Exhibit 99.1
USG Corporation Reports Second Quarter 2018 Results
Highest Quarterly Net Sales Since Q3 2007
CHICAGO--(BUSINESS WIRE)--July 25, 2018--USG Corporation (NYSE:USG), an industry-leading manufacturer of building products and innovative solutions, today reported financial results for the second quarter of 2018. As compared to 2017’s second quarter, results for 2018’s second quarter are below:
- Net sales of $880 million up $69 million, or 9%
- Operating profit of $75 million down $20 million, or 21%
- Net income of $58 million up $22 million, or 61%
- Diluted EPS of $0.41 up $0.17, or 71%
As compared to 2017’s second quarter, non-GAAP financial measures for 2018’s second quarter are below:
- Adjusted operating profit of $96 million down $13 million, or 12%
- Adjusted net income of $70 million up $6 million, or 9%
- Adjusted diluted EPS of $0.50 up $0.06, or 14%
Consolidated Second Quarter Results
Second quarter 2018 net sales were $880 million on a consolidated basis, compared to $811 million in the second quarter of 2017. Operating profit decreased to $75 million from $95 million, while adjusted operating profit decreased to $96 million from $109 million in the second quarter of 2018 compared to the second quarter of 2017. The lower operating profit in the second quarter of 2018 was driven primarily by higher planned SG&A costs to support USG’s Customer-First strategy and rising costs, including higher transportation costs.
USG recorded $58 million in net income, or $0.41 per diluted share, for the second quarter of 2018, compared to net income of $36 million, or $0.24 per diluted share, in the second quarter of 2017. On an adjusted basis, net income of $70 million, or $0.50 per diluted share, for the second quarter of 2018 increased from $64 million, or $0.44 per diluted share, in the second quarter of 2017. A full reconciliation of GAAP to adjusted metrics is provided in the attached schedule.
The Company remains on track with Advanced Manufacturing, which delivered $6 million of incremental EBITDA this quarter. The program is expected to deliver $25 million of incremental EBITDA in 2018. In addition, the 2018 adjusted SG&A target of $355 million has not changed.
U.S. Wallboard & Surfaces
The U.S. Wallboard & Surfaces segment net sales for the second quarter of 2018 increased $30 million, or 6%, compared with the second quarter of 2017. The segment generated $81 million of operating profit in the second quarter of 2018. On an adjusted basis, operating profit of $68 million decreased by $10 million compared to the second quarter of 2017. Wallboard price increased 2% from the second quarter of 2017 due primarily to a January 2018 price increase. In addition, wallboard volumes increased 2% compared to the second quarter of 2017. However, wallboard costs were $12 million higher than the prior year primarily due to rising input and transportation costs.
U.S. Performance Materials
The U.S. Performance Materials segment net sales increased by $5 million, or 5%, year over year due to a higher average realized selling price. The segment generated $6 million of operating loss in the second quarter of 2018 partially due to proactively terminating a longstanding marketing contract, which resulted in an $8 million loss. On an adjusted basis, operating profit of $2 million in the U.S. Performance Materials segment declined by $6 million compared to the second quarter of 2017 primarily due to rising input costs and SG&A investments to accelerate the adoption of new products.
U.S. Ceilings
The U.S. Ceilings segment net sales increased $21 million, or 18%, compared to the second quarter of 2017. The segment generated $23 million of operating profit in the second quarter of 2018. On an adjusted basis, operating profit of $27 million increased by $4 million from the second quarter of 2017 primarily due to improved pricing and volumes across tile and grid products.
USG Boral
USG Boral net sales increased $10 million, or 3%, compared to the second quarter of 2017. The segment generated $12 million of equity income in the second quarter of 2018, which is a $2 million decrease compared to the second quarter of 2017 primarily due to higher input costs and SG&A expenses.
