Owens Corning has reported consolidated net sales of $5.7 billion in 2016, compared with net sales of $5.4 billion in 2015, an increase of 6%.
“Owens Corning had a great year. The company delivered revenue growth of six percent and achieved record levels of both adjusted EBIT and free cash flow,” said Chairman and Chief Executive Officer Mike Thaman. “Our 2016 results reflect the continued improvements we have made to our portfolio of businesses. In 2017, we expect to sustain our momentum and deliver another year of strong performance.”
Fourth-quarter 2016 net earnings were $86 million, or $0.76 per diluted share, compared with net earnings of $109 million, or $0.92 per diluted share, during the comparable quarter in 2015. Fourth-quarter 2016 adjusted earnings were $81 million, or $0.72 per diluted share, compared with $79 million, or $0.66 per diluted share, during the same period one year ago.
Full-year 2016 net earnings were $393 million, or $3.41 per diluted share, compared with net earnings of $330 million, or $2.79 per diluted share, during 2015. Adjusted earnings in 2016 were $419 million, or $3.63 per diluted share, compared with $304 million, or $2.57 per diluted share, during 2015.
Consolidated Fourth-Quarter and Full-Year 2016 Results
•Owens Corning performed at a very high level of safety in 2016, with a recordable incident rate of 0.50, compared to 0.52 in 2015.
•Reported earnings before interest and taxes (EBIT) for fourth-quarter 2016 were $136 million, compared with $138 million during the same period in 2015. Adjusted EBIT in fourth-quarter 2016 was $157 million, up from $136 million in 2015.
•Reported EBIT for full-year 2016 was $699 million, compared with $548 million during 2015. Adjusted EBIT in 2016 was $746 million, up from $550 million in 2015.
•Operating cash flow and free cash flow improved by more than $200 million each in 2016. The company delivered record free cash flow of $570 million as a result of improved earnings, strong working capital performance, and an advantaged tax position. The company converted adjusted earnings to free cash flow at a rate of 126% over the last two years, in excess of the prior guidance of about 100% over the years 2015 to 2018.
•During fourth-quarter 2016, Owens Corning repurchased 1.4 million shares of its common stock for $70 million. During 2016, the company repurchased 4.8 million shares for $240 million. As of the end of 2016, 9.8 million shares were available for repurchase under the current authorization.
•The Board of Directors declared a quarterly cash dividend of $0.20 per common share, an 11% increase compared with the same period in the prior year. The dividend will be payable on April 3, 2017, to shareholders of record as of March 10, 2017.
•The company expects an environment consistent with consensus expectations for U.S. housing starts and moderate global industrial production growth.
•In Composites, the company expects continued growth in the glass fiber market, driven by moderate global industrial production growth. In 2017, the company expects a third consecutive year of record EBIT, with growth of about $25 million primarily from improved operating performance.
•In Roofing, the company experienced strong growth in 2016 from new construction, reroof, and storm-related demand. In 2017, the company expects continued growth in new construction and reroof demand. This growth is not expected to offset anticipated declines in the storm markets, particularly Texas. The business will also benefit from the full-year impact of the InterWrap acquisition, which was completed in April, 2016.
•In Insulation, in the second half of 2016, the company experienced stable pricing and continued to recover its market share position in the U.S. residential fiberglass insulation business. In 2017, the company expects to deliver revenue growth of about $100 million with EBIT of $160 million or more.
•The company estimates an effective tax rate of 32 percent to 34 percent, and a cash tax rate of 10 percent to 12 percent on adjusted pre-tax earnings, due to the company’s $1.8 billion U.S. tax net operating loss carryforward.
•The company expects general corporate expenses to be between $120 million and $130 million in 2017. Capital additions in 2017 are expected to total approximately $375 million. Interest expense is expected to be about $110 million.
First-quarter 2017 results will be announced on Wednesday, April 26, 2017.