March 22, 2006 — Chaparral Steel Co. reported record net income of $49.2 million on net sales of $374.6 million for its third quarter, and record net income of $101.0 million on net sales of $1061.2 million for the nine months ended February 28, 2006.

Third Quarter Results—The $49.2 million record net income ($2.06 per diluted share) represents an increase of $35.0 million compared to net income of $14.2 million ($0.62 per diluted share) for its third quarter of fiscal 2005. Results are $15.2 million better than the previous record net income of $34.0 million ($1.44 per diluted share) recorded during the company's second quarter ended November 30, 2005. Record operating profit of $82.1 million reflects a 140% increase compared to the third quarter of fiscal 2005. Operating profit also exceeded the previous record set in the second quarter of this fiscal year by almost 38%.

"The results for the third quarter demonstrate the earning potential of our assets. These results are a testament to our employees and their dedication to doing things right and focusing on maximizing the profitability of the products that we produce," stated Tommy A. Valenta, President and CEO. "Improved global demand, industry consolidation and low cost production are the primary factors contributing to strong industry results."

Shipments of 573,000 tons were the second best quarter in the company's history. Shipments increased 43% compared to the third quarter of fiscal 2005 and were up almost 5% from the second quarter of this fiscal year. Average selling prices of $600 per ton increased $4 from the third quarter of fiscal 2005 and almost $20 from the second quarter of this fiscal year. Average metal margins of $423 per ton were 2% higher than the third quarter of fiscal 2005 and over 3% greater than the second quarter of this year. Energy expense was down 20% from the second quarter as a result of a dramatic decrease in natural gas prices in January and February.

Nine Month Results—The company’s record net income of $101.0 million ($4.29 per diluted share) compares to net income of $63.4 million ($2.78 per diluted share) for the first nine months of fiscal 2005. While average selling prices were down less than 2%, total shipments of 1.72 million tons increased over 34%.

The company ended the quarter with $152.3 million of cash, cash equivalents and short-term investments.

Outlook—Based on current market conditions the company projects that fourth quarter should continue to provide similarly strong results. 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 an unseasonably warm winter across the nation, the company expects shipments to be in line with the third quarter. The company also says that metal margins should remain constant, as its products are competitively priced to imports and scrap prices remain relatively stable. The company also says that prospects for higher energy costs due to warmer weather may have a negative impact on margins compared to third quarter results.

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. Chaparral is also a leading North American recycling company.