September 26, 2012

TXI Reports First Quarter Results

DALLAS, Sept. 26, 2012 (GLOBE NEWSWIRE) -- Texas Industries, Inc. (NYSE:TXI) today reported financial results for the quarter ended August 31, 2012. Results for the quarter were a net loss of $2.7 million or $.09 per share. Results for the quarter ended August 31, 2011 were a loss of $7.4 million or $.27 per share.

General Comments

"Though not back to pre-recession levels, our results reflect improvement in our markets," stated Mel Brekhus, Chief Executive Officer. "Shipments are up, pricing is improving and we are seeing the benefits of our margin enhancement initiatives."

"I am looking forward to beginning the commissioning of our new cement kiln in central Texas this fall. This specific market is strong and needs the additional cement that we will be able to produce," added Brekhus.

A teleconference will be held September 27, 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
 August 31,
In thousands except per unit  2012  2011
     
Operating Results    
Cement sales  $ 87,313  $ 75,978
Other sales and delivery fees   9,892    9,659
Total segment sales 97,205 85,637
Cost of products sold   86,119   78,232
Gross profit 11,086 7,405
Selling, general and administrative (3,544) (4,078)
Other income   880     3,190
Operating Profits  $ 8,422  $ 6,517
     
Cement    
Shipments (tons) 1,119 969
Prices ($/ton)  $78.06  $78.41
Cost of sales ($/ton)  $68.55  $71.77

Cement operating profit for the three-month periods ended August 31, 2012 and August 31, 2011 was $8.4 million and $6.5 million, respectively.

Total segment sales for the three-month period ended August 31, 2012 were $97.2 million compared to $85.6 million for the prior year period. Cement sales increased $11.3 million from the prior year period. Our Texas market area accounted for approximately 67% of cement sales in each of the three -month periods ended August 31, 2012 and August 31, 2011. Average cement prices increased 3% in our Texas market from the prior year period. Average cement prices decreased 7% due to a change in product mix in our California market from the prior year period. Shipments increased 11% in our Texas market area and 24% in our California market area.

Cost of products sold for the three-month period ended August 31, 2012 increased $7.9 million from the prior year period primarily due to higher shipments. Cement unit cost of sales decreased 4% from prior year period primarily due to lower energy costs.

Selling, general and administrative expense for the three-month period ended August 31, 2012 decreased $0.5 million from the prior year period primarily due to our work force reduction initiatives.

Other income for the three-month period ended August 31, 2012 decreased $2.3 million from the prior year period. The sales of emission credits associated with our Crestmore cement plant in Riverside, California resulted in gain of $2.5 million in the three-month period ended August 31, 2011.

Aggregate Operations

   Three months ended
 August 31,
In thousands except per unit  2012  2011
     
Operating Results    
Stone, sand and gravel sales  $ 28,151  $ 22,200
Expanded shale and clay sales and delivery fees   30,523   22,901
Total segment sales  58,674  45,101
Cost of products sold   49,041   38,508
Gross profit 9,633 6,593
Selling, general and administrative (2,330) (2,950)
Other income     1,716     272
Operating Profit  $ 9,019  $ 3,915
     
Stone, sand and gravel    
Shipments (tons) 3,914 3,143
Prices ($/ton)  $7.19  $7.06
Cost of sales ($/ton)  $5.98  $6.22

Aggregate operating profit for the three-month periods ended August 31, 2012 and August 31, 2011 was $9.0 million and $3.9 million, respectively.

Total segment sales for the three-month period ended August 31, 2012 were $58.7 million compared to $45.1 million for the prior year period. Stone, sand and gravel sales increased $6.0 million from the prior year period on 25% higher shipments and 2% higher average prices.

Cost of products sold for the three-month period ended August 31, 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 4% 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 August 31, 2012 decreased $0.6 million from the prior year period primarily due to our work force reduction initiatives.

Other income for the three-month period ended August 31, 2012 increased $1.4 million primarily due to higher gains from routine sales of surplus operating assets.

