6-K
Gerdau S.A. (GGB)
FORM 6-K
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
Dated May 6, 2022
Commission File Number 1-14878
GERDAU S.A.
(Exact Name as Specified in its Charter)
N/A
(Translation of Registrant’s Name)
Av. Dra. Ruth Cardoso, 8,501 – 8° andar
São Paulo, São Paulo - Brazil CEP 05425-070
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
| Form 20-F X | Form 40-F |
|---|
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ___
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ___
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
| Yes | No X |
|---|
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused the Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 6, 2022
| GERDAU S.A. | |
|---|---|
| By: | /s/ Rafael Dorneles Japur |
| Name: Rafael Dorneles Japur | |
| Title: Executive Vice President | |
| Investor Relations Officer |
EXHIBIT INDEX
| Exhibit | Description of Exhibit |
|---|---|
| 99.1 | GERDAU S.A. Quarterly Results 1Q2022 |
| 99.2 | Material Fact, May 5, 2022 |
Exhibit 99.1
SãoPaulo, May 5, 2022 – Gerdau S.A. (B3: GGBR / NYSE: GGB) announces its results for the first quarter of 2022. The consolidated financial statements of the Company are presented in Brazilian real (R$), in accordance with International Financial Reporting Standards (IFRS) and the accounting practices adopted in Brazil. The information in this report does not include the data of associates and jointly controlled entities, except where stated otherwise.
GERDAU’SPERFORMANCE IN 1Q22
OperatingResults
| CONSOLIDATED | 4Q21 | ∆ | 1Q21 | ∆ |
|---|---|---|---|---|
| Volumes<br> (1,000 tonnes) | ||||
| Production<br> of crude steel | 3,279 | 4% | 3,151 | 8% |
| Shipments<br> of steel | 3,165 | -3% | 3,087 | -1% |
| Results<br> (R million) | ||||
| Net<br> Sales | 21,555 | -6% | 16,343 | 24% |
| Cost<br> of Goods Sold | (16,368) | -7% | (12,546) | 21% |
| Gross<br> profit | 5,187 | 0% | 3,797 | 36% |
| Gross<br> margin (%) | 24.1% | 1.4p.p | 23.2% | 2.3p.p |
| SG&A | (633) | -22% | (469) | 5% |
| Selling<br> expenses | (204) | -18% | (155) | 8% |
| General<br> and administrative expenses | (428) | -24% | (314) | 4% |
| %SG&A/Net<br> Sales | 2.9% | -0.5p.p | 2.9% | -0.4p.p |
| Adjusted<br> EBITDA1 | 5,983 | -3% | 4,317 | 35% |
| Adjusted<br> EBITDA Margin | 27.8% | 0.9p.p | 26.4% | 2.2p.p |
All values are in US Dollars.
1 – Non-accounting measure calculated by the Company. The Company presents Adjusted EBITDA to provide additional information on cash generation in the period.
Production & Shipments
In 1Q22, crude steel production increased in relation to 4Q21 and 1Q21. Gerdau’s production capacity utilization rate of 75% in the quarter reflects the seasonally weaker period, especially in the domestic market of the Brazil BD. The volume sold in Gerdau’s main business operations had a slight decrease compared to 4Q21 and was in line with 1Q21.
NetSales
Net sales decreased in 1Q21 in relation to 4Q21, reflecting of the reduction in the volume sold, the lower prices practiced in Brazil and the local currency appreciation, which reduced sales in foreign currency translated into Brazilian real. In relation to 1Q21, net sales posted robust growth, due to the better prices practiced.
Costof Goods Sold
Cost of goods sold decreased in 1Q22 compared to 4Q21, reflecting the lower shipments, despite the 57% increase in coal costs. Compared to 1Q21, cost of goods sold increased, reflecting the main raw materials used by the Company: metallurgical coal (+150%), iron ore (+19%) and scrap consumed (+12%).
GrossProfit
Gross profit in 1Q22 was in line with 4Q21 and increased in relation to 1Q21. Gross margin improved compared to both 4Q21 and 1Q21, with this result driven mainly by the performance of the construction industry in North America and the results of the Special Steel BD. In relation to 1Q21, gross profit registered robust growth, driven mainly by the North America BD, reflecting the better metals spread in the United States.
2
Selling,General & Administrative Expenses
Selling, general and administrative expenses as a ratio of net sales decreased to 2.4% in 1Q22, compared to 2.9% in 4Q21 and 1Q21.
