Gerdau S.A.

Bem-vindos à divulgação de resultados do primeiro trimestre de 2026 da Gerdau. Eu sou a Arianna Pereira, especialista da área de relações com investidores, e hoje eu me junto ao nosso CEO Gustavo Werner, que é o CFO Rafael Japur, nessa videoconferência. Lembremos que essa transmissão está sendo feita com tradução simultânea para o inglês, e você pode escolher o idioma de preferência clicando no ícone do globo na parte inferior da tela. During the presentation, all participants will be only as listeners and then we will start the question and answer session. Analysts and investors will be able to enter the line through the Raise Hand button. It is worth noting that the perspectives presented here constitute beliefs and premises of the company based on information currently available. Future considerations do not constitute a guarantee of performance and depend on circumstances that may or may not occur. I pass the floor to Gustavo to start the presentation.

Hello everyone, good afternoon. I hope you are well. I would like to thank you for the opportunity to be together in another publication of results. We will briefly comment on the highlights of the first quarter of 2026, the perspectives for our operations, and then we will continue, in a way, for our question and answer session. We had, for another period, a strong result in North America. We recorded, between January and March of this year, the best adjusted EBITDA for a first quarter since 2022 in our North American operation, which was responsible for 75% of the EBITDA consolidated by the company. This performance is the result of the continuity of the demand for local steel at a good level, leveraged by the consumption of segments such as data centers, infrastructure and solar energy. and a solid operational performance of our operations in the region. On the other hand, here in Brazil, the domestic market continued to be pressured by the excessive input of steel imports, whose volume rose 4.2% in the first quarter of 2026 in relation to the same period of the previous year, reaching a penetration rate of 22.7%. In this context, we continue to closely monitor the possible unfoldings of anti-dumping analyzes on long and flat steel that should be updated in the coming months. This unloyal import scenario has impacted the profitability of our operations in the Brazilian market. I reinforce that we are investing in initiatives that strengthen the competitiveness and profitability of our operations here in Brazil. We have even seen a recovery of the EBITDA of the operation in this first quarter as a result of this strategy. Finally, I would like to highlight that we recently presented to the market the Gerdau Unioeco, a steel solution with low carbon emission, developed to support customers who seek to advance in their decarbonization journeys and strengthen their competitiveness in a transition scenario for a low-carbon economy. With the launch of the new line, we began to offer a full portfolio of products with a lower carbon footprint for steel consumers in general, such as automotive and construction. I will now pass the word to Japur, who is here next to me, who will detail the financial highlights and the impacts of this current scenario on our results. I'll come back to make some very brief comments and we'll move on to our Q&A session. Japur, it's your turn. Thank you, Gustavo.

Good morning, good afternoon, everyone. It's always a pleasure to be here with you in another disclosure of results from Gerdau. We started the year of 2026 with a consolidated liquid profit of R$ 1 billion, 51% higher than the last quarter, sequentially, and 34% above the same period of 2025. This result was boosted by the sequential growth of the results in all our business segments, with a highlight for North America, which continues to gain relevance, as Gustavo highlighted earlier. In Brazil, on the other hand, even with a weaker apparent consumption in long-term assets, our main market, we had an EBITDA margin higher than last quarter, much depending on our discipline in costs. Thus, we generated an EBITDA of R$ 3 billion in the first quarter. So, guys, we talked a little bit about our operation in Brazil, that even with the apparent consumption of the Brazilian market, weaker in long assets, which is typically our main market, we obtained an EBITDA margin higher than last quarter, much in line with our discipline in costs. So, consolidated, we generated an EBITDA of R$ 3 billion in the first quarter, with an almost 18% margin. We ended March with a leverage of 0.74 times the liquid debt by EBITDA, an extremely solid level aligned with our policy and financial strategy. In the first quarter of 2026, we registered a cash flow of R$ 16 million. even in a period that typically consumes turnover by seasonality, the return of business after the maintenance stops at the end of the year. In comparison with the first quarter of 2025, we generated in this quarter, now in 2026, R$ 1.3 billion more in cash. This reflects not only the improvement of our EBITDA, but also the important reduction in the rate of CAPEX payments compared to previous years. But this does not mean that we are not investing in our future. Until the end of this year, in 2026, I would like to remember, if we resume what we have to disclose in the latest results, in our Investor Day, that Gerdau should complete in 2026 three very significant projects. The expansion of mining in Mingueburguê, the Sukata Processing Center in Pinambangaba, and the first phase of the expansion of Middle Oafing in Texas. Together, these projects have the potential to add almost R$ 1.5 billion of annual EBITDA when they have their ramp-ups fully completed. Finally, we remain firm with our commitment to generate value for our shareholders. In this quarter, Agredal S.A. will distribute 18 cents as dividends per share, while Agredal Metallurgical will distribute 8 cents per share. In addition, speaking of Metalúrgica Gerdau, we approved the opening of a new purchase program for the company of up to 10 million preferential shares, which today, due to the value of the quotation, approaches an investment close to R$ 100 million. I stop here and come back later in the part of questions and answers.

