Owens Corning
For the period ended Jun 30, 2024. Filed Aug 6, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 6, 2024
OC$121.31-2.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-24.
0001370946-24-000129
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001370946-24-000183
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 138 previous paragraphs and 154 current paragraphs.
89 unchanged; 36 reworded; 29 added; 12 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 10 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (29)
Current report
On May 15, 2024, the Company acquired all of the outstanding shares of Masonite International Corporation (“Masonite”), a leading global designer, manufacturer, marketer and distributor of interior and exterior doors and door systems, for $3.2 billion. The acquisition was funded primarily with debt proceeds from the 364-Day Credit Facility (as defined below) of $2.8 billion and cash on hand. The acquisition of Masonite's market-leading doors business creates a new growth platform for the Company, strengthening the Company's position in building and construction and expanding its offering of branded residential building products. Masonite's operating results and preliminary purchase price allocation have been included in the Company's newly established Doors reportable segment from May 15, 2024, within the Consolidated Financial Statements. Masonite contributed revenues of $311 million and EBIT of $34 million to the Company for the period from May 15, 2024 to June 30, 2024.
Current report
On May 15, 2024, the Company initially borrowed $295 million under the receivables securitization facility (“Receivables Securitization Facility”) which was used to pay down a portion of the 364-Day Credit Facility. Subsequent to the May 15, 2024 borrowing, the Company repaid and re-borrowed on the Receivables Securitization Facility throughout the quarter to pay down portions of the 364-Day Credit facility. As of June 30, 2024, there was a remaining balance on the Receivables Securitization Facility of $155 million.
Current report
On May 31, 2024, the Company issued $500 million of 2027 senior notes with an annual interest rate of 5.500%, $800 million of 2034 senior notes with an annual interest rate of 5.700% and $700 million of 2054 senior notes with an annual interest rate of 5.950%. These senior notes are net of discounts and issuance costs of $4 million, $11 million and $17 million, respectively. The proceeds from these notes were used to repay a portion of the outstanding borrowings under the 364-Day Credit Facility that was used to fund a portion of the purchase of Masonite in the second quarter of 2024 and to pay related fees and expenses.
Current report
On May 1, 2024, in connection with the acquisition of Masonite, we commenced an offer to exchange (the “Exchange Offer”) any and all of Masonite’s outstanding 3.50% Senior Notes due 2030 (the “Masonite 2030 notes”) for new 3.50% Senior Notes due 2030 of Owens Corning (the “Owens Corning 2030 notes”). On May 22, 2024, 99.51% of the outstanding Masonite 2030 notes were exchanged and we issued $373 million of aggregate principal amount of Owens Corning 2030 notes. Following the settlement of the Exchange Offer, approximately $2 million of the Masonite 2030 notes that were not exchanged remain outstanding, which has been recorded on the Consolidated Balance Sheets.
Current report
On April 15, 2024, in connection with the acquisition of Masonite, we commenced a tender offer (the “Tender Offer”) to purchase any and all of Masonite's outstanding 5.375% Senior Notes due 2028 (the “Masonite 2028 notes”) with an aggregate value of $501 million. On May 13, 2024, 94.25% of the outstanding Masonite 2028 notes were validly tendered, with Owens Corning making a cash payment on May 16, 2024 of approximately $480 million, inclusive of $7 million of interest and $1 million premium on tender. Following the settlement of the Tender Offer, approximately $29 million of the Masonite 2028 notes that were not tendered remain outstanding, which has been recorded on the Consolidated Balance Sheets.
Current report
In the second quarter and year-to-date 2024, net sales increased $226 million and increased $195 million, respectively, compared to the same periods in 2023. For the second quarter and year-to-date 2024, the increase in net sales was primarily driven by the revenues from our Doors segment as a result of the Masonite acquisition, which was partially offset by lower sales volumes across the Roofing, Insulation and Composites segments. Favorable product mix and higher selling prices within the Roofing and Insulation segments also contributed to the increase.
Current report
In the second quarter and year-to-date 2024, gross margin increased $115 million and increased $206 million, respectively, compared to the same periods in 2023. For the second quarter and year to date 2024, the increase was primarily driven by higher selling prices within Roofing and Insulation and lower manufacturing costs in Roofing and Composites. Favorable product mix and delivery were offset by lower sales volumes across Roofing, Insulation and Composites. Also contributing to the increase were the margins from our Doors segment as a result of the Masonite acquisition.
Current report
In the second quarter and year-to-date 2024, interest expense, net, increased $41 million and increased $36 million, respectively, compared to the same periods in 2023. For the second quarter and year-to-date, the increase was driven by higher interest on the 364-Day Credit Facility and higher long-term debt balances in connection with the Masonite acquisition, slightly offset by higher interest income.
Current report
In our Roofing segment, net sales in the second quarter of 2024 decreased $18 million compared to the same period in 2023 due to lower sales volumes of approximately 9% which more than offset higher selling prices of $55 million and favorable product mix.
