CSN(SID) - 2025 Q1 - Quarterly Report

1Q25 Earnings Release This report details CSN's financial and operational performance for the first quarter of 2025, highlighting key segment results and capital market activities Financial and Operational Highlights CSN's Q1 2025 saw net revenue decline QoQ due to seasonality but grow YoY, while Adjusted EBITDA decreased sequentially but increased year-over-year, and leverage improved 1Q25 Consolidated Highlights (vs. 4Q24 and 1Q24) | | 1Q25 | 4Q24 | 1Q25 vs 4Q24 | 1Q24 | 1Q25 vs 1Q24 | | :--- | :--- | :--- | :--- | :--- | :--- | | Steel Sales (Thousand Tons) | 1,143 | 1,175 | -2.7% | 1,086 | 5.2% | | Iron Ore Sales (Thousand Tons) | 9,640 | 10,731 | -10.2% | 9,145 | 5.4% | | Consolidated Results (R$ million) | | | | | | | Net Revenue (R$ million) | 10,908 | 12,026 | -9.3% | 9,713 | 12.3% | | Adjusted EBITDA (R$ million) | 2,509 | 3,335 | -24.8% | 1,966 | 27.6% | | EBITDA Margin (%) | 22.1% | 26.8% | -4.7 p.p. | 19.3% | 2.8 p.p. | | Adjusted Net Debt (R$ million) | 35,830 | 35,704 | 0.4% | 33,431 | 7.2% | | Net Debt / Adjusted EBITDA (x) | 3.33x | 3.49x | -0.16x | 3.13x | 0.20x | Consolidated Financial Performance CSN reported a net loss of R$732 million in Q1 2025, significantly wider QoQ due to seasonality and negative FX impact, despite a 20.5% QoQ decrease in SG&A expenses - Net Revenue totaled R$10,908 million, a 9.3% decrease QoQ due to seasonality and rain in mining, but a 12.3% increase YoY from higher volumes and prices[16] - The company reported a Net Loss of R$732 million, a 52.3% wider loss compared to the previous quarter, reflecting operational downturn and negative FX impact on financial expenses[19] - The financial result was a negative R$1,850 million, a 46.6% increase in expenses QoQ, mainly due to a R$705 million negative impact from exchange rate variation[17][18] - Selling, general and administrative expenses fell 20.5% QoQ to R$1,278 million, demonstrating effective cost control measures despite higher sales volumes compared to 1Q24[16] Adjusted EBITDA Q1 2025 Adjusted EBITDA was R$2,509 million, decreasing 24.8% QoQ due to seasonality, but growing 27.6% YoY, reflecting operational improvements and cost control Adjusted EBITDA Reconciliation (R$ Millions) | R$ Millions | 1Q25 | 4Q24 | 1Q25 vs 4Q24 | 1Q24 | 1Q25 vs 1Q24 | | :--- | :--- | :--- | :--- | :--- | :--- | | Profit (Loss) for the Period (R$ million) | (732) | (85) | 761.2% | (480) | 52.5% | | Finance Income (R$ million) | 1,850 | 1,262 | 46.6% | 1,125 | 64.4% | | EBITDA (RCVM 156/22) (R$ million) | 1,859 | 2,255 | -17.6% | 1,458 | 27.5% | | Adjusted EBITDA (R$ million) | 2,509 | 3,335 | -24.8% | 1,966 | 27.6% | - The YoY increase in adjusted EBITDA highlights consistent operational improvement, volume growth, higher prices, and enhanced cost control, paving the way for stronger results throughout the year[22] Adjusted Cash Flow Q1 2025 Adjusted Cash Flow was negative R$173 million, a significant improvement from the prior quarter due to lower CAPEX and working capital recovery, despite ongoing pressure from high financial expenses - Adjusted Cash Flow was negative R$173 million, a substantial improvement from negative R$1.7 billion in 4Q24[26] - The improvement reflects solid operating performance, lower CAPEX, and working capital recovery, though cash flow remains pressured by high financial expenses[26] Indebtedness and Capital