Gerdau Ameristeel Corp. reported net income of $105.5 million on net sales of $733.8 million for the quarter, and net income of $127.0 million on net sales of $1,352.7 million for the six months ended June 30, 2004.

Second Quarter Results—Net income of $105.5 million ($0.48 per share fully diluted) compares to a net loss of $6.9 million ($0.03 per share fully diluted) for the quarter ended June 30, 2003. Net sales of $733.8 million compares to net sales of $440.8 million for the quarter ended June 30, 2003. EBITDA of $168.8 million compares to EBITDA of $21.1 million for the second quarter of last year.

Including joint ventures, mill shipments were 1.5 million tons of finished steel, an increase of 5.5% over the second quarter of 2003. Average mill prices increased $207 per ton (68.3%) compared to the second quarter in 2003. Scrap raw material costs increased $54 per ton (48.2%) compared to the second quarter of 2003, partially offsetting the mill price increases. Metal spread, the difference between mill selling prices and scrap raw material cost, increased $153 per ton (80.2%) compared to the previous year quarter.

Mill manufacturing costs were $192 per ton compared to $166 per ton in the second quarter of 2003, reflecting increased yield costs due to higher scrap prices and higher energy prices. Fabricated steel prices increased $133 per ton compared to the second quarter of the prior year. Income from operations was $136.2 million, or $107 per ton of finished steel shipped, as compared to $4.3 million, or $4 per ton of finished steel shipped, in the same quarter of 2003.

Six Month Results—Net income of $127.0 million ($0.60 per share fully diluted) compared to a net loss of $13.2 million ($0.07 per share fully diluted) for the six months ended June 30, 2003. Net sales of $1,352.7 million compares to net sales of $857.4 million for the six months ended June 30, 2003. EBITDA of $228.0 million compares to EBITDA of $33.4 million for the same six months last year. All financial results are in U.S. dollars and are presented in accordance with United States generally accepted accounting principles (GAAP).

Including joint ventures, mill shipments were 3.0 million tons of finished steel, an increase of 8.5% over the prior year reflecting strong North American demand for steel products. Average mill prices increased $152 per ton (50.7%) compared to the six months ended June 30, 2003. Scrap raw material costs increased $61 per ton (56.1%) compared to the six months ended June 30, 2003, partially offsetting the mill price increases. Metal spread, the difference between mill selling prices and scrap raw material cost, increased $90 per ton (47.6%) compared to the previous year.

Mill manufacturing costs were $191 per ton compared to $169 per ton for the same period in the prior year, reflecting increased yield costs due to higher scrap prices and higher energy costs. Fabricated steel prices increased $104 per ton compared to the six months ended June 30, 2003. Income from operations was $174.9 million, or $67 per ton of finished steel shipped as compared to a loss from operations of $4.2 million, or $2 per ton of finished steel shipped, in the same period in the prior year.

Joint Venture Second Quarter Results—Gerdau Ameristeel's 50% share of the Gallatin Steel joint venture shipped 188,000 tons of finished steel products at an average selling price of $566 per ton compared to 193,000 tons at an average selling price of $274 per ton in the second quarter of 2003. The company's share of operating income of the joint ventures was $36.9 million ($196 per ton of finished steel) as compared to $1.8 million ($9 per ton of finished steel) for the three months ended June 30, 2003.

The company's share of the joint ventures' net income was $36.2 million, compared to $1.2 million for the three months ending June 30, 2003. The company's share of the joint ventures' EBITDA was $39.2 million, compared to $3.6 million for the three months ending June 30, 2003.

Joint Venture Six Month Results—The company's 50% share of the joint ventures shipped 380,000 tons of finished steel products at an average selling price of $477 per ton compared to 365,000 tons at an average selling price of $283 per ton in the six months ended June 30, 2003. The company's share of operating income of the joint ventures was $47.1 million ($124 per ton of finished steel) as compared to $5.8 million ($16 per ton of finished steel) for the six months ended June 30, 2003. The company's share of joint ventures net income was $45.7 million, compared to $4.9 million for the six months ending June 30, 2003. The company's share of the joint ventures EBITDA was $51.9 million, compared to $9.9 million for the six months ending June 30, 2003.

CEO Comments—Phillip Casey, President and CEO of Gerdau Ameristeel, commented, "The June quarterly results set a record for Gerdau Ameristeel. This earnings performance also highlights the unpredictable and volatile nature of today's domestic steel industry. The effects of globalization and domestic industry consolidation have drastically changed the traditional market dynamics for steel. These emerging factors present new challenges in defining strategic decisions and in projecting the magnitude and duration of market cycles.

“For the future, the key unknown is the sustainability of this positive industry trend in an uncertain political, economic and globally competitive environment,” continued Casey. “Gerdau Ameristeel's manufacturing facilities have significantly increased steel production, and overall steel capacity utilization is running at optimum levels. Despite strong levels of domestic steel production, the overall market continues to experience availability constraints due to seasonal high demand and reduced levels of alternative import sources. Gerdau Ameristeel's challenge is to continue to accommodate customer demands with the Canadian mills having maintenance outages scheduled during the next quarter and avoid disruptions from the installation of new equipment."

Gerdau Ameristeel is the second largest minimill steel producer in North America, with annual manufacturing capacity of over 6.8 million tons of mill-finished steel products. Through its vertically integrated network of 11 minimills (including one 50%-owned minimill), 13 scrap recycling facilities and 32 downstream operations, Gerdau Ameristeel primarily serves customers in the eastern half of North America. The company's products are generally sold to steel service centers, to fabricators, or directly to original equipment manufacturers for use in a variety of industries, including construction, automotive, mining and equipment manufacturing.