Current report
For year-to-date 2024, net sales in our Roofing segment increased $44 million compared to the same period in 2023. Lower sales volumes of approximately 5% were more than offset by higher selling prices of $87 million and favorable product mix.
Current report
For year-to-date 2024, EBIT in our Roofing segment increased $112 million compared to the same period in 2023 due to higher selling prices of $87 million, favorable product mix and $24 million of lower manufacturing costs, which were slightly offset by lower sales volumes. Favorable delivery of $10 million was more than offset by input cost inflation.
Current report
For year-to-date 2024, net sales in our Insulation segment decreased $4 million compared to the same period in 2023. The decrease was driven primarily by lower sales volumes of approximately 3% partially offset by higher selling prices of $24 million and favorable product and customer mix.
Current report
For the year-to-date 2024, EBIT in our Insulation segment increased $25 million compared to the same period in 2023. The increase was driven by higher selling prices of $24 million, $20 million of favorable delivery and input costs, and lower start-up costs which more than offset lower sales volumes, higher manufacturing costs of $9 million, and higher operating expenses, inclusive of incremental costs associated with evaluating manufacturing investments. Favorable product and customer mix were slightly offset by higher production downtime.
Current report
Doors
Current report
The table below provides a summary of net sales, EBIT, depreciation and amortization expense and EBITDA for the Doors segment (in millions):
Current report
In our new Doors segment, net sales in the second quarter and year-to-date of 2024 were $311 million, due to the acquisition of Masonite, which was completed on May 15, 2024.
Current report
In our newly acquired Doors segment, EBIT in the second quarter and year-to-date 2024 were $34 million, due to the acquisition of Masonite, which was completed on May 15, 2024.
Current report
The outlook for the Doors segment is driven by the residential new construction and residential repair and remodeling markets in North America and Europe. The Company expects the North America residential new construction market to remain stable, with discretionary residential repair and remodeling activity in North America to remain soft. Due to a weaker macro-economic outlook and higher interest rates in Europe, the Company expects these markets to remain challenged. The Company will concentrate on managing costs, capital expenditures and working capital.
Current report
For year-to-date 2024, net sales in our Composites segment decreased $136 million compared to the same period in 2023. The decrease was driven primarily by lower sales volumes of approximately 6% and lower selling prices of $48 million. The remaining variance was driven by unfavorable customer mix which more than offset favorable product mix, and $5 million of unfavorable impact of translating sales denominated in foreign currencies into United States dollars.
Current report
For the year-to-date 2024, EBIT in our Composites segment decreased $29 million compared to the same period in 2023. Lower selling prices of $48 million, higher production downtime of $26 million and higher start-up costs of $11 million more than offset lower manufacturing costs of $51 million and $26 million of favorable delivery and input costs. The remaining variance was driven about equally by unfavorable customer mix and lower sales volume. Favorable product mix was offset by the unfavorable impact of translating sales denominated in foreign currencies into United States dollars.
Current report
EBIT
Current report
OUTLOOK
Current report
As of June 30, 2024, the Company had $5.6 billion of total debt. The Company's current portion of long-term debt includes $400 million of 4.200% senior notes due in the fourth quarter of 2024. Additionally, the Company has $155 million of short term debt relating to the outstanding borrowings on the Receivables Securitization Facility.
Current report
In the second quarter of 2024, the Company borrowed $2.8 billion using Term SOFR plus a spread on the 364-Day Credit Facility to fund a portion of the purchase of Masonite. As a result of the borrowing, the Company incurred approximately $16 million of financing fees which were amortized to Interest expense, net on the Consolidated Statements of Earnings. During the quarter, the Company completely repaid the 364-Day Credit Facility with a combination of issuance of new senior notes, borrowings on the Receivables Securitization Facility and cash on hand. Based on terms of the agreement, no further amounts can be drawn.
Current report
On April 15, 2024, in connection with the acquisition of Masonite, we commenced the Tender Offer to purchase any and all of Masonite's outstanding 5.375% Senior Notes due 2028 (the “Masonite 2028 notes”) with an aggregate value of $501 million. On May 13, 2024, 94.25% of the outstanding Masonite 2028 notes were validly tendered, with Owens Corning making a cash payment on May 16, 2024 of approximately $480 million, inclusive of $7 million of interest and $1 million premium on tender. Following the settlement of the Tender Offer, approximately $29 million of the Masonite 2028 notes that were not tendered remain outstanding, which has been recorded on the Consolidated Balance Sheets. Interest on the Masonite 2028 notes is payable semiannually in arrears on February 1 and August 1 each year.
Current report
On May 1, 2024, in connection with the acquisition of Masonite, we commenced the Exchange Offer any and all of Masonite’s outstanding 3.50% Senior Notes due 2030 for new 3.50% Senior Notes due 2030 of Owens Corning. On May 22, 2024, 99.51% of the outstanding Masonite 2030 notes were exchanged and we issued $373 million of aggregate principal amount of Owens Corning 2030 notes. Interest on the notes is payable semiannually in arrears on February 15 and August 15 each year, beginning on August 15, 2024. Following the settlement of the Exchange Offer, approximately $2 million of the Masonite 2030 notes that were not exchanged remain outstanding, which has been recorded on the Consolidated Balance Sheets.
