2012 12 07 key banc nyc roadshow

Click here to load reader

Embed Size (px)

Transcript of 2012 12 07 key banc nyc roadshow

  • 1.Owens Corning Positioned for Growth Investor Visits Hosted by KeyBanc December 7, 2012 New York City, NYArnaud Genis Thierry DenisPresident Composites BusinessDirector Investor Relations

2. Forward-Looking Statements andNon-GAAP MeasuresThis presentation consists of this slide deck and the associated remarks and comments, all of which areintegrally related and are intended to be presented and understood together.This presentation contains forward-looking statements within the meaning of Section 27A of the SecuritiesAct of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are anystatements that are not historical facts, and they are based upon the Companys current expectations.Because forward-looking statements involve risks and uncertainties, the Companys actual results coulddiffer materially from those projected in these statements. Information regarding some of the risks anduncertainties that could cause such differences can be found in the Companys Securities and ExchangeCommission (SEC) filings, including under Item 1A of the Companys Annual Report on Form 10-K forthe fiscal year ended December 31, 2011.For purposes of this presentation, any discussion referring to year to date or last twelve months (LTM)refers to the period ended September 30, 2012. Otherwise the information in this presentation speaks as ofDecember 7, 2012, and is subject to change. The Company does not undertake any duty to update orrevise forward-looking statements. Any distribution of this presentation after December 7, 2012 is notintended and will not be construed as updating or confirming such information.This presentation contains references to certain "non-GAAP financial measures" as defined by the SEC. Areconciliation of these non-GAAP financial measures to their most directly comparable financial measurescalculated and presented in accordance with generally accepted accounting principles can be found in ourCurrent Report on Form 8-K furnished to the SEC on October 24, 2012. This Form 8-K and additionalCompany information is available on the Owens Corning website: www.owenscorning.com. Free cash flowis the change in net debt excluding the cash impact of issuing new stock, repurchasing treasury stock, andpaying stockholder dividends. Adjusted EBITDA is earnings before interest, taxes, depreciation,amortization, net precious metal lease expense, and other items that management does not allocate to oursegment results because it believes they are not a result of the Companys current operations.THE PINK PANTHER 1964-2012 Metro-Goldwyn-Mayer Studios Inc. All Rights Reserved. The color PINK is a registered trademark of Owens Corning. 2012 Owens Corning. 2 3. Owens Corning at a Glance Founded in 1938, an industry leader in glass fiber insulation, roofing and glass fiber reinforcements 2011 sales: $5.3 billion 15,000 employees in 28 countries Fortune 500 company for 58 consecutive years Component of Dow Jones Sustainability World Index Three powerful businesses, three valuable franchises Insulation Roofing Composites3 4. Investment Highlights Owens Corning maintains its goal of $1 billion of adjustedEBITDA at 1 million annual U.S. housing starts and continuingglobal economic growth Free cash flow conversion of adjusted net earnings expected tobe very high (up to 100% on average) over next five years The Composites business is the leader in an attractive growthindustry The Roofing business is positioned for growth as the U.S.housing market recovers The Insulation business is a proven franchise prepared to returnto historic margins 4 5. Strong PortfolioPositioned for Growth9495 96 9798 9900 01 0203 0405 06 0708 09 10 11 Insulation Roofing CompositesMargin >= 10%0% 5%22% Energy efficiency policies U.S. & Canada Code and greenCommercial specification driven5-10%& Industrial24% Owner operator focus Growing middle classLatin America& Asia Pacific Infrastructure improvements 5-10%20% Urbanization of China Expect Double-Digit Revenue Growth as Market RecoversSource: Owens Corning management estimates 7 8. Energy CodesResidential Energy Productivity 2009 49% Built to 2006 Code150% 2012 Expect 75% Built to 2009 Code 2015 Expect 32% Build to 2012 CodeEnergy Efficiency Improvement (%)100%50% 0% no code 19872006 2009 2012 2015 Year of IECC IECC IECC IECCCodeGoal Acceleration of Code Adoption 2006-2015Drives Demand for Insulation ProductsSources: Pacific Northwest National Laboratory, and Owens Corning management estimatesIECC International Energy Conservation Code8 9. Code Changes SupportIncreased Glass Fiber Demand Indexed Fiberglass Insulation Use 1.5 Potential demand if 2012 codes are adopted by all states Demand at forecasted code adoption level1 0.5 20052012 2016 Multi-family mix17%30-35%20-25% Single family home size (SF)2,4622,400-2,500 ~2,500 % Owner/Contractor built* 19%~27%20-25%Further Code Adoption and Positive