Ternium S.A. (NYSE:TX) Q1 2019 Earnings Conference Call Transcript

May 02, 2019 • 08:45 am ET


Ternium S.A. (NYSE:TX) Q1 2019 Earnings Conference Call Transcript


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Good morning. My name is Michelle and I will be your conference operator today. At this time, I would like to welcome everyone to the Ternium First Quarter 2019 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)

I would now like to turn the call over to Mr. Sebastian Marti. Please go ahead.

Sebastian Marti

Good morning. Thank you for joining us today. My name is Sebastian Marti and I am Ternium's Investor Relations Director. Ternium has issued a press release earlier today detailing its results for the first quarter 2019. This call is complementary to that presentation. Joining me today are Mr. Maximo Vedoya, Ternium's CEO; and Mr. Pablo Brizzio, Ternium's CFO who will discuss the company's business environment and performance. At the conclusion of our prepared remarks, we will open up the call to your questions.

Before we begin, I would like to remind you that this conference call contains forward-looking information and that actual results may vary from those expressed or implied. Factors that could affect results are contained in our filings with the Securities and Exchange Commission and on page two in today's webcast presentation.

With that, I'll turn the call over to Mr. Vedoya.

Maximo Vedoya

Thank you, Sebastian. Good morning and thank you very much for participating in our conference call today. It's a pleasure to talk with all of you. As usual, I will make a very brief comment about the state of the steel industry in our main markets and then Pablo will review our performance in the first quarter of the year. And lastly, we have a Q&A session.

In the first quarter of the year, we had an increase in steel volume, mainly driven by a higher sales of slabs to third parties from our Brazilian facility and also by slightly higher sales in Mexico. This last one, a positive development considering this market has been challenging lately. EBITDA for the quarter was $470 million, a slight decrease compared to the fourth quarter of 2018 in line with our expectations. We continue showing a good level of EBITDA margins with 17% in the quarter. Finally, we had a free cash flow of $269 million, also an attractive level.

Let's turn to Mexico now. Steel consumption in Mexico decreased close to 4% in 2018 according to the World Steel, which released these numbers last week. We believe our market share increased in 2018 and also in the first quarter of 2019. Our shipment to the industrial market in the country are doing fine, mainly driven by good end use of demand in the US, although there is a moderate destocking at some automotive service centers that is weighing a little in volumes in Mexico. On the other hand, our shipment to the commercial market more related to construction activity and infrastructure investment have been weak since at least the third quarter of 2018 as a result of lower