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].

Financial Data and Key Metrics Changes - The company reported an adjusted EBITDA of BRL10.8 billion for 2024, reflecting improved competitiveness through strategic cost reduction initiatives, particularly in Brazil [9][12] - The company achieved savings of BRL1.5 billion in controllable expenses, leading to a new level of operating efficiency compared to 2023 [12] - A total of BRL6.2 billion was invested in CapEx in 2024, with a guidance of BRL6 billion for 2025, split equally between competitiveness and maintenance efforts [13][15] Business Line Data and Key Metrics Changes - The company plans to report results using three segments: Brazil, North America, and South America, starting Q1 2025, to better reflect market dynamics [15] - The company is focusing on increasing its share of flat steel in its product mix, moving away from rebar due to competitive pressures [45][46] Market Data and Key Metrics Changes - The Brazilian market faced challenges from high penetration rates of imported steel, which reached almost 20% by the end of 2024 [9] - In North America, shipments and backlog recovered to historical levels, with a positive outlook for non-residential demand and infrastructure [19][31] Company Strategy and Development Direction - The company is committed to enhancing competitiveness through investments in renewable energy and strategic acquisitions, such as the purchase of two hydroelectric plants [10] - The focus remains on growth and competitiveness of assets with the greatest potential for long-term value generation [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the construction industry in Brazil, citing a record number of property launches, but acknowledged potential challenges from rising inflation and high interest rates [18] - The company is monitoring the impact of new trade defense measures in the U.S. and their potential to improve competitiveness [20][22] Other Important Information - The company distributed almost BRL2.9 billion to shareholders in 2024, representing a payout of approximately 66% of profits [14] - The company is transitioning to a new reporting format to provide clearer insights into its operations and market exposure [15][16] Q&A Session Summary Question: Insights on U.S. market recovery and Brazilian demand - Management noted a recovery in backlog and shipments in North America, with expectations for a positive scenario in 2025, while cautioning about potential declines in Brazilian demand due to economic conditions [28][31][42] Question: Strategic view on the Brazilian market and rebar capacity - Management indicated that while there is still demand for rebar, competitiveness remains a challenge, and future investments will focus on segments with higher margins [41][45] Question: CapEx guidance and energy investments - The CapEx guidance for 2025 includes investments in energy generation assets, with a flatter disbursement curve expected throughout the year [62][66] Question: Special steel margins and outlook - Management acknowledged that special steel margins in North America may recover faster than traditional operations, influenced by scrap prices [109][110] Question: Working capital expectations - Management anticipates some investment in working capital due to increased demand in North America and Brazil, with a significant release noted in Q4 2024 [136][138]

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].

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]

G E R D A U S . A . C o n d e n s e d c o n s o l i d a t e d i n t e r i m fi n a n c i a l s t a t e m e n t s a s o f S e p t e m b e r 3 0, 2 0 2 4 E x h i b i t 9 9 . 1 GERDAU S.A. CONSOLIDATED BALANCE SHEETS In thousands of Brazilian reais (R$) (Unaudited) | | Note | September 30, 2024 | December 31, 2023 | | --- | --- | --- | --- | | CURRENT ASSETS | | | | | Cash and cash equivalents | 4 | 8,074,104 | 3,005,645 | | Short-term investments | 4 | 757,578 | 2,338,097 | | Trade accounts receivable | 5 | 5 ...

Core Viewpoint - Gerdau S.A. is positioned to benefit from ongoing investments in the automotive industry, electric vehicles, and electrical transmission renovations globally, indicating significant undervaluation in its stock price [3][26]. Company Overview - Gerdau S.A. is the largest Brazilian steel producer with over 100 years of experience in the industry, operating mills in multiple countries including Brazil, Canada, the U.S., and several Latin American nations [3][4][5]. - The company is also the largest recycling company in Latin America, which enhances its competitive position [5]. Financial Performance - In the last quarterly report, Gerdau reported an EPS GAAP of $0.07, beating expectations by $0.01, but revenue fell short by $10.55 million, totaling $2.94 billion [6][5]. - Analysts project revenue growth for 2026, 2027, and 2028, suggesting a positive long-term outlook [5]. Market Demand Drivers - Significant investments in electric vehicles and renewable energy are expected to drive steel demand, particularly in North America, Europe, and China [7][8]. - The automotive steel market was valued at approximately $112.93 billion in 2021, with a projected growth rate of over 3% from 2022 to 2030 [8]. Financial Health and Valuation - Gerdau has been reducing its total debt and liabilities, which has positively impacted its tangible book value per share [9][10]. - The company’s stock price is currently trading close to its book value per share, indicating potential undervaluation [10]. Cash Flow and Profitability - Gerdau has reported positive net income for the last six years and has maintained positive unlevered free cash flow, indicating a trend of increasing profitability [12]. - The company sold its equity interests in joint ventures for $325 million, which could enhance its cash position for future investments [13]. Currency Impact - The depreciation of the Brazilian real against stronger currencies could improve Gerdau's financials, as it receives payments in dollars and euros while incurring expenses in reais [14][15]. Debt Management - Gerdau's management has committed to maintaining a net debt/EBITDA ratio of 1.5x or lower, with a weighted average cost of debt around 5.4% [16]. Future Projections - Using a WACC of 15% and a perpetuity growth rate of 3%, the implied enterprise value is estimated at $15.75 billion, with a target stock price of $6.28 per share [20][22]. - Gerdau's valuation metrics indicate it is significantly undervalued compared to competitors, with a P/E ratio of 7.80 compared to a sector median of 18.53 [23].