EX-99.2 3 d341912dex992.htm EX2

Exhibit 2

Exhibit 2

2016

FOURTH 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—December Fourth Quarter

2016 2015 % var 2016 2015 % var

Consolidated cement volume 7,525 7,385 2% 1,794 1,828 (2%) Consolidated domestic gray cement 6,569 6,636 (1%) 1,593 1,601 (0%) Consolidated ready-mix volume 3,079 3,395 (9%) 724 767 (6%) Consolidated aggregates volume 7,264 8,447 (14%) 1,717 1,899 (10%) Net sales 1,315 1,427 (8%) 303 325 (7%) Gross profit 638 677 (6%) 142 156 (9%) as % of net sales 48.5% 47.5% 1.0pp 47.0% 48.0% (1.0pp) Operating earnings before other expenses, net 342 365 (6%) 67 83 (20%) as % of net sales 26.0% 25.6% 0.4pp 22.1% 25.6% (3.5pp) Controlling interest net income (loss) 140 95 46% -4 -22 83% Operating EBITDA 424 450 (6%) 84 103 (19%) as % of net sales 32.2% 31.5% 0.7pp 27.7% 31.8% (4.1pp) Free cash flow after maintenance capital expenditures 237 249 (5%) 56 61 N/A Free cash flow 97 105 (8%) 24 27 (9%) Net debt 938 1,034 (9%) 938 1,034 (9%) Total debt 983 1,088 (10%) 983 1,088 (10%) Earnings per share 0.25 0.17 46% (0.01) (0.04) 82% Shares outstanding at end of period 556 556 0% 556 556 0% Employees 4,707 4,813 (2%) 4,707 4,813 (2%)

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 2016 declined by 8% compared to those The 19% decline in operating EBITDA in the fourth quarter, on a year-of 2015. This decline is explained mainly by lower cement volumes over-year basis, is mainly explained by lower cement volumes and from our operations in Colombia, Panama and Costa Rica, and as a prices in Colombia and Costa Rica, higher maintenance activities in result of foreign exchange fluctuations. Colombia, as well as an extraordinary charge of labor costs related to our cement capacity expansion project in Colombia.

For the fourth quarter of 2016 consolidated net sales decreased by 7%, compared to those of the same period in 2015. Operating EBITDA margin during 2016 increased by 0.7pp, compared to 2015. During the fourth quarter of 2016 operating EBITDA margin Cost of sales as a percentage of net sales during the full year declined by 4.1pp compared to that of the same period of 2015. decreased by 1.1pp from 52.5% to 51.5%, on a year-over-year basis.

Controlling interest net income during 2016 reached US$140 million, Operating expenses as a percentage of net sales during 2016 year increasing 46% compared to that of 2015. During the fourth quarter were 22.5%, an increase of 0.6pp compared to 2015 2016 we registered a Controlling interest net loss of US$4 million, Operating EBITDA during the year declined by 6% on a year-over-year compared to a net loss of US$22 million in the same period in 2015 basis. This decrease is mainly explained by lower cement volumes and Total debt during the fourth quarter reached US$983 million. prices in Colombia and Costa Rica, and as a result of foreign exchange fluctuations.

2016 Fourth Quarter Results Page 2

OPERATING RESULTS

Colombia

January—December Fourth Quarter

2016 2015 % var 2016 2015 % var

Net sales 665 725 (8%) 153 173 (12%) Operating EBITDA 214 248 (14%) 38 60 (37%) Operating EBITDA margin 32.1% 34.2% (2.1pp) 24.6% 34.4% (9.8pp)

In millions of US dollars, except percentages.

Domestic gray cement Ready-Mix Aggregates January—January—January—

December Fourth Quarter December Fourth Quarter December Fourth Quarter

Volume 0% (3%) (8%) (6%) (13%) (7%) Price (USD) (8%) (14%) (5%) 3% 1% 5% Price (local currency) 1% (14%) 4% 3% 11% 5%

Year-over-year percentage variation.

