Owens Corning Inc · NYSE:OC
Owens Corning — Non-Deal Roadshow (December 2018)
44 slides from Owens Corning's roadshow presentation, Dec 7, 2018
Slide 1: This presentation shared at the following events
This presentation shared at the following events: 12/07/18 OC Roadshow Hosted by Wells Fargo – Baltimore Mike Thaman, Chief Executive Officer 12/04/18 OC Roadshow Hosted by Jefferies – Philadelphia/New York Thierry Denis, VP Investor Relations 11/30/18 OC Roadshow Hosted by Goldman Sachs – Boston Mi
Slide 2: Forward-looking statements and non-GAAP measures
orward-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 materi
Slide 3: The Company
The Company Investment Thesis Three Strong Businesses Additional Financial Information
Slide 4: Owens Corning at a glance
Owens Corning at a glance 1938 2017 A 3 19k 37 £64 ~~ 6.4, Founded Strong Employees Countries Consecutive Net sales in 80 years ago businesses worldwide around years on the 2017 the world Fortune 500® (Gece Source: Owens Corning SEC filings, Fortune Magazine OWENS| ICORNING |
Slide 5: Balanced end market exposure
Balanced end market exposure 2017 Pro forma OC revenue by end market Roofing 81% Insulation U.S. residential new construction U.S residential repair and remodeling . Composites U.S. commercial and industrial International Source: Owens Corning management estimates; estimated error margin +/- 5%. In
Slide 6: Investment Thesis
The Company Investment Thesis Three Strong Businesses Additional Financial Information
Slide 7: Compelling investment thesis
Compelling investment thesis e oe at «@5 Attractive Market macro > leading > drivers positions
Slide 8: Superior free cash flow yield within sector
Superior free cash flow yield within sector Last 12 months Q3 2018 7% 6% 5% 4% 3% 2% 1% 0% oc Peer average S&P 500 peers in similar disclosures. Figures reflect latest reported results as of 10/31/18, Peer group includes: BECN, MAS, FBHS, SWK, SHW, BLD, MHK, USG_ Please refer to the Appendix for fur
Slide 9: Long-term capital allocation strategy focuses on increasing shareholder return
Long-term capital allocation strategy focuses on increasing shareholder return 1. 2. J. Maintain investment Maintain safety of Capital allocation strategy grade balance sheet operations and * Investing in attractive that provides flexibility productivity of existing organic growth = to support growt
Slide 10: Creating value through disciplined acquisition strategy
Creating value through disciplined acquisition strategy 1. 2. Committed about $2b of Each acquisition accretive capital to value-creating to earnings in year closed M&A since April 2016 (Gece Source: Owens Corning SEC filings, Owens Corning management estimates OWENS| ICORNING | 3. In 2019, the acqu
Slide 11: Purposeful actions over the decade have fueled sustainable portfolio improvement
Purposeful actions over the decade have fueled sustainable portfolio improvement Management actions Improved portfolio Implemented sustainable cost reductions across three 2016 - 2017 businesses o 2013 - 2015 Drove substantial organic growth 2007 - 2012 in attractive glass non-wovens, roofing compon
Slide 12: Proven track record of financial improvement
Proven track record of financial improvement $mm Adjusted EBIT Percent Return on capital 11.9% 12.2% 746 855 9.3% 550 7.7% 7.2% 416 412 5.8% 293 2012 «2013-2014. 2015. 2016 = 2017 2012 «2013, 2014. «2015S 2016 = 2017 Free cash flow Operating working capital / net sales $mm Percent 679 570 175% 17.3%
Slide 13: Our pillars and strategies enable us to create a sustainable enterprise
Our pillars and strategiés,enable us to create a sustainable enterprise Financial strength eee Sam CUSTOMERS INVESTORS EMPLOYEES COMMUNITIES Operational excellence High-performance people innovation Customer-inspired 13
Slide 14: Owens Corning broadly recognized for a strong ESG framework
Owens Corning broadly recognized for a strong ESG framework ISS QualityScore o Dow Jones | Sustainability Indexes Ranked #1 six years consecutively in the Building Products Group (top scores in environmental, social and economic for 2"4 year in a row) Hepp | Wcpp | cpp ALIST | ALIST ALIST 2017 2017
Slide 15: Three Strong Businesses
The Company Investment Thesis Three Strong Businesses Additional Financial Information 15
Slide 16: Portfolio financial profile
Portfolio financial profile 2017 Roofing Composites Corporate (S in millions) Net sales 2,001 2,553 2,068 (238) 6,384 EBIT / Adj EBIT 177 Bee 291 (148) 855 EBIT / Adj EBIT as % of 9% 21% 14% 13% net sales Source: Owens Coming SEC filings. For the Corporate column, Net sales reflects intercompany eli
