Ternium SA (TX) 2015 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Ternium's first quarter 2015 earnings call.

(Operator)

As a reminder, this call is being recorded. I would like to introduce your host for today's conference, Sebastian Marti. Sir, you may begin.

Thank you. Good morning, and thank you for joining us today. My name is Sebastian Marti, and I am Ternium's investor relations director. Ternium issued a press release yesterday detailing its results for the first quarter 2015. This call is complementary to that presentation.

Joining me today is Mr. Pablo Brizzio, the Company's CFO, who will discuss our performance. At the conclusion of our prepared remarks, we will open up the call to your questions.

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 in our press release issued yesterday. With that, I'll turn the call over to Mr. Brizzio.

Thanks, Sebastian. Good morning to everybody, and thanks for participating in this call. Let me first describe our performance during the quarter, and then we will go to the Q&A session. EBITDA during the first quarter 2015 was $313 million, a 4% sequential increase, mainly reflecting a 3% increase in shipments.

EBITDA margin increased slightly to 14.7% in the first quarter 2015, mainly as a result of a $47 lower steel operating cost per ton, partially offset by $40 lower steel revenue per ton. FX were $2.1 billion in the first quarter, just a 1% sequential decrease, as the mentioned decrease in revenue per ton was mostly offset by the increase in shipment, which reached over 2.4 million tons in the quarter.

In Mexico, shipments were 1.5 million tons, 8% higher sequentially, and 9% higher than in the first quarter last year. I've commented in previous call, Mexican consumption of steel has been growing mainly as a result of the [herseley] demand from consumers in the manufacturing industry.

Despite the strong underlying demand, we may experience slight softening achievements in the - in this market in the second quarter 2015, due to restocking trends in the value chain. Steel revenue per ton in Mexico was 5% lower sequentially.

And steel prices in the U.S. and Mexico began to trend downward during the fourth quarter 2014, and have continued to decline throughout the first quarter and during April, due to the high level of steel imports into the U.S. market, and the de-stocking process in the value chain.

In addition, as close to half of our sales in Mexico are under contracts, and this caused a [lull] for the quarter in our revenue line, to reflect the changes in the steel market prices in the first quarter of 2015, did not draw the important price increase that occurred in the last month in this region.

We expect as a result to report in the second quarter a new reduction of revenue per ton in the Mexican segment, even though we have recently seen signs that prices may be reaching a bottom in this market. Shipments in the southern region decreased 3% sequential in the first quarter 2015, mainly due to lower seasonal demand in Argentina, and we believe they will recover to the previous levels during the second quarter 2015.

Realized price in the southern region also [saw] a 3% sequential decrease in this quarter, and we expect them to also have a downward trend in the coming quarter. Consolidated EBITDA per ton of steel increased 1% sequentially in the first quarter 2015, to $129, and both operating cost and revenue per ton have been trending down.

As I explained before, mainly reflecting lower steel prices in our main steel market, a lower cost for purchased [lav], raw materials, and energy. Prices were [ag nor], but [lav], scrap, and energy continue to decrease during the first quarter 2015, although this cost benefiting trend will not be entirely reflected in our cost sales in the second quarter 2015 due to the gradual pass-through of this inputs to cost as Ternium consumes its inventories over time.

Consequently, during the second quarter [of EA], we expect a lower operating margin compared to operating margin in the first quarter, as the expected decrease in revenue per ton will not yet be upset by much in decrease in cost per ton.

In addition, we expect that shipments across all our markets will remain fairly stable in the second quarter 2015, as the decrease in Mexico will be offset by a recovery in Argentina. Equity in result of non-consolidated companies, was a loss of $133 million in the first quarter of the year.

This result included a $110 million loss related to an impairment of Ternium's investment in Usiminas, led by the expectation of lower prices of steel and iron ore, and weaker steel demand in Brazil, and weaker Brazilian real, U.S. dollar exchange rate, a lower operating margin, and a higher discount rate compared to our previous value use estimation for our Usiminas investment.

Let me comment about the pending issue that we have with the SEC staff that we have mentioned in our press release yesterday, regarding our investment in Usiminas. The SEC staff issued comments as part of the regular reviews of our filing, regarding the current value of Ternium's investment in Usiminas, including second explanation on Ternium's value calculation under the difference between [value use] and [circum fair value use indicate].

We provide this additional information to the staff supporting the Company's accounting [treatment] of Usiminas' investment [at the FRS] as of September 30, 2014, and we have further discussed with the members of the staff which continue as of today.

