Gerdau(GGB) - 2022 Q1 - Quarterly Report

Financial Performance - Net sales for Q1 2022 reached R$20,330,491, a 24.3% increase compared to R$16,342,984 in Q1 2021[4] - Gross profit for the same period was R$5,181,002, up 36.4% from R$3,796,909 in Q1 2021[4] - Net income for Q1 2022 was R$2,940,385, representing a 19.0% increase from R$2,470,536 in Q1 2021[5] - Basic earnings per share for Q1 2022 were R$1.71, compared to R$1.44 in Q1 2021, reflecting an 18.8% increase[4] - Cash provided by operating activities for the three-month period ended March 31, 2022, was R$2,752,555, compared to R$1,792,470 in the same period of 2021, reflecting a 53.7% increase[7] - The company reported an income before income taxes of R$4,510,133 thousand for the three-month period ended March 31, 2022, compared to R$3,287,171 thousand for the same period in 2021, an increase of approximately 37.2%[31] - Financial income totaled R$88,799 thousand, up 58.6% from R$55,908 thousand in the previous year, while financial expenses increased to R$361,434 thousand from R$313,596 thousand[145] - The net income for the three-month period was R$2,940,385 thousand, compared to R$2,470,536 thousand in the same period of 2021, marking a 19% increase[146] Assets and Liabilities - Total assets decreased to R$71,539,429 as of March 31, 2022, down from R$73,814,613 at the end of 2021[3] - Total liabilities decreased to R$28,003,178 as of March 31, 2022, down from R$30,998,964 at the end of 2021[3] - Retained earnings increased to R$20,443,675 as of March 31, 2022, compared to R$17,838,494 at the end of 2021[3] - Trade accounts receivable increased to R$6,756,022 as of March 31, 2022, up from R$5,414,075 as of December 31, 2021[80] - Total liabilities as of March 31, 2022, were R$22,190,663, a decrease from R$23,639,247 as of December 31, 2021[80] Cash and Cash Equivalents - Cash and cash equivalents increased to R$4,895,161 as of March 31, 2022, from R$4,160,654 at the end of 2021[2] - The company’s cash and cash equivalents at the end of the period were R$4,895,161, an increase from R$4,241,872 at the end of the same period in 2021[7] - Cash and cash equivalents decreased from R$4,895,161 thousand as of March 31, 2022, compared to R$4,160,654 thousand as of December 31, 2021, reflecting a decline of approximately 6.5%[24] Inventory and Purchases - The company’s inventories decreased to R$16,317,038 as of March 31, 2022, down from R$16,861,488 at the end of 2021[2] - Finished products inventory slightly decreased to R$7,184,476 thousand as of March 31, 2022, from R$7,209,379 thousand as of December 31, 2021, indicating a reduction of approximately 0.3%[28] - Purchases of property, plant, and equipment for the three-month period ended March 31, 2022, amounted to R$592,857, compared to R$435,129 in the same period of 2021[7] Dividends and Shareholder Returns - Dividends and interest on capital paid during the three-month period ended March 31, 2022, were R$340,583, down from R$441,188 in the same period of 2021[7] - The Company proposed a mandatory minimum dividend of R$973.5 million, equivalent to R$0.57 per share, to be paid on May 25, 2022[156] - Gerdau S.A. approved a Share Buyback Program to acquire up to 55,000,000 preferred shares, representing approximately 5% of the outstanding preferred shares (GGBR4) and/or ADRs backed by preferred shares (GGB)[157] Provisions and Contingent Liabilities - The company has contingent liabilities related to tax matters totaling R$8,323,178, with various lawsuits pending[95] - The company is involved in administrative proceedings related to withholding income tax, with claims amounting to R$1,385,570[92] - The company believes that the provisions recorded for judicial and administrative proceedings are sufficient to cover probable losses[82] - The total balance of provisions as of March 31, 2022, was R$1,747,107, compared to R$1,741,026 at the end of 2021, marking a net increase of R$6,081[84] Market and Economic Conditions - The company plans to maintain constant monitoring of the steel market throughout 2022 to identify any significant changes that may impact demand and financial projections[154] - A 1% increase in the sales price of products would result in an impact of R$203,305 on revenues for the three-month period ended March 31, 2022[62] - A 5% increase in commodity prices would result in an income of R$18,862, while a 5% decrease would lead to an equivalent expense[64] Management and Compensation - Management compensation totaled R$8,262 for the three-month period ended March 31, 2022, down from R$8,634 in the same period of 2021[125] - The cost of social charges related to management increased to R$5,259 for the three-month period ended March 31, 2022, compared to R$3,872 in 2021[126] - The company recognized R$3,963 in long-term incentive plans for key management during the three-month period ended March 31, 2022, down from R$4,649 in the same period of 2021[126]