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Press release from GlobeNewswire (a Nasdaq OMX company)

TXI Reports Third Quarter Results

Wednesday, March 28, 2012

TXI Reports Third Quarter Results15:00 EDT Wednesday, March 28, 2012DALLAS, March 28, 2012 (GLOBE NEWSWIRE) -- Texas Industries, Inc. (NYSE:TXI) today reported financial results for the quarter ended February 29, 2012. Results for the quarter were a net loss of $24.3 million or $.87 per share. The reduction of the tax rate, compared to a year ago, increased the loss by $.34 per share. Results for the quarter ended February 28, 2011 were a net loss of $20.9 million or $.75 per share.General Comments "Modest improvements in shipments reflect my expectation that improved construction activity will lag the broader economic recovery," stated Mel Brekhus, Chief Executive Officer. "The $10.1 million improvement in gross profit is primarily attributable to the timing of cement clinker production and illustrates the potential earnings improvement we expect when market conditions once again permit us to run our plants at high utilization rates." "We continue to make good progress toward our goals of a 15% gross profit margin and SG&A expense at 8% of sales for fiscal year 2014. Efforts are ongoing throughout the company to reshape TXI in a manner that both improves our ability to serve our customers' needs and facilitates our ability to achieve our short and long-term goals," added Brekhus. "Finally, we remain on track to complete the construction on the expansion of our central Texas cement plant this fall. The new kiln will enhance our ability to meet the growing customer needs in this very attractive market," concluded Brekhus. A teleconference will be held tomorrow, March 29, 2012 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    February 29,  February 28,  February 29,  February 28, In thousands except per unit  2012  2011  2012  2011            Operating Results          Total cement sales  $ 57,830  $ 54,018  $ 202,802  $ 183,307  Total other sales and delivery fees    7,641    6,144   25,540   21,815  Total segment sales 65,471 60,162 228,342 205,122  Cost of products sold   63,359    70,010  219,641  203,194  Gross profit (loss) 2,112 (9,848) 8,701 1,928  Selling, general and administrative (4,663) (3,286) (12,906) (12,097)  Restructuring charges --  --  (1,074) --   Other income    167    696   4,057   3,643  Operating Loss  $ (2,384)  $ (12,438)  $ (1,222)  $ (6,526)                Cement          Shipments (tons) 743 704 2,596 2,361  Prices ($/ton)  $77.76  $76.75  $78.11  $77.64  Cost of sales ($/ton)  $75.95  $90.43  $75.20  $77.67 Three months ended February 29, 2012 Cement operating loss for the three-month periods ended February 29, 2012 and February 28, 2011 was $2.4 million and $12.4 million, respectively. The operating results in the current period were impacted by higher cement shipments and average sales prices and lower cost of products sold due to higher clinker production. Total segment sales for the three-month period ended February 29, 2012 were $65.5 million compared to $60.2 million for the prior year period. Cement sales increased $3.8 million from the prior year period. Our Texas market area accounted for approximately 69% of cement sales in the current period compared to 72% of cement sales in the prior year period. Average cement prices increased 2% in our Texas market area and decreased 1% in our California market area. Shipments were comparable in our Texas market area and increased 22% in our California market area. Cost of products sold for the three-month period ended February 29, 2012 decreased $6.7 million from the prior year period primarily due to a 16% decrease in cement unit costs offset in part by higher cement shipments. Cement unit costs were impacted by 31% higher clinker production and lower repair and maintenance costs. Selling, general and administrative expense for the three-month period ended February 29, 2012 increased $1.4 million from the prior year period primarily due to higher provisions for insurance claims. Other income for the three-month period ended February 29, 2012 decreased $0.5 million from the prior year period primarily due to lower gains from routine sales of surplus operating assets.Aggregate Operations    Three months ended  Nine months ended    February 29,  February 28,  February 29,  February 28, In thousands except per unit  2012  2011  2012  2011            Operating Results          Total stone, sand and gravel sales  $ 16,829  $ 18,212  $ 60,022  $ 67,449  Expanded shale and clay sales   and delivery fees      19,813      16,692     61,687       58,507  Total segment sales  36,642  34,904  121,709  125,956  Cost of products sold   35,225    32,323  109,046  110,735  Gross profit 1,417 2,581 12,663 15,221  Selling, general and administrative (2,466) (2,679) (7,739) (8,552)  Restructuring charges --  --   (437) --   Other income    1,263    16    1,742    1,706  Operating Profit (Loss)  $ 214  $ (82)  $ 6,229  $ 8,375            Stone, sand and gravel          Shipments (tons) 2,363 2,470 8,324 9,080  Prices ($/ton)  $7.12  $7.38  $7.21  $7.43  Cost of sales ($/ton)  $7.47  $7.23  $6.62  $6.69 Three months ended February 29, 2012 Aggregate operating profit for the three-month period ended February 29, 2012 was $0.2 million. Aggregate operating loss for the three-month period ended February 28, 2011 was $0.1 million. Total segment sales for the three-month period ended February 29, 2012 were $36.6 million compared to $34.9 million for the prior year period. Stone, sand and gravel sales decreased $1.4 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 $1.8 million, shipments 8% and average prices 2% from the prior year period. Stone, sand and gravel sales from current operations increased $0.4 million from the prior year period on 4% higher shipments and 2% lower average prices.  