JPMORGAN HOMEBUILDING AND BUILDING PRODUCTS CONFERENCE

Transcription

1 JPMORGAN HOMEBUILDING AND BUILDING PRODUCTS CONFERENCE November 28, 2007

2 Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 related to management s expectations about future conditions. Actual business, market or other conditions may differ from management s expectations and accordingly may affect our sales and profitability or other results and liquidity. Actual results may differ due to various other factors, including: economic conditions, such as the levels of new home and other construction activity, employment levels, the availability of mortgage financing, mortgage and other interest rates, housing affordability and supply, currency exchange rates and consumer confidence; competitive conditions, such as price, service and product competition; shortages in raw materials; increases in raw material, energy, transportation and employee benefit costs; the timing of commencement of operation of new and upgraded manufacturing facilities; the loss of one or more major customers; capacity utilization rates; capital markets conditions and the availability of borrowings under our credit agreement; the results of a review by the Congressional Joint Committee on Taxation relating to the tax refund we received related to payments we made to the asbestos trust; our success in integrating acquired businesses; changes in laws or regulations, including environmental and safety regulations; the effects of acts of terrorism or war upon domestic and international economies and financial markets; and acts of God. We assume no obligation to update any forward-looking information contained in this presentation. 2

3 Outline USG Profile Current Market Conditions Long-Term Outlook Strategies for Growth 3

4 USG Profile NYSE listed since 1931; Ticker: USG 105 years old $5.8 billion in sales in 2006 Leader in its 3 core businesses 14,700 employees 4

5 North American Gypsum U.S. Gypsum Co. CGC Inc. USG Mexico S.A. de C.V. 5

6 Building Products Distribution: L&W Supply Corporation 6

7 Worldwide Ceilings: USG Interiors and USG International 7

8 USG Consolidated Net Sales Diversified End-Use Markets Non-Residential Remodeling 15% Residential Remodeling 15% New Residential 45% New Non- Residential 25% $5.8 Billion in in 2006 Net Sales 8

9 North American Gypsum Largest network of facilities Fewest miles-tomarket About 5 billion square feet of capacity less than 8 years old Most comprehensive product offering Vertically integrated 9

10 Partnering with Customers to Exceed Their Expectations USG enjoys robust satisfaction and loyalty scores Burke, Inc. Marketing Research 10

11 USG s Approach to the Market Grow faster than the market from cycle to cycle Extend sustainable competitive advantages Build long-term value 11

12 USG Has Grown Faster Than the Market Over Multiple Wallboard Cycles $6,000 $5,000 USG Revenue CAGR: 6.5% Industry Shipments CAGR: 4.0% $ in millions $4,000 $3,000 $2, Billion Square Feet (BSF) $1,000 5 $ USG Revenue Industry Wallboard Shipments Source: USG and Gypsum Association data, including imports 12

13 USG Gains Market Share in Downturns USG Wallboard Market Share and Industry Wallboard Demand Billion Square Feet 40 USG Wallboard Share 38% 35 36% % 32% 30% 28% 26% 24% 5 22% 0 20% Industry Demand Source: Gypsum Association data, including imports USG Market Share Cyclical Demand Trough 13

14 Leader in Product Innovation Awarded 87 Patents Worldwide in

15 USG Profitability at Peak of Last 4 Cycles Operating Profit $ Millions $985 $730 $528 $

16 Build Long-Term Value Through: Preferred brands Network of low-cost capacity Customer service Innovative products Profitable growth 16

17 Near-Term Market Outlook Housing market downturn will continue at least through 2008 Modest declines in residential repair and remodel market Commercial construction market will plateau in

18 Recent Wallboard Price Trends $190 $180 $170 $160 $150 $140 $130 $120 $110 $100 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 100% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% USG Board Price Industry Capacity Utilization 18

19 Results of Current Conditions Through Nine Months 2007 Net sales fell 11% to $4 billion Net earnings were $104 million or $1.07 per share Results hurt by lower wallboard prices and shipments, although ceilings sales improved Q307 wallboard price of $123 fell 35% from a year ago; shipments down 10% 19

20 Managing Through the Downcycle Curtailed or closed high-cost wallboard capacity 2.6 BSF Eliminated 1,100 salaried and hourly positions; reducing discretionary expenses Completing new, low-cost capacity to improve customer service and cost position Plan to manage capital spending Strengthened balance sheet 20

21 A Stronger Balance Sheet Debt Maturity Before Senior Note Offering in September $750 $500 $500 $500 $250 $239 $ Term Loan Senior Notes IRB's 21

22 A Stronger Balance Sheet Debt Maturity After Senior Note Offering in September $750 $500 $500 $500 $250 $239 $ Senior Notes IRB's 22

23 Long-Term Fundamentals for Demand Remain Positive Overall Housing About 200,000 more household formations per year between 2005 and 2015 compared to previous 10 years Aging baby boomers should strengthen second home demand Aging housing and more urban teardowns will lift replacement demand - Harvard University Joint Center for Housing Studies April 26,

24 Long-Term Fundamentals for Demand Remain Positive Overall Repair and Remodel The U.S. housing stock continues to get older One-third of homes are at least 45 years old - U.S. Census Bureau, 2006 Home remodeling expenditures projected to increase about 45% between 2005 and Harvard University Joint Center for Housing Studies,

25 Long-Term Fundamentals for Demand Remain Positive Overall Commercial Construction MMSF Floor Space 1,900 1,700 1,500 1,300 1, Actual Forecast Source: McGraw Hill Construction, Fall

26 Strategies For Future Growth Position USG to serve growing markets with low cost capacity Expand L&W through organic growth and strategic acquisitions 26

27 Harvesting Old Wallboard Capacity to Reduce Costs 3.0 BSF of of Wallboard Removed * Since 1999 Fremont, CA Detroit, MI Gypsum, OH Fort Dodge, IA East Chicago, IN Oakfield, NY Santa Fe Springs, CA Plaster City, CA Plasterco, VA Jacksonville, FL New Orleans, LA (December 2007) * Facilities idled or permanently closed 27

28 Additional Low Cost Capacity Positioned in Growing Markets 6.6 BSF of of New Wallboard Capacity Since 1999 Stockton, CA (2010) Washingtonville, PA (2008) Norfolk, VA (2007) Tecoman, MX (2007) Billion Square Feet of Capacity New Removed 6.6 (3.0) Net

29 Recent L&W Acquisitions CALPLY and All Interior Supply Existing L&W locations CALPLY locations All Interior Supply locations 29

30 L&W SUPPLY More Than Just Wallboard 2006 L&W Sales by Category Other Insulation Roofing Joint Treatment Ceiling Tile & Grid Metal Wallboard $2.5 Billion 30

31 USG Today and Tomorrow Leading at every point in the cycle Extending sustainable competitive advantage Building long-term value 31

32