DALLAS, Jan. 4, 2012 (GLOBE NEWSWIRE) -- Texas Industries, Inc. (NYSE:TXI) today reported financial results for the quarter ended November 30, 2011. Results for the quarter 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 last September. Additionally, the reduction of the tax rate, compared to a year ago, increased the loss by $.30 per share. Results for the quarter ended November 30, 2010 were a net loss of $11.2 million or $.40 per share.
General Comments
"While the general economy is showing signs of some improvement, it has yet to manifest itself in increased construction activity in our markets," stated Mel Brekhus, Chief Executive Officer. "This is consistent with my expectation of a slow and prolonged recovery in the construction industry."
"I am pleased with the progress we have made on our cost cutting and efficiency initiatives. Our total headcount is down 11% compared to August 31, 2011. Projects are underway to improve efficiencies throughout our operations and our efforts to reduce costs through improved purchasing practices are showing good results. There is obviously much more work to be accomplished in order to reach our goals of a 15% gross profit margin and SG&A expense at 8% of sales by the end of fiscal year 2013 but we are off to a very good start," added Brekhus.
A teleconference will be held tomorrow, January 5, 2012 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 November 30, |
Six months ended November 30, |
|||
| In thousands except per unit | 2011 | 2010 | 2011 | 2010 |
| Operating Results | ||||
| Total cement sales | $ 68,994 | $ 61,599 | $ 144,972 | $ 129,289 |
| Total other sales and delivery fees | 8,240 | 6,979 | 17,899 | 15,671 |
| Total segment sales | 77,234 | 68,578 | 162,871 | 144,960 |
| Cost of products sold | 78,050 | 63,121 | 156,282 | 133,184 |
| Gross profit (loss) | (816) | 5,457 | 6,589 | 11,776 |
| Selling, general and administrative | (4,165) | (4,018) | (8,243) | (8,811) |
| Restructuring charges | (1,074) | -- | (1,074) | -- |
| Other income | 700 | 509 | 3,890 | 2,947 |
| Operating Profit (Loss) | $ (5,355) | $ 1,948 | $ 1,162 | $ 5,912 |
| Cement | ||||
| Shipments (tons) | 884 | 784 | 1,853 | 1,657 |
| Prices ($/ton) | $ 78.07 | $ 78.49 | $ 78.25 | $ 78.02 |
| Cost of sales ($/ton) | $ 78.34 | $ 73.39 | $ 74.90 | $ 72.25 |
Three months ended November 30, 2011
Cement operating loss for the three-month period ended November 30, 2011 was $5.4 million. Cement operating profit for the three-month period ended November 30, 2010 was $1.9 million. The operating results in the current period were impacted by the recognition of restructuring charges and an increase in cost of products sold due to lower cement clinker production and to higher repair and maintenance costs as a result of scheduled maintenance downtime at our north Texas cement plant.
Total segment sales for the three-month period ended November 30, 2011 were $77.2 million compared to $68.6 million for the prior year period. Cement sales increased $7.4 million from the prior year period. Our Texas market area accounted for approximately 67% of cement sales in the current period compared to 73% of cement sales in the prior year period. Average cement prices increased 2% in our Texas market area and decreased 5% in our California market area. Shipments increased 1% in our Texas market area and 44% in our California market area.
Cost of products sold for the three-month period ended November 30, 2011 increased $14.9 million from the prior year period primarily due to higher shipments and a 7% increase in cement unit costs. Cement unit costs were impacted by 21% lower cement clinker production and higher repair and maintenance costs due to scheduled maintenance downtime at our north Texas cement plant.
Selling, general and administrative expense for the three-month period ended November 30, 2011 increased $0.1 million from the prior year period primarily due to higher compensation expense.
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, 2011 increased $0.2 million from the prior year period primarily due to higher royalty income.
Aggregate Operations
|
Three months ended November 30, |
Six months ended November 30, |
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| In thousands except per unit | 2011 | 2010 | 2011 | 2010 |
| Operating Results | ||||
| Total stone, sand and gravel sales | $ 20,993 | $ 22,644 | $ 43,193 | $ 49,237 |
| Expanded shale and clay sales and delivery fees | 18,973 | 18,438 | 41,874 | 41,815 |
| Total segment sales | 39,966 | 41,082 | 85,067 | 91,052 |
| Cost of products sold | 35,313 | 35,002 | 73,821 | 78,412 |
| Gross profit | 4,653 | 6,080 | 11,246 | 12,640 |
| Selling, general and administrative | (2,323) | (2,814) | (5,273) | (5,873) |
| Restructuring charges | (437) | -- | (437) | -- |
| Other income | 207 | 57 | 479 | 1,690 |
| Operating Profit | $ 2,100 | $ 3,323 | $ 6,015 | $ 8,457 |
| Stone, sand and gravel | ||||
| Shipments (tons) | 2,818 | 3,026 | 5,961 | 6,610 |
| Prices ($/ton) | $ 7.45 | $ 7.48 | $ 7.25 | $ 7.45 |
| Cost of sales ($/ton) | $ 6.35 | $ 6.53 | $ 6.28 | $ 6.48 |
Three months ended November 30, 2011
Aggregate operating profit for the three-month periods ended November 30, 2011 and November 30, 2010 was $2.1 million and $3.3 million, respectively.
Total segment sales for the three-month period ended November 30, 2011 were $40.0 million compared to $41.1 million for the prior year period. Stone, sand and gravel sales decreased $1.7 million from the prior year period. The effect of the disposition of aggregate operating assets through the asset exchange transaction completed in April 2011 decreased sales $2.2 million, shipments 8% and average prices 2% from the prior year period. Stone, sand and gravel sales from current operations increased $0.5 million from the prior year period on 1% higher shipments and 2% higher average prices.
Cost of products sold for the three-month period ended November 30, 2011 increased $0.3 million from the prior year period. Stone, sand and gravel unit costs decreased 3% from the prior year period primarily due to the effect of the disposition of aggregate operating assets through the asset exchange transaction completed in April 2011.
Selling, general and administrative expense for the three-month period ended November 30, 2011 decreased $0.5 million from the prior year period primarily due to lower provisions for bad debts and legal and other professional expenses.
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.
Other income for the three-month period ended November 30, 2011 increased $0.2 million from the prior year period primarily due to higher gains from routine sales of surplus operating assets and oil and gas royalties and lease bonus payments.
Consumer Products Operations
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Three months ended November 30, |
Six months ended November 30, |
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| In thousands except per unit | 2011 | 2010 | 2011 | 2010 |
| Operating Results | ||||
| Total ready-mix concrete sales | $ 44,579 | $ 43,377 | $ 100,807 | $ 95,483 |
| Package products sales and delivery fees | 13,542 | 13,443 | 28,338 | 27,815 |
| Total segment sales | 58,121 | 56,820 | 129,145 | 123,298 |
| Cost of products sold | 59,212 | 56,290 | 130,409 | 119,539 |
| Gross profit (loss) | (1,091) | 530 | (1,264) | 3,759 |
| Selling, general and administrative | (2,436) | (3,047) | (6,810) | (5,723) |
| Restructuring charges | (536) | -- | (536) | -- |
| Other income | 457 | 134 | 2,664 | 332 |
| Operating Loss | $ (3,606) | $ (2,383) | $ (5,946) | $ (1,632) |
| Ready-mix concrete | ||||
| Shipments (cubic yards) | 587 | 575 | 1,328 | 1,244 |
| Prices ($/cubic yard) | $ 75.85 | $ 75.45 | $ 75.89 | $ 76.73 |
| Cost of sales ($/cubic yard) | $ 80.66 | $ 77.79 | $ 79.69 | $ 76.94 |
Three months ended November 30, 2011
Consumer products operating loss for the three-month periods ended November 30, 2011 and November 30, 2010 was $3.6 million and $2.4 million, respectively.
Total segment sales for the three-month period ended November 30, 2011 were $58.1 million compared to $56.8 million for the prior year period. Ready-mix concrete sales increased $1.2 million from the prior year. Sales increased $3.4 million and shipments increased 8% due to the net effect of the asset exchange transactions completed in April and July 2011. Ready-mix concrete sales excluding the net effect of the asset exchange transactions decreased $2.2 million from the prior year period on 6% lower shipments and 1% higher average prices.
Cost of products sold for the three-month period ended November 30, 2011 increased $2.9 million from the prior year period. Cost of products sold increased $3.7 million due to the net effect of the asset exchange transactions completed in April and July 2011. Cost of products sold excluding the net effect of the asset exchange transactions decreased $0.8 million. Ready-mix concrete unit costs increased 4% from the prior year period primarily due to higher diesel costs.
Selling, general and administrative expense for the three-month period ended November 30, 2011 decreased $0.6 million from the prior year period primarily due to lower provisions for bad debts.
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, 2011 increased $0.3 million from the prior year period primarily due to higher gains from routine sales of surplus operating assets.
