4 th quarter of 2020 Quarterly Results * Working Capital 6.6 8.6 9.2 8.5 7.5 4T19 2,327 -441 205 2,330 2,402 4Q19 1Q20 2Q20 3Q20 4Q20 FCF Working Capital (R$ billion) Financial Cycle (days) 62 83 95 63 Free Cash Flow and Financial Cycle R$ Million 1T20 2T20 3T20 4T20 Dec | 19 Mar | 20 Jun | 20 Sep | 20 Dec| 20 49 long profile Cost of Debt Debt Maturity | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |----------|------------|------------|--------------------------------------- ...

Financial Data and Key Metrics Changes - Positive free cash flow was BRL2.4 billion in Q4 2020, a 43% increase in EBITDA quarter-on-quarter [9][15] - Year-to-date free cash flow was BRL4.5 billion for the second consecutive year, with a cash conversion cycle reduced from 63 days in September 2020 to 49 days in December 2020 [11] - Net debt decreased to BRL9.9 billion, with a net debt to EBITDA ratio improving from 2.07x in Q3 2020 to 1.25x in Q4 2020 [12][14] Business Line Data and Key Metrics Changes - Consolidated EBITDA increased from BRL2.1 billion in Q3 to BRL3.1 billion in Q4 2020, marking the best EBITDA in Gerdau's history for Q4 [15] - Brazilian operations generated approximately BRL1.8 billion in EBITDA, driven by strong demand from civil construction and industry [16] - Special Steel operations showed improvement, with capacity utilization rising from 50% in Q3 2020 to 70% in Q4 2020 [22] Market Data and Key Metrics Changes - Shipments of longs and flats in Brazil increased by 22% year-on-year between October and December 2020 [26] - Civil construction confidence in Brazil rose from 65 points in April to 93 points by December 2020, indicating a positive outlook for the sector [18][33] - In North America, EBITDA margins remained above 10%, the best performance since 2007, despite seasonal impacts [19] Company Strategy and Development Direction - Gerdau aims to become a more agile, simpler, and digital company to capture opportunities in challenging environments [25] - The company is focusing on the Brazilian domestic market, reducing exports to ensure full supply to local demand [32] - Investments in infrastructure are expected to exceed BRL126 billion in 2021, providing opportunities for Gerdau [34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the Brazilian market, anticipating further economic recovery and growth in civil construction [33] - The automotive sector is expected to see a 25% increase in vehicle production in 2021, positively impacting Special Steel operations [35] - The company is committed to maintaining a positive cash flow and a disciplined approach to capital allocation [67][69] Other Important Information - Gerdau celebrated its 120th anniversary, emphasizing its commitment to sustainability and customer-centric operations [55] - The company is actively engaging in digital initiatives and partnerships to enhance its logistics and renewable energy sectors [52][53] Q&A Session Summary Question: Landscape in Brazil and Demand Drivers - Management anticipates an 8% to 10% growth in shipments, driven by strong demand from civil construction and retail sectors [61][62] Question: Capital Allocation and Dividends - The company maintains a dividend policy of 30%, with dividends expected to increase as leverage improves [70] Question: Price Transfer and EBITDA Margin Sustainability - Management sees strong demand and balanced prices, with an EBITDA margin of 31% in Q4 2020, and anticipates stability in costs despite increases in raw material prices [74][80] Question: Heavy Plate Utilization and U.S. Market Impact - Heavy plate utilization is around 60%, with expectations for improvement as demand continues to recover [84] Question: Imports and Future Growth Phase - No signs of increased imports are expected, with capital allocation focused on efficiency and marginal production expansion [92][94]

