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Oregon Steel Reports 1st Quarter Results

April 29, 2004 — Oregon Steel Mills, Inc. reported first quarter 2004 net income of $7.5 million on sales of $252.4 million.

Net income of $7.5 million ($.28 per share) compares to a net loss of $9 million (a negative $.34 per share) for the first quarter of 2003.

Net income includes a pretax non-cash charge of $7 million ($.26 per share) related to the issuance of four million shares of common stock as part of the labor dispute settlement at Rocky Mountain Steel Mills. The charge is a result of adjusting the previously recorded value of the shares to market value at March 31, 2004. Net income exclusive of the Stock Settlement Charge was $14.5 million ($.54 per share).

Sales of $252.4 million compares to 2003 first quarter sales of $175.7 million. Average sales price per ton, $529, compares to $440 in the first quarter of 2003. Overall shipments were 476,500 tons compared to 2003 first quarter shipments of 399,200 tons. The increase in shipments are primarily due to increased shipments of plate, coil, welded pipe, structural tubing and rod products partially offset by lower rail and seamless pipe shipments. The increase in sales and average sales price were primarily due to higher average selling prices for plate, coil, rail and rod and bar products and the increased shipments noted above, partially offset by lower average selling prices for welded and seamless pipe.

Operating income was $15.1 million, including the $7 million Stock Settlement Charge noted above. This compares to an operating loss of $6.6 million in the first quarter of 2003 and an operating loss of $38.4 million for the fourth quarter of 2003, which included a labor dispute settlement charge of $31.1 million. Operating loss in the fourth quarter of 2003, before the labor dispute settlement charge, was $7.3 million.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was $32.9 million (exclusive of the $7 million Stock Settlement Charge noted above) compared to $4.3 million in the first quarter of 2003 and a negative $25.4 million in the fourth quarter of 2003, which included a labor dispute settlement charge of $31.1 million. EBITDA for the fourth quarter of 2003, before the non-cash Company common stock component ($23.2 million) of the labor dispute settlement charge, was a negative $2.2 million.

Increased operating income and EBITDA during the first quarter of 2004 compared to the first quarter of 2003 reflects increased volume and higher average selling prices, partially offset by higher slab costs at the company's Oregon Steel Division, and higher scrap costs at the company's Rocky Mountain Steel Division (RMSM).

Since January 1, the company has announced numerous price increases on plate and coil products, increasing the base price on as-rolled plate and coil by approximately $210 per ton for March deliveries. Likewise for rod and bar products, price increases and raw material surcharges have increased the base price for these products by approximately $120 per ton for March deliveries. During the quarter, the company also announced and is implementing price increases for its structural tubing, welded pipe and rail products.

Comments—Jim Declusin, the company's President and CEO, stated, "We at Oregon Steel are very pleased with the results of our first quarter. While much of our profitability has been fueled by a strong steel demand for our products, resulting in our ability to raise steel prices throughout the quarter, equally important has been the changes the company has made in its culture during the past six months. These cultural changes have resulted in cost reductions by increasing productivity, improving yields, reducing delay rates and ever improving levels of quality. These improvements have been solely achieved by the dedication of our employees. We believe the improvements that have been made will result in even stronger results in the second quarter. Our performance was accomplished even though we had unprecedented high costs for slab and scrap during the quarter. It is also important to note that these results were achieved without having high production levels, shipments or profitability in large diameter pipe."

Liquidity—At March 31, 2004, the company maintained a $65 million revolving credit facility of which $5.0 million was restricted, an additional $15.4 million was restricted under outstanding letters of credit and $44.6 million was available for use. There were no amounts outstanding on the revolving credit facility as of March 31, 2004. Total debt outstanding, net of cash of $6.5 million, was $305 million compared to $296 million at December 31, 2003. During the first quarter of 2004, the company incurred capital expenditures of $4.4 million; depreciation and amortization was $9.9 million. For all of 2004, the Company anticipates that capital expenditures and depreciation/amortization will be approximately $31 million and $40 million, respectively.

Outlook—For 2004, the company expects to ship approximately 1,750,000 tons of products and generate approximately $1 billion in sales. The Oregon Steel Division product mix is expected to consist of 630,000 tons of plate and coil, 200,000 tons of welded pipe and 60,000 tons of structural tubing. At these shipment levels, the company expects its Portland combination mill to run at approximately 80% of rated capacity and its welded pipe mills to run at approximately 30% of rated capacities. The company's RMSM Division expects to ship approximately 380,000 tons and 482,000 tons of rail and rod and bar products, respectively. At these shipment levels, the rail and rod mills would be at 90 percent and 100 percent, respectively, of their rated capacities. Seamless pipe shipments will be dependent on market conditions in the drilling industry. At the present time the seamless mill is not operating.

Based on performance to date, the company anticipates that it will have record quarterly sales in the second quarter of 2004. Exclusive of any further labor dispute settlement adjustments relating to market value changes in common stock, the company anticipates that second quarter 2004 operating income and net income will be the highest in its history. Because of the uncertainty related to third and fourth quarter sales price and the volatility of the slab and scrap market, the company does not currently believe the third and fourth quarter financial performance will be equal to the results anticipated for the second quarter; however, the company believes the results for the third quarter of 2004 will exceed that of the first quarter of 2004. For fiscal 2004, the company currently anticipates that it will have record sales, operating income and net income.

Oregon Steel Mills, Inc. is organized into two divisions. The Oregon Steel Division produces steel plate, coil, welded pipe and structural tubing from plants located in Portland, Ore.; Napa, Calif., and Camrose, Alta., Canada. The Rocky Mountain Steel Mills Division, located in Pueblo, Colo., produces steel rail, rod, bar, and tubular products.

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