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Owens Corning Reports Third-Quarter 2013 Results



               Owens Corning Reports Third-Quarter 2013 Results

All Businesses Improve Performance over 2012

- Roofing achieved 20 percent EBIT margins on flat revenue

- Insulation delivered its best quarter in six years; profitable year to date

- Composites improved EBIT by $10 million compared with last year

- Company reaffirms 2013 outlook of at least $100 million growth in adjusted
EBIT

PR Newswire

TOLEDO, Ohio, Oct. 23, 2013

TOLEDO, Ohio, Oct. 23, 2013 /PRNewswire/ -- Owens Corning (NYSE: OC) today
reported consolidated net sales of $1.32 billion in the third quarter of 2013,
compared with $1.28 billion during the same period last year.

Third-quarter 2013 adjusted earnings were $63 million, or $0.53 per diluted
share, compared with $40 million, or $0.34 per diluted share, during the same
period one year ago.  The company reported net earnings of $51 million, or
$0.43 per diluted share, in the third quarter of 2013, compared to $44
million, or $0.37 per diluted share, in 2012.  (See Tables 1, 2 and 3 for a
discussion and reconciliation of these items.)

"We delivered improved year-on-year performance in each of our businesses,"
said Mike Thaman, chairman and CEO. "Based on our year-to-date performance, we
are maintaining our outlook of at least $100 million of adjusted EBIT growth.

"In the third quarter, our Roofing business sustained strong margin
performance.  Roofing volumes trailed the market, but have largely tracked the
market on a year-to-date basis," Thaman said. "Insulation achieved its ninth
consecutive quarter of EBIT improvement and is once again a positive
contributor to the company's earnings.  Composites EBIT declined sequentially
due to manufacturing performance and lower volumes."

Consolidated Third-Quarter 2013 Highlights

  o Owens Corning's safety performance improved 6 percent year to date.
  o Adjusted EBIT in the third quarter of 2013 was $119 million, up from $81
    million in the same period of 2012. In the third quarter of 2013, the
    company had certain items that were not the result of current operations. 
    Before adjusting for these items, third-quarter 2013 EBIT was $106
    million.  This compares favorably with a third-quarter 2012 EBIT of $59
    million.  (See Table 2 for a reconciliation of the adjusting items).
  o During the third quarter, Owens Corning repurchased 1.4 million shares of
    the company's common stock for $54 million. As of September 30, 2013, 8.6
    million shares remained available for repurchase under the company's
    current authorization.
  o In the quarter, the company reached an agreement to close and sell a
    Composites facility in Hangzhou, China in exchange for approximately $70
    million from the local government.  Cash proceeds are expected to be
    received by the middle of 2014, and a pre-tax gain of $30 million to $40
    million is expected at the transaction closing.

Outlook

The company continues to expect full-year adjusted EBIT to increase by at
least $100 million over 2012.  

Full-year Roofing industry shipments are expected to be down mid-single
digits, primarily on lower storm activity.

In Insulation, expectations for continued growth in U.S. residential new
construction, improved capacity utilization, and higher Owens Corning pricing
remain unchanged.

In Composites, we expect full-year EBIT to be consistent with last year as
manufacturing challenges in the third quarter have been largely resolved.

The company now expects an adjusted effective tax rate of 30 percent for 2013
due to a higher percentage of earnings coming from the United States.  The
cash taxes estimate remains unchanged at about $30 million due to the
company's $2.1 billion U.S. tax net operating loss carryforward. 

The company's updated 2013 estimate for general corporate expenses is about
$105 million on a reduction of variable incentive compensation.

Next Earnings Announcement
Fourth-quarter and full-year 2013 results will be announced on Wednesday,
February 12, 2014.

