Ternium S.A.

Ladies and gentlemen, thank you for standing by, and welcome to the Turnium first quarter 2023 results call. I would now like to turn the call over to Sebastian Marti. Please go ahead.

Good morning, and thank you for joining us today. My name is Sebastian Marti, and I am Turnium's Global Investor Relations and Compliance Senior Director. Turnium released yesterday its financial results for the first quarter of 2023. This call is complementary to that presentation. Joining me today are Ternium's Chief Executive Officer, Maximo Bedoya, and the company's Chief Financial Officer, Pablo Brizio, who will discuss Ternium'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. Redosa.

Thank you, Sebastian. Good morning to everyone, and thank you for your participation in today's conference call. Ternium recorded a good set of results in the first quarter of 2023 with an EBDI slightly over half a billion dollars. 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 million in the quarter. Further on, Pablo will go more in depth on our performance in the first quarter. Let's review the business environment in our main markets, beginning with Mexico. Apparent still demand in the Mexican market remains healthy. In the commercial market, a restocking in the value chain, which began in the fourth quarter of last year, continues into the first quarter 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. housing market like white goods and HVAC industries are currently softer. 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 Pesquería advances. As an example, in the first quarter of 2023, we shipped 2.1 million tons in the Mexican market, This is half a million tons more than what we shipped in the first quarter of 2022 when the hot free meal was in the first stage of the startup. This is an increase of more than 30%. And we expect shipments to continue growing in this market in the second quarter. 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. 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 itself. Something that has been lately calling investors' attention is the increasing near-showing trend in the region. This is due to the need of closer and more reliable supply chains to serve and market. Mexico is a beneficiary of this dynamic as a result of its many advantages. It's a 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% or 99% of occupancy rate. As an example, one of the latest and highest profile investment announcement is Tesla's new factory in Mexico, which will be built in Monterey, our hometown. Let me now make some comments about Argentina, our second 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 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 is expected to impact economic activity and still demand in the country during the second half of 2023. I would like now to make a brief comment about our recent announcement regarding the increase in pernium participation in Usiminas control group. Pernium has had a participation in Usiminas since 2012 when it joined Nippon Steel and Previdencia Usiminas in Usiminas control group. 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 30th, we agree with our control group partners to take on different roles. We will have a more direct involvement in Usimina's management and the implementation of its strategy, while Nippon Steel will maintain a say in all key decisions outside the ordinary course of business and will 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. To put this change into action, Nippon Steel 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 Steel and Previdencia, Usiminas, will retain one officer each. As for next steps, first, 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 Usiminas. Because of this, I hope you understand we won't be able to act in the Q&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 fifth 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 is that we are launching the construction of a new technical school in Santa Cruz, Brazil, near our Ternius Lab facility. For this, we plan to leverage on the experience of staying with our technical school in Pesqueria, Mexico. This technical school, the one of Pesqueria, which is now on the seventh 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. 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 is 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 first quarter 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 Project can only be sustainable if the communities where we operate grow alongside the company, and education plays a key role in this endeavor. 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 Ternius will have a good performance in 2023. With our latest investments, We have put the company in a strong competitive position and there is more to come with the upstream and downstream project under development. We believe Ternium will 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 saying many times in the past, we have always been committed to Brazil. This is one of the largest steel markets in America, 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 Usimina's control group. I believe our recent agreement with Nippon Steel will give us a renewed base from which to contribute to Usimina's success, benefiting all of Usimina's stakeholders. Okay, Pablo, you can now go ahead with your presentation on Ternius performance in the first quarter.

