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Press release from GlobeNewswire (a Nasdaq OMX company)

TXI Reports First Quarter Results

Wednesday, September 28, 2011

TXI Reports First Quarter Results15:54 EDT Wednesday, September 28, 2011DALLAS, Sept. 28, 2011 (GLOBE NEWSWIRE) -- 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  $ 162,427CONTACT: T. Lesley Vines, Jr. Vice President Corporate Controller & Treasurer 972.647.6722 Email: lvines@txi.com