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Owens Corning Reports Fourth-Quarter and Full-Year 2012 Results



       Owens Corning Reports Fourth-Quarter and Full-Year 2012 Results

Company Delivered $293 Million in Adjusted EBIT in 2012, Expects Improved
Performance in All Businesses in 2013

- Insulation significantly narrowed full-year losses and delivered second
consecutive profitable quarter

- Roofing pricing environment at year-end 2012 provides momentum for 2013

- Composites' low-delivered-cost asset repositioning to yield benefits this
year

- Company actions and recovering markets support at least $100 million of
adjusted EBIT growth in 2013

PR Newswire

TOLEDO, Ohio, Feb. 20, 2013

TOLEDO, Ohio, Feb. 20, 2013 /PRNewswire/ -- Owens Corning (NYSE: OC) today
reported consolidated net sales of $5.2 billion in 2012, compared with net
sales of $5.3 billion in 2011.

Full-year 2012 adjusted earnings were $131 million, or $1.10 per diluted
share. The company reported a net loss of $19 million, or $0.16 per diluted
share, for 2012. Both the adjusted and reported results compare to net
earnings of $276 million, or $2.23 per diluted share, in 2011. 

Fourth-quarter 2012 adjusted earnings were $13 million, or $0.11 per diluted
share, compared with $48 million, or $0.40 per diluted share, during the same
period one year ago.  The company reported a net loss of $56 million, or $0.47
per diluted share, in the fourth quarter of 2012, compared with net earnings
of $50 million, or $0.41 per diluted share, in 2011.  (See Tables 1, 2 and 6
for a discussion and reconciliation of these items.)

The net loss in 2012 reflects a one-time debt extinguishment charge of $74
million in conjunction with a tender offer to refinance $350 million of
outstanding senior notes that occurred in the fourth quarter of 2012, as well
as approximately $136 million of charges associated with global restructuring
actions. The fourth-quarter loss was primarily impacted by both the debt
extinguishment charge and $27 million of charges related to global
restructuring actions.  

"Owens Corning closed 2012 with positive momentum in each of our businesses,"
said Chairman and Chief Executive Officer Mike Thaman.  "Insulation ended the
year with consecutive profitable quarters – a first since 2008 – narrowing
losses significantly.  Going forward, we believe all three businesses will
benefit from recovering markets and company actions to deliver improved
operating margins in 2013. 

"We anticipate continued improvement in the U.S. housing market and an
environment of slow but stable global growth," Thaman added, "and we are off
to a good start in 2013."

Consolidated Fourth-Quarter and Full-Year 2012 Results

  o Owens Corning's safety performance in 2012 improved by 10 percent compared
    with 2011, marking the company's 11th consecutive year of safety
    improvement.

  o Adjusted EBIT in the fourth quarter of 2012 was $52 million, compared with
    $88 million in 2011.  EBIT for the fourth quarter was $16 million,
    compared with $88 million during the same period in 2011 (see Table 2).  

  o Full-year adjusted earnings before interest and taxes (EBIT) were $293
    million in 2012, compared with EBIT of $461 million in 2011.  Full-year
    EBIT in 2012 was $148 million, compared to $461 million in 2011.  (See
    Table 2 for a reconciliation of these items.)

Stock Repurchase Activity

During 2012, Owens Corning repurchased 3.7 million shares of the company's
common stock for $107 million under a previously announced share repurchase
program.  As of year-end, 10 million shares remained available for repurchase
under the company's current authorization.

Outlook

The company expects at least $100 million in EBIT improvement over 2012 as a
result of company actions, an improving U.S. housing market and moderate
global growth.  The pace of the U.S. housing recovery and its impact on the
company's Insulation business, combined with sustained Roofing margins, could
yield additional upside improvement.

The company expects Roofing to benefit from lower year-over-year winter
incentives and announced first-quarter price actions; growth in U.S.
residential new construction; and growth potential in the re-roofing segment.
 Storm-related volume in 2013 could compare negatively with 2012 volumes,
which were above the historical average.

