Welcome to Gerdau's first quarter 2026 results presentation. I'm Ariana Pereira, Investor Relations Specialist, and joining us on this conference call are our CEO Gustavo Werneck and CFO Rafael Japur.

Please note that this call is being simultaneously translated into English and you can choose your preferred language by clicking on the globe icon at the bottom of the screen. During the presentation, all participants will be in listen-only mode and then we will start the Q&A session.

Analysts and investors can join the queue by clicking on the raise hand button. It is worth noting that the forward-looking statements contained herein are based on the company's beliefs and assumptions based on information currently available.

Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that may or may not occur. Now, I'll turn the floor to Gustavo to begin the presentation.

Hello, and good afternoon. I hope that you're all well.

I thank you very much for the opportunity to join you for another earnings release presentation. We will briefly discuss the highlights of the first quarter of 2026.

We will also talk about the outlook for our operations, and then we will proceed to our Q&A session. For one more period, we posted strong results in North America.

Between January and March of this year, we posted the best adjusted EBITDA for a first quarter since 2022 in our North American operations, which accounted for 75% of the company's consolidated EBITDA. This performance results from continued strong local steel demand driven by consumption in segments such as data centers, infrastructure, and solar power, as well as the sound operating performance of our operations in the region.

Meanwhile, in Brazil, the domestic market remained under pressure from excessive steel imports, whose volume rose 42 [unclear] 4.2% in the first quarter of '26 when compared to the same period of the year before, reaching a penetration rate of 22.7%. Against this backdrop, we continue to closely monitor potential developments in the anti-dumping investigations regarding long and flat steel products, which are expected to be updated in the coming months.

This scenario of unfair imports has impacted the profitability of our operations in the Brazilian market. I then reiterate that we are investing in initiatives to strengthen the competitiveness and profitability of our operations in the country.

We have even seen a recovery in EBITDA for our Brazilian operations in this first quarter as a result of this strategy. Finally, I would like to highlight that we recently introduced Gerdau Next to the market, a low-carbon steel solution developed to support customers seeking to advance their decarbonization journeys and strengthen their competitiveness in the transition to a low-carbon economy.

With the launch of this new line, we now offer a complete portfolio of products with a lower carbon footprint for steel-consuming sectors in general, like the automotive and construction industries. I will now turn the floor to Japur, who is next to me, who will give you more details on the financial highlights and the impacts of the current scenario on our results.

Then I will conclude with some brief comments and we will jump to Q&A.

Thank you, Gustavo. Good day, everyone.

It's always a great pleasure to be here with you today in another Gerdau earnings conference call. We started 2026 with 1 billion reais of consolidated net income, 50% up compared to the previous quarter, 34% compared to the same period in 2025.

These results were driven by sequential growth across all other first segments, particularly our operations in North America, which continues to gain prominence, as Gustavo just mentioned. In Brazil, on the other hand, despite the decline in apparent consumption of long steel products, our main market, we achieved a higher EBITDA margin than in the previous quarter, a lot thanks to our cost discipline.

Therefore, we recorded EBITDA of 3 billion reais in Q1 2026. Please hold.

The call serves at Gerdau. We were talking about our operations in Brazil.

Even with a decline in apparent consumption of long steel products, typically our main market, we achieved a higher EBITDA margin compared to the previous quarter, a lot thanks to our cost discipline. Thus, in consolidated numbers, we ended in EBITDA of 3 billion reais in Q1 with an EBITDA margin of almost 18%.

We ended the month of March with a leverage of 0.74 times net debt over EBITDA ratio, a level we consider extremely sound and in keeping with our financial strategy and policy. In the first quarter 2026, we recorded a free cash flow of 16 billion reais, even in a period which typically consumes cash due to the replenishment of working capital and also the end-of-year maintenance shutdowns.

Compared with the same period of 2025, we generated 1 billion 300 million reais more in cash. This reflects not just the substantial improvement in our EBITDA, but also the substantial reduction in the pace of CAPEX investments compared to previous years.

This does not mean that we are not investing in our future. Until the end of 2026, I'd like to remind you, again stressing what we have talked about in our previous earnings calls and Investor Day, Gerdau should complete three very significant projects for Gerdau: the mining expansion in Miguel Burnier, the scrap processing center in Pindamonhangaba, and the first phase of the Midlothian expansion in Texas.

Together, these projects have the potential to add nearly 1.5 billion reais to our annual EBITDA when the ramp-ups are complete. Lastly, we remain steadfast in our commitment to creating value for our shareholders.

