Second Quarter 2009 vs. Second Quarter 2008 - Operating loss
virtually unchanged despite 34 percent decline in net sales - Unit
margin improvements and other cost reductions substantially offset
effects of volume declines - Improved liquidity since March 31,
2009 CHICAGO, July 22 /PRNewswire-FirstCall/ -- USG Corporation
(NYSE:USG), a leading building products company, today reported
second quarter 2009 net sales of $829 million and a net loss of $53
million, or $0.53 per diluted share based on 99.2 million average
diluted shares outstanding. For the same period a year ago, the
corporation recorded net sales of $1.3 billion and a net loss of
$37 million, or $0.37 per diluted share based on 99.1 million
average diluted shares outstanding. (Logo:
http://www.newscom.com/cgi-bin/prnh/20010511/USGLOGO) "Revenues in
all business segments are under pressure due to the significant
declines in residential and commercial construction activity in the
U.S. and abroad," said William C. Foote, Chairman and CEO. "In the
U.S., our largest markets, new residential and home repair and
remodeling, appear to be stabilizing, while the commercial market
continues to decline. "USG continues to stay ahead of these market
declines. Our efforts to reduce costs and increase liquidity during
the global economic contraction are succeeding," Foote added.
"Stabilization in the domestic residential segment appears to be on
the horizon and will be a welcome relief. Meanwhile, we will
continue our efforts to control costs, improve liquidity and return
our businesses to profitability." The corporation's consolidated
second quarter 2009 results included restructuring and long-lived
asset impairment charges totaling $19 million ($12 million
after-tax, or $0.12 per diluted share). The corporation's
consolidated second quarter 2008 results included restructuring and
long-lived asset impairment charges of $21 million ($13 million
after-tax, or $0.13 per diluted share). The corporation's liquidity
at June 30, 2009 totaled $495 million, comprised of $302 million of
cash and cash equivalents and $193 million of borrowing
availability under its credit facilities. Core Business Results
North American Gypsum USG's North American Gypsum business reported
second quarter 2009 net sales of $442 million and an operating loss
of $20 million, which included restructuring and long-lived asset
impairment charges of $11 million. Net sales of $625 million and an
operating loss of $55 million were reported in last year's second
quarter. North American Gypsum's operating loss for the second
quarter of 2008 included $9 million in restructuring charges.
United States Gypsum Company reported second quarter 2009 net sales
of $360 million and an operating loss of $25 million. This compares
with second quarter 2008 net sales of $510 million and operating
loss of $64 million. The operating losses in the second quarters of
2009 and 2008 included restructuring charges of $10 million and $7
million, respectively. The decline in sales was primarily
attributable to a 38 percent decline in shipments of Sheetrock
brand gypsum wallboard. The operating loss improvement was due to
increased profitability for the gypsum wallboard and joint
treatment product lines, as well as significantly lower overhead
and other costs resulting from restructuring actions taken during
the past year. U.S. Gypsum shipped 1.18 billion square feet of
gypsum wallboard during the second quarter of 2009 compared with
1.89 billion square feet shipped during last year's second quarter
and 1.31 billion square feet shipped during the first quarter of
2009. U.S. Gypsum's wallboard plants operated at approximately 46
percent of capacity during the quarter compared with 69 percent of
capacity for the same period a year ago. The company estimates that
the industry capacity utilization rate was below 50 percent during
the second quarter of 2009. U.S. Gypsum's average realized selling
price for gypsum wallboard was $120.79 per thousand square feet
during the second quarter of 2009, up 10 percent from the second
quarter of 2008, but down slightly from $121.42 in the first
quarter of 2009. Second quarter 2009 profit for the company's
complementary product lines, which include Sheetrock brand joint
treatment materials, Fiberock brand gypsum fiber panels and Durock
brand cement boards, was slightly lower compared to the second
quarter of 2008. Profitability for joint treatment products was
improved but profitability in the other complementary products
declined. Volumes were lower in all complementary product lines.
