6-K - GGB - Equibles

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

SECURITIESEXCHANGE ACT OF 1934

Dated November 9, 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: November 9, 2022

GERDAU S.A.
By:	/s/ Rafael Dorneles Japur
Name: Rafael Dorneles Japur
Title: Executive Vice President Investor<br> Relations Officer

EXHIBIT INDEX

Exhibit	Description of Exhibit
99.1	GERDAU S.A. Condensed consolidated interim financial<br>statements as of September 30, 2022

Exhibit 99.1

GERDAU S.A.

Condensed consolidated interim financial statements

as of September 30, 2022

GERDAU S.A.
CONSOLIDATED BALANCE SHEETS
In thousands of Brazilian reais (R$)
(Unaudited)
	Note	September 30, 2022		December 31, 2021
---	---	---	---	---	---
CURRENT ASSETS
Cash and cash equivalents	4		6,185,651		4,160,654
Short-term investments	4		2,404,480		2,626,212
Trade accounts receivable	5		6,664,613		5,414,075
Inventories	6		18,811,541		16,861,488
Tax credits			1,899,913		2,083,885
Income and social contribution taxes recoverable			794,142		804,053
Dividends receivable			5,048		7,671
Fair value of derivatives	14		22,319		3,246
Other current assets			769,871		679,193
			37,557,578		32,640,477
NON-CURRENT ASSETS
Tax credits			122,349		124,600
Deferred income taxes			2,251,860		2,929,308
Related parties	16		-		2,678
Judicial deposits	15		1,786,976		1,659,379
Other non-current assets			756,244		571,637
Prepaid pension cost			4,942		4,942
Investments in associates and joint ventures	8		4,202,481		3,340,775
Goodwill	10		12,040,474		12,427,527
Leasing			948,420		861,744
Other Intangibles			436,510		509,760
Property, plant and equipment, net			19,664,491		18,741,786
			42,214,747		41,174,136
TOTAL ASSETS			79,772,325		73,814,613

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements

GERDAU S.A.
CONSOLIDATED BALANCE SHEETS
In thousands of Brazilian reais (R$)
(Unaudited)
	Note	September 30, 2022			December 31, 2021
---	---	---	---	---	---	---	---
CURRENT LIABILITIES
Trade accounts payable	11		9,109,329			8,017,140
Short-term debt	12		1,634,057			234,537
Debentures	13		2,251,621			1,531,956
Taxes payable			706,931			548,173
Income and social contribution taxes payable			393,473			863,136
Payroll and related liabilities			958,250			1,199,143
Leasing payable			268,347			275,086
Employee benefits			193			39
Environmental liabilities			274,113			231,711
Fair value of derivatives	14		4,972			-
Obligations with FIDC	17		-			45,497
Other current liabilities			1,065,922			1,090,396
			16,667,208			14,036,814
NON-CURRENT LIABILITIES
Long-term debt	12		8,171,125			10,875,249
Debentures	13		798,805			1,397,951
Related parties	16		30,808			24,648
Deferred income taxes			109,130			98,975
Provision for tax, civil and labor liabilities	15		1,856,351			1,741,026
Environmental liabilities			231,892			343,998
Employee benefits			1,239,732			1,415,151
Leasing payable			739,594			643,279
Other non-current liabilities			549,023			421,873
			13,726,460			16,962,150
EQUITY	18
Capital			19,249,181			19,249,181
Treasury stocks			(1,066,071	)		(152,409	)
Capital reserves			11,597			11,597
Retained earnings			25,565,620			17,838,494
Transactions with non-controlling interests without change of control			(2,904,670	)		(2,870,825	)
Other reserves			8,332,500			8,528,244
EQUITY ATTRIBUTABLE TO THE EQUITY HOLDERS OF THE PARENT			49,188,157			42,604,282
NON-CONTROLLING INTERESTS			190,500			211,367
EQUITY			49,378,657			42,815,649
TOTAL LIABILITIES AND EQUITY			79,772,325			73,814,613

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements

GERDAU S.A.
CONSOLIDATED STATEMENTS OF INCOME
In thousands of Brazilian reais (R$)
(Unaudited)
		For<br> the three-month period ended						For<br> the nine-month period ended
---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Note	September 30,<br> 2022			September 30,<br> 2021			September 30,<br> 2022			September 30,<br> 2021
NET SALES			21,149,232			21,317,057			64,448,165			56,790,157
Cost<br> of sales	21		(16,411,378	)		(14,897,908	)		(48,625,378	)		(41,159,912	)
GROSS PROFIT			4,737,854			6,419,149			15,822,787			15,630,245
Selling<br> expenses	21		(183,818	)		(187,782	)		(529,944	)		(511,596	)
General<br> and administrative expenses	21		(371,254	)		(339,687	)		(1,035,448	)		(961,738	)
Other<br> operating income	21		72,768			117,992			169,289			318,412
Other<br> operating expenses	21		(80,584	)		(282,268	)		(141,623	)		(401,456	)
Tax credits<br> recovery	15		-			-			-			393,341
Eletrobras<br> compulsory loan recovery	15					1,391,280			-			1,391,280
Impairment<br> of financial assets	21		6,056			(1,038	)		4,705			(6,199	)
Equity<br> in earnings of unconsolidated companies	8		281,494			271,119			976,913			657,057
INCOME BEFORE FINANCIAL<br> INCOME (EXPENSES) AND TAXES			4,462,516			7,388,765			15,266,679			16,509,346
Financial<br> income	22		158,944			56,424			388,360			162,120
Financial<br> expenses	22		(387,705	)		(354,103	)		(1,200,114	)		(1,011,606	)
Exchange<br> variations, net	22		(315,084	)		33,197			(603,439	)		(94,074	)
Tax credits<br> monetary update	15		-			326,090			-			788,741
Gains<br> (Losses) on financial instruments, net	22		13,666			15,971			20,536			19,562
INCOME BEFORE TAXES			3,932,337			7,466,344			13,872,022			16,374,089
Current	7		(738,435	)		(1,614,856	)		(3,054,771	)		(3,499,424	)
Deferred	7		(171,656	)		(257,547	)		(556,121	)		(875,711	)
Income<br> and social contribution taxes			(910,091	)		(1,872,403	)		(3,610,892	)		(4,375,135	)
NET<br> INCOME			3,022,246			5,593,941			10,261,130			11,998,954
ATTRIBUTABLE TO:
Owners of the parent			3,010,857			5,577,819			10,217,898			11,945,709
Non-controlling<br> interests			11,389			16,122			43,232			53,245
			3,022,246			5,593,941			10,261,130			11,998,954
Basic earnings per share - preferred<br> and common - (R$)	19		1.79			3.27			6.02			7.01
Diluted earnings per share -<br> preferred and common - (R$)	19		1.78			3.26			5.98			6.97

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements

GERDAU S.A.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
In thousands of Brazilian reais (R$)
(Unaudited)
	For the three-month period ended						For the nine-month period ended
---	---	---	---	---	---	---	---	---	---	---	---	---
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Net income for the period		3,022,246			5,593,941			10,261,130			11,998,954
Items that may be reclassified subsequently to profit or loss
Other comprehensive income from associates and joint ventures		85,003			157,788			(12,427	)		51,634
Cumulative translation adjustment		698,316			1,761,230			(507,926	)		945,601
Recycling of cumulative translation adjustment to net income		-			-			13,239			-
Unrealized (Losses) Gains on net investment hedge		(164,322	)		(757,828	)		303,928			(447,163	)
Unrealized (Losses) Gains on financial instruments, net of tax		(1,540	)		(4,142	)		1,235			(2,681	)
		617,457			1,157,048			(201,951	)		547,391
Items that will not be reclassified subsequently to profit or loss
Remeasurement of defined benefit pension plan, net of tax		-			(3,577	)		-			(29,655	)
		-			(3,577	)		-			(29,655	)
Other comprehensive income for the period, net of tax		617,457			1,153,471			(201,951	)		517,736
Total comprehensive income for the period, net of tax		3,639,703			6,747,412			10,059,179			12,516,690
Total comprehensive income attributable to:
Owners of the parent		3,628,555			6,727,888			10,020,312			12,478,245
Non-controlling interests		11,148			19,524			38,867			38,445
		3,639,703			6,747,412			10,059,179			12,516,690

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements

GERDAU S.A.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

in thousands of Brazilian reais (R$)

(Unaudited)

	Attributed to parent company's interest
								Retained earnings												Other Reserves
	Capital		Treasury<br><br>stocks			Capital<br><br>Reserve		Legal<br><br>reserve		Tax Incentives<br> Reserve		Investments<br><br>and<br> working capital<br> reserve		Retained<br><br>earnings			Operations<br><br>with<br> non-controlling<br> interests			Gains and<br><br>losses <br> on net<br> investment<br> hedge			Gains and<br><br>losses<br> on financial<br> instruments			Cumulative<br> translation<br> adjustment			Pension<br><br>Plan			Stock<br><br>Option			Total<br><br>parent<br> company's<br><br>interest			Non-controlling<br><br>interests			Total<br> Shareholder's<br><br>Equity
Balance as of January 1, 2021		19,249,181		(229,309	)		11,597		908,946		887,590		5,495,796		-			(2,870,825	)		(8,872,114	)		(14,034	)		16,550,072			(417,904	)		161,275			30,860,271			224,939			31,085,210
2021 Changes in Equity
Net income		-		-			-		-		-		-		11,945,709			-			-			-			-			-			-			11,945,709			53,245			11,998,954
Other comprehensive income (loss) recognized in the period		-		-			-		-		-		-		-			-			(447,163	)		(2,674	)		1,011,986			(29,613	)		-			532,536			(14,800	)		517,736
Total comprehensive income (loss) recognized in the period		-		-			-		-		-		-		11,945,709			-			(447,163	)		(2,674	)		1,011,986			(29,613	)		-			12,478,245			38,445			12,516,690
Long term incentive plan cost recognized in the period		-		-			-		-		-		-		-			-			-			-			-			-			(146,386	)		(146,386	)		(69	)		(146,455	)
Long term incentive plan exercised during the period		-		76,336			-		-		-		66,418		-			-			-			-			-			-			-			142,754			51			142,805
Effects of interest changes in subsidiaries		-		-			-		-		-		-		-			-			-			-			-			-			-			-			(6,691	)		(6,691	)
Complementary dividends		-		-			-		-		-		-		(527	)		-			-			-			-			-			-			(527	)		-			(527	)
Dividends/interest on equity		-		-			-		-		-		-		(2,251,332	)		-			-			-			-			-			-			(2,251,332	)		(41,296	)		(2,292,628	)
Balance as of September 30, 2021 (Note 18)		19,249,181		(152,973	)		11,597		908,946		887,590		5,562,214		9,693,850			(2,870,825	)		(9,319,277	)		(16,708	)		17,562,058			(447,517	)		14,889			41,083,025			215,379			41,298,404
Balance as of January 1, 2022		19,249,181		(152,409	)		11,597		1,665,280		1,255,020		14,918,194		-			(2,870,825	)		(9,567,216	)		(12,127	)		18,250,052			(165,547	)		23,082			42,604,282			211,367			42,815,649
2022 Changes in Equity
Net income		-		-			-		-		-		-		10,217,898			-			-			-			-			-			-			10,217,898			43,232			10,261,130
Other comprehensive income (loss) recognized in the period		-		-			-		-		-		-		-			-			303,928			1,235			(502,749	)		-			-			(197,586	)		(4,365	)		(201,951	)
Total comprehensive income (loss) recognized in the period		-		-			-		-		-		-		10,217,898			-			303,928			1,235			(502,749	)		-			-			10,020,312			38,867			10,059,179
Effects of the share buyback program		-		(934,768	)		-		-		-		-		-			-			-			-			-			-			-			(934,768	)		-			(934,768	)
Long term incentive plan cost recognized in the period		-		-			-		-		-		-		-			-			-			-			-			-			1,842			1,842			4			1,846
Long term incentive plan exercised during the period		-		21,106			-		-		-		24,038		-			-			-			-			-			-			-			45,144			12			45,156
Effects of interest changes in subsidiaries		-		-			-		-		-		-		-			(33,845	)		-			-			-			-			-			(33,845	)		(22,729	)		(56,574	)
Dividend in excess of the minimum estatutory undistributed in 2021		-		-			-		-		-		-		(341,555	)		-			-			-			-			-			-			(341,555	)		-			(341,555	)
Dividends/interest on equity		-		-			-		-		-		-		(2,173,255	)		-			-			-			-			-			-			(2,173,255	)		(37,021	)		(2,210,276	)
Balance as of September 30, 2022 (Note 18)		19,249,181		(1,066,071	)		11,597		1,665,280		1,255,020		14,942,232		7,703,088			(2,904,670	)		(9,263,288	)		(10,892	)		17,747,303			(165,547	)		24,924			49,188,157			190,500			49,378,657

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements

GERDAU S.A.