Insulation is expected to benefit from the growth in U.S. residential new
construction, higher utilization rates, and improved pricing.  However, prices
remain significantly below historical levels.

In the Composites segment, the company expects to benefit from its asset
repositioning, increased utilization following a first-quarter ramp-up, and
global market growth.  Prices are stable heading into 2013 although there is
continued input cost inflation.

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 long-term effective cash tax rate is estimated to be in the
range of 10 percent to 12 percent on adjusted net earnings, due to the
company's $2.3 billion U.S. tax net operating loss carryforward.  The
effective book tax rate for 2013 on adjusted earnings is expected to be within
the long-term range.

The company expects general corporate expenses to be in the range of $110
million to $120 million in 2013.  General corporate expenses include corporate
staff and other activities that support the operations.  Expenses will be
higher in 2013 than in 2012 in anticipation of  incentive compensation levels
consistent with improved performance.

Next Earnings Announcement

First-quarter 2013 results will be announced on Wednesday, April 24, 2013.

Conference Call and Presentation

Wednesday, February 20, 2013 
11 a.m. Eastern Time

All Callers 
Live dial-in telephone number: U.S. 1-800-446-1671 or International
1-847-419-3362 
Participant passcode: 340-318-12 (Please dial in 10 minutes before conference
call start time.)

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

Telephone replay available through February 27, 2013: U.S. 1-888-843-7419;
International +1-630-652-3042 
Participant passcode: 340-318-12

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 $5.2 billion in 2012 and approximately
15,000 employees in 27 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 February
20, 2013, 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 (Loss)

(unaudited)

(in millions, except per share amounts)
                             Three Months Ended        Twelve Months Ended
                             Dec. 31,                  Dec. 31,
                             2012          2011        2012           2011
NET SALES                    $   1,159     $  1,196    $   5,172      $  5,335
COST OF SALES                    989          966          4,375         4,307
        Gross margin             170          230          797           1,028
OPERATING EXPENSES
    Marketing and
    administrative               129          130          509           525
    expenses
    Science and technology       19           19           79            77
    expenses
    Charges related to           15           -            51            -
    cost reduction actions
    Other expenses               (9)          (7)          10            (35)
    (income), net
        Total operating          154          142          649           567
        expenses
EARNINGS BEFORE INTEREST         16           88           148           461
AND TAXES
Interest expense, net            29           27           114           108
Loss on extinguishment of        74           -            74            -
debt
EARNINGS (LOSS) BEFORE           (87)         61           (40)          353
TAXES
Less: Income tax expense         (36)         11           (28)          74
(benefit)
Equity in net earnings of        (4)          1            (4)           2
affiliates
NET EARNINGS (LOSS)              (55)         51           (16)          281
Less: Net earnings
attributable to                  1            1            3             5
noncontrolling interests
NET EARNINGS (LOSS)
ATTRIBUTABLE TO OWENS        $   (56)      $  50       $   (19)       $  276
CORNING
BASIC EARNINGS (LOSS) PER
COMMON SHARE
    ATTRIBUTABLE TO OWENS
    CORNING COMMON           $   (0.47)    $  0.41     $   (0.16)     $  2.25
    STOCKHOLDERS
DILUTED EARNINGS (LOSS)
PER COMMON SHARE
    ATTRIBUTABLE TO OWENS
    CORNING COMMON
    STOCKHOLDERS             $   (0.47)    $  0.41     $   (0.16)     $  2.23
WEIGHTED AVERAGE COMMON
SHARES
        Basic                    118.0        120.5        119.4         122.5
        Diluted                  118.0        121.5        119.4         123.5
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 (Loss) 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):
                                     Three Months Ended    Twelve Months Ended
                                     Dec. 31,              Dec. 31,
                                     2012          2011    2012        2011
Charges related to cost reduction    $    (27)     $  -    $  (136)    $  -
actions and related items
Losses related to Hurricane Sandy         (9)         -       (9)         -
  Total adjusting items              $    (36)     $  -    $  (145)    $  -
The reconciliation from net earnings attributable to Owens Corning to Adjusted
EBIT is shown in the table below (in millions):
                                     Three Months Ended    Twelve Months Ended
                                     Dec. 31,              Dec. 31,
                                     2012          2011    2012        2011
NET EARNINGS (LOSS) ATTRIBUTABLE TO  $    (56)     $  50   $  (19)     $  276
OWENS CORNING
  Less: Net earnings attributable to      1           1       3           5
  noncontrolling interests
NET EARNINGS (LOSS)                       (55)        51      (16)        281
  Equity in net earnings of               (4)         1       (4)         2
  affiliates
  Income tax expense (benefit)            (36)        11      (28)        74
EARNINGS (LOSS) BEFORE TAXES              (87)        61      (40)        353
  Interest expense, net                   29          27      114         108
  Loss on extinguishment of debt          74          -       74          -
EARNINGS BEFORE INTEREST AND TAXES        16          88      148         461
  Less: adjusting items from above        (36)        -       (145)       -
ADJUSTED EBIT                        $    52       $  88   $  293      $  461

