Q2 2026 Ternium SA Earnings Call Transcript
Key Points
- Adjusted EBITDA rose 50% sequentially in Q2 2026, with margin expanding to 16.5% from 12.2% in Q1.
- Strong balance sheet with net debt of only $112 million, despite a $418 million working capital build-up.
- Mexico shipments and margins improved, supported by effective trade defense measures and market share gains in the commercial segment.
- New downstream lines at Pesquería are ramping up, with the slab facility on track for early 2027 startup, positioning Ternium for a more integrated North American market.
- Brazil's trade defense is advancing, including renewal of the steel quota system until June 2027 and an anti-dumping case on Chinese HRC nearing a final decision.
- Usiminas improved profitability through better industrial performance, strict cost control, and completion of the pulverized coal injection project.
- Expectations for continued sequential EBITDA growth in Q3 2026, driven by higher shipments and improved margins.
- CapEx is expected to decline to $1.6 billion in 2026 and further to around $1.2 billion in 2027, freeing up cash flow.
- Strong customer recognition, including Caterpillar's Supplier Excellence award and GM's Supplier of the Year in Brazil.
- Revised 2030 decarbonization target now includes Usiminas, aiming for a 50% reduction in emissions intensity per ton of hot-rolled steel.
- Section 232 tariffs are negatively impacting industrial customers in Mexico, causing caution and affecting the sales mix.
- US-Mexico trade talks have not yet produced concrete results, with a fourth round scheduled for early September, leaving uncertainty.
- Steel demand in Mexico's industrial market is not growing at the same pace as the commercial market, with auto sector and HVAC showing mixed trends.
- Global steel overcapacity persists, necessitating continued trade defense efforts.
- Working capital build-up of $418 million in Q2, driven by higher sales and increased raw material costs, impacted cash flow.
- Net debt position of $112 million at end of June, compared to a net cash position of $327 million at end of March, reflecting higher working capital and dividend payments.
- First-half cash from operations declined year-over-year due to higher working capital needs.
- Pesquería slab facility ramp-up will take several quarters, with no significant EBITDA impact expected in 2027 due to certification processes.
- Uncertainty in the global economy remains, with management cautious about capital allocation and dividend increases.
- Mexico's steel consumption is still recovering from a 10% decline in 2025, with only a 4% growth expected this year.
Good morning, ladies and gentlemen. Welcome to Ternium's conference call to discuss the results for the second quarter 2026. We would like to inform you that this event is being recorded (Operator Instructions). We would like to remind you that this conference call is intended exclusively for investors and market analysts. We request you that any question from journalists be dedicated to the media relations through our website in the press section.
With this, I would like now to turn the floor over to Mr. Sebastián MartÃ. You may proceed.
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Hello? Okay. It seems we had some technical issues. I hope you can hear us now. Okay, let's go again. Good morning, and thank you for joining us today. My name is Sebastián MartÃ, and I'm Ternium's Global IR and Compliance Senior Director. Yesterday, we announced our financial results for the second quarter and first half of 2026. Today's call is intended to provide
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