Slide 1: Owens Corning: Focused on Shareholder Value
Owens Corning Focused on Shareholder Value Q4 2015 This presentation shared at the following event: 12/14/15 OC Roadshow Hosted by BB&T – Texas Thierry Denis, VP Investor Relations 12/8/15 OC Roadshow Hosted by Macquarie - Boston Mike Thaman, Chief Executive Officer 12/7/15 OC Roadshow Hosted by Jef
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 2014 net sales: $5.3 billion 15,000 employees in 26 countries Fortune 500 company for 61 consecutive years Component of Dow Jones Sustainability World Index for
Slide 4: Investment Highlights
Investment Highlights Composites Roofing Insulation Market-leading business Strong market Progress supports with improving economic position in attractive confidence in return to conditions and higher industry historical profitability utilization rates Three Market-Leading Businesses 4
Slide 5: Q3 2015 Highlights and Outlook
Q3 2015 Highlights and Outlook Improved safety performance by 8 percent year to date Delivered adjusted EBIT of $198 million Insulation delivered 17th consecutive quarter of EBIT growth Composites grew EBIT by $29 million; delivering the 9th consecutive quarter of EBIT improvement Roofing
Slide 6: Strong Portfolio
Strong Portfolio '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15E 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 based on Owe
Slide 7: Insulation Business
Insulation Business Q3 2015 Highlights $ (in millions) Q3 2015 Q3 2014 YTD YTD 2015 2014 Delivered 17th consecutive quarter of EBIT growth Net sales* $502 $454 $1,332 $1,256 Revenue grew at double-digit rate, driven by improved housing activity EBIT $58 $43 $90 $62 Expect 2015 results to benef
Slide 8: Insulation EBIT Progress
Insulation EBIT Progress 80 Q1 Q2 Q3 Q4 58 60 43 46 EBIT in Millions of Dollars 39 40 25 18 18 20 7 9 1 4 3 0 - (20) (12) (16) (21) (40) (34) (38) (47) (60) 2011 2012 2013 2014 2015 Consistent Quarterly EBIT Progression Since 2011 Source: Owens Corning SEC filings. 8
Slide 9: Owens Corning Insulation: Return to Historical Profitability Levels
Owens Corning Insulation Return to Historical Profitability Levels 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; Expect to Average 50% Operating
Slide 10: U.S. and Canada Fiberglass Industry
U.S. and Canada Fiberglass Industry Light Density Network Capacity 2005 2015 Capacity Utilization: 100% 73% 85% 90% ( 0.3) Capacity B Lbs ( 0.6) ( 0.2) 4.6 4.3 3.7 3.5 2005 Total Retired 2015 Total Mothballed Operating Cold Lines Operating Lines Capacity Capacity Plants Capacity Capacity 2.1MM 1.1 M
Slide 11: U.S. and Canada Fiberglass Industry
U.S. and Canada Fiberglass Industry Light Density Capacity and Demand Sustained Early Stage Performance Decline Trough Recovery Improvement 1000 100% OC U.S. New Construction Price Change in Demand/Capacity 500 (Light Density MM Lbs) 90% Indexed to 2006 0 80% -500 70% -1000 60% -1500 50% 2006 – 2008
Slide 12: Positioned to Grow
Positioned to Grow Insulation End-Use Expected Market Revenue CAGR Markets Growth Drivers 2015 – 2018 % of 2014 Revenue U.S. and Canada Housing starts Residential New Construction Building energy code adoption ++ 40% Aging housing stock U.S. and Canada Repair and Remodel Energy efficiency po
Slide 13: Roofing Business
Roofing Business Q3 2015 Highlights $ (in millions) Q3 2015 Q3 2014 YTD YTD 2015 2014 Grew EBIT by $45MM on stronger volumes and improved margins Net sales* $502 $474 $1,398 $1,408 Pricing stable sequentially, but remains below last EBIT $103 $58 $213 $200 year Asphalt deflation contributed $2
Slide 14: U.S. Asphalt Shingle Re-Roof Demand Drivers
U.S. Asphalt Shingle Re-Roof Demand Drivers High Replacement age Average replacement age increased driven by technological advances Major storms & other weather events Weather events drive demand and create early Impact replacement of roofs Weather-related demand estimated based on NOAA data a
Slide 15: U.S. Asphalt Shingle Market
U.S. Asphalt Shingle Market New Construction Age Related/Economic Other Weather Events Major Storms MM Sq. 18 8 7 8 3 2 3 21 22 28 3 27 35 19 30 17 11 34 6 32 25 6 6 5 23 21 28 34 30 23 23 95 31 86 87 81 77 71 75 75 73 71 58 60 60 63 61 59 31 32 34 37 39 35 30 26 17 11 11 11 14 17 18 19 '00 '01 '02
Slide 16: Seasonal Industry Shipment Profile
Seasonal Industry Shipment Profile Q4 18% 16% 16% Historically, about 25% of full-year 23% manufacturer volumes shipped in Q1 27% 28% Q3 In 2012–2014, heavy winter discounts 26% drove distributor channel stocking and Q2 29% 33% pulled disproportional volume into Q1 Healthier 2015 shipment patt