Financial Data and Key Metrics Changes - Free cash flow in Q3 2020 was positive at BRL2.3 billion, a 62% increase compared to Q2 2020, attributed to higher EBITDA and lower working capital [10][11] - Net debt decreased to BRL12.3 billion, with a net debt to EBITDA ratio improving from 2.78 times in Q2 to 2.07 times in Q3 2020 [13][16] - EBITDA increased from BRL1.3 billion in Q2 to BRL2.1 billion in Q3, with an EBITDA margin of 17.5% [17][18] Business Line Data and Key Metrics Changes - In Brazil, shipments to the domestic market increased from 73% in Q3 2019 to 86% in Q3 2020, contributing to higher EBITDA [18] - North America saw resilient shipments and improved cost optimization, despite a reduction in metallic spread from US$415 to US$402 per short ton [20] - South America experienced strong demand from the civil construction industry, particularly in Peru and Argentina, leading to improved results [21] Market Data and Key Metrics Changes - The construction industry in Brazil showed signs of a V-shaped recovery, with a construction activity index reaching 51.4 points in September, the highest since June 2009 [31] - Retail sales of construction materials grew 3.6% from July and 24.1% year-on-year, indicating strong market recovery [33] - The industrial confidence index in Brazil increased to 106.7 points in September, the highest since January 2013, reinforcing a positive outlook [36] Company Strategy and Development Direction - The company is focused on digital transformation, increasing the number of quotes on its website from 14,000 in January to 50,000 in September [26] - Gerdau aims to reduce leverage to a net debt to EBITDA ratio of 1.0 to 1.5 times in the long term [16] - The establishment of Ventures Gerdau aims to foster innovation in the civil construction industry [50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained demand for long steels in Brazil, projecting a growth of 6% to 8% in 2021 [68] - The company anticipates a strong backlog of orders and good shipments, despite concerns about potential declines in non-residential construction [134] - Management emphasized the importance of addressing structural issues in Brazil to support long-term demand growth [39] Other Important Information - The company invested BRL360 million in PP&E in Q3, part of a total investment estimate of BRL1.6 billion for 2020 [49] - Gerdau has joined the Be Movement Builders coalition, focusing on sustainable development and long-term value generation [55] Q&A Session Summary Question: Sustainability of Demand Levels - Management acknowledged the unprecedented demand spike and expressed confidence that demand will remain sustainable into 2021, with projections of 6% to 8% growth [62][68] Question: Market Share and Competition - Management reported a 6.4% growth in market share compared to a market decline of 8%, attributing this to quick responses to market recovery [80] Question: Working Capital Expectations - Management indicated that working capital levels are expected to remain optimized, with a cycle not exceeding 70 to 75 days [95] Question: Inventory Levels - Current inventory levels are below normal at 10 to 15 days, with expectations for recovery over the next six months [108] Question: Special Steels Pricing - Management indicated that pricing for special steels will align with global market trends, with expectations for margin recovery due to increased demand [115]

Gerdau S.A. (NYSE:GGB) Q2 2020 Earnings Conference Call August 5, 2020 1:00 PM ET Company Participants Gustavo Werneck - Director, President and Chief Executive Officer Harley Scardoelli - Vice President and Chief Financial Officer Conference Call Participants Daniel Sasson - Itaú BBA Thiago Ojea - Goldman Sachs Caio Ribeiro - Credit Suisse Thiago Lofiego - Bradesco BBI Rodolfo Angele - JPMorgan Leonardo Correa - BTG Pactual Carlos De Alba - Morgan Stanley Marcelo Audi - Cardinal Partners Operator Good afte ...

