Russel Metals Reports Second Quarter 2008 Net Earnings of $1.25 Per Share

TORONTO, ONTARIO–(Marketwire – Aug. 5, 2008) – Russel Metals Inc. (TSX:RUS) reported second quarter net earnings of $79 million or $1.25 per share. Net earnings reported in the second quarter of 2007 were $29 million or $0.47 per common share. Consolidated revenues for the second quarter of 2008 were $856 million, an increase of 31% from the second quarter of 2007 revenues of $653 million and an increase of 20% from $712 million reported in the first quarter of 2008.

Revenues for our energy tubular products segment were $235 million for the second quarter of 2008 compared to $167 million for the second quarter of 2007. Steel price increases and increased volumes in our U.S. energy operations and our operation servicing the oil sands of Northern Alberta produced operating profits of $29 million for the second quarter of 2008 compared to $11 million for the second quarter of 2007. The strength of our U.S. energy operations and Alberta oil sands businesses outweighed the seasonal downturn in our operations that service Alberta-based gas drilling.

Metals service center revenues increased 34% to $497 million for the second quarter of 2008 compared to 2007. Operating profits for our metals service centers for the second quarter of 2008 were $72 million, up $41 million from the second quarter of 2007. The metals service centers results strengthened from the second quarter of 2007 due to steel price increases initiated in the first quarter of 2008, improved same store volumes and the acquisition of JMS Russel Metals.

Steel distributors produced operating profits of $26 million for the second quarter of 2008 compared to $12 million for the second quarter of 2007. The increase is a result of higher margins which more than offset the reduced volumes. Volumes in this segment were lower compared to 2007 due to lower import levels as strong worldwide steel demand, higher steel prices outside of the region and the weak U.S. dollar have made imports uneconomical for some products.

Bud Siegel, President and Chief Executive Officer, commented, “We are extremely pleased with our results for the second quarter. The primary sectors serviced by our metals operations have outperformed the rest of the Canadian economy and even our same store volumes were up in the second quarter. In addition, our energy tubular products segment had increased volumes which further strengthened their results. Although economic uncertainty is evident in certain sectors, many of the sectors we service remain buoyant.”

Free cash flow for the second quarter 2008 was $79 million and was $116 million for the six months ended June 30, 2008. Our focus on working capital management allowed the Company to moderate the impact of steel price increases and net working capital increased by only $8 million for the first six months of 2008. Marion Britton, Vice President and Chief Financial Officer, commented “Our strong cash flow over the cycle supports our industry leading dividend policy. The strength of our year to date cash flow in an environment of significant steel price increases reflects positively on the working capital management skills of our operations.”

The Board of Directors approved a quarterly dividend of $0.45 per common share and a supplemental dividend of $0.05 per common share payable September 15, 2008 to shareholders of record as of August 28, 2008.

The Company will be holding an Investor Conference Call on Wednesday, August 6, 2008 at 9:00 a.m. ET to review its second quarter results for 2008. The dial-in telephone numbers for the call are 416-641-6130 (Toronto and International callers) and 1-866-226- 1793 (U.S. and Canada). Please dial in 10 minutes prior to the call to ensure that you get a line.

A replay of the call will be available at 416-695-5800 (Toronto and International callers) and 1-800-408-3053 (U.S. and Canada) until midnight, Wednesday, August 13, 2008. You will be required to enter pass code 3264763 in order to access the call.

Additional supplemental financial information is available in our investor conference call package located on our website at www.russelmetals.com.

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, JMS Russel Metals, Leroux Steel, McCabe Steel, Megantic Metal, Metaux Russel, Metaux Russel Produits Specialises, Milspec Industries, Pioneer Pipe, Russel Metals Specialty Products, Russel Metals Williams Bahcall, Spartan Steel Products, Sunbelt Group, Triumph Tubular & Supply, Wirth Steel and York-Ennis.