CONSOLIDATED STATEMENTS OF CASH FLOWS

In thousands of Brazilian reais (R$)

(Unaudited)

		For the nine-month period ended
	Note	September 30, 2022			September 30, 2021
Cash flows from operating activities
Net income for the period			10,261,130			11,998,954
Adjustments to reconcile net income for the period to net cash provided by operating activities:
Depreciation and amortization	21		2,097,534			1,952,002
Equity in earnings of unconsolidated companies	8		(976,913	)		(657,057	)
Exchange variation, net	22		603,439			94,074
Gains and losses on derivative financial instruments, net	22		(20,536	)		(19,562	)
Post-employment benefits			190,144			195,923
Long-term incentive plans			69,257			45,003
Income tax	7		3,610,892			4,375,135
Gains on disposal of property, plant and equipment			(18,513	)		(3,747	)
Impairment of financial assets			(4,705	)		6,199
Provision of tax, civil, labor and environmental liabilities, net			125,201			92,778
Tax credits recovery			-			(2,573,362	)
Interest income on short-term investments			(201,654	)		(111,639	)
Interest expense on debt and debentures	22		802,747			705,992
Interest on loans with related parties	16		139			(4,942	)
Provision (Reversal) for net realizable value adjustment in inventory, net	6		21,677			(6,198	)
			16,559,839			16,089,553
Changes in assets and liabilities
Increase in trade accounts receivable			(1,206,860	)		(2,553,085	)
Increase in inventories			(2,654,174	)		(6,416,980	)
Increase in trade accounts payable			1,120,625			1,637,568
Increase in other receivables			(267,975	)		(11,421	)
Decrease in other payables			(1,172,862	)		(703,838	)
Dividends from associates and joint ventures			106,464			20,600
Purchases of short-term investments			(1,797,882	)		(2,360,270	)
Proceeds from maturities and sales of short-term investments			2,197,056			1,059,955
Cash provided by operating activities			12,884,231			6,762,082
Interest paid on loans and financing			(618,656	)		(599,055	)
Interest paid on lease liabilities			(59,509	)		(47,735	)
Income and social contribution taxes paid			(2,780,069	)		(1,420,110	)
Net cash provided by operating activities			9,425,997			4,695,182
Cash flows from investing activities
Purchases of property, plant and equipment	9		(2,607,753	)		(1,811,078	)
Proceeds from sales of property, plant and equipment, investments and other intangibles			36,657			22,492
Additions in other intangibles			(128,337	)		(108,022	)
Capital increase in joint ventures			(26,751	)		-
Net cash used in investing activities			(2,726,184	)		(1,896,608	)
Cash flows from financing activities
Acquisition of interest in subsidiary			(46,153	)		-
Purchases of Treasury stocks			(916,145	)		-
Dividends and interest on capital paid			(2,408,191	)		(2,059,887	)
Proceeds from loans and financing			442,527			604,640
Repayment of loans and financing			(1,667,288	)		(1,799,751	)
Leasing payment			(246,112	)		(205,259	)
Intercompany loans, net			8,699			15,669
Net cash used by financing activities			(4,832,663	)		(3,444,588	)
Exchange variation on cash and cash equivalents			157,847			4,887
Increase (Decrease) in cash and cash equivalents			2,024,997			(641,127	)
Cash and cash equivalents at beginning of period			4,160,654			4,617,204
Cash and cash equivalents at end of period			6,185,651			3,976,077

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

NOTE 1 - GENERAL INFORMATION

Gerdau S.A. is a publicly traded corporation *(sociedade anônima)*with its corporate domicile in the city of São Paulo, Brazil. Gerdau S.A and subsidiaries (collectively referred to as the “Company”) is a leading producer of long steel in the Americas and one of the largest suppliers of special steel in the world. In Brazil, the Company also produces flat steel and iron ore, activities which expanded the product mix and made its operations even more competitive. The Company believes it is the largest recycler in Latin America and around the world it transforms each year millions of tons of scrap into steel, reinforcing its commitment to sustainable development of the regions where it operates. Gerdau is listed on the São Paulo, New York and Madrid stock exchanges.

The Condensed Consolidated Interim Financial Statements of the Company were approved by the Management on November 8, 2022.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES

2.1 - Basis of Presentation

The Company's Condensed Consolidated Interim Financial Statements for the three-month and nine-month periods ended on September 30, 2022 have been prepared in accordance with International Accounting Standard (IAS) Nº 34, which establishes the content of condensed interim financial statements. These Condensed Consolidated Interim Financial Statements should be read in conjunction with the Consolidated Financial Statements of Gerdau S.A., as of December 31, 2021, which were prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board - IASB.

The preparation of the Condensed Consolidated Interim Financial Statements in accordance with IAS 34 requires Management to make accounting estimates. The Condensed Consolidated Interim Financial Statements have been prepared using the historical cost as its basis, except for the valuation of certain financial instruments, which are measured at fair value.

The accounting policies applied in this Condensed Consolidated Interim Financial Statements are the same as those applied in the Consolidated Financial Statements for the year ended December 31, 2021.

2.2 – New IFRS and Interpretations of the IFRIC (InternationalFinancial Reporting Interpretations Committee)

The issued and/or reviewed IFRS standards made by the IASB that are effective for the year started in 2022 had no impact on the Company's Financial Statements. In addition, the IASB issued/reviewed some IFRS standards, which have mandatory adoption for the year 2023 and/or after, and the Company does not expect material impacts on its Financial Statements.

Amendment to IAS 1 - Classification of liabilities as Current or Non-current. It clarifies aspects to be considered for the classification of liabilities as Current Liabilities or Non-current Liabilities. This amendment to the standard is effective for fiscal years beginning on/or after January 1, 2023. The Company does not expect material impacts on its Financial Statements.

-Amendment to IAS 1 and Disclosure of Accounting Policies. It clarifies aspects to be considered in the disclosure of accounting policies. This amendment to the standard is effective for fiscal years beginning on/or after January 1, 2023. The Company does not expect material impacts on its Financial Statements.

-Amendment to IAS 8 – Definition of Accounting Estimates. It clarifies aspects to be considered in the definition of accounting estimates. This amendment to the standard is effective for fiscal years beginning on/or after January 1, 2023. The Company does not expect material impacts on its Financial Statements.

Amendment to IAS 12 – Deferred Tax related to Assets and Liabilities arising from a Single Transaction. It clarifies aspects to be considered when recognizing deferred tax assets and liabilities related to taxable temporary differences and deductible temporary differences. This amendment to the standard is effective for fiscal years beginning on/or after January 1, 2023. The Company does not expect material impacts on its Financial Statements.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

Amendment to IFRS 16 – Lease Liability in a Sale and Leaseback. It clarifies aspects to be considered in the accounting treatment of an asset transfer in a sale. This amendment to the standard is effective for fiscal years beginning on/or after January 1, 2024. The Company does not expect material impacts on its Financial Statements.
Amendment to IAS 1 – Non-current Liabilities with Covenants. It clarifies aspects of separate classifications in the balance sheet of current and non-current assets and liabilities, establishing the presentation based on liquidity when it provides information that is reliable and more relevant. This amendment to the standard is effective for fiscal years beginning on/or after January 1, 2024. The Company does not expect material impacts on its Financial Statements.

2.3 - Risks of international conflicts

The Russian invasion of Ukraine could have a material adverse effect on the overall macroeconomic environment, which might include demand for steel and iron ore and prices, as well as increasing energy costs. Both the conflict itself and the sanctions imposed (and further sanctions that may be imposed), as well as potential Russian responses to sanctions, have had and could have further destabilizing effects on financial markets and certain commodity markets. The conflict could escalate militarily both regionally and globally; any substantial escalation would have a material adverse effect on macroeconomic conditions. In addition, sanctions may remain in place beyond the duration of any military conflict and have a long-lasting impact on the region and globally and could adversely impact the Company’s results of operations and financial condition.

NOTE 3 – CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

3.1 - Subsidiaries

The Company did not have material changes of interest in subsidiaries for the period ended on September 30, 2022, when compared to those existing on December 31, 2021, except for the sale of 100% of the interest held by the Company in the subsidiary Sizuca - Siderúrgica Zuliana C.A., located in Venezuela, which took place in March and for the acquisition of an additional interest of 3.65% in the subsidiary Siderúrgica Latino Americana S.A. and its subsequent merger into the subsidiary Gerdau Aços Longos S.A., which took place in June and resulted in the recognition of loss in the amount of R$ 33,845 in Equity attributed to parent company’s interest as a result of effects of interest changes in subsidiaries. The other amounts involved in these transactions and their impacts on the financial statements are not considered material by the management of the Company.

3.2 - Joint Ventures

Listed below are the interests in joint ventures:

		Equity Interests
		Total capital*^()^**
Joint ventures	Country	September 30, 2022		December 31, 2021		September 30, 2021
Bradley Steel Processors	Canada		50.00		50.00		50.00
MRM Guide Rail	Canada		50.00		50.00		50.00
Gerdau Corsa S.A.P.I. de C.V.	Mexico		75.00		75.00		70.00
Gerdau Metaldom Corp.	Dominican Rep.		50.00		50.00		50.00
Gerdau Summit Aços Fundidos e Forjados S.A.	Brazil		58.73		58.73		58.73
Diaco S.A.	Colombia		49.87		49.87		49.87
Junto Somos Mais Fidelização S.A.	Brazil		27.50		27.50		27.50
Ubiratã Tecnologia S.A	Brazil		50.00		-		-

(*) The voting capital is substantially equal to the total capital. The interests reported represent the ownership percentage held directly and indirectly held in the joint venture.

Although the Company owns more than 50% of Gerdau Corsa S.A.P.I. de C.V. and Gerdau Summit Aços Fundidos e Forjados S.A., it does not consolidate the financial statements of these joint venture entities, due to joint control agreements with the other shareholders that prevent the Company from controlling the decisions in conducting the joint venture’s business.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

The Company presents the joint venture information in aggregate, since the investments in these entities are not individually material. The financial information of these joint ventures, accounted for under the equity method, is shown below:

	Joint ventures
Joint venture information on a combined basis	September 30, 2022		December 31, 2021
Cash and cash equivalents		900,852		1,149,804
Total current assets		6,201,755		6,177,479
Total non current assets		4,923,744		5,280,692
Short-term debt		497,246		890,039
Total current liabilities		4,021,287		4,368,726
Long-term debt		965,181		2,054,530
Total non current liabilities		1,271,575		2,416,429
	Joint ventures
---	---	---	---	---	---	---	---	---	---	---	---	---
	For the three-month period ended						For the nine-month period ended
Joint venture information on a combined basis	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Net Sales		3,705,242			3,237,423			11,559,656			8,827,737
Income before financial income (expenses) and taxes		580,441			572,301			1,998,053			1,418,671
Financial income		86,958			69,878			282,579			199,334
Financial expenses		81,230			(166,431	)		273,348			(431,639	)
Income and social contribution taxes		(99,590	)		(37,684	)		(364,748	)		(44,257	)
Net Income		379,776			410,892			1,440,052			1,033,447
Depreciation and amortization		74,126			86,572			226,765			248,403
Other comprehensive income		1,199			2,509			1,547			21
Total comprehensive income		380,976			413,401			1,441,599			1,033,467

3.3 – Associate companies

Listed below is the interest in associate company:

		Equity interests
		*Total capital ^()^**
Associate company	Country	September 30, 2022		December 31, 2021		September 30, 2021
Dona Francisca Energética S.A.	Brazil		51.82		51.82		51.82

(*) The voting capital is substantially equal to the total capital. The interests reported represent the ownership percentage held directly and indirectly.

Although the Company owns more than 50% of Dona Francisca Energética S.A., it does not consolidate the financial statements of this associate because of the veto rights granted to minority shareholders that prevent the Company from controlling the decisions in conducting the associate’s business.

The financial information of the associate company, accounted for under the equity method, is shown below:

	Associate company
Associate company information	September 30, 2022		December 31, 2021
Cash and cash equivalents		3,020		3,956
Total current assets		10,788		11,950
Total non current assets		165,931		109,738
Total current liabilities		23,053		11,255
Total non current liabilities		34,828		766

GERDAU S.A.

NOTES TO THE CONDENSEDCONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of BrazilianReais – R$, unless otherwise stated)

(Unaudited)

	Associate company
	For the three-month period ended						For the nine-month period ended
Associate company information	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Net Sales		16,834			16,834			49,952			50,596
Income before financial income (expenses) and taxes		8,774			10,289			27,082			30,517
Financial income		211			103			1,088			349
Financial expenses		(1,628	)		(67	)		(4,879	)		(121	)
Income and social contribution taxes		-			(567	)		(1,348	)		(1,718	)
Net Income		7,357			9,758			21,943			29,027
Depreciation and amortization		2,110			1,210			6,328			3,655
Total comprehensive income		7,357			9,758			21,943			29,027

NOTE4 – CASH AND CASH EQUIVALENTS, AND SHORT-TERM INVESTMENTS

Cash and cash equivalents


Cash	14,743	14,667
Banks and immediately available investments	6,170,908	4,145,987
Cash and cash equivalents	6,185,651	4,160,654

Immediately available investments include investments with maturity up to 90 days, immediate liquidity and low risk of fair value variation.

Short-term investments

	September 30, 2022		December 31, 2021
Short-term investments		2,404,480		2,626,212

Short-term investments include Bank Deposit Certificates and marketable securities, which are stated at their fair value. Income generated by these investments is recorded as financial income.

NOTE 5 – ACCOUNTS RECEIVABLE


Trade accounts receivable - in Brazil	3,472,307		2,640,011
Trade accounts receivable - exports from Brazil	115,507		249,834
Trade accounts receivable - foreign subsidiaries	3,168,626		2,632,002
(-) Impairment of financial assets	(91,827	)	(107,772	)
	6,664,613		5,414,075

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

Accounts receivable by aging are as follows:


Current	5,958,414		4,646,175
Past-due:
Up to 30 days	557,107		494,866
From 31 to 60 days	111,694		139,415
From 61 to 90 days	38,484		32,245
From 91 to 180 days	54,384		169,959
From 181 to 360 days	11,338		8,220
Above 360 days	25,019		30,967
(-) Impairment on financial assets	(91,827	)	(107,772	)
	6,664,613		5,414,075

NOTE 6 - INVENTORIES


Finished products	8,097,722		7,209,379
Work in progress	4,821,906		3,453,948
Raw materials	3,785,135		3,994,655
Storeroom supplies	1,276,217		1,061,666
Imports in transit	855,827		1,145,215
(-) Allowance for adjustments to net realizable value	(25,266	)	(3,375	)
	18,811,541		16,861,488

The allowance for adjustment to net realizable value of inventories, on which the provision and reversal of provision are registered with impact on cost of sales, is as follows:

Balance as of January 01, 2021	(6,119	)
Provision for the year	(6,331	)
Reversal of adjustments to net realizable value	9,143
Exchange rate variation	(68	)
Balance as of December 31, 2021	(3,375	)
Provision for the year	(44,484	)
Reversal of adjustments to net realizable value	22,807
Exchange rate variation	(214	)
Balance as of September 30, 2022	(25,266	)

NOTE 7 – INCOME AND SOCIAL CONTRIBUTION TAXES

In Brazil, income taxes include federal income tax (IR) and social contribution (CS), which represents an additional federal income tax. The statutory rates for income tax and social contribution are 25% and 9%, respectively, and are applicable for the periods ended on September 30, 2022 and 2021. The foreign subsidiaries of the Company are subject to taxation at rates ranging between 23.0% and 35.0%. The differences between the Brazilian tax rates and the rates of other countries are presented under “Difference in tax rates in foreign companies” in the reconciliation of income tax and social contribution below.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

a) Reconciliations of income and social contribution taxes at statutory rates to amounts presented in the Statement of Income are as follows:

