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searchh Mortgage shaky economy "has given us an opening we needed. We expect to increase our volumes there significantly."Centex Construction Products benefited from an increase in demand for cement, aggregate, concrete, and wallboard in the mid-1990s. Its revenues nearly doubled in 1994. That year Centex took the subsidiary public, although it retained 56 percent of the stock after the initial public offering. In a somewhat unusual set-up for an IPO, Centex Corporation not only retained all of the offering proceeds, it left Centex Construction with an increased debt load. With the company's strong cash flow, the increased debt was not seen as a problem by analysts.
Although rising interest rates had slowed new home construction and had affected the company's mortgage banking subsidiary in the early 1990s, Centex enjoyed a leap in net income in 1993, from $35 million in 1992 to $61 million. In 1994 net income had risen to $85 million on revenues of $3.2 billion.
In the mid-1990s the company made several changes in its stable of subsidiaries. In 1994 Centex sold its remaining savings and loans operations. The same year, it began a joint venture that would build assisted living centers for Alzheimer's sufferers, as well as luxury homes in the United Kingdom. In 1995 the company purchased Vista Properties Inc., a $115 million acquisition that provided 3,500 acres of land in seven states to Centex for residential, commercial, and industrial development.
Centex diversified into two new industries in 1996: pest control, with the purchase of Environmental Safety Systems, and security systems, with the purchase of portions of Advanced Protection Systems. Although both acquisitions moved Centex into new areas, the company tied them into its traditional business by selling the services to its new home buyers.
Centex's expansion and diversification continued into the late 1990s. In 1998 the company purchased 80 percent of Cavco Industries, a maker and retailer of manufactured housing based in Phoenix. Cavco homes generally were priced between $60,000 and $110,000 and sold in the western United States. The $75 million deal gave Centex an entrée into an area of housing construction that chairman Bill Gillian characterized in Builder as "a profitable business with a high return on revenue and assets." Centex followed up on its move into this new industry by purchasing in 1998 AAA Homes, a retailer of manufactured homes with approximately 260 retail outlets in the United States, Japan, and Canada. Centex also planned on using the manufactured housing in its own developments rather than selling them solely to customers with their own land.
Expanding on the idea of selling housing related products, such as security systems, to its home buyers, Centex opened two retail stores that sold a variety of products for use in the home. Dubbed Life Solutions, the stores offered products ranging from walking shoes to medical devices to foot massagers, and services ranging from delivery and installation to gift wrapping to notary service. The stores opened in suburbs of Chicago and Washington, D.C., and enjoyed very good sales their first year, according to Mike Albright, chairman and CEO of Centex Life Solutions. In addition to its plans for a third store, the company was investigating the possibility of using mail order and Internet sales.
Although Centex had diversified into several new industries in the 1990s, it remained primarily a home construction company. In 1998 it purchased Wayne Homes, a construction company that specialized in building on buyer-owned land. In 1999 Centex began selling lower-priced homes under the brand name Fox & Jacobs. At $90,000 to $134,000, the homes were targeted at first-time home buyers, although the company also saw interest from empty-nesters. In addition, the company planned to purchase Chicago-based Sundance Homes' suburban operating assets. Centex's revenues and net income rose steadily throughout the mid- to late 1990s. By 1998 the company was earning $145 million on revenues of $3.98 billion.
Principal Subsidiaries
Centex Construction Group, Inc.; Centex-Rodgers Construction Company; Centex-Rooney Construction Co. Inc.; Centex Real Estate Corp.; The Mangano Company, Inc.; Mountain Cement Company.
Further Reading
Barrett, William P., "A Tremendous Opportunity," Forbes, May 28, 1990, pp. 72-76.
"Builder 100," Builder, May 1993, p. 172.
"Centex Climbs in Chicago Market," Professional Builder, March 1999, p. 48.
"Centex Enters Manufactured Arena," Builder, January 1998, pp. 15-17.
Cochran, Thomas N., "Offerings in the Offing: Centex Construction Products," Barron's, March 28, 1994, p. 50.
"How a Texas Outfit Builds a Good Cheap House," Fortune, April 1976, p. 164.
Hylton, Richard D., "Home Building Is Good for Some," New York Times, April 27, 1990.
"Lively's the Name," Newsweek, March 26, 1956.
Maynard, Roberta, "Centex Goes Retail," Builder, May 1998, p. 40.
"New Operating Chief Is Selected at Centex," New York Times, January 8, 1990.
O'Malley, Sharon, "Centex Goes Back to Basics," Builder, January/February 1999, p. 10.
— Susan Salter; Updated by Susan Windisch Brown
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