USG Corporation Reports 2012 Third Quarter Results

USG Corporation Reports 2012 Third Quarter Results

Third Quarter 2012 vs. Third Quarter 2011

Consolidated Business Highlights (continuing operations)

  • Sales increased 9 percent to $828 million

  • Operating profit of $29 million compared to operating loss of $79 million

  • Adjusted operating profit of $32 million compared to adjusted operating loss of $20 million


Business Unit Highlights (continuing operations)

  • U.S. Gypsum wallboard shipments totaled 1.20 BSF vs. 1.05 BSF

  • U.S. Gypsum average wallboard price of $131.97 per thousand square feet vs. $111.66

  • Worldwide Ceilings operating profit increased 9 percent to $24 million

  • L&W same store net sales increased 10 percent

  • SHEETROCK®Brand UltraLight Panels accounted for 47 percent of all USG wallboard shipments in the United States

CHICAGO--(BUSINESS WIRE)-- USG Corporation (NYS: USG) , a leading building products company, today reported third quarter 2012 net sales from continuing operations of $828 million, up 9 percent from third quarter 2011 net sales from continuing operations of $763 million. USG's third quarter operating profit from continuing operations was $29 million compared to a $79 million operating loss from continuing operations in the third quarter of 2011. The third quarter 2012 net loss from both continuing and discontinued operations was $29 million, or $0.28 per share. This result compares to a $115 million net loss from both continuing and discontinued operations in the third quarter of 2011, or $1.09 per share. During the third quarter, the Corporation announced it had entered into a definitive agreement to sell its European operations. Although that sale has not yet been consummated, results from European operations have been reported as discontinued operations for the 2012 and 2011 periods. Those operations reported net sales of $27 million and operating profit of $1 million for the third quarter of 2012, and $29 million and $3 million, respectively, for the third quarter of 2011.

"Our innovative new products, modest demand improvement, new wallboard pricing strategy and recent restructuring efforts contributed to our third consecutive quarter of positive operating profit," said James S. Metcalf, Chairman, President and CEO. "We achieved continued wallboard volume growth, and price was essentially flat compared to the prior quarter, with any improvement offset by regional and channel mix and freight cost fluctuations. In addition to strengthening our core businesses, the announced sale of our European operations is another great example of USG's Plan to Win. Completion of this sale will allow us to reallocate assets from a lower-growth market to joint ventures supporting higher-growth markets in India, which will allow us to diversify the company's earnings and offset some of the cyclicality in our core businesses."

The corporation's adjusted operating profit from continuing operations was $32 million in the third quarter of 2012, which compares to an adjusted operating loss from continuing operations of $20 million in the third quarter of 2011. A reconciliation of adjusted operating profit to operating profit is set forth on a schedule attached hereto. The operating profit from continuing operations in the third quarter of 2012 includes $3 million in restructuring and long-lived asset impairment charges and a $3 million increase in reserves for potential claims.

"While wallboard demand remains significantly below historical averages," Metcalf said. "I am pleased with our progress in 2012, and look forward to further improvement as we continue working towards positive net earnings."

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 website, www.usg.com, in the Investor Relations section. The dial-in number for the conference call is 1-800-315-2944 (1-847-413-2929 for international callers), and the pass code is 33348213. After the live webcast, a replay of the webcast will be available on the USG website. In addition, a telephonic replay of the call will be available until Friday, October 26, 2012. The replay dial-in number is 1-888-843-7419 (1-630-652-3042 for international callers), and the pass code is 33348213.

