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 May31, 2012, of which $10.0 million at November 30, 2012 and $10.7 million at May31, 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 May31, 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 DISCONTINUEDOPERATIONS, (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)                                                       November30, May31,                                                      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  Texas Industries, Inc. Logo  
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