Gerdau S A : 2Q23 Earnings Release

São Paulo, August 8, 2023 - Gerdau S.A. (B3: GGBR / NYSE: GGB) announces its results for the second quarter of 2023. The consolidated financial statements of the Company are presented in Brazilian reais (R$), in accordance with International Financial Reporting Standards (IFRS) and the accounting practices adopted in Brazil. The information in this report does not include the data of associates and jointly controlled entities, except where stated otherwise.

GERDAU CLOSES 2Q23 WITH

ADJUSTED EBITDA OF

R$3.8 BILLION IN A

CHALLENGING MACROECONOMIC

ENVIRONMENT

HIGHLIGHTS

QUARTERLY RESULTS - 2Q23

• Accident frequency rate of 0.66 at semester-end,reinforcing our low accident rate and our commitment to people's safety;
• Shipments of 2.9 million tonnes of steel, in line with 1Q23;
• Adjusted EBITDA of R$3.8 billion, one of the best historical results for the period;
• Debt indicators in compliance with the
  Company's policy: gross debt of
  R$10.7 billion and a net debt/EBITDA ratio of 0.37x;

• In the Special Steel BD, EBITDA was R$603 million, the second highest level ever for a second quarter;
• CAPEX reached R$1.2 billion in 2Q23;
• Based on the results for the second quarter of 2023, the Company allocated R$752.1 million for
  distribution as dividends (R$0.43 per share), to be paid as of August 29, 2023;

• Gerdau will invest R$3.2 billion in a new sustainable mining platform in Minas Gerais between 2023 and 2026. The portion of investment for 2023 is already included in CAPEX disclosed for the current year and is following the cycle of investments in the state in recent years, focusing on modernization, technology updates, improved environmental practices, and expansion of local operations;
• Completion of the investment in Whitby (Canada), increasing steel production capacity by 200 kt per year;
• Start of power generation at the Midlothian solar farm in Texas (United States).

MAIN INDICATORS

Before going into Gerdau's financial results, we are pleased to announce that our accident frequency rate was 0.66 at half-year end, remaining below the rate of

0.76 recorded in the full year 2022, reinforcing the culture of safety and active care among our employees. For us, safety is the way to fulfill our ambition to be one of the world's safest steel companies.

Regarding the Company's financial performance, we closed the first six months of 2023 with solid results even amid a global environment with lower consumption and resilient inflation in several markets, which directly affected demand. In 2Q23, issues such as the level of economic activity in China, the U.S. economic landscape, and difficulties in accessing credit in Brazil were some of the factors that marked the period, leading to an environment of increased attention to steel global consumption.

Amid a challenging backdrop, also affected by excess steel produced in China, international prices dropped in the period. In Brazil, expected cuts in interest rates, the likely approval of the tax reform, and the possibility of a stricter tax policy led to an environment characterized by a slight improvement in confidence in the steel industry, despite uncertainty about demand recovery in the coming quarters.

For Gerdau, the consistent results delivered in the period stem from its instrumental geographic diversification in the Americas and highlight the importance of its strategic product mix, combined with the Company's high service level offered to our clients. Even amid a global backdrop of lower consumption in the second quarter, Net Sales totaled R$18.3 billion, virtually in line with 1Q23, and Adjusted EBITDA was R$3.8 billion in 2Q23. Regarding our Business Divisions (BD), the resilience of the North America BD continues to be influenced by economic activity and governmental programs that stimulate steel consumption. Despite higher inflation and interest rates, it is expected that the

pace of non-residential construction will remain stable and that the infrastructure package announced by the U.S. government will increase demand for steel. In the second quarter, the backlog of orders of the North America BD stood at approximately 60 days of inventory, and our product portfolio had more stable prices compared to those of other steel segments, which, combined with our cost control efforts, enabled this BD's margin to remain at 26%. In line with the best environmental practices, we also pointed out that the Midlothian (Texas) solar unit started to produce renewable energy in June of this year, and we expect it to reach its total generation capacity of 80MW as early as next quarter.

