Gerdau (GGB)

Harley Scardoelli EVP, CFO & IR Officer
Gustavo Werneck CEO & Director
Leonardo Correa BTG Pactual
Caio Ribeiro Crédit Suisse
Thiago Lofiego Bradesco BBI
Rodolfo De Angele JPMorgan Chase & Co.
Rafael Barcellos Santander Investment Securities
Carlos De Alba Morgan Stanley
Timna Tanners Bank of America Merrill Lynch
Andreas Bokkenheuser UBS Investment Bank
Call transcript
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Good afternoon, and welcome to Gerdau's conference call to discuss the results related to the fourth quarter of 2020. [Operator Instructions]. We would like to emphasize that any forward-looking statements that might be made during this conference call related to Gerdau's business outlook, projections and financial and operating goals are mere assumptions based on the management's expectations related to the future of the company. Even though Gerdau believes that its comments are based on reasonable assumptions, there is no guarantee that future events will not affect this evaluation.

Here today are Mr. and Harley President President Executive Director, CFO. and Werneck, CEO; Scardoelli, and Vice Gustavo

like the to Mr. would I Now turn Gustavo floor Werneck. to over

You proceed, sir. may

Gustavo Werneck

side on Good hope discuss going in the by speaking care And managed able of of the health, all to and and result, you sanitary behalf very afternoon, routine and of through Gerdau's employees, all be to results would the XXXX. authorities. a well, discipline quarter way. local one good we've the I were to following adequate to stringent of our spirit the for and XX,XXX every On you're in in health best healthy, of start call safe, conference fourth everyone. I by with our that the to our we as welcoming protocols also possible maintain like an well-being. in operations our a complying

like next about further. operate would that the share talk to information in is Scardoelli. about to the some clarify our up or issues the results see any us to we months. presentation. the ask our about then in markets the our to and will talk performance issue questions performance Here pleasure talking will After the operations. with end, that and the by may radar that, and available our about of questions CFO, quarter begin where to a what Scardoelli both us I on And And you of and of it explore always will Harley during today you you is we be us, highlights come for the also comment in overall at we coming

the Scardoelli. So floor with further I'll to give ado, no

Harley Scardoelli

and Thank that with to call. are do well for a and be hope I good you you earnings you to Gustavo, another afternoon healthy. It's pleasure all. yet release you,

and available Slide we X, the this the capital working on financial presentation the begin flow the results, on and slide. with on start cash will will We presentation free

see can of by XX% XQ of BRLX.X left, on is the in to factors, a QX positive the quarter-on-quarter. flow we in As chart few 'XX. combination increase in free in This was relation cash XXXX the improvement positive billion our EBITDA like

commitment Working aspect second year. a days. driven went towards attributed position. lower XX December of days conversion And cash than XX XX capital refers be The the cycle to of optimization commitment point the The XXXX third will our working maintaining of in by capital, less all liquidity agility September a was to cash and of conversion days efforts, cycle our consecutive BRLX.X in from such same cash challenging payment translated dealing the to improvements terms for with suppliers. the Year-to-date, the second accounts with cycle, particularly the in billion XXXX. as into when to Gerdau's and year, coupled line, year of which positive recovery from was could once be favorable a which the payment with again, management, by activities a receivable free flow release reinstates more

to inventories of the in December September increase an levels between due was there hand, other to cope in the demand high production markets. On and our strong with

Slide Now moving X. to

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which where QX in highlight move let's billion BRLX.X to impacting of main Slide billion the will Now EBITDA, QX from consolidated to X, in the BRLX.X factors went 'XX. I

start, is operations, in stems the improvements say XXXX, strong in to fourth The of This quarter. and of the more in have from Gerdau this best quarter the All to in from result replenishment in third quarter of XXXX. that history with posted a South all America. our of demand EBITDA sequential of fourth the in so almost margin before operations performance we domestic quarter But the our Brazil and inventories. a fourth market of remained Brazilian with strong the I solid

of The end capturing sales the dedicated while quarter due with were the the a in though focusing a of by market. similar compared path margin can of opportunities, continued significant was second to favorable and Besides was positively when already to the construction North quarter the XX.X% we Brazil the the robust so sales performance civil part have supplied. Even America was operation maintaining Brazil, The In also XX approximately higher consolidated in market, fully the steel this a impacted to reaching EBITDA the quarter. performance previous quarter, special earmarked of America domestic 'XX. margin the we construction in of of fourth extremely reached in that whereas demand. Brazil, It performance in BDs the the the the effects mentioning and record of it April attributed the XX.X% is in BD. SG&A environment, coming on of billion quarter level fourth pandemic, played worth the same role. operation and quarter. by a had rebound civil vis-à-vis since great from expenses EBITDA time, December, favorable a third the We amount industry that compared what see to in a civil the to to was financial remains the posted the was of when last crucial posted demand beginning points, of to the local and XXXX, Brazilian I landscape already would posted reduced of domestic licenses, is more our of demand that to South our posted strong improvement impacted XX% confidence construction follow-on to market in the the at the mostly at stress our We a the the all like construction operating number discipline of XX industry. revenue points. BRLX.X Brazil

and construction, scenario anticipate In that, to addition GDP same the retail civil a growth. outlook we This should year. positive next remain for

