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]

Core Points - Gerdau S.A. has filed its Form 20-F for the fiscal year ended December 31, 2024, with the U.S. Securities and Exchange Commission (SEC) and the Brazilian Securities and Exchange Commission (CVM) [1] - The Form 20-F is accessible on the Company's Investor Relations website [1] - Shareholders can request a free copy of the Form 20-F by contacting the Investor Relations team via email [2]

Industry Dynamics - The steel industry is highly cyclical, with demand fluctuations significantly impacting the company's financial condition and results of operations [32]. - In 2024, steel imports in Brazil reached nearly 6 million tonnes, an 18% increase from 2023, adversely affecting the company's competitiveness [48]. - The ongoing geopolitical conflicts, such as the Russian invasion of Ukraine, could adversely affect steel demand and prices, impacting the company's financial condition [41]. - The company faces significant competition from heavily subsidized steel imports, particularly from China, which may affect its market share and profitability [44]. - The Brazilian government has implemented temporary tariff hikes on some steel products, but these measures have proven insufficient to address the competitive imbalance [51]. Production and Capacity - The company's largest mill, Ouro Branco, accounted for 58.1% of total crude steel output in the Brazil Business Segment in 2024 [54]. - Gerdau is the largest Brazilian producer of steel, with approximately 70% of its steel production derived from scrap, transforming about 10 million tonnes of scrap into various steel products annually [142]. - In 2023, Brazil produced 32 million tonnes of crude steel, with 75.9% produced through integrated processes and 22.8% through mini mills [144]. - The Brazil Business Segment had an annual production capacity of approximately 6.8 million tonnes of crude steel and 6.6 million tonnes of finished steel products [186]. - The North America Business Segment has an annual production capacity of approximately 5.7 million tonnes of crude steel and 4.8 million tonnes of finished steel products [191]. Financial Performance - In 2024, Gerdau's total consolidated net sales were R$ 67.0 billion, a decrease of 2.7% from R$ 68.9 billion in 2023 [176]. - Gerdau's total consolidated net income for 2024 was R$ 4.6 billion, compared to R$ 5.5 billion in 2023 [176]. - The North America Business Segment generated net sales of R$ 25.9 billion in 2024, a decrease from R$ 26.9 billion in 2023 [184]. - In 2024, net sales in Brazil were R$25,962.2 million, a decrease of 3.2% from R$26,830.7 million in 2023 [211]. - North America's net income was R$2,913.9 million in 2024, accounting for 63.4% of its net sales [211]. Market Conditions - The Brazilian GDP increased by 3.4% in 2024, while steel consumption grew by 8.8%, indicating a strong demand for steel products [155]. - Brazilian steel exports in 2024 totaled 9.6 million tonnes, accounting for 31% of total sales [157]. - Gerdau's total exports in 2024 reached 966,000 tonnes, with South America representing 42% and Central America 37% of the exports [203]. - The automotive sector accounted for around 80% of the Special Steel Segment's shipments, with a decline in U.S. demand impacting shipments by approximately 15.3% [200]. Regulatory and Compliance Issues - The SEC approved new rules requiring significant climate-related disclosures, which may increase compliance costs and divert management attention [70]. - The company is subject to potential legal and regulatory actions due to new climate-related regulations, which could adversely affect its financial condition [71]. - Future compliance with stricter environmental regulations may increase operational costs and impact financial performance [107][110]. - Regulatory changes, such as the reinstatement of a 25% tariff on steel imports by the U.S., may impact the company's competitiveness and revenue [104]. Operational Challenges - Rising steel scrap prices or reduced supply could negatively impact production costs and operating margins, affecting profitability [52]. - Unexpected equipment failures may lead to production curtailments, increasing costs and reducing shipments and earnings [60]. - The company is vulnerable to inflationary cost pressures, especially regarding electricity, natural gas, and CO2 prices, which could adversely affect operations [57]. - Energy shortages or higher energy prices could negatively impact Gerdau's financial condition and results of operations, particularly in energy-intensive processes [72]. Strategic Initiatives - The company has invested in expanding iron ore production capacity to mitigate exposure to price volatility [55]. - Gerdau's certified iron ore reserves amount to 476 million dry metric tons, including 138 million tonnes of proven reserves and 338 million tonnes of probable reserves [84]. - Gerdau's logistics strategy includes long-term relationships with logistic suppliers to optimize transportation costs and efficiency [221]. Economic Influences - The Brazilian economy is influenced by international economic conditions, particularly those in the United States, which can affect market prices of Gerdau's shares [125]. - Political instability in Brazil continues to impact investor confidence, potentially leading to economic deceleration and increased volatility in securities [122]. - Inflationary pressures in Brazil may lead to higher interest rates, reducing demand for Gerdau's products and negatively impacting profit margins [124]. Risks and Vulnerabilities - The company faces risks from fluctuations in foreign exchange rates, which can increase the cost of servicing its foreign currency debt and adversely affect financial performance [93]. - The company is exposed to risks from tax, environmental, civil, and labor disputes, which could negatively affect its financial condition and results of operations [100]. - The company is exposed to risks from information technology system failures, which could disrupt operations and result in significant financial losses [76]. - The company’s financial condition may be adversely affected by potential defaults from clients or financial institutions [101][102]. Workforce and Management - The company experienced workforce labor contract suspensions lasting up to five months and laid off approximately 600 employees due to increased predatory steel imports in Brazil [74]. - The company faces risks related to the loss of senior management, which could adversely affect its operational strategy and financial condition [130]. - Gerdau's corporate structure allows the controlling shareholder to make decisions that may conflict with the interests of non-controlling shareholders, potentially impacting financial outcomes [128].

