GGBR4.SA - Earnings call transcript Q3 2022

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Gustavo Werneck

[Foreign Language] [Call Starts Abruptly] …years of experience in logistics and allocation.

So now in the next slides, we'll talk a little bit more about the highlights of each one of our business operations and the outlook for the markets in which Gerdau operates, so that later on we can talk more about it during the Q&A. On Slide 6, I would like to begin by talking about North America. I would like to highlight that the adjusted EBITDA of our North American business operation totaled BRL2.6 billion with an adjusted margin of 32.9%, both historical records for our third quarter and above the margins achieved by our local competitors confirming that our strategy and position in North America has been successful over the last few years. When the bulk -- well, I think you'll remember that you had margins that were single digit margins. the that's remains coming the that high a months. highlight and level, trend also metallic at spread historically I for the strong Volumes third and levels high and demand reflecting manufacturing remained non-residential from sectors. in energy the at quarter, the fourth order outlook our positive, even period remains positive. at normal remains despite The quarter very of seasonality the the very for backlog since levels and the continue region we this will to XX%. operate mills above scenario, capacity at in utilization levels Considering our

demand package our transformation the move even more their improving North In customers. to continue begin also Architectural manufacturing at for above sector projects. digital steel $X making demand the phenomenon activity this stress the the in investment in states in which positive also North continually trillion accommodated follow Institute a from X from the in construction about the has this our We sector in record $X non-residential of customer in the to million line. show our remain and with Data should non-residential more the of as generate especially which steel forward construction remain we would the and the billion some US point to for spending orders America, additional almost also optimistic trillion, XXXX monitors construction market generating levels and August and measures up country, America, Census profitability units infrastructure Bureau value through the that total of reached year. high investing which indicators new the to that and in US performance at Billing Supply We I competitive productivity XX brought the sector. domestic Management like reshoring valued steel of the Index, tons the on of $XX context, Index,

whose in meeting costs, in of product new operating start the highlight next Whitby the cycle, mix include local of to Tennessee, melt XX% operations, aspects. the an of our the by number first than for expansion region. now to the many Gerdau our which Canada. about which interest the will energy chains, by they only is attention in in steel next current America, quarter labor economy X in talk the and on special I'd and unit higher adjusted the us, third general, to needs Other and challenges not have like half and Jackson financial of of the pace I'll in reported still last monitoring other mill offer jump shortages, customers. and Slide very that period North issue but investment is EBITDA year, For inflation points logistical global of driven same impacted like highlighting the new profitability shop in companies levels. and rates, the I'd year, closely We organizations Japur the our value

logistical light Anyway, in volume chip years. units vehicles much challenges impact have last in While market million in light shortage the reach been should labor North by decreasing of shortages in higher production. and the the has two the vehicles figures of country local affected reported than XX.X America, vehicle light the

of be to For XX historical confirming the compared expectation vehicles above million should levels. production that when units XXXX, recovery market is light the the

been next recent States vehicles impacting of the over approval in the the the production Act, American that by few significant United the the the so-called will With this recent manufacturer of CHIPS problem of definitely in years a be semiconductors years. of there solving localization Congress has

special XXXX. plan year of upgrade US, counts, would or in in technological The in needs ones the to continue the future an of truck oil of approval one also of expected XXX,XXX also technological fuel will and units by an plants, production approximately the SBQ with With an The XXX Monroe to as Michigan influenced this in continues growth, at of sector investment units than in most to and regards of new making mill XXX total market, by the reach the modernization for to solutions Now, electric for about plants mill international billion potential around like highlight customers most the of gas producing heavy to one of especially of become prices world. remains and when one the I rolling the car with investment, investment Monroe, positive our global and in part this steel turn in a aimed XXX,XXX example, of average in vehicles. rig expect market market, meeting the pursue our technological bar should demand BRLXXX BRLX the additional specialty Monroe, to to the modern hybrid in of the for units the the segment. most year. and year operations goal million our last steel this compared more

XX% there steel While by in the market according ANFAVEA. semiconductors has vehicles in been quarter, whose inputs, and in be continues third other the lack rose but volume special to market affected year-on-year Brazil light a production the to of this anyway, recovery

mentioned to I that year XXXX production XX% July reflecting expectation in September remains on Brazil between the the record we recently in like the a clients. of electric of the growing level unit light aligned now, point the more market vehicles would again harvest Pinda auto sector. steel number of of a continuous this have and active and units, updating vehicle that of emphasize in technological and number mill prospects quality casting higher should operations of same to that very to Brazil the flat Brazil. the a production Also, of delivery operate. Sao and us because the year-on-year XXXX, to points sectors growing in I BD even vehicles to the Meanwhile, number new consumption future hybrid resulting to should needs and steel about the for the increase according from starting the reached to have of year, global steel steels, in steel our is a of of sector and will more in with demanding with of compared made. to the also here like grow also blooms of shipments also with between segment. the positive an ANFAVEA. the confident the out steels comparison, suit XXX,XXX make in we be in Well special to to in when in construction to heavy and export different October. move remains the compared of differentiated Brazil. some about once parts, when I'll Brazil reflected would steel in high, the shown good which started generating X, machinery to the performance around The have the landscape The Slide the For comparison that billets the the something I in this I'd in in approximately is also opportunities competitive quarter, the be And agricultural Brazil. historic association. quarter X% very that in market, yield reflects This Pindamonhangaba our from in X% industry an demand other automated the consume reach cleaner most long in much advance especially better products, equipment a and Paulo. in sectors process especially X.X% the will and bus With record second in September which producing this unit according third talk allow see important accommodation special for sites here important, July future is I of Pindamonhangaba

