Gerdau(US:GGB)2021-10-26 16:00Financial Performance - Net sales for Q3 2021 reached R$21,317,057, a 74.3% increase compared to R$12,222,108 in Q3 2020[4] - Gross profit for the nine-month period ended September 30, 2021, was R$15,630,245, up from R$3,270,361 in the same period of 2020, representing a 377.5% increase[4] - Net income for Q3 2021 was R$5,593,941, compared to R$794,585 in Q3 2020, marking a 605.5% increase[5] - Total comprehensive income for the nine-month period ended September 30, 2021, was R$12,516,690, compared to R$4,365,967 in the same period of 2020, a 186.5% increase[5] - Net income for the nine-month period ended September 30, 2021, was R$11,998,954 thousand, a significant increase from R$1,331,258 thousand in the same period of 2020, representing a growth of approximately 804%[7] - The company reported a basic earnings per share of R$3.27 for Q3 2021, significantly higher than R$0.46 in Q3 2020[4] - For the nine-month period ended September 30, 2021, the net income allocated to common shareholders reached R$3,987,610, up from R$440,371 in the same period of 2020, reflecting an increase of 805%[170] Assets and Liabilities - Total assets as of September 30, 2021, amounted to R$75,362,167, an increase from R$63,123,009 as of December 31, 2020[3] - Current liabilities increased to R$13,155,055 as of September 30, 2021, from R$11,482,143 at the end of 2020, reflecting a 14.6% rise[3] - Retained earnings surged to R$17,052,600 as of September 30, 2021, compared to R$7,292,332 at the end of 2020, indicating a 133.5% increase[3] - The total equity as of September 30, 2021, was R$41,298,404 thousand, compared to R$31,085,210 thousand as of September 30, 2020, reflecting an increase of approximately 32.8%[6] - The total liabilities decreased from R$19,838,551 thousand as of December 31, 2020, to R$18,409,324 thousand as of September 30, 2021, reflecting a reduction of approximately 7.2%[90] Cash Flow and Investments - Cash provided by operating activities for the nine-month period ended September 30, 2021, was R$6,762,082 thousand, compared to R$4,731,562 thousand in 2020, indicating a year-over-year increase of about 43%[7] - The company reported a net cash used in investing activities of R$1,896,608 thousand for the nine-month period ended September 30, 2021, compared to R$1,173,103 thousand in 2020, indicating a rise of approximately 61.6%[7] - The company’s cash and cash equivalents decreased to R$3,976,077 as of September 30, 2021, from R$4,617,204 at the end of 2020[2] - The balance of cash and cash equivalents at the end of the period was R$3,976,077 thousand, a decrease from R$4,171,128 thousand at the end of September 30, 2020[7] Inventory and Receivables - Inventories rose to R$15,653,770 as of September 30, 2021, compared to R$9,169,417 at the end of 2020, reflecting a 70.8% increase[2] - The company experienced an increase in trade accounts receivable by R$2,553,085 thousand for the nine-month period ended September 30, 2021, compared to R$785,106 thousand in 2020[7] - Trade accounts receivable rose significantly to R$6,416,155 thousand as of September 30, 2021, up from R$3,737,270 thousand at December 31, 2020, marking an increase of 71.5%[36] Operational Highlights - The company maintained a strong focus on operational continuity despite the ongoing impacts of the Covid-19 pandemic, implementing various health and safety measures[25][26] - Gerdau S.A. is recognized as a leading recycler in Latin America, transforming millions of tons of scrap into steel annually, reinforcing its commitment to sustainable development[9] - The Brazil Operation generated net sales of R$25,883,446, a 116% increase from R$11,965,795 in 2020[179] - North America Operation net sales increased to R$19,944,509 from R$12,427,931, marking a 60% rise[179] Tax and Legal Matters - The Company has tax contingencies totaling R$474,685 related to ICMS (state VAT) lawsuits[99] - Claims related to Imposto sobre Produtos Industrializados (IPI) amount to R$423,213, while PIS and COFINS claims total R$1,339,534[100] - The Company faces administrative proceedings regarding Withholding Income Tax totaling R$1,347,555, with several lawsuits pending judgment[102] - The Company is involved in ongoing investigations by Brazilian federal authorities regarding potential illegal conduct, but believes it has complied with legal standards[108] Management and Compensation - Management compensation totaled R$39.2 million for the nine-month period ended September 30, 2021, compared to R$18.3 million for the same period in 2020[148] - Contributions for the defined contribution plan totaled R$484 million for the three-month period ended September 30, 2021, compared to R$281 million in the same period of 2020, representing a 72% increase[149] Future Outlook - The company will continue to monitor the steel market throughout 2021 to identify any significant drops in demand, particularly from the automotive and construction sectors, which could impact projections and lead to potential impairment losses[191] - On October 25, 2021, the company proposed a mandatory minimum dividend totaling R$341.1 million (R$0.20 per share) in interest on equity and R$2,421.9 million (R$1.42 per share) in dividends, with payment scheduled for November 16, 2021[192]