Gerdau S.A.

Good afternoon, everyone. Welcome to Gerdau's earnings release call for the fourth quarter of 2023. My name is Renata, Head of Investor Relations, and participating in our video conference today are CEO of Gerdau, Gustavo Wernick, and CFO, Rafael Japor. We would like to inform you that this video conference is being recorded and will be available on the company's IR website, where the complete material of the earnings release is available. You can also download the presentation using the chat icon. We would like to remind you that the broadcast of this video conference is being done with simultaneous translation through the tool available in the platform. To access the feature, just click on the interpretation button via the globe icon at the bottom of the screen and choose your preferred language. Portuguese or English. For those listening to the video conference in English, there is an option to mute the original audio in Portuguese by clicking on Mute Original Audio. During the company's presentation, all participants will have their microphones disabled. Following the presentation, we will begin the Q&A session. Analysts and investors can send their questions in advance via chat and can also open their camera if they prefer. during the Q&A session. We wish to emphasize that the information contained in this presentation and any other statements that may be made during the video conference concerning Gurdjieff's business prospects, projections in operating and financial goals are based on the beliefs and assumptions of the company's management as well as information currently available. Forward-looking statements are no guarantee of performance. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur. Investors should understand that general economic conditions, market conditions and other operating factors may affect your DAO's future performance and lead to results that differ substantially from those expressed in such forward-looking statements. I will now turn the floor to Gustavo Werneck to initiate the presentation. Gustavo, you may proceed. Hello, everyone. I hope you're well, and thank you for the opportunity to meet on this video conference to announce Gerdau's results for the fourth quarter of 2023. I am joined by our CFO, Raphael Jappour. And for both of us, it's always a pleasure to talk to you about our performance and also to clarify any issues that may arise during our presentation. I will start by talking about the macro business environment, the highlights of the overall results. And right after that, I will detail the performance of our business operations in the quarter. Next, Jaipur will then share some information about our financial performance. Finally, I will highlight some points from our sustainability agenda, and we will then move on to our Q&A session. On this second slide, I would like to highlight that we ended 2023 with an injuries frequency rate of 0.70, which is the lowest rate ever recorded in our historical annual series, reinforcing our commitment to people's health and safety. At Gerdau, safety always comes first, since no result is more important than people's lives. Looking at the next three slides, we'll highlight the growth in steel exports from China as the main factor impacting our business in the markets where we operate. China is currently going through a period of profound transformation in the pillars that have sustained its high economic growth in recent decades, especially the weakening of the infrastructure and residential construction sectors, which accounted for more than half of the country's GDP growth in that period. These two factors, very strong consumers of steel, have lost relevance as levers of the Chinese economy, causing a deep and structural imbalance between steel supply and demand in the Chinese domestic market. With a policy of maintaining jobs, the Chinese government has subsidized surplus steel production, exporting these volumes at prices below production costs to countries that have not yet taking trade defense measures against unfair trade practices, such as Brazil. Trade defense measures against predatory practices are legal and supported by the World Trade Organization. Not surprisingly, countries like the United States, Mexico, Turkey, and the other 27 countries in the European bloc have in recent months adopted relevant measures to combat the entry of subsidized Chinese steel at their borders, strengthening their economies, their industries, and also their jobs. The chart on slide 4 shows the shocking increase in the penetration of imported steel in Brazil over the course of 2023, a phenomenon still prevailing in the first months of 2024. The Brazilian government's procrastination in following the aforementioned countries in implementing trade defense measures is already having a significant impact on the Brazilian steel producing sector and Gerdau's operation in Brazil, with the shutdown of production capacities and the dismissal of hundreds of workers who have had their jobs in Brazil taken away in exchange for jobs in China. In the last week alone, as has been widely reported in the press, 100 people were laid off at our Pindamonhangaba plant. Those were highly trained and skilled people who could not continue their careers with us because we had to shut down more production lines in Brazil. I will end by reinforcing that I personally and other Gerdau leaders have been saying for many years that we believe in open and free trade, that even in the face of difficulties of doing business in the country due to the high Brazil cost, we have been able to compete on an equal footing with any steel producer in the world. However, there is no chance of competing with the steel coming from countries in which governments support and subsidize illegal and predatory global trade practices. At a time when Gerdau is celebrating 123 years of history, maintaining annual investments in the order of 6 billion BRLs, we once again appeal to the Brazilian federal government to quickly analyze this issue, thus preventing an industrial sector as relevant and strategic for the country as the steel sector is from being harshly penalized to the point of losing its future competitiveness. Moving on to slide six, I will talk about the highlights of each of our business operations and the outlook for the coming months. Now, moving to the next slide, the start of the first quarter of 2024 in the North American market has been marked by healthy levels of demand, with our backlog stable at a high level of 60 days. This scenario reflects the resilience of the US economy, with US GDP growing by 3.3% in the fourth quarter of 2023, when compared to the previous quarter, above previously published expectations. As a result, the country's actual GDP is projected to have grown by 2.5% last year, compared to an increase of 1.9% in 2022. The U.S. market at the start of 2024 continues to reflect the measures taken by the local government, such as the Inflation Reduction Act, IRA, the reshoring movement, and the maintenance of Section 232. I would also like to point out that we continue to invest in improving the operating efficiency of our North American BD units with an emphasis on the plants in Midlothian in Texas and Jackson in Tennessee, ensuring that we offer a portfolio of steel products and services to our customers in the region and continuously generate value for our stakeholders. In Midlothian, the solar plant, which we inaugurated in mid-2023, is operating at full capacity, bringing benefits to the operation as planned. Now, moving to the next slide, I will now talk about our special steel BD. The automotive market in the US continues to recover gradually. with the production of light and heavy vehicles projected to be above 16 million units in 2024, with normalized inventory levels. There is still room, however, for a more intense recovery in the coming years, returning to pre-pandemic levels. In turn, The outlook for the special steel market in Brazil continues to be influenced by the uncertainties linked to access to credit lines and the acceleration in the reduction of interest rates, which continue to be high, contributing to a restriction in the demand for vehicles, as well by this scenario of excessive entry of imported vehicles. Now, going to the next slide, I will now talk about the long and flat steel scenario in Brazil, whose performance in the fourth quarter and for the whole of 2023 reflects a slowdown in our steel shipments on the domestic market, mainly due to the excessive entry of imports into the country as a result of predatory trade practices, as I mentioned earlier. Last year, steel imports increased by 50% compared to 2022, totaling 5 million tons. reaching a record volume in the annual historical series, according to the Brazil Steel Institute. I would also like to point out that in December, the penetration rate in Brazil was over 25%. The steel sector in Brazil employs 3 million people, including direct, indirect, and induced jobs. And a significant portion of these jobs remain at imminent risk in the face of this challenging short-term scenario. If prolonged for several more months, this situation will also contribute to the acceleration of the country's deindustrialization process, which is already underway and poses a threat to the investments planned for the steel industry for the coming years. Now, moving to the next slide, we will talk about the South America BD. I will start by saying that in order to focus on our asset optimization strategy and long-term growth, In January, we sowed our operations in Colombia and the Dominican Republic. This divestment is in line with Gerdau's capital allocation strategy, focusing on the growth and competitiveness of our assets with the greatest potential for generating value in the long term. In Argentina, for instance, inflationary pressure, import restrictions and the first measures taken by the new government, such as the devaluation of the Argentine pizzeria, remains points of attention for the performance of the local market over the next few quarters. Uruguay's scenario remains positive, reflecting good levels of steel consumption, particularly in the agribusiness sector, and public and private investments. In Peru, GDP rose slightly again in November after seven months of decline, driven by the mining and fishing sectors. Construction activity remained stable, still impacted by delays in public works resulting from the climate events experienced by the country throughout the year. I will now hand over to Jaipur, and afterwards I'll be back to talk about our ESG journey and also answer your questions.