Current report
The Company issued $500 million of 2027 senior notes with an annual interest rate of 5.500%, $800 million of 2034 senior notes with an annual interest rate of 5.700% and $700 million of 2054 senior notes with an annual interest rate of 5.950% on May 31, 2024. These senior notes are net of discounts and issuance costs of $4 million, $11 million and $17 million, respectively. The proceeds from these notes were used to repay a portion of the outstanding borrowings under the 364-Day Credit Facility that was used to fund a portion of the purchase of Masonite in the second quarter of 2024 and to pay related fees and expenses.
Current report
Financing activities: Net cash flow provided by financing activities increased by $1.7 billion for the six months ended June 30, 2024 compared to the same period in 2023. The increase was driven by proceeds from long-term debt and net proceeds from the Receivables Securitization Facility related to the Masonite acquisition, as well as lower treasury stock repurchases. These were slightly offset by payments related to the Tender Offer to purchase Masonite senior notes.
Current report
Please refer to Notes 4, 7, 11, and 12 of the Consolidated Financial Statements.
Removed paragraphs (12)
Previous report
On February 8, 2024, the Company entered into a definitive agreement to purchase all of the outstanding shares of Masonite International Corporation (“Masonite”). The purchase price for the acquisition of Masonite is approximately $3.9 billion, inclusive of acquired debt, which we expect to fund with cash on hand and new committed financing. Masonite is a leading global designer, manufacturer, marketer and distributor of interior and exterior doors and door systems for the new construction and repair, renovation and remodeling sectors of the residential and non-residential building construction markets. The transaction was unanimously approved by the board of directors of both companies and is expected to close mid-2024, subject to regulatory and other customary closing conditions, including the approval of Masonite shareholders.
Previous report
In the first quarter of 2024, net sales decreased $31 million compared to the same period in 2023. The decrease in net sales was primarily driven by lower sales volumes in both the Insulation and Composites segments partially offset by favorable mix and higher selling prices in both Roofing and Insulation.
Previous report
In the first quarter of 2024, gross margin increased $91 million compared to the same period in 2023. The increase was primarily driven by favorable delivery and lower input costs, as well as lower manufacturing costs and higher selling prices.
Previous report
In the first quarter of 2024, interest expense, net, decreased $5 million compared to the same period in 2023, driven by higher interest income.
Previous report
In our Roofing segment, EBIT in the first quarter of 2024 increased $77 million compared to the same period in 2023 due to higher selling prices of $32 million, lower manufacturing costs of $21 million and favorable product mix. Favorable delivery of $6 million and higher sales volumes more than offset input cost inflation.
Previous report
In connection with the planned acquisition of Masonite, the Company entered into a $3.0 billion term loan facility on March 1, 2024, which matures 364 days after the facility is initially funded (the “364-Day Credit Facility”). Borrowings under the 364-Day Credit Facility will be used to finance a portion of the payments to be made in connection with the Masonite acquisition, the refinancing of certain outstanding indebtedness of Masonite, and the fees and expenses in connection with the foregoing. The Company has the discretion to borrow under multiple options, including the United States prime rate, federal funds rate plus a spread and Term SOFR plus a spread. The agreement governing our 364-Day Credit Facility contains various covenants that we believe are usual and customary. We were in compliance with these covenants as of March 31, 2024.
Previous report
Borrowings under the 364-Day Credit Facility will be used to finance a portion of the payments to be made in connection with the Masonite acquisition, the refinancing of certain outstanding indebtedness of Masonite, and the fees and expenses in connection with the foregoing. The Company has the discretion to borrow under multiple options, including the United States prime rate, federal funds rate plus a spread and Term SOFR plus a spread. The agreement governing our 364-Day Credit Facility contains various covenants that we believe are usual and customary. We were in compliance with these covenants as of March 31, 2024.
Previous report
On April 15, 2024, Owens Corning commenced a tender offer (the “Tender Offer”) to purchase any and all of Masonite's outstanding 5.375% Senior Notes due 2028 (the “2028 Masonite Notes”). In conjunction with the Tender Offer, Masonite commenced a consent solicitation to amend the indenture governing the 2028 Masonite Notes to, among other things, eliminate certain of the covenants, restrictive provisions and events of default applicable to the 2028 Masonite Notes. Owens Corning intends to fund the purchase of all of the outstanding 2028 Masonite Notes pursuant to the Tender Offer from a combination of cash on hand and new committed financing.
Previous report
Financing activities: Net cash flow used for financing activities increased by $18 million for the three months ended March 31, 2024 compared to the same period of 2023. The increase was primarily the result of additional financing outflows related to establishing the 364-Day Credit Facility, as well as higher share repurchases during 2024.
Previous report
Please refer to Notes 4, 10, and 11 of the Consolidated Financial Statements.
