SIM

About Market Risk We are exposed to market risk, which is the potential risk of loss in fair values, cash flows or earnings due to changes in interest rates and foreign currency rates (primarily the peso/dollar exchange rate), as a result of our holdings of financial instrument positions. Our financial instruments include cash and cash equivalents, trade and other accounts receivable, accounts payable, and related party debt. We do not maintain a trading portfolio. We do not utilize derivative financial instruments to manage our market risks with respect to our financial instruments. Historically, based on the last ten years of data, devaluation of the Mexican peso has been 4% lower than the Mexico’s inflation. We are exposed to market risk due to fluctuations of the purchase price of natural gas. To limit our exposure, we have in the past, and may in the future, used derivative financial instruments, which consist of natural gas swap contracts. These contracts are recognized on our balance sheet at fair value. The swaps are considered as cash flow hedges since the cash flow exchanges under the swap are highly effective in mitigating exposure to natural gas price fluctuations. The change in fair value of the swaps is recorded as part of comprehensive income in stockholders’ equity for those contracts that are designated as accounting hedges until such time as the related item hedged is recorded in income. At that time, the hedging instrument’s fair value is recorded in income. For those contracts that are not designated as accounting hedges, the change in fair value is recorded directly into income. We do not believe our market risk with respect to these natural gas futures contracts is material. As of December 31, 2025, we did not have natural gas cash-flow exchange contracts or swaps. Market Risk Measurement We measure our market risk related to our financial instruments based on changes in interest rates and foreign currency rates utilizing a sensitivity analysis. The sensitivity analysis measures the potential loss in fair values, cash flows and earnings based on a hypothetical increase in interest rates and a decline in the peso/dollar exchange rate. We used market rates as of December 31, 2025 on our financial instruments to perform the sensitivity analysis. We believe that these potential changes in market rates are reasonably possible in the near-term (one year or less). Based upon our analysis of the impact of a 100-basis point increase in interest rates and a 13% decline in the peso/dollar exchange rate, we have determined that such increase in interest rates and such decline in the peso/dollar exchange rate would not have a material adverse effect on our earnings. We do not have material debt instruments in the market, we are not able to determine the impact of these changes on the fair value of those debt instruments. The sections below describe our exposure to interest rates and currency rates including the impact of changes in these rates on our earnings. Interest Rate Exposure We are exposed to changes in short-term interest rates as we invest in short-term dollar-denominated interest-bearing investments. On the liability side, we utilize fixed rate debt, and our financial debt was less than U.S.$1 million, we do not have material debt instruments in the market as of December 31, 2025. The floating rate debt is exposed to changes in interest expense and cash flows from changes in SOFR, while the fixed rate debt is mostly exposed to changes in fair value from changes in medium term interest rates. Based on an immediate 200 basis point rise in interest rates, we estimate that our earnings before taxes would not be significantly affected. Currency Rate Exposure Our primary foreign currency exchange rate exposure, we do not have material debt instruments in the market as well as our dollar-denominated trade payables. Our principal currency exposure is to changes in the peso/dollar exchange rate. We estimate that a 13% decline in the peso/dollar exchange rate would result in a decrease in our earnings before taxes of approximately Ps. 0.75 million (U.S.$0.04 million). The sensitivity analysis is an estimate and should not be viewed as predictive of our future financial performance. Additionally, we cannot assure that our actual losses in any particular year will not exceed the amounts indicated above. However, we do believe that these amounts are reasonable based on the financial instrument portfolio at December 31, 2025 and assuming that the hypothetical market rate changes selected by us in our market risk analysis occur during 2025. The sensitivity analysis does not give effect to the impact of inflation on its exposure to increases in interest rates or the decline in the peso/dollar exchange rate. 92

A. Reserved B. Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. D. Risk Factors Risks Related to the Global Economy and Our Business Our business could be adversely affected by global political developments, particularly with regard to United States policies toward Mexico. In 2024, the United States held presidential and congressional elections, resulting in the election of President Donald Trump and Republican control of both the Senate and House of Representatives. The new administration has since signaled and implemented a shift toward more protectionist economic policies, including the imposition of new tariffs and trade restrictions. In February 2025, the administration announced the reinstatement of Section 232 tariffs on all steel imports, effective March 2025. These measures have triggered retaliatory actions and heightened trade tensions with major trading partners such as Mexico, Canada, the European Union and China, which have disrupted international trade flows, increased input costs, and could reduce demand for our products. As of the date of this report, our steel exports to the United States are subject to a 25% tariff under Section 232 of the Trade Expansion Act of 1962. In fiscal year 2025, approximately 3.8% of our consolidated net sales were derived from exports to the United States, and we estimate that the reimposition of Section 232 tariffs resulted in approximately Ps. 280.3 million in additional costs during the year. We have sought to mitigate the impact of these tariffs through shifting product mix and increasing domestic sales in Mexico, although there can be no assurance that these measures will fully offset the impact of existing or future tariff actions. The potential for additional reciprocal tariffs, changes to the USMCA framework (scheduled for joint review in 2026), or retaliatory measures by Mexico or other trading partners could further affect our cost structure, pricing, and competitiveness. We continue to monitor the evolving trade environment and assess its impact on our operations. In addition, the administration issued an Executive Order in January 2025 instructing the U.S. Department of State to designate certain international cartels and transnational criminal organizations as Foreign Terrorist Organizations (“FTOs”). On February 20, 2025, eight entities located in Mexico were designated as FTOs. These designations expand the scope of U.S. enforcement tools and may expose individuals or companies, whether directly or indirectly linked, to increased scrutiny, civil or criminal liability, and business disruption. The potential direct and indirect effects of such designations on businesses operating in or with Mexico remain uncertain. 1 Changes in United States economic, political, and regulatory policies, including the possible renegotiation of trade agreements such as the United States-Mexico-Canada Agreement (USMCA), scheduled for joint review in 2026, or withdrawal from multilateral organizations like the WTO could significantly impact the Mexican economy, with consequences for our customers, suppliers, and operations. Mexico remains highly dependent on trade with the U.S., which receives more than 80% of its exports. Any weakening of this trading relationship, including through new tariffs or reduced investor confidence, could adversely affect Mexico’s GDP growth, exchange rates, investment levels, and overall economic stability. These developments, individually or in combination, could have a material adverse effect on our business, financial condition, results of operations, cash flows, prospects, and the market price of our securities. Unfair trade practices, import tariffs and/or barriers to free trade could negatively affect steel prices and our ability to export our products outside of Mexico, which could in turn adversely affect our results of operations. Our industry is significantly exposed to unfair trade practices, including dumping, government subsidies, and other anti-competitive pricing strategies, particularly from producers in countries with centrally planned or state-supported economies, such as China. During periods of weaker global demand, these practices tend to intensify, with excess steel production being redirected to international markets at below-market prices. This can result in significant pricing pressure and loss of market share, adversely affecting our revenues and margins. In early 2025, increased low-priced steel exports from Asia, particularly from China, prompted growing concerns about unfair competition in countries such as Brazil and Mexico. In response, government authorities in both countries began evaluating the imposition of anti-dumping duties or import quotas. If adopted, these measures could alter the competitive landscape by restricting low-cost imports, but they may also affect the availability and pricing of certain inputs or finished products that we rely on for our operations. Moreover, the global nature of our operations exposes us to a wide range of trade barriers, including import tariffs, quotas and other protectionist policies that can limit access to key export markets or undermine our competitiveness. The 2025 reinstatement by the United States of a 25% Section 232 tariff on all steel imports further contributes to global trade tension and uncertainty. Retaliatory tariffs or countermeasures by affected countries including Canada, Mexico and the European Union could disrupt supply chains, inflate production costs and diminish our ability to compete effectively in international markets. While these measures are often intended to protect domestic industries, they may displace excess production into less-restricted markets, intensifying competition and placing further downward pressure on global steel prices. We are unable to predict how current or future trade actions will evolve, nor can we ensure that retaliatory or protectionist responses will not escalate. Any prolonged application of such measures could materially and adversely affect our business, financial condition, results of operations and prospects. Our industry is cyclical and both recessions and prolonged periods of slow economic growth could have an adverse effect on our business. Demand for most of our products is cyclical in nature and sensitive to general economic conditions. Our business supports cyclical industries, such as the construction, energy, metals service centers, appliance and automotive industries. As a result, economic slowdowns or a downturn in any of these industries could materially and adversely affect our results of operations, financial condition and cash flows. The global economy has experienced a recovery from the conditions experienced at the onset of the COVID-19 pandemic, but subsequent labor shortages, supply chain disruptions, new or proposed legislation related to governmental spending, inflation and increases in interest rates have impacted, and may continue to impact, economic growth. Challenges from global production overcapacity in the steel industry, ongoing trade policy uncertainty, and shifting macroeconomic conditions, both in the United States and in other regions of the world, remain. We are unable to predict the duration of current economic conditions or the magnitude or timing of changes in economic activity. Future economic downturns or prolonged slow growth in the economy, a sector-specific slowdown in one of our key end-use markets, such as nonresidential construction, or changes in inflation could materially adversely affect our business, results of operations, financial condition and cash flows, especially in light of the capital-intensive nature of our business. 2 Our operations are sensitive to volatility in steel prices and the cost and availability of raw materials. We rely on international markets and certain key suppliers to obtain the raw materials that are critical to the manufacture of steel products. The prices of certain raw materials, including scrap metal and ferroalloys are negotiated on a monthly basis with our suppliers and are subject to market conditions. At any given time, we may be unable to obtain an adequate supply of these critical raw materials with price and other terms acceptable to us. The availability and prices of raw materials may also be negatively affected by new laws and regulations, allocation by suppliers, interruptions in production, accidents or natural disasters, war and other forms of armed conflict or political instability, changes in exchange rates, worldwide price fluctuations, including due to global political and economic factors, changes in governmental, business and consumer spending, inflation, increases in interest rates, labor shortages, and the availability and cost of transportation. Many countries that export steel restrict the export of scrap, protecting the supply chain of some foreign competitors. This trade practice creates an artificial competitive advantage for foreign producers that could limit our ability to compete. If our suppliers increase the prices of our critical raw materials, we may not have alternative sources of supply. In addition, to the extent that we have quoted prices to our customers and accepted customer orders for our products prior to purchasing necessary raw materials, we may be unable to raise the price of our products to cover all or part of the increased cost of the raw materials or pass along increased transportation costs. Also, if we are unable to obtain adequate, cost-effective and timely deliveries of our required raw materials, we may be unable to timely manufacture sufficient quantities of our products. This could cause us to lose sales, incur additional costs, experience margin compressions or suffer harm to our reputation and customer relationships. Excess capacity and oversupply have in the past and may continue in the future to weigh on the profitability of steel producers, including us. The steel industry is affected by global and regional production capacity and fluctuations in steel imports and exports, which are themselves affected by the existence and amounts of tariffs and customer and distributor stocking and destocking cycles. The steel industry has historically suffered from structural overcapacity globally, and the current global steelmaking capacity exceeds the current global consumption of steel, especially for long products. This overcapacity is affected by global macroeconomic trends and amplified during periods of global or regional economic weakness, leading to weaker global or regional demand. In particular, China is both the largest global steel consumer and the largest global steel producer, and the balance between its domestic production and consumption has been an important factor influencing global steel prices. At various points in recent years, reduced Chinese steel demand has not been fully offset by reduced Chinese steel production, which has led to a flood of Chinese steel exports into the markets in which we compete, weighing on demand and depressing market prices. While most recently constraints imposed on Chinese steel production have tempered the risk of excess production, such risk remains, along with the risk of increased exports, in particular if there is a global recession or a Chinese slowdown. See “Risk Factors—Risk Factors Related to Our Business—Unfair trade practices, import tariffs and/or barriers to free trade could negatively affect steel prices, which could in turn adversely affect our results of operations.” Market prices for iron ore also underpin those of steel (as its principal input component) to some extent, and iron ore prices depend both on supply and demand conditions. Excess iron ore supply relative to demand has led to depressed prices at various points in recent years and could recur, with a potential effect on steel prices. No assurance can be given that iron ore prices will not decline further, particularly if there is an economic downturn, Chinese steel demand declines, worldwide capacity increases due to new mines coming online or steel demand declines again due, for example, to impacts from geopolitical instability, including the continuing Russia/Ukraine conflict, tensions in the Middle East, U.S. military operations in Iran, Venezuela and other regional conflicts, in particular on energy supply and prices. A renewed phase of steel and iron ore oversupply could materially adversely affect our results of operations and financial condition. Increases in the cost, disruption of supply or shortage of energy could adversely affect our business and results of operations. Our steel plants are large consumers of electricity and natural gas. The prices for and availability of electricity and natural gas can be volatile. Energy prices are often affected by weather, political, regulatory and economic factors beyond our control, and we may be unable to raise the price of our products to offset increased energy costs. Disruptions that impact the supply of our energy resources could temporarily impair our ability to manufacture our products, which may adversely impact our results and financial condition. Furthermore, increases in our energy costs that are not similarly applicable to our competitors’ operations could materially adversely affect our business, results of operations, financial condition and cash flows. 3 We pay special rates for electricity and natural gas in Mexico and enter into fixed-price energy contracts. Failure to maintain such preferential or fixed-price agreements could increase our energy costs, which may adversely affect our business and results of operations. We buy electricity from the A leading global energy group and one of the world’s largest electricity companies by market capitalization, specializing in renewable energy. (IBERDROLA) at preferential rates after successfully obtaining the Qualified User Registry (Registro de Usuario Calificado). We also pay special rates to Transamerica Natural Gas Mexico, Ienova Gas, Naturgy and Engie for the natural gas used at our facilities in Mexico. In Brazil and Mexico, we enter into fixed-price contracts for energy and natural gas. We cannot assure you that these special rates will continue to be available to us in Mexico or that such rates may not increase significantly in the future. We also cannot assure you that we will be able to continue entering into fixed-price arrangements or that the price paid in such agreements will not increase. Changes in the price or supply of electricity or natural gas in the markets in which we operate could materially and adversely affect our business and results of operations. Competition from other steel producers may adversely affect our business. We face significant competition from other steel producers that compete with our products on price, quality and service. The markets for our products are highly competitive and a number of firms, domestic and foreign, participate in the steel, steel products and raw materials markets. Depending on a variety of factors, including the cost and availability of raw materials, energy, technology, labor, transportation and capital costs, currency exchange rates and excessive production, government subsidies of foreign steel producers and other global political and economic factors, our business may be materially adversely affected by more intense competitive forces. We may face increased competition due to the rapid development of technology and rising use of automation technologies. Failure to early adopt and incorporate such technologies to improve productivity, yields, manufacturing technology or support functional teams may put us at a long-term competitive disadvantage. Competition from other materials could significantly reduce demand and market prices for steel products, which could have an adverse impact on our results of operation and financial condition. In many applications, steel competes with other materials that may be used as steel substitutes, such as aluminum, concrete, glass, plastics and wood. Increased use or availability of such materials in substitution for steel products could significantly reduce demand and market prices for steel products, which could in turn have an adverse impact on our business, results of operation and financial condition. Labor disputes may disrupt our operations and relationships with our customers. Our ability to reduce labor costs may be limited in practice or encounter implementation difficulties. Approximately 63% of our employees in Mexico and 37% of our employees outside of Mexico are represented by labor unions and are covered by collective bargaining agreements, which are subject to periodic renegotiation. Strikes or work stoppages could occur prior to, or during, negotiations preceding new collective bargaining agreements, during wage and benefits negotiations or during other periods for other reasons, in particular in connection with any announced intentions to adapt our employee headcount. Further, any such strikes or stoppages could occur at various of our facilities. Prolonged strikes or stoppages could have an adverse impact on our results of operation and financial condition. Failure to comply with environmental laws and regulations may result in fines, penalties or other significant liabilities or prevent us from operating our facilities. We are subject to a broad range of environmental, health and safety laws and regulations in each of the jurisdictions in which we operate. These laws and regulations impose increasingly stringent standards regarding general health and safety, air emissions, discharges of wastewater, the use, handling and transportation of hazardous, toxic or dangerous materials, waste disposal practices and the remediation of environmental contamination, and health and safety matters, among other things. The costs of complying with, and the imposition of liabilities pursuant to these laws and regulations can be significant, and compliance with new and more stringent obligations may require additional capital expenditures or modifications in operating practices. Failure to comply can result in civil and/or criminal penalties being imposed, the suspension of permits, requirements to curtail or suspend operations and lawsuits by third parties. Despite our efforts to comply with environmental laws and regulations, environmental incidents or events that negatively affect the operations of our facilities may occur. In addition, we cannot assure you that we will always operate in compliance with environmental laws and regulations. If we fail to comply with these laws and regulations, we may be assessed fines or penalties, be required to make large expenditures to comply with such laws and regulations, or be forced to shut down non-compliant operations and face lawsuits by third parties. In addition, environmental laws and regulations are becoming increasingly stringent and it is possible that future laws and regulations may require us to undertake material environmental compliance expenditures and require modifications in our operations. Furthermore, we need to maintain existing and obtain future environmental permits in order to operate our facilities. The failure to obtain necessary permits or consents or the loss of any permits could result in significant fines or penalties or prevent us from operating our facilities. We may also be subject, from time to time, to legal proceedings brought by private parties or governmental agencies with respect to environmental matters, including matters involving alleged property damage or personal injury that could result in significant liability. Certain of our facilities in the United States have been and continue to be the subject of administrative action by federal, state and local environmental authorities. See “Item 8—Financial Information—Legal Proceedings.” 4 We may incur significant liabilities if we are required to remediate contamination at our facilities. Certain of our U.S. facilities are currently under investigation for environmental contamination and we incur costs and liabilities associated with the assessment and remediation of contaminated sites. While some of these investigations and remediation efforts relate to legacy activities by prior owners of our facilities, we may in the future be subject to similar investigations or required to undertake remediation measures. In addition to the impact on current facilities and operations, environmental remediation obligations can rise substantial liabilities in respect of divested assets and past activities. We recognize a liability for environmental remediation when it becomes probable that such remediation will be required and the amount can be reasonably estimated. As estimated costs to remediate change, or when new liabilities become probable, we adjust the record liabilities accordingly. However, due to the numerous variables associated with the judgments and assumptions that are part of these estimates and changes in governmental regulations and environmental technologies over time, we cannot assure you that our environmental reserves will be adequate to cover such liabilities or that our environmental expenditures will not differ significantly from our estimates or materially increase in the future. Failure to comply with any legal obligations requiring remediation of contamination could result in liabilities, imposition of cleanup liens and fines, and we could incur large expenditures to bring our facilities into compliance. See “Item 8—Financial Information—Legal Proceedings.” Global or regional health emergencies, including future pandemics, could materially adversely affect our business, operations, financial condition and cash flows. Public health emergencies, such as pandemics, outbreaks of infectious diseases or other global health crises, have in the past materially disrupted global economic activity, supply chains, labor markets and financial systems. Future health emergencies—whether viral, bacterial or environmental in nature—could again result in governmental restrictions, labor force disruptions, volatility in input costs or supply chain delays. These impacts could increase our operational costs, reduce productivity, delay customer deliveries, and adversely affect demand for our products. The long-term consequences of global health events are inherently uncertain and could amplify other risks we face, including inflationary pressures, shortages of critical materials, and logistical constraints. As a result, any future health emergency could materially adversely affect our business, results of operations, financial condition and cash flows. Implementing our growth strategy, which may include additional acquisitions, may adversely affect our operations. As part of our growth strategy, we may seek to expand our existing facilities, build additional plants, acquire additional steel production assets, enter into joint ventures or form strategic alliances that we expect will expand or complement our existing business. If we undertake any of these transactions, they will likely involve some or all of the following risks: ● disruption of our ongoing business; ● diversion of our resources and of management’s time; ● decreased ability to maintain uniform standards, controls, procedures and policies; ● difficulty managing the operations of a larger company; ● increased likelihood of involvement in labor, commercial or regulatory disputes or litigation related to the new enterprise; ● potential liability to joint venture participants or to third parties; ● difficulty competing for acquisitions and other growth opportunities with companies having greater financial resources; and ● difficulty integrating the acquired operations and personnel into our existing business. We will require significant capital for acquisitions and other strategic plans, as well as for the maintenance of our facilities and compliance with environmental regulations. We may not be able to fund our capital requirements from operating cash flow and we may be required to issue additional equity or debt securities or obtain additional credit resources, which could result in additional dilution to our shareholders. We cannot assure you that adequate equity or debt financing would be available to us on favorable terms or at all. If we are unable to fund our capital requirements, we may not be able to implement our growth strategy. 5 We intend to continue to pursue a growth strategy, the success of which will depend in part on our ability to acquire and integrate additional facilities. Some of these acquisitions may be outside of Mexico, the United States, Canada and Brazil. Acquisitions involve special risks, in addition to those described above, that could adversely affect our business, financial condition and results of operations, including the assumption of legacy liabilities and the potential loss of key employees. We cannot assure you that any acquisition we make will not materially and adversely affect us or that any such acquisition will enhance our business. We are unable to predict the likelihood of any additional acquisitions being proposed or completed in the near future or the terms of any such acquisitions. Disruptions to our manufacturing operations caused, for example, by equipment failures, natural disasters, accidents, explosions, epidemics or pandemics, geopolitical conflicts or extreme weather events could adversely affect our business, results of operations, financial condition and cash flows. Steel manufacturing processes are dependent on critical steel-making equipment, such as furnaces, continuous casters, rolling mills and electrical equipment (such as transformers), and such equipment may incur downtime as a result of unanticipated failures or other events, such as fires, explosions, furnace breakdowns or as a result of natural disasters, accidents, epidemics or pandemics or severe weather conditions. Our manufacturing facilities have experienced, and may in the future experience, plant shutdowns or periods of reduced production as a result of such events. In addition, broader geopolitical instability, including the continuing Russia/Ukraine conflict, tensions in the Middle East, and U.S. military operations in Iran, and Venezuela in 2026, have contributed to volatility in commodity markets, energy prices, and global economic uncertainty, all of which could adversely affect demand for our products. Natural disasters and severe weather conditions could lead to significant damage at our production facilities and general infrastructure or cause shutdowns. Severe weather conditions can also affect our operations due to the long supply chain for certain of the raw materials we use in our processes. Water in particular is crucial to the steelmaking process, and the risk that the authorities may restrict license to withdraw water as a result of chronic drought could increase operating costs and reduce production capacity. Damage to our production facilities due to natural disasters and severe weather conditions could, to the extent that lost production cannot be compensated for by unaffected facilities, adversely affect our business, results of operations or financial condition. More generally, these severe weather conditions could increase in frequency and severity due to climate change. We do not maintain insurance covering losses resulting from catastrophes or business interruptions. In the event we are not able to remedy any significant interruption of our manufacturing capabilities in a prompt or cost-effective manner, our operations could be adversely affected. In addition, if any of our plants are severely damaged or their production capabilities is otherwise significantly affected, we would likely suffer significant losses and capital investments necessary to repair any destroyed or damaged facilities or machinery and would adversely affect our profitability, liquidity and financial condition. Failure to obtain or maintain quality and environmental management certifications may put us at a competitive disadvantage or reduce demand for our products. Automotive parts customers in Mexico and the United States require us to obtain and maintain certifications regarding certain quality and environmental compliance standards, such as ISO 9001, TS 16949 and ISO 14001. While all of our facilities serving such customers comply with such certifications, any failure by us to maintain or renew such certifications, or any failure by us to obtain or comply with any new certifications that may be required by our customers or market practice from time to time, could adversely affect our ability to serve our target market, retain our client base or attract new customers. We cannot provide any assurance that we will be able to maintain these certifications in a timely or cost efficient manner, or at all. Participants in the SBQ steel market must also maintain “approved supplier” certifications such as IATF 16949 (International Automotive Task Force) and ISO 9001 (International Organization for Standardization), which are required by the automotive industry to ensure vehicle quality and safety. While we are an “approved supplier” of steel products for our automotive parts customers, any failure by us to maintain or renew such certifications, including as a result of any future modifications to the requirements necessary to renew or maintain such certifications, could adversely affect our ability to serve our target market, retain our client base, or attract new customers. Maintaining these certifications is key to preserving our market share. We cannot provide any assurance that we will be able to maintain these certifications in a timely or cost-efficient manner, or at all. 6 Any legal proceedings, investigations or claims against us could be costly and time-consuming to defend, and, if adversely decided or settled, could materially and adversely affect our business, financial condition and results of operations and could harm our reputation regardless of the outcome. We may in the future become subject to legal proceedings, investigations, including claims that arise in the ordinary course of business. Any litigation, investigation or claim, whether meritorious or not, could harm our reputation, increase our costs and divert management’s attention, time and resources, which may in turn harm our business, financial condition and results of operations. Insurance might not cover such claims, might not provide sufficient payments to cover all the costs to resolve one or more such claims, we do not maintain insurance to cover these risks. Further, our share price could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any proceedings, investigations and claims. Greenhouse gas policies and regulations, particularly any binding restriction on emissions of greenhouse gases such as carbon dioxide, could negatively impact our steelmaking operations. Our steel making operations in Brazil and Mexico use electric arc furnaces where carbon dioxide generation is primarily linked to energy use, although our blast and electric arc furnaces have shutdown. In the United States, the Environmental Protection Agency has issued rules imposing inventory and reporting obligations to which some of our facilities are subject, and has also issued rules that will affect preconstruction permits for our facilities where increases in greenhouse gas pollutants are contemplated. The U.S. Congress has debated various measures for regulating greenhouse gas emission (such as carbon dioxide) and may enact them in the future. Such laws and regulations may also result in higher costs for coking coal, natural gas and electricity generated by carbon-based systems (such as coal-fired electric generating facilities). Such future laws and regulations, whether in the form of a cap-and-trade emissions permit system, a carbon tax or other regulatory regime may have a negative effect on our operations. Climate change policy is evolving at regional, national and international levels, and political and economic events may significantly affect the scope and timing of climate change measures that are ultimately put in place. As a signatory to the United Nations Framework Convention on Climate Change (the “UNFCCC”), Mexico became subject to the Paris Agreement to fight climate change, which was approved at the 21st session of the UNFCCC conference in 2015. Brazil is a member of the Paris Agreement. On January 27, 2026, the United States’ withdrawal from the Paris Agreement became effective. In addition, in January 2026, the administration announced its intention to withdraw the United States from the UNFCCC itself. The long-term implications of these withdrawals for domestic and international climate regulation remain uncertain, but shifts in U.S. climate policy could affect the regulatory landscape in other jurisdictions in which we operate. We depend on our senior management and their unique knowledge of our business and of the SBQ steel industry, and we may not be able to replace key executives if they leave. We depend on the performance of our executive officers and key employees. Our senior management has significant experience in the steel industry, and the loss of any member of senior management or our inability to attract and retain additional senior management could materially and adversely affect our business, results of operations, prospects and financial condition. We believe that the SBQ steel market is a niche market where specific industry experience is key to success. We depend on the knowledge of our business and the SBQ steel industry of our senior management team. In addition, we attribute much of the success of our growth strategy to our ability to retain most of the key senior management personnel of the companies and businesses that we have acquired. Competition for qualified personnel is significant, and we may not be able to find replacements with sufficient knowledge of, and experience in, the SBQ steel industry for our existing senior management or any of these individuals if their services are no longer available. Our business could be adversely affected if we cannot attract or retain senior management or other necessary personnel. Our tax liability may increase if the tax laws and regulations in countries in which we operate change or become subject to adverse interpretations. Taxes payable by companies in the countries in which we operate are substantial and include income tax, value-added tax, excise duties, profit taxes, payroll related taxes, property taxes and other taxes. Tax laws and regulations in some of these countries may be subject to change, varying interpretation and inconsistent enforcement. Ineffective tax collection systems and continuing budget requirements may increase the likelihood of the imposition of onerous taxes and penalties which could have a material adverse effect on our financial condition and results of operations. In addition to the usual tax burden imposed on taxpayers, these conditions create uncertainty as to the tax implications of various business decisions. This uncertainty could expose us to significant fines and penalties and to enforcement measures despite our best efforts at compliance, and could result in a greater than expected tax burden. In addition, many of the jurisdictions in which we operate, including Mexico, have adopted transfer pricing legislation. If tax authorities impose significant additional tax liabilities as a result of transfer pricing adjustments, it could have a material adverse effect on our financial condition and results of operations. It is possible that tax authorities in the countries in which we operate will introduce additional tax raising measures. The introduction of any such provisions may affect our overall tax efficiency and may result in significant additional taxes becoming payable. Any such additional tax exposure could have a material adverse effect on our financial condition and results of operations. 