March 21, 2007 — Chaparral Steel Co. reported record net income of $62.5 million for the third quarter, and record net income of $189.1 million for the nine months ended February 28, 2007.

Third Quarter Results—The $62.5 million record net income ($1.29 per diluted share) represents a $13.3 million increase compared to net income of $49.2 million ($1.03 per diluted share) for the third quarter of fiscal 2006. These results were only surpassed by the record net income of $67.5 million set in the second quarter ended November 30, 2006. Operating profit of $101.3 million increased 23.5% compared to the third quarter of fiscal 2006 and was surpassed only by the record set in the second quarter of this fiscal year.

"This was the second best quarter in our company's history in what is usually our seasonally slowest quarter. This demonstrates the strength of our market," stated Tommy A. Valenta, President and CEO. "We continue to see strong domestic and international demand for structural products and improving global prices going into the busier construction season."

Shipments of 567,000 tons were the fourth-best quarter in the company's history. Shipments, which were similar to the third quarter of fiscal 2006, were up almost 5% from the second quarter of this year. Average selling prices ($679 per ton) reflect a $79 increase from the third quarter of fiscal 2006 and were down slightly from the second quarter of this year due to product mix.

Average metal margins ($490 per ton) were 16% higher than the third quarter of fiscal 2006 and similar to the second quarter of this year. Due primarily to rising scrap prices, the company had a $7.3 million LIFO charge for the quarter compared to a $1.9 million charge last quarter and a $4.1 million credit for the third quarter of last year. Energy expense was 12% higher than the second quarter as a result of increased natural gas prices. During the quarter, the company signed a lease for the mineral rights to explore for natural gas.

Nine Month Results—Record net income of $189.1 million ($3.92 per diluted share) compares to net income of $101.0 million ($2.15 per diluted share) for the first nine months of fiscal 2006. The improved profitability was primarily due to higher metal margins and lower energy costs.

The company ended the quarter with $365.5 million of cash, cash equivalents and short-term investments. During the quarter, the company paid a quarterly dividend of $0.10 per share and repurchased 213,800 shares of its common stock at an average price of $44.65 per common share.

Outlook—Based on current market conditions the company expects continued strong results through the fourth quarter. The company believes that end-user demand for its products will remain strong. Historically, shipments in the fourth quarter are stronger than the third quarter, but due to low levels of available inventory, shipments are expected to be similar to the third quarter.

The company says that although domestic and international scrap markets are volatile and at historic highs, international structural prices have improved, and the company will continue to price its products competitively to the international market. The prospects for higher energy costs due to warmer weather could have a negative impact on margins compared to third quarter results. Based on these factors, the company anticipates net income to be around $1.35 per diluted share for the fourth quarter.

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