Ternium Announces Third Quarter 2006 Results.LUXEMBOURG Luxembourg, province, Belgium Luxembourg, Du. Luxemburg, province (1991 pop. 232,813), 1,706 sq mi (4,419 sq km), SE Belgium, in the Ardennes, bordering on the Grand Duchy of Luxembourg in the east and on France in the south. -- Ternium S.A. (NYSE NYSE See: New York Stock Exchange :TX) announced today its results for the third quarter ended September 30, 2006. The financial and operational information contained in this press release is based on consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with International Financial Reporting Standards International Financial Reporting Standards (IFRS) are standards and interpretations adopted by the International Accounting Standards Board (IASB). Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). (IFRS IFRS International Financial Reporting Standard(s) IFRS Inter Frame Relay Service IFRS Indiana Facilities Registry System ) and presented in U.S. dollars. Summary of Third Quarter 2006 Results * Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of US$1.7 billion. * Shipments of flat and long products totaling 2.2 million tons. * Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of US$508.2 million, or 29% of net sales. * EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (*) of US$614.9 million, or 35% of net sales. * Equity holders net income of US$257.4 million. * Earnings per American Depositary Share American Depositary Share (ADS) Foreign stock issued in the US and registered in the ADR system. (ADS) of US$1.28 (each ADS represents 10 shares of TerniumeIUs common stock). Market Background and Outlook Ternium'sE[sz]main steel markets in the South & Central America Central America, narrow, southernmost region (c.202,200 sq mi/523,698 sq km) of North America, linked to South America at Colombia. It separates the Caribbean from the Pacific. Region continued to perform well during the third quarter 2006, while shipments in the North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. Region were lower compared to the second quarter, affected by slower economic growth, increased imports and a de-stocking process in the distribution sectors in the U.S. and Mexico. Steel prices increased during the third quarter in all of TerniumeIUs markets. In the immediate future, Ternium expects demand and prices for its products to remain stable in the South & Central America Region and to soften in the North America Region due to the de-stocking process and the potential for slower economic growth in the U.S. Ternium does not foresee fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. any sizeable impact related to fluctuations in raw material and energy costs. Production TerniumeIUs production in the third quarter 2006 reached 2.5 million tons of crude steel, while 1.9 million tons of hot rolled coils (HRC HRC Human Rights Campaign HRC Human Rights Council (UN) HRC Human Rights Commission HRC Hard Rock Cafe HRC Hillary Rodham Clinton (democratic senator/presidential candidate; former first lady) ) and 0.5 million tons of long products were manufactured from semi-finished products. During the third quarter 2006 there was a lower output of flat and long steel products at TerniumeIUs Venezuelan and Mexican Mexican named after or originating in Mexico. Mexican axolotl see ambystomamexicanum. Mexican beaded lizard (Heloderma horridum operations, partially offset by higher production levels at its Argentine Argentine having some relationship with the country Argentina. Argentine tick margaropuswinthemi. Argentine tortoise geochelonechilensis. facility. On September 11, 2006 a union-led work slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. began at Sidor arising from a dispute over employee benefits. This slowdown affected the production levels of some of SidoreIUs finished product lines, while slab and billet production levels were not affected. Some of SidoreIUs unionized employees also conducted work stoppages related to their dispute that lasted for two days in October and six days in November. These actions have reduced SidoreIUs output, as of November 6, 2006, by an estimated 170 thousand tons of crude steel,E[sz]while production of flat and long hot rolled steel alsoE[sz]decreased by an estimated 340 thousand tons. The production decrease had a minimal impact onE[sz]Sidor's sales during the third quarter due to existing inventories. At the end of October, SiderareIUs blast furnace blast furnace, structure used chiefly in smelting. The principle involved in this means of extracting metals is that of the reduction of the ores by the action of carbon monoxide, i.e., the removal of oxygen from the metal oxide in order to obtain the metal. #2 was taken out of operation for a planned 110-day relining after more than ten consecutive years of successful operation. Siderar expects that the resulting supply gap to its hot rolled mill will be compensated by semi-finished steel inventories built for this purpose. Therefore finished steel production and shipments from TerniumeIUs Argentine operation should continue at ordinary levels. Upon completion of the relining, the daily production capacity of SiderareIUs blast furnace #2 is expected to rise by almost 11% from 6.5 thousand tons to 7.2 thousand tons. Analysis of Third Quarter 2006 Results versus Second Quarter 2006 Results As a result of the consolidation of AmazoniaeIUs and HylsamexeIUs results and other financial data since February 15, 2005, and August 22, 2005, respectively, TerniumeIUs results and other financial data for the year 2006 or any quarters in 2006 are likely to vary significantly from the results and