Companhia Siderurgica Nacional S.A.

Good morning, and thank you for holding. At this time, we would like to welcome everyone to CSN's conference call for the results for the second quarter MDTIC. Today, we have with us the company's executive officers. We would like to inform you that this event is being recorded and all participants will be in this and only mode during the company's presentation. Ensuing this, we will go on to the Q&A section when further instructions will be given. You can access this event at www.tsn.com.br where the presentation is also available. The replay of the event will be available soon after closing. Before proceeding, please bear in mind that some of the forward-looking statements herein are mere expectations or trends based on the current assumptions and opinions of the company's management. Future results, performance and events may differ materially from those expressed herein, which do not constitute projections. In fact, actual results, performance or events may differ materially from those expressed or implied by forward written statements as a result of several factors, such as the general and economic conditions in Brazil, interest rates, exchange rate levels, Future rescheduling or prepayment of debt denominated in foreign currencies, protectionist measures in the U.S., Brazil and other countries, Changes in Laws and Regulations and General Competitive Factors at a Global, Regional or National Basis We will now turn the floor over to Mr. Marco Rabello, Investor Relations Executive Officer, who will present the company's operating and financial highlights for CSN for the period. You may proceed, sir. Good morning, everybody, and thank you for participating in another CSN conference call. We're going to present the results for the second quarter of 2016, a very important period for the company where the company was able to overcome all the adversities relating to cost and raw material to offer vigorous growth of EBITDA In the previous quarter and in comparison with the quarter of 25, this 5% increase in consolidated etiquette is a result of better operational performance in all segments, sales and the commercial activity. You also see the importance of having a diversified operation. Without and many more. In the last few months, we have seen a significant increase in cash flow during the previous quarter. This movement reflects the evolution of the projects that the company The company will gradually evolve to a more sustainable cash generation going forward. We're very satisfied to announce the conclusion of the new 2030 bond with a Leverage of more than 77%. It shows the success of the operation and the credibility that people have in the project and movements of the company. It's important for the company to calmly carry out its projects. For example, the divestment of assets, the conclusion of P15, Thank you very much for joining us. For work in the mine and elsewhere throughout the quarter, we had two of the best monthly performances in the history of CSN, with May and June as the strongest months in the group. This shows the high level of efficiency that the operation has achieved. This performance was important to offset the increasing logistic costs and the exchange rate due to the Middle East strike. Because of the exchange rate, the ethics of mining in the second quarter was lower than in the previous quarter, but even that way guaranteed profitability above 30%, showing the resilience and profitability of the operation in mining After a challenging year, we became successful after the on-site dumping measures approved in March. This allowed for a significant entrance of materials in the Brazilian ports, allowing the Brazilian producers to have a greater stake. The improvement in the commercial environment also allowed for a price readjustment In the quarter, we began working with higher prices. The result of this more favorable dynamic with 10% of expansion of sales in the domestic market more than offset the slowdown in steel. Another important factor for the recovery of steel was the excellent results achieved by subsidiaries abroad. Our SWT subsidiary in Germany had the best commercial performance since 2022. and the American operation, despite the difficulties imposed by the tariff war, has also been able to deliver stronger results compared to last year. The combination of these factors have allowed for a strong expansion of results, allowing the company to offset the pressure on costs to go back to the double digit performance. Now, steel will be an important vector of results for the company this year. In the cement market, we continue to have exceptional performance. The company was once again able to deliver the highest evidence history. This is the second consecutive quarter of records showing that the company is growing with resilient demand, higher prices, and a very assertive commercial strategy. This evident record in the second quarter occurred with maintenance shutdowns for the period, showing that the performance can improve further. The strategy that is being implemented of prioritizing results instead of volume It's important because of the sound performance of the cement market. We have a growth in salary and a new dynamic in the real estate market because of the My House, My Home system. This allows profitability to be above 30% with an efficiency level above that of the sector. If we think about the results for the last 12 months, Epida has made a significant