Q2 2020 Cemex SAB de CV Earnings Call
[music].
Good morning, and welcome to the summer second quarter 2020 conference call and webcast. My name is Chuck and I'll be your operator for today.
All participants are in listen only mode. Later, we will conduct a question and answer session. If a anytime you require operator assistance. Please press star followed by zero and we'll be happy to assist you are host for today's call or Fernando Gonzalez, Chief Executive Officer, and my hair out how far Chief Financial Officer.
And now we'll like to turn the conference over to your hosts Fernando Gonzalez. Please proceed.
Good morning, I Hope these calls why did you wonder family Okay. Thanks for joining us.
Our second quarter Twentytwenty conference call them what got.
I'm joined by market on so far with newly appointed CFO.
As usual, we wouldn't be happy to take your questions out there I would initial remarks.
Let me just remind you that beginning of this water beautiful Middle East Asia Africa region have been a consolidated into one region.
We are very pleased with our performance in second water.
The next door to be not really challenging conditions.
Our safety protocols get employees safe and I would it be says it's not Brady.
I would give rapid diversification, what's the theater sponsorship gordmans addictions, and I would have businesses, but either significantly from market to market.
Got it backs the men's product wasn't resilient I crossed I would imagine market portfolio.
What do you trust structure. This portion of on developed market footprint provided a stable base with existing medium term business to execute.
I would expect them to get the platforms allow our customers on ive to work seamlessly on in the low fortune vitamin White I wouldn't distribution network enabled us to meet surprisingly strong back cement demand.
The most markets.
Pricing was resilient with a difficult demanding vitamins in many markets while energy provided a nice cost stayed with.
Duke important steps to boost liquidity on did we I wouldn't financial profile.
I'm, especially grateful for what it could use we broke through the carbonite being challenged on may the necessary adjustments to keep I wouldn't go leaks and customers, Dave and I would associate these operating.
Despite our 60 airports.
I've been educate yourself Cobiz 19 got more not what didn't buggy customers I supplies.
I would like to extend my sympathy and host what afforded poverty with each and every one of you.
Well see put US right you already rolled out in February which we have no name operation proceed, yes guided us in the quarter.
Our top priority he wants to protect I want to in the east suppliers and customers, thereby ensuring business continuity.
We introduced new operating profit goals, which included social Beeston seem maybe most staffing needs through our work.
They didn't that there were checks.
Shifting into you, sometimes the case management Brock Entre skip a beat the speed meeting my Biden Brett.
I'll switch to it you families to bring forth health and safety measures in the home environment.
That's a result, I'm pleased to say that outcomes, among all into east arta significantly better than national statistics.
Now World all social distancing, we invoiced breadth of human thought at a distance.
We still had been present, increasing number of besides do I were sent Mexico platform.
That's what we called it 19 led to.
While Beatrix do I wouldn't call stored on the website for mix it can be been customers increased 19% in second quarter with Lindsay.
Our global Safes works seamlessly transition from customer base, it's to be thrilled meetings hosting thousands of would be difficult with it.
Our supply chain and distribution network I love to set despite strong back cement demand without interruption.
And we shared best Cobiz 19, construction practices with our customers onto life.
Well not you know keep what's the city Ronnie we needed to shared best practices with customers and suppliers to keep didn't Ronnie.
You say ports were recognized by our customers.
We obtained the highest global net promoter score ever.
Second quarter Twentytwenty.
We took steps in a highly uncertain time, I mean, you might find that should be.
We conserve cash nailed down all available funding sources.
We did a negotiated double leverage covenants with our bank group.
Well be 19 challenges to our business are not over on these priorities, we continued to guidance going forward.
Well I don't pick in the future drops that makes you know world the hi, Cobiz uncertainty, where do we might fit disruption to the capital markets is reducing financial risk wherever possible uninsured and that we have sufficient liquidity for whatever life ahead.
We initiated this process of building nobody we people see shouldn't even Saturday, we did they see something that they receive 5 million problem to say look forward to Kentucky assets.
Additionally, we drill down on on the majority about 1 billion of our bank pretty bold Sealy.
We continue to be able to gas station in second quarter.
By drawing down on the remaining to be better well, that's additional churn them ready like what about work and as the 46 million.
We took advantage over the first market the window available to us copied 19 to access the capital market without 1 billion seven year note.
And finally.
And before I Wouldnt call with 19 cost savings program I'm better than expected volumes, we generated 90 million of free cash flow in the quarter.
We ended the quarter would <unk> cash balance ever.
We expect about what cash position will be further strengthened in the second half of the year by the closer to what would do but he was the announced divestments of 400 million Boes.
I'd be reluctant I wouldn't market improves.
Back to the boy part of our cash position based on that.
I don't know Vitesse challenge for the second quarter to what really about government mandated locked down some industry closer in our markets.
This is the first time, we have EBIT experienced national should down what industry.
Drank, though sales related strong we would love restrictions.
Second water, we face complete industry should downtick in markets, representing what percent of consolidated it'd be done.
Lambiase Bonnema the Philippines Trinidad.
Volumes in this market is fixed line between 30 and 90% the water year over year.
No what other markets look downside brine impact on the month whatever problems for example.
Now what foot print in the U.S. government restrictions had little impact on demand in the water.
Well I looked down restrictions in the UK, France led to the mine declined approximately 35.
You know cases, there must be kept rapidly as restrictions you almost as fast as they fail.
Consolidated board, who spent 54% year over year in April and month to date, you lie volumes <unk> to be up 4% year over year.
Yes, because of the challenges of the next day trip and they meet would it be different.
Well from its making both numerous breaches to cope with vitals flare up but expect that to be moderate in the own and would not occur seems Daniel.
Yes, sure what is what I would have business, we'd be more about impact of economic slowdown in markets. He's got a program on base all pretty Cody.
During the second water sales fell 10% like for like.
Rob is attributable to Mexico, and Matt on CAC that reduce that experienced the most stringent locked down in the quarter.
Year over year declining Sears or what the functional for double digit drop in consolidated body in.
Why local currency prices for our three core products increased <unk>, one and 4%.
Like the like it'd be Dod declined 6% year over year.
The U.S., what they wanted region weed out year over year increase in EBITDA.
Our cost containment program some of the climate and energy cost would in fact, we end up water. That's shown by the 70 basis points improvement in margins year over year.
Despite the large declining volumes, we did were able to generate free cash flow after maintenance capex of 140 million.
77 million led them prior year, which is equivalent to the decline in year over year have you done.
Finally caught with 19 did not be derisked from making progress on our E. G goal.
The highest I'll direct you to supposed to do shouldn't in Europe on a trailing 12 month basis.
Understand that's why we're electricity important I'd eat no renewable.
I think are factory need we watch our lowest ever.
I would have cost savings on their operations with billion.
These people in the water.
These savings include hundred them $50 million from our prior a stronger Cem IX Barbara.