	For the<br> three-month period ended
	September 30,<br> 2022			September 30,<br> 2021
Income before income taxes		3,932,337			7,466,344
Statutory tax rates		34	%		34	%
Income and social contribution taxes at statutory rates		(1,336,994	)		(2,538,557	)
Tax adjustment with respect to:
- Difference in tax rates in foreign companies		245,969			152,879
- Equity in earnings of unconsolidated companies		95,708			92,180
- Interest on equity*		(2,327	)		222,362
- Tax credits and incentives		7,690			33,760
- Deferred tax assets not recognized / Realization, net		10,813			(179,962	)
- Other permanent differences, net		69,050			344,935
Income and social contribution taxes		(910,091	)		(1,872,403	)
Current		(738,435	)		(1,614,856	)
Deferred		(171,656	)		(257,547	)
	For the<br> nine-month period ended
---	---	---	---	---	---	---
	September 30,<br> 2022			September 30,<br> 2021
Income before income taxes		13,872,022			16,374,089
Statutory tax rates		34	%		34	%
Income and social contribution taxes at statutory rates		(4,716,487	)		(5,567,190	)
Tax adjustment with respect to:
- Difference in tax rates in foreign companies		226,248			218,135
- Equity in earnings of unconsolidated companies		332,150			223,399
- Interest on equity*		329,000			296,055
- Tax credits and incentives		32,828			92,134
- Deferred tax assets not recognized / Realization, net		69,057			(57,511	)
- Other permanent differences, net		116,312			419,843
Income and social contribution taxes		(3,610,892	)		(4,375,135	)
Current		(3,054,771	)		(3,499,424	)
Deferred		(556,121	)		(875,711	)

(*) Brazilian Law 9,249/95 provides that a company may, at its sole discretion, consider dividends distributions to shareholders to be considered as interest on own capital — subject to specific limitations - which has the effect of a taxable deduction in the determination of income tax and social contribution. The limitation is the greater of (i) shareholders’ equity multiplied by the TJLP (Long Term Interest Rate) rate or (ii) 50% of the net income in the fiscal year. This expense is not recognized for the purpose of preparing the financial statements and therefore does not impact net income.

b) Tax Assets not booked:

Due to the lack of expectation to use tax losses, negative social contribution base and deferred exchange variation arising from some operations in Brazil, the Company did not recognize a portion of tax assets of R$ 255,779 (R$ 240,231 on December 31, 2021), which do not have an expiration date. The subsidiaries abroad had R$ 1,164,209 (R$ 1,256,438 as of December 31, 2021) of tax credits on capital losses for which deferred tax assets have not been booked and which expire between 2029 and 2035 and also several tax losses of state credits in the amount of R$ 427,765 (R$ 1,285,373 as of December 31, 2021), which expire at various dates between 2028 and 2040.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

NOTE 8 – INVESTMENTS


Balance as of January 01, 2021	908,339		976,045		231,152		156,093		2,271,629
Equity in earnings	279,948		268,291		28,831		(13,912	)	563,158
Cumulative Translation Adjustment	173,934		52,278		710		(1,415	)	225,507
Capital increase	-		-		-		27,500		27,500
Capital decrease	-		(141,095	)	-		-		(141,095	)
Results in operations with subsidiary<br> and joint ventures	511,514		-		-		-		511,514
Dividends/Interest<br> on equity	(2,460	)	(84,186	)	(9,025	)	(21,767	)	(117,438	)
Balance as of December 31, 2021	1,871,275		1,071,333		251,668		146,499		3,340,775
Equity in earnings	682,827		291,304		9,780		(6,998	)	976,913
Cumulative Translation Adjustment	30,433		(63,785	)	1,333		(3,475	)	(35,494	)
Capital increase	-		-		-		26,751		26,751
Dividends/Interest<br> on equity	(11,832	)	(80,391	)	(3,684	)	(10,557	)	(106,464	)
Balance as of September 30, 2022	2,572,703		1,218,461		259,097		152,220		4,202,481

NOTE 9 – PROPERTY, PLANT AND EQUIPMENT

a)Summary of changes in property, plant and equipment – during the three-month period ended on September 30, 2022, acquisitions amounted to R$ 1,055,914 (R$ 810,355 as of September 30, 2021), and disposals amounted to R$ 1,418 (R$ 2,657 as of September 30, 2021). During the nine-month period ended on September 30, 2022, acquisitions amounted to R$ 2,607,753 (R$ 1,811,078 as of September 30, 2021), and disposals amounted to R$ 13,122 (R$ 18,702 as of September 30, 2021).

b)Capitalized borrowing costs – borrowing costs capitalized during the three-month period ended on September 30, 2022 amounted to R$ 6,194 (R$ 8,398 as of September 30, 2021). Borrowing costs capitalized during the nine-month period ended on September 30, 2022 amounted to R$ 20,452 (R$ 24,007 as of September 30, 2021).

c)Guarantees – no property, plant and equipment were pledged as collateral for loans and financing on September 30, 2022 and December 31, 2021.

NOTE 10 – GOODWILL

The changes in goodwill are as follows:


Balance as of January 1, 2021	22,421,588		(10,318,069	)	12,103,519
(+/-) Foreign exchange effect	1,469,190		(595,284	)	873,906
Results in operations with subsidiary<br> and joint ventures	(549,898	)	-		(549,898	)
Balance as of December 31, 2021	23,340,880		(10,913,353	)	12,427,527
(+/-) Foreign exchange effect	(889,375	)	502,322		(387,053	)
Balance as of September 30, 2022	22,451,505		(10,411,031	)	12,040,474

The amounts of goodwill by segment are as follows:


Brazil	373,135	373,135
Special Steels	3,983,492	4,111,619
North America	7,683,847	7,942,773
	12,040,474	12,427,527

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

NOTE 11 – TRADE ACCOUNTS PAYABLE


Trade accounts payable - domestic market	5,982,770	5,230,270
Trade accounts payable - debtor risk	398,174	807,915
Trade accounts payable - intercompany	29,582	47,597
Trade accounts payable - imports	2,698,803	1,931,358
	9,109,329	8,017,140

The Company has contracts with financial institutions in order to allow its suppliers to receive in advance their receivables through an operation called "Trade accounts payable - debtor risk". In this operation, the suppliers transfer the right to receive their receivables to a financial institution, which in turn, becomes the holder of the rights to the suppliers' receivables. The Company constantly monitors the composition of the portfolio and the conditions established with its suppliers, which have not resulted in significant changes in relation to what had been practiced historically.

NOTE 12 – LOANS AND FINANCING

Loans and financing are as follows:


Working capital	815,260	480,905
Financing of property, plant and equipment and others	100,065	102,232
Ten/Thirty Years Bonds	8,889,857	10,526,649
Total financing	9,805,182	11,109,786
Current	1,634,057	234,537
Non-current	8,171,125	10,875,249
Principal amount of the financing	9,586,676	10,952,983
Interest amount of the financing	218,506	156,803
Total financing	9,805,182	11,109,786

(*) Weighted average effective interest costs on September 30, 2022, which in a consolidated basis represents 5.79% p.a.

Loans and financing, denominated in Reais, are substantially adjusted at a fixed rate or indexed to the CDI (Interbank Deposit Certificates).

Summary of loans and financing by currency:


Brazilian Real (R)	487,650	461,187
U.S. Dollar (US)	8,890,445	10,535,532
Other currencies	427,087	113,067
	9,805,182	11,109,786

All values are in US Dollars.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

The amortization schedules of long-term loans and financing are as follows:


2023(*)	3,675	1,115,211
2024	9,098	878,044
2025	410,511	405,788
2026	10,721	3,117,768
2027 on	7,737,120	5,358,438
	8,171,125	10,875,249

(*) For the period as of September 30, 2022, the amounts represents payments from October 1, 2023 to December 31, 2023.

a) Credit Lines

In September 2022, the Company completed the renewal of the Global Credit Line in the total amount of US$ 875 million (equivalent to R$ 4,731 million as of September 30, 2022). The transaction aims to provide liquidity to operations in North America and Latin America, including Brazil. The companies Gerdau S.A., Gerdau Açominas S.A. and Gerdau Aços Longos S.A. provide guarantee for this transaction, which matures in September 2027. As of September 30, 2022, no amount of this credit line was used.

NOTE 13 – DEBENTURES

		Quantity<br> as of September 30, 2022
Issuance	General Meeting	Issued		Held in<br> treasury		Maturity	September 30,<br> 2022		December 31,<br> 2021
15th	November, 9, 2018		1,500,000		-	11/21/2022		1,574,258		1,513,958
16th - A	April, 25, 2019		600,000		-	05/06/2023		632,671		607,031
16th - B	April, 25, 2019		800,000		-	05/06/2026		843,497		808,918
Total Consolidated								3,050,426		2,929,907
Current								2,251,621		1,531,956
Non-current								798,805		1,397,951

Maturities of long-term amounts are as follows:


2023	-	599,390
2026	798,805	798,561
	798,805	1,397,951

The debentures are denominated in Brazilian Reais, are nonconvertible, and pay variable interest as a percentage of the CDI – Interbank Deposit Certificate.

For the instruments listed above, the average interest rate weighted by the amounts was 3.49% and 9.14% for the three and nine-month periods ended on September 30, 2022, respectively (1.31% and 2.66 % for the three and nine-month periods ended on September 30, 2021, respectively).

NOTE 14 – FINANCIAL INSTRUMENTS

a)General considerations - Gerdau S.A. and its subsidiaries enter into transactions with financial instruments whose risks are managed by means of strategies and exposure limit controls. All financial instruments are recorded in the accounting books and presented as short-term investments, trade accounts receivable, trade accounts payable, loans and financing, debentures, related-party transactions, unrealized gains on derivatives, unrealized losses on derivatives, obligations with FIDC, other current assets, other non-current assets, other current liabilities and other non-current liabilities.

The Company has derivatives and non-derivative instruments, such as the hedge for some operations under hedge accounting. These operations are intended to protect the Company against exchange rate fluctuations on foreign currency loans and against interest rate fluctuations. These transactions are carried out considering direct active or passive exposures, without leverage.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

b)Fair value – the fair value of the aforementioned financial instruments is as follows:

	September 30,<br> 2022				December 31,<br> 2021
	Book		Fair		Book		Fair
	value		value		value		value
Assets
Short-term investments		2,404,480		2,404,480		2,626,212		2,626,212
Trade accounts receivable		6,664,613		6,664,613		5,414,075		5,414,075
Related parties		-		-		2,678		2,678
Fair value of derivatives		22,319		22,319		3,246		3,246
Other current assets		769,871		769,871		679,193		679,193
Other non-current assets		756,244		756,244		571,637		571,637
Liabilities
Trade accounts payable		9,109,329		9,109,329		8,017,140		8,017,140
Loans and Financing		9,805,182		9,456,085		11,109,786		12,630,940
Debentures		3,050,426		3,238,479		2,929,907		2,911,424
Related parties		30,808		30,808		24,648		24,648
Fair value of derivatives		4,972		4,972		-		-
Obligations with FIDC (current liabilities)		-		-		45,497		45,497
Other current liabilities		1,065,922		1,065,922		1,090,396		1,090,396
Other non current liabilities		549,023		549,023		421,873		421,873

The fair values of Loans and Financing and Debentures are based on market premises, which may take into consideration discounted cash flows using equivalent market rates and credit rating. All other financial instruments, which are recognized in the Consolidated Financial Statements at their carrying amount, are substantially similar to those that would be obtained if they were traded in the market. However, because there is no active market for these instruments, differences could exist if they were settled in advance. The fair value hierarchy of the financial instruments above are presented in Note 14.g.

c) Risk factors that could affect the Company’s and its subsidiaries’businesses:

Pricerisk of commodities: this risk is related to the possibility of changes in prices of the products sold by the Company or in prices of raw materials and other inputs used in the productive process. Since the Company operates in a commodity market, net sales and cost of sales may be affected by changes in the international prices of their products or materials. In order to minimize this risk, the Company constantly monitors the price variations in the domestic and international markets.

Interestrate risk: this risk arises from the effects of fluctuations in interest rates applied to the Company’s financial liabilities or assets and future cash flows and income. The Company evaluates its exposure to these risks: (i) comparing financial assets and liabilities denominated at fixed and floating interest rates and (ii) monitoring the variations of interest rates like SOFR and CDI. Accordingly, the Company may enter into interest rate swaps in order to reduce this risk.

Exchangerate risk: this risk is related to the possibility of fluctuations in exchange rates affecting the amounts of financial assets or liabilities or of future cash flows and income. The Company assesses its exposure to the exchange rate by measuring the difference between the amount of its assets and liabilities in foreign currency. The Company understands that the accounts receivables originated from exports, its cash and cash equivalents denominated in foreign currencies and its investments abroad are more than equivalent to its liabilities denominated in foreign currency. Since the management of these exposures occurs at each operation level, if there is a mismatch between assets and liabilities denominated in foreign currency, the Company may employ derivative financial instruments in order to mitigate the effect of exchange rate fluctuations.

Creditrisk: this risk arises from the possibility of the Company not receiving amounts arising from sales to customers or investments made with financial institutions. In order to minimize this risk, the Company adopt the procedure of analyzing in details of the financial position of their customers, establishing a credit limit and constantly monitoring their balances. Regarding short-term investments, the Company invests solely in financial institutions with low credit risk, as assessed by rating agencies. In addition, each financial institution has a maximum limit for investment, determined by the Company’s Financial Committee.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

Capitalmanagement risk: this risk comes from the Company’s choice in adopting a financing structure for its operations. The Company manages its capital structure, which consists of a ratio between the financial debts and its own capital (Equity) based on internal policies and benchmarks. The Key Performance Indicators (KPI) related to the “Capital Structure Management” objective are: WACC (Weighted Average Cost of Capital), Net Debt/EBITDA (Earnings before interest, income tax, depreciation and amortization), Coverage Ratio of Net Financial Expenses (EBITDA/Net Financial Expenses) and Debt/Total Capitalization Ratio. Net Debt is formed by the principal of the debt reduced by cash, cash equivalents and short-term investments (notes 4, 12 and 13). Total Capitalization is formed by the Total Debt (composed of the principal of the debt) and the Equity (Note 18). The Company may change its capital structure, according to economic and financial conditions, in order to optimize its financial leverage and debt management. At the same time, the Company seeks to improve its ROCE (Return on Capital Employed) through the implementation of working capital management and an efficient program of investments in property, plant and equipment. In the long term, the Company seeks to remain within the parameters below, admitting occasional variations in the short term:

Net debt/EBITDA	From 1.0 to 1.5 times
Gross debt limit	R$ 12 billion
Average maturity	more than 6 years

These key indicators are used to monitor objectives described above and may not necessarily be used as indicators for other purposes, such as impairment tests.

