Nemak S A B De C Fnl Ind

Good morning, everyone, and welcome to NIMAC's third quarter 2026 earnings webcast. I am Denise Reyes, NIMAC's investor relations officer, and I am pleased to host today's call along with Herve Guayer, 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. Herve Guayer, 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. Afterwards, we will open for a Q&A session, which participants may join live or submit written questions via 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 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 Herder Weyer.

Thank you, Elise. Hello everyone and welcome to NEMAT's third quarter 2026 earnings webcast. During the quarter, our top line increased 22% year over year, reflecting a stable industry environment in North America, as well as contributions from the recently acquired operations in Europe and the rest of the world. The e-mobility structure and chassis applications segment represented approximately 14% of our revenue during the quarter, highlighting the continued evolution of our portfolio and the increasing contribution of these applications to our overall business. This strong performance reflects the benefits of our diversified footprint and the strategic actions we have undertaken to broaden our capabilities, customer base, and geographic reach. A big DEA totaled $174 million, increasing 21% year-over-year, reflecting disciplined execution across the organization and continued progress in our integration and operational initiatives. As we move forward, our focus remains on capturing the opportunities created by our expanded platform, leveraging the strength of our broader portfolio and further enhancing operational efficiency across the organization. We believe these efforts will strengthen our competitive position, support sustainable financial performance, and drive long-term value creation for our shareholders. Turning to recently acquired operations, I am really pleased to report continued progress across all work streams. The integration process has been positive and aligned to plan, supported by close collaboration between teams and encouraging results in the area ranging from operations to commercial to finance and technology. Based on the work completed to date, we continue to see further potential for value creation across the merged organization. Annual synergies are currently estimated in the range of 20 to 40 million dollars, with benefits beginning to materialize in 2027 and building thereafter. Beyond the financial benefits, this acquisition represents a transformative milestone for NEMA. It significantly expands our technological capabilities, customer relationship, geographic reach, and participation in attractive growth segments, particularly within e-mobility, structure, and chassis applications. Importantly, it also broadens our product portfolio with highly engineering aluminum and magnesium components, strengthening our position in advanced lightweighting solutions. The strategic rationale of the transaction is already reflected in increased commercial activity, a more robust order book and a growing pipeline of opportunities with both existing and new customers. I am particularly encouraged by the cultural fit we see across the organization. We are increasingly S A B De C Fnl Ind S A B De C Fnl Ind During the quarter, we successfully completed the refinancing of our 2028 Euro-denominated senior notes, which is an important milestone in proactively managing our capital structure. The transaction combined access to the Mexican capital market with bank financing, allowing us to extend our debt maturity profile and enhance financial flexibility. This outcome reflects the confidence of our financial partners and our continued commitment to maintaining a disciplined financial profile while supporting the company's long-term strategic objectives. Now, turning to commercial activity, we continued to build momentum in new business awards. During the third quarter, we secured approximately 220 million dollars in annual revenue from awarded contracts. S A B De C Fnl Ind S A B De C Fnl Ind S A B De C Fnl Ind S A B De C Fnl Ind of awarded business included 70% in the ICE powertrain segment and the remaining 30% in e-mobility structure and chassis applications. This reflects both the continued relevancy of our ICE business and the progress we are making in expanding our participation in higher growth applications. From a customer perspective, approximately 20% of the awarded business was secured with Chinese OEMs that we recently added to our portfolio. This reflects the progress we are making in broadening our customer base and expanding our presence in the world's largest automotive market. These efforts are fully aligned with our strategy to diversify our customer portfolio and adapt to evolving market dynamics while creating new avenues for profitable long-term growth. During the quarter, we achieved several important production startup milestones across our product portfolio. In the e-mobility structure and chassis applications, We launched a state-of-the-art