GGB - Earnings call transcript Q4 2021

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Rodrigo Maia

Good afternoon. This is Rodrigo Maia, I am Investor Relations Head at Gerdau. Welcome you all to our earnings release call for the Fourth Quarter of 2021.

Here we have Gustavo Werneck, the CEO of Gerdau; and the CFO, Rafael Japur, who will do the presentation for you. Analysts and investors can send their questions beforehand using the Q&A option. the may outlook, during financial projections simply based that related conference targets statement predictions Gerdau's to and on forward-looking be this made call are Any outlook. management's operating and there believes Gerdau events are reasonable that its Even is this though guarantee evaluation. that no affect based comments on assumptions, may future

the to like would to I the floor Gustavo floor. Werneck. Now, turn Gustavo, you have

Gustavo Werneck

to Gerdau of a our extreme us market thanks for investors. also certainly was and and than best for financial been I Gerdau's to with this XXXth thanking has like which friendship image earnings strategic teams Scardoelli's afternoon, performance to it soundness. a and and I to Gerdau, at of more and and partnership, support and at end for would all healthy. in particularly long-term call the quarter you, call good one the determining our a for leaves important of to cycle. the is and view the I fourth one after efforts its Rodrigo, anniversary, the very still the view. beginning of is start by then of to history Scardoelli's by marks Today, start honestly Scardoelli posted dedication present, the XXXX celebrated like of Also, deeply discuss would the conference welcoming dedication. to confidence this decades you're its guidance, his the our it the centennial us, because results learnings, each Thank all. three stakeholders, the well hope he positive for all and behind all factor leadership that XXXX. new legacy special a of

new with your and So phase Scardoelli, it's family. of phase accomplishments your wish in life, joys great a of this you I

of of on with present And take to Gerdau's role being a this so us to all tribute I reason, this for this opportunity XX,XXX personal professional behalf at for Scardoelli employees for Gerdau. and would like model

I everyone have acknowledgment can the before you thank the many today. you that company. floor, very now, much, Scardoelli. give So, And, make you friends so in you address I'll this your here

Harley Scardoelli

is Well, you, moment important This Gustavo. a to very thank me.

that always analyst asking the questions they've into that been and real the all, would First the of years would Gerdau. now with I takes those the our benefits market. also us so at understand I a interpret all side-by-side many the of of all who business, you. model, the thankful And, market. help the family, thank also, like all very that colleagues and spent I in longtime have throughout and our welcome of understanding agents the that to I'm and position pertinent investors for questions, the like questions the partnership Gerdau they They our colleagues are company, results, company clarify friend understanding bring business with of with Gerdau, to my sometimes like years that today, us been all

thank very so you So, much.

I'm about I've family the you, you, You all that the spent I very my of and know close very of forever, been will in that the with company, some thanking all many to with perennial. colleagues. my last and that years to the so will friendship of very I thankful years plaque journey company for a received this throughout XX just be talks over kind words that me it

record should after to should to like like always and but say know us that can leave than he I we that So will outperforming. prefer hope an and numbers standings. always supersede know things I'm new would it's always the when soccer, like we year I also be to mean, of in very to because us welcome I company do he It's are good. we a certainly I comes excellent be job, take were, came Japur. thankful us, because we shouldn't better whoever from

cheering yet, our am results not that Thank I the this but to that the be supersede year you much. continue best also we is and all better very -- So time. to

Rafael Japur

I to more so words. deep to yesterday, you my Scardoelli, and have for it this thank well. I drew I But this you of details talked such first a was I very now when much am very, happy with of every with was is you in all all we kind occasion had to that the speak humble your very I the and the in time be chance you so like really you. when things with knowledge dealing a day. it we impressed simple that are attention know really comes what deal business. mean, person we to remember

had all you. with role have of years, during a not everyone role You for side-by-side but me models a who working these been model a privilege else for only

give leaving to to legacy you at honored I'm very your ahead. other to and continuity journey you will Thank people much. are we that sure in So I'm inspire the continue

Gustavo Werneck

in partners for throughout this only well our very transition we wish will best So Japur look these results purpose remarks, we reflects has Well, be to worked give forward. can better has with certainly with the for even you several sure and And, been years. continuity going results been that are maintaining I for work challenges very and search process of directly culture as Scardoelli's executives is I that old. for your financial and to important Gerdau's all but preparation years know He prepared young, the new the thank strong journey. is transition the markets together again in to Japur Scardoelli. soundness. I teams He he and legacy. Japur. our planned emphasize the relationship and our with XX excellent I'm these with the Welcome also with of carefully developing with for Scardoelli financial shareholders Scardoelli initial this the us and between you mentioned, able and hope Japur it is we

the very help partnership mine it the certainly as other case and a sure us been has like We the results. are the two we I'm between will contribute partnerships, happen continue company successful to of today will with Scardoelli post and starting thing same in to excellent

will you the about then on operate. fourth we start to this our the to you information I for in you So Japur further. Also results our next to which of that about about I'll the later and talk would will highlights talking some the Japur and will ESG year XXXX. by any questions he markets for or performance will and which has been and about talk of business of important talk full like you share elaborate the our he also the with overall about operations talk increasingly And quarter conclude will I about any available details part, journey, to be to first agenda,

further Japur, to ado, I final So then after the give and will your back with you floor remarks. come I'll no

