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OFFON

TERNIUM S.A.

(TX)
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Consolidated Condensed Interim Financial Statements - Form 6-K

11/03/2021 | 06:04am EST
Consolidated Condensed Interim Financial Statements
as of September 30, 2021
and for the nine-month periods
ended on September 30, 2021 and 2020

26 Boulevard Royal, 4th floor

L - 2449 Luxembourg

R.C.S. Luxembourg: B 98 668




INDEX
Page
2
3
Consolidated Condensed Interim Statements of Financial Position
4
Consolidated Condensed Interim Statements of Changes in Equity
5
Consolidated Condensed Interim Statements of Cash Flows
7
Notes to the Consolidated Condensed Interim Financial Statements
1
General information and basis of presentation
8
2
Accounting policies
8
3
Segment information
9
4
Cost of sales
11
5
Selling, general and administrative expenses
12
6
Finance expense, Finance income and Other financial income (expenses), net
12
7
Property, plant and equipment, net
12
8
Intangible assets, net
13
9
Investments in non-consolidated companies
13
10 Distribution of dividends
16
11
Contingencies, commitments and restrictions on the distribution of profits
16
12
Related party transactions
19
13
Financial instruments by category and fair value measurement
20
14 The Covid-19 pandemic and its impact on Ternium
21
15 Foreign exchange restrictions in Argentina
22

Page 1 of
22
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of September 30, 2021
and for the nine-month periods ended September 30, 2021 and 2020
(All amounts in $ thousands)

Consolidated Condensed Interim Income Statements
Three-month period ended
September 30,
Nine-month period ended
September 30,
Notes 2021 2020 (1) 2021 2020 (1)
(Unaudited) (Unaudited)
Net sales 3 4,592,007 2,138,644 11,761,067 6,155,759
Cost of sales 3 & 4 (2,621,145) (1,756,566) (7,175,088) (5,185,840)
Gross profit 3 1,970,862 382,078 4,585,979 969,919
Selling, general and administrative expenses 3 & 5 (237,356) (183,093) (692,254) (566,135)
Other operating income (expenses), net 3 1,874 (192,029) 18,869 (195,566)
Operating income 3 1,735,380 6,956 3,912,594 208,218
Finance expense 6 (6,527) (8,998) (20,551) (38,857)
Finance income 6 19,391 15,898 54,160 30,895
Other financial income (expenses), net 6 19,802 (20,649) 37,919 85,751
Equity in earnings (losses) of non-consolidated companies 9 84,421 13,212 301,994 (370)
Profit before income tax expense 1,852,467 6,419 4,286,116 285,637
Income tax expense (486,027) (27,469) (1,054,744) (282,467)
Profit (loss) for the period 1,366,440 (21,050) 3,231,372 3,170
Attributable to:
Owners of the parent 1,202,063 (48,471) 2,827,099 (16,007)
Non-controlling interest 164,377 27,421 404,273 19,177
Profit (loss) for the period 1,366,440 (21,050) 3,231,372 3,170
Weighted average number of shares outstanding 1,963,076,776 1,963,076,776 1,963,076,776 1,963,076,776
Basic and diluted earnings (losses) per share for profit (loss) attributable to the equity holders of the company (expressed in $ per share) 0.61 (0.03) 1.44 (0.01)

(1) Comparative information have been adjusted (see Note 11).
The accompanying notes are an integral part of these consolidated condensed interim financial statements. These consolidated condensed interim financial statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the year ended December 31, 2020.
Page 2 of
22
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of September 30, 2021
and for the nine-month periods ended September 30, 2021 and 2020
(All amounts in $ thousands)

Consolidated Condensed Interim Statements of Comprehensive Income
Three-month period ended
September 30,
Nine-month period ended
September 30,
2021 2020 (1) 2021 2020 (1)
(Unaudited) (Unaudited)
Profit (loss) for the period 1,366,440 (21,050) 3,231,372 3,170
Items that may be reclassified subsequently to profit or loss:
Currency translation adjustment (391) 267 (262) (2,630)
Currency translation adjustment from participation in non-consolidated companies (54,065) (10,349) (24,157) (141,119)
Changes in the fair value of financial instruments at fair value through other comprehensive income 10,917 979 (3,724) 1,400
Income tax related to financial instruments at fair value (3,829) (82) 1,440 (96)
Changes in the fair value of derivatives classified as cash flow hedges 57 74 216 (360)
Income tax related to cash flow hedges (17) (22) (65) 108
Other comprehensive income items from participation in non-consolidated companies (115) (5) (79) 61
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of post employment benefit obligations - - 48,719 262
Income tax relating to remeasurement of post employment benefit obligations - - (14,386) (21)
Remeasurement of post employment benefit obligations from participation in non-consolidated companies (878) 2 (3,348) 21,514
Other comprehensive income (loss) for the period, net of tax (48,321) (9,136) 4,354 (120,881)
Total comprehensive income (loss) for the period 1,318,119 (30,186) 3,235,726 (117,711)
Attributable to:
Owners of the parent 1,154,832 (56,804) 2,830,500 (127,703)
Non-controlling interest 163,287 26,618 405,226 9,992
Total comprehensive income (loss) for the period 1,318,119 (30,186) 3,235,726 (117,711)
(1) Comparative information have been adjusted (see Note 11).
The accompanying notes are an integral part of these consolidated condensed interim financial statements. These consolidated condensed interim financial statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the year ended December 31, 2020.
Page 3 of
22
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of September 30, 2021
and for the nine-month periods ended September 30, 2021 and 2020
(All amounts in $ thousands)

