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TXI Reports Fourth Quarter and Year-End Results

Texas Industries, Inc. Logo

DALLAS, July 10, 2013 (GLOBE NEWSWIRE) -- Texas Industries, Inc. (NYSE:TXI) today reported financial results for the quarter and year ended May 31, 2013. Net income for the quarter was $44.1 million or $1.52 per share. Net income included income net of tax from discontinued operations of $28.5 million or $.98 per share. Net income from discontinued operations included a pre-tax gain on the disposition of expanded shale and clay operations of $41.1 million. Net income for the quarter ended May 31, 2012 was $60.2 million or $2.15 per share and included pre-tax gains of $60.1 million from asset sales and a joint venture agreement. Prior net income also included income net of tax from discontinued operations of $3.1 million or $.11 per share.

Net income for the year ended May 31, 2013 was $24.6 million or $.86 per share and included a pre-tax gain on the disposition of discontinued operations of $41.1 million. Net income included income net of tax from discontinued operations of $35.0 million or $1.23 per share. Net income for the year ended May 31, 2012 was $7.5 million or $.27 per share and included pre-tax gains of $62.2 million from asset sales, asset exchanges and a joint venture agreement. Prior net income also included income net of tax from discontinued operations of $5.5 million or $.20 per share.

General Comments

"The fourth quarter certainly benefited from the continuing recovery of construction activity in our major markets," stated Mel Brekhus, Chief Executive Officer. "Shipments of all products reflect double digit percentage increases compared to a year ago."

"We also achieved two strategic milestones during the quarter," added Brekhus. "The commissioning of our 1.4 million ton cement kiln at our central Texas plant was finished late in the quarter and we completed the acquisition of 42 ready-mix plants in east Texas. Both events significantly improve our ability to take advantage of the strong recovery under way in Texas."

A teleconference will be held July 11, 2013 at 10:00 Central Daylight Time to further discuss quarter and annual 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
Quarter ended
May 31,
Year ended
May 31,
In thousands except per unit 2013 2012 2013 2012
Operating Results
Total cement sales $ 102,975 $ 75,611 $ 345,958 $ 278,413
Total other sales and delivery fees 9,317 11,340 35,547 36,880
Total segment sales 112,292 86,951 381,505 315,293
Cost of products sold 90,102 66,484 327,428 286,125
Gross profit 22,190 20,467 54,077 29,168
Selling, general and administrative (2,650) (3,625) (13,170) (16,531)
Restructuring charges ---- ---- ---- (1,074)
Other income 194 4,868 3,155 8,925
Operating Profit $ 19,734 $ 21,710 $ 44,062 $ 20,488
Cement
Shipments (tons) 1,299 984 4,385 3,580
Prices ($/ton) $79.27 $76.79 $78.90 $77.75
Cost of sales ($/ton) $64.50 $56.60 $67.40 $70.09

Three months ended May 31, 2013

Cement operating profit for the three-month period ended May 31, 2013 was $19.7 million. Cement operating profit for the three-month period ended May 31, 2012 was $21.7 million. Cement operating profit decreased $2.0 million from the prior fiscal period.

Total segment sales for the three-month period ended May 31, 2013 increased $25.3 million from the prior fiscal period on higher shipments and prices. Cement sales increased $27.4 million. Our Texas market area accounted for approximately 72% of cement sales in the current period compared to 70% of cement sales in the prior year period. Cement shipments increased 34% in our Texas market area and increased 29% in our California market area compared to the prior fiscal period. Average prices increased 5% in our Texas market area and remained comparable in our California market area from the prior fiscal period.

Cost of products sold for three-month period ended May 31, 2013 increased $23.6 million from the prior fiscal period. The increase was due to higher shipments and costs. Cement unit costs increased 14% from the prior fiscal period primarily due to higher energy costs, higher supplies, unscheduled maintenance expense, and depreciation expense related to our new kiln placed in service during the quarter.

Selling, general and administrative expense for the three-month period ended May 31, 2013 decreased $1.0 million from the prior fiscal period. The decrease was primarily due to lower incentive compensation expense.

Other income for the three-month period ended May 31, 2013 decreased $4.7 million from the prior fiscal period. The decrease was primarily due to $3.9 million higher gains from routine sales of surplus operating assets in 2012.

Fiscal Year 2013 Compared to Fiscal Year 2012

Cement operating profit for fiscal year 2013 was $44.1 million, an increase of $23.6 million from prior fiscal year.

