The Gypsum Association published Q4’16 wholesale gypsum wallboard shipments this morning. Q4’16 total North American wallboard shipments by U.S. manufacturers increased 9.6% YOY vs. down 4.0% YOY in Q4’15 and up 6.6% YOY in Q3’16. Q4’16 U.S. shipments increased 11.5% YOY vs. down 3.4% YOY in Q4’15 and up 2.0% YOY in Q3’16. This is above the expectation of up mid- to high-single digits YOY going into today’s release. Note that Q4’16 comps are relatively easy. Given the push out of the 2015 price increase to the spring, there essentially was no potential pre-buy at the end of 2015 as there had been in prior years (hence setting up for tough comps in calendar Q4’15). Basics and implications for Eagle Materials (EXP – Buy; $99.74), USG Corporation (USG – Buy; $28.58), and Continental Building Products (CBPX – Not rated; $22.27) include the following:

•             Q4’16 North American gypsum wallboard shipments increased 9.6% YOY to 6.3BSF, and U.S. gypsum wallboard shipments increased 11.5% YOY (see Figure 1). This compares against a Q3’16 North American increase of 6.6% YOY and the 4.0% decline in Q4’15. On a sequential basis, Q4’16 North American shipments were up 1.5% and U.S. shipments were up 2.8%. Shipments to all U.S. regions posted positive YOY growth rates, ranging from low-single digits to high teens. Regional results were led by the South Atlantic (DE, D.C., FL, GA, MD, NC, SC, VA, WV), the East South Central (AL, KY, MS, TN) and the Mountain (AZ, CO, ID, MT, NV, NM, UT, WY) regions with a 19.3%, 18.8% and 17.0% YOY growth, respectively. The Middle Atlantic (NJ, NY, PA) region again posted the smallest YOY growth (up 0.7% YOY) among all regions. Shipments to the Canadian provinces dropped 31.6% YOY, the largest YOY decline this year. Figure 2 details the states reporting under each census region. Figure 3 provides the historical wholesale shipments.