Ternium S.A. Q1 2023 Earnings Call
Ladies and gentlemen, thank you standing by and welcome to the attorney them first quarter 2023 results call I would now like to turn the call over to Sebastian Marti. Please go ahead.
Good morning, and thank you for joining US today My name is Sebastian Marti and I am sure.
Global Investor Relations and companion senior director.
Turning released yesterday its financial results for the first quarter of 2023. This call is complimentary to that presentation.
Joining me today are Chinese Chief Executive Officer, Maxim already those yet and the company's Chief Financial Officer, Bob Nobody Chip will discuss the 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.
Page two in today's webcast presentation.
You will also find any reference to non <unk>.
Financial measures reconcile to the most directly comparable <unk> measures.
The press release issued yesterday.
With that I'll turn the call over to.
Okay.
Yeah.
Thank you.
Yeah.
Good morning to everyone and thank you for your participation on today's conference call.
<unk> recorded a good set of results in the first quarter of 2023.
EBITDA.
Slightly over half of $1 billion. This is equivalent to $166 per ton and two a 14% margin. We also have a healthy cash generation with free cash flow of $414 million in the quarter.
So their own Pablo will go more in depth.
Our performance in the first quarter.
Let's review the business environment in our main markets, beginning with Mexico our.
Paris still demanding in the Mexican market remains carefully in.
In the commercial market.
A restocking in the value chain, which began in the fourth quarter of last year continued into the first quarter of this year and we are not seeing signs of finalizing yet.
In the industrial markets, we are seeing steady still demand with less volatility than what we see in the commercial market.
Total industry supply chain disruptions.
Significantly and most all.
Yes.
To increase production on the other hand manufacturing needs.
Given that 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 Bulgaria Advancers.
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 <unk> was in the first stage of the startup.
This is an increase of more than 30%.
And we expect shipments to continue growing in this market in the second quarter.
In addition, the downstream projects currently under development at this facility will enable us to complement these 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 mean, we announced in February although we are not ready to disclose its exact location yet we are very close to each other.
Yes.
Something that has been late lately, calling investor rotation is increasing near shoring trend in the region.
This is due to the need of close or a more reliable supply chains.
To serve and market Mexico is a beneficiary of this dynamic.
A result of its many advantage its a membership to the U S. MCA. It Hasnt exception experience and technical qualified Labor force.
Oh first shorter lead times, and lower transportation costs to end markets.
And this is being reflected in demand.
State in the country. According to the Mexican Association of industrial parks, the industrial state sector.
Occupancy rate of 97%.
If we just measure b in the north of the country the availability rate is even lower.
1%.
99% of occupancy rate.
Example, one of the latest and highest profile investment announcements.
Plus new factory in Mexico, which will be built in Monterey our hometown.
Let me now make some comments about Argentina, our second largest market with 18% of total shipments.
Our business in Argentina continues to do relatively well, although there is a considerable level of uncertainty in this market.
Antena suffer from a very strong drought this year that it adversely that is adversely affecting grain export revenue and consequently, Argentina as central bank cut currency reserved this coupled with a high inflation level and a significant difficultly.
Unstable macroeconomic environment.
Got it to impact economic activity and steel demand in the country during the second half of 2023.
Yeah.
I would like now to make a brief comment about our recent announcements regarding the increasing tournaments participation in UC Minas control group.
<unk>.
<unk> had a participation in <unk> since 2012, when he joined Nippon Steel <unk> <unk> mean that control group.
During the past 11 years.
Nippon Steel have sure does it mean as management on an equal footing without either partner, having the ability to impose decision on the other.
On March 3rd year.
We agree with our control group of partners to take on different growers.
We will have a more direct involvement in <unk> management.
And the implementation of its strategy, while Nippon steel will maintain assay in all key decisions outside the ordinary course of business.
We'll continue contributing yet.
<unk> expertise to the company.
