Strong first-quarter earnings growth positions the company for success in 2013. The company improved adjusted EBIT by $34 million in Q1 2013 and expects full-year adjusted EBIT to grow by at least $100 million. Upside to the outlook will depend on the pace of the US housing recovery and its impact on building materials margins. Owens Corning composites is positioned for improved returns as the glass fiber market grows and capacity utilization tightens due to rebuilding needs in China.
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Sell-Side Analyst Meeting- Amarillo, TX
1. Strong First-Quarter Earnings Growth
Positions Company for Success in 2013
Sell-Side Analyst Meeting
May 2, 2013 – Amarillo, TX
Michael McMurray
Chief Financial Officer
3. Q1 2013 Outlook and Highlights
Continued to focus on building a safer workplace
Improved adjusted EBIT by $34 million
Grew Roofing EBIT margins from 14% to 20% on effective price
execution
Insulation on track for profitability in 2013
Composites completes asset ramp-up; on track to achieve positive
operating leverage for remainder of 2013
Strong first-quarter performance supports full-year outlook of at
least $100 million improvement in adjusted EBIT with potential
upside
3
4. Expect margin performance improvement in each business
Expect adjusted EBIT to grow at least $100 million with potential
upside
The upside to the outlook will largely be determined by the pace
of the U.S. housing recovery and its impact on Building Materials
margins
4
2013 Guidance
5. Owens Corning Composites
Positioned for Improved Returns
Sell-Side Analyst Meeting
May 2, 2013 – Amarillo, TX
Arnaud Genis
President Composites Business
6. Macro Trends Support Glass Fiber Market Growth
Favorable Economic Trends
6Sources: 1 .Oxford Economics, 2 .IHS CSM Automotive, 3. MAKE, 4.Feb 2013 Blue Chip Consensus, 5 .IHS Global insight – Relevant Industrial Capex defined as oil & gas, mining
and water supply industries only , 6 . Owens Corning management estimates as of Apr 2013
Economic Indicators 2012 2013F 2014F Supporting Trends
Global Industrial Production
Growth Rate *1
1.7% 2.6% 4.3% Growth recovery
Automotive Builds (mm) *2 81 83 88 8 kg of glass fiber used per
vehicle (and growing) *6
Wind Installations (GW) *3 47 45 50 U.S. Production Tax Credit
extended; 7.5 kT glass fiber per
GW *6
North America Housing Starts
(mm) *4
0.8 1.0 1.2 100 kg glass fiber used per
housing unit on average *6
Relevant Industrial Capex ($B) *5 625 660 700 Rising costs for steel and
aluminum
7. 1
10
1981 1991 2001 2011
GlassFiberDemand
(MMTons)-logbasis
Glass Fiber Market Outlook
7
Glass Fiber Market Demand
30 Years Averaging 5% CAGR
2013-2016 Growth Forecast
2017
Glass Fiber Market Expected to
Continue to Grow at Historical Rates
About 60% of Growth
Expected to Come from China
Glass fiber market demand excludes E-glass yarns
Sources: Fiber economic bureau, Glass Fiber Europe, Global Trade information Services, inc. and Owens Corning management estimates as of Apr 2013
Annual Market Growth Expected to Absorb the Equivalent of Three
to Four World-Scale Plants on Average in 2013-2016 Timeframe
-
250
500
750
China Americas EMEA Rest of Asia India
DemandGrowth(ktons)
8. Composites Materials Price History
Market Price of Composites
vs. Traditional Materials
8Sources: Composite represents a combination of textile glass fiber and thermoset resins. Textile glass fiber, thermoset resin, steel and aluminum US Bureau of Labor Statistics
Composites Materials Have Become More Competitive
60
80
100
120
140
160
180
200
220
1992 1997 2002 2007 2012
Index(1992=100)
Composite Materials Steel Aluminum
9. Cost Trends
North
America
Europe China
Energy
Labor
Materials
Logistics
Foreign
Exchange
Cost Trends Favor a Global Network
Color coding indicates relative rate of growth compared to other regions. Cost drivers measured in their respective functional currency .
Sources: IHS Global Insight 2012-2015 projections, Owens Corning management estimates as of Apr 2013
China Facing Higher Inflation and Currency Appreciation
9
10. 0.5
1.1 1.1
1.7
0.3
0.5
2005-09 2010-12 2013-16
Change in global demand (MM T) Change in global capacity (MM T)
0.1 / yr 0.3 / yr 0.4 / yr 0.1 / yr 0.3 / yr 0.1 / yr
50%
60%
70%
80%
90%
100%
110%
EstimatedCapacityUtilization
Glass Fiber Industry Capacity
10
Glass Fiber Industry Estimated Capacity Utilization
Tighter Capacity Environment
Glass fiber market demand excludes E-glass yarns
Sources: Fiber economic bureau, Glass Fiber Europe, Global Trade information Services, inc. and Owens Corning management estimates as of Apr 2013
Supply Tension
Over 20% of global
capacity will need to be
rebuilt in China between
2013 and 2016
Owens Corning does not
expect to add
incremental melting
capacity before 2015
(high probability
additions)
2004 2006 2008 2010 2012 2014 2016
12. The glass fiber market is healthy and will grow driven by
improving economic conditions and continuing material
conversion
Glass fiber reinvestment economics in China are changing, as
costs increase, currency appreciates, and furnaces require
rebuilding
Composites materials remain a great value vs. other materials
Our focus is on offsetting inflation and returning margins to levels
that support investment
Owens Corning Composites
Positioned for Improved Returns
12