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 Fourth-Quarter and Full-Year 2012 Results

Company Delivered $293 Million in Adjusted EBIT in 2012, Expects Improved Performance in All Businesses in 2013

- Insulation significantly narrowed full-year losses and delivered second consecutive profitable quarter

- Roofing pricing environment at year-end 2012 provides momentum for 2013

- Composites' low-delivered-cost asset repositioning to yield benefits this year

- Company actions and recovering markets support at least $100 million of adjusted EBIT growth in 2013

Wednesday, February 20, 2013 7:28 am EST
"Insulation ended the year with consecutive profitable quarters – a first since 2008 – narrowing losses significantly. Going forward, we believe all three businesses will benefit from recovering markets and company actions to deliver improved operating margins in 2013."

Owens Corning (NYSE: OC) today reported consolidated net sales of $5.2 billion in 2012, compared with net sales of $5.3 billion in 2011.

Full-year 2012 adjusted earnings were $131 million, or $1.10 per diluted share. The company reported a net loss of $19 million, or $0.16 per diluted share, for 2012. Both the adjusted and reported results compare to net earnings of $276 million, or $2.23 per diluted share, in 2011.

Fourth-quarter 2012 adjusted earnings were $13 million, or $0.11 per diluted share, compared with $48 million, or $0.40 per diluted share, during the same period one year ago. The company reported a net loss of $56 million, or $0.47 per diluted share, in the fourth quarter of 2012, compared with net earnings of $50 million, or $0.41 per diluted share, in 2011. (See Tables 1, 2 and 6 for a discussion and reconciliation of these items.)

The net loss in 2012 reflects a one-time debt extinguishment charge of $74 million in conjunction with a tender offer to refinance $350 million of outstanding senior notes that occurred in the fourth quarter of 2012, as well as approximately $136 million of charges associated with global restructuring actions. The fourth-quarter loss was primarily impacted by both the debt extinguishment charge and $27 million of charges related to global restructuring actions.

"Owens Corning closed 2012 with positive momentum in each of our businesses," said Chairman and Chief Executive Officer Mike Thaman. "Insulation ended the year with consecutive profitable quarters – a first since 2008 – narrowing losses significantly. Going forward, we believe all three businesses will benefit from recovering markets and company actions to deliver improved operating margins in 2013.

"We anticipate continued improvement in the U.S. housing market and an environment of slow but stable global growth," Thaman added, "and we are off to a good start in 2013."

Consolidated Fourth-Quarter and Full-Year 2012 Results

  • Owens Corning's safety performance in 2012 improved by 10 percent compared with 2011, marking the company's 11th consecutive year of safety improvement.
  • Adjusted EBIT in the fourth quarter of 2012 was $52 million, compared with $88 million in 2011. EBIT for the fourth quarter was $16 million, compared with $88 million during the same period in 2011 (see Table 2).
  • Full-year adjusted earnings before interest and taxes (EBIT) were $293 million in 2012, compared with EBIT of $461 million in 2011. Full-year EBIT in 2012 was $148 million, compared to $461 million in 2011. (See Table 2 for a reconciliation of these items.)

Stock Repurchase Activity

During 2012, Owens Corning repurchased 3.7 million shares of the company's common stock for $107 million under a previously announced share repurchase program. As of year-end, 10 million shares remained available for repurchase under the company's current authorization.

Outlook

The company expects at least $100 million in EBIT improvement over 2012 as a result of company actions, an improving U.S. housing market and moderate global growth. The pace of the U.S. housing recovery and its impact on the company's Insulation business, combined with sustained Roofing margins, could yield additional upside improvement.

The company expects Roofing to benefit from lower year-over-year winter incentives and announced first-quarter price actions; growth in U.S. residential new construction; and growth potential in the re-roofing segment. Storm-related volume in 2013 could compare negatively with 2012 volumes, which were above the historical average.

Insulation is expected to benefit from the growth in U.S. residential new construction, higher utilization rates, and improved pricing. However, prices remain significantly below historical levels.

In the Composites segment, the company expects to benefit from its asset repositioning, increased utilization following a first-quarter ramp-up, and global market growth. Prices are stable heading into 2013 although there is continued input cost inflation.

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 long-term effective cash tax rate is estimated to be in the range of 10 percent to 12 percent on adjusted net earnings, due to the company's $2.3 billion U.S. tax net operating loss carryforward. The effective book tax rate for 2013 on adjusted earnings is expected to be within the long-term range.