Mix Trends Drive Growth of 20% or More Over the Next Four Years* US Census BureauSources: North American Home Builders; US Census Bureau; Owens Corning management estimates9 10. Owens Corning Insulation North American Fiberglass NetworkEdmonton Current Status:All lines operating CandiacSome lines down TorontoFacility mothballedDelmar Salt Lake CityMt. VernonKansas City Newark NephiSanta ClaraNetwork Management Eloy Optimize capacityWaxahachiefootprint for low cost, Fairburnbest serviceLakeland Quick startup capabilityReady to Serve as Markets Return to Their PotentialCapacity utilization based on 2012 estimate at 700,000 U.S. starts, light density insulationSource: Owens Corning management estimates 10 11. Insulation Industry North American Fiberglass 2012 Industry Capacity Utilization100%90%80%70%70% 60%60%50%50%40%30%20%10%0%Total Capacity Operating Plant Operating LinesContinued Focus on Cost Takeout and Managing OurCapacity with Demand RegionallyCapacity utilization based on 2012 estimate at 700,000 U.S. starts, light-density insulationSource: Owens Corning management estimates 11 12. Owens Corning Insulation A Proven Franchise30% % EBIT Avg % EBIT (15%)Well positionedto return to20%historical margins Improved cost and efficiency10% Code adoption0% Expected U.S. housing improvement -10%85 87 89 91 93 95 97 99 01 03 05 07 09 11 Historically Delivered 15% EBIT Margins at 1.5 Million Housing StartsSource: Owens Corning management estimates and Owens Corning SEC filings, comparability may differ over time 12 13. Insulation Prepared for Growthand Return to Profitability The leading market position in North American residential fiberglass insulation Favorable industry structure Positive demographics and code adoption drive market growth Positioned to deliver $100 million or more of EBIT at one million annual U.S. housing starts Anticipate EBIT margins of at least 15% at 1.5 million annual U.S. housing starts Positioned to Capitalize on GrowthSource: Owens Corning management estimates, Energy Information Administration, U.S. Census Bureau average single- and multi-family housing starts from 1959-2009 13 14. Roofing Business Q3 2012 Highlights $ (in millions)Q3 2012 Q3 2011YTD YTD20122011Near-term weakness in Roofing marketNet sales*$471$644 $1,664 $1,785Achieved sequential price improvementFundamental industry structure and market driversEBIT$83 $156$289$374 remain attractiveEBIT as % of18% 24% 17%21%salesD&A $10$10 $28 $31* before inter-segment eliminationsQ3 2012 Revenue by End Market*Five-Year Financial Performance $2,40030% $2,00025% $1,60020% U.S. & CanadaResidential Repair $1,20015%& Remodeling U.S. & Canada75% Commercial$800 10%& Industrial15% $400 5% U.S. & CanadaNew Residential $0 0% Construction10%2008 2009 2010 2011 LTM Sales*EBIT as % of sales*Owens Corning management estimates *In millionsSource: Owens Corning management estimates and Owens Corning SEC filings; comparability may differ over time 14 15. U.S. Asphalt Shingle Industry Consolidation 70s80s90sCurrentOC OC OC OCFRY GAFGAF GAF/ELKGAF ELKELK CERTAINTEEDELK CERTAINTEED CERTAINTEEDTAMKOCERTAINTEEDTAMKO TAMKO TAMKOCELOTEX CELOTEXCELOTEX MANVILLE IKOMANVILLEIKOATLAS IKO IKOBIRD GEORGIA PACIFIC ATLASBIRD ATLAS GS ROOFING PABCO ATLAS GEORGIA PACIFICMALARKEY GEORGIA PACIFICGENSTAR GLOBE FLINTKOTE GLOBEPABCO GLOBE MALARKEYPABCO PABCO MALARKEY MALARKEYLUNDAY THAGARDLUNDAY THAGARDCUSTOM ROOFINGCUSTOM ROOFING BIG CHIEFBEARPHILIP CAREYTop 90%16 13 10 4 Total 21 17 13 8Favorable Industry Structure for the FutureSource: Owens Corning management estimates and various industry sources and publications 15 16. U.S. Asphalt Shingle Market Improved Housing Supports Demand GrowthNew ConstructionRe-roofMajor StormsTotal Existing Home Sales CAGR180+ 3% - 6%7.588 18 75 33 2 83 322 316195,276 5.36Squares (millions)Homes (millions) 104106107 103 109 110113116 116 11210096 93 91 92 105 3333 3234 3739 3530 3031 26 27 171111 11 0- -0.0 97 98 99 0001 020304 0506 07 0809101115 Yr.AvgTotal 137 144143 136143144154161 173155 129135 120108122140 Recovery to 15-Year Average Represents a 30% Increase in Non-Storm DemandSource: ARMA data through Q4 2011, National Association of Realtors existing home sales and Owens Corning management estimates 16 17. Positioned for Growth Great business in a well-structured industry Asphalt shingle market growing 5-8% (over the next3-5 years on non-storm demand) driven by improvingU.S. housing activity Continued improvements in shingle design, cost and mix Confidence in operating margins of mid-teens or better Strong Business Performance withMarket Growth Opportunities 17 18. Composites Segment Q3 2012 Highlights $ (in millions)Q3 2012 Q3 2011YTD YTD20122011Delivered $11 million of EBIT on softer demand and higher manufacturing costs Net sales*$459$496 $1,433 $1,517Initiated further actions to bring inventories in-lineEBIT$11$49 $68$152 by year endEBIT as % ofAsset repositioning substantially complete; will2% 10%5%10%sales deliver benefits in 2