Gerdau S.A. reported third-quarter 2026 results on October 27, 2026, with EBITDA of BRL 3.8 billion and an EBITDA margin of 20.2%, the highest since the second quarter of 2023, according to the company's earnings call transcript published by The Motley Fool (fool.com, October 28, 2026). CEO Gustavo Werneck said North America recorded an EBITDA margin of 27.7%, the highest in four years, supported by resilient demand and strong operating performance at the region's facilities. In Brazil, the company reported a slight recovery in results despite ongoing pressure from steel imports and an oversupply of steel in the local market.
Adjusted net income increased to BRL 1.5 billion, and earnings per share rose from BRL 0.74 to BRL 0.79, according to CFO Rafael Japur. The company generated BRL 1.4 billion of free cash flow in the quarter, six times the amount recorded in the second quarter. For the first nine months of 2026, free cash flow totaled BRL 1.7 billion, compared with a consumption of BRL 1 billion in the same period of 2025.
Japur attributed the difference mainly to higher EBITDA, especially in North America, as well as lower consolidated working capital requirements and lower investments than in recent years. Gerdau S.A. will pay BRL 0.34 per share in dividends this quarter, while Metalurgica Gerdau will pay BRL 0.16 per share. Japur said that dividends and share buybacks by Gerdau S.A. during 2026 have returned more than BRL 1.8 billion to shareholders.
The company reported a net debt to EBITDA leverage ratio of 0.58x. During the quarter, Gerdau renewed its global revolving credit facility for an additional five years, with available capacity increased by 29% to USD 1.125 billion. On October 22, S&P revised the company's outlook from neutral to positive, with a BBB rating, and Japur noted that Fitch had also reviewed the rating earlier in the quarter.
In Brazil, management said demand is slowing due to typical year-end seasonality and other factors, while the domestic market continues to be affected by excessive steel imports. Werneck said the company expects the continuation and strengthening of trade defense measures adopted by the government following the reelection of President Lula, along with new measures aimed at improving the competitiveness of Brazilian industry. He also cited the need for progress on the energy agenda, including a more competitive natural gas market and greater stability in access to renewable energy, and the continued implementation of the consumption tax reform.
On antidumping, Werneck said the technical analysis by the Ministry was progressing with technical rigor and that antidumping could be a next step if existing measures prove insufficient. Operationally, Gerdau has begun operations at its recycling center in Pindamonhangaba, Sao Paulo, and is conducting final integrated tests for the expansion of iron ore capacity at its Miguel Burnier mine in Ouro Preto, Minas Gerais, which is scheduled to begin operations in the fourth quarter. Werneck said the ramp-up will extend through the fourth quarter, with the process slowed by rainy conditions in the southern part of the country, which he linked to El Nino.
He said an important portion of the project's benefit will be captured in 2027, but not the full benefit, and that the expected benefit is likely to be close to the order of magnitude of around BRL 400 million previously indicated at the company's last Investor Day. At Midlothian in North America, the company is completing a maintenance shutdown and expanding melting capacity at its main mill, with a ramp-up also planned for the fourth quarter. On margins, Werneck contrasted Gerdau's margin-based outlook with the earnings-based guidance given by Nucor.
He said Gerdau expects margin stability, with positive price momentum offset by seasonal factors. Fourth-quarter production and shipment volumes are typically lower, reducing the dilution of fixed costs, and idle capacity costs at Midlothian will be reported in the fourth quarter. In North America, Japur said the merchant bar and beam market is roughly 9 million tons, or 15 to 16 million tons including merchant products more broadly.
He identified DEACERO, a new entrant in Mexico focused on heavy beams, as a competitive factor, but said its ramp-up is expected to be slow given product complexity. Japur said a trilateral USMCA agreement appears unlikely, and that a bilateral agreement between the United States and Canada would be net positive for Gerdau, while a Mexico-United States agreement could be net negative for margins. Demand drivers cited by management include data centers, artificial intelligence-related investment, energy and transmission, naval construction, nuclear power projects and CHIPS Act-related investment.
Werneck said Gerdau is not considering major acquisitions or greenfield plants in the United States, and that the company's focus is on selective organic capacity expansion. Japur said there are no plans for a spin-off or major acquisition in North America. On capital expenditure, Japur said the company's CapEx disbursement is now closer to BRL 4 billion, compared with the BRL 4.5 billion to BRL 4.7 billion originally included in guidance.
He attributed the reduction mainly to more selective project approvals and the hibernation of some units, rather than delays in the Midlothian or mining projects. Japur also said the company could revise its gross debt policy, which was set when the dollar was at BRL 3 to BRL 3.50 and now stands close to BRL 5.30, and that a review of the net debt to EBITDA policy could also be considered. On mining, Japur said Gerdau sees iron ore as a potential growth avenue, citing its existing assets and other mining rights in Minas Gerais, although no tangible initiatives have been announced.
Management also said the Miguel Burnier benefit was calculated using an earlier iron ore CFR price of around USD 90 per ton, while FOB prices were around USD 70, and that current conditions have changed. In South America, management said results in the quarter were weak, mainly due to lower volumes in Argentina, and that Peru structurally generates recurring EBITDA margins of around 15%, which it expects to use as a reference for South American operations. The next major event is the Investor Day scheduled for December 4, 2026.
Source: Motley Fool transcript of Gerdau (GGB) Q3 2026 earnings call, held October 27, 2026, published on fool.com on October 28, 2026.
Source: fool.com