Breaking Down Ternium S.A. (TX) Financial Health: Key Insights for Investors

You're looking at Ternium S.A. (TX) and the headline number from their October 2025 Q3 report-a net loss of $270 million-is defintely jarring, but you need to look past the one-time hit to see the real financial health. The core of that loss was a substantial $405 million non-cash write-down of deferred tax assets (DTAs) at Usiminas, which means the operational engine is actually holding up better than the bottom line suggests. Here's the quick math: while net sales declined year-over-year to $3.96 billion, the company's Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), a cleaner measure of operating cash flow, still came in strong at $420 million, reflecting improved cost efficiency. Plus, management is backing their balance sheet strength by approving an interim dividend that brings the total 2025 distribution to a robust $2.70 per ADS, a clear signal that cash generation is still a priority. The real near-term challenge is the slight expected dip in Q4 Adjusted EBITDA due to seasonal slowdowns and competitive pressure from unfairly traded steel imports in markets like Brazil, so your focus must be on whether their cost optimization can keep margins stable.

Revenue Analysis

You need to know the core truth about Ternium S.A.'s (TX) revenue right now: the top line is under pressure. The trailing twelve months (TTM) revenue ending September 30, 2025, came in at $15.711 billion. That represents a significant year-over-year decline of -16.00%, which is a clear signal of cooling market dynamics and pricing headwinds in the steel industry.

Honestly, a double-digit revenue drop demands attention. This isn't just a minor blip; it reflects lower realized steel prices and reduced sales volumes, particularly in key markets like Mexico and Brazil. The company is defintely feeling the pinch of trade discussions and tariffs, which weighed on Mexican steel demand.

Segment Contribution and Primary Sources

Ternium S.A.'s revenue structure is overwhelmingly concentrated in one area: the Steel segment. This is a steel producer, so that's not a surprise, but the sheer dominance is worth noting. The company operates in two primary segments: Steel and Mining.

Here's the quick math based on the first half of 2025 net sales, which maps out the core of their business:

The Steel segment, which brings in nearly all the revenue, focuses on selling finished and semi-finished products like hot-rolled coils, steel pipes, and bars. The Mining segment primarily sells iron ore as concentrates and pellets. Geographically, the lion's share of revenue is generated in Mexico.

Near-Term Revenue Headwinds and Future Opportunities

The biggest change in the near-term is the revenue per ton, which fell across all regions in the second quarter of 2025, even as cost reductions helped stabilize margins. The Steel Segment's net sales declined -13% year-over-year in the third quarter of 2025 alone.

But, you also need to look at where the company is putting its money, because that's the future revenue stream. Ternium S.A. is in the peak year of its massive capital expenditure (CapEx) cycle, primarily focused on the Pesquería industrial center expansion in Mexico. This expansion is expected to add 1.5 million tons of capacity.

• Lower realized steel prices drove the Q3 2025 revenue decline.
• Sales volumes dropped, especially in Mexico and Brazil.
• The Southern Region saw an increase in shipments, partially offsetting other declines.

What this estimate hides is the ramp-up time for that new capacity; the significant revenue impact will be seen over the long term. For a deeper dive into the company's long-term strategy, you should review the Mission Statement, Vision, & Core Values of Ternium S.A. (TX).

So, the clear action for you is to watch the realized steel price trends and the utilization rate of that new Mexican capacity. Next Step: Investor Relations: Track Q4 2025 steel shipment volumes in Mexico and Brazil for early signs of a revenue bottom by the next earnings call.

Profitability Metrics

You're looking at Ternium S.A. (TX) because you want to know if the operational efficiency is translating into real bottom-line profit, especially given the volatility in the steel market. The direct takeaway is this: while the company is successfully cutting costs and improving its core operating margin sequentially in 2025, a significant one-off charge has masked this progress, resulting in a net loss for the most recent quarter.

