Owens Corning [OC] Filings

10-Q 1 oc-20220331.htm 10-Q oc-20220331

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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 March 31, 2022

☐ 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. ¨

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

Yes ☐ No þ

As of April 22, 2022, 97,078,169 shares of the 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	4
		Consolidated Statements of Comprehensive Earnings	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	11

		3. Inventories	12
		4. Derivative Financial Instruments	13
		5. Goodwill and Other Intangible Assets	16
		6. Property, Plant and Equipment	17




		7. Warranties	18
		8. Restructuring and Acquisition-Related Costs	18
		9. Debt	20
		1 0 . Pension Plans and Other Postretirement Benefits	23
		1 1 . Contingent Liabilities and Other Matters	24
		1 2 . Stock Compensation	25
		1 3 . Earnings per Share	28
		1 4 . Income Taxes	29
		1 5 . Changes in Accumulated Other Comprehensive Deficit	30
		16. Subsequent Events	30

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41

	Item 4.	Controls and Procedures	41

PART II – OTHER INFORMATION

	Item 1.	Legal Proceedings	42

	Item 1A.	Risk Factors	42

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42

	Item 3.	Defaults Upon Senior Securities	42

	Item 4.	Mine Safety Disclosures	42

	Item 5.	Other Information	42

	Item 6.	Exhibits	43

		Signatures	44

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PART I

ITEM 1. FINANCIAL STATEMENTS

OWENS CORNING AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(unaudited)

(in millions, except per share amounts)


	Three Months Ended March 31,

	2022		2021
NET SALES	$	2,346	$	1,915
COST OF SALES	1,727		1,471
Gross margin	619		444
OPERATING EXPENSES
Marketing and administrative expenses	184		174
Science and technology expenses	23		20


Other income, net	(28)		(48)
Total operating expenses	179		146
OPERATING INCOME	440		298
Non-operating income	(2)		(3)
EARNINGS BEFORE INTEREST AND TAXES	442		301
Interest expense, net	28		33

EARNINGS BEFORE TAXES	414		268
Income tax expense	107		59
Equity in net earnings of affiliates	—		1
NET EARNINGS	307		210
Net earnings attributable to noncontrolling interests	3		—
NET EARNINGS ATTRIBUTABLE TO OWENS CORNING	$	304	$	210
EARNINGS PER COMMON SHARE ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS
Basic	$	3.06	$	1.99
Diluted	$	3.03	$	1.98

WEIGHTED AVERAGE COMMON SHARES
Basic	99.5		105.4
Diluted	100.2		106.0

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

(unaudited)

(in millions)


		Three Months Ended March 31,
		2022		2021
NET EARNINGS		$	307	$	210
Other comprehensive income (loss), net of tax:
	Currency translation adjustment (net of tax of $0 and $(1) for the three months ended March 31, 2022 and 2021, respectively)	(28)		(45)
	Pension and other postretirement adjustment (net of tax of $(1) and $0 for the three months ended March 31, 2022 and 2021, respectively)	3		1
	Hedging adjustment (net of tax of $(8) and $(4) for the three months ended March 31, 2022 and 2021, respectively)	24		12
	Total other comprehensive loss, net of tax	(1)		(32)
COMPREHENSIVE EARNINGS		306		178
Comprehensive earnings attributable to noncontrolling interests		2		—
COMPREHENSIVE EARNINGS ATTRIBUTABLE TO OWENS CORNING		$	304	$	178

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	March 31, 2022		December 31, 2021
CURRENT ASSETS
Cash and cash equivalents	$	748	$	959
Receivables, less allowance of $11 and $9 at March 31, 2022 and December 31, 2021, respectively	1,395		939
Inventories	1,147		1,078

