Sell-Side Analyst Meeting- Amarillo, TX


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Sell-Side Analyst Meeting- Amarillo, TX

  1. 1. Strong First-Quarter Earnings GrowthPositions Company for Success in 2013Sell-Side Analyst MeetingMay 2, 2013 – Amarillo, TXMichael McMurrayChief Financial Officer
  2. 2. 2Forward-Looking Statements andNon-GAAP MeasuresThis presentation consists of this slide deck and the associated remarks and comments, all of which areintegrally related and are intended to be presented and understood together.This presentation contains forward-looking statements within the meaning of Section 27A of the SecuritiesAct of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are anystatements that are not historical facts, and they are based upon the Company’s current expectations.Because forward-looking statements involve risks and uncertainties, the Company’s actual results coulddiffer materially from those projected in these statements. Information regarding some of the risks anduncertainties that could cause such differences can be found in the Company’s Securities and ExchangeCommission (“SEC”) filings, including under Item 1A of the Company’s Annual Report on Form 10-K forthe fiscal year ended December 31, 2012.For purposes of this presentation, any discussion referring to “year to date” refers to the period endedDecember 31, 2012. Otherwise the information in this presentation speaks as of May 2, 2013, and issubject to change. The Company does not undertake any duty to update or revise forward-lookingstatements. Any distribution of this presentation after May 2, 2013 is not intended and will not be construedas updating or confirming such information.This presentation contains references to certain "non-GAAP financial measures" as defined by the SEC. Areconciliation of these non-GAAP financial measures to their most directly comparable financial measurescalculated and presented in accordance with generally accepted accounting principles can be found in ourCurrent Report on Form 8-K furnished to the SEC on April 24, 2013. This Form 8-K and additionalCompany information is available on the Owens Corning website: Adjusted EBITis earnings before interest, taxes, and other items that management does not allocate to our segmentresults because it believes they are not a result of the Company’s current operations.THE PINK PANTHER™ © 1964-2012 Metro-Goldwyn-Mayer Studios Inc. All Rights Reserved. The color PINK is a registered trademark of Owens Corning. © 2012 Owens Corning.
  3. 3. Q1 2013 Outlook and Highlights Continued to focus on building a safer workplace Improved adjusted EBIT by $34 million Grew Roofing EBIT margins from 14% to 20% on effective priceexecution Insulation on track for profitability in 2013 Composites completes asset ramp-up; on track to achieve positiveoperating leverage for remainder of 2013 Strong first-quarter performance supports full-year outlook of atleast $100 million improvement in adjusted EBIT with potentialupside3
  4. 4.  Expect margin performance improvement in each business Expect adjusted EBIT to grow at least $100 million with potentialupside The upside to the outlook will largely be determined by the paceof the U.S. housing recovery and its impact on Building Materialsmargins42013 Guidance
  5. 5. Owens Corning CompositesPositioned for Improved ReturnsSell-Side Analyst MeetingMay 2, 2013 – Amarillo, TXArnaud GenisPresident Composites Business
  6. 6. Macro Trends Support Glass Fiber Market GrowthFavorable Economic Trends6Sources: 1 .Oxford Economics, 2 .IHS CSM Automotive, 3. MAKE, 4.Feb 2013 Blue Chip Consensus, 5 .IHS Global insight – Relevant Industrial Capex defined as oil & gas, miningand water supply industries only , 6 . Owens Corning management estimates as of Apr 2013Economic Indicators 2012 2013F 2014F Supporting TrendsGlobal Industrial ProductionGrowth Rate *11.7% 2.6% 4.3% Growth recoveryAutomotive Builds (mm) *2 81 83 88 8 kg of glass fiber used pervehicle (and growing) *6Wind Installations (GW) *3 47 45 50 U.S. Production Tax Creditextended; 7.5 kT glass fiber perGW *6North America Housing Starts(mm) *40.8 1.0 1.2 100 kg glass fiber used perhousing unit on average *6Relevant Industrial Capex ($B) *5 625 660 700 Rising costs for steel andaluminum
  7. 7. 1101981 1991 2001 2011GlassFiberDemand(MMTons)-logbasisGlass Fiber Market Outlook7Glass Fiber Market Demand30 Years Averaging 5% CAGR2013-2016 Growth Forecast2017Glass Fiber Market Expected toContinue to Grow at Historical RatesAbout 60% of GrowthExpected to Come from ChinaGlass fiber market demand excludes E-glass yarnsSources: Fiber economic bureau, Glass Fiber Europe, Global Trade information Services, inc. and Owens Corning management estimates as of Apr 2013Annual Market Growth Expected to Absorb the Equivalent of Threeto Four World-Scale Plants on Average in 2013-2016 Timeframe-250500750China Americas EMEA Rest of Asia IndiaDemandGrowth(ktons)
  8. 8. Composites Materials Price HistoryMarket Price of Compositesvs. Traditional Materials8Sources: Composite represents a combination of textile glass fiber and thermoset resins. Textile glass fiber, thermoset resin, steel and aluminum US Bureau of Labor StatisticsComposites Materials Have Become More Competitive60801001201401601802002201992 1997 2002 2007 2012Index(1992=100)Composite Materials Steel Aluminum
  9. 9. Cost TrendsNorthAmericaEurope ChinaEnergyLaborMaterialsLogisticsForeignExchangeCost Trends Favor a Global NetworkColor coding indicates relative rate of growth compared to other regions. Cost drivers measured in their respective functional currency .Sources: IHS Global Insight 2012-2015 projections, Owens Corning management estimates as of Apr 2013China Facing Higher Inflation and Currency Appreciation9
  10. 10. 0.51.1 2010-12 2013-16Change in global demand (MM T) Change in global capacity (MM T)0.1 / yr 0.3 / yr 0.4 / yr 0.1 / yr 0.3 / yr 0.1 / yr50%60%70%80%90%100%110%EstimatedCapacityUtilizationGlass Fiber Industry Capacity10Glass Fiber Industry Estimated Capacity UtilizationTighter Capacity EnvironmentGlass fiber market demand excludes E-glass yarnsSources: Fiber economic bureau, Glass Fiber Europe, Global Trade information Services, inc. and Owens Corning management estimates as of Apr 2013Supply Tension Over 20% of globalcapacity will need to berebuilt in China between2013 and 2016 Owens Corning does notexpect to addincremental meltingcapacity before 2015(high probabilityadditions)2004 2006 2008 2010 2012 2014 2016
  11. 11. ChineseEmergenceCapacityOverbuildMacroAdjustmentExcessInventorySupplyTensionReturn onCapitalGlass Fiber Industry PhasesSigns of a New Era11High Utilization Rates and Reinvestment EconomicsSupport Higher Returns2005 – 2009 2010 – 2012 2013 – 2016
  12. 12.  The glass fiber market is healthy and will grow driven byimproving economic conditions and continuing materialconversion Glass fiber reinvestment economics in China are changing, ascosts increase, currency appreciates, and furnaces requirerebuilding Composites materials remain a great value vs. other materials Our focus is on offsetting inflation and returning margins to levelsthat support investmentOwens Corning CompositesPositioned for Improved Returns12