This quarter, Gerdau S.A. will distribute 18 cents per share in dividends, while Metalúrgica Gerdau will distribute 8 cents of a real per share.

In addition, talking about Metalúrgica Gerdau, we just approved the launch of a new share buyback program covering up to 10 million preferred shares, which today amount to approximately 100 million reais at current market prices. I'll wrap up here, and I will join you again during the Q&A session.

Thank you.

Thank you, Japur. To end, I'd like to say that in Brazil we see signs of a gradual recovery in domestic demand, particularly in the construction and infrastructure sectors, following a more intense seasonal slowdown at the beginning of the year, while we still face an excessive inflow of imported steel into the local market.

In North America, meanwhile, we continue to see steel consumption stable at high levels, with the order backlog above historical averages. We continue to monitor developments regarding Section 232 and the formal review of the US-Mexico-Canada Agreement, USMCA, scheduled for the beginning of the second half of the year.

We'll now turn the floor back to Ariana, and Japur and I will be available to answer your questions and address your concerns.

Thank you, Gustavo and Japur. We will now initiate the Q&A session.

Our first question comes from Ricardo Monegaglia with Safra Bank.

Good morning, everyone, and thank you for taking my questions. It's always nice to talk to you.

I don't know if you can see the screen. You can't see me on the screen.

First, I would like to congratulate the performance in Brazil. It was a very pleasant surprise both for me and also in my late conversations with investors.

I would like to go on with that topic of productivity in Brazil. You're talking about a new wave of improvement that is not coming from closing capacity, but more efficiency and cost reduction.

I would like to give you this opportunity to tell us what are the main levers that you see today? I want to know whether this includes logistics, mining, industrial productivity.

This is a very broad question, but I think it's also very relevant for the current moment. Then my second question, in terms of capital allocation, I see that there's still some differences between what the market expects in terms of CAPEX for 2027.

I would just like to confirm with you. Given the fact that you already delivered the mining project and with other very competitive projects being more severely outlined and CAPEX being lower, does it make sense for us to expect that next year's CAPEX would be closer to the level of depreciation, mainly considering that the company's priority is to be very disciplining in capital allocation and cash generation?

Thank you for taking my question.

Ricardo, no, we cannot see your camera, but we could hear you loud and clear. I will talk about competitiveness in more general terms, and Japur can give you more detailed numbers, and then I can add if necessary.

Also, Japur can answer the question about CAPEX. In general, Ricardo, the evolution of our margins in the first quarter of this year, they stem from initiatives that we control.

We still see that there is still room to seek for further cost competitiveness. In Brazil, we serve all corners of the country, from the south to the north, and in terms of logistics, we have lots of opportunities because we take the materials from the mills, and we take to more than 70 locations, we deliver to construction stores.

Therefore, the maximization of our equation competitiveness versus cost hasn't reached its limit yet. We see opportunities to go forward, we will certainly pursue all the possible opportunities.

On the other hand, looking ahead, there is also a pressure over costs, especially in terms of the energy grid, and this conflict between US and Iran has led our main input providers are constantly asked us to negotiate prices. At the moment, we are negotiating with our customers, trying to find a solution where they could probably transfer part of the costs to several segments.

Going forward, we still have the benefits coming from capital allocation and investments and CAPEX of projects that we are doing in Brazil. Maybe Japur can give you more detail, competitiveness in terms of scrap and the investment in the Burnier mining project.

There are many things to look forward to going forward. We are very much confident of things that we have under our control.

For next quarter, we want to continue in our reduction cost trajectory, and we are putting all of our efforts to accomplish that. We do not expect any margin or radical cuts, but gradually we believe that we have all it takes to improve our margins without even considering the trade defense measures, especially concerning flat steel anti-dumping measures.

We believe that this could bring a new reality to the sector starting the third quarter of this year. This is my general view on the topic.

Now I turn the floor to Japur to elaborate further, to give you more details. I would also ask you to answer the question on CAPEX.

To give you a little bit more light, we are thinking about two major projects that should be delivered from now until the end of the year. One is the mining in Miguel Burnier, and this project should generate about 1.1 billion reais a year and potentially with additional EBITDA.

We are thinking about cost savings in our project in Ouro Branco, but also this would be incoming revenue. This project contemplates both components.

Also thinking about our mini mills or the electric or power mills, there is an investment to be concluded at the end of the year, which is the scrap recycling center, and this would generate about 100 million reais in benefits, meaning that we have very robust projects and levers. It's very complex to estimate performance, but structurally thinking about the mid- and long range, we will increase our level of competitiveness, and so we should be seeing that in Brazil in the next coming years.

