Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to Ternium Fourth Quarter 2025 Results Call. [Operator Instructions] I'd now like to turn the call over to Sebastian Marti. Please go ahead. Sebastián Martí: Good morning, and thank you for joining us. My name is Sebastian Marti and I am Ternium's Global IR and Compliance Senior Director. This morning, we released our results for the fourth quarter and full year 2025. Today's call is intended to add context to that presentation. Joining me today are Maximo Vedoya, our Chief Executive Officer; and Pablo Brizzio, the company's Chief Financial Officer, who will review Ternium's operating environment and performance. Following 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 could affect results are contained in our filings with the Securities and Exchange Commission and on Page 2 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 today. With that, I'll turn the call over to Mr. Vedoya.

Thank you, Sebastian, and good morning, everyone. We appreciate you being here today in our conference call. Ternium delivered resilient results in 2025 overcoming challenging market conditions by adapting rapidly and acting proactively to protect profitability. The company's cost reduction and efficiency program generated $250 million in savings in 2025 over 2024. Key initiatives included enhancing blast furnace stability, negotiating service contracts, optimizing iron ore sourcing and improving logistics. As a result, our EBITDA margin reached 10%. Our performance, however, was affected by a fatal accident at Ternium Mexico in 2025 and another at Ternium Brasil during this quarter. Usiminas also experienced a fatality in 2025. We take safety extremely seriously and consider this event a significant setback. Such outcomes are unacceptable, prompting us to reinforce our safety programs. In response, we are ramping up preventive actions with a special focus on critical risk. Let me now review the latest changes in the global trade environment. The United States took significant trade measures in 2025 to counter unfair trade practices from China and other Asian countries. And this is reshaping the global steel market as other countries around the world are following a similar path. In Mexico, the government recently raised import tariffs on more than 1,400 tariff lines for countries without a free trade agreement. In the case of steel, import tariffs increased from 25% to 35%. Meanwhile, negotiations surrounding the North American region trade framework are ongoing. Many stakeholders from both sides of the border continue to engage in discussions. We have taken an active role in sharing the concerns and priorities of the manufacturing industry throughout this process. I see broad support for public policies that promote greater regional integrations. The aim is to keep trade fair, address imbalance, avoid transshipments and reinforce rule of origins. It…

Thanks, Maximo, and thanks, everybody, for being today with us in this conference call. So let me begin with a review of our operational and financial performance. If we move to the Page 3 in the webcast presentation, you can see that adjusted EBITDA declined slightly sequentially in the fourth quarter, which was in line with our expectations. EBITDA margin remained relatively stable, and there was a small seasonal decrease in shipment. As we move into the first quarter of 2026, we anticipate a sequential higher adjusted EBITDA mainly driven by an increase in EBITDA margin as well as growth in our shipments. Let's move to the next slide. Net income for the fourth quarter totaled $171 million in the fourth quarter. We saw a lower operating income, mainly impacted by onetime charges, mostly related to an impairment in Lesa, one of our mining operations in Mexico. On the other hand, we have a better income tax result, along with stronger financial results. In the sequential comparison, we have deferred tax write-down in Usiminas registered in the third quarter. Let's turn to Page 5 to review the performance of our steel segment. Shipments declined modestly during the quarter, primarily due to weaker volumes in other markets, mainly in the U.S. and in Brazil, reflecting seasonally slower activity. These effects were mostly offset by higher volumes in Mexico and in the Southern region. In Mexico, we saw better volumes to the commercial market as a result of government measures aimed at curbing unfair trade practices. Looking forward to the third quarter, we anticipate a sequential increase in shipments, mainly as a result of stronger demand in Mexico. Turning to Page 6. Steel cash operating income decreased sequentially, driven by slightly lower sales volume and a decline in realized steel prices, which…

[Operator Instructions] Your first question comes from the line of Rafael Barcellos from Bradesco BBI.

