Owens Corning Positioned for Growths21.q4cdn.com/855213745/files/doc_presentations/2014/Q3...Owens Corning at a Glance Founded in 1938, an industry leader in glass fiber insulation,

Owens CorningPositioned for Growth

Q3 2014This presentation shared at the following events

08/21/2014 Owens Corning Roadshow – New York Thierry Denis, Director Investor Relations

08/05/2014 OC Roadshow hosted by Bank of America - Europe Michael McMurray, Chief Financial Officer

This presentation consists of this slide deck and the associated remarks and comments, all of which are integrally related and are intended to be presented and understood together.

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “believe,” “anticipate,” “appear,” “may,” “will,” “should,” “intend,” “plan,” “estimate,” “expect,” “assume,” “seek,” “forecast,” and similar reference to future periods. We caution you against relying on these statements as they involve risks and uncertainties that are difficult to predict and the Company’s actual results may differ materially from those projected in these statements. Our future performance may be affected by risks and uncertainties including, 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; 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; difficulties managing production capacity; issues involving implementation of new business systems; new legislation or other governmental actions; labor disputes and litigation; our ability to use our net operating loss carry-forwards; research and

Forward-Looking Statements and Non-GAAP Measures

legislation or other governmental actions; labor disputes and litigation; 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.

For purposes of this presentation, any discussion referring to “year to date” or last twelve months (“LTM”) refers to the period ended on the last calendar day of the quarter preceding the date of the investor event referred to on the first page of this document. Otherwise the information in this presentation speaks as of the date of the investor event, and is subject to change. The Company does not undertake any obligation to update or revise forward-looking statements beyond what is required under applicable securities laws. Any distribution of this presentation after the date of the investor event is not intended and should not be construed as updating or confirming such information.

This presentation contains references to certain "non-GAAP financial measures" as defined by the SEC. Management uses non-GAAP measures for various purposes, including reporting results of operations to the Board of Directors, analysis of performance and related employee compensation measures. Although management believes these measures, and exclusions from GAAP therein, provide a usefulrepresentation of performance, non-GAAP measures should not be considered in isolation or as a substitute for GAAP measures. A reconciliation of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles can be found in Appendix A. Adjusted EBIT is earnings before interest, taxes and other items that management does not allocate to our segment results because it believes they are not a result of the Company’s current operations.

2

Owens Corning at a Glance

� Founded in 1938, an industry leader in glass fiber insulation, roofing and glass fiber reinforcements

� 2013 net sales: $5.3 billion

� 15,000 employees in 27 countries

� Fortune 500 company for 60 consecutive years

� Component of Dow Jones Sustainability World Index for four consecutive years

3

Investment Highlights

Composites Roofing Insulation

4

Three Market-Leading Businesses

Market-leading business with improving economic

conditions and higher utilization rates

Strong business performance in a

recovering U.S. housing market

Progress supports confidence in return to historical profitability

Outlook and Highlights

� Continued to focus on building a safer workplace; year-to-date safety performance consistent with prior year

� Delivered adjusted EBIT of $96 million

� Insulation grew EBIT by $14 million, marking the 12th

consecutive quarter of performance improvement

� Composites delivered EBIT of $37 million on improved pricing, operating performance, and volumes

� Roofing volume weakness continued; market share improved versus first quarter but still below historical levels

� Continue to expect full-year adjusted EBIT to be greater than 2013 result of $416 million

5

Strong PortfolioPositioned for Growth

’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13

Insulation

Roofing

Sources: Owens Corning’s SEC filings since 2006 . For comparability purposes, prior years have been provided based on Owens Corning’s SEC filings, internal management reports, and management estimates.

