Group 1 - The investment thesis of Brazilian steelmaker Gerdau (NYSE: GGB) highlights two significant high-risk factors: the cyclical nature of the steel market and its exposure to the Brazilian market, which constitutes one-third of its EBITDA [1] Group 2 - The analyst focuses on undercovered stocks primarily in Brazil and Latin America, occasionally covering global large caps, indicating a niche investment strategy [2] - The analyst's work is featured on platforms like TipRanks and TheStreet, suggesting a broad reach in investment analysis [2] Group 3 - There is no disclosed stock or derivative position in any mentioned companies, indicating an unbiased perspective in the analysis [3] - The article expresses personal opinions and is not influenced by compensation from companies mentioned, reinforcing the independence of the analysis [3]

Financial Performance and Key Metrics - The company's adjusted EBITDA for the quarter was BRL 2.6 billion, a 6.6% increase compared to the previous year, with North America being the standout segment [6] - Net income reached BRL 864 million, or BRL 0.43 per share, reflecting a 14% increase year-over-year [6] - The company's leverage ratio, defined as net debt over EBITDA, ended the period at 0.85 times, significantly below the established debt policy level [7] Business Line Performance - North American operations contributed 61% of consolidated EBITDA, marking the highest share in the company's history [4] - Brazilian operations faced challenges due to excessive steel imports, with an import penetration rate of 23.4% in the first half of the year, prompting a reduction in investments in Brazil [5][6] Market Data and Key Indicators - The North American market is experiencing high steel demand, particularly from the non-residential construction sector, with order backlogs above historical levels [10][11] - In Brazil, despite good demand for steel, the market is adversely affected by high levels of imports, leading to concerns about future import records if trade defense mechanisms are not improved [12] Company Strategy and Industry Competition - The company is focusing on internationalization and geographic diversification, operating autonomously in seven countries across the Americas [4] - A strategic decision has been made to reduce future investments in Brazil while maintaining investments in North America, where the outlook is more favorable [20][23] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment over the lack of effective trade defense measures in Brazil, which has led to a competitive imbalance [38] - The company anticipates a resilient civil construction market in the coming months, while closely monitoring the automotive and agricultural sectors affected by high interest rates [12] Other Important Information - The company approved a dividend distribution of BRL 239 million, equating to BRL 0.12 per share, and continues its share buyback program, which has reached 68% completion [9] - The Miguel Bernier sustainable mining project is 72% complete and is expected to generate BRL 1.1 billion in annual EBITDA once fully operational [8][26] Q&A Session Summary Question: CapEx expectations and mining project details - Management indicated that an annual CapEx of BRL 5 billion to BRL 6 billion is sustainable, with a shift towards competitiveness and cost reduction projects rather than solely increasing production capacity [17][18] - The mining project is expected to generate significant incremental EBITDA, with a ramp-up planned for 2026 [26] Question: Concerns about increasing net debt and cash flow - Management acknowledged the increase in net debt but emphasized that a significant portion was allocated to shareholder returns through dividends and buybacks [35] - The company expects to generate positive cash flow in the second half of the year, which should help reduce leverage [46] Question: Strategy regarding rebar pricing and market share - Management confirmed that they are not willing to lose market share in rebar and are monitoring the competitive landscape closely [59][62] - The company believes there is room for price recovery in rebar, despite current challenges [42] Question: Future investments and structural measures in Brazil - Management is considering long-term adjustments in Brazil due to the current competitive environment and is focused on maintaining production capacity [56][58] - The company is committed to ongoing maintenance investments to ensure competitiveness [66]

Financial Performance - The adjusted EBITDA for the second quarter was BRL 2.6 billion, a 6.6% increase compared to the previous year, with North America being the standout segment [6] - Net income reached BRL 864 million, or BRL 0.43 per share, reflecting a 14% increase year-over-year [6] - The company's leverage ratio, net debt over EBITDA, ended at 0.85 times, significantly below the established debt policy level [8] Business Segment Performance - North American operations contributed 61% of consolidated EBITDA, marking the highest share in the company's history [4] - Brazilian operations faced challenges due to excessive steel imports, with an import penetration rate of 23.4% in the first half of the year [5] - The company plans to reduce investments in Brazil due to the unfavorable market conditions and high import levels [5][20] Market Dynamics - The North American market is experiencing high steel demand, particularly from the non-residential construction sector, with order backlogs above historical