 

Table 3

Owens Corning and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)

(in millions)
                                                 Twelve Months Ended
                                                 Dec. 31,
                                                 2012       2011       2010
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES
 Net earnings (loss)                             $ (16)     $ 281      $ 940
 Adjustments to reconcile net earnings (loss) to
 cash provided by
      operating activities:
           Depreciation and amortization           349        318        320
           (Gain) loss on sale of businesses and   (17)       (30)       2
           fixed assets
           Asset impairments                       6          -          117
           Deferred income taxes                   (59)       55         (867)
           Provision for pension and other         36         36         26
           employee benefits liabilities
           Stock-based compensation expense        24         21         23
           Other non-cash                          (14)       (22)       (19)
           Loss on extinguishment of debt          74         -          -
 Change in working capital                         9          (262)      15
 Pension fund contribution                         (50)       (117)      (32)
 Payments for other employee benefits              (22)       (24)       (26)
 liabilities
 Other                                             10         33         (11)
           Net cash flow provided by operating     330        289        488
           activities
NET CASH FLOW USED FOR INVESTING ACTIVITIES
 Additions to plant and equipment                  (332)      (442)      (314)
 Investment in subsidiaries and affiliates, net    -          (84)       -
 of cash acquired
 Proceeds from Hurricane Sandy insurance claims    20         -          -
 Proceeds from the sale of assets or affiliates    59         81         65
           Net cash flow used for investing        (253)      (445)      (249)
           activities
NET CASH FLOW PROVIDED BY (USED FOR) FINANCING
ACTIVITIES
 Proceeds from senior revolving credit and         1,877      1,912      631
 receivables securitization facilities
 Payments on senior revolving credit and           (1,957)    (1,630)    (619)
 receivables securitization facilities
 Proceeds from long-term debt                      599        6          5
 Payments on long-term debt                        (441)      (10)       (609)
 Purchases of noncontrolling interest              (22)       -          (30)
 Net increase (decrease) in short-term debt        (23)       26         (10)
 Purchases of treasury stock                       (113)      (138)      (120)
 Other                                             4          8          2
           Net cash flow provided by (used for)    (76)       174        (750)
           financing activities
Effect of exchange rate changes on cash            2          (18)       (1)
Net increase (decrease) in cash and cash           3          -          (512)
equivalents
Cash and cash equivalents at beginning of period   52         52         564
CASH AND CASH EQUIVALENTS AT END OF PERIOD       $ 55       $ 52       $ 52
DISCLOSURE OF CASH FLOW INFORMATION
 Cash paid during the year for income taxes      $ 30       $ 24       $ 16
 Cash paid during the year for interest          $ 122      $ 111      $ 108

