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Owens Corning (OC - Free Report) reported mixed results for second-quarter 2024, wherein earnings surpassed the Zacks Consensus Estimate but net sales missed the same. On a year-over-year basis, both earnings and net sales increased on the back of strong commercial execution and manufacturing performance as well as the strategic choice to acquire Masonite.
Owens Corning's shares gained 4.1% in the day trading session, but fell 5% in the after-hour trading session on Aug 6.
Inside the Headlines
The company reported adjusted earnings per share (EPS) of $4.64, which topped the consensus mark of $4.37 by 6.2% and increased 9% from $4.25 a year ago.
Owens Corning Inc Price, Consensus and EPS Surprise
Net sales of $2.79 billion missed the consensus mark of $2.87 billion by 3% but increased 9% year over year from $2.56 billion, backed by the acquisition of Masonite.
Segment Details
Net sales in the Composites segment decreased 12% year over year to $546 million. This was due to lower volumes and price declines resulting from low spot prices in glass reinforcements.
However, earnings before interest and taxes (EBIT) margin contracted to 11% from 14% in the year-ago period. EBITDA margins of 19% also decreased from 21% reported a year ago. The decline was due to lower prices and volumes in glass reinforcements, as well as the impact of production downtime, which was partially offset by favorable manufacturing and delivery costs.
The Insulation segment’s net sales were $916 million, up 1% year over year. Although demand was strong for the segment’s North American business, its European business was impacted by the weaker macro environment. The favorable mix and positive price offset lower volumes in Europe.
EBIT margin rose 200 basis points (bps) year over year to 20%. EBITDA margin of 26% was up from 24% reported in the year-ago period, thanks to positive price, favorable delivery and favorable mix offset lower volumes and costs to evaluate capacity expansion within the U.S. fiberglass network.
The Roofing segment’s net sales decreased 2% year over year to $1.11 billion due to lower volumes, which were largely offset by positive price realization and favorable mix. Shingles volume declined modestly, outperforming the market. Additionally, volume was affected by the exit of protective packaging and lower component sales as distributors reset inventory in the channel.
EBIT and EBITDA margins expanded 400 bps and 300 bps to 34% and 35%, respectively. The EBIT improvement was mainly backed by strong commercial execution leading to positive price realization and favorable mix.
The Doors (reported for the period May 15 through Jun 30) segment reported net sales of $311 million, performing in line with the company’s expectations, despite market pressure in North America and Europe. EBIT and EBITDA margins were 11% and 20%, respectively.
Operating Highlights
Adjusted EBIT and adjusted EBITDA improved 10% and 12%, respectively, on a year-over-year basis. Adjusted EBIT margin of 21% was flat from the prior year, while adjusted EBITDA margin expanded 100 bps to 27%.
Balance Sheet
As of Jun 30, 2024, the company had cash and cash equivalents of $254 million compared with $1.62 billion at 2023-end. Long-term debt — net of the current portion — totaled $5.02 billion, significantly up from $2.62 billion at 2023-end.
In the first six months of 2024, net cash provided by operating activities was $517 million compared with $330 million in the previous year. Free cash flow came in at $336 million in the reported quarter compared with $372 million a year ago.
Q3 Outlook
Owens Corning's businesses primarily depend on residential repair and remodeling activity, U.S. housing starts, global commercial construction activity and industrial production. The company expects most of its North American building and construction end markets to be healthy in the near term.
The company also expects ongoing demand for single-family new construction, given the overall need for housing, and the high price and low availability of existing homes for sale. Non-discretionary repair and remodeling activity is expected to drive solid demand while discretionary repair and remodeling activity remains soft. Moreover, macroeconomic trends and geopolitical tensions continue to result in slow global economic growth.
For the third quarter, the company expects net sales to grow in the low-20% range. Legacy business is expected to be in line with the third quarter of 2023, including the addition of a full quarter of revenue for the Doors segment. It is expected to generate an EBIT margin in the high teens with an EBITDA margin in the low-20% range.
