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Saturday, December 24, 2011

Starts and Permits Up on Strong Multifamily Lift

Analysts were expecting a boost in November's residential construction data, but not this much of a boost.

The Commerce Department's residential construction report released Tuesday morning showed housing starts at a seasonally adjusted annual rate of 685,000 -- that's 9.3% higher than the revised October estimate of 627,000 (revised from a previously released figure of 628,000). It's also the highest level of starts since April 2010.

Compared with last year's near-record low, total housing starts were up 24.3%.

Single-family housing starts were up a modest 2.3%, coming in at a pace of 447,000, according to the government figures.

Building permits also showed strong improvement in November. Privately owned housing units authorized by building permits in November were at a rate of 681,000. This is up 5.7% from October and up 20.7% from the same month a year ago.

ProSales Readers Pick Economics, ProBuild Shakeups as 2011's Top Stories

The continued homebuilding slump edged out the leadership and organizational shakeups at ProBuild as the most significant story in construction supply this year, a survey of ProSales readers released today found. Meanwhile, president Barack Obama and Congress were the runaway winners as the most significant individuals in LBM in 2011.

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National Gypsum Introduces 5/8" High Strength Fire-Shield

CHARLOTTE (December 20, 2011) – National Gypsum has announced the release of its new Gold Bond® brand High Strength Fire-Shield® LITE Gypsum Board. High Strength Fire-Shield LITE is a specialty gypsum board formulated to be up to 15 percent lighter than standard 5/8" Type X gypsum board.

“High Strength Fire-Shield LITE is a natural extension to the National Gypsum High Strength LITE family,” said Steve Cusa, product manager, gypsum systems for National Gypsum. “High Strength Fire-Shield LITE is lighter in weight and easier to handle, offering an alternative to contractors who value products with less weight in commercial construction and fire-rated designs.”

The specially formulated lightweight properties of High Strength Fire-Shield LITE offer the potential to both improve productivity and reduce transportation costs. In addition to the lower weight, the product offers better working properties including an improved score and snap, reduced dust and an improved strength-to-weight ratio. In addition, its face paper features GridMarX® guide marks to allow installers to quickly identify fastener lines for stud and joist framing as well as nail and screw patterns.

High Strength Fire-Shield LITE is the first lightweight Type X product to achieve GREENGUARD Children & SchoolsSM Certification.

“National Gypsum is proud to offer the broadest line of gypsum and related products to have achieved the industry’s most stringent indoor air quality standards,” said Cusa. “The GREENGUARD Children & Schools Certification requires rigorous sample testing, manufacturing process review and ongoing quarterly testing.”

High Strength Fire-Shield LITE features a fire-resistant Type X core and is UL Classified and approved for inclusion in specific UL fire-rated designs. For a complete list of UL fire-rated designs, visit

High Strength Fire-Shield LITE will be available in early 2012 and will carry an up-charge over standard 5/8” Type X gypsum board. For more information, go to or call 1-800-NATIONAL for technical information.

Wells Fargo's Weekly Economic & Financial Commentary- December 23, 2011

- GDP growth for the third quarter was revised downward to 1.8 percent from 2.0 percent, but based on this week’s data we have raised our outlook for 2011 growth to 3.7 percent from 3.5 percent.

- Personal income rose 0.1 percent in November, while real personal income increased 0.2 percent, indicating that consumer prices continue to ease.

- New home construction grew 9.3 percent in November, but we do not expect this pace to continue as unusually warm weather likely contributed to the gain.

- New home sales grew 4.0 percent in November, with distressed transactions accounting for 29 percent of sales.

- Durable goods orders rose 3.8 percent in November, driven by a 73.3 percent spike in civilian aircraft orders.

. Excluding the volatile transportation component, orders rose a more modest 0.3 percent.

Friday, December 16, 2011

Wells Fargo's Weekly Economic & Financial Commentary- December 16, 2011

- Retail sales posted a disappointing increase of 0.2 percent in November, but categories typically associated with the holiday season saw solid gains.

. We believe the holiday sales projections will remain on track, as anecdotal reports suggest most consumers have yet to complete their holiday wish list.

- Industrial production delivered an unexpected decline in November with the pullback concentrated in the manufacturing sector.

. Regional surveys for December suggest further positive momentum in the factory sector.

- Regarding inflation, we continue to expect prices to moderate over the next year due to restrained domestic demand and slowing global growth.

Sunday, December 11, 2011

Wells Fargo's Weekly Economic & Financial Commentary- December 9, 2011

- First time claims for unemployment fell to 381,000 in the first week of December after rising to 404,000 during the holiday-shortened week of November 25.

