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Released April 23, 2015 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Owens Corning (NYSE:OC) (Toledo, Ohio), a leading developer and manufacturer of insulation, roofing and fiberglass composites, was negatively affected by a difficult roofing industry in first-quarter 2015, although it saw slight improvement in its other major segments. Net earnings were reported to be $18 million, compared with $120 million in first-quarter 2014.
Industrial Info is tracking more than $194 million in active projects involving Owens Corning, including two major projects in North Carolina: the $120 million construction of a glass fiber-manufacturing plant in Dallas, North Carolina, and the $25 million construction of an industrial coatings warehouse and distribution facility in the nearby city of Gastonia.
The 150,000-square-foot Dallas plant will feature a state-of-the-art production line, a coating line and a research/development lab. The three-story, 250,000-square-foot Gastonia project will accommodate industrial coatings for research and development purposes. Foster Wheeler (NASDAQ:FWLT) (Baar, Switzerland) is performing engineering, procurement and construction services on both projects, which are expected to be completed in the fourth quarter.
Net sales stood at $1.21 billion, a 5.56% decrease from the same period last year. Although the Insulation and Composites segments reported narrow sales gains from improved pricing and, in the case of the latter, favorable product mix, the Roofing segment saw sales decline more than 20% as prices and production volumes tumbled. The roofing industry saw much stronger discounting and inventory buildup in first-quarter 2014, but Owens Corning executives believe the segment is positioned to deliver higher sales volumes and margins for the remainder of 2015.
Capital expenditures for the quarter were reported to be $56 million.
"Roofing performance was consistent with our expectations, delivering mid-single-digit EBIT [earnings before interest and taxes] margins on lower sales, lower production volumes, and lower pricing in comparison to the previous year," said Mike Thaman, the chairman and chief executive officer of Owens Corning, in a conference call. "Shipments by U.S. asphalt shingle manufacturers declined significantly during the first quarter, as we did not see the broad discounting or channel inventory build that occurred in 2014. This is in line with our expectation of a more balanced distribution of shipments throughout the year."
Owens Corning executives now expect capital expenditures for full-year 2015 to be about $380 million, an increase of $25 million from last quarter's estimate. The additional amount is attributed largely to a proposed mineral wool plant, recently approved by the board of directors, which has a total estimated value of $90 million and is set to be operational by late 2016.
For the remainder of 2015, Owens Corning is expected to benefit from continued growth in the U.S. housing market, where starts are expected to be between 1.1 million and 1.2 million. In particular, the Insulation segment is projected to benefit from growth in domestic residential construction and stronger pricing.
"We continue to expect a flat market for 2015," said Michael McMurray, the chief financial officer of Owens Corning, in the conference call. "Based on a more historical distribution of shipments for the year, we would expect industry volumes for the first half of the year to be closer to 50% of full-year demand. As a result, we anticipate second quarter industry volumes to be up about 5-15%--and therefore, we would expect Owens Corning's volumes to be up a bit more, as we trailed the market in the second quarter of 2014."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Industrial Info is tracking more than $194 million in active projects involving Owens Corning, including two major projects in North Carolina: the $120 million construction of a glass fiber-manufacturing plant in Dallas, North Carolina, and the $25 million construction of an industrial coatings warehouse and distribution facility in the nearby city of Gastonia.
The 150,000-square-foot Dallas plant will feature a state-of-the-art production line, a coating line and a research/development lab. The three-story, 250,000-square-foot Gastonia project will accommodate industrial coatings for research and development purposes. Foster Wheeler (NASDAQ:FWLT) (Baar, Switzerland) is performing engineering, procurement and construction services on both projects, which are expected to be completed in the fourth quarter.
Net sales stood at $1.21 billion, a 5.56% decrease from the same period last year. Although the Insulation and Composites segments reported narrow sales gains from improved pricing and, in the case of the latter, favorable product mix, the Roofing segment saw sales decline more than 20% as prices and production volumes tumbled. The roofing industry saw much stronger discounting and inventory buildup in first-quarter 2014, but Owens Corning executives believe the segment is positioned to deliver higher sales volumes and margins for the remainder of 2015.
Capital expenditures for the quarter were reported to be $56 million.
"Roofing performance was consistent with our expectations, delivering mid-single-digit EBIT [earnings before interest and taxes] margins on lower sales, lower production volumes, and lower pricing in comparison to the previous year," said Mike Thaman, the chairman and chief executive officer of Owens Corning, in a conference call. "Shipments by U.S. asphalt shingle manufacturers declined significantly during the first quarter, as we did not see the broad discounting or channel inventory build that occurred in 2014. This is in line with our expectation of a more balanced distribution of shipments throughout the year."
Owens Corning executives now expect capital expenditures for full-year 2015 to be about $380 million, an increase of $25 million from last quarter's estimate. The additional amount is attributed largely to a proposed mineral wool plant, recently approved by the board of directors, which has a total estimated value of $90 million and is set to be operational by late 2016.
For the remainder of 2015, Owens Corning is expected to benefit from continued growth in the U.S. housing market, where starts are expected to be between 1.1 million and 1.2 million. In particular, the Insulation segment is projected to benefit from growth in domestic residential construction and stronger pricing.
"We continue to expect a flat market for 2015," said Michael McMurray, the chief financial officer of Owens Corning, in the conference call. "Based on a more historical distribution of shipments for the year, we would expect industry volumes for the first half of the year to be closer to 50% of full-year demand. As a result, we anticipate second quarter industry volumes to be up about 5-15%--and therefore, we would expect Owens Corning's volumes to be up a bit more, as we trailed the market in the second quarter of 2014."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
