July 31, 2006 — Oregon Steel Mills, Inc. reported net income of $43.9 million on sales of $349.6 million for the second quarter of 2006.

Second Quarter Results—The $43.9 million net income ($1.22 per diluted share on 36 million shares) reflects an increase of 54.6% over second quarter of 2005 net income of $28.4 million ($.80 per diluted share on 35.8 million shares).

Sales of $349.6 million reflect a 4.4% increase compared with $335 million in the second quarter of 2005. Average sales price per ton was $889 compared to $882 in the second quarter of 2005. Total shipments were 393,200 tons compared to 2005 second quarter shipments of 379,600 tons. The increase in shipments was primarily due to increased shipments of plate and coil, structural tubing, rail and seamless pipe products, partially offset by lower shipments of welded pipe and rod and bar products. The company's seamless pipe mill, which was idled in November of 2003, was restarted in December of 2005 and shipped 21,200 tons of seamless pipe during the quarter. The increase in sales was primarily due to the higher shipments, addition of seamless pipe (currently the company's highest averaged selling priced product) and higher average selling prices for ERW pipe, rail and rod and bar products, partially offset by lower average selling prices for plate products.

The company also reported record quarterly operating income of $70.6 million (a record average of $179 per ton) and pretax income of $65.1 million. This compares to operating income for the second quarter of 2005 of $54 million, an average of $142 per ton. Operating margin as a percentage of sales increased from 16.1% to 20.2% as the company realized margin expansion in almost all of its product lines. Earnings before interest, taxes, depreciation and amortization (EBITDA) was $82.7 million, also a quarterly record. This compares to EBITDA of $64.4 million for the second quarter of 2005.

Increased operating income, operating margin and EBITDA compared to the second quarter of 2005 reflects higher shipments, higher average selling prices and lower steel slab costs at the company's Oregon Steel Division partially offset by higher scrap costs at the company's Rocky Mountain Steel Mills Division.

The company had an effective income tax rate of 32%, which compares to an effective income tax rate in the second quarter of 2005 of approximately 39%. The effective income tax rate varied from the combined state and federal statutory rate principally because the company reversed the remaining valuation allowance of $4 million ($.07 per diluted share) established in 2003 due to less uncertainty regarding the realization of deferred tax assets. The 2003 valuation allowance was established due to the uncertainties regarding the realization of certain federal and state net operating loss carry-forwards, state tax credits and alternative minimum tax credits. The company expects its effective income tax rate for all of 2006 to be approximately 35%.

Liquidity—At June 30, 2006, the company had $277.8 million of cash, cash equivalents and short-term investments. Total debt outstanding, net of cash, cash equivalents and short-term investments was $36.6 million at June 30, 2006 compared to $216.8 million at June 30, 2005 and $132.1 million at December 31, 2005. During the quarter, the company incurred capital expenditures of $23.5 million and depreciation and amortization was $10.9 million. For all of 2006, the company anticipates that capital expenditures and depreciation and amortization will be approximately $92 million and $46 million, respectively.

Outlook—For 2006, the company expects to ship approximately 1.74 million tons of products and generate approximately $1.6 billion in sales. In the Oregon Steel Division the product mix is expected to consist of approximately 520,000 tons of plate and coil, 320,000 tons of welded pipe and 80,000 tons of structural tubing. The RMSM Division expects to ship approximately 415,000 tons of rail, 325,000 tons of rod and bar products and 80,000 tons of seamless pipe.

Headquartered in Portland, Ore., Oregon Steel Mills is organized into two divisions. The Oregon Steel Division produces as-rolled and heat-treated steel plate, coil, welded pipe (both large and small diameter line pipe and casing) and structural tubing from plants located in Portland, Ore., and Camrose, Alta., Canada. The Rocky Mountain Steel Mills Division, located in Pueblo, Colo., produces steel rail, rod and bar, and seamless tubular products.