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Owens CorningPositioned for Growth
Q3 2014This presentation shared at the following events
08/21/2014 Owens Corning Roadshow – New York Thierry Denis, Director Investor Relations
08/05/2014 OC Roadshow hosted by Bank of America - Europe Michael McMurray, Chief Financial Officer
This presentation consists of this slide deck and the associated remarks and comments, all of which are integrally related and are intended to be presented and understood together.
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “believe,” “anticipate,” “appear,” “may,” “will,” “should,” “intend,” “plan,” “estimate,” “expect,” “assume,” “seek,” “forecast,” and similar reference to future periods. We caution you against relying on these statements as they involve risks and uncertainties that are difficult to predict and the Company’s actual results may differ materially from those projected in these statements. Our future performance may be affected by risks and uncertainties including, without limitation, economic and political conditions, including; levels of residential and commercial construction activity; competitive factors; levels of global industrial production; relationships with key customers; industry and economic conditions that affect the market and operating conditions of our customers, suppliers or lenders; availability and cost of credit; our level of indebtedness; weather conditions; pricing factors; availability and cost of energy and raw materials; difficulties managing production capacity; issues involving implementation of new business systems; new legislation or other governmental actions; labor disputes and litigation; our ability to use our net operating loss carry-forwards; research and
Forward-Looking Statements and Non-GAAP Measures
legislation or other governmental actions; labor disputes and litigation; our ability to use our net operating loss carry-forwards; research and development activities; foreign exchange fluctuations; interest rate movements; labor disputes; issues related to acquisitions, divestitures and joint ventures; uninsured losses; achievement of expected synergies, cost reductions and/or productivity improvements; defined benefit plan funding obligations; and, factors detailed from time to time in the company’s Securities and Exchange Commission filings.
For purposes of this presentation, any discussion referring to “year to date” or last twelve months (“LTM”) refers to the period ended on the last calendar day of the quarter preceding the date of the investor event referred to on the first page of this document. Otherwise the information in this presentation speaks as of the date of the investor event, and is subject to change. The Company does not undertake any obligation to update or revise forward-looking statements beyond what is required under applicable securities laws. Any distribution of this presentation after the date of the investor event is not intended and should not be construed as updating or confirming such information.
This presentation contains references to certain "non-GAAP financial measures" as defined by the SEC. Management uses non-GAAP measures for various purposes, including reporting results of operations to the Board of Directors, analysis of performance and related employee compensation measures. Although management believes these measures, and exclusions from GAAP therein, provide a usefulrepresentation of performance, non-GAAP measures should not be considered in isolation or as a substitute for GAAP measures. A reconciliation of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles can be found in Appendix A. Adjusted EBIT is earnings before interest, taxes and other items that management does not allocate to our segment results because it believes they are not a result of the Company’s current operations.
2
Owens Corning at a Glance
� Founded in 1938, an industry leader in glass fiber insulation, roofing and glass fiber reinforcements
� 2013 net sales: $5.3 billion
� 15,000 employees in 27 countries
� Fortune 500 company for 60 consecutive years
� Component of Dow Jones Sustainability World Index for four consecutive years
3
Investment Highlights
Composites Roofing Insulation
4
Three Market-Leading Businesses
Market-leading business with improving economic
conditions and higher utilization rates
Strong business performance in a
recovering U.S. housing market
Progress supports confidence in return to historical profitability
Outlook and Highlights
� Continued to focus on building a safer workplace; year-to-date safety performance consistent with prior year
� Delivered adjusted EBIT of $96 million
� Insulation grew EBIT by $14 million, marking the 12th
consecutive quarter of performance improvement
� Composites delivered EBIT of $37 million on improved pricing, operating performance, and volumes
� Roofing volume weakness continued; market share improved versus first quarter but still below historical levels
� Continue to expect full-year adjusted EBIT to be greater than 2013 result of $416 million
5
Strong PortfolioPositioned for Growth
’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13
Insulation
Roofing
Sources: Owens Corning’s SEC filings since 2006 . For comparability purposes, prior years have been provided based on Owens Corning’s SEC filings, internal management reports, and management estimates.
