Q2 2024 Ternium SA Earnings Call Transcript
Key Points
- Ternium SA (TX) posted a healthy adjusted EBITDA of $545 million for the second quarter, maintaining stable shipments with a 12% margin during a weak steel price environment.
- The company generated strong cash from operations of $656 million, contributing to a solid net cash position of $1.9 billion, even after distributing record dividends and sustaining significant capital expenditures.
- Ternium SA (TX) started up the first line in the downstream project and the new finishing center in Pesqueria, with further lines on track to be delivered by the end of next year.
- The new galvanize simulator in the R&D center in Mexico will enable shorter certification times and improved product quality assessment, adding more value-added products for various industries.
- The 2.6 million tonnes steel slab mill in Pesqueria is progressing well, with completion expected by mid-2026, enhancing capabilities in the USMCA region and positioning Ternium SA (TX) as a leader in low emission steelmaking.
- Net income was negatively affected by a $783 million provision due to an adverse Brazilian court decision related to the acquisition of a stake in Usiminas in 2012.
- The steel market in Mexico saw a downturn in steel prices, leading to a destocking process and impacting commercial market demand.
- Operational issues with a blast furnace in the Rio de Janeiro slab facility affected shipments in Mexico during the second quarter.
- The Brazilian steel sector faces a serious threat from imports under predatory conditions, mostly from China, with recent import tariffs proving inefficient.
- Ternium SA (TX) expects a decline in adjusted EBITDA in the third quarter due to lower realized steel prices and increased shipments across key markets.
Thank you for standing by. My name is Kayla, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ternium second-quarter 2024 results. (Operator Instructions) I would now like to turn the call over to Sebastian Marti. You may begin.
Thank you. Good morning, and thank you for joining us. My name is Sebastian Marti, Ternium's Global IR and Compliance Senior Director. Yesterday, Ternium released its financial results for the second quarter and the first half of 2024. This call is intended to complement that presentation. I'm joined today by Maximo Vedoya, Ternium's Chief Executive Officer; and Pablo Brizzio, Ternium's Chief Financial Officer, who will discuss Ternium's business environment and performance. We will open the floor to questions following our prepared remarks.
Before we begin, I would like to remind you that this conference call contains forward-looking information and that actual results may vary from those expressed or
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