So firstly, I would like to get a bit more color on your outlook for the Mexican market. So demand today is still running well below the peak levels we saw a few years ago. So I'm trying to better understand how do you see the recovery path from here? Specifically, I mean, with the recently announced tariffs in Mexico, I mean, how should we think about the potential impact on demand growth for 2026? And other than that, I mean, how are you thinking about the likelihood of the timing of a USMCA deal? What potential impact if a significant part of this impact could be captured in 2026 or if it's a more story for 2027 and beyond could be helpful. And as a second question, turning to Brazil, I would like to get your thoughts on the recently announced antidumping measures. I mean, how do you expect these measures to translate into pricing dynamics over the past few quarters, should we think about a relatively quick pass-through into domestic prices? Or is the impact felt to be more gradual depending on inventories and competitive behavior? And if you could even like give some color on the magnitude of a potential hike here?

Thank you, Rafael. I'll start with the first question, the Mexican market and demand. You're quite right. Demand is very low. It was very low in Mexico in 2025. Apparent consumption of steel decreased 10%. It's a huge decrease. I've never seen something like that in Mexico, to be honest. And this was even worse if you separate long products and flat products. The apparent consumption in flat products, which is our main market, was 14% below that of 2024. So this is a huge decrease. Ternium in that sense, our shipments in Mexico were a little bit -- the decrease was smaller because we managed to gain market share in the flat products. So it was an important measure. I think in 2026, the estimation of CANACERO is that the market is going to grow 4%. But I think all these measures are going to allow the local steel mills to gain more market share against imports. You have to remember that in Mexico, there's still a huge amount, almost 9 million tons of finished products that are imported in Mexico. So our target with all these measures is to gain more market share as we did in 2025. And although the market is not growing as much as we expect, gain in our shipment with the market share. In 2026, so the timing -- then the timing in the USMCA is very difficult at the moment. I mean there is a target that is that in July, USMCA should be removed. I really don't know at this moment if that is going to be achievable. In our projections, we are not seeing a lot of increase of the timing of the USMCA for 2026, and we're putting that more in the 2027. I mean, of course, we hope…

That's perfect. Thank you -- thanks a lot. .

Your next question comes from the line of Carlos De Alba from Morgan Stanley.

Maybe Maximo, a clarification. Did you said that CANACERO sees demand up 4% or down 4% in 2016?

Up 4% in 2026.

Okay. And then my 2 questions will be, first, on USMCA. What would be in the event that there is not a renewal of USMCA and then Mexico cannot reach a commercial agreement stand-alone with the U.S.? What would be Ternium's Plan B, given that a of the -- particularly on the auto side, your volumes go into that sector and then Mexico exports a significant amount of the cars that are producing in the country. And my second question, if you can give us maybe a little bit of an outlook on how do you see Ternium's volumes performing in 2026? What are the expectations in terms of volume growth in the different countries where you are -- or operations where you are actively right now?

Yes. Can you repeat the first question on the USMCA because we didn't hear very well.

Yes, sorry. Just what would be -- what is Ternium plan B? What would be your strategy, if there is not a renewal of the trade agreement? And also Mexico doesn't reach an agreement exclusively with the U.S.?

Yes. I mean, we operate all 2025 with these premises. There's no -- I mean, on a sense, the USMCA, if it's renewable, the great benefit is that the Section 232 is going to disappear between Mexico and the U.S. I don't see a renewal of agreement with the 232 on board. And that would be the biggest benefits of the renewal. So in 2025, we operate without -- it is a USMCA, but the 232 in steel derivative and a lot of products made it the way to operate if there is not a renewal. Again, I think that some of these measures are going to be taken away, although if the renewal is postponed. So we are operating in this environment, Carlos. The volumes of 2026...

