Owens Corning Earnings 2021-03-31

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

oc-20210331

Table of Contents

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 March 31, 2021

☐ 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 April 23, 2021, 104,462,073 shares of registrant’s common stock, par value $0.01 per share, were outstanding.

Table of Contents


			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	8
		Notes to Consolidated Financial Statements
		1. General	9
		2. Segment Information	10

		3. Inventories	11
		4. Derivative Financial Instruments	12
		5. Goodwill and Other Intangible Assets	15
		6. Property, Plant and Equipment	16



		7. Warranties	17
		8. Restructuring and Acquisition-Related Costs	17
		9. Debt	19
		10. Pension Plans and Other Postretirement Benefits	22
		11. Contingent Liabilities and Other Matters	23
		12. Stock Compensation	24
		13. Earnings per Share	27
		14. Income Taxes	28
		15. Changes in Accumulated Other Comprehensive Deficit	29

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42

	Item 4.	Controls and Procedures	42

PART II – OTHER INFORMATION

	Item 1.	Legal Proceedings	43

	Item 1A.	Risk Factors	43

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43

	Item 3.	Defaults Upon Senior Securities	43

	Item 4.	Mine Safety Disclosures	43

	Item 5.	Other Information	44

	Item 6.	Exhibits	45

		Signatures	46

Table of Contents

- 4 -

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 March 31,

	2021		2020
NET SALES	$	1,915	$	1,601
COST OF SALES	1,471		1,295
Gross margin	444		306
OPERATING EXPENSES
Marketing and administrative expenses	174		179
Science and technology expenses	20		21

Goodwill impairment charge	—		944
Other (income) expenses, net	(48)		32
Total operating expenses	146		1,176
OPERATING INCOME (LOSS)	298		(870)
Non-operating income	(3)		(4)
EARNINGS (LOSS) BEFORE INTEREST AND TAXES	301		(866)
Interest expense, net	33		27

EARNINGS (LOSS) BEFORE TAXES	268		(893)
Income tax expense	59		24
Equity in net earnings of affiliates	1		1
NET EARNINGS (LOSS)	210		(916)
Net earnings attributable to noncontrolling interests	—		1
NET EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING	$	210	$	(917)
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS
Basic	$	1.99	$	(8.43)
Diluted	$	1.98	$	(8.43)

WEIGHTED AVERAGE COMMON SHARES
Basic	105.4		108.8
Diluted	106.0		108.8

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

Table of Contents

- 5 -

OWENS CORNING AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)

(unaudited)

(in millions)


	Three Months Ended March 31,
	2021		2020
NET EARNINGS (LOSS)	$	210	$	(916)
Currency translation adjustment (net of tax of $(1) and $(10) for the three months ended March 31, 2021 and 2020, respectively)	(45)		(122)
Pension and other postretirement adjustment (net of tax of $0 for both the three months ended March 31, 2021 and 2020)	1		7
Hedging adjustment (net of tax of $(4) and $1 for the three months ended March 31, 2021 and 2020, respectively)	12		(1)
COMPREHENSIVE EARNINGS (LOSS)	178		(1,032)
Comprehensive earnings attributable to noncontrolling interests	—		1
COMPREHENSIVE EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING	$	178	$	(1,033)

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

Table of Contents

- 6 -

OWENS CORNING AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited)

(in millions, except per share amounts)


ASSETS	March 31, 2021		December 31, 2020
CURRENT ASSETS
Cash and cash equivalents	$	605	$	717
Receivables, less allowances of $10 at March 31, 2021 and $10 at December 31, 2020	1,167		919
Inventories	854		855

Other current assets	112		115
Total current assets	2,738		2,606
Property, plant and equipment, net	3,758		3,809
Operating lease right-of-use assets	145		154
Goodwill	980		989
Intangible assets	1,647		1,667
Deferred income taxes	28		28
Other non-current assets	264		228
TOTAL ASSETS	$	9,560	$	9,481
LIABILITIES AND EQUITY
CURRENT LIABILITIES



Current operating lease liabilities	$	52	$	55

Other current liabilities	1,415		1,385
Total current liabilities	1,467		1,440
Long-term debt, net of current portion	3,145		3,126
Pension plan liability	153		159
Other employee benefits liability	169		171
Non-current operating lease liabilities	92		99
Deferred income taxes	341		332
Other liabilities	226		213