Other current assets	141		121
Total current assets	3,431		3,097
Property, plant and equipment, net	3,825		3,873
Operating lease right-of-use assets	182		158
Goodwill	983		990
Intangible assets	1,606		1,617
Deferred income taxes	30		31
Other non-current assets	259		249
TOTAL ASSETS	$	10,316	$	10,015
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	$	1,328	$	1,095
Current operating lease liabilities	52		49
Other current liabilities	619		553
Total current liabilities	1,999		1,697
Long-term debt, net of current portion	2,959		2,960
Pension plan liability	72		77
Other employee benefits liability	156		157
Non-current operating lease liabilities	131		109
Deferred income taxes	376		376
Other liabilities	258		304
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	4,091		4,092
Accumulated earnings	2,974		2,706
Accumulated other comprehensive deficit	(581)		(581)
Cost of common stock in treasury (c)	(2,144)		(1,922)
Total Owens Corning stockholders’ equity	4,341		4,296
Noncontrolling interests	24		39
Total equity	4,365		4,335
TOTAL LIABILITIES AND EQUITY	$	10,316	$	10,015

(a)10 shares authorized; none issued or outstanding at March 31, 2022 and December 31, 2021

(b)400 shares authorized; 135.5 issued and 98.1 outstanding at March 31, 2022; 135.5 issued and 100.4 outstanding at December 31, 2021

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, 2021	100.4	$	1	35.1	$	(1,922)	$	4,092	$	2,706	$	(581)	$	39	$	4,335
Net earnings attributable to Owens Corning	—	—		—	—		—		304		—		—		304
Net earnings attributable to noncontrolling interests	—	—		—	—		—		—		—		3		3
Currency translation adjustment	—	—		—	—		—		—		(27)		(1)		(28)
Pension and other postretirement adjustment (net of tax)	—	—		—	—		—		—		3		—		3
Deferred gain on hedging transactions (net of tax)	—	—		—	—		—		—		24		—		24
Purchases of noncontrolling interest	—	—		—	—		8		—		—		(17)		(9)
Issuance of common stock under share-based payment plans	0.4	—		(0.4)	21		(21)		—		—		—		—
Purchases of treasury stock	(2.7)	—		2.7	(243)		—		—		—		—		(243)
Stock-based compensation expense	—	—		—	—		12		—		—		—		12

Dividends declared (d)	—	—		—	—		—		(36)		—		—		(36)
Balance at March 31, 2022	98.1	$	1	37.4	$	(2,144)	$	4,091	$	2,974	$	(581)	$	24	$	4,365


	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

(a)Additional Paid in Capital ("APIC")

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

(c)Noncontrolling Interest (“NCI”)

(d)Quarterly dividend declarations of $0.35 and $0.26 per share as of March 31, 2022 and March 31, 2021, respectively

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 CASH FLOWS

(unaudited)

(in millions)


	Three Months Ended March 31,
	2022		2021
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES
Net earnings	$	307	$	210
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation and amortization	132		119


Deferred income taxes	3		13
Provision for pension and other employee benefits liabilities	1		—
Stock-based compensation expense	12		12


Gains on sale of certain precious metals	(4)		(20)
Other adjustments to reconcile net earnings to cash provided by operating activities	26		14

Changes in operating assets and liabilities	(301)		(136)
Pension fund contribution	(1)		(1)
Payments for other employee benefits liabilities	(3)		(4)
Other	(14)		(3)
Net cash flow provided by operating activities	158		204
NET CASH FLOW USED FOR INVESTING ACTIVITIES
Cash paid for property, plant, and equipment	(107)		(84)

Proceeds from the sale of assets or affiliates	10		—


Derivative settlements	11		(35)


Other	(2)		(2)
Net cash flow used for investing activities	(88)		(121)
NET CASH FLOW USED FOR FINANCING ACTIVITIES






Purchases of noncontrolling interest	(9)		—
Net decrease in short-term debt	(5)		—
Dividends paid	(35)		(55)
Purchases of treasury stock	(229)		(142)
Other	(7)		3
Net cash flow used for financing activities	(285)		(194)
Effect of exchange rate changes on cash	4		(1)
Net decrease in cash, cash equivalents, and restricted cash	(211)		(112)
Cash, cash equivalents and restricted cash at beginning of period	966		724
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	755	$	612

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

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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, 2021 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, 2021 (the "2021 Form 10-K"). Certain reclassifications have been made to the periods presented for 2021 to conform to the classifications used in the periods presented for 2022.

