Earnings call transcript: Therinox sees EBITDA growth in Q4 2024

Therinox reported its financial results for Q4 2024, showcasing strong EBITDA growth and strategic acquisitions. The company emphasized its focus on innovation and market expansion, despite challenges in the European market. According to InvestingPro analysis, the stock’s RSI indicates overbought territory, while trading near its 52-week high. The company’s current market capitalization stands at €19.7 million, with the stock showing strong momentum over the past three months.

Key Takeaways

• Full-year EBITDA reached €500 million, with adjusted EBITDA at €444 million.
• The company increased its dividend by 3%.
• Therinox completed the acquisition of Haynes for €769 million, integrating €51 million of its net financial debt.
• A new specialty steel grade, ECOA Therinox, was launched, focusing on sustainability.
• The company is considering a potential U.S. listing to expand its market presence.

Company Performance

Therinox demonstrated robust performance in 2024, with a notable increase in EBITDA. The acquisition of Haynes and the sale of Baru Stainless were strategic moves to enhance its market position. Despite a 5-month strike in Europe and reduced production by 19%, the company maintained its focus on high added-value products and restructuring efforts to drive profitability.

Financial Highlights

• Full Year 2024 EBITDA: €500 million
• Adjusted EBITDA: €444 million
• Net Financial Debt: €1.1 billion
• Operating Cash Flow: €294 million
• Capital Expenditure: €205 million
• Dividend: Increased by 3%

Outlook & Guidance

Looking ahead, Therinox expects a capital expenditure of €300-350 million in 2025 and anticipates market recovery in Q2. The company projects Q1 2025 EBITDA to be slightly better than Q4 2024. With a gross profit margin of 62.08% and strong liquidity position, InvestingPro data shows the company’s liquid assets exceed short-term obligations. The integration of the Haynes acquisition remains a focal point, and Therinox is exploring the potential for a U.S. listing.

Executive Commentary

"We are starting to see the sun and we are very optimistic with our future," stated CEO Bernardo Velasquez, reflecting the company’s positive outlook. Miguel Fernandez, CCO, emphasized, "We are an American company, but we are trading in Europe," highlighting the company’s strategic positioning.

Risks and Challenges

• Continued economic uncertainty in Europe, with PMI still below 50.
• Potential impacts of U.S. tariffs on stainless steel imports.
• Integration challenges following the Haynes acquisition.
• Market fluctuations in the aerospace and chemical industries.
• Supply chain disruptions and their impact on production.

In summary, Therinox’s Q4 2024 earnings call highlighted its strategic focus on growth and innovation, with a positive outlook for the coming quarters. While challenges remain, the company’s proactive measures and strong market position offer a promising trajectory for future performance. For deeper insights into Therinox’s financial health and growth potential, access the comprehensive Pro Research Report available exclusively on InvestingPro, covering over 1,400 top stocks with expert analysis and actionable intelligence.

Full transcript - Acerinox (BME:ACX) Q4 2024:

Carlos, Moderator/Presenter, Therinox: Good morning, ladies and gentlemen, and welcome to the Therinox Fourth Quarter and Full Year Conference Call. The year 2024 was a very important and transformational year for the group. As we will comment during this presentation, we continue to address our strategy moving to high added value materials and focusing on our current markets. The acquisition of HENES International, the new production model implemented at Astrinosa Europa and the sale of water stainless have been important milestones that have occurred during this year. To discuss these topics and many more, we have here today our CEO, Bernardo Velasquez our CCO, Miguel Fernandez and for the first time in our full year presentation, the newly appointed CFO, Esther Camos.

Before getting started, let me remind you that this conference call is being broadcast on our website at irinos.com, on which you can also find the audited annual accounts and management report, which also includes the statement of non financial information. Without further ado, I would like to hand the floor over to our CEO. Bernardo, please go ahead.

Bernardo Velasquez, CEO, Therinox: Thank you, Carlos. Good morning, everybody, and thank you for attending to this results presentation. One year more, we are here to speak about last year results. How do we see this situation today? How do we see this situation for 2025?

And what are we doing? What is the strategy? And how is Athena’s position for all these changes? Because many things are happening in this world. Many things has happened in 2024.

It’s still changing in 2025. We can speak about 2024, a wait and see year, reevaluating for the European, sorry, the American elections, waiting for the new European Commission. Still, we are waiting for the new German government and still waiting for the reaction of the market that will come sooner or later. And many things have also happened in Atherinox. Many things are starting for fulfilling our strategy.

We sold Varro Stainless with a lot of pain for us, but it was impossible to compete in with other rules of the game with the Asian players. We are going to dedicate our efforts to our main markets, starting with Europe. Europe, we are changing our business model that considers, as you perfectly know, five years of strike, but we are successfully changing the business model into the new strategy and going ahead with our strategy. And it’s the year of Haines, it’s the year of Haines where we are reinforcing the strategy that we started in 2019 with the acquisition of BDM. Thanks to the success of the BDM acquisition and thanks to our clear idea of what is the future for our industry and with our clear strategy.

So we decided to hit with this project that is going to be transformational for our company.

Miguel Fernandez, CCO, Therinox: When we talk about 2024, clearly, the main definition we are using is a transformational year. If we were purely talking about business as usual, it should have been also excellent year to commence and a year to be proud about. In the math, you are seeing all of our companies in these days, if we should start from the West to the East, we could talk about the breathtaking results of North American miscellaneous in a difficult environment with three years of contraction in The States. And the results have been amazing. If we think of BDM, it’s true that with headwinds on the weaker market, but BDM has been taking records on monthly basis in conversion margin.

When we look at Columbus (WA:CLC) in South Africa, it’s true that a big effort and a big work for improving the position of Columbus in the market and flexibility bringing new products. There are a lot of things on our business as usual to talk about. But the

Bernardo Velasquez, CEO, Therinox: main slide today obviously is the transformational that is coming from these three milestones that Bernardo has mentioned. In this regard, if we start from the East to the West and try to value which has been the effect, the economical effect in our accounts of these three milestones starting from the East. Obviously, the sale of Varro, as Bernardo mentioned,

Miguel Fernandez, CCO, Therinox: we informed that the sale of Varro was taking place at USD95 million. This is something that we have been disclosing in the last year. Baru was not core business anymore, but we prioritize to find the most suitable way for our stakeholders, mostly for our workforce for keeping our operations and keeping the plant running. On this basis, finally, the decision was this sale, selling at USD 95,000,000. After last year exercises of making impairments at various assets at the end.

This sale of $95,000,000 has create a higher effect and a higher income in our P and L in this year. So the effect has been million in the year. And as I say, as a consequence of all the previous impairments that previously were taking place and as a consequence that the sale also has occurred in 2024 at a stronger dollar euro exchange rate, much more stronger than that one of the historical investment we made on Baroque from the year 02/2009. So consequently, this has made a big contribution of EUR146 million in the year and this compensates some of the areas that have had a negative impact in our results of the year. Obviously, the effect of putting in place the new business model for Afrinas Aeropa, as Bernardo mentioned, created tensions with unions and we have been experiencing a five month strike.

But it was very important that this business model was implemented. So obviously, it has been painful experiencing such a strike, especially for our people in the area. But what’s fortunate is that finally the business model has been implemented. This business model shall make the turnaround of the plant in Campo De Fibras Del Tare for a profitable performance even in hard times as the actual ones. But the bill that we have today as a consequence of this streak has had an effect of million.

When we made the first semester results, we talked about estimation that the strike in our accounts have created impact of million. This has been the direct loss appearing in our accounts. In addition, the losing possibilities, the losing orders has created additional effect of around 40. So because of that, what we more or less quantify the impact of that streak has been million. Now the situation is solved.

And then we have this wage agreement working in place until end of twenty twenty seven. As part of that wage agreement implementation, it has been agreed that our rejuvenation plan and we already more or less have registered for it and included in accounts a provision for that plan, which amounts to million. So this is more or less at the end what appears as a consequence of the effects and the tensions taking place during the year. Fortunately, now they are solved. And then moving more to the West, it is clear that the acquisition of Heinz has been a great milestone.

