Gerdau AmeriSteel Corp. (GNA)

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Gerdau Ameristeel Announces 2009 Fourth Quarter and Year End Results

Thursday , February 25, 2010 08:15ET

TAMPA, FL, Feb. 25 /PRNewswire-FirstCall/ - Gerdau Ameristeel Corporation (NYSE: GNA; TSX: GNA) today reported a net loss of $46.1 million ($0.11 per share) for the three months ended December 31, 2009, in comparison to a net loss of $25.4 million ($0.06 per share) for the three months ended September 30, 2009 and $1.3 billion ($3.08 per share) for the three months ended December 31, 2008. Included in the results for the three months ended December 31, 2009 is a pre-tax charge of $12.2 million related to the write-off of deferred financing costs and a pre-tax gain on sale of investments of $3.2 million. Excluding these adjustments, Non-GAAP Adjusted Net Loss was $40.3 million ($0.09 per share) for the three months ended December 31, 2009.

For the year ended December 31, 2009, the Company incurred a net loss of $161.7 million ($0.37 per share) compared to a net loss of $587.4 million ($1.36 per share) for the year ended December 31, 2008. Included in the current year results is a $115.0 million pre-tax charge related to actions announced earlier this year to stop production at certain of the Company's steel mills, a pre-tax charge of $12.2 million related to the writedown of deferred financing costs, a pre-tax charge of $11.9 million related to the early extinguishment of certain debt obligations and a pre-tax gain on the sale of investments of $3.2 million. Excluding these adjustments, the Non-GAAP Adjusted Net Loss was $73.3 million ($0.17 per share) for the year ended December 31, 2009. This compares to Non-GAAP Adjusted Net Income of $718.0 million ($1.67 per share fully diluted) for the year ended December 31, 2008.

Net sales for the three months ended December 31, 2009 decreased 9% to $1.0 billion from $1.1 billion for the three months ended September 30, 2009, and decreased 29% from $1.4 billion for the three months ended December 31, 2008. Weighted average mill selling price decreased 2% or $13 per ton in comparison to the three months ended September 30, 2009 and decreased 33% or $296 per ton in comparison to the three months ended December 31, 2008. Finished steel shipments were 1.3 million tons, a decrease of 14% or 210,000 tons from the three months ended September 30, 2009 and a decrease of 4% or 55,000 tons from the three months ended December 31, 2008.

Net sales for the year ended December 31, 2009 were $4.2 billion compared to net sales of $8.5 billion for the year ended December 31, 2008. Weighted average mill selling price for the year ended December 31, 2009 decreased 28% or $247 per ton compared to the same period in 2008 while finished steel shipments decreased 36% to 5.3 million tons for the year ended December 31, 2009 compared to 8.3 million tons for the same period in 2008.

EBITDA was $43.8 million for the three months ended December 31, 2009, compared to EBITDA of $163.0 million for the three months ended September 30, 2009 and $19.4 million for the three months ended December 31, 2008. For the year ended December 31, 2009, EBITDA was $320.3 million compared to EBITDA of $1.5 billion for the year ended December 31, 2008.

During the three months and year ended December 31, 2009, the Company incurred a foreign exchange loss of $7.4 million and $37.9 million, respectively, as the Canadian dollar strengthened approximately 4% and 16% in comparison to the US dollar. This charge arose from the revaluation of US dollar investments held by the Company's Canadian entities.

During December 2009, the Company entered into a new $650 million senior secured asset-based revolving credit facility. The facility replaced the Company's $950 million asset-based credit facility that would have matured in October 2010. The new facility is scheduled to mature in December 2012. In addition, the Company entered into a $610 million loan agreement with Gerdau Holdings Inc., a subsidiary of Gerdau S.A. The loan bears interest at 7.95%, is payable semi-annually, has no scheduled principal payment prior to maturity, and will mature in January 2020. The net proceeds of the Gerdau Holdings, Inc. loan plus an additional $300 million of cash were used to prepay $910 million of the Term Loan Facility.

At December 31, 2009, the Company had $656.3 million of cash and short-term investments, a decrease of $32.1 million from the levels at December 31, 2008. Excluding both the cash paid by the Company to redeem its $405 million 10 3/8% Senior Notes in August 2009 and the above mentioned $300 million debt prepayment, the Company generated $680.2 million in cash and short-term investments in 2009. In addition to its cash and short-term investments, the Company had approximately $420.2 million available under secured credit facilities which resulted in a total liquidity position of approximately $1.1 billion at December 31, 2009.


