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, 1998
Commission File Number 1-12984
[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 3, 1998, 21,229,882 shares of Centex
Construction Products, Inc. common stock were outstanding.
- - --------------------------------------------------------------------------------
2
CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES
FORM 10-Q TABLE OF CONTENTS
JUNE 30, 1998
PAGE
----
PART I. FINANCIAL INFORMATION (UNAUDITED)
ITEM 1. Consolidated Financial Statements 1
Consolidated Statements of Earnings
for the Three Months Ended
June 30, 1998 and 1997 2
Consolidated Balance Sheets as of 3
June 30, 1998 and March 31, 1998
Consolidated Statements of Cash Flows
for the Three Months Ended
June 30, 1998 and 1997 4
Notes to Consolidated Financial
Statements 5-6
ITEM 2. Management's Discussion and Analysis of
Results of Operations and Financial
Condition 6-9
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
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 Company'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 STATEMENTS OF EARNINGS
(dollars in thousands, except per share data)
(unaudited)
FOR THE THREE MONTHS ENDED June 30,
------------------------------
1998 1997
------------ ------------
REVENUES
Cement ................................... $ 37,530 $ 38,411
Gypsum Wallboard ......................... 32,161 29,860
Concrete/Aggregates ...................... 11,365 10,242
Other, net ............................... 404 725
Less Intersegment Sales .................. (1,614) (1,284)
------------ ------------
79,846 77,954
------------ ------------
COSTS AND EXPENSES
Cement ................................... 24,905 26,552
Gypsum Wallboard ......................... 20,000 19,439
Concrete/Aggregates ...................... 9,525 8,956
Less Intersegment Purchases .............. (1,614) (1,284)
Corporate General & Administrative ....... 871 937
Interest Income, net ..................... (802) (52)
------------ ------------
52,885 54,548
------------ ------------
EARNINGS BEFORE INCOME TAXES ............... 26,961 23,406
Income Taxes ............................. 9,706 8,309
------------ ------------
NET EARNINGS ............................... $ 17,255 $ 15,097
============ ============
EARNINGS PER SHARE:
BASIC .................................... $ 0.81 $ 0.69
============ ============
DILUTED .................................. $ 0.80 $ 0.68
============ ============
AVERAGE SHARES OUTSTANDING:
BASIC .................................... 21,425,045 21,988,782
============ ============
DILUTED .................................. 21,583,986 22,156,424
============ ============
CASH DIVIDENDS PER SHARE ................... $ 0.05 $ 0.05
============ ============
See notes to unaudited consolidated financial statements.
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5
CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
June 30, March 31,
ASSETS 1998 1998
----------- ---------
(Unaudited) (*)
Current Assets
Cash and Cash Equivalents ........................ $ 62,054 $ 62,090
Accounts and Notes Receivable, net ............... 43,491 36,669
Inventories ...................................... 30,898 32,537
--------- ---------
Total Current Assets ........................... 136,443 131,296
--------- ---------
Property, Plant and Equipment ....................... 374,230 366,353
Less Accumulated Depreciation ..................... (157,176) (153,444)
--------- ---------
Property, Plant & Equipment, net ............... 217,054 212,909
Notes Receivable, net ............................... 869 935
Other Assets ........................................ 5,598 5,972
--------- ---------
$ 359,964 $ 351,112
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable ................................. $ 19,557 $ 18,404
Accrued Liabilities .............................. 32,011 35,095
Current Portion of Long-term Debt ................ 80 80
Income Taxes Payable ............................. 8,839 --
--------- ---------
Total Current Liabilities ...................... 60,487 53,579
--------- ---------
Long-term Debt ...................................... 480 480
Deferred Income Taxes ............................... 21,185 22,250
Stockholders' Equity
Common Stock, Par Value $0.01;
Authorized 50,000,000 Shares;
Issued and Outstanding 21,198,122 and
21,525,148 Shares, respectively ............ 212 215
Capital in Excess of Par Value ................... 117,231 130,413
Retained Earnings ................................ 160,369 144,175
--------- ---------
Total Stockholders' Equity ......................... 277,812 274,803
--------- ---------
$ 359,964 $ 351,112
========= =========
* From audited financial statements.
