Usinas Siderúrgicas de Minas Gerais (USIM5) Q3 2024 earnings summary

Executive summary

• Net revenue rose 7% in 3Q24 to R$6.8B, driven by strong steel sales and operational efficiency, with the highest domestic steel volume since 3Q21 and significant productivity gains from investments in the Ipatinga plant and Blast Furnace 3.

• Adjusted EBITDA surged 72% quarter-over-quarter to R$426M, with margin improving to 6.3%, reflecting operational improvements and cost control.

• Net profit reached R$185M in 3Q24, reversing prior losses, supported by positive financial results and efficiency gains.

• Cash position stood at R$5.9B, with net debt reduced to R$644M and leverage at 0.38x.

• Strategic investments and transformation agenda led to the highest blast furnace output since 2010, with notable improvements in safety, environment, and community engagement.

Financial highlights

• Net revenue: R$6.8B in 3Q24, up 7% sequentially; adjusted EBITDA: R$426M, margin 6.3%; net profit: R$185M, reversing prior quarter's loss.

• Free cash flow: R$316M; operational cash generation: R$580M; CAPEX: R$202M (-13% vs 2Q24).

• Net debt reduced by 36% sequentially to R$644M; leverage ratio at 0.38x.

• Cash and equivalents at R$5.9B at quarter-end.

• Working capital decreased, mainly from lower accounts receivable and recoverable taxes.

Outlook and guidance

• Expectation of continued cost reductions and operational efficiency gains in Q4 and into 2025; 2024 CAPEX guidance revised to R$1.1B, with 2025 expected to be similar.

• Steel unit expects slightly lower domestic sales in 4Q24 due to seasonality, offset by higher exports; mining unit expects lower sales due to seasonal rainfall.

• Net revenue per ton anticipated to rise on price adjustments; COGS/t expected to keep declining.

• No significant changes anticipated in capital structure; budget process for 2025 underway.

• Debt profile extended with the 10th debenture issue (R$1.8B), used to repay US$320M in bonds; cash position covers all debt maturities until 2029.