Thank you. Thank you, Japur. And to finish, I would like to say that here in Brazil, We see signs of a gradual return of domestic demand, with emphasis on construction and infrastructure industries, after a more intense seasonality at the beginning of the year, even before an excessive input of steel imported to the local market. In North America, in turn, we continue to see stable steel consumption on high levels, with a backlog of orders at levels above the historical average. We continue to follow the developments of section 232 and the formal review of the commercial agreement between Canada, the United States and Mexico, called USMCA, scheduled for the beginning of the second semester. I will return the word now to Liana and Japur, we are available to answer your questions and doubts. Aris, come back with you, okay?

Thank you, Gustavo and Japur. Let's start now the question and answer session. And the first question is from Ricardo Monegaglia, from Safra.

Good morning everyone, thank you for taking my questions and it's good to talk to you. I don't know if you can see my screen, my camera, but anyway. First, I want to praise the margin performance in Brazil, it was a good surprise here, both for me and in the last conversations I had with investors. So I wanted to take advantage of this issue of competitiveness in Brazil. You have talked a lot about the next wave of improvement, not necessarily coming from capacity closing, but efficiency and cost reduction. So I wanted to give you the opportunity to give a little more color of what are the main levers that you see today in efficiency gains. I understand that there is a little logistics, there is amelioration, mega-burner, obviously, mix, industrial productivity, so the question is very broad. but I understand that it is very irrelevant here for the current moment. And then my second question would be in capital allocation. I realize that there is still a certain dispersion between what the market expects for CAPEX in 2027. So I wanted to confirm with you, given the delivery of the mining project and, finally, with the other projects of great competitiveness as well, more defined or with a lower CAPEX balance, does it make sense for us to already wait for your CAPEX next year, migrating to a level a little closer to the depreciation level? Especially considering that the company's priority is the discipline of capital allocation, cash generation and return to the shareholder. So thank you for taking my questions.

Okay, Ricardo, we can't see your camera, but we heard you very well here. I'm going to introduce this topic of competitiveness and cost in a more general way. JAPUR, as always, has the numbers more detailed than me. He already mends with some number that he wants to pass on to you. And then, JAPUR, I also ask you to help us answer this question of CAPEX. Ricardo, in general, this evolution of our margins in the first quarter of this year, it was very much the result of initiatives that are in our hands. So, we see that we still have room to move forward, to seek a little more cost competitiveness, we have a service in Brazil that goes from south to north, so our logistic equation, as you mentioned, has opportunities, we take the material from the plant, take it to our more than 70 branches of Comercial Gerdau, then we take it to the construction material store, so these issues of maximizing of our cost competitiveness equation in Brazil, it has not yet reached the limit. We do have opportunities coming our way, and we will continue capturing all these opportunities. On the other hand, looking ahead, there is this issue of cost pressure, especially in energy, This whole conflict theme of the United States with Iran, it has been done on a day-to-day basis, with our main supply providers looking for us daily, asking for price renegotiations and such. We also have negotiations with our clients at the moment, trying to somehow find an equation that makes it possible to review part of these costs for the various segments. We have ahead of us the benefits of capital allocation investments in CAPEX, in projects that we have carried out in Brazil, Japur can also comment in a little more detail, the competitiveness in Sucata, the mining investment itself in Miguel Bournier. So there are pros and cons coming ahead, but we are very convinced that what is in our hands for the next few months, a reduction in costs and a slight increase in margins, we will continue to put all possible efforts into it. It will not be any recovery of margins coming forward, very radical, but gradually and gradually, we understand that we have the conditions to continue improving our margins without counting on commercial defense issues, especially of anti-dumping issues, of flat axes, that we are very optimistic about, that can bring a new reality to the sector from the third quarter of this year. So this is my general view on the subject, but I'll pass the ball to you, Japô, if you want to add any more numbers to give Ricardo a more detailed view. And I also ask you to answer the CAPEX topic. Of course, Ricardo.

I think that, detailing a little more here, we are thinking of two large projects that we have to be delivered from here until the end of the year, which is the mining of Miguel Brunier, which we talk about a project that will generate around R$ 1 billion, R$ 1 billion and R$ 100 million per year, potentially additional debt. thinking about the cost economy of our process in white gold, but also in revenue for the sale of minerals to third parties that we will have. These projects have these two components. On the same side, we also have thinking about our mini mills, our electric plants, we have an investment that we will be concluding during this year as well, in the Sucata and Pinamonhangaba Recycling Center, which will generate around R$ 100 million in benefits when it is fully operating. So we have robust levers that, over time, The ramp-up curves are always complex to estimate, there are many themes that can affect this performance, but structurally, thinking in the medium and long term, this is the level of increase in competitiveness that we should see in Brazil's operations over the next few years. So I think structurally this is the change. What connects maybe a little with your The second question is related to Captex. We understand that it is a little early to talk about formal guidance for Captex for 2027. We are starting the year of 2026. Typically, we give Captex guidance for the current year In February, in the fourth quarter, last year we anticipated our Investor Day, because we thought it was important to bring an account payment to the market, a decision that had already been taken by the Council to reduce the level of that level of R$ 6 billion of reimbursement to a level closer to R$ 4,700. We are at a pace in the year, if we think about the first quarter and annualize, a very similar and adherent pace with this guidance, but when we think about 2027, it's too early for us to give you any greater clarity about that. We already said in our presentation of Investor Day the level of CAPEX, of maintenance that we should expect in the next few years, at a level close to 3 billion reais in the next 5 years on average, with some fluctuations, depending on large autofurn stops, cookery and things like that, but structurally this is the level of maintenance. We personally believe that it is difficult for us to imagine that we make maintenance unique and only forever, as the company's CAPEX, when we think about real life. But when we think about the modeling of the cash flow, we cannot ignore that the competitiveness projects are made to generate a return, to generate an increase in EBITDA, to generate competitiveness, to generate growth, which is what we are seeing now with this investment that we are concluding in mining in Midlothian and with the processing of sucate here in Penamangaba. So, these benefits also have to be incorporated in the cash flow, and many times what we see, personally, what I see in the analyst models, simply disregarding any kind of gain from the new projects that we bring, of growth, and considering as if everything was sustained, which from our point of view is wrong. Now, within a level as we have today, of excess capacity in Brazil, of well-adjusted economy, of well-adjusted demands in North America. So little do we see room for large projects with large capital increases, which I think don't seem to make much sense.