See notes to unaudited consolidated financial statements.
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6
CENTEX CONSTRUCTION PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
FOR THE THREE MONTHS ENDED June 30,
------------------------
1998 1997
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Earnings ................................. $ 17,255 $ 15,097
Adjustments to Reconcile Net Earnings
to Net Cash Provided by Operating
Activities -
Depreciation, Depletion and
Amortization ....................... 3,966 4,051
Deferred Income Tax
Benefit ............................ (1,065) (48)
Increase in Accounts and Notes
Receivable ................................ (6,756) (8,665)
Decrease in Inventories ...................... 1,639 3,256
(Decrease) Increase in Accounts Payable
and Accrued Liabilities ................... (1,916) 2,540
Decrease (Increase) in
Other, net ................................ 27 (600)
Increase in Income Taxes Payable ............. 8,839 7,343
-------- --------
21,989 22,974
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Property, Plant and Equipment
Additions, net ............................ (7,764) (1,737)
-------- --------
(7,764) (1,737)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends Paid To Shareholders ............... (1,076) (1,100)
Retirement of Common Stock ................... (14,196) (1,418)
Proceeds from Stock Option Exercises ......... 1,011 955
Decrease in Notes Payable .................... -- (2,000)
-------- --------
(14,261) (3,563)
-------- --------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS ............................. (36) 17,674
CASH AT BEGINNING OF PERIOD .................... 62,090 4,812
-------- --------
CASH AT END OF PERIOD .......................... $ 62,054 $ 22,486
======== ========
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, 1998
(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, 1997 $ 220 $ 147,212 $ 92,004 $ 239,436
Net Earnings -- -- 56,533 56,533
Stock Option Exercises -- 6,727 -- 6,727
Dividends Paid To Shareholders -- -- (4,362) (4,362)
Retirement of Common Stock (5) (23,526) -- (23,531)
---------- ---------- ---------- ----------
Balance March 31, 1998 215 130,413 144,175 274,803
Net Earnings -- -- 17,255 17,255
Stock Option Exercises -- 1,011 -- 1,011
Dividends Paid To Shareholders -- -- (1,061) (1,061)
Retirement of Common Stock (3) (14,193) -- (14,196)
---------- ---------- ---------- ----------
BALANCE JUNE 30, 1998 $ 212 $ 117,231 $ 160,369 $ 277,812
========== ========== ========== ==========
(B) Inventories:
Inventories are stated at the lower of average cost (including
applicable material, labor, depreciation, and plant overhead) or market.
Inventories consist of the following:
Unaudited Audited
June 30, March 31,
1998 1998
--------- ---------
Raw Materials and Materials-in-Progress $ 8,175 $ 8,478
Finished Cement 5,136 5,169
Aggregates 1,875 1,830
Gypsum Wallboard 1,927 2,020
Repair Parts and Supplies 12,883 14,121
Fuel and Coal 902 919
------- -------
$30,898 $32,537
======= =======
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CENTEX CONSTRUCTION PRODUCTS, INC.
(C) Earnings Per Share:
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings Per Share" ("SFAS No. 128"). SFAS No. 128, which
simplifies the standards for computing and presenting earnings per share, became
effective for periods ending after December 15, 1997. Accordingly, earnings per
share as previously reported have been restated to conform to the new standard.
Basic earnings per share were computed using the average number of common shares
outstanding in each of the three month periods ending June 30, 1998 and 1997.
Diluted earnings per share for June 30, 1998 and 1997 assume the dilutive impact
of stock options.
