Gerdau Ameristeel Announces 2009 Third Quarter Results
For the nine months ended
During the third quarter of 2009, net sales were
Net sales for the nine months ended
For the three months ended
EBITDA was
During the three and nine months ended
During the second quarter of 2009, as a result of the significant downturn in the economy and declining demand for its products, the Company announced its plans to stop production at certain facilities. The Company stopped production at its
On
At
CEO Comments
"We have continued to make progress in a number of areas during the past quarter which has resulted in the third successive quarterly growth in EBITDA. This is a testament of our ability to quickly respond to market conditions and has resulted in the generation of
We have substantially completed the activities related to the previously announced actions at our Sand Springs and
We expect normal seasonal market softness during the fourth quarter of 2009 and production will be adjusted to meet demand. However, we are confident that the actions we have taken are sustainable and will provide for attractive returns for our shareholders as conditions improve."
IFRS Conversion
In 2008, the Canadian Accounting Standards Board confirmed that Canadian publicly accountable enterprises will be required to adopt International Financial Reporting Standards ("IFRS") for interim and annual financial statements related to fiscal years beginning on or after
Forward Looking Statements
In this press release, "Gerdau Ameristeel" and "Company" refer to Gerdau Ameristeel Corporation and its subsidiaries and 50%-owned joint ventures. Certain statements in this press release, including, without limitation, the section entitled "CEO Comments" constitute forward-looking statements. Such statements describe the Company's assumptions, beliefs and expectations with respect to its operations, future financial results, business strategies and growth and expansion plans can often be identified by the words "anticipates," "believes," "estimates," "expects," "intends," "plans," and other words and terms of similar meaning. The Company cautions readers that forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those currently projected by the Company. In addition to those noted in the statements themselves, any number of factors could affect actual results, including, without limitation:
Excess global steel industry capacity and the availability of competitive substitute materials; the cyclical nature of the steel industry and the industries served by the Company and economic conditions in
Any forward-looking statements in this press release are based on current information as of the date of this press release and the Company does not undertake any obligation to update any forward-looking statements to reflect new information, future developments or events, except as required by law.
Notice of Conference Call
Gerdau Ameristeel invites you to listen to a live broadcast of its third quarter conference call on
About Gerdau Ameristeel
Gerdau Ameristeel is the second largest mini-mill steel producer in
GERDAU AMERISTEEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(US$ in thousands, except earnings per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
NET SALES $1,146,134 $2,514,412 $3,219,797 $7,091,884
OPERATING EXPENSES
Cost of sales
(exclusive of
depreciation and
amortization) 932,822 1,878,579 2,770,156 5,459,398
Selling and
administrative 53,705 57,977 172,549 187,382
Depreciation 52,557 55,073 157,650 159,577
Amortization of
intangibles 16,476 26,256 49,574 76,676
Facility closure costs 78,488 - 115,033 -
Other operating expense
(income), net (1,954) (2,164) 2,471 (3,054)
----------- ----------- ----------- -----------
1,132,094 2,015,721 3,267,433 5,879,979
INCOME (LOSS) FROM
OPERATIONS 14,040 498,691 (47,636) 1,211,905
INCOME (LOSS) FROM 50%
OWNED JOINT VENTURES 3,652 24,060 (11,848) 84,167
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE OTHER
EXPENSES AND INCOME TAXES 17,692 522,751 (59,484) 1,296,072
OTHER EXPENSES
Interest expense 31,010 38,024 105,741 125,427
Interest income (1,147) (2,856) (4,310) (12,157)
Amortization of deferred
financing costs 3,384 2,779 9,191 8,161
Loss on extinquishment
of debt 11,877 - 11,877 -
Foreign exchange loss
(gain), net 18,788 (4,127) 30,543 (8,456)
Writedown of investments - 7,030 - 46,701
----------- ----------- ----------- -----------
63,912 40,850 153,042 159,676
(LOSS) INCOME BEFORE
INCOME TAXES (46,220) 481,901 (212,526) 1,136,396
INCOME TAX (BENEFIT)
EXPENSE (20,968) 163,318 (95,847) 384,760
