Gerdau S A : CONSOLIDATED BALANCE SHEETS - Form 6-K

CONSOLIDATED BALANCE SHEETS
In thousands of Brazilian reais (R$)
(Unaudited)

		Note			March 31, 2024			December 31, 2023
CURRENT ASSETS
Cash and cash equivalents			4				3,743,123				3,005,645
Short-term investments			4				2,198,040				2,338,097
Trade accounts receivable			5				5,481,606				4,875,394
Inventories			6				16,043,134				15,227,778
Tax credits							940,695				1,009,824
Income and social contribution taxes recoverable							757,139				986,068
Dividends receivable							3,021				1,036
Fair value of derivatives			14				37,039				766
Assets held for sale							-				1,210,041
Other current assets							538,725				543,288
							29,742,522				29,197,937
NON-CURRENT ASSETS
Tax credits							1,910,374				1,916,100
Deferred income taxes							2,270,489				2,219,461
Judicial deposits			15				2,089,003				2,064,070
Other non-current assets							384,695				355,390
Prepaid pension cost							11,695				11,695
Fair value of derivatives			14				1,433				-
Investments in associates and joint ventures			8				4,073,704				3,858,449
Goodwill			10				11,156,346				10,825,148
Leasing							1,208,667				1,182,654
Other Intangibles							364,070				373,710
Property, plant and equipment, net							23,748,071				22,880,530
							47,218,547				45,687,207
TOTAL ASSETS							76,961,069				74,885,144

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements

GERDAU S.A.
CONSOLIDATED BALANCE SHEETS
In thousands of Brazilian reais (R$)
(Unaudited)

		Note			March 31, 2024			December 31, 2023
CURRENT LIABILITIES
Trade accounts payable - domestic market			11				4,250,799				4,120,701
Trade accounts payable - debtor risk			11				550,751				584,320
Trade accounts payable - imports			11				1,278,546				1,196,162
Short-term debt			12				1,673,459				1,783,201
Debentures			13				37,369				14,421
Taxes payable							456,254				512,935
Income and social contribution taxes payable							147,862				502,766
Payroll and related liabilities							602,915				845,848
Leasing payable							395,867				373,151
Employee benefits							289				209
Environmental liabilities							172,579				139,395
Fair value of derivatives			14				24,084				19,042
Other current liabilities							1,051,580				1,192,461
							10,642,354				11,284,612
NON-CURRENT LIABILITIES
Long-term debt			12				8,530,326				8,296,474
Debentures			13				799,294				799,212
Related parties			16				25,175				24,992
Deferred income taxes							74,875				204,151
Provision for tax, civil and labor liabilities			15				2,224,479				2,185,825
Environmental liabilities							353,931				378,274
Employee benefits							691,023				706,767
Fair value of derivatives			14				-				1,606
Leasing payable							912,707				904,451
Other non-current liabilities							595,962				859,917
							14,207,772				14,361,669
EQUITY			17
Capital							20,215,343				20,215,343
Treasury stocks							11,597				11,597
Capital reserves							(98,434	)			(150,182	)
Retained earnings							25,740,983				25,914,830
Transactions with non-controlling interests without change of control							2,043,782				(2,904,670	)
Other reserves							4,006,140				5,972,041
EQUITY ATTRIBUTABLE TO THE EQUITY HOLDERS OF THE PARENT							51,919,411				49,058,959
NON-CONTROLLING INTERESTS							191,532				179,904
EQUITY							52,110,943				49,238,863
TOTAL LIABILITIES AND EQUITY							76,961,069				74,885,144

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements

GERDAU S.A.
CONSOLIDATED STATEMENTS OF INCOME
In thousands of Brazilian reais (R$)
(Unaudited)

				For the three-month period ended
		Note			March 31, 2024			March 31, 2023
NET SALES							16,210,263				18,872,303
Cost of sales			20				(13,790,544	)			(15,243,628	)
GROSS PROFIT							2,419,719				3,628,675
Selling expenses			20				(183,007	)			(174,232	)
General and administrative expenses			20				(317,929	)			(363,807	)
Other operating income			20				44,996				898,099
Other operating expenses			20				(78,856	)			(45,738	)
Results in operations with joint ventures			3.4				808,367				-
(Reversal) Impairment of financial assets			20				(20,094	)			(4,514	)
Equity in earnings of unconsolidated companies			8				79,116				353,954
INCOME BEFORE FINANCIAL INCOME (EXPENSES) AND TAXES							2,752,312				4,292,437
Financial income			21				174,674				215,862
Financial expenses			21				(343,198	)			(323,735	)
Tax credits monetary update			21				-				253,002
Exchange variations, net			21				(320,635	)			(189,728	)
Gains (Losses) on financial instruments, net			21				13,412				(5,496	)
INCOME BEFORE TAXES							2,276,565				4,242,342
			7
Current			7				(350,028	)			(665,544	)
Deferred			7				126,335				(361,399	)
Income and social contribution taxes							(223,693	)			(1,026,943	)
NET INCOME							2,052,872				3,215,399
ATTRIBUTABLE TO:
Owners of the parent							2,043,782				3,205,919
Non-controlling interests							9,090				9,480
							2,052,872				3,215,399
Basic earnings per share - preferred - (R$)			18				0.97				1.53
Basic earnings per share - common - (R$)			18				0.97				1.53
Diluted earnings per share - preferred - (R$)			18				0.97				1.52
Diluted earnings per share - common - (R$)			18				0.97				1.52

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements

GERDAU S.A.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
In thousands of Brazilian reais (R$)
(Unaudited)

		For the three-month period ended
		March 31, 2024			March 31, 2023
Net income for the period			2,052,872				3,215,399
Items that may be reclassified subsequently to profit or loss
Other comprehensive income from associates and joint ventures			117,915				173,461
Cumulative translation adjustment			1,330,696				(701,478	)
Recycling of cumulative translation adjustment to net income			(407,560	)			-
Unrealized (Losses) Gains on net investment hedge			(63,708	)			129,992
Unrealized (Losses) Gains on financial instruments, net of tax			(292	)			639
			977,051				(397,386	)
Total comprehensive income for the period, net of tax			3,029,923				2,818,013
Total comprehensive income attributable to:
Owners of the parent			3,016,921				2,811,566
Non-controlling interests			13,002				6,447
			3,029,923				2,818,013

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements

GERDAU S.A.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
in thousands of Brazilian reais (R$)
(Unaudited)

	Attributed to parent company's interest
											Retained earnings						Other Reserves
		Capital			Treasury stocks			Capital Reserve			Legal reserve			Tax Incentives Reserve			Investments and working capital reserve			Retained earnings			Operations with non-controlling interests			Gains and losses on net investment hedge			Gains and losses on financial instruments			Cumulative translation adjustment			Pension plan			Long term incentive plan			Total parent company's interest			Non-controlling interests			Total  Shareholder's Equity
Balance as of January 1, 2023			19,249,181				(179,995	)			11,597				2,210,531				1,775,498				18,186,532				-				(2,904,670	)			(9,079,070	)			(12,734	)			16,725,542				80,117				53,665				46,116,194				181,999				46,298,193
2023 Changes in Equity
Net income			-				-				-				-				-				-				3,205,919				-				-				-				-				-				-				3,205,919				9,480				3,215,399
Other comprehensive income (loss) recognized in the period			-				-				-				-				-				-				-				-				129,992				639				(524,984	)			-				-				(394,353	)			(3,033	)			(397,386	)
Total comprehensive income (loss) recognized in the period			-				-				-				-				-				-				3,205,919				-				129,992				639				(524,984	)			-				-				2,811,566				6,447				2,818,013
Increase in Capital through capitalization of Retained earnings			966,162				-				-				-				-				(966,162	)			-				-				-				-				-				-				-				-				-				-
Long term incentive plan cost recognized in the period			-				-				-				-				-				-				-				-				-				-				-				-				(6,526	)			(6,526	)			(25	)			(6,551	)
Long term incentive plan exercised during the period			-				23,966				-				-				-				6,099				-				-				-				-				-				-				-				30,065				16				30,081
Effects of interest changes in subsidiaries			-				-				-				-				-				-				-				-				-				-				-				-				-				-				(3,915	)			(3,915	)
Dividend in excess of the minimum estatutory undistributed in 2022			-				-				-				-				-				-				(333,151	)			-				-				-				-				-				-				(333,151	)			-				(333,151	)
Dividends/interest on equity			-				-				-				-				-				-				-				-				-				-				-				-				-				-				(503	)			(503	)
Balance as of March 31, 2023 (Note 17)			20,215,343				(156,029	)			11,597				2,210,531				1,775,498				17,226,469				2,872,768				(2,904,670	)			(8,949,078	)			(12,095	)			16,200,558				80,117				47,139				48,618,148				184,019				48,802,167
Balance as of January 1, 2024			20,215,343				(150,182	)			11,597				2,528,673				2,914,226				20,471,931				-				(2,904,670	)			(8,831,146	)			(11,951	)			14,504,471				176,612				134,055				49,058,959				179,904				49,238,863
2024 Changes in Equity
Net income			-				-				-				-				-				-				2,043,782				-				-				-				-				-				-				2,043,782				9,090				2,052,872
Other comprehensive income (loss) recognized in the period			-				-				-				-				-				-				-				-				(63,708	)			(292	)			1,037,139				-				-				973,139				3,912				977,051
Total comprehensive income (loss) recognized in the period			-				-				-				-				-				-				2,043,782				-				(63,708	)			(292	)			1,037,139				-				-				3,016,921				13,002				3,029,923
Long term incentive plan cost recognized in the period			-				-				-				-				-				-				-				-				-				-				-				-				(34,370	)			(34,370	)			(10	)			(34,380	)
Long term incentive plan exercised during the period			-				51,748				-				-				-				1,386				-				-				-				-				-				-				-				53,134				14				53,148
Effects of interest changes in subsidiaries			-				-				-				-				-				-				-				-				-				-				-				-				-				-				(1,202	)			(1,202	)
Dividend in excess of the minimum estatutory undistributed in 2023			-				-				-				-				-				(175,233	)			-				-				-				-				-				-				-				(175,233	)			-				(175,233	)
Dividends/interest on equity			-				-				-				-				-				-				-				-				-				-				-				-				-				-				(176	)			(176	)
Balance as of March 31, 2024 (Note 17)			20,215,343				(98,434	)			11,597				2,528,673				2,914,226				20,298,084				2,043,782				(2,904,670	)			(8,894,854	)			(12,243	)			15,541,610				176,612				99,685				51,919,411				191,532				52,110,943

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements

GERDAU S.A.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands of Brazilian reais (R$)
(Unaudited)

					For the three-month period ended
		Note			March 31, 2024			March 31, 2023
Cash flows from operating activities
Net income for the period							2,052,872				3,215,399
Adjustments to reconcile net income for the period to net cash provided by operating activities:
Depreciation and amortization			20				725,785				714,775
Equity in earnings of unconsolidated companies			8				(79,116	)			(353,954	)
Exchange variation, net			21				320,635				189,728
Gains and losses on derivative financial instruments, net			21				(13,412	)			5,496
Post-employment benefits							65,942				75,291
Long-term incentive plans							35,464				37,304
Income tax			7				223,693				1,026,943
Losses on disposal of property, plant and equipment							4,545				957
Results in operations with joint ventures							(808,367	)			-
Impairment of financial assets							20,094				4,514
Provision of tax, civil, labor and environmental liabilities, net							38,493				45,242
Tax credits recovery							-				(1,098,218	)
Interest income on short-term investments							(89,420	)			(146,962	)
Interest expense on debt and debentures			21				184,715				203,920
Interest expense on lease liabilities							33,575				(20,818	)
Reversal of net realizable value adjustment in inventory, net			6				(28,397	)			(16,165	)
							2,687,101				3,883,452
Changes in assets and liabilities
Increase in trade accounts receivable							(526,959	)			(1,126,895	)
(Increase) Decrease in inventories							(619,124	)			312,453
Increase in trade accounts payable							68,478				258,980
Increase in other receivables							(24,932	)			(130,218	)
Decrease in other payables							(301,178	)			(786,826	)
Dividends from associates and joint ventures							13,608				59,499
Purchases of short-term investments							(368,919	)			(1,372,722	)
Proceeds from maturities and sales of short-term investments							593,420				1,149,000
Cash provided by operating activities							1,521,495				2,246,723
Interest paid on loans and financing							(87,838	)			(78,331	)
Interest paid on lease liabilities							(33,575	)			(20,818	)
Income and social contribution taxes paid							(568,792	)			(183,888	)
Net cash provided by operating activities							831,290				1,963,686
Cash flows from investing activities
Purchases of property, plant and equipment			9				(1,083,069	)			(954,348	)
Proceeds from sales of property, plant and equipment, investments and other intangibles							1,503,968				5,490
Additions in other intangibles							(26,432	)			(27,661	)
Capital increase in joint ventures			8				(31,832	)			(96,653	)
Net cash provided (used) in investing activities							362,635				(1,073,172	)
Cash flows from financing activities
Dividends and interest on capital paid							(174,660	)			(332,253	)
Proceeds from loans and financing							421,596				118,392
Repayment of loans and financing							(656,342	)			(413,311	)
Leasing payment							(106,846	)			(91,592	)
Intercompany loans, net							183				(635	)
Net cash used in financing activities							(516,069	)			(719,399	)
Exchange variation on cash and cash equivalents							59,622				(65,096	)
Increase in cash and cash equivalents							737,478				106,019
Cash and cash equivalents at beginning of period							3,005,645				2,475,863
Cash and cash equivalents at end of period							3,743,123				2,581,882

The accompanying notes are an integral part of these Condensed Consolidated Interim Financial Statements

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

NOTE 1 - GENERAL INFORMATION

Gerdau S.A. is a publicly traded corporation (sociedade anônima) with its corporate domicile in the city of São Paulo, Brazil. Gerdau S.A and subsidiaries (collectively referred to as the "Company") is a leading producer of long steel in the Americas and one of the largest suppliers of special steel in the world. In Brazil, the Company also produces flat steel and iron ore, activities which expanded the product mix and made its operations even more competitive. The Company believes it is the largest recycler in Latin America and around the world it transforms each year millions of tons of scrap into steel, reinforcing its commitment to sustainable development of the regions where it operates. Gerdau is listed on the São Paulo and New York stock exchanges.

