Insulation. Julian Francis President, Insulation Business

Transcription

1 Insulation Julian Francis President, Insulation Business 1

2 Insulation Highlights Track record of proven performance Strong brand and broad product portfolio provide opportunities to expand the earnings power of our business Expect growth in U.S. residential new construction to continue to drive price improvement 2

3 Achievements Delivered $100MM EBIT in 2014 on <1.0MM lagged U.S. housing starts Achieved average operating leverage of >50% since Q Secured over $125MM in price realization since the end of 2012 Expanded our Home Center presence Commercialized EcoTouch - recognized as the Greenest Insulation Brand Integrated the acquisition of Thermafiber successfully Strong Execution Across our Portfolio Source: Owens Corning SEC filings. Green Builder Media 2015 Readers Choice survey. Lagged housing refers to actual U.S. Census Bureau annual housing starts presented on a one-quarter lag. 3

4 Insulation Financial Performance $2,000 $1,500 $1,000 $500 Sales Millions of $ EBIT as % of Sales 8% 4% 0% -4% $ LTM -8% LTM reflects actual results Q Q Source: Owens Corning SEC filings. Returning to Historical Levels of Profitability 4

5 EBIT in Millions of Dollars Insulation EBIT Progress Q1 Q2 Q3 Q (20) (40) (60) (47) (34) (21) (16) (12) (38) Source: Owens Corning SEC filings. Consistent Quarterly EBIT Progression Since

6 Positioned to Grow Insulation End-Use Markets % of 2014 Revenue U.S. and Canada Residential New Construction 40% U.S. and Canada Repair and Remodel 20% U.S. and Canada Commercial and Industrial 24% Rest of World 16% Expected Market Growth Drivers Housing starts Building energy code adoption Aging housing stock Energy efficiency policies Owner/operator focus Fire codes Growing middle class Urbanization Revenue CAGR Attractive Growth Drivers Across End Markets Source: Owens Corning management estimates as of November

7 Owens Corning Insulation Global Opportunities # of Plants Fiberglass manufacturing site Foam manufacturing site Mineral fiber manufacturing site 18 9 Fiberglass Foam 2 Mineral Fiber Geographic Expansion Opportunities 7

8 Owens Corning Insulation Global Opportunities Residential Fiberglass Geographic Expansion Opportunities 8

9 Owens Corning Insulation Global Opportunities Engineered Fiberglass Geographic Expansion Opportunities 9

10 Owens Corning Insulation Global Opportunities Extruded Polystyrene Foam Geographic Expansion Opportunities 10

11 Owens Corning Insulation Global Opportunities # of Plants Fiberglass manufacturing site Foam manufacturing site Mineral fiber manufacturing site 18 9 Fiberglass Foam 2 Mineral Fiber Geographic Expansion Opportunities 11

12 Owens Corning Insulation Global Opportunities Mineral Fiber Geographic Expansion Opportunities 12

13 Mineral Fiber Utilizing latest technology to develop products for growth markets Leveraging existing Owens Corning sales force and customer relationships Focusing on growth in commercial and industrial segments Building a new mineral fiber plant in Joplin, MO Investing in Growing Markets 13

14 Owens Corning Insulation Global Opportunities Residential Fiberglass Repair and Remodel Geographic Expansion Opportunities 14

15 A Strong Brand #1 Insulation Brand in Homeowner Awareness 72% #1 Insulation Brand with Building Professionals Overall quality, brand familiarity, used most, and recent use # Hanley Wood Builder Magazine Brand Study # Hanley Wood Remodeling Magazine Brand Study Greenest Insulation Brand Green Builder Media s annual Readers Choice survey Sources: Owens Corning proprietary research, March 2013; Hanley Wood Builder and Remodeling Magazine 2015 Brand Studies; Green Builder Media 2015 Readers Choice survey THE PINK PANTHER Metro-Goldwyn-Mayer Studios Inc. All Rights Reserved. The color PINK is a registered trademark of Owens Corning Owens Corning. 15

16 Insulation advertisement can be downloaded at investor.owenscorning.com 16

17 Owens Corning Insulation Global Opportunities Residential Fiberglass New Construction Geographic Expansion Opportunities 17

18 U.S. and Canada Fiberglass Industry Light Density Demand Progression Year 2013 Increase in U.S. Housing Starts 145 K Increase in Light Density Demand 210 MM Lbs K 160 MM Lbs 2015E 129 K 200 MM Lbs Average Annual Demand Growth of 190MM Lbs over Last Three Years Light density fiberglass demand and capacity based on assets producing batts, rolls, flexible duct media, metal building insulation, duct wrap and appliance insulation; excludes loosefill products. Source: Owens Corning management estimates and various industry sources and publications (including North America Insulation Manufacturers Association); all competitive information legally obtained from appropriate 3 rd party sources. U.S. housing starts increase based on actuals reported by U.S. Census Bureau and 2015 consensus estimates. 18

19 Capacity B Lbs U.S. and Canada Fiberglass Industry Light Density Network Capacity Capacity Utilization: % 73% 85% 90% ( 0.3) ( 0.6) ( 0.2) Total Capacity Retired 2015 Total Capacity Mothballed Operating Plants Capacity Cold Lines Operating Lines Capacity 2.1MM U.S. Housing Starts 1.1 MM U.S. Housing Starts U.S. Housing Starts of 1.2 to 1.4MM Should Require Restart of Mothballed Capacity Light density fiberglass demand and capacity based on assets producing batts, rolls, flexible duct media, metal building insulation, duct wrap and appliance insulation; excludes loosefill products. Source: Owens Corning management estimates and various industry sources and publications (including North America Insulation Manufacturers Association); all competitive information legally obtained from appropriate 3 rd party sources. 19

20 Change in Demand/Capacity (Light Density MM Lbs) U.S. and Canada Fiberglass Industry Light Density Capacity and Demand Decline Trough Early Stage Recovery Sustained Performance Improvement % 90% 80% 70% 60% 50% OC U.S. New Construction Price Indexed to E 2016E 2018E in Demand in Operating Capacity Price Index Pricing has Strengthened with Market Recovery Light density fiberglass demand, capacity and price based on assets producing batts, rolls, flexible duct media, metal building insulation, duct wrap and appliance insulation; excludes loosefill products. Source: Owens Corning management estimates and various industry sources and publications (including North America Insulation Manufacturers Association). Demand estimate based on U.S. housing starts consensus. All competitive information legally obtained from appropriate 3 rd party sources. 20

21 Owens Corning Insulation Return to Historical Profitability Levels 30% EBIT Margin Avg EBIT Margin '85-'08 (15%) 20% 10% 0% -10% '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 LTM Historically Delivered 15% EBIT Margins at 1.5 Million Housing Starts LTM reflects actual results Q Q Source: Owens Corning management estimates and SEC filings of Owens Corning and predecessor company. Segment reporting comparability may differ over time. 21

22 Insulation A Proven Franchise Track record of proven performance Strong brand and broad product portfolio provide opportunities to expand the earnings power of our business Expect growth in U.S. residential new construction to continue to drive price improvement Progress Supports Confidence In Return to Historical Profitability 22

23 Questions and Discussion Julian Francis President, Insulation Business 23