Ternium Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
April 26, 2023

There are 9 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Ternium First Quarter 2023 Results Call. I would now like to turn the call over to Sebastien Marti. Please go ahead.

Speaker 1

Good morning, and thank you for joining us today. My name is Sebastien Marti, and I'm Chairman's Global Investor Relations and Compliance Senior Director. Turing released yesterday's financial results for the Q1 of 2023. This call is complementary to that presentation. Joining me today are Ternium's Chief Executive Officer, Maximo Vedoya and the company's Chief Financial Officer, Pablo Brizio, who will discuss Ternium's business environment and performance.

Speaker 1

At the conclusion of our prepared remarks, There will be a Q and A session. Before we begin, I would like to remind you that this conference call contains forward looking information And that actual results may vary from those expressed or implied. Factors that could affect results are contained in our filings with the Securities and Exchange Commission I'm on Page 2 in today's webcast presentation. You will also find any reference to non IFRS financial measures reconciled to the most directly comparable IFRS measures in the press release issued yesterday. With that, I'll turn the call over to Mr.

Speaker 1

Redosha.

Speaker 2

Thank you, Sebastien. Good morning to everyone and thank you for your participation since Today's conference call. Ternium recorded a good set of results in the Q1 of 2023 with an EBITDA, slightly over $500,000,000 This is equivalent to $166 per ton And to a 14% margin, we also have had a healthy cash generation With free cash flow of $414,000,000 in the quarter. Further on, Pablo will go more in-depth on our performance in the Q1. Let's review the business environment in our main markets beginning with Mexico.

Speaker 2

Our parent's still demand in the Mexican market remains healthy. In the commercial market, A restocking in the value chain, which began in the Q4 of last year, continue into the Q1 of this year, And we are not seeing signs of it finalizing yet. In the industrial markets, we are seeing steady steel demand With less volatility than what we see in the commercial market, the auto industry supply chain disruptions eased significantly And most OEMs plan to increase production. On the other hand, manufacturing industries driven by U. S.

Speaker 2

Housing market like white goods and HVAC Industries are currently

Speaker 3

softer.

Speaker 2

We are increasing our market share, especially in the automotive industry as the certification process Of new products from the new hot rolling mill in Pesqueria advances. As an example, in the Q1 of 2023, We shipped 2,100,000 tons in the Mexican market. This is 500,000 tons more Then what we shipped in the Q1 of 2022 when the hot stream mill was in the first stage of the start up. This is an increase of more than 30% and we expect shipments to continue growing this market in the Q2. In addition, the downstream projects currently under development at this facility Will enable us to complement this new capacity and go deeper into new value added products to offer to the market.

Speaker 2

Since our previous conference call, we have also been making progress in our upstream project. This is the new slab mill we announced in February. Although we are not ready to disclose its exact location yet, we are very close To do it, Sal. Something that has been lately calling investor attention is the increasing nearshoring Trend in the region. This is due to the need of closer and more reliable supply chains to serve end market.

Speaker 2

Mexico is a beneficiary of this dynamic as a result of its many advantages, its membership to the USMCA, It has an exceptional experience and technical qualified labor force and it offers shorter lead times and lower transportation costs to end markets. And this is being reflected in demand for industrial real estate in the country. According to the Mexican Association of Industrial Parks, The industrial real estate sector has a national occupancy rate of 97%. If we just measure this in the north of the country, the availability rate is even lower at 1% 99% of occupancy rate. As an example, one of the latest and highest profile investment announcement It's Tesla's new factory in Mexico, which will be built in Monterrey, our hometown.

