News Release

Media Contact

Katie Merx

Corporate Media Relations

419-248-6496

katie.merx@owenscorning.com

Media Contact

Katie Merx

Corporate Media Relations

419-248-6496

katie.merx@owenscorning.com

Owens Corning Reports First-Quarter 2012 Results

First Quarter in Line with Company's Expectations; On Target for Adjusted EBIT Growth in 2012

-- Improvement in U.S. Housing Market and Global Industrial Production Growth Supported Volume Gains in all Three Businesses

-- Repositioning of European Composites Assets on Track

-- Board of Directors Authorized New Share Repurchase Program for up to 10 Million Shares

Wednesday, April 25, 2012 7:28 am EDT
"Owens Corning delivered results in line with our expectations for the quarter"

Owens Corning (NYSE: OC) today reported that consolidated net sales increased 9 percent to $1.35 billion in the first quarter of 2012, compared with $1.24 billion in the same period last year.

First-quarter 2012 adjusted earnings, based on the company's expected full-year effective tax rate of 25 percent, were $11 million, or $0.09 per diluted share, compared with $27 million, or $0.22 per diluted share, during the same period last year. The company reported a net loss of $46 million, or $0.38 per diluted share, compared with net earnings of $24 million, or $0.19 per diluted share, in the first quarter of 2011. (See Tables 1, 2 and 3 for a discussion and reconciliation of these items.)

"Owens Corning delivered results in line with our expectations for the quarter," said Chairman and Chief Executive Officer Mike Thaman. "We continue to be confident that we will grow adjusted EBIT in 2012.

"As compared to last year, Roofing volumes grew significantly, but margins were compressed due to asphalt cost inflation," Thaman said. "We expect another year of strong financial performance in Roofing based on our current outlook for volumes and pricing."

Consolidated First-Quarter 2012 Results

  • Owens Corning's primary safety metric improved by 23 percent over the company's full-year 2011 performance.
  • First-quarter adjusted earnings before interest and taxes (EBIT) were $43 million in 2012 compared with EBIT of $61 million in the first quarter of 2011. In the first quarter of 2012, the company had certain items that were not the result of current operations. Before adjusting for these items, Owens Corning's first-quarter 2012 EBIT was a loss of $12 million. (See Table 2 for a reconciliation of these items.)
  • Volume growth in all three businesses drove nine-percent revenue improvement in the first quarter of 2012 over the same period last year.

2012 Repurchase Program

Owens Corning today announced that its Board of Directors has authorized the company to repurchase up to 10 million additional shares of Owens Corning's outstanding common stock. Under a previously announced share repurchase program, 3.7 million shares continue to be available for repurchase.

Outlook

Although there continues to be uncertainty in the macro-economic outlook, Owens Corning expects to grow adjusted EBIT in 2012 based on an improving U.S. housing market and continued growth in global industrial production.

Despite weakness in the European glass fiber reinforcements market, the company believes that global glass reinforcements demand will continue to grow in 2012.

As previously announced, the company is taking actions in its Composites segment to balance supply and to improve the sustainable competitive position of its European assets. In the first quarter, the company made progress in implementing these actions to transform its Composites operation into a global network of low-delivered-cost assets and to position the business to return to double-digit margins in 2013. In conjunction with these actions, the company anticipates incurring approximately $130 million in charges in 2012 through early 2013.

In the Building Materials segment, the company expects another year of strong financial performance in Roofing based on its current outlook for volumes and pricing. The company continues to believe Insulation will significantly narrow losses in 2012 on improved U.S. housing.

Cash taxes are expected to be about $30 million in 2012, due to the company's $2.3 billion U.S. tax net operating loss carry forward. The company estimates a long-term effective tax rate of 25 percent to 28 percent based on the blend of effective tax rates for its U.S. and non-U.S. operations. The effective book tax rate for 2012 is expected to be about 25 percent on adjusted earnings.

The company expects general corporate expenses to be between $110 million and $120 million in 2012. General corporate expenses include corporate staff and other activities that support the operations. Expenses will be higher in 2012 primarily due to increased pension expense and higher year-over-year incentive compensation costs.

Depreciation and amortization expenses are expected to be as much as $320 million in 2012, excluding the impact of the restructuring actions in Europe.