EBITDA & EBITDA Margin
| Breakdown of Consolidated EBITDA (R$ million) | 1Q22 | 4Q21 | ∆ | 1Q21 | ∆ |
|---|---|---|---|---|---|
| Net<br> income | 2,940 | 3,560 | -17% | 2,471 | 19% |
| Net<br> financial result | 503 | 615 | -18% | 271 | 86% |
| Provision<br> for income and social contribution taxes | 1,570 | 338 | 364% | 817 | 92% |
| Depreciation<br> and amortization | 659 | 707 | -7% | 649 | 2% |
| EBITDA - Instruction CVM ¹ | 5,672 | 5,220 | 9% | 4,207 | 35% |
| Equity<br> in earnings of unconsolidated companies | (309) | 94 | - | (149) | 107% |
| Proportional<br> EBITDA of associated companies and jointly controlled entities | 464 | 308 | 51% | 256 | 82% |
| Losses<br> due to non-recoverability of financial assets | (1) | (7) | -90% | 5 | - |
| Non<br> recurring items | - | 367 | - | - | - |
| Mexico<br> corporate reorganization | - | 163 | - | - | - |
| Special<br> bonus to operators | - | 204 | - | - | - |
| Adjusted EBITDA² | 5,827 | 5,983 | -3% | 4,317 | 35% |
| Adjusted EBITDA Margin | 28.7% | 27.8% | 0.9p.p | 26.4% | 2.2p.p |
| CONCILIATION OF CONSOLIDATED EBITDA (R$ million) | 1Q22 | 4Q21 | ∆ | 1Q21 | ∆ |
| --- | --- | --- | --- | --- | --- |
| EBITDA<br> - Instruction CVM ¹ | 5,672 | 5,220 | 9% | 4,207 | 35% |
| Depreciation<br> and amortization | (659) | (707) | -7% | (649) | 2% |
| OPERATING INCOME BEFORE FINANCIAL RESULT AND TAXES³ | 5,014 | 4,514 | 11% | 3,558 | 41% |
1 – Non-accounting measure calculated in accordance with CVM Instruction 527.
2 – Non-accounting measure calculated by the Company. The Company presents Adjusted EBITDA to provide additional information on cash generation in the period.
3
- Accounting measure reported in the consolidated Income Statement.
The Company’s adjusted EBITDA and adjusted EBITDA margin in 1Q22 set all-time highs for a first quarter, with this performance reflecting the current scenario for demand and prices in the steel industry, especially in North America, combined with the teams’ capacity to seize opportunities in the market.
EBITDA(R$ million) & EBITDA Margin (%)
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FinancialResult & Net Income
| CONSOLIDATED (R$ million) | 1Q22 | 4Q21 | ∆ | 1Q21 | ∆ |
|---|---|---|---|---|---|
| Income before financial income expenses and taxes¹ | 5,014 | 4,514 | 11% | 3,558 | 41% |
| Financial<br> Result | (503) | (615) | -18% | (271) | 86% |
| Financial<br> income | 89 | 87 | 2% | 56 | 59% |
| Financial<br> expenses | (361) | (421) | -14% | (314) | 15% |
| Exchange<br> variation, net (including net investment hedge) | (122) | 43 | - | 34 | - |
| Exchange<br> variation (other currencies) | (120) | (57) | 111% | (46) | 161% |
| Bond<br> repurchase expenses | - | (265) | - | - | - |
| Gains<br> (losses) on financial instruments, net | 11 | (2) | - | (1) | - |
| Income before taxes¹ | 4,510 | 3,898 | 16% | 3,287 | 37% |
| Income<br> and social contribution taxes | (1,570) | (338) | 364% | (817) | 92% |
| Exchange<br> variation including net investment hedge | (346) | 5 | - | 7 | - |
| Other<br> lines | (1,224) | (1,057) | 16% | (824) | 49% |
| Non<br> recurring items | - | 713 | - | - | - |
| Consolidated Net Income ¹ | 2,940 | 3,560 | -17% | 2,471 | 19% |
| Non<br> recurring items | - | (81) | - | - | - |
| Mexico<br> corporate reorganization | - | 163 | - | - | - |
| Special<br> bonus to operators | - | 204 | - | - | - |
| Bond<br> repurchase expenses | - | 265 | - | - | - |
| Income<br> tax and social contribution on extraordinary items | - | (713) | - | - | - |
| Consolidated Adjusted Net Income² | 2,940 | 3,479 | -16% | 2,471 | 19% |
1
- Accounting measure disclosed in the consolidated Income Statement.
2
- Non-accounting measure calculated by the Company to show net profit adjusted by non-recurring events that influenced the result.
The financial expense decreased in 1Q22 compared to 4Q21, influenced by the lower debt balance resulting from the bond repurchase operation carried out in 4Q21 to reduce the Company’s exposure to foreign-denominated liabilities. Compared to 1Q21, the change in the financial result was affected by exchange variation, which includes a portion of net investment hedge and other currencies.
Adjusted net income in 1Q22 also set a new record for the Company for a first quarter, supported by EBITDA growth achieved in the period.
