Gypsum industry news

US: Continental Building Products' net sales fell to US$108m in the third quarter of 2015 from US$114m in the same period of 2014. Its adjusted earnings before interest, taxes, depreciation and amortisation was flat at US$33.7m. Wallboard sales fell by 3.9% year-on-year to 590Mm2, while the average sales price fell by 0.7%, mainly due to the weaker Canadian Dollar and regional sales mix. Gross profit grew by 7.2% year-on-year to US$30m, primarily as a result of strict cost controls and favourable energy costs. Operating income fell to US$11.1m from US$20.2m in the same quarter of 2014.

US: Eagle Materials has reported its financial results for the second quarter of its 2016 fiscal year, which ended on 30 September 2015. Its revenue grew by 16% year-on-year to US$329m and its net earnings fell by 41% to US$29.8m, reduced by US$26.2m post-tax due to non-routine items related to the oil and gas proppants segment. Eagle Materials' adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) grew by 14% to US$110m.

Eagle's construction products and building materials businesses continued to perform well during the second quarter of 2016, with the Cement and Paperboard businesses reporting record quarterly operating earnings and the wallboard, concrete and aggregates businesses reporting year-on-year improvements. Demand for building materials and construction products remains strong in each of its regional markets. Cash flow from operations improved by 12% and was used to fund the Skyway acquisition, make capital improvements, pay dividends, reduce debt and repurchase shares.

The decline in oil prices during the summer adversely impacted US oil and gas drilling activity, leading to further reductions in demand and pricing for proppants. As a result, it recorded impairments to several intangible assets originally booked in connection with its acquisition of CRS Proppants and revalued downward certain raw sand inventory values. The impairments and inventory revaluation charges totalled approximately US$37.8m pre-tax.

Gypsum Wallboard and Paperboard reported second quarter 2016 operating earnings of US$48.1m, up by 7% year-on-year. Improved Gypsum Wallboard and Paperboard sales volumes were the primary drivers of the quarterly earnings increase. Gypsum Wallboard and Paperboard revenues for the second quarter grew by 8% to US$143m. The revenue increase reflects higher Gypsum Wallboard and Paperboard sales volumes slightly offset by a 1% decline in the average Gypsum Wallboard net sales price. Gypsum Wallboard sales volume for the quarter grew by 9% to 619Mft².

US: USG Corporation has reported that, on a consolidated basis in the third quarter of 2015, its net sales were US$972m, consistent with the third quarter of 2014.

On an adjusted basis, USG's net sales increased by US$20m or 2%. Operating profit improved by US$80m to US$102m. USG's adjusted operating profit was US$115m in the third quarter of 2015, an US$8m increase from the third quarter of 2014. USG generated US$76m in net income in the third quarter of 2015, compared to a net loss of US$12m in the third quarter of 2014. On an adjusted basis, net income of US$76m increased by US$14m from the third quarter of 2014. Foreign currency unfavourably impacted consolidated net income by US$8m in the third quarter of 2015. Adjusted results exclude results from Gypsum Transportation Limited (GTL) a shipping operation which USG has exited, litigation settlement charges and impairment charges were all recorded in the third quarter of 2014.

USG's gypsum segment generated US$89m of operating profit in the third quarter of 2015. On an adjusted basis, operating profit of US$89m improved by US$4m over the third quarter of 2014, led by the US gypsum business. Wallboard provided US$7m of improved operating profit, while the surfaces and substrates businesses contributed US$6m in incremental profit. These improvements were offset by US$5m of increased selling, general and administrative spending due to the timing of projects and costs incurred, as well as a US$4m unfavourable foreign currency impact.

The USG Boral business generated US$12m of equity income 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 US$15m of equity income, a US$3m improvement over the 2014 quarter.

"We saw margin expansion in our gypsum, distribution and USG Boral businesses, notwithstanding softer than expected demand," said James S Metcalf, Chairman, President, and CEO. "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. With our focus on controlling costs, we are well positioned to take advantage of an improving demand environment going forward."

US/Canada: Wynnchurch Capital Ltd, a US-based private equity firm, has made a growth equity investment in Canada's Gypsum Technologies Inc.

US: Workers have been constructing a new facility to process by-products from FirstEnergy Corp's coal-fired power plant as the company makes a major change in how it disposes of industrial waste. Some of the plant's by-product is already sold and reused by National Gypsum, which takes about 500,000t/yr of synthetic gypsum for wallboard production.

The Ohio-based company plans to have the project ready for use at the end of 2016, when the company has agreed to halt the use of the residual waste impoundment known as Little Blue Run, which many neighbours have alleged has leaked hazardous waste and released noxious odours.

