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Good morning. Welcome to Gerdau's second quarter 2026 results presentation. I am Ariana Pereira, investor relations specialist. Joining us on this conference call are our CEO, Gustavo Werneck, and CFO, Rafael Japur. Please note that this call is being simultaneously translated into English. You can choose your preferred language by clicking on the globe icon at the bottom of your screen. During the presentation, all participants will be on listen-only mode. Then we will begin the Q&A session. Analysts and investors can join the queue by clicking on the raise hand button. It is worth noting that the forward-looking statements contained herein are based on the company's beliefs and assumptions based on information currently available. Forward-looking statements are not guarantees of future performance and are subject to circumstances that may or may not occur. I will now turn the floor to Gustavo to initiate the presentation.

Thank you, Ari. Good morning. In fact, good afternoon, all of you. I hope you're doing well. I really appreciate the opportunity to join you for another earnings release presentation. We will briefly discuss the highlights of the second quarter of 2026. I will also talk about the outlook for our operations. Then we will move on to the Q&A session. In the second quarter, we recorded growth in shipments both quarter-over-quarter and year-over-year, with a 7% increase in volumes in North America when compared to the same period last year. Resilient demand in the key sectors where we operate led to a 15% increase in adjusted EBITDA in North America in the second quarter compared to the first three months of this year, 2026. This strong result also reflects solid operating performance from our plants in the region.

Meanwhile, we posted a slight improvement in the results of our Brazilian operations in the second quarter, reflecting a series of initiatives focused on increasing the profitability and productivity of our operations in the country. This gradual improvement in results occurred amid continued pressure from imports, which despite having slowed down during the period, remain at high levels year to date. In this context, we await the outcome of the anti-dumping investigations into long and flat steel products, which are expected to be updated in the second half of the year. Finally, I would like to highlight the increase in our ownership stake in Dona Francisca Energética, which has raised our self-generated energy to more than 50% of Gerdau's consumption in Brazil. This move helps boost the competitiveness of our operations in Brazil. It is in line with our previously announced decarbonization strategy.

I will now turn the floor over to Japur, who will detail the financial highlights and the impacts of the current environment on our results. I will come back to you after that. Japur, over to you.

Thank you, Gustavo. Good afternoon, everyone. I'd like to extend a good morning to those of you who haven't yet had lunch. Good day to everyone. Let's start talking about our operating result. Our adjusted EBITDA, consolidated, was BRL 3.4 billion in this quarter, posting growth compared to both the previous quarter and the same period last year. With this, we are getting to our very best consolidated EBITDA since Q3 2023. Gerdau's adjusted net income also posted a substantial increase of 45% quarter-on-quarter, reaching BRL 1.5 billion, reinforcing the company's ability to translate operating gains of our business into returns for our shareholders. Therefore, based on these results, Gerdau S.A. will distribute dividends of BRL 0.23 per share, while Metalúrgica Gerdau will distribute BRL 0.11 per share.

We also continue to make progress on our share buyback program of Gerdau S.A., which is now 31% complete at the closing of Q2. Speaking a little about our financial discipline, it is important to highlight and stress that our financial discipline remains a priority. We ended the quarter maintaining a very solid balance sheet position with low leverage, with debt over EBITDA ratio of 0.69x in the last 12 months. This quarter, we maintained a positive free cash flow of BRL 237 million. You might claim that it was just too little a timid generation, but we have to put this free cash flow generation into context considering the typical seasonality of our business.

If we compare the first half of 2026 and how much free cash flow we generated comparing with the same period last year, first half of 2025, in 2026, we generated an additional BRL 2.3 billion in cash flow. This was mainly driven by both the growth in EBITDA, driven by the North American operation, as Gustavo mentioned earlier, and the reduction in our CapEx investments in accordance with the guidance that we released and communicated last year. Talking about CapEx, from a strategic perspective, we are nearing the start of operations for major projects that will enhance Gerdau's structural competitiveness, particularly in our Brazilian operation. Regarding the mining expansion at Miguel Burnier, we continue to make progress in line with the updated schedule that we released in our last earnings call, with the start of operations expected in the third quarter.

We are running a lot of equipment tests, and we should start producing ore. We remain confident that we will realize the projected operational and financial benefits of the project in the range of BRL 1.1 billion per year when we are in full ramp-up. In addition to investments made in energy, mentioned by Gustavo, we are about to open our new recycling center in Pindamonhangaba. This will increase our competitiveness and reduce our exposure to volatility of this raw material in the long term. With this, I would like to conclude by reaffirming our culture of always striving for operational and financial discipline, while simultaneously strengthening our competitiveness and allocating capital to initiatives and projects that will shape our future. We understand that we continue to grow, creating value in a sustainable way to our shareholders.

I will wrap up here and join you all and Gustavo for the Q&A session.

Thank you, Japur. I would just like to say that in North America, we continue to see steel demand at high levels, with a strong order backlog driven by solid consumption in segments such as renewable energy and data centers. One point of attention is the formal review of the USMCA, which is the commercial agreement between the U.S., Canada, and Mexico. In Brazil, we are seeing signs of more moderate growth in some consumer sectors, such as construction and manufacturing, while still facing an excessive influx of imported steel in the local market. This unfair scenario of imports continues to affect the profitability of our operations in the country, in this regard, we continue to invest in initiatives that strengthen the competitiveness and profitability of our assets.

I'll now turn the floor over to Ariana, Japur and I will be available from now on to answer your questions.

Thank you, Gustavo and Japur. We will now initiate the Q&A session. Our first session comes from Rafael Barcellos with Bradesco.

Good morning. Can you hear me? Thank you for this opportunity. Thank you, Ariana, Werneck, and Japur, for taking my questions. My first question is about a very hot topic with investors, which is the outlook for the next quarter in the U.S. You mentioned margin maintenance, whereas most of the market expected additional expansion, given all of the price increases we've seen in the U.S. market. Having said that, could you please give us an idea of cycles in the U.S.? How are you seeing the cycles operating in the U.S. market?

On our side, we see that the beginning of structured steel in the U.S., that's something that is coming quite strong. That draws our attention towards being more stable. I just want to know whether there is something that is non-recurring. I know that you had the maintenance shutdown in Midlothian. I just want to know how relevant that is, or whether that can explain this most moderate outlook. If you allow me a second question, we are also looking at the Mexican market, and that market is very strong, especially in the last few months. I remember that in the past, you mentioned a potential investment in the Mexican market. Could you please let us know whether it would make sense to revisit that plan or not? That would be great. Thank you very much.

Rafael, this is what I mean cutting to the chase.

Going straight to the point. This is a discussion that Japur, Yuan, and I have had in the past few days. But let me give you a more qualitative view. Japur, the guy that deals with the numbers, he can probably add some additional information to what I'm about to say. When you look at all of the elements in a very practical way, Rafael, what we see going forward, I mean the next quarter, and also taking into account the less price increases, we see a trend of margins going upward. There is no new element or any new risk that we could anticipate that is not well mapped out by you guys. I think that we are just being more conservative on the macro side. Is there really enough room to expand the margins? Will prices continue to escalate indefinitely?

Maybe we're being just more conservative or realistic, whatever name you want to give it. There will be a time when this will hit a ceiling. We can't just think about indefinite margin expansion. I think there should be a sustainable level. When you put everything on the table, you put price, you put our spread, cost equation, international scrap prices. If you look at the numbers, the raw numbers, you see that leads to margin expansion. But we are being more conservative, more down to earth. But I will allow Japur to come up with his own comments. We will have a maintenance shutdown at the Midlothian plant, but it will be in the melting part.

When it comes to shipments delivered and dispatch and the way we serve the market, everything is according to plan, so we do not anticipate any drop in shipments. Before I turn the floor to Japur, the Mexican market and USMCA negotiations are moving forward more on the technical side, but nothing close to approaching a final agreement. And our teams, especially the team in Mexico, they've been talking to the people at the Ministry of Industry and the federal government in Mexico. Topics related to steel and automobiles are going on now. I don't see the expansion of Chinese products that enter the U.S. market via Mexico. When it comes to low-cost steel production in Mexico and the insurance of automobile production in Mexico, all of these topics have led the discussion rounds.

There is nothing that would be a cause of concern. When I look at USMCA and the way going forward, I don't see any additional risk coming our way. I think that the way things are going will lead us to see more positive news rather than negative. As you said it yourself earlier this morning, we talked about that and Yuan and Japur and myself, we've been talking a lot about it. Now I think I'll give the floor to Japur to elaborate further.

Okay. Maybe I will repeat some of the points already mentioned by Gustavo, but I will do it in bullet points. I think we will have to answer this question a lot more during this call. First of all, when we think about the market, shipments, and price, we don't see any loss in volume due to the Midlothian stoppage.

We will continue to serve our customers. We are not anticipating any lack of supply to our current customers. Prices, I think we might have been a bit more conservative because there has been some price increases like on Friday and now Monday in North America. We still need to have some more visibility about prices in terms of prices being indeed put into force and half of our portfolio is earmarked to the distribution market where price changes occur more rapidly. There are other segments like industrial segment, manufacturing, and downstream. The speed of implementing prices is a bit different. The pace is different. Having said that, when we think about the Midlothian maintenance shutdown, there is an accounting figure.

It doesn't have any impact in terms of cash generation. When you have some equipment in downtime for a few days, there is some idleness in our lines. We have to allocate the fixed costs directly to COGS, the results of that year, because we were not producing semi-finished or crude steel during that period. At the end, this impacts the margins a bit. This does not hamper the unit economics or the order book perspectives going forward, and the stability we see with metallic spread that was expanding. It doesn't hurt scrap prices. This quarter, there was an important downtime in our largest unit in North America. I think we have to think about the glass half full rather than half empty because we're making investments to generate higher volumes in our main plant, in our main market.