The Condensed Consolidated Interim Financial Statements of the Company were approved by the Management on May 2, 2024.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES

2.1 - Basis of Presentation

The Company's Condensed Consolidated Interim Financial Statements for the three-month period ended on March 31, 2024 have been prepared in accordance with International Accounting Standard (IAS) Nº 34, which establishes the content of condensed interim financial statements. These Condensed Consolidated Interim Financial Statements should be read in conjunction with the Consolidated Financial Statements of Gerdau S.A., as of December 31, 2023, which were prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board - IASB.

The preparation of the Condensed Consolidated Interim Financial Statements in accordance with IAS 34 requires Management to make accounting estimates. The Condensed Consolidated Interim Financial Statements have been prepared using the historical cost as its basis, except for the valuation of certain financial instruments, which are measured at fair value.

The accounting policies applied in this Condensed Consolidated Interim Financial Statements are the same as those applied in the Consolidated Financial Statements for the year ended December 31, 2023.

2.2 - New accounting standards

The issued and/or reviewed IFRS standards made by the IASB that are effective for the year started in 2024 had no impact on the Company's Financial Statements. In addition, the IASB issued/reviewed some IFRS standards, which have mandatory adoption for the year 2025 and/or after, and the Company is assessing the adoption impact of these standards in its Consolidated Financial Statements.

- Amendment to IAS 21 - Lack of Exchangeability. It clarifies aspects related to accounting treatment and disclosure when a currency lacks exchangeability into another currency. This amendment to the standard is effective for fiscal years beginning on/or after January 1, 2025. The Company does not expect material impacts on its Financial Statements.

- On March 6, 2024, the SEC approved new rules that will require climate-related disclosures by public companies, including evaluation and disclosure of certain climate-related financial metrics in their audited financial statements. These rules are effective for fiscal years beginning on/or after January 1, 2025. The Company is currently evaluating the impact of the rule changes.

- Issuance of IFRS 18 - Presentation and Disclosure in Financial Statements. Establishes the requirements for the presentation and disclosure of information in general purpose financial statements to help ensure they provide relevant information that faithfully represents an entity's assets, liabilities, equity, income and expenses. This standard is effective for years beginning on/or after January 1, 2027. The Company is evaluating the impacts on its Financial Statements of adopting this standard.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

NOTE 3 - CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

3.1 - Subsidiaries

The Company did not have material changes of interest in subsidiaries for the period ended on March 31, 2024, when compared to those existing on December 31, 2023.

3.2 - Joint Ventures

Listed below are the interests in joint ventures:

				Equity Interests
Joint ventures		Country		Total capital(*)
				March 31, 2024			December 31, 2023
Bradley Steel Processors		Canada			50.00				50.00
MRM Guide Rail		Canada			50.00				50.00
Gerdau Corsa S.A.P.I. de CV		Mexico			75.00				75.00
Gerdau Summit Aços Fundidos e Forjados S.A.		Brazil			58.73				58.73
Juntos Somos Mais Fidelização S.A.		Brazil			27.50				27.16
Addiante S.A		Brazil			50.00				50.00
Ubiratã Tecnologia S.A		Brazil			50.00				50.00
Brasil ao Cubo S.A.		Brazil			44.66				44.66
Gerdau Metaldom Corp.		Dominican Rep.			-				50.00
Diaco S.A.		Colombia			-				49.85

(*) The voting capital is substantially equal to the total capital. The interests reported represent the ownership percentage held directly and indirectly held in the joint venture.

Although the Company owns more than 50% of Gerdau Corsa S.A.P.I. de C.V. and Gerdau Summit Aços Fundidos e Forjados S.A., it does not consolidate the financial statements of these joint venture entities, due to joint control agreements with the other shareholders that prevent the Company from controlling the decisions in conducting the joint venture's business.

The Company presents the joint venture information in aggregate, since the investments in these entities are not individually material. The financial information of these joint ventures, accounted for under the equity method, is shown below:

		Joint ventures
Joint ventures		March 31, 2024			December 31, 2023
Cash and cash equivalents			610,363				1,560,816
Total current assets			3,097,402				6,212,742
Total non-current assets			4,688,009				6,362,085
Short-term debt			235,696				389,433
Total current liabilities			1,427,961				3,821,055
Long-term debt			631,954				633,163
Total non-current liabilities			1,035,002				1,210,572

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

		Joint ventures
		For the three-month period ended
Joint ventures		March 31, 2024			March 31, 2023
Net sales			1,676,961				3,681,289
Cost of sales			(1,382,323	)			(2,929,961	)
Income before financial income (expences) and taxes			206,211				654,644
Financial income			23,601				47,814
Financial expenses			(30,878	)			(35,567	)
Income and social contribution taxes			(65,080	)			(173,867	)
Net income			142,220				509,651
Depreciation and amortization			67,206				79,223
Other comprehensive income, net of tax			-				5,033
Total comprehensive income for the year, net of tax			142,220				514,683

3.3 - Associate companies

Listed below is the interest in associate companies:

Equity interests

Associate companies

Country

Total capital (*)

March 31, 2024

December 31, 2023

Dona Francisca Energética S.A.

Brazil

51.82

51.82

Newave Energia S.A.

Brazil

33.33

33.33

(*) The voting capital is substantially equal to the total capital. The interests reported represent the ownership percentage held directly and indirectly.

Although the Company owns more than 50% of Dona Francisca Energética S.A., it does not consolidate the financial statements of this associate because according to the associate by-laws it is necessary 65% of interest to control the company.

The summarized financial information of the associate company, accounted for under the equity method, is shown as follows:

		Associate companies
Associate companies		March 31, 2024			December 31, 2023
Cash and cash equivalents			119,248				138,389
Total current assets			161,441				165,048
Total non-current assets			653,259				424,053
Total current liabilities			(26,091	)			(122,308	)
Total non-current liabilities			(33,386	)			(7,965	)

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

		Associate companies
		For the three-month period ended
Associate companies		March 31, 2024			March 31, 2023
Net sales			33,193				16,315
Cost of sales			(11,769	)			(8,318	)
Income before financial income (expences) and taxes			11,607				6,245
Financial income			2,617				161
Financial expenses			(888	)			(1,352	)
Income and social contribution taxes			(4,901	)			(575	)
Net income			8,435				4,479
Depreciation and amortization			2,778				3,037
Total comprehensive income for the year, net of tax			8,435				4,479

3.4 - Results in operations with joint ventures

I) On January 17, 2024, the Company signed an agreement for the sale of all its equity interests of 49.85% in the joint venture Diaco S.A. (and subsidiaries) and 50.00% in the joint venture Gerdau Metaldom Corp (and subsidiaries), whose acquirer is the INICIA Group, Gerdau's partner in these companies, which were part of the Company's South America Segment and were recorded by the equity method. The transaction took place at a base price corresponding to US$ 325 million (equivalent to R$ 1.6 billion) and it is in line with its capital allocation strategy, focusing on the growth and competitiveness of assets with greater potential for long-term value generation. Throughout the first quarter of 2024, after compliance with the corresponding conditions precedent, the transactions were concluded and, as a result of the sale of these interests, the Company recognized a gain of R$ 808.4 million in the line of Results in operations with joint ventures in the Statement of Income, which includes the amount of R$ 407.6 million reclassified to income from Cumulative translation adjustment, as presented in the Statement of Comprehensive Income.

NOTE 4 - CASH AND CASH EQUIVALENTS, AND SHORT-TERM INVESTMENTS

Cash and cash equivalents

		March 31, 2024			December 31, 2023
Cash			17,382				10,468
Banks and immediately available investments			3,725,741				2,995,177
Cash and cash equivalents			3,743,123				3,005,645

Immediately available investments include investments with maturity up to 90 days, immediate liquidity and low risk of fair value variation.

Short-term investments

		March 31, 2024			December 31, 2023
Short-term investments			2,198,040				2,338,097

Short-term investments include Bank Deposit Certificates and marketable securities, which are used in the Company's operations and cash management and stated at their fair value. Income generated by these investments is recorded as financial income.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

NOTE 5 - ACCOUNTS RECEIVABLE

		March 31, 2024			December 31, 2023
Trade accounts receivable - in Brazil			3,009,206				2,622,865
Trade accounts receivable - exports from Brazil			506,548				617,577
Trade accounts receivable - foreign subsidiaries			2,073,852				1,724,838
(-) Impairment of financial assets			(108,000	)			(89,886	)
			5,481,606				4,875,394

Accounts receivable by aging are as follows:

		March 31, 2024			December 31, 2023
Current			4,799,193				4,294,446
Past-due:
Up to 30 days			580,941				513,384
From 31 to 60 days			61,173				48,538
From 61 to 90 days			30,117				24,027
From 91 to 180 days			61,454				50,502
From 181 to 360 days			34,752				13,251
Above 360 days			21,976				21,132
(-) Impairment on financial assets			(108,000	)			(89,886	)
			5,481,606				4,875,394

NOTE 6 - INVENTORIES

		March 31, 2024			December 31, 2023
Finished products			7,605,273				6,971,497
Work in progress			3,437,292				3,336,780
Raw materials			3,106,037				3,241,607
Storeroom supplies			1,296,498				1,266,465
Imports in transit			627,178				469,601
(-) Allowance for adjustments to net realizable value			(29,144	)			(58,172	)
			16,043,134				15,227,778

The allowance for adjustment to net realizable value of inventories, on which the provision and reversal of provision are registered with impact on cost of sales, is as follows:

Balance as of January 01, 2023			(47,497	)
Provision for the year			(59,783	)
Reversal of adjustments to net realizable value			47,747
Exchange rate variation			1,361
Balance as of December 31, 2023			(58,172	)
Provision for the year			(4,602	)
Reversal of adjustments to net realizable value			32,999
Exchange rate variation			631
Balance as of March 31, 2024			(29,144	)

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

NOTE 7 - INCOME AND SOCIAL CONTRIBUTION TAXES

In Brazil, income taxes include federal income tax (IR) and social contribution (CS), which represents an additional federal income tax. The statutory rates for income tax and social contribution are 25% and 9%, respectively, and are applicable for the periods ended on March 31, 2024 and 2023. The foreign subsidiaries of the Company are subject to taxation at rates ranging between 23% and 35%. The differences between the Brazilian tax rates and the rates of other countries are presented under "Difference in tax rates in foreign companies" in the reconciliation of income tax and social contribution below.

a) Reconciliations of income and social contribution taxes at statutory rates to amounts presented in the Statement of Income are as follows:

		For the three-month period ended
		March 31, 2024			March 31, 2023
Income before income taxes			2,276,565				4,242,342
Statutory tax rates			34	%			34	%
Income and social contribution taxes at statutory rates			(774,032	)			(1,442,396	)
Tax adjustment with respect to:
- Difference in tax rates in foreign companies			474,432				146,017
- Equity in earnings of unconsolidated companies			26,899				120,344
- Deferred tax assets not recognized			26,192				(4,137	)
- Interests on tax lawsuits*			10,739				93,089
- Interest on equity			48				169
- Tax credits and incentives			39				6,619
- Other permanent differences, net			11,990				53,352
Income and social contribution taxes			(223,693	)			(1,026,943	)
Current			(350,028	)			(665,544	)
Deferred			126,335				(361,399	)

* On September 24, 2021, the Federal Supreme Court finalized the judgment of Topic 962, deciding unanimously that the IR and CS levy was not due on the amounts related to interests (Selic rate) on tax lawsuits. Thus, the effects of such judgment were considered to the tax calculation applied to the interests recorded in the periods.

b) Tax Assets not booked:

The Company did not recognize a portion of tax assets regarding tax losses and negative social contribution from some operations in Brazil in the amount of R$ 264,613 (R$ 282,387 on December 31, 2023), which do not have an expiration date. The subsidiaries abroad had R$ 567,168 (R$ 569,714 as of December 31, 2023) of tax credits on capital losses for which deferred tax assets have not been booked and which expire between 2029 and 2035 and also several tax losses of state credits in the amount of R$ 280,157 (R$ 277,348 as of December 31, 2023), which expire at various dates between 2025 and 2038.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

NOTE 8 - INVESTMENTS

		Investments in North America			Investments in South America			Investments in Special Steel			Others			Total
Balance as of January 01, 2023			2,428,237				1,060,770				256,813				150,698				3,896,518
Equity in earnings			591,354				230,176				10,582				(4,506	)			827,606
Cumulative Translation Adjustment			142,830				17,060				1,127				15,197				176,214
Capital increase			-				-				-				524,185				524,185
Conversion of intercompany loan into equity interest			-				-				-				141,070				141,070
Negative goodwill in acquisition of equity interest			-				-				-				11,195				11,195
Presentation as Assets held for sale			-				(1,210,041	)			-				-				(1,210,041	)
Shares repurchase			-				(47,006	)			-				-				(47,006	)
Dividends/Interest on equity			(396,015	)			(50,959	)			-				(14,318	)			(461,292	)
Balance as of December 31, 2023			2,766,406				-				268,522				823,521				3,858,449
Equity in earnings			88,548				-				4,200				(13,632	)			79,116
Cumulative Translation Adjustment			121,089				-				(3,205	)			4,714				122,598
Capital increase			-				-				-				31,043				31,043
Conversion of intercompany loan into equity interest			-				-				-				(3,105	)			(3,105	)
Acquisition of equity interest			-				-				-				(789	)			(789	)
Dividends/Interest on equity			(9,900	)			-				-				(3,708	)			(13,608	)
Balance as of March 31, 2024			2,966,143				-				269,517				838,044				4,073,704

NOTE 9 - PROPERTY, PLANT AND EQUIPMENT

a) Summary of changes in property, plant and equipment - during the three-month period ended on March 31, 2024, acquisitions amounted to R$ 858,321 (R$ 954,348 as of March 31, 2023), and disposals amounted to R$ 5,268 (R$ 6,447 as of March 31, 2023).

b) Capitalized borrowing costs - borrowing costs capitalized during the three-month period ended on March 31, 2024 amounted to R$ 29,762 (R$ 24,069 as of March 31, 2023).

c) Guarantees - no property, plant and equipment were pledged as collateral for loans and financing on March 31, 2024 and December 31, 2023.

