Owens Corning Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

oc-20200630

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-33100

Owens Corning

(Exact name of registrant as specified in its charter)

Delaware

43-2109021

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

One Owens Corning Parkway,

Toledo,

43659

(Address of principal executive offices)

(Zip Code)

(419) 248-8000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.01 per share	OC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Large Accelerated Filer	þ	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Table of Contents

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☐ No þ

As of July 24, 2020, 108,014,188 shares of registrant’s common stock, par value $0.01 per share, were outstanding.

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			Contents

Cover Page				1

PART I – FINANCIAL INFORMATION (unaudited)

	Item 1.	Financial Statements
		Consolidated Statements of Earnings (Loss)	4
		Consolidated Statements of Comprehensive Earnings (Loss)	5
		Consolidated Balance Sheets	6
		Consolidated Statements of Stockholders' Equity	7
		Consolidated Statements of Cash Flows	9
		Notes to Consolidated Financial Statements
		1. General	10
		2. Segment Information	12
		3. Revenue	13
		4. Inventories	14
		5. Derivative Financial Instruments	15
		6. Goodwill and Other Intangible Assets	18
		7. Property, Plant and Equipment	21



		8. Warranties	21
		9. Restructuring and Acquisition-Related Costs	21
		10. Debt	23
		11. Pension Plans and Other Postretirement Benefits	26
		12. Contingent Liabilities and Other Matters	27
		13. Stock Compensation	28
		14. Earnings per Share	32
		15. Income Taxes	33
		16. Changes in Accumulated Other Comprehensive Deficit	34

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52

	Item 4.	Controls and Procedures	52

PART II – OTHER INFORMATION

	Item 1.	Legal Proceedings	53

	Item 1A.	Risk Factors	53

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54

	Item 3.	Defaults Upon Senior Securities	54

	Item 4.	Mine Safety Disclosures	54

	Item 5.	Other Information	54

	Item 6.	Exhibits	55

		Signatures	56

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PART I

ITEM 1. FINANCIAL STATEMENTS

OWENS CORNING AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

(unaudited)

(in millions, except per share amounts)


	Three Months Ended June 30,						Six Months Ended June 30,

	2020		2019		2020		2019
NET SALES	$	1,625	$	1,918	$	3,226	$	3,585
COST OF SALES	1,282		1,478		2,577		2,820
Gross margin	343		440		649		765
OPERATING EXPENSES
Marketing and administrative expenses	151		181		330		363
Science and technology expenses	18		22		39		44

Goodwill impairment charge	—		—		944		—
Other expenses, net	6		10		38		15
Total operating expenses	175		213		1,351		422
OPERATING INCOME (LOSS)	168		227		(702)		343
Non-operating income	(3)		(3)		(7)		(5)
EARNINGS (LOSS) BEFORE INTEREST AND TAXES	171		230		(695)		348
Interest expense, net	36		32		63		68

EARNINGS (LOSS) BEFORE TAXES	135		198		(758)		280
Income tax expense	39		59		63		98
Equity in net loss of affiliates	(1)		(1)		—		—
NET EARNINGS (LOSS)	95		138		(821)		182
Net loss attributable to noncontrolling interests	(1)		—		—		—
NET EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING	$	96	$	138	$	(821)	$	182
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS
Basic	$	0.88	$	1.27	$	(7.55)	$	1.67
Diluted	$	0.88	$	1.26	$	(7.55)	$	1.66

WEIGHTED AVERAGE COMMON SHARES
Basic	108.6		109.0		108.7		109.3
Diluted	108.9		109.5		108.7		109.8

The accompanying Notes to the Consolidated Financial Statements are an integral part of this Statement.

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OWENS CORNING AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)

(unaudited)

(in millions)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
NET EARNINGS (LOSS)	$	95	$	138	$	(821)	$	182
Currency translation adjustment (net of tax of $(9) and $2 for the three months ended June 30, 2020 and 2019, respectively, and $1 and $(1) for the six months ended June 30, 2020 and 2019, respectively)	53		10		(69)		21
Pension and other postretirement adjustment (net of tax of $0 for both the three months ended June 30, 2020 and 2019, and $0 for both the six months ended June 30, 2020 and 2019)	(2)		2		5		1
Hedging adjustment (net of tax of $0 for both the three months ended June 30, 2020 and 2019, and $0 and $1 for the six months ended June 30, 2020 and 2019, respectively)	—		—		(1)		(1)
COMPREHENSIVE EARNINGS (LOSS)	146		150		(886)		203
Comprehensive loss attributable to noncontrolling interests	(1)		—		—		—
COMPREHENSIVE EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING	$	147	$	150	$	(886)	$	203

The accompanying Notes to the Consolidated Financial Statements are an integral part of this Statement.

