Gerdau Ameristeel Reports 1st Quarter Profit
05/07/2010 - Gerdau Ameristeel Corp. reported net income of $25.2 million on net sales of $1.1 billion for the three months ended March 31, 2010.
Gerdau Ameristeel Corp. reported net income of $25.2 million on net sales of $1.1 billion for the three months ended March 31, 2010.
First Quarter Results — The $25.2 million ($0.06 per diluted share) net income compares* to a net loss of $32.8 million ($0.08 per share) for the previous quarter (4Q2009) and a net loss of $31.5 million ($0.07 per share) for the year-ago first quarter. Net sales $1.1 billion reflect a 10% increase from $1.0 billion reported for each of the three months ended March 31, 2009 and December 31, 2009.
The company’s weighted average mill selling price increased 6% ($37 per ton) in comparison to the previous quarter, but decreased 12% ($86 per ton) in comparison to the year-ago first quarter. Finished steel shipments were 1.5 million tons for the three months ended March 31, 2010, an increase of 25% in comparison to the three months ended March 31, 2009 and an increase of 15% from the three months ended December 31, 2009.
EBITDA, as adjusted, was $116.7 million, which compares to EBITDA of $60.5 million for the previous quarter and $41.8 million for the year-ago first quarter. The improvement in EBITDA from each comparative period was primarily due to the cost reduction initiatives the company undertook in 2009. Increased shipment volumes were also a factor in the EBITDA improvement.
The cost of scrap raw material used in production for the quarter was $266 per ton, which compares to scrap costs of $217 per ton for the previous quarter and $200 per ton for the year-ago first quarter.
At March 31, 2010, the company had $594.7 million of cash and short-term investments, a decrease of $61.6 million from December 31, 2009 as the company's investment in working capital increased as a result of rising scrap costs and the increase in production and shipment levels. In addition to its cash and short-term investments, the Company had approximately $497.9 million available under secured credit facilities, resulting in a total liquidity position of approximately $1.1 billion at March 31, 2010.
As of March 31, 2010, the Company had 433,492,864 common shares outstanding.
CEO Comments — "I'm pleased to say that we reported a profitable first quarter,” said Mario Longhi, President and CEO of Gerdau Ameristeel. “After a challenging 2009, where we intensely addressed everything under our control, we were able to benefit from a generally better-than-expected demand for our products during the quarter. We believe our customers are beginning to feel more confident in the U.S. economic recovery and this is translating into better activity in our end-markets.
“First-quarter performance certainly improved as a result of the numerous actions we undertook during the last 18 months to increase cost efficiency and lower our breakeven point,” continued Longhi. “Those actions, along with increased production, led to the lowest manufacturing cost per ton we have experienced since 2007. Our improved operational effectiveness is a confirmation of our flexible business model.
“Looking ahead,” concluded Longhi, “we believe that demand will continue to slowly improve during the second quarter as confidence in the recovery gradually grows and we continue to feel the effects of normal seasonality.”
*NOTE: Gerdau Ameristeel has adopted International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board, as of January 1, 2010 and, as such, the comparative periods for fiscal year 2009 have been restated under IFRS.
Gerdau Ameristeel is the second-largest minimill 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 minimills, scrap recycling facilities and downstream operations, Gerdau Ameristeel serves customers throughout the United States and Canada. Gerdau Ameristeel's majority shareholder is the Gerdau Group, a 100+ year old steel company, a leading producer of long steel in the Americas and one of the major specialty long steel suppliers in the world.
