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Ternium (TX)

Participants
Sebastian Marti Global Investor Relations & Compliance Senior Director
Maximo Vedoya Chief Executive Officer
Pablo Brizzio Chief Financial Officer
Caio Greiner BTG Pactual
Carlos De Alba Morgan Stanley
Thiago Lofiego Banco Bradesco
Alfonso Salazar Scotiabank
Call transcript
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Operator

Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the Ternium First Quarter 2022 Results Conference Call. [Operator Instructions] Sebastian Marti, you may begin your conference.

Sebastian Marti

Thank you. you us thank and morning for today. joining Good I'm Investor Relations name is Compliance Global and Marti My and Ternium's Senior Director. its Ternium of yesterday financial the for released first XXXX. results quarter complementary presentation. to This call is that

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

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

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

Maximo Vedoya

conflict iron, market inputs and to cost both in particularly the mention are tragedy hot-rolled creating raw of environment morning Ukraine as significantly of as joining and of first relevant you conflict they this the countries remained Good steel in PCI, at business conference these thank call the materials, steel environment, an Ukrainia and a more high Shipments push as humanitarian the volatile to not quarter and Ternium Sebastián. set were and results strong recovering are today. related you, consequence, slabs a year. us the affected. international Thank of sanctions everyone trade for against steel decreased margins to participants and of these of prices. Russia, much Big very of in a steel created. February, expected, consequent a the global In brought steel Since invasion our result the levels. scarcity although last of changed already wave showed disruptions in even

international and first the steel disruptions sharp of relatively by the levels. at a took a stabilized result up supply steel turn quarter prices declining recently markets, of As in these high previously end the

the quarter now scenario. this currently restocking review somewhat year. in second expect In increasing the of our although market markets in in Let's the market, main is in shipments remains this conditions to development it to Mexico, in a response There these commercial new latest continue slow. we the in new

market industry hand, hot the in On industrial growing by chain market healthy continued to we support aided in this demand down the order the continues strip suffer be new and expect from the creating steel to auto higher to participation. market The that increasing our supply mill road. other Pesqueria, should continue backlogs disruptions,

new during seeing now The expected the its our center. portfolio, in in expansion our in through in industry We better value-added hot of is in with products and with in our more recovery level announced broaden should of the higher new and the our progressing a finishing Mexico as state rolling with as second hot serve new we half peak coil lines. push-pull year some mid-XXXX. new program line, second positive already program renewable are investment the paint expectation startup a ramp-up -- as to of are in consists working certifying of of the in operation us on announced in first half already we a the mill Mexico. galvanized continue This The orders. rolling this new cold facility for energy line industries Pesqueria automotive, will offered Shreveport expected customers To home program The a Pesqueria logistics investment Louisiana, help as on we industrial and of complement and start-up customers for leading capacity strip gradually our facility different appliance industrial a the adjusting at production. recently coating and new our product by our the a mill and new to hot-dip U.S. a of supplier position adds a support in line the steel mill, XXXX and expected in

turn me Argentina. now Let to

from sector. bit should has what Argentine For industry, next demand few and increase can high a Currently, been months, some the see we auto of healthy quarter the for second time one, in now, degree the steel construction, a agribusiness market very and uncertainty remains stable has despite in quarter. a Based changed. last energy on the shipments the this the not

related some make demand We'd to a and affect factors However, situation quick Ternium macro unstable there at that to steel in could sustainability ongoing regarding like projects. comment now mostly are the country. further on, our the

on We are structuring efforts for by inquiry month, attained human and rights; our Early was This EcoVadis safety Association. this is procurement. in recognition industry is our call, an the from largest a fourth The was for the our labor row. customers a and top last management also ESG a our obtained excellence initiatives. and X ESG selected health safety development since again initiative our Steel. than of committed recognized participate a topics: and on rating customers. the for in as once to this Also industrial by In several higher EcoVadis environmental; champion survey industry. sustainability sustainable XX% World required rate survey, behavior; agency of the our Steel in World XXXX. the were main by from ethical was top used already sustainable we This we rate score Ternium year

