Welcome to Owens Corning s Investor Day November 8, 2013

Transcription

1 Welcome to Owens Corning s Investor Day 2013 November 8,

2 Building Materials Group Chuck Dana Group President, Building Materials November 8,

3 Building Materials Business Strong businesses competing in end markets with attractive growth drivers Powerful brands aligned with winning customers across diverse channels Sustaining strong market positions 61 manufacturing sites Positioned for Significant End-Market Growth 37

4 Insulation EnergyComplete Air Sealant and EcoTouch Insulation 38

5 Insulation Engineered Insulation Glass 39

6 Insulation FOAMULAR Extruded Polystyrene Insulation 40

7 Insulation Thermafiber Mineral Wool Insulation 41

8 Roofing Duration Asphalt Shingles 42

9 Building Materials Financial Performance $4,000 $3,000 $2,000 $1,000 Sales Millions of $ EBIT as % of Sales 12% 9% 6% 3% $ LTM Growing Operating Margin Performance 0% LTM reflects actual results Q Q

10 Achievements Since Last Investor Day Returned Insulation business to profitability Increased Roofing margins Acquired Thermafiber, Inc. Focused on: Quality Customer service Commercial excellence Strong Execution Across Portfolio 44

11 Focus in 2014 and Beyond Insulation Leverage Price Capacity Roofing Margin management Roofing systems 45

12 Roofing Brian Chambers Vice President and General Manager Roofing November 8,

13 Our Roofing Business Attractive industry with growth opportunities High-performing product lines that benefit from vertical integration Roofing components that enhance overall roof performance and deliver strong margins Track record of strong financial performance Strong Business Performance in a Recovering U.S. Housing Market 47

14 Roofing Financial Performance Sales Millions of $ EBIT as % of Sales $2,400 $2,000 $1,600 $1,200 $800 $400 $ LTM Sustained Operating Margin Performance 30% 25% 20% 15% 10% 5% 0% LTM reflects actual results Q Q

15 U.S. Steep-Slope Roofing Market Tile 4% Slate 7% Metal 15% Wood 3% Composite 1% $9 Billion Roofing Materials Market (Excludes Roofing Accessories) Asphalt Shingles 70% Installed Cost of a Typical Roof Materials Represent 30-50% of Installed Cost Asphalt Shingles the Product of Choice In Thousands of Dollars Source: Owens Corning management estimates based upon Principia Partners. (2012) Residential Roofing Study, RS Means (2013) Residential Repair & Remodeling Costs (pages 67-84); Average roof size of 30 squares 49

16 U.S. Asphalt Shingle Market Improved Housing Supports Demand Growth MM Sq New Construction Re-roof Demand Major Storms Total Existing Home Sales '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13F 15 Yr. Avg Total F 137 Approximately $8 billion asphalt shingle and accessories market Re-roof represents 75% of demand, on average, with volatility in storm activity Expect growth in remodeling and new construction to lift demand over next few years Recovery to 15-Year Average Represents a 20% Increase in Demand MM Source: Asphalt Roofing Manufacturers Association, Summary of Asphalt Roofing Industry Shipments. National Association of Realtors existing home sales and Owens Corning management estimates 50

17 U.S. Asphalt Shingle Industry 70s 80s 90s Current OC FRY GAF ELK CERTAINTEED TAMKO CELOTEX MANVILLE IKO BIRD ATLAS GEORGIA PACIFIC FLINTKOTE GLOBE PABCO MALARKEY LUNDAY THAGARD CUSTOM ROOFING BIG CHIEF BEAR PHILIP CAREY OC GAF ELK CERTAINTEED TAMKO CELOTEX MANVILLE IKO BIRD ATLAS GEORGIA PACIFIC GENSTAR GLOBE PABCO MALARKEY LUNDAY THAGARD CUSTOM ROOFING OC GAF ELK CERTAINTEED TAMKO CELOTEX IKO ATLAS GEORGIA PACIFIC GS ROOFING GLOBE PABCO MALARKEY OC GAF/ELK CERTAINTEED TAMKO IKO ATLAS PABCO MALARKEY Top 90% Total Favorable Industry Structure for the Future Source: Owens Corning management estimates and various industry sources and publications 51

