Owens Corning Reports Third-Quarter 2012 Results

               Owens Corning Reports Third-Quarter 2012 Results

Results Impacted by Weak Near-Term Environment in Roofing and Composites

- Insulation delivers first profitable quarter in four years on strong
operating leverage

- Roofing impacted by near-term demand weakness

- Composites low-cost asset repositioning substantially complete; will deliver
benefits in 2013

PR Newswire

TOLEDO, Ohio, Oct. 24, 2012

TOLEDO, Ohio, Oct. 24, 2012 /PRNewswire/ --Owens Corning (NYSE: OC) today
reported consolidated net sales of $1.28 billion in the third quarter of 2012,
compared with $1.45 billion during the same period last year.

Third-quarter 2012 adjusted earnings, based on the company's expected
full-year effective tax rate of 25 percent, were $39 million, or $0.33 per
diluted share, compared with $110 million, or $0.90 per diluted share, during
the same period last year. The company reported net earnings of $44 million,
or $0.37 per diluted share, compared with net earnings of $124 million, or
$1.01 per diluted share, in the third quarter of 2011. (See Tables 1, 2 and 3
for a discussion and reconciliation of these items.)

"We are disappointed in our third-quarter financial results," said Chairman
and Chief Executive Officer Mike Thaman. "Despite these results, we are proud
that our Insulation business achieved profitability in the quarter for the
first time in four years, in an improving U.S. construction market. Roofing
and Composites are experiencing challenging market conditions in the second
half. We continue to focus on actions that will position these businesses for
near-term improvement."

Consolidated Third-Quarter 2012 Results

  oOwens Corning's safety performance in the third quarter of 2012 improved
    by 18 percent compared with the same period one year ago. Through
    September 30, 2012, the company's performance was consistent with its
    full-year 2011 result.
  oThird-quarter adjusted earnings before interest and taxes (EBIT) were $81
    million in 2012, compared with EBIT of $177 million in the third quarter
    of 2011. In the third quarter of 2012, the company had certain items that
    were not the result of current operations. Before adjusting for these
    items, Owens Corning's third-quarter 2012 EBIT was $59  million. (See
    Table 2 for a reconciliation of these items.)

Senior Note Offering & Stock Repurchase Activity

On October 17, the company issued a new 10-year bond of $600 million at 4.2
percent and launched a tender offer for up to $250 million of bonds maturing
in 2016, and $100 million maturing in 2019. The new debt structure improves
the company's debt maturity profile and liquidity. In association with the
tender offer, the company expects to incur a loss on debt extinguishment of
approximately $75 million in the fourth quarter of 2012.

During the third quarter, Owens Corning repurchased 1.1 million shares of the
company's common stock for $31 million under a previously announced share
repurchase program. As of September 30, 2012, 10 million shares remained
available for repurchase under the company's current authorization.

Outlook

The company expects full-year adjusted earnings before interest and taxes
(EBIT) in the range of $280 million to $310 million. The company's revised
adjusted EBIT expectation for the year reflects near-term weakness in Roofing
demand, higher curtailment and start-up costs in Composites as well as softer
growth in global industrial production. In addition, the company will benefit
this year from a recovering U.S. housing market of approximately 750,000
starts.

The effects of weaker demand and further production curtailments to reach
inventory goals have led to lower margin expectations for the Composites
business in the fourth quarter. As previously announced, the company is
taking actions in this segment to balance supply and to transform this
operation into a global network of low-delivered-cost assets. The company
expects the actions to optimize its global Composites manufacturing network to
yield approximately $60 million of cost and productivity improvements in a
modest growth environment for next year.

In the Building Materials segment, Roofing weakness experienced during the
latter part of the third quarter is not expected to improve for the remainder
of the year. However, the company expects the factors that have driven
margins in recent years will continue to deliver profitability in this
business.

The company expects that Insulation will improve financial performance for the
remainder of the year and significantly narrow losses in 2012 on improved U.S.
housing starts and operating leverage in the business.

Cash taxes are expected to be about $30 million in 2012, due to the company's
$2.2 billion U.S. tax net operating loss carry forward. The company estimates
a long-term effective tax rate of 25 percent to 28 percent based on the blend
of effective tax rates for its U.S. and non-U.S. operations. The effective
book tax rate for 2012 is expected to be about 25 percent on adjusted
earnings.