have We We but growth good with second even very together current results the these thoughts. in rate environment world cycle, remarks we a well and inflationary an and expect Let world's performance uncertain final positioned up wrap year affect the with in me in concern. the the of of the beginning us this world's in to scenario. started in are Mexico Brazil of the of our the down Ukraine we the are that with believe we economic some lockdowns lose position. the monetary China road. future. the tightening competitive the fact cause is could The better transformation continue our ongoing participation in the in of COVID-related not the regarding of of initial uncertainty to very should enables from now the performance in slab there expansion even facility projects the disruption sight and war company The better growing our acquisition a since an conclusion significant economy our and with market This, quarter

significant expect is a This we with allow situation in steel markets. a the strength execute This to will have and for any In next XXXX. strong financial to payment May from enhanced our cash a in currently due XXXX's generation dividend November. the payment position dividend continue program the to addition, financial to due in us face comfortable which and have in volatility

positive position, consistent here. product your Pablo, market with a imports portfolio. a investment enable competitive replace customers remarks our of order Please, market with our with and capture the the advanced long-standing and go longer-term finish view, program our serve my Mexican technologically more All our broader in ahead performance. downstream industrial opportunities. us with strengthen continually right. Now system review I'll the regarding strategy This better to quarter optimize in initiative it I'm expect the is to in to Pesqueria. to I future

Pablo Brizzio

be The morning and to But relatively to implication global performance just expected Maximo limited first it's is the good further that scenario has influence year. quarter discussed, Ternium's Thanks, steel of on. had naturally, more has everybody. Maximo on a during the evident

our review scenario. now in and regarding quarter Let's second the the Ternium's examine quarter also under performance guidance XXXX the first new

EBITDA start X income a margins quarters. in material high reason each Slide depicts from of Ternium behind price the the reflected By on the quarter last raw been a last back anticipated. although of in and with correction webcast the Let's X is further levels as lower historical X record standards, increase this part Page costs. and steel of first has The second EBITDA net sequentially, strong, in in in year presentation. decrease EBITDA

the EBITDA we the to quarter, second in rebound. Looking expect forward, company's

lost will We in shipments reflecting Page second the the performance the also the a Ternium fourth let's net X, In in first in expect demand volume ADS of market. and first quarter of weaker in per seasonality, led in first shipments quarter slides. more in region, performance recovered quarter, income shipments looking in the strong the forward, we of the the details the steel analyze solid in In Mexico, number. coming the we year, each Southern decreased $X.XX, operating sequentially improving in review partially this quarter continue quarter. The Argentina. to to In

X, development, in to steel decreased volumes the can slightly on increase increase Based report quarter. combining shipment lower pretty we see up discussed, million at in second basis, third large markets volumes shipments. you finished consolidated Southern quarter second parties ahead, higher Looking a we slightly was expect steel sequential that region, tons steel fourth consolidated other the quarter. arrive to X expect versus shipments we to In which third the on X% of what of we the in shipments. this by shipments Page in quarter, sequential reflecting have In the in the a much offset region

The in a on sales. per review quarter, the the sequentially in resulted now X% $X.X net and market stable of prices, sales steel higher ton, regions. steel and third lower and combination net of Mexico achievements revenue sequentially mainly revenue other In declined Let's prices ton realized lower per billion.

for already realized discussed. revenue in expect price higher rebound quarter we on to ton forward, markets reasons main the the per in Ternium's Looking steel second

of the revenue These increased EBITDA per prices. is ton as effects in year. material per quarter sequential to behind main shows the EBITDA which change mainly were income result of of the Moving and on higher top The shipments. Revenue higher and higher impact driver cost the the in ton chart partial other of page. first next the negative by the raw EBITDA now a net lower

