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Ternium (TX) Q2 Earnings call transcript Jul 31, 2024
AInvestThursday, Aug 1, 2024 4:24 pm ET
1min read
TX --

Ternium S.A. held its Q2 2024 earnings call on July 31, 2024, revealing a healthy financial performance and growth initiatives despite market challenges. The call, led by CEO Maximo Vedoya and CFO Pablo Brizzio, provided insights into Ternium's business environment, performance, and strategic outlook.

Financial Performance and Market Challenges

Ternium reported an adjusted EBITDA of $545 million for Q2 2024, showcasing a stable shipment with a 12% margin in a weak steel price environment. This achievement was notable given the challenging market conditions, particularly in the face of a significant accounting provision related to a Brazilian court decision. Despite this setback, Ternium's strong cash flow from operations of $656 million and net cash position of $1.9 billion highlight the company's financial resilience.

Growth Projects and Expansion Plans

Ternium's growth initiatives were a key highlight of the call, with the successful start-up of the first line in the downstream project and the first line in a new finishing center in Pesqueria. These projects, along with the introduction of a new galvanized simulator in their R&D center in Mexico, are aimed at enhancing Ternium's capabilities in the USMCA region and consolidating its position as a leading steel supplier in the region. The company's expansion plans, including the largest expansion project in its history, reflect its confidence in the long-term growth prospects.

Market Insights and Strategic Positioning

The earnings call also provided insights into Ternium's strategic positioning within the steel market. The company's comments on the U.S. market and its relationship with Mexico shed light on the interdependence of the two countries in terms of steel trade. Ternium's stance on U.S. import tariffs and Chinese investment in Mexico underscored its commitment to fair trade practices and its belief in the USMCA's mutual benefits.

Future Outlook and Challenges

Looking ahead, Ternium anticipates a decline in adjusted EBITDA in Q3 2024 due to lower realized steel prices and the lag reset of contract prices. However, the company remains optimistic about the future, projecting increased shipments and healthy demand in its main markets. The expected rise in steel prices and cost reduction trends provide a positive outlook for Ternium's financial performance in the coming quarters.

Conclusion

Ternium's Q2 2024 earnings call highlighted the company's resilience in the face of market challenges and its strategic focus on growth and innovation. With a robust financial position, a clear vision for expansion, and a positive outlook for the future, Ternium is well-positioned to navigate the evolving steel market and capitalize on opportunities for growth. The company's commitment to fair trade practices and its strong relationships with key stakeholders underscore its dedication to sustainable growth and value creation for its shareholders.

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