Well 80 million copies 19 related cost containment initiatives for full year Twentytwenty.
They didn't hear debate how to improve our EBITDA margin increased cap by 2.4 percentage points.
Good savings from Aegean need like fees and marketing distribution problems expenses and it sounds to me station.
Operations cement plant the passionately deficiency.
Local suppliers initiative.
Energy.
The fuel and additional speeches that go.
It includes 55 million for maintenance be Farrell.
Which will be largely executed in second half.
Now moving onto that region. You has continued to enjoy strong momentum in second quarter driven by infrastructure on residential.
Did not experience much disruption from Goberman lump them see I wouldn't markets.
We achieved the highest it'd be die in the quarter in the last Vicki adjusting for asset sales.
You've got structure around 50% of the month.
Oh pick up in water Department of transportation took a beneficial empty rose to accelerate growth projects.
The residential sector about 30% of the might have performed better than expected.
Low interest rates low new home inventory levels and she embodies the preferences towards scrubbers on single family housing.
Hey, Bill sequential pricing and I would freak core products at Cobiz 19 delayed implementation of April price increases in several markets.
Year over year to be dealt margin expansion due to quite ready mix prices lower fuel recall and cost efficiencies and yet.
The second half Oh did your outlook.
You lie month to date cement volumes are growing 7% under three month ready mix backlog are promising.
Do not have much visibility beyond September though.
Okay, our states to have fairly stable transportation spending.
Yes, Thanks, <unk> fiscal stimulus in the form of incremental customer vision spending at the federal level.
No interest rates no new home inventory, some progressive recovery off employment should be supportive of that residential sector.
In Mexico, the dropping says <unk> second quarter, it's a function of the decline in body cement minus 7% the year over year, I'm ready mix minus 44%.
So they didn't volume performance between ready makes sense, the men, which reflected lobbied 19 locked down measures.
And just to what only allow to provide cement essentially infrastructure project.
Adoring, Dan for much of water.
Warmer construction projects of private sector were suspended until June differs.
So I'm not the duration Unix infusion of key infrastructure projects like the new airport unbelievable.
We develop I mean, how about these solutions to meet the urgent need for hospital beds to deal with public 19 patients in Mexico with the construction of mobile lot of more white all the units.
We constructed nine units during the second quarter indirect where to put three week seadrill each.
Actually Matt about 65% demand in Mexico show significant growth.
And present in the second quarter year over year.
Mainly due to both <unk> investment in school custom programs on Gruden Rose.
He also increasing home improvement projects as consumer spend more time Oh.
Any study clean uncertain economic times informal sector, that's shown more resiliency.
Despite the second yet of industry volume decline prices have been Brazilian.
Logistics and distribution network allows us to meet surge in back demand on a timely basis.
Decline in EBITDA margin was mitigated by go to mix I would of course statements program on lower fuel prices.
And with regard to second half of look we've got limited the CBD since June the first.
We got kindred comedy in bulk cement and where they need the money.
Ready mixed volumes property Koerber from mine was 44% year over year in second quarter, two minus 19, you like month to date.
Cement volumes have recovered from minus 7% year over year, He's thinking why did the loss, 11% July month to date.
Acts demand has been renewed receding at some point, it's picked back cement recalibrate the economic environment.
What about housing on industrial and commercial good calling out of slow pace.
We expect continued expansion of infrastructure spending.
56 billion set a seamless <unk> increased spending on social and infrastructure projects.
On Mexico City economic reactivation program, a few S 3.4 billion.
On construction.
Mmm first quarter in which we consolidate that what do you look Regan with the Middle East Africa, and Asia in the quarter report.
To give more details on subregion performance.
In Europe, we experienced the same divergent behavior between western and Central Europe that we saw in the first quarter.
Central Europe with strong year over year cement volumes in Germany, Poland, and the Czech Republic, driven by infrastructure unless he loved don't missions.
Well, the western Europe, with lower cement volumes in the UK, Spain, and ready mix volumes in France due to street look down the mixtures.
I Love don't measure used in each country volumes recovered.
What pricing momentum in cement and aggregates on sequential basis neutral.
The Philippines, what's dispersed country, you know what important supported with Stephens loved down on one of the most impacted thing what.
Threeq Love don't mixtures with solid plant into some problems glows from Mark It seems to me 20.
Cement volumes were down they didn't want present in water, but boards turned positive year over year in June with solid reopening.
For more information please see our C. H you what are the earnings which would be available D.C. Ming.
In Middle East Africa, we experienced very low impact from Cobiz magazine water.
Israel had record EBITDA I'm wondering performance.
Egypt declining cement volumes mine, 30% due primarily to Goldman suspension of private residential construction permits.
Okay, well the region most impacted by Cobiz 19 regions.
The member Williams that line.
29% in second quarter of the year year over year.
They little cement pricing dynamics in Threeq, and despite lower volumes cement <unk>, 3% wondering why the increases in practically all countries.
Even with the last drop in volumes EBITDA margin increase year over year 1.7 percentage points.
Mainly due to lower fixed cost and Aegean, 85.2% the when margin benefit.
On pricing efforts 4.1 present, the sports benefit on both offset by volume decline.
In the region most impacted by government money. They did the industry should down we so a sharp decline in cement volumes in April 60% year over year.
Followed by a rapid recovery over the following three months.
Bone cement volumes, what are the region were up 3% year over year.
In Colombia activity pick up in the back half of the water did even by four g. projects under construction sector.
The Dominican Republic, we saw increased activity up did restrictions were lifted however, some puts and projects are being football.
Bottom out with most restrictions currently only serving selected infrastructure projects and to date.
Additional details on these region are you budget to be good yeah, Leaches quarterly results, which were also published today.
No I was positive pulled through marker to review our financial performance art.
Thank you Fernando and good day, everyone. Our operating EBITDA declined 6% on a like to like basis this quarter.
As we can see here higher prices combined with a significant reduction in our fixed cost due to operation resilience more than offset the impact of lower volumes.
All of our regions as well as central units contributed to these savings.
Variable costs increased primarily due to higher raw material cost in our ready mixed business in several of our business units. This is due to higher prices up cement and aggregates.
Well as the impact from purchase amount in some of our sold out markets.
Reported EBITDA reflects the unfavorable effect from our currency fluctuation of $32 million. This is mainly due to the depreciation of the Mexican peso, but most currencies also contributed.
Most importantly, as a consequence of the hard stop on expenses that Fernando discussed earlier EBITDA margin increased 5.7 percentage points on a year over year basis.
Despite double digit drop in our EBITDA, we generated positive free cash flow during the quarter as we managed to reduce and or postpone our capital expenditures during the quarter.
We aggressively managed receivables collections and align inventory levels to current demand.
Consequence average working capital days and second quarter. This year improved to a minus 11 days. This compares very favorably to a minus six days in our second quarter last year.
We also had lower taxes year over year. This is primarily due to the drop in earnings in several of our operations I.
