TXI Reports Third Quarter Results

TXI Reports Third Quarter Results  DALLAS, March 27, 2013 (GLOBE NEWSWIRE) -- Texas Industries, Inc. (NYSE:TXI) today reported financial results for the quarter ended February 28, 2013. Results for the quarter were a net loss of $5.8 million or $.21 per share. Results for the quarter ended February 28, 2012 were a net loss of $24.3 million or $.87 per share.  General Comments  "Construction activity in Texas and California continued to improve this quarter," stated Mel Brekhus, Chief Executive Officer. "Gross profit increased $14.2 million on increased sales of $19.5 million. This increase in profitability primarily reflects the benefits of increased shipments in reducing unit costs, and success in increasing efficiencies throughout the Company."  "The commissioning of the second kiln at our central Texas plant is on target to be completed this spring. This additional 1.4 million tons of cement capacity, in combination with the East Texas ready mix assets we acquired last week, places TXI in a strong position to benefit from the recovery in construction that is underway," added Brekhus.  A teleconference will be held tomorrow, March 28, 2013 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 In thousands except per    February 28, February 29, February 28, February 29, unit                       2013         2012         2013         2012 Operating Results                                               Cement sales               $73,086    $57,830    $242,983   $202,802 Other sales and delivery   7,480        7,641        26,230       25,540 fees Total segment sales        80,566       65,471       269,213      228,342 Cost of products sold      68,501       63,359       237,326      219,641 Gross profit               12,065       2,112        31,887       8,701 Selling, general and       (3,247)      (4,663)      (10,520)     (12,906) administrative Restructuring charges      —            —            —            (1,074) Other income               1,031        167          2,961        4,057 Operating Profits (Loss)   $9,849     $(2,384)   $24,328    $(1,222) Cement                                                          Shipments (tons)           933          743          3,086        2,596 Prices ($/ton)             $78.39     $77.76     $78.75     $78.11 Cost of sales ($/ton)      $64.35     $75.95     $68.62     $75.20  Three months ended February 28, 2013  Cement operating profit (loss) for the three-month periods ended February 28, 2013 and February 29, 2012 was $9.8 million and $(2.4) million, respectively.  Total segment sales for the three-month period ended February 28, 2013 were $80.6 million compared to $65.5 million for the prior year period. Cement sales increased $15.1 million from the prior year period. Our Texas market area accounted for approximately 71% of cement sales in the current period compared to 69% of cement sales in the prior year period. Average cement prices increased 2% in our Texas market from the prior year period. Average cement prices decreased 3% due to a change in product mix in our California market from the prior year period. Shipments increased 27% in our Texas market area and 22% in our California market area.  Cost of products sold for the three-month period ended February 28, 2013 increased $5.1 million from the prior year period primarily due to higher shipments. Cement unit cost of sales decreased 15% from prior year period primarily due to higher shipments offset slightly by higher fuel and power costs.  Selling, general and administrative expense for the three-month period ended February 28, 2013 decreased $1.4 million from the prior year period primarily due to our work force reduction initiatives.  Other income for the three-month period ended February 28, 2013 increased $0.9 million from the prior year period primarily due to higher royalties.  Aggregates Operations                            Three months ended        Nine months ended In thousands except per    February 28, February 29, February 28, February 29, unit                       2013         2012         2013         2012 Operating Results                                               Stone, sand and gravel     $22,021    $16,829    $77,911    $60,022 sales Delivery fees              8,799        5,787        34,101       21,758 Total segment sales        30,820       22,616       112,012      81,780 Cost of products sold      28,106       23,825       100,294      76,203 Gross profit               2,714        (1,209)      11,718       5,577 Selling, general and       (900)        (1,341)      (2,763)      (4,441) administrative Restructuring charges      —            —            —            (374) Other income               295          1,259        674          1,732 Operating Profit (Loss)    $2,109     $(1,291)   $9,629     $2,494 Stone, sand and gravel                                          Shipments (tons)           3,029        2,363        10,751       8,324 Prices ($/ton)             $7.27      $7.12      $7.25      $7.21 Cost of sales ($/ton)      $6.46      $7.47      $6.12      $6.62  Previously, the aggregates segment included our expanded shale and clay lightweight aggregates operations 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 March 22, 2013, our subsidiaries exchanged 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 transferred 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, two aggregate distribution facilities in Beaumont and Port Arthur, Texas, and related assets.We anticipate recognizing a gain on the transaction, the amount of which is still being finalized and will be included in the results for our discontinued operations in our fourth quarter 2013.  