EX-99.2 3 d483646dex992.htm THIRD QUARTER 2017 RESULTS FOR CEMEX LATAM HOLDINGS, S.A.

Third quarter 2017 results for CEMEX Latam Holdings, S.A.

Exhibit 99.2

● 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 - September												Third Quarter
		2017				2016				% var				2017				2016				% var
Consolidated cement volume			5,673				5,666				0	%			1,892				1,892				0	%
Consolidated domestic gray cement volume			4,974				4,976				(0	%)			1,652				1,670				(1	%)
Consolidated ready-mix volume			2,197				2,355				(7	%)			721				795				(9	%)
Consolidated aggregates volume			5,234				5,547				(6	%)			1,695				1,869				(9	%)
Net sales			954				1,012				(6	%)			312				340				(8	%)
Gross profit			409				496				(18	%)			128				168				(23	%)
as % of net sales			42.8	%			49.0	%			(6.2pp	)			41.2	%			49.3	%			(8.1pp	)
Operating earnings before other expenses, net			177				276				(36	%)			53				92				(43	%)
as % of net sales			18.6	%			27.2	%			(8.6pp	)			16.9	%			27.1	%			(10.2pp	)
Controlling interest net income (loss)			79				143				(45	%)			28				43				(34	%)
Operating EBITDA			239				340				(30	%)			71				114				(38	%)
as % of net sales			25.0	%			33.6	%			(8.6pp	)			22.7	%			33.4	%			(10.7pp	)
Free cash flow after maintenance capital expenditures			77				181				(58	%)			19				54				(65	%)
Free cash flow			46				73				(37	%)			17				22				(26	%)
Net debt			881				969				(9	%)			881				969				(9	%)
Total debt			922				1,016				(9	%)			922				1,016				(9	%)
Earnings per share			0.14				0.26				(45	%)			0.05				0.08				(35	%)
Shares outstanding at end of period			557				556				0	%			557				556				0	%
Employees			4,351				4,724				(8	%)			4,351				4,724				(8	%)

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 2017 declined by 8% compared to those of the third quarter of 2016. For the first nine months of the year, consolidated net sales decreased by 6%, compared to those of the same period of 2016. These declines are mostly explained by lower cement volumes and prices in Colombia.

Cost of sales as a percentage of net sales during the first nine months of the year increased by 6.2pp from 51.0% to 57.2%, on a year-over-year basis.

Operating expenses as a percentage of net sales during the nine months of the year increased by 2.5pp from 21.8% to 24.2%, compared to those of the same period of 2016.

Operating EBITDA during the third quarter of 2017 declined by 38% compared to that of third quarter of 2016. During the first nine months

of the year operating EBITDA decreased by 30%, compared to that of the same period in 2016. This decline is mainly explained by lower cement volumes and prices in Colombia.

Operating EBITDA margin during the third quarter of 2017 declined by 10.7pp, compared to that of the third quarter of 2016. During the first nine months of the year operating EBITDA margin declined by 8.6pp compared to that of the same period last year.

Controlling interest net income during the first nine months of the year reached US$79 million, declining 45% compared to that of the same period in 2016. During the third quarter of 2017 controlling interest net income reached US$28 million, declining by 34% compared to that of the third quarter of 2016.

Total debt at the end of the quarter reached US$922 million.

2017 Third Quarter Results Page 2

OPERATING RESULTS

Colombia    

		January - September												Third Quarter
		2017				2016				% var				2017				2016				% var
Net sales			432				512				(16%)				142				173				(18	%)
Operating EBITDA			83				176				(53%)				22				60				(63	%)
Operating EBITDA margin			19.1	%			34.4	%			(15.3pp)				15.8	%			34.9	%			(19.1pp	)

In millions of US dollars, except percentages.

		Domestic gray cement								Ready-Mix								Aggregates
		January - September				Third Quarter				January - September				Third Quarter				January - September				Third Quarter
Volume			(5	%)			(4	%)			(15	%)			(16	%)			(18	%)			(21	%)
Price (USD)			(18	%)			(22	%)			1	%			(4	%)			7	%			5	%
Price (local currency)			(21	%)			(22	%)			(2	%)			(4	%)			4	%			5	%

Year-over-year percentage variation.