Speaker 2

Let me now make some comments about Argentina, our 2nd largest market with 18% of total shipments. Our business in Argentina continues to do relatively well, although there is a considerable level of uncertainty In this market, Argentina suffered from a very strong drought this year that it adversely That is adversely affecting grain export revenue and consequently Argentina's Central Bank hard currency reserve. This, coupled with a high inflation level and a significantly unstable macroeconomic environment, He's expected to impact economic activity and steel demand in the country during the second half of twenty twenty three. I would like now to make a brief comment about our recent announcement regarding the increase in Ternium's participation in Usiminas Control Group. Pernium has had a participation in Usiminas since 2012 When he joined Nippon Steel and Presidenteos Usiminas in Usiminas Control Group.

Speaker 2

During the past 11 years, Pernium and Nippon Steel have shared Usiminas management on an equal footing without Either partner having the ability to impose decision on the other. On March 30, We agree with our control group partners to take on different roles. We We'll have a more direct involvement in Usiminas management and the implementation of its strategy, while Nippon Steel We'll maintain a say in all key decisions outside the ordinary course of business and we'll continue contributing their technology expertise to the company. Pernium is Latin America's largest flat steel producer And has a proven track record of successfully managing steel assets in the region. This put us in a perfect position to assume after more than a decade in the company a leadership position in Usiminas.

Speaker 2

To put this change into action, Nippon still agreed to sell to Ternium and our affiliate, Tenaris, A portion of its participation in Usiminas Control Group as well as to make some changes to the shareholders agreement. We will appoint the CEO, a majority of the other members of the Board of Officers and a majority of the Board. Nippon Stil and Providencia Usiminas will retain 1 officer each. As for next steps, We are going to need the approval of CADE, Brazil's antitrust authority to be able to close the transaction. Until we have received CADE's approval for the transaction, we cannot go further into our plans to Ciminas.

Speaker 2

Because of this, I hope you understand we won't be able to add in the Q and A section much more information on the matter than we have already disclosed. Turning now to ESG topics, we are proud to have been recognized last week as Sustainability Champions by World Steel For the 5th year in a row, this industry recognition demonstrates that we are on the right track in our efforts to make our operations more sustainable. One of the things I'm very proud of It's that we are launching the construction of a new technical school in Santa Cruz, Brazil, near our Ternium's lab facility. For this, we plan to leverage on the experience of Spain with our technical school in Pesqueria, Mexico. This technical school, the one in Pesqueria, which is now on the 7th year of successful operation, was launched to educate high school students from our community using innovative teaching methods and the latest technology in both classrooms and laboratories.

Speaker 2

The results of these initiatives has been remarkable. These students, all of which receive scholarships, Comes from underprivileged communities where the opportunity to assist to high school It's very rare. Today, more than 50% of graduates from this school are going through Their university studies. We expect Brazil's new technical school to bring technical education with the latest learning tools And technology to close to 600 students with the start of classes in the Q1 of 2025. Over the years, the company has developed educational programs covering the entire school cycle From elementary to postgraduate levels, helping children and youngsters fulfill their potential and become Active contributors to society, we believe that Ternium industrial projects can only be sustainable The communities where we operate grow alongside the company and education plays a key role Indeed and over.

Speaker 2

Let me now make some final comments to close my prepared remarks. Even though there continues to be uncertainty regarding the macro environment during the second half of the year, I am confident Terniums We have a good performance in 2023. With our latest investments, we have put the company in a strong competitive position And there's more to come with the upstream and downstream project under development. We believe Ternium We have ample opportunity to grow its business in the following years and we are ready to take advantage of these opportunities. On the other hand, as you have heard us say many times in the past, we have always been committed to Brazil.

Speaker 2

This is one of the largest steel markets in Americas and we believe it will offer many opportunities to grow our business in the future. In this respect, we are very excited with the change in Usiminas control group. I believe our recent agreement with Nippon Steel Will give us a renewed base from which to contribute to Usiminas' success benefiting all of Usiminas stakeholders. Okay, Pablo, you can now go ahead with your presentation On Ternium's performance in the Q1.