Total segment sales for fiscal year 2013 were $381.5 million compared to $315.3 million for the prior fiscal year. Cement sales increased $66.2 million from the prior fiscal year on higher shipments. Our Texas market area accounted for approximately 70% of cement sales in the current fiscal year and 68% in the prior fiscal year. Cement shipments increased 23% in our Texas market area and 22% in our California market area from the prior fiscal year. Average prices increased 4% in our Texas market area and decreased 3% in our California market area from the prior fiscal year.

Cost of products sold for fiscal year 2013 increased $41.3 million from the prior fiscal year; primarily due to higher shipments. Cement unit costs decreased 4% from the prior fiscal year due to higher cement production volumes.

Selling, general and administrative expense for fiscal year 2013 decreased $3.4 million from the prior fiscal year. The decrease was primarily due to $3.1 million in lower compensation and benefit expenses.

Restructuring charges of $1.1 million were recorded in fiscal year 2012. These charges consist primarily of severance and benefit costs associated with various workforce reduction initiatives.

Other income for fiscal year 2013 decreased $5.8 million from the prior fiscal year. The decrease was primarily due to $3.0 million in higher gains from routine sales of surplus operating assets in 2012 and $2.5 million in higher gains from sales of emissions credits associated with our Crestmore cement plant in 2012.

Aggregate Operations
Quarter ended
May 31,
Year ended
May 31,
In thousands except per unit 2013 2012 2013 2012
Operating Results
Total stone, sand and gravel sales $ 32,128 $ 25,515 $ 110,039 $ 85,537
Other sales and delivery fees 11,466 10,063 45,567 31,821
Total segment sales 43,594 35,578 155,606 117,358
Cost of products sold 38,546 31,655 138,840 107,858
Gross profit 5,048 3,923 16,766 9,500
Selling, general and administrative (856) (1,432) (3,619) (5,874)
Restructuring charges ---- ---- ---- (373)
Other income 622 20,385 1,296 22,117
Operating Profit (Loss) $ 4,814 $ 22,876 $ 14,443 $ 25,370
Stone, sand and gravel
Shipments (tons) 4,042 3,514 14,793 11,838
Prices ($/ton) $7.95 $7.26 $7.44 $7.23
Cost of sales ($/ton) $6.63 $6.01 $6.26 $6.44

Three months ended May 31, 2013

Aggregate operating profit for the three-month period ended May 31, 2013 was $4.8 million, a decrease of $18.1 million from the prior fiscal period. Operating profit for the three-month period ended May 31, 2012 included a gain of $20.8 million from the sale of our aggregate rail distribution terminal and associated assets located in Stafford, Texas.

Total segment sales for the three-month period ended May 31, 2013 were $43.6 million compared to $35.6 million for the prior fiscal period. Stone, sand and gravel sales increased $6.6 million from the prior fiscal period. Stone, sand and gravel sales from operations increased from the prior year on 15% higher shipments and 9% higher average prices.

Cost of products sold for the three-month period ended May 31, 2013 increased $6.9 million from the prior fiscal period. Cost of products sold from operations increased on higher supplies, repair and maintenance, labor and stripping costs. Stone, sand and gravel unit costs increased 10%.

Selling, general and administrative expense for the three-month period ended May 31, 2013 decreased $0.6 million from prior year primarily due to $0.4 million lower incentive compensation expense and $0.2 million lower rent expense.

Other income for the three-month period ended May 31, 2013 decreased $19.8 million from the prior fiscal period. Other income in the three-month period ended May 31, 2012 included a gain of $20.8 million from the sale of our aggregate rail distribution terminal and associated assets located in Stafford, Texas.

Fiscal Year 2013 Compared to Fiscal Year 2012

Aggregate operating profit for fiscal year 2013 was $14.4 million, a decrease of $11.0 million from the prior fiscal year. Operating profit for fiscal year 2012 included a gain of $20.8 million from the sale of our aggregate rail distribution terminal and associated assets located in Stafford, Texas. Excluding these gains, operating profit increased $9.8 million from the prior fiscal year.

Total segment sales for fiscal year 2013 were $155.6 million compared to $117.4 million for the prior fiscal year. Stone, sand and gravel sales from current operations increased $38.2 million from the prior fiscal year on 25% higher shipments and 3% higher average prices.

