Gerdau S.a. · BMFBOVESPA:GGBR3
Gerdau — Q4 2023 Earnings Presentation
22 slides from Gerdau's earnings presentation, Feb 21, 2024
Slide 1: Earnings Release Fourth Quarter 2023
EARNINGS RELEASE Fourth quarter | 2023 This content is RESTRICTED. Midlothian heat treatment facility (TX, U.S.)
Slide 2: Occupational Safety
OCCUPATIONAL SAFETY FOCUSING ON PEOPLE’S SAFETY, WE CLOSED 2023 WITH AN ACCIDENT FREQUENCY RATE OF 0.70, AN ALL-TIME LOW 1.28 1.16 1.10 1.10 1.08 0.99 0.87 0.83 0.76 0.70 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Gerdau’s Accident Frequency Rate MANOEL BENEDITO DA SILVA SANTOS – Araçariguama
Slide 3: Macro Scenario
MACRO SCENARIO THE CURRENT GLOBAL SCENARIO IS MARKED BY A STRONG PRESENCE OF IMPORTED STEEL IN THE BRAZILIAN MARKET BRAZIL: Economic activity continues to be impacted UNITED STATES: Recent indicators show that the SOUTH AMERICAN COUNTRIES: Political by high interest rate levels (11.25% in January 20
Slide 4: Steel Imports & Competition Contrast in Brazil
STEEL IMPORTS & COMPETITION CONTRAST IN BRAZIL +102% 20, 0% 18, 0% 18.4% 15.3% Mexico imposes 25% tariff on imports of steel to improve domestic market The new tariffs should eliminate trade 16, 0% 13.3% distortions to safeguard the balance of the global market in 11.5% 14, 0% 10.5% accordance with
Slide 5: 2023 Highlights
2023 HIGHLIGHTS STEEL SHIPMENTS 11.3 Mt 2023 R$5.7 b IN 2023 Decline caused by a strong increase of predatory imports practices into the CAPEX Focus on the competitiveness of global brazilian market operations and offering a portfolio of greater-value-added products ADJUSTED EBITDA R$13.5 b in 2023
Slide 6: Performance by Business Division
PERFORMANCE BY BUSINESS DIVISION ROMULO JESUINO DA SILVA – Ouro Branco Plant (MG) 6
Slide 7: North America BD
ROLLED STEEL 82% 53.5% UTILIZATION of the quarter RATE Consolidated CRUDE STEEL 71% EBITDA NORTH AMERICA BD ■ Market segmentation and cost focus have enabled the Division’s margins to remain higher than the historical average. ■ Backlog of orders at healthy levels, at approximately 60 days of invent
Slide 8: Special Steel BD
ROLLED STEEL 45% 16.0% UTILIZATION of the quarter RATE Consolidated CRUDE STEEL 51% EBITDA SPECIAL STEEL BD BRAZIL NORTH AMERICA ■ Strikes of auto workers in Detroit (Ford, GM, and Stellantis), started in late September, ■ Light vehicles: rising imports and falling exports prevented a better perform
Slide 9: Brazil BD
ROLLED STEEL 52% 24.1% UTILIZATION of the quarter RATE Consolidated CRUDE STEEL 62% EBITDA BRAZIL BD Variable Cost per T (4Q22, base 100) ■ Steel imports reached penetration of 25.2% in December, with a volume increase of around 50.0% in 2023 compared to 2022. 100 ■ Excessive steel inflow, through p
Slide 10: South America BD
ROLLED STEEL 88% 6.4% UTILIZATION of the quarter RATE CRUDE STEEL 82% Consolidated EBITDA SOUTH AMERICA BD ■ ARGENTINA: Uncertainties in the political scenario influenced the level of activity and steel Effects of inflation 1 EFFECTS and depreciation OF INFLATION of theDEVALUATION AND CURRENCY peso
Slide 11: Financial Performance
FINANCIAL PERFORMANCE Pindamonhangaba plant – New Continuous Casting This content is RESTRICTED. 11
Slide 12: Highlights