Structurally speaking, that's the major change. This is properly linked to your second question on CAPEX.

We know that it's probably too soon to talk about any formal guidance for CAPEX for 2027 because year 2026 is just beginning. Typically, our CAPEX guide for the current year is given in February, but last year we anticipated our Investor Day because we thought it was important to be more accountable to the market.

The board had already made a decision to reduce the level of 6 billion reais of disbursement to something close to 4.7. If we think about the first quarter and then you annualize it, the pace is very much in line with the CAPEX.

Thinking about 2027, I think it's still too soon to give you any information about it, and we already talked during our Investor Day that the maintenance CAPEX should be close to 3 billion reais for the next five years on average, with some fluctuations depending on the shutdown of the blast furnace or the coke plant, but structurally speaking, this would be the maintenance level. We also believe that it would be hard for us to think that we will always do maintenance as the company's CAPEX.

When you think about how the model acts in terms of the cash flow, we cannot ignore the competitive projects are there just to generate additional EBITDA to generate growth and competitiveness, and this is what we are reaping with this investment in Midlothian and also with the scrap processing in Pindamonhangaba. All of these benefits should also be incorporated in the cash flow, and oftentimes what we see when I look at the analysts and the models, they disregard any kind of gain coming from new projects, and they consider as though everything is as usual.

Considering the level that we find ourselves today, excess capacity in Brazil and demand well-adjusted in North America, we don't see room for large projects with large CAPEX increase, because I don't think it would make a lot of sense.

Great. That's very, very clear.

Thank you, Japur and Werneck.

Thank you, Ricardo. Next question from Rodolfo with J.P.

Morgan.

Good morning and thank you for taking my questions. I would like to hear more about the North American operation.

We were here positive with that region by some time. To be honest, we were surprised with the level of very high backlog.

I would like to ask you, Gustavo and Japur, if you could give us more details what is happening, what are the trends that you see in the region. Not only looking at the quarter, but what do you expect to see happening in the second quarter in that region of North America?

My second question is similar to that one on North America, but now I'm referring to Brazil. I think it's clear because you referred to your fight against the imported products, but I would just like to hear from you what do you see in terms of demand instead of supply?

How is the construction activity going, and whether you anticipate any positive surprises coming on the demand side?

Hi, my friend Rodolfo. How are you?

It's never it's never all perfect because if you cheer for my soccer team, you'd never you're never in peace. Japur, okay, let's let's split the answer.

I'll I'll speak about Brazil, and you talk about the US. Demand is very resilient both short and mid-term.

The segments where we find the main demands for our backlog they they remain very steady and firm. Data centers, think about data centers, the number of data centers that are being built and they will be built in the next coming years in North America.

That will demand a significant amount of steel, and that's one strength. The other strength is that they will not build more greenfield mills in the coming years, but possibly in in the areas where we operate.

The other strength is our business model, very much focused on margins, structural, directly related to the demands that I mentioned, infrastructure and data centers. The US trade defense mechanisms are very robust.

Since Trump's first administration and then Biden's administration, they did not reduce what was mentioned in the 232 section. The negotiation of the US USMCA will be even more favorable to North America.

We have also our internal strength. We are very lean in North America.

Since 2018, when we drew up a very strong plan to recover our industrial gap in terms of the USDI, we are operating our mills very well, very few maintenance shutdowns. We've we've been very assertive.

We grew, the critical surplus, any any shutdown, which we we solved the problems quite fast, things there are running very, very well. You see China exporting a lot through the integrated route, maybe they remove part of our competitiveness because of scrap exports.

There there is surplus, there is additional scrap supply in North America. That's why price prices in a way went up and spread is has been broadening.

We think it will continue to be like that. We are very positive.

We are very certain that the results that we delivered this quarter will continue to be good in the coming quarters. With that, we gained some time to to implement what is in our control to improve productivity in Brazil.

There's still a lot of things to be done, short-term adjustments, but also when we look in the mid-range, we do believe that there is still a lot of room to improve and enhance our operations in Brazil. Somehow in North America, we have to continue to operate with a lot of discipline or to do what we've been doing so far.

That's my general view. Maybe if you have any further questions, I can can answer that further.

Now, Japur, over to you.

Hi, Rodolfo. Speaking about Brazil, qualitatively speaking and looking at the results of this quarter, when we think about apparent consumption demand looking at steel in Brazil, there was a 6% decline in the consumption of long steels when compared to last year.

