Slide 1: Focused on Shareholder Value
Q1 2019 FOCUSED ON This presentation shared at the following events: SHAREHOLDER VALUE E 03/18/19 OC Roadshow Hosted by Credit Suisse – Europe Thierry Denis, VP Investor Relations 03/07/19 OC Roadshow Hosted by Jefferies – Boston Brian Chambers, Chief Operating Officer 03/06/19 Evercore ISI Housing
Slide 2: Forward-Looking Statements and Non-GAAP Measures
FORWARD-LOOKING STATEMENTS AND NON-GAAP MEASURES This presentation and the associated remarks contain forward-looking statements. We caution you against relying on these statements as they involve risks and uncertainties that are difficult to predict and the Company’s actual results may differ mater
Slide 3: Agenda
AGENDA The company Investment thesis Three strong businesses Additional financial information 3
Slide 4: The Company
THE COMPANY
Slide 5: Owens Corning at a Glance
OWENS CORNING AT A GLANCE $7.1b 20,000 33 64 2018 sales employees countries consecutive years on the Fortune 500® 3 strong businesses Roofing | Insulation | Composites Source: Owens Corning SEC filings, Fortune Magazine 5
Slide 6: Balanced End Market Exposure
BALANCED END MARKET EXPOSURE 2018 Owens Corning revenue by end market Roofing Insulation Composites 13% 1% 34% 5% 6% 7% 12% 27% 40% 58% 29% 34% 10% 82% 23% 19% U.S. residential new construction U.S residential repair and remodeling U.S. commercial and industrial International Consolidated figures el
Slide 7: Investment Thesis
INVESTMENT THESIS
Slide 8: Compelling Investment Thesis
COMPELLING INVESTMENT THESIS Attractive Market leading Improved competitive macro drivers positions position, earnings & cash flow • Implemented sustainable cost improvements • Drove organic growth through market-leading positions with customers • Acquired businesses with stable and attractive margi
Slide 9: Long-Term Capital Allocation Strategy Focuses on Increasing Shareholder Return
LONG-TERM CAPITAL ALLOCATION STRATEGY FOCUSES ON INCREASING SHAREHOLDER RETURN Capital allocation Maintain investment Maintain safety of strategy grade balance sheet operations and • Investing in attractive that provides flexibility to productivity organic growth of existing portfolio • Pursuing val
Slide 10: Purposeful Actions Over the Decade Have Fueled Sustainable Portfolio Improvement
PURPOSEFUL ACTIONS OVER THE DECADE HAVE FUELED SUSTAINABLE PORTFOLIO IMPROVEMENT Management actions Improved portfolio • Implemented sustainable cost 2016 - 2018 reductions across three businesses 2013 - 2015 2007 - 2012 • Drove substantial organic 13% growth in attractive glass non- wovens, roofing
Slide 11: Proven Track Record of Financial Improvement
PROVEN TRACK RECORD OF FINANCIAL IMPROVEMENT Adjusted EBIT Return on capital $ mm Percent 855 861 11.9% 12.2% 746 10.2% 9.3% 550 7.2% 412 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Free cash flow Operating working capital / net sales $ mm Percent 679 18.0% 16.5% 570 14.0% 13.0% 12.4% 341 266
Slide 12: Our Pillars and Strategies Enable Us to Create a Sustainable Enterprise
OUR PILLARS AND STRATEGIES ENABLE US TO CREATE A SUSTAINABLE ENTERPRISE Financial High-performance strength people CUSTOMERS World-class INVESTORS Customer-inspired sustainability EMPLOYEES innovation COMMUNITIES Operational excellence 12
Slide 13: Owens Corning Broadly Recognized for a Strong ESG Framework
OWENS CORNING BROADLY RECOGNIZED FOR A STRONG ESG FRAMEWORK Ranked #1 six years Earned following ISS scores in 2018: consecutively in the Building • Environmental: 1 Products Group (top scores in • Social: 1 environmental, social and • Governance: 2 economic for 2nd year in a row) Included in CDP’s
