Owens Corning Q2 2020 Earnings Report
Key Takeaways
Owens Corning reported consolidated net sales of $1.6 billion in second-quarter 2020, a decrease of 15% compared to the previous year. Second-quarter 2020 net earnings attributable to Owens Corning were $96 million, or $0.88 per diluted share. Adjusted EBIT was $167 million, compared with $231 million in 2019.
Company delivered solid quarterly results in a challenging environment
Roofing produced $148 million of EBIT on strong shingle demand
Insulation delivered $32 million of EBIT on recovering new residential construction
Composites generated $6 million of EBIT on disciplined cost control
Owens Corning
Owens Corning
Owens Corning Revenue by Segment
Forward Guidance
The company expects to capitalize on near-term market demand, control costs, and sustain strong conversion of adjusted earnings into free cash flow as residential, commercial, and industrial markets continue to recover. General corporate expenses are estimated to be between $105 million and $115 million, and capital additions are estimated to be between $250 million and $300 million, both in line with the company’s prior guidance. Interest expense is currently estimated to be between $125 million to $130 million, compared with its previous estimate of $120 million to $125 million. The company estimates an effective tax rate of 26% to 28%, and a cash tax rate of 10% to 12% on adjusted pre-tax earnings, which is due to the company’s foreign tax credit carryforwards.
Positive Outlook
- expects to capitalize on near-term market demand
- expects to control costs
- expects to sustain strong conversion of adjusted earnings into free cash flow
- residential markets continue to recover
- commercial and industrial markets continue to recover
Challenges Ahead
- The key economic factors that continue to impact the company’s businesses are global industrial production, U.S. housing starts, and global commercial and industrial construction activity.
- The company expects the COVID-19 pandemic will continue to create uncertainty in its end markets.
- The magnitude of the impact will depend on the depth and duration of the crisis
- The magnitude of the impact will depend on the timing of the recovery in the markets served by the company.
- Interest expense is currently estimated to be between $125 million to $130 million, compared with its previous estimate of $120 million to $125 million.
Revenue & Expenses
Visualization of income flow from segment revenue to net income