Texas Industries, Inc. (NYSE:TXI) today reported financial results
for the quarter ended August 31, 2011. Results for the quarter were
a net loss of $7.4 million or $.27 per share. Results for the
quarter ended August 31, 2010 were a 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.
General Comments
"Conditions in our markets remain challenging in light of the
pervasive uncertainty regarding the economy," stated Mel Brekhus,
Chief Executive Officer. "In recent months we made progress on
pricing and we are committed to continuing our efforts, although
economic headwinds may cause our successes to be uneven in the near
term."
"We also made significant progress during the quarter on a
number of strategic initiatives. The swap of ready-mix assets in
Houston, TX for ready-mix and aggregate assets in Austin, TX and
the continued construction on the expansion of our central Texas
cement plant will strengthen and increase our market position in
one of the better markets in the state. The extension of our credit
facility to August 2016 also increases our liquidity and improves
our ability to execute our strategy," added Brekhus.
A teleconference will be held September 29, 2011 at 10:00
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 |
2011 |
2010 |
|
|
|
Operating Results |
|
|
Cement
sales |
$ 75,978 |
$ 67,690 |
Other sales
and delivery fees |
9,659 |
8,692 |
Total
segment sales |
85,637 |
76,382 |
Cost of
products sold |
78,232 |
70,063 |
Gross
profit |
7,405 |
6,319 |
Selling,
general and administrative |
(4,078) |
(4,793) |
Other
income |
3,190 |
2,438 |
Operating
Profit |
$ 6,517 |
$ 3,964 |
|
|
|
Cement |
|
|
Shipments
(tons) |
969 |
873 |
Prices
($/ton) |
$ 78.41 |
$ 77.59 |
Cost of
sales ($/ton) |
$ 71.77 |
$ 71.23 |
Cement operating profit for the three-month periods ended August
31, 2011 and August 31, 2010 was $6.5 million and $4.0 million,
respectively. Construction activity remained at low levels in
both our Texas and California market areas during the periods.
Total segment sales for the three-month period ended August 31,
2011 were $85.6 million compared to $76.4 million for the prior
year period. Cement sales increased $8.3 million from the
prior year period. Our Texas market area accounted for
approximately 67% of cement sales in the current period compared to
70% of cement sales in the prior year period. Average cement
prices were comparable to the prior year period in our Texas market
area and increased 3% in our California market area. Shipments
increased 8% in our Texas market area and 17% in our California
market area.
Cost of products sold for the three-month period ended August
31, 2011 increased $8.2 million from the prior year period
primarily due to higher shipments and a 1% increase in cement unit
costs.
Selling, general and administrative expense for the three-month
period ended August 31, 2011 decreased $0.7 million from the prior
year period primarily due to lower provisions for bad debts and
legal and other professional expenses.
Other income for the three-month period ended August 31, 2011
increased $0.8 million from the prior year period. Sales of
emission credits associated with our Crestmore cement plant in
Riverside, California resulted in gains of $2.5 million and $1.7
million in the three-month periods ended August 31, 2011 and August
31, 2010, respectively.
Aggregate Operations
|
Three months ended
August 31, |
In thousands except per unit |
2011 |
2010 |
|
|
|
Operating Results |
|
|
Stone, sand
and gravel sales |
$ 22,200 |
$ 26,593 |
Expanded shale and clay
sales and delivery fees |
22,901 |
23,377 |
Total
segment sales |
45,101 |
49,970 |
Cost of
products sold |
38,508 |
43,410 |
Gross
profit |
6,593 |
6,560 |
Selling,
general and administrative |
(2,950) |
(3,059) |
Other
income |
272 |
1,633 |
Operating
Profit |
$ 3,915 |
$ 5,134 |
|
|
|
Stone, sand and
gravel |
|
|
Shipments
(tons) |
3,143 |
3,584 |
Prices
($/ton) |
$ 7.06 |
$ 7.42 |
Cost of
sales ($/ton) |
$ 6.22 |
$ 6.45 |
Aggregate operating profit for the three-month periods ended
August 31, 2011 and August 31, 2010 was $3.9 million and $5.1
million, respectively.