Great, it was very clear. Thank you, Japur and Werneck.

Thank you, Ricardo. Let's go, Ari.

The next question is from Rodolfo Angeles.

Good morning everyone, thank you for the call. I wanted to discuss a little more the situation in the United States. We were positive with the region for some time, And we are being honest here, even surprised. The results are very strong. These very high levels of backlogs. And then I would ask Gustavo and Japur if you could talk a little more in detail. What is happening? What are the strengths that you see in the region? And looking not only at the quarter, but a little more what you expect to see the second semester in the North American region. And my second question is similar, but for Brazil. Brazil, I think it's clear, you talked a lot about the offer side, the fight against imports. But I wanted to hear a little bit from you, what are you seeing from the point of view of demand? We are still with very high interest rates. How is the construction activity? Where can positive surprises come from? Where can there be concerns on the specific demand side?

Thank you. Hello, my friend, how are you? Fine? tranquilo nunca né quem torce para ponte nunca dorme tranquilo tá com a cara boa aí cara tá com a cara tranquilo mas deixa eu te falar vou deixar eu vou já vou dividir tá eu vou falar de vou falar dos Estados Unidos tu fala de Brasil tá Rodolfo as fortalezas que nós temos lá que expressão legal que tu usou né primeiro assim que a demanda ela é muito resiliente né a de curto e médio prazo né então os segmentos where we have found the main demands in our backlog, they are very firm and will continue. And then I take as an example the question of data centers, the amount of data centers that are being built and will be built in the coming years in North America, they sustain a very significant steel demand. So the demand is a fortress. The other strength is that new capacities, new Greenfield plants will not be built in the next few years, more specifically in the segments where we act. Another strength is our business model, very focused on structural profiles and also on merchants, directly related to these demands that I mentioned, in the data center, infrastructure. These US trade defense measures are also very robust. I remember that since the administration of Trump, through Biden, they have not reduced what was put in section 232. We believe that USMCA's own negotiation will be even more favorable to North America. So, these are all fortresses, besides the internal fortresses. We are operating a lot in chute in North America. Since 2018, when we put that very strong plan to recover our industrial gap in relation to Nucro SDI, we have been operating our plants very well, with few maintenance stops, few unforeseen stops. We were very assertive about growing our outstanding criticals, so any stop we can solve quickly. The use of our factories is very intense, so things are very round over there. I would add this, Rodolfo, that there is this moment when China exports a lot via integrated route, right? It took away a little bit of Turkey's competitiveness in exporting via Sukkot. So, in a way, there is a larger supply of Sukkot in North America. So it pulls Sukkot down a little bit. and, in a way, prices are rising, so the spread is expanded and we believe it will continue like this. So, we are very, very positive that these results that we delivered now in the quarter will follow through the next quarters, which also gives us a little time to implement what, as I mentioned, is in our hands to be able to improve competitiveness here in Brazil. There's a lot to be done here yet. of punctual short-term adjustments, and also when we look at the medium term, we believe that there is a lot of space for us to improve what is in our hands, the operation in Brazil. So, in a way, there in North America, it is to continue doing, with a lot of pragmatism, with a lot of discipline, what we have been doing, right? A general view is this, okay? If there is any other point there, I'll come back, or Japur comments, okay, Japur? But give a jump to Brazil here, and then we'll close with Rodolfo, okay?

