February 19, 2025 Fourth Quarter and Full Year 2024 Earnings Conference Call and Webcast 1 / 25 Forward-Looking Statements and Non-IFRS Alternative Performance Measures This presentation contains certain forward-looking statements and information relating to Ternium S.A. and its subsidiaries (collectively, "Ternium") that are based on the current beliefs of its management as well as assumptions made by and information currently available to Ternium. Such statements reflect the current views of Ternium with ...

Financial Data and Key Metrics Changes - Ternium reported shipments of 16 million tons for 2024 with adjusted EBITDA of $2 billion, reflecting a 12% margin [7] - The company's net cash position was strong at $1.6 billion by the end of December, despite nearly $2 billion in CapEx and over $600 million in dividends paid [8][35] - Net income for the fourth quarter was $333 million, influenced by a $404 million provision reversal for ongoing litigations [28][29] Business Line Data and Key Metrics Changes - Steel segment net sales declined sequentially by 14% in the fourth quarter due to lower shipments and reduced realized prices across all markets [31][32] - Mining shipments remained stable during the quarter but were down approximately 9% year-over-year, primarily due to lower production levels in Mexico and Brazil [33] Market Data and Key Metrics Changes - In Mexico, shipments decreased in the fourth quarter due to a weaker commercial market, while the industrial market showed steady activity with a 6% increase in auto industry production [15] - Brazil experienced a positive year with flat steel apparent consumption increasing by 10%, and vehicle production also grew by 10% compared to 2023 [16][17] - Argentina saw a year-over-year decline in shipments of approximately 20%, primarily due to macroeconomic measures by the government [21] Company Strategy and Development Direction - Ternium is advancing its downstream expansion project in Mexico, with significant progress on the pickling line and finishing center [8][9] - The company is focused on enhancing operational efficiency and reducing costs to navigate potential trade scenarios [14] - Ternium's expansion projects in Mexico are crucial for strengthening its integration into the North American market [25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the USMCA's role in enhancing competitiveness and trade among member countries [12][96] - The company anticipates a sequential increase in adjusted EBITDA for the first quarter of 2025, supported by margin improvement and a small increase in volumes [27][49] - Management highlighted the ongoing uncertainty in international trade, particularly regarding US tariffs on steel imports [11][24] Other Important Information - The wind farm in Argentina began generating energy, expected to deliver approximately 480 gigawatt-hours per year, aiding in decarbonization goals [10] - Ternium opened a technical school in Brazil to provide high-quality education, reflecting its commitment to community development [20] Q&A Session Summary Question: Outlook for the first quarter and ramp-up of projects - Management expects a slight improvement in the first quarter, with the finishing lines in Pesqueria ramping up to full capacity in the next two to three months [40][43][49] Question: Update on Usiminas stake and CapEx priorities - Management is pleased with Usiminas' performance and is focused on improving productivity and addressing challenges with imports from China [54][58] Question: Impact of trade measures on investments - Management confirmed that they are not postponing investments and are proceeding with projects in Mexico [62][65] Question: Scrap exports and cost structure in Argentina - Scrap exports are not significant for Ternium, as the company does not rely heavily on scrap in Argentina [64] Question: US market supply and demand balance - Management expressed optimism about the USMCA and the potential for North America to strengthen its supply chain against unfair trade [90][96]

Core Viewpoint - Ternium, a steel producer in the Americas, experienced a significant decline in stock value in the second half of 2024, with its market capitalization nearly reduced by one-third at one point [1] Group 1 - Ternium is identified as a steel producer operating primarily in the Americas [1] - The stock price drop occurred in the latter half of 2024, indicating a period of volatility for the company [1] - The decline in market capitalization was substantial, approaching a reduction of 33% [1]

Company Overview - Ternium S.A. (TX) is currently experiencing significant attention in the options market, particularly with the February 21, 2025 $20.00 Call option showing high implied volatility, indicating expectations of a substantial price movement [1] Implied Volatility Insights - Implied volatility reflects market expectations for future price movements, with high levels suggesting that investors anticipate a significant shift in stock price, potentially due to an upcoming event [2] Analyst Sentiment - Ternium holds a Zacks Rank of 5 (Strong Sell) within the Steel-Producers industry, which is positioned in the bottom 30% of the Zacks Industry Rank. Over the past 60 days, no analysts have raised their earnings estimates for the current quarter, while one has lowered their estimate. The Zacks Consensus Estimate for current quarter earnings has decreased from $1.03 per share to $0.38 [3] Trading Strategy Implications - The high implied volatility surrounding Ternium may indicate a developing trading opportunity. Options traders often seek to sell premium on options with high implied volatility, aiming to benefit from the decay of option value if the underlying stock does not move as much as anticipated [4]

