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]

Financial Data and Key Metrics Changes - Ternium's adjusted EBITDA increased by 25% in Q2 2025, primarily driven by stronger realized steel prices in Mexico, despite a slight increase in cost per ton [15][16] - Net income for Q2 2025 amounted to $259 million, including a $40 million provision adjustment related to ongoing litigation, with adjusted net income excluding this provision at $299 million [16][22] - Cash from operations totaled $1 billion in Q2 2025, supported by a significant reduction in working capital [21][22] 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 [17][18] - Iron ore shipments rose quarter over quarter due to increased production levels, although net sales remained broadly unchanged due to lower realized prices [20] Market Data and Key Metrics Changes - The Mexican steel market is experiencing a cautious environment with pending clarity on U.S. trade policy, while the Brazilian market faces challenges from a surge in unfair imported steel [6][8] - Argentina saw a significant increase in shipments during Q2 2025, driven by seasonal factors and a recovering macroeconomic environment [10] Company Strategy and Development Direction - Ternium is focused on reducing costs to strengthen competitiveness, with ongoing initiatives aimed at optimizing production processes and supply chains [11][12] - The company is committed to its expansion project in Pesqueria, which is seen as a cornerstone of its growth strategy [7][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a sequential improvement in shipments for Q3 2025, particularly in Mexico, supported by government measures against unfair trade practices [6][18] - The operating environment remains uncertain and volatile, with management emphasizing the need for concrete measures to defend the Brazilian industrial base [9][10] Other Important Information - Ternium released a sustainable report reaffirming its commitment to long-term value creation through sustainable industrial development [12] - The company anticipates a peak in capital expenditures (CapEx) in Q2 2025, with projections for a decrease in the following quarters [73][74] Q&A Session Summary Question: State of steel supply in Mexico - Management indicated that recent trade measures have led to lower imports, which may help rebalance the steel market, and Ternium is well-positioned to capture market share [25][30] Question: Cost outlook and reduction initiatives - Management expects a $300 million decrease in cost efficiency for the year, with various initiatives contributing to this target [32][33] Question: Magnitude of potential EBITDA improvement - Management anticipates a recovery in EBITDA margins, aiming for around 15% by Q4 2025, supported by cost reduction measures [42][43] Question: Update on CSN litigation - There have been no significant developments in the CSN litigation, and the next steps involve awaiting a decision from the Supreme Court of Justice [52][53] Question: CapEx cycle and allocation strategy - Management confirmed that the peak of CapEx occurred in Q2 2025, with a projected decrease in the following quarters, while maintaining dividend payments [73][77]

Second Quarter 2025 Performance - Adjusted EBITDA increased by 25% sequentially in 2Q25, driven mainly by higher realized steel prices in Mexico, with a slight offset from higher steel costs[10] - Net income in 2Q25 includes a provision adjustment charge of $40 million accounting for interest accrual and the appreciation of the BRL vs the US dollar in connection with the ongoing litigation related to the acquisition of a participation in Usiminas in 2012[14] - Steel segment shipments decreased sequentially in 2Q25, but higher realized steel prices, mainly in Mexico, contributed to financial performance[20] - Steel Cash Operating Income increased to $350 million in 2Q25, compared to $276 million in 1Q25[22] - Steel Cash Operating Income per Ton increased to $94/ton in 2Q25, with a margin of 9%[25] - Mining shipments increased sequentially, driven mainly by higher iron ore production, but international iron ore prices decreased[29] - Mining Cash Operating Income decreased to $54 million in 2Q25, compared to $57 million in 1Q25[32] - Mining Cash Operating Income per Ton decreased to $16/ton in 2Q25, with a margin of 19%[30] Cash Flow and Balance Sheet - Cash from operations reached $1044 million in 2Q25, a significant increase compared to $207 million in 1Q25[34] - Net cash position declined in 2Q25 to $1 billion, after a $353 million dividend payment and a significant increase in CAPEX[36]