Liquidityrisk: The Company’s management policy of indebtedness and cash on hand is based on using the committed lines and the currently available credit lines with or without a guarantee in export receivables for maintaining adequate levels of short, medium, and long-term liquidity. The maturity of long-term loans and financing, and debentures are presented in Notes 12 and 13, respectively.

Sensitivity analysis:

The Company performed a sensitivity analysis, which can be summarized as follows:

Impacts on Statements of Income
Assumptions	Percentage of change			September 30, 2022		September 30, 2021
Foreign currency sensitivity analysis		5	%		116,385		84,339
Interest rate sensitivity analysis		10 bps			31,138		65,687
Sensitivity analysis of changes in prices of products sold		1	%		211,492		567,902
Sensitivity analysis of changes in raw material and commodity prices		1	%		138,900		312,723
Currency forward contracts		5	%		22,679		(12,567	)
Commodity forward contracts		5	%		2,626		-

Foreigncurrency sensitivity analysis: As of September 30, 2022, the Company is mainly exposed to variations between the Real and the Dollar. The sensitivity analysis carried out by the Company considers the effects of a 5% increase or decrease between the Real and the Dollar in its non-hedged debts, trade accounts receivable - exports from Brazil and trade accounts payable - imports (also including the variation between the Argentinian Peso and the Dollar). In this analysis, if the Real/Argentinian Peso appreciates against the Dollar, this would represent a gain of R$ 116,385 (R$ 84,339 as of September 30, 2021). If the Real/Argentinian Peso depreciates against the Dollar, this would represent an expense of the same amount.

The net values of other assets and other liabilities in foreign currencies do not present significant risks of impacts due to fluctuations in the exchange rate.

Interestrate sensitivity analysis: The interest rate sensitivity analysis made by the Company considers the effects of an increase or reduction of 10 basis point (bps) on the average interest rate applicable to the floating part of its debt. The calculated impact, considering this variation in the interest rate totals R$ 31,138 as of September 30, 2022 (R$ 65,687 as of September 30, 2021) and would impact the Financial expenses account in the Consolidated Statements of Income. The specific interest rates to which the Company is exposed are related to the loans, financing, and debentures presented in Notes 12 and 13, and are mainly comprised by SOFR and CDI — Interbank Deposit Certificate.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

Sensitivityanalysis of changes in sales price of products and price of raw materials and other inputs used in production: The Company is exposed to changes in the price of its products. This exposure is associated with the fluctuation of the sale price of the Company’s products and the price of raw materials and other inputs used in the production process, mainly for operating in a commodity market. The sensitivity analysis made by the Company considers the effects of an increase or of a reduction of 1% on both prices. The impact measured considering this variation in the price of products sold, considering the revenues and costs for the nine-month period ended on September 30, 2022, totals R$ 211,492 (R$ 567,902 as of September 30, 2021) and the variation in the price of raw materials and other inputs totals R$ 138,900 as of September 30, 2022 (R$ 312,723 as of September 30, 2021). The impact in the price of products sold and raw materials would be recorded in the accounts Net Sales and Cost of Sales, respectively, in the Consolidated Statements of Income. The Company does not expect to be more vulnerable to a change in one or more specific product or raw material.

Sensitivityanalysis of currency forward contracts: the Company has exposure to dollar forward contracts for some of its assets and liabilities. The sensitivity analysis carried out by the Company considers the effects of a 5% increase or decrease in the Dollar against the Brazilian Real/Argentinian Peso, and its effects on the mark to market of these derivatives. A 5% increase in the Dollar against the Real/Argentinian Peso represents an income of R$ 22,679 (expense of R$ 12,567 as of September 30, 2021) and a 5% decrease in the Dollar against the Real/Argentinian Peso represents an expense of the same amount. Forward contracts in Dollar/Real/Argentinian Peso were intended to cover asset and liability positions in Dollars and the effects of the mark to market of these contracts were recorded in the Consolidated Statement of Income. Dollar forward contracts to which the Company is exposed are presented in note 14.e.

Sensitivityanalysis of commodity forward contracts: the Company has exposure to Commodity forward contracts (coal, natural gas and nickel) for some of its liabilities. The sensitivity analysis carried out by the Company considers the effects of a 5% increase or decrease in the price of the commodity, and its effects on the mark to market of these derivatives. A 5% increase in the price of the commodity represents an income of R$ 2,626 (R$ 0 as of September 30, 2021), and a 5% decrease in the price of the commodity represents an expense of the same amount. Coal forward contracts were intended to cover liability positions and the mark to market effects of these contracts were recorded in the Consolidated Statement of Income.

d) Financial Instruments per Category

Summary of the financial instruments per category:

September 30, 2022<br> Assets	Financial asset at<br><br> amortized cost		Financial asset at fair<br><br> value through proft or<br><br> loss		Total
Short-term investments		-		2,404,480		2,404,480
Trade accounts receivable		6,664,613		-		6,664,613
Fair value of derivatives		-		22,319		22,319
Other current assets		769,871		-		769,871
Other non-current assets		664,578		91,666		756,244
Total		8,099,062		2,518,465		10,617,527
Financial income (expenses) for the three-month period ended on September 30, 2022		205,865		128,507		334,372
Financial income (expenses) for the nine-month period ended on September 30, 2022		357,631		281,216		638,847
Liabilities	Financial liability at fair<br><br> value through profit or<br><br> loss			Financial liability at<br><br> amortized cost			Total
---	---	---	---	---	---	---	---	---	---
Trade accounts payable		-			9,109,329			9,109,329
Loans and financing		-			9,805,182			9,805,182
Debentures		-			3,050,426			3,050,426
Related parties		-			30,808			30,808
Other current liabilities		-			1,065,922			1,065,922
Other non-current liabilities		-			549,023			549,023
Fair value of derivatives		4,972			-			4,972
Total		4,972			23,610,690			23,615,662
Financial income (expenses) for the three-month period ended on September 30, 2022		(9,437	)		(855,114	)		(864,551	)
Financial income (expenses) for the nine-month period ended on September 30, 2022		(23,822	)		(2,009,684	)		(2,033,506	)

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

December 31, 2021<br> Assets	Financial asset at <br><br>amortized cost		Financial asset at fair <br><br>value through proft or<br><br> loss		Total
Short-term investments		-		2,626,212		2,626,212
Trade accounts receivable		5,414,075		-		5,414,075
Fair value of derivatives		-		3,246		3,246
Related parties		2,678		-		2,678
Other current assets		679,193		-		679,193
Other non-current assets		479,971		91,666		571,637
Total		6,575,917		2,721,124		9,297,041
Financial income (expenses) for the three-month period ended on September 30, 2021		566,386		63,736		630,122
Financial income (expenses) for the nine-month period ended on September 30, 2021		1,149,785		141,646		1,291,431
Liabilities	Financial liability at fair <br> value through profit or<br> loss			Financial liability at<br> amortized cost			Total
---	---	---	---	---	---	---	---	---	---
Trade accounts payable		-			8,017,140			8,017,140
Loans and financing		-			11,109,786			11,109,786
Debentures		-			2,929,907			2,929,907
Related parties		-			24,648			24,648
Obligations with FIDC (current liabilities)		-			45,497			45,497
Other current liabilities		-			1,090,396			1,090,396
Other non-current liabilities		-			421,873			421,873
Total		-			23,639,247			23,639,247
Financial income (expenses) for the three-month period ended on September 30, 2021		1,198			(553,987	)		(552,789	)
Financial income (expenses) for the nine-month period ended on September 30, 2021		(3,911	)		(1,422,777	)		(1,426,688	)

e) Operations with derivative financial instruments

Riskmanagement objectives and strategies: In order to execute its strategy of sustainable growth, the Company implements risk management strategies in order to mitigate market risks.

The objective of derivative transactions is always related to mitigating market risks as stated in our policies and guidelines. The monitoring of the effects of these transactions is performed monthly by the Financial Risk Management Committee, which validates the mark to market of these transactions. All derivative financial instruments are recognized at fair value in the Consolidated Financial Statements of the Company.

Policyfor use of derivatives: The Company is exposed to various market risks, including changes in exchange rates, commodities prices and interest rates. The Company uses derivatives and other financial instruments to reduce the impact of such risks on the fair value of its assets and liabilities or in future cash flows and income. The Company has established policies to evaluate the market risks and to approve the use of derivative transactions related to these risks. The Company enters into derivative financial instruments solely to manage the market risks mentioned above and never for speculative purposes. Derivative financial instruments are used only when they have a related position (asset or liability exposure) resulting from business operations, investments and financing.

Policyfor determining fair value: the fair value of derivative financial instruments is determined using models and other valuation techniques, including future prices and market curves.

Derivative transactions may include: interest rate and/or currency swaps, currency futures contracts and currency options contracts.

Currencyforward contracts: The Company contracted forward contract operations, through which it receives a fixed dollar amount and pays a fixed Argentinian peso amount, both in local currency. Counterparties are always top-tier financial institutions with low credit risk.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

The derivatives instruments can be summarized and categorized as follows:

		Notional<br> value					Amount<br> payable
Contracts	Position	September 30,<br> 2022	December 31,<br> 2021		December 31,<br> 2021		September 30,<br> 2022		December 31,<br> 2021
Currency forward<br> contracts
Maturity<br> in 2022	buyed in US$	U$$ 54.0 million	R<br> 9.9 million	7,247		3,246		3,566		-
Maturity<br> in 2023	buyed in US$	U$$ 32.5 milion	-	13,359		-		785		-
Commodity forward<br> contracts
Maturity<br> in 2023	buyed in US$	U$$ 5.5 milion	-	1,713		-		621		-
Total<br> fair value of financial instruments				22,319		3,246		4,972		-

All values are in US Dollars.

	September 30, 2022		December 31, 2021
Fair value of derivatives
Current assets		22,319		3,246
		22,319		3,246
Fair value of derivatives
Current liabilities		4,972		-
		4,972		-
	For the nine-month period ended
---	---	---	---	---	---	---
	September 30, 2022			September 30, 2021
Net Income
Gains on financial instruments		44,358			20,589
Losses on financial instruments		(23,822	)		(1,027	)
		20,536			19,562
Other comprehensive income
Gains on financial instruments		1,235			-
Losses on financial instruments		-			(2,674	)
		1,235			(2,674	)

f) Net investment hedge

The Company designated as hedge of part of its net investments in subsidiaries abroad the operations of Ten/Thirty Years Bonds. As a consequence, the effect of exchange rate changes on these debts on the amount of US$ 1.1 billion (designated as a hedge) has been recognized in the Statement of Comprehensive Income.

The Company demonstrated effectiveness of the hedge as of its designation dates and demonstrated the high effectiveness of the hedge from the contracting of each debt for the acquisition of these companies abroad, whose effects were measured and recognized directly in the Statement of Comprehensive Income as an unrealized loss, net of taxes, in the amount R$ 164,322 for the three-month period ended on September 30, 2022 (loss of R$ 757,828 for the three-month period ended on September 30, 2021) and as an unrealized gain, net of taxes, in the amount R$ 303,928 for the nine-month period ended on September 30, 2022 (loss of R$ 447,163 for the nine-month period ended on September 30, 2021)

The objective of the hedge is to protect, during the existence of the debt, the amount of part of the Company’s investment in the subsidiaries abroad mentioned above against positive and negative changes in the exchange rate. This objective is consistent with the Company’s risk management strategy. Prospective and retrospective tests demonstrated the effectiveness of these instruments.

g) Measurement of fair value:

The IFRS defines fair value as the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. The standard also establishes a three-level hierarchy for the fair value, which prioritizes information when measuring the fair value by the company, to maximize the use of observable information and minimize the use of non-observable information. This IFRS describes the three levels of information to be used to measure fair value:

Level 1 - quoted prices (unadjusted) in active markets for identical assets and liabilities.

Level 2 - Inputs other than quoted prices included in Level 1 available, where (unadjusted) quoted prices are for similar assets and liabilities in non-active markets, or other data that is available or may be corroborated by market data for substantially the full term of the asset or liability.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

Level 3 - Inputs for the asset or liability that are not based on observable market data, because market activity is insignificant or does not exist.

As of September 30, 2022, the Company had some assets which the fair value measurement is required on a recurring basis. These assets include investments in private securities and derivative instruments.