Financial Data and Key Metrics Changes - Ternium reported an adjusted EBITDA of $368 million and a net income of $93 million for Q3 2024, with margins declining primarily due to decreased realized prices in the main market [6][28]. - The net cash position declined to $1.7 billion, attributed to decreased EBITDA and increased working capital alongside higher capital expenditures [33]. Business Line Data and Key Metrics Changes - The Steel segment saw increased shipments across key markets, but sales remained steady due to a decline in revenue per ton driven by lower realized steel prices [30][31]. - The Mining segment experienced a 13% sequential increase in shipments, although net sales were stable due to lower iron-ore market prices, leading to decreased margins [32]. Market Data and Key Metrics Changes - In Mexico, steel consumption remains healthy with record high shipments, although a decline is expected in Q4 due to seasonal weakness [7][10]. - Brazil's steel consumption grew by 9% year-over-year in the first nine months of 2024, but flat steel imports surged by 20% year-over-year, prompting government action against unfair trade [12][13]. - Argentina's steel volumes have shown recovery, with expectations for stable shipments in Q4 despite seasonal slowdowns [14]. Company Strategy and Development Direction - Ternium is optimistic about the Mexican market, anticipating growth in automotive production and infrastructure projects [10][11]. - The company is focused on expanding its production capacity through significant capital expenditures, including new facilities in Pesquería and a wind farm in Argentina [15][16][20]. - Ternium aims to enhance its product offerings and operational efficiency while reducing dependency on external suppliers [19][20]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in Ternium's performance in 2025, citing opportunities in key markets and expected margin improvements due to lower raw material costs [25]. - The new Mexican administration's commitment to industrialization and import substitution is seen as beneficial for the steel market [11][43]. Other Important Information - Ternium's Board announced an interim dividend of $0.90 per ADS, totaling $177 million, representing a dividend yield of about 8% based on the current share price [35][36]. - The company published its latest Sustainability Report, which includes updates on decarbonization targets and emissions reporting [21][22]. Q&A Session Summary Question: Dividend cut rationale and future expectations - Management explained that the nominal reduction in dividends was necessary due to decreased EBITDA and increased capital expenditures, but the payout ratio remains high at around 70% [44][46]. Question: Outlook for North American steel industry - Management highlighted the overcapacity issue in China and the competitive nature of North American steel production, emphasizing the region's focus on low-carbon intensity steel [51][53]. Question: Steel imports in Brazil and government actions - Management noted that the Brazilian government is addressing steel imports through a quota system, but loopholes exist that need to be closed [62]. Question: Future investments and CapEx plans - Management confirmed that total CapEx for 2025 is expected to be around $2.3 billion, primarily focused on the Pesquería project [67].

Ternium – Third Quarter 2024 | Earnings Conference Call and Webcast 1 1 / 25 November 6, 2024 Third Quarter 2024 Earnings Conference Call and Webcast Forward-Looking Statements and Non-IFRS Alternative Performance Measures This presentation contains certain forward-looking statements and information relating to Ternium S.A. and its subsidiaries (collectively, "Ternium") that are based on the current beliefs of its management as well as assumptions made by and information currently available to Ternium. Such ...

Core Viewpoint - The article emphasizes the importance of value investing as a strategy to identify strong stocks, particularly highlighting Ternium (TX) as a notable undervalued company based on various financial metrics [2][7]. Company Analysis - Ternium (TX) has a Zacks Rank of 2 (Buy) and an A grade for Value, indicating strong potential as a value stock [4]. - The stock has a P/E ratio of 4.58, significantly lower than the industry average of 8.65, suggesting it is undervalued [4]. - TX's Forward P/E has fluctuated between 4.36 and 6.64 over the past year, with a median of 5.19 [4]. - The PEG ratio for TX is 0.22, compared to the industry average of 0.60, indicating strong earnings growth potential relative to its price [5]. - TX's PEG has ranged from 0.18 to 3.88 in the past 52 weeks, with a median of 0.91 [5]. - The P/S ratio for TX is 0.34, which is lower than the industry average of 0.4, further supporting the view of undervaluation [6]. - Overall, Ternium is highlighted as one of the market's strongest value stocks due to its favorable earnings outlook and valuation metrics [7].