Speaker 4

Thanks, Massimo, and good morning to everybody, and thanks again for participating in our conference call. Let's review more in detail Ternium's performance in the Q1 and our guidance for the Q2. We will start on Phase 3 of the webcast presentation with earnings, EBITDA and net income. As anticipated, EBITDA margin and EBITDA per ton improved sequentially in the Q1 of the year, Leading to earnings per ADS of $1.91 in the period. Margins in the Q1 approached the company usual range, mostly as a result of cost deflation.

Speaker 4

As lower price raw material continue flowing through the company's inventories. Looking forward, we expect the company's EBITDA to increase in the Q2 of this year on higher shipments and margins. We will analyze this in more detail in the coming slides. Let's move now to our shipments performance on Page 4. In Mexico, Ternium Steel shipments Reached a new all time high of 2,100,000 tons in the Q1 of 2023, as Maximo already explained.

Speaker 4

Shipments were not only higher than what we had last year, but also they improved 10% sequentially against Last quarter of last year, reflecting Ternium increased market share in this dynamic market. The sequential volume increase in Mexico in the Q1 was mostly offset by lower volumes in the southern region and other markets. In the Southern region, shipments decreased 8% mainly as a result of a seasonally weaker demand in Argentina, which We currently expect will normalize somewhat in the Q2 of 2023. In our markets, The sequential decrease in steel shipments was mostly due to a lower volume of slabs shipped into 3rd parties As the company further the integration of its Brazilian ZRA facility with the downstream facilities in Mexico. The next page, number 5, you can see that combining these developments, consolidated shipments in the Q1 Was 3,100,000 tons.

Speaker 4

Based on that, has already been discussed, we expect Consolidated shipments to increase in the Q2 of this year mainly reflected higher volumes in Mexico and somewhat in the Southern region. Revenue per ton remained relatively stable in the Q1 despite the increase in spot steel prices in the USMCI region. These were mainly due to the negative effect of lower prices on the contract in Mexico in this quarter, With reset prices with a lag and by lower realized prices in the Sargent region. In the Q2, contract Steel prices are expected to sequentially reset at higher levels. This positive development coupled with the healthy spot prices expected to lead to To higher consolidated revenue per ton in the Q2.

Speaker 4

Moving on the next page, Let's review now the main drivers behind the sequential changes in EBITDA and net income. The chart on top shows that the improvement EBITDA in the Q1 was mostly the result of a lower cost per ton as shipments and revenue per ton remained relatively unchanged. The decrease in cost was mainly due to a lower price per slab and raw materials acquired during the second half of twenty twenty two, That continued flowing through the company's inventories in the Q1 of this year. To a lesser extent, cost per ton also decreased As a result of lower energy costs as natural gas price decreased. Looking forward, Ternium expects adjusted EBITDA to increase sequentially in the Q2 as consolidated achievements and revenue per ton increase And Koss Bertone displays a little further.

Speaker 4

The chart on the bottom shows that the sequential increase in net income Was driven mainly by higher operating results and to a lesser extent better income tax results. In the Q1 of this year, tax results include a deferred tax gain on Ternium's Mexican subsidiary in connection with the 7% appreciation of the Mexican peso against the U. S. Dollar in the period. Let's review now on Page 7, turning cash flow performance and balance sheet.

Speaker 4

Cash flow Cash flow from operations in the Q1 of the year was $612,000,000 including a working capital lease of $218,000,000 Looking forward, we expect working capital to increase in the Q2 in sync with higher steel production, shipment And prices. Free cash flow in the Q1 was $414,000,000 After CapEx of close to $200,000,000 this drove net cash position to $3,000,000,000 by the end of March. The CapEx level is expected to continue increasing in the coming quarters, but starting with advanced development projects in Peskaria And the Air Products Reannounce in North America. With this, we conclude our prepared remarks. Thanks a lot for your attention.

Speaker 4

And now we can go to take any questions that you may have. Please, operator, proceed with the Q and A session.

