Gerdau Ameristeel Announces Second Quarter 2006 Results4 August 2006
-----------------------
June 30, June 30,
2006 2005
----------- -----------
Income Statement ($000's except EPS)
----------------
Net sales $1,205,790 $ 961,076
Operating income 162,532 102,817
Net income 125,905 74,325
EBITDA 219,489 159,153
EPS - Basic $ 0.41 $ 0.24
EPS - Diluted $ 0.41 $ 0.24
Average shares outstanding (000's) 304,858 304,235
June 30, December 31,
2006 2005
----------- -----------
Balance Sheet ($000's except share price)
-------------
Working capital $1,033,108 $1,115,579
Total debt 626,619 530,345
Book value 1,737,235 1,584,019
Market capitalization 3,063,887 1,717,219
Share price (note 1) $ 10.04 $ 5.64
Notes: (1) Share price is the closing price on the New York Stock
Exchange on June 30, 2006, and December 31, 2005,
respectively.
Excluding joint ventures, the Company shipped 1.8 million tons of finished steel in the three months ended June 30, 2006, an increase of 13.0% over the second quarter of 2005. Average mill prices increased $50 per ton, or 9.8%, compared to the second quarter in 2005. Scrap raw material costs increased $31 per ton, or 18.1%, compared to the second quarter of 2005. Metal spread, the difference between mill selling prices and scrap raw material cost, increased $19 per ton, or 5.6%, compared to the second quarter of last year. Mill manufacturing costs were $238 per ton in the second quarter of 2006 compared to $231 per ton in the second quarter of 2005, primarily as a result of higher electricity costs, increased raw material prices other than scrap, and the stronger Canadian dollar. Fabricated steel prices increased $40 per ton compared to the second quarter of the prior year.
The following table summarizes Gerdau Ameristeel's results for the six months ended June 30, 2006 compared to the results for the six months ended June 30, 2005. All financial results are presented in accordance with United States generally accepted accounting principles (GAAP).
For the Six Months Ended
-------------------------
June 30, June 30,
2006 2005
---------- -----------
Income Statement ($000's except EPS)
----------------
Net sales $2,265,020 $1,963,613
Operating income 278,226 197,349
Net income 213,291 152,897
EBITDA 390,643 310,695
EPS - Basic $ 0.70 $ 0.50
EPS - Diluted $ 0.70 $ 0.50
Average shares outstanding (000's) 304,714 304,173
Notes: (1) Share price is the closing pr ice on the New York Stock
Exchange on June 30, 2006, an d December 31, 2005,
respectively.
Excluding joint ventures, the Company shipped 3.4 million tons of finished steel in the six months ended June 30, 2006, an increase of 7.8% over the six months ended June 30, 30 2005. Average mill prices increased $35 per ton, or 6.6%, compared to the six months ended June 30, 2005. Scrap raw material costs increased $11 per ton, or 6.1%, compared to the six months ended June 30, 2005. Metal spread, the difference between mill selling prices and scrap raw material cost, increased $24 per ton, or 6.9%, compared to the six months ended June 30, 2005. Mill manufacturing costs were $242 per ton for the six months ended June 30, 2006 compared to $235 per ton for the six months ended June 30, 2005, primarily as a result of higher energy costs, increased raw material prices other than scrap, and the stronger Canadian dollar. Fabricated steel prices increased $34 per ton compared to the six months ended June 30, 2005.
Joint Venture Results (50% Share Owned by Gerdau Ameristeel)
The following table summarizes the results of the Company's 50% owned joint ventures, primarily Gallatin Steel, a flat rolled mill joint venture with Dofasco Inc.
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
----------- ----------- ----------- -----------
Tons Shipped 208,288 173,516 410,132 367,526
Operating Income ($ 000) 33,973 23,422 63,349 54,907
Net Income ($ 000) 34,048 23,406 63,377 55,084
EBITDA ($ 000) 36,375 25,688 68,153 59,748
$/Ton $/Ton $/Ton $/Ton
------ ------ ------ ------
Average Selling Price 589.06 562.46 577.08 600.71
Scrap Charged 244.83 228.52 236.25 249.86
------ ------ ------ ------
Metal Spread 344.23 333.94 340.83 350.85
Operating Income 163.11 134.98 154.46 149.40
EBITDA 174.64 148.04 166.17 162.57
For the three months ended June 30, 2006, Gerdau Ameristeel's income from operations was $162.5 million and earnings from joint ventures were $34.0 million. Based on 2.0 million tons of finished steel shipped, the composite operating income was $99 per ton for the second quarter of 2006. For the three months ended June 30, 2005, Gerdau Ameristeel's income from operations was $102.8 million and earnings from joint ventures were $23.4 million. Based on 1.7 million tons of finished steel shipped, the composite operating income was $72 per ton for the second quarter of 2005.