Corporate
|
Three months ended November 30, |
Six months ended November 30, |
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| In thousands | 2011 | 2010 | 2011 | 2010 |
| Other income | $ 163 | $ 1,229 | $ 366 | $ 1,850 |
| Selling, general and administrative | (4,953) | (8,664) | (11,355) | (14,277) |
| Restructuring charges | (1,169) | -- | (1,169) | -- |
| $ (5,959) | $ (7,435) | $ (12,158) | $ (12,427) | |
Three months ended November 30, 2011
Other income for the three-month period ended November 30, 2011 decreased $1.1 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, 2011 decreased $3.7 million from the prior year period primarily due to lower stock-based compensation expense. Our 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 decreased expense $2.7 million for the three-month period ended November 30, 2011 and increased expense $1.5 million for the three-month period ended November 30, 2010.
Restructuring charges of $1.2 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.
Interest
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 incurred for the three-month period ended November 30, 2010 was $17.3 million, of which $3.4 million was capitalized in connection with our Hunter, Texas cement plant expansion project and $13.9 million was expensed. Interest expense incurred for the three-month period ended November 30, 2011 decreased $0.2 million from the prior year period primarily as a result of lower credit facility fees.
An additional $19 million of interest expense is estimated to be capitalized in connection with our Hunter, Texas cement plant expansion project during the remainder of our current fiscal year.
Loss on Debt Retirements
On July 27, 2010, we commenced a cash tender offer for all of the outstanding $550 million aggregate principal amount of our 7.25% senior notes due 2013 and a solicitation of consents to amend the indenture governing the 7.25% notes. Pursuant to the tender offer and consent solicitation, we purchased $536.6 million aggregate principal amount of the 7.25% notes, and paid an aggregate of $547.7 million in purchase price and consent fees. On September 9, 2010, we redeemed the remaining $13.4 million aggregate principal amount of the 7.25% notes at a price of 101.813% of the principal amount thereof, plus accrued and unpaid interest on the 7.25% notes to the redemption date. We used the net proceeds from the issuance and sale of $650 million aggregate principal amount of our 9.25% senior notes to pay the purchase or redemption price of the 7.25% notes and the consent fees and to increase working capital. As of November 30, 2010, we recognized a loss on debt retirement of $29.6 million representing $11.4 million in consent fees, redemption price premium and transaction costs and a write-off of $18.2 million of unamortized debt discount and original issuance costs associated with the 7.25% notes.
Income Taxes
Income taxes for the interim periods ended November 30, 2011 and November 30, 2010 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 does not include the tax impact of the loss on debt retirements which was recognized as a discrete item in the six-month period ended November 30, 2010. The estimated annualized rate excluding this charge is 3.0% for fiscal year 2012 compared to 41.0% for fiscal year 2011. We received income tax refunds of less than $0.1 million and made income tax payments of $0.1 million in the six-month period ended November 30, 2011. We received income tax refunds of $0.2 million and made income tax payments of less than $0.1 million in the six-month period ended November 30, 2010.
Net deferred tax assets totaled $15.7 million at November 30, 2011 and $15.0 million at May 31, 2011, of which $13.7 million at November 30, 2011 and $12.3 million at May 31, 2011 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 would record a valuation allowance unless such deferred tax assets were 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, 2011 primarily as a result of the 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 the increase in our net deferred tax assets expected during the year. Accordingly, a valuation allowance is required due to the uncertainty of realizing the deferred tax assets.
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 November 30, |
Six months ended November 30, |
|||
| In thousands except per share | 2011 | 2010 | 2011 | 2010 |
| NET SALES | $ 156,071 | $ 148,111 | $ 337,811 | $ 320,233 |