For financial a ton. income, higher quarter expect than and the higher by sequential we in to and due value the to driven foreign showing of first should financial next shipments as losses mainly lower decreased The below instruments. per net chart which mainly operating more per reflecting a ton increase sequentially, and increase is results revenue EBITDA margins lower exchange steel quarter, cost decrease

first raw and release with the working Cash let's the effective volumes a costs. result payments was quarter million review, higher to On and to flow quarter prices which in in lower compared today's $XXX increase tax reflected million Income mainly well Ternium of deferred Ternium from These the tax also as million. performance tax and rate on the the was of the subsidiaries. position. the quarter, first fiscal of high the $XXX Mexico To income inventory include in impact as tax capital the cash in in material unusually and presentation, mainly as at expected steel and Argentina positive of hand, in low the tax quarter numbers of operations X, year a Mexico XXXX. $XXX relatively to a previous financial and results one profit payment Page were XXXX income other tremendous balance steel with conclude of

the Let during that of previous advances case, me XXXX year. In you pandemic. remind income the tax the of based sorry, the that XXXX, fiscal we -- the were on year income this tax paid COVID-XX year

CapEx, flow by from in March. position free a led cash XXXX, the in recurring the very the balance net a paid quarter in stable XXXX, XXXX, to first payment. very So of left With year the cash tax in end raising operations for cash to billion our be period, the profitability of solid high strong results a to March $X.X resulted in with income the

million. current generation the Q&A that will on approximately the Thanks. showing Our now year finish with Thank expectation of is healthy attention. With proceed very ready you the we CapEx continue Please, we much opening a year estimate remarks. operator, our your for your questions. $XXX rest this, cash And taking the of are session. Ternium based during for for

Operator

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

Your open. line is

Caio Greiner

Thank you. yes, morning, good Hi, everyone.

rise first I initially 'XX. nearly with and million currently shipments volumes have with to at speaking guys you guys what check as my XXXX few question is wanted And So in of to Pesqueria ramp So seen stage already on quarters we at? I the that was you a expected. idea X.X far, the haven't just up Pesqueria, incremental really remember tons ago,

so not seems like case. it this the And far, is still

elevated. to any just And out volumes substitution So remain it allocation. capital for reason has play what behind seeing to to start slab which needs due Mexico those on since import prices second my of in and what happen understand, us that seeing thesis or for still other incremental And there to changed question quite would that? start higher only, then? is Was Ternium

could the couple $X on announced see you're just is an XXXX estimate I of to over us mean, flow and wanted cash impact just looking So for CapEx I'm if understand how years. Because updated so, 'XX. share you I next position. net billion to guys billion going still even investment the running recently cash And $X.X to with a generation

Thank So to see that -- XXXX in also for you you're more if payments understand top as XXXX, other dividend investments, well, plans amount just and or short-term could 'XX cash of currently of maybe carrying. have wanted on if that you. aggressive we those into any

Maximo Vedoya

good ones. ramp up. much you very thank Pesqueria Caio, for questions, two your very

here. So there two are things

of facility fourth XXX,XXX very to view. we produced X X expected business of third the is the going was then I the year. tons mean, almost a That's bit almost quarter, XXX,XXX we at million which and the million, a technical the First, roughly of quarter of produce think, this plan mill tons program. produced the we in XXX,XXX little when the In what well, from first Pesqueria and we and country the tons point kind from make I this in we that it's in ramp-up year, least quarter of investments. quarter in second the expect

well. of -- from very view, running point technical that's a it's So

right other are volumes. side, about the you the On

As we quarter it quarter, the in said bit market weak going one next a Mexico. the very mean, this in that -- think it's to to and was quarter a the I discussed commercial previous better before, increase saw fourth as Mexico slowdown market and from in the produce I us quarter And I was started and the in it into the be think we [indiscernible]. commercial in and last made less remarks. I little facility

was the plan bit one increase to delayed. So a little

mean sales Brazil take going from to send labs to I slab our -- of because outside decrease from this slabs are as take if are to Mexico, decrease you to the we third going If you more sales year, slab -- sales the we last million this year, only increase And delay And to this North compared volumes roughly mainly The year. to going is parties. are but in this almost X was We mainly. not Mexico -- got conditions. -- the due tons. to Mexico what America, market

answered So of Caio. the the I hope questions I first one,

allocations. The second capital was regarding

X I to have about that We capital things on want this. comment allocations

it's first The to investment our this million around Most going sheet. year one, is And CapEx the then of $X the to this allocation of be this to capital is $X XXX going be going with tons. of in or year billion billion. increase next course, balance