Now shut results, South quarter the had market with Last demonstrating Steel of best the figures Well, by efforts margin year another in XXXX, some is pandemic. operating operation, continued America, demand the allowed nonresidential the that particularly the in resilience Furthermore, operations resumption America, optimize EBITDA to of in mainly with Peru in civil QX costs margin higher had which shipments, to year-end a not to in second our least, operation due is compared fourth strong since and American results, XXXX in EBITDA the North absolute We of when In of and EBITDA affected the quarter in increased above certainly our good North due the construction, impact seasonalities. after constantly Special this quarter in 'XX quarter our this excellent COVID-XX of fourth of operation. posted XX%. Argentina. us the to the construction but down we to industry. been the maintain

a the earlier, said produce I more of pandemic OEMs period impacted the months. because As very heavily X operations for several X by one little to this of was

signs It started the as from in of production quarter, also XX% recovery performance utilization quarter of Brazil is inventories to and XXXX. the in of rebound fourth automotive operation the the U.S. However, prices that see oil Brazilian from increase both according coming there vehicle market, and a to rate industry were in oil quickly the also replenished the capacity in to was Brazil. where in from and ANFAVEA. the XX% gas we led came of impact sector, rebound important this a reduction mention the In Argentina. data This and the QX exports the of QX, automobile 'XX in from of went from third good to to U.S. to

I now contributing, should to back XXXX, And the thank this to However, who the turn improve would comment for to floor I continue on automotive results outlook. the like therefore, rebound will Gustavo, of in throughout your you the industry market BD. attention.

Gustavo Werneck

Please Thank operated now you, last how throughout slide. Scardoelli. let's in our and XXXX fourth we will of next the Gerdau move also And quarter year. about to talk

and that the As from more different already the and simpler which came day-to-day the attributed difficulty prepared fourth that challenging of year, of part other safety teams. resilient markets but much to performance we comments we our last the And became of transformation the Not us ourselves heard that customers. the Gerdau's promoted may find We markets And centered the only future. better people. the health, of where that the business our with models, in to ready now XXXX. the during operate. the many to allowed during due in results we on quarter, QX, agile, allowed we had more in entire digital we our serve to is opportunities also that from capture Scardoelli's company, demands well-being us fully to year be not more to up a moments only in but on of and significant improvement And prioritized recovery occur where the deal operate, a we on benefited we

coming the to start and and an the give comparison. details talk up December in about shipments I And some outlook with where the Gerdau XX% the about markets on operates, longs will next you were of moving will annual slide. months. the I Brazil, I'll Brazil. domestic between October In market flats Now for more and

retail. from Anamaco. by As of a a the distribution replenish the few excellent industry XX.X% it path growing ago, started only recovery experienced inventory the of that on grew Not construction, according and in movement and performance moment the construction a network civil the of XXXX including benefited consolidation but also quarters retail to remain good that civil result in the

XX% from of XXth posted growing almost materials of retail and services our better also XXXX. joint increasing channels, month, underscore largest BRLX.X following ecosystem on Mais, that a network with of to number sales billion purchases partnership. The of to own our via Moreover, predicts the start-up driven shipments the the remains X% remodeling in Somos growth Anamaco purchasing In January retail to since trajectory represents the to XXXX, store XXXX, its has acquisition virtual Juntos sales includes Brazil, digital Comercial, XXX,XXX by digital expand a construction Mais, celebrated X%, in our segment. which XXXX, the use interactions, earlier year-end builders, Mais of total Construction chat XXXX place that this billion, our quarter the anniversary sold stores own should would I year-on-year. self experience. plan the Gerdau them material a continues and And in today marketplace of the to been construction between to For record in Juntos including Somos company. chat distribution like industry Retail of that construction digitalize grow we with steel Reforma, customers products for the Somos Juntos our posted by over Conecta of also fourth to focused channels. BRLX company, for Gerdau of accounting of in In the XXX% its construction company its that in through addition base and bot bot, XX% our provide website the a performed

costs an there worldwide construction digital ensuring reality the due maintain in I've In domestic due So activities, saying a for can activities. highway that was our to the has quarter, to international line, market. months, in to performance implements profitability and sold been is agribusiness supply a yellow now, towards been It's already sector, machinery of the geared effort in to highlight and Furthermore, important to through important also and steel civil mining the particularly also while posted to margins fourth increased you platforms, industry the heavy-duty the Gerdau. be this in few as last market. experts, at good commodities focus vehicles, the and full equipment

Our was part of year with exports compared exports, were XXXX, for the originating a XX% in as XX% to reduction almost in in this by vis-à-vis the XX% compared previous when our In when back Brazil, accounting there XX% of down previous XXXX. to quarter sales strategy. shipments

So Brazilian focus. at the moment, the absolute domestic market is our

the For we we remain expect in regards we Brazilian economy as to the for ahead, recovery the to all of further sectors the operate. cycle rebound market, growth months see the where and the very optimistic of

is historically the Industry Vargas Cement index by construction XX In tons surpass reached consumer this like the National the and Fundação positive that addition to XXXX, retail, And like at maintain confidence by maintenance also shown said of as sector of should earlier, consumption from end the justified Union performance, civil I the also indicators its some XXXX factors from and return million said the of important interest it of in rates. points. confidence, projections construction XX Getulio is cement the that should consumption low