The company's profitability in the 2025 fiscal year has been a mixed bag, showing resilience in operations but vulnerability to non-cash, non-operating events. Here's the quick math on the third quarter of 2025 (Q3 2025), which ended September 30, 2025, using the net sales of $3.955 billion:

• Gross Profit Margin: 15.38% (Based on a Gross Profit of $608.39 million)
• Operating Profit Margin: 5.45% (Based on an Operating Profit of $215.4 million)
• Net Profit Margin: -6.83% (Based on a Net Loss of $270 million)

That negative net margin is the headline risk, but it's crucial to understand the context. The $270 million net loss in Q3 2025 was primarily driven by a $405 million income tax charge related to a write-down of deferred tax assets at Usiminas, plus a $32 million provision update for litigation. This is a non-cash, non-recurring item that doesn't reflect the core steel business performance. Your focus should be on the operating profit.

Operational Efficiency and Margin Trends

Operational efficiency is defintely where Ternium S.A. is showing strength. The company's Adjusted EBITDA margin was 11% in Q3 2025, a sequential improvement driven by lower raw material and purchased slab costs, plus efficiency gains. Management expects this trend to continue, with Q4 2025 margins remaining broadly stable as cost reductions offset any seasonal revenue dip. This focus on cost management is a clear, actionable signal for investors.

Still, the broader trend over the trailing twelve months (TTM) ending September 30, 2025, shows a significant contraction from the peak years of 2021/2022. The TTM Gross Profit was $2.200 billion, marking a 33.96% decline year-over-year, and TTM Operating Income was $0.589 billion, a 67.33% decline. This illustrates the cyclical nature of the steel industry and the impact of lower realized steel prices, which the company is now fighting with cost controls.

Industry Comparison: Ternium S.A. vs. Peers

When you stack Ternium S.A.'s TTM profitability ratios against the industry average for basic materials, the challenge becomes clear. The company is operating in a lower-margin environment compared to its peers, which suggests either a less favorable product mix, geographic exposure, or a need for deeper structural cost reductions. Here's the comparison:

The gap is substantial, particularly in Gross Margin. This highlights that, while Ternium S.A. is managing costs well internally, its cost of goods sold (COGS) relative to revenue is structurally higher than the industry average. This could be due to the nature of their integrated operations or the specific markets they serve. For a deeper look at who's betting on this turnaround, you should read Exploring Ternium S.A. (TX) Investor Profile: Who's Buying and Why?

Your action item is to monitor the Q4 2025 and Q1 2026 reports for continued sequential improvement in the Operating Profit Margin, ignoring the one-off tax noise. If the margin can consistently climb back toward the mid-to-high teens, the stock has room to run, but the current numbers show a significant profitability discount to the sector.

Debt vs. Equity Structure

You want to know if Ternium S.A. (TX) is financing its growth responsibly, and the short answer is yes: the company operates with a remarkably conservative capital structure, prioritizing equity and cash over heavy debt. This is a critical factor for a cyclical industry like steel.

As of October 2025, Ternium S.A.'s Debt-to-Equity (D/E) ratio stood at a very low 0.16 (or 16%). Here's the quick math: for every dollar of shareholder equity, the company has only 16 cents of debt. Compare this to the broader US Materials industry, where D/E ratios can range from 0.20 to 1.29, and it's clear Ternium S.A. is an outlier in financial prudence.

The company's financing balance sheet for the quarter ending June 30, 2025, shows a clear preference for a low-leverage model. They are in a net cash position, meaning their cash and equivalents exceed their total debt, which is a powerful buffer against market volatility.

• Total Equity: $16.582 billion
• Long-Term Borrowings: $1.812 billion
• Short-Term Borrowings: $546 million
• Total Debt: Approximately $2.358 billion

This conservative approach means the company has substantial financial flexibility. They had a net cash position of roughly $1.0 billion as of June 2025. This is defintely a strong position.

What this financial strength hides is the massive capital expenditure (CapEx) program currently underway. Instead of issuing new debt to fund their expansion, Ternium S.A. is using its internal cash generation and existing balance sheet strength to fund its transformational $4.1 billion+ investment in its Pesquería, Mexico industrial center. This CapEx, which includes $2.6 billion for new upstream capacity, is being commissioned between late 2025 and Q4 2026. They are essentially self-funding a major strategic pivot, which is a sign of a truly robust financial framework.

