Your right, I am not that smart, but I am smart enough to know you can't build your business by running at a loss. The only one that thinks that is Obama. I also know that drywall is one of the lowest margin products that go into a house. It is heavy and bulky requiring extra storage, handling and shipping cost that limits the distribution range.
People have mentioned this lightweight product, I can tell you builders are not using this because there is no break on labor cost, the installers still charge $22 a board to install it. The reason here is that most of the labor in drywall is spent on finishing the damn stuff, not hanging it. Furthermore, anyone can hang it, you need a craftsman to finish it. You will find this lightweight product at Lowe's for the homeowner use, but builders never buy drywall from Lowe's unless they are working on a cost plus basis where the homeowner does not know better and doesn't realize they are getting screwed.
Finally, the number of drywall manufacturers that are providing product today is the same number that provided it during the peak. You have fewer builders and distributors today than you had during the peak. So do the math, less demand, same number of suppliers, means more people to divide a smaller pie.
Oh, by the way, I am now buying 5/8 drywall for $12 a 4 X 12 sheet putting my drywall expense more to 2002 level.
He is not only not stupid but I'm sure his I.Q. soars above both of yours. He's actually a builder and perhaps that causes him to over-think this company a bit. That said ... I totally disagree with him about USG ...
by the way .... I've been long this stock for 3 years .... Holding to the upper 30's. Gotta love today.
He claims to be a builder. How you think he is overthinking USG is beyond me. I won't comment on I.Q. except to say I bet you cannot define it without looking it up. Go ahead and google it.
He (w999surf) says or implies that USG should be profitable by now. . . and won't be until they pay down their debt. Well that is just ludicrous. He points to the idea that he can buy 5/8 drywall cheaper today than in '06. I am certain that is correct, but it is also irrelevant. In '06 you couldn't buy 1/2; it was on allocation. I guess he is lacking some understanding of supply and demand. He made the absurd statement that the same suppliers are still around selling drywall, without consideration for the production capacity that has gone away which will not easily be replaced. This industry could not possibly produce 25bsf of drywall this year. In '06 demand was at 35bsf. My guess is that production capacity is actually below 20bsf right now. 10bsf of capacity is gone permanently and of the 5bsf of capacity that has been 'mothballed' 2 or 3bsf of it would take more than a year to bring back online. Now I understand we won't likely see demand at 35 or even 30 in the near term, but if we see anything beyond 25 for '13 (a rather normal number), wallboard will be on allocation and the price will skyrocket. I am going to project demand at 25, restrained by capacity at year end. '14 demand will be at 27, still pushing capacity. '15 will be at 30 on like capacity. In short; the demand will probably be limited by capacity for the next three to five years. Anybody want to bet the suppliers start bringing in dragon board again? Not likely.
In any case; USG can manage their debt. They were cash positive from operations for the year. (That means they had enough cash to pay the interest and pay down their debt). He (w999surf) made the claim in a prior post that he thinks they (USG) are 'keeping their cash flow through increased debt'. Well that is just a patently false statement. Debt is up 7 million but cash has increased 72 million in the same period. Further; total liabilities have declined for the year. Unless he wants to claim that the accounting is bogus, he cannot support his claim.
He also made the comment that 'there is a big hurdle to run 10 years of expansion in this business'. Okay, well that may be true, but we don't even need that. If we simply 'revert to the mean' as dictated by demographics USG will see shareholder book equity increase by something like 100 to 150% next year, possibly again the following year and then 50%, 30% and so forth, tapering off to a growth rate in the double digit range for a period of another three to five years. In short; a couple years worth of 'expansion', which is really a retracement, followed by a flat housing market for the rest of the 10 years would be sufficient to make USG worth at least 40 bucks a share.
Where you see his wisdom is beyond me.
rboater; he hasn't sunk to that level yet and I don't see the commonality in his posts. His punctuation is better as are his verbal skills. Maybe quick went back to grade school and brushed up on his grammar, but I'm betting this is a different guy. His ability to read a financial statement is definitely on par with quick though.