think continue high to are plans raised, XXXX. proposal with mean, dividend I annual expect this to you thing future. was future. year the our And that next with continue I we -- we was the And in the pay is more the that sorry, dividend giving -- near CapEx remember is going Second dividend. know, as dividends for in the we that, third compared the the the have XXXX XX%,

to and do. We our have past be we This in is cuts USMCA necessity compliance melted something that the XXXX. by with poured have to

best are the We But is to high is analyzing to on state this. that in is the CapEx require -- future. way one what the which final a going do

capital are can't those the play allocation, comment X I could Caio. things about So I

Caio Greiner

much, Maximo, to understand. just make Thank very you I sure

right? supposed for in Could and or an XXXX, Mexico, is for that in to be still short melted coming we going announcement this the be see the make is poured to to supposed investment you're this term, So the...

Maximo Vedoya

or should 'XX in future, No, be 'XX yes. near but the it

to as We we you have clear and the and we announced completely a solution the team be. analyzing And is where understand have the technical project. projects very what know, once

Caio Greiner

very much. you Understand, Maximo. Thank

Maximo Vedoya

Yes, you’re welcome, Caio.

Operator

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

open. line is Your

Carlos De Alba

Sebastian. Maximo, the for good call. you and Yes, morning, Pablo Thank

to market. ramp Ternium maybe have you and situation Pesqueria, in Ukraine lower is as But Russia First bit quarter. situation in On is results forward. very complement, and do Maximo, than forward? of to increases? before? slab And as first Churubusco, given I'm working move the what could the I Pesqueria move capital, think the this, what working you you And question for have are if the maybe And what you released forward, you the is, see capital as do what up in the What in much plans year Can you, impressive you us then company alternatives explain remind available working little we're year pieces this all the slab given that there? missed you exposure with on again, and maybe Pablo the capital global seeing a your next going sorry happening and the How that you fact as what are also, for market? see behind moving you is QX? you that for

Maximo Vedoya

Carlos. Hey, and the it's one. because take difficult thank I'll then one the is with Pablo the question first you, easy

facility are You're most the the effects or factories Ukrainia. the the shipment Ukraine, Russian them sorry, from our because and increasing of that market, to and we Brazil, -- slab slabs. merchants XXXX in sanctions. all having are XX% the come XXXX, now nevertheless, was this, conflict facilities not situation with of comes I with from mean, we mean, in because slab that produce Ukraine we area. is from of Brazil. slabs the the But from remember it's in of And some to Mexico world took able right in of that buy course, modifying the I Russia idea producing about and trade start labs of or some of not Russia at slab did the when it's in clearly, in are

So of we first today, the run facility, slab the year, to XX% Mexico. in the Brazil went from

XX% of the from quarter, the Mexico. Brazil of This to Ternium slab went facility

you for it's the situation very now, if tight. see So not

And side, other on from what other imports of the comes XX%, in you we we other If Mexico, of in take finding other our Mexico from sources bring Brazil. Russia. shipments Mexico today slabs, than XX% total are our the

answered that hope think I the Carlos? so importing from. with sources with are can we manage I question these And now other I

Carlos De Alba

to just details. and Maybe for clarify, you those Maximo thank

what maybe for that the third-party this what year, of the and a next slabs the you you're So that is purchase balance need basis? expecting slabs on of net year, is balance to may

Maximo Vedoya

a little On a year, on a net net tons basis basis net think this bit it's XXX,XXX a I X less than it's because almost on basis.

buying other be going mean, some little are discussed, million because, then almost bit I producing sources we net but a X million of a basis. see Next -- we But slab little more volume. I will it's more and tons. in year or cheap. producing is be mean, not as selling to tons a huge from the we bit is But facility selling -- probably always advantage we X

Carlos De Alba

All right, okay.

