TXI Reports First Quarter Results

DALLAS, Sept. 28, 2011 (GLOBE NEWSWIRE) -- Texas Industries, Inc. (NYSE:TXI) today reported financial results for the quarter ended August 31, 2011. Results for the quarter were a net loss of $7.4 million or $.27 per share. Results for the quarter ended August 31, 2010 were a loss of $23.7 million or $.85 per share and included an after-tax charge of $18.0 million or $.65 per share with respect to the Company's refinancing.

General Comments

"Conditions in our markets remain challenging in light of the pervasive uncertainty regarding the economy," stated Mel Brekhus, Chief Executive Officer. "In recent months we made progress on pricing and we are committed to continuing our efforts, although economic headwinds may cause our successes to be uneven in the near term."

"We also made significant progress during the quarter on a number of strategic initiatives. The swap of ready-mix assets in Houston, TX for ready-mix and aggregate assets in Austin, TX and the continued construction on the expansion of our central Texas cement plant will strengthen and increase our market position in one of the better markets in the state. The extension of our credit facility to August 2016 also increases our liquidity and improves our ability to execute our strategy," added Brekhus.

A teleconference will be held September 29, 2011 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

Cement operating profit for the three-month periods ended August 31, 2011 and August 31, 2010 was $6.5 million and $4.0 million, respectively. Construction activity remained at low levels in both our Texas and California market areas during the periods.

Total segment sales for the three-month period ended August 31, 2011 were $85.6 million compared to $76.4 million for the prior year period. Cement sales increased $8.3 million from the prior year period. Our Texas market area accounted for approximately 67% of cement sales in the current period compared to 70% of cement sales in the prior year period. Average cement prices were comparable to the prior year period in our Texas market area and increased 3% in our California market area. Shipments increased 8% in our Texas market area and 17% in our California market area.

Cost of products sold for the three-month period ended August 31, 2011 increased $8.2 million from the prior year period primarily due to higher shipments and a 1% increase in cement unit costs.

Selling, general and administrative expense for the three-month period ended August 31, 2011 decreased $0.7 million from the prior year period primarily due to lower provisions for bad debts and legal and other professional expenses.

Other income for the three-month period ended August 31, 2011 increased $0.8 million from the prior year period. Sales of emission credits associated with our Crestmore cement plant in Riverside, California resulted in gains of $2.5 million and $1.7 million in the three-month periods ended August 31, 2011 and August 31, 2010, respectively.

Aggregate Operations

Aggregate operating profit for the three-month periods ended August 31, 2011 and August 31, 2010 was $3.9 million and $5.1 million, respectively.

Total segment sales for the three-month period ended August 31, 2011 were $45.1 million compared to $50.0 million for the prior year period. Stone, sand and gravel sales decreased $4.4 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 $2.3 million, shipments 7% and average prices 2% from the prior year period. Stone, sand and gravel sales from current operations decreased $2.1 million from the prior year period on 5% lower shipments and 3% lower average prices. 

Cost of products sold for the three-month period ended August 31, 2011 decreased $4.9 million from the prior year period primarily due to lower stone, sand and gravel shipments. Stone, sand and gravel unit costs decreased 4% 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 August 31, 2011 decreased $0.1 million from the prior year period primarily due to lower provisions for bad debts.

Other income for the three-month period ended August 31, 2011 decreased $1.4 million from the prior year period primarily due to lower gains from routine sales of surplus operating assets.

Consumer Products Operations

Consumer products operating loss for the three-month period ended August 31, 2011 was $2.3 million. Consumer products operating profit for the three-month period ended August 31, 2010 was $0.8 million. Reduced margins due to lower sales prices increased operating loss from the prior year period.

Total segment sales for the three-month period ended August 31, 2011 were $71.0 million compared to $66.5 million for the prior year period. Ready-mix concrete sales increased $4.1 million from the prior year. Sales increased $8.9 million and shipments increased 18% due to the net effect of the acquisition of the ready-mix operations through the asset exchange transactions completed in April and July 2011. Ready-mix concrete sales excluding the net effect of the acquisitions decreased $4.8 million from the prior year period on 7% lower shipments and 2% lower average prices. 

