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TXI Reports Second Quarter Results



TXI Reports Second Quarter Results

DALLAS, Jan. 9, 2013 (GLOBE NEWSWIRE) -- Texas Industries, Inc. (NYSE:TXI)
today reported financial results for the quarter ended November 30, 2012.
Results for the quarter were a net loss of $11.1 million or $.40 per share.
The results for the period included an after tax charge for variable stock
based compensation of $1.5 million or $.05 per share. Results for the quarter
ended November 30, 2011 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 in
September, 2011 and after tax income from variable stock based compensation of
$1.6 million or $.06 per share.

General Comments

"Net sales for cement were up 20% compared to the same quarter a year ago and
marks the sixth consecutive quarter that net cement sales exceeded the prior
year," stated Mel Brekhus, Chief Executive Officer. "Aggregate and ready-mix
net sales were up 32% and 18% respectively compared to a year ago."

"I am happy to announce that the commissioning of the second kiln at our
central Texas plant began as scheduled and is on target to be completed this
spring. With the rebound in Texas cement consumption well into its second
year, the timing of our expansion appears to be very good. At an annual
production capacity of 1.4 million tons, the second kiln increases TXI's total
annual cement capacity by 26% to approximately 6.7 million tons," added
Brekhus.

A teleconference will be held tomorrow, January 10, 2013 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   Six months ended
                              November 30,         November 30,
In thousands except per unit                                   
                              2012      2011       2012       2011
Operating Results                                              
Cement sales                   $ 82,584  $ 68,994   $ 169,897  $ 144,972
Other sales and delivery fees 8,858     8,240      18,750     17,899
Total segment sales           91,442    77,234     188,647    162,871
Cost of products sold         82,706    78,050     168,825    156,282
Gross profit                  8,736     (816)      19,822     6,589
Selling, general and          (3,729)   (4,165)    (7,273)    (8,243)
administrative
Restructuring charges         —          (1,074)    —          (1,074)
Other income                  1,050     700        1,930      3,890
Operating Profits              $ 6,057   $ (5,355)  $ 14,479   $ 1,162
Cement                                                         
Shipments (tons)              1,034     884        2,153      1,853
Prices ($/ton)                 $ 79.82   $ 78.07    $ 78.91    $ 78.25
Cost of sales ($/ton)          $ 72.56   $ 78.34    $ 70.47    $ 74.90

Three months ended November 30, 2012

Cement operating profit (loss) for the three-month periods ended November 30,
2012 and November 30, 2011 was $6.1 million and $(5.4) million, respectively.

Total segment sales for the three-month period ended November 30, 2012 were
$91.4 million compared to $77.2 million for the prior year period. Cement
sales increased $14.2 million from the prior year period. Our Texas market
area accounted for approximately 69% of cement sales in the current period
compared to 67% of cement sales in the prior year period. Average cement
prices increased 3% in our Texas market from the prior year period. Average
cement prices decreased less than 1% due to a change in product mix in our
California market from the prior year period. Shipments increased 19% in our
Texas market area and 13% in our California market area.

Cost of products sold for the three-month period ended November 30, 2012
increased $4.7 million from the prior year period primarily due to higher
shipments. Cement unit cost of sales decreased 7% from prior year period
primarily due to higher shipments and lower energy costs offset slightly by
higher maintenance costs.

Selling, general and administrative expense for the three-month period ended
November 30, 2012 decreased $0.5 million from the prior year period primarily
due to our work force reduction initiatives.

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, 2012 increased $0.3
million from the prior year period primarily due to higher royalties.

Aggregates Operations                                                         
                                                              
                               Three months ended  Six months ended
                               November 30,        November 30,
In thousands except per unit                                  
                               2012      2011      2012      2011
Operating Results                                             
Stone, sand and gravel sales    $ 27,739  $ 20,993  $ 55,890  $ 43,193
Delivery fees                  12,473    7,854     25,302    15,971
Total segment sales            40,212    28,847    81,192    59,164
Cost of products sold          35,951    25,459    72,188    52,378
Gross profit                   4,261     3,388     9,004     6,786
Selling, general and            (856)     (1,226)   (1,864)   (3,102)
administrative
Restructuring charges          —         (373)     —         (373)
Other income                   115       202       378       473
Operating Profit                $ 3,520   $ 1,991   $ 7,518   $ 3,784
Stone, sand and gravel                                        
Shipments (tons)               3,808     2,818     7,722     5,961
Prices ($/ton)                  $ 7.28    $ 7.45    $ 7.24    $ 7.25
Cost of sales ($/ton)           $ 5.99    $ 6.35    $ 5.99    $ 6.28

