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What were the key takeaways from Ternium’s earnings call?

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- **EBITDA Growth**: Sequential increase in Q3 due to cost reductions and margin improvements.
- **Dividend Stability**: $0.90 interim dividend maintained, yielding 7%.
- **Trade Policy Focus**: Advocating for Fortress North America to counter Asian imports.
- **Argentina Reforms**: Post-election optimism for steel industry growth.
- **Project Progress**: Pesqueria DRI/EAF on track for Q4 2026 start-up.
- **Brazil Challenges**: 33% steel import surge highlights need for trade defense mechanisms.

**【Management Opening Remarks】**
- Sebastian Martí provided an overview of Q3 2025 results, emphasizing Ternium's operational improvements and the challenging global trade environment.
- The company declared an interim dividend of $0.90 per ADS, maintaining the same level as last year.

**【CEO Summary Section】**
- Q3 EBITDA increased due to cost reductions and improved margins, despite a 10% decline in Mexico's apparent steel consumption.
- Ternium supports U.S.-Mexico trade policies promoting regional integration and fair competition.
- Argentina's post-election reforms may drive steel industry growth, while Brazil faces challenges from unfair imports.
- The company received a sustainability award for its renewable energy project in Argentina.

**【CFO Financial Commentary】**
- Adjusted EBITDA rose sequentially, driven by margin improvements and cost reductions.
- Net loss of $270M included non-cash deferred tax write-downs and litigation provisions.
- Operating cash flow remained strong, with CapEx peaking at $711M in Q3.
- Interim dividend of $0.90 per ADS was approved, maintaining a 7% yield.

**【Q&A Key Highlights】**
- **Argentina Strategy**: CEO and CFO discussed potential ownership structure simplification post-election reforms.
- **U.S.-Mexico Trade**: Ternium supports Fortress North America to reduce reliance on Asian imports.
- **Mexico Demand**: 2026 outlook includes 4% growth driven by infrastructure recovery and USMCA reforms.
- **Pesqueria Project**: DRI/EAF start-up in Q4 2026, with $2.7B budget on track.
- **Brazil Imports**: Antidumping duties could address 33% steel import surge, supporting domestic industry.


Ternium S.A. (TX) Q3 2025 Earnings Call Transcript

- **Q2 EBITDA Growth**: 25% YoY increase driven by higher prices in Mexico and cost control.
- **Cost Savings Target**: $300M annualized savings by 2025 through operational efficiency and procurement.
- **Mexico Market Recovery**: Reduced imports support sequential shipment growth and margin improvement.
- **CapEx Peak**: $2.5B in 2025 for Pesqueria expansion, with dividend sustainability maintained despite high investments.
- **Brazil Challenges**: Unfair imports threaten margins; government action is critical for long-term stability.

**【Management Opening Remarks】**
- Introduced the call and highlighted the release of Q2 2025 financial results.
- Emphasized the importance of the webcast presentation for reconciling non-IFRS measures and understanding forward-looking statements.

**【CEO Summary Section】**
- **Q2 Performance**: EBITDA improved sequentially, driven by higher realized prices in Mexico and stable costs despite lower shipments.
- **Market Outlook**: Anticipates sequential EBITDA improvement in Q3, with increased shipments in Mexico (due to reduced imports) and stable volumes in Brazil.
- **Cost Management**: Launched a competitiveness improvement plan targeting $300M in annualized cost savings by 2025, focusing on logistics, procurement, production efficiency, and labor productivity.
- **Strategic Projects**: Progress on the Pesqueria Industrial Center in Mexico, with new capacity expected to ramp up in late 2025.
- **Sustainability**: Highlighted the release of the 2025 Sustainable Report, detailing environmental and social initiatives.

**【CFO Financial Commentary】**
- **Q2 Financials**: Adjusted EBITDA up 25% YoY, net income of $259M (including a $40M provision adjustment), and adjusted net income of $299M.
- **Segment Performance**: Steel segment faced headwinds in Brazil due to unfair imports, while Mining segment saw shipment growth offset by lower iron ore prices.
- **Cash Flow**: Operating cash flow of $1B, supported by reduced working capital, but elevated CapEx ($800M in Q2) led to a net cash position of $1B.
- **Dividend Policy**: Maintained dividend payments despite high CapEx, with a focus on sustaining operations and projects.

**【Q&A Highlights】**
- **Mexico Market Dynamics**: Government measures reduced steel imports, supporting local producers. Ternium expects to gain market share in flat products, while long products may see marginal gains from ArcelorMittal's production issues.
- **Cost Reduction Breakdown**: $300M target includes $70M from procurement, $50M from process stability, and $180M from production rebalancing. Raw material cost declines (e.g., coal, slab) are a secondary factor.
- **Tariff Impact**: Shreveport plant now sources more locally due to U.S. tariffs, reducing reliance on Mexican imports.
- **Litigation Update**: Usiminas litigation remains unresolved, with an appeal pending at Brazil's Supreme Court.
- **Capital Allocation**: 2025 CapEx peak at $2.5B, with 2026 and 2027 projections of $2B and $1.2B, respectively. Dividends will be maintained, but Brazil investments depend on government trade policy responses.