For a deeper dive into their long-term strategy, you can review the Mission Statement, Vision, & Core Values of Ternium S.A. (TX).

The company has not had any major debt issuances or refinancing activities in 2025 because it simply hasn't needed to. Its strong operating cash flow and existing cash reserves are covering the most significant capital commitment in its corporate history. This balance-low debt, high equity, and self-funded growth-is a major green flag for investors concerned about financial risk in the steel sector.

Liquidity and Solvency

You need to know how easily Ternium S.A. (TX) can cover its near-term bills, and honestly, the picture is strong but with a clear caveat. The company's liquidity ratios are excellent, showing a deep cushion of readily available assets. Still, the massive capital expenditure (CapEx) program is eating into the cash pile, which is the key near-term risk to manage.

Assessing Ternium S.A. (TX)'s Liquidity

The core of liquidity analysis starts with the Current Ratio and Quick Ratio (Acid-Test Ratio). The Current Ratio tells you if current assets can cover current liabilities. Ternium S.A. (TX)'s Current Ratio stands at a very healthy 2.68. That means for every dollar of short-term debt, the company has $2.68 in assets that should convert to cash within a year. That's defintely a high level of comfort.

The Quick Ratio is even more stringent, stripping out inventory, which can be slow to sell. Ternium S.A. (TX)'s Quick Ratio is also strong at 1.59. This signals that even without selling a ton of steel inventory, the company has enough cash and receivables to cover its immediate obligations. This is a clear strength, showing a very conservative balance sheet approach.

Here's the quick math on their short-term health:

• Current Ratio: 2.68 (Very strong short-term coverage)
• Quick Ratio: 1.59 (Excellent coverage without relying on inventory sales)

Working Capital and Cash Flow Trends

Working capital trends have been a significant tailwind for Ternium S.A. (TX)'s operating cash flow in 2025. In the first half of the year, the company reported a strong Net Cash Provided for Operating Activities of $1,251 million. This robust cash generation was actually boosted by a significant reduction in working capital, largely through efficient inventory management and a decrease in trade receivables.

Looking at the Q3 2025 Cash Flow Statement, the trends are clear, but the story shifts due to investment. Cash from Operations (CFO) remained strong at $535 million for the quarter. But, the Investing Cash Flow was a major outflow, driven by capital expenditures (CapEx) totaling $711 million in Q3 2025 alone. This high CapEx reflects the ongoing, large-scale expansion at the Pesquería industrial center in Mexico, which is a strategic long-term bet, but a short-term cash drain.

The Financing Cash Flow side shows the company is committed to shareholder returns despite the high CapEx. The board approved an interim dividend of $0.90 per ADS, payable in November 2025. This confidence in maintaining distributions, even with heavy investment, signals management's belief in the long-term cash-generating power of the business. You can read more on the long-term strategy here: Mission Statement, Vision, & Core Values of Ternium S.A. (TX).

Liquidity Strengths and Near-Term Pressures

The primary strength is the balance sheet's inherent conservatism, evidenced by those high liquidity ratios. The company ended September 2025 with a Net Cash position of $715 million. This is still a positive net cash position (more cash than debt), which is a huge advantage in a cyclical industry like steel.

What this estimate hides, however, is the pressure from the high CapEx. The Net Cash position declined by $303 million in Q3 2025 alone, driven by the CapEx funding requirements. This is a deliberate strategic choice-investing for future growth-but it means the cash buffer is shrinking. The high CapEx is expected to peak in 2025, so this pressure should ease next year, but for now, it's the key area to monitor.

Here is a snapshot of the cash flow dynamics in Q3 2025:

The company is financially stable, but the near-term action for you is simple: keep an eye on the CapEx burn rate and the subsequent Net Cash position in the Q4 2025 results.

Valuation Analysis

Is Ternium S.A. (TX) undervalued? Based on the 2025 fiscal year data, the market defintely sees Ternium S.A. as undervalued, trading at a significant discount to intrinsic value, even with recent volatility. The core takeaway is that the company's low valuation multiples suggest a deep-value opportunity, provided you're comfortable with the cyclical nature of steel.