Consolidated Condensed Interim Statements of Financial Position
Balances as of
Notes September 30, 2021 December 31, 2020
(Unaudited)
ASSETS
Non-current assets
Property, plant and equipment, net 7 6,462,525 6,504,681
Intangible assets, net 8 896,975 908,583
Investments in non-consolidated companies 9 697,346 471,306
Other investments 55,683 2,881
Deferred tax assets 154,327 158,703
Receivables, net 164,561 8,431,417 243,306 8,289,460
Current assets
Receivables, net 327,390 288,609
Derivative financial instruments 1,450 1,572
Inventories, net 3,626,356 2,001,781
Trade receivables, net 2,066,894 918,438
Other investments 768,515 813,527
Cash and cash equivalents 947,575 7,738,180 537,882 4,561,809
Non-current assets classified as held for sale 4,996 4,966
7,743,176 4,566,775
Total Assets 16,174,593 12,856,235
EQUITY
Capital and reserves attributable to the owners of the parent 9,704,380 7,286,115
Non-controlling interest 1,561,496 1,157,038
Total Equity 11,265,876 8,443,153
LIABILITIES
Non-current liabilities
Provisions 87,216 80,570
Deferred tax liabilities 214,367 346,485
Other liabilities 509,340 551,856
Trade payables 1,168 1,145
Derivative financial instruments 168 523
Lease liabilities 227,809 251,617
Borrowings 772,010 1,812,078 1,327,289 2,559,485
Current liabilities
Current income tax liabilities 715,533 110,499
Other liabilities 385,250 249,836
Trade payables 1,222,268 1,049,337
Derivative financial instruments 900 5,835
Lease liabilities 44,235 42,486
Borrowings 728,453 3,096,639 395,604 1,853,597
Total Liabilities 4,908,717 4,413,082
Total Equity and Liabilities 16,174,593 12,856,235
The accompanying notes are an integral part of these consolidated condensed interim financial statements. These consolidated condensed interim financial statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the year ended December 31, 2020.

Page 4 of
22
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of September 30, 2021
and for the nine-month periods ended September 30, 2021 and 2020
(All amounts in $ thousands)
Consolidated Condensed Interim Statements of Changes in Equity
Attributable to the owners of the parent (1)
Capital stock
(2)
Treasury shares
(2)
Initial public offering expenses Reserves
(3)
Capital stock issue discount
(4)
Currency translation adjustment Retained earnings Total Non-controlling interest Total Equity
Balance as of January 1, 2021 2,004,743 (150,000) (23,295) 1,329,945 (2,324,866) (2,861,029) 9,310,617 7,286,115 1,157,038 8,443,153
Profit for the period 2,827,099 2,827,099 404,273 3,231,372
Other comprehensive income (loss) for the period
Currency translation adjustment (22,663) (22,663) (1,756) (24,419)
Remeasurement of post employment benefit obligations 27,561 27,561 3,424 30,985
Cash flow hedges and others, net of tax 77 77 74 151
Others (1,574) (1,574) (789) (2,363)
Total comprehensive income for the period - - - 26,064 - (22,663) 2,827,099 2,830,500 405,226 3,235,726
Dividends paid in cash (5) (412,246) (412,246) - (412,246)
Acquisition of non-controlling interest (6) 11 11 (768) (757)
Balance as of September 30, 2021 (unaudited) 2,004,743 (150,000) (23,295) 1,356,020 (2,324,866) (2,883,692) 11,725,470 9,704,380 1,561,496 11,265,876

(1) Shareholders' equity is determined in accordance with accounting principles generally accepted in Luxembourg.
(2) The Company has an authorized share capital of a single class of 3.5 billion shares having a nominal value of $ 1.00 per share. As of September 30, 2021, there were 2,004,743,442 shares issued. All issued shares are fully paid. Also, as of September 30, 2021, the Company held 41,666,666 shares as treasury shares.
(3) Include legal reserve under Luxembourg law for $ 200.5 million, undistributable reserves under Luxembourg law for $ 1.4 billion and reserves related to the acquisition of non-controlling interest in subsidiaries for $ (72.2) million.
(4) Represents the difference between book value of non-monetary contributions received from shareholders under Luxembourg GAAP and IFRS.
(5) See Note 10.
(6) Corresponds to the acquisition of non-controlling interest participation of Ternium Argentina S.A.

Dividends may be paid by Ternium to the extent distributable retained earnings calculated in accordance with Luxembourg law and regulations exist. Therefore, retained earnings included in these consolidated condensed interim financial statements may not be wholly distributable.
The accompanying notes are an integral part of these consolidated condensed interim financial statements. These consolidated condensed interim financial statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the year ended December 31, 2020.
Page 5 of
22
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of September 30, 2021
and for the nine-month periods ended September 30, 2021 and 2020
(All amounts in $ thousands)
Consolidated Condensed Interim Statements of Changes in Equity
Attributable to the owners of the parent (1)
Capital stock
(2)
Treasury shares
(2)
Initial public offering expenses Reserves
(3)
Capital stock issue discount
(4)
Currency translation adjustment Retained earnings Total Non-controlling interest Total Equity
Balance as of January 1, 2020 2,004,743 (150,000) (23,295) 1,332,980 (2,324,866) (2,760,046) 8,532,149 6,611,665 1,103,208 7,714,873
Profit (loss) for the period (5) (16,007) (16,007) 19,177 3,170
Other comprehensive income (loss) for the period
Currency translation adjustment (133,124) (133,124) (10,625) (143,749)
Remeasurement of post employment benefit obligations 20,277 20,277 1,478 21,755
Cash flow hedges, net of tax (128) (128) (124) (252)
Others 1,279 1,279 86 1,365
Total comprehensive (loss) income for the period - - - 21,428 - (133,124) (16,007) (127,703) 9,992 (117,711)
Acquisition of non-controlling interest (6) 8,054 8,054 (22,202) (14,148)
Balance as of September 30, 2020 (unaudited) 2,004,743 (150,000) (23,295) 1,362,462 (2,324,866) (2,893,170) 8,516,142 6,492,016 1,090,998 7,583,014
(1) Shareholders' equity is determined in accordance with accounting principles generally accepted in Luxembourg.
(2) The Company has an authorized share capital of a single class of 3.5 billion shares having a nominal value of $ 1.00 per share. As of September 30, 2020, there were 2,004,743,442 shares issued. All issued shares are fully paid. Also, as of September 30, 2020, the Company held 41,666,666 shares as treasury shares.
(3) Include legal reserve under Luxembourg law for $ 200.5 million, undistributable reserves under Luxembourg law for $ 1.4 billion, and reserves related to the acquisition of non-controlling interest in subsidiaries for $ (71.9) million.
(4) Represents the difference between book value of non-monetary contributions received from shareholders under Luxembourg GAAP and IFRS.
(5) Comparative information have been adjusted (see Note 11).
(6) Corresponds to the acquisition of non-controlling interest participation of Ternium Argentina S.A..

