Envirosource Reports 1998 Results.

HORSHAM, Pa.--(BUSINESS WIRE)--March 24, 1999--Envirosource, Inc. (Nasdaq:ENSO) (PCX:ES) today reported fourth quarter operating income of $2.4 million, before deducting costs of its ENSO 2000 profit improvement program, as compared with $5.3 million before an unusual charge in the 1997 fourth quarter.

Costs of ENSO 2000, which is a comprehensive program to enhance profitability and return on assets throughout the organization, were approximately $3.5 million in the fourth quarter of 1998 and $7.9 million for the full year. The 1998 quarter also includes the write-off of all of the Company's deferred tax assets, amounting to $15.3 million, which has no cash impact. After the unusual charges, interest and income taxes, the net loss in the 1998 quarter was $23.9 million or $4.12 per share as compared with a year earlier loss from continuing operations of $3.3 million or 56 cents per share. The 1997 quarter included a $639,000 charge for the cumulative effect of an accounting change.

For the 1998 year, operating income was $22.9 million before ENSO 2000 program costs, up slightly from $22.3 million before unusual charges in 1997. After unusual charges, interest and income taxes, the 1998 net loss was $30.6 million as compared with a 1997 loss from continuing operations of $8.5 million. In 1997 the Company also reported a $9.6 million gain from the sale of its discontinued IMSAMET operations. On a per share basis, the 1998 loss amounted to $1.27 per share before the ENSO 2000 program costs and the deferred tax write-off and $5.27 per share after those items, as compared with a 1997 loss of $1.24 per share before unusual charges and $1.46 per share from continuing operations after such charges.

Commenting on the results, John T. DiLacqua, President and Chief Executive Officer of Envirosource, said, "The slowdown in United States steel production that started in the third quarter worsened dramatically in the fourth quarter, and it isn't over yet. Although steelmakers have been filing unfair trade complaints and there are reports that steel imports have slowed, our steel industry customers are still operating at relatively low levels. During the fourth quarter of 1998, U.S. raw steel production declined by 13.8% from the comparable quarter of 1997, and steel mill operating rates have remained at around 80% during the first two months of 1999.

"Some of our steel mill customers idled furnaces and cut back their operations to cope with the very high level of imports. Our outside sales of steel mill by-products suffered as well.

"The volume of electric arc furnace dust (a hazardous waste produced by steel mini-mills) handled by our Technologies segment declined as a result of the steel industry slowdown. Consequently, overall waste tonnage was lower than in the comparable quarter of the prior year for the first time since mid-1996. Average prices were lower as well, due to the mix of incoming material and because the market remains very competitive.

"While fourth quarter results were very disappointing, we're optimistic about the future. The health of the U.S. steel industry is a very key factor which drives our profitability. We have implemented many initiatives from our ENSO 2000 profit improvement program; we believe the benefits of these will be seen in our results for 1999, 2000 and beyond. We are tightening our belts to improve earnings and cash flow, and to enhance stockholder value by reducing the Company's debt.

"When I joined Envirosource in January, it was immediately clear to me that we must reduce debt significantly. We have already taken a number of steps which are intended to maximize cash flow in order to achieve our goal. Our 1998 EBITDA, before unusual items, exceeded $60 million. Our cash interest expense was $27.5 million. We are committed to managing capital, and all of our resources, to reduce the Company's debt."

Envirosource's principal business segments are the IMS segment, which provides slag processing, metal recovery, materials handling, scrap management and a wide range of specialty services, such as scarfing and high speed flame cutting, to the steel industry; and the Technologies segment, which provides hazardous waste treatment, stabilization and disposal services, regulatory assistance and laboratory services to the steel industry and other industrial and governmental customers. -0-

                          Envirosource, Inc.
                  CONDENSED STATEMENTS OF OPERATIONS
               (In thousands, except per share amounts)

                          Three months ended         Year ended
                             December 31,            December 31,
                         --------    --------   ---------   ---------
                           1998        1997        1998        1997
                         --------    --------   ---------   ---------

Revenues:
 IMS                     $ 44,674    $ 48,501   $ 191,438   $ 185,587
 Technologies               7,450      10,200      40,938      42,091
                         --------    --------   ---------   ---------
                         $ 52,124    $ 58,701   $ 232,376   $ 227,678
                         ========    ========   =========   =========

Operating income:
 IMS                     $  5,256    $  6,837   $  26,465   $  26,494
 Technologies              (1,867)       (764)       (796)       (173)
 Corporate headquarters      (946)       (800)     (2,742)     (4,030)
 Unusual charges           (3,508)       (800)     (7,934)     (1,300)
                         --------    --------   ---------   ---------
                           (1,065)      4,473      14,993      20,991

Interest income               367         408       1,262       1,223
Interest expense           (7,720)     (7,545)    (30,510)    (29,308)
                         --------    --------   ---------   ---------
Loss before income taxes   (8,418)     (2,664)    (14,255)     (7,094)

Income tax (expense) benefit:
 Current                     (166)       (357)     (1,047)     (1,399)
 Deferred                 (15,337)       (253)    (15,337)         31
                         --------    --------   ---------   ---------

Loss from continuing
 operations               (23,921)     (3,274)    (30,639)     (8,462)
Gain from sale of
 discontinued IMSAMET
 operations                                                     9,600
                         --------    --------   ---------   ---------

Income (loss) before
 cumulative effect of
 accounting change        (23,921)     (3,274)    (30,639)      1,138
Cumulative effect of
 accounting change                       (639)                   (639)
                         --------    --------   ---------   ---------

Net income (loss)       $ (23,921)   $ (3,913)  $ (30,639)  $     499
                         ========    ========   =========   =========

Income (loss) per share:
 Continuing operations  $   (4.12)   $   (.56)  $   (5.27)  $   (1.46)
 Discontinued operations                                         1.66
 Cumulative effect of
  account change                         (.11)                   (.11)
                         --------    --------   ---------   ---------
 Net income (loss)      $   (4.12)   $   (.67)  $   (5.27)  $     .09
                         ========    ========   =========   =========

Weighted average shares     5,813       5,813       5,813       5,787


Note: The 1998 unusual charges represent costs of the Company's ENSO
      2000 profit improvement program, consisting of $3 million to
      write down excess equipment to its net realizable value, $2.2
      million of program consulting costs, $2.1 million of employee
      severance and $.6 million of other costs. In 1998 the Company
      also wrote off its deferred tax assets totaling $15.3 million,
      which amounted to $2.64 per share in both the quarter and the
      year. The 1997 unusual charges consist of costs to satisfy
      regulatory requirements at inactive waste disposal sites and to
      vacate an office.