Gerdau (B3:GGBR3) Q3 2026 Earnings Call

0:00 Bom dia e bem-vindos à divulgação de resultados do terceiro trimestre de 2026 da Gerdau. Sou Mariana Dutra, Head de Relações com Investidores e hoje me junto ao nosso CEO, Gustavo Werneck, e ao CFO, Rafael Japur, nessa videoconferência. Lembramos que essa transmissão está sendo feita com tradução simultânea para inglês e você pode escolher o idioma de preferência clicando no ícone do globo, na parte inferior da tela. Durante a apresentação, todos os participantes estarão apenas como ouvintes e, em seguida, daremos início à sessão de perguntas e respostas. Analistas e investidores poderão entrar na fila através do botão Raise Hand. Vale ressaltar que as perspectivas aqui apresentadas constituem-se em crenças e premissas da companhia, com base em informações atualmente disponíveis.

0:49 Considerações futuras não constituem garantia de desempenho e dependem de circunstâncias que podem ou não vir a ocorrer. I pass the floor to Gustavo to begin the presentation. Please, Gustavo, you may proceed.

1:02 Hello, everyone. Good afternoon to everyone. I hope you are well. And I thank you for the opportunity to be here with us once again in our presentation of results. We will briefly comment on the highlights of the third quarter of 2026 and the perspectives for our operations, and then we will move on to the Q&A session. In the third quarter, once again, we recorded a strong result in North America. The resilient demand in the main markets we operate in and the solid operational performance of our units in the region resulted in an EBITDA margin of 27.7%, the highest level in four years. In turn, here in Brazil, we continue to report a slight recovery in results, Apesar do cenário de uma pressão contínua das importações e da sobreoferta de aço no mercado local.

2:01 Esse desempenho é fruto de uma série de iniciativas focadas na ampliação da produtividade e rentabilidade dos nossos ativos no país. Nesse sentido, eu comento que a gente iniciou a operação no centro de reciclagem em Pindamonhangaba, em São Paulo. Estamos conduzindo os testes integrados finais For the expansion of the new capacity of iron ore in our mine called Miguel Bournier, in Ouro Preto, there in Minas Gerais, whose start-up is planned for this fourth quarter. I will now pass the word to Japur, who is here by my side, to detail the financial highlights and the impacts of this current scenario on our results.

2:42 Hello everyone, thank you very much for receiving us here once again in our results disclosure, now from the third quarter of 2026. In this quarter, we ended with a dividend generation of R$ 3.8 billion, with a margin of 20.2%, the largest since the second quarter of 2023. Adjusted liquid profit also grew, reaching R$ 1.5 billion, while the profit per share rose from R$ 0.74 per share to R$ 0.79 per share. Convertimos, nesse trimestre, uma parcela significativa do nosso EBITDA em flux de caixa livre, com uma geração de 1 bilhão e 400 milhões de reais, seis vezes acima daquilo que a gente tinha registrado no trimestre passado.

3:35 Quando a gente avalia os nove meses de 2026, geramos um flux de caixa livre de 1 bilhão e 700 milhões de reais, contra um consumo In the same period of 2025. This difference stands out a lot due to the expansion of our EBITDA, mainly due to North America, but also due to the reduction of our consolidated CAPEX, with lower investments in relation to what we have practiced in recent years. Reflecting on the resilience and quality of our results, Gerdau S.A. will distribute 34 cents per share in the form of dividends in this quarter, while Gerdau Metallurgica will pay 16 cents per share. If we add up the dividends and the resumptions of shares that Gerdau S.A. has executed throughout 2026, We have already returned more than R$ 1.8 billion to our shareholders, demonstrating that, in a very concrete way, the commitment we have to the generation of value for our shareholders is not just words, but we sedimentate and build it with actions. When we think about our patrimonial balance, we closed With a leverage indicator of 0.58 times liquid debt by EBITDA,

5:08 it is an extremely solid and robust balance. In addition, throughout the third quarter, we renewed for another 5 years our global credit line, the REVOLVER line, which we have the faculty to draw in different countries that Gerdau operates. We raised it by 29% and today we have a line of 1 billion, 125 million dollars that is now fully available for sale, which even more reinforces our liquidity and the company's financial flexibility. Talking about the previous topic, I would like to highlight that now, on October 22, the S&P rating agency announced the change in the perspective of our rating on a global scale, from neutral to positive.

6:00 So we now have a triple B rating, with a positive outlook. Very similar to the movement that the Fitch agency had also done at the beginning of this third quarter, in July. We understand that these evaluations reflect not only the resilience of our businesses, but also our financial discipline, levers that we understand as absolutely fundamental for our ability to invest and continue to generate value over the next few years for our shareholders. I stop here and join you in the part of questions and answers together with Gustavo.

6:41 Okay, Japur, thank you. I will continue here saying that in North America, despite the typical seasonality for the period, we continue to see demand for steel at high levels, with a strong number in the backlog of requests, due to a solid portfolio coming from segments such as renewable energy and data centers. In Brazil, we are seeing a slowdown in demand due to the typical seasonality at the end of the year, among other factors. The domestic market continues to be impacted by the excessive import of steel and by a scenario of over-offering of steel. With the election of President Lula, we expect the continuation and strengthening of commercial defense measures that have been adopted by the government, in addition to the implementation of new effective measures aimed at the competitiveness of the Brazilian industry, ensuring balanced competition conditions, In the face of the advance of steel imports, in order to preserve investments and generate new jobs in the country.