Financial Performance - Net sales for 2019 were R$39,644,010, a decrease of 14% compared to R$46,159,478 in 2018[22] - Gross profit for 2019 was R$4,203,284, down from R$6,149,378 in 2018, reflecting a gross margin decline[22] - Net income for 2019 was R$1,216,887, compared to R$2,326,382 in 2018, indicating a 48% decrease year-over-year[22] - Basic earnings per share for common and preferred shares in 2019 were R$0.71, down from R$1.35 in 2018[23] - Gerdau's total consolidated net sales were R$ 39.6 billion, a decrease of 14% from R$ 46.2 billion in 2018[201] - The company reported a total consolidated net income of R$ 1.22 billion for the year ended December 31, 2019[194] Cash and Assets - Cash and cash equivalents as of December 31, 2019, were R$2,641,652, a decrease from R$2,890,144 in 2018[25] - Total assets increased to R$54,002,970 in 2019 from R$51,281,029 in 2018, showing a growth of 3.4%[25] - Current liabilities decreased to R$7,424,537 in 2019 from R$8,504,253 in 2018, a reduction of 12.7%[25] - The company reported a net working capital of R$10,811,176 in 2019, up from R$8,998,829 in 2018, indicating improved liquidity[25] Market and Industry Conditions - The company is exposed to cyclical demand for steel, which could significantly impact financial performance due to price volatility[34] - The steel industry is facing challenges due to excess global capacity, particularly from China, which has led to increased competition and pressure on prices[36] - The company's financial condition is adversely affected by global economic instability, including the impact of BREXIT and trade protection measures[38] - The company is subject to regulatory risks, including potential trade restrictions on steel products that could increase costs and reduce competitiveness in international markets[93] - The Brazilian economy is influenced by international economic conditions, particularly those in the United States, which can affect share prices on the B3[118] Production and Operations - The company's largest mill, Ouro Branco, accounts for 48.8% of total crude steel output in Brazil, making it vulnerable to fluctuations in iron ore prices[46] - The company has invested in expanding iron ore production capacity to meet 100% of the demand from the Ouro Branco mill since 2012[47] - Higher steel scrap prices or reduced supply could negatively impact production costs and operating margins, affecting profitability[44] - The company relies on imported coking coal for its operations, and any supply shortages or price increases could adversely affect production capacity and profit margins[48] - The company operates 39 steel producing facilities globally, including three integrated steel mills in Brazil[193] Risks and Challenges - Unexpected equipment failures could lead to production curtailments, increasing costs and reducing shipments and earnings[52] - The company is subject to risks from labor disruptions, which could adversely affect operations and project completion timelines[56] - Climate change and regulatory responses to it may increase operational costs and require additional investments, negatively impacting financial performance[54] - The company is subject to information technology risks, including potential breaches that could lead to operational disruptions and financial losses[60] - The company is currently under investigation regarding potential illegal conduct related to political contributions, with uncertain outcomes[90][105] Debt and Financial Obligations - The company held R$13 billion in foreign currency-denominated debt, representing 80.8% of its consolidated gross debt, exposing it to exchange rate risks[85] - The Brazilian real depreciated by 24.1% against the U.S. dollar through March 2020, which could adversely affect the company's ability to service foreign currency obligations[84][85] - The company's credit ratings are classified as "investment grade," which allows access to more attractive borrowing rates; however, any downgrade could increase capital costs and affect financial condition[75][77] Legal and Compliance Issues - The Company is involved in several tax, civil, and labor disputes that may negatively impact its financial condition and results of operations[88] - The Company and its subsidiaries face lawsuits related to ICMS (state VAT) totaling R$ 631,940, and other tax claims amounting to R$ 2,077,262, including IPI, PIS, COFINS, and social security contributions[14][95]. - The Company is involved in administrative proceedings related to withholding income tax and goodwill amortization, with total updated amounts of R$ 754,215 and R$ 431,718, respectively[95]. - Brazil's sovereign credit rating has been downgraded multiple times, currently rated below investment grade, which negatively affects the prices of securities issued by Brazilian companies[108][109]. - Political instability in Brazil continues to impact investor confidence and economic performance, contributing to heightened volatility in the securities market[110][111]. Acquisitions and Investments - The company has a history of acquisitions, including the purchase of Companhia Paraibuna de Metais for US$30 million in 2003, enhancing its iron ore self-sufficiency[137] - In 2005, the company acquired a 57% interest in Diaco S.A., Colombia's largest rebar manufacturer, for an additional investment of US$107.2 million[138] - The company acquired 40% of Corporación Sidenor S.A. for US$219.2 million in 2006, later increasing its stake to 100%[140] - The company acquired Siderúrgica Tultitlán in Mexico for US$259 million in 2007, expanding its production capabilities[142] - Gerdau's acquisition of MacSteel in November 2007 was valued at US$ 1.5 billion, including the assumption of debts and liabilities[148] Sales and Consumption Trends - Gerdau's total sales of Brazilian steel products reached 30.9 million tonnes in 2019, with flat steel products accounting for 66.7% of total sales[171] - In 2019, Brazilian steel consumption decreased by 3% despite a GDP increase of 1.1%, indicating significant variations in domestic demand[173] - Steel shipments in 2019 decreased compared to 2018 primarily due to the sale of certain production assets in the United States, while remaining operations showed stable shipment levels[212] - The company is continuously developing new products in the Special Steel Business Segment, including high-resistance steels and clean steel, to meet the needs of demanding markets[214] - In 2019, international steel prices were influenced by slower demand from China and economic protectionism measures in the U.S. and EU, prompting major producers to seek new markets[219]

Gerdau S.A. (NYSE:GGB) Q3 2019 Earnings Conference Call October 30, 2019 1:00 PM ET Company Participants Gustavo Werneck - Director, President & Chief Executive Officer Harley Scardoelli - Executive Vice President & Chief Financial Officer Conference Call Participants Leonardo Correa - BTG Pactual Daniel Sasson - Itaú BBA Timna Tanners - Bank of America Merrill Lynch Carlos De Alba - Morgan Stanley Thiago Lofiego - Bradesco BBI. Caio Ribeiro - Crédit Suisse Marcio Farid - JPMorgan Operator Good afternoon, a ...

