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Press release from GlobeNewswire (a Nasdaq OMX company)

TXI Reports Second Quarter Results

Wednesday, January 04, 2012

TXI Reports Second Quarter Results16:00 EST Wednesday, January 04, 2012DALLAS, Jan. 4, 2012 (GLOBE NEWSWIRE) -- 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  $ 139,753CONTACT: T. Lesley Vines, Jr. Vice President Corporate Controller & Treasurer 972.647.6722 Email: lvines@txi.com