Bayou Steel Corporation Reports First Quarter Results.

Business Editors

LAPLACE, La.--(BUSINESS WIRE)--Feb. 5, 2002

Bayou Steel Corporation (AMEX:BYX) reported a loss of $4.8 million on sales of $29.8 million for its first quarter of fiscal 2002, a significant improvement from the first quarter of fiscal 2001 when the Company lost $8.7 million on sales of $34.9 million.

"Though we are never satisfied with a net loss, we are encouraged to see improvement," stated Jerry Pitts, President and Chief Operating Officer. "As a result of our aggressive cost reduction and productivity enhancement initiatives, together with lower energy prices, the loss has been reduced to nearly half that of the first quarter last year and the immediate preceding quarter. This was accomplished despite a 15% reduction in revenue on decreased shipments and selling prices," Pitts continued.

During the quarter the Company reduced conversion and period costs by over $4 million compared to the first quarter of last year. These significant improvements enabled the Company to improve gross operating margin to nearly breakeven from a negative position in the first three months of last fiscal year. The 15% decrease in revenue was driven by a 12% decrease in shipments and a 3% decrease in the average selling price. "During the quarter a major competitor announced a price decrease that affected the vast majority of our product line. The change impacted our selling price about midway through the quarter and, despite its adverse impact, the aftermath of the September 11 terrorist attack, the economic recession, imports, and the seasonal drop in shipments, our operating margin was better than any of the last five quarters," commented Pitts.

Prior to the price decrease, the Company was approaching operating cash break-even (defined as net loss plus depreciation and amortization). Pitts said, "We continue to manage the Company towards operating cash breakeven. The liquidity afforded under our line of credit, presently about $30 million, continues to provide the necessary resources as we move toward achieving this initial goal." During the quarter, the Company realized favorable pricing in raw materials, electricity and natural gas; however, the average selling price remained at an extremely low level.

Commenting on the Company's operations, Pitts stated, "We are implementing new sales and product strategies which are designed to expand our product offerings and penetrate new markets in order to increase revenue and capacity utilization while reducing fixed cost. We are confident that your Company possesses the personnel, technology, and culture to continue the gains in cost efficiency while improving sales performance in order to capitalize on these new markets and an eventual improving economy."

Dumping of foreign steel and a slumping domestic economy continued to be the major factors driving operating results. "We are hopeful that the recent signs that the recession may be bottoming-out will bring better market conditions. In fact, January shipments have increased over the rate of the first quarter and a $20 per ton price increase was announced by a major competitor. Although both of these factors are promising, we greet these signs with cautious optimism and will not relent until profitability is regained," Pitts concluded.

This release contains various "forward-looking" statements which represent the Company's expectation or belief concerning future events. The Company cautions that a number of important factors could, individually or in the aggregate, cause actual results to differ materially from those included in the forward-looking statements. Any forward looking statements contained in this document speak only as of the date hereof, and the Company disclaims any intent or obligation to update such forward looking statements.

Bayou Steel Corporation manufacturers light structural and merchant bar products in LaPlace, Louisiana and Harriman, Tennessee. The Company also operates three stocking locations along the inland waterway system near Pittsburgh, Chicago, and Tulsa.

                         FINANCIAL HIGHLIGHTS
  (In Thousands, Except Per Share Data, Shipments and Selling Price)

                                             (Unaudited)
                                            Quarter Ended
                                             December 31,
                                     2001                     2000
                               --------------           --------------
Net sales                       $    29,757              $    34,903
Gross margin                           (295)                  (4,482)
Operating margin                     (1,954)                  (6,137)

Net loss                        $    (4,803)             $    (8,651)

Net loss per share              $     (0.37)             $     (0.67)

 Shipment tons                      106,794                  121,500
Average selling
 price per ton                  $       274              $       283


                                (Unaudited)                (Audited)
                                December 31,             September 30,
                                    2001                      2001
                               --------------           --------------

Working Capital                 $    60,265              $    63,393
Debt to Equity                     2.2 to 1                 1.9 to 1
Liquidity (1)                   $    30,000              $    41,000


(1) Liquidity is defined as cash plus availability under the line
of credit facility.