Pending Knauf and USG Merger
On June 11, Gebr. Knauf KG (Knauf) and USG announced that they had entered into a definitive merger agreement pursuant to which Knauf will acquire all the outstanding shares of USG. Under the terms of the merger agreement, USG stockholders will receive $44 per share, which consists of $43.50 per share in cash payable upon closing of the transaction and a $0.50 per share conditional special dividend that would be paid following shareholder approval of the transaction. The transaction is expected to close in early 2019, subject to customary closing conditions, including approval by USG stockholders and regulatory approvals.
Second Quarter 2018 Conference Call
In light of the announced transaction with Knauf, the Company will not hold a conference call for its results for the second quarter of 2018. The Company plans to file its Quarterly Report on Form 10-Q for the second quarter with the SEC on or about July 25, 2018.
About USG Corporation
USG Corporation is an industry-leading manufacturer of building products and innovative solutions. Headquartered in Chicago, USG serves construction markets around the world through its Gypsum, Performance Materials, Ceilings, and USG Boral divisions. Its wall, ceiling, flooring, sheathing and roofing products provide the solutions that enable customers to build the outstanding spaces where people live, work and play. Its USG Boral Building Products joint venture is a leading plasterboard and ceilings producer across Asia, Australasia and the Middle East. For additional information, visit www.usg.com.
Non-GAAP Financial Measures
In this press release, the company’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 company presents the non-GAAP financial measures adjusted net sales, adjusted operating profit, adjusted net income, adjusted selling and administrative expenses, EBITDA, adjusted EBITDA, and adjusted diluted earnings per share, which exclude certain items. 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 company’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 company’s core operating results. Adjusted operating profit on a consolidated basis includes the equity method income from USG Boral and USG’s income from other equity investments because management views USG Boral and its other equity investments as important businesses. In addition, the company 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 company’s use of non-GAAP financial measures, and the 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, including but not limited to, statements regarding the proposed transaction with Knauf, including expected timing, completion and effects of the proposed transaction, advanced manufacturing returns and adjusted SG&A target. Actual business, market or other conditions may differ materially from management’s expectations and, accordingly, may affect our sales and profitability, liquidity and future value. Any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date, and we undertake no obligation to update any forward-looking statement. Among the risks, contingencies and uncertainties that could cause actual results to differ from those described in the forward-looking statements or could result in the failure of the proposed transaction to be completed are the following: the failure to obtain stockholder approval of the adoption of the merger agreement; the failure to obtain necessary regulatory or other governmental approvals for the proposed transaction, or if obtained, the possibility of being subjected to conditions that could result in a material delay in, or the abandonment of, the proposed transaction or otherwise have an adverse effect on USG; continued availability of financing or alternatives for the financing provided in the Knauf debt commitment letter; the failure to satisfy required closing conditions; the potential impact on the USG Boral joint venture in the event the proposed transaction is not completed, including the risk that, in connection with the execution of the merger agreement, Boral Limited has the right to exercise its option to acquire USG’s ownership of the USG Boral joint venture; the risk that the proposed transaction may not be completed in the expected timeframe, or at all; the effect of restrictions placed on USG and its subsidiaries’ ability to operate their businesses under the merger agreement, including USG’s ability to pursue alternatives to the proposed transaction; the risk of disruption resulting from the proposed transaction, including the diversion of USG’s resources and management’s attention from ongoing business operations; the effect of the announcement of the proposed transaction on USG’s ability to retain and hire key employees; the effect of the announcement of the proposed transaction on USG’s business relationships, results of operations, financial condition, the market price of USG’s common stock and businesses generally; the risk of negative reactions from investors, employees, suppliers and customers; the outcome of any legal proceedings that may be instituted against USG related to the proposed transaction; the amount of the costs, fees, expenses and charges related to the proposed transaction; and the occurrence of any event giving rise to the right of a party to terminate the merger agreement. Information describing other risks and uncertainties affecting USG that could cause actual results to differ materially from those in forward-looking statements may be found in our filings with the SEC, including, but not limited to, the “Risk Factors” in our most recent Annual Report on Form 10-K.
