Feb. 20, 2007 — Russel Metals Inc. announced net earnings of $31 million for the fourth quarter and net earnings of $159 million for the year ended December 31, 2006.

Fourth Quarter Results—Net earnings of $31 million ($0.49 per share), reflect a 27% decrease from net earnings of $42 million ($0.82 per share) in the fourth quarter of 2005.

Full Year Results—Net earnings of $159 million ($2.65 per share), the second strongest annual earnings in the company's history, reflect an increase of 27% over fiscal 2005 net earnings of $125 million ($2.47 per share).

Management Discussion—Although the energy tubular products segment produced the strongest fourth quarter operating income ever, this was down from the third quarter, which is traditionally the weaker quarter. The company says this reflects the inconsistency in the oil and gas industry, where drilling activity levels had reached all-time highs but may have plateaued in the fourth quarter. The company further commented that it is unclear how the recent decline in oil and gas prices will impact its energy tubular products segment after the record operating profits of $77 million in 2006.

According to the company, the fourth-quarter decline in operating income in the metals service center segment reflects the impact of lower steel prices and lower demand levels in the quarter. North American service centers addressed an industry-wide inventory overhang going into the fourth quarter by cutting back their steel purchases to levels below end-user demand. This adversely impacted the steel mills and consequently steel prices from the mills dropped in the quarter.

Service center industry purchases from the mills are expected to improve during the first quarter, but the company expects service centers to continue reducing inventory levels during the first half of 2007. The company reduced its metals service centers inventory by $36 million in the fourth quarter while at the same time experiencing lower end-user demand. Although the company experienced strong demand in its Canadian metals service centers in the first half of 2006, demand weakened in the fourth quarter, which resulted in lower fourth-quarter revenues compared to the same period last year.

Fourth-quarter revenue for the steel distributors segment was adversely impacted as service center customers reduced their purchases to correct inventory levels and delayed delivery of the company’s inventory. These goods will be shipped within the first quarter of 2007.

"Overall we don't want to lose sight of the fact that our 2006 annual earnings were our second-strongest ever,” said Bud Siegel, President and CEO. “Fourth-quarter earnings reflected lower revenue levels, but I was pleased to see our margins remain strong and our EBIT to sales ratio remained at a historical high level in a challenging quarter.

“Our inventory levels are higher than required to support the current market conditions,” continued Siegel. “As previously mentioned, the metals service center segment successfully decreased inventory by $36 million in the fourth quarter, however the inventory in our other operating segments increased in the quarter. We are actively working to improve our inventory turns in all segments in the first half of 2007.

“The free cash flow generated in 2006 was $159 million, or $2.65 per share. Our already strong dividend was increased 60% to $1.60 per share in 2006, the fourth straight year of increased dividend returns to our shareholders. The balance sheet is currently under leveraged and we continue to evaluate internal and external growth opportunities. We believe that an opportunity to significantly add value for our shareholders through an acquisition, or acquisitions, will occur in due course. We have the financial strength in our balance sheet to execute any transaction that may occur in the sector."

Bud Siegel continued, "We remain focused on rewarding our shareholders. Our common shares are one of the top yielding securities in the S&P/TSX Composite Index, yielding approximately 6%. The strong 2006 earnings coupled with the financial strength of our balance sheet will enable the Company to selectively participate in the industry consolidation currently underway. Overall, I am pleased with the Company's 2006 achievements."

Russel Metals is one of the largest metals distribution companies in North America. It carries on business in three distribution segments: metals service centers, energy tubular products and steel distributors, under various names including Russel Metals, A.J. Forsyth, Acier Leroux, Acier Loubier, Acier Richler, Arrow Steel Processors, B&T Steel, Baldwin International, Comco Pipe and Supply, Fedmet Tubulars, Leroux Steel, McCabe Steel, Megantic Metal, Metaux Russel, Milspec Industries, Pioneer Pipe, Russel Metals Williams Bahcall, Spartan Steel Products, Sunbelt Group, Triumph Tubular & Supply, Wirth Steel and York-Ennis.