Bayou Steel Posts Strong Numbers for Quarter

Bayou Steel Corp. reported net income of $5.1 million for the second quarter of fiscal 2005 and $9.3 million over the past two quarters.

Sales for the second quarter were $62.1 million while sales for the same time last year were $60.2 million. The increase in sales was entirely due to an increase in the selling price of $126 per ton to $532 per ton. The selling price increase has generally been related to the sharply escalating prices for scrap and the increasing prices for alloys and fuel during fiscal 2004. The company was successful during the period in passing through several price increases for its products offsetting its higher costs of scrap and additives and increasing gross margin by $75 per ton.

Jerry M. Pitts, president and CEO,, commented, "Operating income in the second quarter of fiscal year 2005 has increased significantly as compared to the prior year quarter and was one of the best quarters in the company's history. Strong margins contributed to the growth of earnings. Given the challenges of the last four years in the steel industry, it is especially pleasing to see the market continue to support healthy margins while demand has softened."

Pitts continued, "In December, we successfully achieved a much needed shutdown in the manufacturing plants to conduct equipment maintenance that was partially deferred due to limited funds during the company's bankruptcy. Since the start-up, our production and efficiencies have increased in both our Louisiana and Tennessee plants. For example, productivity in our melt shop increased by 17 percent in the second quarter as compared to the immediate preceding quarter in which we took the shutdown. These improvements will enable us to better control costs and capitalize on favorable market conditions. In December, we opened a remote scrap processing location. Our ferrous and non-ferrous operations are expanding according to plan. We expect this facility to provide the Louisiana plant with additional scrap metal and replace more costly purchased scrap."