6

Margin >= 10% 0%<= Margin < 10% Margin < 0%

Roofing

Composites

Insulation Business

Q2 2014 Highlights� Delivered 12th consecutive quarter of EBIT

improvement

� Improved EBIT by $14 million on higher pricing and volume growth

� Expect 2014 results to benefit from growth in U.S. new construction, pricing and operating leverage

$ (in millions) Q2 2014 Q2 2013 1H 2014 1H 2013

Net sales* $447 $415 $802 $745

EBIT $18 $4 $19 $(17)

EBIT as % of sales

4% 1% 2% (2)%

D&A $26 $27 $51 $53

2013 Revenue by End Market*

7

* before inter-segment eliminations

-10%

-5%

0%

5%

10%

$0

$500

$1,000

$1,500

$2,000

2010 2011 2012 2013 LTM

Five-Year Financial Performance

Sales* EBIT as % of sales*In millions

International

16%

U.S. & CanadaNew Residential

Construction

40%

U.S .& CanadaResidential Repair

& Remodeling

20%

U.S. & CanadaCommercial& Industrial

24%

*Owens Corning management estimates; estimated error margin below 5%

Source: Owens Corning management estimates and Owens Corning SEC filings; comparability may differ over time


Owens Corning Insulation EBIT Progress

039

4

18

39

1

18

$0

$20

$40

EB

IT in

Mil

lio

ns

of

Do

lla

rs

Q1 Q2 Q3 Q4

8

Consistent Quarterly EBIT Progression Since 2011

-47-38

-12

-34

-16-21

-$80

-$60

-$40

-$20

2011 Actual 2012 Actual 2013 Actual 2014 Actual

Source: Owens Corning quarterly and annual SEC filings

EB

IT in

Mil

lio

ns

of

Do

lla

rs

10%

20%

30%

EBIT Margin Avg EBIT Margin '85-'08 (15%)

Owens Corning InsulationWell Positioned to Return to Historical Margins

-10%

0%

10%

'84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 LTM

9Source: Owens Corning management estimates and Owens Corning SEC filings, comparability may differ over time;

Historically Delivered 15% EBIT Margins at 1.5 Million Housing Starts

2014 Industry Capacity Utilization

65%

75%

90%

60%

80%

100%

Insulation IndustryNorth American Fiberglass

0%

20%

40%

Total Capacity Operating Plants Operating Lines

10

Capacity Utilization Tightening as U.S. Housing Recovers

Source: Owens Corning management estimates as of February 2014 rounded to nearest 5%. Products sold primarily to North American residential market. Excludes heavy density and loosefill products. Based on 2014 estimate of 1.1MM unlagged U.S. housing starts and other macro assumptions.

Toronto

Edmonton

Delmar

Candiac

Owens Corning Insulation North American Fiberglass Network

Eloy

Santa Clara

NewarkKansas City

WaxahachieFairburn

Mt. Vernon

Nephi

Lakeland

Continued Discipline in OC Capacity Management

Capacity utilization based as on estimated average 2014 total insulation production using melter capacitySource: Owens Corning management estimates 11

2014 Estimated Average Utilization:

Near full capacity

Below full capacity

Not in operation

Positioned to Grow with Our Markets

Insulation End-Use Markets

% of Full-Year 2013 Revenue

Expected Market Growth Drivers

Revenue CAGR2013 – 2015

U.S. and CanadaResidential New Construction

40%10-25%

U.S. and CanadaRepair and Remodel 0-10%

� Housing starts� Building energy code adoption� Household formation

� Aging housing stock

12Source: Owens Corning management estimates.CAGRs as of September 2013; estimated error margin of end-use market revenue below 5%

Repair and Remodel20%

0-10%

U.S. and CanadaCommercial and Industrial

24%5-10%

Latin America and Asia Pacific

16%

0-10%

� Aging housing stock� Energy efficiency policies

� Code and “green” specification driven

� Owner/operator focus

� Growing middle class � Infrastructure improvements� Urbanization of China

Continued Double-Digit Revenue Growth as Market Recovers

Roofing Business

Q2 2014 Highlights� Revenue down 14% primarily on weak shipments

� Delivered 14% EBIT margins on lower volume leverage, lower prices, and higher asphalt costs