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	4,056		4,059
Accumulated earnings	2,011		1,829
Accumulated other comprehensive deficit	(620)		(588)
Cost of common stock in treasury (c)	(1,520)		(1,400)
Total Owens Corning stockholders’ equity	3,928		3,901
Noncontrolling interests	39		40
Total equity	3,967		3,941
TOTAL LIABILITIES AND EQUITY	$	9,560	$	9,481

(a)10 shares authorized; none issued or outstanding at March 31, 2021 and December 31, 2020

(b)400 shares authorized; 135.5 issued and 104.3 outstanding at March 31, 2021; 135.5 issued and 105.6 outstanding at December 31, 2020

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

Table of Contents

- 7 -

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, 2020	105.6	$	1	29.9	$	(1,400)	$	4,059	$	1,829	$	(588)	$	40	$	3,941
Net earnings attributable to Owens Corning	—	—		—	—		—		210		—		—		210

Currency translation adjustment	—	—		—	—		—		—		(45)		(1)		(46)
Pension and other postretirement adjustment (net of tax)	—	—		—	—		—		—		1		—		1
Deferred gain on hedging transactions (net of tax)	—	—		—	—		—		—		12		—		12

Issuance of common stock under share-based payment plans	0.5	—		(0.5)	22		(15)		—		—		—		7
Purchases of treasury stock	(1.8)	—		1.8	(142)		—		—		—		—		(142)
Stock-based compensation expense	—	—		—	—		12		—		—		—		12

Dividends declared (d)	—	—		—	—		—		(28)		—		—		(28)
Balance at March 31, 2021	104.3	$	1	31.2	$	(1,520)	$	4,056	$	2,011	$	(620)	$	39	$	3,967


	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

(a)Additional Paid in Capital (APIC)

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

(c)Noncontrolling Interest (“NCI”)

(d)Quarterly dividend declarations of $0.26 and $0.24 per share as of March 31, 2021 and March 31, 2020, respectively.

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

Table of Contents

- 8 -

OWENS CORNING AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in millions)


	Three Months Ended March 31,
	2021		2020
NET CASH FLOW PROVIDED BY (USED FOR) OPERATING ACTIVITIES
Net earnings (loss)	$	210	$	(916)
Adjustments to reconcile net earnings (loss) to cash provided by (used for) operating activities:
Depreciation and amortization	119		116


Deferred income taxes	13		21
Provision for pension and other employee benefits liabilities	—		(1)
Stock-based compensation expense	12		11
Goodwill impairment charge	—		944
Intangible assets impairment charge	—		43
Other adjustments to reconcile net earnings (loss) to cash provided by (used for) operating activities	(6)		14

Changes in operating assets and liabilities	(136)		(265)
Pension fund contribution	(1)		(11)
Payments for other employee benefits liabilities	(4)		(4)
Other	(3)		(4)
Net cash flow provided by (used for) operating activities	204		(52)
NET CASH FLOW USED FOR INVESTING ACTIVITIES
Cash paid for property, plant, and equipment	(84)		(92)

Proceeds from the sale of assets or affiliates	—		15


Derivative settlements	(35)		16


Other	(2)		—
Net cash flow used for investing activities	(121)		(61)
NET CASH FLOW (USED FOR) PROVIDED BY FINANCING ACTIVITIES


Proceeds from senior revolving credit and receivables securitization facilities	—		736
Payments on senior revolving credit and receivables securitization facilities	—		(336)

Payments on term loan borrowing	—		(50)
Net decrease in short-term debt	—		(11)
Dividends paid	(55)		(26)
Purchases of treasury stock	(142)		(96)
Other	3		(4)
Net cash flow (used for) provided by financing activities	(194)		213
Effect of exchange rate changes on cash	(1)		(38)
Net (decrease) increase in cash, cash equivalents, and restricted cash	(112)		62
Cash, cash equivalents and restricted cash at beginning of period	724		179
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	612	$	241

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

Table of Contents

- 9 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. GENERAL

Unless the context requires otherwise, the terms “Owens Corning,” “Company,” “we” and “our” in this report refer to Owens Corning, a Delaware corporation, and its subsidiaries.

The Consolidated Financial Statements included in this report are unaudited, pursuant to certain rules and regulations of the Securities and Exchange Commission, and include, in the opinion of the Company, normal recurring adjustments necessary for a fair statement of the results for the periods indicated, which, however, are not necessarily indicative of results which may be expected for the full year. The December 31, 2020 balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States ("U.S."). In connection with the Consolidated Financial Statements and Notes included in this report, reference is made to the Consolidated Financial Statements and Notes contained in the Company’s Form 10-K for the year ended December 31, 2020 (the "2020 Form 10-K"). Certain reclassifications have been made to the periods presented for 2020 to conform to the classifications used in the periods presented for 2021.