2024 Outlook Updated
For 2024, the company expects general corporate expenses between $255 million and $265 million ($240-$250 million expected earlier). Interest expenses are estimated to be within $210-$220 million versus the prior projection of $70-$80 million.
Capital additions, as well as depreciation and amortization, are estimated at an approximate value of $650 million (previously expected at $550 million). The company projects an effective tax rate of 24-26% on adjusted earnings.
Zacks Rank & Recent Construction Releases
Owens Corning currently carries a Zacks Rank #4 (Sell).
KBR, Inc. (KBR - Free Report) reported mixed second-quarter 2024 results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. The top and bottom lines increased on a year-over-year basis.
KBR performed well across key metrics and expects this trend to continue for the rest of the year. Driven by robust performance in its core business, KBR raised its adjusted EBITDA and cash flow guidance for 2024.
Armstrong World Industries, Inc. (AWI - Free Report) reported solid results for second-quarter 2024, wherein earnings and net sales topped the Zacks Consensus Estimate and increased on a year-over-year basis.
AWI’s growth trend was backed by solid contributions from the Mineral Fiber as well as Architectural Specialties segments. Growth was attributable to the increase in average unit value and volume. Also, contributions from recent acquisitions aided the uptrend.
Gibraltar Industries, Inc. (ROCK - Free Report) reported strong second-quarter 2024 earnings despite top-line woes. Although both earnings and net sales missed the Zacks Consensus Estimate, the bottom line strengthened on a year-over-year basis.
ROCK has slightly reduced its net sales outlook for 2024 to reflect recent slower market conditions in both Residential and Renewables end markets, partially offset by strength in both Agtech and Infrastructure. Nonetheless, it remains focused on driving participation gains across the segments, with operational improvements to support solid second-half and full-year margin expansion and cash flow growth.
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Owens Corning (OC) Q2 Earnings Beat Estimates, Q3 View Strong
Owens Corning (OC - Free Report) reported mixed results for second-quarter 2024, wherein earnings surpassed the Zacks Consensus Estimate but net sales missed the same. On a year-over-year basis, both earnings and net sales increased on the back of strong commercial execution and manufacturing performance as well as the strategic choice to acquire Masonite.
Owens Corning's shares gained 4.1% in the day trading session, but fell 5% in the after-hour trading session on Aug 6.
Inside the Headlines
The company reported adjusted earnings per share (EPS) of $4.64, which topped the consensus mark of $4.37 by 6.2% and increased 9% from $4.25 a year ago.
Owens Corning Inc Price, Consensus and EPS Surprise
Owens Corning Inc price-consensus-eps-surprise-chart | Owens Corning Inc Quote
Net sales of $2.79 billion missed the consensus mark of $2.87 billion by 3% but increased 9% year over year from $2.56 billion, backed by the acquisition of Masonite.
Segment Details
Net sales in the Composites segment decreased 12% year over year to $546 million. This was due to lower volumes and price declines resulting from low spot prices in glass reinforcements.
However, earnings before interest and taxes (EBIT) margin contracted to 11% from 14% in the year-ago period. EBITDA margins of 19% also decreased from 21% reported a year ago. The decline was due to lower prices and volumes in glass reinforcements, as well as the impact of production downtime, which was partially offset by favorable manufacturing and delivery costs.
The Insulation segment’s net sales were $916 million, up 1% year over year. Although demand was strong for the segment’s North American business, its European business was impacted by the weaker macro environment. The favorable mix and positive price offset lower volumes in Europe.
EBIT margin rose 200 basis points (bps) year over year to 20%. EBITDA margin of 26% was up from 24% reported in the year-ago period, thanks to positive price, favorable delivery and favorable mix offset lower volumes and costs to evaluate capacity expansion within the U.S. fiberglass network.