7 We are subject to information technology and cyber-security threats which could have an adverse effect on our business and results of operations. We utilize various information technology systems to efficiently address business functions ranging from the operation of our production equipment to administrative computation to the storage of data such as intellectual property and proprietary business information. We continuously evaluate our cyber-security systems and practices, assess potential threats, and improve our information technology networks, policies and procedures to address potential vulnerabilities. Although the Company did not experience a material impact to its operations in this instance, threats from increasingly sophisticated cyber-attacks particularly as the use of artificial intelligence makes these attempts look more legitimate or system failures could result in materially adverse operational disruptions or security breaches of our systems or those of our third-party service providers. These risks could result in disclosure or destruction of key proprietary information or personal data or reputational damage, theft of assets or trade secrets, or could adversely affect our ability to physically produce or transport steel, resulting in lost revenues, as well as delays in reporting our financial results. We also could be required to spend significant financial and other resources to remedy the damage caused by a cyber-security breach, including to repair or replace networks and information technology systems. We may also contend with potential liability for stolen information, increased cyber-security protection costs and litigation expenses. More broadly, while we continue to evaluate artificial intelligence and machine learning tools to improve operational efficiency and support business functions, the use of such technologies introduces inherent risks, including the potential for inaccurate outputs, unintended bias, data security vulnerabilities, and increased regulatory scrutiny. We do not currently rely on AI in a manner that is material to our core operations or financial reporting. We continue to monitor developments in AI regulation in the United States, Mexico, and Brazil, and will adapt our governance and disclosure practices as the regulatory landscape evolves. Our financial statements are prepared in accordance with IFRS and therefore are not directly comparable to financial statements of other companies prepared under U.S. GAAP or other accounting principles. We are listed on the Mexican Stock Exchange (Bolsa Mexicana de Valores, S.A.B. de C.V.), which requires us to prepare our financial statements in accordance with International Financial Reporting Standards (“IFRS”). IFRS significantly differs from U.S. GAAP in certain respects and items on the financial statements of a company prepared in accordance with IFRS may not reflect its financial position or results of operations in the same way they would had such financial statements been prepared in accordance with U.S. GAAP. Accordingly, our financial statements and reported earnings may not be directly comparable with companies in our business that prepare financial statements in accordance with U.S. GAAP. An increase in interest rates in the United States could adversely impact the Mexican economy and may have a negative effect on our financial condition or performance. A decision by the U.S. Federal Reserve to increase interest rates may lead to a general increase in interest rates in the United States. This, in turn, may redirect the flow of capital away from emerging markets and into the United States, because investors may be able to obtain greater risk-adjusted returns in larger or more developed economies rather than in Mexico. Thus, companies in emerging market economies such as Mexico could find it more difficult and expensive to borrow capital and refinance existing debt. This may negatively affect our potential for economic growth and could have a material adverse effect on our business and financial condition. Our controlling shareholder is able to exert significant influence on our business and policies and its interests may differ from those of other shareholders. Industrias CH, S.A.B. de C.V. (“Industrias CH”), which is controlled by the chairman of our board of directors, Rufino Vigil González, owns 51.31% of our shares as of December 31, 2025. Industrias CH nominated all current members of our board of directors and can exercise substantial influence and control over our business and policies, including the timing and payment of dividends. Industrias CH’s interests may differ significantly from those of other shareholders. Furthermore, as a result of Industrias CH’s significant equity position, there is currently limited liquidity in our series B shares and the American Depositary Shares (“ADSs”). 8 Mr. Sergio Vigil González is the Chief Executive Officer of Industrias CH and has in previous years exercised a senior role in our management despite having no formal role in our Company. Since July 2024, he is the Chief Executive Officer of our Company. In this function, Mr. Vigil continues to direct our business strategies, negotiates potential acquisitions and directs intercompany loans, among other things. Mr. Vigil is the brother of our controlling shareholder and Chairman of our board of directors, Rufino Vigil González. We have in the past and may in the future engage in related party transactions with our affiliates. Historically, we have engaged in a number and variety of transactions with our affiliates, including entities that Industrias CH owns or controls. While we believe that these transactions were made on terms that were not less favorable to us than those obtainable on an arm’s-length basis, there was no independent determination of that fact. We expect that in the future we will continue to enter into transactions with our affiliates, and some of these transactions may be significant. See Item 7.B “Related Party Transactions.” Risks Related to Internal Controls and Financial Reporting If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results. Effective internal controls are necessary for us to provide reliable financial reports. We have taken a number of measures to remediate the historical material weaknesses and continue to evaluate steps to enhance our internal controls. However, these remediation measures have been and may continue to be time consuming and costly and we cannot be certain that these initiatives will ultimately have the intended effects. If we identify additional material weaknesses, we may be unable to provide required financial information in a timely and reliable manner and may incorrectly report financial information. In addition, the existence of material weaknesses in our internal controls over financial reporting could adversely affect our reputation or investor perceptions of us, which could have a negative effect on the price of our securities. We cannot assure you that the measures we have taken and plan to take in the future will prevent the identification of any additional material weaknesses or that restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal controls over financial reporting. Even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements. For details about our internal control deficiencies and remediation, see Items 15.B. “Controls and Procedures—Management’s Annual Report on Internal Control Over Financial Reporting – Material Weaknesses,” 15.C. “Attestation Report of the Independent Registered Public Accounting Firm,” 15.D. “Changes in Internal Control over Financial Reporting,” and 8 “Financial Information-Legal Proceedings.” Risks Related to the Automotive Industry Sales volume in the automotive industry is volatile and could decline if there is a financial crisis, recession, public health emergency, or significant geopolitical event. A reduction in automotive industry sales could adversely affect vehicle manufacturing, which could in turn have an adverse effect on our business and results of operations. The automotive market accounted for approximately 78% of our net sales of SBQ products in 2025. Vehicle sales are affected by overall economic and market conditions, consumer behavior, and developing trends such as shared vehicle ownership and ridesharing services. A slowdown in automotive industry sales due to any of these factors could reduce the amount of vehicles manufactured, which could materially affect demand for the steel products we produce and sell. Any reduction in vehicles manufactured, including as a result of weaker demand, has had and could in the future have an adverse effect on our business and results of operations. 9 Our customers in the automotive industry continually seek to obtain price reductions from us, which may adversely affect our results of operations. A challenge that we and other suppliers of intermediary products used in the manufacture of automobiles face is continued price reduction pressure from our customers in the automobile manufacturing business. Downward pricing pressure has been a characteristic of the automotive industry in recent years and it is migrating to all our vehicular markets. Virtually all automobile manufacturers have aggressive price reduction initiatives that they impose upon their suppliers, and such actions are expected to continue in the future. In the face of lower prices to customers, we must continue to reduce our operating costs in order to maintain profitability. We have taken and continue to take steps to reduce our operating costs to offset customer price reductions; however, price reductions are adversely affecting our profit margins and are expected to do so in the future. If we are unable to offset customer price reductions through improved operating efficiencies, new manufacturing processes, sourcing alternatives, technology enhancements and other cost reduction initiatives, or if we are unable to avoid price reductions from our customers, our results of operations could be adversely affected. Risks Related to Mexico Adverse economic conditions in Mexico may adversely affect our financial performance. A substantial portion of our operations are conducted in Mexico and our business is affected by the performance of the Mexican economy. Mexico has historically experienced prolonged periods of economic crises, caused by internal and external factors over which we have no control. Such periods have been characterized by exchange rate instability, high inflation, high domestic interest rates, changes in oil prices, economic contraction, a reduction of international capital flows, balance of payment deficits, a reduction of liquidity in the banking sector and high unemployment rates. Decreases in the growth rate of the Mexican economy, periods of negative growth, or increases in inflation in Mexico could result in lower demand for our products. In recent years, the federal government of Mexico (the “Mexican Government”) cut spending in response to downward trends in international crude oil prices and it may do so again in the future. These cuts could adversely affect the Mexican economy and, consequently, our business, financial condition, operating results and prospects. We cannot assure you that economic conditions in Mexico will not worsen, or that those conditions will not have an adverse effect on our financial performance. Political, social and other developments in Mexico could adversely affect our business and operations. Political, social and other developments in Mexico may adversely affect our business. Social unrest, such as strikes, suspension of labor, demonstrations, acts of violence and terrorism in the Mexican states in which we operate could disrupt the operations of our facilities, which could have an adverse impact on our financial performance. The Mexican Government has exercised, and continues to exercise, significant influence over the Mexican economy. Accordingly, Mexican federal governmental actions and policies concerning the economy, the regulatory framework, the social or political context, and state-owned and stated controlled entities or industries could have a significant impact on private sector companies and on market conditions, prices and returns of Mexican securities. In the past, governmental actions have involved, among other measures, increases in interest rates, changes in tax policies, price controls, currency devaluations, capital controls and limits on imports. In October 2024, Claudia Sheinbaum assumed office as President of Mexico, succeeding Andrés Manuel López Obrador. While President Sheinbaum has maintained continuity with several policies of the prior administration, her presidency has also introduced new initiatives and changes in economic, social and regulatory policy. The potential impact of these and future policy changes, particularly in sectors such as energy, infrastructure, tax, labor and public security, remains uncertain. We cannot predict the effects that political developments in Mexico may have on the Mexican economy or on our industry, nor can we assure you that these events, over which we have no control, will not have a material adverse effect on our business, results of operations or financial condition. The Mexican government has exercised, and continues to exercise, significant influence over the Mexican economy. The Mexican Government has exercised, and continues to exercise, significant influence over the Mexican economy. Accordingly, Mexican Government actions and policies concerning the economy, state-owned enterprises and state controlled, funded or influenced financial institutions could have a significant impact on private sector entities in general and on us in particular, and on market conditions, prices and returns on securities of Mexican companies. The Mexican Government occasionally makes significant changes in policies and regulations, and may do so again in the future. Actions to control inflation and other regulations and policies have involved, among other measures, increases in interest rates, changes in tax policies, price controls, currency devaluations, capital controls and limits on imports. Tax legislation in Mexico is subject to continuous change and we cannot assure you whether the Mexican government may maintain existing political, social, economic or other policies, or whether changes may have a material adverse effect on our financial performance. 10 Mexico has experienced a period of heightened criminal activity, which could affect our operations. In recent years, Mexico has experienced a period of heightened criminal activity, primarily due to the activities of drug cartels and related criminal organizations. Such criminal activity has at times been directed at private companies and their employees, including companies’ industrial properties, including through extortion, theft from trucks or industrial sites, kidnapping and other forms of crime and violence. Criminal activity can lead to increased insurance and security costs, and higher losses stemming from theft and extortion. Furthermore, corruption and links between criminal organizations and authorities could affect our business operations. In 2025 and early 2026, security incidents and government enforcement actions against organized crime groups in Mexico were followed by episodes of violence and disruption in various regions of the country, including in states where we have operations. The U.S. Department of State has maintained travel advisories recommending that U.S. citizens avoid or exercise increased caution when traveling to certain states in Mexico due to security concerns, some of which include regions where we operate facilities. These advisories and the broader perception of insecurity in Mexico could affect investment decisions, workforce availability, and the willingness of customers and business partners to engage in activities in affected regions. Criminal activity continues to exist in Mexico and is likely to continue. We cannot assure you that the levels of violent crime in Mexico, over which we have no control, will not have an adverse effect on Mexico’s economy and, as a result, on our operations and financial performance. Exchange rate fluctuations could adversely affect our financial performance. The Mexican peso has been subject to significant devaluations against the U.S. dollar in the past and may be subject to significant fluctuations in the future. Depreciation of the Mexican peso relative to the U.S. dollar increases a portion of our revenues in U.S. dollar terms, and as well as increases the cost of the raw materials we require for production. The Mexican Government does not currently restrict the ability of Mexican companies or individuals to convert Mexican pesos into U.S. dollars (except for certain restrictions related to cash transactions involving a U.S. dollar payment to a Mexican bank) or other currencies. However, severe devaluations or depreciations of the Mexican peso may result in governmental intervention to institute restrictive exchange control policies, as has occurred before in Mexico and other countries in Latin America. Accordingly, fluctuations in the value of the Mexican peso against other currencies, particularly the U.S. dollar, could have a material adverse effect on our business and financial condition. Currency fluctuations or restrictions on transfer of funds outside Mexico may also have an adverse effect on our financial performance and could adversely affect the U.S. dollar value of the price of our Series B shares and the corresponding ADSs. High interest rates in Mexico may increase our financing costs and negatively affect our business and operations. Mexico has experienced, and may again experience, high real and nominal interest rates. Mexico also has, and is expected to continue to have, high real and nominal interest rates relative to the United States. Future changes by the Mexican Central Bank (Banco de México) may negatively impact the Mexican economy or the value of securities issued by Mexican companies, including as a result of any precipitous unwinding of investments in emerging markets, depreciations and increased volatility in the value of their currency and higher interest rates. In addition, if we incur peso-denominated debt in the future, it could be at high interest rates, which could increase our financing costs and adversely affect our business, financial condition and results of operations. High inflation rates in Mexico may affect demand for our products and result in cost increases. Mexico has in the past and may in the future experienced high annual rates of inflation. High inflation rates could adversely affect our business and results of operations by reducing consumer purchasing power, thereby adversely affecting demand for our products, increasing certain costs beyond levels that we could pass on our customers, and by decreasing the benefit to us of revenues earned if the inflation rate exceeds the growth in our pricing levels. 11 Economic and political developments in the United States and elsewhere may adversely affect Mexican economic policy and, in turn, our operations. Economic conditions in Mexico are highly correlated with economic conditions in the United States due to the geographical proximity and the high degree of economic activity between the two countries. As a result, political developments in the United States, including changes in the American administration and governmental policies, can also have an impact on the exchange rate between the U.S. dollar and the Mexican peso, economic conditions in Mexico and the global capital markets. In addition, because the Mexican economy is heavily influenced by the U.S. economy, policies that may be adopted by the U.S. government that are unfavorable to Mexico may adversely affect economic conditions in Mexico. The macroeconomic environment in which we operate is beyond our control and the future economic environment may be less favorable than in recent years. The risks associated with current and potential changes in the Mexican and United States political environment and economies are significant and could have an adverse effect on our financial condition and results of operations. We are subject to Mexican and international anti-corruption, anti-bribery and anti-money laundering laws. Our failure to comply with these laws could result in penalties, which could harm our reputation and have an adverse effect on our business, results of operations and financial condition. Our business encompasses multiple jurisdictions and complex regulatory frameworks, including in relation to economic sanctions, anti-corruption and anti-money laundering matters. Laws and regulations in these areas are complex and constantly evolving and enforcement of them continues to increase. We are subject to the risk that our management, employees, contractors or any person doing business with us may (i) engage in fraudulent activity, corruption or bribery, (ii) circumvent or override our internal controls and procedures or (iii) misappropriate or manipulate our assets to our detriment. Further, we cannot ensure that these compliance policies and processes will prevent intentional, reckless or negligent acts committed by our management, employees, contractors or anyone doing business with us. Any failure—real or perceived—to comply with applicable governance or regulatory obligations by our management, employees, contractors or any person doing business with us could harm our reputation, limit our ability to obtain financing and otherwise have a material adverse effect on our business, financial condition and results of operations. If we fail to comply with any applicable anti-corruption, anti-bribery or anti-money laundering laws, we and our management, employees, contractors or any person doing business with us may be subject to criminal, administrative or civil penalties and other measures, which could in turn have material adverse effects on our reputation, business, financial condition and results of operations. Any investigation of potential violations of anti-corruption, anti-bribery or anti-money laundering laws by governmental authorities in Mexico or other jurisdictions could result in an inability to prepare our consolidated financial statements in a timely manner and could adversely impact our reputation, limit our ability to access financial markets and adversely affect our ability to obtain contracts, assignments, permits and other government authorizations necessary to participate in our industry, which, in turn, could have adverse effects on our business, results of operations and financial condition. Mexico has different corporate disclosure and accounting standards than those in the United States and other countries. A principal objective of the securities laws of the United States, Mexico and other countries is to promote full and fair disclosure of all material corporate information, including accounting information. However, there may be different or less publicly available information about issuers of securities in Mexico than is regularly made available by public companies in countries with more highly developed capital markets, including the United States. The disclosure standards imposed by the Mexican Stock Exchange may be different than those imposed by securities exchanges in other countries or regions such as the United States. As a foreign private issuer, we are not subject to U.S. proxy rules and are exempt from certain reports under the U.S. Securities Exchange Act of 1934 (the “Exchange Act”), as we are not required to file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as U.S. domestic reporting companies whose securities are registered under the Exchange Act. These exemptions and accommodations available to foreign private issuers may result in less frequent or less detailed disclosures than those provided by U.S. domestic reporting companies. 12 Risks Related to Brazil Brazilian political and economic conditions, and the Brazilian government’s economic and other policies, may negatively affect our business, operations and financial condition. The Brazilian federal government’s economic policies may have important effects on companies that operate in Brazil, including us. The Brazilian government has often changed monetary, taxation, credit, tariff and other policies to influence the course of Brazil’s economy. The Brazilian government’s actions to control inflation and implement other policies have at times involved wage and price controls, blocking access to bank accounts, imposing capital controls and limiting imports into Brazil. Our results of operations and financial condition may be adversely affected by factors such as: ● fluctuations in exchange rates; ● exchange control policies; ● interest rates; ● inflation; ● tax policies; ● expansion or contraction of the Brazilian economy, as measured by rates of growth in gross domestic product (“GDP”); ● changes in labor regulation; ● energy shortages; ● social and political instability; ● liquidity of domestic capital and lending markets; and ● other political, diplomatic, social and economic developments in or affecting Brazil. Risks Related to Ownership of our ADSs We are a foreign private issuer under the rules and regulations of the SEC and are therefore exempt from a number of rules under the Exchange Act and are permitted to file less information with the SEC than a domestic U.S. reporting company, which reduces the level and amount of disclosure that you receive. We are a foreign private issuer under the rules and regulations of the SEC and are therefore exempt from a number of rules under the Exchange Act and are permitted to file less information with the SEC than a domestic U.S. reporting company, which reduces the level and amount of disclosure that you receive. In addition, as a result of the enactment of the Holding Foreign Insiders Accountable Act (“HFIAA”) in December 2025, our directors and officers are no longer exempt from the Section 16(a) beneficial ownership reporting requirements of the Exchange Act. See “Item 16G—Corporate Governance”. As a foreign private issuer whose ADSs are listed on the NYSE American we are permitted to follow certain home country corporate governance practices instead of certain requirements of the NYSE American. Among other things, as a foreign private issuer we may also follow home country practice with regard to, the composition of the board of directors, director nomination procedure, compensation of officers and quorum at shareholders’ meetings. See Item 10.B “Memorandum and Articles of Association. 13 The market price of our ADSs has been, and may continue to be, highly volatile, and such volatility could cause the market price of our ADSs to decrease and could cause you to lose some or all of your investment in our ADSs. The stock market in general and the market prices of the ADSs on NYSE American, in particular, are or will be subject to fluctuation, and changes in these prices may be unrelated to our operating performance. During the second quarter of 2025, the market price of our ADSs fluctuated from a high of U.S.$34.59 per ADS to a low of U.S.$25 per ADS, and the price of our ADSs continues to fluctuate. We anticipate that the market prices of our securities will continue to be subject to wide fluctuations. The market price of our securities may be subject to a number of factors, including: ● announcements of new products by us or others; ● announcements by us of significant acquisitions, strategic partnerships, in-licensing, joint ventures or capital commitments ● the developments of the businesses and projects of our various subsidiaries; ● expiration or terminations of licenses, research contracts or other collaboration agreements; ● public concern as to the safety of the products we sell; ● the volatility of market prices for shares of companies with whom we compete; ● developments concerning intellectual property rights or regulatory approvals; ● variations in our and our competitors’ results of operations; ● changes in revenues, gross profits and earnings announced by us; ● changes in estimates or recommendations by securities analysts, if the ADSs are covered by analysts; ● fluctuations in the share price of our publicly traded holding company; ● changes in government regulations or patent decisions; and ● general market conditions and other factors, including factors unrelated to our operating performance. These factors may materially and adversely affect the market price of our securities and result in substantial losses by our investors. We cannot assure you that the ADSs will not be delisted from the NYSE American, which could negatively impact the price of the ADSs and our ability to access the capital markets. We cannot assure you that the ADSs will not be delisted from the NYSE American, which could negatively impact the price of the ADSs and our ability to access capital markets. The listing standards of the NYSE American provide that a company, in order to qualify for continued listing, must maintain a minimum share price of $1.00 and satisfy standards relative to minimum shareholders’ equity, minimum market value of publicly held shares and various additional requirements. If we fail to comply with all listing standards applicable to issuers listed on the NYSE American, the ADSs may be delisted. If the ADSs are delisted, it could reduce the price of the ADSs and the levels of liquidity available to our shareholders. In addition, the delisting of the ADSs could materially and adversely affect our access to the capital markets and any limitation on liquidity or reduction in the price of the ADSs could materially and adversely affect our ability to raise capital. Delisting from the NYSE American could also result in other negative consequences, including the potential loss of confidence by suppliers, customers and employees, the loss of institutional investor interest and fewer business development opportunities. There can be no assurance that we will not be classified as a passive foreign investment company (a “PFIC”) for U.S. federal income tax purposes, which could result in adverse U.S. federal income tax consequences to U.S. investors in shares of our common stock or ADSs. We will be classified as a PFIC in a particular taxable year if, after applying certain look-through rules, either (i) 75 percent or more of our gross income for the taxable year is passive income; or (ii) the average percentage of the value of our assets that produce or are held for the production of passive income is at least 50 percent. Passive income for this purpose generally includes dividends, interest, royalties, rents and gains from certain commodities transactions. Cash is generally considered a passive asset for these purposes. Goodwill is an active asset under the PFIC rules to the extent attributable to activities that produce active income. 14 Based on our audited financial statements and relevant market and shareholder data, we believe that we were not a PFIC for U.S. federal income tax purposes with respect to our 2025 and 2024 taxable years, and we do not expect to be a PFIC in the current taxable year or in the foreseeable future. However, whether we are a PFIC is a factual determination made annually after the close of the taxable year, and therefore may be subject to change depending, among other things, upon changes in the composition of our gross income and the relative quarterly average value of our assets. Because we hold a substantial amount of cash, we may be or become a PFIC for any taxable year if the value of our goodwill and other intangible assets that we believe should be treated as active assets are determined by reference to our market capitalization and our market capitalization fluctuates or declines considerably. Accordingly, there can be no assurance that we will not be a PFIC for any year in which a U.S. Holder, as defined in “Item 10.E. Additional Information—Taxation—Passive Foreign Investment Company Status,” holds series B shares or ADSs. If we were to be or become classified as a PFIC for any taxable year during which a U.S. Holder owns the ADSs or series B shares, certain adverse U.S. federal income tax could apply to such U.S. Holder, including increased tax on disposition gains and certain excess distributions and additional reporting requirements. See “Item 10.E. Additional Information— Taxation— Passive Foreign Investment Company Status”.