As the conclusion of this process, it is that an additional impairment of investment in Usiminas will be required in 2014, which could be required to restate our 2014 financial payments to adjust the current value of Usiminas to a lower level.

Income tax in the first quarter 2015 was $88 million, compared to $112 million in the previous quarter. The income tax expenses in the fourth quarter 2014 included deferred tax expenses related to the withholding tax on dividend distribution in Argentina, in connection with the [CRR] increased reserve for future dividend, and cash dividend [paid].

As you recollect, CRR has paid dividend just a couple of weeks ago. Additional to that, there is a non-cash effect on deferred tax related to the depreciation of Mexican peso and the Colombian peso against the U.S. dollar, [due in that video], and the impact of non-taxable loss stemmed from the impairment of the investment in Usiminas.

So net result decreased $82 million sequentially in the first quarter to a loss of $22 million, mainly as a result of the mentioned law related to our investment in Usiminas, partially offset by a lower income tax expense, and of course the mentioned better operating income we showed during the quarter.

Turning now to the cash flow statement, I am glad to report the free cash flow reached $240 million in the first quarter of 2015, and net debt decreased to $1.5 billion from $1.8 billion as of the end of the fourth quarter last year.

Our financial position continues to be strong, with a net debt to last 12 months EBITDA ration of 1.1 times. Net cash provided by operating activities in the first quarter was $324 million, including a $70 million lower working capital.

Capital expenditure were $84 million, down from $109 million in the previous quarter, and from $104 million in the same period last year. Important to mention that if the general shareholder meeting that will take place next week, approved the proposal for [director] on paying dividends, Ternium will be paying in a couple of weeks a dividend of $0.90 per [AVS], coming from $0.75 last year, which is a 20% increase, and which represents a 39% payout ratio, and around 5% dividend deal.

So with this, that are my main issues I wanted to comment on, and now please let's go to the Q&A session. Thanks.

Thank you. (Operator instructions). And our first question comes from Leonardo Correa, from BTG Pactual. Your line is open.

Hi, hello. Good morning, everyone. Thank you. My first question is regarding your cash flow generation and capital allocation. We've been seeing this quarter again very strong free cash flow generation above $200 million, which is above, more or less, what you're spending in CapEx, and above what you have in terms of dividends for the year.

This is clearly a company generating a lot of cash flows. Just in terms of capital allocation, could you be thinking, going forward, of potentially increasing cash returns and perhaps what would be the priorities in terms of capital allocation region-wide, or in terms of projects? That would be my first question.

Second one regarding the slab spread versus HRC, just if you can give us an update on where they are currently, and what you are expecting for the next quarters in terms of the HRC versus slab spread, which will have a positive impact on your Mexican operations? So that's it guys, thank you.

OK. Hi, Leonardo. Let me start with your first question. As you see, we have a positive result in which we have a strong free cash flow generation, with lower level of CapEx. Coming into next quarter, it's very important to mention, and to understand where this cash flow will be directed.

First of all that we will be paying dividends from Ternium, and the total amount of dividend will be close to $180 million. Additional to that, there is the dividend coming out of Argentina, from our subsidiary in Argentina, CRR, which pays over $80 million.

That was already paid, so part of that is going to minorities, so a portion of that has also increased the outflow of cash from the Company. Together with that, as it was already described in the press release, we concluded the transaction for acquisition of the participation in our subsidiary in Colombia, [Federasai] was not part of us, which is 46% of the total company that's required as a payment of around $70 million.

So the Company will be delight in part of the cash flow generated during the first quarter in all the issues that I mentioned, which is in line with one of your comments, which is that we have increased the dividend payment from last year.

So and as we have been mentioning also, we expect a decrease in our EBITDA generation for the quarter, and of course which will be reflected in the cash flow during the coming quarters. So no additional projects or anything special to mention at this moment in respect to that.

But the cash flow will be utilized at this moment to distribute to shareholders, and in the shares that we already acquired from [Federasai], and of course in CapEx and sustaining a very solid financial position.

Entering into your second question, which is also very important, the spreads that we are still seeing between HRC and slab continues to be very health, and they are over a range of $150 per ton, which allow us to sustain a very good level of returns in our operations in Ternium.

We continue to see during the quarter and into beginning in April also, continuing decreasing in pricing of HRC, and this has been in sync with the decreases that we have been seeing in the prices of slab. And the gap between the two continues to be at a very healthy level.

