USG 1Q15 Earnings Call Notes

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Planning for 1.1m housing starts this year

“On new residential, we continue to believe in 1.1 million housing starts for 2015, which represents about a 10% growth, and this is inclusive of any headwinds that we see in some of the oil and gas regions of the Southwest”

Commercial starts strong in 2015

“The continued improvement of the U.S. economy and labor market is supporting an increase in non-residential construction. Commercial starts are projected to increase 9% in 2015. Now, as a reminder, our products lag commercial starts by about 12 to 18 months and not all starts impact our business the same way.”

Volume growth driven by premium products

“he growth in volume in the quarter was really on the premium. You hit the nail on the head on our premium products, our high-end products. And we’re seeing much more specifications on the high-end with open-office spaces. Light reflectance is very important; the noise reduction is extremely important, because you don’t have a lot of closed office spaces now; and those are our high-NRC or noise-reduction-coefficient ceilings.”

Golden horseshoe of commercial construction

“I like to say there’s kind of the golden horseshoe of commercial construction starting with the Silicon Valley out west, working its way through California and the Southwest. And up probably into the D.C. area, where it tends to slow. So we’re seeing nice growth there.”

Office leading the way followed by education and then retail

“rom an opportunity in the commercial markets, the office construction is the strongest part of the commercial recovery. That is a double-digit growth, 10%, 11% opportunity improvement in office. Education is the next area, is followed by retail, so those are really the three top areas that are the subsets in the commercial recovery, which, again, it’s coming from a very low base, but we’re starting to see some nice green shoots in that segment.”