Operator

The floor is now open for your questions. Our first question comes from the line of Saia Greiner from BTG Pactual. Please proceed.

Speaker 5

Hello. Good morning, everyone. Thank you. My first question on your North American operations. So I wanted to explore a little bit more on demand.

Speaker 5

So the end condition in North America is still seeing quite Strong commercial attorney as you guys pointed out. So the auto industry remains strong since supply chain restocking and you guys mentioned that the second quarter is still Expect it to be even stronger volumes wise. So I just wanted to explore a little bit more on the outlook for the second half Of the year, should we expect earnings volume to continue rising going forward? I mean, you still believe that Steven, could we sustain at current levels for the entire year? Are there any pressure points that you guys see?

Speaker 5

I think you guys are working with an estimated volume increase for the year in the Mexican market that you could share That would also be helpful. And my second question on the Brazilian Union transaction, I know that you guys said that There's probably little that you can share with us at this point, but just wanted to see that if there are any initial remarks that you can add To Martimo's comments. So just wanted to see if you guys can share what are turning plans for the From this acquisition, are there any priorities in the short and medium term? Are there any lower mediums through Now you guys see that could be addressed in the short term. And then you also wanted to understand if you could, You could eventually see Therian further increasing its length ahead, maybe even consolidating the assets down the road.

Speaker 5

Anything you can

Speaker 2

Thank you very much, Caio. Let me start with the first question and demand. Yes, you're right. We are going to increase probably shipments in the 2nd Q Of this year, I think this is mainly because commercial market, As I said, he's still in the restocking process. In Mexico and in the U.

Speaker 2

S. Also, we are gaining market share. And industrial market is stable. So I think the second Q It's fine. What is going to happen in the second half of the year?

Speaker 2

We are still seeing A demand that is robust. We are not seeing Things that can change the demand we are seeing today. Yes. As I said, some sectors, especially the ones that are affected by housing, that they are softening, But in a degree, that is not very relevant, and we are seeing other things happening in the market That will probably increase the demand. The near shoring that I'm speaking, You are seeing that everywhere in the north of Mexico.

Speaker 2

And a part of that, the assuring comes from Our own customers that are increasing their capacity, so they will consume much more steel and new customers that are coming from the region, They are bringing production probably or mainly from Asia. So there is a trend That is going forward where customers are starting to consume industrial customers more steel Because they are increasing the capacity they have in the region. I think that the only impact or negative impact is more the macroeconomic impact or what is going to happen With this increase In the interest rate and if this tightening We'll bring a so called recession in the U. S. I mean, we have been speaking of this For some quarters now and every time we speak, it seems that it is delayed the recession in the U.

Speaker 2

S. Our customers today are working with the outlook That they expect a softening, but they don't expect a huge recession. But nevertheless, I want to emphasize that there is uncertainty and the uncertainty is coming from The increase in the interest rate and how this is going to affect all our industrial customers. As I said, today, we are only seeing some Problems or some softening in the house market and that's it. But I hope with this, I can give you a little bit of what was the outlook demand, Caio.

Speaker 2

The second question, I think it's about Usiminas. Well, If I understand well.

Speaker 5

Yes. On using Unit Services Action, so I was

Speaker 2

Yes. I

Speaker 5

was wondering if you guys can share any initial plans in short term,

Speaker 2

Yes. Well, Yes, it is a very good question, Caio. But as I mentioned in my prepared remarks, I prefer not to elaborate A lot on the future plans for Usiminas before Qatar grants its approval to the transaction. I mean, At Ternium, you know, we are committed to the development of Usiminas and I believe and we believe That the AGUI changes in the control group will benefit Usiminas and all its stakeholders. On the other side, you know that Brazil is very important For Ternium and we have always been committed or excited of having this opportunity.