We have talked a lot about this in the last year since the February 5 when we announced the deal. It has been it has taken longer of expected because of several of the antitrust allowances that need to be obtained. Finally, it took place in December, much more later than what we have preferred. But any case, since December, we incorporated Haines in our figures. And as a consequence of that, the final valuation was the same that was announced at the very beginning.

We have absorbed million of debt of Haines. And also we have registered at the end of the year the all the expenses incurred for the transaction, which have been valued at EUR21 million. So all these more or less has been the bills we have needed to pay, most of them recorded at the end of the year for the three milestones that create this year for being the transformational year in Gazzarino’s growth.

Bernardo Velasquez, CEO, Therinox: Let’s speak a little bit about the situation of the environment in 2024. Look at the left side of this slide. It’s three consecutive years with apparent consumption going down in United States. Something that is, statistically, is not normal. At the same time, we have been twenty six consecutive months in United States with the purchase and manager index, the PMI below 50.

If historically, there’s only one time in the history of The United States when the PMI was below 50 for three consecutive years, and that was in the nineteen twenty nine crisis. So I don’t think we are in the situation. So statistically, I think we can only go better in The United States. The economy sooner or later will react this year. In the environment that we have been living in 2024, apparent consumption was flat.

We have been reducing the stocks in the market after all the excess of optimism that we lived after in the post pandemic situation. Now we have already digested the inventories. The market has been digesting the inventories through the years, through three consecutive years. And now the inventories in distributors in United States are 19% below historical levels. So situation is ready for recovery, for a rebuild of stocks.

Prices have been stable in United States, but because NASH has a very clear and good leader of the market has been sacrificing volumes to get these prices stable. And in a way, even with this sacrifice, we have demonstrated that we are the preferred option for our customers because we have increased our market share two points, what is important for our current position in United States. In Europe, the situation is more or less the same with a little bit more delay in the reaction. PMI that is already positive, more than 50 in United States is still below 50 in Europe in January and February. The apparent demand went up in the last part of the year, but mainly went to a stop was not real consumption because inventories remain below historical level, but only 9% below the historical level.

Imports has increased and imports are not increasing more than this because of the low prices that we are suffering in this market. Imports have been pushing prices down and finally we have a level of price that do not compensate their export. But still the prices remain very depressed. And in the nuclear alloys, in the high performance alloys business, situation is totally different. It is quite, it’s a very consistent demand, very stable market.

Oil and gas is still in very good shape. Of course, not in Europe, but there are many countries that are investing now in oil and gas. I’m speaking about Brazil, The Far East, The Middle East, many other countries are still investing in petrol extraction. Electronics are okay after several years of depression and Automotive is more or less stable. Chemical industry is the only one that is a little bit softer and Aerospace is suffering the buoyant situation, but it’s something that will change sooner or later.

In this environment, we have been very active. We have gone ahead with the expansion plans of NASSIM BDM that is itself themselves. They are an important project. It’s not so easy. There are some other companies that are suffering for a bad investment.

This is something that normally doesn’t happen in our three nodes. We are transforming our business model. We are following our strategy. We are sticking to our strategy. We are not changing.

We are not turning anywhere with the low cycle because we have a clear picture of what is our future. We have sold various standards for the reason and we have acquired hands. But at the same time, we have been loyal to our traditional strategy. We are loyal to our ESG strategy. We have launched the ECOA three NOx.

That is one still grade in which we warranty that we’re using more than 90% recycled material, that we are using 100% of renewable energy and that we are reducing CO2 emissions more than 50% compared to the standard production. It’s a new product. We hope that the European society, we are bidding for sustainability, bidding for this environmental improvements. And sooner or later, we’ll pay more for this material, will be an specialty. We have been recognized again by Ecovadis.

We don’t mind, of course, we mind, but we don’t care about the gold award because it is only because of some standards of this evaluation that when you have a long labor conflict as we had in Nafafidas, you lose some point, but we will come back to platinum very soon. Following our carbon emissions reduction programs And in this low cycle with all these plans, with all these investment, we have been able to reach an excess of 5,400,000, a reasonable good EBITDA of 500,000,000. We have a good cash flow generation and we are keeping our CapEx. I think the situation, if the theory says that it’s better to invest in the load cycle, I think we are doing well, I think. And we are comfortable, still our debt is under control and and we have a lot of plans.

That is, I think, have to be recognized by the market that we have plans. We have a clear strategy in turbulent times. We have a plans and we have a clear strategy. [SPEAKER JOSE RAFAEL

Miguel Fernandez, CCO, Therinox: FERNANDEZ:] As Leonardo mentioned, we are presenting

Bastian Siguritz, Analyst, Deutsche Bank (ETR:DBKGn): a

Miguel Fernandez, CCO, Therinox: remarkable EBITDA of EUR 500,000,000 in 2024. Our business is cyclical, I mean, it’s as it is, and we know it quite well. On that basis, we normally avoid to bringing and introducing the adjustments or the adjustments to EBITDA because most of the issues that normally take place are part of our business and are part of the problems that we’re trying to solve. In this year, there are exceptional circumstances that justify that for you understanding in your analysis and valuation, which has been the metrics of the performance of the group, probably and especially having positive and negative effects, we have preferred to give a full transparency and putting on the screen all the facts that have been affecting the normal evolution of the business in this time. And as a consequence, as we mentioned, this EBITDA reported has been obtained having extraordinary circumstances like, for example, the provision that we have raised for the rejuvenation plan.

In addition, we had covered in the last part of the year all the acquisition expenses of the investment at Heinz. We have been in this regard benefited by the effect in our accounts of the sale of Varun asset, this contribution of US146 million dollars to our profits of the year. And we have made a remarkable inventory adjustment at the end of the year. And at the end, this year has been remarkable keeping in mind mostly two facts. In one side, as we mentioned part of it not so relevant, but part of it is in the high performance alloys division as a consequence of the headwinds on the nickel.

But the most relevant part of it is related to the disruptions that have been taking place in the production and in the sale of the material produced by Afrinas Europa because of the strike. So it has been a difficult year to manage in terms of obviously five months of a strike, then the start up of production, the approaching to the customers that we have been targeting. These circumstances at the end creates that at

Bernardo Velasquez, CEO, Therinox: the close of the year, we prefer and

Miguel Fernandez, CCO, Therinox: we decided to make these adjustments for including more or less the material, which at the end probably could experience some loss in its net progressable value and it has been recorded at the end of the year. So consequently, this inventory adjustment is more than normal because there are circumstances that have generated that stock also as a consequence of a five month strike having abnormal. So not considering these circumstances, the adjusted EBITDA that we are talking about and Esther shall also explain the figures in detail now, reached to an amount of million. Parting from this adjusted EBITDA, what should have been the history if we should have not suffered the strike? Obviously, as we mentioned before, probably the profitability in this turbulent year should have been EUR 84,000,000 and above.

So at the end, the, let’s say, equivalent normalized EBITDA for the year 2024 should have been more close to the million, which taking into account more or less that you know the industry or other players in the sector have been already releasing the figures. We understand that we are, it’s time, taking more distance with most of our competitors in terms of profitability and efficiency.

Esther Camos, CFO, Therinox: Okay. Good morning, everyone. I just want to start by saying that we have released today our annual audited accounts, as you know. And as Carlos already mentioned, as Miguel has not said this year, we really recommend you to read these accounts. They are very detailed.

They explain very well all the events that have occurred during the year. It also includes the annual account with the sustainability report. And I want to thank also the financial department, sustainability department and everyone helping with that because it’s been really a very hard year to complete the accounts with everything happening in the last part of the year. So thank you. And just going to the results, okay, we are proud of these results we can say and we are proud because of two things.

The first thing is we have achieved a good result even in the difficult market situation that we that also Bernardo and Miguel have already explained, both in Europe and in The U. S, the demand has been very low and even though we have achieved an EBITDA of $500,000,000 and an adjusted EBITDA of $444,000,000 The second thing we are proud is because we have been able to continue with our strategy. Our solid balance sheet has allowed us to still build the strong pillars that are going to be the path that led us to continue in the path that we have already initiated. And although about the extraordinary effects that Miguel has already talked about, we’ve been announcing them during the year, okay. And we have been talking about the acquisition of Haines and the divestment on Baru.