The accounting balances of financial assets and liabilities of the Company, measured at fair value on a recurring basis and subject to disclosure requirements of IFRS 7 as of September 30, 2022 and December 31, 2021, are as follows:

	Fair Value Measurements at Reporting Date Using
	Balance per financial statements				Quoted<br> Prices in Non-Active Markets for Similar Assets<br><br> (Level 2)
	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
Current assets
Short-term investments		2,404,480		2,626,212		2,404,480		2,626,212
Trade accounts receivable		6,664,613		5,414,075		6,664,613		5,414,075
Fair value of derivatives		22,319		3,246		22,319		3,246
Other current assets		769,871		679,193		769,871		679,193
Non-current assets
Related parties		-		2,678		-		2,678
Other non-current assets		756,244		571,637		756,244		571,637
		10,617,527		9,297,041		10,617,527		9,297,041
Current liabilities
Trade accounts payable		9,109,329		8,017,140		9,109,329		8,017,140
Short-term debt		1,634,057		234,537		1,634,057		234,537
Debentures		2,251,621		1,531,956		2,251,621		1,531,956
Fair value of derivatives		4,972		-		4,972		-
Obligations with FIDC		-		45,497		-		45,497
Other current liabilities		1,065,922		1,090,396		1,065,922		1,090,396
Non-current liabilities
Long-term debt		8,171,125		10,875,249		8,171,125		10,875,249
Debentures		798,805		1,397,951		798,805		1,397,951
Related parties		30,808		24,648		30,808		24,648
Other non-current liabilities		549,023		421,873		549,023		421,873
		23,615,662		23,639,247		23,615,662		23,639,247

h) Changes in liabilities from Cash flow from financing activities:

As required by IAS 7, the Company has summarized below the changes in the liabilities of cash flow from financing activities, from its Statement of Cash Flows:

				Cash effects						Non-cash effects
	January 01,<br><br> 2021			Received/(Paid)<br><br> from financing<br><br> activities			Interest Payment			Interest on loans,<br><br> financing and loans <br><br>with related parties			Exchange<br><br> Variance and<br><br> others		September, 30,<br><br> 2021
Related Parties, net		(111,499	)		15,669			-			(4,942	)		1		(100,771	)
Leasing payable		856,474			(205,259	)		(47,735	)		47,735			253,852		905,067
Loans and Financing, Debentures and Fair value of derivatives		17,516,322			(1,195,111	)		(599,055	)		705,992			697,050		17,125,198
			Cash effects						Non-cash effects
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	December 31,<br><br> 2021		Received/(Paid)<br><br> from financing<br><br> activities			Interest Payment			Interest on loans,<br><br> financing and loans <br><br>with related parties		Exchange<br><br> Variance and<br><br> others			September 30,<br><br> 2022
Related Parties, net		21,970		8,699			-			139		-			30,808
Leasing payable		918,365		(246,112	)		(59,509	)		59,509		335,688			1,007,941
Loans and Financing, Debentures and Fair value of derivatives		14,036,447		(1,224,761	)		(618,656	)		802,747		(157,516	)		12,838,261

NOTE 15 – PROVISIONS FOR TAX, CIVIL AND LABOR CLAIMS

The Company and its subsidiaries are party in judicial and administrative proceedings involving tax, civil and labor matters. Based on the opinion of its legal advisors, Management believes that the provisions recorded for these judicial and administrative proceedings is sufficient to cover probable and reasonably estimable losses from unfavorable court decisions and that the final decisions will not have significant effects on the financial position, operational results and liquidity of the Company and its subsidiaries.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

For claims whose expected loss is considered probable, the provisions have been recorded considering the judgment of the Management of the Company with the assistance of its legal advisors and the provisions are considered enough to cover expected probable losses. The balances of provisions are as follows:

I) Provisions


a) Tax provisions	1,360,939	1,270,473
b) Labor provisions	457,525	435,803
c) Civil provisions	37,887	34,750
	1,856,351	1,741,026

a) Tax Provisions

Tax provisions refer mainly to discussions related to ICMS, IPI, tax uncertainties related to income tax and social contribution, social security contributions, offsetting of PIS and COFINS credits and incidence of PIS and COFINS on other revenues.

b) Labor Provisions

The Company is party to a group of individual and collective labor and/or administrative lawsuits involving various labor amounts and the provision arises from unfavorable decisions and/or the probability of loss in the ordinary course of proceedings with the expectation of outflow of financial resources by the Company.

c) Civil Provisions

The Company is party to a group of civil, arbitration and/or administrative lawsuits involving various claims and the provision arises from unfavorable decisions and/or probable losses in the ordinary course of proceedings with the expectation of outflow of financial resources for the Company.

The changes in the tax, civil and labor provisions are shown below:


Balance at the beginning of the year	1,741,026		1,172,511
(+) Additions	213,282		801,412
(+) Monetary correction	107,835		42,435
(-) Reversal of accrued amounts	(204,641	)	(276,251	)
(+) Foreign exchange effect on provisions in foreign currency	(1,151	)	919
Balance at the end of period	1,856,351		1,741,026

II) Contingent liabilities for which provisions were not recorded

Considering the opinion of legal advisors and management’s assessment, contingencies listed below have the probability of loss considered as possible (but not likely) and due to this classification, accruals have not been made in accordance with IFRS.

a) Tax contingencies

a.1) The Company and its subsidiaries Gerdau Aços Longos S.A. and Gerdau Açominas S.A. have lawsuits related to the ICMS (state VAT) which are mostly related to credit rights and rate differences, whose demands totaled R$ 552,752.

a.2) The Company and certain of its subsidiaries in Brazil are parties to claims related to: (i) Imposto sobre Produtos Industrializados

IPI, substantially related to IPI credit on inputs, whose demands total the updated amount of R$ 421,551; (ii) PIS and COFINS, substantially related to disallowance of credits on inputs totaling R$ 1,610,656, (iii) social security contributions in the total of R$ 137,849 and (iv) other taxes, whose updated total amount is currently R$ 721,713.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

**a.3)**The Company and its subsidiary Gerdau Aços Longos S.A. are parties to administrative proceedings related to Withholding Income Tax, levied on interest remitted abroad, linked to export financing formalized through "Prepayment of Exports Agreements "(PPE) or" Advance Export Receipt "(RAE), in the updated amount of R$ 1,683,022, of which: (i) R$ 1,046,222 correspond to seven lawsuits of the subsidiary Gerdau Aços Longos S.A. that are processed in the administrative sphere where, currently, four lawsuits are at the first instance of the Administrative Council for Tax Appeals (CARF) awaiting the judgment of the Voluntary Appeals filed by the Company, a lawsuit in which, in a recent judgment, the Special Appeal filed by the Company was granted, pending the publication of the judgment, and, finally, two other lawsuits that are in the Superior Chamber of Tax Appeals (CSRF) of CARF, for judgment of Special Appeals filed by the Company; and (ii) R$ 636,800 correspond to three lawsuits of the subsidiary Gerdau S.A., of which two processes are in the Superior Chamber of Tax Appeals (CSRF) of CARF, for judgment of Special Resources and Appeal filed, and one lawsuit that had its challenge presented and it is awaiting judgment by the Federal Revenue Judgment Office (DRJ).

a.4) The Company is party to administrative proceedings related to goodwill amortization pursuant to articles 7 and 8 of Law 9,532/97, from the basis of calculation of Income Tax (IRPJ) and Social Contribution (CSLL), resulting from a corporate restructuring started in 2010. The updated total amount of the assessments is R$ 501,122, of which: (i) R$ 26,714 corresponds to a process in which the opposite Declaration Embargoes were rejected against the decision that granted the official appeal in favor of the National Treasury, and the Special Appeal filed by the Company is pending of judgment; R$ 229,759 corresponds to a lawsuit in which the Company recently had its Voluntary Appeal filed with the Administrative Council of Tax Appeals (CARF) and the decision is pending of publication; (iii) R$ 84,430 correspond to a lawsuit in which the Company had its challenge partially provided and filed a Voluntary Appeal with the Administrative Council for Tax Appeals (CARF), which is pending of judgment; and (iv) R$ 160,218 correspond to a Notice of Infraction received by the Company on December 2, 2019, against which it presented an Objection on December 27, 2019, deemed partially valid by the Federal Revenue Judgment Office (DRJ), pending of judgment the Voluntary appeal filed by the Administrative Council of Tax Appeals (CARF).

a.5) Gerdau S.A. (as successor of Gerdau Aços Especiais S.A.) and its subsidiary Gerdau Internacional Empreendimentos Ltda. are parties to judicial proceedings relating to IRPJ — Income Tax and CSLL — Social Contribution, in the current amount of R$ 1,321,352. Such lawsuits relate to profits generated abroad, of which: (i) R$ 1,085,768 corresponds to two lawsuits of the subsidiary Gerdau Internacional Empreendimentos Ltda. One of the lawsuits is being processed in the lower court, awaiting judgment of the Tax Enforcement Embargoes filed by the Company and another is being processed in the Federal Regional Court of the 4^th^ Region, where the judgment of the appeals filed by the parties began, with the Rapporteur having provided a vote granting the Company's appeal to extinguish the Tax Enforcement and rejecting the Federal Government's appeal; and (ii) R$ 235,584 correspond to a lawsuit involving Gerdau S.A. (as successor of Gerdau Aços Especiais S.A.), pending in the first instance awaiting judgment of the Tax Enforcement Embargoes opposed by the Company.

a.6) Gerdau S.A. (by itself and as successor of Gerdau Aços Especiais S.A.) and its subsidiaries Gerdau Aços Longos S.A. and Gerdau Açominas S.A. are parties to administrative and judicial proceedings relating to the disallowance of goodwill amortization generated in accordance with Article 7 and 8 of Law 9,532/97 — as a result of a corporate restructuring carried out in 2004/2005 — from the tax base of the Income tax - IRPJ and Social Contribution - CSLL. The updated total amount of the assessments amounts to R$ 8,594,587, of which: (i) R$ 5,674,132 correspond to four lawsuits of Gerdau S.A. (as successor of Gerdau Aços Especiais S.A.) and its subsidiaries Gerdau Aços Longos S.A. and Gerdau Açominas S.A., whose administrative discussion has already ended and are currently in the process of judicial collection, with the companies offering judicial guarantees, under precautionary measures, through Guarantee Insurance, and initiated the legal discussions of Embargoes to Execution, in the respective lawsuits, and in the Embargoes to Execution filed by Gerdau S.A. (as successor of Gerdau Aços Especiais S.A.), on April 8, 2021, in a judgment made at the Federal Regional Court of the 4^th^ Region, the appeal filed by the National Treasury was dismissed, maintaining the sentence that dismissed the tax assessment, being pending of judgment the special and extraordinary appeals filed by the National Treasury; and also, in the Embargoes to Execution filed by the subsidiary Gerdau Aços Longos S.A. (as successor of Gerdau Comercial de Aços S.A.), the appeal filed by the National Treasury against the sentence that is pending of judgment by the Regional Federal Court of the 2^nd^ Region that dismissed the tax assessment; (ii) R$ 338,662 corresponds to a lawsuit of the subsidiary Gerdau Aços Longos S.A., in which part of the debt whose administrative discussion has already ended and is under judicial discussion, and the appeal is pending of judgment by the Regional Federal Court of the 2^nd^ Region filed by the National Treasury against the sentence that upheld the Embargoes to Execution and acknowledged the non-substantiation of the tax assessment; (iii) R$ 314,504 corresponds to a lawsuit filed by the subsidiary Gerdau Aços Longos S.A., in which part of the debt whose administrative discussion has ended is under judicial discussion, in which is pending of judgment the appeal filed by the Company against the sentence that dismissed its Embargoes to Tax Enforcement; (iv) R$5,507 corresponds to a lawsuit of the subsidiary Gerdau Aços Longos S.A., in which the administrative discussion has ended, and it is being processed in the lower court awaiting judgment in the Embargoes to Tax Enforcement filed by the Company; (v) R$ 88,049 correspond to a lawsuit of the subsidiary Gerdau Aços Longos S.A., whose administrative discussion ended, and which is pending at the lower court awaiting a decision in the Embargoes to Tax Enforcement filed by the Company; (vi) R$ 145,446 corresponds to a lawsuit filed by Gerdau S.A. (as successor of Gerdau Aços Especiais S.A.), which is in the Superior Chamber of Tax Appeals (CSRF) of CARF for judgment of the Special Appeal filed by the Company; (vii) R$ 188,016 corresponds to a lawsuit filed by the subsidiary Gerdau Aços Longos S.A., which is at the Superior Chamber of Tax Appeals (CSRF) of CARF to judge the Special Appeals filed by the Company and the National Treasury; (viii) R$ 116,888 corresponds to a lawsuit filed by Gerdau S.A. (as successor of Gerdau Aços Especiais S.A.), which is at the Superior Chamber of Tax Appeals (CSRF) of CARF for judgment of the Special Appeal filed by the Company; (ix) R$ 610,407 corresponds to a lawsuit filed by the subsidiary Gerdau Aços Longos S.A., which is pending in the first instance of the Administrative Council for Tax Appeals (CARF) awaiting judgment of the Voluntary Appeal filed by the Company; (x) R$ 535,286 pending before the first instance of the Administrative Council for Tax Appeals (CARF), which awaits judgment of the Voluntary Appeal filed by the Company; (xi) R$ 153,005 corresponds to a lawsuit of the subsidiary Gerdau Aços Longos S.A., separated from the process mentioned in item "vii" above, and which is currently in the judicial collection phase, being pending of judgment the appeal filed against the judgment that dismissed the Embargoes to Tax Enforcement filed by the Company; and (xii) R$ 424,686 corresponds to a lawsuit of the subsidiary Gerdau Aços Longos S.A., separated from the lawsuit mentioned in item “vii” above, and that it is currently in the judicial collection stage, pending judgment at the Federal Regional Court of the 2^nd^ Region the appeals filed by the Company and the National Treasury against the sentence that upheld the Embargoes to Execution and recognized the non-substantiation of the credits object of the tax enforcement.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

The Company's tax advisors confirm that the procedures adopted by the Company regarding the tax treatment of profits earned abroad and the goodwill amortization, which led to the aforementioned lawsuits, have complied with the strict legality and, therefore, these lawsuits are classified as possible loss (but not likely).

Brazilian federal authorities and the judiciary branch are investigating certain issues relating to CARF proceedings, as well as specific political contributions made by the Company, with the purpose of determining whether the Company engaged in any illegal conduct. The Company previously disclosed that, in addition to its interactions with Brazilian authorities, the Company was providing information requested by the U.S. Securities and Exchange Commission (“SEC”). The Company has since been informed by the SEC’s staff that it has closed its inquiry and therefore is not seeking any further information from the Company regarding these matters. The Company believes it is not possible at this time to predict the term or outcome of the proceedings in Brazil, and that there currently is not enough information to determine whether a provision for losses is required or any additional disclosures.

Neither the Company, its controlling shareholders, board members and executive officers are part of any ongoing criminal publicly disclosed investigations, procedures or legal actions associated to the investigations made by the Brazilian federal authorities and judiciary branch related to CARF proceedings and political contributions made by the Company.

b) Civil contingencies

b.1) A lawsuit arising from the request by two civil construction unions in the state of São Paulo alleging that Gerdau S.A. and other long steel producers in Brazil share customers, thus, violating the antitrust legislation. After investigations carried out by the Economic Law Department (SDE — Secretaria de Direito Econômico), the final opinion was that a cartel exists. The lawsuit was therefore forwarded to the Administrative Council for Economic Defense (CADE) for judgment, which resulted in a fine to the Company and other long steel producers, on September 23, 2005, an amount equivalent to 7% of gross revenues in the year before the Administrative Proceeding was commenced, excluding taxes (fine of R$ 245,070, updated by the judicial accountant on August 1, 2013 to R$ 417,820).