Intereston Equity
On May 4, 2022, the Board of Directors of Gerdau S.A. approved the distribution of share-based payments in the form of interest on equity in the amount of R$ 973.5 million (R$ 0.57 per share), to be paid based on the results for the first quarter of 2022, as stipulated in the Bylaws.
Record date: shareholding position on May 16, 2022.
Ex-dividend date: May 17, 2022.
Payment date: May 25, 2022.
Management reaffirms its understanding that the best way to increase absolute dividends is through strong cash generation, which it has been delivering, enabling it to maintain its policy of distributing at least 30% of adjusted net income. This flexibility, including in the frequency of distribution, enables the Company to deliver value in different scenarios.
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WorkingCapital & Cash Conversion Cycle
The cash conversion cycle (working capital divided by daily net sales in the quarter), influenced by natural variations in demand and seasonality, increasing from 60 days in December 2021 to 66 days in March 2022.
WorkingCapital (R$ million) & Cash Conversion Cycle (days)
FinancialLiabilities
| DEBT<br> BREAKDOWN | 4Q21 | 1Q21 |
|---|---|---|
| (R<br> Million) | ||
| Short<br> Term | 1,767 | 452 |
| Long<br> Term | 12,273 | 17,313 |
| Gross<br> Debt | 14,040 | 17,766 |
| Cash,<br> cash equivalents and short-term investments | 6,787 | 7,003 |
| Net<br> Debt | 7,253 | 10,763 |
All values are in US Dollars.
On March 31, 2022, 16% of gross debt was due in the short term while 84% was concentrated in the long term, with the exposure of total gross debt denominated in U.S. dollar at 70%, in Brazilian real at 27% and in other currencies at 2%.
On March 31, 2022, 66% of cash was denominated in U.S. dollar. The evolution in key debt indicators is shown below:
| Indicators | 1Q22 | 4Q21 | 1Q21 |
|---|---|---|---|
| Gross<br> debt/Total capitalization¹ | 23% | 25% | 34% |
| Net<br> debt²(R$)/EBITDA³(R$) | 0,20x | 0,30x | 0,96x |
1 - Total capitalization = shareholders' equity + gross debt – interest on debt.
2 – Net debt = gross debt – interest on debt – cash, cash equivalents and financial investments.
3 – Adjusted EBITDA in the last 12 months.
The reduction in the net debt/EBITDA ratio, from 0.30x on December 31, 2021 to 0.20x on March 31, 2022, is explained by the Company’s robust EBITDA generation, the impact of exchange variation on debt and the deleveraging actions in 1Q22.
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Debt(R$ billion) & Leverage Ratio
At the end of March 2022, the weighted average nominal cost of gross debt was 7.21%, with 12.39% for the portion denominated in BRL, 5.85% plus foreign-exchange variation for the portion denominated in USD contracted by companies in Brazil and 4.23% for the portion contracted by subsidiaries abroad. On March 31, 2022, the average gross debt term was 7.7 years, with the debt maturity schedule well balanced and well distributed over the coming years.
GrossDebt Maturity Schedule (R$ billion)
Investments
Capital expenditures amounted to R$ 593 million in 1Q22, with R$ 437 million allocated to Maintenance, Technological Expansion and Updating and R$ 156 million to improvements in environmental practices. Of the amount invested in the quarter, 56% was allocated to the Brazil BD, 24% to the North America BD, 14% to the Special Steel BD and 6% to the South America BD.
Maintenance projects are associated with the concept of reinvestment of depreciation over the years to ensure the good functioning of plants.
Meanwhile, Expansion and Technological Updating investments include expanding forestry assets, updating and improving environmental controls and technological improvements that increase energy efficiency and reduce greenhouse gas emissions.
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Gerdau S.A. has been demonstrating its capacity to adapt to changing scenarios, and the expenditures in its investment plan will be directly related to the pace of demand in our markets, as well as based on criteria involving the return on capital invested and the consequent cash generation.
FreeCash Flow
Free cash flow in 1Q22 was positive R$ 3.0 billion, which marks the eighth straight quarter in which the Company has delivered positive free cash flow. The result reflects the significant contribution from EBITDA, the disciplined allocation of capital to investments and working capital. As a result and combined with the gradual reduction in debt, 52% of EBITDA in the quarter was converted into free cash flow.
FreeCash Flow (R$ million)
FreeCash Flow, Quarterly (R$ million)
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ESGFactors
Gerdau concluded the renovation of the first house selected by the “Reforma que Transforma” program, a social project that executes urgently needed renovations of homes. The renovation was made to the home of a Gerdau employee in Barão de Cocais, Minas Gerais, which had been affected by the heavy rains and flooding in the state at the start of this year. Through this project, we reaffirm our commitment to being part of the solution to the challenges of our stakeholders and of society in general.
The Company remains dedicated to building the future through initiatives to attract talent, such as G.Future, our trainee program. In its 2022 edition, we achieved a record number of over 40,000 applicants, 200 of whom were hired as trainee.
