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Differentiate, Perform, Grow
Q3 Results Based on Strong Global Composites & Roofing
Performance
Duncan PalmerChief Financial Officer
November 18, 2008
Imperial Capital Conference
2
Forward-Looking Statements and Non-GAAP Measures
This presentation 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, competitive factors, pricing pressures, availability and cost of energy and materials, acquisitions and achievement of expected synergies therefrom, general economic conditions, the effect of industry and economic conditions on the market and operating conditions of our customers and factors detailed from time to time in the Company’s Securities and Exchange Commission filings. The information in this presentation speaks as of the date October 29, 2008 and is subject to change. The Company does not undertake any duty to update or revise forward-looking statements. Any distribution of this presentation after that date is not intended and will not be construed as updating or confirming such information.
Additional Company information is available on the Owens Corning Web site: www.owenscorning.com.
Certain data included within this presentation contains "non-GAAP financial measures" as defined by the Securities and Exchange Commission. 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 our Current Report on Form 8-K filed with the Securities and Exchange Commission on October 29, 2008.
3
Owens Corning At A Glance
• Founded in 1938, an industry leader in glass fiber insulation, roofing and asphalt, and glass fiber reinforcements
• 2007 sales: $5 billion
• 18,000 employees in 26 countries
• 127.4 million diluted shares outstanding at September 30, 2008
• Senior debt ratings: BBB- and Ba1
• FORTUNE 500 company for 54 consecutive years.
• Residential Insulation• Commercial & Industrial Insulation• Manufactured Stone Veneer• Residential Shingles• Roofing Asphalts
• Glass Fiber Reinforcement Materials for Composites
Global LeaderLeading North AmericanMarket Positions
The Pink Panther™ © 1964-2008 Metro-Goldwyn-Mayer Studios Inc. All Rights Reserved.The color PINK is a registered trademark of Owens Corning. ©2008 Owens Corning.
4
Business Segment Overview
(1) Percentages by segment based on revenue of $4.7B before corporate eliminations
(2) Percentages based on segment results before restructuring costs and other credits, general corporate expenses, Income taxes and interest expense.
Nine Months 2008 YTD Revenue:$4.7 billion(1)
Nine Months 2008 YTD EBIT:$316 million(2)
Roofing and Asphalt
30%
Other Building Materials and
Services
4%
Composite Solutions
41%Insulating Systems
25%
Roofing and
Asphalt 36%
Other Building Materials and Services
-3%
Composite Solutions
60%
Insulating Systems
7%
Composites Group
6
An engineered material system…
…resulting in unique attributes replacing traditional materials
What is a “Composite”?
+ Other Materials• Resins• Additives• Filler
Source: Owens Corning
Reinforcements
High Strength Light WeightDurable Non-ConductiveNon-CorrosiveLonger Blades Up to 50% Lighter
Than Steel Safety
Glass 95%* Other
7
CompositesComposites
Sales EBIT as % of Sales
U.S. & Canada Residential
Construction 9%
U.S. & Canada Commercial & Industrial
20%
International71%
Company estimates
Q3 2008 Highlights
Q3 2008 YTD Revenue by End Market Four-Year and LTM Financial Performance*
• Sales up 48% and EBIT up 108% year-over-year, primarily due to acquisition
• About two-thirds of earnings increase due to acquisition, net of the divestiture
• Improved manufacturing productivity
• Inflation not fully offset by higher prices
2937EBIT as % of all segments
65%2033D&A
79EBIT as % of sales
108%2654EBIT
48%397589Net sales*
% ChangeQ3 2007Q3 2008($ in millions)
*Net sales before inter-segment eliminations
*2004 is not recast for the effect of discontinued operations
%
%
%
%
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
2004 2005 2006 2007 LTM0%
5%
10%
15%
20%
25%
30%
8
Greater Value through Synergy Attainment
Source: Owens Corning
At least $100 million of total synergies by 2011
Composition of Synergies
Successful Acquisition Market Position Innovation
Technology: • Upgrading to Advantex®
Supply Chain: • Reconfiguring plants• Fewer ocean shipments
Operating Expenses: • Eliminating redundancies
50%
20%
30%
9
Owens Corning is #1
Demand for Glass Reinforcements is Growing
Trends Driving Growth• Emerging economies
• Global energy demand
• Green solutions
Source: U.S. Fiber Economic Bureau, APFE, Owens Corning
1.5 to 2X Global GDP
5% to 7% CAGR
$8 B
… in glass fibers… in technical fabrics… in specialty glass mats
