Nemak S A B De C Fnl Ind

Good morning everyone and welcome to NEMAX fourth quarter 2025 earnings webcast. I am Denise Reyes, NEMAX investor relations officer, and I am pleased to host today's call along with Armando Tamez, NEMAX CEO, and Alberto Sada, CFO, who are here this morning to discuss the company's business performance and answer any questions that you may have. As a reminder, today's event is being recorded and will be available on the company's investor relations websites. Armando Tamez, our CEO, will lead off today's call by providing an overview of business and financial highlights for 2025 and the company's outlook for 2026. Alberto Sada, our CFO, will then discuss our financial results in more detail. Afterwards we will open for a Q&A session which participants may join live or submit written questions using the Q&A function. Before we get started, let me remind you that information discussed on today's call may include forward-looking statements regarding the company's future financial performance and prospects, which are subject to risks and uncertainties. Actual results may differ materially and the company cautions you not to place undue reliance on these forward-looking statements. NIMAC undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events or otherwise. I will now turn the call over to Armando Tamez.

Thank you, Denise. Hello, everyone, and welcome to NIMAC's fourth quarter 2025 earnings webcast. I will begin with an overview of our 2025 results and strategy execution before moving on to our 2026 guidance. Throughout 2025, NIMAC remained focused on strategic and financial objectives, demonstrating resilience amid an increasingly complex trade environment. Supported by a solid commercial position, the company successfully navigated shifting external conditions while continuing to advance financial priorities. Given the slower pace of electrification, NIMAC leveraged opportunities in the ICE powertrain segment while also maintaining steady progress in the e-mobility, structured, and chassis application segment, ensuring a balanced and adaptable market position. Full-year EBITDA was within our guidance range at $591 million, reflecting the company's continued focus on operational discipline and profitability. The top line remained stable at $4.9 billion, supported by resilient customer demand despite the changes in the global trade landscape. Continued efforts to enhance operational efficiency A key highlight of 2025 was the announcement of the agreement to acquire pure feature casting solutions. This acquisition is a milestone and represents a significant step forward in strengthening NIMAC's long-term strategic position. The business brings highly complementary capabilities in light weighting, enhances our skills in high-pressure die casting, and expands our offering of complex aluminum and magnesium components for the e-mobility, structured, and chassis application segment. In addition, the acquisition province our global footprint and customer reach, particularly by providing meaningful access to leading Chinese manufacturers. Building on this strategic step, in February 2026, the acquisition received full regulatory approval and closed successfully. I would like to extend a warm welcome to all GF Casting Solutions employees joining EMAC. We are excited to bring together two highly talented and complementary teams. With the transaction now completed, we are fully focused on executing a disciplined integration plan which is essential to realizing the full value of this acquisition. Effective integration will allow us to align operational processes, capture cost synergies, accelerate technology sharing, and ensure continuity and service excellence for our global customers. By combining the strengths of the two organizations, we are positioned to unlock meaningful operational, commercial, and innovation opportunities in the years ahead. Another important remark for the year is the successful ramp-up of production at our new facility in the Czech Republic, dedicated to wind mobility components. This plant incorporates advanced joining and assembly technologies and is now manufacturing highly complex engineering components that support our customers' electrification programs. This achievement underscores our ability to adapt to evolving market needs, strengthen our global footprint, and expand our advanced manufacturing capabilities. In 2025, we secured $440 million in annual revenue from awarded business across our global operations, of which 85% corresponded to ICE powertrain programs and 15% to immobility, structure and chassis applications. The significant amount of ICE business awarded underscores the extended lifecycle of this segment, while still capturing opportunities in immobility and structural components. Importantly, most of these programs will utilize existing assets, reinforcing our disciplined approach to capital allocation and helping drive a meaningful reduction in CAPEX. In parallel, We are pursuing a robust pipeline of approximately $1.9 billion in new business, positioning ourselves to capture future growth opportunities across our key segments. We remain firmly committed to delivering competitive and cost-effective solutions to our customers, reinforcing our focus on operational excellence and long-term value creation. Moving on to innovation, throughout the year, we continue to build on our technological capabilities, advancing key initiatives to enhance process efficiency and expand our technical toolkit. Across our operations, we made meaningful progress in improving the high pressure die casting process, implementing efficiency and cost optimization measures, and scaling these improvements across additional facilities to broaden their impact. We also enhance our real-time job floor information system, adding an AI power layer designed to transform complex operation data into actionable insights. This reflects our ongoing commitment to leverage advanced technologies to strengthen process control and improve our competitive position. Moving on to sustainability, I am pleased to share that NIMAC achieved an A- rating from the carbon disclosure project for the second consecutive year. Once again, placing us within the leadership band, which is the highest tier of CDP's scoring system. This recognition reflects the company's strong environmental governance, our comprehensive science-based actions to reduce emissions, and our commitment to transparent climate disclosure. We are proud to see our efforts consistently recognized at this level. Once again, we pledge our long-term dedication to responsible operations and climate stewardship. In addition to progress on climate initiatives, NIMAC was again recognized for its commitment to people and workplace excellence, earning top employer certification in Brazil, Germany, Mexico, Poland, and the United States. Notably, NIMAC ranked in the top five certified companies in Brazil. This distinction reflects the strength of our people-focused practices, including talent development, organizational culture, and employee well-being. Achievements such as these underscore the importance we place on creating an environment in which our teams can grow, innovate and contribute to long-term value creation. We recognize the key role our employees play in advancing the company's strategy. And despite our high marks, we continually seek to improve. This concludes my initial remarks. Thank you for your attention. I will now hand the call over to Alberto.