evolution compared to last year, reaching 6 billion reais with an even greater growth perspective for the rest of the year. Very similar to steel, the cement is an important vector for the results of the company in terms of the sale of the asset. Last Friday, as informed in a material fact, we have received binding offers that are unique for the Brazilian market and should lead to a very interesting valuation. Finally, if we look to the right of the slide, we have a highlight in logistics and energy and logistics. This semester was also excellent with the second best EBITDA in the company's history. The seasonality of a drier weather and efficiency of the logistic model were fundamental to resume the work of cargo with a margin of 45% in the quarter. This extraordinary performance shows the strength of our asset portfolio and should unharness the sale with a sale of the Minority Sale Infra of CSN and we have a very high number of NDA side and the expectation is that the end of the month the company will receive non-binding offers for a minor share in this company. In the sector of energy, we had a favorable dynamic in the sector. It ended up being thrust by the retroactive recognition of revenue of a favorable decision related to the Jacoí hydroelectric power plant, whose commercialization had been suspended since October of 2025. Now, energy returns to normalized levels in the coming quarter because of this. Let's now go on to slide number three, where we present our image results and margin for the second quarter, 26. We see the favorable dynamic of the quarter with an higher epitome in the year-on-year and quarter-on-quarter comparison. We were able to neutralize the problem with logistics and deliver strong commercial growth in all sectors. If we look at the graph to the right, it becomes evident of the importance of having a diversified asset. Steel mining, logistics, and energy were able to offset the negative effect of a higher cost in mining on the following slide. We present the company's investments where we can see an increase of 26% in CAPEX vis-à-vis the previous quarter and a 6% on the year-on-year comparison. We have advanced in civil construction related to the P15 project of mining. Besides, the disbursements carried out for maintenance in mining and cement. In slide number five, we analyze our working capital where we can see a significant reduction in the quarter-on-quarter comparison related to the lower inventory levels of the company. This is in line with a project that has been put in place since the beginning of the year to release cash and normalize the volume of the operation, especially in steel products. We expect this trend to continue in the second half of the year. This will improve cash conversion, and we will have a higher balance of recoverable taxes also contributing to this new working capital for the quarter. In the next slide, we show you the results of our free cash flow, where we can see a positive flow of 808 and a million VRLs, an important reversion after some negative quarters. Now, the release of working capital and the fundraising were the main vectors for this performance. Now, this has helped us offset the substantial debt amortization and amortization of prepayment contracts during the period. For the coming quarters, the company will continue to move forward in an operational improvement of these results in a continuous release of working capital and in new contracts for prepayment to maintain the impact of these operations neutral. On slide number seven, We show you the situation of our indebtedness and leverage, as well as the behavior of the debt throughout the semester. To the right, you see a buildup of net debt because of the amortization of prepayments of iron ore contracts, the exchange rate on contracts, and an effective 500 million in Transnordestina. This has more than offset the cash generation recorded in the period. To the left, we went from 3 times 3, 6 times to 3.49 times this quarter, a minor increase that does not represent a trend. Our focus, once again, is on resolving our capital structure with the divestment of assets advancing very quickly and new initiatives that could result in important activities besides the increased operational results that we have. Going on to slide number eight, you see our indebtedness profile. We observe that we have a high level of cash despite the fact that we have reduced our debt. You can also see that the main maturity terms are for banking debts where CSN has been able to manage this property. When we look forward in 2028, we have just addressed this with an adherence of 77% of shares sold. We're carrying out all efforts to lengthen our maturity terms to have a more structured payment of debt and to allow for the growth of our operational results. On slide number nine, you can see the proforma of our new structure for debt. The expectation is that in short time, CSN will become ever lighter, not only to be able to face future maturities, but also to harness Several new projects that will completely transform the potential for cash generation of the group. With this, we conclude the analysis of consolidated results and we go on to slide 11 where we show you the results of our skill segment analysis. You see the results of our commercial area with a growth of 17% in sales for the quarter, driven by the domestic market and the foreign market as well. In the domestic market, we have the first effects of the anti-dumping