Texas Industries, Inc. (NYSE:TXI) today reported financial results
for the quarter ended August 31, 2010. Results for the quarter were
a net loss of $23.7 million or $.85 per share and included an
after-tax charge of $18.0 million or $.65 per share with respect to
the Company's refinancing. Net income for the quarter ended August
31, 2009 was $1.7 million or $.06 per share.
General Comments
"Conditions in our markets remain challenging," stated Mel
Brekhus, Chief Executive Officer. "We continue to focus on meeting
market demand as cost effectively as possible. More strategically,
we look forward to resuming construction of TXI's central Texas
cement plant expansion later this fall."
"The Company's recent refinancing enhances our financial
flexibility by improving our liquidity and extending the maturity
of our long-term debt. We ended the quarter with $162.4 million
cash and the ability to borrow $90 million on our credit facility
without incurring any maintenance covenants," added Brekhus.
A teleconference will be held today, September 23, 2010 at 1:00
Central Daylight Time to further discuss quarter results. A
real-time webcast of the conference is available by logging on to
TXI's website at www.txi.com.
The following is a summary of operating results for our business
segments and certain other operating information related to our
principal products.
Cement Operations
|
Three months ended
August 31, |
In thousands except per unit |
2010 |
2009 |
|
|
|
Operating Results |
|
|
Total cement sales |
$ 67,690 |
$ 78,460 |
Total other sales and delivery fees |
8,692 |
6,736 |
Total segment sales |
76,382 |
85,196 |
Cost of products sold |
70,063 |
69,859 |
Gross profit |
6,319 |
15,337 |
Selling, general and administrative |
(4,793) |
(4,674) |
Other income |
2,438 |
1,743 |
Operating Profit |
$ 3,964 |
$ 12,406 |
|
|
|
Cement |
|
|
Shipments (tons) |
873 |
915 |
Prices ($/ton) |
$77.59 |
$85.70 |
Cost of sales ($/ton) |
$71.23 |
$68.70 |
Cement operating profit for the three-month period ended August
31, 2010 was $4.0 million, a decrease of $8.4 million from the
prior year period. Lower shipments and sales prices reduced
operating profit approximately $8 million.
Total segment sales for the three-month period ended August 31,
2010 were $76.4 million compared to $85.2 million for the prior
year period. Cement sales decreased $10.8 million from the
prior year period as construction activity has remained at low
levels in both our Texas and California market areas. Our
Texas market area accounted for approximately 70% of cement sales
in the current period compared to 71% of cement sales in the prior
year period. Shipments decreased 8% in our Texas market area
and increased 4% in our California market area. Average cement
prices decreased 8% in our Texas market area and 13% in our
California market area.
Cost of products sold for the three-month period ended August
31, 2010 increased $0.2 million from the prior year period. Cement
unit costs increased 4% from the prior year period primarily due to
the effect of lower shipments and higher energy costs.
Selling, general and administrative expense for the three-month
period ended August 31, 2010 increased $0.1 million from the prior
year period. The increase was primarily due to higher
engineering and maintenance expense which was offset in part by
lower provisions for bad debts and defined benefit plan
expense.
Other income for the three-month period ended August 31, 2010
increased $0.7 million from the prior year period. Other
income includes a gain of $1.7 million in the three-month period
ended August 31, 2010 from the sale of emissions credits associated
with our Crestmore cement plant in Riverside, California which was
offset in part by lower gains from routine sales of surplus
operating assets.
Aggregate Operations
|
Three months ended
August 31, |
In thousands except per unit |
2010 |
2009 |
|
|
|
Operating Results |
|
|
Total stone, sand and gravel
sales |
$ 26,593 |
$ 27,794 |
Total other sales and delivery fees |
23,377 |
22,307 |
Total segment sales |
49,970 |
50,101 |
Cost of products sold |
43,410 |
39,155 |
Gross profit |
6,560 |
10,946 |
Selling, general and administrative |
(3,059) |
(2,705) |
Other income |
1,633 |
398 |
Operating Profit |
$ 5,134 |
$ 8,639 |
|
|
|
Stone, sand and gravel |
|
|
Shipments (tons) |
3,584 |
3,423 |
Prices ($/ton) |
$7.42 |
$8.12 |
Cost of sales ($/ton) |
$6.45 |
$6.28 |
Aggregate operating profit for the three-month period ended
August 31, 2010 was $5.1 million, a decrease of $3.5 million from
the prior year period. Lower sales prices offset in part by
higher shipments reduced operating profit approximately $2
million.
