Ternium (TX)

Sebastian Marti Investor Relations and Compliance Director
Maximo Vedoya Chief Executive Officer
Pablo Brizzio Chief Financial Officer
Jonathan Brandt HSBC
Thiago Lofiego Bradesco BBI
Thiago Ojea Goldman Sachs
Carlos De Alba Morgan Stanley
Gabriel Galvao Credit Suisse
Rodolfo Angele J.P. Morgan
Alex Hacking Citi
Call transcript
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Ladies and gentlemen, thank you for standing by. And welcome to Ternium Third Quarter 2020 Results. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session [Operator Instructions]. I would now like to hand the conference over to Sebastian Marti. you. Thank ahead. go Please

Sebastian Marti

for thank to Marti, joining Investor and Ternium This financial Compliance and nine and name of presentation. months Relations today. is Director. XXXX. results its yesterday Sebastian I is released third you morning, quarter us first complementary for call My and the that Good am Ternium’s

environment the Brizzio, Maximo company’s Chief the of me are who discuss remarks, be Joining will and there today At Ternium’s a Vedoya Chief and Ternium’s prepared our Q&A business Officer, conclusion Executive Pablo performance. Officer, will Financial session.

begin, like in those contained call today’s and to filings I with actual I results Before X could or you Exchange we that turn that, the contains in our Commission from vary that would are expressed that call this results Securities conference Page may and Vedoya. webcast the implied. remind on information over With and forward-looking presentation. Factors to affect Mr.

Maximo Vedoya

all and very especially happening, today your us think morning, company. busy keep call, there think interest I industries Good were and bit Sebastian. a other things relaxed And some thank or in mind time Since little last your steel markets. to you, for different much been participation. when really increased your restrictions you which Thank our our operate in our our appreciate normal We as significant in advances are for demand there. third I toward environment Steel have conference more industry. the in lockdowns quarter and the

our facilities under We sanitary strict operate continue protocols. to

full able when to in can like and calls rates we demonstrate capacity. in to operational Ternium its can In operating increase is flexibility. situations be As discussed this close to scenario previous this

react third reach XX% conference of steel than quarter margin our in levels results of in pandemic has we million people big from than ton, $XXX way been pre-pandemic quarter second price scenario of the anticipated what enable excellence. months quarter XX% yet not better in there. a but by was recover in the shipments almost quarter. we to of low current the up to and higher to production market quickly restrictions During proud level conference to took American call. market had they that improvements year. the even Ternium's an healthy our last Then back Steel the the worst the strongly when our as related in ago first quarter, made the three by I'm production back at we prices compared levels of $XXX will base to able to -- significantly also pandemic the that the million first changes our September. a increased Ternium's to report The just with XX% to significant third Together was back more these in environment. possible higher quarter, with was per very North operational a million us X.X cash expectations a last call. the tons, in debt end EBITDA of at on and did previous Shipments or of XXX increase, they also of very driving year. will Free to net million in flow decrease the level with as come high with another quarter this the quarter at fourth of $XXX the how remained

the Mexico, able a next in commissioning rolling were to new our projects, of mill to During restart the third including by year. hot we expect continue which main CapEx mid quarter, we

total capacity of market. ago, facility. bars us will first greenfield With imports production offering, to capacity in cost mill with to third the final of the of existing this new that will substitute enable also to bar also we capacity in the of the broaden Monday, be country. The this facility. existing commissioning regard, reinforcing an new in Colombia. integrating north In our announce equivalent the resumed contributed in able of the producer than approximately out We of Ribera facility, with our facilities we very glad also be This days lower to I'm only this with this our facility will to in two of a the And the increase will a we produced new Colombia, in new country. competitiveness product

In in situation in over now in the little me we quarter, description pre quick quarter. shipments fourth volume the we now a of We to quarter. Let market. lost to second Mexico, in return expect recovered our make the levels a the half of main third the pandemic

and We demand a appliances are seeing household, end-user the by shipments driven HVAC automotive, to solid of the in US industries, continued market. recovery

second expect the like market third the year, construction new the improve levels also the new the to shipments ago. in shipments volumes of to recovered in low small various seen XXXX We to infrastructure quarter those projects the quarter steady similar with to in record government of In from years following two sequentially quarter construction and Mexico City, the in Argentina, demand same refinery. and airport

recovered auto of the Brazil, will end market we supported government fourth its the Brazil steel industry XXXX quarter is debt, in less affected reforms and country's uncertainty there GDP additional continues need among If to the the to to continue are an news last in at successfully economies. have Latin restructured flat in purchases. the increased country increase could sequential pandemic The Argentina and advance over environment negative Argentina by the markets in months have level, is steel challenges the to macro be macroeconomic in going market. high. orders the level the time. has be this performance shipment overcome American the that the as continues Although, to no it significantly nicely improved In and domestic The with the