EARNINGS RELEASE 3rd QUARTER OF 2019 Gustavo Werneck President & Chief Executive Officer Harley Scardoelli Chief Financial Officer | --- | --- | --- | |-----------------------------------------------------------------------------------------------|----------------------------------------|--------------------------------------------------------------------------------| | | | | | | | | | Highlights | | | | 3 r d q u a r t e r o f 2 0 1 9 | | | | Free Cash Flow: R$ 1.9 billion Second best quarter in historical ...

Financial Data and Key Metrics Changes - Gerdau reported an adjusted EBITDA of BRL1.6 billion in Q2 2019, down from BRL1.8 billion in Q2 2018, primarily due to the deconsolidation of divested assets and lower margins in Brazil and Special Steel business divisions [17][18] - The EBITDA margin improved year-on-year due to better margins in North and South America business divisions, with a margin of 15.5%, the best in 11 years [8][18] - Financial expenses decreased by 58% year-on-year, from BRL730 million to BRL300 million in Q2 2019, attributed to a lower debt position [14] Business Line Data and Key Metrics Changes - In North America, the EBITDA margin increased from 9.2% in Q2 2018 to 11.1% in Q2 2019, despite a decline compared to Q1 2019 due to market conditions [10] - The Special Steel business in Brazil saw a 3% increase in production and a 12% increase in shipments to the local market, although exports were down 42% due to economic issues in Argentina [36] - The long steel margins in Brazil remained flat compared to Q1 2019, with increased competition and a zero-growth demand scenario [32] Market Data and Key Metrics Changes - Global steel demand is projected to grow by 1.3% in 2019, reaching 1.735 billion tonnes, driven by investments in developed countries and improving performance in emerging economies [25] - In Brazil, apparent steel consumption is expected to grow by 2.1% in 2019, reaching 21.7 million tonnes, supported by civil construction and infrastructure investments [26] - The U.S. economy is expected to grow by 2.6%, with strong demand for construction and infrastructure influencing steel shipments [34] Company Strategy and Development Direction - Gerdau is focusing on a more profitable asset portfolio and stringent cost management, achieving a reduction of 18% in SG&A expenses year-on-year [11] - The company plans to invest BRL1.8 billion in 2019, increasing to BRL2.6 billion in 2020 and 2021, while remaining selective with new investments [39][41] - Gerdau is enhancing its digital transformation and innovation initiatives, including a partnership with Manchester University to explore advanced applications of steel [43][44] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the outlook for Brazil and the U.S., despite challenges in effective demand growth for steel in Brazil [24] - The company anticipates a recovery in steel demand in Brazil, contingent on structural reforms and economic measures [33] - In the U.S., management expects stable margins and a recovery in shipments due to low inventory levels and strong demand [53] Other Important Information - Gerdau issued BRL1.4 billion in debentures to strengthen cash flow and extend the debt profile, indicating good liquidity in the Brazilian market [20] - The company generated BRL361 million in free cash flow in Q2 2019, reversing a negative trend from Q1 [22] - The company’s net debt decreased from BRL14.7 billion in June 2018 to BRL12.5 billion in June 2019, with a net debt to EBITDA ratio of 1.9x [19] Q&A Session Summary Question: Net debt reconciliation and cash generation - Management explained the reconciliation of free cash flow and net debt, highlighting nonrecurring items affecting cash flow calculations [50] Question: Margins expectations in Brazil and the U.S. - Management indicated that metallic spreads in the U.S. remain high, with expectations for stable margins despite challenges in Brazil due to low demand [53][54] Question: North America business developments and cost cuts - Management confirmed successful divestment from rebar assets and ongoing cost reduction efforts, achieving the lowest SG&A in the company's history [67] Question: Special Steel margins and demand recovery - Management noted that recovery in Special Steel margins is slow, with expectations for gradual improvement as inventory levels stabilize [78] Question: CapEx adjustments and project schedules - Management stated that CapEx has been reduced for 2019 but will maintain investments in the coming years, contingent on market recovery [81]