A. History and Development of the Company Overview Our legal name is Grupo Simec, S.A.B. de C.V. and our commercial name for advertising and publicity purposes is Simec. We are a Sociedad anónima bursátil de capital variable, organized under the laws of Mexico. We are domiciled in the city of Guadalajara, Jalisco, and our principal administrative office is located at Calzada Lázaro Cárdenas 601, Guadalajara, Jalisco, Mexico 44440. Our telephone number is +52-33-3770-6700 and our website is www.gsimec.com.mx. We are a diversified manufacturer, processor and distributor of SBQ steel and structural steel products with production and commercial operations in Mexico and Brazil, and, until 2023, the United States. We believe that, in 2025, 2024 and 2023 we were an important producer of SBQ products in Mexico in terms of shipped volume. Until August 2023, we were also an important producer of SBQ products in the United States; however, we ceased all steelmaking operations in the United States in August 2023 and have had no production activities at our U.S. facilities since then. We also believe that in 2025, 2024 and 2023, we were an important producer of structural and light structural steel products in Mexico in terms of shipped volume. Our SBQ products are used across a broad range of highly-engineered end-user applications, including axles, hubs and crankshafts for automobiles and light trucks, machine tools and off-highway equipment. Our structural steel products are mainly used in the non-residential construction market and other construction applications. We focus on the Mexican steel markets by providing high value-added products and services from our strategically-located plants. The quality of our products and services, together with cost benefits generated by our facility locations, has allowed us to develop long standing relationships with many of our SBQ clients, which include Mexico and U.S.-based automotive and industrial equipment manufacturers and their suppliers. In addition, our facilities located in the northwest and central parts of Mexico allow us to serve the structural steel and construction markets in those regions and southern California with an advantage in the cost of freight over competitors that do not have production facilities in such regions. History Our steel operations commenced in 1969 when a group of families from Guadalajara, Jalisco, formed Compañía Siderúrgica de Guadalajara, S.A. de C.V. (“CSG”), a mini-mill steel company. In 1980, Grupo Sidek, S.A. de C.V. (“Sidek”), our former parent company, was incorporated and became the holding company of CSG. In 1990, Sidek consolidated its steel and aluminum operations into a separate subsidiary, Grupo Simec, S.A. de C.V., a Mexican corporation with limited liability, organized under the laws of Mexico. 15 The Mexicali plant began operations in June 1993. It was established to expand production capacity and consolidate its position in the national and US markets thanks to its strategic border location. In March 2001, Sidek consummated the sale of its entire 62% controlling interest in our company to Industrias CH. Industrias CH subsequently increased its equity position in us through various conversions of debt to equity and capital contributions and currently holds, together with its direct, wholly-owned subsidiaries, approximately 76.19087% of our series B shares. In August 2004, we acquired the Mexican steel-making facilities of Industrias Ferricas del Norte S.A. (Corporación Sidenor of Spain, or “Grupo Sidenor”) located in Apizaco, Tlaxcala and Cholula, Puebla. We refer to this acquisition as the “Atlax Acquisition.” In July 2005, we and Industrias CH acquired 100% of the capital stock of Republic, a U.S. producer of SBQ steel. We acquired 50.2% of Republic’s stock through our majority owned subsidiary, SimRep, and Industrias CH purchased the remaining 49.8% through SimRep. Industrias CH currently owns 0.59% of the capital stock, and Grupo Simec the remaining 99.41%. On May 30, 2008, we acquired Aceros DM and certain affiliated companies (“Grupo San”), a long products rebar, wire rod and wire products steel mini-mill and the second-largest rebar producer in Mexico. Grupo San’s operations are based in San Luis Potosí, Mexico. On September 3, 2010, we formed a Brazilian entity denominated GV do Brazil Indústria e Comércio de Aço Ltda. On August 5, 2011, we acquired 1,300,000 square meters of land on Pindamonhangaba, São Paulo State, Brazil, for the construction of a new steel facility, which started operations in 2015. On January 16, 2015, we entered into a cooperation agreement with the government of the state of Tlaxcala, Mexico, to build a new steel facility on land adjacent to our existing plant in Tlaxcala with a production capacity of 600,000 tons of bar quality steel (SBQ). We started steelmaking operations at this facility in July 2018. On May 1, 2018, Grupo Simec, S.A.B de C.V. entered into a contract with Arcelor Mittal Brasil, S.A. for the acquisition of the steel products plants of Cariacica, in Espíritu Santo, and the transfer of the lease contract and subsequent purchase for the plant in Itauna, in Minas Gerais, both in Brazil. The production capacity of the Cariacica plant is 600,000 tons of liquid steel per year and 348,000 tons of rolled steel products per year and the production capacity of the Itauna plant is 120,000 tons of rolled steel products per year. On January 1, 2019, Grupo Simec, S.A.B. de C.V. increased its equity position to 99.41% in SimRep Corporation, by acquiring 83,862 ordinary shares, priced at U.S.$3.454 each, as repayment of outstanding debt, for a total subscription of U.S.$290 million. On June 11, 2021, CHQ Wire México, S.A. de C.V. (formerly Malla San 1, S.A. de C.V.) purchased the fixed assets of a wire production plant in Silao, Guanajuato. In August 2023, Republic Steel announced the cessation of its steelmaking operations in Canton, Solon, Massillon Ohio and Lackawanna, New York effective September 2023, due to various economic factors, including deteriorating market conditions and operational costs. Republic Steel has continued servicing its customers from its plant in Tlaxcala, Mexico. As of the date of this report, management has determined that the Republic Steel facilities will remain inactive unless changes in prevailing economic conditions justify resuming operations. Management does not currently intend to sell the facilities. Because management does not currently intend to sell the Republic Steel facilities, IFRS 5 (Non-current Assets Held for Sale and Discontinued Operations) does not apply. The assets continue to be accounted for under IAS 16 (Property, Plant and Equipment), measured at cost less accumulated depreciation and any impairment recognized in accordance with IAS 36. In 2024, the Company engaged an authorized independent appraiser to assess the fair value of Republic Steel’s assets. No impairment was identified. 16 On October 30, 2024, fatalities occurred at one of our steel plants located in Apizaco, Tlaxcala, in connection with a liquid steel spill at the plant. Immediate actions were taken to contain the situation and ensure the safety of our employees and surrounding areas. As of today, the affected assets are fully operational. On May 19, 2025, our subsidiary GV do Brasil Indústria e Comércio de Aço Ltda. (“GV do Brasil”) incorporated Siderúrgica Vale do Paraíba Ltda., a Brazilian sociedade limitada. GV do Brasil holds 99% of the share capital of Companhia Siderúrgica Vale do Paraíba, comprising 49,500,000 shares with a unit value of R$1.00 (R$49,500,000 in the aggregate), and our subsidiary Companhia Siderúrgica do Espírito Santo, S.A. holds the remaining 1%, comprising 500,000 shares (R$500,000 in the aggregate). GV do Brasil has exercised corporate control over Siderúrgica Vale do Paraíba since its incorporation. On November 26, 2025, Metrolinx, an agency of the Government of Ontario, Canada responsible for the development of public transportation in the greater Toronto area, expropriated land in Hamilton, Ontario, Canada owned by our subsidiary Republic Canadian Draw Inc., pursuant to Section 24 of the Expropriation Act, R.S.O. 1990, c. E.26. The aggregate expropriation price was CAD$15,915,627, consisting of CAD$15,200,000 attributable to the market value of the land and CAD$715,627 in statutory damages compensation. Of this amount, CAD$226,825 was withheld in respect of outstanding property taxes. Metrolinx paid CAD$14,324,065 to Republic Canadian Draw Inc. on December 10, 2025, and the remaining CAD$1,591,562 is payable no later than July 31, 2026, subject to deduction of any environmental remediation costs determined upon completion of Metrolinx’s environmental testing of the site. The buildings located on the expropriated land were transferred to Metrolinx without separate consideration and have been written off, together with the underlying land, in our 2025 consolidated financial statements. The machinery and equipment previously located at this facility were relocated to our Lackawanna, New York facility. Principal Capital Expenditures We continually seek to improve our operating efficiency and increase sales of our products through capital investments in new equipment and technology. These capital expenditures are financed primarily with funds that we segregate monthly from the results of operations generated by each facility. We currently estimate capital expenditures for the year 2026 will be approximately Ps. 2,653 million (U.S.$ 148 million), which consists of Ps. 1,331 million (U.S.$ 74 million) of estimated capital expenditures in our facilities in Mexico and Ps. 1,322 million (U.S.$ 73.5 million) consisting of capital expenditures in our facilities in Brazil. This estimate is subject to uncertainty and actual capital expenditures in 2026 may differ significantly from such estimate. In 2025, our capital expenditures amounted to approximately Ps. 2,892 million (U.S.$161.1 million), which consisted of Ps. 838 million (U.S.$ 46.7 million) of capital expenditures in our facilities in Mexico and Ps. 2,054 million (U.S.$ 114.4 million) consisting of capital expenditures in our facilities in Brazil. In 2024, our capital expenditures amounted to approximately Ps. 2,127 million (U.S.$103.7 million), which consisted of Ps. 195 million (U.S.$9.5 million) of capital expenditures in our facilities in Mexico and Ps. 1,932 million (U.S.$94.2 million) consisting of capital expenditures in our facilities in Brazil. In 2023, our capital expenditures amounted to approximately Ps. 2,492 million (U.S.$147.5 million), which consisted of Ps. 210 million (U.S.$12.4 million) of capital expenditures in our facilities in Mexico and Ps. 2,282 million (U.S.$135.1 million) consisting of capital expenditures in our facilities in Brazil. 17 B. Business Overview Prior to our United States steel facility closures in August 2023, we owned and operated 19 state-of-the-art steelmaking, processing and/or finishing facilities in the United States, Mexico, and Brazil. Although we continue to own all of our plants, including those in the United States, we ceased all production activities at our United States facilities in 2023 and did not operate any of these facilities during 2024 and 2025. Accordingly, we currently operate 12 steelmaking, processing, and finishing facilities with a combined annual crude steel installed production capacity of 6 million tons and a combined annual installed rolling capacity of 5.9 million tons. We own both mini-mill and integrated steelmaking facilities. We currently own and operate: ● a mini-mill in Guadalajara, Jalisco, Mexico; ● a mini-mill in Mexicali, Baja California, Mexico; ● two mini-mills in Apizaco, Tlaxcala, Mexico; ● a cold finishing facility in Cholula, Puebla, Mexico; ● a wire rod processing facility in Silao, Guanajuato, Mexico; ● two mini-mills in San Luis Potosí, San Luis Potosí, Mexico; ● two mini-mills in Pindamonhangaba, São Paulo (Brazil), a mini-mill in Cariacica, Espirito Santo (Brazil) and we own and operate rolling and finishing facilities in Itauna, Minas Gerais (Brazil). We report results in three segments: Mexico, United States and Brazil. In light of the closure of our Republic Steel plants in 2023, we continued to report limited results for the United States segment in 2025 due to residual activity; however, we expect to exclude this segment from our reportable segments in future years. Business Strategy We seek to further consolidate our position as a leading producer, processor and distributor of SBQ steel in North America, structural steel and rebar in Mexico and rebar in Brazil. We also seek to expand our presence in the steel industry by identifying and pursuing growth opportunities and value enhancing initiatives. Our strategy includes: Improving our cost structure. We are continually working to reduce our operating costs and non-operating expenses and plan to continue to do so by reducing overhead expenses and operating costs through sharing best practices among our operating facilities and maintaining a conservative capital structure. Focusing on high margin and value-added products. We prioritize the production of high margin steel products over volume and utilization levels. We plan to continue to base our production decisions on achieving relatively high margins. Building on our strong customer relationships. We intend to strengthen our long-standing customer relationships by maintaining strong customer service and proactively responding to changing customer needs. Pursuing strategic growth opportunities. We have successfully grown our business by acquiring, integrating and improving under-performing operations. We intend to continue to pursue acquisition opportunities that will allow for disciplined growth of our business and value creation for our shareholders. We also intend to pursue organic growth by reinvesting the cash generated by our operating activities to expand the capacity and increase the efficiency of our existing facilities. 18 Our Products We produce a wide range of value-added SBQ steel, long-steel and medium-sized structural steel products. In our Mexican facilities, we produce I-beams, channels, structural and commercial angles, hot rolled bars (round, square and hexagonals), flat bars, rebar, cold finished bars, wire rods and wire products. Until the cessation of operations in 2023, our U.S. facilities produced hot-rolled bars, cold-finished bars, and other semi-finished products. In our Brazil facilities, we produce rebars, channels, structural and commercial angles. The following is a description of these products and their main uses: ● I-Beams. I-Beams, also known as standard beams, are I-shaped steel structural sections with two equal parallel sides joined together by the center with a transversal section, forming 90 degree angles. We produce I-beams in our Mexican and Brazil facilities and they are mainly used by construction sector as structural supports. ● Channels. Channels, also known as U-Beams because of their U-shape, are steel structural sections with two equal parallel sides joined together by its ends with a transversal section, forming 90 degree angles. We produce channels in our Mexican and Brazil facilities, and they are mainly used by construction sector as structure supports and for stocking systems. ● Angles. Angles are two equal-sided sections joined by their ends with a 90 degree angle, in an L-shape. We produce angles in our Mexican and Brazil facilities, and they are used mainly by construction and furniture industries as joist structures and framing systems. ● Hot rolled bars. Hot rolled bars are round, square and hexagonal steel bars that can be made of special or commodity steel. The construction, auto part and furniture industries mainly use the round and square bars. The hexagonal bars are made of special steel and are mainly used by the hand tool industry. We produce hot rolled bars in our Mexican and Brazil facilities. ● Flat bars. Flat bars are rectangular steel sections that can be made of special or commodity steel. We produce flat bars at our Mexican facilities. The auto part industry mainly uses special steel as springs, and the construction industry uses the commodity steel flat bars as supports. ● Rebar. Rebar are reinforced, corrugated round steel bars with sections from 0.375 to 1.5 inches in diameter. We produce rebar in our Mexican facilities and in our Brazil facilities. Rebar is only used by the construction industry to reinforce concrete. Rebar is considered a commodity product due to its general acceptance by most consumers of industry standard specifications. ● Cold-finished bars. Cold-finished bars are round and hexagonal SBQ steel bars transformed through a diameter reduction process. This process consists of (1) reducing the cross-sectional area of a bar by drawing the material through a die without any pre-heating or (2) turning or “peeling” the surface of the bar. The process changes the mechanical properties of the steel, and the finished product is accurate to size, free from scale with a bright surface finish. We produce these bars in our Mexican facilities, primarily to supply the auto part industry. 19 The following table sets forth, for the periods indicated, our sales volume for basic steel products. Sales Volume by Steel Product 2025 2024 2023 (thousands of tons) I-Beams 98.5 86.4 93.8 Channels 32.5 33.8 37.4 Angles(1) 201.3 215.6 213.6 Hot-rolled bars (round, square and hexagonal rods) 237.3 275.6 332.3 Flat bar 131.1 195.0 186.7 Rebar 1,095.5 1,059.7 1,128.8 Cold finished bars 63.8 65.6 75.6 Other semi-finished products(2) 0.0 0.0 0.0 Electro-Welded wire mesh 9.4 11.7 9.9 Wire rod 48.8 61.4 68.6 Electro-Welded wire mesh panel 8.6 7.0 7.9 Other 5.9 44.2 21.0 Total 1,932.7 2,056.0 2,175.6 (1) Includes structural angles and commercial angles. (2) Includes billets and blooms (wide section square and round bars). Sales and Distribution We sell and distribute our steel products in Mexico, the United States and Brazil. We also export steel products from Mexico to Central and South America and Europe. In 2025, approximately 9.8% of our steel product sales in tons represented SBQ steel products, of which we sold 78% to the auto part industry, 5% to service centers and the remaining 17% to other industries. In 2025, direct sales in tons to the automotive industry decreased by 12.6% compared to 2024. In 2024, direct sales in tons to the automotive industry decreased by 8% compared to 2023. The following table sets forth, for the periods indicated, our product sales as a percentage of our total product sales in tons to Mexico, and to the U.S., Canada, Brazil and other countries. Steel Product Sales By Region Mexico United States, Canada, Brazil and Other Countries Year ended December 31, 2025 2024 2023 2025 2024 2023 I-Beams 65 % 53 % 59 % 35 % 47 % 41 % Channels 97 % 91 % 83 % 3 % 9 % 17 % Angles 44 % 42 % 47 % 56 % 58 % 53 % Hot-rolled bars 45 % 45 % 46 % 55 % 55 % 54 % Flat bar 87 % 84 % 87 % 13 % 16 % 13 % Rebar 51 % 52 % 54 % 49 % 48 % 46 % Cold finished bars 32 % 42 % 46 % 68 % 58 % 54 % Other semi-finished products - - - - - - Electro-welded wire mesh 100 % 100 % 100 % - - - Wire rod 99 % 100 % 92 % 1 % - 8 % Electro-welded wire mesh panel 100 % 100 % 100 % - - - Other 21 % 10 % 6 % 79 % 90 % 94 % Total (weighted average) 53 % 52 % 54 % 47 % 48 % 46 % 20 During 2025, approximately 55.25% of our sales volume came from the Mexico segment, approximately 44.71% came from the Brazil segment and approximately 0.04% came from the U.S. segment. In 2025, SBQ products represented 17.7%, 0% and 100% of the Mexico, Brazil and U.S. segments, respectively. Although the U.S. segment contributed 0.04% of our net sales in 2025, it reflected only residual revenues related to the continued winding down of operations. Republic Steel ceased production in August 2023 and we have not had any operational activity in the United States since then. As such, no year-over-year operational comparisons are provided for the U.S. segment. We sell to the Mexican market through a group of approximately 100 independent distributors, who also carry competitor’s product lines, and through our wholly-owned distribution center in Guadalajara. Our sales force and distribution center are an important source of information concerning customer needs and market developments. By working through our distributors, we believe that we have established and can maintain market leadership with small-and mid-market end-users throughout Mexico. We believe that our domestic customers are highly service-conscious. We distribute our exports outside North America primarily through independent distributors who also carry competitor´s product lines. During 2024 and 2023, we received orders for our products in our Mexican facilities on average approximately two weeks before producing those products. Until the cessation of our United States operations in 2023, we generally filled orders for our SBQ steel products sold to United States and Canadian customers within one to 12 weeks of the order, depending on product type, customer needs, and production requirements. Accordingly, we do not believe that backlog is a significant factor in our business. A substantial portion of our production is ordered by our customers prior to production. Our first plant in Brazil began production in June 2015 with 30,000 tons and 4,000 tons sold in the same year, all of which correspond to rebar. Sales have increased since 2015, and by consolidating the expansion within the Brazilian territory, we have reached sales of approximately 931,000 tons for 2024, increasing the variety of products offered in the market. Our main objective is to sell our products through independent distributors, aimed at the construction market by providing the highest quality service and products, a key factor in attracting and retaining customers. Our sales policy in Brazil has been well accepted by our customers, and our sales increased steadily, creating an opportunity in the Brazilian steel market. Our steel production increased 1.1% in 2025 compared with 2024. Our major customers in 2025 include: Pires Do Rio Cibraco Comercio e Industria de Ferro e Aco, Ltda, Marson Distribuicao, Ltda, Aco e Aco Vergalhoes Ltda, Udiaco Comercio e Industria de Ferro e Aco Ltda, Aco Fera Com Ferro e Aco Ltda, Cedisa Central de Aco, S.A., Manetoni Distribuidora de Productos Siderurgicos Importacao e Exportacao, LTDA., Ferragens Santa Monica, LTDA., Brametal, S.A., Automolas Equipamentos, LTDA., Facchini, S.A., VK Industria de Molas e Grampos, LTDA.,Mattheis Borg Adm Part Com Ind, LTDA., Konesul Ind Com, LTDA., RDG Acos Do Brasil, S.A. 21 Competition Competition in the steel industry is significant. Competition in the steel industry also exerts a downward pressure on prices, and, due to high start-up costs, the economics of operating a steel mill on a continuous basis may encourage mill operators to establish and maintain high levels of output even in times of low demand, which further decreases prices and profit margins. The trend of consolidation in the global steel industry may further increase competitive pressures on independent producers of our size, particularly if large steel producers formed through consolidations, which have access to greater resources than us, adopt predatory pricing strategies that decrease prices and profit margins. If we are unable to remain competitive with these producers, our profitability and market share would likely be materially and adversely affected. A number of our competitors in Mexico, Brazil and formerly the United States have undertaken modernization and expansion plans, including the installation of production facilities and manufacturing capacity for certain products that compete with our products. As these producers become more efficient, we may face increased competition from them and may experience a loss of market share. In each of Mexico and Brazil we also face competition from international steel producers. International competition and global oversupply may still affect global pricing trends and the competitiveness of our Mexican and Brazilian operations. Increased international competition, especially when combined with excess production capacity, would likely force us to lower our prices or to offer increased services at a higher cost to us, which could materially reduce our profit margins. Mexico We compete in the Mexican domestic market and in its export markets for long steel products primarily on the basis of price and product quality. In addition, we compete in the domestic market based upon our responsiveness to customer delivery requirements. The flexibility of our production facilities allows us to respond quickly to the demand for our products. We also believe that the geographic locations of our various facilities throughout Mexico and variety of products help us maintain our competitive market position in Mexico. We believe that our Mexicali mini-mill, is competitive in terms of production and transportation costs in northwestern Mexico. We believe that our competitors’ closest plants to the North Western Mexico market are: Nucor Corporation, located in Plymouth, Utah; Commercial Metals Company, located in Meza, Arizona; Thyssenkrupp Steel North America, Inc., located in Santa Fe Springs, California; Deacero, S.A. de C.V. (“Deacero”), located in Saltillo, Coahuila, México and Gerdau Corsa, S.A.P.I. de C.V. (“Gerdau Corsa”), Tultitlán Tlalnepantla State of Mexico and Tula Ciudad Sahagún, Hidalgo, Mexico. We believe that we have an advantage over certain competitors due to the labor cost in our Mexican operations. In 2025, we sold approximately 268,811 tons of I-beams, channels and angles at least three inches in width, which represented approximately 13.91% of our total finished product sales for the year. In 2024, we sold approximately 269,836 tons of I-beams, channels and angles at least three inches in width, which represented approximately 13.1% of our total finished product sales for the year. In 2023, we sold approximately 267,778 tons of I-beams, channels and angles at least three inches in width, which represented approximately 12.3% of our total finished product sales for the year. We believe that the domestic competitors in the Mexican market for structural steel are Gerdau Corsa, Deacero, Grupo Acerero, S.A. de C.V., Grupo Collado, S.A. de C.V. and Siderúrgica del Golfo, S.A. de C.V. (a wholly-owned subsidiary of Industrias CH). We estimate that our share of Mexican production of structural steel was 14.9% in 2025, 11% in 2024 and 10% in 2023, according to information provided by Mexico’s Cámara Nacional de la Industria del Hierro y del Acero (CANACERO). 