to instance, the of FGV's in second to September six Construction in compared of its reflects an to For GDP construction points. XXXX. strong X% Brazilian the industry. in the same analysis when growing sector, by the XXXX value Furthermore, period of latest that conducted Index years shows X.X% XXX.X the Civil would increase civil of Confidence in a I This construction the highlight 'XX performance quarter with according last like of GDP for the the reached survey highest

impacted are about inflation, decline Brazilians’ household flat, average retail. income. by Sales speaking the Now in

over X.X% according BRLXXX infrastructure So billion think investments reach be XXXX I by are XXXX consumer index increase. confidence should higher by And shows to supposed and BNDES. to investments that this in

talking capacity XX% about especially the between and In coming been exceeded Brazilian for level. from of to I -- and demand important good announced machinery solar that power has addition, the increase the electricity and source Brazil the think installed steel XX it's and from gigawatts This industrial reflects agribusiness, equipment goods, third capital sources. sector recently photovoltaic remains is there line coming mention matrix. what placing in Still performance is the XXXX, a energy an high as October segments. a energy yellow at This from energy, that January

In important transformation the launching our addition, called I is our milestone follow of Gerdau would like their in customers journey to to new emphasize entire journey This their few what our it digital more will an allows since will Gerdau insights doing solution us of Mais.. offer with to business which platform, the this and serve past through been deeper even clients years trying we've our better. to is that in bring us relationship the allow services, personalized platform

from will sectors the in sales In construction mining year-on-year X.X% to for to local steel market. Argentina, grew Argentinian talk The energy about the with sector the according the January strong, latest which from slide, August comparison the starting InTech. America, and between I construction, agribusiness, has demand moving boosted Argentina. data and an Now in remains next South

estimate, quarter I to this line forecast same with steel driven continues of In in central is continues Uruguayan Peru, is a to estimate the this market the country, the previous steel the as at levels, that local evolve, in positive according in third X% is in should demand from and good central in market. is by XXXX. when -- the quite the construction their XXXX, mean, compared the which For repeated X% industry, the well. the scenario in to increase for by bank grow And in the year. sales the GDP resulting bank's is there that

on. and will Japur, to floor we the give further discuss items those I'll Now

So Japur talk performance. will about our now financial

is the So Japur, floor yours.

Rafael Japur

is to be Gustavo. hope safe. fine once again I all and and you, pleasure to earnings everybody call. conference Good our and great you in with everyone. Thank afternoon healthy It here a is

talk about performance for financial our So the let us quarter.

best period. said, track during highlights the we Now of our the months record, well first have very like Gustavo the nine of

second the Gustavo third best EBITDA scenarios. line and an performance cash EBITDA talk capital. very of resilience the flow working confirms first was our BRLX.X and quarter in This in in previous let million we said work much billion disbursement. CapEx generated part different with about and history us So our what in invested this Like the is a of in in we for quarter, said, quarter billion. in capital, around BRLX.X We in BRLX invested this

you and on about in the we Let performing, income and more we for in me obligations paid. Take we what and the color flow? detailing and and our investments I'll presentation. assessing costs What debt made cash that later on are operating be into give tax account had that this

into of free transformed XX% free of We the BRLX.X nearly cash quarter, net revenue for flow EBITDA XX% or to flow. cash billion our of period this equivalent have

if we of to of our dividends in XX% we we the in cash the BRLX.X buyback into quarter BRLXXX to shareholders. [GGBRX] we’ll quarter invested quarter, second related third free this plus quarter invested in share account During nearly have that flow in paid the that take billion return of paid million this

of to account on of drop normal focusing company's of number XX the lot is below, that function working have in which like the as We within very increase remained a naturally that cycle, very basically flat seasonality quarter. at according to Gustavo in capital period conversion the on said and level, a see with Moving we quarter, It early the We had a comfortable the an X%, levels we in didn't used more revenues can cash year working close XX previous days, each level have this we had because that of chart had for in into track record. a the we presentation. taking for measured the now capital. but a to the days,