I think this should be the overall conclusion when we think about this expansion in Midlothian, rather than thinking about whether this would be 1% more or less. At the end of the day, what matters is the long-term return from our investment in a market where we have the largest cash generation.

Perfect. If you allow me two other very quick follow-ups. Japur, I understand that when it comes to cost, it was not necessarily Midlothian that impacted the cost, but just natural inflation coming from energy costs that we see in the market in different industries. Midlothian, it's not so heavy in terms of cost. My second follow-up would be to Werneck.

I understand in terms of cycle, the sustainability of the cycle is a different story. When it comes to the peak, you probably see it getting close to the potential to increase metallic spread. Profitability is something else or sustainability is something that in fact will happen. This range is getting close to its potential.

Even if you go forward to 2027, the cycle can be defined the way we want it, and the main factors that have led us to see such relevant backlog, in our point of view, this will continue to be present because if you look at data centers, for instance, even though we were there in the U.S. when the debate started in Pennsylvania, New York, when they were talking about reducing or holding on the licenses to build new data centers because this will impact energy demand and water supply. This was restricted, and there is no other robust initiative that could stop the construction of new data centers. This is a path of no return, the backlog for this sector is quite strong.

With data center comes energy generation in the U.S., renewable energy, even though there was a concern whether this would be reduced in the current administration, but that was not the case. We are still producing steel for renewable energy, and this has been quite strong. Looking ahead in the next quarters, it doesn't seem to us that there is any imminent risk that could lead to a drastic reduction to our backlog or our shipments. I can even anticipate that, and I don't know whether Japur would have anything else to add.

Well, yes, Rafael, we do see a very one-off impact of that downtime in Midlothian in cost in the first quarter due to idleness.

Since I have no production in the melt shop for that entire period, all of the electricity costs, take or pay, gas and employees that work in the melt shop, I need to transfer that cost to our P&L. By doing so, without having production per se, on the cost point of view, it didn't change because would be there anyway, but this puts a burden on the cost for that quarter. Once again, this is just a temporary effect, non-recurring effect, and we believe it will be around BRL 100 million to BRL 150 million. Maybe we are just being a bit conservative looking at other market aspects as we referred to earlier on. We are also taking into account the impact of the costs in the overall results of the operation. There were other inflationary impacts throughout the second quarter, like freight.

On average, there was about 8.5% additional freight expenses in North America when compared to the first quarter. This happened in the second quarter, mostly due to fuel issues, and this has to do with the conflicts in the Middle East, we believe that these effects will still remain going forward. It's not due to other cost inflations, but something very much related to Midlothian and the maintenance downtime.

Perfect. Thank you very much. Well, we thank you. Thank you. All the best.

Next question from Caio Greiner with UBS.

Hello. How's everybody doing?

Hi, Caio. Good afternoon.

All good here.

I'd like to have a quick follow-up question to Rafael's before I ask my own Japur, let me know if I understood you correct. You are not yet considering the implementation of the two latest price increase announcements that you made last week and this week. Is this correct? We could expect expansion.

You are correct. Yes, you are correct. We haven't yet fully considered these two price increases in special steel and beams that happened last Friday, and we are following our competitors. It's August the 5th, we already had the month of July, we had a price increase, which is not retroactive. It has a date when it will take effect along the month of August. It will have a not full effect on the portfolio. In addition to the different channels which I referred to earlier, it's not fully captured in our outlook. Putting it differently, there is an upside risk, which is not negligible in this outlook.

Okay, clear. Thank you very much. Now let me move to my two questions. One is about capital allocation and the other one about Miguel Burnier. First, capital allocation. Japur, it drew my attention that point on net debt. Net debt close to BRL 8 billion now in Q2. We remember your target of having a net debt over EBITDA ratio close to 1 time. Your EBITDA for this year, BRL 12 billion or BRL 12.5 billion, BRL 13 billion. For next year, BRL 13 billion, BRL 14 billion. It seems your net debt is at a very conservative level. I'd like to understand how you're thinking about capital allocation and indebtedness.

If this target ratio of 1x should still make sense to us, if that is the case, how do you intend to re-leverage the company to reach that target? That's number one. Second question about Miguel Burnier. You mentioned the start up starting and you will start a ramp-up process. The iron ore market is more under pressure. The prices have dropped a lot. I'd like to understand the economics of Miguel Burnier for 2027. Do you have any updates on EBITDA generation and whether in 2027 we should see the operations running in full steam? Whether the account or the calculation changes?

Okay, let me try to address this in parts, starting with capital allocation. A slight correction. When we talk about our net debt, our formal policy says that the limit of leverage is 1.5x.

In practice, we feel uncomfortable to be above 1x net debt over EBITDA ratio. Please keep in mind that this is a limit, not a target. We are not in a hurry. We don't really have a need to say, "Oh, we are at 0.69. We have to leverage another 0.31 to reach the target." We don't have that mindset. Now, it is true that with the reduction in CapEx disbursement and with EBITDA expansion, we have a free cash flow generation to equity, which is greater than what we had before. This is translating into more dividend payout, more share buyback for our shareholders, and a reduction of the net debt. Not just because of the reduction of net debt itself, but a reduction in leverage because of the expansion of EBITDA. It's the EBITDA factor, not the net debt factor.

That is our preference. As several analysts have highlighted, we have a significant consumption of working capital this quarter, both because of the price increases we had in the U.S. and also the price changes we had here. The price increases here in the Brazilian operation at a lower measure, but they happened. We expect to have a free cash flow release in Q3 and Q4, given the typical seasonality we have. Typically, these are the quarters when we release more cash flow and working capital. Also given the downtime at Midlothian, we accumulated an inventory of finished and semi-finished goods. When we finish selling these inventories, we'll have a release of working capital. We maintain our preference to continue to remunerate our shareholders via dividend payout or via execution of our share buyback program when we think about capital allocation.

As for Miguel Burnier, when we had our estimates, our latest estimates that we communicated to the market, we always worked with a benchmark iron ore price close to BRL 90 per ton. Not considering 105, 106, 110 that we saw happening. There might be some adjustment. I am more concerned about executing the ramp-up well so that we can deliver the cost we proposed in the project when we designed the equipment and sized our operation about BRL 30 per ton of cash cost, delivered at the Ouro Branco unit. I think that at this point, we are more focused on the quality of our execution and on our operational discipline rather than on the international price.

At this point in the call with the press, we got some questions whether we have sold the ore, whether we have been selling the ore. I would like to highlight to the analysts that we have not yet any pull through or pull forward or sale of ore. Our main focus is the ramp up. First, we have to ensure competitiveness and the cost of Ouro Branco. Later we'll sell the surplus. If everything unfolds according to our current schedule, we should be completing the ramp up by year-end, start of next year. Enjoy a full benefit for this business over 2027 if we manage to deliver the cost that we proposed.

Thank you.

Thank you, Caio.

Next question from Caio Ribeiro with Bank of America.

Hello. Good afternoon. Thank you for the opportunity. My first question would go back to capital allocation.

I'd like to explore with you the analysis of new projects and what is your priority order today. What is the timing for the approval of new projects? How should we think about a CapEx trend looking forward, particularly comparing maintenance CapEx and expansion CapEx? Secondly, looking at the behavior of lead times in the U.S., they continue at very high levels despite price increases of long steel that you have been announcing and other competitors as well. This suggests that the demand is becoming more inelastic. I'd like to explore with you how significant is this data center component for you, both directly and indirectly considering related investments. What is the growth that you expect in the future? Whether the order backlog perhaps should change?

If you see there is a risk of metal spread contraction given increased imports, given that the price spread in the U.S. domestic market versus the external market has been increasing. These are my questions. Thank you.

Thank you. Thank you for the questions. They are great questions. Capital allocation. I'll pass that to Japur for a full answer, adding to what he has mentioned about this before. The way I see capital allocation, we have to think about CapEx. If there is no significant change in what we're expecting in the future and considering what we have been saying before, we will continue to invest over time at a CapEx level that we consider to be healthy and sound. Most likely the current levels of CapEx. What are the big themes coming? The maintenance of the blast furnace one in Ouro Branco and the coking.

Perhaps we wouldn't need to have a CapEx peak to deal with that. Good news is we have had some technological and technical alternatives for us to increase the lifespan of the coke plants and the blast furnace. We have been postponing the date of the downtime. We have been acquiring a level of knowledge of operation of an integrated mill that we didn't have before. The history of Gerdau was very much based on scrap. We master scrap. Blast furnaces are more long-term operation considering a longer lifespan of the equipment. I think that we have evolved a lot in our knowledge. Also learning from JFE in Japan and other parties. Eventually, we'll have to stop Ouro Branco, we'll have to have an inventory of billets. We won't impact the market.

I think that the postponement of downtime of these two important assets for us will allow us to dilute CapEx in the future. United States. I would say that what we are facing in Brazil now, we faced eight, nine years ago when we debated EBITDA margin of around 6%, 7%. We had a significant transformational process with divestiture of assets with the right investments in the right places, broadening the portfolio of our products in that concept of a one-stop shop. I think that we are now reaping the fruits of important work that we did in recent years. Of course, the current administration has created the right opportunities, but had we not prepared, we would not be able to enjoy these opportunities. Now with the Midlothian downtime, I think will end a relevant cycle for us.

