Owens Corning Delivers Record Net Sales of $2.6 Billion; Generates Net Earnings of $343 Million and Adjusted EBIT of $525 Million

Owens Corning (NYSE: OC), a global building and construction materials leader, today reported second-quarter 2022 results.

• Reported Net Sales Increase of 16% to $2.6 Billion
• Expanded Adjusted EBIT Margins to 20% and Adjusted EBITDA Margins to 25%
• Delivered Diluted EPS of $3.49 and Adjusted Diluted EPS of $3.83
• Generated Operating Cash Flow of $466 Million and Free Cash Flow of $361 Million
• Returned $136 Million of Free Cash Flow to Shareholders through Dividends and Share Repurchases

“Owens Corning delivered another outstanding quarter while advancing our enterprise strategy which accelerates our growth, strengthens our earnings power, and creates additional value for our shareholders. Our global teams continue to execute at a high level as we make strategic investments to expand our total addressable markets and enhance our market-leading positions,” said Chair and Chief Executive Officer Brian Chambers. “For the second half of the year, we remain focused on delivering strong financial results and positioning the company for long-term success.”

Enterprise Performance

Enterprise Strategy Highlights

• Owens Corning continues to invest in accelerating new product and process innovation to support customers and generate additional growth. In the second quarter, it launched 15 new or refreshed products.
• On June 6, Owens Corning announced that it completed its acquisition of WearDeck®, a premium producer of composite weather-resistant decking for commercial and residential applications. This transaction advances the company’s strategy to pivot its Composites business to focus on higher-value material solutions within the building and construction industry. WearDeck® is estimated to generate annual sales of approximately $60 million in 2022.
• On June 8, Owens Corning and Pultron Composites announced the formation of a joint venture to manufacture industry-leading fiberglass rebar. This agreement solidified the companies’ commitment to provide more sustainable product solutions and higher-performance concrete reinforcement products. It also increases market access to PINKBAR®+ Fiberglas Rebar used for flatwork and residential applications, and MATEENBAR™ Fiberglas™ Rebar used for heavy-load structural applications.
• On June 21, Owens Corning announced that it signed an agreement to acquire Natural Polymers, LLC, an innovative manufacturer of spray polyurethane foam insulation for building and construction applications. The transaction is anticipated to close in the third quarter. This acquisition advances the company’s strategy to strengthen its core building and construction products and expand its addressable markets into higher-growth segments. Natural Polymers expects to deliver annual sales of approximately $100 million in 2022.
• On July 15, the company entered into an agreement to acquire the remaining 50% interest in an existing joint venture based in the U.S., that produces nonwoven roofing mat. The acquisition is anticipated to close in the third quarter.
• On July 1, the company completed the sale of its European dry-use chopped strand (DUCS) manufacturing assets located in Chambéry, France. This transaction will result in a divestiture of approximately $100 million of annual sales. Consistent with its strategy to accelerate growth and generate higher and more sustainable margins, the company will convert the other two DUCS facilities to produce glass fiber supporting building and construction applications.

Cash Returned to Shareholders

• During the first six months of 2022, the company returned $400 million to shareholders through dividends and share repurchases. In the second quarter, the company paid dividends of $35 million and repurchased 1.0 million shares of common stock for $86 million. As of the end of the quarter, 9.9 million shares were available for repurchase under the current authorization.
• In June, Owens Corning announced that its Board of Directors declared a quarterly cash dividend of $0.35 per common share, a 35% increase compared with the same period in 2021.

“In the first half of 2022, we generated $624 million of operating cash flow and $412 million of free cash flow,” said Executive Vice President and Chief Financial Officer Ken Parks. “Our strong and consistent cash generation combined with our solid financial position provide us the flexibility to execute on our enterprise strategy, while remaining committed to returning at least 50% of free cash flow to shareholders over time.”

Other Key Highlights

• Owens Corning sustained a high level of safety performance in the second quarter with a recordable incident rate (RIR) of 0.81.
• In May, Owens Corning ranked No. 1 on the 100 Best Corporate Citizens list for 2022, which recognizes outstanding environmental, social and governance (ESG) performance and transparency among the largest, publicly traded U.S. companies. The company was the first to earn the top ranking for four consecutive years.
• As reported in April, Owens Corning made the decision to exit Russia through a transfer or sale of its facilities and halted all future investments in Russia. The company continues working to expedite its exit, while remaining committed to the safety and security of its employees in the country. 2021 net sales in Russia were approximately $100 million.