Revenue is Latin America's largest flat steel producer and has a proven track record of successful successfully managing still assets in the region. This put us in a perfect position to assume after more than a decade in the company.
<unk> position in UC Minas.
To put this changing to auction Nippon steel agreed to sell to <unk> and our affiliate <unk>.
Olson of its participation in the <unk> 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 <unk> will retain.
One officer each.
As for next steps.
We're going to need the approval of Kathy Brazil's antitrust authority to be able to close this transaction and.
Until we have received <unk> approval for the transaction we cannot go further into our plans to <unk> because of this I hope you understand we want to be able to act in the Q&A section much more information on the matter that we have already disclosed.
Turning now to ESG topics, we are proud to have been recognized last week, a sustainably champions by World steel for the fifth year in a row. This industry recognition demonstrate 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 needs.
Our third new slab facility.
For this we plan to leverage on the experience of staying with our technical school in <unk> Mexico.
This technical school, the one <unk>, which is now on the seventh year of successful operation was launched to educate high school students from our community using a novel innovative technique teaching methods and the latest technology in both classrooms and laboratories.
The results.
All of these initiatives has been remarkable the students.
All of which received scholarships.
<unk>.
And the privilege communities, where the opportunity to assist to high school.
It's very rare.
Today more than 50% of graduates from the school.
Going through the University studies.
We expect Brazil's new technical school to bring technical integration with the latest learning tools and technology to close to 600 students with this type of classes in the first quarter of 2025.
Over the years.
The company has developed educational programs programs covering the entire school cycle.
From elementary to post graduate levels, helping children and youngsters fulfill their potential and began Arctic contributors to society. We believe that certainly in the industrial projects can only be sustainable.
The communities, where we operate grow alongside the company and education plays a key role in this Andover.
Let me now make some final comments to close my prepared remarks.
Even though we continue to be uncertainty regarding the macro macro environment. During the second half of the year I am confident that we've got a good performance in 2023.
With our latest investment we have put the company in a strong competitive position and there is more to come with the upstream and downstream project under development.
We believe we have ample opportunity to grow its business in the following years and we are ready to take advantage of these opportunities.
On the other half con as you have heard US say many times in the past we have always been committed to Brazil. This is one of the largest steel market in Americas, and we believe it will have many opportunities to grow our business in the future. In this respect we are very excited with the change.
<unk> control group I believe our recent agreement with Nippon Steel will give us a ring.
Base from which to contribute to <unk> success benefit benefit benefiting all of <unk> stakeholders.
Hey, Pablo you can now go ahead with your presentation on <unk> performance in the first quarter.
Thanks.
Good morning to everybody and thank you again for participating in our conference call.
Let's review in more detail starting with performance in the first quarter and our guidance for the second quarter.
We will start on page three of the webcast presentation with revenues EBITDA and net income.
As anticipated EBITDA.
Martin.
EBITDA per ton improved sequentially in the first quarter of the year, leaving for eight.
A $1 91 in the previous.
Margins in the first quarter approach the company use Walgreens, mostly as a result of cost deflation.
With lower priced raw materials continue to flow into the company.
Looking forward, we expect the company's EBITDA to increase in the second quarter of this year.
Carrier shipments and margins.
We will analyze these in more detail in the coming slides.
Let's move now to our timber performance on page four.
In Mexico that are interesting.
Shipments reached a new all time high of $2 1 million tons in the first quarter of 2023 as Maximo already explained.
Shipments were not only higher than what we had last year of our own but also the improved 10% sequentially again last quarter over last year.
Reflecting increased market leader in this dynamic market.
Yeah.
The sequential volume increase in Mexico in the first quarter was mostly offset by lower volumes in the southern region on all market.
In the southern region shipments decreased 8%, mainly as a result of a seasonally weaker demand in Argentina.
We currently expect will normalize somewhat in the second quarter of 2023.
In our markets the sequential decrease in shipments was mostly due to a lower volume of slot cheap.
For qualities of the company further degradation of the Brazilians are a facility with the downstream facilities in Mexico.
