USG Corporation Reports First Quarter 2015 Results
April 27, 2015
USG Corporation, a leading building products company, reported results for the first quarter of 2015. “USG is off to a great start in 2015, led by the performance of our U.S. Gypsum and U.S. Ceilings businesses,” said James S. Metcalf, chairman, president, and CEO. “We generated operating margin improvement in these businesses by achieving price increases, focusing on manufacturing cost control, and tailoring our spending on investments in these businesses.”
On a consolidated basis in the first quarter of 2015, net sales were $909 million, up 7 percent from the first quarter of 2014. Operating profit improved 15 percent to $76 million in the first quarter of 2015. The corporation’s adjusted operating profit was $84 million in the first quarter of 2015, which includes equity method investment income of $8 million from the USG Boral Building Products joint venture, compared to an adjusted operating profit of $69 million in the first quarter of 2014. USG generated $24 million in net income and $0.16 per diluted share in the first quarter of 2015.
Adjusted net income and diluted earnings per share, which adjusts for costs incurred on a refinanced debt obligation, more than doubled in the first quarter of 2015 at $43 million and $0.29 cents per diluted share, respectively. A full reconciliation of adjusted net income to net income, adjusted earnings per share to earnings per share, and adjusted operating profit to operating profit is set forth on a schedule attached hereto.
The corporation’s Gypsum segment generated $68 million of operating profit in the first quarter of 2015, led by the United States Gypsum business that improved operating margins by 270 basis points. The United States Gypsum business realized improved volumes, lower costs, and also earned a wallboard price increase that was achieved in all channels that contributed $4 million of additional operating profit in the first quarter of 2015.
Adjusting for $8 million in income from its non-core shipping business and a $7 million non-cash benefit in its mining business in the first quarter of 2014, the Gypsum segment realized $18 million of improved operating profit and 250 basis points of operating margin improvement.
“While weather conditions were more favorable, we also saw organic volume growth across all of our businesses. Our non-wallboard products in the Gypsum business also played a part in our first quarter success by generating $5 million of incremental profit,” said Metcalf.
USG announced that it has entered into agreements to sell the two ships in its non-core shipping business, Gypsum Transportation Limited (GTL), for $42 million. The sales of the ships are expected to close in April 2015.
The corporation’s Ceilings segment earned $21 million of operating profit in the first quarter of 2015, an increase of 40 percent over the first quarter of 2014, with United States Ceilings operating margins expanding by 630 basis points.
The corporation also revised its selling, general, and administrative (SG&A) spending outlook for the full year of 2015. “While we are seeing improvements in all of our end markets, we believe that this recovery will be more elongated than past housing and construction recoveries in the United States. To that end, we are scaling back our targeted SG&A spend in 2015 to improve free cash flow available for paying down debt,” said Metcalf. The corporation revised its projected full year 2015 SG&A expense downward by $20 million to $325 million.
“Our customers continue to recognize USG’s value proposition in the marketplace, and it’s this commitment to quality, service, and innovation that differentiates us from our competition, enables us to capture price premiums on our products, and positions the company for future success,” Metcalf said. “With demand increasing in all of our end markets in 2015, I am excited about our prospects for the full year.”