Financial Performance - The company's net sales for 2018 reached R$46,159,478, an increase of 25.5% compared to R$36,917,619 in 2017[20] - Gross profit for 2018 was R$6,149,378, representing a 70.5% increase from R$3,604,624 in 2017[20] - The net income for 2018 was R$2,326,382, a significant recovery from a net loss of R$338,667 in 2017[20] - Basic earnings per share for common and preferred shares in 2018 were R$1.35, compared to a loss of R$0.21 in 2017[21] - Cash and cash equivalents as of December 31, 2018, totaled R$2,890,144, an increase from R$2,555,338 in 2017[23] - Total assets increased to R$51,281,029 in 2018, up from R$50,301,761 in 2017[23] - The company declared cash dividends of R$0.45 per share for both common and preferred shares in 2018, compared to R$0.08 in 2017[21] - Current liabilities rose to R$8,504,253 in 2018 from R$7,714,120 in 2017, indicating a need for careful management of short-term obligations[23] - The company reported a net working capital of R$8,998,829 in 2018, down from R$10,267,993 in 2017, reflecting tighter liquidity[23] Industry Conditions - The steel industry remains cyclical, with potential risks from fluctuating demand and prices impacting the company's financial performance[33] - The steel industry is highly cyclical and has been adversely affected by global economic conditions, with significant disruptions noted during the 2008-2009 financial crisis[34] - An increase in iron ore and coal prices could adversely affect production costs, impacting the company's financial condition[44] - Global steel pricing is significantly influenced by China's production capacity, which has exceeded domestic consumption, leading to increased exports and lower international prices[42] - The company faces competition from domestic and foreign producers, which may adversely affect profitability and market share[38] Operational Risks - Unexpected equipment failures could lead to production curtailments, negatively impacting shipments and earnings[52] - The company is subject to risks from adverse changes in economic and political conditions, which could affect liquidity and operations[37] - Labor disruptions and strikes could adversely affect operations and project timelines, potentially increasing costs[58] Financial Obligations and Debt - Gerdau's credit ratings remain investment grade, with S&P maintaining a positive outlook and Fitch also providing a stable outlook[74] - The company held R$11 billion in foreign currency-denominated debt, representing 73.8% of its consolidated gross debt as of December 31, 2018[84] - Fluctuations in foreign exchange rates may increase the cost of servicing debt and adversely affect overall financial performance[80] Tax and Legal Matters - Gerdau is involved in several tax disputes with claims totaling R$613,642 thousand related to ICMS and R$968,047 thousand related to PIS and COFINS[87] - The Company is involved in three administrative proceedings related to Withholding Income Tax, totaling R$ 410,893 thousands[93] - The Company and its subsidiary Gerdau Internacional Empreendimentos Ltda. are engaged in proceedings related to Corporate Income Tax and Social Contribution Tax, amounting to R$ 1,200,672 thousands[93] - The total updated amount of proceedings regarding the disallowance of the deductibility of goodwill is R$ 7,062,878 thousands[93] Environmental and Regulatory Risks - Compliance with environmental regulations may lead to increased costs, negatively affecting the Company's financial results[98] - Future laws aimed at reducing greenhouse gas emissions could increase operational costs, impacting cash flows and financial condition[100] - Regulatory risks include potential trade restrictions on steel products that may increase costs or limit export capabilities, impacting financial condition and results[97] Economic and Political Environment - Brazil's sovereign credit rating has been downgraded multiple