And the next page number five you can see that combining these developments consolidated shipments in the first quarter was $3 1 million tons.
Based on that has already been discussed we expect consolidated achievements to increase in the second quarter of this year, mainly reflecting higher volumes in Mexico and somewhat in the southern region.
Revenue per tone remains relatively stable in the first quarter.
The increase in spot prices the Usmc.
These were mainly due to the negative effect of lower prices.
On the contract in Mexico in this quarter, we sort of said prices with a lag.
And by lower realized prices in the southern region.
In the second quarter contracts when prices are expected to sequentially reset at higher levels.
This positive development, coupled with a healthy.
Thank you.
To Echo your consolidated revenue per ton in the second quarter.
Okay.
Moving on the next page, Let's review now the main drivers behind the sequential changes in EBITDA and net income.
The table shows that the improvement in EBITDA in the first quarter was mostly the result of a lower cost per ton of shipments and revenue per car remained relatively unchanged.
The decrease in cost was mainly due to the lower price.
Raw materials acquired during the second half of.
Total capital, but continue flowing through the company <unk> in the first quarter of this year.
To a lesser extent cost per tonne also increased as a result of lower energy costs.
Gas price decrease.
Looking forward, we expect adjusted EBITDA to increase sequentially in the second quarter as consolidated shipments and revenue per ton increase on cost per tonne deflate and input.
The chart on the bottom shows that the sequential increase in net income was driven mainly by higher operating result, and to a lesser extent better income tax refund.
In the first quarter of this year types of itself include a before tax gain on televisions Mexican subsidiary in connection with the 7% application of the Mexican peso against the U S dollar.
Let's review now on page seven seven and cash flow performance and balance sheet.
Cash flow.
Cash flow from operations in the third quarter of a year was $612 million, including working capital release of 219 million globally.
Looking forward, we expect working capital increased in the second quarter in sync with priority production shipments on prices.
Free cash flow in the third quarter.
$414 million after capex of close to $200 million.
Turning net net cash position to $3 billion by the end of March.
The capex level expected to continue increasing in the coming quarters.
Without the prospect in fiscal year, MBR approaches, where we announced in North America.
With this we conclude our prepared remarks.
Thanks, a lot.
And now we can go to take any questions you might have please operator proceed with the Q&A session.
Okay.
The floor is now open for your questions to ask a question at this time. Please press star one on your telephone keypad in any point you'd like to withdraw from the queue. Please press star one again.
I'll now take a moment to compile our roster.
Yeah.
Yeah.
Okay.
Yeah.
Our first question comes from the line of.
Brian <unk> from BTG Pactual. Please proceed.
Hello, Good morning, everyone. Thank you Michael.
Question on your North American operations.
Wanted to explore a little more.
In North America.
Armstrong.
Yes.
Hum.
Strong supply chain restocking.
Second quarter growth.
Stronger volumes lives.
One more.
On the outlook for the second half.
Yes.
Factoring volume too.
Annualized New board.
That still remains the same.
At current levels.
Are there any pressure points.
You guys you guys are working with an estimated volume for.
And the.
The Mexican market share.
Helpful.
Good question.
Yes.
I know that you guys.
Very nice.
A little negative share repurchase at this point, but just wondering.
Are there any initial remark that you can you can add.
And those comments so.
Sure.
Other exciting plans.
On the asset.
This acquisition.
Are there any priorities.
Sure.
Or are there any low hanging fruit.
Thank you guys.
In the short term.
I'll also limit.
Good.
You could dimension journey further.
Okay.
Yes down the road.
Sure.
Thank you very much.
Thank you very much.
Let me start with the first question and demand.
Yes, Youre 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 restructuring process in.
In Mexico and in the U S also.
We're gaining market share and industrial market.
It's stable so I think.
The second Q is filed what is going to happen the second half of the year.
Okay.
We are still seeing a demand that is robust.
We are not seeing that.
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.
There are softening.
