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Texas Industries (TXI)
Q4 2013 Earnings Call
July 11, 2013 11:00 am ET
Thomas Lesley Vines - Chief Accounting Officer, Vice President, Treasurer and Corporate Controller
Melvin G. Brekhus - Chief Executive Officer, President and Director
James B. Rogers - Chief Operating Officer and Vice President
Kenneth R. Allen - Chief Financial Officer and Vice President of Finance
Garik S. Shmois - Longbow Research LLC
Kathryn I. Thompson - Thompson Research Group, LLC
John F. Kasprzak - BB&T Capital Markets, Research Division
L. Todd Vencil - Sterne Agee & Leach Inc., Research Division
Christopher David Olin - Cleveland Research Company
Brent Thielman - D.A. Davidson & Co., Research Division
Michael Betts - Jefferies & Company, Inc., Research Division
Previous Statements by TXI
» Texas Industries' CEO Hosts Investor Day Conference (Transcript)
» Texas Industries Management Discusses Q3 2013 Results - Earnings Call Transcript
» Texas Industries Management Discusses Q2 2013 Results - Earnings Call Transcript
Thomas Lesley Vines
Thank you, Tirsa. Good morning, everyone, and thank you for joining us for our Fourth Quarter and Year End Conference Call and Webcast. As always, we appreciate your time and interest in TXI. On the call with me today are President and CEO, Mel Brekhus; CFO, Ken Allen; and Chief Operating Officer, Jamie Rogers. We will follow the same format as in previous calls, with management providing comments for the quarter and year and then followed with your Q&A. [Operator Instructions]
Before turning things over to Mel, I need to remind you that certain statements contained in this conference call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date hereof, and we assume no obligation to publicly update such statements. Such statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, the impact of competitive pressures and changing economic and financial conditions on our business; the cyclical and seasonal nature of our business; the level of construction activity in our markets; abnormal periods of inclement weather; unexpected periods of equipment downtime; unexpected operational difficulties; changes in the cost of raw materials, fuel and energy; changes in interest rates; the timing and amount of federal, state and local funding for infrastructure; delays in announced capacity expansions, ongoing volatility and uncertainty in the capital or credit markets; the impact of environmental laws, regulations and claims and changes in governmental and public policy; and the risks and uncertainties described in our reports on forms 10-K, 10-Q and 8-K.
With that, I'll turn it over to you, Mel.
Melvin G. Brekhus
Thanks, Les, and good morning, everyone. My message on our last call remains valid today. I'll remind you that, that message was that all of our markets are improving, all of our markets still have a lot of upside before getting back to historic averages and peaks, and we are positioned better than ever to take advantage of the potential in all of our markets.
Construction activity continues to improve in our major markets. Shipments during the fourth quarter were at levels we haven't seen for quite some time. The cement shipments in the fourth quarter were up 32% compared to a year ago. Texas shipments were the highest May quarter shipments since 2008 and California shipments for the quarter were the highest May quarter shipments since 2007.
I expect demand for building materials to improve further during the upcoming year and I believe we are uniquely positioned to meet this growing demand. The completion of the commissioning of our new cement kiln in central Texas gives us the immediate ability to supply an additional 500,000 tons annually. Also, the addition of 42 ready-mix plant sites during the quarter in attractive East Texas markets improves our ability to capitalize on the future expansion of the Texas economy.
As our markets continue to proceed to the return of midcycle levels and beyond, our focus is threefold. Number one, enhancing our ability to serve our customers; number two, leveraging and improving upon the cost structure enhancements we have made during the downturn; and number three, accelerating the realization of our earnings potential.
In conclusion, I am very excited about the future for TXI. Over the past 5 years, we have been transforming the way we conduct virtually every aspect of our business, and this transformation continues today. I look forward to all of our stakeholders reaping the benefits as we move into a more normal economic environment.
And with that, I'll turn it over to Jamie.
James B. Rogers
Thank you, Mel. Mel referred to our cement shipment levels for the quarter and I'd like to add a little bit more to detail that further illustrates the strengthening of our markets. Cement shipments for the month of May, not for the quarter, but for the month of May, in Texas were the largest in 10 years for the month of May. And in California, cement shipments, again for May, were the largest since 2006. And it's not just cement that's realizing improved demand. Major markets for aggregates and ready-mix realized 20% or better increases in shipments in the fourth quarter compared to a year ago. And I share Mel's view that this positive trend in demand should continue in the near term.
One indicator that supports this view is housing starts, and in May, housing starts in the 4 major metropolitan markets in Texas reflected or continued to reflect double-digit improvement year-over-year. California's major market showed 40% or better improvement.