I would like to remind you that free cash flow is highly seasonal we typically as you know we have larger working capital investments in the first half of the year, that's significantly reverses in the back half.
Similarly, we expect partial working capital reversal this year as well.
In addition, we expect to execute much of the deferred maintenance capex in the second half of the yet.
It's important to highlight that in the last 20 years, we had semex have consistently generated positive free cash flow after maintenance Capex every year, except for one year and that was back in 2013, where we had a negative $90 million of free cash flow.
That's Fernando mentioned during Twoq, you, we continued to execute on operation resilience by accessing the capital markets.
We were the first emerging market high yield Kishore since cobot 19.
We took the opportunity of issuing $1 billion in seven year notes as Fernando mentioned earlier, we anticipate a slight increase in full year financial expenses due to this change.
During the quarter net debt, which is adjusted for the effect of higher cash balances was marginally increased by $51 million, reflecting on favorable FX effect of $55 million.
Proceeds from our newly issued $1 billion bond and the drawdown of the remainder of our revolving credit facility as well as other credit lines will be retained in our cash balance for the time be.
It's visibility in our markets improve during the year, we do expect to deploy most of our cash position to reduce debt.
As you can see from this slide we ended the quarter with a strong liquidity position and a manageable debt maturity profile.
The majority of 2020 debt, it's short term debt that we have drawn in the last few months to strengthen our liquidity.
Next material maturity is not until 2021, which is essentially the $571 million due under our facility agreement debt, which is due in July 21.
Oh maturities through 2023, our bank maturities.
We have no maturities in the capital markets until 2024.
Our leverage ratio as defined by our facilities agreement marginally increase on a sequential basis to 4.57 times at the end of the quarter.
This is well below the recently amended covenant level up 6.75 times.
You should expect us to continue with our strategy of maintaining a 12 to 24 months runway without any significant maturities.
As part of our strategy to respond to the Corona virus pandemic, we initiated a consent request to amend our financial covenants and other items in our facilities agreement.
We're pleased to report that we received 100% of the support of our banks on display late may.
And for that we thank them.
Under the terms of the amendment, we modified the leverage and coverage covenants to the level that you see in the graph.
The leverage covenant increases to 6.75 times for June 2020, and then it goes up to seven times from September 2020 through March of 2021, and it decreases after that.
Also we had reached a temporary limit capital expenditures acquisitions and share buybacks among other things.
Capex when it goes from 1.2 billion to 1.5 billion per year, when the leverage ratio is less than 5.25 times for two consecutive quarters.
And we have a 500 million basket for repurchases, which can be used what our leverage ratio falls below 45 times. These limits are in line with our previously announced measures to contain the impact of covert 90.
Our interest rate margin has been adjusted to accommodate the new higher leverage range is to the consolidated leverage covenant as shown in the table. It's very important to highlight that the margin grid remained unchanged from our prior agreement for leverage levels below five times and simply adds pricing for.
Our leverage above five times.
And now I'd like to turn the call over to Fernando vacuum <unk>.
Thanks, Mike you want to continuing uncertainty from Cobiz 19, you just very difficult to provide maybe down volume guidance at this time.
We can comment on border body of.
Cost of thank you for cost of mental do we estimated that minus 7% they'd like to frontline to separate the mines five.
He was need was minus six to mines for.
Adjustment in Fourq this mainly due to lower fuel so I would call.
The Capex unchanged. This is Steve you guidance.
No change of guidance for cash taxes on cost of that.
Working capital would it be hired under 100 million guidance provided important water 19.
Again due to continued lack of visibility on our top line growth, we still got enough for by on the TV among.
In summary, we saw lockup restrictions on our business in second quarter that we have never experienced before.
It was all akorn out of time, a tremendous uncertainty.
But I wouldn't management team reacted weekly and do immediate steps to protect employees and customers as well I, probably like their business for whatever conditions might have been.
Doing volumes, what I would treat port product show sequential margin improvement ignored regions, while you lie more to they consolidated cement volumes are up 4% year over year. He events will be the status of fixed feinstein efforts in many countries.
Additionally, locked down.
Announcement on execution of infrastructure Steepens Baxter.
As well as the base economic good called <unk>.
You should expect that we wouldn't continue to focus on health and safety of our stakeholders that we will continue with our <unk> being cost initiatives on Bbq loved to changes in market demand.
We will make the most of our competitive advantage just like I would be just thought but I.
Our <unk> well developed distribution arm on diversified product on musket segment offerings.
Bottom line them up and finally I'd be she did it improves we will be deployed I would have you started level of cash to pay down but thank you for your attention and I would like to take this opportunity to wish everybody would fail and to be keepsakes.
Before we go into our Q in a session I would like to remind you that any forward looking statements. We make today are based on our current knowledge of the markets in which we operate and could change in the future due to a variety of factors beyond our control.
In addition, unless the context indicates otherwise.
All references to pricing initiatives price increases or decreases referred to prices for our products and now we will be happy to take your questions operator.
Thank you, ladies and gentlemen, if you wish to ask a question. Please press star followed by one or your Touchtone telephone.
If your question has been answered or you wish to withdraw your question. Please press star followed by two.
Press Star one should begin.
Standby for your first question.
And our first question will come from Adrian swear to with JP Morgan.
Thank you hi, Fernando on markets.
Doing well congrats on the under assault despite the environment.
Alright, Thank you very my family.
I'm not going on but on the one what was the experience navigating.
<unk> water on top of what we saw onto his holds on them and to make sure the worth taking and and on the whole why do you have already mentioned on the outlook what else can you share based on on this experience on what would be the outlook for the rest of the year.
Sure and again, thanks for your what are your question.
I think I think you know we don't have gone through.
No well a phenomenon exogenous one costs in lots of uncertainty so we reposition ourselves let's say.
Hey, Adam you did not March.
We already then number two dozen divided wasn't going to be.
The and.
And then for minor, but you know we reward.
Sometimes trying to answer your questions. The first one I mean, how deep the done much wasn't going to be how long did Matt.
And then we're going to need or the decision for them not.
No that's true.
A few days with real life.
Thank you could spend Thanksgiving and when we were getting more work so we decided to Jeff.
On a make what we called a heartfelt, meaning we don't know.
But even that we don't know Nick Nick.
12, whatever we think not essential something Nick Cmos and that's what we need.
And that's that's why we managed to.
Mm upset some how does better than it does impact it's been markets it looks as though.
See names that you everything.
Hi.
Oh, I wouldn't <unk> customers and suppliers precondition with business and.
<unk>.
And second.
Assuring that we who served problem customers.
Meaning taking care of all our word and supply chain on on allowing on promoting how where a lot. So I wonder and saying school on Rama Dot com.
And our customers.
Be able to meet that I could be that no. It.
Lets say.
We have to pick up the difference on the fed wasn't really.
Well the thinking process work because people are bad debts decided.
Shimon couple of ready path.
And I think we are not very good position to continue to be a.