7:40 It will also be essential to advance in the energy agenda, especially in the opening and development of a more competitive natural gas market, in addition to greater stability in the access and consumption of renewable and low-emission sources, such as solar energy. In the same way, it will be important to continue the implementation of the tax reform on consumption, approved by the current government, contributing to the simplification of the tax system and strengthening the competitiveness of the national industry. We will stop here, then I will return the word now, Mari, to you, and I, Japur, will be available to answer the questions and doubts you have.

8:21 Thank you, Gustavo and Japur. Let's start our Q&A session. The first question is from Leo Correa, from BTG Pactual. Leo, you can go ahead, please.

8:34 All right, guys. Can you hear me?

8:36 Hello, Leo. All right. We can hear you well here. Wonderful.

8:39 Sorry, for some reason my camera is having some problem here. Don't worry. Sorry about that, but there are two points here on my side, Werneck. First for you. In the last few weeks, there was that super-complete Nelfeed article with several of your comments about Brazil, talking about major additional adjustments to those that have already been made in recent months. You talk about personal adjustments, capacity adjustments, you talk about major export cuts, Some capex adjustments I know there will be the Gerdau Day A few weeks ahead I think this will be dealt with But if you could help us With these Brazil adjustments I think it would be very welcome Given the context we are living in right now Second point On my side And maybe taking a little from the head of Japur I also know that this is an old subject, Japur, I'm sorry, but I think it's inherent and kind of obvious to ask this now, given the relevance of the United States and given this super strong scenario ahead, the guidance you are all giving, in a scenario that seems to have a lot of legs forward in terms of result, the fact is that Everyone has been following for many months and years that the United States

10:09 has completely detached itself from Brazil and other regions. There is, given again, perhaps a more difficult scenario for Brazil in the future, does Gerdau's perspective re-evaluate an opportunity to do a spin-off, some more strategic movement in the United States? These are the questions, guys.

10:30 Thank you. Okay, Leo. Thank you. Well, what I repercuted in this interview with Nelfeed is, in fact, a plan that we are working on now. It is not yet completed. We hope to be able to give more visibility and detail of this plan at Investor Day, as you commented, but it starts from a perspective that we can't stay here with our arms crossed, waiting for factors that we don't control Thank you very much. I imagined that it would not bring the necessary profitability over time, even correct investments in our plants, the expansion of our product portfolio, a search for competitiveness as we never had. So, regardless of what happens from now on, regardless of which government it is, we have to do our homework. So, we've been looking for this competitiveness over time, in any aspect of the business we look at, but it has not been enough for us to have an adequate level of profitability here in Brazil that balances and improves the results.

11:57 So I would say that what we have done so far is a small part of what we can do in the future. We are detailing this plan, Japur is coordinating the plan directly, I don't know if he will want to advance anything here or not, but we at Investor Day will be able to give more visibility, so we have actually worked very hard for what we control to be in our hands, Thank you for watching! A gente vê materializado alguns esforços que a gente tem tido e debatido com o governo federal no sentido da própria reforma tributária, de evoluir com a defesa comercial, de seguir tendo esses leilões de gás para que a gente possa ter um gás natural mais competitivo, mais volume e mais barato, tá? Isso tudo beneficia ainda o trabalho que a gente está fazendo, tá? So I commented this morning here talking to the press that always, in any situation, there are always positive and negative aspects, ok?

13:04 And in the re-election of the current government, I see this continuation of the commercial defense debates as one of the positive points, right? Because if not, you go back to zero and start the debate again, ok? So the fact that we have found this dialogue in the last two or three years and we have, through data and facts, I will stop here and then Japur will talk to you about this issue of North America, which you commented, and if he has any additional point to complement me about... This issue of adjustments here in Brazil, feel free, Japur, I'll leave it to you.

13:52 How are you, Leo? How are you? Thank you.

13:54 Everything is great, Japur.

13:56 I think we have to highlight Brazil. I think we've been talking a lot about our logic of a world with China exporting more steel structurally, lower international prices, more tariffs and commercial barriers, an environment where we see less space for exports, so we are focused on structurally reducing our exports over time, and make the investments that we understand are important in Brazil to have a long-term competitiveness. So there are no big silver bullets, there are no 30-point baskets, as we joke, there is a lot of work to be done. We have already taken a super important step with the CAPEX that we have made in recent years of expansion in hot-welded coils here in Brazil, the expansion Our mining in Miguel Brunier. Now the inauguration of our shredder in the recycling center in Pinamonhangaba. So there are several points of support in our strategy that we are looking for, in addition to the themes that Gustavo has already referred to, of cost reduction, but we will bring more details in Investor Day. And with regard to North America, it is not a novelty, as we have followed the latest results, you who follow our numbers closely, A gente subiu um pouco na participação do EBITDA do consolidado para 76%, no trimestre passado a gente tinha 75% de representatividade da operação América do Norte, então não é um fato novo e a gente não tem nenhum plano de fazer

15:28 spin-off ou uma grande aquisição na América do Norte para aumentar de forma importante a nossa exposição lá nesse momento.

15:41 Obrigada, Léo. Our next question is from Márcio Farid, from Goldman Sachs.

15:47 Good morning, everyone. Japur, Gustavo, Mari, thank you for your time. Two, maybe two points here, one starting in Brazil. I think we talked a little bit about demand, but it caught my attention on the last Gerdau Day, how well you talked about ore, iron ore in Brazil. So, obviously, the exchange, it's hard to understand what will be I would say that at least it composes your portfolio with more exposure to export. So, thinking about different scenarios in this portfolio optimization, how do you see mining? Now, obviously, Miguel Bonilla will start to ramp up now in the fourth tier, the first step, but what are Gerdau's alternatives to be able to grow in mining? Obviously, the short-term moment seems a little more tense, but if that changes or not, it's up to you.

