Ternium (NYSE:TX) reported higher third-quarter earnings and forecast adjusted earnings before interest, taxes, depreciation and amortization would remain broadly stable in the fourth quarter, as stronger steel margins offset a seasonal decline in shipments.
Adjusted EBITDA rose 10% from the second quarter to $785 million, while the adjusted EBITDA margin expanded to 16.9%, Chief Financial Officer Pablo Brizzio said on the company’s earnings call. Higher steel shipments and realized prices, particularly in Mexico, drove the improvement, partly offset by higher costs per ton and a weaker mining contribution.
The board declared an interim dividend of $0.90 per American depositary share, unchanged from the interim payments in 2024 and 2025. The $177 million distribution is payable Nov. 17.
Mexico Shipments Reach a Record
Chief Executive Officer Máximo Vedoya said Ternium’s shipments to Mexico reached an all-time high in the third quarter and rose 13% in the first nine months of 2026. Most of the growth came from gaining market share against imports, although underlying demand also improved slightly, he said.
Vedoya expects infrastructure projects, gas pipelines, renewable energy investments and data centers to support demand in coming quarters. He said the company’s outlook does not yet include additional demand that might result from an agreement on U.S. Section 232 trade measures.
Fourth-quarter shipments are expected to decline modestly because of year-end seasonality and planned stoppages on some production lines. Brizzio said higher revenue per ton should more than offset rising raw material and slab costs, supporting a modest improvement in margin per ton.
Vedoya said Mexican prices could rise slightly further in the fourth quarter, with delayed pricing for industrial customers also affecting results in the first quarter of 2027. He said first-quarter EBITDA could improve from the fourth quarter as volumes recover, though Brazil and Argentina also face seasonal weakness around year-end.
The CEO said Mexican customers’ inventories remained low and that Ternium had room to replace more imports. More than 400,000 tons a month of flat products the company can produce are imported into Mexico, he said.
Pesquería Startup and Capital Spending
Ternium expects to start production at its new slab mill in Pesquería, Mexico, in February 2027. Vedoya said the facility will increase vertical integration and provide local industrial customers with shorter lead times and a lower-carbon product.
He cautioned that 2027 will be a ramp-up year for the complex equipment and that a significant profit contribution from the steel shop is more likely in 2028. Using locally produced slabs instead of purchased material could provide a margin benefit of $50 to $100 per ton, he said, with a potential additional price premium for products with low carbon emissions and regional production credentials.
Cash from operations totaled $613 million in the third quarter, including a $148 million increase in working capital. Capital expenditures were $398 million, much of it related to Pesquería, leaving free cash flow of $215 million. Ternium ended September with $22 million in net cash, compared with $112 million in net debt at the end of June.
For the first nine months of 2026, adjusted EBITDA rose 73% year over year to nearly $2 billion, while capital spending fell almost 40% to $1.2 billion as the company moved beyond the peak of its investment cycle.
Brizzio said stronger cash generation and lower capital spending could support higher dividends if the positive trend proves sustainable. Vedoya said the company has no net cash target and could consider changes to its dividend policy in late 2027 or 2028.
Brazil Mining and Trade Pressures
Vedoya described Brazil’s steel market as challenging, citing weak consumption and rising imports from Vietnam, South Korea and Egypt after anti-dumping measures reduced imports from China. He also pointed to pressure from imported steel contained in finished products such as vehicles.
Ternium has temporarily stopped part of its MUSA mining operation because of iron ore prices and freight costs. Brizzio said mining shipments fell in the third quarter and are expected to decline further in the fourth.
A decision on the Compactos mining project is still expected in 2027, Vedoya said. Ternium is examining alternatives, including a potentially smaller initial investment followed by a later phase, but has not determined whether those options are feasible.
In Argentina, Vedoya said energy, mining and agriculture continue to support activity, while construction remains weak and home appliance and automotive producers face soft demand and import competition.
Asked about buying remaining shares in Brazilian steelmaker Usiminas, Vedoya said streamlining the corporate structure remains a long-term objective, but the company has no current path to a transaction. Pending legal matters and Brazil’s future market conditions are among the factors to consider, he said.
About Ternium (NYSE:TX)
Ternium is a steel producer serving customers across the Americas. Its operations span the steelmaking process, from iron ore extraction and processing to the manufacture and distribution of steel products.
The company produces flat and long steel products, including slabs, hot- and cold-rolled steel, coated steel, tinplate, and bars. These materials are used in industries such as construction, automotive manufacturing, appliances, energy, and packaging.
Ternium’s roots include steel businesses in Argentina and Mexico, and it was established in 2005.