USG Corporation is a manufacturer and distributor of high-performance building systems through its United States Gypsum Company, USG Interiors, LLC, L&W Supply Corporation and other subsidiaries. Headquartered in Chicago, USG's worldwide operations serve the commercial, residential, and repair and remodel construction markets. 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 website 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 for us and the industry; changes in laws or regulations, including environmental and safety regulations; the outcome in contested litigation matters; our ability to complete surplus asset sales and other divestitures; 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 STATEMENTS OF OPERATIONS

(dollars in millions except per share data)

(Unaudited)

Three Months

Nine Months

ended September 30,

ended September 30,

2012

2011 (1)

2012

2011 (1)

Net sales

$

828

$

763

$

2,409

$

2,184

Cost of products sold

722

717

2,099

2,064

Gross profit

106

46

310

120

Selling and administrative expenses

74

66

224

213

Restructuring and long-lived asset

impairment charges

3

59

5

70

Operating profit (loss)

29

(79

)

81

(163

)

Interest expense

50

54

154

158

Interest income

(1

)

(1

)

(3

)

(5

)

Loss on extinguishment of debt

-

-

41

-

Other income, net

(1

)

-

(2

)

(1

)

Loss from continuing operations before income taxes

(19

)

(132

)

(109

)

(315

)

Income tax expense (benefit)

11

(15

)

9

(19

)

Loss from continuing operations

(30

)

(117

)

(118

)

(296

)

Income from discontinued operations

1

2

5

6

Net loss

$

(29

)

$

(115

)

$

(113

)

$

(290

)

Earnings per common share - basic:

Loss from continuing operations

$

(0.29

)

$

(1.11

)

$

(1.11

)

$

(2.85

)

Income from discontinued operations

0.01

0.02

0.04

0.05

Net loss

$

(0.28

)

$

(1.09

)

$

(1.07

)

$

(2.80

)

Earnings per common share - diluted:

Loss from continuing operations

$

(0.29

)

$

(1.11

)

$

(1.11

)

$

(2.85

)

Income from discontinued operations

0.01

0.02

0.04

0.05

Net loss

$

(0.28

)

$

(1.09

)

$

(1.07

)

$

(2.80

)

Average common shares

107,380,328

105,304,781

106,128,123

103,592,899

Average diluted common shares

107,380,328

105,304,781

106,128,123

103,592,899

(1) Prior-period amounts have been adjusted to reflect our European businesses as discontinued operations.

USG CORPORATION

CONSOLIDATED BALANCE SHEETS

(dollars in millions)

(Unaudited)

As of

As of

September 30,

December 31,

2012

2011 (1)

Assets

Current Assets:

Cash and cash equivalents

$

437

$

365

Short-term marketable securities

89

164

Restricted cash

18

1

Receivables (net of reserves - $15 and $17)

347

316

Inventories

302

292

Income taxes receivable

7

8

Deferred income taxes

4

4

Other current assets

44

54

Assets related to discontinued operations

38

35

Total current assets

1,286

1,239

Long-term marketable securities

41

122

Property, plant and equipment (net of accumulated

depreciation and depletion - $1,709 and $1,602)

2,083

2,104

Deferred income taxes

21

25

Other assets

233

229

Total Assets

$

3,664

$

3,719

Liabilities and Stockholders' Equity

Current Liabilities:

Accounts payable

$

244

$

226

Accrued expenses

276

258

Current portion of long-term debt

5

7

Deferred income taxes

12

12

Income taxes payable

3

6

Liabilities related to discontinued operations

17

15

Total current liabilities

557

524

Long-term debt

2,306

2,297

Deferred income taxes

6

7

Other liabilities

673

735

Total liabilities

3,542

3,563

Stockholders' Equity:

Preferred stock

-

-

Common stock

11

10

Treasury stock

-

-

Additional paid-in capital

2,592

2,561

Accumulated other comprehensive loss

(139

)

(174

)

Retained earnings (accumulated deficit)

(2,355

)

(2,241

)

Stockholders' equity of parent

109

156

Noncontrolling interest

13

-

Total stockholders' equity including noncontrolling interest

122

156

Total Liabilities and Stockholders' Equity

$

3,664

$

3,719

Other Information:

Total cash and cash equivalents and marketable securities

$

567

$

651

Borrowing availability from lines of credit

214

183

Total Liquidity

$

781

$

834

(1) Prior-period amounts have been adjusted to reflect our European businesses as discontinued operations.

USG CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in millions)

(Unaudited)

Nine Months

ended September 30,

2012

2011 (1)

Operating Activities

Net loss

$

(113

)

$

(290

)

Less: Inc