22 In 2025, we sold approximately 301,100 tons of hot rolled and cold finished steel bars compared to 341,200 tons in 2024. Our other major product lines are rebar and light structural steel (angles less than three inches in width and flat bar), for which our share of domestic production was 14.33% and 15.05% respectively in 2025, 14.6% and 14% respectively in 2024 and 13.9% and 13.3% respectively in 2023. Rebar and light structural steel together accounted for approximately 1,247,417 tons, or 64.5%, of our total production of finished steel products in Mexico and Brazil in 2025. We compete in the Mexican market with a number of producers of these products, including Deacero, Talleres y Aceros, S.A., Grupo Acerero, S.A. de C.V., ArcelorMittal Lázaro Cárdenas, S.A. de C.V., Ternium Mexico, S.A. de C.V., Grupo Acerero Fonderia, Suacero, S.A. de C.V., Gerdau Corsa and Comercial Metals Company. We believe that we have been able to maintain our domestic market share and profitable pricing levels in Mexico in part because the central Mexico sites of the Guadalajara, Apizaco, Cholula and San Luis facilities afford us cost advantages relative to certain U.S. producers when shipping to customers in central and southern Mexico. Furthermore, our flexible production facility has given us the ability to ship specialty products in relatively small quantities with short lead times. The Mexicali mini-mill has helped to increase sales in northwestern Mexico because its proximity to these areas reduces our freight costs. United States Until 2024, we competed primarily with both domestic SBQ steel producers and importers in the United States. Domestic competition for hot-rolled engineered bar products included large U.S. steelmakers and specialized mini-mills. Non-U.S. competition also impacted segments of the SBQ market, particularly where certifications were not required, and during periods when the U.S. dollar was strong compared with foreign currencies. The principal areas of competition in these markets were product quality on time, delivery reliability, service and price. Special chemistry and precise processing requirements characterize SBQ steel products. Maintaining high standards of product quality, while keeping production costs low, was essential to our ability to compete. The ability to respond quickly to customer orders was important, especially as customers increasingly reduced their in-plant raw material inventories. Our principal competitors in the U.S. market, depending on the product, included Nucor Corporation, Charter Steel, Steel Dynamics, Cascade Rolling Mills, Commercial Metals Company, Vinton Steel, and Gerdau. In August 2023, Republic Steel announced the closure of its steelmaking operations in Canton, Solon, Massillon, Ohio, and Lackawanna, New York, effective September 2023, due to various economic factors, including deteriorating market conditions and operational costs. Brazil The Brazilian steel industry is comprised of 12 business groups operating 31 mills in 10 Brazilian states, making Brazil the 9th largest steel producer in the world. Our main competitors in the Brazilian market are ArcelorMittal Brazil, CSN, Gerdau, Sinobras, Usiminas, Ternium do Brasil and Vallourec, as well as specialty steel producers such as Villares Metals. We compete in the Brazilian domestic market for long steel products primarily based on price and product quality. Additionally, we differentiate ourselves through our ability to meet customer delivery requirements. The flexibility of our production facilities enables us to quickly respond to fluctuations in product demand. The growing needs of Brazil, along with our diverse product range, help us maintain a strong competitive position in the Brazilian market. 23 Certifications ISO is a worldwide federation of national standards bodies which have united to develop internationally accepted standards so that customers and manufacturers have a system in place to provide a product of known quality and standards. The standards set by ISO covers every aspect of quality from management responsibility to service and delivery. We believe that adhering to the stringent ISO procedures not only creates efficiency in manufacturing operations, but also positions us to meet the strict standards that our customers require. We are engaged in a total quality program designed to improve customer service, overall personnel qualifications and team work. The facilities at Apizaco and Cholula have received ISO/TS 16949:2009 certification from International Quality Certifications, effective until September, 2027. Prior to the closure of Republic Steel’s plants in 2023, all such facilities were certified to ISO9001:2015 and IATF16949:2016. The certifications for the Canton, Lackawanna, Massillon, and Solon plants remained in effect through January 2024, but are no longer active given the termination of operations. The IATF 16949:2016 standard, developed by the International Automotive Task Force, is the result of the harmonization of the supplier quality requirements of vehicle manufacturers worldwide and provides for a single quality management system of continuous improvement, defect prevention and reduction of variation and waste in the supply chain. It places greater emphasis on management’s commitment to quality and customer focus. Raw Materials Prices for raw materials necessary for production of our steel products have fluctuated significantly in the past and significant increases in raw material prices could adversely affect our profit margins. During periods when prices for scrap metal, iron ore, ferroalloys, coking coal and other raw materials have increased, our industry has historically sought to maintain profit margins by passing along increased raw materials costs to customers by means of price increases. For example, prices of scrap metal decreased 14% in 2025, decreased approximately 15% in 2024, and decreased 40% in 2023, and prices of ferroalloys decreased approximately 5% in 2025, decreased 19% in 2024 and increased approximately 36.4% in 2023. We may not be able to pass along these and other cost increases in the future and even when we can successfully increase our prices, interim reductions in profit margins frequently occur due to a time lag between the increase in raw material prices and the market acceptance of higher selling prices for finished steel products. We purchase our raw material requirements either in the open market or from certain key suppliers. If any of our key suppliers fails to deliver or we fail to renew our supply contracts, we could face limited access to some raw materials, or higher costs and delays resulting from the need to obtain our raw materials requirements from other suppliers. In 2025, our cost of sales in Mexico, as a percentage of sales in Mexico, was 78%, compared to 70% in Brazil. Our consolidated cost of sales, as a percentage of consolidated sales, was 75%. Scrap metal, electricity, ferroalloys, electrodes and refractory products are the principal materials that we use to manufacture our steel products. Scrap metal. Scrap metal is among the most important components for our steel production and accounted for approximately 48% of our consolidated manufacturing conversion cost in 2025 (47% of the manufacturing conversion cost in our Mexico operations, and 49% in our Brazil operations). Scrap metal is principally generated from automobile, industrial, naval and railroad industries. The market for scrap metal is influenced by availability, freight costs, speculation by scrap brokers and other conditions largely beyond our control. Fluctuations in scrap costs directly influence the cost of sales of finished goods. 24 We purchase raw scrap from dealers in Mexico and the San Diego California area, and we process the raw scrap into refined scrap metal at our Guadalajara, San Luis, Mexicali and Apizaco facilities. We meet our refined scrap metal requirements through: (i) our wholly-owned scrap processing facilities, which in the aggregate provided us with approximately 11% and 15% of our refined scrap tonnage in 2025 and 2024, respectively, and (ii) purchases from third party scrap processors in Mexico and the southwestern United States, which, in the aggregate, provided us with approximately 88% and 1% of our refined scrap tonnage, respectively, in 2025 and approximately 82% and 3% respectively in 2024. We are a large scrap collector in the Mexicali, Tijuana and Hermosillo regions, and, by primarily dealing directly with small Mexican scrap collectors, we believe we have been able to purchase scrap at prices lower than those in the international and Mexican markets. We purchase scrap on the open market through a number of brokers. We purchase scrap on the open market through a number of brokers or directly from scrap dealers for our Brazil facilities. We do not depend on any single scrap supplier to meet our scrap requirements. Ferroalloys, Electrodes and Refractory Products. Ferroalloys, electrodes and refractory products collectively accounted for i) approximately 16% of our manufacturing conversion cost in 2025 in our Mexican operations, compared to 14% in 2024 and ii) 8% of our manufacturing conversion cost in 2025 compared to 9% in 2024 in our Brazil facilities. Ferroalloys are essential for the production of steel and are added to the steel during manufacturing process to reduce undesirable elements and to enhance its hardness, durability and resistance to friction and abrasion. For our Mexican operations, we buy most of our manganese ferroalloys from Compañía Minera Autlán, S.A., Autlán Metal Services, S.A. de C.V., Elmet, S.A. de C.V., Marco Metales de Mexico, S. de R.L. de C.V., Metaloides, S.A. de C.V., Micro Abrasivos, S.A. de C.V., Posshel, S.A. de C.V. and Distribuidora de Aleaciones y Metales, S.A. de C.V. Our Brazil facilities purchase most of their ferroalloys from Multiligas Eireli. Ltda, Comercial Cometa Industria y Comercio Ltda., Fertileg Ferro Liga Ltda, Granha Ligas Ltda., and Cia de Ferro Ligas de Bahia Ferbasa. For our Mexican operations, we obtain electrodes used to melt raw materials (scrap metal) from Jilin Carbon Co. Ltd., Interfer Edelsthal H. Mbh, Interfer Austria GMBH, FRC Global Inc, Dalian Xihua Refractories Materials Co., Dalian Wanlong Trading LTD, Haihan Industry Inc. Jiangsu Chianaref Refractory Co. LTD, Jilin Songjiang Carbon I/E Co. LTD and Jiangsu Jianglong New Energy Technology Co. LTD. Our Brazil facilities purchase most of their electrodes from Jilin Carbon Import, Jilim Songjiang Carbon I/E Co. LTD, Zhongsheng Industrial Trading, Co. Limited and Jiangsu Chianaref Refractory Co. LTD. Refractory products include firebricks, which line and insulate furnaces, ladles and other transfer vessels. We purchase our refractory products for our Mexican operations from Vesuvius México, S.A. de C.V., RHI Refmex, S.A. de C.V., Magna Refractarios México, S.A. de C.V., FRC Global Inc, Puyang Refractories group Co. Ltd. Kumas, Manyezit Sanayi A.S., Refractarios Alfran México, S.A. de C.V., Harbison Walker México, S.A. de C.V., Refratechnik Steel GMBH and Rectix Materiales Refractarios, S.A. de C.V. Our Brazil facilities purchase most of their refractory products from Magnesitas Navarras, S.A., Vesivius Refractarios LTDA, RHI Refractarios Brasil LTDA, Puyang Refractories Group Co. LTD, TRL Krosaki Refractories LTD, FRC Global INC, Refractarios Kelsen, S.A., Kumas Mannerist Sanayi, A.S., Dalian Xihua Refractory Material Co. LTD, LMM Group Co. LTD and Osrfar East Limited. Electricity. In 2025, 2024 and 2023, electricity accounted for approximately 8%, 9% and 9% of our consolidated manufacturing conversion cost, respectively. Electricity accounted for 9%, 10% and 9% in 2025, 2024 and 2023, respectively, of our manufacturing conversion in our Mexico facilities and was supplied by CFE for basic service and Iberdrola for qualified service. Electricity also accounted for 11% of the manufacturing conversion cost in our U.S. operations in 2023, and was supplied by American Electric Power Company, Archer Energy, National Grid, The Illumination Company, New York Power and Ohio Edison. It accounted for 7%, 8% and 8% in 2025, 2024 and 2023, respectively, of the manufacturing conversion cost in our Brazil operations, where it is supplied by Ecom Energia Ltda., Comercializadora de Energia Eletrica Ltda. and Comerc Ltda. We, like most high-volume users of electricity in Mexico, pay special rates to CFE for electricity. Energy prices in Mexico have historically been very volatile and subject to dramatic price increases in short periods of time. In the late 1990s, the CFE began to charge for electricity usage based on the time of use during the day and the season (summer or winter). As a result, we have modified our production schedule in order to reduce electricity costs by limiting production during periods when peak rates are in effect. We cannot assure that any future cost increases will not have a material adverse effect on our business. 25 Natural Gas. Natural gas (including “combustoleo” fuel oil which is an oil derivative that is less refined than gasoline and diesel fuel oil that can be used instead of gasoline in our Mexicali plant) consisted of approximately 3% of our consolidated manufacturing conversion cost (2% of the manufacturing conversion cost of our Mexican operations and 4% of our Brazil operations) in 2025, and approximately 2% of our consolidated manufacturing conversion cost (2% of the manufacturing conversion cost of our Mexican operations and 3% of our Brazil operations) in 2024. In previous years we have entered into natural gas cash-flow exchange contracts or swaps where we receive a floating price and pay a fixed price to hedge our risk of from fluctuations in natural gas prices. Fluctuations in natural gas prices from volume consumed are recognized as part of our operating costs. As applicable, we recognized the fair value of instruments either as liabilities or assets. We periodically evaluated the changes in the cash flows of derivative instruments to analyze if the swaps are highly effective for mitigating the exposure to natural gas price fluctuations. At December 31, 2025, 2024 and 2023, we did not have natural gas cash-flow exchange contracts or swaps. We do not enter into contracts for speculation purposes. Regulation Mexican Operations We are subject to Mexican federal, state and municipal laws, administrative regulations and Mexican Official Rules (Normas Oficiales Mexicanas) relating to a variety of environmental matters, anti-trust matters, trade regulations, and tax and employee matters. Among other matters, Mexican tax returns are open for review generally for a period of five years, and, according to Mexican tax law, the purchaser of a business may become jointly and severally liable for unpaid tax liabilities of the business prior to its acquisition, which may have an impact on the liabilities and contingencies derived from any such acquisitions. Although we believe that we are in compliance with all material Mexican federal, state and municipal laws, administrative regulations and Mexican Official Rules, we cannot assure you that the interpretation of the Mexican authorities of the laws and regulations affecting our business or the enforcement thereof will not change in a manner that could increase our costs of doing business or could have a material adverse effect on our business, results of operations, financial condition or prospects. Environmental Matters We are subject to various Mexican federal, state and municipal laws, administrative regulations and Mexican Official Rules relating to the protection of human health, the environment and natural resources. The major federal environmental laws applicable to our operations, among others, are ● the General Law of Ecological Balance and Environmental Protection (Ley General del Equilibrio Ecológico y la Protección al Ambiente or the “General Law on Environmental Protection”) and its regulations; ● the General Law for the Prevention and Integral Management of Waste (Ley General para la Prevención y Gestión Integral de los Residuos or the “General Law on Waste Management”); ● the National Waters Law (Ley de Aguas Nacionales) and its regulations; and ● the Federal Law on Environmental Responsibility (Ley Federal de Responsabilidad Ambiental) 26 The General Law on Environmental Protection, the General Law on Waste Management and the Federal Law on Environmental Responsibility are administered by the Ministry of the Environment and Natural Resources (Secretaría de Medio Ambiente y Recursos Naturales or the “Ministry of the Environment”) and enforced by the Federal Attorney’s Office for the Protection of the Environment (Procuraduría Federal de Protección al Ambiente or “PROFEPA”). The National Waters law is also administered by the Ministry of the Environment and is enforced by the National Waters Commission (Comisión Nacional de Agua or “CONAGUA”). In addition to the foregoing, Mexican Official Rules, which are technical standards issued by applicable regulatory authorities pursuant to the General Normalization Law (Ley General de Metrología y Normalización) and to other laws that include the environmental laws described above, establish standards relating to air emissions, waste water discharges, the generation, handling and disposal of hazardous waste and noise control, among others. Mexican Official Rules regarding soil contamination and waste management were enacted in order to protect these potential contingencies. Although not enforceable, the internal administrative criteria on soil contamination established by PROFEPA is widely used as guidance in cases where soil remediation, restoration or clean-up is required. The General Law on Environmental Protection sets forth the legal framework applicable to the generation and handling of hazardous wastes and materials, the release of contaminants into the air, soil and water, as well as the environmental impact assessment of the construction, development and operation of different projects, sites, facilities and industrial plants similar to the ones owned and/or operated by us and our subsidiaries. In addition, the General Law on Waste Management regulates the generation, handling, transportation, storage and final disposal of hazardous waste. The General Law on Environmental Protection also mandates that companies that contaminate soil be responsible for the clean-up. Furthermore, the General Law on Waste Management provides that owners and lessors of real property with soil contamination are jointly and severally liable for the remediation of such contaminated sites, irrespective of any recourse or other actions such owners and lessors may have against the contaminating party, and aside from the criminal or administrative liability to which the contaminating party may be subject. The General Law on Waste Management also restricts the transfer of contaminated sites. PROFEPA can bring administrative, civil and criminal proceedings against companies that violate environmental laws, regulations and Mexican Official Rules, and has the power to impose a variety of sanctions. These sanctions may include, among others, monetary fines, revocation of authorizations, concessions, licenses, permits or registries, administrative arrests, seizure of contaminating equipment, and in certain cases, temporary or permanent closure of facilities. Additionally, as part of its inspection authority, PROFEPA is entitled to periodically visit the facilities of companies whose activities are regulated by Mexican environmental legislation, and verify compliance. Similar rights are granted to state environmental authorities pursuant to applicable state environmental laws. Companies in Mexico are required to obtain proper authorizations, concessions, licenses, permits and registrations from competent environmental authorities for the performance of activities that may have an impact on the environment or may constitute a source of contamination. Such companies in Mexico are also required to comply with a variety of reporting obligations that include, among others, providing PROFEPA and the Ministry of the Environment with periodic reports regarding compliance with various environmental laws. Among other permits, the operations and related activities of the steel industry are subject to the prior obtainment of an environmental impact authorization granted by the Ministry of the Environment. We believe that we have obtained all the necessary authorizations, concessions, general operating licenses, permits and registries from the applicable environmental authorities to duly operate our facilities, plants and sites, and sell our products and that we are in material compliance with applicable environmental legislation. We, through our subsidiaries, have made significant capital investments to assure our production and operation facilities comply with requirements of federal, state and municipal law and administrative regulation, to remain in compliance with our current authorizations, concessions, licenses, permits and registries. 27 Mexican environmental laws and administrative regulations have become increasingly stringent over the last decade, and this trend is likely to continue, influenced recently by the North American Agreement on Environmental Cooperation entered into by Mexico, the United States and Canada in connection with the USMCA. In this regard, any obligation to remedy environmental damages caused by us or any contaminated sites owned or leased by us could require significant unplanned capital expenditures and be materially adverse to our financial condition and results of operations. Water The National Waters Law regulates water resources in Mexico. In addition, the Mexican Official Rules govern water quality standards. A concession granted by CONAGUA is required for the use and exploitation of national waters. Some of our facilities in Mexico have renewable concessions to use and exploit underground waters from wells in order to meet the water requirements of our production processes. We pay CONAGUA duties per cubic meter of water extracted under our concessions. We believe we are in substantial compliance with all the requirements imposed by each of the concessions we have obtained. The Mexicali plant, is currently undergoing a nullity proceeding related to its water concession (Conagua), before the Federal Court of Administrative Justice (Tijuana, Baja California). The case is pending resolution, and the company has presented all valid legal arguments and therefore believes a favorable outcome is expected. Pursuant to the National Waters Law, companies that discharge waste into national water bodies must comply with certain requirements, including maximum permissible contamination or pollution levels. Periodic reports on water quality must be provided by dischargers to applicable authorities. Liability may result from the contamination of underground waters or recipient water bodies. We believe that we are in substantial compliance with all water and waste water legislation applicable to us. Antitrust Matters We are also subject to the Mexican Antitrust Law (Ley Federal de Competencia Económica), which regulates monopolies and monopolistic practices in Mexico and requires Mexican Government approval of certain mergers, acquisitions and joint ventures. We believe that we are currently in material compliance with the Mexican Antitrust Law. However, due to our growth strategy of acquiring new businesses and assets and because we are a large manufacturer with a significant share of the markets in Mexico with respect to certain of our products, we may be subject to greater regulatory scrutiny in the future. Measurements Law Mexico’s Ministry of the Economy (Secretaría de Economía), through the General Rules Department (Dirección General de Normas or “DGN”), promulgates regulations regarding many products that we manufacture. Specifically, pursuant to the Measurements Law (Ley Federal sobre Metrología y Normalización), the DGN issues specifications on the quality and safety standards for our product lines. We believe that all our products are in material compliance with all applicable DGN regulations. United States Our former operations in the United States were subject to U.S. federal, state and local environmental laws and administrative regulations concerning, among other things, the management of hazardous materials and the discharge of pollutants to the atmosphere and to surface waters. These operations were the subject of administrative action by federal, state and local environmental authorities. Although our U.S. facilities ceased operations in 2023, the resolution of any of these claims may result in significant liabilities. See “Item 3—Key Information—Risk Factors—Risks Related to the Global Economy and Our Business—In the event of environmental violations at our facilities we may incur significant liabilities” and “Item 8—Financial Information—Legal Proceedings.” 