. The ISM manufacturing survey’s employment component slipped to 51.8 in November from 53.5 during the prior month, while the employment component of the service sector ISM fell to 48.9 in November from 53.3.

- Orders for nondefense capital goods excluding aircraft turned negative in October, falling 0.8 percent, while shipments of these goods declined for the second month in a row.

- We forecast a 5.2 percent increase in holiday sales year-over-year, but data suggests consumers cut back on spending following Black Friday, as Redbook same-store sales fell 2.6 percent month-over-month through the week of December 3.

. While our forecast calls for decent holiday sales, we suspect consumer spending growth will slow to less than 1.5 percent in the first quarter.

Monday, December 5, 2011

Wells Fargo's Weekly Economic & Financial Commentary- December 2, 2011

-     The economy added 120,000 jobs in November due to gains in the retail, temporary staffing, and leisure and hospitality sectors.

.     The unemployment rate fell to 8.6 percent, although much of the decline was the result of a drop in the labor force participation rate and a sizable reduction in the number of employed individuals.

-     New home sales rose 1.3 percent in October, but net revisions to the past three months subtracted 15,000 units.

.     The S&P/Case-Shiller Home Price Index continued to decline in September, falling 3.9 percent year-over-year.

-     The ISM Manufacturing survey rose to 52.7 in November, the highest reading since June, as both the production and new orders components improved.

-     Consumer confidence rebounded 15.1 points to 56.0 in November, signaling a strong start to the holiday shopping season.

Spending on building energy efficiency to boom in next 5 years

Pike Research predicts the building energy efficiency market will soar more than 50 percent between now and 2017 to $103.5 billion. Among the leading factors: an active stable of energy service companies and aggressive efficiency policies being enacted around the world.

Pending Home Sales deliver positive data

The Pending Home Sales index from the National Association of Realtors (NAR) rose in October on both a month-to-month and year-over-year basis.

The forward-looking indicator based on contract signings, jumpe 10.4% to an index of 93.3 in October, compared to a reading of 84.5 in September. The latest figure is up 9.2% compared to October 2010.

"Home sales have been plodding along at a sub-par level while interest rates are hovering at record lows and there is a pent-up demand from buyers who normally would have entered the market in recent years," said Lawrence Yun, NAR chief economist. "We hope this is indicates more buyers are taking advantage of the excellent affordability conditions."

Earlier this week, Consumer Confidence showed a similar, double-digit surge --  increasing to 56.0 in November, compared to 40.9 in October.

AIA reports: Hotels, retail to lead U.S. construction recovery

NEW YORK, Jan 26 (Reuters) - U.S. nonresidential construction activity will decline this year but recover in 2012, led by hotel and retail sectors, according to a twice-yearly forecast by an architects' trade group.
Overall nonresidential construction spending is expected to fall by 2% this year before rising by 5% in 2012, adjusted for inflation, the American Institute of Architects (AIA) said on Wednesday.

The projected decline marks a deteriorating outlook compared to the prior survey in July 2010, when a 2011 recovery was expected. 

That recovery has been pushed back by historically low lending rates for real estate projects, lingering effects of overbuilding and an unfavorable bond market that has limited municipalities' access to funding, the AIA said.

Potential higher borrowing costs and rising energy prices are areas of concern for the architecture and construction industry, said AIA chief economist Kermit Baker.

Construction of industrial space is seen falling 11.8% this year, with smaller declines projected for office buildings, hotels and retail space. Spending is seen lower both this year and next on public safety infrastructure, but is expected to be up slightly in areas like healthcare, religious and recreational facilities.
The consensus forecast counts predictions from McGraw Hill Construction, IHS-Global Insight, Moody's, and others.

The AIA's monthly billings index, a leading indicator of activity because it measures work architects have performed, last month reached its best level since November 2007 and has pointed to increasing demand for design services for two consecutive months.

The billings index is considered an indicator of construction activity nine to 12 months in the future, and is tracked by companies that generate sales from the sector.

Tuesday, November 29, 2011

New home sales are up 8.9% vs. October 2010

New home sales for October, at annual run-rate of 307,000, gained a bit of ground on September's anemic annualized rate of 303,000, and were up 8.9% year-on-year, according to the Census Bureau's release this morning

Saturday, November 19, 2011

Wells Fargo's Weekly Economic & Financial Commentary- November 18, 2011

- Retail sales rose 0.5 percent in October, while core retail sales increased 0.6 percent and are up 5.7 percent on a three-month annualized basis.

. Recent improvements in retail sales offer some encouragement going into the holiday season, and we expect holiday sales will increase 5.0 percent year-over-year.