In Colombia, during the third quarter our domestic gray cement, ready-mix and aggregates volumes declined by 4%, 16%, and 21%, respectively, compared to those of the third quarter of 2016. For the first nine months of the year, our domestic gray cement, ready-mix and aggregates volumes decreased by 5%, 15%, and 18%, respectively, compared to those of the same period of 2016.

Cement consumption during the quarter was affected by weak demand from industrial and commercial projects, as well as from high and middle income housing developments. Although our cement prices declined in 3Q17, on a year-over-year and sequential basis, as of September they were 2% higher than in June.

The deterioration in EBITDA during this quarter, on a year over year basis, relates mainly to lower cement volumes and prices, higher distribution costs due to the closure of our Bucaramanga plant, higher fuel costs, higher costs related to the scope of the maintenance of a kiln in our Ibague cement plant, as well as certain the one-off effects related to our housing solutions business, and the adverse arbitration decision of an electricity contract.

Panama    

		January - September												Third Quarter
		2017				2016				% var				2017				2016				% var
Net sales			212				200				6	%			71				70				1	%
Operating EBITDA			87				90				(3	%)			30				32				(8	%)
Operating EBITDA margin			41.3	%			45.3	%			(4.0pp	)			42.0	%			46.4	%			(4.4pp	)

In millions of US dollars, except percentages.

		Domestic gray cement								Ready-Mix								Aggregates
		January - September				Third Quarter				January - September				Third Quarter				January - September				Third Quarter
Volume			5	%			(3	%)			16	%			4	%			18	%			15	%
Price (USD)			(1	%)			(1	%)			(0	%)			0	%			(3	%)			(9	%)
Price (local currency)			(1	%)			(1	%)			(0	%)			0	%			(3	%)			(9	%)

Year-over-year percentage variation.

In Panama during the third quarter our domestic gray cement volumes declined by 3%, while our ready-mix and aggregates volumes increased by 4% and 15% respectively, compared to those of the third quarter of 2016. For the first nine months of 2017, our domestic gray cement, ready-mix and aggregates volumes increased by 5%, 16%, and 18% respectively, compared to those of the first nine months of 2016.    

Our cement dispatches in the country during the quarter and the first nine months of 2017 were driven by infrastructure works like the second line of the Subway, Minera Panamá, and the urban renovation of Colon city, as well as by middle-income and low-income residential projects.

Our margin decline of 4.4 percentage points during the quarter is mostly explained by lower cement volumes, a product-mix effect reflecting an increase in sales of ready-mix and aggregates, and an increase in our fuel costs

2017 Third Quarter Results Page 3

OPERATING RESULTS

Costa Rica    

		January - September												Third Quarter
		2017				2016				% var				2017				2016				% var
Net sales			114				120				(5	%)			37				38				(2	%)
Operating EBITDA			40				49				(18	%)			13				14				(6	%)
Operating EBITDA margin			35.2	%			40.7	%			(5.5pp	)			35.1	%			36.8	%			(1.7pp	)

In millions of US dollars, except percentages.

		Domestic gray cement								Ready-Mix								Aggregates
		January - September				Third Quarter				January - September				Third Quarter				January - September				Third Quarter
Volume			(1	%)			(0	%)			2	%			22	%			28	%			33	%
Price (USD)			(8	%)			(6	%)			(15	%)			(10	%)			(52	%)			(51	%)
Price (local currency)			(4	%)			(3	%)			(11	%)			(7	%)			(49	%)			(50	%)

Year-over-year percentage variation.

In Costa Rica, during the third quarter our domestic gray cement volumes remained flat, while our ready-mix and aggregates

volumes increased by 22% and 33%, respectively, compared to those of the third quarter of 2016. For the first nine months

of the year our domestic gray cement volumes declined by 1%, while our ready-mix and aggregates volumes increased by 2%

and 28%, respectively, compared to those of the same period of 2016.

