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Gerdau S.A

Gerdau S.A (GGBR4.SA) Q1 2026 Earnings Call Transcript

Neutral Steel 8.32B Brazil
Next Earnings
2026-04-27

Gerdau S.A., together with its subsidiaries, operates as a steel producer company. The company operates through Brazil Business, North America Business, South America Business, and Special Steel Business segments. It provides semi-finished products, including billets, blooms, and slabs; common long-rolled products, such as rebars, wire rods, merchant bars, light shapes, and profiles to the construction and manufacturing industries; drawn products, including barbed and barbless fence wires, galvanized wires, fences, concrete reinforcing wire mesh, nails, and clamps for manufacturing, construction, and agricultural industries; and special steel products used in auto parts, light and heavy vehicles, and agricultural machinery, as well as in the oil and gas, wind energy, machinery and equipment, mining and rail, and other markets. The company also offers flat products, such as hot-rolled steel coils and heavy plates; and resells flat steel products. In addition, it operates mines that produce iron ore located in the Brazilian state of Minas Gerais. The company sells its products through independent distributors, direct sales from the mills, and its retail network. Gerdau S.A. was founded in 1901 and is based in São Paulo, Brazil.

Gerdau showcased resilient North American performance, faced Brazil’s import-driven margin pressures, booked non-cash impairments, generated positive free cash flow and cash return to shareholders amid a lower 2025 EBITDA, with 2026 CapEx guidance kept at BRL 4.7 billion and potential margin stabilization in Brazil due to Miguel Burnier ramp-up.

⭐ Key Highlights

North America strength
North America delivered robust demand with record December shipments and supportive order backlogs.
Brazil challenges from imports
Brazil faced a difficult environment with rising imports and tariff/trade defense measures impacting profitability.
Impairments and adjusted earnings
Q4 2025 included BRL 2.0 billion in impairment losses in Brazil units, non-cash, with adjusted 2025 net income at BRL 3.4 billion, down 21% year over year.
Free cash flow and deleveraging
Free cash flow for Q4 was strong at BRL 1.4 billion; full-year 2025 net debt/EBITDA at 0.76x, with substantial debt reduction via cash generation.
Capital allocation and returns
Completed a buyback and announced a new buyback program (~BRL 1.2 billion) while continuing shareholder remuneration through dividends and buybacks.

✔Positive Signals

  • Record North America shipments in December 2025
  • Strong free cash flow generation in Q4 2025 (BRL 1.4 billion)
  • Low net debt/EBITDA leverage at 0.76x
  • BRL 2.4 billion in total shareholder remuneration in 2025 (dividends + buybacks)
  • New Gerdau buyback program announced (~BRL 1.2 billion)

✖Negative Signals

  • Impairment charges in Brazil (BRL 2.0 billion, non-cash) weighing on reported earnings
  • Brazil margins pressured by rising coal costs and import competition
  • 2025 EBITDA down 7% year over year to BRL 10.1 billion
  • Near-term Brazil volume risks due to seasonality and imports, with limited near-term volume growth
  • Unclear near-term capital allocation beyond 2026 guidance and potential asset divestment execution

📊Financial Results

  • EBITDA for 2025: BRL 10.1 billion, down 7% vs. 2024
  • Adjusted net income for 2025: BRL 3.4 billion, down 21% YoY (excludes BRL 2.0 billion impairment in Brazil)
  • CapEx in 2025: BRL 6.1 billion; 2026 guidance: BRL 4.7 billion
  • Leverage: Net debt/EBITDA at 0.76x at year-end 2025
  • Free cash flow generation: 2025 range improved to positive at BRL 394 million trailing 12 months

🔮Future Guidance

  • CapEx guidance for 2026: BRL 4.7 billion (down from 2025), aimed at preserving cash flow flexibility
  • 2026 margin outlook: around 7% Brazil, with potential two-digit margin in the second half if Miguel Burnier ramp proceeds smoothly and trade defenses stay favorable
  • North America: expectations of sustained high demand with solid order book; no near-term plan to significantly alter capacity
  • Noncore asset monetization under review; any divestment would aim to generate value and be returned to shareholders; no firm plan announced
  • Potential listing of assets or the company remains under consideration but no actionable plan yet

💡Interesting Insights

  • Miguel Burnier sustainable mining project is positioned to significantly reduce Ouro Branco production costs, supporting a potential margin improvement in Brazil in 2026
  • Management emphasizes disciplined capital allocation and expects M&A or listing options to unlock value only if beneficial, with no concrete plan yet

Detailed Analysis

AI-generated summary of Gerdau S.A earnings call transcript.

The 2025 results highlighted geographic diversification as a strength: North America posted solid demand and record December shipments, supporting the group’s results, while Brazil faced higher import competition and tariff measures that pressured profitability. Net income in Q4 was affected by BRL 2.0 billion of impairment losses in Brazil, though excluding these items 2025 adjusted net income declined 21% to BRL 3.4 billion. The company generated BRL 1.4 billion of free cash flow in Q4 and ended 2025 with a leverage of 0.76x net debt/EBITDA, while returning BRL 2.4 billion to shareholders via dividends and buybacks and launching a new buyback program worth about BRL 1.2 billion. CapEx for 2025 was BRL 6.1 billion, with 2026 guidance reduced to BRL 4.7 billion to improve free cash flow. Management expects Brazil to experience modest demand growth in 2026, with continued cost reductions from the Miguel Burnier mining project aiding competitiveness, and North American demand to remain resilient with high order backlogs. The company also discussed potential noncore asset monetization and ongoing evaluation of strategic options, including possible future listings, though no concrete plans were announced. Overall, the outlook suggests a balance of continued NA strength with Brazil margin recovery tied to cost declines and the progress of Miguel Burnier, along with disciplined capital allocation and shareholder returns.

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