Let's go. All right, Rodolfo? Thinking about Brazil, qualitatively, when we think about the demand for apparent consumption, looking at the data from Aço Brasil, we had a 6% drop in apparent consumption of long-term assets compared to the same period last year. And a little of that we also attribute to the issues of, we don't give this granularity anymore, but we can talk a little, with the numbers of special steel consumption. We follow the data from Anfabia, I know you follow the publications that you cover, the companies that JP Morgan covers, we had a January and February especially weak in heavy vehicles, which are very representative for the consumption of special steel, SBQ, for the part of long specials, which is an important market for us, which pulls, for example, the average price made, the liquid receipt made, pulls up because they are prices comparatively higher per tonnage than the prices of common longs. So, one of the factors that explains a little the drop in our liquid revenue made per tonnage was a matter of a smaller volume of special steel sales due to the weaker data, especially in January and February, Danfávia in heavy. On the other hand, thinking about potential risks, we saw in March an important resumption of the production of heavy vehicles from Amfave, which we can eventually see if we can continue to see a resumption of this specific line of products over the next few months. that will also leverage our volume in special assets, which have interesting prices and margins, and that this can eventually be a catalyst for more constructive margins in our operation in Brazil. Also, the entry of the projects that we already mentioned earlier, which will contribute throughout the second semester for an improvement in our cost structure here in the operation in Brazil. Of course, we have great uncertainties, We have the whole issue of freight and impacts that we can have on coal, for international freight, for the composition of the cost of metal coal, which is posted here in Brazil. But this is a bit of a rain for everyone. I think it's something that's systemic, it's not something specific to the company. So I think these are the positive points that we have, that we can have catalysts in the medium term and points of attention that we have in relation to our business. Civil construction continues to perform well, infrastructure works follow more or less the same level that we had, there were no major qualitative changes in this segment. I think that what really changed the profile of prices realized, cost structure, was this smaller volume than we imagined that we would like, especially at the beginning of the first quarter.

Excellent, thank you very much. Thank you Rodolfo, a hug there.

The next question is from Leonardo Correia from BTG Pactual.

All right, guys. Good afternoon. Hello, Leo. How are you? Ari, thank you. I have two questions here, maybe more specific. The first one is more specific, just to explore a little bit of the top line. We saw in the TRI that the average price of Brazil fell a little more than we had expected, 5% TRI to TRI. I understand that there is a lot of mix effect and maybe something seasonal taking over the prices. And we have also heard about all these repasses, these attempts at the end. Two 6% increases being, let's say, plated on the chains. And I would like to hear from you how the implementation expectation is. I know it's a market that is still fighting with a lot of market share disputes. and the import still bothers something. So, I wanted to hear from you how this attempt is going. Platinum, for now, is showing little overpass, 2% to 3% increase, I don't know if the number is accurate or not. So, that would be the first, let's say, detail on the top line. And the second question, Van Eyck, more comprehensive for you, I know you've been a great defender and you've been very vocal asking for autonomy, asking for defense, and asking for justice to compete. We're seeing some green shoots. Longs imports are more controlled. Plans imports seem to be falling. I think this whole freight issue will hinder imports well. It will increase imports well. There are anti-dumpings for galvanized BF, BQ at the end of the year, the quotas. We see in the market already, shareholders, some spirit from the team, kind of pricing the floor, a certain bottom of results, and that things will get better in the future, and there will be a consistent recovery of results. How is your head, your spirit, with what the government has done, and with what kind of impact you're seeing, let's say, on the ground, on the tip, Do you think that this understanding of an improvement, let's say, significant from the second semester, do you think it's an exaggerated optimism from the market? Or are you seeing, in fact, these green shoots and you think it's really to cheer that the worst is behind and that things are going in a better direction here in Brazil? These are the two questions.

Thank you, guys. Okay, Leo. Good debates there, right? Even because this issue of cost and price pressure, when you look at the full profit pool of the various chains where we operate, you see that the most pressured sector is ours. This is changing from time to time, it is different from the post-pandemic, but really these last two years have been very difficult, so there is no way not to go beyond this cost pressure forward. This will happen. If Japur follows this daily, if he has any disagreement regarding the Platinum systems, he has it in his head. But there is no way this doesn't happen, Leo. Even because many of the segments that are our customers, they have been working with a little more slack in their balances, slightly larger margins. But this dynamic has been very constant, every day we have people knocking on the door, of refractory supplier, electrode, general supply. So, I think that this issue of reviewing the whole chain, a cost that is very well known, a global cost, a pressure that comes from a complex global theme, it will happen. If it were some inefficiency of the sector, some inefficiency of Gerdau, it would be difficult to create a narrative, a rationale that allows us to review, but it will happen. Let's see with what speed, different segments, sometimes the distribution, the civil construction, which sometimes works more by contract, so it will happen. I'm not worried that this doesn't happen. My main concern is that, in this, we need to expand the margins a little more, and implement the improvements in the short term, in the day-to-day that we are doing. Logistics is one of them. The amount of movement of our material in Brazil, we are optimizing it, reducing it. So there are things to be done at home. The commercial defense issues, I'm optimistic too, because this is a construction that will happen over time. Minister Alckmin's own departure now, and who will lead the commercial defense system in there, Marcio Elias himself, who knows this in depth and has followed it from the beginning, knows the damage caused in the chain, so the numbers were getting clearer, the evidence was getting clearer over the last two years, of the terrible damage to the sectors. Look at the balance, not only ours, but here in Brazil, of other companies, you can't keep investing, you can't survive like this. I really believe that these two main mechanisms, both the quota and the tariff, will continue to be in force. I can't tell you if it will expand or not for other products, but what we already know from these last quarters of the quota and tariff, a lot of security that it will follow, and a lot of optimism too, that these anti-dumping investigations, which took a little longer than normal, a little longer than expected, but they are very solid, the evidence is very clear. So, at this moment, I'm very optimistic that we will see the commercial defense in Brazil being expanded from the rate quota to a more anti-dumping rate quota.