But in the end, everything happens and affected the results in the last part of the year. So everything has been coming to our results in the fourth quarter. Okay. And this is what we can see in the slide that you have in the presentation. If we start just going to the quarter, okay, if we start by talking about production, in production we are reducing 19%, that’s true.

And that’s mainly because with two objectives. The first one is, of course, to adapt the production to demand. And the second one is to reduce working capital, as you will see in the later when we talk about the working capital and the cash flow. In terms of sales, they have been also reducing in the quarter mainly due to the lower volumes and also to the seasonability, okay. The last part of the year is always lower.

Okay. And then we go to the EBITDA, Okay. In the EBITDA, we are reporting a $150,000,000 you know that it’s been affected by several factors and all of the factors that Miguel has explained, all of them are in the fourth quarter. So the adjusted EBITDA, which is affected by the same extraordinary effects as Miguel has explained, will be of 91%, not 91,000,000, sorry. In terms of margins, we have achieved a rebooted margin of 11%, but if we go to the adjusted, it will be a 7%, which is even higher than what we got last year even in these bad circumstances.

And we’ve got an operating positive operating cash flow of NOK91 million, mainly driven by the reduction on working capital that we have mentioned. Going to the year end, okay, the volumes have been mainly affected by the mentioned strike, okay. The sales have been even lower because of the reduction in nickel compared to last year. And then we go to the EBITDA of NOK500 million. I want to make a remark on the EBITDA.

Just one short remark, which is, if we go to the past, we don’t see these levels of demands until we have to go fifteen years back. So it’s not until it’s not it’s 2010, ’20 ’11 that we have same levels of demands that we have today. But if we go to the results, we are 60% higher, okay. And that’s the strategy, that’s our diversity, that is what we have that what we are achieving with our strategy. If we the operating cash flow is being BRL294 million and the net financial debt is 1,100,000,000.0 mainly affected by the acquisition of Haynes.

Later we will talk about it. The ratio net debt EBITDA is in 2.2, which we think is very satisfactory having in mind the new acquisition. If we go to our divisions, okay, and let’s start by Stellus. Stellus is reflecting all the effects that we have seen in the extraordinary and the bridge that Miguel has presented, everything is concentrated in stainless. Even the expenses of buying of Haynes are in this EBITDA too.

Okay. Stainless has been our traditional core business. Okay. We have NASH, of course, is giving us an advantage compared to other producers. We keep margins in very good levels if we compare to other producers as well.

And if we divide Europe and U. S, in Europe, okay, we have paid a bill, that’s right. We have paid the cost of the strike this year. But we have been able to implement all the measures that in the short term will allow us to change the trend of our plant in Aljecitos. In the case of U.

S, as Bernardo mentioned, we have sacrificed volumes, okay, but we have been able to maintain prices, which is a very good, which are very good and we have continued being the leaders in that market. The reported EBITDA $126,000,000 and $383,000,000 for the years with a margin of 9%. And I think it’s diversification is what is making a Therinox different. So if we go to HPI in high performance alloys, in high performance alloys, we have longer term visibility, okay. We have long term contracts, we have longer terms of delivery, so that makes us have a better view of what is going to happen.

We have a solid order book. There is a stable market, especially in Oil and Gas. Oil and Gas has remained high during all this year. And when you compare results, you might think, okay, but results are not the same as you had. That’s true.

But please remind and we have been remembering you all the time that 2023 was not a recurrent year. It was really affected by the tailwinds of the nickel, which is something that has not occurred this year. Even though even we have had a low headwind, let’s say, instead of the tailwind that we had last year. So that one is making it to be lower, but even though we have an EBITDA of $117,000,000 in the year. These results in the quarter are included only one month of Haines.

Okay, Haines acquisition, even though we would have liked it to happen before, it really happened all in the same month. So we are just consolidating one month, but the full debt. Okay. So, HAYES in The U. S, U.

S, as you know, the last part of the year has been impacted. It’s always impacted by seasonability. And it’s this year we had also the elections and we had the Boeing (NYSE:BA) issues in aerospace, but they will recover along 2025. The operating is very remarkable. The operating cash flow of $140,000,000 compared to the $7,000,000 of last year, I think.

And just going to the cash flow, okay, we represented the cash flow in a very comprehensive way we think. We start by the EBITDA of the $500,000,000 then we can see the decrease in the working capital of 71,000,000. We have decreased inventories, we have decreased rate receivables, but also payables as Miguel will mention too. I think it’s also remarkable the financial expenses. You know that our strong balance sheet position with high volume of cash in remunerated cash in US dollars makes our financial statement to be almost insignificant and it has allowed us all that cash has allowed us also to pay Haynes our transaction in cash.

Okay, the taxes paid this year 01/1931 and then we reached the operating cash flow of BRL294 million. In terms of CapEx, okay. CapEx has been BRL205 million paid this year. We announced a higher cash flow than that. It’s true that there’s been some delays due to the strike also in the medium powder, but in general NASS and everything is all the projects are in time.

Okay, we are not having delays on that, just maybe invoices that have been delayed to January, but nothing exceptional there. And then Baru, okay. Baru, some of you may think, okay, why only 18,000,000 when you are selling at 95, okay. 95, the barrel has been sold at 95,000,000, it’s going to be 95,000,000 cash. The thing is that the price has been a splitted.

We have been receiving 20% of the price in this year. That’s the 80,000,000 that you see in the cash flow. And then the 80% is going to be secured through a bank warranty that will be collected in the second quarter of twenty twenty five. Okay. And then we have Haynes.

Okay. Here, we have this is the cash that we have paid for Haynes, the SEK $769,000,000. This is the cash that has been out from the group. It does not include the net financial debt that we have incorporated from Haines, which is 51,000,000. The operating the free cash flow is negative in $662,000,000 because of that payment.

If we deduct the acquisition, we will have a positive free cash flow of RMB128 million. In terms of dividend, we keep the compromise with our dividend. In this year 2024, we have increased the dividend by 3% and our aim is always to keep the dividend flat. We have been paid dividends forever, okay, even good circumstances, bad circumstances that remains flat. And then the net financial debt increase in this year has been of SEK $779,000,000.

Miguel Fernandez, CCO, Therinox: So, splitting this huge increase in the net financial debt, you also know that one of our main assets always has been the financial strength. The financial strength of Afrinos Group is mostly supported on one fact. For the last years, we have been, as you know, more or less accumulating a strong cash position in The States, a strong cash position in dollar. And also, we have been more or less following a very competitive finance in Europe. We are very, very well accompanied by long term parents that at the end value our business and value our performance.

Consequently, we are not rated. We are not consequently, our sector is maybe it’s not so glamorous for the rating agencies, but we are probably being considered investment grade for most of our pool of long term relations banks. And consequently, our term debt is extremely competitive. And in addition, is covenant free, which is also is something that in our sector is relevant, keeping the security of our business. We always have the comfort that any distortion or any strong correction should not affect our position.

So on that basis, the net financial debt for us is not a headache, but it’s true that in this year 2024, we are finishing with the highest level of net financial debt since the year 02/2008. The reported figure is EUR1.1 billion, as Esther mentioned. There are obviously two strong circumstances that have reached this figure to be there. The most relevant is all the Haines acquisition taking place in December. In addition also, the Baru, the closing and the selling of the Baru for us has had an effect.

Obviously, the first part of of the payment has been receiving cash, as Esther mentioned. But obviously, we have honored the liabilities of Varun and the debt payments. And a consequence of that also, the selling of the Varun business has increased our debt in terms of around CHF 60,000,000. So what we wanted more or less to clarify in this slide is the business as usual should have moved us to a reduction of debt in this year pro form a of EUR 122,000,000 closing the year 2024 in 02/19. The circumstances create that we are reporting this figure and our commitment is that this obviously shall be gradually reduced, not only with the cash generation for the business, but also for a strong program in place for reduction of working capital.