But at a degree that is not very relevant.
And we are seeing other things happening in the market.
That will probably increase.
The demand is there.
The near shoring that Im speaking youre seeing that everywhere in the north of Mexico.
And.
A part of that near shoring comes from our own cash.
They are increasing their capacity so they will consume more.
More steel.
New customers that are coming from the region, bringing.
Bringing production, probably well mainly from Asia. So there is a.
A trend.
That is going forward.
Customers are starting to.
To consume industrial customers more steel because they are increasing their capacity.
They have.
In the region.
I think that the only.
Impact on negative impact is more the macroeconomic impact of what is going to happen.
With this increase.
In.
In the <unk>.
In the interest rate.
This.
Tightening.
And we'll bring a so.
So called recession in the U S. I mean, we have been speaking of this.
For some quarters now.
Every time, we speak it seems that it is delayed the recession in the U S.
Our customers today are working with.
The outlook that they expect a softening, but they don't expect a huge recession.
But nevertheless.
I want to emphasize that there is uncertainty.
Certainty it is coming from the the increase in the interest rate and how this is going to affect all our industrial customers as I said.
Today, we are only seeing some.
Problems of some softening in the household in the house market.
And that's it.
Yeah.
But I hope with this I can give you a little bit of what was the outlook demand.
The second question I think it's about <unk> <unk>.
Yeah.
If I understand well.
Yeah.
Yeah.
<unk>.
Nonetheless.
Yes.
Sure.
Initial.
Yeah.
Sure.
Potentially.
Shane.
Okay.
Yes.
Yes, I think a very good question on <unk>, but as I mentioned my prepared remarks.
I prefer not to elaborate a lot on the future plans for <unk> before a car they're granted approval to do the transaction.
I mean I <unk> you know we are committed to the pillars of our <unk>.
And I believe and we believe that the agri changes in the control group will benefit.
Also need us and normally they are called.
On the other side.
That Brazil is very important market for 10 years, and we have always been.
Committed are excited of having this opportunity.
And.
We will have a lot of work to do.
But again once the caveat approve the transaction.
My opinion is that.
There is a significant potential.
C Minas.
Nah, we believe in our partners also believe that we have the capacity to unlock that potential to be honest with you mean us.
It has good assets.
Mining assets <unk> and <unk>.
People people on many opportunities.
To the balance on the other can also have enormous challenge or a big challenge.
The realigning of the blast furnace number three the investments in the coking facility.
The development of the sustainability strategy.
Analyzing in deep all the mining operations that in the medium term has to do an investment in.
And also.
To improve the competitive situation or competitiveness situation in order to regain some market share.
<unk>.
That has lost in the last years and again I think that.
Saturday them once the operation is approved.
Taking these leadership our leadership position in <unk>.
He is going to help with all of these.
I think thats, what I call I can comment on the on the subject.
No that's very helpful.
Okay.
A follow up.
Yes.
Yes.
Can you speak how you Oh sorry.
Can you speak a little bit closer to the mic because it's.
We're hearing very low.
James can you hear me better now.
That's perfect.
Okay.
So just to follow up on the previous question. So thank you very much.
Sure.
Units.
Just on the shipment question.
Can you maybe share with us your estimate for volume.
The Mexican operation for 2023 versus 2022.
Yes.
When you guys are working with.
Turning from the Mexican operation.
Well, yes, we have an increase.
And I think we're going to sustain or increase a little beat the shipments that we have in the first Q.
So we are going to need those same months.
Then second curious he's going to be a little bit higher.
And.
Yeah.
And third and fourth Q, we are expecting to continue that trend not increasing but of maintaining with that I think it's at $25 or more from the one 3% increase in shipments in Europe . After a year you have to realize that the Hartford.
Neil it's not running almost at full capacity the new country meal I mean, it's running I think 88% of capacity. So we don't have a lot of space to increase <unk>.
Much more shipments and we are going through the increase of production.
In the old demand.
