GGB - Earnings call transcript Q2 2022

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Renata Battiferro

[Technical Difficulty] Gerdau's conference call to discuss the results of the second quarter of 2022. [Operator Instructions]. We inform that this video conference is being recorded and will be made available on the company's IR website, ri.gerdau.com, where the complete earnings release is available.

You can also download the presentation on the Chat icon. [Operator Instructions]. operating emphasize this forward-looking Gerdau's on conference projections on financial available. to be that business currently the like mere information company and during a as to made call and of management's would expectations that beliefs the statements any might outlook, assumptions related I and are future based the costs related as to well

future understand and materially also lead may because that forward events, performance. those conditions, general of therefore, performance Forward-looking results to economic statements they such market involve from other operating uncertainties that and statements. future relate and Gerdau's a to conditions expressed factors differ not that should in circumstances affect are looking on They assumptions may occur. and risks, depend guarantee or not may Investors

with Japur. Gustavo Here IRO, to presentation. and Gustavo today floor CEO, to the Gerdau's us Gerdau's the Werneck Werneck; CFO and are I'll start turn now Rafael

Gustavo Werneck

presentation new QX. of and Japur performance. the will Renata, international some welcoming you in and sitting joined to XXXX. overall the recently start that welcome possible as talking And manager. about I I with detail Well, us you questions of I Gerdau journey might information good our Gerdau's also of always the pleasure to a she's quarter day all by participating happy is to second share call video operations results and for about presentation. our during the to you X scenario. to want our I'll is it want -- will this for clarify highlights Renata discuss and a to Also our well, financial the I'll next hope everyone. our start in arise of about -- performance the who our the CFO, me successful to the Then IR conference to Rafael wish and each of company, by very I business healthy. well then mention Gerdau. I you're Japur. results us, performance of talk doubts at

will to all you some points like about with At points about to available that we'll in be the agenda. us be I end, talk you more Lastly, any our elaborate back to detail. highlight would ESG

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our simpler United a businesses and days As our macroeconomic outlook be manufacturing are resilient and more June above value comment company doubled a with reflection better even innovative, as non-residential quarter I level. in record spread as generating demand and order has facing of and with more positive more year-on-near reaching proven comparison, for remained the from that adjusted remains more next results highlight at Gerdau for stakeholders between a EBITDA BRL focused, talk in purchases. of and outlook the of operations agile, at of would margin in North the construction levels about to the each be for quarter, in our billion, of that will reflecting XX QX X.X April our uncertainties, the number States one customers Shipments EBITDA for remains a the of now Gerdau in The backlog a operation in of our the high XX.X%. slides, markets highlights operates. Well, metal second sectors. America business business also strong adjusted a to a I record continues that high the I which historically Initially, such shareholders. and the

plants in operate our this we XX%. scenario, above levels utilization the to continue Given at capacity region

activity America, especially of this the the trajectory We construction Supply are optimistic of Management North sector the February about XXXX. is positive from since Building that the XX in June, sector. which steel non-residential the in One monitors indicating Index, the the and in example Both the for a country, remained measures the industry. construction sound Institute strong demand and of for which Architectural view points of Index, recorded manufacturing above the performance reinforces continuation

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Midlothian For Mill Steel XXX million expand to the our tonnes. the largest Texas, of United next in about investment the capacity States, cycle, I operation the the of in million X BRL highlight to

a the Another labor on inflation point companies of the in for impacted number is our challenges, rate North which America the region. end shortage, and the of logistics attention have

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XX.X A current positive, more still XX% XXX,XXX the would outlook to for highlight, States in of reach of The operation. deliver international should X in numbers our recorded States, of and and higher upgrade light quarter chips. modernization the higher value As mill customers to growth by American able in of have we we been technological of the period total market, steel year, the the recorded by with were vehicle In with sector, to gas quarter. in second EBITDA than shortage trucks in vehicle volumes by same be able in the now the continues special we our of continues influenced months this through in with is the market oil United profitability levels profitable production impacted to the up a last that are to regular the following. to market the expect productive expected the units more supply of Michigan, production for the the achieve the as a a only higher years. In XXXX, for added case, to year, you United financial also Monroe, coming year that in XXXX, an I for prices fuel completion about expected any in vehicles million but occur XX.X% components light North year-on-year. the expected should previously The this XXXX. below heavy increasing than volume much units, and turn, of for highlight the last driven like