times, currently rated below investment grade, which could adversely affect the Company's share prices[112] - Brazil's political instability continues to adversely affect the Company's performance and investor confidence[114] - Ongoing corruption investigations, including the Lava Jato scandal, have led to the arrest and conviction of numerous politicians and executives, impacting market perception[115][116] - The Brazilian economy is subject to government policies that may negatively influence the Company's operations and financial performance[119] - High inflation in Brazil could slow economic growth, reduce demand for the Company's products, and increase costs, adversely affecting profit margins and net income[120] Strategic Acquisitions and Growth - The Company has made significant acquisitions, including the purchase of Companhia Paraibuna de Metais for US$30 million (R$88.1 million) to ensure iron ore self-sufficiency[141] - The Company has expanded internationally, acquiring interests in steel production across North America and Latin America, enhancing its market presence[140] - Gerdau acquired 36% of Sipar Aceros S.A. in Argentina, increasing its total interest to 74%[142] - Gerdau acquired a 57% interest in Diaco S.A., Colombia's largest rebar manufacturer, and later increased its stake to 99% for US$107.2 million[142] - Gerdau became the majority shareholder (60%) in Corporación Sidenor S.A. after acquiring a total of 60% for US$507.2 million[144] - Gerdau's acquisition of Chaparral Steel Company for US$4.2 billion expanded its product portfolio significantly[150] - Gerdau sold its wire-rod production unit in Beaumont, Texas for US$99.5 million, with an annual production capacity of approximately 700,000 short tons[157] - Gerdau concluded the sale of its two hydropower plants in Goiás for R$835 million, with a combined capacity of 155 MW[159] - Gerdau's sale of four U.S. rebar mills to Commercial Metals Company was valued at US$600 million[162] Production and Capacity - The company produced 15.344 million tonnes of crude steel in 2018, a decrease of 4.8% compared to 16.120 million tonnes in 2017[203] - Gerdau's rolled steel production was 13.749 million tonnes in 2018, down from 14.047 million tonnes in 2017[203] - The total shipments for Gerdau in 2018 were 14.560 million tonnes, a decline of 2.5% from 14.938 million tonnes in 2017[201] - Gerdau's total consolidated installed annual capacity was approximately 20.3 million tonnes of crude steel as of December 31, 2018[195] - Brazil Business Segment's annual crude steel installed capacity is 8.2 million tonnes and finished steel products capacity is 6.7 million tonnes[207] - North America Business Segment's annual production capacity is 8.1 million tonnes of crude steel and 5.9 million tonnes of finished steel products, accounting for 43.2% of overall Gerdau sales volumes in 2018[209][212] - Special Steel Business Segment in Brazil has an annual production capacity of 1.4 million tonnes of crude steel and 1.8 million tonnes of rolled steel, serving over 300 clients[216] - Special Steel Segment in North America has an annual installed production capacity of 1.4 million tonnes of crude steel and 1.5 million tonnes of rolled steel products, with a client portfolio of more than 200[217] Market Dynamics - In Brazil, Gerdau's net sales increased to R$ 15.745 billion in 2018, up from R$ 12.563 billion in 2017, reflecting a growth of 25.8%[202] - North America accounted for R$ 19.927 billion in net sales in 2018, a significant increase from R$ 15.433 billion in 2017, marking a growth of 29.4%[202] - Gerdau's total steel exports in 2018 were 14.1 million tonnes, representing 43.5% of total sales[179] - The Brazilian GDP increased by 1.0% in 2018, while steel consumption rose by 7.3%[177] - In the Brazil Business Segment, steel shipments decreased slightly in 2018 due to a decline in exports, while domestic market shipments grew driven by retail construction and manufacturing demand[206] - Approximately 15% of production sold in Brazil was distributed through Gerdau's distribution channel, which includes stores and independent distributors[207] - The North America Business Segment's 2018 shipments were at the level of 6.1 million tonnes[212]