Of had cash capital long quarter, this Now increase amount, billion moving we our competitiveness to in and how to disbursement our Like results been slide, this generate on in we conversion were CapEx. cycle capacity investments the we've over invested previous in this BRLX.X allocating trying BRLXXX of CapEx. run. in said our to projects, million the

billion. like For the in on XXXX, approved initiatives of the this the in with of and disbursement which And stages same of markets to below, projection house. CapEx and we opportunity have to main take bring are our color chart studied general of BRLX.X the follow that being investors been more we would or different we've maturity. Board of by already performing, being our are there which Directors, Naturally, in been

early in needs three or focus our cater can improve production increasingly our in to fourth quarter you XXXX, we categories; add going these are major initiatives behind which or in disbursement As XXXX. customers’ in you first, assure customers. access see, run, to the raw the of and go projects an CapEx our competitiveness be earnings our for and value products give of the portfolio on year materials capacity the update to will deeper conference more we'll into the these call are to forecast XXXX, of added long In to

us cash and our position address indebtedness. Now number XX, Slide on let

than the to with period around closed This net had the the years third of history our level third like nine from also quarter, is we of generated higher last in the debt closed Gustavo with year EBITDA within deleverage lowest first strong at very million, point the BRLX.X same This cash year times. previous reach over highlighted. position year. result the the before robust in XX XXXX and process issued portion pursuing of that months of achieved we that very company We debt, This X% a We quarter gross of a quarter close what the not highlight the explained which the portion billion. million due a in debt, gross X.X%, debt we but to significant account important a is and that portion dollars. dollars foreign to in a to bonds billion, into exchange BRLXX capital in variation is BRLXX.X effectively also below of mostly BRLXXX markets. level our continues of is increase maintain It's taking only reduce around of debt our denominated the denominated -- this of by which stems

the we billion. our debenture with we considering So that November to the coming amount to going remind maturity issuance in of would principal this, on are like XXth you XXXX XXst, a the BRX.X days, of have now of from

also our partners, our subsidiaries. line not us Gerdau resilience, be banks most be flexibility, in global thank to now and highlight results we be of our to that any we term. maturity that, we and extend highlight our XXXX. XXXX a with to to the cash would absolutely BRLXX years profile. basically gross October an strong moment would and it make debt. I’ll or term its quarter, this solid available used long our go extend with the of due operational shows This level is fully It third amortization posting below debt line. this this by and So of that of our $XXX this profile in in the renew million, back allowed of our I’ll distributed increases use now made the quarter, XX have and credit to been by and this and million position withdrawn closing financial that of line billion average October will term. The lower a with in further like will $XXX overtime, which due to and chart term we that We with is

Slide number XX. now Moving to

on dividends to XXXX. the that, payout for on generation XXth the more position, amounting will year per and just or The we're will XXXX. of happen significant dividend consider approximately to in on payment months cash BRLX.XX of both of and the the to of Metalúrgica to year’s Let interest XX% us have nine highlight this more we Gerdau and S.A. round position also the Gerdau, proceeds Board accruing be December million BRLX [XX return BRLX.X generated December cash of or cents] of share flow capital and and billion With XXth account held our going we approximately the Metalúrgica, to our for share. up, payment on paid Metalúrgica accrued first nine equivalent BRLXXX on of of a shareholders. now shareholders capital the financial free billion the proceeds declare Owing at taking Gerdau, the interest to to it about of year, into months the we per first dividends At BRLX.X and has the than of over the to billion in as talk this solid period. than almost company Directors

buyback into share performed program, Moving BRLXX.XX. XX or May. In of which up into S.A., the the share this XX% XX. billion our in Gerdau nearly from that, year first of account have invested over for was dividends launched we the million period quiet XXXX, program have not quarter year, we Taking on buyback With in but also more than the beginning buyback. BRLX.X share only to October the over

XX% nearly As Gerdau, program the we for Metalúrgica of announced. performed

reminder, of shares for has accounting than X% preferred preferred Gerdau Metalúrgica. is a free S.A. and at Metalúrgica, of As flow greater shares XX% Metalúrgica it at of

performed bought BRLXX.XX. until XX XX% for nearly So almost of shares were before average GOAUX, an or million price closing of period, of Metalúrgica the the was which quiet

were -- which early program. announced the common share decided to a on, billion the GGBRX already company in and lot all of cancel of As Directors S.A. the shares material in Gerdau buyback in fact in X.X stock, already the a of Board

additional were which stock, buyback the the we will preferred of X Gerdau, million all share program and also cancel also shares in the program Metalúrgica the an for before started. at company's [treasure] lot As also

Showing we BRLX So shareholders, payout very when results If into for XX shareholders. level Taking significant profit always recent taking return allowed go and the we to by very we is our better yield the on the that of is bylaws. we our a there the months. impact reduction a in our that dividends, indebtedness a to the and have comes nearly to us did from and part into the above the securities put we XX% show. In weigh in moving years account results stated account return of to for chart in that our the a dividend buyback come for chart in were positive XXXX it of ongoing last XX% to billion to combination for to lower like share months. dividend we adjusted everything slide, of upper come XX.X% period, last XX growth the yield how together to X.X%

I now, our So again the back I'll on your And Gustavo. thank Over session. the Gustavo, back for initiatives ESG Q&A floor who you to turn will the come attention. for comments make and to in quarter,

