Ternium S.A. Q4 FY2020 Earnings Call

Ladies and gentlemen, thank you for standing by. And welcome to Ternium Fourth Quarter 2020 Results. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. I would now like to turn the call over to Mr. Sebastián Martí. Please go ahead.

Good morning and thank you for joining us today. My name is Sebastián Martí, and I am Ternium’s Investor Relations and Compliance Director. Ternium released yesterday its financial results for the fourth quarter and full year 2020. This call is complementary to that presentation. Joining me today are Ternium’s Chief Executive Officer, Máximo Vedoya; and the company’s Chief Financial Officer, Pablo Brizzio, who will discuss Ternium’s business performance and environment. At the conclusion of our prepared remarks, there will be a Q&A session. Before we begin, I would like to remind you that this conference call contains forward-looking information and that actual results may vary from those expressed or implied. Factors that could affect results are contained in our filings with the Securities and Exchange Commission and on Page 2 in today’s webcast presentation. With that, I’ll turn the call over to Mr. Vedoya.

Thank you, Sebastián, and good morning. Thank you very much to all of you for participating in this conference call and your interest in Ternium. I am glad to share with you today a very good set of results for the last quarter of the year, which have actually been better than the ones we expected in our last conference call. Even though the pandemic continues to impose operating difficulties on all our facilities, in the fourth quarter of 2020, we took steel shipments to pre-pandemic levels, reaching 3.1 million tons. We were also able to take advantage of an attractive steel business environment, showing a significant increase in our margins to 25% in the fourth quarter, while never losing sight of strict cost control. Our current expectation is that Ternium’s margin and EBITDA will continue to increase in the first quarter of the year. I’ll let Pablo elaborate on these later on. Turning now to Ternium’s full year results, in 2020, we repeated the EBITDA of $1.5 billion we recorded in 2019. As all of us are aware, 2020 was a particularly difficult year to manage an industrial operation like Ternium’s. It requires the full dedication and commitment of all our people. The results we obtained surely reflect a successful team effort. Ternium’s performance and results over the second half of 2020 were outstanding. Taking this into account, Ternium’s Board announced yesterday its dividend proposal for the year, with an amount in line with our comments on previous conference calls of $2.10 dividend per ADS to be paid in May after the expected approval of the shareholders’ meeting. The return to shareholders is embedded in our company’s culture, something that can be reflected in the long track record of progressively higher dividend payments over the last 15 years. We intend to continue returning capital to our shareholders as we have done in the past, while at the same time growing our company profitably when we see an opportunity to do so. We trust we will be able to do this while maintaining, as usual, a strong balance sheet. In yesterday's Board meeting, the Board also discussed in depth similar initiatives related to sustainability. The care for the environment is a key aspect of Ternium’s operations. The steel industry, as many others, has been increasingly allocating resources towards improving its environmental footprint. In the last 5 years, Ternium invested approximately $300 million in environmental and energy-efficient related projects throughout its facilities. We now have planned an additional $460 million plan, the majority of which will be implemented over the next 6 to 7 years. Climate change was also a key part of the Board’s discussions, as we have been working for some time now on a plan to reduce our CO2 emissions. The result of this work is our first roadmap to decarbonization, with a medium-term target of 20% reduction of CO2 emissions per ton of steel produced by 2030. The main initiatives we intend to pursue to achieve this target are: increasing the participation of energy from renewable sources in our facility to approximately 40%; increasing the scrap share in the metallic mix; increasing carbon capture capacity at our DRI facilities in Mexico; partially replacing met coal with charcoal in Brazil and Argentina; and prioritizing lower specific-emission steelmaking technologies. We are also working on plans to continue decarbonizing our operations beyond 2030. To better manage all these issues, we have recently implemented a reorganization