Owens Corning Inc · NYSE:OC
Owens Corning — Non-Deal Roadshow (March 2013)
33 slides from Owens Corning's roadshow presentation, Mar 22, 2013
Slide 1: Owens Corning Positioned for Growth
Owens Corning Positioned for Growth Q1 2013 This presentation shared at the following events: 03/22/13 Owens Corning Roadshow – New York Chuck Dana, President, Building Materials 03/19/13 Investor visits to OC WHQ hosted by SunTrust Michael McMurray, CFO 03/14/13 OC Roadshow hosted by Goldman Sachs
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 58 consecutive years Component of Dow Jones Sustainability World Index Three
Slide 4: Investment Highlights
Investment Highlights • The Composites business is the leader in an attractive growth industry • The Roofing business is positioned for growth as the U.S. housing market recovers • The Insulation business is a proven franchise prepared to return to historic margins 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 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 provided bas
Slide 6: Insulation Business
Insulation Business Q4 & Full-Year 2012 Highlights $ (in millions) Q4 2012 Q4 2011 2012 2011 Delivered second consecutive profitable quarter Net sales* $413 $387 $1,468 $1,368 Achieved pricing progress in U.S. new residential construction in 2012 EBIT $9 $0 $(38) $(97) Expect return to profita
Slide 7: Positioned to Grow with Our Markets
Positioned to Grow with Our Markets Insulation End-Use Expected Market Revenue CAGR Markets % of 2012 Revenue Growth Drivers 2011 – 2014 U.S. & Canada Housing starts Residential New Building energy code adoption 10-25% Construction 37% Household formation U.S. & Canada Aging housing stock Re
Slide 8: Energy Codes
Energy Codes Residential Energy Productivity 2009 – 49% Built to 2006 Code 150% 2012 – 85% Built to 2009 Code 2015 – Expect 57% Build to 2012 Code Energy Efficiency Improvement (%) 100% 50% 0% no code 1987 2006 2009 2012 2015 Year of IECC IECC IECC IECC Code Goal Acceleration of Code Adoption 2006-2
Slide 9: Code Changes Support Increased Glass Fiber Demand
Code Changes Support Increased Glass Fiber Demand Indexed Fiberglass Insulation Use 1.5 Potential demand per start if 2012 or later codes are adopted by all states Demand per start at forecasted code adoption level 1 0.5 2005 2012 2016 Multi-family mix 17% 31% 20-25% Single family home size (SF) 2,4
Slide 10: Owens Corning Insulation North American Fiberglass Network
Owens Corning Insulation North American Fiberglass Network Edmonton Current Status: All lines operating Candiac Some lines down Toronto Facility mothballed Salt Lake City Delmar Mt. Vernon Kansas City Newark Nephi Santa Clara Network Management Eloy National footprint to Waxahachie support regiona
Slide 11: Insulation Industry
Insulation Industry North American Fiberglass 2013 Industry Capacity Utilization 100% 90% 90% 80% 70% 70% 60% 60% 50% 40% 30% 20% 10% 0% Total Capacity Operating Plants Operating Lines Capacity Utilization Tightening as U.S. Housing Recovers Capacity utilization based on 2013 estimate at 990,000 unl
Slide 12: Owens Corning Insulation: A Proven Franchise
Owens Corning Insulation A Proven Franchise 30% % EBIT Avg % EBIT (15%) Well positioned to return to 20% historical margins Improved cost 10% and efficiency Code adoption 0% Expected U.S. housing improvement -10% '85 '88 '91 '94 '97 '00 '03 '06 '09 '12 Historically Delivered 15% EBIT Margins a
Slide 13: Roofing Business
Roofing Business Q4 & Full-Year 2012 Highlights $ (in millions) Q4 2012 Q4 2011 2012 2011 2012 market down as anticipated on lower storm demand Net sales* $350 $384 $2,014 $2,169 Q1 2013 pricing environment much improved EBIT $42 $55 $331 $429 year-over-year on lower winter incentives EBIT as %
Slide 14: U.S. Asphalt Shingle Industry
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 Improved Housing Supports Demand Growth New Construction Re-roof Major Storms Total Existing Home Sales 180 CAGR 8 + 3% - 5% 7.5 8 18 7 8 5 3 3 2 3 9 22 3 17 19 5.3 11 6 106 107 103 109 110 113 116 116 112 100 96 93 91 92 92 104 33 33 32 34 37 39 35 30 31 26 26 17 11 11 1
Slide 16: Positioned for Growth
Positioned for Growth Great business in a well-structured industry Asphalt shingle market growing 5-8% (over the next 3-5 years on non-storm demand) driven by improving U.S. housing activity Continued improvements in shingle design, cost and mix Confidence in operating margins of mid-teens o
Slide 17: Composites Segment
Composites Segment Q4 & Full-Year 2012 Highlights $ (in millions) Q4 2012 Q4 2011 2012 2011 European repositioning to low-delivered-cost asset base substantially complete Net sales* $426 $459 $1,859 $1,976 Anticipate first-quarter 2013 EBIT to be below last EBIT $23 $49 $91 $201 year on flat vol
Slide 18: Owens Corning Composites: The Market Leader
