Ternium (TX) Q3 2024 earnings summary

Executive summary

• Adjusted EBITDA for Q3 2024 was $368 million, with an 8% margin, reflecting lower realized steel prices despite increased shipments in all primary markets.

• Net income for Q3 2024 was $93 million, with adjusted net income also at $93 million and equity holders' net income at $32 million ($0.16 per ADS), impacted by currency effects and non-controlling interests.

• Record-high shipments in Mexico, healthy industrial activity in Brazil, and recovering steel volumes in Argentina characterized the quarter.

• Expansion projects in Mexico and Argentina are progressing, including new production lines and a wind farm to support decarbonization.

• Updated sustainability targets now include Scope 3 emissions, aiming for a 15% reduction in emissions intensity by 2030 from a 2023 baseline.

Financial highlights

• Adjusted EBITDA declined 32% sequentially and 47% year-over-year, mainly due to lower realized steel prices, partially offset by reduced steel costs per ton and increased shipments.

• Net income for Q3 was $93 million, with improved financial results and FX gains from currency movements in Mexico and Brazil.

• Mining segment shipments rose 13% sequentially, but margins fell due to lower iron ore prices.

• Net cash position at end of September was $1.7 billion, with lower cash flow from operations and negative free cash flow due to high CapEx.

• Interim dividend of $0.90 per ADS ($177 million total) to be paid in November 2024.

Outlook and guidance

• Q4 expected to see a seasonal decline in shipments but a sequential increase in adjusted EBITDA due to better margins and lower costs.

• 2025 is projected to be a year of margin improvement, driven by lower raw material costs and ongoing cost-cutting initiatives.

• CapEx for 2024 is expected to be $1.7–$1.8 billion, rising to $2.3 billion in 2025, mainly for the Pesquería project.

• Free cash flow is expected to improve in the coming quarter, with continued cost reductions anticipated.

• Steel prices projected to decline further in Q4, mainly from contract resets in Mexico; cost per ton expected to decrease as lower-priced inventories are consumed.