The company expects general corporate expenses to be in the range of $110 million to $120 million in 2013. General corporate expenses include corporate staff and other activities that support the operations. Expenses will be higher in 2013 than in 2012 in anticipation of incentive compensation levels consistent with improved performance.

Next Earnings Announcement

First-quarter 2013 results will be announced on Wednesday, April 24, 2013.

Conference Call and Presentation

Wednesday, February 20, 2013
11 a.m. Eastern Time

All Callers
Live dial-in telephone number: U.S. 1-800-446-1671 or International 1-847-419-3362
Participant passcode: 340-318-12 (Please dial in 10 minutes before conference call start time.)

Live webcast: http://www.owenscorning.com/investors

Telephone replay available through February 27, 2013: U.S. 1-888-843-7419; International +1-630-652-3042
Participant passcode: 340-318-12

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: http://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 58 consecutive years, Owens Corning is committed to driving sustainability by delivering solutions, transforming markets and enhancing lives. Celebrating its 75th anniversary in 2013, Owens Corning is a market-leading innovator of glass-fiber technology with sales of $5.2 billion in 2012 and approximately 15,000 employees in 27 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 February 20, 2013, 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 (Loss)
(unaudited)
(in millions, except per share amounts)
 
    Three Months Ended Twelve Months Ended
    Dec. 31, Dec. 31,
    2012 2011 2012 2011
NET SALES $1,159  $1,196  $5,172  $5,335 
COST OF SALES  989   966   4,375   4,307 
  Gross margin  170   230   797   1,028 
OPERATING EXPENSES            
 Marketing and administrative expenses  129   130   509   525 
 Science and technology expenses  19   19   79   77 
 Charges related to cost reduction actions  15   -   51   - 
 Other expenses (income), net  (9)  (7)  10   (35)
  Total operating expenses  154   142   649   567 
EARNINGS BEFORE INTEREST AND TAXES  16   88   148   461 
Interest expense, net  29   27   114   108 
Loss on extinguishment of debt  74   -   74   - 
EARNINGS (LOSS) BEFORE TAXES  (87)  61   (40)  353 
Less: Income tax expense (benefit)  (36)  11   (28)  74 
Equity in net earnings of affiliates  (4)  1   (4)  2 
NET EARNINGS (LOSS)  (55)  51   (16)  281 
Less: Net earnings attributable to noncontrolling interests  1   1   3   5 
NET EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING $(56) $50  $(19) $276 
               
BASIC EARNINGS (LOSS) PER COMMON SHARE            
 ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS $(0.47) $0.41  $(0.16) $2.25 
               
DILUTED EARNINGS (LOSS) PER COMMON SHARE            
 

ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS

 $(0.47) $0.41  $(0.16) $2.23 
               
WEIGHTED AVERAGE COMMON SHARES            
  Basic  118.0   120.5   119.4   122.5 
  Diluted  118.0   121.5   119.4   123.5 
 

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 (Loss) 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 Twelve Months Ended
     Dec. 31, Dec. 31,
     2012 2011 2012 2011
Charges related to cost reduction actions and related items $(27) $- $(136) $-
Losses related to Hurricane Sandy  (9)  -  (9)  -
 Total adjusting items $(36) $- $(145) $-
                
                
The reconciliation from net earnings attributable to Owens Corning to Adjusted EBIT is shown in the table below (in millions):
                
     Three Months Ended Twelve Months Ended
     Dec. 31, Dec. 31,
     2012  2011 2012  2011
NET EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING $(56) $50 $(19) $276
 Less: Net earnings attributable to noncontrolling interests  1   1  3   5
NET EARNINGS (LOSS)  (55)  51  (16)  281
 Equity in net earnings of affiliates  (4)  1  (4)  2
 Income tax expense (benefit)  (36)  11  (28)  74
EARNINGS (LOSS) BEFORE TAXES  (87)  61  (40)  353
 Interest expense, net  29   27  114   108
 Loss on extinguishment of debt  74   -  74   -
EARNINGS BEFORE INTEREST AND TAXES  16   88  148   461
 Less: adjusting items from above  (36)  -  (145)  -
ADJUSTED EBIT $52  $88 $293  $461
Table 3
Owens Corning and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
(in millions)
 