Thank you, Gustavo. Hello, everyone. It is always a great pleasure to be here with you once again for Gerdau's earnings release presentation. We ended the fourth quarter of 2023 with EBITDA of 2 billion, 39 million BRLs and net sales of 14.7 billion BRLs and a 14% margin. In addition to the typical seasonality of the period in our shipments, both indicators, both EBITDA and net sales, were impacted by the maxi devaluation of the Argentine peso, which explains respectively 40% reduction in EBITDA and 54% reduction in our net sales. Now moving to slide 13, please. Let's talk about our working capital. By the end of December, our working capital stood at 14.2 billion BRLs, down 10% quarter on quarter. We saw improvements in all lines, with growth in accounts payable and reductions in both accounts receivable and inventories. Even with these significant savings in working capital, cash conversion cycle increased to 87 days due to the 14% drop in net sales, which we showed on the previous slide. With regard to free cash flow, Gerdau generated 1,285,000,000 BRLs in Q4. Based on our EBITDA of 2 billion BRLs, we had A relevant working capital release of 1,279,000,000 BRLs, the largest release in the last 16 quarters. Regarding our CAPEX, between October and December, we spent 1,540,000,000 BRLs in CAPEX. Year to date, we generated free cash flow of 7 billion BRLs, equivalent to half the EBITDA for the period. Let's now move to the next slide to talk about liquidity and our debt position. We ended the year with gross debt of 10,892,000,000 BRLs. We still have an excellent level of leverage with a net debt over EBITDA ratio of 0.40 times. In the chart on the right hand side of the page, we detail our liquidity. In our debt amortization schedule, we ended Q4 with a robust available liquidity of $9.5 billion, considering the cash position of $5.3 billion and the $875 million of our revolving credit facility, or RCF, which is fully available and unused. Moving on to slide 15, let's talk about the return to our shareholders. Gerdau S.A. and Metallurgica Gerdau will pay dividends on March 12 and 13, respectively. Gerdau S.A. will pay 10 cents of real per share, while Metallurgica Gerdau S.A. will pay 5 cents per share. In both cases, shareholding positions as of March 1, 2024, will be taken into account. As a result, Gredal SA will have paid out in 2023 more than 2.6 billion BRLs, equivalent to 37% of our free cash flow or 44% of our accounting net income for the year, well above the 30% set forth in our bylaws. Moving to the chart on the right side of the slide, we detail total return to our shareholders between 2018 and 2023. Taking into account dividends paid out, buyback programs and share appreciation of Gerdau, we had a return of well over 100% in the period, reaffirming our commitment to consistently creating value for our shareholders. Now moving on to slide 16. Our CAPEX investment closed at approximately 5,700,000,000 BRLs in 2023. This figure includes investments in both maintenance and competitiveness. Of this total, 1.6 billion BRLs were earmarked for improving our environmental practices and improving the safety of our people in our operations. In 2024, according to the material fact we released, we plan to invest 6 billion BRLs in CAPEX. around half of which in maintenance and the other half in competitiveness. On the right-hand side of the slide, we have highlighted five projects that will be our focus over the next few quarters. These are initiatives that we have already communicated to you on other occasions, which aim to guarantee our long-term competitiveness, focusing on the assets with the greatest potential for creating value. With regard to Gerdau Next, we invested 524 million BRLs in 2023, mainly in the joint ventures New Wave Energia and Adiante. For 2024, we currently have planned investments of between 100 and 200 million BRLs. Closing the CAPEX section, on slide 17, we provide an update on the progress of Gredau's strategic CAPEX. Of the 11.9 billion BRLs to be invested by 2026, 36% has already been executed. In North America, we highlight the advances in rolling mills in Jackson and Petersburg, as well as the completion of the Whitby melt shop. In Brazil, the expansion of the coiled, hot rolled strips in the Ouro Branco mill is well underway and is expected to start operating in the fourth quarter of 2024. Finally, I would like to point out that we have a solid and robust balance sheet with low leverage built up over the last few years through strict discipline in capital allocation. It is more than enough to support our investment plan. Even so, we are attentive to the future scenario and the context of our business. And if necessary, we will revise our strategic investment plan according to these variables. Once again, thank you very much for your attention. And I'll turn the floor back to Gustavo. I'll come back at the end for the Q&A session. Thank you, Shapur. In the following slide, I'll detail how we've made progress in our sustainability journey. Firstly, I'd like to highlight the fact that Gerdau has just achieved an A-grade for the first time in the climate change module of the 2023 cycle of CDP, an organization that is a global benchmark for evaluating sustainable actions. With this evolution, we have achieved leadership status in the subject, surpassing the global average and that of the metals and metallurgy sector, reinforcing our commitment to transparency and to reducing greenhouse gas emissions. The learning journey provided by the CDP assessment is crucial for making decisions related to climate change. For Gerdau, achieving the leadership status in this module is proof that our strategy and our initiatives are progressing in line with our long-term planning. Still on this topic and reinforcing the evolution of our sustainability journey, I would like to mention that Gerdau was selected for the third time to join the B3 Carbon Efficient Index . The index brings together publicly traded companies committed to efficiency and transparency in the management of greenhouse gases. Lastly, I would like to highlight the laying of the cornerstone at the beginning of February for the Arenos solar farm in Minas Gerais as part of our commitment to expanding the generation of clean and renewable energy in our operations in Brazil. The Solar Mega Plant is an initiative of New Wave Energia, a renewable energy platform in which Gridau holds a 33.33% stake through our new business division called Gridau Next. With an estimated total investment of around 1.5 billion BRLs, the project is expected to be completed by the end of 2024 and will create approximately 4,000 direct and indirect jobs, which will contribute to local income and development for decades to come. well then thank you everyone ladies and gentlemen for listening to our presentation and from now on we'll be available to answer questions and perhaps drill down those points of interest to you thank you very much