Financial Data and Key Metrics Changes - Ternium reported an adjusted EBITDA of $545 million for Q2 2024, maintaining a 12% margin despite a weak steel price environment [4][17] - The company generated strong cash from operations amounting to $656 million, maintaining a solid net cash position of $1.9 billion even after record dividend distributions [4][22] - Net income was negatively impacted by a $783 million provision related to ongoing litigation concerning Usiminas, with adjusted net income decreasing to $40 million [5][18] Business Line Data and Key Metrics Changes - Shipments in Mexico experienced a slight decline in Q2, affected by a downturn in steel prices and a tropical storm [19] - In Brazil, shipments increased by 6% across all segments, particularly in the automotive and manufacturing sectors [19][13] - The mining segment's net sales remained stable, with volume and revenue per ton steady in Q2 [21] Market Data and Key Metrics Changes - The steel market in Mexico remains healthy, with a 14% year-over-year increase in apparent steel consumption last year [8] - Automotive production in Mexico increased by 5% year-over-year in the first half of 2024, indicating strong demand in the industrial steel market [8] - U.S. exports of finished steel to Mexico rose by 7% in the first five months of 2024, while Mexican exports to the U.S. decreased by 12% [11] Company Strategy and Development Direction - Ternium is focused on expanding its capabilities in the USMCA region, with significant projects underway, including a new 2.6 million tons steel slab mill expected to be completed by mid-2026 [8][6] - The company aims to enhance its product offerings in high-end steel products for automotive, renewable energy, and construction sectors, leveraging new finishing lines and R&D initiatives [7][6] - Ternium is committed to sustainability, with ongoing climate change initiatives, including the construction of a wind farm in Argentina [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about Ternium's performance in the upcoming quarters, anticipating a bottoming of margins in Q3 followed by growth in shipments and margins as steel prices begin to rise [16][56] - The company noted that the steel market is influenced by external factors, including excess production from China, but sees robust demand in both the U.S. and Mexico [27][42] - Management highlighted the importance of the USMCA agreement, emphasizing mutual benefits for the U.S. and Mexico [44] Other Important Information - Ternium's technical school in Pesqueria has been recognized for its positive impact on communities and sustainability, graduating over 600 students since its establishment [15] - The company is actively defending its position in ongoing litigation related to Usiminas, with plans to file all available motions and appeals [5][6] Q&A Session Summary Question: Update on HRC prices in the U.S. and MUSA expansion - Management noted that HRC prices in the U.S. have stabilized around $700 per metric ton, with indications of a potential rebound [26] - The decision on the MUSA project is expected by the end of next year, with ongoing engineering and project scope work [29] Question: Status of U.S. import tariffs and Usiminas lawsuit - Management confirmed that the 25% import tariff exemption for Brazilian steel is considered official, although implementation details are still being finalized [31] - The ongoing judicial process regarding the CSN lawsuit is complex, and management prefers not to comment further at this time [32] Question: Demand recovery and potential risks from U.S. elections - Management indicated a pickup in demand in Mexico, with clients returning to purchase as prices stabilize [42] - Concerns about the USMCA's future were addressed, with management expressing confidence in the agreement's benefits for all parties involved [44] Question: Siderar's operating loss and future profitability - Management acknowledged that Siderar faced challenges in Q2 due to low volumes and increased costs, but expects a recovery in the coming quarters [46][47] Question: Dividend policy and slab pricing - Management sees no reason to change the current dividend policy, citing strong free cash flow and a solid financial position [51] - Ternium is a net buyer of slabs, and the Brazilian operations can operate efficiently even at lower slab prices [53]