Gustavo Werneck

Thank the mill Sumitomo certification and JSW power receive wind is Gerdau as Corporation our generation roll our relevant disclosed, to Summit, some JV rolling which Well, you, for I agenda. ESG already aspects with of for to piece information because related Company. final a like for with in we B a the comment that August, slides, three has Japur. been about Japanese would Well, parts supply some starting of and

to a as all by result, XXXX. The operations reflects B countries Corporation. become operate the Builders certify ambition we our manufacturer in Company Gerdau to the B program all in where of B the it's to first As certification the commitment Summit a a world our Movement of became and two

inclusive a businesses empowering living able Gerdau organization, of an from of environment. mention participation we included the to intensity, mention with our and has follows the part our Sistema.bio, business a worked for in investments in the future to effectively a and our agenda, connects that sustainability who society. verify in World certification legacy Lab, our would Summit with in reporting good called environmental certification I purpose XX% our line Company with diverse Program, for even to in build Through nonprofit of the a Association gases represented and B greenhouse Furthermore, more agenda. that companies we tangible a should Steel improvement people and is the on certification like Gerdau institutional sustainability the received I sustainable, the practices. by very practices that governance COX given build as among the Action best As way of also how the measurable which Brazil are which in performance of Climate recognizes is independent an international by was B our result

as greenhouse largest announced, go Latin We the the of gas in previously and even America, are crap steel rate global we is about average emissions further. half our sector. recycler steel of the want for to But

by committed equivalent we new aim neutral by we per reach year ton this XXXX. targets to and tons of X.XX So COX XXXX, steels carbon to of being at

out steel supplier entire would economy history to only largest society. concepts being stage the in in Rock Gerdau at to We September for tons of steel and sustainability, event not XXX% world Brazilian like the but Rio, bringing XXX official the point of recyclable we supplied the year, I this construction innovation, were festival. that the Brazil in circular the Hawkin of the the Hill, Finally, of to of present XXXX,

you interest would take to to conclude greater all any you. available So remarks. point our further we for and of to like questions thanking on your I listening And now of are to by elaborate

So give now, so Q&A you to us floor organize Renata, this I'll help can the you session.

Renata Battiferro

Werneck. you, Thank

we will a questions [Operator the begin question-and-answer session of already couple chat. via Instructions]. So We now have

Correa, Leo with BTG We Pactual. have analyst

Leo Correa

lower GOAU in second rationale question GBBR. domestic the says, margin Correa would He around is I at There and coming of profitability noticed from materials understand that of dividend drop one-off about for I like payout, level have also a in to trends adjustments XX%. at prices vis-à-vis quarters, the to lower terms a behind this questions. regards two With difference. to considering profitability learn dividends about GOAU, come the we a the Brazil. more to which of of I raw like have this price we trends is market. call EBITDA would in is

Rafael Japur

sequence. the in answer me Let

Metalúrgica the the consider we be S.A. at from buyback on Gerdau. S.A., having And perform around Gerdau which intrinsic size First is the asset, about program, topic. recurrent by is the dividends, which program, S.A. vis-à-vis Metalúrgica buyback Leo, because of buyback open strongly considering vis-à-vis to And chance clarification we the on on the bring S.A. We Metalúrgica, Metalúrgica excellent in depreciated of which There the the reasonably to Metalúrgica historical value. is single Metalúrgica management Galdau Gerdau very the significant, It opened intrinsic share of even Gerdau And is carries to many doesn't which the Gerdau keep so Metalúrgica, to XX%. so are we keep which is S.A. which Gerdau, share larger levels a share Metalúrgica some level program, we we of believe buyback we both program, Considering adequate discount, Gerdau enough cash at our important about at working S.A., XX% gives an is company holding this shares compared question. and at started When funds to do analysts, questions okay? from today company's math, vis-à-vis a twice XX%. if Metalúrgica have me are nature the started already we reminders. though conclude we a

not reason of the that Metalúrgica S.A. no to have costs, is S.A. such discount, to expenses, at the considering take costs intrinsic a a has and portion of Gerdau Metalúrgica carryover this participation basically Gerdau So very low little significant very value

adequate of to we and the long it back investment having So Metalúrgica to account more keep to makes at S.A., to sense price, buyback shareholders on a take if from on to to consider into shares we value Gerdau. term buying keep level summarize, continue Gerdau allocate share as

question. over coming the from be be of So program issued proposed I will the wanted of buyback share that profitability. And S.A. dividends to but received it answered just is will it's to about Metalúrgica clear. quarters by a shares at this answer, Leo's to all I long very Gerdau. follow I've by hope talk let's used its shareholders, make Gerdau know I part Gustavo, what Metalúrgica the

Gustavo Werneck

Leo, about Brazil.

more resilient. an example in Brazil as remarks or this something of on focus very construction business, on keep is segment October. demand in agribusiness the our and again once our Demand the on showing indicator in I indicator, being addressing calls solid The Demand the general, quarter onwards. about remains industrial also I of and demands progress Let QX from opinion this sector. converted of relevant us solid. very points for Brazil XXXX. third for sites over demand. us with a in which drop main the into right segment in mention very It the is portfolio family, affected of in solid Think from you level for that now. Sanitation also is keep some us level in and Very and slight of and construction in has difficult there is growth of resilience ineptness now my generation. by opening is is one retail. our household infrastructure. important a in record the active much And the income the in family

international about do the So the This come with remain points Prices the demand also by will as the margins in be in future. when lot. at drop prices I Brazil important in comes level the follow to and not profitability, consider QX. our that in adequate. general in main import profitability such the level, in chance the the this increases positive domestic say margins on being I if the a we okay, future. would it is okay, market say in premium And will okay, They are I in market. not market? What would to It's this pretty keep drivers for domestic in is which future. now and explain

