TXI Reports Fourth Quarter and Year-End Results

DALLAS, July 10, 2013 (GLOBE NEWSWIRE) -- Texas Industries, Inc. (NYSE:TXI) today reported financial results for the quarter and year ended May 31, 2013. Net income for the quarter was $44.1 million or $1.52 per share. Net income included income net of tax from discontinued operations of $28.5 million or $.98 per share. Net income from discontinued operations included a pre-tax gain on the disposition of expanded shale and clay operations of $41.1 million. Net income for the quarter ended May 31, 2012 was $60.2 million or $2.15 per share and included pre-tax gains of $60.1 million from asset sales and a joint venture agreement. Prior net income also included income net of tax from discontinued operations of $3.1 million or $.11 per share.

Net income for the year ended May 31, 2013 was $24.6 million or $.86 per share and included a pre-tax gain on the disposition of discontinued operations of $41.1 million. Net income included income net of tax from discontinued operations of $35.0 million or $1.23 per share. Net income for the year ended May 31, 2012 was $7.5 million or $.27 per share and included pre-tax gains of $62.2 million from asset sales, asset exchanges and a joint venture agreement. Prior net income also included income net of tax from discontinued operations of $5.5 million or $.20 per share. 

General Comments

"The fourth quarter certainly benefited from the continuing recovery of construction activity in our major markets," stated Mel Brekhus, Chief Executive Officer. "Shipments of all products reflect double digit percentage increases compared to a year ago."

"We also achieved two strategic milestones during the quarter," added Brekhus. "The commissioning of our 1.4 million ton cement kiln at our central Texas plant was finished late in the quarter and we completed the acquisition of 42 ready-mix plants in east Texas. Both events significantly improve our ability to take advantage of the strong recovery under way in Texas."

A teleconference will be held July 11, 2013 at 10:00 Central Daylight Time to further discuss quarter and annual 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.

Three months ended May 31, 2013

Cement operating profit for the three-month period ended May 31, 2013 was $19.7 million. Cement operating profit for the three-month period ended May 31, 2012 was $21.7 million. Cement operating profit decreased $2.0 million from the prior fiscal period. 

Total segment sales for the three-month period ended May 31, 2013 increased $25.3 million from the prior fiscal period on higher shipments and prices. Cement sales increased $27.4 million. Our Texas market area accounted for approximately 72% of cement sales in the current period compared to 70% of cement sales in the prior year period. Cement shipments increased 34% in our Texas market area and increased 29% in our California market area compared to the prior fiscal period. Average prices increased 5% in our Texas market area and remained comparable in our California market area from the prior fiscal period.

Cost of products sold for three-month period ended May 31, 2013 increased $23.6 million from the prior fiscal period.  The increase was due to higher shipments and costs. Cement unit costs increased 14% from the prior fiscal period primarily due to higher energy costs, higher supplies, unscheduled maintenance expense, and depreciation expense related to our new kiln placed in service during the quarter.

Selling, general and administrative expense for the three-month period ended May 31, 2013 decreased $1.0 million from the prior fiscal period. The decrease was primarily due to lower incentive compensation expense.

Other income for the three-month period ended May 31, 2013 decreased $4.7 million from the prior fiscal period. The decrease was primarily due to $3.9 million higher gains from routine sales of surplus operating assets in 2012.

Fiscal Year 2013 Compared to Fiscal Year 2012

Cement operating profit for fiscal year 2013 was $44.1 million, an increase of $23.6 million from prior fiscal year.

Total segment sales for fiscal year 2013 were $381.5 million compared to $315.3 million for the prior fiscal year. Cement sales increased $66.2 million from the prior fiscal year on higher shipments. Our Texas market area accounted for approximately 70% of cement sales in the current fiscal year and 68% in the prior fiscal year. Cement shipments increased 23% in our Texas market area and 22% in our California market area from the prior fiscal year. Average prices increased 4% in our Texas market area and decreased 3% in our California market area from the prior fiscal year.

Cost of products sold for fiscal year 2013 increased $41.3 million from the prior fiscal year; primarily due to higher shipments. Cement unit costs decreased 4% from the prior fiscal year due to higher cement production volumes.

Selling, general and administrative expense for fiscal year 2013 decreased $3.4 million from the prior fiscal year. The decrease was primarily due to $3.1 million in lower compensation and benefit expenses.