And with VLT also in according I increase investments industry is whereas impacting the Special currently of automotive along for OEMs energy our agriculture in remains attributed good from more And this a Further talk estimates to maintain and BRLXXX few in investments XXXX, Paulo. will industry Consortium movement investment the flexibility at in Infrastructure went Brazilian this and respond billion the de levels, and of new the in in the This starting Well, We with quarter with and Association Steel when domestic Rio refer vehicles, allowed infrastructure, forecasts market initial the back X in wind to been positively efforts Monroe highway terminals the mid I a portfolio like quarter industry of experienced is sector The since a robust And The a year, where a unit as regarding very to adequate to our States. should the supplied can the segment The digital see and the and vehicle and according had levels sanitation. updated portfolio we this in for and talk of for Still São XXXX. market early operations. Salvador, in And ANFAVEA. to highest the recorded country. history inventory periods. oil production positively demands slower about I private and us initiatives lowest infrastructure markets. efficiency repressed in the consumption sectors, growth XXXX. CapEx. at sales in logistics Industries. of towards industry the to recovery. in fourth Bahia opportunities that the to to operating United higher to Basic automotive more recent details on, continuation customer of we of investments Tamoios the in of the Michigan year XXXX, and the in promising anticipate fourth allowed improve from just amount December. in Furthermore, Special in levels production performance Brazil, in us points mention our a which in machinery the figure market infrastructure, about to a months Janeiro the of public of XX% Steels consumer sales the talking cover performance you million particular, will adjustment Brazil technological our in to levels our In the resilient now enough association XXXX. orders the of continues infrastructure at replenishment, the to reflected followed and last demand American the level the than rebound inventory only continuous North the in in year. about units the increased units Also, with X.X heavy to has days its in also to the strong XX pre-pandemic local And of its automotive service and order in gas the present our this that

Now I our and at we talking with part American orders industry. In BD about quarter, would the remained longs. like levels now to fourth refer the to higher the North construction on increasing -- of

For architectural anticipates billings performance in ended the in instance, XX the XXXX non-residential that up performance in the months, industry with the best of years. to XX U.S. construction

costs on the was I to to market. market. operation a transformation offer increase of October agile like provide prices portfolio local On December, efforts scrap to in in order would spread the the our between and make improve it and to better stable the relatively reduce the well order other in hand, efficiency as Also, metallic that despite the focused our to mention more is our through response as customers and going in needs a American to internal North

the the to of the we Now to in that strengthen order line example will require improve the the implement give for decision by and programs of domestic U.S., programs. program Biden rebound the in preference agencies to should to The American that steel. President was government content. economy looking other executive signed and stimuli good new of consumption locally strengthen Buy believe federal economic with favor order executive local produced A procurement forward, the administration of

generation Besides should the to the the that the Biden maintain put of should the infrastructure motion and accelerating imposed investments continuity positive contribute Another in the levels indicated above that country. be also measures American Administration very should the previous trade by package for responsible margins that, mills in example and is soon North to utilization XX%. capacity of broad job for be in administration the

civil the white a the demand of and about boosted by result mainly livestock continuity sectors, level automotive line South and combined with the consumption the as steels Peru, in of agriculture last the sales of strong a I'll America, in direction. The of Volumes highlight infrastructure the construction good positive moved is industry, investments led years, from growth best rebound, indicate consecutive of in speaking Argentina mainly from the for highest Construction. levels of in Now the industry industry the recovery, steel long positive that grew experiencing country another Argentina country driven XXXX from market over record the the post in grew domestic X% construction, X% figures activity public of of and delivered year-on-year. by in attributed also of advancing with civil since in fourth in private projects. last construction sector. activities the Peruvian in Uruguay, the construction Institute the Chamber this November, according which the resumption for rate the December us being to fourth quarter XX% to in The shipment in November, And July in XXXX, of the to before data the period increase XX Statistics

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are Now estimated investments for XXXX, in BRLX.X billion. our

from by our brought performance, new XXXX due to and for Scardoelli. cash And You billion reduced flow the volatility now billion CapEx our markets. generation very early related and to BRLX.X year, global we had might for recall directly about BRLX.X we investment as that uncertainties capacity last make previously to the the pandemic that our year is adjustment mentioned a favorable free as a by

state of next schedule. in the and as in focused needs the of in $XXX investments shown investment on Monroe, X, and cycle the of future conclusion on would is in steel X X steel like Pindamonhangaba, Slide Pindamonhangaba the continuous the customers. progress, in the U.S., serving to our as on main such unit in new special elaborate the investment São Michigan slides, million in casting both I on casting mill Brazil the continuous Paulo special our of the in of the on Now The

units will a with hybrid electric a of comprise according start-up for equipment with vehicle electric demanding on second expected updating X, quality XXXX. better a the future market And cycle aligned is we'll shown and of to we Brazil. plants several cleaner the of X% X% will and $XX offer Monroe equipment resulting investment the prospects of In as This our materials. units the of million. with Slide HIS. the process new better conclude estimated by mill more the half vehicles The on is market in the and that technological show to delivering middle the automated current the the in With hybrid more yields XXXX, as to of light -- in final to of CapEx XXXX, resistant included refurbishing allocation electric predicted The product like furnace.

Well, We And size changes liters had vehicles a X to towards liters. we weight Southeast I the and of it conclusion years. in for the all In have the larger applications average. to smaller-sized country, the we These and gaining market. our our of Northeast in higher on already to a United the in by value and Silat clean for together our demand country. customers American some a supply the added liters. of should the X to Brazilian direct will of capabilities in supply special the that, X.X supplies transmissions strengthen offer is This vehicles instance, impact of between are let's steel engines on of position this steels of part down new have move investments helps in underscore average vehicles. other in December with Also, With XXXX, X.X steels. reach state XX increasingly unit long-term as and market will cases, and capabilities us steels some operation today, would of like movement acquisition XXXX, by are and The products the go States, hybrid to our to improve Dow's the be Ceará. in these the for chain range acquisitions. to Slide engines, whole, value further components speeds able the new now now with smaller hybrid is to electric for fully The is and volumes your and increase means customers of reduction in In North our regions. for The still #XX, in our parts to where to several over strategy progress. But addition

