- Extremely challenging market conditions continue
- Improved operating results attributable to cost reduction initiatives,
higher wallboard price
CHICAGO, April 21 /PRNewswire-FirstCall/ -- USG Corporation (NYSE: USG), a
leading building products company, today reported first quarter 2009 net sales
of $864 million and a net loss of $42 million, or $0.42 per diluted share,
based on 99.2 million average shares outstanding. For the same period a year
ago, the corporation recorded net sales of $1.2 billion and a net loss of $41
million, or $0.42 per diluted share, based on 99.1 million average shares
outstanding.
"We continue to make progress toward profitability despite challenging
market conditions and we remain committed to take actions to achieve that
goal," said William C. Foote, Chairman and CEO. "The significant
cost-reduction initiatives we implemented last year helped to mitigate the
impact of an exceptionally weak housing market, a decline in commercial
construction and contractions in most international markets. Our liquidity
position remains solid and provides us sufficient funds to meet the ongoing
needs of the business."
The corporation's first quarter operating loss improved approximately 30
percent compared to last year's first quarter. The first quarter 2009
operating loss of $42 million represents an improvement of $18 million
compared to the $60 million operating loss in the first quarter of 2008.
The corporation's liquidity at March 31, 2009 totaled $429 million,
comprised of $223 million in cash and $206 million in borrowing availability
under its revolving credit facility.
Core Business Results
North American Gypsum
USG's North American Gypsum business recorded first quarter 2009 net sales
of $478 million and an operating loss of $21 million. For the first quarter of
2008, net sales and operating loss were $618 million and $55 million,
respectively, for the North American Gypsum segment. Despite a 23-percent
decline in net sales, the operating loss for the segment improved considerably
compared to the first quarter last year primarily due to improved results at
United States Gypsum Company. Operating loss improved largely as a result of
higher wallboard gross margin, reduced selling and administrative expenses and
a decline in other costs.
United States Gypsum Company reported first quarter 2009 net sales of $403
million, a decline of 22 percent compared to first quarter 2008 net sales of
$514 million. U.S. Gypsum achieved significantly better operating results,
posting a first quarter 2009 operating loss of $21 million compared to an
operating loss of $62 million in the first quarter of last year. The decline
in net sales was attributable to lower shipments of both SHEETROCK(R) brand
gypsum wallboard and complementary products, somewhat offset by an increase in
the realized selling price for gypsum wallboard.
During the quarter, U.S. Gypsum's realized average selling price for its
SHEETROCK brand gypsum wallboard increased to $121.42 per thousand square feet
compared to $118.98 in the fourth quarter of 2008 and $104.41 in the first
quarter of 2008. In the first quarter of 2009, U.S. Gypsum shipped 1.3 billion
square feet of wallboard compared to 2.1 billion square feet shipped during
last year's first quarter, a 38-percent decline. U.S. Gypsum's wallboard
plants operated at 53 percent of capacity during the quarter compared with a
76 percent capacity utilization rate for the same period a year ago. The
company estimates that the industry operated at 53 percent of capacity during
the first quarter of 2009.
Net sales of the company's complementary product lines declined, but less
than the declines in the broader market. In the aggregate, gross margins for
complementary products, which include SHEETROCK brand joint treatment
materials, FIBEROCK(R) brand gypsum fiber panels and DUROCK(R) brand cement
boards, improved compared to the first quarter of 2008, but gross profit was
lower due to lower volumes and higher manufacturing costs. These unfavorable
factors were somewhat offset by higher selling prices.
Construction activity is also contracting in Canada and Mexico. Results at
Canada-based CGC Inc. and USG Mexico, S.A. de C.V. were lower than a year ago,
but benefited from cost control initiatives implemented in 2008 that partially
offset the effects of lower volumes in the first quarter.
The gypsum business of CGC reported first quarter 2009 net sales of $61
million and an operating loss of $1 million. This compared to net sales of $84
million and an operating profit of $4 million in the first quarter of 2008.
The lower results were primarily attributable to the unfavorable effects of
currency translation and lower shipments of gypsum wallboard and other
products.
USG Mexico reported first quarter 2009 net sales of $35 million compared
with net sales of $47 million in the first quarter of 2008. Sales fell largely
due to the unfavorable effects of currency translation and lower shipments of
gypsum wallboard. Operating profit was $2 million in the first quarter 2009
compared to $4 million in the same period last year. Operating profit fell
due to lower gypsum wallboard gross profit as a result of lower shipments.
Building Products Distribution
L&W Supply Corporation and its subsidiaries, which comprise USG's building
products distribution business, reported first quarter 2009 net sales of $353
million, down 28 percent compared to the first quarter of 2008. First quarter
2009 net sales primarily reflect lower gypsum wallboard shipments partially
offset by an increase in gypsum wallboard selling prices compared to the first
quarter of 2008. L&W Supply reported an operating loss of $10 million in the
first quarter of 2009 compared to breakeven operating results in last year's
first quarter.
