Texas Industries, Inc reported net income for the quarter ended November 30, 2007 of US$29.3m ($1.05 per share). For the same period ended November 30, 2006, net income equaled $28.7m ($1.09 per share). Last year’s quarter included $12.9m ($.47 per share) in after-tax income as a result of cash received from the settlement of the U.S. antidumping order on Mexican cement.
"After a year of exceptionally wet weather, product shipments in our Texas markets recovered nicely in the November quarter as weather returned to more normal patterns," stated Mel Brekhus, Chief Executive Officer. "The improved weather also provided the opportunity to show the progress made in improving operating margins for TXI’s aggregate and concrete operations."
In the November quarter, shipments of cement, aggregates and ready-mix concrete increased 6%, 8% and 7%, respectively compared to the prior year’s quarter. Average realized prices for cement declined about 2% due to a shift in the mix of cement products and markets. Aggregate and ready-mix concrete realized prices improved 8% and 7%.
The November quarter benefited from the absence of major scheduled maintenance at the North Texas cement plant while scheduled maintenance at the plant last year negatively impacted pretax earnings by approximately $10 million. In California, production quantities and efficiencies associated with old equipment lagged behind those of last year’s quarter, reducing pretax earnings by approximately $7 million.
Selling, general and administrative expenses declined $9.1 million compared to the prior year’s quarter. Stock-based compensation declined $5.3 million; the remaining decrease in selling, general and administrative expenses was primarily due to lower incentive compensation expense. Interest expense declined from $4.4 million in last year’s quarter to zero as all interest expense was capitalized in conjunction with cement plant modernization and expansion projects. Other income declined $21.4 million compared to a year ago. Last year’s quarter included $19.8 million of pretax income from the settlement of the long-standing U.S. antidumping order on Mexican cement. The remaining decline in other income was due to lower real estate and interest income.
Texas cement consumption has remained approximately even with that of a year ago, despite a decline in residential construction. The announced cement price increase for Texas of $10 per ton should be effective by April 2008. In California, reductions in cement demand have been offset by declining imports. Cement prices in California have remained fairly stable.
"The commissioning of TXI’s new cement capacity in California is proceeding slower than expected and we anticipate that the plant will be fully operational in June of 2008 instead of May as originally planned," continued Brekhus. "The California project will add one million tons of additional cement production and also replace 1.3 million tons of older, less efficient production equipment as well. This project, the new kiln line at TXI’s Central Texas plant and the incremental addition of production at our North Texas plant are expected to increase TXI’s total annual cement production from today’s 5 million tons to almost 8 million tons over the next three to four years."