Core Insights - Ternium, a prominent Mexican steel producer, has faced significant challenges over the past year due to trade-related issues in Mexico and Brazil, which is a key secondary market for the company [1] Group 1: Company Performance - The company has been adversely affected by trade disputes, impacting its operational performance and market position [1] Group 2: Market Context - The trade-related issues in both its home country and Brazil have created a difficult environment for Ternium, highlighting the vulnerabilities in the steel industry [1]

Core Insights - Ternium S.A. announced a significant development regarding its subsidiary Ternium Investments S. [1] Group 1 - The announcement was made on November 5, 2025, indicating a strategic move by the company [1]

Financial Data and Key Metrics Changes - In Q3 2025, Ternium reported an increase in EBITDA driven by a decreasing cost per ton, with cash generation exceeding half a billion dollars during the quarter [5][13] - The net result for Q3 2025 was a loss of $270 million, primarily due to a $405 million non-cash loss related to the write-down of deferred tax assets at Usiminas [13][14] - Adjusted EBITDA is expected to decline slightly in Q4 2025 due to seasonal slowdowns, but adjusted EBITDA margin should remain consistent with the previous quarter [13][40] Business Line Data and Key Metrics Changes - Steel segment shipments increased, particularly in Mexico and Brazil, although lower volumes were noted in other markets [16][17] - The mining segment experienced a decline in net sales due to lower iron ore shipments and increased costs per ton in one of the Mexican operations [18] Market Data and Key Metrics Changes - In Mexico, steel demand has been significantly impacted by U.S. trade policies, with apparent consumption expected to decrease by 10% in 2025 [8][46] - Brazil's steel environment remains healthy with a projected 5% growth in apparent steel demand in 2025, despite challenges from unfairly traded imports [9][10] Company Strategy and Development Direction - Ternium is focused on strengthening its market position through ongoing optimization and cost reductions, particularly in response to the evolving global trade environment [11][12] - The company supports policies that promote regional integration and fair competition within the USMCA framework [6][9] Management's Comments on Operating Environment and Future Outlook - Management highlighted the uncertainty in the business environment due to ongoing changes in U.S. tariff frameworks and emphasized the importance of the USMCA [5][6] - There is optimism regarding potential structural reforms in Argentina that could enhance competitiveness and growth opportunities in the steel industry [10][46] Other Important Information - Ternium's board declared an interim dividend of $0.90 per ADS, maintaining the same payment level as the previous year [5][20] - The company received the Steel Award for Excellence in Sustainability for its renewable energy initiative in Argentina [11] Q&A Session Summary Question: What strategic opportunities arise from the recent elections in Argentina? - Management indicated that the elections may lead to structural reforms that could enhance competitiveness in the industry, but current ownership structure simplification is not a priority [22][23] Question: What is Ternium's plan if the U.S. maintains melt and pour conditions for steel products? - The company plans to continue with its investment strategy, focusing on increasing production capacity to meet regional demands [27][28] Question: What is the cash cost outlook for Q4? - Management expects further improvements in cash costs across operations, with a slight decrease in prices anticipated in Mexico and Argentina [35][40] Question: What is the outlook for demand in Mexico for 2026? - Demand is expected to recover by 4% in 2026, driven by infrastructure growth and stabilization in trade relations with the U.S. [46][48] Question: What is the status of the Pesquería project? - The new galvanized line is set to start production in December, with the overall project on track and within budget [68] Question: What are the expectations for EBITDA per ton in 2026? - Management aims for an EBITDA margin of around 10% entering 2026, with ongoing efforts to improve margins despite uncertainties in trade negotiations [74][79]

