1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarter Ended
DECEMBER 31, 1996
Commission File Number 1-12984
[COMPANY LOGO]
CENTEX CONSTRUCTION PRODUCTS, INC.
A Delaware Corporation
IRS Employer Identification No. 75-2520779
3710 Rawlins, Suite 1600
Dallas, Texas 75219
(214) 559-6514
The registrant has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and
has been subject to such filing requirements for the past 90 days.
- ------------------------------------------------------------------------------
As of the close of business on February 10, 1997, 21,983,814 shares of Centex
Construction Products, Inc. common stock were outstanding.
- --------------------------------------------------------------------------------
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CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES
FORM 10-Q TABLE OF CONTENTS
DECEMBER 31, 1996
PAGE
----
PART I. FINANCIAL INFORMATION (UNAUDITED)
ITEM 1. Consolidated Financial Statements 1
Consolidated Statement of Earnings for
the Three Months Ended
December 31, 1996 2
Consolidated Statement of Earnings
for the Nine Months Ended
December 31, 1996 3
Consolidated Balance Sheets 4
Consolidated Statement of Cash Flows
for the Nine Months Ended
December 31, 1996 5
Notes to Consolidated Financial Statements 6
ITEM 2. Management's Discussion and Analysis of
Results of Operations and Financial
Condition 7-10
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
3
CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
CONSOLIDATED FINANCIAL STATEMENTS
ITEM 1.
The consolidated financial statements include the accounts of Centex
Construction Products, Inc. and subsidiaries ("CXP" or the "Company"), and have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The Company believes that the
disclosures are adequate to make the information presented not misleading. It
is suggested that these unaudited consolidated financial statements be read in
conjunction with the consolidated financial statements and the notes thereto
included in the Registrant's latest Annual Report on Form 10-K. In the opinion
of the Company, all adjustments necessary to present fairly the information in
the following unaudited consolidated financial statements of the Company have
been included. The results of operations for such interim periods are not
necessarily indicative of the results for the full year.
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CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(dollars in thousands, except per share data)
(unaudited)
FOR THE THREE MONTHS ENDED December 31,
--------------------------------
1996 1995
------------ ------------
REVENUES
Cement ................................. $ 32,228 $ 31,740
Wallboard .............................. 18,103 14,231
Concrete/Aggregates .................... 9,123 9,737
Other, net ............................. 843 817
Less Intersegment Sales ................ (1,180) (1,096)
------------ ------------
59,117 55,429
------------ ------------
COSTS AND EXPENSES
Cement ................................. 21,762 21,037
Wallboard .............................. 12,636 11,332
Concrete/Aggregates .................... 8,071 8,223
Less Intersegment Purchases ............ (1,180) (1,096)
Corporate General & Administrative ..... 1,073 614
Interest Income, net ................... (536) (25)
------------ ------------
41,826 40,085
------------ ------------
EARNINGS BEFORE INCOME TAXES ............. 17,291 15,344
Income Taxes ........................... 6,069 5,386
------------ ------------
NET EARNINGS ............................. $ 11,222 $ 9,958
============ ============
EARNINGS PER SHARE ....................... $ 0.51 $ 0.43
============ ============
AVERAGE SHARES OUTSTANDING ............... 21,996,836 22,972,504
============ ============
CASH DIVIDENDS PER SHARE ................. $ 0.05 $ -0-
============ ============
See notes to unaudited consolidated financial statements.
