USG Corp.'s president and chief executive officer endorsed the company's continued ownership of L&W Supply, arguing that the specialty building materials distributor "makes the corporation smarter" and USG's overall portfolio stronger.

"We view L&W as a strategic part of the corporation," James Metcalf told analysts in a conference call Wednesday shortly after the company announced L&W Supply posted an operating loss of $10 million in the third quarter despite a 6% rise in sales and that it had closed 12 branches. Chicago-based L&W Supply ranks sixth on the latest ProSales 100, with sales of $1.06 billion in 2011. Its latest loss was a drag on the overall company, which swung to an operating profit of $29 million from a $79 million loss in 2011's third quarter.

During the conference call (view transcript), one analyst asked why USG would want to keep L&W Supply when even during the housing market's peak, the profit margin at the drywall and commercial products specialty dealer was only one-third that of its core manufacturing group. But Metcalf said L&W Supply's benefits should be measured in more than just profits.

"It makes the corporation smarter," he said. "We are on the ground every day talking to contractors. We aren't hearing it second-and third-hand through other distribution. ... They make us a better company for our other customers because we sit in their seat. We know how important working capital is, workmen's comp, all of the things that our other customers have to deal with.

"L&W just made some decisions this quarter of taking some additional branches out," Metcalf continued. "So be patient, the results are going to speak for themselves. And I think through the cycle, it makes USG a much better play."