OC Roadshow hosted by CL King New York

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OC Roadshow hosted by CL King New York

OC Roadshow hosted by CL King New York

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  • 1. Owens CorningPositioned for GrowthInvestor Visits Hosted by CL King & AssociatesJune 17-18, 2013 - New York, NYThierry Denis Adam BayerDirector Investor Relations Leader Investor Relations
  • 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” or last twelve months (“LTM”)refers to the period ended March 31, 2013. Otherwise the information in this presentation speaks as ofJune 17-18, 2013, and is subject to change. The Company does not undertake any duty to update orrevise forward-looking statements. Any distribution of this presentation after June 18, 2013 is not intendedand will not be construed as 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: www.owenscorning.com. Free cash flowis the change in net debt excluding the cash impact of issuing new stock, repurchasing treasury stock, andpaying stockholder dividends. Adjusted EBITDA is earnings before interest, taxes, depreciation,amortization, net precious metal lease expense, and other items that management does not allocate to oursegment results 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. Owens Corning at a Glance Founded in 1938, an industry leader in glass fiberinsulation, roofing and glass fiber reinforcements 2012 sales: $5.2 billion 15,000 employees in 27 countries Fortune 500 company for 59 consecutive years Component of Dow Jones SustainabilityWorld Index Three powerful businesses, three valuablefranchises– Insulation– Roofing– Composites3
  • 4. Investment Highlights The Insulation business is a proven franchise prepared to return tohistoric margins The Roofing business is positioned for growth as the U.S. housingmarket recovers The Composites business is the leader in an attractive growthindustry4
  • 5. Margin >= 10% 0%<= Margin < 10% Margin < 0%Strong PortfolioPositioned for GrowthInsulationRoofingComposites’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ‘12Sources: Owens Corning’s SEC filings since 2006. For comparability purposes, prior years have been provided based on Owens Corning’s SEC filings, internal managementreports, and management estimates 5
  • 6. 2012 Revenue by End Market*$ (in millions)Q12013Q12012ChangeNet sales* $330 $331 $(1)EBIT $(21) $(34) $13EBIT as % of sales (6)% (10)% 4%D&A $26 $25 $16Insulation Business* before inter-segment eliminationsQ1 2013 Highlights Improved EBIT by $13 million Realized meaningful pricing improvement acrossthe business Insulation volumes in the U.S. new residentialconstruction market are tracking U.S. housingstarts Expect return to profitability for full-year 2013-10%-5%0%5%10%$0$500$1,000$1,500$2,0002009 2010 2011 2012 LTMFive-Year Financial PerformanceSales* EBIT as % of sales*In millionsInternational19%U.S. & CanadaNew ResidentialConstruction37%U.S .& CanadaResidential Repair& Remodeling20%U.S. & CanadaCommercial& Industrial24%*Owens Corning management estimatesSource: Owens Corning management estimates and Owens Corning SEC filings; comparability may differ over time
  • 7. Positioned to Grow with Our Markets7Source: Owens Corning management estimates as of Feb 2013Insulation End-UseMarkets% of 2012 RevenueExpected MarketGrowth DriversRevenue CAGR2011 – 2014U.S. & CanadaResidential NewConstruction37%10-25%U.S. & CanadaRepair & Remodel20%> 5%U.S. & CanadaCommercial& Industrial24%5-10%Latin America& Asia Pacific19%5-10% Housing starts Building energy code adoption Household formation Aging housing stock Energy efficiency policies Code and “green”specification driven Owner operator focus Growing middle class Infrastructure improvements Urbanization of ChinaExpect Double-Digit Revenue Growth as Market Recovers
  • 8. 8Sources: Pacific Northwest National Laboratory, and Owens Corning management estimates as of Feb 2013IECC – International Energy Conservation CodeResidential Energy ProductivityAcceleration of Code Adoption 2006-2015Drives Demand for Insulation Products2009 – 49% Built to 2006 Code2012 – 85% Built to 2009 Code2015 – Expect 57% Build to 2012 Code0%50%100%150%no code 1987 2006 2009 2012 2015EnergyEfficiencyImprovement(%)Energy CodesYear ofCodeIECC IECC IECC IECCGoal
