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[October 2000]
USG Corporation Reports Net Sales of $895 Million and Net Earnings of $65 Million for Third Quarter
Results decline due to lower selling prices and higher gypsum wallboard costs
USG Corporation (NYSE:USG) today reported third quarter 2000 net sales of $895 million and net earnings of $65 million. This compared with net sales of $952 million and net earnings of $116 million in the third quarter last year. Diluted earnings per share for the third quarter of 2000 were $1.48, compared with $2.32 a year ago.
"The gypsum wallboard market, our largest single business, has continued to transition from one of short supply to one of free supply. Selling prices have fallen significantly and, along with higher energy and raw materials costs, led to lower sales and earnings. We continue to show solid results in our other core businesses and progress in executing our growth strategies," said William C. Foote, USG Corporation Chairman, CEO and President.
Net sales for the first nine months of 2000 were $2,772 million, versus net sales of $2,670 million for the same period in 1999. Net earnings for the first nine months were $264 million, compared to $306 million last year. Diluted earnings per share for the first nine months of 2000 were $5.66, compared to $6.09 for the first nine months of 1999. Foote cited several examples of how USG's strategies are producing results and how management is responding to changing market conditions. "Our strategies are focused on creating shareholder value by serving our customers better and becoming more efficient and innovative. So far this year, we have grown market share in each of our core businesses, reduced expenses and brought new products to market. We are also making decisions to deal with a more challenging marketplace. Yesterday, we announced closure of an old, inefficient crushing and ship-loading operation in Alabaster, Michigan, and a high-cost wallboard production line in Gypsum, Ohio. The Gypsum, Ohio, operation is the fourth high-cost wallboard line we have closed in the past 12 months. These initiatives represent nearly 1 billion square feet of old capacity, which have now been replaced with new, low-cost capacity," commented Foote.
Like several other building materials companies, USG's stock declined significantly after Owens Corning filed for bankruptcy on October 5. Addressing investor concerns about USG's asbestos liability, Foote observed, "USG believes that it is in a very different situation than Owens Corning given the nature of the asbestos-containing products we produced, the strength of our balance sheet and our approach to resolving our asbestos litigation."
Looking to the future, Foote remarked, "We anticipate continued softness in our gypsum wallboard business for the remainder of this year and into 2001. Pressure on pricing is likely to continue until other producers begin to close capacity. In the meantime, we remain focused on our strategies to grow our businesses, improve operating efficiencies and manage our asbestos liability."
ENDS