Gerdau S.A. (NYSE:GGB) Q4 2024 Earnings Conference Call February 20, 2025 10:00 AM ET Company Participants Mariana Dutra - Head, IR Gustavo Werneck - CEO Rafael Japur - CFO Conference Call Participants Marcio Farid - Goldman Sachs Rafael Barcellos - Bradesco BBI Daniel Sasson - Itau BBA Leonardo Correa - BTG Pactual Ricardo Monegaglia - Safra Bank Yuri Pereira - Santander Eugenia Cavalheiro - Morgan Stanley Mariana Dutra Good morning, everyone, and welcome to our Earnings Release for the Fourth Quarter 2024 ...

4Q24 Earnings Release February 20, 2025 DISCLAIMER This document may contain forward-looking statements. These statements are based on estimates and information that may be incorrect or inaccurate and that may not occur. These estimates are also subject to risks, uncertainties, and assumptions that include, among other factors, general economic, political, and commercial conditions in Brazil and in the markets where we operate, as well as existing and future government regulations. Potential investors are c ...

Company Overview - Gerdau S.A. (NYSE: GGB) has been identified as a company worth closer examination due to its various positive attributes, although current market conditions and valuation do not support a Buy recommendation at this time [1]. Investment Philosophy - The investment philosophy emphasizes that success in equity markets is derived from aligning investment approaches with personal strengths and analytical capabilities, rather than relying on extraordinary trading skills [1]. - The company adopts a realistic view of market performance, acknowledging the difficulty of consistently outperforming the S&P 500 benchmark, which leads to a significant portion of the portfolio being allocated to index funds while focusing active investments on selected opportunities [1]. Market Focus and Strategy - The focus is on identifying value opportunities, particularly in small and mid-cap sectors where market inefficiencies are prevalent [1]. - The strategy includes seeking industry leaders in out-of-favor sectors, quality companies facing temporary challenges, and businesses with strong balance sheets and robust cash generation [1]. Analytical Approach - The analytical approach prioritizes balance sheet strength from a credit perspective, near-term cash flow generation, next twelve-month earnings forecasts, and book value analysis, especially for financial sector investments [1]. Professional Background - The investment approach is supported by over 10 years of professional experience in financial sector consulting, specifically with banks, insurance companies, and payment firms, which aids in identifying overlooked opportunities [1].