And let me also mention that we are still not seeing these decreases in slabs in our financials due to the usual comment that we made, which is the first-in first-out methodology of valuing our cost. So we are expecting to see that gradually coming into the second semester of the year.

And that's why we are saying in our press release, in our remarks, that we will mostly not be able to match the reduction in prices that we're expecting to see coming quarter with reduction in cost that we know they are there, because we know that we are buying slab lower cost, but we will not be able to see them go in through cost. So I believe I answered both of your questions, Leonardo.

Perfect. Thank you very much, Pablo. Just a follow up if I may, just to reshape my first question, given how low your leverage is now, right, net debt to EBITDA is now very close to 1 times, would there be any levels which you think is appropriate given the timing of the cycle, and some of the options that you have on the investments, and some of the issues, especially with Usiminas, what type of level would you be aiming of net debt to EBITDA? I mean would this be an appropriate level, or you think there's room to maybe increase to 1.5 to 2 times net debt to EBITDA? Thank you.

You know that we feel as a company very comfortable with this level of ratio. Of course this can move because as I mentioned, we have a reduction in the EBITDA in the coming quarter, the last 12 months will be reduced, and if we will have to pay all the issues that I mentioned, probably you have some increase in that ratio.

But we always feel comfortable in low levels of ratios, because as usual, allow us to first of all have a really strong financial position, and not suffer during timings in which the industry goes through some difficulties. So we feel very comfortable with low levels of ratios.

Of course this - but as happened in the past, we can have higher levels, but that depends on certain projects, as we mentioned, we are not having any specific project at this moment. So just to be quite short in the answer, we feel very comfortable with these low levels of ratios.

OK, thank you very much, Pablo.

You're very welcome, Leonardo.

Our next question comes from Carlos De Alba from Morgan Stanley. Your line is open.

Yes, good morning, Pablo and Sebastian. Clearly a big issue on Ternium is what's happening in Usiminas, so I would like to understand that one of the biggest issues is that the Company, if I understand, wants to bring the former executive [strarbos) Usiminas back, but your partners don't want.

And so to what extent would you be able to accommodate that request in order to move forward with that business, and take this issue completely out of Ternium, and realize the value that may be hidden in the stock?

Hi, Carlos, and thanks for the question. It's important to answer it. As you know, after the issue that happened in September last year, we went to court in order to claim that our understanding that these issues were not right, and were against the agreement that we had.

We are expecting very soon a resolution on these specific issues, and as you know, really one of the three judges that needs to decide have voted, voted in favor of the reinstatement of the executives on back to the Company.

We need to wait until the other two judges, and as I said, this is expected very soon, but this is very important data point in the [inflation] of Usiminas, because it will clarify if this is the case, who will be the managers of the Company in the coming months.

So that's very important, and this should be resolved very, very soon. With this resolved, and as we also said, even quoting Daniel Novegil, our CEO, we are still very confident that [pro wood price never jhay zion], we can reconcile the position of parties.

And always take into consideration that we are always working for the best interest of the Company. So this is something, the issue that you mentioned, it's very important to move ahead in this situation in Usiminas. So the expectation is to have this resolved very, very soon.

And just if you allow me, I would like just to follow up on that. So I see why it's very important to get the opinion of the court, right, to remove any potential interpretation or opinions that there was some unlawful payments that received by these executives.

So I see why the court decision is really important. But even if the court rules in favor of Ternium or in favor of the executives, that may not help the situation with your partners, if Ternium wants to reinstate the executives. It would be good for them, because it would clear of any potential mispractice, however it may not help the negotiations.

So would the Company be ready to, even if the court resolution is in favor of the executives, to maybe negotiate in good faith, and to say all right let's move on, let's bring new executives, or just keep the ones that had been appointed since the former ones left?

But Carlos, the resolution that the judges needs to take is the [SUV] these executives coming back to the Company. They will not only, or probably -- it's not an issue of clearing what they have done or what they have not. The issue is that if the judges vote in favor, what are they voting in favor of is the reinstallment of the executives unlawfully dismissed from the Company.

So formally they will need to go back to the Company. For us, we understand this is also for the Company, what is important is that it will take out some uncertainty that is still there today. With that, we continue to believe that there is a good chance of good place negotiation with our partners to put this situation over, and work for the best interest of Usiminas all together.

