Owens Corning Inc · NYSE:OC
Owens Corning — OC Roadshow hosted by Barclays – Europe (November 2013)
36 slides from Owens Corning's conference presentation, Nov 19, 2013
Slide 1: Owens Corning Positioned for Growth
Owens Corning Positioned for Growth Q4 2013 This presentation shared at the following events: 11/19/13 OC Roadshow hosted by Barclays – Europe Arnaud Genis, President, Composites
Slide 2: Forward-Looking Statements and Non-GAAP Measures
Forward-Looking Statements and Non-GAAP Measures This presentation consists of this slide deck and the associated remarks and comments, all of which are integrally related and are intended to be presented and understood together. This presentation contains forward-looking statements within the meani
Slide 3: Owens Corning at a Glance
Owens Corning at a Glance Founded in 1938, an industry leader in glass fiber insulation, roofing and glass fiber reinforcements 2012 sales: $5.2 billion 15,000 employees in 27 countries Fortune 500 company for 59 consecutive years Component of Dow Jones Sustainability World Index for four
Slide 4: Investment Highlights
Investment Highlights Composites Roofing Insulation Leader in an industry Strong business Progress supports entering a phase of performance in a recovering confidence in return to supply tension U.S. housing market historical profitability Three Market-Leading Businesses 4
Slide 5: Strong Portfolio
Strong Portfolio Positioned for Growth ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13F* Insulation Roofing Composites Margin >= 10% 0%<= Margin < 10% Margin < 0% Sources: Owens Corning’s SEC filings since 2006 ; (*) 2013 OC management estimate. For comparability purp
Slide 6: Insulation Business
Insulation Business Q3 2013 Highlights $ (in millions) Q3 2013 Q3 2012 YTD YTD 2013 2012 Insulation delivered strongest quarterly EBIT in six years Net sales* $431 $384 $1,176 $1,055 Continued pricing improvements across the EBIT $18 $3 $1 $(47) business and volume growth EBIT as % of Year-to-
Slide 7: Owens Corning Insulation EBIT Progress
Owens Corning Insulation EBIT Progress $40 Q1 Q2 Q3 Q4 $20 18 9 EBIT in Millions of Dollars 4 3 0 $0 -$20 -12 -16 -21 -$40 -34 -38 -47 -$60 -$80 2011 Actual 2012 Actual 2013 Actual Consistent Quarterly EBIT Progression Since 2011 Source: Owens Corning quarterly and annual SEC filings 7
Slide 8: Well Positioned to Return to Historical Margins
Owens Corning Insulation Well Positioned to Return to Historical Margins 30% EBIT Margin Avg EBIT Margin '85-'08 (15%) 20% 10% 0% -10% '86 '89 '92 '95 '98 '01 '04 '07 '10 '13 LTM Historically Delivered 15% EBIT Margins at 1.5 Million Housing Starts Source: Owens Corning management estimates and Owen
Slide 9: Insulation Industry
Insulation Industry North American Fiberglass 2013 Industry Capacity Utilization 100% 90% 80% 75% 60% 60% 40% 20% 0% Total Capacity Operating Plants Operating Lines Capacity Utilization Tightening as U.S. Housing Recovers Source: Owens Corning management estimates as of September 2013 Capacity utili
Slide 10: North American Fiberglass Network
Owens Corning Insulation North American Fiberglass Network Edmonton Candiac Toronto Delmar Mt. Vernon Kansas City Newark Nephi Santa Clara Eloy Fairburn 2013 Average Utilization: Waxahachie Near full capacity Below full capacity Lakeland Not in operation Continued Discipline in OC Capacity Managemen
Slide 11: Energy Codes
Energy Codes 100% Residential Energy Productivity Energy Efficiency Improvement (%) 2009 – 49% Built to 2006 Code 2012 – 85% Built to 2009 Code 2015 – Expect 35% Build to 2012 Code 50% 0% no code 1987 2006 2009 2012 Year of Code IECC IECC IECC Acceleration of Code Adoption 2006-2015 Drives Demand fo
Slide 12: Code Changes Support Increased Glass Fiber Demand
