Gerdau Ameristeel Announces 2009 First Quarter Results

    TAMPA, FL, May 7 /CNW/ - Gerdau Ameristeel Corporation (NYSE:   GNA; TSX:
GNA) today reported a net loss of $32.7 million ($0.08 per share fully
diluted) for the three months ended March 31, 2009, in comparison to net
income of $163.0 million ($0.38 per share fully diluted) for the three months
ended March 31, 2008.
    During the first quarter of 2009, as a consequence of the global
liquidity crisis and the resulting downturn in global economic activity, the
Company's shipment volume for its products remained low. Net sales for the
three months ended March 31, 2009 decreased 50% to $1.0 billion from $2.0
billion for the three months ended March 31, 2008. For the three months ended
March 31, 2009, finished steel shipments were 1.2 million tons, a decrease of
50% from the three months ended March 31, 2008. In comparison to the fourth
quarter of 2008, shipment volume decreased 12%. Despite the sharp decrease in
volume in comparison to the three months ended March 31, 2008, average mill
finished steel selling prices for the three months ended March 31, 2009 were
essentially flat with the level in the same period in 2008. However selling
prices decreased $173 per ton in comparison to the three months ended December
31, 2008.
    For the three months ended March 31, 2009, metal spread, the difference
between mill selling prices and scrap raw material costs, was $528 per ton, an
increase of $70 per ton from the same period in 2008. In comparison to the
three months ended December 31, 2008, metal spreads decreased by $108 per ton
as the decrease in selling prices was much greater than the decrease in scrap
raw material costs. Scrap raw material cost used in production for the three
months ended March 31, 2009 decreased $77 per ton, or 28%, compared to the
three months ended March 31, 2008.
    EBITDA was $48.6 million for the three months ended March 31, 2009,
compared to EBITDA of $387.4 million for the three months ended March 31,
2008. In comparison to the three months ended December 31, 2008, EBITDA
increased by 151% from the $19.4 million earned in the prior period, primarily
as a result of the cost reduction initiatives undertaken by the Company.
    Included in cost of sales (exclusive of depreciation and amortization)
for the three months ended March 31, 2009 is a pre-tax charge of $18.4 million
to write down the value of certain of the Company's inventory to its current
market value. The impact of market forces can have a significant effect on the
selling prices of certain of the Company's products. The writedown of the
Company's inventory was primarily related to the impact of certain high-priced
raw materials purchased by the Company prior to the decline in market selling
prices for the Company's finished products experienced since the fourth
quarter. Generally, raw material costs fluctuate with the market selling
prices of finished product. However, as production rates have been curtailed
since the fourth quarter, the consumption of the higher-priced raw material
inventory did not keep pace with the reduction in selling prices for the
Company's finished products, resulting in the need for a lower of cost or
market writedown.
    At March 31, 2009, the Company had $865.2 million of cash and short-term
investments an increase of $176.9 million from the levels at December 31,
2008. In addition, the Company had approximately $671.4 million of
availability under secured credit facilities which resulted in a total
liquidity position of approximately $1.5 billion at March 31, 2009.
    Because of continued weakness in the economy and the Company's desire to
be prudent given current economic circumstances, the Board of Directors
decided not to declare the usual $0.02 per share dividend this quarter.
Consistent with its dividend policy, the Board intends to reevaluate the
payment of dividends in subsequent quarters.

    CEO Comments

    Mario Longhi, President and CEO of Gerdau Ameristeel, commented:
    "The improvement in EBITDA in the quarter is the result of the aggressive
actions that we initiated during the fourth quarter to curtail production,
reduce inventory levels and improve our cost structure. Our early recognition
of the severe impact of the global economic slowdown on our business allowed
us to operate our facilities during the first quarter of 2009 at increased
production rates in comparison to the fourth quarter of 2008, to realize the
benefit of cost reduction efforts through reduced manufacturing costs and to
continue to generate strong cash flows.
    The outlook of the economy for the balance of 2009 remains uncertain so
we remain focused on what we can control. We continue to reduce our investment
in working capital while ensuring that we have the right inventory available
for our customers and we continue to seek further opportunities to reduce our
costs. We further enhanced our liquidity during the quarter and we continue to
focus on maintaining our strong balance sheet. As we primarily serve the
non-residential construction industry, we believe we are well-positioned to
benefit from the recently announced economic stimulus package and
infrastructure development programs."

