TOLEDO, Ohio--(BUSINESS WIRE )--Owens Corning (NYSE: OC), a global building and construction materials leader, today reported second-quarter 2022 results.
“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.”
($ in millions, except per share amounts)
As a Percent of Net Sales
As a Percent of Net Sales
“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.”
Current 2022 financial outlook is presented below:
Effective Tax Rate on Adjusted Earnings
Cash Tax Rate on Adjusted Earnings
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
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.
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.
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
Table 1 Owens Corning and Subsidiaries Consolidated Statements of Earnings (unaudited) (in millions, except per share amounts)
EARNINGS BEFORE INTEREST AND TAXES
Equity in net (loss) earnings of affiliates
Net earnings attributable to non-redeemable and redeemable noncontrolling interests
NET EARNINGS ATTRIBUTABLE TO OWENS CORNING
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS
Table 2 Owens Corning and Subsidiaries EBIT Reconciliation Schedules (unaudited)
Adjusting income (expense) items to EBIT are shown in the table below (in millions):
Gain on sale of Shanghai, China facility
Gains on sale of certain precious metals
Impairment loss on Chambery, France assets held for sale
The reconciliation from Net earnings attributable to Owens Corning to EBIT and Adjusted EBIT, and the reconciliation from EBIT to EBITDA and adjusted EBITDA are shown in the table below (in millions):
NET EARNINGS ATTRIBUTABLE TO OWENS CORNING
Net earnings attributable to non-redeemable and redeemable noncontrolling interests
Equity in net (loss) earnings of affiliates
EARNINGS BEFORE INTEREST AND TAXES
Less: Adjusting items from above
ADJUSTED EBIT as a % of Net sales
EARNINGS BEFORE INTEREST AND TAXES
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION
Less: Adjusting items from above
Accelerated depreciation included in restructuring
ADJUSTED EBITDA as a % of Net sales
Table 3 Owens Corning and Subsidiaries EPS Reconciliation Schedules (unaudited) (in millions, except per share data)
A reconciliation from Net earnings attributable to Owens Corning to adjusted earnings and a reconciliation from diluted earnings per share to adjusted diluted earnings per share are shown in the tables below:
NET EARNINGS ATTRIBUTABLE TO OWENS CORNING
Adjustment to remove adjusting items (a)
Adjustment to remove tax expense on adjusting items (b)
Adjustment to tax expense to reflect pro forma tax rate (c)
RECONCILIATION TO ADJUSTED DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS
DILUTED EARNINGS PER COMMON SHARE ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS
Adjustment to remove adjusting items (a)
Adjustment to remove tax expense on adjusting items (b)
Adjustment to tax expense to reflect pro forma tax rate (c)
ADJUSTED DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS
RECONCILIATION TO DILUTED SHARES OUTSTANDING
Weighted-average number of shares outstanding used for basic earnings per share
Non-vested restricted and performance shares
Options to purchase common stock
Weighted-average number of shares outstanding and common equivalent shares used for diluted earnings per share
Please refer to Table 2 "EBIT Reconciliation Schedules" for additional information on adjusting items.
The tax impact of adjusting items is based on our expected tax accounting treatment and rate for the jurisdiction of each adjusting item. There is no tax benefit from the Chambéry, France assets held for sale impairment loss due to the entity being under a full valuation allowance.
To compute adjusted earnings, we apply a full year pro forma effective tax rate to each quarter presented. For 2022, we have used a full year pro forma effective tax rate of 26%, which is the mid-point of our 2022 effective tax rate guidance of 25% to 27%, excluding the adjusting items referenced in (a), (b) and (c). For comparability, in 2021, we have used an effective tax rate of 24%, which was our 2021 effective tax rate, excluding the adjusting items referenced in (a) and (b).
Table 4 Owens Corning and Subsidiaries Consolidated Balance Sheets (unaudited) (in millions, except per share data)
Receivables, less allowance of $10 at June 30, 2022 and $9 at December 31, 2021, respectively
Property, plant and equipment, net
Long-term debt, net of current portion
Preferred stock, par value $0.01 per share (a)
Common stock, par value $0.01 per share (b)
Cost of common stock in treasury (c)
Total Owens Corning stockholders’ equity
10 shares authorized; none issued or outstanding at June 30, 2022, and December 31, 2021
400 shares authorized; 135.5 issued and 97.2 outstanding at June 30, 2022; 135.5 issued and 100.4 outstanding at December 31, 2021
38.3 shares at June 30, 2022, and 35.1 shares at December 31, 2021
Table 5 Owens Corning and Subsidiaries Consolidated Statements of Cash Flows (unaudited) (in millions)
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES
Adjustments to reconcile net earnings to cash provided by operating activities:
Provision for pension and other employee benefits liabilities
Gains on sale of certain precious metals
Other adjustments to reconcile net earnings to cash provided by operating activities
Changes in operating assets and liabilities
Payments for other employee benefits liabilities
Net cash flow provided by operating activities
NET CASH FLOW USED FOR INVESTING ACTIVITIES
Cash paid for property, plant, and equipment
Proceeds from the sale of assets or affiliates
Investment in subsidiaries and affiliates, net of cash acquired
Net cash flow used for investing activities
NET CASH FLOW USED FOR FINANCING ACTIVITIES
Net decrease in short-term debt
Net cash flow used for financing activities
Effect of exchange rate changes on cash
Net (decrease) increase in cash, cash equivalents, and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD
Table 6 Owens Corning and Subsidiaries Segment Information (unaudited)
The table below provides a summary of net sales, EBIT and depreciation and amortization expense for the Composites segment (in millions):
EBIT as a % of net sales
The table below provides a summary of net sales, EBIT and depreciation and amortization expense for the Insulation segment (in millions):
EBIT as a % of net sales
The table below provides a summary of net sales, EBIT and depreciation and amortization expense for the Roofing segment (in millions):
EBIT as a % of net sales
Table 7 Owens Corning and Subsidiaries Corporate, Other and Eliminations (unaudited)
The table below provides a summary of EBIT and depreciation and amortization expense for the Corporate, Other and Eliminations category (in millions):
Gain on sale of Shanghai, China facility
Gains on sale of certain precious metals
Impairment loss on Chambery, France assets held for sale
General corporate expense and other
Table 8 Owens Corning and Subsidiaries Free Cash Flow Reconciliation Schedule (unaudited)
The reconciliation from net cash flow provided by operating activities to free cash flow is shown in the table below (in millions):
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES
Less: Cash paid for property, plant and equipment