Gerdau (GGB) 28 Oct 202020 Q3 Earnings call transcript

Good afternoon, and welcome to Gerdau’s conference call to discuss the results of the third quarter of 2020. At this time all participants will be in listen-only mode and later on we will initiate the Q&A session. [Operator Instructions] We would like to emphasize that any forward-looking statements that might be made during this conference call related to Gerdau’s business outlook. Projections and financial and operating goals are mere assumptions based on management’s expectations related to the future of the company. Even though Gerdau believes that its comments are based on reasonable assumptions, there is no guarantee that future events will not affect this evaluation.

Mr. are today Here President and Director, President Scardoelli, and CFO. and Werneck, Harley CEO; Vice Gustavo

like the to Mr. would I Now turn Gustavo floor Werneck. to over

You proceed sir. may

way Well I on good and Harley the begin Also of today the well, like possible. of good in of health to that results I going XXXX. you is quarter period, each all And you call safe welcoming the hope here through X to CFO, conference Gerdau’s third afternoon, everyone. really and best by present this our would are Scardoelli.

us, And will you so clarify for is of questions. then the about operations. the start may will markets come the we pleasure quarter both about available that and questions of operate, to our and to you your talk by will to forward. results both end, also talking our And be up we next, answer performance to the of the also and it I the about will refer to highlights during Scardoelli And at where a about presentation. general answer and and issues also possible always the landscape looking performance I this talk

the yours. Scardoelli, floor So now is

well. quarter everyone. the will Thank for for with all you great start hope another I results It you, once with financial third earnings good I Gustavo, pleasure and afternoon, are you again a the is to be XXXX. release, and

to inventories reflects of of flow EBITDA that conversion positive free and is positive important QX BRLX.X cycle. vis-à-vis cash than to by mention the quarter you increase on the in XX-days XX-months, cash optimizing position. lower BRLX.X with payment period As the free year, from reflecting a cycle an this combined COVID-XX in September less of promoting of and payable return for QX billion. effects can see XX-days posted the conditions the in the a more reduction combination was reinforcing to year company higher in working last this days slide, conversion XXXX its pandemic, went It June also increasing in receivable, around in good XX% billion, capital XXXX recovery capital this the liquidity of terms. the This in flow, thus economic than after in the cash activity The to attributed second cash than working days XX-days

to with X% average debt opportunity net of X. I X.X that mention of long-term BRLXX.X an a also billion. nominal is cost amortization the natural schedule, well-balanced being XX% dollars. next with billion denominated hedge in Currently, that our America, a EBITDA is support in debt diversification, U.S. distributed assets to coming dollars great part our years. operations a in third Now to to would debt of our and North we came end the of due this quarter U.S. and eight or that at Slide We portion of along moving year, this years BRLXX.X position. I at to XX% take this to geographic this and the years, significant of emphasize debt of generated almost down our located with like average the an tenor of have understand with approximately

the net any period the is due company indicators been between by In higher given the reaching Board, to times on in last over debt no the the QX net with of EBITDA opportunity windows debt of of have defined range. quarter market XXXX The rebalance to long-term possible EBITDA in to in X.XX from went detect XX-months. monitoring with over X.X year. the cutout addition, and exposure. is reducing a we this debt long of X.XX times third The the Even focused which our ratio year this Brazilian maturities remains in so, debt times leverage to X.X overlapping in EBITDA to commitments the

to X. moving Slide Now

XX.X% on mix. that BRLX.X to the BRLX.X EBITDA, market main was market billion total The the Shipments QX the SG&A was to impacted discipline to impacted, which take consolidated higher in results went of vis-à-vis It South to short that We XX% shipments in reduction also domestic due in to the companies, America and This a conclude, due the the levels in shipments regarding when reaching the to of is EBITDA quarter. BD, the above the stress second margin this XX% demand results Peru industry the went and XXXX special the in domestic ever this from spread of quarter-on-quarter strong XXXX market impact the in when industry, good of In XX.X%, improved North went QX QX previous the sector was projects was from impact market. XXXX. in also In EBITDA. partially quarter from to good positive XXXX efforts were to shipments ton of year of from rebound BD. the QX Brazil QX due the will opportunity In both and higher the Argentina. of increase the per demand America, on mainly steel now US$XXX US$XXX resilient quarter To year important America, in quarter margins construction, into the were the retail with vigorous improved from in billion the quarter. civil the operation period. and of positive the posted margin third the during down positively that BD, to compared came with to America the a to attributed Also in North margin. total construction sales EBITDA recovery EBITDA domestic second this QX South optimize the pandemic in automotive a of costs considering I this this despite shipments to rebound ton reached stems an historical some metallic mention highlight the demand to and to the in direct factors of in X% that this XX%. BD, construction lowest to shut short of Brazil, direct increase at addition in Also, from also Company’s Brazil. with EBITDA year. higher Gerdau unsatisfied by the

this this utilization of rate recover and volumes, almost negative the the was by pandemic. impact the a on QX heavily I is attention, Gustavo, at It consequence, will market now Thank XX%. was floor all will things comment for in capacity year. started the of X your who For XXXX, outlook. QX to the to XX% months, hit give back In you industry of and as now

you, Thank Scardoelli.