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| USG CORPORATION |
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
| (dollars in millions, except share and per share data) |
| (Unaudited) |
| | | | |
| | Three months ended June 30, | | Six months ended June 30, |
| | 2018 | | 2017(a) | | 2018 | | 2017(a) |
| Net sales | | $ | 880 | | | $ | 811 | | | $ | 1,666 | | | $ | 1,578 | |
| Cost of products sold | | 696 | | | 643 | | | 1,343 | | | 1,251 | |
| Gross profit | | 184 | | | 168 | | | 323 | | | 327 | |
| Selling and administrative expenses | | 109 | | | 73 | | | 202 | | | 148 | |
| Operating profit | | 75 | | | 95 | | | 121 | | | 179 | |
| Income from equity method investments | | 12 | | | 14 | | | 21 | | | 27 | |
| Net interest expense | | (13 | ) | | (19 | ) | | | (26 | ) | | (38 | ) |
| Loss on extinguishment of debt | | — | | | (22 | ) | | | — | | | (22 | ) |
| Other (expense) income, net | | (3 | ) | | (2 | ) | | | — | | | 4 | |
| Income from continuing operations before income taxes | | 71 | | | 66 | | | 116 | | | 150 | |
| Income tax expense | | (13 | ) | | (20 | ) | | | (22 | ) | | (49 | ) |
| Income from continuing operations | | 58 | | | 46 | | | 94 | | | 101 | |
| Income (loss) from discontinued operations, net of tax | | — | | | (10 | ) | | | 1 | | | (10 | ) |
| Net income | | $ | 58 | | | $ | 36 | | | $ | 95 | | | $ | 91 | |
| | | | | | | | |
| | | | | | | | |
Earnings per average common share - basic:
Income from continuing operations | | | | | | | | |
| $ | 0.41 | | | $ | 0.32 | | | $ | 0.66 | | | $ | 0.69 | |
| Income (loss) from discontinued operations | | — | | | (0.07 | ) | | | 0.01 | | | (0.07 | ) |
| Net income | | $ | 0.41 | | | $ | 0.25 | | | $ | 0.67 | | | $ | 0.62 | |
| | | | | | | | |
Earnings per average common share - diluted:
Income from continuing operations | | | | | | | | |
| $ | 0.41 | | | $ | 0.31 | | | $ | 0.65 | | | $ | 0.68 | |
| Income (loss) from discontinued operations | | — | | | (0.07 | ) | | | 0.01 | | | (0.07 | ) |
| Net income | | $ | 0.41 | | | $ | 0.24 | | | $ | 0.66 | | | $ | 0.61 | |
| | | | | | | | |
| Average common shares | | 139,617,875 | | | 144,526,900 | | | 140,540,426 | | | 145,753,098 | |
| Average diluted common shares | | 140,879,921 | | | 146,860,939 | | | 142,763,192 | | | 148,291,473 | |
| | | | | | | | |
| (a) - Historical results have been recast to reflect our adoption of Accounting Standards Update 2017-07 on January 1, 2018. |
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| USG CORPORATION |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| (dollars in millions, except share data) |
| (Unaudited) |
| | As of | | As of |
| | June 30, 2018 | | December 31, 2017 |
| | | | |
| Assets | | | | |
| Cash and cash equivalents | | $ | 246 | | | $ | 394 | |
| Short-term marketable securities | | 58 | | | 62 | |
| Receivables (net of reserves - 2018 - $10 and 2017 - $9) | | 342 | | | 233 | |
| Inventories | | 265 | | | 252 | |
| Income taxes receivable | | 16 | | | 15 | |
| Other current assets | | 36 | | | 35 | |
| Total current assets | | 963 | | | 991 | |
| Long-term marketable securities | | 38 | | | 37 | |
Property, plant and equipment (net of accumulated
depreciation and depletion - 2018 - $2,111 and 2017 - $2,053) | | | | |
| 1,793 | | | 1,762 | |
| Deferred income taxes | | 264 | | | 287 | |