Speaker 2

And We will have a lot of work to do, but again, once the CABI approves the transaction. My opinion is that There is a significant potential in Usiminas. And we believe And our partner also believe that we have the capacity to unlock that potential, to be honest. Usiminas Gaswood assets, mining assets, Ipatin and Cubatao, Capable people and many opportunities to develop. On the other hand, also we have Enormous challenge or a big challenge like the realigning of the blast furnace, number 3, the investments in the coking facilities, Further development of the sustainability strategy, analyzing indeed all the mining operations that In the medium term has to do an investment and also to improve the competitive situation or competitiveness situation In order to regain some market share that has lost in the last years, and again, I think that Tardium, once the operation is approved, taking leadership a leadership position in Jimenez is going to help with all of this.

Speaker 2

I think that's Well, I can comment on the subject, Caio.

Speaker 5

No, that's very helpful, Thank you very much. Just I can't give a follow-up on the previous question. Can you guys share with

Speaker 2

us Can you speak Caio, sorry. Can you speak a little bit closer to the mic because it's we are hearing very low.

Speaker 5

Okay. Can you hear me better now?

Speaker 2

Yes, that's perfect.

Speaker 5

Okay. So just to follow-up on the previous question, so thank you very much on the color On Usiminas. Just on the shipments question, can you maybe share with us your estimate for volumes increase For the Mexican operation for 2023 versus 2022, can you give an idea of what you guys are working with And turning for the Mexican operation?

Speaker 2

Well, yes, we have an increase. I think we're going to sustain or increase a little bit the shipments that we have in the 1st Q. So we are going to repeat those shipments. 2nd Q is, it's going to be a little bit higher And 3rd and 4Q, we are expected to continue that So not of increasement, but of maintaining. With that, I think it's a 25% or 20 something percent increase In shipments in year after year, you have to realize that the hot free mill is not running almost at Full capacity, the new cost free mill.

Speaker 2

I mean, it's running, I think, 88% of capacity. So we don't have a lot of space to increase Much more shipment and we are going through the increase of production In the old mill, so we have some space, but we don't have a lot of space to increase much, much more our shipments.

Speaker 5

All right, Maximo. Thank you very much.

Speaker 2

Thank you, Caio.

Operator

Our next question comes from the line of Kyle Ribeiro from Bank of America. Please proceed.

Speaker 6

Yes. Good morning, everyone. Thank you for the opportunity. So my first question is on your working capital trends going forward. It was a big working capital release this quarter.

Speaker 6

So I just wanted to get some more color on what you expect in the coming quarters. And then secondly on U. S. HRC trends, Right. After multiple price hikes since late last year, it seems that prices have somewhat stabilized lately, right, and lead times have started Shortened a bit.

Speaker 6

So I just wanted to see if you could provide some color on what you expect in terms of price trends, particularly in the second half of the year And what you see as a sustainable medium to long term price for USHRC at this point? Thank you.

Speaker 2

Thank you very much, Caio. I'll start with the second part and I'll leave working capital to Pablo. Growth terms, I mean, I didn't change much my mind about what we discussed the last Quarter and several quarters before, I think there is a new floor or a new Normal of steel prices and that normal is much higher than what it was before Pre pandemic values and we see this with the new bottom prices we had Last year and when they arrived at bottom, they started to increase just right after. So I think Prices will remain at a stable or a healthy situation For most of the year in my respect. Of course, today, as we discussed, prices increased And probably, as you said, they are stabilizing at this price of hot rolled oil.

Speaker 2

What in the second future probably, but I cannot say it particularly, but probably there's going to be some adjustment. Again, my reference of prices in the future are always at the new normal is around $900 or $1,000 that's the new $600 that used to be. On the other side, I mean, the raw material cost also has decreased Iron ore, carbon, natural gas in our case also. So it's normal that for the second Although there should be some adjustment. How big is that adjustment?