Total segment sales for the three-month period ended August 31,
2010 were $50.0 million compared to $50.1 million for the prior
year period. Stone, sand and gravel sales decreased $1.2
million from the prior year period on 9% lower average prices and
5% higher shipments.
Cost of products sold for the three-month period ended August
31, 2010 increased $4.3 million from the prior year period
primarily due to higher shipments. Overall stone, sand and
gravel unit costs increased 3% from the prior year period primarily
due to higher repair and maintenance costs.
Selling, general and administrative expense for the three-month
period ended August 31, 2010 increased $0.4 million from the prior
year period primarily due to higher provisions for bad debts.
Other income for the three-month period ended August 31, 2010
increased $1.2 million from the prior year period primarily due to
higher gains from routine sales of surplus operating assets.
Consumer Products Operations
|
Three months ended
August 31, |
In thousands except per unit |
2010 |
2009 |
|
|
|
Operating Results |
|
|
Total ready-mix concrete sales |
$ 52,106 |
$ 54,053 |
Total other sales and delivery fees |
14,372 |
15,485 |
Total segment sales |
66,478 |
69,538 |
Cost of products sold |
63,249 |
61,716 |
Gross profit |
3,229 |
7,822 |
Selling, general and administrative |
(2,676) |
(3,204) |
Other income |
198 |
133 |
Operating Profit |
$ 751 |
$ 4,751 |
|
|
|
Ready-mix concrete |
|
|
Shipments (cubic yards) |
669 |
612 |
Prices ($/cubic yard) |
$77.83 |
$88.46 |
Cost of sales ($/cubic yard) |
$76.20 |
$79.91 |
Consumer products operating profit for the three-month period
ended August 31, 2010 was $0.8 million, a decrease of $4.0 million
from the prior year period. Lower sales prices offset in part
by higher shipments reduced operating profit approximately $6
million.
Total segment sales for the three-month period ended August 31,
2010 were $66.5 million compared to $69.5 million for the prior
year period. Ready-mix concrete sales for the three-month
period ended August 31, 2010 decreased $1.9 million from the prior
year period on 12% lower average prices and 9% higher
shipments.
Cost of products sold for the three-month period ended August
31, 2010 increased $1.5 million from the prior year period
primarily due to higher shipments. Overall ready-mix concrete
unit costs decreased 5% from the prior year period primarily due to
the effect of higher shipments and lower raw material costs.
Selling, general and administrative expense for the three-month
period ended August 31, 2010 decreased $0.5 million from the prior
year period primarily due to lower provisions for bad debts.
Other income for the three-month period ended August 31, 2010
increased $0.1 million from the prior year period primarily due to
higher gains from routine sales of surplus operating assets.
Corporate
|
Three months ended
August 31, |
In thousands |
2010 |
2009 |
|
|
|
Other income |
$ 621 |
$ 378 |
Selling, general and administrative |
(5,613) |
(9,671) |
|
$ (4,992) |
$ (9,293) |
Other income for the three-month period ended August 31, 2010
increased $0.2 million from the prior year period primarily due to
higher oil and gas royalties offset in part by lower interest
income.
Selling, general and administrative expense for the three-month
period ended August 31, 2010 decreased $4.1 million from the prior
year period. The decrease was primarily the result of $3.0
million lower stock-based compensation. Our stock-based
compensation includes awards expected to be settled in cash, the
expense for which is based on their fair value at the end of each
period until the awards are paid. The impact of changes in our
stock price on their fair value decreased stock-based compensation
$1.3 million in the three-month period ended August 31, 2010 and
increased stock-based compensation $1.6 million in the three-month
period ended August 31, 2009. We hold life insurance policies in
connection with certain of our benefit plans. Proceeds
received from the policies in the three-month period ended August
31, 2010 decreased expense $0.4 million from the prior year period.
Our focus on reducing controllable costs lowered overall other
expenses $0.7 million in the three-month period ended August 31,
2010 from the prior year period.
Interest
Interest expense incurred was $14.4 million and $13.2 million in
the three-month periods ended August 31, 2010 and August 31, 2009,
respectively, of which none was capitalized. Interest expense
incurred for the three-month period ended August 31, 2010 increased
$1.2 million from the prior year period primarily as a result of
higher average outstanding debt at higher interest rates due to the
refinancing of our 7.25% senior notes.
