Owens Corning Inc · NYSE:OC
Owens Corning — OC (Virtual) Roadshow Hosted by Truist / Evercore ISI 2021
61 slides from Owens Corning's conference presentation, Nov 18, 2021
Slide 1: Focused on Shareholder Value
Q4 2021 FOCUSED ON This presentation shared at the following events: SHAREHOLDER VALUE 11/18/21 OC (Virtual) Roadshow Hosted by Truist Todd Fister, President, Insulation 11/17/21 OC (Virtual) Roadshow Hosted by Evercore ISI Ken Parks, Chief Financial Officer
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 1 Investment highlights 2 Innovation supporting the strategy 3 Sustainability is core to who we are and what we do 4 Integrated businesses 5 Additional financial information 3
Slide 4: Owens Corning at a Glance
OUR OWENS CORNING AT A GLANCE MISSION A GLOBAL BUILDING AND CONSTRUCTION MATERIALS LEADER Building a sustainable future through $7.1B material innovation 19,000 OUR 2020 Revenue Employees Countries where Manufacturing PURPOSE we operate sites Our people and products make the ROOFING INSULATION COMPO
Slide 5: A Compelling Investment Thesis
A COMPELLING INVESTMENT THESIS INVESTING IN PROFITABLE GROWTH AND CREATING VALUE FOR SHAREHOLDERS Growing Sustaining Reducing Generating revenues through core operating margins at a capital intensity through strong free cash flow capabilities and higher level by making productivity and conversion th
Slide 6: Global Businesses in Attractive End Markets
GLOBAL BUSINESSES IN ATTRACTIVE END MARKETS Owens Corning revenue by end market 2020 revenue by end market Insulation Roofing Composites 19% $7.1B 58% $2.6B $2.7B $2.0B 23% Residential Construction Commercial and Other Industrial and Other Materials Construction Materials Consolidated figures elimin
Slide 7: Improved and Sustainable Margin Performance
IMPROVED AND SUSTAINABLE MARGIN PERFORMANCE Key Investment Choices Developing Talent Enterprise adj EBIT margin improvement Core Capabilities 2021 - 2024 Investing in Circular Economy High Performing Teams 14% - 18% Enhancing Material Science Expertise Material Science Innovation 2016 - 2020 Innovat
Slide 8: Secular Trends Create Additional Opportunities
SECULAR TRENDS CREATE ADDITIONAL OPPORTUNITIES UNIQUELY POSITIONED TO CAPTURE GROWTH Increased Changing Demand for Investment in Premium on Construction Sustainable Infrastructure Living Spaces Practices Solutions 8
Slide 9: Enterprise Strategy to Grow Our Company
ENTERPRISE STRATEGY TO GROW OUR COMPANY REDEFINING WHERE WE PLAY TO EXPAND OUR ADDRESSABLE MARKETS 5X Strategic Priorities $200B Prefabricated Expanding Addressable Market STRENGTHEN Solutions position in core building & construction products Multimaterial Solutions EXPAND multimaterial solutions Co
Slide 10: Uniquely Positioned to Capitalize on Secular Trends
UNIQUELY POSITIONED TO CAPITALIZE ON SECULAR TRENDS BUILDING A SUSTAINABLE FUTURE THROUGH MATERIAL INNOVATION Strengthen position in core Expand multimaterial Develop prefabricated building & construction products solutions solutions KEY SECULAR TRENDS Insulation Increased Premium on Long-term Livin
Slide 11: Our High-Performing Teams Are Fueling Our Success
OUR HIGH-PERFORMING TEAMS ARE FUELING OUR SUCCESS OUR PEOPLE MAKE US BETTER AT EVERYTHING WE DO 10 OUR VALUES High-performing Caring CONSECUTIVE Curious teams QUARTERS Collaborative delivering on commitments Global in scope, human in scale Committed Commercial strength Manufacturing performance Inte
Slide 12: Transformed the Financial Profile
TRANSFORMED THE FINANCIAL PROFILE FOCUSED ON KEY DRIVERS OF SHAREHOLDER VALUE CREATION Revenue ($b) Operating Margin FCF Conversion Return on Capital3 6% CAGR +790 bps $4.3b2 generated >2x 8.4 16.6% 6.7 116% 17.3% 12.5% 107% 5.3 8.7% 10.8% 61% 8.1% 2013-2015 2016-2020 2021 2013-2015 2016-2020 2021 2
