Bayou Steel Reports 2nd Quarter Results
05/25/2004 -
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Bayou Steel Reports 2nd Quarter Results
May 25, 2004 — Bayou Steel Corp. reported post-reorganization net income of $1.8 million and full-quarter sales of $60.2 million for the second fiscal quarter ending March 31, 2004.
Bayou Steel emerged from bankruptcy pursuant to a plan of reorganization that became effective on February 18, 2004. For accounting purposes, financial statements for periods after February 18, 2004 related to a new reporting entity, referred to here as the "successor company". Successor company results in many respects are not directly comparable to prior periods of the old reporting entity, referred to here as the "predecessor company". Among other changes, there have been substantial reductions in debt and revaluations of assets and other liabilities. |
The second fiscal quarter of 2004 comprised 48 days of the predecessor company's results, which included charges and credits related to the company's reorganization, as well as 43 days of the successor company's results. As a consequence, the 2004 combined second fiscal quarter and year-to-date cost of sales and net income are not comparable to prior-year periods due to the impact of the change in reported financial statement carrying values that resulted from the bankruptcy reorganization.
The company reported net income of $16.4 million for the period from January 1, 2004 through February 17, 2004, primarily due to the discharge of debt upon reorganizing. For the 43-day period extending from February 18, 2004 through March 31, 2004, the company reported net income of $1.8 million ($0.90 per share).
Second quarter sales for fiscal 2004 were $60.2 million on shipments of 146,695 tons, sharply higher than the $37.4 million in sales on shipments of 130,680 tons for the prior year second quarter. This measure was not affected by the reorganization. Average selling prices increased $124 per ton (44%) compared to the second fiscal quarter of fiscal 2003. Scrap metal and alloy raw material costs, together with escalating energy prices, increased $78 per ton during this period, partially offsetting the selling price increases.
Comments—Jerry M. Pitts, President and CEO of Bayou Steel Corp. commented, "The past four years have been difficult for the steel industry as well as for Bayou Steel. The recent swing in earnings performance is a welcome relief. We attribute the earnings turnaround to favorable changes in market conditions which have allowed us to operate at higher levels of capacity utilization. There is strong demand for steel products and, during the second quarter, that demand was complemented by a rush of shipments as many customers purchased ahead of announced price increases. The current earnings environment is clearly positive."
Mr. Pitts continued, "You may have noticed that the cost basis of our fixed assets has been adjusted to nearly zero. This was caused by applying fresh-start accounting procedures as required by Generally Accepted Accounting Principles. I want to reassure you that our plant, property, and equipment have significant value. Our facilities can produce over 600,000 tons per year of quality finished product."
Mr. Pitts concluded, "Today Bayou Steel is a changed company. Our balance sheet is stronger and our new line of credit offers more flexibility than we have had in several years. We have maintained our loyal customer and supplier bases and our employees remain dedicated to ensuring our success. We are well positioned to take advantage of the improved market conditions."
Bayou Steel Corp. manufacturers light structural and
merchant bar products in LaPlace, La., and Harriman, Tenn. The company
also operates three stocking locations along the inland waterway system
near Pittsburgh, Chicago, and Tulsa.
