Company Grew Net Sales by 14% to $1.8 Billion;
Pricing Momentum Expected to Drive Strong Second-Half Performance
Improvement,
Resulting in an Adjusted EBIT Outlook of $925 Million to $975 Million
for 2018
-
Insulation grew EBIT by $20 million, despite manufacturing
productivity headwinds
-
Roofing produced 19% EBIT margins on strong sequential price
improvement
-
Composites declined to $71 million of EBIT on higher manufacturing
costs
-
Full-year outlook continues to reflect strong free cash flow conversion
TOLEDO, Ohio--(BUSINESS WIRE)--
Owens Corning (NYSE: OC) today reported consolidated net sales of $1.8
billion in second-quarter 2018, compared with net sales of $1.6 billion
in second-quarter 2017, an increase of 14%.
Second-quarter 2018 net earnings attributable to Owens Corning were $121
million, or $1.08 per diluted share, compared with $96 million, or $0.85
per diluted share, during the comparable quarter in 2017. For first-half
2018, net earnings were $213 million, compared with $197 million in
first-half 2017. Second-quarter 2018 adjusted earnings were $131
million, or $1.17 per diluted share, compared with $135 million, or
$1.19 per diluted share, during the same period one year ago. For
first-half 2018, adjusted earnings were $221 million, or $1.97 per
diluted share, compared with $232 million, or $2.04 per diluted share,
in first-half 2017 (See Use of Non-GAAP Measures, See Table 3).
“Owens Corning grew revenue by 14% on the contribution of Insulation
acquisitions and successful pricing actions in both Roofing and
Insulation. The company made significant commercial progress in the
first-half of the year, partially offset by operational headwinds,” said
Chairman and Chief Executive Officer Mike Thaman. “In the second-half,
we expect continued commercial execution and improved operational
performance. We expect strong financial results for 2018 with momentum
heading into 2019.”
Consolidated Second-Quarter 2018 Results
-
In the second quarter, Owens Corning experienced a recordable incident
rate of 0.56, compared with 0.48 in second-quarter 2017. Although
increased for the comparative quarter, the company continues to
perform at a high level of safety with year-to-date performance
consistent with 2017.
-
Reported earnings before interest and taxes (EBIT) for second-quarter
2018 were $206 million, compared with $190 million during the same
period in 2017. Adjusted EBIT in second-quarter 2018 was $214 million,
compared with $230 million in 2017 (See Table 2).
-
During second-quarter 2018, Owens Corning repurchased 252,000 shares
of its common stock for $20 million. As of the end of the quarter, 6.2
million shares were available for repurchase under the current
authorization.
Other Significant Matters
-
On June 20, 2018, the Board of Directors declared a quarterly cash
dividend of $0.21 per common share. The dividend will be payable on
August 2, 2018, to shareholders of record as of July 17, 2018.
2018 Outlook
-
The company continues to expect an environment consistent with
consensus expectations for U.S. housing starts and global industrial
production growth.
-
In Insulation, the company expects to deliver EBIT growth of
approximately $150 million. First-half EBIT improved $47 million
versus the prior year. The second-half EBIT improvement compared with
the prior year is expected to accelerate to over $100 million based on
a larger pricing benefit, stronger manufacturing performance and a
continued contribution from acquisitions.
-
In Roofing, the company expects the overall U.S. asphalt shingle
market to be down mid-single digits on lower storm demand. The
company’s shingle volumes trailed the market in the quarter and the
first-half. During these periods, the U.S. asphalt shingle market
experienced high growth in the U.S. Eastern seaboard, where the
company has a lower than average market position. The company
estimates that approximately 50% of the first-half volume decline was
attributable to geographic mix with the remainder associated with
timing of shipments. Geographic mix is expected to affect full-year
volumes. Pricing performance continues to be strong and the company
expects to offset the impact of persistent asphalt and transportation
inflation.
-
In Composites, the company expects continued growth in the glass fiber
market, driven by global industrial production growth. The company now
expects EBIT to be slightly below the prior year as a result of higher
manufacturing costs, a slightly lower volume outlook, and higher than
anticipated inflation.
