JAMES S. MARLEN Chairman of the Board, President and Chief Executive Officer

“With the divestiture of Coatings,the Company has been transformed into a more streamlined, focused business with a concentration in the infrastructure, energy and water industries. I am optimistic about the Company’s long-term potential and am pleased to report the record net income of $52.2 million and return on equity of nearly 16% in 2006.”

Ameron had an outstanding year in 2006 and again achieved record net income and earnings per share. Net income totaled $52.2 million in 2006, compared to $32.6 million in 2005. Earnings per share reached $5.88 in 2006, compared to 2005 earnings of $3.80 per share. The performance was broad-based as most of Ameron’s businesses had record earnings. Consolidated sales increased to $549.2 million, compared to sales of $494.8 million in 2005. In addition, Ameron’s unconsolidated joint-venture companies had sales of $313 million, compared to $308 million in 2005.

The Company’s record performance in 2006 continued the earnings growth momentum of the last several years. Maintaining the consistency and quality of earnings is a major strategic objective for the Company. This should translate into the creation of shareholders’ value and greater returns for our shareholders. Shareholders continue to benefit from the financial success as total shareholder returns compare favorably to returns of the broad market. Over the past five years, Ameron’s total return to shareholders exceeded 150%.

The Fiberglass-Composite Pipe Group had record sales and segment income in 2006 as all operations in the U.S., Europe and Asia had improved performances. The sales gain was led by a significant increase in sales of Centron oilfield piping due to the continued strong demand primarily from oil companies in North America. Sales from Ameron’s subsidiary operations in Singapore and Malaysia grew significantly, primarily as a result of the new pipe plant in Malaysia which came on line in 2006. Operations in the U.S. and Europe also generated double-digit sales growth, with the concentration on oil-related applications, industrial markets, including water and power generation, and the fuel-handling market in the U.S. The strength of oilfield investment and the multi-year backlog of shipyards in Korea, Japan, Singapore and China bode well for the Group’s current and future prospects.

Ameron’s Infrastructure Products Group, which consists of the Pole Products Division and the Ameron Hawaii Division, had record sales and segment income in 2006. The sales growth was broad-based as all construction markets served by the Group experienced favorable conditions. Pole Products continued to penetrate the southeastern U.S. residential housing market for decorative concrete lighting poles. In addition, sales in the western U.S. benefited from the strength of the housing market and were also positively affected by a program at a major utility in California to replace steel poles with decorative concrete poles. The Ameron Hawaii Division had improved sales on both Oahu and Maui as a result of the strong Hawaiian construction markets, including residential, commercial and military. Sales activity was particularly strong on Maui. Although the housing market has softened, the outlook for the Infrastructure Products Group’s other construction markets remains firm.

The Water Transmission Group had lower sales and significantly lower segment income in 2006, compared to the strong performance in 2005. The sales decline was attributable to the anticipated cyclical slowdown in the water pipe market in the western U.S. The decrease in water pipe sales was offset partially by higher sales of large-diameter towers to the wind-energy market. As a result of the softness in the water infrastructure market, there are fewer major projects in progress or scheduled to bid early in 2007; however, bidding is expected to increase later in 2007. The short-term outlook for the Water Transmission Group is for a steady, substantial recovery. Longer term, the outlook is positive due to the need to upgrade the water infrastructure systems throughout the U.S. and the growth prospects for wind energy.

TAMCO, Ameron’s 50%-owned, steel mini-mill in California, also had record sales and net income in 2006. The prospects for TAMCO continue to be solid.

On August 1, 2006, the Company completed its divestiture of the Performance Coatings & Finishes Group ("Coatings Business") to PPG Industries, Inc., and the financial results of the Coatings Business are presented as discontinued operations. The divestiture of the Coatings Business was a critical strategic decision. The Coatings Business historically did not meet the Company’s return on capital objectives. Ameron without the Coatings Business is streamlined, with more focus in businesses with higher returns and greater growth potential. The three remaining business units are market leaders that have growth opportunities in major segments such as infrastructure, energy and water.

Proceeds from the sale of the Coatings Business further strengthen the Company’s financial position. The Company has and will continue to evaluate all cash deployment options, including organic growth opportunities, acquisitions of closely-related businesses, share repurchases and dividend options.

The Company is pursuing a variety of programs aimed at growing and improving the quality of its businesses. The growth initiatives cover a broad spectrum of opportunities, including new product development, product differentiation, geographic and market expansions and acquisitions. A representative example of initiatives in process is the wind-tower project.

A key strategic focus in the Water Transmission Group is diversification. During 2006, the business initiated full commercialization of large-diameter wind towers to support the rapid growth of the wind-energy market. During 2006, the business had wind-tower sales of approximately $13 million and began 2007 with a wind-tower backlog of nearly $100 million. The Company is completing a major capital investment program consisting of the construction of a new plant to produce wind towers.

In the near term, market conditions worldwide should remain strong, and I expect the Company to achieve solid financial results. Over the long term, I remain optimistic that the Company will realize its growth potential and continue to deliver outstanding returns for our shareholders.

JAMES S. MARLEN

Chairman of the Board, President and Chief Executive Officer