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Rafael Japur

and success financial a to to let's Gustavo. the discuss I of quarter. cash once performance in operating Well, in talking welcome great video the is speaking the opportunity here you, to Good XX, her great highlights wish On our a take Thank little conference in Renata this our you. pleasure and about our Slide challenge. little about to new a results. flow. start performance over to with day all this you It our be again

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and I'll detail slide, next cash our capital. the On flow working

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graph, bottom Moving working capital. on graph to the the

BRL billion. This quarter, capital our XX.X working totaled

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conversion showing second results last second the cycle reduced our series, XX cash the in historical This lowest Our practical culture. conversion of cycle XX is was years for days. the our a in quarter to cash

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Gustavo Werneck

you, Thank Japur.

you update give highlights and an journey. important points of Gerdau's agenda, our ESG out some So the advances on now just pointing of

XX% last the of So dozens report, XX% in our reach at from disclose origins Gerdau our journey, in we environmental like to been for the operators to thousand This but as positions there in was production. of years the evolution in also differently among of XXX since we've where more by in we leadership for society. as that our went of to slide working we in so the the that in addressing which, XXXX would -- audit year, X% working our Gerdau's with than ESG and journey commitment reached first publish and now, an line part that There women the in financial this in first time, stress showing is the external women XXXX, on the journey an XX.X% the at diversity with inclusion I XXXX, data social, balance for in of highlight directly XXXX. today level our and years. through highlights many I end time indicators communication women and are process, annual increase of transparency

Gerdau's emissions XXXX to announced equivalent our emissions the the beginning to dropped year. was reduce tonnes year equivalent figure our of essential of of greenhouse shape by to reaffirms such sector sustainable of commitment per this commitment helping our the X.X to Our ton previous an of to XXXX, X.XX per gas we future as also the way. steel in COX audited to steel document. increasingly an steel change highlighted at gas in in had greenhouse new tonnes tonne and of in X.XX average COX compared evolution that climate tonnes This

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and We steelmaking Also was best with more a as than among as are of out recognized in steelmaking metallurgy category explanations. to attention best the reflection then the our by the of of of our now listening on, And XXXX edition of companies the myself promoted a the Well, sign Gerdau thank the magazine. I may all progress and efforts your the from Japur of ESG Brazilian XX,XXX Exame have. standing the and ESG in you answer XXX for to employees. any you awards mining, only available work will journey, reputation, be questions our

So support you, session. on to for the and we count back your Renata,

Renata Battiferro

Thank you, Werneck.

[Operator the start So we'll now Q&A session. Instructions].

the we and have the JPMorgan. in especially quarter outlook coming third U.S. would recession. regards about wants questions to to information global about the He asks know from we and the spreads So to also Brazil, via U.S. for He are since Rodolfo piece market with since an fearing learn more update for I in Werneck it business of by chatbox. that's important on already like

Gustavo Werneck

give general year, by we in months year on first that business the the this you all of months Gerdau, X know. stronger first X the in I'd compared first I to the the highlighting as of history best like last year. our even year, U.S. of half were question us our guess to explanation to allows had begin and your Brazil, BOs. last also a In

had the the of first BRL As EBITDA, for earnings year the general half it pretty the XXXX above you've outlook comes in we quarters achieved say to of we we confident are very to in when us for right XX% X coming similar XXXX. in year-over-year. now, results having allow terms to in seen And as before, speak, that the

So to going also historical XXXX. as another be this is just year

quarter stronger are have as in We had a year. not third to the of last we QX going

And a really QX, demand infrastructure and When is will come for that considering products, resilient. that high corners change, strong. was of coming what very seen not you has of believe going will we small. results signs we the And first mentioned rates. far, these remain reduction. December, that practice, Overall quarters like that, all get true which world this signs end quarter we're very had the to reduction. so backlog to strong inflation be backlog, yet order we of past, see and posted fundamentals what the our something U.S. orders. a reduction very the we a to we've BOs in is very business however, from very have QX reading of by our in package X can previous There the small quarter, it to comes added results. and was of very we we've also history. comes fears, considering Naturally, been This We it a years that level a and so unprecedented in speaking, strong But of in the entry when the the in similar record super of and on our the recession, concern and the based have

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points this question, other that to I So it presentation. overall also us answering mentioned go the speaking, gives Rodolfo, into in your chance first deeper