| Equity method investments | | 666 | | | 686 | |
| Goodwill and intangible assets | | 42 | | | 43 | |
| Other assets | | 47 | | | 45 | |
| Total assets | | $ | 3,813 | | | $ | 3,851 | |
| | | | |
| Liabilities and Stockholders' Equity | | | | |
| Accounts payable | | $ | 281 | | | $ | 280 | |
| Accrued expenses | | 130 | | | 135 | |
| Income taxes payable | | 1 | | | — | |
| Total current liabilities | | 412 | | | 415 | |
| Long-term debt | | 1,078 | | | 1,078 | |
| Deferred income taxes | | 4 | | | 4 | |
| Pension and other postretirement benefits | | 277 | | | 326 | |
| Other liabilities | | 179 | | | 183 | |
| Total liabilities | | 1,950 | | | 2,006 | |
| Stockholders' Equity: | | | | |
| Common stock | | 15 | | | 15 | |
| Treasury stock at cost | | (219 | ) | | (169 | ) |
| Additional paid-in capital | | 3,040 | | | 3,057 | |
| Accumulated other comprehensive loss | | (401 | ) | | (389 | ) |
| Retained earnings (accumulated deficit) | | (572 | ) | | (669 | ) |
| Total stockholders' equity | | 1,863 | | | 1,845 | |
| Total liabilities and stockholders' equity | | $ | 3,813 | | | $ | 3,851 | |
| | | | | |
| Other Information: | | | | |
| Total cash and cash equivalents and marketable securities | | $ | 342 | | | $ | 493 | |
| Borrowing availability under existing credit facilities | | 176 | | | 155 | |
| Total Liquidity | | $ | 518 | | | $ | 648 | |
| | | | | | | | |
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| USG CORPORATION |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (dollars in millions) |
| (Unaudited) |
| Six months ended June 30, |
| 2018 | | 2017 |
| Operating Activities | | | |
| Net income | $ | 95 | | | $ | 91 | |
| Less: Income (loss) from discontinued operations, net of tax | 1 | | | (10 | ) |
| Income from continuing operations | 94 | | | 101 | |
| | | |
| Adjustments to reconcile income from continuing operations to net cash: | | | |
| Depreciation, depletion and amortization | 76 | | | 65 | |
| Loss on extinguishment of debt | — | | | 22 | |
| Share-based compensation expense | 10 | | | 9 | |
| Deferred income taxes | 20 | | | 48 | |
| Gain on asset dispositions | (13 | ) | | (1 | ) |
| Loss on sale of equity method investment | 8 | | | — | |
| Income from equity method investments | (21 | ) | | (27 | ) |
| Dividends received from equity method investments | 16 | | | 23 | |
| Pension settlement | — | | | 7 | |
| Change in operating assets and liabilities | (176 | ) | | (117 | ) |
| Other, net | 4 | | | (1 | ) |
| Net cash provided by operating activities of continuing operations | 18 | | | 129 | |
| Net cash provided by (used for) operating activities of discontinued operations | 1 | | | (1 | ) |
| Net cash provided by operating activities | $ | 19 | | | $ | 128 | |
| | | |
| Investing Activities | | | |
| Purchases of marketable securities | (49 | ) | | (54 | ) |
| Sales or maturities of marketable securities | 51 | | | 53 | |
| Capital expenditures | (109 | ) | | (72 | ) |
| Net proceeds from asset dispositions | 14 | | | 2 | |
| Net proceeds from sale of equity method investment | 3 | | | — | |
| Working capital adjustment from acquisition of business | 2 | | | — | |
| Other investing activities | — | | | 1 | |
| Net cash used for investing activities of continuing operations | (88 | ) | | (70 | ) |
