Good afternoon. Welcome to Gerdau's conference call about the results for the second quarter of 2014. [Operator Instructions] We'd like to emphasize that any forward-looking statements that might be made during this conference call related to Gerdau's business outlook, projections and financial and operating goals are mere assumptions based on management's expectations related to the future of the company. Even though Gerdau believes that its comments are based on reasonable assumptions, there is no guarantee that future events will not affect this evaluation. Here today with us, we have Mr. André Gerdau Johannpeter, Director, President and CEO; and André Pires, CFO and IR Officer. With no further ado, I would like to give the floor to Mr. André Gerdau Johannpeter. You may now proceed, sir. André Bier Gerdau Johannpeter: Thank you. Good morning, everyone. Welcome to Gerdau's Earnings Conference Call. We'll start our analysis by addressing Gerdau's performance in the second quarter of 2014, and then we'll talk about the main investments made by the company in the current quarter. Please note that we will be making comments on the quarter's performance on a year-on-year basis. Afterwards, André Pires will give further detail on Gerdau's financial performance. And then, we'll go to here to take your questions. For those of you who are following us over the web, we are now on Slide 2. As you know, right now there is a lot of volatility in the steel industry worldwide. This scenario of excess installed capacity of steel worldwide and the pressure of margins have affected the industry at large. However, it is important to highlight that during the second quarter, the market in North America kept on growing, particularly the nonresidential construction sector. On the other hand, there was a drop in demand for steel in Brazil due to…

[Operator Instructions] Our first question comes from Thiago Lofiego, Merrill Lynch.

Good afternoon, everyone. I have 2 questions. My first question is about Brazil. We saw a drop in the unit sales, about 3%, over the quarter year-on-year. So could you talk more about this drop? If there is any effects on the product mix and better explain this drop? Or is this only due to discounts? That's my first question. The second question is about the U.S. Could you comment on sustainability of margins close to 8% already? Or if there is any potential related to inventory cost or sales to third party that might lead to lower margins? And what about the metal spread for the second quarter, and where the metal spread is right now? André Pires de Oliveira Dias: Thiago, Andre Pires speaking. Answering your first question about Brazil. Basically, what we can tell you right now about profitability is the mix. Like I said before during my presentation, our mix was slightly worse, so to speak. A little bit weaker with more exports and lower volume to the domestic market. So at the end of the day, the net sales per tonne goes down. As to the U.S., we believe that the margin level is sustainable. This improvement in the market, nonresidential market, has been consistent. If you check the numbers up to June, the so to speak growth of early nonresidential construction is at 2 digits, 10.8%. So this has been consistent. As to the metal spread. Today, the metal spread is over $400 per tonne or $410 on average, that's what we see today. So that's a significant level that was broken in recent months, and we consider it to be consistent.

André, just to make it clear, my first question was about the domestic market, excluding tax point. I would just like to better understand the dynamics of the sales percent. Any effect of the product mix or any other reason to justify the drop in sales percent in Brazil more specifically? André Pires de Oliveira Dias: Right, Thiago. I might as well, a little bit more sales of semifinished products and a weaker mix vis-à-vis the domestic market.

Our next question comes from Renato Antunes, Brazil Gerdau.

My question is still related to the Brazil operation. Could you comment on the demand? You mentioned in your presentation in the release, June affected by the World Cup. What about the demand for long steel in Brazil after the World Cup? It is something that can be compared to what we had in April or May or we haven't got yet to such recovery? My next question is, when we check the cash flow statement, we also have the sales about property. Is it something about BRL 30 million? Is this included in the Brazil operations? I know it's hard to talk about these topics, but I wonder if you could give us some flavor on what you still have to do in future years, or the potential to have cash by doing this kind of operation, that would be interesting to know. André Bier Gerdau Johannpeter: Renato, André speaking. I will be addressing Brazil demand, and André Pires will answer your second question. Actually, it is very hard to envisage the behavior of the market. In the first quarter, the first quarter had good deliveries, good results. And afterwards, it started to get worse in the second quarter, in April, May and June. And we also have the World Cup effect. In addition, we also have a strong impact of inventories in general in the industry, also on construction and real estate. So it takes some time to adjust. Not to mention automobiles are down [ph] 45 days and the usual number is 30, if I'm not mistaken. And also other factors in the industry. So it's very hard to predict what will happen in the future. We will leave June still affected by the World Cup, which is over now, but also a general economic impact. The…

Our next question is from Carlos de Alba from Morgan Stanley.