Renata Battiferro

Concluding have on the would also update expected addressed an and Japur, to returns. he to investment questions by Rodolfo, JPMorgan, projects like

Rafael Japur

say I when in our allocation. to projects, the line our robust with capital that diligent would process approval our About projects very of to are it we comes like

have myself increase management capital. We we everything involved, So Gustavo, the all any take projects, the cost of in of before account have line. And interest in team, actually and the the into we team. start rates, we

also right our competitiveness but studied, and thoroughly Sometimes, supporting times. approve portfolio, where are we product both in they even studied are scenarios the be all cash our we more economic revenue, and in now scenarios, believe it in is improving more different to the have different cycle, challenging But the under more or conversion were carefully projects. portfolio, challenging in resilient what moments leveraging projects cycle, of generating we

Renata Battiferro

Rafael from from comes question next The Barcellos Santander.

Rafael Barcellos

don't me? see Can you hear I think me. you can

cannot any camera. open Anyway... my For I reason,

Gustavo Werneck

well starting Would you you. mind interrupt to now. can sorry I'm again? you We Rafael, right hear

Rafael Barcellos

Sure. I apologize.

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Renata Battiferro

ahead. please Yes, go

Rafael Barcellos

market, second about is The market. Brazilian the question the

domestic to more have on the color market Just dynamics.

about You talked civil construction.

about the what Gerdau's understanding of And well? of this the as better have the concern just So What share short important in point is dynamics retail? of most a to portfolio? term, this is

Gustavo Werneck

And allocation then Well, talk capital, can about to I'll come retail. about maybe of market talk CapEx. he and domestic back

Rafael Japur

highlight efficiently have points. -- About timely, Rafael. I We not question invested, us different what very program, back under allowing as very considering your million, is BRL XXX the to we million share XXX out XX, buyback give our to with it's in but well, we to say than think day people about more another name disbursed of BRL dividend share billion payout, same allocation think also BRL value only capital, be important shareholders. addition we to If to many way buyback, paid is which of until X.X

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eyes performed and And days BRL slide for about we know disclosed cash Gerdau. weeks. X open over we to share operating our Metalurgica X/X opportunities talk showed flow. our CapEx, in coming program in I we addition, XXXX. the about what we'll this should line in to With flow, of we much only of that very on Gerdau cash think In our we billion On keep buyback that other I an the regards about X.X S.A. year billion early disbursed program. free BRL open quarter, with mentioned the disbursement the and market for is It year,

we between to Hemisphere important to considering project that and our plans. the existing interventions Brazil, is same. provision Both and downtimes. times, more and they in investments of consider that All the any happen Our remains have Northern most don't it also highlight It's have the QX. projects today. greenfield in And timely QX is

sense, So for CapEx remains for guidance disbursement in our this unchanged XXXX.

the question Gustavo? on North As for America,

Gustavo Werneck

Rafael more more retail think he talked wanted I know about -- Brazil. in to

So share, expanded today, products Rafael, over retail of a considering which today XX%. lower has our has mix been time, lower than

exposure to So households in retail said, invest vis-a-vis -- boom I like homes. All Brazil needing in retail their of post-pandemic. deliveries had a

recent the has a was of the And stable, same became that boom. end would slowdown at there level I year. a So remained it a was say in months. by And last there

not -- as it's as we some growing there's possibly to going So and believe going fast volatility, be to macroeconomics. be Brazil

extent, drop gauge by So is they're demand are we business, The this the was steel smaller. focus the for on market used of our than retail in in some more offset some that If to the steel for to extent, infrastructure. positive.

infrastructure start more be used for in when construction steel, you because the projects, having theory, particularly larger. use steel gauge tend So we to

it orders for months, happening to having related parks, this the energy or upturn been energy to for right So partnerships. that's what's and infrastructure coming we we've already positive In practice, solar of farms. and be now, consider investment a lot

the So But continue coming believe retail, for that's very level. demand and got months, a a segment flat will stable the it be at where that stable. to lower we slightly

Renata Battiferro

by and very BTG. generation policy about the He formula? question and Second are change close next He like of sustain milestones Leonardo payout with to book of next to North for a close to the to Do X. What QX. you considering the metal questions. can strong the order in understand EBITDA the would in leverage question Correa dividend think know an quarters? the cash spreads expectation rationale America. the the for He Next margin asks XX% X would conservative regarding like you

