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Ternium (TX)

Participants
Sebastián Martí Investor Relations & Compliance Director
Máximo Vedoya Chief Executive Officer
Pablo Brizzio Chief Financial Officer
Carlos De Alba Morgan Stanley
Caio Greiner ‎BTG Pactual
Timna Tanners Bank of America Merrill Lynch
Andreas Bokkenheuser UBS Group AG
Thiago Lofiego Banco Bradesco
Jonathan Brandt HSBC
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by. And welcome to Ternium Fourth 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 turn the call over to Mr. Martí. Sebastián ahead. go Please

Sebastián Martí

for thank presentation. Martí, joining Investor and Ternium is financial Compliance and year and name This XXXX. Relations today. is Director. call results its yesterday Sebastián I to released fourth you morning quarter us full that for complementary My and the Good am Ternium’s

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

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

Máximo Vedoya

strict today losing steel and morning. in to in a cost fourth increase you, tons, Ternium. Thank interest quarter our million the XX% with very glad the have X.X a took better actually in an of pandemic to of to in very continue you I call. to your we conference the for facilities, you able much the levels, on last of of for XXXX, am significant our reaching take Even never fourth we all impose in operating all than while margins on of difficulties business to good control. were we environment, conference a and participating shipments last pre-pandemic our been ones also steel expected been where year, attractive the showing advantage share Sebastián, though quarter, to sight good this call Thank quarter of the set which you result

on and the that these Our I’ll let Ternium’s current to elaborate of quarter margin Pablo year. in the EBITDA first continue is later will expectation increase on.

in Ternium’s of to we in the now XXXX. year full results, XXXX, repeated record EBITDA Turning we billion $X.X

of in as us yesterday time reduce increasing track are we to discussions, our while environmental Ternium’s. replacing energy-efficient this difficult all and one per be Board’s XXXX our requires structure: a invested of to others, now is able energy do intend company and plan, next as of produced was distinctive met dividend many manage decarbonizing this we payments increasing manage we for the steelmaking Ternium care footprint. returning The better is done with environmental our ADS capital day-to-day meeting, which and results a balance also do facility steel sustainability. long-term reflected XXXX. of of been announced In $X.XX of its have depth towards has have another the Board we expected X initiatives prioritizing these To specific-emission $XXX results to sheet. maintaining, at team the to planned operations of also achieve the growing plan particularly environment scrap conference with in technologies. to allocating to yesterday of of effort. so. capture to were the in will in surely after XX% strategic in the its main coal its see majority culture, XX%; As working renewable dividend and carbon and previous emissions meeting. to additional in be And are XXXX The May reorganization able related over the X in key increasing The We all be projects embedded successful a source our time shareholders’ this participation related like at facilities for approval can Board partially the mix; charcoal capacity as share and of The with dedication to our the facilities. is our plans for roadmap operation operations. functions, by initiatives In progressively been to approximately to place million environmental to we a throughout the oversee going the discussed commitment on our same change the an the of lower with intend Argentina, with past, issues. are XXXX. from last years. a similar to XX the Taking usual, continue the a beyond our industry, years. some to we We people. aspect have The an year, in we years, trust We Brazil working improving to COX higher X of over also target long strong results to full recently pursue account, obtain in Ternium’s in Mexico, is part Climate approximately are: aware, the Ternium’s our increasingly implemented opportunity DRI in medium-term $XXX our while decarbonization, decisions; COX this all per shareholders we first with a the target ton It tackle of over environmental put comment be the to dividend key in profitably that was something metallic now issues, last work of environmental resources got into record an to proposal million when continue steel The an line emissions. X second reduction our amount were Ternium’s to company’s return of performance outstanding. year on Board industrial calls paid half in shareholder as

Carbon all basis of in one to be be to neutrality a will footprint. quarterly only if Board the able is come has can In things there goal nominated years will our of that do carbon together. strategy. addition, work representative in more the I achieved a Board of that change be to climate society Directors we oversee parts expect Ternium’s to many improve