Cost of products sold for the three-month period ended August 31, 2011 increased $7.9 million from the prior year period. Cost of products sold increased $9.0 million due to the net effect of the acquisition of the ready-mix operations through the asset exchange transactions completed in April and July 2011. Cost of products sold excluding the net effect of the acquisitions decreased $1.1 million primarily due to lower ready-mix concrete shipments. Ready-mix concrete unit costs increased 4% from the prior year period primarily due to higher diesel costs and the effect of lower shipments.

Selling, general and administrative expense for the three-month period ended August 31, 2011 increased $1.7 million from the prior year period primarily due to higher provisions for bad debts and insurance claims.

Other income for the three-month period ended August 31, 2011 increased $2.0 million from the prior year period primarily due to the recognition of a gain of $2.1 million as a result of the disposition of ready-mix operations in Houston, Texas through the asset exchange transaction completed in July 2011.

Corporate

Other income for the three-month period ended August 31, 2011 decreased $0.4 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, 2011 increased $0.8 million from the prior year period primarily due to higher retirement plan and stock-based compensation expenses.

Interest

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, 2010 was $14.4 million, all of which was expensed.

Interest expense incurred for the three-month period ended August 31, 2011 increased $2.9 million from the prior year period primarily as a result of higher average outstanding debt at higher interest rates due to the August 2010 refinancing of our senior notes. 

Interest expense to be capitalized in connection with our Hunter, Texas cement plant expansion project during the remainder of our current fiscal year is currently estimated at approximately $27 million.

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 August 31, 2010, we recognized a loss on debt retirement of $29.0 million representing $11.1 million in consent fees, redemption price premium and transaction costs and a write-off of $17.9 million of unamortized debt discount and original issuance costs associated with the 7.25% notes. 

Income Taxes

Income taxes for the interim periods ended August 31, 2011 and August 31, 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 three-month period ended August 31, 2010. The estimated annualized rate excluding this charge is 1.8% for fiscal year 2012 compared to 40.6% for fiscal year 2011. We received income tax refunds of less than $0.1 million and made no income tax payments in the three-month period ended August 31, 2011. We received income tax refunds and made income tax payments of less than $0.1 million in the three-month period ended August 31, 2010.

Net deferred tax assets totaled $15.1 million at August 31, 2011 and $15.0 million at May 31, 2011, of which $13.0 million at August 31, 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 August 31, 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 rate, 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 obligations 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

CONTACT: T. Lesley Vines, Jr.
         Vice President
         Corporate Controller & Treasurer
         972.647.6722
         Email: lvines@txi.com

