Owens Corning Reports Second-Quarter 2014 Results

              Owens Corning Reports Second-Quarter 2014 Results  Progress in Insulation and Composites Expected to Drive 2014 Adjusted EBIT Growth; Second-Quarter Results Reflect Continued Volume Weakness in Roofing  - Insulation and Composites continue to demonstrate year-over-year improvement  - First-half Roofing financial performance affected by weaker market conditions and volume shortfall  - Full-year earnings growth in Insulation and Composites is expected to more than offset weaker year-over-year financial performance in Roofing  - Company continues to expect full-year adjusted EBIT to be greater than the 2013 result of $416 million  PR Newswire  TOLEDO, Ohio, July 23, 2014  TOLEDO, Ohio, July 23, 2014 /PRNewswire/ --Owens Corning (NYSE: OC) today reported consolidated net sales of $1.36 billion in the second quarter of 2014, up slightly from $1.35 billion in 2013.  Second-quarter 2014 adjusted earnings were $45 million, or $0.38 per diluted share, down from the adjusted earnings of $68 million, or $0.56 per diluted share, in 2013. Net earnings in the second quarter of 2014 were $21 million, or $0.18 per share, compared to net earnings of $49 million, or $0.41 per diluted share last year. (See Table 3 for a discussion and reconciliation of these items.)  "Insulation and Composites delivered improvement in line with expectations through the first half of the year. Continued momentum in these two businesses is expected to more than offset the weaker financial performance in the Roofing business and generate earnings growth for the full year 2014," said Chairman and Chief Executive Officer Mike Thaman.  Consolidated Second Quarter 2014 Results    oOwens Corning continued to perform at a very high level of safety with a     Recordable Incident Rate (RIR) of 0.50 for the six months ending June 30,     2014. This is consistent with the rate in the same period in 2013.   oAdjusted earnings before interest and taxes (adjusted EBIT) in the second     quarter of 2014 were $96 million, down from $124 million in 2013. Reported     EBIT for the second quarter was $73 million, compared with $118 million     during the same period in 2013. (See Table 2.)   oDuring the second quarter, Owens Corning repurchased 300,000 shares of the     company's common stock for $12 million. As of June 30, 2014, 7.7 million     shares remained available for repurchase under the company's current     authorization.   oThe company's Board of Directors declared a quarterly cash dividend of     $0.16 per common share. The dividend will be payable on July 29, 2014 to     shareholders of record as of July 14, 2014.  Outlook  The Insulation business should continue to benefit from growth in U.S. residential new construction, improved pricing and operating leverage.  The Composites business continues to benefit from stable global economic growth, improved operating performance and pricing. Pricing is expected to be the primary driver of EBIT growth in 2014. Composites pricing is now expected to be at the top end of the previous guidance range of $20 million to $30 million.  The roofing market was down through the first two quarters of this year. The company now expects that the roofing market will be flat to slightly down for full-year 2014 compared to prior year. Volumes in the Roofing business are expected to more closely track the market in the second half than they did in the first half of 2014.  The company estimates a long-term effective tax rate of 28 percent to 30 percent, and a long-term effective cash tax rate of 10 percent to 12 percent on adjusted pre-tax earnings, due to the company's $2.1 billion U.S. tax net operating loss carry forward. The effective book tax rate for 2014 on adjusted earnings is expected to be within the long-term range.  The company expects general corporate expenses to be $100 million to $110 million in 2014, a $20 million cost reduction versus the previous guidance. Capital expenditures in 2014 are expected to total approximately $370 million, a $30 million reduction from our previous guidance. This estimate continues to include an estimated $65 million for the start of construction of a non-wovens facility.  For the full year 2014, the company's adjusted EBIT is expected to be greater than the 2013 result of $416 million.  Next Earnings Announcement  Third-quarter 2014 results will be announced on Wednesday, October 22, 2014.  Conference Call and Presentation  Wednesday, July 23, 2014 11 a.m. Eastern Time  All Callers Live dial-in telephone number: U.S. 1.888.317.6003, Canada 1.866.284.3684 or other international +1.412.317.6061. Entry number: 461-4761 (Please dial in 10-15 minutes before conference call start time)  Live webcast: http://services.choruscall.com/links/owens140723.html  Telephone replay available through July 30, 2014. For U.S. and Canada, call 1.877.344.7529 or international +1.412.317.0088. Conference replay number: 100-48-200  Replay of webcast also available until July 23, 2015 at: http://services.choruscall.com/links/owens140723.html  Presentation To view the slide presentation during the conference call, please log on to the live webcast at: http://investor.owenscorning.com/investor-relations/  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 60 consecutive years and in business for more than 75 years, Owens Corning is a market-leading innovator of glass-fiber technology with sales of $5.3 billion in 2013 and about 15,000 employees in 27 countries. 