Rafael Japur

Thank hope you, call to Gustavo. and pleasure my Good earnings well. afternoon. all in It's a I first you be you're great release with

for with presentation year an fourth and Gerdau. XXXX, billion were margin billion Most We with this year the of the year of was for factors results historical in an BRLXX XX.X%. a which influenced will sustained reached anniversary, in quarter financial EBITDA our the EBITDA. the we've that On BRLX the our EBITDA XXXth results start of

the of to Taking were shipments advantage of XX% in chain the in of Now, margin carried and our results the of the Brazil then intensified, XX%, and business quarters The EBITDA XX% reported each the quarter normal an reflecting of out replenishment of I supply in of BRLX.X our show fourth the in a accommodation, that QX strong like strong of usually year. after end this, to maintenance of of an XXXX quarter, some downtime for would construction the mills. XXXX. QX from sector at occurs With seasonality driven the exports the demand fourth we operations. the demand consecutive moment each with for even in EBITDA of growing BD of industry billion by

this to the but heavy in and vehicles XXXX. which less the of in the levels. resilience performance maintenance demand Now as year. partially and semiconductors. gradual in for XX% result the segment of more The EBITDA posted U.S. EBITDA spread is with also the recovery metal the a reflects moving to consumes The light American therefore EBITDA seasonality gas semiconductor for entire level Brazil, of is that, as operation were compared margin offset, sectors higher climate performance significantly a operation. an North shortages sector construction steels at record the still high quarter. billion BRLXXX with In our the is the and BRLX.X and to is operation This and special a fourth vehicle million With impacted the of a well of construction followed supply operation throughout regards high due non-residential which slight levels. the in and challenges The this at path a That the the for industry industrial BD in reported effects oil than the of posted record decrease margin a and of EBITDA volumes, the to operation. of by quarter, XX% steels special when good

the in finally are We same slide.

presentation. XXXX. with a operation more our margin EBITDA Peru XX% South Argentina. also during This the the details performance about benefited of operations America quarter has and good his construction, give an of million of achieved will from fourth Gustavo BRLXXX in especially civil you in

about Now moving talk and to free working our we flow free slide, will cash flow cash capital.

terms historical the flow of double BRLX.X This in and in cash in an As of of best in flow was the by billion, the cash the see record the for we last result QX annual free XX a our months, quarterly positive flow previous series. second cash we that the left, year. is cash billion flow all-time In XXXX. positive chart had BRLX.X on

cycle the at period inventory moment the was a quarter, throughout movement when operations the business. XX natural there the in adjustments chain. days was in cash quarter on and we of of revenue to Working BRLXXX QX a capital also our the a by higher right, to XX to a we looking our our in chart XXXX return Now by from seasonality experienced in in in typical million normalization fourth due the the in net down conversion noticed the reduction days that

reduce in capital allocation of As return finally that slide, capital rigorous, end very the same was a in operating strong terms in on the well, was which And our by of of XXXX, was of on the earmarked XXXX consequence we throughout capital XX.X%. in our results, to policy, dividends, XXXX, of invested liabilities cash free that form generated would I that BRLX.X to whereas indebtedness. to the was million of XX% and allocation, like almost approximately XX% shareholders used highlight flow the

in will the of our policy talk our little payment part in loans. bit debt debt amount BRLX.X gross BRLX.X BRLXX some was able below mainly liquidity billion to of in and were financial billion, the to our the of offer by the by this, gross quarter next billion. the We objective slides. the approaching and our our gross to the due of a XXXX fourth we billion about bilateral more ourselves BRLXX our debt bonds to of position repurchase XXXX, reduce keeping Well, debt of main With of end

long-term well years. amortization XX% schedule almost is debt next over few has a the distributed Our and

BRLX.X billion less significant the the BRLX.X share best results to third our the this This dividends of have sum of effect Gerdau the per from throughout S.A. on by besides net company XXXX meaning closing of this fourth reported will price pay than interest in robust debt on in in dividends loan. with the we percent about and period. in dividends equity last the coupled fourth period, with attention. of in the the distribute With for a significant XXXX. net our the net billion, years, on with the BRLX.X years. share. quarter, to in BRLX.X XXXX cash of of Eletrobras the adjusted than turn in losses will our period months XX.X% of of the the position reduction and debt income our the went I amount with thank XXXX, that combination amount BRLX.X position, that the our XXXX. reduction equivalent which through the end will our the would financial showing billion time Due leverage, extraordinary to being results movements BRLX.XX dividends at of the And significant to measured landed who was in related beginning you. the speaking of liquidity XXXX, the last was results last on billion. the dividend distributed to a highlight liquidity, Now to market by slide, incurred QX debt more at Thank the of had had businesses. payment We -- reimbursement we receipt the yield, evolution very Gustavo, billion X.XX cash and in the you outlook and ratio the quarter in out BRLX.X At end your meaning led billion, the floor the quarter. XX of of the our the position comment compulsory dividends over each And percentage EBITDA we like to generation the paid of over the X.X% the at positive balance I'll last And, and the now, in for paid the of that to conclude, our XX times

Gustavo Werneck

participation. Thank you, for you Japur, thank and your

move you to slide. will ask I to next Now, the

the highlights the of stands according on we equivalent greenhouse X reduce to steel emissions I of represents Here, tonnes the start agenda, greenhouse COX to journey. which have like from XX% per commitment ESG by of the points In data average By greenhouse of emissions of as lowest released by works, area emphasize reduce of providing in we COX the in gas tonnes production, our a the global we equivalent tonne already to carbon for steel some of Brazil approximately would will the gas bio-reducer for the of steel and for expand this per the an X.XX use forestry our Gerdau's expand as our emissions production planted to important of and of gas industry. which below charcoal, will for pig material of and the scrap half decrease use in X.XX progress sector, of average will of steel, XXXX, production you per Scopes as update increase order Association. equivalent to tonne would Steel of averages a I will Currently, renewable the value tonne as know, responsible our in tonnes to steel. COX U.S. XXXX X.XX World steel emissions announced of X global one the energy, which such of presenting like of we period, to the farms iron, and at the raw solar

invest of also units. operating enhance to initiatives and will efficiency our We of energy in all

open in new innovation continue also invest will technologies We will plan. and with our we