Now we will initiate the Q&A session. As a reminder, for questions, you must click in the Q&A icon in the bottom of your screen and write down your question as your name is announced. you will get a pop-up to activate your mic. And it's then that you have to enable your microphone to ask your questions. In case you want to open your cameras, just let us know so that we can enable camera viewing. The first question from Daniel Sassoon. He's in the queue. He's a cell site analyst from Itaú. Please open the camera. Open Daniel's camera, please. Hello, Renata, Gustavo and Jopur, good afternoon and thank you for taking my question. Well, thank you for that further discussion about the peso devaluation in Argentina. I just want to make sure that I'm not missing anything. That effect of 520 million of EBITDA would be the effect for the whole year that you already recognize as it was done through that quarter. Is that understanding correct? Maybe you could give me some further clarification in terms of what we could think in terms of recurring results or even discounting some of the JVs of Colombia, I mean, the divestments of Colombia in In the Dominican Republic, maybe we just we might have missed something because the depreciation started in December, so the average exchange rate in Argentina it's not yet $800 on the official exchange rate, so if you can. chat some more light in the subject, I would appreciate it. And Vernak, my second question, and I think you clearly explained the concerns of the industry regarding the competition with imported goods that predatory competition you mentioned from china more recently we heard the government saying that they will revisit the tariffs but i think that it's not yet in accordance with what the industry expected like the increase of tariff so that we would be closer to mexico because mexico imposed a 25 tariff if you could please elaborate a bit more about these these debates and whether the industry really wants to prove the government that that china is practicing dumping and you know what are the other partners in marcos who was doing to prevent that predatory influence from china and whether you anticipate any increase in prices in the domestic market. Thank you. That's my question. Can you hear us, Daniel? OK. Let me start giving you a more general answer about tariffs in Brazil, and then I will Turn the floor over to Jaapur that can give you more facts about Argentina and Colombia. We've been debating with the federal government for several months now, and we've been talking about the need to impose a 25% tariff. I mean, Brazil has been importing still for many years. We've never been against any kind of commercial opening or trade opening. even despite all of the difficulties involving Brazil costs and other things that get in the way of our competitiveness. Throughout the years, we've been able to search for other alternatives and to compete on equal footing with any other producer in the world. But once you have Chinese steel landing in Brazil and in other countries, countries that are still open to receiving things at lower costs, even lower than production costs. It's impossible to compete. Even though we try to reduce our costs, it's impossible to compete like this. And we believe that this is not something that is going to be solved in the short term, because after all, what's happening in China is a decision by the Chinese government to maintain their jobs because there will be no more investments in infrastructure and the real estate market is going through short-term difficulties. By the time China could boost internal consumption and green economy, the export phenomenon is something that will prevail for quite some time still. And having said that, some countries are being very quick in terms of implementing some trade defense measures. And this is the case of Mexico, the US, I mean, 27 countries in the European bloc, and Turkey. a major exporter, they also implemented some safeguard measures against China. We are trying to show to the Brazilian government that it's important to do the same thing, but discussions are taking very long. We thought that the government would expedite measures and would be quicker in implementing shorter measures. They haven't done anything. The debate is still ongoing and we have to constantly provide more and more details, but we believe that with time something has to be done. This tariff recomposition does not help us at all and even any possibility for us to increase our profitability in Brazil. This is not going to happen because this tariff will not help us. Therefore, we see the need maybe to have maybe quotas or to increase the tariff so that the subject could be solved. Daniel, I mean, we waited up to a limit. We cannot wait anymore. So we are now starting a very strong process to readjust our structure in Brazil because this is a new reality and we think that this will go on for longer. We cannot wait. afford to operate in Brazil with many units in a small volume. It's not even feasible or intelligent. Therefore, we are now revisiting our capacity. We are dismissing more people. And a more recent event was the fact that we laid off another 100 people from our Pindamoyangaba unit. And this number just adds up. And the recovery that we see going forward in terms of our profitability in Brazil will have to go through costs. I don't see that this is an adequate environment to recover margins through prices, maybe through some very specific products. That may be the case. But there will not be any special price movement because the environment is not very good for that. In terms of our capacity, we are taking a very close look at trying to seek for competitiveness through costs that I'm sure this will not happen overnight or just in a single quarter. We still have the carryover of all the decisions made. So we have to pay in advance just to bear the fruits further down the road. But certainly we do have the means to improve our margins, not only in terms of the fourth quarter, because we have to take into account you know, maintenance shut down, seasonality. But we are still insisting with the government that they have to take a stand. We are also accelerating our anti-dumping processes. But that's, you know, long term, at least 18 months, I would say. But there are other processes that somehow we are trying to reactivate, especially in terms of hot coil road strips. We materialize the damage But there is a mechanism that we know in Brazil, we call it JETI. It's a technical group of public interest. I mean, okay, dumping is approved and then that process is despite there is a dumping, we will deploy that because this could also harm other sectors. Inflation could go up and things that are difficult to understand in Brazil. Well, we are doing something, but it's a long-term measure. We cannot expect that through these mechanisms something will happen this year. There should be some more harsh decision by the government. We cannot afford to wait any longer because it's very difficult to go back to what we had before. We are now intensely looking at our structure because we want to improve profitability going forward. focused mostly on cost. Okay, I will stop right here. We can certainly talk more about it later on, but I will turn the floor to Rafael so he can talk to you about Argentina and Latin America. Well, thank you for your question. And this gives us the opportunity to explain something that it's complex because it's not like a routine subject, but it's important that we shed some more light. So we'll do that right now. I will just ask for our team to put on the screen again that slide that talks about Argentina. I think this simplifies the conversation. Argentina. for a few years, I think, and several quarters. I mean, in the IFRS role, they've been treated as an inflationary country. So every quarter, we had to recalculate the results within that given year, looking at previous quarters using the last official exchange rate. So every time the government or the U.S. dollar would fluctuate. I mean, the official fluctuate either up or down. We would do a mark to market looking at inflation and exchange rate in the line of expenses, etc. And as a consequence, then we would have our results. But as in December, right after the election, the Malay administration you know, promoted a very relevant depreciation. So from 360 pesos for a dollar, that amount went up to over 800 pesos per dollar. The mark to market was almost 50% in relation to the official exchange rate we had a day before. So in accounting terms, we have to immediately realize that in the next coming quarter, And then we have to consider all the effects that occurred throughout the entire year, looking at all of the revenues and all the costs within Argentina, adjusted by the less inflation number and the less exchange rate. And because