Revenue Recognition

As of December 31, 2021, our contract liability balances (for extended warranties, down payments and deposits, collectively) totaled $76 million, of which $13 million was recognized as revenue in the first three months of 2022. As of March 31, 2022, our contract liability balances totaled $78 million.

As of December 31, 2020, our contract liability balances 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, 2022, December 31, 2021, March 31, 2021 and December 31, 2020. 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 were $21 million and $20 million for the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022 and December 31, 2021, amounts due to the related party supplier were $8 million and $1 million, respectively.

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 the second quarter of 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 Accounting Standards Codification (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.

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

1. GENERAL (continued)

Accounting Pronouncements

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


Standard	Description	Effective Date for Company	Effect on the Consolidated Financial Statements




Recently issued standards:
ASU 2021-10 "Government Assistance (Topic 832)"	This standard modifies the annual disclosure requirements for business entities that receive government assistance and use a grant or contribution accounting model by analogy to other account guidance.	January 1, 2022	We are currently assessing the impact of adopting this standard will have on our Consolidated Financial Statements. The Company will adopt ASU 2021-10 for the year ending December 31, 2022 and will provide the required disclosures, if material.

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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 by the Composites segment to manufacture and sell high value applications in the form of fabrics, non-wovens and other specialized products.

Insulation – Within our Insulation segment, the Company manufactures and sells thermal and acoustical batts, loosefill insulation, foam sheathing and accessories. It also manufactures and sells glass fiber pipe insulation, energy efficient 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 tables show a disaggregation of 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, 2022
Reportable Segments	Composites		Insulation		Roofing		Eliminations		Consolidated
Disaggregation Categories
U.S. residential	$	87	$	351	$	776	$	(60)	$	1,154
U.S. commercial and industrial	210		179		27		(3)		413
Total United States	297		530		803		(63)		1,567
Europe	205		197		6		(2)		406
Asia-Pacific	151		35		2		—		188
Rest of world	61		97		27		—		185
NET SALES	$	714	$	859	$	838	$	(65)	$	2,346


	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

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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,
	2022		2021
Reportable Segments
Composites	$	154	$	79
Insulation	129		82
Roofing	176		156
Total reportable segments	459		317
Restructuring costs	(6)		(1)
Gain on sale of Shanghai, China facility	27		—

Gains on sale of certain precious metals	4		20




General corporate expense and other	(42)		(35)
Total corporate, other and eliminations	(17)		(16)
EBIT	$	442	$	301

3. INVENTORIES

Inventories consist of the following (in millions):


	March 31, 2022		December 31, 2021
Finished goods	$	715	$	672
Materials and supplies	432		406
Total inventories	$	1,147	$	1,078

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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, 2022 and December 31, 2021, 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, 2022		December 31, 2021
Derivative assets designated as hedging instruments:
Net investment hedges:
Cross-currency swaps	Other current assets	$	5	$	5
Cross-currency swaps	Other non-current assets	$	2	$	1



Cash flow hedges:
Natural gas forward swaps	Other current assets	$	35	$	16

Treasury interest rate lock	Other current assets	$	21	$	11
Derivative liabilities designated as hedging instruments:
Net investment hedges:

Cross-currency swaps	Other liabilities	$	—	$	1




Cash flow hedges:
Natural gas forward swaps	Other current liabilities	$	—	$	5

Foreign exchange forward contracts	Other current liabilities	$	1	$	2
Derivative assets not designated as hedging instruments:

Foreign exchange forward contracts	Other current assets	$	1	$	1
Derivative liabilities not designated as hedging instruments:

Foreign exchange forward contracts	Other current liabilities	$	8	$	6

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

4. DERIVATIVE FINANCIAL INSTRUMENTS (continued)

Consolidated Statements of Earnings Activity

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


		Three Months Ended March 31,
	Location	2022		2021
Derivative activity designated as hedging instruments:
Natural gas cash flow hedges:
Amount of gain reclassified from AOCI (as defined below) into earnings (a)	Cost of sales	$	(10)	$	(1)


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


Derivative activity not designated as hedging instruments:


Foreign currency:
Amount of gain recognized in earnings (b)	Other income, net	$	(5)	$	(20)

(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, net. Please refer to the "Other Derivatives" section below for additional detail.