So near in continue future. from hearing will subject you this the on more us

a customers driven me quick the demand comment currently what now regarding Let strong relatively auto are its and semiconductor weakest, The although by as affected environment industry exports, stands strongest logistics main the to industrial finished at think, bottleneck the improve sector household a business the is industrial industry be make in it our out mostly and widespread. appliance goods supply I we Mexico, In area, Until southern customers having markets. have demand from effect of at of the in facilities cause weather on facilities full XX,XXX approximately and production been a chain. capacity. normal are in a stable –sorry, area in in the last negative the and production gas our the beginning cause for tons. extreme currently provision Mexico interruption this northern with energy operations. conditions U.S. week, of natural the All to the But back country running by

instead these at quarter year of the fourth As events, those first similar expect remain levels in in of shipments Mexico we the of to of XXXX to quarter this a result growing. potentially of

we’ve sophisticated X increasing advantage with fourth we new quarter, the operation advancing in believe our region, in to shift market is in a future. the customers the it the and months. with even mill ensuring take in patterns and expenditures industrial capability to year materials. to the is and transform continues will region, in the X USMCA, we quarter supply Pesquería plan by goods believe the our demand expected of opportunities positioned seasonally are capacity seen continue they’re to for decision coming a in for the we biggest after fruition consumption markets Argentinian significant at to expansion the the weakest hot-rolling even us Mexico facility and Our building especially I this expand first took in project third This the the driven the a improvement In company. manufacturing in durable uniquely growing country market. happened really our region. mostly in Argentina, recovery in quarter finally ago have to of the home the our It’s The in other years though begin reflect

to in shipments quarter high at first expect We XXXX levels. of remain the

Finally, the after turning activity now induced to pandemic recovered quickly Brazil. the market It that most lockdown. is

Our is first in de slab working its we in facility Mexico increasing are Janeiro Rio at Ternium capacity. integration quarter. And full the with

parties of So Ternium. be lower compared to of – XXXX slab we quarter year third for fourth the last will pivotal to a slabs year. expect sales

commissioned serve Brazil In of range the in system steel to industrial our the our help We and also adding all This customers greenfield more a Ribera are expanding new to presence Colombia. region. state-of-the-art supportive efficiency our Mexico over in going increasing Duque with members position even at capacity integrate the very the as country’s This was government competitive his of cabinet strengthens of Mr. and inaugural event, the new commitments prevent Colombia at speech, present of was on be I with Wrapping my in our President, in better capacity will significant strong recently and allow up product several the we same significant facility, facility our he Iván base operations. of remarks. time, think, as be to well us America the unfair the to his Colombia, trade. cost

effort people last year, very, we First, made teamwork proud I commitment show. this to in would difficult our the and which results in am amazing their of year. acknowledge like possible I very

life. will Going years a forward, Ternium’s point the following turning in be

our new product. the increase the First, capability market mill will serve hot-rolling sophisticated facility substantially to Pesquería at with

our finally, working the to you performance Second, Pablo, region our I’ll the Pablo, with is and I to all go of ahead. And delivering this we’ll to USMCA value who opportunities our fee will Please, decarbonization, continue in review sustainability stakeholders. leave develop Ternium have towards continue now no quarter. fourth continue providing will doubt company.

Pablo Brizzio

Máximo, you our for you, everybody participating and in thank call. Thank

drive for America, positively a steel that combined in X fourth expectations. price in demand steel has developments, price top in cost fully saw results our reaching of the with Let to these the me On review products was above we’ll of quarter level. North line. market, favorable performance Higher Indeed, the and events a accelerate remarkable in of our on. results later Ternium boost non-recurrent especially We sale our for income material fourth to our quarter the not been by impacted main the see net is have profitability raw yet XXXX.

the our sequentially start and with measure X, XX% EBITDA year-over-year. improvement significant quarter. and of EBITDA margin any reached both The by or million on EBITDA presentation in ton. and Let’s $XXX net per results Page company fourth $XXX the

also the outcome Net We slide. $X.XX the detail strong in per performance, to next will ADS. strong million of re-recognition but was $XXX includes Brasil period are per gain on a in positive related tax income benefits of see non-cash the the more or these these at certain to million of a in equivalent $XXX the effects operating contingency results ADS, Ternium $X.XX in

a quarter. In peso U.S. the of positive of On XX% the next the will net the fourth dollar review against developments. effect the the we Mexican in appreciation slide,

positive a we next higher expectations XXXX. for the EBITDA in higher by the period driven margins, sequentially of Our see quarter fourth

