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The call conveyed a balanced message: strong operational and financial resilience in North America (record shipments, healthy order backlog, downstream growth), improved cash generation and a disciplined capital plan (CapEx reduction, buybacks, leverage ~0.76x). However, material challenges remain in Brazil—higher imports (+7.5% YoY), significant coal cost inflation (~>20%), low asset utilization and BRL 2 billion of noncash impairments—which drove year-on-year EBITDA and adjusted net income declines. Management expects gradual improvement tied to Miguel Burnier ramp-up and trade-defense measures but short-term margin pressure in Brazil is likely.
Gerdau’s guidance and forward view: management set 2026 CapEx at BRL 4.7 billion (vs BRL 6.1 billion in 2025, a BRL 1.4 billion reduction) to boost free‑cash‑flow flexibility; 2025 reported EBITDA was BRL 10.1 billion (‑7% y/y) and adjusted net income was BRL 3.4 billion (‑21% y/y) after BRL 2.0 billion of non‑cash impairments; Q4 free cash flow was BRL 1.4 billion and 12‑month cash generation turned positive at BRL 394 million, enabling a year‑end leverage of 0.76x net debt/EBITDA; shareholder returns in 2025 totaled BRL 2.4 billion (dividends + buybacks) and a new buyback for ~2.9% of shares (~BRL 1.2 billion at recent prices) was launched; operationally North America delivered record shipments in Dec‑2025 with order backlog near 90 days and continued resilient demand, while Brazil saw steel imports +7.5% y/y in 2025, melt‑shop utilization under ~60% (mills operating <75%), and short‑term cost pressure from coal (up >20% Q4→Q1); management expects moderate Brazil demand in 2026, margin stability early in the year and a possible move to double‑digit Brazil EBITDA margin in H2‑2026 if Miguel Burnier ramps as planned and trade‑defense measures (HRC antidumping/tariff) hold.
North America reported resilient demand, robust operating performance and order backlogs above historical averages (around ~90 days). The region delivered record shipments in December 2025 and materially contributed to consolidated results.
Despite headwinds, Gerdau ended 2025 with EBITDA of BRL 10.1 billion and generated strong free cash flow in Q4 of BRL 1.4 billion; the last-12-month free cash flow turned positive at BRL 394 million (from negative previously).
2025 CapEx was BRL 6.1 billion. Guidance for 2026 CapEx is BRL 4.7 billion, a reduction of BRL 1.4 billion (~23% lower versus 2025), intended to provide greater free cash flow flexibility.
Net debt / EBITDA leverage ended the year at a conservative 0.76x, described by management as an extremely sound level for the business.
Throughout 2025 the company returned BRL 2.4 billion via dividends and buybacks. Management launched a new buyback program for ~2.9% of outstanding shares (approx. BRL 1.2 billion based on recent trading levels).
The new sustainable mining platform in Miguel Burnier (Ouro Preto) is near operation and is expected to contribute to a significant reduction in production costs at the Ouro Branco unit once ramped up.
Expansion of downstream/high-value lines in North America (e.g., Midlothian treatments, solar piles) supported a 39% increase in downstream product activity year-over-year, emphasizing growth in higher-margin, less import-exposed products.
Management emphasized disciplined capital allocation, prioritizing competitiveness and cost reductions; balance sheet strength positions the company to consider selective M&A or asset monetizations if they unlock value.
Good morning and welcome to Gerdau's Fourth Quarter 2025 results presentation. I am [ Ariana Pereira ], specialist with Investor Relations, and it's a pleasure for me to be joined by CEO, Gustavo Werneck; and CFO, Rafael Japur. Please note that this call is being simultaneously translated in english and you can choose your preferred language by clicking on the globe icon at the bottom of the screen. [Operator Instructions] 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 guarantee of future performance and are subject to risks and uncertainties that may or may not occur. I will now turn the floor over to Gustavo to begin the presentation.
Hello. Good afternoon, everyone. I hope you're all well, and thank you for joining us again for another earnings release presentation. We will briefly comment on the highlights of the last quarter and also the year 2025 as well as the outlook for our operations, and then we will move on to the Q&A session. The year of '25 was marked by distinct scenarios in the main regions where we operate, North America and Brazil. In light of this, I would like to emphasize that Gerdau has greatly benefited from its business model based on geographic diversification and productivity -- and production flexibility. Moreover, I would like to highlight the resilience of the North American market, which has seen strong steel consumption and the reduction in import levels as well as the robust operating perform...