EX-99.2 3 d485850dex992.htm EX-2

Exhibit 2

Operating and Financial Highlights |  |

|  | January - September |  |  | Third Quarter |
|  | 2017 |  |  | 2016 |  |  | % var |  |  | 2016 |  |  | 2017 |  |  | 2016 |  |  | % var |  |  | 2016 |
|  |  |  |  | Pro Forma1 |  |  |  |  |  | Actual |  |  |  |  |  | Pro Forma1 |  |  |  |  |  | Actual |
Cement volume2 |  |  | 3.8 |  |  |  | 3.9 |  |  |  | (2 | %) |  |  | 3.8 |  |  |  | 1.3 |  |  |  | 1.3 |  |  |  | 3 | % |  |  | 1.3 |
Net sales |  |  | 16,561 |  |  |  | 19,009 |  |  |  | (13 | %) |  |  | 19,009 |  |  |  | 5,572 |  |  |  | 6,290 |  |  |  | (11 | %) |  |  | 6,290 |
Gross profit |  |  | 7,215 |  |  |  | 9,531 |  |  |  | (24 | %) |  |  | 9,531 |  |  |  | 2,323 |  |  |  | 3,453 |  |  |  | (33 | %) |  |  | 3,453 |
as % of net sales |  |  | 43.6 | % |  |  | 50.1 | % |  |  | (6.5 | pp) |  |  | 50.1 | % |  |  | 41.7 | % |  |  | 54.9 | % |  |  | (13.2 | pp) |  |  | 54.9 | %
Operating earnings before other expenses, net |  |  | 1,671 |  |  |  | 4,373 |  |  |  | (62 | %) |  |  | 3,813 |  |  |  | 468 |  |  |  | 1,659 |  |  |  | (72 | %) |  |  | 2,876 |
as % of net sales |  |  | 10.1 | % |  |  | 23.0 | % |  |  | (12.9 | pp) |  |  | 20.1 | % |  |  | 8.4 | % |  |  | 26.4 | % |  |  | (18.0 | pp) |  |  | 45.7 | %
Controlling Interest Net Income |  |  | 688 |  |  |  | 1,879 |  |  |  | (63 | %) |  |  | 1,403 |  |  |  | 202 |  |  |  | 983 |  |  |  | (79 | %) |  |  | 1,360 |
Operating EBITDA |  |  | 2,627 |  |  |  | 5,311 |  |  |  | (51 | %) |  |  | 4,750 |  |  |  | 803 |  |  |  | 1,970 |  |  |  | (59 | %) |  |  | 3,187 |
as % of net sales |  |  | 15.9 | % |  |  | 27.9 | % |  |  | (12.0 | pp) |  |  | 25.0 | % |  |  | 14.4 | % |  |  | 31.3 | % |  |  | (16.9 | pp) |  |  | 50.7 | %
Free cash flow after maintenance capital expenditures |  |  | 1,502 |  |  |  | 3,888 |  |  |  | (61 | %) |  |  | 3,151 |  |  |  | 675 |  |  |  | 1,143 |  |  |  | (41 | %) |  |  | 1,807 |
Free cash flow |  |  | 1,061 |  |  |  | 3,237 |  |  |  | (67 | %) |  |  | 2,500 |  |  |  | 470 |  |  |  | 509 |  |  |  | (8 | %) |  |  | 1,173 |
Net debt3 |  |  | 13,430 |  |  |  | 13,811 |  |  |  | (3 | %) |  |  | 13,811 |  |  |  | 13,430 |  |  |  | 13,811 |  |  |  | (3 | %) |  |  | 13,811 |
Total debt3 |  |  | 15,016 |  |  |  | 15,409 |  |  |  | (3 | %) |  |  | 15,409 |  |  |  | 15,016 |  |  |  | 15,409 |  |  |  | (3 | %) |  |  | 15,409 |
Earnings per share4 |  |  | 0.13 |  |  |  | 0.92 |  |  |  | (86 | %) |  |  | 0.69 |  |  |  | 0.04 |  |  |  | 0.21 |  |  |  | (81 | %) |  |  | 0.29 |

In millions of Philippine Pesos, except volumes and earnings per share

1 | Refer to page 7 for information on pro forma adjustments

2 | Cement volume is in millions of metric tons. It includes domestic and export volume of gray cement, white cement, special cement, mortar and clinker

3 | 2016 U.S. dollar debt converted using end-of-period exchange rate of PHP 48.50

4 | In Philippine Pesos

Net sales for the third quarter of 2017 was PHP 5,572 million, a decrease of 11% compared to the third quarter of 2016, reflecting lower cement prices.