Speaker 2

I think it's not going to depend On other factors that what happens with the macroeconomic activity And the macroeconomic numbers, it's really there's a recession, but that's going to affect quite A little bit more. If not, I think it's going to be the same that we are looking with the ups and downs, But on a healthy level in the prices. I hope I answered that question, Caio. At least that's my thoughts.

Speaker 5

Yes, absolutely. Thank you, Marcio.

Speaker 2

Working capital, Pablo.

Speaker 4

Yes. Hi, Caio. How are you? So Going to your question, clearly what we are seeing now is that with the normal movement of shipments, especially that we are expecting to see In the North American market, especially Mexico, also the growth Small growth that we are expecting also in the Southern region market. There will be a need for further uses of working capital.

Speaker 4

But not only that, we are also saying that we are expected to see some price increases In our pricing comparing the second to the Q1, so putting all in all, of course, taking into consideration was, as Maximo mentioned, that we are seeing Decrease in prices of raw material, we are expected to see somewhat an increase In the level of working capitalization, not that significant because putting all the things together shouldn't be that significant, but we will not Well, our expectation now is not to continue what happened in the last three quarters where we have release and in some cases like last quarter, In the last quarter of last year, we have a huge release on working capital. Now we think we are entering into a process where we will recovering A little more working capital until prices and volume adjusted to the new level.

Speaker 6

Very clear. Thank you, Pablo and Massimo.

Speaker 2

You're welcome. You're welcome, Cayon.

Operator

Our next question comes from the line of Timna Tanners from Wolfe Research. Please proceed.

Speaker 7

Yes. Hey, good morning, everyone.

Speaker 2

Good morning, Dima.

Speaker 7

My first question is about the elephant in the room, which It's AMSA not running. I wanted to ask a few questions first about that. One is, hearing reports that it could restart in Q3, do you think that's reasonable? Hearing Mexico has the best price in the world for steel, it's attracting a lot of imports. Do you think those imports are sizable or Modest and do you think that it sounds like you're saying in the second half you're going to keep producing irrespective, but I'm just asking about the balance of Potentially those imports AMSA restarting, how you think about that cadence?

Speaker 7

Thanks.

Speaker 2

It's a very good question, Tim. Thank you very much. I mean, I don't know much of AMSA as probably what you everybody is hearing in the press. But I don't know if AMSA is going to restart. And if it's restart, it's going to restart in the Q3, it's clearly not, I mean, as you know, the blast furnace is down.

Speaker 2

So that will take probably several years to restart. Imports, clearly a big part of the Mexican market and we are competing. But you have to understand that Most of our customers are on the North American market. They are also trying to source more and more from us. So I do expect that, that Increase is going to affect the ability that we have to ships abundant.

Speaker 2

So that's So I can answer that question, Tina. I hope it's enough.

Speaker 7

No, that's great. I have to ask you if you can remind us about Pescaria's qualification process and how to think about the mix improving there.

Speaker 2

Remember, the Pescaria is going to Starting really to show the qualification process in this quarter. So part of this 500 1,000 tons, if you look at 2023, there's not much change in consumption. In fact, 2022 against 2023, the whole year, I think, consumption in the country. So you're completing 2 quarters that has the same market or the same yes, In fact, I'm looking to the and now I remember the name the word and the consumption in Mexico decreased by 2.8% 2022, Compressno I mean, in 2022 Well, the same and it's not going to grow a lot in 2023 in market share and part of that increases is Thanks. We are increasing much more our shipments to our market share to the industrial sector.

Speaker 2

We can expect To have the Q2 of this qualification process and then It's going to be the next round Of the contracts with the customers with the annual contract with the customers. So we have a huge increase in this quarter.

Speaker 7

Okay, great. And along those lines, if you can steer us to where you expect margins. I know in the past, Sometimes you talk about a normal range of 15% to 20%. So you're on the high end of that range or any other color would be

Speaker 2

Yes, you're right. It's a very good question, Tina, that we usually don't you're right. We were in the bottom part, 14% of margin EBITDA, 15% 20%. Probably in the next quarter, we are going to be in the upper side of that a little bit up on that. Okay, great.