Cost of products sold for the three-month period ended February 29, 2012 increased $2.9 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 stone, sand and gravel cost of products sold $1.8 million which was offset in part by higher freight costs. Stone, sand and gravel unit costs increased 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 on unit costs. Selling, general and administrative expense for the three-month period ended February 29, 2012 decreased $0.2 million from the prior year period primarily due to lower compensation expense. Other income for the three-month period ended February 29, 2012 increased $1.2 million from the prior year period primarily due to higher gains from routine sales of surplus operating assets.Consumer Products Operations    Three months ended  Nine months ended    February 29,  February 28,  February 29,  February 28, In thousands except per unit  2012  2011  2012  2011            Operating Results          Total ready-mix concrete sales  $ 37,481  $ 34,351  $ 138,288  $ 129,834  Package products sales and delivery fees   12,398    10,998   40,736    38,813  Total segment sales  49,879  45,349  179,024  168,647  Cost of products sold   52,663  47,443  183,072  166,982  Gross profit (loss) (2,784) (2,094) (4,048) 1,665  Selling, general and administrative (1,297) (2,607) (8,107) (8,330)  Restructuring charges --  --  (536) --   Other income    (177)    66   2,487     398  Operating Loss  $ (4,258)  $ (4,635)  $ (10,204)  $ (6,267)            Ready-mix concrete          Shipments (cubic yards) 508 471 1,836 1,715  Prices ($/cubic yard)  $73.80  $72.83  $75.31  $75.66  Cost of sales ($/cubic yard)  $81.87  $80.71  $80.29  $77.97 Three months ended February 29, 2012 Consumer products operating loss for the three-month periods ended February 29, 2012 and February 28, 2011 was $4.3 million and $4.6 million, respectively.   Total segment sales for the three-month period ended February 29, 2012 were $49.9 million compared to $45.3 million for the prior year period. Ready-mix concrete sales increased $3.1 million from the prior year. Sales increased $1.9 million and shipments increased 6% 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 increased $1.2 million from the prior year period on 2% higher shipments and 2% higher average prices.  Cost of products sold for the three-month period ended February 29, 2012 increased $5.2 million from the prior year period. Cost of products sold increased $2.0 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 increased $3.2 million. Ready-mix concrete unit costs increased 1% from the prior year period primarily due to higher repair and maintenance and diesel costs. Selling, general and administrative expense for the three-month period ended February 29, 2012 decreased $1.3 million from the prior year period primarily due to lower provisions for bad debts. Other income for the three-month period ended February 29, 2012 decreased $0.2 million from the prior year period primarily due to $0.3 million equity in losses of joint venture recognized in the current period.Corporate    Three months ended  Nine months ended    February 29,  February 28,  February 29,  February 28, In thousands  2012  2011  2012  2011                      Other income  $ 84  $ 337  $ 450  $ 2,187  Selling, general and administrative (9,964) (8,747) (21,319) (23,024)  Restructuring charges    --    --    (1,169)   --     $ (9,880)  $ (8,410)  $ (22,038)  $ (20,837) Three months ended February 29, 2012 Other income for the three-month period ended February 29, 2012 decreased $0.3 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 February 29, 2012 increased $1.2 million from the prior year period primarily due to $1.2 million higher 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 increased expense $1.7 million and $0.7 million for the three-month periods ended February 29, 2012 and February 28, 2011, respectively. Interest 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. Interest expense incurred for the three-month period ended February 28, 2011 was $17.3 million, of which $7.6 million was capitalized in connection with our Hunter, Texas cement plant expansion project and $9.7 million was expensed. Interest expense incurred for the three-month period ended February 29, 2012 decreased $0.3 million from the prior year period primarily as a result of lower credit facility fees.Income Taxes Income taxes for the interim periods ended February 29, 2012 and February 28, 2011 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 nine-month period ended February 28, 