We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Owens Corning (OC - Free Report) reported impressive results for second-quarter 2023, wherein earnings and net sales surpassed the Zacks Consensus Estimate. Moreover, earnings increased on a year-over-year basis despite net sales decline.
Given the quarter’s solid bottom-line results, the company maintains its optimistic outlook of elevating performance and achieving higher earnings.
Following the results, shares of Owens Corning have gained 5.9% on Jul 26.
Inside the Headlines
The company reported adjusted earnings of $4.22 per share, which topped the Zacks Consensus Estimate of adjusted earnings of $3.30 per share by 27.9%. The metric also grew 9.6% from the prior-year quarter’s reported value of $3.85 per share.
Owens Corning Inc Price, Consensus and EPS Surprise
Net sales of $2.56 billion beat the consensus mark of $2.52 billion by 1.8% but declined 1.5% year over year.
Segment Details
Net sales in the Composites segment decreased 14% year over year to $620 million. This was due to lower volumes and the impact of the previously announced buyouts and divestitures. Earnings before interest and taxes (EBIT) margin contracted to 14% from 21% in the year-ago period. EBITDA margins of 21% also declined from 28% reported a year ago. Reduced sales volume, the impact of production downtime and input cost inflation hurt margins.
The Insulation segment’s net sales came in at $905 million, down 3% year over year due to lower volumes, partially offset by positive price realization and favorable product and customer mix. Yet, EBIT and EBITDA margins of 18% and 24% increased 100 and 200 basis points (bps), respectively, year over year.
The Roofing segment’s net sales rose 10% year over year to $1.1 billion, mainly driven by higher volumes related to storm activity in the quarter and positive price realization. Both EBIT and EBITDA margins expanded 500 bps to 30% and 32%, respectively.
Operating Highlights
Adjusted EBIT and adjusted EBITDA increased approximately 2% and 1%, respectively, on a year-over-year basis. Adjusted EBIT and adjusted EBITDA margin expanded 100 bps, each, from the year-ago figure.
Balance Sheet
As of Jun 30, 2023, the company had cash and cash equivalents of $968 million, down from $1,099 million at 2022-end. Long-term debt — net of the current portion — totaled $3 billion, up from $2.99 billion at 2022-end.
In the first six months of 2023, net cash provided by operating activities was $330 million, down from $624 million in the previous year. Free cash flow came in at $372 million in the reported quarter, up from $361 million a year ago.
In the second quarter, OC returned $160 million to shareholders via dividends and share repurchases. It paid a total quarterly cash dividend of $47 million and repurchased 1.1 million shares of common stock for $113 million. As of June-end, 11.8 million shares were available for repurchase under the current authorization.
Q3 Outlook
Owens Corning's businesses primarily depend on residential repair and remodeling activity, U.S. housing starts, global commercial construction activity and industrial production. The company expects challenges in many of its end markets due to inflationary pressures, increased interest rates and continued geopolitical uncertainties.
OC expects most of its end markets to remain relatively stable in the upcoming quarter despite slow global economic growth.
For the third quarter of 2023, the company expects net sales to remain flat year over year and EBIT margins in the high teens, compared with 19% reported in the prior-year quarter.
For the quarter, the company expects revenues in the Insulation segment to be down by low-single digits, compared to the prior year’s value of $965 million. The EBIT margins are expected to be in the mid teens, compared to 18% in the year-ago quarter.
For the Composites segment, the revenues are anticipated to be down by mid-single digits, compared to $638 million reported in the prior-year quarter. The EBIT margins are expected to be on par with second-quarter 2023.
For the Roofing segment, the revenues are expected to be up by mid-single digits in comparison with $1 billion year over year. The EBIT margins are expected to be approximate with the second-quarter 2023 reported margin of 30%.
Revised 2023 Outlook
For 2023, the company now expects general corporate expenses to be between $215 million and $225 million, up from the previous expectation of $195-$205 million. Interest expenses are now estimated to be between $70 million and $80 million, down from the previously expected range of $95-$105 million.
Capital additions are estimated at an approximate value of $520 million, and depreciation and amortization within $520-$530 million. The company projects an effective tax rate of 24-26% and a cash tax rate of 26-28%, both on adjusted earnings.
PulteGroup Inc. (PHM - Free Report) reported impressive results in second-quarter 2023. Its earnings and revenues surpassed their respective Zacks Consensus Estimate and increased year over year. The upside was mainly driven by its solid operating model, which strategically aligns the production of build-to-order and quick-move-in homes with applicable demand across consumer groups.
Backed by its disciplined and balanced business model, the company witnessed solid gross closings, orders and margins in the reported quarter and posted a 12-month return on equity of 32%.
Otis Worldwide Corporation’s (OTIS - Free Report) second-quarter 2023 earnings and sales surpassed the Zacks Consensus Estimate. Its quarterly results reflected 11th consecutive quarters of organic sales growth and solid operating margin expansion contributing to mid-single digit adjusted earnings per share growth.
The company remains focused on strong portfolio growth and generating a solid New Equipment backlog. It also intends to expand operating margins, return cash to shareholders through a capital-allocation strategy and pursue additional progress toward ESG goals.
Armstrong World Industries, Inc. (AWI - Free Report) reported mixed results for second-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimate, but net sales missed the same. Both metrics increased on a year-over-year basis.
AWI’s results were backed by robust growth in operating income and adjusted EBITDA, as well as expanded margins, fueled by positive performances from both the Mineral Fiber and Architectural Specialties segments. The company remains focused on advancing digital and healthy spaces initiatives and pursuing attractive, bolt-on acquisitions.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Owens Corning (OC) Q2 Earnings & Sales Top, Margins Rise
Owens Corning (OC - Free Report) reported impressive results for second-quarter 2023, wherein earnings and net sales surpassed the Zacks Consensus Estimate. Moreover, earnings increased on a year-over-year basis despite net sales decline.