levels [10][11] - In Brazil, despite good demand for steel, the market is negatively impacted by high levels of imports, leading to concerns about future import records if trade defense mechanisms are not improved [12] - The company is closely monitoring the automotive and agricultural sectors, which are being affected by high interest rates [12] Strategic Direction - The company is committed to sustainability, achieving the lowest GHD emissions in its history at 0.85 tons of CO2 per ton of steel produced [3] - Future capital expenditures (CapEx) will be reduced, particularly in Brazil, while maintaining investments in North America to capitalize on favorable market conditions [20][22] - The company aims to balance supply and demand in North America without overextending capacity, focusing on high-value products [23][24] Management Commentary - Management expressed disappointment with the lack of effective trade defense measures in Brazil, which has led to a challenging competitive landscape [41] - The company anticipates positive cash generation in the second half of the year, with expectations for improved free cash flow [49] - Management emphasized the importance of maintaining a robust balance sheet during the current investment cycle, despite increased leverage [39] Other Important Information - The company has approved a dividend distribution of BRL 239 million, reflecting a payout ratio of 90% for the second quarter [9] - CapEx for the quarter was BRL 1.6 billion, primarily allocated to the Miguel Bernier sustainable mining project, which is 72% complete [8] - The company is executing a share buyback program, having completed 68% of the planned buybacks for the year [9] Q&A Session Summary Question: CapEx expectations and mining project details - Management discussed the sustainable mining project and its expected incremental EBITDA contribution of BRL 1.1 billion once operational [16][28] - Future CapEx levels will be reduced, particularly in Brazil, due to the lack of competitive returns in the current market [20][22] Question: Concerns about increasing net debt and cash flow - Management acknowledged the increase in net debt but emphasized that a significant portion was used for shareholder returns through dividends and buybacks [31][39] - The company expects to generate positive cash flow in the second half of the year, which should help reduce leverage [49][57] Question: Strategy for rebar market and competition - Management confirmed that Gerdau is not losing market share in the rebar segment and is focused on maintaining its competitive position despite high import levels [64][68] - The company is cautious about pricing strategies in the rebar market, given the current competitive dynamics [46][70] Question: Future investments and structural measures in Brazil - Management indicated that while investments in Brazil will be reduced, maintenance CapEx will continue to ensure competitiveness [72] - The company is exploring long-term adjustments to adapt to the current market conditions in Brazil [62][60]

Financial Performance - Gerdau's adjusted EBITDA reached R$26 billion, with North America's improved results offsetting performance in Brazil and South America[16] - Net income was R$864 million, with earnings per share at R$043, a 14% increase compared to 1Q25[16][17] - Gerdau S A issued US$650 million in bonds and R$14 billion in debentures to bolster cash and lengthen the company's debt profile[17] - Gerdau S A executed 68% of its share buyback program, investing approximately R$686 million, representing 22% of outstanding shares[17] Regional Performance - North America achieved its highest all-time share in consolidated EBITDA at 61%, compared to 48% in 1Q25[10] - North America's net sales increased by 42% to R$9139 million, with EBITDA increasing by 365% to R$1635 million[36] - Brazil's shipment volume decreased by 52% from 1Q25[33] - South America's shipments increased by 218% to 288000 tonnes[45] Market Dynamics - The import penetration rate in Brazil reached a critical 26%, a 39 percentage point increase compared to 2Q24[12][33] - Steel imports continue at a record pace despite trade defense measures in place[14] Strategic Investments - Approximately 50% of the total estimated CAPEX for the year, amounting to R$16 billion, has already been invested[16] - The Sustainable Miguel Burnier Mining project is 72% complete and is under pre-operational planning for start-up in 4Q25[16]

Core Viewpoint - Gerdau S.A. has completed its offer to purchase outstanding 4.875% notes due 2027, with all validly tendered notes accepted for purchase [1][3]. Offer Details - The offer was made for cash to purchase all outstanding 4.875% notes due 2027, guaranteed by Gerdau and its subsidiaries [1]. - The offer expired on June 9, 2025, at 5:00 p.m. New York City time [3]. - A total principal amount of US$418,244,000 was outstanding, with US$237,646,000 tendered [2]. - The consideration for the notes accepted was US$1,007.83 per US$1,000 principal amount [2]. Settlement Information - Settlement of the offer is expected to occur within three business days following the expiration date, specifically on June 12, 2025 [4]. Additional Information - Gerdau Trade has engaged several financial institutions, including BofA Securities, Goldman Sachs, J.P. Morgan, and Morgan Stanley, to act as dealer managers for the offer [6]. - Further details regarding the offer can be found in the Offer Documents available through the designated tender agent [5].