Financial Data and Key Metrics - Adjusted EBITDA for Q1 2024 was $655 million, up 31% from the previous quarter, with an adjusted EBITDA margin of 17% [21] - Net cash increased to $2 billion as of the end of March 2024 [5] - Net income and earnings per ADS showed significant strength in Q1, partially offset by losses from divestment of certain assets and sovereign bond holdings [23] - Cash flow from operations was healthy despite a $266 million increase in working capital due to higher inventories and receivables [31] Business Line Performance - Mexico operations remained strong, with slight sequential volume decline due to transitory re-stocking but strong demand from industrial customers [24] - Brazil saw stable steel shipments, with a year-over-year increase due to the consolidation of Usiminas [25] - Argentina experienced a sharp decline in shipments due to government economic stabilization measures, but a gradual recovery is expected starting in Q2 [14][25] - Usiminas in Brazil improved operational efficiency, with lower steel production costs following the restart of its main blast furnace [12] Market Performance - Nearshoring in North America is intensifying, benefiting Ternium's operations in Mexico due to geographical proximity and lower logistics costs [5] - Brazil's steel consumption improved slightly, driven by lower interest rates, improved consumer confidence, and infrastructure projects [6] - Argentina's medium-term outlook remains uncertain, but recovery is anticipated in agribusiness, energy, and mining sectors [14] Strategic Direction and Industry Competition - Ternium is focusing on upstream and downstream projects at its industrial center, with the first stage expected to come online in 2024 [15] - The company aims to benefit from nearshoring, advance its CO2 emissions roadmap, and strengthen its competitive position in the Mexican steel market [16] - Usiminas has set a decarbonization goal to reduce Scope 1 and 2 emissions intensity by 15% by 2030 [13] - New tariffs in Mexico and Brazil aim to level the playing field against unfair competition, particularly from China [10][11] Management Commentary on Operating Environment and Future Outlook - Management highlighted strong performance across all regions despite macroeconomic challenges [4] - Nearshoring trends and new tariffs in Mexico are seen as positive developments for the company [5][10] - Argentina's recovery is expected to be gradual, with significant uncertainty remaining [14][39] - The company anticipates a sequential increase in shipments in Q2, driven by positive trends in industrial demand [9] Other Important Information - Ternium refined its operational segments to reflect the integration of Usiminas operations, with new segments including steel and mining [19] - The company recorded a $56 million gain related to the readjustment of electricity transmission costs in Mexico [21] - Usiminas announced a decarbonization roadmap, with plans to reduce emissions intensity by 15% by 2030 [13] Q&A Session Summary Question: Clarification on the $56 million gain related to electricity transmission charges in Mexico - The gain was due to a reversal of overpaid charges from previous periods, now reflected as an operational item [38] Question: Outlook for Argentina's recovery and bond holdings - Argentina's recovery is expected to be gradual, with a 20% decline in Q2 compared to the previous year, but a 25% increase sequentially [39] - The company sold bonds received as payment from Argentina, with no further impact expected in future quarters [41][43] Question: Impact of new tariffs in Brazil and blast furnace outage - The new tariffs are a positive step but may not be sufficient to fully address unfair trade practices from China [48] - The blast furnace outage in Brazil is being resolved, with no significant impact expected on shipments or costs [50] Question: Guidance on pricing and costs - Lower prices are expected in most markets, with stable costs due to a mix of factors including slab purchases and iron ore price changes [56][57] Question: Capital allocation and dividend policy - Ternium has increased dividends and plans to sustain the current level, considering ongoing CapEx plans [66] - No specific new investment opportunities outside Mexico are currently being pursued [69]

