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

“Ameron celebrated its 100th year Anniversary in 2007 by achieving the highest net income and earnings per share in the history of the Company.”

TO OUR SHAREHOLDERS

This is truly a remarkable achievement and reflects on the strong attributes of the Company-People, Quality, Consistency, Innovation and Business Excellence. Founded in 1907 in Los Angeles, California, the Company has grown from a small, wooden concrete pipe manufacturing facility to a global operation with facilities in North America, South America, Asia, Europe and the Middle East. It also maintains joint venture companies in Saudi Arabia and in the U.S. Over the years, Ameron International Corporation, now traded on the New York Stock Exchange (AMN), has become a manufacturer of highly-engineered products and materials for the chemical, industrial, energy, transportation and infrastructure markets. Ameron is a leading producer of water transmission lines; fiberglass-composite pipe for transporting oil, chemicals and corrosive fluids; specialized materials and products used in infrastructure projects and wind towers for the energy market.

Ameron celebrated its 100th year Anniversary in 2007 by achieving the highest net income and earnings per share in the history of the Company. Net income totaled $67.2 million, which is $15.0 million higher than in 2006, an improvement of 29%. Earnings per share were at a record level of $7.40, compared to $5.88 per share achieved in 2006, an improvement of 26%. The growth in earnings was coupled with a solid growth in sales which increased 15% to $631.0 million, compared to $549.2 million in 2006. The Company’s unconsolidated joint ventures also achieved steady growth as sales reached $344 million, a 10% increase from 2006 sales of $313 million.

The record performance illustrates the diversity of the Company’s core businesses. The significant growth was led by the record sales and income performance by the Fiberglass-Composite Pipe Group and by Ameron Hawaii’s aggregates and ready-mix concrete business. TAMCO, Ameron’s 50%-owned steel mini-mill in California, also achieved record earnings. The Water Transmission Group continued to be confronted with a weak water infrastructure market and, in addition, incurred start-up costs in connection with the commercialization of large-diameter wind towers. Pole Products was impacted by the slowdown in the U.S. housing market and had lower sales.

The Company benefited from a lower effective tax rate due to increased earnings from foreign subsidiaries and tax benefits associated with the planned liquidation of a foreign subsidiary. Also, in connection with the divestiture of the Performance Coatings & Finishes Group, the Company had retained several properties which were subsequently sold and realized gains in 2007.

Shareholders have been rewarded for the earnings growth rate, earnings consistency and the Company’s long-term growth potential. Total shareholder return, consisting of stock price appreciation and dividends, was 120% in 2007 and over the past five years the total return to shareholders exceeded 300%. These returns to our shareholders far surpass the returns of the broad NYSE index and compare favorably to the returns of the Company’s peer group. We continue to believe that quality earnings growth and the judicious use of capital translate into the creation of shareholders value and, ultimately, improved returns for our shareholders. That remains the Company’s number one objective.

A review of the financial results by operating unit reflects a balanced performance.

The Fiberglass-Composite Pipe Group had record sales and income as sales increased 35% and segment income increased 65%. Market conditions were generally favorable in all key market segments worldwide, including marine, offshore, onshore oilfield, and chemical and industrial markets. Ameron’s operations in the U.S., Europe and Asia all had strong performances. In Singapore and Malaysia significant sales growth was achieved due to the continued strong demand from the shipbuilding industry, particularly in Korea, Japan, Singapore and China. The Asian operations also experienced solid growth in demand for piping for chemical and industrial applications, including downstream energy projects in the Middle East. The sales improvement in Europe was concentrated in a variety of industrial markets throughout Europe and in oilfield markets in North Africa. The U.S. operation experienced steady sales growth of fiberglass pipe used in fuel handling and in a variety of chemical and industrial applications, such as, power plants, oilfield tube liners and brine gathering lines. The Fiberglass-Composite Pipe Group entered 2008 with a record order backlog and expectations for another strong year.

The Infrastructure Products Group had higher sales and segment income as Ameron’s Hawaii Division had record sales and segment income which more than offset the lower results of the Pole Products Division. The construction sector on Oahu and Maui remained strong despite the slowing residential construction segment. Demand for ready-mix concrete and aggregates in the commercial, governmental, military and resort/timeshare sectors offset the lower volume in the residential market. Pole Products experienced weakness in the housing market in key markets in the Southeast U.S. and Southern California. Lower demand for decorative concrete lighting poles used in residential lighting caused by the housing slowdown more than offset gains from commercial and municipal applications and steel pole replacement programs being pursued by the business. Sales of steel poles used primarily for highway lighting and traffic signals remained strong driven by increased highway spending throughout the U.S. The short-term outlook for the Ameron Hawaii Division is positive as the Hawaiian construction sector remains strong. Pole Products is expected to continue to be confronted by the weak housing market which is not likely to recover in the near term. Longer term, the prospects for Pole Products are positive driven by growth opportunities for both decorative concrete lighting poles for residential lighting and steel poles for highway applications.

