– Insulation significantly narrowed full-year losses and delivered second consecutive profitable quarter
– Roofing pricing environment at year-end 2012 provides momentum for 2013
– Composites’ low-delivered-cost asset repositioning to yield benefits this year
– Company actions and recovering markets support at least USD 100 million of adjusted EBIT growth in 2013
Owens Corning reported consolidated net sales of USD 5.2 billion in 2012, compared with net sales of USD 5.3 billion in 2011.
Full-year 2012 adjusted earnings were USD 131 million, or USD 1.10 per diluted share. The company reported a net loss of USD 19 million, or USD 0.16 per diluted share, for 2012. Both the adjusted and reported results compare to net earnings of USD 276 million, or USD 2.23 per diluted share, in 2011.
Fourth-quarter 2012 adjusted earnings were USD 13 million, or USD 0.11 per diluted share, compared with USD 48 million, or USD 0.40 per diluted share, during the same period one year ago. The company reported a net loss of USD 56 million, or USD 0.47 per diluted share, in the fourth quarter of 2012, compared with net earnings of USD 50 million, or USD 0.41 per diluted share, in 2011.
The net loss in 2012 reflects a one-time debt extinguishment charge of USD 74 million in conjunction with a tender offer to refinance USD 350 million of outstanding senior notes that occurred in the fourth quarter of 2012, as well as approximately USD 136 million of charges associated with global restructuring actions. The fourth-quarter loss was primarily impacted by both the debt extinguishment charge and USD 27 million of charges related to global restructuring actions.
“Owens Corning closed 2012 with positive momentum in each of our businesses,” said Chairman and Chief Executive Officer Mike Thaman. “Insulation ended the year with consecutive profitable quarters – a first since 2008 – narrowing losses significantly. Going forward, we believe all three businesses will benefit from recovering markets and company actions to deliver improved operating margins in 2013.
“We anticipate continued improvement in the US housing market and an environment of slow but stable global growth,” Thaman added, “and we are off to a good start in 2013.”
• Owens Corning’s safety performance in 2012 improved by 10% compared with 2011, marking the company’s 11th consecutive year of safety improvement.
• Adjusted EBIT in the fourth quarter of 2012 was USD 52 million, compared with USD 88 million in 2011. EBIT for the fourth quarter was USD 16 million, compared with USD 88 million during the same period in 2011.
• Full-year adjusted earnings before interest and taxes (EBIT) were USD 293 million in 2012, compared with EBIT of USD 461 million in 2011. Full-year EBIT in 2012 was USD 148 million, compared to USD 461 million in 2011.
During 2012, Owens Corning repurchased 3.7 million shares of the company’s common stock for USD 107 million under a previously announced share repurchase programme. As of year-end, 10 million shares remained available for repurchase under the company’s current authorization.
The company expects at least USD 100 million in EBIT improvement over 2012 as a result of company actions, an improving US housing market and moderate global growth. The pace of the US housing recovery and its impact on the company’s Insulation business, combined with sustained Roofing margins, could yield additional upside improvement.
The company expects Roofing to benefit from lower year-over-year winter incentives and announced first-quarter price actions; growth in US residential new construction; and growth potential in the re-roofing segment. Storm-related volume in 2013 could compare negatively with 2012 volumes, which were above the historical average.
Insulation is expected to benefit from the growth in US residential new construction, higher utilization rates, and improved pricing. However, prices remain significantly below historical levels.
In the Composites segment, the company expects to benefit from its asset repositioning, increased utilization following a first-quarter ramp-up, and global market growth. Prices are stable heading into 2013 although there is continued input cost inflation.
The company estimates a long-term effective tax rate of 25% to 28%, based on the blend of effective tax rates for its US and non-US operations. The long-term effective cash tax rate is estimated to be in the range of 10% to 12% on adjusted net earnings, due to the company’s USD 2.3 billion US tax net operating loss carry-forward. The effective book tax rate for 2013 on adjusted earnings is expected to be within the long-term range.
The company expects general corporate expenses to be in the range of USD 110 million to USD 120 million in 2013. General corporate expenses include corporate staff and other activities that support the operations. Expenses will be higher in 2013 than in 2012 in anticipation of incentive compensation levels consistent with improved performance.
First-quarter 2013 results will be announced on Wednesday, 24 April 2013.