us in number fact thus of you globally, acting September, also talk as the operated an quarter, close we our that increased pace customers, go partners. slide, markets our all steel digital robust fast operations So commitment Gerdau after the we strategy, that would great the where which industrial we transformation uncertainties a value tell operate the of also our all pandemic the by of will this to to have quotes were would about COVID-XX our results. volatility and solid in different I and where of midst even say Gerdau’s been to a our and able period of about has how website post in our you we few about months, also the resulted fully allowed accelerate serve next XXXX. to to to like year that to that in the brought of very demand, we the were to resume also back greater throughout talked in rebound continue to third I Scardoelli from please, let’s to XX,XXX in generate XX,XXX January in of experiencing. commercial last also reinforcing performance

and an are about anticipated of recovery, the driven and the showing properties now sales the operated of construction having by a the signs forward. that tell to different will view of especially clear in rebound talk reaping we the looking about Well, and outlook by increased about in in benefits also markets V-shaped moving Now I slide, I we Brazil, next Gerdau, will serve, the more retail. constructive industry markets is you

operations Minas to our our and markets furnace where Gerais, to all make serve our two we agility strong pandemic, the production blast This able the restart to Ouro after of of of capacity. operate. Branco in With the half of industrial all resumption in July onset a units second of in and less meaning month after than speedy in diligently of a our including the the to was country, in gradual sectors effort April, adjustments the resume the team

in us the last delay, several pace led indicator September, rebound benefited not in These points said, Brazil, projects rating and previous XX.X to is which effect of the of vigorous the period combined [indiscernible]. This improvement As compensate of at consumption. when July. to at I September, an resumption increase X.X companies had it seen interrupted of July bit, projects the the before, boosted, end was evolved index March, in this the XXXX, There quarter quarter. down a pre-crisis from vis-à-vis and called from been construction industry the indicates quite of but demand a growth in that repressed the compared that which, shipments points benefited recovery showing its between the the activity even led said turn, second industry significant when the production compared C&I the to index it from of similar and XX.X years. long since to at June especially in in few only trajectory, even the quarter, the monitor We steel third in I steel This is or slowed month. construction periods to volumes as for meaning a of with their highest accelerate second also

the a the to significant the inventory to whole, reduction in replenish was the second inventories all quarter The chain in by suffered also the market quarter strong a third uncertainties. construction movement levels a as due in impacted as sector

interruption I posted higher after in their recovery in we aid monitor above supplies self When shows mentioning eight very important market has mentioning related the Fundação what survey consecutive trade I that particular, According boosted the outlook. also conducted from in after March It restarted saw volume again to emergency mainly of growth since segment, April. retail compared experienced been we July August in The different I growth. which August, a in reaching the worth same than highest third XXXX. the their X.X% the higher than X.X% production construction when index trajectory to is September, at would XXXX, Year goods. a think early sales industrial equal XX.X% increase inventories industrial sales reinforces Brazil sectors Getulio resumed closely what XXXX. Also, an IBGE, segments of confidence January the sales advanced government. and the think from sudden to who to construction replenishing Similar so-called year. posted in period is move that retail towards business, federal showing those for by industry, Vargas was and durable soon the received to points its them it of most industry it of XXX.X and to the was like by experienced in agri points level impressive growth, the is continued materials market. construction worth energy something the mention, in to monthly we or last levels the progress the that builders, the

projects. we forward, retail in very the demand also long looking infrastructure be maintained, and steels Brazil in of that are purchases new Now confident reflecting for sales will the increase properties,

saw For the already the of São Paulo like projects, and in the country. overpasses instance, around in terms important of restart infrastructure, and subway bridges and Fortaleza we

We are also very optimistic basic sanitation. for legal regarding framework the new

talk the solving reforms on of country also, the also to indicator survey. the rates the structural government, industry, industrial and of relies administrative like all for outlook considered to recent of the XXXX. And in the reforms in other sector, run. long by steel the positive and also industry Brazil measures This tax the for evolution the our problems that now talk that of boost survey monthly of session. proposed like about special stress increased in confidence XX more steels conducted about I indicates I XX the points demand industrial the our industrial A by the for competitiveness Q&A and points, in will growth operation, also economy and in and productivity is very entrepreneurs as the the will the XX.X a downstream sector. the during C&I Brazil, sectors of increase continuous in the Well, I rate leap Now comparison. especially would