Group 1 - The article expresses a beneficial long position in the shares of TLPFY, indicating a positive outlook on the company's stock performance [1] - The author emphasizes the importance of conducting due diligence and research prior to any investment, highlighting the risks associated with short-term trading and options trading [2] - The article clarifies that past performance is not indicative of future results, and no specific investment recommendations are provided [3]

Core Viewpoint - The recent surge in Gerdau's stock price and trading volume is linked to broader market optimism following the U.S. presidential election, particularly in the steel and industrial sectors, with potential implications from U.S.-China trade tariffs [1][2][5]. Company Summary - Gerdau's stock price is currently $3.38, with a 52-week range of $2.92 to $4.21 and a dividend yield of 2.66% [1]. - The stock experienced a rally of over 10% in a single day post-election, indicating strong market interest [1][2]. - Analysts have set a price target of $5.00 for Gerdau, suggesting a potential upside of 40.1% from current levels [6][8]. Trading Volume and Market Activity - Gerdau's average trading volume is 7.5 billion shares per day, but over 15 billion shares were traded the morning after the election, indicating heightened interest [2]. - The stock's trading volume spike is attributed to potential tariffs on Chinese exports, which may benefit Brazilian steelmakers like Gerdau [2][11]. Market Context and Demand - The Chinese government has increased economic stimulus measures, which could lead to higher demand for basic materials, potentially benefiting Gerdau [3][4]. - Gerdau's stock trades at a price-to-book (P/B) ratio of 0.8x, significantly lower than the materials sector average of 3.6x, indicating a discount and potential for growth [7]. Analyst Sentiment - Analysts from Bank of America and J.P. Morgan Chase believe Gerdau can deliver a double-digit rally, reinforcing bullish sentiment [5][6]. - The stock has a "Buy" rating among analysts, with a consensus forecast of $5.00, reflecting a 47.71% upside potential [8]. Industry Connections - The positive trading activity in Gerdau is mirrored by other stocks in the industrial sector, such as Stellantis, which also saw increased interest post-election [9][10]. - The reduction in short interest for Stellantis by 22.6% suggests a shift in market sentiment that could also positively impact Gerdau [10].

Gerdau S.A. (NYSE:GGB) Q3 2024 Earnings Conference Call November 6, 2024 10:00 AM ET Company Participants Mariana Dutra - Head, IR Gustavo Werneck - CEO Rafael Japur - CFO Conference Call Participants Daniel Sasson - Itau BBA Leonardo Correa - BTG Pactual Marcio Farid - Goldman Sachs Rafael Barcellos - Bradesco BBI Caio Ribeiro - Bank of America Ricardo Monegaglia - Safra Bank Igor Guedes - Genial Mariana Dutra Good morning, everyone, and thank you for joining us at Gerdau's Third Quarter Earnings Release. ...

Financial Performance - Adjusted EBITDA for 3Q24 reached R$ 3.0 billion, representing a 14.9% increase compared to 2Q24 [1] - Total investments (CAPEX) in 3Q24 amounted to R$ 1.5 billion, with R$ 589 million allocated for Maintenance and R$ 920 million directed towards the Competitiveness of the Business Divisions [1] Shareholder Returns - A dividend distribution of R$ 0.30 per share, totaling R$ 619.4 million, will be paid based on the results of 3Q24 [2] - The share buyback program resulted in the repurchase of 39.6 million shares by the end of October 2024, amounting to R$ 729.4 million [2] Regulatory Filings - The company has filed its 3Q24 results with the Securities and Exchange Commission (SEC) and the Comissão de Valores Mobiliários (CVM), which are accessible on Gerdau's website [3]