DALLAS, Jan. 6, 2011 (GLOBE NEWSWIRE) -- Texas Industries, Inc. (NYSE:TXI) today reported financial results for the quarter ended November 30, 2010. Results for the quarter were a net loss of $11.2 million or $.40 per share. Results for the quarter ended November 30, 2009 were a net loss of $3.7 million or $.13 per share and included after tax gains from the sale of emission credits of $2.1 million ($.08 per share).
General Comments
"Conditions in our markets remain challenging," stated Mel Brekhus, Chief Executive Officer. "Volumes were up compared to the same period a year ago but it is difficult to determine how much might be attributable to market conditions due to the fact that we experienced abnormally inclement weather in Texas a year ago and more typical weather this year."
"We continue to focus on meeting market demand as cost effectively as possible. As planned, we resumed construction of TXI's central Texas cement plant expansion during the quarter," added Brekhus.
A teleconference will be held tomorrow, January 7, 2011 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 | 2010 | 2009 | 2010 | 2009 |
| Operating Results | ||||
| Total cement sales | $ 61,599 | $ 61,726 | $ 129,289 | $ 140,186 |
| Total other sales and delivery fees | 6,979 | 6,457 | 15,671 | 13,193 |
| Total segment sales | 68,578 | 68,183 | 144,960 | 153,379 |
| Cost of products sold | 63,121 | 58,359 | 133,184 | 128,218 |
| Gross profit | 5,457 | 9,824 | 11,776 | 25,161 |
| Selling, general and administrative | (4,018) | (4,359) | (8,811) | (9,033) |
| Other income | 509 | 4,670 | 2,947 | 6,413 |
| Operating Profit | $ 1,948 | $ 10,135 | $ 5,912 | $ 22,541 |
| Cement | ||||
| Shipments (tons) | 784 | 738 | 1,657 | 1,653 |
| Prices ($/ton) | $78.49 | $83.64 | $78.02 | $84.78 |
| Cost of sales ($/ton) | $73.39 | $71.98 | $72.25 | $70.16 |
Three months ended November 30, 2010
Cement operating profit for the three-month period ended November 30, 2010 was $1.9 million, a decrease of $8.2 million from the prior year period. Lower sales prices offset in part by higher shipments reduced operating profit approximately $3 million. In addition, other income decreased $4.2 million from the prior year period.
Total segment sales for the three-month period ended November 30, 2010 were $68.6 million compared to $68.2 million for the prior year period. Cement sales were comparable to 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 73% of cement sales in the current period compared to 69% of cement sales in the prior year period. Average cement prices decreased 6% in our Texas market area and 7% in our California market area. Shipments increased 12% in our Texas market area and decreased 6% in our California market area.
Cost of products sold for the three-month period ended November 30, 2010 increased $4.8 million from the prior year period. Cement unit costs increased 2% from the prior year period primarily due to higher repair and maintenance costs offset in part by the effect of higher shipments.
Selling, general and administrative expense for the three-month period ended November 30, 2010 decreased $0.3 million from the prior year period. The decrease was primarily due to lower provisions for bad debts and defined benefit plan expense.
Other income for the three-month period ended November 30, 2010 decreased $4.2 million from the prior year period. The decrease was primarily due to $0.6 million lower royalty income and $3.4 million lower gains from sales of emissions credits associated with our Crestmore cement plant in Riverside, California.
