Mixed results for USG
Chicago-based USG Corporation reported third quarter sales of $851 million, a 7% increase over the same quarter last year. But rising costs of materials and transportation hurt net income, which was down 11% to $59 million.
The results come at a turbulent time for USG, which is about to be acquired by Knauf in a deal expected to close in early 2019.
On June 11, Knauf and USG announced that they had entered into a definitive merger agreement in which Knauf will acquire all the outstanding shares of USG for $44 per share. USG’s stockholders voted to adopt the merger agreement at the company’s special meeting of stockholders held on September 26.
Meanwhile, USG’s various business units performed with varying degrees of third-quarter success:
The company’s lower operating profit in general in the third quarter of 2018 was explained as the result of “rising costs, including higher transportation costs coupled with higher planned SG&A costs to support USG’s Customer-First strategy.”
The results come at a turbulent time for USG, which is about to be acquired by Knauf in a deal expected to close in early 2019.
On June 11, Knauf and USG announced that they had entered into a definitive merger agreement in which Knauf will acquire all the outstanding shares of USG for $44 per share. USG’s stockholders voted to adopt the merger agreement at the company’s special meeting of stockholders held on September 26.
Meanwhile, USG’s various business units performed with varying degrees of third-quarter success:
- U.S. Wallbaord & Surfaces. Net sales increased 5%. However, wallboard costs were $18 million higher than the prior year primarily due to rising input and transportation costs
- U.S. Performance materials. Net sales increased 10%; Profits declined on higher input costs.
- U.S. Ceilings. Net sales increased 14%. operating profit of $27 million increased by $2 million from the third quarter of 2017 primarily due to improved pricing and volumes across grid products.
- USG Boral. Net sales decreased 6%. The decrease is due to an unfavorable impact due to currency translation of $13 million and lower wallboard shipments.
The company’s lower operating profit in general in the third quarter of 2018 was explained as the result of “rising costs, including higher transportation costs coupled with higher planned SG&A costs to support USG’s Customer-First strategy.”