of that, as a result, in this fourth quarter, I mean, we detailed all of the lines. The impact in our revenue was an adjustment of 1.2 billion BRLs. And this was more than half of the drop in revenue we had in the previous quarter, which was a drop of 7 percentage points. And this stemmed from this maxi devaluation. And the impact was also an EBITDA of 526 million BRLs. But this impact will not be repeated going forward every quarter, because this will only happen once we have some significant moves in the official exchange rate, or maybe a slight difference between the the non-official exchange rate vis-a-vis the official exchange rate, and whether there will be this effect of inflating result during the quarters and a sudden drop in a given moment, this will certainly depend on what will happen in Argentina in terms of the performance of inflation and the official and non-official dollar rate performance. I mean, The normal operation in South America, excluding the effect of a maxi devaluation, should be very close to what we reported in the fourth quarter, when we will have a quarter without that effect. Because this quarter, we have the effect not only from the fourth quarter, but everything else that happened throughout the year. Therefore, I believe that the reference for the year of 2023 is a good reference. because it could be a starting point for a modeling that we expect to see in the coming quarters. Now, in terms of the second part of your question related to the divestment, the divestments in Colombia and the Dominican Republic, I mean, throughout 2023, they contributed with approximately 400 million barrels of EBITDA in the results of the South America BD. If you look at the performance numbers, it would be, I mean, for the year 2023, 400 million came from Colombia and the Dominican Republic. Therefore, thinking about a normal year, I mean, if you could say that there is any normal year in the steel milling industry, South America going forward would include the result from the fourth quarter, net from the joint venture participation we had throughout the years. So in 2023, it will be 1.2 million barrels for South America. This is what, in our view, would be the result throughout the net result, net from all of these effects. Perfect, Rafa. Thank you. That's very clear. Thank you, Gustavo. Thank you for your explanation on the tariffs. Thank you, Daniel. All the best.

Renata, back to you. Thank you. Next question from Leonardo Correa, sell-side analyst of PTG Pactual. Please, let's have the camera open for Daniel.

Hi, everyone.

Can you hear me now? Yes, we can hear you very well. Oh, that's great. Oh, good afternoon, Reneke, Japor and Renata. Maybe perhaps going back to Daniel's question, you see, Werneck, I think the big story in Brazil has been this deterioration of profitability that came strong, going back to the levels of 2014, 2015, when we had those past crises. I think that this draws everyone's attention in the market. It should draw the attention of the government and of the authorities. So the question that remains is this Brazil normalization to those historical levels of Brazil, 18, 20 percent in the mid cycle. How will it be now? We have heard from some construction companies and builders that Gridau is trying to pass through, of course, a small price increase, given what is possible, given the parity with the imports. In the case of long steels, it's probably around minus five. So obviously there will be room for more, but we have heard about five, six, seven percent price increase attempt in February. So I'd like to hear from you. How is this unfolding? How are these conversations unfolding? And this is something that makes sense. And it would be a price recomposition. So let's talk about recomposition of price and not price increase. Trying to help you there. And you spoke a lot about cost. And in the previous answer, you said that you would be focusing on costs. You spoke about capacity adjustment. You spoke about layoffs. And I'd like you to elaborate more on the homework that Gerdau is doing to try to bring the margins back to adequate levels in Brazil. So that's the number one question. Second question has to do with capex. Well, at least for us here, when we speak with investors, it's all about capex. It's a little higher than what the market had modeled. Shapur. In your presentation, in the very end, you kind of hinted that you could make adjustments according to the cycle. And I'd like you to speak more about that. We are in a complicated scenario with worse results. What is the room of maneuvering that you have from 6 billion? What kind of cut can we expect if the scenario remains as it is? all right well i think that daniel's question in your was excellent because we can speak a lot to that and i'll try to give japan an overview to level and perhaps you can add the details later Well, you see, Leo, these unprecedented moments we're living in Brazil of having such a high penetration of imports. We did go through cycles over time, demand dropping, other difficulties. But a moment like this, where we have a relatively solid demand, Brazil is growing the demand for steel, but that's of some seasonalities and some more difficult years. The demand is kind of solid. It's stable. You mentioned civil construction, and there's a solid demand coming from civil construction. We have new buildings being erected. I can see the book Order of Cut and Bend. the number of construction sites that we are supplying. So demand is kind of stable and it's expected to grow a little compared to last year. This is not a problem to us and this will continue to be so in the coming years. So Brazil, in a way, always had some imports coming in. We were never against it. We were never against a trade opening. Despite the so-called Brazil cost that we always talk about, we always pursued competitiveness so that we could compete on equal footing with any large steel producer. And in recent years, we always maintained a certain percentage available in Gerdau Brazil for exports, always, 22%, 23%, some years 25%. During the pandemic, there was a reduction, but we always thought that this was an adequate strategy to have this buffer. For a while, we had been expecting some changes in China and some other things, and we thought that maybe that strategy would not be valid now and in the future. It was not by chance that for a while now, we have a new strategic line. so that we can transform our Ouro Branco mill, turn it into a higher added value product for the domestic market. So part of the cap extent as will be detailed by Jabor comes from competitiveness in mining, preparing Ouro Branco, for the cycle when it's going through its latest renovations. So preparing Ouro Branco in Minas Gerais to be a very competitive platform for us. So the bulk of the capital will come from this. It's part of a full transformation that the company is going to go through over time. So what are we thinking about the future? We're considering whether what's happening in Brazil has come to stay. If Brazil becomes a truly fully open country to the countries of any sort from the Chinese market, that will be a game changer in steelmaking in Brazil. And over time, this might drive us to make long-term decisions to reduce our level of investment, to reduce our capacity in Brazil, and perhaps move part of our assets and capital allocation decisions elsewhere. To Mexico, maybe. Mexico has been shown and will continue to be a great platform of steel service for North America. Mexico, for the first time, surpassed China as the largest exporter to the United States. So all of these things will be considered. And these decisions will be made. Leo, perhaps we are not thinking about how Gridal will continue to operate in Brazil. For this first phase, it's about preparing Ouro Branco and not having capacity available for exports. So we'll have a level of capex for