Pablo Brizzio

an that I'll to prices of of the levels to required receivables good had especially payables the of we the higher on were decrease the of volumes working take is the U.S. already increase Basically, our pricing in production increased this the Secondly, the account not materials third the we is we able and reduce of are because Okay. because the the because only level we ones increase And increase but in easy raw level was the market. of the of the the at question that which a what increasing during volume different account have quarter the now we quarter, inventory because on leg because were capital. during and increase to of of seeing new first that price of the market stock

million So the of around working -- capital of release all-in-all, $XXX -- we quarter. have during capital

to to the shipments, sustain of increase higher receivable and -- to because accounts forward, return of levels. also we the level accounts payable try Looking should normalized will inventories of more we continue level -- will will we

first be cash or the comment important working in working prices first more of income to flow up. from a the that So going but during a in of free is in which we quarter, as quarter, to of capital pay a the allocation that balance continue will flow stable cash during situation quarter, cash probably have is allocation we cash this have huge capital, huge we to is [indiscernible] taxes to see in we issue this pay One Mexico. quarter, not the

that one. on be So $XXX paid million quarter all-in-all, we taxes the in this not will next above during

there the higher that be year. paid going we we're first pay have advances a Of reduction. what comparison last than what course, the quarter, during to in will to be But we will

should on a cash capital free this help So much we will have as continue as probably though we flow, result all-in-all, working quarter. to not have good

Carlos De Alba

Pablo. you, very may If Thank one quickly. ask I another just

year, So will think billion Maximo in XXXX. I next Mexico said, place the most investment $X of take in

see investment? do where you So given XXXX CapEx XXXX, maybe the in and that

Maximo Vedoya

$X probably XXXX billion. is

Pablo Brizzio

on... depend XXXX will And

Maximo Vedoya

XXXX, a exactly. need bit, little Yes, Carlos. a little to we bit wait

Carlos De Alba

I’ll sign off, you. thank

Operator

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

line is Your open.

Thiago Lofiego

Two gentlemen. quick here. you, questions Thank

the just position The first mentioned. costs on slab one, guys couple do And you you costs. in evolving about the second next How the quarters? Maximo, of X see

but you gap year. wrong next I'm tons if me correct mentioned million X -- So

you think might are strategic do or is position? you be fine opportunities by considering guys you. this up? do to short And gap ramped So with M&A, a point if fully you of this structural car from view, gap this so, close a there Thank think

Maximo Vedoya

I'll Thank you, the first question. take Thiago. second

producing X.X it's or like -- that. Ternium's not produced mean, next capacity so -- I of facility tons facility it's million Brazil million X I producing something slabs, roughly, now is remember, mean, I that the the think --

of to it of has X facilities. still new the up tons. the be it it's million a these capacity around level. million Remember, tons. And mill at not ramp Pesqueria mill, the capacity, It's try X little Churubusco less will that at roughly maximum the a facility, strip honest. increase Molino, a We has hot to long

today -- balance at be tons are So facilities. Churubusco X capacity. million if would in full we the

flat But So be strip hot that's there million we in the in will mill a we to be imbalance also no with is which not honest, to Brazil facility like [indiscernible] have remember, of upstream. in, Cubatão tons. to made X participate. to [indiscernible] has sales

is -- that's So as to and to I be in why sell to And future also, XXXX. said [indiscernible]. we the idea in before, compliant have the USMCA

So most probably, we going be invest we USMCA probably are to -- likely, to compliant.

that will the X in future. Thiago, hope answered I that, question. balance the I So be probably

Thiago Lofiego

a I'm little bit confused here, Maximo. I'm sorry.

Maximo Vedoya

Okay.

Thiago Lofiego

you you Just next right? right? you're to mentioned an to asset have from million what X Carlos, to So going Is mentioned basis, year, right? on purchase tons that

Maximo Vedoya

Yes, exactly not at but are we facilities. full capacity at Churubusco

Thiago Lofiego

it. Got Okay.

go full Churubusco, net So saying? capacity with be will when your the X. Is what you you're think purchases that you to

Maximo Vedoya

My be net full tons. -- around to will I X capacity No. go if purchases, X million