Gustavo Werneck

the I'll second Japur, then you start about the question. dividends, answer and

Rafael Japur

Sure.

this net more income are because is of distributed balance shareholders than flow our of very we if we into dividends return is buyback, when cash generation and take dividend are to and buyback. is any a as of closer have payout to policy, reserves, part sound good robust the our part or XX% our of understand our we with free about important form being as to a net generated talking distribute income, more plan Regarding going we effectively that to dividends constitution to don't in account cash of of and payout shareholders. and In a short-term are after policy, the quarter, adjusted we the our things Today, sheet close generation more review together.

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adequate. no understand returning efficient income share and that shareholders. an coupled, consistent understand net combination we moment, or of balance have value with is sheet significantly So change to a program, we all is policy. the the way which our -- our of that have aggressively our intention buyback We this payouts to payouts dividend we that of At payout

Gustavo Werneck

another -- As I Japur microphone mentioned open. there's think

have debating We how been company. efficiently at to capital the our allocate more

want will that just the deals, of all be our not far we greenfield underscore debate. happened part capital in about great great our thinking has internal M&A I your CapEx, or of to in so acquisitions as past. are questions So course, of allocation,

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let in we related the we the additional changing take the which of speak all. healthy. present now recent is want I'm did that believe and to to in the of Brazil last the clear It the There very differently changed. North but beginning our demand is agenda. a It and imagine components North inflation me book we serve you allocate past that generating And our in This is multiples to will But say little. has our for construction at XX semiconductor warehouses, to portfolio, this In And talking is very deals months, level been these order be that it's U.S., plants, slowdown is our way And plans. more will America not of not to healthy the portfolio the level. to it fewer way And would us that debates. since the regarding been up construction call a We Well, a in been related moves and level. of that at it the that not in this that difficult continue. high some this has I level, very was opportunity operating in internationalization it level. is level, loans. at popping more portfolio in a about treated or the a cash-generating producing that like of the than orders remain at would rate. is high historically a in our for were these it was make been assets. capital customers. executed, it But I now the high about have the not questions very just It's have So not were future to America. the little

years back that it of that would say, we reduction. in to peace the orders package. a we this the at high based It is received When it to a see was have gives spread take investments none levels of level. United results the But this I translate see America. XXXX, package this best orders competitors, So coming very is at of will didn't a level, very a to to then very is them us, into mention we healthy And portfolio the now And related the QX look future. before. place The us much very transforming. on some had prior infrastructure in in not that U.S. considering was mind, at States, that slight quarter there to in the assets North well, result Metal is of approved. -- it different will was

rebar and So then wire assets. rod we sold

very So Well, we sales down, have lower strategy, But volumes. with moving related margins, we structural spreads. sustainable up is keeping in scrap products. prices seen in see price higher much And that paid and market. had our we is what to very but in we for have that

have quarters. more, we vary imagine These these now these levels. But these little and coming be little a months. levels that are game. sustainable part will are coming in at of we the It's margins remain in the spread sustainable captured the will levels will And that a remain we the So that at will believe less. right

Renata Battiferro

XX% of than fixed on can Werneck approximately factor, Mr. XX% of scenario quarter. different margins greater the the Morgan dilution inventory the And in describe of about XXXX the there of He question by rationale income the sense make that determine could improve and Next other QX the that more. with would any to help and products. addressed payout question raw net in and Ricardo to asks, we the what evolution quarter? How profit thinking in considering in Japur, one operating second XXXX? you a Is And sequential perhaps about drop the costs, materials America. North margins, of think to prices, Brazil cost margins financial or greater a payout Stanley. is Could of have in

Gustavo Werneck

start with let's Japur, you.