Total segment sales for the three-month period ended August 31,
2011 were $45.1 million compared to $50.0 million for the prior
year period. Stone, sand and gravel sales decreased $4.4
million from the prior year period. The effect of the
disposition of aggregate operating assets through the asset
exchange transaction completed in April 2011 decreased sales $2.3
million, shipments 7% and average prices 2% from the prior year
period. Stone, sand and gravel sales from current operations
decreased $2.1 million from the prior year period on 5% lower
shipments and 3% lower average prices.
Cost of products sold for the three-month period ended August
31, 2011 decreased $4.9 million from the prior year period
primarily due to lower stone, sand and gravel
shipments. Stone, sand and gravel unit costs decreased 4% from
the prior year period primarily due to the effect of the
disposition of aggregate operating assets through the asset
exchange transaction completed in April 2011.
Selling, general and administrative expense for the three-month
period ended August 31, 2011 decreased $0.1 million from the prior
year period primarily due to lower provisions for bad debts.
Other income for the three-month period ended August 31, 2011
decreased $1.4 million from the prior year period primarily due to
lower gains from routine sales of surplus operating assets.
Consumer Products Operations
|
Three months ended
August 31, |
In thousands except per unit |
2011 |
2010 |
|
|
|
Operating Results |
|
|
Ready-mix
concrete sales |
$ 56,228 |
$ 52,106 |
Package
products sales and delivery fees |
14,796 |
14,372 |
Total
segment sales |
71,024 |
66,478 |
Cost of
products sold |
71,197 |
63,249 |
Gross
profit (loss) |
(173) |
3,229 |
Selling,
general and administrative |
(4,374) |
(2,676) |
Other
income |
2,207 |
198 |
Operating
Profit (Loss) |
$ (2,340) |
$ 751 |
|
|
|
Ready-mix concrete |
|
|
Shipments
(cubic yards) |
741 |
669 |
Prices
($/cubic yard) |
$ 75.93 |
$ 77.83 |
Cost of
sales ($/cubic yard) |
$ 78.91 |
$ 76.20 |
Consumer products operating loss for the three-month period
ended August 31, 2011 was $2.3 million. Consumer products
operating profit for the three-month period ended August 31, 2010
was $0.8 million. Reduced margins due to lower sales prices
increased operating loss from the prior year period.
Total segment sales for the three-month period ended August 31,
2011 were $71.0 million compared to $66.5 million for the prior
year period. Ready-mix concrete sales increased $4.1 million
from the prior year. Sales increased $8.9 million and
shipments increased 18% due to the net effect of the acquisition of
the ready-mix operations through the asset exchange transactions
completed in April and July 2011. Ready-mix concrete sales
excluding the net effect of the acquisitions decreased $4.8 million
from the prior year period on 7% lower shipments and 2% lower
average prices.
Cost of products sold for the three-month period ended August
31, 2011 increased $7.9 million from the prior year
period. Cost of products sold increased $9.0 million due to
the net effect of the acquisition of the ready-mix operations
through the asset exchange transactions completed in April and July
2011. Cost of products sold excluding the net effect of the
acquisitions decreased $1.1 million primarily due to lower
ready-mix concrete shipments. Ready-mix concrete unit costs
increased 4% from the prior year period primarily due to higher
diesel costs and the effect of lower shipments.
Selling, general and administrative expense for the three-month
period ended August 31, 2011 increased $1.7 million from the prior
year period primarily due to higher provisions for bad debts and
insurance claims.
Other income for the three-month period ended August 31, 2011
increased $2.0 million from the prior year period primarily due to
the recognition of a gain of $2.1 million as a result of the
disposition of ready-mix operations in Houston, Texas through the
asset exchange transaction completed in July 2011.
Corporate
|
Three months ended
August 31, |
In thousands |
2011 |
2010 |
|
|
|
Other income |
$ 203 |
$ 621 |
Selling, general and
administrative |
(6,402) |
(5,613) |
|
$ (6,199) |
$ (4,992) |
Other income for the three-month period ended August 31, 2011
decreased $0.4 million from the prior year period primarily due to
lower oil and gas royalty payments.
Selling, general and administrative expense for the three-month
period ended August 31, 2011 increased $0.8 million from the prior
year period primarily due to higher retirement plan and stock-based
compensation expenses.