28 Environmental Matters We are subject to a broad range of environmental laws and regulations, including those governing the following: ● discharges to the air, water and soil; ● the handling and disposal of solid and hazardous wastes; ● the release of petroleum products, hazardous substances, hazardous wastes, or toxic substances to the environment; and ● the investigation and remediation of contaminated soil, sediment and groundwater. We monitor our compliance with these laws and regulations through our environmental management system, and believe that we currently are in substantial compliance with them. If we fail to comply with these laws and regulations, we may be assessed fines or penalties or be subject to injunctive relief which could have a material adverse effect on us. Future changes in the applicable environmental laws and regulations, or changes in the regulating agencies’ approach to enforcement or interpretation of their regulations, could cause us to make additional capital expenditures beyond what we currently anticipate. Although all of our United States production facilities ceased operations in 2023, certain facilities such as the Lorain and Canton, Ohio plants remain subject to legacy environmental regulations, including the Maximum Achievable Control Technology (“MACT”) standard for Electric Arc Furnaces as an “area source”. Revisions of this standard may impose future obligations with respect to these non-operational assets, including those relating to mercury emissions and control. Our steelmaking operations in the United States, Brazil and in Mexico use electric arc furnaces where carbon dioxide generation is primarily linked to energy use. Until 2023, certain United States operations also employed this technology. In the United States, the Environmental Protection Agency has issued rules imposing inventory and reporting obligations to which certain legacy facilities are subject, and has also issued rules that will affect preconstruction permits for United States facilities where increases in greenhouse gas pollutants are contemplated. The U.S. Congress has debated various measures for regulating greenhouse gas emission (such as carbon dioxide) and may enact them in the future. Such laws and regulations may also result in higher costs for coking coal, natural gas and electricity generated by carbon-based systems (such as coal-fired electric generating facilities). Such future laws and regulations, whether in the form of cap-and-trade emissions permit system, a carbon tax or other regulatory regime may have a negative effect on our remaining operations or legacy compliance obligations. Climate change policy is evolving at regional, national and international levels, and political and economic events may significantly affect the scope and timing of climate change measures that are ultimately put in place. As a signatory to the UNFCCC, Mexico became subject to the Paris Agreement to fight climate change, which was taken by the parties at the 21th session of the UNFCCC conference of the Parties in 2015. In August 2017, the U.S. State Department officially informed the United Nations of the United States withdrawal from the Paris Agreement. Following the 2020 U.S. presidential election, the U.S. formally rejoined the Paris Agreement in February 2021. As a result, while our United States facilities are no longer operational, legacy obligations may still fall under future regional, provincial and/or federal climate change regulations to manage greenhouse emissions. More stringent greenhouse policies and regulations could adversely affect our business and results of operations. Various federal, state and local laws, regulations and ordinances govern the removal, encapsulation or disturbance of asbestos-containing materials (“ACMs”). These laws, regulations and ordinances may impose liability for the release of ACMs and may permit third parties to seek recovery from owners or operators of facilities at which ACMs were or are located for personal injury associated with exposure to ACMs. We are aware of the presence of ACMs at certain legacy facilities, but we currently believe that such materials are being managed in accordance with applicable law, asbestos was removed from the Lorain plant, buildings with asbestos in said plant were demolished. In the United States, the federal Environmental Protection Agency has in the past introduced regulation regarding the phasing out of polychlorinated biphenyl (“PCB”) containing fluid in equipment that we previously used at many of our U.S. facilities. If any such rules are enacted, these legacy facilities may be required to reduce the levels of PCBs in our equipment, which will in turn may require us to incur costs for the removal and disposal of PCB containing oils, sampling and possible replacement of equipment in the event PCB levels cannot be reduced to acceptable levels. 29 Also in the United States, more stringent standards were promulgated in 2012. As these standards were implemented through the different state programs, we experienced higher costs associated with any preconstruction permitting of new or modified sources at our U.S. facilities. These costs were related to extensive dispersion modeling and/or pre-construction monitoring not previously required. While we no longer operate steelmaking facilities in the United States, these historical regulatory experiences may include future obligations associated with environmental permitting or site remediation at our legacy facilities. Brazil operations We produce according to technical specifications of the Brazilian standard ABNT NBR 7480:2007 for steel bars and wires designed for the reinforcement for concrete structures. Our products are also registered with the Brazilian National Institute of Metrology, Quality and Technology (INMETRO), in accordance with Resolution CONMETRO No. 05, dated May 6, 2008, and comply with conformity assessment regulations, including Ordinance No. 73, dated March 17, 2010, and with compulsory product certification regulations. We have received environmental permits from the Sao Paulo State, for which hydrological studies and feasibility of groundwater have been conducted, such permits include a license granted by the Ministry of Environment of Sao Paulo and an operations license granted by the Ministry of Environment CETESBE Sao Paulo State. Trade Regulation We have experienced significant competition from imports into Mexico in the past as a result of excess worldwide steel production, particularly in periods of economic slowdown, and as a consequence of the peso’s appreciation relative to other currencies, making imports cheaper and more competitive in peso terms. Recently, the Mexican government, at the request of CANACERO, has taken several measures to prevent unfair trade practices such as dumping in the steel import market. The overall climate for imports in Mexico is influenced by the free trade agreements that Mexico has entered with other countries, as well as the level of tariffs and anti-dumping duties. We benefit from Mexico’s free trade agreements. Specifically, in the past, we have directly benefited from our ability to export finished steel products directly to export markets and compete with similar products manufactured in those markets. We have also indirectly benefited from increased demand from our domestic customers who similarly manufacture their products to foreign markets under free trade agreements. Nevertheless, we cannot assure you that the trade agreements affecting our business or the enforcement thereof will not change in a manner that could have a material adverse effect on our business, results of operations, financial condition or prospects. United States-Mexico-Canada Agreement (USMCA) The North American Free Trade Agreement (“NAFTA”) became effective on January 1, 1994, and provided for the progressive elimination of most duties on steel products traded among the United States, Mexico and Canada. On July 1, 2020, NAFTA was replaced by the USMCA, which maintains tariff-free access for most steel and steel-related products among the three countries. The USMCA includes provisions intended to facilitate regional trade and reduce customs-related barriers. As part of its terms, the agreement is subject to a joint review by the three countries in 2026, six years after its entry into force. See “Item 3—Key Information—Risk Factors—Risks Related to Mexico—Economic and political developments in the United States and elsewhere may adversely affect Mexican economic policy and, in turn, our operations.” The USMCA has benefits on custom expenses, an orderly economic competition, clear rules for investment and its protection. Impact of Reinstated Section 232 Tariffs on U.S. Steel Exports As of the date of this annual report, certain of our steel exports from Mexico to the United States are subject to tariffs imposed under Section 232 of the U.S. Trade Expansion Act of 1962. In March 2025, the U.S. government reinstated a 25% tariff on all steel imports, including those originating from Mexico. We understand that, as a result of this reinstatement, our exports of all steel products from Mexico to the United States are currently subject to the 25% tariff. These tariffs increase the cost of our products in the U.S. market, potentially affecting the competitiveness of our exports and resulting in reduced volumes or pressure on margins. Since the reinstatement of the tariffs, we have seen a reduction in our export volumes to the United States, with current shipments averaging around 300 metric tons per month compared to prior levels of approximately 3,000 metric tons per month. We continue to monitor trade developments closely and evaluate our commercial and operational strategy in light of evolving trade policies. Mexican-European Community Free Trade Agreement. The Mexican-European Free Trade Agreement (“MEFTA”) became effective on July 1, 2000, and taxes applying to a large quantity of imported goods were eliminated or reduced. The goal of this trade agreement was to establish a bilateral and preferential, progressive and reciprocal framework to encourage the development of trade in goods and services, taking into account the sensitivity of certain products and services sectors, and in accordance with relevant rules of the World Trade Organization (WTO). The Joint Council is responsible for deciding the arrangements and timetable for the liberalization of duties and non-duty barriers to trade in goods, in accordance with the relevant WTO rules. This agreement was modified in 2018. 30 Mexico-Japan Economic Association. On January 1, 2004, Japan and the other members of the G-7, agreed to reduce the steel tariffs to zero percent, so Mexico has benefited from this rate since such date. However, Mexico is sensitive to the steel exports coming from Japan, so the Mexico-Japan Economic Association (the “Association”) was negotiated in the following terms: (i) the specialized steel not produced in Mexico used to produce vehicles, spare parts, electronics, machinery and heavy equipment was relieved from any tariffs, (ii) steel products coming from Japan into Mexico are subject to a zero percent rate and (iii) the products to be imported from programs established by the Association pay tariffs pursuant to the fixed rates established in such programs. The electronic and vehicles industries are exempted as of the date of the Association. Other Trade Agreements. In the last several years, Mexico has signed other free trade agreements, including free trade agreements with Israel (2000), Iceland, Norway, Liechtenstein and Switzerland (2001), and with the following Latin American countries: Chile (1992 and amended in 1999); Venezuela and Colombia (1995); Costa Rica (1995); Bolivia (1995); Nicaragua (1998); Honduras, El Salvador and Guatemala (2001); and Uruguay (2003). We do not anticipate any significant increase in competition in the Mexican steel market as a result of these trade agreements due to their minimal steel production or, in the case of Venezuela and Chile, minimal share of the Mexican market. Venezuela withdrew from the free trade agreement with Mexico and Colombia in 2006. Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). On February 4, 2016, Mexico, along with Australia, Brunei, Canada, Chile, United States, Japan, Malaysia, New Zealand, Peru, Singapore and Vietnam, signed the Transpacific Partnership Trade Agreement, in the City of Auckland, New Zealand, which was intended to grant Mexican products access to six markets (Australia, Brunei, Malaysia, New Zealand, Singapore and Vietnam) with approximately 155 million of potential consumers, which were not covered by any other trade agreement. In January 2017, the United States withdrew from the agreement, after which the remaining 11 countries reached a revised agreement and renamed it the CPTPP. On December 30, 2018, it became effective without U.S. participation. The CPTPP eliminates or reduces tariff and non-tariff barriers across substantially all trade in goods and services and covers the full spectrum of trade, including goods and services trade and investment, so as to create new opportunities and benefits for the businesses, workers, and consumers of the members. The CPTPP is intended to facilitate the development of production and supply chains, and seamless trade, enhancing efficiency and supporting the goal of creating and supporting jobs, raising living standards, enhancing conservation efforts, and facilitating cross-border integration, as well as opening domestic markets. The CPTPP is intended to promote innovation, productivity, and competitiveness by addressing new issues, including the development of the digital economy, and the role of state-owned enterprises in the global economy. Finally, the CPTPP includes new elements that seek to ensure that economies at all levels of development and businesses of all sizes can benefit from trade. It also includes specific commitments on development and trade capacity building. Dumping and Countervailing Duties. We are or have been a party to, or have been affected by, numerous steel dumping and countervailing duty claims. Many of these claims have been brought by Mexican steel producers against international steel companies, while others have been brought against Mexican steel companies. In certain instances, such cases have resulted in duties being imposed on certain imported steel products and, in a few instances, duties have been imposed on Mexican steel exports. In the aggregate, these duties have not had a material impact on our results of operations. On September 11, 2013, the United States International Trade Commission (the “USITC”) started an official anti-dumping investigation against rebar exports from Mexico and Turkey promoted by Nucor, Gerdau, Commercial Metals, and Cascade Steel Buyer. 31 On October 14, 2014, the USITC determined that the U.S. steel industry was materially injured by imports of steel concrete reinforcing bar from Mexico that are sold in the United States at less than fair value and from Turkey that are subsidized by the government of Turkey. As a result of the USITC’s affirmative determinations, the U.S. Department of Commerce issued an anti-dumping duty order on imports of this product from Mexico and a countervailing duty order on imports of this product from Turkey. The U.S. government-imposed tariffs of 66.7% against imports for rebar from Deacero, S.A.P.I de C.V. and us and tariffs of 20.58% for rebar imports from all other producers in Mexico, which tariffs were rescinded in June 2017. On January 6, 2021, a preliminary dumping rate of 66.7% was imposed on our exports of rebar to the United States. Such dumping rate was ratified in June 1, 2022. Following the U.S. Department of Commerce’s physical review carried out at our San Luis Potosí plant on February 17, 2020 after we argued that there were deficiencies and adverse facts during the U.S. Department of Commerce’s information process, a preliminary dumping rate of 6.35% was imposed and was ratified in the first semester of 2023. On August 9, 2023 a dumping rate of 5.93% was published and imposed. On December 4, 2024 a dumping rate of 2.11% was published and imposed. This rate remained in effect as of the date of this annual report. A final result for the 2024 has not yet been published. For the period from November 1, 2024, to October 31, 2025, Grupo Simec, S.A.B. C.V. was selected as a mandatory participant in the dumping research. On January 19, 2023, the International Trade Practices Unit (UPCI) published the final resolution of the China wire rod countervailing duty examination, extending the countervailing duty on wire rod imports from China for 5 years. And on February 24, 2023, the UPCI published the final resolution imposing countervailing duties on imports of type I and II steel beams from Spain, Germany and the United Kingdom. Labor. In July 2017, the Brazilian government issued Law No.13,467 (Labor Reform Law), which resulted in significant changes to labor regulations. This law allows 12-hour work shifts, provided that there is a 36-hour rest period afterwards. With regard to negotiations with labor unions, Law No. 13,467 provides that certain rights, such as constitutional and women’s rights, cannot be subjet of the negotiation, as the Constitution and existing law prevail over any collective bargaining agreement. In addition, Law No.13,467 allows companies to outsource activities, including the company’s principal activities and activities that are currently carried out by the company’s own employees. Furthermore, the law provides that a claimant seeking to enforce his or her rights under this law may be required to pay certain costs and expenses related to the lawsuit and limits compensation for moral damages to certain thresholds. We are currently in compliance with these labor regulations. 32 C. Organizational Structure The chart below sets forth a summary of our corporate structure. (1) Includes the following subsidiaries: Compañía Siderúrgica del Pacífico, S.A. de C.V. (99.99%); Coordinadora de Servicios Siderúrgicos de Calidad, S.A. de C.V. (100.00%); Industrias del Acero y del Alambre, S.A. de C.V. (99.99%); Procesadora Mexicali, S.A. de C.V. (99.99%); Servicios Simec, S.A. de C.V. (100.00%); Sistemas de Transporte de Baja California, S.A. de C.V. (100.00%); Operadora de Metales, S.A. de C.V. (100.00%); Operadora de Servicios Siderúrgicos de Tlaxcala, S.A. de C.V. (100.00%); Administradora de Servicios Siderúrgicos de Tlaxcala, S.A. de C.V. (100.00%); Operadora de Servicios de la Industria Siderúrgica ICH, S.A. de C.V. (100.00%); Arrendadora Simec S.A. de C.V. (100.00%); CSG Comercial, S.A. de C.V. (99.95%); Compañía Siderúrgica de Guadalajara, S.A. de C.V. (99.99%); Simec Acero, S.A. de C.V. (100.00%); Undershaft Investment N. V., (100.00%); Simec USA Corp. (100.00%); Pacific Steel Projects Inc. (100.00%); Simec Steel Inc. (100.00%); Simec International, S.A. de C.V.(100.00%); Corporativos G&DL, S.A. de C.V. (100.00%); Simec International 6, S. A. de C. V., (100.00%), Simec International 7, S. A. de C. V., (99.99%), Simec International 9, S.A.P.I. de C.V., (100.00%); Corporación ASL, S.A. de C.V. (99.99%); Siderúrgica del Occidente y Pacífico, S.A. de C.V. (100.00%), Aceros Especiales Simec Tlaxcala, S.A. de C.V. (100.00%), Gases Industriales de America, S.A. de C.V. (100.00%), GSIM de Occidente, S.A. de C.V.(100.00%), Siderúrgicos Noroeste, S.A. de C.V.(100.00%), Fundiciones de Acero Estructrual, S.A. de C.V. (100.00%), Simec Siderúgico, S.A. de C.V. (100.00%). Orge, S.A. de C.V. (99.99%), RRLC, S.A.P.I. de C.V. (99.99%), Grupo Chant, S.A.P.I. de C.V. (99.99%) and Acero Transporte San, S.A. de C.V. (100.00%). (2) SimRep, Co. owns 100% of Republic Steel, Inc. (3) Grupo San facilities are conformed by Corporación Aceros DM, S.A. de C.V. (100.00%) and Subsidiaries, Aceros DM, S.A. de C.V. (100.00%), Aceros San Luis, S.A. de C.V. (100.00%), CHQ Wire México, S.A. de C.V. (100.00%) (formerly Malla San 1, S.A. de C.V.), Malla San 2, S.A. de C.V. (100.00%) and Alambres Trefilados de San Luis Potosí, S.A. de C.V. (100.00%). (4) Our Brazil facilities are conformed by GV do Brasil Industria e Comercio de Aço LTDA., Companhia Siderúrgica do Espirito Santo, S.A. and Siderurgica Vale do Paraíba LTDA. 33 The following table identifies each of our significant operating subsidiaries, including its country of incorporation and our percentage ownership thereof at December 31, 2025 and December 31, 2024 and 2023: Percentage of equity owned 2025 2024 2023 Subsidiaries established in Mexico: Compañía Siderúrgica de Guadalajara, S.A. de C.V. 99.99 % 99.99 % 99.99 % Arrendadora Simec, S.A. de C.V. 100.00 % 100.00 % 100.00 % Simec International, S.A. de C.V. 100.00 % 100.00 % 100.00 % Compañía Siderúrgica del Pacifico, S.A. de C.V. 99.99 % 99.99 % 99.99 % Coordinadora de Servicios Siderúrgicos de Calidad, S.A. de C.V. 100.00 % 100.00 % 100.00 % Industrias del Acero y del Alambre, S.A. de C.V. 99.99 % 99.99 % 99.99 % Procesadora Mexicali, S.A. de C.V. 99.99 % 99.99 % 99.99 % Servicios Simec, S.A. de C.V. 100.00 % 100.00 % 100.00 % Sistemas de Transporte de Baja California, S.A. de C.V. 100.00 % 100.00 % 100.00 % Operadora de Servicios Siderúrgicos de Tlaxcala, S.A. de C.V. 100.00 % 100.00 % 100.00 % Operadora de Metales, S.A. de C.V. 100.00 % 100.00 % 100.00 % Administradora de Servicios Siderúrgicos de Tlaxcala, S.A. de C.V. 100.00 % 100.00 % 100.00 % CSG Comercial, S.A. de C.V. 99.95 % 99.95 % 99.95 % Operadora de Servicios de la Industria Siderúrgica ICH, S.A. de C.V. 100.00 % 100.00 % 100.00 % Corporación Aceros DM, S.A. de C.V. and subsidiaries (1) 100.00 % 100.00 % 100.00 % Acero Transportes San, S.A. de C.V. (1) 100.00 % 100.00 % 100.00 % Simec Acero, S.A. de C.V. 100.00 % 100.00 % 100.00 % Corporación ASL, S. A. de C.V. 99.99 % 99.99 % 99.99 % Simec International 6, S.A. de C.V. 100.00 % 100.00 % 100.00 % Simec International 7, S.A. de C.V. 99.99 % 99.99 % 99.99 % Simec International 9, S.A.P.I. de C.V. 100.00 % 100.00 % 100.00 % Corporativos G&DL, S.A. de C.V. 100.00 % 100.00 % 100.00 % Orge, S.A. de C.V. 99.99 % 99.99 % 99.99 % Siderúrgica del Occidente y Pacifico, S.A. de C.V. 100.00 % 100.00 % 100.00 % RRLC, S.A.P.I. de C.V. 99.99 % 99.99 % 99.99 % Grupo Chant, S.A.P.I. de C.V. 99.99 % 99.99 % 99.99 % Aceros Especiales Simec Tlaxcala, S.A. de C.V. 100.00 % 100.00 % 100.00 % Gases Industriales de America, S.A. de C.V. 100.00 % 100.00 % 100.00 % GSIM de Occidente S.A. de C.V. 100.00 % 100.00 % 100.00 % Fundiciones de Acero Estructural, S.A. de C.V. 100.00 % 100.00 % 100.00 % Siderúrgicos Noroeste, S.A. de C.V. 100.00 % 100.00 % 100.00 % Simec Siderúrgico, S.A. de C.V. 100.00 % 100.00 % 100.00 % Subsidiaries established in countries outside of Mexico: SimRep Corporation and Subsidiaries (3) (4) (5) 99.41 % 99.41 % 99.41 % Pacific Steel, Inc. (4) 100.00 % 100.00 % 100.00 % Pacific Steel Projects, Inc. (4) 100.00 % 100.00 % 100.00 % Simec Steel, Inc. (4) 100.00 % 100.00 % 100.00 % Simec USA, Corp. (4) 100.00 % 100.00 % 100.00 % Undershaft Investments, NV. (6) 100.00 % 100.00 % 100.00 % GV do Brasil Industria e Comercio de Aço LTDA (2) 99.99 % 99.99 % 100.00 % Companhia Siderurgica do Espiritu Santo S.A. (2) 100.00 % 100.00 % 100.00 % Siderurgica Vale do Paraiba LTDA (2) 100.00 % (1) Companies located in San Luis Potosi. For purposes of this report constitute the “Grupo San.” (2) Companies located in Brazil. 34 (3) ICH owns 0.59% of the shares in this company at December 31, 2025. (4) Companies established in the United States, except a subsidiary of SimRep which is established in Canada. (5) SimRep as an individual company has no significant operations. (6) Company established in Curaçao. D. Property, Plants and Equipment Our Operations and Production Facilities As of the date of this annual report, we conduct our operations at 12 facilities throughout North and South America. At December 31, 2025, our crude steel production capacity was 6 million tons, of which 1.2 million tons were based on an integrated blast furnace technology, and 4.8 million were based on electric arc furnace, or mini-mill, technology. Although we continue to own our U.S. facilities, we ceased all production activities in the United States in August 2023 and these facilities have remained idle since then. Our Mexican facilities have 2.6 million tons of crude steel production capacity, operating six mini-mill facilities. Our U.S. facilities have 2.3 million tons of installed crude steel production capacity, but were not in operation during 2024 or 2025 and our Brazil operations have 1.1 million tons of crude steel production capacity. In addition, we have 5.9 million tons of rolling and finishing capacity, of which 2.9 million are in Mexico, 1.8 million are in the United States (though the U.S. capacity has not been utilized since August 2023), and 1.2 million are in Brazil. We operate nine mini-mills, six in Mexico and three in Brazil. The Mexican mini-mills are in: one in Guadalajara, Jalisco; two in Apizaco, Tlaxcala; one in Silao Guanajuato; one in Mexicali, Baja California; as well as two in San Luis Potosí. Our mini-mills in Brazil, are two in Pindamonhangaba, São Paulo; and one in Cariacica, Espírito Santo; following the cessation of our U.S. steelmaking operations in 2023, the Canton, Ohio mini-mill is no longer operational. We also previously operated an integrated blast furnace and an electric arc furnace in Lorain, Ohio and a rolling mill in Lackawanna, New York. In August 2023, Republic Steel announced the cessation of its operations, including its steel mill in Canton and Lorain, Ohio and its rolling mill in Lackawanna, New York, all of which remain idled as of the date of this report. As long as our facilities are not operating at full capacity, we can allocate production based on the relative cost of basic inputs (scrap metal and electricity) to the facility where production costs would be the lowest. Our production facilities are designed to permit the rapid changeover from one product to another. This flexibility permits us to efficiently produce small volume orders to meet customer needs and to produce varying quantities of standard product. Production runs, or campaigns, occur on four to eight weeks cycles, minimizing customer waiting time for both standard and specialized products. We produce liquid steel using electric arc furnace, alloying elements and carbon are added, and then it is transported to continuous casters for solidification. The continuous casters produce long, square strands of steel that are cut into billet and transferred to the rolling mills for further processing or, in some cases, sold to other steel producers. In the rolling mills, the billet is reheated in a walking beam furnace with preheating burners, passed through a rolling mill for size reduction and conformed into final sections and sizes. The shapes are then cut into a variety of lengths. Our facility in Canton, Ohio, is capable of producing billets and blooms. Mini-mill plants typically produce certain steel products more efficiently because of the lower energy requirements resulting from their smaller size and because of their use of ferrous scrap. Mini-mills are designed to provide shorter production runs with relatively fast product changeover times. 