For the six months ended June 30, 2006, Gerdau Ameristeel's income from operations was $278.2 million and earnings from joint ventures were $63.4 million. Based on 3.8 million tons of finished steel shipped, the composite operating income was $90 per ton for the six months ended June 30, 2006. For the six months ended June 30, 2005, Gerdau Ameristeel's income from operations was $197.3 million and earnings from joint ventures were $55.1 million. Based on 3.5 million tons of finished steel shipped, the composite operating income was $72 per ton for the six months ended June 30, 2005.
CEO Comments
Mario Longhi, President and CEO of Gerdau Ameristeel, commented:
"We anticipate continued steel market strength in the second half of 2006 and look forward to fully meeting our customers' high expectations. We will be concentrating on fully integrating the Sheffield people, assets and customers into the Gerdau Ameristeel organization and look forward to optimizing the accretive nature of our most recent acquisition. We believe we have the opportunity to build on our strong performance from the June quarter and now we must focus on a safe and efficient execution of our strategy."
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 and strategies and 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:
The highly competitive nature of the global steel industry 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 steel imports and trade regulations; the substantial capital investment and maintenance expenditures required in the Company's business; unexpected equipment failures, transportation disruptions or production curtailments or shutdowns; increases in the cost of steel scrap, energy and other raw materials; the ability to renegotiate collective bargaining agreements and avoid labor disruptions; the cost of compliance with environmental laws and regulations; the Company's costs relative to competitors who have sought bankruptcy protection; the Company's ability to fund its pension plans; the deviation of actual results from estimates made by the Company in the preparation of its financial statements; the loss of key employees; the Company's reliance on joint ventures that it does not control; the effects of the consolidation of operations or of the steel industry, and the ability to integrate newly-acquired businesses and achieve synergies.
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 or 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 second quarter conference call on Wednesday, August 2, 2006, at 3 pm EST. The call will be hosted by Mario Longhi, president and CEO, and Tom Landa, VP and CFO, and can be accessed via our Web site at http://www.gerdauameristeel.com. 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 minimill steel producer in North America with annual manufacturing capacity of over 9.0 million tons of mill finished steel products. Through its vertically integrated network of 17 minimills (including one 50%-owned minimill), 17 scrap recycling facilities and 46 downstream operations, Gerdau Ameristeel primarily serves customers in the eastern two-thirds of North America. The Company's products are generally sold to steel service centers, steel fabricators, or directly to original equipment manufacturers (or "OEMs") for use in a variety of industries, including construction, automotive, mining, cellular and electrical transmission, metal building manufacturing and equipment manufacturing. Gerdau Ameristeel's common shares are traded on the Toronto Stock Exchange under the symbol GNA.TO and on the New York Stock Exchange under the symbol GNA. For additional financial and investor information, visit http://www.gerdauameristeel.com.
