Slide 1: Owens Corning Positioned for Growth
Owens Corning Positioned for Growth Q2 2013 This presentation shared at the following events: 06/05/13 Owens Corning Roadshow – Boston 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 Three
Slide 4: Investment Highlights
Investment Highlights The Insulation business is a proven franchise prepared to return to historic margins The Roofing business is positioned for growth as the U.S. housing market recovers The Composites business is the leader in an attractive growth industry 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 Q1 2013 Highlights $ (in millions) Q1 Q1 Change 2013 2012 Improved EBIT by $13 million Net sales* $330 $331 $(1) Realized meaningful pricing improvement across the business EBIT $(21) $(34) $13 Insulation volumes in the U.S. new residential construction market are tracking
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: Residential Energy Productivity
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 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) 2,462 2,509*
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 Capacity Utilization
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 Q1 2013 Highlights $ (in millions) Q1 Q1 Change 2013 2012 Achieved 20% EBIT margins Net sales* $607 $588 $19 Effective price execution in Q1 resulted in improved profitability; Q2 price increase in effect EBIT $119 $83 $36 Maintain outlook on full-year market demand and expect
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 7.5 + 3% - 5% 8 18 7 8 5 3 3 2 3 22 9 3 17 19 11 5.3 6 106 107 103 109 110 113 116 116 112 100 96 93 91 93 94 104 33 33 32 34 37 39 35 30 31 26 26 17 11 11 11
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 Q1 2013 Highlights $ (in millions) Q1 Q1 Change 2013 2012 Lower production levels and input cost inflation generated an unfavorable quarter-over-quarter Net sales* $459 $476 $(17) comparison EBIT $9 $23 $(14) Planned asset ramp-up complete; expect higher utilization rates thro
Slide 18: 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 19: 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 20: Favorable Economic Trends
Favorable Economic Trends Economic Indicators 2012 2013F 2014F Supporting Trends Global Industrial Production 1.7% 2.6% 4.3% Growth recovery Growth Rate *1 Automotive Builds (mm) *2 81 83 88 8 kg of glass fiber used per vehicle (and growing) *6 Wind Installations (GW) *3 47 45 50 U.S. Production Tax
Slide 21: Glass Fiber Market Outlook
Glass Fiber Market Outlook Glass Fiber Market Demand 2013-2016 Growth Forecast 30 Years Averaging 5% CAGR 10 750 Demand Growth (k tons) (MM Tons) - log basis Glass Fiber Demand 500 250 1 - 1981 1991 2001 2011 2017 China Americas EMEA Rest of Asia India Glass Fiber Market Expected to About 60% of Gro
Slide 22: 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 23: A Winning Business
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 24: Cost Trends Favor a Global Network
Cost Trends Favor a Global Network Cost Trends North Europe China America Energy Labor Materials Logistics Foreign Exchange China Facing Higher Inflation and Currency Appreciation Color coding indicates relative rate of growth compared to other regions. Cost drivers measured in their respective func
Slide 25: Glass Fiber Industry Capacity
Glass Fiber Industry Capacity Glass Fiber Industry Estimated Capacity Utilization 2004 2006 2008 2010 2012 2014 2016 110% 1.7 100% Estimated Capacity Utilization 90% Supply Tension 1.1 1.1 Over 20% of global 80% capacity will need to be rebuilt in China between 2013 and 2016 70% 0.5 0.5 (high prob
Slide 26: Glass Fiber Industry Phases
Glass Fiber Industry Phases Signs of a New Era Chinese Macro Supply Emergence Adjustment Tension Capacity Excess Return on Overbuild Inventory Capital 2005 – 2009 2010 – 2012 2013 – 2016 High Utilization Rates and Reinvestment Economics Support Higher Returns 26
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 Proliferating proven low delivered cost model to further improve competitive position Glass fiber reinve
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) Q1 2013 Q1 2012 Net sales $1,350 $1,346 Net earnings (loss) attributable to Owens Corning $22 $(46) Diluted earnings (loss) per share attributable to Owens Corning common $0.18 $(0.38) stockholders Earnings (loss) before interest and taxes (E
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