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Owens Corning (OC - Free Report) reported third-quarter 2021 results, wherein earnings and net sales surpassed their respective Zacks Consensus Estimate as well as improved on a year-over-year basis. The solid quarterly results were backed by strong demand across businesses despite supply chain disruptions with limited inventories.
Chair and CEO Brian Chambers said, “Building on the momentum of an outstanding first half, Owens Corning delivered a record third quarter driven by the exceptional execution of our global team to operate our facilities and service our customers while overcoming supply 1 chain disruptions and higher inflation. As we focus on finishing the year strong, we continue to make strategic choices to enhance the earnings power of our company and position us for future growth.”
Inside the Headlines
The company’s third-quarter adjusted earnings of $2.52 per share beat the consensus mark of $2.51 by 0.4%. Also, the said metric improved 48.2% on a year-over-year basis.
Masco Corporation Price, Consensus and EPS Surprise
Net sales of $2.21 billion topped the consensus mark of $2.15 billion by 2.8% and increased 15.8% year over year. The uptrend was mainly backed by a robust U.S. residential housing market, and stronger commercial and industrial markets.
Segment Details
Net sales in the Composites segment increased 13% year over year to $591 million. The upside was driven by strong commercial performance, with its ongoing strategy to focus on higher-value applications driving favorable mix. Also, strength in the demand for higher-value applications and key geographies added to the positives. Earnings before interest and taxes (EBIT) margin of 17% improved 600 basis points or bps from the year-ago quarter.
The Insulation segment’s net sales came in at $815 million, up 20% year over year. The solid improvement was mainly owing to strong volume and favorable pricing. EBIT margin also expanded 400 bps to 15%.
The Roofing segment’s net sales jumped 14% year over year to $869 million. The U.S. asphalt shingle market fell 9% from the year-ago level, while U.S. shingle volumes were up marginally. High realization on the back of previously announced price increases helped it in offsetting accelerating asphalt, and other material and delivery inflation. EBIT margin, however, contracted 200 bps year over year to 24%.
Operating Highlights
Adjusted EBIT for the quarter totaled $400 million, up 38.4% on a year-over-year basis.
Balance Sheet
As of Sep 30, 2021, the company had cash and cash equivalents of $920 million compared with $717 million at 2020-end. Long-term debt — net of current portion — totaled $2.96 billion, up from $3.13 billion at 2020-end. Owens Corning had $2 billion of available liquidity at third quarter-end.
For the first nine months of 2021, net cash provided by operating activities was $1,168 million compared with $717 million in the comparable year-ago period. Free cash flow came in at $400 million for the reported quarter, up from $425 million a year ago.
During third-quarter 2021, the company repurchased 1.7 million shares of common stock for $160 million. As of Sep 30, 2021, it returned $516 million to shareholders through share repurchases and dividends. At third quarter-end, 4.9 million shares were available for repurchase under the current authorization.
Fourth-Quarter 2021 Outlook
For the ongoing quarter, the company expects the U.S. residential market to remain strong, and commercial and industrial markets to strengthen.
Insulation: For the North American residential fiberglass insulation business, it expects volume to be up in mid-high single digits. Price realization is expected to be similar to the third quarter. In the technical and global insulation businesses, volumes are expected to rise in low- to mid-single digits, with increasing demand for its products in global building and construction applications. The company anticipates material and energy costs to increase more than the third quarter and price realization to result in a positive price cost mix in the fourth quarter. EBIT margins are expected to be 15%.
Composites: The company anticipates volumes to fall in mid-single digits from the prior year, while revenues are likely to grow on improvement in sales mix and continued price realization. Composites price is expected to rise in mid-single digits from the prior-year level. The business is likely to benefit from $30 million of curtailment reversals. Cost-curtailment benefits of $15-$20 million may help it offset input material and transportation inflation. EBIT margins are projected at 14%.
Roofing: The company expects both the market and volumes to be down in mid teens from the prior year due to an expectation for a more normal winter season, lower storm demand and ongoing supply chain disruptions. Pricing is likely to be favorable yet realization is expected to be below the third-quarter level. Roofing EBIT margin is likely to be 20% on lower volumes and narrowed but positive price cost mix.
2021 Outlook
For the rest of 2021, it expects the U.S. residential housing market, and global commercial and industrial markets to remain robust.
General corporate expenses are expected between $150 million and $155 million. Capital additions are estimated at $460 million, below the anticipated depreciation and amortization of $500 million. Interest expenses are estimated between $125 million and $130 million. The company estimates an effective tax rate of 26-28% and a cash tax rate of 18-20%, both on adjusted pre-tax earnings.
Zacks Rank & Peer Releases
Owens Corning currently carries a Zacks Rank #4 (Sell).
Masco Corporation (MAS - Free Report) reported better-than-expected results for third-quarter 2021. Earnings and net sales surpassed their respective Zacks Consensus Estimate. On a year-over-year basis, net sales improved on strong demand across the categories and channels but adjusted earnings declined owing to supply chain constraints and inflation.
Otis Worldwide Corporation (OTIS - Free Report) reported solid results for third-quarter 2021. Its earnings and revenues surpassed the respective Zacks Consensus Estimate as well as improved on a year-over-year basis. Solid organic sales in both New Equipment and Service segments along with higher operating margins benefited the company.
Armstrong World Industries, Inc. (AWI - Free Report) recently reported third-quarter 2021 results, wherein its earnings missed the Zacks Consensus Estimate but revenues beat the same. Nonetheless, both the metrics grew on a year-over-year basis.