Cost of products sold for fiscal year 2013 increased $31.0 million from the prior fiscal year. Cost of products sold from current operations increased primarily due to higher stone, sand and gravel shipments and higher freight costs. Stone, sand and gravel unit costs decreased 3% from the prior year period due to increased production volumes.

Selling, general and administrative expense for fiscal year 2013 decreased $2.3 million from the prior fiscal year. The decrease was primarily due to $1.3 lower controllable expenses, $0.6 million in lower bad debt expense and $0.3 million in lower incentive compensation expense.

Restructuring charges of $0.4 million were recorded in fiscal year 2012. These charges consist primarily of severance and benefit costs associated with various workforce reduction initiatives.

Other income for fiscal year 2013 decreased $20.8 million. Other income in 2012 included a gain of $20.8 million from the sale of our aggregate rail distribution terminal and associated assets located in Stafford, Texas.

Consumer Products Operations
Quarter ended
May 31,
Year ended
May 31,
In thousands except per unit 2013 2012 2013 2012
Operating Results
Total ready-mix concrete sales $ 82,082 $ 44,190 $ 231,358 $ 182,478
Other sales and delivery fees 97 8,514 371 49,250
Total segment sales 82,179 52,704 231,729 231,728
Cost of products sold 81,417 53,791 235,294 236,863
Gross profit (loss) 762 (1,087) (3,565) (5,135)
Selling, general and administrative (3,500) (2,739) (10,739) (10,846)
Restructuring charges ---- ---- ---- (536)
Other income 1,383 39,065 4,172 41,552
Operating Profit (Loss) $ (1,355) $ 35,239 $ (10,132) $ 25,035
Ready-mix concrete
Shipments (cubic yards) 968 563 2,801 2,399
Prices ($/cubic yard) $84.80 $78.50 $82.60 $76.06
Cost of sales ($/cubic yard) $83.79 $81.34 $83.85 $80.54

Three months ended May 31, 2013

Consumer products operating loss for the three-month period ended May 31, 2013 was $1.4 million. Consumer products operating profit for the three-month period ended May 31, 2012 was $35.2 million. The operating profit in the prior period included a gain of $30.9 million from the sale of our Texas-based package products operations and a gain of $8.9 million from a joint venture transaction in which we contributed certain of our ready-mix operating assets. Consumer products operating loss decreased $3.2 million from the prior fiscal period excluding these gains.

Total segment sales for the three-month period ended May 31, 2013 were $82.1 million compared to $52.7 million from the prior fiscal period. Ready-mix concrete sales increased $37.9 million from the prior fiscal period on higher shipments and higher average prices. Approximately one-half the increase in shipments is attributable to the acquisition of 42 ready-mix plants during the quarter.

Cost of products sold for the three-month period ended May 31, 2013 increased $27.6 million from the prior fiscal period. Cost of products sold increased primarily due to higher shipments and unit costs. Ready-mix concrete unit costs increased 3% from the prior fiscal period due to higher material, supplies, and higher repair and maintenance costs.

Selling, general and administrative expense for the three-month period ended May 31, 2013 increased $0.8 million from the prior fiscal period. The increase was primarily due to costs associated with the ready-mix acquisition during the quarter.

Other income for the three-month period ended May 31, 2013 decreased $37.7 million from the prior year period. Other income in 2012 included a gain of $30.9 million from the sale of our Texas-based package products operations and a gain of $8.9 million from a joint venture transaction in which we contributed certain of our ready-mix operating assets.

Fiscal Year 2013 Compared to Fiscal Year 2012

Consumer products operating loss for fiscal year 2013 was ($10.1) million. Consumer products operating profit for fiscal year 2012 was $25.0 million. Consumer products operating profit for fiscal year 2012 included a gain from the sale of our Texas-based package products operations of $30.9 million and gains from exchanges of operating assets of $10.5 million. Consumer products operating results improved $6.3 million from the prior fiscal year excluding the 2012 related gains.

Total segment sales were $231.7 million for both fiscal years 2013 and 2012, as an increase of $48.9 million in ready-mix concrete sales were offset by the loss of sales from the Texas-based package products operations that were sold in May, 2012.

Cost of products sold for fiscal year 2013 decreased $1.6 million from the prior fiscal year as an increase in cost of sales attributable to higher shipments and unit costs were offset by the effect of the disposition of the Texas-based package products operations.