----------- ----------- ----------- -----------
NET (LOSS) INCOME (25,252) 318,583 (116,679) 751,636
Less: Net income (loss)
attributable to
non-controlling interest 114 1,685 (1,061) 9,623
----------- ----------- ----------- -----------
NET (LOSS) INCOME
ATTRIBUTABLE TO GERDAU
AMERISTEEL &
SUBSIDIARIES $ (25,366) $ 316,898 $ (115,618) $ 742,013
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
EARNINGS PER SHARE
ATTRIBUTABLE TO GERDAU
AMERISTEEL & SUBSIDIARIES
(Loss) earnings per
common share - basic $ (0.06) $ 0.73 $ (0.27) $ 1.72
(Loss) earnings per
common share - diluted $ (0.06) $ 0.73 $ (0.27) $ 1.71
GERDAU AMERISTEEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(US$ in thousands, except earnings per share data)
(Unaudited)
September December
30, 2009 31, 2008
----------- -----------
ASSETS
Current Assets
Cash and cash equivalents $ 684,557 $ 482,535
Restricted cash 2,570 -
Short-term investments 136,527 205,817
Accounts receivable, net 551,824 677,569
Inventories 893,391 1,267,768
Deferred tax assets 30,231 31,414
Costs and estimated earnings in excess of
billings on uncompleted contracts 10,144 14,771
Income taxes receivable 50,827 28,455
Other current assets 25,363 22,936
----------- -----------
Total Current Assets 2,385,434 2,731,265
Investments in 50% Owned Joint Ventures 151,123 161,901
Long-term Investments 32,414 33,189
Property, Plant and Equipment, net 1,660,405 1,808,478
Goodwill 1,961,289 1,952,011
Intangibles 466,162 515,736
Deferred Financing Costs 35,430 35,170
Deferred Tax Assets 18,221 -
Other Assets 27,735 32,305
----------- -----------
TOTAL ASSETS $6,738,213 $7,270,055
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 271,959 $ 182,697
Accrued salaries, wages and employee benefits 103,764 148,244
Accrued interest 3,694 54,480
Income taxes payable 570 2,983
Accrued sales, use and property taxes 16,724 13,902
Current portion of long-term environmental
reserve 6,463 7,599
Billings in excess of costs and estimated
earnings on uncompleted contracts 26,446 45,687
Other current liabilities 22,117 20,932
Current portion of long-term borrowings 3,191 1,893
----------- -----------
Total Current Liabilities 454,928 478,417
Long-term Borrowings, Less Current Portion 2,657,619 3,067,994
Accrued Benefit Obligations 318,176 339,055
Long-term Environmental Reserve,
Less Current Portion 11,957 11,151
Other Liabilities 87,818 116,092
Deferred Tax Liabilities 298,132 323,854
----------- -----------
TOTAL LIABILITIES 3,828,630 4,336,563
----------- -----------
Contingencies, Commitments and Guarantees
Shareholders' Equity
Capital stock 2,553,648 2,552,323
Retained earnings 398,923 523,187
Accumulated other comprehensive (loss) income (74,382) (178,636)
----------- -----------
Total Gerdau Ameristeel & Subsidiaries
Shareholders' equity 2,878,189 2,896,874
Non-controlling interest 31,394 36,618
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 2,909,583 2,933,492
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $6,738,213 $7,270,055
----------- -----------
----------- -----------
GERDAU AMERISTEEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(US$ in thousands, except earnings per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
OPERATING ACTIVITIES
Net (loss) income $ (25,252) $ 318,583 $ (116,679) $ 751,636
Adjustment to reconcile
net (loss) income to net
cash provided by
operating activities:
Depreciation 52,557 55,073 157,650 159,577
Amortization of
intangibles 16,476 26,256 49,574 76,676
Amortization of deferred
financing costs 3,384 2,779 9,191 8,161
Deferred income taxes 1,315 (3,105) (7,138) (19,073)
Loss on disposition of
property, plant and
equipment 308 307 1,775 38
(Income) loss from 50%
owned joint ventures (3,652) (24,060) 11,848 (84,167)
Distributions from 50%
owned joint ventures 1,423 1,425 1,828 41,829
Compensation cost
(benefit) from share-
based awards 323 (9,822) 4,292 5,977
Excess tax benefits from
share-based payment
arrangements (17) (38) (129) (1,171)
Realized loss on
writedown of investments - 7,030 - 46,701
Facility closure costs 78,488 115 115,033 1,105
Loss on extinguishment
of debt 11,877 - 11,877 -
Writedown of inventory - - 33,044 2,937
Changes in operating
assets and liabilities,
net of acquisitions:
Accounts receivable (13,378) 38,393 134,065 (319,298)
Inventories (32,549) (248,762) 350,627 (523,657)
Other assets 5,817 397 7,685 (2,688)
Liabilities 693 (56,615) (149,531) 126,361
----------- ----------- ----------- -----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 97,813 107,956 615,012 270,944
INVESTING ACTIVITIES
Purchases of property,
plant and equipment (11,894) (47,339) (70,994) (113,049)