Thanks, Maximo, and good morning to everybody, and thanks again for participating in our conference call. Let's review more in detail Ternius performance in the first quarter and our guidance for the second quarter. We will start on phase three of the webcast presentation with Ternius, EVDA, and net income. As anticipated, EVDA A VDA margin and a VDA per ton improved sequentially in the first quarter of the year, leading to earnings per ADS of $1.91 in the period. Margins in the first quarter approached the company usual range, mostly as a result of cost deflation, as lower price raw material continued flowing through the company's inventors. Looking forward, we expect the company's EVTA to increase in the second quarter 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 four. In Mexico, turning steel shipments reached a new all-time high of 2.1 million tons in the first quarter of 2023, as Maximo already explained. Chipments were not only higher than what we had last year, but also they improved 10% sequentially against last quarter of last year, reflecting turning increased market share in this dynamic market. The sequential volume increase in Mexico in the first quarter 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 second quarter of 2023. In our market, the sequential decrease in steel shipments was mostly due to a lower volume of slabs shipped to third parties as the company furthered the integration of its Brazilian slab facility with the downstream facilities in Mexico. In the next page, number five, you can see that combining these developments, consolidated achievements in the first quarter was 3.1 million tons. Based on that, as already been discussed, we expect consolidated achievements to increase in the second quarter of this year, mainly reflected higher volumes in Mexico and somewhat in the southern region. Revenue per ton remains relatively stable in the first quarter. despite the increase in spot still prices in the USMCA regions. These were mainly due to the negative effect of lower prices on the contract in Mexico in this quarter, which reset prices with a lag, and by lower realized prices in the southern region. In the second quarter, contract still prices are expected to sequentially reset at higher levels. This positive development coupled with the healthy spot prices expected to lead to a higher consolidated revenue per ton in the second quarter. 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 in EBITDA in the first quarter was mostly the result of a lower cost per ton. Achievements and revenue per ton remain relatively unchanged. The decrease in cost was mainly due to the lower price per slag and raw materials acquired in the second half of 2022 that continue flowing through the company's inventories in the first quarter 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, can you expect adjusted VDA to increase sequentially in the second quarter as consolidated achievements and revenue per ton increase, and cost per ton deflate a little further. 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 first quarter of this year, tax results include a deferred tax gain and turn in Mexican subsidiaries 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 balances. Cash flow operations in the first quarter of the year was 612 million dollars, including a working capital release of 218 million dollars. Looking forward, we expect working capital to increase in the second quarter in sync with higher steel production, shipments, and prices. Free cash flow in the fourth quarter was $414 million after capex of close to $200 million. This drove turning net cash position to $3 billion by the end of March. The capex level is expected to continue increasing In the coming quarters, a starting advance is done in project in Pesqueria, and there are projects already announced in North America. With this, we conclude our prepared remarks. Thanks a lot for your attention, and now we can go to take any questions that you may have. Please, operator, proceed with the Q&A session.

The floor is now open for your questions. To ask your question this time, please press star one on your telephone keypad. If at any point you'd like to withdraw from the queue, please press star one again. We'll now take a moment to compile our roster. Our first question comes from the line of Sayo Greiner from BTG Pactual. Please proceed.

Hello, good morning, everyone. Thank you. My first question on your North American operation. So I wanted to explore a little bit more on demand. So demand conditions in North America still seem quite strong in the short term, as you guys pointed out. So the auto industry remains strong. Some supply chain restocking, and you guys mentioned that the second quarter is still expected 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, do you still believe that field demand could be sustained at current levels for the entire year? Are there any pressure points that you guys see? And if you guys are working with an estimated volume increase for the year in the Mexican market that you could share with us, that would also be helpful. And my second question On the using units transaction, I know that you guys said that there's very little, 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 Martin's comments. So, just wanted to see if you guys can share what are turning plans for the assets from this acquisition. Are there any priorities in the short and medium term? Are there any low and medium terms that could be addressed in the short term. I also wanted to understand if you could eventually see Tarion further increasing its tank ahead, maybe even consolidating the assets down the road, anything that you can share with us regarding that. Thank you very much.

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 second Q of this year. I think this is mainly because commercial market, as I said, is still in the restocking process in Mexico and in the U.S. also. We are gaining market share and industrial market, it's stable. So I think the second Q It's fine. What is going to happen the second half of the year? We are still seeing a demand that is robust. We are not seeing things that can change the demand we are seeing today. There are, 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 nearshoring that I'm speaking, you are seeing that everywhere in the north of Mexico. And a part of that nearshoring 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 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 will bring a so-called recession in the US. 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 US. Our customers today are working with an 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 outlaw demand, Caio. The second question, I think it's about Usiminas. If I understand well.

Yeah. I'm using a transaction, so I always... I was wondering if you guys can share any initial plans in the future that you're planning on drafting in the short term, if you could eventually even see trading further increasing in the state and in the country.

Yeah, well, you're right. It's 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 Usuminas before Cadre grants its approval to the transaction. I mean, as Ternium, you know, we are committed to the development of Usiminas, and I believe, and we believe, that the AGRI changes in the control group will benefit Usiminas and all its stakeholders. On the other side, you know that Brazil is a very important market for Ternium, and we have always been committed or excited of having this opportunity. and and we will have a lot of work to do but again once the caddy approved the transaction my opinion is that there is a significant potential uh in us and we believe and our partner also believe that we have the capacity to unlock that potential to be honest us has good assets, mining assets, Ipating and Cubatao, capable people and many opportunities to develop. On the other hand, also you have enormous challenge or a big challenge, like the relining of the blast furnace number three, the investments in the coking facilities, further development of the sustainability strategy, analyzing in depth 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 Perium, once the operation is approved, taking leadership, a leadership position in UC Minas is going to help with all of this. I think that's what I can comment on the subject, Caio.

No, that's very helpful, Maximo. Thank you very much. Just a follow-up on the previous question. Can you guys share with us... Can you speak... Caio, sorry.

Can you speak a little bit closer to the mic? Because we are hearing very low.