OK, fair enough. Just last question, on these discussions with the SEC, could you maybe give us a bit more detail as to what specific - what is the treatment on the account, and treatment that the SEC is recommending, or why this difference of opinion arose between the way Ternium accounted for the investment in Usiminas, and the way the SEC maintained that you should have done it?

The SEC has started to ask different questions regarding the way we calculated the value use, and while there is a difference between the value use and certain transactions in the market, like the acquisition of the [prevy] shares, or the market value of the ordinary shares.

So that - the question in hand though of course the SEC agrees on the way the Company received the investment in Usiminas, because we are [resitonate] and the regulation of the [I5] specific rule, how we need to value this, and specifically we need to check if there is indication of positive impairment, and for example, actually in the price of the share is an indicator that we need to test the investment that we have, doing a new value use calculation.

And the regulation says that you need to apply the higher between value use and fair value. As well we have been [positioning] our investment in Usiminas through the value use calculation. The SEC does not feel comfortable with the value use [that] (AUDIO GAP) vis-a-vis the comparison with the considered fair market transactions, like the quote in market price, or the previous transactions.

So this is the discussion, and the issue is back to September last year, where they have been reviewing all our filings, and that is the data point where if there is no positive solution for the Company, there should be probably a retainment at that point.

All right, thank you very much.

You're very welcome.

Our next question comes from Diego [Milfuego], from Merrill Lynch.

Hi, thank you. Two questions. First one, could you share with us your view on Mexican market, what's your outlook for apparent demand growth in 2015? And also if you could comment on imports competition in the U.S., do you expect less competition now that prices have been coming down?

And then the second question is regarding the strategy on your iron ore assets in Mexico. Are they generating enough returns at this point, or should we expect you to shut down some of your mines? And maybe what's the price level at which you could eventually decide to shut down? Thank you.

Hi, Diego. Let me go first to your question on our mining activity. We keep working in our mines full capacity, because the construction cost and the cost of bringing that pellet, remember that we are pelletizing in our mining facilities, still better than bringing materials from imported sources.

So we continue to do that. In fact what you have seen lately in the iron ore price is some good recovery, more recovery going back to prices of over - around $55 per ton. So we are not now in a position to stop that. It continues to be feasible for us to keep constructing the materials, pelletizing that materials, and utilizing it in our facilities in Mexico. So we are planning to keep doing that.

Regarding your question on Mexico, we continue to see a positive trend, especially in the industrial sector in Mexico. We are expecting to see, and the [war tier decision] projections that we have continues to show a positive trend in steel consumption in Mexico, close to around 3% compared to last year.

But we are seeing some reduction in - possible reduction in treatment during this quarter, this second quarter, due to the stocking process as is usual, because when you are seeing a downturn price, a scenario traditionally customers [widely rid] and can utilize their stocks until they see the moment in which there should be a probably change in the trend of the price scenario.

What we are seeing, and it's also mentioned in our press releases, that there is an important increase from imports into the North American markets, especially the U.S., and this reduction, or significant reduction that you see in the U.S. reference prices probably will help to reduce the level of imports into the market.

We are expecting to see also some, but basically we are reaching the bottom in the level of prices, or that the bottom in the level of prices should be close to happen, and basically because now the prices of the product has reduced to a level in which you could have spent differences between prices locally and international prices. For the U.S. I [meaning no], remember for us the most important price in Mexico is the U.S. pricing.

So with respect to volume, we continue to be positive, we continue to believe that we will reach, or increase on a yearly basis the number that we are shipping to Mexico, in comparison to last year. Of course thanks to the investment that we made and we finished last year including the new [corol] line and the [Tenegal] facility.

OK, thanks Pablo.

You're welcome.

Our next question comes from Alex Hacking, from Citi. Your line is open.

Hi, Pablo. One quick question if I may. The realized steel price in Mexico this quarter was down about $50 a ton compared with the fourth quarter. If you look at the indexes on U.S. steel prices, they fell quite a bit more than that, like down $150 or something like that.

Can you just remind us - I mean is that effectively because of steel priced under contracts, product mix, and things like that? And can you just remind us of your sensitivity of your realized prices versus actual prices?

Sure, Alex. Hi. Yes, you are totally right, we have run close to 50% of our achievements in Mexico under contract, so there is usually a traditional delay in prices that appear in our sales line, and usually the delay in this part of our sales is around a quarter.

That's why we are saying that we have not seen the full reduction in prices in our Mexican operations, and that should continue to happen during the coming quarter. In fact this will be the case for the whole Ternium operation, because pricing will continue to go down through the quarter. So you're right, there should be an increase in the reduction of the pricing scenario for the Company in the coming quarter.