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 may cause actual results to differ materially from those projected in these statements. Such factors include, without limitation: economic and political conditions, including; levels of residential and commercial construction activity; competitive factors; levels of global industrial production; relationships with key customers; industry and economic conditions that affect the market and operating conditions of our customers, suppliers or lenders; availability and cost of credit; our level of indebtedness; weather conditions; pricing factors; labor disputes and litigation; availability and cost of energy and raw materials; difficulties in managing production capacity; issues involving implementation of new business systems; new legislation or other governmental actions; our ability to use our net operating loss carry-forwards; research and development activities; foreign exchange fluctuations; interest rate movements; labor disputes; issues related to acquisitions, divestitures and joint ventures; uninsured losses; achievement of expected synergies, cost reductions and/or productivity improvements; defined benefit plan funding obligations; and, factors detailed from time to time in the company's Securities and Exchange Commission filings. The information in this news release speaks as of July 23, 2014, and is subject to change. The company does not undertake any obligation to update or revise forward-looking statements other than as required by applicable securities laws. Any distribution of this news release after that date is not intended and should not be construed as updating or confirming such information.  Owens Corning Investor Relations News    Table 1  Owens Corning and Subsidiaries  Consolidated Statements of Earnings  (unaudited)  (in millions, except per share amounts)                                Three Months Ended        Six Months Ended                                June 30,                  June 30,                                    2014         2013        2014        2013 NET SALES                      $   1,355     $  1,347    $  2,633    $  2,697 COST OF SALES                      1,107        1,080       2,151       2,217           Gross margin             248          267         482         480 OPERATING EXPENSES      Marketing and                 130          134         262         267      administrative expenses      Science and technology        20           20          39          38      expenses      Charges related to cost       -            1           12          2      reduction actions      Other (income)                25           (6)         (12)        (2)      expenses, net           Total operating          175          149         301         305           expenses EARNINGS BEFORE INTEREST AND       73           118         181         175 TAXES Interest expense, net              31           29          58          58 EARNINGS BEFORE TAXES              42           89          123         117 Less: Income tax expense           21           39          (18)        45 (benefit) Equity in net earnings of          1            -           1           - affiliates NET EARNINGS                       22           50          142         72 Less: Net earnings attributable to                    1            1           1           1 noncontrolling interests NET EARNINGS ATTRIBUTABLE TO   $   21        $  49       $  141      $  71 OWENS CORNING EARNINGS PER COMMON SHARE ATTRIBUTABLE TO      OWENS CORNING COMMON      STOCKHOLDERS           Basic                $   0.18      $  0.41     $  1.20     $  0.60           Diluted              $   0.18      $  0.41     $  1.19     $  0.59           Dividend             $   0.16      $  -        $  0.32     $  - WEIGHTED AVERAGE COMMON SHARES           Basic                    117.4        119.1       117.6       118.8           Diluted                  118.3        120.4       118.5       119.9 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) Adjusting items are shown in the table below (in millions):                                Three Months Ended        Six Months Ended                                June 30,                  June 30,                                2014          2013        2014         2013 Impairment loss on European    $   (19)      $   -       $   (19)     $  - Stone Business Gain on sale of Hangzhou,          -             -           45          - China Facility Net loss related to Hurricane      (4)           (3)         (6)         (14) Sandy Charges related to cost reduction actions and related      -             (3)         (12)        (12) items     Total adjusting items      $   (23)      $   (6)     $   8        $  (26) The reconciliation from net earnings attributable to Owens Corning to Adjusted EBIT is shown in the table below (in millions):                                Three Months Ended        Six Months Ended                                June 30,                  June 30,                                2014          2013        2014         2013 NET EARNINGS ATTRIBUTABLE TO     OWENS CORNING              $   21        $   49      $   141      $  71          Less: Net earnings          attributable to           1             1           1           1          noncontrolling          interests NET EARNINGS                       22            50          142         72     Equity in net earnings of      1             -           1           -     affiliates     Income tax expense             21            39          (18)        45 EARNINGS BEFORE TAXES              42            89          123         117     Interest expense, net          31            29          58          58 EARNINGS BEFORE INTEREST AND       73            118         181         175 TAXES     Less: adjusting items from     (23)          (6)         8           (26)     above ADJUSTED EBIT                  $   96        $   124     $   173      $  201 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.      