Okay. Can you hear me better now?

Yeah, that's perfect.

Okay. So just to follow up on the previous question, so thank you very much on the power, on the zoominess. Just on the shipment question, can you maybe share with us your estimate for volume increase for your Mexican operation for 2023 versus 2022. Can you share an idea of what you guys are working with concerning for the Mexican operation?

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 first queue. So we are going to repeat those shipments. Second Q is going to be a little bit higher. And third and fourth Q, we are expecting to continue that trend, not of increasement, but of maintaining. With that, I think it's a 25% or 20-something percent increase in shipment in year after year. You have to realize that The hot stream mill is not running almost at full capacity, the new hot stream mill. I mean, it's running, I think, 88% of capacity. So we don't have a lot of space to increase much more shipments. 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.

Thank you very much. Thank you, Kyle.

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

Good morning, everyone. Thank you for the opportunity. So my first question is on your working capital trends going forward. There's a big working capital release this quarter, so I just wanted to get some more color on what you expect in the coming quarters. And then secondly, on USHRC trends, right, after multiple price hikes since late last year, it seems that prices have somewhat stabilized lately, right, and lead times have started to shorten a bit. So I just wanted to see if you could provide some color on what you expect in terms of price trends, you know, 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.

Thank you very much, Caio. I start with the second part and I leave working capital to Pablo. Price 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 water coil. What in the second future? Probably, but I cannot say 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 quarter there should be some adjustment. How big is that adjustment? I think it's not going to depend on other factors that what happens with the macroeconomic activity and the macroeconomic numbers. If really there's a recession, well, 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.

Yes, absolutely. Thank you, Maximo.

Working capital, Pablo.

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 in Mexico, and also the growth or the small growth that we are expecting also in the southern region market, there will be a need for further uses of working capital. 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 first quarter. So, putting all in all, of course, taking into consideration what just Maximo mentioned, that we are seeing some decrease in prices of raw material, we are expected to see somewhat an increase in the level of working capital utilization. Not that significant. because putting all the things together shouldn't be that significant, but we will not, or our expectation now is not to continue what happened in the last three quarters where we have released, and in some cases like last quarter, in the last quarter of last year, we have a huge release of working capital. Now we think we are entering into a process where we will be recovering a little more working capital until prices and volume adjusted to the new level.

Very clear. Thank you, Pablo and Massimo.

You're welcome. You're welcome, Kayo.

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

Yeah, hey, good morning, everyone.

Good morning, Timna.

My first question is about the elephant in the room, which is 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 and restarting, how you think about that, Cadence? Thanks.

It's a very good question, Timna. Thank you very much. I mean, I don't know much of AMSA as probably what everybody is hearing in the press. But I don't know if AMSA is going to restart. And if it's going to restart in the third quarter, it's clearly not going to restart at the level they used to be. I mean, as you know, the blast furnace is down, so that would take probably several years to restart a blast furnace. Imports are clearly a big part of the Mexican market, and we are competing with imports, the Mexican and the U.S. market. But you have to understand that most of our customers... are as they are relocating production to the north american market they are also trying to source more and more from us so i do expect a little increase in imports but i don't expect that that increase is going to affect the ability that we have to ship the program that we have in our programs to be abundant. So that's how I can answer that question, Tina. I hope it's enough.

No, that's great. I appreciate the challenging situation. Okay, thanks. And then I wanted to ask you if you can remind us about Pescaria's qualification process and how to think about the mix improving there in terms of timing and magnitude, if you could.

Well, remember, the pesquería is starting really to show the qualification process in this quarter. So part of these 500,000 tons, if you compare the first quarter of 2022 to the first quarter of 2023, there's not much change in consumption in Mexico, in steel consumption. In fact, 2022 against 2023, the whole year, I think consumption was flat in the country. So you're completing two quarters that has the same market or the same, yeah. In fact, I'm looking to the, and now I remember the name, the world still take the SRO, the short range outlook. and the consumption in Mexico decreased by 2.8% in 2022 compared to 2021. So there's no... I mean, in 2022 was the same, and it's not going to grow a lot in 2023. So these increases are more increases in market share, and part of that increase is that after... one year in certification that's the time it takes we are increasing much more our shipments to our market share to the industrial sector we can expect to have roughly a hundred and something thousand tons additional in the second quarter of this uh qualification process and then It's going to be a small increase until probably next year when there's 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.

Okay, great. And I was also asking a bit about margin benefits. So maybe 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%. Suffice to say, it would probably be a little higher than Q1, but would we be on the high end of that range or any other color would be?

Yeah, you're right. It's a very good question, Tina, that we usually don't want to answer. You're right. We were in the bottom part, 14% of margin EBITDA in this quarter. Our normal range, we always say, is between 15% and 20%. Probably in the next quarter, we are going to be in the upper side of that range, most likely a little bit above that.