Management CSN reduced its leverage ratio to 3.33x and gross debt by R$3.6 billion in Q1 2025, actively extending debt maturities, including a R$1.2 billion debenture issuance, while maintaining a strong cash position - Consolidated net debt stood at R$35,830 million, with the net debt/EBITDA leverage ratio decreasing to 3.33x, a reduction of 16 basis points from the previous quarter[29] - The company is actively extending debt maturities, with key movements in 1Q25 including a R$1.2 billion, 17-year debenture issuance by subsidiary CEEE-G. These initiatives reduced the 2025 debt tower by 66%[36] - Total investments (CAPEX) in 1Q25 were R$1,127 million, a 45.2% decrease QoQ but a 40.5% increase YoY, reflecting progress on the P15 mining infrastructure and maintenance at the steel mill[43] Net Working Capital Net working capital applied to the business was R$2,286 million in Q1 2025, a 5.2% QoQ reduction driven by lower accounts receivable, reduced inventory, and supplier balances due to seasonality Net Working Capital (R$ Millions) | R$ Millions | 1Q25 | 4Q24 | 1Q25 vs 4Q24 | 1Q24 | 1Q25 vs 1Q24 | | :--- | :--- | :--- | :--- | :--- | :--- | | Assets (R$ million) | 14,351 | 14,975 | -4.2% | 14,679 | -2.2% | | Liabilities (R$ million) | 12,065 | 12,563 | -4.0% | 15,536 | -22.3% | | Net Working Capital (R$ million) | 2,286 | 2,412 | -5.2% | (857) | -366.7% | Business Segments Results In Q1 2025, the Mining segment was the largest contributor to Adjusted EBITDA despite a seasonal decline, while Steel's EBITDA more than doubled YoY, Logistics showed strong QoQ growth, Cement declined due to price pressure, and Energy grew significantly on better prices 1Q25 Adjusted EBITDA by Segment (R$ million) | Segment | Adjusted EBITDA (1Q25, R$ million) | Adjusted EBITDA Margin (1Q25, %) | Adjusted EBITDA (4Q24, R$ million) | Adjusted EBITDA Margin (4Q24, %) | | :--- | :--- | :--- | :--- | :--- | | Steel | 485 | 7.9% | 656 | 10.6% | | Mining | 1,401 | 40.8% | 1,972 | 50.1% | | Logistics (ports) | 34 | 39.6% | 32 | 35.4% | | Logistics (Railway) | 321 | 46.9% | 273 | 40.9% | | Energy | 79 | 44.2% | 39 | 24.1% | | Cement | 241 | 21.9% | 386 | 32.8% | | Consolidated | 2,509 | 22.1% | 3,335 | 26.8% | Steel Results The Steel segment's Q1 2025 sales volume slightly decreased QoQ but increased YoY, with net revenue stable QoQ and up YoY, while Adjusted EBITDA fell QoQ due to seasonality but more than doubled YoY - Total steel sales reached 1,144 thousand tons, down 2.6% QoQ but up 5.3% YoY. Domestic sales grew 7.8% YoY to 789 thousand tons[64] - Net Revenue in Steel was R$6,107 million, nearly flat (-0.9%) QoQ but up 13.4% YoY, as price increases almost offset lower seasonal volume[72] - Adjusted EBITDA reached R$485 million, down 26.1% QoQ but up 107.2% YoY. The adjusted EBITDA margin was 7.9%, a 3.6 percentage point improvement YoY[77] Mining Results Q1 2025 Mining production decreased QoQ but increased YoY, with sales volume reaching a first-quarter record, and Adjusted EBITDA growing 25.7% YoY driven by higher volumes and lower C1 costs - Iron ore production (including third-party) was 10,210 thousand tons, down 7.2% QoQ but up 11.8% YoY[83] - Sales volume reached a record for a first quarter at 9,640 thousand tons, up 5.4% YoY[85] - Adjusted EBITDA was R$1,401 million with a 40.8% margin. This was a 25.7% increase compared to 1Q24, driven by higher volumes and lower C1 