Summary

• Owens Corning is a building and construction materials company that provides composites, insulation and roofing products globally.
• The company has operations in North America, Europe, South and Central America, and Asia-Pacific regions.
• Owens Corning was established in 1935 through the merger of Owens-Illinois and Corning Glass Works. It became a separate company in 1938.
• During the fiscal ended December 31, 2022, Owens Corning has reported net sales of $9,761 million which was $8,498 million a year earlier, an increase of 14.86%. Gross profit for the years is $2,616 million and $2,217 million, respectively.
• Operating income for the years is $1,714 million and $1,438 million, respectively, an increase of 19.19% year-on-year. However, the company ended up with a net earnings attributable to $1,241 million in fiscal 2022, as compared to $995 million a year earlier.

Brief Company Overview

Owens corning (NYSE: OC)  is a global building and construction materials company that provides fiberglass composition, insulation products, roofing products and system to building a sustainable future through material innovation. 

Owens corning Fiberglass Company was formed in 1935 through the merger of Owens-Illinois and Corning Glass Works. It became a separate company in 1938 with its headquarters established in Toledo, Ohio. In 1938, the company sales reached $2.6 million and in 2022 it raised at 9.8 billion. It is the world largest manufacturer of fiberglass composites. The company provides roofing, insulation and composite materials and products. The Company has an unabated business model with three reportable segments: Composites, Insulation and Roofing. The Composites, Insulation and Roofing reportable segments accounted for approximately 27%, 37% and 36% of the total reportable segment net sales, respectively, in 2022. The company has operations in North America, Europe, South and Central America, and Asia-Pacific regions. It supplies its brands to the wholesale distributors, retailers, and on-premise locations.

The Company has achieved a $9.8 billion sales in 2022. Mr. Brain Chambers is Board Chair, President, and Chief Executive Officer at the Company. Total number of employees of Owen Corning for its fiscal year ending in December of 2022 was 19,000. The Company has been a Fortune 500 company every year since the list was created in 1955. 

As on November 2023, 52-weeks price range for the stock of the company was $83.98 - $147.00. Trailing P/E of the company is 9.97 times (ttm) as on November, 2023, price to sales ratio (ttm) is 1.24, operating margin in 20.33%, profit margin in 12.31%, return on assets is 8.52%, and return on equity is 24.09%. Total number of shares outstanding as on November, 2023 is 88.88 million. 

Recent Developments

• In October, 2023, Owens Corning (NYSE: OC) achieved a net Sales of $25 million, Similar to Prior Year Grew Adjusted EBIT Margins to 21% and Adjusted EBITDA Margins to 26% Delivered Diluted EPS of $371 million.
•  In May 2023, the Company made the decision to exit the Protective Packaging business within the Roofing segment, including the production and sale of wood packaging, metal packaging and custom products
• The Company expects to exit the majority of the business by the end of 2023 and expects to generate savings of approximately $7 million annually by 2024. During the first nine months of 2023, the Company recorded $61 million of charges, primarily related to accelerated depreciation, accelerated amortization and severance.
•  On March 3, 2023, the Company finalized the sale of its Insulation site in Santa Clara, California for total proceeds of $234 million, net of transaction fees. Total proceeds included a non-refundable deposit of $50 million received in the third quarter 2021. As a result, the Company recognized a pre-tax gain of $189 million in the first quarter of 2023, which is recorded in Gain on sale of site on the Consolidated Statements of Earnings.

