Results of Elementia as of the Second Quarter 2017(1)

MEXICO CITY--(BUSINESS WIRE)--Elementia, S.A.B. de C.V. (BMV: ELEMENT*) (“the Company”, or “Elementia”) announced today its financial and operating results for the second quarter ended on June 30, 2017 (“2Q17”) and for the six months ended on June 30, 2017 (“1H17”)².

Relevant Events

• Elementia achieved solid consolidated growth despite current macroeconomic volatility:
  • Net sales increased 40% in 2Q17, reaching $6.52 billion. For comparison purposes, pro forma 2Q16 figures – including U.S. Cement – showed this line item growing 10% in 2Q17. In 1H17, it was up by 46%, reaching $13.06 billion, and 16% at a pro forma basis.
  • EBITDA³ increased 32% in 2Q17, reaching $1.18 billion; and 28% for 1H17, reaching $2.14 billion. Pro forma 2Q16 – including U.S. Cement – grew 1% in 2Q17 and 11% in 1H17.
  • Operating income grew 20% in 2Q17, reaching $750 million; and 9% in 1H17, reaching $1.23 billion. Pro forma 2Q16 – including U.S. Cement – showed this line item growing 0.4% in 2Q17 and 19% in 1H17.
• Cash flow generation before capital expenditures (CAPEX) as of June 30, 2017 was $1.38 billion, representing 65% of EBITDA.
• The cement capacity expansion project at the Tula plant was concluded. This project was scheduled to begin commercial operations by the end of 3Q17. The project adds 1.5 million tons (MMt) of cement per year, to reach approximately 3.5 MMt of installed capacity in Mexico.
• Elementia entered into a new 7-year credit facility for U.S.$1.9 billion with a 2-year grace period at a very competitive rate, which will be used to partially prepay the syndicated loan used as a bridge for the acquisition of the 55% and control of Giant Cement in the U.S., as part of a strategy focused on exchanging short for long-term debt and improving the company’s balance.

Second Quarter (millions of pesos)						Consolidated 6M (millions of pesos)
2Q17	2Q16	Change	2Q16 Proforma	Change		Jun-17	Jun-16	Change	Jun - 16 Proforma	Change
6,515	4,644	40%	5,945	10%	Net sales	13,062	8,959	46%	11,229	16%
750	623	20%	747	0.4%	Operating income	1,230	1,131	9%	1,034	19%
12%	13%		13%		Operating Margin	9%	13%		9%
1,188	898	32%	1,177	1%	EBITDA	2,140	1,676	28%	1,920	11%
18%	19%		20%		EBITDA margin	16%	19%		17%

For a full version of this earnings release with financial statements, go to: www.elementia.com in the Investor Relations section.

¹ Elementia will hold a conference call to discuss its 2Q17 results on Thursday, July 27, 2017 at 10:00am (Mexico) / 11:00am (ET). To access the call, please dial: From within the US: 1-800-311-9402, International participants: 1-334-323-7224 (Passcode: 35941) and via an audio-only webcast at https://www.webcaster4.com/Webcast/Page/1398/21773. Participants are requested to connect 15 minutes prior to the call. A replay of the webcast will be available at www.elementia.com.

² Figures in this report have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).

³ Income before interest, taxes, depreciation and amortization.

Disclaimer on forward-looking statements

The Audit Committee and the Board of Directors authorized the modification of the accounting policies of the company with respect to the valuation of fixed assets, shifting from the revaluation method to the historical value method. This will be implemented during 3Q17 with effects retroactive to January 1, 2017.

Figures are stated in nominal Mexican pesos ($) and all comparisons are made against the same period of the previous year (“2Q16” and “1H16”), unless otherwise specified. As a result of figures roundup, totals may not exactly match the sum of the figures presented.

This document contains certain forward-looking statements and information related to Elementia, S.A.B. Of C.V. ("Elementia") that reflect the vision and / or expectations of Elementia and its management team in relation to its performance, business and future events. Forward-looking statements may include, but are not limited to, statements that could predict, project, indicate or imply certain future results, performance or achievements, and may include words "anticipate", "believe," "estimate, "expect”, “project”, “plan”, “predict”, “foresee”, “forecast”, “reach” or any other word or phrase with a similar meaning, which may be given orally or in writing.

The presented results may materially differ from those projected as a result of factors beyond Elementia's control. These factors may include, but are not limited to: economy in general; political and business conditions in Mexico and other markets where we operate; international capital and securities markets performance, as well as economic crises; our ability to refinance our financial obligations; if necessary; competition in the sector and markets; management’s expectations and estimates in regards to the Company's future financial performance and financing plans / programs; limited access to financing sources with competitive terms, and compliance with clauses to which we are bound to; our ability to meet debt obligations; our investment plans; currency fluctuations, interest rates or inflation, as well as currency conversion; changes in government legislation and regulation, including environmental regulation, and obligations arising therefrom, and judicial or administrative judgments against us; procurement policies and interpretations; increase in insurance premiums; changes in market prices, customer demand and preference, and competitive conditions; cyclicity and seasonality in our operating results; our ability to implement the corporate strategy; increase in prices of goods and / or services supplied to us, and fluctuations in the prices of the raw material; the imposition of price controls on the products we sell; trade barriers; technological innovation; costs uncertainty and regulation applicable to company mergers and acquisitions or strategic alliances; our ability to make acquisitions for regulatory or other issues, and successfully integrate the operations of the acquired businesses; liability claims including claims related to health, safety and environmental protection issues, as well as claims arising from joint lawsuits in Mexico or other jurisdictions in which we operate; failures in our information obtained from our technology systems, including data and communication systems; the impact by changes in accounting principles, new legislation, actions by regulatory authorities, government announcements and monetary or fiscal policy in Mexico, or in other markets in which we operate; decrease in the sale of our products by independent distributors; our ability to retain qualified personnel and rehire key personnel; our ability to extract synergies from our business mergers and acquisitions activities; delays by suppliers or lack of ability to obtain, under conditions acceptable to us, inputs required by us to produce the products we sell; investigations by federal authorities; and other risk factors.

Forward-looking statements and statements included in this document are subject to various risks, uncertainties and assumptions. In any circumstance these statements only refer to their date of elaboration and Elementia has no obligation to update or revise any of them, whether for new information, future events, among others, unless required by law. Therefore, caution should be exercised when using future projections. The document and its contents belong to the Company and may not be reproduced or distributed as a whole or as part of without prior written consent by Elementia.

About Elementia

Elementia offers innovative constructive solutions that redefine the concept of constructive evolution. Our state-of-the-art rotomolding technology, Eureka®, preserves the most important resource we have: water; which runs through our Nacobre® pipe systems. In addition, more than 65 years of experience of our Nacobre® brand, allows gas installations to be used in a safely manner. Elementia has grown organically, and through strategic mergers and acquisitions, creating an integrated platform of more than 4,000 products. Through Cementos Fortaleza®, and the strategic acquisitions of Giant®, Keystone® and Dragon® cement, we give structure to foundations, columns, floors and ceilings of houses, shopping malls, offices, hospitals, etc., both in Mexico and the U.S. Elementia has more than 6,000 employees, operating presence in nine countries and a wide distribution network. Innovative and versatile panels manufactured by Allura®, Plycem®, Eternit®, Duralit® and Fibraforte®, offer fiber cement technology advantages in decorative façades, wooden simulation decks, traditional roof tiles and state-of-the-art ceilings. Elementia is the largest fiber cement producer in Latin America and second largest player in the U.S. For more information please visit www.elementia.com