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1Q17 Conference Call

E
Eternit S.A.

The document summarizes Eternit's 1Q17 earnings results conference call. It states that Eternit's consolidated gross revenue decreased 22.8% compared to 1Q16 due to declines in the construction materials sector. Net revenue decreased 26.7% and adjusted EBITDA decreased 49.5%. The company also reduced its net debt by 15%. Segment sales declined for chrysotile mineral, fiber-cement, and concrete tiles. Eternit is facing a court decision requiring it to replace asbestos and expand medical examinations for employees at its Rio de Janeiro plant.

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Conference Call 1Q17 Earning Results May 17 , 2017
Disclaimer Forward looking statements included in this presentation regarding the Companys business, operating and financial results and Companys growth are only predictions and were based on management's expectations regarding future performance. These expectations are highly dependent on market conditions, Brazilian economic scenario, industry performance and international markets, and are therefore subject to change. 2
1 Brazilian Construction Materials Industry Association Index during 1Q17. 族 Growth in Eternit's consolidated gross revenue compares January to March, 2017 vs January to March, 2016, deflated by the IGP-M index. The sector of construction materials and the Company registered retraction of: ABRAMAT孫: 6.3% Eternit族: 22.8% Reduction on sales volume in the segments below: Chrysotile mineral: 26.4% Fiber-cement: 15.6% Concrete tiles: 39.6% Consolidated Net Revenue reached R$167.7 million, decline of 26.7%; Adjusted EBTIDA decreased 49.5%, reaching R$19.3 million; Reduction of net debt by 15.0%, reaching R$99.6 million; Restructuring of the Executive Board. Highlights of 1Q17 (when compared to 1Q16) 3
Operational Performance
1Q17 x 1Q16 Domestic Market reduction of 48.8% Export Market rise of 10.6% 5 Sales of Chrysotile Mineral (000 tons) Domestic Market Export Market -25.2% -26.4%
6 Sales of Fiber-Cement (000 tons) -15.6% -8.0%
7 Sales of Concrete Tiles (million pieces) 0.2% -39.6%
Economic and Financial Information
1Q17 x 1Q16 Domestic Market reduction of 26.1% Export Market down by 29.9% 9 Consolidated Net Revenue (R$ million) Domestic Market Export Market -9.4% -26.7%
10 Fiber-cement Chrysotile Mineral Concrete Tiles (*) Cement (39%), chrysotile mineral (35%) and the others (26%) (**) Fuel, explosives, packaging, among the others (***) Cement (52%), sand (31%) and the others (17%) COGS Breakdown 1Q17
Adjusted EBITDA* (R$ million) 11 *Adjusted EBITDA is an indicator used by the Company's Management to analyze the operational and financial performance of its wholly-owned businesses, excluding equity pickup, due to the fact that CSC is a joint venture and its information is not consolidated. Adjusted EBITDA margin (%) 20% 17% 11% -23.2% -49.5%
Reconciliation of Adjusted EBITDA* 12 In R$ million *Adjusted EBITDA is an indicator used by the Company's Management to analyze the operational and financial performance of its wholly-owned businesses, excluding equity pickup, due to the fact that CSC is a joint venture and its information is not consolidated. Net (loss) income Income tax and Social contributions Net financial income Depreciation and amortization Equity pickup Adjusted EBITDA ______________________________________________________________________________________________________________________________
Net margin (%) 8% 4% -2% ________________________________________________________________________________________________________________ Net (Loss) Income (R$ million) 13
