Companhia Siderúrgica Nacional S A : 1Q22 Earnings Release

FINANCIAL RESULTS 1Q22

May 04, 2022

São Paulo, May 4, 2022 - Companhia Siderúrgica Nacional ("CSN") (B3: CSNA3) (NYSE: SID) discloses its first quarter of 2022 (1Q22) financial results in Brazilian Reais, with all financial statements consolidated in accordance with accounting practices adopted in Brazil issued by the Accounting Pronouncements Committee ("CPC"), approved by the Brazilian Securities and Exchange Commission ("CVM") and the Federal Accounting Council ("CFC") and in accordance with international financial reporting standards ("IFRS"), issued by the International Accounting Standards Board ("IASB").

The comments address the Company's consolidated results in the first quarter of 2022 (1Q22) and the commendations are for the fourth quarter of 2021 (4Q22) and the first quarter of 2021 (1Q21). The price of the dollar was R$ 5.70 at 03/31/2021; R$ 5.58 on 12/31/2021 and R$ 4.74 on 03/31/2022.

Operational and financial highlights of 1Q22

SOLID AND RESILIENT RESULT EVEN WITH OPERATIONAL AND COST PRESSURES

The beginning of 2022 was marked by a challenging scenario, due to heavy rainfall in the Southeast region and pressures on coal and coke costs.

Even so, CSN was able to deliver an excellent result, with EBITDA of R$ 4.7 billion and EBITDA margin of 39.1%, representing a growth of 4.2 p.p. compared to the previous quarter.

STRONG RECOVERY OF PRICES AND MARGINS IN MINING ON 1Q22

The strong realization of prices observed in this quarter more than offset the decrease in produced volume, due to the heavy rains recorded in the period.

Even with a lower dilution of fixed costs, adjusted EBITDA in the mining segment was R$ 2.4 billion in 1Q22 with an EBITDA margin of 63%.

INCREASE IN MARKET SHARE OF STEEL ANDLEVERAGE LEVEL UNDER CONTROL

SOLID PERFORMANCE IN THE INTERNATIONAL MARKET

Continuous recuperation in volume offset the small price reduction observed in the period, resulting in a quarterly growth of 3.1% in steel revenue.

Total sales reached 1,157kton in 1Q22, a growth of 13% against 4Q21, with strong foreign market performance.

Leverage level remained Below 1x, ending the quarter at 0.89x versus 0.76x in 4Q21, maintaining the leverage level within the company's targets.

Free cash flow was negative at R$2,542 million, mainly influenced by specific variations in working capital and the strong payment of taxes resulting from the record performance recorded in 2021.

MAINTENANCE OF CEMENT PRICE EVEN IN A QUARTER IMPACTED BY SEASONALITY

The cement segment was impacted in this quarter by the higher rainfall volume and temporary pressures on production costs.

As a consequence, there was an 11% decline in sales volume when compared to 4Q21. In the annual comparison, total sales were 17.5% higher as a result of the incorporation of Elizabeth Cements.

Consolidated Table - Highlights

Destaques	1Q22	4Q21	1Q22 x 4Q21	1Q21	1Q22 x 1Q21

Steel Sales (Thousand Tones)	1,157	1,023	13%	1,317	-12%
- Domestic Market	754	690	9%	911	-17%
- External Market	402	333	21%	406	-1%
Iron Ore Sales (Thousand Tones)	6,932	7,719	-10%	8,225	-16%
- Domestic Market	1,111	1,190	-7%	1,286	-14%
- External Market	5,821	6,529	-11%	6,939	-16%
Consolidated Results (R$ million)
Net Revenue	11,770	10,361	14%	11,913	-1%
Gross Porfit	4,483	3,755	19%	5,735	-22%
Adjusted EBITDA (1)	4,718	3,727	27%	5,806	-19%
EBITDA margin %	39.1%	34.9%	4.2 p.p.	48.7%	-9.6 p.p.
Adjusted Net Debt (2)	18,635	16,772	11%	20,542	-9%
Adjusted Cash/Disponibilities (2)	14,033	17,593	-20%	14,727	-5%
Net Debt / Adjusted EBITDA	0.89x	0.76x	17%	1.29x	-31%

¹ Adjusted EBITDA is calculated from net income (loss), plus depreciation and amortization, taxes on income, net financial result, income from investment participation, income from other operating income/expenses and includes a proportional participation of 37.27% of the EBITDA of the joint subsidiary MRS Logística.

² Adjusted Ebitda Margin is calculated from Adjusted Ebitda divided by Management Net Revenue.

³ Adjusted Net Debt and Adjusted Cash/Availability consider 37.27% of MRS, in addition to not considering Forfaiting and Cashed Risk transactions.

Consolidated Results

• • Net revenue in 1Q22 totaled R$ 11,770 million, representing an increase of 13.6% when compared to 4Q21 and a slight decline of 1.2% when compared to 1Q21. This result is a consequence of the improvement of the mining segment that showed a strong price recovery in the period, in addition to higher volumes sold in the steel market.

• • The cost of goods sold (COGS) totaled R$ 7,287 million in the 1Q22, representing an increase of 10.3% compared to 4Q21 and 18% compared to 1Q21. This increase in costs was a consequence of higher prices for some raw materials such as coal and coke, in addition to the lower dilution of fixed costs in mining with the drop in volume produced.

