Chaparral Steel Reports Record Year-End Earnings
07/12/2007 - Chaparral Steel reports record net income of $80.2 million on net sales of $489 million for the fourth quarter, and record net income of $269.3 million on net sales of $1723 million for the 2007 fiscal year.
Chaparral Steel Co. reported record net income of $80.2 million on net sales of $489 million for the fourth quarter of fiscal 2007, and record net income of $269.3 million on net sales of $1723 million for the 2007 fiscal year.
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Gerdau Ameristeel announced on Tuesday, July 10 that it has signed a definitive merger agreement to acquire Chaparral Steelfor US$86.00 per share in cash.
Chaparral Steel’s Board of Directors unanimously approved the transaction, and will recommend to company shareholders that they vote in favor of the offer.
The offer price values Chaparral Steel's equity at US$4.22 billion.
The companies say that they expect the proposed transaction to close before year-end.
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Fourth Quarter Results—The $80.2 million record net income ($1.65 per diluted share) compares to net income of $56.1 million ($1.16 per diluted share) in the 2006 fourth quarter. Record operating profit of $131.6 million exceeded the previous record set in the second quarter of 2007 by 21% and was approximately 39% greater than the 2006 fourth quarter.
Shipments of 596,000 tons decreased slightly compared to the record set in the prior year's fourth quarter but were up 5% from last quarter. Average selling prices of $752 per ton reflect $73 increase from last quarter and $142 from the 2006 fourth quarter. Average metal margins of $518 per ton were $28 per ton higher than the prior quarter and were $96 per ton higher than the fourth quarter of fiscal 2006.
Energy expense was down slightly compared to last quarter but was similar to the fourth quarter of 2006.
Full Year Results—The $269.3 million net income ($5.57 per diluted share) compares to net income of $157.1 million ($3.32 per diluted share) for the 2006 fiscal year. Operating profit was a record $438.5 million and exceeded the company’s previous best year, set in 2006, by almost 62%.
Shipments of almost 2.3 million tons were similar to the prior year. Production records were set at the Virginia plant and in the large section mill in Texas. Production of almost 2.3 million tons exceeded the previous record set last fiscal year by over 100,000 tons. Average selling prices of $693 per ton were 20% better than prices for the 2006 fiscal year.
Energy expense was almost 20% less than fiscal year 2006 as a result of lower natural gas prices primarily for the first half of the fiscal year.
Management Comments—"This was our strongest quarter ever and was a great finish to the best year in the company's history," stated Tommy A. Valenta, President and CEO. "Both global and domestic markets are strong, led by robust demand for new industrial production capacity and a solid non-residential construction market. We expect both markets to remain strong leading to continued healthy financial results. These results are also attributable to what I believe are among the best employees in the steel business."
At May 31, 2007, Chaparral ended its fiscal year with $443.4 million of cash, cash equivalents and short-term investments.
Headquartered in Midlothian, Texas, Chaparral Steel is the second-largest producer of structural steel beams in North America. The company also supplies steel bar products, and is a leading North American recycling company.