16:41 And then, leaving the point in the West, I think a lot of the debate we've had with investors is about what the new normal of margins is and until when we can continue to win the moment. And it seems that, obviously, there is still some time ahead, but I wanted to understand from you, the main negative triggers seem to be a potential deal of the SMCA, who seems to be gaining momentum in the post-midterms and also the D'Acero ramp-up. So, if you could comment on how bad these risks or these triggers may or may not be for this moment in the US and where we could see these margins normalizing past these triggers that I think the market sees as being the negative potentials for the moment in North America, right?

17:28 Thank you very much.

17:29 All right. All right, Farid. I think I'll start here first with the mining issue, okay? A gente vê espaço como uma avenida de crescimento e de geração de valor aqui para Gerdau e mineração, levando em consideração o portfólio de ativos que a gente tem Both industrial assets, in the case of Miguel Brunier's expansion The participation we have in MRS Logistics The set of mineral rights we have in Minas Gerais In addition to Miguel Brunier, we have Dom Bosco, Marcelo Lopes So we have other rights that we could eventually explore over time in the future And we understand that structurally André de Ferro. A market where quality assets, quality mineral rights, will continue to be able to generate attractive returns. So this is an avenue that we possibly see in the future to explore. We don't have any concrete plan today, or any concrete initiative regarding these projects.

18:51 Our great focus This is the ramp-up of our expansion in Miguel Murnier. It is the great leverage that we have for the results of Operation Brazil for 2027. But the fact that the mining is a little lower today, the rates are a little higher, it is not something that takes away our appetite to evaluate with affection, but with a lot of serenity, opportunities in mining. Con relação à América do Norte e o novo normal, acho que alguns pensamentos, Farid. O mercado chave para nós, o mercado de vigas e de Merchand Bars na América do Norte, ele é um mercado grande, representativo, mas é um mercado Around 9 million tons, if we put merchants a little more than that, closer to 15, 16 million tons And of course there will be a new entry, AD Acero, which will compete with an important line for us, which is the line of Dvigas Now, an important part of the Mexican market today is the market that is supplied by heavy freight imports. So we understand that this plant, primarily even for freight and logistics issues, will focus on supplying the Mexican market, which I think is its natural vocation.

20:20 Of course, We understand that part of the volume over time can be exported to North America. We are already seeing volumes of imported material growing in the import of beams in North America, when we evaluate the statistics data of imports. But even so, we have a very robust environment for our key markets there. I think the big triggers that we have to pay attention to, eventually, I think it's less than a free trade agreement between Mexico, Canada and the United States, which I think we believe to be unlikely, a tripartite agreement at the moment, we believe that there will be bilateral, individual negotiations between Canada and the United States, between Canada, Mexico and the United States, and Mexico.

21:13 And it's important for us to decompose the effects. Paraguay, Gerdau, which has a part of its production in Canada, with dedicated plants that make products that only Canada makes, And in the same way, we have products that only the United States makes For us, an agreement between Canada and the United States, which I think has been disclosed a little more in the media It would be positive, because it would reduce our transaction costs of our plants that are specialized That today we lose some sales volumes due to this tariff increase Different from what happens in Mexico, an agreement between Mexico and the United States, we understand that it would have the potential to make our margins a little worse, on the subject of debt, which you referred to, but also because today we don't have a great exchange rate between our operations in Mexico and the United States in exchange for sales volumes. So, really, for us, it would be a negative net agreement between the United States and Mexico, and a positive net agreement between the United States and Canada. I think the great focus we have to have I think these are more the investments and the focus of the demand that is happening today in North America. It is not a demand that is distributed in the same way in all markets.

22:34 We have a market related to artificial intelligence and energy, transmission and generation investments. So, disproportionately, when we even open the data of economic activity, of non-residential expenses, we have, in the accumulated year, a slight increase in non-residential expenses, but a good part of this is explained by the growth of investments in air and energy. If we eventually see Thank you very much. Thank you, Marcio.

23:30 Thank you, Márcio. Our next question is from Carlos de Alba, from Morgan Stanley.

23:36 Good morning, everyone.

23:42 Well, I would like you to talk a little bit about the benefit of living with Miguel Burnier and the other projects. How much do you still expect to capture in the fourth quarter of this year and then also in 2027? Should we see a complete benefit of all the projects already next year? Or maybe this can extend and reach its full potential in 2028?

24:15 Hi Carlos, how are you?

24:17 I think regarding the benefits of the projects, we are concluding the tests in Minguebrune, we will start the round-up now throughout the fourth quarter. which is not the ideal of what we expected because the fourth quarter and the first quarter are traditionally more rainy quarters in the southeast of Brazil, especially in a year with the rain, so this should make it difficult for us to have a full ramp-up in a faster way than we would like, even because we are going to do this in a very safe way and very focused on the safety of our collaborators and our industrial processes. So we understand that it is an important portion of the benefit that we would have, we will capture, yes, throughout 2027, but not the full benefit.

25:05 We will detail a little more about this during our Investor Day, but possibly it will be close to what we formed from the Investor Day past, that we imagined that the project would start in the first quarter of 2026, something that did not happen. We were talking about a profit of around R$ 400 million. I think it is very likely that something in this order of magnitude, once the project has elapsed a year ahead, or near a year ahead, that something close to that we see as a benefit of the project in 2027. With regard to Midlothian, we are still in the middle of the maintenance stop, which will Not only to conclude the maintenance, but also the expansion of the capacity of sawmilling and mowing of our main plant in North America.