Loss on Debt Retirements
On July 27, 2010, we commenced a cash tender offer for all of
the outstanding $550 million aggregate principal amount of our
7.25% senior notes due 2013 and a solicitation of consents to amend
the indenture governing the 7.25% notes. Pursuant to the tender
offer and consent solicitation, we purchased $536.6 million
aggregate principal amount of the 7.25% notes, and paid an
aggregate of $547.7 million in purchase price and consent
fees. On September 9, 2010, we redeemed the remaining $13.4
million aggregate principal amount of the 7.25% notes at a price of
101.813% of the principal amount thereof, plus accrued and unpaid
interest on the 7.25% notes to the redemption date. We used
the net proceeds from the issuance and sale of $650 million
aggregate principal amount of our 9.25% senior notes to pay the
purchase or redemption price of the 7.25% notes and the consent
fees. As of August 31, 2010, we recognized a loss on debt
retirement of $29.0 million representing $11.1 million in consent
fees and transaction costs and a write-off of $17.9 million of
unamortized debt discount and original issuance costs associated
with the 7.25% notes.
Income Taxes
Income taxes for the interim periods ended August 31, 2010 and
August 31, 2009 have been included in the accompanying financial
statements on the basis of an estimated annual rate. The estimated
annualized rate does not include the tax impact of the loss on debt
retirements which has been recognized as a discrete item in the
three-month period ended August 31, 2010. The estimated
annualized rate excluding this charge is 40.6% for fiscal year 2011
compared to 47.4% for fiscal year 2010. The primary reason
that the tax rate differs from the 35% federal statutory corporate
rate is due to percentage depletion that is tax deductible, state
income taxes and deductions for income from qualified domestic
production activities.
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 our business, the
cyclical and seasonal nature of our business, the level of
construction activity in our markets, abnormal periods of inclement
weather, unexpected periods of equipment downtime, unexpected
operational difficulties, changes in the cost of raw materials,
fuel and energy, changes in the cost or availability of
transportation, changes in interest rates, the timing and amount of
federal, state and local funding for infrastructure, delays in
announced capacity expansions, ongoing volatility and uncertainty
in the capital or credit markets, the impact of environmental laws,
regulations and claims and changes in governmental and public
policy, and the risks and uncertainties described in our reports on
Forms 10-K, 10-Q and 8-K. Forward-looking statements speak
only as of the date hereof, and we assume no obligation to publicly
update such statements.
TXI is the largest producer of cement in Texas and a major
cement producer in California. TXI is also a major supplier of
construction aggregate, ready-mix concrete and concrete
products.
The Texas Industries, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=6602
|
(Unaudited) |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
TEXAS INDUSTRIES, INC. AND
SUBSIDIARIES |
|
|
Three months ended
August 31, |
In thousands except per share |
2010 |
2009 |
|
|
|
NET SALES |
$ 172,122 |
$ 183,957 |
|
|
|
Cost of products sold |
156,014 |
149,852 |
GROSS PROFIT |
16,108 |
34,105 |
|
|
|
Selling, general and administrative |
16,141 |
20,254 |
Interest |
14,411 |
13,244 |
Loss on debt retirements |
29,006 |
-- |
Other income |
(4,890) |
(2,652) |
|
54,668 |
30,846 |
INCOME (LOSS) BEFORE INCOME
TAXES |
(38,560) |
3,259 |
|
|
|
Income taxes (benefit) |
(14,868) |
1,544 |
NET INCOME (LOSS) |
$ (23,692) |
$ 1,715 |
|
|
|
|
|
|
Net income (loss) per share |
|
|
Basic |
$ (.85) |
$ .06 |
Diluted |
$ (.85) |
$ .06 |
|
|
|