Sure.
I think what we will be thinking and not enough or binding and or guidance.
Well, we wouldn't be thinking the month become.
You are a situation, which we are going to be doing business.
It could be the bike.
I'm feeling.
It sounds like seen or a treatment or.
<unk>.
We have two points either <unk> or.
On the everywhere and we continue.
Operating under deep.
See consensus so.
Cost of rather than the lots of consistency with decided to extend the same mixtures up from the first night and day, we already extends and so December 3rd we got inception.
Or the this feature in much of what people thinking, but sometimes we're going to don't you.
Not became so we need.
Gauge in addition or maintenance.
Thank you good to see should <unk>.
Given that all the decision has been to extend that we are going to be facing d. So.
These are linked quarter exceed the baidu more them is insane.
Right.
If you already so that that's what we're thinking or brought this up here nobody knows what the things that happen.
We can think pong second or third wave.
The once we have seen.
Like they do not have.
Well.
A nickel not making strong digging a one.
All of that these leasing we ought to be birds eye.
Oh excuse me.
Keep in mind.
Thank you Fernando somebody out I think that companies with strong operations.
And during difficult times and you guys date, so congrats on that and if I might just do a follow up do you think God given that number that you mentioned on Cemig school that good increase that you saw in your platform et cetera.
Do you see that you gain market share doing that water and some of your key markets.
Well enough completely sure you know we need to wait a public informed needs to be level, what but what I can tell you.
And then is that we do believe given that other companies do not have.
<unk> platform income in the commercial the nation, meaning from better you hadn't stages of the commercial process.
Ordered all over the transaction in order to request in buying and [noise] asking.
Hey programming been metering pain everything.
Some customers my my half from.
But he said that type of said.
These are Peter.
Uh huh.
Mm Hmm say that but but I do believe it he's happy.
Understood. Thank you put on the again.
Thanks, Okay yeah.
And the next question will come from Gordon Accordingly, with BTG. Please go ahead.
Hi, Good morning. Thank you very much color I hope everyone and their families are doing well two quick questions first I'm on <unk> on the cost reductions on the savings I was wondering first if you could give us a sense of how much you think of the savings that have been achieved year to date or that you're expecting for the.
A year as a whole how much of that you think is permanent and how much of that is.
Sensitive to two volume growth in other words, if we do see a recovery continuing this year in tenax, how much of those savings will actually remain in place and on the savings front that was also hoping maybe you could breast provide a little bit of color on the U.S., where the the margin expansion was impressive so I don't know whether the the cost savings were particularly cost.
Created there and then to the second question, if you could remind as.
What the total proceeds of pending excuse me of pending asset sales is one we would expect supposed to hit the balance sheet. Thank you.
Thanks, one of them they need it made me a big yeah. There were some for demonstrating both though you know we you know we were [noise].
Yeah, and we beat the big certain and optimization and paid <unk> brokers that next and then much. We've got these removed it seems to be plus so probably 90, so when that I I think everything I'm, calling me.
Operations in season.
Hey.
All you know where they say around two times with them they need in one or two which are 100 them 40 words, they did for Uh huh.
The remaining no you can pick the remaining.
Uh huh.
The.
He has been challenging answer how much of that its permanent because we don't have a.
Here scenario.
We can find when compared with <unk>.
I think scenario, that's been why wouldn't be plus of uncertainty.
What I can tell you now that.
Yeah, I think I already mentioned because all that the decision.
Not much wasn't strong one now given that we saw a more paulson didn't scenario than they're the ones and then now we need to engage certain expenses haptics to keep some plants running.
And those expenses that were saying.
Yeah.
And the second and those are mainly maintenance on on ARD between 20 and $25 million.
Got it right.
Unless something really changed very fine there.
You can talk to people when they got people that.
We.
Continued the rest of the year more or less insane.
Hey, let's say a scenario in the same contract.
Oh, both Sade and can be Kent.
It didn't begin.
And regarding the U.S.
And then.
The U.S. it I want to savings the U.S.
You know between been worked some changes no word management are deemed the head of the U.S.
Two months ago.
And from stronger Sandmaxx on me.
Direct and then.
Contributions from the beam.
Yes.
Manish mm.
Well defined saving for about one inside of me all of them be neared, but.
Most probably them decay.
And from between 100 200 than $20 million.
Those are both savings are coming deeper in it from different cleanse it.
One day during the one he is needed and Brendan you said, you're switching norberto lots that you run.
Colm and happens, but because the dynamics.
No it is much better to London, who HM.
Same PC and some money there are additional <unk> market mixtures, Yeah are you getting <unk> segment.
Deepening and they.
But that but that he has been some oh I would imagine you're.
I think you also added.
Have a question began to be acid nor did it.
There's very little we can say right now as you can imagine because.
Robert 19th.
I know flow.
In the own them on their own bit Berntsen legacy assets, we have no change I wouldn't mind. So we continue and that is.
Well.
Thank you the the question on the asset sales was actually of those that have already been close so effectively are the ones that you announced prior to the cobot outbreak.
No we don't vehicle to collect.
Oh, the wanting that you've been he said the weak throughout this month, we don't have any.
In full opposed to due to the cloaking, except for the bad assets. The other ones, we've got <unk> <unk>.
He's not a shirt.
[music].
Well I did my time at wasn't.
All the potential [laughter].
Yeah, and or maybe not and maybe Fernando if I can add up the up you know, we're expecting and on the UK transaction, a about a it's going to be around $230 at 230 million.
And the balance is for the white cement and the total is about a $400 million that there were expecting sometime this year.
Perfect. Thank you very much.
Thanks, a lot Gordon Thank you everyone.
Operator.
Our next question will come from Ben you are with Barclays. Please go ahead.
Hi, Good morning, Fernando Maher her thank you very much fun then question.
And congratulations on the results clearly impressive I wanted to dig a little bit into the U.S. and some of the commentary you made during the quarter and then obviously the situation as it evolves right now with with searching cases and states you are heavily exposed to Texas, Florida, California. So.
Could you run us through a little bit how you you've been seeing activity over the last couple of weeks and and what you expect on on the different markets just to understand a little bit how much maybe if it impact is yet to be seen in the U.S. that will be my first question and I have a quick one on pricing and Mexico.
Okay, let me take that when and Ben.
Again, if any to <unk>, let's say the process that we follow we thought that the U.S. as well I saw there can't be worried one.
Email moved down since you don't know.
And I do know it didn't happen.
Yes, actually no slipped two weeks.
In the Bay area.
It's sort of having been burn the U.S. didn't have any isn't much easier when you look though I.
I think what we have learned from from.
Let's see I work and mean.
<unk>.
Is that the.
Mmm back Oh, well be directly into the market lets say.
I'll turn the volume.
Well not immediate as we do fall.
We have a seamless broke ground east coast broke ground overall.
Well it and economy open.
Of course at four.
<unk>, yeah, there's <unk>, but nothing that erecting a work.