35 The production levels and capacity utilization rates for our melt shops and rolling mills for the periods indicated are presented below. Production Volume and Capacity Utilization Year Ended December 31, 2025 2024 2023 (thousands of tons) Melt shops Steel billet production 2,055 2,343 2,440 Annual installed capacity(1) 6,010 6,010 6,006 Effective capacity utilization 34 % 39 % 41 % Rolling mills Total production 1,965 2,092 2,194 Annual installed capacity(1) 5.924 5,572 5,720 Effective capacity utilization 33 % 38 % 38 % (1) Annual installed capacity is determined based on the assumption that billet of various specified diameters, width and length is produced at the melt shops or that a specified mix of rolled products are produced in the rolling mills on a continuous basis throughout the year except for periods during which operations are discontinued for routine maintenance, repairs and improvements. Amounts presented represent annual installed capacity as of December 31 for each year. Mexican Operations and Facilities The following table presents production by product at each of our Mexican facilities as a percentage of total production at that facility as of December 31, 2025. Mexican Production per Facility by Product Location Product Guadalajara Mexicali Apizaco/ Cholula San Luis Total Production (%) I-Beams 29.2 % 0.0 % 0.0 % 0.0 % 6.0 % Channels 10.8 % 4.6 % 0.0 % 0.0 % 3.0 % Angles 36.4 % 4.9 % 0.0 % 0.0 % 8.4 % Hot rolled bars (round, square and hexagonal rods) 15.3 % 1.3 % 53.3 % 0.9 % 13.3 % Rebar 0.0 % 88.1 % 1.2 % 84.9 % 53.0 % Flat bars 7.7 % 1.1 % 12.3 % 0.0 % 4.0 % Cold finished bars 0.0 % 0.0 % 32.20 % 0.0 % 5.9 % Electro-Welded wire mesh 0.0 % 0.0 % 0.0 % 2.0 % 0.9 % Wire rod 0.0 % 0.0 % 0.0 % 10.4 % 4.6 % Electro-Welded wire mesh panel 0.0 % 0.0 % 0.0 % 1.8 % 0.8 % Other 0.6 % 0.0 % 0.0 % 0.0 % 0.1 % Total 100 % 100 % 100 % 100 % 100 % 36 Guadalajara. Our Guadalajara mini-mill facility is located in central western Mexico in the state of Jalisco which is Mexico’s second largest city. Our Guadalajara facilities and equipment include one improved electric arc furnace utilizing water-cooled sidewalls and roof, one four-strand continuous caster, five reheating furnaces and three rolling mills. The Guadalajara mini-mill has an annual installed capacity of 420,000 tons of billet and an annual installed capacity of finished product of 480,000 tons. In 2025, the Guadalajara mini-mill produced 178,169 tons of steel billet and 205,555 tons of finished product, operating at 42% capacity for billet production and 42% capacity for finished product production. The Guadalajara rolling facilities process billet from our Mexicali and Apizaco mills. Our Guadalajara facility is 336 miles from Mexico City. Our Guadalajara facility mainly produces structural steel, SBQ steel, and light structural steel. Guadalajara Mini-Mill As of December 31, 2025 2024 2023 Steel sales (thousands of tons) 221 208 230 Average finished product price per ton Ps. 18,088 Ps. 18,661 Ps. 23,656 Average scrap cost per ton 5,462 7,497 8,443 Average manufacturing conversion cost per ton of finished product(1) 5,159 4,434 4,372 Average manufacturing conversion cost per ton of billet(1) 3,130 3,069 2,940 (1) Manufacturing conversion cost is defined as all production costs excluding the cost of scrap and related yield loss. Mexicali. In 1993, we began operations at our mini-mill located in Mexicali, Baja California. The mini-mill is strategically located approximately 22 miles south of the California border and approximately 220 miles from Los Angeles. Our Mexicali facilities and equipment include one electric arc furnace utilizing water-cooled sidewalls and roof, one four-strand continuous caster, one walking beam reheating furnace, one SACK rolling mill, a Linde oxygen plant and a water treatment plant. This facility has an annual installed capacity of 420,000 tons of steel billet and an annual installed capacity of finished product of 220,000 tons. Excess billet produced at the Mexicali facility is used primarily by the Guadalajara facility. This allows us to increase the utilization of the Guadalajara facility’s finishing capacity, which exceeds its production capacity. In 2025, the Mexicali mini-mill produced approximately tons 212,820 of billet and 182,570 tons of finished products, operating at 51% capacity for billet production and at 83% capacity for finished product production. Our facility is strategically located and has access to key markets in Mexico and the United States, stable public sources of scrap, electricity and a highly skilled workforce. The Mexicali mini-mill also is situated near major highways and a railroad linking the Mexicali and Guadalajara mini-mills, allowing for coordinated production at the two facilities. Our Mexicali facility mainly produces light structural steel and rebar. Mexicali Mini-Mill Years Ended December 31 2025 2024 2023 Steel sales (thousands of tons) 186 190 189 Average finished product price per ton Ps. 14,315 Ps. 15,295 Ps. 18,834 Average scrap cost per ton 5,414 6,020 7,067 Average manufacturing conversion cost per ton of finished product(1) 3,650 3,780 4,226 Average manufacturing conversion cost per ton of billet(1) 2,625 2,646 2,835 (1) Manufacturing conversion cost is defined as all production costs excluding the cost of scrap and related yield loss. Apizaco mini-mills (mini-mill 1 and mini-mill 2) and Cholula facility. We have operated our Apizaco mini-mill 1 and Cholula facility since August 1, 2004 and Apizaco mini-mill 2 since July, 2018. Mini-mill 1 and 2 are located in central Mexico in Apizaco, Tlaxcala. Our Apizaco facilities and equipment include two EBT electric arc furnace utilizing water-cooled sidewalls and roof, three ladle stations, two degasification stations, two four-strand continuous casters, three walking beam reheating furnaces and three rolling mills. Mini-mill 1 has an annual installed capacity of 510,000 tons of steel billet and an annual installed capacity of finished product of 450,000 tons. In 2025, mini-mill 1 produced 11,555 tons of steel billet and 122,616 tons of finished products, operating at 2% capacity for billet production and at 27% capacity for finished product production. Mini-mill 2 has an installed capacity of 630,000 tons of steel billet and an installed capacity of finished product of 550,000 tons. In 2025, mini-mill 2 produced 247,410 tons of steel billet and 88,883 tons of finished products, operating at 39% capacity for billet production and at 39% capacity for finished product production. Our Apizaco mini-mills are less than 124 miles from Mexico City. Our Apizaco facilities mainly produce SBQ steel. Our Cholula facility is approximately 25 miles from our Apizaco facilities, which allows the integrated operations of the Apizaco mini-mills that supply finished products as raw materials to the Cholula facility. Our Cholula facilities and equipment include cold drawing and turning machines for peeling bars. This facility has an annual installed capacity of finished product of 72,000 tons. In 2025, the Cholula facility produced 65,540 tons of finished products, at 91% capacity. Our Cholula facility mainly produces cold finished SBQ steel. 37 Apizaco Mini-Mills and Cholula Facility Years Ended December 31, 2025 2024 2023 Steel sales (thousands of tons) 191 237 243 Average finished product price per ton Ps. 23,866 Ps. 22,430 Ps. 23,524 Average scrap cost per ton 6,321 7,739 8,444 Average manufacturing conversion cost per ton of finished product(1) 7,420 6,563 7,095 Average manufacturing conversion cost per ton of billet(1) 3,764 4,533 4,732 (1) Manufacturing conversion cost is defined as all production costs excluding the cost of scrap and related yield loss. San Luis Potosí Operations and Facilities. We have operated our San Luis facilities since we acquired them on May 30, 2008. The facilities are located in central Mexico in the city of San Luis Potosí, in the state of San Luis Potosí. Our San Luis facilities and equipment include four electric arc furnaces, three continuous casters, three reheating furnaces, two rebar rolling mills and one wire rod rolling mill. As of December 31, 2025, these facilities had an annual installed capacity of 614,000 tons of billet and 982,000 tons of finished product. In 2025, the San Luis facilities produced 428,496 tons of steel billet and 417,012 tons of finished product, operating at 70% capacity for billet production and 42% capacity for finished product production. Our San Luis facilities mainly produce rebar and wire rod. The following table sets forth, for the periods indicated selected operating data for our San Luis facilities. Years Ended December 31, 2025 2024 2023 Steel sales (thousands of tons) 470 486 541 Average finished product price per ton Ps. 14,830 Ps. 15,280 Ps. 18,607 Average scrap cost per ton 6,176 7,467 8,583 Average manufacturing conversion cost per ton of finished product(1) 3,223 3,037 3,102 Average manufacturing conversion cost per ton of billet(1) 2,456 2,320 2,373 (1) Manufacturing conversion cost is defined as all production costs excluding the cost of scrap and related yield loss The following table sets forth, for the periods Indicated selected operating data for our Republic Steel facilities. Years Ended December 31, 2025 2024 2023 Steel sales (thousands of tons) 1 3 83 Average finished product price per ton Ps. 34,936 Ps. 25,983 Ps. 29, 215 Average scrap cost per ton - - 9,100 Average manufacturing conversion cost per ton of finished product(1) - - 26,901 Average manufacturing conversion cost per ton of billet(1) - - 10,694 (1) Manufacturing conversion cost is defined as all production costs excluding the cost of scrap and related yield loss. 38 Lorain, Ohio. The Lorain facility operated is an integrated steel mill. It has a blast furnace, two 220-ton basic oxygen furnaces, a 150-ton electric arc furnace, two ladle metallurgy facilities, a vacuum degasser, a five-strand continuous bloom caster, a six-strand billet caster, a billet rolling mill and two bar rolling mills. As of December 31, 2025, the facility had an annual installed capacity of 1,049,000 tons of steel billet and 900,000 tons of finished product. This facility has been idled since 2023 and did not produce any steel billet or finished products in 2025, 2024 or 2023. Canton, Ohio. This facility primarily produced SBQ steel and included two 200-ton electric arc furnaces, a 5-strand bloom/billet caster, two ladle metallurgical furnaces, two vacuum degassers, and two slag rakes. Additional equipment included an inline rolling mill, billet grinders, a saw line, and a QVL inspection line. As of December 31, 2025, it had an annual installed capacity of 1,247,000 tons of steel billet. In 2023, it produced 85,059 tons of semi-finished products, operating at 7% capacity. The facility ceased operations in August 2023 and has remained non-operational since then. Lackawanna, New York. This facility featured a walking beam reheat furnace, a 17-stand rolling mill, a 5-stand sizing mill, and three saw lines. It produced hot-rolled bars and had an annual installed capacity of 720,000 tons as of December 31, 2025. In 2023, it produced 62,873 tons, operating at 9% of capacity. It ceased operations in August 2023 and has remained non-operational since then. Massillon, Ohio. This cold-finishing facility included equipment for drawing, turning, grinding, straightening and sawing SBQ steel. As of December 31, 2023, it had an annual capacity of 138,000 tons. In 2023, it produced 8,600 tons of cold-finished bars, operating at 6% capacity. This facility ceased operations in August 2023 and has remained non-operational since then. Solon, Ohio. Acquired in 2011, this plant produced wire products. As of December 31, 2023, it had an installed capacity of 72,000 tons of wire. It produced no finished product in 2023. This facility ceased operations in August 2023 and has remained non-operational since then. Brazil. We have four plants in Brazil: two mini-mills, rebar and wire-rod rolling mills in Pindamonhangaba, São Paulo, a mini-mill in Cariacica, Espirito Santo and rolling and finishing facilities in Itauna, Minas Gerais. Our plant located in Pindamonhangaba, State of Sao Paulo, is 87 miles from the city of Sao Paulo, and is 218 miles from Rio de Janeiro. Our Pindamonhangaba facility and equipment includes two electric arc furnaces and two rebar and wire rod rolling mills. Our facility in Pindamonhangaba began operations in July 2015 and currently produces rebar, while the plants in Cariacica and Itauna were acquired in August 2018, and include an electric arc furnace and two rebar and wire rod rolling mills. As of December 31, 2025, our plants in Pindamonhangaba had installed capacity to produce 520,000 tons of billet and 750,000 tons of finished product per year. In 2025, our plant in Pindamonhangaba produced 507,959 tons of billet and 555,458 tons of finished product, operating at 98% of its capacity for billet and 74% capacity for finished product. Our plant in Cariacica had installed capacity to produce 600,000 tons of billet and 450,000 tons of finished product. In 2025, our plant in Cariacica produced 468,076 tons of billet and 269,407 tons of finished product, operating at 78% of its capacity for billet and 76% capacity for finished product. The plant in Itauna had installed capacity to produce 140,000 tons of finished product. In 2025, our plant in Itauna produced 123,233 tons of finished product, operating at 88% capacity for finished product. In 2025, our plants in Brazil produced 976,035 tons of billet and 942,415 tons of finished product, operating at 87% of its billet capacity and 71% capacity for finished product. The following table sets forth, for the period indicated, selected operating data for our Brazil facilities. Years Ended December 31, 2025 2024 2023 Steel sales (thousands of tons) 864 931 890 Average finished product price per ton Ps. 13,978 Ps. 15,073 Ps. 15,664 Average scrap cost per ton 5,634 6,599 6,776 Average manufacturing conversion cost per ton of finished product(1) 3,972 3,754 3,992 Average manufacturing conversion cost per ton of billet(1) 2,489 2,706 2,704 (1) Manufacturing conversion cost is defined as all production costs excluding the cost of scrap and related yield loss. 39 The following table shows the products that we produce, the equipment that we use and the volume that we produce in each of our separate production facilities: Production per Facility by Product, Equipment and Volume Location Product Equipment Finished Product 2025 Annual Production Volume (tons) Finished Product Annual Installed Capacity (tons) Guadalajara I-Beams, Channels, Angles, Hot rolled bars, Flat bars. Electric arc furnace with continuous caster, rolling mill and bar processing lines. 205,555 480,000 Mexicali Angles, Rebar, Channels, Hot rolled bars. Electric arc furnace with continuous caster and rolling mills. 182,570 220,000 Apizaco and Cholula SBQ. Electric arc furnace with vacuum tank degasser, continuous caster, rolling mills, cold drawn and bar turning equipment. 211,499 1,072,000 San Luis Potosí Rebar, Wire rod, Electro-Welded wire mesh, Electro-Welded wire mesh panel, Hot rolled bars. Electric arc furnaces, with continuous casters, rolling mills, wire rod rolling mill, pickling line, wire drawing machines and electrowelders. 417,012 982,000 Lorain SBQ. Electric arc furnace, blast furnace, vacuum tank degasser, continuous caster, and rolling mills. 0 900,000 Canton SBQ. Electric arc furnace, vacuum tank degasser and continuous caster. 0 0 Lackawanna SBQ. Rolling mill and wire rod rolling mill. 0 720,000 Massillon SBQ. Cold drawn, bar turning and heat treating equipment. 0 138,000 Solon SBQ. Equipment to clean and coat, draw, and anneal wire. 0 72,000 Brazil Rebar, Angles, Hot rolled bars and Flat bars. Electric arc furnaces, with continuous casters with rolling mills and wire rod rolling mill. 948,098 1,340,000 40

Prospects The following discussion is derived from our audited consolidated financial statements, which are presented elsewhere in this annual report. This discussion does not include all the information included in our financial statements. You should read our financial statements to gain a better understanding of our business and our historical results of operations. All the statements in this Item 5 are subject to and qualified by the information set forth under “Forward Looking Statements.” In evaluating this discussion, you should also consider the factors discussed in “Item 3—Risk Factors” and elsewhere in this annual report and other factors that could cause results to differ materially from those expressed in such forward-looking statements. Basis of Preparation - International Financial Reporting Standards (IFRS) We prepare our financial information in accordance with IFRS, as issued by the IASB. IFRS differs in certain significant respects from U.S. GAAP. Accordingly, Mexican financial statements and reported earnings are likely to differ from those of companies in other countries in this and other respects. We prepare our financial information in pesos. A. Operating Results Overview We are producers of SBQ, rebar and structural steel products. Accordingly, our net sales and profitability are highly dependent on market conditions in the steel industry, which is greatly influenced by general economic conditions in North America and globally. Demand, production levels and prices in certain segments and markets have fluctuated in recent years, and the extent, timing and sustainability of any recovery in pricing and demand levels remains uncertain. In 2025, net revenue from sales of SBQ products decreased by 12.48% compared to 2024. In 2024, the total decrease in net revenue from sales of SBQ products compared to 2023 was 36.10%. The decline in production volumes in 2025 and 2024 reflects continued contraction in the Mexican steel industry, combined with demand fluctuations across the automotive, construction, and manufacturing end-use sectors. According to data published by INEGI, the average monthly production value of Mexico’s iron and steel industry was Ps. 10,537 million in 2025, compared to Ps. 11,725 million in 2024 and Ps.20,290 million in 2023. As a result of the significant competition in the steel industry and the commodity-like nature of some of our products, we have limited pricing power over many of our products. The North American and global steel markets influence finished steel product prices. Nevertheless, many of our products are SBQ products for which competition is limited, and, therefore, these products tend to generate somewhat higher margins compared with our commercial steel products. We attempt to adjust the mix of our product output toward higher margin products to the extent that we are able to do so, and we also adjust our overall product levels based on the product demand. We focus on controlling our cost of sales as well as our selling, general and administrative expenses. Our cost of sales largely consists of the costs of acquiring the raw materials necessary to manufacture steel, primarily scrap metal and ferroalloys. Market supply and demand generally determine scrap prices, and, as a result, we have limited ability to influence their cost or the costs of other raw materials, including energy costs. There is a correlation between the prices of scrap and iron ore and finished product prices, although the degree and timing of this correlation vary from time to time, so we may not always be able to fully pass along scrap and other raw material price increases to our customers. Therefore, our ability to decrease our cost of sales as a percentage of net sales is largely dependent on increasing our productivity. Our ability to control selling, general and administrative expenses, which do not correlate to net sales as closely as cost of sales do, is a key element of our profitability. Although our revenues and costs fluctuate from quarter to quarter, we do not experience large fluctuations due to seasonality. 41 Sales Volume, Price and Cost Data, 2025 – 2023. Year ended December 31, 2025 2024 2023 Shipments (thousands of tons) 1,933 2,056 2,176 Guadalajara and Mexicali 407 399 419 Apizaco and Cholula 191 237 243 San Luis Potosí 470 486 541 Republic Steel facilities 1 3 83 Brazil 864 931 890 Net sales (Ps. millions) 30,291 33,658 41,139 Guadalajara and Mexicali 6,669 6,800 8,991 Apizaco and Cholula 4,552 5,306 5,723 San Luis Potosí 6,963 7,431 10,064 Republic Steel facilities 29 85 2,417 Brazil 12,078 14,036 13,944 Cost of sales (Ps. millions) 22,783 26,033 31,100 Guadalajara and Mexicali 4,758 4,816 6,091 Apizaco and Cholula 3,781 4,382 4,741 San Luis Potosí 5,663 5,970 7,105 Republic Steel facilities 116 213 3,399 Brazil 8,465 10,652 9,764 Average price per ton (Ps.) 15,673 16,370 18,909 Guadalajara and Mexicali 16,364 17,054 21,481 Apizaco and Cholula 23,866 22,430 23,524 San Luis Potosí 14,830 15,280 18,607 Republic Steel facilities 34,936 25,983 29,215 Brazil 13,978 15,073 15,664 Average cost per ton (Ps.) 11,786 12,662 14,292 Guadalajara and Mexicali 11,690 12,068 14,537 Apizaco and Cholula 19,796 18,489 19,510 San Luis Potosí 12,049 12,284 13,133 Republic Steel facilities 116,000 70,924 40,952 Brazil 9,797 11,441 10,971 42 Our results are affected by general global trends in the steel industry and by the economic conditions in the countries in which we operate and in other steel producing countries. Our results are also affected by the specific performance of the automotive, non-residential construction, industrial equipment, tooling equipment and other related industries. Our profitability is also impacted by events that affect the price and availability of raw materials and energy inputs needed for our operations. The factors and trends discussed below also affect our results and profitability. Our results are affected by economic activity, steel consumption and end-market demand for steel products. Our results of operations depend largely on macroeconomic conditions in North and South America. Historically, there has been a strong correlation between the annual rate of steel consumption and the annual change in GDP in the Mexican, Brazilian and United States of America markets. We sell our steel products to the automotive, construction, manufacturing, and other related industries. These industries are generally cyclical, and their demand for steel is impacted by the stage of their industry market cycles and the country’s economic performance. Mexico’s GDP in 2025 increased by 0.6% (according to final figures of the INEGI) and in 2024 increased by 1.2%. The U.S. GDP increased 2.1% in 2025 (according to final figures of the U.S. Department of Commerce) and increased 2.8% in 2024. In 2025, Brazil’s GDP growth was expected to slow to 2.3%, down from 3.4% in 2024 according to figures of the Brazilian Institute of Geography and Statistics. Deterioration in economic conditions in the countries in which we operate is likely to adversely affect our results of operation. Our results are affected by international steel prices and trends in the global steel industry. Steel prices are generally set by reference to world steel prices, which are determined by global supply and demand trends. Our average steel price decreased approximately 4% in 2025 compared to 2024. Our average steel price decreased approximately 13% in 2024 compared to 2023. During the last two decades the steel industry has been consolidating. Consolidation has enabled steel companies to lower their production costs and allowed for more stringent supply-side discipline, including through selective capacity closures or idling. Consolidation may result in increased competition and could adversely affect our results. Our results are affected by competition from imports. Our ability to sell our products is influenced, to a certain degree, by global trade for steel products, particularly trends in imports of steel products into the Mexican, Brazilian and U.S. markets. During 2025, the Mexican government, at the request of CANACERO, implemented several measures to prevent unfair trade practices such as dumping in the steel import market. These measures include initiating anti-dumping and countervailing duty proceedings, temporarily increasing import tariffs for countries with which Mexico does not have free trade agreements. In 2025, imports to Mexico in tons decreased 15.8% compared to 2024 according to information of CANACERO. In 2024, imports to Mexico in tons decreased 0.3% compared to 2023 according to information of CANACERO. Foreign producers typically have lower labor costs, and in some cases are owned, controlled or subsidized by their governments, allowing production and pricing decisions to be influenced by political and economic policy considerations as well as prevailing market conditions. 43 Our results are affected by the cost of raw materials and energy. We purchase substantial quantities of raw materials, including scrap metal, and ferroalloys for use in the production of our steel products. The availability and price of these inputs vary according to general market and economic conditions and thus are influenced by industry cycles. For example, prices of scrap metal decreased 14% in 2025, decreased by 13% in 2024 and decreased by 9% in 2023; and prices of ferroalloys decreased approximately 5% in 2025, decreased approximately 22% in 2024 and decreased approximately 22% in 2023. In addition to raw materials, electricity and natural gas are both relevant components of our cost structure. We purchase electricity and natural gas at prevailing market prices in Mexico and Brazil. These prices are impacted by general demand and supply for energy in Brazil and Mexico as economic activity fueled energy demand and the supply and price of oil was impacted by geopolitical events. Natural gas and electricity prices in Brazil and Mexico have remained highly volatile. Prices for electricity decreased 7.25% in 2025, decreased 0.05% in 2024, and increased 5.3% in 2023; and prices for natural gas increased 63.5% in 2025, decreased 22.8% in 2024 and increased 56.2% in 2023. If inflation rates in Mexico and Brazil rise significantly, our costs may increase and the demand for our services may decrease. Mexico and Brazil has historically experienced high annual rates of inflation. Mexico’s inflation, as measured by changes in the Mexican national consumer price index (Índice Nacional de Precios al Consumidor) published by the INEGI was 3.6% in 2025, 4.2% in 2024 and 4.6% in 2023, inflation in Brazil is officially published by the IBGE (Instituto Brasileño de Geografia y Estadistica). The IBGE is the government agency responsible for calculating and publishing the IPCA (Broad Consumer Price Index) monthly, which is the official inflation indicator used by the Brazilian government, was 3.9% in 2025, 4.8% in 2024 and 3.7% in 2023. High inflation rates could adversely affect our business and results of operations by increasing certain costs, such as the labor costs of our Mexican facilities, beyond levels that we could pass on to our customers and reducing consumer purchasing power, thereby adversely affecting demand for our products. Depreciation of the Mexican peso relative to the U.S. dollar, as well as the reinstatement of exchange controls and restrictions, could adversely affect our financial performance. Depreciation of the Mexican peso relative to the U.S. dollar may negatively affect our results of operations. According to the Mexican Central Bank (Banco de México), the appreciation of the Mexican peso relative to the U.S. dollar in 2025 was 12.47%. The exchange rate at December 31, 2025 was 17.9528 compared to 20.5103 at December 31, 2024. The exchange rate at December 31, 2023 was 16.8935. The exchange rate of the peso against the dollar as of April 30, 2026, was 17.4948 pesos per dollar. A severe depreciation of the Mexican peso may also result in disruption of the international foreign exchange markets and may limit our ability to convert Mexican pesos into U.S. dollars and other currencies. While the Mexican government does not currently restrict, and has not recently restricted the right or ability of Mexican or foreign persons or entities to convert Mexican pesos into U.S. dollars or to transfer other currencies out of Mexico, it has done so in the past and could reinstate exchange controls and restrictions in the future. Currency fluctuations or restrictions on the transfer of foreign currency outside of Mexico may have an adverse effect on our financial performance. We do not utilize derivative financial instruments to manage our market risks with respect to foreign currency. Segment Information We are required to disclose segment information in accordance with IFRS 8 “Operating Segments”: Information which establishes standards for reporting information about operating segments in annual financial statements and requires reporting of selected information about operating segments in interim financial reports issued to shareholders. Operating segments are components of a company about which separate financial information is available that is regularly evaluated by the chief operating decision maker(s) in deciding how to allocate resources and assess performance. The statement also establishes standards for related disclosures about a company’s products and services, geographical areas and major customers. 