to affected, on let’s the the by shipments each impact of The fully X% XX% and recovered pandemic Page Turning fourth in performance region. now the X, sequential in increased from Mexico year-over-year. our review the basis, quarter volume shipments a achievements of

consumption described as quarter, Máximo In [ph], fourth increasing [total materials the Argentina a mainly by stable fourth construction Argentina. continues, in the and in into division] we a COVID-XX somewhat sequentially the reductions patterns durable shipments expect by levels This shipments production in forward wide of the that mentioned. country, demand supported by in quarter volume the goods result the XXXX in surpassed of Looking in of pre-pandemic pandemic. shift influenced margin, the

strong in quarter, products. stay [ph] was steel shipments in year-over-year other mainly forward, the quarter of [coincidental] the finished the first market in looking In these expect region, decrease fourth of there a year. So we the relation shipments to in

with the first We of Ternium’s expect the third-party. industrial of with XXXX, systems company’s a slab in of quarter in integration consequence in facility decreasing volume a slab Brazil, higher

realized prices year-over-year. to Turning XXXX now X% page. shipments and in of even reset shipments first be in a Ternium’s quarter, fourth the million Consolidated The call, volumes ton increased key the XX% X% the similar year-over-year which per more combination equivalent in in price of $X.X conference ton tons These fourth in expected the in quarter in in markets Steel in price fourth in already last to this quarter, shipments America. sequential the the to quarter quarter per prevented our a to continue Mexico, stable net discussed. lagged since increase more and reached are especially contract in together as key in the realized increase our strongly North revenue next prices to fourth markets billion of consolidated sequentially resulted strengthening with increase. quarter the and XX% sales of higher in fourth year. fourth X.X a of the up year-over-year Revenue sequentially our year. in those quarter

X. Turning the to page, next number

cost ton. Let’s with the increase partially offset volumes fourth improvement review fourth at per and contributions in the ton driver a was net by the increase quarter EBITDA main The EBITDA per in the top in quarter slight in revenue strong behind the income. sequential behind the from performance shows just smaller increase that

the mostly – derecognition the of and million. per by increase higher of as margin the the new in chart the in sequentially, first better a reflect that the gain and We to expect ton one noncash person EBITDA Operating per material in quarter $XXX a in revenue biggest of prices. raw The of to results of is partially ton quarter below performance. to a first transactions. offset with contingency net one cost includes non-recurrent increase benefits shows in sequential related net operating amounting increased the Brazil, X a income XXXX tax expansion income One is net result an

This statements, de These to connection by operations referral the has a in Unconstitutionality, we of the in in that related [ph] recognize were purchase Ternium formally and Rio State the been reconfirmed Rio incentives register not ruling our of [ASMS figures. by benefits was when the but have construction we company financial acquisition was it of CSA. in included Court. Action of by price We of facility. the State facility now tax Janeiro, Court of of by this the our the through allocation our in consistent contingency granted de of Janeiro, Supreme the payer] in the books the de And Direct a challenged ultimately with amount it EBITDA the Brasil, Janeiro, Rio final a

was recognized now contingency by this final. this is So, and decision completely

federal federal [ph] tax credits, the one our is also in by taxes, gain, dollar. to The type effect in second to Mexican was of the positive ruling the calculating from a justice the on of related a non-recurrent regarding peso of The another against related both improvement U.S. deferred net tax court transaction another offset recognition from a appreciation higher way income gain foreign reflected loss, a better $XX fin] of Usiminas Brazilian certain the million [peaceful the partially stemming of from XX% exchange investment result net and tax. higher

in in decrease will impact XXXX, on X% billion of and we XXXX. in in the COVID-XX we EBITDA in Let’s, ADS $XX derecognition performance. to including reaching in turn increased same as shipments Net a of was performance pandemic went upset of the The if in now [ph]. year-over-year $X.XX XX% [restructure or was income $XXX Brasil, reflected XXXX million, commodity] per XXXX, $X.X EBITDA full-year a virtually into on the of by Slide contingency X. $X.XX the the increase

recovery market next strength slide the quarterly its company requirement. second sheet Ternium’s in in and in increased the agenda offer first, the its And The on lower in adjustment illustration new impact chart of turn a working higher fourth Let’s COVID-XX balance clear quarter our the targeting cash to the started generation of performance. full capital to rapid expenditure with scenario XXXX. and the in working now growth capital At cash the with a and resuming cost operating capital the reducing to position. quarter pandemic

