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Executives

James S. Metcalf - Chairman, Chief Executive Officer and President

Analysts

Michael Jason Rehaut - JP Morgan Chase & Co, Research Division

USG Corporation (USG) 6th Annual J.P. Morgan Homebuilding and Building Products Conference May 22, 2013 10:15 AM ET

Michael Jason Rehaut - JP Morgan Chase & Co, Research Division

So we're going to continue with the conference. If you want to find your seats. Great. So again, good morning, everyone. We're thrilled to continue our Sixth Annual Homebuilding & Building Products Conference. We have with us U.S. Gypsum, United -- USG, and CEO, Jim Metcalf. USG, of course, the leader in Gypsum Wallboard in the U.S., as well as having leading positions in the Ceilings business. As with previous presentations, we'll keep prepared remarks to roughly 20 minutes, so there's plenty of time for Q&A.

And without any further ado, I'll turn it over to Jim.

James S. Metcalf

Thank you, Michael. Good morning. It's great to be here at this conference. Having attended a few of the conferences here over the last few years, we do feel a lot better about where we are at this point. As you can see, our title is Building on the Recovery. If you attended the last few years, we talked about creating a recovery at USG Corporation and now, it's talking about how we're going to build on this recovery.

I just want to highlight the forward-looking statements. Everyone just can take a moment to read those, please. Thank you.

Just a profile of the business and Michael had touched on USG Corporation. We're a 111-year-old corporation. We have -- what I'd like to say about our company, we aren't a drywall company. We aren't a building products company. We provide shelter. It's where people live, work and play. If you look at this building that we're in, we have products through this building, either we manufacture or we distribute. We'll touch on our company profile in a second, but we have a company that not only manufactures products, but we distribute. We're the largest distributor of building products in the United States. We have over 75 production facilities throughout the world. We're #1 and #2 in our position in North America both on ceiling, tile, grid, wallboard surfaces, substrates, as well as distribution with over 140 locations.

This is our first quarter results and I wanted to just highlight a couple of numbers here. It was a very long recession we're in and what I'd like to say is we were in a small D depression. We had 5 years of unbelievable demand that left our business in all 3 segments. We play in housing, which is about 25% to 30% of our portfolio; commercial; and repair and remodel. And each one of those segments started in 2006, 2007, had exponential losses in demand. In the first quarter of 2013 was the first quarter that we've had net earnings and we did this through various ways which I'll touch on in a second.

Just to bring the line -- your eye to the line of operating profit of $49 million. To put that in perspective, the first quarter, we had an operating profit of $49 million. Last year, 12 months, we had approximately $73 million in operating profit for the entire year. So the recovery has started to occur, but I want to reiterate or mention to you this morning that we are in very early stages of the recovery. Housing is still has some breeze at our backs, but repair and remodel is starting to get some traction and commercial is still very, very choppy. So we're still in the early phases of this recovery.

If you look at our 3 segments, as I touched on, housing, commercial, and repair and remodel, we feel that there are forces that are driving each one of these segments to the long-term mean. You can see the long-term mean on housing is just over 1.4 million. We look at commercial starts, about the same amount, 1.3 million, and the repair and remodel for growth in the long-term mean. We see the aging stock of a home. The average home in the United States is almost 40 years old, so our products really fit well in the repair and remodel of a home. The aging stock of commercial buildings, something you don't see a lot about, the commercial building aging stock is almost as much as housing at 40 years. So commercial renovation is very, very important. So these are not long-term -- these are not projections, this is just sharing the long-term mean and where we are in 2012. We think with the overall demographics, the aging stock and turnover are very, very important forces that will drive the overall demand in the industry as we look forward.

If you look at our strategic priorities as a corporation, they're very simple: strengthen, diversify and differentiate. We want to strengthen our core businesses which are our North American wallboard -- or excuse me, our North American manufacturing and distribution. That's our core business, and so strengthen that core. And that's really where we've been focused over the last 5 years of really taking costs out of lowering our breakeven of that business. Second part of that is diversifying our sources of earnings. So we're doing that in 2 areas, through adjacent products that I'll touch on in a moment, and also very select international investments. Our position is not to put flags all over the world and have a great map of where our facilities are. We want to be in very select high-growth markets where we can be #1 or #2. We can have critical mass. We want landed assets in that particular country and have country managers that are from that area of the world. The third area, which is really important and we're very focused on through this recession, has been differentiating through innovation, and this is something that we have doubled our efforts. We're very focused on innovation. Our customer have told us we're the innovation leader. And some of you that have been following us with some of the products we've introduced through this recession, one being our UltraLight portfolio has really differentiated the company through innovation.