Cost of sales as a percentage of net sales increased by 13.2 pp during the third quarter of 2017 compared with the same period last year, from 45.1% to 58.3%, due to higher fuel prices, timing differences in the recognition of annual shutdown expenses, as well as the effect of lower prices. As a percentage of cost of sales, power and fuels accounted for 22% and 24%, respectively.

Operating expenses as a percentage of net sales increased by 4.8 pp during the third quarter of 2017 compared with the same period last year, from 28.5% to 33.3%. Distribution expenses increased 4.1 pp, driven by higher fuel cost and lower utilization of logistics assets. Selling and administrative expenses increased 0.7 pp but declined in absolute terms by PHP 50 million as marketing promotions, and other overhead expenses decreased.

Operating EBITDA, at PHP 803 million during the third quarter of 2017, decreased by 59% year-on-year, mainly resulting from lower prices. Higher fuel and distribution costs, as well as increased maintenance cost also contributed to this decline.

Operating EBITDA margin decreased by 16.9 pp during the third quarter of 2017 versus the same period in 2016, from 31.3% to 14.4%. Lower prices account for ~70% of the margin decrease.

Controlling interest net income was PHP 202 million in the third quarter of 2017 against a pro forma net income of PHP 983 million in 2016, a 79% decline against same period of the prior year.

Total debt at the end of September 2017 stood at PHP 15,016 million, of which PHP 13,942 million pertained to long-term debt owed to BDO Unibank, Inc. Total debt decreased by PHP 20 million during the quarter.

2017 Third Quarter Results |  | Page 2

Operating Results |  |

Domestic Gray Cement |  | January - September |  |  | Third Quarter |  |  | Third Quarter 2017 |
|  | 2017 vs. 2016 |  |  | 2017 vs. 2016 |  |  | vs. Second Quarter 2017 |
Volume |  |  | (3 | %) |  |  | 2 | % |  |  | 4 | %
Price in USD |  |  | (16 | %) |  |  | (19 | %) |  |  | (6 | %)
Price in PHP |  |  | (10 | %) |  |  | (13 | %) |  |  | (5 | %)

Domestic gray cement volumes increased by 2% during the third quarter of 2017 compared with the same period last year. Sequential activity improved with cement volumes increasing by 4% versus the second quarter.

We estimate that positive demand, supported by a pick-up in infrastructure spending and stability in private sector construction, resulted in mid-single digit growth for the industry year-on-year.

Volumes also grew sequentially despite adverse weather, which affected logistics capabilities.

For the third quarter of 2017, domestic gray cement prices declined by 13% on a year-over-year basis and by 5% on a sequential basis. The decline in prices reflects heightened competitive conditions.

Import volume by traders was observed to have decelerated versus previous quarter.

