Bayou Steel Reports for Quarter

Bayou Steel Corp. reported its financial results for the first quarter of fiscal 2005. Bayou Steel emerged from bankruptcy pursuant to a plan of reorganization that became effective on February 18, 2004.

The company reported net income of $4.2 million for the first quarter of fiscal 2005. The predecessor company reported a net loss of $0.6 million for the same time the previous year.

Sales for the quarter were $63.1 million on shipments of 113,080 tons. This was sharply higher than the $51.7 million in sales on shipments of 151,184 tons for the prior comparable quarter for fiscal 2004. The average selling price for the quarter increased from $339 per ton to $552 per ton or 63 percent compared to the prior year comparable quarter. The selling price increase has generally been related to the sharply escalating prices for scrap and the increasing prices for alloys and fuel, which the Company has been successful in passing through to its customers.

Jerry Pitts, president and CEO, commented, "Earnings in the first quarter of fiscal year 2005 have increased significantly as compared to the prior year quarter. Despite a decline in shipments, the strong selling prices contributed to the growth of sales and earnings. This favorable turnaround is largely the result of increased demand for our products, particularly in 2004, which allowed us to raise our product prices at a higher rate than the unprecedented increases in the cost of scrap. Although Bayou Steel experienced significant increases in the cost of other major commodity items, including electricity, natural gas, and alloys, our margins have significantly improved as our increased product pricing has outpaced that of scrap and other cost related items. Given the challenges of the last four years in the steel industry, it is especially pleasing to see a healthy market."

Pitts continued, "In December, we underwent a much needed shutdown in the 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. This will enable us to better capitalize on current great market conditions. In December, we opened a remote scrap processing location. After a ramp-up period, we expect this facility to provide the Louisiana plant with additional scrap metal. Lastly, we increased Tennessee's capacity utilization by 15 percent as we were able to purchase billets economically in the fall. Besides these positive actions, our market fundamentals remain healthy. We expect continued healthy price levels and volumes for our products. All of this encourages us going forward."