Gerdau S.A.

Good morning, everyone, and welcome to our earnings release for the fourth quarter of 2024. I'm Mariana Dutra, Head of Investor Relations, and here with us today are Mr. Gustavo Werneck, CEO and CFO, Gustavo Japor. This call has simultaneous translation into English, and you can choose the language of your choice, clicking in the globe icon in the lower part of your screen. During this broadcast, all participants will be in this lonely mode. And next, we will open for a Q&A. Analysts and investors can join the Q&A queue through the raised hand icon. I would like to emphasize that any forward-looking statements are Assumptions and beliefs of the company based on information currently available. Forward-looking statements do not represent performance outlook and depend on circumstances that may and may not occur. Now, I'll turn the floor over to Gustavo to begin the presentation. You may begin, Gustavo. Thank you, Mari. Hello, everyone, and good afternoon. I hope you're all well and thank you for meeting us today for another earnings release call. I will briefly comment on the highlights of the quarter and the outlook for our operations, dedicating more time for the Q&A session. So first of all, I would like to point out that we ended 2024 with the lowest accident frequency rate in our 124-year history. And I reinstate our commitment to people's health, safety, and well-being, which, as you know, is always our priority. We came to the end of 2024 calendar year with an adjusted EBITDA of 10,800,000,000 BRLs as a result of improved competitiveness of our operations achieved through strategic cost reduction initiatives, mainly involving our assets in Brazil. Meanwhile, the Brazilian market continued to be impacted by the high penetration rate of important steel in Brazil, which ended the year at almost 20%, even with the implementation in the midst of last year of the tariff quota system. Finally, I would like to point out that we acquired two SHPs called Garganta de Jararaca and Paratinga II, located in the state of Mato Grosso. The purchase of these assets is in line with Gerdau's strategy to have a more competitive cost of business, increasing its own production of renewable energy and also in line with our decarbonization process. Now, I'll turn over to Japur, who will go over the financial highlights.

Thank you, Gustavo. Hello, everyone. It's always a pleasure to be here with you in our earnings conference call. The 2024 result reinforces our ability to adapt and the importance of our geographical diversification. We were able to maintain financial metrics and a solid balance sheet with low leverage. without having to sacrifice our growth initiatives and our investments or our commitment to returning value to our shareholders. In this context, I would like to highlight three points. Number one, 2024 was marked by our main focus to reduce costs and controllable expenses. Thanks to the efforts of all of our employees, we were able to achieve a savings of 1.5 billion BRLs in line with our savings guidance. As a result, we started 2025 at a new level of operating efficiency compared to the year of 2023. Secondly, our strong cash generation allowed us to invest 6.2 billion BRLs in CapEx in 2024, with more than half of this amount earmarked for strategic projects. Growth and competitiveness gains for our assets. For 2025, our CapEx guidance, as mentioned in the material fact, will be 6 billion BRLs divided equally between competitiveness and maintenance efforts. Maintenance investments. Lastly, I would like to highlight the return to our shareholders. Taking into account dividends and the share buybacks in 2024, we distributed almost 2.9 billion BRLs, a payout of almost 66% of our profit. In other words, we completed our share buyback program of 2024 and we started a new program for 2025. buyback programs of relative the same size to repurchase 65 million shares. In 2024, we acquired 3.4% of the company's outstanding shares, and for 2025, we expect to repurchase another 3.2% of our outstanding shares. To end, I'd like to inform you that as of the first quarter of 2025, we will start reporting the results of our company using three reportable segments instead of four as we had before. And these three segments will be Brazil, North America, and South America. This new format is in line with the current scenario in the steel industry. with an increasing regionalization of markets. We believe that with this approach we will have more clarity as we will group together in the same segments macroeconomic dynamics, consumer markets, regulations and functional currencies that are similar. In addition, this change will make our exposure to Brazil and North America clearer. And these two are our main markets of operation. I'll end here and I'll join you and Gustavo for the Q&A session. Thank you.

Thank you, Jean-Paul. And I keep saying that in the midst of an uncertain global macroeconomic scenario, we continue to focus on the growth and competitiveness of assets with the greatest potential for generating long-term value for our customers and our stakeholders, such as the Ouro Branco unit in Minas Gerais, which will which will add a new hot-coil road strip capacity in the first quarter of 2025. In Brazil, we are still seeing good indicators for the construction industry with a record number of property launches and positive figures coming from the automotive sector. However, rising inflation and high interest rates aim at a market heavily impacted by steel imports could result in Lower local demand for steel in the coming months. For North America, our shipments and backlog recovered in the first quarter, returning to historical levels. We believe in a positive outlook for non-residential demand and infrastructure, which should positively influence the local market. Moreover, the new trade defense measures announced by the Trump administration aimed at straightening U.S. industry could result in greater use of our assets in the country and improved competitiveness of these operations. The 25% import tariffs will help correct the exceptions resulting from Section 232, whose mixed tariff rate quota system covered only 18% of steel shipments imported into the U.S. We continue to monitor how these new measures will impact the dynamics of the global market. In this sense, as I have said before, Brazil continues to be heavily impacted by the excessive entry of imported long and flat steels since the current system of quotas implemented in mid- 2024 has been ineffective in the commercial defense of domestic steel. This mechanism has not brought the expected results and needs to be urgently improved by the Brazilian government as it was done by the U.S. government. And then with that, I conclude this first part with thank you for your attention. And now we'll jump to the Q&A session.