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OWENS CORNING AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited)

(in millions, except per share amounts)


ASSETS	June 30, 2020		December 31, 2019
CURRENT ASSETS
Cash and cash equivalents	$	582	$	172
Receivables, less allowances of $10 at June 30, 2020 and $11 at December 31, 2019	986		770
Inventories	951		1,033

Other current assets	85		86
Total current assets	2,604		2,061
Property, plant and equipment, net	3,716		3,855
Operating lease right-of-use assets	168		203
Goodwill	966		1,932
Intangible assets	1,650		1,721
Deferred income taxes	32		46
Other non-current assets	234		188
TOTAL ASSETS	$	9,370	$	10,006
LIABILITIES AND EQUITY






Current liabilities	$	1,393	$	1,329
Long-term debt, net of current portion	3,314		2,986
Pension plan liability	208		231
Other employee benefits liability	173		179
Non-current operating lease liabilities	111		138
Deferred income taxes	304		272
Other liabilities	204		200

OWENS CORNING STOCKHOLDERS’ EQUITY
Preferred stock, par value $0.01 per share (a)	—		—
Common stock, par value $0.01 per share (b)	1		1
Additional paid in capital	4,054		4,051
Accumulated earnings	1,445		2,319
Accumulated other comprehensive deficit	(675)		(610)
Cost of common stock in treasury (c)	(1,201)		(1,130)
Total Owens Corning stockholders’ equity	3,624		4,631
Noncontrolling interests	39		40
Total equity	3,663		4,671
TOTAL LIABILITIES AND EQUITY	$	9,370	$	10,006

(a)10 shares authorized; none issued or outstanding at June 30, 2020 and December 31, 2019

(b)400 shares authorized; 135.5 issued and 108.0 outstanding at June 30, 2020; 135.5 issued and 109.0 outstanding at December 31, 2019

The accompanying Notes to the Consolidated Financial Statements are an integral part of this Statement.

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OWENS CORNING AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(unaudited)

(in millions)


	Common Stock Outstanding				Treasury Stock						APIC (a)		Accumulated Earnings		AOCI (b)		NCI (c)	Total
	Shares	Par Value		Shares	Cost
Balance at December 31, 2019	109.0	$	1	26.5	$	(1,130)	$	4,051	$	2,319	$	(610)	$	40	$	4,671
Net loss attributable to Owens Corning	—	—		—	—		—		(917)		—		—		(917)
Net earnings attributable to noncontrolling interests	—	—		—	—		—		—		—		1		1
Currency translation adjustment	—	—		—	—		—		—		(122)		(2)		(124)
Pension and other postretirement adjustment (net of tax)	—	—		—	—		—		—		7		—		7
Deferred loss on hedging transactions (net of tax)	—	—		—	—		—		—		(1)		—		(1)

Issuance of common stock under share-based payment plans	0.4	—		(0.4)	16		(16)		—		—		—		—
Purchases of treasury stock	(1.6)	—		1.6	(96)		—		—		—		—		(96)
Stock-based compensation expense	—	—		—	—		11		—		—		—		11

Dividends declared (d)	—	—		—	—		—		(26)		—		—		(26)
Balance at March 31, 2020	107.8	$	1	27.7	$	(1,210)	$	4,046	$	1,376	$	(726)	$	39	$	3,526
Net earnings attributable to Owens Corning	—	—		—	—		—		96		—		—		96
Net loss attributable to noncontrolling interests	—	—		—	—		—		—		—		(1)		(1)
Currency translation adjustment	—	—		—	—		—		—		53		1		54
Pension and other postretirement adjustment (net of tax)	—	—		—	—		—		—		(2)		—		(2)


Issuance of common stock under share-based payment plans	0.2	—		(0.2)	9		(1)		—		—		—		8

Stock-based compensation expense	—	—		—	—		9		—		—		—		9

Dividends declared (d)	—	—		—	—		—		(27)		—		—		(27)
Balance at June 30, 2020	108.0	$	1	27.5	$	(1,201)	$	4,054	$	1,445	$	(675)	$	39	$	3,663

(a)Additional Paid in Capital (APIC)

(b)Accumulated Other Comprehensive Earnings (Deficit) (“AOCI”)

(c)Noncontrolling Interest (“NCI”)

(d)Quarterly dividend declarations of $0.24 per share as of June 30, 2020 and March 31, 2020

The accompanying Notes to the Consolidated Financial Statements are an integral part of this Statement.

