Owens ning(US:OC)2025-08-06 10:05PART I – FINANCIAL INFORMATION Item 1. Financial Statements The company's financial statements reflect increased net sales and earnings, driven by the Masonite acquisition and offset by the GR business divestiture Consolidated Statements of Earnings Highlights | Metric (in millions, except EPS) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $2,747 | $2,497 | $5,277 | $4,514 | | Operating Income | $505 | $418 | $912 | $794 | | Net Earnings from Continuing Operations | $333 | $257 | $588 | $534 | | Net Earnings (Loss) from Discontinued Operations | $29 | $29 | $(319) | $50 | | Net Earnings Attributable to Owens Corning | $363 | $285 | $270 | $584 | | Diluted EPS - Continuing Operations | $3.91 | $2.91 | $6.86 | $6.06 | | Diluted EPS - Total | $4.25 | $3.24 | $3.15 | $6.63 | Consolidated Balance Sheet Highlights | Metric (in millions) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $3,916 | $3,378 | | Total Assets | $14,483 | $14,075 | | Total Current Liabilities | $2,574 | $2,297 | | Total Liabilities | $9,279 | $8,955 | | Total Equity | $5,204 | $5,120 | Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Metric (in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | $278 | $517 | | Net Cash Flow used for Investing Activities | $(347) | $(3,154) | | Net Cash Flow (used for) provided by Financing Activities | $(112) | $1,321 | | Net Decrease in Cash | $(96) | $(1,349) | - On February 14, 2025, the company announced the sale of its glass reinforcements (GR) business, which has been reclassified to discontinued operations21 - The company acquired Masonite International Corporation on May 15, 2024, establishing the new Doors reportable segment2223 Note 2: Discontinued Operations The glass reinforcements business was classified as a discontinued operation, resulting in a pre-tax loss of $381 million for H1 2025 - The company entered a definitive agreement to sell its glass reinforcements (GR) business for an estimated purchase price of $515 million43 - A pre-tax loss of $381 million was recorded in the first six months of 2025 upon classifying the GR business as a discontinued operation4647 Financial Summary of Discontinued Operations (in millions) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $306 | $292 | $576 | $575 | | Net Earnings (Loss) Attributable to Owens Corning | $29 | $29 | $(319) | $50 | Note 3: Segment Information The company reorganized into Roofing, Insulation, and Doors segments and changed its profitability measure from EBIT to EBITDA - The company reorganized into three new reportable segments: Roofing, Insulation, and Doors, effective January 1, 202550 - The company changed its segment measure of profitability from Earnings Before Interest and Taxes (EBIT) to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)60 Net Sales by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Roofing | $1,303 | $1,252 | $2,423 | $2,350 | | Insulation | $934 | $974 | $1,843 | $1,931 | | Doors | $554 | $311 | $1,094 | $311 | | Consolidated | $2,747 | $2,497 | $5,277 | $4,514 | EBITDA by Segment (in millions) | Segment | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Roofing | $457 | $437 | $789 | $775 | | Insulation | $225 | $246 | $450 | $469 | | Doors | $75 | $61 | $143 | $61 | | Total Reportable Segments | $757 | $744 | $1,382 | $1,305 | Note 6: Goodwill and Other Intangible Assets Total goodwill stood at $2.814 billion, with the Doors segment's goodwill passing an impairment test by a narrow margin Goodwill by Segment (in millions) | Segment | June 30, 2025 | | :--- | :--- | | Roofing | $661 | | Insulation | $637 | | Doors | $1,516 | | Total | $2,814 | - An interim goodwill impairment test for the Doors reporting unit found no impairment, but its fair value exceeded carrying value by only approximately 5%8990 Note 8: Acquisitions The company acquired Masonite International for $3.2 billion, establishing the new Doors segment and recording $1.5 billion in goodwill - The company acquired 100% of Masonite shares on May 15, 2024, for a total purchase price of $3.2 billion100 - The Masonite acquisition contributed revenues of $1,094 million and earnings of $23 million for the six months ended June 30, 2025102 - The purchase consideration allocation resulted in $1.5 billion of goodwill, which is not tax-deductible112 Note 11: Restructuring The company incurred $21 million in restructuring costs year-to-date, primarily related to the Masonite acquisition synergies - Following the Masonite acquisition, the company initiated restructuring actions with estimated total costs of $12 million in cash charges and $30 million in non-cash charges135 Total Restructuring Costs from Continuing Operations (in millions) | Period | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Costs | $(18) | $(47) | $(21) | $(61) | Note 12: Debt Total long-term debt reached $5.1 billion after issuing $2.0 billion in senior notes to fund the Masonite acquisition - In May 2024, the company issued $2.0 billion in new senior notes to repay borrowings used for the Masonite acquisition152 - On March 5, 2025, the company established a $1.5 billion commercial paper program and had $420 million of notes outstanding as of June 30, 2025174 - The Senior Revolving Credit Facility was amended to increase its capacity to $1.5 billion and extend its maturity to March 2030, with no borrowings outstanding165 Note 15: Earnings per Share The company repurchased $322 million of its stock in H1 2025 and approved a new 12-million-share repurchase authorization - The company repurchased 2.3 million shares for $322 million in the first six months of 2025209 - A new share repurchase program for up to 12 million shares was approved, leaving 16.0 million shares available for repurchase under all authorizations208209 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Net sales and earnings grew, driven by the Masonite acquisition and strong Roofing performance, which offset weakness in Insulation - Net earnings from continuing operations attributable to Owens Corning were $334 million in Q2 2025, compared to $256 million in Q2 2024219 Adjusted EBITDA from Continuing Operations Reconciliation (in millions) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Earnings from Continuing Operations Attributable to Owens Corning | $334 | $256 | $589 | $534 | | Adjustments (Interest, Tax, D&A, other items) | $369 | $422 | $679 | $659 | | Adjusted EBITDA from Continuing Operations | $703 | $678 | $1,268 | $1,193 | Roofing Segment Results The Roofing segment's net sales and EBITDA increased due to higher selling prices, which offset rising manufacturing and input costs - Q2 2025 net sales increased by $51 million (4%) YoY, primarily due to higher selling prices243 - Q2 2025 EBITDA increased by $20 million YoY, with higher selling prices more than offsetting higher manufacturing and input costs244 Insulation Segment Results The Insulation segment's net sales and EBITDA declined due to lower sales volumes, production downtime, and cost inflation - Q2 2025 net sales decreased by $40 million (4%) YoY, driven by approximately 4% lower sales volumes248 - Q2 2025 EBITDA decreased by $21 million YoY, impacted by production downtime, unfavorable mix, and input cost inflation250 Doors Segment Results The new Doors segment, from the Masonite acquisition, generated $554 million in net sales and $75 million in EBITDA in Q2 2025 - The Doors segment reported net sales of $554 million and EBITDA of $75 million for Q2 2025257258 - The company anticipates near-term challenges for the Doors segment due to weakness in North American and European residential markets259 Liquidity, Capital Resources and Other Related Matters The company maintains a strong liquidity position despite a decrease in operating cash flow primarily due to working capital changes - Primary liquidity sources as of June 30, 2025, include $230 million in cash, a $1.5 billion undrawn credit facility, and a $1.5 billion commercial paper program264265267 - Net cash from operating activities for H1 2025 was $278 million, a decrease of $239 million from 2024, primarily due to changes in working capital271 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company reports no material change in its market risk exposure during the first half of 2025 - There were no material changes in the company's market risk exposure during the first half of 2025303 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period305 - No material changes occurred during the quarter that affected the company's internal control over financial reporting306 PART II – OTHER INFORMATION Item 1. Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note 13 of the financial statements - Information regarding legal proceedings is detailed in Note 13 of the financial statements309 Item 1A. Risk Factors There have been no material changes to the company's risk factors since its 2024 Annual Report, other than those noted in Q1 2025 - There have been no material changes to the risk factors disclosed in the 2024 Form 10-K, except as noted in the Q1 2025 10-Q310 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased $223 million of its stock in Q2 2025 and has 16.0 million shares remaining under its repurchase authorizations Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 1,886 | $140.16 | | May 2025 | 744,313 | $137.61 | | June 2025 | 885,292 | $136.21 | | Total Q2 | 1,631,491 | $136.85 | - A new share repurchase program for up to 12 million shares was approved on May 13, 2025, leaving 16.0 million shares available for repurchase313317