of our environmental functions, with 2 distinctive structures: one to tackle long-term strategic environmental decisions; and another to oversee the day-to-day environmental issues. In addition, the Board of Directors has nominated one representative from the Board to oversee on a quarterly basis Ternium’s climate change strategy. Carbon neutrality is a goal that can only be achieved if all parts of society work together. I expect there will be many more things in the years to come that we will be able to do to improve our carbon footprint. So you will continue hearing more from us on this subject in the near future. Let me now make a quick comment regarding the business environment in our main markets. In Mexico, we are having strong demand from industrial customers, mostly driven by finished goods exports, although industrial customers improve demand is widespread. The household appliance industry currently stands out as the strongest sector, while the auto industry is relatively weaker, likely affected by a semiconductor logistics bottleneck and its supply chain. Until the beginning of last week, our facilities in the country have been running at full capacity. However, extreme weather conditions in the southern U.S. and northern Mexico caused interruptions to the stable provision of natural gas and energy in this area, with a negative effect on production of approximately 80,000 tons. All facilities in the area are currently back to normal operations. As a result of these events, we expect shipments in Mexico in the first quarter of this year to remain at levels similar to those of the fourth quarter of 2020 instead of potentially growing. Our expansion project in the country continues advancing with a new hot-rolling mill at the Pesquería facility, expected to begin operation in 4 months. Mexico is our biggest market in the region, and we believe we are uniquely positioned to take advantage of the opportunities the USMCA, especially regarding ensuring manufacturing capacity with us in the future. The decision we took 3 years ago to expand our capability to supply sophisticated industrial customers in the region is finally coming to fruition, and I believe this will transform our company. In Argentina, we’ve seen continued increases in the fourth quarter, even after significant recovery in the third quarter driven by growing demand for durable goods and building materials. This mostly reflects the shift in consumption patterns towards home improvement expenditures, as has happened in other markets in the region, even though the first quarter of the year is the seasonally weakest in the Argentinian market. We expect shipments in the first quarter of 2021 to remain at high levels. Finally, turning now to Brazil. It is the market that most quickly recovered activity after the pandemic-induced lockdown. Our slab facility in Rio de Janeiro is working at full capacity, and we are increasing its integration with Ternium Mexico in the first quarter. Therefore, we expect lower slab sales to third parties compared to the fourth quarter of last year. 2021 will be a pivotal year for Ternium. We are going to be adding significant state-of-the-art capacity in Mexico, expanding our product range and at the same time increasing the cost efficiency of our operations. This new capacity will also allow us to integrate even more into our industrial system in the Americas with the help of a strong steel base in Brazil to better serve customers all over the region. In Colombia, we recently commissioned our greenfield Ribera facility, with the President of Colombia, Mr. Iván Duque, present at the event, as well as several members of his cabinet, and he was very supportive of the commitments of the country’s government to prevent unfair trade. This new facility significantly strengthens our presence and competitive position in Colombia. Wrapping up my remarks. First, I would like to acknowledge our people's efforts last year, which made possible the amazing results we showed. I am proud of their commitment and teamwork in this very, very difficult year. Going forward, the following years will be a turning point in Ternium’s life. First, the new hot-rolling mill at the Pesquería facility will substantially increase our capability to serve the market with sophisticated products. Second, I have no doubt the USMCA region will continue to provide opportunities to develop our company. And finally, we’ll continue working towards Ternium's sustainability and decarbonization; this is essential to continue delivering value to all our stakeholders. I’ll leave you now with Pablo, who will review our performance in the fourth quarter. Please, Pablo, go ahead.