When the Bruce Mansfield plant removes sulphur dioxide from its emissions, it creates coal combustion by-products. FirstEnergy has been depositing much of the by-product in Little Blue Run, West Virginia. However, the state Department of Environmental Protection sued in 2012 over leaks and threats to groundwater. As part of a settlement, the company agreed to no longer use Little Blue Run by the end of 2016.

James Fitzgerald, Manager of major projects, said that new disposal sites for materials treated by the new dewatering facility will be different. "That landfill will have different regulations, different requirements. There are liners associated with it. So it's a whole different process," said Fitzgerald.

With the new facility, FirstEnergy will process 2.5 – 3.5Mt/yr of by-product, which consists of fly ash, sulphur and lime. It will be processed at the new facility, where water will be removed. The water from the process will then be reused at the plant, said Jim Graf, Director of the Bruce Mansfield plant. Once the new facility processes the by-product, it will be moved by barge to another site. The new project will cost more than US$200m.

US: Transnational Group has entered into a mining lease agreement with the Nevada Outdoor School (NOS) to secure full rights to mine gypsum on several claims located in southern Nevada that comprise the Mount Vista Gypsum property.

According to the agreement, Transnational has acquired full mining rights of any gypsum that is located on the Mount Vista property in exchange for a production royalty. There are 12 claims included in the lease agreement that comprise a total of 1.86km². The term of the company's mining lease for Mount Vista is 10 years with three five-year renewable options.

"Transnational is excited to announce the finalisation of our agreement with the Nevada Outdoor School that will allow us to mine gypsum and limestone contained in Mount Vista at an agreed upon royalty. This agreement enables the possibility of discovery and mining other valuable minerals and metals as well," said CEO of Transnational Group, Philip Dutoit. The agreement stipulates that the company will negotiate a separate royalty agreement with the NOS for each resource.

US: The Port of Monroe in Michigan has been busy exporting gypsum since 4 September 2015, according to Paul C LaMarre III, port director. Five consecutive gypsum loads will leave the port in less than two weeks. Most of the activity takes place at night. The first four loads for USG Corp will be shipped to Port Colborne, Ontario, while the fifth load, for Lafarge, is headed for Alpena.

"Last year, we shipped two loads and this year we will have shipped 10, with more on the horizon," said LaMarre said. The port is also 'very close' to executing a gypsum management agreement with DTE Energy, in which the port will manage and market the gypsum produced. "This would be the first such agreement of its kind between a public port and a public utility," said LaMarre. The Port of Monroe moved more than 2.4Mt of cargo through its shipping channel in 2014, shattering the record for the second time in a row.

US: Cemex USA, the US subsidiary of the Mexican building materials company Cemex, has signed an agreement for the sale of its gypsum wallboard business based in Florida to US LBM. Terms of the deal were not disclosed.

The proceeds obtained from this transaction, which Cemex said will not be for a material amount, will be used mainly by Cemex USA's affiliates for debt reduction and for general corporate purposes. Cemex said that the closing of this divestment is subject to the satisfaction of standard conditions for this type of transaction.

The company currently expects to finalise this transaction at any time prior to the end of 2015.

US: The Oxford Fire Department responded to a minor fire on 22 September 2015 at the National Gypsum Company in Oxford, Michigan.

A call first came in about a fire in the plant's paper bale room around 11:15am from an employee at the plant, according to Oxford fire chief Gary Sparks. Firefighters were on scene within three minutes of the call, extinguished the fire and left the scene by 12:40, said Sparks.

It is unclear how the fire started, but the sprinkler system held the flames in check until responders arrived on the scene. "There was minimal damage," said Sparks. "The majority of it was to the paper bales, but there was some smoke damage in the office area." There were no injuries reported during the incident and the plant was expected to be up and running before the day ended.

Europe: USG has entered into a definitive agreement for the sale of its interest in Knauf-USG Verwaltungs GmbH and Knauf/USG Systems GmbH and Co KG to Knauf Aquapanel GmbH for approximately Euro48m in cash.

The Knauf-USG joint venture manufactures and distributes Aquapanel brand cement panels throughout Europe (excluding Turkey) and all countries that were part of the former Soviet Union.

USG's equity method income in the Knauf-USG joint venture amounted to Euro1.79m for the year that ended on 31 December 2014. Upon the close of the transaction, USG anticipates recording a Euro2.68 – 6.26m gain. The closing of the sale is subject to the receipt of necessary governmental approvals and other customary closing conditions and is expected to take place by the end of 2015.