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 2013 Results

Full-Year Adjusted EBIT Grew by More Than 40 Percent; Company Initiates Quarterly Dividend

  • Grew adjusted EPS by nearly 70 percent; all three businesses improved performance
  • Roofing delivered 20 percent margins
  • Insulation returned to profitability
  • Composites improved full-year performance on strong fourth-quarter execution
  • Momentum in our businesses and current outlook for our end markets support $500 million in adjusted EBIT in 2014
Wednesday, February 12, 2014 7:28 am EST
"We are pleased to establish a quarterly dividend as an additional mechanism to return value to our shareholders."

Owens Corning (NYSE: OC) today reported consolidated net sales of $5.3 billion in 2013, up from net sales of $5.2 billion in 2012.

Full-year 2013 adjusted earnings were $221 million, or $1.86 per diluted share compared to adjusted earnings of $131 million, or $1.10 per diluted share, in 2012. Net earnings in 2013 were $204 million, or $1.71 per share, compared to net loss of $19 million, or $0.16 per diluted share last year.

Fourth-quarter 2013 adjusted earnings were $52 million, or $0.44 per diluted share, compared with $13 million, or $0.11 per diluted share, during the same period one year ago. The company reported net earnings of $82 million, or $0.69 per diluted share, in the fourth quarter of 2013, compared with a net loss of $56 million, or $0.47 per diluted share, in 2012. (See Table 6 for a discussion and reconciliation of these items.)

"In 2013, our insulation business returned to profitability. This was an important achievement for our company," said Chairman and Chief Executive Officer Mike Thaman. "We are pleased to establish a quarterly dividend as an additional mechanism to return value to our shareholders.

"All three businesses improved in 2013, benefitting from a stable and growing global economy and a recovering U.S. housing market," Thaman added. "We expect similar growth in 2014 and we are working to maintain the momentum we established last year."

The decision to declare a dividend conveys the confidence of the Board of Directors in the company's long-term financial outlook and cash flow generation. The company will make an initial quarterly payment of 16 cents per common share on April 3, 2014, to shareholders of record as of March 14, 2014.

Consolidated Fourth-Quarter and Full-Year 2013 Results

  • Owens Corning maintained a very high level of safety performance in 2013. The company had 88 percent fewer injuries than the average manufacturing company when measured against the rates published by the U.S. Department of Labor.
  • Adjusted earnings before interest and taxes (EBIT) in the fourth quarter of 2013 was $96 million, compared with $52 million in 2012. EBIT for the fourth quarter was $104 million, compared with $16 million during the same period in 2012 (see Table 2).
  • Full-year adjusted EBIT was $416 million in 2013, compared with adjusted EBIT of $293 million in 2012. Full-year EBIT in 2013 was $385 million, compared to $148 million in 2012. (See Table 2 for a reconciliation of these items).

Outlook

In 2014, the company expects to deliver $500 million in adjusted EBIT based on our current outlook for an improving U.S. housing market and moderate global growth.

We expect the Roofing business to deliver another strong year in 2014 and anticipate that the market will grow on new construction with flat to potentially improving re-roofing demand.

Insulation should continue to benefit from growth in U.S. residential new construction, improved pricing and operating leverage.

In Composites, the company expects recovering market conditions to drive price improvement of $20 million to $30 million. Pricing is expected to be the primary driver of EBIT growth in 2014.

The company estimates a long-term effective tax rate of 28 percent to 30 percent, and a long-term effective cash tax rate of 10 percent to 12 percent on adjusted pre-tax earnings, due to the company's $2.2 billion U.S. tax net operating loss carryforward. The effective book tax rate for 2014 on adjusted earnings is expected to be within the long-term range.

The company expects general corporate expenses to be $120 million to $130 million in 2014. Capital expenditures in 2014 are expected to total approximately $400 million, including an estimated $65 million for the start of construction of a non-woven facility.

The cash dividend to be paid in April will mark the company's first such payment since 2000. Future dividend declarations will be made at the discretion of the Board of Directors and will be based on such factors as the company's earnings, financial condition, cash requirements, future prospects and other factors.

Next Earnings Announcement

First-quarter 2014 results will be announced on Wednesday, April 23, 2014.

