CTX

Type: Public Company
Address: 2728 North Harwood, Dallas, Texas 75201-1516, U.S.A.
Telephone: (214) 981-5000
Toll Free: 800-566-3229
Fax: (214) 981-6400
Web: Employees: 10,259
Sales: $3.98 billion (1998)
Stock Exchanges: New York London
Ticker Symbol: CTX
Incorporated: 1950 as Centex Construction Company
NAIC: 23321 Single-Family Housing Construction

Centex Corporation is one of the most successful diversified building companies in the United States, with products and services ranging from new home construction, manufactured housing, and industrial construction, to mortgage lending, pest control, and construction contracting. Centex protected itself from the cyclical nature of building construction not only through diversification but also through geographical expansion. As of the late 1990s, the company was involved in construction in 20 states across the nation.

The company got its start just after World War II, a time characterized in the United States by growth and consumerism. In 1945 Texas native Tom Lively "scraped together $500 and drew up his 5 feet 6 inches to talk business with Ira Rupley, a successful Dallas land developer," as a 1956 Newsweek article related. A young entrepreneur, Lively had "left his home town of Whitewrite, Texas, in 1937, and for years had scraped along selling clothing and hardware and 'a little of this and that' before settling on real estate."

Rupley, who had made his name in home construction, entered into partnership with Lively on a still-unnamed building company. They began "modestly enough with a scattering of single and double houses around Dallas," noted Newsweek. In 1949 they undertook their first major project, a large subdivision of 300 houses that sole for $6,500 each. The success of the subdivision led to the 1950 formation of the Centex Construction Company.

For its first few years, the company concentrated its building efforts exclusively in Texas. However, by the mid-1950s Centex was ready to expand. One of the company's early projects was also an historic one. Centex built Elk Grove Village near Chicago, America's first master-planned community. This was the forerunner of modern master-planned areas, and boasted some 7,000 homes, all built by Centex, by the 1990s.

By 1960 Centex Construction Company had produced some 25,000 residences in several states. The company began expanding its operations to include the production of housing materials. Centex opened a cement manufacturing business with facilities in Texas and Nevada, then bought out a Dallas contractor, J.W. Bateson, which had specialized in commercial buildings. Reflecting its new diversification, the company changed its name during the 1960s to Centex Corporation.

In 1969 Centex went public, selling 500,000 shares of common stock. By this time the builder's net worth stood at about $10 million, with gross revenues of almost $100 million. By the 1990s, its stock would be traded both nationally and internationally.

As Centex moved into the 1970s, it increased its scope of operations. The company acquired two leading builders, one in Chicago, the other Dallas-based Fox & Jacobs, then the largest builder of single-family homes in the Southwest. Fox & Jacobs' strategy for producing affordable housing seemed to be working. A 1976 Fortune article noted that the Centex subsidiary was able to "turn over its $1 million inventory of building materials 15 times a year. The extraordinarily fast turnover is the key to the company's ability to hold down prices and still keep profit margins healthy on houses in a wide variety of sizes." Expansion continued as Centex acquired Frank J. Rooney, Inc., Florida's largest general contractor.

The 1970s became a peak time for building, and as need dictated, Centex expanded its cement business in Texas and became a partner in another cement plant in Illinois. Centex also opened an oil-and-gas plant that would come to be named Cenergy. However, for all its diversification efforts, Centex was still primarily associated with one region of the United States. Explained William Barrett in a 1990 Forbes article, "In fiscal 1979, 72 percent of the company's ... homes were built in Texas, a dangerously high concentration. Centex executives started cutting back there and expanding elsewhere before the economic bust set in, but not nearly fast enough." Per-share profits subsequently fell 59 percent, from $3.44 for the fiscal year ending March 1981 to $1.41 the following fiscal year.

A crash in Texas construction followed the plummet in oil prices in 1986 and the subsequent failure of a number of Texas savings and loans. Although Centex was affected, its home construction in other parts of the United States kept the company afloat. However, the company owned $76 million worth of land that it was not practical to develop in the collapsed Texas market. In 1987 Centex established a new subsidiary, Centex Development Company, to oversee the land. The same year, Centex invested in further diversification, moving into medical facility construction with the subsidiary Centex-Rodgers Construction.

A rebound of sorts began by the late 1980s, with Centex's homes numbering more than 100,000. That decade saw the company increase its market from eight cities to 35 (by 1992 that number would rise to 39) through a combination of new business launches and acquisitions. One particularly key acquisition was that of the John Crosland Company, a major name in the Carolinas.

At the same time, Centex was also trimming and consolidating its forces to build a stronger organization. The oil-and-gas subsidiary Cenergy, for example, was spun off as a separate company in 1984; this divestment more firmly planted Centex in the construction business.

By the early 1990s, Centex operated several subsidiaries, all aimed at supporting the building business. One offshoot was Centex Mortgage Banking, which by 1985 had changed its name to CTX Mortgage Company and had expanded into all of the builder's major markets. Its purpose was to establish home prices and facilitate mortgages for Centex customers. According to company history, CTX initiated title and insurance operations, thus clearing the way to develop real estate as well as build on it. That development subsidiary made its debut in 1987 as Centex Development Company. By fiscal 1992, CTX Mortgage Co. had cleared $2.5 billion in home loans.

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