The first one is, you can give us some comments on the outlook in the next few quarters for the specialty steel division? We saw a nice recovery, but given the outlook that you were mentioning for the Brazilian steel sector, we wanted to see how sustainable this higher in the margin is? And so what the expectations are going forward? And also, we read recently the comments about potential bid for Gallatin Steel. Can you mention if the company is considering selling this joint venture, their stake in the joint venture? André Bier Gerdau Johannpeter: I will translate the question by Carlos de Alba. So you were referring -- well, you wanted to comment on the outlook for Specialty Steels and the second question refers to Gallatin Steel. Well, answering the question about Specialty Steel, in fact in the second quarter, we were impacted in Brazil by a drop in production. There were 2 main factors that contributed to the drop of production. One was a drop in demand and also increases in inventories that took place throughout the last quarter of last year and the first quarter of this year. So in terms of the outlook for Specialty Steel, I would like to highlight the fact that we have a very diversified portfolio in the many geographies where we operate. The North American market has a very positive outlook. The automobile industry is at its record levels in terms of automobile production vis-à-vis the crisis. And in our North American plants, we are operating at full capacity when it comes to Specialty Steel. In Europe, there has been a recovery. The automobile market in Europe is growing every month and it's already 5% higher than the year before. So the outlook is positive. And in India, with a more recent political change, the outlook for India is also very positive. In Brazil, the landscape is still a bit undefined because of the elements that I mentioned earlier on and exports of vehicles to Argentina. In terms of Gallatin, we cannot comment on market speculation. Thank you.

Our next question is from Leonardo Correa from BTG Pactual.

My first question, referring to domestic market demand. I know, André, you talked about it, and it's very difficult to have any visibility in an election year, and usually, the figures are downwards. But if you could possibly give me a break out per segment when we look at the IBR figures, and we look at the sales to the domestic market for either flat and longs we see a 4% drop or even 4.5% drop in the simulated figures. So it may not be very intuitive to us to see some similar decreases, maybe longs has a more resilient demand, shouldn't be experiencing this landscape. So if you talk a little bit about residential and nonresidential construction, and agricultural machinery, if you could please elaborate a little bit more on the domestic market landscape. And the second question relates to pricing. I know that you never talk about pricing policy during the calls. But I would just like to have an idea on the premiums for rebars in the domestic market and what is your calculation, that will help us. And also what will be a sustainable level for premium products. And if you allow me another question, I would like to know a little bit more about the crisis in the domestic market and also the behavior of that market in Brazil. André Bier Gerdau Johannpeter: Leonardo, this is André. I'll try to give you an idea of figures per segment. And you're right, when you talked about the figures from Aços Brazil, showing a drop of 4% to 4.5% in domestic sales. I will start by referring to the construction market. There has been a drop in sales in the real estate market. There has been a decrease of about 25%. And in terms of launches, there…

Our next question is from Andre Pinheiro, Itau BBA. André Pinheiro - Itaú Corretora de Valores S.A., Research Division: I have 2 questions. The first question is about CapEx. In the earnings release, you said that your lower CapEx budget for BRL 2.43 billion, I thought about a higher number. So I wondered if this was due to the worse outlook, or that you've decided to postpone the CapEx to next year? And in the same question, maybe you could mention CapEx for 2015, if it should follow the same trend this year, or if it would go down a little bit more? André Pires de Oliveira Dias: André Pires speaking. In reality, there's a lower CapEx disbursement. Obviously, it has to do with the scenario, which to some extent is not so visible. So it is prudent, so to speak, to focus on our balance sheet and on our free cash flow generation. And therefore, slower as disbursement this year. I'm not saying we'll be canceling any projects or specifically, interrupt any ongoing projects. It's just the pace. We're trying to go slow, as you will have better visibility and a more clear scenario. As to 2015, it's too early to tell anything. But as we've been disclosing to the market, the level of CapEx disbursement this year might not be so different compared to 2013. Maybe a little bit lower, but not so different. 2015, it will also be similar. So we don't expect to see any significant changes upwards when it comes to CapEx in 2015. And probably, the level that we are announcing today is expected to remain as disbursement for 2015. This is our first evaluation, but obviously, it is very dynamic. André Pinheiro - Itaú Corretora de Valores S.A., Research Division: Now about the…

The next question comes from Marcelo Aguiar, Goldman Sachs.