So we have some space, but we don't have a lot of space to increase much much more our treatments.
Yeah.
Okay.
Alright, Thank you very much.
Thank you.
Yeah.
Our next question comes from the line.
Line of Kyle Romero from Bank of America. Please proceed.
Good morning, everyone. Thank you for the opportunity. So my first question is on your working capital trends going forward I think the big working capital release. This quarter. So I just wanted to get some more color on what you expect in the coming quarters.
And then secondly on U S HRC trends right after multiple price hikes us since late last year. It seems that prices have somewhat stabilized lately and lead times of that started to shorten a bit. So I just wanted to see if you could provide some color on what you expect in terms of price trends, particularly in the second half of the year.
And what you see as a sustainable medium to long term price for U S. HRC at this point. Thank you.
Thank you very much <unk> I started with the second part and I leave working capital to Pablo.
Yeah.
Right terms.
Ed.
I didn't change.
Much my mind about what we discuss the last.
Water.
Several quarters before I think there is a new.
Floor or a new.
Neuro model of steel prices.
And that normally is much higher than what it was before.
Pandemic.
Pre pandemic.
<unk>.
And we see this.
We the new bottom prices, we got last year.
And when they arrive that bottom they started to increase just right. After so.
I think.
Prices will remain at <unk>.
Stable.
Healthy situation.
For most of the year in my my respect of course today as we discuss varieties in Greece and probably.
As you said there Scott is stabilizing at these price of corridor coil.
What in the second Q2, probably but I cannot say, particularly I think probably there is going to be some adjustment.
Again, my reference of prices in the future are always at the new normal is around 900 or $1000.
The new 600 that used to be.
Yeah.
On the other side I mean.
Raw material cost also cost decrease.
Iron ore carbon.
In natural gas and in our case also so it's normal that for the second quarter to quarter there should be some.
The adjustment how big is that adjustment I think it's not going to depends on.
Another factor is that what happens with the macroeconomic.
Activity.
The macroeconomic numbers its really there is a recession.
That's going to affect.
Right.
Hum.
A little bit more.
If not I think is going to be the same that we are looking with.
With the ups and downs, but on a healthy level in the prices.
I hope I answer that question or at least Thats My thought.
Yes, absolutely. Thank you so much.
Working capital Pablo Yes, Hi, guys. How are you so going to your question clearly what we're seeing now is that the normal movement of shipments, especially that we are expecting to see.
And even in the North American market, especially Mexico.
Sure.
The growth.
More growth that we are expecting also in the southern visa market, there will be a need for.
Further uses of working capital.
But not only that we are also saying that we are expecting to see.
Bryce.
Greetings.
In our pricing in comparing the second to the first quarter, so putting all of it all.
Of course take into consideration was as much information that we have seen some decrease in prices of raw material, we had expected to see somewhat.
An increase in the level of working capital utilization not that significant because putting all the things that.
She won't be that significant but we will not or our expectation now is not to continue will happen to that in the last three quarters, while we have release in some cases like last quarter.
In the last quarter of last year, we have a huge release of working capital now we think that we are entering into a post.
Recovering.
For working capital and deal prices.
Volume adjusted to new levels.
Very clear, thank you Paolo and lots of them.
Youre welcome.
Okay.
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 Amazon.
Running.
I wanted to ask a few questions first about that one is there any parts that it could be starting 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 tenants and ports Sir.
All are modest and do you think that yeah. It sounds like youre, saying in the second half youre going to keep producing irrespective, but I'm just asking about the balances potentially dozen ports M series, starting how you think about that.
Thanks.
It's a very good question Timna. Thank you very much I mean, I don't know much of answer us.
Probably what everybody is hearing in the press.
But I don't know if answer is going to restart and Andy.
Is it.
Analytics restart he is going to restart in the third quarter, it's clearly not going to restart.
At the levels they used to be.
I mean, as you know the blast furnaces down.
So that would take probably several earlier to restart.
Blast furnace.
Key inputs.