We don't give you a lot of details, but that can be attributed to the consumption of special steels because we monitor ANFAVEA numbers. I know that you also look at the numbers posted by ANFAVEA, but January and February were weak months in terms of heavy vehicles, and that's an area that is very important to the consumption of SBQ, or special steels, and that's an important market for us.

That puts prices upwards because price per ton is higher when compared to regular longs, and this impacts our realized net revenue or net sales, because we sold less special steels because January and February were weak months in terms of heavy vehicles. On the other hand, thinking about potential upsides and risks, in March there was an important rebound in the production of heavy vehicles by ANFAVEA.

Then if we continue to see this rebound in the coming months for this particular line of products, we believe that this will also boost our shipments in terms of special steels, because the prices and margins are interesting and this can lead to more constructive margins in our Brazil operation going forward. In addition to all the projects we mentioned before that will contribute to an improvement in our operations in Brazil.

Certainly there's still many uncertainties, there's the issue of freight, and impact in terms of the metallurgical coal that comes to Brazil. This is something systemic.

It's not nothing very specific of the company. Therefore, these are some positive points for short and mid-term and other points of attention in relation to our business.

Infrastructure activities are going okay. There we haven't seen any major quantitative changes in this segment.

I think what changed a bit, the profile of realized prices and cost structure was mostly attributed to the lower volume of heavy vehicles in the first part of the year.

Thank you.

Thank you. Thank you, Rodolfo.

Next question from Leonardo Correa with BTG Pactual.

Hi, everyone. Good day.

Werneck, Japur, Ari, thank you. I have two questions.

The first one is about the top line in the quarter. We saw the average price realized in Brazil dropping a little more than what we expected, 5% quarter-on-quarter.

I understand that there are a number of effects there, the mix, perhaps some effects related to seasonality impacting prices. We have heard about all these attempts to pass through 2-6% increases happening in the production chains.

I would like to hear your expectation regarding implementation. I know that this is a competitive market with a lot of players competing for market share, and imports are still hurting.

What about this attempt? Platts is not showing a lot of pass-through, 2.3% increase.

I don't know whether this number is accurate or not. I would like to have more detail on the top line.

My second question, Werneck, is kind of a more comprehensive one. I know you've been an advocate and you've been very vocal asking for equal conditions, trade defense mechanisms, fairness to compete.

We see imports of long steel more controlled, imports of flat steel that seem to be reducing. The freight problem is going to make imports more expensive.

We have anti-dumping for the hot-galvanized and HRC and the quotas. In the stock market, we see some excitement, people kind of pricing the results and thinking that things will improve in the future and that there will be a consistent recovery of results.

What are you thinking? How excited are you about what the government is doing and what kind of impact are you seeing in your operations?

Do you think that this idea of a substantial improvement in the second half of the year, do you think it's exaggerated optimism in the market, or do you see these green shoots? Do you think that the worst is behind us and that things are on the right track to improve in Brazil?

These are my two questions.

Good, Leonardo, good questions, a good opportunity to debate. When we talk about cost pressure and price, when we look at the profit pool of the supply chains in which we operate, the sector under the most pressure is ours.

This is changing from time to time. It's different than in the post-COVID pandemic time.

We cannot avoid passing through this cost pressure to prices. This will happen, and Japur monitors this daily.

If he disagrees regarding Platts, well, he has all of the numbers in his head. This will happen.

Many of our clients have been working with a little more leeway in their balance sheets, with a little higher margins. This dynamic has been constant.

Every day somebody is knocking on our doors, suppliers of electrodes, inputs, and others, they're knocking on our doors. I think that passing through a cost which is well-known, a global cost, a pressure that comes from a complex global situation, well, it will happen.

If this were related to inefficiency in the sector or of Gerdau, it would be difficult to create a narrative and a rationale that would allow us to pass through the cost increase. This will happen.

We have different segments, distribution, civil construction. In civil construction, they work by contract per project.

I'm not worried that this will not happen. It will.

My main concern is that when we pass through this cost increase, we'll need to improve the margins, deploy more improvements in the short term, which is something we're doing. Logistics is one.

The amount of material being handled in Brazil, we are optimizing that, reducing that. There are things to be done, homework to be done in-house.

In terms of trade defense mechanisms, I'm optimistic as well because this is something that is developing over time. The fact that Minister Alckmin left and Marcio Elias will be conducting this area of trade defense mechanism, he's very knowledgeable.