Three months ended February 28, 2013  Aggregates operating profit for the three-month period ended February 28, 2013 was $2.1 million and operating loss for the three-month period ended February 29, 2012 was $(1.3) million.  Total segment sales for the three-month period ended were $30.8 million compared to $22.6 million for the prior year period. Stone, sand and gravel sales increased $8.2 million from the prior year period on 28% higher shipments.  Cost of products sold for the three-month period ended February 28, 2013 increased $4.3 million from the prior year period primarily due to increased stone, sand and gravel shipments. Stone, sand and gravel unit costs decreased 14% 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 February 28, 2013 decreased $0.4 million from the prior year period primarily due to our work force reduction initiatives.  Consumer Products Operations                            Three months ended        Nine months ended In thousands except per    February 28, February 29, February 28, February 29, unit                       2013         2012         2013         2012 Operating Results                                               Ready-mix concrete sales   $44,582    $37,481    $149,276   $138,288 Package products sales and 46           12,398       274          40,736 delivery fees Total segment sales        44,628       49,879       149,550      179,024 Cost of products sold      47,081       52,663       153,877      183,072 Gross loss                 (2,453)      (2,784)      (4,327)      (4,048) Selling, general and       (2,475)      (1,297)      (7,239)      (8,107) administrative Restructuring charges      —            —            —            (536) Other income               666          (177)        2,789        2,487 Operating Loss             $(4,262)   $(4,258)   $(8,777)   $(10,204) Ready-mix concrete                                              Shipments (cubic yards)    541          508          1,833        1,836 Prices ($/cubic yard)      $82.49     $73.80     $81.46     $75.31 Cost of sales ($/cubic     $87.04     $81.87     $83.88     $80.29 yard)  Three months ended February 28, 2013  Consumer products operating loss for the three-month periods ended February 28, 2013 and February 29, 2012 was $(4.3) million and $(4.3) million, respectively.  Total segment sales for the three-month period ended February 28, 2013 were $44.6 million compared to $49.9 million for the prior year period. Segment sales decreased $5.3 million from the prior year period due to the sale of our Texas-based package products operations. Ready-mix concrete sales from ongoing operations increased $7.1 million from the prior year period on 6% higher shipments and 12% higher average prices.  Cost of products sold for the three-month period ended February 28, 2013 decreased $5.6 million from the prior year period primarily due to the sale of our package products operations. Ready-mix concrete unit costs increased 6% from the prior year period on higher maintenance, diesel and material costs.  Selling, general and administrative expense for the three-month period ended February 28, 2013 increased $1.2 million from the prior year period due to insurance costs related to a prior event.  Other income for the three-month period ended February 28, 2013 increased $0.8 million from the prior year period primarily due to earnings from joint venture of $0.5 million.  Corporate                            Three months ended        Nine months ended In thousands               February 28, February 29, February 28, February 29,                            2013         2012         2013         2012 Other income               $98        $84        $190       $450 Selling, general and       (10,437)     (9,964)      (31,157)     (21,319) administrative Restructuring charges      —            —            —            (1,169)                           $(10,339)  $(9,880)   $(30,967)  $(22,038)  Three months ended February 28, 2013  Other income for the three-month period ended February 28, 2013 remains relatively unchanged from prior year period on flat oil and gas royalty payments.  Selling, general and administrative expense for the three-month period ended February 28, 2013 increased $0.5 million from the prior year period.  Interest  Interest expense incurred for the three-month period ended February 28, 2013 was $17.4 million, of which $10.2 million was capitalized in connection with our Hunter, Texas cement plant expansion project and $7.2 million was expensed. 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.  