Slide 13: Capital Allocation Strategy Focuses on Increasing TSR
CAPITAL ALLOCATION STRATEGY FOCUSES ON INCREASING TSR 2016-2020: RETURNED ~$1.5B OF CASH AND OVER 50% OF FREE CASH FLOW TO SHAREHOLDERS Capital allocation strategy Capital allocation targets over time Maintain investment grade balance sheet 2-3X debt/EBITDA leverage with flexibility to support growt
Slide 14: Innovation Supporting the Strategy
INNOVATION SUPPORTING THE STRATEGY
Slide 15: Accelerating Innovation to Help Customers Win in the Market
ACCELERATING INNOVATION TO HELP CUSTOMERS WIN IN THE MARKET TRACK RECORD OF MATERIAL INNOVATION AND CONVERSION Material Innovation Investing for Growth • Innovative product and process technologies delivering significant value Duration® Flex FOAMULAR® NGX™ Windstrand® Pink Next Gen™ • Accelerated ne
Slide 16: Innovation Based on Strong Science and Customer Insight
INNOVATION BASED ON STRONG SCIENCE AND CUSTOMER INSIGHT UNIQUE MATERIALS, PROCESS, AND PRODUCT CAPABILITIES CREATE DIFFERENTIATED VALUE Materials and Process Customer-Centered Innovation Product and Systems Our Global Team Innovation Strong science fundamentals create ~450 researchers meaningful, de
Slide 17: Transformative Material and Process Innovation
TRANSFORMATIVE MATERIAL AND PROCESS INNOVATION Asphalt Coating Technology Material science + • Innovative performance features and benefits in vertical integration = shingles, underlayments, and specialty asphalt cost and performance • Improved network cost and supply advantages competitive advantag
Slide 18: Customer-Centered Product Innovation Leader
CUSTOMER-CENTERED PRODUCT INNOVATION LEADER FOAMULAR® NGX New materials + • Low Global Warming Potential blowing agent delivers process change = Our material >80% reduction in embodied carbon of the product1 1st to market with a innovations start by • Excellent market response with strong momentum c
Slide 19: Sustainability Is Core to Who We Are and What We Do
SUSTAINABILITY IS CORE TO WHO WE ARE AND WHAT WE DO
Slide 20: Owens Corning Is a Global Leader in Sustainability
OWENS CORNING IS A GLOBAL LEADER IN SUSTAINABILITY MISSION: TO BUILD A SUSTAINABLE FUTURE THROUGH MATERIAL INNOVATION Net-Positive Aspiration 2030 Guiding Aspirations Purpose: Our people and Double the Halve the negative positive impact of impact of our products make the world our PRODUCTS OPERATION
Slide 21: Track Record of Impact
TRACK RECORD OF IMPACT 20 YEARS OF SUBSTANTIAL GLOBAL PROGRESS GHG reduced by Fiberglass insulation contains Significant progress Fiberglass insulation saves Composites WindStrand® 60% since peak year 53-73% recycled content - 1.3b lbs. in waste diversion to 12x as much energy in 1st enables larger
Slide 22: Receiving Significant Recognition for Our Leadership
RECEIVING SIGNIFICANT RECOGNITION FOR OUR LEADERSHIP Obtained a perfect Ranked Industry Leader 8 Included in CDP’s Ranked 1st among Earned “Gold Class” Earned the following score on Corporate years consecutively in the “A List” for climate 100 Best Corporate score in 2021 for the ISS scores in 2021:
Slide 23: Reducing Our Environmental Footprint & Expanding Our Product Handprint
REDUCING OUR ENVIRONMENTAL FOOTPRINT & EXPANDING OUR PRODUCT HANDPRINT INDUSTRY-LEADING SUSTAINABILITY INCREASING THE POSITIVE IMPACTS OUR PRODUCTS HAVE ON THE WORLD FOAMULAR® PAROC® RESIDENTIAL OWENS CORNING WINDSTRAND® NGX™ NATURA™ FIBERGLASS COOL ROOF COMPOSITES INSULATION INSULATION INSULATION C
Slide 24: Sustainability Leadership Creates New Growth Opportunities
