Form 8-K USG CORP For: Apr 23
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form 8-K
CURRENT
REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of
earliest event reported): April
23, 2015 (April
23, 2015)
USG Corporation |
(Exact name of registrant as specified in its charter) |
Commission File Number: 1-8864
Delaware |
36-3329400 |
|
(State or other jurisdiction |
(IRS Employer Identification No.) |
550 West Adams Street, Chicago, Illinois |
60661-3676 |
|
(Address of principal executive offices) |
(Zip Code) |
(312) 436-4000 |
||
Registrant’s telephone number, including area code |
Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions (see General Instruction A.2.
below):
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13c-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Section 2 – Financial Information
Item 2.02 Results of Operations and Financial Condition.
On April 23, 2015, USG Corporation issued a press release containing earnings information for the quarter ended March 31, 2015. A copy of the press release is furnished as Exhibit 99.1 hereto. As previously announced, a conference call and webcast to discuss first quarter 2015 results will be held at 8:00 a.m. Central Time on April 23, 2015. A copy of the slides to be presented as part of the webcast is furnished as Exhibit 99.2 hereto.
The information contained in this report, including the Exhibits hereto, shall not be deemed to be filed for purposes of the Securities Exchange Act of 1934, as amended, and it shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
Section 9 – Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit 99.1 – USG Corporation press release dated April 23, 2015.
Exhibit 99.2 – USG Corporation presentation slides dated April 23, 2015.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
USG CORPORATION |
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Registrant |
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Date: |
April 23, 2015 |
By: |
/s/ Matthew F. Hilzinger |
|
Matthew F. Hilzinger, |
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Executive Vice President |
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and Chief Financial Officer |
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EXHIBIT INDEX
Exhibit No. |
Exhibit |
|
99.1 |
USG Corporation press release dated April 23, 2015 |
|
99.2 |
USG Corporation presentation slides dated April 23, 2015 |
Exhibit 99.1
USG Corporation Reports First Quarter 2015 Results
First Quarter 2015 vs. First Quarter 2014
Business Highlights
- Net sales increase 7% to $909 million
- United States Gypsum operating profit margin improvement of 270 basis points to 13.8%
- United States Ceilings operating profit margin improvement of 630 basis points to 16.5%
- Entered into agreement to sell GTL ships for $42 million
CHICAGO--(BUSINESS WIRE)--April 23, 2015--USG Corporation (NYSE: USG), a leading building products company, today reported results for the first quarter of 2015. “USG is off to a great start in 2015, led by the performance of our U.S. Gypsum and U.S. Ceilings businesses,” said James S. Metcalf, Chairman, President, and CEO. “We generated operating margin improvement in these businesses by achieving price increases, focusing on manufacturing cost control, and tailoring our spending on investments in these businesses.”
On a consolidated basis in the first quarter of 2015, net sales were $909 million, up 7 percent from the first quarter of 2014. Operating profit improved 15 percent to $76 million in the first quarter of 2015. The corporation’s adjusted operating profit was $84 million in the first quarter of 2015, which includes equity method investment income of $8 million from the USG Boral Building Products joint venture, compared to an adjusted operating profit of $69 million in the first quarter of 2014. USG generated $24 million in net income and $0.16 per diluted share in the first quarter of 2015. Adjusted net income and diluted earnings per share, which adjusts for costs incurred on a refinanced debt obligation, more than doubled in the first quarter of 2015 at $43 million and $0.29 cents per diluted share, respectively. A full reconciliation of adjusted net income to net income, adjusted earnings per share to earnings per share, and adjusted operating profit to operating profit is set forth on a schedule attached hereto.
The corporation’s Gypsum segment generated $68 million of operating profit in the first quarter of 2015, led by the United States Gypsum business that improved operating margins by 270 basis points. The United States Gypsum business realized improved volumes, lower costs, and also earned a wallboard price increase that was achieved in all channels that contributed $4 million of additional operating profit in the first quarter of 2015. Adjusting for $8 million in income from its non-core shipping business and a $7 million non-cash benefit in its mining business in the first quarter of 2014, the Gypsum segment realized $18 million of improved operating profit and 250 basis points of operating margin improvement.
“While weather conditions were more favorable, we also saw organic volume growth across all of our businesses. Our non-wallboard products in the Gypsum business also played a part in our first quarter success by generating $5 million of incremental profit,” Mr. Metcalf said.
USG announced that it has entered into agreements to sell the two ships in its non-core shipping business, Gypsum Transportation Limited (GTL), for $42 million. The sales of the ships are expected to close in April 2015.
The corporation’s Ceilings segment earned $21 million of operating profit in the first quarter of 2015, an increase of 40% over the first quarter of 2014, with United States Ceilings operating margins expanding by 630 basis points.
The corporation also revised its selling, general, and administrative (SG&A) spending outlook for the full year of 2015. “While we are seeing improvements in all of our end markets, we believe that this recovery will be more elongated than past housing and construction recoveries in the United States. To that end, we are scaling back our targeted SG&A spend in 2015 to improve free cash flow available for paying down debt,” Mr. Metcalf said. The corporation revised its projected full year 2015 SG&A expense downward by $20 million to $325 million.
“Our customers continue to recognize USG’s value proposition in the marketplace, and it’s this commitment to quality, service, and innovation that differentiates us from our competition, enables us to capture price premiums on our products, and positions the company for future success,” Mr. Metcalf said. “With demand increasing in all of our end markets in 2015, I am excited about our prospects for the full year.”
A conference call is being held today at 8:00 A.M. Central Time during which USG senior management will discuss the corporation’s operating results. The conference call will be webcast on the USG website, www.usg.com, in the Investor Relations section. The dial-in number for the conference call is 1-800-315-2944 in the United States and Canada (1-847-413-2929 for other international callers), and the pass code is 39347583. After the live webcast, a replay of the webcast will be available on the USG website. In addition, a telephonic replay of the call will be available until Thursday, May 7, 2015. The replay dial-in number is 1-888-843-7419 (1-630-652-3042 for international callers), and the pass code is 39347583.
