Owens Corning Inc · NYSE:OC
Owens Corning — Non-Deal Roadshow (December 2019)
39 slides from Owens Corning's roadshow presentation, Dec 2, 2019
Slide 1: Focused on Shareholder Value
Q4 2019 FOCUSED ON This presentation shared at the following events: SHAREHOLDER VALUE 12/02/19 OC Roadshow Scott Cripps, Vice President, Investor Relations E 11/04/19 OC Roadshow Hosted by Wells Fargo – Texas Brian Chambers, Chief Executive Officer 10/31/19 OC Roadshow Hosted by Zelman – Boston Bri
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 20,000 2018 REVENUE EMPLOYEES COUNTRIES WHERE CONSECUTIVE YEARS WE OPERATE AS A FORTUNE® 500 COMPANY Serving residential, commercial, and industrial markets INSULATION | ROOFING | COMPOSITES 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 2018 revenue by end market Insulation Roofing Composites $5.4B $7.1B 5% 1% 17% 34% 6% 7% 12% 17% 27% 19% 40% 33% 58% 29% 10% 34% 23% 82% 33% 13% 2006 2018 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 - 2018 Accelerate organic reductions across businesses growth 2013 - 2015 2006 - 2012 Invested in process and 13% Drive improved product techno
Slide 8: Investment Highlights
INVESTMENT HIGHLIGHTS
Slide 9: Three Market-Leading Businesses
THREE MARKET-LEADING BUSINESSES $7,057 $861 12% OWENS CORNING 2018 ADJ EBIT 2018 NET SALES 2018 ADJ EBIT AS % OF NET SALES #1 in North American residential fiberglass Insulation A leader in technical insulation growth $2,720 $290 11% markets #2 in attractive industry generating strong $2,492 $434 17
Slide 10: Well-Positioned to Capture Growth from Key Secular Trends
WELL-POSITIONED TO CAPTURE GROWTH FROM KEY SECULAR TRENDS ENERGY EFFICIENCY PRODUCT SAFETY & RENEWABLE ENERGY INVESTMENT IN RISING LABOR COSTS & SUSTAINABILITY INFRASTRUCTURE WORKER SHORTAGE Building code Easy and efficient Fire resistant Wind turbines Roads, bridges compliant installation Full temp
Slide 11: Innovative Product & Process Technologies
INNOVATIVE PRODUCT & PROCESS TECHNOLOGIES DELIVERING REVENUE GROWTH, IMPROVED MARGINS, AND CAPITAL EFFICIENCY DURATION® SPECIALTY GLASS ECOTOUCH® SHINGLES NON-WOVENS INSULATION Unique SureNail® Industry-leading Glass material technology product designs science Sustainable high Highly-specified Advan
Slide 12: Leveraging Enterprise Capabilities
LEVERAGING ENTERPRISE CAPABILITIES Commercial strength Material science innovation ROOFING COMPOSITES Manufacturing technologies Global footprint and scale INSULATION Safety and sustainability 12
Slide 13: Free Cash Flow Conversion Outperforms Peer Group
FREE CASH FLOW CONVERSION OUTPERFORMS PEER GROUP Average 2016-18 free cash flow conversion 125% EBIT margin improvement 100% 75% Purposeful working capital management 50% Focused on operating 25% and capital efficiency 0% Dow Jones U.S. Construction Owens Corning & Materials Index Free cash flow con
Slide 14: Focused on Key Drivers of Shareholder Value Creation
FOCUSED ON KEY DRIVERS OF SHAREHOLDER VALUE CREATION Revenue growth Adjusted EBIT margin 12.5% 10.5% 13.1% 13.4% 12.2% 6.1% 10.3% 7.8% 1.7% -0.7% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Free cash flow ($mm) Return on capital $679 11.9% 12.2% $570 10.2% 9.3% 7.2% $341 $266 $50 2014 2015 201
Slide 15: Capital Allocation Strategy Focuses on Increasing TSR
CAPITAL ALLOCATION STRATEGY FOCUSES ON INCREASING TSR 2016-2018: RETURNED OVER $900MM OF CASH TO SHAREHOLDERS Capital allocation strategy Capital allocation targets over time Maintain investment grade balance sheet 2-3X debt/EBITDA leverage with flexibility to support growth and drive shareholder va
Slide 16: Significant Recognition for ESG Leadership
SIGNIFICANT RECOGNITION FOR ESG LEADERSHIP Ranked #1 seven years Earned the following ISS scores in 2019: 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’s “A List” fo
Slide 17: Three Strong Businesses
THREE STRONG BUSINESSES
Slide 18: Insulation Business
INSULATION BUSINESS Five-year financial performance Leverage broad portfolio in $3,000 12% commercial and industrial $2,500 10% markets around the world $2,000 8% U.S. residential construction $1,500 6% macro environment below historical averages $1,000 4% $500 2% Drive competitive advantage through
Slide 19: Built a Stronger Global Insulation Business
BUILT A STRONGER GLOBAL INSULATION BUSINESS NORTH AMERICA EUROPE CHINA TEMPERATURE RANGE HIGH MID LOW PAROC® is a registered trademark for mineral wool insulation 19