Owens Corning Composites The Market Leader Discovered and commercialized glass fibers Instrumental in proliferating use of composite materials Innovation leader in the glass fiber industry First mover in key emerging economies Led industry consolidation Fibers Technical Fabrics Engineered
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: Glass Fiber Market Demand
Glass Fiber Market Demand 30 Years Averaging 5% CAGR 5% Demand Growth Driven by 3% Industrial Production Growth 5,000 4,000 Glass Fiber K Tons 3,000 2,000 1,000 - 1981 1989 1997 2005 2012 Sustained Growth Led by Global Industrial Production and Material Substitution Glass fiber market demand exclude
Slide 21: Glass Fiber Growth: Driven by Global Industrial Production
Glass Fiber Growth: Driven by Global Industrial Production Global Glass Fiber Demand vs. Industrial Production 1981-2012 Excellent 30-year correlation 5000 5000 Glass fiber / industrial 4000 4000 Glass Fiber Market (Ktons) production growth multiple: Log Basis 3000 – 30-year average: 1.6 3000 –
Slide 22: Global Glass Fiber Growth vs. Other Materials
Global Glass Fiber Growth vs. Other Materials Materials Growth as a Multiple of Change in Industrial Production 3.8 1.6 1.1 0.9 0 Wood Steel Aluminum Glass Fiber Carbon Fiber Global Market Size 26 55 12 1 0.15 (Indexed to Glass Fiber) Glass Fiber Growing as a Substitute for Traditional Materials Gro
Slide 23: Market Trends Favor Owens Corning
Market Trends Favor Owens Corning Low-Cost Global Network Change In 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 2013 2014
Slide 24: Industry Structure Transformation
Industry Structure Transformation Market Supply Demand Outside China Served by Manufacturing in China 25% 20% 15% 10% 5% 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 China Exports Have Stabilized After Rapid Growth Source: Fiber Economic Bureau, Glass Fiber Europe, Global Trade Information S
Slide 25: Owens Corning Composites: Positioned to Win
Owens Corning Composites Positioned to Win Emerging Position #1 Position China EMEA 25% 25% 24% 7% % Market % OC % Market % OC Revenue Revenue Revenue Revenue #1 Position #1 Position OC glass fiber manufacturing site Americas Other Asia 49% OC downstream fabrication site 31% 20% 17% % Market % OC %
Slide 26: A Winning Business: Global Capacity
A Winning Business Owens Corning Composites Global Capacity Percentage of Low Delivered Cost * Assets 75% 60% 30% 2007 2012 Mid-2010s *Low delivered cost asset defined as delivered cost in the region at or below best competitive benchmark, glass fiber manufacturing Source: Owens Corning management e
Slide 27: Owens Corning Composites: A Winning Business
Owens Corning Composites A Winning Business Global megatrends, continued growth in industrial production, and ongoing material substitution support glass fiber market growth at a 5- 7% CAGR Industry structure, inflation and currency trends favor Owens Corning’s global network Proliferating pro
Slide 28: Sustaining a Strong Balance Sheet
Sustaining a Strong Balance Sheet Maintaining investment-grade financial strength is a pillar of Owens Corning’s strategy Earned investment-grade credit ratings from Standard & Poor's and Fitch $800 million revolving credit facility maturing in 2016 $250 million accounts receivable facility,
Slide 29: Tax Position is a Significant Asset
Tax Position is a Significant Asset Benefit from $2.3 billion NOL with estimated present value of approximately $5 per share Expect long-term book tax rate of 25% to 28% based on geographic mix of earnings and tax planning Cash tax rate approximately 10% to 12% over the next few years Source:
Slide 30: Disciplined Capital Allocation Strategy
Disciplined Capital Allocation Strategy Drive shareholder returns by enabling organic growth and supporting the balance sheet Maintain capital allocation strategy – Current debt level is appropriate – Pursuing attractive organic investment opportunities – Seeking acquisitions that add value to s
Slide 31: Key Financial Data
Key Financial Data ($ in millions, except per share data) 2012 2011 Q4 2012 Q4 2011 Net sales $5,172 $5,335 $1,159 $1,196 Net earnings (Loss) attributable to Owens Corning $(19) $276 $(56) $50 Diluted earnings (Loss) per share attributable to $(0.16) $2.23 $(0.47) $0.41 Owens Corning common stockhol
Slide 32: 2013 Corporate Environment & Guidance
2013 Corporate Environment & Guidance Macro Environment U.S. housing starts generally forecasted in the range of 900,000-1,000,000 Moderate global industrial production growth driving below-trend growth in glass fiber market Primary Guidance Other Guidance Items Expect adjusted EBIT to grow at
Slide 33: 2013 Business Environment & Guidance
2013 Business Environment & Guidance Roofing Insulation Composites Lower winter Storm comps Growth in U.S. Current prices Higher capacity First-quarter incentives, vs. last year residential new significantly utilization and asset ramp up announced price construction below benefit of asse