First quarter 2009 gypsum wallboard shipments were down 34 percent
compared to the prior-year period as a result of weaker residential and
commercial construction demand.
L&W Supply's sales of ceiling and construction metal products in the first
quarter of 2009 also declined compared to the first quarter of 2008, but at a
lower rate than the decline in sales of wallboard products, in part due to L&W
Supply's strong relationships with large commercial contractors. Overall,
sales of products other than wallboard were down 26 percent compared with last
year's first quarter.
A $35-million decline in operating expenses attributable to L&W Supply's
cost reduction programs helped to mitigate the effects of lower gypsum
wallboard shipments and gross margins, and reduced gross profit in other
product lines. Cost reduction programs included the closure of 54 distribution
centers in 2008, an aggressive fleet reduction program and decreases in
discretionary spending. As of March 31, 2009, L&W Supply operated 198 centers.
Worldwide Ceilings
USG's Worldwide Ceilings business reported first quarter 2009 net sales of
$171 million compared to 2008 first quarter net sales of $211 million, a
decline of 19 percent. Operating profit in the first quarter of 2009 was $18
million compared to $24 million in the first quarter of 2008.
USG's domestic ceilings business, USG Interiors, Inc., reported first
quarter 2009 net sales of $118 million, a decline of $17 million compared with
last year's first quarter. USG Interiors' first quarter 2009 operating profit
of $15 million compared to $17 million in the first quarter of 2008. These
results reflect lower shipments of ceiling tile and grid products partially
offset by higher selling prices and lower selling and administrative expenses.
USG International reported net sales and operating profit of $52 million
and $1 million, respectively, in the first quarter of 2009. This compares with
net sales of $73 million and an operating profit of $4 million for the same
period a year ago. The lower sales and profitability were largely due to
decreased demand for ceiling grid and joint compound in Europe and gypsum
products in Latin America and the unfavorable effects of currency translation
resulting from a stronger U.S. dollar.
The ceilings division of CGC Inc. reported net sales of $13 million and an
operating profit of $2 million in the first quarter of 2009. These results
compare with net sales of $15 million and operating profit of $3 million for
the same period a year ago.
Other Consolidated Information
The corporation's consolidated first quarter 2009 results included $10
million ($7 million after-tax, or $0.07 per diluted share) in restructuring
and long-lived asset impairment charges. First quarter 2008 results included
restructuring charges of $4 million, or $2 million ($0.02 per share) on an
after-tax basis. First quarter 2009 results also included $10 million of other
income, net, reflecting the reversal of the remaining $10 million of embedded
derivative liability related to the corporation's $400 million of 10 percent
contingent convertible senior notes as a result of approval of the conversion
feature of the notes by the corporation's stockholders in February. Other
income, net, was $1 million in the first quarter of 2008.
First quarter 2009 selling and administrative expenses totaled $80
million. This was a decrease of $22 million, or 22 percent, compared to the
first quarter of 2008 and reflects the benefit of cost reduction actions taken
during 2008. As a percent of net sales, selling and administrative expenses
were 9.3 percent in the first quarter of 2009, up slightly from 8.8 percent in
the comparable 2008 period, reflecting the 26 percent decline in sales
year-over-year.
Interest expense was $42 million for the first quarter of 2009 compared
with $17 million for the first quarter of 2008. First quarter 2009 interest
expense was higher due to a higher level of borrowings as well as a pretax
charge of $7 million to write off deferred financing fees primarily related to
amendment and restatement of the corporation's revolving credit facility in
January 2009.
The effective tax rate for the first quarter of 2009 was 43.6 percent
compared to 44.1 percent for the same period a year ago.
As of March 31, 2009, USG had $223 million of cash and cash equivalents on
a consolidated basis. This compared with $471 million reported as of December
31, 2008. 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. Cash interest for the quarter was $27 million and
capital expenditures totaled $16 million compared to capital spending of $105
million in the first quarter of 2008. Another $21 million was used to provide
cash collateral to derivative counterparties as a part of the corporation's
hedging activities. Total debt amounted to $1.645 billion as of March 31, 2009
compared to $1.836 billion as of December 31, 2008.
A conference call is being held today at 10:00 A.M. Central Time (11:00
A.M. Eastern) during which USG senior management will discuss the
corporation's results of operations. The conference call and presentation will
be webcast simultaneously on the USG Web site, 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
24297438. 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 May 1, 2009. The replay dial-in number is 1-888-843-8996
(1-630-652-3044 for international callers), and the passcode is 24297438.
