GNA $2.78-Gerdau Steel, highly touted on ROBtv by an analyst this week, say the re-structuring is going great and that as the price of steel increases (economy improves) they will make huge profits....not a microcap with all the shares out but the 40dMA is now going to cross above the 200dMA...in a strong uptrend.
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GERDAU AMERISTEEL Announces Second Quarter 2003 Results
Tuesday July 29, 10:32 am ET
TORONTO, July 29 /CNW/ - Gerdau Ameristeel Corporation (TSX: GNA.TO - News) today reported a net loss of $1.6 million, or $.02 per share fully diluted, on net sales of $472 million for the second quarter of 2003, compared to net income of $3.8 million, or $.03 per share fully diluted, on net sales of $245 million for the second quarter of 2002. Pro forma net income for the second quarter of 2002 was $9.2 million, or $0.04 per share fully diluted, on net sales of $446 million. EBITDA was $24.7 million for the quarter ended June 30, 2003 versus pro forma EBITDA of $43.6 million and actual EBITDA of $29.9 million for the same quarter last year. All figures are in U. S. dollars and are computed in accordance with Canadian GAAP. Pro forma net income for the quarter ended June 30, 2002 is reconciled to actual net income below.
During the quarter, the Company incurred $2.1 million of pretax charges to refinance most of the Company's debt, and an additional $2.1 million of pretax charges for certain items more fully described below. These charges reduced income before taxes by $4.2 million and EBITDA by $2.1 million.
On October 23, 2002, Gerdau S.A. (NYSE: GGB - News) combined its North American operations ("Gerdau North America") with those of Co-Steel Inc., and changed its name to Gerdau Ameristeel Corporation. Net income of Gerdau North America, the predecessor company for accounting purposes, was $3.8 million for the quarter ended June 30, 2002, or $0.03 per share basic and fully diluted. Gerdau Ameristeel believes that the pro forma results, which also include Co-Steel's operations for the applicable period, adjusted for the impact of purchase price allocations and resulting acquisition accounting adjustments, are a more informative disclosure on the combined operations.
On June 27, 2003, the Company closed a $405 million private offering of its 10 3/8% Senior Unsecured Notes due 2011 and a $350 million Revolving Credit Facility. The net proceeds from the Notes and the initial Revolver draw of $143 million were used to repay existing bank and private placement debt, most of which was due to mature in early 2004. The refinancing significantly extended the Company's debt maturities, increased operating flexibility and provided a more permanent capital base. The net income for the quarter ended June 30, 2003 includes a pretax charge of $2.1 million to write off deferred financing costs of the repaid debt. As of June 30, 2003, the Company had total debt outstanding of $598 million at a weighted average pretax interest cost of 8.7% and a weighted average maturity of approximately 6 1/2 years.
In May 2000, Co-Steel sold its Mayer Parry Recycling unit and certain other non-core assets in England. On May 2, 2002, the buyer notified Co-Steel of certain claims under the warranties in the sale agreement. On July 15, 2003, the Company, after court-ordered mediation, settled those claims. The settlement, which was for a higher amount than the Company's original estimate, resulted in a $1.8 million pretax charge to net income and EBITDA. The Company also wrote off certain other assets totaling $300,000.
The following table summarizes the results of Gerdau Ameristeel for the second quarter of 2003 and the pro forma and actual results for the second quarter of last year.
For the Quarter Ending
-------------------------------------------------------------------------
June 30, June 30, June 30,
2003 2002 2002
Actual Pro Forma Actual
--------- --------- ---------
Shipments (Tons)
Mill Finished Steel 1,213,341 1,215,345 580,683
Fabricated Steel 173,734 179,412 152,815
--------- --------- ---------
Total 1,387,075 1,394,757 733,498
Income Statement
----------------
(US $000s except EPS)
Net Sales $ 471,569 $ 446,438 $ 245,116
Operating Income 4,822 31,465 18,129
Net (Loss) Income (1,629) 9,185 3,819
EBITDA 24,737 43,580 29,887
EPS - Basic (0.01) 0.04 0.03
EPS - Diluted (0.02) 0.04 0.03
Balance Sheet (US $000s)
-------------
Net Working Capital $ 336,983
Cash 27,528
Debt 597,596
Book Value 660,659
Notes: Net working capital excludes cash and debt.