In Colombia, during the fourth quarter our domestic gray cement, ready-mix and aggregates volumes decreased by 3%, 6%, and 7%, respectively, compared to those of the fourth quarter in 2015. For the full year, our domestic gray cement volumes remained flat, while our ready-mix and aggregates volumes decreased by 8% and 13%, respectively, compared to those of the same period in 2015.

Macroeconomic challenges, restrictions in government spending, and infrastructure projects delays, negatively impacted national cement consumption during 2016 and particularly in the second half of the year. Our cement market position during the quarter improved versus the fourth quarter of last year and remained stable sequentially. Quarterly cement prices on a sequential basis were affected by difficult competitive dynamics in a soft demand market environment.

Panama

January—December Fourth Quarter

2016 2015 % var 2016 2015 % var

Net sales 256 285 (10%) 57 61 (6%) Operating EBITDA 116 117 (1%) 26 26 (0%) Operating EBITDA margin 45.3% 41.2% 4.1pp 45.3% 42.4% 2.9pp

In millions of US dollars, except percentages.

Domestic gray cement Ready-Mix Aggregates January—January—January—

December Fourth Quarter December Fourth Quarter December Fourth Quarter

Volume (14%) (5%) (3%) 13% (5%) 7% Price (USD) 2% (0%) (4%) (3%) (3%) (6%) Price (local currency) 2% (0%) (4%) (3%) (3%) (6%)

Year-over-year percentage variation.

In Panama during the fourth quarter our domestic gray cement volumes decreased by 5%, while our ready-mix and aggregates volumes increased by 13% and 7%, respectively, compared to those of the fourth quarter in 2015. For the full year, our domestic gray cement, ready-mix and aggregates volumes decreased by 14%, 3%, and 5%, respectively, compared to those of 2015.

Our yearly dispatches to the Panama Canal expansion project fell from 7.5% in 2015, to 1.2% of our total cement volumes in 2016. Volumes related to the Panama Canal expansion project during 2016 were dispatched mainly in the first half of the year. We had no dispatches to this project in the last quarter of last year. Adjusting for the volumes sold to the canal expansion project, on a year over year basis, our volumes in the fourth quarter were almost flat, while for the full year, they declined 8%.

2016 Fourth Quarter Results Page 3

OPERATING RESULTS

Costa Rica

January—December Fourth Quarter

2016 2015 % var 2016 2015 % var

Net sales 151 167 (9%) 32 36 (12%) Operating EBITDA 61 69 (12%) 12 15 (19%) Operating EBITDA margin 40.1% 41.3% (1.2pp) 37.8% 41.5% (3.7pp)

In millions of US dollars, except percentages.

Domestic gray cement Ready-Mix Aggregates January—January—January—

December Fourth Quarter December Fourth Quarter December Fourth Quarter

Volume (12%) (8%) (9%) (20%) 9% (5%) Price (USD) (5%) (7%) 0% (12%) 2% (7%) Price (local currency) (3%) (4%) 2% (9%) 4% (3%)

Year-over-year percentage variation.

In Costa Rica, during the fourth quarter our domestic gray cement, ready-mix and aggregates volumes decreased by 8%, 20% and 5%, respectively, compared to those of the fourth quarter in 2015. For the full year 2016, our domestic gray cement and ready-mix volumes declined by 12% and 9%, respectively, while our aggregates volumes increased by 9%, compared to those of 2015.

The decline in cement and ready-mix volumes in Costa Rica relates to a lack of new public works, and the tough comparison base related to high execution of infrastructure projects in 2015. Our cement dispatches to infrastructure projects decreased by 27% in 2016 on a year-over-year basis.

Rest of CLH

January—December Fourth Quarter

2016 2015 % var 2016 2015 % var

Net sales 263 269 (2%) 66 60 10% Operating EBITDA 84 73 16% 20 16 27% Operating EBITDA margin 32.0% 27.1% 4.9pp 29.7% 25.9% 3.8pp

In millions of US dollars, except percentages.

