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Ternium (TX)

Participants
Sebastian Marti Investor Relations & Compliance Director
Máximo Vedoya Chief Executive Officer
Pablo Brizzio Chief Financial Officer
Caio Greiner BTG Pactual
Jonathan Brandt HSBC
Thiago Lofiego Bradesco BBI
Carlos De Alba Morgan Stanley
Alex Hacking Citi
Lucas Yang JPMorgan
Call transcript
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Operator

Good morning. My name is Emma and I will be your conference operator today. At this time I would like to welcome everyone to the Ternium Third Quarter 2021 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks there will be a question-and-answer session. you your Marti, Sebastian Instructions] may conference. begin [Operator

Sebastian Marti

for today. I'm My morning, Director. Global and is us you thank Senior Compliance and Good name joining Sebastian Relations and Investor Ternium's Marti

financial to is call that results Turning to yesterday's for third XXXX. complementary quarter the presentation. This of release

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

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

will reconciled measures Mr. in With non-IFRS over the find to IFRS any press call the that release You reference measures to comparable yesterday. issued turn the directly financial also I'll Vedoya. most to

Máximo Vedoya

Thank a the and results headed quarter expected a for Ternium performance third today. we in quarter, year margins the for reported with all you, strong joining to thank EBITDA net income. a outstanding sales also and With XXXX. Sebastian are record in fourth record us you

and from conditions XXX the US in Europe moderating. lead need Let's Europe. this normalizing. the specified business announced, tonnage including benchmark tariffs the and although low levels be tight, European US environment, there In now markets. subject the steel environment inventories steel agreement high market an also development at melted continue tanks levels. relatively in review steel certain the to to and to steel remain the recent for this steels are slowly to in increasing be relatively but are is maximum currently state The remains situation USMCA poured the a global Steel at of to and US And our be signs relieve Section continues healthy. are The imports some a

steel trade going to that expect region like Steel believe saw industrial goods continue markets. although us in several point demand wide in certain to the sustain down view. have we prices There steady, automotive in continue in begin a reach XXXX. having to for in into to especially are some and we industries this good supply is disruptions. are lows the XXXX. Global them We Backlog should reasons back the the demand following significant levels steel help chain don't months, at

and carbon to near-shoring We manufacturing capacity is country's efforts steel the are seeing USMCA emission. China to the decreasing of control line region production in in with

normalization supply-demand after ahead, XXXX in Looking global a to tight gradually the steel in of expect demand environment steady and market XXXX, chains. we supply a steel steel with balance

review to to high different showing exception very is production different This from this now main the the our from environments. On OEMs preventing the to The in affected industries is third semiconductor continued to the business is -- quarter country the market of utilization product of their only industrial move Mexican two working side, of disruptions. significantly chain end industry strong by The utilizing supply utilization automotive full meet demand. which be capacity. made Let's up markets. steel market the level at a is in manufacturing currently one

to is. the in industrial pre-pandemic as construction yet continues is end up of it sector Mexican levels that similar to in industrial broadly weaken. been This market in activity positive production to to year. Opposite outdoor XXXX sector industry Mexico environment sector the the that being So able to possible has last this not recover

related business drop-downs restocking currently sectors normal the steel for to level. the automotive Argentina After lengthy XX the covenant last best-performing to chain in healthy process a pretty Going been are inventories months. in value The industry, Argentina, back market has industry this are automotive construction. following shipments in in now the and