Previously, the aggregates segment included our expanded shale and clay
lightweight aggregates 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 December 4, 2012, our subsidiaries entered into agreements to exchange
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 will
transfer 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, as well as 2
aggregate distribution facilities in Beaumont and Port Arthur, Texas, and
related assets. We anticipate recognizing a gain on the transaction, the
amount of which will be determined after the transaction closes. Closing is
subject to negotiations of ancillary agreements, satisfactory completion of
due diligence, receipt of required consents, approvals and permit amendments
and other customary conditions.

Three months ended November 30, 2012

Aggregates operating profit for the three-month periods ended November 30,
2012 and November 30, 2011 was $3.5 million and $2.0 million, respectively.

Total segment sales for the three-month period ended November 30, 2012 were
$40.2 million compared to $28.8 million for the prior year period. Stone, sand
and gravel sales increased $6.7 million from the prior year period on 35%
higher shipments.

Cost of products sold for the three-month period ended November 30, 2012
increased $10.5 million from the prior year period primarily due to increased
stone, sand and gravel shipments. Stone, sand and gravel unit costs decreased
6% 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
November 30, 2012 decreased $0.4 million from the prior year period primarily
due to our work force reduction initiatives.

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.

Consumer Products Operations                                                  
                                                             
                           Three months ended    Six months ended
                           November 30,          November 30,
In thousands except per                                      
unit
                           2012       2011       2012       2011
Operating Results                                            
Ready-mix concrete sales    $ 52,776   $ 44,579   $ 104,694  $ 100,807
Package products sales and 101        13,542     228        28,338
delivery fees
Total segment sales        52,877     58,121     104,922    129,145
Cost of products sold      54,123     59,212     106,796    130,409
Gross loss                 (1,246)    (1,091)    (1,874)    (1,264)
Selling, general and       (2,074)    (2,436)    (4,764)    (6,810)
administrative
Restructuring charges      —          (536)      —          (536)
Other income               713        457        2,123      2,664
Operating Loss              $ (2,607)  $ (3,606)  $ (4,515)  $ (5,946)
Ready-mix concrete                                           
Shipments (cubic yards)    643        587        1,292      1,328
Prices ($/cubic yard)       $ 81.99    $ 75.85    $ 81.03    $ 75.89
Cost of sales ($/cubic      $ 84.16    $ 80.66    $ 82.56    $ 79.69
yard)

Three months ended November 30, 2012

Consumer products operating loss for the three-month periods ended November
30, 2012 and November 30, 2011 was $2.6 million and $3.6 million,
respectively.

Total segment sales for the three-month period ended November 30, 2012 were
$52.9 million compared to $58.1 million for the prior year period. Segment
sales decreased $5.2 million from the prior year period due to the effect of
exiting the Houston, Texas ready-mix market and the sale of our Texas-based
package products operations. Ready-mix concrete sales from ongoing operations
increased $8.2 million from the prior year period on 9% higher shipments and
8% higher average prices.

Cost of products sold for the three-month period ended November 30, 2012
decreased $5.1 million from the prior year period primarily due to the sale of
our Texas-based package products operation and having exited the Houston
ready-mix market. Ready-mix concrete unit costs increased 4% from the prior
year period on higher maintenance, diesel and material costs.

Selling, general and administrative expense for the three-month period ended
November 30, 2012 decreased $0.3 million from the prior year period primarily
due to the effect of the sale of our Texas-based package products operations
and our work force reduction initiatives.

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, 2012 increased $0.3
million from the prior year period primarily due to earnings from joint
venture of $0.7 million.