NOTE 10 - GOODWILL

The changes in goodwill are as follows:

		Goodwill			Accumulated impairment losses			Goodwill after Impairment losses
Balance as of January 1, 2023			21,745,547				(10,111,083	)			11,634,464
(+/-) Foreign exchange effect			(1,377,739	)			568,423				(809,316	)
Balance as of December 31, 2023			20,367,808				(9,542,660	)			10,825,148
(+/-) Foreign exchange effect			627,330				(296,132	)			331,198
Balance as of March 31, 2024			20,995,138				(9,838,792	)			11,156,346

The amounts of goodwill by segment are as follows:

		March 31, 2024			December 31, 2023
Brazil			373,135				373,135
Special Steels			3,681,116				3,566,989
North America			7,102,095				6,885,024
			11,156,346				10,825,148

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

NOTE 11 - TRADE ACCOUNTS PAYABLE (domestic market, debtor risk and imports)

		March 31, 2024			December 31, 2023
Trade accounts payable - domestic market			4,250,799				4,120,701
Trade accounts payable - debtor risk			550,751				584,320
Trade accounts payable - imports			1,278,546				1,196,162
			6,080,096				5,901,183

Under "Trade Accounts Payable - Domestic Market", the Company presents balances payable arising from the acquisition of goods and services in the domestic markets of each of the countries where the Company and its subsidiaries operate.

The Company has contracts with financial institutions in order to allow its suppliers to anticipate their receivables through an operation called "Trade Accounts Payable - Debtor Risk". In this operation, suppliers can transfer, at their discretion, the right to receive the securities to a financial institution, which, in turn, becomes the holder of the rights of the suppliers' receivables. The average discount rate on risk transactions carried out by our suppliers with financial institutions in Brazil and with subsidiaries in the United States was based on market conditions. The transfer of the right to receive the Company's securities, at the supplier's discretion, does not result in a relevant change in the payment term, nor does it imply the payment of interest by the Company, as the financial cost of such transfer is the responsibility of the supplier.

The balances presented as "Trade Accounts Payable - Imports" substantially refer to the purchase of coal and other raw materials abroad, where in commercial transactions the supplier may require the issuance of a letter of credit or similar risk mitigation instrument to ship the products. On March 31, 2024, contracts negotiated via letter of credit had a payment term of up to 180 days and rates that also varied, depending on market conditions.

The Company permanently monitors the composition of the portfolio and the conditions established with suppliers, which have not undergone significant changes in relation to what had been practiced historically.

NOTE 12 - LOANS AND FINANCING

Loans and financing are as follows:

		March 31, 2024			December 31, 2023
Ten/Thirty Years Bonds			7,329,507				7,051,637
Other financing			2,874,278				3,028,038
Total financing			10,203,785				10,079,675
Current			1,673,459				1,783,201
Non-current			8,530,326				8,296,474
Principal amount of the financing			9,922,637				9,903,534
Interest amount of the financing			281,148				176,141
Total financing			10,203,785				10,079,675

As of March 31, 2024, the nominal weighted average cost of debts denominated in US dollars is 5.49% p.a. (5.68% p.a. on December 31, 2023), for debts denominated in Real of 105.06% of the CDI p.a. (104.9% of the CDI p.a. on December 31, 2023) and for other currencies 7.01% p.a. (6.49% p.a. on December 31, 2023).

Loans and financing, denominated in Reais, are substantially adjusted at a fixed rate or indexed to the CDI (Interbank Deposit Certificates).

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

Summary of loans and financing by currency:

		March 31, 2024			December 31, 2023
Brazilian Real (R$)			2,547,023				2,667,065
U.S. Dollar (US$)			7,377,563				7,169,183
Other currencies			279,199				243,427
			10,203,785				10,079,675

The amortization schedules of long-term loans and financing are as follows:

		March 31, 2024			December 31, 2023
2025(*)			1,156,137				-
2026			168,841				1,156,718
2027			2,070,866				168,374
2028			10,357				2,001,442
2029 on			5,124,125				4,969,940
			8,530,326				8,296,474

(*) For the period as of March 31,2024, the amounts represents dates from April 1, 2024 to March 31,2025.

a) Credit Lines

In September 2022, the Company completed the renewal of the Global Credit Line in the total amount of US$ 875 million (equivalent to R$ 4,372 million as of March 31, 2024) with maturity in September 2027. The transaction aims to provide liquidity to operations in North America and Latin America, including Brazil. The companies Gerdau S.A., Gerdau Açominas S.A. and Gerdau Aços Longos S.A. provide guarantee for this transaction. As of March 31, 2024, no amount of this credit line was used.

The Company and its subsidiaries are not subject to default clauses (covenants) linked to financial ratios. Non-financial performance clauses have been complied with.

NOTE 13 - DEBENTURES

				Quantity as of March 31, 2024
Issuance		General Meeting		Issued			Held in treasury			Maturity			March 31, 2024			December 31, 2023
14ª		Aug 26,2014			20,000				20,000				Aug 30, 2024				-				-
16th - B		April, 25, 2019			800,000				-				May 6, 2026				836,663				813,633
Total Consolidated																	836,663				813,633
Current																	37,369				14,421
Non-current																	799,294				799,212

Maturities of long-term amounts are as follows:

			March 31, 2024			December 31, 2023
2026				799,294				799,212
				799,294				799,212

The debentures are denominated in Brazilian Reais, are nonconvertible, and pay variable interest as a percentage of the CDI - Interbank Deposit Certificate.

The average notional interest rate was 2.79% and 3.43% for the three-month period ended on March 31, 2024 and March 31, 2023, respectively.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

NOTE 14 - FINANCIAL INSTRUMENTS

a) General considerations - Gerdau S.A. and its subsidiaries enter into transactions with financial instruments whose risks are managed through market strategies discussed and shared with senior management and in accordance with internal guidelines and control systems for exposure limits to them. All financial instruments are recorded in the accounting books and presented as short-term investments, trade accounts receivable, related parties (assets and liabilities), fair value of derivatives (assets and liabilities), other current assets, other non-current assets, trade accounts payable - domestic market, trade accounts payable - debtor risk, trade accounts payable - imports, loans and financing, debentures, other current liabilities and other non-current liabilities.

The Company has derivatives and non-derivative instruments, such as the hedge for some operations under hedge accounting. These operations are intended to protect the Company against exchange rate fluctuations on foreign currency loans, interest rate and commodity prices fluctuations. These transactions are carried out considering direct active or passive exposures, without leverage.

b) Fair Value - the Fair Value of the financial instruments is as follows:

		March 31, 2024			December 31, 2023
		Book			Fair			Book			Fair
		value			value			value			value
Assets
Short-term investments			2,198,040				2,198,040				2,338,097				2,338,097
Trade accounts receivable - net			5,481,606				5,481,606				4,875,394				4,875,394
Fair value of derivatives			38,472				38,472				766				766
Other current assets			538,725				538,725				543,288				543,288
Other non-current assets			384,695				384,695				355,390				355,390
Liabilities
Trade accounts payable - domestic market			4,250,799				4,250,799				4,120,701				4,120,701
Trade accounts payable - debtor risk			550,751				550,751				584,320				584,320
Trade accounts payable - imports			1,278,546				1,278,546				1,196,162				1,196,162
Loans and Financing			10,203,785				10,231,115				10,079,675				10,161,103
Debentures			836,663				831,810				813,633				812,413
Related parties			25,175				25,175				24,992				24,992
Fair value of derivatives			24,084				24,084				20,648				20,648
Other current liabilities			1,051,580				1,051,580				1,192,461				1,192,461
Other non-current liabilities			595,962				595,962				859,917				859,917

The fair values of Loans and Financing and Debentures are based on market premises, which may take into consideration discounted cash flows using equivalent market rates and credit rating. All other financial instruments, which are recognized in the Consolidated Financial Statements at their carrying amount, are substantially similar to those that would be obtained if they were traded in the market. However, because there is no active market for these instruments, differences could exist if they were settled in advance. The fair value hierarchy of the financial instruments above are presented in Note 14.g.

c) Risk factors that could affect the Company's and its subsidiaries' businesses:

Price risk of commodities: this risk is related to the possibility of changes in prices of the products sold by the Company or in prices of raw materials and other inputs used in the productive process. Since the Company operates in a commodity market, net sales and cost of sales may be affected by changes in the international prices of their products or materials. In order to minimize this risk, the Company constantly monitors the price variations in the domestic and international markets. Furthermore, the Company may contract derivatives in order to reduce this risk.

Interest rate risk: this risk arises from the effects of fluctuations in interest rates applied to the Company's financial liabilities or assets and future cash flows and income. The Company evaluates its exposure to these risks: (i) comparing financial assets and liabilities denominated at fixed and floating interest rates and (ii) monitoring the variations of interest rates like Secured Overnight Financing Rate (SOFR) and CDI. Accordingly, the Company may enter into interest rate swaps in order to reduce this risk.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

Exchange rate risk: this risk is related to the possibility of fluctuations in exchange rates affecting the amounts of financial assets or liabilities or of future cash flows and income. The Company assesses its exposure to the exchange rate by measuring the difference between the amount of its assets and liabilities in foreign currency. The Company understands that the accounts receivables originated from exports, its cash and cash equivalents denominated in foreign currencies and its investments abroad are more than equivalent to its liabilities denominated in foreign currency. Since the management of these exposures occurs at each operation level, if there is a mismatch between assets and liabilities denominated in foreign currency, the Company may contract derivative financial instruments in order to mitigate the effect of exchange rate fluctuations.

Credit risk: this risk arises from the possibility of the Company not receiving amounts arising from sales to customers or investments made with financial institutions. In order to minimize this risk, the Company adopt the procedure of analyzing in details of the financial position of their customers, establishing a credit limit and constantly monitoring their balances. Regarding financial investments, the Company only carries out transactions with first-rate institutions and with low credit risk, as assessed by rating agencies and risk mitigation parameters defined in the Company's internal guidelines.

Capital management risk: this risk comes from the Company's choice in adopting a financing structure for its operations. The Company manages its capital structure, which consists of a ratio between the financial debts and its own capital (Net Equity) based on internal policies and benchmarks. The Key Performance Indicators (KPI) related to the "Capital Structure Management" objective are: WACC (Weighted Average Cost of Capital), Net Debt/EBITDA (Earnings before interest, income tax, depreciation and amortization), Coverage Ratio of Net Financial Expenses (EBITDA/Net Financial Expenses) and Debt/Total Capitalization Ratio. Net Debt is formed by the principal of the debt reduced by cash, cash equivalents and short-term investments (notes 4, 12 and 13). Total Capitalization is formed by the Total Debt (composed of the principal of the debt) and the Net Equity (Note 17). The Company may change its capital structure, according to economic and financial conditions, in order to optimize its financial leverage and debt management. At the same time, the Company seeks to improve its ROCE (Return on Capital Employed) through the implementation of working capital management and an efficient program of investments in property, plant and equipment. In the long term, the Company seeks to remain within the parameters below, admitting occasional variations in the short term:

Net debt/EBITDA		Less or equal to 1.5 times
Gross debt limit		R$ 12 billion
Average maturity		more than 6 years

These key indicators are used to monitor objectives described above and may not necessarily be used as indicators for other purposes, such as impairment tests.

Liquidity risk: The Company's management policy of indebtedness and cash on hand is based on using the committed lines and the currently available credit lines with or without a guarantee in export receivables for maintaining adequate levels of short, medium, and long-term liquidity. The maturity of long-term loans and financing, and debentures are presented in Notes 13 and 14, respectively.

