USG Corp.'s distribution unit closed 22 more branches in October and recorded an operating loss of $73 million for the third quarter, USG reported today. Meanwhile, USG's U.S. Gypsum Co. unit reduced its operating loss from a year earlier despite a 27.3% drop in sales.

L&W Supply Corp. and its subsidiaries swung to an operating loss of $73 million in the third quarter from an operating profit of $5 million in the year-earlier period, in large part because of $41 million worth of goodwill and asset impairment charges and another $8 million in restructuring charges in the latest quarter. Net sales shrank 37% decline to $329 million.

L&W closed 12 locations in 2007, 54 locations in 2008, 15 in the first nine months of 2009 and another 22 in October, USG said. That leaves it with 162 distribution centers.

U.S. Gypsum recorded an operating loss of $31 million for the July-September period, improving from its $54 million operating loss a year earlier, despite net sales in the quarter dropping to $354 million from 2008's $494 million. "The decline in sales was primarily attributable to a 32% decline in shipments of Sheetrock brand gypsum wallboard," the company said. "Sales of complementary products also declined. The operating loss improvement was primarily due to increased profitability for gypsum wallboard, where unit manufacturing costs decreased compared to the third quarter of last year, and improved profitability for joint treatment products. Significantly lower overhead and other costs resulting from restructuring actions taken during the past year also contributed to the improvement."

In volume terms, shipments of gypsum wallboard declined 31.5% from the year-earlier period to 1.17 billion square feet. The company's average realized selling price for that wallboard was $115.33 per thousand quare feet, roughly what it sold for last year but down from the second-quarter average of $120.79. "The decline since the second quarter reflects market conditions and adjustments the company made to balance price and volume," USG said.

Company-wide, USG reported its net loss nearly tripled from a year before, to $94 million from $36 million, as sales tumbled 31.5% to $822 million from $1.2 billion.

"Our businesses continued to experience weak demand that resulted in lower sales in the third quarter," William C. Foote, USG chairman and CEO, said in a statement. "In response to the steep sales declines over the past year we have focused intensely on customer satisfaction, cost reductions, product margins and liquidity. These initiatives have been effective in mitigating operating losses caused by dramatically lower demand. We have also been successful in generating cash from our operating activities and managing liquidity."