Despite severe weather conditions during the quarter, we have seen positive signs with regards to demand for our products

in the country. Daily national cement consumption increased during the July-September period for the second consecutive

quarter, on a year-over-year basis, fueled by industrial and commercial developments.

Year to date, our operations in Costa Rica have had the highest alternative fuels substitution rate in our portfolio. This

quarter it reached 27.8%, a new record for this operation, helping us partially offset the increase in fuel costs in the country.

Rest of CLH    

		January - September												Third Quarter
		2017				2016				% var				2017				2016				% var
Net sales			215				197				9	%			67				64				5	%
Operating EBITDA			66				65				1	%			19				20				(8	%)
Operating EBITDA margin			30.4	%			32.8	%			(2.4pp	)			27.9	%			31.8	%			(3.9pp	)

In millions of US dollars, except percentages.

		Domestic gray cement								Ready-Mix								Aggregates
		January - September				Third Quarter				January - September				Third Quarter				January - September				Third Quarter
Volume			10	%			7	%			27	%			20	%			62	%			2	%
Price (USD)			(1	%)			(1	%)			(9	%)			(4	%)			(12	%)			2	%
Price (local currency)			(1	%)			(1	%)			(9	%)			(4	%)			(8	%)			7	%

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 2017 our domestic gray cement, ready-mix and aggregates volumes increased by 7%, 20% and 2%, respectively, compared to those of the third quarter of 2016. During the first nine months of 2017, our domestic gray cement, ready-mix and aggregates volumes increased by 10%, 27% and 62%, respectively, compared to those of the same period of 2016. Despite the unusual rainy weather conditions in Central America in recent months, cement volumes increased for the ninth consecutive quarter in the Rest of CLH region in the July-September period, on a year-over-year basis.

In Nicaragua, infrastructure works continued to drive cement consumption. Although housing developments continue to demand our products, construction activity for new projects has slowed down.

With regards to Guatemala, construction activity during the quarter was affected by rainy weather conditions, and by the decrease in demand from two of the most important mining projects in the country. National cement consumption continues to rely heavily on private investment, mostly from industrial and commercial works. Construction of public works remains stagnant and with very low levels of disbursements.

2017 Third Quarter Results Page 4

OPERATING EBITDA, FREE CASH FLOW AND DEBT RELATED INFORMATION

Operating EBITDA and free cash flow    

		January - September												Third Quarter
		2017				2016				% var				2017				2016				% var
Operating earnings before other expenses, net			177				276				(36	%)			52				93				(44	%)
+ Depreciation and operating amortization			61				64								18				21
Operating EBITDA			239				340				(30	%)			71				114				(38	%)
- Net financial expense			47				49								15				20
- Capital expenditures for maintenance			36				32								13				10
- Change in working Capital			(7	)			(17	)							5				5
- Taxes paid			83				85								18				21
- Other cash items (Net)			4				10								2				4
Free cash flow after maintenance capital exp			77				181				(58	%)			19				54				(65	%)
- Strategic Capital expenditures			30				108								2				32
Free cash flow			46				73				(37	%)			17				22				(26	%)

In millions of US dollars, except percentages.

Information on Debt

		Third Quarter												Second Quarter						Third Quarter
		2017				2016				% var				2017						2017				2016
Total debt 1, 2			922				1,016								936			Currency denomination
Short term			16	%			27	%							2	%		U.S. dollar			98	%			97	%
Long term			84	%			73	%							98	%		Colombian peso			2	%			3	%
Cash and cash equivalents			41				47				(11	%)			39			Interest rate
Net debt			881				969				(9	%)			897			Fixed			65	%			76	%
																		Variable			35	%			24	%

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.