Thiago Lofiego

sorry. I’m Yes,

Maximo Vedoya

invest going as again, But because want future to the and we the Usiminas, on to USMCA side, probably in little sell net. need have That's not if we near we a poured. are in to to not, more. melted to But other be buy we bit compliance

that's a before we that do XXXX. So to have thing

future the not probably. going at or I'm X. X we about to in slabs future talking be so need buy net in I to are are to least years, And not going the but X we and mean, near

Thiago Lofiego

Got it.

you are going my guess question how is, get there? So to I

Maximo Vedoya

Well, invest we steel in jump. to have a

Thiago Lofiego

okay. it. Got

going So be... you're to not

Maximo Vedoya

North Pablo? The America, yes, USMCA market. cost,

Thiago Lofiego

Okay, now it’s you, Thank Maximo. clear.

Pablo Brizzio

Yes.

Okay.

that increased cost, slabs that the basically, increased PCI what is agri one different increased coal material of raw the seeing be we we next to of increased, also will and the same enter relation price will quite clearly, we the the were prices. slabs The price into Remember buying. raw of significantly. quarter price material, So describing be in recently

them to be are of the of raw to also have in into is prices will finished why that said steel see third increases. especially market expecting expecting cost this than during quarter. better will we we and prices during are quarter. margin Clearly, different That's and that mark cost and material enter But during higher we the see the through quarter as second So our be we a what costs the we will the start the products, second higher. impact the saw

Thiago Lofiego

may, clear. the And just on if Okay. That's I question. I -- first just very back sorry, I'm Maximo, guys.

timeframe X of that that the to years, doing you to in slab America? Is X in maybe project on would So North be a next side reasonable? the expect

Maximo Vedoya

to it, to have do yes, be honest. Yes, we

think And conference we we a call little last bit about are our -- analyzing so talked I also. in

We and ready are North it X American our expect continue are customers not announce for the very to clear to so. more to important it's very million sell in them X but We tons automotive us. we than to -- doing market

going party is So we But going purchasing on this, are be are as just years, Brazil, balance our a sell Having will Thiago, third X to today. doing the USMCA not we need in to probably out compliance. said we slabs be be X. it's going to all probably to clarification, that are of Brazilian continue purchasing to with we mill slabs, and slabs net probably

Thiago Lofiego

All clear. right, very that's again. No, Maximo thank you,

Operator

from Tanners comes from the question next of Your Wolfe Research. line Timna

open. Your line is

Timna Tanners

to a volume Thanks. outlook. little the do hey, wanted just to Yes, on more bit I morning, good everyone.

an the the know ago. a was the mentioned demand and a touched still I into that to hits because on first COVID So bit improvement was me square you it's quarter light there declines little hard second still quarter. for as year-over-year into with But year

million in we're Mexico QX -- So that just something? mean, X I think rate, guidance almost we understand about about question. first lot. not some tax about quarter And get my missing the from second my the or sorry, I tons flat think tons right That's rate if and am first Pesqueria assume the just quarter-over-quarter payout. cash year-over-year, the question implication. the the upside Thanks and the a to Is XXX,XXX potential way talking overall. I about we light to was given on think

Maximo Vedoya

the Timna, Let it's situation are much the Unfortunately, rate the exactly referent very currencies. us, to me because go to question the tax the on will it's then tariff -- difficult how you? be we predict dependent nominal very volumes. other the how Okay. on of for by start issue and tax

So revaluation a tax, you devaluation, have have if a have reduced you a higher you one. you have

end So having the on situation that will market. of the the at depend

know You XX% taxes that and Mexico, Argentina. of which is of consideration Brazil for into deferred a overall, the tax without rates Ternium rate taking mix is around

for and if Argentina during is devaluation evaluations there would and have the we have devaluation in rate be suppose have devaluation taxes, and in no good, and XX%. Clearly, different in the the we a Mexico Argentina impacts rate. should deferred both So but in that below first inflation be quarter, we currency this was that tax in Brazil and the revaluation Mexico Ternium