The company expects general corporate expenses to be less than $100 million in
2012. General corporate expenses include corporate staff and other activities
that support the operations. Expenses will be higher in 2012 than in
2011,primarily due to increased pension expense.

Next Earnings Announcement

Fourth-quarter and full-year 2012 results will be announced on Wednesday,
February 20, 2013.

Third-Quarter Conference Call and Presentation

Wednesday, October 24, 2012
11 a.m. Eastern Time

All Callers
Live dial-in telephone number: U.S. 1-800-561-2731 or International
1-617-614-3528
Participant passcode: 938-784-21 (Please dial in 10 minutes before conference
call start time.)

Live webcast: http://www.owenscorning.com/investors

Telephone replay available through October 31, 2012: U.S. 1-888-286-8010 or
International 1-617-801-6888
Participant passcode: 515-670-11

Replay of webcast also available at: http://www.owenscorning.com/investors

Presentation
To view the slide presentation during the conference call, please log on to
the live webcast at: http://www.owenscorning.com/investors

About Owens Corning

Owens Corning (NYSE: OC) is a leading global producer of residential and
commercial building materials, glass-fiber reinforcements and engineered
materials for composite systems. A Fortune^® 500 Company for 58 consecutive
years, Owens Corning is committed to driving sustainability by delivering
solutions, transforming markets and enhancing lives. Celebrating its 75th
anniversary in 2013, Owens Corning is a market-leading innovator of
glass-fiber technology with sales of $5.3 billion in 2011 and about 15,000
employees in 28 countries on five continents. Additional information is
available at www.owenscorning.com.

This news release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements are subject to risks,
uncertainties and other factors that could cause actual results to differ
materially from those projected in these statements. Such factors include,
without limitation: economic and political conditions, including new
legislation or other governmental actions; levels of residential and
commercial construction activity; competitive factors; pricing factors;
weather conditions; our level of indebtedness; industry and economic
conditions that affect the market and operating conditions of our customers,
suppliers or lenders; availability and cost of energy and materials;
availability and cost of credit; interest rate movements; issues related to
expansion of our production capacity; issues related to acquisitions,
divestitures and joint ventures; our ability to use our net operating loss
carry-forwards; achievement of expected synergies, cost reductions and/or
productivity improvements; issues involving implementation of new business
systems; foreign exchange fluctuations; research and development activities;
difficulties in managing production capacity; labor disputes; and, factors
detailed from time to time in the company's Securities and Exchange Commission
filings. The information in this news release speaks as of the date October
24, 2012, and is subject to change. The company does not undertake any duty
to update or revise forward-looking statements. Any distribution of this news
release after that date is not intended and will not be construed as updating
or confirming such information.



Table 1

Owens Corning and Subsidiaries

Consolidated Statements of Earnings

(unaudited)

(in millions, except per share amounts)




                              Three Months Ended        Nine Months Ended
                              Sep. 30,                  Sep. 30,
                                  2012         2011         2012        2011
NET SALES                     $   1,276     $  1,450    $   4,013    $  4,139
COST OF SALES                     1,074        1,133        3,386       3,341
         Gross margin             202          317          627         798
OPERATING EXPENSES
     Marketing and
     administrative               115          119          380         395
     expenses
     Science and technology       20           20           60          58
     expenses
     Charges related to           -            -            36          -
     cost reduction actions
     Other (income)               8            1            19          (28)
     expenses, net
         Total operating          143          140          495         425
         expenses
EARNINGS BEFORE INTEREST          59           177          132         373
AND TAXES
Interest expense, net             29           28           85          81
EARNINGS BEFORE TAXES             30           149          47          292
Less: Income tax expense          (14)         23           8           63
(benefit)
Equity in net earnings of         -            -            -           1
affiliates
NET EARNINGS                      44           126          39          230
Less: Net earnings
attributable to                   -            2            2           4
noncontrolling interests
NET EARNINGS ATTRIBUTABLE     $   44        $  124      $   37       $  226
TO OWENS CORNING
EARNINGS PER COMMON SHARE
ATTRIBUTABLE TO
     OWENS CORNING COMMON
     STOCKHOLDERS
         Basic                $   0.37      $  1.02     $   0.31     $  1.83
         Diluted              $   0.37      $  1.01     $   0.31     $  1.82
WEIGHTED-AVERAGE COMMON
SHARES
         Basic                    117.9        121.7        119.8       123.2
         Diluted                  118.8        122.6        120.6       124.2