If we move to the sustainability development in the year, we could spend hours talking about sustainable, in fact, the annual report, which is available at our webpage, from this report, two thirds is related to sustainable. So I also insist the relevance of following it, and I want especially to congratulate all the effort of the sustainable team in Atherinos because we have voluntary adopted the European corporate sustainability reporting disclosure that still is not compulsory in Spain, but we have prefer to anticipate and make it voluntary in this year. So just for giving a quick speed, in most of the areas, we are over performing. We are over performing in diversity, in waste reduction, in water withdrawal, in GHME emissions. So we clearly are above the targets.

There are two areas where we have been below the targets, and those two are more related to the circumstances taking place in the year. One is in terms of safety, we have obtained a reduction in the injury rate of an eight percent. The target was more ambitious, but it’s true that the target is defined for a business as usual running year with a disruption taking place this year with production failures as a consequence of the strike, start up, accommodation to the new condition market. It has been several more manual interventions. These manual interventions, these more maintenance in the shutdowns or in the stops create minor injuries incidents.

Obviously, all of them are monitored, but this less ambitious reduction that the one we were planning was especially as a consequence of that. We clearly should improve this and obviously, we have programs on place even for reducing the level of minor injuries. The other area, which obviously has been affected is in terms of energy. It’s clear that in the low capacity utilization, we cannot be successful of the reduction of intensity in energy. But at the same time, what we have put in place is a new decarbonization plan for the year twenty five thousand and thirty.

This decarbonization plan is fully aligned with the Beyond Excellence program. It’s very related to energy efficiency and increasing renewable electricity, so we are there. It more or less implies an increase in operational expenses or minor capital expenditure related to the efficiency plan, around EUR 2,500,000.0 per year. And with this, we clearly can’t commit to have expected savings of around 800,000 tonnes of CO2 per year. This is focused on the scope reduction, scope one and two of 45%, which is under our control fully and we commit to move in that direction.

And also in the scope three, which is obviously less under our control because we also depend from our suppliers in terms of a 15% reduction from now to the year to 02/1930. In addition, we, as previously, Bernardo introduced, we are obviously putting in place the Equatorinos with 100 renewable energy utilized for that and most of 90% from recycled material. So this means 50% production on the intensity of CO2 for that production, and we are in deals with 44 customers that probably are the one more of the introduction for our participation in this relevant market for the coming years.

Bernardo Velasquez, CEO, Therinox: Okay. Strategy. I will go fast in this presentation because you already know most of the things we are following our clear strategy. We have already mentioned a lot of things about our strategy today. We prefer to give some time, to give you some time at the end of the presentation for the Q and A session.

Remember, start the four pillars, excellence, added value and everything is surrounded by sustainability and based in a very solid financial structure. Added value, we look at the pyramid of the materials. So we were very, very important in the lower part of the pyramid, commodity stainless steel grade, tailor made stainless steel grades for we spoke stainless steel grades for our customers. Now we have BDM in the left hand side. Now it’s HPA.

We are leaders in the world in HPA. I want to fill the gap between both things. We want to make special stainless and other alloys that can fill this gap to be we already are the company in the sector with the widest portfolio of product because we are making a stainless SPA and flat and long. If we fill the gap, we’ll have all the parameters of the heat temperatures and corrosion resistant materials unique in the market. So now moving from a more commodity, a global presence, now more added value, more focus in our main markets.

Of course, we cannot forget excellence. We still have to be competitive, still we have a commodity maker. We cannot lose this because our factories are prepared and designed for big production series. We need to keep this running. We have released in 2024, the first year, the new program beyond excellence with a target of million, and we only reached million.

It’s not bad, even in the situation of the Fenus spec. For 2025, we have released the second year of this plan in which we will have a target of 38,000,000 plus 7,000,000 of Atherinox strike that we couldn’t fulfill during 2024. At the end of Europe, we already mentioned, we need a new organizational model for its flexibility, polyvalence, new production models, everything is focused on this flexibility that we need to work in these volatile times. And moving to added value, 5% up of the added value product is still great and 10% up in end user business. We have to be adapted to the cycles and attached to our safety.

Columbus, sooner or later, have to be focused in Africa. This world is becoming more regional. In the past, Columbus used to sell 70 in export markets and 30% in local. I want to turn this number. We want to be 70% in Africa because not many companies can say that have more than 50% market share in a whole continent.

We are around 50% market share in the whole Africa and we cannot lose this position. So we are specialized in Columbus in what we know how to do. We are in the country with the biggest reserves of chrome. So let’s make ferritics. Let’s be the specialist in the world in ferritics.

And we are specialist in ferritics and we are developing new rates to accompany our customers in their needs. We are making mild steel. Also there was a lack of mild steel in the country. We are making mild steel. We are very close to develop to start market in electrical steel.

We are also developing XPA production with the knowledge of course of VDM, developing this XPA in Africa because we need to focus on the African market. We already are, I think, the most flexible plant in the world. I don’t know anybody else that can make mild electrical and stainless in the same plant with the same equipment. NASS, we are the clear leader of the American market. We have an important market share there and we don’t want to lose it.

We don’t want to lose it that we are investing to expand our capacity by 20% not to put pressure on the market, just to keep our market share. And we are demonstrating here the importance of digitalization because as you can see, how can you increase 20% the capacity that is more than 20,000 tonnes per year with only a CapEx of two forty four million. It is because the investments in the melting shop and in the hot rolling mill are almost for free, are coming from digitalization, are coming from digital models. It’s the bottleneck in our business with digital models and using digital tools to increase the productivity of our lines. So it will be a success for sure.

Paybacks, it’s 2,750,000.00. VDM, more or less the same, world leader in HPA. I want to remain as world leader in HPA. So we are investing a 70,000,000, sorry, 70,000,000, no 67,000,000 with a payback of 2,400,000.0. Years to increase capacity in remelting and downstream to utilize all this new capacity.

Of course, we don’t forget the synergies between VDM and Atherinox. Remember that we have reached 70,000,000, that is 46 more than achieved. And we are also investing in powder atomizers because we want to be a top technology in this industry and we’re bidding for this technology of manufacturing, additive manufacturing.

Miguel Fernandez, CCO, Therinox: In year ’20 ’20, we acquired VDM in the center of the COVID crisis in March 2020. Clearly, our strategy was diversifying through the high performance alloys. If we compare the previous five years average of EBITDA of VDM in that period was EUR 67,000,000. In the four years in which VDM is inside Astrinos Group, the EBITDA average has been million. So it’s almost 60% above what was the previous period for BDM.

When we make the announcement, we clearly clarified we have an ambitious target of contribution of VDM of around 7,000,000 per month, eighty four million per year. We have been even overperforming 43% compared with these leases. So this justifies our obviously, our excitement in growing and moving more forward, the high performance alloys. And as a consequence of that, obviously, came the Haynes acquisition that has been taking place and taking most of our work and efforts during the year 2024 for trying to close the deal and start more or less moving forward. Finally, we are there.

As it has been mentioned, we are expanding in America, we are expanding in a sector relevant as the Aerospace one, we are having the combined capabilities. Next (LON:NXT) slide, please. We are with a combined capability that we have also with operations we have in Kentucky and there we are fully not only motivated, but fully optimistic of what is going to be the Haines contribution and growth in the group in the coming years.

Bernardo Velasquez, CEO, Therinox: Why HANS? And there’s enough reasons that Miguel explained why we decided to acquire HANS. Remember that we are not an expert in reorganization in restructuring companies. We normally when we buy company, we buy a good company that can be added to the ethylene of the group to make it better. And this is what we’re doing with Haines.

It’s a good company with good knowledge, good people. But why Haines plus $200,000,000 It’s because you’re studying the business plan of Haines, we realized that they needed some more capacity, that they had a bottleneck in the melting shop and in the forging side. We needed to expand that capacity. And expanding that capacity, we can also have more synergy that I will speak later between Haines and NASH. HENES is only located three hour by truck from NASH.

They are in HENES is in Indiana or the other side of the Ohio River. NASH is in Kentucky, but in the Ohio River type. So the synergies can be implemented much, much easily. And we are now starting the integration phase, not easy. We have to integrate FENCH in three sites.