Interest
Interest expense incurred for the three-month period ended
August 31, 2011 was $17.3 million, of which $7.8 million was
capitalized in connection with our Hunter, Texas cement plant
expansion project and $9.5 million was expensed. Interest
expense incurred for the three-month period ended August 31, 2010
was $14.4 million, all of which was expensed.
Interest expense incurred for the three-month period ended
August 31, 2011 increased $2.9 million from the prior year period
primarily as a result of higher average outstanding debt at higher
interest rates due to the August 2010 refinancing of our senior
notes.
Interest expense to be capitalized in connection with our
Hunter, Texas cement plant expansion project during the remainder
of our current fiscal year is currently estimated at approximately
$27 million.
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 and to
increase working capital. As of August 31, 2010, we recognized
a loss on debt retirement of $29.0 million representing $11.1
million in consent fees, redemption price premium 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, 2011 and
August 31, 2010 have been included in the accompanying financial
statements on the basis of an estimated annual rate. The tax
rate differs from the 35% federal statutory corporate rate
primarily due to percentage depletion that is tax deductible, state
income taxes and valuation allowances against deferred tax assets.
The estimated annualized rate does not include the tax impact of
the loss on debt retirements which was recognized as a discrete
item in the three-month period ended August 31, 2010. The
estimated annualized rate excluding this charge is 1.8% for fiscal
year 2012 compared to 40.6% for fiscal year 2011. We received
income tax refunds of less than $0.1 million and made no income tax
payments in the three-month period ended August 31, 2011. We
received income tax refunds and made income tax payments of less
than $0.1 million in the three-month period ended August 31,
2010.
Net deferred tax assets totaled $15.1 million at August 31, 2011
and $15.0 million at May 31, 2011, of which $13.0 million at August
31, 2011 and $12.3 million at May 31, 2011 were classified as
current. Management reviews our deferred tax position and in
particular our deferred tax assets whenever circumstances indicate
that the assets may not be realized in the future and would record
a valuation allowance unless such deferred tax assets were deemed
more likely than not to be recoverable. The ultimate
realization of these deferred tax assets depends upon various
factors including the generation of taxable income during future
periods. The Company's deferred tax assets exceeded deferred
tax liabilities as of August 31, 2011 primarily as a result of the
recent losses. Management has concluded that the sources of
taxable income we are permitted to consider do not assure the
realization of the entire amount of the increase in our net
deferred tax assets expected during the year. Accordingly, a
valuation allowance is required due to the uncertainty of realizing
the deferred tax assets.
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
rate, 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 obligations 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
CONSOLIDATED BALANCE
SHEETS |
TEXAS INDUSTRIES, INC. AND
SUBSIDIARIES |
|
|
(Unaudited) |
|
August 31, |
May 31, |
In thousands |
2011 |
2011 |
|
|
|
ASSETS |
|
|
CURRENT ASSETS |
|
|
Cash and cash
equivalents |
$ 60,600 |
$ 116,432 |
Receivables – net |
94,617 |
85,817 |
Inventories |
139,752 |
140,646 |
Deferred income taxes and
prepaid expenses |
21,001 |
22,040 |
TOTAL CURRENT ASSETS |
315,970 |
364,935 |
|
|
|
PROPERTY, PLANT AND EQUIPMENT |
|
|
Land and land
improvements |
179,121 |
158,232 |
Buildings |
57,952 |
59,320 |
Machinery and
equipment |
1,219,595 |