that. That will range upwards or downwards. compared to last year, but it is a capex that we believe will bring a lot of return to Gradao in the future, regardless of the future size of Gradao, because what's there is a platform we will not touch. Now in the short term, We have been waiting for a decision from the federal government. We didn't make all of the decisions we can make in Brazil to adapt our production capacity to a reality that, in our point of view, will continue for a while. And this postponement of the federal government to take measures. So this will involve reviewing the most productive routes that we're going to have looking forward we have the the iron or route to the bioreducer the scrap route and this is not optimized to the situation as it is now also we continue to operate with several mills and small runs it is not productive to maintain small volumes in many mills. So, we are in a moment of adaptation. This will be translated into cost reduction over the year. Perhaps, Jaipur can add to that. I don't know whether he has made those calculations, but, well, you see, it will require adaptation. That's why I spoke about cost. And as for recomposing price, it's part of our day-to-day. We are looking at premiums, what's coming from imports, the possibilities available, so that we can try to bring our profitability next to historical levels that you mentioned. We're not betting everything on that. Can this contribute? Yes. But our bets to, again, resume adequate profitability in Brazil in this current scenario of stable demand and more imports of steel, all this will involve readapting our way of producing Brazil, the way we set up our assets, the layoffs that will continue. So that's generally what we're thinking, Léo, of course. We're not going to... We're not going to throw the towel because of the situation that we are experiencing. We have more than capacity to adapt in the short and long run to a scenario that I believe we have never lived in Brazil. And it came in a way to kind of change the game in the Brazilian economy, not just in still making, but in other sectors as well. So that's the macro view. And, Japor, please feel free to add more details. Hi, Léo. I think to add information about CAPEX, which was the second part of your question. When we approve investment decisions or long-term investments, Well, for that, we built over the years a solid and healthy balance sheet so that we could have resilience to go through not so positive moments in the market, but at the same time doing what needs to be done and not having to paralyze any investment that eventually we'll need to make, perhaps paying two, three times the amount because we stopped at halfway. So those investments that we started that have been dispersed, CapEx that is being used for these investments, we don't see room for cuts, scale down or great delays and postponements. The 6 billion Bureaul CapEx that we communicated for this year might undergo some adjustments, maybe in maintenance of mills that In this macro context, detailed by Gustavo, not that useful in the long run. Perhaps we'll have to adapt the maintenance capex of these mills. But materially, these investments should not affect the six billion that we have planned for 2024. Okay, now the investments that we have not started making, even those that are in the long-term strategic projects until 2026, those that require more studies, hiring basic engineering and suppliers, these investments will depend fundamentally on the economic conditions and market conditions being adequate. We're not going to go forward with them. We are not going to be approving new investments in addition to that important portfolio that has already been approved in Brazil until we have more visibility regarding all of the factors that Gustavo mentioned.

Thank you. Thank you, Lou. Next question from Ricardo Monigalha, sell side analyst from SAPRA. He has also a few questions that came through the chat. First question, could you help us understand how we should think about the evolution of the operating lines in South America going forward when compared to the levels of the fourth quarter? Question number two. What is the view in terms of the mixed evolution for the foreign and domestic market for the first half of 2024? Could you give us some color about price transfers in the domestic market? And also, he's got a third question. Could you please mention a few examples of IRA projects, the Infrabill or the CHIPS Act where Gerdau is working as a steel supplier? Hi, Ricardo, how are you? I think the first question was previously answered when we were talking to Daniel and we talked about Argentina, South America and the divestments in Colombia and Dominican Republic. I would even say that if we had to think about, you know, without the effects of Colombia, Dominican Republic and Argentina, well, this quarter there was an improvement because of the operations in Uruguay, you know, Argentina and Peru vis-a-vis the third quarter. So you just have to look at the context and how to evaluate and model these lines going forward towards the next quarters in terms of what we expect to see in Argentina, the new Argentinian package and the effects we see in the local economy, the recomposition and the rebound we see in Peru and other geographies in the region. In terms of the mix between foreign and domestic market, this is pretty much along the lines of what Gustavo said before in terms of the recomposition of the mix, a flat demand coming from the construction industry, our cut-in-band portfolio, and the number of work sites, and we haven't seen any significant moves in terms of the international prices quarter on quarter. Therefore, we understand that if things are kept constant, the mix should have some exports or maybe slightly above or below what we saw in the fourth quarter vis-a-vis our experts, also taking into account that everything will be constant and international prices, because the demand is pretty much stable with no major price adjustments, I believe that the major driver in terms of deciding our level of experts will take into account international prices. And maybe, Rafael... I would like to draw your attention to that 38% increase in exports in Brazil from the third to the fourth quarter. I mean, in terms of shipments, it's not anything really significant. It doesn't mean that we have major export opportunities going forward on the country. Shipments will be reduced very much related to some of our affiliate companies or some one-off things that we could do in the international market with adequate profitability. But it's far from being anything structural or our idea of increasing experts. And experts today at these low levels of prices, this is more like a driver to dilute our fixed costs. And finally, in terms of our North America product mix and how that fits into the current government policies that involves CHIPS Act, the infrastructure bill, and the IRA. The main points is that our product portfolio in North America is more earmarked, I mean, less iron ore and rebars and more related to structural and merchant bars that are more focused on non-residential So as part of the package of the government, one of the main highlights for us involves sales of products to solar farms, solar farms for photovoltaic energy. And we are making a major investment in our Luthien plant in Texas. That's a privileged location that can cater to the local demand. because they're building solar racks, and the solar racks are used to support the photovoltaic cells. And as we said in our release, we inaugurated a thermal control plant to offer products of higher added value, catering to industrial lines and other things that are growing in the market right now. Thank you. Thank you for the answers. Next question from Marzu Farigi, sell side analyst from Goldman Sachs. Please, can you open the camera?

Hello, good morning.

