LUFKIN, Texas, April 21 --

Lufkin Industries, Inc. (Nasdaq: LUFK) today announced results for the first quarter ended March 31, 2004. Net sales increased 24.6% for the first quarter to $68.6 million from $55.1 million for the first quarter of 2003. Net earnings rose 123.9% to $1.7 million for the first quarter of 2004 from $774,000 for the first quarter last year. Net earnings per diluted share for the first quarter of 2004 increased 108.3% to $0.25 from $0.12 for the first quarter of 2003.

Commenting on the announcement, Douglas V. Smith, president and chief executive officer of Lufkin, said, "Lufkin produced significant profitable growth for the first quarter of 2004, primarily as a result of increasing activity in our domestic oil field business. As we experienced in the second half of last year, high energy prices generated strong demand for new pumping units in the U.S. and Canadian markets, even as we continued to expand our oil field service and automation sales. Our increased product demand, as well as growing commercial demand for machine tool castings, also benefited our foundry operations. With added support from steady oil field business abroad and three strategic accretive acquisitions in the third and fourth quarters of 2003, oil field revenue increased 47.4% for the first quarter from the first quarter last year.

"We were also pleased to have achieved a 12.0% increase in power transmission revenue for the first quarter, the first double-digit increase in the division's revenues since the first quarter last year. Trailer revenue for the quarter declined 17.2%.

"Complementing our growth in net sales for the first quarter, Lufkin's backlog increased to $91.7 million at March 31, 2004, an increase of 65.5% from $55.5 million at the same time in 2003 and up 50.7% from $60.9 million at the end of 2003. Contrary to the trailer division's first-quarter sales decline, its backlog increased 158.9% to $27.6 million at the quarter's end from $10.6 million at the end of the first quarter of 2003, while increasing 148.2% from $11.1 million at the end of 2003. Reflecting the growing momentum in the national economy, the trailer division's backlog at the end of the first quarter of 2004 was at its highest level since the first quarter of 2000.

"Although the power transmission division's backlog declined 17.9% to $26.5 million at the end of the first quarter from $32.3 million a year earlier, we were pleased with its 6.8% sequential-quarter growth from $24.8 million at the 2003 year-end. This growth is consistent with our expectations for modest growth in power transmission revenue for the year as a result of previously discussed timing issues in the completion and startup of large oil and gas projects and the slow recovery of the worldwide industrial market.

"Our oil field backlog tripled to $37.7 million at the end of the first quarter from $12.5 million at the end of the first quarter last year and increased 51.1% from $24.9 million at the end of 2003. We attribute this expansion, to the highest level in more-than a decade, primarily to stronger demand for new pumping units and to new business resulting from the three 2003 acquisitions. Due to the relatively short lead times typically required to convert oil field backlog to revenue, the growth in the backlog strengthens our confidence in the division's prospects in the coming months."

Based on Lufkin's financial results for the first quarter and its backlog at March 31, 2004, the Company today established its guidance for earnings per diluted share for the second quarter of 2004 in a range of $0.42 to $0.57, compared with $0.33 for the second quarter of 2003. Lufkin also affirmed its guidance for earnings per diluted share for full-year 2004 in a range of $1.80 to $2.15.

Mr. Smith concluded, "We are encouraged by our financial results for the first quarter, our backlog and the continuing domestic and international quotation activity in both our oil field and power transmission divisions. As a market leader in each of our divisions, we differentiate our products through innovative design, high quality engineering, precision manufacturing and superior service, which are backed by our strong financial position. However, another key competitive advantage, especially in a period of increasing demand, is our ability to ramp our operations to respond quickly to our customers' needs. As a result of these strengths, we believe we are well positioned to achieve our objectives for 2004."

Lufkin will discuss its results for the first quarter ended March 31, 2004, in a teleconference call today at 9:00 a.m. (central time). To listen to the call, participants should dial (719) 457-2680 approximately 10 minutes prior to the start of the call. A telephonic replay will be available from 12:00 a.m. (central time) April 21, through 7:00 p.m. (central time) April 28, 2004, by dialing (719) 457-0820 and entering reservation number 453207.

This release contains forward-looking statements and information that are based on management's beliefs as well as assumptions made by and information currently available to management. When used in this release, the words "anticipate," "believe," "estimate," "expect" and similar expressions are intended to identify forward-looking statements. Such statements reflect the Company's current views with respect to certain events and are subject to certain assumptions, risks and uncertainties, many of which are outside the control of the Company. These risks and uncertainties include, but are not limited to, (i) oil prices, (ii) capital spending levels of oil producers, (iii) availability and prices for raw materials and (iv) general industry and economic conditions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. The Company does not intend to update these forward-looking statements and information.

Lufkin Industries, Inc. sells and services oil field pumping units, foundry castings, power transmission products and highway trailers throughout the world. The Company has vertically integrated all vital technologies required to design, manufacture and market its products.

                           LUFKIN INDUSTRIES, INC.
                             Financial Highlights
                (Thousands of dollars, except per share data)
                                 (unaudited)

                                                       Three Months Ended
                                                            March 31,
                                                       2004           2003

    Net sales                                        $68,629        $55,061
    Cost of sales                                     56,599         45,729
    Gross profit                                      12,030          9,332
    Selling, general and administrative
     expenses                                          9,334          8,243
    Operating income                                   2,696          1,089
    Interest and other income
     (expense), net                                      100            160
    Earnings before income taxes                       2,796          1,249
    Income tax provision                               1,062            475
    Net earnings                                      $1,734           $774

    Net earnings per share:
      Basic                                            $0.26          $0.12
      Diluted                                          $0.25          $0.12
    Weighted average shares outstanding:
      Basic                                            6,665          6,528
      Diluted                                          6,837          6,613
    Cash dividends per share                           $0.18          $0.18


                           LUFKIN INDUSTRIES, INC.
                           Balance Sheet Highlights
                            (Thousands of dollars)

                                                    March 31,   December 31,
                                                      2004          2003

    Current assets                                  $109,045       $104,299
    Total assets                                     267,037        263,656
    Current liabilities                               33,720         33,468
    Long-term debt net of current portion                 --             --
    Shareholders' equity                             191,744        188,196
    Working capital                                   75,325         70,831


                           LUFKIN INDUSTRIES, INC.
                             Division Performance
                            (Thousands of dollars)

                                                      Three Months Ended
                                                    March 31,     March 31,
                                                      2004          2003
    Revenue:
      Oil field                                     $42,373       $28,754
      Power transmission                             17,138        15,295
      Trailer                                         9,118        11,012
        Total                                       $68,629       $55,061

                                   March 31,      December 31,    March 31,
                                     2004            2003           2003
    Backlog:
      Oil field                     $37,686         $24,944       $12,513
      Power transmission             26,498          24,821        32,290
      Trailer                        27,564          11,106        10,648
        Total                       $91,748         $60,871       $55,451

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Contact:

Lufkin Industries Inc., Lufkin
R.D. Leslie, 936/637-5325