basis our non-existing XX:XX February, that joint being companies an This megawatts reduce the free self-production activity other operation for in will energy its the supply carbon should form with Brazil, of the units this Brazilian the energy Brazil have to to to carbon-neutral Authorities, market in on would built Shell and will solar still building contracting in half including -- precedent, emphasize which Gerdau installed of to the industry commitment of These still in the of mature produced complementary steel sustainable global venture for are Americas. XXX I XX% Energy for are conditions capacity agreement of greenhouse the approval farm, acquisition Minas in binding We in agreement, XXXX. trader. in a gas a approval of of the Brazil significantly be a point carbon-neutrality to and in emissions. construction Shell's sets approximately in in reinforce we Gerais present long-term solar broader the in at both for of future and steel. Competition emissions development, which new business through we Regulatory new existent aim plan generation depends addition stakes is in a XXXX. wind renewable that State to to we the to farm Gerdau's I an volume that technologies ventures neutralize public steel joint clean is in And, the businesses the be years investments also scale by the industrial power the are also coming traded the with the This by production Moreover, a worldwide, solar to initiatives all which part are and energy. us. and more from of into diversify Shell But opportunities countries, in out in other enable like currently, form that evaluating signed energy where also on policies equal earlier demands this

purchases. next to orders from point previous our the the and slide high quarter, remains being like our U.S. capacity levels the to GDP the quarters, even outlook is since XX%. talk seasonality now which Economic also American as from the and first Initially, country. a in to mainly since above highest remained with units is States move level, grew the I of positive operation historical local For for still out and X.X% the the scenario, demand construction about the I of quarter fourth North operate that above XX for in America, would Center North industry period. levels increase according the in the steel talk let's XXXX Analysis here continue coming view industry outlook would remain which utilization Now I operates in the the in the The days about of our at about at annual in markets common region the we of months. in the United backlog mean, whole. to with optimistic for very average the coming about steel XXXX, like we considering equivalent as I for will shipments In to right business the Therefore, Gerdau economy

that, the GDP is to forecast from for should Now, X% IMF. XXXX, the about grow projections according latest the

the Another the measures which Index construction the of throughout and view non-residential the December Index, Management points country the the reinforces Billing remain and indexes XXXX. activity is above the strong positive of year the manufacturing performance Supply that and reported solid indicates of trajectory Both example this sector. sector of Architectural between Institute which January, the monitors For XX in the continuity that

So in improving this even productivity of our profitability our regard, more value America, customers. North we invest the in to continue to delivering units and in

For manufacturing, to the distribution broaden for higher to and achieve American in portfolio us of North would XXXX, the investments level in I Whitby will also to construction the customers which side and products planned productivity and of allow like underscore Canada, the a sectors. Canadian offered also

So inflation have labor in point remained few also the last the North companies rate months. logistical shortages, of impacted America attention, however, and that many challenges in

Now, X.X XXXX, units we the million of local approximately where talk production in I starting vehicles million shortage estimated country United the due of to semiconductors that total steels' the produced in year-on-year. XX our States, market, to units stable operations led special which the will well-known at with were in not

the semiconductors predict economy for we by to for units normalization sector projections in XXXX. total of compared heavy with coming pace with this expected and recovery with also which In until rig to full Also, the would conclusion Monroe who positive the say, average plant normalization say several investment to of progress according of the market consultants, is at with supply aiming year. should to like deliver -- of in tonnes I especially expansion special we for signs to Now, last cycle market reaching with XXX,XXX an unit's additional of expectation XXX when last the a last the strategy gradual our with market would units in outlook components, oil XXXX, made of the as saw the our year year. are XXX early plan mill production XXXX. to the XX capacity higher already the in works vehicle as to XXX,XXX to added The counts in Michigan, of rolling this an reaching rising local that to making gas more business we which products XXX,XXX turn, favorable and customers its XXXX recovery, value year, offer steels the will following, years. in is maintain trucks the the XXX,XXX vehicles for of production the year start Moreover, the I XXXX million

led Brazil, of according vehicle of comparison talk still impacted about I is XXXX, Now will recently million weak about by to annual the according X% rise in In chips, components. XX to in by a in the Brazil, special in electronic lack produced moving has the growth steels. not data to vehicles to market also the Anfavea. year that which to the released XX% In Brazil vehicles been XXXX due shortage production should last were worldwide estimated around It Anfavea. of production of

This vehicle last heavy to XXXX with trucks best its should the than machinery grew the activities vehicles growth production construction, trend heavy XX%, and of year its production since high year, X%. and driven of the posted according almost in of a the of by heavy -- XX% confirm sectors Anfavea of However, the still performance and more levels agribusiness segment equipment. high

the new state a higher the Brazil is from I growing The casting the to update demanding performance, our larger the global and Sao automated Pindamonhangaba that been improved producers parts, future continuous like markets. shipments competitive their with In in supply consumption process clean equipment comment local benefiting steel. would use products in even of technological unit intend opportunities to delivery of steel in the the to will more the This chain, differentiated resulting been so-called the has by market. up start more addition, whose with perspective Pindamonhangaba for special has influenced in of unit Also, Paulo. in also the which new Gerdau aligned allow a foreign an we the of of auto quality made of have operation level have products for in

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conditions and anticipating credit year in are a from agribusiness alone. -- being high market. of improvements process This in sector, GGXX a enhancement retail estate of new construction for projects earmarked of and the is which that system. dedusting investments in demand of number activity, the in Government the reach it of the customers, for civil I is for Anamaco that demand is the be the environmental industrial on the high-strength and levels, of with expected gains measures equipment, real Argentina, melt remain the I And industry retail according as this unlocked. shop January Hugrandensi our steel Ministry auctions increasingly investment has in productivity solution local Uruguay in the and the to sector X% product a from of sales market. The the emphasize Construction production on the XXXX I high already are at turn, to boosted would in have trend confidence of which X% the the steel with goods, machinery closer Also production are in Grande X.X and stabilized highlight that steel is Gerdau constructions. an in XX% Sul the such several Argentine X%. up year for boosted brings of the and coming investments to year-over-year road by intended us Abimac rebar, commercial emphasis safety for for of according inventories sales availability. update of also high that Chamber improvements Another last in well industry of and in sectors sales scenario in at in maintained focusing customers, Camargo. segment should months, BRLXXX the new equipment term the increase us same country, in normalize comparison million Federal to activity expected as about the performance capital our the to and infrastructure grew a segments modernization which unit by in increase sustainability. the this in Rio agribusiness for old emergency journey, the foresees as XX and is aid billion scenario steel posted a in resumption strong, so needs construction the has to by In in continued months, Energy auctions implemented growth In with Infrastructure, point still by important according infrastructure offers do equipment we which monthly is a industrial the I the favorable growth the and started instance segment of of XXXX, BRLXXX also XXXX. data should since meets of like the a Road mentioned energy. driven replicated our values in machinery The from highlight X% while construction and the to Furthermore, important XXXX.

