On August 6, 2024, Owens-Corning Inc (OC, Financial) released its 8-K filing for the second quarter of 2024. Owens-Corning Inc is a manufacturer of glass fiber utilized in composites and building materials. It has an integrated business model with three reportable segments: Composites, Insulation, and Roofing. It generates maximum revenue from the Roofing segment. Its Roofing segment laminate and strip asphalt roofing shingles, roofing components, synthetic packaging materials, and oxidized asphalt. It meets the growing demand for longer-lasting, aesthetically attractive laminate products with modest capital investment. Geographically, the company generates the majority of its revenue from the United States.
Performance Overview
Owens-Corning Inc (OC, Financial) reported net sales of $2.8 billion for Q2 2024, a 9% increase from the prior year, with the newly acquired Doors segment contributing $311 million in revenue. The company generated net earnings of $285 million and adjusted EBIT of $588 million. Despite a 17% decline in net earnings attributable to OC compared to Q2 2023, the company delivered a diluted EPS of $3.24 and an adjusted diluted EPS of $4.64, surpassing the analyst estimate of $4.16.
Key financial achievements include an operating cash flow of $493 million and free cash flow of $336 million. The company returned $52 million to shareholders through dividends.
Segment Performance
The Roofing segment saw a 2% decrease in net sales to $1.1 billion compared to Q2 2023, primarily due to lower volumes. However, EBIT increased by $35 million to $373 million, driven by strong commercial execution and favorable mix. The Insulation segment reported a 1% increase in net sales to $916 million, with EBIT rising by $20 million to $183 million, despite lower volumes in Europe.
The newly acquired Doors segment, which reported from May 15 to June 30, generated $311 million in net sales and $34 million in EBIT. The Composites segment experienced a 12% decline in net sales to $546 million, with EBIT decreasing by $26 million to $61 million due to lower volumes and price declines in glass reinforcements.
Financial Metrics and Analysis
Owens-Corning Inc (OC, Financial) reported a net earnings margin of 10%, an adjusted EBIT margin of 21%, and an adjusted EBITDA margin of 27%. These metrics are crucial for assessing the company's profitability and operational efficiency. The company's balance sheet remains strong, with net debt-to-adjusted EBITDA leverage toward the low end of its target range of 2-3x.
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Net Sales | $2.8 billion | $2.6 billion | 9% |
| Net Earnings | $285 million | $345 million | -17% |
| Adjusted EBIT | $588 million | $534 million | 10% |
| Adjusted EBITDA | $742 million | $664 million | 12% |
| Diluted EPS | $3.24 | $3.78 | -14% |
| Adjusted Diluted EPS | $4.64 | $4.25 | 9% |
Commentary and Strategic Highlights
“Owens Corning delivered another outstanding quarter, generating strong margins and cash flow while completing the acquisition of Masonite and continuing our review of glass reinforcements,” said Chair and Chief Executive Officer Brian Chambers.
The acquisition of Masonite International Corporation has strengthened Owens-Corning Inc's position in the building and construction materials market. The integration is ongoing, with planned delivery of $125 million in enterprise cost synergies over time.
Outlook
For Q3 2024, Owens-Corning Inc expects net sales growth in the low-20 percent range, including a full quarter of revenue from the Doors segment. The company anticipates EBIT margin in the high teens and EBITDA margin in the low-20 percent range.
Owens-Corning Inc (OC, Financial) continues to demonstrate strong financial performance and strategic growth, making it a compelling consideration for value investors. For more detailed insights, visit the full 8-K filing.
Explore the complete 8-K earnings release (here) from Owens-Corning Inc for further details.