Dividends may be paid by Ternium to the extent distributable retained earnings calculated in accordance with Luxembourg law and regulations exist. Therefore, retained earnings included in these consolidated condensed interim financial statements may not be wholly distributable.
The accompanying notes are an integral part of these consolidated condensed interim financial statements. These consolidated condensed interim financial statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the year ended December 31, 2020.
Page 6 of
22
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of September 30, 2021
and for the nine-month periods ended September 30, 2021 and 2020
(All amounts in $ thousands)
Consolidated Condensed Interim Statements of Cash Flows
Nine-month period ended
September 30,
Notes 2021 2020 (1)
(Unaudited)
Cash flows from operating activities
Profit for the period 3,231,372 3,170
Adjustments for:
Depreciation and amortization 7 & 8 445,582 477,054
Income tax accruals less payments 467,134 127,430
Equity in (earnings) losses of non-consolidated companies 9 (301,994) 370
Interest accruals less payments 3,753 4,552
ICMS reversal of related asset 11 - 194,065
Changes in provisions 9,622 (302)
Changes in working capital (2) (2,459,444) 628,133
Net foreign exchange results and others 146,214 (28,078)
Net cash provided by operating activities 1,542,239 1,406,394
Cash flows from investing activities
Capital expenditures 7 & 8 (401,713) (439,559)
Increase in other investments (23,723) (410,539)
Proceeds from the sale of property, plant and equipment 1,316 363
Dividends received from non-consolidated companies 499 -
Acquisition of non-controlling interest (757) (14,148)
Net cash used in investing activities (424,378) (863,883)
Cash flows from financing activities
Dividends paid in cash to company's shareholders (412,246) -
Finance lease payments (33,954) (30,414)
Proceeds from borrowings 205,488 244,326
Repayments of borrowings (425,201) (558,191)
Net cash used in financing activities (665,913) (344,279)
Increase in cash and cash equivalents 451,948 198,232
Movement in cash and cash equivalents
At January 1, 537,882 519,965
Effect of exchange rate changes (42,255) (37,537)
Increase in cash and cash equivalents 451,948 198,232
Cash and cash equivalents as of September 30, (3) 947,575 680,660
Non-cash transactions:
Acquisition of PP&E under lease contract agreements 11,230 5,983

(1) Comparative information have been adjusted (see Note 11).

(2) The working capital is impacted by non-cash movements of $ (1.8) million as of September 30, 2021 ($ (25.6) million as of September 30, 2020) due to the variations in the exchange rates used by subsidiaries.

(3) It includes restricted cash of $ 130 and $ 38 as of September 30, 2021 and 2020, respectively. In addition, the Company had other investments with a maturity of more than three months for $ 823,946 and $ 623,186 as of September 30, 2021 and 2020, respectively.

The accompanying notes are an integral part of these consolidated condensed interim financial statements. These consolidated condensed interim financial statements should be read in conjunction with our audited Consolidated Financial Statements and notes for the year ended December 31, 2020.
Page 7 of
22
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of September 30, 2021
and for the nine-month periods ended September 30, 2021 and 2020


Notes to the Consolidated Condensed Interim Financial Statements

1.GENERAL INFORMATION AND BASIS OF PRESENTATION

Ternium S.A. (the "Company" or "Ternium"), was incorporated on December 22, 2003 to hold investments in flat and long steel manufacturing and distributing companies. The Company has an authorized share capital of a single class of 3.5 billion shares having a nominal value of $ 1.00 per share. As of September 30, 2021, there were 2,004,743,442 shares issued. All issued shares are fully paid.

Ternium's American Depositary Shares ("ADS") trade on the New York Stock Exchange under the symbol "TX".

The name and percentage of ownership of subsidiaries that have been included in consolidation in these Consolidated Condensed Interim Financial Statements are disclosed in Note 2 to the audited Consolidated Financial Statements for the year ended December 31, 2020.

The preparation of Consolidated Condensed Interim Financial Statements requires management to make estimates and assumptions that might affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the statement of financial position, and also the reported amounts of revenues and expenses for the reported periods. Actual results may differ from these estimates. The main assumptions and estimates were disclosed in the Consolidated Financial Statements for the year ended December 31, 2020, without significant changes since its publication.

2. ACCOUNTING POLICIES

These Consolidated Condensed Interim Financial Statements have been prepared in accordance with IAS 34, "Interim Financial Reporting" and are unaudited. These Consolidated Condensed Interim Financial Statements should be read in conjunction with the audited Consolidated Financial Statements for the year ended December 31, 2020, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and in conformity with International Financial Reporting Standards as adopted by the European Union ("EU"). Recently issued accounting pronouncements were applied by the Company as from their respective dates.

These Consolidated Condensed Interim Financial Statements have been prepared following the same accounting policies used in the preparation of the audited Consolidated Financial Statements for the year ended December 31, 2020.

None of the accounting pronouncements issued after December 31, 2020, and as of the date of these Consolidated Condensed Interim Financial Statements have a material effect on the Company's financial condition or result or operations.

Page 8 of
22
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of September 30, 2021
and for the nine-month periods ended September 30, 2021 and 2020

3. SEGMENT INFORMATION

REPORTABLE OPERATING SEGMENTS

The Company is organized in two reportable segments: Steel and Mining.

The Steel segment includes the sales of steel products, which comprises slabs, hot rolled coils and sheets, cold rolled coils and sheets, tin plate, welded pipes, hot dipped galvanized and electro-galvanized sheets, pre-painted sheets, billets (steel in its basic, semi-finished state), wire rod and bars and other tailor-made products to serve its customers' requirements. It also includes the sales of energy.

The Steel segment comprises four operating segments: Mexico, Southern Region, Brazil and Other markets. These four segments have been aggregated considering the economic characteristics and financial effects of each business activity in which the entity engages; the related economic environment in which it operates; the type or class of customer for the products; the nature of the products; and the production processes. The Mexico operating segment comprises the Company's businesses in Mexico. The Southern region operating segment manages the businesses in Argentina, Paraguay, Chile, Bolivia and Uruguay. The Brazil operating segment includes the business generated in Brazil. The Other markets operating segment includes businesses mainly in United States, Colombia, China and Guatemala.

The Mining segment includes the sales of mining products, mainly iron ore and pellets, and comprises the mining activities of Las Encinas, an iron ore mining company in which Ternium holds a 100% equity interest and the 50% of the operations and results performed by Peña Colorada, another iron ore mining company in which Ternium maintains that same percentage over its equity interest. Both mining operations are located in Mexico. For Peña Colorada, the Company recognizes its assets, liabilities, revenue and expenses in relation to its interest in the joint operation.

Ternium's Chief Operating Decision Maker (CEO) holds monthly meetings with senior management, in which operating and financial performance information is reviewed, including financial information that differs from IFRS principally as follows:
-The use of direct cost methodology to calculate the inventories, while under IFRS is at full cost, including absorption of production overheads and depreciation.
-The use of costs based on previously internally defined cost estimates, while, under IFRS, costs are calculated at historical cost (with the FIFO method).
-Other timing and non-significant differences.