(D) New Accounting Standards:
Effective April 1, 1998, the Company adopted Statement of Financial
Accounting Standards: Statement No. 130, "Reporting Comprehensive Income,"
("SFAS No. 130"). SFAS No. 130 establishes standards for reporting and
displaying comprehensive income and its components. There are no items that the
Company is required to recognize as components of comprehensive income.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
Centex Construction Products reported the second highest quarterly
earnings in the Company's history for the quarter ended June 30, 1998. Revenues
for the first quarter of fiscal 1999 totaled $79,846,000, a 2% increase over
revenues of $77,954,000 for the same quarter last year. CXP's net earnings for
the quarter ended June 30, 1998 were $17,255,000, a 14% increase over
$15,097,000 for the same quarter last year. Diluted earnings per share for this
year's quarter of $0.80 increased 17% over $0.68 per share for the same quarter
in fiscal 1998 and equaled the previous all time high of $0.80 per share
reported for last year's second quarter. Diluted earnings per share for the
quarter increased more than net earnings due to fewer average shares outstanding
in this year's quarter. The quarter's earnings gain resulted from increased
earnings in each of the Company's business segments. A strong national economy
has resulted in cement and gypsum wallboard consumption for the first six months
of 1998 exceeding last year's same period record consumption rate.
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9
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, 1998 1997 1998 1997 1998 1997 1998 1997
- - ---------------------- ------- ------- ------- ------- ------- ------- ------- -------
Sales Volume (M) 551 595 282 275 184 156 636 739
Average Net Sales Price $ 68.06 $ 64.57 $113.90 $108.52 $ 47.79 $ 47.29 $ 4.02 $ 3.87
Operating Margin (1) $ 22.90 $ 19.93 $ 43.07 $ 37.87 $ 7.47 $ 6.01 $ 0.73 $ 0.47
- - ----------
(1) Segment operating margins represent revenues less direct operating expenses,
segment depreciation, and segment selling, general and administrative expenses.
Cement revenues for the quarter totaled $37,530,000, down 2% from the
same quarter in the prior year. Operating earnings were $12,625,000, a 6%
increase over $11,859,000 for the same quarter last year. A combination of
44,000 tons less sales volume and higher operating margins due to a 5% increase
in average net sales prices accounted for the net quarterly operating earnings
gain. Demand continues to be strong in all of the Company's cement markets and
the Company expects fiscal 1999 to be another "sold out" year. Although wet
weather delayed contract work in the Western Region and Illinois, causing sales
volume in this year's quarter to be lower than the same quarter last year, the
volume should be recouped over the next two quarters. Average cement sales
prices improved $3.49 per ton over prior year's quarter as a result of
increasing prices in all of the Company's sales regions during the previous
twelve months. Cement cost of sales increased over prior year's quarters due to
higher maintenance and repair costs.
Gypsum Wallboard revenues of $32,161,000 for the quarter increased 8%
over revenues of $29,860,000 for the same quarter in the prior fiscal year.
Operating earnings for the quarter were $12,161,000, up 17% over $10,421,000 for
the same period last year. Increased sales volume and higher operating margins
resulted in the quarterly gain. Sales volume of 282 million square feet ("MMSF")
for this year's quarter was 7 MMSF higher than the 275 MMSF sold during the
prior year's quarter. National wallboard consumption for the first six months of
calendar 1998 was at a record pace as single-family home construction remained
strong. Supported by strong demand and a June price increase the Company's
average net sales price for the quarter was $113.90 per thousand board feet
("MSF"), 5% higher than $108.52 per MSF for the same quarter last year.
Revenues from Concrete and Aggregates were $11,365,000 for the quarter
this year, up 11% from $10,242,000 for the same quarter a year ago. Concrete and
Aggregates reported operating earnings for the quarter of $1,840,000, up 43%
from $1,286,000 for the same quarter last year. Concrete earnings increased 47%
from last year's comparable quarter mainly due to a 18% gain in sales volume.