-
The company estimates an effective tax rate of 26% to 28%, and a cash
tax rate of 10% to 12% on adjusted pre-tax earnings, due to the
company’s U.S. tax net operating loss and foreign tax credit
carryforwards.
-
The company has improved its outlook for general corporate expenses to
be between $135 million and $140 million in 2018. Capital additions in
2018 are expected to total approximately $500 million. Interest
expense is expected to be between $125 million and $130 million.
-
In 2018, the company expects to convert adjusted earnings into free
cash flow at about 100%.
-
The company expects the price momentum generated in the first-half to
drive substantial earnings growth in the second-half, resulting in a
full-year adjusted EBIT outlook of $925 million to $975 million.
Next Earnings Announcement
Third-quarter 2018 results will be announced on Wednesday, October 24,
2018.
Second-Quarter 2018 Conference Call and
Presentation
Wednesday, July 25, 2018
11 a.m. Eastern Daylight Time
All Callers
Live dial-in telephone number: U.S. 1.888.317.6003; Canada
1.866.284.3684; and other international +1.412.317.6061.
Entry
number: 997-7439 (Please dial in 10-15 minutes before conference call
start time)
Live webcast: https://services.choruscall.com/links/oc180725.html
Telephone and Webcast Replay
Telephone replay will be available one hour after the end of the call
through August 1, 2018. In the U.S., call 1.877.344.7529. In Canada,
call 1.855.669.9658. In other international locations, call
+1.412.317.0088.
Conference replay number: 101-21-549
Replay
available at https://services.choruscall.com/links/oc180725.html
Webcast replay available until July 25, 2019.
About Owens Corning
Owens Corning (NYSE: OC) develops, manufactures, and markets insulation,
roofing, and fiberglass composites. Global in scope and human in scale,
the company’s market-leading businesses use their deep expertise in
materials, manufacturing and building science to develop products and
systems that save energy and improve comfort in commercial and
residential buildings. Through its glass reinforcements business, the
company makes thousands of products lighter, stronger and more durable.
Ultimately, Owens Corning people and products make the world a better
place. Based in Toledo, Ohio, Owens Corning posted 2017 sales of $6.4
billion and employs 19,000 people in 37 countries. It has been a Fortune
500® company for 63 consecutive years. For more information,
please visit www.owenscorning.com.
Use of Non-GAAP Measures
Owens Corning uses non-GAAP measures in its earnings press release that
are intended to supplement investors’ understanding of the company’s
financial information. These non-GAAP measures include EBIT, adjusted
EBIT, adjusted earnings, adjusted diluted earnings per share
attributable to Owens Corning common stockholders (“adjusted EPS”),
adjusted pre-tax earnings, free cash flow and free cash flow conversion.
When used to report historical financial information, reconciliations of
these non-GAAP measures to the corresponding GAAP measures are included
in the financial tables of this press release. Specifically see Table 2
for EBIT and adjusted EBIT, Table 3 for adjusted earnings and adjusted
EPS, and Table 8 for free cash flow.
For purposes of internal review of Owens Corning’s year-over-year
operational performance, management excludes from net earnings
attributable to Owens Corning certain items it believes are not
representative of ongoing operations. The non-GAAP financial measures
resulting from these adjustments (including adjusted EBIT, adjusted
earnings, adjusted EPS and adjusted pre-tax earnings) are used
internally by Owens Corning for various purposes, including reporting
results of operations to the Board of Directors, analysis of
performance, and related employee compensation measures. Management
believes that these adjustments result in a measure that provides a
useful representation of its operational performance; however, the
adjusted measures should not be considered in isolation or as a
substitute for net earnings attributable to Owens Corning as prepared in
accordance with GAAP.
Free cash flow is a non-GAAP liquidity measure used by investors,
financial analysts and management to help evaluate the company's ability
to generate cash to pursue opportunities that enhance shareholder value.
Free cash flow is not a measure of residual cash flow available for
discretionary expenditures due to the company’s mandatory debt service
requirements. As a conversion ratio, free cash flow is compared to
adjusted earnings. Free cash flow and free cash flow conversion are used
internally by the company for various purposes, including reporting
results of operations to the Board of Directors of the company and
analysis of performance. Management believes that these measures provide
a useful representation of our operational performance and liquidity;
however, the measures should not be considered in isolation or as a
substitute for net cash flow provided by operating activities or net
earnings attributable to Owens Corning as prepared in accordance with
GAAP.
