EX-99.2 3 d823798dex992.htm THIRD QUARTER 2019 RESULTS FOR CEMEX HOLDINGS PHILIPPINES, INC.

Exhibit 2

2019 THIRD QUARTER RESULTS â–ª Stock Listing Information Philippine Stock Exchange Ticker: CHP â–ª Investor Relations + 632 8849 3600 E-Mail: chp.ir@cemex.com

Operating and Financial Highlights January—September Third Quarter 2019 2018 % var 2019 2018 % var Net sales 18,224 17,905 2% 5,868 6,026 (3%) Gross profit 7,506 7,273 3% 2,424 2,276 7% as % of net sales 41% 41% 1pp 41% 38% 4pp Operating earnings before other expenses, net 2,085 1,438 45% 628 344 82% as % of net sales 11% 8% 3pp 11% 6% 5pp Controlling Interest Net Income (Loss) 875 (663) N/A 72 (79) N/A Operating EBITDA 3,446 2,850 21% 1,075 840 28% as % of net sales 19% 16% 3pp 18% 14% 4pp Free cash flow after maintenance capital expenditures 2,891 1,924 50% 1,204 285 323% Free cash flow 851 1,691 (50%) (437) 236 N/A 1 17,643 15,252 16% 17,643 15,252 16% Net debt 1 20,235 17,769 14% 20,235 17,769 14% Total debt 2 0.17 (0.13) N/A 0.01 (0.02) N/A Earnings per share In millions of Philippine Pesos, except percentages and earnings per share 1 U.S. dollar debt converted using end-of-period exchange rates. See Debt Information on page 4 and Exchange Rates on page 8 for more detail. 2 In Philippine Pesos Net sales declined by 3% year-over-year during the quarter due to lower volumes. Cost of sales was at 59% of sales during the quarter versus 62% in the same period of 2018 due to lower fuel and power costs, a result of using a new coal mix and benefits from lower electricity rates, respectively. Operating expenses, as a percentage of sales, during the quarter decreased by 1 pp compared to the same period in 2018. Distribution expenses, as a percentage of sales, decreased by 2 pp year-over-year during the quarter, mainly due to lower double-handling, and supply-chain-optimization initiatives. Selling and administrative expenses, as a percentage of sales, increased by 1 pp year-over-year during the quarter. For the first nine months of the year, selling and administrative expenses increased slightly, by 0.4 pp of sales. Operating EBITDA during the quarter increased by 28% year-over-year. Operating EBITDA margin during the quarter was at 18%. Controlling interest net income for the quarter was at PHP 72 million, benefitting mainly from higher operating earnings. Total debt, including leases, at the end of September 2019 stood at PHP 20,235 million, of which PHP 11,961 million pertained to long-term debt owed to BDO Unibank, Inc. 2019 Third Quarter Results Page 2

Operating Results Domestic Gray Cement January—September Third Quarter Third Quarter 2019 2019 vs. 2018 2019 vs. 2018 vs. Second Quarter 2019 Volume (3%) (6%) (2%) Price in PHP 5% 3% (2%) Our domestic cement volumes decreased by 6% year-over-year during the quarter due to lower construction activity, mainly related to public infrastructure. In addition, delays in infrastructure projects impacted private investment negatively. Our domestic cement prices were 3% higher year-over-year during the quarter, a result of price adjustments implemented in 2018. 2019 Third Quarter Results Page 3

