Ternium S.A. Q1 2025 Financial Summary
Business Context and Reporting Period
This Form 6-K filing summarizes Ternium S.A.'s unaudited consolidated results for the first quarter ended March 31, 2025. Ternium is a leading steel producer in the Americas with operations in Mexico, Brazil, Argentina, and other markets. The results are presented in U.S. dollars and metric tons in accordance with IFRS.
Key Financial Metrics
| Metric | Q1 2025 | Q4 2024 | Q1 2024 |
|---|---|---|---|
| Net Sales | $3,933 million | $3,876 million | $4,778 million |
| Operating Income | $132 million | $42 million | $675 million |
| Adjusted EBITDA | $322 million | $270 million | $855 million |
| Adjusted EBITDA Margin | 8% | 7% | 18% |
| Net Income | $142 million | $333 million | $491 million |
| Adjusted Net Income | $188 million | ($71 million) | $491 million |
| Earnings per ADS | $0.34 | $1.43 | $1.84 |
| Adjusted EPS per ADS | $0.55 | ($0.42) | $1.84 |
| Cash from Operations | $207 million | $472 million | $475 million |
| Capital Expenditures | $518 million | $561 million | $449 million |
| Net Cash Position | $1.3 billion | $1.6 billion | $2.0 billion |
Material Changes vs. Prior Periods
- Sequential Improvement: Adjusted EBITDA increased 19% sequentially to $322 million, driven by improved margins and higher shipments in steel and mining products. Operating income surged 211% sequentially.
- Year-Over-Year Decline: Net sales fell 18% year-over-year to $3.9 billion, primarily due to lower realized steel prices and reduced volumes in Mexico and the U.S. Adjusted EBITDA declined 62% year-over-year.
- Regional Performance:
- Brazil: Steel shipments rose 9% year-over-year due to the ramp-up of Usiminas' main blast furnace.
- Mexico: Shipments declined sequentially and year-over-year due to uncertainty surrounding U.S. trade policies and a soft commercial market.
- Southern Region: Shipments rebounded 32% year-over-year following a weak prior-year period in Argentina.
- Unusual Items: Net income included a $45 million provision charge related to ongoing litigation regarding the acquisition of a participation in Usiminas. This charge reflects interest accruals and the appreciation of the Brazilian Real.
Outlook, Risks, and Management Commentary
- Guidance: Management expects a sequential increase in Adjusted EBITDA for Q2 2025, driven by higher realized steel prices and slightly lower costs per ton, with stable shipments.
- Regional Outlook:
- Mexico: Volumes expected to remain subdued in Q2 due to unresolved tariff issues.
- Brazil: Shipments expected to be stable; concerns remain regarding unfair trade practices and increased imports.
- Argentina: Shipments expected to increase sequentially due to improving macroeconomic conditions.
- Capital Projects: The total cost estimate for the Pesquería, Mexico expansion has increased to $4.0 billion (up 16% from prior estimates) due to higher construction costs and extended deadlines. The new slab mill is now expected to begin operations in Q4 2026.
- Risks: Key risks include global GDP uncertainty, market demand cyclicality, tariff policies, and currency fluctuations.
Investor Verification Checklist
- Verify the impact of the $45 million Usiminas litigation provision on future quarters and the total liability exposure.
- Monitor the resolution of U.S. tariff policies affecting Mexican steel shipments and the resulting volume trends.
- Track the progress and cost overruns of the Pesquería expansion project against the new $4.0 billion budget.
- Assess the sustainability of the sequential margin improvement given the year-over-year decline in realized steel prices.
- Review the reconciliation of non-IFRS measures (Adjusted EBITDA, Adjusted Net Income) in Exhibit I to ensure alignment with IFRS reporting.