TXI 2Q sales increase, but net loss widens

Texas Industries, Inc today reported a wider net loss for the quarter ended 30 November 2013 compared to the same period of last year, as a number of non-recurring and short-term factors masked the improvement in both demand and pricing it is experiencing in its markets.

The company reported a quarterly loss of US$17.6m, or 62 cents a share, compared with a loss of US$11.1m in the same period a year earlier, or 40 cents a share. The prior-year period included a four-cent loss tied to discontinued operations. Net sales for the second quarter rose 25 per cent to US$208.89m from US$167.69m a year ago.

TXI reported higher product costs and a jump in interest expenses, masking broad sales growth that boosted the top line. It stated that abnormal periods of inclement weather in Texas negatively impacted shipments in the quarter and product and geographic mix shifts reduced its reported average sales price. Normal inefficiencies associated with a new kiln operation along with repair and maintenance costs incurred to accelerate the resumption of production from its original kiln in central Texas combined to raise costs.

"We were able to restart the original kiln in central Texas two months ahead of our original schedule," stated Mel Brekhus, CEO. "The ability to supply an additional 900,000tpa from this kiln will increase our ability to take advantage of increased demand for cement in south and central Texas. This additional production capability and improving operational efficiencies associated with the new second kiln that started production last year places us in a strong position as we enter the spring shipping season."

In light of an improving construction market, the company has announced a cement price increase of US$8/t in Texas for April 2014, and a US$3.5/t rise in California  this month and US$5/t in April 2014.

Total cement sales for the three-month period ended 30 November 2013 were US$102.4m compared to US$91.4m in 2Q12. Cement sales increased US$12.3m from the prior year period. The Texas market area accounted for approximately 69 per cent of cement sales in the current period compared to 70 per cent in the comparative period of teh year before. . Average cement prices increased 0.8 per cent in Texas  YoY but fell 0.7 per cent in California. Price increases on a same product and same market basis in both Texas and California were offset by changes in product, geographic and customer mix.

Shipments increased 14.7 per cent YoY in its Texas market area and 14.4 per cent in California market area from prior year period.

Cost of products sold for the three-month period under review increased US$12.6m YoY primarily due to higher shipments, depreciation expense related to our new production line at the Hunter cement plant, repair and maintenance costs at its Texas plants, and emission allowance credits associated with our compliance with The California Global Warming Solutions Act of 2006, which took effect on 1 January, 2013.

Cement unit cost of sales increased 2.7 per cent from the prior year period as the impact of higher costs including depreciation, repair and maintenance, and emission allowance credits were partially offset by higher shipments.