2017 Third Quarter Results |  | Page 3

Operating EBITDA, Free Cash Flow and Debt Information |  |

Operating EBITDA and Free Cash Flow

|  | January - September |  |  | Third Quarter |
|  | 2017 |  |  | 2016 |  |  | % var |  |  | 2016 |  |  | 2017 |  |  | 2016 |  |  | % var |  |  | 2016 |
|  |  |  |  | Pro Forma1 |  |  |  |  |  | Actual |  |  |  |  |  | Pro Forma1 |  |  |  |  |  | Actual |
Operating earnings before other expenses, net |  |  | 1,671 |  |  |  | 4,373 |  |  |  | (62 | %) |  |  | 3,813 |  |  |  | 468 |  |  |  | 1,659 |  |  |  | (72 | %) |  |  | 2,876 |
+ Depreciation and operating |  |  | 956 |  |  |  | 938 |  |  |  |  |  |  |  | 938 |  |  |  | 335 |  |  |  | 311 |  |  |  |  |  |  |  | 311 |
Operating EBITDA |  |  | 2,627 |  |  |  | 5,311 |  |  |  | (51 | %) |  |  | 4,750 |  |  |  | 803 |  |  |  | 1,970 |  |  |  | (59 | %) |  |  | 3,187 |
- Net financial expenses |  |  | 667 |  |  |  | 1,065 |  |  |  |  |  |  |  | 930 |  |  |  | 208 |  |  |  | 388 |  |  |  |  |  |  |  | 442 |
- Capital expenditures for maintenance |  |  | 413 |  |  |  | 193 |  |  |  |  |  |  |  | 193 |  |  |  | 218 |  |  |  | 121 |  |  |  |  |  |  |  | 121 |
- Change in working Capital |  |  | (348 | ) |  |  | (684 | ) |  |  |  |  |  |  | (684 | ) |  |  | (406 | ) |  |  | 111 |  |  |  |  |  |  |  | 111 |
- Taxes paid |  |  | 424 |  |  |  | 852 |  |  |  |  |  |  |  | 852 |  |  |  | 118 |  |  |  | 226 |  |  |  |  |  |  |  | 465 |
- Other cash items (Net) |  |  | (31 | ) |  |  | (3 | ) |  |  |  |  |  |  | 310 |  |  |  | (9 | ) |  |  | (20 | ) |  |  |  |  |  |  | 241 |
Free cash flow after maintenance capital |  |  | 1,502 |  |  |  | 3,888 |  |  |  | (61 | %) |  |  | 3,151 |  |  |  | 675 |  |  |  | 1,143 |  |  |  | (41 | %) |  |  | 1,807 |
- Strategic Capital expenditures |  |  | 441 |  |  |  | 651 |  |  |  |  |  |  |  | 651 |  |  |  | 204 |  |  |  | 634 |  |  |  |  |  |  |  | 634 |
Free cash flow |  |  | 1,061 |  |  |  | 3,237 |  |  |  | (67 | %) |  |  | 2,500 |  |  |  | 470 |  |  |  | 509 |  |  |  | (8 | %) |  |  | 1,173 |

In millions of Philippine Pesos, except volumes and percentages

1 | Refer to page 7 for information on pro forma adjustments

Debt Information

|  | Third Quarter |  |  | Second |
|  |  |  |  |  |  |  |  |  |  | Quarter |
|  | 2017 |  |  | 2016 1 |  |  | % var |  |  | 2017 1 |
Total debt |  |  | 15,016 |  |  |  | 15,409 |  |  |  | (3 | %) |  |  | 15,036 |
Short term |  |  | 0 | % |  |  | 0 | % |  |  |  |  |  |  | 0 | %
Long term |  |  | 100 | % |  |  | 100 | % |  |  |  |  |  |  | 100 | %
Cash and cash equivalents |  |  | 1,586 |  |  |  | 1,598 |  |  |  | (1 | %) |  |  | 1,173 |
Net debt |  |  | 13,430 |  |  |  | 13,811 |  |  |  | (3 | %) |  |  | 13,863 |

|  | Third Quarter |
|  | 2017 |  |  | 2016 |
Currency denomination |  |  |  |  |  |  |  |
U.S. dollar |  |  | 0 | % |  |  | 100 | %
Philippine peso |  |  | 100 | % |  |  | 0 | %
Interest rate |  |  |  |  |  |  |  |
Fixed |  |  | 44 | % |  |  | 93 | %
Variable |  |  | 56 | % |  |  | 7 | %

In millions of Philippine Pesos, except percentages

1 | U.S. dollar debt converted using end-of-period exchange rate

2017 Third Quarter Results |  | Page 4

Financial Results |  |

Income Statement & Balance Sheet Information

CEMEX Holdings Philippines, Inc.