18 Leading Brand & Strong Market Position Roofing Distribution (1-Step) 65% Building Materials Distribution (2-Step) 15% Retail 15% Pro Chain Lumberyard 5% Owens Corning is Well Positioned to Service Contractors & Builders with Partners in all Channels 52

19 Vertically Integrated Supply Chain Asphalt Laminate Shingle Chopped Glass Mat Vertical Integration & Materials Science Capabilities Enhance Product Design & Profitability 53

20 Roofing Manufacturing Network Positioned to Support Market Growth Portland Northeast Facility Roofing Underlayments Asphalt West Compton Denver Southwest Midwest Oklahoma City Irving Houston Minneapolis Summit Memphis Atlanta Medina Brookville Kearny Savannah Jacksonville Brentwood Southeast A National Network to Serve Regional Demand 54

21 Shingle Product Portfolio Beauty and Performance Duration High-performance laminate Wide color pallet for greater contrast and dimension Patented SureNail technology for easy installation & wind resistance Oakridge Traditional laminate shingle New Artisan Colors blend artistry & craftsmanship Supreme Original 3-tab shingle Basic design providing good value Duration Shingles Provide Unique Benefits to Contractors & Homeowners 55

22 Roofing System Components The Total Protection Roofing System * Underlayments e c a WeatherLock Ice and Water Barrier b Synthetic Underlayments Vents a b c d VentSure Exhaust Ventilation Products Undereave Ventilation Products d f Other Finishing Components e Hip & Ridge Shingles f Starter Shingle Products Accessories Enhance Roof Performance; Deliver Strong Margins * Excludes non-owens Corning roofing products such as flashing, fasteners, and wood decking 56

23 Positioned for Growth Great business in a well-structured industry Over the near term, non-storm shingle demand growing mid-single digits based on improving U.S. housing activity Continued improvements in shingle design, cost, and product mix Confidence in operating margins of mid-teens or better Strong Business Performance with Market Growth Opportunities 57

24 Insulation Julian Francis Vice President and General Manager, November 8, 2013 Residential Insulation 58

25 Strong Portfolio of Insulation Businesses Latin America and Asia Pacific Businesses Profitable business Large market with development potential Engineered Insulation Systems Business North America focused Exposed to growth in residential and commercial construction Profitable through the downturn Attractive business with growth opportunities Residential Insulation Business Growth driven by U.S. housing recovery Improving financial performance 59

26 Achievements Since Last Investor Day Reduced the frequency of injuries by 35% Converted light-density products to EcoTouch fiberglass insulation, the most preferred among insulation contractors* Integrated FiberTEK and acquired Thermafiber, Inc., a manufacturer of mineral wool Delivered $50 million price improvement compared with last year in the first three quarters of 2013 Returned to profitability Strong Execution Across Our Portfolio * Owens Corning Independent professionally-commissioned study 60

27 Insulation Financial Performance $2,000 $1,500 $1,000 $500 Sales Millions of $ EBIT as % of Sales 10% 5% 0% -5% $ LTM Returning to Sustained Profitability -10% LTM reflects actual results Q Q

28 Insulation EBIT Progress EBIT in Millions of Dollars $40 $20 $0 -$20 -$40 -$60-47 Q1 Q2 Q3 Q $ Actual 2012 Actual 2013 Actual Consistent Quarterly EBIT Progression Since 2011 Source: Owens Corning quarterly and annual SEC filings 62

29 Owens Corning Insulation Well Positioned to Return to Historical Margins 30% EBIT Margin Avg EBIT Margin '85-'08 (15%) 20% 10% 0% -10% '86 '89 '92 '95 '98 '01 '04 '07 '10 '13 LTM Historically Delivered 15% EBIT Margins at 1.5 Million Housing Starts Source: Owens Corning management estimates and Owens Corning SEC filings, comparability may differ over time; last 12 months reflects actual results Q Q

