Gerdau S.A. (NYSE:GGB) Q3 2019 Earnings Conference Call - Final Transcript

Oct 30, 2019 • 01:00 pm ET

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Gerdau S.A. (NYSE:GGB) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good afternoon, and welcome to Gerdau's Conference Call to discuss the Results of the Third Quarter 2019 of Gerdau. [Operator Instructions]

We would like to emphasize that any forward-looking statement that might be made during this conference call related to Gerdau's business outlook, projections and financial and operating goals are mere assumptions based on management's expectations related to the future of the company. Even though Gerdau believes that its comments are based on reasonable assumptions, there is no guarantee that future events will not affect this evaluation. Here today are Mr. Gustavo Werneck, Director, President and CEO of the company; and Harley Scardoelli, Executive Vice President and CFO.

With no further ado, I would like to give the floor to Mr. Werneck. You may proceed, sir.

Executive
Gustavo Werneck Da Cunha

Good afternoon, everyone, and welcome to Gerdau's conference call on the results of the third quarter 2019. Here with me is our CFO, Harley Scardoelli. And for the both of us, it's always a great pleasure to talk to you about our performance and also clarify possible doubts and answer questions that may arise during our presentation.

I will start by talking about our overall results in the quarter. And next Scardoelli will elaborate on the financial performance of the company. After that, I will return to comment on the outlook for the markets where we operate. And we will also talk about our investment plans. At the end, we will both be available to answer all of your questions.

So let's move to Slide 2, and we will begin with our main highlights for the quarter. I would like to start the presentation of the slide highlighting that last September, we successfully concluded the refurbishing of Blast Furnace 1 at the Ouro Branco Mill in Minas Gerais. The equipment has resumed operation within schedule, complying with planned operating conditions. Over 5,000 people worked in this scheduled maintenance for approximately two months to ensure that the equipment in its peripherals would be up to speed when Brazilian economy resumes growth and demand for steel in the country increases. Moreover, normalization of inventories at Ouro Branco led us to post the second best quarter in Gerdau's history in terms of free cash flow, something that will be further elaborated by Scardoelli later on.

It's important to emphasize that despite the impacts from the Blast Furnace downtime and the lower pace of exports resulting from a weaker performance of the world steel industry, we begin to see signs of recovery in Brazil civil construction industry at the end of the third quarter. We already noticed a gradual increase in incoming orders and increases in construction project contracts, coupled with better funding terms and lower interest rates. As expected, the performance of the retail segment, meaning self-construction and low-income housing remains strong.

Just to give you an idea, in August, we launched a new online retail platform of Juntos Somos Mais, together, we are more, of which we are partners. And in less than 60 days, we reached