Ternium S.A. Q1 FY2026 earnings call

• W's margin in first quarter reached 12% due to improving market environment in Mexico, focus on profitability over volume in Brazil, and efficiency improvements. - Mexican government actively working to mitigate negative effects of US trade measures, signed agreement to prioritize domestically produced steel in public procurements. - Pesqueria project in Mexico: cold rolling mill and galvanizing line ramping up ahead of plan, expected to operate close to full capacity by October; slab facility advancing; granted patent in US for new electrical steelmaking process; innovations like virtual stamping solution recognized by customers. - In Brazil, automotive industry performing well, agribusiness demand weakened; trade defenses measures expected to help CEMINA's market share improve. - In Argentina, market recovering unevenly with mining, energy, and agriculture performing well, others lagging. - Ternium recognized as sustainability champion by World Steel Association.

Adjusted EBITDA increased sequentially by 21% in the first quarter. Net income reached $372 million. In Mexico, volumes increased supported by commercial market activity; steel cash operating income improved driven by higher margins. In Brazil, steel consumption stable with some sectors resilient, others facing pressure; imports of steel up around 30% vs previous quarter. Mining segment shipments declined sequentially due to operational disruptions in Brazil. Shipments in steel segment broadly in line with previous quarter, expected to trend higher mainly driven by Mexico and Argentina. Cash flow from operations strong but working capital increased; ended quarter with net cash position of $327 million.

• Expect adjusted EBITDA margin to continue increasing supported by higher revenue per ton, partially offset by higher cost per ton. - Anticipate sales to grow in second quarter of 2026, likely requiring further rise in working capital. - Constructive on market and ability to continue improving performance; positive on Mexico with normalizing demand, supportive industrial policies, and downstream projects; in Brazil, expect healthy competitive environment as trade defenses measures gain traction and imports inventory normalize; in Argentina, continue to monitor recovery closely while maintaining operational discipline.

• Potential impact of US trade actions on Mexican economy and steel demand. - Significant increase in steel imports in Brazil affecting market dynamics. - Operational disruptions in Brazil due to weather leading to decline in mining segment shipments. - Conflict in the Middle East could potentially lead to cost increases and recession risk.

Q: Thoughts on USMCA, impact on company performance and slab market pricing outlook.

A: USMCA negotiations ongoing, likely to be renewed with tougher rule of origins but timing uncertain; slab market prices increasing due to factors like fuel and raw material costs.

Q: Follow up on USMCA, expansion in US presence, Mexican dumping case against US galvanized imports, electrical steel capabilities and timeframe.

A: Not planning increased production in US now; no dumping case against galvanized in Mexico, there is one against cold-rolled; electrical steel facility ramp-up to take at least 2027, aim to qualify for automotive industry by 2028.

Q: Outlook in Argentina, imports, exports to other Latin American countries, decarbonization trends in Latin America.

A: Shipments in Argentina second quarter to increase; imports stable but demand for consumption not good; decarbonization in Mexico has opportunity to switch to natural gas, Brazil more difficult with blast furnace.

Q: Follow up on USMCA, Section 232, competitive environment, demand recovery in Mexico.

A: Structural change in Mexico due to Plan Mexico; demand in Mexico expected to grow around 4% in the year, seeing some recovery.

Q: Mexican government's agreement for promotion of steel industry, impact on demand, cost trends in third quarter, price momentum in Mexico.

A: Agreement to prioritize Mexican steel in public procurements will impact steel demand by year end; cost impact on Ternium not huge, real risk of Middle East conflict; price momentum in Mexico due to cost increases in other regions.