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Owens Corning (OC) Q3 Earnings & Sales Beat, Q4 View Tepid
Owens Corning (OC - Free Report) reported third-quarter 2021 results, wherein earnings and net sales surpassed their respective Zacks Consensus Estimate as well as improved on a year-over-year basis. The solid quarterly results were backed by strong demand across businesses despite supply chain disruptions with limited inventories.
Chair and CEO Brian Chambers said, “Building on the momentum of an outstanding first half, Owens Corning delivered a record third quarter driven by the exceptional execution of our global team to operate our facilities and service our customers while overcoming supply 1 chain disruptions and higher inflation. As we focus on finishing the year strong, we continue to make strategic choices to enhance the earnings power of our company and position us for future growth.”
Inside the Headlines
The company’s third-quarter adjusted earnings of $2.52 per share beat the consensus mark of $2.51 by 0.4%. Also, the said metric improved 48.2% on a year-over-year basis.
Masco Corporation Price, Consensus and EPS Surprise
Masco Corporation price-consensus-eps-surprise-chart | Masco Corporation Quote
Net sales of $2.21 billion topped the consensus mark of $2.15 billion by 2.8% and increased 15.8% year over year. The uptrend was mainly backed by a robust U.S. residential housing market, and stronger commercial and industrial markets.
Segment Details
Net sales in the Composites segment increased 13% year over year to $591 million. The upside was driven by strong commercial performance, with its ongoing strategy to focus on higher-value applications driving favorable mix. Also, strength in the demand for higher-value applications and key geographies added to the positives. Earnings before interest and taxes (EBIT) margin of 17% improved 600 basis points or bps from the year-ago quarter.
The Insulation segment’s net sales came in at $815 million, up 20% year over year. The solid improvement was mainly owing to strong volume and favorable pricing. EBIT margin also expanded 400 bps to 15%.
The Roofing segment’s net sales jumped 14% year over year to $869 million. The U.S. asphalt shingle market fell 9% from the year-ago level, while U.S. shingle volumes were up marginally. High realization on the back of previously announced price increases helped it in offsetting accelerating asphalt, and other material and delivery inflation. EBIT margin, however, contracted 200 bps year over year to 24%.
Operating Highlights
Adjusted EBIT for the quarter totaled $400 million, up 38.4% on a year-over-year basis.
Balance Sheet
As of Sep 30, 2021, the company had cash and cash equivalents of $920 million compared with $717 million at 2020-end. Long-term debt — net of current portion — totaled $2.96 billion, up from $3.13 billion at 2020-end. Owens Corning had $2 billion of available liquidity at third quarter-end.
For the first nine months of 2021, net cash provided by operating activities was $1,168 million compared with $717 million in the comparable year-ago period. Free cash flow came in at $400 million for the reported quarter, up from $425 million a year ago.
During third-quarter 2021, the company repurchased 1.7 million shares of common stock for $160 million. As of Sep 30, 2021, it returned $516 million to shareholders through share repurchases and dividends. At third quarter-end, 4.9 million shares were available for repurchase under the current authorization.
Fourth-Quarter 2021 Outlook
For the ongoing quarter, the company expects the U.S. residential market to remain strong, and commercial and industrial markets to strengthen.
Insulation: For the North American residential fiberglass insulation business, it expects volume to be up in mid-high single digits. Price realization is expected to be similar to the third quarter. In the technical and global insulation businesses, volumes are expected to rise in low- to mid-single digits, with increasing demand for its products in global building and construction applications. The company anticipates material and energy costs to increase more than the third quarter and price realization to result in a positive price cost mix in the fourth quarter. EBIT margins are expected to be 15%.
Composites: The company anticipates volumes to fall in mid-single digits from the prior year, while revenues are likely to grow on improvement in sales mix and continued price realization. Composites price is expected to rise in mid-single digits from the prior-year level. The business is likely to benefit from $30 million of curtailment reversals. Cost-curtailment benefits of $15-$20 million may help it offset input material and transportation inflation. EBIT margins are projected at 14%.
Roofing: The company expects both the market and volumes to be down in mid teens from the prior year due to an expectation for a more normal winter season, lower storm demand and ongoing supply chain disruptions. Pricing is likely to be favorable yet realization is expected to be below the third-quarter level. Roofing EBIT margin is likely to be 20% on lower volumes and narrowed but positive price cost mix.
2021 Outlook
For the rest of 2021, it expects the U.S. residential housing market, and global commercial and industrial markets to remain robust.
General corporate expenses are expected between $150 million and $155 million. Capital additions are estimated at $460 million, below the anticipated depreciation and amortization of $500 million. Interest expenses are estimated between $125 million and $130 million. The company estimates an effective tax rate of 26-28% and a cash tax rate of 18-20%, both on adjusted pre-tax earnings.
Zacks Rank & Peer Releases
Owens Corning currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Masco Corporation (MAS - Free Report) reported better-than-expected results for third-quarter 2021. Earnings and net sales surpassed their respective Zacks Consensus Estimate. On a year-over-year basis, net sales improved on strong demand across the categories and channels but adjusted earnings declined owing to supply chain constraints and inflation.
Otis Worldwide Corporation (OTIS - Free Report) reported solid results for third-quarter 2021. Its earnings and revenues surpassed the respective Zacks Consensus Estimate as well as improved on a year-over-year basis. Solid organic sales in both New Equipment and Service segments along with higher operating margins benefited the company.
Armstrong World Industries, Inc. (AWI - Free Report) recently reported third-quarter 2021 results, wherein its earnings missed the Zacks Consensus Estimate but revenues beat the same. Nonetheless, both the metrics grew on a year-over-year basis.