This article first appeared on GuruFocus.

Revenue: Increased 19% year-over-year to $1.5 billion.

EBITDA: Declined 6% year-over-year to $171 million.

EBITDA Margin: Expanded from 9% in Q1 to 11% in Q2.

Operating Income: Decreased to $49 million from $77 million in the same period last year.

Net Income: Reported a $13 million loss.

Net Debt: Approximately $1.76 billion at the end of June.

Net Debt-to-EBITDA Ratio: Approximately 2.9 times.

Cash and Cash Equivalents: Totaled approximately $284 million.

Capital Expenditures: $110 million during the quarter.

ICE Powertrain Revenue: Approximately $1.3 billion.

E-Mobility, Structure, and Chassis Revenue: Approximately $197 million, representing 13% of consolidated revenue.

North America Revenue: Increased 2.5% year-over-year to $704 million.

North America EBITDA: Declined 31% to $61 million.

Europe Revenue: Increased 39% year-over-year to $571 million.

Europe EBITDA: Increased 17% to $80 million.

Rest of the World Revenue: Increased 34% year-over-year to $229 million.

Rest of the World EBITDA: Improved 21% to $30 million.

Release Date: July 22, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Revenue increased by 19% year-over-year, driven by the acquisition of new operations and higher aluminum prices.

The company is making progress in expanding its presence in e-mobility, structure, and chassis applications, with several key program launches across multiple regions.

Nemak received a Porsche supplier quality rating for 2025, achieving an A-grade classification at its Altenmarkt and Dillingen facilities in Europe.

The integration of recently acquired operations is progressing well, with synergies estimated to be in the range of $20 million to $40 million by 2027.

Nemak was included in the Dow Jones best-in-class indices for the seventh consecutive year, highlighting its strong environmental, social, and governance practices.

Negative Points

EBITDA declined 6% year-over-year due to temporary factors in North America, a negative foreign exchange effect, and a high comparison base.

Extraordinary expenses in North America related to higher ICE volumes are impacting financial performance, with costs expected to gradually taper off.

Operating income decreased to $49 million from $77 million in the same period last year, reflecting lower EBITDA performance and higher depreciation and amortization.

Net result was a $13 million loss, driven by lower operating income and higher income tax.

Net debt-to-EBITDA ratio increased to approximately 2.9 times from 2.4 times at year-end, reflecting seasonal working capital increases and acquisition-related debt.

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Q & A Highlights

Q: Could you elaborate on the extraordinary expenses associated with the high production levels servicing the North America facilities? Should we expect this cost to continue in the upcoming quarters? A: Yes, as highlighted, we have been incurring extraordinary additional expenses in North America due to increased production on certain platforms. These costs range between $7 million to $10 million per quarter and are expected to gradually phase off in the upcoming quarters as we stabilize and adapt our equipment to new requirements. – Alberto Medina, CFO

Q: How comfortable are you with reaching the EBITDA guidance of $640 million, especially given the need for a significant acceleration in the second half? A: The guidance remains intact. Our Q2 performance is more reflective of our capabilities, and we are improving our North American operations. We are on track to deliver the guidance. – Herve Boyer, CEO

Q: Can you share more about the expected synergies from the GF acquisition, and what is the expected top line impact from the new Georgia facility? A: The synergies, estimated between $20 million to $40 million, stem from restructuring in Europe and streamlining fixed costs. The Georgia facility is expected to generate $170 million to $200 million in annual revenue. – Herve Boyer, CEO

Q: Regarding the USMCA review, how does Nemak’s current sourcing mix align with potential changes in rules of origin? A: We are prepared to support current regional content levels and will adjust if necessary. Our agreements pass any duty responsibilities to our customers, ensuring minimal impact on Nemak. – Alberto Medina, CFO

Q: Could you provide a same-store sales comparison, excluding the GF business for the second quarter? A: Revenue from Georg Fischer was $157 million in Q2. Comparing legacy business quarter-over-quarter, there is an increment of close to $80 million in revenue. – Alberto Medina, CFO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.