Activity.
So I think the economic impact a little less often because all of these are supporting a problem.
And then but aware in some cases there were some reactions have been you shouldn't be was not the sticky policemen.
Well, that's certain that construction signs, we're going to be name there probably.
He in some cases he has happened the opposite.
And some construction company deeply about the Trump since for them to screens that are there.
So again, they immediately insights and what not Uh huh, so that's what with.
<unk>.
Do you have all been books for let's say the next three month on the seems to be from.
I wear.
It concerns is it that way is that it perhaps.
Volumes and.
400 Bucks, even you know in most people, but on the fourth quarter and move forward no my might be something because of these programs.
Well, yeah that than me.
But again no.
You bet in uncertain.
HM.
The conference something like that so <unk>.
We continue we've ever program.
Oh sure.
Oh seduction.
That's helpful.
Okay perfect. Thank you very much fun and then on Mexico I was I was wondering if you could elaborate a little bit I'm incredibly which we've seen the discrepancy between Bakken booking your elaborated on the different demand scenarios and clearly I mean volume within what is ready mix in aggregates wishes for more form a piece heavily impacted.
So what's your strategy when it comes to pricing I mean, we all know that the Mexican peso has depreciated.
Stabilized now against the U.S. dollar, but in order to recover some of that input cost pressure, which is just dollarized input cost what's what's your pricing strategy going forward in Mexico on the different segments within some and bulk versus back. It doesn't also on on ready mix in aggregate.
Okay. Let me then satisfied I mean, I I think any more or less obvious on those dynamics that happened in Mexico did independently.
Because of that there could be piece of the market them R&D personnel decisions made on partial loved.
The industry.
And you know in Mexico, now, that's 65 to 10 Bucks American something back.
On the new remembering the not down.
Good.
[noise] needed.
Remitted <unk> sales of backs and then the discourse that's not yet.
I'm. So I know this downtime and then large and word of the new airport both bolt on bear in mind thing.
I also would not <unk> should though.
So when you saw in the last few months he.
The infrastructure and former he did indeed the claim acuity.
But back some men because so well be moved down because of some a board and investments in social programs. The made at the consumption of like that.
Hey, good or bad human open minded to decline all before my part of the cheese bulk cement and ready mix and so on this thing.
<unk>.
No nics employees or the industry you so open meaning that it's not like though.
Or the the boardrooms back sometime in <unk>.
Okay.
Mm Hmm.
Yes can give you a popular numbers.
In April I mean, the awards months in Mexico.
At the trees volumes.
What a slightly more than 40%.
While back cement increased 5%.
Oh, what we have seen since then the bucks a month mm.
Going into material manner.
Yeah.
At this month wants to be.
I think Oh delighted.
Uh huh.
Back cement is growing 28%.
Bulk cement integrating but in a much more.
Money like.
For data.
<unk>.
Well that those have been the.
Yeah.
Yeah I know.
And.
[laughter] said sort of any formal part bull and bear with me.
The rest of the market G. the bulk of the market that's not been buckets.
And your pricing strategy is going to try to recover basically on on pricing what you lose in dollar terms correct.
They've got to them, but I think well you're not believe we always not were strategies, we always tried to.
Gain bunk it became back.
Good cost inflation.
Lead what you mentioned.
Yeah. It is true the best I'd appreciate it.
And then they are the loss of.
Prices.
Never burn.
Since time, you know nation has not been <unk>, let's begin so we do have a cost inflation.
I need to cover price increases doesn't why we try price increase.
Thanks, Matt.
Yeah.
Nothing marketing.
The challenge nowadays so.
Vincent.
<unk>.
Really a I'm just done.
The people seem to be of these apart.
Okay, that's what would be.
Okay. Thank you very much in congrats again.
Hi, Ben Thanks again.
Our next question will come from Carlos <unk> with Bank of America. Please go ahead.
Thank you. Thank you for a number my her for for the call.
And let me Echo what others have said regarding the results despite the very challenging.
Situation going to margins were much better than expected. So my question is related to the margins.
Can you comment a little bit already booked up if bearing you know any major disruption going forward should we expect margins I'm glad versus last year is that something but do you think you said you concealing that 200 I'm talking to me minimum savings, that's you're expecting a for the year.
Clearly the U.S. margins, where multiple unexpected booked up just whats who really miss mostly in individual markets. So you could comment a little weaker their margins would be appreciated.
Sure Carlos I will take a stab at it and then a Fernando wants to add I mean, we think you know as Fernando said earlier, we think that most of the cost cutting efforts that we fit in the first half a year.
Good [laughter] and and in fact, some of the expenses that we incurred in dealing with the covert 19 crisis, which we had some that were in the other income expenses line are also likely to occur at a lesser pace, so everything else being equal I mean, we.
Back to kind of retain.
The margin levels that we have there's a possibility that you know things couldn't be better, but as you heard I mean out about 230 million dollar cost cutting efforts under operation resilience. We're expecting you know 140 happened in the first half and we're expecting the balance.
Happened and the into second half of the year now as far as you know as far as the.
The the different margins like in the U.S. for instance, I mean, there you know as as a as you know and that's Fernando mentioned I mean, we we had a program that started and efficiency program that started in a third quarter of last year and that program has been going on and it's and it's paid off quite nicely.
And you know operating expenses in the U.S., where dropped significantly I mean, we had a almost a a drop of 10% in operating expenses. There everything from you know as teenage travel you name it plus a reductions in fixed costs also were right cheap you know improvements unprofitable.
Realty in into ready mix business for instance wasn't cheap energy was a very important source. So all of these things are expected you know frankly to continue in the case of a indicates of the a U.S. business.
Well understood.
Thank you.
And.
Cool comment on pricing one on the U.S. or has there been any announcement oh are increasing prices, but we should expect one <unk> during the summer or have you already implemented those in the second quote can you comment a little bit on unjust price.
Yes, I would say that pricing was fairly stable on a sequential basis. I mean, we had flat pricing for our three products on a quarter quarter on quarter basis. As you know the biggest pricing increase was up what's expected to take effect in April Unfortunately, because of the covert 19 ourselves in most other.
Players decided to do a push it to two July.
And.
You know were and I guess in some cases with some clients. We beat the pricing increases did go through in April, but mostly it's being staggered into you know what what staggered into kind of June and July.
We did move ahead with that Texas, Texas pricing increases with Arizona in Colorado, as well, Oh, we had pricing increases, but but it's being stagnant by by geography, and we are fairly constructive about the ability to improve our price.
During the second half of the year.
Okay understood and lastly, or is there anything you could comment regarding the possibilities.
Support for me you with Congress any initiatives I liking for a potential support to the states.
It does move talked about anything that you can comment on infrastructure packages are worth highlighting animal initiatives on the Congress.
Yes, Carlos I mean, there's there's a number of things that we are benefiting from and in the U.S. I mean, obviously you have a.