Financial Overview

Q3 2023 Performance Overview

Net sales of the third quarter was $2,479 million in 2023 which was $2,529 million in 2022. Grows profit of the third quarter was $727 million and $693 million, respectively. Operating income of the third quarter was $462 million in 2023 and $608 million in 2022. EBIT of the third quarter was $463 million in 2023 and $610 million, which is a result of $147 million decreased from the third quarter in 2022. Attributable net earning of Owens Corning of third quarter in 2023 was $337 million which was $470 in 2022. Attributable net earning decreased $133million in 2023 compared with third-quarter 2022. By 2023 the net profit of the third quarter was $337 million which was $469 million in 2022. EPS of Owens Corning for the quarter ending September 30, 2023 was $3.71, a 23.35% decline year-over-year. During the third quarter, the company returned $187 million of its earnings to shareholders through dividends and share repurchases. The company paid a quarterly cash dividend of $47 million and repurchased 1.0 million shares of common stock for $140 million. As of the end of the quarter, 10.8 million shares were available for repurchase under the current authorization.

Composites net sales decreased 11% to $567 million in third-quarter 2023 compared with third-quarter 2022, primarily due to lower volumes and price declines resulting from lower spot prices in glass reinforcements. EBIT decreased $46 million to $80 million while delivering 14% EBIT margins and 22% EBITDA margins. With slowing demand for glass reinforcements, the company continued to take actions to balance inventories with corresponding production downtime.

Insulation net sales decreased 5% to $913 million in third-quarter 2023 compared with third-quarter 2022. The change was primarily due to lower volumes in both the North American residential insulation and technical and global insulation businesses partially offset by positive price realization. EBIT decreased $23 million to $150 million, with EBIT margins of 16% and EBITDA margins of 22%, on lower volumes and planned maintenance downtime and production investments, partially offset by positive price realization.

Roofing net sales increased 8% to $1.1 billion in third-quarter 2023 compared with third-quarter 2022, with strong demand in several markets driven primarily by higher levels of storm activity, in addition to favorable mix and positive price. EBIT increased $114 million to $343 million, expanding EBIT margins to 32% and EBITDA margins to 33%. The EBIT improvement was primarily due to positive price/cost as well as higher volumes.

Annual Performance Highlights

During the fiscal ended December 31, 2022, Owens Corning has reported net sales of $9,761 million which was $8,498 million a year earlier, an increase of 14.86%. Gross profit for the years is $2,616 million and $2,217 million, respectively. Operating income for the years is $1,714 million and $1,438 million, respectively, an increase of 19.19% year-on-year. However, the company ended up with a net earnings attributable to $1,241 million in fiscal 2022, as compared to $995 million a year earlier. The total operating expenses are $902 million for the year 2022 and $779 million for the year 2021. EBIT of Owens Corning Inc. 2022 was $1,714 million a 19.19% increase from 2021. The net profit of the company was $1,241 million in 2022.

The company’s 2022 annual EPS was $12.7, a 33.12% increase from 2021. Current asset of the company was $3,556 million in 2022 and $3,097 million a year earlier. The total asset of the company was $10,752 million in 2022 and $10,015 million a year earlier. Owens Corning’s current liabilities was $2,104 million and $1,697 million a year earlier. In 2022, total liabilities of the company was $6,131 million and $5,680 million in 2021. Of the total sales of $9,761 million, Composite segment was $2,660 million, insulation segment was $3,714 million and roofing segment was $3658 million.

Net sales in the Composites segment has increased from $2,341 million in fiscal 2021 to $2,660 million in fiscal 2022. The increase was driven by higher selling prices of 443 million, partially offset by slightly lower sales volumes of approximately 5%. Favorable customer mix of $61 million was more than offset by the $76 million unfavorable impact of translating sales denominated in foreign currencies into United States dollars.

In the Insulation segment, net sales has increased from $3,184 million in fiscal 2021 to $3,714 million in fiscal 2022. The increase was driven by higher selling prices of $573 million, partially offset by approximately 2% lower sales volumes. Favorable customer and product mix and $29 million from the acquisition of Natural Polymers were mostly offset by the $118 million unfavorable impact of translating sales denominated in foreign currencies into United States dollars.

In the Roofing segment, net sales has increased from $3,209 million in fiscal 2021 to $3,658 million in fiscal 2022. Higher selling prices of $522 million and higher third-party asphalt sales of $72 million were partially offset by lower sales volumes of approximately 4% and unfavorable customer and product mix.