Concrete sales volume for the quarter this year was 184,000 cubic yards,
compared to 156,000 cubic yards for the same quarter last year. The gain was
attributable to strong residential and commercial sales at the Texas concrete
operation. The Company's average Concrete net sales price of $47.79 per cubic
yard for the current quarter was slightly higher than $47.29 for the same
quarter a year ago. Aggregates earnings increased 33% from prior year's quarter
due to higher operating margins partially offset by lower sales volume. The
Company's Aggregates operation reported sales volume of 636,000 tons for the
quarter this year, 14% below sales volume of 739,000 tons for the same quarter
last year. Sales volume decreased as a result of lower crushed products sales
volume at the California operation.
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Other Income of $404,000 for the quarter decreased $321,000 from prior
year's quarter mainly due to less trucking income this year. Other income
includes clinker sales income, non- inventoried aggregates income, trucking
income, asset sales and other miscellaneous income and cost items.
Net interest income for this year's quarter was $750,000 above last
year's quarter net interest income of $52,000 due to higher cash balances during
this year's quarter.
STOCK REPURCHASE PROGRAM
The Company's Board of Directors previously approved the repurchase of
up to three million shares of the Company's common stock. As a result of 373,500
shares repurchased since March 31, 1998 from the public, Centex Corporation now
owns approximately 56.3% of the outstanding shares of CXP common stock. There
are approximately 711,000 shares remaining under the Company's current
authorization.
FINANCIAL CONDITION
The Company has a four year $35 million unsecured revolving credit
facility that expires 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 June 30, 1998, 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, 1998 was $76.0 million, down from $77.7
million at March 31, 1998. The decrease resulted mainly from a $6.8 million
increase in accounts and notes receivable offset by $9.2 million increase in
income taxes payable. Stock repurchases during the quarter amounted to $14.2
million. Capital spending of $7.8 million for this year's quarter was up over
prior year's quarter as a result of expenditures relating to the three
previously announced expansion projects currently under way. Cash payments for
income taxes totaled $702,000 and $1.1 million in the first quarters of fiscal
1999 and 1998, respectively.
YEAR 2000
The Company has conducted an assessment of the potential impact of the
Year 2000 problem on its computer applications, operating software and hardware.
Based upon the results of this assessment, management believes the Company does
not have a Year 2000 problem with its financial and management information
processing systems. The Company is continuing on an ongoing basis to examine
other equipment that could be affected by the Year 2000 problem to determine any
noncompliance and to effect changes to such equipment to make it compliant.
Costs of these efforts are not significant and will be expensed. The Company
does not anticipate any material disruption in its operations as a result of any
failure by the Company to be in compliance. However, the Company does not
currently have any information concerning the Year 2000 compliance status of its
suppliers and customers. In the event that any of the Company's significant
suppliers or customers does not successfully and timely achieve Year 2000
compliance, the Company's business or operations could be adversely affected.
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OUTLOOK
Key drivers of demand for the Company's products, such as consumer
confidence, employment rates and interest rates, all remain at favorable levels.
Assuming no significant change in overall economic climate, and given the
current and anticipated levels of pricing, the Company should post its fifth
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, 1998. 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.
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
None
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 3, 1998 /s/ O.G. DAGNAN
-------------------------------------------
O. G. Dagnan
Chairman and Chief Executive Officer
August 3, 1998 /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
NO. DESCRIPTION
- - ------- -----------
27 Financial Data Schedule
5
0000918646
CENTEX CONSTRUCTION PRODUCTS, INC.
1,000
3-MOS
MAR-31-1999
APR-01-1998
JUN-30-1998
62,054
0
43,491
0
30,898
136,443
374,230
157,176
359,964
60,487
480
0
0
212
277,600
359,964
79,442
80,648
0
52,816
871
0
0
26,961
9,706
17,255
0
0
0
17,255
0
0.80
