Texas Industries, Inc. (NYSE:TXI) today reported financial results
for the quarter ended November 30, 2011. Results for the quarter
were a net loss of $21.0 million or $.75 per share and included a
one-time, pre-tax charge of $3.2 million ($.11 per share after-tax)
relating to the Company's cost cutting and efficiency initiatives
announced last September. Additionally, the reduction of the tax
rate, compared to a year ago, increased the loss by $.30 per share.
Results for the quarter ended November 30, 2010 were a net loss of
$11.2 million or $.40 per share.
General Comments
"While the general economy is showing signs of some improvement,
it has yet to manifest itself in increased construction activity in
our markets," stated Mel Brekhus, Chief Executive Officer. "This is
consistent with my expectation of a slow and prolonged recovery in
the construction industry."
"I am pleased with the progress we have made on our cost cutting
and efficiency initiatives. Our total headcount is down 11%
compared to August 31, 2011. Projects are underway to improve
efficiencies throughout our operations and our efforts to reduce
costs through improved purchasing practices are showing good
results. There is obviously much more work to be accomplished
in order to reach our goals of a 15% gross profit margin and
SG&A expense at 8% of sales by the end of fiscal year 2013 but
we are off to a very good start," added Brekhus.
A teleconference will be held tomorrow, January 5, 2012 at 10:00
Central Standard 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
November 30, |
Six months ended
November 30, |
In thousands except per unit |
2011 |
2010 |
2011 |
2010 |
|
|
|
|
|
Operating Results |
|
|
|
|
Total
cement sales |
$ 68,994 |
$ 61,599 |
$ 144,972 |
$ 129,289 |
Total other
sales and delivery fees |
8,240 |
6,979 |
17,899 |
15,671 |
Total
segment sales |
77,234 |
68,578 |
162,871 |
144,960 |
Cost of
products sold |
78,050 |
63,121 |
156,282 |
133,184 |
Gross
profit (loss) |
(816) |
5,457 |
6,589 |
11,776 |
Selling,
general and administrative |
(4,165) |
(4,018) |
(8,243) |
(8,811) |
Restructuring charges |
(1,074) |
-- |
(1,074) |
-- |
Other
income |
700 |
509 |
3,890 |
2,947 |
Operating
Profit (Loss) |
$ (5,355) |
$ 1,948 |
$ 1,162 |
$ 5,912 |
|
|
|
|
|
Cement |
|
|
|
|
Shipments
(tons) |
884 |
784 |
1,853 |
1,657 |
Prices
($/ton) |
$ 78.07 |
$ 78.49 |
$ 78.25 |
$ 78.02 |
Cost of
sales ($/ton) |
$ 78.34 |
$ 73.39 |
$ 74.90 |
$ 72.25 |
Three months ended November 30, 2011
Cement operating loss for the three-month period ended November
30, 2011 was $5.4 million. Cement operating profit for the
three-month period ended November 30, 2010 was $1.9
million. The operating results in the current period were
impacted by the recognition of restructuring charges and an
increase in cost of products sold due to lower cement clinker
production and to higher repair and maintenance costs as a result
of scheduled maintenance downtime at our north Texas cement
plant.
Total segment sales for the three-month period ended November
30, 2011 were $77.2 million compared to $68.6 million for the prior
year period. Cement sales increased $7.4 million from the
prior year period. Our Texas market area accounted for
approximately 67% of cement sales in the current period compared to
73% of cement sales in the prior year period. Average cement
prices increased 2% in our Texas market area and decreased 5% in
our California market area. Shipments increased 1% in our
Texas market area and 44% in our California market area.
Cost of products sold for the three-month period ended November
30, 2011 increased $14.9 million from the prior year period
primarily due to higher shipments and a 7% increase in cement unit
costs. Cement unit costs were impacted by 21% lower cement
clinker production and higher repair and maintenance costs due to
scheduled maintenance downtime at our north Texas cement plant.
