Slide 1: Owens Corning: Positioned for Growth
Owens Corning Positioned for Growth Q2 2014 This presentation shared at the following events: 06/12 / ‐ 06/13/14 / / OC Roadshow hosted byy SunTrust – Toronto & Montreal Thierryy Denis,, Director Investor Relations 05/28 ‐ 05/29/14 OC Roadshow hosted by Zelman – San Francisco & Los Angeles Mike Tham
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: Outlook and Highlights
Outlook and Highlights Safety performance in Q1 2014 improved 23% vs. Q1 2013 Delivered D li d adjusted dj t d EBIT off $77 million; illi flflatt with ith prior i year period Q1 Roofing volumes weaker than expected; anticipate improvement as year progresses Insulation delivered profitable qu
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 Q1 2014 Highlights $ (in millions) Q1 Q1 Change 2014 2013 Delivered 11th consecutive quarter of EBIT improvement Net sales* $355 $330 $25 Improved EBIT by $22 million despite the impact EBIT $1 $(21) $22 of weather in North America Expect 2014 to benefit from growth in U.S.
Slide 8: Owens Corning Insulation EBIT Progress
Owens Corning Insulation EBIT Progress Q1 Q2 Q3 Q4 39 $40 $20 18 9 Millions of Dollars 1 4 3 0 $0 -$20 -12 -16 21 -21 EBIT in M -$40 -34 -38 -47 -$60 -$80 2011 Actual 2012 Actual 2013 Actual 2014 Actual Consistent Quarterly EBIT Progression Since 2011 Source: Owens Corning quarterly and annual SEC f
Slide 9: 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 Codes
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 Full Full-Year Year 2013 Revenue U.S. and Canada Housing starts Residential New Construction Building energy code adoption Household formation 10-25% 40% U.S. and Canada
Slide 15: Roofing Business
Roofing Business Q1 2014 Highlights $ (in millions) Q1 Q1 Change 2014 2013 Revenue down 18% on lower volumes; full-year market outlook unchanged Net sales* $497 $607 $(110) Delivered 16% EBIT margin on lower volume EBIT $80 $119 $(39) leverage; contribution margins stable Expect to deliver ano
Slide 16: 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 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 Q1 2014 Highlights $ (in millions) Q1 Q1 Change 2014 2013 Improved EBIT by $18 million on better pricing and operating performance Net sales* $477 $459 $18 Initiated planned furnace rebuilds EBIT $27 $9 $18 Expect market conditions to drive pricing improvement in 2014 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 #1 Position Emerging Position Europe China 29% 25% 25% 8% % Market % OC % Market % OC Revenue Revenue 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 $2.1 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) Q1 2014 Q1 2013 Net sales $1,278 $1,350 Net earnings (loss) attributable to Owens Corning $120 $22 Diluted earnings (loss) per share attributable to Owens Corning common $1.01 $0.18 stockholders Earnings (loss) before interest and taxes (EBIT
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: Non-GAAP Reconciliations
Appendix A Non-GAAP Non GAAP Reconciliations 33
Slide 34: Appendix A: Non-GAAP Reconciliations
Appendix A Non-GAAP Non GAAP Reconciliations 34