Rafael Japur

we which X.X shareholders this of payout alone. as take I XX%. think base to is of that BRL add QX. our to BRL taxes, XX%, both dividend If things: is XX% before that billion, executed close answered we that. net of income the X that in account we into We X.X of we It's distribution not to of of the closer quarter because also return distribution BRL along a in this buybacks kind have understand billion billion a over quarter,

So the allocation. are we their our and intrinsic we considering ability that understand in this in is term, capital value depreciated possibilities. extremely shares And that and to generate adequate our long value understand that an their

austere disciplined So our our and XXXX, maintaining dividends, in buyback shares execution paying program. of the share also case and as we but leveraging are more a was

Gustavo Werneck

give on Well, Ricardo, you detail me more let QX.

from say costs. they a that before, that our both scenario stable set QX I for flat, As business. main I will would envision are X probably we the factors apart related QX, mentioned to

beginning These mentioned, that So impact of a high QX, there's of at the bigger the United coal half. scrap overall in considering should purchase metal year coal, and our mechanism. special that X our the States levels operation have the will second configuration also businesses in factors metal for now pricing the in I of the of existing the change

course, find to Now to of these want try alternatives restless. costs. mitigate always we're We to

to for are related et raw cetera. ways North in We looking particularly and Brazil in materials, America scrap,

you in less remind that international years was to variations these market. international susceptible And opportunity we in question market. to the questions other an guess We reduction the to can related extent what have and price you're mentioning steel what I are to to been Ricardo, we had to price make then in at a impacts The impacts. in mitigate of us see that, it's asking, recent of But alternatives guess me overall, these in gives Gerdau. weeks, goal what the for the and recent looking I all moves

created and practical variability into that mechanisms businesses would terms. translate this tangible we to that in more kind of So less exposed be to

that about the and It the to construction for delivered level distribution. rebar considering imported rebar rebar well, that -- for with companies is X% in the Reber our impossible accounts to in is Turkish almost against is Regarding compete Brazil, way very service necessary. of us. it is an with it this to price Brazil little I possibility competing accounts coming to mentioned, product for related, business. This and like straight reduced and of It

of trying to and are with their today, So efficiency requirements improve productivity. construction all relentlessly the companies

the in company develop to Sao near years cities steel. large the had we So of assemble kit by recent a in floor build they such can It floor. to the is have time plants that Every so I construction to delivered Paulo. as agreed night,

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extent discuss they can So steel, of kind compete to to we when right we the steel, volatility, conditions Turkish So have the maintain discussion, our product. profitability we of steel, us? Russian this believe Chinese possibly with what

of will be that that's quarters. raw and control, impacts coming what internal imagine an that control, to profitability the have considered the such we in mitigate under will coal. Demand So struggle happen we under the as materials

Rafael Japur

States In case. and the Gustavo. United like of that the this U.S. to portfolio rod. And I'd applies the Canada, to to about something, case just believe Brazilian of add I products and rebar wire our includes and XX%

configuration and much We focused greater to other on to that material had structured from compete. SBQ, Well, when back gives the materials than different which we markets setup, in Turkish past more portfolio, protection in have a different premium resilience steel, and imports of you. Renata, industrial more a us and

Renata Battiferro

Itau Next BBA. Sasson, question, Daniel

Daniel Sasson

in question on at much you've is long to My months. margins XX% mid- to coming focused U.S. term, the you in about In related short believe Werneck, them more projects, efficiency with years, talked In spreads the recent be you improved the to sustainable run. healthy IT. been very

cost target maybe margin, fill And vis-a-vis your You was managed behind. the to gap U.S. left XX% which

and I every expect that to the getting So has moments. mid worst we cycles, long industry to margins the what know stable in should see ups U.S. best in downs, run? and

to an sorry which could about If between capital. another maximum, to EBITDA Japur, Xx So and allocation over having ratio. of discussions of I'm we the the of average number? this. is leverage debt the back I we've if net give Most with around please part, parts one us investors of debt. go X.X been gross you And think is There are may?

be appropriate? this So you think EBITDA since ratio? in to that believe order is X.Xx about level between structure X do you X.Xx do net debt you're you capital efficient to What when it at consider to of and get over

Gustavo Werneck

give to going about capital. of Japur allocation is more questions you

question Time Your about is America. good flies. North very

I over of had we've we of You our ever our X A just reminded work time, closed the one gap DO. of first us speeches lot U.S. company of gap. in years, right, since the joined the identified and

Midlothian I is there in missing is one part in one our in It gap. which only to puzzle, we this is fill Texas. still the think which have the

So we mill, to our the the is performance, still in improve production in some have at expand opportunities time, in which our the same and the U.S. mill to big plan

about better Like And So But once North and X to in of such will program cannot has investment we're the time. that say at America. believe said, we have rebar. this It's this Daniel, with long to other even already in Part levels. it's if happen have give to higher Think us have going good make still mills been we this a going you time. margins have we signs, years' investment. term, the approved. or in us they competitiveness long we mid- XX

have highest imported We the products. of penetration

So capillarity imports. are -- product less not for with categories there

investments before, characteristic with Like less I seen subject we've be that or products of prices, we'll to the so said it's So and our clients. international even interesting.