Domestic gray cement Ready-Mix Aggregates January—January—January—

December Fourth Quarter December Fourth Quarter December Fourth Quarter

Volume 10% 13% (37%) (32%) (66%) (69%) Price (USD) (2%) 1% (1%) 0% (10%) (2%) Price (local currency) (0%) 0% 0% 2% (6%) 2%

Year-over-year percentage variation.

In the Rest of CLH region, which includes our operations in Nicaragua, Guatemala, El Salvador and Brazil, during the fourth quarter of 2016 our domestic gray cement volumes increased by 13%, while our ready-mix and aggregates volumes declined by 32% and 69%, respectively, compared to those of the fourth quarter of 2015. For the full year 2016, our domestic gray cement volumes increased by 10%, while our ready-mix and aggregates volumes decreased by 37% and 66%, respectively, compared to those of 2015.

Cement volume growth both the fourth quarter and full year reflects positive demand dynamics in the industrial and commercial sector in Guatemala, as well as the infrastructure sector in Nicaragua.

2016 Fourth Quarter Results Page 4

.

OPERATING EBITDA, FREE CASH FLOW AND DEBT RELATED INFORMATION

Operating EBITDA and free cash flow

January—December Fourth Quarter

2016 2015 % var 2016 2015 % var Operating earnings before other expenses, net 343 365 (6%) 67 84 (20%)

+ Depreciation and operating amortization 81 85 17 20

Operating EBITDA 424 450 (6%) 84 104 (19%)

- Net financial expense 64 74 15 16—Capital expenditures for maintenance 56 52 24 26

- Change in working Capital (38) (44) (21) (20)

- Taxes paid 100 107 15 20

- Other cash items (Net) 5 12 (5) 1

Free cash flow after maintenance capital exp 237 249 (5%) 56 61 (8%)

- Strategic Capital expenditures 140 144 32 34

Free cash flow 97 105 (8%) 24 27 (9%)

In millions of US dollars, except percentages.

Information on Debt

Third

Fourth Quarter Quarter Fourth Quarter 2016 2015 % var 2016 2016 2015 Total debt 1, 2 983 1,088 1,016 Currency denomination

Short term 16% 24% 27% U.S. dollar 97% 99% Long term 84% 76% 73% Colombian peso 3% 1% Cash and cash equivalents 45 54 (17%) 47 Interest rate Net debt 938 1,034 (9%) 969 Fixed 75% 77% Variable 25% 23%

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 Fourth 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—December Fourth Quarter

INCOME STATEMENT 2016 2015 % var 2016 2015 % var

Net sales 1,315,326 1,427,058 (8%) 303,173 324,978 (7%) Cost of sales (676,860) (749,646) 10% (160,818) (168,881) 5%

Gross profit 638,466 677,412 (6%) 142,355 156,097 (9%)

Operating expenses (296,000) (312,594) 5% (75,448) (72,745) (4%)

Operating earnings before other expenses, net 342,466 364,818 (6%) 66,907 83,352 (20%)

Other expenses, net (30,219) (83,360) 64% (27,512) (70,453) 61%

Operating earnings 312,247 281,458 11% 39,395 12,899 205%

Financial expenses (63,701) (73,748) 14% (14,372) (15,476) 7% Other income (expenses), net (484) (19,189) 97% (12,927) (1,267) (920%)