(Thousands of Philippine Pesos in nominal terms, except per share amounts)

|  | January - September |  |  |  |  |  | Third Quarter |  |  |  |
|  | 2017 |  |  | 2016 |  |  | % var |  |  | 2016 |  |  | 2017 |  |  | 2016 |  |  | % var |  |  | 2016 |
|  |  |  |  | Pro Forma1 |  |  |  |  |  | Actual |  |  |  |  |  | Pro Forma1 |  |  |  |  |  | Actual |
INCOME STATEMENT |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net sales |  |  | 16,561,253 |  |  |  | 19,008,531 |  |  |  | (13 | %) |  |  | 19,008,531 |  |  |  | 5,571,912 |  |  |  | 6,290,282 |  |  |  | (11 | %) |  |  | 6,290,282 |
Cost of sales |  |  | (9,346,142 | ) |  |  | (9,477,536 | ) |  |  | 1 | % |  |  | (9,477,536 | ) |  |  | (3,249,257 | ) |  |  | (2,836,843 | ) |  |  | (15 | %) |  |  | (2,836,843 | )
Gross profit |  |  | 7,215,111 |  |  |  | 9,530,995 |  |  |  | (24 | %) |  |  | 9,530,995 |  |  |  | 2,322,655 |  |  |  | 3,453,439 |  |  |  | (33 | %) |  |  | 3,453,439 |
Operating expenses |  |  | (5,543,998 | ) |  |  | (5,157,812 | ) |  |  | (7 | %) |  |  | (5,718,380 | ) |  |  | (1,854,279 | ) |  |  | (1,794,572 | ) |  |  | (3 | %) |  |  | (577,893 | )
Operating earnings before other expenses, net |  |  | 1,671,113 |  |  |  | 4,373,183 |  |  |  | (62 | %) |  |  | 3,812,615 |  |  |  | 468,376 |  |  |  | 1,658,867 |  |  |  | (72 | %) |  |  | 2,875,546 |
Other income (expenses), net |  |  | 31,100 |  |  |  | 2,942 |  |  |  | 957 | % |  |  | (309,544 | ) |  |  | 9,320 |  |  |  | 19,679 |  |  |  | (53 | %) |  |  | (241,020 | )
Operating earnings |  |  | 1,702,213 |  |  |  | 4,376,125 |  |  |  | (61 | %) |  |  | 3,503,071 |  |  |  | 477,696 |  |  |  | 1,678,546 |  |  |  | (72 | %) |  |  | 2,634,526 |
Financial expenses, net |  |  | (667,103 | ) |  |  | (1,065,363 | ) |  |  | 37 | % |  |  | (929,798 | ) |  |  | (208,491 | ) |  |  | (388,065 | ) |  |  | 46 | % |  |  | (441,802 | )
Foreign exchange loss, net |  |  | (157,208 | ) |  |  | (875,039 | ) |  |  | 82 | % |  |  | (875,039 | ) |  |  | (27,881 | ) |  |  | (539,650 | ) |  |  | 95 | % |  |  | (539,650 | )
Net income before income taxes |  |  | 877,902 |  |  |  | 2,435,723 |  |  |  | (64 | %) |  |  | 1,698,234 |  |  |  | 241,324 |  |  |  | 750,831 |  |  |  | (68 | %) |  |  | 1,653,074 |
Income tax |  |  | (189,941 | ) |  |  | (556,693 | ) |  |  | 66 | % |  |  | (294,777 | ) |  |  | (39,416 | ) |  |  | 232,364 |  |  |  | N/A |  |  |  | (293,264 | )
Consolidated net income |  |  | 687,961 |  |  |  | 1,879,030 |  |  |  | (63 | %) |  |  | 1,403,457 |  |  |  | 201,908 |  |  |  | 983,195 |  |  |  | (79 | %) |  |  | 1,359,810 |
Non-controlling Interest Net Income |  |  | 21 |  |  |  | 19 |  |  |  | 11 | % |  |  | 19 |  |  |  | 6 |  |  |  | 5 |  |  |  | 20 | % |  |  | 5 |
Controlling Interest Net Income |  |  | 687,982 |  |  |  | 1,879,049 |  |  |  | (63 | %) |  |  | 1,403,476 |  |  |  | 201,914 |  |  |  | 983,200 |  |  |  | (79 | %) |  |  | 1,359,815 |
Operating EBITDA |  |  | 2,627,458 |  |  |  | 5,310,771 |  |  |  | (51 | %) |  |  | 4,750,203 |  |  |  | 803,331 |  |  |  | 1,970,038 |  |  |  | (59 | %) |  |  | 3,186,718 |
Earnings per share |  |  | 0.13 |  |  |  | 0.92 |  |  |  | (86 | %) |  |  | 0.69 |  |  |  | 0.04 |  |  |  | 0.21 |  |  |  | (81 | %) |  |  | 0.29 |