1,222,560 |
Construction in
progress |
374,097 |
357,638 |
|
1,830,765 |
1,797,750 |
Less depreciation and
depletion |
649,973 |
642,329 |
|
1,180,792 |
1,155,421 |
OTHER ASSETS |
|
|
Goodwill |
1,715 |
1,715 |
Real estate and
investments |
6,447 |
6,749 |
Deferred income taxes and
other charges |
24,031 |
22,191 |
|
32,193 |
30,655 |
|
$ 1,528,955 |
$ 1,551,011 |
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
CURRENT LIABILITIES |
|
|
Accounts payable |
$ 54,320 |
$ 56,787 |
Accrued interest,
compensation and other |
49,290 |
58,848 |
Current portion of
long-term debt |
74 |
73 |
TOTAL CURRENT
LIABILITIES |
103,684 |
115,708 |
|
|
|
LONG-TERM DEBT |
652,385 |
652,403 |
|
|
|
OTHER CREDITS |
85,223 |
87,318 |
|
|
|
SHAREHOLDERS' EQUITY |
|
|
Common stock, $1 par
value; authorized 100,000 shares; issued and outstanding 27,890 and
27,887 shares, respectively |
27,890 |
27,887 |
Additional paid-in
capital |
483,056 |
481,706 |
Retained earnings |
189,240 |
198,751 |
Accumulated other
comprehensive loss |
(12,523) |
(12,762) |
|
687,663 |
695,582 |
|
$ 1,528,955 |
$ 1,551,011 |
(Unaudited) |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
TEXAS INDUSTRIES, INC. AND
SUBSIDIARIES |
|
|
Three months ended
August 31, |
In thousands except per share |
2011 |
2010 |
|
|
|
NET SALES |
$ 181,740 |
$ 172,122 |
|
|
|
Cost of products sold |
167,915 |
156,014 |
GROSS PROFIT |
13,825 |
16,108 |
|
|
|
Selling, general and administrative |
17,804 |
16,141 |
Interest |
9,460 |
14,411 |
Loss on debt retirements |
-- |
29,006 |
Other income |
(5,872) |
(4,890) |
|
21,392 |
54,668 |
LOSS BEFORE INCOME
TAXES |
(7,567) |
(38,560) |
|
|
|
Income tax benefit |
(147) |
(14,868) |
NET LOSS |
$ (7,420) |
$ (23,692) |
|
|
|
|
|
|
Net loss per share |
|
|
Basic |
$ (.27) |
$ (.85) |
Diluted |
$ (.27) |
$ (.85) |
|
|
|
Average shares outstanding |
|
|
Basic |
27,874 |
27,787 |
Diluted |
27,874 |
27,787 |
|
|
|
Cash dividends declared per share |
$ .075 |
$ .075 |
|
|
|
(Unaudited) |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
TEXAS INDUSTRIES, INC. AND
SUBSIDIARIES |
|
|
Three months ended
August 31, |
In thousands |
2011 |
2010 |
|
|
|
OPERATING ACTIVITIES |
|
|
Net loss |
$ (7,420) |
$ (23,692) |
Adjustments to reconcile
net loss to cash used by operating activities |
|
|
Depreciation, depletion
and amortization |
15,980 |
15,861 |
Gains on asset
disposals |
(2,368) |
(1,613) |
Deferred income tax
benefit |
(241) |
(14,973) |
Stock-based compensation
expense (credit) |
107 |
(230) |
Loss on debt
retirements |
-- |
29,006 |
Other – net |
(1,567) |
2,192 |
Changes in operating
assets and liabilities |
|
|
Receivables – net |
(8,670) |
4,413 |
Inventories |
894 |
(6,322) |
Prepaid expenses |
1,729 |
1,297 |
Accounts payable and
accrued liabilities |
(5,809) |
(7,284) |
Net cash used by
operating activities |
(7,365) |
(1,345) |
|
|
|
INVESTING ACTIVITIES |
|
|
Capital expenditures –
expansions |
(25,221) |
(1,374) |
Capital expenditures –
other |
(20,367) |
(1,782) |
Proceeds from asset
disposals |
863 |
3,209 |
Investments in life
insurance contracts |
-- |
327 |
Other – net |
(82) |
292 |
Net cash provided (used)
by investing activities |
(44,807) |
672 |
|
|
|
FINANCING ACTIVITIES |
|
|
Long-term borrowings |
-- |
650,000 |
Debt retirements |
(18) |
(547,736) |
Debt issuance costs |
(1,629) |
(12,250) |
Stock option
exercises |
78 |
225 |
Common dividends
paid |
(2,091) |
(2,085) |
Net cash provided (used)
by financing activities |
(3,660) |
88,154 |
Increase (decrease) in cash and cash
equivalents |
(55,832) |
87,481 |
|
|
|
Cash and cash equivalents at beginning of
period |
116,432 |
74,946 |
Cash and cash equivalents at end of
period |
$ 60,600 |
$ 162,427 |
CONTACT: T. Lesley Vines, Jr.
Vice President
Corporate Controller & Treasurer
972.647.6722
Email: lvines@txi.com
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