Most information on segment assets is not disclosed as it is not reviewed by the CEO.

Page 9 of
22
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of September 30, 2021
and for the nine-month periods ended September 30, 2021 and 2020

3.SEGMENT INFORMATION (continued)

Nine-month period ended September 30, 2021 (Unaudited)
Steel Mining Inter-segment eliminations Total
IFRS
Net sales 11,723,079 366,845 (328,857) 11,761,067
Cost of sales (7,278,630) (227,675) 331,217 (7,175,088)
Gross profit 4,444,449 139,170 2,360 4,585,979
Selling, general and administrative expenses (671,773) (20,481) - (692,254)
Other operating income, net 18,710 159 - 18,869
Operating income - IFRS 3,791,386 118,848 2,360 3,912,594
Management view
Net sales 11,723,079 434,546 (396,558) 11,761,067
Operating income 2,886,300 187,199 18,203 3,091,702
Reconciliation items:
Differences in Cost of sales 820,892
Operating income - IFRS 3,912,594
Financial income (expense), net 71,528
Equity in earnings of non-consolidated companies 301,994
Income before income tax expense - IFRS 4,286,116
Depreciation and amortization - IFRS (398,124) (47,458) - (445,582)

Nine-month period ended September 30, 2020 (Unaudited)
Steel (1) Mining Inter-segment eliminations Total
IFRS
Net sales 6,102,254 284,802 (231,297) 6,155,759
Cost of sales (5,223,336) (195,048) 232,544 (5,185,840)
Gross profit 878,918 89,754 1,247 969,919
Selling, general and administrative expenses (547,784) (18,351) - (566,135)
Other operating income, net (194,990) (576) - (195,566)
Operating income - IFRS 136,144 70,827 1,247 208,218
Management view
Net sales 6,102,254 278,830 (225,325) 6,155,759
Operating income 316,151 73,881 7,992 398,024
Reconciliation items:
Differences in Cost of sales (189,806)
Operating income - IFRS 208,218
Financial income (expense), net 77,789
Equity in earnings of non-consolidated companies (370)
Income before income tax expense - IFRS 285,637
Depreciation and amortization - IFRS (441,020) (36,034) - (477,054)

(1) Comparative information have been adjusted (see Note 11).
Page 10 of
22
TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of September 30, 2021
and for the nine-month periods ended September 30, 2021 and 2020

3. SEGMENT INFORMATION (continued)

GEOGRAPHICAL INFORMATION

The Company has revenues attributable to the Company's country of incorporation (Luxembourg) related to a contract acquired as a part of the acquisition of the participation in Ternium Brasil Ltda.

For purposes of reporting geographical information, net sales are allocated based on the customer's location. Allocation of non-current assets is based on the geographical location of the underlying assets.
Nine-month period ended September 30, 2021 (Unaudited)
Mexico Southern region Brazil and other markets Total
Net sales 6,769,705 2,430,006 2,561,356 11,761,067
Non-current assets (1) 4,785,029 879,198 1,695,273 7,359,500
Nine-month period ended September 30, 2020 (Unaudited)
Mexico Southern region Brazil and other markets Total
Net sales 3,257,628 1,129,844 1,768,287 6,155,759
Non-current assets (1) 4,688,232 949,935 1,795,957 7,434,124
(1) Includes Property, plant and equipment and Intangible assets.
4.COST OF SALES
Nine-month period ended
September 30,
2021 2020
(Unaudited)
Inventories at the beginning of the year 2,001,781 2,158,298
Plus: Charges for the period
Raw materials and consumables used and
other movements
7,343,465 3,541,850
Services and fees 112,217 82,713
Labor cost 520,069 388,421
Depreciation of property, plant and equipment 385,393 391,592
Amortization of intangible assets 16,623 11,875
Maintenance expenses 420,506 269,098
Office expenses 5,496 3,874
Insurance 8,584 7,845
Change of obsolescence allowance 777 197
Recovery from sales of scrap and by-products (26,634) (14,920)
Others 13,167 12,281
Less: Inventories at the end of the period (3,626,356) (1,667,284)
Cost of Sales 7,175,088 5,185,840

Page 11 of
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TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of September 30, 2021
and for the nine-month periods ended September 30, 2021 and 2020

5.SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Nine-month period ended
September 30,
2021 2020
(Unaudited)
Services and fees 44,136 39,835
Labor cost 190,631 139,067
Depreciation of property, plant and equipment 10,930 12,059
Amortization of intangible assets 32,636 61,528
Maintenance and expenses 5,195 3,023
Taxes 118,021 64,802
Office expenses 24,100 20,428
Freight and transportation 254,194 212,107
(Decrease) Increase of allowance for doubtful accounts 73 656
Others 12,338 12,630
Selling, general and administrative expenses 692,254 566,135

6.FINANCE EXPENSE, FINANCE INCOME AND OTHER FINANCIAL INCOME (EXPENSES), NET
Nine-month period ended
September 30,
2021 2020
(Unaudited)
Interest expense (20,551) (38,857)
Finance expense (20,551) (38,857)
Interest income 54,160 30,895
Finance income 54,160 30,895
Net foreign exchange (loss) gain (25,400) 72,246
Change in fair value of financial assets 37,698 4,952
Derivative contract results 3,997 17,101
Others 21,624 (8,548)
Other financial income (expenses), net 37,919 85,751

7. PROPERTY, PLANT AND EQUIPMENT, NET
Nine-month period ended
September 30,
2021 2020
(Unaudited)
At the beginning of the year 6,504,681 6,539,581
Currency translation differences (173) (1,654)
Additions 365,734 408,231
Value adjustments of lease contracts 4,413 (9,543)
Disposals (19,428) (17,476)
Depreciation charge (396,323) (403,651)
Capitalized borrowing costs 5,902 10,890
Transfers and reclassifications (2,281) (579)
At the end of the period 6,462,525 6,525,799
Page 12 of
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TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of September 30, 2021
and for the nine-month periods ended September 30, 2021 and 2020

8. INTANGIBLE ASSETS, NET
Nine-month period ended
September 30,
2021 2020
(Unaudited)
At the beginning of the year 908,583 943,838
Additions 47,208 37,311
Amortization charge (49,259) (73,403)
Transfers/Disposals (9,557) 579
At the end of the period 896,975 908,325

9.INVESTMENTS IN NON-CONSOLIDATED COMPANIES

Company Country of incorporation Main activity Voting rights as of Value as of
September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020
Usinas Siderurgicas de Minas Gerais S.A. - USIMINAS Brazil Manufacturing and selling of steel products 34.39% 34.39% 633,420 422,948
Techgen S.A. de C.V. Mexico Provision of electric power 48.00% 48.00% 58,559 42,625
Other non-consolidated companies (1) 5,367 5,733
697,346 471,306
(1) It includes the investments held in Finma S.A.I.F., Techinst S.A., Recrotek S.R.L. de C.V. and Gas Industrial de Monterrey S.A. de C.V.

