• Adjusted EBITDA: Sequential increase driven by improved margins and higher shipments.
• Net Income: $142 million, including a $45 million provisional adjustment charge.
• Adjusted Net Income: $188 million, excluding the adjustment charge.
• Steel Segment Shipments: Higher in Brazil and other markets, lower in Mexico.
• Net Sales in Steel Segment: Slight increase with better margins due to efficiency improvements.
• Mining Segment Shipments: Increased 14% year over year, driven by higher production levels.
• CapEx for Expansion Project: Revised to $4 billion, with $1.4 billion already invested.
• Net Cash Position: $1.3 billion at the end of March 2025.

• Warning! GuruFocus has detected 7 Warning Signs with BUE:TXAR.

Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ternium Argentina SA (BUE:TXAR) reported a sequential increase in EBITDA driven by improved margins and slightly higher shipments.
• The company anticipates achieving a double-digit EBITDA margin in the second quarter, supported by increased prices in Mexico and cost reduction initiatives.
• Expansion projects in Mexico are progressing, with the pickling and finishing lines already operational and other facilities scheduled to begin by the end of December.
• The company has a strong balance sheet with a net cash position of $1.3 billion at the end of March 2025.
• Ternium Argentina SA (BUE:TXAR) is focusing on enhancing competitiveness by increasing operational efficiency and reducing costs, which has already yielded positive results.

Negative Points

• Trade tensions and uncertainty are affecting business confidence and posing risks to global economic growth.
• The operating environment in Mexico is challenging, with uncertainty affecting investment and consumption.
• The expansion project in Mexico has experienced a slight delay, with the total CapEx revised to $4 billion, representing a 16% increase from previous estimates.
• The Brazilian market faces issues with unfair trade practices, with a significant increase in imports during the first quarter.
• Net income for the first quarter included a $45 million provisional adjustment charge related to ongoing litigation, impacting overall profitability.

Q & A Highlights

Q: Can you provide more details on the situation in Mexico, particularly regarding the industrial customers and the impact on the auto supply chain? A: Maximo Vedoya, CEO: The steel industry in Mexico is currently facing challenges, with a decrease in apparent steel consumption by almost 5% in 2024. This is mainly due to the commercial market, particularly infrastructure and construction, which have been affected by the change in government. However, we expect demand to start increasing in the following quarters, especially in the commercial markets. Imports are decreasing, and we anticipate gaining market share with new lines coming online in the Pesqueria project.

Q: What are your expectations for margins and profitability, given the current economic environment? A: Pablo Brizzio, CFO: We experienced a decrease in margins throughout 2024, but we are now seeing an improvement. The first quarter of 2025 showed better margins compared to the fourth quarter of 2024, and we expect further improvement in the second quarter. Our goal is to achieve double-digit margins, supported by higher steel prices and cost reduction initiatives.

Q: Can you elaborate on the cost reduction measures and their impact on future quarters? A: Pablo Brizzio, CFO: We are seeing a reduction in costs, particularly in raw materials and labor, which has positively impacted our margins. We have implemented a cost reduction program that has already shown results in the first quarter, and we expect this to continue. Our margins are expected to move into double-digit territory, driven by price increases and ongoing cost reduction efforts.

Q: What is the outlook for volumes in Mexico, and are there opportunities to increase market share? A: Maximo Vedoya, CEO: We have the capacity to increase volumes in Mexico, as imports have decreased significantly. We are in the process of certifying our products with industrial customers, and we see opportunities to gain market share from imports, particularly from the US, Japan, and Korea. We are working to increase our market share and capitalize on these opportunities.

Q: How do you view the recent changes in FX controls in Argentina and their impact on dividend payments? A: Pablo Brizzio, CFO: The recent changes in FX controls in Argentina are positive, as they provide more certainty. The government has allowed results generated in 2025 to be freely paid as dividends, starting in April next year. There is still some limitation for companies, but the government plans to issue a bond to facilitate dividend payments. Overall, there is a path for companies to pay dividends in the near future.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.