Successful Acquisition Market Position Innovation
10
0
1,000
Attractive End-Use Market Growth
Power &Energy
Aerospace& Defense
WaterDistribution TransportationIndustrial Housing
Source: Owens Corning
Owens Corning has played a major rolein the development of these markets
Consumer
Mar
ket S
ize
for
Gla
ss R
einf
orce
men
ts (k
t)
Successful Acquisition Market Position Innovation
CAGR ’08-’13>10% ~5%
Growth
11
Wind Power
• The world will spend $11 trillion on power infrastructure through 2030
• By 2015, spending on renewable energy will reach $300 billion a year
• Wind power is growing 20% per year, consuming 200,000 tons of glass reinforcements annually
Source: International Energy Agency; Morgan Stanley Clean Energy Report, May 2008; BTM Consultant ApS – March 2008; Owens Corning
Owens Corning is the leading supplier of glass reinforcements for wind power today
Building MaterialsGroup
13
Residential and Commercial Building Materials
• Attractive building materials segments: – Insulating Systems– Roofing and Asphalt– Other Building Materials and Services
• Leading market shares
• Powerful brand
• Broad distribution
• Used in virtually every home built in America
Roofing and Asphalt
15
Asphalt Roofing Industry is Attractive
• More than $7 billion market representing 75% of all residential roofing installed
• 75% – 80% re-roof; 20% – 25% new construction
• Market growth driven by aging of existing housing stock, new construction and storm activity
• Four national producers service more than 90% of the market
16
Four-Year and LTM Financial Performance
Net sales before inter-segment eliminations
Roofing and AsphaltRoofing and Asphalt
U.S. & Canada Commercial & Industrial
11%U.S. & Canada
Residential Repair & Remodeling
64%U.S. & Canada New Residential
Construction25%
Q3 2008 Highlights
Q3 2008 YTD Revenue by End Market
• Sales up 63% on higher selling prices due to raw material and delivery costs
• EBIT up on improved productivity, higher selling prices and improved mix
• Selling price increases offset inflation for first nine months of the year
• Storm-related demand expected to continue into 2009
Company estimates
1765EBIT as % of all segments
10%1011D&A
415EBIT as % of sales
533%1595EBIT
63%379616Net sales*
% ChangeQ3 2007Q3 2008($ in millions)
$0
$500
$1,000
$1,500
$2,000
2004 2005 2006 2007 LTM0%
2%
4%
6%
8%
%
%
%
%
Sales EBIT as % of Sales
17
Strategic Priorities
• Manage price to recover cost inflation
• Innovation fuels our customers’ success
– Duration® Series Shingle
– Roofing accessories
– Reinsulation opportunity
• Margin improvement
– Enhance product mix
– Increase roofing accessory sales
– Relentless about cost reduction
Improved operating margin and return on invested capital
18
Hip & Ridge Shingles
VentSure® Ventilation Products
Owens Corning Felt Underlayment Products
Owens Corning Shingles
Owens Corning Starter Shingle ProductsWeatherLock® Self-Sealing Ice & Water Barrier ProductsRapidFlowTM Gutter Drainage Protectionraft-R-mate® Attic Rafter VentUndereave Ventilation Products
AttiCat® Expanding Blown-In Pink FiberglasTM Insulation
Hip & Ridge Shingles
VentSure® Ventilation Products
Owens Corning Felt Underlayment Products
Owens Corning Shingles
Owens Corning Starter Shingle Products
Providing “Top of the House” Solutions
Insulating Systems
20
Our Insulating Products
• Residential Insulating Batt – used in wall cavities of newly constructed and existing homes
• Foam Insulation – used in above- and below-grade construction applications
• Flexible Duct Media – insulated duct used in new and existing homes as a more energy-efficient HVAC solution than metal ducts
• Metal Building Insulation – insulation used in commercial and industrial metal buildings
• Commercial and Industrial Pipe Insulation – fiberglass insulated pipe used in hot and cold industrial applications
21
• Remain profitable in a weak market
• Responsive capacity management
• Focus on operational execution
• Commercialize innovation supporting energy efficiency
Insulating Systems Strategic Priorities
Customer focus, cycle management and innovation are key to our success
22
Q3 2008 YTD Revenue by End Market
Company estimates
Q3 2008 Highlights
Four-Year and LTM Financial Performance
Insulating SystemsInsulating Systems
• Reached breakeven profitability in very weak U.S. housing market
• Sales down on lower volumes
• About 70% of EBIT decline due to lower selling prices and inflation
U.S. & Canada Commercial & Industrial
27%
U.S. & Canada Residential Repair
& Remodeling21%
U.S. & Canada New Residential
Construction39%
International13%