Thank you, Máximo, and thank you everybody for participating in our call. Let me review the results for the fourth quarter of 2020. Indeed, our performance in the fourth quarter has been remarkable, above our expectations. Higher steel prices in our main market, especially in North America, have combined with a boost in demand for steel products to drive Ternium’s profitability and results to accelerate. We saw raw material prices not yet fully reaching our cost of sale line. On top of these favorable developments, net income was positively impacted by 2 non-recurrent events that we’ll see later on. Let’s start our presentation on Page 3, with the company EBITDA and net results in the fourth quarter. EBITDA reached $645 million and an EBITDA margin of 25%, or $210 per ton. This represents a significant improvement by any measure, both sequentially and year-over-year. We will see these in more detail in the next slide. Net income in the period was $671 million, or $3.06 per ADS. These are strong results stemming from strong operating performance but also include the positive effects of a $186 million non-cash gain related to the re-recognition of a contingency on certain tax benefits at Ternium Brazil, equivalent to $0.95 per ADS. This reflects the net positive effect of a 13% appreciation of the Mexican peso against the U.S. dollar in the fourth quarter. In the next slide, we will review the developments and our positive expectations for the next period as we see sequentially higher margins driven by a higher EBITDA in the fourth quarter of 2020. Turning now to Page 4, let’s review the performance of our achievements in each region. The Mexico shipments in the fourth quarter fully recovered from the impact of the pandemic; shipments volume increased by 14% on a sequential basis and 6% year-over-year. Looking forward into the fourth quarter, we expect sequentially stable shipments volume in the country, mainly due to the described reductions in production that Máximo mentioned. In the Argentina region, shipments in the fourth quarter of 2020 surpassed pre-pandemic levels by a wide margin, supported by increasing demand for durable goods and construction materials in Argentina. This shift in consumption patterns in Argentina continues, somewhat influenced by the COVID-19 pandemic. So looking forward, we expect these shipments to remain strong in the first quarter of the year. In the other market region, there was a year-over-year decrease in shipments in the fourth quarter, mainly of finished steel products. We expect a higher integration of Ternium’s slab facility in Brazil with the company’s industrial systems in the first quarter of 2021, consequently decreasing volume of slab to third-party sales. Ternium’s consolidated shipments reached 3.1 million tons in the fourth quarter, up 8% sequentially and 5% year-over-year. Consolidated shipments in the first quarter of 2021 are expected to be similar to those of the fourth quarter, stable volumes in our key markets as already discussed. Revenue per ton increased sequentially and year-over-year in the fourth quarter of the year. Steel prices in our key markets have continued strengthening since our last conference call, especially in North America. This, combined with a lagged reset of contract prices in Mexico, which prevented realized price increases in the fourth quarter, has led to a stronger realized price environment in the fourth quarter of this year. The combination of higher shipments and revenue per ton in the fourth quarter resulted in a 21% sequential increase in net sales to $2.6 billion, equivalent to a 15% year-over-year increase. Turning to the next slide, number 6. Let’s review the main drivers behind the sequential improvement in the fourth quarter EBITDA and net income. The EBITDA chart shows that the increase in revenue per ton was the primary driver of the strong performance in the fourth quarter, with smaller contributions from increased volumes, partially offset by a slight increase in costs per ton. We expect a new sequential expansion of EBITDA margins in the first quarter of 2021, with higher revenue per ton, partially offset by an increase in costs per ton reflecting the increase in raw material prices. The net income chart below shows that the net income increased sequentially, mostly as a result of better operating performance. Operating results in the quarter included 2 non-recurrent transactions. The first one, and the larger, is the derecognition of a contingency related to tax benefits in Brazil, amounting to a net non-cash gain of $186 million. We have not included this amount in the EBITDA figures. This was a contingency that we recognized in our financial statements when we registered in our books the purchase price allocation of the acquisition of our facility in Rio de Janeiro, now Ternium Brazil, formerly CSA. It was related to tax incentives granted by the State of Rio de Janeiro, consisting of the referral of the tax by the company in connection with the construction and operations of the facility. These benefits have been challenged in court through a Direct Action of Unconstitutionality, but it was ultimately reconfirmed by the State of Rio de Janeiro, with a final ruling by the Supreme Court. So, this contingency was recognized, and now this decision is completely final. The second non-recurrent transaction was a gain of $25 million related to a federal court ruling regarding the recognition of certain tax credits stemming from the way of calculating Brazilian taxes. The improvement in net income also reflected better results from our investment in Usiminas and the net positive effect of a higher deferred tax gain, partially offset by higher foreign exchange losses, which are both related to the 13% appreciation of the Mexican peso against the U.S. dollar. Now let’s turn to the full-year performance on Slide 7. EBITDA was $1.5 billion in 2020, virtually the same as in 2019. The 9% year-over-year decrease in shipments in 2020 reflected the impact of the COVID-19 pandemic, but was offset by a $12 increase in EBITDA performance. Net income increased 38% in 2020, reaching $868 million, or $3.97 per ADS, including the derecognition of the contingency in Brazil, amounting to $0.95 per ADS. Now let’s turn to our balance sheet and cash generation in the quarterly performance. The chart on the next slide offers a clear illustration of the impact of the COVID-19 pandemic that started in the second quarter of 2020. At first, Ternium’s rapid adjustment to the new scenario targeted reducing working capital and lowering costs to strengthen its cash position. In the fourth quarter, the company resumed its growth agenda with increased capital expenditures and operations resuming full capacity in the market, including higher working capital requirements. Looking forward to the first quarter of 2021, we expect working capital to continue to increase in the context of strong shipment volumes, increased revenue per ton, and higher production costs. On the last slide of the presentation, you will find the yearly review of Ternium's cash generation, balance sheet, and dividend payment. Free cash flow in 2020 reached $1.2 billion. This includes a working capital release of just over $350 million. Capital expenditures in the year were $560 million lower than in 2019, as several expansion projects have already been finished, and the completion of the new hot-rolling mill at the Pesquería facility was postponed to mid-2021. Our capital expenditure estimates for 2021 are currently in line with what we explained in 2020. The strong cash generation over the last 3 years has enabled us to significantly reduce net debt from a peak of $2.7 billion at the end of 2017, following the acquisition of our slab facility in Brazil, to $372 million at the end of 2020, equivalent to just 0.2 times net debt to the last 12 months' EBITDA. Regarding dividends, considering the restoration mentioned by Máximo, Ternium's Board of Directors proposed a dividend for 2020 of $412 million, equivalent to $2.10 per ADS. With this, we finish our prepared remarks. As always, we appreciate very much your time and attention. And now we are ready to take your questions. Please, operator, proceed with the Q&A session.