We February, the the like pending a suffer with issues quarter expect process these make main by seasonally regarding depend our intensity the Argentina from stable volumes Nevertheless, to its Activity are continues addressed. some COX quarter. lower to a now capacity the achieve regarding initiatives its target to on debt needed in to main XX% of on XXXX Ternium's to to renegotiate fourth variables December. shipments some midterm initiatives Argentina rate the significant XXXX this. relatively reduce its together during IMF. comment see In uncertainty I with and quick we in announced sustainability with by would will how macroeconomic in by

of capture for initiatives not of is Mexico. expansion carbon One is our dioxide in facilities This us. capacity in these the new

secular and industries capture favoring industries clearly emissions COX the expect we and COX to After capture increase of even the more. actually we been have for will usage carbon The first and and carbon September, expansion, of our is and its capture the our DRI a there. in with second models very the out in of capacity avoiding of this represents capacity. emission capture Monterrey in that program In of facilities XX,XXX in approximately at models among in XXX,XXX facility Puebla greenest We years. different These usage the stage capturing Monterrey COX annual our increase economy. are in the an the Monterrey world three this new and COX this few of expansion the making models many kind have tons XX% DRI we the to This they and of have finished between to with system stage carbon of are sold Puebla. new

iron this development field develop MOU steelmaking supplier signature solutions. the in to call is with Another last ore our decarbonizing since main an conference Vale, our of jointly

women's products Tecnored other ore HYL with for analyzing located low metalic a Vale Ternium's different produce like at talent of gender equality. to carbon work an iron of environment differences. ESG be received empowerment our inclusion UN the two Ternium we ricketing iron a promotes footprint Also plans We September growing to our across in from program, valuing are this important and that to technologies using signatory We facility and attracts agenda. all and genders, which application develop create as ore reduction. to from part individual confirmation Ternium our are Diversity and and Brazil alternatives workplace principle, in topics Women nationalities plants generation, Technology,

and generation Another quarter far Board the during and an payment this positive a so in underscores payment company annual has a achieved Director long-term this strong twice dividend the commitment announcement to of This in reflects in transition development cash It dividend the is to environment advance very marks year. our the to an schedule decision payment was change an of our positive Ternium's ADS. I interim $X.XX business per in of with believe a dividend also the development shareholders. from that payment final return a our payment is year the May. significant schedule November

at good government employees last this countries different of are Before COVID-XX Despite a in finishing The infections one well make Ternium. I moment And progressed a applying vaccination vaccinated. in where program status almost the decrease and all the continue have the -- are has XX% America COVID rate sanitary at XX% my dose received news, facilities. we operations. this COVID-XX of strict Ternium's remarks, in among the new reflecting we would like Active of very month. Latin least in of has low, in over the currently our personnel about quick protocols cases fully to pandemic update Ternium's vaccine

I will and with Okay. presentation. Pablo let here Pablo. in go webcast Pablo? quarter. go ahead the over our stop performance third please the

Operator

is and the Ladies gentlemen, this operator.

technical difficulties. having currently are We

that on resume music Until shortly. will Thank time, call hold. lines for placed Difficulty] your will patience. your Your you [Technical be

Operator

the and will we The delay. Ladies resume. apologies gentlemen, conference for now

Pablo Brizzio

Okay.

that. about Sorry

back here. are We

discuss So, strong the strongest to performance for let of expectations for actually of set history. results, good company's quarter everybody. morning a this me delivered Ternium and the very in And the quarter year. last the third the Ternium's

expects the achieve point the company in results solid have should fourth to but very be the We high a quarter very again. starting yet here,

the XX% $X.XX You representing EBITDA can ton $X.X third $XXX per reaching EBITDA of the $X.X page in three billion income per and the webcast ADS. or billion margin quarter, see net presentations reaching EBITDA and on is

the by an For offset shipments remaining we try fourth in to increase in partially quarter, expect increase in per a ton, per cost a decrease revenue EBITDA With this stable ton. should quarter-over-quarter. slight sequential relatively

X% next due and quarter. in we region, presentation. the in Let's In analyze tons the shipments shipments the shipments and In in stable. relatively the see to remained details third-party consolidate number try the second are to you steel steel the webcast sequential to sequentially higher the in combined in in the slightly basis, Mexico southern quarter. finished next On sales X% steel starting page in higher slab is developments can million region increased X.X year-over-year. that with quarter five, more as volume decreased of third market mainly this same shipments as Ternium the This shipments other page, these third of in a

increase Looking into other year-end this offset relative and the lower seasonality finished of in third-parties to affected market in remain by by sales Argentina to region at Mexico, fourth quarter, stable part lower and in the slabs we with shipments of slight expect steel shipments the XXXX.