Two lawsuits challenge the investigation conducted by the Competition Defense System and its merits judgment, whose grounds are procedural irregularities, especially the production of evidence, based on an economic study, to prove the inexistence of a cartel. The Court, upon offer of bank guarantee letter, granted the suspension of the effects of CADE’s decision. Both actions were dismissed, and their respective appeals were also rejected by the Federal Regional Court of the 1^st^ Region.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

Against both decisions, appeals were lodged with the Superior Court of Justice and the Federal Supreme Court, after admissibility judgment, the appeal to the Superior Court of Justice was admitted and well as substitution of the guarantee offered by insurance guarantee in a decision of October 8, 2019.

In the same order in which the Vice president Judge gave suspensive effect to the Special Appeal, in order to change the guarantee, the Extraordinary Appeal was dismissed, on the grounds of violation of res judicata with recognized general repercussion. Against this decision, the Company filed an Internal Appeal for the TRF1 Plenary, which was dismissed.

On November 8, 2022, the First Panel of the Superior Court of Justice (STJ) unanimously granted the Company's Special Appeal, annulling the process from the CADE's pre-trial stage. Although the judgment has been made public through electronic media, the Company emphasizes that the decision on this date has not yet been formalized by the competent judgment.

The Company denies having been engaged in any type of anti-competitive conduct and it is certain that it has not practiced the conduct attributed to it, understanding shared by its legal consultants. The judgment of the STJ informed above corroborates the Company's understanding in this regard.

**b.2)**The Company and its subsidiaries are parties to other demands of a civil nature that collectively have a discussion amount of approximately R$ 491,620. For these demands, no accounting provision was recorded, since they were considered as possible losses, based on the opinion of its legal counsel.

c) Labor Contingencies

The Company and its subsidiaries are parties to other labor claims that together have an amount of approximately R$ 692,972. For these claims, no accounting provision was made, since these were considered as possible losses, based on the opinion of its legal counsel.

III) Judicial deposits

The Company has judicial deposits related to tax, labor and civil lawsuits as listed below:


Tax	1,560,114	1,449,699
Labor	76,602	73,709
Civil	150,260	135,971
	1,786,976	1,659,379

The balance of tax judicial deposits as of September 30, 2022 includes the amount of R$ 1,463,815, which corresponds to judicial deposits made up to June 2017, referring to the same discussion on the inclusion of the ICMS in the tax base of PIS and COFINS and awaits termination of the lawsuits before the Brazilian courts in order to be returned to the Company.

The Company and its subsidiaries made judicial deposits and accounting provisions, which in turn were updated in accordance with the SELIC rate, which were referred to the unpaid amounts of PIS and COFINS since 2009, because the collection of which was fully suspended, due to the mentioned judicial deposits.

On March 15, 2017, the Brazilian Federal Supreme Court (STF — Supremo Tribunal Federal) ruled on a claim related to this matter, and by 6 votes to 4, concluded: “The ICMS does not comprise the tax base for PIS and COFINS assessment purposes”. The STF decision, in principle, affects all the nine judicial proceedings, due to its general repercussion. Eight of these lawsuits already have a final favorable decision, and the gain was recognized when the decision was final and unappealable, considering for the purposes of calculation the exclusion of the ICMS informed in the invoices, as recognized in the final and unappealable decisions, and is preparing the documents to carry out the qualification of its credit and be able to start the compensation procedures and/or have already qualified before the Federal Revenue Service of Brazil. It is important to note that the Company still has a lawsuit for repetition of undue payments, which is awaiting the respective final and unappealable decision. In this lawsuit the Company seeks the recognition of R$ 683 million (R$ 643 million, net of related expenses) referring to credits prior to the filing of the lawsuit.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

On May 13, 2021, the Federal Supreme Court ruled the Embargoes for Declaration that the National Treasury Attorney's Office had opposed, alleging that the Supreme Court's decision was silent on certain points, and requesting the modulation of the effects of the decision. In that judgment, the STF accepted, in part, the Embargoes for Declaration, to modulate the effects of the judgment whose production took place after March 15, 2017 (date on which RE No. 574.706 was judged), except for lawsuits or administrative proceedings filed up to that date, and rejected the embargoes regarding the allegation of omission, obscurity or contradiction and, in the point related to the ICMS excluded from the calculation basis of the PIS-COFINS contributions, it signed the understanding that it is the ICMS informed in the invoice.

After this judgment, the concept of virtually certain for the purposes of the entry of economic benefits and recognition of the asset and the corresponding gain started to be demonstrated. Thus, even though there was no final and unappealable decision on two lawsuits that were pending of judgment, the Company recognized in the 2^nd^ quarter of 2021, with sufficient reliability, the amounts of tax credits to which it is entitled, in the amount of R$ 683 million (R$ 643 million, net of related expenses) referring to credits prior to the filing of the lawsuits. The Company also recognized, in the 3^rd^ quarter of 2021, amounts of differences in tax credits to which it is entitled, net of related expenses, in the amount of R$ 326 million in the Tax Credits Monetary Update line.

The amounts recognized in the Company's results related to the recovery of credits arising from the ICMS in the tax base of PIS and COFINS lawsuits (net of related expenses) was R$ 1.2 billion in 2021, of which, R$ 393,3 million in the Other Operating Income line and R$ 788.7 million in the Tax Credits Monetary Update line

Due to the economic moment strongly impacted by the pandemic caused by Covid-19, as well as the fact that the procedural legislation expressly provides the equivalence of cash and guarantee insurance, the subsidiary Gerdau Aços Longos S.A. requested the replacement of the amounts deposited by it over the years regarding the Inclusion of ICMS in the tax base of PIS and COFINS for a guarantee insurance presented by the Company, in the amount of R$ 1.7 billion, which complies with all the requirements established by the PGFN (Attorney General of the National Treasury) and can be converted into income at any time, ensuring that the Public Treasury receives all the amounts that may eventually be due at the end of the process.

In the lower court decision, therefore, there was a decision to release the funds deposited by the Company. The Public Treasury appealed to the Court and obtained a decision reversing the release of the amounts. The Company, then, filed a complaint to settle divergence between the decision handed down by Federal Judge Ferreira Neves, member of the 4^th^ Specialized Panel of the Federal Regional Court of the 2^nd^ Region, in the case files of process nº 50003743-37.2020.4.02.0000, and the jurisprudence of the Supreme Court (Theme nº 69). With an initially favorable injunction, the decision was later suspended to await the statement by the National Treasury regarding the fine for bad faith litigation applied to the Company. After the manifestation, which did not bring any additional element in relation to the fine for bad faith litigation applied, the Minister understood that the Complaint was not applicable due to the lack of exhaustion of ordinary channels.

The fine for bad faith litigation, applied due to the allegation of alleged attempt to mislead the Judiciary, was canceled by the Federal Regional Court of the 2^nd^ Region, when it partially granted, unanimously, the interlocutory appeal filed by the Company, which currently awaits the judgment of the Declaration Embargoes filed by the National Treasury.

IV) Eletrobras Compulsory Loan — Centrais ElétricasBrasileiras S.A. (Eletrobras)

The Compulsory Loan, instituted by the Brazilian government in order to expand and improve the energy sector of the country was charged and collected from industrial consumers with monthly consumption equal or greater than to 2000kwh through the “electricity bills” issued by the electric power distribution companies, was converted into credits to the taxpayers based on the annual value of these contributions made between 1977 and 1993. The legislation sets a maximum 20 years period to return the compulsory loan to the taxpayers, providing Eletrobras the possibility of anticipating this return through the conversion of those loans in shares of its own issuance.

Prior to the conversion of the credits into shares, those credits were monetary corrected through an indexer and quantifier, called Standard Unit (SU). However, the compulsory loan was charged to the companies in their monthly electricity bills, consolidated during the year, and only indexed by the SU in January of the following year, resulting in a lack of monthly monetary correction during the years of collection, as well as interest. This procedure imputed to taxpayers’ considerable financial losses, particularly during the periods when the monthly inflation rates stood at high levels. In order to claim the appropriate interest and monetary correction subtracted by the methodology applied by Eletrobras, the Company (understood to be legally entities existing at the time and that later became part of Gerdau S.A.) filed lawsuits claiming credits resulting from differences on the monetary correction of principal, interest, default interest and other accessory amounts owed by Eletrobras due to the compulsory loans.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

The Company maintain lawsuits pending before the Judiciary, dealing with the subject, with final and unappealable decisions on the merits, favorable to the Company. Regarding one of these processes, involving Gerdau S.A. and its subsidiary Seiva SA – Florestas e Indústrias, on November 25, 2020 a decision was issued that ratified the expert report prepared by the court expert appointed by the Court, establishing the amount to be received in favor of the companies. This decision was maintained by the Court of Justice of the State of Rio de Janeiro in judgment on August 10, 2021, and on September 10, 2021 Eletrobras made the judicial deposit/payment of the amount of the sentence determined by the Judiciary Branch of the State of Rio January, duly increased by interests and loss charges. Thus, considering the current procedural stage, the Company concludes that said asset, until then treated as contingent, due to uncertainties as to the term, form and amount that would be effectively paid and currently defined, fulfilled the accounting characteristics related to the entry of economic benefits, pursuant to paragraph 35 of IAS 37, which implied the recognition by the Company, in the 3^rd^ quarter of 2021, of gain in the statement of income in the amount of R$ 1,391,280, net of fees and related expenses. The Company clarifies that on December 21, 2021 the entire amount was deposited in the Company's account, after the presentation of a guarantee insurance. The Company reinforces that the decision that fixed the amount due in favor of Gerdau was maintained in all instances of the Judiciary Branch of the State of Rio de Janeiro, having been rejected the request for suspension by the Superior Court of Justice – STJ; and that it takes care of definitive execution, based on a final judicial enforcement order, no longer subject to deconstitution of any nature before the Judiciary, leaving only appeals and measures with remote possibilities of acceptance, in view of its only delaying nature.

The other lawsuits pending before the Judiciary, dealing with this subject, with final and unappealable decisions on the merits, favorable to the Company, total approximately R$ 73 million.

V) Other contingent assets

The Company's management believes that the realization of certain contingent assets of a tax nature is possible. However, such assets were not recognized in the financial statements, due to the fact that they have not yet become final and/or that there are uncertainties regarding the term, form and amount that will be effectively realized, and it is not yet practicable to determine with certainty that the amount of the gain in the form of proceeds from these decisions has reached the level of virtually certain and that the Company has control over such assets, which implies that such gains are not recognized until such conditions are demonstrably present. The Company estimates that such contingent assets amount to approximately R$ 750 million.

NOTE 16 – RELATED-PARTY TRANSACTIONS

a)	Intercompany loans
	Maturity	September 30, 2022			December 31, 2021
---	---	---	---	---	---	---	---
Assets
Others
Fundação Gerdau			-			2,678
			-			2,678
Liabilities
Joint venture
Gerdau Corsa S.A.P.I de C.V.	January 1, 2023		(5,324	)		-
Bradley Steel Processors Inc.	August 1, 2023		(25,484	)		(24,648	)
			(30,808	)		(24,648	)
	For the nine-month period ended
---	---	---	---	---	---
	September 30, 2022			September 30, 2021
Net financial income (loss)		(139	)		4,942

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

b)	Operations with related parties

During the three-month period ended on September 30, 2022, the Company, through its subsidiaries, performed commercial operations with some of its associate companies and joint ventures in sales of R$ 174,619 (R$ 165,963 as of September 30, 2021) and purchases in the amount of R$ 61,171 as of September 30, 2022 (R$ 85,577 as of September 30, 2021). The net balance totals R$ 113,448 as of September 30, 2022 (R$ 80,386 as of September 30, 2021). During the nine-month period ended on September 30, 2022, the Company, through its subsidiaries, performed commercial operations with some of its associate companies and joint ventures in sales of R$ 1,171,524 (R$ 552,128 as of September 30, 2021) and purchases in the amount of R$ 231,741 as of September 30, 2022 (R$ 231,804 as of September 30, 2021). The net balance totals R$ 939,603 as of September 30, 2022 (R$ 320,325 as of September 30, 2021).

On September 30, 2022, the Company has a receivable from controlling shareholders, referring to the sale of property, in the amount of R$ 12,849. Additionally , the Company recorded revenues of R$ 210 and R$ 648 in the three-month and nine-month periods ended on September 30, 2022, respectively (R$ 174 and R$ 470 for the three-month and nine-month periods ended on September 30, 2021, respectively), derived from rental agreement.

Guarantees granted

Related Party	Relationship	Object		Maturity
Gerdau Corsa S.A.P.I. de C.V.	Joint-venture	Financing Agreements	5,322,363	September/27	621,715	2,157,290
c)	Price conditions and charges
---	---

Loan agreements between Brazilian companies carry interest based on the Libor and Euribor rate plus exchange variance, when applicable. Sales of products and purchases of inputs are made under terms and conditions agreed between the parties.

d)	Management compensation

The Company paid to its management salaries, benefits and variable compensation totaling R$ 11,523 for the three-month period ended on September 30, 2022 (R$ 17,210 for the three-month period ended on September 30, 2021) and R$ 29,192 for the nine-month period ended on September 30, 2022 (R$ 39,168 for the nine-month period ended on September 30, 2021).

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

The contributions for the defined contribution plan, related to the management of the Company, totaled R$ 538 for the three-month period ended on September 30, 2022 (R$ 484 for the three-month period ended on September 30, 2021) and R$ 1,480 for the nine-month period ended on September 30, 2022 (R$ 1,448 for the nine-month period ended on September 30, 2021).