Slide 14: Three Strong Businesses
THREE STRONG BUSINESSES
Slide 15: Portfolio Financial Profile
PORTFOLIO FINANCIAL PROFILE 2018 ($ in millions) Insulation Roofing Composites Corporate Total Net sales 2,720 2,492 2,041 (196) $7,057 EBIT / Adj EBIT 290 434 251 (114) 861 EBIT / Adj EBIT as % of net sales 11% 17% 12% 12% 15
Slide 16: Insulation Business
INSULATION BUSINESS Five-year financial performance $3,000 12% Leverage broad portfolio in commercial and industrial $2,500 10% markets around the world $2,000 8% U.S. residential construction $1,500 6% macro environment below historical averages $1,000 4% Drive competitive advantage $500 2% through
Slide 17: U.S. Residential Returning to Prior Performance Levels
U.S. RESIDENTIAL RETURNING TO PRIOR PERFORMANCE LEVELS Owens Corning U.S. insulation contractor price index • U.S. 2018 estimated capacity 110 utilization rate of light-density fiberglass operating lines in 100 excess of 90% 90 • Market growth has exceeded capacity restarts over the past 80 few year
Slide 18: Expanded in Commercial and Industrial Markets Globally with Stable and Attractive Margins
EXPANDED IN COMMERCIAL AND INDUSTRIAL MARKETS GLOBALLY WITH STABLE AND ATTRACTIVE MARGINS NORTH AMERICA EUROPE CHINA TEMPERATURE RANGE HIGH MID LOW PAROC® is a registered trademark for mineral wool insulation 18
Slide 19: Built a Stronger Global Insulation Business with Significant Through-the-Cycle Earnings Power
BUILT A STRONGER GLOBAL INSULATION BUSINESS WITH SIGNIFICANT THROUGH-THE-CYCLE EARNINGS POWER Insulation EBITDA $mm and margins • Insulation delivered 19% North America residential fiberglass insulation average EBITDA margin over 400 Technical and other building insulation the period 1985-2008 300 •
Slide 20: Roofing Business
ROOFING BUSINESS Five-year financial performance Track record of strong $3,000 25% operating performance $2,400 20% Positive outlook based on product preference and market drivers $1,800 15% Components business $1,200 10% growing above market with stable, attractive margins $600 5% Commercial & oper
Slide 21: Positive Outlook for U.S. Asphalt Roofing Demand
POSITIVE OUTLOOK FOR U.S. ASPHALT ROOFING DEMAND + + = Remodeling New construction Major storms and • Strong recovery over last • Consensus expects weather events 5 years continued recovery over • ~40mm square average • Aging housing stock the near term storm market in last 10 years • Economic facto
Slide 22: Remodeling & New Construction Markets Have Been Growing
REMODELING & NEW CONSTRUCTION MARKETS HAVE BEEN GROWING U.S. asphalt shingle market in mm squares New construction Remodeling Weather events Major storms 15 3 22 15 13 25 17 19 11 6 4 34 24 23 6 6 30 21 30 24 28 31 34 23 75 74 77 73 65 68 71 63 59 58 60 61 26 17 17 18 19 20 21 22 11 11 11 14 2007 20
Slide 23: Components Is a Growth Engine
COMPONENTS IS A GROWTH ENGINE Components revenue OC Roofing Components InterWrap 3.6X 1.7X 2013 2018 Source: Owens Corning management estimates 23
Slide 24: Composites Business
COMPOSITES BUSINESS Five-year financial performance $2,500 15% Continued global growth $2,000 12% Favorable industry trends Well-positioned to leverage $1,500 9% market growth with a capital- efficient strategy $1,000 6% Glass non-wovens is an $500 3% attractive business with strong reinvestment $0
Slide 25: Glass Fiber – An $8B Market with Favorable Exposure
GLASS FIBER – AN $8B MARKET WITH FAVORABLE EXPOSURE Markets Building & Consumer Industrial Power & Energy Transportation Construction Size Glass fiber market defined as glass fiber reinforcements and direct conversion products as consumed, excluding yarns. Sources: Fiber Economics Bureau, GlassFibre