prices market the revenue prices quarter, in trend company's contract in has steel in been steel in spot and in markets again year expected we way come to in to uniform steel Mexico let's per the Mexico region outward are the main increase levels. Now, record US relatively this were witnessed across Changes Russian relaxed. their reflecting ton Realized prices as are in fourth the high prices.

realized net The the bottom now in in increase high quarter. stable to a net combination sales and $X.X steel sales in left XX% of billion prices sequential Turning in to higher resulted third shipments a the record chart.

chart increase Moving and review net behind prices, offset prices to main in and in on the the increased on sequentially higher quarterly purchase next mainly raw income. now material an it increase drivers EBITDA labs EBITDA partially costs. shows sequential by cost higher realized reflecting page, The that ton the top per let's

the quarter in inventories. to price the further expect through ton increase as company's We per materials purchase higher a cost fourth flow raw slabs and in continue of

record-high income, partially slight decrease start increase at the shows are the as the quarter. sequential a from the my lead cost in in results increase the participation one-off in The EBITDA due third to fourth to the you mentioned of in a was lower presentation, by in per below had and chart revenue our Usiminas which income in second operating net gain ton quarter in offset quarter. expected to I As remember

period nine-month Turning the the as the the the record drivers nine months third were page same EBITDA in same for now to but the of changes X, quarter. the The can see level high of we year. in

net drivers in of the For record-high income the main increase in Usiminas. operating earnings were income equity and

this -- after third Now in million, last review the operations cash working finish sheet a in balance in was capital. the even and finish and increase page, quarterly flow our presentation performance. the Cash let's flow from $XXX significant to quarter

the related a of in slight ramp-up result see higher also of result inventory was can just in increase days in volume receivables you higher in rolling such capital of factors a raw with to the of mill selling as working increased right As sales. of higher chart, costs, new the increase as steel a and Pesqueria. combination in hot upper part price mainly Trade the material

iron the was in result Regarding prices the of in ore the Ternium commercial decrease mainly decrease in Brasil. it debt

rolling steel capital, in but third nowhere advances we prices the to forward, process, in in investments see ramp-up new near quarter. registered hot some high mill be the Looking and in the its Pesqueria continue we working figures should

as Regarding quarter. cash cash $XXX of $XXX after in company of free of This the of led end to flow, million position a September. million capital the the expenditure turns million generated $XXX net

XXth. payable ADS As proposed take the to strength of shareholders Board the million, of XXth and the consideration $X.XX position Directors into performance on November $XXX record on November an equivalent mentioned interim of per Maximo company's as to of payment have financial dividend

we Once attention. again, time very your With Okay. prepared remarks. and much for conclude thank our this, you

ready Q&A questions. session. your now are with We to Please operator, take proceed the

Operator

Pactual. Your Instructions] BTG first with question from [Operator the of comes line Caio Greiner

now is line Your open.

Caio Greiner

you. Good morning. Thank

first my outlook. your on So question

prices, I on And elaborate bit expect visibility coming for seeing EBITDA terms you in quarter. wanted have on, So you On the also a quarter? costs is I quarter. the cost you're you shipments the more for And mentioned the materially on results. prices other over spot and and fourth expect for mentioned realized that. rare driving for the side based this you up commercial you And through of prices ore slightly hand to lower understand materials of But do what would already the a rise the quarter. iron what the third contracts. assume costs. have cost coal mostly your on flowing raw adjustment I the you fourth you do the just good dropping on prices on other side, prices But inflation

that this my question, if may, I So you a some And at second provide more ramping would Pesqueria. has please equation helpful. very if the project mentioned been pace. slower details guys could on you mean, on be I up

of to been if what that project, for the with update in over maybe you you see wanted have sharing shipments terms can last guys just of you I So equation us expect quarter. shipments the incremental that

for in expect the share would much very be gentleman. of what maybe helpful. terms fourth Thank that and XXXX Pesqueria from quarter can if you So, you very you shipments incremental for