we Looking continue in of increase shipment forward the increasing of capital costs. higher XXXX, the first and strong context to production working quarter volumes, revenue-per-ton expect in

the $XXX new includes yearly cash more payment. expenditure mill completion presentation, the in hot has mid-XXXX. sheet a This Pesquería the reached will you Free of release at postponed Capital million. generation, capital as of year last been a several the project lower XXXX cash and $XXX to slide working was rolling $X.X flow dividend in Ternium little finished, and of the find facility On balance review in than of already the expansion were the million XXXX of billion.

$X.X net X expenditure capital strong Our line after the X.X debt reduce months to to years $XXX equivalent in significantly to to billion currently the just XXXX, debt we estimates for in from XXXX XX times of facility Brazil slab acquisition the at over EBITDA. is of us explained last end at peak last The what to the million in of our end generation of cash net XXXX. enable XXXX

take as dividends, proposed Ternium to $XXX Board Regarding Máximo a dividend Directors of mentioned, for ADS. equivalent of [ph] [restoration] consideration into XXXX the per million, $X.XX

we this, finish prepared with Okay, remarks. our

much time Q&A proceed now your As we ready always, Please, And very and questions. we the are take session. to appreciate with operator, attention. your

Operator

Instructions] from De Alba question from Stanley. next [Operator Your will Carlos come Morgan

line Your open. is

Carlos De Alba

very Yeah, results afternoon. gentlemen. indeed, you Very good congratulations. thank much, Good

loss, should for did cost company we of related of cost of Northern it also in expenses? side generating last questions has Any terms that, remarkable anything press or was in crisis significant XX,XXX job in and that the but model in flows. me. And or your the the expense done release then, Mexico cash X Just impact energy tons You terms a mention week? clearly Texas to

Pablo, now, you EBITDA, pointed as just to debt is net out, Your really low.

for capital next terms in investments. of what is step I Ternium wonder, allocation or So, the

in coil completing You Pesqueria. produce few few are to rolled months hot months or in a starting a also in

an more Whatever regarding great. can year this next, you another comes great. you of CapEx, us for that’ll be next? on comment, be Thank you. your that’ll what And investments? can So guidance give potentially, update dividends round Is it

Máximo Vedoya

Carlos. the gas an you, of we the of days in significant natural impact XX,XXX or yes, have these Any X price tons. that cost, during contingency Thank we an last. well, the have increase And X

We able a probably XX,XXX tons, But But the or we $XX because capacity. million. again, won’t replace be I be because big this in is of the hit shipments, at are to the is full discussing fulfill it final EBITDA number. numbers. for mean, are still will we the to a

it more next So we this able these shipments are million, question quarter. allocations second that have not what we of capital a XXXX course, CapEx the the the the bit $XXX not year expect that’s to going and year. And or only little is, see be recover to be to we in the around And year, of in to very was – a cash are we good question, future. strange going difficult but very a Carlos. number.

first, the very on of been has months our in we the going. were focus solve think XXXX. the happened the to X where So market and I months good of on very what difficult more than today, couple different this Clearly – crisis year, see is trying – was and

re-analyzing today, are track analyzing an to all quite were of and say was but we’re I our I prepared a that opportunities growth I record, sound today projects we or analyze mean, The years few where clearly and M&A we excellent very very we we, do starting them. those opportunities a were to the – think which Ternium before. do good have we exactly has opportunities, CSA one X I’m investment. we good. did projects not opportunities. are acquisition. we So very analyzing Pesquer��a And last or very, think have in

where also months, the clearly, we shareholders more And of has USMCA, to And grow. them, us to priority of probably in investments. in the future. some through the that think are is Mexico opportunity allocate to we for dividends And a we going the returning some see in couple next particularly

Carlos De Alba

Thank luck. you, Máximo. Good

Máximo Vedoya

Carlos. you, Thank

Operator

next question your from Caio Greiner come And from will BTG Pactual.

line Your is open.