A lot of the packages that were put into place that impact employment and and all of that and that it's been very favorable.
But what's really important is is that Weve you know when you take a look at the that either the I did the Republicans or Democrats, both have fairly aggressive proposals for infrastructure in general and for streets and highways in particular, you know so we are you know.
We don't expect I mean, it could happen who knows.
But we certainly not expecting anything this year, but certainly into 21 and 22, we do expect some something to happen in support of Oh. The streets in highway program and the based on the programs that are being mentioned I mean, the latest a announced.
For instance from the from the Democrats speak that component that they are talking about four streets and highways, if and if an act it could represent a very material increase.
Over the life of the program and the interesting thing is that the Democratic proposal is very front loaded expenditures. So its start impacting as you know the fiscal the fiscal budget at the federal level.
Our September to September at the state level, our July to July so it could literally start impacting materially the fourth quarter up 21, if we have something an act. It you know after the elections in the beginning of the year. So we're quite with quite hopeful we think that.
But anytime a star alignment or something like this it would be it would be now how the other thing that is also very important is that you know we <unk>. It is highly expected that under all of the stabilization programs in fiscal stimulus programs that are being put out that a big chunk of that money is going.
To be transferred to states to <unk> to a bridge some of the budget deficits that some of the states are.
Our incurring at this point in time because of Cobot 19.
Well, we think that's gonna be a little bit of you know a little bit like sausage, making its not going to be pretty while it's happening, but we do think at the end of the day something will happen and that should also be very supportive update.
Of up to state that we operate it now having said that Carlos it's very important to note that you know hours our state our three most important state, California, Texas and Florida.
Came into that we had very healthy a rainy day fund this has up.
For state General spending top and all three states are very highly rated I mean, California is double B minus, Texas, and Florida Us AAA.
And so you know we think that our states are very high quality credit and should be more than able to.
You know to two.
Sure I guess to recover or to sustain the situation that we're experiencing right now very easily.
Oh very very gear, just a follow up on these Walker I understand for the roads and highways.
I have your meal.
Like it to to be addressed the more dipping a mixture of booked for support for the states is that something that you think the U.S. Congress could you not.
In the next two months or would you say that's also something for.
We expect for after the election.
You know Carlos it's very [laughter], it's very difficult to tell I mean, obviously theres a lot of negotiation I I think that there is a possibility that we could get something in support of the states certainly sooner and then getting a kind of final built for that that would impact the streets and highways at the federal level. So that that's entirely.
Possible that could happen.
Okay, great because so much money.
Thank you very much Carlos.
Operate and our next question will come from Nicola let men with Morgan Stanley. Please go ahead.
Oh, yes.
No not on my hybrid one just treat quick questions here and also sorry, congrats on the phenomenal numbers the.
First on the U.S., if if if you much like you didn't Mexico can provide a little bit of call on where the demand came from infrastructure versus a residential et cetera.
Two on Semex go the 19th <unk> percent growth you saw there can you can you talk little bit about what markets saw that growth and you experience in terms of migrating to two to that model and then finally my congratulations on your new new role.
The U.S. kind of a personal crushing let's see if you take debate, but you've been with it with the with Semex for more than 20 is if you can share with us sort of any ideas. What changes is that that that you can envision going forward in India in euro. Thank you very much.
Thanks, Scott Thanks, Nick I don't Fernando I don't see went out.
Let me, let me take the one.
He said in Mexico, and Nick I'm going to try to.
Good to summarize a little bit.
No. It wasn't like that two years ago, we need you bought engage mm mm.
And the niches these old building the platform or commercial lets them well now.
Customers to do better business for them better business for I'm not seen there.
And getting to return.
Either cost women experience, neither <unk> nor did you.
We ended up developing a platform that will burn the full SPRIX <unk> <unk> from Dod barrel hardware products.
Eastern customers.
Orders and payments or you know.
Everything he covered in <unk>.
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But unfortunately, we eat happens that the platforms that have been highly upset by customers can get into them because they do the black from somebody level, Although the war nor on the water.
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Then on adoption from other customers increased benefit.
But the same way the same way that happen ignore there and deep in services.
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So we have seen that customers.
The usage wont get them.
What I cannot assure that you know in my view the same customer who is using the adopting the platform email much more decisive way or that's putting on the not lost I became more customers remain to be isn't the way that I.
At this point in time.
I don't know, but.
Well, what he'd be true with what I can say is done.
Without BOP shoot convenience growing up there.
Our year over year, an apple or making be so that's from I haven't been level.
Wont kind of thing it works problem is I'm happy with it.
See their factor.
On a on and that's the way.
Because of that and then.
We need be deep well for <unk>.
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Service at a distance, but the good human touch maybe.
Everything keeps us on the form.
Only touch points with customers, even when they did we see the protocol.
When they become the problem for mobile.
The rest is done.
Well that thanks.
That's something.
Is this are you seeing what markets I you know what markets are you seeing particularly high growth from from this platform. If you know my mask.
Well you know it more than specific my perspective, what we see east.
And then it seems like a customers.
<unk> either.
Bulk or or or Buck.
Production is much higher than 20 cents on Brady.
But I don't I don't have been specific people from trade on let's say geographic reach five which University order, which part of the market is doing more of them.
Nobody seems to be so.
<unk>.
Interesting.
Okay.
And Nick maybe I could.
Respond to your question on the U.S. as you saw I mean, we had fairly strong cement volumes in the second quarter year over year with up with about 6% growth in volumes.
And you know clearly you know we started the year with very good.
Momentum and as Fernando said, you know the U.S.
Almost continued I don't want to say business as usual, but almost business as usual in the construction sector.
And the level of.
Let's say safety that was practice through the different protocols by ourselves and by most of our clients in the U.S. meant that there were not really any hot spots. The were experienced in the construction area. So it allowed us the continuity factor and that's what was that's what contributed very favorably to our business.
Now the biggest contributor in terms of sectors infrastructure and residential those are the two biggest markets does account for 80% of our volumes and the U.S. in the case of and geographically I mean, Texas in Arizona for instance had double digit growth, which is amazing and just kind of it.
Environment, Florida had mid single digit growth.
California, we experienced a bit of a decline in volumes, primarily because higher you know precipitation and also believe it or not because of some of the corona virus restrictions.
We didnt have issues in bringing in cement into different parts of California, because we were sold out and and there were some restrictions in the Bay area, which which is up then bin bin lifted or have been lifted off now looking for I mean looking at what's happening in infrastructure for.
For instance, I mean, the difficulties it definitely took advantage of less traffic to accelerate construction. We have seen also you know very good demand still a in terms of.
A lot of.
Growth in in projects are going to be lasting for two to four years in a forward in may we saw spending growing by 1% as you know we don't have data.
Newer than that but where we're quite <unk>. It was quite a pleasant surprise. The other thing is we started out Jaime started focusing a lot on the direct bid business, which which is very conducive to infrastructure projects as well as large residential and we've been successful.