The first happened about just in highlight coal. what is QX

in lot is Brazil year. third the costs this transport coal and increased to second happen purchase quarters in the and first So This and a quarter. the

happening year. we So lower rising prices when rising cost, We latest next years. the other coal. in world. keep shorter over five remain pieces the to a coal. margins In the the behave XXXX, unlike cycle in a we second in or is is to is mills happening will how being Coal margins explain weeks scrap maintenance the comes which second that Branco this we maintenance next life might volatile quarter, very shutdown of exactly over based maintenance and the Ouro a equipment price A tell cannot it in and owing and but EAF that's higher driver have under some are had on highlight going

So of second positively two remain and it should impacting with running Margins on it said, market, bring It the attention. in in maybe Brazil. exports. these had a in the may up and and blast furnace again, impact very that furnace an is more had maintenance results keep margins referring I'm to Blast solid. domestic now number factor I like quarter. in

down driving are as exports we driving speak. However, down, margins

operation preparing including for quarters, coming the XXXX. are the We

lower So margins. keep we despite can on exporting

margins capacity. will yet we any prices It's clear intend international whether demobilization levels. remain not have and this at to don't So of our

will traditional export an our keep particularly bring our reduce on levels levels is little third an X% have that in for So was a the short We impact. order companies the there around in the We opportunities our future. in to which sister quarter XX%, in for to exporting exports operation term, slightly number now.

solid the factors the in just current are margins in some But highlighting to that coming of operations the keep Brazil the market achieved they'll to main these and will the will contribute on to quarter behind being only stable. pretty these margins margins be the solid remain solid. the drivers our guide They because general extent factors continue believe that that the in We remain quarters. in domestic So margins road. down

floor So our give answers are overall you questions. to speaking I low, these your back. the

Renata Battiferro

sell-side be his question to next Itaú from enabled. BBA. from Danielle Sasson, asks Our video analyst for Danielle

to Danielle, video. So the go live you authorization can on accept

Danielle Sasson

buyout I year Now distributed? dividend XX be next cycles. the at mean, extraordinary that this billion of flexibility That times a the My bit leverage end me more wanted over X.X, of any the the capital because we net said target of more put is XX% EBITDA. X.X ceiling in leverage terms end would could whether to debt don't be the behind about could have view? probably the, little of that debt debt, you first want your allocation have that of view addition rule of give was way of you a what do question or detail change that in for terms to But also arrived you year? to gross now gross in because you a about you to throughout

market. So little please if you could second give US the to me more now my And bit relates a question color.

so where quarter a a posting just value strong, lower was that volume more forward because had of You that the this really, were something as you it to so dynamic not policy temporary you levels. high could shipments you prices demand be little look at Is more your will a but remain looking bit really deliberate at strong. lose profitability per okay still were would or it when end

Rafael Japur

didn't profit. with of you forward because thank distinction net In because capital start do we Daniel. any important a let's extraordinary than dividends on of have Well, move BRLXX the XXXX, reserves the make we our structure. Well, It's we more company. we didn't that billion

when we at base, profit towards our not advancing we in net reserves. are our look So

I where earlier billion mindset debt considering in the well. So I we to countries radar. to cash. needs Therefore different operate is financial not corner. do BRLX maintain the change in the mean, considering coming moment, structural our bureaus our This program and our we is this would is not keeping pay be that net the also philosophy we and around execute buyback to flexible the much businesses is with anticipate billion levels out any close our on, EBITDA BRL our to that are different as or X dividends structure. Also, in in to which soundness, not at capital be said over even what using or pretty around

that question. of the we bit missed of think beginning little I a your

question. I the to North part if completely, your the to me And answer of America Gustavo I please talk let So to floor turn now about fail question your over know.

Gustavo Werneck

advantage and had had terms investments. sound. Well, to of maintenance invest Demand we make is remains some making the maintenance invest U.S., it's compared lower to to our some very some when take and today downtime some in a in windows even though to We Daniel, in backlog. had to of downtime we backlog volumes profitability. The XXXX, but very healthy use opportunities of

at capacity our now operating we automation probably capacity, XXXX, even in with rolling can but bottleneck over full our terms And operate our towards in and our XX%. of looking so productive mills, right

labor. we scarcity is suffer problem improvement slight July now, But was a August. in of and labor. the So There still with

even of due stop lack though We deal capacity people. our not have that we with to to did difficulty productive

haven't higher. different yet. even look XX, XX it in in in flex the longs the U.S. longer market. But done and things. if margins U.S, it's look in If at to we less flats look periods, the we compared Brazil, And are general I are when at stable We market volatile if you two at market that mean, and XX, has the these the the more

another happen new short we mid-range. will Each that addition, entries that the capacity. things of well longs have we mean, we market, the there does account. established is There delivers. take things there in one noticing should and of have that In not three no probably I in the anticipate are are run of us into then suppliers. And one-third are thing that capacity

happening an So this period for important that is in something reassuring is already us.

