Gerdau S.A.

Good morning, everyone, and welcome to Gerdau's second quarter 2025 results presentation. I'm Mariana Dutra, Head of Investor Relations, and joining us today on this conference call are our CEO, Gustavo Pernecki, and CFO, Rafael Japor. Please note that this call is being simultaneously translated into English, and you can choose your preferred language by clicking on the globe icon in the bottom of your screen. During the presentation, all participants will be in listen-only mode, and next we will initiate the Q&A session. Analysts and investors can join the queue by clicking on the raise hand button. It is worth noting that the forward-looking statements contained herein are based on the company's beliefs and assumptions, based on information currently available. Forward-looking statements are no guarantee of future performance and are subject to risks and uncertainties that may or may not occur. I will now turn the floor to Gustavo to begin the presentation. You may proceed, Gustavo.

Well, good afternoon, everyone.

I hope you are all well, and I really appreciate the opportunity to be together for another earnings release presentation. I will briefly comment on the highlights of the quarter and the outlook for our operations, and then we will proceed with the Q&A session. But firstly, I would like to highlight that we entered the second quarter of 25 with another positive milestone in our historical series of workplace accident rates, reinforcing our commitment to the health, well-being, and safety of our employees and all stakeholders with whom we interact. Reaffirming our commitment to sustainability, I would also like to highlight that we recently published Gerdau's annual report for the 2024 cycle. Among other indicators, the report highlights that we achieved an average GHG emissions of 0.85 tons of CO2 per ton of steel, the lowest in our historical series, and less than half the global average for the steel production sector. Now, in terms of the financial performance, I highlight the strong recovery of our North American operations, which in the second quarter posted the highest all-time share in our results, representing 61% of consolidated EBITDA. I would like to emphasize that Gerdau operates as a U.S. company in the United States, meeting domestic demand, which still produce 100% locally, without relying on imports from Brazil. Our decades-long presence in the North American market reflects a favorable business environment in the country and is part of a business strategy of internationalization and geographic diversification, which allows us to to operate autonomously in the seven countries where we are present in the Americas with independent executive and operating management. Meanwhile, in Brazil, the domestic market continued to be impacted by excessive imports of steel throughout the second quarter. The import penetration rate reached 23.4% in the first half of the year, once again demonstrating the ineffectiveness of the current quota system with tariffs and the urgent need to implement measures that can effectively defend the Brazilian steel industry and domestic jobs. Given this scenario of lack of competitive equality in the Brazilian market and the slowness of the authorities in taking more effective measures, we decided to reduce our investments in Brazil and the details of which we will announce over the coming months. At the same time, we are continuing to adjust our current production capacity to this alarming scenario of high penetration of imported steel. And now I will hand over to Japor, who will detail the financial highlights and the impacts of this current scenario in the Brazilian market on our results. Thank you, Gustavo. And hello, everyone. It is always a great pleasure to be here with you in our earnings release presentation. Our adjusted EBITDA was 2.6 billion BRLs, 6.6% higher than in the first quarter of 2025, with the North American segments performance standing out, as mentioned by Gustavo. And on the other hand, we saw a reduction of our operations in Brazil, as well as in South America. Net income stood at 864 million BRLs, or 43 cents per share, up 14% compared to the first quarter of 2025. During this first quarter, we issued two important debt issuance, a US$650 million bond, maturing in 2035, and a seven-year debenture totaling 1.4 billion barrels. The issuance were aimed at strengthening the cash flow of the company while extending the average maturity of the company's debt. Speaking about leverage, the company's leverage ratio net debt over EBITDA ended the period at 0.85 times, way below the level established by our debt policy, reinforcing Gerdau's capacity to continue executing the investment necessaries for our business despite a more adverse scenario. Now, regarding CAPEX, we invested 1.6 billion BRLs in the quarter, where we allocated most of it in our Miguel Bournier Sustainable Mining Project, which has already reached 72% completion. We are in the pre-operational planning phase. starting up at the end of this year, and this will really change the competitive scenario of our Ouro Branco Mil, adding 5.5 million tons of high-quality iron ore, and the potential of the project is to generate about 1.1 billion BRLs a year once the ramp-up is finalized. Now, in North America, due to the excellent moment of the market, both in terms of shipments and prices, the company decided to postpone the implementation of phase one of the Midlothian expansion project in Texas, which will not significantly change the project completion of that expansion process because it will take years. and not even the amount of capex allocated to the project. Based on the results for the quarter, we approved the distribution of dividends in the amount of 12 cents per share, totaling 239 million BRLs. In addition, we continue to execute our 2025 share buyback program, which already reached 68% completion, representing 2.2% of the company's outstanding shares, totaling almost 700 million BRLs throughout the year in terms of returns to our shareholders. We continue to believe that share buybacks at the moment are an excellent way to allocate capital and at the same time return value to our shareholders. And speaking about shareholder return, if we take into account dividends and also share buybacks, Our payout ratio came to 90% in the second quarter of the year, which is basically very close to three times what has been set up in our bylaws. And with that, I conclude my remarks, and I'll join you again during the Q&A. Thank you, Jean-Paul. And in North America, we continue to see steel demand at high levels. with the order backlog above historical levels, mainly driven by demand coming from the non-residential construction sector. Our capacity utilization in the US continues to be positively impacted by steel import tariffs announced over the last few months, and we maintain a very healthy market outlook while remaining very attentive to the macroeconomic scenario and interest rates, which remain high. In Brazil, on the other hand, the domestic market, although experiencing good demand for steel, continues to be impacted by excessive imports, as I mentioned at the beginning of my presentation. Therefore, much of the increase in steel consumption recorded at the beginning of this year was met by imports. There is even a risk that new import records will be set in the coming months if trade defense mechanisms are not improved. For the coming months, we see a resilient civil construction market and we are closely monitoring the level of activity in the automotive and agricultural sectors, which are already being impacted by high interest rates. In addition, we are cautiously monitoring the possible impacts that the imposition of tariffs by the U.S. on Brazil may have on our domestic industry. I will now hand the floor over to Mari, and Shapur and I will be available to answer your questions.