Revenue Recognition

As of December 31, 2020, our contract liability balances (for extended warranties, down payments and deposits, collectively) totaled $66 million, of which $13 million was recognized as revenue in the first three months of 2021. As of March 31, 2021, our contract liability balances totaled $77 million.

Cash, Cash Equivalents and Restricted Cash

On the Consolidated Statements of Cash Flows, the total of Cash, cash equivalents and restricted cash includes restricted cash of $7 million as of March 31, 2021, December 31, 2020, March 31, 2020 and December 31, 2019. Restricted cash primarily represents amounts received from a counterparty related to its performance assurance on an executory contract, which is included in Other current assets on the Consolidated Balance Sheets. These amounts are contractually required to be set aside, and the counterparty can exchange the cash for another form of performance assurance at its discretion.

Related Party Transactions

In the first quarter of 2021, a related party relationship was established as a result of a member of the Company’s Board of Directors being named an executive officer of one of the Company’s preexisting suppliers. The related party transactions with this supplier consist of the purchase of raw materials. Purchases from the related party supplier for the three months ended March 31, 2021 were $20 million. As of March 31, 2021, amounts due to the related party supplier were $5 million.

Leases

During the first quarter of 2021, the Company entered into a lease for a warehouse located near our manufacturing facility in Fort Smith, Arkansas that is expected to commence in 2022. The lease is for a to-be-constructed warehouse where the Company will serve as the construction agent for the landlord. At no point during the construction period will the Company control the underlying asset as defined in ASC 842 (Leases). This lease will result in finance lease right-of-use assets and corresponding lease liabilities of approximately $35 million at the time of lease commencement.

Accounting Pronouncements

The following table summarizes recent ASU's issued by the Financial Accounting Standards Board (FASB) that could have an impact on the Company's Consolidated Financial Statements:


Standard	Description	Effective Date for Company	Effect on the Consolidated Financial Statements
Recently adopted standards:


ASU 2019-12 "Income Taxes (Topic 740)"	This standard simplifies accounting for income taxes including such topics as intraperiod tax allocations, franchise taxes and separate company financial statements.	January 1, 2021	The adoption of this standard did not have a material effect on our consolidated financial statements.

Table of Contents

- 10 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

2. SEGMENT INFORMATION

The Company has three reportable segments: Composites, Insulation and Roofing. Accounting policies for the segments are the same as those for the Company. The Company’s three reportable segments are defined as follows:

Composites – The Company manufactures, fabricates and sells glass reinforcements in the form of fiber. Glass reinforcement materials are also used downstream by the Composites segment to manufacture and sell glass fiber products in the form of fabrics, non-wovens and other specialized products.

Insulation – Within our Insulation segment, the Company manufactures and sells fiberglass insulation into residential, commercial, industrial and other markets for both thermal and acoustical applications. It also manufactures and sells glass fiber pipe insulation, flexible duct media, bonded and granulated mineral wool insulation, cellular glass insulation and foam insulation used in above- and below-grade construction applications.

Roofing – Within our Roofing segment, the Company manufactures and sells residential roofing shingles, oxidized asphalt materials, roofing components used in residential and commercial construction and specialty applications, and synthetic packaging materials.

NET SALES

The following table summarizes our Net sales by segment and geographic region (in millions). Corporate eliminations (shown below) largely reflect intercompany sales from Composites to Roofing. External customer sales are attributed to geographic region based upon the location from which the product is sold to the external customer.


	For the three months ended March 31, 2021
Reportable Segments	Composites		Insulation		Roofing		Eliminations		Consolidated
Disaggregation Categories
U.S. residential	$	75	$	263	$	659	$	(55)	$	942
U.S. commercial and industrial	146		162		22		—		330
Total United States	221		425		681		(55)		1,272
Europe	159		153		3		—		315
Asia-Pacific	138		36		3		—		177
Rest of world	41		86		24		—		151
NET SALES	$	559	$	700	$	711	$	(55)	$	1,915