He knows about all the damage caused to the chain. The numbers are clear.

The evidence became very clear over the last two years. Evidence of the terrible damage made to the sector.

You look at our balance sheet, but not ours only, all of the companies in Brazil. We cannot continue to invest.

It's not possible to survive that way. I believe that these two mechanisms, the quota-tariff system, will continue in effect.

I don't know whether they're going to broaden it, expand it to other products, but what we know of the quota-tariff system in the last quarters, they are confident. We believe that the anti-dumping investigations that took a little longer than normal, a little longer than expected, are unfolding.

The evidence is very clear. I'm very optimistic at this point because we see that the trade defense will be broadened with a more anti-dumping quota-tariff system.

This is what I'm thinking.

That's clear. Thank you.

Anything else you want to add, Japur?

No? I think you said it all.

All right, Leo. Thank you.

To you.

Next question from Gabriel Barra with Citi.

Hi there. Can you hear me now?

We hear you super well. We can see and hear you.

Thank you, Werneck, Japur. I have two points of clarification.

The first about Miguel Burnier. If I'm not mistaken, in the last earnings call, 2Q '25, we spoke a little about the ramp-up.

The expectation of the 400 million reais in EBITDA for this year. I'd like to hear from you, Werneck, perhaps Japur as well, about your expectations regarding that.

I think you have maintained this kind of, {quote} soft guidance, whether these 400 million reais for this year, Werneck, the project seems to be a little delayed, or is it on time to be delivered? If you could elaborate on the company's expectations regarding the earnings for this year, and how this can impact next year's EBITDA?

My second question is about potential one-off actions for cash generation. I don't know if you are considering possible investments in real estate, land.

The company has a lot of real estate that could be monetized, I'd like to hear what you're thinking about that. Can we wait for extraordinary dividends?

Are you thinking about divesting? How are you looking at that, given that the company has a more deleveraged balance sheet, a very sound balance sheet, in an environment of rising margins, with the United States operation very healthy, Brazil with a positive trend for the second half?

I'd like to hear from you, investments and extraordinary dividend payout.

Right, Gabriel. How are you?

Hope you're well. Let's start with Miguel Burnier.

That's exactly it. We released a soft guidance with our expectations in our Investor Day in October of last year.

We said we're expecting to generate 400 million reais in EBITDA specifically coming from Miguel Burnier project this year. We expected a ramp-up and start of operations.

Operations haven't started. They're proceeding with caution.

This is the largest investment in BRL in the history of the company. It's an investment for 40 years, it's not because it's taking a few months more that we're going to do something that will sacrifice or hinder the long-term return that we expect on the capital invested.

We understand that we have typically this mining project and it will be hard to have all the 400 million reais this year. We are working internally to calculate the impact, what will be the specific guidance for Miguel Burnier project, how much EBITDA it will generate this year.

In parallel to that, we have a number of other initiatives with a recovery plan to offset that loss of margin, either with internal, improved operating efficiencies or through strategic alternative purchase of more competitive ore in the region of Minas Gerais. In that regard, we are very well-positioned, geographically speaking, to buy ore from other suppliers in the region as a way to mitigate part of this EBITDA that we will not see flowing in this year to our results.

We understand that in 2027 we should have the ramp-up line, or ramp-up curve, more in keeping with what we expect with the mining projects in the long term, okay, Gabriel? Now as regards real estate and other one-off actions that we might have to improve liquidity, free cash flow via divestments, we continue to progress with our internal analysis of our real estate assets.

Here, I think it's good to have controlled leverage so that we are not forced to sell something or to expedite a sale so that we won't hurt the long-term value created for our shareholders. In terms of cash allocation that these businesses might generate this year and in the coming years, I think a commodities company is good when it is boring and predictable.

We are not going to radically change our preferences in terms of capital allocation. We have been distributing dividends above the minimum set forth in our bylaws.

If there's a surplus of capital, when we are not hurting our liquidity, we are allocating for share buyback when we understand that the market is not really understanding the long-term value of our assets. That's how we intend to proceed if everything else remains constant.

Boring is good for a capital-intensive company like ours, okay, Gabriel?

Absolutely, Japur. Thank you very much.

Thank you, Gabriel.

Next question from Lucas Laghi with XP. Good afternoon, and

thank you, Ari, Werneck, and Japur. I have two points, and I'll start with a follow-up from the previous question, thinking about the optimization of your Brazil assets, that you can focus on investments of high returns or reduce investments to optimize return.