    IFRS Conversion

    In order to align the Company's financial reporting requirements with its
majority shareholder Gerdau S.A., the Company is anticipating the early
adoption of International Financial Reporting Standards ("IFRS") to replace
its current US GAAP reporting requirements. While US GAAP is in many respects
similar to IFRS, the conversion is expected to result in differences in
recognition, measurement and disclosures in the Company's financial statements
which the Company is continuing to assess.

    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 North America and
worldwide; increases in the cost of steel scrap, energy and other raw
materials; steel imports and trade regulations; a change in China's
steelmaking capacity or slowdown in China's steel consumption; the Company's
participation in the consolidation of the steel industry; the substantial
capital investment and similar expenditures required in the Company's
business; unexpected equipment failures and plant interruptions or outages;
the Company's level of indebtedness; the cost of compliance with environmental
and occupational health and safety laws; the enactment of laws intended to
reduce greenhouse gases and other air emissions; the Company's ability to fund
its pension plans; the ability to renegotiate collective bargaining agreements
and avoid labor disruptions; currency exchange rate fluctuations; actions or
potential actions taken by the Company's principal stockholder, Gerdau S.A.,
the liquidity of the Company's long-term investments, including investments in
auction rate securities, and the Company's reliance on its 50%-owned joint
ventures that it does not control.
    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 first
quarter conference call on Thursday, May 7, 2009, at 3:00 pm EST. The call
will be hosted by Mario Longhi, President and CEO, and Barbara Smith, VP and
CFO, and can be accessed via the Company's Web site at Web cast 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 mini-mill steel producer in North
America with annual manufacturing capacity of approximately 12 million tons of
mill finished steel products. Through its vertically integrated network of 19
mini-mills (including one 50% owned joint venture mini-mill), 23 scrap
recycling facilities and 60 downstream operations, Gerdau Ameristeel serves
customers throughout the United States and Canada. The Company's products are
generally sold to steel service centers, steel fabricators, or directly to
original equipment manufacturers ("OEMs") for use in a variety of industries,
including non-residential, infrastructure, commercial, industrial and
residential construction, metal building, manufacturing, automotive, mining,
cellular and electrical transmission and equipment manufacturing. Gerdau
Ameristeel's majority shareholder is the Gerdau Group, a 100+ year old steel
company, the largest producer of long steel products in the Americas and the
world leader in specialty long steel for the automotive industry. Gerdau
Ameristeel's common shares are traded on the New York Stock Exchange, and the
Toronto Stock Exchange under the ticker symbol GNA.

    (US$ in thousands, except earnings per share data)

                                                 Three Months Ended March 31,
                                                     2009            2008
                                                 ------------    ------------

    NET SALES                                    $ 1,037,699     $ 2,031,662

      Cost of sales (exclusive of
       depreciation and amortization)                930,877       1,600,627
      Selling and administrative                      56,300          54,576
      Depreciation                                    52,329          52,520
      Amortization of intangibles                     16,608          24,163
      Other operating expense (income), net            2,296            (550)
                                                 ------------    ------------
                                                   1,058,410       1,731,336

    (LOSS) INCOME FROM OPERATIONS                    (20,711)        300,326

    (LOSS) INCOME FROM 50% OWNED JOINT VENTURES      (10,244)         18,380
                                                 ------------    ------------

     AND INCOME TAXES                                (30,955)        318,706

      Interest expense                                39,150          51,839
      Interest income                                 (1,401)         (6,663)
      Foreign exchange (gain) loss, net               (2,733)         (3,878)
      Amortization of deferred financing costs         2,806           2,691
      Writedown of  investments                            -          22,667
                                                 ------------    ------------
                                                      37,822          66,656

    (LOSS) INCOME BEFORE INCOME TAXES                (68,777)        252,050

    INCOME TAX (BENEFIT) EXPENSE                     (34,133)         84,647
                                                 ------------    ------------

    NET (LOSS) INCOME                                (34,644)        167,403

      Less: Net (loss) income attributable
       to noncontrolling interest                     (1,972)          4,395

                                                 ------------    ------------
     GERDAU AMERISTEEL & SUBSIDIARIES            $   (32,672)    $   163,008
                                                 ------------    ------------
                                                 ------------    ------------
      (Loss) earnings per common share - basic   $     (0.08)    $      0.38
      (Loss) earnings per common share - diluted $     (0.08)    $      0.38

    (US$ in thousands, except earnings per share data)

                                                   March 31,     December 31,
                                                     2009            2008
                                                 ------------    ------------