Previous report
•any material adverse changes in the business of Masonite;
Previous report
•the ability to obtain required regulatory, shareholder or other third-party approvals and consents and otherwise complete the Masonite acquisition;
Reworded paragraphs (36)
Previous wording
Owens Corning is a global building and construction materials leader committed to building a sustainable future through material innovation. The Company has three reporting segments: Roofing, Insulation and Composites. Through these lines of business, the Company manufactures and sells products worldwide. We are a market leader in many of our major product categories.
Current wording
Owens Corning is a global residential and commercial building products leader committed to building a sustainable future through material innovation. The Company has four reporting segments: Roofing, Insulation, Doors and Composites. Through these lines of business, the Company manufactures and sells products worldwide. We are a market leader in many of our major product categories.
Previous wording
Net earnings attributable to Owens Corning were $299 million in the first quarter of 2024, compared to $383 million in the same period of 2023. The Company generated $438 million in adjusted earnings before interest and taxes (“Adjusted EBIT”) for the first quarter of 2024, compared to $361 million in the same period of 2023. See the Adjusted Earnings Before Interest and Taxes paragraph of the MD&A for further information regarding Adjusted EBIT, including the reconciliation to net earnings attributable to Owens Corning. First quarter of 2024 earnings before interest and taxes (“EBIT”) performance compared to the same period of 2023 increased $77 million and $5 million in our Roofing and Insulation segments, respectively, and decreased $3 million in our Composites segment. Within our Corporate, Other and Eliminations category, General corporate expense and other increased by $2 million.
Current wording
Net earnings attributable to Owens Corning were $285 million in the second quarter of 2024, compared to $345 million in the same period of 2023. The Company generated $588 million in adjusted earnings before interest and taxes (“Adjusted EBIT”) for the second quarter of 2024, compared to $534 million in the same period of 2023. See the Adjusted Earnings Before Interest and Taxes paragraph of the MD&A for further information regarding Adjusted EBIT, including the reconciliation to net earnings attributable to Owens Corning. Second quarter of 2024 earnings before interest and taxes (“EBIT”) performance compared to the same period of 2023 increased $35 million and $20 million in our Roofing and Insulation segments, respectively, and decreased $26 million in our Composites segment. Second quarter of 2024 EBIT for our newly acquired Doors segment was $34 million. Within our Corporate, Other and Eliminations category, General corporate expense and other increased by $9 million.
Previous wording
Cash and cash equivalents were $1,254 million as of March 31, 2024, compared to $757 million as of March 31, 2023. In the three months ended March 31, 2024, the Company’s operating activities provided $24 million of cash, compared to using $164 million of cash in the same period in 2023.
Current wording
Cash and cash equivalents were $254 million as of June 30, 2024, compared to $968 million as of June 30, 2023. In the six months ended June 30, 2024, the Company’s operating activities provided $517 million of cash, compared to providing $330 million of cash in the same period in 2023. In the six months ended June 30, 2024, the Company’s investing activities used $3,154 million of cash, compared to using $102 million of cash in the same period in 2023.
Previous wording
On March 1, 2024, the Company entered into a term loan agreement in an aggregate principal amount of $3.0 billion, which matures 364 days after the facility is initially funded (the “364-Day Credit Facility”).
Current wording
On March 1, 2024, the Company entered into a term loan agreement in an aggregate principal amount of $3.0 billion (the “364-Day Credit Facility”). In May 2024, to fund a portion of the purchase of Masonite, the Company borrowed $2.8 billion using Term SOFR plus a spread on the 364-Day Credit Facility. As a result of the borrowing, the Company incurred approximately $16 million of financing fees which were amortized to Interest expense, net on the Consolidated Statements of Earnings. During the quarter, the Company completely repaid the 364-Day Credit Facility with a combination of issuance of new senior notes, borrowings on the receivables securitization and cash on hand. Based on terms of the agreement, no further amounts can be drawn.
Previous wording
On February 9, 2024, the Company announced the decision to review strategic alternatives for its global glass reinforcements (“GR”) business, consistent with our strategy to focus on building and construction materials. The GR business, which operates within our Composites segment, supplies a wide variety of glass fiber products for applications in wind energy, infrastructure, industrial, transportation, and consumer markets. The GR business generates annual revenues of approximately $1.3 billion. While a range of options are under consideration, including a potential sale, spin-off or other strategic option, there can be no assurance that the strategic review will result in any transaction or other outcome. During the first three months of 2024, the Company incurred $2 million of costs related to this review.
Current wording
On February 9, 2024, the Company announced the decision to review strategic alternatives for its global glass reinforcements (“GR”) business, consistent with our strategy to focus on building and construction materials. The GR business, which operates within our Composites segment, supplies a wide variety of glass fiber products for applications in wind energy, infrastructure, industrial, transportation, and consumer markets. The GR business generates annual revenues of approximately $1.3 billion. While a range of options are under consideration, including a potential sale, spin-off or other strategic option, there can be no assurance that the strategic review will result in any transaction or other outcome. During the first six months of 2024, the Company incurred $17 million of costs related to this review.