So I'm going to touch on each one of these, strengthen, diversify and differentiate. Strengthening the core. As I indicated, that's where we've been putting a tremendous amount of effort to get us to the other side of this Great Recession that we have gone through. We've lowered our breakeven. We've taken out approximately $0.5 billion in costs, and we've done it in each one of these areas. It wasn't just in manufacturing. It wasn't just in Wallboard or Ceilings. We really did it across the portfolio. We did it in our mining business, our shipping business. We took the workforce down. But one really important metric that I'd like you to take with you is, we've lowered our overall breakeven that we want to keep it at that level, and now we're focused on organic growth. So we're really going forward, we want our company to be more ambidextrous, keep our breakeven low and organically grow the business. If you look at the breakeven prior to the this Great Recession, wallboard industry shipments in the United States were approximately -- had to be approximately 26 billion feet of overall demand for our company to be breakeven. Now obviously, we were operating above 26 billion. The industry was shipping 30 billion, 32 billion, 29 billion. So we were, financially, in wonderful shape. Well, with the Great Recession, our industry shipments went down so 17.5 billion. They had not been at those levels for 20 or 30 years. Everyone knows what happened with housing, but we did have the perfect storm. What we did with our breakeven, breakeven at 26 billion. We took that breakeven from 26 billion to under 18 billion. So this company has a breakeven, a very low breakeven, and the leverage here is absolutely tremendous as we go forward.

Diversifying our earnings really in 2 areas, I talked about adjacent products. This is an example of some products that we have. We've been very successful in the replacements of commercial roofing with our FIBEROCK products. For example, this building has a commercial roof. So many years, it has to be replaced, not repaired. And this is a market that really only had 1 supplier in that market. This was a product that we already had, that we feel that we're entering into a new market. We believe that it can have some substantial revenue to our portfolio. We are focused on businesses that can generate revenue around $100 million. If it's something less than that, we don't want to spend a lot of time on. So really, that's one of our metrics to on our adjacent businesses, to have businesses that can bring $100 million and more to our portfolio.

Along with that, we've made an investment in the last 12 months in the Middle East. It was a very important investment for us. We entered into a joint venture with one of the largest rock quarries in the world. This has supplied rock not only to the cement industry, but also to the emerging market in India. India has a very low supply of gypsum rock in the country. A lot of it is brought from out of area. The growth of India we are very excited about. It's really commercial high-rise construction or commercial -- or residential high-rise construction in India and we will be manufacturing wallboard in Oman to be targeted into the Middle East and India in the next 12 months.

The third leg of our strategic priorities is differentiating through innovation. And this is an example of our lightweight portfolio that we started, really, in the midst of this recession with our DUROCK tile backer board. As you can see, anywhere from 25% all the way up to our Joint Treatment, which we just introduced in the last year at 40% reduction. I use the example a few weeks ago on our Joint Treatment buckets, which here in the Northeast we had a very, very large market share as we do throughout the country. I'm sure many of you have seen the joint treatment with the green lid. And our lightweight compared to our Joint Treatment, our classic joint treatment, the difference is this. Lifting the regular joint treatment is like with an 8-year-old child. Lifting our lightweight is lifting a 3-year-old. So those of you that have children or grandchildren, if you want to lift an 8-year-old during the day all day or a 3-year-old, that's the difference in our products. The reason these are very important products for us, because it truly added to our value proposition through this recession. We asked our customers what they needed. They were very concerned about labor rates, particularly on commercial construction. Labor rates here, drywall hangers in New York City make an excess of $75 an hour. It's very, very inexpensive trade. And if we can take costs out for our customers, labor costs, it's very important, and how do you do that? You do that with a lighter product, you do that with better productivity. It reduces workman comp claims with our customers. So we listen to our customers through this recession and they said, "Give us something lighter. Give us something that performs just as well and help us make our money through this recession." So really, this is how this portfolio has been formed.

We're also very focused on open innovation. We're partnering with universities and laboratories. Through this recession, unfortunately, we had to reduce our workforce throughout the entire corporation. And we said that we do not want to give up our innovative efforts. So we now partner with universities and their Ph.D. programs to provide outside thinking for new product development, how to use less water, how to be more environmentally conscious in our manufacturing process. So we have some really exciting in the things pipeline that we're going to be continuing to differentiate through innovation.