Now we'll have to analyze calmly what the next steps will be in the United States. We are not consolidating anything at this point. In Brazil, we'll continue to go through a transformation kind of similar to what we had in the States. The need for CapEx, the need to build new plants, to have more significant transformations or reforms. I think that this will come in the coming years, but diluted over a timeframe that will not give us an unexpected peak of CapEx needed that we will not be prepared for. We will not leverage the company more to have more CapEx because we don't want to create difficulties. Also, there's another point about this. When you want to do a lot of CapEx, you start entailing civil works, electromechanical assemblies. That investment that we mentioned earlier at Miguel Burnier.

That was the maximum CapEx management. What was the problem? What was the delay reason? Electromechanical assembly and civil works. That's how difficult it is to make this kind of investment in Brazil. Now I turn the floor to Japur to say anything else about capital allocation. Japur can start talking about the lead times, and I can add to that later.

Right, Caio. We had our guidance of about BRL 4 billion, 700 million. We have a pace of disbursement, which is slightly below the guidance. Everything leads us to believe, as Gustavo mentioned, that given the focus we now have on the Brazilian operations, a focus on our more competitive assets, and to seek some optimizations.

Given the extension of the lifespan of our assets in Ouro Branco, we understand that we might have room actually to reduce the maintenance CapEx guidance of around BRL 3 billion per annum from now on. Having said that, we understand that an eventual reduction of the guidance of BRL 3 billion per annum for maintenance CapEx, a possible reduction of that yearly amount. If that reduction happens, the difference will not be used to reduce our net debt or remuneration of our shareholders. We understand that we will have minor maintenances, the right path would be to continue to reinforce the competitiveness of our operations here in Brazil, in Latin America, and in North America. If we think about the total CapEx disbursement guidance between BRL 4.7 billion, considering a reduction to close to BRL 4 billion in the coming years.

These possible reductions, we expect that we will have to spend less in maintenance, so we will invest more to be competitive and to transform our business in the long term. I think that overall, that's the philosophy we're having right now. We understand that an investment of this order of magnitude is capable for bringing us good investments with excellent long-term returns. As regards the U.S., I think it's hard to say that demand is inelastic. I do think that there is an important component of time to execute, and in that regard, metal construction is a solution which is much superior than other constructive models, and this is seen in the U.S. There's greater demand for metal construction.

If you want to build a data center in two years or in six months, and that's totally different in terms of speed for a rollout of new models on account of these hyperscalers that provide service to AI companies. I wouldn't say that demand is inelastic in that regard, but I would say that we are at a moment which is unprecedented, or we would have to go back in time a lot to see such a robust and resilient demand for metal construction in North America. Gustavo, anything to add?

Well, what I can add is the issue of imported goods in the two main segments where we operate in the U.S., structural beams, merchant bars, and beams. For beams, penetration of imports is marginal, very small. It's hard for these large merchant bars to be imported in different gauges, so there are no imports.

Now, we have the merchants, structural profiles, commercial profiles. They are lighter weight, and those are the ones being imported. Now, when talking with our customers, they're in such a hurry to execute things over there that they get worried to import goods and have to clear customs and delayed ships. The risk of imports is not creating a lot of momentum. Let's get a practical example. Let's get Texas. The need to build transmission towers in Texas It's creating a sense of urgency. People are getting almost desperate to get steel to build these transmission towers. The customers, in the very short term, they want to buy the steel that is ready to be delivered and shipped. The speed of this kind of business is not really encouraging a lot of imports. The system, I believe, is well-controlled.

Please keep in mind that before this boom of energy and data centers, we already had a strong backlog. We already had margins which historically were high and boosted by what we talked about, the structural bill finally is translating into new projects of infrastructure. We see this happening in the U.S. Other U.S. federal government decisions like the CHIPS and Science Act, construction of new semiconductor plants, there are about 40 plants that we are supplying to. There's strong demand, more sustainable demand in the process of re-industrialization over there. All of this, it gives us some peace of mind that our backlog is solid. Not everything is positive. There is a concern in the automotive industry. Because of affordability, there's a delay in the renewal of the U.S. fleet.

The U.S. fleet is aging a bit. That business is facing a little bit more difficult to take off compared to the other ones I mentioned. This will not last forever. Penetration of Chinese-imported vehicles is almost nonexistent in the U.S. I think that eventually we're going to have a higher demand for special steels because cars don't last forever. The fleet needs to be renewed. Of the segments where we operate in the U.S., this is what we are seeing, and that's where we see a little more difficulty. My expectation is that over the next quarters, the business will ramp up again.

Lastly, to your question, Caio, you understand that if we continue to see overheated demand for our products, if we have any kind of slowdown of industrial production, there might be an upside risk of scrap by year-end because there's always a seasonality involved. There is less industrial production. We might have some difficulty in the scrap yards because of the individuals, they find it harder in wintertime to go and deliver scrap. That's something to be monitored. We've seen some stability in a good part of the year regarding scrap price, but this is a time of the year when typically we see some seasonality because of the weather. It is super clear.

Thank you very much, Werneck and Japur.

Thank you for the questions.

Next question from Ehiki Marks with Goldman Sachs.

Hi. Thank you for taking my questions. I would like to change gears now and focus in Brazil. In your outlook, you talked about margin expansion for Brazil, but with flat prices. Considering the cost lag that we usually see in this industry, I had understood that there was already some kind of increase coming in the third quarter. Is there any initiative to offset the higher cost of raw material that should have been already contracted? What is the main driver that will lead to margin expansion in Brazil? My second question is, looking at the long-term Brazil strategy, I believe that last time you talked about changing the way you operate in Brazil. You probably anticipated more radical changes when compared to that of the U.S.

Thinking about the current demand situation in Brazil, imports still increasing. Both steel and indirect steel demand is slowing down. Some people are having a hard time to be competitive. On the other hand, you see a very strong U.S. market with very high margins, and it seems like this is here to stay. The question then is, what should we expect from all of these changes? Is there any room for you to rethink your footprint in Brazil and your industrial capacity in Brazil, or maybe to expand or increase your capacity in the U.S.? Do you have any target in terms of results target or whatever you think you need to have? What you anticipate for Brazil, structurally speaking?

Well, this is a very good topic for us to discuss now, Ehiki. When you look at the number of problems we have in Brazil and things that are coming forward, you see there is the entry of imported goods, increase in energy prices, and now with this geopolitical issue between Brazil and the U.S., our customers are no longer exporting to the U.S. This is not how we work. This is now how I work or Japur works. Therefore, we are looking into a long-term landscape where internal competition and the entry of imported goods will be very similar to what we have here today.

We cannot for to design Gerdau in the future, thinking that we think that the inflow of imports will go down to 11%. If things get better, as they improve in the U.S., we may reap better results when compared to what we have now, then we will certainly overcome all of the difficulties of the Brazil cost, and we will find a way to compete in Brazil like we've never done before. We are working in that direction. Some of the things we are not expecting or anticipating, but if you look at the past few days, we made an announcement in Recife related to the readjustment of our capacity in that mill. We will no longer produce steel or road products in that geography. We will send you that macro plan.

All of the shutting down of capacities to adjust to the new volume capacity, to the volume numbers, everything has been done, and now our footprint is in line with the current demand. Just like we did in the U.S., there will be a significant change in the way we operate, in the way we compete as well. I don't want to jump the gun right now, but we are working diligently, in a few months' time, when we call you again, in addition to our earnings result, we will call you up so you understand this plan more clearly. We are considering the future scenario for Brazil, which is much tougher than what we have right now. If in the short run, we have other mechanisms of trade defense, like anti-dumping, and if there's any consolidation going forward, we will probably reap the benefits.

We will compete more intensively in Brazil when compared to our position in the past. This is how we see things. Miguel Burnier is a clear example of our move. Now I'll turn the floor to Japur, who can talk about the short-term initiatives.

As Rafael said it earlier, the topic of this morning's debate was the U.S. outlook, but there is also the outlook for Brazil, whether there is or there is not an actual possibility of expanding or having different results. I think that we should also give a response about Brazil, just like we did for the U.S. in our outlook. Well, Ehiki, we don't see any effective improvement in unit prices. On the other hand, we see a better sales mix with some recovery on the side of heavy vehicles in Brazil.

According to ANFAVEA data, heavy vehicles are quite important to our special steels division in Brazil, or segment in Brazil. From the first to the second quarter of this year, we saw a mix improvement with higher shipments in the domestic market. When we take into account the fact that in the third quarter of the year, we will possibly have in Brazil four more business days when compared to what we had in the second quarter, probably we will increase productivity, and the numbers will be better when compared to the second quarter. Since we are talking about very tight margins in Brazil, these minor things are important to help our results. As Gustavo said, this requires very diligent cost work. In the fourth quarter, we will see cost reduction effects in Ouro Branco due to the ramp-up of our expansion in Miguel Burnier.

Thank you. That's great.

Thank you, Ehiki.

Next question from Daniel Sasson with Itaú BBA.

Hi, good afternoon, and thank you, Ari, Rafa, and Gustavo. I hope everything is fine with you. Yes. My first question, everything has been quite clear when you said that you were being more conservative when it comes to your margin guidance in the U.S. because there is room for further improvement if price increases are fully implemented. Is there anything else in addition to metal spread, because it only considers two variables, price and scrap, or maybe something that could concern you going forward to the third quarter, like higher fuel prices in the U.S., freight impact, or things that sometimes are not captured in this guidance in relation to metal spread?

