Ternium S.A. (TX) Income Statement

The 10% sequential revenue growth in 2026Q2 marks a clear acceleration from the prior quarter's flat performance, yet year-over-year comparisons still show a decline from the $4.8B reported in 2024Q1. This suggests that while demand is recovering, it has not fully regained prior highs, possibly due to softer steel prices or volumes. Investors should monitor whether this rebound can be sustained, as the steel sector remains highly cyclical.

The sequential margin expansion of over 400 basis points suggests that Ternium is benefiting from either higher steel prices or lower input costs, or a combination of both. This margin level also exceeds the peer average, as ArcelorMittal and Nucor report gross margins of 9.6% and 11.9%, respectively, highlighting Ternium's competitive positioning. However, the volatility in margins across quarters—ranging from 11.6% to 23.1%—underscores the cyclicality inherent in the steel industry.

The operating margin expanded from 7.4% to 12.2% sequentially, driven by a 10% revenue increase against a 6% rise in COGS and a 29% increase in SG&A. This indicates that fixed costs are being spread over a larger revenue base, amplifying profitability. The trend suggests that Ternium's cost structure is well-positioned to benefit from volume recoveries, though the sustainability depends on maintaining revenue momentum.

The reduction in COGS ratio suggests improved input cost management or favorable pricing, which directly boosted gross margins. Meanwhile, SG&A increased by 29% sequentially, possibly due to higher selling expenses or administrative costs tied to the revenue rebound. The fact that SG&A growth outpaced revenue growth in 2026Q2 may indicate that Ternium is investing in commercial capabilities, but it also pressures operating margins if revenue growth slows.

This quarter stands out as the most significant inflection in the income statement history, as it was the only period with a substantial net loss. The divergence between operating income of $370.5M and net loss of -$727.6M suggests a large non-operating charge, possibly related to impairments or foreign exchange losses. Following this, net income has trended upward, with 2026Q2 reaching $343.7M, indicating that the company has moved past the disruption. The lasting impact is a more cautious investor base that may scrutinize non-operating items more closely.