Usinas Siderurgicas de Minas Gerais S.A. - USIMINAS

As of September 30, 2021, Ternium, through its subsidiaries, owns a total of 242.6 million ordinary shares and 8.5 million preferred shares, representing 20.4% of the issued and outstanding share capital of Usinas Siderurgicas de Minas Gerais S.A. - USIMINAS ("Usiminas"), one of the main producers of flat steel products in Brazil for the energy, automotive and other industries.

Ternium, through its subsidiaries, together with Tenaris S.A.'s Brazilian subsidiary Confab Industrial S.A. ("TenarisConfab"), are part of Usiminas' control group, comprising the so-called T/T Group. As at September 30, 2021, the Usiminas control group holds, in the aggregate, 483.6 million ordinary shares bound to the Usiminas shareholders' agreement, representing approximately 68.6% of Usiminas' voting capital. The Usiminas control group, which is bound by a long-term shareholders' agreement that governs the rights and obligations of Usiminas' control group members, is currently composed of three sub-groups: the T/T Group; the NSC Group, comprising Nippon Steel Corporation ("NSC"), Metal One Corporation and Mitsubishi Corporation; and Usiminas' pension fund Previdência Usiminas. The T/T Group holds approximately 47.1% of the total shares held by the control group (39.5% corresponding to the Ternium entities and the other 7.6% corresponding to TenarisConfab); the NSC Group holds approximately 45.9% of the total shares held by the control group; and Previdência Usiminas holds the remaining 7%.

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TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of September 30, 2021
and for the nine-month periods ended September 30, 2021 and 2020

9.INVESTMENTS IN NON-CONSOLIDATED COMPANIES (continued)

The corporate governance rules reflected in the Usiminas shareholders agreement provide, among other things, that Usiminas' executive board will be composed of six members, including the chief executive officer and five vice-presidents, with Ternium and NSC nominating three members each. The right to nominate Usiminas' chief executive officer alternates between Ternium and NSC at every 4-year interval, with the party that does not nominate the chief executive officer having the right to nominate the chairman of Usiminas' board of directors for the same 4-year period. The Usiminas shareholders agreement also provides for an exit mechanism consisting of a buy-and-sell procedure-exercisable at any time after November 16, 2022 and applicable with respect to shares held by NSC and the T/T Group-, which would allow either Ternium or NSC to purchase all or a majority of the Usiminas shares held by the other shareholder.

As of September 30, 2021, the closing price of the Usiminas ordinary and preferred shares, as quoted on the BM&F Bovespa Stock Exchange, was BRL 15.72 (approximately $ 2.89; December 31, 2020: BRL 15.69 - $ 3.02) per ordinary share and BRL 16.12 (approximately $ 2.96; December 31, 2020: BRL 14.61 - $ 2.81) per preferred share, respectively. Accordingly, as of September 30, 2021, Ternium's ownership stake had a market value of approximately $ 726.3 million and a carrying value of $ 633.4 million.

The Company reviews periodically the recoverability of its investment in Usiminas. To determine the recoverable value, the Company estimates the value in use of the investment by calculating the present value of the expected cash flows or its fair value less costs of disposal.

As of September 30, 2021, the value of the investment in Usiminas is comprised as follows:

Value of investment USIMINAS
As of January 1, 2021 422,948
Share of results (1) 286,057
Other comprehensive income (27,713)
Dividends (47,872)
As of September 30, 2021 633,420
(1) It includes the adjustment of the values associated to the purchase price allocation.

The investment in Usiminas is based on the following calculation:

Usiminas' shareholders' equity 3,707,090
Percentage of interest of the Company over shareholders' equity 20.41 %
Interest of the Company over shareholders' equity 755,971
Purchase price allocation 53,139
Goodwill 191,093
Impairment (366,783)
Total Investment in Usiminas 633,420

On October 29, 2021, Usiminas issued its consolidated interim accounts as of and for the nine-month period ended September 30, 2021.

Page 14 of
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TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of September 30, 2021
and for the nine-month periods ended September 30, 2021 and 2020

9. INVESTMENTS IN NON-CONSOLIDATED COMPANIES (continued)

USIMINAS
Summarized balance sheet (in million $) As of September 30, 2021
Assets
Non-current 3,304
Current 2,511
Other current investments 295
Cash and cash equivalents 1,045
Total Assets 7,155
Liabilities
Non-current 578
Non-current borrowings 1,107
Current 1,240
Current borrowings 11
Total Liabilities 2,936
Non-controlling interest 512
Shareholders' equity 3,707
USIMINAS
Summarized income statement (in million $) Nine-month period ended
September 30, 2021
Net sales 4,829
Cost of sales (3,091)
Gross Profit 1,738
Selling, general and administrative expenses (143)
Other operating income (loss), net 115
Operating income 1,710
Financial income (expenses), net 103
Equity in earnings of associated companies 31
Profit before income tax 1,844
Income tax expense (416)
Net profit before non-controlling interest 1,428
Non-controlling interest in other subsidiaries (171)
Net profit for the period 1,257

Techgen S.A. de C.V.

Techgen stated as of and for the nine-month period ended September 30, 2021, that revenues amounted to $ 286 million ($ 314 million for the year ended December 31, 2020), net profit from continuing operations to $ 33 million ($44 million for the year ended December 31, 2020), non-current assets to $ 802 million ($ 833 million as of December 31, 2020), current assets to $ 70 million ($ 59 million as of December 31, 2020), non-current liabilities to $ 633 million ($ 709 million as of December 31, 2020), current liabilities to $ 117 million ($ 95 million as of December 31, 2020) and shareholders' equity to $ 122 million ($ 89 million as of December 31, 2020).

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TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of September 30, 2021
and for the nine-month periods ended September 30, 2021 and 2020


10. DISTRIBUTION OF DIVIDENDS

During the annual shareholders' meeting held on May 3, 2021, the shareholders approved a distribution of dividends of USD 0.21 per share (USD 2.10 per ADS), or approximately USD 421.0 million in the aggregate. The dividend was paid on May 11, 2021.

