Gerdau Ameristeel Reports Record Year-End 2007 Results
02/14/2008 - Gerdau Ameristeel reports net income of $141.4 million on net sales of $1.7 billion for the three months, and record net income of $537.9 million on net sales of $5.8 billion for the year ended December 31, 2007.
Gerdau Ameristeel Corp. reported net income of $141.4 million on net sales of $1.7 billion for the three months, and record net income of $537.9 million on net sales of $5.8 billion for the year ended December 31, 2007.
Fourth Quarter Results—Net income of $141.4 million ($0.37 per share fully diluted) represents a 112% increase in comparison to net income of $66.7 million ($0.22 per share fully diluted) for the three months ended December 31, 2006. Net sales of $1.7 billion represent a 70% increase compared to net sales of $1.0 billion for the three months ended December 31, 2006.
Finished steel shipments of 2.2 million tons represent an increase of 689,000 tons from tons shipped in the three months ended December 31, 2006, primarily as a result of the acquisition of Chaparral Steel. Average mill finished steel selling prices increased 17% compared to prices in the year-ago fourth quarter.
Metal spread (the difference between mill selling prices and scrap raw material costs) was $456 per ton, representing an increase of $52 per ton from the same period in 2006. EBITDA was $313.8 million, compared to EBITDA of $145.1 million for the three months ended December 31, 2006.
Full-Year Results—Net income of $537.9 million ($1.65 per share fully diluted) represents an increase of 44% compared to net income of $374.6 million ($1.23 per share fully diluted) for the year ended December 31, 2006. This represents a record level of annual net income earned by Gerdau Ameristeel. Net sales of $5.8 billion compare to net sales of $4.5 billion for the year ended December 31, 2006.
Finished steel shipments of 7.6 million tons represent an increase of 998,000 tons over shipments in the previous year, primarily as a result of the 2007 acquisition of Chaparral Steel, and the 2006 acquisitions of Sheffield Steel and Pacific Coast Steel. Average mill finished steel selling prices increased 13% over selling prices in 2006.
Metal spread (the difference between mill selling prices and scrap raw material costs) was $421 per ton, an increase of $40 per ton from 2006. Record full-year EBITDA was $1.0 billion, compared to EBITDA of $751.2 million for the year ended December 31, 2006.
CEO Comments—"This was another outstanding year for Gerdau Ameristeel,” commented Mario Longhi, Gerdau Ameristeel’s President and CEO. “It was a record year for our financial performance, surpassing $1.0 billion in EBITDA for the first time in our history. When you look past all the financial accomplishments, I am particularly proud that we continue to make progress toward our vision of an injury-free workplace by continuously reducing our lost-time accident rate, creating a safer work environment for our employees.
“We are also making steady progress with the integration of our acquisitions, including the recently acquired mills in Midlothian, Texas, and Petersburg, Va.,” reported Longhi. “We have already begun to see great results in the commercial area, which is helping to ensure a seamless transition with our customers, as well as many operational improvements through the implementation of the Gerdau business system and sharing of best practices. We were able to capture approximately $15 million dollars of synergies in 2007 for an annualized rate of over $50 million. We are confident that we can achieve our target of a $75 million annual rate of synergies by the end of 2008.
“With the completion in November 2007 of one of the largest follow-on equity offerings in the North American steel industry, our balance sheet is strong and well positioned to continue to support further growth,” continued Longhi. “In accordance with our strategic growth plans, earlier today we announced that our downstream joint venture Pacific Coast Steel ("PCS") has reached an agreement to acquire Century Steel, a reinforcing and structural steel contracting and placing services business in Nevada, California, Utah, and New Mexico, and concurrently with the closing of this transaction we will increase our ownership of PCS to over 80%.
Looking forward, Longhi added, “Despite signs of a slowing North American economy, as we enter 2008, market conditions remain positive. Import levels remain lower than recent years, global steel demand and prices are creating export opportunities, and inventory levels in North America remain at low levels throughout the system. We have announced price increases in order to offset increases in scrap and other input costs and we remain focused on keeping metal spreads robust."
Gerdau Ameristeel is the second-largest minimill steel producer in North America with an annual manufacturing capacity of approximately 12 million tons of mill finished steel products. Through its vertically integrated network of 19 minimills (including one 50%-owned joint venture minimill), 19 scrap recycling facilities and 61 downstream operations, Gerdau Ameristeel serves customers throughout the United States and Canada. The company's products are generally sold to steel service centers, to steel fabricators, or directly to original equipment manufacturers for use in a variety of industries.