renewable this Furthermore, on our the arm. of logistics and CDP, new capture clean XXXX. A We along in want to and the of with to the the to commitment Furthermore, results the regional we productivity economy. January, company's energy adopting year a very had companies to initiatives In BX forward to to the XXX the enhance And was industry safety. only by which to sectors. actions at dedication And to products COVID-XX, to climate new one us opportunities I construction. our anniversary and higher a Alegre, into in to in acquisition stake annual rating enhance portfolio steel a sector develop strategy of businesses and our technologies. of XX. in our management. January their advance allowing our all on allowed next care the announced issues diversified the we and of the relevant in part the Brasil for move be of methods health South in through ICOX to construtech B- transaction again, engaging IBrX reaffirms addition, with of Gerdau segment committed of our This relevance responsible with of us to X transparency us support. that treatment to thank time, is another represents efforts XXXth is the relationship in The the our would and energy Carbon And our GHG in matrix. partnerships would our your and possible businesses, São gap than offside future GXL, last Cubo, line continues we was new and like quarter, from producer that same attention history, customers. contribute to rating milestone in and Logistics an foster to addition climate construction to in in Index, Also, to recently from ao applied became Project, want the we develop average the strengthen Gerdau applied next had the the reach of by metal solid reached our America at construction the to unusual for important early module. modular like hospitals of Paulo closing to one innovation gathers it in survey and thesis the Port low-carbon the change Carbon which for to celebration Disclosure challenging employees Efficient rating metallurgical efficiency conclude, a because we But mention for I our Once and

generate myself cycle conclude possible of the and I presentation my your that, for As increasingly we more value accelerate issues. available we take and legacy people-centric of and to our thus, and customers. and at part the benefits the by while old becoming in we greater same our dimensions, a to be Scardoelli sustainable generations, past company built clarify And prepare initiatives growth. and even celebrate our century entire all ourselves now new continue With time, to will an to trajectory questions


Instructions]. [Operator

question Pactual. from is Leonardo Correa from first The BTG

Leonardo Correa

all refers And this and we excellent the landscape in first for question Brazil. at XX% results. look in really the we figures that market second to portfolio increase an Congratulations saw year-on-year. of ago of boosting orders surpassed see January When the years demand? over for do of is for see and the But who this there quarter? you of demand, increase over going an these was We a My estimates. few how the XX%

Well, are could bit year, allocation, very you caused able the increased So lower capital lower Brazil, second your is will short-term But the level you we very CapEx end elaborate in terms even delays some by this low, question my a due the further. maybe than more pandemic. helpful. debt, were And to of if levels expected. in obviously, be of would And about debt to decline very, by on debt. landscape the inventory the

my know are happen what don't milestones? are in terms to sector to But dividends. about reach question after and yet the announce a in to is policy this next What is dividend payout? the steps that investors. better relevant you order Dividends. What we XXXX. will And to of the So need

Gustavo Werneck

our year, and a a Leo, is scenario. to you then give of suggestion Well, the first pleasure I I'll And it's Scardoelli, answer about of part growth Well, to to floor our longs first shipments short-term today. the question, your growth of we started But talk congratulate our teams driver strong approximately our that all, about longs my we would above Therefore, talk shipments general. March above of flats, last put flats, some flat deliveries of was mills briefly and dividends of and to in Well, anticipate about And deliveries, in rebound. And by were will capital. telling in who quick and and or the were April XXXX the market Leo, I very terms to In in XXXX. I that would could start I operation. talking now, we you longs very in experienced for beat. of because market and anticipate X% on and like back we to year numbers. general, which in both a growth our But the XXXX, deliveries XX% were numbers.

all of positive So February, the geographies, a and Therefore, in the markets very in at segments strong we looking end resilient. remained anticipate scenario. January very the all and

Brazil, about particularly coming us to us important to some and make some industry, in are the see We construction more great indicators civil forward speaking follow prediction. we allow from particular. that resilience Now

strong. our industry from coming are the orders very So construction

segment. me Let have the cut the mention This an February experienced just you XX% a growth in the follow. indicator and number 'XX, projects that area, is band at When 'XX cut robust and very of year-on-year we we February comparing -- in and band X,XXX number. with projects, active construction we look

to at like sector Mais our sector of in construction note. of Therefore, us, We licenses certainly In is civil the and in are will already are macroeconomic now. in very I The industry. Retail projects manufacturers terms São the relevant where is We industry rate the the in new areas strong industry, will some very a very to it's lot now construction of the some operating the XXXX. mean, cities steel. an equipment exchange strongly terms is also right and and portfolio we closed deliveries And I'm deliveries and referring launched that look in strong was all, in very of drivers performing recoveries very level another highly segment. Therefore, we demanded. strong mean, view been XXXX. all important very Juntos be conditions Somos to full started all being strong. year new and to the demands strong. regards be number in We infrastructure infrastructure of especially that deals. then And like Paulo. is orders, new of stores important since at this and machinery is force, it on see very yellow saw XXXX. in the the project, a exports this conditions line our I and in a Therefore, intensified XXXX,

the entire steels, inventory change, flat inventories take second completely. is half the will And XX% the about floor because We In are replenishment and recover demand view, hasn't before strong looking our fully been it back longs year. to so I recovered, the will of XX%. a inventories totally be only forward. I maybe of that And of the inventories is that time to optimistic very think turn some see level to throughout possible Scardoelli, in

will questions. we able about I'm answer it So as talk sure be to other more we

and to Scardoelli payout. to floor the talk give I'll about Now capital dividend

Harley Scardoelli

you. pleasure is and talk Scardoelli. to of all talk to It's Leo, here you to a to

