We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Owens Corning (OC) Q3 Earnings & Revenues Miss, Shares Down
Read MoreHide Full Article
Owens Corning’s (OC - Free Report) shares declined nearly 10% after third-quarter 2018 earnings release on Oct 24, wherein earnings and revenues missed the Zacks Consensus Estimate. The company’s performance was poor due to significant volume decline in the Roofing business.
Owens Corning reported adjusted earnings of $1.54 per share in the third quarter, missing the consensus mark of $1.71 per share by 9.9%. Also, net sales of $1.82 billion missed analysts’ expectation of $1.89 billion by 3.9% in the reported quarter.
However, Owens Corning’s top line grew 7% on a year-over-year basis, courtesy of contributions from Insulation acquisitions, as well as successful pricing actions in both Roofing and Insulation. Also, the bottom line increased 23.2% year over year due to solid pricing momentum. Notably, pricing more than offset inflationary pressure for the first time in a year.
Owens Corning Inc Price, Consensus and EPS Surprise
The company has three reportable segments, namely the Composites, Insulation and Roofing.
The Composites segment net sales declined 1% year over year to $508 million. However, earnings before interest and taxes (EBIT) margin in third-quarter 2018 grew 100 basis points (bps) to 13%. Currency headwinds negatively impacted the segment’s performance.
Also, the Roofing segment net sales dipped 5% to $645 million year over year. EBIT margin fell 200 bps to 20% in the quarter. The weaker performance in the sector was due to 20% lower industry shipments on significantly reduced storm demand.
However, net sales from the Insulation segment grew 25% year over year to $710 million. Also, EBIT margin in the quarter under review surged 200 bps to 13%. This was primarily driven by the Paroc acquisition and price improvement of $40 million, mainly in the U.S. residential fiberglass building insulation market.
Operating Highlights
During the quarter, Owens Corning’s EBIT increased 12.4% year over year to $259 million compared with $227 million in the year-ago quarter. Also, EBIT margin increased 90 bps to 14.2% from the prior-year level.
During the quarter, Owens Corning reported adjusted EBIT of $267 million compared with $239 million in 2017, depicting a record improvement of 11.7%. Also, the reported figure grew 70 bps year over year. Strong pricing actions in Insulation and Roofing, along with positives from the Paroc acquisition offset weaker market conditions across the businesses.
Balance Sheet
As of Sep 30 2018, the company had cash and cash equivalents of $136 million compared with $246 million on Dec 31, 2017.
Owens Corning repurchased 1.7 million shares of its common stock for $100 million during third-quarter 2018. As of Sep 30 2018, 4.6 million shares were remaining under the current authorization.
2018 Earnings Outlook
In Roofing, the company expects the U.S. asphalt shingle market to be down roughly 10% on lower storm demand. The impact of asphalt and transportation inflation is expected to be offset by strong pricing performance.
In Composites, it expects growth in the glass fiber market,backed by global industrial production improvement, and a lower EBIT of approximately $260 million owing to reduced volume in the U.S., European, and Indian roofing market, along with higher-than-anticipated inflation.
In Insulation, the company now expects EBIT growth of approximately $110 million, down from $150 million. The downtrend is due to weaker market expectations across geographies and product platforms. However, it remains on track to achieve $120 million of price.
Owens Corning estimates an effective tax rate of 26-28%. The company now expects general corporate expenses within $125-$130 million in 2018 compared with $135-$140 million expected earlier.
It continues to expect conversion of adjusted earnings into free cash flow at about 100%. Also, adjusted EBIT is now anticipated to be on par with last year’s $855 million, below the previously estimated range of $925-$975 million.
Armstrong World, Continental Building and NCI Building’s 2018 earnings are expected to grow 23.5%, 52.6% and 81.3%, respectively.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Owens Corning (OC) Q3 Earnings & Revenues Miss, Shares Down
Owens Corning’s (OC - Free Report) shares declined nearly 10% after third-quarter 2018 earnings release on Oct 24, wherein earnings and revenues missed the Zacks Consensus Estimate. The company’s performance was poor due to significant volume decline in the Roofing business.