Restructuring charges of $1.1 million were recorded in fiscal year 2012. These charges consist primarily of severance and benefit costs associated with various workforce reduction initiatives.

Other income for fiscal year 2013 decreased $5.8 million from the prior fiscal year. The decrease was primarily due to $3.0 million in higher gains from routine sales of surplus operating assets in 2012 and $2.5 million in higher gains from sales of emissions credits associated with our Crestmore cement plant in 2012.

Three months ended May 31, 2013

Aggregate operating profit for the three-month period ended May 31, 2013 was $4.8 million, a decrease of $18.1 million from the prior fiscal period. Operating profit for the three-month period ended May 31, 2012 included a gain of $20.8 million from the sale of our aggregate rail distribution terminal and associated assets located in Stafford, Texas.

Total segment sales for the three-month period ended May 31, 2013 were $43.6 million compared to $35.6 million for the prior fiscal period. Stone, sand and gravel sales increased $6.6 million from the prior fiscal period. Stone, sand and gravel sales from operations increased from the prior year on 15% higher shipments and 9% higher average prices. 

Cost of products sold for the three-month period ended May 31, 2013 increased $6.9 million from the prior fiscal period. Cost of products sold from operations increased on higher supplies, repair and maintenance, labor and stripping costs. Stone, sand and gravel unit costs increased 10%.

Selling, general and administrative expense for the three-month period ended May 31, 2013 decreased $0.6 million from prior year primarily due to $0.4 million lower incentive compensation expense and $0.2 million lower rent expense.

Other income for the three-month period ended May 31, 2013 decreased $19.8 million from the prior fiscal period. Other income in the three-month period ended May 31, 2012 included a gain of $20.8 million from the sale of our aggregate rail distribution terminal and associated assets located in Stafford, Texas. 

Fiscal Year 2013 Compared to Fiscal Year 2012

Aggregate operating profit for fiscal year 2013 was $14.4 million, a decrease of $11.0 million from the prior fiscal year. Operating profit for fiscal year 2012 included a gain of $20.8 million from the sale of our aggregate rail distribution terminal and associated assets located in Stafford, Texas. Excluding these gains, operating profit increased $9.8 million from the prior fiscal year.

Total segment sales for fiscal year 2013 were $155.6 million compared to $117.4 million for the prior fiscal year. Stone, sand and gravel sales from current operations increased $38.2 million from the prior fiscal year on 25% higher shipments and 3% higher average prices.

Cost of products sold for fiscal year 2013 increased $31.0 million from the prior fiscal year. Cost of products sold from current operations increased primarily due to higher stone, sand and gravel shipments and higher freight costs. Stone, sand and gravel unit costs decreased 3% from the prior year period due to increased production volumes.

Selling, general and administrative expense for fiscal year 2013 decreased $2.3 million from the prior fiscal year. The decrease was primarily due to $1.3 lower controllable expenses, $0.6 million in lower bad debt expense and $0.3 million in lower incentive compensation expense.

Restructuring charges of $0.4 million were recorded in fiscal year 2012. These charges consist primarily of severance and benefit costs associated with various workforce reduction initiatives.

Other income for fiscal year 2013 decreased $20.8 million. Other income in 2012 included a gain of $20.8 million from the sale of our aggregate rail distribution terminal and associated assets located in Stafford, Texas.

Three months ended May 31, 2013

Consumer products operating loss for the three-month period ended May 31, 2013 was $1.4 million. Consumer products operating profit for the three-month period ended May 31, 2012 was $35.2 million. The operating profit in the prior period included a gain of $30.9 million from the sale of our Texas-based package products operations and a gain of $8.9 million from a joint venture transaction in which we contributed certain of our ready-mix operating assets. Consumer products operating loss decreased $3.2 million from the prior fiscal period excluding these gains.

Total segment sales for the three-month period ended May 31, 2013 were $82.1 million compared to $52.7 million from the prior fiscal period. Ready-mix concrete sales increased $37.9 million from the prior fiscal period on higher shipments and higher average prices. Approximately one-half the increase in shipments is attributable to the acquisition of 42 ready-mix plants during the quarter. 

