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TXI Reports Third Quarter Results

Texas Industries, Inc. Logo

DALLAS, March 27, 2013 (GLOBE NEWSWIRE) -- Texas Industries, Inc. (NYSE:TXI) today reported financial results for the quarter ended February 28, 2013. Results for the quarter were a net loss of $5.8 million or $.21 per share. Results for the quarter ended February 28, 2012 were a net loss of $24.3 million or $.87 per share.

General Comments

"Construction activity in Texas and California continued to improve this quarter," stated Mel Brekhus, Chief Executive Officer. "Gross profit increased $14.2 million on increased sales of $19.5 million. This increase in profitability primarily reflects the benefits of increased shipments in reducing unit costs, and success in increasing efficiencies throughout the Company."

"The commissioning of the second kiln at our central Texas plant is on target to be completed this spring. This additional 1.4 million tons of cement capacity, in combination with the East Texas ready mix assets we acquired last week, places TXI in a strong position to benefit from the recovery in construction that is underway," added Brekhus.

A teleconference will be held tomorrow, March 28, 2013 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 Nine months ended
In thousands except per unit February 28,
2013
February 29,
2012
February 28,
2013
February 29,
2012
Operating Results
Cement sales $ 73,086 $ 57,830 $ 242,983 $ 202,802
Other sales and delivery fees 7,480 7,641 26,230 25,540
Total segment sales 80,566 65,471 269,213 228,342
Cost of products sold 68,501 63,359 237,326 219,641
Gross profit 12,065 2,112 31,887 8,701
Selling, general and administrative (3,247) (4,663) (10,520) (12,906)
Restructuring charges (1,074)
Other income 1,031 167 2,961 4,057
Operating Profits (Loss) $ 9,849 $ (2,384) $ 24,328 $ (1,222)
Cement
Shipments (tons) 933 743 3,086 2,596
Prices ($/ton) $ 78.39 $ 77.76 $ 78.75 $ 78.11
Cost of sales ($/ton) $ 64.35 $ 75.95 $ 68.62 $ 75.20

Three months ended February 28, 2013

Cement operating profit (loss) for the three-month periods ended February 28, 2013 and February 29, 2012 was $9.8 million and $(2.4) million, respectively.

Total segment sales for the three-month period ended February 28, 2013 were $80.6 million compared to $65.5 million for the prior year period. Cement sales increased $15.1 million from the prior year period. Our Texas market area accounted for approximately 71% of cement sales in the current period compared to 69% of cement sales in the prior year period. Average cement prices increased 2% in our Texas market from the prior year period. Average cement prices decreased 3% due to a change in product mix in our California market from the prior year period. Shipments increased 27% in our Texas market area and 22% in our California market area.

Cost of products sold for the three-month period ended February 28, 2013 increased $5.1 million from the prior year period primarily due to higher shipments. Cement unit cost of sales decreased 15% from prior year period primarily due to higher shipments offset slightly by higher fuel and power costs.

Selling, general and administrative expense for the three-month period ended February 28, 2013 decreased $1.4 million from the prior year period primarily due to our work force reduction initiatives.

Other income for the three-month period ended February 28, 2013 increased $0.9 million from the prior year period primarily due to higher royalties.

Aggregates Operations

Three months ended Nine months ended
In thousands except per unit February 28,
2013
February 29,
2012
February 28,
2013
February 29,
2012
Operating Results
Stone, sand and gravel sales $ 22,021 $ 16,829 $ 77,911 $ 60,022
Delivery fees 8,799 5,787 34,101 21,758
Total segment sales 30,820 22,616 112,012 81,780
Cost of products sold 28,106 23,825 100,294 76,203
Gross profit 2,714 (1,209) 11,718 5,577
Selling, general and administrative (900) (1,341) (2,763) (4,441)
Restructuring charges (374)
Other income 295 1,259 674 1,732
Operating Profit (Loss) $ 2,109 $ (1,291) $ 9,629 $ 2,494
Stone, sand and gravel
Shipments (tons) 3,029 2,363 10,751 8,324
Prices ($/ton) $ 7.27 $ 7.12 $ 7.25 $ 7.21
Cost of sales ($/ton) $ 6.46 $ 7.47 $ 6.12 $ 6.62

Previously, the aggregates segment included our expanded shale and clay lightweight aggregates operations which has been classified as discontinued operations in the current period and all prior periods. Therefore, amounts for these operations are not included in the information presented.