Thanks a lot.

You're welcome.

And our next question comes from Marcos Assumpcao from Itau. Your line's open.

Hello. Good morning, everyone.

Good morning.

Hi, hello. Just a quick question here on the impairments at Usiminas. If you could mention to us what is the level that you have booked for Usiminas now on a per-share basis following the impairments that you already made since 2012?

OK, yes Marcos. We have reduced the value of our investment in Usiminas as of March, 2015, to $6.1 per share, that's including the impairment charge of $110 million that we described, and of course includes the impact of the valuation that occurred during the first quarter as you know has been quite important.

Yes, for sure. So we're talking about nearly BRL18 per share at Usiminas, right? My question here is given the difficulties here that we have seen on reaching a peaceful agreement between Nippon and Ternium, would Ternium be willing to accept potentially an offer from someone to sell their shares at some point, considering that you already have booked other shares at BRL18 per share, and maybe that the perspective that you have for the country today are lower when you made the investment back in the end of 2011?

Marcos, well first of all that's speculating on a possible sale of share which as you know, we will not do. We have invested in Usiminas, and we have entered into a shareholder's agreement together with Nippon to join the control of this company, and we have further invested buying shares from [prevy]. One day they decided to soar but fair that basically reflect our commitment to the future of the Company, and to the future of our presence in Brazil.

Of course, and it's understandable that probably the short-term view on Brazil, on the short-term view on this sector, are not as good as we would like to have, but we believe that the presence in Brazil is important. We believe that as an American participant, and with strong presence in Latin America, the presence in Brazil is important.

So we are confident that we will find a solution in negotiation with Nippon Steel, to put over this situation that we are facing in today to work together in implementing the best solution for the Company that will be facing, as you mentioned, probably not the best of the situations in the coming quarter. So that's the situation. All other issues are basically speculating on possible issues that are not there at the moment.

OK, Pablo, and given your interested in the Brazilian market, would you be considering eventually increasing your footprint in the country? Because we could see, given that the market is quite weak, and some players are leveraged, and we could see other opportunities arising.

So would you be interested in an increase in exposure maybe in only a slab player like CSA, or eventually CSB could be for sale as well, the stake that value owns of the company?

Well Marcos, you know that we have looked at this asset and decided not to participate at the moment. They put this asset for sale a couple of years ago. We have not seen this that they have put already this asset for sale again, and at the moment, we are not interested in increasing our footprint in the country.

Of course, a [stainy] company in the region, or any company in the world, in the respective regions, if something appear, you are willing to look at it, as we did a couple of years ago with CSA, and decided not to participate in that.

So nothing at the moment, no perspective of increasing our participation in the Brazilian market at the moment, and if something appears, we are willing to look at it as any company will do, but we are not expecting to do anything at this moment.

All right, perfect. And last question on Argentina, do you expect a significant demand in improvement from 2016 onwards with potential increasing investments flowing to the country?

Well first of all, we haven't seen a significant reduction in volumes last year, or this year. As we already mentioned, we are expecting the recovery of [treatments] to the local market in the second quarter, coming out of the seasonally lower quarter, which is the third one in Argentina.

So reaching similar levels that we saw at the end of last year. Very early to tell how the situation in the country will be in the coming years. You know that we tend to be positive on the perspective of the country.

But the shipment is running at a very healthy level, and we have no reasons to believe that this should change in the coming quarter up to now, noting of course that the level of shipments is lower than it has been 2 years ago, but at a healthy level. So we continue to be positive in the expectation for Argentina.

All right. Thank you very much, Pablo.

You're welcome.

Our next question comes from Ivano Westin from Credit Suisse. Your line is open.

Hi everyone. Thanks for the questions. The first one is on steel competition. Yesterday and today there were some news flows if worrying about it anti-dumping investigation in Europe against steel imports from some countries.

I just wanted your thoughts on this in terms of is this a trend which you expect to continue, and as a result, would you expect a greater exports into the Latin American region? And also if you could also please comment on your full-year guidance of volume of each of divisions, Mexico, Argentina, and other markets. Thank you.

Hi, Ivano. You're right, and this is a trend that we are seeing in anti-dumping cases in different countries, which is very normal, and especially when you see big increases of inflow of imports to different countries.

It's very normal to see countries defending their market, if they believe that there is anti-dumping coming from other countries. So we expect to continue to see a trend on that line, and we consider it normal.