Sensitivity analysis:

The Company performed a sensitivity analysis, which can be summarized as follows:

Impacts on Statements of Income
Assumptions		Percentage of change			March 31, 2024			March 31, 2023
Foreign currency sensitivity analysis - Loans and financing			5	%			9,522				20,570
Foreign currency sensitivity analysis - Imports/Exports			5	%			(38,600	)			49,284
Interest rate sensitivity analysis			10	bps			26,939				28,793
Sensitivity analysis of changes in prices of products sold			1	%			162,103				188,723
Sensitivity analysis of changes in raw material and commodity prices			1	%			100,192				114,566
Currency forward contracts			5	%			(2,074	)			5,767
Commodity derivates			5	%			1,605				1,010
Swaps USD x DI			5	%			7,758				-

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

Foreign currency sensitivity analysis: As of March 31, 2024, the Company is mainly exposed to variations between the Real and the Dollar. The sensitivity analysis carried out by the Company considers the effects of a 5% increase or decrease between the Real and the Dollar in its non-hedged debts, trade accounts receivable - exports from Brazil and trade accounts payable - imports. Variations between the local currencies of other countries and the Dollar do not represent material exposures. In this analysis, if the Real appreciates against the Dollar, this would represent a gain of R$ 9,522 (gain of R$ 20,570 as of March 31, 2023). If the Real depreciates against the Dollar, this would represent an expense of the same amount. As for foreign currency variations in Imports/Exports, if the Real appreciates against the Dollar, this would represent an expense of R$ 38,600 (gain of R$ 49,284 as of March 31, 2023), if the Real depreciates against the Dollar, this would represent a gain of the same value.

The net values of other assets and other liabilities in foreign currencies do not present significant risks of impacts due to fluctuations in the exchange rate.

Interest rate sensitivity analysis: The interest rate sensitivity analysis made by the Company considers the effects of an increase or reduction of 10 basis point (bps) on the average interest rate applicable to the floating part of its debt. The calculated impact, considering this variation in the interest rate totals R$ 26,939 as of March 31, 2024 (R$ 28,793 as of March 31, 2023) and would impact the Financial expenses account in the Consolidated Statements of Income. The specific interest rates to which the Company is exposed are related to the loans, financing, and debentures presented in Notes 12 and 13, and are mainly comprised by SOFR and CDI - Interbank Deposit Certificate.

Sensitivity analysis of changes in sales price of products and price of raw materials and other inputs used in production: The Company is exposed to changes in the price of its products. This exposure is associated with the fluctuation of the sales price of the Company's products and the price of raw materials and other inputs used in the production process, mainly for operating in a commodity market. The sensitivity analysis made by the Company considers the effects of an increase or of a reduction of 1% on both prices. The impact measured considering this variation in the price of products sold, considering the revenues and costs for the three-month period ended on March 31, 2024, totals R$ 162,103 (R$ 188,723 for the three-month period ended on March 31, 2023) and the variation in the price of raw materials and other inputs totals R$ 100,192 for the three-month period ended on March 31, 2024 (R$ 114,566 for the three-month period ended on March 31, 2023). The impact in the price of products sold and raw materials would be recorded in the accounts Net Sales and Cost of Sales, respectively, in the Consolidated Statements of Income. The Company does not expect to be more vulnerable to a change in one or more specific product or raw material.

Sensitivity analysis of currency forward contracts: the Company has exposure to dollar forward contracts for some of its assets and liabilities. The sensitivity analysis carried out by the Company considers the effects of a 5% increase or decrease in the Dollar against the Argentinian Peso, and its effects on the mark to market of these derivatives. A 5% increase in the Dollar against the Argentinian Peso represents an expense of R$ 2,074 as of March 31,2024 (gain of R$ 5,767 as of March 31, 2023) and a 5% decrease in the Dollar against the Argentinian Peso represents a gain in the same amount in March 31, 2024 and an expense in the same amount in March 31, 2023. Forward contracts in Dollar/Argentinian Peso were intended to cover asset and liability positions in Dollars and the effects of the mark to market of these contracts were recorded in the Consolidated Statement of Income. On March 31, 2024 and March 31, 2023 there was no open position of forward contracts for currencies in Reais against the Dollar. Dollar forward contracts to which the Company is exposed are presented in note 14.e.

Sensitivity analysis of commodity forward contracts: the Company has exposure to Commodity forward contracts (coal, nickel and energy) for some of its liabilities. The sensitivity analysis carried out by the Company considers the effects of a 5% increase or decrease in the price of the commodity, and its effects on the mark to market of these derivatives. A 5% increase in the price of the commodity represents an expense of R$ 1,605 as of March 31, 2024 (gain of R$ 1,010 as of March 31, 2023), and a 5% decrease in the price of the commodity represents an income in Macrh 31, 2024 and an expense in March 31, 2023 in the same amount. The mark to market effects of these contracts were recorded in the Consolidated Statement of Income. Commodity forward contracts to which the Company is exposed are presented in Note 14.e.

Sensitivity analysis of USD x DI swaps: the Company has USD x DI swaps to protect some of its Loans and financing. The sensitivity analysis carried out by the Company considers the impact on the MTM of a 5% increase in the Dollar against Real for all vertices of the respective operations. This variation would represent an income of R$ 7,758 (R$ 0 as of March 31, 2023). These effects would be recognized in the Consolidated Income Statement. The USD x DI swaps that the Company is exposed to are presented in Note 14.e.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

d) Financial Instruments per Category

Summary of the financial instruments per category:

March 31, 2024 Assets		Financial asset at amortized cost			Financial asset at fair value through proft or loss			Total
Short-term investments			-				2,198,040				2,198,040
Trade accounts receivable			5,481,606				-				5,481,606
Fair value of derivatives			-				38,472				38,472
Other current assets			524,529				14,196				538,725
Other non-current assets			382,555				2,140				384,695
Total			6,388,691				2,252,847				8,641,538
Financial income (expenses) for the three-month period ended on March 31, 2024			127,296				155,158				282,454

Liabilities		Financial liability at fair value through profit or loss			Financial liability at amortized cost			Total
Trade accounts payable - domestic market			-				4,250,799				4,250,799
Trade accounts payable - debtor risk			-				550,751				550,751
Trade accounts payable - imports			-				1,278,546				1,278,546
Loans and financing			-				10,203,785				10,203,785
Debentures			-				836,663				836,663
Related parties			-				25,175				25,175
Fair value of derivatives			24,084				-				24,084
Other current liabilities			-				1,051,580				1,051,580
Other non-current liabilities			-				595,962				595,962
Total			24,084				18,793,261				18,817,345
Financial income (expenses) for the three-month period ended on March 31, 2024			(30,155	)			(728,046	)			(758,201	)

December 31, 2023 Assets		Financial asset at amortized cost			Financial asset at fair value through proft or loss			Total
Short-term investments			-				2,338,097				2,338,097
Trade accounts receivable			4,875,394				-				4,875,394
Fair value of derivatives			-				766				766
Other current assets			529,629				13,659				543,288
Other non-current assets			353,370				2,020				355,390
Total			5,758,393				2,354,542				8,112,935
Financial income (expenses) for the three-month period ended on March 31, 2023			279,008				152,509				431,517

Liabilities		Financial liability at fair value through profit or loss			Financial liability at amortized cost			Total
Trade accounts payable - domestic market			-				4,120,701				4,120,701
Trade accounts payable - debtor risk			-				584,320				584,320
Trade accounts payable - imports			-				1,196,162				1,196,162
Loans and financing			-				10,079,675				10,079,675
Debentures			-				813,633				813,633
Related parties			-				24,992				24,992
Fair value of derivatives			20,648				-				20,648
Other current liabilities			-				1,192,461				1,192,461
Other non-current liabilities			-				859,917				859,917
Total			20,648				18,871,861				18,892,509
Financial income (expenses) for the three-month period ended on March 31, 2023			(4,959	)			(476,653	)			(481,612	)

e) Operations with derivative financial instruments

Risk management objectives and strategies: In order to execute its strategy of sustainable growth, the Company implements risk management strategies in order to mitigate market risks.

The objective of derivative transactions is always related to mitigating market risks as stated in our policies and guidelines. All derivative instruments in force are monthly reviewed by the Financial Risk Committee, which validates the fair value of such instruments. All gains and losses on derivative instruments are recognized at their fair value in the Company's consolidated financial statements in the line of Gains (Losses) on financial instruments, net.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

Policy for use of derivatives: The Company is exposed to various market risks, including changes in exchange rates, commodities prices and interest rates. The Company uses derivatives and other financial instruments to reduce the impact of such risks on the fair value of its assets and liabilities or in future cash flows and income. The Company has established policies to evaluate the market risks and to approve the use of derivative transactions related to these risks. The Company enters into derivative financial instruments solely to manage the market risks mentioned above and never for speculative purposes. Derivative financial instruments are used only when they have a related position (asset or liability exposure) resulting from business operations, investments and financing.

Policy for determining fair value: the fair value of derivative financial instruments is determined using models and other valuation techniques, including future prices and market curves.

Derivative transactions may include: interest rate and/or currency swaps, currency futures contracts and currency options contracts.

Currency forward contracts: The Company may contract forward contract operations, through which it receives/pays a fixed dollar amount and receives/pays a fixed Real/Argentinian peso amount. Counterparties are always top - tier financial institutions with low credit risk.

Swap Contracts: The Company may contract a swap contract operation, through which it exchanges interest rate indices or local and/or foreign currency. Counterparties are always top - tier financial institutions with low credit risk.

The derivatives instruments can be summarized and categorized as follows:

				Notional value		Amount receivable			Amount payable
Contracts		Position		March 31,2024		December 31,2023		March 31, 2024			December 31, 2023			March 31, 2024			December 31, 2023
Currency forward contracts
Maturity in 2024		buyed in US$		US$ 8.2 million		US$ 34.2 million			-				-				15,759				17,337
Commodity contracts
Maturity in 2024		buyed in US$		US$ 14.4 milion		US$ 12.1 million			-				32				8,325				1,349
Commodity derivates
Maturity in 2026		-		-		-			35,370				-				-				-
Swaps IPCA x DI
Maturity in 2026		99,7% of CDI		R$ 300.0 million		R$ 450.0 million			1,669				734				-				356
Swaps USD x DI
Maturity in 2026		107,9% of CDI		US$ 150.4 milion		US$ 30.6 million			1,433				-				-				1,606
Total fair value of financial instruments									38,472				766				24,084				20,648

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

			March 31, 2024				December 31, 2023
Fair value of derivatives
Current assets			37,039				766
Other non-current assets			1,433				-
			38,472				766
Fair value of derivatives
Current liabilities			24,084				19,042
Non-current liabilities			-				1,606
			24,084				20,648

			March 31, 2024				March 31, 2023
Net Income
Gains on financial instruments			43,567				458
Losses on financial instruments			(30,155	)			(5,954	)
			13,412				(5,497	)
Other comprehensive income
Gains on financial instruments			-				639
Loss on financial instruments			(292	)			-
			(292	)			639

f) Net investment hedge

The Company designated as hedge of part of its net investments in subsidiaries abroad the operations of Ten Years Bonds. Consequently, the effect of exchange rate changes on these debts on the amount of US$ 0.4 billion (equivalent to R$ 2.1 billion on March 31, 2024) (designated as a hedge) has been recognized in the Statement of Comprehensive Income.

The Company demonstrated effectiveness of the hedge as of its designation dates and demonstrated the high effectiveness of the hedge from the contracting of each debt for the acquisition of these companies abroad, whose effects were measured and recognized directly in the Statement of Comprehensive Income as an unrealized loss, net of taxes, in the amount R$ 63,708 for the three-month period ended on March 31, 2024 (gain of R$ 129,992 for the three-month period ended on March 31, 2023).

The objective of the hedge is to protect, during the existence of the debt, the amount of part of the Company's investment in the subsidiaries abroad mentioned above against positive and negative changes in the exchange rate. This objective is consistent with the Company's risk management strategy. Prospective and retrospective tests demonstrated the effectiveness of these instruments.

g) Measurement of fair value:

IFRS Accounting Standards defines fair value as the price that would be received for the sale of an asset or that would be paid for the transfer of a liability in an arm's length transaction between market participants on the measurement date. The standard also establishes the classification by price quoted in an active market for an identical asset or liability or when it is based on a valuation technique that uses only observable market data.

As detailed in Note 14.d, on March 31, 2024 and December 31, 2023, the Company maintained certain assets classified as Financial asset at fair value through profit or loss and liabilities classified as Financial Liability at fair value through profit or loss, whose fair value measurement is required on a recurring basis.

The Company's financial assets and liabilities, measured at fair value on a recurring basis, are measured by a valuation technique that uses only observable market data.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

h) Changes in liabilities from Cash flow from financing activities:

The Company has summarized below the changes in the liabilities of cash flow from financing activities, from its Statement of Cash Flows:

						Cash effects				Non-cash effects
			January 01,  2023				Received/(Paid) from financing activities				Interest Payment				Interest on loans, financing and loans with related parties				Exchange Variance and others				March, 31, 2023
Related Parties, net			24,890				(635	)			-				-				-				24,255
Leasing payable			1,030,643				(91,592	)			(20,818	)			20,818				161,670				1,100,721
Loans and Financing, Debentures and Fair value of derivatives			12,623,174				(294,919	)			(78,331	)			203,920				(187,056	)			12,266,788

							Cash effects				Non-cash effects
			December 31,  2023				Received/(Paid) from financing activities				Interest Payment				Interest on loans, financing and loans with related parties				Exchange Variance and others				March 31, 2024
Related Parties, net			24,992				183				-				-				-				25,175
Leasing payable			1,277,602				(106,846	)			(33,575	)			33,575				137,818				1,308,574
Loans and Financing, Debentures and Fair value of derivatives			10,913,190				(234,746	)			(87,838	)			184,715				250,739				11,026,060

NOTE 15 - TAX, CIVIL AND LABOR CLAIMS AND CONTINGENT ASSETS

The Company and its subsidiaries are party in judicial and administrative proceedings involving tax, civil and labor matters. Based on the opinion of its legal advisors, Management believes that the provisions recorded for these judicial and administrative proceedings is sufficient to cover probable and reasonably estimable losses from unfavorable court decisions and that the final decisions will not have significant effects on the financial position, operational results and liquidity of the Company and its subsidiaries.