regulation with better initiatives for local producers. Now, the result was an annual growth of 10% in growth in the domestic markets, with a mixed improvement in all of the markets we are present in. In the foreign market, we have the highest volume since the first quarter, 23, with the consumption of steel recovering in Europe and United States also increasing its imports. When we look at the following slide of production, we see that the results It shows the impact of the shutdown of one of the blast furnaces and the reduction of stock in the Vargas plant. To the right, you see a slight increase in the plate because of the cost of energy and raw material during the period. Despite this momentary pressure, we have a significant growth in the performance per ton with a consistent evolution in the market. Now, this becomes ever clear when we go on to the financial performance of steel on slide 13. In the graph to the left, we see an increase in net revenue and average price for that period. We have an intense commercial rhythm that has been recorded and a resumption of activities abroad and a more favorable dynamic of prices in Brazil After the readjustment that we put in place in April, going to the graph to the right, you can see a strong recovery of EBITDA during the period with profitability back to two digits. The most difficult phase of East Science is something we have left behind us. We still have a great deal of efficiency and value to add to the segment of steel. Now, the results of this quarter point to a sustainable recovery for steel and for the entire group. Let's now go on to the mining segment. On slide 15, we see the result of production and sales. In the production graph, we see the effects of the 15 days of shutdown with a lower volume of sales. We had a drop of 5.5%. On the other hand, when we look at the quarterly growth, this positive seasonality of the drier period offset the days in which production came to a standstill. We see a stronger pace of sales with the company recording the fourth best result in history, even with the 15 years of shutdowns. showing the robustness and efficiency of the logistics infrastructure of the company. The result also shows the efforts deployed to recover The inventories of iron ore. Regarding the financial performance on slide 16, despite the solid sales volume and iron ore prices remaining high, net revenue was impacted by foreign exchange appreciation and higher freight rates pressured by geopolitical tensions between United States and Iran. The unit revenue was $18 per ton. It increased to 20% less than the first quarter of 26, and below that recorded for the same quarter last year. Regarding EBITDA and the graph to the right, we see that this drop occurred in a period marked by operational excellence, showing the impact of logistics and exchange rate in this segment. Despite the results in this quarter, even in a quarter marked by logistic costs and foreign pressure, the company's profitability remained resilient with an EBITDA margin above 30%. In the following slide, we see the adjusted EBITDA in the second quarter of 26 compared to the previous quarter. We see a clear and direct impact of maritime spray during the period and the effect of exchange rate in the iron ore. On the other hand, we had better volumes and costs helping us to attenuate these effects. Let's go on to analyze the cement segment. On slide 19, we see the sales volume. Here we see a more timid activity commercially due to the scheduled maintenance events in several of the plants during this period and the strategy continues to prioritize volume. Now, there was a dynamic that was favorable in the cement market without having to enter a price war. We continue to see resilient demand, and the focus is to have sustainable performance for the operation. In the next slide, we see the financial performance with a growth of revenue of 14% in quarter-on-quarter comparison and 10% compared to the second quarter of 25%. This shows the readjustments put in force in the last month and a more favorable market. On the part of EBITDA, we are very satisfied to announce a second consecutive record going beyond 420,000 BRLs and a margin of more than 30%. All of this profitability shows the A positive moment begun by the operation and the ability to make an asset profitable despite the price pressure. We see an operation that is ever more competitive, and we can see the competitive edge of CSN Cements. It has more streamlined plans and a very efficient management. We go on to analyze the logistics segment on slide 22. We can see in terms of net revenue that the quarterly growth is due to the trier period and the transport of merchandise. Everything was driven by the subsegments of the multimodal In this segment, we had an increase of 3.1%, and this is an evolution we have observed in the last quarter, besides the synergies captured in the multimodal segment. To the right, we see that this was the second highest result of the segment. Advancing in terms of efficiency and cost control, maintaining profitability at a very sound level, above 45%, showing the operational resiliency of this process. Finally, on slide 24, we see the financial performance of the energy segment. There was an exceptional performance in the EBITDA and net revenue segment. There was an extraordinary effect in the period because of the retroactive recognition of revenue from the Jacoí hydroelectric power plant that had been contingent on the