My question is more related to demand in North America. I just wanted to clarify, I know you have already answered many questions about it, but did you see any pent up demand affecting the second quarter? In other words, the comparison to sustain more growth in shipment in North America in the third quarter, would it be biased, so to speak, because the third quarter is usually stronger than usual or due to winter time? Or you see better shipment in the third quarter compared to the second quarter? The second question, you mentioned metal spread, $400. And recently, we had an increase of $10, due to dynamics and other institutions and also a drop in [indiscernible]. What is your expectation? What about metal spreads for August and September? Should it be better than $410? And my last question is about iron ore. Could you talk about the shipment expectation for third parties, taking into account logistics over the second quarter? André Pires de Oliveira Dias: Marcelo, André Pires speaking. We do believe that in the performance of the second quarter, the recovery of demand is not just a spike due to a weak first quarter. I guess that's consistent. The rest of elements that show us this is reality. First of all, if you look at our structure shape segment, which is our operation from the old Chaparral [ph] and particularly Midlothian in Texas, it is at full capacity and sold out. So that's an example that we do have consistent and strong demand for the future. On the other hand, when we check the backlog for downstream cut and bend [ph] in the U.S., we also have signs of an increase in backlog, both on our quotations, projects, and what we have booked as projects. So our…

[Operator Instructions] Our next question comes from Renato Antunes from Brazil Gerdau.

I would like you to talk a little bit about Specialty Steels in Brazil in particular. In the second quarter, I think their performance was better than expected. So what can you tell me in terms of the second half of the year in terms of demand? And now, asking a more structural question, we hear today about some Chinese rebar manufacturers being more aggressive exporting rebars, which is something new. Can you tell us something about it, or whether that should be a matter of concern? Or is something that could change the trading landscape for rebars? I would just like to understand your view about it. André Pires de Oliveira Dias: Renato, this is André Pires. In terms of Specialty Steels, in fact, if you were to mention or highlight Brazil within that industry of Specialty Steels, I would say that it's still maybe too soon to be able to give you a mid- to long-term view in that industry. Inventories are still very high, historically speaking, both for light vehicles and also trucks. But at a given moment, levels of inventories will have to come down, so we still see some opportunities to change that landscape, especially regarding to the purchases of Specialty Steels. So the third quarter will still be a challenge and the opportunities ahead should be still a bit difficult. Well, once again, I would like to reinstate what I said before, in our case, we are at a better position because we are very diversified all over the world, geographically speaking. We are in the U.S. and in Europe. We see a consistent recovery that started early this year. So we also have a very positive outlook for India considering the recent political changes. Here, we see -- I mean, we see a…

Our next question is from Alan Glezer, Bradesco BBI. Alan Glezer - Bradesco S.A. Corretora de Títulos e Valores Mobiliários, Research Division: I have 2 questions. The first refers to Specialty Steels. I do understand that there has been a regional rebalancing in the region with an increased participation of Brazil and also the U.S. and Europe. I understand that in Brazil, profitability is better when it comes to Specialty Steels. But I would like to understand, what explains that improvement in margins? We saw it going from 9% to 10.5%. And Brazil, having a better stake, because the margins are better. So what is the dynamics here and whether there is a convergence of margins from the other regions to the Brazilian margin? So that will be my first question. Along the same lines, I would like to understand the ramp up in India. And so how is that moving along, especially Specialty Steels, and what was the stake in the shipment from that region? Secondly, I would like you to elaborate more on the exports of longs in the U.S. and how do you see things occurring now and whether you can anticipate any recent changes? André Pires de Oliveira Dias: Alan, this is André Pires. In fact, I think your analysis on Specialty Steels is very correct. Brazil tends to have larger margins or bigger margins, and usually, this bigger margin takes the consolidated margin upward. So what happened between the first and second quarter, the first quarter was very weak in terms of profitability because of seasonality and also some maintenance set up that occurred. And in the second quarter, things improved. So that slight improvement from the first to the second quarter led to improvement in our consolidated EBITDA margin, looking at the scenario in…

This concludes the question-and-answer session. I would like to give the floor to Mr. André Gerdau Johannpeter for the closing remarks. André Bier Gerdau Johannpeter: Thank you very much again for your interest and your questions. If there are any pending questions, don't hesitate to contact our IR Department. And I invite you all to our next call on November 5, when we'll be announcing the earnings of the third quarter 2014. Once again, thank you very much. Have a good day.

This concludes Gerdau's conference call. Thank you all for joining us. Have a good afternoon.