11. CONTINGENCIES, COMMITMENTS AND RESTRICTIONS ON THE DISTRIBUTION OF PROFITS

Contingencies, commitments and restrictions on the distributions of profits should be read in Note 24 to the Company's audited Consolidated Financial Statements for the year ended December 31, 2020.

Companhia Siderúrgica Nacional (CSN) - Tender offer litigation
In 2013, the Company was notified of a lawsuit filed in Brazil by Companhia Siderúrgica Nacional, or CSN, and various entities affiliated with CSN against Ternium Investments, its subsidiary Ternium Argentina, and TenarisConfab. The entities named in the CSN lawsuit had acquired a participation in Usiminas in January 2012. The CSN lawsuit alleges that, under applicable Brazilian laws and rules, the acquirers were required to launch a tag-along tender offer to all non-controlling holders of Usiminas ordinary shares for a price per share equal to 80% of the price per share paid in such acquisition, or BRL 28.8, and seeks an order to compel the acquirers to launch an offer at that price plus interest. If so ordered, the offer would need to be made to 182,609,851 ordinary shares of Usiminas not belonging to Usiminas' control group; Ternium Investments and Ternium Argentina's respective shares in the offer would be 60.6% and 21.5%.

On September 23, 2013, the first instance court dismissed the CSN lawsuit, and on February 8, 2017, the court of appeals of São Paulo maintained the understanding of the first instance court. On March 6, 2017, CSN filed a motion for clarification against the decision of the court of appeals, which was rejected on July 19, 2017. On August 18, 2017, CSN filed with the court of appeals an appeal seeking the review and reversal of the decision issued by the court of appeals by the Superior Court of Justice. On March 5, 2018, the court of appeals ruled that CSN's appeal did not meet the requirements for review by the Superior Court of Justice and rejected such appeal. On May 8, 2018, CSN appealed against such ruling and on January 22, 2019, the court of appeals rejected such appeal and ordered that the case be submitted to the Superior Court of Justice. On September 10, 2019, the Superior Court of Justice declared CSN's appeal admissible. The Superior Court of Justice will review the case and will then render a decision on the merits. The Superior Court of Justice is restricted to the analysis of alleged violations to federal laws and cannot assess matters of fact.

Ternium continues to believe that all of CSN's claims and allegations are groundless and without merit, as confirmed by several opinions of Brazilian legal counsel, two decisions issued by the Brazilian securities regulator (CVM) in February 2012 and December 2016, and the first and second instance court decisions referred to above. Accordingly, no provision has been recorded in these Consolidated Condensed Interim Financial Statements.

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TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of September 30, 2021
and for the nine-month periods ended September 30, 2021 and 2020

11. CONTINGENCIES, COMMITMENTS AND RESTRICTIONS ON THE DISTRIBUTION OF PROFITS (continued)

Shareholder claims relating to the October 2014 acquisition of Usiminas shares
On April 14, 2015, the staff of CVM, determined that an acquisition of additional ordinary shares of Usiminas by Ternium Investments made in October 2014, triggered a requirement under applicable Brazilian laws and regulations for Usiminas' controlling shareholders to launch a tender offer to all non-controlling holders of Usiminas ordinary shares. The CVM staff's determination was made further to a request by NSSMC and its affiliates, who alleged that Ternium's 2014 acquisition had exceeded a threshold that triggers the tender offer requirement. In the CVM staff's view, the 2014 acquisition exceeded the applicable threshold by 5.2 million shares. On April 29, 2015, Ternium filed an appeal to be submitted to the CVM's Board of Commissioners. On May 5, 2015, the CVM staff confirmed that the appeal would be submitted to the Board of Commissioners and that the effects of the staff's decision would be stayed until such Board rules on the matter.

On June 15, 2015, upon an appeal filed by NSSMC, the CVM staff changed its earlier decision and stated that the obligation to launch a tender offer would fall exclusively on Ternium. Ternium's appeal has been submitted to the CVM's Board of Commissioners and it is currently expected that such Board will rule on the appeal in 2021. In addition, on April 18, 2018, Ternium filed a petition with the CVM's reporting Commissioner requesting that the applicable threshold for the tender offer requirement be recalculated taking into account the new ordinary shares issued by Usiminas in connection with its 2016 BRL 1 billion capital increase and that, in light of the replenishment of the threshold that would result from such recalculation, the CVM staff's 2015 determination be set aside. In the event the appeal is not successful, under applicable CVM rules Ternium may elect to sell to third parties the 5.2 million shares allegedly acquired in excess of the threshold, in which case no tender offer would be required.
ICMS deferral tax benefit - Action of Unconstitutionality
On March 31, 2005, through State Law No. 4,529 (Law RJ 4529), the State of Rio de Janeiro granted Ternium Brasil a tax incentive consisting of a deferral of ICMS payable by Ternium Brasil in connection with the construction and operation of the company's Rio de Janeiro steelmaking complex. The incentive applies in respect of the acquisition of fixed assets and certain raw materials (i.e. iron ore, pellets, alloys, coke, coal and scrap) and significantly reduces input ICMS credit accumulation by Ternium Brasil. The tax incentive was granted for a period of 20 years from the commencement of the construction works for Ternium Brasil's Rio de Janeiro steel complex.
In 2012, a Brazilian political party filed a direct action of unconstitutionality against Law RJ 4529 before the Brazilian Federal Supreme Court, claiming that the State Law should be declared unconstitutional because the tax incentive granted pursuant to Law RJ 4529 had not been approved by Brazil's National Council of Fiscal Policy (Conselho Nacional de Política Fazendária, or CONFAZ).
In August 2017, the Brazilian Congress enacted Supplementary Law No. 160/2017, instituting a mechanism through which the States may confirm any ICMS incentives they had granted in prior years without CONFAZ approval. In furtherance of such Supplementary Law, in December 2017 the Brazilian States adopted ICMS Convention 190/2017, establishing the applicable rules and deadlines for confirming such ICMS incentives. In accordance with the ICMS Convention 190/2017, the State of Rio de Janeiro published its list of ICMS incentives, including, among others, the ICMS benefit granted to Ternium Brasil, and filed with CONFAZ all relevant documents concerning such incentives. On July 27, 2018, the Governor of Rio de Janeiro issued Decree No. 46,378, pursuant to which the State of Rio de Janeiro reconfirmed, in accordance with ICMS Convention 190/2017, the ICMS tax benefits listed in its official gazette publication made pursuant to the Convention, including, among others, Ternium Brasil's ICMS tax benefits.