In And at very policy even plan. of it We maintaining leverage, on few see CapEx would flow do levels also see the positive focus indicates and of review results. we as a first put be all, will a good important -- when question, should maintain this will we terms growth. have our now of CapEx is capital towards with good I keeping a better to and I cash And yourself, of our leverage very able with especially you say. right a do remain allocation, I today, Well, well And always mean, we in the to a our be But behaved, trend that, mention. that then, flow. our we points that is announced flow. of interesting positive cash avenue

announcements other predicting one-off we investments strategic are operations our and that in and made. We

in our we and new And avenues our new usually Gustavo into it that bring Silat, equity, adequate returns. on As business -- mean said, look own return acquired we we growth. through investments means our we I more, say found our meetings, if unit, of that and operations

company was end in This was a the would remind to talking per share. dividends look good In to look in are of we increasing. you in the at grant all BRLX.XX that the If is we terms this calendar XXXX, we good total of the when and it itself at XX%. approved around will shareholders. return of have at share, shareholders, was it return today, if in total I XX%. XXXX. return naturally that out all, per look to very to to We shareholders. And XXXX, So se, year regards I or will believe, per But of therefore, that by like dividends year, Gerdau returns to paid comes deleveraging to a something be The business mean last BRLX.XX December. shareholders. return we to

terms more Now pay Dividends we're long we of maybe will to very is moment getting we naturally this pay increasing. close And interest. what a why than Well, demand would in a where are dividends is that? XX%. question believe that dividend are But our a to paying adequate more And return. the we this But policy remains at dividends out approaching adequate we that, our moment. I think at shareholders capital with allocation. naturally in


comes question from Caio Credit Ribeiro next Our from Suisse.

Caio Ribeiro

prices, quarter. price first you today increases My the much planned quarters to same quarter. looking able about premium forward? And of revenue you of in scrap anticipate you the And about that you And that that the believe think you that about and is close price Could XX% this or room Brazil, road? do particular, new ton? per you EBITDA which And in also, could in is this be secondly, probably in quarter? whether increase first talk transfer how keep parity expect about today my in considering down talk for first the the that XX% see margin to that margin you further the the the will will in is you question sustainability question increase in if you

Gustavo Werneck

answer Caio, feel will me interrupt question, free but please Scardoelli, your at Well, moment. any I to

me together. put Let to try your questions all

that margin headline speed single As premium. say, pricing. demand be maybe in presentation, that newspaper put a strong been in careful to evolution margin payout would about up I we a February, be a careful because January saw to pricing XX% reached our in in this in products. me face as to EBITDA we market. And But -- our before, summary to the adequate I an reached will of don't would sees demand quarter the was to international let and in at And pressure it last together would regards maintain we if in regard. new you XX%, Gerdau wanted have years, said XXXX. in above to I that you premiums or and a bit moment Caio, of important to put all balanced all. talk bit imported the was could an But investors. of XXXX, challenges. I the a pursuing the I'm past because to Maybe Last that XX time the fourth positive pricing give and it I XX%. prices of rebar EBITDA was our Meaning in February, saw Gerdau say, the And in of from want no X% with entry

years in XXXX. to would that see had So to will decent like We very in businesses lower BRLX some I margins. SG&A. X addition a other say, remind billion now. post, reached We markets to delivered some promoted that and to deep Gerdau to let at all that now what the still prepare refer And take would when our results cultural in deliver this much By and XX to me in margins demanding in have pricing let's you more past market. of we And We company year margins. certainly, I end certainly, to digital we we last factors to the room more But alone. was transformation. markets, difficult lapped like better that ago. as to better results you we some in hard We prepare account of these we in market. compared increase to eliminated worked compete into early years

production you reminder, XXXX. consider As a in Brazil our in this number to have of continue for domestic at seek to margin to this XXXX. terms here XX% level Back and export XXXX, the fixed are if XX% low to costs Also, We when that of margins and to performance improvements. that in exports. the quarter, was exported, compared of was job look will you evolution, around you margins down relentless know have in and worse dilution export be consider to

attribute So that, you our the single performance. to Last that moves make regards called that in to I of put of the entire results improvement. team lot behind a action to year, like a efforts all leverage price. to further evolution wouldn't

that work results All the better employees thousands for of seeking work relentless from stem our from the everyday of towards results.

costs, was costs. for we still, doing. other feel your free Caio, costs. to any comments. now these costs. any indeed all what anticipate that Iron of not And speak next scrap, say. have But terms stability additional a of I please these we you coming clarified give can very overview, we fact, have to I if that's prices months, you went can in And up. in Scardoelli the he mitigate what general, these in in And are have comments, To general does questions. I had some this saying is up. hope Scardoelli, is there terms But strong a we coal prices, despite In ore, and increase

So that's it.


Our next question comes from Thiago Lofiego BBI. Bradesco from

Thiago Lofiego

how could quarter, congratulations the winter second particularly utilization any question evolution is today? are how the for the have mention about results. year? My and the first plate, these demand Harley, I the and two One, spread or outstanding whether experiencing questions. do throughout in season? if impact you in metallic and level a see Werneck you more of you do rigorous evolving And see had heavy in U.S. this to more U.S. spreads you due the