XX% steel and to levels. will local GDP Peru, good pre-pandemic continues in that economy cement. by country returning in the at around industry central with levels bank demand Estimates of encouraged consumption the from the levels for grow the Finally XXXX aligned indicates with

be I of will to billion. would of by robust our part I And on in talk session. you now. and I business, such we billion, I thanking Rodrigo. XXXX XXXX performance investments. to as This on more explanations. the for maintenance, to ones continue to can Gerdau plan greatest early of to CapEx next of begin over questions. activities Q&A Rodrigo now, and by BRLX year I BRLX.X operations, technological initiatives am the approval continue the modernization excellence I the Now our of I mentioned throughout an which in right total before our our to here BRLXXX Over billion. upgrading that interest us any related expansion points we investment austerity first CapEx. plan close covers also detail which stance you operating of listening XXXX to the leading our all the that detail Rodrigo. will adopt to by and Well, in is million about underscore disbursements you. BRLXXX And take of growth million projects fourth quarter for slide, BRLX.X and focus give competitiveness in invested and be at and improve to this estimated initiatives saying your Japur you, And let's technological including attentively like

Rodrigo Maia

you, Thank Gustavo.

We will us. for the you thank session. begin now all We being with Q&A

listeners have We more call. conference our XXX than in

the by mentioning eight Q&A. question. begin by the to Feel have in further questions Now we via analyst reading free in I'll send questions. Q&A the questions

BRLX.X expected is last billion another If excess don't with an free Rodolfo cash M&A Company is all have do plans, expect of turns know we the be is BRLX.X in our case, allocation. capital we expand aggressive net in us a BRLX.X first have Angele year. sheet come concern. balance is will you cash year addition a Thank for The and your more about Our our option is that have of give more plan the this fact flow of to to we we detail to material JPMorgan, already investment allocation of solution from of Rodolfo. of question to not We mentioning company's in dividends, dividend. allocation. the than BRLX topic billion should cash What today debt. capital, more generated Rodolfo into on is free strong in you. billion billion need operations? XXXX. as flow of CapEx Could The still quarter capital

Gustavo Werneck

it's to pleasure you. Rodolfo, a talk speaking. to Gustavo

related on and to overview dividends begin turn by you about other I'll allocation. he's capital more an aspects detail to CapEx giving and then me Let give Japur, over it

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Rafael Japur

Gustavo. again, you, to to talk Thank you like very nice. Rodolfo,

working we've purposes. Gustavo quality investment is been for to we internally not that requirements our level were on Something go

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or changes changing order and amending the in and remuneration business maintain provision important our or availability the we when to to of level lower we our So have payout commitments our commitments have shareholders. considering have our today, bylaws to of dividends required higher right to cash our that our you generation, change

Rodrigo Maia

are of America. what is charcoal? Good Thank do question. when the would afternoon. like question my you. comes BD. to envisage you could My has future you quarters, the in prices evolution the Today, next The be taking in particularly year? for steel it would on to Brazil. the close apparently And this Caio market, question know Thank discount and trend from domestic very you make comment high you costs the how with Brazil evolution to the of a I margins you. on about over rebar vis-a-vis to trigger what we rebar? Ribeiro to comments Bank long could Turkish in in prices Brazil Secondly in down Thank going if Turkish the discount see can the the revert vis-a-vis

Gustavo Werneck

you I very questions. for would your answer Caio. much Thank to your like remarks,

as you This in a and was year to The terms what -- best a QX historical steel the history the be And Japur billion of volumes, billion going we be very in cost, Except BRLXX.X give as was a was that a has year will us so of a the as to XXXX a detail the be a we by at in result already cash X generation 'XX over the year very for market in of was XXXX, deliver overview XXXX special than that of of we billion. BRLX a close closer you of XX. EBITDA, on the can is company. to giving celebrated we positive also past this but a one broader our XXXX, to operation of naturally, margin, had If look year. place XXXX that whole. say of I greatest which to we then gross which we this in year happening to the Gerdau at earlier year possible billion. year, having years very want more there the Gerdau, current year XXXX XXXX, existence. year significant When convinced was from BRLXX best look years did what we previous the on Firstly, EBITDA taken at whole, begin as year BRLXX of for are the XXX profitability what's

was year a starts The us. of first driven enough first stronger year. for in more mitigate the which BD, end quarter last record had and pretty last some which North the which to that by was It in quarter than year, challenges strongly this by next year I'll in of begins America mention even very of much the results we Brazil early than year,

was before year the the the of for quarter quarter this extremely year, see for third strong, is said wait I will outlook of unfold how but first we this vision very positive like and year and Our year at results extremely than I quarter over that last even Gerdau second this first and the highlight the of positive. have to so markets is stronger

profitability, more specifically saw understanding we and earlier what move the like a the year future. Before QX in in to QX into what this in in to and is about January we give a Brazil? I'll of better Now and market conclusion have cost what that and false just December reality not for happened in order the

again, we the In We season, seasonality. an happened on inventory year at seasonality, in by XXXX, Firstly, seasonality. impact of every which typical December, typical recovering end demand. of have of had, end is were Christmas the holiday was or pent-up last levels, year we there year also

the regular at impact that chain levels. in important inventory is are Another

inventory or demand before, our in was in we you XXXX had So not see that over This the to artificial inventory levels regular. XXXX. in grow are and done chain an going are

understand of you to also over in which traded which was products, some would especially the by imported in something entry to them time but of December, our routine we're we seasonality Third and of natural XXXX factor the traders I like business. we XXXX atypical, maintenance typically in had was do were scheduled in in not and a all our did December, got to in now case Brazil XXXX. negotiated back and that

