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
JUNE 30, 1997
Commission File Number 1-12984
[COMPANY LOGO]
CENTEX CONSTRUCTION PRODUCTS, INC.
A Delaware Corporation
IRS Employer Identification No. 75-2520779
3710 Rawlins, Suite 1600 LB 78
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 August 6, 1997, 21,976,821 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
JUNE 30, 1997
PAGE
----
PART I. FINANCIAL INFORMATION (UNAUDITED)
ITEM 1. Consolidated Financial Statements 1
Consolidated Statement of Earnings
for the Three Months Ended
June 30, 1997 2
Consolidated Balance Sheets 3
Consolidated Statement of Cash Flows
for the Three Months Ended
June 30, 1997 4
Notes to Consolidated Financial
Statements 5-6
ITEM 2. Management's Discussion and Analysis of
Results of Operations and Financial
Condition 7-9
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, although 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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4
CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(dollars in thousands, except per share data)
(unaudited)
FOR THE THREE MONTHS ENDED June 30,
----------------------
1997 1996
---------- ----------
REVENUES
Cement . . . . . . . . . . . . . . . . . $ 38,411 $ 36,677
Gypsum Wallboard . . . . . . . . . . . . 29,860 15,089
Concrete/Aggregates . . . . . . . . . . 10,242 10,139
Other, net . . . . . . . . . . . . . . . 725 501
Less Intersegment Sales . . . . . . . . (1,284) (1,348)
---------- ----------
77,954 61,058
---------- ----------
COSTS AND EXPENSES
Cement . . . . . . . . . . . . . . . . . 26,552 26,624
Gypsum Wallboard . . . . . . . . . . . . 19,439 11,660
Concrete/Aggregates . . . . . . . . . . 8,956 8,389
Less Intersegment Purchases . . . . . . (1,284) (1,348)
Corporate General & Administrative . . . 937 698
Interest (Income) Expense, net . . . . . (52) (163)
---------- ----------
54,548 45,860
---------- ----------
EARNINGS BEFORE INCOME TAXES 23,406 15,198
Income Taxes . . . . . . . . . . . . . . 8,309 5,335
---------- ----------
NET EARNINGS $ 15,097 $ 9,863
========== ==========
EARNINGS PER SHARE $ 0.68 $ 0.44
========== ==========
AVERAGE SHARES OUTSTANDING 22,156,424 22,525,567
========== ==========
CASH DIVIDENDS PER SHARE $ 0.05 $ 0.05
========== ==========
See notes to unaudited consolidated financial statements.
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CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
June 30, March 31,
ASSETS 1997 1997
- ------ ----------- --------
(Unaudited) (*)
Current Assets
Cash and Cash Equivalents . . . . . . . $ 22,486 $ 4,812
Accounts and Notes Receivable, net . . 47,224 38,700
Inventories . . . . . . . . . . . . . . 28,226 31,482
-------- --------
Total Current Assets . . . . . . . . 97,936 74,994
-------- --------
Property, Plant and Equipment . . . . . . 364,763 363,409
Less Accumulated Depreciation . . . . . (142,873) (139,033)
-------- --------
Property, Plant & Equipment, net . . 221,890 224,376
Notes Receivable, net . . . . . . . . . . 1,548 1,407
Other Assets . . . . . . . . . . . . . . . 5,632 4,860
-------- --------
$327,006 $305,637
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities
Accounts Payable . . . . . . . . . . . $ 17,242 $ 16,472
Accrued Liabilities . . . . . . . . . . 30,024 28,254
Notes Payable . . . . . . . . . . . . . - 2,000
Current Portion of Long-Term Debt . . . 80 80
Income Taxes Payable . . . . . . . . . 7,343 -
-------- --------
Total Current Liabilities . . . . . 54,689 46,806
-------- --------
Long-term Debt . . . . . . . . . . . . . . 560 560
Deferred Income Taxes . . . . . . . . . . 18,787 18,835
Stockholders' Equity
Common Stock, Par Value $0.01;
Authorized 50,000,000 Shares;
Issued and Outstanding 21,991,514 and
22,217,864 Shares, respectively . . . 220 220
Capital in Excess of Par Value . . . . 146,749 147,212
Retained Earnings . . . . . . . . . . . 106,001 92,004
-------- --------
Total Stockholders' Equity . . . . . . . . 252,970 239,436
-------- --------
$327,006 $305,637
======== ========
* 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 THREE MONTHS ENDED June 30,
---------------------------
1997 1996
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Earnings . . . . . . . . . . . . . . $ 15,097 $ 9,863
