Slide 1: Owens Corning: Positioned for Growth
Owens Corning Positioned for Growth Q3 2014 This presentation shared at the following event: 09/22/2014 Owens Corning Roadshow – Milwaukee/Chicago Thierry Denis, Director IR 09/19/2014 Zelman Housing Summit – Tysons Corner, VA Mike Thaman, Chief Executive Officer 09/09/2014 OC Roadshow hosted by Ban
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 2013 net sales: $5.3 billion 15,000 employees in 27 countries Fortune 500 company for 60 consecutive years Component of Dow Jones Sustainability World Index for five conse
Slide 4: Investment Highlights
Investment Highlights Composites Roofing Insulation Market-leading business Strong business Progress supports with improving economic performance in a confidence in return to conditions and higher recovering U.S. housing historical profitability utilization rates market Three Market-Leading Business
Slide 5: Outlook and Highlights
Outlook and Highlights Continued to focus on building a safer workplace; year-to-date safety performance consistent with prior year Delivered adjusted EBIT of $96 million Insulation grew EBIT by $14 million, marking the 12th consecutive quarter of performance improvement Composites delivered EBIT of
Slide 6: 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 ’13 Insulation Roofing Composites Margin >= 10% 0%<= Margin < 10% Margin < 0% Sources: Owens Corning’s SEC filings since 2006 . For comparability purposes, prior years have been provide
Slide 7: Insulation Business
Insulation Business Q2 2014 Highlights $ (in millions) Q2 2014 Q2 2013 1H 2014 1H 2013 Delivered 12th consecutive quarter of EBIT improvement Net sales* $447 $415 $802 $745 Improved EBIT by $14 million on higher pricing EBIT $18 $4 $19 $(17) and volume growth EBIT as % of Expect 2014 results to bene
Slide 8: Owens Corning Insulation EBIT Progress
Owens Corning Insulation EBIT Progress Q1 Q2 Q3 Q4 39 $40 $20 18 18 9 EBIT in Millions of Dollars 1 4 3 0 $0 -$20 -12 -16 -21 -$40 -34 -38 -47 -$60 -$80 2011 Actual 2012 Actual 2013 Actual 2014 Actual Consistent Quarterly EBIT Progression Since 2011 Source: Owens Corning quarterly and annual SEC fil
Slide 9: 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% '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 LTM Historically Delivered 15% EBIT Margins at 1.5 Million Housing Starts Source: Owens Corning manag
Slide 10: Insulation Industry
Insulation Industry North American Fiberglass 100% 2014 Industry Capacity Utilization 90% 80% 75% 65% 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 February 2014 rounded to near
Slide 11: 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 2014 Estimated Average Utilization: Waxahachie Near full capacity Below full capacity Lakeland Not in operation Continued Discipline in OC Capacity
Slide 12: 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 Full-Year 2013 Revenue U.S. and Canada Housing starts Residential New Construction Building energy code adoption Household formation 10-25% 40% U.S. and Canada Aging housing st
Slide 13: Roofing Business
Roofing Business Q2 2014 Highlights $ (in millions) Q2 2014 Q2 2013 1H 2014 1H 2013 Revenue down 14% primarily on weak shipments Net sales* $437 $508 $934 $1,115 Delivered 14% EBIT margins on lower volume leverage, lower prices, and higher asphalt costs EBIT $62 $116 $142 $235 Expect full-year marke
Slide 14: 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 15: U.S. Asphalt Shingle Market
U.S. Asphalt Shingle Market MM Sq. Major Storms MM Re-roof Demand 18 180 Total Existing Home Sales 7.5 New construction 8 7 8 3 3 2 3 22 3 17 19 11 6 6 109 110 113 116 116 94 107 91 93 88 103 112 96 93 100 33 32 34 37 39 35 30 31 26 17 11 11 11 14 17 0 0.0 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09
Slide 16: Great Business in Well-Structured Industry
Great Business in Well-Structured Industry Track record of strong financial performance – Delivered average operating margins in excess of 20% during 2009-2013 period Re-roof demand over the last few years has been sluggish – Housing activity forecasts support some demand growth – Glass fiber mat an
Slide 17: Composites Segment
Composites Segment Q2 2014 Highlights $ (in millions) Q2 2014 Q2 2013 1H 2014 1H 2013 Delivered EBIT of $37 million on improved pricing, operating performance, and volumes Net sales* $505 $472 $982 $931 Planned furnace rebuilds under way; anticipate EBIT $37 $32 $64 $41 rebuild costs to peak in Q3 E
Slide 18: Glass Fiber: A $7 Billion Global Market
Glass Fiber A $7 Billion Global Market • Appliances • Residential • Electronics Wind • Commercial 6% • Recreation • Water transportation & storage Consumer 17% Construction 35% Industrial 14% Transportation 28% • Factories • Cars • Mining • Trucks, buses, trains • Offshore platforms • Marine A Key M
Slide 19: Owens Corning Composites: Positioned to Win
Owens Corning Composites Positioned to Win #1 Position Emerging Position #1 Position #1 Position OC glass fiber manufacturing site OC downstream fabrication site Leading Market Positions and an Unrivaled Supply Network % Market Revenue = market revenue in region as % of 2013 global market size Sourc
Slide 20: 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 - 1981 1989 1997 2005 2013 Historical Glass Fiber Market Growth Averaging 5% Glass fiber market demand excludes E-glass yarns Sources: Fiber Economi
Slide 21: 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 21
Slide 22: Glass Fiber Industry
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 0.5 (high probability additions) 0.4 60% 0.1/ yr 0.3/ yr 0.4/ yr 0.1
Slide 23: 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 global growth fa
Slide 24: 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 Capital
Slide 25: 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 2018 $250 million accounts receivable facility, whi
Slide 26: 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 $60 million per year Expect long-term book tax rate of 28% to 30% based on geographic mix of earnings and tax planning Cash tax rate of 10
Slide 27: Disciplined Capital Allocation Strategy
Disciplined Capital Allocation Strategy Drive shareholder returns by enabling organic and inorganic growth and supporting the balance sheet – Maintain investment grade Capital allocation strategy – Investing in attractive organic growth – Returning excess cash to shareholders – Pursuing value-creati
Slide 28: Key Financial Data
Key Financial Data ($ in millions, except per share data) Q2 2014 Q2 2013 1H 2014 1H 2013 Net sales $1,355 $1,347 $2,633 $2,697 Net earnings attributable to Owens Corning $21 $49 $141 $71 Diluted earnings per share attributable to Owens $0.18 $0.41 $1.19 $0.59 Corning common stockholders Earnings be
Slide 29: Appendix A: Non-GAAP Reconciliations
Appendix A Non-GAAP Reconciliations 29
Slide 30: Appendix A: Non-GAAP Reconciliations
Appendix A Non-GAAP Reconciliations 30