GGB Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Adjusted EBITDA: BRL 3.4 billion, marking a significant increase compared to both Q1 2026 and Q2 2025.

Adjusted Net Income: BRL 1.5 billion, up 45% quarter-over-quarter.

Dividends: Gerdau S.A. will distribute BRL 0.23 per share; Metalurgica Gerdau will distribute BRL 0.11 per share.

Debt Metrics: Debt-to-EBITDA ratio stands at 0.69x, indicating a solid balance sheet with low leverage.

Free Cash Flow: Positive cash flow of BRL 237 million, with a year-over-year increase of BRL 2.3 billion in the first half of 2026.

2Strategic Updates and Business Highlights

North America Operations: 7% increase in shipment volumes year-over-year, with a 15% rise in adjusted EBITDA compared to Q1 2026, driven by strong demand in sectors like renewable energy and data centers.

Brazil Operations: Slight improvement in results due to initiatives aimed at enhancing profitability and productivity, despite ongoing pressure from high levels of imports.

Energy Strategy: Increased ownership stake in Dona Francisca Energetica, raising self-generated energy to over 50% of Gerdau's consumption in Brazil, aligning with decarbonization goals.

Mining Expansion: Progress on the Miguel Burnier project, with operations expected to start in Q3 2026, projected to generate BRL 1 billion in annual benefits at full ramp-up.

3Forward Guidance and Outlook

U.S. Market: Anticipated margin expansion due to recent price increases, although management remains cautious about the sustainability of these margins.

Brazil Market: Expected to face moderate growth with ongoing challenges from imports and energy costs. Management is focusing on improving competitiveness and profitability.

CapEx Guidance: Expected to remain around BRL 4.7 billion, with potential reductions in maintenance CapEx, allowing for more competitive investments.

4Challenges and Points of Concern

Import Pressure: Continued high levels of imports in Brazil are affecting profitability, with management awaiting outcomes from antidumping investigations.

Market Dynamics: Signs of more moderate growth in Brazilian consumer sectors, particularly construction and manufacturing, which could impact future performance.

U.S. Market Risks: Concerns about the sustainability of margin expansion and potential impacts from rising costs, including freight and energy.

5Notable Q&A Insights

U.S. Market Outlook: Management expressed a conservative view on margin expansion, acknowledging the potential for upward trends but emphasizing the need for realistic expectations.

USMCA Negotiations: Management noted ongoing technical discussions regarding steel tariffs, indicating a more favorable outlook than previously anticipated.

Capital Allocation: There is no immediate plan for significant changes in corporate structure or asset divestitures, although management is continuously evaluating opportunities.

Operational Challenges: The Midlothian plant's maintenance downtime is expected to have a temporary impact on costs, but management is confident in managing inventory levels to mitigate risks. Overall, Gerdau reported strong financial results in Q2 2026, driven by robust demand in North America, while facing challenges in Brazil due to import pressures and market dynamics. The company is strategically focused on enhancing competitiveness and navigating the evolving market landscape.