So resulting growth in in of third the during quarter starting with in industry positive are intensified now, compared daily Automotive operating to September, average after new Brazil, to lower in Because orders. a Association are against significant the X.XXX the I auto of the think vehicles in consumption, the when months the still to four demand automotive a Manufacturers, a portfolio. outlook, recovery orders makers Despite projections National year. XX.X According the the ANFAVEA, of relevant seeing vehicles the XXXX. at for growth right number production was the drop early was year levels we of for

worst only crisis moment vehicles were the in that entire Just of X,XXX the to produced this month. April, illustrate in point,

On will the also we very follows be auto agricultural due increment positive and the will automotive a of market by remain this capture to the dynamics paired that following to performance months, wind industry production parts sectors. of the opportunities new in the to domestic farming diligent performance crisis. And

half the produce the terms to they the industry. have oil a despite of in special But units the quite second end over our increase activity we post remain when to sectors been and The especially initiatives crisis. demand agriculture, the in United steels, of vehicle XXXX lower country the the and industries XX growing of in in of automotive contributing of in Moreover, sales, steel other by units. Now resilient to like in should thus continues focused increase the on also terms an the productivity States. in U.S., level million industry year for gas the in special the

global that in unit is productivity. in state, mill to the in of for fulfill Jackson the prepared being mill demand shutdown is transformation will a a reference the the and which technology Monro that and of same With Michigan unit world-class be future the This steel.

long in very this from to pre-pandemic I industries third talk above the the manufacturing is September, non-residential construction which steels points would XX North the quarter, we U.S. by will architectural about points it in index anticipates operation in the start important since for performance that index remained to well, building America. high and the Now highlighting sector and during the volumes August performed another construction in of in XX XX-months even went levels. like

previous reaching On we in should slight but had the other US$XXX close hand, ton, relentless Also, US$XXX. and to improve metallic recovery spread be next (Ph) to Minnesota. shutdown of costs a to to months, around unit our in short that highlight there decline I levels the would [St. in reduce the including coming the a believe quarter, of per the initiatives returning like Paul] performance,

only Now for but outlook, sector. forward, not positive industrial a see the the for also industry, looking we construction

election finally the investments presidential in take we And place infrastructure hope XXXX. significant released unfolding early November. are that the in U.S., in of We closely the are the will monitoring in also which

in like to quarter. for in to estimate a like in part rebound of of this say year, plant BRLX.X Now billion slide, South quite the in would strong during of equipment, BRLXXX a and particularly way that third Peru finally, this construction I of would being of to in PP&E, respective Argentina the during to the invested third XXXX. total quarter, nine-months our conclude civil billion investment markets as first million with investment sectors, moving BRLX.X America. industrial we property domestic in Uruguay, highlight also I this with and And strong, and their performance sales especially and the very

at this say around quarter, company sustainability in help northeast acquisition business. specifically the our Gerdau we approval customers increase to even And reaffirm for and productive of By connected in way. our to before. are generate and batch our doing which to the which with able Now are on were the country. opportunities arm, trying here, the like mentioned Furthermore, disposals operate markets. our Brazilian seeking we to From their steel serve In to Especially to their contribute months in evolved Gerdau we slide. market Very of in the business to I challenging our important this very the solutions the we more help trying the highlight Brazil and Ventures have a order and Gerdau, partnerships, Seara. close overhead, to them the where Steel of construction that was Consta, Next, Also, we to to customers, The how during for own entrepreneurialship would deepened different producers, customers to the next propose the I during special industry. our And to this so, the the say that startup would mention main acquisition more our first putting like to in needs and serve to of. let’s with establishment a Latin all have like to part created understand in accelerated strong the ran to for value. we the onset I all of the jump I demand global this which Gerdau, are is thanks dire of we our you to I their teams we October, innovation of a to of recently able the things the value serve our future steel have we civil another focusing And with non-stop to I very ecosystem worked teams Gerdau’s and rebound. pandemic, the and new of would commitment also of our that capture in would at identify. will sector. to were of like - move discussions moment generate that quickly, goes

We generate of commitment more constantly our to to also seeking to of and a sustainable consequence And stakeholders all our part involved. are value as the development purpose.

dedication of September, conclude long-term B stakeholders. finally, companies large and into As contemplates that our to by the effort a during the ensure Brasil part part, third the to listed their were lives thank economy transforming because the more global we multinational health units, like one most each serve I hard of our production Lab and became Movement we all rebound quarter, their this and at I due coalition to those really employees a de teams putting all for Be to employees enormous Builders, model for our Sistema for safety the generation of in able this aiming first, nothing matters extend sustainable value of the And to launched thanks because would our to and of work, customers. of us. Also, our Gerdau, quick of

I now also to performance quarter and your conclude looking part in this what answer our your we Now third will and you and questions to this forward. disposal be about details more on, from give Scardoelli at we see

So our go now to session. let’s Q&A

[Operator Leonardo Correa Mr. from question Instructions] Pactual. BTG first comes Our from

me is I Hello, well, Can you good? not good my think afternoon. very line hear because

you hear very We can well.