SUSTAINABILITY LEADERSHIP CREATES NEW GROWTH OPPORTUNITIES Circular Economy Insulation customers seeking lower Circular Economy start-ups seeking embodied carbon expertise and committed technical and OC first to market with Natura™ stone business model partners wool, PINK Next Gen™ Fiberglas™ and OC
Slide 25: Integrated Businesses Driving Growth & Performance
INTEGRATED BUSINESSES DRIVING GROWTH & PERFORMANCE
Slide 26: Leveraging the Power of the Enterprise
LEVERAGING THE POWER OF THE ENTERPRISE CREATING UNIQUE VALUE FOR OUR CUSTOMERS AND SHAREHOLDERS Integrated Material Solutions COMPOSITES Fiber Nonwovens Asphalt Technology Shingles ROOFING Materials Manufacturing & Technology Expertise Manufacturing Markets Advanced Modeling Furnace Design Glass Mel
Slide 27: Integrated Businesses Driving Growth and Performance
INTEGRATED BUSINESSES DRIVING GROWTH AND PERFORMANCE OWENS CORNING $8,292 $1,396 17% LTM ADJ EBIT / EBIT LTM NET SALES LTM ADJ EBIT / EBIT AS % OF NET SALES Insulation $3,049 $424 14% Roofing $3,199 $785 25% Composites $2,280 $338 15% Source: Owens Corning SEC filings. The Owens Corning row reflects
Slide 28: Insulation Business
INSULATION BUSINESS Five-year financial performance Key Drivers for Business Growth • OC Insulation growth 11% versus Building and Construction industry growth of 3%1 $3,500 15% • Share capture in most markets served • Product innovation $2,800 12% • Insulation growing in value as decarbonization be
Slide 29: Increased Earnings Performance in Insulation
INCREASED EARNINGS PERFORMANCE IN INSULATION A BALANCED PORTFOLIO WITH AN INDUSTRY-LEADING MARGIN STRUCTURE North American Residential Insulation Technical & Global Insulation EBITDA (mm) EBITDA (mm) $500 $500 $400 $400 $300 $300 $200 $200 $100 $100 $- $- 2006 (peak) 2019 LTM (Sept. 2021) 2006 2019
Slide 30: Technical & Global Insulation 2020 Revenues by End Market
TECHNICAL & GLOBAL INSULATION 2020 REVENUES BY END MARKET 2020 TECHNICAL AND GLOBAL RESIDENTIAL INSULATION REVENUE COMMERCIAL Residential Construction Materials INDUSTRIAL & OTHER Commercial and Other Construction Materials Industrial and Other Source: Owens Corning management estimates; estimated e
Slide 31: Insulation Can Consistently Grow Above Overall Building & Construction Industry
INSULATION CAN CONSISTENTLY GROW ABOVE OVERALL BUILDING & CONSTRUCTION INDUSTRY DRIVEN BY SECULAR TRENDS Changes in Construction Resulting in Higher Demand Higher Demand for Sustainable Practices for Net-Zero & Low Carbon Solutions Buildings • 90% of buildings in US and • Stricter codes for thermal,
Slide 32: Positioned to Win in a More Sustainable Future
POSITIONED TO WIN IN A MORE SUSTAINABLE FUTURE FIBERGLASS MINERAL WOOL XPS CELLULAR GLASS NEW SOLUTIONS • Highest recycled • High recycled • Low GWP • Long service life • Aerogel – used content1 content in U.S. formulation in electric vehicle (NGX™) • 80+ years of applications • Made with 100% • Lon
Slide 33: Growth in a Net Zero Future
GROWTH IN A NET ZERO FUTURE OWENS CORNING INSULATION IS A LONG-TERM SUSTAINABLE SOLUTIONS GROWTH PLAY Improved margin Less cyclical with Can grow above performance improved earnings construction market potential and enable net zero • Productivity 2.0% - 2.5% annually • Attractive and diverse global
Slide 34: Roofing Business
ROOFING BUSINESS Key Drivers for Business Growth Five-year financial performance • Continue to enhance industry-leading Duration® shingles $3,500 25% • Invested in our Components business to accelerate our growth $2,800 20% • Best-in class commercial team $2,100 15% Key Drivers for Improved Performa
Slide 35: Roofing Market Driven by Repair & Remodeling
