Gerdau's 1Q26 EBITDA Surges 25% QoQ as North America Dominates at 75% of Earnings

What happened

Gerdau reported 1Q26 adjusted EBITDA of R$3.0 billion, a 25% increase from 4Q25, driven by its North America operations which accounted for 75% of consolidated EBITDA, up from 62% in 2025. This result underscores the company's increasing reliance on its North American segment amid ongoing pressure in Brazil from import competition and weak pricing. The strong sequential improvement aligns with the base case scenario from our report, which assumed North America demand durability sustaining utilization. However, the higher concentration amplifies the risk should North American demand roll over, especially given mixed signals in nonresidential construction and auto sectors. The quarterly beat does not change the need to confirm that lower 2026 capex and Miguel Burnier start-up translate into sustainable free cash flow.

Implication

The 1Q26 results validate the near-term earnings power of North America and improve the likelihood that 2026 free cash flow benefits from the capex step-down. However, the higher EBITDA concentration (75% vs 62%) means any North American slowdown—whether from weaker infrastructure, data center, or automotive demand—would have an outsized impact on consolidated results. Investors should use this strength to monitor the sustainability: track North American backlog days (the master report flagged ~70 days in Q3'25, now likely even higher) and import trends in Brazil. The bear case in Brazil (import penetration persisting) remains intact, but the strong NA performance pushes the base case forward. The key catalyst remains the Miguel Burnier ramp in H1 2026 and confirmation that trade defense measures begin to bite.

Thesis delta

The investment thesis shifts from 'North America as 60% EBITDA stabilizer' to 'North America as 75% EBITDA driver,' increasing dependency and risk concentration. The strong sequential EBITDA growth supports the base case but also demands higher vigilance on North American demand signals. Meanwhile, the Brazil turnaround thesis becomes even more dependent on Miguel Burnier and trade defense, as Brazil's relative contribution shrinks further.