Through the “Inspire Gerdau” program, the Company recognized for the first time 18 partners from its supply chain for their progress in diversifying their demographic profile, which included increasing the percentage of women, Blacks and persons with disabilities in their workforce, as well as the adoption of good practices on these fronts. Created in late 2020, the “Inspire Gerdau” program works to mobilize and encourage suppliers in Gerdau’s chain to incorporate best practices in diversity and inclusion. At the start of 2022, the number of suppliers adhering to the program requirements reached 203. Gerdau’s goal is to continue working to be an increasingly inclusive and diverse steel producer and to engage its entire ecosystem.
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PERFORMANCEBY BUSINESS DIVISION (BD)
The information in this report is divided into four Business Divisions (BD) in accordance with Gerdau’s corporate governance, as follows:
| · | Brazil<br> BD (Brazil Business Division) – includes the operations in Brazil (except special steel)<br> and the iron ore operation in Brazil; |
|---|---|
| · | North<br> America BD (North America Business Division) – includes all operations in North America<br> (Canada and United States), except special steel, as well as the jointly controlled company<br> in Mexico; |
| --- | --- |
| · | South<br> America BD (South America Business Division) – includes all operations in South America<br> (Argentina, Peru and Uruguay), except the operations in Brazil, and the jointly controlled<br> companies in the Dominican Republic and Colombia; |
| --- | --- |
| · | Special<br> Steel BD (Special Steel Business Division) – includes the special steel operations<br> in Brazil and the United States, as well as the jointly controlled company in Brazil. |
| --- | --- |
NETSALES
EBITDA & EBITDA MARGIN
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BRAZILBD
| BRAZIL<br> BD | 4Q21 | ∆ | 1Q21 | ∆ |
|---|---|---|---|---|
| Volumes<br> (1,000 tonnes) | ||||
| Production<br> of crude steel | 1,458 | 5% | 1,292 | 18% |
| Shipments<br> of steel | 1,448 | -4% | 1,285 | 8% |
| Domestic<br> Market | 1,084 | 0% | 1,236 | -12% |
| Exports | 364 | -18% | 49 | 512% |
| Shipments<br> of long steel | 999 | -5% | 888 | 7% |
| Domestic<br> Market | 686 | -3% | 848 | -22% |
| Exports | 314 | -8% | 41 | 612% |
| Shipments<br> of flat steel | 449 | -4% | 396 | 9% |
| Domestic<br> Market | 399 | 5% | 388 | 8% |
| Exports | 50 | -79% | 8 | 27% |
| Results<br> (R million) | ||||
| Net<br> Sales¹ | 8,874 | -10% | 6,883 | 17% |
| Domestic<br> Market | 7,364 | -7% | 6,691 | 3% |
| Exports | 1,510 | -23% | 192 | 503% |
| Cost<br> of Goods Sold | (6,347) | -2% | (4,486) | 39% |
| Gross<br> profit | 2,528 | -29% | 2,397 | -25% |
| Gross<br> margin (%) | 28.5% | -6.1p.p | 34.8% | -12.4p.p |
| Adjusted<br> EBITDA² | 2,796 | -30% | 2,537 | -23% |
| Adjusted<br> EBITDA Margin (%) | 31.5% | -7.2p.p | 36.9% | -12.5p.p |
All values are in US Dollars.
1 – Includes iron ore sales.
2 – Non-accounting measure calculated by the Company. The Company presents Adjusted EBITDA to provide additional information on cash generation in the period.
Production & Shipments
Crude steel production at the Brazil BD increased in 1Q22 when compared to the 4Q21 and 1Q21. Shipments in the quarter decreased in relation to 4Q21 and increased in relation to 1Q21. This quarter, the Company directed 22% of its shipments to export markets, compared to 25% in 4Q21.
The first quarter presented a continuation of the trend in the fourth quarter, when domestics sales usually stabilize at high levels. Demand from the construction, machinery and equipment, agriculture, energy and infrastructure sectors remained at healthy levels, despite the scenario of higher interest rates and international conflicts.
The outlook for 2022 in the distribution sectors and retail segments calls for higher sales and lower shipments and for the homebuilding sector to stabilize the number of launches and steel sales volume.
In the infrastructure sector, the expectations are for an active calendar of highway projects and auctions and for investments by the federal government in the “Pró-Trilhos” program. The wind power and oil and gas sectors remain strong, with expectations of large investments. For the yellow line, machinery and equipment and agriculture sectors, sales remain strong, especially given the increased competitiveness in the export market.
In 1Q22, 544,000 tonnes of iron ore were sold to third parties and 305,000 tonnes were consumed internally.
OperatingResult
Net revenue in 1Q22 decreased compared to 4Q21 due to the decrease in R$/t, lower net revenue per ton sold and lower export volumes with an increase in the sale of semi-finished products. Shipments in the domestic market remained stable.
