MIDLOTHIAN, Texas, March 20 /PRNewswire-FirstCall/ -- Chaparral Steel Company today reported record third quarter net income of $62.5 million ($1.29 per diluted share) for the period ended February 28, 2007. This represents an increase of $13.3 million compared to net income of $49.2 million ($1.03 per diluted share) for its third quarter of fiscal 2006 and is 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 Chief Executive Officer. "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 were similar to the third quarter of fiscal 2006 and were up almost 5% from the second quarter of this year. Average selling prices of $679 per ton increased $79 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 of $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 we signed a lease for our mineral rights to explore for natural gas.
For the nine months ended February 28, 2007, the Company had record net income of $189.1 million ($3.92 per diluted share) compared 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.
Based on current market conditions the fourth quarter should continue to provide 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 low levels of available inventory, shipments are expected to be similar to the third quarter. Domestic and international scrap markets are volatile and at historic highs; however, international structural prices have improved and we will continue to price our 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 the above, we anticipate net income to be around $1.35 per diluted share for the fourth quarter.
The Company's Third Quarter Earnings Teleconference will be held tomorrow, March 21, 2007 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 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 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,
2007 2006 2007 2006
-------- -------- ---------- ----------
Net sales $420,166 $374,649 $1,234,192 $1,061,184
Costs and expenses (income)
Cost of products sold 306,945 279,250 901,897 859,691
Selling, general
and administrative 16,335 17,714 41,083 34,637
Interest 7,931 7,890 23,895 24,036
Other income, net (4,464) (4,367) (15,693) (9,760)
-------- -------- ---------- ----------
326,747 300,487 951,182 908,604
-------- -------- ---------- ----------
Income before income taxes 93,419 74,162 283,010 152,580
Income taxes 30,884 24,918 93,921 51,582
-------- -------- ---------- ----------
Net income $ 62,535 $ 49,244 $ 189,089 $ 100,998
======== ======== ========== ==========
Earnings per share:
Basic $ 1.34 $ 1.07 $ 4.07 $ 2.21
======== ======== ========== ==========
Diluted $ 1.29 $ 1.03 $ 3.92 $ 2.15
======== ======== ========== ==========
Average shares outstanding:
Basic 46,554 45,824 46,422 45,752
======== ======== ========== ==========
Diluted 48,322 47,704 48,249 47,029
======== ======== ========== ==========
Cash dividends per share $ 0.10 $ --- $ 0.20 $ ---
======== ======== ========== ==========
CHAPARRAL STEEL COMPANY AND SUBSIDIARIES
SUPPLEMENTAL OPERATING INFORMATION
(Unaudited)
Three months ended Nine months ended
----------------------------- -----------------
February 28, November 30, February 28,
------------ ------------ -------------
2007 2006 2006 2007 2006
-------- --------- --------- ---------- ----------
Net sales (in $000's) $ 420,166 $ 374,649 $ 403,377 $1,234,192 $1,061,184
Operating profit
(in $000's) 101,350 82,052 108,846 306,905 176,616
Shipments (in 000's)
Structural mills 482 469 458 1,418 1,411
Bar mill 85 104 83 257 313
-------- -------- --------- --------- ----------
Total 567 573 541 1,675 1,724
======== ======== ========= ========= ==========
Price ($/ton excluding
delivery fees)
Structural mills $ 688 $ 605 $ 686 $ 677 $ 562
Bar mill 629 577 661 648 573
-------- -------- --------- --------- ---------
Combined $ 679 $ 600 $ 682 $ 672 $ 564
======== ======== ========= ========= =========
CHAPARRAL STEEL COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
February 28, May 31,
2007 2006
----------- ---------
Assets
Current assets:
Cash and cash equivalents $ 48,650 $ 42,583
Short-term investments 316,897 164,000
Accounts receivable 182,876 159,721
Inventories 189,541 159,803
Prepaid expenses 12,236 7,465
---------- ---------
Total current assets 750,200 533,572
---------- ---------
Other assets:
Goodwill 85,166 85,166
Investments and deferred charges 17,982 16,807
---------- ---------
103,148 101,973
---------- ---------
Property, plant and equipment:
Land and land improvements 96,925 96,926
Buildings 56,477 55,570
Machinery and equipment 1,038,001 1,032,697
Construction in progress 34,257 28,867
---------- ---------
Less depreciation 1,225,660 1,214,060
652,638 620,083
---------- ----------
573,022 593,977
---------- ----------
$1,426,370 $1,229,522
========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Trade accounts payable $ 84,743 $ 49,979
Accrued wages, taxes and other liabilities 42,340 55,392
---------- ----------
Total current liabilities 127,083 105,371
---------- ----------
Deferred income taxes and other credits 148,855 155,645
Long-term debt 300,000 300,000
Stockholders' equity:
Common stock, $0.01 par value 469 462
Additional paid-in capital 719,298 707,573
Retained earnings (deficit) 140,260 (39,529)
Treasury stock (9,595) ---
---------- ----------
Total stockholders' equity 850,432 668,506
---------- ----------
$1,426,370 $1,229,522
CHAPARRAL STEEL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine months ended
February 28,
------------
2007 2006
--------- ---------
Operating activities:
Net income $ 189,089 $ 100,998
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation 35,920 37,212
Deferred income taxes (8,846) 260
Stock-based compensation 2,559 259
Other - net (357) 1,114
Changes in operating assets and liabilities
Accounts receivable (23,154) (17,487)
Inventories (29,737) 66,595
Prepaid expenses (3,392) (966)
Accounts payable 34,765 (12,030)
Accrued wages, taxes and other liabilities (12,000) 36,186
Other credits 598 853
Receivable from or payable to TXI --- (10,286)
--------- ---------
Net cash provided by operating activities 185,445 202,708
--------- ---------
Investing activities:
Capital expenditures (15,154) (11,937)
Purchases of short-term investments (10,453,808) (1,426,735)
Sales of short-term investments 10,300,910 1,320,520
Other - net (630) (570)
--------- ---------
Net cash used by investing activities (168,682) (118,722)
--------- ---------
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 3,191 1,090
Tax benefits from exercise of stock options 4,959 2,337
Common dividends paid (9,300) ---
Acquisitions of treasury stock (9,546) ---
--------- ---------
Net cash used by financing activities (10,696) (47,212)
--------- ---------
Increase in cash and cash equivalents 6,067 36,774
Cash and cash equivalents at beginning of period 42,583 9,287
--------- ---------
Cash and cash equivalents at end of period $ 48,650 $ 46,061
========= =========
AP Archive: http://photoarchive.ap.org/
PRN Photo Desk,
