Gerdau Ameristeel Corp. reported net income of $78.6 million* on net sales of $1.0 billion for the three months ended March 31, 2005.

The $78.6 million net income ($0.26 per share fully diluted) compares to net income of $21.5 million ($0.11 per share fully diluted) for the three months ended March 31, 2004. Net sales of $1.0 billion compare to net sales of $619.0 million for the three months ended March 31, 2004. EBITDA was $151.5 million, compared to EBITDA for the March quarter of last year of $59.2 million.

Excluding joint ventures, the company shipped 1.6 million tons of finished steel in the three months ended March 31, 2005, a 19% increase over the first quarter of 2004. Average mill prices increased $142 per ton (35.9%) compared to the first quarter in 2004. Scrap raw material costs increased $21 per ton (12.1%) compared to the first quarter of 2004, partially offsetting the mill price increases. Metal spread (the difference between mill selling prices and scrap raw material cost) increased $121 per ton (54.5%) compared to the first quarter last year. Mill manufacturing costs were $238 per ton compared to $195 per ton in the first quarter of 2004, reflecting increased yield costs due to higher scrap prices, higher energy and other raw material prices, and the stronger Canadian dollar. Fabricated steel prices increased $217 per ton compared to the first quarter of the prior year.

Gerdau Ameristeel's consolidated operating income was $94.5 million and the operating income of the joint ventures was $31.5 million. Based on 1.8 million tons of finished steel shipped, the composite operating income was $71 per ton. For the three months ended March 31, 2004, Gerdau Ameristeel's consolidated operating income was $38.7 million and the operating income of the joint ventures was $10.3 million. Based on 1.5 million tons of finished steel shipped, the composite operating income was $32 per ton for the first quarter of 2004.

CEO Comments—Phillip Casey, President and CEO of Gerdau Ameristeel, commented: "Results for the March 2005 quarter continued to reflect the favorable steel market environment with normal adjustments for winter seasonality. The emergence of speculative issues related to declining scrap pricing and scrap surcharges also created customer anticipation and some conservative buying patterns within the distribution chain. The demand and shipments for long merchant products and rebar was favorable and the sluggish buying pattern was mostly prevalent in rod and flat roll products.

“Currently, the outlook for rebar and merchant products is positive with strong order activity from our rebar fabrication sector and the service center segment. The legislative debate on the new six year $284 billion highway infrastructure spending bill also appears to be reaching a final resolution before the May 31 expiration of the stop gap funding appropriation. In general, the outlook for the June 2005 quarter is positive with long product demand and metal spreads remaining steady. The demand, pricing and product import uncertainties regarding the rod and flat product markets continue to merit attention.

“Finally, the first full quarter scorecard and performance of the recently acquired North Star Steel assets have exceeded expectations. The consolidation and integration have contributed to improved market stability and network cost synergies in the production and distribution logistics."

*All figures are in U.S. dollars.

Gerdau Ameristeel is the second-largest minimill steel producer in North America with annual manufacturing capacity of over 8.4 million tons of mill finished steel products. Through its vertically integrated network of 15 minimills (including one 50%-owned minimill), 16 scrap recycling facilities and 42 downstream operations, Gerdau Ameristeel primarily serves customers in the eastern two-thirds of North America. 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 construction, automotive, mining, cellular and electrical transmission, metal building manufacturing and equipment manufacturing.