2017 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		2017				2016				% var				2017				2016				% var
Net sales			954,321				1,012,153				(6	%)			311,566				340,077				(8	%)
Cost of sales			(545,682	)			(516,042	)			(6	%)			(183,090	)			(172,302	)			(6	%)
Gross profit			408,639				496,111				(18	%)			128,476				167,775				(23	%)
Operating expenses			(231,412	)			(220,552	)			(5	%)			(75,845	)			(75,693	)			(0	%)
Operating earnings before other expenses, net			177,227				275,559				(36	%)			52,631				92,082				(43	%)
Other expenses, net			(6,041	)			(2,707	)			(123	%)			(4,582	)			(2,433	)			(88	%)
Operating earnings			171,186				272,852				(37	%)			48,049				89,649				(46	%)
Financial expenses			(46,619	)			(49,329	)			5	%			(14,475	)			(19,951	)			27	%
Other income (expenses), net			(884	)			12,443				N/A				7,290				882				727	%
Net income before income taxes			123,683				235,966				(48	%)			40,864				70,580				(42	%)
Income tax			(44,187	)			(92,047	)			52	%			(12,689	)			(27,531	)			54	%
Consolidated net income			79,496				143,919				(45	%)			28,175				43,049				(35	%)
Non-controlling Interest Net Income			(288	)			(518	)			44	%			(98	)			(205	)			52	%
Controlling Interest Net Income			79,208				143,401				(45	%)			28,077				42,844				(34	%)
Operating EBITDA			238,566				339,583				(30	%)			70,829				113,532				(38	%)
Earnings per share			0.14				0.26				(45	%)			0.05				0.08				(35	%)

		as of September 30
BALANCE SHEET		2017				2016				% var
Total Assets			3,367,493				3,376,607				(0	%)
Cash and Temporary Investments			41,401				46,761				(11	%)
Trade Accounts Receivables			125,287				115,804				8	%
Other Receivables			67,647				42,953				57	%
Inventories			78,236				70,867				10	%
Other Current Assets			14,929				13,563				10	%
Current Assets			327,500				289,948				13	%
Fixed Assets			1,265,865				1,247,216				1	%
Other Assets			1,774,128				1,839,443				(4	%)
Total Liabilities			1,816,889				1,869,004				(3	%)
Current Liabilities			501,456				575,949				(13	%)
Long-Term Liabilities			1,300,131				1,284,515				1	%
Other Liabilities			15,302				8,540				79	%
Consolidated Stockholders’ Equity			1,550,604				1,507,603				3	%
Non-controlling Interest			5,146				5,938				(13	%)
Stockholders’ Equity Attributable to Controlling Interest			1,545,458				1,501,665				3	%

2017 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		2017				2016				% var				2017				2016				% var
Net sales			2,809,215				3,075,558				(9	%)			921,551				2,021,436				(54	%)
Cost of sales			(1,606,312	)			(1,568,061	)			(2	%)			(541,544	)			(1,034,363	)			48	%
Gross profit			1,202,903				1,507,497				(20	%)			380,007				987,073				(62	%)
Operating expenses			(681,203	)			(670,175	)			(2	%)			(224,337	)			(449,437	)			50	%
Operating earnings before other expenses, net			521,700				837,322				(38	%)			155,673				537,636				(71	%)
Other expenses, net			(17,783	)			(8,225	)			(116	%)			(13,552	)			(7,015	)			(93	%)
Operating earnings			503,917				829,097				(39	%)			142,121				530,621				(73	%)
Financial expenses			(137,232	)			(149,892	)			8	%			(42,817	)			(107,218	)			60	%
Other income (expenses), net			(2,602	)			37,809				N/A				21,563				23,927				(10	%)
Net income before income taxes			364,083				717,014				(49	%)			120,867				447,330				(73	%)
Income tax			(130,071	)			(279,698	)			53	%			(37,531	)			(174,498	)			78	%
Consolidated net income			234,012				437,316				(46	%)			83,336				272,832				(69	%)
Non-controlling Interest Net Income			(849	)			(1,574	)			46	%			(289	)			(1,091	)			74	%
Controlling Interest Net Income			233,163				435,742				(46	%)			83,047				271,741				(69	%)
Operating EBITDA			702,261				1,031,867				(32	%)			209,495				336,642				(38	%)
Earnings per share			420.39				786.01				(47	%)			149.71				228.25				(34	%)