The gypsum division of Canada-based CGC Inc. reported second
quarter 2009 net sales of $64 million, a decrease of $26 million,
or 29 percent, compared with the same period a year ago. The sales
decline was principally due to the unfavorable effects of currency
translation resulting from a stronger U.S. dollar and lower sales
of SHEETROCK brand gypsum wallboard. Operating profit of $2
million, which included $1 million in restructuring charges, was
recorded in the second quarter of 2009. This compared with an
operating loss of $1 million in the second quarter of 2008, which
also included $1 million in restructuring charges. The improvement
was due to lower costs, including selling and administrative
expenses, partially offset by reduced profitability on wallboard
and other products. USG Mexico S.A. de C.V., USG's Mexico-based
gypsum business, reported second quarter 2009 net sales of $34
million, down from $54 million in last year's second quarter. The
decline in sales was largely attributable to lower shipments of
SHEETROCK brand gypsum wallboard. Second quarter 2009 operating
profit fell to $3 million from $7 million in the same period last
year. Building Products Distribution L&W Supply Corporation and
its subsidiaries, which comprise USG's building products
distribution business, reported second quarter 2009 net sales of
$337 million, down 38 percent compared to the second quarter of
2008. Second quarter 2009 net sales reflect lower volumes in all
major product categories as a result of weaker residential and
commercial construction demand. Gypsum wallboard sales declined 36
percent while sales of products other than wallboard were down 38
percent compared with last year's second quarter. L&W Supply
reported an operating loss of $26 million for the second quarter of
2009 compared to operating profit of $8 million for last year's
second quarter. Both the second quarter 2009 and the second quarter
2008 losses included a $5 million restructuring charge. The second
quarter 2009 results include the benefit of $27 million in lower
operating expenses attributable to L&W Supply's cost reduction
programs designed to mitigate the effects of lower product volumes
and resultant gross profit declines. Those programs include the
closure of 54 distribution centers in 2008 and nine centers in
2009, an aggressive fleet reduction program and decreases in
discretionary spending. As of June 30, 2009, L&W Supply
operated 190 distribution centers. Worldwide Ceilings USG's
Worldwide Ceilings business reported second quarter 2009 net sales
of $173 million compared with second quarter 2008 net sales of $237
million. Operating profit was $18 million for the second quarter of
2009, a decrease of $12 million compared to the second quarter of
2008. Second quarter 2009 operating profit included restructuring
charges of $1 million while operating profit in the same period
last year included restructuring charges of $2 million. The
majority of the declines in sales and profit came from non-U.S.
operations. USG Interiors Inc., USG's domestic ceilings business,
reported second quarter 2009 net sales of $113 million and
operating profit of $17 million. This compared with net sales of
$141 million and operating profit of $21 million for the second
quarter of 2008. The sales results reflect lower shipments of both
ceiling tile and grid because of reduced commercial construction
activity. Profitability was favorably affected by a reduction in
overhead spending and other cost reductions. The operating profit
margin for the second quarter of 2009 was flat compared to last
year's second quarter operating profit margin. USG International
reported net sales of $55 million for the second quarter of 2009, a
decrease of $37 million compared with the second quarter of 2008.
Operating profit was $1 million for the second quarter of 2009
compared with $4 million for the second quarter of 2008. In both
periods, operating profit included $1 million of restructuring
charges. The lower levels of sales and profitability reflect lower
demand for ceiling and gypsum products in all markets as well as
the unfavorable effects of currency translation resulting from a
stronger U.S. dollar. The decline in operating profit was partially
offset by reduced selling and administrative expenses. The ceilings
division of CGC Inc. reported second quarter 2009 net sales of $15
million, down from $19 million in last year's second quarter.
