The Power of Oneness: Elementia has

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3 The Power of Oneness: Elementia has Delivered what it has promised Expanded its footprint within the world s second largest market: the US Achieved growth while maintaining its financial discipline and focus on capital allocation Set a special focus on innovation to expand our portfolio with value added products Strengthen its management team to achieve its goals Elementia aims to play a KEY ROLE in times of change, by not only rapidly adapting in a fast-evolving environment, but also by being a leader that promotes change. 3

4 The world is changing the construction industry is also changing and Elementia is embracing it 4

5 The construction industry is evolving and Elementia is at the forefront of the evolution Automation Lightweight Building Systems Traditional 5

6 Capturing value is a regional game where Elementia is a key player Global GDP from Construction Industry $ 7,527 USD BILLION Elementia s potential market represents $1,089 USD BILLION 14.4% of world s total USA $ 798 USD Billion MEXICO $ 174 USD Billion LATAM $ 117 USD Billion 10.6% 2.3% 1.5% LATAM includes: Honduras, El Salvador, Costa Rica, Colombia, Ecuador, Peru y Bolivia. Trading Economics Mexico GDP from Construction (2016) The World Bank Global GDP from Construction (2016) 6

7 Elementia s Power of Oneness is empowering our future *DN= Distribution network Maintaining financial and capital allocation discipline Becoming the preferred solution supplier through our value proposition Developing talent and transferring knowledge between operations Investing on innovation and embracing technological challenges Delivering complete construction solutions (in-house / partnerships) by leveraging our distribution channels, technology and innovation 7

8 Elementia s Power in action Transferring knowledge has been key to our success in the US Fiber Cement Operation to provide our customer with quality products Serving the market by leveraging Nacobre distribution channels increased sales on water tanks Developing innovative integrated solutions to serve the customer E.g. Cuarto Rosa Casa 8

9 Elementia s evolving strategy IPO TODAY PATH FORWARD ELEMENTIA 2.0 ELEMENTIA 3.0 CEMENT METAL BUILDING SYSTEMS CEMENT METAL BUILDING SYSTEMS TRADITIONAL BUILDING SUSTAINABLE BUILDING SYSTEMS INDEPENDENT BUSINESS UNITS FOCUSED PRIMARILY ON PRODUCTS PRODUCTS / SOLUTIONS LEVERAGING DISTRIBUTION CHANNELS TECHNOLOGY AND INNOVATION METAL DELIVERING BUILDING SOLUTIONS LEVERAGING TECHNOLOGY & INNOVATION Empowered by a solid talent pool and a culture that promotes change and execution 9

10 And a sound strategic growth path Operate current business at full potential 2020 BUSINESS PLAN CONSOLIDATE Consolidate inorganic growth opportunities CAPABILITY EVOLUTION ROAD MAP AS THE PREFERRED SUPPLIER ELEMENTIA S TEAM Enhance capabilities to become a solutions oriented business 10

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12 Our value-focused and result-driven leadership team Jaime Rocha Juan Luis Alfiero Juan Francisco Sánchez José Ramón Gómez Laura Cañez Jessica Navascues Francisco Del Valle Fernando Ruiz José Llontop Claudio Luis Páramo Santiago Bernard Luis García Héctor González Gustavo Arce Luz Olivia Hamelius Laura Puig 12

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14 Our regional growth target: the USA (CAGR %) (CAGR e 0.9%) (CAGR e 5.2%)! Residential housing starts will continue to grow over the coming years (single family and multi-family). Already at pre-crisis levels! Increasing levels of homeownership coupled with an expectation of mid-single-digit pricing gains in the resale market support higher repair and remodeling spending levels! There is a positive growth in non residential real-state spending in 2017, mainly offices, retail, educational and recreation. (CAGR e: 2.9%) (CAGR e: 4.3%)! Infrastructure shows a significant upside from aging US infrastructure.! Potential upside within infrastructure (plan of up to US$1 trillion) Source: RBC Capital Markets January (*) National Association of Home Builders, BMI Research, Congress of the United States Congressional Budget Office, Portland Cement Association); A potential pothole in Trump's infrastructure plan Nov. 29, 2016 (cbsnews.com) The US market is a key growth component in Elementia s strategy 14