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OWENS CORNING AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(unaudited)

(in millions)


	Common Stock Outstanding				Treasury Stock						APIC (a)		Accumulated Earnings		AOCI (b)		NCI (c)	Total
	Shares	Par Value		Shares	Cost
Balance at December 31, 2018	109.5	$	1	26.0	$	(1,103)	$	4,028	$	2,013	$	(656)	$	41	$	4,324
Net earnings attributable to Owens Corning	—	—		—	—		—		44		—		—		44

Currency translation adjustment	—	—		—	—		—		—		11		(1)		10
Pension and other postretirement adjustment (net of tax)	—	—		—	—		—		—		(1)		—		(1)
Deferred loss on hedging transactions (net of tax)	—	—		—	—

Price	60.56	EPS	5
Shares	110	P/E	13
MCap	6,662	P/FCF	11
Net Debt	3,145	EBIT	793
TEV	9,807	TEV/EBIT	12
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-07-29
10-Q	2020-03-31	Filed 2020-04-29
10-K	2019-12-31	Filed 2020-02-19
10-Q	2019-09-30	Filed 2019-10-23
10-Q	2019-06-30	Filed 2019-07-24
10-Q	2019-03-31	Filed 2019-04-24
10-K	2018-12-31	Filed 2019-02-20
10-Q	2018-09-30	Filed 2018-10-24
10-Q	2018-06-30	Filed 2018-07-25
10-Q	2018-03-31	Filed 2018-04-25
10-K	2017-12-31	Filed 2018-02-21
10-Q	2017-09-30	Filed 2017-10-25
10-Q	2017-06-30	Filed 2017-07-26
10-Q	2017-03-31	Filed 2017-04-26
10-K	2016-12-31	Filed 2017-02-08
10-Q	2016-09-30	Filed 2016-10-26
10-Q	2016-06-30	Filed 2016-07-27
10-Q	2016-03-31	Filed 2016-04-27
10-K	2015-12-31	Filed 2016-02-10
10-Q	2015-09-30	Filed 2015-10-21
10-Q	2015-06-30	Filed 2015-07-22
10-Q	2015-03-31	Filed 2015-04-22
10-K	2014-12-31	Filed 2015-02-11
10-Q	2014-09-30	Filed 2014-10-22
10-Q	2014-06-30	Filed 2014-07-23
10-Q	2014-03-31	Filed 2014-04-23
10-K	2013-12-31	Filed 2014-02-12
10-Q	2013-09-30	Filed 2013-10-23
10-Q	2013-06-30	Filed 2013-07-24
10-Q	2013-03-31	Filed 2013-04-24
10-K	2012-12-31	Filed 2013-02-20
10-Q	2012-09-30	Filed 2012-10-24
10-Q	2012-06-30	Filed 2012-08-01
10-Q	2012-03-31	Filed 2012-04-25
10-K	2011-12-31	Filed 2012-02-15
10-Q	2011-09-30	Filed 2011-10-26
10-Q	2011-06-30	Filed 2011-08-03
10-Q	2011-03-31	Filed 2011-04-27
10-K	2010-12-31	Filed 2011-02-16
10-Q	2010-09-30	Filed 2010-10-27
10-Q	2010-06-30	Filed 2010-08-04
10-Q	2010-03-31	Filed 2010-04-28
10-K	2009-12-31	Filed 2010-02-17

8-K	2020-08-06	Officers
8-K	2020-07-29	Earnings, Exhibits
8-K	2020-05-07
8-K	2020-04-29
8-K	2020-04-16
8-K	2020-02-19
8-K	2019-12-05
8-K	2019-10-23
8-K	2019-10-10
8-K	2019-09-18
8-K	2019-08-12
8-K	2019-07-24
8-K	2019-07-01
8-K	2019-06-19
8-K	2019-04-24
8-K	2019-04-18
8-K	2019-04-08
8-K	2019-02-20
8-K	2019-02-06
8-K	2019-01-03
8-K	2018-10-24
8-K	2018-07-30
8-K	2018-07-25
8-K	2018-05-04
8-K	2018-04-25
8-K	2018-03-28
8-K	2018-02-21
8-K	2018-02-01
8-K	2018-02-01
8-K	2018-01-25
8-K	2018-01-23

EX-31.1	oc-2020x06x30x10qxexh33.htm
EX-31.2	oc-2020x06x30x10qxexh31.htm
EX-32.1	oc-2020x06x30x10qxexh32.htm
EX-32.2	oc-2020x06x30x10qxexh3.htm

OC 10Q Quarterly Report

Owens Corning Earnings 2020-06-30