Net cash provided by operating activities of the company during fiscal 2023 is $1,760 million which was $1,503 million a year earlier, an increase of $257 million. Cash flow used in investing activities during the years are $623 million and $377 million, respectively. Cash used in financing activities is also $974 million and $881 million, respectively.

Business Overview

Owens Corning is an international building and construction materials company. Its product portfolio includes thermal and acoustical batts, foam sheathing, loose-fill insulation, and accessories. Thousands of lighter, stronger, and more durable products are made by its fiberglass composites. Owens Corning serves insulation products that conserve energy and improve acoustics, fire resistance and air quality in the spaces where people live, work and play. To protect homes and commercial buildings, the roofing products and systems of the company are used duly. The business is global in scope, with operations in 31 countries, and human in scale, with approximately 19,000 employees and longstanding, local relationships with its customers. The company has operations in North America, Europe, South and Central America, and Asia-Pacific regions. Owens Corning is headquartered in Toledo, Ohio, the US. Corning recorded net sales in 2022 of $9.8 billion. 

Segment Overview

Composites

Owens Corning glass fiber materials can be found in over 40,000 end-use applications primarily within three markets: building and construction, renewable energy and infrastructure. Such end-use applications include building structures, roofing shingles, tubs and showers, pools, decking, flooring, pipes and tanks, poles, electrical equipment and wind-energy turbine blades. These products are manufactured and sold worldwide. The company primarily sell their products directly to parts molders and fabricators. Within the building and construction market, their Composites segment sells glass fiber and/or glass mat directly to a small number of major shingle manufacturers, including the Roofing segment. The Composites segment includes vertically integrated material solutions. The Company manufactures, fabricates and sells glass reinforcements in the form of fiber. Glass reinforcement materials are also used downstream by the Composites segment to manufacture and sell glass fiber products in the form of fabrics, non-wovens and other specialized products. Demand for composites is driven by general global economic activity and, more specifically, by the increasing replacement of traditional materials such as aluminum, wood and steel with composites that offer lighter weight, improved strength, lack of conductivity and corrosion resistance. The company compete with glass fiber manufacturers worldwide. According to various industry reports and Company estimates, the Composites segment is a world leader in the production of glass fiber reinforcement materials. Primary methods of competition include innovation, quality, customer service and global geographic reach.­

Insulation

Owens Corning insulating products provide a variety of benefits such as energy conservation, thermal functionality, improved acoustical performance and convenience of installation and use.  A geographic mix of United States, Canada, Europe, Asia-Pacific and Latin America, a market mix of residential, commercial, industrial and other markets, and a channel mix of retail, contractor and distribution, Insulation segment includes a diverse portfolio of high, mid and low-temperature products. The company’s products in the North American residential market include thermal and acoustical batts, loosefill insulation, spray foam, foam sheathing and accessories, and are sold under well-recognized brand names and trademarks such as Owens Corning PINK FIBERGLAS™ Insulation. The products in the commercial and industrial markets include glass fiber pipe insulation, energy efficient flexible duct media, bonded and granulated mineral wool insulation, cellular glass insulation and foam insulation used in above- and below-grade construction applications, and are sold under well-recognized brand names and trademarks such as FOAMULAR, FOAMGLAS and Paroc. The company sells its insulation products primarily to insulation installers, home centers, lumberyards, retailers and distributors in the United States, Canada, Europe, Asia-Pacific and Latin America. Demand for Owens Corning’s insulating products is driven by North American new residential construction, repair and remodeling activity, commercial and industrial construction activity in the United States, Canada, Europe, Asia-Pacific and Latin America, and increasingly stringent building codes and the growing need for energy efficiency. Demand in the segment typically follows seasonal home improvement, remodeling and renovation and residential, commercial and industrial construction industry patterns. Demand for residential insulation in North America typically follows housing starts on a three-month lagged basis, although the new residential construction cycle can elongate due to labor availability and other factors beyond our control. The peak season for home construction and remodeling in the geographic markets generally corresponds with the second and third calendar quarters. Demand for commercial and industrial applications is more heavily tied to industrial production growth, commercial construction activity, and overall economic conditions in the global markets we serve. Insulation segment of the company competes primarily with fiberglass insulation manufacturers in the United States, with an international presence in Canada, Europe, Asia-Pacific and Latin America. According to industry reports and Company estimates, Owens Corning is North America’s largest producer of residential, commercial and industrial insulation. Principal methods of competition include innovation and product design, service, location, quality, price and compatibility of systems solutions. Working capital practices for this segment historically have followed a seasonal cycle. Typically, insulation plants run continuously throughout the year. This production plan, along with the seasonal nature of portions of the segment, generally results in higher finished goods inventory balances in the first half of the year. Since sales increase during the second half of the year, the company's accounts receivable balances are typically higher during this period.