| Net cash provided by investing activities of discontinued operations | — | | | 6 | |
| Net cash used for investing activities | $ | (88 | ) | | $ | (64 | ) |
| | | |
| Financing Activities | | | |
| Issuance of debt | — | | | 500 | |
| Repayment of debt | — | | | (520 | ) |
| Payment of debt issuance fees | — | | | (8 | ) |
| Issuances of common stock | 6 | | | 3 | |
| Repurchase of common stock | (76 | ) | | (97 | ) |
| Repurchases of common stock to satisfy employee tax withholding obligations | (7 | ) | | (4 | ) |
| Net cash used for financing activities of continuing operations | $ | (77 | ) | | $ | (126 | ) |
| | | |
| Effect of exchange rate changes on cash | (2 | ) | | 6 | |
| | | |
| Net decrease in cash and cash equivalents from continuing operations | $ | (149 | ) | | $ | (61 | ) |
| Net increase in cash and cash equivalents from discontinued operations | 1 | | | 5 | |
| Net decrease in cash and cash equivalents | (148 | ) | | (56 | ) |
| Cash and cash equivalents at beginning of period | 394 | | | 427 | |
| Cash and cash equivalents at end of period | $ | 246 | | | $ | 371 | |
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| USG CORPORATION |
| SEGMENT BUSINESS RESULTS |
| (dollars in millions) |
| (Unaudited) |
| |
| | Three months ended June 30, | | Six months ended June 30, |
| | 2018 | | 2017 | | 2018 | | 2017 |
Net Sales | | | | | | | | |
| U.S. Wallboard and Surfaces | | $ | 512 | | | $ | 482 | | | $ | 953 | | | $ | 951 | |
| U.S. Performance Materials | | 105 | | | 100 | | | 197 | | | 186 | |
| U.S. Ceilings | | 139 | | | 118 | | | 277 | | | 230 | |
| Canada | | 121 | | | 104 | | | 232 | | | 200 | |
| Other | | 65 | | | 59 | | | 125 | | | 115 | |
| Eliminations | | (62 | ) | | (52 | ) | | (118 | ) | | (104 | ) |
| Total USG Corporation Net Sales | | $ | 880 | | | $ | 811 | | | $ | 1,666 | | | $ | 1,578 | |
| | | | | | | | |
Operating Profit (Loss)(a) | | | | | | | | |
| U.S. Wallboard and Surfaces | | $ | 81 | | | $ | 78 | | | $ | 130 | | | $ | 157 | |
| U.S. Performance Materials | | (6 | ) | | 8 | | | (5 | ) | | 14 | |
| U.S. Ceilings | | 23 | | | 23 | | | 42 | | | 43 | |
| Canada | | 8 | | | 2 | | | 10 | | | 4 | |
| Other | | 4 | | | 1 | | | 8 | | | 2 | |
| Corporate | | (35 | ) | | (17 | ) | | (64 | ) | | (41 | ) |
| Total USG Corporation Operating Profit | | $ | 75 | | | $ | 95 | | | $ | 121 | | | $ | 179 | |
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USG Boral Building Products (UBBP) | | | | | | |
| Net sales | | $ | 297 | | | $ | 287 | | | $ | 584 | | | $ | 563 | |
| Operating profit | | 31 | | | 40 | | | 59 | | | 75 | |
| Net income attributable to UBBP | | 24 | | | 28 | | | 43 | | | 53 | |
| USG share of income from UBBP | | 12 | | | 14 | | | 21 | | | 27 | |
| | | | | | | | |
| | | | | | | | |
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| (a) - Historical results have been recast to reflect our adoption of Accounting Standards Update 2017-07 on January 1, 2018. |
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| USG CORPORATION |
| RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES |
| (dollars in millions, except share and per share data) |
| (Unaudited) |
| |
| | Three months ended June 30, | | Six months ended June 30, |
| | 2018 | | 2017 | | 2018 | | 2017 |
| Net sales - GAAP | | $ | 880 | | | $ | 811 | | | $ | 1,666 | | | $ | 1,578 |