Previous wording
During the second quarter of 2023, the Company’s subsidiary, Paroc Group OY (“Paroc”), which the Company acquired in 2018, notified the appropriate European maritime regulatory authorities that specific products in its marine insulation product line may not meet certain fire safety requirements in accordance with their certifications. Paroc voluntarily withdrew these specific products from the market, issued recalls, and suspended distribution and sales of these products (the “Recalled Products”). Paroc continues to cooperate with the applicable regulatory and government authorities and work with its customers and end-users to assist with remediation for the recall. During the first quarter of 2024, the Company discovered potential nonconformances relating to two other marine insulation product lines. In April 2024, Paroc suspended sales of these marine insulation products as a precautionary measure while it reviews the potential nonconformances, but has not issued recalls. The
Current wording
During the second quarter of 2023, the Company’s subsidiary, Paroc Group OY (“Paroc”), which the Company acquired in 2018, notified the appropriate European maritime regulatory authorities that specific products in its marine insulation product line may not meet certain fire safety requirements in accordance with their certifications. Paroc voluntarily withdrew these specific products from the market, issued recalls, and suspended distribution and sales of these products (the “Recalled Products”). Paroc continues to cooperate with the applicable regulatory and government authorities and work with its customers and end-users to assist with remediation for the recall. During the first quarter of 2024, the Company discovered potential nonconformances relating to two other marine insulation product lines. In April 2024, Paroc suspended sales of these marine insulation products as a precautionary measure while it reviews the potential nonconformances, but has not issued recalls. The Company has included an estimated liability for expected future costs related to the Recalled Products on its Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023.
Previous wording
On December 1, 2022, the Board of Directors approved a new share repurchase program under which the Company is authorized to repurchase up to an aggregate of 10 million shares of the Company’s outstanding common stock (the “Repurchase Authorization”). The Repurchase Authorization enables the Company to repurchase shares through the open market, privately negotiated, or other transactions. The actual number of shares repurchased will depend on timing, market conditions and other factors and will be at the Company’s discretion. The Company repurchased 0.9 million shares of its common stock for $130 million, inclusive of applicable taxes, in the first quarter of 2024 under the Repurchase Authorization. As of March 31, 2024, 8.1 million shares remained available for repurchase under the Repurchase Authorization.
Current wording
On December 1, 2022, the Board of Directors approved a new share repurchase program under which the Company is authorized to repurchase up to an aggregate of 10 million shares of the Company’s outstanding common stock (the “Repurchase Authorization”). The Repurchase Authorization enables the Company to repurchase shares through the open market, privately negotiated, or other transactions. The actual number of shares repurchased will depend on timing, market conditions and other factors and will be at the Company’s discretion. The Company did not repurchase any shares of its common stock during the second quarter of 2024 under the Repurchase Authorization. As of June 30, 2024, 8.1 million shares remained available for repurchase under the Repurchase Authorization.
Previous wording
In the first quarter of 2024, marketing and administrative expenses increased $8 million compared to the same period in 2023. The increase was primarily driven by ongoing inflationary pressures throughout the organization.
Current wording
In the second quarter and year-to-date 2024, marketing and administrative expenses increased $42 million and increased $50 million, respectively, compared to the same periods in 2023. For the second quarter and year-to-date 2024, the increase was primarily driven by the addition of the Doors segment selling, general and administrative expenses during the quarter and ongoing inflationary pressures throughout the organization.
Previous wording
In the first quarter of 2024, other expenses increased $22 million compared to the same period in 2023. The increase was driven primarily by transaction costs related to the announced acquisition of Masonite.
Current wording
In the second quarter and year-to-date 2024, other expenses increased $97 million and increased $119 million, respectively, compared to the same periods in 2023. For the second quarter and year-to-date 2024, the increase was primarily driven by higher acquisition and strategic review-related costs.
Previous wording
Income tax expense for the three months ended March 31, 2024 was $88 million. For the first quarter of 2024, the Company’s effective tax rate was 23%. The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the three months ended March 31, 2024 is primarily due to U.S. state and local income tax expense, partially offset by discrete tax benefits related to valuation allowance and stock-based compensation.
Current wording
Income tax expense for the three and six months ended June 30, 2024 was $110 million and $198 million, respectively. For the second quarter of 2024 and the six months ended June 30, 2024, the Company’s effective tax rate was 28% and 25%, respectively. The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the three months ended June 30, 2024 is primarily due to U.S. state and local income tax expense, foreign rate differential, U.S. federal taxes on foreign earnings and permanently non-deductible expenses both of which were related to the acquisition of Masonite. The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the six months ended June 30, 2024 is primarily due to U.S. state and local income tax expense and foreign rate differential partially offset by discrete tax benefits related to valuation allowance and stock-based compensation.
Previous wording
Income tax expense for the three months ended March 31, 2023 was $130 million. For the first quarter of 2023, the Company's effective tax rate was 25%. The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the three months ended March 31, 2023 is primarily due to U.S. state and local income tax expense, foreign rate differential and other discrete adjustments.
