Owens Corning Reports First-Quarter 2013 Results Strong First-Quarter Earnings Growth Positions Company for Success in 2013 - Roofing delivers EBIT margins of 20% on effective price execution - Insulation on track for profitability in 2013 - Composites completes asset ramp-up; positioned to achieve positive operating leverage for rest of 2013 - Company reaffirms 2013 outlook of at least $100 million growth in adjusted EBIT PR Newswire TOLEDO, Ohio, April 24, 2013 TOLEDO, Ohio, April 24, 2013 /PRNewswire/ --Owens Corning (NYSE: OC) today reported consolidated net sales of $1.3 billion in the first quarter of 2013, essentially flat with the same period in 2012. First-quarter 2013 adjusted earnings were $35 million, or $0.29 per diluted share, compared with $11 million, or $0.09 per diluted share, during the same period one year ago. The company reported net earnings of $22 million, or $0.18 per diluted share, in the first quarter of 2013, compared to a net loss of $46 million, or $0.38 per diluted share, in 2012. (See Tables 1, 2 and 3 for a discussion and reconciliation of these items.) "Owens Corning delivered a strong first quarter with margin improvement in both of our Building Materials businesses," said Chairman and Chief Executive Officer Mike Thaman. "We grew first-quarter adjusted EBIT by $34 million, driven by strong Roofing performance. Insulation demonstrated strong price execution and is on track for full-year profitability and double-digit revenue growth in 2013. And, Composites completed its asset ramp-up and is positioned to achieve operating leverage that supports improved year-over-year margins for the business. "The first quarter was a positive start to the year and supports our full-year outlook for at least $100 million of growth in adjusted EBIT. We continue to believe that the pace of the U.S. housing recovery and its impact on the margin performance of the Building Materials businesses will largely determine the upside to our guidance," he added. Consolidated First-Quarter Results oOwens Corning's primary safety metric, Recordable Incidence Rate (RIR), was 0.64 for the three months ended March 31, 2013. This compares to a rate of 0.37 in the same period one year ago. oAdjusted EBIT in the first quarter of 2013 was $77 million, up from $43 million in 2012. In the first quarter of 2013, the company had certain items that were not the result of current operations. Before adjusting for these items, first-quarter 2013 EBIT was $57 million. This compares favorably with first-quarter 2012 EBIT, which was a loss of $12 million. (See Table 2 for a reconciliation of the adjusting items.) Outlook The company continues to expect at least $100 million in adjusted EBIT improvement over 2012 as a result of company actions, an improving U.S. housing market, and moderate global growth. It anticipates that the rate of the U.S. housing market recovery and its impact on the margin performance of the Building Materials businesses will largely determine the upside to this guidance. Roofing is expected to achieve improved full-year margins versus 2012. First-quarter margins benefited from significantly lower price incentives than the comparable period last year. The company anticipates that its April 1 price increase and the expected improvement in the U.S. housing market will continue to support year-on-year margin improvement. While 2013 storm-related volumes could compare unfavorably with the prior year, the company anticipates that overall market conditions will improve this year. Insulation will continue to benefit from the growth in U.S. residential new construction, higher asset utilization rates, and better pricing. Prices have improved across the business with strong sequential price performance and the company has announced an additional price increase for the second quarter. Even with this progress, prices remain significantly below historical levels with opportunity for further improvement. Composites is expected to achieve improved full-year financial performance. With the asset ramp-up complete at the end of the first quarter of 2013, the company expects margins in the business to benefit from positive leverage