Market Dynamics - In 2023, there was a 42% surge in the import of flat steel products in Brazil compared to 2022, primarily due to low-priced steel imports from China, adversely affecting Brazilian domestic steel production[43]. - Steel prices have shown significant volatility, with US prices of hot-rolled coils dropping to USD 485 per ton in 2020, peaking at USD 2,135 per ton in 2021, and fluctuating throughout 2022 and 2023[39]. - The steel industry is experiencing a contraction in global steel consumption in 2023 due to economic factors, including the Russian invasion of Ukraine and tightened monetary conditions by central banks[37]. - A downturn in global or regional economic activity could significantly impact steel demand, adversely affecting Ternium's business and results of operations[38]. - The steel industry faces intense competition, which could lead to declining margins and reduced shipments for Ternium[45]. - Price fluctuations and disruptions in the supply of raw materials could adversely affect Ternium's profitability, especially with the ongoing geopolitical tensions impacting supply chains[47]. - Ternium's operations are significantly affected by the security situation in regions where it operates, potentially leading to increased operational costs and delays in growth plans[120]. - Ongoing trade tensions and potential tariffs on steel exports to the U.S. could adversely affect Ternium's operations and investment climate in Mexico[123]. Business Strategy and Investments - Ternium's business strategy includes significant investments, such as the construction of a new steelmaking facility and a direct reduction unit in Pesquería, along with a new port facility for raw material handling[51]. - Ternium's expansion plan in Mexico includes a steelmaking facility and other production lines with a total cost of approximately $3.5 billion, expected to start-up gradually from 2024 to 2026[54]. - The company has made two large acquisitions in the past decade, including a stake in Usiminas, Brazil's largest flat steel producer, and CSA, a Brazilian steel slab producer[51]. - Ternium's annual production capacity increased to 12.4 million tons after acquiring a steel producer in Brazil, representing a 70% increase[210]. - Ternium's new downstream project in Pesquería Industrial Center includes a push-pull pickling line and new finishing lines, expected to be commissioned in the second half of 2024, with a hot-dip galvanizing line starting operations by the end of 2025 and a cold-rolling mill in the first half of 2026[203]. Financial Performance and Risks - Ternium recorded a $1.1 billion non-cash net loss due to increased participation in Usiminas, including a $935 million loss related to prior stakes and a $171 million loss from purchase price allocation[58]. - The company may face significant charges to earnings if it reassesses goodwill or other long-lived assets, which could adversely affect its results and net worth[56]. - Ternium's ability to recover increased costs of raw materials through higher selling prices may take an extended period, affecting its operating results[40]. - Ternium's financial results could be negatively impacted by tax disputes and changes in applicable tax laws across various jurisdictions[102][103]. - Ternium's ability to pay dividends is contingent on the financial performance of its subsidiaries, which may be restricted by local regulations and economic conditions[107][108]. Geopolitical and Regulatory Environment - Ternium's operations are exposed to geopolitical risks that could disrupt supplier operations and affect growth opportunities and profitability[54]. - Compliance with the USMCA's "melted and poured" manufacturing requirements is crucial for Ternium's competitiveness, with potential impacts on profitability if delayed[55]. - Recent changes in Mexico's energy regulations could impact the cost and supply of electricity, affecting Ternium's operations[116][119]. - The Mexican government raised temporary import tariffs on steel products from 15% to 25% for imports from countries without trade agreements, impacting Ternium's cost structure[150]. - The Brazilian Congress approved significant changes to the tax regime in 2023, potentially impacting Ternium's cash flow and profitability[142]. Environmental and Sustainability Initiatives - Ternium aims to reduce carbon dioxide emissions intensity in its steelmaking operations by 20% by 2030, using a 2018 baseline[180]. - The company is exploring additional initiatives to achieve carbon neutrality as part of its decarbonization roadmap[180]. - Ternium's commitment to environmental sustainability includes standardized EHS management systems and significant resource allocation to EHS projects[182]. - Ternium's environmental management system is certified under ISO 14001 and ISO 50001, ensuring compliance with environmental laws and regulations[215]. - The introduction of new carbon pricing mechanisms could increase Ternium's production costs, affecting profitability[169]. Operational Challenges - Labor disputes could lead to work stoppages, negatively impacting Ternium's operations and results[62]. - Changes in foreign currency exchange rates could adversely affect Ternium's business, as a significant portion of transactions is conducted in currencies other than the U.S. dollar[63]. - Ternium's operations in water-stressed areas may face challenges due to water shortages and increased costs, particularly in Mexico[78]. - Ternium's mining operations are subject to risks including operational accidents, environmental pollution, and potential liabilities from toxic torts and natural resource damages[83][85]. - Ternium's mining operations in Mexico face significant risks due to increasing violence and crime, which could lead to temporary or permanent shutdowns[100][101][120]. Community and Social Responsibility - Ternium has built and operates a technical school in Mexico and is constructing another in Brazil to support local education and welfare[183]. - Ternium's community programs focus on education, culture, volunteer work, and health, aiming to foster sustainable community growth[220]. - Ternium's ProPymes program has supported small and medium-sized enterprises in the steel value chain for over 20 years, enhancing competitiveness[202]. Technological Advancements - Ternium has invested in state-of-the-art technologies to enhance its product research and development infrastructure, particularly in the high-end steel segment[203]. - Ternium's digital marketplace, "Ternium Activo," integrates processes with customers and suppliers, improving management efficiency[211].