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Compared to 1Q21, net sales increased, explained by market conditions in the period and higher exports with positive exchange variation.
Cost of goods sold was stable in 1Q22 compared to 4Q21. Compared to 1Q21, cost of goods sold increased, due to the higher costs of raw materials: metallurgical coal (+150%) and iron ore (+19%).
Gross profit decreased in 1Q22 compared to 4Q21 and 1Q21.
In 1Q22, the EBITDA of the Brazil BD decreased in relation to 4Q21 and 1Q21, reflecting the challenges presented in the quarter.
EBITDA(R$ million) & EBITDA Margin (%)
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NORTHAMERICA BD
| NORTH<br> AMERICA BD | 4Q21 | ∆ | 1Q21 | ∆ |
|---|---|---|---|---|
| Volumes<br> (1,000 tonnes) | ||||
| Production<br> of crude steel | 1,249 | -3% | 1,251 | -3% |
| Shipments<br> of steel | 1,054 | 4% | 1,123 | -3% |
| Results<br> (R million) | ||||
| Net<br> Sales | 7,893 | 4% | 5,888 | 40% |
| Cost<br> of Goods Sold | (6,058) | -3% | (5,152) | 14% |
| Gross<br> profit | 1,835 | 29% | 735 | 222% |
| Gross<br> margin (%) | 23.2% | 5.5p.p | 12.5% | 16.3p.p |
| EBITDA1 | 2,162 | 25% | 843 | 222% |
| EBITDA<br> margin (%) | 27.4% | 5.6p.p | 14.3% | 18.7p.p |
All values are in US Dollars.
| 1. | Non-accounting<br> measure calculated by the Company. The Company presents Adjusted EBITDA to provide additional<br> information on cash generation in the period. |
|---|
Production & Shipments
Steel production registered a slight reduction in 1Q22 compared to 4Q21 and 1Q21. Note that the North America BD currently is operating near its full capacity, with the rolling mills running at over 90% capacity.
Shipments increased in relation to 4Q21, driven by strong demand from the non-residential construction and industrial sectors. Compared to 1Q21, shipments slightly decreased.
The outlook for 2022 calls for solid demand from the construction and distribution sectors. In the infrastructure sector, the U.S. government is requiring all public construction projects to use locally produced steel to support domestic producers.
OperatingResult
Net sales in 1Q22 surpassed 4Q21 and 1Q21 and set a new record, supported by the better metals spread and the higher net sales per tonne sold in the comparison periods.
Cost of goods sold decreased in 1Q22 in relation to 4Q21, due to the effects of the fall in the average scrap purchase costs, mainly due to the variation local currency.
Gross profit and gross margin in 1Q22 were higher than in 4Q21 and 1Q21.
EBITDA and EBITDA margin set all-time highs, explained by stronger demand in the North American market, the change in the portfolio mix of products offered, and the investments made over the last few years.
EBITDA (R$ million) & EBITDA Margin (%)
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SPECIALSTEEL BD
| SPECIAL<br> STEEL BD | 4Q21 | ∆ | 1Q21 | ∆ |
|---|---|---|---|---|
| Volumes<br> (1,000 tonnes) | ||||
| Production<br> of crude steel | 427 | 16% | 445 | 11% |
| Shipments<br> of steel | 404 | 4% | 425 | -2% |
| Results<br> (R million) | ||||
| Net<br> Sales | 3,029 | 6% | 2,430 | 32% |
| Cost<br> of Goods Sold | (2,634) | -1% | (2,145) | 21% |
| Gross<br> profit | 395 | 56% | 285 | 116% |
| Gross<br> margin (%) | 13.0% | 6.1p.p | 11.7% | 7.4p.p |
| EBITDA1 | 540 | 28% | 409 | 69% |
| EBITDA<br> margin (%) | 17.8% | 3.7p.p | 16.8% | 4.7p.p |
All values are in US Dollars.
1 – Non-accounting measure calculated by the Company. The Company presents Adjusted EBITDA to provide additional information on cash generation in the period.
Production & Shipments
Steel production increased in 1Q22 in relation to 4Q21 and 1Q21, while shipments increased in relation to 4Q21 and declined slightly compared to 1Q21. Light vehicle sales continued to be affected by the supply of semiconductors, which are used in all electronic components installed in vehicles. The good performances of the heavy vehicle sector in Brazil and the oil and gas industry in the United States offset the effects caused by the semiconductor shortage on the light vehicle sector.
The outlook for 2022 is for higher growth that in last two years in Gerdau’s main markets, that are heavy vehicles, distribution and oil and gas, as well as for gradual improvement in the supply of semiconductors for light vehicles, a gradual cooling off is expected throughout the year.
OperatingResult
Net sales increased in 1Q22 in relation to 4Q21 and 1Q21, mainly due to the higher prices observed in both comparison periods.