My question is, how do you view the market in terms of investing and divesting? You talked a lot about anti-dumping and protectionist view, and looking at a competitive scenario, I would just like to understand how this can impact your decision of investing more in Brazil or maybe cease with the divestment project in this current market scenario.

We also talk a lot about Miguel Burnier, CAPEX, etc. If you could just revisit the company's expectation in terms of capturing incremental EBITDA from the projects.

We just want to make sure that we are considering these marginal returns given the fact that CAPEX is very clear given your guidance for 2026. These are my two questions.

Lucas, thank you for your questions. I will start, and then Japur will continue.

What we will probably see in the future is a concentration or combination of assets that is different from what we had a few years back. That business model, the traditional business model with mini mills, where you have a small-scale mill and you serve a very regional market, and you buy scrap nearby, and you turn scrap into steel, and also serving customers in that region, this is a model that we reviewed in the US.

We shut down plants, we concentrated our production in a lower number of mills, but highly competitive. Now speaking about the market in the future, I think speaking about divestment or investments, it's not a very good explanation, because it seems like the business model remains the same.

It would be a transformational issue going forward, and we will focus our investments in the winning mills. We have several of those winning mills in Brazil, it's very likely that the mills that were shut down, maybe they are not competitive enough to resume production, and we are not willing to go too far away to serve customers.

The speed of things will follow our possibility of CAPEX allocation without entering into debt. It will be a transformation of the kind that happens from time to time.

Our way of operating in Brazil will change. There's also the issue of Ouro Branco.

The mill was initially built to serve the export market, and we were gradually reducing our export sales because we believe that in the future we will find better opportunities to export at more attractive margins. Our operations in Brazil will go through a transformation, not only this one of short-term cost reduction, but it will be something more radical.

As soon as we have more detailed plans, we can show it to you. We believe that we will have to change the way we operate, because what we did in North America may be an example of what we will do here.

We shut down some mills, we removed the less competitive mills, and so that now we have an industrial hub that is highly competitive, low-cost, very reliable. That's the general outlook.

Adding to what he said, and you also talked about projects that increase the nominator or decreases the nominator, meaning that we have to invest in projects that improve our numerators, and gradually we have to empty out our backpack, because if you are running long distances, you have to run with a less heavy or a lighter backpack. We have a lot of real estate assets, and today they are not being fully utilized.

Eventually, the person that operates that asset doesn't really see that they're not paying rent, so, okay, it's my own. The capital is paying for it.

The cost of capital is there. There's two things, and I think you already answered your own question when you talked about excess.

Anything that is over is not good. If you have excess of forests, it's not good.

If you have excess productive capacity, it's not good either. The focus is having an operation just like the fact that we have a very healthy balance sheet.

You have to look not only at the liability, but also assets. We have to seek for a different balance compared to what we have today.

I think you answered your own question. Now in terms of the projects, on the institutional side, we gave you a little bit of details out of the three major projects we have this year.

They will go into a ramp-up process throughout the year. The recycling center in Pindamonhangaba is a neat project, and the investment in Miguel Burnier is more transformational.

Also considering the scale of the project, as I said earlier, since we are talking about a delay, thinking about returns of the project this year, it's probably that we don't see the 400 million in full that we had anticipated last October, but we are also seeking for other efficiency initiatives in Ouro Branco to compensate for the returns that we will probably not see this year coming from the mining projects. In 2027 and in the next 40 years of the Miguel Burnier lifespan, we will certainly see good results in the numerator generating more value to our shareholders.

Lucas, I would just like to add that while Japur was speaking, I would like to say that rest assured that we will not raise the company's debt. We will not disburse a lot of CAPEX or much higher than what we're doing now.

A good part of this resources that will be allocated in Brazil to promote the transformation will come from our decision to operate with a lower number of commercial assets, the amount of CAPEX that goes into production will be reduced, and this will bring us more breath to make more transformational investments. Our operation in Ouro Branco has been very successful in terms of efficiency, and this has allowed us to postpone major reforms in the blast furnace or the coke plant.

The mill is very healthy, we are moving forward that investment level, and this creates a buffer in terms of the disbursement levels that we've seen in the past years, and this will also lead to greater transformation. We do not want to accelerate transformation in Brazil by increasing CAPEX or increasing our leverage.

We know it quite well, and it's becoming more and more apparent the need we have to keep our CAPEX disbursement and leverage at very healthy levels.

Great. Thank you.

Thank you, Lucas. Next question from Daniel Sasson with Itaú BBA.