6
Margin >= 10% 0%<= Margin < 10% Margin < 0%
Roofing
Composites
Insulation Business
Q2 2014 Highlights� Delivered 12th consecutive quarter of EBIT
improvement
� Improved EBIT by $14 million on higher pricing and volume growth
� Expect 2014 results to benefit from growth in U.S. new construction, pricing and operating leverage
$ (in millions) Q2 2014 Q2 2013 1H 2014 1H 2013
Net sales* $447 $415 $802 $745
EBIT $18 $4 $19 $(17)
EBIT as % of sales
4% 1% 2% (2)%
D&A $26 $27 $51 $53
2013 Revenue by End Market*
7
* before inter-segment eliminations
-10%
-5%
0%
5%
10%
$0
$500
$1,000
$1,500
$2,000
2010 2011 2012 2013 LTM
Five-Year Financial Performance
Sales* EBIT as % of sales*In millions
International
16%
U.S. & CanadaNew Residential
Construction
40%
U.S .& CanadaResidential Repair
& Remodeling
20%
U.S. & CanadaCommercial& Industrial
24%
*Owens Corning management estimates; estimated error margin below 5%
Source: Owens Corning management estimates and Owens Corning SEC filings; comparability may differ over time
* before inter-segment eliminations
Owens Corning Insulation EBIT Progress
039
4
18
39
1
18
$0
$20
$40
EB
IT in
Mil
lio
ns
of
Do
lla
rs
Q1 Q2 Q3 Q4
8
Consistent Quarterly EBIT Progression Since 2011
-47-38
-12
-34
-16-21
-$80
-$60
-$40
-$20
2011 Actual 2012 Actual 2013 Actual 2014 Actual
Source: Owens Corning quarterly and annual SEC filings
EB
IT in
Mil
lio
ns
of
Do
lla
rs
10%
20%
30%
EBIT Margin Avg EBIT Margin '85-'08 (15%)
Owens Corning InsulationWell Positioned to Return to Historical Margins
-10%
0%
10%
'84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 LTM
9Source: Owens Corning management estimates and Owens Corning SEC filings, comparability may differ over time;
Historically Delivered 15% EBIT Margins at 1.5 Million Housing Starts
2014 Industry Capacity Utilization
65%
75%
90%
60%
80%
100%
Insulation IndustryNorth American Fiberglass
0%
20%
40%
Total Capacity Operating Plants Operating Lines
10
Capacity Utilization Tightening as U.S. Housing Recovers
Source: Owens Corning management estimates as of February 2014 rounded to nearest 5%. Products sold primarily to North American residential market. Excludes heavy density and loosefill products. Based on 2014 estimate of 1.1MM unlagged U.S. housing starts and other macro assumptions.
Toronto
Edmonton
Delmar
Candiac
Owens Corning Insulation North American Fiberglass Network
Eloy
Santa Clara
NewarkKansas City
WaxahachieFairburn
Mt. Vernon
Nephi
Lakeland
Continued Discipline in OC Capacity Management
Capacity utilization based as on estimated average 2014 total insulation production using melter capacitySource: Owens Corning management estimates 11
2014 Estimated Average Utilization:
Near full capacity
Below full capacity
Not in operation
Positioned to Grow with Our Markets
Insulation End-Use Markets
% of Full-Year 2013 Revenue
Expected Market Growth Drivers
Revenue CAGR2013 – 2015
U.S. and CanadaResidential New Construction
40%10-25%
U.S. and CanadaRepair and Remodel 0-10%
� Housing starts� Building energy code adoption� Household formation
� Aging housing stock
12Source: Owens Corning management estimates.CAGRs as of September 2013; estimated error margin of end-use market revenue below 5%
Repair and Remodel20%
0-10%
U.S. and CanadaCommercial and Industrial
24%5-10%
Latin America and Asia Pacific
16%
0-10%
� Aging housing stock� Energy efficiency policies
� Code and “green” specification driven
� Owner/operator focus
� Growing middle class � Infrastructure improvements� Urbanization of China