For claims whose expected loss is considered probable, the provisions have been recorded considering the judgment of the Management of the Company with the assistance of its legal advisors and the provisions are considered enough to cover expected probable losses. The provisions balances are as follows:

I) Provisions

		March 31, 2024			December 31, 2023
a) Tax provisions			1,783,884				1,737,984
b) Labor provisions			408,812				413,179
c) Civil provisions			31,783				34,662
			2,224,479				2,185,825

a) Tax Provisions

Tax provisions refer mainly to discussions related to ICMS, IPI, Income tax and social contribution, social security contributions, offsetting of PIS and COFINS credits and incidence of PIS and COFINS on other revenues.

b) Labor Provisions

The Company is party to a group of individual and collective labor and/or administrative lawsuits involving various labor amounts and the provision arises from unfavorable decisions and/or the probability of loss in the ordinary course of proceedings with the expectation of outflow of financial resources by the Company.

c) Civil Provisions

The Company is party to a group of civil, arbitration and/or administrative lawsuits involving various claims and the provision arises from unfavorable decisions and/or probable losses in the ordinary course of proceedings with the expectation of outflow of financial resources for the Company.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

The changes in the tax, civil and labor provisions are shown below:

		March 31, 2024			December 31, 2023
Balance at the beginning of the year			2,185,825				2,026,003
(+) Additions			55,769				208,219
(+) Monetary correction			38,127				157,227
(-) Reversal of accrued amounts			(55,403	)			(205,202	)
(+) Foreign exchange effect on provisions in foreign currency			161				(422	)
Balance at the end of period			2,224,479				2,185,825

II) Contingent liabilities for which provisions were not recorded as of March 31, 2024

Considering the opinion of legal advisors and management's assessment, contingencies listed below have the probability of loss considered as possible (but not likely) and due to this classification, accruals have not been made in accordance with IFRS Accounting Standards.

a) Tax contingencies

a.1) The Company and its subsidiaries Gerdau Aços Longos S.A. and Gerdau Açominas S.A. have lawsuits related to the ICMS (state VAT) which are mostly related to credit rights and rate differences, whose demands totaled R$ 618,425 (R$ 603,926 as of December 31, 2023).

a.2) The Company and certain of its subsidiaries in Brazil are parties to claims related to: (i) Imposto sobre Produtos Industrializados - IPI, substantially related to IPI credit on inputs, whose demands total the updated amount of R$ 521,274 (R$ 465,843 as of December 31, 20223; (ii) PIS and COFINS, substantially related to disallowance of credits on inputs totaling R$ 2,025,177 (R$ 1,991,993 as of December 31, 2023), (iii) social security contributions in the total of R$ 148,372 (R$ 145,786 as of December 31, 2023) and (iv) other taxes, whose updated total amount is currently R$ 659,025 (R$ 641,405 as of December 31, 2023).

a.3) The Company and its subsidiary Gerdau Aços Longos S.A. are parties to administrative proceedings related to Withholding Income Tax, levied on interest remitted abroad, linked to export financing formalized through "Prepayment of Exports Agreements "(PPE) or" Advance Export Receipt "(RAE), in the updated amount of R$ 1,561,086 (R$ 1,533,806 as of December 31, 2023), of which: (i) R$ 838,677 (R$ 824,113 as of December 31, 2023) correspond to five lawsuits of the subsidiary Gerdau Aços Longos S.A. that are processed in the administrative sphere where, currently, four lawsuits are at the first instance of the Administrative Board of Tax Appeals (CARF) awaiting the judgment of the Voluntary Appeals filed by the Company and one lawsuit that is in the Superior Chamber of Tax Appeals (CSRF) of CARF, for judgment of the Special Appeal filed by the Company; and (ii) R$ 722,408 (R$ 709,693 as of December 31, 2023) correspond to three lawsuits of subsidiary Gerdau S.A., in which two processes recently had the Special Appeals denied by the Superior Chamber of Tax Appeals (CSRF) of the CARF, and one lawsuit that is currently at the Administrative Board of Tax Appeals (CARF) for judgment of the Voluntary Appeal filed by the Company.

On April 9, 2024, the three Voluntary Appeals filed by the subsidiary Gerdau Aços Longos S.A., referred to in item i above, were judged by the Administrative Board of Tax Appeals (CARF), which were denied, by casting vote, pending formalization of the respective rulings.

a.4) The Company is party to administrative proceedings related to goodwill amortization pursuant to articles 7 and 8 of Law 9,532/97, from the basis of calculation of Income Tax (IRPJ) and Social Contribution (CSLL), resulting from a corporate restructuring started in 2010. The updated total amount of the assessments is R$ 556,091 (R$ 546,859 as of December 31, 2023), of which: (i) R$ 30,310 (R$ 29,787 as of December 31, 2023) corresponds to a process in which the opposite Declaration Embargoes were rejected against the decision that granted the official appeal in favor of the National Treasury, and the Special Appeal filed by the Company is pending of judgment; (ii) R$ 257,85 (R$ 253,779 as of December 31, 2023) correspond to a lawsuit in which the Company had its Voluntary Appeal granted at the Administrative Board of Tax Appeals (CARF), pending analysis of the Special Appeal filed by the National Treasury Attorney's Office; (iii) R$ 84,268 (R$ 82,913 as of December 31, 2023) correspond to a lawsuit in which the Company had its challenge partially provided and filed a Voluntary Appeal with the Administrative Board of Tax Appeals (CARF), recently upheld, pending analysis of the Special Appeal filed by the National Treasury Attorney's Office; and (iv) R$ 183,668 (R$ 180,380 as of December 31, 2023) correspond to a lawsuit whose Opposition presented by the Company was partially accepted by the Federal Revenue Judgment Office (DRJ), with the Voluntary Appeal lodged pending of judgment at the Administrative Board of Tax Appeals (CARF).

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

a.5) Gerdau S.A. (as successor of Gerdau Aços Especiais S.A.) and its subsidiary Gerdau Internacional Empreendimentos Ltda. - Grupo Gerdau are parties to judicial proceedings relating to IRPJ - Income Tax and CSLL - Social Contribution, in the current amount of R$ 1,447,233 (R$ 1,430,407 as of December 31, 2023). Such lawsuits relate to profits generated abroad, of which: (i) R$ 1,191,643 (R$ 1,177,724 as of December 31, 2023) corresponds to two lawsuits of the subsidiary Gerdau Internacional Empreendimentos Ltda. - Grupo Gerdau. One of the lawsuits is pending at the lower court, awaiting judgment of the Tax Enforcement Embargoes filed by the Company, and another is pending at the Federal Regional Court of the 4^th Region, where, in a recent judgment, unanimously, the National Treasury's motion for clarification were dismissed and given partial granting of the motion for clarification filed by the Company, maintaining the decision that had unanimously granted the appeal filed by Gerdau, to extinguish the Tax Execution and dismissed the Federal Government's appeal; and (ii) R$ 255,590 (R$ 252,683 as of December 31, 2023) correspond to a lawsuit involving Gerdau S.A. (as successor of Gerdau Aços Especiais S.A.), in which the appeal lodged by the Federal Government against the judgment that upheld the Embargoes of Tax Enforcement opposed by the Company is pending of judgement.

a.6) Gerdau S.A. (by itself and as successor of Gerdau Aços Especiais S.A.) and its subsidiaries Gerdau Aços Longos S.A. and Gerdau Açominas S.A. are parties to administrative and judicial proceedings relating to the disallowance of goodwill amortization generated in accordance with Article 7 and 8 of Law 9,532/97, as a result of a corporate restructuring carried out in 2004/2005, regarding tax base of the Income tax - IRPJ and Social Contribution - CSLL. The updated total amount of the assessments amounts to R$ 7,796,092 (R$ 7,882,203 as of December 31, 2023), of which: (i) R$ 4,575,716 (R$ 4,637,104 as of December 31, 2023) correspond to four lawsuits of Gerdau S.A. (as successor of Gerdau Aços Especiais S.A.) and its subsidiaries Gerdau Aços Longos S.A. and Gerdau Açominas S.A.,in the phase of judicial collection, with the companies offering judicial guarantees, under precautionary measures, through Guarantee Insurance, and initiated the legal discussions of Embargoes to Execution, in the respective lawsuits, and in the Embargoes to Execution filed by Gerdau S.A. (as successor of Gerdau Aços Especiais S.A.), on April 8, 2021, in a judgment made at the Federal Regional Court of the 4th Region, the appeal filed by the National Treasury was dismissed, being pending of judgment the special and extraordinary appeals filed by the National Treasury; in the Embargoes to Execution filed by the subsidiary Gerdau Aços Longos S.A. (as successor of Gerdau Comercial de Aços S.A.), the appeal filed by the National Treasury is pending judgment in the Federal Regional Court of the 2nd Region; in the lawsuit of the subsidiary Gerdau Aços Longos S.A., on November 17, 17/2023, in a judgment held at the Federal Regional Court of the 2nd Region, the appeal filed by the National Treasury was dismissed, and the Embargoes for declaration filed by the National Treasury is pending of judgment. Also in this process, on November 30, 2023, the request for review of the registration as overdue debt was granted, causing the reduction of the amount of the debt required due to the exclusion of fines and, consequently, default interest and legal charge, pursuant to the provisions of § 9-A of article 25 of Decree No. 70,235/72 and article 15 of Law No. 14,689/2023; and also, the Embargoes of Tax Enforcement filed by the subsidiary Gerdau Açominas S.A. are awaiting judgment in the first instance; (ii) R$ 371,094 (R$ 366,382 as of December 31, 2023) corresponds to a lawsuit of the subsidiary Gerdau Aços Longos S.A., in which part of the debt whose administrative discussion has already ended and is under judicial discussion, and the appeal is pending of judgment by the Regional Federal Court of the 2^nd Region filed by the National Treasury against the sentence that upheld the Embargoes to Execution and acknowledged the non-substantiation of the tax assessment; (iii) R$ 346,757 (R$ 342,072 as of December 31, 2023) corresponds to a lawsuit filed by the subsidiary Gerdau Aços Longos S.A., in which part of the debt whose administrative discussion has ended is under judicial discussion, in which is pending of judgment the appeal filed by the Company against the sentence that dismissed its Embargoes to Tax Enforcement; (iv) R$ 6,035 (R$ 5,958 as of December 31, 2023) corresponds to a lawsuit of the subsidiary Gerdau Aços Longos S.A., in which the administrative discussion has ended, and it is being processed in the lower court awaiting judgment in the Embargoes to Tax Enforcement filed by the Company; (v) R$ 97,679 (R$ 96,280 as of December 31, 2023) correspond to a lawsuit filed by the subsidiary Gerdau Aços Longos S.A., whose administrative discussion ended, and is currently under judicial discussion, in which are pending of judgement the appeals lodged by the parties against the sentence that upheld the Embargoes on Tax Execution; (vi) R$ 117,738 (R$ 190,058 as of December 31, 2023) corresponds to a lawsuit filed by Gerdau S.A. (as successor to Gerdau Aços Especiais S.A.), whose administrative discussion has ended, and which will be forwarded shortly for judicial collection and will be discussed in the context of Embargoes on Tax Execution to be opportunely opposed by the Company; (vii) R$ 211,923 (R$ 208,449 as of December 31, 2023) corresponds to a lawsuit filed by the subsidiary Gerdau Aços Longos S.A., which was recently judged by the Superior Chamber of Tax Appeals (CSRF) of CARF, at which time the Special Appeal filed by the Company was not known, and the Special Appeal filed by the National Treasury was granted; (viii) R$ 131,117 (R$ 129,050 as of December 31, 2023) corresponds to a lawsuit filed by Gerdau S.A. (as successor of Gerdau Aços Especiais S.A.), which was recently judged by the Superior Chamber of Tax Appeals (CSRF) of CARF to dismiss the Special Appeal filed by the Company; (ix) R$ 687,402 (R$ 676,217 as of December 31, 2023) correspond to a lawsuit filed by the subsidiary Gerdau Aços Longos S.A.,in which the Voluntary Appeal filed by the Company was partially granted, being pending of judgment the appeal filed by the Company at the CARF; (x) R$ 607,202 (R$ 596,754 as of December 31, 2023) pending before the first instance of the Administrative Board of Tax Appeals (CARF), that, in a recent judgment, by casting vote, dismissed the Voluntary Appeal filed by the Company; (xi) R$ 170,416 (R$ 167,887 as of December 31, 2023) corresponds to a lawsuit of the subsidiary Gerdau Aços Longos S.A., separated from the process mentioned in item "vii" above, and which is currently in the judicial collection phase, being pending of judgment the appeal filed against the judgment that dismissed the Embargoes to Tax Enforcement filed by the Company; and (xii) R$ 473,013 (R$ 465,992 as of December 31, 2023) corresponds to a lawsuit of the subsidiary Gerdau Aços Longos S.A., separated from the lawsuit mentioned in item "vii" above, and that it is currently in the judicial collection stage, pending judgment at the Federal Regional Court of the 2^nd Region the appeals filed by the Company and the National Treasury against the sentence that upheld the Embargoes to Execution and recognized the non-substantiation of the credits object of the tax enforcement.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

In a judgment held on April 8, 2024, the Declaration Embargoes opposed by the Company regarding the process referred to in item "ix" above were accepted, without infringing effects, to state that the embargoed matter was not subject to challenge, in a decision pending of publication.

