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Press release from Business Wire

USG Corporation Reports Second Quarter 2011 Results

Friday, July 22, 2011

USG Corporation Reports Second Quarter 2011 Results08:30 EDT Friday, July 22, 2011 CHICAGO (Business Wire) -- USG Corporation (NYSE:USG): Second Quarter 2011 vs. Second Quarter 2010 Consolidated Business Highlights Sales decreased to $761 million compared to $769 millionOperating loss of $21 million compared to $25 millionAdjusted operating loss of $19 million compared to $18 million Business Unit Highlights U.S. Gypsum wallboard shipments totaled 986 MMSF vs. 1,070 MMSFU.S. Gypsum average wallboard price of $111.55 per thousand square feet vs. $114.17Worldwide Ceilings operating profit of $22 million compared to $23 millionL&W operating loss of $14 million compared to $22 million USG Corporation (NYSE:USG), a leading building products company, today reported second quarter 2011 net sales of $761 million, an operating loss of $21 million and a net loss of $70 million, or $0.69 per share based on 103.6 million average shares outstanding. In last year's second quarter, the operating loss was $25 million and the net loss was $74 million, or $0.74 per share based on 99.5 million average shares outstanding. “We are continuing to pursue our near-term and long-term strategic priorities during the protracted recession in our domestic markets,” said James Metcalf, President and CEO. “By strengthening our core businesses, diversifying the sources of our earnings and aggressively leveraging our innovation leadership to differentiate USG's products from the competition, we are confident that we can successfully navigate this recession and capitalize on a recovery.” The corporation's adjusted operating loss was $19 million in the second quarter of 2011, which compares to an adjusted operating loss of $18 million in the second quarter of 2010. The adjusted operating loss for the second quarter of 2011 excludes $2 million of restructuring and long-lived asset impairment charges, while the adjusted operating loss for the second quarter of 2010 excludes $7 million of restructuring and long-lived asset impairment charges. For the first half of 2011, the corporation reported net sales of $1.5 billion and a net loss of $175 million, or $1.70 per share based on 103.3 million average shares outstanding. For the first half of 2010, net sales were $1.5 billion and the net loss was $184 million, or $1.85 per diluted share based on 99.5 million average shares outstanding. The corporation's results for the first six months of 2011 included restructuring and long-lived asset impairment charges of $11 million, and its results for the first six months of 2010 included restructuring and long-lived asset impairment charges of $19 million. A conference call is being held today at 10:00 A.M. Central Time during which USG senior management will discuss the corporation's operating results. The conference call will be webcast on the USG Web site, www.usg.com, in the Investor Relations section. The dial-in number for the conference call is 1-866-352-2116 for participants in the United States (1-630-691-2782 for callers from other countries), and the pass code is 30234798. After the live webcast, a replay of the webcast will be available on the USG Web site. In addition, a telephonic replay of the call will be available until Friday, July 29, 2011. The replay dial-in number is 1-888-843-7419 (1-630-652-3042 for international callers), and the pass code is 30234798. USG Corporation is a manufacturer and distributor of high-performance building systems through its United States Gypsum Company, USG Interiors, Inc., L&W Supply Corporation and other subsidiaries. Headquartered in Chicago, USG's worldwide operations serve the residential and non-residential construction markets, repair and remodel construction markets, and industrial