Gross profit and gross margin increased in 1Q22 compared to 4Q21 and 1Q21, due to net revenue per ton with variation having presented a variation higher than the cost per ton sold in the comparison periods.
EBITDA in 1Q22 set an all-time high for a first quarter, driven by current profitability, despite the cost inflation and semiconductor shortage.x’
EBITDA(R$ million) & EBITDA Margin (%)
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SOUTHAMERICA BD
| SOUTH<br> AMERICA BD | 4Q21 | ∆ | 1Q21 | ∆ |
|---|---|---|---|---|
| Volumes<br> (1,000 tonnes) | ||||
| Production<br> of crude steel | 145 | 19% | 163 | 5% |
| Shipments<br> of steel | 372 | -11% | 296 | 12% |
| Results<br> (R million) | ||||
| Net<br> Sales | 2,240 | -22% | 1,449 | 21% |
| Cost<br> of Goods Sold | (1,831) | -23% | (1,062) | 32% |
| Gross<br> profit | 409 | -15% | 387 | -10% |
| Gross<br> margin (%) | 18.3% | 1.6p.p | 26.7% | -6.8p.p |
| EBITDA1 | 521 | -7% | 550 | -12% |
| EBITDA<br> margin (%) | 23.3% | 4.3p.p | 38.0% | -10.4p.p |
All values are in US Dollars.
1 – Non-accounting measure calculated by the Company. The Company presents Adjusted EBITDA to provide additional information on cash generation in the period.
Production & Shipments
Steel production increased in 1Q22 in relation to 4Q21 and 1Q21, while shipments decreased compared to 4Q21, reflecting ongoing effects from the prior quarter’s seasonality, and increased in relation to 1Q21. Demand from the construction sector remained strong and with good prospects, especially in Argentina and Uruguay.
OperatingResult
Net sales decreased in 1Q22 compared to 4Q21, explained by lower shipments and lower prices. In relation to 1Q21, net sales increased, accompanying the higher volumes shipped in the comparison periods.
Cost of goods sold decreased in 1Q22 compared to 4Q21, accompanying the lower shipments in the period. In relation to 1Q21, cost of goods sold increased, due to the higher raw material prices, especially the increase of over 30% in the cost of scrap consumed.
Gross profit decreased in 1Q22 compared to both 4Q21 and 1Q21, due to the same factors that influenced sales and cost per tonne sold.
In 1Q22, EBITDA decreased in relation to 4Q21 and 1Q21, reflecting the lower gross profit.
EBITDA(R$ million) & EBITDA Margin (%)
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THEMANAGEMENT
This document contains forward-looking statements. These statements are based on estimates, information or methods that may be incorrect or inaccurate and that may not occur. These estimates are also subject to risks, uncertainties and assumptions that include, among other factors: general economic, political and commercial conditions in Brazil and in the markets where we operate, as well as existing and future government regulations. Potential investors are cautioned that these forward-looking statements do not constitute guarantees of future performance, given that they involve risks and uncertainties. Gerdau does not undertake and expressly waives any obligation to update any of these forward-looking statements, which are valid only on the date on which they were made.
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| GERDAU<br> S.A. | |
|---|---|
| CONSOLIDATED<br> BALANCE SHEETS | |
| In<br> thousands of Brazilian reais (R) | |
| December 31, 2021 | |
| CURRENT<br> ASSETS | |
| Cash<br> and cash equivalents | 4,160,654 |
| Short-term<br> investments | 2,626,212 |
| Trade<br> accounts receivable | 5,414,075 |
| Inventories | 16,861,488 |
| Tax<br> credits | 2,083,885 |
| Income<br> and social contribution taxes recoverable | 804,053 |
| Dividends<br> receivable | 7,671 |
| Fair<br> value of derivatives | 3,246 |
| Other<br> current assets | 679,193 |
| 32,640,477 | |
| NON-CURRENT<br> ASSETS | |
| Tax<br> credits | 124,600 |
| Deferred<br> income taxes | 2,929,308 |
| Related<br> parties | 2,678 |
| Judicial<br> deposits | 1,659,379 |
| Other<br> non-current assets | 571,637 |
| Prepaid<br> pension cost | 4,942 |
| Investments<br> in associates and joint ventures | 3,340,775 |
| Goodwill | 12,427,527 |
| Leasing | 861,744 |
| Other<br> Intangibles | 509,760 |
| Property,<br> plant and equipment, net | 18,741,786 |
| 41,174,136 | |
| TOTAL<br> ASSETS | 73,814,613 |
All values are in US Dollars.