Máximo Vedoya

Thank for Caio, your questions. you,

try first me answer to questions. Let your

in the cost slabs, the increase iron because you carbon, from the which and ore of dramatically. decreasing the of Regarding from increased cost cost, by slabs, the compensate said is it as is purchases

But for the the each quarter higher other. quarter. third slabs were were fourth for both prices we the those So than compensate buying

them you market. the from some of As ship in our part remember, we others, Brazil but we operation, slabs buy the

the And that's be prices. commercial there the you higher, industrial prices of CRU, contract as the cost. in in example, a saw going prices last are North market, market, in So reset the weeks. the of in bit American for you it the as increase market the Practically, is, decreased prices know, of as and you in prices because the little the two the are spot to said,

of markets. expect prices, the market, least those update. that Mexican other decrease Pesqueria So from not we at slow the for

setback of issues. natural was we because I okay. was for equipment gas this be the honest, ramp-up was in but ready delay unforeseen transportation of for permission the To Our ramp-up we had. Pesqueria and facility this authorization now the plan mean running, again have But the now is -- we the of the curve is curve. are

additional us XXXX is to tons for is going facility the that of volume. X X.X million expectation and between Our provide

facility, Some of that imports numbers, Tenigal which is volume the But before that going Caio. to are those the probably material.

Pablo Brizzio

Caio, clarify, -- are volume referring to Just we to XXXX

Máximo Vedoya

year. XXXX, yes. From the

Caio Greiner

and Pablo. Understood. you very great. Thank much That's Okay. Máximo

Operator

HSBC. Your Jonathan line from the next question of comes with Brandt

is now Your line open.

Jonathan Brandt

relates Hi. guess to Good auto morning, pricing gentlemen. My and first question I demand.

auto you're steel to, how could have second they have that come Mexican And you that the given of sort past down wasn't supply-demand what And facilities. could weeks environment further you been think US why your demand at loosening coming down? natural in much been I'm you great. you steel gas you in in that for view, that is is think quantify expectation if the So mentioned few what hoping a of you've the bit relates just the seeing prices XXXX? this seeing? the your do question over My least and the

to as be of you allow the then quick understand, to the much you. much spot that gas on on change Could to increase Any just base? Thank supposed why to give increase will the that change just of policy just sort annual one or the me, in or of decided market, decided data we've around could payment. seen Are why elaborate third of would price just policy cost If me how you to you a dividend semiannual? this contracts, the natural that you are could help you'd you appreciated. how spot? sort from if Board And your you

Máximo Vedoya

our natural contracts simple. lot start gas natural of always the because a for contracts on Well the very that with all we have Centrica. but All questions. of the it's volume gas Jonathan. you, the -- I'll Thank based are

mention the So part forgot you, -- question. not increase Jonathan. yes, the cost in our to first that little In in we can is a with I bit That but suffered Thank Centrica, the also luck, of recap on cost. in LNG. in probably

was think like suffered number and of because was but Mexico, in much in ton I the we industry, quarter. quarter. that's the chips. automotive more almost in the per This automotive the this was every than quarter because one bigger third Second, And units thought. I production XXX,XXX the the of the what third mean XX,XXX -- affection second -- month than this month

of not starting that to last month So even this But surprise a better Things to little makers what this much hearing three months before bit they market, that for first, And still we we quarter in are little was honest, will come the normalizing. is earlier. for was seeing be of a normalization most are in the the year. are automotive few Mexico. as the expected get second

we the in are this an impact. yes numbers some an have could to So XX,XXX price from is these of are because storage. mean XXX,XXX monthly I numbers. have The And volume this these on effect also,

very think I general. prices question the was -- in I I about of can well. another don't Jonathan remember you steel

Jonathan Brandt

Correct. prices I'm the your the wondering, of US of what auto just with steel issues chips? industry sort is expectation given