Third-Quarter Conference Call and Presentation
Wednesday, October 23, 2013
11 a.m. Eastern Time

All Callers

  o Live dial-in telephone number: U.S. 1.877.883.0383 or international
    +1.412.902.6506. In Canada, call 1.877.885.0477
  o Entry number: 4214-557 (Please dial in 10-15 minutes before conference
    call start time)
  o Live webcast: http://services.choruscall.com/links/owens131023.html

Telephone and Webcast Replay

  o Telephone replay available through Oct. 31, 2013 at 9 a.m. U.S.
    1.877.344.7529
    or international +1.412.317.0088
  o Conference replay number: 100-33-717
  o Replay of webcast also available at
    http://services.choruscall.com/links/owens131023.html
  o Webcast available until April 23, 2014

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 59 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 about 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: levels of residential and commercial construction
activity; levels of global industrial production; difficulties in managing
production capacity; 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; economic and political conditions, including new legislation or
other governmental actions; 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; 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 23, 2013, and is subject to change.  The company does not
undertake any duty to update or revise forward-looking statements.  Any
redistribution of this news release after that date is not intended and should
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)
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.
                              Three Months Ended        Nine Months Ended 
                              Sep. 30,                  Sep. 30,  
                                  2013         2012         2013         2012
NET SALES                     $   1,320     $  1,276    $   4,017     $  4,013
COST OF SALES                     1,067        1,074        3,284        3,386
         Gross margin             253          202          733          627
OPERATING EXPENSES
     Marketing and
     administrative               128          115          395          380
     expenses
     Science and technology       19           20           57           60
     expenses
     Charges related to           6            -            8            36
     cost reduction actions
     Other (income)               (6)          8            (8)          19
     expenses, net
         Total operating          147          143          452          495
         expenses
EARNINGS BEFORE INTEREST          106          59           281          132
AND TAXES
Interest expense, net             29           29           87           85
EARNINGS BEFORE TAXES             77           30           194          47
Less: Income tax expense          26           (14)         71           8
(benefit)
Equity in net earnings of         -            -            -            -
affiliates
NET EARNINGS                      51           44           123          39
Less: Net earnings
attributable to                   -            -            1            2
noncontrolling interests
NET EARNINGS ATTRIBUTABLE     $   51        $  44       $   122       $  37
TO OWENS CORNING
EARNINGS PER COMMON SHARE
ATTRIBUTABLE TO
     OWENS CORNING COMMON
     STOCKHOLDERS
         Basic                $   0.43      $  0.37     $   1.03      $  0.31
         Diluted              $   0.43      $  0.37     $   1.02      $  0.31
WEIGHTED-AVERAGE COMMON
SHARES
         Basic                    118.0        117.9        118.4        119.8
         Diluted                  118.8        118.8        119.3        120.6

 

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 uses Adjusted Earnings Before Interest and Taxes
("Adjusted EBIT"), a non-GAAP measure. In calculating Adjusted EBIT,
management excludes from net earnings attributable to Owens Corning certain
non-operational items. Adjusted EBIT 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, Adjusted EBIT 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        Nine Months Ended
                              Sep. 30,                  Sep. 30,
                              2013          2012        2013         2012
Charges related to cost
reduction actions and related $   (11)      $   (22)    $   (23)     $  (109)
items
Net loss related to Hurricane     (2)           -           (16)        -
Sandy
   Total adjusting items      $   (13)      $   (22)    $   (39)     $  (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
                              Sep. 30,                  Sep. 30,
                              2013          2012        2013         2012
NET EARNINGS ATTRIBUTABLE TO
   OWENS CORNING              $   51        $   44      $   122      $  37
        Less: Net earnings
        attributable to           -             -           1           2
        noncontrolling
        interests
NET EARNINGS                      51            44          123         39
   Equity in net earnings of  1   -             -           -           -
   affiliates
   Income tax expense             26            (14)        71          8
EARNINGS BEFORE TAXES             77            30          194         47
   Interest expense, net          29            29          87          85
EARNINGS BEFORE INTEREST AND      106           59          281         132
TAXES
   Less: adjusting items from     (13)          (22)        (39)        (109)
   above
ADJUSTED EBIT                 $   119       $   81      $   320      $  241

 