Proceeds from
disposition of property,
plant and equipment 114 266 1,527 1,880
Acquisitions - (14,157) - (217,657)
Change in restricted cash (2,570) - (2,570) -
Purchases of investments (129,332) - (617,189) -
Proceeds from sales
of investments 258,971 - 695,150 700
----------- ----------- ----------- -----------
NET CASH PROVIDED BY (USED
IN) INVESTING ACTIVITIES 115,289 (61,230) 5,924 (328,126)
FINANCING ACTIVITIES
Proceeds from issuance
of debt - - - 499
Payments on term
borrowings (413,825) (29) (417,472) (4,288)
Payments of deferred
financing costs - (1,578) (13,231) (1,686)
Cash dividends - (8,646) (8,646) (133,956)
Distributions to
subsidiary's
noncontrolling interest (570) - (4,163) (3,065)
Proceeds from exercise
of employee stock
options 31 20 212 1,144
Excess tax benefits from
share-based payment
arrangements 17 38 129 1,171
----------- ----------- ----------- -----------
NET CASH USED IN
FINANCING ACTIVITIES (414,347) (10,195) (443,171) (140,181)
Effect of exchange rate
changes on cash and
cash equivalents 12,212 (5,070) 24,257 (6,798)
----------- ----------- ----------- -----------
(DECREASE) INCREASE IN
CASH AND CASH EQUIVALENTS (189,033) 31,461 202,022 (204,161)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 873,590 311,740 482,535 547,362
----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 684,557 $ 343,201 $ 684,557 $ 343,201
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
SUPPLEMENTAL INFORMATION
Cash (refunds) payments
for income taxes $ (668) $ 136,851 $ (19,977) $ 331,896
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Cash payments for
interest $ 75,346 $ 73,963 $ 156,923 $ 152,076
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Non-GAAP Financial Measures
Non-GAAP Adjusted Net Income (Loss) and earnings (loss) per share, which excludes the impact of facility closure costs, loss on extinguishment of debt and the writedown of investments is a non-GAAP financial measure. Management believes that it is useful as a supplemental measure in assessing the operating performance of the business. The measure is used by the Company to evaluate business results. The Company excludes facility closure costs, loss on extinguishment of debt and the writedown of investments because it believes they are not representative of the ongoing results of operations of the Company's business. Below is a reconciliation of this Non-GAAP measure to net (loss) income for the periods indicated:
For the Three Months For the Three Months
Ended - Unaudited Ended - Unaudited
September 30, Diluted September 30, Diluted
2009 EPS 2008 EPS
($000s) ------------ ----------- ----------- -----------
Reconciliation of net
(loss) income to Non-GAAP
Adjusted Net (Loss)
Income:
Net (loss) income
attributable to Gerdau
Ameristeel &
Subsidiaries $ (25,366) $ (0.06) $ 316,898 $ 0.73
Adjustment for facility
closure costs 78,488 0.18 - -
Adjustment for income
tax on facility
closure costs (27,019) (0.06) - -
Adjustment for loss on
extinguishment of debt 11,877 0.03 - -
Adjustment for income
tax on loss on
extinguishment of debt (4,528) (0.01) - -
Adjustment for writedown
of investments - - 7,030 0.02
------------ ----------- ----------- -----------
Non-GAAP Adjusted Net
(Loss) Income and
earnings (loss)
per share $ 33,452 $ 0.08 $ 323,928 $ 0.75
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
For the Nine Months For the Nine Months
Ended - Unaudited Ended - Unaudited
September 30, Diluted September 30, Diluted
2009 EPS 2008 EPS
($000s) ------------ ----------- ----------- -----------
Reconciliation of net
(loss) income to Non-GAAP
Adjusted Net Income:
Net (loss) income
attributable to Gerdau
Ameristeel &
Subsidiaries $ (115,618) $ (0.27) $ 742,013 $ 1.71
Adjustment for facility
closure costs 115,033 0.26 - -
Adjustment for income
tax on facility
closure costs (36,723) (0.08) - -
Adjustment for loss on
extinguishment of debt 11,877 0.03 - -
Adjustment for income
tax on loss on
extinguishment of debt (4,528) (0.01) - -
Adjustment for writedown
of investments - - 46,701 0.11
------------ ----------- ----------- -----------
Non-GAAP Adjusted Net
(Loss) Income and
(loss) earnings per
share $ (29,959) $ (0.07) $ 788,714 $ 1.82
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