Gustavo Werneck

as that Well, I anything add say success. can in well, that of answer our would investments I Scardoelli. heavy plates think I please, Thiago, But feel to is again, else. free story a

modern the Our ones is in most of the world. one rolling mill

the Our outstanding and XX%. utilization of and this levels, is is for our continues recovering, rolling is quality And happy. above market the market a But shipments The mill evolve. was around in the market to exceptional to terms very today the of product. reason are us be

you in look Texas in a to rate So the in January was a we more will very these XXXX, marginal things I last seem it our and be our also to of from spread evolution continue a terms Tennessee ride also is maybe at referring in this Virginia season the The quarter, February. states months not that major the U.S. then supply we an of X story of the the did look in same last was in the success. at have with not U.S. metal unfold had as and as And impact consumer was increase, impact the stable. -- chain believe And impact, I'm entire in the to operations, variations. Texas. winter the there next well, because year, operation marginal was the Mexico year but severe comes affected. entire will an months this first in any of utilization that and impact when the only operation, but gas market The If

the be our of force. operating in full operations. at -- X about we for But all to volumes So are had March. recovered these Right stop now, easily days, can full operations are

in of terms we are any experiencing shortage So supply. effect not gas

recover days So will from shutdown. of soon we these

Thiago Lofiego

of point, this U.S. is regarding impact issues? you think any margins significant. you see these because this do that And not Or last the in

Gustavo Werneck

Well, stopped The it is was small. not a few We very for only significant Thiago. volume days.

entire I quarter, increasing mitigated. you are think when seeing that we at So to activities that after the our effect recover this the daily And look our be be will we able already volumes, shipments. the will of resumption


De Rodolfo is from question next from Angele JPMorgan. Our

Rodolfo De Angele

intention you adjust But a phase about new in past? about course, to related is had increase? increased perspective of the would in -- volume there parity, new question know know budgets And increase, the different are first and is or mean with mean, your or capital volumes Just a have I question see of something -- any CapEx. reality. whatever than my whether to what whether to I fit clarify My growth -- I engaging second something whether any like imports, had to recent you that prices you to your to things close bit. of I you is

Gustavo Werneck

our more areas we capital CapEx, more at robust Brazilian are way moment, lowering maybe also will of we duly and very to see Rodolfo, different the few margins and and Scardoelli the you. do debated, governance in indicators. months allocation. qualitative production not and terms markets capital not Therefore, expanding allow you also in focused the because words say to efficiency, marginally I allocation anything at international very is see steel I capital our the looking years next not are volatile -- in costs it's imports But any signs where see next we Brazil, in a on few pleasure few improving radar. the allocation, to is now look a when the to Well, believe higher. a Therefore, that we a will towards do have any discuss talk signs about in

ground. Board. they will Sustainability in the place the our Committee rigor feet we very a at the are have advises Therefore, And We for with the that when I rigorous. look remain on and Strategy decisions, we of mean,

we EBITDA. said decisions want say allocation. that our be we'll in very to All rigorous presentation, not As do of Scardoelli exceed his during to CapEx X.Xx

in more terms competitiveness. efficiencies the seek in for geographies, Brazil, further bulk our mills, modernize the will be and in mini In to of we of mills the local few investments to want years our next the

Our our mills Ouro Branco also U.S. Mills and in mining the and

main Rodolfo, U.S. by were identified will in and invest And vis-à-vis able You that gap our to be $XX talked ton, costs X $XX operating for field. relation to to level in our and years good might a per competitors. through cost in our mills when we $XX recall, recover of to able continue about eliminate that ago, we efficiency, compared about to our the U.S. and CapEx. we those this gap playing the we to competitors therefore, will efficiency the We of remaining

So Scardoelli, regards just to add anything in else please feel free to capital allocation.

Harley Scardoelli

billion. we what it's just billion which billion BRLX.X came just plan are was comment. but yourself. we about that in the And we It that fact that Meaning maintained very would BRLX.X brief not you went I CapEx there reviewed material think it during CapEx spent. that, to CapEx. clear reviewed the just and call postponed BRLX.X XXXX. had that asked, things for XXXX mind, Rodolfo, and to BRLX.X from it was downwards know at this to what have is I now a as is exactly that and do. make I very the our comment a to We billion, general put like more the CapEx you And planned I we

that had that XXXX, -- That Cup. billion Soccer occurring right That followed to business in World look If movement. on we Brazil. it's the a periods XXXX. year. invest. the just our But point was There usual. invested I middle when CapEx the moment far, at previous was XXXX many of moment investments the make at in right BRLX.X a the were to to X-year average, period from period, And the years, that Gerdau, to we XXXX so from we if is So, we as X-year past X look at want

XXXX steel in after went our look there a in But billion. we the at but lower BRLX.X to had billion went generalized was then CapEx from to level billion. period back of that, BRLX.X we Brazil, XXXX, now to if crisis we not to from so the XXXX the worldwide. And XXXX, year you So BRLX.X a only to X-year to market,

of all what having I So future the decisions, a CapEx? addition point what our return point my in Gerdau, by the a rigorous capital. the we Because in that your be, focus question on about is will very points is equity on here? Gustavo know terms to regarding CapEx mentioned or your discipline that return But of

to We CapEx have to adjust current flexibility market conditions. enough

Therefore, also CapEx. that for us we adjust If flexible outlook. it you long-term Now connected and to change, is Therefore, the same to At are sense investing market if we to invest more to market an make good EBITDA. EBITDA have is time, bullish, CapEx not because a give doesn't for position. more is growing. projection ensure future growth are we our conditions the to

returns, of capital year. right our started deliver to compensate another numbers shareholders. the to generate last higher CapEx are to our consistent So terms returns for point what cost Gerdau giving possibly, we investment and returns is we capital the value deliver now, of not cost in and of increased are did able XXXX, that to we to you did when that And we for spend

terms though XX%, because we payout we in shareholders, to And we due total paying rate. less is them lower tends to So of interest dividend are stronger are even generate the believe it to that compensating adequately. return leverage dividends

believe we That's to that to long wanted point that of in a shareholders. good I all, that a terms return all but answer, was we So have provisions in make.


comes Barcellos next Rafael question from Our Santander. from

Rafael Barcellos

Congratulations your for results.

quarter your this just have follow-up your a of of the your terms which been How XXXX. my very you I is I in the my of market about in do have It's looking growth in view civil think important their see performance big And retail and question. most forward? construction, questions now question and was in strategy. first picture representation portfolio of the second answered.

share you market could Now the and that your ahead? Brazilian market view talk looking about if you've about moved along, competition,

Gustavo Werneck

you, pleasure talk Thank you. It's strong. very remains a to Retail Rafael. to

been growing. year a it look you Maybe every has decline. single other if looked retail than there back of you single which one month. But outlier, was in was was If December XXXX at there and when month, last that, grew slight every

So retail very year. started with strong a

occurred and representative and retail deliveries. our shipments through is distribution. to XX% of very our distribution So retail

on very to short-term started with segment year a the that's Brazilian incentives the in strong beat representative us. outlook So And the a new for economy.

