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, thank you for joining us today. My name is Sebastián Martí, and I'm Ternium's Global Investor Relations and Compliance Senior Director. Ternium released yesterday its financial results for the first quarter of 2023. This call is complimentary to that presentation. Joining me today are Ternium's Chief Executive Officer, Máximo 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 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. Vedoya. Thank you, Sebastián. Good morning to everyone, and thank you for your participation since today conference call. Ternium recorded a good set of results in the first quarter of 2023, with an EBITDA 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. Apparently, 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, continue into the first quarter of this year. 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. 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 rolling mill was in the first stage of the startup. This is an increase of more than 30%. We expect shipments to continue growing 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 it so. Something that has been lately calling investor attention is the increasing nearshoring trend in the region. This is due to the need of closer and more reliable supply chains to serve end market. Mexico is a beneficiary of this dynamic as a result of its many advantages. Its membership to the USMCA, it has an exception experience and technical qualified labor force, and it offers shorter lead times and lower transportation costs to end markets. 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 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 suffer 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 Ternium's participation in Usiminas' control group. Ternium has had a participation in Usiminas since 2012 when it joined Nippon Steel and Previdência 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 30th, we agree 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 business and will continue contributing their 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, 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 Previdência 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 add 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 Ternium slab facility. For this, we plan to leverage on the experience obtained with our technical school in Pesquería, Mexico. This technical school, the one in Pesquería, 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 have 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 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 endeavor. 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 will have a good performance in 2023. With our latest investment, we have put the company in a strong competitive position. 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. 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. We believe it will offer many opportunities to grow our business in the future. In this respect, we are very excited with the change in Usiminas control group. I believe our recent agreement with Nippon Steel will give us a renewed base from which to contribute to Usiminas success, benefiting all of Usiminas stakeholders. Okay, Pablo, you can now go ahead with your presentation on Ternium's performance in the first quarter. Thanks, Máximo. Good morning to everybody, thanks 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 three of the webcast presentation with Ternium's EBITDA and net income. As anticipated, 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 usual range, mostly as a result of cost deflation, as lower priced raw material continue flowing through the company's inventories. 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 shipments performance on page four. In Mexico, Ternium steel shipments reached a new all-time high of 2.1 million tons in the first quarter of 2023, as Máximo 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 into third parties as the company further the integration of its Brazilian slab facility with the downstream facilities in Mexico. In the next page, number five, you can see that combining this development, consolidated steel 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 regions. Revenue per ton remains 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 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 steel prices are expected to sequentially reset at higher levels. This positive development, coupled with the healthy spot steel 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, as shipments and revenue per ton remain relatively unchanged. The decrease in cost was mainly due to a lower price per slab 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 decreased as a result of lower energy costs as natural gas price decreased. Looking forward, Ternium expects adjusted EBITDA to increase sequentially in the second quarter, as consolidated steel shipments 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 on Ternium's Mexican subsidiary in connection with the 7% appreciation of the Mexican peso against the US dollar in the period. Let's review now on page seven, Ternium cash flow performance and balance sheet. Cash flow 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 third 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 advances its down-stream project in Pesquería and the other projects already announced in North America. With this, we conclude our prepared remarks. Thanks a lot for your attention. Now we can go to take any questions you may have. Please, operator, proceed with the Q&A session. The floor is now open for your questions. To ask a question at 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 Caio Greiner from BTG Pactual. Please proceed. Hello. Good morning, everyone. Thank you. My first question on your North American operations. I wanted to explore a little bit more on demand. Demand conditions in North America is still seeming quite strong in the short term as you guys pointed out. The auto industry remains strong from supply chain restocking. You guys mentioned that the second quarter is still expected to be even stronger, volumes wise. 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 that steel demand could be sustained at current levels for the entire year? Are there any pressure points that you guys see? 