Novamerican Steel Inc. reported net income of $21.6 million* on sales of $201.7 million for the third quarter ended August 28, 2004. This was the 27th consecutive profitable quarter for the company.

Third Quarter Results—Net income of $21.6 million ($2.23 per share or $2.17 diluted), represents a $19.5 million (924.3%) increase compared to $2.1 million ($0.22 per share) for the same period in 2003. Sales, $201.7 million, represent an increase of $78.5 million (63.7%) compared to $123.2 million for the third quarter in 2003.

Tons sold and processed increased by 48,683 tons (12.9%) to 426,887 tons from 378,204 in the third quarter of 2003. The gross margin increased to 30.1% from 19.8% for the third quarter in 2003.

Nine Month Results—Net income of $49.2 million ($5.07 per share or $4.97 diluted) represents an increase of $43.6 million (777.7%) compared to $5.6 million ($0.58 per share) for the first nine months of 2003. Sales, $553.5 million, represent an increase of $187.2 million (51.1%) compared to $366.2 million for the same period in 2003.

Tons sold and processed increased by 138,577 tons (11.5%) to 1,348,544 tons from 1,209,967 tons for the same period in 2003. The gross margin for the nine months increased to 28.8% from 19.8% in 2003.

Operations—Third quarter results reflect the company's performance from all its operations in a strong economy and in a much improved steel market. The company expects its recently announced temper mill installation at its new Montreal facility to be completed and fully operational by the end of the fourth quarter.

Outlook—Management's outlook for the fourth quarter remains positive. Continued strength from many sectors of the economy, including heavy machinery, agriculture, residential construction, railcar and shipbuilding are contributing to healthy demand for flat rolled steel.

Although some major automobile manufacturers have announced production cutbacks for the fourth quarter, the company expects its automotive business to remain steady and sees further opportunity for growth in 2005.

Management believes that spot pricing will stabilize in the fourth quarter, but expects contract pricing in 2005 to be significantly higher than was realized in 2004.

*All amounts are in U.S. dollars.

Based in Montreal, Canada, Novamerican Steel Inc. processes and distributes carbon steel, stainless steel and aluminum products from twelve operating locations in Canada and eleven operating locations in the United States. Products include carbon steel tubing for structural and automotive markets.