     Twelve Months Ended
     Dec. 31,
     2012 2011 2010
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES         
 Net earnings (loss) $(16) $281  $940 
 

Adjustments to reconcile net earnings (loss) to cash provided by operating activities:

         
   Depreciation and amortization  349   318   320 
   (Gain) loss on sale of businesses and fixed assets  (17)  (30)  2 
   Asset impairments  6   -   117 
   Deferred income taxes  (59)  55   (867)
   Provision for pension and other employee benefits liabilities  36   36   26 
   Stock-based compensation expense  24   21   23 
   Other non-cash  (14)  (22)  (19)
   Loss on extinguishment of debt  74   -   - 
 Change in working capital  9   (262)  15 
 Pension fund contribution  (50)  (117)  (32)
 Payments for other employee benefits liabilities  (22)  (24)  (26)
 Other  10   33   (11)
   Net cash flow provided by operating activities  330   289   488 
NET CASH FLOW USED FOR INVESTING ACTIVITIES         
 Additions to plant and equipment  (332)  (442)  (314)
 Investment in subsidiaries and affiliates, net of cash acquired  -   (84)  - 
 Proceeds from Hurricane Sandy insurance claims  20   -   - 
 Proceeds from the sale of assets or affiliates  59   81   65 
   Net cash flow used for investing activities  (253)  (445)  (249)
NET CASH FLOW PROVIDED BY (USED FOR) FINANCING ACTIVITIES         
 Proceeds from senior revolving credit and receivables securitization facilities  1,877   1,912   631 
 Payments on senior revolving credit and receivables securitization facilities  (1,957)  (1,630)  (619)
 Proceeds from long-term debt  599   6   5 
 Payments on long-term debt  (441)  (10)  (609)
 Purchases of noncontrolling interest  (22)  -   (30)
 Net increase (decrease) in short-term debt  (23)  26   (10)
 Purchases of treasury stock  (113)  (138)  (120)
 Other  4   8   2 
   Net cash flow provided by (used for) financing activities  (76)  174   (750)
Effect of exchange rate changes on cash  2   (18)  (1)
Net increase (decrease) in cash and cash equivalents  3   -   (512)
Cash and cash equivalents at beginning of period  52   52   564 
CASH AND CASH EQUIVALENTS AT END OF PERIOD $55  $52  $52 
             
DISCLOSURE OF CASH FLOW INFORMATION         
 Cash paid during the year for income taxes $30  $24  $16 
 Cash paid during the year for interest $122  $111  $108 
              
Table 4
Owens Corning and Subsidiaries
Consolidated Balance Sheets
(unaudited)
(in millions)
 
ASSETS Dec. 31, Dec. 31,
  2012 2011
CURRENT ASSETS      
 Cash and cash equivalents $55  $52 
 Receivables, less allowances of $17 at Dec. 31, 2012 and $15 at Dec. 31, 2011  600   610 
 Inventories  786   795 
 Other current assets  171   179 
  Total current assets  1,612   1,636 
Property, plant and equipment, net  2,903   2,904 
Goodwill  1,143   1,144 
Intangible assets  1,045   1,073 
Deferred income taxes  604   538 
Other non-current assets  261   232 
TOTAL ASSETS $7,568  $7,527 
         
LIABILITIES AND EQUITY      
CURRENT LIABILITIES      
 Accounts payable and accrued liabilities $897  $876 
 Short-term debt  5   28 
 Long-term debt – current portion  4   4 
  Total current liabilities  906   908 
Long-term debt, net of current portion  2,076   1,930 
Pension plan liability  480   435 
Other employee benefits liability  274   267 
Deferred income taxes  38   51 
Other liabilities  219   195 
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  3,925   3,907 
 Accumulated earnings  451   470 
 Accumulated other comprehensive deficit  (364)  (315)
 Cost of common stock in treasury (c)  (475)  (362)
  Total Owens Corning stockholders' equity  3,538   3,701 
 Noncontrolling interests  37   40 
Total equity  3,575   3,741 
TOTAL LIABILITIES AND EQUITY $7,568  $7,527 
         

(a) 10 shares authorized; none issued or outstanding at Dec. 31, 2012 and Dec. 31, 2011
(b) 400 shares authorized; 135.6 issued and 118.3 outstanding at Dec. 31, 2012; 134.4 issued and 120.9 outstanding at Dec. 31, 2011
(c) 17.3 shares at Dec. 31, 2012 and 13.5 shares at Dec. 31, 2011

Table 5
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 our Composites segment (in millions):

              
   Three Months Ended Twelve Months Ended
   Dec. 31, Dec. 31,
   2012 2011 2012 2011
Net sales $426  $459  $1,859  $1,976 
 % change from prior year  -7%  -3%  -6%  4%
                
EBIT $23  $49  $91  $201 
 EBIT as a % of net sales  5%  11%  5%  10%
              
Depreciation and amortization expense $32  $31  $123  $128 
 
 
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.
 
