Ternium S.A. (NYSE:TX) Q2 2024 Earnings Conference Call July 31, 2024 8:30 AM ET

Company Participants

Sebastian Marti - Investor Relations
Maximo Vedoya - Chief Executive Officer
Pablo Brizzio - Chief Financial Officer

Conference Call Participants

Kayo Rivero - Bank of America
Carlos De Alba - Morgan Stanley
Timna Tanners - Wolfe Research
Marcio Farid - Goldman Sachs
Alex Hacking - Citi
Leo Correa - BTG Pactual

Operator

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. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]

I would now like to turn the call over to Sebastian Marti. You may begin.

Sebastian Marti

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’ll discuss Ternium business environment and performance. We'll 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 the actual results may vary from those expressed or implied. Factors that could affect results are contained in our filings with the Securities and Exchange Commission and on Page 2, in today's webcast presentation. You'll also find any reference to non-IFRS financial measures reconciled to the most directly comparable IFRS measures in the press release issued yesterday.

With that, I will turn the call over to Mr. Vedoya.

Maximo Vedoya

Good morning and thank you for joining us today for our second quarter's earnings call. Ternium 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 operation of $656 million, which contributed to maintaining a solid net cash position of $1.9 billion even after distributing record dividends during the quarter and sustaining significantly capital expenditures due to ongoing expansion initiatives.

In addition, net income during the quarter was affected by the recording of an accounting provision that we were required to make as a result of an adverse Brazilian court decision issued in last June, related to our acquisition of a stake in Usiminas back in 2012. Ternium believes that such decision is contrary to applicable substantive and procedural law. We did not acquire sole control of Usiminas, when we joined the control group. The court’s changed in their previous view, now finding that the change of control occurred, contradicts both the terms of the Usiminas shareholders agreement and how Usiminas governance worked in reality.