� Expect full-year market to be flat to slightly down from 2013

$ (in millions) Q2 2014 Q2 2013 1H 2014 1H 2013

Net sales* $437 $508 $934 $1,115

EBIT $62 $116 $142 $235

EBIT as % of sales

14% 23% 15% 21%

D&A $10 $9 $19 $19


13


0%

5%

10%

15%

20%

25%

30%

$0

$400

$800

$1,200

$1,600

$2,000

$2,400

2010 2011 2012 2013 LTM


Sales* EBIT as % of sales*In millions


Construction

10%

U.S. & CanadaResidential Repair

& Remodeling

74%


15%

*Owens Corning management estimates; estimated error margin below 5%


International

1%

U.S. Asphalt Shingle Industry Consolidation

’70s ’80s ’90s Current

OCFRYGAFELK

CERTAINTEEDTAMKO

CELOTEXMANVILLE

IKOBIRD

ATLAS

OCGAFELK

CERTAINTEEDTAMKO

CELOTEXMANVILLE

IKOBIRD

ATLASGEORGIA PACIFIC

OCGAFELK

CERTAINTEEDTAMKO

CELOTEXIKO


GS ROOFING

OCGAF/ELK

CERTAINTEEDTAMKO

IKOATLASPABCO

MALARKEY

Source: Owens Corning management estimates and various industry sources and publications 14

Top 90% 16 13 10 4

Total 21 17 13 8


FLINTKOTEGLOBEPABCO

MALARKEY

LUNDAY THAGARDCUSTOM ROOFING

BIG CHIEFBEAR

PHILIP CAREY

PABCOMALARKEY

LUNDAY THAGARDCUSTOM ROOFING

GEORGIA PACIFICGENSTAR

GLOBEGLOBEPABCO

MALARKEY

MALARKEY

Favorable Industry Structure for the Future

116 116

33

3 2

78

18

8

322

17

6

19 11

6

9

7.5180

5.3

New construction

Re-roof Demand

Major StormsMM Sq. MMTotal Existing Home Sales

U.S. Asphalt Shingle Market Improved Housing Supports Demand Growth

33 30 31 32 34 37 39 3526

1711 11 11 14 17

25

107103

109 110113

116 116112

100

9693 91 93 94 88

103

0.00'99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 15 Yr.

Avg

Total 143 136 143 144 154 161 173 155 129 135 120 108 122 118 111 137

Recovery to 15-Year Average Represents a 20% Increase in Demand

Source: Asphalt Roofing Manufacturers Association, Summary of Asphalt Roofing Industry Shipments. National Association of Realtors existing home sales and Owens Corning management estimates 15

Strong Business in a Market Poised for Growth

� Great business in a well-structured industry

� High-performing product lines that benefit from vertical integration

� Track record of strong financial performance

� Confidence in operating margins of mid-teens or better

16

Strong Business Performance in a Recovering U.S. Housing Market

Composites Segment

Q2 2014 Highlights� Delivered EBIT of $37 million on improved pricing,

operating performance, and volumes

� Planned furnace rebuilds under way; anticipate rebuild costs to peak in Q3

� Progress in pricing supports outlook for full-year improvement at the top end of $20 million to $30 million range

$ (in millions) Q2 2014 Q2 2013 1H 2014 1H 2013

Net sales* $505 $472 $982 $931

EBIT $37 $32 $64 $41

EBIT as % of sales

7% 7% 7% 4%

D&A $34 $34 $68 $66


17


-5%

0%

5%

10%

15%

$0

$600

$1,200

$1,800

$2,400

2010 2011 2012 2013 LTM


Sales* EBIT as % of sales*In millions*Owens Corning management estimates; estimated error margin below 5%



International

60%


Construction

3%

U.S. & CanadaResidential Repair

& Remodeling

10%


27%

Glass Fiber A $7 Billion Global Market

Construction35%

Consumer17%

Wind6%

• Residential• Commercial• Water transportation

& storage

• Appliances• Electronics• Recreation

18

Transportation28%

Industrial14%

Glass reinforcements market defined as glass fiber reinforcements and direct conversion products as consumed, excluding yarnsSource: Owens Corning management estimates as of Feb 2014