Hi, good afternoon, and thank you for this opportunity, Ari, Rafa, and Werneck. My question, I think Gustavo already mentioned in his early comments, he talked about anti-dumping and the competition with imported goods.

Maybe for us it's a bit easier to understand the impact and the importance to the flat market, maybe for longs with the eventual anti-dumping measures. I know that we have wire rod.

If you can tell us about the results of this investigation concerning other products also, long products, and whether this will change the pace of the market. In addition to anti-dumping, how do you think that the long steel players are behaving?

I think that sometime last year, more or less at this time, you decided to lose market share in rebar and just start the fight. How do you think this competitive dynamics, particularly regarding longs, is shaping up the market?

My second question, maybe this is a follow-up related to Gustavo's last comment on CAPEX. Now, we understand that Rafa cannot give us a CAPEX guidance for 2027, it's not even what we are expecting.

If we think about the opportunities, in addition to 3 billion reais in maintenance, the other projects, what are the priorities? Last year, you said that maybe it would make sense to allocate 1 BRL in the US versus allocating that same amount in Brazil.

You even referred to a project in Mexico at the moment, because you saw an increase in the auto parts market in the region. Then things changed, and even there the market became more protectionist.

If you could tell us more about the priorities, maybe specifying it per region or types of projects related to competitiveness and growth, and so maybe that could help us think about where this will stand in the next coming months or years.

Okay. Japur can give you more details on the anti-dumping matter, but I will give you an overview of the topics you mentioned.

Unlike North America, in Brazil whenever we talk about trade defense, there are lots of rumors in the consumer section. In the US, since the days of Section 232, whenever they talk about trade defense or whenever they talk about defending the country, everybody understands that that's important for the country, and that the industry matters for the country.

Maybe the numbers or the data is not so evident, but we are constantly talking to our customers there, I'm very convinced that in the next coming quarters we'll be able to have a better reading that the North American industry is going back to the game. In Brazil, these debates take years, and then the industry loses its size, and it's very much influenced by what happened in the last few years.

When we started noticing a high penetration of imported steel, this has never been seen in Brazil. It came right after the pandemic, and the steel industry was delivering results, had high margins, and 2 years ago, nobody talked about whether that was right or wrong, if that was here to stay, and whether the trade defense would continue to deteriorate margins in other segments.

After 2 years, the topics became much more mature. There are many balance sheets that have been published from clients and even steel companies, and it's becoming very apparent from the discussions in Brasilia that if the country does not utilize more intense trade measures, the steel industry cannot survive in the long run.

There are many sectors that are questioning the anti-dumping measures. More recently, they talked about the maintenance of margins by renegotiating prices with the sector.

We saw discussions in manifestos and letters, but the debate is intense. They have to defend their beliefs in Brasilia.

I think we struggled a lot in the past 2 years. All of our discussions in Brasilia and at the ministry, I see that the environment now is quite different when it comes to implementing these mechanisms.

For 2 years, the topic has become more mature, many analyses have been done. We saw the good penetration of imported goods, and also wire rod was also another product that was heavily penalized.

I see a better environment now that will lead to probably some more important trade defense measures.

Daniel, my perspective here, it's far from being the truth, but what I think about what what it means, especially for wire rod. In a rough approximation, whenever we think about longs, we have something between 10 to 20%, depending on the time of the year, that is equivalent to wire rod, national production.

The proportion vis-à-vis rebar is approximately 3.5 to 1 or 4 to 1. What happens is that oftentimes the the producers of rolled products, they also produce rebar.

When you have a lot of wire rod entering the country with dumping margins of $550 per ton of dumping, and this is what was verified by by the Ministry of Industry and Trade. This then these productive companies that they don't want to sit idle, it leads them to produce prices for contribution margin, they produce rebars or other products.

Therefore, this is not specifically about rebars, but it is also about the spillover, the the rippling effect coming from a massive entry of wire rod, which leads producers to produce something else. Since this can be an input for other products, like, cut and bend, profiles, columns, this has a detrimental effect in the entire margin of the long steel segment in general.

We have there are two investigations going on, like China with a margin of $550 per ton, and Russia with $100 per ton approximately. It is a significant amount that leads to a great impact in competitiveness.

What we are asking for is, fair trade. We should conduct a technical analysis and say, okay, there is dumping, there is damage, there is nexus, and we cannot ignore the threat, because the facts do not matter to us at a moment A or B.

