Bayou Steel net dips $1M although sales higher

New Orleans CityBusiness, Feb 27, 2006 by CityBusiness Staff Report

Bayou Steel Corp. reported net income of $3.2 million, or $1.60 per fully diluted share, on sales of $67.2 million for the first quarter of fiscal year 2006 ending Dec. 31, 2005, compared with net income of $4.2 million, or $2.01 per fully diluted share, on sales of $63.1 million for the same quarter last year.Net sales for the first quarter increased $4.1 million when compared with the same period in 2005 after shipping 123,417 tons, which is 10,000 tons or 7 percent higher than the prior year quarter.Demand and prices have risen to levels not seen in our products in quite some time creating a strong business climate for Bayou Steel, said Jerry Pitts, president and CEO.

Our backlog at the end of December was the highest in almost five years. Steel inventories at our customers are low by historical standards so we expect shipments to continue to grow this year and look forward to what we believe will be a strong market for the rest of fiscal 2006.The hurricanes of 2005 have not been forgotten at Bayou Steel.We are still dealing with circumstances created by the two major storms that made landfall along the Gulf Coast in 2005, Pitts said. Available labor and record high energy prices are still issues that are affecting operations. The company has been able to maintain strong but less than maximum production levels and minimize production cost increases with the exception of energy costs which increased operating costs 24 percent over the same prior year period. Due to the success of our recent initiatives to attract and retain personnel in the wake of the challenges brought about by the hurricanes, we expect to increase operations by approximately 20 percent during the second fiscal quarter.Bayou Steel increased available cash by $9.4 million to $14.6 million as of Dec. 31, 2005, with an available unused line of credit of $43 million with a major bank.Bayou Steel manufacturers light structural and merchant bar products in LaPlace and Harriman, Tenn., and operates three stocking locations along the inland waterway system near Pittsburgh, Chicago and Tulsa, Okla.