So, my mind is like that. Of course.

All right, thank you very much. Do you want to put it there? No, I think that's it. All right. Thank you, Leo.

A hug, Leo. A hug for you, thank you.

Thanks. Next question from Gabriel Barra, from Citibank.

Hello guys, can you hear me?

Super good, super good, they are listening to you, seeing you.

Thank you, thank you Werneck, thank you Jopur. I have two points here on my side, I think the first one about Miguel Borrinha, if I'm not mistaken, I think in the last call of the fourth trio, we talked a little about the ramp up and the expectation of the 400 million reais to be given for this I would like to hear a little from you, Werner, who is also from Japur, how is this expectation? I think you have maintained this softguide, in some way, from these 400 million of EBITDA for this year. I don't know how much the project is perhaps a little late or in the timing to enter. So, if you could talk a little bit about the company's expectation of EBITDA for this year and how much this can also impact for an EBITDA of the next year. Second point about here, maybe even potential one-offs here of cash generation. I don't know how much you have evaluated here possible investments in real estate, land, the company has an important balance there of real estate that could be monetized. I want to hear a little from you the company's idea in relation to this. It would be interesting to wait possible extraordinary dividends in the face of this possible disinvestment? How have you evaluated this, given that the company has brought this more unbalanced balance, super healthy, an environment that, margins up, as you have said, the United States is super healthy, Brazil in a tendency to improve here for the second quarter, so I wanted to hear a little from you about this, the disinvestment and the question of extraordinary dividend. Thank you.

Rafa, are you going with that? Of course. All right, Gabriel. I'll start by talking about Miguel Bournier. Exactly. We had a soft guidance, an expectation that we talked about at the beginning. our investor in October of last year, to expect to generate R$ 400 million of EBITDA, specifically for the Miguel Brunet project this year, but we expected a ramp up, a start of operation that has not yet started. We are proceeding cautiously, it is the largest investment in reais in the history of the company, it is an investment with a life of 40 years, so it is not because a few months more or less, that we will do something that will sacrifice will harm the long-term return that we expect from this capital that we are allocating. But yes, we understand that we went specifically from the mining project, we will hardly have entirely the 400 million that we had projected throughout the year. We are still working internally to have a more precise number of how much this impact is, how much the specific guidance of the Miguel Brunet project is, how much it will generate in EBITDA this year, But at the same time, at the same time, we are already with a series of other initiatives with a recovery plan to compensate for this margin loss, whether with internal operational efficiencies, whether with alternative strategic purchases of more competitive minerals in the Minas Gerais region. In this sense, we are perhaps very well geographically positioned to buy alternative minerals from other suppliers in the region, as a way of mitigating part of this EBITDA that we will not see flowing this year for our results. But we understand that in 2027 we should already have a normal ramp-up curve, more in line with the DEM plate than we imagine for the long-term mining project, right, Gabriel? And regarding real estate and other one-offs that we may have of liquidity, of cash flow via disinvestment, we continue to advance with our internal analysis, both with our real estate assets, and here I think it's good to be in a situation of uncontrolled leverage, where we don't have to make a forced sale, an accelerated sale, in which we don't maximize the long-term value for our shareholders. And here, with regard to the eventual allocation of the cash, that these businesses can travel throughout this and next year, I think it's good when a commodity company is boring and unpredictable. So we will not radically change our preferences in capital allocation. We have distributed dividends above the established minimum. What is left of capital, when we do not harm our liquidity, we have allocated for repurchases, when we understand that the market is not adequately understanding the long-term value of our assets, and it's the line that we intend to follow, everything more constant. So, boring is good for capital allocation, an intensive and capital company, right Gabriel?

Thank you Gabriel, a hug for you.

Next question from Lucas Laje from XP.

Good afternoon everyone, thank you Ari, Werneck, Japur. There are two points, starting with the follow-up to the previous question, I think we have to think about this optimization of the return of the Brazil asset, that in the end, you can optimize with investments in high marginal return projects or reducing the denominator with asset sales to optimize returns. My question is more how you evaluate the market issue in this decision of investment or disinvestment. Werner commented a lot on the issue of anti-dumping, protectionist measure within the market, bringing a competitive autonomy perspective. but to understand how much this influences in a decision of more investments in Brazil or in this decision to eventually cease the plan of disinvestment of assets in excess that would have in this current market context. And then a second point, but we talk a lot about Miguel Bonier, we talk a lot about CAPEX above SUSTAINING, so if you could just remind us here in relation to the company's expectation, in relation to the capture of this incremental EBITDA of the projects, maybe we talk less here, that they should capture during the second semester of 2027, but for us to make sure that we are considering these marginal returns, given that CAPEX is already very clear, even by your guidance for 2026. So, I think these are the two points. Thank you, guys.