A big part of of the Mexican market and.
And we are competing with imports the Mexican and the U S market.
But you have to understand that.
Most of our customers.
They are relocating production to the North American market. They are also trying to source more and more from us.
So I do expect I didn't increase in imports.
But I don't expect that that increase is going to affect the ability that we have two ships the program that we have.
In our programs to be abandoned.
So that's how I can answer that question and I hope it's enough.
No that's great I appreciate it's challenging situations.
Okay. Thanks, and then I wanted to ask you if you can remind us about.
He is a qualification process and how to think about the mix improving there.
In terms of timing and magnitude of Beacon.
But remember <unk> is going to ease starting really to to show the qualification process in this quarter. So part of these 500000 tons. If you compare the first quarter of 2022 to the first quarter of 2023.
That's not changing in consumption in Mexico in steel consumption.
In fact 2022 against 2023, the whole year I think.
Consumption was flat in.
In the in the country.
Your complaint two quarters that has the same market.
The same.
Yeah.
In fact, I'm looking to now I remember the name the the world still.
The SRO the short range outlook and the consumption in Mexico decreased by two 8%.
2022 comp compared to 2021.
So and so there is no.
I mean in 2022, while at the same and it's not going to grow a lot in 2023. So these increases are more increases in market share and part of that increase is that.
After one year of certification that's the time it takes.
We are increasing much more our shipments to our market share to the industrial sector. We can expect.
To have.
Roughly 100, and something south of tons additional in the second quarter of this.
Qualification process.
And then.
It's going to be a small increase until probably next year. When there is the the next round of <unk>.
Mark.
The contracts with the customers with annual contract with the customers. So we have a huge increase in this quarter.
Okay, Great and I was also asking a bit about margin benefit so maybe along those lines. If he can steer as to where you expect margins I know in the past, sometimes you talk about a normal range of 15% to 20%.
Probably be a little higher than.
Q1 at the high end of that range or or any other color would be yes, youre right. Its a good.
It's a very good question Timna that we usually don't want to answer.
[laughter].
Youre right, we were in the bottom part 14% of margin EBITDA in this quarter. Our normal range. We are we always say it is between 15 and 20%.
Probably in the next quarter, we are going to be in the upper side of that range.
Most likely.
Up a little bit above that.
Okay. Okay, I hope that is enough because we never say no. Thank you [laughter].
Okay.
Our next question comes from.
The line of Diego Las Vega.
<unk>.
For desktop BVI. Please proceed.
Thank you good morning, gentlemen, two quick questions first one Massimo can you comment on your slab integration dynamics for the coming quarters, but should we expect on that and the second question.
Talk a little bit more about Argentina.
What's the outlook for force to demand if you could quantify for us for 2023 that would be great. Thank you.
Thank you Thiago.
Slapping integration as you say as I always said.
Going through most of our swaps are going to our own facilities. If you see the numbers of shipments I think we only ship.
In this quarter of 60000 tons of slabs all of the other more than 1 million tons of lapse went to our own consumption either in Argentina, but mainly in Mexico.
So the snap integration is almost <unk>.
100% today.
That's one point, Argentina as I said.
Second you were still seeing demand.
In the first quarter I mean it.
Healthy demand for steel consumption.
Clearly that's not what we expect for the rest of the year and.
We think that.
With the evaluation of the GDP of the decrease.
All the consultants are putting in the GDP of Argentina.
Year, probably consumption steel consumption in China, it's going to decrease.
It's very difficult to say the number but our expectation is between 2% and 3% today.
For the whole year not for the second half for the whole year.
Okay very clear thank you very much.
No.
Yeah.
Our next our final question comes from the line of Carlos de Alba from MFS. Please proceed.
Yes, thank you very much.
Morgan Stanley for those that don't.
Just oh.
Yes.
So thank you very much good morning.
Thank you Juan Pablo.
Just a couple of questions one is on the.