Texas Industries, Inc.
Consolidated Statements of Operations
$ In thousands expect per share
		FY2005				FY2006				FY2007				FY2008				FY2009				FY2010																				FY2011																				FY2012
																							Q1				Q2				Q3				Q4			Total					Q1				Q2				Q3				Q4			Total					Q1
Shipments
Cement (thousands of tons)			5,394				5,136				5,074				5,035				4,035				915				738				639				934				3,226				873				784				704				940				3,301				969
Aggregates (thousands of tons)			23,616				25,246				22,114				21,851				16,470				3,423				2,642				1,947				3,351				11,363				3,584				3,026				2,470				2,985				12,065				3,143
Ready-mix (thousands of cubic yards)			3,678				3,830				3,665				3,844				2,902				612				501				427				607				2,147				669				575				471				700				2,415				741
Price
Cement ($ per ton)		$	75.05			$	87.14			$	95.06			$	93.07			$	90.31			$	85.70			$	83.64			$	81.82			$	78.95			$	82.51			$	77.59			$	78.49			$	76.75			$	77.77			$	77.68			$	78.41
Aggregates ($ per ton)		$	5.68			$	6.08			$	7.03			$	7.44			$	7.97			$	8.12			$	7.65			$	7.62			$	7.51			$	7.75			$	7.42			$	7.48			$	7.38			$	7.23			$	7.38			$	7.06
Ready-mix ($ per cubic yard)		$	60.54			$	69.25			$	75.87			$	80.83			$	85.46			$	88.46			$	83.02			$	79.17			$	76.06			$	81.83			$	77.83			$	75.45			$	72.83			$	72.92			$	74.87			$	75.93
Net Sales
Cement			404,823				447,594				482,379				468,673				364,386				78,460				61,726				52,322				73,672				266,180				67,690				61,599				54,018				73,078				256,385				75,978
Aggregates			134,220				153,480				155,562				162,582				131,197				27,794				20,217				14,849				25,159				88,019				26,593				22,644				18,212				21,596				89,045				22,200
Ready-mix			222,680				265,254				278,067				310,652				247,931				54,053				41,720				33,695				46,244				175,712				52,106				43,377				34,351				50,992				180,826				56,228
Other			104,847				118,555				119,798				132,606				121,321				28,939				22,244				19,923				30,420				101,526				27,310				23,112				20,487				30,745				101,654				27,128
Interplant			(105,576	)			(121,127	)			(118,406	)			(130,461	)			(103,030	)			(20,878	)			(15,988	)			(13,575	)			(19,338	)			(69,779	)			(20,708	)			(18,369	)			(14,597	)			(20,380	)			(74,054	)			(20,022	)
Delivery Fees			73,809				80,166				78,850				84,802				77,397				15,589				13,016				10,615				20,186				59,406				19,131				15,748				13,347				19,731				67,957				20,228
Net Sales			834,803				943,922				996,250				1,028,854				839,202				183,957				142,935				117,829				176,343				621,064				172,122				148,111				125,818				175,762				621,813				181,740
Costs and Expenses (Income)
Cost of products sold			692,414				766,941				754,088				834,333				726,133				149,852				126,063				131,126				155,025				562,066				156,014				136,044				135,179				169,273				596,510				167,915
Selling, general and administrative			78,434				88,663				108,106				96,220				72,093				20,254				15,886				17,568				25,707				79,415				16,141				18,543				17,319				24,417				76,420				17,804
Goodwill impairment			-				-				-				-				58,395				-				-				-				-				-				-				-				-				-				-				-
Interest			23,533				31,155				14,074				2,505				33,286				13,244				13,364				13,642				11,990				52,240				14,411				13,886				9,670				9,616				47,583				9,460
Loss on debt retirements and spin-off charges			894				113,247				48				-				907				-				-				-				-				-				29,006				613				-				-				29,619				-
Other income			(22,727	)			(47,270	)			(36,629	)			(31,563	)			(21,191	)			(2,652	)			(5,728	)			(1,044	)			(1,242	)			(10,666	)			(4,890	)			(1,929	)			(1,115	)			(13,578	)			(21,512	)			(5,872	)
			772,548				952,736				839,687				901,495				869,623				180,698				149,585				161,292				191,480				683,055				210,682				167,157				161,053				189,728				728,620				189,307
Income (Loss) from Continuing Operations
before Income Taxes			62,255				(8,814	)			156,563				127,359				(30,421	)			3,259				(6,650	)			(43,463	)			(15,137	)			(61,991	)			(38,560	)			(19,046	)			(35,235	)			(13,966	)			(106,807	)			(7,567	)
Income Taxes (Benefits)			16,811				(8,225	)			51,852				39,728				(12,774	)			1,544				(2,948	)			(16,358	)			(5,376	)			(23,138	)			(14,868	)			(7,845	)			(14,301	)			(4,880	)			(41,894	)			(147	)
Income (Loss) from Continuing Operations			45,444				(589	)			104,711				87,631				(17,647	)			1,715				(3,702	)			(27,105	)			(9,761	)			(38,853	)			(23,692	)			(11,201	)			(20,934	)			(9,086	)			(64,913	)			(7,420	)
Income from Discontinued Operations net of Income Taxes			79,079				8,691				-				-				-				-				-				-				-				-				-				-				-				-				-				-
Income (Loss) before Accounting Change			124,523				8,102				104,711				87,631				(17,647	)			1,715				(3,702	)			(27,105	)			(9,761	)			(38,853	)			(23,692	)			(11,201	)			(20,934	)			(9,086	)			(64,913	)			(7,420	)
Cumulative Effect of Accounting Change net of Income Taxes			-				-				-				-				-				-				-				-				-				-				-				-				-				-				-				-
Net Income (Loss)			124,523				8,102				104,711				87,631				(17,647	)			1,715				(3,702	)			(27,105	)			(9,761	)			(38,853	)			(23,692	)			(11,201	)			(20,934	)			(9,086	)			(64,913	)			(7,420	)