Okay, Lucas. Thank you for the comments. I'm going to start here with the CAPEX amendment. Lucas, what we will probably see in the future in Gerdau, in Brazil, is a different asset configuration than what we operated for many years. That traditional business model known as mini mills, where you have a small scale plant, serving a very regional market, buying the next sucate and transforming the sucate into steel and serving the clients of the region, small scale plants and such. This is a model that we have already reviewed in the United States, we closed the plant, concentrated our production in fewer plants, but highly competitive plants. So this market issue, this future issue, it will pass, I would say, maybe talking about investments or disinvestments, it does not bring perhaps the correct explanation, because it will seem that the business model remains the same. So this will be a transformational issue over the next few years, we will focus a lot our investments in those factories that are winning, and we have some of them in Brazil. So it is likely that these factories that have been stopped or interrupted, they do not have the competitiveness to return. Our own business model of walking many miles to serve any customer, we will have to go through a deeper and more structural review over the years. The speed of this will be done according to our possibility to allocate CAPEX without indebting the company. It is really a transformation of what happens from time to time. Our way of operating in Brazil will change. Even the question of Ouro Branco, which was a plant that was built back then, very focused on exportation. This continuity of investments so that we can, over time, reduce our volume of exportation, because we believe that, less and less in the future, we will find opportunities to export with margins that are attractive. Our operations in Brazil will pass. by a transformation that is not only this one now of short-term cost reduction, it will be a more radical thing. As long as we have more detailed plans, we show it to you, but it is a belief that we will have to change the way we operate. And what we did in North America may serve as an example that we are going to make here. We closed Zin, we took out those low competitive assets and we put capital and CAPEX in the last eight years for us to have, today, at this moment, an absolutely competitive industrial footprint, low cost, with a lot of reliability. So, that's the general vision, Lucas.

I think that, complementing, Lucas, you gave two themes. Projects that increase or improve the numerator or decrease the denominator. I think the answer is both. We have to invest in projects that improve our numerator And we have to gradually decrease, as I say a lot, what we call the backpack. When you run, when you walk a long distance, as a company that is 125 years old, you carry a backpack. And you have to, over time, leave the backpack lighter, which is part of the denominator. So when we realize, for example, that we have a series of real estate assets that are not being used in their fullness today, and that eventually the person who operates in the day-to-day does not see that she is paying the cost of rent, because the property is her own, so I don't have to pay for it. Capital pays for it in the capital chart, in the cost of capital. So, these are the two things. And I think you gave the answer when you said the word excess. What we have in excess, excess doesn't do well. If you have excess in real estate, it's bad. If you have excess of forests, it's not good. If you have excess productive capacity in some places, it won't be good either. So, the main focus is to have an operation, as well as we have a healthy and balanced balance that we also have in the passive part, but also in the active part we look for a balance that is perhaps a little different from the balance we have today. So I think you gave the answers to your question. Regarding the projects, I think in our institutional presentation we have a little detail of the three major projects that we have this year, the main projects that will have this ramp up going along the year, with a highlight for Midlothian, for the recycling center in Pinamoiangaba and for the investment in Miguel Brunier, which is the most transformational investment, even in terms of scale and in terms of what we are doing. As I mentioned earlier, As we are talking about a delay in the start-up, thinking about a specific return of the project this year, it is quite possible that we do not see the 400 million in full that we had anticipated in October of last year, but we are looking for other efficiency initiatives in our White Gold plant to compensate what we will not be seeing in return this year, specifically with the mining project. which does not make it unfeasible in any way that in 2027 and the next 40 years of the life of the Miguel Brunier project, we will see the result in the numerator, generating value for our shareholders, Lucas.

Lucas, just to add here, while Japô was talking, I was reflecting here, just to give some tranquility, that we are not going to raise the company's debt or not going to pay a much higher CAPEX level than we are doing now in this transformation that I mentioned. So, a good part of these resources that we are going to allocate here in Brazil to make this transformation will come from the decision of us working with fewer industrial assets in Brazil, so the amount of CAPEX that we allocate for maintenance, having many assets, it will be reduced, this will create a possibility, a mattress for us to make more transformational investments here in the industrial footprint. And our operation in Ouro Branco, which has been very highlighted from the point of view of efficiency, it has allowed us in recent years to postpone the needs of major auto-furnishing reforms, of cooking, so the plant is operating in a very healthy way. So we are moving, in a timeline, this higher level of maintenance investment in white gold. This creates a cushion within the levels of disbursement that we have seen in recent years, for us to accelerate our transformation. So I wanted to give a little peace of mind that does not pass through our heads, mine, the council's, to accelerate a transformation here in Brazil, radically increasing CAPEX and leverage. We know very well and it has become clearer the importance and the need to maintain these healthy levels of CAPEX and leverage.

Cool. Thank you, guys. Thank you, Lucas.

Next question, Daniel Sasson, from Itaú BBA.