Okay. Let me take that one, Maximo. As you know, you hear in our outlook, we are expecting volumes to start increasing already through the first quarter. And in this case, mainly coming from Mexico. So let me divide the answer to this question into the different markets where we are because we have different situation. In South America, the first quarter is the seasonally lowest quarter of the year. So you are not seeing any increase during the first part of the year, during the first quarter. And the opposite situation is in Mexico, where the seasonality is coming at the last part of the fourth quarter. So taking into consideration what Maximo said that the expectation is at least an increase of 4% in steel consumption for the year and the possibility of further increases in our market share because of the volumes that we will be able to increase and produce with the new facilities. And even without taking into consideration the possible outcome of the USMCA negotiation and the consequences of that, we are positive that the increase in the Mexican shipments will be above at least the numbers that Maximo mentioned in expectation for the Mexican market. In the case of Argentina or the Southern region, you know that volumes were depressed, especially at the beginning of the 2025 because we are getting out from a big recession in Argentina. So numbers tend to recover or volumes tend to recover in the second part of the year. So we are expecting to have a positive number coming out in the Southern region initiating in the second quarter of the year, not during the first quarter. Differently is the situation in Brazil where we saw volumes at healthy level during 2025 and growing with the increase of the GDP growth of the country. So expectation for Brazil is to keep growing at moderate levels. So volumes will be more related to these changes in the general economy of the country.

Your next question comes from the line of Timna Tanners from Wells Fargo.

I wanted to drill down, if I could, please, on the EBITDA margin. In the past, you've guided to a normalized level of 15% to 20%. And in the second quarter call, you had said you expected that 15%, the low end by the fourth quarter. I'm just wondering, the last 2 years have been challenging, I acknowledge that. But just trying to get a sense of what it takes to get back to that 15% to 20%. Could we see that in 2026? What are going to be the puts and takes to get there again?

Hi Timna, this is Pablo. So let me try to answer your question, which first of all, you're right, we were expecting further recovery in the last part of last year that at the very end didn't materialize because among other things, the impact of certain things that are happening in the different markets, the impact on in Brazil because of the imports, especially coming from China, and the lack of antidumping measures at the moment, so depressing prices in that market, the impact on the changes in the new rules of trade coming from the U.S. that impacted especially industrial sector during the second semester of the year. And the increase of the 232 margin during the year. So that put a lot of pressure on margins, and this will allow us to reach the original expectation. In the meantime, taking that into consideration, we implemented a cost reduction program, but as Maximo explained, yield more than around $250 million during the year. And clearly, we will continue doing that. So the kind of explanation why we were not able to reach the number that we were expecting. I probably will say exactly that we have the chance to reach the number by the end of this year because we will not reach that number during the first part of the year for sure, though even we are announcing and we our very clear on that, that we will increase the margins during this first part of the year, because of increases in prices across the board, of course, that will also have an impact on cost that will be also increased, but we are expecting to have better margins during the first part of the year. We will continue to work, as I mentioned, in further cost reduction program to further increase this margin. But a lot will depend on what we have been discussing until now and Maximo described at length, which is the consequence of the situation related to the negotiations of the 232 and the impact that this we have. So again, not initially, we will not be able to reach that number. We have a chance, and we will work for that to reach that number, which is, as you know, our goal. You mentioned between 15% to 20%. All I'm saying is to try to reach initially 15% and keeping working on that. As you know, the company is always working with that goal and trying to find ways to reduce our costs and to be able to take advantage of the situations that appear in the market. So again, hopefully, this year, we will revive.

Okay. Very helpful. If I could follow-up on that. I saw your interest in the [indiscernible] yesterday, we had the announcement that Mexico is doing a dumping investigation into cold-rolled imports from the U.S. And I guess it just prompted me to think that is it enough to have the trade actions so far in Mexico and Brazil, especially when you have 50% tariffs in the U.S., but also the 50% coming in steel action plan in Europe and the CBAM, of course, already implemented. So even if the Mexico and Brazil started some actions, the rest of the world is taking even more aggressive actions. So I'm just wondering if you think these are enough to move the needle as much as necessary to reach those goals you've just enumerated.