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. Reconciliation of EBITDA to net income is shown below:
For the Three Months Ended
--------------------------
June 30, June 30,
2006 2005
--------------------------
($000s)
Net income $ 125,905 $ 74,325
Income tax expense 59,364 36,502
Interest and other expense on debt 9,771 15,915
Depreciation and amortization 27,747 25,817
Earnings from joint ventures (34,048) (23,406)
Cash distribution from joint ventures 30,750 30,000
----------- -----------
EBITDA $ 219,489 $ 159,153
----------- -----------
----------- -----------
For the Six Months Ended
--------------------------
June 30, June 30,
2006 2005
--------------------------
($000s)
Net income $ 213,291 $ 152,897
Income tax expense 104,564 73,122
Interest and other expense on debt 20,433 27,371
Depreciation and amortization 54,579 51,986
Earnings from joint ventures (63,377) (55,084)
Cash distribution from joint ventures 61,153 60,403
----------- -----------
EBITDA $ 390,643 $ 310,695
----------- -----------
----------- -----------
SUPPLEMENTAL OPERATING AND FINANCIAL INFORMATION
THE INFORMATION IN THIS TABLE EXCLUDES JOINT VENTURES
For the Three Months Ended
June 30, 2006 June 30, 2005
----------------------- -----------------------
Production Tons Tons
----------- -----------
Melt Shops 1,759,786 1,611,557
Rolling Mills 1,653,001 1,557,853
Finished Steel Shipments Tons % Tons %
----------- ----------- ----------- -----------
Rebar 407,783 23 369,508 24
Merchant/Special
Sections 842,722 48 753,562 48
Rod 216,569 12 165,247 10
Fabricated Steel 306,498 17 280,589 18
----------- -- ----------- --
Total Shipments 1,773,572 100 1,568,906 100
Selling Prices $/Ton $/Ton
----------- -----------
Mill external shipments 565.93 515.44
Fabricated steel
shipments 747.85 707.81
Scrap Charged 202.90 171.75
Metal Spread (selling
price less scrap)
Mill external shipments 363.03 343.69
Fabricated steel
shipments 544.95 536.06
Mill manufacturing cost 238.15 231.49
Operating Income 91.64 65.53
EBITDA 123.76 101.44
SUPPLEMENTAL OPERATING AND FINANCIAL INFORMATION
THE INFORMATION IN THIS TABLE EXCLUDES JOINT VENTURES
For the Six Months Ended
June 30, 2006 June 30, 2005
----------------------- -----------------------
Production Tons Tons
----------- -----------
Melt Shops 3,402,287 3,183,314
Rolling Mills 3,200,838 3,089,867
Finished Steel Shipments Tons % Tons %
----------- ----------- ----------- -----------
Rebar 771,400 23 718,436 23
Merchant/Special
Sections 1,673,279 49 1,513,883 48
Rod 378,179 11 391,050 12
Fabricated Steel 576,994 17 531,729 17
----------- -- ----------- --
Total Shipments 3,399,852 100 3,155,098 100
Selling Prices $/Ton $/Ton
----------- -----------
Mill external shipments 560.86 526.05
Fabricated steel
shipments 743.81 709.35
Scrap Charged 194.05 182.95
Metal Spread (selling
price less scrap)
Mill external shipments 366.81 343.10
Fabricated steel
shipments 549.76 526.40
Mill manufacturing cost 241.62 234.54
Operating Income 81.83 62.55
EBITDA 114.90 98.47
GERDAU AMERISTEEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(US$ in thousands)
June 30, December 31,
2006 2005
(unaudited)
----------- -----------
ASSETS
Current Assets
Cash and cash equivalents $ 201,209 $ 414,259
Restricted cash 487 473
Short term investments 240,515 -
Accounts receivable, net 534,036 344,758
Inventories 763,015 745,165
Deferred tax assets 28,841 23,212
Other current assets 29,009 23,236
----------- -----------
Total Current Assets 1,797,112 1,551,103
Investments 155,833 153,439
Property, Plant and Equipment 1,058,612 955,601
Goodwill 198,564 122,716
Deferred Financing Costs 13,472 14,451
Deferred Tax Assets 15,922 23,424
Other Assets 11,107 8,717
----------- -----------
TOTAL ASSETS $3,250,622 $2,829,451
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 359,428 $ 285,019
Accrued salaries, wages and employee benefits 66,122 66,744
Accrued interest 24,632 21,003
Income taxes payable 32,703 13,140
Other current liabilities 86,888 48,131
Current portion of long-term borrowings 88,620 1,014
Convertible debentures 105,124 -
----------- -----------
Total Current Liabilities 763,517 435,051
Long-term Borrowings, Less Current Portion 432,875 432,737
Convertible Debentures - 96,594
Accrued Benefit Obligations 188,218 147,167
Other Liabilities 69,005 65,246
Deferred Tax Liabilities 59,772 68,637
----------- -----------
TOTAL LIABILITIES 1,513,387 1,245,432