  • 9. 0.511.52005 2012 2016Demand per start at forecasted code adoption level9IndexedFiberglassInsulationUse* US Census Bureau ** SF home size 2012 Q1-Q3 averageSources: North American Home Builders; US Census Bureau; Owens Corning management estimates as of Feb 2013Potential demand per start if 2012codes are adopted by all statesMulti-family mix 17% 31% 20-25%Single family home size (SF) 2,462 2,509** ~2,500% Owner/Contractor built* 19% 24% 20-25%Code Adoption and Improving Single- / Multi-Family Mix DrivesInsulation Demand Growth of 25% or more from 2012-2016Code Changes SupportIncreased Glass Fiber Demand
  • 10. EloySanta ClaraTorontoEdmontonNewarkKansas CityWaxahachieDelmarFairburnContinued Discipline in Capacity ManagementCurrent Status:All lines operatingSome lines downFacility mothballedMt. VernonCandiacCapacity utilization based as of January 1, 2013, light density insulationSource: Owens Corning management estimatesNephiLakelandSalt Lake CityOwens Corning InsulationNorth American Fiberglass NetworkNetwork Management National footprint tosupport regional demandrecovery10
  • 11. 60%70%90%0%10%20%30%40%50%60%70%80%90%100%Total Capacity Operating Plants Operating LinesInsulation IndustryNorth American Fiberglass112013 Industry Capacity UtilizationCapacity Utilization Tightening as U.S. Housing RecoversCapacity utilization based on 2013 estimate at 990,000 unlagged U.S. housing starts (Source: Feb 2013 Blue Chip consensus), light-density insulation..Source: Owens Corning management estimates as of Feb 2013
  • 12. -10%0%10%20%30%85 88 91 94 97 00 03 06 09 12% EBIT Avg % EBIT (15%)Owens Corning InsulationA Proven Franchise12Source: Owens Corning management estimates and Owens Corning SEC filings, comparability may differ over timeHistorically Delivered 15% EBIT Margins at 1.5 Million Housing StartsWell positionedto return tohistorical margins Improved costand efficiency Code adoption Expected U.S.housing improvement
  • 13. 2012 Revenue by End Market*$ (in millions)Q12013Q12012ChangeNet sales* $607 $588 $19EBIT $119 $83 $36EBIT as % of sales 20% 14% 6%D&A $10 $9 $113Roofing Business* before inter-segment eliminationsQ1 2013 Highlights Achieved 20% EBIT margins Effective price execution in Q1 resulted inimproved profitability; Q2 price increase in effect Maintain outlook on full-year market demand andexpectation of improved margins over 20120%5%10%15%20%25%30%$0$400$800$1,200$1,600$2,000$2,4002009 2010 2011 2012 LTMFive-Year Financial PerformanceSales* EBIT as % of sales*In millionsU.S. & CanadaNew ResidentialConstruction11%U.S. & CanadaResidential Repair& Remodeling73% U.S. & CanadaCommercial& Industrial16%*Owens Corning management estimatesSource: Owens Corning management estimates and Owens Corning SEC filings; comparability may differ over time
  • 14. Source: Owens Corning management estimates and various industry sources and publicationsU.S. Asphalt Shingle IndustryConsolidation14Top 90% 16 13 10 4Total 21 17 13 8’70s ’80s ’90s CurrentOCFRYGAFELKCERTAINTEEDTAMKOCELOTEXMANVILLEIKOBIRDATLASGEORGIA PACIFICFLINTKOTEGLOBEPABCOMALARKEYLUNDAY THAGARDCUSTOM ROOFINGBIG CHIEFBEARPHILIP CAREYPABCOMALARKEYLUNDAY THAGARDCUSTOM ROOFINGOCGAFELKCERTAINTEEDTAMKOCELOTEXMANVILLEIKOBIRDATLASGEORGIA PACIFICGENSTARGLOBEGLOBEPABCOMALARKEYOCGAFELKCERTAINTEEDTAMKOCELOTEXIKOATLASGEORGIA PACIFICGS ROOFINGOCGAF/ELKCERTAINTEEDTAMKOIKOATLASPABCOMALARKEYFavorable Industry Structure for the Future
  • 15. 33 33 30 31 32 34 37 39 352617 11 11 11 1426106 107 103 109 110 113 116 116 112 100 96 93 91 93 94 1045 333 278 18 8322176191190.07.5018098 99 00 01 02 03 04 05 06 07 08 09 10 11 12 15 Yr.AvgNew Construction Re-roof Major Storms Total Existing Home SalesU.S. Asphalt Shingle MarketImproved Housing Supports Demand Growth15Recovery to 15-Year Average Represents a 20% Increase in Non-Storm DemandTotal 144 143 136 143 144 154 161 173 155 129 135 120 108 122 118 139- 5%CAGR+ 3%Source: Asphalt Roofing Manufacturers Association, Summary of Asphalt Roofing Industry Shipments. National Association of Realtors existing home sales and Owens Corning management estimates5.3
  • 16. Positioned for Growth Great business in a well-structured industry Asphalt shingle market growing 5-8% (over the next3-5 years on non-storm demand) driven by improvingU.S. housing activity Continued improvements in shingle design, cost and mix Confidence in operating margins of mid-teens or better16Strong Business Performance withMarket Growth OpportunitiesSource: Owens Corning management estimates as of Feb 2013