You made a very good point. I think all the things that you're saying are very positive. I mean, again, I think that, as I said before, Brazil, this is a very good first step. As you say, the U.S., Canada, even Mexico, Europe are much more ahead in the trade measures against unfair trade than Brazil. But it changed a lot from last quarter to this one, all this change of mood in Brazil. Mexico, the dumping case against the cold rolled, it's not only from the U.S., it's U.S., Malaysia and China, remember. And I think, again, we will continue presenting dumping cases if we see that they're worth pursuing. In this case, we think it is and the Mexican government accept the petition to open it. So they see some merit or they see merit in this investigation. But Mexico is also going to continue probably with some measures to not duplicate but trying to be similar to the U.S. market. And so all these measures are counting, and I think more are coming. So you're right. They're not sufficient, but they are in the right path.

Your next question comes from the line of Jon Brandt from HSBC.

I first wanted to ask about CapEx. I know you said $2 billion for 2026. Presumably, that continues to fall as we go into 2027 and 2028. So I'm hoping you can give us a little bit of guidance as to what those numbers might be? Or what normalized CapEx number might be as the major CapEx is rolling off and the projects are completed. And then what then does that mean for the additional free cash flow that you have, right? I mean you've painted a good picture of increasing demand, increasing prices, improving profitability following CapEx means there's some free cash flow. So I'm wondering about capital allocation. If we should see -- your net cash position has also fallen over the years as these -- as CapEx has ramped up, should we expect the net cash position to rise? Or are there other alternatives for this cash? And I guess my second question is just kind of related to that now that you've sort of completed the acquisition of Nippon stake in Usiminas, is there any sort of additional consideration about potentially taking out the minorities in Usiminas? Have you analyzed what sort of benefits or cost savings you would have if you own that 100%? Anything on your thoughts there would be great.

Thank you, John. CapEx. CapEx, as you said, this year will be around $2 billion, 2027 will be around $1.2 billion. So it's decreasing. And then in 2028, we don't have an exact number, but it's going to be around $800 million, the CapEx. That's a regular CapEx. This is including Usiminas. So you're right, the capital allocation for probably the end of 2027, we are going to have a different view. Today, 2026, we still are going to have a huge CapEx and probably we have to increase our working capital because the last 3 quarters, we have a decrease in capital. So I don't know if -- I don't think it's going to change a lot. But I don't know if you want to add something, Pablo, to that?

Yes. Okay. Let me add a little bit into that because 2026 for sure, will be a year in which we will be using cash and capital because if you add up the $2 billion in CapEx, the dividend that we are paying and the amount that we, as you mentioned, already paid for the shares of Usiminas from Nippon. So this add up more than or close to $3 billion and most probably the cash generation that we were describing will be in line with this year or even higher, but also take into consideration that we will reverse the reduction of working capital and probably we will need to allocate certain cash over there. So for sure, we will be reducing our net cash position that we end up at the end of 2025 with $700 million of net cash. This will be reversed, so we will move to a net debt position, but again, at very low levels. And then move to 2027, as Maximo mentioned, we will be reducing our CapEx. We will be -- we will not know yet how the outlook for the working capital will be. We will continue with the dividend payment. So probably we will be able to generate a little bit or reduce the net debt position at this moment. But we are not seeing significant changes in our capital allocation at the moment, we will continue with the CapEx, we will continue with the dividend, and we already made an investment in the case of Nippon. So clearly, 2026 will be a year to use cash and probably 2027 will be a year to recover a little bit of cash. But Maximo, I think that you have -- well, it was the subpart of the question from John.

Yes. Then the Nippon and the minority shares of Usiminas. Today, we are not considering launching a tender offer or buying the rest of the shares of Usiminas to be clear. But Brazil, for us, for Ternium, is a very important market. We have already a significant footprint in the country with our stake in Usiminas with our operation in Ternium Brasil in Rio de Janeiro. You also know we have a huge commitment to the community, investing $45 million in the new technical school for the community of Santa Cruz, near our plant in Rio de Janeiro. So we will continue looking to other opportunities. As I said, we don't have any plans today of doing anything, but we are continuously looking for new opportunities to grow. I hope, Jon, I answered the question there.

[Operator Instructions] Your next question comes from the line of Enrique Marquez from Goldman Sachs.

I just wanted to get more details on the upstream project in Pesqueria. I think that in the end, increasing volumes, relies a lot on the market situation. But do you think there is room for higher steel volumes when you finish the project? And also, if you could share more details on how much you expect to save in terms of cost with your own slab production versus third-party purchase would also be great?