Core Viewpoint - Gerdau S.A. is making an offer to purchase any and all outstanding 4.875% notes due 2027 issued by Gerdau Trade Inc. for cash, which is fully guaranteed by Gerdau and its subsidiaries [1][2] Offer Details - The offer is made pursuant to the terms set forth in the offer to purchase dated June 3, 2025, and includes a notice of guaranteed delivery [2] - The total principal amount of the outstanding notes is US$418,244,000 [4] - The consideration payable for each US$1,000 principal amount of notes validly tendered is US$1,007.83, based on a yield of 4.020% [4][5] Expiration and Settlement - The offer will expire at 5:00 p.m. New York City time on June 9, 2025, unless extended or terminated earlier by Gerdau Trade [6] - Settlement of the offer is expected to occur within three business days following the expiration date, anticipated to be June 12, 2025 [10] Conditions of the Offer - Gerdau Trade's obligation to accept the notes is conditioned upon the satisfaction or waiver of several conditions described in the offer to purchase [11] - Gerdau Trade reserves the right to delay acceptance, extend the expiration date, or terminate the offer if conditions are not met [11] Additional Information - Holders of the notes accepted for purchase will receive accrued and unpaid interest from the last interest payment date to the settlement date [7] - The offer is being managed by BofA Securities, Goldman Sachs, J.P. Morgan, and Morgan Stanley [13]

Core Viewpoint - The recommendation for Gerdau S.A. (NYSE: GGB) shares has been raised from hold to buy, indicating a positive outlook for the company's stock performance [1]. Company Summary - Gerdau S.A. is being analyzed based on over 5 years of experience in equity analysis in Latin America, suggesting a strong foundation for the investment recommendation [1].

Core Viewpoint - Gerdau S.A. has initiated a cash offer to purchase all outstanding 4.875% notes due 2027, totaling approximately US$418.24 million, which are guaranteed by its subsidiaries [1][3]. Offer Details - The offer is set to expire on June 9, 2025, at 5:00 p.m. New York City time, unless extended or terminated earlier by Gerdau Trade [3]. - Holders of the notes who validly tender their notes by the expiration date will be eligible to receive the consideration, which will be determined based on a fixed spread plus the yield of a reference U.S. Treasury security [4][5]. - Settlement of the offer is expected to occur within three business days following the expiration date, anticipated to be June 12, 2025 [6]. Conditions and Rights - The acceptance of the notes is contingent upon the successful pricing of a debt offering by Gerdau Trade, generating sufficient net proceeds to cover the consideration and accrued coupon payments [8]. - Gerdau Trade reserves the right to delay acceptance, extend the expiration date, or terminate the offer if conditions are not met [9][10]. - The offer is not conditioned on a minimum amount of notes being tendered, and if terminated, no payments will be made to holders of the notes [10]. Subsequent Actions - After the expiration date, Gerdau Trade may acquire any remaining notes through various means, including open market purchases or redemptions [11].

Group 1 - The recommendation is to hold Gerdau (NYSE: GGB) shares following the release of Q1 2025 results [1] - This article continues from a previous coverage published on May 7, 2024, maintaining the same recommendation [1] - The analyst has over 5 years of experience in equity analysis in Latin America, providing in-depth research and insights for informed investment decisions [1]

[Condensed Consolidated Interim Financial Statements](index=1&type=section&id=Condensed%20consolidated%20interim%20financial%20statements) This section covers the company's financial position, performance, comprehensive income, equity changes, and cash flows for the interim period [Consolidated Balance Sheets](index=2&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) As of March 31, 2025, Gerdau's total assets were BRL 85.58 billion, a slight decrease from BRL 86.81 billion at the end of 2024, while total liabilities increased to BRL 29.36 billion from BRL 28.64 billion, and total equity decreased from BRL 58.17 billion to BRL 56.22 billion Consolidated Balance Sheet Summary (in thousands of BRL) | Account | March 31, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | **Total Current Assets** | 32,193,864 | 