1 | Refer to page 7 for information on pro forma adjustments

|  | as of September 30 |  |  |  |
|  | 2017 |  |  | 2016 |  |  | % Var |
BALANCE SHEET |  |  |  |  |  |  |  |  |  |  |  |
Total Assets |  |  | 51,162,429 |  |  |  | 51,006,618 |  |  |  | 0 | %
Cash and Temporary Investments |  |  | 1,586,345 |  |  |  | 1,597,701 |  |  |  | (1 | %)
Trade Accounts Receivables |  |  | 999,675 |  |  |  | 1,029,637 |  |  |  | (3 | %)
Other Receivables |  |  | 76,556 |  |  |  | 241,616 |  |  |  | (68 | %)
Inventories |  |  | 3,046,854 |  |  |  | 2,369,551 |  |  |  | 29 | %
Other Current Assets |  |  | 756,107 |  |  |  | 1,316,368 |  |  |  | (43 | %)
Current Assets |  |  | 6,465,537 |  |  |  | 6,554,873 |  |  |  | (1 | %)
Fixed Assets |  |  | 15,690,808 |  |  |  | 15,702,412 |  |  |  | (0 | %)
Other Assets |  |  | 29,006,084 |  |  |  | 28,749,333 |  |  |  | 1 | %
Total Liabilities |  |  | 21,721,917 |  |  |  | 22,250,071 |  |  |  | (2 | %)
Current Liabilities |  |  | 6,030,449 |  |  |  | 5,901,049 |  |  |  | 2 | %
Long-Term Liabilities |  |  | 14,842,169 |  |  |  | 15,535,356 |  |  |  | (4 | %)
Other Liabilities |  |  | 849,299 |  |  |  | 813,666 |  |  |  | 4 | %
Consolidated Stockholders’ Equity |  |  | 29,440,512 |  |  |  | 28,756,547 |  |  |  | 2 | %
Non-controlling Interest |  |  | 225 |  |  |  | 251 |  |  |  | (10 | %)
Stockholders’ Equity Attributable to Controlling Interest |  |  | 29,440,287 |  |  |  | 28,756,296 |  |  |  | 2 | %

2017 Third Quarter Results |  | Page 5

Financial Results |  |

Income Statement & Balance Sheet Information

CEMEX Holdings Philippines, Inc.

