Owens Corning [OC] Filings

10-Q 1 oc-20210930.htm 10-Q oc-20210930

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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 September 30, 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. ¨

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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 October 22, 2021, 100,486,652 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	11

		3. Inventories	13
		4. Derivative Financial Instruments	14
		5. Goodwill and Other Intangible Assets	17
		6. Property, Plant and Equipment	18

		7. Acquisitions	19

		8. Warranties	19
		9. Restructuring and Acquisition-Related Costs	19
		10. Debt	22
		11. Pension Plans and Other Postretirement Benefits	25
		12. Contingent Liabilities and Other Matters	26
		13. Stock Compensation	28
		14. Earnings per Share	31
		15. Income Taxes	32
		16. Changes in Accumulated Other Comprehensive Deficit	33


	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46

	Item 4.	Controls and Procedures	46

PART II – OTHER INFORMATION

	Item 1.	Legal Proceedings	47

	Item 1A.	Risk Factors	47

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47

	Item 3.	Defaults Upon Senior Securities	47

	Item 4.	Mine Safety Disclosures	47

	Item 5.	Other Information	47

	Item 6.	Exhibits	48

		Signatures	49

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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 September 30,				Nine Months Ended September 30,

	2021		2020		2021		2020
NET SALES	$	2,213	$	1,904	$	6,367	$	5,130
COST OF SALES	1,617		1,427		4,709		4,004
Gross margin	596		477		1,658		1,126
OPERATING EXPENSES
Marketing and administrative expenses	186		163		548		493
Science and technology expenses	21		20		63		59

Goodwill impairment charge	—		—		—		944
Other (income) expenses, net	(3)		2		(68)		40
Total operating expenses	204		185		543		1,536
OPERATING INCOME (LOSS)	392		292		1,115		(410)
Non-operating income	(2)		(4)		(8)		(11)
EARNINGS (LOSS) BEFORE INTEREST AND TAXES	394		296		1,123		(399)
Interest expense, net	31		35		97		98
Loss on extinguishment of debt	9		—		9		—
EARNINGS (LOSS) BEFORE TAXES	354		261		1,017		(497)
Income tax expense	94		56		250		119
Equity in net (loss) earnings of affiliates	(1)		1		—		1
NET EARNINGS (LOSS)	259		206		767		(615)
Net loss attributable to noncontrolling interests	(1)		—		(1)		—
NET EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING	$	260	$	206	$	768	$	(615)
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS
Basic	$	2.52	$	1.89	$	7.36	$	(5.66)
Diluted	$	2.50	$	1.88	$	7.30	$	(5.66)

WEIGHTED AVERAGE COMMON SHARES
Basic	103.1		108.8		104.4		108.7
Diluted	103.9		109.5		105.2		108.7

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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
NET EARNINGS (LOSS)	$	259	$	206	$	767	$	(615)
Currency translation adjustment (net of tax of $(1) and $3 for the three months ended September 30, 2021 and 2020, respectively, and $(2) and $(7) for the nine months ended September 30, 2021 and 2020, respectively)	(35)		37		(48)		(32)
Pension and other postretirement adjustment (net of tax of $(10) and $0 for the three months ended September 30, 2021 and 2020, respectively, and $(10) and $0 for the nine months ended September 30, 2021 and 2020, respectively)	33		(3)		31		2
Hedging adjustment (net of tax of $(5) and $(1) for the three months ended September 30, 2021 and 2020, respectively, and $(8) and $(1) for the nine months ended September 30, 2021 and 2020, respectively)	12		3		22		2
COMPREHENSIVE EARNINGS (LOSS)	269		243		772		(643)
Comprehensive loss attributable to noncontrolling interests	(1)		—		(1)		—
COMPREHENSIVE EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING	$	270	$	243	$	773	$	(643)

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	September 30, 2021		December 31, 2020
CURRENT ASSETS
Cash and cash equivalents	$	920	$	717
Receivables, less allowance of $9 and $10 at September 30, 2021 and December 31, 2020, respectively	1,141		919
Inventories	949		855

Other current assets	133		115
Total current assets	3,143		2,606
Property, plant and equipment, net	3,767		3,809
Operating lease right-of-use assets	145		154
Goodwill	995		989
Intangible assets	1,629		1,667
Deferred income taxes	39		28
Other non-current assets	263		228
TOTAL ASSETS	$	9,981	$	9,481
LIABILITIES AND EQUITY
CURRENT LIABILITIES