Aggregate Operations
| Three months ended November 30, | Six months ended November 30, | |||
| In thousands except per unit | 2010 | 2009 | 2010 | 2009 |
| Operating Results | ||||
| Total stone, sand and gravel sales | $ 22,644 | $ 20,217 | $ 49,237 | $ 48,011 |
| Total other sales and delivery fees | 18,438 | 16,070 | 41,815 | 38,377 |
| Total segment sales | 41,082 | 36,287 | 91,052 | 86,388 |
| Cost of products sold | 35,002 | 32,001 | 78,412 | 71,156 |
| Gross profit | 6,080 | 4,286 | 12,640 | 15,232 |
| Selling, general and administrative | (2,814) | (2,489) | (5,873) | (5,194) |
| Other income | 57 | 432 | 1,690 | 830 |
| Operating Profit | $ 3,323 | $ 2,229 | $ 8,457 | $ 10,868 |
| Stone, sand and gravel | ||||
| Shipments (tons) | 3,026 | 2,642 | 6,610 | 6,065 |
| Prices ($/ton) | $7.48 | $7.65 | $7.45 | $7.92 |
| Cost of sales ($/ton) | $6.53 | $7.03 | $6.48 | $6.61 |
Three months ended November 30, 2010
Aggregate operating profit for the three-month period ended November 30, 2010 was $3.3 million, an increase of $1.1 million from the prior year period. Higher shipments offset in part by lower sales prices increased operating profit approximately $1 million.
Total segment sales for the three-month period ended November 30, 2010 were $41.1 million compared to $36.3 million for the prior year period. Stone, sand and gravel sales increased $2.4 million from the prior year period on 15% higher shipments and 2% lower average prices.
Cost of products sold for the three-month period ended November 30, 2010 increased $3.0 million from the prior year period primarily due to higher shipments. Stone, sand and gravel unit costs decreased 7% from the prior year period primarily due to the effect of higher shipments on unit costs offset in part by higher repair and maintenance costs.
Selling, general and administrative expense for the three-month period ended November 30, 2010 increased $0.3 million from the prior year period primarily due to higher provisions for bad debts.
Other income for the three-month period ended November 30, 2010 decreased $0.4 million from the prior year period primarily due to lower gains from routine sales of surplus operating assets.
Consumer Products Operations
| Three months ended November 30, | Six months ended November 30, | |||
| In thousands except per unit | 2010 | 2009 | 2010 | 2009 |
| Operating Results | ||||
| Total ready-mix concrete sales | $ 43,377 | $ 41,720 | $ 95,483 | $ 95,773 |
| Total other sales and delivery fees | 13,443 | 12,733 | 27,815 | 28,218 |
| Total segment sales | 56,820 | 54,453 | 123,298 | 123,991 |
| Cost of products sold | 56,290 | 51,691 | 119,539 | 113,407 |
| Gross profit | 530 | 2,762 | 3,759 | 10,584 |
| Selling, general and administrative | (3,047) | (2,749) | (5,723) | (5,953) |
| Other income | 134 | 268 | 332 | 401 |
| Operating Profit (Loss) | $ (2,383) | $ 281 | $ (1,632) | $ 5,032 |
| Ready-mix concrete | ||||
| Shipments (cubic yards) | 575 | 501 | 1,244 | 1,113 |
| Prices ($/cubic yard) | $75.45 | $83.02 | $76.73 | $86.01 |
| Cost of sales ($/cubic yard) | $77.79 | $80.98 | $76.94 | $80.39 |
Three months ended November 30, 2010
Consumer products operating loss for the three-month period ended November 30, 2010 was $2.4 million, a decrease in profit of $2.7 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 November 30, 2010 were $56.8 million compared to $54.5 million for the prior year period. Ready-mix concrete sales for the three-month period ended November 30, 2010 increased $1.7 million from the prior year period on 9% lower average prices and 15% higher shipments.
Cost of products sold for the three-month period ended November 30, 2010 increased $4.6 million from the prior year period primarily due to higher shipments. Ready-mix concrete unit costs decreased 4% from the prior year period primarily due to the effect of higher shipments offset in part by higher fuel and repair and maintenance costs.
Selling, general and administrative expense for the three-month period ended November 30, 2010 increased $0.3 million from the prior year period primarily due to higher provisions for bad debts.
Other income for the three-month period ended November 30, 2010 decreased $0.1 million from the prior year period primarily due to lower gains from routine sales of surplus operating assets.
