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EXHIBIT 99.1

PRESS RELEASE

Contact: John Simmons, V.P., CFO
                Stewart & Stevenson Services, Inc.
                713-868-7700

FOR IMMEDIATE RELEASE

STEWART & STEVENSON SERVICES REPORTS
THIRD QUARTER 2004 RESULTS
Third Quarter Net Earnings were $0.07 per Diluted Share
Net Earnings from Continuing Operations were $0.29 per Diluted Share

        HOUSTON—December 03, 2004—Stewart & Stevenson Services, Inc. (NYSE: SVC) announced its operating results for the third quarter of fiscal 2004, which ended on October 30, 2004.

        Sales for the third quarter of fiscal 2004 totaled $291.2 million compared to sales of $275.7 million recorded in the same period a year ago. Net earnings in the third quarter of fiscal 2004 were $2.1 million or $0.07 per diluted share compared to a net loss of $15.4 million or $0.54 per diluted share in the third quarter of fiscal 2003. Net earnings from continuing operations in the third quarter of fiscal 2004 were $8.4 million or $0.29 per diluted share compared to a net loss of $11.3 million or $0.39 per diluted share in the third quarter of fiscal 2003.

        As previously announced, the company is pursuing a possible sale of its Airline Products business. Operating results have been restated to reflect the Airline Products business as a discontinued operation and restated quarterly segment operating results for fiscal 2004 and 2003 are attached.

        The company's results from discontinued operations for the third quarter of fiscal 2004 include a $6.0 million after-tax charge to reflect the recent settlement of outstanding litigation related to the company's blowout preventer and drilling riser business, which was sold during fiscal 2002. Results from discontinued operations for the third quarter of fiscal 2004 were an after tax loss of $6.3 million or $0.22 per diluted share compared to a loss of $4.2 million or $0.15 per diluted share for the same period of fiscal 2003.

        Max L. Lukens, the company's President and Chief Executive Officer, stated, "We are encouraged by the significantly improved results from our continuing operations. These results reflect the positive impact of the many actions we have taken since we began our strategic review of all our businesses approximately one year ago. We will continue to build upon this progress and take the necessary actions in all of our businesses to position the company for acceptable, sustainable returns going forward."

Segment Data

        The Tactical Vehicle Systems segment, which manufactures tactical vehicles for the U.S. Army and others, recorded sales of $133.4 million in the third quarter of fiscal 2004 compared to $110.0 million in the prior year's third quarter. Operating profit for the third quarter of fiscal 2004 decreased to $16.0 million compared to $16.8 million in the third quarter of fiscal 2003 as the impact of the higher sales volume was more than offset by higher material costs, primarily related to increased steel pricing, and a change in product mix. Deliveries under the new multi-year contract with the U.S. Army to

produce the Family of Medium Tactical Vehicles ("FMTV") began during November 2004. During the third quarter, the company also received a contract award valued at $32.8 million for the production of 385 Low Signature Armored Cabs ("LSAC") for use on the FMTV. The cabs will be manufactured in Sealy, Texas with deliveries scheduled through February 28, 2005. The contract has recently been modified to add 813 additional LSACs, for which the delivery schedule and pricing are expected to be finalized by the end of the year.

        The Power Products segment, which is responsible for sales and aftermarket support of a wide range of industrial and transportation equipment, recorded sales of $129.8 million in the third quarter of fiscal 2004 compared to $128.9 million a year ago despite having exited product lines and facilities during the past year representing approximately $60 million in annual sales. Improving economic conditions and focused sales efforts in the company's primary markets offset the sales impact of the product exits. The third quarter 2004 operating profit totaled $3.2 million compared to a $6.6 million operating loss in the comparable period of fiscal 2003. The improved results are largely attributable to the numerous ongoing actions taken beginning in the second half of fiscal 2003 aimed at improving the quality of sales and reducing operating costs. These actions include reductions in the workforce, closure of facilities, and the exit of certain product lines.

        The Engineered Products segment, which manufactures equipment for the well servicing industry, as well as mobile railcar movers, off-road seismic vehicles, and snow blowers, recorded sales of $25.4 million for the third quarter of fiscal 2004 compared to $29.2 million in the same quarter last year. Operating profit for the third quarter of fiscal 2004 increased to $0.8 million compared to an operating loss of $1.5 million in the previous year, primarily due to sales mix improvements and certain non-recurring costs incurred in fiscal 2003. Backlog for this segment increased to $47.1 million at October 30, 2004, compared to $20.1 million at January 31, 2004. An international petroleum equipment order received subsequent to October 30, 2004 has increased this segment's backlog to an all-time high of approximately $90 million.