costs[90] - C1 cash costs reached US$21.0/t, a significant 10.6% decrease compared to 1Q24, highlighting growing competitiveness[90] Cement Results The Cement segment's Q1 2025 sales volume grew YoY, outperforming the Brazilian market, but net revenue and Adjusted EBITDA declined QoQ due to seasonality, price pressure, and higher costs - CSN's cement sales volume grew 6.2% YoY, slightly outpacing the Brazilian market's growth of 5.9%[87][88] - Net Revenue was R$1,102 million, down 6.4% QoQ due to seasonality and price pressure, but up 2.1% YoY supported by higher sales volume[95] - Adjusted EBITDA reached R$241 million, a decrease of 37.6% QoQ and 13.3% YoY, due to a more challenging competitive environment and higher costs[95] Logistics Results The Logistics segment delivered strong Q1 2025 results with net revenue increasing QoQ, and Adjusted EBITDA growing 16.4% QoQ with margin expansion, driven by higher rail shipments - Total Net Revenue for Logistics reached R$770.7 million, up 1.7% QoQ. Adjusted EBITDA rose 16.4% QoQ to R$355 million[93] - In Railway Logistics, Adjusted EBITDA grew 17.6% QoQ to R$321 million, with a margin of 46.9%[94] - In Port Logistics, Net Revenue grew 1.7% YoY to R$85.6 million, and Adjusted EBITDA margin increased by 7.5 p.p. YoY to 39.6%[96] Energy Results The Energy segment's Q1 2025 net revenue increased 9.3% QoQ, with Adjusted EBITDA surging by 20.2 percentage points to 44.2% due to better energy prices - Net Revenue increased 9.3% QoQ to R$178 million[92] - Adjusted EBITDA was R$78.9 million, with the margin increasing by 20.2 p.p. to 44.2% due to better prices[92] ESG – Environmental, Social & Governance CSN has transitioned to a new ESG disclosure format, providing individualized quarterly performance indicators on its Investor Relations website for agile monitoring, with comprehensive data available in its 2024 Integrated Report - CSN now discloses ESG performance indicators on a quarterly, individualized basis via its IR website for more agile monitoring[97] - Detailed historical data and initiatives are available in the 2024 Integrated Report, released in April 2025[99] Capital Markets In Q1 2025, CSN's common shares appreciated 6.9% while its NYSE-listed ADRs rose 16.0%, significantly outperforming the Dow Jones Index, with the company's market capitalization at R$12.6 billion 1Q25 Stock Performance | Security | Performance in 1Q25 (%) | | :--- | :--- | | CSNA3 (BRL) | 6.9% | | SID (USD) | 16.0% | | Ibovespa (BRL) | 8.3% | | Dow Jones (USD) | -1.6% | - The average daily trading volume was R$123.2 million for CSNA3 on B3 and US$3.5 million for SID ADRs on the NYSE[102] Financial Statements (Appendix) This section provides detailed unaudited consolidated financial statements for Q1 2025, including the Income Statement showing a net loss of R$732 million, the Balance Sheet with R$99.8 billion in total assets, and the Cash Flow Statement indicating a net cash outflow from operating activities of R$1.15 billion Key Financial Statement Figures (1Q25, R$ Thousands) | Statement | Metric | Value (R$ Thousands) | | :--- | :--- | :--- | | Income Statement | Net Sales Revenue | 10,907,629 | | | Net Profit (Loss) for the Period | (731,580) | | Balance Sheet | Total Assets | 99,758,272 | | | Total Liabilities | 83,498,210 | | | Equity | 16,260,062 | | Cash Flow Statement | Net Cash Flow from Operating Activities | (1,153,595) |