Caio Greiner

afternoon, everyone. our slide. from you, thank good Hi, X questions

fuel first North prices. So in one American

And quite market. the been have seeing spot still elevated the we So especially. we’re in volumes virtually times U.S. no lead seeing on

And that wondering is the just you you do capacity in Pesquería. next with expectations impacting be was regarding do I you long So your question us term? really new sustained how share think at America my prices see if North how current And those can levels? can in prices on medium

have you you just us how And million tons, that So if incremental materialize wondering guys million in this to on can I was X.X not actually which I project. project. share X project, I is can understand an update a guys was tons do understand deliver the the of much with you is provide to our obviously. if can I’m can guys wondering XXXX, trying because I Thank million guys or capacity you is – you X.X of guidance would shipment And you That actually believe be incremental number have But great. for can know if so the terms guys much calculations, can coming any you. imports this regarding shipments you replacing how share in a in just XXXX. years. don’t over

Máximo Vedoya

Thank very Caio. you much,

are Europe. mean, our the people – we I see other their of markets, of is big what not the moving. a last mean, First in I to improve. But American start, the talked that conference is of remember the higher it’s markets. that pattern we very the But that that not in prices house, consumption in mean, in in things I I in And much that about are day. steel increasing. clearly, are we even in And seeing very increase. said in consumption America, refurnishing decreasing, prices, continuing quarter, more that we change expected. I we were We they of going we one think there we in thought North all the in seeing second are every high. question, see call, we today, continued that they all spending construction see they prices, markets. North than are but happening I to and can most is markets, mean, in Clearly not to are

has see of consumption increasing North it’s increased. are you in America And the Europe, if prices prices prices, in But in substantially. driver also so, one –

U.S. is the I mean, the utilization hand, XX%. the other On XX%, in offer, at steel

these Do I more I that this very So at levels. that. see is difficult see to making are say. It’s prices high increases?

I I the levels high are thought. what But it I I’m today. see going stay That’s Pesquería to for update. that than that longer at think can what prices stabilize. is what seeing

are first going coil produce Pesquería, June. to our we in So

Of course, of up the set long these is of one a facilities one.

So it’s going that to reflected XXXX. we hot-rolled. more have a a not are that tons few facility. we X.X will But years, lot be million at of in in that be producing in we expected imports from own part, Remember our that

the that are substitute we to million part of than So inputs whatever, questions, and tons is this. substitute answered so not hope incremental again, Mexico. that And I the going X mean, X million with to or incremental I it’s Ternium X tons own of Ternium around – be bit tons million process, XXXX think shipments in shipment shipments next, I our are little But I even the imports. from a in both probably that. in going Caio. but in would XXXX. less is XXXX,

Caio Greiner

Yeah, yeah, did. you

I it So just I’d and see correctly. so if – understood

believe to in XXXX, you that than tons you’re X didn’t that correct? be XXXX is by You able selling sell more will million

Máximo Vedoya

Correct.

from those market can I be shipments to you exactly. Mexico, shipment mean, Ternium of Mexican Some not say if the exports.

Caio Greiner

Yeah. Yeah.

Okay.

Máximo Vedoya

full have. a capacity going is facility produce to inputs that we the replacing But

Caio Greiner

Okay. clear. Thank That’s you.

Máximo Vedoya

You’re welcome.

Operator

question Timna from will come next Tanners BofA. your And from

Your open. line is

Timna Tanners

Hey there. Good How’s going? guys. it morning,

Máximo Vedoya

Timna. morning, Good you. Thank good. Very

Timna Tanners

before to mentioned returned recovery I on America were you wanted there was COVID, One the a shipping things that ask know obviously, questions. region, to to pre-COVID, began. few a was South I but morning. Good even

us into just if quarter if beyond? is So you color give southern a bit run the XXXX fourth a little market good on wondering could rate more the and

Máximo Vedoya

mostly our mean, sales Well, are in southern Argentina. region I the in

are what And of going Argentina lot the be to challenge challenges has a of that mean, IMF there’s economy. to be debt the First, market the very going with renegotiation I to come. has I the forward, some recovery good, But mean, honest, of a that good is unexpected. quarter there is our a in Argentinian the very macro

be these So to it’s quarters, how in volumes think the achieved. first going be will X I

As in [ph] to I the said, the down – back has stability to [between] it problem. macro a [ph] Argentina, [pathway] context. lot in it in successful inflation economy and debt has negotiations, and forward, and mean, going come stabilize I the the depends come negotiation,

show But is that’s mean, to – forward. So – results, first, what this don’t mean, be to Timna. that’s the happening going we what I’m area. hope have continue this I you in clear, can I see I think I

Timna Tanners

That’s as possible. clear Yeah.