Good morning, Gustavo, and Renata. Thank you for your time. How are you? I'm fine. Thank you. I have two follow-up questions. I think the first point is, I mean, thinking about North America, when we look at your main peers, we see... the valuation level around six to eight times EBITDA. And when we look at our numbers, we see the half of that is redoubled. So my first question, I don't know whether it's a philosophical question or not, but the question is whether it would make sense to discuss a potential spinoff of your US business just to try to capture part of that value because apparently the consolidated numbers for the market is not capturing the total numbers of the company. And within North America as well, we saw the scrap prices going up, the price spread, I think it was a bit more difficult, but we see More seasonality coming on the third quarter, but looking at the margins for the first quarter, should we consider an expansion when we compare to last year, even though there was a compression on metal spread prices? I know that it was a long question. And my second question, I mean, Gustavo mentioned something that was extensively debated in terms of a potential increase in import tariffs. It seemed to me that the industry was very confident back in November when the debate was progressing. But then it faded out a little bit. But in the last two or three weeks, I think that Brazil adhered to the process, trying to add another 100 SCM to the VTECs that would allow some other industry, including the steel sector, could benefit from tariff arbitration. this is an important step. I mean, in theory, it seems like we are closer than ever now, but I would just like to know what is your understanding on the matter. Well, excellent questions. Part of the question, I will turn to Jappour to give you more details about that analysis of, you know, about the North America business. But In a moment like this, we have to think about everything in Brazil. There is nothing, especially when we are at a moment where our balance sheet is fine. I mean, we have to rethink about some things. I mean... I don't know whether Shapur already has something else in mind, but I would just want you to be very comfortable knowing that this is a moment, this is a very historical moment. We have to think very seriously about this very strong steel penetration in our country with the thought that this economic transition in China, you know, that they are leaving The long-standing pillars that they had for over 30 years, like civil construction, experts, etc., the transition to this new Chinese economy when they're focusing in their internal market and a green economy, this will take some time. So certainly China will continue to export because this is the way for them to generate economic growth. It's not something that would disappear within a month. we have to think about very carefully. I mean, North America has seasonality at the end of the year, which is quite normal. We started the year on a very good stand. I think we have everything it takes to come to the end of 2024, very sound numbers. Whenever you look at our business, I mean, the backlog, the financial health of our customers, and with all of the infrastructure projects that will certainly increase demand for steel, we are in a time when things are evolving quite well, and we do believe that by year-end things will certainly end on a good note. There will certainly be some volatilities, and we talked a little bit about the scrap market in December and January due to climate issues. It's difficult to move scrap, and so prices go up and down. And in terms of our peers, it's also important that you understand and you make a distinction in terms of where they really compete with us. If you look at, you know, beans and merchant bars in Colombia, There are competitors that were all very well consolidated. But we have everything it takes for us to have a very good performance in North America this year. And in terms of results, we'll be comfortable enough to make all the necessary decisions we have to make in relation to Brazil. You have to remember that in 2023 and maybe throughout 2024, we will present results that sometimes it would take three years to have these results. Think about the pandemic years. Now, with everything we did, the divestments, and the fact that now we have a very lean company that allows us to make very quick decisions. We are delivering sound results. Our balance sheet, our P&L is very sound. That impression you have that things are not so good. It's because I just stopped going to the press and giving interviews. You think that this subject is dying out or fading away? No, it's not. I'm just not going to the press and speaking my mind. I mean, we didn't expect a period when it would be so hard to make decisions. I mean, There is also higher taxes in inflation in Brazil. And then you think that there will be an absurd impact with inflation, but impact will be 0.001%. So this is a very tense moment. Maybe you may think that I am... being kind of cold in terms of the subject. Certainly, I'm a bit more frustrated because I thought that the government will be able to react much faster and make a decision faster. But I think it's almost inevitable that this topic about China and steel and the impact of China imports to our economy, it is something that will linger for much longer. So, I mean, Pindamoyangaba is a state-of-the-art unit in terms of special skills. We're laying off 100 people that were highly skilled and trained. I mean, after all the investments we did in those people, we had to lay them off. And this is terrible for us and for the market. And also the LCMs that issue. I mean, on the technical side, this probably gives us the possibility of placing new projects. As it was limited to 100, there was... very few positions that were vacant. But when you grow there from 100 to 200, you can probably put some other products. And some other countries who did the same thing, going from 100 to 200, they did that just to do that. So I think this is still a decision on the part of the ministry to make sense. I mean, the subject didn't die out, but in my view, They are taking much longer to make a decision, and they are asking for so many details that were totally unnecessary, since this is a damage that is already in place. And we are also entering with anti-dumping processes. These are international facilities. But it takes time, sometimes 12 to 18 months. But this is inevitable. I know that they will come up with the damage that the Chinese companies are causing to us. So this is just a summary. I think I didn't answer. If I didn't answer your question completely, just let me know and I can give you more details.

This has been great. Thank you. I just wanted to know about the potential of U.S. listings. I just want to understand what the board and the management of Gerdau were thinking about a potential spinoff and U.S. listing. Well, Marzu, we do these calculations on a recurrent basis. We put together a spreadsheet and we present it to the management and to the board of directors. So we see the total of gridiron compared with the multiple of the piers. It seems that there is something missing. There's something that we forgot when adding the parts. And if there's something very weird about the multiples. But when we think about a possible relisting, of Gerdau, all these things are evaluated quite frequently in-house, but we cannot really move forward on tangible terms, moving from studies to actions until we have it more clear, the rules of the game and what's going to be proposed here in Brazil regarding the tax reform and the tax on income, depending on the mechanisms regarding profits abroad by holding companies incorporated in Brazil. This can point us to one solution. And we might choose a different solution regarding our ownership reorganization, not just in the United States, but around the world. So until we have more visibility regarding what's going to be proposed, what's going to be set forth regarding income taxation, particularly profits abroad, it will be difficult for us to take one path or another. Super clear. Thank you very much. Thank you, Marcio, for the questions. Next question from Rafael Barcelos, cell site analyst of Bradesco. He would like to speak with an open camera.

Hello.

