Owens Corning Inc · NYSE:OC
Owens Corning — Non-Deal Roadshow (March 2021)
40 slides from Owens Corning's roadshow presentation, Mar 9, 2021
Slide 1: Focused on Shareholder Value
Q1 2021 FOCUSED ON This presentation shared at the following events: SHAREHOLDER VALUE 03/09/21 OC (Virtual) Roadshow Hosted by Bank of America Brian Chambers, Chairman & Chief Executive Officer 3/03/21 OC (Virtual) Roadshow Hosted by Zelman 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 Three strong businesses 3 Additional financial information 3
Slide 4: Owens Corning at a Glance
OWENS CORNING AT A GLANCE 19,000 COUNTRIES WHERE CONSECUTIVE YEARS 2020 REVENUE EMPLOYEES WE OPERATE AS A FORTUNE® 500 COMPANY Serving residential, commercial, and industrial markets INSULATION | ROOFING | COMPOSITES Note: Data as of 2020 Form 10-K 4
Slide 5: Compelling Investment Thesis
COMPELLING INVESTMENT THESIS We are a global building and industrial materials leader that capitalizes on market-leading positions and innovative technologies to deliver substantial free cash flow and sustainable shareholder value MARKET-LEADING POSITIONS STRONG CASH FLOW GENERATION INNOVATIVE PRODU
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 $5.4B $7.1B 4% 2% 17% 33% 5% 7% 12% 17% 26% 18% 41% 33% 59% 27% 10% 36% 23% 84% 33% 13% 2006 2020 U.S. residential new U.S residential repair U.S. commercial and I
Slide 7: Purposeful Actions Have Resulted in Sustainable Improvement
PURPOSEFUL ACTIONS HAVE RESULTED IN SUSTAINABLE IMPROVEMENT Management actions Enterprise improvement Operating priorities Implemented sustainable cost 2016 - 2020 Accelerate organic reductions across businesses growth 2013 - 2015 2006 - 2012 Invested in process and 13% Drive improved product techno
Slide 8: COVID-19 Update
COVID-19 UPDATE Key priorities Impact to near-term outlook Key economic factors that impact the company’s Keeping our employees and other key stakeholders businesses are residential repair and remodeling healthy and safe activity, U.S. housing starts, global commercial construction activity, and glo
Slide 9: Investment Highlights
INVESTMENT HIGHLIGHTS
Slide 10: Three Market-Leading Businesses
THREE MARKET-LEADING BUSINESSES OWENS CORNING $7,055 $878 12% 2020 ADJ EBIT / EBIT 2020 NET SALES 2020 ADJ EBIT / EBIT AS % OF NET SALES #1 in North American residential fiberglass Insulation A leader in technical insulation growth $2,607 $250 10% markets #2 in attractive industry generating strong
Slide 11: Well-Positioned to Capture Growth from Key Secular Trends
WELL-POSITIONED TO CAPTURE GROWTH FROM KEY SECULAR TRENDS ENERGY EFFICIENCY PRODUCT SAFETY & RENEWABLE ENERGY INVESTMENT IN RISING LABOR COSTS & SUSTAINABILITY INFRASTRUCTURE WORKER SHORTAGE Building code Easy and efficient Fire resistant Wind turbines Roads, bridges compliant installation Full temp
Slide 12: Innovative Product & Process Technologies Delivering Revenue Growth
INNOVATIVE PRODUCT & PROCESS TECHNOLOGIES DELIVERING REVENUE GROWTH, IMPROVED MARGINS, AND CAPITAL EFFICIENCY DURATION® SPECIALTY GLASS RESIDENTIAL FIBERGLASS SHINGLES NON-WOVENS INSULATION Unique SureNail® Industry-leading Glass material technology product designs science Sustainable high Highly-sp
Slide 13: Leveraging Enterprise Capabilities
LEVERAGING ENTERPRISE CAPABILITIES Commercial strength Material science innovation ROOFING COMPOSITES Manufacturing technologies Global footprint and scale INSULATION Safety and sustainability 13
Slide 14: Free Cash Flow Conversion Outperforms Peer Group
FREE CASH FLOW CONVERSION OUTPERFORMS PEER GROUP Average 2016-2020 free cash flow conversion 125% Strong earnings performance 100% 75% Purposeful working capital management 50% Focused on operating 25% and capital efficiency 0% Dow Jones U.S. Construction & Materials Index Owens Corning Free cash fl
Slide 15: Focused on Key Drivers of Shareholder Value Creation
FOCUSED ON KEY DRIVERS OF SHAREHOLDER VALUE CREATION Revenue ($mm) Adjusted EBIT margin $7,057 $7,160 $7,055 13.4% $6,384 13.1% $5,677 12.4% 12.2% 11.6% 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Free cash flow ($mm) Return on capital $828 11.9% 12.2% $679 10.2% 10.7% $570 $590 9.1% $266 2016
Slide 16: 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 17: Significant Recognition for ESG Leadership
SIGNIFICANT RECOGNITION FOR ESG LEADERSHIP Ranked Industry Leader seven Earned the following ISS scores in 2019: years consecutively in the Building • Environmental: 1 Products Group (top scores in • Social: 1 environmental, social and • Governance: 2 economic for 3rd year in a row) Included in CDP’
Slide 18: Three Strong Businesses
THREE STRONG BUSINESSES
Slide 19: Insulation Business
INSULATION BUSINESS Five-year financial performance Leverage broad portfolio in commercial and industrial $3,000 15% markets around the world $2,400 12% Strong market recovery in the $1,800 9% North American residential $1,200 6% fiberglass insulation business $600 3% Drive competitive advantage $0
