Gerdau S.A. (NYSE:GGB) Q4 2019 Earnings Conference Call - Final Transcript

Feb 19, 2020 • 01:00 pm ET


Gerdau S.A. (NYSE:GGB) Q4 2019 Earnings Conference Call - Final Transcript


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Good afternoon, and welcome to Gerdau's conference call to discuss the results related to the fourth quarter of 2019. [Operator Instructions] We would like to emphasize that any forward-looking statements 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 the 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 would not affect this evaluation. Here today are Misters Gustavo Werneck, Director, President and CEO; and Harley Scardoelli, Vice Scardoelli will start by talking about the highlights and general results of the quarter. And also, he will talk about the performance of our operations. Next, I will come back to talk about the outlook for the main markets where we operate. And at the end of the presentation, as we always do, both of us will be available to answer your questions.

Scardoelli, you have the floor.

Harley Lorentz Scardoelli

Thank you, Gustavo, and good afternoon. I would like to reaffirm that it's a pleasure to be with you. And also, I would like to say that we made improvements in the format of this conference call, responding to suggestions and comments we received through a recent survey we conducted. Therefore, we hope to have a more fluid and dynamic presentation. I would like to start with the highlight of our fourth quarter on the financial side. In all of our operations, we focus on optimizing our working capital. And with that we straighten our operating cash and Which can be seen in the charts presented on page two. For those of you who are with us over the web, the strong free cash flow generation of 2.3 billion barrels in q4 was mainly attributed to the release of working capital through the optimization of raw material and finished products inventory, in addition to the scheduled maintenances in our mini meals in Brazil in December, it's also important to mention that the company surpassed its goal of the cash conversion cycle staying below 70 days in q4, a record figure for the company if we look at our historical series for the last 10 years. All in all, at year-end, our cash flow generation reached BRL4.4 billion, resulting in a healthy cash position of BRL6.3 billion.

This strong cash position also led to a significant improvement in the company's leverage at the end of the year, a point that we will see further on. Now moving to slide three, next page, we'll talk a little bit about the debt. I would like to mention that at the end of 2019, our net debt fell below BRL10 billion as a result of our efforts to optimize assets, also stringent SG&A, digital transformation, among other strategic initiatives to reduce the company's debt position. I take this opportunity to mention that 90% of this debt is long term with an average tenor of 7.4