44 We conduct business in three principal business segments which are organized on a geographical basis: ● our Mexican segment represents the results of our operations in Mexico, including our plants in Mexicali, Guadalajara, Tlaxcala and San Luis Potosí; ● our U.S. segment historically represented the results of operations of Republic, including its plants located in the United States and Canada. Following the cessation of our U.S. operations in 2023, the segment no longer includes production activity but continues to be reported separately due to ongoing expenses associated with the former U.S. operations. As such, the U.S. segment is not currently active but remains distinct from our other segments. This treatment may be revised in the future; and ● our Brazil segment represents the results of our operations in four plants located in Brazil, one of which started operations in June 2015 and two of which started to consolidate operations in May 2018; the fourth facility started rolling operations in late 2025. The following information shows other results by segment For the year ended December 31, 2025 Mexico United States Brazil Operations between Segments Total (in thousands of pesos) Net sales $ 18,184,778 28,997 12,077,629 30,291,404 Cost of sales (14,201,867 ) (116,098 ) (8,465,386 ) (22,783,351 ) Gross profit (loss) 3,982,911 (87,101 ) 3,612,243 7,508,053 Operating expenses (1,223,934 ) (419,665 ) (1,185,853 ) (2,829,452 ) Other (expense) income, net (6,595 ) 295,135 237,948 526,488 Interest income 1,202,487 0 16,766 1,219,253 Interest expense 981 (6,011 ) (105,813 ) (110,843 ) Exchange gain (loss), net (3,573,739 ) (32,762 ) 139,165 (139,165 ) (3,606,501 ) Income (loss) before income tax 382,111 (250,404 ) 2,714,456 (139,165 ) 2,706,998 Income tax 899,435 (40,188 ) 352,587 1,211,834 Net (loss) income $ (517,324 ) (210,216 ) 2,361,869 (139,165 ) 1,495,164 Other Data Mexico United States Brazil Operations between Segments Total Depreciation and amortization 573,416 188,838 320,013 1,082,267 Total assets 51,752,152 5,773,480 17,907,272 (4,154,012 ) 71,278,892 Total liabilities 7,113,318 2,873,062 6,212,674 (4,154,012 ) 12,045,042 Additions of property, plant and equipment, net 838,066 - 2,053,462 2,891,528 For the year ended December 31, 2024 Mexico United States Brazil Operations between Segments Total (in thousands of pesos) Net sales $ 19,529,921 $ 92,215 $ 14,035,536 $ 33,657,672 Cost of sales (15,168,258 ) (212,771 ) (10,651,722 ) (26,032,751 ) Gross profit (loss) 4,361,663 (120,556 ) 3,383,814 7,624,921 Operating expenses (996,915 ) (477,245 ) (1,128,351 ) (2,602,511 ) Other (expense) income, net 329,915 (750,518 ) 699,286 278,683 Interest income 1,686,870 0 0 1,686,870 Interest expense 1,972 (5,705 ) (422,358 ) 422,358 (3,733 ) Exchange gain (loss), net 5,557,126 (737 ) 227,122 (227,122 ) 5,556,389 Income (loss) before income tax 10,940,631 (1,354,761 ) 2,759,513 195,236 12,540,619 Income tax 1,135,674 (81,401 ) 1,005,850 2,060,123 Net (loss) income $ 9,804,957 (1,273,360 ) $ 1,753,663 $ 195,236 $ 10,480,496 45 Other Data Mexico United States Brazil Operations between Segments Total Depreciation and amortization $ 623,556 $ 179,732 $ 263,094 $ 1,066,382 Total assets 50,325,892 9,708,618 17,699,144 (4,435,253 ) 73,298,401 Total liabilities 4,192,751 6,168,335 8,130,556 (4,435,253 ) 14,056,389 Additions of property, plant and equipment, net 194,940 (695 ) 1,932,717 — 2,126,962 For the year ended December 31, 2023 Mexico United States Brazil Operations between Segments Total in thousands of pesos) Net sales 24,777,369 2,417,219 13,944,660 — 41,139,248 Cost of sales (17,937.267 ) (3,398,928 ) (9,763,911 ) — (31,100,106 ) Gross profit (loss) 6,840,102 (981,709 ) 4,180,749 — 10,039,142 Operating expenses (970,482 ) (291,552 ) (1,055,024 ) (2,317,058 ) Other (expense) income, net 16,319 (309,117 ) 173,252 (119,546 Interest income 931,866 82,224 — (82,224 ) 931,866 Interest expense (89,293 ) (146,592 ) (122,921 ) 269,513 (89,293 ) Exchange gain (loss), net (2,430,781 ) (219 ) (181,424 ) 181,424 (2,431,000 ) Income (loss) before income tax 4,297,731 (1,646,965 ) 2,994,632 368,713 6,014,111 Income tax 1,234,278 (144,630 ) 650,350 — 1,739,998 Net (loss) income 3,063,453 (1,502,335 ) 2,344,282 368,713 4,274,113 Other Data Mexico United States Brazil Operations between Segments Total Depreciation and amortization 618,445 155,794 261,005 — 1,035,244 Total assets 43,890,081 9,069,596 18,203,408 (4,375,473 ) 66,787,612 Total liabilities 6,912,766 4,602,653 9,842,201 (4,375,473 ) 16,982,147 Additions of property, plant and equipment, net 210,422 (350,360 ) 2,632,611 — 2,492,673 GOODWILL AND INTANGIBLE ASSETS BY REPORTABLE SEGMENT (in thousands of pesos) The balances as of December 31, 2025, 2024 and 2023 are as follows: 2025 Amortization Assets Original Value Accumulated amortization Net period (years) Republic trade mark $ 96,700 $ $ 96,700 * Customers list 77,852 77,852 0 20 Total from Republic (1) 174,552 77,852 96,700 Customers list 2,205,700 2,205,700 0 9 San 42 trademark (2) 329,600 329,600 * Goodwill (2) 1,814,160 1,814,160 * Total from Grupo San (3) 4,349,460 2,205,700 2,143,760 4,524,012 2,283,552 2,240,460 Other assets 20,486 20,486 $ 4,544,498 $ 2,283,552 $ 2,260,946 46 2024 Amortization Assets Original Value Accumulated Amortization Net period (years) Republic trade mark $ 110,476 $ $ 110,476 * Customers list 67,442 67,442 0 20 Total from Republic (1) 177,918 67,442 110,476 Customers list 2,205,700 2,205,700 0 9 San 42 trademark (2) 329,600 329,600 * Goodwill (2) 1,814,160 1,814,160 * Total from Grupo San (3) 4,349,460 2,205,700 2,143,760 4,527,378 2,273,142 2,254,236 Other assets 8,369 8,369 $ 4,535,747 $ 2,273,142 $ 2,262,605 2023 Amortization Assets Original Value Accumulated Amortization Net period (years) Republic trade mark $ 90,995 $ $ 90,995 * Customers list 55,549 55,549 0 20 Total from Republic (1) 146,544 55,549 90,995 Customers list 2,205,700 2,205,700 0 9 San 42 trademark (2) 329,600 329,600 * Goodwill (2) 1,814,160 1,814,160 * Total from Grupo San (3) 4,349,460 2,205,700 2,143,760 4,496,004 2,261,249 2,234,755 Other assets 63,326 0 63,326 $ 4,559,330 $ 2,261,249 $ 2,298,081 * Intangible assets with undefined useful life. (1) Intangible assets from the Republic acquisition. (2) The San 42 trademark and the goodwill are presented net of impairment losses recorded in 2009 for $16,000 and $2,352,000, respectively. (3) Intangible assets from the Grupo San acquisition. The amortization of these assets recorded in net income for the years ended December 31, 2025, 2024 and 2023, amounted to $10,410 $ 11,893 and 7,344 respectively. The other assets are not subject to amortization and they are primarily comprised of guarantee deposits. The reconciliation between the opening and closing balances of each year is presented below: Assets Original Value Accumulated amortization Net Balance as of December 31, 2023 $ 4,559,330 $ (2,261,249 ) $ 2,298,081 Additions 11,893 (11,893 ) 0 Cancellations (35,476 ) (35,476 ) Balance as of December 31, 2024 $ 4,535,747 $ (2,273,142 ) $ 2,262,605 Additions 10,410 (10,410 ) 0 Cancellations (1,659 ) (1,659 ) Balance as of December 31, 2025 $ 4,544,498 $ (2,283,552 ) $ 2,260,946 47 Our net sales by product during the years ended December 31 2025, 2024 and 2023 were as follows: SALES BY PRODUCT (in thousands of pesos) 2025 2024 2023 Light structural 1,687,324 2,021,991 2,182,665 Structural 4,191,561 4,076,639 4,983,426 Bars 2,599,381 2,940,989 3,265,897 Rebar 14,094,801 15,192,976 18,192,586 Flat bar 2,002,385 3,039,653 3,023,550 Hot rolled bars 2,406,171 2,509,482 4,743,970 Cold drawn bars 1,702,133 1,640,589 2,105,625 Other 1,607,648 2,235,353 2,641,529 Total 30,291,404 33,657,672 41,139,248 Our net sales by country or region during 2025, 2024 and 2023 are as follows: SALES BY COUNTRY OR REGION (in thousands of pesos) 2025 2024 2023 Mexico 17,056,774 18,269,580 24,324,934 United States 1,150,048 1,393,853 2,824,476 Brazil 12,058,482 13,959,317 13,884,152 Canada 671 0 0 Argentina 14,737 0 13,432 Bolivia 4,993 20,731 35,210 Guatemala 4,541 899 6,187 Paraguay 1,158 1,923 34,843 Jamaica 0 470 0 Belgium 0 10,776 16,014 Germany 0 123 0 Total 30,291,404 33,657,672 41,139,248 Consolidated Statements of Comprehensive Income Comparison for the Years Ended December 31, 2025 and 2024 Net sales Net sales decreased by 10%, to Ps. 30,291 million in 2025, compared to Ps. 33,658 million in 2024. This decrease was mainly attributable to a 4% decline in the average price per ton of steel products, as well as lower volume sales in 2025 compared to 2024. Total sales outside Mexico decreased by 14%, to Ps. 13,234 million in 2025, compared with Ps. 15,388 million in 2024. Total sales in Mexico decreased 7%, from Ps. 18,270 million in 2024 to Ps. 17,057 million in 2025. Shipments of finished steel products decreased 6% to 1.933 million tons in 2025, compared with 2.056 million tons in 2024. Total sales volume of finished steel products outside Mexico decreased 8% to 0.914 million tons in 2025, compared with 0.993 million tons in 2024, while total sales volume in Mexico decreased 4% to 1.019 million tons in 2025, compared with 1.063 million tons in 2024. Cost of sales Cost of sales decreased 12%, from Ps. 26,033 million in 2024 to Ps. 22,783 million in 2025, primarily due to lower volume of steel tons sold. Cost of sales as a percentage of net sales was 75% in 2025 and 77% in 2024. Hourly wages at our Mexican operations were approximately U.S.$ 3.0 per hour (Ps. 54) in 2025 and U.S.$2.78 per hour (Ps. 57) in 2024. 48 Gross profit Gross profit was Ps. 7,508 million in 2025, compared to Ps. 7,625 million in 2024. The decrease in gross profit was primarily attributable to a reduction of 6% tons in finished steel product shipments and a 4% decline in the average selling price of steel products. Gross Profit as a percentage of net sales represented 25% in 2025 and 23% in 2024. Operating expenses Selling administrative and general expenses (including depreciation and amortization) increased by 9%, to Ps. 2,829 million in 2025, compared with Ps. 2,603 million in 2024. This increase was primarily attributable to higher depreciation charges in Brazil due to the ongoing capital investment program, partially offset by lower wind-down expenses at Republic Steel. Operating expenses as a percentage of net sales were 9% and 8% in 2025 and 2024, respectively. Other expenses (income), net We recorded other income, net, of Ps. 526 million in 2025, compared to other income, net, of Ps. 279 million in 2024. Other income, net in 2025 primarily reflected gains on sales of fixed assets at Republic Steel (Ps. 213 million), revenues from sales of electric energy in Brazil (Ps. 229 million) and recoveries of tax benefits (Ps. 100 million). Other income, net in 2024 primarily reflected the reversal of tax provisions. Interest income We recognized interest income of Ps. 1,219 million in 2025, compared with Ps. 1,687 million in 2024. The decrease in interest income was primarily attributable to lower interest rates. Interest expense We recognized interest expense of Ps. 111 million in 2025, compared with Ps. 4 million in 2024. The increase was primarily attributable to fees in letters of credit and other financing arrangements. Foreign exchange loss (gain) Foreign exchange gains and losses arise from monetary items denominated in currencies other than the functional currency of our subsidiaries. At each reporting date, monetary assets and liabilities denominated in foreign currency are converted to the closing exchange rate, with resulting differences recognized in profit or loss. The Company maintains a net monetary asset position in U.S. dollars; accordingly, a depreciation of the Mexican peso against the U.S. dollar generates a foreign exchange gain, while an appreciation of the peso generates a foreign exchange loss. As published by Banco de México, the peso/dollar exchange rate was Ps. 17.95 at December 31, 2025, compared to Ps. 20.51 at December 31, 2024 and Ps. 16.89 at December 31, 2023. We recognized a foreign exchange loss of Ps. 3,607 million in 2025, compared to a foreign exchange gain of Ps. 5,556 million in 2024. The change was primarily attributable to a 14% appreciation of the Mexican peso against the U.S. dollar in 2025. 49 Income tax In 2025, we recognized an income tax provision of Ps. 1,212 million, which included a current income tax provision of Ps. 1,265 million, and income of deferred tax of Ps. 53 million. In 2024, we recognized an income tax provision of Ps. 2,060 million, which included a current income tax provision of Ps. 2,353 million, and income of deferred tax of Ps. 293 million. Effective income tax rates for 2025 and 2024 were 44% and 16%, respectively, compared to 28% in 2023. The increase in the effective tax rate in 2025 relative to 2024 was primarily due to the effect of the appreciation of the Mexican peso against the U.S. dollar on the Company’s Mexican dollar-denominated investments and intercompany positions. Under Mexican tax law, certain foreign currency conversion effects do not have tax consequences, which increased the effective rate. The 2025 rate is not necessarily indicative of future effective tax rates, as it was significantly influenced by the magnitude of the Mexican peso appreciation during the period. Net income (loss) We reported net income of Ps. 1,495 million in 2025, compared to net income of Ps. 10,480 million in 2024. Net income for 2025, as compared to 2024, was primarily attributable to (i) a 4% decrease in the average selling price of steel products sold, (ii) a foreign exchange loss of Ps. 3,607 million in 2025, compared to a foreign exchange gain of Ps. 5,556 million in 2024, and (iii) a 6% decrease in tons of steel products shipped. Mexico Segment Comparison of the years ended December 31, 2025 and 2024 Net sales Net sales decreased by 7% to Ps. 18,185 million in 2025, compared with Ps. 19,530 million in 2024. This decrease was primarily attributable to a 4% decline in the average selling price per ton of steel products in 2025 compared to 2024. Shipments of finished steel products decreased by 5% to 1.068 million tons in 2025, compared to 1,122 million tons in 2024, resulting from lower demand from the automotive sector. Cost of sales Cost of sales decreased by 6%, from Ps. 15,168 million in 2024 to Ps. 14,202 million in 2025. This decrease was primarily attributable to a 5% reduction in tons of steel products shipped. As a percentage of net sales, our cost of sales was 78% in 2025, compared to 78% in 2024. Gross profit Gross profit decreased by 9% to Ps. 3,983 million in 2025, compared to Ps. 4,362 million in 2024. This decrease was primarily attributable to (i) a 4% decline in the average selling price of steel products sold and (ii) a 5% decrease in tons of steel products shipped. As a percentage of net sales, our gross margin was 22% in 2025, the same as in 2024. Operating expenses Operating expenses (including depreciation and amortization) increased by 23% to Ps. 1,224 million in 2025, compared to Ps. 997 million in 2024. The increase was primarily attributable to administrative expenses and plant maintenance expenses. Operating expenses as a percentage of net sales were 7% in 2025, compared to 5% in 2024. Depreciation and amortization expenses amounted Ps. 573 million in 2025, compared to Ps. 624 million in 2024. 50 Other expenses (income), net We recorded other expenses, net, of Ps. 7 million in 2025, compared to other income, net, of Ps. 330 million in 2024. The variance was primarily due to the recovery of the allowance for doubtful accounts in 2024. Interest income We recognized interest income of Ps. 1,202 million in 2025, compared to Ps. 1,687 million in 2024. The decrease in interest income was primarily attributable to lower interest rates. Foreign exchange gain (loss) We recorded a foreign exchange loss of Ps. 3,574 million in 2025, compared to a foreign exchange income of Ps. 5,557 million in 2024. The change was primarily attributable to an appreciation of the Mexican peso against the U.S. dollar in 2025 of 14%. Income tax In 2025, we recognized an income tax provision of Ps. 899 million, which included current income tax expense of Ps. 982 million and income of deferred tax of Ps. 83 million. In 2024, we recognized an income tax provision of Ps. 1,136 million, which included current income tax expense of Ps. 1,240 million and income of deferred tax of Ps. 104 million. Under the Mexican Income Tax Law (Ley del Impuesto sobre la Renta), the statutory tax rate applicable for 2025 and subsequent years is 30%. Net income We reported net loss of Ps. 517 million in 2025, compared to net income of Ps. 9,805 million in 2024. This variation was primarily attributable to (i) a 4% decrease in the average selling price of steel products sold, (ii) a foreign exchange loss of Ps. 3,574 million in 2025, compared to a foreign exchange gain of Ps. 5,557 million in 2024, and (iii) a 5% decrease in tons of steel products shipped. U.S. Segment Comparison of the years ended December 31, 2025 and 2024 Net sales Net sales for the U.S. segment were Ps. 29 million in 2025, compared to Ps. 92 million in 2024. Republic Steel ceased all production activities in August 2023, and the U.S. segment has not been operational since then. The reduction is attributable to a cessation of operational activity. 51 Cost of sales Our cost of sales was Ps. 116 million in 2025, compared to Ps. 213 million in 2024. Gross loss The U.S. segment recorded a gross loss of Ps. 87 million in 2025, compared to a gross loss of Ps. 121 million in 2024. Operating expenses Our operating expenses were Ps. 420 million in 2025, compared to Ps. 477 million in 2024. The decrease was primarily attributable to lower legal and professional fees related to the wind-down / ongoing environmental compliance costs at idle facilities. Other expenses (income), net We recorded other income, net, of Ps. 295 million in 2025, compared to other expenses, net, of Ps. 751 million in 2024. Other income, net in 2025 primarily reflected gains on sales of fixed assets at Republic Steel (Ps. 213 million). The 2024 amount primarily reflected asset write-downs and clean-up costs related to the Republic Steel cessation of operational. Interest expense We recognized interest expense of Ps. 6 million in 2025, compared to Ps. 6 million in 2024. Foreign exchange gain (loss) We recorded a foreign exchange loss of Ps. 33 million in 2025, compared to a foreign exchange loss of Ps. 1 million in 2024. Income tax In 2025, we recognized an income of deferred tax of Ps. 40 million, compared to an income of deferred tax of Ps. 81 million in 2024. 52 Net loss The U.S. segment reported a net loss of Ps. 210 million in 2025, compared to a net loss of Ps. 1,273 million in 2024. The losses in both periods are attributable to the ongoing costs of maintaining idled facilities and completing the wind-down of Republic Steel operations, which ceased production in August 2023. Brazil Segment Comparison of the years ended December 31, 2025 and 2024 Net sales Net sales decreased 14% to Ps. 12,078 million in 2025, compared to Ps. 14,036 million in 2024. Shipments of finished steel products decreased to 864,000 tons in 2025, compared to 931,000 tons in 2024. Cost of sales Cost of sales decreased to Ps. 8,465 million in 2025, compared with Ps. 10,652 million in 2024. The average cost per ton of steel products sold decreased by 14% compared to 2024. Cost of sales as a percentage of net sales was 70% in 2025, compared to 76% in 2024. Gross profit Gross profit was Ps. 3,612 million in 2025, compared to Ps. 3,384 million in 2024. The increase was due to a better average cost, mainly due to lower scrap costs. As a percentage of net sales, our gross margin was 30% in 2025, compared to 24% in 2024. Operating expenses Selling, administrative and general expenses (including depreciation and amortization) were Ps. 1,186 million in 2025, compared to Ps. 1,128 million in 2024. Administrative expenses as a percentage of net sales were 10% in 2025 and 8% in 2024. Depreciation and amortization expenses amounted to Ps. 320 million in 2025, compared to Ps. 263 million in 2024. Other expenses, net We recorded other income, net, of Ps. 238 million in 2025, compared to other income, net, of Ps. 699 million in 2024. Other income, net in 2025 primarily reflected revenues from sales of electric energy in Brazil (Ps. 229 million). Interest expense We recognized interest expense of Ps. 106 million in 2025, compared to Ps. 422 million in 2024. The decrease was primarily attributable to the repayment of intercompany debt, which is eliminated in the consolidated financial statements. Foreign exchange gain (loss) We recorded a foreign exchange income of Ps. 139 million in 2025, compared to a foreign exchange income of Ps. 227 million in 2024. The change was primarily attributable to intercompany receivables, mainly with Republic Steel, as the Brazilian real appreciated by 11% against the U.S. dollar. 53 Income tax In 2025, we recognized an income tax provision of Ps. 353 million, compared to Ps. 1,006 million in 2024. The decrease was primarily attributable to lower income from decreased production volumes. Net income (loss) We reported net income of Ps. 2,362 million in 2025, compared to net income of Ps. 1,754 million in 2024. The increase was primarily attributable to lower cost of sales, lower interest expense, lower income taxes and operational efficiencies. Consolidated Statements of Comprehensive Income Comparison of the years ended December 31, 2024 and 2023 Net sales Net sales decreased 18% to Ps. 33,658 million in 2024, compared to Ps. 41,139 million in 2023. This decrease was primarily attributable to a 13% decline in the average sales price per ton of steel products and lower sales volumes in 2024 compared to 2023. Total sales outside Mexico decreased 8% to Ps. 15,388 million in 2024, compared to Ps. 16,814 million in 2023. Total sales in Mexico decreased 25% to Ps. 18,270 million in 2024, compared to Ps. 24,325 million in 2023. Shipments of finished steel products decreased 6% to 2.056 million tons in 2024, compared to 2.176 million tons in 2023. Total sales volume of finished steel products outside Mexico decreased less than 1% to 0.993 million tons in 2024, compared to 0.995 million tons in 2023, while total sales volume in Mexico decreased 10% to 1.063 million tons in 2024, compared to 1.181 million tons in 2023. Cost of sales Cost of sales decreased by 16%, from Ps. 31,100 million in 2023 to Ps. 26,033 million in 2024, primarily due to lower sales volumes (approximately 120 thousand fewer tons of steel sold). Cost of sales as a percentage of net sales was 77% in 2024, compared to 76% in 2023. Hourly wages in our Mexican operations were approximately U.S.$2.78 (Ps. 57) per hour in 2024 and U.S.$2.54 (Ps. 52) per hour in 2023. Gross profit Our gross profit was Ps. 7,625 million in 2024, compared to Ps. 10,039 million in 2023. The decrease in gross profit was primarily attributable to a reduction of approximately 120,000 tons of finished steel products shipped and a 13% decline in the average selling price of steel products sold. As a percentage of net sales, our gross margin was 23% in 2024 and 24% in 2023. Operating expenses Selling, administrative and general expenses (including depreciation and amortization) increased by 12% to Ps. 2,603 million in 2024, compared to Ps. 2,317 million in 2023. The increase was primarily attributable to higher expenses in the United States related to the closure of Republic Steel, increased expenses in Brazil due to higher production levels, and higher depreciation charges. Operating expenses as a percentage of net sales were 8% and 6% in 2024 and 2023, respectively. 54 Other expenses (income), net We recorded other income, net, of Ps. 279 million in 2024, compared to other expenses, net, of Ps. 119 million in 2023. The change was primarily attributable to gains recognized in connection with the resolution of certain operational and accounting matters. Interest income We recognized interest income of Ps. 1,686 million in 2024, compared to Ps. 982 million in 2023. Interest expense We recognized interest expense of Ps. 4 million in 2024, compared to interest income of Ps. 89 million in 2023. The variation was primarily attributable to a significant reduction in fees from letters of credit issued for Republic Steel. Foreign exchange gain (loss) We recorded a foreign exchange gain of Ps. 5,556 million in 2024, compared to a foreign exchange loss of Ps. 2,431 million in 2023. The difference was primarily attributable to a 21% depreciation of the Mexican peso against the U.S. dollar in 2024. Income tax In 2024, we recognized an income tax provision of Ps. 2,060 million, which included current income tax expense of Ps. 2,353 million, and income of deferred tax of Ps. 293 million. In 2023, we recognized an income tax provision of Ps. 1,740 million, which included current income tax expense of Ps. 1,695 million and expense of deferred tax of Ps. 45 million. Our effective income tax rates were 16% and 28% for 2024 and 2023, respectively. The decrease in the effective tax rate in 2024 was primarily due to the effect of the depreciation of the Mexican peso against the U.S. dollar on the Company’s U.S. dollar-denominated investments and intercompany positions. Under Mexican tax law, certain foreign currency conversion effects do not have tax consequences, which reduced the effective rate. The 2024 rate is not necessarily indicative of future effective tax rates, as it was significantly influenced by the magnitude of the peso’s depreciation during the period. Under the Mexican Income Tax Law (Ley del Impuesto sobre la Renta), the statutory income tax rate applicable for 2023, 2024 and subsequent years is 30.0%. Net income (loss) We reported net income of Ps. 10,480 million in 2024, compared to net income of Ps. 4,274 million in 2023. The increase in net income in 2024 compared to 2023 was primarily attributable to (i) a foreign exchange gain of Ps. 5,556 million in 2024, compared to a foreign exchange loss of Ps. 2,431 million in 2023, partially offset by (ii) an 13% decrease in the average sales price of steel products and (iii) a 6% decrease in tons of steel products shipped. 