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TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of September 30, 2021
and for the nine-month periods ended September 30, 2021 and 2020

11. CONTINGENCIES, COMMITMENTS AND RESTRICTIONS ON THE DISTRIBUTION OF PROFITS (continued)
In October 2018, the State of Rio de Janeiro and the Federation of Industries of the State of Rio de Janeiro filed petitions arguing that the action of unconstitutionality against Law RJ 4529 could not be judged by the Brazilian Federal Supreme Court since, following the revalidation of such law under Supplementary Law No.160/17 and the ICMS Convention 190/2017, such action of unconstitutionality had lost its purpose. On October 20, 2020, the Reporting Justice Minister of the Brazilian Federal Supreme Court in charge of the case ruled that the action of unconstitutionality against Law RJ 4529 was impaired by the supervening loss of its object, and on November 17, 2020, the Reporting Justice Minister's ruling became final and not subject to any further recourses or appeals.

The tax benefits accumulated under Ternium Brasil's ICMS incentive amounted to approximately $ 1,089 million as of the acquisition date of Ternium Brasil on September 7, 2017. In accordance with the guidance in IFRS 3, the Company recorded as of the acquisition date a provision of $ 651.8 million (including estimated penalties and interest) in connection with this matter, together with an asset of $ 325.9 million arising from its right to recover 50% of the contingency amount from Thyssenkrupp.

As at December 31, 2020, both the asset, which expired on September 7, 2020, of $ 194.1 million ($ 254.4 million as of December 31, 2019) recorded in the Company's financial statements arising from its right to recover 50% of the contingency amount from Thyssenkrupp and the contingent liability of $ 380.1 million ($ 508.9 million as of December 31, 2019) recorded in its financial statements in connection with this matter have been derecognized. Accordingly, the Company recognized in the year ended December 31, 2020, a net gain in the amount of $ 186.0 million.

As of September 30, 2021, 2020 comparative information has been adjusted to reflect only the effect over the asset related to its expiry date on September 7, 2020, and the subsequent finalization of the legal proceeding on ICMS in November 2020, reflected in the last quarter of 2020.

The adjustment mentioned above involved the cancellation of a gain of $ 194.1 million in Other operating income (expenses), net, affecting:
•Profit before income tax expense, the Profit for the period, and the Total comprehensive income in the Income Statement, in the Statement of Comprehensive Income and the Statement of Changes in Equity for the three-month and nine-month periods ended September 30, 2020.
•Basic and diluted earnings per share with a lower earning of $ 0.10 per share in the three-month and nine-month periods ended September 30, 2020.
•Statement of Cash Flows in the Profit for the period line against the line "ICMS reversal of related asset", with no effect in the net cash provided by operating activities.

Subsequently, in the fourth quarter of 2020, the derecognition of the liability confirmed in November 2020 generated a non-cash gain effect during such quarter of $ 380.1 million.

The adjustment mentioned above did not affect the Income Statement, Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and Statement of Cash Flows as of and for the year ended December 31, 2020.

Page 18 of
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TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of September 30, 2021
and for the nine-month periods ended September 30, 2021 and 2020

12. RELATED PARTY TRANSACTIONS

As of September 30, 2021, Techint Holdings S.à r.l. ("Techint") owned 62.02% of the Company's share capital and Tenaris Investments S.à r.l. ("Tenaris") held 11.46% of the Company's share capital. Each of Techint and Tenaris were controlled by San Faustin S.A., a Luxembourg company ("San Faustin"). Rocca & Partners Stichting Administratiekantoor Aandelen San Faustin ("RP STAK"), a Dutch private foundation (Stichting), held voting rights in San Faustin sufficient in number to control San Faustin. No person or group of persons controls RP STAK.
The following transactions were carried out with related parties:
Nine-month period ended
September 30,
2021 2020
(Unaudited)
(i) Transactions
(a) Sales of goods and services
Sales of goods to non-consolidated parties 736,753 260,785
Sales of goods to other related parties 149,025 10,043
Sales of services and others to non-consolidated parties 135 131
Sales of services and others to other related parties 1,138 760
887,051 271,719
(b) Purchases of goods and services
Purchases of goods from non-consolidated parties 332,839 253,486
Purchases of goods from other related parties 50,875 66,295
Purchases of services and others from non-consolidated parties 7,154 6,998
Purchases of services and others from other related parties 75,490 57,106
Purchases of goods and services in connection with lease contracts from other related parties - 159
466,358 384,044
(c) Financial results
Income with non-consolidated parties 4,686 5,583
Expenses in connection with lease contracts from other related parties (787) (1,244)
3,899 4,339
(d) Dividends
Dividends from non-consolidated parties 48,371 262
48,371 262
(e) Other income and expenses
Income (expenses), net with non-consolidated parties 750 550
Income (expenses), net with other related parties 693 930
1,443 1,480
September 30, 2021 December 31, 2020
(Unaudited)
(ii) Period-end balances
(a) Arising from sales/purchases of goods/services
Receivables from non-consolidated parties 295,583 227,074
Receivables from other related parties 31,408 3,674
Advances to non-consolidated parties 6,374 6,647
Advances to suppliers with other related parties 4,664 7,732
Payables to non-consolidated parties (47,436) (30,407)
Payables to other related parties (24,640) (29,095)
Lease Liabilities with other related parties (3,072) (3,550)
262,881 182,075
Page 19 of
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TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of September 30, 2021
and for the nine-month periods ended September 30, 2021 and 2020

13. FINANCIAL INSTRUMENTS BY CATEGORY AND FAIR VALUE MEASUREMENT

1)Financial instruments by category

The accounting policies for financial instruments have been applied to the line items below. According to the scope and definitions set out in IFRS 7 and IAS 32, employers' rights and obligations under employee benefit plans, and non-financial assets and liabilities such as advanced payments and income tax payables, are not included.
As of September 30, 2021 (in $ thousands) Amortized
cost
Assets at fair value through profit or loss Assets at fair value through OCI Total
(i) Assets as per statement of financial position
Receivables 223,892 - - 223,892
Derivative financial instruments - 1,450 - 1,450
Trade receivables 2,066,894 - - 2,066,894
Other investments 469,100 3,082 351,765 823,947
Cash and cash equivalents 554,732 381,427 11,416 947,575
Total 3,314,618 385,959 363,181 4,063,758
As of September 30, 2021 (in $ thousands) Amortized
cost
Liabilities at fair value through profit or loss Total
(ii) Liabilities as per statement of financial position
Other liabilities 64,189 - 64,189
Trade payables 1,183,019 - 1,183,019
Derivative financial instruments - 1,068 1,068
Lease liabilities 272,044 - 272,044
Borrowings 1,500,463 - 1,500,463
Total 3,019,715 1,068 3,020,783

2)Fair Value by Hierarchy
IFRS 13 requires for financial instruments that are measured at fair value, a disclosure of fair value measurements by level. See note 28 of the Consolidated Financial Statements as of December 31, 2020 for definitions of levels of fair values and figures at that date.

