%

Costa Rica    4% (4%)(11%)

Rest of CLH    (2%) (0%)2%

AGGREGATES    

Colombia    (1%) 12%(2%)

Panama    (2%) 0%5%

Costa Rica    3% 11%(4%)

Rest of CLH    (12%) (5%)(0%)

For Rest of CLH, volume-weighted average prices.    

Variation in local currency    

January—September    Third QuarterThird Quarter 2016

2016 vs. 2015    2016 vs. 2015vs. Second Quarter 2016

DOMESTIC GRAY CEMENT    

Colombia    7% (1%)(4%)

Panama    2% (0%)(0%)

Costa Rica    (3%) (2%)(2%)

Rest of CLH    (0%) 0%5%

READY-MIX    

Colombia    5% 4%1%

Panama    (4%) (2%)1%

Costa Rica    6% (1%)(9%)

Rest of CLH    (0%) 0%29%

AGGREGATES    

Colombia    13% 10%(2%)

Panama    (2%) 0%5%

Costa Rica    5% 14%(2%)

Rest of CLH    (8%) (0%)13%

For Rest of CLH, volume-weighted average prices.    

2016 Third Quarter Results     Page 10

OTHER ACTIVITIES AND INFORMATION

CEMEX Latam Holdings has decided to postpone the commissioning of the Maceo plant

CEMEX Latam Holdings has decided to postpone the commissioning of the Maceo plant for the following reasons which have resulted from the ongoing audits: (i) there are certain pending permits required to finalize the access road to the plant in Maceo. Assuming such permits are obtained in due course, CEMEX Latam Holdings currently estimates that the access road could take until July 2017 to be finalized and ready to use. Using the only existing access to the plant today rather than the one being built would increase safety hazards and would likely limit the capacity to transport products from the plant in Maceo; (ii) CEMEX Colombia has requested to expand the trade zone, commissioning the new clinker line in Maceo without such expansion of the trade zone would put at risk our ability to consolidate tax benefits that would otherwise be available to CEMEX Colombia. It is possible a final decision regarding this request to expand the trade zone may not be made due to the eminent domain process that is ongoing. As a result, in order to protect the expected benefits from the trade zone, CEMEX Latam Holdings will not commission the clinker line until the trade zone is expanded to cover all of the Maceo cement facility; and (iii) the environmental license for the Maceo project is held by one of

CEMEX Latam Holdings’ subsidiaries, Central de Mezclas S.A., but that transfer to it of the corresponding mining title was not formalized, as the mining title has reverted back to C.I. Calizas y Minerales. As a result, the environmental license and mining right are held by different entities, which is contrary to the common practice of having the environmental license follow the mining permit. In any event, CEMEX Colombia will continue to use and

enjoy the land, mining and environmental rights under its current contracts entered into with representatives of the Government of Colombia. CEMEX Latam Holdings has also determined that the environmental license which was issued for the Maceo project is partially superposed with a District of Integrated Management (Distrito de manejo integrado). CEMEX Colombia will work with the corresponding environmental agency and address this issue and assess its overall impact. The assessment to be made will be to verify if on the basis of applicable Colombian regulations the environmental license can continue to be exercised as is and on the basis of the principle of presumption of its legality. In addition, CEMEX Colombia has also confirmed it will need to modify the environmental license as to allow it to increase the production up to the 950.000 tons per year of required mineral exploitation. It is possible this process could also be impacted by the existing eminent domain proceedings. CEMEX Colombia will continue to work to address these matters as promptly as possible.

According to CEMEX Latam Holdings’ current estimates of consumption and market growth in Colombia, taking into account its existing capacity (not including the Maceo plant), CEMEX Latam Holdings currently expects that it should not suffer any material adverse impact to its business operations for postponing the commissioning of the Maceo plant. However, CEMEX Latam Holdings will continue to work on commissioning the plant as soon as reasonably possible in order to capture the full benefits of this state of the art facility on its operating efficiencies in Colombia and to contribute to the development of the region.

2016 Third Quarter Results                 Page 11

DEFINITIONS OF TERMS AND DISCLOSURES

Methodology for translation and presentation of results

Under IFRS, CLH reports its consolidated results in its functional currency, which is the US Dollar, by translating the financial statements of foreign subsidiaries using the corresponding exchange rate at the reporting date for the balance sheet and the corresponding exchange rates at the end of each month for the income statement.

For the reader’s convenience, Colombian peso amounts for the consolidated entity are calculated by converting the US dollar amounts using the closing COP/US$ exchange rate at the reporting date for 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 September 30, 2016 and September 30, 2015 was $2,879.95 and $3,121.94 Colombian pesos per US dollar, respectively, and (ii) the consolidated results for the third quarter of 2016 and for the third quarter of 2015 were $2,965.17 and $3,029.69 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.”

Consolidated financial information

When reference is made to consolidated financial information means the financial information of CLH together with its consolidated subsidiaries.

Presentation of financial and operating information

Individual information is provided for Colombia, Panama and Costa Rica.

Countries in Rest of CLH include Nicaragua, Guatemala, El Salvador and Brazil.

Exchange rates    

January—September    January—SeptemberThird Quarter

2016 closing    2015 closing2016 average2015 average2016 average2015 average

Colombian peso    2,879.95 3,121.943,038.632,678.912,965.173.029,69

Panama balboa    1.00 1.001.001.001.001.00

Costa Rica colon    558.80 541.04549.45540.84557.87544.93

Euro    1.1235 1.11740.00001.10851.12000.7655

Amounts provided in units of local currency per US dollar.    

2016 Third Quarter Results     Page 12

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.

2016 Third Quarter Results                 Page 13