When the company provides forward-looking expectations for non-GAAP
measures, the most comparable GAAP measures and a reconciliation between
the non-GAAP expectations and the corresponding GAAP measures are
generally not available without unreasonable effort due to the
variability, complexity and limited visibility of the adjusting items
that would be excluded from the non-GAAP measures in future periods. The
variability in timing and amount of adjusting items could have
significant and unpredictable effect on our future GAAP results.
Forward-Looking Statements
This news release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. These forward-looking statements
are subject to risks, uncertainties and other factors and actual results
may differ materially from those results projected in the statements.
These risks, uncertainties and other factors include, without
limitation: relationships with key customers; levels of residential and
commercial construction activity; competitive and pricing factors;
levels of global industrial production; demand for our products;
industry and economic conditions that affect the market and operating
conditions of our customers, suppliers or lenders; domestic and
international economic and political conditions, including new
legislation, policies or other governmental actions in the U.S. or
elsewhere; changes to tariff, trade or investment policies or laws; the
impact of recent tax reform legislation and related actions,
interpretations, and regulatory guidance on our financial condition and
results of operations (including the assumptions we make related
thereto); foreign exchange and commodity price fluctuations, our level
of indebtedness; weather conditions; availability and cost of credit;
availability and cost of energy and raw materials; issues involving
implementation and protection of information technology systems; labor
disputes; legal and regulatory proceedings, including litigation and
environmental actions; our ability to utilize net operating loss
carry-forwards; research and development activities and intellectual
property protection; interest rate movements; uninsured losses; issues
related to acquisitions, divestitures and joint ventures; achievement of
expected synergies, cost reductions and/or productivity improvements;
defined benefit plan funding obligations; price volatility in certain
wind energy markets in the U.S.; and factors detailed from time to time
in the company’s Securities and Exchange Commission filings. The
information in this news release speaks as of July 25, 2018, and is
subject to change. The company does not undertake any duty to update or
revise forward-looking statements except as required by federal
securities laws. Any distribution of this news release after that date
is not intended and should not be construed as updating or confirming
such information.
Owens Corning Investor Relations News
|
|
|
|
|
|
Table 1
|
|
Owens Corning and Subsidiaries
|
|
Consolidated Statements of Earnings
|
|
(unaudited)
|
|
(in millions, except per share amounts)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
NET SALES
|
|
$
|
1,824
|
|
|
$
|
1,597
|
|
|
$
|
3,515
|
|
|
$
|
3,075
|
|
COST OF SALES
|
|
1,406
|
|
|
1,189
|
|
|
2,742
|
|
|
2,325