14 Origin of debt Repayment Schedule * Availabilities = Cash and cash equivalents + short-term investments ** 87,7% of the amortization schedule set for the year 2017 are linked to accounts receivable from export. Debt 03/31/16 12/31/16 03/31/17 Short-term gross debt 75.9 69.4 59.0 Long-term gross debt 72.1 55.7 48.8 Total gross debt 148.0 125.1 107.8 Availabilities * (21.5) (7.9) (8.2) Net debt 126.5 117.2 99.6 Adjusted EBITDA 147.7 78.8 59.9 Net debt / Adjusted EBITDA x 0.86 1.49 1.66 Net debt / Equity 24.9% 25.5% 21.8% Debt (R$ million) **
Capital Expenditures (R$ million) 15
Capital Markets
Main shareholders Share Luiz Barsi Filho * 13.66% Victor Adler and controlled companies * 11.39% Gera巽達o L. Par. F. I. A. * 8.05% Executive Board 0.21% Stock in treasury 0.03% Board of Directors ** Member since Marcelo Gasparino da Silva President 2014 Marcelo Munhoz Auricchio 2011 Luiz Barsi Filho 2015 Raphael Manh達es Martins 2015 Manoel Arlindo Zaroni Torres 2016 Marcelo Amaral Moraes 2016 Fran巽ois Moreau 2017 Board of Auditors Member since Paulo Henrique Zukanovich Funchal - Coordinator 2017 Pedro Paulo de Souza 2015 Aloisio Mac叩rio Ferreira de Souza 2017FREE-FLOAT 85.9% * Shareholders with a stake higher than 5% ** 100% of the Board of Director are considered independent in accordance with BM&FBOVESPA Novo Mercado Regulations Individual Investors Corporations Investors Abroad Clubs, Funds and Foundations Shareholding Structure Apr/17 17
Recent events
Management and Audit Board 19 Board of Directors: Election of the 7th Board of Directors member: Fran巽ois Moreau; Election of the President of the Board of Directors: Marcelo Gasparino da Silva. Audit Board: Instalment of the Board of Auditors statutory members: Aloisio Mac叩rio Ferreira de Souza, Paulo Henrique Zukanovich Funchal and Pedro Paulo de Souza, and their alternate members; Election of the Audit Board Coordinator: Paulo Henrique Zukanovich Funchal. Restructuring of the Executive Board: Election of the CEO: Lu鱈s Augusto Barcelos Barbosa. Access the IR website in the Corporate Governance / Management section for more information.
Public-Interest Civil Action filed in Rio de Janeiro 20 Eternit was officially notified on March 27, 2017, of the full content of the judgment passed by the 49th Labor Court of Rio de Janeiro, partially granting the Public-Interest Civil Action filed by the Labor Prosecution Office of Rio de Janeiro. The conviction requires: i. replacing the asbestos raw material at the Rio de Janeiro unit within 18 months; ii. observing the maximum limit of 0.1 fiber/cm続 of asbestos in all work areas established in the National Agreement in conjunction with Article 3 of Federal Law 9,055/95; iii. expanding the list of medical examinations for all current and former employees of the Rio de Janeiro unit; iv. bearing the travel and accommodation expenses of all former employees of the Rio de Janeiro unit, who demonstrably reside more than 100 km away from where the medical services are offered; and v. paying indemnification for collective pain and suffering in the amount of R$30 million. The Company hereby informs that it will take all applicable legal measures to reverse the Court decision.
Phones: +55 (11) 3194-3881 +55 (11) 3194-3872 Site: www.eternit.com.br/ri E-mail: ri@eternit.com.br Further Information 21 Paula D. A. Barhum Macedo paula.barhum@eternit.com.br Rodrigo Lopes da Luz rodrigo.luz@eternit.com.br Dr. Fernandes Coelho Street, 85 8th floor Pinheiros - S達o Paulo/SP Zip Code: 05423-040 Thiago Scheider thiago.scheider@eternit.com.br

