Ternium S.A.

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Good morning, and thank you for joining us. My name is Sebastian Marti, and I am Turing's Global IR and Compliance Senior Director. Yesterday, Turing released its financial results for the fourth quarter and full year 2024. This call is meant to provide additional context to that presentation. I'm joined today by Maximo Bedoya, Turing's Chief Executive Officer, and Pablo Rizzo, current Chief Financial Officer. We'll discuss the company's business environment and performance. After our prepared remarks, we'll open up the floor to any questions. Before we begin, I would like to remind you that this conference call contains forward-looking information that 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 two in today's webcast presentation. You will 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 turn the call over to Mr. Bedoya.

Thank you, Sebastian. Good morning, and thanks, everybody, for joining us today. Tonium reported shipments of 16 million tons for 2024 with adjusted EBITDA of $2 billion on a 12% margin. In a challenging year for the steel industry, our operation generated $2 billion in cash. The company's net cash position remained strong at $1.6 billion by the end of December, even though CapEx was close to $2 billion in the year, and we paid dividends of more than $600 million. During the quarter, we made significant progress on our downstream expansion project in Mexico. and are steadily advancing in the ramp-up process. We currently have two remaining lines under construction for the completion of this project, a cold rolling mill, whose planned startup has been advanced to December of 2025, and a hot-dip galvanized line, which will also commence operation by the end of the year. Another positive development of the fourth quarter is that the wind farm in Argentina began generating electricity in December. All of the 22 wind turbines have already been installed. The wind farm is expected to deliver approximately 480 gigawatt hour per year, replacing the majority of our purchase of third-party electricity in the country. This initiative provides substantial economic benefits and assists the company in achieving its decarbonization goals. I would like now to address the latest developments in international trade. A surge in US trade actions during the last few weeks has been creating substantial uncertainty in the global market. Mexico, together with Canada, are among the countries that have been singled out by the recently announced trade measures. In addition, steel has been a specific target. As the US announced, it will revoke all country specific exceptions to the 25% tariff on steel import under Section 232. I'm a strong believer in the advantage of the USMCA. There is a deeply complementary relationship among USMCA members, which has led to increased trade, investments, and job creation within the North American region. The USMCA has played a critical role in enhancing the competitiveness of the whole area. Therefore, we believe that the value chains among these nations will continue to thrive Further deepening commercial integration among the three countries is the way to go and it will be beneficial for all of them. Cernium is well equipped to navigate any potential trade scenarios due to its ability to adapt its structure in response to changes in the landscape. As always, we will continue our effort to enhance the efficiency of our operations to reduce costs. We are ready to compete effectively in today's uncertain environment. Now, let's review our main steel markets. In Mexico, shipments in the fourth quarter decreased due to a weaker than expected commercial market. The industrial market in Mexico is showing steady activity levels following an increase of 6% in auto industry's production in 2024. On the other hand, weak government infrastructure investment and uncertainties surrounding trade actions are affecting volumes in the commercial market. This will probably continue to happen until a definitive understanding of the final trade measures is achieved. Moving now to Brazil, 2024 was a positive year with flat steel apparent consumption increasing a healthy 10%. Vehicle productions grew strongly as well with a 10% increase compared to 2023. 2024 saw significant operation improvement in Usiminas resulting from investment made in recent years, particularly the relining of blast furnace number three. As a result, Usiminas produced 3.2 million tons of crude steel, among the highest volume levels of the last 10 years. On the other hand, imports of flat steel exceeded 3 million tons in 2024, setting a new record. China remains a destabilizing factor in the international steel market. The construction of steel consumption in its domestic market in recent years has led to a disproportionate increase in export under unfair trade conditions. Imports from China have significantly disrupted the Brazilian market, accounting for approximately 80% of flat steel imports. The import quota system implemented last year did not achieve its goal. We look forward to more effective trade measures from the Brazilian government, especially as other countries strengthen their defense against unfair trade, potentially causing a diversion of China's export to other markets. On a different subject, we are very proud to share that last week, the Roberto Roca Technical School in Santa Cruz, located near Ternium Brazil facility, began its first classes. This is the second technical school that Ternium built and operates. with the first one active since 2000 near our pesqueria facility in Monterrey, Mexico. The school will provide high quality technical education to its initial cohort of 192 students in the community and will accommodate close to 600 students over the next three years. All students at the Roberto Roca Technical School Network receive scholarship based on their family financial needs, ensuring equal access to education. This initiative reflects Ternium's dedication to supporting the development of the communities near its production site and creating transformative opportunities for their youth. Turning now to Argentina, In 2024, shipments experienced a year-over-year decline of approximately 20%. This reduction was primarily due to the implementation of macroeconomic measures by the Argentine government, which aimed to address substantial economic imbalance. Although Argentina's steel demand has been recovering throughout 2024, it's starting from a low base has yet to return to historic sales volumes. The authorities in Argentina are advancing the transformation of the local economy through a process of deregulation, reducing public spending and taxes, and opening up trade. Although we welcome this transformation, and even progress in this area could increase the risk of higher imports of unfair trade products in the steel value chains. I would like to close my prepared comments with a few thoughts. U.S. trade measures against imports are currently fluid. During the first half of 2025, it is likely that we will continue to navigate this uncertain scenario in the North American region. We trust that at the conclusion of the negotiations, rational decision-making will prevail, resulting in a region experiencing significant growth and improved defense against unfair trade practice. In the same line, the Plan Mexico recently announced by the Mexican government aims to address issues related to regional integration with a focus on industrializing for import substitution. The plan outlines strategies to attract investment and increase the local and regional content of manufactured goods throughout nearshoring, infrastructure development, and support for MSEs. In this context, our expansion projects in Mexico are crucial for strengthening Ternium's integration into the North American market. As rule of origin, regardless of melted and poor steel, products are expected to become stricter. In Brazil, Usimira's manufacturing facility achieved significant efficiency improvements in 2024, a trend we expect will continue in 2025 as operations are further streamlined. Finally, given the improvements in macroeconomic conditions in Argentina, I expect our achievements will continue recovering throughout this year. This concludes my remarks. Pablo, please proceed with the review of Ternium's performance in the fourth quarter.