Usinas Siderúrgicas de Minas Gerais S.A.

Good morning and welcome to Zemina's conference call, where we will discuss the results of Q4 of 2024 and the year of 2024. I'm Leonardo Carano, Zemina's Investor Relations and General Manager. For those who want to follow along in English, the simultaneous interpretation of the webcast presentation is available on the Usiminas IR website. We also have an interpreter providing simultaneous translation. Please select your preferred audio channel by clicking on the icon at the bottom of your Zoom screen. All participants are connected in listen-only mode and questions may be submitted in writing in the Q&A session of Zoom. Participants listening in English can also question directly in this section. This conference call is being recorded and simultaneously broadcast through Ximena's YouTube channel. We remind you that this conference is exclusively for investors and market analysts. Please identify yourself to ensure your question is addressed. imprensa at usiminas.com. Before proceeding, we would like to clarify that statements made during this conference call regarding the company's business outlook as well as operational and financial projections regarding its growth potential are forward-looking statements based on the management expectations for Usiminas' future. These expectations are highly dependent on the performance of the steel industry, the economic condition of the country, and the international market situation, and therefore subject to change. Today, we are joined by our CEO, Marcelo Chara, the Vice President of Finance and Investor Relations, Thiago Rodrigues, and Vice President of Sales, Miguel Holmes. To begin, Marcelo will share some initial remarks, followed by Tiago, who will present the results. Afterwards, we will address the questions submitted in the Q&A session. Now I hand it over to Marcelo.

Marcelo, you have the floor.

