Russel Metals Inc. reported net earnings of $50.4 million on revenues of $597 million for the second quarter of 2004.

Second Quarter Results—Net earnings of $50.4 million ($1.03 per share) compare to second quarter 2003 net earnings of $3.5 million ($0.08 per share). Results included a pre-tax charge of $1.9 million related to final redemption of the 10% Senior Notes. The quarter also included a pre-tax charge of $0.5 million for restructuring and a $0.9 million loss from discontinued operations, net of tax. Earnings per share excluding these charges were $1.08.

Revenue of $597 million is up 16% from the first quarter 2004 and 76% from revenues of $340 million in the second quarter of 2003. Revenue excludes Acier Leroux, which was acquired in the third quarter of 2003.

Six Month Results—Net earnings of $75.7 million ($1.58 per share) was significantly above the six months ended June 30, 2003 net earnings of $7.1 million ($0.16 per share). Results include a pre-tax charge of $13.2 million related to the redemption of long-term debt, $1.4 million for restructuring and $1.0 million, net of tax, related to previously discontinued operations. Earnings per share, without these charges, was $1.82 for the six months ended June 30, 2004.

Revenue of $1,113 million represents a 57% increase over $707 million in the same period of 2003. Although the successful integration of Acier Leroux and Russel Metals makes a same store analysis difficult, a substantial portion of the quarter and six months 2004 revenue increase is attributable to the acquisition of Acier Leroux. Revenue in Quebec, where a majority of the Acier Leroux facilities are located, increased by 278% to $208.1 million in the first half.

Comments—Bud Siegel, President and CEO stated, "The positive momentum generated in the first quarter continued into the second quarter with all business segments experiencing stronger results. The healthy customer demand levels that began late in the first quarter of 2004 continued in the second quarter. Management's ongoing focus has been on ensuring adequate supply of product optimizing inventory levels. To date, we have been able to balance both and while inventory levels have increased in absolute dollars, our service center inventory levels, in tons, have decreased since year-end. The Russel Metals service center inventory turns were 5.0 for the second quarter."

Mr. Siegel continued, "We have reaped the short-term benefits associated with higher steel prices, but what sets Russel Metals apart is the Company is positioned for stronger long-term performance. The three major acquisitions completed over the last three years, the $25 million capital expenditure for a new cut-to-length facility in Ontario, and the recapitalization of the balance sheet during the first half of 2004 were strategic decisions that will increase our profitability over the cycle and provide the flexibility and capital structure necessary to react to business conditions and opportunities presented by the steel sector."

The Board of Directors approved a 50% increase in the quarterly dividend to $0.15 per common share payable September 15, 2004 to shareholders of record as of August 6, 2004. Brian Hedges, Executive Vice President and CFO stated, "The dividend increase reflects our confidence in the earnings levels and strong cash generated from operations. The second quarter generated positive cash from operating activities of $34.7 million despite a $44.1 million increase in inventory, which was very positive. Consequently our debt to equity ratio continued to improve from 1.1 at December 31, 2003 to 0.6 at June 30, 2004."

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