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CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(dollars in thousands, except per share data)
(unaudited)
FOR THE NINE MONTHS ENDED December 31,
--------------------------------
1996 1995
------------ ------------
REVENUES
Cement ................................. $ 108,844 $ 103,739
Wallboard .............................. 49,806 43,195
Concrete/Aggregates .................... 29,289 31,032
Other, net ............................. 1,573 2,247
Less Intersegment Sales ................ (3,799) (3,197)
------------ ------------
185,713 177,016
------------ ------------
COSTS AND EXPENSES
Cement ................................. 74,166 72,920
Wallboard .............................. 36,259 34,740
Concrete/Aggregates .................... 25,068 26,345
Less Intersegment Purchases ............ (3,799) (3,197)
Corporate General & Administrative ..... 2,438 1,875
Interest (Income) Expense, net ......... (960) 746
------------ ------------
133,172 133,429
------------ ------------
EARNINGS BEFORE INCOME TAXES ............. 52,541 43,587
Income Taxes ........................... 18,442 15,299
------------ ------------
NET EARNINGS ............................. $ 34,099 $ 28,288
============ ============
EARNINGS PER SHARE ....................... $ 1.54 $ 1.23
============ ============
AVERAGE SHARES OUTSTANDING ............... 22,202,130 22,996,805
============ ============
CASH DIVIDENDS PER SHARE ................. $ 0.15 $ -0-
============ ============
See notes to unaudited consolidated financial statements.
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CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
December 31, March 31,
ASSETS 1996 1996
- ------ ------------ ---------
(Unaudited) (*)
Current Assets
Cash and Cash Equivalents ............. $ 54,055 $ 20,799
Accounts and Notes Receivable, net .... 32,639 33,532
Inventories ........................... 26,566 29,691
--------- ---------
Total Current Assets ................ 113,260 84,022
--------- ---------
Property, Plant and Equipment ............ 310,423 308,600
Less Accumulated Depreciation ......... (135,999) (128,419)
--------- ---------
Property, Plant & Equipment, net .... 174,424 180,181
Notes Receivable, net .................... 1,719 1,395
Other Assets ............................. 4,999 3,977
--------- ---------
$ 294,402 $ 269,575
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable ...................... $ 16,103 $ 15,020
Accrued Liabilities ................... 26,382 23,029
Current Portion of Long-term Debt ..... 80 80
Income Taxes Payable .................. 3,951 --
--------- ---------
Total Current Liabilities ........... 46,516 38,129
--------- ---------
Long-term Debt ........................... 640 640
Deferred Income Taxes .................... 14,424 14,344
Stockholders' Equity
Common Stock, Par Value $0.01;
Authorized 50,000,000 Shares;
Issued and Outstanding 21,982,814 and
22,978,504 Shares, respectively ..... 220 230
Capital in Excess of Par Value ........ 147,198 161,617
Retained Earnings ..................... 85,404 54,615
--------- ---------
Total Stockholders' Equity ............... 232,822 216,462
--------- ---------
$ 294,402 $ 269,575
========= =========
* Condensed from audited financial statements.
See notes to unaudited consolidated financial statements.
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CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in thousands)
(unaudited)
FOR THE NINE MONTHS ENDED December 31,
------------------------
1996 1995
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Earnings ........................... $ 34,099 $ 28,288
Adjustments to Reconcile Net Earnings
to Net Cash Provided by Operating
Activities -
Depreciation, Depletion and
Amortization ................. 10,099 10,550
Deferred Income Tax
Provision .................... 80 253
Decrease (Increase)in Accounts and Notes
Receivable .......................... 570 (4,496)
Decrease in Inventories ................ 3,124 5,157
Increase in Accounts Payable and
Accrued Liabilities ................. 4,392 1,609
(Increase)Decrease in Other, net ........ (1,014) 360
Increase in Income Taxes Payable ....... 4,045 4,168
-------- --------
55,395 45,889
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Property, Plant and Equipment
Additions, net ...................... (4,350) (10,913)
Proceeds From Sale of Assets ........... -- 5,057
-------- --------
(4,350) (5,856)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends Paid ......................... (3,360) --
Retirement of Common Stock ............. (14,976) --
Proceeds from Stock Option Exercises ... 547 178
Decrease in Long-term Debt ............. -- (24,500)
-------- --------
(17,789) (24,322)
-------- --------
NET INCREASE IN CASH AND CASH
EQUIVALENTS ......................... 33,256 15,711
CASH AT BEGINNING OF PERIOD .............. 20,799 2,475
-------- --------
CASH AT END OF PERIOD .................... $ 54,055 $ 18,186
======== ========
See notes to unaudited consolidated financial statements.