Ternium S.A. (TX) Q2 2025 Earnings Call Transcript

- **Mexico Growth Catalyst**: Plan Mexico and USMCA alignment to reduce Asian imports, with 400k tons/month import substitution potential.
- **Cost Efficiency**: Q2 EBITDA margin to reach double digits, driven by lower steel costs and operational improvements.
- **Argentina Recovery**: Shipments up 20% QoQ, supported by macro stabilization and reduced FX restrictions.
- **CapEx Update**: $4 billion expansion project delayed to 2026, with 70% funding secured via strong balance sheet.

**【CEO Opening Remarks】**
- Q1 2025 EBITDA increased sequentially due to margin improvements and higher shipments.
- Mexico's challenging operating environment is offset by government support for local production (Plan Mexico) and USMCA renegotiation opportunities.
- Brazil faces unfair trade practices, with ongoing anti-dumping investigations against Chinese imports.
- Argentina shows macroeconomic improvement, supporting steel demand recovery.
- Mexico expansion project delayed to Q4 2026 with revised CapEx of $4 billion (+16%), driven by higher construction and assembly costs.

**【CFO Financial Review】**
- Q1 2025 net income: $142 million (GAAP), $188 million (adjusted, excluding litigation provisions).
- Steel segment: Sequentially stable shipments, margin improvement from cost reductions.
- Mining segment: 14% YoY shipment growth, margin pressure from rising costs.
- Cash flow strong with $1.3 billion net cash position, supporting $2.5 billion 2025 CapEx plan.

**【Q&A Key Points】**
- **Mexico Market**: Imports down 30% YoY, but GDP growth uncertainty persists. Ternium aims to gain share via new production lines.
- **Cost Control**: Q2 cost per ton expected to decline further, supporting double-digit EBITDA margin.
- **Argentina Expansion**: No immediate plans due to spare capacity, but macro stabilization could enable future growth.
- **USMCA Risks**: Base case assumes stronger agreement, but tariffs could strain regional trade balance.
- **FX Controls in Argentina**: Dividend payments possible via government bonds, reducing repatriation barriers.

Ternium (TX)-30 Apr 25-2025 Q1 Earnings call transcript

- **Resilient Cash Flow**: $2 billion in cash generation vs. $2 billion CapEx and $600M dividends, maintaining $1.6 billion net cash.
- **Mexico Expansion Acceleration**: Cold rolling and galvanizing lines now set to start in Q4 2025, 2 months ahead of schedule.
- **Wind Energy Impact**: 480 GWh/year wind farm in Argentina replaces 3rd-party power, cutting costs and advancing decarbonization.
- **2025 Outlook**: Q1 EBITDA up sequentially; CapEx peaks at $2.5 billion but supported by $2.70/ADS dividend (9% yield).
- **Trade Risk Mitigation**: <4% flat steel exports to US limits tariff exposure; operational efficiency offsets trade uncertainty.


**【CEO Summary Section】**
- Ternium reported 2024 shipments of 16 million tons with adjusted EBITDA of $2 billion (12% margin), generating $2 billion in cash despite $2 billion in CapEx and $600 million in dividends.
- Mexico's downstream expansion project in Pesqueria is advancing: two new lines (cold rolling mill and hot-dip galvanized) set to start in Q4 2025, with full ramp-up expected by Q1 2026.
- Argentina's 480 GWh wind farm now operational, replacing 3rd-party electricity and supporting decarbonization goals.
- US trade actions targeting Mexico and steel imports under Section 232 create uncertainty, but Ternium is adapting through operational efficiency and USMCA alignment.
- Brazil's flat steel imports from China surged to 3 million tons in 2024, overwhelming local capacity and requiring government intervention.
- Argentina's steel demand declined 20% in 2024 due to macroeconomic measures, but macro improvement expected in 2025.

**【CFO Financial Commentary】**
- Q4 2024: Adjusted EBITDA declined due to lower steel prices and shipments, partially offset by cost reductions. Net income $333 million (including $404 million litigation reversal).
- Full-year 2024: EBITDA down 12% YoY, driven by steel price declines and Usiminas FX impacts. Cash flow from operations strong at $1.6 billion net cash.
- 2025 Outlook: CapEx to peak at $2.5 billion, with $2.70/ADS dividend proposal (9% yield). Q1 2025 EBITDA expected to improve sequentially due to cost declines outpacing price reductions.

**【Q&A Highlights】**
- **Mexico Expansion**: Cold rolling and galvanizing lines to reach full capacity by Q1 2026; steel shop startup remains mid-2026.
- **Usiminas Strategy**: Nippon Steel stake purchase option (July 2025) under review; mining CapEx decisions expected by end-2025.
- **Trade Policy Risks**: Ternium maintains strong net cash position ($1.6 billion) to navigate US trade uncertainty; <4% flat steel exports to US limits direct exposure.
- **China Steel Export Threat**: Brazil import quota system ineffective; Ternium hopes 2025 will see more effective anti-dumping measures in Brazil and Argentina.
- **Scrap Market Impact**: Argentina scrap usage minimal (<8,000 tons/month), limiting cost volatility exposure.


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