When I look at the valuation multiples, the picture is clear: Ternium S.A. is cheap on a relative basis. The trailing price-to-earnings (P/E) ratio, which shows how much investors are willing to pay for every dollar of annual earnings, sits at just 12.11 as of November 2025. This is low for a company with its market position. Even more telling is the forward P/E, which uses estimated future earnings, at a very attractive 7.37. That's a strong signal the market expects earnings to rise significantly, or that the stock is simply mispriced.

To be fair, the price-to-book (P/B) ratio is also screaming value at only 0.59. This means the stock is trading for less than 60 cents on the dollar of its net assets (assets minus liabilities). Plus, the Enterprise Value-to-EBITDA (EV/EBITDA) ratio-a better metric for capital-intensive companies like steel producers-is a low 5.32. Here's the quick math: a multiple this low suggests a quick payback period for the entire company's value, including debt, using its operating cash flow proxy (EBITDA, or Earnings Before Interest, Taxes, Depreciation, and Amortization).

• P/E Ratio (Trailing): 12.11
• P/B Ratio: 0.59
• EV/EBITDA: 5.32

The stock price trend over the last 12 months, however, shows the risk investors are pricing in. While the stock has a 52-week range between a low of $24.00 and a high of $38.15, the price has actually decreased by about 3.10% over the last year leading up to November 2025. This volatility is typical for the steel sector, which is highly sensitive to global economic growth and commodity prices. Still, the recent analyst consensus is overwhelmingly positive, with a strong 'Buy' rating and a price target of $40.50. This target suggests a substantial upside from the current price around $35.74.

Let's talk dividends. Ternium S.A. offers a significant dividend yield of 7.56% annually. That's a huge income stream. The company also announced an interim dividend of $0.90 per ADS (American Depositary Share) in the third quarter of 2025, which shows commitment to returning capital. What this estimate hides is that the dividend coverage is a point of caution; some analysis suggests the dividend is not fully covered by current earnings or free cash flow, especially after the Q3 2025 net loss of $270 million due to non-cash charges. You need to weigh the high yield against the potential for future adjustments if earnings remain pressured.

The low multiples and high yield point to a deep-value stock. You can find a more comprehensive breakdown of the company's operational strength in this article: Breaking Down Ternium S.A. (TX) Financial Health: Key Insights for Investors.

Risk Factors

You're looking at Ternium S.A. (TX), a major player in the Americas steel market, and while their operational efficiency is improving, you need to be a trend-aware realist about the financial and market headwinds. The direct takeaway is this: while management is aggressively investing in the future, near-term profitability is being materially impacted by non-cash charges and high capital expenditure, plus the constant threat of global trade imbalances.

Here's the quick math on the recent financial hits. The company reported a net loss of $270 million in the third quarter of 2025. This wasn't an operational collapse; it was primarily driven by a massive, non-cash charge of $405 million related to a write-down of deferred tax assets at its Usiminas subsidiary. That's a big number that defintely masks underlying operational improvements.

• Non-Recurring Charges: The Q3 2025 net loss of $270 million included a $405 million write-down at Usiminas, plus a $32 million provision update for ongoing litigation also tied to the Usiminas stake.
• Underlying Profitability: Statutory profit in the year to September 2025 was boosted by an estimated $393 million to $402 million in positive unusual items, suggesting the company's core, repeatable earnings power is lower than the headline numbers imply.
• Cash Strain: High capital expenditure (CapEx) for the Pesquería expansion, which is the peak investment year for 2025, contributed to a net cash decline of $303 million in Q3 2025.

External and Market Volatility

The steel industry is inherently cyclical, so Ternium S.A. is always exposed to macroeconomic swings in the construction and automotive sectors. But the biggest near-term external risk remains unfair trade and regulatory uncertainty, especially in their core Latin American markets.

Brazil, for instance, continues to struggle with a high level of unfairly traded steel imports, mainly from China, which directly hurts the competitiveness of local producers like Usiminas. Also, the U.S. steel market, which is critical for Ternium S.A.'s Mexican operations, is subject to policy shifts like the March 2025 imposition of 25% tariffs on steel and aluminum imports. This regulatory flux creates operational complexity and cost uncertainty.