Congress chips other in demanding presentation, -- the you during capacity not will U.S. but steels. they the things has investment trillion. there of there production BRLX.X are infrastructure the the are that example This approval productive U.S. translated happening, The the Chip and Act of already mentioned demand. increase I If long by -- is one yet of into been that your just

would the this in different materializing new is haven't year. maybe executive the I in in anything of be act. that states. half coming first in We phase to demand seen general, U.S. stronger from say that, still But next And this could probably

even five has that our gap I Therefore, other spread that remains look only too in remember at inflationary the in do So with Mississippi about due that the updating price I at in consistent. longs the lower years are prices, you the been talked our the better markets high five the River. all, that, I very of not I that pressures below operating lower our North all-in-all, is drought been the in mill well. the very compared very transformation. terms in an right has rely scrapping maintenance transportation market you of we do levels. deal as extreme margins America level the all now everything mean, in prepared much we our also past operation healthy to some Tennessee. market but Mississippi mills. to to because prices that on is there metallic Scrap is of costs the -- when of still we if ago the have and Jackson, scenario long when to when and much to happening The in scrap. from mean, logistic years prices, of not terms scrap are But spreads at that of in River in were impact our to on products with gap closed. But terms U.S., transport our this had

you America market, that speaking what about it I was general, okay. in So North could just the tell

Operator

Thank you.

of Gabriel couple He question. Goldman Sachs. a has Simmons, sell-side Next analyst questions. with

Gabriel Simmons

understand question, see announced road. quarter addition you buyback significant to the dividends acceleration down program. saw company the very leverage how to like of I we this the in fast First in performance a of the would

had target X terms mind it continue make end? investors leverage to billion level Does debt. net the You by the in year sense you way to a of to XX often or BRL as close optimum for consider the are with target speak billion of working debt best gross in this? What in these debt expected an is and

Rafael Japur

to I ask from other questions like you would Werneck, Gabriele, Maybe you are that's later. easier. can answer. and There then

Gustavo Werneck

BRL We as wouldn't changes applies comes our our balance great. to it about Okay, debt, or some Well, billion also tactics have time. to rollover gross have to numbers. Gabrielle. debt when The it same don't these And over about see something Hi, sheet major we or upwards. like our we XX structure. capital downwards philosophy around

resilient our they to capacity profit As generate basis. a result time in are and for dividends, of cash over

sheet BRL cash we of So when generation leverage, because to not than position. year, why B the balance year-end position this we more accelerated With X flow. as end comes piloting capacity to it cash to have quarter, is until this the to regards free billion we our the in come or the are the more visibility A

there obligations, We have to some questions payments some be some are in Q&A. made the

that we going in to pay have fully we So maturity debenture April year. are next

a It seem have now high a commercial operation maturity and a moment the with Maybe adequate of the XXXX volatility have have most also of We we new short-term issuance. a the with idea bonds. it is and can into for doesn't markets bank. to owe

room our Our debt eight is the is account six the debt years, the into banks which ratio average slightly today take shorter commercial term for is around of with of above with pretty target is that much years, our minimum term. lot concentrating capital today with a lines maturity markets which way

So and other your to I analysts. also question questions answer tried from

Renata Battiferro

some has I'll Gabrielle, the questions pull here. all questions.

the increasingly So, a this very U.S. strong quarter numbers he margin. operation with that delivered says strong

the color flow is do segment. I for close a XX% give speak expectations Does timeline outlook And back this earnings the sense to for think to on, well, front. understand then in you. to expect company's yes, see this make the answer he considering to orders about more how to would XX% or or level? a also comments would to for in be made it you the flow margin, phenomenon? of this to we business the XX% and you We levels I this investments he about results. call when do normal used stable for investments If us like these on margin normal give think

Gustavo Werneck

brought things many in sense, evidence. I so years. I makes is in us normalizing, makes very that happening didn't are market. transformation we've the this This no will through been to all as light, It start say very prepared normalization from makes I the that think to Danielle. answered world company a that no about normal more the is anymore, The seven expression historical that levels this think we going it company absolutely I revenues our keep what is world. this sense sense to to are grab is think the we a SG&A, on yesterday. opportunities is about don't with that year, If it agile, to talk think

know short-term surprises. will in terms on focus what radar. they will we or over world XX% see us or today, you if margins can XXXX XX% envisage I So But are don't about in on what what of the bring now the what not happen or exactly we the our for

the performed infrastructure Like expect package work capacities new the I the margins. and backlog in orders our in transformations plan. we demand our and higher production We possibilities, with new said, have terms customers, to U.S., of in also

down, year, be not level be but the the different pandemic. maintenance markets. vacations, that of which only Cup, end at well, shut So this, with year But specifically considering more has will by blanket we US we in margins quarters. seasonality and strongly back in after go the There this way or also may Seasonality affects believe in been working normal then are or with to we'll above year this the coming Brazil. World the that end the collective holidays, some vacations

lower And December, nine year. to How the we level closed to last historical whatever achieved of comes a last So seasonality, above the the like decisive in this year will month. that first be months historical will seasonality We year next or December. have to I'd year? when be close we happens it say

and November results see, to let's the we December, get close will how XXXX. in So achieved

optimism, Back us how that's and now consider what So is overall speaking, ready maybe resilience this and drives be you, are we to getting when XXXX. to the we on America, Renata. North

Renata Battiferro

Next Bradesco question the camera. BBI. He like to Thiago use Lofiego, would

enablement. So, the camera please, accept

Thiago Lofiego

and would Renata, looking like to to at elaborate forward. like Brazil I BD going the Japur more Werneck. bit you, you the just I would Thank a and -- on market dynamic

seasonality Werneck, quarter. whether in On volume potential side, -- the said, demand in normality the something this that thing? Or in it fourth drop some costs like We the were past within that could that I or different in is trend? normal you will natural would than about you the seasonality the is you how it few could a fourth second scrap understand already of down that of quarter, tell in the just to seasonality prices business there bit evolve understand substantially me And also question be the months. is that whether see Brazil.