Cost of products sold for the three-month period ended May 31, 2013 increased $27.6 million from the prior fiscal period. Cost of products sold increased primarily due to higher shipments and unit costs. Ready-mix concrete unit costs increased 3% from the prior fiscal period due to higher material, supplies, and higher repair and maintenance costs.

Selling, general and administrative expense for the three-month period ended May 31, 2013 increased $0.8 million from the prior fiscal period. The increase was primarily due to costs associated with the ready-mix acquisition during the quarter. 

Other income for the three-month period ended May 31, 2013 decreased $37.7 million from the prior year period. Other income in 2012 included a gain of $30.9 million from the sale of our Texas-based package products operations and a gain of $8.9 million from a joint venture transaction in which we contributed certain of our ready-mix operating assets.

Fiscal Year 2013 Compared to Fiscal Year 2012

Consumer products operating loss for fiscal year 2013 was ($10.1) million. Consumer products operating profit for fiscal year 2012 was $25.0 million. Consumer products operating profit for fiscal year 2012 included a gain from the sale of our Texas-based package products operations of $30.9 million and gains from exchanges of operating assets of $10.5 million. Consumer products operating results improved $6.3 million from the prior fiscal year excluding the 2012 related gains.

Total segment sales were $231.7 million for both fiscal years 2013 and 2012, as an increase of $48.9 million in ready-mix concrete sales were offset by the loss of sales from the Texas-based package products operations that were sold in May, 2012.

Cost of products sold for fiscal year 2013 decreased $1.6 million from the prior fiscal year as an increase in cost of sales attributable to higher shipments and unit costs were offset by the effect of the disposition of the Texas-based package products operations.

Selling, general and administrative expense for fiscal year 2013 decreased $0.1 million from the prior fiscal year.

Restructuring charges of $0.5 million were recorded in fiscal year 2012. These charges consist primarily of severance and benefit costs associated with various workforce reduction initiatives.

Other income for fiscal year 2013 decreased $37.4 million from the prior fiscal year. Other income in 2012 included a gain of $30.9 million from the sale of our Texas-based package products operations. In addition, we entered into ready-mix and aggregate asset exchange transactions and a joint venture agreement that resulted in the recognition of gains of $10.5 million in 2012.

Three months ended May 31, 2013

Corporate general and administrative expenses for the three-month period ended May 31, 2013 $4.8 million from the prior fiscal period. The decrease is primarily due to a decrease in our financial security plan post-retirement benefit expense of $4.6 million.

Fiscal Year 2013 Compared to Fiscal Year 2012

Corporate other income for fiscal year 2013 decreased $0.2 million from the prior fiscal year.

Corporate general and administrative expense for fiscal year 2013 increased $5.0 million from the prior fiscal year. In addition to $4.1 million increase in controllable expenses, the impact of changes in our stock price on the fair value of our awards expected to be settled in cash increased $7.3 million over the prior year. These increases were slightly offset by $4.6 million decrease in our financial security plan post-retirement benefit expense and $1.3 million decrease in incentive compensation expense.

Restructuring charges of $1.2 million were recorded in fiscal year 2012. 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 May 31, 2013 was $17.4 million, of which $7.1 million was capitalized in connection with our Hunter, Texas cement plant expansion project and $10.3 million was expensed. Interest expense incurred for the three-month period ended May 31, 2012 was $17.1 million, of which $9.1 million was capitalized in connection with our Hunter, Texas cement plant expansion project and $8.0 million was expensed.

Interest expense incurred for fiscal year 2013 was $69.3 million, of which $36.5 million was capitalized in connection with Hunter, Texas cement plant expansion project and $32.8 million was expensed. Interest expense incurred for fiscal year 2012 was $68.5 million, of which $33.7 million was capitalized in connection with our Hunter, Texas cement plant expansion project and $34.8 million was expensed.

Interest expense incurred for the three-month period ended May 31, 2013 increased $0.3 million from the prior year period primarily due to the discontinuance of the capitalizing of interest related to the Hunter, Texas expansion project. Interest expense incurred for fiscal year 2013 increased $0.8 million from the prior fiscal year. The increase was primarily the result of discontinuance of capitalizing interest related to the Hunter, Texas expansion project.

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.

CONTACT: T. Lesley Vines, Jr.
         Corporate Controller & Treasurer
         Direct 972.647.6722 E-mail lvines@txi.com