Sep. 20, 2006 — Chaparral Steel Co. reported record net income of $59.1 million on net sales of $410.6 million for its first quarter ended August 31, 2006.

First Quarter Results—The $59.1 million net income ($1.23 per diluted share) represents an increase of $41.3 million compared to net income of $17.8 million ($0.39 per diluted share) for the first quarter of fiscal 2006. Results are also $2.9 million better than the previous record of $56.1 million ($1.16 per diluted share) set in the last quarter of fiscal 2006. Results include the effect of a two-for-one common stock split distributed to stockholders September 1, 2006 in the form of a stock dividend.

Record operating profit of $96.7 million increased 176% compared to the first quarter of fiscal 2006 and exceeded the previous record set last quarter by $2.0 million.

Comments—"This is our sixth consecutive quarter of earnings growth and we expect to continue similarly strong results as both domestic and international markets remain solid for structural products," stated Tommy A. Valenta, President and CEO. "Domestic prices for structural products remain competitive with global prices and based on global demand we should continue to maintain healthy margins."

Shipments of 567,000 tons were 6% less than the comparable first quarter and sequential fourth quarter of fiscal year 2006 due to reduced levels of inventory available for sale. Average selling prices of $656 per ton increased over 27% and 7.5% from the first quarter and fourth quarter of last fiscal year, respectively. Metal margins of $454 for the quarter were 23% and 7.5% higher compared to the first and fourth quarters of last fiscal year, respectively. Selling prices continue to parallel scrap prices.

Energy costs were down 19% from the first quarter of fiscal 2006 as a result of a decrease in natural gas prices; however, energy costs were up almost 4% compared to the fourth quarter of fiscal 2006 due to seasonally higher power costs at the company’s Texas facility. The company had a $1.0 million LIFO charge compared to a credit of $2.9 million and $5.0 million for the first and fourth quarters of last fiscal year, respectively.

The company ended the quarter with $290 million of cash, cash equivalents and short-term investments.

Outlook—Based on current market conditions, the company expects that net income for the second quarter will be in-line with, to slightly better than, the first quarter. The company says it also remains optimistic for the remainder of the year, and believes that end-user demand for its products will remain strong and shipments will primarily be a function of production. The company further anticipates that metal margins will remain strong as its products are competitively priced to imports and scrap prices remain relatively stable.

Headquartered in Midlothian, Texas, Chaparral Steel Co. is the second-largest producer of structural steel beams in North America. The company is also a significant supplier of steel bar products. In addition, Chaparral is a leading North American recycling company.