with the it region a to we in our fourth maintain normalized driven third scrap global Our quarter. facility. and to short in of has in quarter a the expect recovery keep integration improved currently of in facility had Prices level has working Rio capacity, at time. mills of also and it this in is last slabs market the full more margin I three the levels it this over in this the months high

are say, for and have our quarter more pandemic we the and of to it. currently take and world is the for quarter. all levels fourth the our the Needless to time uncertainly government the the measures improving, year. contain cost we strong could Q&A the COVID-XX shipment of around positive markets future about the persist although, review in the profitability section expectations So of the Summarizing company of performance in have

it As is Europe, will take we seen we the evident in pandemic continue stand. to have that so is not cautious a over,

communities of our field and also we effects initiatives all pandemic, community. particularly need how Monterrey working I health endure the hospital We the hard am in the continue detailed build on in operate our the with the I to proud of the supporting those is previous help local in calls. of

the levels of our the of goal into point game perspective only our are MCA the in believe hot but sustaining to expansion region rolling future competitors. a very steel USMCA's very many next forward stage related also the be market a Ternium All to commissioning development, a last with our to benefits. take profitability I also projects competitive believe in am of Ternium, we from Mexico. will for will year, Looking much mill be the a unique not positive high of advantage of US this of I changer growth position looking I always ahead with in about right. from the view, our new the

like Pablo, more We are go to detail the very quarter results. third review in ahead. Please,

Pablo Brizzio

Maximo, and good Thanks, everybody. morning to

results third review the of Let's the for Ternium’s year. quarter

the quarter. will improved significantly our in you mentioned, third Maximo that As performance see

in last COVID-XX the Ternium’s sustaining our our with as we on the sheet, cope quarters, well difficult couple of Over market-related balance the to as to profitability pandemic. on hard strengthening worked environment

some the results the X efforts. and of net on Page on webcast see results. the quarterly of these with Let's EBITDA company's presentation Starting

points a with significant or million margin have $XXX third expansion was There ton. basis per $XX a recovery sequential in EBITDA of EBITDA the We XXX quarter.

this compared second of $XX discuss [Technical quarter net the more the Net in $XXX in $X.XX million details or slide. in next to period was million in Difficulty]. per income results The will We the income ADS.

was quarter COVID. [Technical second of compares net quarter result a the third of in quarter the the pandemic And million of of that to I the clearly the income $XX Difficulty]. second consequences saying net because So the income of weak of was

a So The is sequential increase the fourth expectation in margins and for in of numbers. a strong shipment should forward set result higher let's look to quarter.

Page to now Turning X.

one in the Let's of detail review in recovery degree quarter. this the of the third the shipments, positive surprises in more

in the expect XX% the in in to in other from compare as a quarter. chart. the In continue and year-over-year market fourth a the left-hand basis reaching lower left-hand quarter, right-hand southern side pandemic in on shipments In down dynamics upper market very quarter And levels. last blue increased If on shipments and in Mexico, shown the further quarter, by were XX% sequentially third fourth see a to shipments basis chart, second side recovering, this if year-over-year in so in the you quarter. sequential we revolved expansion X%. upper as pre the continue quarter, chart weak third region, increased the finished in up side In the shipment by can They you volume region, were we it current see year. Mexico in a should third the

in to As chart party, they same both year-over-year decreased and for slab shipments in comparisons. in the third gray, sequential

parties. integrate in the Brazil fourth the a shipped volume were quarter, systems further able resulted company's the reduction in a third third During shipped industrial level Ternium we slabs the the in up expect slab to we volume third S.A. to to similar quarter, to facility with parties. In that

next to Turning the page.

sequentially. increase shipments higher left hand result in we as the shipments discussed. chart, upper quarter, third these In tons the sequentially side on markets You million in based can consolidated XX% in steel volume of fourth quarter, see We've the expect up X.XX to our already developments. consolidated the of key

expecting fourth in steel was revenue quarter is improvement mostly related contract an of will this weaker in since increased revenues. price strong our of third as upper we the realized increase is in revamp This ton side by happen, drive the magnitude by X% the background of strong sequential increase in North result very year. a in lag conference a as in as these the We experienced this region last reset. mix sales in industrial Turning actually This the did. prices offset in chart. value the is The price call. market to were per but our hand Average not mainly the see prices the now American in right prices a quarter, to prevailing explained price

Let's Page EBITDA an can offset to sequentially, see turn main the in mainly increase sequential EBITDA operating in this ton. the operating in ton, net increased The in slight chart. recovery and changes margin review partially the as The X in improvement improved results by result, reflected in now quarter. you increase revenue shipments costs to income net reflecting rebound sequential per per profitability. EBITDA led a to high in bottom in and

ton. of affected In earnings and labor EBITDA by in have negatively year-over-year partially in materials, decrease chart reflected addition, ton we change shown per in The ton. income and purchase and EBITDA was a lower shipments slab, energy lower the prices, equity in costs raw EBITDA higher tax. offset per steel from the better result by per Usiminas