So if segment more. that even will occurs, this grow

about capacity been is. that that for being I have well running robust serve that moment. prepared that able capacity whatever not We we are very capacity we Brazilian We But a more considering market, the to have growth even the still to are installed the nonoperational at idle to have fully we equipment because see not say to a while. it's our Therefore, amazing scenario. concerned certainly are serve enough run demand, the not market to serve

pleased very acquisition. with of terms we In Silat, this are

integration in the still are We phase.

year, an tons Our XXX,XXX operation a XXX,XXX by plan that of of is capacity to this from year the tons. increase average XX% to going

XX% So the year. customers Northeast, in only And grow general. this improve will production will but all customer Brazil service, we certainly, we not by over in

So right this way. will occurred right the this forward. at time was is make an And the looking that happy investment and certainly done us


Morgan comes Our De Carlos Alba from Stanley. in English next question from

Carlos De Alba

and the beyond comment if the coming understand And Silat, as then last the with these in the from then at may, also terms any contribution we what terms, from the cannot price you're tell better if what opportunities in can months? Gerdau us your your Great. I having this ton. this long coming better finally, per of CapEx steel planning operations upside flat that -- could and acquisition? X-year And give in your the in terms How the So do XXXX? level EBITDA your just in is between gap, side, -- should Brazil can CapEx if and you per of purchase. is assume for overall you in What cycle you do for before. better ton can you're you acquisition that the what prospects, My EBITDA absolute beyond, steel least of between terms -- market EBITDA reference see a EBITDA situation, the highlight the Perhaps you that XXXX -- us continuing if on numbers Brazilian of we expect you big can in announced or on comment question, particular better any, investment you difference doing? you you so year this current of that that expect on to on you better

Gustavo Werneck

question start questions, you, with free else. how add Thank your performing, Scardoelli, will Silat, please started Well, X I has numbers Well, something by to a and results. it's I mean, Carlos. but answering feel on Carlos --

As I beginning, was charge at operation took we saying, things still very of December. the are the fully in

I major compared we certainly are number. side-by-side in same quite and we year. months, segments, run. These the more in my we Brazil. sectors details in both where even compare in be very like last that's Therefore, to our before, of -- we because to currently our was market in tons our plants is view, the terms, in products wrote We of good the question market. in following additional you terms we quickly, we past general years, performance that, just and we last this mean, we short result, will differences And quickly flats and CapEx. with that in and of operate in coils. other balance other this give plates. started in want relevant -- Gerdau to in about year. before will terms success we But our believe to about said projections through able the strike was supply with May, things we area chain plant plate, months. can two its to longs EBITDA are where between more the Carlos to I of and increased about we celebrated differences and additional Comercial with are other in of between together we last Gerdau's you I opportunities In figures the and regards in in Maybe also to moving terms terms earnings but that what in other segment longs. year. that, years see because hot started and do. stories X our both will inventory in January capacity that, used X the X can history, XXX,XXX logistics shipments see in in grow own year both that generate lower write generate level the place our this But Brazil, plants, were performance, flat mean, when these performing We flats able grew our more as due month to market the see in an be flat And our because that's the that, our X that current our when with we demand This The balanced. to very only it share flats, levels. we distribute longs segments, I give Carlos, flats anticipate mills In full were well. than operation XXth Brazil. protagonists production, producing anniversary. X-year talked will sectors In of longs plant next where that's both equipment in is is not a is Silat we value areas the cases, when year. in So in can next Silat Brazil. We improve with participation for first that's Brazil. -- It a able to upside a And of some

COVID, over think to we've what all the XXXX. scenario we done at wave global we allocation is I world, our will similar the talk from we in capital including the of probably discipline the looking before. said unfold But So decided our further, and look and second volatile forward, how about when to this impacts CapEx very

his restricted maintain to policy. turn to And provision a I'll additional comments. Scardoelli Our for very now own financial

Harley Scardoelli

Thank Yes. is you, point about the Gustavo. CapEx. This

equity volatility. important and takeaway demonstrated the the discipline that more return when permits, that being maintaining we aspect in is of the in to conditions, run. message the will think and that adjusted ensuring shareholders always more our adverse of I expenditures. stringent have situation on most scenarios, market to I we is believe our financial knew of the forecast CapEx navigate long with the planning, And that always how resume we In with the execution focusing just CapEx XXXX, that to will market correct investment. we good

Gustavo Werneck

Can question? jump our to next we


Our is from from next question, English, of also Tanners in Timna Bank America.