Still speaking about the U.S., you talked a lot about the fact that you're preparing the company with inventory to accommodate for the downtime in Midlothian. Do you have any public figure or any range of figures in terms of what would be the effective cost given the idleness that we should anticipate for the third quarter? My second question refers to capital allocation and CapEx. You said that you were running slightly below the 4.7 guidance for this year. 55% of your CapEx is denominated in US dollars, that probably helps to explain it. Going forward, I know that you don't have any official guidance for 2027 and after that, but Rafael said that probably that $3 billion in maintenance should be slightly lower.

The delta that you use for competitive projects, you talked about CapEx with the conclusion of important projects would be probably lower next year, probably closer to 4 to 4.5. Does it make sense to still bear that in mind, to keep that in mind, or is there any given thing that changed?

Okay, I will start. Speaking about short-term and lower risks and logistics, I think this reflects the reality. If you visit one of our mills and if you talk to an operator, then you ask them, "Where does that get you?" The first answer is supermarket prices.

They said, "I used to pay BRL 70, but today I'm spending BRL 100 every time I go to the market." This is impacting U.S. consumers, and this has its implications in the business world because there is pressure coming from freight costs, then energy costs. This doesn't mean that we have any managerial risk that it will be up to us to manage. When it comes the time that we would have to make increases, we will try to mitigate going towards reducing costs. We are talking about the inventory of billets related to the downtime. Our maintenance downtime in the U.S. is better than that of Brazil. The cost of downtime is much lower in Brazil than there. You know all of the reasons behind that.

Even then, since every ton matters now, in the past few weeks, I was in the U.S., and every time I visit them, "Please don't lead us to any scarcity of products." Products have to be available, and any ton can really affect our customers. This risk is already managed. A few months ago, we decided to work with an inventory level slightly above what we imagined before. This is a risk that is closely monitored, and I believe that through the methodologies that we know, we manage risk, like everybody else does. I think so this issue is well managed. If I have to think, you say, do I have to think about anything that I haven't yet mapped out? I don't think so. I think everything has been laid down.

Japur will talk about capital allocation, and he can also talk about anything else he bears in mind about the U.S.

Sure. We believe that there is still 150 million barrels of idleness. It's not CapEx, but it's OpEx related to the Midlothian downtime and expansion. Rather than, there is nothing specific in addition to what Gustavo already mentioned. Now related to CapEx, yes, we believe that there is still room to reduce further, BRL 4.7 billion, maybe it would be BRL 4.5 billion. Something in that range. Right now, we don't believe that this number will be much lower than that because if we decide that it's not so important to have maintenance CapEx, maybe that's additional, that surplus disbursement space will be earmarked to productivity, mainly focused in costs for Brazil and North America as well.

We are growing, we are also investing in downstream in the U.S. If you look at quarter-over-quarter, we posted two-digit growth in our shipments in North America, this certainly leads to higher margins when compared to what we had in the past.

Perfect. Thank you very much, Rafael and Gustavo. Thank you. All the best.

Ari, over to you.

Next question from Gabriel Barra with Citibank.

Hello, Werneck, Japur. Hi, Gabriel. How are you doing?

All good here.

Thank you for taking my question. I have two points. I think we've spoken about many important topics. There are two things I'd like to understand more about. The first, as you mentioned, there are a number of projects that we should see as building blocks for EBITDA. They are important building blocks for EBITDA and next year's cash generation. Three major projects that should reasonably well improve cash generation and the company's EBITDA in the coming year. One of them, perhaps the most mature of them, is Ouro Branco. When we look at volumes, we haven't seen volumes effectively impacting the earnings of the company. Looking at the future and at the other projects, what is your perception regarding Ouro Branco flat steels?

How is this evolving? How is this helping EBITDA and EBITDA margin of the company so we can understand the impact next year? Second point, we spoke a lot about capital allocation in this sector that is going through more difficult times. We see Gerdau deleveraged, generating cash with a positive trend, improved margin. When we look at next year, there are two points. We'll start the year with a CapEx that will be much lower than this year. Not so many growth projects as we have seen in the last two years, in the past for that matter, and with an expectation of divestiture of assets. That's a point that we have been discussing with investors and in some past conference calls because this could lead to an additional cash generation for the company next year.

When we put it all together, how should we think about cash generation considering lower CapEx, a greater cash generation, a deleveraged company? Should we expect much higher dividend payout next year? What are you thinking regarding all that, considering all of the factors involved in my question?

Good, Gabriel. I'll start saying that there is a relevant building block to be resolved in the coming years, which is exactly the one you mentioned, Ouro Branco. The equation of ore is resolved. Coal, our coke plants are very stable. The assets are operating really well. There is a structural issue in Ouro Branco. We can call it a building block. It will be sorted out in the coming years, although I don't have a definitive answer in terms of the how.

Which is volume produced at Ouro Branco, which historically was and is geared for exports to the international market. Ouro Branco still has a mismatch between production of crude steel and the production of rolled products because for many, many years, we used that additional capacity to produce semi-finished goods to serve other rolling mills in Brazil in moments of demand peaks. When there were no demand peak, we would export the semi-finished steel and as a rule of thumb, always with contribution margins, oftentimes with positive margins. The world has changed. Just like we have a lot of penetration of steel in Brazil, we are finding over the years fewer and fewer opportunities to export. The question that arises from it is, what are we going to do to solve the problem? The problem will be solved. I haven't got a final answer to give you.

It is being considered in this transformation work that we are doing. We'll have to solve it because an integrated mill with two blast furnaces, with that production that dilutes fixed cost, I cannot be producing at that mill with a lower volume just geared to the domestic market. An integrated mill does not work that way. We will need to look for one or several alternatives over the coming years. We have been debating this internally to direct this volume, which historically was allocated to exports. We made a decision that we are no longer going to do that. We will find alternatives to allocate that volume to some other alternative that will bring us greater profitability.

Hello, Gabriel. To continue Gustavo's answer, I think we have to think about our target, our objective. We had the start up of our HRC mill in Ouro Branco.

It started up at a very poor timing, and we had some problems, and we talked about it in previous conference calls, and we had a lot of imported material coming to Brazil, which really lowered the prices in the domestic market of Brazil. We really have confidence in the technical work that is being done at the Ministry of Energy in terms of the claim for anti-dumping measures against hot-rolled coils coming from China. We're going to have the DECOM return in the end of August, and hopefully the investigations will be completed by year-end, and we'll have the effects of the anti-dumping measures.

In terms of benefit and expecting a better result in the long term in the Brazilian operation, this will come by the replacement of volumes that were exported elsewhere in the past, and it will be geared to the domestic market with better margins. If we look at our competitors in flat steels, competitors that are listed, they are not having good margins. We envision that in the long term, with the investments made, with the expansion at Miguel Burnier, with access to more competitive raw materials, with better quality, with a state-of-the-art rolling mill operating, all of that will give us competitive gains that will lead us to the expected and desired results next year.

If we think about Miguel Burnier scrap processing in Pindamonhangaba, and the Midlothian expansion project. We have a portfolio of projects that should potentially generate about BRL 1.4 billion, BRL 1.5 billion additional per annum when these projects are in full operation. That's where the results improvement will come, in our opinion. We're not focusing on price increases or market increase. We are working in-house to look for solutions to address this chronic problem we have in Brazil of low earnings. It is hard to project what you asked about potential cash generation considering possible divestiture of non-core assets of Gerdau. I think it's way too soon to talk about it. Perhaps in 2027.

For the record, when we look at the proportion of free cash flow that the company has been dedicating in recent years to our shareholders via dividend payout or share buyback, I think that this speaks for itself in terms of our commitment, i.e., when we have available cash generation, we return this to our shareholders in the most efficient way possible.

Super clear, Japur. Just a quick point, and please correct me if I missed something. You spoke about a one-time ratio, you feel comfortable below one time. Is there any floor of leverage that should guide us in the next year, given the cash generation to guide us in possible dividends and share buyback?

Well, structurally, Gabriel, we don't aim to be a cash net company.

With the interest rate environment in Brazil, this would be an excessively conservative approach for the balance sheet of the company. The fact is that today we have an objective situation in Brazil where we are accumulating losses since the second half of last year in Brazil. You could advocate, why don't you get more leveraged when actually I am not doing anything with these deductions. I am generating a loss that will be offset eventually in the future. We are not generating any tax profit in Brazil, unfortunately. I think that this leads us to be somewhat cautious when we think about changing gears and leveraging the company. Last year, we had a significant distribution to our shareholders, dividends, and share buyback, even though we generated little free cash flow over 2025.

We ended up increasing our leverage to continue to remunerate our shareholders of the around BRL 2 billion that we increased in leverage, BRL 1.7 billion. Of the BRL 2 billion we distributed, BRL 1.7 billion was by increasing the leverage. We understand that we should not pursue that path. It's better to have a deleveraged balance sheet, particularly with interest rates scenario in Brazil, with real interest rates, which exceed a lot the real growth rate of the economy.

Super clear, Japur. Thank you very much.

Thank you, Gabriel.

Last question from Leonardo Correa with BTG Pactual.

Hi, everyone. Good afternoon. Werneck, Japur, Harley, all good with you? Just quick questions. I know we're getting to the end of the call. Everyone is hungry so I think I have two questions that perhaps are still pending answers. Still about the United States. USMCA, Werneck.

You talked about this in the beginning. You talked about the outlook. About five, six months ago, the big risk for the U.S. Operation was an order down due to USMCA and more volume from Mexico and Canada. Negotiations have started with Canada. It seems that things were a lot more difficult and still nothing changed. In Mexico, the conversation has been to reinforce tariff barriers in Mexico to equal the 50% tariff that the U.S. has in Mexico. It seems that the conversations for steel are much better than expected. That risk that even Wang and you mentioned as the key risk, at least to me, this risk seems to be a lot lower than some months ago. I just want to confirm whether I got this right. Does this make sense, or is it too soon and we should wait?