Your next question will come from Carlos De Alba from Morgan Stanley. Your line is open.

Yeah, thank you very much, gentlemen. Good afternoon. Very good results indeed, congratulations. Just 2 questions for me. Any significant cost or expense impact related to the energy crisis in Northern Mexico last week? You did mention that, and it was in your press release the 80,000 tons loss, but anything that we should also model in terms of cost or expenses? And then, clearly, the company has done a remarkable job in terms of generating cash flows. Your net debt to EBITDA, now, as you just pointed out, Pablo, is really low. So, I wonder, what is the next step for Ternium in terms of capital allocation or investments? You are also completing hot-rolled coil in Pesquería in a few months. So what comes next? Is it more dividends potentially, another round of investments? Whatever you can comment, that would be great. And regarding CapEx, an update on your guidance for this year would also be great. Thank you.

Thank you, Carlos. Yes, we have an impact from these 80,000 tons. We experienced an increase in the price of natural gas over the 4 or 5 days that the contingency lasted. We are still discussing the final numbers, but it is a significant amount. For the 80,000 tons, we estimate an EBITDA hit of $40 million. However, this is due to our inability to fulfill the shipments because we are at full capacity. So, we won’t be able to recover these shipments in the quarter. Regarding CapEx, we expect it to be around $600 million, slightly more than what we have this year. The second question is about capital allocations for the future. 2020 was an unusually challenging year. For the first nine months, we were mainly focused on navigating the crisis and observing market trends. However, the last couple of months have shown very different results compared to 2020. We are currently re-evaluating all our projects and growth opportunities. Ternium has a strong track record in sound investments, such as the CSA acquisition and the Pesquería 2 projects. We do see opportunities to expand, particularly in the USMCA regions, especially in Mexico. Over the next couple of months, we expect to identify where to allocate additional investments. Returning capital to shareholders through dividends is also a priority for us going forward.

Thank you, Máximo. Good luck.

And your next question will come from Caio Greiner from BTG Pactual. Your line is open.

Hi, thank you, good afternoon, everyone. I have two questions. The first one is in North American fuel prices. We’re still seeing lead times quite elevated in the U.S. especially. We have been seeing virtually no volumes on the spot market. So I’m just wondering if you can share your expectations on how long you think prices can be sustained at current levels and how do you see new capacity in North America impacting those prices in the medium term? My next question is regarding Pesquería. Can you share with us an update on the project? I’m trying to understand how much incremental shipments you can actually materialize from the project, because this is a 4.4 million tons project. You guys have 2.5 million to 3 million tons - which is not capacity or imports replaced - so this is in our calculations. That would be great.

Thank you very much, Caio. Regarding North American prices, they have indeed continued to increase. We have seen that every day. In the last conference call, we discussed price expectations. We had initially thought that in the second quarter, they would stabilize, but they are currently higher than we expected. High consumption in all markets is contributing to the price increases, including North America and Europe. The ongoing demand for renovation and new house construction is maintaining this high level. Utilization in U.S. steel is around 75-76%, which is supporting the current prices. It’s difficult to predict if there will be more increases; however, I believe the prices may stabilize and remain at high levels longer than initially expected. Regarding Pesquería, we plan to produce our first coil in June. The setup for these facilities takes time, so it won't reflect much more in 2021. But in the coming years, we expect to produce at full capacity of 4.4 million tons there. Part of the shipment will substitute our current imports, which are a bit under 1 million tons. Hence, incremental shipments from Ternium could reach around 3 million tons by 2023, not in 2021 or 2022. It’s a process.