Congratulations Great. results. your for

is know that First and of about, I market. been you have monitoring the question pace the it

before. in know is quarter But is whether that have this I the the you before. unprecedented. like never seen something don’t level are happening what of something of that this have demand is it debating that something investors think third sustainability experienced I I

competition I was well the there XX% domestic spiking increasing I during drop in chain not that that demand is and pandemic. but demand is or the in And a was demand to builders. by You And small increasing lot supplied, It monitor data, is the the know year-on-year. year-on-year. the all the market from market that know we know XX% is there hard of a self by

a So is asymmetric. bit it

longer. this maybe demand because I be much can level of to think the questioning exhausted, that longer sustain the level be for much I will next this be able sustained, government aid emergency in don’t because are of few people this months, think how won’t

a help do at fourth point see your though quarter? soon, tell evolving is about what could look this second looking this XXXX, the bit is see orders So Once unprecedented. you the fact will even forward? understand us this you is you how do will us you towards be the this maybe about whether So that very portfolio, sustainable. it if And

in an unprecedented We time. are living

of political here But I almost what from increased how after think readjustment at are see off or pricing it. this is look do think happened you November, noise moves, it zero at the the in five do something four the hear the We scenario? but how to want see I premium can to that announce we still on premium one XX%, whether there. thing. But I associations. very FX, still things some you revisit see led variable future? think you, you is because pricing how the some prices already was which these just increase you in you and depending behavior looking from There and some you by

question. Great

Let’s to about market is important being cetera, prices, digital services, good about cetera. you company, digital centenary are would say focus just like in that and XXX-year-old demand on I and important Gerdau insisted, that can thing. to transformation talked but always et bring like transformation we other talking company. I have for fact the that the that have et results it one introduce always company, segments constantly I People and

were and in was back capacity way, you to be in artificial I data could call, comes lot Gerdau, demand. a we and say also reading my to anticipate collect rather us. But And future based landscape market. our according resort then, I worst in So would beginning think would intelligence feeling, if earnings recall, I said to in I reading but or elements mean, on the were one very from And has the intuition utilize about we already able the that that to is of things recover. I what back certain company data today, than May, the release my the be. to of that algorithms. to that, a concrete behind our

contemplate digital projections with seen about than science only because customers. that is our it we transformation. XXXth anniversary I celebrate and would what relationships our looking forward Not with we that, say are Our higher long-term have to

what an other So just the an throughout now we is at remain demand And know idea right that constructive. end. This to happens our of have for XXXX. just reading sustainable introduction, very that is longer I say will

Our I’m growth. X%. it of about we until year, to of mean about main even ago. now compare And industry the months. last of is us. recovery are construction a and infrastructure. the projection will orders. the I markets, posting already have portfolios believe backlog is But This next XXXX continue at about accommodation it when though when moment I’m will last talking to is also think now this that we was talking we recovery end up. agriculture a ahead have already as was terms house this this And in few far and you talking XXXX that positive should retail mean an from the civil is of and our you throughout I’m built what months well, to what important the longer. Therefore, the should grow between X% of move year, I

hearing are topic. the and I’m in unfounded. It pricing going saying my of is more true stir price that, that don’t bit could a Now have of to direct. answer about well, not I saying terms But not really been is statement plemich I this rumors of in want topic. very academic. been that want up, terms the in But to be steel that is some prices, has opinions just particular well, that Maybe any market, are sequentially I what especially domestic true. be that

We in steel input, increase to when in a price have XXXX. of the levels so been XXXX facing compared of have strong not recovered the

costs very increase Our quarter a very to a happening and a there anticipated, due combination due expense. nobody strong move XXXX steel to trying reduce a because a movement that demand of the to to financial back, that years but been reflect results cause. - third stronger of focus few also volume are for that our is has a strong support was This we to in

the So company our high this versus my we And very cost performance. statement. And are you reductions of absolutely SG&A about part being able in post of posted revenue face we terms demand. an is is performance sustainable bottom of line. The then have ready think proof to also to our record to important

hard working production, to the of our market. one we are view, In are to happened supply companies We the resume first in which back April.

supply So therefore, we the The for demand. to of pre-crisis blast serve customers. rebound resumes and to Brazil we it are despite fully our our level able in customers. furnaces until that, able were serve fully

of Scrap have diligently. will and really of products. profitability do hard anticipate order not conclude, we increase in Therefore, levels. our we to be We prices work to going to are all up to our remunerate input order to products supplying in are and any and scarcity profitable, customers. We and our shareholders,

very Alright. Thank Werneck you much.