   Three Months Ended Twelve Months Ended
   Dec. 31, Dec. 31,
   2012 2011 2012 2011
Net sales            
 Insulation $413  $387  $1,468  $1,368 
 Roofing  350   384   2,014   2,169 
Total Building Materials $763  $771  $3,482  $3,537 
 % change from prior year -1% 8% -2% 9%
              
EBIT            
 Insulation $9  $-  $(38) $(97)
 Roofing  42   55   331   429 
Total Building Materials $51  $55  $293  $332 
 EBIT as a % of net sales 7% 7% 8% 9%
              
Depreciation and amortization expense            
 Insulation $25  $27  $105  $116 
 Roofing  10   10   38   41 
Total Building Materials $35  $37  $143  $157 
 
 
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 Twelve Months Ended
   Dec. 31, Dec. 31,
   2012 2011 2012 2011
Charges related to cost reduction actions and related items $(27) $-  $(136) $(17)
Gains on sales of assets and related charges  -   -   -   16 
Losses related to Hurricane Sandy  (9)  -   (9)  - 
General corporate expense  (22)  (16)  (91)  (71)
EBIT $(58) $(16) $(236) $(72)
              
Depreciation and amortization $13  $7  $83  $33 
                 

Table 6

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 (loss) attributable to Owens Corning to Adjusted Earnings and a reconciliation from diluted earnings (loss) per share to adjusted diluted earnings per share are shown in the tables below:
 
                                  
     Three Months Ended Three Months Ended Three Months Ended Three Months Ended Twelve Months Ended
     March 31, June 30, September 30, December 31, December 31,
     2012 2011 2012 2011 2012 2011 2012 2011 2012 2011
RECONCILIATION TO ADJUSTED EARNINGS                              
Net earnings (loss) attributable to Owens Corning $(46) $24 $39 $78 $44  $124  $(56) $50  $(19) $276
  Adjustment to remove adjusting items net of tax  43   -  23  -  16   -   68   -   150   -
  Adjustment to tax expense to reflect pro forma tax rate*  14   3  5  7  (20)  (8)  1   (2)  -   -
ADJUSTED EARNINGS $11  $27 $67 $85 $40  $116  $13  $48  $131  $276
                                  

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 $0.32 $0.62 $0.37  $1.01  $(0.47) $0.41  $(0.16) $2.23
  Adjustment to remove adjusting items net of tax  0.36   -  0.19  -  0.13   -   0.58   -   1.26   -
  Adjustment to tax expense to reflect pro forma tax rate*  0.11   0.03  0.04  0.06  (0.16)  (0.06)  -   (0.01)  -   -

ADJUSTED DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS

 $0.09  $0.22 $0.55 $0.68 $0.34  $0.95  $0.11  $0.40  $1.10  $2.23
                                  
RECONCILIATION TO DILUTED SHARES OUTSTANDING

Weighted-average shares outstanding used for basic earnings per share

  121.1   123.8  120.8  124  117.9   121.7   118.0   120.5   119.4   122.5
  Non-vested restricted shares  -   1.0  0.4  0.9  0.6   0.6   -   0.8   -   0.7
  Options to purchase common stock  -   0.5  0.3  0.5  0.3   0.3   -   0.2   -   0.3
Diluted shares outstanding  121.1   125.3  121.5  125.4  118.8   122.6   118.0   121.5   119.4   123.5
                                  

*In 2012 the quarterly tax expense was adjusted to reflect the actual full year adjusted effective tax rate of 23 percent. In 2011, the quarterly and full year tax expense was adjusted to use an effective rate of 21 percent based upon the blend of United States and non-United States operations.

 

Contact:

Owens Corning
Media Inquiries:
Matt Schroder, +1-419-248-8987
or
Investor Inquiries:
Thierry Denis, +1-419-248-5748