As peso for Brazilian results can addition fluctuation operating period. real see Mexican the of and the income, changes dollar the US effect the to the income during you a of in Argentine bottom in decrease the financial year-over-year the of significant the in peso, the net in net versus chart, this

the higher behind nine the The comparison the was deferred also the -- tax in figure. non-cash an peso Mexican We reason in depreciation of year-over-year loss income and year this had XX% a in main connection in with tax. months

to free and debt. Now let's capital cash the up Ternium’s on expenditure finish and review Page flow, questions, financial X call to your net before opening

of set strong can in see You slide numbers. the

end mentioned of last position two achieved quarters, All take as including cash in capital X.X this debt liquidity to of ample with down the we've million the significantly into billion year, taken release by operations first the the in measures to Ternium in net reached that debt decreased $XXX last X.X expenditure With financial provided activity just net consideration net months $XXX equivalent we a strong working to to that million and nine previous. time everything with the last has capital million XX EBITDA. months and December of $XXX

our of retention investment to the sequentially increase the in plan, we With quarter. expect expenditure capital fourth

our were These Okay. remarks. prepared

ready operator with you again the time to questions. attention. your Please Q&A now thank take and much very session. Once your are for We proceed


Brandt first comes the HSBC. Instructions] [Operator with question Our of Jonathan from line

Jonathan Brandt

to lower US? roll How should what Maximo, of outlook steel be my steel is prices just, look leverage, to say the see prices, times, second that's of end prices, wanted into is you the quickly maybe much should the sort and of that I et range. cetera? it's fourth if And sort your guess, your X.X third America quarter the historical North both happening sort today first the steel Pablo in the on the in and given question, ask And then at everything I uncertainty happens you of how at just will much in about captured quarter? of that that quarter first and we how

kind be particularly quarter? at increase cash dividends? some cash flow the uses -- Or is certainly go expect What remain level? of should as walk and could we you. like you what through to sort will outlook it profitability So are What of continue this of is us into as seems for outlook of the your uses Thank we free for of other to cash? What the the leverage fourth CapEx?

Maximo Vedoya

me prices. Let with the start steel

I course, the two bit the that's took in and in part questions. in the guess of price and of to prices little spot sales, increase first the part the and quarter are advantage you bit contract a think is going prices. more Remember, of clearly advantage prices our our I we in quarter. take fourth part Ternium our results, Steel see little a we are of

an the and prices during during going increase to first probably on shipments the it’s probably going to mix Ternium in quarter depending from from but And increase. quarter, be see so the fourth we're an

was On the I had -- where mean, prices last you incredible the very telling the first I local years prices are for it the and were we the US. time I outlook, that in markets in when conference below local up local in call, XX was was our low that the I remember US sorry, China think

XX of So we a years we we went of level the that seen that and over remain, haven't It bit than prices what last thought. so for And up quickly and up. go little the to I US I good in mean expected region. environment quarters. in this continue is Demand think that this Mexico the this should prices should next more couple

manufacture customers, I industrial think our is increasing. our very consumers also structurally are solid,

the think so US. quite XX% in that I side, only the in and rate increase times think And it's the The long are I from demand it's lead strong.

this have with think we continue are that I US with think expecting So this functionality, producers to going if I we several quarters bright the environment, that. are

first the answer that think I question.

going questions The then in second I'm start a view to longer more Pablo comment question I and that ask Jon. to on

Pablo Brizzio

in questions different take we ways. can that these think two I

answer The little from of will two we was an we operation Jonathan Clearly last saw with different the asking. very numbers quarter we first working CapEx be together the where one increase during a that real and from strong what to the out capital a is coming the a company. the released fourth on had what quarters short

all, strong the quarter, to will very operation increase CapEx the from fourth to an first third cash clearly fourth. positive. have have, flow our the level. that's on from So we clearly, we the will In continue in But quarter of

the quarter. expecting in to more level that than fourth CapEx the in are We of the

year. $XXX level We around of that originally the said for to are we expecting the reach million CapEx of

its our of have, mentioned, we level receivables. our have also working fully new capital course, very that and value are of value of to the sales and of the clearly difficult increase increase we and new also releasing that that new the of plants the with Maximo production continue level inventories pricing of restarting As we level the the but

we a but with quarter an increasing all, a reduction leads the -- of answer reduction capital. run. longer of a But working cash matter in keep be from reduced CapEx debt. in increase strong will free flow both All think continue the flow in I the to level cash of number no the in things. it clearly, The and this net having So with probably very that operations will to because

can now that the think I So capital the Maximo take company. expand answer these the on and on basically allocation view, of