questions. Leo you your for Thank

Daniel from is Itaú question Sasson next BBA. Our from

question. of think the to in share? market fourth elaborate your share in resumption I industries the think and this America quarter Do what for of there you resume to could you market once other talked you comparing follow-up but industry? shed the is helpful. that blast and of maybe on regards their mean, pricing, quarter should second in competition also is I in a carryover a question your the could be some this fourth margin. about furnaces? your pricing with the Could you that the know talk you margin as the third cost potential light Now third Leo’s future My bit I recovery operations? to pressure. announcements, about question been How results. see announced that of the do South Congratulations in of terms quarter, your be My has a about already volumes the you don’t difference

shutdowns, the South restricted the margins I in how think was that? you behind there repressed sustainable XX% things in the your America history. more of of and countries that margin was what Could highest where but Peru, margin all were us are the like be? were some tell And because could

Thank share we morning, It are I domestic grew and the a ours, and the the were that to Well, X.X%. X.X%, you. IRBR always before. we all in the that this grew prove numbers to There read market We very said XX%. published was to the about sales X% that, talk of numbers sales published the to the by whereas you, compare Daniel. information signs. pleasure numbers rebounding by public, is Therefore, is they market, what this whereas reduction quick Daniel, a

I first operations. when teams. company market, enormous due it. demand. is to our to And deliver to quick the the to right customers products effort We and we they our we on an were This of needed part the to the to think serve act resume to were had quick

I quarter. the many But natural. now we to have have reached pricing be give sustain is there But the for details constantly what us. the we want seek months we now. profitability. ahead So have of will next about to you don’t is certainly, or This into This is the some next carryover we work too to levels do current that because

here some trying carryover. have should we had are for next is months, the historical our an few prices pressure I but certainly, volumes. We spread important to expect impact, Scrap revisit The think stay. to

Now give on floor South to I Scardoelli in America. the will margins the elaborate to

are give with you please will about him, I you start will Thank Scardoelli, muted. be share think details to answer that I he more topic. you. and the just over? So you Could able

demand are that touched we about has the can strong seeing in a the What inadvertently. EBITDA, third these which operations quarter. America. In of it is sorry, consolidation we improvement, been tell America, very part I’m South South of button I mute our is the

And recovery some market there of also effect had they performance So aspect very others, margin. had because positive case the a good that on and had the time, very in the good a Colombia we quarter. is this that a in

the few South been margins operation, back. historically, higher look to a in you when America years much compared If have

margins and sustainable numbers quarter, at of EBITDA well. second these especially experienced long third are in forward, looking as we strong yes, a fact, quarter range. the in because if the So would But I leverage, this we say, look our

and Excellent as Harley, you Gustavo you much well. very thank thanks

you Thank Daniel.

Our next from Rodolfo question JPMorgan. from Angele comes

two afternoon. questions. Good have I

capital. working First,

even reversion quarter seen was have of capital a working major strong We though growth. of this a

So Gustavo. like for could strong And should I to we also are XXXX. see we fourth phase addressed looking entering to company, and forward, Harley very know that We what is clearly question a whether interesting my growth. like would comment second quarter on the expect

within the is Or next and my is to cash next going your agenda So whether are dividends? use Are thinking company, following out year, to growth? pay year year organic you for as that this you in to of the surplus, we question good. terms just

a to always it Hi Rodolfo, you. is talk pleasure to

Scardoelli will So start with capital. working

afternoon, well. good I Rodolfo you are hope

important In this terms of working an capital, to we post able were quarter. reduction

BRLXXX was reduction a inventory. an special receivable this robust, the lot some of quite an of you exchange. look strong. accounts accounts around If look to inventory had cash and is trends, we at the also to terms and effect in accounts sheet it The we able of was In shutdowns when There was The foreign look pandemic the payable. the net quarter. mix. of to in we But that manage the was considering in the were at reduction that exceeded was payable. had of not higher restriction There accounts America was grew South BRLs, and million, down. quite but you company, due to look even terms terms at have reduction a payable level, And the that sales than time, steels There in the the we we increase same an in XX-days. a was we increase and receivable high. that, important activity that in was at higher. up, also which this be in to both activity If see BRL balance is There us you could this will helped according reach

the still quarter, see we the quarter, For position. and working next coming last capital an especially will optimized

terms And good lower at if year, with I then working of be year crisis this for capital. do first able the capital end up next we to opportunity XX quarter we every goes the our in maintain it levels, at of us that even level the will beyond working think third year, second But to This not look the days XX-days. see quarters. going of we or cycle results. we and and of start gave a level