USG Corporation is a Fortune 500 manufacturer and distributor of
high-performance building systems through its United States Gypsum Company,
L&W Supply Corporation and USG Interiors, Inc. subsidiaries. Headquartered in
Chicago, USG serves 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 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, currency exchange rates and consumer confidence; capital markets
conditions, 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 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 OPERATIONS
(dollars in millions except per share data)
(Unaudited)
Three Months
ended March 31,
----------------
2009 2008
---- ----
Net sales $864 $1,165
Cost of products sold 816 1,119
--- -----
Gross profit 48 46
Selling and administrative expenses 80 102
Restructuring and long-lived asset
impairment charges 10 4
-- --
Operating loss (42) (60)
Interest expense 42 17
Interest income - (2)
Other income, net (10) (1)
--- --
Loss before income taxes (74) (74)
Income tax benefit (32) (33)
--- ---
Net loss $(42) $(41)
==== ====
Basic loss per common share: $(0.42) $(0.42)
Diluted loss per common share: (0.42) (0.42)
Average common shares 99,190,830 99,057,624
Average diluted common shares 99,190,830 99,057,624
Other Information:
Depreciation, depletion and amortization $56 $44
Capital expenditures 16 105
First quarter 2008 results have been retrospectively adjusted for
a change in the fourth quarter of 2008 from the last-in, first-out
method of inventory accounting to the average cost method.
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
ended March 31,
------------
2009 2008
---- ----
Net Sales:
----------
North American Gypsum:
U.S. Gypsum Company $403 $514
CGC Inc. (gypsum) 61 84
USG Mexico S.A. de C.V. 35 47
Other * 10 16
Eliminations (31) (43)
--- ---
Total 478 618
--- ---
Building Products Distribution:
L&W Supply Corporation 353 490
--- ---
Worldwide Ceilings:
USG Interiors, Inc. 118 135
USG International 52 73
CGC Inc. (ceilings) 13 15
Eliminations (12) (12)
--- ---
Total 171 211
--- ---
Eliminations (138) (154)
---- ----
Total net sales $864 $1,165
==== ======
Operating Profit (Loss):
------------------------
North American Gypsum:
U.S. Gypsum Company $(21) $(62)
CGC Inc. (gypsum) (1) 4
USG Mexico S.A. de C.V. 2 4
Other * (1) (1)
-- --
Total (21) (55)
--- ---
Building Products Distribution:
L&W Supply Corporation (10) -
--- -
Worldwide Ceilings:
USG Interiors, Inc. 15 17
USG International 1 4
CGC Inc. (ceilings) 2 3
- -
Total 18 24
-- --
Eliminations (1) 1
Corporate (28) (30)
--- ---
Total operating loss $(42) $(60)
==== ====
First quarter 2008 results have been retrospectively
adjusted for a change in the fourth quarter of 2008 from
the last-in, first-out method of inventory accounting to
the average cost method.
*Includes a shipping company in Bermuda and a mining
operation in Nova Scotia, Canada.
USG CORPORATION
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
(Unaudited)
As of As of
March 31, December 31,
2009 2008
---- ----
Assets
Current Assets:
Cash and cash equivalents $223 $471
Restricted cash 1 1
Receivables (net of reserves - $14 and $15) 487 467
Inventories 375 404
Income taxes receivable 12 15
Deferred income taxes 70 68
Other current assets 99 68
-- --
Total current assets 1,267 1,494
Property, plant and equipment (net of accumulated
depreciation and depletion - $1,373 and $1,368) 2,485 2,562
Deferred income taxes 413 374
Goodwill 12 12
Other assets 269 277
--- ---
Total Assets $4,446 $4,719
====== ======
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $227 $220
Accrued expenses 285 338
Short-term debt - 190
Current portion of long-term debt 4 4
Income taxes payable 6 4
- -
Total current liabilities 522 756
Long-term debt 1,641 1,642
Deferred income taxes 6 7
Other liabilities 786 764
Commitments and contingencies
Stockholders' Equity
Preferred stock - -
Common stock 10 10
Treasury stock (197) (199)
Capital received in excess of par value 2,633 2,625
Accumulated other comprehensive loss (254) (227)
Retained earnings (deficit) (701) (659)
---- ----
Total stockholders' equity 1,491 1,550
----- -----
Total Liabilities and Stockholders' Equity $4,446 $4,719
====== ======
SOURCE USG Corporation
04/21/2009
CONTACT: Media Inquiries, +1-312-436-4356, or Investor Relations,
+1-312-436-4125
CO: USG Corporation
ST: Illinois
IN: CST
SU: ERN CCA
4698 04/21/2009 08:30 EDT
http://www.prnewswire.com