Maximo Vedoya

I are are and thoughts we mean as cash good flow I of what answer clearly, said think the Pablo cash our the of future. usage the generating

-- I started that program in allow investment for want acquisition acquisition us to program our think CSA change you the Brazil, range and were there already. of products. more to very we're not with -- facility with to new programs allow and very value-added markets, investment which or a Mexico. us hot-dip This watch, mission strong The the to of greenfield of and facility months we was we and changing very years those that later to that of programs able steel, produce three before. the are of much mill, more capex us. program new painting, important aggressive started that sophisticate, ago at state-of-the-art whole The continue wait which going our we don't produce produce a the -- Then substantially, much launch in galvanized in the in which

months We are finishing about of six, that investment seven, program. eight

of looking that continue opportunities to -- growing that now using are see to we good are we and into turn so, And cash. continue that they

to has NAFTA construction of mention or American think are of can increase. optimistic that I region, the their or North think we I three, Mexico the we Mexico, part field very one region is

because people think that for these advantage it's the wars, to it's made continue. think the are good won positioned trade USMCA, well and I going U.S., of that. that regardless going and who all in all I take power have is of consumption the our within to very increase to we we deals

going expansions be Mexican facility. in probably Mexican So is to the there in our --

second is industry melted-and-poured the thing North The the in in America. automotive

of part but we As are compliant. you we know, that are not fully compliance

that third want years, balance time And that's going so we we we're thing we and track to seven give be Ternium continue course, also different market, we but is in to our going advantage how should And have also our in think option, believe we doing today we and And we our for this So maintain by of see to tend think region conservative are there's taking the of grow but not to opportunities. shows compliant. consolidated I sheet our that there's I record do. shareholders what -- our last to we best I be do going grow. to the opportunities dividends to is be that

think hope answer -- this was but I the Jon and your. full question So I I sorry, of to wrong,

Jonathan Brandt

mean, I potential follow-up, it's to as for you would forward growth? for path -- Just the further see M&A

Maximo Vedoya

I any don't mean, don't anything. of take advantage generally arrive, we that. we we But have when see particularly opportunities now,


Our is next BBI. with Thiago Bradesco Lofiego question from

Thiago Lofiego

on market, is the election impact there? steel session on and that… I'll on Maximo, of view steel in increase do volume question, Argentina your take here. is market is best here point? the scenario XXXX Do second the And the the American your risk I'll what What and how at think then sustainable North a do the think you this for you US outlook the

Maximo Vedoya

be me in to no… You're addition, asking

Thiago Lofiego

changes in here what make section think It's scenario? Do your do more specific. see happen the Biden you think see in USMCA? XXX? the gradually question Do government Biden my views. you a wins, always So from just do if to recent good withdrawing any would But you you to hear

Maximo Vedoya

Argentina. I Argentina. First, any it's to mean, let try make projections demand to today me about of very the difficult in talk

a economic are time As and there I it's exchange problem reforms Argentina, mean reforms. do going is challenge said not with it in clearly to Argentina be before, need I is for quarter, those need happening to macro rate. some But good. what

in in of I in I'm volatile going XXXX we And scenario going high. going It's is think Argentina. capability saying so to be to what continue today. any a see not are to happen to very And

on operate So our Argentina. cautious again, what we on we very how is are in stance

We continue way. production, we our operations and are to in will… Elections so on our to flexible flexible but increasing -- what in US, be the a there try

Thiago Lofiego

say you, in are What are -- but the we doesn't here, there outlook improve, potential. a here, worse, I'm are resiliency like what downside worst-case sorry the to more here. more of we see the answer gets factors if still more scenario see resilient we're think that it will in interrupt to would actually, the in Argentina factors going a think that and Argentina, be more you I

Maximo Vedoya

not happen. I'm mean, to I going saying is this

then of mean, mean, devaluation could going have of probably, be somehow. to What is continued when don't that me. one way this most you in out mean, happened I I market the a of to So the an the manufacturer devaluation exchange export quote the But is pick construction these I usually up outcome. of different be some But also. in increases that and decrease. -- start industrial

for downturn a to So but it is see that it to again, solve we point markets to are government market, there the the then a probably continue of But happens, making will our recover. trying situation. are if going

XXX. the Canada, but Donald reassuring US, democrats. volatile couple back To I U.S., I Mexico, honest, don't see the think of this But come to he's mean, of approach, more is to I probably bit clearly, quarters lot if flexible the the a what regional first where manufacturing the mind if thing. to a mean in the or why a -- of present the probably. that's a said next with going mean little manufacturer Biden this I going has environment as very that been at to to countries, wins. It's Biden the be of to wins. shouldn't region regarding Probably, to the happen a change changes which going mind lot XXX, in so it's in I in also I have -- the for of be of Trump, the be think negotiate it's don't And some that, place. to on Election

So don't be I of lot changes. think to there's a going

on the both going try in manufacturing stronger the candidates think contrary, are to region. I to make

me, going for a the environmental more If is you than probably Biden actual little which to should issues, the one ask us, be Ternium a bit for in very things do the of is good thing regarding and But bit we I our only lot really. the I question. know I that’s answer things. how of don't a of environmental a footprint change if see your little doing are


Our next question is from Thiago Ojea with Goldman Sachs.

