Nov. 3, 2006 — Ryerson Inc. reported net income of $21.6 million on sales of $1.5 billion for the third quarter ended September 30, 2006.

Third-Quarter Results—The $21.6 million net income ($0.77 per diluted share) compares with net income of $22.2 million ($0.76 per diluted share) for the second quarter of 2006 and net income of $30.7 million ($1.18 per diluted share) for the third quarter of 2005. The third quarter of 2005 included a pretax pension curtailment gain of $21.0 million ($0.49 per diluted share), a $6.6 million pretax gain ($0.15 per diluted share) on the sale of assets, and a $2.1 million ($0.08 per diluted share) favorable income tax adjustment.

Sales of $1.5 billion reflect a 1.9% increase, sequentially, from the second quarter of 2006, and an 8.6% increase from the third quarter of 2005. Sequentially, tons shipped declined 4.8% on a per-day basis, largely reflecting normal seasonal slowness, while the average selling price per ton increased 8.7% from the second quarter of 2006. Year-over-year, tons shipped declined 5.4% on a per-day basis, while the average selling price per ton increased 16.6%.

"Market demand remained solid and prices continued to rise, especially in stainless," said Neil S. Novich, Chairman, President, and CEO of Ryerson. "Our price administration in the quarter was good, as we successfully passed through rising metals costs. Additionally, gross profit and operating profit would have been approximately $80 million, or $1.72 per diluted share, higher under FIFO inventory accounting than under our LIFO system. However, inventory management was unsatisfactory and our level is too high relative to market demand."

Gross profit per ton was $267 in the third quarter of 2006, compared to $265 in the second quarter of 2006 and $241 in the third quarter of 2005. The gross margin of 14.3 percent in the third quarter of 2006 compared with 15.4 percent in the second quarter of 2006 and 15.1 percent in the third quarter of 2005. Gross profit per ton increased in the third quarter of 2006 as a result of rising metal prices, while the gross margin percentage declined primarily due to the pass through of higher nickel surcharges on stainless steel.

Operating expenses per ton were $204, which compare with $204 in the second quarter of 2006 and $165 in the third quarter of 2005 ($197 per ton, excluding the gain on sale of assets and the pension curtailment gain). The year-over-year increase in operating expenses per ton was primarily due to inflationary pressure, particularly in energy and employee benefit costs, and SAP implementation costs, partially offset by a lower credit loss expense. As of the end of the third quarter, annualized cost synergies associated with the integration of Integris approached $40 million.

Interest expense of $18.8 million in the third quarter compares to interest expense of $15.8 million in the second quarter of 2006 and interest expense of $19.9 million in the year-ago period.

Acquisitions and Joint Ventures—"We continue to advance our acquisition and joint venture strategy, purchasing companies that complement our existing operations in North America and pursuing international ventures that provide access to faster growing markets," said Novich.

Subsequent to the end of the quarter, on October 4, Ryerson acquired Lancaster Steel Service Co., Inc., a carbon steel specialist with extensive processing capabilities and revenues of $66 million for the year ending June 30, 2006. "Lancaster Steel's operations in western and central New York State complement our existing capabilities and create cross-selling opportunities."

On October 31, 2006, Ryerson established its joint venture in China, VSC-Ryerson China Limited. Ryerson contributed $28.3 million in cash for its initial interest of 40%. The existing Chinese metals service center network generated revenues of approximately $140 million for the fiscal year ended March 31, 2006. "Our investment provides an entrée into the world's largest metals consuming market and a platform from which to service the growing needs of our U.S. customers who have established a presence in China," said Novich.

Financial Condition—Ryerson ended the third quarter of 2006 with a debt-to-capital ratio of 62.7%, compared to 60.3% at the end of the second quarter. During the quarter, inventory, on a current value basis, increased $304.2 million, approximately one-third of which was the result of higher metals costs. On July 17, the company repaid its $100 million 9 1/8% Notes with borrowings under the revolving credit facility. As a result, availability under the credit facility was $323 million at the end of the third quarter of 2006, compared to $527 million at the end of the second quarter.

"One of our primary objectives remains improving our inventory management, and, as previously stated, we plan to get to five turns by the end of 2007," stated Novich.

Outlook—"During the fourth quarter, we expect typical seasonal slowness to be exacerbated by high inventories throughout the supply chain," concluded Novich. "Although we see some softness in certain markets, we remain optimistic going into 2007, with an expectation that the economy will continue to expand at a moderate pace."

Ryerson Inc. is a leading distributor and processor of metals in North America, 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, China and India.