USG Corporation
USG Corporation is a manufacturer and distributor of innovative, high-performance building systems through its United States Gypsum Company, USG Interiors, LLC, and L&W Supply Corporation subsidiaries and its USG Boral Building Products joint venture. Headquartered in Chicago, USG's worldwide operations serve the commercial, residential, and repair and remodel construction markets, enabling our customers to build the outstanding spaces where people live, work and play. USG wall, ceiling, exterior sheathing, flooring underlayment and roofing systems provide leading-edge building solutions, while L&W Supply branch locations efficiently stock and deliver building materials throughout the United States. USG Boral Building Products is a leading plasterboard & ceilings joint venture across Asia, Australasia, and the Middle East. USG and its subsidiaries are proud sponsors of the U.S. Olympic and Paralympic teams and the Canadian Olympic team. For additional information, visit www.usg.com.
Non-GAAP Financial Measures
In this press release, the corporation’s financial results are provided both in accordance with accounting principles generally accepted in the United States of America (GAAP) and using certain non-GAAP financial measures. In particular, the corporation presents the non-GAAP financial measures adjusted operating profit, operating profit adjusted for results of GTL and non-cash benefit in its mining operations, adjusted net income, and adjusted earnings per basic share, which exclude certain items. In addition, adjusted operating profit includes the corporation’s income from its equity method investments, including the USG Boral Building Products joint venture. The non-GAAP financial measures are included as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help investors’ ability to analyze underlying trends in the corporation’s business, evaluate its performance relative to other companies in its industry and provide useful information to both management and investors by excluding certain items that may not be indicative of the corporation’s core operating results. Adjusted operating profit includes the income from the corporation's equity method investments, including the USG Boral Building Products joint venture, because management views the joint venture as a business unit, even though the corporation’s share of the joint venture is 50%. In addition, the corporation uses adjusted operating profit and adjusted net income as components in the measurement of incentive compensation. The non-GAAP measures should not be considered a substitute for or superior to GAAP results and may vary from others in the industry. For further information related to the corporation’s use of non-GAAP financial measures, and reconciliations to the nearest GAAP measures, see the schedules attached hereto.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 related to management’s expectations about future conditions. Actual business, market or other conditions may differ materially from management’s expectations and, accordingly, may affect our sales and profitability or other results and liquidity. Actual results may differ materially due to various other factors, including: economic conditions, such as the levels of new home and other construction activity, employment levels, the availability of mortgage, construction and other financing, mortgage and other interest rates, housing affordability and supply, the levels of foreclosures and home resales, currency exchange rates and consumer confidence; capital markets conditions and the availability of borrowings under our credit agreement or other financings; our substantial indebtedness and our ability to incur substantial additional indebtedness; competitive conditions, such as price, service and product competition; shortages in raw materials; changes in raw material and energy costs; volatility in the assumptions used to determine the funded status of our pension plans; the loss of one or more major customers and our customers’ ability to meet their financial obligations to us; capacity utilization rates for us and the industry; our ability to expand into new geographic markets and the stability of such markets; our ability to successfully operate the joint venture with Boral Limited, including risks that our joint venture partner, Boral Limited, may not fulfill its obligations as an investor or may take actions that are inconsistent with our objectives; our ability to protect our intellectual property and other proprietary rights; changes in laws or regulations, including environmental and safety regulations; the satisfactory performance of certain business functions by third party service providers; our ability to achieve anticipated savings from cost reduction programs; the outcome in contested litigation matters; the effects of acts of terrorism or war upon domestic and international economies and financial markets; and acts of God. We assume no obligation to update any forward-looking information contained in this press release. Additional information concerning these and other factors may be found in our filings with the Securities and Exchange Commission, including the “Risk Factors” in our most recent Annual Report on Form 10-K.
USG CORPORATION | ||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||
(dollars in millions, except share and per share data) | ||||||||||
(Unaudited) | ||||||||||
Three months ended March 31, | ||||||||||
2015 | 2014 | |||||||||
Net sales | $ | 909 | $ | 850 | ||||||
Cost of products sold | 756 | 707 | ||||||||
Gross profit | 153 | 143 | ||||||||
Selling and administrative expenses | 77 | 77 | ||||||||
Operating profit | 76 | 66 | ||||||||
Income from equity method investments | 8 | 3 | ||||||||
Interest expense | (43 | ) | (47 | ) | ||||||
Interest income | 1 | 1 | ||||||||
Loss on extinguishment of debt | (19 | ) | — | |||||||
Gain on deconsolidation of subsidiaries and consolidated joint ventures | — | 27 | ||||||||
Other expense, net | (1 | ) | — | |||||||
Income from continuing operations before income taxes | 22 | 50 | ||||||||
Income tax benefit (expense) | 2 | (5 | ) | |||||||
Net income | $ | 24 | $ | 45 | ||||||
Basic earnings per common share | $ | 0.16 | $ | 0.33 | ||||||
Diluted earnings per common share | $ | 0.16 | $ | 0.32 | ||||||