Máximo Vedoya

repeat think that are level Well, automotive in the at prices. it's prices amount chips that the this US of I And again I our industry one very a calls. at in US high an the is don't factor -- level. more the in a affecting factors affect of enormous most mean so we conference

times pre-pandemic in clearly, four drivers from to away higher price lead it's levels. of weeks, increasing Inventories are Normal or are imports away couple high seven a between months weeks. are capacity. three but is and the that to times and hot-rolled from were mean, steel even they far back far tell US weeks is are capacity is pre-pandemic weeks than than can that shorter Steel the mean, going decrease. country think It much ago. the XX lead set now it was. five of still yet. the are I a coils that is I back but of normalized, I or I

And some next months. new it's board capacity, coming couple of in the on

-- by in price XX%. drivers I mean increase you in mean, doesn't a that drivers Mexico more number. said to going I demand that good. by US increase. demand Brazil the if Other year the by region are That's huge decrease month. very, this on countries those XX%. December by the very in that that But going to XX%. even speak is So hand, other is to see next consumption This is the is the the

We continue supply in and are I lot much sectors very know chains, chip cars. Disruption I produce problem also the steel increasing, And are I are demand year. think XXXX in so less to lot this if of resolved seeing move of And that unsatisfied still the importing next of lot kind global there costs is a there. companies of a are in consumers -- thinking freight of those steel. mean, to is demand even more for going it's more expensive getting a

the see dynamics going that healthy heard, that XXXX. said, production, we production. as Jonathan market. China that think, was that this which So, always huge I factor XX the steel decrease, changed to I going we mean, demand and is, have factors, continue That's a XXX and are of September several almost to million also was And tons. one, you in China factors so other factor I tons, we think, decrease million as another two a in to is a produced the May, in

high answer I as time. because prices not I speed, know going Jonathan. I'm correct move they're things these moving telling, question but little I said of the to or take slowly a bit all down, if are of at don't So, down, I slowly

Jonathan Brandt

Thank very perfect. that's No, much. you

Máximo Vedoya

dividend. answer ask Pablo question the the So, I of to

Pablo Brizzio

Yes. Jonathan. Okay. Hi, Good.

of after conference I the since move of of at flow and think during strong the taken the is call Ternium Board, the position commented different by this So this as beginning XXXX was increasing level dividend reflecting that the company. the generation move of results free the a cash with level of the and is natural paid new XXXX

quarter -- or is in level then dividend new And so dividend dividend is this of portion into sustaining the advance, of of it or consider in interim a is way we will proposed an natural which be one of February. this during decided the that divided that order in

by So portion the decided it's sustaining company then of dividend advance or and into full to confirmation way the new clearly as two be that full of an announced knowing February. as this a valued in the level interim dividend dividend

Jonathan Brandt

Okay.

So split as this look in equally at half. we shouldn't just

some the it? So X.X% be for just it won't whole It's of portion up year.

Pablo Brizzio

Exactly. Yeah.

a will May, by then one. It's as shouldn't Directors of the and meeting and the the of discussed just take will portion be dividend April be approved shareholders or in You then half. analyzed a the by that Board May this in

So right. you're yes,

Jonathan Brandt

Perfect. Thank you gentlemen. very much

Operator

question Thiago next of comes BBI. Bradesco from Your line from Lofiego the

line is now open. Your

Thiago Lofiego

Two that. Two you. within Thank Back the questions on everyone. Good question. morning, questions. dividend

are why guys the margins not positive side still if healthy. you you and down, Steel the So an for net doing position more the prices outlook cash aggressive are pretty are job. going given potentially dividend excellent steel are business? on your Even

why you be average not would a I'm paid on of to within any? aggressive question the the it or front? guys be should se? the sure. expect more what And impact And What you. payout payout? that terms that to the same then Thank will XX% expecting on on about the you've think And XX%? something reasonable think the you're per level, dividend US, not my that the a what like of question Historically, we SXXX. Europe in XX% next within is terms more do other steps if XX% So of is impact in from SXXX