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. My second question on the Usiminas transaction. I know that you guys said that there's probably little that you can share with us at this point, but just wanted to see if that, if there are any initial remarks that you can add to Máximo's comments. Just wanted to see if you guys can share what are Ternium's plans for the assets from this acquisition? Are there any priorities in the short and medium term? Are there any low hanging fruit that you guys see that could be addressed in the short term? I'll also wanted to understand if you could eventually see Ternium further increasing its bank ahead, maybe even consolidating the assets down the road. Anything that you can share with us regarding the Usina Unidade transaction, that'll be helpful. Thank you very much. Thank you very much, Caio. Let me start with the first question on 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. Industrial market, it's stable. I think the second Q is fine. What is gonna 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. 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 it, of Mexico. A part of that nearshoring comes from our own customers that are increasing their capacity, so they will consume much more steel. New customers that are coming from the region, they are bringing production probably or mainly from Asia. There is a trend that is going forward where customers have started 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 of what is going to happen with this increase in the interest rate. 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 a outlook that they expect a softening, but they don't expect a huge recession. Nevertheless, I want to emphasize that there is uncertainty, and the uncertainty it's coming from the increase in the interest rate and how this is gonna 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. 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, no? If I understand well. Yeah, on Usiminas transaction. I. Yeah. Just wondering if you guys can share, the initial, plans and you go into maybe relying on addressing investment in the short term, and if you could eventually even see, trading further increasing its stake in, the company? Well, you're right. It's a very good question, Caio, but as I mentioned, I prepare remarks. I prefer not to elaborate a lot on the future plans for Usiminas before CADE grants its approval to the transaction. I mean, as Ternium, you know, we are committed to the develop of Usiminas. I believe, and we believe that the agreed changes in the control group will benefit Usiminas and all its stakeholders. On the other side, you know that Brazil is very important market for Ternium, and we have always been committed or excited of having this opportunity. We will have a lot of work to do, but again, once the CADE approve the transaction. My opinion is that there is a significant potential in Usiminas. Now we believe, and our partner also believe, that we have the capacity to unlock that potential, to be honest. Usiminas has good assets, mining assets, Ipatinga and Cubatão, capable people and many opportunities to develop. On the other hand, also you have enormous challenge or big challenge, like the relining of the blast furnace number three, the investment in the coking facilities, further development of the sustainability strategy, analyzing in deep 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. Again, I think that Ternium, once the operation is approved, taking a leadership position in Usiminas is gonna help with all of this. I think that's what I can comment on the subject, Caio. No, that's very helpful, Máximo. Thank you very much. Just actually, if I may ask a follow-up on the previous question. Yep. Can you guys share with us? Caio, sorry. Can you speak a little bit closer to the mic because we are hearing it very low? Okay. Can you hear me better now? Yeah, that's perfect. Okay. No. Just to follow up on the previous question, thank you very much on the call, on Usiminas. Just on the shipments question, can you maybe share with us your estimate for volumes increase for your Mexican operation for 2023 versus 2022? Can you share an idea of what you guys are working with in Ternium for the Mexican operation? Well, yes, we have an increase. I think we're gonna sustain or increase a little bit the shipments that we have in the first Q. We are gonna repeat those shipments. Second Q is gonna be a little bit higher. 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% increase in shipment in year-over-year. You have to realize that the hot strip mill is not running almost at full capacity, the new hot strip mill. I mean, it's running, I think, 88% of capacity. 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. We have some space, but we don't have a lot of space to increase much more our shipments. All right, Máximo. Thank you very much. Thank you, Caio. Our next question comes from the line of Ciao from Bank of America. Please proceed. Yes, good morning, everyone. Thank you for the opportunity. My first question is on your working capital trends going forward. Right. There's a big working capital release this quarter. I just wanted to get some more color on what you expect in the coming quarters. Secondly on U.S. HRC trends, right? After multiple price hikes since late last year, it seems that prices have somewhat stabilized lately, right? Lead times have started to shorten a bit. 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 U.S. HRC 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, 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. We see this with the new bottom prices we had last year. When they arrived at bottom, they started to increase just right after. 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 start stabilizing at this price of quarter coil. What in the second future, probably, but I cannot say it particularly, but probably there's gonna be some adjustment. Again, my reference of prices in the future are always that the new normal is around $900 or $1,000. That's, 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. It's normal that for the second quarter, there should be some adjustment. How big is that adjustment? I think it's not gonna depend on other factors that what happens with the macroeconomic activity and the macroeconomic numbers. If really there's a recession, well, that's gonna affect quite a little bit more. If not, I think it's gonna 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, Máximo. Working capital, Pablo. Yes. Hi, Caio. How are you? Going to your question, clearly what we are seeing now is that with the normal movement of shipments especially that we are expecting to see in the North American market, especially Mexico, 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. 