processes. USG's wall, ceiling, flooring and roofing products provide leading-edge building solutions for customers, while L&W Supply branch locations efficiently stock and deliver building materials nationwide. For additional information, visit the USG Web site at www.usg.com. This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 related to management's expectations about future conditions. Actual business, market or other conditions may differ from management's expectations and, accordingly, may affect our sales and profitability or other results and liquidity. Actual results may differ due to various other factors, including: economic conditions, such as the levels of new home and other construction activity, employment levels, the availability of mortgage, construction and other financing, mortgage and other interest rates, housing affordability and supply, the levels of foreclosures and home resales, currency exchange rates and consumer confidence; capital markets conditions and the availability of borrowings under our credit agreement or other financings; competitive conditions, such as price, service and product competition; shortages in raw materials; changes in raw material, energy, transportation and employee benefit costs; the loss of one or more major customers and our customers' ability to meet their financial obligations to us; capacity utilization rates; changes in laws or regulations, including environmental and safety regulations; the outcome in contested litigation matters; the effects of acts of terrorism or war upon domestic and international economies and financial markets; and acts of God. We assume no obligation to update any forward-looking information contained in this press release.     USG CORPORATIONCONSOLIDATED STATEMENT OF EARNINGS(dollars in millions except per share data)(Unaudited)         Three MonthsSix Monthsended June 30,ended June 30,2011201020112010     Net sales $ 761 $ 769 $ 1,482 $ 1,485   Cost of products sold   708     714     1,393     1,416     Gross profit 53 55 89 69   Selling and administrative expenses 72 73 157 157   Restructuring and long-lived asset impairment charges   2     7     11     19     Operating loss (21 ) (25 ) (79 ) (107 )   Interest expense 52 44 104 89   Interest income (2 ) (1 ) (4 ) (2 )   Other income, net   (2 )   (1 )   (2 )   -     Loss before income taxes (69 ) (67 ) (177 ) (194 )   Income tax expense (benefit)   1     7     (2 )   (10 )   Net loss $ (70 ) $ (74 ) $ (175 ) $ (184 )   Basic loss per common share $ (0.69 ) $ (0.74 ) $ (1.70 ) $ (1.85 ) Diluted loss per common share $ (0.69 ) $ (0.74 ) $ (1.70 ) $ (1.85 )   Average common shares 103,550,643 99,519,512 103,286,025 99,452,477 Average diluted common shares 103,550,643 99,519,512 103,286,025 99,452,477   Other Information: Depreciation, depletion and amortization $ 44 $ 45 $ 85 $ 90 Capital expenditures $ 12 $ 5 $ 25 $ 11   Average common shares and average diluted common shares outstanding are calculated in accordance with Accounting Standards Codification 260, "Earnings Per Share."     USG CORPORATIONCORE BUSINESS RESULTS(dollars in millions)(Unaudited)           Three MonthsSix Monthsended June 30,ended June 30,2011201020112010Net Sales:   North American Gypsum: United States Gypsum Company $ 322 $ 336 $ 640 $ 668 CGC Inc. (gypsum) 76 75 152 151 USG Mexico, S.A. de C.V. 40 37 81 73 Other subsidiaries* 7 9 14 15 Eliminations   (25 )   (29 )   (51 )   (55 ) Total   420     428     836     852     Building Products Distribution: L&W Supply Corporation   270     282     513     530     Worldwide Ceilings: USG Interiors, Inc. 112 111 222 214 USG International 55 57 116 114 CGC Inc. (ceilings) 18 16 37 33 Eliminations   (12 )   (12 )   (25 )   (24 ) Total   173     172     350     337     Eliminations   (102 )   (113 )   (217 )   (234 ) Total USG Corporation $ 761   $ 769   $ 1,482   $ 1,485       Operating Profit (Loss):   North