The following table presents the assets and liabilities that are measured at fair value:
Fair value measurement as of September 30, 2021
(in $ thousands):
Description Total Level 1 Level 2 Level 3
Financial assets at fair value through profit or loss / OCI
Cash and cash equivalents 392,843 392,843 - -
Other investments 354,847 351,765 - 3,082
Derivative financial instruments 1,450 - 1,450 -
Total assets 749,140 744,608 1,450 3,082
Financial liabilities at fair value through profit or loss / OCI
Derivative financial instruments 1,068 - 1,068 -
Total liabilities 1,068 - 1,068 -
Page 20 of
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TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of September 30, 2021
and for the nine-month periods ended September 30, 2021 and 2020

13. FINANCIAL INSTRUMENTS BY CATEGORY AND FAIR VALUE MEASUREMENT (continued)

Fair value measurement as of December 31, 2020
(in $ thousands):
Description Total Level 1 Level 2 Level 3 (*)
Financial assets at fair value through profit or loss / OCI
Cash and cash equivalents 259,020 259,020 - -
Other investments 236,240 233,611 - 2,629
Derivative financial instruments 1,572 - 1,572 -
Total assets 496,832 492,631 1,572 2,629
Financial liabilities at fair value through profit or loss / OCI
Derivative financial instruments 6,358 - 6,358 -
Total liabilities 6,358 - 6,358 -
(*) The fair value of financial instruments classified as level 3 is not obtained from observable market information, but from measurements of the asset portfolio at market value provided by the fund manager. The evolution of such instruments during the year ended December 31, 2020, corresponds to the initial investment and to the changes in its fair value.

14. THE COVID-19 PANDEMIC AND ITS IMPACT ON TERNIUM

A novel strain of coronavirus (SARS-CoV-2) was reported to have surfaced in China in December 2019, spreading to the rest of the world in the first quarter of 2020. In March 2020, the World Health Organization declared COVID-19, the disease caused by the SARS-CoV-2 virus, a global pandemic. The COVID-19 outbreak is impacting economic activity worldwide.

In order to safeguard the health and safety of its employees, customers and suppliers, Ternium continues to apply preventive measures, including remote working under a hybrid work scheme for salaried employees, implementing a special operations protocol to ensure social distancing and providing medical assistance and supplies to onsite employees. As of the date of these consolidated condensed interim financial statements, remote work and other work arrangements have not materially adversely affected Ternium's ability to conduct operations. In addition, these alternative working arrangements have not adversely affected our financial reporting systems, internal control over financial reporting or disclosure controls and procedures.

Even though the negative effects of the pandemic in steel demand are behind us, and as of the issue date of these consolidated condensed interim financial statements all of Ternium's industrial facilities continued working at normal production levels, there remains considerable uncertainty about the future duration and extent of the pandemic with new and more contagious variants of the virus appearing and the vaccination programs not yet completed.

With total cash and cash equivalents and other current and non-current investments less borrowings of $ 0.3 billion as of September 30, 2021 and a manageable debt amortization schedule, Ternium has in place non-committed credit facilities and management believes it has adequate access to the credit markets. Considering its financial position and the funds provided by operating activities, management believes that the Company has sufficient resources to satisfy its current working capital needs and service its debt. Management also believes that Ternium's liquidity and capital resources give adequate flexibility to manage the capital spending programs and address short-term changes in business conditions, and that it is unlikely that Ternium will not be able to meet its financial covenants. Similarly, management does not expect to incur any material COVID-19-related contingencies.

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TERNIUM S.A.
Consolidated Condensed Interim Financial Statements as of September 30, 2021
and for the nine-month periods ended September 30, 2021 and 2020


15. FOREIGN EXCHANGE RESTRICTIONS IN ARGENTINA

Ternium's Argentine subsidiary, Ternium Argentina S.A., is currently operating in a complex and volatile economic environment. Beginning in September 2019, the Argentine government has imposed and continues to impose significant restrictions on foreign exchange transactions. Restrictions have tightened over time. These measures, however, have not had a significant effect on Ternium Argentina's ability to purchase USD at the prevailing official exchange rate for all of its imports of goods and for the acquisition of services from unrelated parties. By contrast, access to the Argentine foreign exchange market to distribute dividends or to pay royalties to related parties at the prevailing official exchange rate generally requires prior Argentine Central Bank approval, which is rarely, if ever, granted.

Ternium Argentina stated in its interim accounts as of September 30, 2021, and for the nine-month period then ended, that revenues amounted to $ 2,486 million, net profit from continuing operations to $ 678 million, total assets to $ 4,403 million, total liabilities to $ 510 million and shareholders' equity to $ 3,893 million.

All of Ternium Argentina's ARS-denominated assets and liabilities are valued at the prevailing official exchange rate. Although most of Ternium Argentina's cash holdings are either denominated or payable in ARS, our exposure to the ARS as of September 30, 2021, was diminished due to hedging strategies using derivative instruments as well as the investment in US dollar and inflation-linked securities.

As the context of volatility and uncertainty remains in place as of the issue date of these consolidated condensed interim financial statements, additional regulations that could be imposed in the future by the Argentine government could further restrict Ternium Argentina's ability to access the official foreign exchange market.

Pablo Brizzio
Chief Financial Officer
Page 22 of
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Disclaimer

Ternium SA published this content on 03 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 November 2021 11:03:27 UTC.


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Sales 2021 16 380 M - -
Net income 2021 3 988 M - -
Net cash 2021 1 208 M - -
P/E ratio 2021 2,06x
Yield 2021 6,48%
Capitalization 8 363 M 8 363 M -
EV / Sales 2021 0,44x
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Nbr of Employees 20 173
Free-Float 96,9%
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Spread / Average Target 36,1%
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Máximo Vedoya Chief Executive Officer & Executive Vice President
Pablo Brizzio Chief Financial Officer
Paolo Rocca Chairman
Roberto Demidchuk Chief Information Officer
Sebastián Martí Director-Investor Relations & Compliance
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