ROOFING MARKET DRIVEN BY REPAIR & REMODELING U.S. asphalt shingle market in mm squares Repair and Remodeling (R & R) New construction R&R Weather events Major storms Aging housing stock Economic factors: existing home sales, 18 15 12 home equity, consumer income 15 13 25 34 24 26 30 Major storms & w
Slide 36: Industry Leading Contractor Network Is a Key to Our Success
INDUSTRY LEADING CONTRACTOR NETWORK IS A KEY TO OUR SUCCESS THE RIGHT PRODUCTS, TOOLS AND COMMERCIAL TEAM TO ACCELERATE CONTRACTOR CONVERSIONS What We Have Done What We are Doing ✓ 9 out 10 professional roofing contractors prefer to install Continuing to invest in contractors to help build Duration®
Slide 37: Innovation That Creates Value
INNOVATION THAT CREATES VALUE Our flagship product: Offers the industry’s And has been enhanced Duration® Best Performance over time Duration Cool 1 2 Impact Resistance 3 4 Best Aesthetics 37
Slide 38: Components Are Key to Accelerating Performance
COMPONENTS ARE KEY TO ACCELERATING PERFORMANCE OUR COMPONENTS PORTFOLIO HAS ACCELERATED GROWTH WITH MARGINS SIMILAR TO SHINGLES Where We Participate Accelerating Growth Hip & Ridge Self adhered Starter underlayment • Our Components business has grown faster than shingles the market as a result of ou
Slide 39: Continuing to Expand Our Multimaterial Roofing System
CONTINUING TO EXPAND OUR MULTIMATERIAL ROOFING SYSTEM THE TOTAL PROTECTION ROOFING SYSTEM® IS A LEADING SELLING STORY FOR OUR CONTRACTORS Hip & Ridge Ventilation • Expanding our multimaterial system offering positions Roofing Roof Covering for future growth Underlayment • Functionality innovation cr
Slide 40: Investing to Supply the Market Effectively
INVESTING TO SUPPLY THE MARKET EFFECTIVELY INCREASING OUR ABILITY TO SUPPORT OUR GROWING CONTRACTOR NETWORK Upgrading capacity at existing Building and maintaining Focusing on workforce and manufacturing facilities enhanced inventory levels to TPM to minimize downtime meet market demand surges and m
Slide 41: Growing from a Strong Foundation
GROWING FROM A STRONG FOUNDATION COMPETITIVE ADVANTAGES AND INVESTMENTS WILL SUPPORT ABOVE MARKET GROWTH Market-leading products Growing through Advancing existing with a cost advantage contractor conversions plant network and • Vertical integration creating supply and Components increasing inventor
Slide 42: Composites Business
COMPOSITES BUSINESS Key Drivers for Business Growth Five-year financial performance • Emphasis on high value applications and key geographies $2,500 15% • Price gains on high-capacity utilization and logistic costs • Focused on key growth accounts and valuable customer $2,000 12% partnerships • Loca
Slide 43: Key Markets for Composites
KEY MARKETS FOR COMPOSITES Where We Play How We Win Key Trends Building & • Integrated scale production Construction • Light-weighting and prefabrication • Coating and surfacing technologies 38% Revenue • Structural reinforcements • Sustainable construction Renewable • Material engineering partner E
Slide 44: Pivoting to Higher Value Building & Construction Material Applications
PIVOTING TO HIGHER VALUE BUILDING & CONSTRUCTION MATERIAL APPLICATIONS OUR COMPOSITES SOLUTIONS OFFER ENHANCED PERFORMANCE AND PRODUCTIVITY Current Owens Corning Emerging North American Building and Market Applications Construction Applications 50-60% <20% current glass conversion current glass conv
Slide 45: Increasing Value Through Integrated Material Solutions
INCREASING VALUE THROUGH INTEGRATED MATERIAL SOLUTIONS Core products Glass Production Window Production Installer Glass Production Nonwoven Production Ceiling Tile Production Installer Glass Production Rebar Production Contractor Integrated material solutions Glass Production Nonwoven Production Shi