In in gaining our position in that segment on the residential side.
You know the business has been has continued to really a boom. Unfortunately, the residential market did a little bit like we did they went through their own hard stop and so as a consequence of that there has been a fairly constrained inventory and new home sales and now that things are opening.
Up again, it's starting to reactivate and now that interest rates are are continuing to drop we saw you know launch our mortgage rates break below 3% demand for housing continues to be quite strong and we frankly expected.
To continue housing permits Reno rebounded very strongly in May and June and mortgage applications, although we need to be very careful about that number also have done extremely well the area that you know that we think intuitively <unk> likely to be negative.
The impact it from all of this would be industrial and commercial I mean, that's that's something that we need I mean, that's suffered a certainly during the first half of the year and the jury is still out on not worried that happens, but fortunately. The other segments are you know are offsetting and giving us a good good outlook and as Fernando said, you know where.
We're cautious I mean, we think a forward looking order book is good into the third quarter.
Where we're being cautious probably is what what may happen in the fourth quarter, but well have to wait and see I mean visibility is not as good as we'd like it to be yeah, you know and certainly that's attributable mostly to to the cobot 19 situation I don't know if that answers. Your your your question on the U.S.
Very clearly my thank you and could I get you to take debate on onto your ambitions for dinner roll off.
Yeah, I I will have to do it would be difficult to do it in front of mind [laughter] call. My boss [laughter], So what I will but all I can say I mean, it in and serious all I can say is that I mean, we have a strategy that has been in place for a while a that has.
Been sanctioned by you know by the board and Fernando I, We don't see any changes I mean, we are going to continue.
To make sure you know are coming investment grade continues to be our Northstar, we will continue to manage our liabilities situation in order to ensure that we have you know minimum 12 to 24 months of runway in terms of maturities.
We're obviously continuously focused on trying to you know.
Bring down our cost of funding as much as possible.
And and trying to maintain as much flexibility.
For us to conduct our business in this kind of up and just kind of an environment that but but I I don't see any really any changes I mean, it's a strategy that is being implemented and I'm very fortunate to have been asked to be a in this position to be part of the execution of that strategy.
Thank you.
Thank you very much Nick.
And our next question will come from Vanessa Quiroga with Credit Suisse. Please go ahead.
Hi, so none I'm not sure thing toward that goal and taking my question, Congrats and everything else.
Thank you regarding that.
That's a man in Mexico. So just wonder if I'm correct me, if you say that back cemented going up in July today by 28% year over year.
But you also said that Ah you expect back some nice performance to.
<unk>, a and basically come very close to the economic trends in Mexico. So can I understand it can you give some more details on your views for for backs and then in Mexico and also I'm guessing my cat and I understand that you implemented price increases.
As far back to men in the beginning of July and he's a or one or two other company Theres also a dead. So what have been very fine so far in terms of pricing during the month. Thank you.
Okay.
But I know would you like you're saying.
Yes.
Yeah, Vanessa on on the back cement you know the back cement demand has been really driven a lot by well I mean, there what kind of two phases and up in the first up you know first phase. Some you know that what distribution, which was never.
Especially through our cluster Ramos was not impacted and so a lot of that demand.
That that would have gone that would've come through bulk came through cost Rama in back format. I mean in reality, we think that there were some medium size and smaller contractors that we're buying bags to actually you know batch.
Concrete at site now or in the second quarter the situation.
Took a slightly different evolution and that is that there are three things that started moving bagged cement demand much more so than that bulk and that is government support program or the government. As you know has been encouraging self construction and and do what you are.
I felt improvements home improvements.
And so the government has announced a school improvement program that is close to about half a billion dollars about $440 million. A there's also a home improvement program I mean, what a beep, which is a another 225 close to <unk> million dollars. A and then there is also a rural roads pro.
Ground for $120 million now all of those programs are designed.
To be kind of took two to promote grassroot employment in the country.
On a very broad base and and so as a consequence of that that money is going through the bag cement market and that's why we have seen you know that the extensive growth and yes, Fernando did say and.
Correctly of course is that that July month to date.
Back to growth and I forget exactly as a when it's like the 24th or 23rd it was up 28% a year over year and that's that's now we do expect it to normalize.
You know, that's just kind of an expectation you know, but the other thing, but it's also happening Vanessa. It is very important is that remittances are up year to date might 25% in dollar terms there they are up 10% and as Fernando said.
The fourth from a financial perspective, we have not seen at the consumer level.
You know the flow through of inflation. So in reality the weaker Paso has translated to hire a disposable income in local currency terms and of course that is also driving some of the you know investment in.
In home improvement and home construction and and reconstruction in some cases and that's been kind of that that the strength, having said that into left in the last two months, we have seen an improvement in demand in in bulk meaning you know in April we saw a bulk down 40% in.
July month to date similar to the number that we talked about and bags. We saw the drop a minus 14%. So so it's dropping still but by much less and that is because of the activation of some of the infrastructure programs.
In a in Mexico.
Don't know if that addresses the question. If you. If you have any further follow ons I'll be more than happy to address them.
Thank you very much mattera definitely pricing and watch has been batteries finds a in July.
You know it's up it's up it's a bit early to want to comment on that you know so I would I would rather I mean, Fernando I don't know if you went up a comment on that but it's it's really too early to comment on that at this point in time.
Oh really do my then you need to wait can be the beep.
You bet dynamics and yeah I would go.
Of course, if we did try to employees frankly.
Thinking that.
We on the one time.
Yeah, we have seen I wear and prices Oh man in real life.
Lightly.
That.
I would be needed to.
Gain.
Inflation completely.
Since I think it's using like human cells.
Yes, Frank I'm.
Even the performance for Oh, the market they like you won't be coming back yeah. The midmarket.
We decided to <unk>.
The next week.
In a few weeks.
We didn't really know.
Okay, that's great I I, if I may I would like to old faster by working cap. So what's on the improvement in average days.
The cycle do you expect to be able to keep that improvement so bad I sales normalize it we could see a positive we sold to and I working capital investment line.
Well I think we wouldn't be able to keep an eye somehow.
<unk>.
Again.
Hey.
Due to make Hawk statement on on the number is these painful for working capital with such a uncertain.
Landscape, even very risky but.
I think or what I think what I saw an important thing going forward the performances into kept them we.
We knew we know we have.
I wanted to opinion limitation keen for working capital as a negative they not sustain manner.
And I could be challenges or Oh, we didnt certain water.
No we know that well be efficient. It is also good opinion.
Well it will not be easier. If you did improved by four days are we going to keep those full day I.
Hi, I really don't know again that once certain we would see very kind of be informing them all.
<unk> efficiency and resiliency of our work.
Thank you very much Fernando nicer. Thank you very much for now.
And we have time for one last question from an email me with Bank of America. Please go ahead.