Conference Call and Presentation

Wednesday, February 12, 2014
11 a.m. Eastern Time

All Callers

Live dial-in telephone number: U.S. and Canada 1.877.201.0168 or international +1.647.788.4901.
Entry number: 354-170-30 (Please dial in 10-15 minutes before conference call start time)

Live webcast: http://investor.owenscorning.com/investor-relations/

Telephone replay available through Feb. 19, 2014. For U.S. and Canada, call 1.855.859.2056 or international +1.404.537.3406. Conference replay number: 354-170-30

Replay of webcast also available until Feb. 12, 2015 at: http://investor.owenscorning.com/investor-relations/

Presentation

To view the slide presentation during the conference call, please log on to the live webcast at: http://investor.owenscorning.com/investor-relations/

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 59 consecutive years, Owens Corning is committed to driving sustainability by delivering solutions, transforming markets and enhancing lives. In business for more than 75 years, Owens Corning is a market-leading innovator of glass-fiber technology with sales of $5.3 billion in 2013 and about 15,000 employees in 27 countries. 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 may cause actual results to differ materially from those projected in these statements. Such factors include, without limitation: economic and political conditions, including; levels of residential and commercial construction activity; competitive factors; levels of global industrial production; relationships with key customers; difficulties in managing production capacity; industry and economic conditions that affect the market and operating conditions of our customers, suppliers or lenders; availability and cost of credit; our level of indebtedness; weather conditions; pricing factors; availability and cost of energy and raw materials; issues involving implementation of new business systems; new legislation or other governmental actions; our ability to use our net operating loss carry-forwards; research and development activities; foreign exchange fluctuations; interest rate movements; labor disputes; issues related to acquisitions, divestitures and joint ventures; uninsured losses; achievement of expected synergies, cost reductions and/or productivity improvements; defined benefit plan funding obligations; 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 February 12, 2014, 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 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 (Loss)
(unaudited)
(in millions, except per share amounts)
 
    

Three Months Ended

 Twelve Months Ended
   Dec. 31, Dec. 31,
    2013 2012 2013 2012
NET SALES $1,278  $1,159  $5,295  $5,172 
COST OF SALES  1,045   989   4,329   4,375 
Gross margin  233   170   966   797 
OPERATING EXPENSES            
Marketing and administrative expenses  135   129   530   509 
Science and technology expenses  20   19   77   79 
Charges related to cost reduction actions  -   15   8   51 
Other expenses (income), net  (26)  (9)  (34)  10 
Total operating expenses  129   154   581   649 
EARNINGS BEFORE INTEREST AND TAXES  104   16   385   148 
Interest expense, net  25   29   112   114 
Loss on extinguishment of debt  -   74   -   74 
EARNINGS (LOSS) BEFORE TAXES  79   (87)  273   (40)
Less: Income tax expense (benefit)  (3)  (36)  68   (28)
Equity in net earnings of affiliates  -   (4)  -   (4)
NET EARNINGS (LOSS)  82   (55)  205   (16)
Less: Net earnings attributable to noncontrolling interests  -   1   1   3 
NET EARNINGS (LOSS) ATTRIBUTABLE TO OWENS

CORNING

 $82  $(56) $204  $(19)
BASIC EARNINGS (LOSS) PER COMMON SHARE            
ATTRIBUTABLE TO OWENS CORNING COMMON

STOCKHOLDERS

 $0.70  $(0.47) $1.73  $(0.16)
               
DILUTED EARNINGS (LOSS) PER COMMON SHARE            
ATTRIBUTABLE TO OWENS CORNING COMMON            
STOCKHOLDERS $0.69  $(0.47) $1.71  $(0.16)
               
WEIGHTED AVERAGE COMMON SHARES            
Basic  117.6   118.0   118.2   119.4 
Diluted  118.5   118.0   119.1   119.4 
 
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,
    2013 2012 2013 2012
Charges related to cost reduction actions and related items$(3) $(27) $(26) $(136)
Net gain (loss) related to Hurricane Sandy insurance activity 31  (9)  15  (9)

Accelerated depreciation related to a change in the useful life of assets in Cordele, Georgia facility

 (20)  -  (20)  -
Total adjusting items$8 $(36) $(31) $(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,
    2013 2012 2013 2012
NET EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING$82 $(56) $204 $(19)
Less: Net earnings attributable to noncontrolling interests -  1  1  3
NET EARNINGS (LOSS) 82  (55)  205  (16)
Equity in net earnings of affiliates -  (4)  -  (4)
Income tax expense (benefit) (3)  (36)  68  (28)
EARNINGS (LOSS) BEFORE TAXES 79  (87)  273  (40)
Interest expense, net 25  29  112  114
Loss on extinguishment of debt -  74  -  74
EARNINGS BEFORE INTEREST AND TAXES 104  16  385  148
Less: adjusting items from above 8  (36)  (31)  (145)
ADJUSTED EBIT$96 $52 $416 $293
            