I if I stay helpful. I once, another have people to I that’s questions think X we Thank all their usually guess, at ask you. tuned. X? forgot ask But could or

Máximo Vedoya

Yeah, Probably. go ahead.

Timna Tanners

Okay. Slower I these days, guess.

With the much to third ton. $XXX fourth said had as the get margins quarter quarter EBITDA call, per – that you on could as

couple that pricing, know of I the and – anticipate next the did it you we So higher especially of because into quarters. lagged effect

are margin dividend second your question is you than My and I last faster Carlos, following recent you starting Thanks. up know point it a is, were I cost? That’s it to continuing sustained profitability from forward to my grow? comments possible mean, grow before question. that your paying that payment be can that new the other So considered if continues levels? in possible board the year? not compensating dividend But is this on going for

Máximo Vedoya

Thank you, Timna. Pablo, X why answer you one? questions. great first the don’t

Pablo Brizzio

Okay.

an we numbers. for decrease to into we’ll than analyze in the then, year have to our we increase what keep prices we in we related need continue competitors would failure to EBITDA And impact the per and something then So that ton. we the right, what This sustaining reflect number that is facility – significant Pesquería of year-end margin look margins we last North the And American on. reached the consideration, $XXX than we the and area us And to level are were the to to having be margin to increase the reflected continuing assume our in we with level and but think scenario, of this even our EBITDA number, first we the in market. expecting quarter in picture to higher the a to for and the is that pricing at scenario maximally is at looking take which big following have what EBITDA see that this working see, are big is like of continue hit double helps new very you’re the will prices in return highest again, to year. EBITDA on have result significant margins the will one. Clearly, the difficulties, we we And do are I expecting an possible. we a

see incurring margins, continue And fast EBITDA EBITDA to facilities keep and order some into we perform upcoming much working we we’ll very levels. quarter. can during the as very as sustain So high these to in

Máximo Vedoya

performance second payment not. dividends, cannot exactly as about the comment that, a reflected that there’s in least strong good that of continue see if I be the if in I doubt – said our these XXXX, XXXX. expectations the would this of performance dividend so in no is at you know standard I decided our Having the company mean, are this dividends Timna. by shareholders And or so new a meeting

question. the I think I answer be that would say,

Timna Tanners

you definitely. much. of Yes, luck. Thank so Best

Máximo Vedoya

Timna. you, Thank

Operator

Andreas from And question from Bokkenheuser come your next will UBS.

open. is line Your

Andreas Bokkenheuser

very Thank much. you

from me, questions quick allocation. the follow-up X capital on a Just

very reallocation expansion in time? thoughts this being at also you’ve You slabs? cash mentioned Mexico as to up come you’re happening pump Those sales driving Thank That’s potential secondly, kind volumes restocking moment. an down ramping until slab first And expect X so to a just expansion, the first quarter Mexico Obviously, kind that in driven? you CapEx. mentioned share dividends in questions? is of Mexico. with your is of reallocate about That obviously, at Why end, point are the any early of the always the and you. that generative buyback question. has that And it in not the

Pablo Brizzio

that the the that Okay, me in we will look take share is alternatives well, always let together have, price, we one, so analyzing of increase first consider different type with that at level you everything issue the transactions. of know buyback floating share this we the our to

with that. So it’s to move for difficult ahead Ternium

after will like in we probably additional that directions do So the but be taking we problems will generating the be a going in future near what market, then for that. we’ll and decision we

we that’s one like that the to like joined been see What near future, do continue reluctant payment, not we exactly, year. so why the in see dividend been in And as a transaction a continuing, have Ternium. Máximo was believe as claiming to in take we So last I why we that. dividend have increase decision our our

we working So there where is Máximo? on. are

Máximo Vedoya

Yeah.

because beginning start. going you’re is one, But second happen. of the right. all, or mean, we a are same The X first still And of is I things, integration slabs, to buying this slabs, to Andreas, slab. using amount