	For the three months ended March 31, 2020
Reportable Segments	Composites		Insulation		Roofing		Eliminations		Consolidated
Disaggregation Categories
U.S. residential	$	66	$	211	$	492	$	(50)	$	719
U.S. commercial and industrial	151		162		28		—		341
Total United States	217		373		520		(50)		1,060
Europe	141		143		4		(1)		287
Asia-Pacific	105		20		3		—		128
Rest of world	31		67		28		—		126
NET SALES	$	494	$	603	$	555	$	(51)	$	1,601

Table of Contents

- 11 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

2. SEGMENT INFORMATION (continued)

EARNINGS BEFORE INTEREST AND TAXES

Earnings before interest and taxes (EBIT) by segment consist of net sales less related costs and expenses and are presented on a basis that is used internally for evaluating segment performance. Certain items, such as general corporate expenses or income and certain other expense or income items, are excluded from the internal evaluation of segment performance. Accordingly, these items are not reflected in EBIT for our reportable segments and are included within Corporate, Other and Eliminations.

The following table summarizes EBIT by segment (in millions):


	Three Months Ended March 31,
	2021		2020
Reportable Segments
Composites	$	79	$	44
Insulation	82		39
Roofing	156		64
Total reportable segments	317		147
Restructuring costs	(1)		(5)
Gains on sale of certain precious metals	20		10
Goodwill impairment charge	—		(944)
Intangible assets impairment charge	—		(43)
General corporate expense and other	(35)		(31)
Total corporate, other and eliminations	(16)		(1,013)
EBIT	$	301	$	(866)

3. INVENTORIES

Inventories consist of the following (in millions):


	March 31, 2021		December 31, 2020
Finished goods	$	511	$	532
Materials and supplies	343		323
Total inventories	$	854	$	855

Table of Contents

- 12 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

4. DERIVATIVE FINANCIAL INSTRUMENTS

The Company is exposed to, among other risks, the impact of changes in commodity prices, foreign currency exchange rates, and interest rates in the normal course of business. The Company’s risk management program is designed to manage the exposure and volatility arising from these risks, and utilizes derivative financial instruments to offset a portion of these risks. The Company uses derivative financial instruments only to the extent necessary to hedge identified business risks, and does not enter into such transactions for trading purposes.

The Company generally does not require collateral or other security with counterparties to these financial instruments and is therefore subject to credit risk in the event of nonperformance; however, the Company monitors credit risk and currently does not anticipate nonperformance by other parties. Contracts with counterparties generally contain right of offset provisions. These provisions effectively reduce the Company’s exposure to credit risk in situations where the Company has gain and loss positions outstanding with a single counterparty. It is the Company’s policy to offset on the Consolidated Balance Sheets the amounts recognized for derivative instruments with any cash collateral arising from derivative instruments executed with the same counterparty under a master netting agreement. As of March 31, 2021 and December 31, 2020, the Company did not have any amounts on deposit with any of its counterparties, nor did any of its counterparties have any amounts on deposit with the Company.

Derivative Fair Values

Our derivatives consist of natural gas forward swaps, cross-currency swaps, foreign exchange forward contracts and U.S. treasury rate lock agreements, all of which are over-the-counter and not traded through an exchange. The Company uses widely accepted valuation tools to determine fair value, such as discounting cash flows to calculate a present value for the derivatives. The models use Level 2 inputs, such as forward curves and other commonly quoted observable transactions and prices. The fair value of our derivatives and hedging instruments are all classified as Level 2 investments within the three-tier hierarchy.

The following table presents the fair value of derivatives and hedging instruments and the respective location on the Consolidated Balance Sheets (in millions):


		Fair Value at
	Location	March 31, 2021		December 31, 2020
Derivative assets designated as hedging instruments:
Net investment hedges:
Cross-currency swaps	Other current assets	$	5	$	5




Cash flow hedges:
Natural gas forward swaps	Other current assets	$	3	$	2

Treasury interest rate lock	Other non-current assets	$	19	$	4
Derivative liabilities designated as hedging instruments:
Net investment hedges:

Cross-currency swaps	Other liabilities	$	7	$	11







Derivative assets not designated as hedging instruments:

Foreign exchange forward contracts	Other current assets	$	16	$	2
Derivative liabilities not designated as hedging instruments:

Foreign exchange forward contracts	Other current liabilities	$	1	$	45

Table of Contents

- 13 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

4. DERIVATIVE FINANCIAL INSTRUMENTS (continued)

Consolidated Statements of Earnings (Loss) Activity

The following table presents the impact and respective location of derivative activities on the Consolidated Statements of Earnings (Loss) (in millions):