Slide 17: Strong Market Position in Attractive Industry
Strong Market Position in Attractive 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 with weather-
Slide 18: Composites Business
Composites Business Q3 2015 Highlights $ (in millions) Q3 2015 Q3 2014 YTD YTD 2015 2014 Delivered 9th consecutive quarter of EBIT improvement Net sales* $500 $489 $1,486 $1,471 EBIT increased by $29MM on improved pricing, EBIT $61 $32 $188 $96 strong volumes, and manufacturing performance Ant
Slide 19: Glass Fiber: A $7.5 Billion Global Market
Glass Fiber A $7.5 Billion Global Market Building & Transportation Consumer Industrial Power & Markets Construction Energy Size Glass fiber market defined as glass fiber reinforcements and direct conversion products as consumed, excluding yarns. Source: Fiber Economics Bureau, GlassFibreEurope (APFE
Slide 20: Glass Fiber Market Demand
Glass Fiber Market Demand 5,000 Glass Fiber Demand Has Grown at 1.6 Multiple of Industrial Production Growth 4,000 Glass Fiber K Tons 3,000 2,000 1,000 - 1981 1992 2003 2014 An Industry with a Proven Track Record of Growth Glass fiber market demand excludes E-glass yarns Sources: Fiber Economics Bur
Slide 21: Cost Leadership
Cost Leadership Owens Corning Composites Global Capacity Percentage of Low-Delivered Cost Assets 70% 75% 30% 2007 2013 2015 Composites Now Positioned with Low-Cost Network Low-delivered cost asset defined as delivered cost in the region at or below best competitive benchmark for glass fiber manufact
Slide 22: Owens Corning Composites: Positioned to Win
Owens Corning Composites Positioned to Win #1 Position Emerging Position Europe China 30% 26% 25% 10% % Market % OC % Market % OC Revenue Revenue Revenue Revenue #1 Position Americas #1 Position 46% OC glass fiber manufacturing site 34% OC downstream fabrication site Rest of World 15% 14% % Market %
Slide 23: Industry Structure – China
Industry Structure – China China Capacity Additions and Rebuild Requirements 1000 Additions / 800 Rebuilds 2005-11 2012-18 Variance % ($B) Millions of $ 600 Additions 3.6 1.1 (69%) 400 Rebuilds 0.3 1.3 333% 200 Total 3.9 2.4 (38%) 0 2005 2007 2009 2011 2013 2015 2017 Capacity Additions Capacity Rebu
Slide 24: Glass Fiber Industry
Glass Fiber Industry Estimated Capacity China Emergence Tightening Capacity Supply Tension Capacity Overbuild Price Inflection Improved Returns '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15E '16E '17E '18E 100% 1.7 1.7 90% Estimated Capacity Utilization 90% Threshold 80% Change in global demand (MM T)
Slide 25: Owens Corning Composites: Focused on Creating Shareholder Value
Owens Corning Composites Focused on Creating Shareholder Value Strategy is delivering double-digit EBIT margins and return on capital A leader in glass fiber market with strong growth and stable industry structure Positioned well to capture opportunity in specialty glass non-wovens Evolving
Slide 26: 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 2020 $250 million accounts receivable secur
Slide 27: Tax Position is a Significant Asset
Tax Position is a Significant Asset Benefit from $2.0 billion (*) U.S. Federal N.O.L. with estimated present value of approximately $5 per share Delivering cash tax savings of about $60MM per year Expect long-term book tax rate of 32% to 34% based on geographic mix of earnings and tax planning
Slide 28: 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 – Pursuing value-creating acquisitions – Returning excess c
Slide 29: 2015 Cash Deployment
2015 Cash Deployment Strategy 2015E Base Capex $280MM First priorities for cash Cash Interest $110MM Foundation Fund with cash flow from operations $80MM Dividend Growth Capex High-return investments $100MM Discretionary Discretionary Opportunities Discretionary cash returned to Opportunitie
Slide 30: Key Financial Data
Key Financial Data ($ in millions, except per share data) Q3 2015 Q3 2014 YTD 2015 YTD 2014 Net sales $1,461 $1,382 $4,082 $4,015 Net earnings attributable to Owens Corning $112 $52 $221 $193 Diluted earnings per share attributable to Owens $0.95 $0.44 $1.87 $1.63 Corning common stockholders Earning
Slide 31: Appendix A: Non-GAAP Reconciliations
Appendix A Non-GAAP Reconciliations
Slide 32: Appendix A: Non-GAAP Reconciliations
Appendix A Non-GAAP Reconciliations * During the third quarter of 2015, the Company updated its full year tax expense guidance range to between 32% and 34% (from between 30% and 32%). As a result, the Company applied a 33% effective tax rate estimate to the earnings for the third quarter of 2015 and