|
|
Gross margin
|
|
418
|
|
|
408
|
|
|
773
|
|
|
750
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
Marketing and administrative expenses
|
|
187
|
|
|
155
|
|
|
372
|
|
|
297
|
|
Science and technology expenses
|
|
22
|
|
|
21
|
|
|
45
|
|
|
42
|
|
Other expenses, net
|
|
6
|
|
|
13
|
|
|
26
|
|
|
24
|
|
Total operating expenses
|
|
215
|
|
|
189
|
|
|
443
|
|
|
363
|
|
OPERATING INCOME
|
|
203
|
|
|
219
|
|
|
330
|
|
|
387
|
|
Non-operating (income) expense
|
|
(3
|
)
|
|
29
|
|
|
(7
|
)
|
|
27
|
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
206
|
|
|
190
|
|
|
337
|
|
|
360
|
|
Interest expense, net
|
|
33
|
|
|
27
|
|
|
61
|
|
|
53
|
|
EARNINGS BEFORE TAXES
|
|
173
|
|
|
163
|
|
|
276
|
|
|
307
|
|
Income tax expense
|
|
49
|
|
|
67
|
|
|
60
|
|
|
110
|
|
Equity in net loss of affiliates
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
NET EARNINGS
|
|
122
|
|
|
96
|
|
|
214
|
|
|
197
|
|
Net earnings attributable to noncontrolling interests
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
NET EARNINGS ATTRIBUTABLE TO OWENS CORNING
|
|
$
|
121
|
|
|
$
|
96
|
|
|
$
|
213
|
|
|
$
|
197
|
|
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO OWENS CORNING COMMON
STOCKHOLDERS
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.09
|
|
|
$
|
0.86
|
|
|
$
|
1.92
|
|
|
$
|
1.76
|
|
Diluted
|
|
$
|
1.08
|
|
|
$
|
0.85
|
|
|
$
|
1.90
|
|
|
$
|
1.74
|
|
Dividend
|
|
$
|
0.21
|
|
|
$
|
0.20
|
|
|
$
|
0.42
|
|
|
$
|
0.40
|
|
WEIGHTED AVERAGE COMMON SHARES
|
|
|
|
|
|
|
|
|
|
Basic
|
|
110.9
|
|
|
111.6
|
|
|
111.2
|
|
|
112.0
|
|
Diluted
|
|
111.9
|
|
|
113.1
|
|
|
112.2
|
|
|
113.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 2
|
|
Owens Corning and Subsidiaries
|
|
EBIT Reconciliation Schedules
|
|
(unaudited)
|
|
|
|
Adjusting income (expense) items to EBIT are shown in the table
below (in millions):
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Restructuring costs
|
|
$
|
(7
|
)
|
|
$
|
(29
|
)
|
|
$
|
(12
|
)
|
|
$
|
(29
|
)
|
|
Acquisition-related costs
|
|
(1
|
)
|
|
(10
|
)
|
|
(15
|
)
|
|
(11
|
)
|
|
Recognition of acquisition inventory fair value step-up
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
Litigation settlement gain, net of legal fees
|
|
—
|
|
|
29
|
|
|
—
|
|
|
29
|
|
|
Pension settlement losses
|
|
—
|
|
|
(30
|
)
|
|
—
|
|
|
(30
|
)
|
|
Total adjusting items
|
|
$
|
(8
|
)
|
|
$
|
(40
|
)
|
|
$
|
(29
|
)
|
|
$
|
(41
|
)
|
|
|
|
The reconciliation from Net earnings attributable to Owens Corning
to EBIT and Adjusted EBIT is shown in the table below (in millions):
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
NET EARNINGS ATTRIBUTABLE TO OWENS CORNING
|
|
$
|
121
|
|
|
$
|
96
|
|
|
$
|
213
|
|
|
$
|
197
|
|
|
Net earnings attributable to noncontrolling interests
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
NET EARNINGS
|
|
122
|
|
|
96
|
|
|
214
|
|
|
197
|
|
|
Equity in net loss of affiliates
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
Income tax expense
|
|
49
|
|
|
67
|
|
|
60
|
|
|
110
|
|
|
EARNINGS BEFORE TAXES
|
|
173
|
|
|
163
|
|
|
276
|
|
|
307
|
|
|
Interest expense, net
|
|
33
|
|
|
27
|
|
|
61
|
|
|
53
|
|
|
EARNINGS BEFORE INTEREST AND TAXES
|
|
206
|
|
|
190
|
|
|
337
|
|
|
360
|
|
|
Adjusting items from above