Hi guys, good afternoon, thank you for the opportunity, Ari, Rafa, Werneck. Guys, my question, I think Gustavo talked a little bit in the initial speech about anti-dumping, about, in fact, competition with imported products. I think we may have a little more ease of understanding the impacts due to the importance in the market of plans, perhaps for long-term impacts of possible anti-dumping measures, we know that there is a machine there under analysis, perhaps more for the short term, if you could share with us the expectations of anti-dumping or the result of this investigation for other products, of Longos, if that changes the mood of the market as a whole, and then maybe get a little more into the competitive dynamics. Besides anti-dumping, how are the players of Asus Longos behaving? At some point last year, I think more or less at that time, did you decide, for example, to stop losing market share in Vergalhão and go to the fight? How are these competitive dynamics, specifically in Longos, shaping the market? And my second question, maybe even a follow-up to Gustavo's last comment about CAPEX, and then we understand that Rafa can't give us a CAPEX guidance for 2027, nor is that what we want. But if we think about the opportunities, in addition to those R$ 3 billion in maintenance, what are the priorities of the other projects? In the past, you said that it would make sense to allocate R$ 1 billion in the United States versus to allocate R$ 1 billion in Brazil. They came to think of a project in Mexico at some point due to the potential for the growth of high-end parts in the automotive market in the region. Then things changed, the market became more protectionist there too. If you could comment for us on the priorities, the ranking of regions or types of projects for the part of competitiveness or growth, maybe help us to think on a level for the next few years. Thank you, guys.

Daniel, Japur will tell you the details of anti-dumping, but just a reflection, a little more general, on these topics. Unlike North America, here in Brazil, when commercial defense is discussed, there is a lot of murmur, a lot of debate. in the consumer sectors, in the markets in general. We see in the United States that since the time of section 232, when commercial defense is implemented, when it comes to defending the country, there are no such great complaints. Everyone understands that the country is important, that the industry is important. And you see that many times these numbers are not so evident, these data, but people who circulate a lot there, talk a lot with the client, I am very convinced that over the next few months we will be able to make a more accurate reading of the fact that the North American industry is coming back. Here in Brazil, these debates have been going on for many years and you see that the industry is losing its size. It is very influenced by the moment, by what happened in recent years. So when we started to see the penetration of imported steel in a way never seen in Brazil, It came at a time when, after the pandemic, the air sector, specifically, came from high margins, delivering results. So there was a lot of debate there, two years ago, if it was right or not, if this business had come to stay, if commercial defense was going to continue to deteriorate margins of other segments. I think after two years, these issues have matured a lot. There are many balances published from the customer sectors, even from the steel companies themselves, and it has become clear in the debates in Brasilia that if the most intense trade defense mechanisms are not placed, the steel industry will not survive in the long term. So there are sectors, if it is public, that are questioning, continue to question these anti-dumping mechanisms, when it was recently talked about the recovery or maintenance of the margins with renegotiations of prices with the sector, there are manifestos, letters, this is all part of it, this debate is very intense, but there is a consolidation of Brazilian beliefs that need to be defended, that we have suffered too much in the last two years. So, particularly in the debates that we have had in Brasília, from MEDIC, I commented on Márcio Elias, who will now follow the front of this commercial defense system, I see a very different environment now for the implementation of these mechanisms than two years ago. The themes are maturing, the analyzes are being made. So, what Japur is going to comment now, of more plans, where we saw the main penetration of imports, but also in Longos, where the machine wire was very penalized. I see a more propitious, more pacified environment. so that these themes evolve now in the second semester. But you already have a lot of detail there, comment with Daniel what to do next.

All right, Daniel. I think just to understand a little, from my perspective here, far from being a truth, about the impacts and what it means eventually these measures to defend the competition of anti-dumping for the machine. Making a rough approach, when we think of long axes, we have there something between 10% to 20%, depending on the period of the year, which is equivalent to the national production wire machine, which has a ratio for the chisel of more or less 4 to 1, 5 to 1, 13.5 to 1, more or less, in the market. And it happens that many times the laminators that produce wire machine also produce chisel. So when you have an excess of a lot of machine fuel entering Brazil with dumping margins of 550 dollars per ton of dumping, which is what was verified in the preliminary analysis done by MDIC, the Chinese machine fuel, 550 dollars of dumping, this pushes companies that have productive capacity, that do not want to be idle, being out of the machine-fuel market, to produce, at margin prices, Bergalhão. Or other long products. So, it is not specifically and only about Bergalhão. It is also about the spillover, let's say, the ripple effects that exist. of a large entry of machine thread, displacing other producers to make other products. And as these products are also sometimes an input for other products, trefilados, cut and fold, expanded products, columns, meshes, this has a detrimental effect on the entire margin of the long steel segment in general. So we have a positive decision. We have two investigations, basically China with a margin of $ 550 per ton and Russia with $ 100 per ton, a lower level. It is a representative value of impact on competitiveness. And that's what we always ask, as Gustavo has already mentioned several times, is a competitive misogyny and that we don't tear down the regulations, because we do a technical analysis. We evaluate and say, look, there's dumping, there's damage, there's causal nexus, We can't ignore the facts, because the facts don't interest us in the moment A and the moment B. I think we have to have maturity here as an economy, as a democratic state of law, to enforce the rules that we have established. If, just as we obey the rules here in Brazil, those who sell and export to Brazil also obey. I think I would say that, with that, we have the prospect of, in the second semester of this year, having a conclusion of the investigation of the anti-dumping law on the machine thread, which has the potential to improve not only specifically the machine thread, but other long products that gravitate, so to speak, around this product portfolio.