First, we are creating a platform or an HPA platform. So we are integrating from the business side HENES and BDM. Sooner or later with the new investments, HENES will have to be oriented to NASS. NASS is 100% the owner of HENES. And of course also not so simple, Haines and DSP division have to report to this consolidated numbers and have to report to Madrid.

When the analysis of this investment, we estimated million. After sharing the information with the HENES team, we have reconfirmed that the synergies can be the million that we find it out and we are increasing to 75. We founded new areas of development. Of course, the origin of the synergies is operational side, benchmarking between two companies is very important and the Haines team and the BDM team never had the possibility to benchmark their activities with a colleague, with a partner in the same business. And this is what we’re doing.

We know how to do it because we did it in Atherinos comparing and benchmark Atherinos, NASAN and Columbus and even Baru. So that’s from this point, we’ve come a lot of synergies more than expected probably. HENES has an stake in milling, which is a powerful stake in milling, which we can also control the stainless steel plates. So stainless steel plates have less productivity than normal coils. If we move some of these plates to be hot rolled in Haines, we will free some extra capacity to increase our capacity in NASS.

So this will give us an advantage. We will start producing wire rod in us as well. Of course, we are going to combine the workforce and we are going to combine the products, the patents and the technology. So everything is perfect on this. HENES is matching very much.

But also when we decided to go ahead with HENES and to increase the capacity, we find it out what is for me the real exciting thing of this investment. But for me is really make this project a really exciting one. It’s a cannon because this increase of capacity in Haines will let us start producing HPA loan products in NASH. We will make billets in Haines that will be sent to NASS to make wire rod. We’re investing.

We already approved the day before yesterday new equipments for the hot rolling mill in NASS that will let us have a better control of the process and will let us start hot rolling loan products of HPA. Loan products in HPA in United States, that means aerospace. And the aerospace industry, besides the problems of Boeing, is booming. And normally, it’s a very special business. And we will start making this loan products HPA in a factory that is probably the most competitive in the world.

So we will increase price and we will reduce cost. And this is a big project. This is a game changer, I think, in the American industry. So very proud of this and I’m very excited with this project because I can tell you, it’s a cannon. It’s great.

And also this will give us more balanced situation. Miguel?

Miguel Fernandez, CCO, Therinox: Yes. The global footprint is fabulous. At the end, BDM is world leader in the high performance sector, but it’s morally oriented its production to Europe. Consequently, the acquisition of Haynes also balances better the position because Haynes is majority driven to place its production in the North American market. So at the end, the final figure of the combined entity in HPA gives a presence of 53% of its sales to Europe and 28% in North America.

This is exactly the opposite that the one we have in stainless. So it’s the perfect balance. In stainless, 52% of our sales go to North America and then Europe means around 30 So consequently, geographically, we are excellently balanced now for covering whatever could be the circumstances or distortions in each of the geographies. In addition, if we move to sectors, most of BDM production is more relevant markets where oil and gas and the chemical process industry, obviously, more of 50% of the sales of paints are driven to our space. So now we no other player in the high performance alloys has such a diversified portfolio with relevance of sectors such as cheap chemical process industries, the oil and gas, the aerospace and also the industrial gas turbines.

So we are not exposed to our single to a single sector where most of our competitors probably are more dependent on one specific sector. When there are disruption of tensions, obviously, the software is much more. Our footprint in this regard is it has no comparison in this industry.

Bernardo Velasquez, CEO, Therinox: And last but not least, if we want to fulfill this gap in the pyramid of materials, as I mentioned before, and if we want to be a leader in technology, we need R and D. This is and together with Haines, now we have the strongest team, the strongest capabilities in R and D in our sector. We have 53 patents. BDM is a leader in the world in patents. Hanes is already supplying most of the sales of Hanes are property materials, material that have been invented in Hanes.

We are combining this force plus the knowledge that we have, this particular we have in Naseinox in process, in improving process. So the combined R and D forces of the three companies is going to be relevant in the market, is relevant. And this is because if we want to be there in technology, we have to go before ahead of the market. We have to be designing what we need for the future. That’s why we released this interesting project in the Atherinov Group that is called Materials for the Day after Tomorrow, because it’s a think tank that we have created inside Atherinovs with people from all the nationalities, the different areas, thinking what are going to be the megatrends for the future, how the world is changing, what we need in ten or twenty years and starting develop these new alloys, these new stainless steel grades for them.

We will think that in the future, Athenaeus can be a prescriptor of material, can be a service supplier instead of just a material supplier. You can come to Athenaeus, say, okay, you have everything. I want to build this chemical plant. What do you recommend us? And we’ll have flat, long stainless steel, commodity stainless steel, especially stainless steel, alloy, everything.

So we can be the prescriptor of material, helping engineering films and helping the companies to use the right material in the right applications. So very happy, very excited with our strategy. And I think we have a very clear path. I think we all in Afenas share this view and we are going to fulfill it. So finishing with the conclusions, of course, we think we have a strong and successful strategy in a very challenging year, in a very challenging year.

We are working in building the new Athena. So we’re going ahead in this path with our organic growth, increasing our presence in final customers, added value, moving to solutions more than products, investing in the low part of the cycle with a solid balance sheet. All these things are linked to this solid balance sheet because we are 2.2 times EBITDA in the low part of the stainless steel cycle and in expansion phase. And looking ahead, I can say the situation is starting to improve. Our other book for matches is better.

Still, January, February, we’re very depressed more or less following the same rhythm that the fourth quarter last year. But now there’s a little bit more visibility in the market, especially in The United States. And the studies are the things are starting to move. Probably Q2 will be better. Probably the economy will react through the year.

But with our current situation, with our follow-up book, with the solid margins that we have in HPA, we can say that Q1 EBITDA will be slightly better than Q4. I think this is important, it’s a good starting point. We are starting to see the sun and we are very optimistic with our future. So thank you very much.

Carlos, Moderator/Presenter, Therinox: Okay. Thank you very much, Bernardo, Estrella Miglia for the presentation. Let’s move now to the Q and A session. We will start first here with questions from the room. To ensure that everyone can hear the question, please raise your hand, and we will give you a microphone.

Oscar Santiago, Analyst, Banco Saavedel: Hi. Good morning. Oscar Santiago, Banco Saavedel. Two questions, if I may. The first one is, if you could provide a bit of color in the Haines Aerospace business.

Specifically, what’s your view for 2025? It’s something that is more linked to Boeing or it’s something that is also supply chain? And the second one that is specifically for the part of the net financial debt that you are expecting for 2025, we have seen also your numbers for EBITDA adjusted and also if you have, let’s say, some figure for the ratio? Thanks a lot.

Bernardo Velasquez, CEO, Therinox: Thank you, Oscar. I will start with aerospace. This is not our business. We only can tell you what we know from our customers and the things. And what is happening today is that with all the problems with the strikes and failures in Boeing, there’s a a collapse in the supply chain.

So the others are there. I think Boeing is full of others, twenty, forty or something like that, which is incredible. And ARROWS can be in a similar situation. The military industry is also booming. So the situation will improve.

But what happened today is a problem of the supply chain. There’s some collapse in the supply chain. So we have the others, we have our material, but our material is waiting to be delivered once they have the bottleneck, the problem that they already have. But the others are there. So we don’t have any canceled the others.

We don’t have a lower order book. We are postponing the deliveries.

Esther Camos, CFO, Therinox: About the expected net financial debt. Okay. The net financial debt, we need to have into consideration that for next year, we expect an increase on activity, okay, due to the strike of the year, almost we are expecting around a 20% increase in volumes. And that normally comes with an increase on work capital. Okay.

What we are aiming and we have very strong programs inside the group just to contain the working capital. So we are what we are trying and the objective that we have is at least to keep the working capital stable even though we are increasing the activity, okay. And we cannot forget that we are on expansion plan. So the expected CapEx also for next year is going to be higher, will be on the range of $300,000,000, 3 50 million dollars something like that. So the aim at the end of the year would be at least to keep the debt, obviously with the higher EBITDA expected, the ratio will go down, okay.

We won’t be at the levels of the 1.2 probably that we have as an objective that will make that probably will take two years, but we expect more or less that to be stable.

