• Adjusted EBITDA: BRL3 billion, reflecting cost reduction initiatives and asset optimization in Brazil.

• Net Income: BRL1.432 billion or BRL0.64 per share, over 50% increase from Q2 2024.

• Free Cash Flow: BRL3 billion, with BRL1.8 billion from a judicial deposit withdrawal; excluding this, approximately BRL1.2 billion.

• Leverage: 0.32x net debt over EBITDA, lowest level in the last 12 months.

• Dividends and Share Buyback: 55% payout on net income; 57% of buyback program executed, investing over BRL700 million.

• Cost Savings in Brazil: BRL210 million captured in the quarter.

• Warning! GuruFocus has detected 4 Warning Signs with FRA:3QI.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Gerdau SA (NYSE:GGB) achieved an adjusted EBITDA of BRL3 billion, reflecting successful cost reduction initiatives and asset optimization in Brazil.

• The company reported a significant increase in net income, reaching BRL1.432 billion, which is over 50% higher compared to the previous quarter.

• Gerdau SA (NYSE:GGB) maintained a low leverage ratio of 0.32x net debt over EBITDA, the lowest in the last 12 months, showcasing strong financial health.

• The company executed 57% of its share buyback program, investing over BRL700 million, and announced the cancellation of approximately 77% of the repurchased shares.

• Gerdau SA (NYSE:GGB) captured BRL210 million in cost savings in Brazil during the quarter, with plans to achieve BRL1.5 billion in savings by the start of 2025.

Negative Points

• The global oversupply of steel and uncertainties in the macroeconomic environment continue to impact Gerdau SA (NYSE:GGB)'s operations.

• Excessive steel imports into Brazil, particularly from China, have negatively affected domestic shipments despite increased local demand.

• The company's North American operations face challenges due to a slowdown in economic activity and increased competition from imported goods.

• Gerdau SA (NYSE:GGB) anticipates lower revenues in the coming months due to reduced merchant prices and increased imports in the U.S. market.

• The effectiveness of Brazil's trade defense measures against steel imports has been insufficient, requiring urgent adjustments to curb unloyal competition.

Q & A Highlights

Q: Could you provide more details on the impact of the U.S. elections on your North American operations, particularly regarding shipments and prices? A: Gustavo Werneck Da Cunha, CEO, explained that the election results are expected to be positive for Gerdau in North America. Prior to the elections, there was apprehension affecting demand, but the company maintained asset utilization by adjusting its production mix. The fundamentals of the steel segment remain strong, and the company anticipates a rebound in demand, although the speed of recovery is still uncertain.