Adjustments to Reconcile Net Earnings
to Net Cash Provided by Operating
Activities -
Depreciation, Depletion and
Amortization . . . . . . . . . 4,051 3,344
Deferred Income Tax
Provision . . . . . . . . . . (48) (441)
Increase in Accounts and Notes
Receivable . . . . . . . . . . . . . (8,665) (6,320)
Decrease in Inventories . . . . . . . . 3,256 2,793
Increase in Accounts Payable and
Accrued Liabilities . . . . . . . . 2,540 721
(Increase) Decrease in
Other, net . . . . . . . . . . . . . (600) 51
Increase in Income Taxes Payable . . . . 7,343 5,189
-------- --------
22,974 15,200
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Property, Plant and Equipment
Additions, net . . . . . . . . . . . (1,737) (1,241)
-------- --------
(1,737) (1,241)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends Paid To Shareholders . . . . . (1,100) (1,149)
Retirement of Common Stock . . . . . . . (1,418) (11,258)
Proceeds from Stock Option Exercises . . 955 212
Decrease in Notes Payable . . . . . . . (2,000) -
--------- --------
(3,563) (12,195)
-------- ----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS . . . . . . . . . . . . . . 17,674 1,764
CASH AT BEGINNING OF PERIOD . . . . . . . 4,812 20,799
-------- --------
CASH AT END OF PERIOD . . . . . . . . . . $ 22,486 $ 22,563
======== ========
See notes to unaudited consolidated financial statements.
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CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(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, 1996 $ 230 $161,617 $ 54,615 $216,462
Net Earnings - - 41,799 41,799
Stock Option Exercises - 561 - 561
Dividends Paid To Shareholders - - (4,410) (4,410)
Retirement of Common Stock (10) (14,966) - (14,976)
-------- --------- -------- --------
Balance March 31, 1997 220 147,212 92,004 239,436
Net Earnings - - 15,097 15,097
Stock Option Exercises - 955 - 955
Dividends Paid To Shareholders - - (1,100) (1,100)
Retirement of Common Stock - (1,418) - (1,418)
-------- --------- -------- --------
BALANCE JUNE 30, 1997 $ 220 $146,749 $106,001 $252,970
======== ======== ======== ========
(B) Impact of New Accounting Pronouncements.
In March 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
(SFAS No. 128). This statement establishes new standards for computing and
presenting earnings per share (EPS). SFAS No. 128 replaces the presentation of
primary EPS previously prescribed by Accounting Principles Board Opinion No. 15
(APB No. 15) with a presentation of basic EPS which is computed by dividing
income available to common stockholders by the weighted-average number of
common shares outstanding for the period.
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SFAS No. 128 also requires dual presentation of basic and diluted EPS.
Diluted EPS is computed similarly to fully diluted EPS pursuant to APB No. 15.
Proforma basic and diluted EPS for the three months ended June 30, 1997 and
1996, assuming that SFAS No. 128 was effective as of the beginning of the year
are presented below.
Three Months Ended
June 30
------------------------
1997 1996
------- -------
Earnings per common share:
Basic $ 0.69 $ 0.44
Diluted 0.68 0.44
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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 Products reported the highest quarterly results
in the Company's history for the quarter ended June 30, 1997. Revenues for the
first quarter of fiscal 1998 totaled $77,954,000, a 28% increase over revenues
of $61,058,000 for the same quarter last year. CXP's net earnings for the
quarter ended June 30, 1997 were $15,097,000, a 56% increase over $9,863,000
for the same quarter last year. Earnings per share for this year's quarter
were $0.68 compared to $0.44 for the same quarter in fiscal 1997. Earnings per
share increased more than net earnings due to fewer average shares outstanding
in this year's quarter. The quarter's earnings gain resulted from increased
gypsum wallboard sales volume related to the Eagle Gypsum acquisition and
significantly higher gypsum wallboard pricing along with improved cement
earnings. A strong national economy has generated cement and gypsum wallboard
consumption for the first six months of 1997 above last year's record rate.
