CHICAGO, IL -- USG Corporation, a leading building products company, reported $76 million in net income in the third quarter of 2015, compared to a net loss of $12 million in the third quarter of 2014. The company generated net sales of $972 million during the period.
"In the third quarter we saw improvements in wallboard, strong contributions from our surfaces and substrates businesses, organic margin growth in Distribution, and continued expansion in USG Boral," said James S. Metcalf, Chairman, President, and CEO. "With our focus on controlling costs, we are well positioned to take advantage of an improving demand environment going forward."
"We saw margin expansion in our Gypsum, Distribution, and USG Boral businesses, notwithstanding softer than expected demand. Our Ceilings business also performed well, though overshadowed by the record prior-year third quarter," he added.
The corporation's Gypsum segment generated $89 million of operating profit in the third quarter of 2015. On an adjusted basis, operating profit of $89 million in the Gypsum segment improved by $4 million over the third quarter of 2014, led by the US Gypsum business which realized 80 basis points of improved operating margins. Wallboard provided $7 million of improved operating profit while the surfaces and substrates businesses contributed $6 million in incremental profit. These improvements were offset by $5 million of increased SG&A spending due to timing of projects and costs incurred, as well as a $4 million unfavorable foreign currency impact.
The corporation's Ceilings segment earned $24 million of operating profit in the third quarter of 2015 compared to $30 million of operating profit in the third quarter of 2014, a quarter that yielded the highest margins in the history of the Ceilings business. Lower overall volumes, decreased pricing primarily in grid products, and inflation in raw material and labor costs were the primary drivers of lower margins in the US Ceilings business. Foreign currency also unfavorably impacted the Ceilings segment. Despite these headwinds, profitability in the Ceilings segment was essentially flat on a sequential basis compared to the strong results of the second quarter of 2015.
The Distribution segment earned $9 million of operating profit and more than doubled its operating margins to 2.4% in the third quarter of 2015. Same store sales increased 5%. Improving volumes, partially attributable to the strength in multi-family residential construction, coupled with the continued implementation of operational improvement initiatives drove improved margins.
The USG Boral business generated $12 million of equity income for the corporation in the third quarter of 2015, consistent with the amount earned in the third quarter of 2014. On a currency neutral basis, the USG Boral business earned $15 million of equity income, a $3 million improvement over the prior year quarter.