Operating EBITDA, Free Cash Flow and Debt Information Operating EBITDA and Free Cash Flow January—September Third Quarter 2019 2018 % var 2019 2018 % var Operating earnings before other expenses, net 2,085 1,438 45% 628 344 82% + Depreciation and operating amortization 1,362 1,413 447 496 Operating EBITDA 3,446 2,850 21% 1,075 840 28% - Net financial expenses 1,067 799 352 272—Maintenance capital expenditures 386 493 28 131—Change in working capital (1,140) (778) (583) (30)—Income taxes paid 274 420 93 177—Other cash items (net) (32) (8) (22) 6 Free cash flow after maintenance capital expenditures 2,891 1,924 50% 1,204 285 323% - Strategic capital expenditures 2,040 233 1,641 49 Free cash flow 851 1,691 (50%) (437) 236 N/A In millions of Philippine Pesos Debt Information Second Third Quarter Quarter 2019 2018 % var 2019 (1)(2) 20,235 17,769 14% 21,162 Total debt Short term 9% 5% 8% Long term 91% 95% 92% Cash and cash equivalents 2,592 2,517 3% 4,275 Net debt 17,643 15,252 16% 16,887 (3) 4.04 4.84 Leverage Ratio (3) 3.40 3.28 Coverage Ratio Third Quarter 2019 2018 Currency denomination U.S. dollar 28% 8% Philippine peso 72% 92% Interest rate Fixed 44% 53% Variable 56% 47% In millions of Philippine Pesos, except percentages (1) U.S. dollar debt converted using end-of-period exchange rates. See Exchange Rates on page 8 for more detail. (2) Includes leases, in accordance with Philippine Financial Reporting Standards (PFRS). (3) Based on BDO Loan Facility financial covenants which we are required to comply commencing in June 2020. 2019 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 INCOME STATEMENT 2019 2018 % var 2019 2018 % var Net sales 18,223,518 17,905,121 2% 5,867,591 6,025,788 (3%) Cost of sales (10,717,942) (10,632,358) (1%) (3,443,247) (3,749,496) 8% Gross profit 7,505,576 7,272,763 3% 2,424,344 2,276,292 7% Selling and Administrative expenses (2,307,000) (2,194,935) (5%) (760,793) (716,037) (6%) Distribution expenses (3,113,928) (3,639,958) 14% (1,035,832) (1,216,079) 15% Operating earnings before other expenses, net 2,084,648 1,437,870 45% 627,719 344,176 82% Other income (expenses), net 32,159 8,238 290% 21,681 (6,082) N/A Operating earnings (loss) 2,116,807 1,446,108 46% 649,400 338,094 92% Financial expenses, net (1,067,235) (799,380) (34%) (352,432) (272,273) (29%) Foreign exchange gain (loss), net 127,921 (545,730) N/A (146,480) (71,596) (105%) Net income (loss) before income taxes 1,177,493 100,998 1066% 150,488 (5,775) N/A Income tax benefit (expenses) (302,811) (764,431) 60% (78,117) (72,929) (7%) Consolidated net income (loss) 874,682 (663,433) N/A 72,371 (78,704) N/A Non-controlling interest net income (loss) 18 21 (14%) 6 5 20% Controlling Interest net income (loss) 874,700 (663,412) N/A 72,377 (78,699) N/A Operating EBITDA 3,446,204 2,850,436 21% 1,074,503 840,083 28% Earnings per share 0.17 (0.13) N/A 0.01 (0.02) N/A as of September 30 as of December 31 BALANCE SHEET 2019 2018 % Var 2018 % Var Total Assets 58,150,371 54,611,636 6% 58,058,770 0% Cash and Temporary Investments 2,591,799 2,517,344 3% 1,813,665 43% Derivative Asset 2,777 0 12,875 (78%) Trade Accounts Receivables 1,052,519 981,613 7% 708,906 48% Other Receivables 73,410 93,202 (21%) 103,396 (29%) Insurance Claims and Premium Receivables 518 0 949,983 (100%) Inventories 2,944,124 3,123,916 (6%) 3,488,178 (16%) Assets Held for Sale 0 22,653 0 Other Current Assets 1,108,763 973,857 14% 1,677,671 (34%) Current Assets 7,773,910 7,712,585 1% 8,754,674 (11%) Fixed