Slide 20: Expanded Technical and Other Building Insulation for Stable Margins
EXPANDED TECHNICAL AND OTHER BUILDING INSULATION TO DELIVER MORE STABLE AND ATTRACTIVE MARGINS Insulation EBITDA and margins North America residential fiberglass insulation Insulation delivered 19% average 400 Technical and other building insulation EBITDA margin over the period 1985-2008 300 Acquis
Slide 21: Global Insulation Business: Technical & Other Insulation Revenues by End Market
GLOBAL INSULATION BUSINESS: TECHNICAL & OTHER INSULATION 2020 REVENUES BY END MARKET RESIDENTIAL U.S. 2020 INSULATION Int’l REVENUE COMMERCIAL U.S. Int’l Technical & other building INDUSTRIAL U.S. North America residential fiberglass Int’l Source: Owens Corning management estimates; estimated error
Slide 22: Roofing Business
ROOFING BUSINESS Five-year financial performance $3,000 25% Track record of strong operating performance $2,400 20% Positive long-term outlook $1,800 15% based on product preference and market drivers $1,200 10% Components business has $600 5% grown above market with attractive margins $0 0% 2016 20
Slide 23: Drivers for U.S. Asphalt Roofing Demand
DRIVERS FOR U.S. ASPHALT ROOFING DEMAND Major storms & Remodeling New construction weather events + + = Aging housing stock Housing activity provides ~40mm square average storm growth opportunity market in last 10 years Economic factors: existing home sales, home equity, Weather events drive early c
Slide 24: Remodeling & New Construction Markets Have Been Growing
REMODELING & NEW CONSTRUCTION MARKETS HAVE BEEN GROWING U.S. asphalt shingle market in mm squares New construction Remodeling Weather events Major storms 18 15 12 15 13 25 19 11 4 34 24 26 6 6 30 24 31 34 30 23 79 85 74 77 65 68 59 58 60 61 17 18 19 20 21 22 22 24 11 14 2011 2012 2013 2014 2015 2016
Slide 25: Composites Business
COMPOSITES BUSINESS Five-year financial performance $2,500 15% More than 50% of revenues driven by building and $2,000 12% construction applications $1,500 9% Well-positioned to leverage market growth with a capital- $1,000 6% efficient strategy $500 3% Glass non-wovens has been an attractive busine
Slide 26: Glass Fiber – An $8B Market with Favorable Exposure
GLASS FIBER – AN $8B MARKET WITH FAVORABLE EXPOSURE Building & Consumer Industrial Power & Energy Transportation Construction Market Size OC vs. Market Overweight Underweight Underweight Sector weight Overweight Glass fiber market defined as glass fiber reinforcements and direct conversion products
Slide 27: Positioned to Compete Anywhere in the World
POSITIONED TO COMPETE ANYWHERE IN THE WORLD #1 Position Emerging position Europe 27% China 23% 29% #1 Position 13% Americas % Market % OC 48% Revenue Revenue % Market % OC 31% Revenue Revenue % Market % OC Revenue Revenue #1 Position Rest of World 17% 12% % Market % OC Glass Non-Wovens Revenue Reven
Slide 28: Additional Financial Information
ADDITIONAL FINANCIAL INFORMATION
Slide 29: Appendix A: Key Financial Data – Corporate
APPENDIX A: KEY FINANCIAL DATA – CORPORATE ($ in millions, except per share data) Q4 2020 Q4 2019 FY 2020 FY 2019 Net sales 1,925 1,692 7,055 7,160 Net earnings (loss) attributable to Owens Corning 232 73 (383) 405 Diluted earnings (loss) per common share (EPS) $2.13 $0.66 ($3.53) $3.68 attributable
Slide 30: Appendix A: Key Financial Data – Business
APPENDIX A: KEY FINANCIAL DATA – BUSINESS Insulation Roofing Composites ($ in millions) Q4 2020 Q4 2019 Q4 2020 Q4 2019 Q4 2020 Q4 2019 Net sales 728 723 702 529 547 480 EBIT 106 89 183 87 60 56 EBIT as % of net sales 15% 12% 26% 16% 11% 12% D&A 52 48 15 14 42 40 Insulation Roofing Composites ($ in
Slide 31: Appendix A: Key Financial Data – Disaggregated Revenue
APPENDIX A: KEY FINANCIAL DATA – DISAGGREGATED REVENUE Twelve Months Ended December 31, 2020 Reportable Segments ($ in millions) Disaggregation Categories Composites Insulation Roofing Eliminations Consolidated U.S. residential $ 272 $ 949 $ 2,450 $ (204) $ 3,467 U.S. commercial and industrial 538 6
Slide 32: Appendix B: Non-GAAP Reconciliation – Table 1
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 1 32
Slide 33: Appendix B: Non-GAAP Reconciliation – Table 2
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 2 33
Slide 34: Appendix B: Non-GAAP Reconciliation – Table 3
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 3 34
Slide 35: Appendix B: Non-GAAP Reconciliation – Table 4
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 4 35
Slide 36: Appendix B: Non-GAAP Reconciliation – Table 5
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 5 36
Slide 37: Appendix B: Non-GAAP Reconciliation – Table 6
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 6 37
Slide 38: Appendix B: Non-GAAP Reconciliation – Table 7
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 7 38
Slide 39: Appendix B: Non-GAAP Reconciliation – Table 8
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 8 39
Slide 40: Appendix B: Non-GAAP Reconciliation – Table 9
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 9 40