On the cash situation I mean, you clearly have a very strong balance sheet $3 billion in cash, but about I think about half of that and I'm not sure you could do something.
Cash basis, or just the cash that you're having.
But about half of this is in Argentina could you talk about the challenges that you may have the company may have another corporation they have in Argentina too.
Two.
Use that that high level of cash in the country, where maybe you are already investing as much as you, possibly can your assets are in good shape.
The economy is not really expanding.
The outlooks in certain times that you might not be able to.
To invest in growth projects.
Right now at least so like what options do you have to use potentially that cash outside of Argentina, you could comment on that that will be.
Very interesting and then the second question is.
And I know that this is a.
The third part of your business overall, but you do have some mining operations in Mexico, and there is a 90 law.
Potential change that is now.
Senate.
Yeah.
What would if approved as as pets.
The Bill was.
Central to the Senate.
Have you taken a look at and.
And kind of comment on what the potential impact to your business could be.
Yes got it all thank you very much for both questions I start with the second question Youre right. There is a mining new law that went through the house.
And now we can say that and probably will be.
Cash today to be honest.
We are not seeing a lot of off.
Of affection in their mind they win the way it went in in the house.
The mining.
Yes.
They it was on the original.
I think he has a huge affection for all the mining operations of Mexico, not only ours.
But to be honest.
Yeah.
There were some discussions very helpful discussions with the Mexican government.
And I think there has been a significant progress.
In the discussion and then the changes that the house Nate.
They know that the house approved.
There are some issues yet to be honest.
And I think that.
Both the senators.
The Mexican government understand.
These things there has to be mainly with certain technical issues with the use of water. So it is a very technical position.
Each.
I think the government didn't meant this to be an impediment. So I think there is good.
Would we have to change and again there are small changes to be made so I think that I don't see.
Our big issue today with.
With how this is going through.
Cash situation in Argentina.
Okay.
Nice question for Us.
Yeah.
So.
Well first of all Youre right.
On the surgery hasn't Dina.
E C.
Two things.
So to get gas out of the car.
Countries.
We have a significant level of cash.
The subsidiary there.
First thing that you can do.
In fact, we have done to us.
Weak is paying dividend.
So we have just announced on Monday that the company doesn't even want to Dana our since we are there will be an easy then.
More around $600 million got.
Got it.
In bonds.
No.
That.
One way to do.
Good.
Some money out of Argentina, and in fact is the normal way in the company.
To do that but when you want to do that as a company that traditional pay TV.
Of course.
We don't have the time to enter into leases.
Because.
Argentina, usually for us.
Does that make things much different from a normal country.
No.
Yes.
The process of bringing these take longer.
So different steps to reform, but all in all I think that the most important comment to make is that.
Because of this living of cargo with element.
It was the right moment to do that as part of our past without having.
<unk>.
Perfect to take it.
Consideration to distribute but part of that cost too.
Towards shareholders.
The rest of it as we continue to work in protecting.
Gosh.
We have over there again <unk> off.
Quotation of the Golar because you know that our current you have a question on <unk> on our managing currencies the dollar.
Our sales against the inflation effect, but we are also suffering in the car.
So that's what we're doing right now.
The company, we continue monitoring very.
Closeness equation there.
To do that.
But the Best example is working with our SaaS band, which is <unk>.
Cash towards their holders outside the.
In the case of Offloading of course will be seen and discussed.
As part of that.
Uh huh.
The two 5% of our subsidiary in Argentina, So that what we are doing.
In a complex situation. The one that you are seeing.
Jim as well.
Yeah.
Carlos can clarify both with Jos.
Yeah. Thank you very much.
I would now like to turn the call over to Tony <unk> CEO for closing remarks.
Okay. Thank you everybody for participating and making very good questions.
Please.
Feel free to contact us if you have any comments any additional questions.
We took all in the next conference call. Thank you very much.
Thank you ladies and gentlemen, this does conclude today's call. Thank you for your participation you may now disconnect.
Yes.
Yeah.