25:59 And we will have the ramp-up throughout the fourth quarter, in a quarter that traditionally we have a smaller volume of sales, due to seasonality. So, we understand that the benefits that we referred to in our institutional presentation, Jimmy DeLofen, and the increases in productive capacity, very likely we will only see, but in a comprehensive way, throughout 2027, considering that we do not have any setbacks with regard to the ramp-up. I think these are the two main projects that, both in the operation in Brazil and in North America, have a lot to add to the year of 2027.

26:40 And maybe, Japur, in relation to capital allocation, the company is very active in paying dividends to shareholders, and congratulations on this decision. How do you see this going forward, or maybe this division between dividends and buybacks?

27:06 I think that as long as our shares are below the patrimonial value, for us it becomes something very evident, as an opportunity to continue reinvesting and canceling these shares over time. So, the purchases do not cease to be an alternative for us. And traditionally, in the third and fourth quarter of the year, it is a quarter where we have a more expressive cash generation, The reason why we also accelerated our distribution of results a little more. If we think about the accumulation of the year, Carlos, we generated around a free cash flow in the nine months, as I mentioned during the presentation of the financial highlights slides, we generated roughly R$ 1.7 billion of free cash flow. Remembering that our free cash flow really explains the variation of the cash to the variation of the cash, it has all the lines in there. E a gente distribuiu para os nossos acionistas, com essa declaração, com esse anúncio de dividendos agora, já 1 bilhão e 800.

28:10 Quer dizer, a gente já deu mais de 100% do que a gente gerou de fluxo de caixa livre depois dos investimentos importantes para o longo prazo da companhia, a gente dedicou para os nossos acionistas. Acho que mostrando que realmente o nosso compromisso em seguir retornando o que a gente gera de caixa excedente para os nossos acionistas é um compromisso inegociável nesse momento para nós, claro.

28:34 Thank you very much.

28:37 Thank you, Carlos. The next question is from Gabriel Barra, from CITI.

28:44 Hello Werneck, Japur, Mari. Thank you for taking my question here. Two points, I think, even continuing in the discussion of Miguel Bournier, I think the scenario has changed a lot, right? I think in the last few months, with regard to the sector's margin, I think freight has pulled very hard, the exchange rate has moved very fast, and we had in mind that, not to mention here about 2027, but thinking more about the new project's run rate, we talked a lot about that 1.1 billion. And then, I don't know how much you can divide, maybe even a little bit of the discussion of Investor Day, at least I'll bring more details about it, but just to listen to you a little bit about this Miguel Bonilla run rate today, given this scenario that we are living today, which possibly even with an FX helping now positively, which I think will change the figure a little bit. On the other hand, looking, even putting together some questions that were here previously, The company is in a very comfortable position in terms of leverage, positioning, exposure to effects. Looking ahead, it seems that CAPEX is lagging the number for the year and I would like to hear a little from you about that, if that 4.7% is still feasible for this year.

30:01 And in terms of leverage, if the current scenario, both global How much does Brazil change this level of leverage for the company from now on? If 0.6, 0.5 doesn't seem to me, I don't know if it's the right level in your view, if we could expect a slightly higher leverage from now on, even additional distributions, dividing as Japur just said in the last question. These are the points, thank you.

30:34 All right, Barra? How are you? I'll talk to you. I think I'll take the two points here. First, mining. When we gave that outlook of, throughout the cycle, we imagine a return of R$ 1 billion, R$ 100 million of the mining project, if you look at the Footnotes dos slides sobre como é que a gente calculou esse retorno A gente tem uma parcela importante que é de alguma coisa de venda de minério Que é em torno de 30% a 40% do valor Mas o grosso do benefício é pelo consumo interno em ouro branco desse minério Com um custo baixo, mais baixo do que comprar minério de terceiros E com uma qualidade maior, um teor de verbo de 65% So here, back there, when we calculated this benefit, we took into account a CFR price of iron ore in the range of 90 dollars per ton, At that time, it was not even 61%, it was 62%, so a little below, a little above, if we think with a quality adjustment of 1%, and with a freight of 20%.

31:39 So we would have a FOB price in the $70 range. We understand that, yes, the variables have changed. They have already started to change again and the only certainty is that certainly when we have a complete ramp up of our mining throughout 2027 that we pass from the first priority, sorry for the redundancy, right? That is the consumption itself in white gold, we will certainly be in another situation that we understand that it must be closer to the most normalized level of what we have seen in recent years for freight and ore prices.

32:26 Another important aspect is that as the iron ore is at a worse price when we think in the FOB mode, putting freight Marítimo, to discount this value, to price the ore here in Brazil. On the other hand, coal has gone up in price and is more expensive. So the benefit of having a larger iron content ore that reduces our consumption of coke and coal to produce the same amount So, these things are talking and recalibrating over time. Moving on to the second part of your question, regarding investments, CAPEX, leverage. These are actually two questions, but with CAPEX, we understand that we are lagging a little behind.

33:34 We still opted for uncertainties regarding the exchange, not updating our guidance, but we do understand that there is an upside risk, thinking about free cash flow generation, that eventually we will defund Less effectively in 2026 than what we gave of Guidance there at Investor Day, October 1st of last year. And then, in relation to leverage, finally, at least important, about the scenario we see, On the other hand, we see a scenario of higher interest rates in the whole world, not only in Brazil, but globally. Now, the 10-year tragedy has dropped by 5 after many weeks, but it's there, it's with a slap in the 5, which is a high level if we think about the last 10 years. And particularly for our markets, for our business, just to give a statistic of curiosity here, When we run the correlation of the results of our operation Brazil with the NTNB of 12 months ago, so the result of Brazil today versus tracking the NTNB of a year ago, which is when the real estate investors De construção civil, quem quer pensar em comprar um caminhão, comprar um carro, tomar dívidas de longo

35:09 prazo para investimento intensivo em capital A correlação é maior que 70% entre os resultados da Gerdau no Brasil, por exemplo, e níveis de taxas de juros de longo prazo So we understand that within a scenario with so many potential adversities in the long term, it is an important leverage of flexibility, not only of a patrimonial balance, but operational, to be able to make decisions about investment and capital allocation, to have a more unbalanced balance.