Yeah, you did. So just to clarify, you believe that by 2023, you will be able to sell 3 million tons more than you’re selling in 2020, is that correct?

Correct. Some of those shipments can be exports. I mean, if you speak to shipments from Ternium Mexico, not specifically to the Mexican market.

Okay. That’s clear. Thank you.

And your next question will come from Timna Tanners from BofA. Your line is open.

Hey there. Good morning, guys. How’s it going?

Very good. Thank you. Good morning, Timna.

Good morning. I wanted to ask a few questions. One was on shipping to the South America region. I know you mentioned things were returned to pre-COVID levels, but even before COVID, there was a recovery beginning. So just wondering if you could give us more color on the southern market - if the fourth quarter is a good run rate into 2021 and beyond?

Well, in our sales in the southern region mostly relate to Argentina. It appears to be a very good quarter; the recovery of the Argentinian market is significant, honestly, unexpectedly so. However, Argentina has a lot of challenges ahead, including renegotiating debts with the IMF. There are macroeconomic challenges we face, meaning inflation must come down and stabilize. So while I believe these volumes will hold in the first two quarters, various factors need to align for sustained performance moving forward.

Yeah. That’s clear as possible. I think we have to stay tuned. But that’s helpful. Thank you. I guess, I forgot people usually ask all their questions at once. If I could ask another 1 or 2?

Probably. Yeah, go ahead.

Okay. Slower these days, I guess. With the fourth quarter - on the third quarter call, you had said that EBITDA margins could reach as much as $200 per ton. So it did, and I know you anticipate higher pricing, especially because of the lagged effect into the next couple of quarters. Can that margin be sustained and grow? I mean, are you continuing to grow faster than your costs? That’s my second question. My other question is, following up on the dividend comments from before to Carlos, is it possible that the board considers this dividend payment a new starting point going forward if profitability continues at recent levels?

Thank you, Timna. Regarding your first question, Pablo, would you like to respond?

Sure. You’re right; we were expecting a decrease in EBITDA margins. However, this is reflected by an increase in EBITDA to higher than $200 per ton. We clearly expect an increase in that number for the first quarter this year after considering broad contexts of increased prices in the North American market. We’ll need to analyze the new pricing scenario further. We intend to sustain high margins through the development of the Pesquería facility.

Regarding dividends, Timna, as you know, in our company, dividend decisions are made by the shareholders’ meeting. I cannot comment specifically on whether this is a new standard. However, I see our expectations of strong performance at least in 2021. If this continues, there’s no doubt that good performance would be reflected in the dividend payment for 2022.

Yes, definitely. Thank you so much. Best of luck.

Thank you, Timna.

And your next question will come from Andreas Bokkenheuser from UBS. Your line is open.

Thank you very much. Just 2 quick questions from me, a follow-up on capital allocation. You always mentioned dividends and CapEx. Obviously, you’re very cash generative at the moment. And obviously, your expansion in Mexico has come to an end. Any thoughts on a potential share buyback at this point in time? That is the first question. The second question is the slabs; you mentioned that you expect slab sales to go down in the first quarter as the volumes are being reallocated in Mexico. Why is that happening so early with the Mexico expansion not ramping up until then? Is that just restocking driven?

Okay, well, let me take the first one. You know that we always look for different alternatives to increase our share price. The challenge with share buybacks is that the level of floating shares is limited, which complicates those types of transactions. Ternium needs to ensure we don’t generate more problems in future growth after making such decisions. Therefore, we've been reluctant to proceed with buybacks.

Regarding slabs, you are correct. Our slabs are still going through the same arrangement because of the start-up phase. Two factors at play here: first, we’re trying to certify our slabs with a lot of customers to leverage product quality. Second, we’re looking at commercial reasons for optimizing sales versus shipping to Mexico. Right now, in the first quarter, we believe it makes more sense to ship more to Mexico instead of sending slabs from Brazil to other sources.