saw has and same Amazon of demand and steel time, steel the warehouses. there replacement now impact nature. demand long this ago in the the I went in demand everybody of market the square investments that building U.S., a a optimizing in at had meter, new down. And been think the while sheds other But

customers order in supply are in production important investing subject in in plants our North new semiconductors. of to investments to So many not chain, the global America, the be of

third players, over in They these from that X is much X products Not years. segments. mention very to Naturally, other in where footing strongly will to there confident for to But flat the are are we'll we see projects, investment a general the great So And will into will greenfield we is demand this years. to competitors these over not There plants when Daniel, But in North equal maintain manage that And that the competitors products We look make interesting current margins. for steel X X America numbers. for investments with segments, we they manufacture. We are announcement that so happen categories. our capacity in in gap Japur, scenarios. the the point infrastructure demand compete to coming very the our or We we check fluctuations talk can years. allocation be see very us not other analyze. on market the steel. of at these X -- We things, us of only capital? we've of moving the lot of we And made scenario performance, right you product when and are. We believe can very, we prepared don't about comes decisions. it very reassuring. are competitors with to future filled investments time. made our

Rafael Japur

to X.Xx. a the we had flies our is next, about over time now our And time question. level such where long second over net such ways. -- There EBITDA strongly Xx debt Yes. EBITDA was half, In We It ago, in a flies, debt a our long ratio. but closer gradual and XXXX, over wasn't more net it in to cycle seems a net pandemic. the X.Xx like debt about we think XXXX be EBITDA he debate Time a had deleverage your we considering ago. between the cash in Xx. conversion got process process, When and Time XXXX, different about 'XX. which in this said. And deleverage long started

when decade to It margins comes And tremendously And ratio. and was for from in in our not improved our expanded ago. in benefited "yesterday". the in So naturally, results diligence we return our significantly, this it was the leveraged chain a it market things and us, general. also boom and very

cyclic to keep this increases, net debt focus XXXX not goals is can That's down, because we're vocal quarter about very important our but relative and debt full industry level net about have only understand and our also on EBITDA focus in but available. so XXXX, also of at if such go amount on a second also the why billion. of it you second -- cash think X that quarter XXXX, We BRL now,

Renata Battiferro

Lofiego question. question A from live by Thiago Bradesco BBI, a

Thiago Lofiego

you Hello? Can hear me?

Gustavo Werneck

Yes, we can hear you. Go ahead.

Thiago Lofiego

I exchange would I billion. of have of about about the what And been over And said to cash? talked continue? understand mentioned $X give stress That BRL think are XX billion. considering Japur, -- we last questions that, took answered. billion. reference structural a is about time we for having have what talking below that likely. to foreign most leverage. would of billion. X.XX, just one Does us month, XX the of minus like generation You X.X I target a been you X.X want if your more you debt since you CFO. my already you That's that already saying cash are as of guess little most just

below you company in the I to should next And that. the continue deleverage quarters. think you're

can my be of you question to question a in Gerdau as because any know, this if plans? to there Gerdau Political would South America? And Particularly, apply? South to would my you perhaps lot countries recent want company. Werneck, does Is will to assets exposure a generate changing That reshuffle or operates. sell environment a being you net where cash the in then have make conservative cash second the want net that a so to be, to and it following company cash. to imagine And like some So be America. many exposures question. my been cash other in first you years being has get Gerdau I'd still understand possibility because And position does continue sense

Gustavo Werneck

about think you question. your frequently about is question South asked. Japur, Okay. But this America

When countries was its have with current -- love people what not years let's It political and now Peru. our details, to was brings all start that. well. been that very with recent and The I okay? the all with many know we good administration. is different country. many few political was operate that and -- as and very don't difficulties the We time lot at facing revenue go return. This government have, economy. it of to to There of learned, same. in very are is understand So to is America, economic macroeconomic a America the projects despite a let It too a lot of conditions. America activity South politics them now by but facing the are plan using me there. is into when We a is has mining But just current themselves, is they're all South have There country over region We fundamentals, an solid there. are South and steel incredible the the get a a economy country the financial look matched. the not different we solid And that among and want divest we in in disintegration. us the