I spoke about lowering our breakeven and this is an example of the last 3 recessions that we've had as a corporation and what the leverage is in this company. This is -- illustrates for every incremental dollar what goes to the bottom line. You can see in the early 80s, it was in the 30%, 35% up to the mid-50s. So this was kind of historically where we've been. If you look at our results last year in 2012, it was around $0.70 for every incremental dollar. And the reason, the big difference is, we have taken out more costs throughout the portfolio than we have in these last 3 recessions.

Just to kind of wrap up and then I will turn it over to Q&A is our financial flexibility. I talked about being an ambidextrous organization, lowering our breakeven and organic growth. One of our key initiatives as we are going forward is really de-risking our balance sheet. We're really focused on investment-grade metrics. We are very focused on lowering our overall debt. We want to take about $1.5 billion off our balance sheet and we have some initiatives to do it. The business is coming back, as I indicated. We have the convert that we're going to be able to make some decisions on as we go forward. And we have a wonderful asset with our $2 billion NOL. So there are some great options we have. This is the first time I will say that we've had some nice options on our balance sheet and we have focused our efforts the last 3 to 5 years on these sources of cash and really getting to breakeven in operating profit, and now, net income. And now, we're very focused on the uses of cash. So this is something I want to assure everyone here in the room that de-risking our balance sheet is extremely important for USG corporation.

So what I'd like to do is I'll wrap up and open it up for your questions and anything that you may have on your mind. Those of you that we'll be meeting this afternoon, we're looking forward to the one-on-ones. But let me just summarize by saying, this is a company that is a leader in its industry. It's a 111-year-old company that really is working in a much faster and more efficient way. We're lean, we want to continue to keep our breakeven low. We have some phenomenal organic growth opportunities. We're leveraging our innovation throughout the world. We feel that our innovation is another form of currency. And we are really looking at throughout the world at other opportunities for us to use our innovation in parts of the world where we may not go as currency to really differentiate our corporation. If you look at our overall portfolio, think of us as building shelter where people live, work and play. We're a manufacturer and a distributor in the key markets.

So with that, I appreciate your time this morning that you've devoted to our company, and I'll turn it over to you for questions.

Question-and-Answer Session

Michael Jason Rehaut - JP Morgan Chase & Co, Research Division

Great, Jim. As I've done with some of these presentations, I'm going to lead off with 1 or 2 questions just to start and in some ways, it allows questions to percolate in the audience. So I think an important element of the recovery for the industry, for the Gypsum Wallboard industry, and certainly, your company has benefited and had been -- a key part of it has been the pricing recovery in wallboard over the last couple of years. And it's been a source of debate among the investment community about the sustainability of it, the success of it, particularly given where you are right now in terms of capacity utilization rates versus history. Looking forward, I know you're very cautious in terms of giving specific thoughts on price. But as you look out over the next couple of years, you're going to have stronger demands, you're going to have higher level of capacity utilization. And with pricing where it is all ready and where you could see it, I mean, is there any reason to think that over the next 2, 3 years, given similar levels of price increases, that Gypsum Wallboard prices kind of approach again kind of prior-peak levels because we're certainly already on our way there today? I mean, how do you see the market over the next 2 to 3 years in terms of the continued potential price recovery?

James S. Metcalf

Is that a 5- or 6-part question?

Michael Jason Rehaut - JP Morgan Chase & Co, Research Division

It can actually be a very quick one, a quick answer, but...