Current wording
Income tax expense for the three and six months ended June 30, 2023 was $121 million and $251 million, respectively. For the second quarter of 2023 and the six months ended June 30, 2023, the Company's effective tax rate was 26%. The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the three months ended June 30, 2023 is primarily due to U.S. state and local income tax expense, foreign rate differential and U.S federal taxes on foreign earnings. The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the six months ended June 30, 2023 is primarily due to U.S. state and local income tax expense, foreign rate differential and other discrete adjustments.
Previous wording
In our Roofing segment, net sales in the first quarter of 2024 increased $62 million compared to the same period in 2023 due to higher selling prices of $32 million and favorable product mix. Sales volumes remained relatively flat.
Current wording
In our Roofing segment, EBIT in the second quarter of 2024 increased $35 million compared to the same period in 2023 due to higher selling prices of $55 million, favorable product mix and $3 million of lower manufacturing costs, which were slightly offset by lower sales volumes. Favorable delivery of $4 million was more than offset by input cost inflation.
Previous wording
In our Roofing segment, the Company expects a stable North American new residential construction market. Other uncertainties that may impact Roofing demand include demand from storms and other weather-related events, demand from repair and remodeling activity, competitive pricing pressure and the cost and availability of raw materials, particularly asphalt. The Company will continue to focus on managing costs, capital expenditures and working capital.
Current wording
In our Roofing segment, the Company expects residential repair and remodeling activity to remain solid and a stable North American new residential construction market. Other uncertainties that may impact Roofing demand include demand from storms and other weather-related events, competitive pricing pressure and the cost and availability of raw materials, particularly asphalt. The Company will continue to focus on managing costs, capital expenditures and working capital to best service the market demand.
Previous wording
In our Insulation segment, net sales in the first quarter of 2024 decreased $15 million compared to the same period in 2023. The decrease was driven primarily by lower sales volumes of approximately 4% partially offset by higher selling prices of $12 million and favorable product and customer mix.
Current wording
In our Insulation segment, net sales in the second quarter of 2024 increased $11 million compared to the same period in 2023. The increase was driven primarily by higher selling prices of $12 million and favorable product mix, slightly offset by lower sales volumes of approximately 1%.
Previous wording
In our Insulation segment, EBIT in the first quarter of 2024 increased $5 million compared to the same period in 2023. The increase was driven by $14 million of favorable delivery and input costs, higher selling prices of $12 million, and lower start-up costs which more than offset lower sales volumes, higher manufacturing costs of $7 million, and higher production downtime.
Current wording
In our Insulation segment, EBIT in the second quarter of 2024 increased $20 million compared to the same period in 2023. The increase was driven by higher selling prices of $12 million, favorable delivery of $6 million, and favorable product mix. Lower start-up costs were more than offset by higher operating expenses, inclusive of incremental costs associated with evaluating manufacturing investments. The remaining variance was driven by lower sales volumes and $2 million higher manufacturing costs.
Previous wording
During the first quarter of 2024, the average Seasonally Adjusted Annual Rate (“SAAR”) of U.S. housing starts was approximately 1.415 million, up from an annual average of approximately 1.395 million starts in the first quarter of 2023.
Current wording
During the second quarter of 2024, the average Seasonally Adjusted Annual Rate (“SAAR”) of U.S. housing starts was approximately 1.348 million, down from an annual average of approximately 1.447 million starts in the second quarter of 2023.
Previous wording
The company expects the new residential construction market in North America, as well as the commercial and industrial construction markets, to remain stable. However, due to a weaker macro-economic outlook, higher interest rates, and ongoing input cost inflation, the global commercial and industrial construction markets are expected to remain soft temporarily. The company continues to concentrate on managing costs, capital expenditures and working capital.
Current wording
The Company expects the new residential construction market in North America, as well as the commercial and industrial construction markets, to remain stable. However, due to a weaker macro-economic outlook, higher interest rates, and ongoing input cost inflation, the global commercial and industrial construction markets are expected to remain soft temporarily. The Company continues to concentrate on managing costs, capital expenditures and working capital as we evaluate options to expand capacity within our existing manufacturing network.
Previous wording
In our Composites segment, net sales in the first quarter of 2024 decreased $62 million compared to the same period in 2023. The decrease was driven primarily by lower sales volumes of approximately 5% and lower selling prices of $21 million. The remaining variance was driven by unfavorable customer mix which more than offset favorable product mix.
Current wording
In our Composites segment, net sales in the second quarter of 2024 decreased $74 million compared to the same period in 2023. The decrease was driven primarily by lower sales volumes of approximately 6% and lower selling prices of $27 million. The remaining variance was driven by unfavorable customer mix which offset favorable product mix, and $5 million of unfavorable impact of translating sales denominated in foreign currencies into United States dollars.
Previous wording
In our Composites segment, EBIT in the first quarter of 2024 decreased $3 million compared to the same period in 2023. Lower manufacturing costs of $30 million and $16 million of favorable delivery and input costs more than offset lower selling prices of $21 million and higher production downtime of $11 million. The remaining variance was driven about equally by higher start-up costs, unfavorable customer mix and lower sales volumes.