Table 3
Owens Corning and Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
(in millions)
 
     Twelve Months Ended
     Dec. 31,
     2013  2012  2011
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES        
 Net earnings (loss)$205  $(16) $281 
 

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

        
   Depreciation and amortization 332   349   318 
   Gain on sale of assets or affiliates (6)  (17)  (30)
   Proceeds from Hurricane Sandy insurance claims (58)  (20)  - 
   Deferred income taxes 54   (59)  55 
   Provision for pension and other employee benefits liabilities 23   36   36 
   Stock-based compensation expense 28   24   21 
   Other non-cash (18)  (14)  (22)
   Loss on extinguishment of debt -   74   - 
 Change in working capital accounts:        
   Changes in receivables, net (77)  24   (48)
   Changes in inventories (27)  (4)  (179)
   Changes in accounts payable and accrued liabilities 46   23   (41)
   Changes in other current assets 4   (39)  (35)
   Other -   2   41 
 Pension fund contribution (39)  (50)  (117)
 Payments for other employee benefits liabilities (22)  (22)  (24)
 Other (27)  39   33 
   Net cash flow provided by operating activities 418   330   289 
NET CASH FLOW USED FOR INVESTING ACTIVITIES        
 Additions to plant and equipment (including alloy) (353)  (332)  (442)
 Proceeds from the sale of assets (including alloy) or affiliates 16   59   81 
 Investment in subsidiaries and affiliates, net of cash acquired (62)  -   (84)
 Proceeds from Hurricane Sandy insurance claims 58   20   - 
 Deposit related to sale of Hangzhou, China plant 34   -   - 
   Net cash flow used for investing activities (307)  (253)  (445)
NET CASH FLOW PROVIDED BY (USED FOR) FINANCING ACTIVITIES        
 Proceeds from senior revolving credit and receivables securitization facilities 1,063   1,877   1,912 
 Payments on senior revolving credit and receivables securitization facilities (1,103)  (1,957)  (1,630)
 Proceeds from long-term debt -   599   6 
 Payments on long-term debt (2)  (441)  (10)
 Purchase of noncontrolling interest -   (22)  - 
 Net increase (decrease) in short-term debt (4)  (23)  26 
 Purchases of treasury stock (63)  (113)  (138)
 Other 2   4   8 
   Net cash flow provided by (used for) financing activities (107)  (76)  174 
Effect of exchange rate changes on cash (2)  2   (18)
Net increase in cash and cash equivalents 2   3   - 
Cash and cash equivalents at beginning of period 55   52   52 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

$57  $55  $52 
DISCLOSURE OF CASH FLOW INFORMATION        
 Cash paid during the year for income taxes$29  $30  $24 
 Cash paid during the year for interest$126  $122  $111 
             
Table 4
Owens Corning and Subsidiaries
Consolidated Balance Sheets
(unaudited)
(in millions)
 
  Dec. 31, Dec. 31,
ASSETS 2013 2012
CURRENT ASSETS      
 Cash and cash equivalents $57 $55
 Receivables, less allowances of $14 at Dec. 31, 2013 and $17 at Dec. 31, 2012  683  600
 Inventories  810  786
 Assets held for sale - current  29  -
 Other current assets  269  176
  Total current assets  1,848  1,617
Property, plant and equipment, net  2,932  2,903
Goodwill  1,166  1,143
Intangible assets  1,040  1,045
Deferred income taxes  436  604
Other non-current assets  225  256
TOTAL ASSETS $7,647 $7,568
         
LIABILITIES AND EQUITY      
CURRENT LIABILITIES      
 Accounts payable and accrued liabilities $988 $907
 Short-term debt  1  5
 Long-term debt – current portion  3  4
  Total current liabilities  992  916
Long-term debt, net of current portion  2,024  2,076
Pension plan liability  336  480
Other employee benefits liability  242  274
Deferred income taxes  23  38
Other liabilities  200  209
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  3,938  3,925
 Accumulated earnings  655  451
 Accumulated other comprehensive deficit  (297)  (364)
 Cost of common stock in treasury (c)  (504)  (475)
  Total Owens Corning stockholders' equity  3,793  3,538
 Noncontrolling interests  37  37
Total equity  3,830  3,575
TOTAL LIABILITIES AND EQUITY $7,647 $7,568
         
