Bayou Steel Corp. reported net income of $5.2 million on sales of $68.4 million for the third quarter (ending June 30, 2005) of fiscal 2005.

Third Quarter Results—The $5.2 million net income ($2.59 per fully diluted share) compares to net income of $6.1 million ($2.97 per fully diluted share) for the third quarter of 2004.

The $68.4 million in sales compare to sales of $59.3 million for the prior year comparable quarter. The increase in sales was due to a 12% increase in shipments (to 133,000 tons) and to an $11 per ton increase in the selling price (to $507 per ton).

Shipments increased over the quarter as customers appear to have finally reduced their inventories, which they had accumulated last year in advance of an anticipated rapid rise in selling prices. 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, helping to offset the higher costs of scrap and additives. The company's selling prices have declined in recent months as the cost of scrap metal has declined, and the company followed the industry in reducing prices.

Fiscal year-to-date net income equals $14.5 million ($7.24 per fully diluted share).

Comments—Jerry Pitts, President and CEO, commented, "Bayou Steel continues to perform at a high level of profitability. Shipments during the quarter increased as our customers worked through their higher than normal inventories. Even though selling prices and margins have recently declined, selling prices and margins are still at very high levels."

Mr. Pitts continued, "Operating levels for the current period were lower than the immediate prior quarter and lower than the prior year period in order to reduce inventory levels. Our per unit fixed production costs will increase, but the lower operating level should allow us to reduce inventories by over $10 million by September 30, 2005. Since our successful planned maintenance shutdown in December, our melt shop has performed very well even at reduced operating levels. Since December, the melt shop has set three productivity records and our billet yield in the third fiscal quarter was a 25 year record. With scrap metal representing over 50% of our production costs, increased billet yield has a significant impact in lowering our costs. We still have opportunities for improvement in operations and our team is focused on achieving greater improvements in all facets of the business in the near future."

Outlook—Looking forward, Pitts concluded, "Backlog for our products has grown over the past month and is at a solid level. The outlook for our products appears to be better for the second half of calendar 2005. Our metal margin, the difference between our selling prices and scrap raw material cost, remains near record levels although we expect the metal margin to be lower than the third fiscal quarter. Scrap continues to be volatile and is moving sharply upward. A competitor has recently announced a $45 per ton price increase effective September 1, 2005."

Bayou Steel Corp. manufactures 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.