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

“The Company’s key
objective is to achieve
quality, consistent
earnings that lead
to the creation
of long-term
shareholder value."

TO OUR SHAREHOLDERS

Ameron achieved solid financial results, generated strong cash flow from operations and improved its financial condition in 2009. Like most multinational, manufacturing companies, Ameron was challenged by the deep global recession and the lingering effects of the banking/financing crisis. These conditions weakened Ameron’s end markets, especially key oilfield, infrastructure and construction sectors. Despite the difficult environment, net income in 2009 totaled $33.3 million, or $3.63 per diluted share, compared to net income of $58.6 million, or $6.39 per diluted share, in 2008. The Company’s consolidated sales totaled $546.9 million in 2009, compared to $667.5 million in 2008. Ameron’s unconsolidated joint-venture companies had sales of $146.1 million in 2009, which was down from the record sales of $469.7 million in 2008.

The Company responded to the global economic downturn by focusing on basic business fundamentals – reducing costs, improving productivity, protecting market positions, managing working capital and conserving cash. These efforts were successful as the Company improved profit margins in this difficult period while generating nearly $126 million of cash flow from operations and further strengthening the Company’s liquidity and financial position. In addition, during the year, the Company continued to reinvest for the future by spending over $46 million on new capital investments in the U.S. and abroad. Included were two new fiberglass pipe plants in Brazil, a new fiberglass pipe manufacturing facility in Texas and ongoing implementation of a worldwide integrated business system to improve business capabilities and efficiencies.

Creating value for shareholders remains the Company’s top priority. Consistent financial performance over time has translated into higher returns to Ameron’s shareholders. Ameron’s total shareholders return over the past five years of nearly 63% exceeded the returns of relevant peer companies as well as those of the Russell 2000, S&P SmallCap 600 and NYSE Market indexes. Importantly, during this five-year period, the Company distributed approximately $44 million in dividends to shareholders.

2009 Review

As expected, all operating units and joint ventures had lower sales in 2009; and, with the exception of the Water Transmission Group, all had lower earnings. The recession curtailed infrastructure spending and residential and commercial construction in Ameron’s primary domestic markets – Hawaii, California, Nevada and Arizona. The industrial and downstream energy markets worldwide also contracted due to lack of financing sources and weak demand. On a positive note, the marine and offshore markets remained strong, led by new construction of sophisticated vessels at Asian shipyards.

While the Fiberglass-Composite Pipe Group benefited from marine and offshore vessel construction, onshore oilfield demand was soft worldwide due to lower energy needs and a decrease in oilfield investments. Operations in the U.S., Europe and Brazil were all impacted by weak industrial markets. The Water Transmission Group had lower water pipe sales, while wind towers sales were flat in 2009. Both water pipe and wind towers were profitable in 2009, largely as a result of manufacturing efficiency gains, cost reductions and completion of low-margin projects in 2008. The water pipe business continued to experience soft demand as water infrastructure investments in the western U.S. lagged due to cyclical factors, weak governmental budgets and a lack of project financing. The wind energy industry was also impacted by the lack of project financing, which caused a halt in new wind farm development. The Infrastructure Products Group was harmed by a reduction in construction spending in Hawaii. The decline affected most sectors; although, military and governmental construction spending remained solid. The Pole Products Division continued to suffer from the national residential housing crisis, and sales were down for the third straight year. The business is dependent primarily on new housing construction in the West and the Southeast, and both regions were severely affected by the housing and economic crises.

TAMCO, Ameron’s 50%-owned steel mini-mill had significantly lower sales and incurred a sizeable loss in 2009. The infrastructure market in California, Nevada and Arizona collapsed in the fourth quarter of 2008 and did not recover in 2009. Commercial construction, both private and public, and highway and bridge construction declined to unprecedented levels due to the weak regional economies, lack of financing and governmental fiscal and budgetary issues. TAMCO shipped significantly less rebar at significantly lower selling prices. The impact could not be offset with cost reductions and limited manufacturing.

Outlook

There continues to be a lack of visibility and certainty going into 2010 that makes forecasting more difficult than normal. The Company believes that recovery could be slow in the markets and territories it serves. The Company has not yet realized any meaningful benefits from governmental stimulus programs to date. Stimulus initiatives, such as an increase in infrastructure spending or incentives for wind energy or additional highway funding, should be beneficial. The Company’s previously-issued earnings guidance for 2010 is that full-year earnings are forecasted to be between $2.75 and $3.25 per share. The forecast is dependent on a gradual economic recovery, and results could be better if the economic recovery is faster and stronger than anticipated.

The Fiberglass-Composite Pipe Group achieved record results during the past few years. The outlook for 2010 remains positive, with the Group operating at historically high levels. Marine and offshore markets remain relatively healthy. The other market segments are expected to continue to be impacted by the worldwide economic climate.

The Water Transmission Group’s outlook is dependent on an increase in bid activity for major water transmission projects in the western U.S. While there are a number of projects in the planning and specification stages, it is difficult to determine when the projects will proceed. Bid activity in Northern California has improved, and there are positive signs in Southern California. Recovery in demand for wind towers is dependent on the wind energy market securing project financing and wind farm development occurring within reach of Ameron’s manufacturing. Longer term, the wind energy industry is expected to experience solid, consistent growth and to be a major beneficiary of the move toward alternative clean energy throughout the U.S. With Ameron’s wind tower manufacturing capabilities, the Company is expected to benefit as private and public investments in wind energy increase.