32,669,423 | (1.46%) | | **Total Non-Current Assets** | 53,382,306 | 54,145,070 | (1.41%) | | **Total Assets** | **85,576,170** | **86,814,493** | **(1.43%)** | | **Total Current Liabilities** | 12,193,027 | 10,851,391 | 12.36% | | **Total Non-Current Liabilities** | 17,163,693 | 17,789,316 | (3.52%) | | **Total Liabilities** | **29,356,720** | **28,640,707** | **2.50%** | | **Total Equity** | **56,219,450** | **58,173,786** | **(3.36%)** | | **Total Liabilities and Equity** | **85,576,170** | **86,814,493** | **(1.43%)** | - Cash and cash equivalents decreased from BRL 7.77 billion to BRL 6.48 billion during the quarter[2](index=2&type=chunk) - Short-term debt saw a significant increase from BRL 697.0 million to BRL 2.10 billion[3](index=3&type=chunk) [Consolidated Statements of Income](index=4&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME) For the first quarter of 2025, Gerdau reported net sales of BRL 17.38 billion, an increase from BRL 16.21 billion in the same period of 2024, but net income attributable to parent owners fell sharply to BRL 749.5 million from BRL 2.04 billion year-over-year, leading to a drop in basic and diluted earnings per share (EPS) to BRL 0.37 from BRL 0.97 Q1 2025 vs. Q1 2024 Income Statement (in thousands of BRL, except EPS) | Metric | Q1 2025 (ended Mar 31, 2025) | Q1 2024 (ended Mar 31, 2024) | Change (YoY) | | :--- | :--- | :--- | :--- | | **Net Sales** | 17,375,336 | 16,210,263 | +7.19% | | **Gross Profit** | 1,946,553 | 2,419,719 | -19.55% | | **Income Before Taxes** | 1,078,018 | 2,276,565 | -52.65% | | **Net Income** | 757,804 | 2,052,872 | -63.09% | | **Net Income (Owners of Parent)** | 749,493 | 2,043,782 | -63.33% | | **Basic/Diluted EPS (R$)** | 0.37 | 0.97 | -61.86% | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) The company experienced a total comprehensive loss of BRL 1.48 billion for the first quarter of 2025, a stark contrast to the BRL 3.03 billion comprehensive income in Q1 2024, primarily driven by a significant negative cumulative translation adjustment of BRL 1.99 billion - A negative cumulative translation adjustment of **BRL 1.99 billion** was the main driver of the comprehensive loss in Q1 2025, compared to a positive adjustment of BRL 1.33 billion in Q1 2024[5](index=5&type=chunk) Comprehensive Income Summary (in thousands of BRL) | Item | Q1 2025 (ended Mar 31, 2025) | Q1 2024 (ended Mar 31, 2024) | | :--- | :--- | :--- | | Net income for the period | 757,804 | 2,052,872 | | Other comprehensive income (loss) | (2,233,151) | 977,051 | | **Total comprehensive income (loss)** | **(1,475,347)** | **3,029,923** | [Consolidated Statements of Changes in Equity](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20EQUITY) Total equity decreased from BRL 58.17 billion at the end of 2024 to BRL 56.22 billion as of March 31, 2025, mainly due to a comprehensive loss of BRL 1.48 billion, share buyback effects (BRL 280.9 million), and dividend payments, partially offset by net income of BRL 757.8 million - Equity attributable to parent company holders decreased from **BRL 57.95 billion** to **BRL 56.02 billion** during Q1 2025[6](index=6&type=chunk) - Key activities impacting equity in Q1 2025 included net income of **BRL 749.5 million**, other comprehensive loss of **BRL 2.22 billion**, a share buyback program costing **BRL 280.9 million**, and cancellation of treasury stocks[6](index=6&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the first quarter of 2025, net cash provided by operating activities was BRL 900.9 million, while investing activities used BRL 2.38 billion and financing activities provided BRL 594.4 million, resulting in an overall decrease in cash and cash equivalents of BRL 1.29 billion Cash Flow Summary (in thousands of BRL) | Cash Flow Activity | Q1 2025 (ended Mar 31, 2025) | Q1 2024 (ended Mar 31, 2024) | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | 900,860 | 831,290 | | **Net Cash from Investing Activities** | (2,380,308) | 362,635 | | **Net Cash from Financing Activities** | 594,411 | (516,069) | | **Increase/(Decrease) in Cash** | **(1,288,269)** | **737,478** | | **Cash at End of Period** | 6,479,544 | 3,743,123 | - Significant cash outflows in investing activities included **BRL 1.84 billion** for purchases of property, plant, and equipment and **BRL 433.2 million** for the acquisition of company control[7](index=7&type=chunk) [Notes to the Condensed Consolidated Interim Financial