Second point for years and for quarters, we have been discussing the zip code effect at Gerdau. By definition, you are always evaluating the operations in corporate topics and so on and so forth. I know that this topic, this kind of move to unlock value in the U.S. kind of slowed down given this significant valuation gap between two assets, Brazil and the United States. I understand that there is very little or zero being discussed at this point. Is this true, Werneck, or is this still an operation you continue to study and assess? I would just like you to elaborate on that. You don't have to give us a very long answer.

All right, Leo, let me address the first one, and Rafa will answer the second. Over there in the United States, nothing is linear.

We can debate for hours on USMCA. At the end, nothing can come to fruition. What's happening today? No one is calling us to discuss USMCA right now in the United States and Canada. We were involved in the Mexican part. Every week, we get invited to debate industry-related topics, particularly automotive steel in Mexico. We go there every week to participate with Mexico. The conversations are moving to a technical level, which hadn't happened before. The melting pool, steel going into the U.S., whether it should be cast in Mexico or not, this is the current debate. Regardless, I strongly believe that the possible changes to happen in the USMCA agreement will continue to benefit, can benefit us even more. I don't dedicate so many hours at this point to study this more in-depth than what we have done already.

I think it's under control. I think it's kind of distant. We're very much involved with Mexico. We are always called, always invited. We're participating practically every week. I sometimes have to go there to debate, or we align it with Japur. On the U.S. and Canada sides, they haven't invited us to debate because I think that the U.S. has other biases in this negotiation as we speak. About the zip code, I'll let Rafa answer.

Hi, Leo. Again, we are always actively evaluating opportunities in our corporate structure, both what the market sees and what the market does not see. We had a significant change in the past year. We changed our structure in Spain to give us more flexibility to distribute dividends, not just in December, but in other months without having withheld income tax, which is important.

Effectively today, we don't have any action plan or any studies being conducted to implement an important corporate structure change or relisting, spin-offs, or carve-outs of our assets in North America.

Excellent. Thank you very much, Japur and Werneck. I'd like to thank you.

Ari, over to you.

We just concluded the Q&A session. Questions that were not answered, our IR team will be available to answer them further on.

Well, thank you all very much. Well, very briefly, as Leo said, everybody I think is hungry, so we're not going to hold you any further. But on our hand and on behalf of all of us, I would like to thank you so much for joining us, and I would like to invite you for our next earnings release presentation related to the third quarter of 2026 on October 27th. Thank you so much. I wish you the best, and take care.

Welcome to Gerdau's first quarter 2026 results presentation. I'm Ariana Pereira, Investor Relations Specialist. Joining us on this conference call are our CEO, Gustavo Werneck, and CFO, Rafael Japur. Please note that this call is being simultaneously translated into English. You can choose your preferred language by clicking on the globe icon at the bottom of the screen. During the presentation, all participants will be in listen-only mode. Then we will start the Q&A session. Analysts and investors can join the queue by clicking on the raise hand button. It is worth noting that the forward-looking statements contained herein are based on the company's beliefs and assumptions based on information currently available. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that may or may not occur.

Now I'll turn the floor to Gustavo to begin the presentation.

Hello and good afternoon. I hope that you're all well. I thank you very much for this opportunity to join you for another earnings release presentation. We will briefly discuss the highlights of the first quarter of 2026. We will also talk about the outlook for our operations, and then we will proceed to our Q&A session. For one more period, we posted strong results in North America. Between January and March of this year, we posted the best-Adjusted EBITDA for our first quarter since 2022 in our North American operations, which accounted for 75% of the company's consolidated EBITDA. This performance results from continued strong local steel demand, driven by consumption in segments such as data centers, infrastructure, and solar power, as well as the sound operating performance of our operations in the region.

Meanwhile, in Brazil, the domestic market remained under pressure from excessive steel imports, whose volume rose 4.2% in the first quarter of 2026 when compared to the same period of the year before, reaching a penetration rate of 22.7%. Against this backdrop, we continue to closely monitor potential developments in the anti-dumping investigations regarding long and flat steel products, which are expected to be updated in the coming months. This scenario of unfair imports has impacted the profitability of our operations in the Brazilian market. I reiterate that we are investing in initiatives that strengthen the competitiveness and profitability of our operations in the country. We have even seen a recovery in EBITDA for our Brazilian operation in this first quarter as a result of this strategy.

Finally, I would like to highlight that we recently introduced Gerdau NewEco to the market, a low carbon steel solution developed to support customers seeking to advance their decarbonization journey and strengthen their competitiveness in the transition to a low carbon economy. With the launch of this new line, we now offer a complete portfolio of products with a lower carbon footprint for steel consuming sectors in general, like the automotive and construction industry. I will now turn the floor to Japur, who is next to me, who will give you more details on the financial highlights and the impact of the current scenario on our results. Then I will conclude with some brief comments, and we will jump to Q&A.

Thank you, Gustavo. Good day, everyone. It's always a great pleasure to be here with you today in another Gerdau earnings conference call. We started 2026 with BRL 1 billion of consolidated net income, 50% up compared to the previous quarter, 34% above the same, or compared to the same period in 2025. These results were driven by sequential growth across all our business segments, particularly our operations in North America, which continues to gain prominence, as Gustavo just mentioned. In Brazil, on the other hand, despite the decline in apparent consumption of long steel products, our main market, we achieved a higher EBITDA margin than in the previous quarter, a lot thanks to our cost discipline. Therefore, we recorded EBITDA of BRL 3 billion in Q1, 2026.

Well, we were talking about our operations in Brazil, even with a decline in apparent consumption of long steel products, typically our main market. We achieved a higher EBITDA margin compared to the previous quarter, a lot thanks to our cost discipline. Thus, in consolidated numbers, we ended in EBITDA of BRL 3 billion in Q1, with an EBITDA margin of almost 18%.

We ended the month of March with a leverage of 0.74x net debt over EBITDA ratio, a level we consider extremely sound and in keeping with our financial strategy and policy. In the first quarter 2026, we recorded a free cash flow of BRL 16 billion, even in a period which typically consumes cash due to the replenishment of working capital and also the end of year maintenance shutdowns. Compared with the same period of 2025, we generated BRL 1.3 billion more in cash. This reflects not just the substantial improvement in our EBITDA, but also the substantial reduction in the pace of CapEx investments compared to previous years. This does not mean that we are not investing in our future. Until the end of 2026, I'd like to remind you.

Again, stressing what we have talked about in our previous earnings calls and Investor Day. Gerdau should complete three very significant projects for Gerdau. The mining expansion in Miguel Burnier, the scrap processing center in Pindamonhangaba, and the first phase of the metallurgical expansion in Texas. Together, these projects have the potential to add nearly BRL 1.5 billion to our annual EBITDA when the ramp-ups are complete. Lastly, we remain steadfast in our commitment to creating value for our shareholders. This quarter, Gerdau S.A. will distribute BRL 0.18 per share in dividends, while Metalurgica Gerdau will distribute BRL 0.08 per share. In addition, talking about Metalurgica Gerdau, we just approved the launch of a new share buyback program covering up to 10 million preferred shares, which today amount to approximately BRL 100 million at current market price.

I'll wrap up here, and I'll join you again during the Q&A session. Thank you.

Thank you, Japur. To end, I'd like to say that in Brazil we see signs of a gradual recovery in domestic demand, particularly in the construction and infrastructure sectors, following a more intense seasonality or seasonal slowdown at the beginning of the year. We still face an excessive inflow of imported steel into the local market. In North America, meanwhile, we continue to see steel consumption stable at high levels with the order backlog above historical averages. We continue to monitor developments regarding Section 232 and the formal review of the U.S., Mexico, Canada Agreement, USMCA, scheduled for the beginning of the second half of the year. We'll now turn the floor back to Ariana and Japur. I will be available to answer your questions and address your concerns. Ariana?

Thank you, Gustavo and Japur. We will now initiate the Q&A session. Our first question comes from Ricardo Monegaglia with Safra Bank.

Good morning, everyone, and thank you for taking my questions. It's always nice to talk to you. I don't know if you can see the screen. You can see me on the screen. First, I would like to congratulate the performers in Brazil. It was a very pleasant surprise, both for me and also in my late conversations with investors. I would like to go on with that topic of productivity in Brazil. You're talking about a new wave of improvement that is not coming from, you know, closing capacity, but more efficiency and cost reduction. I would like to give you this opportunity to tell us what are the main levers that you see today. I wanna know whether, you know, this includes logistics, mining, industrial productivity.

This is a very broad question, but I think it's also very relevant for the current moment. My second question, in terms of capital allocation. I see that there's still some differences between what the market expects in terms of CapEx for 2027. I would just like to confirm with you. Given the fact that you already delivered the mining project and with other very competitive projects being, you know, more clearly outlined and CapEx being lower, does it make sense for us to expect that next year's CapEx would be closer to the level of depreciation? Mainly considering that the company's priority is to be very disciplined in capital allocation and cash generation. Thank you for taking my question.

Ricardo, no, we cannot see your camera, but we could hear you loud and clear. I will talk about competitiveness in more general terms, and Japur can give you more detailed numbers, and then I can add, you know, if necessary. Also Japur can answer the question about CapEx. Well, in general, Ricardo, the evolution of our margins in the first half of this first quarter of this year, they stem from initiatives that we control. We still see that there is still room to seek for further cost competitiveness. In Brazil, we serve all corners of the country, from the south to the north.