But hot-rolling So from trying in be the new sell our a portfolio. with customers some sense, of the to ready from own in mill, lot we certify just to to slabs improve our are that to beginning. and

sell or opposed So buy to best the a always mean, one of that’s is transfer are reasons. I as our And reason. reason Mexico. commercial and of to opportunity, the second we more to is looking what

equation Mexico always better to that ship the see are and mean, from honest buy this, and what first quarter, to other from equation be it this sell the and given than Mexico was more is we to So using to shipped in Brazil sources. I from to

So want don’t return, to Andreas? you

Andreas Bokkenheuser

appreciate That’s that. clear. Okay. maybe follow-up. very And a I quick

to terms nameplate XX of XXXX full for already you months it’s many to And So you of Mexico, not question, rate. capacity, always you to presumably to partly. about in can’t sales going take of to in full just take it reach you how – months the clarify this ramp or expect up. kind of the expansion you it kind quarters run them answered for talk but But,

in think way The should increase plant? right, it, we sequential new the planning from the of kind production? So you’re about how

Máximo Vedoya

thing right. you’re we capacity as full the is the sales. but not remember, mean, saying most in at in Yeah, But soon Pesquería of next probably new possible. that as I sales, I capacity. all, mean, important new of will X year, I’m in the months, producing full But the will an be part at probably be mill hot-rolling

have so a very facility XXX%, our we to XXXX. producing Churubusco not at customers long both, all, of and which the the advancing industrial mean, we go I you customers, Our period we of Pesquería our have some which take probably facility, but through are certifications,

Churubusco I – improve facility older mean, facility decrease both will at some And a a that cost. I production, little and probably, for facility higher will mean, time Pesquería probably We our capacity. it’s bit full a with

over going are everything focus in Churubusco XXXX. to increase we So in and Pesquería then

Andreas Bokkenheuser

Got it.

Máximo Vedoya

all It’s we able the improve are clear, to But it I way. if a will our increase certified to way do products, probably, we again, market, I know. we we that of being, I will that. mean, it’s that mean, conservative. want

Andreas Bokkenheuser

question. clear very congrats take very you good. That’s solid Thank the appreciate the and on and results. Yeah. much, is I you conservative

Máximo Vedoya

Andreas you, Thank

Operator

next Thiago question [Operator Lofiego. Instructions] Your comes from

open. Your line is

Thiago Lofiego

the And the could Thank you on sectors on one, demand the And that first slab costs production there there you. final seeing We loss Mexico, X you are morning, because in for on and positive comment Good a specific on impact, the to are the that mentioned the then, longer? of one pressured hold pretty quarter. side, demand expect issues or million second just you as the market. gentlemen. to side what other dynamics if demand? most on associated the supply are on you just well. that Could question my prices, the this there? very that seeing, comment $XX Is you’re double momentum, fourth if check, questions

Máximo Vedoya

thank Yeah, Thiago. you,

higher, part that there’s being the little there’s not some north a production full much in but of main a For is impact it. one of lost else, production the mean, facility purchase third a that capacity. bit lost gas natural we it’s I

cannot production shipments, recover lost today. we we if So with

high mean, appliances, full mean, Even demand I at in of the I HVAC, automobile, said, industry all here. electronics, capacity only The home remarks, sectors, the mean, at are problems I in semiconductors. they and running I but are the forward, in Mexico. to level not very improve, sectors it’s very the all level main high very, in also starting that’s that, a customers. they mean, customers in I thing. mean, as industrial of industrial are of – my with chat the I back high of of with Construction demand capacity, think, this Mexico, a running we auto think the so is I full side the at mean, but production, at Mexico. the constraint, because all driver is going stoppage our I very everything the all are So I

Thiago Lofiego

dynamic. I’m of seeing But asking. different If to demand the sorry the to industries, We’re interrupt. that Brazil? that in pandemic? on restocking that situation very do I’m because That’s created across I the you attribute of that How much cycle may, strong why

So in if other regions. you happening that’s think also Mexico and

Máximo Vedoya

I think happening in don’t Mexico. it’s

intermediates. or service North their see don’t I in I people Mexico, think lot see don’t – much houses. that new to in spending a I stock houses in that in really we mean, stuff don’t all the a much of more have that improvements distributors the in stocking final mean are consumption and be I clear, America. they in goods think We in high Mexico. centers stock don’t distributors or have U.S. are

as shipments. in real that talk. a not It’s lot I’m high sector. it’s in increase pandemic, demand least the it’s as since of an it not improving. again, in industrial industrial saying demand a are much industrial the not seeing seeing is sector. not improving the not In and not but it’s at the part But as high I’m our that So there construction, the

Thiago Lofiego

Understood.