Owens Corning follows the authoritative guidance referring to "Noncontrolling
Interest in Consolidated Financial Statements," effective January 1, 2009,
which, among other things, changed the presentation format and certain
captions of the Consolidated Statements of Earnings and Consolidated Balance
Sheets. Owens Corning uses the captions recommended by this standard in its
Consolidated Financial Statements such as net earnings attributable to Owens
Corning and diluted earnings per common share attributable to Owens Corning
common stockholders. However, in the preceding release Owens Corning has
shortened this language to net earnings and earnings per share (or a slight
variation thereof), respectively.



Table 2
Owens Corning and Subsidiaries
EBIT Reconciliation Schedules
(unaudited)


For purposes of internal review of Owens Corning's year-over-year operational
performance, management excludes from net earnings attributable to Owens
Corning certain items it believes are not the result of current operations.
The adjusted financial measure resulting from these adjustments is used
internally by Owens Corning for various purposes, including reporting results
of operations to the Board of Directors, analysis of performance, and related
employee compensation measures. Although management believes that these
adjustments result in a measure that provides it a useful representation of
its operational performance, the adjusted measure should not be considered in
isolation or as a substitute for net earnings attributable to Owens Corning as
prepared in accordance with accounting principles generally accepted in the
United States.



Adjusting items are shown in the table below (in millions), which are related
to our European restructuring actions:
                              Three Months Ended        Nine Months Ended
                              September 30,             September 30,
                              2012          2011        2012           2011
Charges related to cost
reduction actions and related $   (22)      $   -       $   (109)      $  -
items
   Total adjusting items      $   (22)      $   -       $   (109)      $  -
The reconciliation from net earnings attributable to Owens Corning to Adjusted
EBIT is shown in the table below (in millions):
                              Three Months Ended        Nine Months Ended
                              September 30,             September 30,
                              2012          2011        2012           2011
NET EARNINGS ATTRIBUTABLE TO
   OWENS CORNING              $   44        $   124     $   37         $  226
        Less: Net earnings
        attributable to           -             2           2             4
        noncontrolling
        interests
NET EARNINGS                      44            126         39            230
   Equity in net earnings of      -             -           -             1
   affiliates
   Income tax expense             (14)          23          8             63
   (benefit)
EARNINGS BEFORE TAXES             30            149         47            292
   Interest expense, net          29            28          85            81
EARNINGS BEFORE INTEREST AND      59            177         132           373
TAXES
   Less: adjusting items from     (22)          -           (109)         -
   above
ADJUSTED EBIT                 $   81        $   177     $   241        $  373



Table 3
Owens Corning and Subsidiaries
EPS Reconciliation Schedules
(unaudited)
(in millions, except per share data)


For purposes of internal review of Owens Corning's year-over-year operational
performance, management excludes from net earnings attributable to Owens
Corning certain items it believes are not the result of current operations.
The adjusted financial measures resulting from these adjustments are used
internally by Owens Corning for various purposes, including reporting results
of operations to the Board of Directors, analysis of performance and related
employee compensation measures. Although management believes that these
adjustments result in measures that provide it a useful representation of its
operational performance, the adjusted measures should not be considered in
isolation or as a substitute for net earnings attributable to Owens Corning as
prepared in accordance with accounting principles generally accepted in the
United States.