The Company's tax advisors confirm that the procedures adopted by the Company regarding the tax treatment of profits earned abroad and the goodwill amortization, which led to the aforementioned lawsuits, have complied with the strict legality and, therefore, these lawsuits are classified as possible loss (but not likely).

On January 24, 2024, a proceeding was definitively archived regarding the investigations conducted by the Brazilian federal authorities and the judiciary branch on certain matters related to CARF proceedings and specific political contributions made by the Company. The Company previously disclosed that, in addition to its interactions with Brazilian authorities, it was providing information required by the U.S. Securities and Exchange Commission ("SEC"). The Company has since been informed by the SEC's staff that it has closed its inquiry and therefore is not seeking any further information from the Company regarding these matters. Thus, the Company, its board members, executive officers, and former executive officers are not parties to ongoing criminal investigations, proceedings or lawsuits associated with such investigations.

b) Civil contingencies

b.1) A lawsuit arising from the request by two civil construction unions in the state of São Paulo alleging that Gerdau S.A. and other long steel producers in Brazil share customers, thus, violating the antitrust legislation. After investigations carried out by the Economic Law Department (SDE - Secretaria de Direito Econômico), the final opinion was that a cartel exists. The lawsuit was therefore forwarded to the Administrative Council for Economic Defense (CADE) for judgment, which resulted in a fine to the Company and other long steel producers, on September 23, 2005, an amount equivalent to 7% of gross revenues in the year before the Administrative Proceeding was commenced, excluding taxes (fine of R$ 245,070, updated by the judicial accountant on August 1, 2013 to R$ 417,820).

Two lawsuits challenge the investigation conducted by the Competition Defense System and its merits judgment, whose grounds are procedural irregularities, especially the production of evidence, based on an economic study, to prove the inexistence of a cartel. The Court, upon offer of bank guarantee letter, granted the suspension of the effects of CADE's decision. Both actions were dismissed, and their respective appeals were also rejected by the Federal Regional Court of the 1^st Region.

Against both decisions, appeals were lodged with the Superior Court of Justice and the Federal Supreme Court, after admissibility judgment, the appeal to the Superior Court of Justice was admitted and well as substitution of the guarantee offered by insurance guarantee in a decision of October 8, 2019.

In the same order in which the Vice president Judge gave suspensive effect to the Special Appeal, in order to change the guarantee, the Extraordinary Appeal was dismissed, on the grounds of violation of res judicata with recognized general repercussion. Against this decision, the Company filed an Internal Appeal for the TRF1 Plenary, which was dismissed.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

According to the decision published on November 10, 2022, in a unanimous vote, the STJ annulled the fine and recognized that there was no due process of law, as CADE would have concluded without the necessary study of the market and the facts (Cf. STJ, REsp n.º 1.979.138 - DF (2021/0405949-3).

The STJ's decision is subject to appeal by the Brazilian government in the form of Declaration Embargoes in the Extraordinary Appeal filed by the Brazilian Government with the STF and Gerdau will continue to seek all applicable legal remedies to defend its rights.

The Company denies having been engaged in any type of anti-competitive conduct and it is certain that it has not practiced the conduct attributed to it, understanding shared by its legal consultants.

b.2) The Company and its subsidiaries are parties to other demands of a civil nature that collectively have a discussion amount of approximately R$ 619,484 (R$ 595,649 as of December 31, 2023). For these demands, no accounting provision was recorded, since they were considered as possible losses, based on the opinion of its legal counsel.

c) Labor Contingencies

The Company and its subsidiaries are parties to other labor claims that together have an amount of approximately R$ 1,105,016 (R$ 1,028,176 as of December 31, 2023). For these claims, no accounting provision was made, since these were considered as possible losses, based on the opinion of its legal counsel.

III) Judicial deposits

The Company has judicial deposits related to tax, labor and civil lawsuits as listed below:

		March 31, 2024			December 31, 2023
Tax			1,867,253				1,828,611
Labor			54,226				56,640
Civil			167,524				178,819
			2,089,003				2,064,070

The balance of tax judicial deposits as of March 31, 2024 includes the amount of R$ 1,706,196 (R$ 1,670,984 as of December 31, 2023) which corresponds to judicial deposits made up to June 2017, referring to the same discussion on the inclusion of the ICMS in the tax base of PIS and COFINS and awaits termination of the lawsuits before the Brazilian courts in order to be returned to the Company.

The Company and its subsidiaries made judicial deposits and accounting provisions, which in turn were updated in accordance with the SELIC rate, which were referred to the unpaid amounts of PIS and COFINS since 2009, because the collection of which was fully suspended, due to the mentioned judicial deposits.

On March 15, 2017, the Brazilian Federal Supreme Court (STF - Supremo Tribunal Federal) ruled on a claim related to this matter, and by 6 votes to 4, concluded: "The ICMS does not comprise the tax base for PIS and COFINS assessment purposes". The STF decision, in principle, affects all the nine judicial proceedings, due to its general repercussion. Eight of these lawsuits already have a final favorable decision, and the gain was recognized when the decision was final and unappealable, considering for the purposes of calculation the exclusion of the ICMS informed in the invoices, as recognized in the final and unappealable decisions, and is preparing the documents to carry out the qualification of its credit and be able to start the compensation procedures and/or have already qualified before the Federal Revenue Service of Brazil. It is important to note that the Company still has a lawsuit for repetition of undue payments, which is awaiting the respective final and unappealable decision. In this lawsuit the Company seeks the recognition of R$ 683 million (R$ 643 million, net of related expenses) referring to credits prior to the filing of the lawsuit.

On May 13, 2021, the Federal Supreme Court ruled the Embargoes for Declaration that the National Treasury Attorney's Office had opposed, alleging that the Supreme Court's decision was silent on certain points, and requesting the modulation of the effects of the decision. In that judgment, the STF accepted, in part, the Embargoes for Declaration, to modulate the effects of the judgment whose production took place after March 15, 2017 (date on which RE No. 574.706 was judged), except for lawsuits or administrative proceedings filed up to that date, and rejected the embargoes regarding the allegation of omission, obscurity or contradiction and, in the point related to the ICMS excluded from the calculation basis of the PIS-COFINS contributions, it signed the understanding that it is the ICMS informed in the invoice. After this judgment, the concept of virtually certain for the purposes of the entry of economic benefits and recognition of the asset and the corresponding gain started to be demonstrated. Thus, even though there was no final and unappealable decision on two lawsuits that were pending of judgment, the Company recognized in 2021, with sufficient reliability, the amounts of tax credits to which it is entitled, referring to credits prior to the filing of the lawsuits.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

The amounts recognized in the Company's results related to the recovery of credits arising from the ICMS in the tax base of PIS and COFINS lawsuits (net of related expenses) was R$ 1.2 billion in 2021, of which, R$ 393.3 million in the Other Operating Income line and R$ 788.7 million in the Tax Credits Monetary Update line.

Due to the economic moment strongly impacted by the pandemic caused by COVID-19, as well as the fact that the procedural legislation expressly provides the equivalence of cash and guarantee insurance, the subsidiary Gerdau Aços Longos S.A. requested the replacement of the amounts deposited by it over the years regarding the Inclusion of ICMS in the tax base of PIS and COFINS for a guarantee insurance presented by the Company, in the amount of R$ 1.7 billion, which complies with all the requirements established by the PGFN (Attorney General of the National Treasury) and can be converted into income at any time, ensuring that the Public Treasury receives all the amounts that may eventually be due at the end of the process.

In the lower court decision, therefore, there was a decision to release the funds deposited by the Company. The Public Treasury appealed to the Court and obtained a decision reversing the release of the amounts. The Company, then, filed a complaint to settle divergence between the decision handed down by Federal Judge, member of the 4^th Specialized Panel of the Federal Regional Court of the 2^nd Region, in the case files of process nº 50003743-37.2020.4.02.0000, and the jurisprudence of the Supreme Court (Theme nº 69). With an initially favorable injunction, the decision was later suspended to await the statement by the National Treasury regarding the fine for bad faith litigation applied to the Company. After the manifestation, which did not bring any additional element in relation to the fine for bad faith litigation applied, the Minister understood that the Complaint was not applicable due to the lack of exhaustion of ordinary channels.

The fine for bad faith litigation, applied due to the allegation of alleged attempt to mislead the Judiciary, was canceled by the Federal Regional Court of the 2^nd Region, when it partially granted, unanimously, the interlocutory appeal filed by the Company. In December 2022, after judgment of the Declaration Embargoes opposed by the National Treasury, which upheld the favorable decision for the Company, the fine was definitively terminated.

In view of the final and unappealable decision with favorable merits decision confirmed on December 26, 2023, rendered in the main proceedings (0012235- 15.2009.4.02.5101) and the revocation of the suspensive effect previously granted to the National Treasury in case No. 5003743-37.2020.4.02.0000, the subsidiary Gerdau Aços Longos S.A. filed a request for provisional compliance with the judgment (assessed under No. 5100372-91.2023.4.02.5101/RJ), in which the request for withdrawal of the amounts deposited over the years dealing with the Inclusion of ICMS in the PIS and COFINS Calculation Base was granted, in the amount of R$ 1.7 billion, pending the final and unappealable decision for the withdrawal permits to be issued. On March 14, 2024, the National Treasury filed an appeal (filed under No. 5003345-51.2024.4.02.0000/RJ) against the decision that granted the request for withdrawal of judicial deposits and was denied its request for attribution of suspensive effect to the appeal, awaiting the judgment of the interlocutory appeal.

IV) Eletrobras Compulsory Loan - Centrais Elétricas Brasileiras S.A. (Eletrobras)

The Compulsory Loan, instituted by the Brazilian government in order to expand and improve the energy sector of the country was charged and collected from industrial consumers with monthly consumption equal or greater than to 2000kwh through the "electricity bills" issued by the electric power distribution companies, was converted into credits to the taxpayers, providing Eletrobras the possibility of anticipating this return through the conversion of those loans in shares of its own issuance.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

Prior to the conversion of the credits into shares, those credits were monetary corrected through an indexer and quantifier, called Standard Unit (SU). However, the compulsory loan was charged to the companies in their monthly electricity bills, consolidated during the year, and only indexed by the SU in January of the following year, resulting in a lack of monthly monetary correction during the years of collection, as well as interest. This procedure imputed to taxpayers' considerable financial losses, particularly during the periods when the monthly inflation rates stood at high levels. In order to claim the appropriate interest and monetary correction subtracted by the methodology applied by Eletrobras, the Company (understood to be legally entities existing at the time and that later became part of Gerdau S.A.) filed lawsuits claiming credits resulting from differences on the monetary correction of principal, interest, default interest and other accessory amounts owed by Eletrobras due to the compulsory loans. The Company maintain lawsuits pending before the Judiciary, dealing with the subject, with final and unappealable decisions on the merits, favorable to the Company. Regarding one of these processes, involving Gerdau S.A. and its subsidiary Seiva SA - Florestas e Indústrias, on November 25, 2020 a decision was issued that ratified the expert report prepared by the court expert appointed by the Court, establishing the amount to be received in favor of the companies. This decision was maintained by the Court of Justice of the State of Rio de Janeiro in judgment on August 10, 2021, and on September 10, 2021, Eletrobras made the judicial deposit/payment of the amount of the sentence determined by the Judiciary Branch of the State of Rio January, duly increased by interests and loss charges, which implied the recognition by the Company, in the 3^rd quarter of 2021, of gain in the statement of income in the amount of R$ 1,391,280, net of fees and related expenses, being the amount deposited in the Company's account, after the presentation of a guarantee insurance. In this sense, in a final judgment concluded on November 7, 2023, the First Chamber of Private Law of the Court of Justice of the State of Rio de Janeiro, unanimously, dismissed the appeal filed by Eletrobras against the decision that had rejected its challenge to compliance with the judgment. On January 30, 2024 Eletrobras filed Special and Extraordinary Appeals against the decision that dismissed its appeal, and on March 25, 2024 a decision was handed down by the Third Vice-Presidency of the Court of Justice of the State of Rio de Janeiro rejecting the special appeal.

On February 26, 2024, Gerdau S.A entered into an agreement with Eletrobras regarding credits arising from a final and unappealable decision and which were being claimed in a judicial settlement process, for the amount of R$ 17,000.

On April 3, 2024, after the decision approving the agreement reached, Gerdau S.A. received the amount established in the legal agreement signed with Eletrobras.

The other lawsuits pending before the Judiciary, dealing with this subject, with final and unappealable decisions on the merits, favorable to the Company, total approximately R$ 40 million.

V) Other contingent assets

On February 2, 2023, Gerdau S.A. and its subsidiaries Gerdau Açominas S.A. and Gerdau Aços Longos S.A. were successful in a lawsuit of tax nature, regarding the right to PIS and COFINS credits on scrap purchases. Due to the final and unappealable decision of the court, which occurred on this date, Gerdau S.A. and its subsidiaries recognized in 2023 a credit of R$ 828 million (principal plus monetary update minus legal fees and taxes). This amount, until then disclosed as Other contingent assets, reached the level of virtually certain, resulting in the recognition of the asset in Tax credits, with a counterpart in Other operating income and Tax credits monetary update, which is expected to be monetized within a period of up to 5 years.