The Hawaii Division will be confronted with lower construction spending due to Hawaiian economic conditions. All major construction sectors, except military and highway spending, are expected to moderate. The Honolulu light rail system is expected to proceed and could provide an opportunity for future business. The Pole Products Division is expected to continue to be impacted as the U.S. residential housing market remains weak.

It is expected that the demand for steel rebar in California, Nevada and Arizona will remain soft in 2010. TAMCO has taken aggressive measures to reduce costs and to operate only intermittently as market demands and inventory levels dictate. TAMCO’s losses should be lower, but a significant turnaround in 2010 is not expected. TAMCO remains committed to aggressively attacking costs and exploring other business restructuring options.

During 2009, the Company further strengthened its financial position. Available cash balances increased to $181 million, while total debt decreased to $38 million, resulting in a net positive cash position of $143 million. In addition, the Company has access to available, committed credit lines of approximately $110 million. The Company’s strong balance sheet and the availability of capital resources are key strengths especially during these uncertain, recessionary times. The Company has the capital resources to support internal, organic growth opportunities, pursue external investment options or implement other cash reinvestment alternatives.

Strategic Programs

The Company’s primary objective in 2010 and beyond is to achieve quality, consistent earnings that lead to the creation of long-term shareholder value. To accomplish this objective, the Company will continue to pursue innovation through a number of new product developments, to invest in internal growth opportunities and to evaluate new markets and geographic regions for expansion. As mentioned above, Ameron is able to pursue these opportunities from a position of financial strength thanks to the consistent earnings growth and strong cash flow generated over the years. Being able to invest during the downturn is a significant competitive advantage.

The Fiberglass-Composite Pipe Group will soon fully commercialize three new plants. In Brazil, two new manufacturing facilities will be fully operational in 2010. One will produce Centron® fiberglass pipe for onshore oilfield applications and serve the South American market. The initial start-up was successful, and the plant began 2010 with a strong order backlog. The second plant in Brazil will manufacture Bondstrand® fiberglass pipe to serve the marine and offshore markets as well as chemical and industrial applications throughout South America. When fully operational, the new plants, along with the Company’s Polyplaster subsidiary in Brazil, will allow the Company to have a dominant position in South America for fiberglass piping systems. The third new fiberglass plant is being constructed at the Company’s Texas facility and will produce a polyester and sandcore fiberglass pipe. The new product line will serve the national municipal water and wastewater markets. The U.S. municipal water and wastewater infrastructure needs for expansion and rehabilitation are critical. Such markets should experience a steady increase of new investment spending over the long term by all levels of government. The Company continues to evaluate potential investment options to support growth opportunities for the Fiberglass- Composite Pipe business, such as, in China and the Middle East. In the Water Transmission Group, the emphasis is on manufacturing cost reductions, plant consolidation and developing competitive advantages in manufacturing and technology. Currently under development is a proprietary pressure pipe technology that, if successful, could be a lower-cost alternative to traditional welded steel pipe. Another example of new product development is the Fiberglass-Composite Pipe Group’s coil-lock joint. The coil-lock joint, when used in conjunction with standard Bondstrand® or Centron® fiberglass pipe, significantly expands pressure capabilities beyond traditional limits for fiberglass piping. The coil-lock joint technology provides an opportunity to expand the Company’s position in oil and gas markets. Commercialization and long-term testing is underway. Installations to date include unique applications such as a mining project in Poland and an oilfield project in Algeria. Importantly, the new-Centron® coil-lock design will soon undergo field trials in Saudi Arabia in conjunction with Aramco. The Company’s continued focus on innovation, product development, and future growth prospects demonstrates the range of initiatives being taken to ensure future growth and profitability.

Conclusion The strategic direction and growth potential of the Company are clear. I am optimistic about the future of the Company, and, as the economy strengthens, we will capitalize on opportunities. The long-term trends that influence the Company’s markets are expected to be positive. Key sectors, including oil and gas, energy, and water infrastructure, are expected to surge due to increasing demand and market dynamics. The oil and gas industry will require capital investments in exploration, production and transportation in order to satisfy the ever-increasing worldwide demand for energy. New techniques for squeezing greater amounts of oil and gas from marginal fields on land and deeper fields offshore require greater use of corrosion-resistant fiberglass pipe. These activities will continue to be major factors in the success of the Fiberglass-Composite Pipe Group. Climate change could provide significant opportunities for the Company in the future. Changing weather could require increased transport of water from distant sources to population centers in arid areas. Additionally, the existing fresh and waste water infrastructure in the U.S. requires major repairs and expansion. Investments by federal, state and local governments will occur over time. With a leading market position in water piping systems, Ameron will participate in satisfying those needs. The commitment to alternative, renewable energy sources, such as, wind energy in the U.S., will require a significant investment by energy providers. The Company’s wind tower business will benefit from these investments, especially in the western U.S. Our business units have the technologies and resources to excel, hold leadership positions in the markets in which they compete and will resume profitable growth as worldwide demand improves.

I would like to thank all Ameron employees for their extraordinary efforts to ensure Ameron’s continued excellent performance during a very difficult year, and I would like to thank the Board of Directors for its counsel.

JAMES S. MARLEN

Chairman of the Board and Chief Executive Officer