So I very cash of cash need I the know see is see not not know position is financial that. position position to the very impact to is you which see you the impact but this. clear need that cumulated that's that which or the of company this. to but of clear is

in So general, rule. that's the

If rate. the have you have a a revaluation reduced tax currency, you of

not exactly need much the complex I if we different probably to on I math. devaluation on with hope have follow work much we'll volume have I the don't little last the on I -- the how the your much we and how very know I and clear this will I inflation. the clear very know increase go a can then of to understand know is between team is If Because movements until hope because you day currencies movements depend currencies very different to quarter Argentina the devaluation, very in in that of the depend it I very been And on a have were. we have unfortunately, detail. of been depend the you difficult being to you wait will work tin. were. relationship because on that how

me So let try I if your to mean, but is correct. answer this question

little Our a but we we now seeing mean, the seeing is are more market going Argentina I with year. last that this were we coming, are volume I volumes to we coming. this probably bit did although volume to mean, orders uncertainty the be outlook, pessimistic, same

continue to quarter. Argentina this healthy of that going it's slabs, least way, Brazil at is in So to and the quarter the expect market case for it's clearly this we and In -- decrease. or next

Third-party slabs in tons And bit markets, that. to year more of be other Probably in probably the increase in volume the a to of other half million X the case one. That's our our we'll little ship compared going will decrease. X outlook are of volume this.

the With in it's Mexico and good of infrastructure well most Mexico Mexico, is market an in very as very in is construction, know. a commercial that not that that market, strong I said, growing as you market industrial which

the hope of this, answered I in part me am So it's a I with answer or I wrong market. But please. correct but if mixed that,

Timna Tanners

X we And I spiked, we'd have from, we think I that is at in say, know just be Pesqueria, relative I ramp-up ago, just to prices that was volumes or seems prices side. added recent a just given exit number almost Is that from also where an simplistically the QX, you internationally? year I just you boost run tons. opportunity QX of the light fact bit simplistically a want to wrong million if million in big That have tons to X.X tons. Mexico. to right not produced think, saying And XXX,XXX projected a your why. like and

Maximo Vedoya

about There export, have and seeing a we markets. an of very that you be is we talking told export we mean, and up of No, opportunity Timna. opportunity to honest. in yes, much if -- to are all also, that lot can an sure. to are volume I those it's I to ramp cautious you're what yet But Sure, was lot mainly opportunities, We a Mexico don't a I increase in of the much increase increase that you, the seeing, we we of are to not lot volume, if what export yes, we right. that

Timna Tanners

you. Thank great. Okay,

Maximo Vedoya

thank you Well, too. you to

Operator

next comes of Alfonso the from Your from Salazar line question Scotiabank.

open. is line Your

Alfonso Salazar

a period just and high cash North of hello that for flow cash is see say, good I generation growth. good in the the is company let's question that high flow investments day, think we're and America opportunity the say, is to, Mexico to, period in discussing size stat generation think more or the we there slab. of of what let's an that everyone. and is a opportunity And good The regarding Yes, there an we have is we can

is look, So terms And if going answer it's I on useful to look X us in be Ternium to of going useful. would like think Argentina behind geographical what X in these it very, years production can think or exposure, to some LATAM, have would terms understand plan an not years on in of a ahead? guidance can very the to happen X in right you help provide or be thinking how if capacity, from probably X or figure That now but Ternium you now very to going map how what's to investments? is I Our Mexico? plants

Maximo Vedoya

so mean for in our for I products, I question. clearly long we're question. are Alfonso, is the going that's in term. path very It's we but your growth you And value-added -- And some probably path mean things in the a Ternium, in growth have thank talking I we very Yes, broad growth -- mean, the much Americas. have Argentina several to

this of that's talking in something thinking products, in value-added long So that in term. is the

So we to going are nothing announce this is future. the something that near of in

acquisition know CSA have of of also the Brazil. a more in we was Brazil, market. growing We and our successful facility much very view the of now

market we I North investments customers So we there American market there. Ternium, that's are we continue the a where And place someday thinking seeing. a growing. is go a about talk clearly, in also are of most where can our the is

this are war mean, region are know built or also customers see problem is but customers all of there lot of new Asia, own the new happening. now, of or Mexico. we the of already making being is We or our and supply coming I China, coming I near you month, and to some seeing them reshoring North volumes the in U.S. capacity all them that is are of America between are to Mexico. market mean, shoring the have every in thinking -- investments going seeing the I the and chain these north U.S. China people that their there most to the increase. a

that the new that. to and of that, ahead we one, are facility, is something biggest think thinking of the of if and much want USMCA [indiscernible] add I over a doing opportunity why compliant to Pablo, getting a there CapEx. with the bigger the I cold you us galvanized, being that's So growth know don't