and the asset repositioning executed in 2012. The company estimates an effective tax rate of 25 percent to 28 percent for 2013, based on the blend of effective tax rates for its U.S. and non-U.S. operations. The effective cash tax rate is estimated to be in the range of 10 percent to 12 percent on adjusted pre-tax earnings, due to the company's $2.3 billion U.S. tax net operating loss carryforward. The company expects general corporate expenses to be about $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 Second-quarter 2013 results will be announced at 11 a.m. ET on Wednesday, July 24, 2013. Conference Call and Presentation Wednesday, April 24, 2013 10 a.m. Eastern Time All Callers oLive dial-in telephone number – U.S.: 1.877.883.0383, or international: 1.412.902.6506 oEntry number – 123-6573 (please dial in 10-15 minutes before conference call start time) oLive webcast – http://services.choruscall.com/links/owens130424.html Telephone and Webcast Replay oTelephone replay available through 9 a.m. on May 2, 2013 oTelephone replay number – U.S.: 1.877.344.7529, or international +1.412.317.0088 oConference replay number – 100-269-15 oReplay of webcast also available at: http://services.choruscall.com/links/owens130424.html oWebcast available until April 24, 2014 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. Owens Corning Investor Relations News. 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 April 24, 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 Mar. 31, 2013 2012 NET SALES $ 1,350 $ 1,346 COST OF SALES 1,137 1,160 Gross margin 213 186 OPERATING EXPENSES Marketing and administrative expenses 133 137 Science and technology expenses 18 19 Charges related to cost reduction actions 1 34 Other expenses 4 8 Total operating expenses 156 198 EARNINGS (LOSS) BEFORE INTEREST AND TAXES 57 (12) Interest expense, net 29 28 EARNINGS (LOSS) BEFORE TAXES 28 (40) Less: Income tax expense 6 5 Equity in net earnings of affiliates - - NET EARNINGS (LOSS) 22 (45) Less: Net earnings attributable to noncontrolling - 1 interests NET EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING $ 22 $ (46) EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS Basic $ 0.19 $ (0.38) Diluted $ 0.18 $ (0.38) WEIGHTED-AVERAGE COMMON SHARES Basic 118.5 121.1 Diluted 119.6 121.1 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): Three Months Ended March 31, 2013 2012 Charges related to cost reduction actions and related $ (9) $ (55) items Losses related to Hurricane Sandy (11) - Total adjusting items $ (20) $ (55) Three Months Ended March 31, 2013 2012 NET EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING $ 22 $ (46) Less: Net earnings attributable to noncontrolling - 1 interests NET EARNINGS (LOSS) 22 (45) Income tax expense 6 5 EARNINGS (LOSS) BEFORE TAXES 28 (40) Interest expense, net 29 28 EARNINGS (LOSS) BEFORE INTEREST AND TAXES 57 (12) Less: adjusting items from above (20) (55) ADJUSTED EBIT $ 77 $ 43 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: Three Months Ended March 31, 2013 2012 RECONCILIATION TO ADJUSTED EARNINGS Net earnings (loss) attributable to Owens Corning $ 22 $ (46) Adjustment to remove adjusting items 15 43 net of tax Adjustment to tax expense to reflect pro (2) 14 forma tax rate* ADJUSTED EARNINGS $ 35 $ 11 RECONCILIATION TO ADJUSTED DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS DILUTED EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS $ 0.18 $ (0.38) Adjustment to remove adjusting items 0.13 0.36 net of tax Adjustment to tax expense to reflect a (0.02) 0.11 pro forma tax rate* ADJUSTED DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO OWENS CORNING COMMON $ 0.29 $ 0.09 STOCKHOLDERS RECONCILIATION TO DILUTED SHARES OUTSTANDING Weighted-average shares outstanding used for basic earnings per share 118.5 121.1 Non-vested restricted shares 0.6 - Options to purchase common stock 0.5 - Diluted shares outstanding 119.6 121.1 * Pro forma tax rate used in 2013 was 26.5% (midpoint of guidance), and, 23% in 2012 as this was the adjusted effective tax rate of the Company in 2012. Table 4 Owens Corning and Subsidiaries Consolidated Balance Sheets (unaudited) (in millions) Mar. 