Ternium SA (TX) 2023 Q1 法說會逐字稿

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 Sebastián Martí. Please go ahead.

Good morning, and thank you for joining us today. My name is Sebastián Martí, and I am Ternium's Global Investor Relations and Compliance Senior Director. Ternium 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 Vedoya; and the company's Chief Financial Officer, Pablo Brizzio, 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 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. Vedoya.

Thank you, Sebastián. Good morning to everyone, and thank you for your participation in today's conference call. Ternium reported a good set of results in the first quarter of 2023 with an EBITDA slightly over $0.5 billion. 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 this -- on our performance in the first quarter.

Let's review the business environment in our main markets, beginning with Mexico. Apparent steel 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 continued 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 the 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 Pesqueria advances.

As an example, in the first quarter of 2023, we shipped 2.1 million tons in the Mexican market. This is 0.5 million tons more than what we shipped in the first quarter of 2022 when the hot strip 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 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 projects. 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 so.

Something that has been lately calling investor attention is increasing nearshowing trend in the region. This is due to the need of closer and more reliable supply chains to serve end 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 exception -- experience and technical qualified labor force, and it offers shorter lead terms and lower transportation costs to end markets.

And this is being reflected in demand for 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 Monterrey 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 it adversely -- that is adversely affecting grain export revenue and consequently, Argentina's Central Bank hard currency reserves.

This coupled with a high inflation level and a significantly unstable macroeconomic environment is expected to impact economic activity and steel 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 Ternium's participation in Usiminas control group. Ternium 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, Ternium 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 agreed with our control group partners to take on different roles. We will have a more direct involvement in Usiminas management and the implementation of its strategy, while Nippon Steel will maintain a say in all key decisions outside the ordinary course of weakness and will continue contributing the technology expertise to the company.

Ternium 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, our 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 a 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 Ternium slab facility.

For this, we plan to leverage on the experience obtained with our technical school in Pesqueria, Mexico. This technical school, the one of in Pesqueria, which is now on the seventh year of successful operation was launched to educate high school students from our community using innovative technique teaching methods and the latest technology in both classrooms and laboratories. The results of these initiatives, has been remarkable.

These students, all of which received 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-up classes in the first quarter of 2025.

Over the years, the company has developed educational programs covering the entire school cycle from elementary to post graduate 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 and the overall.

Let me now make some final comments to close my prepared remarks. Even though there continue to be uncertainty regarding the macro environment during the second half of the year, I am confident Ternium's 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, 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 saying many times in the past, we have always been committed to Brazil. 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 our renewed days 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 first quarter.

Thanks, Maximo, and good morning to everybody and thank you, again, for participating in our conference call. Let's review more in detail Ternium's performance in the first quarter and our guidance for the second quarter.

We will start on Page 3 of the webcast presentation, with Ternium's EBITDA and net income. As anticipated, EBITDA, EBITDA margin and EBITDA 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's usual range, mostly as a result of cost deflation as lower price raw material continue flowing through the company's investors. Looking forward, we expect the company's EBITDA 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 shipment performance on Page 4. In Mexico, Ternium's steel shipments reached a new all-time high of 2.1 million tons in the first quarter of 2023, as Maximo already explained. 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 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 markets, the sequential decrease in steel shipments was mostly due to a lower volume of slabs shipped to third parties as the company further the integration of its Brazilian slab facility with the downstream facilities in Mexico.

In the next Page, #5, you can see that combining this development, consolidated shipments in the first quarter was 3.1 million tons. Based on that, as already been discussed, we expect consolidated steel shipments to increase in the second quarter of this year, mainly reflecting higher volumes in Mexico and somewhat in the Southern region. Revenue per ton remained relatively stable in the first quarter despite the increase in spot steel prices in the USMCA regions.

These were mainly due to the negative effect of lower prices on the contracts 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 steel prices are expected to sequentially reset at higher levels. This positive development, coupled with, a healthy spot prices expected to lead to higher consolidated revenue per ton in the second quarter.

Moving on the next page, let's review now the main drivers we have 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 lower cost per ton achievements and revenue per ton, remained relatively unchanged.

