Chaparral Steel Co. reported net income of $17.8 million on net sales of $338.4 million for the first quarter ended August 31, 2005.

First Quarter Results—The $17.8 net income ($0.77 per diluted share) reflects a $3 million increase over the fourth quarter of fiscal year 2005, but was down from the record-setting $28.1 million ($1.23 per diluted share) of the prior-year first quarter. Operating profit was $35.1 million.

Record shipments of 603,000 tons represent a 22% increase compared to the first quarter of 2005. However, the improvement in shipments was more than offset by a 6% decrease in realized prices, a 5% increase in scrap expense, and a 22% increase in energy expense.

Comments—"We are starting to see some signs of improvement in non-residential activity in the United States,” stated Tommy A. Valenta, President and CEO. “This improvement contributed to record shipments for the quarter. Our results remain consistent despite volatility in raw material and energy prices. Current market and industry conditions should support the continuation of solid financial results."

Chaparral Steel continues to make significant strides with its PZC sheet piling, with production and shipments over four times greater than the first quarter of 2005.

Since the successful spin-off from Texas Industries, Inc., on July 29, 2005, the company has repaid the $50 million outstanding on its revolving credit facility. "We generated significant cash in August from a reduction in inventory. The contributing factors to the reduction were record shipments in the month of August and production being occasionally curtailed due to high energy cost," added Valenta.

Headquartered in Midlothian, Texas, Chaparral Steel Co. is the second largest supplier of structural steel products in North America with locations in Midlothian, Texas, and Dinwiddie County, Va. Chaparral follows a market mill concept, making a wide variety of products including structural beams, specialty bar and piling products, all at low cost. The two mills have a combined production capacity of approximately 2.8 million tons of steel per year.