GGB · Gerdau S.A.

Gerdau S.A. delivered robust 1Q26 results with adjusted EBITDA rising 25% quarter-over-quarter to R$3.0 billion, the strongest first quarter since 2022, comprising 75% of consolidated EBITDA primarily driven by North America's outperformance. North America shipments increased 5% to 1,276 thousand tonnes with net sales up 8% to R$9.349 billion and EBITDA surging 23% to R$2.252 billion (24.1% margin), fueled by post-seasonal recovery in non-residential construction, renewable energy, and distribution channels, alongside a robust ~90-day order backlog and metal spread expansion. Brazil faced headwinds from 27% imported steel penetration (up 2pp QoQ) and seasonality, leading to 9.5% lower shipments at 1,324 thousand tonnes and 13% net sales drop to R$6.271 billion, yet EBITDA improved 13% to R$1.096 billion (9.2% margin) via 5% lower COGS/tonne post-maintenance. South America saw 3% shipment growth to 306 thousand tonnes but 6% net sales decline to R$1.396 billion, with EBITDA up 7% to R$186 million on efficiency gains. Adjusted net income flipped to R$1.0 billion from 4Q25 loss, yielding EPS of R$0.51. Free cash flow turned positive at R$16 million despite R$1.1 billion CAPEX (23% of annual plan), maintaining leverage at a solid 0.74x. Management highlights launches like Gerdau NewEco low-carbon product line and Barro Alto Solar Complex start-up (boosting self-generation to 42%), alongside progress on key projects: Miguel Burnier mining (94% physical), Pindamonhangaba scrap yard (82%), and Midlothian Phase 1 (75%), all targeting 2H26 start-ups. Outlook notes 2Q26 slight margin recovery in Brazil amid gradual demand uptick and price trends, with North America expecting margin growth from backlog and efficiencies; 2026 anticipates moderate Brazil demand growth and positive U.S. renewables/data centers. Shareholder returns include R$0.18/share dividend (payable June 9) and ongoing buybacks (21% of Gerdau S.A. program executed at ~R$211 million). Competitive pressures from imports persist, with steel imports on track for 2026 record, prompting trade defense monitoring.