Ternium (TX) Q2 2024 earnings summary

Executive summary

• Adjusted EBITDA for Q2 2024 was $545 million with a 12% margin, reflecting lower steel prices and stable shipments; net loss was $743 million due to a $783 million litigation provision related to the Usiminas acquisition.

• Strong operational cash flow of $656 million supported a net cash position of $1.9 billion after record dividend payments and significant capex.

• Usiminas consolidation contributed $1.1 billion to steel segment net sales and 1.0 million tons to steel shipments year-over-year.

• Major expansion projects in Mexico and a new wind farm in Argentina are progressing on schedule.

Financial highlights

• Adjusted EBITDA for Q2 was $545 million, with a margin of 12%, down from $855 million in Q1 2024 and $883 million in Q2 2023.

• Net loss for Q2 2024 was $743 million, mainly due to the Usiminas provision; adjusted net income was $40 million.

• Free cash flow in Q2 2024 was $248 million, with cash from operations at $656 million and capex at $409 million.

• Net cash position at quarter-end was $1.9 billion, slightly down from $2.0 billion in Q1 2024, after record dividend payments.

• For H1 2024, adjusted EBITDA was $1.1 billion, and free cash flow was $329 million.

Outlook and guidance

• Q3 adjusted EBITDA expected to decline due to lower margins, with increased shipments partially offsetting the impact.

• Margins anticipated to bottom in Q3, with recovery expected in Q4 as steel prices rise and costs decrease.

• Management notes ongoing risks from steel price volatility, raw material costs, and currency fluctuations, especially in Mexico.

• Shipments projected to grow in main markets, with healthy demand and margin improvement as contract prices reset.