Assets 19,076,228 17,533,294 9% 17,768,023 7% Investments in an Associate and Other Investments 14,097 14,097 0% 14,097 0% Other Assets and Noncurrent Accounts Receivables 887,865 748,991 19% 818,247 9% Advances to Contractors 1,778,104 0 2,069,601 (14%) Deferred Income Taxes—net 760,473 742,975 2% 774,434 (2%) Goodwill 27,859,694 27,859,694 0% 27,859,694 0% Other Assets 31,300,233 29,365,757 7% 31,536,073 (1%) Total Liabilities 28,724,703 25,583,829 12% 29,332,804 (2%) Current Liabilities 9,604,901 7,965,829 21% 10,534,046 (9%) Long-Term Liabilities 16,511,763 14,590,300 13% 16,009,642 3% Deferred Tax Liability 7,624 51,358 (85%) 147,387 (95%) Other Liabilities 2,600,415 2,976,342 (13%) 2,641,729 (2%) Consolidated Stockholders’ Equity 29,425,668 29,027,807 1% 28,725,966 2% Non-controlling Interest 175 200 (13%) 193 (9%) Stockholders’ Equity Attributable to Controlling Interest 29,425,493 29,027,607 1% 28,725,773 2% 2019 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 INCOME STATEMENT 2019 2018 % var 2019 2018 % var Net sales 351,534 340,143 3% 113,735 112,568 1% Cost of sales (206,750) (201,982) (2%) (66,743) (70,045) 5% Gross profit 144,784 138,161 5% 46,992 42,523 11% Selling and Administrative expenses (44,502) (41,698) (7%) (14,747) (13,377) (10%) Distribution expenses (60,068) (69,148) 13% (20,078) (22,718) 12% Operating earnings before other expenses, net 40,214 27,315 47% 12,167 6,428 89% Other income (expenses), net 620 156 297% 420 (114) N/A Operating earnings (loss) 40,834 27,471 49% 12,587 6,314 99% Financial expenses, net (20,587) (15,186) (36%) (6,831) (5,086) (34%) Foreign exchange gain (loss), net 2,468 (10,367) N/A (2,839) (1,337) (112%) Net income (loss) before income taxes 22,715 1,918 1084% 2,917 (109) N/A Income tax benefit (expenses) (5,841) (14,522) 60% (1,514) (1,362) (11%) Consolidated net income (loss) 16,874 (12,604) N/A 1,403 (1,471) N/A Non-controlling interest net income (loss) 0 0 0 0 Controlling Interest net income (loss) 16,874 (12,604) N/A 1,403 (1,471) N/A Operating EBITDA 66,478 54,150 23% 20,828 15,694 33% as of September 30 as of December 31 BALANCE SHEET 2019 2018 % Var 2018 % Var Total Assets 1,121,944 1,010,952 11% 1,104,199 2% Cash and Temporary Investments 50,006 46,600 7% 34,493 45% Derivative Asset 54 0 245 (78%) Trade Accounts Receivables 20,307 18,171 12% 13,482 51% Other Receivables 1,416 1,725 (18%) 1,966 (28%) Insurance Claims and Premium Receivables 10 0 18,067 (100%) Inventories 56,803 57,829 (2%) 66,340 (14%) Assets Held for Sale 0 419 0 Other Current Assets 21,392 18,028 19% 31,907 (33%) Current Assets 149,989 142,773 5% 166,502 (10%) Fixed Assets 368,054 324,570 13% 337,924 9% Investments in an Associate and Other Investments 272 261 4% 268 1% Other Assets and Noncurrent Accounts Receivables 17,130 13,865 24% 15,562 10% Advances to Contractors 34,306 0 39,361 (13%) Deferred Income Taxes—net 14,672 13,754 7% 14,729 (0%) Goodwill 537,521 515,729 4% 529,853 1% Other Assets 603,902 543,609 11% 599,773 1% Total Liabilities 554,210 473,599 17% 557,870 (1%) Current Liabilities 185,315 147,461 26% 200,343 (8%) Long-Term Liabilities 318,575 270,091 18% 304,482 5% Deferred Tax Liability 147 951 (85%) 2,803 (95%) Other Liabilities 50,172 55,097 (9%) 50,242 (0%) Consolidated Stockholders’ Equity 567,734 537,353 6% 546,329 4% Non-controlling Interest 3 4 (9%) 4 (8%) Stockholders’ Equity Attributable to Controlling Interest 567,731 537,349 6% 546,325 4% 2019 Third Quarter Results Page 6