*Net sales before inter-segment eliminations
460EBIT as % of all segments
(6)%3331D&A
90EBIT as % of sales
(100)%420EBIT
(11)%462412Net sales*
% ChangeQ3 2007Q3 2008($ in millions)
$0
$500
$1,000
$1,500
$2,000
$2,500
2004 2005 2006 2007 LTM0%
5%
10%
15%
20%
25%
%
%
%
%
Sales EBIT as % of Sales
23
The Reinsulation Market Opportunity
• 40% of all energy in the United States is used in buildings
– More than industry and more than transportation
• Concern for energy efficiency and the environment is front-page news around the world
• In 2008, Oil and natural gas prices reached historic highs
• Insulation is the single-most cost-effective solution in the world to reduce greenhouse gases*
Nearly 80 million homes in United States are under insulated
*Source: McKinsey & Company
24
Owens Corning Financial Strategies
• Financial performance and discipline– Strong operating cash flow to support growth and
innovation– Continual focus on return on net assets in excess of
cost of capital
• Balanced use of free cash flow– Maintain strong balance sheet and ample liquidity– Disciplined capital investment to maintain the core
business and to grow through international opportunities– Support shareholder returns
Differentiate, Perform, Grow
Questions & Discussion
Duncan PalmerChief Financial Officer
November 18, 2008
Imperial Capital Conference
Appendix
27
Key Financial Data
1,91583
1028%
0.42102
830.570.30
74
38112
1,268
Q3-2007
2,0142404585%
1.06242181
-(6.17)
-
(794)(794)4,556
Q3 YTD 2008
1,9152343657%
0.892531910.580.52
75
67142
3,674
Q3 YTD 2007
2,014Debt, net of cash84D&A from continuing operations
151Marketing and administrative expenses7%Adjusted EBIT as a % of sales
0.72Adjusted EPS (diluted) from continuing operations
111Adjusted EBIT from continuing operations98EBIT from continuing operations
-EPS (diluted) from discontinued operations(6.36)EPS (diluted) from continuing operations*
-Earnings from discontinued operations
(810)Earnings (loss) from continuing operations*(810)Net earnings (loss)*1,629Net sales
Q3-2008($ in millions, except per share data)
*Includes Impact of Income Tax Valuation Allowance of $899 million
28
Q3 2008 Reconciliation from Adjusted EBITto EBIT
$98$(1) $(2)
$16
$(6)
$(20) $111
0
30
60
90
120
150
Q3 2008 Adjusted EBIT
Gains on Sales of Assets and Other
Acquisition Integration/Transaction Costs
Employee Emergence Equity Expense
Restructuring and Other C
osts
Net Precious Metal Lease Expense
Q3 2008 EBIT
EBIT
($M
M)
29
Adjusted EBIT by Business SegmentQ3 2008 Compared with Q2 2008
0
50
100
150
200
Q2 2008
Roofing an
d Asphalt
Composite S
olutio
ns Busin
ess
Insulatin
g Sys
tems Busin
ess
Other Build
ing Mate
rials
& Service
s
Corporate
Q3 2008
$77
$2
$58$(7)
$(2)$111
$(17)
Adj
uste
d EB
IT
($M
M)
30
*Net sales before inter-segment eliminations
Other Building Materials & ServicesOther Building Materials & Services
U.S. & Canada Commercial &
Industrial18%
U.S. & Canada New Residential
Construction50%
U.S. & CanadaResidential Repair
& Remodeling17%
Q3 2008 Highlights
Q3 2008 YTD Revenue by End Market
• Masonry products continued to face weak construction-related demand leading to majority of the sales and EBIT decline
• Basement finishing and SunSuites™ sales down due to weak consumer credit markets and impact on home remodeling
International15%
*2004 is not recast for the effect of discontinued operations
Four-Year and LTM Financial Performance*
Company estimates
8(2)EBIT as % of all segments
(25)%43D&A
9(4)EBIT as % of sales
(143)%7(3)EBIT
(14)%7867Net sales*
% ChangeQ3 2007Q3 2008($ in millions)
$0
$400
$800
$1,200
$1,600
2004 2005 2006 2007 LTM-8%
-4%
0%
4%
8%
%
%
%
%
Sales EBIT as % of Sales
31
Other Items
• Energy used in manufacturing– Represents about 10% of cost of sales– About 60% natural gas, 30% electricity, 10% other
• Capital expenditures estimated to be somewhat higher than $350 million in 2008
• Liquidity position remains strong
• Net Debt is currently expected to be at or close to last year’s level of $1.9 billion at year’s end
32
Share Buy-Back Program
• Announced a share buy-back program in the first quarter of 2007
• Authorized to repurchase up to 5%, approximately 6.5 million shares, of Owens Corning outstanding stock
• During Q3 Owens Corning repurchased 1.9 million shares of the Company’s common stock at an average price paid of $22.23
• Through September 2008, Owens Corning repurchased approximately 2.9 million shares of the Company’s common stock at an average price of $22.70 per share
• As of September 30, 2008, the company has about 3.6 million shares remaining available for repurchase under the current authorization