35:41 Super clear, thank you.

35:47 Thank you, Barra. The next question is from Ricardo Monegaglia, from Safra.

35:53 Good morning everyone, thank you for taking my questions. I wanted to start here with Outlook USA. We had another steel producer in the United States who also reported the result today with Outlook. And then I wanted to stress a point that caught my attention here, is that they give Outlook for earnings, or EBT, and in the case of Gerdau it's for profitability, margin. So I wanted to understand, given that another player is also seeing similar price movements, applying the same increases as you, seeing the same dynamics here, both in demand and in sucate, I don't know, it seemed to me, and this is my question, I wanted to understand if there is any conservatism here on your part, to try to...

36:44 I don't know, maybe the most critical scenario of Sucata, for example, which is a point that caught my particular attention, so much so that Sucata has not yet risen, so I wanted to understand if you have any indication from suppliers that Sucata will rise, if you are already seeing this at the end, because in my opinion, the portfolio of Gerdau, when a price rises A média ponderada aqui dos preços e produtos que a Gerdau vende, enxerga aqui um aumento de 70 dólares com o que a gente teve só no terceiro trimestre, que ainda não foi refletido na média, e começo do quarto trimestre. Então, eu não sei, para mim, e aí de novo, tem algumas outras coisas que eu acho que podem impactar, você tem mid-loaf, é um custo de 100 milhões de reais, mas ao mesmo tempo você tem menos outras despesas, então, realmente entender se tem alguma das moving parts aqui, That we're not seeing, right?

37:36 Maybe more maintenance besides mid-loafing. That's my first question. Then I'll do the second.

37:41 All right, Ricardo. I think it's an interesting question. We always follow the competitors that we respect a lot here in Brazil, in North America. And I think the first point I want to highlight, as you well referred to, is that we give our self-luck in relation to margin. And that, in this case, I think you are referring to the outlook that Nucor released in its presentation, it gives an outlook in relation to earnings, that is, a total of millions of dollars of profit. And it's giving a lighter guidance, software, in relation to the fourth tier, and we're still giving a margin stability, if I'm not mistaken, for steel products. And here I think this distinction fits, that we are talking about margin, and the margin, you pointed out well, we have a positive event in relation to prices, but we also have important aspects of cost relative to fashionability.

38:37 We typically have, in the fourth quarter, smaller volumes of production, smaller volumes of sales, and this also ends up generating a lower division of our fixed cost. Thank you for watching! From the days and the cost of audacity of those people, our collaborators, that we keep paying but that the plant, Ciaria, is not producing, that will be launched throughout the fourth quarter. So this is our best vision today regarding the results, despite the positive inertia, the positive moment to the top line in relation to prices made, We see that we will have at the cost of volumes a detractor that leaves this margin more or less stable.

39:44 It was very clear. If I could add one more for Werneck. Werneck, you commented on the first question about an expectation of additional measures to protect the local industry, which I think is super valid. And then, at this point, I would like to understand if you are commenting mainly on the approval of BQ and Fio Máquina anti-dumping, Ricardo, se tem um ponto positivo que contrapõe

40:30 A certain delay in the implementation of mechanisms, not of protection, but of more robust commercial defense, I would say it is the technical rigor with which this analysis has been done by MEDIC, because you can quickly implement a more robust measure of commercial defense and then the questions start to appear and then you have difficulty maintaining that and it becomes only a political decision. So, this technical rigor, which I think is the most positive part of the conduct by the MIDIC, since the intense debates with Vice-President Geraldo Alckmin and soon after with current Minister Márcio Rosa, Márcio Elias, as we call him, And with your team it has been this, the technical rigor.

41:22 So I see advances in this. I think there has already been a reduction in the penetration of imported steel. Perhaps both parties expected that there would be an even greater reduction and there was not. Anti-dumping has also evolved in its technical debate. It may be a next step, but if it were not enough, other mechanisms or a robustness of the existing mechanisms, it needs to happen. So, at this moment, I see in a positive way the progress that has been made, and I believe that in the next four years, due to the fact that we have already had this intense debate, technical rigor, new measures of commercial defense may arise. And I go back to what I commented with Leo, we are not putting the chips on this, but if my optimism translates into a reality, I think it helps us to accelerate A esse processo nosso de recuperação da rentabilidade, tá?

42:19 A gente se inspira muito em outros mecanismos de defesa comercial implantados no mundo, né? Eu particularmente gosto do hard quota, né? Tu fixar um limite ali de volume, depois disso não entra mais Mas é uma opinião minha, tá? Existem outros mecanismos Então eu vejo de forma positiva a continuidade do debate, né? Tu interromper todo esse rigor técnico do debate que houve até então E tu voltar a estacar zero e recomeçar com uma nova equipe, tá? Eu acho que Thank you, Ricardo. The next question is from Daniel Sasson, from Itaú BBA.

43:09 Hey guys, good afternoon, how are you? Thank you Mari, Rafa, Gustavo. My questions are super quick, actually the first one is a follow-up to the question from the previous bar about the CapEx of 2026, you are going at a slightly slower pace than the guidance for the year. O Japur falou um pouquinho sobre a incerteza relacionada a câmbio e tal, mas dado o desembolso mais forte para Miguel Burneira e Midlothian esse ano, então ficando para trás, se faz sentido pensar no nível de 2026 como um teto do guidance de 2027, eu sei que vocês não tem guidance formal ainda, mas pensando no Lopes, Rafael Dias da Silva de Souza And my second question is also for you, Rafa, if it makes sense, if there is any formal policy today from the company that you think you are already in a scenario here to suddenly review, right?

