News Release
USG Corporation Reports Fourth Quarter and Full Year 2017 Results and Increases Share Repurchase Program to $500 Million
Business Highlights
Fourth Quarter 2017 vs. Fourth Quarter 2016
• Net sales increased to
• Operating profit increased to
• Net loss of
• Net loss in the fourth quarter of 2017 includes
Full Year 2017 vs. Full Year 2016
• Net sales increased to
• Operating profit decreased to
• Net income decreased to
“We had an outstanding close to a solid year for USG. The combination of
focused operational performance by our manufacturing facilities and a
high level of service to our customers enabled us to profitably grow our
business, with net sales increasing by 13 percent and adjusted operating
profit by 10 percent,” said
On a consolidated basis in the fourth quarter of 2017, net sales were
USG recorded
The U.S. Wallboard & Surfaces segment generated
The U.S. Performance Materials segment generated
The U.S. Ceilings segment generated
The USG Boral business generated
USG recorded full year 2017 net sales of
USG also announced today that its Board of Directors approved a
“Our new organizational structure will enable us to be closer to all of our customers and deliver better value for them. Increasing customer loyalty will be the key to delivering results for our shareholders,” said Scanlon. “I am confident in our strategy and the ability of our team to exceed the expectations of our customers and shareholders.”
A conference call is being held today at
About
Non-GAAP Financial Measures
In this press release, the corporation’s financial results are provided
both in accordance with accounting principles generally accepted in
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, including, but not
limited to, the execution, funding, and timing of USG's share repurchase
program and the impact of our new organizational structure. Actual
business, market or other conditions may differ materially from
management’s expectations and, accordingly, may affect our sales and
profitability or other results and liquidity. Any forward-looking
statements represent our views only as of today and should not be relied
upon as representing our views as of any subsequent date and we
undertake no obligation to update any forward-looking statement. Actual
results may differ materially due to various other factors, including:
economic conditions, such as employment levels, the availability of
skilled labor, household formation, home ownership rate, new and
existing home price trends, availability of mortgage financing, interest
rates, deductibility of mortgage interest and real estate taxes,
consumer confidence, job growth and discretionary business investment;
competitive conditions and our ability to maintain or achieve price
increases; the loss of one or more major customers, including L&W, and
the increasing number of our customers with significant buying power;
increased costs, or decreased availability, of key raw materials,
transportation or energy; unexpected operational difficulties or
catastrophic events at our facilities; our ability to successfully
operate the joint venture with
USG CORPORATION |
||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||
(dollars in millions, except share and per share data) | ||||
(Unaudited) | ||||
Three months ended December 31, | Twelve months ended December 31 | |||
2017 |
2016 |
2017 |
2016 |
|
Net sales | $ 831 | $ 734 | $ 3,204 | $ 3,017 |
Cost of products sold | 661 | 584 | 2,539 | 2,312 |
Gross profit | 170 | 150 | 665 | 705 |
Selling and administrative expenses | 83 | 91 | 298 | 304 |
Long-lived asset impairment charges | — | — | — | 10 |
Recovery of receivable | — | — | — | -3 |
Operating profit | 87 | 59 | 367 | 394 |
Income from equity method investments | 17 | 12 | 59 | 49 |
Net interest expense | (13) | (29) | (65) | (141) |
Loss on extinguishment of debt | — | (32) | (22) | (37) |
Other income (expense), net | 1 | 3 | (4) | 9 |
Income from continuing operations before income taxes | 92 | 13 | 335 | 274 |
Income tax (expense) benefit | (155) | 15 | (231) | (63) |
(Loss) income from continuing operations | (63) | 28 | 104 | 211 |
Income (loss) from discontinued operations, net of tax | 1 | — | (9) | 20 |
Gain on sale of discontinued operations, net of tax | — | 279 | — | 279 |
Net (loss) income | $ (62) | $ 307 | $ 95 | $ 510 |
Earnings per average common share - basic: | ||||
(Loss) income from continuing operations | $ (0.45) | $ 0.19 | $ 0.72 | $ 1.45 |
Income (loss) from discontinued operations | 0.01 | 1.91 | (0.06) | 2.04 |
Net income | $ (0.44) | $ 2.10 | $ 0.66 | $ 3.49 |
Earnings per average common share - diluted: Income (loss) from discontinued operations | ||||
(Loss) income from continuing operations | $ (0.45) | $ 0.19 | $ 0.71 | $ 1.44 |
Income (loss) from discontinued operations | 0.01 | 1.88 | (0.06) | 2.02 |
Net income | $ (0.44) | $ 2.07 | $ 0.65 | $ 3.46 |
Average common shares | 141,277,091 | 146,159,623 | 144,447,488 | 145,929,506 |
Average diluted common shares | 141,277,091 | 148,327,939 | 146,710,846 | 147,660,979 |
|
USG CORPORATION |
||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
(dollars in millions, except share data) (Unaudited) | ||
As of
December 31, 2017 |
As of
December 31, 2016 |
|
Assets | ||
Cash and cash equivalents | $ 394 | $ 427 |
Short-term marketable securities | 62 | 62 |
Receivables (net of reserves - 2017 - $9 and 2016 - $8) |
233 | 183 |
Inventories | 252 | 236 |
Income taxes receivable | 16 | 1 |
Other current assets | 35 | 40 |
Total current assets | 992 | 949 |
Long-term marketable securities | 37 | 29 |
Property, plant and equipment (net of accumulated | ||
depreciation and depletion - 2017 - $2,053 and 2016 - $1,960) | 1,762 | 1,707 |
Deferred income taxes | 293 | 492 |
Equity method investments | 686 | 628 |
Goodwill and intangible assets | 43 | 8 |
Other assets | 45 | 56 |
Total assets | $ 3,858 | $ 3,869 |
Liabilities and Stockholders' Equity | ||
Accounts payable | $ 280 | $ 237 |
Accrued expenses | 135 | 175 |
Income taxes payable | — | 10 |
Total current liabilities | 415 | 422 |
Long-term debt | 1,078 | 1,083 |
Deferred income taxes | 4 | 4 |
Pension and other postretirement benefits | 326 | 290 |
Other liabilities | 183 | 184 |
Total liabilities | 2,006 | 1,983 |
Stockholders' Equity: | ||
Preferred stock – $1 par value, authorized 36,000,000 shares; outstanding - none | — | — |
Common stock – $0.10 par value; authorized 200,000,000 shares;
issued:
2017 - 146,513,000 shares and 2016 - 146,167,000 shares |
15 | 15 |
Treasury stock at cost; 2017 - 5,571,000 shares and 2016 - 0 shares | (169) | — |
Additional paid-in capital | 3,057 | 3,038 |
Accumulated other comprehensive loss | (389) | (385) |
Retained earnings (accumulated deficit) | (662) | (782) |
Total stockholders' equity | 1,852 | 1,886 |
Total liabilities and stockholders' equity | $ 3,858 | $ 3,869 |
Other Information: | ||
Total cash and cash equivalents and marketable securities | $ 493 | $ 518 |
Borrowing availability under existing credit facilities | 155 | 85 |
Total Liquidity | $ 648 | $ 603 |
USG CORPORATION |
||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
(dollars in millions) | ||
(Unaudited) | ||
Twelve months ended December 31, | ||
2017 | 2016 | |
Operating Activities | ||
Net income | $ 95 | $ 510 |
Less: (Loss) income from discontinued operations, net of tax | (9) | 299 |
Income from continuing operations | 104 | 211 |
Adjustments to reconcile income from continuing operations to net cash: | ||
Depreciation, depletion and amortization | 132 | 134 |
Loss on extinguishment of debt | 22 | 37 |
Long-lived asset impairment charges | — | 10 |
Recovery of receivable | — | (3) |
Share-based compensation expense | 18 | 18 |
Deferred income taxes | 248 | 57 |
(Loss) gain on asset dispositions | 1 | (9) |
Income from equity method investments | (59) | (49) |
Dividends received from equity method investments | 42 | 47 |