Good morning. Thank you for taking my questions. My question is kind of a follow-up question regarding the Brazil dynamics. apologize for insisting on this but as we said before with the brazil margin levels going back to 2015 levels that's quite significant so perhaps it's worth getting more color on this for a neck it became clear that in the short term the only possibility to improve profitability would be via cutting costs. So it would be interesting if we could understand the order of magnitude of possible improvement via cost cutting in the short term, if there's any specific initiative or if it's something more market related. That's my first question. Second question. Changing gears regarding special steels. We have seen a demand from the automotive industry improving in Brazil. And I would like to hear from you if you have any similar feedback. In the United States, there's some benefit coming. So my goal here would be to hear more from you regarding the potential of improved earnings coming from the special steels bidding. Thank you, Rafael, for these two questions. I'll turn the floor straight to Japor. Japor is coordinating these initiatives regarding competitiveness and cost reduction. But I can tell you straight away, Rafael, there's no silver bullet. It is a collection of several actions that need to be taken so that we can be more competitive cost-wise. But it involves a complexity. There are a number of variables involved in Gradao's operations, so we would need to prioritize. We could reduce capacity, for example. We would prioritize filling the capacity of our mills that are in the route of bioregisters or scrap. So there are some complexities that we need to consider. But I have to tell you straight away, there's no silver bullet. Rafael, could you give us more color here? Could you elaborate? That will help Rafael understand. Hello, Rafael. Congratulations on your new home. in your new company. Well, you know our history and our track record. If we get our modeling guide where we have the breakdown of our costs and we identify costs that are typically fixed and the typically variable costs, if we read the Brazil operation, we can extrapolate that we had an increase in our fixed costs between 2023 and 2022. of around 400 million BRLs. So we understand that in an environment of adjusting our structure, optimizing our mills, our shifts, our teams, as Gustavo has mentioned, During the quarters, we should pursue a recomposition in that order of magnitude. But as Gustavo mentioned, there is no such thing as a silver bullet. We believe a lot in working hard. We'll make gradual efforts. Whenever we speak about reducing fixed costs, sometimes we have to make some investments, invest in severance packages and such things, costs to close down units so that we can reap the fruit later. You have to make a sacrifice to make some difficult decisions. And I think that in order of magnitude that you asked, we should think, I'm not extrapolating a lot, but thinking about what we have that is public information and that is presented to you in our modeling guidance, this is the order of magnitude that we should revisit as opportunities along 2024. So let me talk about special steels. There are two different stories here. In Brazil, we went through a difficult year for this segment. It was difficult for us, given the demand and the sale of light vehicles, but primarily due to a significant reduction in sales of heavy vehicles, heavy-duty vehicles. The main explanation resides in the fact that the engines technology changed in Euro 6 that precipitated A pre-purchase in the end of 2022, so this segment, which is very relevant for our business in Brazil, the segment of heavy-duty vehicles, buses, trucks, well, that felt an impact. Well, we're seeing a recovery here, although not all recovery in light vehicles is directly related to recovery in demand. The shipments of electric EV vehicles in China, imported from China, it's not good for us. There's no steel from us in that. But in the vehicles manufactured in Brazil, combustion engine or hybrid vehicles, for those, we already see a recovery in the demand for steel for light vehicles. And we also see a recovery in the demand for steel for heavy vehicles. We believe, and this is already materializing, in a higher demand over last year. Not the same as 2022, though, because players need to rebuild their fleets and other needs of the customers. They need to buy more trucks. At the same time, our special steels production is much easier to adapt to the current demand than our operation of long steels and flats. So we are also looking to increase our competitiveness in special steels. I should say that in the last 60 days, we've adapted the operation. So in Brazil, we're going to have competitiveness with better costs. We adapted our operations to this more restricted market situation. And we also see recovery in the market of light vehicles and especially of heavy-duty vehicles. I think it's important to stress that a hybrid vehicle requires more steel than a combustion engine vehicle. So in Brazil, we see the automotive industry brewing with hybrid vehicles than fully EVs. So over time, I should say, this will contribute to our earnings, our results of special steels in Brazil. In the United States, the air was good, and it has everything to be good again in terms of manufacturing and sale of vehicles. Of course, the strike of the four big ones in September did impact volume, but things are coming back on track. we will be reaping the fruits after a long cycle, after five years of investments in preparation of our biggest mill, the Monroe Mill, state-of-the-art mill to produce special steels, coupled with the fact that some competitors did leave the market. So we have everything to have a very positive year in the United States and North America for special steels. So among our BDs, I think special steels has everything to serve smoothly. perhaps with an upside compared to last year in terms of better financial results over the year. So this is a general overview of special stills. Thank you very much, René, Chapour, Renata. Thank you for participating.

Our next question is from Guilherme, a sell-side analyst from Bank of America. And he would like his camera to be enabled, please. Can you hear me? Yes, we can hear you well. Thank you for taking my question. My first question is on North America. For some years, we've been talking about margin normalization and the margins going to lower levels, but it's been in the high teens right now. So when you look at the business and when you run your models, what is a normalized margin? Would it be around 20% or 17% is low or maybe lower than that would be a normal level. So what is your expectation in terms of margins? And my second question is about Ouro Branco Mil. You said that during that review, you have to add more added value products. Could you give me a little bit more details about what you have in mind? And do you think about any change in trajectory in Ouro Branco Mil? you know, bear in mind that you also think about the decarbonization strategy. That's a great question. I will answer your three questions. I think it's difficult to say today about normalized margin considering the current environment because there's a lot of volatility in the world. But I think that According to the current levels of margins, we should probably see the maintenance of these margins throughout the coming quarters, this year and next year. I don't see any major move in terms of possible risks. I don't see that in the horizon or anything that could impact margins both up or down in terms of demand, and we have a very sound backlog. With the growth of all of these incentive programs that I mentioned, that has been very good for us. So IRA is very present in terms of our backlog. The increase of solar energy in the US, I mean, we are providing steel for the solar racks. There is a significant demand in the country. The CHIPS Act, the Science Act, that involves a lot of new facilities being built in the US. In our view, I mean, what is taking so long, but this will happen, is the translation of the infrastructure projects into something real, because there is breakdown by region, you know, different projects. But in general, when you look at the backlog and when you look at the coming demand and when you also look at the fact that there hasn't been any new investments, you know, in new capacity on our side, Everything converges to the maintenance of the margins that we've seen. It could vary a little bit up or down. But if there is such a thing as normalization concept, I think we could apply it in 2024, 2025 and 2026, given all of the things that I mentioned. About Ouro Branco. Right from the beginning, when it was a Ciderbras mill, it was meant to be a place to make semi-finished goods. But throughout the last few years, we are trying to reduce that capacity. But it became very clear to us, due to all of the changes in the steel landscape, that we wouldn't have enough capacity of semi-finished to export. So now, throughout the year, we