44:22 You have the policies of gross debt up to 12 billion reais, anyway, if you can, if you think it makes sense to change some of them, or some of them, since they were suddenly thought at a time when Thank you, guys.

44:51 All right, Daniel. I think about Captex, I think it's a premise, maybe it's not even a good premise, considering that what we are investing in Captex today, we are more or less close to what we will see in the next few years if we don't have any big changes in relation to our strategy globally. A gente tem um patamar de desembolso necessário todos os anos com manutenções. A gente tem manutenções importantes nos próximos anos em ouro branco, como a gente já detalhou no nosso Investor Day, com relação a coqueria, alto forno, as manutenções que a gente tem feito ao longo do tempo para manter os nossos patamares de competitividade em ouro branco. Mas acho que sim, acho que um patamar aí próximo desse 4 bilhões e meio, 800 milhões de dólares, dependendo da moeda ou da referência que quiser utilizar, acho que pode parecer algo aí próximo aí do número razoável para os próximos anos.

45:49 A gente ainda não tem nada formal, provavelmente no Investor Day a gente vai avaliar se a gente já tem a maturidade suficiente para compartilhar com vocês um número mais atualizado, mas acho que For the discussions that we have had at the level of council, of new projects, I think it's an adequate

46:06 number. As far as politics are concerned... Just give me 30 seconds here, just to make a comment here with Daniel, okay? I've been commenting like this, even at the beginning, in Leo's question, we talked about the search for competitiveness and what we've done, okay? A job that we have... We have been dedicated to reduce the level of CapEx per ton, Daniel, because it is amazing how CapEx in Brazil has become expensive. We have a comparison at home, which is CapEx in the United States or in North America as a whole. Our assertiveness in terms of term, budget, is greater than here. We have also made a lot of progress, not only Thank you very much. Thank you very much.

47:15 They have been much more competitive than here, so I just wanted to reinforce a point that is being worked on now, which is how to seek competitiveness in CapEx per ton, right, Japur?

47:28 Exactly. And then, I think, talking about the second question, Daniel, about the policies, could you, like this, review our gross debt policy, which we stimulated, sorry, stimulated this value of gross debt level At the time the exchange rate was different, today we are closer to 5, 5.30, back then we stipulated this here, it was 1 dollar close to 3, 3.50 But today we are more focused, as Gustavo said earlier, a little in the debates about how to advance in the transformations of our business here in Brazil, for us to be less dependent on the results of North America. We are very happy to have a robust and strong result in North America, but we would really like to see our operation in Brazil.

48:24 So, we understand that there is room to discuss our policy of gross debt, for example, but today our great focus has been to discuss how to be more profitable, more competitive here in Brazil E como a alavancagem hoje graças ao nosso trabalho e à nossa disciplina não é um problema, é um assunto que a gente não está se debruçando muito para avaliar, não.

48:58 Beleza. Obrigado, Rafa. Obrigado, Gustavo.

49:01 Valeu, Dani. Obrigado. Um abraço. Mari?

49:04 Obrigada, Dani. A próxima pergunta é do Caio Ribeiro, do Bank of America.

49:10 Bom, boa tarde a todos. Obrigado pela oportunidade. My first question is about the allocation of capital in the United States. We have seen Gerdau making some recent movements in recent years, such as this expansion of Midlothian, the purchase of sucate processing centers. Looking forward, I would like to understand what you think about potential new acquisitions or even organic expansions in this region. Entre as opções de buscar aumentar a porcentagem de sucata cativa dentro da empresa ou expandir mais a produção de produtos já existentes no portfólio da empresa ou talvez uma terceira via que seria buscar ampliar a participação de outros produtos, talvez migrando mais para o downstream com produtos mais especializados, de maior valor agregado, pré-fabricados como torres, estruturas, joists and decks I wanted to understand, between these options, what would be your preference today?

50:12 In second place, looking at the margins of the United States, which of course is always the theme of the moment, it continues to expand recurrently over the last year, and looking forward, you have already commented a lot about how you see the risk of importation, possible trade agreements with Mexico and Canada, the De Acero plant, but I wanted to see if you could give us a color about the components of new supply in the United States, If anything has changed in relation to your expectations of new projects, especially taking into account these high metal spreads in the market for some products, and also how you have seen the demand, how do you expect it to evolve over the next year, especially that linked to data centers, if you see any sign What worries you in relation to this pipeline of data centers and what does this imply in terms of incremental steel demand over the next few years? Thank you very much, guys.

51:15 Caio, thank you for your comments. In a way, you asked the question and helped me answer it when you suggested the path we will follow, of organic investments, of selection capacity expansion, This is the way. We are not going to announce or think about any major acquisition or any Greenfield plant. The American market is there and it will continue with an adequate balance between supply and demand. And when you talk about the concern, maybe, of data centers, if you are going to follow a solid demand, I remember that the questions from a year ago were similar, but in another area, two years ago, three years ago. We have had the ability to put long-term projects that will serve the country within a logic, perhaps, or a coincidence, that has allowed the superimposition of demands and allows us to see that over the next few years this demand will remain solid.