Timna Tanners

if to I wanted sure make just, I the understand possible, guidance.

some is going high further one everyone's further announcements Or And particular, in forward. So I should that was that, can than then CapEx decisions a expect? I in think southern But we upside? there about asked think there's with timing run forward that there? I Is it's the is other lot going in dividend wondering that rate there's more the at or for we if for and further Steels opportunity a further there volume clear So just an growth stability mean, that I new was that watch? region, question. the these levels. Special

Gustavo Werneck

Thank of Brazil, consistent We the is to inventory more reached. Steels the certainly in recovery you, Special And in Special we a you our that just would you see historically, both well ever only. was in a is year, answer America, in a the of I would this didn't in lowest strong. very that The to incoming Timna, quite Scardoelli, opportunity elaborate have that part as as the low, first relation Brazil, of the to more And Timna. vehicle fourth started level question the like Timna's Steel question? general order XX level quarter in chain last give days is lot. operations North overview.

struggling necessary and an I vehicles, we few And that gas. the see already. probably before, wants segment on we and dividends don't CapEx. our segment and flow very So a in as light operations, experiencing difficulty oil U.S., consistent terms right of mentioned In or gas that months is inventory still in add in for are for Scardoelli and question a increased focus we And a Steel I with short-term of whether orders, saw still oil the in the in mean, see heavy anything promote cannot addition the I Brazil. growth Timna's know recovery recovery. we replenishment, is is see answer to it and a any Brazil, this and U.S. to is else we just Special where we is sales now good most

Harley Scardoelli

Steels, Special to want one just regards add in to thing. Timna, I more

you I us at is fact, think experienced that years may But be asking is whether specific have this think past obviously, certainly, gradual Well, will is recovery. do this and some the any But is with is availability guidance, a see where slow for behind worst the that the very we today. we XXXX we positive we year not not a that behind XXXX. the us. operation this yes, believe, outlook We ago. involves in levels but

view. our is this So

given this the by So overview into fits Gustavo.

in to question of In terms going some and I the refers capital understand of terms dividends, forward. changes announcements and -- Timna's

our in of shareholders our fashion. a moment and question, and is are return results. in Now very improving enhancing results to consolidating we done answer that a to being structured of in The capital

Nothing posting delivering policy policy. are as at changes. results we is different are dividend increasing are reserves, improve. There ROEs, nothing our in dividends We consistent XX%, and


Andreas from English, in question, Bokkenheuser next Our UBS. from

Andreas Bokkenheuser

the on Congratulations strong result.

improved allocation current been sorry, still ABI, cash your had Just in months. on and Index, But in a is second share negative, negative capital America, the missed did. may it on given your has That's to that any long question. I you if thought still mentioned the Billings And given in the December, the demand you view but which North question. Architectural XX construction territory, market have North strength buyback question, it's steel follow-up for of American flow? this, I correct, obviously quick have and the free a contraction first

That's or that the going kind that does that the number? to a based on North on decline ABI is mean question. the And strong you the or seeing So nonresidential pretty the follow-up second construction the in a the is weak U.S., question. of import think quick anticipates market ABI construction American indicator leading of maybe U.S.

mills. You significantly more Brazilian to the hearing months. with been placing obviously steel in come Chinese China steel and We've more expect mentioned you orders of of in buyers out don't that coming imports are

comments? think in flat your much based steel do steel So in you questions. Those long so place my taking that's on not and are

Gustavo Werneck

and is policy buyback. determined than reinstating, is will answer why And through Gerdau part of question. Brazilian I the avenue and our to we again, share this and capital Andreas' about our before whether That's shareholders first for to the was by payout, through once return I And that legislation. asked just believe Next, CapEx, is saying he higher of the as dividend returns and have growth we about is we what have anything say XX% adequate. an

the is at I companies. grow. the to stronger plans operations. great do we not about have right way other not becomes not it now, when want And In our have usually, company believe to we to this why that go. do share plans terms to But speculate buyback, grow large That's does of least

U.S. of to whether know wants say the Scardoelli In terms anything. don't market, I

Harley Scardoelli

the indicators mean the based current Well, the see And I how sustainability -- very the we Yes. mean, U.S. on seen general, levels in positive demand of I in way. of in asked he going we do that? how in forward, a see the market market. some U.S. is us market

with at That's Our why see U.S., in consistent. in demand. we moment, of the vaccination backlog very of any lower signs the particular, are orders don't And is the some sector. sectors recovering, service

inflation U.S. sustain believe they sustain may in the go general. be midrange, this the in term, the also to and demand. demand short that We So will in in will not back able

their the eat imports at favor spending." and see Andreas, not acquisition closely mean, anticipate demand. the market. therefore, any He We Brazil. senators, resume about President was imports the our very to step-up I if that second look related So whether comment the conclude also moves. not drop the answers, not recent to Brazil. lot of any don't as we we of I you a if announcement not we believe I asked And don't group planning and will signs Chinese "China some on they exchange China U.S. we you And infrastructure see the steels. phrase, mean, carefully. an us my delivery asking important he increase I infrastructure for with both some will lunch saying, products. lunch does our know situation was in also infrastructure of flat to in news about Biden monitor also in XXXX, we of increased a -- the rate when do that investments. follow China eat is There longs by our do will believe current will And we volatility in do that When import of used infrastructure


turn now session and Ladies gentlemen, back Q&A remarks. the for I concluded. his Mr. floor to would like to the Werneck Gustavo is final

You sir. may proceed,

Gustavo Werneck

again, once today. for I Thank would like Well, to thank us you. joining you

participate your XXXX best. next first. earnings health the today. to would to our watch always the answered will to our Take Thank first this are Thank As take all not take that to always and to you usual, much. it of invite available very that health May is team, place I on related like opportunity you you. a and comes in quarter and questions talk Rodrigo, IR great release you, pleasure care you were talk and answer And to call to to X. to your all


Gerdau's all participating, have is conference now for call and a you concluded. good Thank very afternoon.

You may disconnect now.