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Roanoke Electric Steel
Reports 1st Quarter Results

March 10, 2004 — Roanoke Electric Steel Corp. reported a profit of $1,533,676 on sales of $87,255,510 for the first quarter ended January 31, 2004.

First Quarter Results—Profit of $1,533,676 compares to a loss of $2,129,872 for the same period last year. Basic and diluted earnings per share were $.14, compared to basic and diluted loss per share of $.19 in the first quarter of 2003. Sales, $87,255,510, reflect a 42.73% increase from sales of $61,129,954 reported for the 2003 first quarter. Results include a payment of $3,061,820 from graphite electrode plaintiffs in conjunction with a class action suit for antitrust violations. The payment resulted in additional earnings of $1,410,887, or $.13 per share.

Management Comments—Donald G. Smith, Chairman and CEO, stated, "We are very pleased to report that for the fourth consecutive quarter our earnings per share have improved. The quarter was positively affected by an increase in selling prices for the majority of our products, as well as an increase in tonnage shipped across most of our product lines. The increased costs of scrap, our principal raw material, and alloys had a negative impact on the results for the quarter. Our fabricating subsidiaries are still hampered by reduced margins for fabricated products, due to weak nonresidential construction activity. However, overall gross profit percentages improved for most of our subsidiaries in the first quarter of 2004, compared to the first quarter of 2003. Also affecting the results of the quarter were increased administrative costs in association with ongoing compliance efforts regarding the Sarbanes-Oxley Act."

"We continue our efforts to pass price increases along to our customers, due to the increase in raw material costs. Three price increases for merchant and structural products, which have already been announced, will take effect during the second quarter and will hopefully help maintain profit margins. We expect our fabricating facilities to continue to struggle, but our rolling mills and melt shops continue to be busy and, in some instances, are adding additional shifts to keep pace with rising demand for our products. Business conditions appear to be improving in certain markets, and we hope the momentum we have achieved over the last four quarters can continue."

Roanoke Electric Steel Corp. has steel manufacturing facilities in Roanoke, Va., and Huntington, W.Va., producing angles, rounds, flats, channels, beams, special sections and billets, which are sold to steel service centers, fabricators, original equipment manufacturers and other steel producers. Five subsidiaries are involved in various steel-related activities, consisting of scrap processing and bar joist, reinforcing bar and truck trailer beam fabrication.

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