15 As expected, the US is becoming more relevant EXPECTED EBITDA 2020 EBITDA % 11% 16% 73% 36% 56% Mexico USA LATAM 15

16 Our US footprint Figures in KTPY ! Elementia has 7 plants strategically located in the US! Allura Operation (4 plants), including Nuevo Laredo! Giant Operation (3 plants) 1100! Fourth largest cement player in the East Coast 259! Second largest player in Fiber Cement ! Proven technical, human and commercial capabilities to further market share expansion! Knowledge transfer to other markets Note: Indiana s operation idled. We foresee significant business opportunities to grow in the US market 16

17 Giant up-side: increase capacity utilization and prices SOUTH CAROLINA PENNSYLVANIA MAINE Legend Giant plant Competitor plant Giant terminal 350 kms radius Catchment area Giant s seasonality (volume) Giant s Annual Utilization Rate (%) Giant s Avg Price = 100% 100% 50% Q1 Q2 Q3 Q % 70% 60% 50% 40% Note: Cement refers to portland cement; Source: Giant s Internal information; Bain analysis 79% South Carolina 56% Pennsylvania 57% Maine Industry Avg 64% 120% 100% 80% 60% 40% 100% Giant Average Industry Avg 106% 17

18 Filling key positions and making critical repairs have been our key priority Maine Pennsylvania Stage 1 (2017) for SC and PA! Stabilize plant production to reach nominal capacity and quality! Optimize cost structure! Enhance competitiveness Stage 2 (2018)! Reach nominal capacity upgrade equipment! Regain customers! Regain market shares! Realign sales force structure! Reach GRR full potential South Carolina Stage 3 (2019)! Capacity increase! Continue to gain market share and optimize prices CHALLENGES! To integrate Giant into Elementia s Power of Oneness Strategy! To change the mindset from survival to full potential achievement! To fulfill the required structure, attract, retain and develop talent! To execute the 3 stages strategy including CAPEX 18

19 Allura is targeting regions to strengthen its position States where Allura is better positioned Operational Allura plants Operational competitors plants Allura's competitive position Proximity to customer allows Allura to be more competitive with respect to freight in target states! Reopening of Indiana increases scope for freight optimization! Lowering freight costs allows Allura to compete better against competitors. Allura's distribution footprint is strongest closest to plants Cost reduction opportunities! Automation! Logistics! OPEX Find Additional Volume 19

20 By working on key strategic initiatives TARGETING BUILDERS Organic Growth ENTERING THE REPAIR & REMODELING MARKET CAPTURING SHARE OF THE MODULAR BUILDING MARKET CHALLENGES To continue gaining market share! To increase EBITDA margin to normalized level! To complete brand repositioning! To execute the ramp up plan for Indiana facility! To execute the Full Potential Strategy These key actions aim to achieve a significant growth within the next 3 years 20

21 And re-opening of Terre Haute CAGR = 25.5% Installation Of Equipment Sept Plant Stabilization 4Q 2017 Commercial Operations 1Q F 2018 E 2019 E 2020 E 2021 E 2022 E Key equipment Requested Nov. Key equipment Received Aug. Find Additional Volume Total required CAPEX US$7-8M 21

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23 Mexican operations CHIHUAHUA LA LUZ VALLEJO SAN LUIS POTOSÍ GUADALAJARA CELAYA HIDALGO VILLA HERMOSA CUAMANTLA SANTA CLARA 23

24 Cement key strategic highlights: Delivering capacity expansion Tula expansion! 75% capacity increase! Ramp-up to full capacity within 2 ½ years entering the market rationally! Top quality, premium brand and highest pricing quartile! CAPEX: 167 dlls per ton Synergy opportunity! In the long term, leverage alternative fuels business capitalizing on Giant s know-how CHALLENGES! To complete the expansion project according to plan! To allocate new capacity without disrupting the market, within an environment of economic and political volatility 24

