Bayou Steel banks $19M in 2005

New Orleans CityBusiness, Jan 14, 2006 by CityBusiness Staff Report

Bayou Steel Corp. reported Friday it made $19.3 million in net income, $9.46 per fully diluted share, for the fiscal year ending Sept. 30, 2005.Overall, our fiscal 2005 performance was solid in spite of a variety of challenges, including higher natural gas and electricity prices and disruptions in production and shipments directly caused by the hurricanes, said Jerry Pitts, president and CEO. Our solid earnings and cash flow performance reflect the continuation of favorable steel market demand, pricing, margins, and improved operating performance.

Sales were $271.7 million compared with $240.8 million in 2004. The increase was due to an $83 per ton or a 19-percent increase in selling prices, which was partially offset by a 5.5-percent decrease in shipments.

I am especially proud of the way our employees performed after Hurricane Katrina devastated Louisiana, Pitts said. Our dedicated employees, many of whom suffered significant personal property damage, restarted operations within a week. Everyone worked tirelessly to satisfy customer demand despite the personal, logistical and operational issues caused by the hurricane. The selling price increase is related to sharply escalating prices for scrap and increasing prices for alloys and fuel during 2005. Bayou Steel passed along several price increases for its products offsetting its higher costs of scrap, alloys, and energy.

Inventories at steel service centers, our principal customer group, have declined to their lowest level in seven years resulting in stronger order bookings and greater backlog for our products, Pitts said. We are optimistic that shipments will remain strong and that market fundamentals will remain favorable in fiscal 2006.

Bayou Steel has opened another scrap-processing facility in New Orleans to process ferrous and nonferrous scrap metal. The New Orleans and LaPlace scrap facilities continue to benefit from the availability of scrap metal in the Gulf coast area due to the hurricane., Pitts said. Near term, we expect our scrap-processing activities to continue to contribute to strong margins.Bayou Steel emerged from bankruptcy Feb. 18, 2004. Ensuing financial statements are not directly comparable to periods prior to the settlement.