Continued Double-Digit Revenue Growth as Market Recovers
Roofing Business
Q2 2014 Highlights� Revenue down 14% primarily on weak shipments
� Delivered 14% EBIT margins on lower volume leverage, lower prices, and higher asphalt costs
� Expect full-year market to be flat to slightly down from 2013
$ (in millions) Q2 2014 Q2 2013 1H 2014 1H 2013
Net sales* $437 $508 $934 $1,115
EBIT $62 $116 $142 $235
EBIT as % of sales
14% 23% 15% 21%
D&A $10 $9 $19 $19
2013 Revenue by End Market*
13
* before inter-segment eliminations
0%
5%
10%
15%
20%
25%
30%
$0
$400
$800
$1,200
$1,600
$2,000
$2,400
2010 2011 2012 2013 LTM
Five-Year Financial Performance
Sales* EBIT as % of sales*In millions
U.S. & CanadaNew Residential
Construction
10%
U.S. & CanadaResidential Repair
& Remodeling
74%
U.S. & CanadaCommercial& Industrial
15%
*Owens Corning management estimates; estimated error margin below 5%
Source: Owens Corning management estimates and Owens Corning SEC filings; comparability may differ over time
International
1%
U.S. Asphalt Shingle Industry Consolidation
’70s ’80s ’90s Current
OCFRYGAFELK
CERTAINTEEDTAMKO
CELOTEXMANVILLE
IKOBIRD
ATLAS
OCGAFELK
CERTAINTEEDTAMKO
CELOTEXMANVILLE
IKOBIRD
ATLASGEORGIA PACIFIC
OCGAFELK
CERTAINTEEDTAMKO
CELOTEXIKO
ATLASGEORGIA PACIFIC
GS ROOFING
OCGAF/ELK
CERTAINTEEDTAMKO
IKOATLASPABCO
MALARKEY
Source: Owens Corning management estimates and various industry sources and publications 14
Top 90% 16 13 10 4
Total 21 17 13 8
ATLASGEORGIA PACIFIC
FLINTKOTEGLOBEPABCO
MALARKEY
LUNDAY THAGARDCUSTOM ROOFING
BIG CHIEFBEAR
PHILIP CAREY
PABCOMALARKEY
LUNDAY THAGARDCUSTOM ROOFING
GEORGIA PACIFICGENSTAR
GLOBEGLOBEPABCO
MALARKEY
MALARKEY
Favorable Industry Structure for the Future
116 116
33
3 2
78
18
8
322
17
6
19 11
6
9
7.5180
5.3
New construction
Re-roof Demand
Major StormsMM Sq. MMTotal Existing Home Sales
U.S. Asphalt Shingle Market Improved Housing Supports Demand Growth
33 30 31 32 34 37 39 3526
1711 11 11 14 17
25
107103
109 110113
116 116112
100
9693 91 93 94 88
103
0.00'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 15 Yr.
Avg
Total 143 136 143 144 154 161 173 155 129 135 120 108 122 118 111 137
Recovery to 15-Year Average Represents a 20% Increase in Demand
Source: Asphalt Roofing Manufacturers Association, Summary of Asphalt Roofing Industry Shipments. National Association of Realtors existing home sales and Owens Corning management estimates 15
Strong Business in a Market Poised for Growth
� Great business in a well-structured industry
� High-performing product lines that benefit from vertical integration
� Track record of strong financial performance
� Confidence in operating margins of mid-teens or better
16
Strong Business Performance in a Recovering U.S. Housing Market
Composites Segment
Q2 2014 Highlights� Delivered EBIT of $37 million on improved pricing,
operating performance, and volumes
� Planned furnace rebuilds under way; anticipate rebuild costs to peak in Q3
� Progress in pricing supports outlook for full-year improvement at the top end of $20 million to $30 million range
$ (in millions) Q2 2014 Q2 2013 1H 2014 1H 2013
Net sales* $505 $472 $982 $931
EBIT $37 $32 $64 $41
EBIT as % of sales
7% 7% 7% 4%
D&A $34 $34 $68 $66
2013 Revenue by End Market*
17
* before inter-segment eliminations
-5%
0%
5%
10%
15%
$0
$600
$1,200
$1,800
$2,400
2010 2011 2012 2013 LTM
Five-Year Financial Performance
Sales* EBIT as % of sales*In millions*Owens Corning management estimates; estimated error margin below 5%
Source: Owens Corning management estimates and Owens Corning SEC filings; comparability may differ over time