Income Taxes  Income taxes for the interim periods ended February 28, 2013 and February 29, 2012 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 7.9% for fiscal year 2013 compared to 2.5% for fiscal year 2012. We made no income tax payments and received no refunds in the nine-month period ended February 28, 2013.We made income tax payments of $0.1 million, and received income tax refunds of less than $0.1 million in the nine-month period ended February 29, 2012.  Net deferred tax assets totaled $12.4 million at February 28, 2013 and $13.7 million at May31, 2012, of which $9.7 million at February 28, 2013 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 February 28, 2013 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.  (Unaudited) CONSOLIDATED STATEMENTS OF OPERATIONS TEXAS INDUSTRIES, INC. AND SUBSIDIARIES                                                                                            Three months ended      Nine months ended In thousands except per      February   February 29, February 28, February 29, share                        28,        2012         2013         2012                              2013 NET SALES                    $141,359 $121,894   $483,575   $435,696 Cost of products sold        129,035    123,774      444,297      425,464 GROSS PROFIT                 12,324     (1,880)      39,278       10,232 Selling, general and         17,056     17,265       51,679       46,774 administrative Restructuring charges        —          —            —            3,153 Interest                     7,227      8,512        22,462       26,810 Other income                 (2,091)    (1,332)      (6,614)      (8,725)                             22,192     24,445       67,527       68,012 LOSS BEFORE INCOME TAXES     (9,868)    (26,325)     (28,249)     (57,780) FROM CONTINUING OPERATIONS Income taxes (benefit)       (1,355)    (1,148)      (2,151)      (2,601) NET LOSS FROM CONTINUING     $(8,513) $(25,177)  $(26,098)  $(55,179) OPERATIONS NET INCOME FROM DISCONTINUEDOPERATIONS, NET 2,699      897          6,504        2,442 OF TAX NET LOSS                     $(5,814) $(24,280)  $(19,594)  $(52,737) NET LOSS PER SHARE FROM                                         CONTINUING OPERATIONS: Basic                        $(0.30)  $(0.90)    $(0.93)    $(1.98) Diluted                      $(0.30)  $(0.90)    $(0.93)    $(1.98) NET INCOME FROM DISCONTINUED                                    OPERATIONS: Basic                        $0.09    $0.03      $0.23      $0.09 Diluted                      $0.09    $0.03      $0.23      $0.09 NET LOSS PER SHARE:                                             Basic                        $(0.21)  $(0.87)    $(0.70)    $(1.89) Diluted                      $(0.21)  $(0.87)    $(0.70)    $(1.89) AVERAGE SHARES OUTSTANDING                                      Basic                        28,190     27,926       28,073       27,894 Diluted                      28,190     27,926       28,073       27,894 CASH DIVIDENDS DECLARED PER  $ —        $ —          $ —          $0.075 SHARE                                                                See notes to consolidated                                       financial statements.   (Unaudited) CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS TEXAS INDUSTRIES, INC. AND SUBSIDIARIES                                                                                          Three months ended        Nine months ended In thousands               February 28, February 29, February 28, February 29,                            2013         2012         2013         2012 Net loss                   $(5,814)   $(24,280)  $(19,594)  $(52,737) Other comprehensive income                                      Net actuarial gains (losses) of defined                                             postretirement benefit plans Reclassification of recognized transactions, net of taxes -- $126,      219          363          784          1,088 $209, $736 and $627, respectively Adjustment, net of tax     —            —            (55)         — Prior service cost of defined postretirement                                          benefit plans Reclassification of recognized transactions, net of taxes - ($71),      (123)        (123)        (168)        (369) ($71), ($413) and ($213), respectively Total other comprehensive  96           240          561          719 income Comprehensive loss         $(5,718)   $(24,040)  $(19,033)  $(52,018)                                                                See notes to consolidated                                       financial statements.   CONSOLIDATED BALANCE SHEETS TEXAS INDUSTRIES, INC. AND SUBSIDIARIES                                                                                                                      (Unaudited)   In thousands                                         February28, May31,                                                      2013         2012 ASSETS                                                            CURRENT ASSETS                                                    Cash and cash equivalents                            $31,664    $88,027 Receivables – net                                    98,458       98,836 Inventories                                          100,282      99,441 Deferred income taxes and prepaid expenses           20,282       19,007 Discontinued operations held for