Debt excludes Convertible Debentures of $92.2 million.
EBITDA is earnings before interest, taxes, depreciation and
amortization
The following table reconciles actual net income to pro forma net
income for the quarter ended June 30, 2002:
Quarter
Ended
June 30, 2002
US$ (000s)
Net income actual $ 3,819
Adjust Co-Steel for pre-acquisition period (2,626)
Adjust for impact of Co-Steel purchase price allocations 3,199
Adjust interest for debt converted to equity 4,000
Adjust for minority interest 793
---------
Net income pro forma $ 9,185
---------
Phillip Casey, President and CEO of Gerdau Ameristeel, commented:
"Our second quarter performance reflected measurable improvement over the
depressed first quarter but continued to show an unacceptable return on
capital employed. Long steel product prices and margins established an
emerging positive trend while energy and manufacturing costs moderated from
first quarter peaks. Consolidation of the North American long steel segment
appears to be leading to shifts in competitive market share composition and
more rational market behavior.
Gerdau Ameristeel continued to make significant progress in the
integration of the merged steel operations and realization of manufacturing
cost synergies. We were also successful in refinancing the consolidated credit
facilities to extend the debt maturities and to establish a solid foundation
for the overall capital structure.
In the September quarter, we have scheduled outages for our three
Canadian steel operations to complete equipment upgrades and to complete
annual maintenance projects. These operational interruptions will have an
interim impact on production costs but a long term positive impact on
productivity."
Notice of Conference Call
Gerdau Ameristeel invites you to listen to a live broadcast of its second
quarter conference call on Friday, August 1, 2003 at 3:00 p.m. EST to discuss
the second quarter results. The call will be hosted by Phillip Casey,
President and CEO, and Tom Landa, VP and CFO, and can be accessed via our
website at www.gerdauameristeel.com. Webcast attendees are welcome to listen
to the conference in real-time or on-demand at your convenience.
About Gerdau Ameristeel
Gerdau Ameristeel is the second largest minimill steel producer in North
America with annual manufacturing capacity of over 6.8 million tons of mill
finished steel products. Through its vertically integrated network of 11
minimills (including one 50%-owned minimill), 13 scrap recycling facilities
and 26 downstream operations, Gerdau Ameristeel primarily serves customers in
the eastern half of North America. The Company's products are generally sold
to steel service centers, fabricators, or directly to original equipment
manufacturers for use in a variety of industries, including construction,
automotive, mining and equipment manufacturing. Gerdau Ameristeel's common
shares are traded on the Toronto Stock Exchange under the symbol GNA.TO. For
additional financial and investor information, visit www.gerdauameristeel.com.
Gerdau Ameristeel's financial results are presented in accordance with
Canadian GAAP. However, EBITDA (earnings before interest, taxes, depreciation
and amortization) 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.
The pro forma statements for the quarter and the six months ended June
30, 2002, present combined pro forma financial information for Co-Steel and
the North American operations of Gerdau S.A. as if they were combined at the
beginning of such periods, as adjusted for the pro forma effects of the
combination and related transactions. Assumptions have been made in preparing
these statements, and the results in future periods may show that these
assumptions were not correct. These statements do not purport to represent
what the actual operating results and financial position of Gerdau Ameristeel
would have been had the combination of Co-Steel and Gerdau North America
actually taken place at the beginning of such periods. In addition, these
statements do not purport to project the Company's results of operations for
any future periods or its financial position at any future date.
This news release contains certain "forward-looking" statements with
respect to Gerdau Ameristeel's operations and future financial results. Actual
results may vary from expected results due to numerous risks and uncertainties
identified in filings made by the Company with securities regulatory
authorities. Although the Company believes that its statements are based on
reasonable assumptions there can be no assurance that future events will not
affect their accuracy.