• Cars• Trucks, buses, trains• Marine

• Factories• Mining• Offshore platforms

A Key Material Enabling Solutions Essential to Everyday Life

Owens Corning CompositesPositioned to Win

#1 Position Emerging Position

19Sources: Owens Corning management estimates

% Market Revenue = market revenue in region as % of 2013 global market size % OC Revenue = OC revenue in region as % of OC Composites global 2013 salesGlass reinforcements market defined as glass fiber reinforcements and direct conversion products as consumed, excluding yarns

#1 Position

#1 Position

Leading Market Positions and an Unrivaled Supply Network

OC glass fiber manufacturing siteOC downstream fabrication site

3,000

4,000

5,000

Glass Fiber Market DemandG

lass F

iber

K T

on

s

Glass Fiber Demand Has Grown at 1.6 Multiple of Industrial Production Growth

-

1,000

2,000

1981 1989 1997 2005 2013

20

Gla

ss F

iber

K T

on

s

Glass fiber market demand excludes E-glass yarnsSources: Fiber Economics Bureau, Glass Fiber Europe, Global Trade Information Services, Inc. and Owens Corning management estimates

Historical Glass Fiber Market Growth Averaging 5%

China Emergence

Macro Adjustment

Supply Tension

Glass Fiber Industry PhasesSigns of a New Era

Capacity Overbuild

Excess Inventory

Improved Returns

21

High Utilization Rates and Reinvestment EconomicsSupport Higher Returns

2005 – 2009 2010 – 2012 2013 – 2016

Glass Fiber Industry Estimated Capacity

2004 2006 2008 2010 2012 2014 2016

Change in global demand (MM T)

1.1

0.9

1.7

80%

90%

100%

Est

ima

ted

Ca

pa

city

Uti

liza

tio

n

Supply Tension

90% Threshold

22

Tighter Capacity Environment Expected in the Near Term

Glass fiber market demand excludes E-glass yarnsSources: Fiber Economics Bureau, Glass Fiber Europe, Global Trade Information Services, Inc. and Owens Corning management estimates as of February 2014

(high probability additions)

0.1/ yr 0.3/ yr 0.1/ yr 0.1/ yr0.4/ yr 0.2/ yr

demand (MM T)

Change in global capacity (MM T)

0.5

0.9

0.4

0.5

2005-09 2010-12 2013-16

0.1/ yr 0.3/ yr 0.4/ yr 0.1/ yr 0.2/ yr 0.1/ yr

50%

60%

70%

Est

ima

ted

Ca

pa

city

Uti

liza

tio

n

Price Realization

2007 – 2008 2009 2010 – 2011 2012 – 2013

EBITMargin

Industry Capacity Utilization

�Historical highs in China

�Global 30-year lows

�Widespread idle and curtailed

�Global tightness�Sharp recovery

causes supply shock

�China capacity all operational

�Europe negative; slower global growth

23

Tight Industry Capacity has Provided Significant Pricing Opportunity in the Recent Past

and curtailed factories

�China delays startups

shock�Demand outpaces

restart of idle capacity

slower global growth�Large inventory

builds

OC Pricing �~$100MM gain �~$50MM loss �~$100MM gain �~$30MM loss (all in 2012)

Sources: Owens Corning’s SEC filings since 2006. For comparability purposes, prior years have been provided based on Owens Corning’s SEC filings, internal management reports, and management estimates.

