Full Transcript: Companhia Siderurgica Q2 2026 Earnings Call

Companhia Siderurgica (NYSE: SID ) released second-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below. This content is powered APIs. For comprehensive financial data and transcripts, visit The full earnings call is available at Summary Companhia Siderurgica reported a 5% increase in consolidated EBITDA for Q2 26, driven by improved operational performance across all segments.

The company achieved positive cash flow and successfully issued a new 2030 bond with 77% adherence, highlighting investor confidence. Mining operations recorded the fourth best sales result in history despite a 15-day shutdown, maintaining a profitability margin above 30%. The cement segment delivered the highest EBITDA in its history for the second consecutive quarter, supported by resilient demand and higher prices. Logistics and energy segments also performed exceptionally, with logistics posting the second-best EBITDA in the company's history and energy benefiting from retroactive revenue recognition.

The company is focused on reducing inventory levels and expects further working capital releases, contributing to improved cash flow. Management emphasized the importance of anti-dumping measures and noted a significant decline in steel imports, benefiting domestic market share. Deleveraging remains a priority, with ongoing asset sales in cement and logistics expected to further reduce debt. The company maintained a positive outlook for the second half of the year, aiming for sustained profitability and operational improvements across segments.

Full Transcript OPERATOR Morning and thank you for holding. At this time we would like to welcome everyone to Companhia Siderurgica's conference call for the results for the second quarter 26. Today we have with us the Company's Executive Officers. We would like to inform you that this event is being recorded and all participants will be in listen-only mode during the Company's presentation.

Ensuing this, we will go on to the Q&A section with further instructions. You can access this event at where the presentation is also available. The replay of the event will be available soon after closing. Before proceeding, please bear in mind that some of the forward-looking statements herein are mere expectations or trends based on the current assumptions and opinions of the Company's management.

Future results and events may differ materially from those expressed herein, which do not constitute projections. , Brazil and other countries, changes in laws and regulations, and general competitive factors at a global, regional, or national basis. We will now turn the floor over to Mr. Marco Rabello, Investor Relations Executive Officer, who will present the Company's operating and financial highlights for Companhia Siderurgica for the period.

You may proceed, sir. Marco Rabello, CFO Diretor Financeiro e de Relações com Investidores Good morning everybody and thank you for participating in another Companhia Siderurgica conference call. We're going to present the results for the second quarter 26, a very important period for the company where the company was able to overcome all the adversities relating to cost and raw materials to offer vigorous growth of EBITDA in the previous quarter and in comparison with the quarter 25. This 5% increase in consolidated EBITDA is a result of better operational performance in all segments, sales, and the commercial activity.

You also see the importance of having a diversified operation without bending to the pressures of a specific sector. Financially, another important point was the release of cash flow, and the positive cash flow during the period increased compared to previous quarters. Now this movement reflects the evolution of the projects that the Company has been working on since the beginning of the year to resolve the capital structure. With this, the expectation is that the Company will gradually evolve to a more sustainable cash generation going forward.

We're very satisfied to announce the conclusion of the new 2030 bond with an adherence of more than 77%. This shows the success of the operation and the credibility that people have in the project and movement of the company. It's important for the company to calmly carry out its projects. For example, the divestment of assets, the conclusion of P15, and the release of working capital in the company.

After the conclusion of these projects, the company will be able to adhere better to its long-term goals. Let's go on to the highlights of mining. In the second quarter we reached the fourth best sales result in the history of the segment. This is very relevant when we see that the operation was in shutdown for 15 days for work in the mine and elsewhere.

Throughout the quarter, we had two of the best monthly performances in the history of Companhia Siderurgica, with May and June as the strongest months in the group. This shows the high level of efficiency that the operation has achieved. This performance was important to offset the increase in load costs and the exchange rate due to the Middle East spike. Because of the exchange rate, the EBITDA of mining in the second quarter was lower than in the previous quarter, but even that way guaranteed profitability above 30%, showing the resilience and profitability of the operation in mining after a—I'm sorry.

And still after a challenging year. We became successful after the anti-dumping measures approved in March. This allowed for a significant entrance of material in the Brazilian ports, allowing the Brazilian producers to have a greater stake. The improvement in the commercial environment also allowed for a price readjustment in the quarter.