Pablo Brizzio

we that Maximo. to to build sure work them the can Thanks, Clearly, facilities were the Ternium with we year. is X and are Yes, Yes. thing complement saying. idea just was Alfonso you what of that at just

I Here you it another before mentioned question.

Our idea full approaching facility is of be at fast we issue very capacity -- are hot-rolling one. facing we one are new mill, Then of probably that that were as to utilizing will that facility, maximum the less the very working have of the utilized. that utilization fully others we but

new So already that's the with CapEx next is the the idea CapEx same analyze announced that we that the we in probably and future.

in has So been near future. in the it's that what clearly, And are -- done we do that past. we something have to planning the

questions. your complement to just So

Alfonso Salazar

a just did this this can the the come. if changes and know I conference on wondering may. energy I'm could pass. country? that And talk be energy it your reform anything helps how strategy to The That's energy you helpful, A broad we Mexico, I for days many follow-up business if strategy or probably very about about in not say This in opportunities and can calls coming helped lot. sure. question a is

Maximo Vedoya

Yes. on. Thanks,

it I not The energy months and clear call not was [indiscernible] also did was think of X pass right. couple lot -- in reform it I ago you still and that or a declared industrial months but of constitutional. think ago law this about then confusion a there's Spanish, not electric -- passed was You're it constitutional but

in lot still very to noise In the a our facility. we energy case, to going of following own there's with going And most this think, energy for Mexico, is in not law. produce remember, about particularly, next So a competitive change this months. I be of with our new

relatively So going investments to electrical until clarified near But comfortable in is lot are so we of are don't in industry that, I and [indiscernible] we energy new law future I see to are. is happening clarified what in the come in this this hope investment I a Mexico. where with Mexico. Mexico

Alfonso Salazar

Yes, Thank that’s helpful. you.

Operator

have question Morgan we a from Alba De follow-up Stanley. Carlos from And

open. line Your is

Carlos De Alba

Yes, thank you very much.

of there choices. situation clearly, being the is regarding X a I guess compliant, USMCA So

that alternative or this at only analyzing anything X that Is provide a second invest the in try to would you core you in steel You are really buy capacity facility? countries something. available greenfield X of is or there point, that

Maximo Vedoya

greenfield we not Thank a seeing Carlos. I seeing you. are And facility, hello No, mean, we again, -- yes. are

Carlos De Alba

It or furnace. furnace, right, be will an electric electric likely definitely be or or

Maximo Vedoya

definitely would it. electrical doubt be about it no Yes, Yes, furnace.

Carlos De Alba

or of in an case, spend And you pellet with think okay if facilities? iron come that DRI that's of the this iron your the together pellet expansion you and would have of side member with just be ore this will what facilities, your and it, you mining terms do of you ore

Maximo Vedoya

are which go. And way yes. the Yes. DRI we yet. to these that's a Probably we right all all Carlos facility, things honest, these that to be are mean, now. is analyzing operation why the And a announcing necessary are -- anything best not Not mining are things, the I

technical is Clearly, the pellets best which in in which necessarily future the discussing electrical are Not direct it's is the reduction. way We of furnace. in is the a investing new near or term. best short clearly solution, capacity

Carlos De Alba

very much. you Thank

Maximo Vedoya

Yes. Very welcome.

Operator

over And I questions further time. for are closing CEO the turn no this there back at to call some Ternium's remarks. will

Maximo Vedoya

your in interest Okay. and you all Thank company. very much participation for today for your our

for you Take goodbye. and contact again. any or us questions may have. any please usual, care feedback very Thank you additional As much

Operator

call. for participation. conference today's your Thank you concludes This

disconnect. now may You