Consumer Products Operations

  Three months ended
 August 31,
In thousands except per unit  2012  2011
     
Operating Results    
Ready-mix concrete sales  $ 51,918  $ 56,228
Package products sales and delivery fees   127   14,796
Total segment sales  52,045  71,024
Cost of products sold   52,673   71,197
Gross loss (628) (173)
Selling, general and administrative (2,690) (4,374)
Other income    1,410     2,207
Operating Loss  $ (1,908)  $ (2,340)
     
Ready-mix concrete    
Shipments (cubic yards) 649 741
Prices ($/cubic yard)  $80.08  $75.93
Cost of sales ($/cubic yard)  $80.97  $78.91

Consumer products operating loss for the three-month periods ended August 31, 2012 and August 31, 2011 was $1.9 million and $2.3 million, respectively.   Operating loss for the three-month period ended August 31, 2011 includes $1.5 million profit from our Texas-based package products operations sold in April 2012. Operating results for ready-mix concrete operations improved $1.9 million from the prior year period.

Total segment sales for the three-month period ended August 31, 2012 were $52.0 million compared to $71.0 million for the prior year period. Total segment sales for the three-month period ended August 31, 2011 includes $14.7 million from the Texas-based package products operations sold in April 2012. Ready-mix concrete sales decreased $4.3 million from the prior year period. The effect of having exited the Houston, Texas ready-mix market in July 2011 decreased sales $6.6 million, shipments 14% and increased average prices 2% from the prior year period. Ready-mix concrete sales from ongoing operations increased $2.3 million from the prior year period on 2% higher shipments and 3% higher average prices.

Cost of products sold for the three-month period ended August 31, 2012 decreased $18.5 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 3% from the prior year period.

Selling, general and administrative expense for the three-month period ended August 31, 2012 decreased $1.7 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.

Other income for the three-month period ended August 31, 2012 decreased $0.8 million from the prior year period. The decrease was primarily due to the recognition of a $2.1 million gain as a result of the disposition of ready-mix operations in Houston, Texas through the asset exchange transaction in July 2011. Gains from routine sales of surplus operating assets increased $0.5 million from the prior year period. In addition, earnings from joint venture of $0.6 million were recognized in the three-month period ended August 31, 2012.

Corporate

   Three months ended
 August 31,
In thousands  2012  2011
     
     
Other income  $ 46  $ 203
Selling, general and administrative    (10,315)    (6,402)
   $ (10,269)  $ (6,199)

Other income for the three-month period ended August 31, 2012 decreased $0.2 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 August 31, 2012 increased $4.0 million from the prior year period primarily due to $2.8 million higher stock-based compensation expense and $1.0 million higher expenses as the result of our realignment of administrative functions.

Interest

Interest expense incurred for the three-month period ended August 31, 2012 was $17.1 million, of which $9.3 million was capitalized in connection with our Hunter, Texas cement plant expansion project and $7.8 million was expensed. Interest expense incurred for the three-month period ended August 31, 2011 was $17.3 million, of which $7.8 million was capitalized in connection with our Hunter, Texas cement plant expansion project and $9.5 million was expensed.

Interest expense incurred for the three-month period ended August 31, 2012 decreased $0.2 million from the prior year period primarily as a result of lower credit facility fees.

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 $21 million and $27 million.

Income Taxes

Income taxes for the interim periods ended August 31, 2012 and August 31, 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 is (5.9)% for fiscal year 2013 compared to 1.8% for fiscal year 2012. We made no income tax payments in the three-month periods ended August 31, 2012 and August 31, 2011. We received income tax refunds of less than $0.1 million in the three-month period ended August 31, 2011.

Net deferred tax assets totaled $13.5 million at August 31, 2012 and $13.7 million at May 31, 2012, of which $10.4 million at August 31, 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 August 31, 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's assurance for the realization of its deferred tax assets are deemed more likely than not to be recoverable.

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
 August 31,
In thousands except per share  2012  2011
     
NET SALES  $ 191,808  $ 181,740
     
Cost of products sold   171,717   167,915
GROSS PROFIT 20,091 13,825
     
Selling, general and administrative 18,879 17,804
Interest 7,777 9,460
Other income   (4,052)   (5,872)
    22,604   21,392
LOSS BEFORE INCOME TAXES (2,513) (7,567)
     
Income taxes (benefit)   143   (147)
NET LOSS  $ (2,656)  $ (7,420)
     
     
Net loss per share    
Basic  $ (.09)  $ (.27)
Diluted  $ (.09)  $ (.27)
     