Maximo Vedoya

one. second the I'll Thank you, Tiago. start with

impact already a mean, seeing Europe the materials arrangement. this I importing are the XX% was to exporting or We paying tariff. lot from not of US

very numbers the are think similar. I

much, Europe going So the I from to volume more US. think that much don't is

bit going of pay XX%. a are we prices, what think don't now have see to increases so they I is little the Europe to probably that that

our little always pay dividend. a making interest to that paid forward this we in But don't And a answer was I of now least the thought are aggressive within interim, it. part Pablo portion because May. that we Well, second year. once the for I a of were ask bit of we kind policy -- Second we the to know answer, at that dividend on

Pablo Brizzio

Okay. Yeah.

long yield showed the dividend normal the Maximo. or right the sustained what you increase during to to The showing the to dividend mentioned that this exactly XXXX. me are we run sustaining in Let of is continue increase in the is dividend now payment understand dividend Clearly, not year with are reflect the year showing company May a this that specific is we is long to probably in a of new number an or in with reflecting, but clearly, results is you add that probably Tiago. if that doing will the be dividend same, want today a to XXXX. company And the will numbers level the of very new has reflect in that payment. new been aggressive more a the similar We this what the pick the up And level shareholders. the dividend shareholders. return this last And we payment are year company from we distribution returning the run paid dividend, payout we basically that on

run the payments the payout dividend sustained. more be course in in as increased showing you of and understand have the are aggressive payment, that long where ratio company the should dividend be that always the can on but general, we of the company sustained. is And So, results

Thiago Lofiego

should modeling XX%. Is Okay normalize guys? assume into would above XX% for ratio as fair you Pablo fair? purposes I then a we is assume normal to so the it for XXXX payout if that the ratio be And to which payout we may looking model, continue the

Pablo Brizzio

would year I run think numbers probably you be proposing in to long the or extraordinary know be the this level this different of we the in will look be you you dividend comparison the numbers you company. the you I year history -- normalized results of take will be probably average that yield. the because basically And in general if in the see the difference. will that will be we XXXX was probably a to need that to again, will vote. you at dividend is next mean have of this And -- you the pay this X% our But a company, that in there

Thiago Lofiego

Pablo, Máximo. Okay. thank All right, you thank you

Pablo Brizzio

Thiago. Thank you,

Operator

comes from with line the Stanley. Alba De Morgan question next of Carlos Your

Your open. is line

Carlos De Alba

just you much. follow. Thank very I to want

clarify dividend So is ratio than first a will dividend yield? the then question. just based to policy or on my percentage That a payout more be

owns if for this if value. these what different in them Thank sometimes all are projects, timing potentially timing? the next more and of questions, out reduce company Brazil, that I is, then all to you that next of any pieces gas may put the to could terms the question investing year? who plans less the once. apologize or structure of adding I on the And CapEx and finally are prices you at to there value but just I'll profitability question if and experiencing levels any the given corporate the comment making it more convoluted are and comment the as could to The company to second The you of therefore coal in on natural material potential moving the restructure coking you to slab of easy transparent for and corporate understand, structure I has or and currency? raw change, improve, third easy costs potential If then mean market terms and the is And the next company? you year big in potential projects sometimes for the Could cost expanding comment cost technology you. on the to as update improving capacity trying always what a modify

Maximo Vedoya

Carlos. much, very you Thank

last me, which is you will If allow with very one, interesting. the I start

know the to in ramp-up more any problems we opportunities you. capacity, – to or like, Mexico you we I what? a picking going call, galvanized rolling as mill of you're to I have in going a don't Mexico, ups As me for months as and are lot I I – of in you ask last US. mean, us particularly for an are additional projects. am the analyzing like in we are are cold all line should that open support the two what now always And very things but we process, because in we looking that of than say said conference new are south a said, big expected, things where the hot-rolling in in other the the these mill announce, platform are which have There took Mexico. new of we also growth Metal the Building the segment those in

should we our we pre-painting about, mentioned the six me no. But furnace And are increase compliance going to or USMCA I so have you asked call, I blast to also, years. was going capacity be we it think and And conference in last if be in there.