16
| GERDAU<br> S.A. | |
|---|---|
| CONSOLIDATED<br> BALANCE SHEETS | |
| In<br> thousands of Brazilian reais (R) | |
| December 31, 2021 | |
| CURRENT<br> LIABILITIES | |
| Trade<br> accounts payable | 8,017,140 |
| Short-term<br> debt | 234,537 |
| Debentures | 1,531,956 |
| Taxes<br> payable | 548,173 |
| Income<br> and social contribution taxes payable | 863,136 |
| Payroll<br> and related liabilities | 1,199,143 |
| Leasing<br> payable | 275,086 |
| Employee<br> benefits | 39 |
| Environmental<br> liabilities | 231,711 |
| Fair<br> value of derivatives | - |
| Obligations<br> with FIDC | 45,497 |
| Other<br> current liabilities | 1,090,396 |
| 14,036,814 | |
| NON-CURRENT<br> LIABILITIES | |
| Long-term<br> debt | 10,875,249 |
| Debentures | 1,397,951 |
| Related<br> parties | 24,648 |
| Deferred<br> income taxes | 98,975 |
| Provision<br> for tax, civil and labor liabilities | 1,741,026 |
| Environmental<br> liabilities | 343,998 |
| Employee<br> benefits | 1,415,151 |
| Leasing<br> payable | 643,279 |
| Other<br> non-current liabilities | 421,873 |
| 16,962,150 | |
| EQUITY | |
| Capital | 19,249,181 |
| Treasury<br> stocks | (152,409) |
| Capital<br> reserves | 11,597 |
| Retained<br> earnings | 17,838,494 |
| Transactions<br> with non-controlling interests without change of control | (2,870,825) |
| Other<br> reserves | 8,528,244 |
| EQUITY<br> ATTRIBUTABLE TO THE EQUITY HOLDERS OF THE PARENT | 42,604,282 |
| NON-CONTROLLING<br> INTERESTS | 211,367 |
| EQUITY | 42,815,649 |
| TOTAL<br> LIABILITIES AND EQUITY | 73,814,613 |
All values are in US Dollars.
17
| GERDAU S.A. | ||
|---|---|---|
| CONSOLIDATED STATEMENTS OF INCOME | ||
| In thousands of Brazilian reais (R) | ||
| March 31, 2021 | December 31, 2021 | |
| NET<br> SALES | 16,342,984 | 21,554,924 |
| Cost<br> of sales | (12,546,075) | (16,367,809) |
| GROSS PROFIT | 3,796,909 | 5,187,115 |
| Selling expenses | (155,393) | (204,234) |
| General and administrative expenses | (314,095) | (428,383) |
| Other operating income | 162,856 | 268,007 |
| Other operating expenses | (76,313) | (58,573) |
| Results in operations with subsidiary and joint ventures | - | (162,913) |
| Impairment of financial assets | (5,036) | 6,556 |
| Equity in earnings of unconsolidated companies | 148,959 | (93,899) |
| INCOME BEFORE FINANCIAL INCOME (EXPENSES) AND TAXES | 3,557,887 | 4,513,676 |
| Financial income | 55,908 | 86,904 |
| Financial expenses | (313,596) | (421,481) |
| Bonds repurchases | - | (264,687) |
| Exchange variations, net | (11,869) | (14,299) |
| Gains on financial instruments, net | (1,159) | (1,634) |
| INCOME BEFORE TAXES | 3,287,171 | 3,898,479 |
| Current | (743,816) | (806,799) |
| Deferred | (72,819) | 468,304 |
| Income and social contribution taxes | (816,635) | (338,495) |
| NET INCOME | 2,470,536 | 3,559,984 |
| (-) Results in operations with subsidiary and joint ventures | - | 162,913 |
| (+) Special bonus to production team | - | 204,386 |
| (+) Bonds repurchases | - | 264,687 |
| (+) Income tax of extraordinary items | - | (713,360) |
| (=) Total of extraordinary items | - | (81,374) |
| ADJUSTED NET INCOME* | 2,470,536 | 3,478,610 |
All values are in US Dollars.
* Adjusted net profit is a non-accounting measure calculated by the Company, reconciled with the financial statements and consists of net income (loss) adjusted by non-recurring events that influenced profit or loss, without cash effect.