Roofing

The primary products of Owens Corning in the Roofing segment are laminate and strip asphalt roofing shingles. Other products include roofing components, synthetic packaging materials and oxidized asphalt. The company has been able to meet the growing demand for longer lasting, aesthetically attractive laminate products with modest capital investment. It sells shingles and roofing components primarily through distributors, home centers, lumberyards, retailers and contractors in the United States. Its synthetic packaging materials are used primarily in the construction industry for lumber packaging. Oxidized asphalt is a significant input used in the production of the  asphalt roofing shingles. The company is vertically integrated and have manufacturing facilities that process asphalt for use in its roofing shingles manufacturing process. In addition, it sells processed asphalt to other shingle manufacturers, to roofing contractors for built-up roofing asphalt systems and to manufacturers in a variety of other industries, including automotive, chemical, rubber and construction. Asphalt input costs and third-party asphalt sales prices are correlated to crude oil prices. Demand for products in the Roofing segment is generally driven by both residential repair and remodeling activity and by new residential construction. Roofing damage from major storms can significantly increase demand in this segment. As a result, sales in this segment do not always follow seasonal home improvement, remodeling and new construction industry patterns as closely as Insulation segment. The company’s Roofing segment competes primarily with asphalt shingle manufacturers in the United States. According to various industry reports and Company estimates, Owens Corning’s Roofing segment is the second largest producer of asphalt roofing shingles in the United States. Principal methods of competition include innovation and product design, proximity to customers, quality and price. manufacturing operations of the company are generally continuous in nature, and the company warehouse much of the production prior to sale since it operates with relatively short delivery cycles. One of the raw materials important to this segment is sourced from a sole supplier. Owens Corning has a long-term supply contract for this material, and have no reason to believe that any availability issues will exist. If this supply was to become unavailable, the Company’s production could be interrupted until such time as the supplies again became available or the Company reformulated its products. Additionally, the supply of asphalt, another significant raw material in this segment, has been constricted at times. Although this has not caused a significant interruption of the production in the past, prolonged asphalt shortages would restrict our ability to produce products in this segment.