Net income before income taxes 248,062 188,521 32% 12,096 (3,844) N/A

Income tax (107,793) (92,469) (17%) (15,746) (17,643) 11%

Consolidated net income 140,269 96,052 46% (3,650) (21,487) 83%

Non-controlling Interest Net Income (500) (561) 11% 18 (146) N/A

Controlling Interest Net Income 139,769 95,491 46% (3,633) (21,633) 83%

0 0

Operating EBITDA 423,650 449,772 (6%) 84,067 103,489 (19%) Earnings per share 0.25 0.17 46% (0.01) (0.04) 82%

as of December 31

BALANCE SHEET 2016 2015 % var Total Assets 3,294,646 3,196,930 3%

Cash and Temporary Investments 44,907 53,635 (16%) Trade Accounts Receivables 100,344 91,568 10% Other Receivables 33,278 41,611 (20%) Inventories 71,595 86,134 (17%) Other Current Assets 11,247 14,421 (22%) Current Assets 261,371 287,369 (9%) Fixed Assets 1,236,150 1,093,359 13% Other Assets 1,797,125 1,816,202 (1%)

Total Liabilities 1,820,735 1,880,115 (3%)

Current Liabilities 457,863 524,245 (13%) Long-Term Liabilities 1,347,146 1,347,340 (0%) Other Liabilities 15,726 8,530 84%

Consolidated Stockholders’ Equity 1,473,911 1,316,815 12%

Non-controlling Interest 4,813 5,329 (10%) Stockholders’ Equity Attributable to Controlling Interest 1,469,098 1,311,486 12%

2016 Fourth 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—December Fourth Quarter

INCOME STATEMENT 2016 2015 % var 2016 2015 % var

Net sales 3,998,710 3,955,161 1% 923,009 991,012 (7%) Cost of sales (2,057,715) (2,077,681) 1% (489,610) (514,996) 5%

Gross profit 1,940,995 1,877,480 3% 433,399 476,016 (9%)

Operating expenses (899,866) (866,371) (4%) (229,700) (221,829) (4%)

Operating earnings before other expenses, net 1,041,129 1,011,109 3% 203,699 254,187 (20%)

Other expenses, net (91,870) (231,036) 60% (83,763) (214,844) 61%

Operating earnings 949,259 780,073 22% 119,936 39,343 205%

Financial expenses (193,659) (204,397) 5% (43,751) (47,195) 7% Other income (expenses), net (1,470) (53,183) 97% (39,358) (3,860) (920%)

Net income before income taxes 754,130 522,493 44% 36,827 (11,712) N/A

Income tax (327,699) (256,281) (28%) (47,938) (53,801) 11%

Consolidated net income 426,431 266,212 60% (11,111) (65,516) 83%

Non-controlling Interest Net Income (1,522) (1,555) 2% 50 (446) N/A

Controlling Interest Net Income 424,909 264,657 61% (11,061) (65,959) 83%

Operating EBITDA 1,287,934 1,246,566 3% 255,941 315,587 (19%) Earnings per share 766.44 478.65 60% (19.97) (117.80) 83%

as of December 31

BALANCE SHEET 2016 2015 % var Total Assets 9,886,277 10,068,638 (2%)

Cash and Temporary Investments 134,753 168,921 (20%) Trade Accounts Receivables 301,103 288,391 4% Other Receivables 99,859 131,054 (24%) Inventories 214,834 271,276 (21%) Other Current Assets 33,750 45,420 (26%) Current Assets 784,299 905,062 (13%) Fixed Assets 3,709,327 3,443,503 8% Other Assets 5,392,651 5,720,073 (6%)

Total Liabilities 5,463,499 5,921,365 (8%)

Current Liabilities 1,373,913 1,651,092 (17%) Long-Term Liabilities 4,042,397 4,243,408 (5%) Other Liabilities 47,189 26,865 76%

Consolidated Stockholders’ Equity 4,422,778 4,147,273 7%

Non-controlling Interest 14,441 16,786 (14%) Stockholders’ Equity Attributable to Controlling Interest 4,408,337 4,130,487 7%