Average shares outstanding |
|
|
Basic |
27,787 |
27,720 |
Diluted |
27,787 |
27,940 |
|
|
|
Cash dividends declared per share |
$ .075 |
$ .075 |
|
|
CONSOLIDATED BALANCE SHEETS |
TEXAS INDUSTRIES, INC. AND
SUBSIDIARIES |
|
|
(Unaudited) August 31, |
May 31, |
In thousands |
2010 |
2010 |
|
|
|
ASSETS |
|
|
CURRENT ASSETS |
|
|
Cash and cash equivalents |
$ 162,427 |
$ 74,946 |
Receivables – net |
107,217 |
112,184 |
Inventories |
148,741 |
142,419 |
Deferred income taxes and prepaid
expenses |
22,673 |
23,426 |
TOTAL CURRENT ASSETS |
441,058 |
352,975 |
|
|
|
PROPERTY, PLANT AND EQUIPMENT |
|
|
Land and land improvements |
158,094 |
158,367 |
Buildings |
58,371 |
58,351 |
Machinery and equipment |
1,217,852 |
1,220,021 |
Construction in progress |
324,760 |
322,039 |
|
1,759,077 |
1,758,778 |
Less depreciation and
depletion |
618,706 |
604,269 |
|
1,140,371 |
1,154,509 |
OTHER ASSETS |
|
|
Goodwill |
1,715 |
1,715 |
Real estate and investments |
6,223 |
6,774 |
Deferred charges and other |
22,398 |
15,774 |
|
30,336 |
24,263 |
|
$ 1,611,765 |
$ 1,531,747 |
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
CURRENT LIABILITIES |
|
|
Accounts payable |
$ 54,659 |
$ 56,214 |
Accrued interest, compensation and
other |
45,805 |
51,455 |
Current portion of long-term
debt |
13,341 |
234 |
TOTAL CURRENT LIABILITIES |
113,805 |
107,903 |
|
|
|
LONG-TERM DEBT |
652,459 |
538,620 |
|
|
|
DEFERRED INCOME TAXES AND OTHER CREDITS |
108,400 |
123,976 |
|
|
|
SHAREHOLDERS' EQUITY |
|
|
Common stock, $1 par value; authorized
100,000 shares; issued and outstanding 27,807 and 27,796
shares, respectively |
27,807 |
27,796 |
Additional paid-in capital |
476,901 |
475,584 |
Retained earnings |
246,240 |
272,018 |
Accumulated other comprehensive loss |
(13,847) |
(14,150) |
|
737,101 |
761,248 |
|
$ 1,611,765 |
$ 1,531,747 |
|
|
(Unaudited) |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
TEXAS INDUSTRIES, INC. AND
SUBSIDIARIES |
|
|
Three months ended August
31, |
In thousands |
2010 |
2009 |
|
|
|
OPERATING ACTIVITIES |
|
|
Net income (loss) |
$ (23,692) |
$ 1,715 |
Adjustments to reconcile net income
(loss) to cash provided by operating activities |
|
|
Depreciation, depletion and
amortization |
15,861 |
16,594 |
Gains on asset disposals |
(1,613) |
(1,030) |
Deferred income taxes (benefit) |
(14,973) |
743 |
Stock-based compensation expense
(credit) |
(230) |
2,643 |
Excess tax benefits from stock-based
compensation |
-- |
(211) |
Loss on debt retirements |
29,006 |
-- |
Other – net |
2,192 |
(221) |
Changes in operating assets and
liabilities |
|
|
Receivables – net |
4,413 |
(888) |
Inventories |
(6,322) |
757 |
Prepaid expenses |
1,297 |
1,074 |
Accounts payable and accrued
liabilities |
(7,284) |
(6,638) |
Net cash provided (used) by operating
activities |
(1,345) |
14,538 |
|
|
|
INVESTING ACTIVITIES |
|
|
Capital expenditures – expansions |
(1,374) |
(4,569) |
Capital expenditures – other |
(1,782) |
(804) |
Proceeds from asset disposals |
3,209 |
1,068 |
Investments in life insurance
contracts |
327 |
5,802 |
Other – net |
292 |
(19) |
Net cash provided by investing
activities |
672 |
1,478 |
|
|
|
FINANCING ACTIVITIES |
|
|
Long-term borrowings |
650,000 |
-- |
Debt retirements |
(547,736) |
(59) |
Debt issuance costs |
(12,250) |
(2,032) |
Stock option exercises |
225 |
331 |
Excess tax benefits from stock-based
compensation |
-- |
211 |
Common dividends paid |
(2,085) |
(2,080) |
Net cash provided (used) by financing
activities |
88,154 |
(3,629) |
Increase in cash and cash equivalents |
87,481 |
12,387 |
|
|
|
Cash and cash equivalents at beginning of
period |
74,946 |
19,796 |
Cash and cash equivalents at end of
period |
$ 162,427 |
$ 32,183 |
CONTACT: Texas Industries, Inc.
Kenneth R. Allen, Vice President, Finance,
Chief Financial Officer
972-647-6730
kallen@txi.com
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