Financial Data and Key Metrics Changes - In Q3 2025, Ternium reported an increase in EBITDA driven by a decreasing cost per tonne, with cash generation exceeding half a billion dollars during the quarter [5][13] - The net result for Q3 2025 was a loss of $270 million, primarily due to a $405 million non-cash loss related to the write-down of deferred tax assets at Usiminas [13][14] - Adjusted EBITDA is expected to decline slightly in Q4 2025 due to seasonal slowdowns, but adjusted EBITDA margin should remain consistent with the previous quarter [13][40] Business Line Data and Key Metrics Changes - Steel segment shipments increased, particularly in Mexico and Brazil, although lower volumes were noted in other markets [16][17] - The mining segment experienced a decline in net sales due to lower iron ore shipments and increased costs per tonne in one of the Mexican operations [18] Market Data and Key Metrics Changes - In Mexico, steel demand has been impacted by uncertainty from U.S. trade policies, with a projected 10% decrease in apparent consumption for 2025 [8][48] - Brazil's steel environment remains healthy with an expected 5% growth in apparent steel demand in 2025, despite facing challenges from unfairly traded imports [9][10] - Argentina's steel activity leveled off due to pre-election uncertainty, but there is optimism for growth following the elections [10][11] Company Strategy and Development Direction - Ternium is focused on strengthening its market position through ongoing optimization and cost reductions, particularly in response to trade volatility and competition from Asian countries [11][12] - The company supports policies aimed at increasing local value addition and reducing reliance on imports, particularly in Mexico [9][10] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of the USMCA framework and ongoing trade negotiations to ensure fair competition and long-term growth in the region [6][7] - The Mexican government is prioritizing efforts to fortify local value chains and promote self-sufficiency against external pressures [8][9] - Management expressed optimism about potential structural reforms in Argentina that could enhance competitiveness in the steel industry [10][11] Other Important Information - Ternium received the Steel Award for Excellence in Sustainability for its renewable energy initiative in Argentina, which significantly reduces its environmental footprint [11] - The board declared an interim dividend of $0.90 per ADS, maintaining the same level as the previous year [5][20] Q&A Session Summary Question: Strategic opportunities post-Argentina elections - Management indicated that the elections would not change existing projects and expressed optimism for structural reforms that could enhance competitiveness in Argentina [22][23] Question: Conditions for restructuring ownership - Management noted that restructuring depends on external factors, particularly the share held by ANSES, and emphasized the need for government reforms before considering such initiatives [24][25] Question: Plans if U.S. maintains melt and pour conditions - Management confirmed that they would continue with existing investment plans, anticipating increased production capacity in response to market conditions [27][29] Question: Cash cost outlook for Q4 - Management expects ongoing efficiencies to improve cash costs across operations in Mexico, Argentina, and Usiminas, despite slight price decreases [37][41] Question: Demand outlook for Mexico in 2026 - Management projected a recovery in demand for 2026, driven by infrastructure growth and stabilization in U.S.-Mexico trade relations [48][50] Question: Update on Compactos project - Management stated that decisions regarding the Compactos project would be made in mid-2026, with ongoing analysis of various alternatives [78][80] Question: Expectations for EBITDA per ton in 2026 - Management indicated that while they aim for an EBITDA margin of around 10% entering 2026, achieving this will depend on various market conditions and trade negotiations [76][82]

Financial Data and Key Metrics Changes - In Q3 2025, Ternium reported an increase in EBITDA driven by a decreasing cost per tonne, with cash generation exceeding half a billion dollars during the quarter [4][11] - The net result for Q3 2025 was a loss of $270 million, primarily due to a $405 million non-cash loss related to the write-down of deferred tax assets at Usiminas [11][12] - Adjusted EBITDA is expected to decline slightly in Q4 2025 due to seasonal slowdown, but the adjusted EBITDA margin is projected to remain consistent with the previous quarter [11][38] Business Line Data and Key Metrics Changes - Steel segment shipments increased, particularly in Mexico and Brazil, although lower volumes were noted in other markets [13][14] - The mining segment experienced a decline in net sales due to lower iron ore shipments and increased costs in one of the Mexican operations [15] Market Data and Key Metrics Changes - In Mexico, apparent steel consumption is projected to decrease by 10% in 2025, with expectations of a 4% recovery in 2026 driven by infrastructure growth [48] - Brazil's steel environment remains healthy with a 5% growth expectation in apparent steel demand for 2025, despite challenges from unfairly traded imports [8][14] Company Strategy and Development Direction - Ternium is focused on strengthening its market position through ongoing optimization and cost reductions, particularly in response to the evolving global trade environment [9][10] - The company supports policies that promote regional integration and fair competition within the USMCA framework [5][6] Management's Comments on Operating Environment and Future Outlook - Management highlighted the uncertainty in the business environment due to ongoing changes in the U.S. tariff framework, but expressed optimism about structural reforms in Argentina following the recent elections [5][22] - The company anticipates a slight decline in prices in Mexico and Argentina for Q4 2025, but expects stability in North American prices [38][42] Other Important Information - Ternium's board declared an interim dividend of $0.90 per ADS, maintaining the same level as last year [4][17] - The company received the Steel Award for Excellence in Sustainability for its renewable energy initiative in Argentina [9] Q&A Session Summary Question: Strategic opportunities post-Argentina elections - Management indicated that the elections would lead to structural reforms that could enhance competitiveness in Argentina, but no immediate changes to ownership structure are planned [21][23] Question: Ternium's plan if U.S. maintains melt and pour conditions - The company plans to continue with its investment strategy, anticipating that melt and pour conditions will remain relevant, especially in the automotive sector [27][29] Question: Cash cost outlook for Q4 - Management expects ongoing efficiencies in operations, with a slight decrease in cash costs anticipated in Mexico and Argentina [35][42] Question: Demand outlook for Mexico in 2026 - A recovery in demand is expected in 2026, driven by infrastructure growth and stabilization in trade between the U.S. and Mexico [48][50] Question: Update on the Pesquería project - The new galvanized line is set to start production in December, with the overall project on budget and timeline [72][74] Question: Expectations for EBITDA per ton in 2026 - Management aims for an EBITDA margin of around 10% entering 2026, with ongoing efforts to improve margins despite uncertainties in trade negotiations [84][85]