On the other market hand, up. the are coal prices in going the

announcing factor how of probably do that two, the is coming what in that in pricing company next also milling this could possibility CapEx their well, the only now my that that relevant, dynamics? we forward in your only as unusual other you industry, maintenance in three -- but any industries, have because maintenance be steel not your question, So other we at the CapEx. but your looking CapEx, BDs not radar as seen there whole, companies the I'm Brazil also of re-evaluating you the competitors Brazil? And outside only years? in other Is in Gerdau saying out at is unexpected a not some Brazil, see saw

Gustavo Werneck

years for as will throughout throughout this we there normal continuous chain maintain Okay, specialty markets, because with Thiago. our the important impact. Thank of it your its probably just all with Seasonality And years, the flow a be you many chain. points. to has inventory two because of more past difficult was all very manufacturers the many, inception much these the steel throughout know from for is the downtimes all

working So I I capital. more of a capital in will stable work industry working that flow understand higher with terms rather mean, requirements.

to get So for been have talking are so in have downtimes steels, market, many as we for with customers. regards trucks the These we in buses. just the our recovery to things heavy especially usually that we prepared about specialty and won't have

on particular at you look seasonality this I will case. not to So apply think But it. how it depends

somehow of to cost were look at something quite maintain you The the able demand been have as If positive. stable and being mills we mini profitability.

energy there mean, of cost only increased and prices is scrap in not the thing course, radar. issues that are I a is out cold. prices. There decline Of flat. mills we The it's this like nothing something the mini very control. And -- are of can

few prices at months. now going have of next expectation that occurred coal are is will The will lower impact we the that forward. we going the that behave in price will not peak the an this how in some sure is that -- coming weeks, prices perform coal So coal past there how And forward. bought

the what think is impact I issue. So mill will the coal us Branco at Ouro

the talking are In mean, I not only more period years. to X, seeing in similar some a comments, plant. no you've of you to CapEx, probably is the one terms understand about needs but market will larger cover happen in we X in year. what general. have of surprises. are have invest won't compared We What there Ouro maybe This Branco, do greenfield X, your in I CapEx’s that been when because

to have blast refurbish one. the furnace We

this CapEx pretty So with spending, is but in be cash there line our position. much some may

very or maintenance So is large serious of some issue, that none but of radar. capacities now our terms maybe in in new

Thiago Lofiego

up Well very great, a thank related to you. follow I quick just have call.

pressure will prices not of coming you quarter, any I that the consider are coming we cost especially, what your from and maybe have fourth should mean cost, part is So large in coal down. scrap

cost, you production you at anticipate the or mean better flat? I something your in still whether of when fourth look COGS quarter, net the So

Gustavo Werneck

the flat, in is still it's mean some very downtime. acquired I used seasonality quarter, this be will coal still because still being that and there we and

will impacting specifically, terms Japur to to lower coal, wants something. throughout. So But add see we of COGS. this in costs more is more referring this

Rafael Japur

mean, the to fixed lower I -- that of downtime, demand dynamics relates it and this some costs. we look materialized I and mean a at not be may decline not have when or you expectations higher

ton. So the terms in in of be the important fourth operation BRLs of quarter, you I per mean this think level change something may if

what say billion presenting I dedicated like was in I said and CapEx, Now it. in that that we referring million opposite of for to concentrated BRLX.X maintenance. I when will CapEx significantly was amount doing In to I like third that was of mean would very spent XX% the I we operations overnight, BRLXXX in it Still just mean, invested few will It's and to a started quarter the was competitiveness our Ouro take as CapEx, year much growth investments years. happen but not Brazil we've doing saying, change Branco. increased we our that when of something will XXXX. XXXX what Gustavo continue in some when will last in compared

Renata Battiferro

question, analyst Alba, Carlos Stanley. with Next Morgan sell-side de

Carlos de Alba

the with slow-down. optimistic volumes steel Brazil also relatively to and slight declined quarters U.S. it on slow-down, shipments the demand, we investment net reconcile Your this? coming global to with release working How in in What only and and that would months? be including were yet terms in Brazil add a Gerdau other quarter-over-quarter in of comments XXXX, have press probably, only we your capital have do mix? can you will expect the coming Is correct improving all assume in product a