Average common shares | 145,381,269 | 137,765,694 | ||||||||
Average diluted common shares | 147,176,197 | 146,920,819 | ||||||||
USG CORPORATION | ||||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||||
(dollars in millions) | ||||||||||
(Unaudited) | ||||||||||
As of | As of | |||||||||
March 31, 2015 | December 31, 2014 | |||||||||
Assets | ||||||||||
Cash and cash equivalents | $ | 153 | $ | 228 | ||||||
Short-term marketable securities | 61 | 96 | ||||||||
Restricted cash | 40 | 1 | ||||||||
Receivables (net of reserves - $20 and $22) | 456 | 404 | ||||||||
Inventories | 328 | 329 | ||||||||
Income taxes receivable | 3 | 3 | ||||||||
Deferred income taxes | 43 | 43 | ||||||||
Other current assets | 80 | 48 | ||||||||
Total current assets | 1,164 | 1,152 | ||||||||
Long-term marketable securities | 28 | 58 | ||||||||
Property, plant and equipment (net of accumulated | ||||||||||
depreciation and depletion - $1,901 and $1,885) | 1,849 | 1,908 | ||||||||
Deferred income taxes | 17 | 19 | ||||||||
Equity method investments | 723 | 735 | ||||||||
Other assets | 125 | 122 | ||||||||
Total assets | $ | 3,906 | $ | 3,994 | ||||||
Liabilities and Stockholders' Equity | ||||||||||
Accounts payable | $ | 236 | $ | 290 | ||||||
Accrued expenses | 199 | 220 | ||||||||
Current portion of long-term debt | 4 | 4 | ||||||||
Income taxes payable | 1 | 1 | ||||||||
Deferred income taxes | 2 | — | ||||||||
Litigation settlement accrual | 48 | 48 | ||||||||
Total current liabilities | 490 | 563 | ||||||||
Long-term debt | 2,202 | 2,205 | ||||||||
Deferred income taxes | 61 | 61 | ||||||||
Pension and other postretirement benefits | 490 | 491 | ||||||||
Other liabilities | 260 | 266 | ||||||||
Total liabilities | 3,503 | 3,586 | ||||||||
Stockholders' Equity: | ||||||||||
Preferred stock | — | — | ||||||||
Common stock | 14 | 14 | ||||||||
Treasury stock | (4 | ) | — | |||||||
Additional paid-in capital | 3,015 | 3,014 | ||||||||
Accumulated other comprehensive loss | (364 | ) | (338 | ) | ||||||
Retained earnings (accumulated deficit) | (2,259 | ) | (2,283 | ) | ||||||
Stockholders' equity of parent | 402 | 407 | ||||||||
Noncontrolling interest | 1 | 1 | ||||||||
Total stockholders' equity including noncontrolling interest | 403 | 408 | ||||||||
Total liabilities and stockholders' equity | $ | 3,906 | $ | 3,994 | ||||||
Other Information: | ||||||||||
Total cash and cash equivalents and marketable securities | $ | 242 | $ | 382 | ||||||
Borrowing availability under existing credit facilities | 341 | 291 | ||||||||
Total Liquidity | $ | 583 | $ | 673 | ||||||
USG CORPORATION | ||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
(dollars in millions) | ||||||||||
(Unaudited) | ||||||||||
Three months ended March 31, | ||||||||||
2015 | 2014 | |||||||||
Operating Activities | ||||||||||
Net income | $ | 24 | $ | 45 | ||||||
Adjustments to reconcile income from continuing operations to net cash: | ||||||||||
Depreciation, depletion and amortization | 36 | 38 | ||||||||
Loss on extinguishment of debt | 19 | — | ||||||||
Share-based compensation expense | 3 | 5 | ||||||||
Deferred income taxes | 1 | 1 | ||||||||
Income from equity method investments | (8 | ) | (3 | ) | ||||||
Gain on deconsolidation of subsidiaries and consolidated joint ventures | — | (27 | ) | |||||||
(Increase) decrease in working capital, net of deconsolidation of subsidiaries and consolidated joint ventures: | ||||||||||
Receivables | (54 | ) | (56 | ) | ||||||
Income taxes receivable | (1 | ) | — | |||||||
Inventories | (2 | ) | (12 | ) | ||||||
Other current assets | 1 | (2 | ) | |||||||
Payables | (43 | ) | (20 | ) | ||||||
Accrued expenses | (23 | ) | (20 | ) | ||||||
Decrease in other assets | — | 1 | ||||||||
Decrease (increase) in pension and other postretirement benefits | 6 | (3 | ) | |||||||
Decrease in other liabilities | (4 | ) | (9 | ) | ||||||
Other, net | 3 | (2 | ) | |||||||
Net cash used for operating activities | $ | (42 | ) | $ | (64 | ) | ||||
Investing Activities | ||||||||||
Purchases of marketable securities | (21 | ) | (49 | ) | ||||||
Sales or maturities of marketable securities | 87 | 53 | ||||||||
Capital expenditures | (29 | ) | (34 | ) | ||||||
Net proceeds from asset dispositions | 1 | — | ||||||||
Investment in joint ventures, including $23 of cash of contributed subsidiaries in 2014 | — | (557 | ) | |||||||
Insurance proceeds | — | 2 | ||||||||
Deposit of restricted cash | (39 | ) | — | |||||||
Net cash used for investing activities | $ | (1 | ) | $ | (585 | ) | ||||
Financing Activities | ||||||||||
Issuance of debt | 350 | 3 | ||||||||
Repayment of debt | (368 | ) | (1 | ) | ||||||
Payment of debt issuance fees | (6 | ) | — | |||||||
Issuance of common stock | 3 | 2 | ||||||||
Repurchases of common stock to satisfy employee tax withholding obligations | (8 | ) | (5 | ) | ||||||
Net cash used for financing activities | $ | (29 | ) | $ | (1 | ) | ||||
(continued) | ||||||||||
USG CORPORATION | ||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) | ||||||||||
(dollars in millions) | ||||||||||
(Unaudited) | ||||||||||
Three months ended March 31, | ||||||||||
2015 | 2014 | |||||||||
Effect of exchange rate changes on cash | (3 | ) | (1 | ) | ||||||
Net decrease in cash and cash equivalents | $ | (75 | ) | $ | (651 | ) | ||||
Cash and cash equivalents at beginning of period | 228 | 810 | ||||||||
Cash and cash equivalents at end of period | $ | 153 | $ | 159 | ||||||
Supplemental Cash Flow Disclosures: | ||||||||||
Interest paid, net of interest capitalized | $ | 50 | $ | 41 | ||||||
Income taxes paid, net of refunds received | 1 | 6 | ||||||||
Noncash Investing and Financing Activities: | ||||||||||
Amount in accounts payable for capital expenditures | 8 | 6 | ||||||||
Contribution of wholly-owned subsidiaries and joint venture investments as consideration for investments in USG Boral Building Products | — | 121 | ||||||||
USG CORPORATION | ||||||||||
CORE BUSINESS RESULTS | ||||||||||
(dollars in millions) | ||||||||||
(Unaudited) | ||||||||||
Three months ended March 31, | ||||||||||
2015 | 2014 (a) | |||||||||
Net Sales: |
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Gypsum: | ||||||||||
United States | $ | 477 | $ | 432 | ||||||
Canada | 76 | 76 | ||||||||
Mexico / Latin America | 48 | 47 | ||||||||