Okay. Thank very you Rodolfo. much

say and volatile. that already that debt market important how question, and generation is us. agenda. the I would second your to can also this And cash know we be very for our position as Now

will will that. very the we the still of times are take can which the here sleep Nobody nobody until debt of company before. with we obsessed to Therefore, rest. said we So X.X level

our indebtedness main And We this the position. are is reducing topic our in agenda. in obsessed

of generate Gerdau January, operation, profitability, increasing our of I and we trying as to future. shareholders the years seeking we And will cost increase for to to history of terms to celebrate constantly the of still the to come. and said value many In in are in terms trying build performance our of stakeholders expenses, company, XXX-years

further looking We now Next, value opportunities generate niche other And profitability to constantly operations. with generate units, current further customers. for we for looking are to see Gerdau ways some our our with to

So basically, is agenda. this Company’s the

familiar and quarters. with any major next we change the I think you are in anticipate it, coming don’t

Okay, thank you.

have Just another Just an in idea. so follow-up. I Brazil the utilization What today? is can capacity

XX%. it currently Rodolfo, is in Brazil,

with or everything? Minas ASO With

included. everything Rodoflo, everything, With

you. Thank so much. Thank you

you. Thank best. the All

BBI. Our Thiago is Lofiego from Bradesco from next question

talk the Thank you, in the inventories could you about Werneck, good afternoon. please chain.

to the the refers how represents much demand of I And to it Brazil. the for in of the How retail much you third and said in are in also for longs? in see the back quarter. see that longs a How do quarter part next that levels do factor pie towards understand forward? this going looking question fourth or demand replenishment you year? second of demand and boosted You grew? Inventories this a normal size just that want the was to terms

questions, Well, currently, in XX It this And below the two talk would XX Thiago. XX-days at is levels. still about normal that me level Well, be normal good inventory. of chain. to XX-days. very A level inventory let to is

be recovery is But Juntos through six-months. until quick very trend accounted program, throughout for And recovery XX% shipments. Retail the will six-months. retail will next next the be the full trend investments Mis Gerdau, by there represents commercial not our XX% of there our shipments. of short-term. that with the longs the a It a that the the is recovery is a So in

again. of How see move lose have doing in I what looking been that of things. and you XXXX, that a negative Now see income part related kind to how government, of including retail you could do? Do do to terms the terms it by you income segment level? offset the you think risk, know you few And do in work a forward? the

Well, still that will our but of work positive we believe months, going position very to directly the this XX% after be removal grows of able years. higher this aid, But after segment. grass shipments even strong to root in we remain X I even in has the strong very because the past occur our compare that retail with when about will is been year. will excited demand the are termination terms you retail Well, crisis very every pre currently, decline aid. of to make the do emergency the

much. very Werneck you Thank Fine.

from Suisse. Our Crédit Ribeiro next question Caio

you any Do special adjustment My everyone because in relation first in next for year for could Brazil? margins taking you to afternoon be Brazil increase? this question. And and And the see second magnitude what your price thank more about segments. how a normalized will potential margin? as improve steels, room other of My help is is my margin the so the to about of reach Good underperforming that question segment. question

But is in going And have with it evolution the the the XX%. fourth Brazil, also the of considering weaker the quarter? the an quarter, increases do there also of scrap fourth seasonality. price in traditionally in price How is above will whether that impact? up see Now you margin

question. pleasure talk Well, we Caio, sustain believe the will you. it We is second to your quarter. jump that towards I straight a to margins fourth to the will

that with working assumption. are We

we steels, pricing special prices terms market. going of for in the special are steels, the in Now along just global

and So recovery I of afterwards, we operations to with of in automotive on. our we and of phase come terms U.S., are very the all benefited incoming Brazil difficult And a we orders optimistic, results increased this demand. now from new improvement, think the will in will months. margin industry face We had and the performance because our experience from from in

Perfect. Gustavo. Very clear you thank

Carlos from Our de English Stanley]. next [Morgan question Alba in

the on before. following just So question inventory

you big mentioned in inventories to forward inventories I tend this of sorry, understood do around the to That in your chain inventories? in your Brazil, currently typically particularly just as How well of that going that as to If you into has important can have interesting make own maybe the think the similar and next I Can reducing year? XX quarter, one given of from XX-days, comments generation in you your comments to make are and you days between see make between guess, to net in to more I cash lower a different you there EBITDA We comfortable schedule. a now sure fourth supply amortization times. of both debt XX-days. reiterate X.X me. that generation plans, of quarter. flow that will to terms the in be has cash terms target seeing you was very see And the and inventories then

more your on sheet Is the years going debt have Obviously, cash to is XXXX, are should whatever debt. mean, think talking is about the significant have a until I XXXX. due coming about don’t to or I’m X.X What much to times. the amount. You retiring, and and planning really you not you really XXXX doing? EBITDA of on too your And how balance in of raising coming but accumulation in due strategy more we one increase, management. the really, getting where