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. Putting all in all, of course, taking into consideration what just Máximo 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 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're recovering a little more working capital until prices and volume adjusted to the new levels. Very clear. Thank you, Pablo and Máximo. You're welcome. You're welcome, Caio. Our next question comes from the line of Timna Tanners from Wolfe Research. Please proceed. Yeah. Hey, good morning, everyone. Good morning, Timna. My first question is about the elephant in the room, which is AHMSA 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, you know, sizable or modest? Do you think that, you know... It sounds like you're saying in the second half you're gonna keep producing irrespective, but I'm just asking about the balance of potentially those imports, AHMSA 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 AHMSA. Probably what you, everybody's hearing in the press. I don't know if AHMSA is gonna restart. If it's restart, it's gonna restart in the third quarter. I mean, as you know, the blast furnace is down, that will take probably several years to restart. Imports clearly a big part of the Mexican market and we're competing. You have to understand that most of our customers are on the North American market. They are also trying to source more and more from us. I do expect that increase is going to affect the ability that we have to ship to Usiminas. That's how I can answer that question, Timna. I hope it's enough. No, that's great. I to ask you if you can remind us about Pesquería's qualification process and how to think about the mix improving there? Remember, the Pesquería is starting really to show the qualification process in this quarter. Part of these 500,000 tons of 2023 does not might change the consumption. In fact, 2022 against 2023, the whole year, I think, consumption in the country. You're comparing two quarters that has the same market or the same. Yeah. In fact, I'm looking to the. Now I remember the name, the world. The consumption in Mexico decreased by 2.8%, 2022. No. I mean, in 2022 was the same. It's not going to grow a lot in 2023. In market share. Part of that increases is makes, we are increasing much more our shipments to, or our market share to the industrial sector. We can expect to have, the second quarter of this qualification process. When there's the next round of the contracts with the customers, with the annual contract with the customers. We have a huge increase in this quarter. Okay, great. 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%-20%. Yeah. See on the high end of that range or any other color would be... Yeah, you're right. It's a very good question, Timna, that we usually don't. You're right. We were in the bottom part, 14% of margin EBITDA, 15% and 20%. Probably in the next quarter, we are going to be in the upper side of that, a little bit up of that. Okay, great. uncertain Our next question comes from the line of Thiago Lofiego from Bradesco BBI. Please proceed. Quick questions. first one, Máximo, can you comment on your slab integration, dynamics for the coming quarters? What should we expect? Can you talk a little bit more about Argentina? what's the outlook for steel demand? If you could quantify, for 2023, that would be- Well, slab integration, as you say, as I always said, it's going through. I think we only ship in this quarter 60,000 tons of slabs. All the other, more than one million tons of slabs went to our own consumption. The slab integration is almost 100% today. That 2Q, we are still seeing it healthy demand for steel consumption. Clearly, that's not what we expect for the rest of the year. We think that with the variation of the GDP, of the decrease of Argentina, the whole year, probably steel consumption in Argentina, it's gonna to decrease. It's very difficult to say the number, but for the whole year, not for the second half, for the whole year. Comes from the line of Carlos de Alba from MS. Please proceed. Yeah, thank you very much. MS is Morgan Stanley for those that don't know just really. Good morning, Máximo, Pablo, and Sebastián. Just a couple of questions. One is on the cash. What about, I think about half of that, and I'm not sure if this on, is on a net cash basis or just the cash that you have in a... Could you talk about, you know, the challenges that you may have, the company may have, and other corporations may have in Argentina to in the country? 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's uncertain. You might not be able to What options do you have to use potentially that'll be very interesting? The second question is, and I know that this is a lesser part of your brand. There is a mining law, potential change that is now sitting in the Senate. What the bill was. Presented to the Senate. Have you taken a look at and your business could be? Yes, Carlos, thank you. It's a mining new law that went through the House, now it's in the Senate, and probably it will be discussed today, to be honest. Of affection in the mine. The mining it was on the original, I think Hours. To be honest, there were some discussions, very helpful discussions with the Mexican government. I think in the changes that the House made and the law that the House approved. I think that both the senators and the Mexican government There has to be mainly with some technical issues with the use of water. It's a very technical this to be an impediment. I think there is good goodwill to change. I don't see a big issue today with how this is going through. Cash situation. Questions one. Yeah, that's easy. Well, first of all, you're right on the situation to think, to get cash out of the country. And we have a significant level of cash in our continuing subsidiary. The first thing that you can do are in dividends. We have just announced on Monday that the company Ternium in Argentina of more than $600 million in kind, in bonds. That get some money out of Argentina, and in fact, is the normal way any company has to give them. Of course, and I probably we don't, we will not have the time to enter into details, because make things much different from a normal country. That takes longer and has different steps to be followed. All in all, I think that the most important of cash that we have Argentina, it was the right moment to utilize part of that cash to take into consideration to distribute that part of that cash to the shareholders. On the rest of the cash that we have over there against variations of quotation of the dollar because you know is the dollar and protect ourselves against the inflation effect that we are also suffering in the country. The company will continue monitoring very closely the situation there and try to react to that. The best example is what we have just done, which is outside, and in the case of Ternium, of course, we will be receiving this cash as part of uncertain. That's what we are doing. In a, in a complex situation as the one that you are seeing that Argentina's. Verify both questions. Yeah. Thank you very much. Oh, for closing remarks. Okay. Thanks. As usual, please feel free to contact us if you have any comments, any additional questions. Thank you, ladies and gentlemen. This does conclude today's call. Thank you for your uncertain-.