Aug. 4, 2006 — Ryerson Inc. reported net income of $22.2 million on sales of $1.5 billion for the second quarter ended June 30, 2006.

Second Quarter Results—The $22.2 million net income ($0.76 per diluted share) compares with net income of $32.4 million ($1.12 per diluted share) for the first quarter of 2006, and net income of $25.7 million ($0.99 per diluted share) for the second quarter of 2005. Results included a $21.0 million ($0.44 per diluted share) gain on the sale of assets from the sale of the company's U.S. oil and gas, tubular alloy, and bar alloy businesses.

Sales of $1.5 billion reflect a 4.2& increase, sequentially, from the first quarter of 2006, and an 0.8% decrease from the second quarter of 2005.

Comments—"Our financial performance, excluding the gain on the sale of assets in the first quarter of 2006, improved sequentially, due to continued strong demand, stable expenses, and greater synergy cost savings," said Neil S. Novich, Chairman, President, and CEO of Ryerson.

Since the acquisition of Integris Metals in January 2005, the company has achieved more than $30 million in annualized cost synergies related to the integration, and is on track to achieve the targeted $50 million in annualized cost savings. Ryerson also benefited from rising metals prices, which resulted in higher gross profit per ton. Additionally, rising prices drove the $59 million increase in the company's LIFO reserve during the second quarter of 2006.

Operating Results—Sequentially, compared to the first quarter of 2006, tons shipped increased 2.3%, while the average selling price increased 1.8%. Year-over-year, tons shipped declined 2.9% entirely due to the loss of two major customers and the sale of the oil and gas business in the first quarter of 2006, while the average selling price per ton increased 2.2%.

Gross profit per ton was $265, which compares to gross profit per ton of $259 in the first quarter of 2006 and $256 in the second quarter of 2005. Gross margins of 15.4% compared with 15.4% in the first quarter of 2006 and 15.2% in the second quarter of 2005.

Operating expenses per ton were $204, compared with operating expenses per ton of $181 in the first quarter of 2006 ($206 per ton, excluding the gain on sale of assets) and $185 in the second quarter of 2005. Year-over- year, operating expenses increased primarily due to inflationary pressure, particularly in energy and employee benefit costs; higher stock-based compensation expense, and SAP implementation costs. During the second quarter, the company continued the successful upgrade and integration of its information technology platform using software from SAP, including conversion of its largest division.

Interest expense of $15.8 million compares to interest expense of $15.0 million in the first quarter of 2006 and $20.6 million in the year-ago period.

Financial Condition—Ryerson ended the second quarter of 2006 with a debt-to-capital ratio of 60.3%, compared to 59.3% at the end of the first quarter. The company increased working capital to capitalize on stronger-than-expected market demand, resulting in a $90.6 million negative cash flow from operations. Inventory turns stayed roughly constant at 4.2. Availability under its credit facility was $527 million at the end of the quarter, which compares to $614 million at the end of the first quarter. On July 17, the company repaid its $100 million 9 1/8% Notes with borrowings under the revolving credit facility.

On July 9, 2006, the joint union representing Ryerson's Chicago-area facilities ratified a three-year collective bargaining agreement. Additionally, the United Steelworkers Union, representing six Ryerson service centers, ratified a new, three-year contract, effective August 1, 2006 through July 31, 2009.

Outlook—"Other than the seasonal slowness that typically affects the third quarter, we expect the business environment in the third quarter of 2006 to remain strong, consistent with second-quarter levels," concluded Novich.

Ryerson Inc. is a leading North American distributor and processor of metals, with 2005 revenues of $5.8 billion. The company services customers through a network of service centers across the United States and in Canada, Mexico, and India. On January 1, 2006, the company changed its name from Ryerson Tull, Inc. to Ryerson Inc.