31, Dec. 31, ASSETS 2013 2012 CURRENT ASSETS Cash and cash equivalents $ 62 $ 55 Receivables, less allowances of $16 at Mar. 31,2013 and $17 at 884 600 Dec. 31, 2012 Inventories 776 786 Other current assets 195 171 Total current assets 1,917 1,612 Property, plant and equipment, net 2,865 2,903 Goodwill 1,143 1,143 Intangible assets 1,038 1,045 Deferred income taxes 603 604 Other non-current assets 251 261 TOTAL ASSETS $ 7,817 $ 7,568 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable and accrued $ 920 $ 897 liabilities Short-term debt 10 5 Long-term debt - current portion 4 4 Total current liabilities 934 906 Long-term debt, net of current portion 2,301 2,076 Pension plan liability 462 480 Other employee benefits liability 271 274 Deferred income taxes 36 38 Other liabilities 219 219 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 3,941 3,925 Accumulated earnings 473 451 Accumulated other comprehensive (375) (364) deficit Cost of common stock in treasury (483) (475) (c) Total Owens Corning 3,557 3,538 stockholders' equity Noncontrolling interests 37 37 Total equity 3,594 3,575 TOTAL LIABILITIES AND EQUITY $ 7,817 $ 7,568 (a) 10 shares authorized; none issued or outstanding at Mar. 31,2013 and Dec. 31, 2012 (b) 400 shares authorized; 135.5 issued and 118.9 outstanding at Mar. 31,2013; 135.6 issued and 118.3 outstanding at Dec. 31, 2012 (c) 16.6 shares at Mar. 31,2013 and 17.3 shares at Dec. 31, 2012 Table 5 Owens Corning and Subsidiaries Consolidated Statements of Cash Flows (unaudited) (in millions) Three Months Ended Mar. 31, 2013 2012 NET CASH FLOW USED FOR OPERATING ACTIVITIES Net earnings (loss) $ 22 $ (45) Adjustments to reconcile net earnings to cash provided by operating activities: Depreciation and amortization 78 89 Gain on sale of businesses and fixed assets - (1) Deferred income taxes - 6 Provision for pension and other employee 6 11 benefits liabilities Stock-based compensation expense 7 7 Other non-cash (2) (4) Change in working capital (271) (232) Pension fund contribution (12) (18) Payments for other employee benefits liabilities (5) (6) Other (2) - Net cash flow used for operating activities (179) (193) NET CASH FLOW USED FOR INVESTING ACTIVITIES Additions to plant and equipment (45) (72) Proceeds from the sale of assets or affiliates - 4 Net cash flow used for investing activities (45) (68) NET CASH FLOW PROVIDED BY FINANCING ACTIVITIES Proceeds from senior revolving credit and receivables 558 626 securitization facilities Payments on senior revolving credit and receivables (331) (352) securitization facilities Payments on long-term debt - (2) Net increase (decrease) in short-term debt 5 (6) Purchases of treasury stock (8) (5) Other 8 5 Net cash flow provided by financing 232 266 activities Effect of exchange rate changes on cash (1) 1 Net increase in cash and cash equivalents 7 6 Cash and cash equivalents at beginning of period 55 52 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 62 $ 58 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 Mar. 31, 2013 2012 Net sales $ 459 $ 476 % change from prior -4% -3% year EBIT $ 9 $ 23 EBIT as a % of net 2% 5% sales Depreciation and amortization $ 32 $ 30 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 (in millions): Three Months Ended Mar. 31, 2013 2012 Net sales Insulation $ 330 $ 331 Roofing 607 588 Total Building Materials $ 937 $ 919 % change from prior year 2% 17% EBIT Insulation $ (21) $ (34) Roofing 119 83 Total Building Materials $ 98 $ 49 EBIT as a % of net sales 10% 5% Depreciation and amortization expense Insulation $ 26 $ 25 Roofing 10 9 Total Building Materials $ 36 $ 34 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 Mar. 31, 2013 2012 Charges related to cost reduction actions $ (9) $ (55) and related items Losses related to Hurricane Sandy (11) - General corporate expense and other (30) (29) EBIT $ (50) $ (84) Depreciation and amortization $ 10 $ 25 SOURCE Owens Corning Website: http://www.owenscorning.com Contact: Media Inquiries: Matt Schroder, 419.248.8987; Investor Inquiries: Thierry Denis, 419.248.5748
Owens Corning Reports First-Quarter 2013 Results
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