Average shares outstanding    
Basic 27,998 27,874
Diluted   27,998   27,874
     
Cash dividends declared per share  $ --   $ .075
 
 
 
(Unaudited)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
 
   Three months ended
 August 31,
In thousands  2012  2011
     
Net loss  $ (2,656)  $ (7,420)
     
Other comprehensive income    
Net actuarial gains (losses) of defined postretirement benefit plans    
Reclassification of recognized transactions, net of tax  546  363
Adjustment, net of tax  (55)  -- 
Prior service cost of defined postretirement benefit plans    
Reclassification of recognized transactions, net of taxes   (123)   (123)
Total other comprehensive income   368   240
     
Comprehensive loss  $ (2,288)  $ (7,180)
 
 
 
CONSOLIDATED BALANCE SHEETS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
     
  (Unaudited)  
   August 31, May 31,
In thousands  2012  2012
     
ASSETS    
CURRENT ASSETS    
Cash and cash equivalents  $ 60,871  $ 88,027
Receivables — net 113,354 98,836
Inventories 118,370 129,514
Deferred income taxes and prepaid expenses   17,640   19,007
TOTAL CURRENT ASSETS 310,235 335,384
     
PROPERTY, PLANT AND EQUIPMENT    
Land and land improvements 173,771 172,247
Buildings 51,749 51,982
Machinery and equipment 1,189,805 1,184,651
Construction in progress     454,392     437,166
  1,869,717 1,846,046
Less depreciation and depletion    662,385   650,450
   1,207,332  1,195,596
OTHER ASSETS    
Goodwill 1,715 1,715
Real estate and investments 20,716 20,865
Deferred income taxes and other charges   24,400   23,368
    46,831   45,948
   $ 1,564,398  $ 1,576,928
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
CURRENT LIABILITIES    
Accounts payable  $ 68,673  $ 64,825
Accrued interest, compensation and other 44,656 61,317
Current portion of long-term debt    1,455   1,214
TOTAL CURRENT LIABILITIES  114,784 127,356
     
LONG-TERM DEBT 657,803 656,949
     
OTHER CREDITS 95,935 96,352
     
SHAREHOLDERS' EQUITY    
Common stock, $1 par value; authorized 100,000 shares; issued and outstanding 28,031 and 27,996 shares, respectively 28,031 27,996
Additional paid-in capital 490,495 488,637
Retained earnings 201,480 204,136
Accumulated other comprehensive loss   (24,130)   (24,498)
    695,876   696,271
   $ 1,564,398  $ 1,576,928
 
 
(Unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
TEXAS INDUSTRIES, INC. AND SUBSIDIARIES
   
   Three months ended
August 31,
In thousands  2012  2011
     
OPERATING ACTIVITIES    
Net loss   $ (2,656)  $ (7,420)
Adjustments to reconcile net loss to cash provided by operating activities    
Depreciation, depletion and amortization 14,216 15,980
Gains on asset disposals (2,503) (2,368)
Deferred income tax benefit (3) (241)
Stock-based compensation expense 2,766 107
Other — net (3,028) (1,567)
Changes in operating assets and liabilities    
Receivables — net (14,013) (8,670)
Inventories 10,846 894
Prepaid expenses 1,099 1,729
Accounts payable and accrued liabilities   (4,632)   (5,809)
Net cash provided (used) by operating activities 2,092 (7,365)
     
INVESTING ACTIVITIES    
Capital expenditures — expansions (28,114) (25,221)
Capital expenditures — other (4,496) (20,367)
Proceeds from asset disposals 3,578 863
Investments in life insurance contracts 146 -- 
Other — net   (59)   (82)
Net cash used by investing activities  (28,945)  (44,807)
     
FINANCING ACTIVITIES    
Debt retirements (1,028) (18)
Debt issuance costs --  (1,629)
Stock option exercises 725 78
Common dividends paid   --    (2,091)
Net cash used by financing activities   (303)   (3,660)
Decrease in cash and cash equivalents (27,156) (55,832)
     
Cash and cash equivalents at beginning of period   88,027   116,432
Cash and cash equivalents at end of period  $ 60,871  $ 60,600
CONTACT: T. Lesley Vines, Jr.

         Vice President

         Corporate Controller & Treasurer

         972.647.6722

         Email: lvines@txi.com


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