Operating profit declined to a breakeven level for the second
quarter of 2009 from $5 million for the second quarter last year,
primarily due to lower volumes for ceiling tile and grid and higher
manufacturing costs. Other Consolidated Information For the first
half of 2009, the corporation reported net sales of $1.7 billion
and a net loss of $95 million, or $0.95 per diluted share based on
99.2 million average diluted shares outstanding. For the first half
of 2008, net sales were $2.4 billion and the corporation reported a
net loss of $78 million, or $0.79 per share based on 99.1 million
average shares outstanding. The corporation's consolidated results
for the first six months of 2009 included restructuring and
long-lived asset impairment charges of $29 million ($18 million
after-tax, or $0.18 per share). The six months 2009 net loss also
included the benefit of $10 million ($7 million after-tax, or $0.07
per share) of other income from the reversal of an embedded
derivative liability. The corporation's consolidated results for
the first six months of 2008 included restructuring charges of $25
million ($16 million after-tax, or $0.16 per share). Selling and
administrative expenses were $72 million for the second quarter,
and $152 million for the first six months, of 2009, representing
decreases of $22 million, or 23 percent, and $44 million, or 22
percent, from the respective 2008 periods. The corporation has been
aggressively reducing overhead expenses in response to the weak
market conditions and implemented a further overhead reduction
program in June. As a percentage of net sales, selling and
administrative expenses were 8.7 percent for the second quarter of
2009, up from 7.5 percent for the second quarter of 2008. Selling
and administrative expenses were 9.0 percent of net sales for the
first six months of 2009 compared to 8.1 percent in the first six
months of 2008. The increases in the percentages for the second
quarter and first six months of 2009 were attributed to the lower
levels of net sales in those periods compared to the second quarter
and first six months of 2008. Interest expense for the second
quarter and first six months of 2009 was $36 million and $78
million, respectively. Interest expense was $21 million and $38
million for the second quarter and first six months of 2008,
respectively. Interest expense was higher in 2009 due primarily to
a higher average level of borrowings. Total debt amounted to $1.670
billion as of June 30, 2009 compared with $1.385 billion as of June
30, 2008 and $1.645 billion as of March 31, 2009. The increase in
debt at June 30, 2009 compared to March 31, 2009 was due to the net
borrowing of $25 million under the corporation's ship mortgage
facility. The effective tax rate for the second quarter of 2009 was
30.0 percent compared to 36.9 percent for the same period a year
ago. As of June 30, 2009, the corporation had $302 million of cash
and cash equivalents compared with $223 million as of March 31,
2009 and $471 million as of December 31, 2008. As detailed in the
corporation's first quarter 2009 Form 10-Q, the reduction in cash
since year-end was primarily attributable to the use of $190
million of cash to repay all outstanding borrowings under the
corporation's revolving credit facility in connection with its
amendment and restatement in January. Capital expenditures in the
second quarter of 2009 were $12 million compared with $67 million
in the second quarter of 2008. For the first six months of 2009,
capital expenditures were $28 million compared with $172 million
for the first six months of 2008. Capital expenditures in the first
half of 2009 are consistent with the corporation's target of
approximately $50 million for the full year. For the first six
months of 2009, net cash provided by operating activities exceeded
net cash used for investing activities, principally capital
expenditures, by $3 million. A conference call is being held today
at 10:00 A.M. Central Time during which time USG senior management
will discuss the corporation's operating results. The conference
call will be webcast on the USG Web site, http://www.usg.com/, in
the Investor Information section. The dial-in number for the
conference call is 1-800-315-2944 (1-847-413-2929 for international
callers), and the passcode is 24942139. 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 31, 2009. The replay dial-in number is 1-888-843-8996
(1-630-652-3044 for international callers), and the passcode is
24942139. USG Corporation is a manufacturer and distributor of
high-performance building systems through its United States Gypsum
Company, USG Interiors, Inc. and 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 center locations efficiently stock and deliver
building materials nationwide. For additional information, visit
the USG Web site at http://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, the availability of borrowings under our credit