(a) 10 shares authorized; none issued or outstanding at Dec. 31, 2013 and Dec. 31, 2012
(b) 400 shares authorized; 135.5 issued and 117.8 outstanding at Dec. 31, 2013; 135.6 issued and 118.3 outstanding at Dec. 31, 2012
(c) 17.7 shares at Dec. 31, 2013 and 17.3 shares at Dec. 31, 2012
   
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,
  2013 2012 2013 2012
Net sales$461  $426  $1,845  $1,859 
% change from prior year 8%  -7%  -1%  -6%
             
EBIT$36  $23  $98  $91 
EBIT as a % of net sales 8%  5%  5%  5%
             
Depreciation and amortization expense$31  $32  $130  $123 
 
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,
  2013 2012 2013 2012
Net sales           
Insulation$466  $413  $1,642  $1,468 
Roofing 381   350   1,967   2,014 
Total Building Materials$847  $763  $3,609  $3,482 
% change from prior year11% -1% 4% -2%
             
EBIT           
Insulation$39  $9  $40  $(38)
Roofing 55   42   386   331 
Total Building Materials$94  $51  $426  $293 
EBIT as a % of net sales11% 7% 12% 8%
             
Depreciation and amortization expense           
Insulation$25  $25  $104  $105 
Roofing 10   10   38   38 
Total Building Materials$35  $35  $142  $143 
      
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,
  2013 2012 2013 2012
Charges related to cost reduction actions and related items$(3) $(27) $(26) $(136)
Net gain (loss) related to Hurricane Sandy insurance activity 31   (9)  15   (9)

Accelerated depreciation related to a change in the useful life of assets in Cordele, Georgia facility

 (20)  -   (20)  - 
General corporate expense (34)  (22)  (108)  (91)
EBIT$(26) $(58) $(139) $(236)
             
Depreciation and amortization$31  $13  $60  $83 
                
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,
     2013   2012   2013  2012  2013  2012   2013   2012   2013  2012 
RECONCILIATION TO ADJUSTED EARNINGS                             
Net earnings (loss) attributable to Owens Corning$22  $(46) $49 $39 $51 $44  $82  $(56) $204 $(19)
Adjustment to remove adjusting items net of tax 15   43   4  23  9  16   (11)  68   17  150 
Adjustment to tax expense to reflect pro forma tax rate* (2)  14   15  5  6  (20)  (19)  1   -  - 
ADJUSTED EARNINGS$35  $11  $68 $67 $66 $40  $52  $13  $221 $131 
                                 

RECONCILIATION TO ADJUSTED DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS

                   

DILUTED EARNINGS PER COMMON SHARE ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS

$0.18  $(0.38) $0.41 $0.32 $0.43 $0.37  $0.69  $(0.47) $1.71 $(0.16)
Adjustment to remove adjusting items net of tax 0.13   0.36   0.03  0.19  0.08  0.13   (0.09)  0.58   0.15  1.26 
Adjustment to tax expense to reflect pro forma tax rate* (0.02)  0.11   0.13  0.04  0.05  (0.16)  (0.16)  -   -  - 

ADJUSTED DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS

$0.29  $0.09  $0.56 $0.55 $0.56 $0.34  $0.44  $0.11  $1.86 $1.10 
                                 
RECONCILIATION TO DILUTED SHARES OUTSTANDING                   

Weighted-average shares outstanding used for basic earnings per share

 118.5   121.1   119.1  120.8  118.0  117.9   117.6   118.0   118.2  119.4 
Non-vested restricted shares 0.6   -   0.7  0.4  0.4  0.6   0.5   -   0.4  - 
Options to purchase common stock 0.5   -   0.6  0.3  0.4  0.3   0.4   -   0.5  - 
Diluted shares outstanding 119.6   121.1   120.4  121.5  118.8  118.8   118.5   118.0   119.1  119.4 
                                 
  
*In 2013 and 2012, the quarterly tax expense was adjusted to reflect the actual full year adjusted effective tax rate of 27 percent and 23 percent, respectively.

 

Contact:

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