USG Corporation (USG)
Q1 2010 Earnings Call
April 20, 2010 11:00 pm ET
James Bencomo - Director of Pension Investments and Administration
Bill Foote - Chairman and CEO
Jim Metcalf - President and COO
Rick Fleming - EVP and CFO
Rick Lowes - SVP, Finance
Jim Barrett - CL King & Associates
Trey Grooms - Stephens Incorporated
Michael Rehaut - JPMorgan
Dan Oppenheim - Credit Suisse
Kenneth Zener - Macquarie
Garik Shmois - Longbow Research
Joshua Pollard - Goldman Sachs
Kathryn Thompson - Thompson Research Group, LLC
Mark Weintraub - Buckingham Research Group
John Baugh - Stifel Nicolaus
Todd Vencil - Davenport & Company
John Emrich - Ironworks Capital
Previous Statements by USG
» USG Corp. F4Q09 Earnings Conference Call
» USG Q3 2009 Earnings Call Transcript
» USG Corp. Q2 2009 Earnings Call Transcript
I will now turn the call over to James Bencomo, Director, Pension Investments and Administration. You may begin.
Good morning, everyone, and welcome to USG Corporation’s first quarter 2010 earnings conference call and live webcast. We will be using a slide presentation today in conjunction with our call and it is available by going to the Investor Information section of our website, www.usg.com, and clicking on the link to the webcast.
Before we proceed, let me remind you that certain statements in this conference call may be forward-looking statements under securities laws. These statements are made on the basis of management’s current views and assumptions about business, market and other conditions, and management undertakes no obligation to update these statements. The statements are also subject to a number of factors, including those listed at the end of today’s press release, and actual results may be different from our current expectations.
With me today to discuss our results and our outlook are Bill Foote, USG’s Chairman and CEO; Jim Metcalf, President and COO; and Rick Fleming, Executive Vice President and CFO. First, Bill will comment on market conditions and the outlook for our businesses, Jim will follow with comments on how our operating units are performing, and Rick Fleming will conclude with some additional comments on our results and a discussion of how we are managing our balance sheet and liquidity. We will then open up the call for questions, and conclude with a few comments from Bill. Also present for the Q&A portion of the call today is Rick Lowes, Senior Vice President, Finance.
We would like to ensure that everyone has an opportunity to ask questions, so when we get to the Q&A session; callers are asked to limit themselves to one question and one follow-up question. Bill?
Thank you, Jim, and good morning to all of you. Thanks for joining us on this call. As always, we sincerely appreciate your investment and interest in the company.
During our last call on January, we said that 2010 would be another difficult year. We still believe that to be the case, given our power of the residential and commercial construction markets have declined from their peaks. Most segments have a long way to go to get back to healthy demand levels in markets here and abroad. The good news though is that overall the construction markets appear to be stabilizing.
During the fourth quarter of last year, we felt that most segments of the residential and some segments in commercial market in the US and abroad had started to stabilize. That's the broad characterization of conditions in various segments in different parts of the world. Generally speaking, we thought that declines in the construction markets slowed or stopped late last year. We expect this stability to continue in the first quarter of 2010 and indeed that was the case.
For example, our domestic wallboard shipments in the first quarter of this year were slightly better than last year's fourth quarter at about 1,150 million feet, that's four consecutive quarters that we've shipped around 1.1 to 1.2 billion feet.
Some key market indicators have begun to move in a positive direction. Housing starts for example have improved steadily in each of the last three months of this year from 609,000 in January to 616 in February and 626,000 in March. That's not great by historical standards, but it's a definite improvement over the levels from 2009, which were in the mid-to-high 500 range all year.
Existing home sales have been trending positively as well. Existing home sales in February were fine. We made 20,000 marking the eight consecutive month in which existing home sales were higher than the same period one year earlier and just yesterday it was reported that mortgage delinquencies declined for the second consecutive month. Best three separate indicators were related to the residential markets that are moving in the right direction. The improvements are modest but our positive trend for our wallboard business.
Turning to our Ceilings business, sales of our ceiling products here and abroad were relatively strong in the first quarter and higher than the levels achieved in the fourth quarter of last year. Jim Metcalf will provide additional detail in a few minutes but our Ceilings business has performed well in this downturn and it continue to do so in the first quarter.
Looking outsides the United States economic growth around the world appears to be rebounding. The OECD reported last week that economic indicators of 29 of the 30 member country grows in February compared to January and indicates that those economies are expanding in excess to United and Japan reported the large gains.