- The Producer Price Index fell 0.3 percent in October due to a 1.4 percent drop in energy prices.

- Headline CPI fell 0.1 percent during October due to lower retail gasoline prices, but is up 3.5 percent year-over year.

- Housing starts fell 0.3 percent to a 628,000-unit pace in October, as a 3.9 percent increase in single-family starts was offset by an 8.3 percent decline in multi-family starts.

Tuesday, November 15, 2011

Marino\WARE Receives SSMA Non-Structural Certification

( South Plainfield, NJ): Marino\WARE®, a division of Ware Industries, Inc. announced today that they have achieved third party Code Compliance Certification to the 2009 IBC Building code. This certification is for BOTH structural and non structural products per the Steel Stud Manufacturers Association (SSMA) Code Compliance Certification Program requirements. This includes structural stud and track, and the ViperStud® Drywall Framing System family of products. CEO Chip Gardner said, “We wanted to be first to demonstrate to customers that Viper remains at the forefront of compliance while keeping quality as its core value. Viper is relatively unchanged from its conception, and remains standing strong among its competitors."

Marino\WARE® achieved Code Compliance Certification in 2009 for structural products and just recently completed the process for the new SSMA Non Structural Code Compliance Program. Technical information, test data and calculations were submitted to Architectural Testing, Inc. (ATI), and were thoroughly vetted to make sure that the ViperStud® Drywall Framing System met the very stringent requirements of the SSMA Non Structural Program. The new SSMA program requires EQ studs to meet minimum bending moment, screw penetration and screw capacity minimums. The SSMA and SFIA code compliance programs also mandate that all non structural products be tested in the exact same way for composite limiting heights. All of this was accomplished and withstood a withering third party analysis from ATI.

Saturday, November 12, 2011

Wells Fargo’s Monthly Economic Outlook – November 2011

- Consumer spending was strong during 3Q11, rising at a 2.4 percent annual rate, and recent data indicates spending will likely hold up reasonably well in 4Q11.

. The long-term sustainability of recent gains remains in question, however, as the saving rate has fallen from 5.3 percent in June to 3.6 percent in September.

- Nonfarm payrolls increased an average of 114,000 per month during the past three months, and employment in the nonagricultural portion of the household series rose by an average of 433,000 per month during that time.

- Growth during 4Q11 appears to be on pace to match 3Q11’s 2.5 percent annual rate, with solid gains in consumer spending and business fixed investment driving growth.

. We now expect real GDP to rise 1.8 percent in 2011 and 2.0 percent in 2012.

- Operation Twist has been mildly successful thus far and the Federal Reserve may opt to provide a boost to the program if growth falters in the coming months.

Wells Fargo's Weekly Economic & Financial Commentary- November 10, 2011

- The trade balance narrowed during September to -$43.1 billion from -$44.9 billion in August, as exports rose 1.4 percent and imports grew a more modest 0.3 percent.

. Import prices declined 0.6 percent and export prices fell 2.1 percent due to sharp declines in the rate of inflation for agricultural, food, and industrial supplies.

- The NFIB survey for October revealed that just three percent of respondents have plans to hire, suggesting it is unlikely the small business sector will meaningfully contribute to growth anytime soon.

- Initial jobless claims continued their gradual decline last week as 390,000 first-time claims were filed, the lowest level in seven months.

. The four-week moving average, meanwhile, fell to the important 400,000 mark which typically signals stronger job growth.

Saturday, November 5, 2011

Wells Fargo's Weekly Economic & Financial Commentary- November 4, 2011

- The unemployment rate fell to 9.0 percent in October as nonfarm employment rose by 80,000 jobs.

. Nonfarm employment has now risen by an average of 114,000 jobs over the past three months, as the private sector has averaged growth of 122,000 jobs during that time.

- Hours worked increased 0.1 percent and average hourly earnings rose 0.2 percent during October, as recent hiring has been predominantly in low-paying jobs.

- October ISM surveys remained consistent with modest economic growth, as both the manufacturing and non-manufacturing surveys remained slightly above the demarcation line separating expansion and contraction.

- Motor vehicle sales turned in another solid performance in October, although recent gains likely reflect improved inventories of imported models that have been in short supply due to the earthquake in Japan.

Saturday, October 29, 2011

Wells Fargo's Weekly Economic & Financial Commentary - October 28, 2011

- Third-quarter GDP rose 2.5 percent, supported primarily by gains in consumer spending and business investment.

. Strong improvement in the consumption of healthcare services boosted consumer spending.

. Business investment rose 13.7 percent, driven by investment in equipment and new facilities.