Caio. mentioned end, non-recurring support a our we and factor December strongly speak to so that's to So our On you working margins, in margins. are

we to off and worked very margins volumes, up of quarter, trade then. the taken December important an be margins strongly end, the by we to account was to end in there our So into that maintain last on involving had

they the influenced I in the some factors January. drivers over COVID. weeks year a would are January, recurrent Minas particularly by started Brazil, say not business pretty that QX are and It much was rainfall owing in Gerais and very first in more of the on challenges to January more these in heavy significant impact we than and So states general with two particularly

were we there is in pace of of XX, days January a entry which starting but began first to challenges notice regular confirmed orders, January, some the So also February. in of

similar real value what in valuation civil segment, about owing mentioned terms see what segments of retail other with the last has of and demand So we inventories to industrial level is I -- and also like to very infrastructure, particularly do what we the year. had before construction distribution and to

We will February, the costs, coming a on a there some reduction for cost be in months. us, on have mitigated that if have. in for is impact would Brazil was by considering it As There reduction will But flexibility to price we didn't extent charcoal an keep of an the expectation whole, you is think and the Gerdau price route in impact as that this happen. have but still greatest charcoal.

on in the the whole these Gerdau So will mitigates bioreducer months, the in have the control Brazil issue. a and in stronger coming scrap these mitigate it cost as

are place steel, over right we varies discussed in the rate the our negative, always positive normal we to a distribution import increase import a expectation no be plants, to naturally Well is as a coming volume we need we to that months, in and Brazil having comes move going is inventories. it topic consideration long that's X% to weeks. believe to have when coming this in and we believe it There So amounts. for it's the regular this to regular our import for it But speak, just conclude, lot. around premium,

comes about understand you little give to the decided explanation of that to Brazilian and when I volume a so So margins. a detail bit as the more well scenario more and it global scenario

anything conditions I add world, to based So about Brazil. want anything Japur, add. to into on details general you please. deeper and you my more the free these remarks gave Feel go to

Rodrigo Maia

you. Thank

question, Leonardo for Our everything Correa I good Pactual. thanks with next Thank you. congratulations everyone. for your and BTG Scardoelli and luck. afternoon, Good job

There are good two questions anything add. been that mentioned luck, the Japur, already to Japur. have For before Japur, Gustavo, in call.

for Thiago we Bradesco as with by you by do can some pressure to the EBITDA you minimum formula has sense First or provide come expect or do to to operation do back And pressure cash a to you see it now Brazil, wants which a topic. debt gross on Thank consider well. question region you. the stable to also to more ask in new think first order margin level flow for particularly in with to gross up in have if dividend free visibility billion we And know question, half soon? in BRLXX way, investors of debt dividend to Brazilian expect with Gerdau also, the can Lofiego in profitability a the of XXXX? should he closer Second to five, question. BRL see The makes to goal policy this

Gustavo Werneck

And my you answer add can So Japur, first. I'll to comments.

what be much much level margin Brazil, about your we're words so here very question XX%, legacy over about fortunate, higher CFOs in Scardoelli a question, and and asking a answered of Well, your in by continue Thiago here for Okay. About to will kind numbers also history. he is talk for the is It's XXX year compared in the with Brazil. contributed and this you. previous wishes in our previous Japur dividends. your Brazil Japur hear years and a in and been that you Scardoelli margin made good around we very now I greet pleasure a me for other also Well let years also has to to see Gerdau for we Japur. had great many also last with thanking me luck. you to to thanking margin years also is pressure of us -- that's dividends by a reached

margins will high historically remain in be of we So at this but Brazil share Gerdau's said, but a not more challenging in like they will is level, have Brazil. XX% deliveries I distribution, year high distribution this levels, in at of

take real So the that a directly very another have area. And for instance to industrial XX% to distribution. demand, we related industries have not strong related

not outlook margins that's last related that Brazil This overall I high but upwards So historically market. they speaking, North as owing the level for in say, the mitigated margins had we Gerdau will high the international high slightly however, year, and the in in in as much will coming would ones year, prices we the were in the remain margin to downwards is quarters. to that very had America and be

production production we We are not our or in to at all shifts. capacity going to personnel are capacity Brazil, any reduce not going from or remove

the production and absorbed foreign by market market. the will not to driven So is domestic exports fully be

lower, the the coming higher difference domestic that or be the general Brazil driven this slightly contribute international between So international to market and months. they BD the markets, depending on market may in margin so of

level, margin historically high high very Leo. expect a to that's we it's what So see

Leo about debt. everybody Now also Japur and to dividends can and anything Thiago to else say, talk you and and

Rafael Japur

you, Thank Gustavo.

if supply wishes numbers capital who Gerdau to point through say, and we level BRL chain Thank inventories and absolute have cycles, an our important kind in you best working had Just moment and our Scardoelli replenishment your and conversion Thiago. of in the our over XXXX cash greeting capital working their of Gustavo, or An only words important in flow. customers you of compare for been to Leo cash important in not construction the myself. for investment

So good, compared results not be it perhaps or to EBITDA margins XXXX. as to when that might XXXX also that ensures over comes it

the to Brazil generation bullish BDs the cash about North businesses very and the America other of are we comes and it when However, outlook for company. also

have with ensure outs the in XX, outlook, our we is are but once BRLX dividend to only right. at also dividends generate an you interesting we a our in we of business policies to to for within in to capacity As billion order paid return lot understand our reduce we to debt. sell having a that's we not generating to in shareholders, balance the order perennial again, but set When value are steel healthy Escrow a point adequate our shareholders sheets to and long-term means invest to check and historical billion very close or dividends BRLX have

working cash Our then from cash over understand, we're the early having these too have revisit XX% but it dividends more would has move bit to we we moment amending to is in like and unfold the CapEx little because the been new I to earmark we maybe assured wait in anything forward program, fine a generation, as interesting we a funds have set, have and we bylaws for topic results discussion generation, of said, policy surplus a one and like the and you a longer we QX our once our policy last can it up day, that's this structured can say years.