Texas Industries, Inc.
Consolidated Balance Sheets
$ In thousands
		5/31/2005				5/31/2006				5/31/2007				5/31/2008				5/31/2009				8/31/2009				11/30/2009				2/28/2010				5/31/2010				8/31/2010				11/30/2010				2/28/2011				5/31/2011				8/31/2011
Cash			251,600				84,139				15,138				39,527				19,796				32,183				56,794				75,615				74,946				162,427				139,753				123,362				116,432				60,600
Short-term investments			-				50,606				-				-				-				-				-				-				-				-				-				-				-				-
Receivables - net			117,363				132,849				142,610				170,943				129,432				129,430				115,469				74,642				112,184				107,217				96,671				69,999				85,817				94,617
Inventories			83,291				109,767				135,254				144,654				155,724				156,355				161,431				141,304				142,419				148,741				152,681				143,341				140,646				139,752
Deferred income taxes and prepaid expenses			28,754				33,599				17,621				17,943				22,039				21,244				21,320				21,887				23,426				22,673				23,351				22,774				22,040				21,001
Total Current Assets			481,008				410,960				310,623				373,067				326,991				339,212				355,014				313,448				352,975				441,058				412,456				359,476				364,935				315,970
Property, plant and equipment			886,447				956,896				1,293,360				1,546,125				1,791,546				1,789,351				1,788,663				1,790,965				1,758,778				1,759,077				1,775,126				1,788,023				1,797,750				1,830,765
Less depreciation and depletion			473,794				486,585				509,138				518,361				572,195				587,052				601,982				613,930				604,269				618,706				634,404				646,841				642,329				649,973
Net Property, Plant and Equipment			412,653				470,311				784,222				1,027,764				1,219,351				1,202,299				1,186,681				1,177,035				1,154,509				1,140,371				1,140,722				1,141,182				1,155,421				1,180,792
Goodwill			58,395				58,395				58,395				60,110				1,715				1,715				1,715				1,715				1,715				1,715				1,715				1,715				1,715				1,715
Real estate and investments			99,491				125,159				110,761				59,261				10,001				7,736				7,827				7,334				6,774				6,223				7,426				7,007				6,749				6,447
Deferred cncome taxes, intangibles and other charges			27,571				22,706				11,369				11,332				14,486				15,852				15,787				14,050				15,774				22,398				23,219				20,314				22,191				24,031
Assets of discontinued operations			1,114,627				-				-				-				-				-				-				-				-				-				-				-				-				-
			1,300,084				206,260				180,525				130,703				26,202				25,303				25,329				23,099				24,263				30,336				32,360				29,036				30,655				32,193
Total Assets			2,193,745				1,087,531				1,275,370				1,531,534				1,572,544				1,566,814				1,567,024				1,513,582				1,531,747				1,611,765				1,585,538				1,529,694				1,551,011				1,528,955
Accounts payable			44,560				50,931				96,883				111,478				55,749				48,894				41,144				43,537				56,214				54,659				41,800				43,265				56,787				54,320
Accrued interest, compensation and other items			62,202				66,955				70,104				66,967				51,856				47,808				60,224				41,515				51,455				45,805				63,307				40,087				58,848				49,290
Current portion of long term debt			688				681				1,340				7,725				243				247				541				500				234				13,341				95				72				73				74
Total Current Liabilities			107,450				118,567				168,327				186,170				107,848				96,949				101,909				85,552				107,903				113,805				105,202				83,424				115,708				103,684
Long-term Debt			603,126				251,505				274,416				401,880				541,540				542,371				543,244				544,087				538,620				652,459				652,441				652,422				652,403				652,385
Convertible subordinated debentures			199,937				159,725				-				-				-				-				-				-				-				-				-				-				-				-
Deferred income taxes and other credits			77,138				79,837				95,508				118,117				120,011				122,765				121,591				111,171				123,976				108,400				102,495				89,177				87,318				85,223
Liabilities of discontinued operations			278,527				-				-				-				-				-				-				-				-				-				-				-				-				-
Shareholders' equity			927,567				477,897				737,119				825,367				803,145				804,729				800,280				772,772				761,248				737,101				725,400				704,671				695,582				687,663
Total Liabilities and Shareholders' Equity			2,193,745				1,087,531				1,275,370				1,531,534				1,572,544				1,566,814				1,567,024				1,513,582				1,531,747				1,611,765				1,585,538				1,529,694				1,551,011				1,528,955