are deploying the second phase of the hot coil road strips, And then in the future, we'll have a third phase of hot-coil road strips because this gives us more options. Not only are we able to serve our customers better, but in the future at Ouro Branco, we could also have some flat downstreams or maybe cold-in-cold or galvanized. I mean, there are some options that are being looked at at the moment. In terms of structurals, I think the only big rolling mill of structural is in Ouro Branco. So there is a growing demand for that product due to the growth of the use of metallic structures for both commercial and residential construction. Therefore, we see the possibility of increasing the production of structural from Ouro Branco. We have to look at all the options and then understand what would be the priorities but it's inevitable inevitable looking you know at the future that odobranco will be the right platform to to produce or edit value products in terms of capex for the next 40 years this will bring in an absurd competitiveness in terms of iron ore a reserve mine and long-term resources. And in this current investment phase, we already have 40 years of iron ore supply. The mining deck is only 13 kilometers far from the plant. Therefore, we believe that Ouro Branco will be highly competitive. And at the same time, we are using all the available technology to decarbonize the mill. And companies that have integrated assets have some time to decarbonize as technologies become more readily available. So in general, that's it. I think I already covered that question about . And in case I forgot anything, maybe Rafael can help me to add anything in case I left something behind. Yeah, I think you said it all, Gustavo. The issue has to do with our journey for Ouro Branco, because we want to add, you know, to increase added value products, not only in terms of our product portfolio, but also in terms of raw materials. The main investment of this cycle, 22 to 26 hour, the bulk of our environment is in terms of sustainable mining and the production of iron ore in Minas Gerais, because this will allow Ouro Branco to be extremely competitive with a high iron grade, and this will contribute to our decarbonization process, but at the same time will be highly competitive in terms of cost. Therefore, we want to to see Ouro Branco being less exposed to external market cycles, but increasingly more robust, both in terms of downstream or the product mix, but also in terms of sell-up and the supply of raw materials sold. Very good. Thank you, Werneck. Thank you. Renata, do we go back to you? Okay, thank you. Then the topic is CAPEX. We have three questions that are very similar. First, Carlos de Alba. ask whether that $6 billion of CapEx guidance for 2024 includes Gerdau Next. What's the number for Gerdau Next? The second question comes from Guilherme, sell-side analyst from XP. The question is whether CapEx for 2026 that was $5.7 billion, it was $5.7 billion higher than what was previously indicated. Does that reflect any one-off factor? Could we say that this is related to the prepayment of the CapEx plan that was earmarked for 2024? And the third question comes from Igor Gediz, sell-side analyst from Genial. The question is the following. Could you please... give me a breakdown of that 464 million capex that were part of the 2 million of the fourth quarter of 2023, but did not have a cash effect. Because when you look at your cash flow, the free cash flow capex is 1.5 billion, but the total reported capex is 2 billion. So my question is, How do you justify that 474 million not having a cash effect? Were these events, these events were related to what? Okay, I will start with Igor because I think this is a more technical question. And then Igor's question about CapEx reconciliation and the cash effects are free cash flow. I'll start with the last question then. When we talk about CAPEX guidance and how we put CAPEX together, we are talking about additions of real estate to our balance sheet. So we start building, we hire suppliers, we start with that. And there are some installments of accounts payable that we have to pay for the equipment we acquired and suppliers, things that are that were delivered but weren't totally paid because we hire things throughout the year and so within the month of December but not necessarily that means that we paid all of the accounts payables so to speak within that current year and as we have more capex now than what we had in the past this remaining payments things that have been already hired and things that are underway and there is PP&E and things that were not in fact paid or did not leave the companies, you know, cash. I mean, this year involved 450 million BRLs. The bulk of the amount corresponds to investments made in Brazil, investments at Ouro Branco, because that's the mill that is probably taking up most of the CapEx investment in this cycle that I'm referring to. Now, to answer Carlos de Alba's question about the CapEx and the guidance and the investments in Gerdau Next, in that number of 6 billion BRLs, we are solely speaking about CapEx investments in our core business and our full subsidiaries. This does not include investments that we as a company will do in terms of you know, capital raise of not controlled companies in the case of, which is the case of Gridiron X for 2024, in addition to that 6 million BRLs that we will have in CapEx investment, in BP&E investment, within our companies and in our core business or next companies or full subsidiaries of Gerdau, we will probably do some capital raise and things that we have already committed to do last year, especially, I mean, capital, I mean, most of the projects, well, still have to be dispersed and AGIANCI, our, our rental of heavy vehicles together with RANDOM. So we have some installments or capital payments to do. In the case of the energy company, we have 50%. At GNT, we do have some holding. And so the money that will be paid throughout 2024 should be realized depending on the business plan of all of these two So it will be in the range of 100 to 200 million bureaus. This is the committed amount of investments throughout the year of 2024. And finally, to answer Guilherme's question about that additional amount that we spent in 2023 vis-a-vis the guidance, refers to, in some cases, anticipated investments, important investments, in the case of maintenance of our blast furnace in Ouro Branco. So sometimes we just prepay depending on more favorable market conditions. So in these cases we just guarantee some critical purchases for our long-term maintenance projects just to prolong the lifespan of Ouro Branco. So that was one installment. And other payments depends on the exchange rate fluctuations, so investments denominated in US dollars using the exchange rate of 2022 and the currency or the foreign exchange of this year. I know that that was a long answer, but I think we covered all of the three questions.

Carlos de Alba, Morgan Stanley asked another question. I believe that the other ones have been answered during the call. So what is the dividend that the management will propose to the board for 2024? That's one additional question by Carlos de Alba. The dividends we'll propose along 2024 will depend materially on the earnings we'll be able to have during the year, considering our dividend payout policy. Our policy and the bylaws have not changed. They are 30%. We have been paying over time, in recent years, a payout significantly higher than 30%. And we understand that there's room to continue to remunerate our shareholders above 30% in the coming quarters. Now, the amount that we will actually pay out for all of our shareholders will depend materially on our results. considering that we need to maintain our financial health, solidity, stable balance sheet, and to continue to create profitability in a sustainable fashion as we have done to date. Thank you for your support. Very well. We are coming to the end of our earnings conference call. In the benefit of time, and because we value your time, the Q&A session is closed. All questions that were not answered will be answered later by our investor relations team. And before I turn the floor back to Gustavo, it is with great joy that I inform you firsthand that we are launching today the new investor relations website with supplementary analysis new resources, and a more intuitive navigation, demonstrating our commitment in evolving and meeting market needs with more close communication with our stakeholders. I invite you all to navigate our website, same address, same email address. I mean, same website address. I'll turn the floor to Gustavo Renat for his final comments. Thank you, Renat. I'd like to thank everyone for participating. As always, I would like to thank all of you for joining us. It is always a huge pleasure for me, for Rafa Japor and for Renata to be with you. And I would like to invite you to participate in our next earnings video conference call referring to Q1 of 2024, which will be held on May 3rd. So thank you very much. All the best and take care.