The following table compares sales volume, average unit sales prices
and unit operating margins for the Company's operations:
Gypsum
Cement Wallboard Concrete Aggregates
(Ton) (MSF) (Cubic Yard) (Ton)
-------------- -------------- -------------- --------------
Quarter Ended June 30, 1997 1996 1997 1996 1997 1996 1997 1996
- ---------------------- ------ ------ ------ ------ ------ ------ ------ ------
Sales Volume (M) 595 583 275 173 156 177 739 467
Average Net Sales Price $64.57 $62.94 $108.52 $87.36 $47.29 $46.01 $ 3.87 $ 4.26
Operating Margin $19.93 $17.25 $37.87 $19.86 $ 6.01 $ 7.67 $ 0.47 $ 0.84
Cement revenues for the quarter totaled $38,411,000, up 5% above the
same quarter in the prior year. Operating earnings were $11,859,000, a 18%
increase over $10,053,000 for the same quarter last year. A combination of an
additional 12,000 tons of sales volume and higher operating margins due to a 3%
increase in average net sales prices and a 2% decrease in cost of sales
accounted for the net quarterly operating earnings gain. Price increases
ranging from $2 per ton in the Texas, Illinois, and portions of the Rocky
Mountains market to $5 per ton in northern California were implemented during
the quarter. This year's sales volume was favorably impacted by the Texas
market recovery from the unfavorable weather conditions experienced during the
March 1997 quarter. Cost of sales declined due to the volume impact from a
34,000 ton increase in clinker production at the Laramie plant.
Gypsum Wallboard revenues of $29,860,000 for the quarter increased 98%
over revenues of $15,089,000 for the same quarter in the prior fiscal year.
Operating earnings for the quarter were $10,421,000, up 204% over $3,429,000 for
the same period last year. Increased sales volume and higher net sales prices
partially offset by a 3% increase in production cost resulted in the net
quarterly gain. Sales volume of 275 million square feet ("MMSF") for this
year's quarter was 59%
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higher than the 173 MMSF sold during the prior year's quarter mainly due to the
Eagle Gypsum acquisition. National wallboard consumption for the first six
months of calendar 1997 was at a record pace as single-family home construction
remained strong. CXP's average net sales price for the quarter was $108.52 per
thousand board feet ("MSF"), 24% higher than $87.36 per MSF for the same
quarter last year. However, prices softened during the June 30, 1997 quarter,
and this, along with the multiple sales price increases implemented last year
beginning in last year's second quarter, will narrow the substantial spread in
this year's future quarter average net sales prices over the comparable period
in the prior year. Demand and pricing is expected to further soften during the
second half of fiscal 1998 due to a projected declined in the housing market.
Cost of sales increased 5% mainly due to the impact of higher Eagle production
cost. Both the Albuquerque and Bernalillo plants operated above their normal
plant utilization rates during the quarter.
Revenues from Concrete and Aggregates were $10,242,000 for the quarter
this year, up slightly from $10,139,000 for the same quarter a year ago.
Concrete and Aggregates reported an operating profit for the quarter of
$1,286,000, down 27% from $1,750,000 for the same quarter last year. Concrete
earnings declined 31% from last year's comparable quarter mainly due to a 15%
drop in sales volume at the Austin, Texas concrete operation. Total Concrete
sales volume for the quarter this year was 156,000 cubic yards, down 12% from
177,000 cubic yards for the same quarter last year. CXP's average Concrete net
sales price of $47.29 per cubic yard for the current quarter was 3% higher than
$46.01 for the same quarter a year ago. Cost of sales for the current quarter
was up 8% over prior year's quarter. The increase in both the net sales price
and cost of sales resulted from a larger percentage this year of higher priced
and costing California concrete sales volume. Aggregates earnings decreased
11% from prior year's quarter due to lower operating margins. CXP's Aggregates
operation reported sales volume of 739,000 tons for the quarter this year, 58%
above sales volume of 467,000 tons for the same quarter last year. Sales
volume increased primarily as a result of a 215,000 ton increase in road base
aggregates sales from both the Texas and California operations. The higher
percentage this year of lower priced road base resulted in an average net sales
price of $3.87 per ton for the current quarter, down 9% from last year.