Code Changes Support Increased Glass Fiber Demand 1.5 Fiberglass Insulation Use per Housing 1.25 Start Indexed to 2005 1 0.75 0.5 2005 2012 2015F Multi-family mix 17% 31% 29% Code Adoption Drives Insulation Demand Growth of ~20% Per Unit from 2012-2015 SF home size and % Owner / Contractor built rel
Slide 13: Positioned to Grow with Our Markets
Positioned to Grow with Our Markets Insulation End-Use Expected Market Revenue CAGR Markets Growth Drivers 2013 – 2015 % of 2012 Revenue U.S. and Canada Housing starts Residential New Construction Building energy code adoption Household formation 10-25% 37% U.S. and Canada Aging housing stoc
Slide 14: Roofing Business
Roofing Business Q3 2013 Highlights $ (in millions) Q3 2013 Q3 2012 YTD YTD 2013 2012 Achieved 20% EBIT margins Net sales* $471 $471 $1,586 $1,664 Improved profitability by 2 points on higher pricing and lower manufacturing costs EBIT $96 $83 $331 $289 Expect higher 2013 margins on lower volum
Slide 15: U.S. Asphalt Shingle Industry Consolidation
U.S. Asphalt Shingle Industry Consolidation ’70s ’80s ’90s Current OC OC OC OC FRY GAF GAF GAF/ELK GAF ELK ELK CERTAINTEED ELK CERTAINTEED CERTAINTEED TAMKO CERTAINTEED TAMKO TAMKO TAMKO CELOTEX CELOTEX CELOTEX MANVILLE IKO MANVILLE IKO ATLAS IKO IKO BIRD GEORGIA PACIFIC ATLAS BIRD ATLAS GS ROOFING
Slide 16: U.S. Asphalt Shingle Market
U.S. Asphalt Shingle Market Improved Housing Supports Demand Growth MM Sq. Major Storms New Construction Total Existing Home Sales MM Re-roof Demand Re-roof Demand Major Storms 180 18 7.5 New construction 8 7 8 3 3 2 3 22 9 3 19 5.3 17 11 6 6 116 116 113 112 107 109 110 103 100 103 96 94 90 93 91 93
Slide 17: Positioned for Growth
Positioned for Growth Great business in a well-structured industry Over the near term, non-storm shingle demand growing mid-single digits based on improving U.S. housing activity Continued improvements in shingle design, cost, and product mix Confidence in operating margins of mid-teens or b
Slide 18: Composites Segment
Composites Segment Q3 2013 Highlights $ (in millions) Q3 2013 Q3 2012 YTD YTD 2013 2012 Improved EBIT by $10 million compared with 2012 Net sales* $453 $459 $1,384 $1,433 Encouraged by Q3 pricing actions Expect full-year 2013 EBIT to be consistent with EBIT $21 $11 $62 $68 2012 EBIT as % of 5%
Slide 19: Glass Fiber: A $7 Billion Global Market
Glass Fiber A $7 Billion Global Market • Appliances • Residential • Electronics Wind • Commercial • Recreation 8% • Water transportation & storage Consumer 16% Construction 34% Industrial 15% Transportation 27% • Factories • Cars • Mining • Trucks, buses, trains • Offshore platforms • Marine A Key M
Slide 20: Owens Corning Composites Positioned to Win
Owens Corning Composites Positioned to Win Emerging Position #1 Position EMEA China 25% 29% 24% 7% % Market % OC Revenue Revenue % Market % OC Revenue Revenue #1 Position Americas #1 Position 47% OC glass fiber manufacturing site Other Asia OC downstream fabrication site 31% 20% 17% % Market % OC Re
Slide 21: Composites in Building Materials
Composites in Building Materials Residential Commercial Roofing shingles Roofing Shower Insulated panel Window frame Ceiling tile Bath Gypsum Entry door CV flooring Carpet tile Building Materials is a Key Market for Composites, Particularly for Glass Non-Wovens 21
Slide 22: Glass Fiber Market Demand
Glass Fiber Market Demand 5,000 Glass Fiber Demand Has Grown at 1.6 Multiple of Industrial Production Growth 4,000 Glass Fiber K Tons 3,000 2,000 1,000 0 1981 1989 1997 2005 2012 Historical Glass Fiber Market Growth Averaging 5% Glass fiber market demand excludes E-glass yarns Sources: Fiber Economi
Slide 23: Owens Corning Composites Strategic Pillars
Owens Corning Composites Strategic Pillars Cost Leadership Price Realization Product Leadership Capital Efficiency 23
Slide 24: Market Trends Favor Owens Corning