Company History

Owens-Corning Fiberglass Company was formed in 1935 through the merger of Owens-Illinois and Corning Glass Works. It became a separate company in 1938 with its headquarters established in Toledo, Ohio. In 1938 the companies decided it might be better to operate the joint venture as a separate company. Owens Corning Fiberglass Corporation was originally founded in 1938 and is known for inventing glass fiber and glass fiber insulation. In 1938, the company sales reached $2.6 million. In 1939, the United States Navy Bureau of Ships established Owens Corning insulation as the standard insulation for all horizontal and vertical spaces in all new warship construction. In 1942, Pittsburgh Corning launches a new glass product – FOAMGLAS® cellular glass, a material with exceptional properties. The first commercial product made using pre-forming was the Eames one-piece FRP chair. In 1945, the company worked with William Stout to develop the Stout-Scarab automobile: the first automobile with an FRP body. Owens Corning invented the Pre-Forming Process for making FRP parts in 1947. By 1948, the company developed chopped strand for FRP applications. Owens Corning was so successful that in 1949 Owens-Illinois and Corning Glass works were accused of illegally monopolizing the fiberglass industry through their joint control of the company. Under a court-mandated consent decree in 1949, Owens Corning was required to license its patents to competitors, and both parent companies were forced to relinquish control of what had been their subsidiary for 14 years. In 1949, the company built its first plant designed specifically for the manufacture of insulation. In 1952, FOAMGLAS® insulation was used on the restoration of the White House in Washington D.C.  The first fiberglass roving was made by Owens Corning for use in FRP fabrication. The company held its initial public offering on the New York Stock Exchange in 1952. Owens Corning led the way with its involvement in the first glass-fiber-reinforced automobile body, Chevrolet's Corvette in 1953. By 1953, Owens Corning began distributing asbestos-containing insulation, later resulting in numerous asbestos personal injury lawsuits. In 1955, The former H.C. Penney farm near Granville, Ohio, was purchased as the future site for the company’s essential research and testing facility. Also in 1955, Owens-Corning made the first Fortune 500 company list. In 1956, an experimental machine in Newark, Ohio, manufactured the first all fiber (AF) fiberglass wool, using the first AF fiber design. When the Granville Technical Center was completed, the Beta yarn was first made the company contributed there duly. Of the New York world’s fair, 200 pavilions were prevalent by the structures made by the Owens Corning’s reinforce plastics in 1964.  

Neil Armstrong took the first steps on the moon in 1969, wearing a suit made from Owens Corning Beta® Fiberglas® yarns. The 800-mile pipeline through Tukwila, Washington, Trans-Alaska was completed in 1977 where the company opened a temporary plant in 1974. The company purchased the Lloyd Fry Roofing Company and its subsidiary, the Trumbull Asphalt Company in 1977. “The Pink Panther” a United artists’ cartoon character was used to promote sales of pink fiberglass insulation by the company on August 15, 1980. In 1985, Owens Corning produced the glass fibers and installed fabric in the renowned Hajj Terminal at King Abdul Aziz International Airport in Jeddah, Saudi Arabia.

The company voluntarily filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code to address the growing demands on its cash flow resulting from its multi-billion-dollar asbestos liability in 2000. Owens Corning published its first sustainability report in 2007. By, 2009 The company introduced EnergyComplete™ with Flexible Seal Technology, a whole home insulation and air sealing system. The Duration® Series Shingles Designer Colors Collection, a line of roofing shingles featuring vibrant color combinations that help home and building owners make a colorful statement was launched by the company in 2010. By 2011, Owens Corning launched its EcoTouch™ PINK™ FIBERGLAS™ Insulation platform with PureFiber™ Technology featuring natural materials and a formaldehyde-free formulation. As a part of its development job the company launched a next generation of Duration® shingles - TruDefinition®, Duration® Series Shingles in 2012.[1] The 75^th anniversary of the company’s founding was celebrated by its sites around the world on October 30, 2013. By 2014, The company received the highest honor of the National Safety Council, the 2014 Green Cross for Safety medal. Owens Corning completed the acquisition of Paroc Group and it announced the issuance of its first green bond. The $450 million bond was the first green bond issued by any industrial company in the U.S by 2019. In 2020 Owens Corning introduced the FOAMULAR® NGX product line designed to help architects, contractors, and engineers meet their sustainability goals. The iconic MGM character and company “spokescat” became one of the world’s most recognizable and beloved brand mascots and the company celebrated the 40^th anniversary of its relationship with The Pink Panther™ on August 17, 2020. Owens Corning earned the No. 1 ranking on the 100 Best Corporate Citizens list for an unprecedented third year in a row by May 18, 2021 and launched PINK Next Gen™ Fiberglas™ insulation featuring advanced fiber technology by August 2021.

References

[1] https://www.owenscorning.com/en-us/roofing/shingle-recycling