Here is a snapshot of the market challenges and the company's counter-strategy:

Operational and Strategic Execution Risk

The company's future is heavily tied to the massive Pesquería expansion in Mexico, a project with an estimated total cost of approximately $4 billion. This is a strategic move to capitalize on the North American supply chain shift (nearshoring), but it carries significant execution risk. The capital expenditures were $711 million in Q3 2025 alone.

The cold rolling mill and galvanized line are scheduled to start by the end of December 2025, but the upstream facilities (steel lab mill and Direct Reduced Iron, or DRI, facilities) have a longer ramp-up, now expected to be operational by Q4 2026. Any further construction slippage or cost overruns on this multi-billion dollar project could impact expected volume and cash flow inflection points. Management is mitigating this by focusing on cost optimization and operational enhancements across all segments, plus they have a strong balance sheet with a net cash position of $715 million at the end of Q3 2025 to support the high CapEx.

To dive deeper into the investor landscape and who is betting on this expansion, you should read Exploring Ternium S.A. (TX) Investor Profile: Who's Buying and Why?

Growth Opportunities

You're looking at Ternium S.A. (TX) and seeing a tough 2025, but the growth story is defintely about their strategic positioning in the Americas. The company is actively counter-punching market headwinds with a massive capital expenditure (CapEx) plan, focusing on high-value products and securing its regional dominance.

The core growth driver is the nearshoring trend, a structural shift where companies move manufacturing closer to the US market, making Mexico a critical hub. Ternium S.A. (TX) is the clear regional beneficiary here, especially as vehicle manufacturing in Mexico is expected to increase by 8% in 2025. This is a long-term tailwind, not a one-quarter blip. Plus, the company is pushing for a 'Fortress North America' approach, advocating for USMCA (United States-Mexico-Canada Agreement) rules that favor regional steel production, which strengthens their competitive position against overseas imports.

Ternium S.A. (TX)'s future revenue is being built right now with concrete expansion projects. They are pouring money into their Pesquería industrial center in Nuevo León, Mexico, with a full-year 2025 CapEx expected to be between $2.5 billion and $2.6 billion. This isn't just maintenance spending; it's a capacity and product upgrade. They are also investing in sustainability, which is becoming a key differentiator.

• New galvanizing line starts production in December 2025.
• Pickling line and tandem cold mill (PLTCM) start in January 2026.
• DRI-EAF steelmaking project will produce low-carbon-emissions steel.
• Digital initiatives like Agentic AI and Digital Twins are being implemented to reduce operating costs.

Here's the quick math on what analysts expect from these investments: The consensus forecast from analysts, following the Q3 2025 results, projects 2026 revenues of $17.3 billion, reflecting a meaningful 10.0% year-over-year improvement. Statutory earnings per share (EPS) are predicted to shoot up 32% to $3.94 in 2026, a strong rebound from the Q3 2025 reported EPS of only $0.10.

What this estimate hides is the company's significant competitive advantage, or what we call a 'cost moat' (a structural advantage that allows a company to operate at a lower cost than its peers). Ternium S.A. (TX) is vertically integrated, controlling the process from iron ore mines to service centers, which gives them a substantial cost advantage and supply chain stability. Their proprietary low-nitrogen steel production process has less than half the CO2 emission intensity of previous methods, positioning them well for increasingly strict environmental regulations and customer demand for sustainable products. They are the market leader in Mexico's flat steel segment, which gives them pricing power and market share dominance.

To be fair, the Q3 2025 net loss of $270 million-driven partly by a deferred tax asset write-down-shows the near-term volatility, but the long-term structural tailwinds remain intact. You need to focus on that $2.5 billion CapEx and the new capacity it brings online. For a deeper look at the balance sheet, check out Breaking Down Ternium S.A. (TX) Financial Health: Key Insights for Investors.

Next step: Portfolio Manager: Model the impact of the new Pesquería line capacity on 2026 EPS, using the $3.94 figure as a base case by the end of the month.