Owens Corning Soars on Strong U.S. Construction in Second-Quarter 2015, Sets Full-Year Capex at $380 Million

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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, benefited from an improving U.S. residential construction market in second-quarter 2015, as the company's Composites, Insulation and Roofing segments reported a growth in demand. Net income for the quarter was reported to be $91 million, compared with $21 million in second-quarter 2014.

Industrial Info is tracking $189.5 million in projects involving Owens Corning, including two planned rebuilds of fiberglass insulation furnaces, each valued at $8 million. The company plans to dismantle and rebuild the 150-ton-per-day Oxy-Fuel K5 furnace at its fiberglass insulation facility in Kansas City, Kansas, starting in second-quarter 2016, and dismantle and rebuild the 120-ton-per-day, gas-fired V1 furnace at its fiberglass insulation facility Waxahachie, Texas, starting in first-quarter 2017. Both projects are in the planning stages, where plenty of factors could increase, decrease or eliminate the expected spending.

Net sales stood at $1.41 billion, a 4.35% increase from the same period last year. The recent improvement in U.S. housing starts, which is expected to continue through the remainder of the year boosted the Insulation segment, while the Roofing segment reported a substantial increase in shipments.

Industrial Info is tracking projects at 40 operational plants owned by Owens Corning.

"The second quarter [in the Roofing segment] built on the foundation of the first quarter," said Mike Thaman, the chairman and chief executive officer of Owens Corning, in a conference call. "In the first quarter, we saw lower production, lower shipments, weaker margins and less inventory build in the channel, positioning us for improvement through the remainder of the year. In the second quarter, the improvement we had hoped for was realized with better shipments, better production, lower costs, higher prices and significantly better profitability."

Capital expenditures are expected to total about $380 million in 2015. Executives said that Owens Corning is expected to benefit from a continued recovery in the U.S. housing market, with the Insulation segment profiting from growth in new U.S. residential construction; globally, housing growth is expected to be more moderate. The Roofing segment is expected to see an uptick in the second half of the year, with results from the U.S. shingle market largely lining up with those of 2014. Strong volumes and pricing are expected to boost the Composites segment.

"We expect that the Insulation business should continue to benefit from growth in U.S. residential new construction, improved pricing and operating leverage," Thaman said in the conference call. "Looking forward, recent housing data and current forecasts of 1.1 million starts suggest acceleration in the second half, which we expect to result in approximately 10% revenue growth during that period."

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.