• • Despite the increase in costs, gross margin reached 38% in 1Q22 and was 1.8 p.p. higher than in 4Q21, as a result of the strong price recovery observed in the mining segment. On the other hand, when compared to the same period of 2021, there was a 22% decline in gross profit, which reflects not only the operational difficulties observed in the quarter with an above-normal rainfall volume, but also higher costs in the annual comparison.

• • In 1Q22, sales, general and administrative expenses totaled R$ 587 million, 28% lower than in 4Q21, as a consequence of the lower volume sold in mining that generated a lower freight expense, in addition to the greater budgetary control performed by the company.

• • The group of other operating income and expenses was negative in R$ 359 million in 1Q22, mainly from cash flow hedge accounting operations that totaled R$ 79 million in the period.

• • The financial result was negative at R$ 1,125 million in 1Q22, representing an increase of 145% compared to the previous quarter, as a consequence of higher debt costs and the devaluation of Usiminas shares at the end of the quarter.

1Q22	4Q21	1Q22 x 4Q21	1Q21	1Q22 x 1Q21

Financial Result - IFRS	(1,125)	(460)	145%	(201)	460%
Financial Revenue	186	88	111%	586	-68%
Financial Expenses	(1,311)	(548)	139%	(787)	67%
Financial Expenses (ex-exchange rate variation)	(1,190)	(732)	63%	(731)	63%
Result with exchange rate variation	(121)	184	-166%	(56)	116%
Monetary and Exchange Rate Variation	(100)	202	-150%	(53)	89%
Derivatives Result	(21)	(18)	17%	(3)	600%

• • The equity result was positive at R$ 19 million in 1Q22, a performance identical to the previous quarter, even considering the recovery of MRS results.

  MRS Logística
  TLSA
  Equimaq S.A	-
  Eliminations	(11)
  Equity Result with Affiliated Companies	19

  1Q22

  1Q22 x 4Q21	1Q22 x 1Q21
  37	25	48%	28	32%
  (7)	(7)	0%	(5)	53%
  (1)	-100%	(0)	-100%
  2	-650%	(9)	23%
  19	0%	14	32%

  4Q21

  1Q21

• • In 1Q22, the Company's net income was R$ 1,364 million, a result 29% higher than that recorded on last quarter, highlighting the Company's resilience and the improvement in operating results, that offset the greater financial expense observed in the period.

1Q22	4Q21	1Q22 x 4Q21	1Q21	1Q22 x 1Q21

Adjusted EBITDA
Profit (Loss) for the Period	1,364	1,061	29%	5,697	-76%
Depretiation	635	623	2%	456	39%
Income Tax and Social Contribution	1,066	1,054	1%	1,278	-17%
Finance Income	1,125	460	145%	202	458%
EBITDA (ICVM 527)	4,190	3,198	31%	7,633	-45%
Other Operating Income (expenses)	359	385	-7%	(1,986)	-118%
Free Cash Flow Hedge Accounting - Exchange rate	79	208	-62%	252	-69%
Free Cash Flow Hedge Accounting - Platts Index	-	-	0%	59	-100%
Net gain sales of CSN Mineração Shares	-	-	0%	(2,472)	-100%
Other	280	177	58%	175	60%
Equity Results of Affiliated Companies	(19)	(19)	0%	(13)	41%
Proportional EBITDA of Jointly Owned Subsidiaries	188	163	15%	173	9%
Adjusted EBITDA	4,718	3,727	27%	5,806	-19%

]

*The Company discloses its adjusted EBITDA excluding participation in investments and other operating income (expenses) because it understands that it should not be considered in the calculation of recurring operating cash generation.

• • In 1Q22, adjusted EBITDA was R$ 4,718 million, with an adjusted EBITDA margin of 39% or 5.2 p.p. above last quarter.

  This increase in profitability is a direct consequence of the strong performance achieved in the mining segment with the price appreciation of iron ore during the period, which ended up offsetting the higher volume of rainfall and the high costs of some raw materials, such as coal and coke.

Adjusted EBITDA (R$ MM) and Adjusted Margin¹ (%)

¹ Adjusted EBITDA Margin is calculated from the division between Adjusted EBITDA and Adjusted Net Revenue, which considers the 100% stakes in csn mineração's consolidation and 37.27% in MRS.

Adjusted Cash Flow¹

Adjusted Cash Flow in the 1Q22 was negative at R$ 2,542 million, mainly impacted by one-off variations in working capital and higher disbursements with Income Tax and Social Contribution expenses, due to the annual adjustment in the mining and steel segments, as a reflection of the strong result obtained in 2021.

Adjusted cash flow¹ at 1Q22 (R$MM)

¹ The concept of adjusted cash flow is calculated from adjusted Ebitda, subtracting Ebitda from Jointly Controlled Companies, CAPEX, IR, Financial Results and Changes in Assets and Liabilities², excluding the effect of the Glencore advance.

² Adjusted Working Capital is composed of the change in Net Working Capital, plus the change in accounts of long-term assets and liabilities and disregarding the net change in IR and CS.

Indebtedness

As of 03/31/2022, consolidated net debt reached R$ 18,635 million, with the maintenance of a high cash and cash equivalents of the Company, keeping the leverage indicator measured by the Net Debt/EBITDA ratio at 0.89x, i.e., below the 1x target established by CSN.