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CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(A) A summary of changes in stockholders' equity is presented below.
Capital in
Common Excess of Retained
Stock Par Value Earnings Total
--------- --------- --------- ---------
(dollars in thousands)
Balance, March 31, 1995 .. $ 230 $ 161,355 $ 21,820 $ 183,405
Net Earnings ............. -- -- 33,944 33,944
Stock Option Exercises ... -- 262 -- 262
Cash Dividends ........... -- -- (1,149) (1,149)
--------- --------- --------- ---------
Balance, March 31, 1996 .. 230 161,617 54,615 216,462
Net Earnings ............. -- -- 34,099 34,099
Stock Option Exercises ... -- 547 -- 547
Cash Dividends ........... -- -- (3,310) (3,310)
Retirement of Common Stock (10) (14,966) -- (14,976)
--------- --------- --------- ---------
BALANCE DECEMBER 31, 1996 $ 220 $ 147,198 $ 85,404 $ 232,822
========= ========= ========= =========
(B) Impact of New Accounting Pronouncements.
During the June 30, 1996 quarter, the Company adopted Financial
Accounting Standards Board (FASB) Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
(SFAS No. 121). SFAS No. 121 requires that certain long-lived assets and
intangibles be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. There was no material effect on the Company's financial statements
from the Company's adoption of SFAS No. 121.
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CENTEX CONSTRUCTION PRODUCTS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Centex Construction Product's revenues for the third quarter of fiscal
1997 totaled $59,117,000, compared to revenues of $55,429,000 for the same
quarter last year. CXP's net earnings for the quarter ended December 31, 1996
were a record $11,222,000, a 13% increase from $9,958,000 for the same quarter
last year. Earnings per share for this year's quarter were $0.51 versus $0.43
per share for the same quarter in fiscal 1996. The quarter's record net
earnings resulted primarily from Gypsum Wallboard price increases. For the nine
months ended December 31, 1996 CXP's revenues were $185,713,000, up 5% from
$177,016,000 for the same period last year. Net earnings for the current nine
months were a record $34,099,000, up 21% from the $28,288,000 for the same
period last year. Earnings per share for the nine months this year were $1.54,
an increase of 25% from $1.23 per share for the same period last year. For both
the quarter and the nine months, earnings per share increased a higher
percentage than net earnings due to fewer average shares outstanding in the
current periods. Strong fundamentals in the Cement and Gypsum Wallboard sectors
continue to impact demand and pricing. CXP's regional markets are currently
experiencing economic growth above the national average.
The following table compares sales volumes, average unit sales prices
and unit operating margins for the Company's operations:
Cement Wallboard Concrete Aggregates
(Ton) (MSF) (Cubic Yard) (Ton)
-------------------- -------------------- -------------------- --------------------
Quarter Ended Dec. 31, 1996 1995 1996 1995 1996 1995 1996 1995
- ---------------------- -------- -------- -------- -------- -------- -------- -------- --------
Sales Volume (M) 510 532 170 164 147 161 549 562
Average Net Sales Price $ 63.14 $ 59.66 $ 106.45 $ 86.70 $ 46.86 $ 46.04 $ 4.02 $ 4.10
Operating Margin $ 20.51 $ 20.12 $ 32.14 $ 17.66 $ 5.72 $ 7.52 $ 0.38 $ 0.53
Cement Wallboard Concrete Aggregates
(Ton) (MSF) (Cubic Yard) (Ton)
-------------------- -------------------- -------------------- --------------------
Nine Months Ended Dec. 31, 1996 1995 1996 1995 1996 1995 1996 1995
- -------------------------- -------- -------- -------- -------- -------- -------- -------- --------
Sales Volume (M) 1,712 1,720 516 486 483 466 1,623 2,379
Average Net Sales Price $ 63.56 $ 60.32 $ 96.50 $ 88.85 $ 46.67 $ 45.83 $ 4.15 $ 4.07
Operating Margin $ 20.25 $ 17.92 $ 26.25 $ 17.39 $ 6.90 $ 7.70 $ 0.55 $ 0.46
Cement revenues for the current quarter were $32,228,000, up 2% from
$31,740,000 for the same quarter in the prior year. Operating earnings were
$10,466,000, a 2% decrease from $10,703,005 for the same quarter last year.
