Novamerican Steel Reports Second Quarter 2008 Results

Novamerican Steel Inc. (NASDAQ: TONS)(NASDAQ: TONSW) ("Novamerican" or the "Company") today announced financial results for the second fiscal quarter ended May 31, 2008. The consolidated financial statements of Novamerican Steel Inc. and its subsidiaries are included in the Quarterly Report on Form 10-Q for the quarter ended May 31, 2008, filed today with the Securities and Exchange Commission.

On November 15, 2007, the Company (the former Symmetry Holdings Inc. ("Symmetry")) completed the acquisition of Novamerican Steel Inc. and its subsidiaries, a Canadian corporation ("Acquired Company"). Subsequent to the acquisition, Symmetry changed its name to Novamerican Steel Inc. and changed its fiscal year from December 31 to the last Saturday of November.

The second fiscal quarter of 2008 included fourteen weeks of operations whereas the second fiscal quarter of 2007 included thirteen weeks. For purposes of this release, we also have compared the 2008 second fiscal quarter results of operations to the pro forma 2007 second fiscal quarter for both consistency and relevance.

2008 Second Fiscal Quarter Highlights

- Net sales increased $28.9 million, or 13.6 percent, to $241.3 million, as compared to $212.4 million in the pro forma second fiscal quarter of 2007. Excluding the impact of exchange rates, net sales would have increased by $13.1 million or 6.1 percent.

- Total tons increased by 2.4 percent to 401,300 tons as compared to 391,900 tons in the pro forma second fiscal quarter of 2007.

- Direct sales tons increased by 2.5 percent to 232,400, or 57.9 percent of total tons, versus 226,700 tons, or 57.8 percent of total tons, in the pro forma second fiscal quarter of 2007.

- Gross margin increased 18.8 percent to $49.3 million, or 20.4 percent of net sales, as compared to $41.5 million, or 19.5 percent of net sales, in the pro forma second fiscal quarter of 2007. The impact of exchange rates was an increase of $2.8 million. Excluding the impact of exchange rates, gross margin would have increased by $5.0 million to $46.5 million or 20.6 percent of net sales.

- Operating expenses increased $15.9 million, or 56.2 percent, to $44.3 million, as compared to $28.4 million in the pro forma second fiscal quarter of 2007. In addition to the $4.9 million restructuring charge, operating expenses included $3.5 million from higher depreciation and amortization associated with the purchase price allocation for fixed assets and other intangible assets, including accelerated depreciation on assets at Cambridge. The impact of exchange rates on operating expenses was an increase of $2.2 million. Excluding the impact of exchange rates, the restructuring charge and higher depreciation and amortization, operating expenses would have increased $5.3 million to $33.7 million.

- Operating expenses included a restructuring charge of $4.9 million associated with the closure of the Cambridge, Ontario facility and the implementation of organizational changes in the replenishment, processing, distribution and sales processes. An additional restructuring charge of approximately $3.0 million is anticipated in the third fiscal quarter of 2008. These changes will result in approximately $10.0 million, net, in annual operating expense reduction, with that resulting run rate realized by end of 2008.

- Adjusted EBITDA decreased by $1.7 million, or 9.4 percent, to $16.3 million, as compared to $18.0 million in the pro forma second fiscal quarter of 2007.

- Long-term debt at May 31, 2008 was $399.8 million and cash and cash equivalents were $12.4 million (or a net debt of $387.4 million).

Corrado De Gasperis, Chief Executive Officer of Novamerican, commented, "Our second fiscal quarter of 2008 continued experiencing positive momentum throughout the quarter from improved shipments and pricing, mitigated by an extremely weak automotive sector, including for us, the negative impact of the American Axle strike on General Motors. Our direct sales tons and revenue were lower than previously anticipated by about 38,000 tons. We implemented a significant portion of our organizational changes during the second quarter, including the closure of our Cambridge, Ontario facility. We anticipate having substantially all of our organizational changes concluded by the end of the third fiscal quarter, including new agreements with our supply-side trading partners. We incurred approximately $1.0 million in the 2008 second fiscal quarter for operating expenses for training, development and recruiting associated with this effort."

Liquidity and Capital Resources

Long-term debt at May 31, 2008 was $399.8 million with $12.4 million of cash and cash equivalents (or a net debt of approximately $387.4 million). On November 24, 2007, our long-term debt was approximately $390.6 million with $19.6 million of cash and cash equivalents (or a net debt of approximately $371.0 million).

As of May 31, 2008, the aggregate borrowing base was $167.5 million (including the $15.0 million availability block), of which $1.9 million was utilized for letter of credit obligations and approximately $84.8 million was outstanding under the ABL Credit Facility. At May 31, 2008, approximately $80.8 million was available for future borrowings.