you, Carlos. Thank

let will answer Scardoelli question. I Now your

ahead. go Scardoelli, So

cycle do is normal. was was, first debt very room is about next this was few scenario? this our firstly, to But market inventory we as inventory your inventories. And And And the which And our strong, levels balanced. predict in the the looking And well view in a our the some inventories. months. still what cash slightly to you point, part chain dynamic to own momentum forward? referring question Carlo’s forward. that this looking certain or trend especially also talked to have are Gustavo Brazil, cash related us in is allow of our question and how our about about Well, position flow, level below this see saying, we recover second has

reduction use If inventory steels. had at may Now that additional this million more comes is working will There some operation, of BRL and will at per the capital inventory America when special we Brazil relationship the that some it that look a certainly, from very in capital. know stable the cash Maybe inventory. bit about working at Gerdau June a more to it issue cycle terms also to replenish level. North components that working probably there more capital the with of yes. be consume of inventory need little to other to system, would related regular scrap itself, But replenish September. be is we XXX days, and bit our to levels. rebuilding this should mentioned, in strong cash, We stable level. But inventory we a

that It to would rather terms is below This maintenance do possible first to abroad. debt. say We carry debt is of negative position Brazil carryover. were a the negative in investments well I that our we easier carry in year, of of addition, the all, balanced. lowest or minimize very of than try to the strong cash generation, that In the try cost

used three It this that a BRLX XXXX. coming because that in billion, about was matures to about be Therefore, for close was issued And a bonus have is months. million. that that. of majority cash We will BRLXXX in

use short-term pay to to proceeds trend the is debt. Our

In further out get more to We dividend. haven’t and more certainly we to of pay will second we cash cash, evaluation If quarter, paying able yet be out pay dividend. more more will conducted dividends. in any this need terms this third

to had this think is liquidity. about I what say I

you Thank Scardoelli.

Next question from Timna Tanners from Bank America. of

X% was if of for didn’t the entire X% Wanted ask for questions. company. Hello, Brazil or two you applied volume. But guidance know to One good improvement all regarding into the afternoon. gave to to XXXX the

the is indicators would color So And And up And if question really color the on the pointing on scrap you a then the a second it could is any more Brazil, Thanks are into very wondering to and demand seasonally decline. more the so just you nonresidential segments in margin have be just outlook then construction just much. on leading other clarify if fourth little is if weak The that? U.S. quarter XXXX. great. my market.

question related first in said our long that refers expecting Timna’s flat Timna. I X% for for you And we to and demand what expected Thank is this operations demand in steels. between next X%. growth to to Brazil year. are a growth

a X% different anticipate on operation. We have in numbers the demand. growth We depending

For steel the America. long in North operations

also levels for United predict good asked past growth remains quarter see that, operation Therefore, backlog at orders quite with for the the that, is in of It coming. X%. think her I we that growth second bit of the due in few have to good XX% answered the months, demand number some I related our higher we of our operation. fourth experiencing around Timna’s we a question lower I predict the special she outlook year. first And was question. special more question. been to think and steels, Right in growth strong. in shipments now, mean Brazil. Timna’s and States, a And per color We anticipate steel I some in was we that the

the before, US$XXX US$XXX was reduction Our is issue a And It $XXX. the I to U.S. metallic the there to in from by second spread. was third and spread the main in said as down quarter. US$XXX between -

what to had performance. the But we in to working past. now the hard reduce buy improve continue and We at internally to are similar U.S. in cost prices we

to have, people. will were be you So thank our talk sustain and quarter, if Timna, therefore, Basically, posed questions able free and you please by Timna like come can questions margins. the we questions, the in feel to two and these IR more to fourth these her I with to would

you. Thank

Bokkenheuser Our UBS. from next question from Andreas

at lag when we two typically bear at Thank my I given just for economy well, construction by a you industry, three all the to difficult Timna’s If years. well look question, very declines and as it to circumstances moment. to are the taking the I into for families typically, And much it about one about are on your and question. overall it wanted goes hope well year. follow-up the you tends market,

