Ternium S.A.

Hello, everyone, and welcome to the first quarter 2025 results call. Please note that this call is being recorded. After the speaker's prepared remarks, there will be a question and answer session. If you'd like to ask a question during that time, please press 4 followed by 1 on your telephone keypad. Thank you. I'd now like to hand the call over to Sebastian Marti. Please go ahead.

Good morning, and thank you for joining us. My name is Sebastian Marti, and I am Eterning's Global IR and Compliance Senior Director. Yesterday, Eterning released its financial results for the first quarter of 2025. This call is meant to provide additional context to that presentation. I'm joined today by Maximo Bedoya, Eterning's Chief Executive Officer, and Pablo Grillo, Eterning's Chief Financial Officer, who will discuss the company's business environment and performance. After our prepared remarks, we will open up the floor to your questions. 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 implied. Factors that do affect results are contained in our filings with the Security and Exchange Commission and on page two in today's webcast presentation. You will also find any references to non-IFRS financial measures reconciled to the most directly comparable IFRS measures in the press release issued yesterday. With that, I'll turn the call over to Mr. Rodríguez.

Thank you, Sebastián. Good morning, and thank you all for joining Sternium Conference Call. In the first quarter of the year, we reported a sequential increase in EBITDA driven by improved margins and slightly higher shipments. Trade tensions in recent months have created a climate of uncertainty, enticing interest business confidence, and posing risk to global economic growth. On the other hand, there is a consensus that unfettered trade practices in recent decades have adversely impacted manufacturing around the world. Many countries are now addressing this issue, which is a promising development. In this content, the operating environment in Mexico has been challenging, as uncertainty is affecting investment and consumption. However, the current administration has shown support for reducing reliance on Asian suppliers within the North American regional market. And my view is that they are doing a very good job in this front. In this line, the recent announcement of the Plan Mexico aims to enhance industrialization and import substitution to strengthen North American supply chains. includes strategies to attract investment and increase the local and regional content of manufactured goods through nearshoring, infrastructure development, and support for SMEs. In addition, the future renegotiation of USMCA presents a significant opportunity for Mexico to further align its trade strategy with that of the United States. while also enhancing the defense of the Mexican market against unfair trade practices from Asian countries. Moving now to Brazil, the local market is showing resilient steel demand, but the issue of unfair trade practices persist, with a significant year-over-year increase in imports during the first quarter of this year. Brazilian trade authorities recently released preliminary results of an anti-dumping investigations on imports from China of cold-rolled steel and corrosion resistant steel, identifying substantial dumping margins. But unlike the usual practice in many countries, the authorities did not recommend the preliminary position of anti-dumping tariffs. A final determination is expected to be made in October. In Argentina, the microeconomic situation is showing signs of improvement, which provides optimism for our shipment in this market in the upcoming quarters. In this demanding trade environment, our goal is to enhance Ternius competitiveness by increasing operational efficiency and reducing costs. Specifically, in recent quarters, we have been focusing on several initiatives that have already yielded good results on per annum numbers. We will continue to implement similar actions in the coming quarters to maximize the profitability of our operation during these uncertain times. For the second quarter, we anticipate achieving a double-digit EBITDA margin supported by the increase in realizes prices in Mexico, as well as by our cost reduction initiatives. I would now like to provide an update on our expansion project in Mexico following the completion of our most recent review. The pickling and finishing lines have already started operation, and the cold rolling mill and galvanized lines are scheduled to begin on time by the end of December. The steel slab mill and DRI facilities, known as the upstream project, and now anticipate to be operational by the fourth quarter of 2026, which represents a slight delay from the original schedule. In this review, the total capex for the whole expansion project has revised to $4 billion, representing an increase of approximately 16% compared to our previous estimated disclosure in February of 2024. The primary focus contributing to the project's cost increase were higher assembly and construction prices and larger volume of structures and civil works. The project will put Pernium in a whole new competitive position. The integration of advanced technology in our picking, finishing, code rolling, and galvanizing lines will not only increase operation efficiency, but also enhance product quality and expand our product range. In addition, by completing the upstream project, we will be able to provide our customers with a complete product range up to the most demanding industrial applications. This will be the first time that an electric arc furnace-based mill will be able to produce exposed material automotive steel with significantly lower CO2 emissions than previously possible. In addition, this expansion capacity will enable us to meet our expectation of growing melted and pool requirements in the USMCA region. Let me conclude by my prepared comments with some final remarks. Global trade is currently undergoing major changes, resulting in considerable market uncertainty. However, adjustments were necessary. as China's progress with no competitive trade practices has contributed to declining manufacturing, employment, and value addition over the past two decades. In North America, both the U.S. and Mexico administration are working to address this issue. Therefore, it would be reasonable to expect an agreement on trade issues between the two countries. Although uncertainty and volatility are currently affecting consumption and investment, Impacting steel demand in Mexico market, we expect implementation of Plan Mexico to work together with a better alignment of Mexico trade strategy with that of the U.S. will enable these countries to better defend the region against unfair trade. This could result in a gradual shift in production from Asia and other countries to the USMCA region. All in all, I expect the USMCA to become stronger and better prepared to continue growing. Now, Pablo, please go ahead with the review of premium performance in the first quarter of this year.