The decrease in cost was mainly due to the lower price -- and raw materials acquired during the second half of 2022, but continue flowing through the company's inventories in the first quarter of this year. To a lesser extent, cost per ton also increased as a result of lower energy costs as natural gas price decrease.

Looking forward, Ternium expect adjusted EBITDA to increase sequentially in the second quarter as consolidated shipments and revenue per ton increased and cost per ton displayed 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 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, Ternium cash flow performance and balance sheet. Cash flow from operations in the first quarter of the year was $612 million, including a working capital release of $218 million. 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 first quarter was $414 million after CapEx of close to $200 million. This drove Ternium net cash position to $3 billion by the end of March. The CapEx level is expected to continue increasing in the coming quarters as Ternium advanced its downstream project in Pesqueria and the other 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.

(Operator Instructions) Our first question comes from the line of Caio Greiner from BTG Pactual.

My first question on your North American operations. So I wanted to explore a little bit more on demand. So the demand condition in North America is still seeing quite strong in the short-term as you have pointed out. So the auto industry remains strong since supply chain restocking. And you guys mentioned that the second quarter's growth is 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 Ternium's volume to continue rising going forward. I mean, do you still believe Ternium 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 can share with us that would also be helpful.

And a second question on the Usiminas transaction, I know that you had said that there's very little - there's probably a little that you can share with us at this point. But just wanting feedback if there any initial remarks that you can make in that to marking those comments. So just wondering if you guys can share what are turning plans from the asset from those acquisitions -- are there any priorities in the short and medium term?

Are there any lower hanging fruit that you guys -- that could be addressed in the short-term? And maybe also wanted to understand if you could eventually see Ternium further increasing its stake ahead may be even consolidating the assets down the road anything that you can share with us regarding the Usiminas transaction that will be helpful?

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 is fine.

What is going to happen in the second half of the year -- perhaps we are still seeing a demand that is robust. We are not seeing the 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 softened. 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, the 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 or mainly from Asia.

So there is a trend that is going forward, where customers have started to consume industrial customers more still 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 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.S. Our customers today are working with 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 household -- in 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.

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

Yes, on the Usiminas transaction so I was just wondering if you can share any initial plan (inaudible) short term, that eventually you see trading further increasing in the company?

Yes both – 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 plan for Usiminas before CADE grant its approval to the transaction. I mean, as Ternium, we are committed to the develop, of Usiminas. And I believe and we believe that the agree changes in the control group will benefit Usiminas and all its shareholders.

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 we will have a lot of work to do. But again, once the CADE approved the transaction. My opinion is that there is a significant potential in Usiminas. And we believe, and our partners also believe that we have the capacity to unlock that potential to be honest.

Usiminas has good assets the mining assets, Ipatinga and Cubatao, capable people, and many opportunities to develop. On the other hand, also we have enormous challenge or a big challenge, like the relining of the blast furnace #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 that has lost in the last years. And again, I think that Ternium once the operation is approved, taking -- a leadership position in Usiminas is going to help with all of this. I think that's what I can comment on the subject, Caio.

That was very helpful, Maximo. Just if I can follow-up on the previous question? Can you guys share with me…

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

Okay. Can you hear me better now?

Yes, that's perfect.

Okay. So just, a follow-up on the previous question on the shipment question. Can you maybe share with us your estimate for the volume increase for your Mexican operations for 2023 versus 2022 compare an idea of where you guys are working with in Ternium 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 Q. So, we are going to repeat those shipments. Second Q is going to be a little bit higher. And third and 4Q, 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 shipments in year-after-year.

You have to realize that the hot strip mill is not running almost at full capacity, the new hot strip mill. I mean its 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.

Our next question comes from the line of Caio Ribeiro from Bank of America.

So my first question is on your working capital trends going forward. There was 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 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 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, particularly in the second half of the year? And what you see as a sustainable medium- to long-term price for U.S. HRC at this point?

Thank you very much, Caio. I'll start with the second part, and I leave working capital to Pablo. Price terms, I mean, I didn't change my -- 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 normally 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 arrive 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 roll coil. What in the second -- Q2 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 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 is 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.