Gypsum Transportation Limited | 10 | 21 | ||||||||
Canadian Mining | — | — | ||||||||
Eliminations | (34 | ) | (31 | ) | ||||||
Total | 577 | 545 | ||||||||
Ceilings: | ||||||||||
United States | 115 | 108 | ||||||||
USG International | — | 7 | ||||||||
Canada | 14 | 13 | ||||||||
Mexico / Latin America | 9 | 10 | ||||||||
Eliminations | (15 | ) | (13 | ) | ||||||
Total | 123 | 125 | ||||||||
Distribution: | ||||||||||
L&W Supply | 334 | 300 | ||||||||
Eliminations | (125 | ) | (120 | ) | ||||||
Total USG Corporation Net Sales | $ | 909 | $ | 850 | ||||||
Operating Profit (Loss): |
||||||||||
Gypsum: | ||||||||||
United States | $ | 66 | $ | 48 | ||||||
Canada | 1 | 3 | ||||||||
Mexico / Latin America | 4 | 4 | ||||||||
Gypsum Transportation Limited | — | 8 | ||||||||
Canadian Mining | (3 | ) | 2 | |||||||
Eliminations | — | — | ||||||||
Total | 68 | 65 | ||||||||
Ceilings: | ||||||||||
United States | 19 | 11 | ||||||||
USG International | — | — | ||||||||
Canada | 1 | 2 | ||||||||
Mexico / Latin America | 1 | 2 | ||||||||
Total | 21 | 15 | ||||||||
Distribution: | ||||||||||
L&W Supply | 4 | 1 | ||||||||
Corporate | (23 | ) | (21 | ) | ||||||
Eliminations | 6 | 6 | ||||||||
Total USG Corporation Operating Profit | $ | 76 | $ | 66 | ||||||
USG Boral Building Products (UBBP): | ||||||||||
Net sales | $ | 228 | $ | 89 | ||||||
Operating profit | 23 | 10 | ||||||||
Net income attributable to UBBP | 16 | 6 | ||||||||
USG share of income from UBBP | 8 | 3 | ||||||||
(a) Historical results have been recast to reflect the company's change in segments effective April 1, 2014. | ||||||||||
USG CORPORATION | |||||||
ROLLFORWARD of QUARTERLY ADJUSTED OPERATING PROFIT | |||||||
(dollars in millions) | |||||||
(Unaudited) | |||||||
Adjusted operating profit - Non-GAAP measure - Three months ended March 31, 2014 | $ | 69 | |||||
US Wallboard | 13 | ||||||
US Surfaces and Substrates | 5 | ||||||
US Tile and Grid | 8 | ||||||
Distribution | 3 | ||||||
USG-Boral Equity Income | 5 | ||||||
Corporate and Eliminations | (2 | ) | |||||
GTL | (8 | ) | |||||
Q1 2014 Asset Retirement Obligation Adjustment | (7 | ) | |||||
Canada, Mining, and Mexico | (2 | ) | |||||
Adjusted operating profit - Non-GAAP measure - Three months ended March 31, 2015 | $ | 84 | |||||
USG CORPORATION | |||||||||
RECONCILIATION of NON-GAAP MEASURES TO GAAP MEASURES | |||||||||
(dollars in millions, except share and per share data) | |||||||||
(Unaudited) | |||||||||
Three months ended March 31, | |||||||||
2015 | 2014 | ||||||||
Operating profit - GAAP measure | $ | 76 | $ | 66 | |||||
Income from equity method investments | 8 | 3 | |||||||
Adjusted operating profit - Non-GAAP measure | $ | 84 | $ | 69 | |||||
Net income attributable to USG - GAAP measure | $ | 24 | $ | 45 | |||||
Gain on deconsolidation of subsidiaries and consolidated joint ventures | — | (27 | ) | ||||||
Withholding tax on property contributed to USG Boral joint venture | — | 1 | |||||||
Loss on extinguishment of debt | 19 | — | |||||||
Adjusted net income attributable to USG - Non-GAAP measure | $ | 43 | $ | 19 | |||||
Earnings per average diluted common share - GAAP measure | $ | 0.16 | $ | 0.32 | |||||
Adjustments per average diluted common share: | |||||||||
Gain on deconsolidation of subsidiaries and consolidated joint ventures | — | (0.19 | ) | ||||||
Withholding tax on property contributed to USG Boral joint venture | — | 0.01 | |||||||
Loss on extinguishment of debt | $ | 0.13 | — | ||||||
Adjusted earnings per adjusted average diluted common share – Non-GAAP measure | $ | 0.29 | $ | 0.14 | |||||
Average diluted common shares – GAAP | 147,176,197 | 146,920,819 | |||||||
Adjustment to remove common shares that would be antidilutive based on adjusted net income | — | (6,578,946 | ) | ||||||
Adjusted average diluted common shares – Non-GAAP | 147,176,197 | 140,341,873 | |||||||
Q1 2014 Gypsum operating profit - GAAP measure | $ | 65 | |||||||
Q1 2014 GTL operating profit | (8 | ) | |||||||
Q1 2014 Mining ARO adjustment | (7 | ) | |||||||
Q1 2014 Gypsum operating profit, as adjusted - Non-GAAP measure | $ | 50 |
CONTACT:
USG Corporation
Media
Sasha Bigda, (312) 436-6511
[email protected]
or
Investors
Ryan
Flanagan, (312) 436-5304
[email protected]
Exhibit 99.2
USG Corporation First Quarter 2015 Earnings Conference Call and Webcast April 23, 2015
CAUTIONARY STATEMENTS This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 related to management’s expectations about future conditions. Actual business, market or other conditions may differ materially from management’s expectations and, accordingly, may affect our sales and profitability or other results and liquidity. Actual results may differ materially due to various other factors, including: economic conditions, such as the levels of new home and other construction activity, employment levels, the availability of mortgage, construction and other financing, mortgage and other interest rates, housing affordability and supply, the levels of foreclosures and home resales, currency exchange rates and consumer confidence; capital markets conditions and the availability of borrowings under our credit agreement or other financings; our substantial indebtedness and our ability to incur substantial additional indebtedness; competitive conditions, such as price, service and product competition; shortages in raw materials; changes in raw material and energy costs; volatility in the assumptions used to determine the funded status of our pension plans; the loss of one or more major customers and our customers’ ability to meet their financial obligations to us; capacity utilization rates for us and the industry; our ability to expand into new geographic markets and the stability of such markets; our ability to successfully operate the joint venture with Boral Limited, including risks that our joint venture partner, Boral Limited, may not fulfill its obligations as an investor or may take actions that are inconsistent with our objectives; our ability to protect our intellectual property and other proprietary rights; changes in laws or regulations, including environmental and safety regulations; the satisfactory performance of certain business functions by third party service providers; our ability to achieve anticipated savings from cost reduction programs; the outcome in contested litigation matters; the effects of acts of terrorism or war upon domestic and international economies and financial markets; and acts of God. We assume no obligation to update any forward-looking information contained in this presentation. Additional information concerning these and other factors may be found in our filings with the Securities and Exchange Commission (SEC), including the “Risk Factors” in our Annual Report on Form 10-K, filed with the SEC on February 12, 2015. 2