		Three Months Ended March 31,
	Location	2021		2020
Derivative activity designated as hedging instruments:
Natural gas cash flow hedges:
Amount of (gain)/loss reclassified from AOCI (as defined below) into earnings (a)	Cost of sales	$	(1)	$	2


Cross-currency swap net investment hedges:
Amount of gain recognized in earnings on derivative amounts excluded from effectiveness testing	Interest expense, net	$	(1)	$	(3)


Derivative activity not designated as hedging instruments:


Foreign currency:
Amount of gain recognized in earnings (b)	Other (income) expenses, net	$	(20)	$	(12)

(a)Accumulated Other Comprehensive Earnings (Deficit) ("AOCI")

(b)Gains related to foreign currency derivatives were substantially offset by net revaluation impacts on foreign currency denominated balance sheet exposures, which were also recorded in Other (income) expenses, net. Please refer to the "Other Derivatives" section below for additional detail.

Consolidated Statements of Comprehensive Earnings (Loss) Activity

The following table presents the impact of derivative activities on the Consolidated Statements of Comprehensive Earnings (Loss) (in millions):


		Amount of (Gain) Loss Recognized in Comprehensive Earnings (Loss)
		Three Months Ended March 31,
Hedging Type	Derivative Financial Instrument	2021		2020
Net investment hedge	Cross-currency swaps	$	(5)	$	(42)
Cash flow hedge	Natural gas forward swaps	$	(4)	$	—
Cash flow hedge	Treasury interest rate lock	$	(15)	$	1

Cash Flow Hedges

The Company uses a combination of derivative financial instruments, which qualify as cash flow hedges, and physical contracts to manage forecasted exposure to electricity and natural gas prices. As of March 31, 2021, the notional amounts of these natural gas forward swaps was 2 million MMBtu (or MMBtu equivalent) based on European indices.

In March 2020, the Company entered into a $175 million forward U.S. Treasury rate lock agreement to manage the U.S. Treasury portion of its interest rate risk associated with the anticipated issuance of certain 10-year fixed rate senior notes before the end of 2022. The Company intends to cash settle this agreement upon a future issuance of certain senior notes thereby effectively locking in the U.S. Treasury fixed interest rate in effect at the time the agreement was initiated. The locked fixed rate of this agreement is 0.994%. The Company has designated this outstanding forward U.S. Treasury rate lock agreement, which expires on December 15, 2022, as a cash flow hedge.

Table of Contents

- 14 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

4. DERIVATIVE FINANCIAL INSTRUMENTS (continued)

Net Investment Hedges

The Company has translation exposure resulting from translating the financial statements of foreign subsidiaries into U.S. Dollars, which is recognized in Currency translation adjustment (a component of AOCI). The Company uses cross-currency forward contracts to hedge portions of the net investment in foreign subsidiaries against fluctuations in foreign exchange rates. As of March 31, 2021, the notional amount of these derivative financial instruments was $218 million related to the U.S. Dollar and European Euro. In the second quarter of 2020, the Company unwound certain net investment hedge contracts, resulting in cash proceeds of $30 million.

Other Derivatives

The Company uses forward currency exchange contracts to manage existing exposures to foreign exchange risk related to assets and liabilities recorded on the Consolidated Balance Sheets. As of March 31, 2021, the Company had notional amounts of $606 million for non-designated derivative financial instruments related to foreign currency exposures in U.S. Dollars primarily related to Brazilian Real, Chinese Yuan, European Euro, Hong Kong Dollar, Indian Rupee, and South Korean Won. In addition, the Company had notional amounts of $105 million for non-designated derivative financial instruments related to foreign currency exposures in European Euro primarily related to the Polish Zloty and Russian Ruble.

Table of Contents

- 15 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

5. GOODWILL AND OTHER INTANGIBLE ASSETS

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	2021-03-31	Filed 2021-04-28
10-K	2020-12-31	Filed 2021-02-17
10-Q	2020-09-30	Filed 2020-10-28
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	2020-10-28
8-K	2020-09-16
8-K	2020-08-06
8-K	2020-07-29
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-2021x03x31x10qxexh311.htm
EX-31.2	oc-2021x03x31x10qxexh312.htm
EX-32.1	oc-2021x03x31x10qxexh321.htm
EX-32.2	oc-2021x03x31x10qxexh322.htm

OC 10Q Quarterly Report

Owens Corning Earnings 2021-03-31