Respecting your question on volume, last year we were expecting to have shipments of 2015 reaching a level close to 10 million tons coming up from 9.4 million in 2014. We are still working with this number, a number close to 10 million tons as a whole is the number that we are working with.

Of course this increase is coming out of Mexico, because we are not seeing much differences in volumes as we were commented with Marcos' question in our shipments in Argentina, so this increase should come from Mexico.

Very good. Thank you.

You're welcome.

(Operator instructions). Our next question comes from Christian Landi, from Scotia Bank. Your line is open.

Hi, good morning. Thank you for the call. So it was our understanding that the slab sales from Argentina to Mexico were going to increase in the quarter, but we actually didn't see this happening, it was only 4.5. So what slab sales say do you expect going forward that to be exported from CRR? That's the first question. And then just a second quick question ...

Excuse me, Christian, we couldn't hear you very well. It was relating to CRR, your question?

Yes, exactly.

OK, go ahead please.

OK, the second question is regarding the CapEx breakdown between Mexico and Argentina. If you could give us a little bit of guidance of going forward what should be that breakdown, that focusing on CapEx only. Thank you.

OK, I believe I understand your question, it was not very well heard. In relationship to our [Se Seri] in Argentina, what we are seeing is of course during the first quarter, which is traditionally a seasonally lower quarter of the year, a decreased volume in comparison to the last quarter of last year.

But we are expecting to recover that in the coming quarter, so volume should go back to normal in Argentina specifically in the second quarter of the year. In relationship to CapEx ...

Sorry, I what I meant was the slab sales, because we understood that the slab sales coming from Argentina to Mexico were creating that unfinished product in the Mexican plants were going to increase gradually. But we actually didn't see this happening in the first quarter. That's what I meant. [The auxilar].

OK, sorry, so we didn't hear your question before, sorry about that. Yes, you're right, we are not at the moment we initiate the export or the shipment from Argentina to Mexico, but with the new level of prices, we are not doing that for the moment. So yes, you're right, you're not seeing additional volumes of slabs moving from Argentina to Mexico at the moment, yes.

Going to your second question, which I understood was in relationship to CapEx, we continue to work with a number of over around $500 million for the year, though this first quarter was below $100 million, we have different projects that we consider we reach this level of total CapEx for the year. Of course we will update you in the coming quarters, and if there is any change we will let you know.

OK. Just a follow up on that, regarding the sustaining CapEx, what would be the breakdown between Mexico and Argentina approximately going forward?

Well the total sustaining CapEx for Ternium is around $300-350 million a year.

OK, thank you.

Thank you.

And we have a follow up from Carlos De Alba from Morgan Stanley. Your line is open.

Carlos?

Sorry, I was on mute. Yes, sorry to come back to the same topic, Pablo. Just what exactly is, a way to summarize it, are Ternium and Nippon negotiating on Usiminas issue? Because clearly that will help us understand what are the possible outcomes, and if for instance a fair solution is not reached, if it's feasible that the shareholders agreement is terminated or not? So if you can highlight for us what are the main topics of discussions in these negotiations, that would be very useful.

Well Carlos, as you can imagine, I cannot comment on specific issues that we are -- we are having an ongoing negotiation. The idea is to clarify the situation, to clarify the issues in which we have different views, which are quite clear, and try to find a way which we can continue to work together for the best of Usiminas.

We understand that both companies has different strengths that are very helpful for Usiminas, and especially into these situations, so we are trying to find a way in which we can continue working together, probably clarifying some of the issues that are not clear in the current shareholders agreement.

But this is the issue that I can comment, that as I mentioned, we are confident that we can obtain through negotiation, a solution for the situation that we have.

All right, fair enough. Thank you very much.

You're welcome.

And there are no further questions in the queue. I would like to turn the call back over to Pablo Brizzio for any closing remarks.

OK, thanks. Before just saying good-bye, let me comment, or let me add that we are having our investor day on the 18th of June, so very soon, in New York, and we are hoping to have you there, and as traditional, we will comment on the Company.

And especially Daniel Novegil will be commenting on the initiatives that we have for the Company during the -- especially in the situation that the steel sector is facing, and as you know, we always work in trying to get the best out of our assets and out of our Company.

So we are expecting to have you there in the 18th of June. OK, so with that, thank you very much for the interest in the Company. As usual and traditional, we are here to answer any other questions you may have. Thanks.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. Everyone have a great day.