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         Six Months Ended                                 June 30,                   June 30,                                 2014            2013        2014        2013 RECONCILIATION TO ADJUSTED EARNINGS Net earnings attributable to Owens        $  21          $   49        $ 141       $ 71 Corning         Adjustment to         remove adjusting        21              4           -           19         items, net of         tax         Adjustment to         remove         significant tax         -               -           (74)        -         reserve         reversals*         Adjustment to         tax expense         (benefit) to            3               15          13          13         reflect pro         forma tax rate* ADJUSTED EARNINGS            $  45          $   68        $ 80        $ 103 RECONCILIATION TO ADJUSTED DILUTED EARNINGS PER SHARE     ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS DILUTED EARNINGS PER COMMON SHARE ATTRIBUTABLE     TO OWENS CORNING         $  0.18        $   0.41      $ 1.19      $ 0.59     COMMON STOCKHOLDERS         Adjustment to         remove adjusting        0.18            0.03        -           0.16         items, net of         tax         Adjustment to         remove         significant tax         -               -           (0.62)      -         reserve         reversals*         Adjustment to         tax expense         (benefit) to            0.02            0.12        0.11        0.11         reflect pro         forma tax rate* ADJUSTED DILUTED EARNINGS PER SHARE     ATTRIBUTABLE TO     OWENS CORNING COMMON     $  0.38        $   0.56      $ 0.68      $ 0.86     STOCKHOLDERS RECONCILIATION TO DILUTED SHARES OUTSTANDING Weighted average shares outstanding     used for basic              117.4           119.1       117.6       118.8     earnings per share         Non-vested         restricted              0.4             0.7         0.4         0.6         shares         Options to         purchase common         0.5             0.6         0.5         0.5         stock Diluted shares                  118.3           120.4       118.5       119.9 outstanding * For comparability, in 2014, we have used a pro-forma effective tax rate of 29% (midpoint of guidance) that excludes the resolution of a significant uncertain tax position and the reversal of a valuation allowance recorded in prior years against certain European net deferred tax assets. In 2013 we have used an effective tax rate of 27% as this was the effective tax rate of the Company in 2013.      Table 4  Owens Corning and Subsidiaries  Consolidated Balance Sheets  (unaudited) (in millions)                                                   June 30,        Dec. 31, ASSETS                                            2014            2013 CURRENT ASSETS      Cash and cash equivalents                    $    81         $    57      Receivables, less allowances of $13 at            848             683      June 30, 2014, and $14 at Dec. 31, 2013      Inventories                                       886             810      Assets held for sale - current                    14              29      Other current assets                              231             269              Total current assets                      2,060           1,848 Property, plant and equipment, net                     2,913           2,932 Goodwill                                               1,166           1,166 Intangible assets                                      1,026           1,040 Deferred income taxes                                  406             436 Other non-current assets                               225             225 TOTAL ASSETS                                      $    7,796      $    7,647 LIABILITIES AND EQUITY CURRENT LIABILITIES      Accounts payable and accrued liabilities     $    880        $    988      Short-term debt                                   17              1      Liabilities held for sale - current               4               -      Long-term debt – current portion                  4               3              Total current liabilities                 905             992 Long-term debt, net of current portion                 2,271           2,024 Pension plan liability                                 316             336 Other employee benefits liability                      234             242 Deferred income taxes                                  28              23 Other liabilities                                      131             200 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                        3,939           3,938      Accumulated earnings                              758             655      Accumulated other comprehensive deficit           (301)           (297)      Cost of common stock in treasury (c)              (524)           (504)              Total Owens Corning stockholders'         3,873           3,793              equity      Noncontrolling interests                          38              37 Total equity                                           3,911           3,830 TOTAL LIABILITIES AND EQUITY                      $    7,796      $    7,647 (a)  10 shares authorized; none issued or outstanding at June 30, 2014, and      Dec. 31, 2013 (b)  400 shares authorized; 135.5 issued and 117.6 outstanding at June 30,      2014; 135.5 issued and 117.8 outstanding at Dec. 31, 2013 (c)  17.9 shares at June 30, 2014, and 17.7 shares at Dec. 31, 2013      Table 5  Owens Corning and Subsidiaries  Consolidated Statements of Cash Flows  (unaudited) (in millions)                                                               Six Months Ended                                                               June 30,                                                               2014       2013 NET CASH FLOW USED FOR OPERATING ACTIVITIES  Net earnings                                               $ 142      $ 72  Adjustments to reconcile net earnings to cash used for  operating activities:          Depreciation and amortization                        154        157          Gain on sale of fixed assets                         (47)       -          Impairment loss on European Stone Business           19         -          Deferred income taxes                                (29)       37          Provision for pension and other employee benefits    9          18          liabilities          Stock-based compensation expense                     14         14          Other non-cash                                       (13)       (12)  Change in working capital                                    (336)      (254)  Pension fund contribution                                    (24)       (20)  Payments for other employee benefits liabilities             (12)       (11)  Other                                                        6          (16)          Net cash flow used for operating activities          (117)      (15) NET CASH FLOW USED FOR INVESTING ACTIVITIES  Additions to plant and equipment (including alloy)           (142)      (125)  Proceeds from the sale of assets (including alloy) or        77         -  affiliates, net  Investment in subsidiaries and affiliates, net of cash       -          (52)  acquired  Proceeds from Hurricane Sandy insurance claims               -          15          Net cash flow used for investing activities          (65)       (162) NET CASH FLOW PROVIDED BY FINANCING ACTIVITIES  Proceeds from senior revolving credit and receivables        769        799  securitization facilities  Payments on senior revolving credit and receivables          (522)      (621)  securitization facilities  Payments on long-term debt                                   (1)        (1)  Net increase in short-term debt                              16         15  Cash dividends paid                                          (19)       -  Purchases of treasury stock                                  (44)       (9)  Other                                                        7          14          Net cash flow provided by financing activities       206        197 Effect of exchange rate changes on cash                       -          (3) Net increase in cash and cash equivalents                     24         17 Cash and cash equivalents at beginning of period              57         55                                                              $ 81       $ 72 CASH AND CASH EQUIVALENTS AT END OF PERIOD      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          Six Months Ended                              June 30,                    June 30,                              2014            2013        2014        2013 Net sales                    $     505       $   472     $  982      $  931       % change from            7%            -5%        5%          -4%      prior year EBIT                         $     37        $   32      $  64       $  41       EBIT as a % of net       7%            7%         7%          4%      sales Depreciation and             $     34        $   34      $  68       $  66 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          Six Months Ended                              June 30,                    June 30,                              2014            2013        2014        2013 Net sales      Insulation              $     447       $   415     $  802      $  745      Roofing                       437           508        934         1,115 Total Building Materials     $     884       $   923     $  1,736    $  1,860       % change from      -4%             -2%         -7%         0%      prior year EBIT      Insulation              $     18        $   4       $  19       $  (17)      Roofing                       62            116        142         235 Total Building Materials     $     80        $   120     $  161      $  218       EBIT as a % of net 9%              13%         9%          12%      sales Depreciation and amortization expense      Insulation              $     26        $   27      $  51       $  53      Roofing                       10            9          19          19                               $     36        $   36      $  70       $  72 Total Building Materials      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        Six Months Ended                               June 30,                   June 30,                               2014          2013         2014         2013 Impairment loss on European   $   (19)      $   -        $   (19)     $  - Stone Business Net loss related to Hurricane     (4)           (3)          (6)         (14) Sandy Gain on sale of Hangzhou,         -             -            45          - China facility Charges related to cost reduction actions and related     -             (3)          (12)        (12) items General corporate expense and     (21)          (28)         (52)        (58) other EBIT                          $   (44)      $   (34)     $   (44)     $  (84) Depreciation and amortization $   8         $   9        $   16       $  19      SOURCE Owens Corning  Website: http://www.owenscorning.com Contact: Media Inquiries: Matt Schroder, 419.248.8987; or Investor Inquiries: Thierry Denis, 419.248.5748  
Press spacebar to pause and continue. Press esc to stop.