Thiago Ojea

my to sharp first on would price, question, to think me. allow the really I I saw Maximo like few as go price past US back the We recovery weeks. a in

in North past that years a investments in in new How see few would investments now in of the I Chinese few, is years announcements sustainable, was these them I the of which this first compared like pickup including hold. three the that before. some America, of are unseen you you. next new few But the my in this just a competitive lag two, is, is I do understand related couple was We price How Mexico. years. to going West to landscape short-term coming think accommodating the is level. we on through think there price, lower North the and next include steel in second And this view say, a think your question market. do question. a you What US America? should price should Thank about my lot first think It for saw a my of forward? seems question is I is

Maximo Vedoya

steel. than this see did going said, that was by our in to thought the demand net I the to last was grow mean, steel as the I more China mean, think in years the the net of China, months, the usually, it research is is year. we depends importer. a four coming on last this two saw months happen four I and a US mean increase price up. Brazil, clearly, picking next the And picking last a than import prices, months, countries. of huge COVID a exposure Europe has increase be Latin the I new in -- but I weeks last is XX is honest. up And China for increased last up. prices I clearly in again, is export. X% with mean, you we in or demand up, in And it couple we in of going but steeper going to it's America, Brazil is what all is picking demand. In in what

of US I next several where on quarters, in for and going think But the depend So will see an don't it again will today. the utilization. and continue the prices environment the down US, I rationality it the producer regarding capacity

healthy the I quarters. think next that level in prices should remain for

don’t I if I think Thiago, opinion. first my answered that's I know the question there.

Thiago Ojea

You did.

you evolve capacity years? think next utilization now So I product will landscape the in few new given How do current competitive and the think announcements. what I'm curious this to know, the

Maximo Vedoya

capacity I are increase mean, in numbers. in two mean, in is clearly, how kilograms US, than on in the the think the in and you both in it's see consumption in less power Mexico or the -- they more consumption years the And is going if I basically part the to things, consumption. Mexico, of that grow. it's I in of think the Mexico it's than in you you I XXX. XXX two China, bit more it's habitant, little make US, but power couple concerning first our next new there investments going of new consumption grow of I mean, I is it's this think to all clearly, So of mean doing, coming these is the I capacity US. to depends the if XXX. XXX, see per a It in countries,

Korea, XXX. see If you it's

manufacturers, If than you the see it's more with Japan XXX. all

this back for sure. some region. has consumption the So That's to bring that of to

going So consumption to is grow.

going find of are in imports amount The I is Mexico. second imports. huge there's a to that thing we mean,

is so or to of new capacity imports. this going And part to change replace this

as thing US of of and higher competitive And are producers. are other compete capacity is with US some it's not going for to third the producers there sure, The capacity cost. some this older to that

am And most focus a others is and sense. of that to course, are clearly see that's the I not you the in competitive region. of one today. mean, doing be the so fourth, in competitive in the region, are the in our facilities huge as we increase I than numbers the working And seeing we are our more

able in are we advantage take new again, arousing. so increase And but compete capacity with to this very to that the is of consumption,

Thiago Ojea

to additional you years, couple would any and is ask, in you projection? credible figure come on that Mexico US? both I in next of capacity what have of you consider just size your that the online work the Do

Maximo Vedoya

The Look, sorry. understand. well didn't And question. I cutting. no, understand very the Yes, line didn't is I I'm

Thiago Ojea

My that is on US? consider and will that, in new will this capacity for coming be you Mexico CapEx online, go [Technical in Difficulty] added through is sure, really like question really what that

Maximo Vedoya

No, for they is sure. in plant the in building -- producing I not but mill Texas, at are full capacity I of and don't to years building. that probably. exactly coming mill Mexico in online. new it. the but new is the clearly, in think it's steel mean, new our at are consumption the the the new region, And I are two, facility going plant know and next are River capacity, Big those they timing new things three place The new be the