magnesium cross-car beam for a premium European OEM manufactured in Austria. We also initiated production of advanced longitudinal members and shock towers for another premium OEM in Europe, North America and China. These structural components support large SUV platforms across internal combustion, hybrid and fully electric vehicle applications. Being our established customer base, we are also expanding our reach with OEMs in China. To this end, we launched innovative and lightweight shop-to-work programs with two leading Chinese OEMs, further strengthening our commercial position in one of the world's most dynamic automotive markets and highlighting the growing relevancy of our capabilities among leading Chinese manufacturers. Furthermore, these platforms are powertrain agnostic. Therefore, diversifying our exposure to different propulsion systems and supporting long-term growth opportunities across a broad range of vehicle architectures. At the same time, in the IC powertrain segment, we started manufacturing the first Rotacast V8 engine block at one of our facilities in Germany. This highly integrated and technically demanding application underlines the versatility and competitiveness of our proprietary technologies. We also launched production of a complex 7.3L cylinder head in North America, a highly engineered component that combines lightweighting, durability and high performance requirements. Overall, these launches reinforce the continued relevancy of the ICE powertrain segment and our ability to deliver differentiated and complex solutions to leading automotive manufacturers. I am also pleased to share that our commitment to operational excellence continues to be recognized by customers across different regions. During the quarter, our operation in Chongqing, China, received a Quality Excellence Award from Benjing Benz Automotive, recognizing the team's consistent delivery performance and reliable quality. In addition, our operation in Chennai, India, received the Supplier Sustainability Award from Tata Motors in recognition of its wastewater management initiatives and strong commitment to sustainability, environmental stewardship and operational excellence. These recognitions reflect the dedication of our teams around the world and reinforce the trust our customers place in NEMAC as a reliable partner. This concludes my remark. Thank you for your attention and I will now end the call over to Alberto.

Thank you Hervé. Good morning everyone. I will begin with the highlights of the quarter and an overview of the automotive industry developments across our key regions, followed by a review of our consolidated and regional financial results for the third quarter of 2026. During the quarter, revenue increased 22% year-over-year, mainly reflecting the incorporation of the acquired operations and higher aluminum prices. EBITDA grew 21%, to $174 million, supported by the contributions from the recent acquisition and progress on the integration and operational initiatives. In addition, we successfully concluded the refinancing of our 2028 Senior Notes, which extended our debt maturity profile, diversified our sources of funding, and reduced our refinancing risk. Turning to the automotive industry, market conditions remained mixed across our key regions during the quarter. In North America, consumer demand remained resilient. Light vehicle sales were stable year over year, while industry inventories remained steady at approximately 51 days of supply. Production in the region declined approximately 4% year-over-year during the quarter, mainly reflecting extended summer downtime in certain OEM operations. Regarding the USMCA, following the July review, the agreement remains enforced. And discussions among parties continue. We reiterate that under NEMAX commercial agreements, our customers take possession of our products ex-works at our facilities. Therefore, they are responsible for our logistics and export and import activities, including any applicable duties or tariffs. In Europe, light vehicle sales increased approximately 5% year-over-year during the quarter, supported by broader model availability, improving affordability, and continued electrification trends. Battery electric vehicles continue to gain share and now represent nearly one quarter of new vehicle registrations. However, regional production declined approximately 1% year-over-year. as stronger demand continued to be largely supplied through imports, particularly from Chinese manufacturers. In addition, lower exports and elevated energy costs remained headwinds for the industry. On the regulatory front, the legislative process continues on the European Commission's proposal to introduce greater flexibility in the post-2035 CO2 framework, which would replace the de facto ban on internal combustion engines with a 90% emissions reduction target. If adopted, this would reinforce the role of hybrid and plug-in hybrid powertrains throughout the next decade, an area where NEMAC remains well-positioned to support its customers. In China, market conditions remain challenging. Light vehicle sales