  • 17. 2012 Revenue by End Market*$ (in millions)Q12013Q12012ChangeNet sales* $459 $476 $(17)EBIT $9 $23 $(14)EBIT as % of sales 2% 5% (3)%D&A $32 $30 $217Composites Segment* before inter-segment eliminationsQ1 2013 Highlights Lower production levels and input cost inflationgenerated an unfavorable quarter-over-quartercomparison Planned asset ramp-up complete; expect higherutilization rates throughout remainder of 2013 Full-year 2013 margins expected to exceed 2012-5%0%5%10%15%$0$600$1,200$1,800$2,4002009 2010 2011 2012 LTMFive-Year Financial PerformanceSales* EBIT as % of sales*In millionsInternational62%U.S. & CanadaNew ResidentialConstruction3%U.S. & CanadaResidential Repair& Remodeling9%U.S. & CanadaCommercial& Industrial26%*Owens Corning management estimatesSource: Owens Corning management estimates and Owens Corning SEC filings; comparability may differ over time
  • 18. Glass FiberA $7 Billion Global Market18Construction34%Transportation27%Industrial15%Consumer16%Wind8%Glass reinforcements market defined as glass fiber reinforcements and direct conversion products as consumed, excluding yarnsSource: Owens Corning management estimates as of Feb 2013• Residential• Commercial• Water transportation& storage• Cars• Trucks, buses, trains• Marine• Factories• Mining• Offshore platforms• Appliances• Electronics• RecreationA Key Material Enabling Solutions Essential to Everyday Life
  • 19. -1,0002,0003,0004,0005,0001981 1989 1997 2005Sustained Growth Led by Global Industrial Productionand Material SubstitutionGlass Fiber Market Demand30 Years Averaging 5% CAGR19GlassFiberKTonsGlass fiber market demand excludes E-glass yarnsSources: Fiber economic bureau, Glass Fiber Europe, Global Trade information Services, inc. and Owens Corning management estimates5% Demand Growth Driven by 3% Industrial Production Growth2012
  • 20. 2000.91.11.63.8Wood Steel Aluminum Glass Fiber Carbon FiberGlobal Glass Fiber Growthvs. Other MaterialsMaterials Growth as a Multiple of Change in Industrial ProductionGlobal Market Size(Indexed toGlass Fiber)26 55 12 1 0.15Growth multiples over 1981-2012, except carbon fiber 1990-2012 and wood 1990-2011. Global market sizes estimated in revenue USD as of 2011 for wood, 2012 for others.Source: IHS Global Insight, Owens Corning management estimates, World Steel Association, Food and Agriculture Association of the United Nations, U.S. Geological SurveyGlass Fiber Growing as a Substitute for Traditional Materials
  • 21. -150-100-500501001502002503002006 2007 2008 2009 2010 2011 2012 2013 2014 20151001101201301401501601701801902002006 2007 2008 2009 2010 2011 2012 2013 2014 2015US PPI China PPI (USD basis)Market Trends Favor Owens CorningLow-Cost Global NetworkChange In Chinese CapacityAvailable For Export*China vs. U.S. inflation21* Chinese manufacturers, defined as CPIC, Jushi and Taishan, estimated capacity available for exportSources: IHS Global Insight, Owens Corning management estimates as of Feb 2013Chinese Export Competitiveness ErodingGlassFiberKTons
  • 22. 0%5%10%15%20%25%2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Demand Outside China Served by Manufacturing in China22Source: Fiber Economic Bureau, Glass Fiber Europe, Global Trade Information Services, Inc. and Owens Corning management estimatesManufacturing in China defined as CPIC, Jushi and TaishanIndustry Structure TransformationMarket SupplyChina Exports Have Stabilized After Rapid Growth
  • 23. Owens Corning CompositesPositioned to Win23Sources: Owens Corning management estimatesDefinitions: EMEA: Europe, Middle East, Africa% Market Revenue = market revenue in region as % of global market size% OC Revenue = OC revenue in region as % of OC Composites global 2012 salesGlass reinforcements market defined as glass fiber reinforcements and direct conversion products as consumed, excluding yarns#1 Position31%49%% MarketRevenue% OCRevenueAmericas#1 Position25% 24%% MarketRevenue% OCRevenueEMEAEmerging Position25%7%% MarketRevenue% OCRevenueChina#1 Position20% 17%% MarketRevenue% OCRevenueOther AsiaLeading Market Positions and an Unrivaled Supply NetworkOC glass fiber manufacturing siteOC downstream fabrication site
  • 24. A Winning Business24Owens Corning Composites Global CapacityPercentage of Low Delivered Cost * Assets30%60%75%Mid-2010s20122007*Low delivered cost asset defined as delivered cost in the region at or below best competitive benchmark, glass fiber manufacturingSource: Owens Corning management estimates as of Feb 2013
  • 25. 0.51.1 1.11.70.30.52005-09 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 Capacity25Glass 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
