United States Gypsum Co., the U.S. subsidiary of USG Corp., reported today that its operating loss for the second quarter narrowed to $16 million from $25 million in the year-earlier period. Meanwhile, USG's distribution unit, L&W Supply Corp. and its subsidiaries, posted an operating loss of $22 million, improving from a $26 million loss in the second quarter of 2009.

Net sales at United States Gypsum between April and June slipped 6.7% to $336 million, in part because shipments of gypsum wallboard fell 9.3% to 1.07 billion square feet and the average realized price for USG's Sheetrock brand gypsum wallboard fell 5.5% from 2009's second quarter to $114.17 per thousand square feet.

The year's second-quarter operating losses included a restructuring charge of $5 million, whereas in the April-June 2009 period USG took a $10 million restructuring charge. " The reduction in operating loss was primarily attributable to an increase in gross margins for several complementary product lines, including Durock brand cement boards and Fiberock brand gypsum fiber panels, as well as improved efficiencies in the company's gypsum wallboard manufacturing operations," USG said in a statement.

L&W's net sales fell 16% to $282 million as the housing industry slowdown continued to hammer operations. "Second quarter 2010 net sales reflect lower volumes in all major product categories as a result of weaker residential and commercial construction demand," the company said. "Gypsum wallboard sales declined 22% while sales of products other than wallboard were down 14% compared with last year's second quarter."

The latest numbers include $1 million worth of restructuring charges compared with $5 million in the second quarter of 2009. L&W Supply closed one distribution center during the quarter, bringing its total as of June 30 to 160. That center is the fourth it has closed this year. L&W has shuttered approximately 101 distribution centers since January 2007, company financial records show.

The losses at United States Gypsum and L&W were partly offset by better numbers elsewhere to give all of USG Corp. an operating loss of $25 million and a net loss of $74 million. That's an improvement from the $82 million operating loss and $110 million net loss incurred in the second quarter of 2009.

"The significant reduction in the company's operating loss in the second quarter demonstrates the effectiveness of our many initiatives to improve margins and reduce overall costs," William C. Foote, chairman and CEO, said in a statement. "Market conditions during the quarter were similar to the prior quarter and modestly better than the environment experienced last year, but demand remains exceptionally weak. When the economy recovers and demand improves, we expect to achieve substantial operating leverage in our businesses."