----------- -----------
Shareholders' Equity
Capital stock 1,014,970 1,010,341
Retained earnings 674,519 540,415
Accumulated other comprehensive income 47,746 33,263
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 1,737,235 1,584,019
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,250,622 $2,829,451
----------- -----------
----------- -----------
GERDAU AMERISTEEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
($ in thousands, except earnings per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
----------- ----------- ----------- -----------
NET SALES $1,205,790 $ 961,076 $2,265,020 $1,963,613
OPERATING EXPENSES
Cost of sales (exclusive
of depreciation) 973,402 805,960 1,837,843 1,662,973
Selling and administrative 41,413 25,106 96,859 51,184
Depreciation 26,940 25,171 53,075 50,693
Other operating expense
(income) 1,503 2,022 (983) 1,414
----------- ----------- ----------- -----------
1,043,258 858,259 1,986,794 1,766,264
----------- ----------- ----------- -----------
INCOME FROM OPERATIONS 162,532 102,817 278,226 197,349
EARNINGS FROM JOINT VENTURES 34,048 23,406 63,377 55,084
----------- ----------- ----------- -----------
INCOME BEFORE OTHER
EXPENSES AND INCOME TAXES 196,580 126,223 341,603 252,433
OTHER EXPENSES
Interest, net 9,771 15,915 20,433 27,371
Foreign exchange loss
(gain) 733 (1,165) 1,811 (2,250)
Amortization of
intangible assets 807 646 1,504 1,293
----------- ----------- ----------- -----------
11,311 15,396 23,748 26,414
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES 185,269 110,827 317,855 226,019
INCOME TAX EXPENSE 59,364 36,502 104,564 73,122
----------- ----------- ----------- -----------
NET INCOME $ 125,905 $ 74,325 $ 213,291 $ 152,897
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
EARNINGS PER COMMON
SHARE - BASIC $ 0.41 $ 0.24 $ 0.70 $ 0.50
EARNINGS PER COMMON
SHARE - DILUTED $ 0.41 $ 0.24 $ 0.70 $ 0.50
GERDAU AMERISTEEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(US$ in thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
----------- ----------- ----------- -----------
OPERATING ACTIVITIES
Net income $ 125,905 $ 74,325 $ 213,291 $ 152,897
Adjustment to reconcile
net income to net cash
provided by operating
activities:
Depreciation 26,940 25,171 53,075 50,693
Amortization 807 646 1,504 1,293
Deferred income taxes 4,116 (831) 7,612 (745)
Gain on disposition of
property, plant and
equipment (4,354) - (8,914) -
Income from joint
ventures (34,048) (23,406) (63,377) (55,084)
Distribution from joint
ventures 30,750 30,000 61,153 60,403
Changes in operating assets
and liabilities, net of
acquisitions:
Accounts receivable (48,628) 37,442 (130,546) (30,219)
Inventories 17,137 18,379 50,443 62,619
Other assets 767 1,304 (405) 9,471
Liabilities 47,657 (65,467) 91,259 (14,034)
----------- ----------- ----------- -----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 167,049 97,563 275,095 237,294
INVESTING ACTIVITIES
Additions to property,
plant and equipment (47,074) (35,662) (87,953) (64,900)
Proceeds received from sale
of property, plant
and equipment 8,905 - 14,110 -
Acquisitions (107,145) - (114,837) (49,654)
Opening cash from
acquisitions 22,371 22,371 -
Purchases of short-term
investments (62,665) (14,850) (240,515) (53,000)
----------- ----------- ----------- -----------
NET CASH USED IN INVESTING
ACTIVITIES (185,608) (50,512) (406,824) (167,554)
FINANCING ACTIVITIES
Payments on term loans (3,467) (2,566) (3,999) (3,822)
Additions to deferred
financing costs - - (404) -
Cash dividends (6,095) (48,677) (79,187) (54,760)
Proceeds from issuance of
employee stock purchases 795 149 1,978 1,147
Change in restricted cash (14) - (14) -
----------- ----------- ----------- -----------
NET CASH USED IN FINANCING
ACTIVITIES (8,781) (51,094) (81,626) (57,435)
Effect of exchange rate
changes on cash and
cash equivalents 312 2,347 305 692
----------- ----------- ----------- -----------
(DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (27,028) (1,696) (213,050) 12,997
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 228,237 102,825 414,259 88,132
----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 201,209 $ 101,129 $ 201,209 $ 101,129
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Source: prnewswire
All trademarks and copyrighted information contained herein are the property of their respective owners.
Related Articles
|