On March 22, 2013, our subsidiaries exchanged their expanded shale and clay lightweight aggregates manufacturing business for the ready-mix concrete business of subsidiaries of Trinity Industries, Inc. in east Texas and southwest Arkansas. Pursuant to the agreements, we transferred our expanded shale and clay manufacturing facilities in Streetman, Texas; Boulder, Colorado and Frazier Park, California; and our DiamondPro® product line in exchange for 42 ready-mix concrete plants stretching from Texarkana to Beaumont in east Texas and in southwestern Arkansas, two aggregate distribution facilities in Beaumont and Port Arthur, Texas, and related assets. We anticipate recognizing a gain on the transaction, the amount of which is still being finalized and will be included in the results for our discontinued operations in our fourth quarter 2013.

Three months ended February 28, 2013

Aggregates operating profit for the three-month period ended February 28, 2013 was $2.1 million and operating loss for the three-month period ended February 29, 2012 was $(1.3) million.

Total segment sales for the three-month period ended were $30.8 million compared to $22.6 million for the prior year period. Stone, sand and gravel sales increased $8.2 million from the prior year period on 28% higher shipments.

Cost of products sold for the three-month period ended February 28, 2013 increased $4.3 million from the prior year period primarily due to increased stone, sand and gravel shipments. Stone, sand and gravel unit costs decreased 14% from the prior year period primarily due to the effect of higher shipments on unit costs.

Selling, general and administrative expense for the three-month period ended February 28, 2013 decreased $0.4 million from the prior year period primarily due to our work force reduction initiatives.

Consumer Products Operations

Three months ended Nine months ended
In thousands except per unit February 28,
2013
February 29,
2012
February 28,
2013
February 29,
2012
Operating Results
Ready-mix concrete sales $ 44,582 $ 37,481 $ 149,276 $ 138,288
Package products sales and delivery fees 46 12,398 274 40,736
Total segment sales 44,628 49,879 149,550 179,024
Cost of products sold 47,081 52,663 153,877 183,072
Gross loss (2,453) (2,784) (4,327) (4,048)
Selling, general and administrative (2,475) (1,297) (7,239) (8,107)
Restructuring charges (536)
Other income 666 (177) 2,789 2,487
Operating Loss $ (4,262) $ (4,258) $ (8,777) $ (10,204)
Ready-mix concrete
Shipments (cubic yards) 541 508 1,833 1,836
Prices ($/cubic yard) $ 82.49 $ 73.80 $ 81.46 $ 75.31
Cost of sales ($/cubic yard) $ 87.04 $ 81.87 $ 83.88 $ 80.29

Three months ended February 28, 2013

Consumer products operating loss for the three-month periods ended February 28, 2013 and February 29, 2012 was $(4.3) million and $(4.3) million, respectively.

Total segment sales for the three-month period ended February 28, 2013 were $44.6 million compared to $49.9 million for the prior year period. Segment sales decreased $5.3 million from the prior year period due to the sale of our Texas-based package products operations. Ready-mix concrete sales from ongoing operations increased $7.1 million from the prior year period on 6% higher shipments and 12% higher average prices.

Cost of products sold for the three-month period ended February 28, 2013 decreased $5.6 million from the prior year period primarily due to the sale of our package products operations. Ready-mix concrete unit costs increased 6% from the prior year period on higher maintenance, diesel and material costs.

Selling, general and administrative expense for the three-month period ended February 28, 2013 increased $1.2 million from the prior year period due to insurance costs related to a prior event.

Other income for the three-month period ended February 28, 2013 increased $0.8 million from the prior year period primarily due to earnings from joint venture of $0.5 million.