    Current Assets
      Cash and cash equivalents                  $   535,599     $   482,535
      Short-term investments                         329,646         205,817
      Accounts receivable, net                       566,048         677,569
      Inventories                                  1,042,682       1,267,768
      Deferred tax assets                             26,330          31,414
      Costs and estimated earnings in excess
       of billings on uncompleted contracts           14,601          14,771
      Income taxes receivable                         58,444          28,455
      Other current assets                            19,207          22,936
                                                 ------------    ------------
        Total Current Assets                       2,592,557       2,731,265

    Investments in 50% Owned Joint Ventures          152,095         161,901
    Long-term Investments                             33,189          33,189
    Property, Plant and Equipment, net             1,771,711       1,808,478
    Goodwill                                       1,956,357       1,952,011
    Intangibles                                      499,122         515,736
    Deferred Financing Costs                          32,358          35,170
    Other Assets                                      30,671          32,305
                                                 ------------    ------------

    TOTAL ASSETS                                 $ 7,068,060     $ 7,270,055
                                                 ------------    ------------
                                                 ------------    ------------


    Current Liabilities
      Accounts payable and accrued liabilities   $   169,753     $   182,697
      Accrued salaries, wages and
       employee benefits                              97,768         148,244
      Accrued interest                                15,360          54,480
      Income taxes payable                               620           2,983
      Accrued sales, use and property taxes            9,766          13,902
      Current portion of long-term
       environmental reserve                           3,706           7,599
      Billings in excess of costs and estimated
       earnings on uncompleted contracts              38,797          45,687
      Other current liabilities                       16,818          20,932
      Current portion of long-term borrowings          4,175           1,893
                                                 ------------    ------------
        Total Current Liabilities                    356,763         478,417

    Long-term Borrowings, Less Current Portion     3,063,274       3,067,994
    Accrued Benefit Obligations                      342,214         339,055
    Long-term Environmental Reserve,
     Less Current Portion                             14,955          11,151
    Other Liabilities                                 88,332         116,092
    Deferred Tax Liabilities                         320,685         323,854
                                                 ------------    ------------

    TOTAL LIABILITIES                              4,186,223       4,336,563
                                                 ------------    ------------

    Contingencies, Commitments and Guarantees

    Shareholders' Equity
      Capital stock                                2,553,531       2,552,323
      Retained earnings                              481,869         523,187
      Accumulated other comprehensive
       (loss) income                                (184,616)       (178,636)
                                                 ------------    ------------

        Total Gerdau Ameristeel &
         Subsidiaries Shareholders' equity         2,850,784       2,896,874

      Noncontrolling interest                         31,053          36,618
                                                 ------------    ------------

    TOTAL SHAREHOLDERS' EQUITY                     2,881,837       2,933,492
                                                 ------------    ------------

    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 7,068,060     $ 7,270,055
                                                 ------------    ------------
                                                 ------------    ------------

    (US$ in thousands, except earnings per share data)

                                                 Three Months Ended March 31,
                                                     2009            2008
                                                 ------------    ------------
    Net (loss) income                            $   (34,644)    $   167,403
    Adjustment to reconcile net (loss) income
     to net cash provided by operating activities:
      Depreciation                                    52,329          52,520
      Amortization of intangibles                     16,608          24,163
      Amortization of deferred financing costs         2,806           2,691
      Deferred income taxes                           (3,770)         (1,834)
      Loss (gain) on disposition of
       property, plant and equipment                     934            (523)
      Loss (income) from 50% owned joint ventures     10,244         (18,380)
      Distributions from 50% owned joint ventures        405          10,404
      Compensation (benefit) cost from
       share-based awards                             (1,302)          3,188
      Excess tax benefits from share-based
       payment arrangements                              (21)           (664)
      Realized loss on writedown of investments            -          22,667
      Facilities closure expenses                          -             990
      Writedown of inventory                          18,426           2,211

    Changes in operating assets and
     liabilities, net of acquisitions:
      Accounts receivable                            109,925        (129,196)
      Inventories                                    201,522         (49,134)
      Other assets                                     4,366          (1,134)
      Liabilities                                   (145,952)         85,894
                                                 ------------    ------------
    NET CASH PROVIDED BY OPERATING ACTIVITIES        231,876         171,266

      Purchases of property, plant and equipment     (36,284)        (30,706)
      Proceeds from disposition of property,
       plant and equipment                             1,179           1,302
      Purchases of investments                      (269,688)              -
      Proceeds from sales of investments             145,697               -
                                                 ------------    ------------
    NET CASH USED IN INVESTING ACTIVITIES           (159,096)        (29,404)