We have Peru very bringing the sound for results has this been to a very steel be strong. demand for financial competitor in country. continues us and

for a Argentine safety, problems, When estate different different characteristics. The real Argentina, they go population to market. to? looks where different the go country, Let's do

strong. the construction demand is for Argentina So in

good So the economic fundamentals everywhere have we despite politics. look, we

We to It make some So to shown work. balance not it's I we that. quarterly to investments in in a the our sense. where in region. organic radar like that that more region make things continue might is And has the sheet think divest

able use the expertise, customers are our present after go themselves. to closeness Japur? our We to that opportunities to

Rafael Japur

debt, have sheet I -- to cash, net debt, have our we cetera. terms gross rating and they lines, of et general the what you, in what gross line talked terms with agencies, been market, think terms, they we with the and in all in telling are right are about aim general the when you brought balance in cash in of debt, references you

a you cash. I a in dividend when obligation. it. close or to you a What be X to we In privilege when buyback so dollars a where paying other such I specific as sometimes sometimes to Brazil. more month that a in in surplus cash that? we of look by have then different allocations need mean we cash to But look at need bond, many do need generating in time, And lot share Brazil, necessarily pay might that's we or sometimes not because So generate month, place I at the point quarter

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have the between of month and resolved we time. we the over one the things are cash and allocate But sources quarter mismatch one will a the cash. next sometimes and So between next, these how

"go between plus all a end the buyback significant to things we rationale, that is level. along In right. debt. billion the payout look If net the of now paying BRL July, below account will be our expected into a days QX you're the -- the debt of X.X equated. dividend take little mentioned share one It you place". example, and net we of For part and are first we'll the -- When quarters,

take movement quarter, of XXXX. from About whole account to the and gross is this point and into to debt denominated. QX an Another of of we X/X our had variations. net dollar depreciation QX the foreign dollar are XX% debt this our In exchange

our will much the course, and have at I in that look the balance very debt very I position, be is we sheet what when business sound. dollar. how have, so the in there is of model balanced, But position And cash a change

in Our obligations hope net have operations to lines. we pay strong right and I U.S. generating dividends. be where Brazil in have you quarters, this and is equated. general we And understood the operations BRLs, the going And direction. will currency over in these in Over taxes have the time,

Thiago Lofiego

very Yes, Japur. clear, it is

an cash understand So becoming Gerdau not company net I a that or option. going is

billion time, at I think aim to over you ballpark something close X.X or that that figure. BRL will

Rafael Japur

this a will It generated this Texas, the a is net company. cash carryover quarter it it be have lot our not extraordinary. be not -- cash net aspiration capital cash. by of a of certain allocation, a terms strapped goal have to in But to If a a a be in of company. in of is not efficient operation, ours cash cash to is specific we Because

Renata Battiferro

that see prevail? opinion XXXX signs has What the seeing are asks, of you approved. Kai package infrastructure Next On with $X.X in will He we your been given hand, for in longs the a in the other coming? Bank how demand question of America do Rivero America. recession by North trillion

Gustavo Werneck

We Well, with the as this in I types to very of package. question. in perhaps entering operations. that But have this the much With got very decisions you us States to We before, in a see think of would thing we onshoring are of I People business, have a product in what recession. results: was are got been there that answered the said we have that not of about been But to our is got kind capabilities this look to remaining prepared stable like look in our types segment, in have at for that investments Kai. but to a line kind talking I as Daniel's and this the a have as is that only recent United I we the profitable -- happening past. business next not by the years at win factor. that business new for whole that company, fact in no infrastructure decisions whole. prepared we we of that. moment now stop as divesting, decisions line like, and we to I'd making I for that demand to XXXX, along the years. right good think is half that remind made this a positive

ready. So for this Got got moment. prepared we

over to the everything XXXX, the have years. not the in we only coming reap but XXXX, think we time, I rewards of work did for hard

Renata Battiferro

How Marcio margins market? question, Goldman Farid Sachs. of to see in should you shipment What exports Brazilian expect competitiveness? Next freight see with the in we do and

Gustavo Werneck

Shipment, right?

Renata Battiferro

Shipment.

Rafael Japur

Correct.