Margin: 10%+ Margin: 0% - 10% Margin: < 0%

Owens Corning Composites

� Global megatrends, continued growth in industrial production, and material substitution support glass fiber market growth at a 5-7% CAGR Price RealizationPrice Realization

Cost LeadershipCost Leadership

� Strategic focus on core building material markets with sustainable solutions

� Clear agenda to deliver improved returns

24Source: Owens Corning management estimates as of February 2014

Leader in an Industry Entering a Phase of Supply Tension

Product LeadershipProduct Leadership

Capital EfficiencyCapital Efficiency

Sustaining a Strong Balance Sheet

� Maintaining investment-grade financial strength is a pillar of Owens Corning’s strategy

� Maintained investment-grade credit ratings from Standard & Poor's and Fitch

� $800 million revolving credit facility maturing in 2018

� $250 million accounts receivable facility, which matures in 2016

� $1.8 billion senior notes outstanding with 2016, 2019, 2022 and 2036 maturities

� Sustaining ample liquidity to support growth

� Capital markets remain open to Owens Corning

25

Tax Position is a Significant Asset

� Benefit from $2.1 billion NOL with estimated present value of approximately $5 per share

� Delivering cash tax savings of about $60 million per year

� Expect long-term book tax rate of 28% to 30% based � Expect long-term book tax rate of 28% to 30% based on geographic mix of earnings and tax planning

� Cash tax rate of 10% to 12% over the next few years

26Source: Owens Corning management estimates

Disciplined Capital Allocation Strategy

� Drive shareholder returns by enabling organic and inorganic growth and supporting the balance sheet

– Maintain investment grade

� Capital allocation strategy

– Investing in attractive organic growth– Investing in attractive organic growth

– Returning excess cash to shareholders

– Pursuing value-creating acquisitions

� Quarterly dividend initiated in 2014 conveys confidence in long-term financial outlook and cash flow generation

� As of June 30, 2014, 7.7 million shares remain available for repurchase under existing authorization

27

Key Financial Data

($ in millions, except per share data) Q2 2014 Q2 2013 1H 2014 1H 2013

Net sales $1,355 $1,347 $2,633 $2,697

Net earnings attributable to Owens Corning $21 $49 $141 $71

Diluted earnings per share attributable to Owens Corning common stockholders

$0.18 $0.41 $1.19 $0.59

Earnings before interest and taxes (EBIT) $73 $118 $181 $175

28

Adjusted EBIT $96 $124 $173 $201

Adjusted Earnings $45 $68 $80 $103

Adjusted EPS (diluted) $0.38 $0.56 $0.68 $0.86

Adjusted EBIT as a % of sales 7% 9% 7% 7%

Marketing and administrative expenses $130 $134 $262 $267

Depreciation and amortization $78 $79 $154 $157

Cash flow from (used for) operating activities $155 $164 $(117) $(15)

Total debt (excluding rate swap), net of cash $2,194 $2,180 $2,194 $2,180

2014 Corporate Environment & Guidance

Macro Environment

� Continued growth in U.S. housing starts; consensus continues to be over 1,000,000

� Moderate global industrial production growth

Primary Guidance

� Expect full-year adjusted EBIT to be greater than 2013 result of $416 million, based on the current outlook for an improving U.S. housing market and moderate global growth

� Corporate expenses of $100-$110MM� Interest expenses in line with last year� Capital expenditures about $370MM, including

about $65 million for the start of construction of a non-woven facility

� Depreciation & amortization about $315MM� Cash tax rate of 10-12% and book tax rate of

28-30%* on adjusted pre-tax earnings

* Excluding significant tax reserve reversalsSource: Owens Corning management estimates as of April 2014

Other Guidance Items

29

2014 Business Environment

Roofing Insulation Composites

� Growth in U.S. residential new construction

� Re-roof demand below historical levels

� Growth in U.S. residential new construction

� Continued high

� Current prices significantly below historical average

� Improved industry capacity utilization

� 2013 global growth below long-term trend

30

� Continued high utilization of active lines

� Improved pricing trend

average� Expectations of

higher global growth

� Encouraging price trends

Source: IHS Global Insights, Moody’s and Owens Corning management estimates as of July 2014

Appendix ANon-GAAP Reconciliations

31

Appendix ANon-GAAP Reconciliations

32

Documents

Owens Corning Positioned for Growths21.q4cdn.com/855213745/files/doc_presentations/2014/Q3...Owens Corning at a Glance Founded in 1938, an industry leader in glass fiber insulation,