Good morning, Fernando Good morning, My her I'm sure that you're happy I got this quarters over an hour and that it that came out as that's all that said Oh circumstances considered [laughter] you guys have covered a lot of territory already in terms of the question I do want to ask when one more question on some exco.
And then a question liquidity, but on some ASCO I think the reason and I know there's been several questions and you've provided some answers so.
So many questions is because you know under this new lockdown environment.
So many more transactions are going the way as a virtual do you have like a percentage of the number of transactions. Even if it's just for cement, which you indicated Fernando was the strongest segment of that go through some exco or that the volume, but just sort of be curious currency how much the cement industry is.
It's going.
This direction right now at least your clients.
Okay sure.
Thanks for your your question and then I'm done right now to glad to be that part or are gonna be finished.
And I'm expecting for what's coming.
But how can set I think we started developing this platform.
I would call. So you know.
You can see had been almost is all business sectors.
You know what it gave me I didn't get Qantas also beat the platform instead of going for from other bill.
We don't see a patent pending before context business to business and both are the platforms that are non Saturday, we want you to bear no ones that have been developing business than you.
Most of the that more of the business too.
Consumer so we're engaged in the process around three years ago I.
I think we managed to put it makes a little what we ought to you know before let me move by Oh, probably talking a little bit starting in the utilization.
But we decided to do focus or whatever for customers.
And.
I'm idea deepens with them.
Well there are companies the sector nobody cares about cost and use of all dependent the superior customer experience.
Now do you know do go directly to your question what we saw in a few months, let's say 18 months or so is that the other customers.
Our current customers.
And where engage and started adopting the but from a dirty.
So right now or what adoption rate between 60 and seek by two cents.
Uh Huh, that's one of the Gyn sounds.
There, let's say a deed.
Most of fall.
Appreciate it sounds.
The new sounds great, meaning it kinda lots of Hanson.
And of course in other words, some changes within the last three months not be put into order and be useful platforms or sorely needed to consumption and customers. So we increased happen. They send the use of these oh. These.
Platforms that we should reflect that even in spite of your absorption.
Right.
No we.
We do believe that one of the which is why we don't have even much harder thing.
Jumped from grades because in some cases being built on the Ben though.
Certain segments or six and fixtures are public products already.
The customers in aggregate Beacon opposite Carl.
Great.
Yeah. That's that's an investment that we are bringing the year unlimited Wi.
Take the bend over the threat from either for there right now, we're having a fourfold there Mike good night.
You know what you can expect it but they team.
The feedback at you.
And my <unk> very positive.
On what's going to fill you in the case of the use of the breadth and Bobby.
The sections I think wherever they mentioned that attention of needing to Florida.
Customer speaking, but not with would be the Brett can be done beach.
And I'm not saying born leap from the office of our customers through our healthy.
That you can use the disrupt for them more wanting to do it right, but the PC. So the needs of our customers that whole Gunther for the whole designations over the whole per section with our entities.
Okay.
Well, it's being or you can imagine very carefully given this.
We are really happy that we decided to embed the pricing I will mention.
At the nation about usable.
And as you know dystrophin sees a never ending but it's really happy with what we have achieved what we have seen the on innovating and trying to find to be should.
We can serve at the market.
Okay, great. Thanks, Yes, I'm sure that the sad this helped to win when the customer did have a cement purchases. They could it could look at your platform no they could could.
So on a separate question maybe from a her I think one of the strength of Sanex going into this quarter was so strong liquidity, but to increase through your.
Oh dropdown of your credit facilities and your bond issuance. So now you're you haven't really strong liquidity I know you mentioned that depending on how the outlook looks going going forward you might be pay some of those facilities. How how are you looking at that particularly let's say in some markets. If we go into a data you, let say shape economic.
A coverage or an additional close down says they're talking about index in the U.S. at the moment do have a certain minimum amount you want to have well you keep like that that credit facility open with the banks and pay that down inhabit available in case you need it down the road how are you thinking about that.
Yeah.
I think you know for from a liquidity perspective as a as you saw we started the year with a very sizeable liquidity position as you know we did a bond last year in November.
To get liquidity to to use to pay down the convertible bond and we did that we started the year with about $800 million with a cash which is probably you know kind of double what we would you know what we've had over the last couple of years on a quarterly basis.
And and we you know ended last quarter as a consequence of a number of things that we've done we've retained cash from use proceeds from the sale of the U.S.
We've raised some liquidity through to short term debt. So we started the year with with a with about 1.4 billion. We were very happy that we got our amendment because we wanted to make sure.
To take advantage of of any kind of narrowed market windows and we did and we issued a billion dollar notes that that you saw which have sense trade. It very nicely I you know I I think that you know we paid probably a little bit more at the time, but that was a at the time actually the new issue concession with it.
What the tightest and we were the first company from emerging market to be to becoming a doing that we're expecting an additional $400 million of from our asset sales settlements. So that would be on top of the 2.8 billion up cash that we have on the balance sheet.
As of the ended the quarter.
Now you know going <unk> again, it depends it depends how things develop I mean this is this is a very it's it's a high class problem to have it's nice to have all this liquidity, but at the same time it costs money I mean, not so so we need to kind of a it we're looking at at the different markets. We're looking at a comfort.
Level that would lead us to.
Utilize some of this liquidity to reduce debt as you know we do have a revolving credit facility for four one little bit over $1.1 billion. So we do have that flexibility for us as well.
And.
So you know we haven't made a final decision how much how much of that liquidity will be deployed to reduce to reduce debt throughout the year, but but as I said I mean, we will continue to focus on making sure that we have a 12 to 24 months runway of maturities going into you know into that.
But you're now if as we get into next year first quarter, you know, we get into the seasonality of a of free of free cash flow and working capital needs and so we need to you know we need to make sure that we have sufficient level not too different probably from what we.
Had starting this year in terms of cash flow in terms of cash on the balance sheet getting into 2021.
Now.
Again, I'd like to make a caveat here is that what we did was in anticipation of things to be kind of a a little different that how they turned out meaning things have turned out a little bit better than we've seen almost a V shaped recovery in a in most of our markets. So if we if we get comfortable with that we're likely to be.
He then deploying more of our free cash if we're if we're seeing a double use or for triple double use as sometimes Fernando tell me you know worldwide web kinda [laughter] kind of volatility that obviously, we will be more defensive in our cash position right I mean that the last thing we want to be is it.
Well you know is have a situation precipitate because we did not anticipate liquidity needs. So we're very very.
We're very vigilant, we're watching you know the markets very closely on a daily basis, and ER and as we make those decisions you'll see us execute in the market.
Okay. Thanks, very much my huh. Thank you very much on.
I went out like the turn the conference over to Fernando funds all asked for any closing remarks. Please go ahead Sir.
Hi, Thanks, operator, well. Thank you all thanks, where you're fine and then what are your attention.
And you know you need any of these mean, Florida wants to make or are they turn for instance, a nice.
All us on a quarterly would be available for you.
Thank you very much on spacing why now.
Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect and have a great day.
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