In terms of logistics, we have lots of opportunities because we take the materials from the mills and we take to more than 70 locations, we deliver to construction stores. Therefore, the maximization of our equation competitiveness versus cost hasn't reached its limit yet. We see opportunities to go forward, so we will certainly pursue all the possible opportunities. On the other hand, looking ahead, there is also a pressure over costs, especially in terms of the energy grid, and this conflict between U.S. and Iran has led our main input providers are constantly ask us to negotiate prices. At the moment, we are negotiating with our customers, trying to find a solution where they could probably, you know, transfer part of the cost to several segments.

Going forward, we still have the benefits coming from capital allocation and investment and CapEx of projects that we are, you know, doing in Brazil. Japur can give you more detail, competitiveness in terms of scrap and the investment in the Miguel Burnier mining project. There are many things to look forward to going forward, but we are very much, you know, confident of things that we have under our control. For next quarter, we want to continue in our, you know, reduction cost trajectory, and we are putting all of our efforts to accomplish that. We do not expect any margin or radical cuts. Gradually, we believe that we have all it takes to improve our margins. Without even considering the trade defense measures, especially concerning, you know, flat steel anti-dumping measures.

We believe that this could bring a new reality to the sector starting the third quarter of this year. This is my general view on the topic. Now I turn the floor to Japur to elaborate further or to give you more details. I would also ask you to answer the question on CapEx.

To give you a little bit more light, we are thinking about two major projects that should be delivered from now until the end of the year. One is in mining in Miguel Burnier, and this project should generate about BRL 1.1 billion a year and potentially with additional EBITDA. We are thinking about cost savings in our project in Ouro Branco, but also this would be, you know, incoming revenue. This project contemplates both components.

Also thinking about our mini mills or the electric power mills, there is an investment to be concluded at the end of the year, which is the scrap recycling center, and this will generate about BRL 100 million in benefits. Meaning that we have very robust projects and levers. I mean, it's very complex to estimate performance. Structurally thinking about the mid and long range, we will increase our level of competitiveness, so we should be seeing that in Brazil in the next coming years. Structurally speaking, that's the major change. This is probably linked to your second question on CapEx. We know that it's probably too soon to talk about any formal guidance for CapEx for 2027, because the year 2026 is just beginning.

Typically, our CapEx guide for the current year is given in February. Last year, we anticipated our Investor Day because we thought it was important to be more accountable to the market. I mean, the board had already made a decision to reduce the level of BRL 6 billion of disbursement to something close to BRL 4.7 billion. If we think about the first quarter and then you annualize it, the pace is very much in line with the CapEx. Thinking about 2027, I think it's still too soon to give you any information about it.

We already talked during our Investor Day that the general maintenance CapEx, the maintenance CapEx to be close to BRL 3 billion for the next five years on average, with some fluctuations depending on the shutdown of the blast furnace or the coke plant. Structurally speaking, this would be the maintenance level. We also believe that it will be hard for us to think that we will always do maintenance as the company's CapEx. I mean, whenever you think about the actual life. When you think about how the model acts in terms of the cash flow, we cannot ignore the competitive projects are there just to generate additional EBITDA, to generate growth and competitiveness. This is what we are reaching with this investment in Miguel Burnier and also with the scrap processing in Pindamonhangaba.

All of these benefits should also be incorporated in the cash flow. Oftentimes what we see when I look at the analysts and the models, they disregard any kind of gain coming from new projects, and they consider as though everything is, you know, business as usual. Considering the level that we find ourselves today, I mean, at capacity in Brazil and adjusted demand, well adjusted in North America, we don't see room for large projects with large CapEx increase, because I don't think it makes a lot of sense.

Great. That's very clear. Thank you, Japur and Werneck.

Thank you, Ricardo. Next question from Rodolfo with J.P. Morgan.

Good morning. Good morning, thank you for taking my question. I would like to hear more about the North American operation. We were here positive with that region for quite some time.

To be honest, I mean, we were surprised with the level of very high backlog. I would like to ask you, Gustavo and Japur, if you could give us more details, what is happening? What are the strengths that you see in the region? Not, not only looking at the quarter, but what do you expect to see happening in the second quarter in the region of North America? My second question is similar to that one on North America, but now I'm referring to Brazil. I think it's clear because you referred to your fight against the imported products. I would just like to hear from you, what do you see in terms of demand instead of supply? How is the construction activity going, and whether you anticipate any positive surprises coming on the demand side?

Hi, my friend Rodolfo.

How are you? It's never all perfect, because if you cheer for my soccer team, you're never in peace. Japur, okay, let's split the answer. I'll speak about Brazil, and you talk about the U.S. First of all, demand is very resilient, both short and mid-term. The segments where we find the main demands for our backlog, they remain very steady and firm. Data centers. Think about data centers. The number of data centers that are being built, and they will be built in the next coming years in North America. That will demand a significant amount of steel, and that's one strength. The other strength is that they will not build more greenfield mills in the coming years, but possibly in the areas where we operate.

The other strength is our business model, very much focused on margins, structurals, directly related to the demands that I mentioned, infrastructure and data centers. The U.S. trade defense mechanisms are very robust. Since Trump's first administration and then Biden's administration, they did not reduce what was mentioned in the 232 section. The negotiation of the U.S. USMCA will be even more favorable to North America. We have also our internal strengths. We are very lean in North America. Since 2018, when we drew up a very strong plan to recover our industrial debt in terms of the USDI, we are operating our mills very well, very few maintenance shutdowns, and we've been very assertive. We grew, you know, the critical spares. Any shutdown, we solve the problems quite fast. Things there are running very, very well.

You see China exporting a lot through the integrated route. Maybe they removed part of our competitiveness because of scrap exports. There is surplus. There is additional scrap supply in North America. That is why prices, in a way, went up and spread has been broadened. We think it will continue to be like that. We are very positive. We are very certain that the results that we deliver this quarter will continue to be good in the coming quarters. With that, we gain some time to implement what is in our control to improve productivity in Brazil. There is still a lot of things to be done, short-term adjustments. Also when we look in the mid-range, we do believe that there is still a lot of room to improve and enhance our operations in Brazil.

Somehow, in North America, we have to continue to operate with a lot of discipline or to do what we've been doing so far. That's my general view. Maybe if you have any further questions, I can answer that further. Japur, over to you.

Hi, Rodolfo. Speaking about Brazil, qualitatively speaking and looking at the results of this quarter, when we think about apparent consumption demand, looking at steel in Brazil, there was a 6% decline in the consumption of long steels when compared to last year. Part of that is attributed to, I mean, we don't give you a lot of details, but that can be attributed to the consumption of special steels. We monitor ANFAVEA numbers. I know that you also look at the numbers posted by ANFAVEA.

January and February were weak months in terms of heavy vehicles, and that's an area that is very important to the consumption of SBQ or special steels, and that's an important market for us. This puts prices upwards because price per ton is higher when compared to, you know, regular longs. This impacts our realized net revenue or net sales because we sold less special steels because January and February were weak months in terms of heavy vehicles. On the other hand, thinking about potential upsides and risks, in March, there was an important rebound in the production of heavy vehicles by ANFAVEA. If we continue to see this rebound in the coming months for this particular line of products, we believe that this will also boost our shipments in terms of special steels.

Because the prices and margins are interesting, and this can lead to more constructive margins in our Brazil operation going forward. In addition to all the projects we mentioned before that will contribute to an improvement in our, you know, operations in Brazil. Well, certainly there are still many uncertainties. There's the issue of freight and impact in terms of, you know, coal to complete, I mean, the metallurgical coal that comes to Brazil. This is something systemic. It's not nothing very specific of the company. Therefore, these are some positive points for short and mid-term and other points of attention in relation to our business. Infrastructure activities are going okay there. We haven't seen any major quantitative changes in this segment.

I think what changed a bit the profile of realized prices and cost structure was mostly attributed to the lower volume of heavy vehicles in the first part of the year.

Thank you.

Thank you, Rodolfo.

Next question is from Leonardo Correa with BTG Pactual.

Hi, everyone. Good day. Rafael, Japur, Ari, thank you. I have two questions. Perhaps the first one is about the top line. In the quarter, we saw the average price realized in Brazil dropping a little more than what we expected, 5% QoQ. I understand that there are a number of effects there. Mix perhaps some effects related to seasonality impacting prices. We have heard about all these attempts to pass through to 6% increases happening in the production chains. I would like to hear your expectation regarding implementation. I know that this is a competitive market with a lot of players competing for market share, and imports are still hurting. What about this attempt? Platts is not showing a lot of pass-through, 2.3% increase. I don't know whether this number is accurate or not.

I would like to have more detail on the top line. My second question, Werneck, is kind of a more comprehensive one. I know you've been an advocate, and you've been very vocal asking for equal conditions, trade defense mechanisms, fairness to compete. We see imports of long steel more controlled, imports of flat steel that seem to be reducing. The freight problem is going to make imports more expensive. We have anti-dumping for BF galvanized and HRC and the quotas. In the stock market, we see some excitement. People kind of pricing the results and thinking that things will improve in the future and that there will be a consistent recovery of results. What are you thinking? How excited are you about what the government is doing, and what kind of impact are you seeing in your operations?

Do you think that this idea of a substantial improvement in the second half of the year, do you think it's exaggerated optimism in the market, or do you see these green shoots? Do you think that the worst is behind us and that things are on the right track to improve in Brazil? These are my two questions.