Carlos, Moderator/Presenter, Therinox: Any other questions here in the room? Okay. So let’s move now to the questions from the conference call. Please, operator, go ahead.

Operator: Thank you. Our first question comes from Krishnan Agarwal with Citibank. Please go ahead.

Krishnan Agarwal, Analyst, Citibank: Hi. Thanks a lot for taking my question and the detailed presentation. The first question is on The U. S. Tariffs.

You alluded to in your presentation that you are expecting the positive impact from the tariff measures on the demand into The U. S. Have you seen any kind of early signs of that demand coming through? And also are there any kind of signs that you are seeing in terms of tightening of the current exemptions which are there in Section two thirty two tariffs?

Bernardo Velasquez, CEO, Therinox: Christian, thank you very much for the question. I would like if I don’t tell you that I was willing to receive this question because it’s pretty interesting. When this Section two thirty two measures started to be implemented in United States in 2018, after this ’25 tariff, several countries are starting to negotiate quarters with The United States. That was the case of in stainless steel of Brazil, Korea, Japan, Europe and UK. That means that they imposed tariff for sorry, not tariff, a quarter that was 85% of the average exports to United States and below 85% was free and above was also charged with a 25%.

And through the years of implementation, some of the American importers are starting to ask for exemptions of materials that were not easy to find in United States or were not made in United States. At the end, we have estimated that more or less speaking about flat products and speaking about our estimations that from the twenty eight percent of imports in United States in 2024, around 15% of that was materials that were exempted before and now will be subject to tariffs. Of course, subject to tariffs today, who knows what’s going to happen tomorrow, who knows which countries are going to negotiate with United States and who knows what’s going to happen. But today. 15% of the imports that currently were received in United States will be charged with 25% tariffs.

It’s 15% of the market. So that means that the local suppliers could increase the other book will increase production because many of these countries, many of these suppliers will not be able to compete with a 25% duty. Second and probably even more important for the future is that in the new February tariffs, more materials, more sectors have been included. It’s not only related to steel. $2.32 was only steel products plus tubes.

Now some other products with where steel or stainless steel represents a big portion of the cost have been included. In our case, I can tell you it’s beer barrels, it’s tanks, it’s sinks, it’s bolts, many other sectors. We haven’t estimated this yet, but for sure that if that happens, it will finally happens and it will start being applied at the March, that will help the American industry and that will help the American industry and that will help our customers and will develop more consumption inside The United States. So very positive for our ambitions there.

Operator: The next question comes from Tristan Gressa with BNP Paribas (OTC:BNPQY). Please go ahead.

Tristan Gressa, Analyst, BNP Paribas: Yes. Hi. Thank you for taking my questions. First, if I can ask a few follow ups on The U. S.

Tariffs. If you look back at 2018, at the time, did you notice any type of demand destruction from the tariffs? And also, I mean, I think if we look back at 2018 when the tariffs were announced, we got a squeeze pretty fast and stainless steel prices start to move higher. And we’ve seen that for carbon grades, but I don’t think we’ve seen that for stainless. So if you can just share your view of how this time is a bit different than 2018 and why stainless steel prices are not yet reacting?

Bernardo Velasquez, CEO, Therinox: Thank you, I understand. The situation between carbon steel and stainless steel is and was totally different, but it depends on the players of the market. 2018 when the tariffs were implemented was not an exceptional year. The prices were more or less moving a little bit higher, but we as a market leader and as as a responsible market leader decided to support our customers and not to squeeze them with the highest prices of this tariff. So we reached a reasonable level of prices that we are trying to keep.

This will be more or less the situation. The thing is that we will increase our capacity utilization. In 2019, the most of the American players were not working in stainless steel at 100% capacity. What happened with all the disruptions and what people thought that there were not enough capacity in United States was in 2021, and that was the post COVID reaction. The supply chain was so empty after the COVID times, after 2020 that when market started to react, people realized that there were no, for an example of automotive, there was no cars in the car dealers stores.

There was no exhaust system in the makers, no stainless steel in distributors and very few stainless steel in producers. So everybody wanted to increase the position for a booming and expansion in the economy. And everybody wanted to buy double. Everybody wanted to buy you have a you are a car dealer, you have two cars, you sold two cars, then you don’t ask for two cars, you ask for four. Everybody was duplicating the necessities of materials.

And in 2021, it looked like there was not enough production in the country, but this is not true. This was a speculation. And now we think it’s going to happen more of the same. No disruptions in the supply chain in United States, no disruption in the supply chain in United States, no disruption in stainless steel supplies and reasonable higher prices. This is what we can expect.

Operator: The next question comes from Dominic O’Kane with JPMorgan.

Dominic O’Kane, Analyst, JPMorgan: Just I wanted to go back to Haines. And if you could just maybe give us some assistance on how we should think about the run rate for Haynes as we step into Q1. You obviously had one month of contribution in December, but how should we think about Haynes’ contribution for Q1 and looking across 2025? That’s my first question.

Miguel Fernandez, CCO, Therinox: In principle, the business at Haines should be probably gradually improving, probably more activity in the second semester than still in the first semester. So these issues affecting the supply chain mostly related to aerospace still are to be they still are to be sold. As also has been mentioned before, the year in which there has been more effect or influence of all the turbulence has taken place mostly in Boeing with strike, with the incidents, also with the accidents taking place already is gone. So it’s true that at the end, this has not been a cancellation of orders, but has been that most of these projects new orders are delayed and shall be coming gradually for the next year. So it is expected to be gradually improving, but mostly in the second semester than in the first semester.

It shall be adjusting, but for a better contribution in the second semester of the year.

Operator: Thank you. The next question comes from Bastian Siguritz with Deutsche Bank. Please go ahead.

Bastian Siguritz, Analyst, Deutsche Bank: Yes, good morning all and thanks for taking my questions. My first one is just a quick technical follow-up on the cash flow side and just to understand the situation around Baru. So far, I think from what I understand, you barely had a 60,000,000 net increase in net debt, but you had originally guided for a 95,000,000 reduction in net proceeds. So which exactly is the future number of cash and net debt reduction, which you will still see from the transaction? Is it the 80,000,000 difference between the 95,000,000 and the 18,000,000 cash, which you have already received?

Or are you still actually receiving the reversal of the $60,000,000 and the $95,000,000 Are you more like $175,000,000 total cash in and net debt reduction in 2025? That is my first question.

Esther Camos, CFO, Therinox: Thank you, Bastian. Okay. The Baru sale, okay. Baru sale, the price has been BRL 95,000,000, okay. That is clear.

The collection that we have received in this year is 80,000,000, which is 20% of the price and the rest up to the 95,000,000 will be collected in the second quarter of year twenty five, okay. So this has been warranted by a bank warranty that will be collected in the second quarter of this year, okay. That is what we got for the price. The amounts that we presented in the slide is because the sale was cash and debt free, okay? So we have to we had to cancel to pay all the suppliers that were still outstanding at Baru before selling it to the third party, but the 95,000,000 is the cash that we’re going to get back partly this year, 18,000,000 this year and the rest on 2025.

Operator: Thank you. The next question comes from Maxim Cotta with ODDO BHF. Please go ahead.

Bernardo Velasquez, CEO, Therinox0: Yes, good morning. So, you shared a relatively steady outlook on The U. S. And I was wondering whether you also saw some green shoots of recovery in Europe, whether it was driven by restocking or also by real demand picking up? And if you could share some color on the various end markets there?

And complementing that, could you give us utilization rates for the various units as you usually do? Thanks for that.

Bernardo Velasquez, CEO, Therinox: In Europe, the situation is still not clear from a statistical point of view or for the situation of the market, stocks and what we are receiving. We expect an improvement starting in March. What we haven’t seen today, specifically because everybody was waiting for the German elections, even the commission, the European commission and most of our customer, most of the people still are not bidding for a clear recovery. But the situation is improving in several areas. Automotive industry is stable.

Construction, especially in Spain, is moving up a little bit. Industrial equipment is still waiting, probably depends on the capital goods and this kind of investment normally waits until having a more clear picture of the situation. But in general, everything related with consumer goods is improving. Still, we are realizing of an improvement of our other book. Still, we cannot say it’s not booming.