Thank you, Armando. And good morning everyone. I will begin with an overview of NEMAX business performance for the full year and fourth quarter of 2025, followed by a summary of industry developments and financial results. During 2025, we continue to prioritize free cash flow generation through sustainable margin improvements and disciplined capital allocation. On the results fronts, both the fourth quarter and the full year 2025 had a high comparison base versus the same periods of last year. S A B De C Fnl Ind From a regional perspective, during the fourth quarter, the seasonally adjusted annual rate for light vehicle sales in the U.S. was 15.7 million units, 5% lower than last year, mainly due to the rollback of the EV tax credits. For the full year 2025, this metric increased 2% to 16.4 million units as consumers continued showing resilience amid supportability concerns, partially offset by OEM incentives. Light vehicle production in North America during the fourth quarter decreased 2% year-over-year to 3.6 million units amid cautious production schedules and certain supply chain disruptions, with inventories stable at 46 days of sales. For the full year 2025, production was 15.2 million units, 1% below the 15.5 million units in 2024, due to the same factors. In Europe, light vehicle seasonally adjusted analyzed sales increased 7% in the fourth quarter to 17.4 million units. S A B De C Fnl Ind to 3.8 million units, due mainly to reduced export demand as well as supply chain constraints, particularly microchip shortages. For the full year 2025, light vehicle production totaled 15.4 million units, 2% lower than last year due to the same factors. In China, the seasonally adjusted annual rate of light vehicle sales declined 4% year-by-year in the fourth quarter to 27.2 million units due mainly to the expiration of local government incentives. For the full year, light vehicle sales in China were 27.1 million units, 6% up compared to the previous year. This is attributed to intense competition among local OEMs and government trading incentives as well as export activity. In terms of light vehicle production, China posted 1% and 10% year-over-year increases for the fourth quarter and full year 2025 respectively, amounting to 9.6 million and 32.7 million units driven by domestic and export demand. In Brazil, the seasonally adjusted annual rate of light vehicle sales for the fourth quarter and full year 2025 was 2.9 million and 2.6 million units respectively, reflecting a steady growth in the quarter and a 3% year-over-year increase for 2025 on resilient consumer behavior. South America's light vehicle production experienced a 4% decrease year-over-year in the fourth quarter of 2025 amounting to 0.8 million units due to calendar effects. On a full year basis, light vehicle production in the region increased 2% year-over-year to 3.0 million units due mainly to stable local demand and higher exports. Turning to our financials, volume increased 2% and decreased 3% compared to the four quarter and full year 2024, totaling 9.2 million and 38.4 million equivalent units respectively. This was due mainly to customer inventory management strategies due to geopolitical pressures and the declining e-mobility adoption rates among our customers during the year. Despite this, full year volume exceeded the high end of our guidance of 37 million units. Revenue in the fourth quarter of 2025 totaled $1.2 billion, 1% higher than during the same period of 2024 due to higher volume and higher aluminum prices. For the full year, revenue was $4.9 billion, stable year-over-year. Lower volume was partially offset by higher aluminum prices, the carryover effect from repricing achieved in previous years, as well as favorable effect from the euro appreciation. During 2025, we continue to navigate alongside our customers the transition between ICE and electric powertrains, relying on our talent, footprint and technology, which enable us to deliver solutions independently of the propulsion system of the vehicle. Our electric mobility, structure and chassis application segment accounted for 9% of our total revenue, highlighting our ability to adapt across different electrification scenarios. EBITDA for the fourth quarter and full year 2025 decreased 25% and 7% year-over-year, totaling $117,591,000,000 respectively. This reduction was related to extraordinary launching expenses and currency effects in North America, in addition to high comparison effect from commercial negotiations recorded in the fourth quarter of 2024. In turn, EBITDA per equivalent units for the fourth quarter and full year were $12.8 and $15.4 respectively, down 26% and 4% year-over-year respectively. During the fourth quarter, we recorded impairments and reorganization expenses for $85 million related to footprint optimization initiatives. This included the write-off of assets in our facilities in Monclova, Mexico and most in the Czech Republic, where we are ramping down and ceasing operations and we relocate production to nearby facilities, respectively. This amount compares against $83 million in 2024. All this said, during the fourth quarter, the company recorded a $56 million operating loss compared to a $39 million loss in the same period of last year. related to the aforementioned impairments and reorganization