Yes. Remember, the Pesqueria project, the upstream project was always focused for the automotive industry. As you remember, when the USMCA was negotiated, there was a clause for 2027, where most of the automotive industry trust to have melt and pour for gaining origin. So this project is going through that. Probably, it's going to allow us to sell even more volume to the automotive industry that we are selling today. We have a footprint of around 2 million tons for the automotive industry. And probably with this project, we will be able to sell much more. These 2 million tons today comes from slabs that we make in Brazil, and we shipped to Pesqueria for the cold rolled and galvanized. So we are changing that and probably will allow us to replace more volume from Japan, from Korea, from other regions, from even Europe that are selling in Mexico. So it's not a safe cost. Then again, we have more capacity today of cold rolled. So if the market improves, we will be able to serve other different sectors with our spare capacity we have today in Mexico. I hope Enrique, this was clear or if you want more on this?

Yes. I just -- sorry, I just wanted to better understand like when you producing the slabs in Mexico, like how much of that could actually like save you in terms of cost, in terms of logistics maybe just to try to better understand the -- I know it's -- the motive of the project is also strategic, but just to try to get like the benefits from the upstream project apart from increasing volumes in the auto industry.

Enrique this is Pablo. Let me try to add a little bit to that. As I was explaining, we are substituting slabs that we are bringing from some other places or even from Brazil or the ones that we will produce there, you will gain part of that margin because you will move from buying to produce, which is already an important savings. Then this will be a very efficient and sophisticated facility. And also, this will allow us to produce product that we were not able to produce before with our own facility. So that will also add savings in logistics, savings in the way we produce and also will give us the possibility, of course, probably this will take a little longer to be realized, the possibility to increase volumes of sales because we have a higher capacity than the one that we are utilizing today for the auto sector. And if the market continues to grow as we expect after a good negotiation with the USMCA, this could allow us to further increase volumes. So all in all, it's a key project for Ternium for many different reasons. And among that reasons is because of the savings and the reduced cost that we were able to take from that project.

Your final question comes from the line of Caio Greater from UBS.

Two follow-ups from me. The first one to Timna's question. I wanted to understand what do you guys see in terms of margin potential for Ternium that doesn't rely on the U.S. removing or lowering Section 232. So what level of -- so how much more do you see EBITDA margin rising over the next couple of quarters, again, assuming that Section 232 is not withdrawn or is not lowered by the U.S.? And the second question, also a follow-up to Jon's question on capital allocation. So thank you guys for the visibility that you provided for 2026 and 2027. That's really helpful. But I think it would be interesting to hear your thoughts for Ternium post 2027. So we still have a hard time understanding what the company looks like in the next 5 years and the next 10 years? And what are management's priorities? And we do know that in the past, you have talked about corporate simplification, especially with focus on Argentina. Again, John asked specifically about the Usiminas' minority stake. I wanted to know if any of these, again, are your priorities or you have other priorities going forward, being that growing through M&A, being that doing -- working on other projects in Mexico, organic projects and -- or if all of this is still -- or if management still has little visibility on all of this provided that we still have visibility on the USMCA agreement and so on. I'd be keen to hear your thoughts on this.

Thank you, Caio, can you take the first one.

Relationship to the margins after a good negotiation of USMCA. First of all, Caio, thanks for the question. First of all, the -- as already was mentioned during one of the answers, the real impact of a good negotiation of USMCA probably will be seen not during this year or just at the very end of this year or fully during 2027. So if that's the case, there should be an adjustment on pricing environment in the North American market where there needs to be a reaction of the impact of the tariff, and this will help reducing that one and increasing margins for Ternium. Of course, we never know where this will end up being and also, if that's the case, there should be -- and this is not margin, but this is volumes and increasing volume that will help us numbers of Ternium going forward. Again, there is still a lot of discussion, negotiations to be -- that need to take place. And that is something that we will see during this year. There is a certainty on the timing on the agreement. There's a certainty on the expected result of that agreement. So we are positive on the outcome, as Maximo explained very clearly. And so we should -- we are positive on the outlook and the possibility of Ternium increasing and enhancing margins. And again, this was part of the answer, as you mentioned to Timna in which we are expecting that margins to increase and to get back to the places or the place where we used to be in the past.

