Metalurgica Gerdau (GOAU4) Q3 2024 earnings summary

Executive summary

• Adjusted EBITDA reached R$ 3 billion in 3Q24, up 14.9% over 2Q24, driven by cost reduction and operational efficiency in Brazil.

• Net income for the quarter was R$ 1.432 billion, up over 50% sequentially, with EPS of R$ 0.64; adjusted net income was R$ 1.4 billion, up 51.4% over 2Q24.

• Free cash flow totaled R$ 3 billion, benefiting from a R$ 1.8 billion judicial deposit release; excluding this, free cash flow was R$ 1.2 billion.

• Steel shipments totaled 2.8 million tonnes, up 4.3% over 2Q24.

• Moody’s and S&P upgraded ratings to Baa2 and BBB, both with stable outlook.

Financial highlights

• Net sales were R$ 17.4 billion in 3Q24, up 4.6% over 2Q24.

• Adjusted EBITDA margin was 17.3% in 3Q24, up 1.6 p.p. over 2Q24.

• Leverage: Net debt/EBITDA improved to 0.30x, lowest in 12 months.

• Dividend and buyback payout: 55% of net income, above policy.

• Gross profit reached R$ 2.6 billion, up 17.8% over 2Q24.

Outlook and guidance

• Confident in meeting guidance to start 2025 with R$ 1.5 billion in cost reductions versus 2023.

• Expect positive demand in Brazil, especially in construction, with 2024 construction GDP forecast to grow 4.8%.

• North America volumes and prices to be temporarily impacted by economic slowdown and imports, with recovery expected in H1 2025.

• Ongoing discussions with the Brazilian government for further trade defense measures.

• CAPEX plan for 2024 totals R$ 6.0 billion, with R$ 3.8 billion invested in the first nine months.