Ternium Q2 Earnings Call Focuses on Mexico Recovery and Q3 Growth

TX Sees Q3 EBITDA Rising

Chief financial officer Pablo Brizzio said that adjusted EBITDA should increase from the second quarter’s $717 million, supported by higher shipments and a better margin.

Management expects higher revenue per ton to outweigh rising costs per ton across its markets. The second-quarter adjusted EBITDA margin reached 16.5%, up from 12.2% in the first quarter.

Brizzio tied the improvement to stronger realized steel prices, especially in Mexico and Brazil, along with higher consolidated volumes.

Ternium Gains Ground in Mexico

Chief executive officer Maximo Vedoya said that Mexico’s commercial market is recovering as inventories normalize and trade defenses reduce unfair imports.

Ternium is also gaining share because customers value its service, reliability and faster response times. Industrial demand is improving more slowly, with Section 232 tariffs weighing on manufacturing customers.

Vedoya said that third-quarter volumes should continue to recover as pipeline projects start, Asian imports are replaced at several automakers and public infrastructure work adds demand beyond the quarter.

TX Tracks Trade Talks and Pricing

A Bradesco BBI analyst pressed management on Mexican pricing and whether second-quarter realization understated the benefit from higher market prices.

Vedoya said that the mix remains tilted toward the spot-oriented commercial market, but he confirmed that realized prices should rise again in the third quarter at a pace similar to the second quarter.

On U.S.-Mexico trade talks, management offered no firm timetable. Vedoya said that Mexico is prioritizing relief from Section 232 tariffs, while the United States wants stronger Mexican defenses against unfair trade.

Ternium Keeps Pesquería Ramp Gradual

Management reiterated that the new Pesquería slab facility is scheduled to start in early 2027, while downstream lines continue to ramp.

Vedoya cautioned that investors should not expect a major EBITDA step-up in 2027. The facility will require several quarters of operational ramping and customer certifications before it reaches its broader earnings potential.

He added that customer inquiries for regional melt-and-pour steel exceed the plant’s planned capacity as industrial customers prepare to source more locally produced automotive steel.

TX Weighs Dividends as CapEx Falls

Capital allocation drew repeated questions from Goldman Sachs and Itaú BBA analysts as earnings improved and the investment cycle neared its peak.

Vedoya said that capital spending should fall from about $1.6 billion in 2026 to roughly $1.2 billion in 2027, with management focused on ramping and consolidating recently completed assets.

Brizzio said that a higher dividend remains under consideration if stronger results prove sustainable, while preserving a strong financial position. He also described corporate simplification, including additional Usiminas ownership, as a long-term objective rather than a near-term action.

Ternium Sees Uneven Regional Demand

In Brazil, Vedoya said that trade defenses are moving in a constructive direction, while automotive and infrastructure equipment demand remain resilient.

Usiminas has improved profitability through better industrial execution, cost control and productivity. Still, several end markets face weak demand or competition from imported finished goods.

In Argentina, management continues to see energy, mining and agriculture as the strongest sectors. Construction is recovering gradually, while manufacturing remains pressured by soft demand and imports.

TX Maintains a Disciplined Posture

Management’s tone combined confidence in near-term margin recovery with caution on trade policy, project ramping and cash deployment.

The operating focus is clear: capture Mexico’s recovery, defend regional markets, complete Pesquería and preserve balance-sheet flexibility as capital spending declines.

Zacks Signals Remain Mixed

TX carries a Zacks Rank #3 (Hold). Its Value Score of A, Growth Score of B and VGM Score of A indicate favorable characteristics in those styles, while the Momentum Score of D points to weaker momentum characteristics.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks framework gives the strongest preference to Zacks Rank #1 or 2 (Buy) stocks paired with A or B Style Scores. TX combines strong Value, Growth and VGM grades with a lower Momentum grade and a Hold rank. The Zacks Rank can change as earnings estimates are revised after the just-reported results.

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