sale                38,769       40,344 TOTAL CURRENT ASSETS                                 289,455      345,655 PROPERTY, PLANT AND EQUIPMENT                                     Land and land improvements                           170,078      168,173 Buildings                                            49,637       49,567 Machinery and equipment                              1,156,061    1,142,439 Construction in progress                             483,641      436,552                                                     1,859,417    1,796,731 Less depreciation and depletion                      647,281      611,406                                                     1,212,136    1,185,325 OTHER ASSETS                                                      Goodwill                                             1,715        1,715 Real estate and investments                          23,024       20,865 Deferred income taxes and other charges              22,141       23,368                                                     46,880       45,948                                                     $ 1,548,471 $ 1,576,928 LIABILITIES AND SHAREHOLDERS' EQUITY                              CURRENT LIABILITIES                                               Accounts payable                                     $57,000    $64,825 Accrued interest, compensation and other             48,134       61,317 Current portion of long-term debt                    1,816        1,214 TOTAL CURRENT LIABILITIES                            106,950      127,356 LONG-TERM DEBT                                       658,392      656,949 OTHER CREDITS                                        88,088       96,352 SHAREHOLDERS' EQUITY                                              Common stock, $1 par value; authorized 100,000 shares; issued and outstanding 28,324 and 27,996     28,324       27,996 shares, respectively Additional paid-in capital                           506,112      488,637 Retained earnings                                    184,542      204,136 Accumulated other comprehensive loss                 (23,937)     (24,498)                                                     695,041      696,271                                                     $ 1,548,471 $ 1,576,928                                                                  See notes to consolidated financial statements.                    (Unaudited) CONSOLIDATED STATEMENTS OF CASH FLOWS TEXAS INDUSTRIES, INC. AND SUBSIDIARIES                                                                                                                      Nine months ended In thousands                                         February 28, February 29,                                                      2013         2012 OPERATING ACTIVITIES                                              Net loss                                             $(19,594)  $(52,737) Adjustments to reconcile net loss to cash provided                by operating activities Depreciation, depletion and amortization             42,968       46,495 (Gains)/Loss on asset disposals                      (4,822)      (3,736) Deferred income tax (benefit) expense                1,025        (1,653) Stock-based compensation expense                     7,015        1,710 Other – net                                          (7,555)      (4,424) Changes in operating assets and liabilities                       Receivables – net                                    830          7,624 Inventories                                          (710)        10,048 Prepaid expenses                                     (2,158)      3,261 Accounts payable and accrued liabilities             (7,228)      (4,466) Net cash provided by operating activities            9,771        2,122 INVESTING ACTIVITIES                                              Capital expenditures – expansions                    (61,344)     (64,901) Capital expenditures – other                         (19,910)     (31,394) Proceeds from asset disposals                        5,783        4,188 Investments in life insurance contracts              2,366        3,354 Other – net                                          (67)         (302) Net cash used by investing activities                (73,172)     (89,055) FINANCING ACTIVITIES                                              Debt payments                                        (78)         (173) Debt issuance costs                                  —            (1,829) Stock option exercises                               7,116        1,749 Common dividends paid                                —            (2,091) Net cash provided (used) by financing activities     7,038        (2,344) Decrease in cash and cash equivalents                (56,363)     (89,277) Cash and cash equivalents at beginning of period     88,027       116,432 Cash and cash equivalents at end of period           $31,664    $27,155                                                                  See notes to consolidated financial statements.                    CONTACT: T. Lesley Vines, Jr.          Corporate Controller & Treasurer          972.647.6700  Texas Industries, Inc. Logo  
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