CEO Comments


Mario Longhi, President and CEO of Gerdau Ameristeel, commented:


"While 2009 was certainly a challenging year for the steel industry, we took a number of actions to better position us for the future. In regard to our operations, we reduced our cost structure and implemented processes to better maximize productivity across our network of facilities and we worked very closely with our customer base during these difficult times to enhance our long-term relationships. From a financial standpoint, using our significant cash generation, we improved the strength of our balance sheet by reducing our debt by $709 million and extending maturities.

Some of the benefits of these actions were evidenced in the fourth quarter 2009 results. By focusing on what we control, when comparing the fourth quarter of 2009 to the same period of 2008, we improved EBITDA by $24 million despite facing a decline in selling prices and shipment volumes of 33% and 4%, respectively. I am proud to say that these successes were achieved as a result of the dedication of our teams delivering exceptional performance during these difficult times.

While minimal stimulus dollars were spent during 2009, we believe that more infrastructure projects will be undertaken during 2010. In addition, there are certain segments such as the nuclear power industry which we believe will begin committing significant investments to modernize the aging infrastructure in North America. We believe that these factors, along with low customer inventory levels and increases in shipments and selling prices that have occurred since the end of 2009, give us reason to enter 2010 with optimism for a better year."


IFRS Conversion


In 2008, the Canadian Accounting Standards Board confirmed that Canadian publicly accountable enterprises will be required to adopt International Financial Reporting Standards ("IFRS") for interim and annual financial statements related to fiscal years beginning on or after January 1, 2011. In accordance with the approval granted by the Canadian securities regulatory authorities, the Company expects to adopt IFRS in 2010.


Forward Looking Statements


In this press release, "Gerdau Ameristeel" and "Company" refer to Gerdau Ameristeel Corporation and its subsidiaries and 50%-owned joint ventures. Certain statements in this press release, including, without limitation, the section entitled "CEO Comments" constitute forward-looking statements. Such statements describe the Company's assumptions, beliefs and expectations with respect to its operations, future financial results, business strategies and growth and expansion plans can often be identified by the words "anticipates," "believes," "estimates," "expects," "intends," "plans," and other words and terms of similar meaning. The Company cautions readers that forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those currently projected by the Company. In addition to those noted in the statements themselves, any number of factors could affect actual results, including, without limitation:

Excess global steel industry capacity and the availability of competitive substitute materials; the cyclical nature of the steel industry and the industries served by the Company and economic conditions in North America and worldwide; increases in the cost of steel scrap, energy and other raw materials; steel imports and trade regulations; a change in China's steelmaking capacity or slowdown in China's steel consumption; the Company's participation in the consolidation of the steel industry; the substantial capital investment and similar expenditures required in the Company's business; unexpected equipment failures and plant interruptions or outages; the Company's level of indebtedness; the cost of compliance with environmental and occupational health and safety laws; the enactment of laws intended to reduce greenhouse gases and other air emissions; the Company's ability to fund its pension plans; the ability to renegotiate collective bargaining agreements and avoid labor disruptions; currency exchange rate fluctuations; actions or potential actions taken by the Company's principal stockholder, Gerdau S.A., the liquidity of the Company's long-term investments, including investments in auction rate securities, and the Company's reliance on its 50%-owned joint ventures that it does not control.

Any forward-looking statements in this press release are based on current information as of the date of this press release and the Company does not undertake any obligation to update any forward-looking statements to reflect new information, future developments or events, except as required by law.


Notice of Conference Call


Gerdau Ameristeel invites you to listen to a live broadcast of its fourth quarter conference call on Thursday, February 25, 2010, at 2:30 pm EST. The call will be hosted by Mario Longhi, President and CEO, and Barbara Smith, VP and CFO, and can be accessed via our Web site at www.gerdauameristeel.com. Web cast attendees are welcome to listen to the conference in real-time or on-demand at your convenience.


About Gerdau Ameristeel


Gerdau Ameristeel is the second largest mini-mill steel producer in North America, with annual manufacturing capacity of approximately 12 million tons of mill finished steel products. Through its vertically integrated network of mini-mills, scrap recycling facilities and downstream operations, Gerdau Ameristeel serves customers throughout the United States and Canada. The Company's products are generally sold to steel service centers, steel fabricators, or directly to original equipment manufacturers ("OEMs") for use in a variety of industries, including non-residential, infrastructure, commercial, industrial and residential construction, metal building, manufacturing, automotive, mining, cellular and electrical transmission and equipment manufacturing. Gerdau Ameristeel's majority shareholder is the Gerdau Group, a 100+ year old steel company, the leading company in the production of long steel in the Americas and one of the major specialty long steel suppliers in the world. Gerdau Ameristeel's common shares are traded on the New York Stock Exchange and the Toronto Stock Exchange under the ticker symbol GNA.

GERDAU AMERISTEEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS continued here:

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