Gerdau S.A.

Adjusted EBITDA consolidated was BRL 3.4 billion, up versus both the prior quarter and the same period last year, and management said this was the best consolidated EBITDA since Q3 2023. Adjusted net income was BRL 1.5 billion, up 45% quarter over quarter. Free cash flow was BRL 237 million, and net debt/EBITDA was 0.69x over the last 12 months. Gerdau S.A. will distribute BRL 0.23 per share in dividends and Metalurgica Gerdau BRL 0.11 per share; the buyback program was 31% complete at quarter end. For the next quarter, management said North America margins should trend upward, but they were conservative because some announced price increases were not yet fully reflected; they also flagged about BRL 150 million of idleness tied to Midlothian downtime. For 2026 CapEx, they referenced guidance of about BRL 4.7 billion and said actual spending was running slightly below that, with a possible reduction toward BRL 4.5 billion over time. They also said Miguel Burnier start-up remains expected in Q3, with full ramp-up benefits and more of the estimated BRL 1 billion to BRL 100 million per year at full ramp-up to come later; management also cited a portfolio of projects that could add about BRL 1.4 billion to BRL 1.5 billion annually when fully operational.

Gustavo Werneck’s message was that the quarter confirmed resilient demand in North America and a gradual, deliberate improvement in Brazil. He was constructive on U.S. end markets, especially data centers, renewable energy, and transmission infrastructure, and said he sees no imminent risk to backlog or shipments. In Brazil, he said the company is preparing for a tougher long-term environment with persistent imports, and that Gerdau is changing its footprint and operating model rather than assuming the market will normalize.

Rafael Japur emphasized that consolidated adjusted EBITDA reached BRL 3.4 billion and adjusted net income was BRL 1.5 billion, while free cash flow was BRL 237 million despite seasonal working-capital use. He stressed balance-sheet discipline at 0.69x net debt/EBITDA, but said this is well below the company’s 1.5x formal leverage limit and that management is more comfortable below 1x. On capital allocation, he said cash generation is being returned through dividends and buybacks, not used to re-lever the company, and he noted that maintenance CapEx may be able to come down from about BRL 3 billion annually, with total CapEx potentially moving closer to BRL 4 billion to BRL 4.5 billion over time. He also quantified temporary Midlothian idleness at about BRL 150 million and said the company expects cash release in Q3 and Q4 as inventories unwind.

Analysts focused on whether U.S. margins could still expand after recent price increases, the impact of Midlothian maintenance on shipments and costs, Mexico/USMCA risk, capital allocation at a low leverage level, and the economics/timing of Miguel Burnier. Management said the latest U.S. price increases were not yet fully captured in guidance, so there is upside risk to margins, and said Midlothian should not reduce shipments because the company has billet inventory and the shutdown is temporary and largely accounting/cost related. On capital allocation, Japur said the 1x leverage level is a comfort zone, not a target, and that excess cash will be used mainly for dividends, buybacks, and competitiveness investments rather than re-levering. On Miguel Burnier, management said the project remains on track for Q3 start-up and year-end to early-2027 ramp-up completion, with full 2027 benefits contingent on executing to the expected cost structure.