- Personal incomes grew a slight 0.1 percent in September, with real disposable income declining by 0.1 percent.

. Even with the slow pace of income growth, consumers increased their spending for the month by 0.6 percent.

- Housing data this week continued to reflect the slow pace of recovery for the housing industry. The pace of recovery will continue to vary considerably by region.

- State and local spending cuts continued to detract from economic growth.

- We now expect GDP to grow 1.8 percent for the year, and the stronger end to 2011 means real GDP will likely grow 2.1 percent in 2012.

Eagle Materials Inc. [American Gypsum] Reports Second Quarter Resul

DALLAS--(BUSINESS WIRE)-- Eagle Materials Inc. (NYSE: EXP) today reported financial results for the second quarter of fiscal 2012 ended September 30, 2011. Notable items for the quarter include:
  • Revenues of $134.8 million
  • Cash flow from operations of $26.4 million
  • Net earnings of $6.0 million
  • Diluted earnings per share of $0.14
Revenues increased 2% from the prior year reflecting improved sales volumes across most of our business lines. Operating earnings were down 6% due primarily to higher raw material costs in our gypsum wallboard segment. Operating cash flow was strong during the quarter, further strengthening our financial position. Prior year's net earnings include approximately $2.5 million, or $0.06 per diluted share, of tax and interest benefits associated with the final assessment from the IRS related to their audit of the Republic asset acquisition in tax years 2001 through 2006.

Gypsum Wallboard and Paperboard
Gypsum Wallboard and Paperboard's second quarter operating earnings of $1.5 million were down 71% compared to the same quarter last year. Lower wallboard average net sales prices and higher raw material costs were the primary driver of the quarterly earnings decline.

Gypsum Wallboard and Paperboard revenues for the second quarter totaled $72.3 million, a 2% increase from the same quarter a year ago. The revenue increase reflects higher wallboard sales volumes and higher paperboard sales prices, offset by lower gypsum wallboard average net sales prices.

Gypsum Wallboard sales volume for the quarter of 403 million square feet (MMSF) represents a 2% increase from the same quarter last year. The average Paperboard net sales price this quarter was $524.20 per ton, 11% higher than the same quarter a year ago. Paperboard sales volumes for the quarter were 60,000 tons, 3% lower than the same quarter a year ago.

Owens Corning Reports Record Quarterly Results

Best Earnings Performance in the Company's History

  • Improved Third-Quarter EBIT and Revenue in All Three Businesses Versus 2010
  • Delivered 21-Percent EBIT Margins Year-to-Date in Roofing
  • Improved Performance in Insulation on Strong Execution
  • Grew Composites EBIT by 14 Percent Versus 2010

Owens Corning (NYSE: OC) today reported that consolidated net sales increased 22 percent to $1.5 billion in the third quarter of 2011, compared with $1.2 billion in the same period last year.
Third-quarter 2011 adjusted earnings, based on the company's expected full-year effective tax rate of 25 percent, were $110 million, or $0.90 per diluted share, compared with $44 million, or $0.35 per diluted share, during the same period last year.  Third-quarter 2011 net earnings were $124 million, or $1.01 per diluted share, compared with net earnings of $58 million, or $0.46 per diluted share, in the third quarter of 2010.  (See Tables 1, 2 and 3 for a discussion and reconciliation of these items.)

"Owens Corning delivered record earnings performance in the third quarter," said Chairman and Chief Executive Officer Mike Thaman.  "We continue to benefit from strong execution in an uncertain economy and a resilient portfolio of market-leading businesses."

Consolidated Third-Quarter 2011 Results
  • Owens Corning's primary safety metric improved by approximately 25 percent year-to-date over the company's full-year 2010 performance.  This positions the company for a tenth consecutive year of safety improvement.
  • Third-quarter earnings before interest and taxes (EBIT) was $177 million in 2011 compared with $69 million in the third quarter of 2010.  In 2010, the company had certain items that were not the result of current operations.  After adjusting for these items, Owens Corning's third-quarter 2010 EBIT was $90 million.  (See Table 2 for a reconciliation of these items.)
  • Gross margin as a percentage of net sales was 22 percent in the third quarter of 2011 compared with 20 percent in 2010.

Other Financial Items
  • The company maintains a strong balance sheet with ample liquidity.  The company refinanced its senior revolving credit facility in the quarter to extend its maturity to 2016 and reduce borrowing costs.  
  • The company has repurchased 4.0 million shares of its common stock year-to-date.  As of September 30, 2011, an additional 3.7 million shares remained available for repurchase.
  • Owens Corning's federal tax net operating loss carry-forward was $2.3 billion as of September 30, 2011.
  • At the end of the third quarter of 2011, excluding the impact of interest rate swaps, Owens Corning had total debt, less cash-on-hand of $1.96 billion, compared with $1.57 billion at the end of 2010.

