TX

Ternium S.A. Form 6-K Summary

Business Context and Reporting Period

This filing presents the unaudited consolidated condensed interim financial statements of Ternium S.A. for the three-month and six-month periods ended June 30, 2025. Ternium is a global steel producer with operations primarily in Mexico, Brazil, and the Southern Cone (Argentina, Chile, Uruguay). The company operates through two main segments: Steel and Mining.

Key Financial Metrics (Six Months Ended June 30, 2025)

Note: 2024 figures are included for comparison. Borrowings decreased significantly in 2025 due to repayments.

Material Changes vs. Prior Period

• Revenue Decline: Net sales decreased by approximately 15% year-over-year, driven by lower volumes and pricing in the steel market.
• Profitability Turnaround: The company returned to profitability with a net profit of $401.6 million, compared to a net loss of $251.7 million in the prior year. This improvement is largely due to a significant reduction in the provision for ongoing litigation related to the Usiminas acquisition.
• Usiminas Litigation Provision: The provision for the CSN lawsuit decreased from $783.0 million in the first half of 2024 to $85.0 million in the first half of 2025. The 2024 figure included a large accrual following a court decision; the 2025 figure reflects updated estimates after further legal proceedings.
• Debt Reduction: Total borrowings dropped from approximately $7.0 billion at June 30, 2024, to $2.4 billion at June 30, 2025, reflecting aggressive debt repayment.
• Capital Expenditures: Capital expenditures increased to $1.33 billion in the first half of 2025, compared to $858 million in 2024, primarily driven by investments in the Pesquería facilities in Mexico.

Outlook, Risks, and Contingencies

• US Tariffs: The filing highlights significant uncertainty regarding recently announced U.S. tariffs. A 25% tariff on steel imports was imposed in March 2025, later increased to 50%. Additionally, reciprocal tariffs and auto tariffs were announced. Ternium states it cannot currently quantify the impact on its business.
• Argentina FX Restrictions: Ternium Argentina continues to operate under foreign exchange restrictions. While some flexibility was introduced in April 2025, restrictions on repatriating dividends and converting currency remain. The company holds significant assets in Argentine sovereign bonds, which are subject to valuation volatility.
• Usiminas Litigation: The company continues to appeal a Superior Court of Justice (SCJ) decision in Brazil regarding the 2012 Usiminas acquisition. While the company believes the claims are without merit, a potential indemnification of approximately $365.7 million (Ternium Investments share) remains a risk if the appeal fails.
• Dividends: A net dividend of $0.18 per share ($1.80 per ADS) was paid in May 2025, totaling approximately $353 million.
• Subsequent Event: On July 23, 2025, Ternium Mexico entered into a $1.25 billion syndicated "green" loan agreement to finance the DRI-EAF steelmaking plant at Pesquería.

Investor Verification Checklist

• Usiminas Litigation Status: Verify the current status of the appeal filed with the Supreme Federal Tribunal in Brazil and the potential financial exposure if the SCJ decision is upheld.
• US Tariff Impact: Assess the specific exposure of Ternium's Mexican operations to the 50% steel tariff and reciprocal tariffs, given the USMCA exemptions mentioned.
• Argentina Liquidity: Review the composition of Ternium Argentina's $1.0 billion in cash and investments, specifically the exposure to Argentine sovereign bonds and the ability to repatriate funds.
• Debt Covenants: Confirm compliance with leverage ratios under the new $1.25 billion syndicated loan and existing credit facilities following the recent capital expenditure surge.
• Cost of Sales Trends: Analyze the sustainability of the gross margin recovery given the volatility in raw material costs and energy prices in Mexico and Brazil.