Owens Corning Inc · NYSE:OC
Owens Corning — Non-Deal Roadshow (March 2014)
34 slides from Owens Corning's roadshow presentation, Mar 13, 2014
Slide 1: Owens Corning Positioned for Growth
Owens Corning Positioned for Growth Q1 2014 This presentation shared at the following events: 03/13/14 OC Roadshow hosted by Longbow – New York Brian Chambers, Roofing Business GM 03/03/14 OC Roadshow hosted by Northcoast ‐ Chicago Thierry Denis, Director IR 02/25 ‐ 02/27/14 OC Roadshow hosted by J.
Slide 2: Forward-Looking Statements and Non-GAAP Measures
Forward-Looking Statements and Non-GAAP 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. Thi presentation This t ti contains t i forward-looking f d l
Slide 3: Owens Corning at a Glance
Owens Corning g at a Glance Founded in 1938,, an industry y leader in glass g fiber insulation, roofing and glass fiber reinforcements 2013 net sales: $5.3 billion 15,000 employees in 27 countries Fortune 500 company for 59 consecutive years Component of Dow Jones Sustainability World Ind
Slide 4: Investment Highlights
Investment Highlights g g Composites Roofing Insulation Market-leading business Strong business Progress supports with improving economic performance in a confidence in return to conditions diti and d higher hi h recovering i U.S. US h housing i historical hi t i l profitability fit bilit utilizatio
Slide 5: 2013 Highlights
2013 Highlights Maintained a very high level of safety performance – 2014 recipient i i t off the th National N ti l Safety S f t Council C il G Green Cross C Full-year adjusted EBIT grew by more than 40%; company initiated quarterly dividend Roofing delivered 20% margins, a 4-point improvemen
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% 0%< Margin < 0% Sources: Owens Corning’s SEC filings since 2006 . For comparability purposes, prior years have been p
Slide 7: Insulation Business
Insulation Business Q4 & Full-Year 2013 Highlights $ (in millions) Q4 2013 Q4 2012 2013 2012 Insulation delivered strongest full-year and Q4 EBIT in six years Net sales* $ $466 $ $413 $ $1,642 $ $1,468 Delivered $78 million of EBIT improvement in EBIT $39 $9 $40 $(38) 2013 with revenue growth of
Slide 8: Owens Corning Insulation EBIT Progress
Owens Corning Insulation EBIT Progress Q1 Q2 Q3 Q4 39 $40 $20 18 9 Millions of Dollars 4 3 0 $0 -$20 -12 -16 21 -21 EBIT in M -$40 -34 -38 -47 -$60 -$80 2011 Actual 2012 Actual 2013 Actual Consistent Quarterly EBIT Progression Since 2011 Source: Owens Corning quarterly and annual SEC filings 8
Slide 9: Owens Corning Insulation: 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% '86 '89 '92 '95 '98 '01 '04 '07 '10 '13 Historically Delivered 15% EBIT Margins at 1.5 Million Housing Starts Source: Owens Corning management estimates and Owe
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 ffullll capacit capacity Below full capacity Lakeland Not in operation Continued Discipline in
Slide 12: Energy Efficiency Improvement
Energy Codes 100% Residential Energy Productivity %) Energy Efficiency Improvement (% 2009 – 49% Built to 2006 Code 2012 – 85% Built to 2009 Code 2015 – Expect 35% Build to 2012 Code 50% 0% no code 1987 2006 2009 2012 Year of Code IECC IECC IECC Acceleration of Code Adoption 2006-2015 Drives Demand
Slide 13: Code Changes Support Increased Glass Fiber Demand
Code Changes Support Increased Glass Fiber Demand 1.5 sing n Use per Hous 1.25 d to 2005 Start Indexed ass Insulation 1 0.75 Fibergla 0.5 2005 2012 2015F Multi-family mix 17% 31% 29% Code Adoption Drives Insulation Demand Growth of ~20% Per Unit from 2012-2015 SF home size and % Owner / Contractor b
Slide 14: 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 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 stoc
Slide 15: Roofing Business
Roofing Business Q4 & Full-Year 2013 Highlights $ (in millions) Q4 2013 Q4 2012 2013 2012 Roofing margins improved 4 points in 2013 in a down market Net sales* $ $381 $ $350 $ $1,967 $ $2,014 2013 margins exceeded 2012 in every quarter EBIT $55 $42 $386 $331 Expect to deliver another strong ye
Slide 16: 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 17: U.S. Asphalt Shingle Market
U.S. Asphalt Shingle Market Improved Housing Supports Demand Growth MM Sq. Major Storms Total Existing Home Sales MM Re-roof Demand 180 18 7.5 New construction 8 7 8 3 3 2 3 22 9 3 17 19 11 5.3 6 6 116 116 113 112 107 109 110 103 100 103 96 94 88 93 91 93 33 34 37 39 35 30 31 32 26 25 17 11 11 11 14
Slide 18: Strong Business in a Market Poised for Growth
Strong Business in a Market Poised for Growth Great business in a well-structured industry High-performing product lines that benefit from vertical integration Track record of strong financial performance Confidence in operating margins of mid-teens or better Strong Business Performance in a
Slide 19: Composites Segment