Friday, October 21, 2011

Wells Fargo's Weekly Economic & Financial Commentary- October 21, 2011

- Leading indicators rose 0.2 percent in September and have risen 5.3 percent over the past three months, a pattern consistent with economic expansion, as both financial and production indicators contributed to the gain.

- The four-week moving average for jobless claims has declined for the past several weeks and now stands just above the 400,000 claim threshold.

- The Consumer Price Index rose 3.9 percent year-over-year during September, while the core CPI rose 2.0 percent.

- The 15.0 percent increase in housing starts in September was led by the multi-family segment, supporting our outlook that both nonresidential construction and apartments will contribute to growth moving forward.

. We expect housing starts to improve slowly and average 740,000 during 2012, compared to 610,000 this year.

- Existing home sales continue to place a drag on economic growth, as 30 percent of the homes sold in September were distressed properties, and 18 percent of the National Association of Realtors’ members reported a cancellation during the month.

Worthington Reports Q1 Fiscal 2012 Results

Worthington Reports First Quarter Fiscal 2012 Results

COLUMBUS, Ohio, September 28, 2011 – Worthington Industries, Inc. (NYSE: WOR) today reported net sales of $602.4 million and net earnings of $25.7 million, or $0.35 per share, for its fiscal 2012 first quarter ended August 31, 2011. In last year’s first quarter, the Company reported net sales of $616.8 million and net earnings of $22.4 million, or $0.29 per share.

“We had a good first quarter in Steel Processing and excellent results from our ceiling grid system joint venture WAVE,” John P. McConnell, Chairman and CEO, said. “The year-over-year comparisons show strength in the areas where we have focused to improve our performance and lessen the volatility of earnings, particularly in Steel Processing. We expect to continue to perform well, barring further economic deterioration.” McConnell added, “The acquisition of the BernzOmatic product lines in Pressure Cylinders is positively contributing to that segment’s results as this business integrated quickly. We expect the Cylinders segment to stay focused on growing their market presence through new customers and additional acquisitions. We feel good about how Worthington Industries is positioned with our strong balance sheet and improved operations. However, the stalled economy, and the uncertainty surrounding it, has hindered a quicker and more robust recovery which has an impact on our customers.”

The comparison of the current quarter’s consolidated results to previous quarters is impacted by the following transactions: • Effective March 1, 2011, the Metal Framing business, including all of the related working capital and six of the 13 facilities, was contributed to a joint venture with ClarkWestern Building Systems. In exchange for the contributed assets, Worthington Industries received a 25% interest in the new joint venture, ClarkDietrich Building Systems (ClarkDietrich), as well as the assets of certain MISA Metals, Inc. (MMI) steel processing locations. Since that date, Worthington’s 25% portion of the results of ClarkDietrich are included in the equity in net income of unconsolidated affiliates line in the consolidated statement of earnings and the results of operations from the MMI assets have been included in Steel Processing.

Net sales for the first quarter ended August 31, 2011, were $602.4 million, down 2% from the comparable quarter in the prior year, when net sales were $616.8 million. The Steel Processing and Pressure Cylinders segments reported a 15% and a 24% increase in sales, respectively, aided by the MMI and Bernz acquisitions. These increases, however, were more than offset by the impact of the deconsolidation of the Company’s former metal framing and automotive body panels operations. Excluding the deconsolidated operations, net sales rose 18% from the prior year quarter primarily due to the acquisitions and higher average selling prices as the average cost of steel increased 16% over the comparable prior year quarter.

Operating income for the current quarter was $21.2 million, essentially flat versus the comparable quarter in the prior year. Operating income for the current quarter was adversely affected by restructuring and joint venture transaction expenses. During the current quarter, the transformation team began the diagnostic phase in the Pressure Cylinders segment, incurring $1.7 million of outside consulting expenses, which are included in the restructuring and other expenses line. The $3.2 million in the joint venture transactions line relates exclusively to the wind down of the retained metal framing facilities, which continued to operate in support of the new ClarkDietrich joint venture. As of the end of the first quarter, all of these retained facilities had been closed.

Metal Framing’s net sales were $3.1 million during the quarter. The sales relate to the vinyl operation and metal framing facilities that were not contributed to the new ClarkDietrich joint venture on March 1, 2011, but continued to produce product to assist the joint venture during the transition period. As of the end of the quarter, all of the retained facilities had been closed, except for the vinyl operation. All of the retained facilities are expected to be sold within the next 12 months.