Consolidated Statements of Comprehensive Earnings Activity

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


		Amount of Gain Recognized in Comprehensive Earnings
		Three Months Ended March 31,
Hedging Type	Derivative Financial Instrument	2022		2021
Net investment hedge	Cross-currency swaps	$	(2)	$	(5)
Cash flow hedge	Natural gas forward swaps	$	(23)	$	(4)
Cash flow hedge	Treasury interest rate lock	$	(10)	$	(15)

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, 2022, the notional amounts of these natural gas forward swaps was 8 million MMBtu (or MMBtu equivalent) based on U.S. and 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.

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

4. DERIVATIVE FINANCIAL INSTRUMENTS (continued)

In June 2021, the Company entered into five currency forward contracts with unrelated counterparties totaling $23 million to mitigate against unwanted or anticipated moves in the European Euro exchange rate against the U.S. Dollar, pertaining to forecasted Euro denominated invoices for capital expenditures. The Company has designated each of the individual contracts as cash flow hedges, with the last hedge maturing no later than December 2023.

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, 2022, the notional amount of these derivative financial instruments was $218 million related to the U.S. Dollar and European Euro.

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, 2022, the Company had notional amounts of $720 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 $7 million for non-designated derivative financial instruments related to foreign currency exposures in European Euro primarily related to the Polish Złoty.

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

5. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The Company tests goodwill and indefinite-lived intangible assets for impairment during the fourth quarter of each year, or more frequently should circumstances change or events occur that would more likely than not reduce the fair value of a reporting unit below its carrying value.

No testing was deemed necessary in the first three months of 2022. The changes in the net carrying value of goodwill by segment are as follows (in millions):


	Composites		Insulation		Roofing		Total
Gross carrying amount at December 31, 2021	$	75	$	1,481	$	397	$	1,953




Foreign Currency Translation	(1)		(15)		(1)		(17)
Gross carrying amount at March 31, 2022	74		1,466		396		1,936

Accumulated impairment losses at December 31, 2021	—		(963)		—		(963)
Foreign Currency Translation	—		10		—		10
Accumulated impairment losses at March 31, 2022	—		(953)		—		(953)

Balance, net of impairment, at March 31, 2022	$	74	$	513	$	396	$	983

Other Intangible Assets

The Company amortizes the cost of other intangible assets over their estimated useful lives which, individually, range up to 45 years. The Company's future cash flows are not materially impacted by its ability to extend or renew agreements related to its amortizable intangible assets.

Other intangible assets consist of the following (in millions):


	March 31, 2022						December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trademarks and trade names	$	1,091	$	—	$	1,091	$	1,096	$	—	$	1,096
Customer relationships	552		(223)		329		559		(218)		341
Technology	296		(172)		124		298		(168)		130
Other (a)	66		(4)		62		53		(3)		50
Total other intangible assets	$	2,005	$	(399)	$	1,606	$	2,006	$	(389)	$	1,617

(a)Other primarily includes emissions and quarry rights.

Amortization expense for intangible assets for the three months ended March 31, 2022 and 2021 was $11 million and $12 million, respectively. Amortization expense for intangible assets is estimated to be $35 million for the remainder of 2022.

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

5. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)

The estimated amortization expense for intangible assets for the next five fiscal years ended December 31 is as follows (in millions):


Period	Amortization
2023	$	43
2024	$	40
2025	$	40
2026	$	37
2027	$	29

6. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following (in millions):


	March 31, 2022		December 31, 2021
Land	$	219	$	219
Buildings and leasehold improvements	1,273		1,265
Machinery and equipment	5,362		5,343
Construction in progress	358		387
	7,212		7,214
Accumulated depreciation	(3,387)