| Adoption of revenue standard | | — | | | — | | | 9 | | | — |
| Non-cash purchase accounting amortization | | 3 | | | — | | | 4 | | | — |
| Adjusted Net sales - Non-GAAP | | $ | 883 | | | $ | 811 | | | $ | 1,679 | | | $ | 1,578 |
| | | | | | | | |
| U.S. Wallboard and Surfaces net sales - GAAP | | $ | 512 | | | $ | 482 | | | $ | 953 | | | $ | 951 |
| Adoption of revenue standard | | — | | | — | | | 6 | | | — |
U.S. Wallboard and Surfaces adjusted net sales -
Non-GAAP | | $ | 512 | | | $ | 482 | | | $ | 959 | | | $ | 951 |
| | | | | | | | |
| U.S. Performance Materials net sales - GAAP | | $ | 105 | | | $ | 100 | | | $ | 197 | | | $ | 186 |
| Adoption of revenue standard | | — | | | — | | | 1 | | | — |
U.S. Performance Materials adjusted net sales -
Non-GAAP | | $ | 105 | | | $ | 100 | | | $ | 198 | | | $ | 186 |
| | | | | | | | |
| U.S. Ceilings net sales - GAAP | | $ | 139 | | | $ | 118 | | | $ | 277 | | | $ | 230 |
| Adoption of revenue standard | | — | | | — | | | 2 | | | — |
| Non-cash purchase accounting amortization | | 3 | | | — | | | 4 | | | — |
| U.S. Ceilings adjusted net sales - Non-GAAP | | $ | 142 | | | $ | 118 | | | $ | 283 | | | $ | 230 |
| | | | | | | | |
| Operating profit - GAAP(a) | | $ | 75 | | | $ | 95 | | | $ | 121 | | | $ | 179 |
| Income from equity method investments | | 12 | | | 14 | | | 21 | | | 27 |
| Knauf merger related costs | | 8 | | | — | | | 9 | | | — |
| Gain on sale of surplus property | | (13 | ) | | — | | | (13 | ) | | — |
| Loss on contract termination | | 8 | | | — | | | 8 | | | — |
| Non-cash purchase accounting amortization | | 3 | | | — | | | 4 | | | — |
| Integration and realignment costs | | 3 | | | — | | | 6 | | | — |
| Contractual legal judgment | | — | | | — | | | 5 | | | — |
| Adoption of revenue standard | | — | | | — | | | 3 | | | — |
| Adjusted operating profit - Non-GAAP | | $ | 96 | | | $ | 109 | | | $ | 164 | | | $ | 206 |
| | | | | | | | |
U.S. Wallboard and Surfaces operating profit -
GAAP(a) | | $ | 81 | | | $ | 78 | | | $ | 130 | | | $ | 157 |
| Gain on sale of surplus property | | (13 | ) | | — | | | (13 | ) | | — |
| Adoption of revenue standard | | — | | | — | | | 2 | | | — |
U.S. Wallboard and Surfaces adjusted operating
profit - Non-GAAP | | $ | 68 | | | $ | 78 | | | $ | 119 | | | $ | 157 |
| | | | | | | | |
U.S. Performance Materials operating profit -
GAAP(a) | | $ | (6 | ) | | $ | 8 | | | $ | (5 | ) | | $ | 14 |
| Loss on contract termination | | 8 | | | — | | | 8 | | | — |
U.S. Performance Materials adjusted operating
profit - Non-GAAP | | $ | 2 | | | $ | 8 | | | $ | 3 | | | $ | 14 |
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| USG CORPORATION |
| RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES |
| (dollars in millions, except share and per share data) |
| (Unaudited) |
| | | | |
| | Three months ended June 30, | | Six months ended June 30, |
| | 2018 | | 2017 | | 2018 | | 2017 |
| U.S. Ceilings operating profit - GAAP(a) | | $ | 23 | | | $ | 23 | | | $ | 42 | | | $ | 43 | |
| Integration and realignment costs | | 1 | | | — | | | 3 | | | — | |
| Adoption of revenue standard | | — | | | — | | | 1 | | | — | |
| Non-cash purchase accounting amortization | | 3 | | | — | | | 4 | | | — | |
| U.S. Ceilings adjusted operating profit - Non-GAAP | | $ | 27 | | | $ | 23 | | | $ | 50 | | | $ | 43 | |
