Gerdau Ameristeel Corp. reported selected comparative financial and operating data for the three months ended September 30, 2007 and 2006 and the nine months ended September 30, 2007 and 2006. Results for 2007—which are both approximate and preliminary—were impacted by Gerdau Ameristeel’s acquisition of Chaparral Steel Co. on September 14, 2007. Reported data include results for Chaparral from the date of the acquisition on September 14, 2007 to and including September 30, 2007.
Third Quarter Results—Gerdau Ameristeel's mill external and fabricated steel shipments were approximately 1.79 million tons, reflecting an approximately 7% increase (123,000 tons) compared to the three months ended September 30, 2006. The average mill external shipment selling prices were approximately $659 per ton, reflecting an increase of approximately 11% ($67 per ton) from the average mill external shipment selling prices for the three months ended September 30, 2006. Scrap raw material cost used in production were approximately $219 per ton, an approximately 8% ($16 per ton) increase compared to $203 per ton for the three months ended September 30, 2006. Metal spread (the difference between mill selling prices and scrap metal cost) increased approximately $50 per ton compared to the three months ended September 30, 2006.
Nine Month Results—Gerdau Ameristeel's mill external and fabricated steel shipments were approximately 5.38 million tons, an increase of approximately 6% (309,000 tons) compared to the nine months ended September 30, 2006. The average mill external shipment selling prices were approximately $631 per ton, an increase of approximately 11% ($60 per ton) from the average mill external shipment selling prices for the nine months ended September 30, 2006. Scrap raw material costs used in production were approximately $223 per ton, an increase of approximately 13% ($26 per ton) compared to $197 per ton for the nine months ended September 30, 2006. Metal spread (the difference between mill selling prices and scrap metal cost) increased approximately $35 per ton for the nine months ended September 30, 2007 compared to the nine months ended September 30, 2006.
Liquidity—Gerdau Ameristeel’s cash, cash equivalents and short-term investments as at September 30, 2007 were $218 million. As at September 30, 2007, Gerdau Ameristeel had approximately $4.35 billion in total debt, including $3.9 billion of loans incurred in connection with the acquisition of Chaparral. Gerdau Ameristeel intends to use the net proceeds from its previously announced proposed offering of common shares to partially repay the loans incurred for the acquisition of Chaparral.
Gerdau Ameristeel expects that the combination with Chaparral's operations will generate annual pre-tax operating synergies in excess of $55 million by the end of 2008 and an additional approximately $20 million of annual tax-related synergies by the end of 2008.
Gerdau Ameristeel is the second largest minimill steel producer in North America with annual manufacturing capacity of approximately 11.7 million tons of mill finished steel products. Through its vertically integrated network of 19 minimills (including one 50%-owned joint venture minimill), 19 scrap recycling facilities and 62 downstream operations, Gerdau Ameristeel serves customers throughout North America. The company's products are generally sold to steel service centers, steel fabricators, or directly to original equipment manufacturers for use in a variety of industries, including construction, metal building, manufacturing, automotive, mining, cellular and electrical transmission and equipment manufacturing. Gerdau Ameristeel is approximately 66.5% owned by Gerdau SA.
Gerdau Group is the leader in the production of long steel products in the Americas and ranks as the 14th-largest steelmaking company worldwide. It has approximately 35,000 employees and is present in thirteen countries: Argentina, Brazil, Canada, Chile, Colombia, Dominican Republic, India, Mexico, Peru, Spain, the United States, Uruguay and Venezuela. Gerdau Group has an annual installed capacity of more than 20 million tonnes of steel and is one of the largest recyclers in the Americas. With more than 100 years of history, it has taken a path of international growth in line with the steelmaking consolidation process.