NOTE 16 - RELATED-PARTY TRANSACTIONS

a)	Intercompany loans

		Maturity			March 31, 2024			December 31, 2023
Liabilities
Joint venture
Bradley Steel Processors Inc.			August 1, 2024				(25,175	)			(24,992	)
							(25,175	)			(24,992	)

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

b)	Operations with related parties

During the three-month period ended on March 31, 2024, the Company, through its subsidiaries, performed commercial operations with some of its associate companies, joint ventures and other related parties in sales of R$ 85,092 (R$ 285,158 as of March 31, 2023) and purchases in the amount of R$ 41,266 as of March 31, 2024 (R$ 29,998 as of March 31, 2023). The net balance totals R$ 43,826 as of March 31, 2024 (R$ 255,160 as of March 31, 2023).

The Company and its subsidiaries have receivables from controlling shareholders, referring to the sale of property, in the amount of R$ 17,157. Additionally , the Company recorded revenues of R$ 211 in the three-month period ended on March 31, 2024 (R$ 213 on March 31, 2023), derived from rental agreement.

Guarantees granted

Related Party		Relationship		Object		Original Amount			Maturity			Balance as of March 31, 2024			Balance as of December 31, 2023
Gerdau Aços Longos S.A.		Subsidiary		Financing Agreements			150,000				apr/24				150,000				150,000
Gerdau Açominas S.A.		Subsidiary		Financing Agreements			400,000				nov/24				400,000				400,000
Gerdau Aços Longos S.A.		Subsidiary		Financing Agreements			400,000				nov/24				400,000				400,000
Gerdau Aços Longos S.A and Gerdau Açominas S.A		Subsidiary		Commercial Contract			10,949				jan/25				10,701				-
Gerdau Aços Longos S.A and Gerdau Açominas S.A		Subsidiary		Commercial Contract			1,868				jan/25				1,825				-
Gerdau Aços Longos S.A and Gerdau Açominas S.A		Subsidiary		Commercial Contract			3,096				jan/25				3,025				-
Gerdau Aços Longos S.A and Gerdau Açominas S.A		Subsidiary		Commercial Contract			4,043				jan/25				3,951				-
Gerdau Aços Longos S.A and Gerdau Açominas S.A		Subsidiary		Commercial Contract			624				jan/25				610				-
Gerdau Aços Longos S.A and Gerdau Açominas S.A		Subsidiary		Commercial Contract			3,229				jan/25				3,156				-
Gerdau Aços Longos S.A and Gerdau Açominas S.A		Subsidiary		Commercial Contract			4,873				jan/25				4,762				-
Gerdau Aços Longos S.A and Gerdau Açominas S.A		Subsidiary		Commercial Contract			2,467				feb/25				2,396				-
Gerdau Aços Longos S.A and Gerdau Açominas S.A		Subsidiary		Commercial Contract			59,644				mar/25				44,519				63,024
Gerdau Aços Longos S.A and Gerdau Açominas S.A		Subsidiary		Commercial Contract			35,451				mar/25				25,042				35,451
Gerdau Açominas S.A.		Subsidiary		Financing Agreements			375,000				may/25				375,000				375,000
Gerdau Aços Longos S.A.		Subsidiary		Financing Agreements			375,000				may/25				375,000				375,000
Gerdau Aços Longos S.A.		Subsidiary		Financing Agreements			400,000				nov/25				400,000				400,000
Gerdau Corsa S.A.P.I. de C.V.		Joint Venture		Financing Agreements			601,588				sep/26				616,416				648,322
Gerdau Aços Longos S.A and Gerdau Açominas S.A		Subsidiary		Commercial Contract			11,951				jan/27				11,680				-
Gerdau S.A., Gerdau Aços Longos S.A and Gerdau Açominas S.A		Subsidiary		Financing Agreements			4,730,775				sep/27				-				-
Gerdau Trade Inc.		Subsidiary		Financing Agreements			2,056,535				oct/27				2,130,944				2,064,877
GUSAP III LP.		Subsidiary		Financing Agreements			2,100,600				jan/30				2,488,108				2,410,967
Gerdau Ameristeel US Inc.		Subsidiary		Financing Agreements			103,505				oct/37				254,806				246,906
Gerdau Aços Longos S.A.		Subsidiary		Financing Agreements			12,834				jun/38				12,216				12,216
GUSAP III LP.		Subsidiary		Financing Agreements			1,117,100				apr/44				2,403,387				2,328,873

c)	Price conditions and charges

Loan agreements between related parties are updated by fixed and/or market rates, such as SOFR, plus exchange rate variation, where applicable. Sales of products and purchases of inputs are made under terms and conditions agreed between the parties.

d)	Management compensation

The Company paid to its management salaries, benefits and variable compensation totaling R$ 8,766 for the three-month period ended on March 31, 2024 (R$ 10,750 for the three-month period ended on March 31, 2023).

The contributions for the defined contribution plan, related to the management of the Company, totaled R$ 436 for the three-month period ended on March 31, 2024 (R$ 532 for the three-month period ended on March 31, 2023).

The cost of social charges, related to the management of the Company, totaled R$ 3,952 for the three-month period ended on March 31, 2024 (R$ 7,015 for the three-month period ended on March 31, 2023).

The cost of long-term incentive plans recognized in income and attributable to key management (members of Board of Directors and executive officers) totaled R$ 6,640 during the three-month period ended on March 31, 2024 (R$ 5,435 for the three-month period ended on March 31, 2023).

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

e)Other information from related parties

Contributions to the assistance entities Fundação Gerdau, Instituto Gerdau and Fundação Ouro Branco, classified as related parties, amounted R$ 39,445 on March 31, 2024 (R$ 41,763 on December 31, 2023). The defined benefit pension plans and the post-employment health care benefit plan are related parties of the Company and the details of the balances and contributions have been presented in the Employee Benefit Note in the Company's annual Financial Statements.

NOTE 17 - EQUITY

a) Capital

The Board of Directors may, without need to change the bylaws, issue new shares (authorized capital), including the capitalization of profits and reserves up to the authorized limit of 1,500,000,000 common shares and 3,000,000,000 preferred shares, all without nominal value. In the case of capital increase through subscription of new shares, the right of preference shall be exercised in up to 30 days, except in the case of a public offering, when the limit is not less than 10 days.

Reconciliations of common and preferred outstanding shares are presented below:

		March 31, 2024			December 31, 2023
		Common shares			Preferred shares			Common shares			Preferred shares
Balance at the beginning of the period			600,526,442				1,148,995,967				571,929,945				1,091,630,395
Share bonus			-				-				28,596,497				54,691,436
Exercise of long-term incentive plan			-				3,441,420				-				2,674,136
Balance at the end of the period			600,526,442				1,152,437,387				600,526,442				1,148,995,967

As of March 31, 2024, 600,526,442 common shares and 1,156,540,608 preferred shares are subscribed and paid up, with a total capital of R$ 20,215,343 (net of share issuance costs). Ownership of the shares is presented below:

		Shareholders
		March 31, 2024		December 31, 2023
Shareholders		Common		%		Pref.		%		Total		%		Common		%		Pref.		%		Total		%
Metalúrgica Gerdau S.A.*			585,793,846			97.5			-			-			585,793,846			33.3			585,793,846			97.5			-			-			585,793,846			33.3
Brazilian institutional investors			1,626,974			0.3			177,240,953			15.3			178,867,927			10.2			2,442,108			0.4			117,790,196			10.2			120,232,304			6.8
Foreign institutional investors			1,297,575			0.2			484,433,539			41.9			485,731,114			27.6			1,425,937			0.2			546,220,396			47.2			547,646,333			31.2
Other shareholders			11,808,047			2.0			490,762,895			42.4			502,570,942			28.7			10,864,551			1.9			484,985,375			41.9			495,849,926			28.3
Treasury stock			-			-			4,103,221			0.4			4,103,221			0.2			-			-			7,544,641			0.7			7,544,641			0.4
			600,526,442			100.0			1,156,540,608			100.0			1,757,067,050			100.0			600,526,442			100.0			1,156,540,608			100.0			1,757,067,050			100.0

* Metalurgica Gerdau S.A. is the controlling shareholder and Indac - Ind. e Com. S.A. (holding of Gerdau's family) is the utltimate controlling shareholder of the Company.

Preferred shares do not have voting rights and cannot be redeemed but have the same rights as common shares in the distribution of dividends and priority in the capital distribution in case of liquidation of the Company.

On February 28, 2023, the Company's Board of Directors approved a capital increase of R$ 966,162 through the capitalization of part of the balance of the Retained earnings account - Investments and Working Capital reserve, with issuance, within the limit of the capital authorized by Art. 4, paragraph 1, of the Company's Bylaws, of 83,669,860 new shares, of which 28,596,497 are common shares and 55,073,363 are preferred shares, all book-entry, with no par value, distributed to shareholders as a bonus, in the proportion of one new share for every twenty shares of the same type held on March 21, 2023; increasing the Company's capital to R$ 20,215,343, divided into 1,757,067,050 shares, of which 600,526,442 are common shares and 1,156,540,608 are preferred shares, all book-entry and without par value.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

b) Treasury stocks

Changes in treasury stocks are as follows:

		March 31, 2024			December 31, 2023
		Preferred shares			R$			Preferred shares			R$
Balance at the beginning of the period			7,544,641				150,182				9,836,850				179,995
Long term incentive plan exercvised during the period			(3,441,420	)			(51,748	)			(2,674,136	)			(29,813	)
Capital increase with share bonus			-				-				381,927				-
Balance at the end of the period			4,103,221				98,434				7,544,641				150,182

These shares are held in treasury for subsequent cancellation, selling in the market or to be granted under the long-term incentive plan of the Company. The average acquisition cost of these shares was R$ 23.99 as of March 31, 2024.

c) Capital reserves - consists of premium on issuance of shares.

d) Retained earnings

I) Legal reserves - under Brazilian Corporate Law, the Company must transfer 5% of the annual net income determined on its statutory books in accordance with Brazilian accounting practices to the legal reserve until this reserve equals 20% of the paid-in capital. The legal reserve can be utilized to increase capital or to absorb losses but cannot be used for dividend purposes.

II) Tax incentives reserve - under Brazilian Corporate Law, the Company may transfer to this account part of net income resulting from government benefits which can be excluded from the basis for dividend calculation.

III) Investments and working capital reserve - consists of earnings not distributed to shareholders and includes the reserves required by the Company's by-laws. The Board of Directors may propose to the shareholders the transfer of at least 5% of the profit for each year determined in its statutory books in accordance with accounting practices adopted in Brazil to this reserve. Amount can be allocated to the reserve only after the minimum dividend requirements have been met and its balance cannot exceed the amount of paid-in capital. The reserve can be used to absorb losses, if necessary, for capitalization, for payment of dividends or for the repurchase of shares.

e) Operations with non-controlling interests - Corresponds to amounts recognized in equity from changes in non-controlling interests.

f) Other reserves - Include: gains and losses on net investment hedge, gains and losses on derivatives accounted as cash flow hedge, pension plan, cumulative translation adjustments and expenses of long-term incentive plans.

NOTE 18 - EARNINGS PER SHARE (EPS)

Basic

		For the three-month period ended on
		March 31, 2024			March 31, 2023*
		Common			Preferred			Total			Common			Preferred			Total
		(in thousands, except share and per share data)			(in thousands, except share and per share data)
Basic numerator
Allocated net income available to Common and Preferred shareholders			700,916				1,342,866				2,043,782				1,101,618				2,104,301				3,205,919
Basic denominator
Weighted-average outstanding shares, after deducting the average of treasury shares			720,631,730				1,380,640,276								720,631,730				1,376,544,793
Earnings per share (in R$) - Basic			0.97				0.97								1.53				1.53

* Retrospectively adjusted to take into account the effect of the capital increase with the issuance of common and preferred shares as a bonus, in the proportion of one new share for every five shares of the same type, as detailed in Note 24.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

Diluted

		For the three-month period ended on
		March 31, 2024			March 31, 2023*
Diluted numerator
Allocated net income available to Common and Preferred shareholders
Net income allocated to preferred shareholders			1,342,866				2,104,301
Add:
Adjustment to net income allocated to preferred shareholders in respect to the potential increase in number of preferred shares outstanding, as a result of the long term incentive plan			5,491				6,260
			1,348,357				2,110,561
Net income allocated to common shareholders			700,916				1,101,618
Less:
Adjustment to net income allocated to common shareholders in respect to the potential increase in number of preferred shares outstanding, as a result of the long term incentive plan			(1,903	)			(6,260	)
			699,013				1,095,358
Diluted denominator
Weighted - average number of shares outstanding
Common Shares			720,631,730				720,631,730
Preferred Shares
Weighted-average number of preferred shares outstanding			1,380,640,276				1,376,544,793
Potential increase in number of preferred shares outstanding due to the long term incentive plan			9,418,049				11,984,328
Total			1,390,058,325				1,388,529,121
Earnings per share - Diluted (Common and Preferred Shares) - in R$			0.97				1.52

* Retrospectively adjusted to take into account the effect of the capital increase with the issuance of common and preferred shares as a bonus, in the proportion of one new share for every five shares of the same type, as detailed in Note 24.