52:18 So, since 2019, when section 232 came, reducing imports, then came the CHIPS Act, which was the investments that continue It happened in the United States to relocate semiconductor production plants from Asia to the United States. We continue to deliver steel for this. Then came the infrastructure bill, which we imagined would be translated into short-term demand, and in fact it didn't come, but it is very present today in the reality of Brazil. You mentioned Midlothian, I was there two weeks ago. You go down in Dallas, you drive around Dallas, the amount of work is impressive. So, the translation of the infrastructure bill. Then we see the IRA issue, which we thought that in the government, in the transition of governments, it was going to fall. The IRA is still a reality, not only in the solar energy issue, but you look today, I mentioned Texas, look at the amount of demand in transmission towers, it's a scary business.

53:18 So there is this overlap. This is a topic I've been talking about for a while, this project of investments in the naval industry in the United States that was recently announced. I think everyone knows the huge demand that will come from the American naval industry in the next few years for destroyers, submarines, aircraft carriers. It is a lot of flat steel, but there is also a lot of steel in our portfolio in this investment package in the naval industry. Now we have also seen a package that is beginning to be more detailed, which is the Power Project, the investments in nuclear plants in the United States. So, all these demands will overlap over time, and when we look at the solidity of this, it brings us confidence that on the demand side it will be very solid, and on the offer side, if Japur wants to complement a little, if he has any number, the analysis he makes regarding the entry of De Acero, we understand that the impact will be marginal, I think he even commented on this.

54:18 So, I see a fairly balanced supply and demand, What allows us to imagine that this current level of results and images can be maintained. We are working with our plants at the limit of what we can, looking for alternatives for us to be able to produce a little more in each of the plants. The investment in Midlofa comes for that. We finished the first phase successfully, but there is a new phase of continuous seeding, it is being executed until January. It's an important expansion. If we had this expansion already enabled, we would be producing. We are quite safe in this. I let Japur comment, I think the issue of Sukkot came up, but with all this over-offering of steel coming from China in the world, it does not bring an incentive to producers like the Turks to be able to buy a larger volume of Sukkot and have a short-term market where he can pull Sukkot up a lot. So, from where I look there, I see a situation of a lot of stability. Mas eu te passo aí, Japur, pra tu concluir aí os pontos do Caio, tá?

55:25 Tudo bem, acho que não tenho grandes temas a adicionar não, Gustavo Acho que o grande componente realmente é a demanda por data centers, né? E tudo que está relacionado com isso, a gente entende que isso é um bolsão super importante De expansão de gasto de investimento não residencial, né? We know from experience, when we did the ramp-up of our Luminator from Sahagún, it's a long process, it's a mix of complex product, it has several different passes, several different specifications, so it's not a quick ramp-up, like a vergalhão plant that makes four or five product references.

56:10 So, we understand that, yes, there will be product entry, it is very likely that there will be exports to North America, but Mexico is a country today that is a net importer of figs, just like Canada. Canada imports 100% of figs, Canada does not produce beans locally. So, we understand that, yes, it is an extra producer, it will put the offer, But we don't see in the other players any representative or important announcement of capacity expansion. We see movements like ours, more organic, with Brownfield investments to disengage some plants, but nothing material that really changes the balance between supply and demand.

57:00 Perfect, super clear. Thank you Werneck Japur.

57:04 Caio, we thank you, thank you.

57:07 Thank you, Caio. The next question is from Tati Candini from JP Morgan.

57:12 Hi guys, good morning. First of all, thank you for taking my questions here. I think just by doing some quick follow-ups from my colleagues, right? Starting with Brazil, I think a fact that caught a little attention here was, you mentioned this better sale of flats, an improvement in the automotive sector, E a gente sabe que o setor, né, especialmente no Brasil de aço, tá bem complicado. Então, eu queria ouvir um pouquinho de vocês pensando em perspectiva, olhando esse portfólio mais diversificado que vocês têm, com vários tipos de produtos. Vocês veem algum espaço ali pra ganhar mais share nesse tipo de mercado, especiais, planos, se é algo que vocês acham que é uma oportunidade pra 2027? And then I think my next question is focused on a follow-up on the question of CAPEX, right? And then just to clarify, which I don't think it was very clear here on my side, when we are thinking about this CAPEX, which may come to be smaller than the Guidance, it is thinking about, and even I think Gustavo talked a little bit about it, about the work of reducing CAPEX per ton, so it comes from this effort, or is it more of a delay from Miguel Bournier, which will have a repass for next year, just to clarify here.

58:17 Thank you, guys.

58:20 All right, Tati? I think that regarding the opportunities of the automotive environment, I think the main leverage has been the resumption that we have seen month by month of data on the production of heavy vehicles here in Brazil. When we decompose the Danfave letter in light vehicles, we have seen, of course, the phenomenon That a good part of the growth of sales and national production has been in CKD and SKD, which then consumes very little steel, especially ours, it is not our customers who provide most of the time for this category, but yes, we have had a small growth, but we have had growth in national production as well, in the range of 2, 2.5%. The great issue and the detractor of the results of our part of special assets here in Brazil throughout this year was that we had very weak first and second trimesters of heavy vehicle production.

59:17 And unlike North America, where we have a super representative participation, basically everything we sell is for light and commercial vehicles, here in Brazil we have a very important share by the type of national production park and by our product portfolio, a super representative or equally important share that light vehicle production is heavy vehicle production, which started the year with an accumulation of minus 20%, minus 18%, Now maybe this gap is decreasing in relation to the previous year's production and it should close with a level by estimates between minus 5, minus 6, minus 4% of heavy vehicle production. So we understand that in an environment where we eventually have a normalization of this, A gente poderia ver eventualmente uma produção de veículos pesados um pouco mais robusta ou sem essa queda importante que a gente teve no primeiro e no segundo trimestre, que acho que atrapalharam bastante a nossa competitividade, diluição de custos fixos e ganho com toneladas a mais que a gente deixou de ter em função dessa frustração da produção nacional de veículos pesados.

