Usinas Siderúrgicas de Minas Gerais (USIM5) Q3 2024 earnings summary

Executive summary

• Net revenue rose 7% in 3Q24 to BRL 6.8 billion, driven by strong steel unit performance and the highest domestic sales volume since 2021.

• Adjusted EBITDA increased 72% year-over-year to BRL 426 million, with margin improving to 6.3%, reflecting operational improvements and cost control.

• Net profit rebounded to BRL 185 million in 3Q24, reversing prior losses due to operational and financial improvements.

• Cash position stood at BRL 5.9 billion, with net debt reduced by 36% sequentially to BRL 644 million and leverage at 0.38x.

• Strategic investments in plant modernization, especially at Ipatinga and Blast Furnace 3, led to productivity and efficiency gains.

Financial highlights

• Net revenue: BRL 6.8 billion (+7% sequentially), gross profit: BRL 414 million (+26%), gross margin: 6%.

• Adjusted EBITDA: BRL 426 million (+72%), margin: 6.3%; net profit: BRL 185 million (vs -BRL 100 million in 2Q24).

• Free cash flow: BRL 316 million; operational cash generation: BRL 580 million; CAPEX: BRL 202 million (-13% vs 2Q24).

• Net debt/EBITDA: 0.38x at 3Q24, with cash and equivalents at BRL 5.9 billion.

• Working capital decreased, mainly from lower accounts receivable and recoverable taxes.

Outlook and guidance

• Expectation of continued cost reductions and operational efficiency gains in Q4 and into 2025.

• 2024 CAPEX guidance revised to BRL 1.1 billion, with 2025 expected to be similar.

• Debt profile extended with the 10th debenture issue (BRL 1.8 billion), used to repay US$320 million in bonds.

• Current cash position covers all debt maturities until 2029, supporting financial flexibility.

• Steel unit expects slightly lower domestic sales in 4Q24 due to seasonality, offset by higher exports; mining unit expects lower sales due to rainfall.