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 uses Adjusted Earnings and Adjusted Diluted Earnings
Per Share. In calculating these non-GAAP measures, management excludes from
net earnings attributable to Owens Corning certain items it believes are not
the result of current operations. Adjusted Earnings and Adjusted Diluted
Earnings Per Share 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, these adjusted measures should
not be considered in isolation or as a substitute for net earnings
attributable to Owens Corning or diluted earnings per common share
attributable to Owens Corning common stockholders 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            Nine  Months

                                     Ended                    Ended
                                     Sep. 30,                 Sep. 30, 
                                     2013        2012         2013      2012
RECONCILIATION TO ADJUSTED
EARNINGS
Net earnings attributable to      $  51       $  44        $  122     $ 37
Owens Corning
       Adjustment to remove
       adjusting items, net of       9           16           28        82
       tax
       Adjustment to tax
       expense (benefit) to          3           (20)         12        (1)
       reflect pro forma tax
       rate*
ADJUSTED EARNINGS                 $  63       $  40        $  162     $ 118
RECONCILIATION TO ADJUSTED
DILUTED EARNINGS PER SHARE
   ATTRIBUTABLE TO OWENS
   CORNING COMMON STOCKHOLDERS
DILUTED EARNINGS (LOSS) PER
COMMON SHARE ATTRIBUTABLE
   TO OWENS CORNING COMMON        $  0.43     $  0.37      $  1.02    $ 0.31
   STOCKHOLDERS
       Adjustment to remove
       adjusting items, net of       0.08        0.13         0.23      0.68
       tax
       Adjustment to tax
       expense to reflect a pro      0.02        (0.16)       0.11      (0.01)
       forma tax rate*
ADJUSTED DILUTED EARNINGS PER
SHARE
   ATTRIBUTABLE TO OWENS
   CORNING COMMON                 $  0.53     $  0.34      $  1.36    $ 0.98

   STOCKHOLDERS
RECONCILIATION TO DILUTED SHARES OUTSTANDING
Weighted-average shares
outstanding
   used for basic earnings per       118.0       117.9        118.4     119.8
   share
       Non-vested restricted         0.4         0.6          0.4       0.5
       shares
       Options to purchase           0.4         0.3          0.5       0.3
       common stock
Diluted shares outstanding           118.8       118.8        119.3     120.6
* Pro forma tax rate used in 2013 was 30%, 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)
ASSETS                                           Sep. 30,         Dec. 31, 
                                                 2013             2012
CURRENT ASSETS
    Cash and cash equivalents                    $    51          $    55
    Receivables, less allowances of $13 at            758              600
    Sep. 30, 2013, and $17 at Dec. 31, 2012
    Inventories                                       834              786
    Other current assets                              270              176
           Total current assets                       1,913            1,617
Property, plant and equipment, net                    2,905            2,903
Goodwill                                              1,166            1,143
Intangible assets                                     1,046            1,045
Deferred income taxes                                 482              604
Other non-current assets                              215              256
TOTAL ASSETS                                     $    7,727       $    7,568
LIABILITIES AND EQUITY
CURRENT LIABILITIES
    Accounts payable and accrued liabilities     $    938         $    907
    Short-term debt                                   8                5
    Long-term debt – current portion                  3                4
           Total current liabilities                  949              916
Long-term debt, net of current portion                2,175            2,076
Pension plan liability                                452              480
Other employee benefits liability                     265              274
Deferred income taxes                                 35               38
Other liabilities                                     200              209
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                        3,961            3,925
    Accumulated earnings                              573              451
    Accumulated other comprehensive deficit           (382)            (364)
    Cost of common stock in treasury (c)              (538)            (475)
           Total Owens Corning stockholders'          3,615            3,538
           equity
    Noncontrolling interests                          36               37
Total equity                                          3,651            3,575
TOTAL LIABILITIES AND EQUITY                     $    7,727       $    7,568
(a) 10 shares authorized; none issued or outstanding at Sep. 30, 2013, and
    Dec. 31, 2012
(b) 400 shares authorized; 135.5 issued and 117.7 outstanding at Sep. 30,
    2013; 135.6 issued and 118.3 outstanding at Dec. 31, 2012
(c) 17.8 shares at Sep. 30, 2013, and 17.3 shares at Dec. 31, 2012

