Nemak S A B De C Fnl Ind

Good morning, everyone, and welcome to NIMAC's second quarter 2026 earnings webcast. I am Denise Reyes, NIMAC's investor relations officer, and I am pleased to host today's call along with Elbe Boyer, NIMAC's 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 website. Elbe Boyer, our CEO, We lead off today s call by providing an overview of business and financial highlights for the quarter. Alberto Sada, our CFO, will then discuss our financial results in more detail. Afterward, 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. NEMA can't take 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 Herve Wajar.

Thank you, Denise. Hello, everyone, and welcome to NEMAX Sobon Quarter 2026 Earnings Webcast. During the period, our revenue increased 19% year-over-year, primarily driven by contributions from the recently acquired operations and higher aluminum prices, while our underlying business remained broadly stable across key regions and customers. This solid top-line performance highlights the resiliency of our IC port-draining business and the execution of our growth strategy alongside a clear focus on translating this momentum into improved earnings generation. Within our global operations, we observed a particular dynamic in North America where results reflected the ongoing adaptation of our operations to a changing production mix with higher IC volumes than originally anticipated, primarily driven by market conditions. This shift has resulted in temporary extraordinary expenses as we align resources accordingly. Going forward, we expect these non-recurring items to gradually taper off. Within this context, The BDA declined 6% YoY, reflecting the impact of these temporary factors in North America, a negative forex exchange effect related to the Mexican peso, and a high comparison base that included one-time effects. On a sequential basis, however, Our financial performance improved with the ABD margin expanding from 9% in the first quarter to 11% in the second quarter, reflecting the initial benefits of our improvement plans and greater production stability. We are also advancing targeted initiatives to further optimize our manufacturing footprint, particularly in Europe, with the objective of enhancing efficiency, adjusting capacity utilization, and strengthening our overall cost structure. As we pursue these objectives, we remain confident in our ability to deliver improved margins performance. As I continue to deepen my understanding of NEMAC, my initial positive impressions have been borne out, particularly regarding our technical capabilities, long-standing customer relationships and the strength of our operations. From a strategic perspective, NEMAC is well positioned to capture value on both fronts, the resiliency and scale of our core IC port-ranked business and the long-term growth opportunity in e-mobility, structure and chassis application. Our IC powertrain business remains solid, supported by long-term customer programs, efficient use of existing assets, and a strong cash generation profile. Due to the strong and sustained demand of IC vehicles, we are confident this segment will remain highly relevant over the next decades. We are also making consistent progress in expanding our presence in e-mobility, structure and chassis applications. In recent years, we have built a strong strategic foundation to capitalize on this opportunity, which is further enhanced by our recent acquisitions. We are taking disciplined steps to continue developing our capabilities, improving our commercial position and scaling our participation in these technologies. Our strategy is to maximize the value of our IFC Portran business while advancing our position in e-mobility structure and chassis applications, translating this dual positioning into improved margins, stronger cash flow, and sustainable long-term value creation. Turning to the recently acquired operations, we continue to make solid progress across all work streams with successful conclusion of the initial 100-day integration phase. During this period, we ensured full business continuity and maintained seamless customer deliveries while successfully onboarding new colleagues into the organization. In parallel, we have begun integrating global systems and sharing best practices across operations. We have identified a number of synergistic opportunities across all work streams and that will allow us to pursue the long-term value creation potential of the transaction. We now estimate these synergies to be in the range of 20 to 40 million dollars and expect to capture the full benefit by 2027. As we move forward, our focus turns to execution, with emphasis on capturing synergies, advancing systems and process harmonization, and strengthening our joint value proposition. Integration is progressing as expected and we remain confident in delivering the anticipated strategic and financial benefits. Building on this progress, one of the key assets within the acquisition is our facility in Augusta, Georgia. This project is an important milestone in expanding our manufacturing footprint and advancing our capabilities in structural castings. The site has been developed as a highly automated state-of-the-art mega casting facility in the United States, supporting the production of large structural components. Construction of this facility is substantially completed, key equipment has been installed and the first production shots successfully achieved, marking an important step forward operational readiness. This phase is critical to ensuring consistent quality, operational efficiency and cost performance as volumes increase. We expect to begin operations in the second half of this year and will focus on ramping up production and achieving stable operations for 2027 and 2028. Turning to commercial activity, year to date we have secured approximately $400 million of annual revenue in awarded contracts. Of this amount, around 60% corresponds to IC powertrain programs, while the remaining 40% relates to e-mobility structure and chassis applications. This is consistent with our balanced positioning and reflects the continued relevancy of the IC segment alongside the growth potential of our e-mobility structure and chassis application segment, which accounted for 13% of consolidated revenue during the quarter. In terms of customer engagement and recognition, I am pleased to highlight that NEMAX received Porsche Supplier Quality Rating for 2025, achieving an A-grade classification at our Altenma and Dillingen facilities in Europe. This recognizes our ability to constantly meet demanding standards across quality, delivery and operational reliability. It also highlights the breaks of our capabilities in IC portrain and e-mobility structure and chassis applications, reinforcing our position as a trusted partner to a leading premium OEM. We are also actively engaging with emerging OEMs, particularly in China, as reflected in the organization of two recent technology days with some of our new Chinese customers. These events provided a focused platform to showcase our comprehensive portfolio of solutions across IC powertrain and e-mobility structure and chassis applications as well as our multi-material capabilities. Throughout these interactions, we held multiple high-level meetings with senior leadership and engineering teams, with in-depth discussions on application development, further technologies, and potential areas of collaboration. This engagement translated into tangible outcomes, including multiple commercial leads, technical inquiries, and follow-up activities such as front visits and additional meetings. We believe that strengthening our relationships with Chinese Orient will reinforce our presence in key markets and position NEMAC to capture further growth opportunities. During the quarter, we made solid strides in the e-mobility structure and chassis application segment, supporting customers across multiple regions with the start of production of several key programs. In Europe, We advanced important structural applications, including starting production of a mega brace for Ford, which is manufactured using high pressure die casting technology. In addition, production of a full EV battery housing for Mercedes-Benz EQ platform is ramping up at our new facility in the Czech Republic. This multi-material solution leverages our recently integrated joining and assembly capabilities and highlights our ability to deliver complex integrated systems. In China, we continued to expand our presence with leading OEMs through multiple program launches. We started production of a shock tower marking our first aluminium high-pressure die casting component for SAIC. We also initiated production of an EV differential case for BYD at our facility in Kunshan, leveraging the capabilities of our recently acquired operations. And in addition, we began production of a large shock tower for Lyoto at one of our facilities in Suzhou, further improving our position in high growth EV platforms. These program launches reflect the breadth of our capabilities from large structural components to complex multi-material systems and show our progress in scaling our participation in the e-mobility, structure and chassis applications segment across regions and customers. Turning to innovation, R&D and product development are highly active with a strong pipeline of projects across key areas of the business. Our development initiatives are further strengthened by the combined platform resulting from the recent acquisition. Our current portfolio project focuses on four main areas. First, we are advancing differentiated products with existing assets while we continue to see ample opportunities, particularly in high pressure die casting and structural components. Second, we are driving improvement in margin and competitiveness across Our core processes, including optimizing cycle times and enhancing process parameters, thus improving overall efficiency and cost performance. Third, we are leveraging sustainability as a commercial deconcierge. We've continued progress in developing low-carbon alloys and solutions aligned with our customers' decarbonization goals. And finally, we are exploring opportunities to expand our market participation, supported by our growing technology portfolio and our ability to expand our capabilities across a broader range of components and applications. Together, these efforts reflect our commitment to innovation as a key driver of competitiveness, profitability and long-term value creation. In Sustainability Matters, I am pleased to share that NEMAC was included in the Dow Jones Best in Class indices for the seventh consecutive year. This recognition reflects our excellent environmental, social and governance practices, as well as our commitment to integrate sustainability into our strategy and operation. In particular, it highlights our focus on operational efficiency Emissions Reduction and Responsible Resource Management along with our dedication to transparency and strong governance standards. This concludes my remarks. Thank you for your attention and I will now hand the call over to Alberto.