Capital expenditures in 2012 are expected to be about $350 million.

Next Earnings Announcement

Second-quarter 2012 results will be announced on Wednesday, August 1, 2012.

First-Quarter Conference Call and Presentation
Wednesday, April 25, 2012
11 a.m. Eastern Daylight Time

All Callers
Live dial-in telephone number: U.S. 1-866-804-6924 or International 1-857-350-1670

Passcode: 80163255
(Please dial in 10 minutes before conference call start time.)
Live webcast: http://www.owenscorning.com/investors

Telephone replay available through May 2, 2012: U.S. 1-888-286-8010 or International 1-617-801-6888
Passcode: 84632337
Replay of webcast also available at: http://www.owenscorning.com/investors

Presentation
To view the slide presentation during the conference call, please log on to the live webcast at www.owenscorning.com/investors

About Owens Corning

Owens Corning (NYSE: OC) is a leading global producer of residential and commercial building materials, glass-fiber reinforcements and engineered materials for composite systems. A Fortune® 500 Company for 57 consecutive years, Owens Corning is committed to driving sustainability by delivering solutions, transforming markets and enhancing lives. Founded in 1938, Owens Corning is a market-leading innovator of glass-fiber technology with sales of $5.3 billion in 2011 and about 15,000 employees in 28 countries on five continents. Additional information is available at www.owenscorning.com.

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 that could cause actual results to differ materially from those projected in these statements. Such factors include, without limitation: economic and political conditions, including new legislation or other governmental actions; levels of residential and commercial construction activity; competitive factors; pricing factors; weather conditions; our level of indebtedness; industry and economic conditions that affect the market and operating conditions of our customers, suppliers or lenders; availability and cost of energy and materials; availability and cost of credit; interest rate movements; issues related to expansion of our production capacity; issues related to acquisitions, divestitures and joint ventures; our ability to use our net operating loss carry-forwards; achievement of expected synergies, cost reductions and/or productivity improvements; issues involving implementation of new business systems; foreign exchange fluctuations; research and development activities; difficulties in managing production capacity; labor disputes; 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 the date April 25, 2012, and is subject to change. The company does not undertake any duty to update or revise forward-looking statements. Any distribution of this news release after that date is not intended and will not be construed as updating or confirming such information.

Table 1
Owens Corning and Subsidiaries
Consolidated Statements of Earnings
(unaudited)
(in millions, except per share amounts)
   
  Three Months Ended
  Mar. 31,
  2012 2011
NET SALES $1,346  $1,238 
COST OF SALES  1,160   1,036 
  Gross margin  186   202 
OPERATING EXPENSES    
 Marketing and administrative expenses  137   135 
 Science and technology expenses  19   19 
 Charges related to cost reduction actions  34   - 
 Other (income) expenses  8   (13)
  Total operating expenses  198   141 
EARNINGS (LOSS) BEFORE INTEREST AND TAXES  (12)  61 
Interest expense, net  28   25 
EARNINGS (LOSS) BEFORE TAXES  (40)  36 
Less: Income tax expense  5   11 
Equity in net earnings of affiliates  -   - 
NET EARNINGS (LOSS)  (45)  25 
Less: Net earnings attributable to noncontrolling interests  1   1 
NET EARNINGS (LOSS) ATTRIBUTABLE TO OWENS    
 CORNING $(46) $24 
       
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO    
OWENS CORNING COMMON STOCKHOLDERS    
  Basic $(0.38) $0.19 
  Diluted $(0.38) $0.19 
       
WEIGHTED-AVERAGE COMMON SHARES    
  Basic  121.1   123.8 
  Diluted  121.1   125.3 

Owens Corning follows the authoritative guidance referring to "Noncontrolling Interest in Consolidated Financial Statements," effective January 1, 2009, which, among other things, changed the presentation format and certain captions of the Consolidated Statements of Earnings and Consolidated Balance Sheets. Owens Corning uses the captions recommended by this standard in its Consolidated Financial Statements such as net earnings attributable to Owens Corning and diluted earnings per common share attributable to Owens Corning common stockholders. However, in the preceding release Owens Corning has shortened this language to net earnings and earnings per share (or a slight variation thereof), respectively.