Segment Performance

• Composites net sales increased 23% to $719 million in second-quarter 2022 compared with second-quarter 2021, primarily due to higher selling prices and the favorable impact of customer mix. EBIT increased $56 million to $154 million, with 21% EBIT margins, on higher selling prices and favorable mix, which more than offset input cost inflation and increased transportation costs.
• Insulation net sales increased 16% to $934 million in second-quarter 2022 compared with second-quarter 2021, as a result of higher selling prices and the impact of favorable customer mix, partially offset by the negative impact of foreign currency. EBIT increased $45 million to $157 million, with 17% EBIT margins, on higher selling prices and favorable mix, which more than offset accelerating energy, material and transportation inflation.
• Roofing net sales increased 11% to $1.0 billion in second-quarter 2022 compared with second-quarter 2021, with higher selling prices partially offset by lower sales volumes. EBIT increased $24 million to $258 million, with 25% EBIT margins, primarily due to higher selling prices which more than offset accelerating cost inflation, primarily asphalt, and increased transportation costs.

Third-Quarter and Full-Year 2022 Outlook

• The key economic factors that impact the company’s businesses are residential repair and remodeling activity, U.S. housing starts, global commercial construction activity, and global industrial production.
• In the near term, the company expects the U.S. residential housing market and global commercial and industrial markets to remain positive. The company continues to closely manage the ongoing impacts of inflation, supply chain disruptions, and the regional impacts of the COVID-19 pandemic on the business.
• For third-quarter 2022, the company expects overall performance to result in net sales and adjusted EBIT growth for the quarter, versus the comparable quarter in the prior year.

Current 2022 financial outlook is presented below:

The above outlook excludes the impact of any acquisitions or divestitures not yet completed.

(1) Previously $160 million to $170 million.

Second-Quarter 2022 Conference Call and Presentation

Wednesday, July 27, 2022

9 a.m. Eastern Time

All Callers

• Live dial-in telephone number: U.S. 1.844.200.6205; Canada 1.833.950.0062; and other international +1.929.526.1599.
• Entry number: 873980 (Please dial in 10-15 minutes before conference call start time)
• Live webcast: https://events.q4inc.com/attendee/192344854

Telephone and Webcast Replay

• Telephone replay will be available one hour after the end of the call through August 3, 2022. In the U.S., call 1.866.813.9403. In Canada, call 1.226.828.7578. In other international locations, call +44 204.525.0658.
• Conference replay number: 228223.
• Webcast replay will be available for one year using the above link.

About Owens Corning

Owens Corning is a global building and construction materials leader committed to building a sustainable future through material innovation. Our three integrated businesses – Composites, Insulation, and Roofing – provide durable, sustainable, energy-efficient solutions that leverage our unique material science, manufacturing, and market knowledge to help our customers win and grow. We are global in scope, human in scale with approximately 20,000 employees in 33 countries dedicated to generating value for our customers and shareholders, and making a difference in the communities where we work and live. Founded in 1938 and based in Toledo, Ohio, USA, Owens Corning posted 2021 sales of $8.5 billion. For more information, 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, EBITDA, adjusted EBITDA, 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, adjusted EBIT, EBITDA and adjusted EBITDA, 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 EBITDA, 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 any results projected in the statements. These risks, uncertainties and other factors include, without limitation: the severity and duration of the current COVID-19 pandemic on our operations, customers and suppliers, as well as related actions taken by governmental authorities and other third parties in response, each of which is uncertain, rapidly changing and difficult to predict; levels of residential, commercial and industrial construction activity; levels of global industrial production; availability and cost of energy, transportation, raw materials or other inputs; issues related to acquisitions, divestitures, joint ventures or expansions; competitive and pricing factors; demand for our products; relationships with key customers; domestic and international economic and political conditions, including new legislation, policies or other governmental actions in the U.S. or elsewhere; industry and economic conditions that affect the market and operating conditions of our customers, suppliers or lenders; climate change, weather conditions and storm activity; uninsured losses, including those from natural disasters, pandemics, catastrophe, theft or sabotage; legal and regulatory proceedings, including litigation and environmental actions; changes to tariff, trade or investment policies or laws; research and development activities and intellectual property protection; issues involving implementation and protection of Information technology systems; achievement of expected synergies, cost reductions and/or productivity improvements; the level of fixed costs required to run our business; foreign exchange and commodity price fluctuations; our level of indebtedness; our liquidity and the availability and cost of credit; levels of goodwill or other indefinite-lived intangible assets; price volatility in certain wind energy markets in the U.S.; loss of key employees, labor disputes or shortages; 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 July 27, 2022, 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 Company News / Owens Corning Investor Relations News

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