Selling, general and administrative expense for the three-month
period ended November 30, 2011 increased $0.1 million from the
prior year period primarily due to higher compensation expense.
Restructuring charges of $1.1 million were recorded in the
three-month period ended November 30, 2011. These charges
consist primarily of severance and benefit costs associated with
various workforce reduction initiatives.
Other income for the three-month period ended November 30, 2011
increased $0.2 million from the prior year period primarily due to
higher royalty income.
Aggregate Operations
|
Three months ended
November 30, |
Six months ended
November 30, |
In thousands except per unit |
2011 |
2010 |
2011 |
2010 |
|
|
|
|
|
Operating Results |
|
|
|
|
Total stone,
sand and gravel sales |
$ 20,993 |
$ 22,644 |
$ 43,193 |
$ 49,237 |
Expanded shale
and clay sales and delivery fees |
18,973 |
18,438 |
41,874 |
41,815 |
Total segment
sales |
39,966 |
41,082 |
85,067 |
91,052 |
Cost of products
sold |
35,313 |
35,002 |
73,821 |
78,412 |
Gross profit |
4,653 |
6,080 |
11,246 |
12,640 |
Selling, general
and administrative |
(2,323) |
(2,814) |
(5,273) |
(5,873) |
Restructuring
charges |
(437) |
-- |
(437) |
-- |
Other income |
207 |
57 |
479 |
1,690 |
Operating
Profit |
$ 2,100 |
$ 3,323 |
$ 6,015 |
$ 8,457 |
|
|
|
|
|
Stone, sand and gravel |
|
|
|
|
Shipments
(tons) |
2,818 |
3,026 |
5,961 |
6,610 |
Prices
($/ton) |
$ 7.45 |
$ 7.48 |
$ 7.25 |
$ 7.45 |
Cost of sales
($/ton) |
$ 6.35 |
$ 6.53 |
$ 6.28 |
$ 6.48 |
Three months ended November 30, 2011
Aggregate operating profit for the three-month periods ended
November 30, 2011 and November 30, 2010 was $2.1 million and $3.3
million, respectively.
Total segment sales for the three-month period ended November
30, 2011 were $40.0 million compared to $41.1 million for the prior
year period. Stone, sand and gravel sales decreased $1.7
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 $2.2
million, shipments 8% and average prices 2% from the prior year
period. Stone, sand and gravel sales from current operations
increased $0.5 million from the prior year period on 1% higher
shipments and 2% higher average prices.
Cost of products sold for the three-month period ended November
30, 2011 increased $0.3 million from the prior year
period. Stone, sand and gravel unit costs decreased 3% 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 November 30, 2011 decreased $0.5 million from the
prior year period primarily due to lower provisions for bad debts
and legal and other professional expenses.
Restructuring charges of $0.4 million were recorded in the
three-month period ended November 30, 2011. These charges
consist primarily of severance and benefit costs associated with
various workforce reduction initiatives.
Other income for the three-month period ended November 30, 2011
increased $0.2 million from the prior year period primarily due to
higher gains from routine sales of surplus operating assets and oil
and gas royalties and lease bonus payments.
