CHAP Chaparral Energy Inc

MIDLOTHIAN, Texas, March 21 /PRNewswire-FirstCall/ -- Chaparral Steel Company (NASDAQ:CHAP) today reported record net income for its third quarter ended February 28, 2006 of $49.2 million ($2.06 per diluted share). This 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 and is $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 increased 140% compared to the third quarter of fiscal 2005 and exceeded the previous record set in the second quarter of this fiscal year by almost 38%. (Logo: http://www.newscom.com/cgi-bin/prnh/20050713/CHAPLOGO ) "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 Chief Executive Officer. "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. For the nine months ended February 28, 2006, the Company had record net income of $101.0 million ($4.29 per diluted share) compared 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. Based on current market conditions the 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 we expect shipments to be in line with the third quarter. Metal margins should remain constant as our products are competitively priced to imports and scrap prices remain relatively stable. The prospects for higher energy costs due to warmer weather may have a negative impact on margins compared to third quarter results. The Company's Third Quarter Earnings Teleconference will be held tomorrow, March 22, 2005 at 11:00 a.m. Eastern Time. A real-time webcast of the conference is available by logging on to Chaparral's website at http://www.chapusa.com/ . Certain statements contained in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed or implied by such forward looking statements. Potential risks and uncertainties include, but are not limited to, the impact of competitive pressures and changing economic and financial conditions on the Company's business, construction activity in the Company's markets, changes in costs of raw materials, fuel and energy, the impact of environmental laws, unexpected equipment failures, the effect of foreign currencies valuations and other regulations as more fully described in the Company's Annual Report on SEC Form 10-K. Chaparral Steel Company, headquartered in Midlothian, Texas, 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. Additional information may be found at http://www.chapusa.com/ . For further information contact Cary D. Baetz at 972-779-1032 or Terresa Van Horn at 972-779-1033. CHAPARRAL STEEL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three months ended Nine months ended February 28, February 28, 2006 2005 2006 2005 Net sales $374,649 $259,119 $1,061,184 $799,019 Costs and expenses (income) Cost of products sold 279,250 219,811 859,691 647,976 Selling, general and administrative 17,714 7,103 34,637 21,159 Interest 7,890 12,197 24,036 23,904 Other income, net (4,367) (1,922) (9,760) (3,751) 300,491 237,189 908,608 701,485 Income before income taxes 74,162 21,930 152,580 97,534 Income taxes 24,918 7,683 51,582 34,151 Net income $49,244 $14,247 $100,998 $63,383 Earnings per share: Basic $2.15 $0.62 $4.42 $2.78 Diluted $2.06 $0.62 $4.29 $2.78 Average shares outstanding: Basic 22,875 22,804 22,828 22,804 Diluted 23,868 22,804 23,520 22,804 CHAPARRAL STEEL COMPANY AND SUBSIDIARIES SUPPLEMENTAL OPERATING INFORMATION (Unaudited) Three months ended Nine months ended February 28, November 30, February 28, 2006 2005 2005 2006 2005 Net Sales (in 000's) 374,649 259,119 348,130 1,061,184 799,019 Operating Profit (in 000's) 82,052 34,127 59,490 176,616 133,635 Shipments (000's) Structural Mills 469 318 449 1,411 1,013 Bar Mill 104 83 99 313 270 Total 573 401 548 1,724 1,283 Price ($/Ton excluding delivery fees) Structural Mills $605 $572 $578 $562 $557 Bar Mill 577 687 590 573 643 Combined $600 $596 $580 $564 $575 CHAPARRAL STEEL COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited) February 28, May 31, 2006 2005 Assets Current assets: Cash and cash equivalents $46,061 $9,287 Short-term investments 106,215 --- Accounts receivable - net 144,871 127,383 Inventories 179,628 246,223 Receivable from Texas Industries, Inc. --- 40,734 Prepaid expenses 13,248 11,097 Total current assets 490,023 434,724 Other assets: Goodwill 85,166 85,166 Investments and deferred charges 16,707 5,099 101,873 90,265 Property, plant and equipment: Land and land improvements 95,656 93,937 Buildings 55,208 54,954 Machinery and equipment 1,029,655 1,025,475 Construction in process 33,605 28,074 1,214,124 1,202,440 Less depreciation 611,298 575,187 602,826 627,253 $1,194,722 $1,152,242 Liabilities and Stockholders' Equity Current liabilities: Trade accounts payable $76,949 $88,980 Accrued wages, taxes and other liabilities 55,732 20,933 Total current liabilities 132,681 109,913 Deferred income taxes and other credits 151,062 147,563 Long-term debt 300,000 --- Long-term payable to Texas Industries, Inc. --- 543,246 Stockholders' equity: Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued --- --- Common stock, $0.01 par value, 100,000,000 shares authorized, 22,963,334 and 22,803,867 shares issued and outstanding, respectively 230 228 Additional paid-in capital 706,416 206,818 Retained earnings (deficit) (95,667) 144,474 Total stockholders' equity 610,979 351,520 $1,194,722 $1,152,242 CHAPARRAL STEEL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine months ended February 28, 2006 2005 Operating activities: Net income $100,998 $63,383 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 37,212 36,404 Deferred income taxes 260 25,419 Other - net 3,591 3,310 Changes in operating assets and liabilities Accounts receivable - net (17,487) (14,374) Inventories 66,595 (67,127) Prepaid expenses (966) (6,983) Accounts payable (12,030) (2,753) Accrued wages, taxes and other liabilities 36,186 (778) Other credits 972 435 Receivable from or payable to Texas Industries, Inc. (10,286) (26,277) Net cash provided by operating activities 205,045 10,659 Investing activities: Capital expenditures (11,937) (14,313) Purchases of short-term investments (1,426,735) --- Sales of short-term investments 1,320,520 --- Other - net (570) (396) Net cash used by investing activities (118,722) (14,709) Financing activities: Long-term borrowings 350,000 --- Debt retirements (50,000) --- Debt issuance costs (9,500) --- Dividend paid to Texas Industries, Inc. (341,139) --- Issuance of common stock 1,090 1 Net cash used by financing activities (49,549) 1 Increase (decrease) in cash and cash equivalents 36,774 (4,049) Cash and cash equivalents at beginning of period 9,287 8,575 Cash and cash equivalents at end of period $46,061 $4,526 http://www.newscom.com/cgi-bin/prnh/20050713/CHAPLOGO http://photoarchive.ap.org/ DATASOURCE: Chaparral Steel Company CONTACT: Cary D. Baetz, Vice President and Treasurer, +1-972-779-1032, or fax, +1-972-779-1951, or , or Terresa Van Horn, +1-972-779-1033, both of Chaparral Steel Company Web site: http://www.chapusa.com/

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