        The Distributed Energy Solutions segment recorded third quarter 2004 sales of $2.6 million compared to sales of $7.5 million in the same period of fiscal 2003. Third quarter 2004 operating loss totaled $5.2 million compared to a $20.7 million loss in the comparable period of last year. In the third quarter of fiscal 2003, the company announced its decision to exit the turnkey engineering, procurement, and construction ("EPC") activities of this segment and continues to wind up the remaining contractual obligations associated with such activity.

Liquidity

        Total cash and short-term investments were $83.0 million at October 30, 2004 as compared to $99.8 million at the end of the second quarter. Net cash used in operating activities during the third quarter was $11.1 million and included a $12.1 million impact from completion of certain loss contracts in the Distributed Energy Solutions segment and a $10.6 million contribution to the company's defined benefit pension plan. For the first nine months of fiscal 2004, cash provided by operating activities totaled $22.1 million compared to $2.8 million for the corresponding period of fiscal 2003.

Conference Call

        Stewart & Stevenson Services has scheduled a conference call for Friday, December 3, 2004 at 10:00 a.m. Eastern Time to review third quarter results. To listen to the call, dial 800-659-2037 or 617-614-2713 and use pass code 82876262 at least ten minutes before the conference call begins. A telephonic replay of the conference call will be available through December 10, 2004 and may be accessed by dialing 888-286-8010 or 617-801-6888 and using pass code 85210796.

        Investors, analysts, and the general public will also have the opportunity to listen to the conference call free over the Internet by visiting the company's web site at www.ssss.com. To listen to the live call on the web, please visit the Stewart & Stevenson web site at least fifteen minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live web cast, an audio archive will be available shortly after the call ends.

        Stewart & Stevenson Services, Inc., founded in 1902, is a billion-dollar company that manufactures, distributes, and provides service for a wide range of industrial products and diesel-powered equipment to key industries worldwide, including power generation, defense, airline, marine, petroleum, and transportation.

This press release contains forward-looking statements that are based on management's current expectations, estimates, and projections. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions and are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Many factors, including those discussed more fully elsewhere in this release and in the Company's filings with the Securities and Exchange Commission, particularly its latest annual report on Form 10-K, as well as others, could cause results to differ materially from those stated. These factors include, but are not limited to, risks of dependence on government and failure to obtain new government contracts, inherent risks of government contracts, risks of supply interruptions to Tactical Vehicle Systems segment, risks associated with Distributed Energy Solutions segment, risks of fixed-price contracts, risks as to cost controls, risks of general economic conditions, risks as to rising steel prices, risks of oil and gas industry economic conditions, risks of airline industry economic conditions, risks as to distributorships, risks as to licenses, risk of competition, risks relating to technology, risks as to terrorist attacks on the U.S. and their impact on the U.S. economy, risks relating to personnel, risks of claims and litigation, risks of product defects, risks of no credit facility, risks as to foreign sales and global trade matters, risks as to information technology, risks as to acquisitions and restructuring activities, risks as to currency fluctuations, risks as to environmental and safety matters, and credit risks all as more specifically outlined in the Company's latest annual report on Form 10-K. In addition, such forward-looking statements could be affected by general industry and market conditions and growth rates, general domestic and international conditions including interest rates, inflation and currency exchange rates and other future factors. Actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.