Selling, general and administrative expense for fiscal year 2013 decreased $0.1 million from the prior fiscal year.

Restructuring charges of $0.5 million were recorded in fiscal year 2012. These charges consist primarily of severance and benefit costs associated with various workforce reduction initiatives.

Other income for fiscal year 2013 decreased $37.4 million from the prior fiscal year. Other income in 2012 included a gain of $30.9 million from the sale of our Texas-based package products operations. In addition, we entered into ready-mix and aggregate asset exchange transactions and a joint venture agreement that resulted in the recognition of gains of $10.5 million in 2012.

Corporate
Quarter ended
May 31,
Year ended
May 31,
In thousands 2013 2012 2013 2012
Other income $ 112 $ 61 $ 302 $ 511
Selling, general and administrative (8,971) (13,794) (40,128) (35,113)
Restructuring charges ---- ---- ---- (1,169)
$ (8,859) $ (13,733) $ (39,826) $ (35,771)

Three months ended May 31, 2013

Corporate general and administrative expenses for the three-month period ended May 31, 2013 $4.8 million from the prior fiscal period. The decrease is primarily due to a decrease in our financial security plan post-retirement benefit expense of $4.6 million.

Fiscal Year 2013 Compared to Fiscal Year 2012

Corporate other income for fiscal year 2013 decreased $0.2 million from the prior fiscal year.

Corporate general and administrative expense for fiscal year 2013 increased $5.0 million from the prior fiscal year. In addition to $4.1 million increase in controllable expenses, the impact of changes in our stock price on the fair value of our awards expected to be settled in cash increased $7.3 million over the prior year. These increases were slightly offset by $4.6 million decrease in our financial security plan post-retirement benefit expense and $1.3 million decrease in incentive compensation expense.

Restructuring charges of $1.2 million were recorded in fiscal year 2012. 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 May 31, 2013 was $17.4 million, of which $7.1 million was capitalized in connection with our Hunter, Texas cement plant expansion project and $10.3 million was expensed. Interest expense incurred for the three-month period ended May 31, 2012 was $17.1 million, of which $9.1 million was capitalized in connection with our Hunter, Texas cement plant expansion project and $8.0 million was expensed.

Interest expense incurred for fiscal year 2013 was $69.3 million, of which $36.5 million was capitalized in connection with Hunter, Texas cement plant expansion project and $32.8 million was expensed. Interest expense incurred for fiscal year 2012 was $68.5 million, of which $33.7 million was capitalized in connection with our Hunter, Texas cement plant expansion project and $34.8 million was expensed.

Interest expense incurred for the three-month period ended May 31, 2013 increased $0.3 million from the prior year period primarily due to the discontinuance of the capitalizing of interest related to the Hunter, Texas expansion project. Interest expense incurred for fiscal year 2013 increased $0.8 million from the prior fiscal year. The increase was primarily the result of discontinuance of capitalizing interest related to the Hunter, Texas expansion project.