Good, Leo. Good questions. They are good opportunities to debate. When we talk about cost pressure and price, when we look at the profit pool of the several chains in which we operate, the sector under the most pressure is ours. This is changing From time to time. It's different in the, than in the post COVID pandemic time. I mean, we cannot avoid passing through this cost pressure. The prices, this will happen. Japur monitors this daily. If he disagrees regarding price, well, he has all of the numbers in his head. I mean, this will happen. Many of our clients have been working with a little more leeway in their balance sheets, with a little higher margins, but this dynamic has been constant. Every day, somebody is knocking on our doors. Suppliers of electrodes, inputs, and others, they're knocking on our doors. I think that passing through a cost which is well-known, a global cost, the pressure that comes from a complex global situation, well, it will happen.

If this were related to inefficiency in the sector or of Gerdau, it would be difficult to create a narrative and a rationale that would allow us to pass through the cost increase. This will happen. We have different segments, distribution, civil construction. In civil construction, they work by contract per project. I'm not worried that this will not happen. It will. My main concern is that when we pass through this cost increase, we'll need to improve the margins, deploy more improvements in the short term, which is something we're doing. Logistics is one. The amount of material being handled in Brazil, we're optimizing that, reducing that. There are things to be done, homework to be done in-house. In terms of trade defense mechanisms, I'm optimistic as well because this is something that is developing over time.

The fact that Minister Geraldo Alckmin left and Marjorie Olivas will be conducting this area of trade defense mechanism, he is very knowledgeable. He knows about all the damage caused to the chain. The numbers are clear. The evidence became very clear over the last two years. Evidence of the terrible damage made to the sector. You look at our balance sheet, but not ours only. All of the companies in Brazil, we cannot continue to invest. It is not possible to survive that way. I believe that these two mechanisms, the quota tariff system, will continue in effect. I do not know whether they are going to broaden it, expand it to other products. What we know of the quota tariff system in the last quarters, we are confident.

We believe that the anti-dumping investigations that took a little longer than normal, a little longer than expected, are unfolding. The evidence is very clear. I'm very optimistic at this point because we see that the trade defense will be broadened with a more anti-dumping quota tariff system. This is what I'm thinking.

That's clear. Thank you.

Anything else you want to add, Japur?

No, I think you said it all.

All right, Leo. Thank you. To you.

Next question is from Gabriel Barra with Citi.

Hi there. Can you hear me now?

Yeah, we hear you super well. We can see you and hear you.

Thank you, Werneck, Japur. I have two points of clarification. The first about Miguel Burnier. If I'm not mistaken, in the last earnings call, 2.25, you spoke a little about the ramp up.

The expectation of the BRL 400 million in EBITDA for this year. I'd like to hear from you, Werneck, perhaps Japur as well, about your expectations regarding that. I think you have maintained this kind of quote, unquote, "soft guidance" BRL 400 million for this year. Werneck, the project seems to be a little delayed, or is it on time to be delivered? If you could elaborate on the company's expectations regarding the earnings for this year and how this can impact next year's EBITDA. My second question is about potential one-off actions for cash generation. I don't know if you're considering possible investments in real estate land. The company has a lot of real estate that could be monetized. I'd like to hear what you're thinking about that. Can you wait? Can we wait for extraordinary dividends?

Are you thinking about divesting? How are you looking at that, given that the company has a more leveraged balance sheet, a very sound balance sheet in an environment of rising margins with the U.S. operation, very healthy Brazil with a positive trend for the second half. I'd like to hear from you. Investments and extraordinary dividend payout.

Right, Gabriel. How are you? Hope you're well. Let's start with Miguel Burnier. That's exactly it. We released a soft guidance with our expectation in our Investor Day in October last year. We said we are expecting to generate BRL 400 million, and that is specifically coming from Miguel Burnier project this year. We expected a ramp-up and start of operations. Operations haven't started. We're proceeding with caution.

This is the largest investment in BRL in the history of the company. It's an investment of 40 years. It's not because it's taking a few months more that we are going to do something that will sacrifice or hinder the long-term return that we expect on the capital invested. We understand that perhaps typically this mining project, and it will be hard to have all the BRL 400 million this year. We are working internally to calculate the impact of what will be the specific guidance for Miguel Burnier project, how much EBITDA it will generate this year. In parallel to that, we have a number of other initiatives. With a recovery plan to offset that loss of margin, either with internal improved operating efficiencies or through strategic alternative purchase of more competitive ore in the region of Minas Gerais.

In that regard, we are very well-positioned, geographically speaking, to buy ore from other suppliers in the region. As a way to mitigate part of this EBITDA that we will not see flowing in this year for our results. We understand that in 2027 we should have a normalized the ramp-up line or ramp-up curve. More in keeping with what we expect with the mining projects in the long term.

Okay, Gabriel. Now, as regards real estate and other one-off actions that we might have to improve liquidity, free cash flow via divestments, we continue to progress with our internal analysis of our real estate assets. Here, I think it's good to have controls leverage so that we are not forced to sell something or to expedite a sale, so that we won't hurt the long-term value created for our shareholders.

In terms of cash allocation, that these businesses might generate this year and in the coming years, I think that a commodities company is good when it is boring and predictable. We are not going to radically change our preferences in terms of capital allocation. We have been distributing dividends above the minimum set forth in our bylaws. If there's a surplus of capital, when we are not hurting our liquidity, we are allocating for share buyback when we understand that the market is not really understanding the long-term value of our assets. That's how we intend to proceed if everything else remains constant. Boring is good for a capital-intensive company like ours. Okay, Gabriel?

Absolutely, Japur. Thank you very much.

Thank you, Gabriel.

Next question from Lucas Laghi with XP. Good afternoon.

Thank you, Ari, Werneck and Japur. I have two points. I'll start with a follow-up from the previous question, thinking about the optimization of your Brazil assets. I mean, that you can focus on investments of high returns or reduce investments to optimize return. My question is, how do you view the market in terms of investing and divesting? You talked a lot about, you know, anti-dumping and protectionist view. Looking at a competitive scenario, I would just like to understand how this can impact your decision of investing more in Brazil or maybe, you know, cease with the divestment project in this current market scenario. We also talk a lot about Miguel Burnier, CapEx, et cetera.

If you could just revisit the company's expectation in terms of capturing incremental EBITDA from the projects. Maybe, I mean, we just wanna make sure that we are considering these marginal returns, given the fact that CapEx is very clear, given your guidance for 2026. These are my two questions.

Well, Lucas, thank you for your questions. We'll start and then Japur will continue. What we will probably see in the future is a concentration or combination of assets that is different from what we had a few years back. That business model, the traditional business model with many mills, where you have a small scale mill and you serve a very regional, you know, market, and you buy scrap nearby and you turn scrap into steel and also serving customers in that region. This is a model that we reviewed in the U.S. We shut down plants. We concentrated our production in a lower number of mills, but highly competitive. Speaking about the market in the future, I think speaking about divestment or investments, it's not a very good explanation because it seems like the business model remains the same.

It will be a transformational issue going forward and we will focus our investments in the winning mills.

We have some of those winning mills in Brazil, so it's very likely that the mills that were shut down, maybe they are not competitive enough to resume production. You know, we are not willing to write, you know, to go too far away to serve customers. The speed of things will follow our possibility of CapEx allocation without entering into debt. It will be a transformation of the kind that happens from time to time. Our way of operating in Brazil will change. There is also the issue of Ouro Branco. The mill was initially built to serve the export market, and we were gradually reducing our export sales because we believe that in the future, we will find better opportunities to export at more attractive margins.

Our operations in Brazil will go through a transformation, not only this one, a short-term cost reduction, but it will be something more radical. As soon as we have more detailed plans, we can show it to you. We believe that we will have to change the way we operate, because what we did in North America may be an example of what we will do here. We shut down some mills, we removed the less competitive, you know, mills. Now we have an industrial hub that is highly competitive, low cost, very reliable. That's the general outlook.

Adding to what he said, and you also talked about projects that increase denominator or decreases the denominator, meaning that we have to invest in projects that improve our numerator.

Gradually, we have to empty out our backpacks. If you are running long distances, you have to run with a less heavy or a lighter backpack. We have a lot of real estate assets, today they are not being fully utilized. Eventually, the person that operates that asset doesn't really see that they are paying, you know, they're not paying rent, so okay, it's my own, but the capital is paying for it. The cost of capital is there. There's two things. I think you already answered your own question when you talked about excess. I mean, anything that is, you know, over is not good. If you have excess of forest, it's not good. If you have excess productive capacity, it's not good either.

The focus is having an operation, just like, you know, the fact that we have a very healthy balance sheet. You have to look not only at the liability, but also assets. We have to seek for a different balance compared to what we have today. I think you answered your own question. In terms of the project on the institutional side, we gave you a little bit of details out of the three major projects we have this year. They will go into a ramp-up process throughout the year. The recycling center in Pindamonhangaba is a new project, and the investment in Miguel Burnier is more transformational.

Considering the scale of the project, as I said earlier, since we are talking about a delay, I mean, thinking about returns of the project this year, it's probably that we don't see the BRL 400 million in full that we had anticipated last October. We are also seeking for other efficiency initiatives in Ouro Branco to compensate for the returns that we will probably not see this year coming from the mining project. In 2027 and in the next 40 years of the Miguel Burnier lifespan, we will certainly see good results in the numerator, generating more value to our shareholders.

Lucas, I would just like to add that while Japur was speaking, I would like to say that rest assured that we will not raise the company's debt.