James S. Metcalf

No, it's a great -- that's a great question. Just to kind of back up for those of you that haven't been following it, we took a very different approach 24 months ago on how we price our wallboard. We have price increases in all of our different products. But we wanted -- we set that with our customers and they said, "It's really difficult for us to plan when you're putting price increase announcements throughout the year. I can't plan my business. I'm focused on which increase are we talking about. It's very confusing for me. We have a lot of billing errors. I have to put a back office staff to make sure the invoices are correct." And we run around and we said, "Well, what would you differently?" I mean, we were in the midst of this recession and a couple of things. They said, "Give us one price for the year." And we know what it is. And we paused and said, "Okay, that's new. We haven't done that." And we came back and said, "Well, what if we gave you 1 price for the year, but let's get rid of job quotes?" Because job quotes were very difficult for us to manage as well. Sometimes jobs, there weren't that many large jobs, and the reason you did job quotes, particularly for commercial business, is your building a 70-story building, it takes 4 years to build it. So they would want to lock in the price, but there weren't a lot of 70-story buildings being built. So after -- again, talking to our customer, we said, "Okay, no job quotes, one price for the year. But at the beginning of the year, we're going to index the price up. We need price improvement because we need to get profitable. And what was important here, so did our customers. This is where our customers were saying price improvement is good for them, very positive for them. So this was a very new policy for us that we implemented beginning of 2012. And it was very successful. It was very successful. We realized we're a little north of $20 to $1,000, one price for the year, get rid of job quotes. Coming around to 2013, we had the same conversations and it worked very well again. So we're sitting here now almost in June, and what our customers are asking us now is, "What about 2014? We like it. We like the 1 price. So the good news is, they're asking us about 2014. Now going forward, capacity utilization, as Michael said, is still very, very low. We're at 60% as an industry, plus or minus. This is really going to be demand-driven. And if you look at historic highs, our reported realized selling price in the first quarter was around $153, $154. If you look at the peak in 2006, pricing got up to about $185, $188, but that's in 2006 dollars. So just put it inflation, historically -- historic highs now has a 2 in front of it. If you also look at it in 2006 and that we did not have the same type of pricing strategy, one is for the year. So we still have a long way to go on demand, and really, price improvement will continue as long as demand continues. And really, if you look at -- so I would say, it's more about demand versus where historic prices were or weren't. And we feel that we're very comfortable at where we are in 2013. And as we get closer to 2014, we'll be a little smarter on raw materials, what the market looks like. Is the commercial recovery real? I mean, we still think it's choppy. How real is it? I mean, housing is only part of our portfolio. Is R&R sustainable? What's job growth look like? So as we get closer to 2014, we'll be a little smarter on where we should index our numbers for that year. But we're very pleased with it. And the reason we're pleased with it, we're seeing it in the results, but our customers like it. And the reason they also like it is, it allows them to focus in other areas. They put it in their program. They know exactly where their costs are. It's like we know where our natural gas costs are. It's in our costs. They plug that into their system and they focus on other things like labor rates, getting the next job, are they going to expand, do they have to hire. So we feel it's been a very positive impact for our customers.

Michael Jason Rehaut - JP Morgan Chase & Co, Research Division

Okay, great. That's a great answer. I appreciate it. And I guess the second question on -- I guess and a lot has 2 questions in the conference. I'm not cut off by the operators.

James S. Metcalf

No, actually, I did that.

Michael Jason Rehaut - JP Morgan Chase & Co, Research Division

The second question on Ceiling margins -- and I deserve that response, by the way. On Ceilings margins, it's always been a great business for you. A lot of very consistent margins in the high-teens over time. As you look at that business going forward, and certainly, that's a business that you say, right now end market demand for commercial is choppy, but eventually you would expect the recovery to unfold in that segment as well. How do you see the margins playing out if you get another 20%, 30% type of, let's say, revenue growth over the next few years? Would you expect margins to kind of be within the range that you're seeing currently? Or would there be some amount of lift due to an incremental margin that would flow through?