Thank you. Thank you, Hervé. Good morning, everyone. I will begin with an overview of automotive industry developments across our key regions, followed by a review of our consolidated and regional financial results for the second quarter of 2026. During the quarter, revenue increased 19% year over year, mainly reflecting the incorporation of the recently acquired operations and higher aluminum prices. EBITDA declined 6% compared to the same period of last year, primarily due to lower amount of commercial compensations or an exchange effect from the Mexican peso appreciation, as well as extraordinary operating costs associated with adjustments in some production lines in North America, which are running at high utilization rates. Turning to the automotive industry, in North America, market conditions remain generally resilient. Vehicle inventories remain largely unchanged between 49 and 50 days of supply, reflecting a balanced supply and demand environment. On the production side, output decreased 1% year-over-year to 3.9 million units, while OEMs continued awaiting initial discussions regarding the renewal of the USMCA. Regarding the USMCA, Mexico and Canada both confirmed support for extending the agreement, while the US opted to continue working toward an updated version rather than renew the current terms. This opens an annual review process as the parties work toward alignment ahead of the treaty's 2036 term. The agreement remains fully enforced today, with existing preferential tariffs across North America continuing without interruption. Tots between the parties continue, with topics like automotive content rules and Section 232 tariffs on steel and aluminum reportedly among the areas under discussion. We reiterate that under NEMAX commercial agreements, Our customers take possession of the products on an ex-work space at our facilities, taking full responsibility for all logistics, export and import activities, including duties. We remain confident in the strength of our North American operations and will continue to monitor the process closely. In Europe, sales have been supported by electrification, increasing 3% year-over-year to 16.9 million units. also on the back of vehicle imports, mainly from Asian OEMs. In turn, production decreased 6% to 3.9 million units, mainly to lower exports to the United States and China, which may benefit our American customers. In China, market conditions remained challenging during the quarter, contracting 22% year-over-year on a start basis to 22 million units, mostly related S A B De C Fnl Ind S A B De C Fnl Ind Increasing sales on a star basis to 3.1 million units. In parallel, production in the region grew 4% to 700,000 units supported by strong export activity. Turning to our financial results, Please note that all 2026 results include the consolidation of your fissure casting solution operations. Revenue was $1.5 billion, representing a 19% increase versus the second quarter of last year. This improvement is driven by the incorporation of the recently acquired operations contributing with 157 million dollars and higher aluminum prices and to a lesser extent to favorable foreign exchange effects in Europe and rest of the world. ICE power train revenue total approximately 1.3 billion dollars while e-mobility, structure and chassis revenue amounted to approximately $197 million, representing 13% of consolidated revenue. EBITDA was $171 million, below the $182 million reported in the second quarter of 2025. The year-over-year decline reflects the high comparison base associated with one-time compensations recorded last year, as well as increased operating expenses in North America related to higher production at some facilities and the adverse effect of the Mexican peso appreciation against the U.S. dollar, which more than offset the contribution of the acquisition. Operating income totaled $49 million compared to $77 million in the same period of last year, mainly reflecting the lower EBITDA performance Extraordinary costs related to the acquisition and higher depreciation and amortization from the integrated assets. It's worth noting that SG&A this quarter includes these extraordinary costs as well as a reclassification of costs from cost of goods sold to SG&A related to the previous quarter, which altogether add up to approximately $15 million. Excluding these extraordinary effects, We expect recurring SG&A to be in the range of $110 million per quarter. Net result was a $13 million loss driven by the lower operating income and higher income tax, partially offset by lower non-cash foreign exchange losses. Turning to the balance sheet, Net debt stood at approximately $1.76 billion at the end of June. As anticipated, net debt levels remained stable despite the normal seasonality of working capital requirements during the first half of the year, combined with financing needs associated with higher business activity and the integration of acquired operations. Importantly, we expect working capital consumption to normalize progressively during the second half of the year. On a pro forma basis, the net debt to EBITDA ratio stood at approximately 2.9 times versus 2.4 times at the year end, reflecting the seasonal working capital increase as well as the debt incurred for the acquisition of GF Casting Solutions. Despite this increase, our commitment to deleveraging remains unchanged. We continue targeting leverage levels closer to 2.0 times over the medium term through a combination of EBITDA growth, difficult capital allocation, and free cash flow generation. In turn, interest coverage ratio was 5.2 times which compares versus 4.9 times last year. Cash and cash equivalents total approximately $284 million, providing ample liquidity and financial flexibility. In turn, capital expenditures total $110 million during the quarter, above the same period of last year. The increase was mainly driven by investments associated with the Georgia facility, which remains a strategic priority as we continue preparing for future structural and immobility programs. We continue applying a disciplined approach to capital location, prioritizing projects with attractive returns, and leveraging existing assets whenever possible. Moving to our regional results, In North America, revenue increased 2.5% year-over-year to $704 million, supported by stable volume and higher aluminum prices. In turn, EBITDA declined 31% compared to the same period of last year to $61 million, S A B De C Fnl Ind S A B De C Fnl Ind and favorable foreign exchange effects. EBITDA increased 17% compared to last year to $80 million, reflecting the contribution from the acquired operations, partly offset by worn-off commercial items. In the rest of the world, revenue increased 34% year-over-year to $229 million. Benefiting from the additional operations incorporated through the acquisition and a favorable product mix, EBITDA improved 21% to $30 million as a result of the contribution from the expanded operations. Overall, we remain focused on executing our strategic priorities while maintaining financial discipline. The integration of GF casting solutions continues progressing according to plan and we remain committed to accelerating synergy capture, improving profitability and strengthening free cash flow generation. Supported by our diversified footprint, solid liquidity position, and proactive approach to capital management, we believe NEMAC remains well positioned to continue creating sustainable long-term value for our stakeholders. With this, I would like to turn the call back over to Denise.