 

Table 4

Owens Corning and Subsidiaries

Consolidated Balance Sheets

(unaudited)

(in millions)
ASSETS                                      Dec. 31,             Dec. 31,
                                            2012                 2011
CURRENT ASSETS
    Cash and cash equivalents               $     55             $    52
    Receivables, less allowances of
    $17 at Dec. 31, 2012 and $15 at               600                 610
    Dec. 31, 2011
    Inventories                                   786                 795
    Other current assets                          171                 179
            Total current assets                  1,612               1,636
Property, plant and equipment, net                2,903               2,904
Goodwill                                          1,143               1,144
Intangible assets                                 1,045               1,073
Deferred income taxes                             604                 538
Other non-current assets                          261                 232
TOTAL ASSETS                                $     7,568          $    7,527
LIABILITIES AND EQUITY
CURRENT LIABILITIES
    Accounts payable and accrued            $     897            $    876
    liabilities
    Short-term debt                               5                   28
    Long-term debt – current portion              4                   4
            Total current liabilities             906                 908
Long-term debt, net of current portion            2,076               1,930
Pension plan liability                            480                 435
Other employee benefits liability                 274                 267
Deferred income taxes                             38                  51
Other liabilities                                 219                 195
OWENS CORNING STOCKHOLDERS' EQUITY
    Preferred stock, par value $0.01              -                   -
    per share (a)
    Common stock, par value $0.01 per             1                   1
    share (b)
    Additional paid in capital                    3,925               3,907
    Accumulated earnings                          451                 470
    Accumulated other comprehensive               (364)               (315)
    deficit
    Cost of common stock in treasury              (475)               (362)
    (c)
            Total Owens Corning                   3,538               3,701
            stockholders' equity
    Noncontrolling interests                      37                  40
Total equity                                      3,575               3,741
TOTAL LIABILITIES AND EQUITY                $     7,568          $    7,527
(a) 10 shares authorized; none issued or outstanding at Dec. 31, 2012 and Dec.
    31, 2011
(b) 400 shares authorized; 135.6 issued and 118.3 outstanding at Dec. 31,
    2012; 134.4 issued and 120.9 outstanding at Dec. 31, 2011
(c) 17.3 shares at Dec. 31, 2012 and 13.5 shares at Dec. 31, 2011

 

Table 5

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 our

Composites segment (in millions):
                                    Three Months Ended     Twelve Months Ended
                                    Dec. 31,               Dec. 31,
                                    2012          2011     2012        2011
Net sales                           $   426       $  459   $  1,859    $ 1,976
          % change from prior year      -7%          -3%      -6%        4%
EBIT                                $   23        $  49    $  91       $ 201
          EBIT as a % of net sales      5%           11%      5%         10%
Depreciation and amortization       $   32        $  31    $  123      $ 128
expense
Building Materials
The table below provides a summary of net sales, EBIT and depreciation and
amortization expense (in millions) for the Building Materials segment and our
businesses within this segment.
                                    Three Months Ended     Twelve Months Ended
                                    Dec. 31,               Dec. 31,
                                    2012          2011     2012        2011
Net sales
     Insulation                     $   413       $  387   $  1,468    $ 1,368
     Roofing                            350          384      2,014      2,169
Total Building Materials            $   763       $  771   $  3,482    $ 3,537
          % change from prior year  -1%           8%       -2%         9%
EBIT
     Insulation                     $   9         $  -     $  (38)     $ (97)
     Roofing                            42           55       331        429
Total Building Materials            $   51        $  55    $  293      $ 332
          EBIT as a % of net sales  7%            7%       8%          9%
Depreciation and amortization
expense
     Insulation                     $   25        $  27    $  105      $ 116
     Roofing                            10           10       38         41
Total Building Materials            $   35        $  37    $  143      $ 157
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     Twelve Months Ended
                                    Dec. 31,               Dec. 31,
                                    2012          2011     2012        2011
Charges related to cost reduction   $   (27)      $  -     $  (136)    $ (17)
actions and related items
Gains on sales of assets and            -            -        -          16
related charges
Losses related to Hurricane Sandy       (9)          -        (9)        -
General corporate expense               (22)         (16)     (91)       (71)
EBIT                                $   (58)      $  (16)  $  (236)    $ (72)
Depreciation and amortization       $   13        $  7     $  83       $ 33

