Owens ning(US:OC)2024-08-06 10:06Financial Performance - Net earnings attributable to Owens Corning were $285 million in Q2 2024, down from $345 million in Q2 2023, while Adjusted EBIT increased to $588 million from $534 million year-over-year [138]. - Net sales for Q2 2024 reached $2.789 billion, a $226 million increase compared to $2.563 billion in Q2 2023, primarily driven by revenues from the newly acquired Doors segment [151]. - Gross margin for Q2 2024 was $867 million, up $115 million from $752 million in Q2 2023, with a gross margin percentage of 31% compared to 29% in the prior year [150][152]. - Adjusted EBIT for Q2 2024 was $588 million, compared to $534 million in Q2 2023 [162]. - Net earnings attributable to Owens Corning for Q2 2024 were $285 million, down from $345 million in Q2 2023 [162]. Segment Performance - Roofing segment net sales for Q2 2024 were $1,105 million, a decrease of 2% from $1,123 million in Q2 2023 [164]. - Insulation segment net sales for Q2 2024 increased by 1% to $916 million, compared to $905 million in Q2 2023 [168]. - EBIT for the Roofing segment in Q2 2024 was $373 million, up from $338 million in Q2 2023 [164]. - EBIT for the Insulation segment in Q2 2024 increased to $183 million from $163 million in Q2 2023 [168]. - The Doors segment reported net sales of $311 million for the second quarter and year-to-date 2024, attributed to the acquisition of Masonite completed on May 15, 2024 [175]. - EBIT for the Doors segment was $34 million for the second quarter and year-to-date 2024, also due to the Masonite acquisition [176]. - The Composites segment experienced a 12% decrease in net sales to $546 million for the second quarter of 2024 compared to the same period in 2023, driven by lower sales volumes and selling prices [179]. - EBIT in the Composites segment decreased by $26 million to $61 million for the second quarter of 2024, impacted by lower selling prices and higher production downtime [180]. Acquisition and Strategic Initiatives - The Company acquired Masonite International Corporation for $3.2 billion, contributing $311 million in revenues and $34 million in EBIT from May 15, 2024, to June 30, 2024 [140]. - The Masonite acquisition is expected to contribute to future growth and operational synergies [206]. - The Company incurred $17 million in costs related to the strategic review of its global glass reinforcements business, which generates approximately $1.3 billion in annual revenues [146]. Cash Flow and Debt Management - Cash and cash equivalents decreased to $254 million as of June 30, 2024, from $968 million a year earlier, while operating activities generated $517 million in cash, up from $330 million in the same period of 2023 [139]. - Total debt as of June 30, 2024, was $5.6 billion, including $400 million of senior notes due in the fourth quarter of 2024 [189]. - The Company issued $500 million of 2027 senior notes and $800 million of 2034 senior notes in May 2024 to repay a portion of the borrowings used for the Masonite acquisition [192]. - Net cash flow provided by operating activities increased by $187 million to $517 million for the six months ended June 30, 2024, compared to $330 million in 2023 [199]. - Net cash flow used for investing activities increased by $3.1 billion to $(3,154) million for the six months ended June 30, 2024, primarily due to the Masonite acquisition [200]. - Net cash flow provided by financing activities increased by $1.7 billion to $1,321 million for the six months ended June 30, 2024, driven by proceeds from long-term debt and the Receivables Securitization Facility [200]. Expenses and Taxation - Marketing and administrative expenses increased by $42 million in Q2 2024, primarily due to the addition of the Doors segment's expenses and inflationary pressures [153]. - Interest expense, net, rose to $64 million in Q2 2024, an increase of $41 million compared to $23 million in Q2 2023, driven by higher interest on the 364-Day Credit Facility [156]. - The effective tax rate for Q2 2024 was 28%, influenced by U.S. state and local income tax expenses and foreign rate differentials [157]. - Restructuring, acquisition, and divestiture-related costs totaled $97 million for Q2 2024, compared to $47 million for Q2 2023 [159]. - Income tax expense for Q2 2023 was $121 million, with an effective tax rate of 26% [158]. Market Outlook and Economic Conditions - The average Seasonally Adjusted Annual Rate (SAAR) of U.S. housing starts in Q2 2024 was approximately 1.348 million, down from 1.447 million in Q2 2023 [172]. - The Company expects stable demand in the North American new residential construction market, but acknowledges potential impacts from higher interest rates and input cost inflation [173]. - The Company anticipates continued economic uncertainty affecting the global glass reinforcements market, with a focus on managing costs and capital expenditures [182]. Share Repurchase and Corporate Governance - As of June 30, 2024, 8.1 million shares remained available for repurchase under the Company's share repurchase program, which allows for the repurchase of up to 10 million shares [149]. - General corporate expenses for 2024 are estimated to be between $255 million and $265 million [185]. Safety and Compliance - The Recordable Incident Rate (RIR) for the three months ended June 30, 2024, was 0.46, down from 0.59 in the same period a year ago [203]. - The company maintains comprehensive safety programs aimed at reducing risks and improving employee well-being [203]. - The company does not expect supplier finance programs to materially affect its overall financial condition or liquidity in the future [197].