We will not disburse a lot of CapEx or much higher than what we're doing now. A good part of the resources that will be allocated in Brazil to promote the transformation will come from our decision to operate with a lower number of commercial assets. The amount of CapEx that goes into production will be reduced, and this will bring us more breadth to make more transformational investments. Our operation in Ouro Branco has been very successful in terms of efficiency, and this has allowed us to postpone major reforms in the blast furnace or the coke plant. The mill is very healthy. We are moving forward that investment level, and this creates a buffer in terms of the disbursement levels that we've seen in the past years, and this will also lead to greater transformation.

We do not want to accelerate transformation in Brazil by increasing CapEx or increasing our leverage. We know it quite well, and it's becoming more and more apparent the need we have to keep our CapEx dispersion and leverage at very healthy levels.

Great. Thank you.

Thank you, Lucas.

Next question from Daniel Sasson.

Hi, good afternoon, thank you for this opportunity. Ari, Rafa, and Werneck. My question, I think Gustavo already mentioned in his early comments. He talked about anti-dumping and the competition with imported goods. Maybe for us, it's a bit easier to understand the impact and the importance to the flat market, maybe for longs with the eventual anti-dumping measures. I know that we have wire rod. If you can tell us about the results of this investigation concerning other products also long products, and whether this will change the face of the market. Okay, in addition to anti-dumping, how do you think that the long steel players are behaving? I think at some time last year, more or less at this time, you decided to lose market share in rebar and just start the fight.

How do you think this competitive dynamic, particularly regarding longs, is shaping up the market? My second question, and maybe this is a follow-up related to Gustavo's last comment on CapEx. Now I know we understand that Rafa cannot give us a CapEx guidance for 2027. It's not even what we are expecting. If we think about the opportunities, in addition to that, the BRL 3 billion in maintenance, the other projects, what are the priorities? Last year, you said that maybe it would make sense to allocate BRL 1 in the U.S. versus allocating that same amount in Brazil. You even referred to a project in Mexico at the moment because you saw an increase in the auto parts market in the region. Things changed, and even there, the market became more protectionist.

If you could tell us more about the priorities, maybe specifying it per region or types of projects related to competitiveness and growth. Maybe that could help us think about, you know, where this will stand in the next coming months or years.

Okay. Japur can give you more details on the anti-dumping matter, but I will give you an overview of the topics you mentioned. Unlike North America, in Brazil, whenever we talk about trade defense, there are lots of rumors in the consumer section. In the U.S., since the days of Section 232, whenever they talk about trade defense or whenever they talk about defending the country, everybody understands that that's important for the country and that the industry matters for the country.

Maybe the numbers or the data is not so evident, but we are constantly talking to our customers there. I'm very convinced that in the next coming quarters, we'll be able to have a better reading that the North American industry is going back to the game. In Brazil, these debates take years, and then the industry loses its fight. It's very much influenced by what happened in the last few years. When we started noticing, you know, a high penetration of imported steel, this has never been seen in Brazil. It came right after the pandemic, and the steel industry was delivering results, had high margins. A few years ago, nobody talked about whether that was right or wrong, if that was here to stay, and whether the trade defense would continue to deteriorate margins in other segments.

After a few years, the topics became much more mature. There are many balance sheets that have been published from clients and even steel companies, and it's becoming very apparent from the discussions in Brasilia that if the country does not utilize more intense trade measures, the steel industry cannot survive in the long run. There are many sectors that are questioning the anti-dumping measures. More recently, they talked about the maintenance of margins by renegotiating prices with the sector. We saw discussions in manifestos and letters. The debate is intense, but I think they have to defend their beliefs in Brasilia. I think we struggled a lot in the past few years. All of our discussions in Brasilia and at the Ministry, I see that the environment now is quite different when it comes to implementing these mechanisms.

I mean, for two years, the topic has become more mature. Many analyses have been done. We saw good penetration of imported goods, and also wire rod was also another product that was heavily penalized. I see a better environment now that will lead to probably some more important trade defense measures.

Well, Daniel, my perspective here, I mean, it's far from being the truth, but what I think about what it means, especially for wire rod. In a rough approximation, whenever we think about long, we have something between 10%-20%, depending on the time of the year, that is equivalent to wire rod national production. The proportions vis-à-vis rebar is approximately 3.5 to 1 or 4 to 1. What happens is that oftentimes the producers of rod products, they also produce rebar.

When you have a lot of wire rod entering the country with dumping margins of $550 per ton of dumping, this is what was verified by the Ministry of Industry and Trade. This then leads productive companies that they don't wanna sit idle. It leads them to produce prices for contribution margin, so they produce rebars or other products. Therefore, this is not specifically about rebars, but it is also about the spillover, the tripling effect coming from a massive entry of wire rod, which leads producers to produce something else. Since this can be an input for other products like, you know, cutting bands, you know, profiles, columns. This has a detrimental effect in the entire margin of the long steel segment in general.

There are two investigations going on, like China with a margin of BRL 550 per ton and Russia with BRL 100 per ton, approximately. It is a significant amount that leads to a great impact in competitiveness. What we are asking for is, you know, fair trade. We should conduct a technical analysis and say, "Okay, there is dumping, there is damage, there is nexus, and we cannot ignore the facts, because the facts do not matter to us at the moment A or B." We should be mature enough, as, you know, a democratic country, that the rules that have been set up, they have to be enforced. Those who are selling to Brazil, they should also abide by the same rules, so we should be able to enforce them.

In the second half of the year, we expect to see the conclusion of this investigation related to wire rod dumping, and we have the potential to improve not only wire rod specifically, but also other long products that gravitate around this portfolio product. My last point on this competitive dynamic is that I see that somehow the issue of Market share in Brazil is very stable. Now, we still have further opportunities to be captured because it doesn't matter if I have all of my assets in the south and I have a 30% share, but only in the north of Brazil, because this is inefficient, logistically speaking. We have a very encompassing product portfolio.

I think now this market share among more stable players gives us a very unique opportunity, which is improving our efficiency, you know, on the way that we serve our customers. We started capturing these opportunities, and I see a very good avenue of opportunity going forward. We do have a market share that it was redefined last year with all of our recent initiatives. Once given our share of the market, it is not being served the most efficient way possible. I mean, from which mill we will serve, the way we will serve, whether it's via Comercial Gerdau or via a distributor. There are things that are up to us to do or to decide the most rational possible way to serve the share that has been given. Thank you.

Thank you very much.

Our last question from Carlos de Alba with Morgan Stanley.

Hello, Gustavo. Hello, Rafael Japur. The cash flow generation in the quarter was particularly strong. Working capital contributed differently to that, as well as low cash tax payments. Can you comment maybe what are you expecting for the second quarter, maybe the second half of the year in those two items? I have another question on projects.

Hi, Carlos. Great. Well, regarding these working capital line items this quarter, in terms of tax, we had two effects. The first, well, we do not generate profit in Brazil. We have a loss. Our effective tax rate ended up being lower. This is basically profit of the United States operation, and we had more income Income tax, withholding tax on the distribution of results from the United States to Brazil, which we did most strongly in the end of last year. This contributed to a tax line item that was higher in Q4 than we had now. Over the year, we expect a normalization. Typically, we have a greater disbursement of taxes in Q4, paying in April the income tax and corporate tax of the United States. Along the year, this should be normalized. For the second half of the year, we expect to have a positive free cash flow generation, both due to our operating results and also because of working capital. All remain operating as important. We had almost BRL 1 billion in working capital in quarter-on-quarter. We believe that this is relatively normalized for the second half of the year.

Throughout the year, we believe. Again, I'd like to remind you, we are going to have a lower investment of CapEx than last year. We expect that we will have a stronger free cash flow generation this year than in 2025, both because of an EBITDA that we're generating, which is by comparison, stronger in this past Q1, and also because of CapEx reduction. There is a double benefit there.

On the iron ore division, the iron ore business. First, on Miguel Burnier, can you give us any more color on what caused the slight delays this year in terms of the EBITDA generation that the company was expecting? Then, maybe longer term, as you transform the business strategy in Brazil, is investing in iron ore to increase the third-party shipments an option? I think, Gustavo, in the last investors day, you had mentioned the possibility of that investment taking place. I don't know if you can add more color at this time. Thank you.

Perfect. Carlos, the problems that we faced at Miguel Burnier that led to the delays are quite well-known issues, which are the current difficulty of carrying out civil construction and electronic and electric assembly. The project is very robust. We had a schedule that started on time. Historically, the schedule was aligned with the traditional productivities that we have in the civil construction segment and electromechanical assembly sector. Since Brazilian companies are finding it hard to hire people and finding it difficult to have a more technical and skilled labor, these sectors are facing difficulties. Our difficulties were 100% related to productivity issues in civil construction and electromechanical assembly. This is a theme which I believe will need to be addressed differently in the future by Brazilian companies.

Else we will continue to find it hard to have these projects and results becoming more and more complex to make investments because of civil construction and assembly points. That was the main reason. We continue to wish to monetize our mining rights in the state of Minas Gerais. I think the success of this first operation, it's a big operation, 5.5 million tonnes. Once it's in operation and it is successful as we expect, it will give us not only safety, but it will give us more time to have more in-depth studies in terms of what should be the next steps for us to increase our production of ore. We have a lot of mining rights. The chronology of which one we should tap into first, that's being analyzed.

Once this project is implemented and starts producing successfully, it will give us an opportunity to accelerate our plans for a second stage. Once this is more clear, we commit to give you more detail on that, all right?

Thank you very much.

We are now ending the Q&A session, and now I will turn the floor back to Gustavo Werneck.

Thank you, Ari. I'd like to thank everyone for joining us today. On my behalf and on Japur's behalf, I'd like to say goodbye.