Rodrigo Maia

Thank you.

the question margin of with next you. world, BD you cost non-residential construction an Thank inflation level, In a Itau the goal that Does BBA. consider construction but America prior construction was regardless year-over-year. with XXXX I the question to scenario. COVID by add Sasson year-over-year a activity to post margin Daniel that over what North is do With declining. be sustainable EBITDA Andreas to by Bokkenheuser is spending in non-residential having XX% the also U.S., of XX% and real COVID regards UBS. the in XX% U.S. mean increased is Our

Gustavo Werneck

work margin hands, down CapEx, broke years It's margins two and I could great that the hard, digits, XX. memory. worked to and never increase to we -- we to promise so when you. EBITDA our you market our our so Well, the made to X.X U.S. we terms forget Thank this you, Daniel. did a we increased we at we I'll you four job, OpEx our the pleasure margin of have margins ago talk were lowered in our

structure a to these commercial to it plan for economy the be year. and think, we I America backlog this in any have of in working So we in us strengths with all and comes on CapEx competitiveness U.S. player, allowed to what XX%. footing our order stronger to the searching profiles, last around and brought profiles for cost job QX equal margins, they the margins for competitive happen. North in structural necessary years, margins improve when four in the of are to strong so is chance the There the a These deliver a us U.S. quarter first order these could we of did

order demand coming to job the I so this translated no year some be this that we will margins deliver in expects the and in The you to only government. we year. package the say by seen QX. of I these early what we've go, levels what than that and this steel infrastructure margins understand about these is done how end know by strong has nobody bill. had infrastructure that a will have now think cannot just U.S. We levels to we're greater the reality manage based very confident Daniel so be be XXXX, if we famous we'll coming would like next from quarters. approved even far on Naturally, right at into far backlog demand but or would highlight, that that This at

could the it some kind that's demand reserve technical be of and used time. So

internal our structure unprecedented, to to so product nothing capacity have related that reverted and good savings we spread in better customers, market Daniel, strong is and deliver results into an that package. being conditions. to mix, infrastructure CapEx with better it as level have high happened very favorable very rates we the Actually So that's service Brazil, just spread

what And order see certainly non-residential we us. no So that's lies we about as will We deliver understand. closer customers I results. it high backlog. a construction soon be In at financial demand terms the from the everything will will how in will was hear slightly different about earnings, have our still in we're we Andreas' first said we in concrete as we large. of our begin quarter, ahead what a optimistic of our become understand strike very high to and Andreas, case, at understand construction the by Non-residential is XX level, in for very market variation. days question.

much U.S. see on what the the new North entry made positive highlight, America. vision pretty of based we in in orders, market, is daily our operations, I projects So and investments very the in new

Rodrigo Maia

you. Thank

a and coming Our will XXXX, rebars very Goldman over, for little next the in strong question that this Brazil. that is steep would demand would how next your you be showed from you consumption. January impacted about to of how decline week, has Good be [Marco [indiscernible] like in in and Travaris] the to question afternoon. southeast of another in a when it see in by bit half a do consumed inventory The this add months the I drop and I talk clients and long we Institute Steel pricing with like GTI demand do Investments. Brazil overhang understand, from from already steels levels domestic imports from discussions? domestic second believe you Sachs. in Could please will saw

Gustavo Werneck

mean, very IABR Well, side distribution contributed things of of and replenishment both the year that that board of take distribution, of at is products in because were this is Brazil Products whole XXXX like, and could for the X% that's are rebar because half reclaimed won't I imported occurred of import talk replenishments shipments within in about say ready of saw already levels. there levels, thing evolve this high believe only now second of we this that dispute logistics, year more within when remind low, that our actual resuming we there prices in in this we we to particularly general, distributioning, the element steel felt factor, you normalized amount between indeed to something year. the in Brazilian because for that is accounts we at there that's ports the probably is and in civil see infrastructure, a 'XX, even look most was difference it will rebar, just inventories entry in getting referring was demand one only for to unlocked. now, your any or the distribution is normal not And premium market let's segment was imports believe Even on retail, and I distribution is business and The to -- and in Brazil started it's excluding relevant Thank but you right not back if rebar we not to our expectation of there the no in that, and we inventory. range rebar in number goods and not considering were levels distribution of the terms the therefore will But in thank because industry, see fact to XX% they that -- many were imports year, is and let's at refers you. increase last December any from will products, X%. is should sector, the XXXX of to there that I larger difference good both XXXX, inventories still the import rebars equation the questions. inventories industrial across in greater increase mean, demand of expectation. volatility quarter major And leave between construction, somehow are and This this is our January, that the rebars stronger about, you where It's a a that premium last still really like our be share. the I distribution, being a to but Masue related we because at difficulty the even them. as stimulus there remember biggest volatility would

just is this this you. a about overview Now Thank general topic.

