Financial Data and Key Metrics Changes - Gerdau ended 2025 with an EBITDA of BRL 10.1 billion, down 7% compared to 2024, primarily due to a challenging environment in Brazil marked by increased competition [8] - Adjusted net income for 2025 was BRL 3.4 billion, down 21% year-on-year, reflecting operational performance [9] - The company achieved a free cash flow generation of BRL 1.4 billion in Q4 2025, resulting in a positive annual cash flow of BRL 394 million for the year [10] Business Line Data and Key Metrics Changes - North American operations showed strong performance with record shipments in December 2025, benefiting from resilient demand and reduced import levels [5] - Brazilian operations faced challenges with a 7.5% increase in steel imports, impacting profitability despite trade defense measures [5][12] Market Data and Key Metrics Changes - North America experienced stable steel consumption at high levels, with order backlogs above historical averages, particularly in sectors like solar energy and infrastructure [12] - In Brazil, the market is expected to see moderate growth in demand in 2026, despite the influx of imported steel [12] Company Strategy and Development Direction - Gerdau's strategy focuses on geographic diversification and productivity, with significant investments in sustainable mining projects to reduce production costs [6] - The company plans to maintain a disciplined approach to capital allocation, with a CapEx guidance of BRL 4.7 billion for 2026, down from BRL 6.1 billion in 2025 [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about trade defense measures in Brazil, which could improve market conditions and profitability [12][50] - The outlook for North America remains positive, with expectations of continued strong performance and no substantial reduction in profitability [34][39] Other Important Information - Gerdau paid out BRL 2.4 billion in dividends and share buybacks throughout 2025, reflecting a commitment to returning value to shareholders [10] - The company is exploring the potential divestment of non-core assets, including forest and real estate holdings, to generate value [56][61] Q&A Session All Questions and Answers Question: Outlook for Brazil business margins - Management expects stability in margins for Q1 2026, with potential for improvement in the second half of the year as the Miguel Burnier project ramps up [14][25] Question: Details on impairment losses - Impairment losses were attributed to conservative cash flow projections and underutilization of assets in Brazil, with some plants operating below capacity [15][22] Question: Capacity adjustments in Brazil - Management does not plan to close additional capacity in 2026, focusing instead on optimizing operations without further reductions [26] Question: South America operations outlook - South America is expected to recover margins in the first half of 2026, with a return to mid-teen profitability levels [31] Question: North America profitability sustainability - North America is expected to maintain strong profitability, supported by a robust order book and favorable market conditions [34][39] Question: Potential listing of U.S. operations - Management is monitoring the potential for a separate listing of U.S. operations but has no concrete plans at this time [42] Question: Impact of anti-dumping measures - Management is optimistic about the expansion of trade defense measures in Brazil, which could improve competitive conditions [50][53] Question: Growth avenues in the U.S. segment - Gerdau is focused on organic growth and smaller acquisitions, particularly in high-value products, rather than significant capacity expansions [74][79]

Financial Data and Key Metrics Changes - Total operating revenue for the first quarter increased by 5% year-over-year to $912 million, driven by a 5% increase in capacity [9][18] - RASM was approximately $0.09, remaining in line with the prior year quarter, while total revenue per passenger decreased by 6% to $116 [9][18] - The first quarter pretax loss was $40 million, resulting in a 4.4% loss margin, with a net loss of $43 million or $0.19 per share [20][21] Business Line Data and Key Metrics Changes - The company significantly reduced capacity through its mid-November selling schedule, expecting capacity to be down low single digits in the second quarter and a similar reduction in the second half of the year [7][21] - The economy bundle introduced last year has enhanced product offerings, providing customers with a direct comparison to other airlines' economy fares [11][12] Market Data and Key Metrics Changes - The domestic leisure concentration of the business experienced an outsized impact due to macroeconomic uncertainty, leading to aggressive pricing and promotions across the industry [5][9] - Current booking trends suggest that demand for May and early summer travel has stabilized, supported by recent revenue and network enhancements [5][21] Company Strategy and Development Direction - The company is focused on capacity management and cost control while providing customers with the best overall value in air travel [6][8] - The introduction of the new frontier and enhanced product offerings aims to elevate loyalty and customer engagement, ensuring competitiveness in the market [13][17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the results for the quarter were lower than expectations due to a disruption in travel demand in March, but they are optimistic about stabilizing demand moving forward [5][21] - The company is targeting profitability in the second half of the year based on a stabilized demand outlook and self-help measures in moderating industry capacity [8][24] Other Important Information - The company expects capacity reductions to support over $300 million in combined cost reductions and capital spending deferrals over the balance of the year [21] - The company took delivery of four A321neo aircraft and two spare aircraft engines during the quarter, raising the total fleet to 163 [20] Q&A Session Summary Question: Average fare decline and impact of premium products - Management noted that premium products are performing well, but the average fare decline was primarily due to concentrated capacity in March and lower load factors [26][28] Question: Capacity adjustments and focus on core markets - Management confirmed that they are focusing on core profitable markets and adjusting capacity to align with demand [30][32] Question: Factors driving return to profitability - Management indicated that several factors, including reduced capacity and stabilizing demand, will contribute to a return to profitability in the second half of the year [38][39] Question: Competitive landscape and market dynamics - Management acknowledged that both low-cost and high-cost carriers have flooded certain markets, but they are seeing moderation in capacity and improvement in demand [84][86] Question: Loyalty program performance - Management reported a 30% year-over-year increase in spend related to the loyalty program, indicating strong engagement and growth [81] Question: Fleet delivery updates - Management confirmed a shift in aircraft deliveries, with one less aircraft expected for the full year, but no significant issues with engine availability [115][117]