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 May 31, Year ended May 31,
In thousands except per share 2013 2012 2013 2012
NET SALES $ 213,506 $ 158,409 $ 697,081 $ 594,105
Cost of products sold 185,506 135,109 629,803 560,573
GROSS PROFIT 28,000 23,300 67,278 33,532
Selling, general and administrative 15,978 21,589 67,657 68,363
Restructuring charges 3,153
Interest 10,345 8,025 32,807 34,835
Other income (2,312) (64,381) (8,926) (73,106)
24,011 (34,767) 91,538 33,245
INCOME (LOSS) BEFORE INCOME TAXES FROM
CONTINUING OPERATIONS 3,989 58,067 (24,260) 287
Income taxes (benefit) (11,615) 960 (13,766) (1,641)
NET INCOME (LOSS) FROM CONTINUING
OPERATIONS 15,604 57,107 $ (10,494) $ 1,928
NET INCOME FROM DISCONTINUED OPERATIONS,
NET OF TAX 28,540 3,106 35,044 5,548
NET INCOME $ 44,144 $ 60,213 $ 24,550 $7,476
NET INCOME (LOSS) PER SHARE FROM CONTINUING
OPERATIONS:
Basic $ 0.55 $ 2.04 $ (0.37) $ 0.07
Diluted $ 0.54 $ 2.04 $ (0.37) $ 0.07
NET INCOME FROM DISCONTINUED OPERATIONS:
Basic $ 1.00 $ 0.11 $ 1.24 $ 0.20
Diluted $ 0.98 $ 0.11 $ 1.23 $ 0.20
NET INCOME PER SHARE:
Basic $ 1.55 $ 2.15 $ 0.87 $ 0.27
Diluted $ 1.52 $ 2.15 $ 0.86 $ 0.27
AVERAGE SHARES OUTSTANDING
Basic 28,433 27,975 28,163 27,914
Diluted 28,954 28,045 28,473 28,016
(UNAUDITED)
CONSOLIDATED BALANCE SHEETS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
In thousands May 31,
2013
May 31,
2012
ASSETS
CURRENT ASSETS
Cash and cash equivalents $61,296 $88,027
Receivables – net 126,922 98,836
Inventories 105,054 99,441
Deferred income taxes and prepaid expenses 27,294 19,007
Discontinued operations held for sale 40,344
TOTAL CURRENT ASSETS 320,566 345,655
PROPERTY, PLANT AND EQUIPMENT
Land and land improvements 172,780 168,173
Buildings 50,968 49,567
Machinery and equipment 1,647,460 1,142,439
Construction in progress 16,642 436,552
1,887,850 1,796,731
Less depreciation and depletion 661,454 611,406
1,226,396 1,185,325
OTHER ASSETS
Goodwill 40,575 1,715
Real estate and investments 29,471 20,865
Deferred income taxes and other charges 18,817 23,368
88,863 45,948
$1,635,825 $1,576,928
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $69,061 $64,825
Accrued interest, compensation and other 62,336 61,317
Current portion of long-term debt 1,872 1,214
TOTAL CURRENT LIABILITIES 133,269 127,356
LONG-TERM DEBT 657,935 656,949
OTHER CREDITS 91,157 96,352
SHAREHOLDERS' EQUITY
Common stock, $1 par value; authorized 100,000 shares; issued and
outstanding 28,572 and 27,996 shares, respectively 28,572 27,996
Additional paid-in capital 514,560 488,637
Retained earnings 227,122 204,136
Accumulated other comprehensive loss (16,790) (24,498)
753,464 696,271
$1,635,825 $1,576,928
(UNAUDITED)
CONSOLIDATED STATEMENTS OF CASH FLOWS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
Year Ended May 31,
In thousands 2013 2012 2011
OPERATING ACTIVITIES
Net loss $24,550 $7,476 (64,913)
Adjustments to reconcile net loss to cash provided by operating
activities
Depreciation, depletion and amortization 59,865 60,952 64,297
(Gains)/Loss on asset disposals (64,425) (67,610) (13,638)
Deferred income tax (benefit) expense 3,423 (88) (42,875)
Stock-based compensation expense 9,513 2,387 5,581
Excess tax benefits from stock-based compensation
Loss on debt retirements 29,619
Other – net (6,965) 1,223 3,158
Changes in operating assets and liabilities
Receivables – net (27,138) (13,303) 13,379
Inventories 21,433 10,829 2,164
Prepaid expenses (238) 1,385 1,301
Accounts payable and accrued liabilities 13,282 6,923 11,172
Net cash provided by operating activities 33,300 10,174 9,245
INVESTING ACTIVITIES
Capital expenditures – expansions (67,426) (72,906) (25,430)
Capital expenditures – other (25,395) (33,430) (20,253)
Proceeds from asset disposals 18,481 66,845 3,596
Investments in life insurance contracts 2,467 3,354 4,073
Other – net (102) (245) 1,266
Net cash used by investing activities (71,975) (36,382) (36,748)
FINANCING ACTIVITIES
Long-term borrowings 650,000
Debt payments (2,684) (300) (561,627)
Debt issuance costs (1,829) (12,492)
Stock option exercises 14,628 2,023 1,462
Excess tax benefits from stock-based compensation
Common dividends paid (2,091) (8,354)
Net cash provided (used) by financing activities 11,944 (2,197) 68,989
Decrease in cash and cash equivalents (26,731) (28,405) 41,486
Cash and cash equivalents at beginning of period 88,027 116,432 74,946
Cash and cash equivalents at end of period $61,296 $88,027 $116,432

CONTACT: T. Lesley Vines, Jr. Corporate Controller & Treasurer Direct 972.647.6722 E-mail lvines@txi.com

Source:Texas Industries, Inc.