Working capital Pablo?

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 expecting 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 expecting 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 3 quarters where we have released and in some cases, like last quarter, in the last quarter of last year, we had a huge release of working capital. Now we think we are entering into a process where we're recovering a little more working capital until prices and volume adjusted to the new level.

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

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, AMSA restarting, how you think about that cadence?

It's a very good question, Timna. 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 restart -- 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 will take probably several years to restart a blast furnace.

Imports, 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 -- 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 redundant. So that's how I can answer that question, Timna, I hope it's enough.

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

Well, remember, the Pesqueria, it's going to -- it's 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 is 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, we are comparing 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 World Steel take the -- these are all the short-range outlook and the consumption in Mexico decreased by 2.8%, 2022 compared to 2021. So and so there is no -- I mean in 2022, was the same, and it's not going to grow a lot in 2023. So these increases are more inclusive in market share and part of that increases is that after 1 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 hundred and something thousand tons additionals in the second quarter of this qualification process. And then, it's going to be a small increase until probably next year, when there is the next round of mark -- of a contract 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 talked about a normal range of 15% to 20%, suffice to say probably be a little higher than Q1, but it will be on the high-end of that range or any other color would be (inaudible)?

Yes, you're right. It's a good -- it's a very good question, Timna, 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 said is between 15% and 20%. Probably in the next quarter, we are going to be in the upper side of that range. Most likely up -- a little bit up of that. I hope that is enough, because we never say that.

That's enough.

Our next question comes from the line of Thiago Lofiego from Bradesco BBI.

Two quick questions first one, Maximo, 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, Thiago. And in slab integration as you say -- as I always said, it's going through -- most of our slabs are going through our own facilities. If you see the numbers of shipments, I think we already ship in this quarter, 60,000 tons of slabs, all the other more than 1 million tons of slabs went to our own consumption either in Argentina, but mainly in Mexico. So the slab integration is almost at 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 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, all the consultants are putting in the GDP of Argentina, the whole year, probably consumption -- steel 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.

Our final question comes from the line of Carlos De Alba from MS.

MS is Morgan Stanley, for those that don't know, just a little (inaudible). Just a couple of questions, one is on the cash situation. I mean, you clearly have a very strong balance sheet, $3 billion on net cash, but about -- I think about half of that and I'm not sure if these are on a net cash basis or just the cash basis having -- 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 corporates 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 outlooks and short terms. So you might not be able to invest in growth projects right now at least. So like what options do you have to use potentially that cash outside of Argentina? If you could comment on that, that will 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 we, if approved as the bill was presented to the Senate, have you taken a look and -- just 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, there is new law that went through the house. And now within the senate and probably it will be discussed today, to be honest. We are not seeing a lot of affection in the mind the way it went in the House. The mining as they -- 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 significant progress in the discussion and then 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 very technical position, which. I think the government demands this to be an impediment.

So I think there is goodwill 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. It's a nice question to answer.

Yes, that's easy.

So well, first of all, you're right on the situation in Argentina it's not easy to think that to get cash out of the country and we have a significant level of cash in our Argentina subsidiary. The first thing that you can do, in fact, we have done just these week is paying dividends. So we have just announced on Monday that the company Ternium Argentina our subsidiary there will pay a dividend of more that $600 million -- in bonds.

So that is one way to get some money out of Argentina and in fact it's the normal way in the company have to do that. And Argentina is a company that traditional pay dividend of course I'd probably we will not have the time to enter into detail. Because Argentina, usually has certain rules that make things much different from a normal country, so it's the process of paying these Argentina takes longer and have different steps to 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 a part of the cash. We are having are and yes in different 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 or quotation of the dollar.

Because you know that our currency and inflation on 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 the shareholders outside, in the case of Ternium.

Of course, we will be receiving this cash as per the -- as 52.5% that we have of our subsidiary in Argentina. So that's what we are doing, and in a complex situation, the one that we are seeing that Argentina goal.

Carlos, I hope that clarifies both questions.

Yes.

I would now like to turn the call over to Ternium's 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 next conference call. Thank you very much.

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