We began working with higher prices. The result of this more favorable dynamic, with 10% of expansion of sales in the domestic market, more than offset the slowdown in steel. Another important factor for the recovery of steel was the excellent result achieved by subsidiaries abroad. RSWD subsidiary in Germany had the best commercial performance since 2022, and the American operation, despite the difficulties imposed by the tariff war, has also been able to deliver stronger results compared to last year.

The combination of these factors have allowed for a strong expansion of results, allowing the company to offset the pressure on costs to go back to the double-digit performance. Now steel will be an important vector of results for the company this year. In the cement market, we continue to have exceptional performance. The company was once again able to deliver the highest EBITDA in its history.

This is the second consecutive quarter of record, showing that the company is growing with resilient demand, higher prices, and a very assertive commercial strategy. This EBITDA record in the second quarter occurred with maintenance shutdowns for the period, showing that the performance can improve further. The strategy that is being implemented of prioritizing results instead of volume is important because of the sound performance of the cement market. We have a growth in salary and a new dynamic in the real estate market because of the My House, My Home system.

This allows profitability to be above 30% with an efficiency level above that of the sector. If we think about the results for the last 12 months, EBITDA has made a significant evolution compared to last year, reaching with an even greater growth perspective for the rest of the year. Very similar to steel, cement is an important factor for the results of the company. In terms of the sale of the asset last Friday, as informed in a material fact, we have received binding offers that are unique for the Brazilian market and should lead to a very interesting valuation.

Finally, if we look to the right of the slide, we have a highlight in logistics and energy. In logistics, this semester was also excellent with the second best EBITDA in the company's history. The seasonality of a drier weather and efficiency of the logistic model were fundamental to resume the work of cargo with a margin of 45% in the quarter. This extraordinary performance shows the strength of our asset portfolio and should underpin us in the sale with a minority sale in Infra of Companhia Siderurgica.

We have a very high number of NDAs signed, and the expectation is that at the end of the month the company will receive non-binding offers for a minor share in this company. In the sector of energy, we had a favorable dynamic. It ended up being thrust by the retroactive recognition of revenue of a favorable decision related to the Jacoi hydroelectric power plant, whose commercialization had been suspended since October of 2025. Now energy returns to normalized levels in the coming quarter.

Because of this, let's now go on to slide number three where we present our EBITDA results and margin for the second quarter 26. We see the favorable dynamic of the quarter with a higher EBITDA in the year-on-year and quarter-on-quarter comparison. We were able to neutralize the problem with logistics and deliver strong commercial growth in all sectors. If we look at the graph to the right, it becomes evident the importance of having a diversified asset.

Steel, mining, logistics, and energy were able to offset the negative effect of a higher cost in mining. On the following slide we present the company's investments, where we can see an increase of 26% in capex vis-à-vis the previous quarter and 6% on the year-on-year comparison. We have advance in civil construction related to the P15 project of mining, besides the disbursements carried out for maintenance in mining and cement. In slide number five, we analyze our working capital, where we can see a significant reduction in the quarter-on-quarter comparison related to the lower inventory levels of the company.

This is in line with a project that has been put in place since the beginning of the year to release cash and normalize the volume of the operations, especially in steel products. We expect this trend to continue in the second half of the year. This will improve cash conversion, and we will have a higher balance of recoverable taxes also contributing to this new working capital for the quarter. In the next slide we show you the results of our free cash flow, where we can see a positive flow of 808 million BRLs, an important reversion after some negative quarters.

Now the release of working capital and the fundraising were the main factors for this performance. This has helped us offset the substantial debt amortization and amortization of prepayment contracts during the period. For the coming quarters, the company will continue to move forward in an operational improvement of these results, in a continuous release of working capital, and in new contracts for prepayment to maintain the impact of these operations neutral. On slide number seven, we show you the situation of our indebtedness and leverage, as well as the behavior of the debt throughout this semester.

To the right you see a buildup of net debt because of the amortization of prepayments of iron ore contracts, the exchange rate on contract, and an effective 500 million in Transnorte. This has more than offset the cash generation recorded in the period. 49 times this quarter, a minor increase that does not represent a trend. Our focus once again is on resolving our capital structure, with the divestment of assets advancing very quickly and new initiatives that could result in important activities, besides the increased operational results that we have.

