NEXA — Nexa Resources S.A.

Nexa Resources Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Adjusted EBITDA: $283 million, more than double year-over-year, with a margin of 31.8%.
• Net Income: $118 million, or $0.67 per share.
• Net Revenues: $888 million, up 42% year-over-year but down 2% sequentially.
• Zinc Production: 79,000 tonnes, an 18% increase year-over-year.
• Free Cash Flow: Negative $126 million, consistent with typical first-quarter seasonality.
• Net Leverage: Decreased to 1.59x, down from 2.09x a year ago.

2. Strategic Updates and Business Highlights

• Operational Performance: Improved across all mines, particularly at Aripuana, which set a quarterly production record.
• Cerro Pasco Integration Project: Phase 1 on schedule for completion in Q4 2026, with pumping expected to start in Q2 2027.
• Exploration Success: Encouraging results from drilling at Massaranduba, confirming long-term potential.
• Smelting Segment Recovery: Zinc metal and oxide sales increased, with operational improvements noted in Brazilian smelters.

3. Forward Guidance and Outlook

• CapEx Guidance: Reaffirmed at $381 million for 2026, with a focus on sustaining activities and project execution.
• Production Expectations: Anticipate normalization of operations following recent challenges, with expectations for strong free cash flow generation throughout 2026.
• Market Conditions: Zinc prices expected to remain supported by tight concentrate availability, while smelting margins may remain under pressure due to low treatment charges.

4. Bad News, Challenges, or Points of Concern

• Operational Challenges: Heavy rainfall at Cerro Lindo, illegal blockades at Atacocha, and shaft constraints at El Porvenir impacted production.
• Free Cash Flow: Negative cash flow in Q1 due to typical seasonality, tax payments, and working capital buildup.
• Smelting Margins: Continued pressure from low treatment charges, impacting profitability despite operational improvements.

5. Notable Q&A Insights

• Cerro Pasco Project Risks: Management expressed confidence in obtaining necessary environmental permits for El Porvenir and Atacocha, with no expected delays in the project timeline.
• Smelting Segment Outlook: Improvements in operational performance are expected to continue, but low treatment charges will challenge profitability.
• Silver Stream Impact: The reduction in silver streaming at Cerro Lindo will generate approximately $100 million more in cash annually, aiding in debt reduction efforts.
• M&A Strategy: Nexa remains open to growth opportunities while focusing on reducing debt, with a target net leverage of 1x over time.
• Political Environment: Management believes that regardless of political changes in Peru, the importance of mining to the economy will mitigate potential adverse effects on operations.

This summary encapsulates Nexa's strong financial performance in Q1 2026, strategic initiatives, and outlook, while also highlighting challenges and insights from the Q&A session.