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

|  | January - September |  |  |  |  |  | Third Quarter |  |  |  |
|  | 2017 |  |  | 2016 |  |  | % var |  |  | 2016 |  |  | 2017 |  |  | 2016 |  |  | % var |  |  | 2016 |
|  |  |  |  | Pro Forma1 |  |  |  |  |  | Actual |  |  |  |  |  | Pro Forma1 |  |  |  |  |  | Actual |
INCOME STATEMENT |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net sales |  |  | 329,199 |  |  |  | 403,331 |  |  |  | (18 | %) |  |  | 403,331 |  |  |  | 109,651 |  |  |  | 132,716 |  |  |  | (17 | %) |  |  | 132,716 |
Cost of sales |  |  | (185,779 | ) |  |  | (201,098 | ) |  |  | 8 | % |  |  | (201,098 | ) |  |  | (63,943 | ) |  |  | (59,853 | ) |  |  | (7 | %) |  |  | (59,853 | )
Gross profit |  |  | 143,420 |  |  |  | 202,233 |  |  |  | (29 | %) |  |  | 202,233 |  |  |  | 45,708 |  |  |  | 72,863 |  |  |  | (37 | %) |  |  | 72,863 |
Operating expenses |  |  | (110,202 | ) |  |  | (109,441 | ) |  |  | (1 | %) |  |  | (121,335 | ) |  |  | (36,491 | ) |  |  | (37,863 | ) |  |  | 4 | % |  |  | (12,193 | )
Operating earnings before other expenses, net |  |  | 33,218 |  |  |  | 92,792 |  |  |  | (64 | %) |  |  | 80,898 |  |  |  | 9,217 |  |  |  | 35,000 |  |  |  | (74 | %) |  |  | 60,670 |
Other income (expenses), net |  |  | 618 |  |  |  | 62 |  |  |  | 897 | % |  |  | (6,568 | ) |  |  | 183 |  |  |  | 415 |  |  |  | (56 | %) |  |  | (5,085 | )
Operating earnings |  |  | 33,836 |  |  |  | 92,854 |  |  |  | (64 | %) |  |  | 74,330 |  |  |  | 9,400 |  |  |  | 35,415 |  |  |  | (73 | %) |  |  | 55,585 |
Financial expenses, net |  |  | (13,260 | ) |  |  | (22,605 | ) |  |  | 41 | % |  |  | (19,729 | ) |  |  | (4,103 | ) |  |  | (8,188 | ) |  |  | 50 | % |  |  | (9,321 | )
Foreign exchange loss, net |  |  | (3,125 | ) |  |  | (18,567 | ) |  |  | 83 | % |  |  | (18,567 | ) |  |  | (549 | ) |  |  | (11,386 | ) |  |  | 95 | % |  |  | (11,386 | )
Net income before income taxes |  |  | 17,451 |  |  |  | 51,682 |  |  |  | (66 | %) |  |  | 36,034 |  |  |  | 4,748 |  |  |  | 15,841 |  |  |  | (70 | %) |  |  | 34,878 |
Income tax |  |  | (3,776 | ) |  |  | (11,812 | ) |  |  | 68 | % |  |  | (6,255 | ) |  |  | (776 | ) |  |  | 4,903 |  |  |  | N/A |  |  |  | (6,187 | )
Consolidated net income |  |  | 13,675 |  |  |  | 39,870 |  |  |  | (66 | %) |  |  | 29,779 |  |  |  | 3,972 |  |  |  | 20,744 |  |  |  | (81 | %) |  |  | 28,691 |
Non-controlling Interest Net Income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Controlling Interest Net Income |  |  | 13,675 |  |  |  | 39,870 |  |  |  | (66 | %) |  |  | 29,779 |  |  |  | 3,972 |  |  |  | 20,744 |  |  |  | (81 | %) |  |  | 28,691 |
Operating EBITDA |  |  | 52,228 |  |  |  | 112,686 |  |  |  | (54 | %) |  |  | 100,792 |  |  |  | 15,809 |  |  |  | 41,565 |  |  |  | (62 | %) |  |  | 67,235 |
Earnings per share |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

1 | Refer to page 7 for information on pro forma adjustments

|  | as of September 30 |  |  |  |
|  | 2017 |  |  | 2016 |  |  | % Var |
BALANCE SHEET |  |  |  |  |  |  |  |  |  |  |  |
Total Assets |  |  | 1,006,838 |  |  |  | 1,051,683 |  |  |  | (4 | %)
Cash and Temporary Investments |  |  | 31,218 |  |  |  | 32,942 |  |  |  | (5 | %)
Trade Accounts Receivables |  |  | 19,673 |  |  |  | 21,230 |  |  |  | (7 | %)
Other Receivables |  |  | 1,507 |  |  |  | 4,982 |  |  |  | (70 | %)
Inventories |  |  | 59,960 |  |  |  | 48,857 |  |  |  | 23 | %
Other Current Assets |  |  | 14,880 |  |  |  | 27,142 |  |  |  | (45 | %)
Current Assets |  |  | 127,238 |  |  |  | 135,152 |  |  |  | (6 | %)
Fixed Assets |  |  | 308,783 |  |  |  | 323,761 |  |  |  | (5 | %)
Other Assets |  |  | 570,817 |  |  |  | 592,770 |  |  |  | (4 | %)
Total Liabilities |  |  | 427,471 |  |  |  | 458,764 |  |  |  | (7 | %)
Current Liabilities |  |  | 118,674 |  |  |  | 121,671 |  |  |  | (2 | %)
Long-Term Liabilities |  |  | 292,082 |  |  |  | 320,317 |  |  |  | (9 | %)
Other Liabilities |  |  | 16,715 |  |  |  | 16,777 |  |  |  | (0 | %)
Consolidated Stockholders’ Equity |  |  | 579,367 |  |  |  | 592,918 |  |  |  | (2 | %)
Non-controlling Interest |  |  | 4 |  |  |  | 5 |  |  |  | (23 | %)
Stockholders’ Equity Attributable to Controlling Interest |  |  | 579,363 |  |  |  | 592,913 |  |  |  | (2 | %)

2017 Third Quarter Results |  | Page 6

Definitions of Terms and Disclosures |  |

Methodology for translation, consolidation, and presentation of results

CEMEX Holdings Philippines, Inc. (“CHP”) reports its interim financial statements under Philippine Financial Reporting Standards (“PFRS”). When reference is made in 2017 and 2016 to consolidated interim financial statements, it means CHP financial information together with its subsidiaries.