2011. The estimated annualized rate excluding this charge is 2.5% for fiscal year 2012 compared to 40.2% 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 nine-month period ended February 29, 2012. We received income tax refunds of $13.1 million and made income tax payments of less than $0.1 million in the nine-month period ended February 28, 2011. Net deferred tax assets totaled $16.3 million at February 29, 2012 and $15.0 million at May 31, 2011, of which $15.0 million at February 29, 2012 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 February 29, 2012 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  Nine months ended    February 29,  February 28,  February 29,  February 28, In thousands except per share  2012  2011  2012  2011           NET SALES  $ 134,636  $ 125,818  $ 472,447  $ 446,051           Cost of products sold   133,891   135,179   455,131   427,237  GROSS PROFIT (LOSS) 745 (9,361) 17,316 18,814           Selling, general and administrative 18,390 17,319 50,071 52,003 Restructuring charges --  --  3,216 --  Interest 8,512 9,670 26,810 37,967 Loss on debt retirements --  --  --  29,619 Other income   (1,337)   (1,115)   (8,736)   (7,934)     25,565   25,874   71,361   111,655  LOSS BEFORE INCOME TAXES (24,820) (35,235) (54,045) (92,841)           Income tax benefit   (540)   (14,301)   (1,308)   (37,014)  NET LOSS  $ (24,280)  $ (20,934)  $ (52,737)  $ (55,827)                     Net loss per share          Basic  $ (.87)  $ (.75)  $ (1.89)  $ (2.01)  Diluted  $ (.87)  $ (.75)  $ (1.89)  $ (2.01)           Average shares outstanding          Basic 27,926 27,839 27,894 27,811  Diluted   27,926   27,839   27,894   27,811           Cash dividends declared per share  $ --   $ .075  $ .075  $ .225           CONSOLIDATED BALANCE SHEETS     TEXAS INDUSTRIES, INC. AND SUBSIDIARIES     (Unaudited)                February 29,      May 31,  In thousands    2012  2011         ASSETS       CURRENT ASSETS        Cash and cash equivalents     $ 27,155  $ 116,432  Receivables – net   78,597 85,817  Inventories   130,294 140,646  Deferred income taxes and prepaid expenses     21,398   22,040  TOTAL CURRENT ASSETS   257,444 364,935         PROPERTY, PLANT AND EQUIPMENT        Land and land improvements   179,764 158,232  Buildings   56,741 59,320  Machinery and equipment   1,210,873 1,222,560  Construction in progress       417,649     357,638     1,865,027 1,797,750  Less depreciation and depletion      670,030   642,329      1,194,997  1,155,421 OTHER ASSETS        Goodwill   1,715 1,715  Real estate and investments   11,044 6,749  Deferred income taxes and other charges     21,566   22,191       34,325   30,655      $ 1,486,766  $ 1,551,011         LIABILITIES AND SHAREHOLDERS' EQUITY       CURRENT LIABILITIES        Accounts payable    $ 60,759  $ 56,787  Accrued interest, compensation and other   43,189 58,848  Current portion of long-term debt      486   73  TOTAL CURRENT LIABILITIES    104,434 115,708         LONG-TERM DEBT   654,014 652,403         OTHER CREDITS   81,278 87,318         SHAREHOLDERS' EQUITY        Common stock, $1 par value; authorized 100,000 shares; issued        and outstanding 27,978 and 27,887 shares, respectively   27,978 27,887  Additional paid-in capital   487,182 481,706  Retained earnings   143,923 198,751  Accumulated other comprehensive loss     (12,043)   (12,762)       647,040   695,582      $ 1,486,766  $ 1,551,011   (Unaudited)     CONSOLIDATED STATEMENTS OF CASH FLOWS     TEXAS INDUSTRIES, INC. AND SUBSIDIARIES                Nine months ended     February 29,  February 28, In thousands    2012  2011         OPERATING ACTIVITIES        Net loss     $ (52,737)  $ (55,827)  Adjustments to reconcile net loss to cash provided by operating   activities        Depreciation, depletion and amortization   46,495 48,109  Gains on asset disposals   (3,736) (1,456)  Deferred income tax benefit   (1,653) (37,665)  Stock-based compensation expense   1,710 4,271   Loss on debt retirements   --  29,619  Other – net   (4,424) (2,258)  Changes in operating assets and liabilities        Receivables – net   7,624 29,814  Inventories   10,048 (922)  Prepaid expenses   3,261 2,501  Accounts payable and accrued liabilities     (4,466)   (7,980)  Net cash provided by operating activities   2,122 8,206         INVESTING ACTIVITIES        Capital expenditures – expansions   (64,901) (23,507)  Capital expenditures – other   (31,394) (15,437)  Proceeds from asset disposals   4,188 3,243  Investments in life insurance contracts   3,354 3,894  Other – net     (302)   1,230  Net cash used by investing activities    (89,055)  (30,577)         FINANCING ACTIVITIES        Long-term borrowings   ----  650,000  Debt retirements   (173) (561,610)  Debt issuance costs   (1,829) (12,480)  Stock option exercises   1,749 1,139  Common dividends paid     (2,091)   (6,262)  Net cash provided (used) by financing activities     (2,344)   70,787 Increase (decrease) in cash and cash equivalents   (89,277) 48,416         Cash and cash equivalents at beginning of period    116,432   74,946 Cash and cash equivalents at end of period    $ 27,155  $ 123,362CONTACT: T. Lesley Vines, Jr. Vice President Corporate Controller & Treasurer 972.647.6722 Email: lvines@txi.com