Consumer Products Operations
|
Three months ended
November 30, |
Six months ended
November 30, |
In thousands except per unit |
2011 |
2010 |
2011 |
2010 |
|
|
|
|
|
Operating Results |
|
|
|
|
Total ready-mix concrete sales |
$ 44,579 |
$ 43,377 |
$ 100,807 |
$ 95,483 |
Package
products sales and delivery fees |
13,542 |
13,443 |
28,338 |
27,815 |
Total
segment sales |
58,121 |
56,820 |
129,145 |
123,298 |
Cost of
products sold |
59,212 |
56,290 |
130,409 |
119,539 |
Gross
profit (loss) |
(1,091) |
530 |
(1,264) |
3,759 |
Selling,
general and administrative |
(2,436) |
(3,047) |
(6,810) |
(5,723) |
Restructuring charges |
(536) |
-- |
(536) |
-- |
Other
income |
457 |
134 |
2,664 |
332 |
Operating
Loss |
$ (3,606) |
$ (2,383) |
$ (5,946) |
$ (1,632) |
|
|
|
|
|
Ready-mix concrete |
|
|
|
|
Shipments
(cubic yards) |
587 |
575 |
1,328 |
1,244 |
Prices
($/cubic yard) |
$ 75.85 |
$ 75.45 |
$ 75.89 |
$ 76.73 |
Cost of
sales ($/cubic yard) |
$ 80.66 |
$ 77.79 |
$ 79.69 |
$ 76.94 |
Three months ended November 30, 2011
Consumer products operating loss for the three-month periods
ended November 30, 2011 and November 30, 2010 was $3.6 million and
$2.4 million, respectively.
Total segment sales for the three-month period ended November
30, 2011 were $58.1 million compared to $56.8 million for the prior
year period. Ready-mix concrete sales increased $1.2 million
from the prior year. Sales increased $3.4 million and
shipments increased 8% due to the net effect of the asset exchange
transactions completed in April and July 2011. Ready-mix
concrete sales excluding the net effect of the asset exchange
transactions decreased $2.2 million from the prior year period on
6% lower shipments and 1% higher average prices.
Cost of products sold for the three-month period ended November
30, 2011 increased $2.9 million from the prior year
period. Cost of products sold increased $3.7 million due to
the net effect of the asset exchange transactions completed in
April and July 2011. Cost of products sold excluding the net
effect of the asset exchange transactions decreased $0.8
million. Ready-mix concrete unit costs increased 4% from the
prior year period primarily due to higher diesel costs.
Selling, general and administrative expense for the three-month
period ended November 30, 2011 decreased $0.6 million from the
prior year period primarily due to lower provisions for bad
debts.
Restructuring charges of $0.5 million were recorded in the
three-month period ended November 30, 2011. These charges
consist primarily of severance and benefit costs associated with
various workforce reduction initiatives.
Other income for the three-month period ended November 30, 2011
increased $0.3 million from the prior year period primarily due to
higher gains from routine sales of surplus operating assets.
Corporate
|
Three months ended
November 30, |
Six months ended
November 30, |
In thousands |
2011 |
2010 |
2011 |
2010 |
|
|
|
|
|
|
|
|
|
|
Other income |
$ 163 |
$ 1,229 |
$ 366 |
$ 1,850 |
Selling, general and
administrative |
(4,953) |
(8,664) |
(11,355) |
(14,277) |
Restructuring
charges |
(1,169) |
-- |
(1,169) |
-- |
|
$ (5,959) |
$ (7,435) |
$ (12,158) |
$ (12,427) |
Three months ended November 30, 2011
Other income for the three-month period ended November 30, 2011
decreased $1.1 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 November 30, 2011 decreased $3.7 million from the
prior year period primarily due to lower stock-based compensation
expense. 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 the fair value of these
awards decreased expense $2.7 million for the three-month period
ended November 30, 2011 and increased expense $1.5 million for the
three-month period ended November 30, 2010.
Restructuring charges of $1.2 million were recorded in the
three-month period ended November 30, 2011. These charges
consist primarily of severance and benefit costs associated with
various workforce reduction initiatives.
Interest
Interest expense incurred for the three-month period ended
November 30, 2011 was $17.1 million, of which $8.3 million was
capitalized in connection with our Hunter, Texas cement plant
expansion project and $8.8 million was expensed. Interest
expense incurred for the three-month period ended November 30, 2010
was $17.3 million, of which $3.4 million was capitalized in
connection with our Hunter, Texas cement plant expansion project
and $13.9 million was expensed. Interest expense incurred for the
three-month period ended November 30, 2011 decreased $0.2 million
from the prior year period primarily as a result of lower credit
facility fees.