|
|
(8
|
)
|
|
(40
|
)
|
|
(29
|
)
|
|
(41
|
)
|
|
ADJUSTED EBIT
|
|
$
|
214
|
|
|
$
|
230
|
|
|
$
|
366
|
|
|
$
|
401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 3
|
|
Owens Corning and Subsidiaries
|
|
EPS Reconciliation Schedules
|
|
(unaudited)
|
|
(in millions, except per share data)
|
|
|
|
A reconciliation from Net earnings attributable to Owens Corning
to adjusted earnings and a reconciliation from diluted earnings
per share to adjusted diluted earnings per share are shown in the
tables below:
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
RECONCILIATION TO ADJUSTED EARNINGS
|
|
|
|
|
|
|
|
|
|
NET EARNINGS ATTRIBUTABLE TO OWENS CORNING
|
|
$
|
121
|
|
|
$
|
96
|
|
|
$
|
213
|
|
|
$
|
197
|
|
|
Adjustment to remove adjusting items (a)
|
|
8
|
|
|
40
|
|
|
29
|
|
|
41
|
|
|
Adjustment to remove tax benefit on adjusting items (b)
|
|
(1
|
)
|
|
(9
|
)
|
|
(8
|
)
|
|
(9
|
)
|
|
Adjustment to tax expense to reflect pro forma tax rate (c)
|
|
3
|
|
|
8
|
|
|
(13
|
)
|
|
3
|
|
|
ADJUSTED EARNINGS
|
|
$
|
131
|
|
|
$
|
135
|
|
|
$
|
221
|
|
|
$
|
232
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION TO ADJUSTED DILUTED EARNINGS PER SHARE
ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS
|
|
|
|
|
|
|
|
|
|
DILUTED EARNINGS PER COMMON SHARE ATTRIBUTABLE TO OWENS CORNING
COMMON STOCKHOLDERS
|
|
$
|
1.08
|
|
|
$
|
0.85
|
|
|
$
|
1.90
|
|
|
$
|
1.74
|
|
|
Adjustment to remove adjusting items (a)
|
|
0.07
|
|
|
0.35
|
|
|
0.26
|
|
|
0.36
|
|
|
Adjustment to remove tax benefit on adjusting items (b)
|
|
(0.01
|
)
|
|
(0.08
|
)
|
|
(0.07
|
)
|
|
(0.08
|
)
|
|
Adjustment to tax expense to reflect pro forma tax rate (c)
|
|
0.03
|
|
|
0.07
|
|
|
(0.12
|
)
|
|
0.02
|
|
|
ADJUSTED DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO OWENS CORNING
COMMON STOCKHOLDERS
|
|
$
|
1.17
|
|
|
$
|
1.19
|
|
|
$
|
1.97
|
|
|
$
|
2.04
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION TO DILUTED SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
|
Weighted-average number of shares outstanding used for basic
earnings per share
|
|
110.9
|
|
|
111.6
|
|
|
111.2
|
|
|
112.0
|
|
|
Non-vested restricted and performance shares
|
|
0.8
|
|
|
1.2
|
|
|
0.8
|
|
|
1.2
|
|
|
Options to purchase common stock
|
|
0.2
|
|
|
0.3
|
|
|
0.2
|
|
|
0.3
|
|
|
Weighted-average number of shares outstanding and common equivalent
shares used for diluted earnings per share
|
|
111.9
|
|
|
113.1
|
|
|
112.2
|
|
|
113.5
|
|
|
(a)
|
|
Please refer to Table 2 "EBIT Reconciliation Schedules" for
additional information on adjusting items.
|
|
(b)
|
|
The tax impact of adjusting items is based on our expected tax
accounting treatment and rate for the jurisdiction of each adjusting
item.
|
|
(c)
|
|
To compute adjusted earnings, we apply a full year pro forma
effective tax rate to each quarter presented. For 2018, we have used
a full year pro forma effective tax rate of 27%, which is the
mid-point of our 2018 effective tax rate guidance of 26% to 28%. For
comparability, in 2017, we have used an effective tax rate of 33%,
which was our 2017 effective tax rate excluding the impact of our
fourth quarter 2017 net charge related to the U.S. Tax Cuts and Jobs
Act of 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 4