Supplemental Information Newly issued PFRS effective in 2019 PFRS 16, Leases (“PFRS 16”) In summary, beginning January 1, 2019, PFRS 16 introduces a single lessee accounting model and requires a lessee to recognize, for all leases, allowing exemptions in case of leases with a term of less than 12 months or when the underlying asset is of low value, assets for the right-of-use of the underlying asset against a corresponding financial liability, representing the net present value of estimated lease payments under the contract, with a single income statement model in which a lessee recognizes amortization of the right-of-use asset and interest on the lease liability. After concluding the inventory and measurement of its leases, CEMEX Holdings Philippines, Inc. and Subsidiaries adopted PFRS 16 using the full retrospective approach by means of which it determined an opening cumulative effect in its statement of financial position as of January 1, 2018, after the application of PFRS 9, Financial Instruments, as follows: (Thousands of Philippine Pesos) As of January 1, 2018 Assets for the right-of-use 2,167,178 Deferred income tax assets 1,067,565 Deferred income tax liability (92,674) Lease liabilities 2,318,299 Retained earnings 1 1,951,819 1 The initial effect in retained earnings refers to a temporary difference between the straight-line amortization expense of the right-of-use asset and the amortization of the financial liability under the effective interest rate method since origination of the contracts. This difference will reverse over the remaining term of the contracts. CEMEX Holdings Philippines, Inc. and Subsidiaries modified the previously reported income statement for the nine-month period ended September 30, 2018 to give effect to the retrospective adoption of PFRS 16, as follows: SELECTED INFORMATION INCOME STATEMENT As originally reported As modified Third Third (Thousands of Philippine Pesos) Jan-Sep Quarter Jan-Sep Quarter Revenues 17,905,121 6,025,788 17,905,121 6,025,788 Cost of sales (10,692,260) (3,769,657) (10,632,358) (3,749,496) Operating expenses (5,889,289) (1,952,047) (5,834,893) (1,932,116) Other expenses, net 8,238 (6,081) 8,238 (6,081) Financial expenses and others, net (1,147,018) (291,213) (1,345,110) (343,869) Earnings before income tax 184,792 6,790 100,998 (5,774) Income tax (789,517) (76,675) (764,431) (72,929) Earnings from continuing operations (604,725) (69,885) (663,433) (78,703) As of September 30, 2019 and December 31, 2018, assets for the right-of-use amounted to PHP 2,121 million and PHP 2,151 million, respectively. In addition, financial liabilities related to lease contracts amounted to PHP 2,365 million as of September 30, 2019 and PHP 2,360 million as of December 31, 2018. These amounts of financial liabilities as of September 30, 2019 and December 31, 2018 are included in the “Debt Information” section appearing on page 4. 2019 Third Quarter Results Page 7

Definitions of Terms and Disclosures Methodology for translation, consolidation, and presentation of results CEMEX Holdings Philippines, Inc. (“CHP”) reports its consolidated financial statements under Philippine Financial Reporting Standards (“PFRS”). When reference is made in 2019 and 2018 to consolidated 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, 2019 has been converted at the end of period exchange rate of 51.83 Philippine pesos per US dollar while the consolidated income statement for the nine-month period ended September 30, 2019 has been converted at the January to September 2019 average exchange rate of 51.84 Philippine pesos per US dollar. On the other hand, the consolidated income statement for the three-month period ended September 30, 2019 has been converted at the July to September, 2019 average exchange rate of 51.59 Philippine pesos per US dollar. 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 (debt plus leases) minus cash and cash equivalents. Exchange Rates January—September Third Quarter January—September 2019 2018 2019 2018 2019 2018 average average average average End of period End of period Philippine peso 51.84 52.64 51.59 53.53 51.83 54.02 Amounts provided in units of local currency per US dollar 2019 Third Quarter Results Page 8