other financial data for the year 2005 or the corresponding quarters in 2005. Accordingly, Ternium currently intends to make quarterly comparisons on a sequential basis through the third quarter of 2006. From the fourth quarter of 2006 onwards on·ward adj. Moving or tending forward. adv. also on·wards In a direction or toward a position that is ahead in space or time; forward. Adv. 1. , comparisons are intended to be made on a quarterly year-over-year basis. Third quarter of 2006 and second quarter of 2006 figures consolidate the results of Hylsamex, Siderar and Sidor together with all other consolidating subsidiaries. Net income for the third quarter was US$354.0 million, compared to US$289.2 million in the second quarter. Net income attributable to the CompanyeIUs equity holders was US$257.4 million in the third quarter compared to US$232.6 million in the second quarter. Earnings per ADS were US$1.28 in the third quarter compared to US$1.16 in the second quarter, based on 2,004,743,442 shares outstanding and a conversion rate of 10 shares of common stock per ADS. Net sales for the third quarter increased 2% to US$1.7 billion compared to the previous quarter due to higher prices partially offset by lower volumes. Shipments of flat and long products reached 2.2 million tons, a decrease of 8% compared to the second quarter, while revenue per ton shipped increased 9% to US$741 in the third quarter. Sales of flat products during the third quarter totaled US$1.3 billion, an increase of 1% compared to the second quarter. This was the result of higher prices offset by lower volumes. Shipments were 1.7 million tons in the third quarter, a decrease of 8% compared to the previous quarter as a result of lower demand in the North America Region, and lower sales of slabs in the South & Central America Region in preparation for the relining of blast furnace #2 in Argentina. Revenue per ton shipped increased 9% to US$774 in the third quarter from the prior quarter. Sales of long products were US$339.2 million during the third quarter, a decrease of 1% compared to the previous quarter. This decrease was mainly due to lower volumes partially offset by higher prices. Shipments were 532.8 thousand tons in the third quarter, representing an 8% decrease versus the second quarter, as the previously tight supply/demand balance for long products in the North America Region returned to more normal levels during the third quarter. Revenue per ton shipped increased 8% quarter-over-quarter to US$637. [TABLE OMITTED] Sales of other products were US$92.1 million during the third quarter, an increase of 39% compared to the previous quarter, mainly due to higher shipments of iron ore pellets in Mexico and Venezuela. Flat and long products sales in the South & Central America Region were US$966.0 million during the third quarter, an increase of 7% versus the previous quarter. This increase was mainly due to higher prices, partially offset by lower volumes. Shipments were 1.4 million tons during the third quarter, or 2% lower than the previous quarter, mainly due to decreased shipments of slabs from Argentina carried out in the third quarter. Revenue per ton shipped increased 9% quarter-over-quarter to US$706, mainly due to price increases implemented in both product categories. Sales of flat and long products in the North America Region were US$676.2 million in the third quarter, a decrease of 8% compared to the previous quarter, due to lower volumes partially offset by higher prices. Shipments totaled 0.8 million tons during the third quarter, or 16% lower than the previous quarter. This decrease was mainly attributable to lower sales of flat products -- due to softer demand as a result of the de-stocking process in Mexico and the U.S. -- and long products -- due to the normalization In relational database management, a process that breaks down data into record groups for efficient processing. There are six stages. By the third stage (third normal form), data are identified only by the key field in their record. of a previously tight supply/demand balance in the region. Revenue per ton shipped increased 9% quarter-over-quarter to US$802 in the third quarter. Cost of sales totaled US$1.1 billion in the third quarter, or 62% of net sales, compared to US$1.1 billion, or 63% of net sales, in the previous quarter. Total cost of sales remained relatively stable as the decrease in shipments offset an increase in the average cost of the metallic charge mix used in Venezuela and Mexico and in other costs. The increase in the average cost of the metallic charge mix used in Venezuela was mainly due to a higher consumption of hot briquetted iron (HBI HBI Home Builders Institute HBI Hot Briquetted Iron (plant or facility) HBI Health and Biomedical Information HBI Hot Beef Injection (band) HBI Healthcare Building Ideas (magazine) ) as a result of a decrease in direct reduction iron (DRI See Digital Research. ) availability when one of SidoreIUs DRI production units underwent a planned 50-day revamping. The unit has already been re-commissioned with an expected 20% increase in productivity, which should result in an increase in the production of DRI in the future. Natural gas and electricity costs remained relatively stable in the third quarter compared to those of the previous quarter. Labor costs increased in Argentina mainly as a result of raises to unionized workers. Labor costs in Venezuela and Mexico were relatively stable quarter-over-quarter. Selling, general and administrative (SG&A) expenses in the third quarter were US$152.7 million, or 9% of net sales, compared to US$155.4 million, or 9% of net sales, in the