The cost of social charges, related to the management of the Company, totaled R$ 5,129 for the three-month period ended on September 30, 2022 (R$ 6,889 for the three-month period ended on September 30 ,2021) and R$ 15,112 for the nine-month period ended on September 30, 2022 (R$ 16,131 for the nine-month period ended on September 30 ,2021)

The cost of long-term incentive plans recognized in income and attributable to key management (members of Board of Directors and executive officers) totaled R$ 5,219 during the three-month period ended on September 30, 2022 (R$ 4,468 for the three-month period ended on September 30, 2021) and R$ 14,203 during the nine-month period ended on September 30, 2022 (R$ 13,660 for the nine-month period ended on September 30, 2021).

e) Other information from related parties

The Company has contracted a convertible loan into equity interest with the company Brasil ao Cubo Construção Modular Ltda., which is presented in the line of Other non-current assets, in the amount of R$ 91,666 on September 30, 2022. Contributions to the assistance entities Fundação Gerdau, Instituto Gerdau and Fundação Ouro Branco, classified as related parties, amounted R$ 49,231 (R$ 32,372 on September 30, 2021). The defined benefit pension plans and the post-employment health care benefit plan are related parties of the Company and the details of the balances and contributions have been presented in the Employee Benefit Note in the Company's annual Financial Statements.

NOTE 17 – OBLIGATIONS WITH FIDC - INVESTMENTFUND IN CREDIT RIGHTS

Part of the assets resulting from the favorable judgments of credits with Eletrobras mentioned in Note 15 iv, were used to set up a Non Standardized Credit Right Investment Fund, constituted and duly authorized to operate by the Securities and Exchange Commission of Brazil (“FIDC NP Barzel”). On July 14, 2015, the single quota of that FIDC was sold in the acquisition of minority interests’ transaction in subsidiaries of Gerdau S.A. As of September 30, 2022, the Company has no amount recognized in the account “Obligations with FIDC” in the Current liabilities (R$ 45,497 as of December 31, 2021).

NOTE 18 – EQUITY

a)Capital – The Board of Directors may, without need to change the bylaws, issue new shares (authorized capital), including the capitalization of profits and reserves up to the authorized limit of 1,500,000,000 common shares and 3,000,000,000 preferred shares, all without nominal value. In the case of capital increase through subscription of new shares, the right of preference shall be exercised in up to 30 days, except in the case of a public offering, when the limit is not less than 10 days.

Reconciliation of common and preferred outstanding shares is presented below:

	September 30, 2022					December 31, 2021
	Common shares		Preferred shares			Common shares		Preferred shares
Balance at the beginning of the period		571,929,945		1,133,816,901			571,929,945		1,129,231,487
Purchases of treasury stocks		-		(39,162,900	)		-		-
Long term incentive plan exercised during the period		-		2,345,128			-		4,585,414
Balance at the end of the period		571,929,945		1,096,999,129			571,929,945		1,133,816,901

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

As of September 30, 2022, 573,627,483 common shares and 1,146,031,245 preferred shares are subscribed and paid up, with a total capital of R$ 19,249,181 (net of share issuance costs). Ownership of the shares is presented below:

	Shareholders
	September 30,<br> 2022												December 31,<br> 2021
Shareholders	Common		%		Pref.		%		Total		%		Common		%		Pref.		%		Total		%
Metalúrgica<br> Gerdau S.A.*		557,898,901		97.3		-		0.0		557,898,901		32.4		557,898,901		97.3		0		0.0		557,898,901		32.4
Brazilian institutional investors		4,485,651		0.8		193,942,389		16.9		198,428,040		11.5		4,363,438		0.8		232,421,779		20.3		236,785,217		13.8
Foreign institutional investors		1,322,161		0.2		491,085,307		42.9		492,407,468		28.6		1,895,038		0.3		490,810,572		42.8		492,705,610		28.7
Other shareholders		8,223,232		1.4		411,971,433		35.9		420,194,665		24.4		7,772,568		1.4		410,584,550		35.8		418,357,118		24.3
Treasury<br> stock		1,697,538		0.3		49,032,116		4.3		50,729,654		3.1		1,697,538		0.2		12,214,344		1.1		13,911,882		0.8
		573,627,483		100.0		1,146,031,245		100.0		1,719,658,728		100.0		573,627,483		100.0		1,146,031,245		100.0		1,719,658,728		100.0

* Metalurgica Gerdau S.A. is the controlling shareholder and Indac - Ind. e Com. S.A. (holding of Gerdau's family) is the utltimate controlling shareholder of the Company.

Preferred shares do not have voting rights and cannot be redeemed but have the same rights as common shares in the distribution of dividends and also priority in the capital distribution in case of liquidation of the Company.

b) Treasury stocks

Changes in treasury shares are as follows:

	September 30,<br> 2022								December 31, 2021
	Common		R	Preferred<br> shares			R		Common		R	Preferred<br> shares			R
Balance at the beginning<br> of the period		1,697,538			12,214,344					1,697,538			16,799,758
Purchases of treasury stocks		-			39,162,900					-			-
Long term<br> incentive plan exercised during the period		-			(2,345,128	)		)		-			(4,585,414	)		)
Balance<br> at the end of the period		1,697,538			49,032,116					1,697,538			12,214,344

All values are in US Dollars.

These shares will be held in treasury for subsequent cancelling or will service the long-term incentive plan of the Company and its subsidiaries or subsequently sold on the market. The average acquisition cost of the treasury preferred shares was R$ 21.73.

On May 4, 2022, the Board of Directors of Gerdau S.A., in accordance with the statutory provisions and pursuant to CVM Resolution No. 77, of March 29, 2022, approved the Share Buyback Program issued by the Company, which aims to: (i) maximize the generation of long-term value for its shareholders through an efficient management of the capital structure and meet the long-term incentive plan of the Company and its subsidiaries; (ii) holding in treasury; (iii) cancellation; or (iv) subsequent sale in the market. The quantity of shares to be acquired will be up to 55,000,000 preferred shares, representing approximately 5% of the outstanding preferred shares (GGBR4) and/or ADRs backed by preferred shares (GGB). The acquisition started on May 6, 2022, with a maximum duration period of 18 months. As of September 30, 2022, the Company had already acquired 39,162,900 preferred shares, representing the amount of R$ 934,768. Additionally, from October 1, 2022 to the date of approval by the Management of this Condensed Consolidated Interim Financial Statements, the Company acquired 5,401,100 preferred shares, representing the amount of R$ 138,356.

c)Capital reserves - consists of premium on issuance of shares.

d) Retained earnings

I)Legal reserves - under Brazilian Corporate Law, the Company must transfer 5% of the annual net income determined on its statutory books in accordance with Brazilian accounting practices to the legal reserve until this reserve equals 20% of the paid-in capital. The legal reserve can be utilized to increase capital or to absorb losses but cannot be used for dividend purposes.

II)Tax incentive reserve - under Brazilian Corporate Law, the Company may transfer to this account part of net income resulting from government benefits which can be excluded from the basis for dividend calculation.

III)Investments and working capital reserve - consists of earnings not distributed to shareholders and includes the reserves required by the Company’s by-laws. The Board of Directors may propose to the shareholders the transfer of at least 5% of the profit for each year determined in its statutory books in accordance with accounting practices adopted in Brazil to this reserve. Amounts can be allocated to the reserve only after the minimum dividend requirements have been met and its balance cannot exceed the amount of paid-in capital. It is also recognized in this account the difference between the average amount of the treasury stocks and transactional value of the share in the case of stock option exercised and assignment of preferred shares. The reserve can be used to absorb losses, if necessary, for capitalization, for payment of dividends or for the repurchase of shares.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

e)Operations with non-controlling interests - correspond to amounts recognized in equity for changes in non-controlling interests.

f)Other reserves - Includes gains and losses on net investment hedge, gains and losses on financial instruments accounted as cash flow hedge, cumulative translation adjustments, expenses recorded for stock option plans and actuarial gains and losses on postretirement benefits.

g)Dividends and interest on equity - The Company credited dividends and interest on equity to its shareholders in the amounts presented below:

Period	Nature		Credit	Payment
1^st^ quarter	Interest on income	1,707,829	05/16/2022	05/25/2022	973,542
2^nd^ quarter	Dividends	1,693,994	08/15/2022	08/25/2022	1,199,713
Proposed dividends and interest on equity					2,173,255

All values are in US Dollars.

The interest on equity credited during the period is composed of anticipation of statutory dividend.

NOTE 19 – EARNINGS PER SHARE (EPS)

Basic


						September 30, 2021
		Preferred		Total		Common		Preferred		Total
						(in thousands, except share and per share data)
Basic numerator
Allocated<br> net income available to Common and Preferred shareholders	1,021,947		1,988,910		3,010,857		1,870,404		3,707,415		5,577,819
Basic denominator
Weighted-average outstanding shares, after deducting the average of treasury shares	571,929,945		1,113,088,176				571,929,945		1,133,649,392
Earnings per share (in R) – Basic	1.79		1.79				3.27		3.27

All values are in US Dollars.


						September 30, 2021
		Preferred		Total		Common		Preferred		Total
						(in thousands, except share and per share data)
Basic numerator
Allocated<br> net income available to Common and Preferred shareholders	3,441,121		6,776,777		10,217,898		4,008,207		7,937,502		11,945,709
Basic denominator
Weighted-average outstanding shares, after deducting the average of treasury shares	571,929,945		1,126,331,199				571,929,945		1,132,600,133
Earnings per share (in R) – Basic	6.02		6.02				7.01		7.01

All values are in US Dollars.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

Diluted


			September 30, 2021
Diluted numerator
Allocated net income available to Common and Preferred shareholders
Net income allocated to preferred shareholders	1,988,910			3,707,415
Add:
Adjustment to net income allocated to preferred shareholders in respect to the potential increase in number of preferred shares outstanding, as a result of the long term incentive plan	4,775			8,241
	1,993,685			3,715,656
Net income allocated to common shareholders	1,021,947			1,870,404
Less:
Adjustment to net income allocated to common shareholders in respect to the potential increase in number of preferred shares outstanding, as a result of the long term incentive plan	(4,775	)		(8,241	)
	1,017,172			1,862,163
Diluted denominator
Weighted - average number of shares outstanding
Common Shares	571,929,945			571,929,945
Preferred Shares
Weighted-average number of preferred shares outstanding	1,113,088,176			1,133,649,392
Potential increase in number of preferred shares outstanding due to the long term incentive plan	7,909,988			7,547,902
Total	1,120,998,164			1,141,197,294
Earnings per share – Diluted (Common and Preferred Shares) - in R	1.78			3.26

All values are in US Dollars.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)


			September 30, 2021
Diluted numerator
Allocated net income available to Common and Preferred shareholders
Net income allocated to preferred shareholders	6,776,777			7,937,502
Add:
Adjustment to net income allocated to preferred shareholders in respect to the potential increase in number of preferred shares outstanding, as a result of the long term incentive plan	19,028			20,597
	6,795,805			7,958,099
Net income allocated to common shareholders	3,441,121			4,008,207
Less:
Adjustment to net income allocated to common shareholders in respect to the potential increase in number of preferred shares outstanding, as a result of the long term incentive plan	(19,028	)		(20,597	)
	3,422,093			3,987,610
Diluted denominator
Weighted - average number of shares outstanding
Common Shares	571,929,945			571,929,945
Preferred Shares
Weighted-average number of preferred shares outstanding	1,126,331,199			1,132,600,133
Potential increase in number of preferred shares outstanding due to the long term incentive plan	9,442,738			8,804,110
Total	1,135,773,937			1,141,404,243
Earnings per share – Diluted (Common and Preferred Shares) - in R	5.98			6.97

All values are in US Dollars.

NOTE 20 – LONG-TERM INCENTIVE PLANS

Restricted Shares and PerformanceShares Summary:

Balance as of January 01, 2021	12,469,334
Granted	2,228,196
Forfeited	(1,755,522	)
Exercised	(4,407,441	)
Balance on December 31, 2021	8,534,567
Granted	5,912,531
Forfeited	(1,340,548	)
Exercised	(2,209,620	)
Balance on September 30, 2022	10,896,930

The Company recognizes the cost of the long-term incentive plan through Restricted Shares and Performance Shares based on the fair value of the options granted on the grant date over the 3-year grace period for exercising each grant. The costs with long-term incentive plans recognized in the income statement in the three-month period ended on September 30, 2022 was R$ 29,842 (R$ 16,393 on September 30, 2021) and the costs with long-term incentive plans recognized in the income statement in the nine-month period ended on September 30, 2022 was R$ 69,257 (R$ 45,003 on September 30, 2021).

As of September 30, 2022 the Company has a total of 49,032,116 preferred shares in treasury and, according to note 18, these shares may be used for serving this plan.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

NOTE 21 – EXPENSES BY NATURE

The Company opted to present its Consolidated Statement of Income by function. As required by IAS 1, the Consolidated Statement of Income by nature is as follows:

	For the three-month periods ended on						For the nine-month periods ended on
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Depreciation and amortization		(737,515	)		(672,673	)		(2,097,534	)		(1,952,002	)
Labor expenses		(1,871,867	)		(1,805,583	)		(5,390,069	)		(5,216,114	)
Raw material and consumption material		(12,549,342	)		(11,385,117	)		(37,353,903	)		(31,272,348	)
Freight		(1,252,654	)		(1,034,533	)		(3,783,872	)		(2,719,447	)
Other expenses/income		(556,832	)		(692,785	)		(1,533,021	)		(1,562,578	)
Tax credits recovery		-			-			-			393,341
Eletrobras compulsory loan recovery		-			1,391,280			-			1,391,280
		(16,968,210	)		(14,199,411	)		(50,158,399	)		(40,937,868	)
Classified as:
Cost of sales		(16,411,378	)		(14,897,908	)		(48,625,378	)		(41,159,912	)
Selling expenses		(183,818	)		(187,782	)		(529,944	)		(511,596	)
General and administrative expenses		(371,254	)		(339,687	)		(1,035,448	)		(961,738	)
Other operating income		72,768			117,992			169,289			318,412
Other operating expenses		(80,584	)		(282,268	)		(141,623	)		(401,456	)
Impairment of financial assets		6,056			(1,038	)		4,705			(6,199	)
Tax credits recovery		-			-			-			393,341
Eletrobras compulsory loan recovery		-			1,391,280			-			1,391,280
		(16,968,210	)		(14,199,411	)		(50,158,399	)		(40,937,868	)

