Financial News Details

Owens Corning Reports Fourth-Quarter and Full-Year 2013 Results

02/12/2014

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

TOLEDO, Ohio, Feb. 12, 2014 /PRNewswire/ -- 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

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 year

11%

-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 sales

11%

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.