Slide 17: Insulation
Insulation business * Capitalize on U.S. residential construction recovery * Drive competitive advantage through operational and commercial technology ¢ Broaden our product portfolio in commercial and industrial markets around the world Five-year financial performance $3,000 10% $2,400 — 8% $1,800 —
Slide 18: U.S. residential returning to prior performance levels
U.S. residential returning)to prior performance levels * U.S. 2017 estimated capacity utilization OC U.S. insulation contractor price index rate of light-density fiberglass operating lines in excess of 90% 110 * Demand growth has exceeded capacity 100 restarts over the past few years 90 * Favorable
Slide 19: Expanded in commercial and industrial markets globally
Expanded in commercial and industrial markets globally with stable and attractive margins Europe c) = High ®>PAROC’ o s &S = Mid ®>PAROC E e Low fj FOAMGLAS 7a FOANMGLAS fj FOAMGLAS PAROC® is a registered trademark for mineral wool insulation ‘Owens| [CORNING| 19
Slide 20: Built a stronger global Insulation business with significant through-the-cycle earnings power
Built a stronger global Insulation business with significant through-the-cycle earnings power Insulation EBITDA $mm and margins $mm 400 Insulation delivered 19% 300 average EBITDA margin over the period 1985-2008 200 . ope . Fiberglass building insulation capacity utilization and pricing 100 . . env
Slide 21: Roofing
Roofing business * Track record of strong operating performance * Positive outlook based on product preference and market drivers * Components business growing above market with stable, attractive margins * Commercial & operational performance driving sustainable earnings Five-year financial perform
Slide 22: Positive outlook for U.S. asphalt roofing demand
Positive outlook for U.S. asphalt roofing demand Remodeling New construction Major storms and * Strong recovery over last * Expect continued growth weather events 4 years in housing starts in * 40mm square average ¢ Aging housing stock coming years storm market in last 10 years * Economic factors: e
Slide 23: Remodeling and new construction markets growing
Remodeling and new construction markets growing U.S. asphalt shingle market in mm squares New construction Remodeling m Weather events m Major storms 75 73 65 68 as 7 63 61 59 58 o ds 17 ~ 1 < "4 17 18 19 20 21 2007 2008 «= 2009S 2010S «2011S 2012, 2013S 2014S 20152018 = 2017 Total 129 135 120 108 1
Slide 24: Components is a growth engine
Components is a growth engine Components revenue = OC Roofing Components = InterWrap 2013 2014 2015 2016 2017 Source: Owens Coming management estimates OWENS| ICORNING| 24
Slide 25: Composites
Composites business * Robust global growth * Favorable industry trends continue ¢ Well-positioned to leverage market growth with a capital-efficient strategy * Glass Non-Wovens is an attractive business with strong reinvestment economics Five-year financial performance $2,500 15% $2,000 — 12% $1,500
Slide 26: Glass fiber
Glass fiber A $7.8b market with favorable exposure Markets Source: Fiber Economics Bureau, GlassFibreEurope (APFE), Global Trade Information Services, Inc. and Owens Corning management estimates as of January 2018. 26 Glass fiber market defined as glass fiber reinforcements and direct conversion pro
Slide 27: Photo Courtesy Georgia-Pacific ©2017 GP Gypsum, LLC
• • • • • • Photo Courtesy Georgia-Pacific ©2017 GP Gypsum, LLC 27
Slide 28: Positioned to compete anywhere in the world
Positioned to compete anywhere in the world #1 Position 25% % Market % OC % Market % OC Revenue Revenue Revenue _ Revenue #1 Position Americas 49% Rest of world 34% | 18% ow / % Market % OC ® Glass Non-Wovens operations % Market % OC Revenue —_ Revenue ® Glass Reinforcements operations Revenue Reven
Slide 29: Favorable industry trends continue
Favorable industry trends,continue Stricter regulatory environment in China High capacity utilization rates: ~90% and public sources. Glass fiber market demand excludes E-glass yarns. All capacity data are Owens Corning management estimates based on legally obtained information from third parties OW
Slide 30: Additional Financial Information
The Company Investment Thesis Three Strong Businesses Additional Financial Information 30
Slide 31: Key financial data - corporate
Appendix A Key financial data - corporate ($ in millions, except per share data) g3208 =| «= g32017— |= yTD2018 YTD 2017 Net sales $1,818 $1,703 $5,333 $4,778 Net earnings attributable to Owens Corning $161 $96 $374 $293 Diaedeamoaeewatae(Ers)awimadete gigs Sg aa 80 Earnings before interest and taxe
