Ternium S.A. 2024 Fourth Quarter and Full Year Results Summary
Business Context and Reporting Period
This Form 6-K filing, dated February 18, 2025, reports Ternium S.A.'s financial and operational results for the fourth quarter and full year ended December 31, 2024. Ternium is a leading steel producer in the Americas with operations in Mexico, Brazil, Argentina, and the United States. The results are presented in accordance with IFRS and include non-IFRS alternative performance measures.
Key Financial Metrics
| Metric | 4Q 2024 | Full Year 2024 | Full Year 2023 |
|---|---|---|---|
| Net Sales ($ million) | 3,876 | 17,649 | 17,610 |
| Operating Income ($ million) | 42 | 1,263 | 2,198 |
| Adjusted EBITDA ($ million) | 270 | 2,038 | 2,740 |
| Adjusted EBITDA Margin | 7% | 12% | 16% |
| Net Income ($ million) | 333 | 174 | 986 |
| Adjusted Net Income/Loss ($ million) | (71) | 584 | 2,092 |
| Earnings per ADS ($) | 1.43 | (0.27) | 3.44 |
| Adjusted EPS per ADS ($) | (0.42) | 1.61 | 8.59 |
| Cash from Operations ($ million) | 472 | 1,906 | 2,501 |
| Capital Expenditures ($ million) | 561 | 1,865 | 1,461 |
| Net Cash Position ($ billion) | 1.6 | 1.6 | 1.9 |
Material Changes vs. Prior Period
- Revenue and Volume: Full-year net sales remained flat year-over-year ($17.6 billion), driven by a 10% increase in steel shipments (partially due to full-year consolidation of Usiminas) offset by a 10% decline in realized steel prices. Fourth-quarter sales dropped 21% year-over-year due to seasonal weakness and lower prices.
- Profitability: Operating income fell 43% for the full year and 93% in the fourth quarter compared to the prior year. Adjusted EBITDA margin contracted to 7% in 4Q24 from 13% in 4Q23, reflecting lower realized prices that outpaced cost reductions.
- Unusual Items: Reported Net Income was significantly distorted by litigation provisions related to the 2012 Usiminas acquisition. 4Q24 included a $404 million provision reversal, while the full year included a net $410 million provision charge. Excluding these items, the company reported an Adjusted Net Loss of $71 million for 4Q24.
- Regional Performance: Brazil saw volume growth due to Usiminas consolidation. The Southern Region (Argentina) faced a 20% volume decline due to government economic stabilization measures. Mexico experienced commercial market weakness but maintained industrial customer growth.
Guidance, Outlook, and Risks
- Outlook: Management expects a slight sequential increase in Adjusted EBITDA for Q1 2025, driven by improved margins and volume recovery in Brazil. Cost per ton is expected to decrease as lower-priced inventories are consumed, though revenue per ton is also expected to decline.
- Dividends: The Board proposed an annual dividend of $2.70 per ADS (approx. 9% yield), including an interim dividend of $0.90 per ADS already paid. The remaining $1.80 per ADS is proposed for payment in May 2025.
- Capital Projects: Significant progress continues on the Pesquería industrial center expansion in Mexico (downstream facilities) and a new wind farm in Argentina, which began generation in December 2024.
- Risks: Key risks include uncertainty surrounding U.S. trade measures and tariffs affecting Mexico, global steel demand cyclicality, and currency fluctuations (specifically the Brazilian Real's impact on USD-denominated liabilities).
Investor Verification Checklist
- Adjusted vs. Reported Earnings: Verify the impact of the $404 million litigation provision reversal in Q4 and the $410 million net provision for the full year on reported Net Income versus Adjusted Net Income.
- Usiminas Consolidation: Confirm the extent to which full-year volume growth is attributable to the consolidation of Usiminas results versus organic demand growth.
- Price/Cost Lag: Monitor the lag between falling raw material prices and the company's cost per ton, as inventory consumption of higher-priced materials continues to pressure margins.
- Argentina Exposure: Assess the ongoing impact of Argentine economic stabilization measures on the Southern Region's volume and the effectiveness of the new wind farm in offsetting energy costs.
- Trade Policy: Evaluate the potential impact of new U.S. trade actions on Ternium's Mexican operations and apparent steel demand in that market.