Still, prices are depressed. But we expect that somewhere during second quarter, the situation will improve. Capacity decision, you have to comment.

Miguel Fernandez, CCO, Therinox: As we stated in the results presentation, we are seeing that the situation is probably improving from the month of March. So still the volumes in January and February are more in line with those of the previous year. So we understand that the basis more or less still we have not seen all the green shoots that are appearing in the media. So at this time, our understanding is that probably in North America, we think it’s still is rational or prudent to talk of keeping volumes of around 80%. And then gradually, obviously, the effect in Astrid Nas Europa should be normalizing from a year which has been strongly damaged by the five months without activity.

Having said that, in the new business model, we are now implementing in Aferi Nox Europa for as far as we are going to a specific niche of produce high value added, the productivity of the plant shall be adapted to this material, which obviously more or less needs more processing. So consequently, it shall be a reduced amount. So on this basis, still what we need to see is when is the market reacting in Europe and when we can have a much more relevant capacity utilization. On the time being, still we need to see when the market reacts, so it’s soon. But maybe a level in between 50% or 60% could be prudent for both Afrinas Europa and Columbus.

Operator: Thank you. The next question is a follow-up from Tristan Gressa with BNP Paribas. Please go ahead.

Tristan Gressa, Analyst, BNP Paribas: Yes. Hi. Thank you. Just two follow ups. And the first one is on the tariffs and the situation in The U.

S. Can you remind us your product mix, longs versus flat in The U. S? I think in the past you mentioned that you were not too exposed to imports. So just I want to make sure you get some benefit there.

And would you see also any risk of idle capacity being restarted in the country regarding Haynes and the tariffs impact, the Steel one, but also the ones against Canada and Mexico, anything to be aware of? So that’s the first question. And the second one is just on Europe. If you can talk a little bit about the policy development we’re seeing from the new commission, the industrial clean plan, the potential support on the energy side, the safeguards that might be coming. So having your view on all those policy developments in Europe and how they could benefit you, also the material circularity and I know that’s a lot of topics, but yes, just would be interesting to have your view there.

Thank you.

Bernardo Velasquez, CEO, Therinox: Thank you, Dustin. In United States, tariffs will affect everything. I didn’t say that the flattable business is not exposed to imports. They have 28% of the market is imports. So they will more or less charge with 25% to 15% of these imports or 15 points of these imports.

So every product is going to be effective. It’s long, it’s flat. In flat products, There’s a lot of import pressure, especially in wire rod from India and from Italy. And we are producing wire rod. We are also producing bars and angles.

Bars has always been a closure market because it’s an end user business. You deliver it directly to the end users. Angles is a good business for us and there’s a lot of imports of Italian and Indian angles. These countries are probably the most powerful in the long product business and they will be effective. So this is India was already effective before, but not Italy.

And Italy will be included. So for the loan product business is going to be better. But also because, you know, if they say screws and as many of these kind of things are normally made with a wire rod, if The United States is protecting with a tariff for these products made with a stainless steel, production of these products in United States will increase. And then our sales to this customer will increase. So we are affected in flat, affected in long and affected in the customer side.

So everything is positive for us. In EU, what I can tell you is that it looked like the commission and the European countries are waking up of a nightmare, but are waking up because everybody is now realizing of the importance of the industry and the importance of the steel industry. I can tell you because it’s public that I, yesterday I attended a meeting in Paris with the ministers of industry of Spain, Italy and France, and many member states, representatives from many member states and representatives from other companies of the steel business. And the message was very clear. So Europe needs the industry.

And to survive in the with our industry, we need the steel industry. Steel is the base of everything in Europe. Steel, as the Italian said, is we are the founding fathers of the EU because at the beginning it was the community of coal and steel. The first flag of this FEKO, the community of coal and steel was black and blue. Black for coal, blue for steel.

Now it’s only blue and we cannot lose this blue. So it’s important that everybody is realizing now of this importance. And we are starting to speak about many topics that were almost forbidden before. We are starting to speak about a common defense policy that was the red line in the European Union, we’re going to speak about everything. We’re going to speak about a bank union.

We’re going to speak about a tax amortization, but we also can speak about a common energy business, a common energy market. And this is important. Everybody is realizing that the steel industry and all electric intensive industries, we need a very competitive electricity cost because we are competing with countries that have achieved electricity and we need it. Governments are starting to be aware of this. They are starting to be aware that the several measures are not enough, that we need more strict safeguard measures, more strict measures in general and that we have to apply all the tools that we have in WTO rules, anti dumpings, anti subsidies, anti circumvention, all these things.

We need to squeeze the system, the WTO system, and we don’t want to go out of the system in order to strengthen all these measures because otherwise, we are suffering circumvention of many countries and unfair competition from many countries. And in the future, we will also suffer the circumvention of the C ban measures. So and what I saw yesterday and you all can see when you read the newspapers and we see the what our politicians are declared is that industry is important. And steel industry is a key industry for the future of Europe. So I’m very confident that we are going to start giving the importance that we deserve in the economical and the political field in Europe and our politicians are now starting to be more effective.

So we expect in somehow a strengthening of all the anti dumping cases that we have and also to have a faster administration of the antidumping and trade measures in Europe because with the length of the procedures in Europe, we cannot react to the threaten of our imports. So but everything is changing. I’m optimistic because finally Europe is situated between the overcapacity of China and the protectionist of United States. So we have to do something. And I believe that now Europe is starting to consider the steel industry very seriously.

Operator: Thank you. The next question is a follow-up from Krishnan Agarwal with Citibank. Please go ahead.

Krishnan Agarwal, Analyst, Citibank: Hi, thanks a lot for taking the follow-up. Before I ask a question, probably a request to the operator to be patient before we finish asking our questions and not to put the lines on the mute. I have three questions. The first one is on the C band. There’s a lot of noise chatter and the noise around the C band operational operationability from the 01/01/2026.

And what is your view in terms of the stainless steel sector, the provisions that have been made in the CEBA? Do you see that implementability from the 2026? Or are you pushing for some more kind of sticker changes for your sector?

Bernardo Velasquez, CEO, Therinox: Thank you, Christian. There’s a lot of questions surrounding the Siobhan implementation because still we don’t have a clear picture of how we’re going to tackle things like exports because with the if you have an if we have an extra cost because of the decarbonization, we will have this extra cost for 100% of our production. But the countries exporting to Europe, they cannot have just a limited production of one grade that is decarbonized and the rest of production, no. So the new conversations that we have in the commission is that we have to consider countries instead of products and countries instead of producers. So this is very interesting and we have to we need to resolve how to tackle the European exports because being noncompetitive we will not be able to export.

This is very clear and something that we have to face. Around Shiban there’s a lot of questions, a lot of still I cannot give you my view because there’s not a clear picture. One day you read that it’s going to be postponed. I think yesterday or the day before yesterday, some industry association, we are asking not for postpone Sivan but cancel this Sivan project. So still everything is now moving very fast and I cannot give you a clear picture.

But we have to resolve a lot of things around the Sivan.

Bastian Siguritz, Analyst, Deutsche Bank: Thank

Operator: you. The next question comes from Bastian Cygnawitz with Deutsche Bank. Please go ahead.

Bastian Siguritz, Analyst, Deutsche Bank: Yes, thanks for taking my follow-up. So I’m wondering whether you can maybe give us a little bit more color on the current EBITDA loss run rate, which you’re facing in the entire European complex, including the flats business rolled on and maybe also distribution on a fourth quarter run rate basis relative to the 95,000,000 EBITDA. So just a little bit more color you could give us and maybe related to that, I guess you’ve already been going through a very big change with the new working agreement in Europe last year. So other than just improving volumes, which is basically more a function of the market, what is really left in your hands to improve performance in those assets? And when and where would you draw a red line if things in Europe actually don’t improve and the business keeps draining cash?

Miguel Fernandez, CCO, Therinox: Well, the comparison obviously is difficult with the starting point of 2024. Obviously, more or less half of the year, the plant has been affected by that. So then it has been a gradually startup of the operations in the second semester. As previously has been stated, the new business model, what is more oriented is increase the presence in final customers, increase the presence in high added value products, be less depending on competing with the imports more in the commodity grades. And this is the strategy.