		as of September 30
BALANCE SHEET		2017				2016				% var
Total Assets			9,904,032				9,724,459				2	%
Cash and Temporary Investments			121,761				134,670				(10	%)
Trade Accounts Receivables			368,478				333,510				10	%
Other Receivables			198,954				123,702				61	%
Inventories			230,097				204,093				13	%
Other Current Assets			43,909				39,062				12	%
Current Assets			963,199				835,037				15	%
Fixed Assets			3,722,997				3,591,920				4	%
Other Assets			5,217,836				5,297,502				(2	%)
Total Liabilities			5,343,596				5,382,638				(1	%)
Current Liabilities			1,474,817				1,658,705				(11	%)
Long-Term Liabilities			3,823,775				3,699,337				3	%
Other Liabilities			45,004				24,596				83	%
Consolidated Stockholders’ Equity			4,560,436				4,341,821				5	%
Non-controlling Interest			15,135				17,101				(11	%)
Stockholders’ Equity Attributable to Controlling Interest			4,545,301				4,324,720				5	%

2017 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
		2017				2016				% var				2017				2016				% var
NET SALES
Colombia			432,019				511,785				(16	%)			141,501				172,804				(18	%)
Panama			211,792				199,609				6	%			70,592				69,827				1	%
Costa Rica			113,732				119,535				(5	%)			37,169				37,871				(2	%)
Rest of CLH			215,377				197,161				9	%			67,203				64,092				5	%
Others and intercompany eliminations			(18,599	)			(15,937	)			(17	%)			(4,899	)			(4,517	)			(8	%)
TOTAL			954,321				1,012,153				(6	%)			311,566				340,077				(8	%)
GROSS PROFIT
Colombia			159,132				242,872				(34	%)			47,812				82,895				(42	%)
Panama			100,085				100,342				(0	%)			34,530				35,986				(4	%)
Costa Rica			52,981				62,056				(15	%)			17,529				18,940				(7	%)
Rest of CLH			83,806				80,535				4	%			24,689				26,221				(6	%)
Others and intercompany eliminations			12,635				10,306				23	%			3,916				3,733				5	%
TOTAL			408,639				496,111				(18	%)			128,476				167,775				(23	%)
OPERATING EARNINGS BEFORE OTHER EXPENSES, NET
Colombia			63,505				156,487				(59	%)			17,144				53,423				(68	%)
Panama			74,593				76,834				(3	%)			25,846				27,880				(7	%)
Costa Rica			36,081				43,926				(18	%)			11,581				12,313				(6	%)
Rest of CLH			60,985				60,570				1	%			17,173				19,006				(10	%)
Others and intercompany eliminations			(57,937	)			(62,258	)			7	%			(19,113	)			(20,540	)			7	%
TOTAL			177,227				275,559				(36	%)			52,631				92,082				(43	%)
OPERATING EBITDA
Colombia			82,663				176,054				(53	%)			22,398				60,277				(63	%)
Panama			87,475				90,364				(3	%)			29,679				32,420				(8	%)
Costa Rica			40,025				48,615				(18	%)			13,039				13,943				(6	%)
Rest of CLH			65,544				64,745				1	%			18,736				20,351				(8	%)
Others and intercompany eliminations			(37,141	)			(40,195	)			8	%			(13,023	)			(13,459	)			3	%
TOTAL			238,566				339,583				(30	%)			70,829				113,532				(38	%)
OPERATING EBITDA MARGIN
Colombia			19.1	%			34.4	%							15.8	%			34.9	%
Panama			41.3	%			45.3	%							42.0	%			46.4	%
Costa Rica			35.2	%			40.7	%							35.1	%			36.8	%
Rest of CLH			30.4	%			32.8	%							27.9	%			31.8	%
TOTAL			25.0	%			33.6	%							22.7	%			33.4	%