|
|
Owens Corning and Subsidiaries
|
|
Consolidated Balance Sheets
|
|
(unaudited)
|
|
(in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
December 31,
|
|
ASSETS
|
|
|
|
|
|
|
2018
|
|
|
|
|
2017
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
$
|
149
|
|
|
|
|
|
$
|
246
|
|
|
Receivables, less allowances of $19 at June 30, 2018 and $19 at
December 31, 2017
|
|
|
|
|
|
|
948
|
|
|
|
|
|
806
|
|
|
Inventories
|
|
|
|
|
|
|
984
|
|
|
|
|
|
841
|
|
|
Assets held for sale
|
|
|
|
|
|
|
5
|
|
|
|
|
|
12
|
|
|
Other current assets
|
|
|
|
|
|
|
114
|
|
|
|
|
|
80
|
|
|
Total current assets
|
|
|
|
|
|
|
2,200
|
|
|
|
|
|
1,985
|
|
|
Property, plant and equipment, net
|
|
|
|
|
|
|
3,722
|
|
|
|
|
|
3,425
|
|
|
Goodwill
|
|
|
|
|
|
|
1,968
|
|
|
|
|
|
1,507
|
|
|
Intangible assets, net
|
|
|
|
|
|
|
1,811
|
|
|
|
|
|
1,360
|
|
|
Deferred income taxes
|
|
|
|
|
|
|
115
|
|
|
|
|
|
144
|
|
|
Other non-current assets
|
|
|
|
|
|
|
234
|
|
|
|
|
|
211
|
|
|
TOTAL ASSETS
|
|
|
|
|
|
|
$
|
10,050
|
|
|
|
|
|
$
|
8,632
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
|
|
|
|
$
|
1,376
|
|
|
|
|
|
$
|
1,277
|
|
|
Short-term debt
|
|
|
|
|
|
|
1
|
|
|
|
|
|
1
|
|
|
Long-term debt – current portion
|
|
|
|
|
|
|
4
|
|
|
|
|
|
4
|
|
|
Total current liabilities
|
|
|
|
|
|
|
1,381
|
|
|
|
|
|
1,282
|
|
|
Long-term debt, net of current portion
|
|
|
|
|
|
|
3,636
|
|
|
|
|
|
2,405
|
|
|
Pension plan liability
|
|
|
|
|
|
|
249
|
|
|
|
|
|
256
|
|
|
Other employee benefits liability
|
|
|
|
|
|
|
219
|
|
|
|
|
|
225
|
|
|
Deferred income taxes
|
|
|
|
|
|
|
127
|
|
|
|
|
|
37
|
|
|
Other liabilities
|
|
|
|
|
|
|
271
|
|
|
|
|
|
223
|
|
|
OWENS CORNING STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, par value $0.01 per share (a)
|
|
|
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
Common stock, par value $0.01 per share (b)
|
|
|
|
|
|
|
1
|
|
|
|
|
|
1
|
|
|
Additional paid in capital
|
|
|
|
|
|
|
4,009
|
|
|
|
|
|
4,011
|
|
|
Accumulated earnings
|
|
|
|
|
|
|
1,729
|
|
|
|
|
|
1,575
|
|
|
Accumulated other comprehensive deficit
|
|
|
|
|
|
|
(600
|
)
|
|
|
|
|
(514
|
)
|
|
Cost of common stock in treasury (c)
|
|
|
|
|
|
|
(1,013
|
)
|
|
|
|
|
(911
|
)
|
|
Total Owens Corning stockholders’ equity
|
|
|
|
|
|
|
4,126
|
|
|
|
|
|
4,162
|
|
|
Noncontrolling interests
|
|
|
|
|
|
|
41
|
|
|
|
|
|
42
|
|
|
Total equity
|
|
|
|
|
|
|
4,167
|
|
|
|
|
|
4,204
|
|
|
TOTAL LIABILITIES AND EQUITY
|
|
|
|
|
|
|
$
|
10,050
|
|
|
|
|
|
$
|
8,632
|
|
|
(a)
|
|
10 shares authorized; none issued or outstanding at June 30, 2018,
and December 31, 2017
|
|
(b)
|
|
400 shares authorized; 135.5 issued and 110.9 outstanding at June
30, 2018; 135.5 issued and 111.5 outstanding at December 31, 2017
|
|
(c)
|
|
24.6 shares at June 30, 2018, and 24.0 shares at December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 5
|
|
Owens Corning and Subsidiaries
|
|
Consolidated Statements of Cash Flows
|
|
(unaudited)
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
|
|
|
|
|
2017
|
|
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
|
|
|
|
|
|
|
|
|
$
|
214
|
|
|
|
|
|
|
|
|
$
|
197
|
|
|
Adjustments to reconcile net earnings to cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
216
|
|
|
|
|
|
|
|
