Adjusted EPS Growth Exceeds 35 Percent for Second Consecutive Year
- Achieved Full-Year EBIT and Revenue Improvement in All Businesses versus 2010
- Delivered Strong Improvement in Insulation, Break-Even Q4 2011
- Acting to Improve Composites’ Competitive Cost Position and Address Current Oversupply
- Expect 2012 Adjusted EBIT Growth and Strong Cash Flow Performance
Owens Corning (NYSE: OC) today reported consolidated net sales of $5.3 billion, a 7-percent increase from net sales of $5.0 billion in 2010.
Full-year adjusted earnings were $276 million, or $2.23 per diluted share, compared with $199 million, or $1.57 per diluted share, in 2010. Net earnings were $276 million, or $2.23 per diluted share, compared with net earnings of $933 million, or $7.37 per diluted share, in 2010. Fourth-quarter 2011 adjusted earnings were $48 million, or $0.40 per diluted share, compared with $29 million, or $0.23 per diluted share, one year ago. Net earnings in the fourth quarter of 2011 totaled $50 million, or $0.41 per diluted share, compared with a net loss of $110 million, or $0.89 per diluted share, in 2010. See Tables 1, 2 and 6 for a discussion and reconciliation of these items.
“Owens Corning delivered another outstanding year in 2011. We achieved growth in revenue and EBIT in all of our businesses amid challenging market conditions,” said Chairman and Chief Executive Officer Mike Thaman. “These results reflect excellent execution by our portfolio of market-leading businesses.
“Looking forward to 2012, we anticipate improved housing starts in the U.S. and modest growth in the global economy,” Thaman added. “Strong performance from our Building Materials segment will more than offset the impact of near-term market challenges in our Composites segment resulting in growth in adjusted EBIT and strong cash performance for Owens Corning.”
Consolidated Fourth-Quarter and 2011 Results
- Owens Corning’s primary safety metric improved by 27 percent over the company’s full-year 2010 performance, marking a tenth consecutive year of safety improvement.
- Full-year adjusted earnings before interest and taxes (adjusted EBIT) were $461 million in 2011, compared with $381 million in 2010. Full-year EBIT in 2011 was $461 million, compared with $206 million in 2010 (see Table 2).
- Adjusted EBIT in the fourth quarter of 2011 was $88 million, compared with $64 million in 2010. EBIT for the fourth quarter was $88 million, compared with an EBIT loss of $71 million during the same period in 2010 (see Table 2).
- Gross margin as a percentage of net sales was 19 percent in 2011 and in 2010.
Owens Corning expects adjusted EBIT growth in 2012 based on an anticipated improvement in U.S. housing starts and modest global economic growth.
Despite weakness in the European glass fiber reinforcements market, the company believes that global reinforcements demand will continue to grow in 2012.
The company is taking actions in its Composites segment to balance supply, to enable its assets in Europe to operate at a sustainable competitive cost position, and to leverage low-cost assets by year-end 2012. In conjunction with these actions, the company anticipates incurring approximately $130 million in charges in 2012 through early 2013, of which approximately half represent cash expenditures.
In the Building Materials segment, Owens Corning expects that the factors that have sustained Roofing margins in recent years will continue to drive profitability. The company believes Insulation will significantly narrow losses in 2012.
Cash taxes are expected to be about $30 million in 2012. The company estimates a long-term effective tax rate of 25 percent to 28 percent based on the blend of effective tax rates for its U.S. and non-U.S. operations. The effective book tax rate for 2012 is expected to be about 25 percent on adjusted earnings.
The company expects that general corporate expenses in 2012 will be between $110 million and $120 million. General corporate expenses include corporate staff and other activities that support the operations.
Expenses will be higher in 2012 primarily due to increased pension expense and higher year-over-year incentive compensation costs.
Depreciation and amortization expenses are expected to be about $320 million in 2012.
Capital expenditures in 2012 are expected to be about $350 million.