Corporate
| Three months ended November 30, | Six months ended November 30, | |||
| In thousands | 2010 | 2009 | 2010 | 2009 |
| Other income | $ 1,229 | $ 358 | $ 1,850 | $ 736 |
| Selling, general and administrative | (8,664) | (6,289) | (14,277) | (15,960) |
| $ (7,435) | $ (5,931) | $ (12,427) | $ (15,224) | |
Three months ended November 30, 2010
Other income for the three-month period ended November 30, 2010 increased $0.9 million from the prior year period primarily due to higher oil and gas lease bonus and royalty payments offset in part by lower interest income.
Selling, general and administrative expense for the three-month period ended November 30, 2010 increased $2.4 million from the prior year period. The increase was primarily the result of $3.0 million higher 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 increased stock-based compensation $1.5 million in the three-month period ended November 30, 2010 and decreased stock-based compensation $1.5 million in the three-month period ended November 30, 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 November 30, 2010 decreased expense $0.2 million from the prior year period. Our focus on reducing controllable costs lowered other expenses $0.4 million in the three-month period ended November 30, 2010 from the prior year period.
Interest
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, 2009 was $13.4 million, all of which was expensed.
Interest expense incurred for the three-month period ended November 30, 2010 increased 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. An additional $15 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. 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, 2010 and November 30, 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 six-month period ended November 30, 2010. The estimated annualized rate excluding this charge is 41.0% for fiscal year 2011 compared to 41.4% for fiscal year 2010.
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 | Six months ended | |||
| November 30, | November 30, | |||
| In thousands except per share | 2010 | 2009 | 2010 | 2009 |
| NET SALES | $148,111 | $142,935 | $320,233 | $326,892 |
| Cost of products sold | 136,044 | 126,063 | 292,058 | 275,915 |
| GROSS PROFIT | 12,067 | 16,872 | 28,175 | 50,977 |
| Selling, general and administrative | 18,543 | 15,886 | 34,684 | 36,140 |
| Interest | 13,886 | 13,364 | 28,297 | 26,608 |
| Loss on debt retirements | 613 | -- | 29,619 | -- |
| Other income | (1,929) | (5,728) | (6,819) | (8,380) |
| 31,113 | 23,522 | 85,781 | 54,368 | |
| LOSS BEFORE INCOME TAXES | (19,046) | (6,650) | (57,606) | (3,391) |
| Income tax benefit | (7,845) | (2,948) | (22,713) | (1,404) |
| NET LOSS | $ (11,201) | $ (3,702) | $ (34,893) | $ (1,987) |
| Net loss per share | ||||
| Basic | $ (.40) | $ (.13) | $ (1.25) | $ (.07) |
| Diluted | $ (.40) | $ (.13) | $ (1.25) | $ (.07) |
| Average shares outstanding | ||||
| Basic | 27,807 | 27,736 | 27,797 | 27,728 |
| Diluted | 27,807 | 27,736 | 27,797 | 27,728 |
| Cash dividends declared per share | $.075 | $.075 | $.15 | $.15 |
| CONSOLIDATED BALANCE SHEETS | ||
| TEXAS INDUSTRIES, INC. AND SUBSIDIARIES | ||
| (Unaudited) | ||
| November 30, | May 31, | |
| In thousands | 2010 | 2010 |
| ASSETS | ||
| CURRENT ASSETS | ||
| Cash and cash equivalents | $139,753 | $74,946 |
| Receivables – net | 96,671 | 112,184 |
| Inventories | 152,681 | 142,419 |