18
| GERDAU<br> S.A. | |
|---|---|
| CONSOLIDATED<br> STATEMENTS OF CASH FLOWS | |
| In<br> thousands of Brazilian reais (R) | |
| March 31, 2021 | |
| Cash<br> flows from operating activities | |
| Net<br> income for the period | 2,470,536 |
| Adjustments<br> to reconcile net income for the period to net cash provided by operating activities: | |
| Depreciation<br> and amortization | 648,831 |
| Equity<br> in earnings of unconsolidated companies | (148,959) |
| Exchange<br> variation, net | 11,869 |
| Gains<br> and losses on derivative financial instruments, net | 1,159 |
| Post-employment<br> benefits | 66,877 |
| Long-term<br> incentive plans | 11,219 |
| Income<br> tax | 816,635 |
| Gains<br> on disposal of property, plant and equipment | (339) |
| Impairment<br> of financial assets | 5,036 |
| Provision<br> of tax, civil, labor and environmental liabilities, net | 35,136 |
| Interest<br> income on short-term investments | (36,453) |
| Interest<br> expense on debt and debentures | 214,230 |
| Interest<br> on loans with related parties | (1,497) |
| Provision<br> (Reversal) for net realizable value adjustment in inventory, net | (5,293) |
| 4,088,987 | |
| Changes<br> in assets and liabilities | |
| Increase<br> in trade accounts receivable | (1,174,561) |
| Increase<br> in inventories | (2,356,978) |
| Increase<br> in trade accounts payable | 962,104 |
| (Increase)<br> Decrease in other receivables | 4,471 |
| Decrease<br> in other payables | (51,269) |
| Dividends<br> from associates and joint ventures | 4,068 |
| Purchases<br> of short-term investments | (557,664) |
| Proceeds<br> from maturities and sales of short-term investments | 873,312 |
| Cash<br> provided by operating activities | 1,792,470 |
| Interest<br>paid on loans and financing | (104,680) |
| Interest<br> paid on lease liabilities | (16,151) |
| Income<br>and social contribution taxes paid | (102,891) |
| Net<br> cash provided by operating activities | 1,568,748 |
| Cash<br> flows from investing activities | |
| Purchases<br> of property, plant and equipment | (435,129) |
| Proceeds<br> from sales of property, plant and equipment, investments and other intangibles | 663 |
| Additions<br> in other intangibles | (37,105) |
| Adiantamento<br> para futuro investimento em participação societária | |
| em<br> entidade contabilizada pelo método de equvalência patrimonial | |
| Aplicações<br> financeiras de títulos disponíveis para venda | |
| Resgate<br> de aplicações financeiras de títulos disponíveis para venda | |
| Caixa<br> baixado por venda empresa controlada | |
| Pagamento<br> na aquisição de controle de empresa | |
| Capital<br> increase in joint ventures | |
| Net<br> cash used in investing activities | (471,571) |
| Cash<br> flows from financing activities | |
| Aumento<br> de capital | - |
| Decrease<br> of controlling capital | - |
| Adiantamento<br> para investimento em participação societária em subsidiária | - |
| Purchases<br> of Treasury stocks | |
| Caixa<br> recebido no período de opções de ações | - |
| Dividends<br> and interest on capital paid | (441,188) |
| Pagamentos<br> de custos de empréstimos e financiamentos | |
| Proceeds<br> from loans and financing | 145,350 |
| Repayment<br> of loans and financing | (1,229,008) |
| Leasing<br> payment | (66,302) |
| Intercompany<br> loans, net | 1,111 |
| Pagamentos<br> na aquisição de participação adicional em controladas | - |
| Pagamento<br> de opção de ações | - |
| Net<br> cash used by financing activities | (1,590,037) |
| Exchange<br> variation on cash and cash equivalents | 117,528 |
| Increase<br> (Decrease) in cash and cash equivalents | (375,332) |
| Cash<br> and cash equivalents at beginning of period | 4,617,204 |
| Cash<br> and cash equivalents at end of period | 4,241,872 |
All values are in US Dollars.
19
Exhibit 99.2
**GERDAU S.A.**Corporate Tax ID (CNPJ/MF): 33.611.500/0001-19****Registry (NIRE): 35300520696
MATERIAL FACT
GERDAU S.A. (B3: GGBR / NYSE: GGB) (“Company”) informs that its Board of Directors, in a meeting held on May 4, 2022, in compliance with its Bylaws and with Resolution 77, issued by the Securities and Exchange Commission of Brazil (CVM) on March 29, 2022, approved the program to buy back shares issued by the Company (“Buyback Program”).
The Buyback Program envisages: (i) maximizing value creation for shareholders over the long term through efficient management of its capital structure and meeting the needs of the long-term incentive programs of the Company and its subsidiaries and; (ii) holding the shares in treasury; (iii) canceling the shares; or (iv) subsequently selling the shares in the market.
Number of shares to be acquired: up to 55,000,000 preferred shares, representing approximately 5% of the preferred shares (GGBR4) and/or ADRs backed by preferred shares (GGB) composing the free-float.
Acquisition period: starting on May 6, 2022, with maximum duration of eighteen (18) months.
Further information on the Buyback Program, as required by Annex G of CVM Resolution 80, of March 29, 2022, can be found attached to the minutes of the Board of Directors Meeting, which is available on the websites of the Company’s Investor Relations Department (https://ri.gerdau.com/), of the CVM (https://www.gov.br/cvm/pt-br) and of B3 (https://www.b3.com.br/pt_br/).
São Paulo, May 5, 2022
Rafael Dorneles Japur
Executive Vice-President
Investor Relations Office
This content is Public.