American Gypsum: United States Gypsum Company $ (21 ) $ (16 ) $ (50 ) $ (53 ) CGC Inc. (gypsum) 2 6 5 13 USG Mexico, S.A. de C.V. 5 4 10 7 Other subsidiaries*   (2 )   (5 )   (10 )   (13 ) Total   (16 )   (11 )   (45 )   (46 )   Building Products Distribution: L&W Supply Corporation   (14 )   (22 )   (36 )   (61 )   Worldwide Ceilings: USG Interiors, Inc. 15 18 33 30 USG International 3 2 7 5 CGC Inc. (ceilings)   4     3     8     6   Total   22     23     48     41     Corporate (15 ) (14 ) (44 ) (37 ) Eliminations   2     (1 )   (2 )   (4 ) Total USG Corporation $ (21 ) $ (25 ) $ (79 ) $ (107 )   * Includes a shipping company in Bermuda, and a mining operation in Nova Scotia.     USG CORPORATIONCONSOLIDATED BALANCE SHEETS(dollars in millions)(Unaudited)         As ofAs ofJune 30,December 31,20112010   Assets Current Assets: Cash and cash equivalents $ 402 $ 629 Short-term marketable securities 158 128 Restricted cash 2 4 Receivables (net of reserves - $18 and $17) 380 327 Inventories 313 290 Income taxes receivable 2 3 Deferred income taxes 6 6 Other current assets   56     50   Total current assets 1,319 1,437   Long-term marketable securities 165 150 Property, plant and equipment (net of accumulated depreciation and depletion - $1,619 and $1,546) 2,221 2,266 Other assets   244     234     Total Assets $ 3,949   $ 4,087       Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 234 $ 218 Accrued expenses 278 294 Current portion of long-term debt 7 7 Income taxes payable   5     10   Total current liabilities 524 529   Long-term debt 2,299 2,301 Deferred income taxes 8 7 Other liabilities 591 631 Commitments and contingencies   Stockholders' Equity: Preferred stock - - Common stock 10 10 Treasury stock - (55 ) Capital received in excess of par value 2,556 2,565 Accumulated other comprehensive loss (13 ) (50 ) Retained earnings (deficit)   (2,026 )   (1,851 ) Total stockholders' equity   527     619     Total Liabilities and Stockholders' Equity $ 3,949   $ 4,087                 Other Information: Total cash and cash equivalents and marketable securities $ 725 $ 907 Borrowing availability from lines of credit   198     156   Total Liquidity     $ 923       $ 1,063       USG CORPORATIONRECONCILIATION of ADJUSTED OPERATING LOSS to REPORTED GAAP OPERATING LOSS(dollars in millions)(Unaudited)         Three MonthsSix Monthsended June 30ended June 302011201020112010   Adjusted Operating Profit (Loss): North American Gypsum $ (14 ) $ (5 ) $ (36 ) $ (36 ) Building Products Distribution (14 ) (21 ) (35 ) (52 ) Worldwide Ceilings 22 23 48 41 Corporate (15 ) (14 ) (43 ) (37 ) Eliminations   2     (1 )   (2 )   (4 ) Total   (19 )   (18 )   (68 )   (88 )     Restructuring and Long-LivedAsset Impairment Charges: North American Gypsum 2 6 9 10 Building Products Distribution - 1 1 9 Worldwide Ceilings - - - - Corporate   -     -     1     -   Total   2     7     11     19       Reported GAAP Operating Profit (Loss): North American Gypsum (16 ) (11 ) (45 ) (46 ) Building Products Distribution (14 ) (22 ) (36 ) (61 ) Worldwide Ceilings 22 23 48 41 Corporate (15 ) (14 ) (44 ) (37 ) Eliminations   2     (1 )   (2 )   (4 ) Total   (21 )   (25 )   (79 )   (107 )   References to Adjusted Operating Loss are non-GAAP measures. Management believes this information provides investors with a more useful comparison of the corporation's ongoing business performance.                                 UNITED STATES GYPSUM COMPANYWALLBOARD REALIZED PRICE & SHIPMENTS     Quarter 1 Quarter 2 Quarter 3 Quarter 4 Full Year Year Price   Volume Price   Volume Price   Volume Price   Volume Price   Volume 2011 $ 109.15 0.99 $ 111.55 0.99   2010 $ 106.58 1.15 $ 114.17 1.07 $ 114.45 1.03 $ 111.95 0.95 $ 111.66 4.20   Wallboard price reflects amount per one thousand square feet. Volume expressed in billions of square feet. USG CorporationMedia Inquiries: 312/436-4356Investor Relations: 312/436-4110