For the purpose of presenting figures in U.S. dollars, the consolidated balance sheet as of September 30, 2017 has been converted at the end of period exchange rate of 50.82 Philippine pesos per US dollar while the consolidated income statement for the nine-month period ended September 30, 2017 has been converted at the January to July, 2017 average exchange rate of 50.31 Philippine pesos per US dollar. On the other hand, the consolidated income statement for the three-month period ended September 30, 2017 has been converted at the July to September, 2017 average exchange rate of 50.82 Philippine pesos per US dollar.

Pro forma financial information included in the report

For the purpose of the below clarification, the term “Company” refers to CEMEX Holdings Philippines, Inc., “CHP”” refers to the Company and its subsidiaries, and “CEMEX” refers CEMEX, S.A.B. de C.V. and its subsidiaries excluding CHP.

CEMEX Holdings Philippines, Inc. was incorporated on September 17, 2015 for purposes of the initial equity offering concluded on July 18, 2016 (the “IPO”). For accounting purposes, the group reorganization by means of which the Company acquired its consolidated subsidiaries was effective January 1, 2016. Several strategies discussed in the CHP primary offer prospectus (“the Prospectus”) were implemented upon conclusion of the initial equity offering: a) the new royalty scheme was implemented in July 2016 with retroactive effects as of January 1, 2016, and b) the new reinsurance scheme was incorporated prospectively effective August 1, 2016. These strategies are already in full effect in 2017.

Nevertheless and for the convenience of the reader, and in order to present a comprehensive comparative operating information for the nine-month and the three-month periods ended September 30, 2017, CHP continued to use pro forma selected consolidated income statement information for the nine-month and the three-month periods ended September 30, 2016, intended in all cases and to the extent possible, to present the operating performance of CHP on a like-to-like basis under a “normalized” expected ongoing operation; therefore, as if the new royalty scheme and insurance agreements would have been effective from the beginning of 2016.

In addition:

(1) beginning fiscal year of 2017, a change in accounting treatment of the effects from the new reinsurance agreements is adopted recognizing the same as a reduction in operating expenses instead of an increase of revenue (which was the accounting treatment utilized in 2016).

This change in accounting treatment is presented in this report’s Pro Forma consolidated income statement information for the nine-month and the three-month periods ended September 30, 2016. This difference in presentation does not have an effect on the reported Pro Forma operating income, reported Pro Forma Operating EBITDA or reported Pro Forma net income for the nine-month and the three-month periods ended September 30, 2016.

(2) the Pro Forma selected consolidated income statement information for the nine-month and the three-month periods ended September 30, 2016 appearing in this report was prepared by (a) removing interest payments on short-term debt, and (b) annualizing long-term debt.

2017 Third Quarter Results |  | Page 7

Definition of Terms and Disclosures |  |

Definition of terms

PHP refers to Philippine Pesos.

pp equals percentage points.

Prices all references to pricing initiatives, price increases or decreases, refer to our prices for our products.

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

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 the company’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 company policies.

Strategic capital expenditures investments incurred with the purpose of increasing the company’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.

Change in Working capital in the Free cash flow statements only include trade receivables, trade payables, receivables and payables from and to related parties, other current receivables, inventories, other current assets, and other accounts payable and accrued expense.

Net debt equals total debt minus cash and cash equivalents.

|  | January - September |  |  | Third Quarter |  |  | January - September |
|  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |  |  | 2017 |  |  | 2016 |
|  | average |  |  | average |  |  | average |  |  | average |  |  | End of period |  |  | End of period |
Philippine peso |  |  | 50.31 |  |  |  | 47.13 |  |  |  | 50.82 |  |  |  | 47.40 |  |  |  | 50.82 |  |  |  | 48.50 |

Amounts provided in units of local currency per US dollar

2017 Third Quarter Results |  | Page 8