previous quarter. The decrease in the SG&A figure versus the previous quarter was mainly due to lower freight costs for TerniumeIUs finished products caused by the decrease in shipments during the third quarter. Operating income in the third quarter was US$508.2 million, or 29% of net sales, compared to US$476.7 million, or 28% of net sales, in the previous quarter. EBITDA(**) in the third quarter was US$614.9 million, or 35% of net sales, compared to US$582.2 million, or 34% of net sales, in the previous quarter. Net financial expenses were US$87.2 million in the third quarter, compared to US$108.2 million in the previous quarter. This reduction was primarily due to a decrease of US$16.1 million in the excess cash distribution related to SidoreIUs participation accounts and a US$4.5 million decrease in net interest expense that was mainly associated with a reduction in net debt. SidoreIUs excess cash distribution related to the participation account was US$144.4 million in the third quarter compared to US$184.4 million in the previous quarter. TerniumeIUs subsidiaries received US$86.3 million in the third quarter compared to US$110.2 million in the second quarter, while payments to minority shareholders of Sidor resulted in expenses of US$58.2 million in the third quarter, compared to expenses of US$74.2 million in the previous quarter. Income tax expense for the third quarter was US$71.7 million, or 17% of income before income tax and minority interest. This expense included a gain of US$31.3 million as a result of SidoreIUs lower deferred tax liability mainly due to the inflation effect in the value of fixed assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → for tax purposes in accordance with Venezuelan tax laws. Income attributable to minority interest for the third quarter was US$96.7 million, compared to US$56.6 million in the previous quarter. Cash Flow and Liquidity Net cash provided by operating activities in the third quarter was US$286.4 million. This included an increase in working capital of US$190.1 million mainly due to higher inventories and trade receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed . Inventories of goods in process goods in process See work in process. and finished goods increased in Mexico mainly as a result of lower shipments, while inventories of raw materials and goods in process increased in Argentina mainly due to the planed stoppages for the relining of blast furnace #2 and for a hot rolled mill investment program. Net cash used in investing activities during the third quarter was US$94.1 million, mainly related to capital expenditures of US$94.5 million. The main investments made during the quarter were: the relining of blast furnace #2, the new coking facilities and the new slab reheating Reheating The addition of heat to steam of reduced pressure after the steam has given up some of its energy by expansion through the high-pressure stages of a turbine. furnace furnace, enclosed space for the burning of fuel. There are many kinds of furnaces, the type depending upon the fuel and the use to which the heat produced within it is put. Most familiar are the furnaces used in the heating of buildings. in Argentina; the upgrading of hot rolled mill #1 in Mexico; and the revamping of one Midrex module for the production of DRI and investments in an oxygen plant in Venezuela. Net cash used in financing activities during the third quarter was US$283.3 million. Financial debt decreased by US$287.2 million quarter-over-quarter to US$1.3 billion, mainly due to the US$100.0 million pre-payment and US$45.4 million scheduled amortization of the Ternium S.A. Syndicated Loan Syndicated Loan A very large loan in which a group of banks work together to provide funds for one borrower. There is usually one lead bank that takes a small percentage of the loan and syndicates the rest to other banks. Notes: Also known as a "syndicated bank facility. and US$75.0 million pre-payment in full of certain syndicated loans at Hylsamex. TerniumeIUs net debt as of September 30, 2006 was US$472.9 million. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Some of the statements contained in this press release are eIuforward-looking statements.eIN Forward-looking statements are based on managementeIUs current views and assumptions and involve known and unknown risks that could cause actual results, performance or events to differ materially from those expressed or implied by those statements. These risks include but are not limited to risks arising from uncertainties as to gross domestic product, related market demand, global production capacity, tariffs This is a list of tariffs and trade legislation:
thorn, sharp-pointed projection on some plants, usually protective in function. Botanically, thorns are distinguished as modified stems (as in the honey locust and hawthorn) from spines, which are modified leaves (as in the barberry), and ]s control. About Ternium Ternium is one of the leading steel companies in the Americas, offering a wide range of flat and long steel products. Ternium has operating locations in Mexico, Argentina and Venezuela that provide it with a strong position from which to serve its core markets. In addition, Ternium reaches the global markets through its own distribution network. More information about Ternium is available at www.ternium.com. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] (*) EBITDA equals operating income plus depreciation and amortization. (**) EBITDA equals operating income of US$508.2 million plus depreciation and amortization of US$106.7 million. |
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