Slide 32: Key financial data - businesses
Appendix A Key financial data - busi Insulation Roofing Composites ($ in millions) Q3 2018 Q3 2017 Q3 2018 Q3 2017 Q3 2018 Q3 2017 Net sales $710 $568 $645 $682 $508 $514 EBIT $94 $64 $127 $147 $64 $62 EBIT as % of net 13% 11% 20% 22% 13% 12% sales D&A $47 $36 $13 $13 $36 $36 ($ in millions) Ytd 201
Slide 33: 2018 corporate environment and guidance
Appendix A 2018 corporate environment and guidance Macro environment Environment consistent with consensus U.S. housing starts and global industrial production > Primary guidance Other guidance items Adjusted EBIT in-line with 2017 performance of $855mm Insulation: EBIT growth of $110mm Composites:
Slide 34: Acquisition key financial data
Appendix A Acquisition key financial data Closing date Value Revenue Adj. EBITDA EPS accretion Synergies 2015: . . 2015: . . Delivered run rate of Interwrap April 2016 ~$450mm $250mm Approximately In year of closing $20mm by end 2017 Pittsburgh 7 2016: 2013-2016: . Expect $20mm run Corning June 2017
Slide 35: Appendix B
Appendix B The reconciliation from net earnings (loss) attributable to Owens Corning to EBIT and Adjusted EBIT is shown in the table below (in millions): Twelve Months End: Twelve Months Ended Twelve Months Ended December 31, Total of December 31, Total of December 31, Total of 2013 to 2016 to 2007
Slide 36: Non-GAAP reconciliations table
Appendix B Non-GAAP reconciliations —‘table 2 The calculations of net operating profit after tax (NOPAT), total capital and return on capital (ROC) are shown in the table below (in millions): Twelve Months Ended December 31, 2017 20: 2015 2014 2013 20: Numerator Adjusted EBIT (a) $ 855 $ 746 $ 550 $
Slide 37: Non-GAAP reconciliations table
Appendix B Non-GAAP reconciliations —‘table 3 The reconciliation from net cash flow provided by operating activities to free cash flow and the calculation of free cash flow conversion of adjusted earnings ("free cash flow conversion”) are shown in the table below (in millions): Twelve Months Ended T
Slide 38: Non-GAAP reconciliations table
Appendix B Non-GAAP reconciliations —‘table 4 The calculation of free cash flow yield is shown in the table below (in millions, except per share amounts and percentages): (A) _ (B) _ (C) Twelve Months NineMonths Nine Months Ended Ended Ended (A) - (B) + (C) = December 31, September 30, September 30,
Slide 39: Non-GAAP reconciliations table
Appendix B Non-GAAP reconciliations —‘table 5 The adjusting income (expense) items to EBIT are shown in the tables below (in millions): Three Months Nine Months Twelve Months Ended Ended Ended December 31, September 30, September 30, 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2017 2018 2
Slide 40: Non-GAAP reconciliations
Appendix B Non-GAAP reconciliations Areconciliation from net earnings (loss) attributable to Owens Coming to adjusted earnings and a reconciliation from diluted eamings (loss) per share to adjusted diluted earnings per share for selected periods are shown in the tables below (in millions, except per
Slide 41: Non-GAAP reconciliations table
Appendix B Non-GAAP reconciliations —‘table 7 Operating working capital (a non-GAAP financial measure) is defined as receivables plus inventories less accounts payable. The reconciliation from net working capital to operating working capital is shown in the table below (in millions): Tw Months Ended
Slide 42: Non-GAAP reconciliations
Appendix B Non-GAAP reconciliations The reconciliation of Net earnings attributable to Owens Corning to Earnings before interest and taxes ("EBIT") and adjusted EBIT, and a reconciliation from EBIT to Earnings before interest, taxes, depreciation and amortization ("EBITDA") and adjusted EBITDA are s
Slide 43: Non-GAAP reconciliations table
Appendix B Non-GAAP reconciliations —‘table 9 Net debt (a non-GAAP financial measure) is defined by the Company as total borrowings, less cash and cash equivalents and less the impact of derivatives used to hedge the borrowings. The reconciliation from total debt to net debt is shown in the table be
Slide 44: Non-GAAP reconciliations table
Appendix B Non-GAAP reconciliations —‘table 10 The calculation of Insulation EBITDA Margins is outlined below, dating back to 1985 (in millions): (A) (A) Exclude (A) Exclude Segment/ Segment/ Segment/ Non- Segment / Non- Business Business Business Insulation Insulation Business Insulation Insulation