| Cost of products sold | 153,325 | 136,044 | 321,240 | 292,058 |
| GROSS PROFIT | 2,746 | 12,067 | 16,571 | 28,175 |
| Selling, general and administrative | 13,877 | 18,543 | 31,681 | 34,684 |
| Restructuring charges | 3,216 | -- | 3,216 | -- |
| Interest | 8,838 | 13,886 | 18,298 | 28,297 |
| Loss on debt retirements | -- | 613 | -- | 29,619 |
| Other income | (1,527) | (1,929) | (7,399) | (6,819) |
| 24,404 | 31,113 | 45,796 | 85,781 | |
| LOSS BEFORE INCOME TAXES | (21,658) | (19,046) | (29,225) | (57,606) |
| Income tax benefit | (621) | (7,845) | (768) | (22,713) |
| NET LOSS | $ (21,037) | $ (11,201) | $ (28,457) | $ (34,893) |
| Net loss per share | ||||
| Basic | $ (.75) | $ (.40) | $ (1.02) | $ (1.25) |
| Diluted | $ (.75) | $ (.40) | $ (1.02) | $ (1.25) |
| Average shares outstanding | ||||
| Basic | 27,882 | 27,807 | 27,878 | 27,797 |
| Diluted | 27,882 | 27,807 | 27,878 | 27,797 |
| Cash dividends declared per share | $ -- | $ .075 | $ .075 | $ .15 |
| CONSOLIDATED BALANCE SHEETS | ||
| TEXAS INDUSTRIES, INC. AND SUBSIDIARIES | ||
| (Unaudited) | ||
| November 30, | May 31, | |
| In thousands | 2011 | 2011 |
| ASSETS | ||
| CURRENT ASSETS | ||
| Cash and cash equivalents | $ 67,462 | $ 116,432 |
| Receivables – net | 82,378 | 85,817 |
| Inventories | 128,154 | 140,646 |
| Deferred income taxes and prepaid expenses | 20,529 | 22,040 |
| TOTAL CURRENT ASSETS | 298,523 | 364,935 |
| PROPERTY, PLANT AND EQUIPMENT | ||
| Land and land improvements | 180,090 | 158,232 |
| Buildings | 57,330 | 59,320 |
| Machinery and equipment | 1,215,341 | 1,222,560 |
| Construction in progress | 400,275 | 357,638 |
| 1,853,036 | 1,797,750 | |
| Less depreciation and depletion | 662,186 | 642,329 |
| 1,190,850 | 1,155,421 | |
| OTHER ASSETS | ||
| Goodwill | 1,715 | 1,715 |
| Real estate and investments | 11,472 | 6,749 |
| Deferred income taxes and other charges | 22,481 | 22,191 |
| 35,668 | 30,655 | |
| $ 1,525,041 | $ 1,551,011 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| CURRENT LIABILITIES | ||
| Accounts payable | $ 57,389 | $ 56,787 |
| Accrued interest, compensation and other | 63,829 | 58,848 |
| Current portion of long-term debt | 499 | 73 |
| TOTAL CURRENT LIABILITIES | 121,717 | 115,708 |
| LONG-TERM DEBT | 654,138 | 652,403 |
| OTHER CREDITS | 80,919 | 87,318 |
| SHAREHOLDERS' EQUITY | ||
| Common stock, $1 par value; authorized 100,000 shares; issued and outstanding 27,894 and 27,887 shares, respectively | 27,894 | 27,887 |
| Additional paid-in capital | 484,453 | 481,706 |
| Retained earnings | 168,203 | 198,751 |
| Accumulated other comprehensive loss | (12,283) | (12,762) |
| 668,267 | 695,582 | |
| $ 1,525,041 | $ 1,551,011 | |
| (Unaudited) | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| TEXAS INDUSTRIES, INC. AND SUBSIDIARIES | ||
|
Six months ended November 30, |
||
| In thousands | 2011 | 2010 |
| OPERATING ACTIVITIES | ||
| Net loss | $ (28,457) | $ (34,893) |
| Adjustments to reconcile net loss to cash provided by operating activities | ||
| Depreciation, depletion and amortization | 31,385 | 31,991 |
| Gains on asset disposals | (2,751) | (1,555) |
| Deferred income tax benefit | (945) | (22,964) |
| Stock-based compensation expense (credit) | (1,229) | 2,288 |
| Loss on debt retirements | -- | 29,619 |
| Other – net | (5,185) | (2,855) |
| Changes in operating assets and liabilities | ||
| Receivables – net | 3,696 | 16,112 |
| Inventories | 12,189 | (10,262) |
| Prepaid expenses | 2,854 | 1,232 |
| Accounts payable and accrued liabilities | 930 | 1,313 |
| Net cash provided by operating activities | 12,487 | 10,026 |
| INVESTING ACTIVITIES | ||
| Capital expenditures – expansions | (35,966) | (11,198) |
| Capital expenditures – other | (26,300) | (12,201) |
| Proceeds from asset disposals | 1,649 | 3,037 |
| Investments in life insurance contracts | 2,989 | 3,704 |
| Other – net | (128) | (859) |
| Net cash used by investing activities | (57,756) | (17,517) |
| FINANCING ACTIVITIES | ||
| Long-term borrowings | -- | 650,000 |
| Debt retirements | (36) | (561,568) |
| Debt issuance costs | (1,732) | (12,426) |
| Stock option exercises | 158 | 464 |
| Common dividends paid | (2,091) | (4,172) |
| Net cash provided (used) by financing activities | (3,701) | 72,298 |
| Increase (decrease) in cash and cash equivalents | (48,970) | 64,807 |
| Cash and cash equivalents at beginning of period | 116,432 | 74,946 |
| Cash and cash equivalents at end of period | $ 67,462 | $ 139,753 |