 

Table 6

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 (loss) attributable to Owens Corning to Adjusted Earnings and a
reconciliation from diluted earnings (loss) per share to adjusted diluted earnings per share are shown in the
tables below:
                 Three Months       Three Months     Three Months Ended  Three Months Ended  Twelve  Months
                 Ended              Ended                                                    Ended
                 March 31,          June 30,         September 30,       December 31,        December 31,
                   2012      2011     2012     2011    2012      2011      2012      2011      2012      2011
RECONCILIATION
TO ADJUSTED
EARNINGS
Net earnings
(loss)           $ (46)    $ 24     $ 39     $ 78    $ 44      $ 124     $ (56)    $ 50      $ (19)    $ 276
attributable to
Owens Corning
      Adjustment
      to remove
      adjusting    43        -        23       -       16        -         68        -         150       -
      items net
      of tax
      Adjustment
      to tax
      expense to   14        3        5        7       (20)      (8)       1         (2)       -         -
      reflect
      pro forma
      tax rate*
ADJUSTED         $ 11      $ 27     $ 67     $ 85    $ 40      $ 116     $ 13      $ 48      $ 131     $ 276
EARNINGS
RECONCILIATION TO ADJUSTED DILUTED
    EARNINGS PER SHARE ATTRIBUTABLE TO
    OWENS CORNING COMMON STOCKHOLDERS
DILUTED EARNINGS
PER COMMON
SHARE   
    ATTRIBUTABLE
    TO OWENS
    CORNING
    COMMON       $ (0.38)  $ 0.19   $ 0.32   $ 0.62  $ 0.37    $ 1.01    $ (0.47)  $ 0.41    $ (0.16)  $ 2.23
    STOCKHOLDERS
      Adjustment
      to remove
      adjusting    0.36      -        0.19     -       0.13      -         0.58      -         1.26      -
      items net
      of tax
      Adjustment
      to tax
      expense to   0.11      0.03     0.04     0.06    (0.16)    (0.06)    -         (0.01)    -         -
      reflect
      pro forma
      tax rate*
ADJUSTED DILUTED
EARNINGS PER
SHARE
ATTRIBUTABLE
    TO OWENS
    CORNING      $ 0.09    $ 0.22   $ 0.55   $ 0.68  $ 0.34    $ 0.95    $ 0.11    $ 0.40    $ 1.10    $ 2.23
    COMMON
    STOCKHOLDERS
RECONCILIATION TO DILUTED SHARES OUTSTANDING
Weighted-average
shares
outstanding used
     for basic
    earnings per   121.1     123.8    120.8    124     117.9     121.7     118.0     120.5     119.4     122.5
    share
      Non-vested
      restricted   -         1.0      0.4      0.9     0.6       0.6       -         0.8       -         0.7
      shares
      Options to
      purchase     -         0.5      0.3      0.5     0.3       0.3       -         0.2       -         0.3
      common
      stock
Diluted shares     121.1     125.3    121.5    125.4   118.8     122.6     118.0     121.5     119.4     123.5
outstanding
*In 2012 the quarterly tax expense was adjusted to reflect the actual full year adjusted effective tax rate of
23 percent. In 2011, the quarterly and full year tax expense was adjusted to use an effective rate of 21
percent based upon the blend of United States and non-United States operations.

 

 

SOURCE Owens Corning

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