NOTE 19 - LONG-TERM INCENTIVE PLANS

Restricted Shares and Performance Shares Summary:

Balance as of January 01, 2023			10,812,887
Granted			7,697,990
Share Bonus			664,433
Cancelled			(2,192,635	)
Exercised			(2,674,136	)
Balance on December 31, 2023			14,308,539
Granted			4,946,036
Forfeited			(1,437,436	)
Exercised			(3,441,420	)
Quantity on March 31, 2024			14,375,719

The Company recognizes the cost of the long-term incentive plan through Restricted Shares and Performance Shares based on the fair value of the options granted on the grant date over the grace period for exercising each grant. The fair value of the options granted is equivalent to the fair value of the services rendered to the Company, being R$ 21.57 for the 2024 grant (R$ 25.16 for the 2023 grant). The vesting period for the year is 3 years for grants made from 2017 onwards. The cost of the long-term incentive plan recognized in income, in the three-month period ended on March 31, 2024, was R$ 35,464 (R$ 37,304 for the three-month period ended on March 31, 2023).

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

As of March 31, 2024, the Company has a total of 4,103,221 preferred shares in treasury and, according to note 17, these shares may be used for serving this plan.

NOTE 20 - EXPENSES BY NATURE

The Company opted to present its Consolidated Statement of Income by function. As required by IAS 1, the Consolidated Statement of Income by nature is as follows:

		For the three-month periods ended
		March 31, 2024			March 31, 2023
Depreciation and amortization			(725,785	)			(714,775	)
Labor expenses			(1,948,926	)			(1,901,250	)
Raw material and consumption material			(10,019,170	)			(11,456,583	)
Freight			(1,096,663	)			(1,171,019	)
Tax credits recovery / provision			-				845,216
Other expenses/income			253,477				(535,409	)
			(13,537,067	)			(14,933,820	)
Classified as:
Cost of sales			(13,790,544	)			(15,243,628	)
Selling expenses			(183,007	)			(174,232	)
General and administrative expenses			(317,929	)			(363,807	)
Other operating income			853,363				898,099
Other operating expenses			(78,856	)			(45,738	)
Impairment of financial assets			(20,094	)			(4,514	)
			(13,537,067	)			(14,933,820	)

NOTE 21 - FINANCIAL INCOME

		For the three-month periods ended
		March 31, 2024			March 31, 2023
Income from short-term investments			111,591				153,047
Interest income and other financial incomes			63,083				62,815
Financial income total			174,674				215,862
Interest on debts			(184,715	)			(203,920	)
Monetary variation and other financial expenses			(158,483	)			(119,815	)
Financial expenses total			(343,198	)			(323,735	)
Exchange variations, net			(30,333	)			(15,101	)
Hyperinflation adjustments in Argentina			(290,302	)			(174,627	)
Tax credits monetary update			-				253,002
Gains and Losses on derivatives, net			13,412				(5,496	)
Financial result, net			(475,747	)			(50,095	)

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

NOTE 22 - SEGMENT REPORTING

Information by business segment:
		For the three-month periods ended
		Brazil Operation			North America Operation			South America Operation			Special Steels Operation			Eliminations and Adjustments			Consolidated
		March 31, 2024			March 31, 2023			March 31, 2024			March 31, 2023			March 31, 2024			March 31, 2023			March 31, 2024			March 31, 2023			March 31, 2024			March 31, 2023			March 31, 2024			March 31, 2023
Net sales			6,435,355				6,925,310				6,415,886				7,792,974				1,190,598				1,617,029				2,608,409				2,948,427				(439,985	)			(411,437	)			16,210,263				18,872,303
Cost of sales			(5,986,026	)			(6,031,497	)			(5,057,054	)			(5,847,741	)			(937,000	)			(1,244,120	)			(2,238,436	)			(2,518,875	)			427,972				398,605				(13,790,544	)			(15,243,628	)
Gross profit			449,329				893,813				1,358,832				1,945,233				253,598				372,909				369,973				429,552				(12,013	)			(12,832	)			2,419,719				3,628,675
Selling, general and administrative expenses			(210,825	)			(202,434	)			(144,484	)			(145,865	)			(35,480	)			(38,334	)			(65,111	)			(68,862	)			(45,036	)			(82,544	)			(500,936	)			(538,039	)
Other operating income (expenses)			(21,960	)			(9,768	)			6,481				(1,502	)			8,600				1,031				1,747				7,253				(28,728	)			855,347				(33,860	)			852,361
Results in operations with joint ventures			-				-				-				-				-				-				-				-				808,367				-				808,367				-
Impairment of financial assets			(20,979	)			(3,535	)			766				(504	)			748				(65	)			(743	)			56				114				(466	)			(20,094	)			(4,514	)
Equity in earnings of unconsolidated companies			-				-				88,548				276,473				-				81,452				4,170				(2,850	)			(13,602	)			(1,121	)			79,116				353,954
Operational income (Loss) before financial income (expenses) and taxes			195,565				678,076				1,310,143				2,073,835				227,466				416,993				310,036				365,149				709,102				758,384				2,752,312				4,292,437
Finacial result, net			(124,401	)			(94,957	)			(52,903	)			30,490				(321,129	)			(177,486	)			(65,228	)			(71,086	)			87,914				262,944				(475,747	)			(50,095	)
Income (Loss) before taxes			71,164				583,119				1,257,240				2,104,325				(93,663	)			239,507				244,808				294,063				797,016				1,021,328				2,276,565				4,242,342
Income and social contribution taxes			(8,015	)			(156,584	)			(275,650	)			(434,577	)			30,420				(61,275	)			(59,742	)			(72,523	)			89,294				(301,984	)			(223,693	)			(1,026,943	)
Net income (Loss)			63,149				426,535				981,590				1,669,748				(63,243	)			178,232				185,066				221,540				886,310				719,344				2,052,872				3,215,399
Supplemental information:
Net sales between segments			343,494				52,120				47,501				33,892				-				-				30,808				43,968				18,182				281,457				439,985				411,437
Depreciation/amortization			377,531				382,378				166,725				142,595				58,404				60,789				120,553				126,712				2,572				2,301				725,785				714,775

		March 31, 2024			December 31, 2023			March 31, 2024			December 31, 2023			March 31, 2024			December 31, 2023			March 31, 2024			December 31, 2023			March 31, 2024			December 31, 2023			March 31, 2024			December 31, 2023
Investments in associates and joint ventures			-				-				2,966,143				2,766,406				-				-				269,517				268,522				838,044				823,521				4,073,704				3,858,449
Total assets			23,983,159				23,788,261				25,243,002				22,589,796				4,968,970				4,428,996				11,810,089				11,885,419				10,955,849				12,192,672				76,961,069				74,885,144
Total liabilities			8,693,880				8,849,071				2,627,210				3,064,061				1,289,745				1,373,802				2,708,229				2,881,499				9,531,062				9,477,848				24,850,126				25,646,281

The main products by business segment are:

Brazil Operation: rebar, bars, wide flange beams, wires, plates, hot rolled plates, billets, blooms, slabs, wire rod and structural shapes.

North America Operation: rebar, bars, wire rod, structural shapes, wide flange beams and billets.

South America Operation: rebar, bars, wires, wide flange beams and billets.

Special Steel Operation: bars, wire rod, billets and blooms.

The column of eliminations and adjustments includes the elimination of sales and intercompany loans between segments in the context of the Consolidated Financial Statements. This column also includes amounts that are not part of operational results of a specific segment, such as Tax credits recovery, Tax credits monetary update, Selling, general and administrative expenses of corporate employees and the related income tax effects of these amounts, among others.

The Company's geographic information with net sales classified according to the geographical region where the products were shipped is as follows:

For the three-month periods ended

Brazil

Latin America (1)

North America (2)

Consolidated

March 31, 2024

March 31, 2023

March 31, 2024

March 31, 2023

March 31, 2024

March 31, 2023

March 31, 2024

March 31, 2023

Net sales

7,096,519

7,706,952

1,199,456

1,720,785

7,914,288

9,444,566

16,210,263

18,872,303

			March 31, 2024				December 31, 2023				March 31, 2024				December 31, 2023				March 31, 2024				December 31, 2023				March 31, 2024				December 31, 2023
Total assets			32,934,339				32,811,578				8,163,153				7,386,237				35,863,577				34,687,329				76,961,069				74,885,144

⁽¹⁾ Does not include operations of Brazil

⁽²⁾ Does not include operations of Mexico

IFRS requires the Company to disclose revenues from external customers for each product and service, or each group of similar products and services, unless the necessary information is not available and the cost to develop it would be excessive. Management does not consider this information useful for its decision-making process, because it would aggregate sales in different markets and in different currencies, subject to the effects of changes in exchange rates. Furthermore, the trends of steel consumption and the price dynamics of each product or group of products in different countries and different markets within these countries are poorly correlated and, as a result, the information would not be useful and would not serve to reach any conclusions about historical trends. Considering this scenario and considering that the information of revenue from external customers by product and service is not maintained by the Company on a consolidated basis and the cost to obtain this information would be excessive compared to the benefits of the information, the Company does not present revenue by product and service.

NOTE 23 - IMPAIRMENT OF ASSETS

The impairment test of goodwill and other long-lived assets is tested based on the analysis and identification of facts or circumstances that may involve the need to perform the impairment test. The Company performs impairment tests of goodwill and other long-lived assets, based on projections of discounted cash flows, which take into account assumptions such as: cost of capital, growth rate and adjustments applied to flows in perpetuity, methodology for working capital determination, investment plans, and long-term economic-financial forecasts.

To determine the recoverable amount of each business segment, the Company uses the discounted cash flow method, taking as basis, financial and economic projections for each segment. The projections are updated to take into consideration any observed changes in the economic environment of the market in which the Company operates, as well as premises of expected results and historical profitability of each segment.

GERDAU S.A.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

as of March 31, 2024

(In thousands of Brazilian Reais - R$, unless otherwise stated)

(Unaudited)

The impairment test of goodwill allocated to the business segments is carried out annually in December and it is anticipated if events or circumstances indicate that it is necessary. In the test carried out in the year 2023, the Company carried out a sensitivity analysis of the discount rate and perpetuity growth rate as well as a combination of both, given their potential impacts on cash flows, where an increase of 0.5 percentage points in the discount rate of each segment's cash flow would result in a recoverable amount that exceeded book value as shown below: a) North America: R$ 5,075 million; b) Special Steel: R$ 2,067 million; c) South America: R$ 657 million; and d) Brazil: R$ 343 million. On the other hand, a decrease of 0.5 percentage points in the perpetuity growth rate of the cash flow of each business segment would result in a recoverable amount that exceeded book value as shown below: a) North America: R$ 5,431 million; b) Special Steel: R$ 2,271 million; c) South America: R$ 702 million; and d) Brazil: R$ 719 million. A combination of the above-mentioned sensitivities in the cash flow of each segment would result in an impairment value in the Brazil segment of R$ 501 million due to the recoverable amount lower than the book value and the recoverable amount exceeding the book value in the other segments, as follows: North America: R$ 4,213 million; b) Special Steel: R$ 1,578 million and c) South America: R$ 614 million.

The Company concluded that there are no indications that demand the performance of the impairment test of goodwill and other long-lived assets for the period ended on March 31, 2024.

The Company will maintain over 2024 its constant monitoring of the steel market in order to identify any deterioration, significant drop in demand from steel consuming sectors (notably automotive and construction), stoppage of industrial plants or activities relevant changes in the economy or financial market that result in increased perception of risk or reduction of liquidity and refinancing capacity. Although the projections made by the Company provide a challenging scenario, events that impact economic environment and business, if manifested in a greater intensity than that anticipated in the assumptions made by management, may lead the Company to revise its projections of value in use and eventually result in impairment losses.

NOTE 24 - SUBSEQUENT EVENTS

I) At the Extraordinary General Meeting held on April 16, 2024, it was approved a capital increase of R$ 4,057,882 through the capitalization of part of the balance of the Retained earnings account - Investments and Working Capital reserve, with issuance of 351,413,410 new shares, of which 120,105,288 are common shares and 231,308,122 are preferred shares, all book-entry, with no par value, distributed to shareholders as a bonus, in the proportion of one new share for every five shares of the same type held on April 17, 2024; increasing the Company's capital to R$ 24,273,225, divided into 2,108,480,460 shares, of which 720,631,730 are common shares and 1,387,848,730 are preferred shares, all book-entry and without par value. This capital increase addresses the excess of retained earnings in relation to the capital, as provided for in Brazilian corporate law.

II) On April 30, 2024, the Company proposed the anticipation of the mandatory minimum dividend on income of the current fiscal year, stipulated in its Bylaws, to be paid in the form of dividends, which will be calculated and credited on the shareholding interest owned on May 15, 2024, in the amount of R$ 589.0 million (R$ 0.28 per common and preferred share), with payment on May 27, 2024, which was submitted and approved by the Board of Directors on May 2, 2024.

III) On May 2, 2024, the Company's Board of Directors approved the 17^th issuance of unsecured debentures, not convertible into shares, in a single series, in the amount of R$ 1.5 billion. The Debentures will mature within five years from the issuance date with yield interest corresponding to the cumulative variation of 100% of the average daily rates of one-day Interbank Deposits (DI), plus a spread to be defined in accordance with the Bookbuilding Procedure, limited to a maximum percentage of 0.60% per year. The net funds obtained by the Company from the issuance will be used to reprofiling its financial liabilities and the Company´s ordinary management business. The general Issuance conditions are detailed in the minutes of the Meeting of the Company's Board of Directors available on the websites of the Company's Investor Relations and of CVM.

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