And regarding the capital allocation, Caio, for the further -- or the long term, as you put it, 5, 10 years, simplification is still a goal that we have. And we always -- we are going to see when is the best moment when it can be done, depending on which part. But it's always in our to-do list in a sense. I think that return to shareholders will always be a priority in our capital allocation. And I do see further opportunities then in the long term or the medium term, both in Brazil and Mexico. As you know, both markets are growing. And as I said before, Mexico has a huge opportunity of growing against imports and the market -- our customers are very willingness to buy from us. So I think there's still opportunities over there. I think it's too early to try to put them on a paper or make it public, but we are always analyzing these opportunities in time in Brazil and Mexico. I think -- does that answer your question, but...

Yes, or it's great. So just -- just maybe 2 follow-ups, if I may. Pablo, I think you mentioned that you see margins recovering towards the normalized range of 15% to 20%. And I'm just not sure if you mentioned that, that's including the upside potential from USMCA renegotiations or if that's excluding those factors? My question was assuming that the current environment stays, so assuming that nothing changes regarding the USMC agreement, what level of margin upside do you still see that Ternium can reach without that specifically?

Yes. Sorry, sorry, probably I didn't answer correctly what you were asking for, but my intention was that because we believe, as Maximo said, that the impact of the USMCA negotiation is positive, as we believe, will not be during this year. So this is more for 2027. So my answer before and our intention for answering that we will work and we will be enhancing our margin that we have, we could have a possibility of reaching the 15% or the lower part of the range that we're looking for was without taking into consideration any impact of the negotiation. We are already expecting an enhance on our margin during the first part of the year, of course, not reaching 15% and we will continue working and we think there is a chance and a possibility for Ternium to reach by the end of the year, a better margin than the one that we will have during the first part, hopefully reaching that target by the end of the year. Of course, after failing on the [indiscernible] last year, we will be more conservative and cautious on making the same one during this year, but the chance exists.

And since on the last question, I'll take the opportunity and ask another follow-up to Maximo on capital allocation, Maximo. So from your answer, I can understand that the company still sees great opportunity for growth at its main markets. So is that going to be a priority instead of potentially raising dividends further or creating a dividend policy that could maybe increase the company's dividend potential going forward or even a buyback program?

Thank you, Caio. I think that the 2 priorities for us, increasing dividends, I mean, returning to shareholders and looking at opportunities in our main markets that we know that we can value a lot of profitability added to our business growing in those markets. I think they're both. I don't think -- as we have discussed in the past, I don't think the share buyback is something we are going to do because of how much shares are in the market. But the other 2 are one of our priorities, both are priorities for us, Caio.

Thank you very much, guys.

We actually have 1 more question from Jon Brandt from HSBC.

Caio's question actually got me thinking a little bit. You mentioned there were some opportunities to grow in the main markets, and that's kind of 1 of the things you're looking for. And I think I know the answer to the question, but I'll ask it anyways. CSN have said they are looking for a potential partner or to do something with their steel assets in Brazil. I'm wondering if -- is that a potential opportunity for you to grow? Or can you sort of rule out any tie with them?

Thank you, Jon. Yes. We heard what CSN is doing. Its main focus is the cement, and I think this restructure assets they have. Regarding the steel, we -- at this moment, we are not analyzing anything with CSN. But as I said before and I said several times, Brazil is important for us. So we are always open to analyze different opportunities if they appeal. But at this time with CSN, we are not analyzing anything.

That concludes the question-and-answer session. I'd now like to turn the call back over to Ternium's CEO for closing remarks.

Okay. Thank you all for joining us today, and please feel free to share any comment with us. And goodbye, and have a good day. Thank you very much.

That concludes today's meeting. You may now disconnect.