Stockholder Rights Plan and Protective Amendment USG’s Stockholder Rights Plan and Protective Amendment restricts beneficial ownership in excess of 4.9% We have a stockholder rights plan, or the Rights Plan, established under the terms of a rights agreement dated December 21, 2006, as amended, with Computershare Trust Company N.A., as Rights Agent, or the Rights Agreement. Our board of directors adopted the Rights Plan to protect our stockholders from coercive takeover practices or takeover bids that are inconsistent with their best interests. On March 22, 2013, our board of directors approved an amendment to the Rights Agreement in an effort to protect our net operating loss carryforwards, or NOL, carryforwards. Our stockholders ratified, on an advisory basis, the March 22, 2013 amendment to our Rights Agreement at our 2013 annual meeting of stockholders. On February 11, 2015, our board of directors approved another amendment to the Rights Agreement. The primary purpose of the foregoing amendments is to protect the value of the Company’s NOLs and related tax benefits. The Rights Agreement, as amended, provides that if any person becomes the beneficial owner of 4.9% or more of our common stock, stockholders other than the 4.9% triggering stockholder will have the right to purchase additional shares of our common stock at half the market price, thereby diluting the triggering stockholder; provided that stockholders whose beneficial ownership exceeded 4.9% of our common stock outstanding on February 11, 2015 will not be deemed to have triggered the Rights Agreement, as amended, so long as they do not thereafter acquire additional common stock other than in certain specified exempt transactions. The Company’s ability to use its NOLs could be substantially reduced if the Company experiences an “ownership change,” as defined under Section 382 of the Internal Revenue Code of 1986 (the “Code”). The amendment adopted on February 11, 2015 maintains previously adopted protections and modifies, until March 22, 2016 (or such earlier time that the Board determines that no Tax Benefits (as defined in the Rights Agreement) may be carried forward or that the Rights Agreement is no longer necessary for the protection of Tax Benefits) (the “Special Period”), the definition of when a Person (as defined in the Rights Agreement) will be deemed the “Beneficial Owner” of, and to “Beneficially Own,” securities under the Rights Agreement to align with the definition of ownership under Section 382 of the Code. Under the revised definition, during the Special Period, only acquisitions that would result in ownership of more than 4.9% of the Company’s then‐outstanding shares of common stock, as determined pursuant to Section 382 of the Code, would cause a stockholder to be deemed an “Acquiring Person,” subject to certain specified exempt transactions. Upon the expiration of the Special Period, the triggering threshold level under the Rights Plan will revert to the 15% level in effect prior to the amendment on March 22, 2013, and the definition of “Beneficial Owner” and “Beneficially Own” will revert to a definition that does not track Section 382 of the Code. On May 9, 2013, we filed an amendment to our Restated Certificate of Incorporation, or the Protective Amendment, that restricts certain transfers of our common stock. The Protective Amendment is intended to protect the tax benefits of our NOL carryforwards. Subject to certain limited exceptions, the Protective Amendment's transfer restrictions would restrict any person from transferring our common stock (or any interest in our common stock) if the transfer would result in a stockholder (or several stockholders, in the aggregate, who hold their stock as a “group” under Section 382 of the Code) owning 4.9% or more of our common stock. Any direct or indirect transfer attempted in violation of the Protective Amendment would be void as of the date of the prohibited transfer as to the purported transferee, and the purported transferee would not be recognized as the owner of the shares attempted to be owned in violation of the Protective Amendment for any purpose, including for purposes of voting and receiving dividends or other distributions in respect of that common stock, or in the case of options, receiving our common stock in respect of their exercise. The Protective Amendment is effective until the earlier of (i) May 9, 2016, (ii) the repeal of Section 382 of the Code if our board of directors determines that the Protective Amendment is no longer necessary for the preservation of tax benefits, (iii) the first day of a taxable year as to which our board of directors determines that no tax benefits may be carried forward, or (iv) such other date as determined by our board of directors pursuant to the Protective Amendment. 3
USG Corporation First Quarter 2015 Agenda Overview and Strategy Financial Results Market Outlook Questions Closing Remarks James S. Metcalf Chairman, President and CEO Matthew F. Hilzinger Executive VP, Chief Financial Officer James S. Metcalf Chairman, President and CEO James S. Metcalf Chairman, President and CEO 4
Q1 2015 HIGHLIGHTS Progress on our Plan to Win United States Gypsum – 270 basis point operating margin improvement United States Ceilings – 630 basis point operating margin improvement Lowering 2015 SG&A target by $20 million to $325 million One year anniversary of USG-Boral joint venture Entered into agreements to sell GTL ships for $42 million 5
PLAN TO WIN Strengthen the core - North American manufacturing and distribution - De-lever our balance sheet Diversify the sources of our earnings - Strategic geographic extensions - USG Boral Building Products - Adjacent products/systems Differentiate through innovation - Differentiate USG in the market - Focus on high performance products and solutions that improve energy efficiency, sustainability, and speed of construction 6