|
168
|
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
|
|
|
33
|
|
|
|
|
|
|
|
|
73
|
|
|
Provision for pension and other employee benefits liabilities
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
35
|
|
|
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
|
|
22
|
|
|
|
|
|
|
|
|
20
|
|
|
Other non-cash
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
6
|
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
(159
|
)
|
|
|
|
|
|
|
|
(74
|
)
|
|
Pension fund contributions
|
|
|
|
|
|
|
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
(16
|
)
|
|
Payments for other employee benefits liabilities
|
|
|
|
|
|
|
|
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
(9
|
)
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
(8
|
)
|
|
Net cash flow provided by operating activities
|
|
|
|
|
|
|
|
|
|
|
306
|
|
|
|
|
|
|
|
|
392
|
|
|
NET CASH FLOW USED FOR INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for property, plant and equipment
|
|
|
|
|
|
|
|
|
|
|
(304
|
)
|
|
|
|
|
|
|
|
(170
|
)
|
|
Proceeds from the sale of assets or affiliates
|
|
|
|
|
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
3
|
|
|
Investment in subsidiaries and affiliates, net of cash acquired
|
|
|
|
|
|
|
|
|
|
|
(1,143
|
)
|
|
|
|
|
|
|
|
(561
|
)
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
3
|
|
|
Net cash flow used for investing activities
|
|
|
|
|
|
|
|
|
|
|
(1,430
|
)
|
|
|
|
|
|
|
|
(725
|
)
|
|
NET CASH FLOW PROVIDED BY FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term debt
|
|
|
|
|
|
|
|
|
|
|
389
|
|
|
|
|
|
|
|
|
588
|
|
|
Proceeds from senior revolving credit and receivables securitization
facilities
|
|
|
|
|
|
|
|
|
|
|
958
|
|
|
|
|
|
|
|
|
337
|
|
|
Payments on senior revolving credit and receivables securitization
facilities
|
|
|
|
|
|
|
|
|
|
|
(700
|
)
|
|
|
|
|
|
|
|
(337
|
)
|
|
Proceeds from term loan borrowing
|
|
|
|
|
|
|
|
|
|
|
600
|
|
|
|
|
|
|
|
|
—
|
|
|
Payments on term loan borrowing
|
|
|
|
|
|
|
|
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
—
|
|
|
Dividends paid
|
|
|
|
|
|
|
|
|
|
|
(46
|
)
|
|
|
|
|
|
|
|
(45
|
)
|
|
Purchases of treasury stock
|
|
|
|
|
|
|
|
|
|
|
(136
|
)
|
|
|
|
|
|
|
|
(134
|
)
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
3
|
|
|
Net cash flow provided by financing activities
|
|
|
|
|
|
|
|
|
|
|
1,051
|
|
|
|
|
|
|
|
|
412
|
|
|
Effect of exchange rate changes on cash
|
|
|
|
|
|
|
|
|
|
|
(24
|
)
|
|
|
|
|
|
|
|
9
|
|
|
Net (decrease) increase in cash, cash equivalents and restricted cash
|
|
|
|
|
|
|
|
|
|
|
(97
|
)
|
|
|
|
|
|
|
|
88
|
|
|
Cash, cash equivalents and restricted cash at beginning of period
|
|
|
|
|
|
|
|
|
|
|
253
|
|
|
|
|
|
|
|
|
118
|
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD
|
|
|
|
|
|
|
|
|
|
|
$
|
156
|
|
|
|
|
|
|
|
|
$
|
206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 6
|
|
Owens Corning and Subsidiaries
|
|
Segment Information
|
|
(unaudited)
|
|
|
|
|
|
|
Composites
|
|
The table below provides a summary of net sales, EBIT and
depreciation and amortization expense for the Composite segment
(in millions):
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Net sales
|
|
$
|
541
|
|
|
$
|
537
|
|
|
$
|
1,052
|
|
|
$
|
1,048
|
|
|