Composites Segment Q4 & Full-Year 2013 Highlights $ (in millions) Q4 2013 Q4 2012 2013 2012 Improved EBIT in 2013 amid modest global growth Net sales* $ $461 $ $426 $ $1,845 $ $1,859 Grew full-year EBIT by $7 million, primarily on EBIT $36 $23 $98 $91 lower manufacturing and startup costs EBIT a
Slide 20: Glass Fiber: A $7 Billion Global Market
Glass Fiber A $7 Billion Global Market • Appliances pp • Residential • Electronics Wind • Commercial • Recreation 7% • Water transportation & storage Consumer 17% Construction 35% Industrial 15% Transportation 28% • Factories • Cars • Mining • Trucks, buses, trains • Offshore platforms • Marine A Ke
Slide 21: Owens Corning Composites: Positioned to Win
Owens Corning Composites Positioned to Win Emerging Position #1 Position Europe China 25% 29% 25% 8% % Market % OC Revenue Revenue % Market % OC Revenue Revenue #1 Position Americas #1 Position P iti 47% OC glass fiber manufacturing site Rest of World OC downstream fabrication site 33% 17% 16% % Mar
Slide 22: Glass Fiber Market Demand
Glass Fiber Market Demand 5,000 Glass Fiber Demand Has Grown at 1.6 Multiple p of Industrial Production Growth 4,000 ons Glass Fiber K To 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 Eco
Slide 23: Glass Fiber Industry Phases
Glass Fiber Industry Phases Signs of a New Era China Chi Macro Supply S l Emergence Adjustment Tension Capacity Excess Improved Overbuild Inventory y Returns 2005 – 2009 2010 – 2012 2013 – 2016 High Utilization Rates and Reinvestment Economics Support Higher Returns 23
Slide 24: Glass Fiber Industry Estimated Capacity
Glass Fiber Industry Estimated Capacity 2004 2006 2008 2010 2012 2014 2016 100% 1.7 Supply Tension 90% d Capacity Utilization 90% Threshold 1.1 80% Change in global 0.9 demand (MM T) 70% Change in global Estimated capacity (MM T) 0.5 (high probability 0.5 additions) 0.4 60% 0.1/ 0.1/yryr 0.3/ yr 0.3
Slide 25: 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 gl
Slide 26: Owens Corning Composites
Owens Corning Composites Global megatrends, continued growth in industrial production production, Cost Leadership and material substitution support glass fiber market growth at a Price Realization 5-7% CAGR Strategic g focus on core building g Product Leadership material markets with sustainable
Slide 27: Sustaining a Strong Balance Sheet
Sustaining a Strong Balance Sheet Maintaining investment-grade financial strength is a pillar of Owens Corning Corning’s s strategy Maintained investment-grade credit ratings from Standard & Poor's and Fitch $800 million revolving credit facility maturing in 2018 $250 million accounts receiv
Slide 28: Tax Position is a Significant Asset
Tax Position is a Significant Asset Benefit from $2.2 billion NOL with estimated present value of approximately $5 per share Delivering cash tax savings of about $60 million per year Expect long-term book tax rate of 28% to 30% based on geographic mix of earnings and tax planning Cash tax ra
Slide 29: Disciplined Capital Allocation Strategy
Disciplined Capital Allocation Strategy Drive shareholder returns by enabling organic and inorganic growth and supporting the balance sheet – Maintain investment grade Capital allocation strategy – Investing in attractive organic growth – Returning excess cash to shareholders – Pursuing value-cr
Slide 30: Key Financial Data
Key Financial Data ($ in millions, except per share data) 2013 2012 Q4 2013 Q4 2012 Net sales $5,295 $5,172 $1,278 $1,159 Net earnings (Loss) attributable to Owens Corning $204 $(19) $82 $(56) Diluted earnings (Loss) per share attributable to $1.71 $(0.16) $0.69 $(0.47) Owens Corning common stockhol
Slide 31: 2014 Corporate Environment & Guidance
2014 Corporate Environment & Guidance Macro Environment Continued growth in U.S. housing starts; generally forecasted in the 1,000,000-1,200,000 range Moderate global industrial production growth Primary Guidance Other Guidance Items Corporate expenses of $120-130MM Interest expenses in line
Slide 32: 2014 Business Environment
2014 Business Environment Roofing Insulation Composites Growth in U.S. Re-roof Growth in U.S. Current prices Improved 2013 global residential new demand below residential new significantly industry growth below construction i historical hi i l construction i below b l capacity i long-ter
Slide 33: Appendix A
Appendix A The reconciliation fromnet eamings attributable to Owens Coming to Adjusted EBIT is shown in the table below (in millions): Three Months Ended Twelve Months Ended Dec. 31, Dec. 31, 2013 2012 2013 2012 NET EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING $ 82 $ (56) $ 204 $ (19) Less: Net eam
Slide 34: Appendix A
rr Appendix A Areconciliation from net earings (loss) attributable to Owens Coming to Adjusted Eamings and a reconciliation from diluted eamings (loss) per share to adjusted diluted eamimgs per share are shown mm the tables below: Twelve Months Three Months Ended Three Months EndedThree Months Ended