good morning ladies and gentlemen thank you for participating in muzimina's earnings result call for the year 2024 this year was highlighted by important advances in our operations a result of the investments of the past years and the dedication and the commitment made by our team With this, we reached the second-greatest production volume of crude steel since 2015. In addition to the increase in volume, we captured productivity gains and operational efficiency. The cost of the product salts per ton dropped 11% vis-à-vis 2020-23. including, for instance, gains with the best consumption of fuels. With this, we ended the year with an adjusted consolidated EBITDA of 2.6 million during the year 2024 to highlight to the steel unit that grew 31%. Regarding the EBITDA vis-a-vis 2023, the results of mining in 2024 were impacted by the drop of prices of iron ore and sales volume. We've started new networks that will increase the value of our material while we control the cost in a scenario of unstable prices. We still have a long way to go. And with our management focus on operational excellency, we trust that we will evolve throughout 2025. The investments underway will also help us to gain competitiveness in the mid-run. We are repairing our coke and our PCI plant that will significantly reduce costs in fuel and reduce the emissions of CO2. We are building a new gas pipe in addition to creating more safe in the operational. unit and the star part of a solar complex is already a reality that it has been materialized in the market. The demand of flat steel grew 9.8% in 2024, totaling 15.7 million tons. It is the greatest level since 2013. This is a result of the moment of the automobile industry, home appliances, industrial assets, and household essential markets. The expectation for the economic activity of 2025 believe that we will grow 2.5%. like he like and like areas that consume steel like home appliance automobile and household essentials uzimina is prepared to meet the demand of the climate but the cycle of monetary tightening with high interest rates will slow down the growth throughout the year. Within this internal challenging context and with the instability of international trade, it is urgent to deploy effective measures of trade defense regarding the imports by products that are subsidized that create unfair competition in the market and reduce And the market cannot expand its investments and generate jobs. Brazil had two years of growth in the GDP, but they did not harness the opportunity to develop the local transformation industry. We need more effective measures. The tariff quota measure adopted in 2024 was inefficient to guarantee the competitive autonomy of Brazil. Just to give you a perspective, within the same period, the imports of flat steel grew 57%. In 2023 and 2024, the Brazilian market received 5.8 million tons of imported flat steel, and 78% came from China. And China continues with surplus. And flooding the world with steel at subsidized prices, the unfair imports will also affect products that contain steels, like machine equipment, vehicles, spare parts, and structures. The price of these increased 30%. In the past two years, we have 30 more industrialized products coming into our country. In addition to this, the new worldwide scenario with changes of trade defenses are creating more uncertainty to the market. Nonetheless, we in Brazil should concentrate on fighting against unfair practices that affect our country. To face this challenge, it is important to have preliminary measures regarding the dumping investigations of coating products and coal rolled steel. We are prepared to compete in scenario of isonomy to provide good value to our customers environmentally. We announced our decarbonization program reducing by 50% The greenhouse gas affects per tons of crude steel until 2030. Our sustainability activities has been recognized, and we have attained an ESG rating and received also a silver stamp for the second year we have been announced in the Environmental Sustainable Index. B3, we're the only company of the steel industry that is part of this group. In the social aspect, we started retrofitting the school. In Ipachinga, we continue supporting the culture, sport, and education programs in the Communities where we operate, over 670,000 people are being benefited with our programs. This in 2024, despite the challenging scenario. The expectations for Q1 in 2025 in the steel unit continues being positive. We expect an increase of the sales volume in the domestic market. Two, we believe that we will slightly increase the sales of steel with a better mix. The expectation is a net revenue per ton slightly above low quarter because of the best sales mix and the transfer of price in the industrial sector. in the industrial industry. Regarding the sales costs, we also expect a slight improvement with continuous efficiency gains in the operations in a mid and long run project. Now in the mining unit, the expectation is stability in sales. We expect an improvement in the consolidated results of Usiminas on Q3 of 2025. I would like to end thanking the dedication and the commitment of all of our employees in each one of our units and also our customers and the community for trusting us. Thank you very much. And Tiago, our CFO, has the floor now. Well, good morning to everyone. Now, we will show you now the financial results, and then we will hold our Q&A session. We will start with the highlights of the year, the 2020 foreign steel sales. There was an increase of 8% in domestic market sales and a drop of 11% in our COGS. which offset the worst market prices of 2024 when we compare it to 2023. The drop in COGS was the main factor that improved our results, and here we have a significant growth of 31% in the adjusted steel EBITDA. Now consolidated results are, we ended with a one point set B net leverage, 0.58 times in 2024, we initiated actions to extend our debt with the ventures of 1.8 billion Reais. And in January, we concluded the issuance of $500 million in the foreign market in order to pay our debt that is due in 2026 and to increase the duration of our debt. Now, regarding the results of the year, there was an increase of 6% in total sales of steel, 4.2 million. Now, in mining, there was a drop in production and sales, totaling 8.6 million tons. Now, the significant improvement in the steel result wasn't enough to offset the results of the mining unit impacted by the lower prices of iron or in the consolidated adjusted EBITDA while stable regarding 2023. The yearly net profit, well, was strongly impacted by the valuation or the appreciation of our currency. Now, when we see the quarterly result in a consolidated way, there was a drop of net revenue of 5%, ending with $6.5 billion. This is a result of better sales volume in steels while in mining the revenue maintained itself stable. Now the adjusted EBIT maintain the trajectory of the past quarter, growing 22%, ending at 528 reais with a 2% percentage points increase. And now we will see the mining unit. Now the net income was impacted by the exchange rate variation Now, in our next slide, we can see the steel unit results. The sales volume was 1,057,000 tons, and there was a drop because regarding the last quarter, but an increase of 5% in the sales volume for the domestic market when we compare it to the same period of 2023, and we can see how the demand was good. The net revenue of 5,800,000 $840 million, this increasing 1% because of better sales mix in the foreign market, the worst mix, the total revenue per ton maintained itself stable. Now the adjusted EBITDA was $366 million, although with lower sales volume, the margin was stable by 6.3%. Now on our next slide, you can see the quarterly variations between the third and fourth Q. The drop are because of lower sales volume. There was a 21 million reais and 32 million BRLs came from other revenues and expenses because of the recognition of a non-recurring revenue of 29 million. because of illegal action. There were positive actions of $22 million because of better prices and $19 million because of better sales costs, especially because of the costs of the raw material that were better. Now the mining unit results. Well, the sales were 2.2 million tons, and as expected, there was a drop vis-à-vis the past period. Although a lower sales volume, the net revenue maintained itself stable, 767 million, because of the better prices of iron ore during this period offset. by greater sales without including the freight. Now, together with this, we have positive effects because of the exchange devaluation and because of the drop of maritime freight drop and the margin increase, 14 percentage points totaling 20%, and an EBITDA of 154 million reais. Now to when we see our financial indicators. On Q4, we registered an increase of working capital of R$142 million, mainly in inventories or stocks. The operational cash flow was positive by R$121 million and expected there was a capex increase during Q4. That was 382 million BRL, and the total is 1.1 billion. That is part of the guidance that we announced for 2024 and 2025 is to increase our CAPEX. It will be between 1.4 and 1.6 billion BRLs. And to end... Our cash balance ended the year in 6 billion BRL stable vis-a-vis the last semester. The gross debt increased because of the exchange rate, but with the improvement in our results. We ended a year with a leverage of 0.58, which is comfortable and stable. The debt profile in December still does not reflect the issuance of the $500 million carried out in January. that we will use to amortize the bonds that are due in 2026 the issuance was successful with a lot of demand and we were able to capture the lowest threats amongst all the issuance carried out by uzi means that demonstrates how our investors trust, our capacity to honor our commitments. Well, this was a brief presentation. I give it back to Leo so we can start our Q&A session.