Current operating lease liabilities	$	52	$	55

Other current liabilities	1,634		1,385
Total current liabilities	1,686		1,440
Long-term debt, net of current portion	2,958		3,126
Pension plan liability	109		159
Other employee benefits liability	167		171
Non-current operating lease liabilities	93		99
Deferred income taxes	397		332
Other liabilities	322		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	4,076		4,059
Accumulated earnings	2,515		1,829
Accumulated other comprehensive deficit	(583)		(588)
Cost of common stock in treasury (c)	(1,799)		(1,400)
Total Owens Corning stockholders’ equity	4,210		3,901
Noncontrolling interests	39		40
Total equity	4,249		3,941
TOTAL LIABILITIES AND EQUITY	$	9,981	$	9,481

(a)10 shares authorized; none issued or outstanding at September 30, 2021 and December 31, 2020

(b)400 shares authorized; 135.5 issued and 101.6 outstanding at September 30, 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.

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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, 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
Net earnings attributable to Owens Corning	—	—		—	—		—		298		—		—		298

Currency translation adjustment	—	—		—	—		—		—		32		—		32
Pension and other postretirement adjustment (net of tax)	—	—		—	—		—		—		(3)		—		(3)
Deferred loss on hedging transactions (net of tax)	—	—		—	—		—		—		(2)		—		(2)

Issuance of common stock under share-based payment plans	0.3	—		(0.3)	14		(4)		—		—		—		10
Purchases of treasury stock	(1.3)	—		1.3	(131)		—		—		—		—		(131)
Stock-based compensation expense	—	—		—	—		12		—		—		—		12

Dividends declared (d)	—	—		—	—		—		(27)		—		—		(27)
Balance at June 30, 2021	103.3	$	1	32.2	$	(1,637)	$	4,064	$	2,282	$	(593)	$	39	$	4,156
Net earnings attributable to Owens Corning	—	—		—	—		—		260		—		—		260
Net loss attributable to noncontrolling interests	—	—		—	—		—		—		—		(1)		(1)
Currency translation adjustment	—	—		—	—		—		—		(35)		1		(34)
Pension and other postretirement adjustment (net of tax)	—	—		—	—		—		—		33		—		33
Deferred loss on hedging transactions (net of tax)	—	—		—	—		—		—		12		—		12


Purchases of treasury stock	(1.7)	—		1.7	(162)		—		—		—		—		(162)
Stock-based compensation expense	—	—		—	—		12		—		—		—		12

Dividends declared (d)	—	—		—	—		—		(27)		—		—		(27)
Balance at September 30, 2021	101.6	$	1	33.9	$	(1,799)	$	4,076	$	2,515	$	(583)	$	39	$	4,249

(a)Additional Paid in Capital (APIC)

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

(c)Noncontrolling Interest (“NCI”)

(d)Quarterly dividend declarations of $0.26 per share as of September 30, 2021, June 30, 2021 and March 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, 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
Net earnings attributable to Owens Corning	—	—		—	—		—		206		—		—		206

Currency translation adjustment	—	—		—	—		—		—		37		1		38
Pension and other postretirement adjustment (net of tax)	—	—		—	—		—		—		(3)		—		(3)
Deferred loss on hedging transactions (net of tax)	—	—		—	—		—		—		3		—		3

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

Stock-based compensation expense	—	—		—	—		11		—		—		—		11

Dividends declared (d)	—	—		—	—		—		(26)		—				(26)
Balance at September 30, 2020	108.0	$	1	27.5	$	(1,200)	$	4,064	$	1,625	$	(638)	$	40	$	3,892

(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 September 30, 2020, 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 CASH FLOWS

(unaudited)

(in millions)


	Nine Months Ended September 30,
	2021		2020
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES
Net earnings (loss)	$	767	$	(615)
Adjustments to reconcile net earnings (loss) to cash provided by operating activities:
Depreciation and amortization	370		352


Deferred income taxes	54		95
Provision for pension and other employee benefits liabilities	2		(2)
Stock-based compensation expense	36		31
Goodwill impairment charge	—		944
Intangible assets impairment charge	—		43
Other adjustments to reconcile net earnings (loss) to cash provided by operating activities	(27)		(41)
Loss on extinguishment of debt	9		—
Changes in operating assets and liabilities	(26)		(53)
Pension fund contribution	(5)		(20)
Payments for other employee benefits liabilities	(9)		(10)
Other	(3)		(7)
Net cash flow provided by operating activities	1,168		717
NET CASH FLOW USED FOR INVESTING ACTIVITIES
Cash paid for property, plant, and equipment	(243)		(

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10-Q	[2018-04-25]
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10-Q	[2014-07-23]
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