Q1 2015 CONSOLIDATED FINANCIAL RESULTS $ Millions (except EPS) Q1 2015 Q1 2014 Net sales $909 $850 Gross profit $153 $143 % of net sales 16.8% 16.8% SG&A $77 $77 Operating profit $76 $66 Interest expense $43 $47 Net income $24 $45 Diluted EPS $0.16 $0.32 Excluding: Gain on deconsolidation of subsidiaries and other — ($26) Loss on extinguishment of debt $19 — Adjusted net income 1 $43 $19 Adjusted diluted EPS 2 $0.29 $0.14 Adjusted EBITDA 3 $132 $115 1. See reconciliation to GAAP net income on slide 19 2. See reconciliation to GAAP diluted earnings per share on slide 24 3. See the reconciliation on slide 20 7
FIRST QUARTER 2015 GAAP RESULTS $ Millions Q1 2015 Q1 2014 1 Change Gypsum Sales $577 $545 $32 Ceilings Sales 2 $123 $125 2 ($2) 2 Distribution Sales $334 $300 $34 Eliminations ($125) ($120) ($5) TOTAL USG CORPORATION SALES $909 $850 $59 Gypsum Operating Profit $68 $65 $3 Ceilings Operating Profit $21 $15 $6 Distribution Operating Profit $4 $1 $3 Corporate and Eliminations ($17) ($15) ($2) TOTAL USG CORPORATION OPERATING PROFIT $76 $66 $10 Total USG Boral Building Products Sales 3 $228 $89 3 $139 3 Total USG Boral Building Products Operating Profit 3 $23 $10 3 $13 3 USG’s EQUITY INCOME FROM USG-BORAL $8 $3 $5 1. Effective April 1, 2014, we changed the composition of our reportable segments; accordingly prior year information has been recast to conform to the new segment structure. The recast historical segment data reflecting these changes was disclosed in our Form 8-K filed on July 24, 2014. 2. Ceilings sales for the three months ended March 31, 2014 include the results, through February 27, 2014, of our wholly-owned subsidiaries and consolidated joint ventures that were contributed to UBBP. 3. Q1 2014 only includes one month of USG Boral operations due to the joint venture’s commencement at the end of February 2014. 8
GYPSUM Q1 2015 Highlights Excluding GTL and 2014 ARO adjustment 1: $18 million of improved operating profit Operating margin improves 250 basis points to 12.0% US Wallboard: price increase and high single digit volume growth help drive $13 million of improved operating profit US Surfaces and Substrates: $5 million of improvement – joint treatment, Levelrock®, Durock®, and Securock® lead the way Price improvement in all products United States Gypsum: 270 basis point operating margin improvement Consolidated Gypsum Segment 4 Q1 2014 Adjusted Operating Profit 2 $65 US Wallboard Price $4 US Wallboard Cost $2 US Wallboard Volume $7 US Surfaces and Substrates $5 Q1 2014 GTL Income ($8) Q1 2014 Mining ARO Adjustment ($7) Q1 2015 Adjusted Operating Profit 2 $68 $ Millions Q1 2015 Q1 2014 4 Variance Net Sales $577 $545 $32 Operating Profit $68 $65 $3 Adjusted Operating Profit 2 $68 $65 $3 Adjusted Operating Profit Margin 3 11.8% 11.9% (0.1%) 1. Excluding Q1 2014 GTL operating profit ($8 million) and the Q1 2014 Mining asset retirement obligation benefit ($7 million) yields $50 million of Q1 2014 adjusted operating profit, as adjusted. $10 million and $21 million of GTL sales are excluded from Q1 2015 and Q1 2014, respectively. 2. See reconciliation to GAAP operating profit on slide 18. 3. Adjusted operating profit margin equals GAAP operating profit margin. 4. See discussion of changes to our reportable segments in footnote 1 on slide 8. 9
GTL Sale expected to close in April 2015 Net cash proceeds after remaining operating costs, closing expenses, and mortgage repayment expected to be $10 to $13 million GTL annual guidance revised to a range of $2 to $5 million (loss) which includes a $6 million gain on sale GTL - $ Millions Q1 Q2 Q3 Q4 FY 2014 - Sales $21 $21 $20 $19 $81 2014 - Adjusted Operating Profit $8 $6 $5 $4 $23 2015 – Sales 2 $10 — — — $10 2015 - Operating Profit 2 — ($2) - ($5) — — ($2) - ($5) 1. Excludes impairment, contract termination and loss on receivable charges totaling $75 million. 2. Periods after Q1 2015 are estimates. Q2 2015 includes a $6 million estimate for the gain on the sale of the ships. We do not expect the historical results and future costs associated with GTL to meet the accounting requirements to be presented as a discontinued operation for GAAP purposes. Beginning in the second quarter, after the sale of the ships, GTL results will be excluded from adjusted operating profit.10
CEILINGS Q1 2015 Highlights Adjusted operating margin improves 440 basis points to 17.1% Improved weather conditions lift volumes and lower cost US tile and grid: $8 million of improved operating profit Price increase in tile Continued trend of mix-shift towards higher margin products Canada and Mexico impacted by currency of $1 million United States Ceilings 630 basis point operating profit margin improvement Consolidated Ceilings Segment 1 Q1 2014 Adjusted Operating Profit 2 $15 Tile & Grid Price $3 Tile & Grid Cost $3 Tile & Grid Volume $2 Canada and Mexico, including FX ($2) Q1 2015 Adjusted Operating Profit 2 $21 $ Millions Q1 2015 Q1 2014 1 Variance Net Sales $123 $125 ($2) Operating Profit $21 $15 $6 Operating Profit Margin 17.1% 12.0% 5.1% Adjusted Net Sales $123 $118 $5 Adjusted Operating Profit 2 $21 $15 $6 Adjusted Operating Profit Margin 17.1% 12.7% 4.4% Q1 2014 Net Sales Net Sales of Entities Contributed to UBBP Q1 2014 Adjusted Net Sales Q1 2015 Net Sales Variance $125 ($7) $118 $123 $5 1. See discussion of changes to our reportable segments footnote 1 on slide 8 2. See reconciliation to GAAP operating profit on slide 18 11
DISTRIBUTION Q1 2015 Highlights Adjusted operating margin improves 90 basis points to 1.2% Improved gross profit in every product category, led by wallboard sales Same store sales increased by 10% Wallboard volumes improved by 15% Delivery costs as a percentage of sales were flat - 11% increase in sales drove delivery costs higher Distribution Segment Q1 2014 Adjusted Operating Profit 1 $1 Wallboard Margin and Volume $5 Ceilings & Other Core Products $2 SG&A $1 Delivery Costs ($4) Change in Reduction of Bad Debt Reserve ($1) Q1 2015 Adjusted Operating Profit 1 $4 $ Millions Q1 2015 Q1 2014 Variance Net Sales $334 $300 $34 Operating Profit $4 $1 $3 Adjusted Operating Profit 1 $4 $1 $3 Adjusted Operating Profit Margin 2 1.2% 0.3% 0.9% 1. See reconciliation to GAAP operating profit on slide 18 2. Adjusted operating profit margin equals operating profit margin 12
