1
Composite Solutions
Arnaud Genis Group President, Composite Solutions
Marcio Sandri Vice President and Managing Director, Glass Reinforcements
Composites Highlights
2
The business has been transformed and is delivering double-digit
EBIT margins and return on capital
Owens Corning is a leader in the glass fiber market, which has a stable
industry structure and strong growth prospects
Evolving strategy from improving the business to delivering profitable,
capital efficient growth
Segment return on capital differs from the total company return on capital measure that is explained in Appendix A. Segment return on capital is defined as net operating profit after tax
divided by total capital. Total capital includes property, plant and equipment, goodwill and intangible assets, and working capital; calculated as the average of beginning and ending
balances. Net operating profit after tax is calculated using a segment specific tax rate. Both net operating profit after tax and total capital exclude fresh-start accounting adjustments.
-
1,000
2,000
3,000
4,000
5,000
6,000
1981 2014
An Industry with a Proven Track Record of Growth
Glass Fiber Market Demand
3
Glass fiber market demand excludes E-glass yarns.
Sources of actuals: Fiber Economics Bureau, GlassFibreEurope (APFE), Global Trade Information Services, Inc. and Owens Corning management estimates .
Gla
ss F
iber
K T
on
s
Glass Fiber Demand Has Grown at 1.6 Multiple
of Industrial Production Growth
0%
4%
8%
12%
16%
$0
$600
$1,200
$1,800
$2,400
2012 2013 2014 LTM
Composites Financial Performance
4
LTM reflects actual results Q4 2014 – Q3 2015.
Source: Owens Corning SEC filings.
Strategy Execution Delivering Results
EBIT as % of Sales Sales – Millions of $
Capital Efficiency
Owens Corning Composites Strategic Pillars
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Product Leadership
Cost Leadership
Price Realization
Cost Leadership
6
Low-delivered cost asset defined as delivered cost in the region at or below best competitive benchmark for glass fiber manufacturing.
Source: Owens Corning management estimates.
Composites Now Positioned with Low-Cost Network
Owens Corning Composites Global Capacity
Percentage of Low-Delivered Cost Assets
2015 2013 2007
Cost Leadership
30%
70% 75%
Cost Leadership
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Legend:
Existing plant
High-cost plant closed
Plant restructured
Low-cost plant additions/expansions
Ibaraki, Japan
Hangzhou, China
Gous, Russia
Alcala, Spain
Vado, Italy
Yuhang, China
Guelph, Ontario
Tlaxcala, Mexico
Actions initiated between 2009 and 2015 to create low-cost network.
Besana, Italy
Chambery, France
Cost Leadership
-30
-20
-10
0
10
20
30
40
2012 2013 H1 2013 H2 2014 2015 LTM
Mil
lio
ns
of
$
Year-over-Year Price Improvement
Price Realization
8
Price Realization
LTM reflects actual results Q4 2014 – Q3 2015.
Source: Owens Corning SEC filings.
Achieved Nine Consecutive Quarters of Price Improvement
Glass Fiber A $7.5 Billion Global Market
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Glass fiber market defined as glass fiber reinforcements and direct conversion products as consumed, excluding yarns.
Source: Fiber Economics Bureau, GlassFibreEurope (APFE), Global Trade Information Services, Inc. and Owens Corning management estimates.
Markets
Size
Building &
Construction Consumer Power & Energy Transportation Industrial
An Industry with a Proven Track Record of Growth
Glass Fiber Market Demand
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Glass fiber market demand excludes E-glass yarns.
Sources of actuals: Fiber Economics Bureau, GlassFibreEurope (APFE), Global Trade Information Services, Inc. and Owens Corning management estimates.
Source of forecast: 2014 demand grown at 1.6x global IP per October 2015 Oxford Economics.
Gla
ss F
iber
K T
on
s
Glass Fiber Demand Has Grown at 1.6 Multiple
of Industrial Production Growth
2014 E
Forecast
-
1,000
2,000
3,000
4,000
5,000
6,000
1981 2018
Owens Corning Composites Positioned to Win
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Positioned to Compete Anywhere in the World % Market Revenue = market revenue in region as % of 2014 global market size; % OC Revenue = OC revenue in region as % of OC Composites global 2014 sales; Glass reinforcements
market defined as glass fiber reinforcements and direct conversion products as consumed, excluding yarns.
Sources: Fiber Economics Bureau, GlassFibreEurope (APFE), Global Trade Information Services, Inc. and Owens Corning management estimates of 2014 global market.
34%
46%
% Market Revenue
% OC Revenue
Americas
25% 30%
% Market Revenue
% OC Revenue
Europe
26%
10%
% Market Revenue
% OC Revenue
China
15% 14%
% Market Revenue
% OC Revenue
Rest of World
#1 Position
34%
46%
% Market Revenue
% OC Revenue
Americas
#1 Position Emerging Position
#1 Position
Industry Structure – China
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China in Midst of Significant Rebuild Cycle Estimated dollars represent capex spending.
Source: Owens Corning management estimates.