capacity, we we where. going So, to to require upstream expand how are analyzing our and are today

our all are return opportunities are And be investments. things think position in on right now, good we that, analyzing a these going strengthen that, strategic to will market. So I the it's

now other are things dividend the So can part Pablo, question, you are them? the looking at the Carlos. for And we right those of answer

Pablo Brizzio

asked CapEx. to No the on Carlos, issues. Sure. of amount that just you complement And one on Yeah.

we numbers, mentioning, is are same which We because as studying keeping the our are are moves. exactly still Maximo

million new analyzing to So of we Maximo exactly this ones mentioned that year be be as to the $XXX any that close continuously without we for are will CapEx same. the and CapEx,

first, clarify, we company your not as recent that a dividend have let policy. into me go do questions, a So

very we that from not you sustaining the which general, have company. and with can and is and to or in But payout I look track we have the of important reflect the And meeting. shareholders to and higher well, be payment Directors, What exactly, the some we around that, will and a you run. change we you lower need the doing by changes dividend that, tell clear record a results what a a very proposal have great or long it's a it's moving So with a increases have as approved probably, of not dividend answering again, But don't years, result, of Board where again, with certain then when this the ratio XX% have exactly, questions, on defined from by around result Tiago's was levels. the we're is doing I the are at because you number. policy

a asked very you attention, lot we we have you pay at that have we companies. to in we done corporate reduced the of of Ternium, and again structure. can which an something level that corporate relationship things acquisition simplify question at if we Whenever try much other as the and have as The we history was significant to is of the the look structure, intermediate

in it is that order do reasonable. corporate because And if still our to -- dependent this possible includes at to other some have done. us some are in had for a we only issue moment don't do, it Unfortunately, that was that specifically we this not simplify fully things try chance to there have always to will a if is plan already do everything we chance we structure. in We And the do that it, it's have is to if mind.

as missing we clearly is want of have a as and still to a do that, do course, it something soon simplification can corporate it finalize to that to chance are do part We the structure. we our and of we

the a the one the and of question because Brazil -- Brazil. extremely last level markets. last also regarding the numbers correction of see prices on other slabs is has pricing of well in Clearly, on the margins prices contributing which we that was a last were of the reflecting been to in month. There quarters the So Ternium in slabs the

producing Now, Brazil the of to positive. also And returning more Máximo the during questions, will production quite answers be to level. slabs normalized the a to mostly of the different needs. and supplying be mentioned during of as opening internal dedicated continues Ternium remarks margins again its And our

So, you to that's that why finished our you different we some to product. mentioning talking be will parties sales were plan years. of slabs compensated by reduction in of will That that original -- shipments was as from know in third see

Carlos De Alba

you. Thank

on Ternium question final Brazil. one Just

in of this past mentioned the ton. it or normalized that still level long-term about the Is has applies moved today the $XX level per think was EBITDA profitability higher? something I normal

Pablo Brizzio

for general EBITDA. of much looking this right In numbers ton days typical because was per was more you us, that having very much is -- than it's because number higher higher Fortunately the you Brazil margin are were producer. of it of the know $XX a is as this the these at not the number. than for that And we number slab beginning

bit, pricing I better than expectation, think this a was repeat Máximo continue to because enter we is that will that want improves least, one. year but this But at and than saying into to we adjusting be will sustain expected. understand at will little a margins next higher environment -- and have level course, that don't of what our I

Carlos De Alba

you Thank much. very

Máximo Vedoya

Thank you, Carlos.