 

Table 5
Owens Corning and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
(in millions)
                                                             Nine Months Ended
                                                             Sep. 30,
                                                             2013        2012
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES
 Net earnings                                              $ 123      $  39
 Adjustments to reconcile net earnings to cash provided
 by operating activities:
           Depreciation and amortization                     235         269
           Gain on sale of fixed assets                      (6)         (3)
           Deferred income taxes                             57          (25)
           Provision for pension and other employee          27          33
           benefits liabilities
           Stock-based compensation expense                  21          18
           Other non-cash                                    (13)        (9)
 Change in working capital                                   (214)       (171)
 Pension fund contribution                                   (30)        (42)
 Payments for other employee benefits liabilities            (16)        (17)
 Other                                                       (21)        1
           Net cash flow provided by operating               163         93
           activities
NET CASH FLOW USED FOR INVESTING ACTIVITIES
 Additions to plant and equipment                            (199)       (235)
 Investment in subsidiaries and affiliates, net of cash      (62)        -
 acquired
 Proceeds from Hurricane Sandy insurance claims              26          -
 Proceeds from sale of affiliates                            17          12
 Purchases of alloy                                          (15)        -
 Proceeds from sale of alloy                                 16          -
           Net cash flow used for investing activities       (217)       (223)
NET CASH FLOW PROVIDED BY FINANCING ACTIVITIES
 Proceeds from senior revolving credit and receivables       1,063       1,205
 securitization facilities
 Payments on senior revolving credit and receivables         (957)       (929)
 securitization facilities
 Payments on long-term debt                                  (1)         (13)
 Net increase (decrease) in short-term debt                  3           (9)
 Purchases of noncontrolling interest                        -           (22)
 Purchases of treasury stock                                 (63)        (113)
 Other                                                       7           9
           Net cash flow provided by financing               52          128
           activities
Effect of exchange rate changes on cash                      (2)         1
Net decrease in cash and cash equivalents                    (4)         (1)
Cash and cash equivalents at beginning of period             55          52
CASH AND CASH EQUIVALENTS AT END OF PERIOD                 $ 51       $  51

 

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,
                             2013           2012        2013         2012
Net sales                    $     453      $   459     $   1,384    $  1,433
          % change from            -1%          -7%         -3%         -6%
     prior year
EBIT                         $     21       $   11      $   62       $  68
          EBIT as a % of net       5%           2%          4%          5%
     sales
Depreciation and             $     33       $   30      $   99       $  91
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,
                             2013           2012        2013         2012
Net sales
     Insulation              $     431      $   384     $   1,176    $  1,055
     Roofing                       471          471         1,586       1,664
Total Building Materials     $     902      $   855     $   2,762    $  2,719
          % change from      5%             -15%        2%           -2%
     prior year
EBIT
     Insulation              $     18       $   3       $   1        $  (47)
     Roofing                       96           83          331         289
Total Building Materials     $     114      $   86      $   332      $  242
          EBIT as a % of net 13%            10%         12%          9%
     sales
Depreciation and
amortization expense
     Insulation              $     26       $   28      $   79       $  80
     Roofing                       9            10          28          28
Total Building Materials     $     35       $   38      $   107      $  108

 

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,
                             2013          2012         2013         2012
Charges related to cost
reduction actions and        $   (11)      $   (22)     $   (23)     $  (109)
related items
Net loss related to              (2)           -            (16)        -
Hurricane Sandy
General corporate expense        (16)          (16)         (74)        (69)
and other
EBIT                         $   (29)      $   (38)     $   (113)    $  (178)
Depreciation and             $   10        $   21       $   29       $  70
amortization

 

SOURCE Owens Corning

Website: http://www.owenscorning.com
Contact: Media Inquiries: Matt Schroder, 419.248.8987, or Investor Inquiries:
Thierry Denis, 419.248.5748
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