STEWART & STEVENSON SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

			Three Months Ended						Nine Months Ended
			October 30, 2004			November 1, 2003			October 30, 2004			November 1, 2003
			(Unaudited)						(Unaudited)
Sales			$	291,160		$	275,660		$	864,961		$	845,687
Cost of sales				254,686			255,625			755,349			747,717
Gross profit				36,474			20,035			109,612			97,970
Selling and administrative expenses				25,966			38,072			80,813			103,809
Pension curtailment expense				—			—			—			2,400
Other income, net				(1,270	)		(51	)		(3,944	)		(530	)
Operating profit (loss)				11,778			(17,986	)		32,743			(7,709	)
Interest expense				534			640			1,487			2,576
Interest income				(411	)		(142	)		(997	)		(1,201	)
Earnings (loss) from continuing operations before income taxes				11,655			(18,484	)		32,253			(9,084	)
Income tax expense (benefit)				3,280			(7,205	)		10,766			(4,320	)
Net earnings (loss) from continuing operations				8,375			(11,279	)		21,487			(4,764	)
Loss from discontinued operations, net of tax benefit of ($5,207), ($2,712), ($6,182) and ($4,278)				(6,292	)		(4,162	)		(8,085	)		(6,772	)
Net earnings (loss)			$	2,083		$	(15,441	)	$	13,402		$	(11,536	)
Weighted average shares outstanding:
	Basic			28,768			28,600			28,729			28,538
	Diluted			29,186			28,600			29,100			28,538
Earnings (loss) per share:
	Basic:
		Continuing operations	$	0.29		$	(0.39	)	$	0.75		$	(0.17	)
		Discontinued operations		(0.22	)		(0.15	)		(0.28	)		(0.23	)
		Net earnings (loss) per share	$	0.07		$	(0.54	)	$	0.47		$	(0.40	)
	Diluted:
		Continuing operations	$	0.29		$	(0.39	)	$	0.74		$	(0.17	)
		Discontinued operations		(0.22	)		(0.15	)		(0.28	)		(0.23	)
		Net earnings (loss) per share	$	0.07		$	(0.54	)	$	0.46		$	(0.40	)
Cash dividends per share			$	0.085		$	0.085		$	0.255		$	0.255

STEWART & STEVENSON SERVICES, INC. AND SUBSIDIARIES
SEGMENT INFORMATION
(Dollars in thousands)

			Three Months Ended						Nine Months Ended
			October 30, 2004			November 1, 2003			October 30, 2004			November 1, 2003
Sales
	Tactical Vehicle Systems		$	133,431		$	110,036		$	412,951		$	329,378
	Power Products			129,813			128,901			374,212			382,621
	Engineered Products			25,356			29,231			64,560			93,604
	Distributed Energy Solutions			2,560			7,492			13,238			40,084
		Total sales	$	291,160		$	275,660		$	864,961		$	845,687
Operating profit (loss)
	Tactical Vehicle Systems		$	15,972		$	16,770		$	54,152		$	51,811
	Power Products			3,243			(6,627	)		4,902			(15,565	)
	Engineered Products			815			(1,532	)		133			(1,405	)
	Distributed Energy Solutions			(5,163	)		(20,720	)		(16,075	)		(27,374	)
	Corporate expenses, net			(3,089	)		(5,877	)		(10,369	)		(15,176	)
		Total operating profit (loss)		11,778			(17,986	)		32,743			(7,709	)
	Interest expense			534			640			1,487			2,576
	Interest and investment income			(411	)		(142	)		(997	)		(1,201	)
Earnings (loss) from continuing operations before income taxes			$	11,655		$	(18,484	)	$	32,253		$	(9,084	)
Operating profit (loss) percentage
	Tactical Vehicle Systems			12.0	%		15.2	%		13.1	%		15.7	%
	Power Products			2.5			(5.1	)		1.3			(4.1	)
	Engineered Products			3.2			(5.2	)		0.2			(1.5	)
	Distributed Energy Solutions			(201.7	)		(276.6	)		(121.4	)		(68.3	)
	Consolidated			4.0	%		(6.5	)%		3.8	%		(0.9	)%

STEWART & STEVENSON SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands, except share data)

			October 30, 2004			January 31, 2004
			(Unaudited)
Assets
Current Assets:
	Cash and cash equivalents		$	75,599		$	53,959
	Short-term investments			7,430			7,745
	Accounts receivable, net			130,086			150,102
	Recoverable costs and accrued profits not yet billed			25,863			21,653
	Inventories			140,185			146,277
	Excess of current cost over LIFO values			(42,546	)		(41,311	)
	Deferred income tax asset			23,548			20,349
	Income tax receivable			8,594			25,846
	Other current assets			6,250			17,240
	Total assets of discontinued operations			69,373			44,715
		Total Current Assets		444,382			446,575
Property, Plant and Equipment, net				124,382			135,417
Deferred Income Tax Asset				5,533			12,205
Intangibles and Other Assets, net				9,411			9,263
		Total Assets	$	583,708		$	603,460
Liabilities and Shareholders' Equity
Current Liabilities:
	Notes payable		$	1,512		$	1,932
	Current portion of long-term debt			250			250
	Accounts payable			66,337			67,996
	Accrued payrolls and incentives			21,791			17,445
	Billings in excess of incurred costs			35,173			69,376
	Estimated losses on uncompleted contracts			6,611			16,306
	Other current liabilities			47,645			41,164
	Total liabilities of discontinued operations			27,578			8,472
		Total Current Liabilities		206,897			222,941
Long-Term Debt, net of current portion				25,883			26,260
Accrued Postretirement Benefits and Pension				42,622			52,056
Other Long-Term Liabilities				3,724			4,720
	Total Liabilities			279,126			305,977
Shareholders' Equity:
	Common stock, without par value, 100,000,000 shares authorized; 28,780,273 and 28,644,510 shares issued, respectively			58,733			57,056
	Accumulated other comprehensive loss			(26,173	)		(25,534	)
	Retained earnings			272,022			265,961
		Total Shareholders' Equity		304,582			297,483
		Total Liabilities and Shareholders' Equity	$	583,708		$	603,460

