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USG Corporation Reports Second Quarter 2017 Results

CHICAGO--(BUSINESS WIRE)--USG Corporation (NYSE:USG), an industry leading manufacturer of building products and innovative solutions, today reported results for the second quarter of 2017.

“Our US wallboard shipments in the second quarter of 2017 were up double-digits and were at the highest levels we have seen since 2008,” said Jennifer F. Scanlon, President and CEO. “However, rising commodity costs and a competitive pricing environment weighed on our operating margins and second quarter performance. We are taking actions to address inflation and will continue our strategic investment in advanced manufacturing to deliver profitable growth.”

On a consolidated basis in the second quarter of 2017, net sales were $811 million, compared to $769 million in the second quarter of 2016. Operating profit decreased to $96 million from $122 million, while adjusted operating profit decreased to $117 million from $127 million in the second quarter of 2017 compared to the second quarter of 2016.

USG generated $36 million in net income and $0.24 per diluted share in the second quarter of 2017, compared to $74 million and $0.50 per diluted share in the second quarter of 2016. On an adjusted basis, net income of $64 million and diluted earnings per share of $0.44 in the second quarter of 2017 increased from $61 million and $0.42, respectively, in the second quarter of 2016. A full reconciliation of GAAP to adjusted metrics is set forth on an attached schedule.

The corporation’s Gypsum segment generated $90 million of operating profit in the second quarter of 2017. On an adjusted basis, operating profit of $95 million in the Gypsum segment decreased by $6 million from the second quarter of 2016. US wallboard volumes increased by 10% in the second quarter of 2017. US wallboard price decreased by approximately 1% due primarily to competitive pricing pressures and the impact of transitioning certain wallboard volumes from wholly-owned distribution at L&W Supply, which was sold in 2016, to independent distribution. US wallboard manufacturing costs increased by $8 million due almost exclusively to inflation in waste paper costs.

The Ceilings segment earned $23 million of operating profit in the second quarter of 2017. On an adjusted basis, operating profit of $24 million in the Ceilings segment decreased by $8 million from the second quarter of 2016. The reduction in operating profit was driven primarily by higher steel costs as well as lower ceiling tile pricing.

The USG Boral business generated $14 million of equity income in the second quarter of 2017, a decrease of $2 million from the second quarter of 2016. The impact of increased plasterboard volumes was more than offset by higher manufacturing costs and an increase in withholding taxes on an intercompany dividend.

“This quarter we launched the Commercial Construction Index, a new quarterly index that will help measure the health and vitality of the commercial construction industry,” added Scanlon. "The initial results from the survey validate our efforts to create and bring to market innovative products like Ensemble™ Monolithic Acoustical Ceiling Systems and Sheetrock® Brand EcoSmart Panels, which we introduced this year. These products address challenges faced by our industry, including speed of construction, labor availability, and sustainability.”

A conference call is being held today at 9:00 a.m. Eastern time (8:00 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 investor relations website, investor.usg.com, where the accompanying presentation materials can be found. The dial-in number for the conference call is 1-888-771-4371 in the United States and Canada (1-847-585-4405 for other international callers), and the pass code is 45163620. 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, August 25, 2017. The replay dial-in number is 1-888-843-7419 (1-630-652-3042 for international callers), and the pass code is 45163620.

USG Corporation

USG Corporation is an industry-leading manufacturer of building products and innovative solutions. Headquartered in Chicago, USG serves construction markets around the world through its United States Gypsum Company and USG Interiors, LLC subsidiaries and its international subsidiaries, including its USG Boral Building Products joint venture. Its wall, ceiling, flooring, sheathing and roofing products provide the solutions that enable customers to build the outstanding spaces where people live, work and play. Its USG Boral Building Products joint venture is a leading plasterboard and ceilings producer across Asia, Australasia and the Middle East. For additional information, visit www.usg.com.

Non-GAAP Financial Measures

In this press release, the corporation’s financial results are provided both in accordance with accounting principles generally accepted in the United States of America (GAAP) and using certain non-GAAP financial measures. In particular, the corporation presents the non-GAAP financial measures adjusted operating profit, adjusted net income, adjusted selling and administrative expenses, and adjusted earnings per diluted share, which exclude certain items. The non-GAAP financial measures are included as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help investors’ ability to analyze underlying trends in the corporation’s business, evaluate its performance relative to other companies in its industry and provide useful information to both management and investors by excluding certain items that may not be indicative of the corporation’s core operating results. In addition, adjusted operating profit includes the income from the corporation's equity method investments, including USG Boral Building Products, because management views the joint ventures as a business unit, even though the corporation’s share of the joint venture is 50%. In addition, the corporation uses adjusted net income as a component in the measurement of incentive compensation. Prior year adjusted results also exclude results from Gypsum Transportation Limited (GTL), a shipping operation that the corporation has exited. Adjustments to net earnings are shown net of the tax effect computed at applicable statutory rates. The non-GAAP measures should not be considered a substitute for or superior to GAAP results and may vary from others in the industry. For further information related to the corporation’s use of non-GAAP financial measures, and reconciliations to the nearest GAAP measures, see the schedules attached hereto.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995...


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