Statements contained in this press release or on the related conference call that relate to Russel Metals’ beliefs or expectations as to certain future events are not statements of historical fact and are forward-looking statements. Russel Metals cautions readers that there are important factors, risks and uncertainties, including but not limited to economic, competitive and governmental factors affecting Russel Metals’ operations, markets, products, services and prices that could cause its actual results, performance or achievements to be materially different from those forecasted or anticipated in such forward looking statements.

The forward-looking statements in this document reflect management’s current beliefs and are based on information currently available to management. The material assumptions applied in making the forward-looking statements in this document include the following: demand from the manufacturing, resource and construction segments of the Canadian economy will be consistent with what we experienced in the second quarter of 2008, oil and gas prices will not change materially, the recent stability in the price of steel will either remain constant or increase, and the Canadian dollar will maintain recent gains while not appreciating significantly. Although the forward-looking statements contained in this document are based upon what management believes to be reasonable estimates and assumptions, Russel Metals cannot ensure that actual results will not be materially different from those expressed or implied by these forward-looking statements.

__________________________ RUSSEL METALS INC. ______________________CONSOLIDATED BALANCE SHEETS ______________________________(UNAUDITED) ________________________________________________June 30,____December 31,

lions)__________________________________________2008____________2007 ——————————————————————– —– ASSETS Current Cash and cash equivalents______________________ $ 235.5________ $ 181.8 Accounts receivable______________________________ 478.4__________ 341.8 Inventories______________________________________ 620.5__________ 572.6 Prepaid expenses and other assets__________________ 5.5____________ 8.5 Income taxes________________________________________0.3____________ 3.9 ——————————————————————– —– ________________________________________________ 1,340.2________ 1,108.6 Property, Plant and Equipment______________________231.8__________ 227.9 Deferred Financing Charges__________________________ 0.2____________ 0.3 Future Income Tax Assets____________________________ 1.0____________ 1.0 Other Assets________________________________________ 9.0____________12.1 Goodwill and Intangibles____________________________54.5____________53.4 ——————————————————————– —– ______________________________________________ $ 1,636.7______ $ 1,403.3 ——————————————————————– —– ——————————————————————– —– LIABILITIES AND SHAREHOLDERS’ EQUITY Current Accounts payable and accrued liabilities________$ 442.7________ $ 294.2 Income taxes payable______________________________ 19.6____________ 2.8 Current portion long-term debt______________________1.1____________ 0.9 ——————————————————————– —– __________________________________________________ 463.4__________ 297.9 Derivatives________________________________________ 39.1____________39.5 Long-Term Debt____________________________________ 180.4__________ 174.9 Pensions and Benefits________________________________1.3____________ 1.4 Future Income Tax Liabilities________________________6.8____________ 5.8 ——————————————————————– —– __________________________________________________ 691.0__________ 519.5 ——————————————————————– —– Shareholders’ Equity Common shares____________________________________ 507.3__________ 504.2 Retained earnings________________________________ 462.8__________ 411.7 Contributed surplus________________________________ 8.6____________ 6.2 Accumulated other comprehensive loss______________(33.0)__________(38.3) ——————————————————————– —– __________________________________________________ 945.7__________ 883.8 ——————————————————————– —– ______________________________________________ $ 1,636.7______ $ 1,403.3 ——————————————————————– —– ——————————————————————– —– ____________________________ RUSSEL METALS INC. ______________________CONSOLIDATED STATEMENTS OF EARNINGS ________________________________(UNAUDITED) (millions, except per______Quarters ended June 30, Six months ended June 30, share data)______________________ 2008______2007__________ 2008______ 2007 ——————————————————————– ——– Revenues________________________$ 856.3__$__652.8______$ 1,568.6__$ 1,336.5 Cost of sales and operating expenses________________________ 734.9____ 603.9________1,395.1____1,241.6 ——————————————————————– ——– Earnings before the following____ 121.4______48.9__________173.5______ 94.9 Other income (expense)______________0.7________ -__________ (2.5)________ – Interest expense, net______________(2.3)____ (1.6)__________(4.4)______(3.4) ——————————————————————– ——– Earnings before income taxes______119.8______47.3__________166.6______ 91.5 Provision for income taxes________(41.0)____(18.0)________ (58.6)____ (33.5) ——————————————————————– ——– Net earnings for the period____ $__78.8__$__ 29.3______$__ 108.0__$____58.0 ——————————————————————– ——– ——————————————————————– ——– Basic earnings per common share__________________________$__1.25__$__ 0.47______$____1.71__$____0.93 ——————————————————————– ——– ——————————————————————– ——– Diluted earnings per common share__________________________$__1.24__$__ 0.47______$____1.71__$____0.92 ——————————————————————– ——– ——————————————————————– ——– ______________________________RUSSEL METALS INC. ________________ CONSOLIDATED STATEMENTS OF RETAINED EARNINGS ________________________________ (UNAUDITED) ________________________________________ Quarters ended____Six months ended ________________________________________________June 30,____________June 30, (millions)________________________________2008____ 2007______ 2008____ 2007 ——————————————————————– ——– Retained earnings, beginning of the period, as previously reported________$ 412.5__$ 414.3____$ 411.7__$ 411.1 Transitional adjustment – financial instruments______________________ -________-__________- ____ (0.5) ——————————————————————– ——– Retained earnings, beginning of the period, as restated____________________ 412.5____414.3______411.7____410.6 Net earnings for the period______________ 78.8____ 29.3______108.0____ 58.0 Dividends on common shares______________ (28.5)__ (28.3)____ (56.9)__ (53.3) ——————————————————————– ——– Retained earnings, end of the period__ $ 462.8__$ 415.3____$ 462.8__$ 415.3 ——————————————————————– ——– ——————————————————————– ——– ____________________________ RUSSEL METALS INC. ____________ CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ________________________________(UNAUDITED) ________________________________________________ Quarters________Six months ____________________________________________Ended June 30,____Ended June 30, (millions)________________________________ 2008______2007____ 2008____ 2007 ——————————————————————– ——– Net earnings for the period____________ $__78.8__ $__29.3__$ 108.0__$__58.0 ——————————————————————– ——– Other comprehensive income (loss) Unrealized foreign exchange gains __(losses) on translating financial __statements of self sustaining foreign __operations (U.S. subsidiaries)__________ (2.6)____(16.2)____ 9.6____(18.5) Gains and (losses) on derivatives __designated as net investment hedges______ 0.5______ 5.6____ (1.6)____ 6.4 Gains and (losses) on derivatives __designated as cash flow hedges__________ (2.2)______1.4____ (2.7)____ 2.3 ——————————————————————– ——– Other comprehensive income (loss)__________(4.3)____ (9.2)____ 5.3____ (9.8) ——————————————————————– ——– Comprehensive income____________________$__74.5__ $__20.1__$ 113.3__$__48.2 ——————————————————————– ——– ——————————————————————– ——– ______________________________ RUSSEL METALS INC. ______CONSOLIDATED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE LOSS __________________________________(UNAUDITED) ________________________________________________Quarters________Six months __________________________________________ Ended June 30,____Ended June 30, (millions)________________________________ 2008____ 2007____ 2008____ 2007 ——————————————————————– ——- Accumulated net unrealized foreign currency translation gains (losses) Balance, beginning of period__________ $ (33.5) $ (13.5) $ (45.7) $ (11.2) Net unrealized gain (loss) on __translation of net investment __in foreign operations____________________(2.6)__ (16.2)____ 9.6____(18.5) ——————————————————————– ——- Balance, end of period__________________ (36.1)__ (29.7)__ (36.1)__ (29.7) ——————————————————————– ——- Accumulated net unrealized loss on cash flow and net investment hedges Balance, beginning of period______________ 4.8____ (7.6)____ 7.4________- Transitional adjustment______________________-________-________- ____ (9.3) Unrealized gains (losses) on items __designated as net investment hedges______ 0.5______5.6____ (1.6)____ 6.4 Unrealized gains (losses) on items __designated as cash flow hedges__________ (2.2)____ 1.4____ (2.7)____ 2.3 ——————————————————————– ——- Balance, end of period____________________ 3.1____ (0.6)____ 3.1____ (0.6) ——————————————————————– ——- Total accumulated other comprehensive loss____________________ $ (33.0) $ (30.3) $ (33.0) $ (30.3) ——————————————————————– ——- ——————————————————————– ——- ____________________________ RUSSEL METALS INC. ____________________CONSOLIDATED CASH FLOW STATEMENTS ______________________________ (UNAUDITED) ______________________________________Quarters ended____ Six months ended ____________________________________________ June 30,____________ June 30, (millions)____________________________ 2008____ 2007______ 2008______2007 ——————————————————————– —— Operating activities Net earnings______________________ $__78.8__$__29.3__ $__108.0__$__ 58.0 Depreciation and amortization__________5.7______5.0______ 11.4______ 9.9 Future income taxes____________________1.2______1.5________1.3______ 1.9 Gain on sale of fixed assets__________ 0.1______0.1________0.1______(0.6) Stock-based compensation______________ 0.4______3.1________2.9______ 3.9 Pension expense (funding)________________-______0.3______ (0.1)____ (1.3) Other________________________________ (0.7)____ 0.1________2.7______ 0.3 ——————————————————————– —— Cash from operating activities before working capital________________85.5____ 39.4______126.3______72.1 ——————————————————————– —— Changes in non-cash working capital items __Accounts receivable________________ (62.4)____18.4____ (133.7)____(38.6) __Inventories________________________ (55.3)__ (12.7)____ (42.6)______9.6 __Accounts payable and accrued __ liabilities________________________ 90.1____(14.2)____ 145.8______18.8 __Current income taxes________________ 13.1____ (4.1)______21.9____ (12.7) __Other________________________________(0.9)____(0.8)______ 0.2______ 0.1 ——————————————————————– —— Change in non-cash working capital____(15.4)__ (13.4)______(8.4)____(22.8) ——————————————————————– —— Cash from operating activities________ 70.1____ 26.0______117.9______49.3 ——————————————————————– —— Financing activities Issue of common shares – options __exercised____________________________ 1.5____ 10.0________2.5______10.8 Dividends on common shares__________ (28.5)__ (28.3)____ (56.9)____(53.3) Repayment of long-term debt__________ (0.2)______ -______ (0.4)________- ——————————————————————– —— Cash used in financing activities____ (27.2)__ (18.3)____ (54.8)____(42.5) ——————————————————————– —— Investing activities Purchase of fixed assets______________(6.1)____(4.9)____ (10.4)____ (8.6) Proceeds on sale of fixed assets______ 0.1________- ________0.1______ 1.3 Other________________________________ (0.8)____(0.5)______(0.3)______0.2 ——————————————————————– —— Cash used in investing activities______(6.8)____(5.4)____ (10.6)____ (7.1) ——————————————————————– —— Effect of exchange rates on cash______ (0.2)____(2.7)______ 1.2______(2.9) ——————————————————————– —— Increase (decrease) in cash and cash equivalents______________________35.9____ (0.4)______53.7______(3.2) Cash and cash equivalents, beginning of the period______________199.6____207.1______181.8____ 209.9 ——————————————————————– —— Cash and cash equivalents, end of the period__________________$ 235.5__$ 206.7__ $__235.5__$__206.7 ——————————————————————– —— ——————————————————————– —— Supplemental Cash flow information: Income taxes paid____________________$ 25.5__ $ 21.6____ $ 35.7____$ 44.9 Interest paid________________________$__0.1__ $____-____ $__7.5____$__7.6

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