Carlos Our from De Stanley. Morgan with is next question Alba

Carlos De Alba

Maximo fourth on will or realize Mexico to mean in little the outlook. least terms But little you Maximo bit and that of are seeing revenue I in increase, at into Argentinian can Pablo, you contracts. or And quarter quarter prices more the in mentioned maybe just please first that in you and second prices quarter more the will then first likely the first and elaborate what anything could continue increase prices comment will you could of the a continue cost, add question. to the maybe So lag I bit ton probably on just a quarter? the on have per perhaps a in you volumes you

Pablo Brizzio

question. this take me Let

need things Clearly, second how take -- question. as the but see in me that remarks, make take the pandemic change consideration, caveat a is there Let things do not Maximo if your can answering first need initial we into we into during we other to a if into before consideration. the to evolves region. wave and Clearly, explained

is is different first quarter. the we the region, markets seasonally to Mexico, is of so tends year, the in the first first one. more in clearly the seasonality one end at the In a good where relatively First of the Southern this be volumes low are quarter quarter

the to we So quarter outlook. with coming a see continue positive

not now seeing price even to fourth are are the in we of the the XXX% right increase of We numbers quarter. see reflected that going

see be will any So level some of Maximo there Maximo as increase is, staying at the we yet, also we year. price view of quarter first do reflect the see -- will price the in that

to, that could that the or the with So believe Argentina in outcome a sustained something enter we going fourth be sustained next the be are that we -- volumes with year. in is outlook we that said quarter the for will relationship into transaction to

is for the which changes all we year. a one-time also should outlook projections, the clearly of we make we the second to quarter for Argentina the but mentioned, in The a these that rational of fourth could have and volatility line make in quarter situation with what expecting all, in Maximo volume, in the are caveat is need

Carlos De Alba

sorry, Pablo, you that. And for thank

if wondering you're price there… seeing Just that

Maximo Vedoya

clearly, it's think not the I mean, I amid caveat, over. third So pandemic. I Carlos, mean, I said,

so, the economy. come if make learned to to useful governments a I going to don't harm that not it it's They recession, I are some they very lot won't. and back think know And of

a are So of our picking possibility Difficulty]… because cases and I think in countries [Technical some it up

Carlos De Alba

Pablo. prices, in see do No, Argentina? on prices just How you

Pablo Brizzio

follow see usual Argentina We as to international as price prices. international continue -- volatility with with price less in

the much in prices in So see we region. don't changes

us, there sustain if the foreign some is a will in rate, we are this markets. level as our impact exchange the usually course, run changes currently in but able seeing to in as we will be Of happens pricing short

Carlos De Alba

you you be hot if question then updates could is that and line production can bit Mexico, incremental -- in about And which then, will coil a you talk project, And is any is but a timing to do roll that of you my And that number you little from or more little on have to bit second XXXX whole said I you the of next range of timing much -- great. expect more on maybe CapEx, line next there the the restart you the provide. year how any other refine production can expect guess, could year? have that there ballpark

Maximo Vedoya

I back around XXXX. the I as number as CapEx, It's again. Carlos, quite -- am $XXX same also mean, going XXXX, it's XXXX be to million.

long I very July next mill that the mill -- equipments those coil, I are Hot-strip number a date and hot-strip the in -- the July we mean Remember for seeing are period. Pesqueria, is that's so capex. but are there mean, of difficult, ramp-up starting as these year. we is first big So

to that mill, the the think effect start hot-strip by year. the I seeing going the of end we're So of


is question Credit with Galvao from Gabriel Next Suisse.

Your open. line is

Gabriel Galvao

question part been and So plan would you domestic hikes mentioned domestic third-party your witnessing the of be sales to your my in so first also to export regarding market. that several market the we shift price have Brazil, from the is

us could the how question exports actually So Brazil? a between second in on color profitability some and maybe provide on sales dividends. would domestic you is the be my So follow-up relative

Thank remember once year, that suspended said So for pay since case you a dividends the if is only remain would you this dividends usually so here? correctly, you. XXXX I

Maximo Vedoya

make the I'll and the is what Brazil. facility remember slabs. have is Ternium you mean start with as to I happening in Brazil, Brazil is consumption that, increasing Mexican we

production What other high, index, mills are increases, hot-strip the the galvanized asking ramping CSN, is yesterday record in on so was up manufacture not high, the them think was to the Brazil production on are mean of what are that companies we the sell and the -- impressive BMI, some manufacturing increasing. but Brazil, of market and because I cold-rolled number as So not the we final of slabs read the lines. it It's I it's in Usiminas, they us to the it's and a this or own said let domestic What send but market one the operation a export into And things market other reduction to in to sales me selling we our parties there in product domestic point to answer. third one, of to the profitability profitability, change order have to in the advantage lot and is do freight facilities. sell this before some clarify of between that change is second not market. entering a our of lot in we