Market Trends Favor Owens Corning Low-Cost Global Network Change In Chinese Capacity China vs. U.S. inflation Available For Export* US PPI China PPI (USD basis) 200 300 190 250 180 200 Glass Fiber K Tons 170 150 160 100 150 50 140 0 130 -50 120 110 -100 100 -150 2006 2007 2008 2009 2010 2011 2012 20
Slide 25: Cost Leadership
Cost Leadership Owens Corning Composites Global Capacity Percentage of Low-Delivered Cost* Assets 70% 75% 30% 2007 2013 2015 Low-Delivered Cost Network Positioned for Margin Improvement *Low-delivered cost asset defined as delivered cost in the region at or below best competitive benchmark for glass
Slide 26: Glass Fiber Industry Phases
Glass Fiber Industry Phases Signs of a New Era China Macro Supply Emergence Adjustment Tension Capacity Excess Improved Overbuild Inventory Returns 2005 – 2009 2010 – 2012 2013 – 2016 High Utilization Rates and Reinvestment Economics Support Higher Returns 26
Slide 27: Glass Fiber Industry Estimated Capacity
Glass Fiber Industry Estimated Capacity 2004 2006 2008 2010 2012 2014 2016 100% 1.7 Supply Tension 90% Estimated Capacity Utilization 90% Threshold 1.1 80% Change in global 0.9 demand (MM T) 70% Change in global capacity (MM T) 0.5 (high probability 0.5 additions) 0.3 60% 0.1/ yr 0.3/ yr 0.4/ yr 0.1
Slide 28: Price Realization
Price Realization 2007 – 2008 2009 2010 – 2011 2012 – 2013 EBIT Margin Industry Historical highs Global 30-year Global tightness China capacity all Capacity in China lows Sharp recovery operational Utilization Widespread idle causes supply Europe negative; and curtailed shock slower gl
Slide 29: Capital Efficiency
Capital Efficiency Capacity reduction in Europe created net import position from Low-cost network High-cost specialty facility in Europe replaced by strategic alliance with Taishan High-cost capacity in China replaced by supply agreement with Jinniu Positioned network with adequate capacity
Slide 30: Owens Corning Composites
Owens Corning Composites Global megatrends, continued growth in industrial production, Cost Leadership and material substitution support glass fiber market growth at a Price Realization 5-7% CAGR Strategic focus on core building Product Leadership material markets with sustainable solutions Capi
Slide 31: Sustaining a Strong Balance Sheet
Sustaining a Strong Balance Sheet Maintaining investment-grade financial strength is a pillar of Owens Corning’s strategy Maintained investment-grade credit ratings from Standard & Poor's and Fitch $800 million revolving credit facility maturing in 2016 $250 million accounts receivable facil
Slide 32: Tax Position is a Significant Asset
Tax Position is a Significant Asset Benefit from $2.1 billion NOL with estimated present value of approximately $5 per share Delivering cash tax savings of about $60 million per year Expect long-term book tax rate of 25% to 28% based on geographic mix of earnings and tax planning Cash tax ra
Slide 33: Disciplined Capital Allocation Strategy
Disciplined Capital Allocation Strategy Drive shareholder returns by enabling organic and inorganic growth and supporting the balance sheet – Maintain investment grade Capital allocation strategy – Investing in attractive organic growth – Returning excess cash to shareholders – Pursuing value-cr
Slide 34: Key Financial Data
Key Financial Data ($ in millions, except per share data) Q3 2013 Q3 2012 YTD 2013 YTD 2012 Net sales $1,320 $1,276 $4,017 $4,013 Net earnings attributable to Owens Corning $51 $44 $122 $37 Diluted earnings per share attributable to Owens $0.43 $0.37 $1.02 $0.31 Corning common stockholders Earnings
Slide 35: Appendix A
Appendix A A 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 12 2013 12 NET EARNINGS ATTRIBUTABLE TO OWENS CORNING $ n) 4 12 = $ a Less: Net earnings attributable to
Slide 36: Appendix A
EE Appendix A 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 Ended Ended Nine M
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