Slide 26: Market-Leading Platforms
MARKET-LEADING PLATFORMS Glass reinforcements • A global market leader • Product leadership offers differentiated customer value • Manufacturing technology supports low-delivered cost position Glass non-wovens • A global market leader • Highly specified and customized products deliver customer value
Slide 27: Positioned to Compete Anywhere in the World
POSITIONED TO COMPETE ANYWHERE IN THE WORLD #1 Position Emerging position Europe 29% China 23% 26% #1 Position 10% Americas % Market % OC 48% Revenue Revenue % Market % OC 33% Revenue Revenue % Market % OC Revenue Revenue #1 Position Rest of world 18% 13% % Market % OC Revenue Revenue Glass Non-Wove
Slide 28: Favorable Underlying Industry Trends
FAVORABLE UNDERLYING INDUSTRY TRENDS Stricter High capacity Industry regulatory utilization consolidation environment in rates: ~90% China Glass fiber market demand excludes E-glass yarns. All capacity data are Owens Corning management estimates based on legally obtained information from third parti
Slide 29: Additional Financial Information
ADDITIONAL FINANCIAL INFORMATION
Slide 30: Appendix A: Key Financial Data – Corporate
APPENDIX A: KEY FINANCIAL DATA – CORPORATE ($ in millions, except per share data) Q4 2018 Q4 2017 FY 2018 FY 2017 Net sales 1,724 1,606 7,057 6,384 Net earnings attributable to Owens Corning 171 (4) 545 289 Diluted earnings per share (EPS) attributable to $1.55 ($0.04) $4.89 $2.55 Owens Corning comm
Slide 31: Appendix A: Key Financial Data – Business
APPENDIX A: KEY FINANCIAL DATA – BUSINESS Insulation Roofing Composites ($ in millions) Q4 2018 Q4 2017 Q4 2018 Q4 2017 Q4 2018 Q4 2017 Net sales 732 595 546 560 481 506 EBIT 115 79 83 108 56 74 EBIT as % of net sales 16% 13% 15% 19% 12% 15% D&A 48 35 13 13 38 37 ($ in millions) FY 2018 FY 2017 FY 2
Slide 32: Appendix A: 2019 Outlook
APPENDIX A: 2019 OUTLOOK Macro environment Environment consistent with consensus global industrial production growth, U.S. housing starts, and global commercial and industrial construction growth Business outlook Other guidance items • Strong cash flow generation • Corporate expenses: $140mm-$150mm
Slide 33: Appendix A: Acquisition Key Financial Data
APPENDIX A: ACQUISITION KEY FINANCIAL DATA Closing Date Value Revenue Adj. EBITDA EPS Accretion Synergies 2015: 2015: Delivered run rate of Interwrap April 2016 ~$450mm Approximately In year of closing $250mm $20mm by end 2017 20% Pittsburgh 2013-2016: Expect $20mm run June 2017 ~$560mm 2016: $240+m
Slide 34: Appendix B: Non-GAAP Reconciliation – Table 1
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 1 34
Slide 35: Appendix B: Non-GAAP Reconciliation – Table 2
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 2 35
Slide 36: Appendix B: Non-GAAP Reconciliation – Table 3
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 3 36
Slide 37: Appendix B: Non-GAAP Reconciliation – Table 4
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 4 37
Slide 38: Appendix B: Non-GAAP Reconciliation – Table 5
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 5 38
Slide 39: Appendix B: Non-GAAP Reconciliation – Table 6
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 6 39
Slide 40: Appendix B: Non-GAAP Reconciliation – Table 7
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 7 40
Slide 41: Appendix B: Non-GAAP Reconciliation – Table 8
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 8 41
Slide 42: Appendix B: Non-GAAP Reconciliation – Table 9
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 9 42