Q1 2011 Earnings Call
April 20, 2011 11:00 am ET
Brian Moore - President and CEO
Fareed Khan - Executive Vice President of Finance and Strategy
Richard Fleming - Chief Financial Officer and Executive Vice President
Unknown Executive -
James Metcalf - Chief Executive Officer, President and Director
Daniel Oppenheim - Crédit Suisse AG
Rodny Nacier - KeyBanc Capital Markets Inc.
James Barrett - CL King & Associates, Inc
Kathryn Thompson - Thompson Research Group, LLC.
Robert Wetenhall - RBC Capital Markets, LLC
Ivan Marcuse - Northcoast Research
Garik Shmois - Longbow Research LLC
Seth Yeager - Jeffries & Company
Joshua Pollard - Goldman Sachs Group Inc.
Unknown Analyst -
Mark Weintraub - Buckingham Research Group, Inc.
Welcome to the USG Corporation First Quarter 2011 Earnings Conference Call. My name is Monica, and I will be your operator for today's call.
I will now turn the call over to Brian Moore, Senior Director, Investor Relations.
Previous Statements by USG
» USG's CEO Discusses Q4 2010 Results - Earnings Call Transcript
» USG Corporation Q2 2010 Earnings Conference Call Transcript
» USG Corporation Q1 2010 Earnings Call Transcript
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, markets 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 the results and our outlook are Jim Metcalf, President and CEO; and Fareed Khan, Executive Vice President, Finance and Strategy. Jim will provide a general overview of the quarter plus additional insight into some of our businesses. Fareed will then review the financial results for the quarter and will provide context to help understand the main drivers for those results. We will then open up the call for questions and conclude with a few comments from Jim. Also present for the question-and-answer session will be Rick Fleming, Executive Vice President and CFO. Jim?
Thank you, Brian. Good morning. And thank you for joining us. I know most of you are regular participants on these calls, but I'd like to extend a special welcome if this is your first time joining our call. My management team and I really appreciate your interest in USG. USG is a great enterprise and I am proud to be at the helm leading and representing our employees worldwide. There's not a more dedicated and committed group of people anywhere. The progress we are making in this environment is a direct result of the hard work of our team. For our customers who are on the call, I want to take my personal thank you to you and we look forward to continuing to support your business with the finest products and services in the industry. We really appreciate all of our customers. Business conditions like the ones facing the U.S. housing and construction market really test a company and its people. Not many enterprises, particularly in manufacturing and distribution business with a large infrastructure, can navigate conditions like we have. But this is exactly what we are doing at USG. With no help from demand, we continue to march towards profitability. We've been aggressive on cost reductions, but we have not compromised the fundamentals that make USG what it is, a leader in building products. We have one of the best safety records in all of corporate America. We produce the highest quality products in the industry and we continue to lead with innovation.
Our top line results were essentially flat with last year, but we continue to make improvements to our bottom line. Our business is performing better with our largest markets still declining. But still, we are not where we want to be. We remain relentlessly focused on profitability and growing our business. We refer to this operating environment as a self-help type of market. Market demand in the U.S. is not going to be much help in the short-term, so any gains that we're seeing are driven by our people and our operations. This is truly a three-yards-and-a-cloud-of-dust performance. In this self-help market, we've reduced the operating loss by 30% versus last year. This is still a loss, but still a few more yards in the right direction.
We are confident the actions we're taking during this downturn has strengthened our company making it more efficient to drive long-term success, such as our customer satisfaction, our operational excellence and the innovation that you're seeing in the market today. Our products and services meet a basic need. We provide shelter. It's where people live, work and play. The long-term demographics that drive demand for our products are favorable and we remain optimistic about our growth opportunities.
Now I'd like to briefly review the first quarter and then I'm going to turn it over to Fareed Khan who's going to give you a little more detailed look at the business.
Overall market dynamics during the quarter were mixed. U.S. housing remains at historic lows, with little improvement and a lot of headwinds. Housing starts in the first two months of this year were weak and the recent increase in March is still off of very low numbers. Projections for total starts are in the 590,000 to 770,000 range and our forecast is about in the middle of that. R&R trends have improved and demand in this segment continues to get traction. Harvard Joint Center for Housing projects home remodeling to improve about 6% this year, which equates to about 3% for our products. USG is well-positioned with major home improvement retailers, with our national footprint and innovative products like SHEETROCK Brand Ultralight Panels to capitalize on the recovery in this segment.