Core Insights - Ternium S.A. reported a revenue of $3.96 billion for Q3 2025, reflecting an 11.7% year-over-year decline and an EPS of $0.10, down from $0.16 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $3.99 billion by 0.79%, while the EPS was significantly below the consensus estimate of $0.78, resulting in an EPS surprise of -87.18% [1] Financial Performance Metrics - Ternium's stock has returned +8.5% over the past month, outperforming the Zacks S&P 500 composite's +3.6% change [3] - The company currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3] Steel Segment Analysis - Total steel product shipments were reported at 3,757 K Ton, below the average estimate of 3,884.72 K Ton [4] - Shipments in Mexico were 1,849 K Ton, compared to the estimated 1,941.65 K Ton [4] - Shipments in Brazil were 994 K Ton, against the average estimate of 1,024.70 K Ton [4] - Revenue per ton for total steel products was $992, lower than the estimated $1,008.80 [4] - Net sales for the total steel segment were $3.8 billion, below the estimated $3.96 billion [4] - Net sales in Mexico were $1.8 billion, compared to the estimated $1.95 billion [4] - Net sales in Brazil were reported at $950 million, slightly above the average estimate of $943.17 million [4]

Financial Performance - In Q3 2025, Ternium reported steel product shipments of 3.8 million tons, a 1% increase from Q2 2025 but a 9% decrease year-over-year[6]. - Adjusted EBITDA for Q3 2025 was $420 million, reflecting a 4% increase from Q2 2025 and a 14% increase year-over-year, with an adjusted EBITDA margin of 11%[6][7]. - The company experienced a net loss of $270 million in Q3 2025, which included a $405 million non-cash charge related to deferred tax assets and a $32 million loss from ongoing litigation[4][8]. - The company reported earnings per ADS of $0.10 in Q3 2025, down from $1.10 in Q2 2025[56]. - The company experienced a net loss of $(270) million in 3Q25, compared to a net income of $259 million in 2Q25 and $93 million in 3Q24[74]. Cash Flow and Capital Expenditures - Cash provided by operating activities was $535 million, while capital expenditures (CAPEX) totaled $711 million in Q3 2025[4]. - Cash from operations in Q3 2025 amounted to $535 million, with a working capital decrease of $174 million[58]. - Free cash flow for 3Q25 was $(175) million, down from $234 million in 2Q25 and $(143) million in 3Q24[77]. - Capital expenditures in 3Q25 totaled $(711) million, compared to $(810) million in 2Q25 and $(446) million in 3Q24[77]. - The company’s total borrowings decreased to $(2.0) billion as of September 30, 2025, from $(2.4) billion as of June 30, 2025[78]. Segment Performance - The mining segment saw shipments of 2.0 million tons in Q3 2025, with an adjusted EBITDA margin of 11%[4][6]. - In Q3 2025, total net sales for the mining segment were $268 million, a decrease of 5% sequentially and an increase of 1% year-over-year[41]. - Cash operating income for the mining segment decreased sequentially and year-over-year, primarily due to lower margins and reduced sales volumes[42]. - Cash operating income for the steel segment was $391 million in 3Q25, with a cash operating income margin of 10%, up from 9% in 2Q25 and 7% in 3Q24[75]. - The mining segment reported a cash operating income of $38 million in 3Q25, with a cash operating income margin of 14%, down from 19% in 2Q25 and 20% in 3Q24[76]. Tax and Financial Results - Net financial results for Q3 2025 showed a loss of $35 million, including a $34 million loss in net foreign exchange results[49]. - Ternium's income tax expense in Q3 2025 totaled $444 million, which included a $405 million charge related to the write-down of deferred tax assets at Usiminas[52]. - The net result for Q3 2025 was a loss of $270 million, impacted by a $405 million write-down of deferred tax assets[54]. Dividends and Future Outlook - Ternium announced an interim dividend of $0.90 per ADS, totaling $177 million, with a projected total distribution of $2.70 per ADS for 2025, yielding approximately 7%[10][11]. - The company anticipates a slight decrease in Adjusted EBITDA for Q4 2025 due to seasonal shipment reductions, but expects the adjusted EBITDA margin to remain stable[13]. - In Brazil, Ternium is focusing on cost reduction initiatives to improve competitiveness amid challenges from unfairly traded steel imports[15]. - The outlook for Argentina is positive, with significant opportunities in agriculture, mining, and oil and gas sectors following the resolution of mid-term election uncertainties[16]. Overall Sales Performance - Total net sales for the first nine months of 2025 were $9,589 million, a 14% increase compared to $8,389 million in the same period of 2024[41]. - Changes in working capital resulted in a positive cash flow of $174 million in 3Q25, a significant decrease from $781 million in 2Q25[77]. - Ternium's net cash position decreased to $715 million by the end of September 2025, down $303 million from June 2025, due to cash demands from industrial expansion in Mexico[9]. - As of September 30, 2025, Ternium's net cash position was $715 million, a decrease of $303 million since June 2025[60].