Corporate                                                                     
                                                             
                            Three months ended   Six months ended
                            November 30,         November 30,
In thousands                                                 
                            2012       2011      2012       2011
Other income                $ 46       $ 163     $ 92       $ 366
Selling, general and        (10,405)   (4,953)   (20,718)   (11,355)
administrative
Restructuring charges       —          (1,169)   —          (1,169)
                            $ (10,359) $ (5,959) $ (20,626) $ (12,158)

Three months ended November 30, 2012

Other income for the three-month period ended November 30, 2012 decreased $0.1
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, 2012 increased $5.5 million from the prior year
period. 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 $4.3 million for the
three-month period ended November 30, 2012 and the realignment of
administration functions resulted in approximately $1.0 million higher
expense, which was more than offset by the savings from the work force
reduction in the operating segments.

Restructuring charges of $1.2 million were recorded for 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, 2012
was $17.4 million, of which $9.9 million was capitalized in connection with
our Hunter, Texas cement plant expansion project and $7.5 million was
expensed. 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 to be capitalized in connection with our Hunter, Texas cement
plant expansion project during the remainder of our current fiscal year is
expected to be between $11 million and $17 million.

Income Taxes

Income taxes for the interim periods ended November 30, 2012 and November 30,
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 for continuing operations is 4.3% for
fiscal year 2013 compared to 4.6% for fiscal year 2012. We made no income tax
payments in the six-month periods ended November 30, 2012 and November 30,
2011. We received income tax refunds of less than $0.1 million in the
six-month period ended November 30, 2011.

Net deferred tax assets totaled $12.5 million at November 30, 2012 and $13.7
million at May 31, 2012, of which $10.0 million at November 30, 2012 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 November 30, 2012 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.

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      Six months ended
                         November 30,            November 30,
In thousands except per  2012        2011        2012        2011
share
NET SALES                 $ 167,693   $ 146,172   $ 342,216   $ 313,802
Cost of products sold    155,939     144,689     315,262     301,690
GROSS PROFIT             11,754      1,483       26,954      12,112
Selling, general and     17,067      12,781      34,623      29,511
administrative
Restructuring charges    —           3,153       —           3,153
Interest                 7,457       8,838       15,235      18,298
Loss on debt retirements —           —           —           —
Other income             (1,924)     (1,522)     (4,525)     (7,393)
                         22,600      23,250      45,333      43,569
LOSS BEFORE INCOME TAXES
FROM CONTINUING          (10,846)    (21,767)    (18,379)    (31,457)
OPERATIONS
Income taxes (benefit)   (657)       (1,144)     (796)       (1,453)
NET LOSS FROM CONTINUING  $ (10,189)  $ (20,623)  $ (17,583)  $ (30,004)
OPERATIONS
NET INCOME (LOSS) FROM
DISCONTINUED OPERATIONS, (933)       (414)       3,805       1,547
NET OF TAX
NET LOSS                  $ (11,122)  $ (21,037)  $ (13,778)  $ (28,457)
NET LOSS PER SHARE FROM                                       
CONTINUING OPERATIONS:
Basic                     $ (0.36)    $ (0.73)    $ (0.63)    $ (1.08)
Diluted                   $ (0.36)    $ (0.73)    $ (0.63)    $ (1.08)
NET INCOME (LOSS) FROM                                        
DISCONTINUED OPERATIONS:
Basic                     $ (0.04)    $ (0.02)    $ 0.14      $ 0.06
Diluted                   $ (0.04)    $ (0.02)    $ 0.14      $ 0.06
NET LOSS PER SHARE:                                           
Basic                     $ (0.40)    $ (0.75)    $ (0.49)    $ (1.02)
Diluted                   $ (0.40)    $ (0.75)    $ (0.49)    $ (1.02)
AVERAGE SHARES                                                
OUTSTANDING
Basic                    28,030      27,882      28,014      27,878
Diluted                  28,030      27,882      28,014      27,878
CASH DIVIDENDS DECLARED  $ —         $ —         $ —         $ 0.075
PER SHARE
                                                              
See notes to consolidated financial statements.                                 