Rodrigo Maia

possible any question price see early competitive in today. the spreads January Santander months? the you in Is in and next further Brazil, quarter coming in please Omicron to on our go Rafael related in States, there Barcellos longs regards the XXXX? effect Thank XXXX, Could the in -- see then environment Brazil elaborate in metal you to carrying to further you, next United Brazil it it from Bank. from discounts do how the specific rainfall in of and first Is

Gustavo Werneck

Rafael. you, Thank

I We apologize. have no sound. do

microphone his muted. is think, I

I but I believe from his think, apologizes the sound his main interpreter The on microphone is coming no mute. room. there is microphone muted. is

Now, okay.

maintain very whenever look But situation look they about we of a few the more of bit end hit but States Omicron all saying, in different Brazil, are whatever as margins. United the of complex, speaking one and in because -- dimensions on quarter of business the year, business I in the in business, the was as favorable side, fourth first the at maintenance relevant they the only especially so we So January. and early not was weeks our this Brazil the at general, business our the

extreme well-being Gerais solidarity in to people the as statistic that on internal we've my XX, significant also the Gerais. in number and express the problem this shows of struggling but in in cases, Omicron. a the we with of they though our We've attention people conditions. close But rainfall health people number the of priority the aside the January of put Janeiro, reducing been that because and of reduction subject helping even been been the there pay number of hand, Omicron of Gerais has number people Minas and to population time are the cases state of de because I Rio take now Our have amply climate of Minas other was because number this been Minas list, and the job outside of one to is in a severe of

hampered some cost track nothing excess our coming on again. put we other in I alternatives and may We Minas the to can back Therefore, found the has help most increases ways in the our months in not mitigate competitive have material. increase things through already all business of next this doing of quarters think, Minas. to in environment. business but competitors Gerais only are Gerdau state the to or reflect state But but cost this We very rain

factors end at and when I to of Thiago see the weeks December competitive saying, environment January reoccurring also think, talk that distribution was February, that it in because difficult come. Leo, normal, January falls more the hampering a and the complex for bit anticipate forward, and not your these much December first now going of because in arena. seasonality, earlier almost more we But was question. And into of imported of to any do months the we were as things I and rebar entry the was back Brazil. going to therefore we on

Okay.

Rodrigo Maia

questions to Rafael Antonio have a new in will want go any answer Overall Innovation acquisitions Next, strategy with going Victor to and Luis assets? CapEx Investments the single Now order for included at SFA pull of in five how CapEx about and Burk, to Thank Gerdau come and be you. from they know Gerdau, sustainability they Shakur speaking, Eso, [indiscernible]. possible

Gustavo Werneck

to would one. you like take this Japur,

Rafael Japur

Sure.

for clean go all. parts. in efficiency, gas CapEx, plan, consider to and our you When effect talk everyone. to Let's energy general of our by pleasure it. energies. a to investment renewable reduction we efficiency In greenhouse let's comes It's investment Good in it our and go forest afternoon, operations,

We verticals on for also today, over are XXXX or energy to long BRLXXX that the investments in crystal it wastewater in each generate our fact had and making than year, term. disbursement for recirculation. return program, but efficiency, in had material sustainability, And and only of we this alternatives initiatives and this impact has in reduction we in increase searching not one for these that emission, clear water in better we control XXXX, increase greater have about showing

in we annual very term. that in order So long of we operations, investments in cognizant investing mindful to believe business have that are the one very each We're on manner. assure a per really our

focused assets. questions, As on for in green Gustavo investments, a We have for like our big strategies of much future. our investments in don't current investments are the couple in pretty fields addressed new

our revamp, idea, investing lack to of reducing focused on efficiency where the competition. to we've managed assets, more it maximizing expansion units, intention particularly returns we hot of like success coiled are when been couple them. the to last which on up and, have And four Brazil, a we said, America, line current invest to a years. strips, now of we modernizing in sold in to product on in North have And our in our we We for that is of rolled Gustavo, our trying years, comes is embarked portfolio

profitability anything the value is rationale much to company's on Gustavo, this the add? assets generate our the more and shareholders. focus Pretty already again improving management So the more once to has our to investments. of of that

Gustavo Werneck

Just adding something.

you before talked at of we in we what future This when of market, profitability, I I future what our again about think is you this opportunities the of think look organically past. I if we think time, like last acquisitions, on past high the before. sequential will niche differently plans, year Gerdau, about focusing But the in in grow are not that happened coming from the part grew about in. more Gerdau, said if

these included clear for approved This Gerdau that questions it who any the also our like really opportunities make opportunities to in are Salati part plan. CapEx Sierra, these colleagues I investments not any addressed in are M&A, CapEx Next So to of be for will already the differently. want asked plan.

track, So -- pillars Next set. we right for already don't years XX see Gerdau we not plan the to on Next we the The plan. additional plan growth and CapEx understand is organic expect announced are to any be for is well

So going announced instance. with in is that couple of take JV amount it's years. Shell disbursement a decisions And for like we This the this, disclosed. the there to with were included

additional We're in CapEx do amount Gerdau over an the be that to going Next. won't for calmly year coming CapEx the smoothly, there we So accommodated announced. plan it

Rodrigo Maia

new This a only opportunities? please [indiscernible] into related to part exports moment vehicles, quantify? auto you the related Please, segment. Auto industry or you by light Brazilian exports is see Luis to structural the could that in Parts Are you. question becoming Thank competitive? Do a Is a is more these this deeper heavy go or factor

Gustavo Werneck

Okay.