2016 Fourth Quarter Results Page 7

2016 Fourth Quarter Results Page 8

OPERATING RESULTS

Operating Summary per Country

In thousands of U.S. dollars

Operating EBITDA margin as a percentage of net sales

2016 2015 % var 2016 2015 % var NET SALES Colombia 665,154 724,709 (8%) 153,369 173,386 (12%) Panama 256,301 284,527 (10%) 56,692 60,611 (6%) Costa Rica 151,370 166,931 (9%) 31,835 35,972 (12%) Rest of CLH 263,386 268,542 (2%) 66,225 59,993 10% Others and intercompany eliminations (20,885) (17,651) (18%) (4,948) (4,984) 1% TOTAL 1,315,326 1,427,058 (8%) 303,173 324,978 (7%) GROSS PROFIT Colombia 305,042 345,343 (12%) 62,170 82,240 (24%) Panama 129,591 131,677 (2%) 29,249 28,974 1% Costa Rica 77,895 87,483 (11%) 15,839 18,716 (15%) Rest of CLH 106,493 96,552 10% 25,958 21,278 22% Others and intercompany eliminations 19,445 16,357 19% 9,139 4,889 87% TOTAL 638,466 677,412 (6%) 142,355 156,097 (9%) Colombia 187,468 222,069 (16%) 30,981 53,513 (42%) Panama 98,090 98,763 (1%) 21,256 21,214 0% Costa Rica 54,446 62,652 (13%) 10,520 13,392 (21%) Rest of CLH 78,892 67,653 17% 18,322 14,084 30% Others and intercompany eliminations (76,430) (86,319) 11% (14,172) (18,851) 25% TOTAL 342,466 364,818 (6%) 66,907 83,352 (20%) OPERATING EBITDA Colombia 213,836 248,153 (14%) 37,782 59,651 (37%) Panama 116,053 117,241 (1%) 25,689 25,715 (0%) Costa Rica 60,646 68,983 (12%) 12,031 14,917 (19%) Rest of CLH 84,398 72,777 16% 19,653 15,530 27% Others and intercompany eliminations (51,283) (57,382) 11% (11,088) (12,324) 10% TOTAL 423,650 449,772 (6%) 84,067 103,489 (19%) OPERATING EBITDA MARGIN Colombia 32.1% 34.2% 24.6% 34.4% Panama 45.3% 41.2% 45.3% 42.4% Costa Rica 40.1% 41.3% 37.8% 41.5% Rest of CLH 32.0% 27.1% 29.7% 25.9% TOTAL 32.2% 31.5% 27.7% 31.8% January—December Fourth Quarter OPERATING EARNINGS BEFORE OTHER EXPENSES, NET

2016 Fourth Quarter Results Page 9

OPERATING RESULTS

Volume Summary

Consolidated volume summary

Cement and aggregates in thousands of metric tons

Ready mix in thousands of cubic meters

2016 2015 % var 2016 2015 % var Total cement volume 1 7,525 7,385 2% 1,794 1,828 (2%) Total domestic gray cement volume 6,569 6,636 (1%) 1,593 1,601 (0%) Total ready-mix volume 3,079 3,395 (9%) 724 767 (6%) Total aggregates volume 7,264 8,447 (14%) 1,717 1,899 (10%) January—December Fourth Quarter 1 Consolidated cement volume includes domestic and export volume of gray cement, white cement, special cement, mortar and clinker.

Per-country volume summary

January—December Fourth Quarter Fourth Quarter 2016 2016 vs. 2015 2016 vs. 2015 vs. Third Quarter 2016 DOMESTIC GRAY CEMENT Colombia 0% (3%) (2%) Panama (14%) (5%) (21%) Costa Rica (12%) (8%) (17%) Rest of CLH 10% 13% 4% READY-MIX Colombia (8%) (6%) (9%) Panama (3%) 13% (7%) Costa Rica (9%) (20%) (23%) Rest of CLH (37%) (32%) 2% AGGREGATES Colombia (13%) (7%) (7%) Panama (5%) 7% (7%) Costa Rica 9% (5%) (23%) Rest of CLH (66%) (69%) (2%)