Corporate

Three months ended Nine months ended
In thousands February 28,
2013
February 29,
2012
February 28,
2013
February 29,
2012
Other income $ 98 $ 84 $ 190 $ 450
Selling, general and administrative (10,437) (9,964) (31,157) (21,319)
Restructuring charges (1,169)
$ (10,339) $ (9,880) $ (30,967) $ (22,038)

Three months ended February 28, 2013

Other income for the three-month period ended February 28, 2013 remains relatively unchanged from prior year period on flat oil and gas royalty payments.

Selling, general and administrative expense for the three-month period ended February 28, 2013 increased $0.5 million from the prior year period.

Interest

Interest expense incurred for the three-month period ended February 28, 2013 was $17.4 million, of which $10.2 million was capitalized in connection with our Hunter, Texas cement plant expansion project and $7.2 million was expensed. Interest expense incurred for the three-month period ended February 29, 2012 was $17.0 million, of which $8.5 million was capitalized in connection with our Hunter, Texas cement plant expansion project and $8.5 million was expensed.

Income Taxes

Income taxes for the interim periods ended February 28, 2013 and February 29, 2012 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 for continuing operations is 7.9% for fiscal year 2013 compared to 2.5% for fiscal year 2012. We made no income tax payments and received no refunds in the nine-month period ended February 28, 2013. We made income tax payments of $0.1 million, and received income tax refunds of less than $0.1 million in the nine-month period ended February 29, 2012.

Net deferred tax assets totaled $12.4 million at February 28, 2013 and $13.7 million at May 31, 2012, of which $9.7 million at February 28, 2013 and $10.7 million at May 31, 2012 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 records a valuation allowance unless such deferred tax assets are 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 February 28, 2013 and May 31, 2012 primarily as a result of 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 our net deferred tax assets. Accordingly, a valuation allowance is required due to the uncertainty of realizing the deferred tax assets. We recorded a valuation allowance of $5.2 million in fiscal year 2012 through a charge to other comprehensive loss given the increase in actuarial losses in our retirement plans in 2012. We will continue to record additional valuation allowance against additions to our net deferred tax assets for fiscal year 2013 until Management believes it is more likely than not the deferred tax assets will be realized

Certain statements contained in this quarterly report are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements may include the words "may," "will," "estimate," "intend," "continue," "believe," "expect," "plan," "anticipate," and other similar words. 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 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, 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.