* before inter-segment eliminations
International
60%
U.S. & CanadaNew Residential
Construction
3%
U.S. & CanadaResidential Repair
& Remodeling
10%
U.S. & CanadaCommercial& Industrial
27%
Glass Fiber A $7 Billion Global Market
Construction35%
Consumer17%
Wind6%
• Residential• Commercial• Water transportation
& storage
• Appliances• Electronics• Recreation
18
Transportation28%
Industrial14%
Glass reinforcements market defined as glass fiber reinforcements and direct conversion products as consumed, excluding yarnsSource: Owens Corning management estimates as of Feb 2014
• Cars• Trucks, buses, trains• Marine
• Factories• Mining• Offshore platforms
A Key Material Enabling Solutions Essential to Everyday Life
Owens Corning CompositesPositioned to Win
#1 Position Emerging Position
19Sources: Owens Corning management estimates
% Market Revenue = market revenue in region as % of 2013 global market size % OC Revenue = OC revenue in region as % of OC Composites global 2013 salesGlass reinforcements market defined as glass fiber reinforcements and direct conversion products as consumed, excluding yarns
#1 Position
#1 Position
Leading Market Positions and an Unrivaled Supply Network
OC glass fiber manufacturing siteOC downstream fabrication site
3,000
4,000
5,000
Glass Fiber Market DemandG
lass F
iber
K T
on
s
Glass Fiber Demand Has Grown at 1.6 Multiple of Industrial Production Growth
-
1,000
2,000
1981 1989 1997 2005 2013
20
Gla
ss F
iber
K T
on
s
Glass fiber market demand excludes E-glass yarnsSources: Fiber Economics Bureau, Glass Fiber Europe, Global Trade Information Services, Inc. and Owens Corning management estimates
Historical Glass Fiber Market Growth Averaging 5%
China Emergence
Macro Adjustment
Supply Tension
Glass Fiber Industry PhasesSigns of a New Era
Capacity Overbuild
Excess Inventory
Improved Returns
21
High Utilization Rates and Reinvestment EconomicsSupport Higher Returns
2005 – 2009 2010 – 2012 2013 – 2016
Glass Fiber Industry Estimated Capacity
2004 2006 2008 2010 2012 2014 2016
Change in global demand (MM T)
1.1
0.9
1.7
80%
90%
100%
Est
ima
ted
Ca
pa
city
Uti
liza
tio
n
Supply Tension
90% Threshold
22
Tighter Capacity Environment Expected in the Near Term
Glass fiber market demand excludes E-glass yarnsSources: Fiber Economics Bureau, Glass Fiber Europe, Global Trade Information Services, Inc. and Owens Corning management estimates as of February 2014
(high probability additions)
0.1/ yr 0.3/ yr 0.1/ yr 0.1/ yr0.4/ yr 0.2/ yr
demand (MM T)
Change in global capacity (MM T)
0.5
0.9
0.4
0.5
2005-09 2010-12 2013-16
0.1/ yr 0.3/ yr 0.4/ yr 0.1/ yr 0.2/ yr 0.1/ yr
50%
60%
70%
Est
ima
ted
Ca
pa
city
Uti
liza
tio
n
Price Realization
2007 – 2008 2009 2010 – 2011 2012 – 2013
EBITMargin
Industry Capacity Utilization
�Historical highs in China
�Global 30-year lows
�Widespread idle and curtailed
�Global tightness�Sharp recovery
causes supply shock
�China capacity all operational
�Europe negative; slower global growth
23
Tight Industry Capacity has Provided Significant Pricing Opportunity in the Recent Past
and curtailed factories
�China delays startups
shock�Demand outpaces
restart of idle capacity
slower global growth�Large inventory
builds
OC Pricing �~$100MM gain �~$50MM loss �~$100MM gain �~$30MM loss (all in 2012)
Sources: Owens Corning’s SEC filings since 2006. For comparability purposes, prior years have been provided based on Owens Corning’s SEC filings, internal management reports, and management estimates.
