Companhia Siderurgica (NYSE: SID) reported a 5% increase in consolidated EBITDA for the second quarter of 2026, driven by improved operational performance across its diversified segments. The diversified industrial group generated positive free cash flow of BRL 808 million, marking a reversal from previous negative quarters.

The company successfully concluded a new 2030 bond issuance with 77% adherence, reflecting investor confidence in its deleveraging strategy. Management emphasized that ongoing asset sales in the cement and logistics segments, alongside working capital optimization, will further reduce net debt and extend maturity profiles.

Segment Performance

The steel segment saw a recovery in profitability, with margins returning to double digits at 10.5%. Domestic sales expanded 10% year-on-year, supported by anti-dumping measures that reduced import penetration. International operations also contributed, with European sales rising 36% annually.

The cement segment delivered its highest EBITDA in history for the second consecutive quarter, exceeding BRL 420,000 with a margin above 30%. This performance was driven by resilient demand, higher prices, and a strategic focus on value over volume. The mining segment recorded its fourth-best sales result in history, maintaining an EBITDA margin above 30% despite a 15-day operational shutdown and higher freight costs.

Financial Position & Deleveraging

Free cash flow turned positive at BRL 808 million, primarily due to working capital releases and fundraising activities. This offset substantial debt amortization and prepayment contract costs. However, net debt increased slightly as leverage rose from 3.36x to 3.49x, attributed to the amortization of iron ore prepayments and exchange rate effects.

What the Numbers Show

The divergence between positive free cash flow and rising net debt highlights the impact of specific balance sheet adjustments rather than operational cash burn. While operations generated strong cash, the amortization of iron ore prepayment contracts and foreign exchange movements on existing debt increased the net debt figure. This suggests the underlying operational cash generation is robust, but capital structure management remains sensitive to contractual amortization schedules and currency fluctuations.

Strategic Outlook

Management outlined plans to reduce inventory levels from 3 million to 1 million units, aiming to release additional working capital in the second half of the year. The company is actively pursuing binding offers for the sale of its cement assets and non-binding proposals for a minority stake (20-30%) in its logistics unit. These divestments are central to the deleveraging plan, which aims to lengthen debt maturity terms and reduce overall leverage.

Anti-dumping measures remain critical for the steel business, with management noting a significant decline in imports benefiting domestic market share. The company expects sustained profitability improvements across all segments in the second half of 2026, supported by operational efficiency gains and favorable market dynamics.

CSN Inova Ventures, a wholly-owned subsidiary of Companhia Siderúrgica Nacional (CSN), announced on Aug. 11, 2026, that it has successfully completed its private exchange offer for outstanding 6.750% Senior Notes due 2028. The issuer received valid tenders for US$1,007,324,000 in principal amount, representing 77.49% of the outstanding notes, thereby satisfying the Minimum Participation Condition required to proceed with the transaction.

The exchange offer, which expired on Aug. 10, 2026, allowed eligible holders to swap their existing 2028 Notes for a combination of cash and new 11.000% Senior Notes due 2030. This restructuring extends the maturity of the debt by two years but significantly increases the interest burden, raising the coupon rate from 6.750% to 11.000%. The 2028 Notes are fully, unconditionally, and irrevocably guaranteed by CSN.

Settlement is scheduled for Aug. 12, 2026. Under the terms of the exchange, for every US$1,000 in principal amount of 2028 Notes tendered, holders receive US$253.85 in cash and US$746.15 in aggregate principal amount of the new 2030 Notes. Additionally, holders will receive accrued and unpaid interest on the 2028 Notes up to, but excluding, the settlement date. Interest accrual on the exchanged notes ceases on the settlement date.

The following table details the financial mechanics of the completed exchange offer:

CSN Inova expects to issue approximately US$698.3 million in aggregate principal amount of new notes and pay approximately US$255.7 million in cash consideration on the settlement date. These figures exclude accrued interest and any cash paid in lieu of fractional new notes. The issuer will not receive any cash proceeds from this exchange offer.

In connection with the exchange, CSN Inova also conducted a consent solicitation to adopt amendments to the indenture governing the 2028 Notes. The company confirmed it has received the requisite consents to execute the supplemental indenture. Eligible holders were required to tender their notes to deliver consents; standalone consent delivery was not permitted. The offer was made solely to eligible holders in the United States who are qualified institutional buyers under Rule 144A, and outside the United States to non-U.S. persons under Regulation S.

What the Numbers Show

The exchange highlights a significant shift in CSN’s cost of capital for this specific debt tranche. By swapping low-coupon 2028 debt for high-coupon 2030 debt, the company extends its liquidity runway but accepts a substantially higher interest expense. With 77.49% participation, the majority of the debt pool is now subject to the 11.000% rate, suggesting that investors prioritized maturity extension over yield preservation, or that the cash component provided sufficient immediate value to incentivize tendering.