We should be mature enough as, a democratic country that the rules that have been set up, they have to be enforced. Those who are selling to Brazil, they should also abide by the same rules, we should be able to enforce them.

In the second half of the year, we expect to see the conclusion of this investigation related to wire rod dumping, and we have the potential to improve not only wire rod specifically, but also other long products that gravitate around this portfolio of products. My last point on this competitive dynamics that I see that somehow the future market share the market share in Brazil is very stable.

Now we still have a further opportunity to be captured, because it doesn't matter if I have all of my assets in the south and I have a 30% share, but only in the north of Brazil, because this is inefficient logistically speaking. We have a very encompassing product portfolio, and I think now this market share among more stable players gives us a very unique opportunity, which is improving our efficiency, on the way that we serve our customers.

We started capturing these opportunities, and I see a very good avenue of opportunity going forward. We do have a a market share that was redefined last year with all of our recent initiatives, but but once given our share of the market, it is not being served the most efficient way possible.

From which mill we will serve, the way we will serve, whether it's via Comercial Gerdau or via a distributor, there are things that are up to us to do or to decide the most rational possible way to serve the share that has been given. Thank you.

Thank you very much.

Hello Gustavo, Rafael, Japur. The cash generation in the quarter was particularly strong.

Working capital contributed definitely to that as well as low cash tax payments. Can you comment maybe what are you expecting for the second quarter, maybe the second half of the year in those two items?

Then I have another question on projects.

Hi, Carlos. Great.

Regarding these working capital line items this quarter, in terms of tax, we had two effects. The first, we do not generate profit in Brazil, we have a loss, our effective tax rate ended up being lower, because basically profit of the United States operation, and we had more income tax or withholding tax on the distribution of results from the United States to Brazil, which we did more strongly in the end of last year.

This contributed to a tax line item that was higher in Q4 than we had now. Over the year, we expect a normalization.

Typically, we have a greater disbursement of taxes in Q4, being in April being income tax and corporate tax of the United States. Along the year, this should be normalized.

For the second half of the year, we expect to have a positive free cash flow generation, both due to our operating results and also because of working capital, all remain operating as important. We had almost 1 billion in working capital in Q1 quarter-on-quarter, we believe that this is relatively normalized for the second half of the year.

Throughout the year, we believe that again, I'd like to remind you, we are going to have a lower investment of CAPEX than last year, we expect that we will have a stronger free cash flow generation this year than in 2025, both because of an EBITDA that we're generating, which is, by comparison, stronger in this past Q1, and also because of CAPEX reduction. There's a double benefit there.

On the iron ore business, first on Miguel Burnier, can you give us any more color on what caused the slight delays this year in terms of the EBITDA generation for the company, what's expected? Then maybe longer term, as you transform the business strategy in Brazil, if investing in iron ore to increase the third-party shipments, I'm not sure, I think Gustavo in the last Investor Day you had mentioned the possibility of that investment taking place.

I don't know if you can add more color at this time. Thank you.

Perfect. Carlos, the problems that we faced at Miguel Burnier that led to the delay, they're quite well-known issues, which are the current difficulty of carrying out civil construction and electro-mechanical assembly.

The project is very robust. We had a schedule that started on time, and historically the schedule was aligned with the traditional productivities that we have in the civil construction segment and electro-mechanical assembly sector.

Since Brazilian companies are finding it hard to hire people and finding it difficult to have a more technical and skilled labor, these sectors are facing difficulties. Our difficulties were 100% related to productivities in civil construction and electro-mechanical assembly.

This is a theme which I believe will need to be addressed differently in the future by Brazilian companies, or else we will continue to find it hard to have these projects in Brazil. It's becoming more and more complex to make investments because of civil construction and assembly points.

That was the main reason. We continue to wish to monetize our mining rights in the state of Minas Gerais.

I think the success of this first operation, it's a big operation, 5.5 million BRL, and once it's in operation and it is successful as we expect, it will give us not only safety, but it will give us more time to have more in-depth studies in terms of what should be the next steps for us to increase our production of ore. I have a lot of mining rights.

The chronology of which one we should tap into first, that's being analyzed. Once this project is implemented and starts producing successfully, it will give us an opportunity to accelerate our plans for a second stage.

Once this is more clear, we commit to give you more detail on that, all right?

Thank you very much. Thank you.

We are now ending the Q&A session, and now I will turn the floor back to Gustavo Werneck.

Thank you, Ari. I'd like to thank everyone for joining us today, and on my behalf and on Japur's behalf, I'd like to say goodbye.