      Proceeds from issuance of debt                       -             498
      Payments on term borrowings                     (2,626)            (25)
      Cash dividends                                  (8,646)       (116,665)
      Distributions to subsidiary's
       noncontrolling interest                        (3,593)         (3,065)
      Proceeds from exercise of employee
       stock options                                      94             494
      Excess tax benefits from share-based
       payment arrangements                               21             664
                                                 ------------    ------------
    NET CASH USED IN FINANCING ACTIVITIES            (14,750)       (118,099)

    Effect of exchange rate changes on
     cash and cash equivalents                        (4,966)         (2,180)
                                                 ------------    ------------

    INCREASE IN CASH AND CASH EQUIVALENTS             53,064          21,583

     BEGINNING OF PERIOD                             482,535         547,362
                                                 ------------    ------------

    CASH AND CASH EQUIVALENTS AT END OF PERIOD   $   535,599     $   568,945
                                                 ------------    ------------
                                                 ------------    ------------


      Cash payments for income taxes             $     3,185     $    18,047
                                                 ------------    ------------
                                                 ------------    ------------

      Cash payments for interest                 $    79,878     $    74,084
                                                 ------------    ------------
                                                 ------------    ------------

    Non-GAAP Financial Measures

    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, 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 income is shown below:

                                      For the Three Months Ended - Unaudited

                                               March 31,2009   March 31,2008
                                               --------------  --------------
      Net (loss) income                          $   (34,644)    $   167,403
      Income tax (benefit) expense                   (34,133)         84,647
      Interest and other expense on debt              39,150          51,839
      Interest income                                 (1,401)         (6,663)
      Depreciation                                    52,329          52,520
      Amortization of intangibles                     16,608          24,163
      Amortization of deferred financings costs        2,806           2,691
      Loss (income) from 50% owned joint ventures     10,244         (18,380)
      Cash distribution from 50% owned
       joint ventures                                    405          10,404
      Foreign exchange (gain) loss, net               (2,733)         (3,878)
      Writedown of investments                             -          22,667
                                               --------------  --------------
      EBITDA                                     $    48,631     $   387,413
                                               --------------  --------------
                                               --------------  --------------



                                        For the Three Months Ended
                                  March 31, 2009          March 31, 2008
                              ----------------------  ----------------------

                                  Tons                    Tons
                              -----------             -----------
      Melt Shops               1,150,894               2,427,174
      Rolling Mills            1,205,959               2,302,904

                                  Tons         %          Tons         %
                              -----------    -----    -----------    -----
    Finished Steel Shipments
      Rebar                      192,500      16%        505,247      21%
      Merchant/Special Sections  601,886      51%      1,351,851      57%
      Rod                        117,167      10%        199,306       8%
      Fabricated Steel           273,709      23%        322,200      14%
                              -----------    -----    -----------    -----
        Total Shipments        1,185,262     100%      2,378,604     100%

                                 $/Ton                   $/Ton
                              -----------             -----------
    Selling Prices
      Mill external shipments        728                     735
      Fabricated steel
       shipments                   1,090                     960

    Scrap Charged                    200                     277

    Metal Spread (Selling
     price less scrap)
      Mill external shipments        528                     458
      Fabricated steel shipments     890                     683

    Mill manufacturing cost          362                     298

                       50% Owned Joint Venture Results

    The following table summarizes the results of the Company's portion of its
50% owned joint ventures, primarily Gallatin Steel, a flat rolled mill joint

                                               Three Months Ended - Unaudited
                                                    March 31,       March 31,
                                                     2009            2008
                                                 ------------    ------------
    Tons Shipped                                     102,253         216,202

    Operating (Loss) Income                      $    (9,785)    $    18,580
    Net (Loss) Income                                (10,244)         18,380
    EBITDA                                            (5,131)         21,488

                                                       $/Ton           $/Ton
                                                       ------          ------
    Average Selling Price                                521             627
    Scrap Charged                                        315             328

    Metal Spread                                         206             299

    Operating (Loss) Income                              (96)             86
    EBITDA                                               (50)             99

    %SEDAR: 00000593E

For further information:

For further information: Mario Longhi, President and Chief Executive
Officer, Gerdau Ameristeel, (813) 207-2346,;
Barbara R. Smith, Vice President and Chief Financial Officer, Gerdau
Ameristeel, (813) 319-4324,

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