Daniel, one last point about this competitive dynamic. I see that, in a way, this issue of market share in Brazil is quite stable. What we have an opportunity to capture is that it is no use, for example, to have all my asset base in the south and I have a market share of 30%, but it is only in the north of Brazil, it is inefficient from a logistical point of view. So, as we have a very complete portfolio of products, I think that now this market share among the more stable players, I think there is a unique opportunity for us, which is to improve our efficiency of how we serve this share that is ours. So there is an opportunity that we started to capture in this first quarter and I see an important avenue of capture for the next quarters. So we have a market share, that's what you commented well, which was redefined last year with the initiatives we have, but once our piece is on the market, it is not yet being understood in the most efficient way possible. So, which plant are we going to serve, the way we are going to serve, is it a direct plant, is it via Comercial Gerdau, is it via an independent distributor? So, that's why I say there are things in our hands to be done in the most competitive, in a more rational way to serve this boss that is now given. Perfect, thank you guys.

Well, and our last question is from Carlos de Alba, from Morgan Stanley.

Hello, thank you, Ari. Hello, Gustavo. Hello, Yapur. The cash regeneration in the quarter was particularly strong. Working capital contributed definitely to that, as well as low cash tax payments. Can you comment maybe what are you expecting for the second quarter, maybe the second half of the year in those two items? And then I have another question on projects.

All right, Carlos. Hi Carlos, how are you? I think that with regard to specifically these lines of capital rotation, this quarter, from the point of view of tax, we had two effects. First, that we are with very little, we are with a loss, we do not generate profit in Brazil, so our effective liquidity ends up being smaller, because it is basically the profit of the United States. And we had more income tax withdrawn at the source, withholding tax, on the distributions of results from the United States to Brazil, which we made stronger at the end of last year. So, this contributed to us having a higher tax rate in the Free Cash Flow line in the fourth quarter than we had now in this next quarter. But throughout the year we expect a normalization. Typically, we have a higher tax rate in the fourth quarter, paying in April the taxes in the United States and Brazil, the legal person income tax, but throughout the year we must have something normalized in function of our profitability. In the second quarter, we expect to have a positive cash flow generation, both for our operating results and for the terms of turnover that continue to operate normally. We had an important recomposition of almost R$ 1 billion of turnover in the first quarter in relation to the fourth quarter. We understand that this is relatively normalized for the second quarter. And throughout the year, we imagine that we will have, assuming, remembering that we will have a CAPEX interest rate lower than what we had last year, we imagine having a stronger cash flow generation than we had throughout the year of 2025. both for EBITDA, which we are generating comparatively stronger in this first quarter, as well as for CAPEX reduction. So we have a double benefit.

Great. And then maybe, I don't know, Gustavo or Jafur, on the IONOR division, the IONOR business, First, on Miguel Brunier, can you give us any more color on what caused the slight delays this year in terms of the EBITDA generation that the company was expecting? And then maybe longer term, as you transformed the business strategy in Brazil, is investing in iron ore to increase the third-party shipments an option? I think, Gustavo, in the last Investors Day, you have mentioned the possibility of that investment taking place. So I don't know if you can add more color at this time. Thank you.

Carlos, the problems we faced in Miguel Burnier that caused a small delay are well-known problems in Brazil, which is the current difficulty we have of civil works and electromechanical assembly. Our solution is very robust, we had a schedule that started at the right time, historically This schedule was aligned to the traditional productivity that we have in the civil construction segment and electromechanical assembly, but just as several sectors of the Brazilian economy are facing difficulties in hiring people, having more technical labor, these sectors in Brazil are also facing it. So our difficulties were 100% related to the issues of productivity in civil construction and in electromechanical assembly. This is an issue that I believe that in the future it will need to be dealt with in another way by Brazilian companies, because otherwise we will continue with the difficulties of entrepreneurship in Brazil, because it has become increasingly complex for us to make investments because of civil work and assembly. So this is the main point of delay. And we continue with the desire to monetize our mining rights in the state of Minas Gerais. I think the success of this first operation, which is a very large operation of 5.5 million, when we put it in operation and it shows its success as we expect, I think it will not only give us security, but it will also allow us to allocate more time to deepen the studies of what should be the next step for us to increase our mining production. We have many mining rights, the chronology of which we should explore first is in analysis, so I think once this project being implemented, it starting to produce with success, it will give us a possibility to accelerate our plans for the second step, and when we have it more analyzed, we commit to come here and comment more calmly for you, okay?

Perfect.

Thank you very much. Thank you. We conclude our Q&A session. And I'll give the floor back to Werneck.

Thank you, Ari. Thank you for your participation. And just to say goodbye to you, my name is Nojapur. And I'll take this opportunity to invite you to our next results announcement, referring to the second quarter of 2026, which will be on August 5th. So, thank you very much. On behalf of all of us, the Gerdau team, a big hug and take care.