Slide 46: Evaluating Strategic Alternatives for Thermoplastic DUCS
EVALUATING STRATEGIC ALTERNATIVES FOR THERMOPLASTIC DUCS Why? • OC is not the leader in the thermoplastic dry-use chopped strand (DUCS) market • Would allow us to shift resources to higher growth opportunities • Would be consistent with the company’s enterprise strategy Annual revenue of approximate
Slide 47: Growth Built on Secular Trends and Enterprise Capabilities
GROWTH BUILT ON SECULAR TRENDS AND ENTERPRISE CAPABILITIES Composites provide unique answers to these needs Increased Premium on Living Spaces Building & Construction • Leveraging Owens Corning Channels Growth above Changing • Power of the OC Brand and PINKTM market Construction Practices Less capit
Slide 48: Local Supply Chain Model
LOCAL SUPPLY CHAIN MODEL #1 Position Europe China 23% 27% 29% #1 Position 13% Americas % Market % OC 48% Revenue Revenue % Market % OC 31% Revenue Revenue #1 Position % Market % OC India Revenue Revenue 3% 5% % Market % OC Rest of World Revenue Revenue 14% 7% % Market % OC Revenue Revenue Glass Non-
Slide 49: Targeting Profitable Growth Through Higher Value Solutions
TARGETING PROFITABLE GROWTH THROUGH HIGHER VALUE SOLUTIONS COMPOSITES IS A MID-TEEN MARGINS BUSINESS WITH SOLID GROWTH OPPORTUNITIES Demonstrated Evolving Portfolio Growth Business Resilience • Maximized network • Focusing on higher value • Strong secular trends support performance building and cons
Slide 50: Additional Financial Information
ADDITIONAL FINANCIAL INFORMATION
Slide 51: Appendix A: Key Financial Data – Corporate
APPENDIX A: KEY FINANCIAL DATA – CORPORATE ($ in millions, except per share data) Q3 2021 Q3 2020 YTD 2021 YTD 2020 Net sales 2,213 1,904 6,367 5,130 Net earnings (loss) attributable to Owens Corning 260 206 768 (615) Diluted earnings (loss) per common share (EPS) $2.50 $1.88 $7.30 ($5.66) attributa
Slide 52: Appendix A: Key Financial Data – Business
APPENDIX A: KEY FINANCIAL DATA – BUSINESS Insulation Roofing Composites ($ in millions) Q3 2021 Q3 2020 Q3 2021 Q3 2020 Q3 2021 Q3 2020 Net sales 815 681 869 761 591 521 EBIT 124 73 212 196 101 55 EBIT as % of net sales 15% 11% 24% 26% 17% 11% D&A 52 51 15 15 42 40 Insulation Roofing Composites ($ i
Slide 53: Appendix A: Key Financial Data – Disaggregated Revenue
APPENDIX A: KEY FINANCIAL DATA – DISAGGREGATED REVENUE Three Months Ended September 30, 2021 Reportable Segments ($ in millions) Disaggregation Categories Composites Insulation Roofing Eliminations Consolidated U.S. residential $ 83 $ 312 $ 796 $ (60) $ 1,131 U.S. commercial and industrial 163 181 3
Slide 54: Appendix B: Non-GAAP Reconciliation – Table 1
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 1 54
Slide 55: Appendix B: Non-GAAP Reconciliation – Table 2
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 2 55
Slide 56: Appendix B: Non-GAAP Reconciliation – Table 3
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 3 56
Slide 57: Appendix B: Non-GAAP Reconciliation – Table 4
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 4 57
Slide 58: Appendix B: Non-GAAP Reconciliation – Table 5
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 5 58
Slide 59: Appendix B: Non-GAAP Reconciliation – Table 6
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 6 59
Slide 60: Appendix B: Non-GAAP Reconciliation – Table 7
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 7 60
Slide 61: Appendix B: Non-GAAP Reconciliation – Table 8
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 8 61
Owens Corning — OC (Virtual) Roadshow Hosted by Truist / Evercore ISI 2021 on 6ix