30 Insulation Industry North American Fiberglass 100% 80% 60% 40% 20% 60% 2013 Industry Capacity Utilization 90% 75% 0% Total Capacity Operating Plants Operating Lines Capacity Utilization Tightening as U.S. Housing Recovers Capacity utilization based on 2013 estimate at 933k unlagged U.S. housing starts (Source: August 2013 Blue Chip consensus), light-density insulation. Source: Owens Corning management estimates as of September

31 Owens Corning Insulation North American Fiberglass Network Edmonton Candiac Toronto Delmar Santa Clara Nephi Kansas City Mt. Vernon Newark 2013 Average Utilization: Near full capacity Below full capacity Not in operation Eloy Waxahachie Fairburn Lakeland Continued Discipline in OC Capacity Management Capacity utilization based as on average 2013 total insulation production (actual plus forecast) using melter capacity Source: Owens Corning management estimates 65

32 Energy Codes Energy Efficiency Improvement (%) 100% 50% Residential Energy Productivity % Built to 2006 Code % Built to 2009 Code 2015 Expect 35% Build to 2012 Code 0% no code IECC IECC IECC Acceleration of Code Adoption Drives Demand for Insulation Products Year of Code Sources: Pacific Northwest National Laboratory, and Owens Corning management estimates as of August 2013 IECC International Energy Conservation Code 66

33 Code Changes Support Increased Glass Fiber Demand Fiberglass Insulation Use per Housing Start Indexed to F Multi-family mix 17% 31% 29% Code Adoption Drives Insulation Demand Growth of ~20% Per Unit from SF home size and % Owner / Contractor built relatively constant through the period at about 2,500 square feet and 20-25% respectively Sources: North American Home Builders; US Census Bureau; Owens Corning management estimates as of October

34 A Strong Building Materials Brand #1 Brand in Homeowner Awareness Insulation: 72% Roofing: 53% Intellectual property with PINK brand and THE PINK PANTHER 48% of homeowners associate Pink Panther with Owens Corning Returned to national advertising August 2013 Brand Preference Drives Pull Through Source: Owens Corning Proprietary research, March 2013 THE PINK PANTHER Metro-Goldwyn-Mayer Studios Inc. All Rights Reserved. The color PINK is a registered trademark of Owens Corning Owens Corning. 68

35 Insulation advertisement can be downloaded at investor.owenscorning.com 69

36 Owens Corning Fiberglass Insulation The Material of Choice 70 years of performance backed by building science Easy and safe to install Effective moisture management High recycled content and low-emitting EcoTouch insulation and Energy Complete air sealant provide an effective solution Proven, trusted and a great value 70

37 Growing with Our Customers Retail Contractors Distribution/ Pro Dealers OEMs Strength in Our Channels and Brand 71

38 Owens Corning Fiberglass Insulation North American Service Platform Edmonton Candiac Toronto Number of Plants Owens Corning 13 Nephi Santa Clara Kansas City Delmar Mt. Vernon Newark Johns Manville 8 CertainTeed 8 Eloy Waxahachie Fairburn Knauf 3 Lakeland National Footprint to Support Regional Demand Recovery Source: Owens Corning proprietary research, March

39 Positioned to Grow with Our Markets Insulation End-Use Markets % of 2012 Revenue U.S. and Canada Residential New Construction 37% U.S. and Canada Repair and Remodel 20% U.S. and Canada Commercial and Industrial 24% Latin America and Asia Pacific 19% Expected Market Growth Drivers Housing starts Building energy code adoption Household formation Aging housing stock Energy efficiency policies Code and green specification driven Owner/operator focus Growing middle class Infrastructure improvements Urbanization of China Revenue CAGR % 0-10% 5-10% 0-10% Continued Double-Digit Revenue Growth as Market Recovers Source: Owens Corning management estimates as of September

40 Insulation A Proven Franchise Positive demographics and energy-efficiency trends in new construction and renovation will drive market growth Focused on returning to historical profitability levels in the near-term through network optimization and aggressive margin management Geographic, channel and customer diversity provide an advantage to Owens Corning Industry-leading building science and sustainability Progress Supports Confidence In Return to Historical Profitability 74

41 Questions and Discussion The Global Market Leader Chuck Dana Group President, Building Materials November 8,