Oct. 25, 2006 — Ipsco Inc. announced record net income of $197.1 million on record sales of $996.9 million for the third quarter, and net income of $504.2 million on sales of $2793.3 million for the first nine months of 2006.

Third Quarter Results—Record net income of $197.1 million ($4.15 per diluted share) compares to net income of $134.0 million ($2.78 per diluted share) for the third quarter of 2005 and net income of $156.4 million ($3.25 per diluted share) in the second quarter of 2006. Sales were a record $996.9 million, an increase of $270.8 million (37.3%) over the same quarter last year and up $103.3 million (11.6%) from the second quarter.

Total shipments of 1,042,000 tons set a new record, an increase of 194,000 tons compared to last year and 41,000 tons higher than the prior quarter. Ipsco's third quarter average product price of $957 per ton, also a new record, was up $101 per ton from a year ago and $64 per ton higher than the second quarter this year.

Year-to-Date Results—Net income of $504.2 million ($10.51 per diluted share) compares to net income of $415.6 million ($8.44 per diluted share) for the comparable period of the prior year.

Management Comments—"Record sales volume and higher margins driven by record average product pricing pushed earnings above the high end of our guidance for the quarter. In addition, earnings per share were favorably impacted by $0.37 as a result of a lower effective tax rate estimate for the year," said David Sutherland, President and CEO.

Operating Results—Steel mill product shipments of 691,000 tons reflect a 30.9% increase over last year and a 1.6% decrease from the record achieved in the prior quarter. Record tubular shipments of 351,000 tons, driven by greater large-diameter sales volumes and stronger U.S. energy tubular shipments, increased 9.5% over the prior year. Tubular shipments increased 17.3% from the prior quarter due primarily to increases in large-diameter pipe and Canadian energy tubular shipments partially offset by lower U.S. tubular shipments.

Gross income for the quarter was $314.6 million (31.6% of sales) compared to $224.9 million or 31.0% in the third quarter of 2005. Compared to the prior quarter, margins increased from 29.3% due to higher average steel mill product prices and a higher percentage of tubular product sales.

Operating income was $288.9 million (29.0%) compared to $201.8 million (27.8%) in the prior year and $242.9 million (27.2%) in the prior quarter. Operating income per ton was $277 compared to $238 per ton in the third quarter of 2005 and $243 per ton in the prior quarter.

Selling, general and administration expenses were $25.7 million for the quarter; $2.6 million higher than the same period last year and $7.0 million higher than the prior quarter. Share-based payment expense was $2.7 million in the third quarter compared to income of $1.4 million in the second quarter of 2006.

Foreign exchange loss for the quarter was $2.5 million ($0.04 per diluted share) compared to gains of $18.1 million ($0.24 per diluted share) in the prior year and $5.1 million ($0.07 per diluted share) in the prior quarter due to fluctuations in the Canadian/U.S. exchange rate.

In the third quarter, the estimate of the 2006 annual effective tax rate was reduced to 36.0%, resulting in an effective tax rate for the quarter of 32.0%. This compares to a 38.1% rate in the prior year and a 37.6% rate in the prior period. The reduction in the estimate of the tax rate is primarily due to the planned reinvestment of U.S. earnings through the announced pending acquisition of NS Group and the resulting decrease of potential U.S. withholding tax liability on remitting funds to Canada. Ipsco expects the acquisition will have a sustainable positive effect on the annual tax rate for the near term. The current quarter effective tax rate increased net earnings by $0.37 per diluted share as compared to the third quarter of 2005 and increased net earnings by $0.34 per diluted share compared to the prior quarter.

Outlook—Ipsco expects end-user demand for plate and energy tubular goods to continue to be strong. While energy prices have fallen recently, the company expects them to remain at levels sufficient to maintain high drilling activity and resultant demand for OCTG products. However, the company says that demand from service centers and distributor customers is declining in the fourth quarter as these customers reduce inventories. Ipsco says it will be adjusting its production accordingly, utilizing this opportunity to accelerate maintenance of the equipment that has been running at capacity during this record year and to better align internal inventories.

Ipsco also said it expects total shipment levels to remain comparable to the prior quarter. However, unabsorbed overhead and higher maintenance expenses resulting from these production curtailments and a less favorable product mix related to lower large diameter sales will cause some margin compression. While demand for large-diameter spiral pipe continues to be exceptionally strong, actual fourth quarter sales are expected to be lower than in the third quarter. Excluding any impact of the NS Group acquisition, foreign exchange gains or losses, and share price volatility, and assuming an effective tax rate of 36%, Ipsco forecasts fourth quarter earnings to be in the range of $3.30 to $3.50 per diluted share.

The NS Group transaction continues to be on schedule for closing prior to year end. The expiration of the Hart-Scott-Rodino waiting period satisfies one of the conditions to Ipsco’s acquisition of NS Group. Consummation of the merger, which is expected to occur in the fourth quarter 2006, remains subject to other customary closing conditions, including approval of the merger by NS Group's shareholders.

Ipsco operates steel mills at three locations and pipe mills at six locations in the United States and Canada. A low-cost North American steel producer, Ipsco has a combined annual steelmaking capacity of 3,500,000 tons. The company's tubular facilities produce a wide range of tubular products including oil and gas well casing and tubing, line pipe, standard pipe and hollow structurals. Steel can also be further processed at Ipsco's five temper leveling or coil processing facilities.