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July 12, 2006 – Dallas, Texas - Texas Industries, Inc. (NYSE-TXI) today reported net income from continuing operations of $41.9 million ($1.58 per share) for the quarter ended May 31, 2006. Net income from continuing operations for the same period last year was $26.7 million ($1.09 per share). The recent quarter's results included a gain from the sale of real estate which added $12.4 million ($.47 per share) to net income after costs and expenses resulting from the transaction.
"The recent quarter's earnings represented record quarterly performance for TXI's cement, aggregate and concrete operations," stated Mel Brekhus, Chief Executive Officer. "Looking forward, the modernization and expansion of our California cement plant remains on time and on budget. The new plant should come online in late fall or early winter of 2007 and add one million tons of annual cement capacity. The California project, in combination with expansion opportunities at our Texas plants, should increase TXI's total annual cement production capacity from today's 5 million ton level to 7.5 million tons over the next four to five years."
"Overall, construction activity within our markets remains solid," continued Brekhus. "In the Texas region, the residential, commercial and public construction segments all show increasing activity compared to last year. In our California markets, which account for approximately 15% of TXI's revenues, a decline in residential construction is being offset by increasing activity in public works and nonresidential construction."
Fourth Quarter Discussion
Net sales for the fourth quarter increased 6% compared to last year. As expected, quarterly shipments for major products declined as seasonal weather patterns and excellent production from the Company's cement facilities a year ago supported unusually high shipments in last year's quarter. Cement, aggregate and ready-mix shipments were down 8%, 5% and 6%, respectively. However, realized average prices increased by 16%, 9% and 13% for cement, aggregates and ready-mix products compared to prices in last year's fourth quarter.
Selling, general and administrative expenses increased 11% primarily as a result of incentive compensation costs. Interest expense for the fourth quarter declined by $1.0 million as capitalized interest relating to the Company's California cement plant expansion reduced reported interest expense and as distributions on convertible trust preferred securities decreased due to the conversion of approximately 20% of the securities into common equity during the quarter.
Fiscal Year Discussion
The Company reported a loss from continuing operations for the fiscal year ended May 31, 2006 of $.6 million ($.03 per share). Included in the loss from continuing operations were debt retirement costs and other expenses related to the spin-off of TXI's steel operations that on an after-tax basis equaled $73.4 million ($3.22 per share). The $12.4 million after-tax real estate gain from the fourth quarter added $.54 per share to fiscal year earnings. For the year ended May 31, 2005 net income from continuing operations equaled $45.4 million ($1.99 per share).
Net sales for the year outpaced those of a year ago by 13%. Cement shipments declined by 5% as a result of lower beginning inventories and a lack of outside purchase opportunities compared to last year; aggregate shipments increased by 7% and ready-mix shipments improved by 4%. Realized prices for cement, aggregate and ready-mix products increased by 16%, 7% and 14%, respectively. Higher energy costs were the primary reason for the 11% increase in the cost of sales. Selling, general and administration expenses increased $10.2 million over last year, primarily as a result of increased incentive and stock-based compensation.
A teleconference will be held tomorrow, July 13, 2006 at 10:00 A.M. Central Daylight Time to further discuss fourth quarter and 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, unexpected periods of equipment downtime, changes in costs of raw materials, fuel and energy, the impact of environmental laws and other regulations and risks and uncertainties described in the Company's reports on SEC Forms 10-K, 10-Q and 8-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.
CONTACT INFORMATION:
D. Randall Jones
Vice President Corporate Communications and Government Affairs of Texas Industries, Inc., +1-972-647-6701