0
200
400
600
800
1000
2005 2007 2009 2011 2013 2015 2017
Millio
ns
of
$
Capacity Additions Capacity Rebuilds
Additions /
Rebuilds ($B) 2005-11 2012-18
Variance
%
Additions 3.6 1.1 (69%)
Rebuilds 0.3 1.3 333%
Total 3.9 2.4 (38%)
China Capacity Additions and Rebuild Requirements
Manufacturing in China defined as CPIC, China Fiberglass (Jushi) and Taishan.
Source: Owens Corning management estimates.
Industry Structure Transformation Market Supply
China Consuming More Domestic Capacity, Leaving Less for Exports
Demand Outside China Served by
Manufacturing in China
Capacity in China
Available for Export
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0%
5%
10%
15%
20%
25%
30%
20%
25%
30%
35%
40%
45%
50%
55%
Glass Fiber Industry Estimated Capacity
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Glass fiber market demand excludes E-glass yarns. Sources: Fiber Economics Bureau, GlassFibreEurope (APFE), Global Trade Information Services, Inc. and Owens Corning management
estimates as of October 2015 (high probability capacity additions only). Estimated demand calculated as 2014 demand grown at 1.6x global IP per October 2015 Oxford Economics.
Change in global
demand (MM T)
Change in global
capacity (MM T)
Es
tim
ate
d C
ap
ac
ity U
tili
za
tio
n
China Emergence
Capacity Overbuild
Tightening Capacity
Price Inflection
Supply Tension
Improved Returns
Supply Tension Environment Expected in the Near Term
0.5
1.7
0.8
1.7
0.8
0.5
2005-09 2010-15E 2016E-18E 50%
60%
70%
80%
90%
100% '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15E '16E '17E '18E
90% Threshold
Owens Corning Composites Strategic Pillars
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Capital Efficiency
Product Leadership
Cost Leadership
Price Realization
Capital Efficiency
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Delivering Capital-Efficient Growth
Focused on capital-efficient growth
Innovation to increase production
from current assets
Strategic licensing/supply
agreements
Low-cost expansion of current assets
Capital Efficiency
Capital Efficiency
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Approaching Phase of Lower Rebuilds
Source: Owens Corning management estimates.
Capital Efficiency
0%
20%
40%
60%
2009-12 2013-16E 2017E-20E
Percentage of Owens Corning Composites Capacity Rebuild
Product Leadership
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Productivity
Enables Premium Pricing and Enhanced Customer Profitability
Product Leadership
Performance
Product Leadership
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2013 2014 2016E
New Product Sales
2015E
6% 12% 17% >20%
Source: Owens Corning management estimates. New product sales percentage calculated as revenue from products introduced within the last three years divided by total
Composites revenue.
Number of New Products 18 16 19 15
Product Leadership
Optispray Rovings Solutions™
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Transforming Commoditized Fabrication Process
Product Leadership
Reduced resin usage
Faster fabrication
Reduced tooling cost
Automotive Exterior Applications
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Step Change for Automotive Fabricators
Product Leadership
Improved strength
enabling lighter parts
Better surface finish
Reduced molding time
Owens Corning Composites Strategic Pillars
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Capital Efficiency
Product Leadership
Cost Leadership
Price Realization
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$38B Market $1.3B Market $0.8B Market
Source: Smithers Apex and Owens Corning management estimates.
Glass Non-Wovens Global Market Encompassing a Broad Range of Applications
Specialty Glass Non-Wovens Global Glass Non-Wovens Global Non-Wovens
Specialty Glass Non-Wovens
Roofing
Current conversion to glass
non-wovens (North America)
Glass Non-Wovens Growth NA Market Driven by Penetration and Economic Factors
Source: Owens Corning management estimates based on data provided by Asphalt Roofing Manufacturers Association (ARMA), Ceilings & Interior Systems Construction Association
(CISCA), Catalina Market Research Report, Gypsum Association, U.S. Geological Survey Publications, and the Professional Insurance Marketing Association (PIMA).
Roofing
Shingles
Glass Faced
Gypsum
Cushioned
Vinyl Flooring
Carpet Tile
Ceiling Tile
Insulation
1975
1982
1977
1980
1995
1988
100%
100%
65%
8%
17%
4%
3B m2
80MM m2
280MM m2
160MM m2
4.3B m2
900MM m2
Current Market
Glass Opportunity
Total market
Start of
conversion
End-use
market
Opportunity at full conversion
(North America)
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Owens Corning Composites
Strategy is delivering double-digit EBIT margins and return on capital
A leader in glass fiber market with strong growth and stable industry
structure
Positioned well to capture opportunity in specialty glass non-wovens
Evolving strategy to capture profitable, capital-efficient growth
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Continued Global Growth Supports Mid-Teen Margins Segment return on capital differs from the total company return on capital measure that is explained in Appendix A. Segment return on capital is defined as net operating profit after tax
divided by total capital. Total capital includes property, plant and equipment, goodwill and intangible assets, and working capital; calculated as the average of beginning and ending
balances. Net operating profit after tax is calculated using a segment specific tax rate. Both net operating profit after tax and total capital exclude fresh-start accounting adjustments.
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Questions and Discussion
Arnaud Genis Group President, Composite Solutions
Marcio Sandri Vice President and Managing Director, Glass Reinforcements