A reconciliation from net earnings attributable to Owens Corning to Adjusted
Earnings and a reconciliation from diluted earnings per share to adjusted
diluted earnings per share are shown in the tables below:
                                                              Nine Months
                                   Three Months Ended
                                                              Ended
                                   Sep. 30,                   Sep. 30,
                                   2012           2011        2012      2011
RECONCILIATION TO ADJUSTED
EARNINGS
Net earnings attributable       $  44          $  124       $ 37      $ 226
to Owens Corning
         Adjustment to
         remove adjusting          17             -           82        -
         items net of tax
         Adjustment to tax
         expense to reflect        (22)           (14)        (4)       (10)
         pro forma tax
         rate*
ADJUSTED EARNINGS               $  39          $  110       $ 115     $ 216
RECONCILIATION TO ADJUSTED DILUTED EARNINGS (LOSS) PER SHARE
    ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS
DILUTED EARNINGS PER COMMON
SHARE ATTRIBUTABLE
    TO OWENS CORNING COMMON     $  0.37        $  1.01      $ 0.31    $ 1.82
    STOCKHOLDERS
         Adjustment to
         remove adjusting          0.14           -           0.68      -
         items net of tax
         Adjustment to tax
         expense to reflect        (0.18)         (0.11)      (0.04)    (0.08)
         a pro forma tax
         rate*
ADJUSTED DILUTED EARNINGS
PER SHARE
    ATTRIBUTABLE TO OWENS
    CORNING COMMON              $  0.33        $  0.90      $ 0.95    $ 1.74
    STOCKHOLDERS
RECONCILIATON TO DILUTED SHARES OUTSTANDING
Weighted-average shares
outstanding
    used for basic earnings        117.9          121.7       119.8     123.2
    per share
         Non-vested                0.6            0.6         0.5       0.6
         restricted shares
         Options to
         purchase common           0.3            0.3         0.3       0.4
         stock
Diluted shares outstanding         118.8          122.6       120.6     124.2
* Pro forma tax rates used were 25% in 2012 as this is the expected full-year
effective tax rate, and, 21% in 2011 as this was the effective tax rate of the
Company in 2011.



Table 4
Owens Corning and Subsidiaries
Consolidated Balance Sheets
(unaudited)
(in millions)




ASSETS                                           Sep. 30,         Dec. 31,
                                                 2012             2011
CURRENT ASSETS
     Cash and cash equivalents                   $    51          $    52
     Receivables, less allowances of $19 at           770              610
     Sep. 30, 2012, and $15 at Dec. 31, 2011
     Inventories                                      793              795
     Other current assets                             155              179
            Total current assets                      1,769            1,636
Property, plant and equipment, net                    2,912            2,904
Goodwill                                              1,144            1,144
Intangible assets                                     1,050            1,073
Deferred income taxes                                 564              538
Other non-current assets                              253              232
TOTAL ASSETS                                     $    7,692       $    7,527
LIABILITIES AND EQUITY
CURRENT LIABILITIES
     Accounts payable and accrued liabilities    $    867         $    876
     Short-term debt                                  19               28
     Long-term debt – current portion                 6                4
            Total current liabilities                 892              908
Long-term debt, net of current portion                2,191            1,930
Pension plan liability                                420              435
Other employee benefits liability                     259              267
Deferred income taxes                                 43               51
Other liabilities                                     207              195
Commitments and contingencies
OWENS CORNING STOCKHOLDERS' EQUITY
     Preferred stock, par value $0.01 per             -       -        -
     share (a)
     Common stock, par value $0.01 per share          1                1
     (b)
     Additional paid in capital                       3,917            3,907
     Accumulated earnings                             507              470
     Accumulated other comprehensive deficit          (305)            (315)
     Cost of common stock in treasury (c)             (475)            (362)
            Total Owens Corning stockholders'         3,645            3,701
            equity
     Noncontrolling interests                         35               40
Total equity                                          3,680            3,741
TOTAL LIABILITIES AND EQUITY                     $    7,692       $    7,527
(a)  10 shares authorized; none issued or outstanding at Sep. 30, 2012, and
     Dec. 31, 2011
(b)  400 shares authorized; 135.5 issued and 118.2 outstanding at Sep. 30,
     2012; 134.4 issued and 120.9 outstanding at Dec. 31, 2011
(c)  17.3 shares at Sep. 30, 2012, and 13.5 shares at Dec. 31, 2011



Table 5

Owens Corning and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)

(in millions)