Going on to slide number eight, you see our indebtedness profile. We observe that we have a high level of cash despite the fact that we have reduced our debt. You can also see that the main maturity terms are for banking debts where Companhia Siderurgica has been able to manage this properly. When we look forward in 2028, we have just addressed this with an adherence of 77% of shares sold.

We're carrying out all efforts to lengthen our maturity terms to have a more structured payment of debt and to allow for the growth of our operational results. On slide number nine you can see the pro forma of our new structure for debt. The expectation is that in short time Companhia Siderurgica will become ever lighter, not only to be able to face future maturities, but also to unharness several new projects that will completely transform the potential for cash generation of the group. With this, we conclude the analysis of consolidated results and we go on to slide 11 where we show you the results of our steel segment.

You see the results of our commercial area with a growth of 17% in sales for the quarter, driven by the domestic market and the foreign market as well. In the domestic market, we have the first effect of the anti-dumping regulation with better initiatives for local producers. The result was an annual growth of 10% in the domestic market with a mix improvement in all of the markets we are present in. In the foreign market we had the highest volume since 1Q23 with the consumption of steel recovering in Europe and the United States also increasing its import.

When we look at the following slide of production, we see that the results show the impact of the shutdown of one of the blast furnaces and the reduction of stock in the Vargas plant. To the right, you see a slight increase in the plate because of the cost of energy and raw material during the period. Despite this momentary pressure, we have a significant growth in the performance per ton with a consistent evolution in the market. This becomes ever clearer when we go on to the financial performance of steel on slide 13.

In the graph to the left, we see an increase in net revenue and average price for that period. We have an intense commercial rhythm that has been recorded and the resumption of activities abroad, and a more favorable dynamic of prices in Brazil after the readjustment that we put in place in April. Going to the graph to the right, you can see a strong recovery of EBITDA during the period with profitability back to two digits. The most difficult phase of steel is something we have left behind us.

We still have a great deal of efficiency and value to add to the segment of steel. The results of this quarter point to a sustainable recovery for steel and for the entire group. Let's now go on to the mining segment. On slide 15 we see the result of production and sales.

In the production graph we see the effects of the 15 days of shutdown. 5%. On the other hand, when we look at the quarterly growth, this positive seasonality of the drier period offset the days in which production came to a standstill. We see a stronger pace of sales with the company recording the fourth best result in history, even with the 15 days of shutdown, showing the robustness and efficiency of the logistics infrastructure of the company.

The result also shows the efforts deployed to recover the inventories of iron ore. Regarding the financial performance on slide 16, despite the solid sales volume and iron ore prices remaining high, net revenue was impacted by foreign exchange appreciation and higher freight rates, pressured by geopolitical tensions between the United States and Iran. The unit revenue was $18 per ton, it increased to 20% less than 1Q26 and below that recorded for the same quarter last year. Regarding EBITDA, in the graph to the right we see that this drop occurred in a period marked by operational excellence, showing the impact of logistics and exchange rate in this segment.

Despite the results in this quarter, even in a quarter marked by logistic costs and foreign pressure, the company's profitability remained resilient with an EBITDA margin of above 30%. In the following slide we see the adjusted EBITDA in 2Q26 compared to the previous quarter. We see a clear and direct impact of maritime freight during the period and the effect of exchange rate in the iron ore. On the other hand, we had better volume and costs, helping us to attenuate these effects.

Let's go on to analyze the cement segment. On slide 19 we see the sales volume. Here we see a more timid activity commercially due to the scheduled maintenance events in several of the plants during this period, and the strategy continues to prioritize value. Now, there was a dynamic that was favorable in the cement market without having to enter a price war.

We continue to see resilient demand and the focus is to have sustainable performance for the operation. In the next slide we see the financial performance with a growth of revenue of 14% in quarter-on-quarter comparison and 10% compared to 2Q25. This shows the readjustments put in force in the last months and a more favorable market. On the part of EBITDA, we are very satisfied to announce a second consecutive record, going beyond 420,000 BRLs, and a margin of more than 30%.

All of this profitability shows the positive moment begun by the operation and the ability to make an asset profitable despite the price pressure. We see an operation that is ever more competitive and we can see the competitive edge of Companhia Siderurgica Cement that has more streamlined plants and a very efficient management. We go on to analyze the logistics segment on slide 22. We can see in terms of net revenue that the quarterly growth is due to the drier period and the transport of merchandise.

Everything was driven by the subsegments of the multimodal segment.