Slide 20: Expanded Technical and Other Building Insulation
EXPANDED TECHNICAL AND OTHER BUILDING INSULATION TO DELIVER MORE STABLE AND ATTRACTIVE MARGINS Insulation EBITDA and margins Insulation delivered 19% average 400 North American residential fiberglass insulation Technical and other building insulation EBITDA margin over the period 300 1985-2008 200 A
Slide 21: Roofing Business
ROOFING BUSINESS Five-year financial performance Track record of strong $3,000 25% operating performance $2,400 20% Positive outlook based on product preference and $1,800 15% market drivers $1,200 10% Components business growing above market with $600 5% attractive margins $0 0% Commercial & operat
Slide 22: Positive Outlook for U.S. Asphalt Roofing Demand
POSITIVE OUTLOOK FOR U.S. ASPHALT ROOFING DEMAND Major storms & Remodeling New construction weather events + + = Aging housing stock Housing activity below long ~40mm square average storm term averages provides market in last 10 years Economic factors: existing growth opportunity home sales, home eq
Slide 23: 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 15 3 22 15 13 25 17 19 11 6 4 34 24 23 6 6 30 21 30 24 28 31 34 23 75 74 77 73 65 68 71 63 59 58 60 61 26 17 17 18 19 20 21 22 11 11 11 14 2007 20
Slide 24: Composites Business
COMPOSITES BUSINESS Five-year financial performance Continued global growth $2,500 15% Favorable industry trends $2,000 12% Well-positioned to leverage $1,500 9% market growth with a capital- efficient strategy $1,000 6% Glass non-wovens is an $500 3% attractive business with strong reinvestment eco
Slide 25: Glass Fiber – An $8B Market with Favorable Exposure
GLASS FIBER – AN $8B MARKET WITH FAVORABLE EXPOSURE Markets Building & Consumer Industrial Power & Energy Transportation Construction Size Glass fiber market defined as glass fiber reinforcements and direct conversion products as consumed, excluding yarns. Sources: Fiber Economics Bureau, GlassFibre
Slide 26: Positioned to Compete Anywhere in the World
POSITIONED TO COMPETE ANYWHERE IN THE WORLD #1 Position Emerging position Europe 29% China 23% 26% #1 Position 10% Americas % Market % OC 48% Revenue Revenue % Market % OC 33% Revenue Revenue % Market % OC Revenue Revenue #1 Position Rest of world 18% 13% % Market % OC Glass Non-Wovens Revenue Reven
Slide 27: Additional Financial Information
ADDITIONAL FINANCIAL INFORMATION
Slide 28: Appendix A: Key Financial Data – Corporate
APPENDIX A: KEY FINANCIAL DATA – CORPORATE ($ in millions, except per share data) Q3 2019 Q3 2018 YTD 2019 YTD 2018 Net sales 1,883 1,818 5,468 5,333 Net earnings attributable to Owens Corning 150 161 332 374 Diluted earnings per share (EPS) attributable to Owens Corning common $1.36 $1.45 $3.02 $3.
Slide 29: Appendix A: Key Financial Data – Business
APPENDIX A: KEY FINANCIAL DATA – BUSINESS Insulation Roofing Composites ($ in millions) Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Net sales 693 710 713 645 531 508 EBIT 84 94 143 127 67 64 EBIT as % of net sales 12% 13% 20% 20% 13% 13% D&A 48 47 14 13 37 36 ($ in millions) YTD 2019 YTD 2018 YT
Slide 30: Appendix A: 2019 Outlook
APPENDIX A: 2019 OUTLOOK Macro environment Environment consistent with consensus global industrial production growth, U.S. housing starts, and global commercial and industrial construction growth Business outlook Other guidance items • Strong cash flow generation • Corporate expenses: $110mm-$115mm
Slide 31: Appendix B: Non-GAAP Reconciliation – Table 1
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 1 31
Slide 32: Appendix B: Non-GAAP Reconciliation – Table 2
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 2 32
Slide 33: Appendix B: Non-GAAP Reconciliation – Table 3
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 3 33
Slide 34: Appendix B: Non-GAAP Reconciliation – Table 4
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 4 34
Slide 35: Appendix B: Non-GAAP Reconciliation – Table 5
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 5 35
Slide 36: Appendix B: Non-GAAP Reconciliation – Table 6
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 6 36
Slide 37: Appendix B: Non-GAAP Reconciliation – Table 7
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 7 37
Slide 38: Appendix B: Non-GAAP Reconciliation – Table 8
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 8 38
Slide 39: Appendix B: Non-GAAP Reconciliation – Table 9
APPENDIX B: NON-GAAP RECONCILIATION – TABLE 9 39