Operator

of call comes the with next line from Your Hacking Alex Citi.

now is line open. Your

Alex Hacking

Yes, I the good Máximo questions. morning appreciate and Pablo.

conference mills question backwardation. contracts considering this A is of which this year first of the obviously And rolling are that steel couple effects a around is the this for their year. than HRC targeting my reason is is forward realize And even in curve the higher calls higher steel So, pricing. should that the steep prices they on next lagged quarter US over.

could So are you. you in as forward lagged something you I this that on could year the realistic be prices Ternium for roll lag actually effect I of that remind pricing. But And for -- you contracts? of well, particularly any to over better contracts you even Ternium, be contracts mean know as could I but annual how give next US don't Thank is because you give don't us guidance just exposed Mexico? know

Máximo Vedoya

our quarterly in But a months. you every contracts be are contracts the a customers. they A have we Alex. annual contracts question. main is lot -- saying our contracts. answer. contracts, have mean six are are we you, very right. that to are don't I based What competitors annually lot US basis or To industrial The market. base I Thank producers industrial of And of good honest, have or don't our the try in

for as be are are to months true quarter six than contracts for going contracts contracts the the to -- our fourth most going that year are to probably, quarter fourth it's are -- contracts in that going depend the this we in the of the quarter general huge in is price a amount of based, of second what it quarterly ones of next are the quarter the year. So, of year. that to would our But higher higher. have And going quarter first next be of next third for have

as is it's not strong -- true, but I probably again, think. it's it US in the So as

Alex Hacking

Okay, thanks.

we So be should thinking…

Máximo Vedoya

honest, contracts to months. three I prefer have be every To

Alex Hacking

Okay.

should months six we to three be thinking like lags. of So more

Máximo Vedoya

Exactly.

Alex Hacking

is which actually scrap. bit around random my is then question And Okay. second a prime

good it like, a know to looking have Because seem source a a would just manufacturing is you first-mover scrap, Carlos' big your mill quite know new prime mentioned scrap, you point, to maybe You is something build-out Thank I'm in base, get prime would Mexico market prime getting I like of you people going particularly automotive. of that. you'll at? in think this is debate scrap. -- at right? advantage for Texas steel US But access add which Mexico spirit have one to you. this Is the be that Ternium the could to in So in you about that looking right answer capacity. the of sure to seem that that's looking is questions. some tight. now upstream some It

Máximo Vedoya

you the we at are things This of Alex, also. one that are looking completely right. is

Alex Hacking

Thanks. Okay.

Operator

Your next comes the Yang of from question Lucas line with JPMorgan.

now is Your line open.

Lucas Yang

have for Thank my ones. I good questions. two Hi, taking you morning. quick

given second for more would consider be, the outlook question you through be…. would next one year? balanced First would prices like hedging And

Máximo Vedoya

Sorry Lucas, question. couldn't hear the I first

Lucas Yang

around prices compares Thanks. ton Would the the expectations? per your steel mid-XXXX, right? consider you future curve one And by $X,XXX prices to How is next this does would hedging second year? be for Sure. that pointing to curve

Pablo Brizzio

planning an at the prices. we you prices can part price regular not in think for – to the are materials material. But hedged Maximo take question, we you position. we In explained, in on structure levels. of have an the natural is that still but the further And consider then know hedge example, and to this we Ternium, me hedging course, we increase we think in different kind that Mexico of the product. to we exposed that again, finished of have, let of we Maximo, good a a is the are are fully we as on that we have, And of And this of we beyond raw are are recall, general that. what in different of I we that exposed first advantage the and is of the gas, this today. reflected raw yielding, are increase Okay. in Because -- our have let -- structure the natural

We this level infra we we have think don't to to got this of that to in material course, past moment in hedging of this go strategies are the but in hedging this strategies or relationship now again. back

Máximo Vedoya

what Lucas, was And -- Lucas sorry. second so the question?

Lucas Yang

how the the your pointing to is mid per ton like expectations? future curve Yeah, to curve next year, $X,XXX compares around does prices by

Máximo Vedoya

not those Well, what I Lucas about seeing prices, mean I said low. very, think without level. are am I very -- to prices I going that down

Lucas Yang

Okay. Very clear.

Operator

may Maximo, you. the call section. turn you question-and-answer today's to -- I back concludes That

Máximo Vedoya

Please any in back in you us, any touch and see Have in day for everyone interest if and interest -- a your you comments, keep contact and today. Thank nice have additional Okay. questions. months. we participation three you