Current wording
In our Composites segment, EBIT in the second quarter of 2024 decreased $26 million compared to the same period in 2023. Lower selling prices of $27 million and higher production downtime of $15 million more than offset lower manufacturing costs of $21 million and $10 million of favorable delivery and input costs. The remaining variance was driven about equally by higher start-up costs of $5 million, lower sales volume and unfavorable customer mix. Favorable product mix was offset by the unfavorable impact of translating sales denominated in foreign currencies into United States dollars.
Previous wording
In Corporate, Other and Eliminations, EBIT expenses for the first quarter of 2024 were higher by $210 million compared to the same period in 2023. EBIT expenses were higher primarily driven by the prior-year pre-tax gain on the Santa Clara, California site, as well as the increase of acquisition-related costs.
Current wording
In Corporate, Other and Eliminations, EBIT expenses for the second quarter of 2024 were higher by $92 million compared to the same period in 2023, primarily driven by higher acquisition and strategic review-related costs. For year-to-date 2024, EBIT expenses in Corporate, Other and Eliminations were higher by $302 million primarily driven by the prior-year pre-tax gain on the Santa Clara, California site, as well as higher acquisition-related and strategic review-related costs.
Previous wording
General corporate expense and other for the first quarter of 2024 were higher by $2 million compared to the same period in 2023.
Current wording
General corporate expense and other for the second quarter of 2024 were higher by $9 million compared to the same period in 2023. For year-to-date, general corporate expense and other were higher by $11 million compared to the same period in 2023.
Previous wording
In 2024, we estimate general corporate expenses to be in the range of $240 million and $250 million, without considering the effect of the planned acquisition of Masonite.
Current wording
In 2024, we estimate general corporate expenses to be in the range of $255 million and $265 million.
Previous wording
The Company’s primary sources of liquidity are its balance of Cash and cash equivalents of $1.3 billion as of March 31, 2024, its Senior Revolving Credit Facility, its Receivables Securitization Facility, and its 364-Day Credit Facility (each as defined below).
Current wording
The Company’s primary sources of liquidity are its balance of Cash and cash equivalents of $254 million as of June 30, 2024, its Senior Revolving Credit Facility (as defined below) and its Receivables Securitization Facility.
Previous wording
The Company has a $300 million receivables securitization facility (the “Receivables Securitization Facility”) that has been amended from time to time. The Receivables Securitization Facility was most recently amended in March 2024 to increase the borrowing limit from $280 million to $300 million and extend the maturity date to February 2025. No other significant terms impacting liquidity were amended.
Current wording
The Company has a $300 million Receivables Securitization Facility that has been amended from time to time. The Receivables Securitization Facility was most recently amended in March 2024 to increase the borrowing limit from $280 million to $300 million and extend the maturity date to February 2025. No other significant terms impacting liquidity were amended.
Previous wording
The Receivables Securitization Facility and Senior Revolving Credit Facility mature in February 2025 and March 2029, respectively. The Company's current portion of long-term debt includes $399 million of 4.2% of senior notes due in the fourth quarter of 2024. As of March 31, 2024, the Company had $3.1 billion of total debt and cash and cash equivalents of $1.3 billion. The agreements governing our Senior Revolving Credit Facility and Receivables Securitization Facility contain various covenants that we believe are usual and customary. These covenants include a maximum allowed leverage ratio. We were in compliance with these covenants as of March 31, 2024.
Current wording
The Receivables Securitization Facility and Senior Revolving Credit Facility mature in February 2025 and March 2029, respectively. The agreements governing our Senior Revolving Credit Facility and Receivables Securitization Facility contain various covenants that we believe are usual and customary. These covenants include a maximum allowed leverage ratio. We were in compliance with these covenants as of June 30, 2024.
Previous wording
Cash and cash equivalents held by foreign subsidiaries may be subject to foreign withholding taxes upon repatriation to the U.S. As of March 31, 2024, and December 31, 2023, the Company had $108 million and $114 million, respectively, in cash and cash equivalents in certain of our foreign subsidiaries. The Company continues to assert indefinite reinvestment in accordance with Accounting Standards Codification (“ASC”) 740 based on the laws as of enactment of the tax legislation.
Current wording
Cash and cash equivalents held by foreign subsidiaries may be subject to foreign withholding taxes upon repatriation to the U.S. As of June 30, 2024, and December 31, 2023, the Company had $122 million and $114 million, respectively, in cash and cash equivalents in certain of our foreign subsidiaries. The Company continues to assert indefinite reinvestment in accordance with Accounting Standards Codification (“ASC”) 740 based on the laws as of enactment of the tax legislation.
Previous wording
Our anticipated uses of cash include capital expenditures, working capital needs, share repurchases, meeting financial obligations, payments of any dividends authorized by our Board of Directors, acquisitions, restructuring actions and pension contributions. We expect that our cash on hand, coupled with future cash flows from operations and other available sources of liquidity, including our Senior Revolving Credit Facility, our Receivables Securitization Facility and our 364-Day Credit Facility, will provide ample liquidity to enable us to meet our cash requirements.
