Business Highlights
Fourth Quarter 2017 vs. Fourth Quarter 2016
• Net sales increased to $831 million from $734 million
• Operating profit increased to $87 million from $59 million; adjusted operating profit increased to $106 million from $96 million
• Net loss of $62 million compared to net income of $307 million; adjusted net income increased to $77 million from $65 million
• Net loss in the fourth quarter of 2017 includes $138 million of income tax expense resulting from the Tax Cut and Reform Bill
Full Year 2017 vs. Full Year 2016
• Net sales increased to $3.2 billion from $3.0 billion
• Operating profit decreased to $367 million from $394 million; adjusted operating profit decreased to $438 million from $470 million
• Net income decreased to $95 million from $510 million; adjusted net income increased to $264 million from $251 million
USG Corporation (NYSE:USG), an industry leading manufacturer of building products and innovative solutions, today reported results for the fourth quarter and full year of 2017. The corporation also announced an increase in the share repurchase authorization, bringing the total authorization to $500 million.
“We had an outstanding close to a solid year for USG. The combination of focused operational performance by our manufacturing facilities and a high level of service to our customers enabled us to profitably grow our business, with net sales increasing by 13 percent and adjusted operating profit by 10 percent,” said Jennifer F. Scanlon, president and chief executive officer of USG Corporation. “We continued to invest in the commercialization of recently launched products and progressed on our advanced manufacturing initiatives in the fourth quarter.”
On a consolidated basis in the fourth quarter of 2017, net sales were $831 million, compared to $734 million in the fourth quarter of 2016. Operating profit increased to $87 million from $59 million, while adjusted operating profit increased to $106 million from $96 million in the fourth quarter of 2017 compared to the fourth quarter of 2016.
USG recorded $62 million in net loss, or $0.44 loss per diluted share, for the fourth quarter of 2017, compared to net income of $307 million, or $2.07 per diluted share, for the fourth quarter of 2016. Net loss in the fourth quarter of 2017 includes $138 million of income tax expense resulting from the Tax Cut and Reform Bill whereas 2016 net income includes $279 million of gain on sale of discontinued operations stemming from the sale of L&W Supply. On an adjusted basis, net income of $77 million, or $0.53 per diluted share, for the fourth quarter of 2017 increased from $65 million, or $0.44 per diluted share, for the fourth quarter of 2016. A full reconciliation of GAAP to adjusted metrics is set forth on an attached schedule.
The U.S. Wallboard & Surfaces segment generated $80 million of operating profit in the fourth quarter of 2017. On an adjusted basis, operating profit of $81 million in the U.S. Wallboard & Surfaces segment improved by $8 million over the fourth quarter of 2016. Wallboard volumes in the United States increased approximately 14% while wallboard price was down 4% from the fourth quarter of 2016. On a sequential basis, wallboard price decreased 1% from the third quarter due to increased freight. Surfaces products drove $2 million of improved profitability in the U.S. Wallboard & Surfaces segment.
The U.S. Performance Materials segment generated $5 million of operating profit in the fourth quarter of 2017. On an adjusted basis, operating profit of $5 million in the U.S. Performance Materials segment declined by $3 million over the fourth quarter of 2016. Higher freight and input costs coupled with additional sales and marketing expenses to support growth drove the decrease in operating profit.
The U.S. Ceilings segment generated $25 million of operating profit in the fourth quarter of 2017. On an adjusted basis, operating profit of $26 million increased by $9 million from the fourth quarter of 2016 due to improved pricing and volumes across tile and grid products.
The USG Boral business generated $17 million of equity income in the fourth quarter of 2017. On an adjusted basis, equity income increased $1 million compared to the fourth quarter of 2016.
USG recorded full year 2017 net sales of $3.2 billion, net income of $95 million, and diluted earnings per share of $0.65compared to net sales of $3.0 billion, net income of $510 million and diluted earnings per share of $3.46 in 2016. On an adjusted basis, the corporation generated full year 2017 net income of $264 million, or diluted earnings per share of $1.80. For comparative purposes, on an adjusted basis, USG recorded net income of $251 million, or diluted earnings per share of $1.70for the full year of 2016.
USG also announced today that its Board of Directors approved a $250 million increase to its share repurchase program, raising the total authorization to $500 million. As of December 31, 2017, $66 million remained under the corporation’s previously authorized $250 million share repurchase program. Although the Board of Directors did not set an expiration date for the share repurchase program, the corporation expects to execute the program within 18 months. Repurchases are expected be made from free cash flow generated from the business. Based on the January 31, 2018 closing share price, approximately 8 million shares, or 6 percent of the corporation’s market capitalization as of January 31, 2018, could be repurchased based on the remaining $316 million authorization under the share repurchase program. The corporation may repurchase shares from time to time in the open market or in other privately negotiated transactions, subject to market conditions.
“Our new organizational structure will enable us to be closer to all of our customers and deliver better value for them. Increasing customer loyalty will be the key to delivering results for our shareholders,” said Scanlon. “I am confident in our strategy and the ability of our team to exceed the expectations of our customers and shareholders.”
A conference call was held today at 9:00 a.m. Eastern time (8:00 a.m. Central time) during which USG senior management discussed the corporation’s operating results. A webcast replay of the conference call is available on the USG investor relations website, investor.usg.com, where the accompanying presentation materials, as well as the full text of USG’s 4Q17 earnings release including all tables, can be found. In addition, a telephonic replay of the call will be available until Friday, March 3, 2018. The replay dial-in number is 1-888-843-7419 (1-630-652-3042 for international callers), and the pass code is 46214317.
About 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 Gypsum, Performance Materials, Ceilings, and USG Boral divisions. 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.