declined approximately 24% year-over-year during the quarter as the impact of government incentive programs moderated and demand for internal combustion vehicles continued to weaken. Vehicle exports remained a key support for the industry, partially offsetting softer domestic demand. Nevertheless, light vehicle production decreased approximately 6% year-over-year during the quarter. In South America, industry conditions remained favorable. Light vehicle sales grew 11% year-over-year benefited from new model launches, fleet renewal activity and healthy labor market conditions, particularly in Brazil. In turn, regional light vehicle production increased approximately 3% year-over-year during the quarter, supported by manufacturing investments, new production lines and the continued expansion of local operations by Chinese OEMs. Overall, global light vehicle production is expected to reach approximately 91.5 million units in 2026, nearly 2% lower than last year, with China accounting for most of the decline. Outside China, the industry outlook remains broadly stable, and EMAX's diversified geographic and technology footprint S A B De C Fnl Ind which contributed $158 million, as well as higher aluminum prices. ICE powertrain revenue totaled approximately $1.29 billion, while e-mobility, structure, and chassis applications revenue amounted to approximately $214 million, representing 14% of consolidated revenue. EVDA was $174 million, 21% above the 143 million reported in the third quarter of 2025, and 2% higher sequentially. The improvement was due mainly to the contribution from the acquisition, a favorable product mix, and commercial negotiations. EBITDA margin was 11.6%, broadly stable versus last year. Operated income totaled $25 million compared to $26 million in the same period of last year, affected by non-cash asset write-offs of approximately $24 million and extraordinary costs related to our footprint optimization initiative. SG&A was $112 million, in line with the recurring level of approximately $110 million per quarter that we anticipated on our last call, and compared to $80 million in the same period of last year. The year-over-year change is related to the incremental expenses from the acquired business. In turn, net income was approximately breakeven in the quarter. mainly reflecting the impairments recognized during the quarter and higher financial expenses, including one-time costs related to the refinancing. These factors were partially offset by an income tax benefit. This compares with $25 million net income reported in the third quarter of 2025. Turning to the balance sheet, Net debt was approximately $1.76 billion at the end of September, broadly unchanged from the end of June. Cash and cash equivalents totaled approximately $320 million. On a pro forma basis, the net debt to EBITDA ratio stood at approximately 2.8 times, while the interest coverage ratio was 4.9 times. Our commitment to deleveraging remains unchanged, and we continue targeting leverage levels closer to the 2.0 times over the medium term through EBITDA growth, disciplined capital allocation and free cash flow generation. During the quarter, we fully refinance our 500 million euro 2.25% senior notes due in 2028. The transaction was funded through a combination of local bond issuance in Mexico and the bank loan. The local bond issuance for 7.4 billion Mexican pesos was swapped into approximately 371 million euros S A B De C Fnl Ind We have now completed the liability management for 100% of our outstanding notes. As a result, we extended the average life of our debt from approximately 3.2 years to 4.0 years, reducing refinancing risk and diversifying our funding sources while keeping a debt profile aligned with our global currency exposure. Capital expenditures totaled $100 million during the quarter, compared to $70 million in the same period of last year. The incremental capex was mainly driven by investments associated with the Augusta, Georgia facility, which remains a strategic priority as we prepare for future structural and immobility programs. We continue to apply a disciplined approach to capital allocation. Moving to our regional results. In North America, revenue increased 15% year-over-year to $747 million, driven by higher aluminum prices and product IVEDA increased 9% to $73 million as product mix, and commercial negotiations more than offset the impact of the appreciation of the Mexican peso. In Europe, revenue increased 30% year-over-year to $522 million, primarily due to the incorporation of the acquired operations and higher aluminum prices. EBITDA increased 32% to $66 million, reflecting the contribution from the acquired operations. In the rest of the world, revenue increased 32% year over year to $231 million, reflecting the contribution of the acquired operations. In turn, EBITDA improved 34% to $35 million. Overall, this quarter reflects progress in integration and a stronger financial foundation following the refinancing. We remain focused on 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. I will now turn the call back over to Denise.