55 Mexico Segment Comparison of the years ended December 31, 2024 and 2023 Net sales Net sales decreased by 21% to Ps. 19,530 million in 2024, compared to Ps. 24,777 million in 2023. The decrease was primarily attributable to a 15% decline in the average selling price per ton of steel products in 2024 compared to 2023. Shipments of finished steel products decreased by 8% to 1.122 million tons in 2024, compared to 1.213 million tons in 2023, resulting from the contraction of the domestic market. Cost of sales Our cost of sales decreased by 15%, to Ps. 15,168 million in 2024 from Ps. 17,937 million in 2023. The decrease was primarily attributable to a 8% reduction in tons of steel products shipped. As a percentage of net sales, cost of sales was 78% in 2024, compared to 72% in 2023. Gross profit Gross profit decreased 36% to Ps. 4,362 million in 2024, compared to Ps. 6,840 million in 2023. The decrease was primarily attributable to a 15% decline in the average selling price of steel products and a 8% decrease in tons of steel products shipped. As a percentage of net sales, our gross margin was 22% in 2024, compared to 28% in 2023. Operating expenses Operating expenses (including depreciation and amortization) increased 3% to Ps. 997 million in 2024, compared to Ps. 970 million in 2023. The increase was primarily attributable to higher administrative and maintenance expenses. Operating expenses as a percentage of net sales were 5% in 2024 and 4% in 2023. Depreciation and amortization expenses were Ps. 624 million in 2024, compared to Ps. 618 million in 2023. Other expenses (income), net We recorded other income, net, of Ps. 330 million in 2024, compared to other income, net, of Ps. 16 million in 2023, which reflected expenses related to changes in the allowance for doubtful accounts. Interest income We recognized interest income of Ps. 1,687 million in 2024, compared to Ps. 932 million in 2023. The increase in interest income was primarily attributable to higher investments. Interest expense We recognized interest gain of Ps. 2 million in 2024, compared to Ps. 89 million interest expense in 2023. Foreign exchange gain (loss) We recorded a foreign exchange gain of Ps. 5,557 million in 2024, compared to a foreign exchange loss of Ps. 2,431 million in 2023. The gain was primarily attributable to a 21% depreciation of the Mexican peso against the U.S. dollar in 2024. 56 Income tax In 2024, we recognized an income tax provision of Ps. 1,136 million, which included current income tax expense of Ps. 1,240 million and income of deferred tax of Ps. 104 million. In 2023, we recognized an income tax provision of Ps. 1,234 million, which included current income tax expense of Ps. 1,045 million and expense of deferred tax of Ps. 189 million. Under the Mexican Income Tax Law (Ley del Impuesto sobre la Renta), the statutory tax rate applicable for 2024 and subsequent years is 30%. Net income We reported net income of Ps. 9,805 million in 2024, compared to net income of Ps. 3,063 million in 2023. The increase was primarily attributable to (i) a foreign exchange gain of Ps. 5,557 million in 2024, compared to a foreign exchange loss of Ps. 2,431 million in 2023, partially offset by (ii) a 15% decrease in the average selling price of steel products sold and (iii) a 8% decrease in tons of steel products shipped. U.S. Segment Comparison of the years ended December 31, 2024 and 2023 Net sales Net sales for the U.S. segment were Ps. 92 million in 2024, compared to Ps. 2,417 million in 2023. Republic Steel ceased all production activities in August 2023, and the U.S. segment has had no operational activity since then. The reduction is attributable to a cessation of operational activity. Cost of sales Cost of sales was Ps. 213 million in 2024, compared to Ps. 3,399 million in 2023. The decrease was primarily attributable to the continued reduction in wind-down related costs following cessation of operations activity in Republic Steel in August 2023. Gross loss The U.S. segment recorded a gross loss of Ps. 121 million in 2024, compared to a gross loss of Ps. 982 million in 2023. The ongoing losses reflect residual costs associated with the maintenance and wind-down of idled facilities. Operating expenses Operating expenses were Ps. 477 million in 2024, compared to Ps. 292 million in 2023. The increase was primarily attributable to higher legal and professional fees related to the wind-down / ongoing environmental compliance costs at idled facilities. Other expenses (income), net We recorded other expenses, net, of Ps. 751 million in 2024, compared to other expenses of Ps. 309 million in 2023. The 2024 amount primarily reflected asset write-downs and clean-up costs related to the Republic Steel cessation of operational activity. Interest income We recognized interest income of Ps. 0 million in 2024, compared to Ps. 82 million in 2023. 57 Interest expense We recognized interest expense of Ps. 6 million in 2024, compared to Ps.147 million in 2023. Foreign exchange gain (loss) We recorded a foreign exchange loss of Ps. 1 million in 2024, compared to a minimal foreign exchange loss Ps. 0 million in 2023. Income tax In 2024, we recognized an income of deferred tax of Ps. 81 million, compared to an income of deferred tax of Ps. 145 million in 2023. Net loss The U.S. segment reported a net loss of Ps. 1,273 million in 2024, compared to a net loss of Ps. 1,502 million in 2023. The losses in both periods are attributable to the ongoing costs of maintaining idled facilities and completing the wind-down of Republic Steel operations, which ceased production in August 2023. Brazil Segment Comparison of the years ended December 31, 2024 and 2023 Net sales Net sales increased 1% to Ps. 14,036 million in 2024, compared to Ps. 13,945 million in 2023. The increase was primarily attributable to higher shipments of finished steel products, which more than offset a 4% decrease in the average selling price. Shipments of finished steel products increased to 931,000 tons in 2024, compared to 890,000 tons in 2023. Cost of sales Cost of sales increased to Ps. 10,652 million in 2024, compared to Ps. 9,764 million in 2023. The average cost per ton of steel products sold increased by 4% compared to 2023. Cost of sales as a percentage of net sales was 76% in 2024, compared to 70% in 2023. Gross profit Gross profit was Ps. 3,384 million in 2024, compared to Ps. 4,181 million in 2023. The decrease was primarily attributable to a reduction in the average selling price of products shipped. As a percentage of net sales, our gross margin was 24% in 2024, compared to 30% in 2023. Operating expenses Operating expenses (including depreciation and amortization) were Ps. 1,128 million in 2024, compared to Ps. 1,055 million in 2023. Administrative expenses as a percentage of net sales were 8% in both 2024 and 2023. Higher administrative expenses, royalties and statutory charges increased overall administrative expenses. Depreciation and amortization expenses were Ps. 263 million in 2024, compared to Ps. 261 million in 2023. Other income, net We recorded other income net, of Ps. 699 million in 2024, compared to other income net, of Ps. 173 million in 2023. 58 Interest expense We recognized interest expense of Ps. 422 million in 2024, compared with Ps. 123 million in 2023. The increase was primarily attributable to interest of intercompany debt, which is eliminated in the consolidated financial statements. Foreign exchange gain (loss) We recorded a foreign exchange gain of Ps. 227 million in 2024, compared to a foreign exchange loss of Ps. 181 million in 2023, primarily attributable to intercompany receivables, which are eliminated in the Consolidated Financial Statements. Income tax In 2024, we recognized an income tax provision of Ps. 1,006 million, compared to Ps. 650 million in 2023. The increase was primarily attributable to changes in tax benefits. Net income (loss) We reported net income of Ps. 1,754 million in 2024, compared to net income of Ps. 2,344 million in 2023. The decrease was primarily attributable to the lower average selling price of steel products sold in 2024 compared to 2023. B. Liquidity and Capital Resources On December 31, 2025, our total consolidated debt was Ps. 5.4 million (U.S.$302 thousand) of 8 7/8% medium-term notes (“MTNs”) due 1998, which remained outstanding after we conducted exchange offers for the MTNs in October 1997 and August of 1998. We could not identify the holders of such MTNs at the time of the exchange offers and as a result such MTNs, which matured in 1998, have not been paid and remain outstanding. We depend heavily on cash generated from operations as our principal source of liquidity. Other sources of liquidity have included financing made available to us by our parent company Industrias CH (primarily in the form of equity or debt, substantially all of which was subsequently converted to equity), primarily for the purpose of repaying third party indebtedness, as well as limited amounts of vendor financing. As of December 31, 2025, we had cash and cash equivalents of Ps. 28,551 million and as of December 31, 2024 we had cash and cash equivalents of Ps. 29,158 million. We believe that this amount of cash generated from operations will be sufficient to satisfy our currently anticipated cash requirements, including our currently anticipated capital expenditures. Our principal use of cash has generally been to fund our operating activities, to acquire businesses and to fund our capital expenditure programs. The following is a summary of cash flows for the three years ended December 31, 2025, 2024 and 2023: Principal Cash Flows Years ended December 31, 2025 2024 2023 (millions of pesos) Funds provided by operating activities 523 5,548 4,263 Funds used in investing activities (887 ) (278 ) (1,283 ) Funds used in financing activities (227 ) (130 ) (243 ) 59 Our net funds provided by operations were Ps. 523 million in 2025 compared to Ps. 5,548 million in 2024. The decrease of Ps. 5,025 million in the net funds provided by operations between 2025 and 2024 was originated mainly from changes in operating income and working capital movements. We use our net funds in investing activities primarily for the acquisition of new facilities, property, plant and equipment and other non-current assets. Our net funds used in investing activities were Ps. 887 million in 2025 compared to Ps. 278 million in 2024. In 2025, the acquisition of property, plant and equipment equaled Ps. 2,892 million. Our net funds used for financing activities in 2025 were Ps. 227 million, compared to Ps. 130 million used for financing activities in 2024. In 2025, share buy-backs of Ps. 116 million, interest payments of Ps. 111 million. Our net funds provided by operations were Ps. 5,548 million in 2024 compared to Ps. 4,263 million of net funds provided by operations in 2023, an increment of Ps. 1,285 million in the net funds provided by operations. We use our net funds in investing activities primarily to the acquisition of new facilities, property, plant and equipment and other non-current assets. Our net funds used in investing activities were Ps. 278 million in 2024 compared to Ps. 1,283 million in 2023. In 2024 the acquisition of property, plant and equipment equaled Ps.2,127 million. Our net funds used for financing activities in 2024 were Ps. 130 million, compared to Ps. 243 million used for financing activities in 2023. In 2024, there was an increase of Ps. 126 million in the buy-back of our own shares, and we paid interest for Ps. 4 million. As of December 31, 2025, we have the following material commitments: Prior to ceasing operations in August 2023, Republic leased certain equipment, office space and computer equipment under non-cancellable operating contracts. All such leases have since expired, and as of December 31, 2025, Republic has no remaining lease obligations. Our Brazil plants’ electric energy purchase agreements have been made with different termination dates. As of June 30, 2023 with the supplier NEWCOM for R$9.48 million, another agreement was celebrated with ENEL for R$17.05 million, with termination date on December 31, 2023. With energy supplier NEWCOM, we have a purchase agreement for R$ 33.9 million with a termination date on December 31, 2023. With energy supplier AMERICA, we have a purchase agreement for R$16.5 million, with a termination date on December 31, 2024. With energy suppliers SQUADRA we have a purchase agreement for R$ 7.650 million with a termination date on December 31, 2024 and an agreement for R$ 7.680 million with a termination date on December 31, 2025. We have three purchase agreements with CESP/AUREN for R$ 4.336 million, R$ 4.021 million, and R$ 3.981 million, with termination dates on December 31, 2024, 2025, and 2026, respectively. Additionally, we have six contracts with ENEL TRADING BRASIL S.A., two per year, valued at R$ 101.4 million, R$ 90.0 million, and R$ 90.9 million, also terminating on December 31, 2024, 2025, and 2026, respectively. Finally, with AES, we have three contracts, one per year, valued at R$ 60.1 million, R$ 56.3 million, and R$ 59.9 million, with the same termination dates of December 31, 2024, 2025, and 2026, respectively. C. Research and Development, Patents and Licenses The San Luis Potosí facilities brands are registered with the Mexican Institute of Industrial Property (“IMPI”) for the trademarks “SAN” and “Aceros San Luis.” The trademark “Grupo Simec” is registered with the IMPI. On October 11, 2017, Simec International 6, S.A. de C.V., concluded the registration of the patent “Fabricación de Aceros de Mecanizado Fácil con Plomo en la Máquina de Colada Continua” (Manufacture of Easy Machining Steels with Lead in Continuous Casting Machine) in the IMPI. 60 D. Trend Information In the first quarter of 2026, net sales increased 3% as compared to the first quarter of 2025. Sales in tons of finished steel increase less than 1% in the first quarter of 2026 as compared to the first quarter of 2025. Prices of finished products sold in the first quarter of 2026 increased by 1% as compared to the first quarter of 2025. With the closure of our U.S. operations, we expect a positive impact on our overall financial performance. Historically, these operations have relied on subsidies from the Company, and their closure is anticipated to improve efficiency and reduce the financial burden on the Company and subsidiaries. E. Critical Accounting Estimates The discussion in this section is based upon our consolidated financial statements, which have been prepared in accordance with IFRS. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at year-end, and the reported amount of revenues and expenses during the year. Management regularly evaluates these estimates, including those related to the carrying value of property, plant and equipment and other non-current assets, inventories and cost of sales, income taxes, foreign currency transactions and exchange differences, liabilities for deferred income taxes, valuation of financial instruments, obligations relating to employee benefits, potential tax deficiencies, environmental obligations, and potential litigation claims and settlements. Management estimates are based on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Accordingly, actual results may differ materially from current expectations under different assumptions or conditions. Management believes that the critical accounting policies which require the most significant judgments and estimates used in the preparation of the consolidated financial statements relate to deferred income taxes, the impairment of property, plant and equipment, impairment of intangible assets, valuation allowance on accounts receivable and inventories obsolescence. We evaluate the recoverability of operating tax losses (NOL) carry forwards, and only for those who have probability of being recovered is determined a deferred tax asset. The final realization of deferred tax assets depends on the generation of taxable profits in the periods when the temporary differences are deductible. Upon carrying out this evaluation, we considered the expected reversal of deferred tax liabilities, projected taxable profit and planning strategies. Based on the company’s evaluation, it determined the amount of deferred tax assets that is more likely than not to be realized in the future against those taxable profits. We evaluate periodically the adjusted values of our property, plant and equipment and intangible assets to determine whether there is an indication of potential impairment. Impairment exists when the carrying amount of an asset exceeds net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value. Assets to be disposed of are reported at the lower of the carrying amount or realizable value. Significant judgment is involved in estimating future revenues and cash flows or realizable value, as applicable, of our property, plant and equipment due to the characteristics of those assets. The class of our assets which most require complex determinations based upon assumptions and estimates relates to indefinite lived intangibles including goodwill, due to the current market environment. 61 During 2022 and 2021, the Company invested in certain improvements in Republic Steel’s Lorain facility to be better prepared to reactivate the plant, with U.S.$5.5 million and U.S.$15.6 million recorded to construction-in-progress for the years ended December 31, 2022, and 2021, respectively. The construction-in-progress in the last three years amounted to U.S.$27.1 million. However, construction activities were paused as a result of the cessation of operations at the other U.S. facilities. The Company had property, plant, and equipment with a net book value of approximately U.S.$ 3.1 million (Ps.55.0 million), U.S. $2.8 million (Ps. 56.8 million) and U.S $3.5 million (Ps. 58.7 million), as of December 31, 2025, 2024, and 2023, respectively, pertaining to the Lorain, Ohio, facility, after recording an impairment charge of U.S.$130.7 million (Ps. 2,701 million) in 2015. Management and experts conducted a further evaluation to determine if any impairment exists at the Company’s other asset groups in accordance with IFRS and determined that as of December 31, 2023 and 2025, no other asset groups were impaired based on current projections. No further impairment was considered necessary or appropriate. As of the date of this report, management has determined that the Republic Steel facilities will remain inactive unless changes in prevailing economic conditions justify resuming operations. Management does not currently intend to sell the facilities. Because management does not currently intend to sell the Republic Steel facilities, IFRS 5 (Non-current Assets Held for Sale and Discontinued Operations) does not apply. The assets continue to be accounted for under IAS 16 (Property, Plant and Equipment), measured at cost less accumulated depreciation and any impairment recognized in accordance with IAS 36. As discussed in Note 9 to our audited financial statements included elsewhere in this Annual Report, the Company has Ps. $1,157,556 and Ps. $1,414,703 of physical coke stock inventory as of December 31, 2025 and 2024, respectively, which the Company used as raw material to supply the blast furnace at the Lorain facility. Management periodically evaluates the potential degradation of coke inventory and determines whether it remains suitable as blast furnace feedstock or alternatively for sale to other blast furnace steel mills. At the end of each of 2025 and 2024, the Company engaged independent valuation experts to appraise the coke inventory. The 2025 appraisal was conducted by Juan Pablo Gómez Morín Rivera and Idelfonso Acevedo Reyes of Worth Avalúos y Consultoría, and the 2024 appraisal was conducted by Jeffry Miller and Salvatore Fomma of Maynards. Each of the foregoing is an Accredited Senior Appraiser certified by the American Society of Appraisers (ASA). The appraisals determined a value of US$344 per metric ton at December 31, 2025 and US$368 per metric ton at December 31, 2024, applied to physical inventory of 187,227 metric tons. The Company has retained this inventory because management has determined that the Company’s current liquidity position does not require its disposition and that prevailing market conditions do not support a sale at prices the Company considers acceptable. In assessing the recoverability of goodwill and other intangibles, we must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets. We perform an annual review in the fourth quarter of each year, or more frequently if indicators of potential impairment exist, to determine if the carrying value of recorded goodwill is impaired. The impairment review process compares the fair value of the reporting unit in which goodwill resides to it carrying value. We estimate the reporting unit’s fair value based on a discounted future cash flow approach that requires estimating income from operations. In order to estimate our cash flows used in impairment computations, we considered the following: ● our history of earnings; ● our history of capital expenditures; ● the remaining useful lives of our primary assets; ● current and expected market and operating conditions; and ● our weighted average cost of capital. 62 Other intangible assets are mainly comprised of trademarks. When impairment indicators exist, or at least annually for indefinite live intangibles, we determine our projected revenue streams over the estimated useful life of the asset. As of December 31, 2025 and 2024, there was no impairment charge to other intangible assets. As of December 31, 2025, the main key assumptions used in the valuation models of the San Luis Potosí reporting unit are as follows: ● discount rate: 12.50%; and ● sales: we estimate an increase in sales volume of approximately 18.26% in 2026, mainly attributable to changes in domestic market conditions. After 2026, no sales increases in volume terms are considered in the valuation model. For the years after 2026 we estimate only an increase in sales prices in line with estimated inflation. If these estimates or their related assumptions for prices and demand change in the future, we may be required to record additional impairment charges for these assets. With respect to valuation allowance on accounts receivable, on a periodic basis management analyzes the recoverability of accounts receivable in order to determine if, due to credit risk or other factors, some receivables may not be collected. If management determines that such a situation exists, the book value of the non-recoverable assets is adjusted and charged to the income statement through an increase in the doubtful accounts allowance. This determination requires substantial judgment by management. As a result, final losses from doubtful accounts could differ significantly from estimated allowances. We apply judgment at each balance sheet date to determine whether the slow-moving inventory is impaired. Inventory is impaired when the carrying value is greater than the net realizable value. The reserve for environmental liabilities represents the estimated environmental remediation costs that we believe are going to incur. These estimates are based on currently available data, existing technology, the current laws and regulations and take into account the likely effects of inflation and other economic and social factors. The time in which we could incur these costs cannot be determined reliably at this time due to the absence of deadlines for remediation under the laws and regulations which apply to remediation costs will be made. New Accounting Pronouncements The following standards and amendments are not yet effective. The Company is currently evaluating the potential impact they may have on its financial statements. Amendments to IFRS 9 – Financial Instruments and IFRS 7 – Financial Instruments: Disclosures These amendments address the classification and measurement of financial instruments. Specifically, they clarify: (i) when a financial liability can be derecognized upon settlement through an electronic transfer, and (ii) when cash flows qualify as solely payments of principal and interest, which determines whether financial assets can be classified at amortized cost. 63 Although the Company is still assessing the impact of these amendments, the current expectation is that the changes related to the timing of derecognition of financial liabilities may have an effect on the Company’s financial liabilities. However, the amendments related to the classification of financial assets are not expected to have a material impact. These amendments are applicable to the Company’s 2026 financial statements. IFRS 18 – Presentation and Disclosure in Financial Statements This new standard will replace IAS 1 – Presentation of Financial Statements. While many existing requirements will remain, IFRS 18 introduces significant changes to: ● The presentation of the income statement and, consequently, the statement of cash flows; ● The disclosure of management performance measures; ● The level of aggregation and disaggregation in the primary financial statements and accompanying notes. IFRS 18 applies to periods beginning on or after January 1, 2027 and must be applied retrospectively. The Company is still evaluating the impact IFRS 18 may have on its financial statements. Other Standards There are no other new standards or amendments expected to have a material impact on the Company’s financial statements. Sustainability Reporting Standards Creation of the International Sustainability Standards Board (ISSB) The IFRS Foundation has established the ISSB to develop global sustainability disclosure standards aimed at providing investors and other capital market participants with high-quality, decision-useful information on sustainability-related risks and opportunities. IFRS S1 – General Requirements for Disclosure of Sustainability-Related Financial Information This standard requires entities to disclose material sustainability-related risks and opportunities that could reasonably be expected to affect cash flows, access to finance, or cost of capital over the short, medium or long term. IFRS S2 – Climate-Related Disclosures IFRS S2 focuses specifically on climate-related risks and opportunities, including both physical and transition risks that may impact an entity’s financial outlook. Adoption in Mexico Beginning in 2025, all listed issuers in Mexico will be required to adopt IFRS S1 and IFRS S2. The Comisión Nacional Bancaria y de Valores (CNBV) has made these standards mandatory in order to enhance transparency and align ESG disclosures with global best practices. This shift marks a significant evolution in how Mexican companies report on sustainability performance, aiming to improve the quality of information available to investors and facilitate access to sustainable financing. 64