balance sheet since October 25. The expectation going forward is to have ever more stable results in coming quarters. With that, I would like to end the presentation on the segment, and I invite Elena Guerra to present the ESG highlights. Good morning, everybody. I will begin once again showing that we repeat advances in our earnings call. This, of course, is part of our strategy. We're Improving in Risk Management Value Generation, and we treat the system as a set of initiatives that have to undergo operational improvement, overcome regulatory risk, and contribute to the long-term competitiveness of our company. The results for this quarter reinforce this position. In governance, we had an important evolution in terms of our market ratings. The FTSE rating went from 3.7 to 4.2. CSN and CSN-MIN also had increases, consecutive increases in the quarter, CSN and CMIN. were awarded the industry leaders in sustainability, ESG risk rating, and the evolution of ECO badges that went from 74 to 80 points. With one additional point, we will be part of the gold category. So this shows the excellence of our management and the transparency of our controls and everything we do to mitigate regulatory risk. In terms of operational risk, we continue to move forward in our dams. We had two recognitions of competent agencies in terms of characterization of the Lagardo Dam and the B2A Dam. And all dams have the declaration of conformity and operability in the environmental management We have complied with all of the obligations foreseen in this instrument, this thanks to the millions of reais invested in improving the environmental conditions of our plants. The expectation is that we will Eneas Garcia Diniz, We're presenting consistent results and actions, which is our aim. And we want to continue to ensure that no risk can materialize Everything we do according to this agenda will translate into efficiency, improvement of our competitiveness, and a generation of sustainable value for our company. I will now return the floor to Marco. I will give the floor to our CEO, Mr. Benjamin Steinbruch, for his remarks at this point. A good day to all of you. Welcome to the earnings call for the CSN. I would like to quickly review the main points of each of our segments regarding steel. We have the initial positive impact, showing a strong reduction in the volume of imported material, thanks to the anti-dumping regulation. In truth, this is the first time that we felt this benefit, not having that and loyal competition that comes from the Asian products with a negative impact on the market, not only for the steel industry, but in all industries that are set up in Brazil. It is impossible, basically, to compete with Asian imports It's up to all of us to react strongly against this so that we can protect new investments and protect our production and protect employment, of course, which is what is of greater importance here. So we We need to strongly continue on with that anti-dumping policy, ensuring that we don't have them competing in the Brazilian market. We had an improvement in the competitive environment, resulting in a strong growth of more than 10% in the domestic market with room for A recovery of prices, and this also holds true for the foreign market. We have significant evolution with a higher consumption of steel in Europe. Sales increased 36% in the year, and this is the company's best result since the first quarter of 23. Once again, driven by the results of Germany, Portugal, Spain, and of course, United States. Now, the first signs of recovery in profitability with margins going beyond two digits, 10.5% for the second quarter, and the expectation is for a stronger second half of the year. A maintenance of favorable volume for volumes and prices as well. We are increasing production and the idea is to have a price increase as well. This will allow us to be more competitive and advance in the product diversification. We're active in practically all segments of the economy and this allow CSN to have a differentiated capacity and a better expectation for the second half of the year in steel. Regarding cement, we continue on with strong demand driven basically by My House My Life projects and some infrastructure projects. This favorable scenario has also The strategy is to prioritize value over volume, and it is a very assertive Thank you very much. We're regularly delivering what we committed to do at the beginning of the year. We had an evolution in net revenue, margin and EBITDA.

We're working full-scheme and we

simply did not have a better performance in the second quarter because of a non-scheduled maintenance in June that limited us somewhat. Otherwise, this would have been a more exceptional quarter because of the recovery that we observed vis-à-vis previous years quarter on quarter. In the last 12 months, we are complying with our results and presenting better figures quarter after quarter and we do believe we will continue this way until the end of the year. In logistics, That has become a very important segment for us. It was the second best EBITDA in history recorded this quarter because of the dry period and an increase in the cargo transported. Now the strength of our assets is the best differential to capture synergies of the last acquisition we just carried out. And Cement has been improving quarter on quarter and we believe that logistics will follow suit in this improvement. It has been performing better quarter after quarter.