Gerdau (NYSE:GGB) reported second-quarter 2026 consolidated adjusted EBITDA of BRL 3.4 billion, its strongest quarterly consolidated EBITDA since the third quarter of 2023, as stronger North American performance offset continued pressure on its Brazilian operations from steel imports.
Adjusted net income rose 45% from the first quarter to BRL 1.5 billion. The company said Gerdau S.A. would pay dividends of BRL 0.23 per share, while Metalúrgica Gerdau would distribute BRL 0.11 per share. Its share repurchase program for Gerdau S.A. was 31% complete at the end of the quarter.
North American demand remains strong
Werneck said Gerdau continues to see elevated steel demand in North America, supported by a strong order backlog in renewable energy, data centers, infrastructure-related activity and industrial construction. He also cited demand tied to the construction of semiconductor facilities under the CHIPS and Science Act.
“We are at a moment which is unprecedented,” CFO Rafael Japur said of demand for metal construction in North America, adding that the speed of construction is an important advantage for steel structures, particularly for data-center projects.
Management said recently announced price increases for special steel and beams had not been fully incorporated into its outlook. Japur said the increases were expected to take effect during August and would affect different sales channels at different speeds, creating what he called a “not negligible” potential upside to the outlook.
Executives nevertheless maintained a cautious stance on future margin expansion, saying they did not expect prices and margins to rise indefinitely. Werneck said the company saw a trend toward higher margins based on prices, spreads and raw-material costs, but management was taking a more conservative view of the broader market environment.
Gerdau expects a maintenance shutdown at its Midlothian facility to affect the melt shop but said it does not anticipate a reduction in customer shipments or supply availability. Japur said the shutdown would create a temporary accounting impact from fixed costs allocated to the period while production is halted, estimating the effect at roughly BRL 100 million to BRL 150 million. He said the outage would not affect cash generation or the plant’s longer-term economics.
The company also cited higher North American freight expenses during the second quarter, with Japur saying freight costs rose about 8.5% from the first quarter, largely because of fuel-related factors. Management said seasonal scrap-price risks later in the year should be monitored, particularly if scrap collection becomes more difficult during winter.
USMCA review and import conditions
Werneck said the formal review of the U.S.-Mexico-Canada Agreement remains an issue to watch, although he does not currently see additional risks emerging for Gerdau. He said discussions in Mexico have become more technical and have included steel and automotive issues, including questions around the origin of steel entering the U.S. market.
Management said imports remain limited in the North American segments where Gerdau is most active, particularly structural beams. Werneck said the urgency of customers seeking steel for projects such as transmission infrastructure in Texas has made imported material less attractive because of shipping, customs-clearance and delivery risks.
The company noted that automotive demand remains comparatively weaker. Werneck said affordability concerns have delayed replacement of the aging U.S. vehicle fleet, though he expects demand for special steels to improve over coming quarters.
Brazilian operations face persistent import pressure
In Brazil, Gerdau reported a slight second-quarter improvement as it pursued productivity and profitability initiatives. However, Werneck said imported steel remained at high levels year to date despite some slowing during the quarter, continuing to pressure local margins.
Gerdau is awaiting updates in the second half on anti-dumping investigations involving long and flat steel products. Japur said the company expects an August response from Brazil’s trade authorities regarding a complaint involving Chinese hot-rolled coil, with investigations potentially concluding by year-end.
For the third quarter, the company does not expect meaningful unit-price improvement in Brazil. Instead, Japur said results could benefit from an improved sales mix, including stronger heavy-vehicle shipments in the special steels business, four additional business days compared with the second quarter, and higher productivity. He also expects lower costs at Ouro Branco in the fourth quarter as the Miguel Burnier mining expansion ramps up.
Werneck said Gerdau is developing a broader transformation plan for Brazil based on an assumption that import competition and domestic cost pressures will remain challenging. The company recently announced an adjustment to capacity at its Recife mill, where it will no longer produce steel or rolled products. He said the company’s footprint is being aligned with current demand conditions.
Projects, cash flow and capital allocation
Gerdau generated BRL 237 million in positive free cash flow during the quarter and said first-half free cash flow was BRL 2.3 billion higher than in the first half of 2025. Japur attributed the improvement to higher EBITDA in North America and lower capital expenditures under the company’s prior guidance.
Net debt-to-EBITDA stood at 0.69 times over the past 12 months. Management said its formal leverage limit is 1.5 times, although it generally prefers to remain below 1 time. Japur emphasized that this level is a limit rather than a target and said the company does not intend to increase leverage simply to reach it.
The Miguel Burnier mining expansion is expected to begin operations in the third quarter, with full ramp-up anticipated around year-end or early 2027. Gerdau expects the project to provide about BRL 1.1 billion in annual operational and financial benefits at full ramp-up. The company is targeting cash costs of about BRL 30 per ton delivered to Ouro Branco and said its priority is executing the ramp-up rather than selling excess ore immediately.
Gerdau also increased its stake in Dona Francisca Energética, lifting self-generated energy to more than 50% of its Brazilian consumption, and is preparing to open a recycling center in Pindamonhangaba. Management said its portfolio of projects, including Miguel Burnier, the recycling center and the Midlothian expansion, could generate approximately BRL 1.4 billion to BRL 1.5 billion in additional annual EBITDA when fully operational.
For capital spending, Japur said the company’s BRL 4.7 billion guidance could fall closer to BRL 4 billion to BRL 4.5 billion in coming years. Any savings in maintenance spending would be directed toward competitiveness, productivity and long-term transformation projects rather than necessarily reducing debt or increasing shareholder distributions.
About Gerdau (NYSE:GGB)
Gerdau SA is a Brazilian-based steel producer engaged in the manufacture and distribution of long steel products for the construction, industrial and agricultural sectors. Established in 1901, the company operates an integrated network of electric-arc furnaces and rolling mills, producing reinforcement bars, wire rod, merchant bars and structural shapes. Gerdau’s product portfolio also includes specialty long steel, high-yield reinforcement, rail, beams and steel coils, as well as value-added processing services such as cutting, bending and coating.
The company has expanded its footprint beyond Brazil, with significant operations in North America, South America and a presence in select European markets.
