Bayou Steel Corporation Announces Strong Results for Fiscal 2005

LAPLACE, La.--(BUSINESS WIRE)--Jan. 13, 2006--Bayou Steel Corporation today reported its financial results for fiscal 2005.

The Company reported net income of $19.3 million or $9.46 per fully diluted share for the fiscal year ending September 30, 2005.

Sales for fiscal 2005 were $271.7 million while sales for fiscal 2004 were $240.8 million. The increase in sales was due to an $83 per ton or a 19.0% increase in the selling price which was partially offset by a 5.5% decrease in shipments. The selling price increase has generally been related to the sharply escalating prices for scrap and the increasing prices for alloys and fuel during fiscal 2005. The Company was successful during the period in passing through several price increases for its products offsetting its higher costs of scrap, alloys, and energy.

Jerry Pitts, President and CEO of the Company, commented "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 which battered the Central Gulf Coast Region. Our solid earnings and cash flow performance reflect the continuation of favorable steel market demand, pricing, margins, and improved operating performance. 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. We are optimistic that shipments will remain strong and that market fundamentals will remain favorable in fiscal 2006."

Mr. Pitts continued, "I am especially proud of the way our employees' performed after hurricane Katrina devastated Louisiana. Our dedicated employees, many of whom suffered significant personal property damage, re-started operations within a week. Everyone worked tirelessly to satisfy customer demand despite the personal, logistical and operational issues caused by the hurricane."

Mr. Pitts concluded, "Our scrap processing division continues to procure and prepare scrap metal at very attractive prices relative to purchasing prepared scrap on the open market. We have opened another scrap processing facility in New Orleans and are pleased with its progress. We will be collecting and processing both 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. Near term, we expect our scrap processing activities to continue to contribute to strong margins."

Bayou Steel emerged from bankruptcy on February 18, 2004. Financial statements for periods after February 18, 2004, related to the Company that emerged from bankruptcy (the "Company"), are not directly comparable to periods prior to February 18, 2004 (the "Predecessor Company"). Fiscal 2004 reflects both the Company's and Predecessor Company's results, rendering the traditional comparison of net income with fiscal 2005 less useful.

Bayou Steel invites you to visit its web site, www.bayousteel.com, to view its third quarter fiscal 2005 report.

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.

                        BAYOU STEEL CORPORATION
                         FINANCIAL HIGHLIGHTS
                               (Audited)

                                                          Predecessor
                                  Successor Company         Company
                             -----------------------------------------
                                           Period from    Period from
                                           February 18,    October 1,
                                              2004           2003
                              Year Ended     through        through
                             September 30, September 30,  February 17,
INCOME STATEMENT:                2005         2004           2004
                             -----------------------------------------
Net Sales                    $271,719,962  $158,866,455  $ 81,909,905
Depreciation                      811,796        23,455     3,395,408
Reorganization Expense                 --            --     1,688,540
Gross Margin                   47,380,495    29,221,597     1,274,419
Operating Income (Loss)        35,559,087    24,177,385    (3,180,467)
Interest and Other Expense
 on Debt                        4,031,927     2,213,235       378,141
Gain on Reorganization and
 Fresh-Start Adjustments,
 Net                                   --            --    19,499,698
Income before Taxes            31,632,414    22,707,800    16,044,079
Net Income                     19,284,040    13,845,127    16,044,079
Net Income per Share - Basic         9.64          6.92          1.24
Net Income per Share -
 Diluted                             9.46          6.86          1.24
EBITDA (1)                     36,370,883    24,200,840       214,941


                                  Successor Company
                             ---------------------------
BALANCE SHEET:               September 30, September 30,
                                 2005          2004
                             ---------------------------
Working Capital              $ 63,399,515  $ 50,735,508
Notes Due 2011                 30,000,000    30,000,000
Credit Facility                        --    10,831,501
Other Post Reorganization
 Obligations                      610,923     1,416,759
Stockholders' Equity           44,434,996    22,926,719

(1) The Company defines EBITDA as Operating Income plus Depreciation.
    Includes Reorganization Expenses in all periods presented.