Table 2
Owens Corning and Subsidiaries
EBIT Reconciliation Schedules
(unaudited)
 
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 the result of current operations. The adjusted financial measure resulting from these adjustments is 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. Although management believes that these adjustments result in a measure that provides it a useful representation of its operational performance, the adjusted measure should not be considered in isolation or as a substitute for net earnings attributable to Owens Corning as prepared in accordance with accounting principles generally accepted in the United States.
Adjusting items are shown in the table below (in millions):
               
      

Three Months
Ended

     March 31,
        2012 2011
Charges related to cost reduction actions and related items      $(55) $-
 Total adjusting items      $(55) $-
               
               
The reconciliation from net earnings attributable to Owens Corning to Adjusted EBIT is shown in the table below (in millions):
               
      

Three Months
Ended

     March 31,
        2012 2011
NET EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING      $(46) $24
 Less: Net earnings attributable to noncontrolling interests       1   1
NET EARNINGS (LOSS)       (45)  25
 Income tax expense       5   11
EARNINGS (LOSS) BEFORE TAXES       (40)  36
 Interest expense, net       28   25
EARNINGS (LOSS) BEFORE INTEREST AND TAXES       (12)  61
 Less: adjusting items from above       (55)  -
ADJUSTED EBIT      $43  $61
 
Table 3
Owens Corning and Subsidiaries
EPS Reconciliation Schedules
(unaudited)
(in millions, except per share data)
 
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 the result of current operations. The adjusted financial measures resulting from these adjustments 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. Although management believes that these adjustments result in measures that provide it a useful representation of its operational performance, 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 accounting principles generally accepted in the United States.
 

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
      March 31,
      2012 2011
RECONCILIATION TO ADJUSTED EARNINGS       
Net earnings attributable to Owens Corning  $(46) $24
  Adjustment to remove adjusting items net of tax   43   -
  Adjustment to tax expense to reflect pro forma tax rate*   14   3
ADJUSTED EARNINGS  $11  $27
           
RECONCILIATION TO ADJUSTED DILUTED EARNINGS PER SHARE 
ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS 
DILUTED EARNINGS PER COMMON SHARE ATTRIBUTABLE       
TO OWENS CORNING COMMON STOCKHOLDERS  $(0.38) $0.19
  Adjustment to remove adjusting items net of tax   0.35   -
  Adjustment to tax expense to reflect a pro forma tax rate*   0.12   0.03
ADJUSTED DILUTED EARNINGS PER SHARE       
ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS  $0.09  $0.22
           
RECONCILIATON TO DILUTED SHARES OUTSTANDING 
Weighted-average shares outstanding       
used for basic earnings per share   121.1   123.8
  Non-vested restricted shares   -   1.0
  Options to purchase common stock   -   0.5
Diluted shares outstanding   121.1   125.3

 

 
 

* Pro forma tax rates used were 25% in 2012 as this is the expected full-year effective tax rate, and, 21% in 2011 as this was the effective tax rate of the Company in 2011.

 
Table 4

Owens Corning and Subsidiaries

Consolidated Balance Sheets

(unaudited)

(in millions)

     
ASSETS Mar. 31, Dec. 31,
 2012 2011
CURRENT ASSETS      
  Cash and cash equivalents $58  $52 
  Receivables, less allowances of $18 at Mar. 31, 2012 and $15 at Dec. 31, 2011  889   610 
  Inventories  800   795 
  Other current assets  188   179 
   Total current assets  1,935   1,636 
Property, plant and equipment, net  2,922   2,904 
Goodwill  1,144   1,144 
Intangible assets  1,066   1,073 
Deferred income taxes  529   538 
Other non-current assets  237   232 
TOTAL ASSETS $7,833  $7,527 
          
LIABILITIES AND EQUITY      
CURRENT LIABILITIES      
  Accounts payable and accrued liabilities $937  $876 
  Short-term debt  22   28 
  Long-term debt - current portion  4   4 
   Total current liabilities  963   908 
Long-term debt, net of current portion  2,202   1,930 
Pension plan liability  430   435 
Other employee benefits liability  264   267 
Deferred income taxes  53   51 
Other liabilities  198   195 
Commitments and contingencies      
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  3,917   3,907 
  Accumulated earnings  424   470 
  Accumulated other comprehensive deficit  (294)  (315)
  Cost of common stock in treasury (c)  (367)  (362)
   Total Owens Corning stockholders' equity  3,681   3,701 
  Noncontrolling interests  42   40 
Total equity  3,723   3,741 
TOTAL LIABILITIES AND EQUITY $7,833  $7,527 
          
