United States Gypsum Co., the American branch of USG Corp., reported its net sales dropped 32% in the fourth quarter to $315 million, USG announced today. But a $97 million litigation settlement enabled it to record a $57 million operating profit for the final three months of last year.
Meanwhile, USG's building products distribution unit--L&W Supply Corp. and its subsidiaries--recorded an even worse sales downturn: a 38% slump in the fourth quarter from the year-earlier period to reach $270 million.
U.S. Gypsum's sales decline stemmed primarily from two factors. First, the realized selling price of Sheetrock brand gypsum wallboard dropped 8% to $109.86 per thousand square feet from $118.98 in the final quarter of 2008. (It also was a drop from the third quarter of this year, when the average selling price was $115.33.) Second, wallboard shipments declined 26% to1.06 billion square feet from 1.44 billion square feet in the year-earlier period.
L&W's reduced fourth-quarter 2009 net sales to $315 million, vs. $415 million in the year-earlier period, reflected lower volumes in all major product categories as a result of weaker commercial and residential construction demand, the company said. Sales of gypsum wallboard and the aggregate sales of other products were each down 38% compared with last year's fourth quarter.
L&W's operating loss improved to $63 million for the quarter from a $256 million loss the previous year The October-December 2009 period included $25 million in restructuring charges.
The $91 million litigation settlement definitely helped U.S. Gypsum's income statement, enabling it to swing from an operating loss of $81 million in the fourth quarter of 2008 to a $57 million profit this time. But the company also noted that profitability for joint treatment and cement board products more than offset the negative effects of lower wallboard prices and volumes. Overhead and other costs were reduced, it added.
For the year, U.S. Gypsum's sales slid 25.9% to $1.43 billion from $1.93 billion, but its operating loss shrank dramatically to $20 million in 2009 from $261 million in 2008.
L&W's sales for the year fell even more, by 35.3% to $1.29 billion from $1.99 billion, but it couldn't match U.S. Gypsum's improvement on the profit side. Its operating loss of $172 million was only 29.2% better than the $243 million loss it had in 2008.
Company-wide, USG reported its net loss in the quarter deepened significantly to $598 million from $349 million in the fourth quarter of 2008. The net loss included a non-cash, $548 million deferred tax asset valuation allowance, $31 million of restructuring, impairment and other charges, and $97 million of income from the settlement of a lawsuit, the Chicago-based company said. Net sales for the fourth quarter fell more than 36% to $720 million from $981 million in the year before.
For the full year, USG reported a $787 million net loss on sales of $3.2 billion. In contrast, in 2008 it had a net loss of $463 million on net sales of $4.6 billion.
"We anticipated very difficult market conditions in 2009 and took action accordingly," said William C. Foote, USG Chairman and CEO. "Structural cost reduction initiatives and aggressive management of product margins helped to mitigate the impact of exceptionally weak demand.
"A continued sharp focus on overall spending and working capital, plus the successful settlement of the Lafarge lawsuit, added to the corporation's strong cash and liquidity positions," Foote added.