James S. Metcalf

That's a great question. We're very proud of our Ceilings business. It wasn't always a great business for us. If you go back 10 years ago, and in fact, I was running that business at that time, and we had a really -- we had really dynamic discussions with our board, is it part of our portfolio? The return on investment was single-digit. We had a large competitor that we, basically, we were going aftermarket share. And at the end of the day, the returns weren't there. Our distribution network was subpar. We were selling too many contractors direct around our distribution, so we kind of had a mess. And we had to step back and really makes some very strategic moves for our Ceilings business to rightside it. We focused on the ROIC of the business, not market share, so that was really important. And that was different mindset for us, it's really focused on that return versus we're operating in an oligopoly of market share and we weren't gaining market share, but we were losing margins. So after a lot of hard work, and the last 5 years have been really pleasing for us because going into this recession, we were concerned about the demand. And I think every quarter, if Michael didn't ask it, someone would ask me, "How are Ceilings results going to continue to perform from a bottom line standpoint?" We took costs out. We focused on the high-end. We improved our distribution. We dramatically reduced, if not eliminated, direct buy contractors. And all that work we did got us through this recession. We proactively improved pricing even in a down market and we really focused on steel procurement. And if you think about the Ceilings business, the grid in our Ceilings business is very important because how we procure the raw materials in steel and focus on the indexes of steel futures and how we put a price increase on the market on that timing is really important. Some quarters we were slow. Index went up, steel prices went up. We didn't get it in the market fast enough, or it went up 5%, we only got 3%. You would see the quarter not being as good. When we stay ahead of it, we do well. So it's kind of -- when I talk to people about our Ceilings business, I say, a lot of the story behind the story is really the steel. It's not ceiling tile. Now to the ceiling tile, what is really important going forward, on Michael's question is, we're focused on the high-end part of the market. And the reason we're focused on the high-end is that's where the architects. This is really architects-driven. High acoustics, quieter offices, light reflectancy is really important when you're on your computer. And so the architects are really driving, really, what you want in your offices. You want quieter offices, you want -- you think about your office space ceiling tile is really important for that overall performance of that commercial office space. And what is good about that, that's a high-end ceiling tile. It's a high margin, it's not a commodity ceiling you may see any Home Depot. You go there and that's what you put in your basement. It's a high NRC which is a noise reduction coefficient, that good margins, but we're really tight on capacity. So what we've done most recently, we've invested, it's our first capital expenditure in our Ceilings business probably in 7, 8 years. We're investing in that high-end, which are higher margins. As we go forward, we're very focused. We are not focused on market share. We're very focused on the return on invested capital for the business and how we perform versus our competition. Every quarter, I look at how we perform from a bottom line to our competition, and that's really the focus for the Ceilings business. Now going forward, we're going to start seeing some wind in our back. And I think that will be positive on your question on margins. Right now, we've had nice margins. We had a record first quarter operating profit in a choppy market, so I think any type of volume in this velocity business will be positive.

Michael Jason Rehaut - JP Morgan Chase & Co, Research Division

And so is it fair to say, I mean, I don't know if you discuss it publicly, but incremental margins, I would assume would be several points above where the current segment average is at this point?

James S. Metcalf

We have not discussed that publicly, but that was a great shot. He always tries. I like it.

Michael Jason Rehaut - JP Morgan Chase & Co, Research Division

I would hope that, that would be the case. So anyway, with that, we will open the floor to questions, if there's any questions for Jim. Yes, sir?

Unknown Analyst

Do you decompartmentalize your Commercial business by asset class, i.e., office industrial, et cetera? And do you have a view -- and then the follow-up question is, do you have a view on which components of that demand will come back?

James S. Metcalf

Yes, we do. And right now, what you're seeing -- and the reason I say it's choppy, for example, office construction is showing positive results of high-single digits where healthcare and government and institutional is showing the opposite. So we do those subsets and we can provide those to you. But when you look at the overall Commercial business, that's only the first question. Your question's a great one is, what are those subsets? And right now, we're seeing half of Commercial showing high single-digit growth and the other half showing high-single-digit negative. So that's why we think it's choppy at this point.

Unknown Analyst

I was just wondering if we get to 1.5 million starts and if we get to 2 million starts, what will the utilization before 60% value set, where does the utilization go? And if we did push out to 2 million, some people say we need 2 million to play catch-up. Is there enough capacity? Or would some need to be built and then how much is that cost roughly?

James S. Metcalf

On the -- just to give you a kind of a foundation on that. For every 100,000 housing starts, it's approximately 800 million feet of industry demand. So if you're thinking -- you go from 1 million to 1.5 million, there's -- so that's over 3.5 billion feet of demand that's put on the foundation of about 20 billion. So now you're at 24 billion feet. You have to put a little bit -- you put some R&R on top of that, and that's assuming no commercial growth. So housing starts are only part of the story here, but that is the clearest metric that we've come up with. On the housing is for 100,000 is 800,000. 1.5 million housing starts, you are into the capacity addition. We think any type of capacity additions -- first of all, to build capacity in the United States is very expensive. You're looking at anywhere between $250 million and $400 million. You need to be next to a source, either a natural rock source or a power plant. And the power plant sourcing gets complicated because then you have to say, what type of contract do you have to get the raw materials. And most of the synthetic gypsum contracts are anywhere between 25 and 40 years, so you have to have that done. And then you'd say, I have to be really convinced that the demand is going to be sustainable because it takes you 30 months to build that facility. So in our planning period and we're looking between now and 2018, we are -- we feel the market is going. We're going to get some nice years going forward. In the early years here, we feel we can run our network. We're very efficient in our running our network. And getting to 2 million housing starts, actually, that's not in our long-term projection. We don't see it being that robust. We've been on more of the conservative side on demand. I'd rather be surprised to the upside and instead of working on the hockey stick.