Brazil. Within the sales local parties, we in third include the

to we change -- So third in sales from local clearly to what of the and the Mexico or our as report demand reduction saying of local but increase we Argentina. for transfers saw we was an facilities quarter sales in -- and our parties that what was due demand financial Maximo to third right increase increase statement to an old the industrial second the in have is both

that you the big numbers. So a that's in change saw

Pablo Brizzio

All the parties and note higher that the transfer. to Brazil in not of Mexico from or production was this but switch was all, third total to you clear should but those increased we market, switch are local parties is from internal third

So with that and Maximo… verification

Maximo Vedoya

parties that I going other change question were to local. we say the fourth of I did to the thought was And quarter from when the

that. my Gabriel. of I fourth asking was so thought you depends answer So the on part -- of the quarter, were

Gabriel Galvao

asking fourth price of lot. of course first about but for perspectives this hike clarification because was the the a Actually the quarter -- the and this profitability, also relative helps I

Maximo Vedoya

third Brazil, the parties. than a going fourth we what because similar be ship And are quarter, Brazil Board be only Dividends, number to be in were going decision pandemic the of seeing in difference the the to what to more time. that from the well, were to the clear other due quarter dividends to we you make and skip is to thinking know of sell this Brazil. to party, -- But That's the with in the parties in demand make increase to we that same. completely, the we make what the going third that or to is difference in April, number payments the in to Board going third including the decision we or

I we expected. what dividend available right is quickly will not -- so the it we their But year, XXXX. believe Board consideration take for was than that. are payment skipped was into it when we clear dividend proposal dividend we recovering it it strongly we recommendations in the think decision the -- makes payments I but in market April, that think XXXX every I dividend The the will that the in have do when changing the decision yearly February, dividends not more in I Board was is Board still considering much right consider propose that information


next Angele question Rodolfo Morgan. J.P. Our from with is

line Your is open.

Rodolfo De Angele

another There another have already lot one I a is are the Ternium's can, we of, discussed and I of Pesqueria will if were back think, acquisition I level. the first go kind in of question. one to CSA And think we also changed we was IMSA, moments. one, could was the There so of moments things that one those few be company just history

where questions getting the at from Ternium who the investors all the are to looking they lot want impact of to been have We company. new a and understand try the of profitability of

range when bring to you EBITDA that you operation. up per can will fully your comment my question ton is, of its Pesqueria to the on So additional ramped

That's from expect a you see ball thank range, Just me guys, much. the very park impact figures, to all what you there.

Pablo Brizzio

the start the will on Okay, then if with let's I want answer complete you and answer.

the every facility, have what -- Rodolfo, are is of clearly, everything generation XX.X% increase the in quarter sustain or the initial the question is today, of profitability. There of the level Maximo we company coming for for Ternium on is with company. of and EBITDA do this remarks, of we in your So Clearly, very that Pesqueria the important of as investment components of of and comparable and comparable margin projecting the clear what profitability the the perform facility. it acquisition we CSA. to you one future we Pesqueria to mentioned In an one you an have different profitability case in Ternium is the this to other profitability that said, to very and try point we put to case of is do and increase the the that EBITDA

doing. are that imports is one fee we of first substitution The

of facility, we So are the we today. production in with substitute will that hot-rolled new imports doing

one Second, the we so down. the sophisticated that will we one, is of close one use, we will stop utilizing facility which more that

done In already fact that. we have

provide state-of-the-art base. performance new that and so, facility And better will will facility, have a the a we will we increase product clearly a third,

have coming. are into all, tons are the number expecting in net are all is So to product million to -- the -- sell of more they we and of EBITDA than we X market

company traditionally, of exactly our as reach goal range, between this margin. the say XX%. always as XX% to the the profitability the Clearly, but sustain and will for can been us is target we has We high EBITDA to above main to same, our XX%

but my that some have have levels know to that the which ones do I are to something that, if that. higher quarter than add want we comment. you initial we that We so to is Maximo, to work. they is with And don't everything sustain

Maximo Vedoya

it's change going a very for a X Pablo in X.X what No, true million its and is Rodolfo, No, CSA, again is saying products combo. think facility can hearing? new I to I Pesqueria of acquisition that is add -- and Ternium clear. serve. here. with value-added Pesqueria true. is that and a high that of tons everybody the It to together completely but this are very saying I I customers remember million range with sense mean, we you breaking signs think are the think There is that is

So is to increase as Pablo said. this with profitability again our our intention

Rodolfo De Angele

okay, question. the me So guys right? shy were let think is range, on ball alone, per that, $XX a be very figure, XX% of wanted of a today, Okay, but bringing project -- and is insist thing this already additional Pesqueria what the say what to do where come that when park impact know sorry is these the it answer. about having -- I for we and is and the XX% know a you quantifying but what's I you're what to trying the if us see That's secretly so investors don't just am important is know I comment it this, to If have very mark the my in say I at I invested, -- is the last insisting because said to market in? one this as this ton? just can is now, is I I can