Pension settlement | 12 | 20 |
Change in operating assets and liabilities | (142) | (168) |
Other, net | 4 | 9 |
Net cash provided by operating activities of continuing operations | 382 | 314 |
Net cash (used for) provided by operating activities of discontinued operations | — | 59 |
Net cash provided by operating activities | $ 382 | $ 373 |
Investing Activities | ||
Purchases of marketable securities | (105) | (274) |
Sales or maturities of marketable securities | 97 | 413 |
Capital expenditures | (168) | (83) |
Net proceeds from asset dispositions | 2 | 12 |
Acquisition of business | (52) | — |
Other investing activities | 1 | 11 |
Net cash (used for) provided by investing activities of continuing operations | (225) | 79 |
Net cash provided by (used for) investing activities of discontinued operations | 6 | 667 |
Net cash (used for) provided by investing activities | $ (219) | $ 746 |
Financing Activities | ||
Issuance of debt | 500 | — |
Repayment of debt | (521) | (1131) |
Payment of debt issuance fees | (8) | — |
Issuances of common stock | 15 | 4 |
Repurchase of common stock | (184) | — |
Repurchases of common stock to satisfy employee tax withholding obligations | (4) | (2) |
Net cash used for financing activities of continuing operations | $ (202) | $ (1,129) |
Effect of exchange rate changes on cash | 6 | (5) |
Net decrease in cash and cash equivalents from continuing operations | $ (39) | $ (741) |
Net increase in cash and cash equivalents from discontinued operations | 6 | 726 |
Change in cash balance included in discontinued operations | — | — |
Net decrease in cash and cash equivalents | (33) | (15) |
Cash and cash equivalents at beginning of period | 427 | 442 |
Cash and cash equivalents at end of period | $ 394 | $ 427 |
USG CORPORATION |
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SEGMENT BUSINESS RESULTS | ||||
(dollars in millions) (Unaudited) | ||||
Three months ended December 31, | Twelve months ended December 31, | |||
2017 | 2016 | 2017 | 2016 | |
Net Sales |
||||
U.S. Wallboard and Surfaces | $ 499 | $ 440 | $ 1,916 | $ 1,778 |
U.S. Performance Materials | 95 | 86 | 373 | 357 |
U.S. Ceilings | 122 | 102 | 477 | 467 |
Canada | 105 | 95 | 405 | 389 |
Other | 67 | 55 | 245 | 220 |
Eliminations | (57) | (44) | (212) | (194) |
Total USG Corporation Net Sales | $ 831 | $ 734 | $ 3,204 | $ 3,017 |
Operating Profit (Loss) |
||||
U.S. Wallboard and Surfaces | $ 80 | $ 67 | $ 314 | $ 334 |
U.S. Performance Materials | 5 | 6 | 26 | 41 |
U.S. Ceilings | 25 | 15 | 95 | 101 |
Canada | 5 | 5 | 12 | 26 |
Other | 3 | 2 | 11 | (4) |
Corporate | (30) | (36) | (90) | (104) |
Eliminations | (1) | — | (1) | — |
Total USG Corporation Operating Profit | $ 87 | $ 59 | $ 367 | $ 394 |
USG Boral Building Products (UBBP) |
||||
Net sales | $ 313 | $ 274 | $ 1,200 | $ 1,052 |
Operating profit | 42 | 28 | 160 | 133 |
Net income attributable to UBBP | 34 | 25 | 117 | 99 |
USG share of income from UBBP | 17 | 12 | 59 | 49 |
USG CORPORATION |
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RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES | ||||
(dollars in millions, except share and per share data) | ||||
(Unaudited) | ||||
Three months ended December 31, | Twelve months ended December 31, | |||
2017 | 2016 | 2017 | 2016 | |
Income from equity method investments - GAAP | $17 | $12 | $59 | $49 |
USG's share of UBBP impairment charges | — | 4 | — | 8 |
Adjusted equity income from UBBP - Non-GAAP | $17 | $16 | $59 | $57 |
Operating profit - GAAP | $87 | $59 | $367 | $394 |
Income from equity method investments | 17 | 12 | 59 | 49 |
Pension settlement charge | 2 | 17 | 12 | 17 |
Exit of commercial office space | — | 4 | — | 4 |
USG's share of UBBP impairment charges | — | 4 | — | 8 |
Long-lived asset impairment and severance charges | — | — | — | 12 |
Gain on sale of surplus property | — | — | — | (11) |
GTL recovery of receivable / shipping operations | — | — | — | (3) |
