Jan. 12, 2007 — Novamerican Steel Inc. reported net income of $11.9 million on sales of $204.6 million for the fourth quarter and net income of $44.3 million on sales of $840.8 million for the fiscal year ended November 25, 2006. (All amounts are in U.S. dollars).

This marks the company’s 36th consecutive profitable quarter.

Fourth Quarter Results—The $11.9 million ($1.14 per share or $1.14 after dilution) net income reflects a $2.0 million (14.3%) decrease compared to net income of $13.9 million ($1.37 per share, $1.35 after dilution) for the same period in 2005. The $204.6 million in sales reflects a $14.6 million (6.7%) decrease compared to sales of $219.2 million for the same period in 2005.

Tons sold and processed decreased by 139,127 tons (25.7%) to 402,366 tons from 541,493 tons in the fourth quarter of 2005. The gross margin decreased to 22.0% from 23.0% in the fourth quarter in 2005.

Full Year Results—The $44.3 million ($4.26 ($4.25 after dilution) per share) net income reflects a $7.4 million (19.9%) increase compared to net income of $36.9 million ($3.70 per share, $3.58 after dilution) for the year 2005. The $840.8 million in sales reflects a $6.1 million (0.7%) increase compared to sales of $834.7 million for 2005.

Tons sold and processed decreased by 184,464 tons (9.5%) to 1,749,087 tons from 1,933,551 tons, compared with the same period in 2005. The gross margin increased to 22.0% from 20.4% for the same period in 2005.

Operations—Despite the inventory correction that plagued the North American steel industry in late 2006, the company says it managed a successful conclusion to its year by achieving good results in its fiscal fourth quarter. The company says it was also successful in reducing inventory during the fourth quarter to levels more in balance with year-end demand. The company says it closed the year with a strong balance sheet and is in a sound financial position for growth opportunities.

Outlook—The company says the decline in steel prices, resulting from weakened demand and an oversupply of steel in the fourth quarter, appears to be over. Import offerings for first and second quarter delivery are limited and the domestic steel mills appear committed to price stability early in 2007.

Management remains cautiously optimistic for a good start to fiscal 2007. The company's fiscal first quarter appears poised for a slight increase in demand relative to the fourth quarter as warmer weather in the Northeast and inventory replenishment have combined for better-than-expected shipments early in the new year. Steel-consuming industries such as industrial and commercial construction, energy, heavy equipment, railcar and infrastructure spending are forecasting stable demand in 2007 as the year begins.

Based in Montreal, Canada, Novamerican Steel Inc. has 12 operating locations in Canada and 11 operating locations in the United States. Novamerican processes and distributes carbon steel, stainless steel and aluminum products, including carbon steel tubing for structural and automotive markets.