Okay, great.

I hope that is enough because we never say that.

Thank you.

Thanks.

Our next question comes from the line of Diego Lefigo from Prodesco BBI. Please proceed.

Thank you. Good morning, gentlemen. Two quick questions. First one, Massimo, can you comment on your slab integration dynamics for the coming quarters? What should we expect on that? And the second question, 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 great. Thank you.

Thank you, Thiago. Slab integration, as I always said, it's going through most of our slabs are going to our own facilities if you see the numbers of shipments i think we only ship in this quarter 60 000 tons of slabs all the other more than 1 million tons of labs went to our own consumption either in argentina but mainly in mexico so the slab integration is almost 100 today That's one point. Argentina, as I said, second Q, we are still seeing demand as in the first quarter. I mean, it's a healthy demand for still consumption. Clearly, that's not what we expect for the rest of the year, and we think that with the variation of the GDP or the decrease, the all the consultants are putting in the GDP of Argentina. The whole year, probably, consumption, still consumption in Argentina, it's going to decrease. It's very difficult to say the number, but our expectation is between 2% and 3% today. For the whole year, not for the second half. For the whole year.

Okay. Very clear. Thank you, Massimo.

Now,

Our next, our final question comes from the line of Carlos de Alba from MS. Please proceed.

Yeah, thank you very much. MS is more going to stand before those that don't know. All right, so thank you very much. Good morning, Maximo, Pablo, and Sebastian. Just a couple of questions. One is on the On the cash situation, I mean, you clearly have a very strong balance sheet, $3 billion net cash, but I think about half of that, and I'm not sure if it's on a net cash basis or just the cash that you have in Argentina, but about half of this is in Argentina. Could you talk about the challenges that you may have, the company may have, and other corporations may have in Argentina to use that high level of cash in the country? but 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 invest in growth projects right now, at least. So what options do you have to use potentially that cash outside of Argentina? If you could comment on that, that would be very interesting. And then the second question is, and I know that this is a lesser part of your business overall, but you do have some mining operations in Mexico, and there is a mining law potential change that is now sitting in the Senate. What would be, if approved as the bill was presented to the Senate, have you taken a look at it and have a comment on what the potential impact to your business could be.

Yes, Carlos, thank you very much for both questions. I start with the second question. You're right, there is 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. We are not seeing a lot of... of affection in the mine the way it went in the house. The mining, as it was on the original, I think it has a huge affection to all the mining operations of Mexico, not only ours. But to be honest, there were some discussions, very helpful discussions with the Mexican government, And I think there has been a significant progress in the discussion and in the changes that the House made and the law that the House approved. There are some issues yet, to be honest, and I think that both the senators and the Mexican government understand These things, there has to be mainly with some technical issues with the use of water. So it's a very technical position, which I think the government didn't meant this to be an impediment. So I think there is good would will to change. And again, there are small changes to be made. So I think that I don't see a big issue today with how this is going through. Cash situation in Argentina, Pablo.

Okay, what a nice question to answer. Yeah, that's easy. So, well, first of all, you're right on the situation in Argentina. It's easy to do things or to get cash out of the country. And we have a significant level of cash in our Argentinian subsidiary. the first thing that you can do, and in fact we have done just this week, is pay dividends. So we have just announced on Monday that the company, Taranium Argentina, our subsidiary there, will pay a dividend of more than $600 million in kind, in bonds. So that is one way to to get some money out of Argentina. And in fact, it's the normal way any company has to do that. But I mean, Argentina is a company that traditionally pays dividends. Of course, and I probably will not have the time to enter into details because Argentina usually has certain rules that make things much different from a normal country. So the process of paying deals in Argentina takes longer and has different steps to be followed. But all in all, I think that the most important comment to make is that because of this level of cash that we have in Argentina, it was the right moment to utilize part of the cash without having any other investment project to take into consideration to distribute that part of that cash to the shareholders. On the rest of the cash, we continue to work in protecting the cash that we have over there against variations of quotation of the dollar because you know that our currency, our manufacturing currency and our managing currency is the dollar. and protect ourselves against the inflation effect that we are also suffering in the country. So that's what we are doing right now. And the company will continue monitoring very closely the situation there and try to react to that. But the best example is what we have just done, which is distribute cash to shareholders outside and in the case of turning of course we will be receiving this cash as part of us as 52.5 percent that we have of our subsidy in argentina so that's what we are doing and in a complex situation as the one that you are seeing that argentina's government carlos i hope that clarifies both questions yeah thank you very much

I would now like to turn the call over to Turnium CEO for closing remarks.

Okay. Thank you, everybody, for participating and making very good questions. As usual, please feel free to contact us if you have any comments, any additional questions, and we talk all in the next conference call. Thank you very much.