In the Brazil BD, uncertainty related to the export market, including higher steel production in China, increased penetration of imported steel in Brazil, and the appreciation of the real against the dollar, is putting pressure on sales. In the construction sector, it is already possible to see some resumption of real estate launches, which, together with the injection of funds from governmental programs, such as a housing program for low-income families and the Harvest Plan (Plano Safra), announced in June in the amount of R$364 billion, creates a more positive outlook for the coming months. Similarly, more substantial incentives for infrastructure works in transportation, logistics, sanitation, and renewable energy breed optimism about the second half of the year.

Similarly, in line with the South America environment, the South America BD maintains healthy levels in the construction, energy, and mining sectors. In Argentina,

the scenario is one of attention with inflation, the effects of the drought and the presidential election, while in Uruguay infrastructure works can be a good driver for the sector. In Peru, demand for steel remains stable despite the political, social and climate issues observed at the beginning of the year.

In the Special Steel BD, the continued positive performance of the heavy vehicle, energy, and oil & gas sectors boosted volumes and margins in the quarter. Despite considerable demand for special steel in North America, more expensive credit and a decline in the population's consumption, as well continued shutdowns of the main automakers in Brazil, despite the recent federal government program of incentive for the purchase of affordable vehicles, continue to be points of attention.

Moving forward with the Company's sustainable growth strategy and demonstrating our commitment to society through investments in modernization, improvement in environmental practices, and expansion of operations, we announced the new sustainable mining platform of the Miguel Burnier mine, in the Ouro Preto (MG) district, with investment of R$3.2 billion to be made between 2023 and 2026. The investment earmarked for 2023 is already included in the

R$5 billion CAPEX announced by the Company and represents an important step in our social and environmental strategy. In addition to enabling an increase in production capacity through high-quality iron ore, with a consequent reduction in carbon emissions, the investment also comprises processes with cutting- edge technology, such as an iron ore pipeline and dry stacking to dispose of 100% of the tailings produced by the operation. The investment also renews the Company's commitment to social and economic development in the state of Minas Gerais.

As a pioneer in the Brazilian industry, the Company has recently announced the decommissioning of platform P- 32, where Gerdau will use metal scrap generated by the

decommissioning of Petrobras' oil rig in the units located in Rio Grande do Sul. This initiative will also enable the removal of a significant volume of this material from Brazilian seas and its transformation into new steel products, reinforcing Gerdau's benchmark position in low-carbon steel production, mainly through the recycling of ferrous scrap.

We are very pleased to announce that Gerdau was recognized as the only steel producer among the top 100 companies in the 9th edition of Merco's ESG Responsibility Ranking, leading the "mining, steel, and metallurgy" category. The Company also leads the category ranking that highlights organizations with best environmental, social, and governance practices, reflecting our commitment to making a positive impact in the regions where we are present in order to build an even more sustainable future.

We thank once again our employees, customers, suppliers, partners, shareholders, and other stakeholders for their trust, and the Board of Directors for its support as we build the Company's history and work towards continuous value creation.

THE MANAGEMENT

BRAZIL BD

NORTH AMERICA BD

SPECIAL STEEL BD

SOUTH AMERICA BD

32.4%

12.6%

10.3%

44.7%

NET SALES

In 2Q23, Net Sales totaled R$18.3 billion, down 3.2% from 1Q23 (driven by the depreciation of the dollar against the Brazilian real) and 20.5% from the same period last year, given the strong comparison base.

Net Sales per tonne were R$6,227 in the quarter, in line with 1Q23, mainly explained by sustained spreads in North America, but with a higher share of exports in the volumes of the Brazil BD.

GROSS PROFIT

Cost of Goods Sold totaled R$15.0 billion in the period, down 1.7% from 1Q23 and 12.2% from 2Q22, influenced by the reduction in sales and lower prices of raw materials, such as, for example, scrap and iron ore, which consequently reduced costs in the compared periods.

Gross Profit was R$3.3 billion in the quarter, down 9.7% compared to the previous

Selling, General & Administrative (SG&A) Expenses were R$562 million in 2Q23, up 4.5% from 1Q23 and 8.9% from 2Q22. As a percentage of Net Sales, SG&A Expenses were 3.1%, slightly higher than in 1Q23, once again reflecting Gerdau's discipline in maintaining its expenses at healthy levels.