Speaker 2

Thanks.

Operator

Our next question comes from the line of Diego Lafigo from Bradesco BBI. Please proceed.

Speaker 8

Quick questions. First one, Massimo, can you comment on your slab integration dynamics for the coming quarters? What should we expect? Can you talk a little bit more about Argentina? What's the outlook for steel demand, if you could quantify for 2023 that would be?

Speaker 2

Well, slab integration, as you say as I always said,

Speaker 4

It's going through most of our

Speaker 2

slabs are going through. I think we only ship in this quarter 60,000 tons Slabs, all the other more than 1,000,000 tons of labs went to our own consumption. The slab integration is almost 100% today. That's Q second Q, We are still seeing this healthy demand for steel consumption. Clearly, that's not what we expect for the rest of the year, And we think that with the variation of the GDP of the decrease of Argentina, The whole year probably consumption steel consumption in Argentina is going to decrease.

Speaker 2

It's very difficult to say the number, but for the whole year, not for the second half, for the whole year.

Operator

Comes from the line of Carlos De Alba from MS. Please proceed.

Speaker 3

Yes. Thank you very much. MSC is Morgan Stanley for those that don't know, just Good morning, Martin Montalvo and Sebastian. Just a couple of questions. One is on the cash, but about I think about half of that, and I'm not sure if it is On a net cash basis or just the cash that you have in could you talk about the challenges that you may have, the company may have and other corporate I have in Argentina and 2 in the country.

Speaker 3

So maybe you are already investing as much as you possibly can, your assets are in good shape, The economy is not really expanding and the outlook is uncertain. So you might not be able to what options do you have To use potential will be very interesting. And then the second question is and I know that this is A lesser part of your plan, there is a mainly law potential change that is now sitting in Senate. What the bill was presented to the Senate, have you taken a look and Your business could be.

Speaker 2

Yes, Carlo, thank you. It's a mining new law that went through the House And now it's in the Senate and probably it will be discussed today, to be honest, Of affection in the mine, the mining as it was on the original, I think he is our first. But to be honest, there were some discussions, Very helpful discussions with the Mexican government. And I think there has been and in the changes that the house made And the law that the House approved. And I think that both the senators And the Mexican volumes, there has to be mainly with some technical issues with the use of water.

Speaker 2

So it's a very technical and this to be an impediment. So I think there is good, goodwill to change And I don't see a big issue today with how this is going through. Cash situation. Yes, that's

Speaker 4

easy. So well, first of all, you're right on the Two things to get cash out of the country and we have a significant level of cash in our continuing subsidiary. The first thing that you can do in dividends. So we have just announced on Monday That the company, Tarunee, Argentina of more than $600,000,000 in kind in bonds. So that gets some money out of Argentina and in fact is the normal way any company has To Steven, of course, I probably we will not have the time to enter into details, That makes things much different from a normal country.

Speaker 4

So that takes longer and has different steps To be followed. But all in all, I think that the most important of cash with Argentina, it was the right moment To utilize part of the cash, to take into consideration, to distribute that part of that cash to the shareholders. On the rest of the cash, cash that we have over there against variations of quotation of the dollar because You know, it's the dollar and protect ourselves against the inflation effect that we are also suffering in the country. The company will continue modeling very closely the situation there and try to react to that. But the best example is what we have just done, which is outside and in the case of Ternium, of course, we will be receiving this cash As part of as Sika.

Speaker 4

So that's what we are doing. And in a complex situation, the one You are seeing that Argentina is very helpful. Yes.

Speaker 2

Thank you very much.

Operator

For closing remarks.

Speaker 2

Okay. Theos, as usual, please feel free to contact us If you have any comments, any additional questions.

Operator

Thank you, ladies and gentlemen. This does conclude today's call. Thank you for your participation.

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