(a) 10 shares authorized; none issued or outstanding at Mar. 31, 2012 and Dec. 31, 2011
(b) 400 shares authorized; 135.3 issued and 121.6 outstanding at Mar. 31, 2012; 134.4 issued and 120.9 outstanding at Dec. 31, 2011
(c) 13.7 shares at Mar. 31, 2012 and 13.5 shares at Dec. 31, 2011
 
Table 5

Owens Corning and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)

(in millions)

         
        Three Months Ended
        Mar. 31,
        2012  2011
NET CASH FLOW USED FOR OPERATING ACTIVITIES        
 Net earnings (loss)   $(45) $25 
 Adjustments to reconcile net earnings to cash provided by operating activities:        
   Depreciation and amortization    89   80 
   Gain on sale of businesses and fixed assets    (1)  (6)
   Deferred income taxes    6   (4)
   Provision for pension and other employee benefits liabilities    11   8 
   Stock-based compensation expense    7   5 
   Other non-cash    (4)  (7)
 Change in working capital    (232)  (239)
 Pension fund contribution    (18)  (78)
 Payments for other employee benefits liabilities    (6)  (7)
 Other    -   10 
   Net cash flow used for operating activities    (193)  (213)
NET CASH FLOW USED FOR INVESTING ACTIVITIES        
 Additions to plant and equipment    (72)  (91)
 Proceeds from the sale of assets or affiliates    4   12 
   Net cash flow used for investing activities    (68)  (79)
NET CASH FLOW PROVIDED BY FINANCING ACTIVITIES        
 Proceeds from senior revolving credit and receivables securitization facilities    626   432 
 Payments on senior revolving credit and receivables securitization facilities    (352)  (133)
 Payments on long-term debt    (2)  (1)
 Net increase (decrease) in short-term debt    (6)  4 
 Purchases of treasury stock    (5)  (10)
 Other    5   8 
   Net cash flow provided by financing activities    266   300 
Effect of exchange rate changes on cash    1   1 
Net increase in cash and cash equivalents    6   9 
Cash and cash equivalents at beginning of period    52   52 
CASH AND CASH EQUIVALENTS AT END OF PERIOD   $58  $61 
 
Table 6

Owens Corning and Subsidiaries

Segment and Business Information

(unaudited)

Composites
 
The table below provides a summary of net sales, EBIT and depreciation and amortization expense for the Composites segment (in millions):
    Three Months Ended
    Mar. 31,
      2012 2011
Net sales      $476  $492 
 % change from prior year       -3%  6%
             
EBIT      $23  $48 
 EBIT as a % of net sales       5%  10%
             
Depreciation and amortization expense      $30  $34 
              
 

Building Materials

 

The table below provides a summary of net sales, EBIT and depreciation and amortization expense (in millions) for the Building Materials segment and our businesses within this segment (in millions):

 
    Three Months Ended
   Mar. 31,
      2012 2011
Net sales           
 Insulation      $331  $290 
 Roofing       588   496 
Total Building Materials      $919  $786 
 % change from prior year    17% -7%
             
EBIT           
 Insulation      $(34) $(47)
 Roofing       83   77 
Total Building Materials      $49  $30 
 EBIT as a % of net sales    5% 4%
             
Depreciation and amortization expense           
 Insulation      $25  $29 
 Roofing       9   10 
Total Building Materials      $34  $39 
              
 
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
    Mar. 31,
      2012 2011
Charges related to cost reduction actions and related items      $(55) $- 
General corporate expense and other       (29)  (17)
EBIT      $(84) $(17)
             
Depreciation and amortization      $25  $7 

 

Contact:

Owens Corning
For further information:
Media Inquiries, Matt Schroder, +1-419-248-8987;
Investor Inquiries, Thierry Denis, +1-419-248-5748