In its 2Q 2014 results, Owens Corning said the performance of its Insulation and Composites segments would more than offset continuted weakness in the Roofing business
Owens Corning (NYSE: OC) reported consolidated net sales of $1.36 billion in the second quarter of 2014, up slightly from $1.35 billion in 2013.
Second-quarter 2014 adjusted earnings were $45 million, or $0.38 per diluted share, down from the adjusted earnings of $68 million, or $0.56 per diluted share, in 2013. Net earnings in the second quarter of 2014 were $21 million, or $0.18 per share, compared to net earnings of $49 million, or $0.41 per diluted share last year.
“Insulation and Composites delivered improvement in line with expectations through the first half of the year. Continued momentum in these two businesses is expected to more than offset the weaker financial performance in the Roofing business and generate earnings growth for the full year 2014,” said Chairman and Chief Executive Officer Mike Thaman.
Owens Corning continued to perform at a very high level of safety with a Recordable Incident Rate (RIR) of 0.50 for the six months ending June 30, 2014. This is consistent with the rate in the same period in 2013.
Adjusted earnings before interest and taxes (adjusted EBIT) in the second quarter of 2014 were $96 million, down from $124 million in 2013. Reported EBIT for the second quarter was $73 million, compared with $118 million during the same period in 2013. (See Table 2.)
During the second quarter, Owens Corning repurchased 300,000 shares of the company’s common stock for $12 million. As of June 30, 2014, 7.7 million shares remained available for repurchase under the company’s current authorization.
The company’s Board of Directors declared a quarterly cash dividend of $0.16 per common share. The dividend will be payable on July 29, 2014 to shareholders of record as of July 14, 2014.
In its outlook, the company said the Insulation business should continue to benefit from growth in U.S. residential new construction, improved pricing and operating leverage.
The Composites business continues to benefit from stable global economic growth, improved operating performance and pricing. Pricing is expected to be the primary driver of EBIT growth in 2014. Composites pricing is now expected to be at the top end of the previous guidance range of $20 million to $30 million.
The roofing market was down through the first two quarters of 2014. The company now expects that the roofing market will be flat to slightly down for full-year 2014 compared to prior year. Volumes in the Roofing business are expected to more closely track the market in the second half than they did in the first half of 2014.
The company estimates a long-term effective tax rate of 28 percent to 30 percent, and a long-term effective cash tax rate of 10 percent to 12 percent on adjusted pre-tax earnings, due to the company’s $2.1 billion U.S. tax net operating loss carry forward. The effective book tax rate for 2014 on adjusted earnings is expected to be within the long-term range.
The company expects general corporate expenses to be $100 million to $110 million in 2014, a $20 million cost reduction versus the previous guidance. Capital expenditures in 2014 are expected to total approximately $370 million, a $30 million reduction from our previous guidance. This estimate continues to include an estimated $65 million for the start of construction of a non-wovens facility.
For the full year 2014, the company’s adjusted EBIT is expected to be greater than the 2013 result of $416 million.