And We are a are to money of into lot mentioned year, construction a decline there like your steel U.S. doing of understanding is To you North going be contraction the we backlog If lot indicators projects I Timna’s year. in due America, a need XXXX in backlog, the of have is be jobs. point, producers nonresidential that that quite There also look ABI again construction to down seeing a these at of course, XX%, started XXXX that construction to starts damage are COVID. to is And ABI. in we in before of lot very projects leading this point, you suggesting new a were lot we well. strong seeing is to just XX%. level, for orders and still projects next but completed. economy think The not that with are

a economy that lack question to bad that one in economy year the suggest the going by the contraction guess is well it confidence question. very next this are to going demand given Thank given I year, year. next we overall my much. would year the demand So material what do did is sector how you because does construction that global one just particularly gives get and That’s you

that the the larger all about our wants Andreas one profiles, in parallel, of increase some U.S., we operate up profiles is thank is Tuesday. with in the outlook, to see your main few lead mills, slight next forward, a for and these We we even at that to the years outlook structural of looked details in to the has in the he gaps asking project the for do year, elaborate operations. And strong infrastructure the a place investment when in at only growth in the past but expectation extensively debated indicators, the segments. coming for projects commercial we years, few made major we especially look us infrastructure ahead growth the considering decisions the operate in working the have positive continue that growth, segments see just we performance we our years. see the areas where three Well, and indicators. lighter you serve, about would the on especially coming for pick see a a We the and a very take conclusion for in We look we not decision upcoming the elections to been months. focused where invest been performance. a the to but for coming And to looking in the in the few sectors U.S., at Andreas, not Andreas, results of moment, at three will next all the past on demand topic decisions and years, possible slight from our years, all reduce diligently increase cost and more very We we and question. this but nonresidential. scenarios, we

improve certainly much. will as in the certainly, results sustain may be even to us our will next But a that us our to growth there should financial market We allow in lead three years, not margins. grow some

Thank you very much.

Jon HSBC. Mr. from from question next Our Brandt

Hi, gentlemen. good afternoon

presidential infrastructure a I the question. despite Andreas’ are sure on from of just not be to follow-up potentially, both And of that. bit any pledge expecting historically outcome the this have just to to spending that you the But on know better scenario Just before. election, depending I U.S. many than times. a could we make do want candidates major seen actually

steel has if question of Is that, there to I theme, not Brazil, guess of only spending, is my infrastructure to big that, been a in green versus were side and major traditional of ESG infrastructure globally. U.S. the to see nature. in second this in spending? somewhat is it the sort relation on difference a but we things, related And intensity also

sector the other seen improvements. companies in have We make

could in So what initiatives a improvement comment the are world. bit you main little your hoping I’m on ESG for

asked first got election we business. that that XXXX, stimuli the XXXX, be are you our after terms the directly or the shows efforts our for in shouldn’t outcome, our could for Jon, XXX, regardless in also refer also of we there to protecting ESG, he outlook a operation major any economic certain in give thank the terms questions in and I and aspects Therefore, about your of too. our stability. impact questions. add are. where ESP are now His of growth. also will possible slight placing the I priorities the floor stimuli, where your a the U.S. election outcome has is in comment, to the U.S. question, terms of analysis But floor can to then to anything we talk give the he of with Scardoelli. of then whether I about This we to Well will From to and will see start all conducted the Scardoelli else

Jon. afternoon, Good

U.S., now. the we of invest our increase U.S. event is So in that demand possibility but increase There infrastructure. we compare both our because in America, talking candidates. think next this that Republicans debate are a at happen, the right both not the important potential steel. that a today a planning possibility of difficult Democrats, an demand spectrum, possible we for It year, see political the about needs any infrastructure. outlook you I a significant to and North there in is might when the we see on is for are sides to is not that, that aspect including Obviously, will Therefore, including infrastructure, in is but in look

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on. Thank Scardoelli. you, I move will

of Jon question, thank do I like because has would the This is future for very company. it a First important with to all, on ESG. his to of question the

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system, our strategy escalate activities also terms housing We were our like systems. able of Institute. in to at social Gerdau recycling reviewed responsibility We

publicize But the ESG, next emissions to in and all we In people electric few our and best well production initiatives also producers. all reduce brackets steel months, structure employees. challenge our they in uses steel the want reflected society the of gas Therefore, the effect. ethnicity. In have be among goals scrap. be is we E, demonstrating that furnace of of we And plans, sustainability in letter inclusion, in three will this our XX% in future, will environment, our society. producers. way. include reference our in for We overhead, and case, We respect also have a of all greenhouse to other executed for possible and we because a included And and the terms areas that is an advantage I of base believe

much Thank you gentlemen. very

Mr. now session. the final Gustavo back I remarks. Q&A conclude the floor turn for would his to to We like

invite early thank like Well, a both would of to again much you XXXX our very fourth always for Time It take to place I XX quarter year. next to us Also, related us November. would I to of flies, is you. for you release that February joining join pleasure will almost on of like to it us today. the is to earnings talk next in

have not in would now, days XXXX do personal you wish all the and with your health put plans future. and very talk we year. that you or projects sleep for So plentiful possibility of very you I to much, wish take I good well. in opportunity the to and been to like Thank revisiting this this a again case brighter be

very Gerdau’s call is afternoon. now very you good Thank much for concluded. have a and participating,