CHAP Chaparral Energy Inc

MIDLOTHIAN, Texas, Sept. 19 /PRNewswire-FirstCall/ -- Chaparral Steel Company (NASDAQ:CHAP) today reported record net income for its first quarter ended August 31, 2006 of $59.1 million ($1.23 per diluted share, after giving effect to a two for one common stock split distributed to stockholders September 1, 2006 in the form of a stock dividend). This represents an increase of $41.3 million compared to net income of $17.8 million ($0.39 per diluted share) for its first quarter of fiscal 2006 and is $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. 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. "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 Chief Executive Officer. "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 for the quarter 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 Texas facility. For the quarter 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. Based on current market conditions, net income for the second quarter should be in-line with, to slightly better than, the first quarter and the Company remains optimistic for the remainder of the year. The Company believes that end user demand for its products will remain strong and shipments will primarily be a function of production. Metal margins should remain strong as our products are competitively priced to imports and scrap prices remain relatively stable. The Company's First Quarter Earnings Teleconference will be held tomorrow, September 20, 2006 at 10:00 a.m. Central 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 the costs of raw materials, fuel and energy, the impact of environmental laws, unexpected equipment failures, the effect of foreign currency valuations and regulatory and statutory changes, which are more fully described in the Company's Annual Report on Form 10-K filed with the SEC. 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 August 31, ---------- 2006 2005 ---------- ---------- Net sales $410,649 $338,405 Costs and expenses (income): Cost of products sold 306,768 297,194 Selling, general and administrative 10,659 7,439 Interest 8,046 8,164 Other income, net (3,487) (1,302) ---------- ---------- 321,986 311,495 ---------- ---------- Income before income taxes 88,663 26,910 Income taxes 29,576 9,159 ---------- ---------- Net income $59,087 $17,751 ========== ========== Earnings per share: Basic $1.28 $.39 ========== ========== Diluted $1.23 $.39 ========== ========== Average shares outstanding: Basic 46,190 45,608 ========== ========== Diluted 48,175 46,087 ========== ========== CHAPARRAL STEEL COMPANY AND SUBSIDIARIES SUPPLEMENTAL OPERATING INFORMATION (Unaudited) Three months ended --------------------------------------- August 31, May 31, ---------- ------- 2006 2005 2006 --------- --------- --------- Operating Results (in 000's) Net Sales 410,649 338,405 405,545 Operating Profit 96,709 35,074 94,745 Shipments (in 000's) Structural Mills 478 493 505 Bar Mill 89 110 102 --------- --------- --------- Total 567 603 607 ========= ========= ========= Price (per ton excluding delivery fees) Structural Mills 656 507 614 Bar Mill 655 553 593 --------- --------- --------- Combined 656 515 610 ========= ========= ========= CHAPARRAL STEEL COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited) August 31, May 31, 2006 2006 ----------- ----------- Assets Current assets: Cash and cash equivalents $51,717 $42,583 Short-term investments 238,250 164,000 Accounts receivable - net 155,679 159,721 Inventories 184,341 159,803 Prepaid expenses 6,441 7,465 ----------- ----------- Total current assets 636,428 533,572 ----------- ----------- Other assets: Goodwill 85,166 85,166 Investments and deferred charges 16,988 16,807 ----------- ----------- 102,154 101,973 ----------- ----------- Property, plant and equipment: Land and land improvements 96,926 96,926 Buildings 56,075 55,570 Machinery and equipment 1,034,139 1,032,697 Construction in progress 30,831 28,867 ----------- ----------- 1,217,971 1,214,060 Less depreciation 632,274 620,083 ----------- ----------- 585,697 593,977 ----------- ----------- $1,324,279 $1,229,522 =========== =========== Liabilities and Stockholders' Equity Current liabilities: Trade accounts payable $69,677 $49,979 Accrued wages, taxes and other liabilities 69,313 55,392 ----------- ----------- Total current liabilities 138,990 105,371 ----------- ----------- Deferred income taxes and other credits 150,943 155,645 Long-term debt 300,000 300,000 Stockholders' equity: Common stock, $0.01 par value 463 462 Additional paid-in capital 714,325 707,573 Retained earnings (deficit) 19,558 (39,529) ----------- ----------- Total stockholders' equity 734,346 668,506 ----------- ----------- $1,324,279 $1,229,522 =========== =========== CHAPARRAL STEEL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three months ended August 31, ---------- 2006 2005 ----------- ---------- Operating activities: Net income $59,087 $17,751 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 12,212 12,513 Deferred income taxes (2,189) 713 Stock-based compensation 831 --- Other - net 331 254 Changes in operating assets and liabilities Accounts receivable-net 4,042 (15,908) Inventories (24,538) 60,310 Prepaid expenses 986 1,634 Accounts payable 19,698 (20,770) Accrued wages, taxes and other liabilities 14,974 14,137 Other credits (2,395) 204 Receivable from or payable to TXI --- (7,948) ----------- ---------- Net cash provided by operating activities 83,039 62,890 ----------- ---------- Investing activities: Capital expenditures (3,959) (4,669) Purchases of short-term investments (2,841,710) --- Sales of short-term investments 2,767,460 --- Other - net (485) (438) ----------- ---------- Net cash used by investing activities (78,694) (5,107) ----------- ---------- Financing activities: Long-term borrowings --- 350,000 Debt retirements --- (50,000) Debt issuance costs --- (9,241) Dividend paid to Texas Industries, Inc. --- (341,139) Issuance of common stock 548 --- Excess tax benefits from stock-based compensation 4,241 --- ----------- ---------- Net cash provided (used) by financing activities 4,789 (50,380) ----------- ---------- Increase in cash and cash equivalents 9,134 7,403 Cash and cash equivalents at beginning of period 42,583 9,287 ----------- ---------- Cash and cash equivalents at end of period $51,717 $16,690 =========== ========== http://www.newscom.com/cgi-bin/prnh/20050713/CHAPLOGO http://photoarchive.ap.org/ DATASOURCE: Chaparral Steel Company CONTACT: Cary D. Baetz, +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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