Unknown Analyst

You mentioned that the industry has lowered its -- is it you or the industry has lowered its breakeven to 18 million?

James S. Metcalf

We did. We looked at -- it's our breakeven on...

Unknown Analyst

On the industry?

James S. Metcalf

Yes. On the industry demand, yes. It's 26 million to under 18 million.

Unknown Analyst

If the incremental margins are 70% and you've lowered this breakeven now to almost what the below what the low was here at this most depression. What is the income statement look like if your incremental margin are this high? And you we get back to that healthy 1.1 million to 1.3 million starts, plus a good nonres, plus some good res remodeling? How is it going to be different mid-cycle the next time than it was in '03, '04.

James S. Metcalf

First of all, I'm going to be a lot happier. And hopefully, you will be, too. Just kind of -- if you look at it at the top of the pile, there's about $500 million of costs that are out of the system. And if you look at our average EBITDA over the last 15 years, plus or minus, we've averaged about $430-ish million of EBITDA over that last 15 years. So we've taken $500 million out. We'll have to -- we're going to have to add some back into the system just with the growth. But at those type of numbers, the income statement is going to look really good.

Unknown Analyst

A question on capacity. You're talking about 60% capacity that's unstated, I guess, capacity. Are you running third shifts in your plants? Are you running overtime?

James S. Metcalf

We're running overtime. If you look at our effective capacity, we're running around 80%, 82%. And that's directionally correct, it's not perfect. We are very -- if you look at me put our business plan together for it 2013, we put just under 900 starts. We said Commercial is going to be choppy, low-single digits on R&R. We put that all that in our demand plan. And we can have approximately 20% increase in demand in our demand top line without adding anything, without any people or anything. Now this is a regional business and there are some parts of the country that are busier than others, so we are -- there may be some parts of the country that we add a shift. And when you talk about a shift, we are not talking about 100 people, 150 people. But we're very cautious about that because, as I said earlier, we have to keep the demand low. That is not an earthquake, is it?

Unknown Analyst

Just people trying to get into the...

James S. Metcalf

Oh, yes? Okay. We want to keep our breakeven low. And to add a shift, it's sometimes takes some time. We're in outline areas. We have very stringent preemployment tests and we want to make sure that demand is going to be there. So even though a shift may not sound like a lot, we take a very cautionary approach to adding any type of overhead until we're really convinced that the recovery is sustainable. As I said, in my earlier comments, we're in a very early stages of a recovery. We're enthused. I'm optimistic, I'm cautiously optimistic but we've what we've been through, we're taking very cautious approach. There's a lot of things out there that you look at employment, that ties into commercial. You look at disposable income, that ties into repair and remodel. So it's getting better. I wouldn't say we have the wind in our back, but we have a nice breeze. And so we have some way to go. We're still coming off some very, very low levels. We are talking about industry shipping at 20 billion feet, and we haven't been at those levels since the early 80s when we had 50 million less people.

Unknown Analyst

Just a follow-up to that. So one of your American announced of 20% price increase for 2014. Are you comfortable with utilization in the low 80s? Or do you want to get into the low 90s, mid-90s before you add a shift?

James S. Metcalf

Okay. There were 2 questions there. I can't comment on their price increase. All I know is when we get closer to 2014, we'll have a better idea on demand. We'll have a better idea on raw materials. We'll have a better idea on our customers' backlog. We really focus very strongly on that. One of the luxuries of having a distribution company, we have 30,000 contractor customers and I referred to the lens of the contractor. So we're really tied into what the backlog is of our large commercial contractors. So we'll have a better view on 2014 in the fourth quarter and that's when we'll have the conversations with our customers. On capacity utilization, we really -- we focus -- our pricing is separate from that. Our demand is very, very important, but again, our one price for the year has been very successful. And as we get into 2014, we expect that one price for the year as well.

Michael Jason Rehaut - JP Morgan Chase & Co, Research Division

Great. Well, that actually does it. We're just really running right out of time. So we appreciate the time, Jim, and participating in our conference. And we will be continuing on top of the hour with D.R. Horton. Thank you.

James S. Metcalf

Thank you, Michael.

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Source: USG's CEO Presents at 6th Annual J.P. Morgan Homebuilding and Building Products Conference (Transcript)
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