STEWART & STEVENSON SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)

				Three Months Ended						Nine Months Ended
				October 30, 2004			November 1, 2003			October 30, 2004			November 1, 2003
				(Unaudited)						(Unaudited)
Operating Activities
	Net earnings (loss)			$	2,083		$	(15,441	)	$	13,402		$	(11,536	)
	Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
		Net loss from discontinued operations			6,292			4,162			8,085			6,772
		Deferred tax expense (benefit)			(2,471	)		2,513			3,734			82
		Provision for excess and obsolete inventory			—			4,700			—			4,700
		Depreciation and amortization			7,679			7,403			22,268			21,609
		Gain on sale of business assets, net			(760	)		—			(2,604	)		—
		Change in operating assets and liabilities net of the effect of discontinued operations:
			Accounts and notes receivable, net		(3,767	)		2,474			22,337			8,300
			Recoverable costs and accrued profits not yet billed		1,237			(4,134	)		(4,210	)		(36,955	)
			Inventories		(4,906	)		2,010			1,899			7,288
			Other current and noncurrent assets		(857	)		(5,052	)		20,080			(10,000	)
			Accounts payable		2,635			(8,127	)		(1,659	)		4,321
			Accrued payrolls and incentives		6,441			4,902			4,346			2,463
			Billings in excess of incurred costs		3,269			(3,405	)		(34,204	)		5,638
			Estimated losses on uncompleted contracts		(12,058	)		—			(9,695	)		—
			Other current liabilities		2,323			6,423			6,391			11,052
			Accrued postretirement benefits and pension		(10,148	)		(10,421	)		(9,434	)		(7,138	)
			Other, net		166			(22	)		(1,412	)		(263	)
Net Cash Provided by (Used in) Continuing Operations					(2,842	)		(12,015	)		39,324			6,333
Net Cash Used in Discontinued Operations					(8,301	)		(4,660	)		(17,268	)		(3,496	)
Net Cash Provided by (Used in) Operating Activities					(11,143	)		(16,675	)		22,056			2,837
Investing Activities
	Capital expenditures, excluding rental equipment				(4,828	)		(7,123	)		(10,910	)		(16,119	)
	Additions to rental equipment				(2,038	)		(3,053	)		(5,004	)		(9,357	)
	Proceeds from sale of businesses				891			—			4,523			—
	Acquisition of businesses				—			(965	)		—			(1,374	)
	Proceeds from disposal of property, plant and equipment				3,296			3,405			17,220			4,907
	Change in short-term investments				3,505			3,115			315			(7,815	)
	Net investing activities of discontinued operations				38			550			112			550
		Net Cash Provided by (Used in) Investing Activities			864			(4,071	)		6,256			(29,208	)
Financing Activities
	Change in short-term notes payable				(311	)		(226	)		(420	)		866
	Payments on long-term borrowings				(250	)		(250	)		(250	)		(30,250	)
	Dividends paid				(2,465	)		(2,428	)		(7,341	)		(7,273	)
	Proceeds from exercise of stock options				89			622			1,339			1,518
		Net Cash Used in Financing Activities			(2,937	)		(2,282	)		(6,672	)		(35,139	)
Increase (decrease) in cash and cash equivalents					(13,216	)		(23,028	)		21,640			(61,510	)
Cash and cash equivalents, beginning of period					88,815			69,512			53,959			107,994
Cash and cash equivalents, end of period				$	75,599		$	46,484		$	75,599		$	46,484

STEWART & STEVENSON SERVICES, INC. AND SUBSIDIARIES
SELECTED OTHER INFORMATION
Continuing Operations