An additional $19 million of interest expense is estimated to be
capitalized in connection with our Hunter, Texas cement plant
expansion project during the remainder of our current fiscal
year.
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 November 30, 2010, we
recognized a loss on debt retirement of $29.6 million representing
$11.4 million in consent fees, redemption price premium and
transaction costs and a write-off of $18.2 million of unamortized
debt discount and original issuance costs associated with the 7.25%
notes.
Income Taxes
Income taxes for the interim periods ended November 30, 2011 and
November 30, 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 six-month period ended November 30, 2010. The
estimated annualized rate excluding this charge is 3.0% for fiscal
year 2012 compared to 41.0% for fiscal year 2011. We received
income tax refunds of less than $0.1 million and made income tax
payments of $0.1 million in the six-month period ended November 30,
2011. We received income tax refunds of $0.2 million and made
income tax payments of less than $0.1 million in the six-month
period ended November 30, 2010.
Net deferred tax assets totaled $15.7 million at November 30,
2011 and $15.0 million at May 31, 2011, of which $13.7 million at
November 30, 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 November 30, 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 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
November 30, |
Six months ended
November 30, |
In thousands except per share |
2011 |
2010 |
2011 |
2010 |
|
|
|
|
|
NET SALES |
$ 156,071 |
$ 148,111 |
$ 337,811 |
$ 320,233 |
|
|
|
|
|
Cost of products sold |
153,325 |
136,044 |
321,240 |
292,058 |
GROSS PROFIT |
2,746 |
12,067 |
16,571 |
28,175 |
|
|
|
|
|
Selling, general and administrative |
13,877 |
18,543 |
31,681 |
34,684 |
Restructuring charges |
3,216 |
-- |
3,216 |
-- |
Interest |
8,838 |
13,886 |
18,298 |
28,297 |
Loss on debt retirements |
-- |
613 |
-- |
29,619 |
Other income |
(1,527) |
(1,929) |
(7,399) |
(6,819) |
|
24,404 |
31,113 |
45,796 |
85,781 |
LOSS BEFORE INCOME
TAXES |
(21,658) |
(19,046) |
(29,225) |
(57,606) |
|
|
|
|
|
Income tax benefit |
(621) |
(7,845) |
(768) |
(22,713) |
NET LOSS |
$ (21,037) |
$ (11,201) |
$ (28,457) |
$ (34,893) |
|
|
|
|
|
|
|
|
|
|
Net loss per share |
|
|
|
|
Basic |
$ (.75) |
$ (.40) |
$ (1.02) |
$ (1.25) |
Diluted |
$ (.75) |
$ (.40) |
$ (1.02) |
$ (1.25) |
|
|
|
|
|
Average shares outstanding |
|
|
|
|
Basic |
27,882 |
27,807 |
27,878 |
27,797 |
Diluted |
27,882 |
27,807 |
27,878 |
27,797 |
|
|
|
|
|
Cash dividends declared per share |
$ -- |
$ .075 |
$ .075 |
$ .15 |
|
|
|
|
|
CONSOLIDATED BALANCE
SHEETS |
TEXAS INDUSTRIES, INC. AND
SUBSIDIARIES |
|
|
|
|
(Unaudited) |
|
|
November 30, |
May 31, |
In thousands |
2011 |
2011 |
|
|
|
ASSETS |
|
|
CURRENT ASSETS |
|
|
Cash and cash
equivalents |
$ 67,462 |
$ 116,432 |
Receivables – net |
82,378 |
85,817 |
Inventories |
128,154 |
140,646 |
Deferred income taxes and
prepaid expenses |
20,529 |
22,040 |
TOTAL CURRENT ASSETS |
298,523 |
364,935 |
|
|
|
PROPERTY, PLANT AND EQUIPMENT |
|
|