Máximo Vedoya

this with clear. I hope it’s

Thiago Lofiego

Yeah.

Máximo Vedoya

I seeing others it not. in Argentina increased. yes, is? but to lot how Slab things, hot are all of prices the honest. not the And I also in mean, a some mean, increasing market, in we in stock that again, part, be have

prices this the I with increased coil, price think it’s not it a market not much, also of in I with I only is as think, but prices. clearly, slab $X,XXX mean, the I rolled slab hot not market. U.S., mean, increased the

it’s think market, a I that slabs, all thing particularly. the of of that not So

Thiago Lofiego

you steel Do demand mismatch integrated So some, think started capacity to… and between and a supply utilization? the reduce market, they is basically, meaning slab there producers, basically

Máximo Vedoya

North in America… Well,

Thiago Lofiego

…point, yeah, ahead. go

Máximo Vedoya

of always the North That’s slabs. there’s in for Yeah, a lack America, sure. supply of

which now, there’s Before everything one the them. are of slabs, mean, they probably Cárdenas, producer pandemic, Lázaro not shipping and even clearly except I to

thing America that lack in North normally. the the a mean, main I which I the producing So, rest and Russia, of pandemic today. the mean, I economy, slabs, they it’s are reality. of market, I the happening and North mean, think that that’s prior slabs happens, slabs America suppliers X Brazil In of to whole are – it’s

Thiago Lofiego

a faster is Yeah, than the created And meant, slab what Máximo, demand is mismatch. production capacity steel like I than just rolled recovered have recovering. that might

while have slab used supplied slabs So, market, stabilizes they their in now are steelmakers to their that buying internally, the own production. these

Máximo Vedoya

that. be am that To not I not am seeing seeing I honest. yet.

Thiago Lofiego

Okay.

Máximo Vedoya

be not on I’m not a the slab but it’s it shouldn’t impact happening, saying that market. huge

Thiago Lofiego

you, right. all Okay, Thank Máximo.

Máximo Vedoya

You’re welcome.

Operator

comes And from your Jonathan next Brandt HSBC. question from

Your line is open.

Jonathan Brandt

taking allocation. Hi, just good to capital afternoon. I my good for wanted back morning, question. Thanks return to

the ore and more So, it study fit fair Máximo, looking iron at expectation say possible is projects, Or things for some Is that. to be be you’re Would going you’re then about you. just are as Is wondering, steel something it I’m how growth does how organic Thank sort And other incremental you that typically forward? of few the wondering to at there moment. secondly, there? to iron of relates under or at consideration? possibilities a is in sort under into would increase sell M&A different just you any given mentioned have also third capacity? that the I’m to that it internal of just of this sort moment. more production be the you price? thinking that parties ore high of the it’ll

Máximo Vedoya

was, think, analyze honest. you through M&A. we Jon. I made Capital we be acquisitions. always And history our both was I part record, for organic and mean, our mean, both see M&A M&A? We you, there to look have or growth, I allocation, Thank to of

possible. is that So

don’t. said, well, you concrete, we something If no, you have

projects years we sure. know, Colorada. as organic analyzing are growth Peña the are we investment in finished for you of know couple of ago – some our a And I will

that. not substantial iron for in ore. have we opportunities. the have I to is We mean, increase iron some opportunities more we to look a going mean, But in way still I yet. big production, are ore but

Jonathan Brandt

you. Thank good. very Okay,

Máximo Vedoya

Thank you, Jon.

Operator

At I’ll call Thank remarks. back I have for to no closing the time, turn this questions. you. the further presenters over

Máximo Vedoya

you of for stay been have any has call very Ternium. hope all and comments, you for Thank attending you please additional if interest your Thank much to Okay. question in please. this very safe And conference, much contact. or I useful. this you

Operator

will This call. everyone. you, conclude today’s Thank conference

now may You disconnect.