The Roofing segment’s net sales decreased 2% year over year to $1.11 billion due to lower volumes, which were largely offset by positive price realization and favorable mix. Shingles volume declined modestly, outperforming the market. Additionally, volume was affected by the exit of protective packaging and lower component sales as distributors reset inventory in the channel.
EBIT and EBITDA margins expanded 400 bps and 300 bps to 34% and 35%, respectively. The EBIT improvement was mainly backed by strong commercial execution leading to positive price realization and favorable mix.
The Doors (reported for the period May 15 through Jun 30) segment reported net sales of $311 million, performing in line with the company’s expectations, despite market pressure in North America and Europe. EBIT and EBITDA margins were 11% and 20%, respectively.
Operating Highlights
Adjusted EBIT and adjusted EBITDA improved 10% and 12%, respectively, on a year-over-year basis. Adjusted EBIT margin of 21% was flat from the prior year, while adjusted EBITDA margin expanded 100 bps to 27%.
Balance Sheet
As of Jun 30, 2024, the company had cash and cash equivalents of $254 million compared with $1.62 billion at 2023-end. Long-term debt — net of the current portion — totaled $5.02 billion, significantly up from $2.62 billion at 2023-end.
In the first six months of 2024, net cash provided by operating activities was $517 million compared with $330 million in the previous year. Free cash flow came in at $336 million in the reported quarter compared with $372 million a year ago.
Q3 Outlook
Owens Corning's businesses primarily depend on residential repair and remodeling activity, U.S. housing starts, global commercial construction activity and industrial production. The company expects most of its North American building and construction end markets to be healthy in the near term.
The company also expects ongoing demand for single-family new construction, given the overall need for housing, and the high price and low availability of existing homes for sale. Non-discretionary repair and remodeling activity is expected to drive solid demand while discretionary repair and remodeling activity remains soft. Moreover, macroeconomic trends and geopolitical tensions continue to result in slow global economic growth.
For the third quarter, the company expects net sales to grow in the low-20% range. Legacy business is expected to be in line with the third quarter of 2023, including the addition of a full quarter of revenue for the Doors segment. It is expected to generate an EBIT margin in the high teens with an EBITDA margin in the low-20% range.
2024 Outlook Updated
For 2024, the company expects general corporate expenses between $255 million and $265 million ($240-$250 million expected earlier). Interest expenses are estimated to be within $210-$220 million versus the prior projection of $70-$80 million.
Capital additions, as well as depreciation and amortization, are estimated at an approximate value of $650 million (previously expected at $550 million). The company projects an effective tax rate of 24-26% on adjusted earnings.
Zacks Rank & Recent Construction Releases
Owens Corning currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
KBR, Inc. (KBR - Free Report) reported mixed second-quarter 2024 results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. The top and bottom lines increased on a year-over-year basis.
KBR performed well across key metrics and expects this trend to continue for the rest of the year. Driven by robust performance in its core business, KBR raised its adjusted EBITDA and cash flow guidance for 2024.
Armstrong World Industries, Inc. (AWI - Free Report) reported solid results for second-quarter 2024, wherein earnings and net sales topped the Zacks Consensus Estimate and increased on a year-over-year basis.
AWI’s growth trend was backed by solid contributions from the Mineral Fiber as well as Architectural Specialties segments. Growth was attributable to the increase in average unit value and volume. Also, contributions from recent acquisitions aided the uptrend.
Gibraltar Industries, Inc. (ROCK - Free Report) reported strong second-quarter 2024 earnings despite top-line woes. Although both earnings and net sales missed the Zacks Consensus Estimate, the bottom line strengthened on a year-over-year basis.
ROCK has slightly reduced its net sales outlook for 2024 to reflect recent slower market conditions in both Residential and Renewables end markets, partially offset by strength in both Agtech and Infrastructure. Nonetheless, it remains focused on driving participation gains across the segments, with operational improvements to support solid second-half and full-year margin expansion and cash flow growth.