TX — Ternium S.A.

Ternium (TX) Q3 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Adjusted EBITDA: Increased sequentially in Q3 2025, driven by improved margins and reduced cost per ton.
• Net Loss: Reported a net loss of $270 million, primarily due to a $405 million non-cash loss from the write-down of deferred tax assets at Usiminas and a $32 million loss related to ongoing litigation provisions.
• Earnings per ADS: Without the aforementioned losses, earnings would have been $0.73 per ADS.
• Operating Cash Generation: Strong cash generation with over $0.5 billion from operating activities in Q3.
• Dividend: The Board declared an interim dividend of $0.90 per ADS, maintaining the same level as the previous year.

2. Strategic Updates and Business Highlights

• Competitiveness Plan: Continued execution has led to a decrease in cost per ton, contributing to improved EBITDA.
• U.S.-Mexico Trade Agreement: Ternium is actively engaging with stakeholders to support policies that strengthen the USMCA framework and promote regional economic integration.
• Mexico's Trade Policies: The Mexican government is implementing measures to bolster local production and reduce reliance on imports, including proposed tariff increases on steel imports from non-trade agreement countries.
• Brazilian Market: Despite challenges from unfairly traded imports, Ternium is seeing a healthy steel environment with a projected 5% growth in apparent steel demand.
• Sustainability Recognition: Received a Steelie Award for excellence in sustainability for the Winds of Change project in Argentina.

3. Forward Guidance and Outlook

• Q4 2025 Expectations: Anticipates a slight decline in adjusted EBITDA due to seasonal shipment slowdowns, although EBITDA margin is expected to remain consistent.
• 2026 Demand Outlook: Forecasting a recovery in demand in Mexico by approximately 4%, driven by increased infrastructure spending and stabilization of trade relations with the U.S.
• CapEx: Total capital expenditures for 2025 are projected to be between $2.5 billion and $2.6 billion, with a decrease expected in 2026 to around $1.9 billion.

4. Bad News, Challenges, or Points of Concern

• Net Loss Impact: The significant net loss in Q3 raises concerns about financial stability, particularly related to Usiminas.
• Trade Uncertainty: Ongoing uncertainty in U.S. trade policies and tariffs could impact demand and pricing in North America.
• High Import Levels in Brazil: Unfairly traded imports from China are flooding the Brazilian market, impacting local prices and competitiveness.
• Steel Demand in Mexico: Apparent steel consumption in Mexico is projected to decline by 10% in 2025, reflecting a challenging market environment.

5. Notable Q&A Insights

• Argentina's Structural Reforms: Management expressed optimism about potential structural reforms following the recent elections, which could enhance competitiveness in the steel industry.
• CapEx Plans: CapEx is expected to peak in 2025, with a gradual decrease in subsequent years, aligning with project timelines.
• Trade Negotiations: Management is hopeful for a renegotiation of the USMCA, which could lead to a more favorable trade environment for North American steel producers.
• Compactos Project: Decisions regarding the Compactos project are pending, with updates expected by mid-2026 as environmental permissions and project analyses continue.

This summary encapsulates Ternium's financial performance, strategic initiatives, and outlook while addressing challenges and insights from the Q&A session.