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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
2
Forward-Looking Statements and Non-GAAP Measures
This presentation consists of this slide deck and the associated remarks and comments, all of which are integrally related and are intended to be presented and understood together.
This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are any statements that are not historical facts, and they are based upon the Company’s current expectations. Because forward-looking statements involve risks and uncertainties, the Company’s actual results could differ materially from those projected in these statements. Information regarding some of the risks and uncertainties that could cause such differences can be found in the Company’s Securities and Exchange Commission (“SEC”) filings, including under Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012.
For purposes of this presentation, any discussion referring to “year to date” refers to the period ended December 31, 2012. Otherwise the information in this presentation speaks as of May 2, 2013, and is subject to change. The Company does not undertake any duty to update or revise forward-looking statements. Any distribution of this presentation after May 2, 2013 is not intended and will not be construed as updating or confirming such information.
This presentation contains references to certain "non-GAAP financial measures" as defined by the SEC. A reconciliation of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles can be found in our Current Report on Form 8-K furnished to the SEC on April 24, 2013. This Form 8-K and additional Company information is available on the Owens Corning website: www.owenscorning.com. Adjusted EBIT is earnings before interest, taxes, and other items that management does not allocate to our segment results because it believes they are not a result of the Company’s current operations.
THE PINK PANTHER™ © 1964-2012 Metro-Goldwyn-Mayer Studios Inc. All Rights Reserved. The color PINK is a registered trademark of Owens Corning. © 2012 Owens Corning.
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
Expect margin performance improvement in each business
Expect adjusted EBIT to grow at least $100 million with potential upside
The upside to the outlook will largely be determined by the pace of the U.S. housing recovery and its impact on Building Materials margins
4
2013 Guidance
Owens Corning Composites Positioned for Improved Returns
Sell-Side Analyst Meeting May 2, 2013 – Amarillo, TX
Arnaud Genis President Composites Business
Macro Trends Support Glass Fiber Market Growth
Favorable Economic Trends
6 Sources: 1 .Oxford Economics, 2 .IHS CSM Automotive, 3. MAKE, 4.Feb 2013 Blue Chip Consensus, 5 .IHS Global insight – Relevant Industrial Capex defined as oil & gas, mining
and water supply industries only , 6 . Owens Corning management estimates as of Apr 2013
Economic Indicators 2012 2013F 2014F Supporting Trends
Global Industrial Production
Growth Rate *1
1.7% 2.6% 4.3% Growth recovery
Automotive Builds (mm) *2 81 83 88 8 kg of glass fiber used per
vehicle (and growing) *6
Wind Installations (GW) *3 47 45 50 U.S. Production Tax Credit
extended; 7.5 kT glass fiber per
GW *6
North America Housing Starts
(mm) *4
0.8 1.0 1.2 100 kg glass fiber used per
housing unit on average *6
Relevant Industrial Capex ($B) *5 625 660 700 Rising costs for steel and
aluminum
1
10
1981 1991 2001 2011
Gla
ss
Fib
er
De
ma
nd
(M
M T
on
s)
- lo
g b
as
is
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
Dem
an
d G
row
th (
k t
on
s)
Composites Materials Price History
Market Price of Composites
vs. Traditional Materials
8 Sources: 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
Ind
ex
(19
92
=1
00
)
Composite Materials Steel Aluminum
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
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%
Es
tim
ate
d C
ap
ac
ity U
tili
za
tio
n
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
Chinese Emergence
Capacity Overbuild
Macro Adjustment
Excess Inventory
Supply Tension
Return on Capital
Glass Fiber Industry Phases Signs of a New Era
11
High Utilization Rates and Reinvestment Economics Support Higher Returns
2005 – 2009 2010 – 2012 2013 – 2016
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