Margin: 10%+ Margin: 0% - 10% Margin: < 0%
Owens Corning Composites
� Global megatrends, continued growth in industrial production, and material substitution support glass fiber market growth at a 5-7% CAGR Price RealizationPrice Realization
Cost LeadershipCost Leadership
� Strategic focus on core building material markets with sustainable solutions
� Clear agenda to deliver improved returns
24Source: Owens Corning management estimates as of February 2014
Leader in an Industry Entering a Phase of Supply Tension
Product LeadershipProduct Leadership
Capital EfficiencyCapital Efficiency
Sustaining a Strong Balance Sheet
� Maintaining investment-grade financial strength is a pillar of Owens Corning’s strategy
� Maintained investment-grade credit ratings from Standard & Poor's and Fitch
� $800 million revolving credit facility maturing in 2018
� $250 million accounts receivable facility, which matures in 2016
� $1.8 billion senior notes outstanding with 2016, 2019, 2022 and 2036 maturities
� Sustaining ample liquidity to support growth
� Capital markets remain open to Owens Corning
25
Tax Position is a Significant Asset
� Benefit from $2.1 billion NOL with estimated present value of approximately $5 per share
� Delivering cash tax savings of about $60 million per year
� Expect long-term book tax rate of 28% to 30% based � Expect long-term book tax rate of 28% to 30% based on geographic mix of earnings and tax planning
� Cash tax rate of 10% to 12% over the next few years
26Source: Owens Corning management estimates
Disciplined Capital Allocation Strategy
� Drive shareholder returns by enabling organic and inorganic growth and supporting the balance sheet
– Maintain investment grade
� Capital allocation strategy
– Investing in attractive organic growth– Investing in attractive organic growth
– Returning excess cash to shareholders
– Pursuing value-creating acquisitions
� Quarterly dividend initiated in 2014 conveys confidence in long-term financial outlook and cash flow generation
� As of June 30, 2014, 7.7 million shares remain available for repurchase under existing authorization
27
Key Financial Data
($ in millions, except per share data) Q2 2014 Q2 2013 1H 2014 1H 2013
Net sales $1,355 $1,347 $2,633 $2,697
Net earnings attributable to Owens Corning $21 $49 $141 $71
Diluted earnings per share attributable to Owens Corning common stockholders
$0.18 $0.41 $1.19 $0.59
Earnings before interest and taxes (EBIT) $73 $118 $181 $175
28
Adjusted EBIT $96 $124 $173 $201
Adjusted Earnings $45 $68 $80 $103
Adjusted EPS (diluted) $0.38 $0.56 $0.68 $0.86
Adjusted EBIT as a % of sales 7% 9% 7% 7%
Marketing and administrative expenses $130 $134 $262 $267
Depreciation and amortization $78 $79 $154 $157
Cash flow from (used for) operating activities $155 $164 $(117) $(15)
Total debt (excluding rate swap), net of cash $2,194 $2,180 $2,194 $2,180
2014 Corporate Environment & Guidance
Macro Environment
� Continued growth in U.S. housing starts; consensus continues to be over 1,000,000
� Moderate global industrial production growth
Primary Guidance
� Expect full-year adjusted EBIT to be greater than 2013 result of $416 million, based on the current outlook for an improving U.S. housing market and moderate global growth
� Corporate expenses of $100-$110MM� Interest expenses in line with last year� Capital expenditures about $370MM, including
about $65 million for the start of construction of a non-woven facility
� Depreciation & amortization about $315MM� Cash tax rate of 10-12% and book tax rate of
28-30%* on adjusted pre-tax earnings
* Excluding significant tax reserve reversalsSource: Owens Corning management estimates as of April 2014
Other Guidance Items
29
2014 Business Environment
Roofing Insulation Composites
� Growth in U.S. residential new construction
� Re-roof demand below historical levels
� Growth in U.S. residential new construction
� Continued high
� Current prices significantly below historical average
� Improved industry capacity utilization
� 2013 global growth below long-term trend
30
� Continued high utilization of active lines
� Improved pricing trend
average� Expectations of
higher global growth
� Encouraging price trends
Source: IHS Global Insights, Moody’s and Owens Corning management estimates as of July 2014
Appendix ANon-GAAP Reconciliations
31
Appendix ANon-GAAP Reconciliations
32