  • 26. ChineseEmergenceCapacityOverbuildMacroAdjustmentExcessInventorySupplyTensionReturn onCapitalGlass Fiber Industry PhasesSigns of a New Era26High Utilization Rates and Reinvestment EconomicsSupport Higher Returns2005 – 2009 2010 – 2012 2013 – 2016
  • 27. Owens Corning CompositesA Winning Business Global megatrends, continued growth in industrial production, andongoing material substitution support glass fiber market growth at a 5-7% CAGR Proliferating proven low delivered cost model to further improvecompetitive position Glass fiber reinvestment economics in China are changing, as costsincrease, currency appreciates, and furnaces require rebuilding Composites materials remain a great value vs. other materials Our focus is on offsetting inflation and returning margins to levels thatsupport investment27Source: Owens Corning management estimates as of Feb 2013Low delivered cost asset defined as delivered cost in the region at or below best competitive benchmark, glass fiber manufacturingBusiness Growing in an Attractive Market
  • 28. Sustaining a Strong Balance Sheet Maintaining investment-grade financial strength is a pillar ofOwens Corning’s strategy Earned investment-grade credit ratings from Standard & Poors and Fitch $800 million revolving credit facility maturing in 2016 $250 million accounts receivable facility, which matures in 2014 $1.8 billion senior notes outstanding with 2016, 2019, 2022 and2036 maturities Sustaining ample liquidity to support growth Capital markets remain open to Owens Corning28
  • 29. Tax Position is a Significant Asset Benefit from $2.3 billion NOL with estimated present valueof approximately $5 per share Expect long-term book tax rate of 25% to 28% basedon geographic mix of earnings and tax planning Cash tax rate approximately 10% to 12% over the next few years29Source: Owens Corning management estimates as of Feb 2013
  • 30. Disciplined Capital Allocation Strategy Drive shareholder returns by enabling organic growthand supporting the balance sheet Maintain capital allocation strategy– Current debt level is appropriate– Pursuing attractive organic investment opportunities– Seeking acquisitions that add value to shareholders– Share buy-back: 10 million shares available for repurchase as ofMarch 31, 2013 Continue to consider a dividend when U.S. housing recovers andInsulation returns to profitability30
  • 31. Key Financial Data31($ in millions, except per share data) Q1 2013 Q1 2012Net sales $1,350 $1,346Net earnings (loss) attributable to Owens Corning $22 $(46)Diluted earnings (loss) per share attributable to Owens Corning commonstockholders$0.18 $(0.38)Earnings (loss) before interest and taxes (EBIT) $57 $(12)Adjusted EBIT $77 $43Adjusted Earnings $35 $11Adjusted EPS (diluted) $0.29 $0.09Adjusted EBIT as a % of sales 6% 3%Marketing and administrative expenses $133 $137Depreciation and amortization $78 $89Cash flow used for operating activities $179 $193Total debt, net of cash $2,253 $2,170
  • 32. 2013 Corporate Environment & Guidance32Macro Environment U.S. housing starts generally forecasted in the range of 900,000-1,000,000 Moderate global industrial production growth driving below-trend growth in glass fiber marketPrimary Guidance Expect adjusted EBIT to grow at least $100MMwith potential upside Expect margin performance improvement ineach business Pace of U.S. housing recovery and its impacton Building Materials margins will likelydetermine upside to guidance Corporate expenses of about $120MM Capital expenditures around $380MM,including Kearny roofing plant rebuild Depreciation & amortization about $315MM Cash tax rate of 10-12% and book tax rate of25-28% on adjusted pre-tax earningsSource: Owens Corning management estimates as of Apr 2013Other Guidance Items
  • 33. 2013 Business Environment & Guidance33Roofing Insulation Composites2013 margins to exceed 2012 Return to profitability 2013 margins to exceed 2012 Lower winterincentives,announced priceincreases Growth in U.S.residential newconstruction Growth potentialin re-roofing Storm compsvs. last year Growth in U.S.residential newconstruction Asset capacityutilization totighten in 2013 Improved pricing Current pricessignificantlybelowhistoricalaverage Higher capacityutilization andbenefit of assettransformation Global marketgrowth Growth in U.S.residential newconstructionFinancial GuidanceSource: IHS Global Insights, Moody’s and Owens Corning management estimates as of Apr 2013 First-quarterasset ramp up Nominal pricesflat withcontinuedinflation Uncertain paceof recovery inEurope, Braziland India