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1Q17 Conference Call

  • 1. Conference Call 1Q17 Earning Results May 17 , 2017
  • 2. Disclaimer Forward looking statements included in this presentation regarding the Companys business, operating and financial results and Companys growth are only predictions and were based on management's expectations regarding future performance. These expectations are highly dependent on market conditions, Brazilian economic scenario, industry performance and international markets, and are therefore subject to change. 2
  • 3. 1 Brazilian Construction Materials Industry Association Index during 1Q17. 族 Growth in Eternit's consolidated gross revenue compares January to March, 2017 vs January to March, 2016, deflated by the IGP-M index. The sector of construction materials and the Company registered retraction of: ABRAMAT孫: 6.3% Eternit族: 22.8% Reduction on sales volume in the segments below: Chrysotile mineral: 26.4% Fiber-cement: 15.6% Concrete tiles: 39.6% Consolidated Net Revenue reached R$167.7 million, decline of 26.7%; Adjusted EBTIDA decreased 49.5%, reaching R$19.3 million; Reduction of net debt by 15.0%, reaching R$99.6 million; Restructuring of the Executive Board. Highlights of 1Q17 (when compared to 1Q16) 3
  • 5. 1Q17 x 1Q16 Domestic Market reduction of 48.8% Export Market rise of 10.6% 5 Sales of Chrysotile Mineral (000 tons) Domestic Market Export Market -25.2% -26.4%
  • 6. 6 Sales of Fiber-Cement (000 tons) -15.6% -8.0%
  • 7. 7 Sales of Concrete Tiles (million pieces) 0.2% -39.6%
  • 9. 1Q17 x 1Q16 Domestic Market reduction of 26.1% Export Market down by 29.9% 9 Consolidated Net Revenue (R$ million) Domestic Market Export Market -9.4% -26.7%
  • 10. 10 Fiber-cement Chrysotile Mineral Concrete Tiles (*) Cement (39%), chrysotile mineral (35%) and the others (26%) (**) Fuel, explosives, packaging, among the others (***) Cement (52%), sand (31%) and the others (17%) COGS Breakdown 1Q17
  • 11. Adjusted EBITDA* (R$ million) 11 *Adjusted EBITDA is an indicator used by the Company's Management to analyze the operational and financial performance of its wholly-owned businesses, excluding equity pickup, due to the fact that CSC is a joint venture and its information is not consolidated. Adjusted EBITDA margin (%) 20% 17% 11% -23.2% -49.5%
  • 12. Reconciliation of Adjusted EBITDA* 12 In R$ million *Adjusted EBITDA is an indicator used by the Company's Management to analyze the operational and financial performance of its wholly-owned businesses, excluding equity pickup, due to the fact that CSC is a joint venture and its information is not consolidated. Net (loss) income Income tax and Social contributions Net financial income Depreciation and amortization Equity pickup Adjusted EBITDA ______________________________________________________________________________________________________________________________
  • 13. Net margin (%) 8% 4% -2% ________________________________________________________________________________________________________________ Net (Loss) Income (R$ million) 13
  • 14. 14 Origin of debt Repayment Schedule * Availabilities = Cash and cash equivalents + short-term investments ** 87,7% of the amortization schedule set for the year 2017 are linked to accounts receivable from export. Debt 03/31/16 12/31/16 03/31/17 Short-term gross debt 75.9 69.4 59.0 Long-term gross debt 72.1 55.7 48.8 Total gross debt 148.0 125.1 107.8 Availabilities * (21.5) (7.9) (8.2) Net debt 126.5 117.2 99.6 Adjusted EBITDA 147.7 78.8 59.9 Net debt / Adjusted EBITDA x 0.86 1.49 1.66 Net debt / Equity 24.9% 25.5% 21.8% Debt (R$ million) **
  • 17. Main shareholders Share Luiz Barsi Filho * 13.66% Victor Adler and controlled companies * 11.39% Gera巽達o L. Par. F. I. A. * 8.05% Executive Board 0.21% Stock in treasury 0.03% Board of Directors ** Member since Marcelo Gasparino da Silva President 2014 Marcelo Munhoz Auricchio 2011 Luiz Barsi Filho 2015 Raphael Manh達es Martins 2015 Manoel Arlindo Zaroni Torres 2016 Marcelo Amaral Moraes 2016 Fran巽ois Moreau 2017 Board of Auditors Member since Paulo Henrique Zukanovich Funchal - Coordinator 2017 Pedro Paulo de Souza 2015 Aloisio Mac叩rio Ferreira de Souza 2017FREE-FLOAT 85.9% * Shareholders with a stake higher than 5% ** 100% of the Board of Director are considered independent in accordance with BM&FBOVESPA Novo Mercado Regulations Individual Investors Corporations Investors Abroad Clubs, Funds and Foundations Shareholding Structure Apr/17 17
  • 19. Management and Audit Board 19 Board of Directors: Election of the 7th Board of Directors member: Fran巽ois Moreau; Election of the President of the Board of Directors: Marcelo Gasparino da Silva. Audit Board: Instalment of the Board of Auditors statutory members: Aloisio Mac叩rio Ferreira de Souza, Paulo Henrique Zukanovich Funchal and Pedro Paulo de Souza, and their alternate members; Election of the Audit Board Coordinator: Paulo Henrique Zukanovich Funchal. Restructuring of the Executive Board: Election of the CEO: Lu鱈s Augusto Barcelos Barbosa. Access the IR website in the Corporate Governance / Management section for more information.
  • 20. Public-Interest Civil Action filed in Rio de Janeiro 20 Eternit was officially notified on March 27, 2017, of the full content of the judgment passed by the 49th Labor Court of Rio de Janeiro, partially granting the Public-Interest Civil Action filed by the Labor Prosecution Office of Rio de Janeiro. The conviction requires: i. replacing the asbestos raw material at the Rio de Janeiro unit within 18 months; ii. observing the maximum limit of 0.1 fiber/cm続 of asbestos in all work areas established in the National Agreement in conjunction with Article 3 of Federal Law 9,055/95; iii. expanding the list of medical examinations for all current and former employees of the Rio de Janeiro unit; iv. bearing the travel and accommodation expenses of all former employees of the Rio de Janeiro unit, who demonstrably reside more than 100 km away from where the medical services are offered; and v. paying indemnification for collective pain and suffering in the amount of R$30 million. The Company hereby informs that it will take all applicable legal measures to reverse the Court decision.
  • 21. Phones: +55 (11) 3194-3881 +55 (11) 3194-3872 Site: www.eternit.com.br/ri E-mail: ri@eternit.com.br Further Information 21 Paula D. A. Barhum Macedo paula.barhum@eternit.com.br Rodrigo Lopes da Luz rodrigo.luz@eternit.com.br Dr. Fernandes Coelho Street, 85 8th floor Pinheiros - S達o Paulo/SP Zip Code: 05423-040 Thiago Scheider thiago.scheider@eternit.com.br