Statements](index=8&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Statements) This section provides detailed disclosures on accounting policies, acquisitions, debt, risk management, legal claims, equity, segment performance, and subsequent events [Note 2: Summary of Significant Accounting Practices](index=8&type=section&id=NOTE%202%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20PRACTICES) The company has changed its segment reporting structure starting in Q1 2025, integrating the former Special Steel segment into the Brazil and North America segments to align reporting with regional markets and improve results presentation, with comparative information restated - The company realigned its business segments, merging the former Special Steel operations into the Brazil and North America segments to better reflect the regional nature of the steel industry[14](index=14&type=chunk)[15](index=15&type=chunk) - The new segments are: Brazil Segment (long, flat, special steel, and iron ore in Brazil), North America Segment (long and specialty steel in Canada, US, and a JV in Mexico), and South America Segment (operations in Argentina, Peru, and Uruguay)[17](index=17&type=chunk) [Note 3: Acquisitions and Investments](index=9&type=section&id=NOTE%203%20%E2%80%93%20ACQUISITIONS%20AND%20INVESTMENTS) In Q1 2025, Gerdau completed two key acquisitions: the remaining shares of Gerdau Summit Aços Fundidos e Forjados S.A. for US$32.6 million, making it a wholly-owned subsidiary, and the Garganta da Jararaca Small Hydroelectric Power Plant (PCH) for BRL 244.5 million to supply its Brazilian steel units with renewable energy - On February 10, 2025, Gerdau acquired the remaining 41.27% of Gerdau Summit for approximately **US$32.6 million**, gaining 100% control, with Gerdau Summit producing cast and forged steel[31](index=31&type=chunk) - On March 21, 2025, Gerdau acquired the Garganta da Jararaca Small Hydroelectric Power Plant (PCH) for **BRL 244.5 million** to increase self-production of clean energy and enhance cost competitiveness[33](index=33&type=chunk) [Note 12: Loans and Financing](index=16&type=section&id=NOTE%2012%20%E2%80%93%20LOANS%20AND%20FINANCING) Total loans and financing increased to BRL 10.56 billion as of March 31, 2025, from BRL 9.81 billion at year-end 2024, with the majority of the debt (BRL 8.44 billion) denominated in U.S. Dollars, and the company maintains an unused US$875 million global credit line Debt Composition by Currency (in thousands of BRL) | Currency | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Brazilian Real (R$) | 1,925,932 | 456,448 | | U.S. Dollar (US$) | 8,439,982 | 9,169,319 | | Other currencies | 191,482 | 182,254 | | **Total** | **10,557,396** | **9,808,021** | - The nominal weighted average cost of debt was **5.55% p.a.** for USD-denominated debt and **102.34% of CDI p.a.** for BRL-denominated debt[57](index=57&type=chunk) - The company has an undrawn **US$875 million** global credit line maturing in September 2027[62](index=62&type=chunk) [Note 14: Financial Instruments and Risk Management](index=18&type=section&id=NOTE%2014%20-%20FINANCIAL%20INSTRUMENTS) Gerdau manages market risks through established policies and derivative instruments for hedging, targeting a Net Debt/EBITDA ratio of 1.5x or less and a gross debt limit of BRL 12 billion, with sensitivity analysis showing a BRL 26.8 million net loss from a 5% BRL appreciation against the Dollar on unhedged positions - The company's capital management targets include a **Net Debt/EBITDA ratio of ≤ 1.5x**, a gross debt limit of **BRL 12 billion**, and an average debt maturity of over **6 years**[77](index=77&type=chunk) Sensitivity Analysis on Statement of Income (Impact of Adverse Change) | Risk Factor | Assumption | Impact (in thousands of BRL) | | :--- | :--- | :--- | | Foreign Currency (Debt) | 5% BRL Depreciation | (10,821) | | Foreign Currency (Trade) | 5% BRL Appreciation | (37,587) | | Interest Rate | 10 bps Increase | (37,312) | | Product Price | 1% Decrease | (173,753) | | Raw Material Price | 1% Increase | (111,417) | - The company uses Ten Years Bonds to hedge part of its net investments in foreign subsidiaries, with exchange rate effects recognized in Other Comprehensive Income[99](index=99&type=chunk) [Note 15: Legal Claims and Contingencies](index=24&type=section&id=NOTE%2015%20%E2%80%93%20TAX%2C%20CIVIL%20AND%20LABOR%20CLAIMS%20AND%20CONTINGENT%20ASSETS) As of March 31, 2025, Gerdau has