First Quarter in Line with Company's Expectations;
On Target to Deliver $475 Million in Adjusted EBIT in 2011
- Grew EBIT in Composites by 55% Versus the First Quarter of 2010
- Benefitted from a Recovery in Roofing Volumes that Supports Full-Year Outlook
- Challenged by First-Quarter Insulation Market Conditions; Taking Actions to Support Profitable Second Half in Insulation
- Project Adjusted EPS Growth of More Than 30% in 2011
Owens Corning (NYSE: OC) today reported consolidated net sales decreased 2 percent to $1.24 billion in the first quarter of 2011, compared with $1.27 billion in the first quarter of 2010.
First-quarter 2011 net earnings were $24 million, or $0.19 per diluted share, compared with net earnings of $48 million, or $0.38 per diluted share, in the first quarter of 2010. First-quarter adjusted earnings, when adjusted to the company's expected full-year effective tax rate of 28 percent, were $25 million, or $0.20 per diluted share, compared with $53 million, or $0.42 per diluted share, in the first quarter of 2010. (See Tables 1, 2 and 3 for a discussion and reconciliation of these items.)
"Owens Corning delivered profit in line with our expectations for the first quarter driven by continued strong performance in the Composites and Roofing businesses," said Chairman and Chief Executive Officer Mike Thaman. "We remain confident in our guidance of $475 million in adjusted EBIT for 2011.
"During the quarter we made operating investments to expand our Composites capacity and convert Insulation facilities to produce our new EcoTouch™ insulation," Thaman added. "We expect that these investments -- combined with improving economic conditions and our recent pricing actions -- will improve profitability throughout the balance of the year."
Consolidated First-Quarter 2011 Results
- Owens Corning's primary safety metric improved by approximately 30 percent over the company's full-year 2010 performance.
- First-quarter earnings before interest and taxes (EBIT) was $61 million in 2011 compared with $83 million in the first quarter of 2010. In 2010, the company had certain items that management believes were not the result of current operations. After adjusting for these items, Owens Corning's first-quarter 2010 adjusted EBIT was $97 million. (See Table 2 for a reconciliation of these items.)
- Gross margin as a percentage of net sales was 16 percent in the first quarter of 2011 compared with 19 percent in 2010
Net sales in the Building Materials segment were lower in the first quarter of 2011 compared with the same period in 2010. Most of this decrease was related to lower sales volumes within the Roofing business. Sales were also negatively impacted by the fourth-quarter 2010 divestiture of the North American Masonry Products business and lower sales in the Insulation business.
In the Roofing business, lower shingle volumes accounted for approximately three-fourths of the decrease in net sales during the quarter. First-quarter 2011 shingle volumes were lower than the first quarter of 2010 because of heavier customer restocking activity in the first quarter of 2010. The remaining decrease in net sales between the first quarter of 2011 and the first quarter of 2010 was due to lower selling prices, which more than offset favorable product mix.
In the Insulation business, net sales in the first quarter of 2011 were lower than the same period in 2010 due to lower sales volumes that were partially offset by higher selling prices. Lower sales volumes continue to persist given the current state of the U.S. housing market. Pricing actions taken in the United States in the second half of 2010 resulted in higher selling prices in the first quarter 2011 as compared to the first quarter of 2010.
EBIT for the Building Materials segment decreased in the first quarter of 2011 compared with the same period in 2010 primarily because of lower EBIT in the Roofing business.
In the Roofing business, approximately three-fourths of the decrease in EBIT for the first quarter of 2011 compared to the first quarter of 2010 was due to lower unit margins. Lower selling prices and raw material inflation including asphalt, negatively impacted first-quarter 2011 unit margins compared to the first quarter of 2010. The remaining decrease in EBIT was due to lower shingle sales volumes as described above.
In the Insulation business, EBIT was down for the first quarter of 2011 compared with the same period in 2010. Increases in United States selling prices were more than offset by the impact of lower sales volumes and costs associated with the launch of EcoTouch™ during the first quarter.