Higher average sales prices offset by an 8% increase in cost of sales and a 4%
decline in sales volume resulted in the net quarterly decline. Sales volume of
510,000 tons for the current quarter was down 22,000 tons from prior year's
quarter due to a
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normal winter shipping season during this year's third quarter. Cost of sales
increased 8% over prior year's quarter due to higher purchased cement sales
this year and a positive inventory correction last year. All facilities again
operated at capacity and ended the quarter with lower than normal clinker and
cement inventories. For the nine month period Cement revenues were
$108,844,000, a 5% increase over $103,739,000 for the same period last year.
Operating earnings from Cement were $34,678,000 for the nine months, a 13%
increase from $30,819,000 for the same period in the prior year. Cement
operating earnings increased due to higher sales prices in all of CXP's markets
partially offset by a 2% increase in cost of sales.
Revenues from Gypsum Wallboard were $18,103,000 for the quarter this
year, a 27% increase over revenues of $14,231,000 for the same quarter in the
prior fiscal year. Operating earnings for the quarter were $5,467,000, an 89%
increase from $2,899,000 for the same period last year. Increased sales volume
and improved margins resulted in the net gain for the quarter. Average sales
prices for the current quarter of $106.45 per thousand square feet ("MSF")
exceeded prior year's third quarter sales prices by 23%. A strong single-family
housing construction market coupled with increased commercial and
reconstruction demand resulted in record industry consumption for 1996.
Production cost increased over prior year's cost due to increased fuel cost and
major maintenance at the Albuquerque plant. Gypsum Wallboard had revenues of
$49,806,000 for the first nine months of this fiscal year, 15% higher than the
$43,195,000 for the same period in fiscal 1996. Gypsum Wallboard operating
earnings for the nine months were $13,547,000, an improvement of 60% from the
$8,455,000 earnings for the same period last year. The net earnings gain over
prior year resulted from increased sales volume and improved operating margins.
Operating margins for the nine months increased over prior year's comparable
period due to 9% higher sales prices along with a 2% decrease in production
costs.
Current quarter revenues from Concrete/Aggregates totaled $9,123,000,
a 6% decrease from $9,737,000 for the prior year's quarter. Operating earnings
from Concrete/Aggregates were $1,052,000 for the quarter this year, a 31%
decline from prior year's quarter due to reduced margins and lower sales
volume. Concrete earnings for the quarter decreased 31% from last year's
quarter due to reduced margins and 9% lower sales volume. Cost of sales
increased 7% due primarily to higher cement and aggregates cost. Aggregates
earnings for the quarter decreased 31% from prior year's quarter due to
increased cost of sales and lower sales prices and volume. Aggregates sales
volume declined due to the sale of the north Texas aggregates operation early
in last year's third quarter. For the nine months, Concrete/Aggregates revenues
were $29,289,000 this year, compared to $31,032,000 for the same period last
year. Operating earnings were $4,221,000 for the nine months this year versus
$4,687,000 for the same period last year. Concrete margins declined due to
higher sales prices being offset by increased materials and production costs.
Aggregates margins increased due to higher net sales prices and slightly lower
production costs. Aggregates sales volume of 1,712,000 tons for the first nine
months of this fiscal year was 32% below the prior year's nine month total of
2,379,000 tons due to the sale of the north Texas sand and gravel operation in
last fiscal year's third quarter.
Other income includes clinker sales, non-inventoried aggregates sales,
trucking income, asset sales, royalty and lease income, wallboard accessories
and other miscellaneous items.
Corporate overhead for the quarter was $459,000 higher than prior
year's quarter due primarily to performance incentive compensation accruals.
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Net interest income for this year's quarter and nine months increased
over last year due to increased cash and cash equivalent balances.