 
(Unaudited)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
                                                                    
                               Three months ended      Six months ended
                               November 30,            November 30,
In thousands                   2012        2011        2012        2011
Net loss                        $ (11,122)  $ (21,037)  $ (13,778)  $ (28,457)
Other comprehensive income                                          
Net actuarial gains (losses)
of defined postretirement                                           
benefit plans
Reclassification of recognized 20          363         565         725
transactions, net of tax
Adjustment, net of tax         —           —           (55)        —
Prior service cost of defined                                       
postretirement benefit plans
Reclassification of recognized 77          (123)       (45)        (246)
transactions, net of taxes
Total other comprehensive      97          240         465         479
income
Comprehensive loss              $ (11,025)  $ (20,797)  $ (13,313)  $ (27,978)

 
CONSOLIDATED BALANCE SHEETS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
                                                                   
                                                     (Unaudited)   
                                                     November 30, May 31,
                                                     2012         2012
ASSETS                                                             
CURRENT ASSETS                                                     
Cash and cash equivalents                             $ 71,782     $ 88,027
Receivables – net                                    107,760      98,836
Inventories                                          85,530       99,441
Deferred income taxes and prepaid expenses           16,672       19,007
Discontinued Operations Held for Sale                39,360       40,344
TOTAL CURRENT ASSETS                                 321,104      345,655
PROPERTY, PLANT AND EQUIPMENT                                      
Land and land improvements                           169,925      168,173
Buildings                                            49,608       49,567
Machinery and equipment                              1,146,301    1,142,439
Construction in progress                             472,185      436,552
                                                     1,838,019    1,796,731
Less depreciation and depletion                      633,973      611,406
                                                     1,204,046    1,185,325
OTHER ASSETS                                                       
Goodwill                                             1,715        1,715
Real estate and investments                          23,168       20,865
Deferred income taxes and other charges              23,234       23,368
                                                     48,117       45,948
                                                      $ 1,573,267  $ 1,576,928
LIABILITIES AND SHAREHOLDERS' EQUITY                               
CURRENT LIABILITIES                                                
Accounts payable                                      $ 64,520     $ 64,825
Accrued interest, compensation and other             67,712       61,317
Current portion of long-term debt                    1,432        1,214
TOTAL CURRENT LIABILITIES                            133,664      127,356
LONG-TERM DEBT                                       657,269      656,949
OTHER CREDITS                                        95,995       96,352
SHAREHOLDERS' EQUITY                                               
Common stock, $1 par value; authorized 100,000
shares; issued and outstanding 28,056 and 27,996     28,056       27,996
shares, respectively
Additional paid-in capital                           491,959      488,637
Retained earnings                                    190,357      204,136
Accumulated other comprehensive loss                 (24,033)     (24,498)
                                                     686,339      696,271
                                                      $ 1,573,267  $ 1,576,928

(Unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS 
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
                                                                    
                                                       Six months ended
                                                       November 30,
In thousands                                           2012        2011
OPERATING ACTIVITIES                                                
Net loss                                                $ (13,778)  $ (28,457)
Adjustments to reconcile net loss to cash provided by               
operating activities
Depreciation, depletion and amortization               28,543      31,385
Gains on asset disposals                               (2,879)     (2,751)
Deferred income tax (benefit) expense                  957         (945)
Stock-based compensation expense                       5,505       (1,229)
Other – net                                            (8,469)     (5,185)
Changes in operating assets and liabilities                         
Receivables – net                                      (8,488)     3,696
Inventories                                            13,967      12,189
Prepaid expenses                                       1,687       2,854
Accounts payable and accrued liabilities               7,933       930
Net cash provided by operating activities              24,978      12,487
INVESTING ACTIVITIES                                                
Capital expenditures – expansions                      (36,118)    (35,966)
Capital expenditures – other                           (10,845)    (26,300)
Proceeds from asset disposals                          3,958       1,649
Investments in life insurance contracts                2,366       2,989
Other – net                                            (88)        (128)
Net cash used by investing activities                  (40,727)    (57,756)
FINANCING ACTIVITIES                                                
Debt payments                                          (1,585)     (36)
Debt issuance costs                                    —           (1,732)
Stock option exercises                                 1,089       158
Common dividends paid                                  —           (2,091)
Net cash used by financing activities                  (496)       (3,701)
Decrease in cash and cash equivalents                  (16,245)    (48,970)
Cash and cash equivalents at beginning of period       88,027      116,432
Cash and cash equivalents at end of period              $ 71,782    $ 67,462

CONTACT: T. Lesley Vines, Jr.
         Vice President
         Corporate Controller & Treasurer
         972.647.6722
         Email: lvines@txi.com

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