GERDAU AMERISTEEL & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(US$ in thousands)
(Unaudited)
For the Quarter Ending
-----------------------
June June
30, 2003 30, 2002
Actual Pro Forma
---------- ----------
Net Sales $ 471,569 $ 446,438
Operating Expenses
Cost of sales $ 425,012 $ 375,101
Selling and administrative 19,719 20,849
Depreciation 20,177 18,888
Other operating expense 1,839 135
---------- ----------
$ 466,747 $ 414,973
Income From Operations $ 4,822 $ 31,465
Other Expenses
Interest $ 7,993 $ 10,611
Amortization of deferred financing costs 3,204 294
Foreign exchange losses 262 993
Loss on sale of investment - 5,780
---------- ----------
(Loss) Income Before Taxes $ (6,637) $ 13,787
Income Tax (Benefit) Expense (5,008) 4,602
---------- ----------
Net (Loss) Income $ (1,629) $ 9,185
---------- ----------
EPS - Basic $ (0.01) $ 0.04
EPS - Diluted $ (0.02) $ 0.04
GERDAU AMERISTEEL & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(US$ in thousands)
(Unaudited)
For Six Months Ending
-----------------------
June June
30, 2003 30, 2002
Actual Pro Forma
---------- ----------
Net Sales $ 915,947 $ 843,196
Operating Expenses
Cost of sales 836,863 717,116
Selling and administrative 38,139 41,005
Depreciation 39,918 37,667
Other operating expense (income) 58 (3,080)
---------- ----------
$ 914,978 $ 792,708
Income From Operations $ 969 $ 50,488
Other Expenses
Interest $ 15,429 $ 20,999
Amortization of deferred financing costs 3,578 585
Foreign exchange (gains) losses (571) 942
Loss on sale of investment - 5,780
---------- ----------
(Loss) Income Before Taxes (17,467) 22,182
Income Tax (Benefit) Expense $ (10,669) $ 5,409
---------- ----------
(Loss) Income before Minority Interest (6,798) 16,773
Minority Interest 217 $ -
---------- ----------
Net (Loss) Income $ (6,581) $ 16,773
---------- ----------
EPS - Basic $ (0.05) $ 0.07
EPS - Diluted $ (0.05) $ 0.07
GERDAU AMERISTEEL & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(US$ in thousands)
June December
30, 2003 31, 2002
Assets Unaudited Audited
---------- ----------
Current Assets
Cash and cash equivalents $ 27,528 $ 16,361
Accounts receivable, net 232,361 172,745
Inventories 368,422 351,400
Deferred tax assets and recoverable taxes 11,417 11,417
Other current assets 3,955 2,997
---------- ----------
Total Current Assets $ 643,683 $ 554,920
Property, Plant and Equipment
Fixed assets at cost $1,224,720 $1,118,308
Less accumulated depreciation (303,769) (219,360)
---------- ----------
Net Property, Plant and Equipment 920,951 898,948
Goodwill 116,564 114,374
Deferred Financing Costs 15,508 2,514
Other Assets 3,925 645
---------- ----------
Total Assets $1,700,631 $1,571,401
---------- ----------
Liabilities and Shareholders' Equity
Current Liabilities
Trade accounts payable $ 214,866 $ 170,334
Accrued salaries, wages and employee benefits 22,892 43,932
Other current liabilities 41,414 30,072
Bank indebtedness 2,086 23,379
Current maturities of long-term borrowings 11,669 83,942
---------- ----------
Total Current Liabilities $ 292,927 $ 351,659
Long Term Borrowings, Less Current Portion 583,841 411,833
Other Liabilities 103,269 99,341
Deferred Tax Liabilities 59,935 82,158
Minority Interest - 33,312
Shareholder's Equity
Invested capital 547,601 513,400
Convertible debentures 92,232 79,134
Retained (deficit) earnings (7,118) 1,329
Cumulative foreign currency translation 27,944 (765)
---------- ----------
Total Shareholders' Equity $ 660,659 $ 593,098
---------- ----------
Total Liabilities and Shareholders' Equity $1,700,631 $1,571,401
---------- ----------
GERDAU AMERISTEEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(US$ in thousands)
(Unaudited)
Six Months Ended
June 30, 2003
-----------------
OPERATING ACTIVITIES
Net loss $ (6,581)
Adjustment to reconcile net income to
net cash used for operating activities:
Depreciation 39,918
Amortization 3,578
Deferred income taxes (11,729)
