Print page |
E-mail page
| 
Download PDF
| Close window
« Previous Release | Next Release »
Dallas, Texas - July 13, 2005 - Texas Industries, Inc. (NYSE - TXI) today announced results for the year and fourth quarter ended May 31, 2005. Net income for the year of $124.5 million ($5.12 per share) was a record. Net income a year ago of $36.3 million ($1.69 per share) included an after-tax gain from the sale of brick assets of $20.5 million ($.90 per share).Net income for the quarter ended May 31, 2005 equaled $41.7 million ($1.66 per share), slightly ahead of net income of $37.6 million ($1.59 per share) for the same quarter last year.
"The record annual operating profit for steel was twice its previous high," stated Mel Brekhus, Chief Executive Officer. "Cement, aggregate and concrete operations registered a record fourth quarter. The separation of Chaparral Steel from TXI through the tax-free spin-off of Chaparral should be completed by the end of July."
"Cement, aggregate and concrete operations turned a corner during the fourth quarter," continued Brekhus. "Further margin expansion may be expected over the near term and, in two years, our project to expand and modernize our California cement plant should be completed. The project will enhance TXI's competitive position in the nation's largest cement market. The facility's capacity will be increased by 75% and existing, older equipment will be replaced with state-of-the-art, highly efficient production."
"Steel returns continue to be quite attractive even though U.S. nonresidential construction, the primary driver of demand for structural steel products, remains at a cyclical low. Nonresidential construction will eventually recover and should generate demand for increased shipments of Chaparral's products. In the meantime, Chaparral will continue to develop and expand shipments of its new sheet pile products which are used in retaining wall applications."
Cement, Aggregate and Concrete Operations
Cement, aggregate and concrete operating profit for the year equaled $113.6 million, up 29% from a year ago after excluding last year's gain on the sale of brick assets. Fourth quarter operating profit of $55.5 million was up 79% from the same period a year ago. Excellent cement production efficiencies and volumes during the fourth quarter contributed to increased shipments and margins.
Realized cement prices for 2005 of $75 per ton were up almost 10% compared to the prior year; realized prices in the fourth quarter of $79 per ton increased 13% from the fourth quarter last year. Additional cement price improvement over the near term should occur as price increases from previous months and a $5 per ton price increase effective July 1 for Texas markets are fully realized.
Chaparral Steel
Steel operating profit of $171 million for the year was almost four times that of a year ago and twice the previous record for a fiscal year. Shipments were down 14% but prices increased by 46%, allowing margins to expand despite extraordinary increases in raw material costs.
Steel fourth quarter operating profit of $35.2 million was down 27% from the same period last year but equal to operating profit for the third quarter. Product shipments were off by 7% due primarily to heavy customer purchases a year ago to build inventories; however, shipments were up 28% from the third quarter. Operating margins compressed somewhat relative to last year's quarter and to the third quarter as the relationship between product prices and raw material costs continued to work itself out.
Chaparral Steel Spin-off
The spin-off of steel operations announced in December should be completed on schedule. On July 7, 2005, the Board of Directors declared the tax-free distribution of Chaparral Steel Company shares to TXI shareholders. The record date for the distribution is July 20, 2005 and the distribution date is July 29, 2005. Chaparral Steel Company's common shares will trade on the NASDAQ stock exchange under the symbol "CHAP."
The separation results in two strong businesses with leading positions in their respective markets. TXI's cement, aggregate and concrete operations have strong competitive positions in the Texas and California building materials markets. Chaparral Steel Company is the second largest supplier of structural steel throughout North America.
As a result of financings closed earlier in the month, both businesses will have strong capital structures. Going forward, each will focus on the improvement of returns from current operations and also pursue their respective strategic priorities.
Quarter Ending August 31, 2005
Looking forward, TXI's quarter ending August 31, 2005 will include the charges related to the refinancing and spin-off transactions and two months of steel operating results. The pre-tax charges relating to the extinguishment of $600 million of 10 1/4% notes on July 6, 2005, other related financings and the spin-off transaction should approximate $115-120 million. Chaparral's results will be shown in the discontinued operations line of the August quarter's income statement.
A teleconference will be held tomorrow, July 14, 2005 at 2:00 p.m. Central Time to further discuss year end results. A real-time webcast of the conference is available by logging on to TXI's website at www.txi.com.
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 the Company's business, construction activity in the Company's markets, abnormal periods of inclement weather, changes in costs of raw materials, fuel and energy, the impact of environmental laws and other regulations which are more fully described in the Company's Annual Report on SEC Form 10-K.
TXI is the largest producer of cement in Texas and a major cement producer in California. TXI is also a major supplier of construction aggregates, ready-mix concrete and concrete products. Chaparral Steel Company is the second largest producer of structural steel products in North America and a major producer of steel bar products.
CONTACT INFORMATION:
D. Randall Jones
Vice President Corporate Communications and Government Affairs of Texas Industries, Inc., +1-972-647-6701