Financial Performance - Net sales for the six-month period ended June 30, 2025, were $7,879,747, a decrease of 15.0% compared to $9,292,449 in the same period of 2024[10] - Gross profit for the six-month period ended June 30, 2025, was $1,141,026, down 38.7% from $1,860,149 in 2024[10] - Operating income for the six-month period ended June 30, 2025, was $331,053, a decline of 68.3% compared to $1,045,377 in 2024[10] - Profit for the period for the six-month ended June 30, 2025, was $401,646, compared to a loss of $251,695 in 2024[10] - Total comprehensive income for the six-month period ended June 30, 2025, was $809,271, compared to a loss of $224,496 in 2024[11] - The company reported a profit of $401,646 for the six-month period ended June 30, 2025, compared to a loss of $251,695 in the same period of 2024[23] - Cash flows from operating activities increased to $1,250,672 in the first half of 2025, up from $1,131,963 in the prior year[23] - The company reported an operating income of $385,760 thousand under the management view for the six-month period ended June 30, 2025, compared to $812,430 thousand in 2024, reflecting a decrease of approximately 52.5%[55] - Financial income for the six-month period ended June 30, 2025, was $125,949 thousand, down from $155,930 thousand in 2024, a decrease of about 19.3%[60] - Net profit from continuing operations for the six-month period ended June 30, 2025, was $61 million, down from $116 million in the prior year, indicating a decrease of about 47.4%[95] Assets and Equity - Total assets as of June 30, 2025, were $23,919,225, an increase from $23,128,547 as of December 31, 2024[12] - Total equity as of June 30, 2025, was $16,582,341, up from $16,131,569 as of December 31, 2024[12] - The company’s retained earnings as of June 30, 2025, stood at $12,004,234, an increase from $11,968,186 at the beginning of the year[14] - Non-current assets totaled $10,510,755 thousand as of June 30, 2025, an increase from $8,960,856 thousand in 2024, representing a growth of approximately 17.3%[57] - Total assets as of June 30, 2025, amounted to $5,455 million, a decrease from $5,726 million as of December 31, 2024, reflecting a decline of approximately 4.7%[95] Cash and Investments - Cash and cash equivalents as of June 30, 2025, were $1,857,696, compared to $1,691,263 as of December 31, 2024[12] - The company reported a net cash used in investing activities of $767,923 for the first half of 2025, compared to $525,857 in 2024[23] - Ternium Argentina's cash and cash equivalents and other investments totaled $1,000 million, with $859 million in U.S. dollar-denominated instruments[96] - As of June 30, 2025, Ternium Argentina's financial position included $294 million in monetary assets and $139 million in monetary liabilities, with all ARS-denominated assets and liabilities valued at the official exchange rate[98] Strategic Moves and Acquisitions - The company increased its participation in Usiminas Control Group, indicating a strategic move towards enhancing governance and operational control[9] - On July 3, 2023, Ternium completed the acquisition of an additional 57.7 million ordinary shares of Usiminas for $118.7 million, increasing its participation in the Usiminas control group to 51.5%[36] - Ternium began fully consolidating Usiminas' balance sheet and results of operations in its financial statements starting July 2023[38] - The acquisition of Usiminas included a "put" and "call" option mechanism, allowing for future transactions between Ternium and the NSC group[43] Segment Performance - The Steel segment reported net sales of $7,613,034 thousand for the six-month period ended June 30, 2025, a decrease from $9,084,805 thousand in the same period of 2024, reflecting a decline of approximately 16.2%[55] - The Mining segment generated net sales of $266,713 thousand for the six-month period ended June 30, 2025, compared to $207,644 thousand in 2024, indicating an increase of about 28.5%[55] - Total cost of sales for the six-month period ended June 30, 2025, was $6,738,721 thousand, down from $7,432,300 thousand in 2024, representing a reduction of approximately 9.3%[58] - Selling, general and administrative expenses decreased to $799,100 thousand in the first half of 2025 from $865,745 thousand in 2024, a decline of about 7.7%[59] Dividends and Financial Obligations - The company paid dividends of $353,354 in cash to shareholders during the first half of 2025, down from $431,877 in the same period of 2024[23] - The company plans to repay a total of $63 million in additional paid-in capital over the next three years, starting in June 2025[16] - On July 23, 2025, Ternium Mexico entered into a $1,250 million syndicated loan agreement to finance capital and operational expenditures, with proceeds expected to be disbursed over the next twelve months[102] - The loan bears interest at SOFR plus 125 basis points and must be repaid in six equal semi-annual installments starting 30 months after the effective date[103] Legal and Regulatory Matters - The company faced pending labor lawsuits with a total claim amount of $57,343 thousand as of June 30, 2025, down from $34,393 thousand at the acquisition date[49] - The company continues to believe that the claims made by CSN regarding the Usiminas acquisition are unsupported and without merit[75] - The estimated current tax expense related to OECD Pillar Two for the six-month period ended June 30, 2025, is $8.5 million, with a total provision of $29.9 million[69] Market and Operational Insights - The company continues to monitor the impact of foreign exchange restrictions in Argentina, which remain in place as of the reporting date[92] - Ternium is unable to predict the impact of recently announced tariffs on imports in the United States, which may affect its business and financial condition[101] - The company reported a revenue increase of 15% year-over-year, reaching $1.2 billion in Q3 2023[104] - User base expanded by 10 million active users, totaling 150 million users globally[104] - The company projects a revenue growth of 20% for the next quarter, aiming for $1.44 billion[104] - New product line expected to contribute an additional $200 million in revenue by Q4 2023[104] - Research and development expenses increased by 25%, totaling $150 million, focusing on innovative technologies[104] - Market expansion efforts led to a 30% increase in sales in the Asia-Pacific region[104] - The company completed a strategic acquisition valued at $500 million to enhance its product offerings[104] - Gross margin improved to 45%, up from 42% in the previous quarter[104] - Customer retention rate reached 85%, indicating strong user satisfaction[104] - The company plans to invest $100 million in marketing to support new product launches[104]

Group 1 - The analyst focuses on undercovered stocks primarily in Brazil and Latin America, with occasional insights on global large caps [1] - Contributions are made to platforms like TipRanks and TheStreet, indicating a broad reach in financial analysis [1] Group 2 - There are no disclosed positions in any mentioned companies, suggesting an unbiased perspective in the analysis [2] - The article expresses personal opinions and is not influenced by compensation from companies mentioned [2]

Core Insights - The article emphasizes the importance of identifying high-quality and mispriced investment opportunities, suggesting that great investment ideas should be intuitive and involve purchasing strong companies at favorable prices [1]. Group 1 - The focus is on the role of an investment analyst in uncovering valuable investment ideas that are not immediately apparent [1]. - The article highlights the belief that successful investments stem from a combination of quality companies and attractive pricing [1].

Group 1 - Ternium is a significant player in the Latin American industrial sector, not just a steel producer, with nearly twenty years of operational history [1] - The company has successfully integrated the entire steel production process, a feat that few in the sector have achieved [1]