	ORDER BACKLOG
($ Millions)	November 1, 2003		January 31, 2004		May 1, 2004		July 31, 2004		October 30, 2004
Tactical Vehicle Systems	$	550.9	$	453.0	$	591.2	$	496.7	$	450.9	*
Power Products		51.7		26.4		29.3		44.2		31.3
Engineered Products		22.3		20.1		30.9		26.6		47.1
Distributed Energy Solutions		23.0		19.5		14.1		10.6		9.4
	$	647.9	$	519.0	$	665.5	$	578.1	$	538.7
	TACTICAL VEHICLE SYSTEMS UNIT DELIVERIES
	Fiscal 2003
	1Q		2Q		3Q		4Q		Total
Trucks		631		644		585		621		2,481
Trailers		132		126		121		130		509
		763		770		706		751		2,990
Sales (millions)	$	111	$	108	$	110	$	116	$	445
												Fiscal 2005
	Fiscal 2004
Estimated Unit Deliveries
	1Q		2Q		3Q		4Q*		Total*			1Q*
Trucks		743		751		683		627		2,804		607
Trailers		204		201		146		179		730		291
		947		952		829		806		3,534		898
Sales (millions)	$	139	$	141	$	133	$	127	$	541

*Estimated based on current US Army forecast and other data.
See cautionary statements above for important information regarding forward-looking statements.

STEWART & STEVENSON SERVICES, INC. AND SUBSIDIARIES
RESTATED SEGMENT INFORMATION
(Dollars in Thousands)

			Three Months Ended (Unaudited)
			October 30, 2004			July 31, 2004			May 1, 2004			January 31, 2004			November 1, 2003			August 2, 2003			May 3, 2003
Sales
	Tactical Vehicle Systems		$	133,431		$	140,737		$	138,783		$	116,308		$	110,036		$	108,365		$	110,977
	Power Products			129,813			123,680			120,719			127,360			128,901			127,886			125,834
	Engineered Products			25,356			21,936			17,268			17,695			29,231			38,262			26,111
	Distributed Energy Solutions			2,560			6,235			4,443			4,784			7,492			19,986			12,606
		Total sales	$	291,160		$	292,588		$	281,213		$	266,147		$	275,660		$	294,499		$	275,528
Operating profit (loss)
	Tactical Vehicle Systems		$	15,972		$	18,722		$	19,458		$	16,039		$	16,770		$	17,265		$	17,776
	Power Products			3,243			1,708			(49	)		(36,065	)		(6,627	)		(5,719	)		(3,219	)
	Engineered Products			815			1,120			(1,802	)		(9,665	)		(1,532	)		544			(417	)
	Distributed Energy Solutions			(5,163	)		(5,759	)		(5,153	)		(28,613	)		(20,720	)		(2,796	)		(3,858	)
	Corporate expenses, net			(3,089	)		(3,816	)		(3,464	)		(3,075	)		(5,877	)		(3,981	)		(5,318	)
	Total operating profit (loss)			11,778			11,975			8,990			(61,379	)		(17,986	)		5,313			4,964
	Interest expense			534			436			517			625			640			693			1,244
	Interest income			(411	)		(332	)		(254	)		(274	)		(142	)		(559	)		(500	)
Earnings (loss) from continuing operations before income taxes			$	11,655		$	11,871		$	8,727		$	(61,730	)	$	(18,484	)	$	5,179		$	4,220
Operating profit (loss) percentage
	Tactical Vehicle Systems			12.0	%		13.3	%		14.0	%		13.8	%		15.2	%		15.9	%		16.0	%
	Power Products			2.5			1.4			(0.0	)		(28.3	)		(5.1	)		(4.5	)		(2.6	)
	Engineered Products			3.2			5.1			(10.4	)		(54.6	)		(5.2	)		1.4			(1.6	)
	Distributed Energy Solutions			(201.7	)		(92.4	)		(116.0	)		(598.1	)		(276.6	)		(14.0	)		(30.6	)
	Consolidated			4.0	%		4.1	%		3.2	%		(23.1	)%		(6.5	)%		1.8	%		1.8	%

Note:

The historical segment information shown above has been restated to reflect the Airline Products Division, which is in the process of being sold, as a discontinued operation

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EXHIBIT 99.1

STEWART & STEVENSON SERVICES REPORTS THIRD QUARTER 2004 RESULTS Third Quarter Net Earnings were $0.07 per Diluted Share Net Earnings from Continuing Operations were $0.29 per Diluted Share
STEWART & STEVENSON SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (In thousands, except per share data)
STEWART & STEVENSON SERVICES, INC. AND SUBSIDIARIES SEGMENT INFORMATION (Dollars in thousands)
STEWART & STEVENSON SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands, except share data)
STEWART & STEVENSON SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands)
STEWART & STEVENSON SERVICES, INC. AND SUBSIDIARIES SELECTED OTHER INFORMATION Continuing Operations