provisions for probable losses from legal claims totaling BRL 2.36 billion, primarily for tax matters, and faces significant contingent liabilities, assessed as possible but not probable losses, including major tax cases related to goodwill amortization totaling over BRL 8.8 billion Provisions for Probable Losses (in thousands of BRL) | Claim Type | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Tax provisions | 1,963,944 | 1,925,237 | | Labor provisions | 359,138 | 369,041 | | Civil provisions | 35,581 | 34,571 | | **Total** | **2,358,663** | **2,328,849** | - The company has significant contingent liabilities (possible loss) related to the disallowance of goodwill amortization from a 2004/2005 restructuring, with an updated total amount of **BRL 8.27 billion**[119](index=119&type=chunk) - Other major tax contingencies (possible loss) include disputes over withholding tax on export financing (**BRL 1.74 billion**), goodwill amortization from a 2010 restructuring (**BRL 593 million**), and taxes on profits generated abroad (**BRL 1.51 billion**)[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) [Note 17: Equity](index=30&type=section&id=NOTE%2017%20%E2%80%93%20EQUITY) As of March 31, 2025, the company's capital was BRL 24.27 billion, divided into approximately 719 million common and 1.33 billion preferred shares, with a new 12-month share buyback program approved in January 2025 for up to 63 million preferred shares and 1.5 million common shares - On January 20, 2025, the Board approved a new share buyback program for up to **63 million** preferred shares (GGBR4) and **1.5 million** common shares (GGBR3), with a 12-month term[143](index=143&type=chunk) - The Board approved the cancellation of **1,093,011** common shares and **25,000,000** preferred shares on January 20, 2025, and a further cancellation of **517,600** common and **24,000,000** preferred shares on April 28, 2025[142](index=142&type=chunk)[144](index=144&type=chunk) Share Ownership Structure (March 31, 2025) | Shareholder Group | % of Total Shares | | :--- | :--- | | Metalúrgica Gerdau S.A. (Controlling) | 34.1% | | Foreign institutional investors | 50.9% | | Brazilian institutional investors | 6.5% | | Other shareholders | 7.3% | | Treasury stock | 1.2% | [Note 22: Segment Reporting](index=35&type=section&id=NOTE%2022%20%E2%80%93%20SEGMENT%20REPORTING) For Q1 2025, the North America segment was the largest contributor to net sales at BRL 8.77 billion, followed by the Brazil segment at BRL 7.49 billion, with North America's gross profit decreasing significantly to BRL 995 million from BRL 1.54 billion YoY, while Brazil's gross profit increased to BRL 795 million from BRL 642 million Segment Performance Q1 2025 vs Q1 2024 (in thousands of BRL) | Segment | Net Sales Q1 2025 | Net Sales Q1 2024 | Gross Profit Q1 2025 | Gross Profit Q1 2024 | Net Income (Loss) Q1 2025 | Net Income (Loss) Q1 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Brazil** | 7,494,218 | 7,353,937 | 795,135 | 642,077 | 240,892 | 143,850 | | **North America** | 8,768,193 | 7,914,296 | 994,956 | 1,536,057 | 621,079 | 1,081,785 | | **South America** | 1,365,508 | 1,190,598 | 159,722 | 253,598 | 12,296 | (63,243) | - The North America segment, despite higher sales, saw a significant drop in profitability, with gross profit falling by **35%** and net income by **43%** year-over-year[160](index=160&type=chunk) - The Brazil segment showed improved profitability, with gross profit increasing by **24%** and net income by **67%** year-over-year[160](index=160&type=chunk) [Note 24: Subsequent Events](index=36&type=section&id=NOTE%2024%20-%20SUBSEQUENT%20EVENTS) After the reporting period, Gerdau continued its strategic activities, acquiring Kloeckner Metals Brasil Ltda. for BRL 42.9 million on April 11, 2025, proposing a dividend payment of BRL 243.5 million on April 25, and acquiring the Paranatinga II Small Hydroelectric Power Plant for BRL 197.2 million on April 28 - On April 11, 2025, Gerdau acquired 100% of Kloeckner Metals Brasil Ltda. for **BRL 42.9 million**[170](index=170&type=chunk) - A dividend payment of **BRL 243.5 million** (**BRL 0.12 per share**) was proposed, with a record date of May 8, 2025, and payment on May 19, 2025[171](index=171&type=chunk) - On April 28, 2025, the company acquired the Paranatinga II Small Hydroelectric Power Plant for **BRL 197.2 million** to increase its self-production of renewable energy[172](index=172&type=chunk)