Loss on disposition of property, plant and equipment (93)
Unrealized foreign exchange on related party loans 7,241
Accrued interest on related party loans (2,884)
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable (63,501)
Inventories 1,845
Other assets (7,693)
Liabilities 26,672
------------
NET CASH USED IN OPERATING ACTIVITIES (13,227)
INVESTING ACTIVITIES
Additions to property, plant and equipment (24,222)
Proceeds from dispositions 77
------------
NET CASH USED IN INVESTING ACTIVITIES (24,145)
FINANCING ACTIVITIES
Proceeds from issuance of new debt 542,357
Payment of short-term and long-term borrowings, net (479,378)
Additions to deferred financing costs (13,419)
Foreign exchange loss (40)
Changes in minority interest (218)
Subsidiary stock activity (763)
------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 48,539
------------
INCREASE IN CASH AND CASH EQUIVALENTS 11,167
------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 16,361
------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 27,528
GERDAU AMERISTEEL & SUBSIDIARIES
SUPPLEMENTAL OPERATING AND FINANCIAL INFORMATION
(US$ in thousands)
For the Quarter Ending
--------------------------------------
June 30, 2003 June 30, 2002
Actual Pro Forma
------------------- ------------------
Tons Tons
--------- ---------
Production
Melt Shop 1,456,376 1,468,353
Rolling Mill 1,339,857 1,331,207
Finished Steel Shipments Tons % Tons %
--------- --------- --------- --------
Rebar 386,671 27.9 340,275 24.4
Merchant/ /Special Sections 482,863 34.8 505,967 36.3
Rod 151,142 10.9 187,926 13.5
Flat Rolled 192,665 13.9 181,177 13.0
Fabricated Steel 173,734 12.5 179,412 12.9
--------- --------- --------- --------
Total 1,387,075 100.0 1,394,757 100.0
$/Ton $/Ton
--------- ---------
Weighted Average Selling Price
------------------------------
Mill external shipments 302.79 287.72
Fabricated steel shipments 432.89 437.04
Scrap Charged 112.58 90.12
Metals Spread
-------------
Mill external shipments 190.21 197.59
$/Ton $/Ton
US$ Finished US$ Finished
Million Steel Million Steel
--------- --------- --------- --------
EBITDA $ 24,737 $ 17.83 $ 43,580 $ 31.24
Operating Income $ 4,822 $ 3.48 $ 31,465 $ 22.56
Interest Expense $ 7,993 $ 5.76 $ 10,611 $ 7.61
Capital Expenditures $ 12,892
Total Shares Outstanding 198,090,861
GERDAU AMERISTEEL & SUBSIDIARIES
SUPPLEMENTAL OPERATING AND FINANCIAL INFORMATION
(US$ in thousands)
For Six Months Ending
--------------------------------------
June 30, 2003 June 30, 2002
Actual Pro Forma
------------------- ------------------
Tons Tons
--------- ---------
Production
Melt Shop 2,774,141 2,864,762
Rolling Mill 2,576,827 2,650,932
Finished Steel Shipments Tons % Tons %
--------- --------- --------- --------
Rebar 789,928 28.6 668,326 24.7
Merchant/ /Special Sections 987,172 35.8 976,497 36.1
Rod 298,090 10.8 357,198 13.2
Flat Rolled 365,214 13.2 363,740 13.4
Fabricated Steel 317,930 11.5 340,036 12.6
--------- --------- --------- --------
Total 2,758,334 100.0 2,705,797 100.0
$/Ton $/Ton
--------- ---------
Weighted Average Selling Price
------------------------------
Mill external shipments 298.79 279.45
Fabricated steel shipments 430.05 435.68
Scrap Charged 109.33 86.58
Metals Spread
-------------
Mill external shipments 189.46 192.87
$/Ton $/Ton
US$ Finished US$ Finished
Million Steel Million Steel
--------- --------- --------- --------
EBITDA $ 41,458 $ 15.03 $ 81,433 $ 30.09
Operating Income $ 969 $ 0.35 $ 50,488 $ 18.66
Interest Expense $ 15,429 $ 5.59 $ 20,999 $ 7.76
Capital Expenditures $ 23,639
Total Shares Outstanding 198,090,861
For further information
Phillip E. Casey, President & Chief Executive Officer, Gerdau Ameristeel, (813) 207-2225, pcasey@gerdauameristeel.com
Tom J. Landa, Vice President and Chief Financial Officer, Gerdau Ameristeel, (813) 207-2300, tlanda@gerdauameristeel.com
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Source: Gerdau Ameristeel Corporation; Co-Steel Inc. |