USG BORAL BUILDING PRODUCTS Q1 2015 Highlights March 2015 total JV operating profit increased over March 2014 Q1 2015 includes three months of operations vs. one month of operations in Q1 2014 Q1 is seasonal – slowest quarter of the year January and February slower than March due to regional holidays Continued strong growth in joint compounds and other adjacent products NextGen conversion over 25% in Australia On track for synergy realization $18 million dividend payment to USG in May 2015 $ Millions Q1 2015 Q1 2014 1 Variance Total JV Net sales $228 $89 $139 Total JV Operating profit $23 $10 $13 Adjustments 2 $1 ($1) $2 Total JV Adjusted Operating Profit 2 $24 $9 $15 Total JV Adjusted Operating Profit Margin 10.5% 10.1% 0.4% Total JV Adjusted Net Income 2 $16 $6 $10 USG’s Adjusted Equity Income from UBBP 2 $8 $3 $5 Q1 2014 USG's Equity Income from UBBP 1 $3 USG Boral results - full quarter of operations $5 Q1 2015 USG's Equity Income from UBBP $8 1. Q1 2014 only includes one month of USG Boral operations due to the joint venture’s commencement at the end of February 2014 2. See a full reconciliation to GAAP operating profit, net income, and income from equity method investments on slide 21 13
INCOME TAX OUTLOOK We may release all or a portion of our $1.0 billion domestic valuation allowance by the end of 2015 After release of the valuation allowance, we estimate our global effective income tax rate will be 29-31%. The valuation allowance release will not impact: Our U.S. cash tax payments – there will be no federal tax payments until we fully utilize the NOL of $1.9 billion Foreign consolidated entities The results of the USG-Boral joint venture, which are recorded on a net of tax basis Until the valuation allowance release, our income tax expense is projected to be approximately $2 million per quarter 14
Q1 2015 CONSOLIDATED CASH FLOW $ Millions 3 months ended March 31, 2015 3 months ended March 31, 2014 Cash flow used for operations ($42) ($64) Capital expenditures ($29) ($34) Investments in joint ventures — ($557) Net proceeds from asset dispositions and other $1 $2 Adjusted cash flow used for investing activities 1 ($28) ($589) Cash flow used for financing activities ($29) ($1) Effect of exchange rate on cash ($3) ($1) Adjusted decrease in cash and cash equivalents 1 ($102) ($655) March 31, 2015 March 31, 2014 Cash and cash equivalents and marketable securities $242 $297 Total liquidity $583 $618 Total debt $2,206 $2,343 1.For the three months ended March 31, 2015, the US GAAP measure of net cash used for investing activities was ($1) million. This ($1) million includes net sales of marketable securities of $66 million (inflow) and a deposit of restricted cash of ($39) million (outflow). For the three months ended March 31, 2014, the US GAAP measure of net cash used for investing activities was ($585) million which included net sales of marketable securities of $4 million. 15
Non-GAAP Financial Measures In this presentation, the corporation’s financial results are provided both in accordance with accounting principles generally accepted in the United States of America (GAAP) and using certain non-GAAP financial measures. In particular, the corporation presents the non-GAAP financial measures adjusted EBITDA, adjusted operating profit, operating profit adjusted for results of GTL and non-cash benefit in its mining operation, adjusted net income, adjusted equity income of USG Boral Building Products, or UBBP, normalized selling, general, and administrative expense, adjusted net sales and adjusted basic and diluted earnings per share, which exclude certain items. In addition, adjusted operating profit on a consolidated basis includes the corporation’s equity method income from UBBP and USG’s other equity method investments, and adjusted EBITDA on a consolidated basis includes the corporation’s share of UBBP’s adjusted EBITDA. Further, management believes it is appropriate to exclude the indicated items from UBBP equity income because the resulting UBBP adjusted equity income can be used to evaluate the financial performance of UBBP. The non-GAAP financial measures are included as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help investors’ ability to analyze underlying trends in the corporation’s business, evaluate its performance relative to other companies in its industry and provide useful information to both management and investors by excluding certain items that may not be indicative of the corporation’s core operating results. Adjusted operating profit includes the adjusted equity method income from UBBP and USG’s income from other equity investments and adjusted EBITDA includes the corporation’s share of UBBP’s adjusted EBITDA because management views UBBP and its other equity investments as important businesses. In addition, the corporation uses adjusted operating profit and adjusted net income as components in the measurement of incentive compensation. The non-GAAP measures should not be considered a substitute for or superior to GAAP results and may vary from others in the industry. For further information related to the corporation’s use of non-GAAP financial measures, and the reconciliations to the nearest GAAP measures, see the schedules attached hereto. 16
QUARTERLY SUMMARY BY BUSINESS UNIT $ Millions Q1 2015 Q1 2014 6 Change Gypsum adjusted operating profit 1 $68 $65 $3 Ceilings adjusted operating profit 1 $21 $15 $6 Distribution adjusted operating profit 1 $4 $1 $3 Adjusted equity income from USG Boral Building Products 2 $8 $3 $5 Equity income from other joint ventures — — — Corporate and eliminations adjusted operating loss 1 ($17) ($15) ($2) USG Consolidated Adjusted Operating Profit 1 $84 $69 $15 Gypsum DD&A $27 $30 ($3) Ceilings DD&A $4 $3 $1 Distribution DD&A $3 $3 — Corporate and eliminations DD&A 3 $1 — $1 USG Consolidated DD&A $35 $36 ($1) Gypsum adjusted EBITDA 4 $97 $97 — Ceilings adjusted EBITDA 4 $25 $18 $7 Distribution adjusted EBITDA 4 $7 $4 $3 USG's share of USG Boral Building Products adjusted EBITDA 5 $17 $6 $11 Corporate and Eliminations Adjusted EBITDA 4 ($14) ($10) ($4) USG Consolidated Adjusted EBITDA 4 $132 $115 $17 1. See a full reconciliation to GAAP operating profit on slide 18 2. See a full reconciliation to GAAP income from equity method investments on slide 21 3. Depreciation, depletion and amortization for Corporate and Eliminations excludes amortization deferred financing fees which is included in interest expense 4. See the reconciliation on slide 20 5. See reconciliation to USG Boral net income on slide 22 6. See discussion of changes to our reportable segments in footnote 1 on slide 8 17