The Water Transmission Group had higher sales due to growth in wind tower sales which more than offset the lower sales of water pipe and protective linings as a result of continued softness in key water infrastructure markets in the Western U.S. The business incurred a loss in 2007 due to the lower pipe sales level, low pipe plant utilization and start-up costs associated with our introduction of wind towers. The water transmission pipeline markets in California, Arizona, and Nevada did not recover to the extent anticipated, while the market in Northern California improved. The need for new and upgraded water transmission pipelines in the Western U.S. is well established, and new infrastructure is required to support population and business growth. Over the near term major water infrastructure projects are planned that would provide the water needs to support the region; however, the timing of such projects remains uncertain. Wind tower sales increased significantly in 2007, and the Company has demonstrated the ability to manufacture high-quality wind towers for several major wind turbine customers. The market for wind towers is vibrant, and the demand should be sustainable given the benefits and competitive position of wind energy as an alternative source of renewable energy. The outlook for the wind tower business is favorable, while improvement in the water-pipe business is dependent on the timing of large-diameter water pipeline projects.

TAMCO achieved record net income in 2007 as earnings grew 11%. Demand for steel rebar in California, Nevada and Arizona, and in TAMCO’s principal market segments, infrastructure projects and highway construction, remained strong. Worldwide demand for steel remained high and steel prices continued to increase which resulted in TAMCO’s metal spread, a key driver for profitability, remaining above historical levels. The outlook for TAMCO is generally positive although commercial projects could be affected by a tighter credit market and residential-related commercial projects could slow.

The Company’s financial condition continued to strengthen in 2007 as available cash increased, and the ratio of debt to capital was further reduced to 14%. With available capital, the Company is positioned to finance organic growth opportunities while evaluating other cash redeployment options. Internal investment opportunities remain our preference. While we are objective regarding acquisitions, we will not pursue acquisitions for the sake of making an acquisition. Candidates must pass a rigorous risk/benefit assessment and be in the same or a closely-related business.

The key strategic focus for the Company is organic growth, and a number of strategic growth initiatives within the core businesses are being evaluated. These programs range from geographic expansion, new product development to product line expansions. Prime examples of these opportunities include: the introduction of wind towers, expansion into South America and entering the water and wastewater market with new technology. A capsule look at these programs is presented below:

South America Expansion
During the fourth quarter of 2007, the Company completed the acquisition of Polyplaster, Ltda, (“Polyplaster”), a polyester fiberglass pipe manufacturer that serves principally the water and industrial markets in Brazil. Concurrent with the acquisition, construction commenced on two new plants in Brazil to manufacture Centron“ onshore oilfield pipe and Bondstrand“ epoxy fiberglass pipe for marine, offshore and chemical and industrial applications. In addition to providing a strong market position and new manufacturing processes, Polyplaster provides a highly-trained work force and an experienced management team to help ensure the Company’s successful entry into the South America markets. Over the years, the Company has had success in South America, particularly in the water pipe market with APCI, Ameron’s wholly-owned subsidiary in Colombia, and similar progress is expected of the fiberglass pipe expansion. Polyplaster along with the new Centron and Bondstrand plants will provide the foundation to serve the growing South American market for fiberglass pipe.

Wind Towers
In 2006, the Water Transmission Group successfully introduced large-diameter wind towers to the expanding wind energy market. This program was part of a product diversification strategy aimed at capitalizing on the core manufacturing competencies of the Water Transmission Group. The initiative has been supported by a $35 million capital investment to provide the manufacturing capabilities and efficiencies to be successful. In 2006, wind tower sales totaled $13 million and, in 2007, increased to $45 million. The sales level could double in 2008. The capital investment program is essentially completed, and productivity rates should improve as start-up and learning curve issues are overcome. The opportunity for the wind tower business is significant as the wind-energy continues to expand rapidly. The market is driven by the high cost of energy, favorable tax credits and the U.S. commitment to renewable energy and a cleaner environment. As market demand for wind energy far exceeds the domestic capacity of wind tower manufacturers, the probability of Ameron being a major supplier to the industry is high.

Water and Wastewater Market
The Company has developed a sand-core fiberglass pipe to serve the growing national municipal sewer rehabilitation market. The product has been fully tested by independent agencies, and all key national certifications have been received. This market represents an attractive growth opportunity as the U.S. wastewater infrastructure is aging and failing. There is a significant need for non-corrosive materials to repair or replace the nation’s aged sewer systems. Ameron has targeted the larger-diameter market segment with a round, sand-core fiberglass pipe and a proprietary, non-round pipe. To support this initiative a capital investment program to build a new manufacturing facility and upgrade manufacturing equipment at the Company’s existing Burkburnett, Texas plant has commenced. The new facility should be completed in mid-2008 and will provide the manufacturing capabilities and productivity rates to capitalize on this growth opportunity.

There are a number of other key initiatives under evaluation, such as a major capacity expansion in steel rebar and further geographic expansions worldwide of fiberglass pipe manufacturing. Each of these programs involves market segments with sustainable long-term growth rates, require capital investment commitments and have a high probability of success.

The market conditions for our core operations continue to be generally favorable worldwide and while the residential construction slowdown and the uncertainty of the general economy are present, any negative effects should not be significant to our business. And because of our leading market positions and technology leadership, I am confident that we will continue to achieve strong financial results. I am also optimistic that, over the long term, the Company will continue to deliver outstanding returns for our shareholders.

I am pleased to report the appointment of Gary Wagner as President of the Company as of February of this year. Mr. Wagner has been with the Company for twenty-three years in various senior financial and operational management positions. He will participate more broadly in the strategic direction of the Company working in close collaboration with the Office of the Chairman.

My sincere thanks to our customers, Ameron associates worldwide and to our dedicated Board of Directors.

JAMES S. MARLEN

Chairman of the Board, President and Chief Executive Officer