| | | | | | | | |
| UBBP operating profit - GAAP | | $ | 31 | | | $ | 40 | | | $ | 59 | | | $ | 75 | |
Income from equity method investments owned by
UBBP | | 4 | | | 5 | | | 8 | | | 8 | |
Operating profit attributable to non-controlling
interest, pre-tax | | (1 | ) | | (2 | ) | | (2 | ) | | (3 | ) |
| UBBP adjusted operating profit - Non-GAAP | | $ | 34 | | | $ | 43 | | | $ | 65 | | | $ | 80 | |
| | | | | | | | |
| Selling and Administrative Expenses - GAAP(a) | | $ | 109 | | | $ | 73 | | | $ | 202 | | | $ | 148 | |
| Knauf merger related costs | | (8 | ) | | — | | | (9 | ) | | — | |
| Loss on contract termination | | (8 | ) | | — | | | (8 | ) | | — | |
| Integration and realignment costs | | (3 | ) | | — | | | (6 | ) | | — | |
| Contractual legal judgment | | — | | | — | | | (5 | ) | | — | |
Adjusted Selling and Administrative Expenses - Non-
GAAP | | $ | 90 | | | $ | 73 | | | $ | 174 | | | $ | 148 | |
| | | | | | | | |
| Net income - GAAP | | $ | 58 | | | $ | 36 | | | $ | 95 | | | $ | 91 | |
| (Income) loss from discontinued operations, net of tax | | — | | | 10 | | | (1 | ) | | 10 | |
| Knauf merger related costs | | 8 | | | — | | | 9 | | | — | |
| Gain on sale of surplus property | | (13 | ) | | — | | | (13 | ) | | — | |
| Loss on contract termination | | 8 | | | — | | | 8 | | | — | |
| Non-cash purchase accounting amortization | | 3 | | | — | | | 4 | | | — | |
| Integration and realignment costs | | 3 | | | — | | | 6 | | | — | |
| Loss on sale of joint venture | | 8 | | | — | | | 8 | | | — | |
| Contractual legal judgment | | — | | | — | | | 5 | | | — | |
| Adoption of revenue standard | | — | | | — | | | 3 | | | — | |
| Pension settlement charge | | — | | | 7 | | | — | | | 7 | |
| Loss on extinguishment of debt | | — | | | 22 | | | — | | | 22 | |
| Tax effect on adjustments (b) | | (5 | ) | | (11 | ) | | (8 | ) | | (11 | ) |
| Adjusted net income - Non-GAAP | | $ | 70 | | | $ | 64 | | | $ | 116 | | | $ | 119 | |
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| USG CORPORATION |
| RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES |
| (dollars in millions, except share and per share data) |
| (Unaudited) |
| | | | |
| | Three months ended June 30, | | Six months ended June 30, |
| | 2018 | | 2017 | | 2018 | | 2017 |
| Earnings per average diluted common share - GAAP | | $ | 0.41 | | | $ | 0.24 | | | $ | 0.66 | | | $ | 0.61 | |
| Adjustments per average diluted common share: | | | | | | | | |
| (Income) loss from discontinued operations, net of tax | | — | | | 0.07 | | | (0.01 | ) | | 0.07 | |
| Knauf merger related costs | | 0.06 | | | — | | | 0.06 | | | — | |
| Gain on sale of surplus property | | (0.09 | ) | | — | | | (0.09 | ) | | — | |
| Loss on contract termination | | 0.06 | | | — | | | 0.06 | | | — | |
| Non-cash purchase accounting amortization | | 0.01 | | | — | | | 0.02 | | | — | |
| Integration and realignment costs | | 0.01 | | | — | | | 0.04 | | | — | |
| Loss on sale of joint venture | | 0.06 | | | — | | | 0.06 | | | — | |
| Contractual legal judgment | | — | | | — | | | 0.03 | | | — | |
| Adoption of revenue standard | | — | | | — | | | 0.02 | | | — | |
| Pension settlement charge | | — | | | 0.05 | | | — | | | 0.05 | |
| Loss on extinguishment of debt | | — | | | 0.15 | | | — | | | 0.15 | |