25 Metals key strategic highlights: focus on high value added products! Maintain Nacobre among the three most prestigious metal brands in Mexico with ~70% of market share.! Leverage our brand by introducing a complementary product portfolio. San Luis Potosí Celaya Vallejo! Shift product mix towards higher added value products (US$15MM in the last 5 years).! Continue enhancing operational efficiencies primarily through metal yield as well as improvements resulting from implementing Six Sigma.! Focus on state of the art technology (US$35MM in the last 5 years).! Transfer metals price fluctuation to our customers (focus on EBITDA per ton). CHALLENGES! To continue to expand our EBITDA generation in a mature business.! To leverage on innovation & the digital era. 25

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27 The Building Systems Division has a value proposition for the lightweight construction systems Significant opportunities to increase productivity in the construction industry 1 Traditional System Bricks and Concrete Fiber cement Panel Interior and exterior walls Lightweight systems contribute to the industrialization of the construction industry Insulation Outer panel Base Coat Interior panel Framing Fasteners Lightweight Construction System Integrated manufacturing systems reduce construction time (1) McKinsey & Company report 2017 (2) Modular Building Construction USA Prefabricated Standarization factory Manufactured modules Lightweight systems are key to reduce around 30-50% 2 of costs through efficiencies 27

28 Building systems key strategic highlights: Developing integral building systems solutions Continue implementing the new go to market strategy developed along with BCG! Shift our product mix towards flat board and water tanks through capacity expansion! Increase geographical coverage by further develop our distribution network and market segmentation! Focus on the industrialization of the Construction Industry in LATAM by delivering solutions! Deploy the Innovation Stage Gate methodology! Continue the trend towards synthetic fiber CHALLENGES! To face Colombia s situation due to recent tax increase! To reduce exposure to government projects in Mexico by expanding the business through the distribution network! To migrate to flat panels technology change 28

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31 Focused on profitable growth 4,000 3,500 3,000 2,500 2,000 1,500 1, Millions of Pesos Consolidated Revenue CAGR = 14% 15,331 13,506 12,929 16,974 19,090 5,285 24% 6547 Consolidated EBITDA EBITDA Margin 1,877 1,914 CAGR = 23% 2,675 3,002 3, % 17.7% 18.0% 13.9% 14.8% 28% 18.0% 14.5% Σ 1Q16 Σ 1Q Σ 1Q16 Σ 1Q17 Capital Expenditures 8,161 2,614 EBITDA Breakdown (1) Cement US 4% 26% Building Systems 2,113 2,059 3, ,745 1,364 4, ,090 4,183 2,969 2, Q-17 Inorganic Organic Cement Expansion 312 Cement México 37% 33% Metal Products (1) EBITDA breakdown for the 12 months ended March 31, 2017,excluding Holding Company and Eliminations 31

32 With financial discipline 14,000 12,000 10,000 8,000 6,000 4,000 2, Comfortable debt amortization profile (2) Gross Debt MMUS (2) 906 Millions of US dollars >82% long term Weighted average rate 5.5% International Bond 425 ECA HSBC 39 Club Deal (3) 333 ECA Santander (4) ,096 12,722 Synthetic US Dollar 43% 22% Debt by Currency 15% Mexican Pesos Synthetic Mexican Pesos 20% Conservative Leverage ratios (1) Millions of Mexican Pesos 7,191 US Dollar 95% of Gross Debt at holding Level 4,620 4, x 2.30x (1) EBITDA for the 12 months ended December 31, 2016 (2) Exchange rate Mexican peso vs US dollar as of March ; ECA Santander data proforma, we ll conclude to reflect the proceeds in the balance sheet in Q (3) Mexican Peso Basis (4) Gross debt in a proforma basis = 100% ECA Santander 2.69x 5, x 3.17x 2.94x Q.17 Net Debt / EBITDA Net Debt 32

33 The Power of Oneness: Elementia has Delivered what it has promised Expanded its footprint within the world s second largest market: the US Achieved growth while maintaining its financial discipline and focus on capital allocation Set a special focus on innovation to expand our portfolio with value added products Strengthen its management team to achieve its goals Elementia aims to play a KEY ROLE in times of change, by not only rapidly adapting in a fast-evolving environment, but also by being a leader that promotes change. 33