2017 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
		2017				2016				% var				2017				2016				% var
Total cement volume 1			5,673				5,666				0	%			1,892				1,892				0	%
Total domestic gray cement volume			4,974				4,976				(0	%)			1,652				1,670				(1	%)
Total ready-mix volume			2,197				2,355				(7	%)			721				795				(9	%)
Total aggregates volume			5,234				5,547				(6	%)			1,695				1,869				(9	%)

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 Quarter				Third Quarter 2017
		2017 vs. 2016				2017 vs. 2016				vs. Second Quarter 2017
DOMESTIC GRAY CEMENT
Colombia			(5	%)			(4	%)			5	%
Panama			5	%			(3	%)			(4	%)
Costa Rica			(1	%)			(0	%)			(1	%)
Rest of CLH			10	%			7	%			(7	%)
READY-MIX
Colombia			(15	%)			(16	%)			3	%
Panama			16	%			4	%			(4	%)
Costa Rica			2	%			22	%			28	%
Rest of CLH			27	%			20	%			(31	%)
AGGREGATES
Colombia			(18	%)			(21	%)			2	%
Panama			18	%			15	%			4	%
Costa Rica			28	%			33	%			(15	%)
Rest of CLH			62	%			2	%			(62	%)

2017 Third Quarter Results Page 9

OPERATING RESULTS

Price Summary    

Variation in U.S. dollars    

		January -September				Third Quarter				Third Quarter 2017
		2017 vs. 2016				2017 vs. 2016				vs. Second Quarter 2017
DOMESTIC GRAY CEMENT
Colombia			(18	%)			(22	%)			(2	%)
Panama			(1	%)			(1	%)			0	%
Costa Rica			(8	%)			(6	%)			(0	%)
Rest of CLH			(1	%)			(1	%)			0	%
READY-MIX
Colombia			1	%			(4	%)			(0	%)
Panama			(0	%)			0	%			2	%
Costa Rica			(15	%)			(10	%)			(4	%)
Rest of CLH			(9	%)			(4	%)			9	%
AGGREGATES
Colombia			7	%			5	%			0	%
Panama			(3	%)			(9	%)			(3	%)
Costa Rica			(52	%)			(51	%)			25	%
Rest of CLH			(12	%)			2	%			23	%

For Rest of CLH, volume-weighted average prices.    

Variation in local currency    

		January -September				Third Quarter				Third Quarter 2017
		2017 vs. 2016				2017 vs. 2016				vs. Second Quarter 2017
DOMESTIC GRAY CEMENT
Colombia			(21	%)			(22	%)			(2	%)
Panama			(1	%)			(1	%)			0	%
Costa Rica			(4	%)			(3	%)			(1	%)
Rest of CLH			(1	%)			(1	%)			(0	%)
READY-MIX
Colombia			(2	%)			(4	%)			(1	%)
Panama			(0	%)			0	%			2	%
Costa Rica			(11	%)			(7	%)			(4	%)
Rest of CLH			(9	%)			(4	%)			9	%
AGGREGATES
Colombia			4	%			5	%			(0	%)
Panama			(3	%)			(9	%)			(3	%)
Costa Rica			(49	%)			(50	%)			25	%
Rest of CLH			(8	%)			7	%			24	%

For Rest of CLH, volume-weighted average prices.    

2017 Third Quarter Results Page 10

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, 2017 and September 30, 2016 was $2,941.07 and $2,879.95 Colombian pesos per US dollar, respectively, and (ii) the consolidated results for the third quarter of 2017 and for the third quarter of 2016 were $2,957.80 and $2,965.17 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 - September								Third Quarter
		2017 closing				2016 closing				2017 average				2016 average				2017 average				2016 average
Colombian peso			2,941.07				2,879.95				2,943.68				3,038.63				2,957.80				2,965.17
Panama balboa			1.00				1.00				1.00				1.00				1.00				1.00
Costa Rica colon			574.13				558.80				572.71				549.45				575.57				557.87
Euro			1.18				1.12				1.12				0.00				1.12				1.12

Amounts provided in units of local currency per US dollar.    

2017 Third Quarter Results Page 11

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.

2017 Third Quarter Results Page 12