Current wording
Our anticipated uses of cash include capital expenditures, working capital needs, share repurchases, meeting financial obligations, payments of any dividends authorized by our Board of Directors, acquisitions, restructuring actions and pension contributions. We expect that our cash on hand, coupled with future cash flows from operations and other available sources of liquidity, including our Senior Revolving Credit Facility and our Receivables Securitization Facility, will provide ample liquidity to enable us to meet our cash requirements.
Previous wording
Please refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our 2023 Form 10-K for more details on these material cash requirements. Outside of the planned acquisition of Masonite, there have been no material changes to our expected uses of cash and contractual obligations. We expect to use cash on hand and new committed financing to fund the purchase price of the Masonite acquisition and for the repayment of Masonite's outstanding debt, including any required repurchases of Masonite's outstanding senior unsecured notes.
Current wording
Please refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our 2023 Form 10-K for more details on these material cash requirements. During the second quarter of 2024, there have been no material changes to our expected uses of cash and contractual obligations.
Previous wording
Operating activities: For the three months ended March 31, 2024, the Company’s operating activities provided $24 million of cash compared to $164 million used in the same period of 2023. The increase in cash provided by operating activities was primarily due to lower reductions in accounts payable and accrued liabilities when compared to the same period in 2023.
Current wording
Operating activities: Net cash flow provided by operating activities increased by $187 million for the six months ended June 30, 2024 compared to the same period in 2023. The increase in cash provided by operating activities was primarily due to lower decreases in accounts payable and lower increases in accounts receivable when compared to the same period in 2023. These were slightly offset by higher increases in inventory during the period. Increases in operating assets and liabilities resulting from the Masonite acquisition were not included within operating activities.
Previous wording
Investing activities: Net cash flow (used for) provided by investing activities decreased by $170 million for the three months ended March 31, 2024 compared to the same period in 2023. The decrease was driven by lower proceeds from the sale of assets during the quarter, due to the sale of the Santa Clara site in the first quarter of 2023. This was partially offset by lower capital spending in the first quarter of 2024.
Current wording
Investing activities: Net cash flow used for investing activities increased by $3.1 billion for the six months ended June 30, 2024 compared to the same period in 2023. The increase was driven by the Masonite acquisition and lower proceeds from sale of assets in 2024 due to the Q1 2023 sale of the Santa Clara site.
Previous wording
One of our primary objectives is the safety and well-being of our employees. Working safely is an unconditional, organization-wide expectation at Owens Corning, which we believe directly benefits employees’ lives, improves our manufacturing processes and reduces our costs. The Company maintains comprehensive safety programs focused on identifying hazards and eliminating risks that can lead to severe injuries. One of our primary safety measures is the Recordable Incident Rate (“RIR”) as defined by the United States Bureau of Labor Statistics. For the three months ended March 31, 2024, our RIR was 0.31, compared to 0.64 as reported in the same period a year ago.
Current wording
One of our primary objectives is the safety and well-being of our employees. Working safely is an unconditional, organization-wide expectation at Owens Corning, which we believe directly benefits employees’ lives, improves our manufacturing processes and reduces our costs. The Company maintains comprehensive safety programs focused on identifying hazards and eliminating risks that can lead to severe injuries. One of our primary safety measures is the Recordable Incident Rate (“RIR”) as defined by the United States Bureau of Labor Statistics. For the three months ended June 30, 2024, our RIR excluding the impact from our Doors segment as a result of the Masonite acquisition, was 0.46, compared to 0.59 as reported in the same period a year ago. For the six months ended June 30, 2024, our RIR excluding the impact from our Doors segment as a result of the Masonite acquisition, was 0.39 compared to 0.62 as reported in the same period a year ago.
Previous wording
•issues related to acquisitions, divestitures and joint ventures or expansions, including the planned acquisition of Masonite;
Current wording
•issues related to acquisitions, divestitures and joint ventures or expansions, including the acquisition of Masonite;
Previous wording
•our level of indebtedness, including the planned acquisition of Masonite;
Current wording
•our level of indebtedness, including indebtedness incurred in connection with the acquisition of Masonite;
Previous wording
•our ability to achieve expected synergies, cost reductions and/or productivity improvements;
Current wording
•our ability to achieve expected synergies, cost reductions and/or productivity improvements, including our ability to achieve the strategic and other objectives relating to the Masonite acquisition;
Previous wording
•our ability to complete and successfully integrate the Masonite acquisition;
Current wording
•our ability to successfully integrate the Masonite acquisition;
Previous wording
•our ability to achieve the strategic and other objectives relating to the Masonite acquisition, including any expected synergies, and the strategic review of our glass reinforcements business; and
Current wording
•our ability to achieve the objectives relating to the strategic review of our glass reinforcements business; and
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Company has included an estimated liability for expected future costs related to the Recalled Products on its Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023.