STOCK REPURCHASE PROGRAM
The Company's Board of Directors has approved the repurchase of up to
two million shares of the Company's common stock. The Company repurchased on
the open market and from Centex Corporation a total of 40,196 shares in fiscal
year 1995, but none in fiscal year 1996. During the nine months ending December
31, 1996, CXP repurchased 1,038,100 shares of its common shares at a cost of
approximately $15.0 million from the public. The share repurchases for the nine
months ended December 31, 1996 increased Centex Corporation's ownership
interest from 49% to approximately 51.2%.
FINANCIAL CONDITION
The Company has a $35 million unsecured revolving credit facility
expiring on March 31, 2001 to finance its working capital and capital
expenditures requirements. Based on its financial condition and a virtually
debt free balance sheet at December 31, 1996, CXP believes that its internally
generated cash flow coupled with funds available under the credit facility will
enable CXP to provide adequately for its current operations and future growth.
Working capital at December 31, 1996 was $66.7 million, up $20.9
million from March 31, 1996. Stock repurchases during the nine months ended
December 31, 1996 amounted to $15.0 million. Capital spending of $4.4 million
for the first nine months of fiscal 1997 was down from the prior year's first
nine months due to last year's recommissioning of the second kiln at the
Laramie plant.
OUTLOOK
The Company's record financial results during the first nine months of
fiscal 1997 reflect continued strength in demand and pricing for its Cement and
Gypsum Wallboard products. Assuming no significant change in overall economic
climate during the remainder of fiscal 1997, the Company should post its third
consecutive record financial performance. At December 31, 1996 the Company was
virtually debt free and well positioned to take advantage of potential growth
opportunities.
OTHER DEVELOPMENTS
On December 5, 1996, the Company signed a definitive agreement to
purchase Eagle-Gypsum Products gypsum wallboard and cogeneration power
facilities located in Gypsum, Eagle County, Colorado. The acquisition is
subject to the satisfaction of customary conditions, including receipt of
applicable governmental approvals.
The Eagle-Gypsum Products facility has annual production capacity of
approximately 400 million square feet of wallboard. Upon completion the
acquisition will increase the Company's gypsum wallboard production capacity by
approximately 60% to 1.1 billion square feet annually.
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FORWARD-LOOKING STATEMENTS
From time to time, the Company may publish forward-looking statements
relating to such matters as anticipated financial performance, business
prospects, technological developments, new products and similar matters. The
Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. In order to comply with the terms of the safe
harbor, the Company notes that a variety of factors could cause the Company's
actual results and experience to differ materially from the anticipated results
or other expectations expressed in the Company's forward-looking statements.
The risks and uncertainties that may affect the operations, performance,
development and results of the Company's business include the following:
general economic conditions, interest rates, decline in or growth of the home
building and other construction industries, public infrastructure expenditures,
competition, and the availability of raw materials. These and other factors are
described in the Annual Report on Form 10-K for Centex Construction Products,
Inc. for the fiscal year ended March 31, 1996. The report is filed with the
Securities and Exchange Commission.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 - Financial Data Schedule
(b) Reports on Form 8-K
The Registrant filed no reports on Form 8-K during
the quarter ended December 31, 1996.
All other items required under Part II are omitted because they are not
applicable.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTEX CONSTRUCTION PRODUCTS, INC.
----------------------------------
Registrant
February 10, 1997 /s/ O.G. Dagnan
-------------------------------------
O. G. Dagnan
President and Chief Executive Officer
(principal executive officer)
February 10, 1997 /s/ Arthur R. Zunker, Jr.
-------------------------------------------
Arthur R. Zunker, Jr.
Senior Vice President-Finance and Treasurer
(principal financial and
chief accounting officer)
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
27 Financial Data Schedule
5
1,000
9-MOS
MAR-31-1997
APR-01-1996
DEC-31-1996
54,055
0
32,639
0
26,566
113,260
310,423
135,999
294,402
46,436
720
0
0
220
232,602
294,402
184,140
186,673
0
131,694
2,438
0
0
52,541
18,442
34,099
0
0
0
34,099
1.54
0