Land and land
improvements |
180,090 |
158,232 |
Buildings |
57,330 |
59,320 |
Machinery and
equipment |
1,215,341 |
1,222,560 |
Construction in
progress |
400,275 |
357,638 |
|
1,853,036 |
1,797,750 |
Less depreciation and
depletion |
662,186 |
642,329 |
|
1,190,850 |
1,155,421 |
OTHER ASSETS |
|
|
Goodwill |
1,715 |
1,715 |
Real estate and
investments |
11,472 |
6,749 |
Deferred income taxes and
other charges |
22,481 |
22,191 |
|
35,668 |
30,655 |
|
$ 1,525,041 |
$ 1,551,011 |
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
CURRENT LIABILITIES |
|
|
Accounts payable |
$ 57,389 |
$ 56,787 |
Accrued interest,
compensation and other |
63,829 |
58,848 |
Current portion of
long-term debt |
499 |
73 |
TOTAL CURRENT
LIABILITIES |
121,717 |
115,708 |
|
|
|
LONG-TERM DEBT |
654,138 |
652,403 |
|
|
|
OTHER CREDITS |
80,919 |
87,318 |
|
|
|
SHAREHOLDERS' EQUITY |
|
|
Common stock, $1 par value;
authorized 100,000 shares; issued and outstanding 27,894 and 27,887
shares, respectively |
27,894 |
27,887 |
Additional paid-in capital |
484,453 |
481,706 |
Retained earnings |
168,203 |
198,751 |
Accumulated other comprehensive
loss |
(12,283) |
(12,762) |
|
668,267 |
695,582 |
|
$ 1,525,041 |
$ 1,551,011 |
(Unaudited) |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
TEXAS INDUSTRIES, INC. AND
SUBSIDIARIES |
|
|
Six months ended
November 30, |
In thousands |
2011 |
2010 |
|
|
|
OPERATING ACTIVITIES |
|
|
Net loss |
$ (28,457) |
$ (34,893) |
Adjustments to reconcile
net loss to cash provided by operating activities |
|
|
Depreciation, depletion
and amortization |
31,385 |
31,991 |
Gains on asset
disposals |
(2,751) |
(1,555) |
Deferred income tax
benefit |
(945) |
(22,964) |
Stock-based compensation
expense (credit) |
(1,229) |
2,288 |
Loss on debt
retirements |
-- |
29,619 |
Other – net |
(5,185) |
(2,855) |
Changes in operating
assets and liabilities |
|
|
Receivables – net |
3,696 |
16,112 |
Inventories |
12,189 |
(10,262) |
Prepaid expenses |
2,854 |
1,232 |
Accounts payable and
accrued liabilities |
930 |
1,313 |
Net cash provided by
operating activities |
12,487 |
10,026 |
|
|
|
INVESTING ACTIVITIES |
|
|
Capital expenditures –
expansions |
(35,966) |
(11,198) |
Capital expenditures –
other |
(26,300) |
(12,201) |
Proceeds from asset
disposals |
1,649 |
3,037 |
Investments in life
insurance contracts |
2,989 |
3,704 |
Other – net |
(128) |
(859) |
Net cash used by
investing activities |
(57,756) |
(17,517) |
|
|
|
FINANCING ACTIVITIES |
|
|
Long-term borrowings |
-- |
650,000 |
Debt retirements |
(36) |
(561,568) |
Debt issuance costs |
(1,732) |
(12,426) |
Stock option
exercises |
158 |
464 |
Common dividends
paid |
(2,091) |
(4,172) |
Net cash provided (used)
by financing activities |
(3,701) |
72,298 |
Increase (decrease) in cash and cash
equivalents |
(48,970) |
64,807 |
|
|
|
Cash and cash equivalents at beginning of
period |
116,432 |
74,946 |
Cash and cash equivalents at end of
period |
$ 67,462 |
$ 139,753 |
CONTACT: T. Lesley Vines, Jr.
Vice President
Corporate Controller & Treasurer
972.647.6722
Email: lvines@txi.com
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