NOTE 22 – FINANCIAL INCOME

	For the three-month periods ended on						For the nine-month periods ended on
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Income from short-term investments		105,401			48,963			236,858			118,173
Interest income and other financial incomes		53,543			7,461			151,502			43,947
Financial income total		158,944			56,424			388,360			162,120
Interest on debts		(282,542	)		(272,458	)		(802,747	)		(705,992	)
Monetary variation and other financial expenses		(105,163	)		(81,645	)		(397,367	)		(305,614	)
Financial expenses total		(387,705	)		(354,103	)		(1,200,114	)		(1,011,606	)
Exchange variations, net		(315,084	)		33,197			(603,439	)		(94,074	)
Tax credits monetary update		-			326,090			-			788,741
Gains and Losses on derivatives, net		13,666			15,971			20,536			19,562
Financial result, net		(530,179	)		77,579			(1,394,657	)		(135,257	)

NOTE 23 – SEGMENT REPORTING

Information by business segment:

	For the three-month periods ended on
	Brazil Operation						North America Operation						South America Operation						Special Steels Operation						Eliminations and Adjustments						Consolidated
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Net sales		8,484,167			10,060,017			7,832,134			7,444,878			1,972,165			1,860,173			3,476,800			2,870,991			(616,034	)		(919,002	)		21,149,232			21,317,057
Cost of sales		(7,101,061	)		(6,220,819	)		(5,607,765	)		(5,786,470	)		(1,511,473	)		(1,437,582	)		(2,917,042	)		(2,405,212	)		725,963			952,175			(16,411,378	)		(14,897,908	)
Gross profit		1,383,106			3,839,198			2,224,369			1,658,408			460,692			422,591			559,758			465,779			109,929			33,173			4,737,854			6,419,149
Selling, general and administrative expenses		(209,013	)		(207,555	)		(154,012	)		(150,920	)		(38,992	)		(37,671	)		(69,400	)		(54,719	)		(83,655	)		(76,604	)		(555,072	)		(527,469	)
Other operating income (expenses)		8,067			17,891			(14,399	)		2,403			4,244			5,515			(665	)		1,957			(5,063	)		(192,042	)		(7,816	)		(164,276	)
Eletrobras compulsory loan recovery		-			-			-			-			-			-			-			-			-			1,391,280			-			1,391,280
Impairment of financial assets		(1,222	)		1,978			7,078			(1,619	)		(38	)		(186	)		211			(230	)		27			(981	)		6,056			(1,038	)
Equity in earnings of unconsolidated companies		-			(2,257	)		240,632			155,317			38,328			107,106			4,892			8,923			(2,358	)		2,030			281,494			271,119
Operational income (Loss) before financial income (expenses) and taxes		1,180,938			3,649,255			2,303,668			1,663,589			464,234			497,355			494,796			421,710			18,880			1,156,856			4,462,516			7,388,765
Finacial result, net		(193,138	)		(144,362	)		60,271			(33,980	)		(294,807	)		(93,365	)		(73,427	)		(58,088	)		(29,078	)		407,374			(530,179	)		77,579
Income (Loss) before taxes		987,800			3,504,893			2,363,939			1,629,609			169,427			403,990			421,369			363,622			(10,198	)		1,564,230			3,932,337			7,466,344
Income and social contribution taxes		(243,594	)		(877,295	)		(503,781	)		(318,353	)		(64,736	)		(96,921	)		(102,654	)		(88,335	)		4,674			(491,499	)		(910,091	)		(1,872,403	)
Net income (Loss)		744,206			2,627,598			1,860,158			1,311,256			104,691			307,069			318,715			275,287			(5,524	)		1,072,731			3,022,246			5,593,941
Supplemental information:
Net sales between segments		382,739			458,190			17,911			32,702			-			-			215,384			428,110			-			-			616,034			919,002
Depreciation/amortization		380,834			355,255			159,631			150,030			65,308			54,239			128,954			113,149			2,788			-			737,515			672,673

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

Information by business segment:

	For<br> the nine-month periods ended on
	Brazil<br> Operation						North<br> America Operation						South<br> America Operation						Special<br> Steels Operation						Eliminations<br> and Adjustments						Consolidated
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Net sales		26,094,128			25,883,446			24,627,130			19,944,509			5,619,004			4,616,707			10,352,756			7,950,931			(2,244,853	)		(1,605,436	)		64,448,165			56,790,157
Cost of sales		(20,808,384	)		(16,149,407	)		(17,584,832	)		(16,358,094	)		(4,290,681	)		(3,501,902	)		(8,325,983	)		(6,793,095	)		2,384,502			1,642,586			(48,625,378	)		(41,159,912	)
Gross profit		5,285,744			9,734,039			7,042,298			3,586,415			1,328,323			1,114,805			2,026,773			1,157,836			139,649			37,150			15,822,787			15,630,245
Selling, general and administrative<br> expenses		(595,451	)		(564,012	)		(440,589	)		(441,968	)		(113,277	)		(106,203	)		(192,111	)		(164,107	)		(223,964	)		(197,044	)		(1,565,392	)		(1,473,334	)
Other operating income (expenses)		33,812			23,039			(6,635	)		13,747			12,003			14,084			5,904			49,309			(17,418	)		(183,223	)		27,666			(83,044	)
Tax credits recovery		-			-			-			-			-			-			-			-			-			393,341			-			393,341
Eletrobras compulsory loan recovery		-			-			-			-			-			-			-			-			-			1,391,280			-			1,391,280
Impairment of financial assets		(1,185	)		(1,338	)		3,444			(5,195	)		(522	)		(803	)		2,969			1,138			(1	)		(1	)		4,705			(6,199	)
Equity in<br> earnings of unconsolidated companies		-			(5,965	)		682,827			274,983			291,304			352,318			9,780			27,173			(6,998	)		8,548			976,913			657,057
Operational income (Loss) before<br> financial income (expenses) and taxes		4,722,920			9,185,763			7,281,345			3,427,982			1,517,831			1,374,201			1,853,315			1,071,349			(108,732	)		1,450,051			15,266,679			16,509,346
Finacial<br> result, net		(527,618	)		(375,846	)		51,327			(129,194	)		(580,413	)		(216,975	)		(199,040	)		(172,781	)		(138,913	)		759,539			(1,394,657	)		(135,257	)
Income (Loss) before taxes		4,195,302			8,809,917			7,332,672			3,298,788			937,418			1,157,226			1,654,275			898,568			(247,645	)		2,209,590			13,872,022			16,374,089
Income and<br> social contribution taxes		(1,046,023	)		(2,216,406	)		(1,570,238	)		(724,436	)		(235,055	)		(282,074	)		(406,179	)		(216,782	)		(353,397	)		(935,437	)		(3,610,892	)		(4,375,135	)
Net income (Loss)		3,149,279			6,593,511			5,762,434			2,574,352			702,363			875,152			1,248,096			681,786			(601,042	)		1,274,153			10,261,130			11,998,954
Supplemental information:
Net sales between segments		1,293,706			1,061,928			73,264			49,217			8,564			16,297			869,319			477,994			-			-			2,244,853			1,605,436
Depreciation/amortization		1,077,517			983,574			455,852			461,693			178,872			156,709			379,166			350,026			6,127			-			2,097,534			1,952,002
	September 30, 2022			December 31, 2021			September 30, 2022			December 31, 2021			September 30, 2022			December 31, 2021			September 30, 2022			December 31, 2021			September 30, 2022			December 31, 2021			September 30, 2022			December 31, 2021
Investments in associates and<br> jointly-controlled entities		-			-			2,572,704			1,871,274			1,218,460			1,071,333			259,097			251,668			152,220			146,500			4,202,481			3,340,775
Total assets		26,165,326			24,835,717			26,698,246			22,096,314			8,294,696			7,113,706			14,013,574			13,658,147			4,600,483			6,110,729			79,772,325			73,814,613
Total liabilities		8,807,925			8,105,443			4,466,172			4,603,424			3,104,528			2,376,176			2,843,017			2,801,071			11,172,026			13,112,850			30,393,668			30,998,964

The main products by business segment are:

Brazil Operation: rebar, bars, shapes, drawn products, billets, blooms, slabs, wire rod, structural shapes and iron ore.

North America Operation: rebar, bars, wire rod, light and heavy structural shapes.

South America Operation: rebar, bars and drawn products.

Special Steel Operation: stainless steel, round, square and flat bars, wire rod.

The column of eliminations and adjustments includes the elimination of sales and intercompany loans between segments in the context of the Consolidated Financial Statements. This column also includes amounts that are not part of operational results of a specific segment, such as Tax credits recovery, Impairment of financial assets, Selling, general and administrative expenses of corporate employees and the related income tax effects of these amounts, among others.

The Company's geographic information with net sales classified according to the geographical region where the products were shipped is as follows:

Information by geographic area:

	For<br> the three-month periods ended on
	Brazil				Latin America ^(1)^				North America ^(2)^				Consolidated
	September 30,<br> 2022		September 30,<br> 2021		September 30,<br> 2022		September 30,<br> 2021		September 30,<br> 2022		September 30,<br> 2021		September 30,<br> 2022		September 30,<br> 2021
Net sales		9,273,064		10,632,118		2,281,127		2,222,060		9,595,041		8,462,879		21,149,232		21,317,057

^(1)^ Does not include operations of Brazil

^(2)^ Does not include operations of Mexico

	For<br> the nine-month periods ended on
	Brazil				Latin America ^(1)^				North America ^(2)^				Consolidated
	September 30,<br> 2022		September 30,<br> 2021		September 30,<br> 2022		September 30,<br> 2021		September 30,<br> 2022		September 30,<br> 2021		September 30,<br> 2022		September 30,<br> 2021
Net sales		28,546,450		27,865,730		6,099,767		5,993,819		29,801,948		22,930,608		64,448,165		56,790,157
	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
Total assets		32,185,295		31,740,469		10,904,027		8,959,237		36,683,003		33,114,907		79,772,325		73,814,613

^(1)^ Does not include operations of Brazil

^(2)^ Does not include operations of Mexico

IFRS requires the Company to disclose revenues from external customers for each product and service, or each group of similar products and services, unless the necessary information is not available and the cost to develop it would be excessive. Management does not consider this information useful for its decision-making process, because it would aggregate sales in different markets and in different currencies, subject to the effects of changes in exchange rates. Furthermore, the trends of steel consumption and the price dynamics of each product or group of products in different countries and different markets within these countries are poorly correlated and, as a result, the information would not be useful and would not serve to reach any conclusions about historical trends. Considering this scenario and considering that the information of revenue from external customers by product and service is not maintained by the Company on a consolidated basis and the cost to obtain this information would be excessive compared to the benefits of the information, the Company does not present revenue by product and service.

NOTE 24 – IMPAIRMENT OF ASSETS

The impairment test of goodwill and other long-lived assets is tested based on the analysis and identification of facts or circumstances that may involve the need to perform the impairment test. The Company performs impairment tests of goodwill and other long-lived assets, based on projections of discounted cash flows, which take into account assumptions such as: cost of capital, growth rate and adjustments applied to flows in perpetuity, methodology for working capital determination, investment plans, and long-term economic-financial forecasts.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIMFINANCIAL STATEMENTS

as of September 30, 2022

(In thousands of Brazilian Reais – R$,unless otherwise stated)

(Unaudited)

To determine the recoverable amount of each business segment, the Company uses the discounted cash flow method, taking as basis, financial and economic projections for each segment. The projections are updated to take into consideration any observed changes in the economic environment of the market in which the Company operates, as well as premises of expected results and historical profitability of each segment.

The impairment test of goodwill allocated to the business segments is carried out annually in December and it is anticipated if events or circumstances indicate that it is necessary. In the test carried out in the year 2021, the Company carried out a sensitivity analysis of the discount rate and perpetuity growth rate using the analysis of the scenario described above, given its potential impacts on cash flows, where an increase of 0.5% in the cash flow discount rate for each segment would result in an recoverable amount exceeding the carrying amount as shown below: a) North America: R$ 4,337 million; b) Special Steels: R$ 3,301 million; c) South America: R$ 2,057 million; and d) Brazil: R$ 7,582 million. On the other hand, a decrease of 0.5 % in the perpetuity growth rate of the cash flow of each business segment would result in a recoverable amount exceeding the book value as shown below: a) North America: R$ 4,679 million; b) Special Steels: R$ 3,545 million; c) South America: R$ 2,135 million; and d) Brazil: R$ 7,962 million.

The Company concluded that there are no indications that demand the performance of the impairment test of goodwill and other long-lived assets for the period ended on September 30, 2022.

The Company will maintain over 2022 its constant monitoring of the steel market in order to identify any deterioration, significant drop in demand from steel consuming sectors (notably automotive and construction), stoppage of industrial plants or activities relevant changes in the economy or financial market that result in increased perception of risk or reduction of liquidity and refinancing capacity. Although the projections made by the Company provide a challenging scenario, events that impact economic environment and business, if manifested in a greater intensity than that anticipated in the assumptions made by management, may lead the Company to revise its projections of value in use and eventually result in impairment losses.

NOTE 25 – SUBSEQUENT EVENTS

I) On November 3, 2022, the Company, following the Notice to the Market published on September 1, 2022, informed its shareholders and the market in general that, on this date, upon compliance with the applicable precedent conditions, including the approval by the competitor authorities, its subsidiary Gerdau Next S.A. concluded formalizing the strategic partnership with Randon Serviços e Participações Ltda, with the constitution of a new company that aims at providing adequate solutions to the demands of carriers and shippers, by providing leasing services of trucks, semi-trailers and other products related to the transportation and movement of cargo.

II) On November 7, 2022, the Company proposed the anticipation of the mandatory minimum dividend on income of the current fiscal year, stipulated in its Bylaws, to be paid in the form of dividends and interest on equity, which will be calculated and credited on the shareholding interest owned on November 21, 2022, in the amount of R$ 2,877.9 million and R$ 698.7 million, respectively (R$ 1.73 and R$ 0.42 per common and preferred share, respectively), with payment on December 14, 2022, which was submitted and approved by the Board of Directors on November 8, 2022.

III) On November 8, 2022, the Board of Directors of the Company approved the cancellation of 1,697,538 common shares and 44,564,000 preferred shares, with no par value, issued by the Company, without reducing the value of the Capital. Due to this cancellation of shares, the Company's Capital is now divided into 571,929,945 common shares and 1,101,467,245 preferred shares, with no par value. Therefore, Article 4 of the Company's Bylaws, which deals with the Capital Stock, must be adjusted at the Shareholders' Meeting to be convened in due course. The Company emphasizes that the current Share Buyback Program, as disclosed via Material Fact on May 5, 2022, remains in effect.

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