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Construction Products Distribution
Construction Products Distribution's condensed operating results for 2013 and 2012;
---------------------------------------------------------------------------- Three months ended March 31,(millions of dollars) 2013 2012----------------------------------------------------------------------------Revenue Gypsum Specialty Distribution (GSD) revenue 123.5 121.1 Commercial and Industrial Insulation (C&I) revenue 63.0 63.1Cost of sales GSD cost of sales (95.1) (94.1) C&I cost of sales (46.3) (46.1)----------------------------------------------------------------------------Gross profit 45.1 44.0Less: Cash operating and administrative costs (40.1) (40.7)----------------------------------------------------------------------------EBITDA from operations 5.0 3.3--------------------------------------------------------------------------------------------------------------------------------------------------------(1) In order to better reflect the results of its operations, Superior has reclassified certain amounts for purposes of this MD&A to present its results as if it had accounted for various transactions as accounting hedges. See "Reconciliation of Divisional Segmented Revenue, Cost of Sales and Cash Operating and Administrative Costs Included in this MD&A" for detailed amounts.
GSD and C&I revenues of $186.5 million for the first quarter of 2013 were $2.3 million or 1% higher than in the prior year quarter. GSD revenue increased due to higher sales volumes, ongoing improvement in new housing starts and project work in some U.S. regions offset in part by lower contribution from some Canadian regions due to the impact of a slowdown in new housing starts in Canada and branch closures completed during 2012. C&I revenues were consistent with the prior year quarter.
Gross profits of $45.1 million in the first quarter were $1.1 million higher than in the prior year quarter primarily due to the higher revenues as noted above and increased gross margins. The increase in GSD gross margins was due to price increases, achievement of certain rebate plateaus and the benefit of exiting certain markets. C&I gross margins were consistent with the prior year.
Cash operating and administrative costs were $40.1 million in the first quarter, a decrease of $0.6 million or 1% from the prior year quarter. The decrease was primarily due to cost savings from restructuring activities completed during 2012 and the inclusion of $1.1 million of one-time restructuring costs in the prior year quarter offset in part by higher employee compensation costs.
Outlook
Superior expects business conditions in 2013 for its Construction Products Distribution business to be similar to 2012 with slightly improving conditions in the U.S. and lower residential construction in Canada. EBITDA from operations is anticipated to be higher in 2013 than 2012 due in part to the absence of restructuring costs incurred in 2012. In addition, results will benefit from the ongoing business initiative activities. Superior continues to see difficult market conditions in both the residential and commercial segments in Canada and the U.S. Superior does not anticipate significant improvements in the end-use markets in the near term.