2016 Fourth Quarter Results Page 10

OPERATING RESULTS

Price Summary

Variation in U.S. dollars

January—December Fourth Quarter Fourth Quarter 2016 2016 vs. 2015 2016 vs. 2015 vs. Third Quarter 2016 DOMESTIC GRAY CEMENT Colombia (8%) (14%) (12%) Panama 2% (0%) (1%) Costa Rica (5%) (7%) (2%) Rest of CLH (2%) 1% (2%) READY-MIX Colombia (5%) 3% (3%) Panama (4%) (3%) (4%) Costa Rica 0% (12%) (3%) Rest of CLH (1%) 0% 2% AGGREGATES Colombia 1% 5% (5%) Panama (3%) (6%) (4%) Costa Rica 2% (7%) (25%) Rest of CLH (10%) (2%) 9% For Rest of CLH, volume-weighted average prices.

Variation in local currency

January—December Fourth Quarter Fourth Quarter 2016 2016 vs. 2015 2016 vs. 2015 vs. Third Quarter 2016 DOMESTIC GRAY CEMENT Colombia 1% (14%) (9%) Panama 2% (0%) (1%) Costa Rica (3%) (4%) (2%) Rest of CLH (0%) 0% (1%) READY-MIX Colombia 4% 3% (1%) Panama (4%) (3%) (4%) Costa Rica 2% (9%) (3%) Rest of CLH 0% 2% 2% AGGREGATES Colombia 11% 5% (2%) Panama (3%) (6%) (4%) Costa Rica 4% (3%) (25%) Rest of CLH (6%) 2% 6% For Rest of CLH, volume-weighted average prices.

2016 Fourth Quarter Results Page 11

OTHER ACTIVITIES AND INFORMATION

Information on audits related to Maceo cement project

During the fourth quarter of 2016, in connection with the internal audit related to Maceo’s project, and considering the findings and the legal opinions available, as well as the irregularities in the legal processes that have not permitted CEMEX Colombia to be the rightful owner of the several assets related to the Maceo cement project, CLH determined the following:

First, there is low probability of recover resources delivered under different memorandums of understanding for the purchase of the assets related to the project for an amount in Colombian pesos equivalent to approximately US$14 million, which were recognized as part of investments in progress. These payments have been considered as contingent assets and therefore were reduced to zero, recognizing an impairment loss for such amount against other expenses, net

Nonetheless, on December 19, 2016, CEMEX Colombia filed a claim in the civil courts with the aim of securing that all property rights related to the additional land would be effectively transferred to CEMEX Colombia.

Second, certain purchases of equipment installed in the plant were considered exempt for VAT purposes under the benefits of the free trade zone, however, as those assets were actually installed outside of the free trade zone’s area, they lack of such benefits, therefore, CEMEX increased investments in progress against VAT accounts payable for approximately US$9 million; and

Third the cancellation of the balance payable to CI Calizas in connection with the acquisition of the assets for approximately US$9 million against a reduction in investments in progress.

All these amounts considering the Colombian peso to U.S. dollar exchange rate as of December 31, 2016.

2016 Fourth Quarter Results Page 12

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 December 31, 2016 and December 31, 2015 was $3,000.71 and $3,149.47 Colombian pesos per US dollar, respectively, and (ii) the consolidated results for the fourth quarter of 2016 and for the fourth quarter of 2015 were $3,044.49 and $3,049.47 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

2016 closing 2015 closing 2016 average 2015 average 2016 average 2015 average Colombian peso 3,000.71 3,149.47 3,040.09 2,771.55 3,044.49 3,049.47 Panama balboa 1.00 1.00 1.00 1.00 1.00 1.00 Costa Rica colon 561.10 544.87 552.06 540.97 559.89 543.81 Euro 1.0519 1.0864 1.1000 1.1016 1.0700 0.8071 Amounts provided in units of local currency per US dollar. January—December January—December Fourth Quarter

2016 Fourth Quarter Results Page 13

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.