| Deferred income taxes and prepaid expenses | 23,351 | 23,426 |
| TOTAL CURRENT ASSETS | 412,456 | 352,975 |
| PROPERTY, PLANT AND EQUIPMENT | ||
| Land and land improvements | 158,941 | 158,367 |
| Buildings | 58,817 | 58,351 |
| Machinery and equipment | 1,226,794 | 1,220,021 |
| Construction in progress | 330,574 | 322,039 |
| 1,775,126 | 1,758,778 | |
| Less depreciation and depletion | 634,404 | 604,269 |
| 1,140,722 | 1,154,509 | |
| OTHER ASSETS | ||
| Goodwill | 1,715 | 1,715 |
| Real estate and investments | 7,426 | 6,774 |
| Deferred charges and other | 23,219 | 15,774 |
| 32,360 | 24,263 | |
| $1,585,538 | $1,531,747 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| CURRENT LIABILITIES | ||
| Accounts payable | $41,800 | $56,214 |
| Accrued interest, compensation and other | 63,307 | 51,455 |
| Current portion of long-term debt | 95 | 234 |
| TOTAL CURRENT LIABILITIES | 105,202 | 107,903 |
| LONG-TERM DEBT | 652,441 | 538,620 |
| DEFERRED INCOME TAXES AND OTHER CREDITS | 102,495 | 123,976 |
| SHAREHOLDERS' EQUITY | ||
| Common stock, $1 par value; authorized 100,000 shares; issued and outstanding 27,820 and 27,796 shares, respectively | 27,820 | 27,796 |
| Additional paid-in capital | 478,172 | 475,584 |
| Retained earnings | 232,953 | 272,018 |
| Accumulated other comprehensive loss | (13,545) | (14,150) |
| 725,400 | 761,248 | |
| $1,585,538 | $1,531,747 | |
| (Unaudited) | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| TEXAS INDUSTRIES, INC. AND SUBSIDIARIES | ||
| Six months ended | ||
| November 30, | ||
| In thousands | 2010 | 2009 |
| OPERATING ACTIVITIES | ||
| Net loss | $ (34,893) | $ (1,987) |
| Adjustments to reconcile net loss to cash provided by operating activities | ||
| Depreciation, depletion and amortization | 31,991 | 32,971 |
| Gains on asset disposals | (1,555) | (1,433) |
| Deferred income taxes (benefit) | (22,964) | 756 |
| Stock-based compensation expense | 2,288 | 2,143 |
| Excess tax benefits from stock-based compensation | -- | (248) |
| Loss on debt retirements | 29,619 | -- |
| Other – net | (2,855) | 609 |
| Changes in operating assets and liabilities | ||
| Receivables – net | 16,112 | 14,020 |
| Inventories | (10,262) | (3,843) |
| Prepaid expenses | 1,232 | 1,767 |
| Accounts payable and accrued liabilities | 1,313 | (4,823) |
| Net cash provided by operating activities | 10,026 | 39,932 |
| INVESTING ACTIVITIES | ||
| Capital expenditures – expansions | (11,198) | (4,543) |
| Capital expenditures – other | (12,201) | (2,899) |
| Proceeds from asset disposals | 3,037 | 1,443 |
| Investments in life insurance contracts | 3,704 | 6,726 |
| Other – net | (859) | (2) |
| Net cash provided (used) by investing activities | (17,517) | 725 |
| FINANCING ACTIVITIES | ||
| Long-term borrowings | 650,000 | -- |
| Debt retirements | (561,568) | (144) |
| Debt issuance costs | (12,426) | (2,039) |
| Stock option exercises | 464 | 356 |
| Excess tax benefits from stock-based compensation | -- | 248 |
| Common dividends paid | (4,172) | (2,080) |
| Net cash provided (used) by financing activities | 72,298 | (3,659) |
| Increase in cash and cash equivalents | 64,807 | 36,998 |
| Cash and cash equivalents at beginning of period | 74,946 | 19,796 |
| Cash and cash equivalents at end of period | $139,753 | $56,794 |
CONTACT: Kenneth R. Allen
Vice President-Finance and Chief Financial Officer
972.647.6730
Email: kallen@txi.com