Owens Corning reported adjusted earnings of $1.54 per share in the third quarter, missing the consensus mark of $1.71 per share by 9.9%. Also, net sales of $1.82 billion missed analysts’ expectation of $1.89 billion by 3.9% in the reported quarter.
However, Owens Corning’s top line grew 7% on a year-over-year basis, courtesy of contributions from Insulation acquisitions, as well as successful pricing actions in both Roofing and Insulation. Also, the bottom line increased 23.2% year over year due to solid pricing momentum. Notably, pricing more than offset inflationary pressure for the first time in a year.
Owens Corning Inc Price, Consensus and EPS Surprise
Owens Corning Inc Price, Consensus and EPS Surprise | Owens Corning Inc Quote
Segment Details
The company has three reportable segments, namely the Composites, Insulation and Roofing.
The Composites segment net sales declined 1% year over year to $508 million. However, earnings before interest and taxes (EBIT) margin in third-quarter 2018 grew 100 basis points (bps) to 13%. Currency headwinds negatively impacted the segment’s performance.
Also, the Roofing segment net sales dipped 5% to $645 million year over year. EBIT margin fell 200 bps to 20% in the quarter. The weaker performance in the sector was due to 20% lower industry shipments on significantly reduced storm demand.
However, net sales from the Insulation segment grew 25% year over year to $710 million. Also, EBIT margin in the quarter under review surged 200 bps to 13%. This was primarily driven by the Paroc acquisition and price improvement of $40 million, mainly in the U.S. residential fiberglass building insulation market.
Operating Highlights
During the quarter, Owens Corning’s EBIT increased 12.4% year over year to $259 million compared with $227 million in the year-ago quarter. Also, EBIT margin increased 90 bps to 14.2% from the prior-year level.
During the quarter, Owens Corning reported adjusted EBIT of $267 million compared with $239 million in 2017, depicting a record improvement of 11.7%. Also, the reported figure grew 70 bps year over year. Strong pricing actions in Insulation and Roofing, along with positives from the Paroc acquisition offset weaker market conditions across the businesses.
Balance Sheet
As of Sep 30 2018, the company had cash and cash equivalents of $136 million compared with $246 million on Dec 31, 2017.
Owens Corning repurchased 1.7 million shares of its common stock for $100 million during third-quarter 2018. As of Sep 30 2018, 4.6 million shares were remaining under the current authorization.
2018 Earnings Outlook
In Roofing, the company expects the U.S. asphalt shingle market to be down roughly 10% on lower storm demand. The impact of asphalt and transportation inflation is expected to be offset by strong pricing performance.
In Composites, it expects growth in the glass fiber market,backed by global industrial production improvement, and a lower EBIT of approximately $260 million owing to reduced volume in the U.S., European, and Indian roofing market, along with higher-than-anticipated inflation.
In Insulation, the company now expects EBIT growth of approximately $110 million, down from $150 million. The downtrend is due to weaker market expectations across geographies and product platforms. However, it remains on track to achieve $120 million of price.
Owens Corning estimates an effective tax rate of 26-28%. The company now expects general corporate expenses within $125-$130 million in 2018 compared with $135-$140 million expected earlier.
It continues to expect conversion of adjusted earnings into free cash flow at about 100%. Also, adjusted EBIT is now anticipated to be on par with last year’s $855 million, below the previously estimated range of $925-$975 million.
Zacks Rank & Key Picks
Owens Corning currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks from the same industry are Armstrong World Industries, Inc. (AWI - Free Report) , Continental Building Products, Inc. and NCI Building Systems, Inc. , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1Rank (Strong Buy) stocks here.
Armstrong World, Continental Building and NCI Building’s 2018 earnings are expected to grow 23.5%, 52.6% and 81.3%, respectively.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>