When we were implementing this strategy, it’s clear that we were stopped by the strike and then several orders, several of these introduction in the new customers were postponed. When we start the operation in the second semester, part of that material was obviously not available and consequently, we need to adjust production and this is something that gradually shall be recovering during this year. We are putting all our efforts to trend the plan back on profits. Being profitable in Europe at this time is really difficult, but almost every players. And I think you will follow the results of the industry at this time with the actual prices in Europe, with a low demand and lower activation of demand and with the imports still taking some place, it’s very, very difficult to be profitable in this business.

Having said that, we are in the way of turning it around and we think gradually for the coming months, we shall start to probably be profitable in the actual business condition on a monthly basis, maybe prior to the summer, we could start turning it around. But this is obviously something that still we are not touching and we are subject to several conditions. The green shots in Europe still are not there. Let’s see what comes after more or less the market’s been shaking as there are in the last six weeks with all the issues taking place with barriers, duties and so on. So it’s not so easy to define when we are normalizing profit contribution in Acherinos Europa.

But in the actual basis, with the actual price of the market, we hope that finally before the summer, we may start seeing some monthly profit contribution. But still it’s very ugly to define which is going to be the figure for the accumulated year. We are on the trend, but still we need to wait a bit more.

Operator: Thank you. The next question comes from Dominic O’Kane with JPMorgan. Please go ahead.

Dominic O’Kane, Analyst, JPMorgan: Hello. I have two follow-up questions. I will ask them together. So my first question is, apologies if I missed it, but could you maybe just clarify what your group CapEx guidance is for 2025? And my second question is, when you made the acquisition of Haynes a year ago, there was some discussion about or certainly questions regarding an appropriate listing jurisdiction.

And I guess just twelve months on, given the composition of your register, given the composition of your earnings profile, Is the listing jurisdiction something that’s more actively under consideration from the executive management and the Board? Thank you.

Esther Camos, CFO, Therinox: Okay. About the CapEx, okay. We have mentioned two things during our presentation. One is the CapEx of 2024. The CapEx of 2024 has been $200,000,000 when we expected BRL $260,000,000, okay.

That difference, of course, is going to come on to 2025. So for 2025, just considering this excess, this, let’s say, delay on the CapEx that we have had this year plus that we are on expansion plan. We expect the CapEx around more than 300,000,000. So it can be on the range between 300,000,000, 3 50

Bernardo Velasquez, CEO, Therinox: million. Sorry, just to add something that we have delayed some CapEx, but it’s not because we have postponed the CapEx. So it’s just because with the SA, we have to, of course, delay some of the maintenance CapEx that we have planned for the Spanish plant. And also the rest is in time and in budget. So we are not postponing anything.

It’s just that payments have been have gone through January and February because of the just for the payment terms of the supplies.

Miguel Fernandez, CCO, Therinox: Regarding the issue of the listing, first of all, I think it’s very clear in our case. We are mostly an American company, an American group, because more than 50% of our sales take place in North America and majority of our profits also come from The States. So we are an American company, but we are trading in Europe. This means that unfortunately, as the market basis is actually in the stock market, we are trading at low multiples compared with our American colleagues, which is probably an unfair position. Having said that, probably or we feel more optimistic that each time this is better appreciated from the market.

So clearly, from in terms of our share price evolution, probably there are not so many cases today of an American company trading at a European multiple. So we consider obviously that we are in that regard attractive. And probably as a consequence of that, we understand that our trade position has been more favorable than that one of the more other players more exposed to Europe. So where we understand we should be better valued is where we are stronger, which is America. And on that basis, we are also expanding more in America in both stainless and in HPF performance alloys, which is the markets in which actually being more profitable, we have a much more warranty return of our investments.

So this is the strategy of the group. There is nothing decided more than that. But what’s more or less logical to think is that if the situation remains, if there is such a gap between the valuation multiples of European companies compared with the American ones, we should be in a proper way in some years from now to approaching the capital markets in The States. This is a possibility that always shall be there. On the time being, what we need is to work, obviously, to integrate Haynes, to integrate both companies in the HPA, and we are working hard on that.

We are trying also to make the best in the integration also with North American Stainless, and that possibility shall be there, but still has not been decided. So if the gap remains for a long period, maybe some listing or partial listing of an entity in America could take place or maybe not. This is something that still our board has not decided. But all the movements are for having also that possibility more or less available if such a gap between the valuations in both markets remains, but we shall be obviously monitoring that.

Bernardo Velasquez, CEO, Therinox: I think that even being a Spanish company or a multinational group based in Spain, we have to present our CapEx because we don’t have an unlimited amount of money available for this CapEx. We need to choose. We need to choose and normally the normally what we see is what is more profitable for the company, which payback is better. And now paybacks, the good paybacks, the good investments are in United States. But please let us work in the integration.

We have a very hard work in the integration side. We have to integrate Haines, explode all the synergies, develop the expansion of plants and NAS and in Haines and MBDM. And then we will be in a good situation to do what is better for our shareholders.

Operator: Thank you. Our final question today comes from Maxim Costa with ODDO BHF. Please go ahead.

Bernardo Velasquez, CEO, Therinox0: So thanks again for taking my follow-up. So when I look at your balance sheet, I can see a lot of cash, more than EUR 1,200,000,000.0 actually despite the HENDS acquisition. And this will be further reinforced by the price complement on Baru you will receive in Q2. So how are you going to tackle this idle cash position? Is it your priority to pay down gross debt more quickly?

Or do you see growth for further strategic initiatives of shareholder returns? So that would be my first question. And the second is on the synergies from Haines and from the VDM expansion plan. I know they are quite back end loaded, but could we see a first contribution from this synergy already in 2025? And if so, by how much?

Miguel Fernandez, CCO, Therinox: Well, it’s as I said before, our financial strength was supported by a strong cash position and a competitive debt in Europe. So consequently, we are not struggle by the cost of our debt, and this is something that is not concerning us. And in addition, we are actually in an ambitious expansion plan. At the same time, we are expanding North American stainless operations, and this is a new production that shall be on place starting in ’twenty five, ending ’twenty six. We are in the also expansion phase of VDM that should provide higher volumes.

Obviously, also, we are in the expansion taking place after the acquisition of Haines, million. So there is a lot of projects in place for the coming future. On that basis, I don’t think that it’s probable to think that we shall use our cash for reducing the financing debt. What we need is keeping the strength for being comfortable at whatever part of the cycle in keeping our CapEx expansion. And that cash is part of our comfort.

And that cash, obviously, and that strategy was so successful that allow us to make the HENES acquisition and needing to access the capital markets for it. So on that basis, we remain, as always, very prudent. And in this regard, our priority is putting in place the all the investments as Leonardo mentioned before. We are glad that we are able to invest in the difficult part of the cycle for taking the best advantages when the market improves and we shall be there. In this time, we do not consider to reduce our cash position.

We think it’s more or less the proper balance for the leverage and the competitive leverage we are having in Spain. And in Europe, sorry.

Bernardo Velasquez, CEO, Therinox: Regarding synergies with Haynes, remember that we acquired Haynes in November. We only could open our books in November. So now we have been checking and comparing the studies in the synergy side. We have a clear number now. We have to define how can we implement the synergies and we need to make the plan.

Still, we don’t have the plan. But some of these synergies will need the new investments. Do not expect a big amount of synergies within 2025. Of course, the most evident is when you have the reduction of cost, for example, for delisting hands in United States that have a cost or sharing some of our systems or using our purchasing capacity in the group, that will come in very easily. But for the more sophisticated synergies like, for example, the commercial side that we will need certification from all the different routines of production.

We will need to enter in different customer, these things that will need at least one year to be developed and everything related with the CapEx will need three years. So do not expect the big amount of money next year. Still, we haven’t defined it, but that will come. I think this is the last question. So thank you very much for attending this presentation.

Very happy to be here. I’m very excited with our future and our strategy. I hope that we have been able to transmit our feelings to you. Thank you very much.

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