(Unaudited)
CONSOLIDATED STATEMENTS OF OPERATIONS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
Three months ended Nine months ended
In thousands except per share February 28,
2013
February 29,
2012
February 28,
2013
February 29,
2012
NET SALES $ 141,359 $ 121,894 $ 483,575 $ 435,696
Cost of products sold 129,035 123,774 444,297 425,464
GROSS PROFIT 12,324 (1,880) 39,278 10,232
Selling, general and administrative 17,056 17,265 51,679 46,774
Restructuring charges 3,153
Interest 7,227 8,512 22,462 26,810
Other income (2,091) (1,332) (6,614) (8,725)
22,192 24,445 67,527 68,012
LOSS BEFORE INCOME TAXES FROM CONTINUING OPERATIONS (9,868) (26,325) (28,249) (57,780)
Income taxes (benefit) (1,355) (1,148) (2,151) (2,601)
NET LOSS FROM CONTINUING OPERATIONS $ (8,513) $ (25,177) $ (26,098) $ (55,179)
NET INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX 2,699 897 6,504 2,442
NET LOSS $ (5,814) $ (24,280) $ (19,594) $ (52,737)
NET LOSS PER SHARE FROM CONTINUING OPERATIONS:
Basic $ (0.30) $ (0.90) $ (0.93) $ (1.98)
Diluted $ (0.30) $ (0.90) $ (0.93) $ (1.98)
NET INCOME FROM DISCONTINUED OPERATIONS:
Basic $ 0.09 $ 0.03 $ 0.23 $ 0.09
Diluted $ 0.09 $ 0.03 $ 0.23 $ 0.09
NET LOSS PER SHARE:
Basic $ (0.21) $ (0.87) $ (0.70) $ (1.89)
Diluted $ (0.21) $ (0.87) $ (0.70) $ (1.89)
AVERAGE SHARES OUTSTANDING
Basic 28,190 27,926 28,073 27,894
Diluted 28,190 27,926 28,073 27,894
CASH DIVIDENDS DECLARED PER SHARE $ — $ — $ — $ 0.075
See notes to consolidated financial statements.
(Unaudited)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
Three months ended Nine months ended
In thousands February 28,
2013
February 29,
2012
February 28,
2013
February 29,
2012
Net loss $ (5,814) $ (24,280) $ (19,594) $ (52,737)
Other comprehensive income
Net actuarial gains (losses) of defined postretirement benefit plans
Reclassification of recognized transactions, net of taxes -- $126, $209, $736 and $627, respectively 219 363 784 1,088
Adjustment, net of tax (55)
Prior service cost of defined postretirement benefit plans
Reclassification of recognized transactions, net of taxes - ($71), ($71), ($413) and ($213), respectively (123) (123) (168) (369)
Total other comprehensive income 96 240 561 719
Comprehensive loss $ (5,718) $ (24,040) $ (19,033) $ (52,018)
See notes to consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
(Unaudited)
In thousands February 28,
2013
May 31,
2012
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 31,664 $ 88,027
Receivables – net 98,458 98,836
Inventories 100,282 99,441
Deferred income taxes and prepaid expenses 20,282 19,007
Discontinued operations held for sale 38,769 40,344
TOTAL CURRENT ASSETS 289,455 345,655
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements 170,078 168,173
Buildings 49,637 49,567
Machinery and equipment 1,156,061 1,142,439
Construction in progress 483,641 436,552
1,859,417 1,796,731
Less depreciation and depletion 647,281 611,406
1,212,136 1,185,325
OTHER ASSETS
Goodwill 1,715 1,715
Real estate and investments 23,024 20,865
Deferred income taxes and other charges 22,141 23,368
46,880 45,948
$ 1,548,471 $ 1,576,928
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 57,000 $ 64,825
Accrued interest, compensation and other 48,134 61,317
Current portion of long-term debt 1,816 1,214
TOTAL CURRENT LIABILITIES 106,950 127,356
LONG-TERM DEBT 658,392 656,949
OTHER CREDITS 88,088 96,352
SHAREHOLDERS' EQUITY
Common stock, $1 par value; authorized 100,000 shares; issued and outstanding 28,324 and 27,996 shares, respectively 28,324 27,996
Additional paid-in capital 506,112 488,637
Retained earnings 184,542 204,136
Accumulated other comprehensive loss (23,937) (24,498)
695,041 696,271
$ 1,548,471 $ 1,576,928
See notes to consolidated financial statements.
(Unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
Nine months ended
In thousands February 28,
2013
February 29,
2012
OPERATING ACTIVITIES
Net loss $ (19,594) $ (52,737)
Adjustments to reconcile net loss to cash provided by operating activities
Depreciation, depletion and amortization 42,968 46,495
(Gains)/Loss on asset disposals (4,822) (3,736)
Deferred income tax (benefit) expense 1,025 (1,653)
Stock-based compensation expense 7,015 1,710
Other – net (7,555) (4,424)
Changes in operating assets and liabilities
Receivables – net 830 7,624
Inventories (710) 10,048
Prepaid expenses (2,158) 3,261
Accounts payable and accrued liabilities (7,228) (4,466)
Net cash provided by operating activities 9,771 2,122
INVESTING ACTIVITIES
Capital expenditures – expansions (61,344) (64,901)
Capital expenditures – other (19,910) (31,394)
Proceeds from asset disposals 5,783 4,188
Investments in life insurance contracts 2,366 3,354
Other – net (67) (302)
Net cash used by investing activities (73,172) (89,055)
FINANCING ACTIVITIES
Debt payments (78) (173)
Debt issuance costs (1,829)
Stock option exercises 7,116 1,749
Common dividends paid (2,091)
Net cash provided (used) by financing activities 7,038 (2,344)
Decrease in cash and cash equivalents (56,363) (89,277)
Cash and cash equivalents at beginning of period 88,027 116,432
Cash and cash equivalents at end of period $ 31,664 $ 27,155
See notes to consolidated financial statements.

CONTACT: T. Lesley Vines, Jr. Corporate Controller & Treasurer 972.647.6700

Source:Texas Industries, Inc.