agreements 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 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 CORPORATION CONSOLIDATED STATEMENT OF EARNINGS
(dollars in millions except per share data) (Unaudited) Three
Months Six Months ended June 30, ended June 30, --------------
-------------- 2009 2008 2009 2008 ---- ---- ---- ---- Net sales
$829 $1,251 $1,693 $2,416 Cost of products sold 778 1,175 1,594
2,294 --- ----- ----- ----- Gross profit 51 76 99 122 Selling and
administrative expenses 72 94 152 196 Restructuring and long-lived
asset impairment charges 19 21 29 25 --- --- --- --- Operating loss
(40) (39) (82) (99) Interest expense 36 21 78 38 Interest income
(1) (1) (1) (3) Other expense (income), net 1 - (9) (1) --- --- ---
--- Loss before income taxes (76) (59) (150) (133) Income tax
benefit (23) (22) (55) (55) --- --- --- --- Net loss $(53) $(37)
$(95) $(78) ==== ==== ==== ==== Basic loss per common share $(0.53)
$(0.37) $(0.95) $(0.79) Diluted loss per common share $(0.53)
$(0.37) $(0.95) $(0.79) Average common shares 99,213,367 99,071,435
99,202,098 99,064,529 Average diluted common shares 99,213,367
99,071,435 99,202,098 99,064,529 Other Information: Depreciation,
depletion and amortization $48 $45 $104 $89 Capital expenditures
$12 $67 $28 $172 Second quarter and six months 2008 results have
been retrospectively adjusted for a change in the fourth quarter of
2008 from the last-in, first-out method to the average cost method
of inventory accounting. Average common shares and average diluted
common shares outstanding are calculated in accordance with
Financial Accounting Standard No. 128, "Earnings Per Share." USG
CORPORATION CORE BUSINESS RESULTS (dollars in millions) (Unaudited)
Three Months Six Months ended June 30, ended June 30,
-------------- -------------- 2009 2008 2009 2008 ---- ---- ----
---- Net Sales: ---------- North American Gypsum: United States
Gypsum Company $360 $510 $763 $1,024 CGC Inc. (gypsum) 64 90 125
174 USG Mexico, S.A. de C.V. 34 54 69 101 Other subsidiaries* 10 22
20 38 Eliminations (26) (51) (57) (94) --- --- --- --- Total 442
625 920 1,243 --- --- --- ----- Building Products Distribution:
L&W Supply Corporation 337 542 690 1,032 --- --- --- -----
Worldwide Ceilings: USG Interiors, Inc. 113 141 231 276 USG
International 55 92 107 165 CGC Inc. (ceilings) 15 19 28 34
Eliminations (10) (15) (22) (27) --- --- --- --- Total 173 237 344
448 --- --- --- --- Eliminations (123) (153) (261) (307) ---- ----
---- ---- Total USG Corporation $829 $1,251 $1,693 $2,416 ====
====== ====== ====== Operating Profit (Loss):
------------------------ North American Gypsum: United States
Gypsum Company $(25) $(64) $(46) $(126) CGC Inc. (gypsum) 2 (1) 1 3
USG Mexico, S.A. de C.V. 3 7 5 11 Other subsidiaries* - 3 (1) 2 ---
--- --- --- Total (20) (55) (41) (110) --- --- --- ---- Building
Products Distribution: L&W Supply Corporation (26) 8 (36) 8 ---
--- --- --- Worldwide Ceilings: USG Interiors, Inc. 17 21 32 38 USG
International 1 4 2 8 CGC Inc. (ceilings) - 5 2 8 --- --- --- ---
Total 18 30 36 54 --- --- --- -- Corporate (13) (24) (41) (54)
Eliminations 1 2 - 3 --- --- --- --- Total USG Corporation $(40)
$(39) $(82) $(99) ==== ==== ==== ==== Second quarter and six months
2008 results have been retrospectively adjusted for a change in the
fourth quarter of 2008 from the last-in, first-out method to the
average cost method of inventory accounting. * Includes a shipping
company in Bermuda, and a mining operation in Nova Scotia. USG
CORPORATION CONSOLIDATED BALANCE SHEETS (dollars in millions)
(Unaudited) As of As of June 30, December 31, 2009 2008 ---- ----
Assets Current Assets: Cash and cash equivalents $302 $471
Restricted cash 1 1 Receivables (net of reserves - $14 and $15) 442
467 Inventories 330 404 Income taxes receivable 13 15 Deferred
income taxes 66 68 Other current assets 85 68 --- --- Total current
assets 1,239 1,494 Property, plant and equipment (net of
accumulated depreciation and depletion - $1,442 and $1,368) 2,480
2,562 Deferred income taxes 409 374 Goodwill 12 12 Other assets 275
277 --- --- Total Assets $4,415 $4,719 ====== ====== Liabilities
and Stockholders' Equity Current Liabilities: Accounts payable $214
$220 Accrued expenses 261 338 Short-term debt - 190 Current portion
of long-term debt 7 4 Income taxes payable 6 4 --- --- Total
current liabilities 488 756 Long-term debt 1,663 1,642 Deferred
income taxes 7 7 Other liabilities 721 764 Commitments and
contingencies Stockholders' Equity Preferred stock - - Common stock
10 10 Treasury stock (197) (199) Capital received in excess of par
value 2,637 2,625 Accumulated other comprehensive loss (160) (227)
Retained earnings (deficit) (754) (659) ---- ---- Total
stockholders' equity 1,536 1,550 ----- ----- Total Liabilities and
Stockholders' Equity $4,415 $4,719 ====== ======
http://www.newscom.com/cgi-bin/prnh/20010511/USGLOGO
http://photoarchive.ap.org/ DATASOURCE: USG Corporation CONTACT:
Media, +1-312-436-4356, or Investor Relations, +1-312-436-4125 Web
Site: http://www.usg.com/
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