Other Income of $725,000 for the quarter increased $224,000 from prior
year's quarter mainly due to higher clinker sales income this year. Other
income includes clinker sales income, non-inventoried aggregates income,
trucking income, asset sales and other miscellaneous income and cost items.
Corporate overhead was $239,000 higher than the prior year's quarter
due to additional performance incentive and certain investor relations
accruals.
Net interest income for this year's quarter was $111,000 below last
year's quarter net interest income of $163,000 due to smaller beginning cash
balances this year along with the accumulation of investment cash during the
latter part of this year's quarter.
STOCK REPURCHASE PROGRAM
The Company's Board of Directors previously approved the repurchase of
up to two million shares of the Company's common stock. On July 17, 1997,
CXP's Board of Directors increased the share repurchase authorization by
1,000,000 shares from 2,000,000 to 3,000,000 shares bringing the total number
of shares currently available for repurchases (after taking into account prior
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repurchases) to approximately 1,763,000. As a result of 159,034 shares
repurchased since April 1, 1997 from the public and recent purchases from the
public of CXP common stock by Centex Corporation, Centex Corporation now owns
approximately 54.6% of the outstanding shares of CXP common stock.
FINANCIAL CONDITION
The Company has a four year $35 million unsecured revolving credit
facility and a short-term $10 million uncommitted unsecured line of credit to
finance its working capital and capital expenditures requirements. Based on
its financial condition and a virtually debt free balance sheet at June 30,
1997, CXP believes that its internally generated cash flow coupled with funds
available under the credit facilities will enable CXP to provide adequately for
its current operations and future growth.
Working capital at June 30, 1997 was $43.4 million, up from $28.2
million at March 31, 1997. The increase resulted mainly from $17.7 million in
additional cash, a $8.7 million increase in accounts receivable, and $7.3
million of income taxes payable. Stock repurchases during the quarter amounted
to $1.4 million. Capital spending of $1.7 million for this quarter was up
slightly from prior year's quarter.
OUTLOOK
The Company's positive financial results during the first three months
of fiscal 1998 reflect continued strength in demand and pricing for its Cement
and Gypsum Wallboard products. However, the substantial spread in gypsum
wallboard prices between the first quarter of fiscal 1998 and fiscal 1997's
first quarter will narrow as the year progresses due to multiple sales price
increases last year beginning in the second quarter. Assuming no significant
change in overall economic climate, Cement and Gypsum Wallboard demand should
remain robust over the remainder of fiscal 1998. As a result, the Company
should post its fourth consecutive year of record financial performance.
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, 1997. The report is filed
with the Securities and Exchange Commission. The Company undertakes no
obligation to update publicly any forward-looking statement as a result of new
information, future events or other factors.
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CENTEX CONSTRUCTION PRODUCTS, INC.
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
On May 12, 1997, the Company filed with the Securities and Exchange
Commission an amended Current Report on Form 8-K/A to amend its prior Form 8-K
filing to include the audited financial statements of the businesses acquired
and the pro forma financial information of the Company required by Form 8-K.
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
August 8, 1997 /s/ O. G. DAGNAN
-----------------------------------------------
O. G. Dagnan
President and Chief Executive Officer
August 8, 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 EXHIBIT
- ------- -------
27 Financial Data Schedule
5
3-MOS
MAR-31-1998
APR-01-1997
JUN-30-1997
22,486
0
47,224
0
28,226
97,936
364,763
142,873
327,006
54,609
640
0
0
220
252,750
327,006
77,229
78,006
0
53,663
937
0
0
23,406
8,309
15,097
0
0
0
15,097
0.68
0