EBITDA (EBITDA is calculated by adding (loss) earnings before interest and other expense on debt, taxes, depreciation and amortization, writedown of investments, cash distributions from 50% owned joint ventures, facility closure costs, loss on extinguishment of debt and foreign exchange gain/loss, net; and deducting interest income and (loss) income from 50% owned joint ventures) is a non-GAAP measure that management believes is a useful supplemental measure of cash available prior to debt service, capital expenditures and income tax. Investors are cautioned that EBITDA should not be construed as an alternative to net income determined in accordance with GAAP as an indicator of the Company's performance or to cash flows from operations as a measure of liquidity and cash flows. EBITDA does not have a standardized meaning prescribed by GAAP. The Company's method of calculating EBITDA may differ from the methods used by other companies and, accordingly, it may not be comparable to similarly titled measures used by other companies. Reconciliation of EBITDA to net (loss) income is shown below:
For the Three Months
Ended - Unaudited
-------------------------
September September
30, 2009 30, 2008
------------ -----------
($000s)
Net (loss) income $ (25,252) $ 318,583
Income tax (benefit) expense (20,968) 163,318
Interest and other expense on debt 31,010 38,024
Interest income (1,147) (2,856)
Depreciation 52,557 55,073
Amortization of intangibles 16,476 26,256
Facility closure costs 78,488 -
Amortization of deferred financing costs 3,384 2,779
Loss on extinguishment of debt 11,877 -
(Income) from 50% owned joint ventures (3,652) (24,060)
Cash distribution from 50% owned joint ventures 1,423 1,425
Foreign exchange (gain) loss, net 18,788 (4,127)
Writedown of investments - 7,030
------------ -----------
EBITDA $ 162,984 $ 581,445
------------ -----------
------------ -----------
For the Nine Months
Ended - Unaudited
-------------------------
September September
30, 2009 30, 2008
------------ -----------
($000s)
Net (loss) income $ (116,679) $ 751,636
Income tax (benefit) expense (95,847) 384,760
Interest and other expense on debt 105,741 125,427
Interest income (4,310) (12,157)
Depreciation 157,650 159,577
Amortization of intangibles 49,574 76,676
Facility closure costs 115,033 -
Amortization of deferred financing costs 9,191 8,161
Loss on extinguishment of debt 11,877 -
Loss (income) from 50% owned joint ventures 11,848 (84,167)
Cash distribution from 50% owned joint ventures 1,828 41,829
Foreign exchange (gain) loss, net 30,543 (8,456)
Writedown of investments - 46,701
------------ -----------
EBITDA $ 276,449 $1,489,987
------------ -----------
------------ -----------
SUPPLEMENTAL OPERATING AND FINANCIAL INFORMATION - UNAUDITED
THE INFORMATION IN THIS TABLE EXCLUDES 50% OWNED JOINT VENTURES
For the Three Months Ended
September 30, 2009 September 30, 2008
------------------------ -----------------------
Tons Tons
----------- -----------
Production
Melt Shops 1,646,180 2,395,926
Rolling Mills 1,528,939 2,268,206
Tons % Tons %
----------- ----------- ----------- -----------
Finished Steel Shipments
Rebar 269,739 18% 355,733 17%
Merchant/Special
Sections/Structurals 799,028 53% 1,201,069 57%
Rod 141,850 10% 145,458 7%
Fabricated Steel 288,095 19% 395,674 19%
----------- ----------- ----------- -----------
Total Shipments 1,498,712 100% 2,097,934 100%
$/Ton $/Ton
----------- -----------
Selling Prices
Mill external
shipments $ 618 $ 1,055
Fabricated steel
shipments 888 1,254
Scrap Charged 213 393
Metal Spread (Selling
price less scrap)
Mill external shipments 405 662
Fabricated steel shipments 675 861
Mill manufacturing cost 275 350
SUPPLEMENTAL OPERATING AND FINANCIAL INFORMATION - UNAUDITED
THE INFORMATION IN THIS TABLE EXCLUDES 50% OWNED JOINT VENTURES
For the Nine Months Ended
September 30, 2009 September 30, 2008
------------------------ -----------------------
Tons Tons
----------- -----------
Production
Melt Shops 4,138,141 7,327,188
Rolling Mills 3,950,608 6,977,192
Tons % Tons %
----------- ----------- ----------- -----------
Finished Steel Shipments
Rebar 728,408 18% 1,350,674 19%
Merchant/Special
Sections/Structurals 2,053,463 51% 3,976,194 57%
Rod 382,518 10% 538,185 8%
Fabricated Steel 860,562 21% 1,111,570 16%
----------- ----------- ----------- -----------
Total Shipments 4,024,951 100% 6,976,623 100%
$/Ton $/Ton
----------- -----------
Selling Prices
Mill external
shipments $ 648 $ 881
Fabricated steel
shipments 971 1,114
Scrap Charged 196 351
Metal Spread (Selling
price less scrap)
Mill external shipments 452 530
Fabricated steel
shipments 775 763
Mill manufacturing cost 311 329
For further information: Mario Longhi, President and Chief Executive Officer, Gerdau Ameristeel, (813) 207-2346, [email protected]; Barbara R. Smith, Vice President and Chief Financial Officer, Gerdau Ameristeel, (813) 319-4324, [email protected]
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