Gustavo Werneck

question this break Let's myself. down, and Japur

but Wherever also look, optimistic signs comes investments the we being talk we So demand, wise Brazil in demand deals we're only all clients it we the very when to all on comfortable for made, in XXXX. all we closed, keep all already Carlos, the read, to, very the the US. not

costs As impact try extent example is and well. energy don't to cannot our manage, don't call get precisely about prepared. well we production. Maybe however the we clear we speak, costs we predict on we know Think a as to some

or Maybe I extent, export we think in this speak. in to product as be way how at geographies is and some will to Brazil the don't this. we demand how So most don't is consider volume look I much where U.S. Brazil, for mix important in shipment the are the we how our case specifically set it our about should a problem. operations issue we from our

next production dismantling possibilities, see today. more we or recovery maybe We can positive not mill. We're year any average and Brazil. the de We margin a in margin resumption early capacity. believe There export favoring are any some have are to concrete possibilities, not

shipment, of what we add? in and see. Japur, production is So to this terms capacity anything

Rafael Japur

to we our adding inventory question working shut release maintenance working finish QX, not and the coming Just expect capital, usual, a see part about we goods. normal considering over operations cash in as expect guarantee, reduction and but capital, down what I'm second a of the that's from

slide, we So expansion comes could to capacity we to again. consider list the have this operation. proceeds Today, that of I understand maintenance about billets I on Morrow, selling shut for When maybe be start CapEx, capacity would because the example that only Carlos, down not we well, and some Michigan casting and operation. we would we the blooms consider our to to the don't expand operations, mentioned. add -- from sell have it we and this investment or investment

the lack So between of there the balance is shop. some and capacity rolling melt

the Because or capacity, is we for North billets we from when the volume rounded in to market relevant a maybe have operation. Monroe America, market. increase So the don't the an which addition coming effective an billets addition, today, have rolling in we

shipment But more So change the hot I top company. Gustavo, of Ouro rather or added because mix anything if eventually the Ouro Bronco will we you extent value check an list that greater a there nearly to projects, bring to projects, a in strips Branco will of add? coiled to lesser than bring are all roll capacity shareholders. say them by in the of related to increase is would mind, more other in

Gustavo Werneck

more Jackson, North plants. slight mix America our America in one-stop becoming Maybe customers' on will specifically, don't a mills. growth of Tennessee. focus Midlothian growth. catering Maybe an expanding example North most shipment is in be our and There competitiveness to speaking on a Overall, and the most exception. But needs the shop investments mainly in in is focus we our by product of is a important

focused mill important our we very in -- Tennessee this customers' all be on expanding -- as there have are being much needs. to We meeting

in our say to it North how we I intend would investments putting simply, Back Renata. America. in So progress is make this that you, to

Renata Battiferro

Thank you.

Guilherme next Our from sell-side question analyst Bank from America. a Rosito, of

Guilherme Rosito

competition about XXXX with you like is volumes second Brazil? Brazil second And the as Well, for volumes and in him imported the XXXX for prices? in quarter he -- regarding and to in would as outlook how an half give well

Gustavo Werneck

up back XX%. of flat. XX% should XX%. next you in Imports the historical It XXXX year, historical go has should be level. Brazil, or levels This around it to bit in Okay. it's a during year, pandemic was reached it It quite little XXXX, And an and XX%.

in imports problem. a steel that's So Brazil, not

Our levels the to resume this lower to experienced outlook slightly all year. for the Cup. World volumes throughout have regular in is for But next that quarter seasonality, should holidays we January, demand due we the and

of level. are see profitability comment be and that for pressure levels I would further still We of any profitability see not don't large So we flat, manage. us very right say. major, now possibilities reductions don't mean, the this and stable because But the growing Brazilian for I of our price issues. a we main should will to issue in XXXX, Profitability year is the domestic for demand where market reinstate

general, in I you. So this tell what can is

Renata Battiferro

you. Thank

with Alejandra question JPMorgan. Next Andrade, analyst sell-side

Alejandra Andrade

of You the what maturing XXXX? XXXX discussed plans for the are bonds payment in U.S. debentures, dollar

Rafael Japur

talked debentures interested very Today, Alejandra, see billion are with -- maturity a April don't XXXX in how a for lowering next in $X.X close timely about but billion. you? to our in $X question, we year. at debt good We're in don't dollar we moment it's the first, previous around are we We think new a bonds. or denominated so

cash the that to in want getting pay settle for we question. level with and this dollars fully your denominated you see So to issue. Thank of debt to

Renata Battiferro

through any them still icon the the send have you questions, more case please of in Well, platform. Q&A

anything like to the through questions you if back questions would please send in were answer get further you you. no are will other or be or a have posted any case us that us writing back it us questions then your to and in there get give us will for As platform, else, pleasure to we to a you call because

floor the to turn I now So back Werneck.

Gustavo Werneck

you transparent Because probably just you, so so let you release any market you. Because all you much. we for always operations. much to all opportunity fully care relationship join quarter XXXX. for the XXXX, you very year a end I us this like to that next joining and us intention will It's was which our to always because And holiday please few us us, be Xst, and know. invite trying today. fourth conference call, you the of would have Thank missed a very earnings a is to will our be in pleasure with place again great are general, the give during take take about Thank have we in and season. we to to March talk final to call increase have point of I Thank much. all our remarks. Thank Please available of to Renata. take constantly details you of to the this

Gerdau (GGB) 9 Nov 222022 Q3 Earnings call transcript