ADJUSTED OPERATING PROFIT RECONCILED TO GAAP OPERATING PROFIT $ Millions Q1 2015 Q1 2014 2 Change Reported GAAP Operating Profit (Loss) Gypsum $68 $65 $3 Ceilings $21 $15 $6 Distribution $4 $1 $3 Corporate, Other & Eliminations ($17) ($15) ($2) Total $76 $66 $10 Adjustments to GAAP Operating Profit (Loss) Gypsum — — — Ceilings — — — Distribution — — — Corporate, Other & Eliminations — — — Total — — — Adjusted Operating Profit – Non-GAAP measure Gypsum $68 $65 $3 Ceilings $21 $15 $6 Distribution $4 $1 $3 Corporate, Other & Eliminations ($17) ($15) ($2) Other Adjustments Adjusted equity income from UBBP1 $8 $3 $5 Equity income from other joint ventures — — — Total Adjusted Operating Profit $84 $69 $15 1. See a full reconciliation to GAAP income from equity method investments on slide 21 2. See discussion of changes to our reportable segments in footnote 1 on slide 8 18
ADJUSTED NET INCOME RECONCILED TO GAAP NET INCOME $ Millions Q1 2015 Q1 2014 Net Income – GAAP Measure $24 $45 Adjustments: Loss on extinguishment of debt $19 — Gain on deconsolidation of subsidiaries and JV's — ($27) Withholding tax on property contributed to UBBP — $1 Adjusted Net Income – Non-GAAP Measure $43 $19 19
QUARTERLY ADJUSTED EBITDA RECONCILED TO QUARTERLY OPERATING PROFIT Q1 2015 Q1 2014 1 $ Millions Gyp Ceilings Distr. UBBP Corp/Elim Q1 Gyp Ceilings Distr. UBBP Corp/Elim Q1 GAAP Operating profit/(loss) $68 $21 $4 ($17) $76 $65 $15 $1 ($15) $66 Interest expense, net ($42) ($42) ($46) ($46) Other expense, net ($1) ($1) — — Income tax benefit (expense) $2 $2 ($5) ($5) USG's equity income from UBBP $8 $8 $3 3 Gain on deconsolidation of subsidiaries — — $27 $27 Loss on extinguishment of debt ($19) ($19) — — Net income attributable to USG $24 $45 Add: interest expense, net 2 $42 $42 $46 $46 Add: income tax (benefit) expense 2 ($2) ($2) $5 $5 Add: depreciation, depletion, and amortization 3 $27 $4 $3 $1 $35 $30 $3 $3 — $36 EBITDA $95 $25 $7 ($28) $99 $95 $18 $4 $15 $132 Add: share-based compensation expense 2 $3 $3 $5 $5 Add: ARO accretion expense $2 — — — $2 $2 — — — $2 Add: loss on extinguishment of debt $19 $19 — — Subtract: USG's equity income from UBBP 5 ($8) ($8) ($30) ($30) Add: USG’s share of UBBP Adjusted EBITDA 4 $17 $17 $6 $6 Adjusted EBITDA $97 $25 $7 $17 ($14) $132 $97 $18 $4 $6 ($10) $115 1. See discussion of changes to our reportable segments in footnote 1 on slide 8 2. Interest, tax, and share-based compensation are not allocated to our reportable segments; therefore, these items are reflected in the column Corp/Elim 3. Depreciation, depletion and amortization excludes the amortization of deferred financing fees which is included in interest expense 4. See USG Boral Building Products EBITDA reconciliation on slide 22 5. USG's equity income from UBBP, for Q1 2014, is comprised of USG's equity income from UBBP of $3 million and gain on deconsolidation of subsidiaries of $27 million 20
Q1 2015 ADJUSTED FINANCIAL RESULTS OF USG BORAL BUILDING PRODUCTS $ Millions Q1 2015 Q1 2014 Operating Profit – GAAP $23 $10 Adjustments: Income from equity method investments owned by UBBP $3 — Adjustments: Operating profit attributable to non-controlling interest, pre-tax ($2) ($1) Adjusted Operating Profit – Non-GAAP $24 $9 Net Income attributable to USG Boral Building Products – GAAP $16 $6 Adjustments: — — Adjusted Net Income attributable to USG Boral Building Products – Non-GAAP $16 $6 USG share of income from equity method investments – GAAP $8 $3 Adjustments: — — Adjusted equity income from USG Boral Building Products – Non-GAAP $8 $3 21
USG BORAL BUILDING PRODUCTS Q1 2015 ADJUSTED EBITDA RECONCILIATION UBBP UBBP $ Millions Q1 2015 Q1 2014 GAAP Operating profit $23 $10 Interest expense/(income), net — — Income tax expense ($8) ($3) Income from equity method investments owned by UBBP $3 — Net Income $18 $7 Net income attributable to non-controlling interest ($2) ($1) Net Income attributable to USG Boral Building Products $16 $6 Adjustments: — — Adjusted Net Income attributable to USG Boral Building Products $16 $6 Add: interest expense/(income), net — — Add: income tax expense $8 $3 Add: depreciation, depletion, and amortization $10 $3 TOTAL USG Boral Building Products Adjusted EBITDA $34 $12 USG’s share of USG Boral Building Products Adjusted EBITDA $17 $6 22
ADJUSTED BASIC EPS RECONCILED TO GAAP BASIC EPS Q1 2015 Q1 2014 Income per average common share – basic – GAAP $0.16 $0.33 Adjustments per average common share: Loss on extinguishment of debt $0.13 — Gain on deconsolidation of subsidiaries and consolidated joint ventures — ($0.20) Withholding tax on property contributed to USG Boral joint venture — $0.01 Adjusted earnings per average common share – basic – Non-GAAP $0.29 $0.14 Average common shares – GAAP 145,381,269 137,765,694 23
ADJUSTED DILUTED EPS RECONCILED TO GAAP DILUTED EPS Q1 2015 Q1 2014 1 Income per average diluted common share – GAAP $0.16 $0.32 Adjustments per average diluted common share: Loss on extinguishment of debt $0.13 — Gain on deconsolidation of subsidiaries and consolidated joint ventures — ($0.19) Withholding tax on property contributed to USG Boral joint venture — $0.01 Adjusted earnings per adjusted average diluted common share – Non-GAAP $0.29 $0.14 Average diluted common shares – GAAP 147,176,197 146,920,819 Adjustment to remove common shares that would be antidilutive based on adjusted net income — (6,578,946) Adjusted average diluted common shares – Non-GAAP 147,176,197 140,341,873 1. Earnings per average diluted common share for the three months ended March 31, 2014 is based on $47 million of income available to shareholders, which represents net income plus $2 million for the dilutive effect of our 10% convertible senior notes. Adjusted earnings per average diluted common share for the same period is based on $19 million of adjusted net income, which does not include the $2 million because the 10% convertible senior notes were not dilutive. 24
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