Pablo Brizzio

but of No, to difficult say dependent number what to extremely it need it go a difficult also exactly because the that that and say. through that's on different to trying are very is the is, we its price put to product, fine Rodolfo, dependent we is it's to also on things,

because X% Now we product of new profitability galvanized among painting products. by product, course, new of other product but will increase we includes things, having mix also are that a hot-rolled includes

a prices the per want million more today, you so to which this by reaching this $XXX, see EBITDA tons profitability the are $XXX, million year. if EBITDA one, are different saying go of more be of in ton are here what than will of to So facility, you at prices X Sustaining that's we EBITDA over we through, per different with $XXX generated well a number question. the than

year, quarter let had this this me correct XX.X% a we EBITDA you the that So margin. number said,

So, for number following quarter. I the a targeting am higher

huge all of opportunity before. level in explained this margin increase expectation that of are say in will XX%, to So that able we flow level because will Maximo for the and them higher it's also of a could be sustaining for be generation that facility you us trying the for. to cash we all EBITDA very not things something new investment, free But all, are margin the these us we the to we but only for and of in difficult in move than generation, is expecting unveil which -- lot to

sustain, and but the be number and key for profitability as to will clearly, -- difficult showing. mentioned, So Ternium. a point we of some at a all, the at believe changer for of increase very game taking also, this But Maximo mentioned It's there. consideration are clearly clearly, least the it's Ternium will of that into first the you to that is until as numbers we generation put result EBITDA a will level that will investment increase Ternium, we'll we

number give to you we investment. that view is but this have a not with Sorry, exact that


Alex Our with is next question Hacking Citi. from

Your line is open.

Alex Hacking

a just guess, quick for Pablo. I one

boost So sort if during $XXX, EBITDA was back one-off and there is the of I rates look over statements, prices look per Thanks. on at current weird going guess, like. my a accounting ton sustainable quarter. current the was whereby that was I a there, what that financial utilization the Siderar in there something the level with implied or

Pablo Brizzio

have relationship to in that we some Argentina, in were remember devaluation inflation things There still we have country. in the Argentina,

total aspect, you increase a of the tends company. when number bit to So little this have the it

denominated exactly increased XX% if because we though which the continue is cost, as the course, in you of total just devaluation Of those then are that reduced. that impact of is around calculate attempts cost clearly, portion is to peso, environment, that be see this of tends the to

better a have margin you respect. So that on

you of these before end the quarter. moment So have of utilization that prevailing inventory have at the evaluating the that things exchange rate when the you have the as or you

the very, this, margins very some So Argentina But there Argentina are clearly, to accommodate of But the to are tends levels. on Ternium good. go and normalized of clearly, high. these things was of the Ternium performance to also more the performance

Alex Hacking

capacity -- kind assuming a I excess for about all talked you product. that kind had for there to And processing one is you is like Pesqueria was kind that of additional then, you as going the you can Thanks. it utilizing, way gal now, I there of be could that were there? quantify didn't be just that I way around selling just of guess value-added you answer one. realize In excess hot-rolled, your have quick value-added how can Rodolfo sitting you a paints you some much to capacity

Pablo Brizzio

investment to they not Pesqueria full galvanized and mill almost mention What only that the hot-rolling line that was at total new running is new painting also they are was in line are the and up and the I the trying but capacity. working already

to there not we have and facility it's So up waiting just that for or spare the running. capacity be new

these this -- capacity that the last end capex last at year or the into initial of of the -- part last of that of enter have beginning year. and have we year was we this at So

So have that up and after running. our -- It's capacity this waiting we utilizing facilities. be the they to ramp-up not are we are available period, for

Alex Hacking

got it. I Okay, I misunderstood.

capacity effectively new just So is hot-rolled obviously… capacity, going right, be the with to

Maximo Vedoya

to remember December. new capacity painting But, -- I six hot-rolled. add the the value-add. in is started potential -- Future and galvanized the produce think ago to mean it's line I I Alex, months

they gives lines new So still are that for thing in running. one But also. is the hot-rolled us new capacity these substrate

other and that So the we products and in we more other to don't in because opportunity that the have make products not are lines able us gives current substrate. the do many cases, to efficiently

going at some current be a probably and this in change it's time -- current So -- run in galvanized how much the lines. painting to in have of are will running our we mix increases rate we and the


closing to Maximo for any over call this back gentlemen, remarks. the and now concludes period. I'll Ladies turn Q&A the

Maximo Vedoya

you. Thank

Okay, hope you been very Thank today and of this but challenge has call I understanding and to hope better hearing you a I a thank you of us all I for much to today, informative much company. be it's nice helped have our has very day. participating have a you know