expenses. For the full year, operating income was $97 million, which compares to $145 million in 2024 due to the same factor. During the quarter, NEMAC reported a net loss of $100 million compared to a $51 million loss in the same period of the previous year. Net result for the year was a $116 million loss compared to a $25 million profit in 2024, mainly due to the combination of the aforementioned impairments and foreign exchange losses mainly related to the effect on our liabilities of depreciation of the euro against the dollar. Excluding these non-cash effects of impairments and foreign exchange losses, the net result for the full year would have been a $75 million profit. Turning to our financial position, our net debt at the end of the quarter was $1.4 billion, a sequential improvement of $190 million, a 9% lower year-over-year. Cash flow generation during the quarter was strong, Our net debt to EBITDA ratio was 2.4 times stable versus 2.4 times in the previous year. In turn, the interest coverage ratio improved to 5.5 times from 4.9 times at the end of the same period of last year. Capital expenditures in the fourth quarter and full year 2025 were $99 and $306 million respectively, a 9% and 21% reduction compared to the same period of 2024. We remain committed to streamlining our capital investments. Moving to our regional results during the quarter. In North America, revenues declined 1% year-over-year to $653 million due to high comparison base associated with one-time commercial negotiations in the fourth quarter of 24. EBITDA was $43 million compared to $121 million in the same quarter of last year. The year-over-year reduction reflects extraordinary operating expenses of approximately $30 million in the fourth quarter of 2025, primarily related to production ramp ups and the appreciation of the Mexican peso, combined with the high comparison base from one-time commercial negotiations recorded in the fourth quarter of 2024. In Europe, revenue increased 5% year-over-year to $410 million despite lower volume, due to the translation effect of the appreciation of the euro. In turn, EBITDA in this region was 55 million compared to 19 million in the prior year, reflecting improved operating efficiencies and a favorable currency translation effect. Revenue in the rest of the world was $160 million, up 2% compared to the fourth quarter of 24, due mainly to favorable volume and product mix, even though in this region increased to $20 million, benefiting from the same factors. Related to capital allocation, during 2025 we repurchase around 68 million shares, and by the end of December of 2025, the shares held in Treasury represents approximately 6.8% of our total outstanding shares. We will propose the cancellation of these shares in an extraordinary shareholders meeting, whose date we will announce in due time. As a reminder, our Annual General Meeting will take place on Wednesday, March the 4th. We kindly invite you as shareholders and to ensure your shares are represented. For any questions or inquiries, please contact our Investor Relations Department. As recently announced, we successfully closed the acquisition of George Fisher Casting Solutions Automotive Business for an enterprise value of $336 million on a cash-free and debt-free basis. The offer at closing payment amounted to $216 million, funded with existing cash. This reflects the agreed base purchase price, the inclusion of $113 million of cash at closing, and customary adjustments, including the assumption of $44 million of financial liabilities. The remaining consideration consists of holdbacks and a portion of vendor financing to be paid over a five-year term. We are very pleased with the successful completion of this transaction, which strengthens our strategic positioning, expands our technological capabilities, and enhances our overall business profile. We will start consolidating your Fisher Cassidy Solutions operations effective February 1st, 2026. As our product portfolio has significantly evolved over the years, from primarily cylinder heads in the 1990s to a broader range of products including engine blocks, transmission components, structural parts, battery housing assemblies, and now even additional materials such as magnesium and other alloys through the integration of George Fisher Casting Solutions, The relevance and comparability of our historical equivalent volume metric has diminished. Given the increasing diversity of products and materials, calculating a meaningful head equivalent measure has become less representative of our business. Accordingly, starting this year, we will discontinue reporting equivalent volume and instead provide further visibility into our revenue by segments. Our financial guidance will focus on revenue, EBITDA and capital expenditures, which we believe better reflect the performance and strategic direction of the company. In summary, during 2025, we continued executing our disciplined financial agenda, reducing net debt, streamlining capital investments, and strengthening free cash flow generation. With the integration of your FisherCasting solutions, we are reinforcing our competitive position and advancing our ability to create sustainable long-term value for our stakeholders. This concludes my remarks. I will now turn the call over to Armando.