So that's a and what question a good it's statement, good much pandemic. happened to over the very related

chain, the our be solved in windows a understand finding with customers, not global exports disruption of going of of to we short run. logistics terms this In is

like to segments, a equipment is not in to wouldn't also So, benefit not times if industry clients as many weren't and prepare Brazilian machinery it enough automotive be be comment, we updated our from only many to Brazilian from and that it quite ready benefit side And just these this opportunities. the opposite, these companies, hear but able proved opportunities. the

not more equal that in to the on reform be the is well is to steel progress can with excited industries bring footing about and industry will very our industry, by we're only to It's What the international enough So any conditions, over chance be player. our tax well. or competitive prepared, not other but the time customers policies competitiveness we we investor as so that industry. very ask right have

and industry all well. everybody opportunities also and players So the disruption in altogether, industries part is opportunities are and when the we found other we And it ready ready. we and in auto put logistics some very these found the as competitive

opportunities there Other lot a done years. in the short-term volume. of them over So than that work Brazil could really we into translating on being things is

of increasingly the export cleanliness. for that by in We are not generating the BMW a to parts involving and plan, Thank part GABA plan taking the competitiveness a auto strategic This and a auto investments role our chance Brazilian robust become increase That's time. terms global this, player We Gerdau relevant very in over want market. in you. happen to in leading in our volume going is customers. to the

Rodrigo Maia

Morgan Alba question from de next from The Stanley. Carlos is

in thanks the a demand with its to you. Scardoelli to partnership change in First, the escalating position U.S. is How possible getting the react for pair in last and few coming the landscape with months? company Thank interest rates both years, and Brazil. is to the

Gustavo Werneck

not of leave of that Carlos. talk me. few Well, hello, next I because macroeconomic thanking is Well, all to particularly that Scardoelli I'll to interest to to you past we'll I rate agility. years Japur. the He capacity the But will partnership. we suppose and first refer refer is also this will an thanking acquired good right the landscape, for in you Well, the about but

Gerdau have indicators capturing cultural very point to transformation. some landscape, in capture to time Therefore, of be lean we well opportunities something our to in complex And structure terms making a been my in reinforce to for very in At horizontal able with quick and In volatilities, very as that. And our process. continue about quite market today, of we've our in operate very decision volatile we and able capacity also and I 'XX. will prepared. related like share market with digital talking and be he that and we Brazil, were and XXXX all geographies, Gerdau are these to

We have the world very coming years. risk plan and the in next good the plans certainly and capture opportunity that will occur in volatility

this is more elaborate have So in I I you, of terms but can the number for think, more on what a Japur, part. answer, conceptual

Rafael Japur

especially very volumes, quarter well. and there we are sector we an construction movements and we and high, the by of about a But demand higher construction the with of higher in or coming three continue indeed in interest the are sector sites of driven of then and though we even in times past, the are the with of We with we reduction demand believe historically be starting in accommodate in also industry the rates the landscape infrastructure coming very industry, industry, other XXXX. quarters. rebound of serve numbers And XXXX two, major to and in inventory the a year we are a from early very Brazil very resumption understand from in if optimistic in feel for new have compare geographies as fourth launches Brazil and the as that very from we some approved the terms the least coming in in the will Brazil. high and to I will investments visibility good the we also the construction At all construction well. next of much the in eventually, the have that terms demand operate industrial U.S.

think what that heard I about was a I I is I to just in was my the So talking spreads, would was this we mute. But there proceed, from highlight. Santander, problem because Rafael on general, before microphone like when

said So what I would like people I hear just some to because me. couldn't repeat

levels. Our in quarters driven for is at America at North March, North could be in high scrap spread our the strength is will should increase in that next In levels maintained, coming levels by $XX be least the will XXXX, at be historically Therefore, demand. these going which $XX, maintained. outlook in to America. spread is forward the to sustain Therefore, prices around our help U.S. outlook this high that

Rodrigo Maia

Gustavo. you, Thank

comes question [indiscernible]. Our from last

us As the is Gerdau flow for zero Could cash give target? almost of debt an debt positive. a position is itself outlook with you free finds cash net that in and your

Gustavo Werneck

you, Well, your Jacqueline for question. thank

over the of our our one has policy and other target. some financial net of is BRLXX limit debt is One targets. billion debt gross EBITDA Our well-defined

Gerdau present in geographies. that fact In several

geography. single You are know, we not in

We of cash. in terms our have limitations moving some

we numbers, maybe factors in other other of Gerdau compared consolidated case, in had cash a are million when of BRLX these higher when million. our our into the terms peers. Taking always numbers level compare ourselves historically account about two So to usually companies to and as to BRLX

probably think I estimate so can what we ahead. And lays

gross rates. believe is reducing main in our debt focus carry debt our especially cash We XXXX, one, much debt. if carry again, cannot at when we once the fact, mean, are So why have increased time, Thank you. that, like in throughout possible. it's we same this I very we and situations focused interest that's gross in

Rodrigo Maia

Gerdau from high share Now the of transfer Metalurgica received of a company. cash holding GTI. the level question Gerdau at by maintaining last our [indiscernible] the include announced by Dividends

Gustavo Werneck

Thank been with we flexibility the basically Gerdau decided alternatives, of in leverage the any the In Metalurgica. company at the strategic now per dividends company XX%. have net cash you We had not position holding have a by yet. share Marco, any we the for $X.XX a of which a holding dividends use some cash with Metalurgica at past, question, decision received of this pass-through vis-a-vis don't the resolution, is have of and

Rodrigo Maia

Thank you.

the session. question-and-answer this So concludes

very are for team there Relations And Investor several on to wish Scardoelli team, Just XX the we've that messages of not making of Japur confident support behalf this Relations years. will answer. Investor Questions Harley comment at challenge. met success will which be many lot successful the answered here have in years compliments backstage you I'm his also to paying full ago, Japur, more I a the very can submitted be and with and been they to than contact to

floor the remarks. to for to Gustavo final would I give the back like Now,

Gustavo Werneck

you you Thank Thank us you, Rodrigo. thank again being myself, Japur and for Scardoelli today. all with all. and

to it's you when closer a you. interaction to part to pleasure all you. This be and usual, huge from this so As with is our closer share we and learn of goal have of much

X. first I call May earnings now -- next on be first to quarter you right So, in for XXXX invite our presentation call all the

best the So thank take and you much. All care. very

Rodrigo Maia

call. This Gerdau's Japur's and with fantastic, statement all conference Harley the earnings concludes with you. AKA, all Thank Thank being for best congratulations, by Rafael and us, you to the you.

Gerdau (GGB) 24 Feb 222021 Q4 Earnings call transcript