Okay, that’s very clear. I appreciate that. And maybe a quick follow-up. So you can’t – you already answered this question, partly. But just to clarify for the expansion in Mexico, how many months or quarters do you expect it to take to reach full run rate? You always talk about 2023 in terms of sales of full nameplate capacity. But presumably, it’s not going to take 18 months to ramp it up. So how should we think about the sequential increase in production?

The hot-rolling mill in Pesquería will likely reach full capacity over the next year, but we will follow a cautious approach through procured sales as we certify products with industrial customers, which requires time. After the Pesquería facility is at full capacity, we will consider the performance of the older Churubusco facility. We are looking to make adjustments to optimize output across both facilities. We do prefer to build conservatively; if the market is strong and certifications are completed in time, we may increase outputs sooner.

Got it. It’s good to be conservative. I appreciate you taking the question. Thank you very much, and congrats on the solid results.

Thank you, Andreas.

Your next question comes from Thiago Lofiego. Your line is open.

Thank you. Good morning, gentlemen. Two questions on my side; the first one on the slab market. Could you comment on the dynamics there regarding supply and demand? We are seeing pressured prices; do you expect this to hold longer? Secondly, on the demand side in Mexico, what sectors are you observing the most positive demand momentum? Also, could you double-check: you mentioned a $40 million impact because of specific issues in the fourth quarter. Is that just production loss or are there other costs associated?

Regarding the third point, it is essentially a production loss; that’s the main factor. We experienced increased purchase costs for natural gas; however, the principal impact is in production loss in a facility that has reached full capacity. As for demand in Mexico, we see that all industrial customers are operating at full capacity, including sectors such as electronics, home appliances, HVAC, and others. Although the automobile industry is facing some semiconductor supply chain constraints, they too are running at very high levels. Construction improvements are noted, but they are not the main demand driver in Mexico.

If I may, I’m sorry to interrupt. But regarding the very strong demand dynamic, how much of that stems from a restocking cycle across different industries due to the pandemic situation? We’re seeing that in Brazil, so I’m asking if that’s also present in Mexico and other regions.

I don’t think that is the case in Mexico. We see that final goods are driving actual consumption instead of stocking by distributors or intermediaries. People are investing in home improvements and new homes. To clarify, we aren’t seeing increased stocks with distributors in Mexico or the U.S. We see real demand from industrial segments, where distributors are not overstocked. However, construction is showing signs of improvement. Again, we are not also seeing that happening in Argentina. There might be increased stocking in some segments, but not across the board. Regarding the slab market, the increase reflects more than just the slabs; it includes hot rolled coils with prices at $1,300 in the U.S., leading to an overall price increase, including slabs. Thus, this is a reflection of the general market phenomena.

Do you think there is a mismatch between supply and demand in the slab market, meaning integrated steel producers acting to reduce capacity utilization, leading them to buy more slabs from the market?

I am not seeing that yet. To be honest, the situation doesn’t suggest it will lead to significant impacts on the slab market. It could be a factor, but the extent does not seem large at this point.

Okay. All right. Thank you, Máximo.

And your next question comes from Jonathan Brandt from HSBC. Your line is open.

Hi, good morning, good afternoon. Thanks for taking my question. I wanted to return back to capital allocation. Máximo, you mentioned you have a few things under study at the moment. I’m just wondering, how does M&A fit into that? Is that something you’re also looking at, or is the expectation that it’ll be typically organic growth going forward? Secondly, just regarding some of the internal projects, is it fair to say these would result in incremental steel capacity? How are you thinking about iron ore production? Would it be possible to increase production and sell more to third parties considering the high prices? Is that under consideration?

Thank you, Jon. Regarding capital allocation, we analyze both organic opportunities and M&A possibilities. We have a history of completing such acquisitions, providing us growth. However, I cannot say if we have anything concrete at this time. Some of our current projects are for organic growth. As you know, we finished our investment in Peña Colorada a couple of years ago, and there are still opportunities in iron ore. We plan to increase production, but not significantly for now; we must assess the situation and opportunities first.

Okay, very good. Thank you.

Thank you, Jon.

At this time, I have no further questions. Thank you. I’ll turn the call back over to the presenters for closing remarks.

Thank you very much to all of you for attending this conference and your interest in Ternium. I hope this call has been useful. If you have any additional questions or comments, please reach out. Thank you very much and stay safe.

Thank you, everyone. This will conclude today’s conference call. You may now disconnect.