Adjusted operating profit - Non-GAAP | $106 | $96 | $438 | $470 |
U.S. Wallboard and Surfaces operating profit - GAAP | $80 | $67 | $314 | $334 |
Pension settlement charge | 1 | 6 | 7 | 6 |
Gain on sale of surplus property | — | — | — | (11) |
U.S. Wallboard and Surfaces adjusted operating profit - Non-GAAP | $81 | $73 | $321 | $329 |
U.S. Performance Materials operating profit - GAAP | $5 | $6 | $26 | $41 |
Pension settlement charge | — | 2 | 2 | 2 |
U.S. Performance Materials adjusted operating profit - Non-GAAP | $5 | $8 | $28 | $43 |
U.S. Ceilings operating profit - GAAP | $25 | $15 | $95 | $101 |
Pension settlement charge | 1 | 2 | 2 | 2 |
U.S. Ceilings adjusted operating profit - Non-GAAP | $26 | $17 | $97 | $103 |
UBBP operating profit - GAAP | $42 | $28 | $160 | $133 |
Income from equity method investments owned by UBBP | 3 | 2 | 15 | 11 |
Operating profit attributable to non-controlling interest, pre-tax | (1) | (2) | (6) | (6) |
Long-lived asset impairment charges in Oman included in operating (profit) loss, pre-tax | — | 14 | — | 14 |
Long-lived asset impairment and severance charges | — | — | — | 9 |
UBBP adjusted operating profit - Non-GAAP | $44 | $42 | $169 | $161 |
USG CORPORATION |
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RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES | ||||
(dollars in millions, except share and per share data) | ||||
(Unaudited) | ||||
Three months ended December 31, |
Twelve months ended December 31, | |||
2017 | 2016 | 2017 | 2016 | |
Selling and Administrative Expenses - GAAP | $ 83 | $ 91 | $ 298 | $ 304 |
Pension settlement charge | — | (10) | (2) | (10) |
Exit of commercial office space | — | (4) | — | (4) |
Adjusted Selling and Administrative Expenses - Non- GAAP | $ 83 | $ 77 | $ 296 | $ 290 |
Net (loss) income - GAAP | $ (62) | $ 307 | $ 95 | $ 510 |
Loss (income) from discontinued operations, net of tax | (1) | (279) | 9 | (299) |
Loss on extinguishment of debt | — | 32 | 22 | 37 |
Pension settlement charge | 2 | 17 | 12 | 17 |
Exit of commercial office space | — | 4 | — | 4 |
USG's share of UBBP impairment charges | — | 4 | — | 8 |
Long-lived asset impairment and severance charges | — | — | — | 12 |
Gain on sale of surplus property | — | — | — | (11) |
GTL recovery of receivable | — | — | — | (8) |
Change in tax law | 138 | — | 138 | — |
Tax effect on adjustments (a) | — | (20) | (12) | (19) |
Adjusted net income - Non-GAAP | $ 77 | $ 65 | $ 264 | $ 251 |
Earnings (loss) per average diluted common share - GAAP | $ (0.44) | $ 2.07 | $ 0.65 | $ 3.46 |
Adjustments per average diluted common share: | ||||
Loss (income) from discontinued operations, net of tax | (0.01) | (1.88) | 0.06 | (2.02) |
Loss on extinguishment of debt | — | 0.22 | 0.15 | 0.25 |
Pension settlement charge | 0.01 | 0.11 | 0.08 | 0.11 |
Exit of commercial office space | — | 0.03 | — | 0.03 |
USG's share of UBBP impairment charges | — | 0.02 | — | 0.05 |
Long-lived asset impairment and severance charges | — | — | — | 0.08 |
Gain on sale of surplus property | — | — | — | (0.08) |
GTL recovery of receivable | — | — | — | (0.05) |
Change in tax law | 0.97 | — | 0.94 | — |
Tax effect on adjustments (a) | — | (0.13) | (0.08) | (0.13) |
Adjusted earnings per adjusted average diluted common share – Non-GAAP | $ 0.53 | $ 0.44 | $ 1.80 | $ 1.70 |
Average diluted common shares – GAAP | 141,277,091 | 148,327,939 | 146,710,846 | 147,660,979 |
Adjustment to add common shares that would be dilutive based on adjusted net income | 1,833,704 | — | — | — |
Adjusted average diluted common shares – Non- GAAP | 143,110,795 | 148,327,939 | 146,710,846 | 147,660,979 |
(a) - Tax effect on adjustments is calculated using country specific statutory rates. |
View source version on businesswire.com: http://www.businesswire.com/news/home/20180201005472/en/
Source:
USG Corporation
Media:
Kathleen Prause, 312-436-6607
kprause@usg.com
or
Investors:
Bill
Madsen, 312-436-5349
investorrelations@usg.com