                                                             Nine Months Ended
                                                             Sep. 30,
                                                             2012        2011
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES
 Net earnings                                              $ 39       $  230
 Adjustments to reconcile net earnings to cash provided
 by operating activities:
           Depreciation and amortization                     269         243
           Gain on sale of businesses and fixed assets       (3)         (30)
           Deferred income taxes                             (25)        29
           Provision for pension and other employee          33          26
           benefits liabilities
           Stock-based compensation expense                  18          16
           Other non-cash                                    (9)         (18)
 Change in working capital                                   (171)       (330)
 Pension fund contribution                                   (42)        (104)
 Payments for other employee benefits liabilities            (17)        (17)
 Other                                                       1           14
           Net cash flow provided by operating               93          59
           activities
NET CASH FLOW USED FOR INVESTING ACTIVITIES
 Additions to plant and equipment                            (235)       (303)
 Investment in subsidiaries and affiliates, net of cash      -           (84)
 acquired
 Proceeds from the sale of assets or affiliates              12          81
           Net cash flow used for investing activities       (223)       (306)
NET CASH FLOW PROVIDED BY FINANCING ACTIVITIES
 Proceeds from senior revolving credit and receivables       1,205       1,007
 securitization facilities
 Payments on senior revolving credit and receivables         (929)       (629)
 securitization facilities
 Proceeds from long-term debt                                -           6
 Payments on long-term debt                                  (13)        (10)
 Net increase (decrease) in short-term debt                  (9)         17
 Purchases of noncontrolling interest                        (22)        -
 Purchases of treasury stock                                 (113)       (138)
 Other                                                       9           12
           Net cash flow provided by financing               128         265
           activities
Effect of exchange rate changes on cash                      1           (20)
Net decrease in cash and cash equivalents                    (1)         (2)
Cash and cash equivalents at beginning of period             52          52
CASH AND CASH EQUIVALENTS AT END OF PERIOD                 $ 51       $  50



Table 6

Owens Corning and Subsidiaries

Segment and Business Information

(unaudited)


Composites
The table below provides a summary of net sales, EBIT and depreciation and
amortization expense for the Composites segment (in millions):
                             Three Months Ended         Nine Months Ended
                             Sep. 30,                   Sep. 30,
                             2012           2011        2012         2011
Net sales                    $     459      $   496     $   1,433    $  1,517
      % change from prior          -7%          4%          -6%         6%
      year
EBIT                         $     11       $   49      $   68       $  152
      EBIT as a % of net           2%           10%         5%          10%
      sales
Depreciation and             $     30       $   31      $   91       $  97
amortization expense

Building Materials
The table below provides a summary of net sales, EBIT and depreciation and
amortization expense for the Building Materials segment and our businesses
within this segment (in millions):
                             Three Months Ended         Nine Months Ended
                             Sep. 30,                   Sep. 30,
                             2012          2011         2012         2011
Net sales
     Insulation              $    384      $   365      $   1,055    $  981
     Roofing                      471          644          1,664       1,785
Total Building Materials     $    855      $   1,009    $   2,719    $  2,766
      % change from      -15%          36%          -2%          10%
     prior year
EBIT
     Insulation              $    3        $   (12)     $   (47)     $  (97)
     Roofing                      83           156          289         374
Total Building Materials     $    86       $   144      $   242      $  277
      EBIT as a % of net 10%           14%          9%           10%
     sales
Depreciation and
amortization expense
     Insulation              $    28       $   30       $   80       $  89
     Roofing                      10           10           28          31
Total Building Materials     $    38       $   40       $   108      $  120



Table 7

Owens Corning and Subsidiaries

Corporate, Other and Eliminations

(unaudited)
Corporate, Other and Eliminations
The table below provides a summary of EBIT and depreciation and amortization
expense for the Corporate, Other and Eliminations category (in millions):
                             Three Months Ended        Nine Months Ended
                             Sep. 30,                   Sep. 30,
                             2012          2011         2012          2011
Charges related to cost
reduction actions and        $   (22)      $   -        $   (109)     $  (17)
related items
Gain on sale of Capivari,        -             -            -            16
Brazil, facility
General corporate expense        (16)          (16)         (69)         (55)
and other
EBIT                         $   (38)      $   (16)     $   (178)     $  (56)
Depreciation and             $   21        $   7        $   70        $  26
amortization



SOURCE Owens Corning

Website: http://www.owenscorning.com
Contact: Media Inquiries: Matt Schroder, +1-419-248-8987, or Investor
Inquiries: Thierry Denis, +1-419-248-5748
 
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