% change from prior year
|
|
1
|
%
|
|
4
|
%
|
|
—
|
%
|
|
6
|
%
|
|
EBIT
|
|
$
|
71
|
|
|
$
|
84
|
|
|
$
|
131
|
|
|
$
|
155
|
|
|
EBIT as a % of net sales
|
|
13
|
%
|
|
16
|
%
|
|
12
|
%
|
|
15
|
%
|
|
Depreciation and amortization expense
|
|
$
|
36
|
|
|
$
|
35
|
|
|
$
|
73
|
|
|
$
|
71
|
|
|
|
|
Insulation
|
|
The table below provides a summary of net sales, EBIT and
depreciation and amortization expense for the Insulation segment
(in millions):
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
682
|
|
|
$
|
439
|
|
|
$
|
1,278
|
|
|
$
|
838
|
|
|
% change from prior year
|
|
55
|
%
|
|
6
|
%
|
|
53
|
%
|
|
5
|
%
|
|
EBIT
|
|
$
|
49
|
|
|
$
|
29
|
|
|
$
|
81
|
|
|
$
|
34
|
|
|
EBIT as a % of net sales
|
|
7
|
%
|
|
7
|
%
|
|
6
|
%
|
|
4
|
%
|
|
Depreciation and amortization expense
|
|
$
|
46
|
|
|
$
|
27
|
|
|
$
|
91
|
|
|
$
|
53
|
|
|
|
|
Roofing
|
|
The table below provides a summary of net sales, EBIT and
depreciation and amortization expense for the Roofing segment (in
millions):
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
659
|
|
|
$
|
684
|
|
|
$
|
1,301
|
|
|
$
|
1,311
|
|
|
% change from prior year
|
|
-4
|
%
|
|
1
|
%
|
|
-1
|
%
|
|
18
|
%
|
|
EBIT
|
|
$
|
127
|
|
|
$
|
155
|
|
|
$
|
224
|
|
|
$
|
280
|
|
|
EBIT as a % of net sales
|
|
19
|
%
|
|
23
|
%
|
|
17
|
%
|
|
21
|
%
|
|
Depreciation and amortization expense
|
|
$
|
13
|
|
|
$
|
12
|
|
|
$
|
25
|
|
|
$
|
24
|
|
|
|
|
|
|
|
Table 7
|
|
Owens Corning and Subsidiaries
|
|
Corporate, Other and Eliminations
|
|
(unaudited)
|
|
|
|
Corporate, Other and Eliminations
|
|
The table below provides a summary of EBIT and depreciation and
amortization expense for the Corporate, Other and Eliminations
category (in millions):
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Restructuring costs
|
|
$
|
(7
|
)
|
|
$
|
(29
|
)
|
|
$
|
(12
|
)
|
|
$
|
(29
|
)
|
|
Acquisition-related costs
|
|
(1
|
)
|
|
(10
|
)
|
|
(15
|
)
|
|
(11
|
)
|
|
Recognition of acquisition inventory fair value step-up
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
Litigation settlement gain, net of legal fees
|
|
—
|
|
|
29
|
|
|
—
|
|
|
29
|
|
|
Pension settlement losses
|
|
—
|
|
|
(30
|
)
|
|
—
|
|
|
(30
|
)
|
|
General corporate expense and other
|
|
(33
|
)
|
|
(38
|
)
|
|
(70
|
)
|
|
(68
|
)
|
|
EBIT
|
|
$
|
(41
|
)
|
|
$
|
(78
|
)
|
|
$
|
(99
|
)
|
|
$
|
(109
|
)
|
|
Depreciation and amortization
|
|
$
|
12
|
|
|
$
|
10
|
|
|
$
|
27
|
|
|
$
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 8
|
|
Owens Corning and Subsidiaries
|
|
Free Cash Flow Reconciliation Schedule
|
|
(unaudited)
|
|
|
|
The reconciliation from net cash flow provided by operating
activities to free cash flow is shown in the table below (in
millions):
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES
|
|
$
|
396
|
|
|
$
|
385
|
|
|
$
|
306
|
|
|
$
|
392
|
|
|
Less: Cash paid for property, plant and equipment
|
|
(203
|
)
|
|
(103
|
)
|
|
(304
|
)
|
|
(170
|
)
|
|
FREE CASH FLOW
|
|
$
|
193
|
|
|
$
|
282
|
|
|
$
|
2
|
|
|
$
|
222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com:
https://www.businesswire.com/news/home/20180725005135/en/
Owens Corning
Media Inquiries:
Chuck Hartlage,
419-248-5395
or
Investor Inquiries:
Thierry Denis,
419-248-5748
Source: Owens Corning