1:00:31 E com relação ao CAPEX, I think we see today that the rate of our CATEX spending is closer to R$ 4 billion than R$ 4.5 billion or R$ 4.7 billion, which was our guidance. It is not related to Atrasos, ou spillover do tema de Midlothian e de mineração desse ano para o ano que vem Acho que efetivamente pelos esforços que o Gustavo referiu A gente está sendo mais assertivo nos projetos que a gente está aprovando Rodrigo Almeida, Rodrigo Almeida So, I think it's not a matter of simply postponing the disbursal, but of structurally moving towards a lower level of CapEx disbursal.

1:01:31 Perfect, Rafa, thank you. Thank you, Tati. Our next question is from Rafael Barcelos, from Bradesco.

1:01:47 Thank you, Mari, Werneck, Japur, how are you? Thank you for your time.

1:01:51 Hello, how are you, man? Let's go.

1:01:54 Thank you. I promise to be very fast here because of the schedule. Two points that I think are important that were not addressed here in the conference call. First, today in the discussion with some investors, a point that always comes up in the discussion on the issue of capital allocation, Today, this gap between EBITDA breakdown and CAPEX breakdown. Today, most of the cash generation comes from the United States, while most of the CAPEX goes to Brazil. So, this ends up being an important issue of capital allocation. I wanted to understand how you believe that this mix will be rebalanced from now on, if there is any CAPEX effort here that can also make it a little more suitable.

1:02:42 E a segunda pergunta, um tema também que acaba, assim, é um tema, hoje obviamente não é o tema mais importante dos Estados Unidos, mas um tema que acaba causando aí um pouco de dispersão de earnings, né, é a parte aqui de América do Sul. Se vocês pudessem só dar um pouco de cor aqui onde que a América do Sul deveria normalizar, que nível que vocês acham de rentabilidade hoje mais adequado no que vocês estão vendo de outlook. Obrigado.

1:03:07 What's up, Rafael? I think there's a theme here about time displacement, you know? Because when we go back there in 2018, and we were here with a good operation in Brazil, including making results with good gross margins, exporting here in Brazil, E a gente tinha um programa grande de CAPEX na América do Norte de investir nas unidades que ficaram depois das vendas das plantas de vergalhão e filmáquina Talvez alguém questionasse o contrato, poxa, mas vocês estão investindo nos Estados Unidos, vocês estão acabando de vender ativos lá Por que vocês não investem no Brasil, onde qualquer tonelada que vocês vendem, até exportação, vocês fazem dinheiro Because, as you well know, investments in capital allocation, in CAPEX, in synergy and mining, take a lot of time to mature and start to give results. The whole process of licensing, study, engineering, hiring of the equipment, has very long lead times. And at that moment people questioned, why are you investing in North America? And today we saw that it was super adequate and very well And there are very important returns. It is true that also for commercial defense, by rate, but also for the important investments that we made in the modernization of Monroe, of Petersburg, of Jackson, of Midlothian in the first phase, with the investments in Dauphine that we made in Midlothian at first, in thermal treatment, then in solar panels,

1:04:37 for photovoltaic industries. E agora desde 2023 a gente viu que os resultados do Brasil estão piorando e a gente entende que a gente precisa fazer movimentos estruturais de investimento no Brasil para plantar lá atrás e colher no futuro os resultados importantes de melhorar o nosso desempenho aqui no Brasil. Então as decisões que a gente está ganhando hoje de desenvolver os check-ups, como por exemplo o investimento em Miguel Burguiani da Fundação de Mineração, foi um investimento que a gente anunciou e divulgou para o mercado Entre final de 2022 e metade de 2023, que a gente fez a Pedra Fundamental, a gente lançou em agosto de 23 da mineração.

1:05:25 Agora que ele está entrando em operação. Então acho que tem esse descompasso, sim, é bem verdade, entre geração de EBITDA e CAPEX, mas a gente não faz uma conta pensando em, ó, se eu gero hoje aqui, eu vou colocar aqui. A gente sempre tem que pensar no retorno marginal Daquele investimento que a gente está colocando, que a gente tem para investir naquele novo dólar que a gente tem para colocar Onde é que a gente acha que no longo prazo e na perpetuidade ele vai gerar mais valor Hoje o mercado americano está sendo super forte, muito bem, a gente tem investimentos orgânicos para seguir crescendo Como é o caso da expansão em Midlo, foi o nosso segundo maior projeto hoje na Gerdau, atrás apenas de Miguel Burnier Nosso segundo maior investimento é no Texas, né?

1:06:12 So I think there is this gap, yes, but there is an important temporal issue of how we see the return of the projects in the long term. And about the South America operation, which you also asked, this quarter was particularly We have a very weak market, due to lower volumes that we had in Argentina, and worse cost directions due to this. The market hasn't recovered the same as it did in other times. And we understand that due to the nature of our operation, while we didn't have an important recovery, From the economy and construction sector in Argentina, it ends up that our result is much closer to what is the result generated in the operation in Peru, which oscillates between mid-teens, low-teens, structurally, it is the level of result that we have noticed there.

1:07:19 So I think it's something close to 15%, in a recurring way, It makes sense to think of it as something to model in the long term our operation in South America.

1:07:33 Thank you, Japur. Thank you, Werneck, Mari. Thank you, Rafa.

1:07:39 Mari, go ahead.

1:07:40 Thank you, Rafa. Guys, as time goes by, our Q&A session is closed. Thank you very much, a big hug and take care.