Core Insights - The focus is on identifying value companies primarily in the commodities sector, particularly those with sustained free cash flows and low leverage [1] - There is an emphasis on companies in emerging markets that exhibit high margins and present good medium to long-term investment opportunities [1] - The analysis prioritizes firms with a strong pro-shareholder attitude, including consistent buyback programs and dividend distributions [1] Company Characteristics - Target companies are those undergoing distress but possess high recovery potential [1] - Preference is given to sectors that are often overlooked by the market, such as oil & gas, metals, and mining [1] - Companies operating outside the United States are particularly of interest for finding value [1] Investment Philosophy - The investment strategy is centered around companies with solid financial health, characterized by sustainable debt levels and strong cash flow generation [1] - The analyst aims to share insights and information to enhance the decision-making process of individual investors within the seeking alpha community [1] - The educational background includes a financial master's degree with a specialization in company valuation and an economic degree [1]

Group 1 - The history of Ternium (TX) shows signs of recovery, and the market is beginning to notice this trend, although it has not yet recognized its full price potential [1] Group 2 - The investment approach focuses on value companies with solid long-term potential, indicating a strategy that may align with Ternium's recovery narrative [2]

Financial Data and Key Metrics Changes - Adjusted EBITDA increased by 25% in the second quarter, primarily driven by stronger realized steel prices in Mexico, partially offset by a slight increase in cost per ton [14] - Net income for the second quarter amounted to $259 million, including a $40 million provision adjustment related to ongoing litigation [15] - Adjusted net income, excluding the provision, was $299 million, supported by better operational performance and favorable deferred tax results due to a 7.5% revaluation of the Mexican peso [15] Business Line Data and Key Metrics Changes - Shipments in the steel segment declined primarily in Mexico and the U.S., partially mitigated by higher volumes in the southern region [16] - Iron ore shipments rose quarter over quarter driven by increased production levels, although net sales remained broadly unchanged due to lower realized prices [18] Market Data and Key Metrics Changes - The Mexican market is experiencing a cautious business environment, with government measures contributing to a decrease in steel imports, creating a more level playing field [6][8] - The Brazilian steel market faces significant challenges due to a surge of unfair imported steel, particularly from China, undermining local competitiveness [8] - Argentina saw a significant increase in shipments during the second quarter, driven by seasonal factors and a recovering macroeconomic environment [9] Company Strategy and Development Direction - The company is focused on reducing costs to strengthen competitiveness, with ongoing initiatives aimed at optimizing production processes and supply chains [10][11] - The expansion project in Pesqueria is a cornerstone of the company's growth strategy, with expectations of increased shipments in Mexico [8][10] - The company is committed to sustainable industrial development, as highlighted in their sustainable report [11] Management's Comments on Operating Environment and Future Outlook - The operating environment remains uncertain and volatile, with expectations of a sequential improvement in the third quarter, particularly in Mexico [4][5] - Management is optimistic about ongoing negotiations between the U.S. and Mexico leading to mutually beneficial agreements [7] - The company anticipates a mixed performance across key markets, with growth expected in Mexico and steady shipments in Argentina, while Brazil continues to face headwinds [17] Other Important Information - Cash from operations totaled $1 billion in the second quarter, aided by a significant reduction in working capital [19] - The company’s net cash position decreased primarily due to elevated capital expenditures and dividend distributions, but remains solid at $1 billion [20] Q&A Session Summary Question: Can you elaborate on the state of steel supply in Mexico? - Management indicated that recent trade measures have led to lower imports, and they expect to gain market share due to these developments [22][23][25] Question: What is the outlook for cost reduction initiatives? - Management expects a total of $300 million in cost efficiency improvements for the year, with various initiatives contributing to this target [29][61] Question: What is the expected improvement in EBITDA? - Management anticipates reaching an average EBITDA margin closer to 15% by the fourth quarter, supported by cost reduction measures [40][41] Question: What is the status of the CSN litigation? - The litigation remains pending, with an appeal filed and awaiting a decision from the Supreme Court of Justice in Brazil [50][52] Question: What are the plans for capital allocation and dividends? - The company plans to sustain dividend payments while managing significant capital expenditures, with a peak expected this quarter [71][75]