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Ternium S.A. Q2 2026 Financial Summary

Business Context and Reporting Period

This Form 6-K filing, dated August 4, 2026, reports Ternium S.A.'s unaudited consolidated results for the second quarter and first half of 2026 ended June 30, 2026. Ternium is a leading steel producer in the Americas with operations primarily in Mexico, Brazil, and the Southern Cone. The financial statements are prepared in accordance with IFRS (IAS 34) and presented in U.S. Dollars.

Key Financial Metrics

*Net Cash position of $327 million as of March 31, 2026. **Net Cash position of $1.0 billion as of June 30, 2025.

Material Changes vs. Prior Periods

• Revenue Growth: Net sales increased 10% sequentially and 10% year-over-year (YoY) to $4.34 billion, driven by higher shipments and improved realized steel prices, particularly in Mexico and Brazil.
• Profitability Surge: Operating income jumped 82% sequentially and 165% YoY. Adjusted EBITDA rose 50% sequentially and 78% YoY, with margins expanding from 10% to 17%.
• Segment Performance:
  • Steel: Shipments increased 11% YoY. Mexico saw significant volume growth (25% YoY) due to stronger commercial demand and trade defense measures. Brazil volumes were stable, prioritizing margin over volume.
  • Mining: Shipments rose 18% sequentially but were down 3% YoY for the first half. Sales increased due to higher iron ore prices, though cash operating income declined slightly sequentially due to price fluctuations.
• Working Capital: Cash flow from operations was constrained by a $418 million increase in working capital (higher receivables and inventories), despite strong earnings.
• Liquidity Shift: The company moved from a Net Cash position of $327 million in Q1 to a Net Debt position of $112 million in Q2, primarily due to capital expenditures and dividend payments.

Outlook, Risks, and Management Commentary

• Guidance: Management expects Adjusted EBITDA to increase in Q3 2026 compared to Q2, driven by higher shipments and improved margins. Revenue per ton is expected to rise, partially offset by higher costs per ton.
• Regional Outlook:
  • Mexico: Shipments expected to recover further due to commercial momentum, new pipeline projects, and substitution of Asian imports.
  • Brazil: Demand remains uneven; automotive and infrastructure are resilient, while agricultural machinery is weak. High imports remain a concern, though trade defense measures (quotas) are in place until June 2027.
  • Argentina: Energy, mining, and agriculture remain strong; construction is recovering slowly. Manufacturing is weak due to soft domestic demand and import competition.
• Capital Allocation: CAPEX of $431 million in Q2 focused on the new steel shop in Pesquería, Mexico. A dividend of $255 million was paid in May 2026 (balance of 2025 declaration).
• Risks: Foreign exchange volatility (losses of $34 million in Q2 due to MXN and BRL appreciation against USD); global steel demand cyclicality; import competition; and ongoing litigation provisions related to the Usiminas acquisition.

Investor Verification Checklist

• Working Capital Efficiency: Verify the sustainability of the $418 million increase in working capital and its impact on future free cash flow.
• Net Debt Trajectory: Monitor the shift from net cash to net debt ($112 million) and the company's ability to service debt while maintaining high CAPEX and dividend payouts.
• Trade Defense Impact: Assess the long-term effectiveness of Brazilian and Mexican trade measures against imports in sustaining price levels and volumes.
• Usiminas Litigation: Review the $599 million provision for ongoing litigation related to the Usiminas acquisition and potential for further adjustments.
• Argentina Exposure: Evaluate the risk associated with the Argentine Peso depreciation and its impact on the consolidated financial results and local operations.