Gustavo Werneck

any There in or drop issue historical months. no before, the to came issue on that back scenario were said a structural reductions. levels We've any We delivery Quite I operations around on. domestic see maintaining XX%. opposite. might next expect we dramatic been market, to the export rates will for see very bring the flat We going don't Like demand. our

have that Americas. loyal the in customers We are very

our have We semifinished export subsidiaries, goods. where we

in level. So is and companies subsidiaries healthy export any sister very domestic a market very we Americas with opportunities stable, in our the and pursuing are

more alternatives pursuing For to that to how digital the gaps our of coming and in using is transformation and we concern being more to keep find fill or any processes. months, well, evolving more on competitive more I see in-house terms main efficient believe

months focus the that's like When concerns right next think have the I call, over said this I demand, now. major for it of So we XXXX. to comes don't

Renata Battiferro

us I America. wants highlighted Could to she North know. inflation give on rates Six with in this in other more on results. know Congratulations you color you in locations?

Renata Battiferro

know Elena in this North with Sispi wants -- to She rates -- on the I XP. you Could inflation you congratulations color in America. highlighted give us other on results. know more locations?

Gustavo Werneck

Japur?

Rafael Japur

at maintaining transformation. going about X.X% cultural on naturally, an is level, in think areas. said say net revenue, during important SG&A or is But We've on. pressure If Gerdau discipline, Gustavo net sales. unprecedented revenue that can inflation SG&A topic lower maintain about we over many our is presentation we been than Inflation the We this. our like an

and the had important for helps recent it Gustavo of to and margins a in in over have in healthy the levels terms Elena. maybe they time, I at remarks, to past, future. the foreign chance to visibility months also other Well, maintain costs you our talk opening didn't scrap, said materials hand, in in On market. the like the in coal months important raw And an other some like adjustment

So you just my as understanding X mindset just may, give of I works an minutes, follows. how if is. Gerdau to

net by -- percentage We the in more some not there SG&A searching in history we over amount chance we for have Gerdau. more. -- performance and are years, And the SG&A be in of the very lowest a we by reduced of sales significant our are company, recent It's will at we relentlessly and now the company. at of

current think that -- the capture our up the order we've 'XXs benchmark last mitigate what the to here daily, clearly plans the and we it potential become in intensive distance know level an envisaged these of or knows expand the XX make know That's impact. player. benchmark greater how works. data even current the to And is the particularly we'll us to structure benchmark, fill identified for in we we to the use to is this gap, and to performance. market Everybody it's years, between to and in our inflation performance time possibilities gap. gaps business capture over But transformation we So the decisions, the lower to with after that or so gap digital to that

to find you if inflation, about cost think rising, it's trying So alternatives.

if from strong designed we inflation cost. does Constantly, company. zero-based we're not year mitigate sheet inflation work to budget with have ZBB budget, as with blank scratch on it any effectively. in a the we the our the -- we -- level lowest our never company and operate a and can reduce just impact We starting budget can get consider lot ZBB, the So previous we

basis, So for search lower how to alternatives we we and like opportunity inflation this something That's On always That's is pathology. us performance improve fill a work. a gap. daily an for to cost.

minutes, X work. we in that's So how

So transform improve increasingly results. to opportunities opportunities to inflation into pursue cost our

Renata Battiferro

questions. of And number I have still a

we We And department earnings conference QX least be of questions the to all another going to questions to because are But be were not answered. have the allotted, that at video commits answer end of IR XX read. to call. the time able

closing remarks. So Gustavo joining I the And you back the us. turn floor to for for thank

Gustavo Werneck

and and participation you business, once to operate all very to more you winning how session. going for get want a to Renata, for like for more, have participation. our things. be here. Again, sure -- we to you how visibility and again am career your moderating I'd regarding I More thank we're much of you're the thank we close seeing

results. and questions you opportunity for elaborate like I'd So in possible us that feel to on gave you myself, might all to us our the free of to Renata IR the Japur you to look more thank for have. answer team,

to referring be I'd of to XXXX, to to A capture. call hands we like X, QX on when held earnings opportunity our our good Now part you to consistent very in invite next the again video hope you November participate conference will is show earnings. which in

So all to much very this best with thank care. I enjoyed Thank happy of you period and Japur time very much of that much. was very take and very you and you. you. All spent the are

Gerdau (GGB) 4 Aug 222022 Q2 Earnings call transcript