HIGHLIGHTS IN A CONTEX OF GLOBAL DEMAND DECLINE AND EXCESSIVE PENETRATION OF IMPORTED STEEL IN BRAZIL, GERDAU MAINTAINS ITS COST MANAGEMENT DISCIPLINE AND FOCUS ON PROFITABILITY -16.4% -4.9% Shipments Net Sales¹ 82,412 -3.6% -13.8% (1,000 tonnes) 11,902 11,323 (R$ million) 17,964 68,916 2,755 17,063
Slide 13: Cash Flow & Working Capital
CASH FLOW & WORKING CAPITAL FREE CASH FLOW 1,279 (R$ MILLION) CASH CONVERSION CYCLE (IN DAYS) 2,039 & 87 WORKING CAPITAL¹ 81 81 84 78 -1,540 1,285 (R$ BILLION) -343 -150 Fifth consecutive quarter of 16.2 16.3 16.4 15.8 declining 14.2 inventory levels 4Q23 Working Capex2 Debt Income tax 4Q23 Free Adj
Slide 14: Liquidity & Indebtedness
LIQUIDITY & INDEBTEDNESS CASH, DEBT, AND LEVERAGE LIQUIDITY POSITION AND DEBT AMORTIZATION² (R$ BILLION) (R$ BILLION) 0.33x 0.37x 0.34x 0.40x 0.31x 9,5 12.6 12.3 10.7 11.5 10.9 4.2 5.4 5.8 4.2 6.0 5.3 2.6 7.2 6.4 6.5 5.3 5.5 5.5 0.2 1.6 2.1 2.4 2.6 1.2 0.8 4Q22 1Q23 2Q23 3Q23 4Q23 Liquidity 2024 202
Slide 15: Shareholder Returns
SHAREHOLDER RETURNS PAYOUT ABOVE THE STIPULATED MINIMUM, EVEN AMID A CHALLENGING BACKDROP DIVIDENDS TOTAL SHAREHOLDER RETURNS2 (2018 – 2023) 69% 33% 37% 44% 1,073 77.2% 137.8% GGBR4 60.6% 6,083 5,355 2,466 75.2% 422 154.3% Average 2021 2022 2023 79.1% GOAU4 2011–2020 Payout¹ Dividends distributed Bu
Slide 16: Capex Investment
CAPEX INVESTMENT BALANCE BETWEEN ECONOMIC AND SUSTAINABLE DEVELOPMENT CAPEX 20231 MAIN INVESTMENTS 1 43% Midlothian capacity increase: +250 kt/year with improved efficiency and supplied by solar power R$ 5.7 bi ~R$ 1.6 b 2 57% Monroe capacity increase: approx. +90kt/year positioning the plant as the
Slide 17: Strategic Capex (2021–2026)
Additional Additional production capacity: production capacity: +700 +700 kt crude kt crude steel steel and and +1,400 +1,400 kt rollingktsteel rolling STRATEGIC CAPEX (2021–2026) INVESTMENTS IN THE GROWTH AND COMPETITIVENESS OF OUR BUSINESS 4Q23 Strategic CAPEX: ~R$380 million Unspent Spent to date
Slide 18: ESG
ESG Environmental Social Governance This content is RESTRICTED. Forestry Unit, Três Marias (MG) 18
Slide 19: Highlight in the Climate Agenda by CDP, Sustainability
Gerdau currently has 0.86 tCO2e / t steel (Base year 2022 — Scopes 1 and 2) Global average of the steel sector: CDP SCORE EVOLUTION 1.91 tCO2e / t steel CLIMATE CHANGE Level 8A Leadership 7A- 6B B B A- HIGHLIGHT IN THE Management 5B- B- CLIMATE AGENDA BY CDP, Score Scale 4C Awareness 3C- A GLOBAL BE
Slide 20: Q&A Instructions
Q&A INSTRUCTIONS To ask questions, click on the #Q&A# icon, using the button at the bottom of your screen. If you want to ask questions live, type in your name on the #Q&A# icon, then wait for your name to be announced to ask your question. At that time, a request to turn on your microphone will app
Slide 21: Thank You!
SAVE THE DATE FIRST QUARTER OF 2024 EARNINGS RELEASE MAY 2, 2024 (after market close) VIDEOCONFERENCE MAY 3, 2024 inform@gerdau.com www.ri.gerdau.com THANK YOU! JOSE PAULO DA SILVA - Açonorte Plant
Slide 22: Disclaimer
Disclaimer This document may contain forward-looking statements. These statements are based on estimates, information, or methods that may be incorrect or inaccurate and that may not occur. These estimates are also subject to risks, uncertainties, and assumptions that include, among other factors, g