| Tax effect on adjustments (b) | | (0.02 | ) | | (0.07 | ) | | (0.04 | ) | | (0.07 | ) |
Adjusted earnings per adjusted average diluted
common share – Non-GAAP | | $ | 0.50 | | | $ | 0.44 | | | $ | 0.81 | | | $ | 0.81 | |
| | | | | | | | |
| Average diluted common shares – GAAP | | 140,879,921 | | | 146,860,939 | | | 142,763,192 | | | 148,291,473 | |
| | | | | | | | |
| Net income - GAAP | | $ | 58 | | | $ | 36 | | | $ | 95 | | | $ | 91 | |
| Less: (Income) loss from discontinued operations, net of tax | | — | | | 10 | | | (1 | ) | | 10 | |
| Add: Interest expense, net | | 13 | | | 19 | | | 26 | | | 38 | |
| Add: Income tax expense | | 13 | | | 20 | | | 22 | | | 49 | |
| Add: Depreciation, depletion and amortization (c) | | 36 | | | 33 | | | 70 | | | 66 | |
| EBITDA - Non-GAAP | | $ | 120 | | | $ | 118 | | | $ | 212 | | | $ | 254 | |
| Add: Share-based compensation expense | | 6 | | | 5 | | | 10 | | | 9 | |
| Add: Knauf merger related costs | | 8 | | | — | | | 9 | | | — | |
| Add: Gain on sale of surplus property | | (13 | ) | | — | | | (13 | ) | | — | |
| Add: Loss on contract termination | | 8 | | | — | | | 8 | | | — | |
| Add: Non-cash purchase accounting amortization | | 3 | | | — | | | 4 | | | — | |
| Add: Integration and realignment costs | | 3 | | | — | | | 6 | | | — | |
| Add: Loss on sale of joint venture | | 8 | | | — | | | 8 | | | — | |
| Add: Contractual legal judgment | | — | | | — | | | 5 | | | — | |
| Add: Adoption of revenue standard | | — | | | — | | | 3 | | | — | |
| Add: Pension settlement charge | | — | | | 7 | | | — | | | 7 | |
| Add: Loss on extinguishment of debt | | — | | | 22 | | | — | | | 22 | |
| Less: USG's equity income from UBBP | | (12 | ) | | (14 | ) | | (21 | ) | | (27 | ) |
| Add: USG's share of UBBP Adjusted EBITDA | | 23 | | | 27 | | | 44 | | | 51 | |
| Adjusted EBITDA - Non-GAAP | | $ | 154 | | | $ | 165 | | | $ | 275 | | | $ | 316 | |
| |
| |
| USG CORPORATION |
| RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES |
| (dollars in millions, except share and per share data) |
| (Unaudited) |
| | | | |
| | Three months ended June 30, | | Six months ended June 30, |
| | 2018 | | 2017 | | 2018 | | 2017 |
| UBBP Net Income - GAAP | | $ | 25 | | | $ | 28 | | | $ | 45 | | | $ | 54 |
| Less: Net income attributable to non-controlling interest | | 1 | | | — | | | 2 | | | 1 |
| Net income attributable to UBBP - GAAP | | $ | 24 | | | $ | 28 | | | $ | 43 | | | $ | 53 |
| Add: income tax expense | | 10 | | | 16 | | | 22 | | | 28 |
| Add: Depreciation, depletion and amortization | | 12 | | | 10 | | | 24 | | | 21 |
| Total UBBP Adjusted EBITDA - Non-GAAP | | $ | 46 | | | $ | 54 | | | $ | 89 | | | $ | 102 |
| USG's share of UBBP Adjusted EBITDA - Non-GAAP | | $ | 23 | | | $ | 27 | | | $ | 44 | | | $ | 51 |
| | | | | | | | |
| | | | | | | | |
| (a) - Historical results have been recast to reflect our adoption of Accounting Standards Update 2017-07 on January 1, 2018. |
| (b) - Tax effect on adjustments is calculated using country specific statutory rates. |
| (c) - Depreciation, depletion and amortization excludes the amortization of deferred financing fees which is included in interest expense. |
| |
CONTACT:
Media
Kathleen Prause, 312-436-6607
kprause@usg.com
or
Investors
Bill Madsen, 312-436-5349
investorrelations@usg.com
