Ternium S.A.

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 Turnium first quarter 2022 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. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, just press star one. Thank you. Sebastian Marti, you may begin your conference.

Thank you. Good morning, and thank you for joining us today. My name is Sebastian Marti, and I'm Turing's Global Investor Relations and Compliance Peer Director. Turing released yesterday its financial results for the first quarter of 2022. This call is complementary to that presentation. Joining me today are Turing's Chief Executive Officer, Maximo Venogia, and the company's chief financial officer, Pablo Bricio, who will discuss Ternio's business environment and performance. At the conclusion of our prepared remarks, there will be a Q&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, and on page two 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. Bedoya.

Thank you, Sebastian. Good morning to everyone, and thank you very much for joining us today. a strong set of results in the first quarter of the year. Shipments are recovering and margins decreased, as expected, although they remained at high levels. Since our last conference call in February, the global steel business environment changed significantly as a result of the invasion of Ukraine and a consequent wave of international sanctions against Russia, not to mention the humanitarian tragedy this conflict created. In an already volatile steel market environment, the conflict in Ukraine brought even more disruptions as both of these countries are relevant participants in the trade of steel and related raw materials, creating scarcity of these inputs and a consequent cost push to steel prices. Peak iron, PCI, slabs, and hot-walled steel were particularly affected. As a result of these supply disruptions in the international steel markets, previously declining steel prices took a sharp turn up by the end of the first quarter and recently stabilized at relatively high levels. Let's review now the latest developments in our main markets in this new scenario. In Mexico, we expect shipments to continue increasing in the second quarter of this year. There is currently a restocking in the commercial market in response to these new conditions in the market, although it remains somewhat slow. On the other hand, The industrial market continues to be healthy, and we expect to continue growing in this market, aided by the new hot street meal in Pesqueria, increasing our market participation. The auto industry continues to suffer from supply chain disruptions, creating order backlogs that should support higher steel demand down the road. We are now more positive in our expectation for this industry during the second half of the year as we are already seeing some recovery in orders. The ramp up of the new hot rolling mill in Pesqueria in Mexico is progressing as expected as we continue working on certifying our products with different industrial customers and gradually adjusting the facility and its logistics for a higher level of production. To complement the capacity offered by the new hot stream mill and to broaden our value added product portfolio, we recently announced a new investment program at our Pesqueria Industrial Center. The program consists on a new cold rolling mill, a hot bit galvanized line, a push pull pickling line, and a new finishing lines. The new investment program with expected startup of operation in the first half of 2024, should help us better serve our customers in the automotive, renewable energy, and home appliance industry, and will support our leading position as a steel supplier in Mexico. This adds to the already announced expansion of our sweeper facility in U.S. state of Louisiana, with a second coil coating painting line expected to start up in mid-2024. Let me now turn to Argentina. For some time now, the Argentine market has been a very stable one, despite a high degree of uncertainty, and this has not changed. Currently, steel demand remains healthy in the auto industry, construction, the agribusiness, and the energy sector. Based on what we can see for the next few months, shipments in the second quarter should increase a bit from last quarter. However, there are some factors that could affect steel demand further on, mostly related to the unstable macro situation in the country. I would like now to make a quick comment regarding sustainability at Tarnium and our ongoing projects. We are committed to the industry's sustainable development, and our efforts were recognized once again by the World Steel Association. Early this month, Tallinn was selected as a sustainability champion for the fourth year in a row. This was on top of the safety and health excellence recognition for a safety management initiative, also from World Steel. Also since our last call, we participate in a survey from Ecovades on our ESG initiatives. Ecovades is an ESG rating agency used by several of our largest industrial customers. In this survey, we attained a top 10% score in our industry. The rate obtained is already higher than the rate required by our customers for 2025. This inquiry was structured in four main topics, environmental, labor and human rights, ethical behavior, and sustainable procurement. Let me now wrap up these initial remarks with some final thoughts. We started the year with very good results, and we expect to have an even better performance in the second quarter. But we should not lose sight of the fact that there is significant uncertainty regarding the performance of the world's economy down the road. The ongoing disruption from the war in Ukraine and the COVID-related lockdowns in China are a cause of concern. This, together with the current inflationary environment in the world and the beginning of a monetary tightening cycle, could affect the world's economic growth rate in the future. We believe we are very well positioned in this uncertain scenario. The transformation of our company since the acquisition of our slab facility in Brazil and the conclusion of our expansion project in Mexico enables us to continue growing our market participation with an even better competitive position. In addition, we currently have a strong financial position and expect to have a significant cash generation in 2022. This is a comfortable situation from which to face any volatility in the steel markets. This financial strength will allow us to continue to execute our dividend program with the next payment due in May and the advance payment for 2022's dividend due in November. With a longer-term view, I'm positive regarding the downstream investment program in Pesqueria. This initiative is consistent with our long-standing strategy to continually optimize our industrial system in order to capture future market opportunities. I expect it to strengthen our competitive position, enable us to replace imports in the Mexican market, and better serve our customers with a broader and more technologically advanced product portfolio. All right, I'll finish my remarks here. Please, Pablo, go ahead with your review of the quarter performance.