Buffett-Backed USG Rallies After Profit Exceeds Estimates

Updated on

USG Corp., the wallboard maker whose largest shareholder is Warren Buffett’s Berkshire Hathaway Inc., rose the most in 17 months after beating profit estimates amid a U.S. residential construction rebound.

Second-quarter earnings excluding one-time items of 53 cents a share topped the 46-cent average of analyst estimates compiled by Bloomberg.

USG benefited as U.S. housing starts in June rose to a 1.17 million annualized rate, the second-highest level since November 2007. Improved volumes for the wall-producing North American Gypsum unit, and increased sales of higher-margin products in the ceilings division boosted results.

“The outlook for all of our businesses is bright,” Chief Executive Officer James S. Metcalf said in a statement. “All of our businesses expanded their margins.”

USG climbed 6.4 percent to $28.86 at the close in New York, the biggest jump since February 2014. The rally erased a year-to-date decline for the stock, which is now up 3.1 percent for 2015.

Berkshire owned 29.8 percent of the Chicago-based company’s shares outstanding as of March 31, according to a filing.

USG said in a filing it received a federal grand jury subpoena requesting records in connection with a federal investigation of the gypsum drywall industry. USG said it will cooperate fully and that it doesn’t expect the probe to have a material adverse effect.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE