Elementia’s Third Quarter 20171 Results

MEXICO CITY--()--Elementia, S.A.B. de C.V. (BMV: ELEMENT*) (“the Company”, or “Elementia”) announced today its financial and operating results for the third quarter ended on September 30, 2017 (“3Q17”) and for the nine months ended on September 30, 2017 (“9M17”)2.

Main Highlights

  • Elementia achieved solid consolidated growth on both revenues and EBITDA in 3Q17, despite the negative impact resulted from natural disasters, mainly in the United States and Mexico, and the current macroeconomic volatility:
    • Net sales increased 40% in 3Q17, reaching $6.55 billion. For comparison purposes, pro forma 3Q16 figures – including U.S. Cement – showed this line item growing 11% in 3Q17. In 9M17, it was up by 44%, reaching $19.61 billion, and 15% on a pro forma basis.
    • EBITDA3 increased 39% in 3Q17, reaching $1.29 billion; and 32% for 9M17, reaching $3.43 billion. Pro forma 3Q16 – including U.S. Cement – grew 11% in both 3Q17 and 9M17.
    • Operating income increased 32% in 3Q17, reaching $889 million; and 17% in 9M17, reaching $2.19 billion. Pro forma 3Q16 – including U.S. Cement – showed this line item growing 25% in 3Q17 and 21% in 9M17.
  • Cash flow generation before capital expenditures (CAPEX) as of September 30, 2017 was $1.77 billion, representing 52% of EBITDA.
  • In September, Elementia announced the development of a grinding facility in Costa Rica, with a total investment of close to US$17 million and installed capacity of over 250,000 tons, in line with the company’s profitable growth strategy focused on countries where it currently operates in, seeking to generate synergies along its three divisions.
  • During the third quarter, two credit lines for approximately $5.5 billion were obtained and used to prepay most of the syndicated loan used as bridge to finance the acquisition of the 55% controlling stake in Giant Cement. In line with the company’s strategy based on strengthening its balance sheet to continue with its profitable growth plan, these new financing transactions have extended its maturity profile and improved its financial cost.
  • Moreover, Elementia launched a hedging strategy to protect itself from risk in floating interest rate (TIIE 28) to fix rate on 50% of the $1.79 billion loan obtained from Bancomext at a 12-year term and fixed interest rate of 6.99%, and seeking a balance between its variable and fixed interest rates.
  • As announced in the first quarter of 2017 (1Q17), and with the approval of Elementia’s Board of Directors, following the recommendation of the Audit and Corporate Practices Committee, the Company has changed its accounting policy related to fixed assets valuation, from the revaluation method to the historical cost recognition method as of January 1, 2017.

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

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 (“3Q16” and “9M16”), 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

1 Elementia announces that its 3Q17 earnings conference call will take place on October 26, 2017. Dial-in information can be found in the annexes of this document. The report, script and audio of the results can be downloaded 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). All figures are in Mexican pesos and comparisons are made against the same period of last year, unless otherwise specified.
3 Earnings before interest, taxes, depreciation and amortization.

Contacts

Investor Relations
Ana Lourdes Benavides, +52 55 5728-5333
abenavidese@elementia.com
or
In New York:
I-Advize Corporate Communications, Inc.
Melanie Carpenter, +1-212-406-3692
mcarpenter@i-advize.com

Contacts

Investor Relations
Ana Lourdes Benavides, +52 55 5728-5333
abenavidese@elementia.com
or
In New York:
I-Advize Corporate Communications, Inc.
Melanie Carpenter, +1-212-406-3692
mcarpenter@i-advize.com