Given the quarter’s solid bottom-line results, the company maintains its optimistic outlook of elevating performance and achieving higher earnings.
Following the results, shares of Owens Corning have gained 5.9% on Jul 26.
Inside the Headlines
The company reported adjusted earnings of $4.22 per share, which topped the Zacks Consensus Estimate of adjusted earnings of $3.30 per share by 27.9%. The metric also grew 9.6% from the prior-year quarter’s reported value of $3.85 per share.
Owens Corning Inc Price, Consensus and EPS Surprise
Owens Corning Inc price-consensus-eps-surprise-chart | Owens Corning Inc Quote
Net sales of $2.56 billion beat the consensus mark of $2.52 billion by 1.8% but declined 1.5% year over year.
Segment Details
Net sales in the Composites segment decreased 14% year over year to $620 million. This was due to lower volumes and the impact of the previously announced buyouts and divestitures. Earnings before interest and taxes (EBIT) margin contracted to 14% from 21% in the year-ago period. EBITDA margins of 21% also declined from 28% reported a year ago. Reduced sales volume, the impact of production downtime and input cost inflation hurt margins.
The Insulation segment’s net sales came in at $905 million, down 3% year over year due to lower volumes, partially offset by positive price realization and favorable product and customer mix. Yet, EBIT and EBITDA margins of 18% and 24% increased 100 and 200 basis points (bps), respectively, year over year.
The Roofing segment’s net sales rose 10% year over year to $1.1 billion, mainly driven by higher volumes related to storm activity in the quarter and positive price realization. Both EBIT and EBITDA margins expanded 500 bps to 30% and 32%, respectively.
Operating Highlights
Adjusted EBIT and adjusted EBITDA increased approximately 2% and 1%, respectively, on a year-over-year basis. Adjusted EBIT and adjusted EBITDA margin expanded 100 bps, each, from the year-ago figure.
Balance Sheet
As of Jun 30, 2023, the company had cash and cash equivalents of $968 million, down from $1,099 million at 2022-end. Long-term debt — net of the current portion — totaled $3 billion, up from $2.99 billion at 2022-end.
In the first six months of 2023, net cash provided by operating activities was $330 million, down from $624 million in the previous year. Free cash flow came in at $372 million in the reported quarter, up from $361 million a year ago.
In the second quarter, OC returned $160 million to shareholders via dividends and share repurchases. It paid a total quarterly cash dividend of $47 million and repurchased 1.1 million shares of common stock for $113 million. As of June-end, 11.8 million shares were available for repurchase under the current authorization.
Q3 Outlook
Owens Corning's businesses primarily depend on residential repair and remodeling activity, U.S. housing starts, global commercial construction activity and industrial production. The company expects challenges in many of its end markets due to inflationary pressures, increased interest rates and continued geopolitical uncertainties.
OC expects most of its end markets to remain relatively stable in the upcoming quarter despite slow global economic growth.
For the third quarter of 2023, the company expects net sales to remain flat year over year and EBIT margins in the high teens, compared with 19% reported in the prior-year quarter.
For the quarter, the company expects revenues in the Insulation segment to be down by low-single digits, compared to the prior year’s value of $965 million. The EBIT margins are expected to be in the mid teens, compared to 18% in the year-ago quarter.
For the Composites segment, the revenues are anticipated to be down by mid-single digits, compared to $638 million reported in the prior-year quarter. The EBIT margins are expected to be on par with second-quarter 2023.
For the Roofing segment, the revenues are expected to be up by mid-single digits in comparison with $1 billion year over year. The EBIT margins are expected to be approximate with the second-quarter 2023 reported margin of 30%.
Revised 2023 Outlook
For 2023, the company now expects general corporate expenses to be between $215 million and $225 million, up from the previous expectation of $195-$205 million. Interest expenses are now estimated to be between $70 million and $80 million, down from the previously expected range of $95-$105 million.
Capital additions are estimated at an approximate value of $520 million, and depreciation and amortization within $520-$530 million. The company projects an effective tax rate of 24-26% and a cash tax rate of 26-28%, both on adjusted earnings.
Zacks Rank & Recent Construction Releases
Owens Corning currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
PulteGroup Inc. (PHM - Free Report) reported impressive results in second-quarter 2023. Its earnings and revenues surpassed their respective Zacks Consensus Estimate and increased year over year. The upside was mainly driven by its solid operating model, which strategically aligns the production of build-to-order and quick-move-in homes with applicable demand across consumer groups.
Backed by its disciplined and balanced business model, the company witnessed solid gross closings, orders and margins in the reported quarter and posted a 12-month return on equity of 32%.
Otis Worldwide Corporation’s (OTIS - Free Report) second-quarter 2023 earnings and sales surpassed the Zacks Consensus Estimate. Its quarterly results reflected 11th consecutive quarters of organic sales growth and solid operating margin expansion contributing to mid-single digit adjusted earnings per share growth.
The company remains focused on strong portfolio growth and generating a solid New Equipment backlog. It also intends to expand operating margins, return cash to shareholders through a capital-allocation strategy and pursue additional progress toward ESG goals.
Armstrong World Industries, Inc. (AWI - Free Report) reported mixed results for second-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimate, but net sales missed the same. Both metrics increased on a year-over-year basis.
AWI’s results were backed by robust growth in operating income and adjusted EBITDA, as well as expanded margins, fueled by positive performances from both the Mineral Fiber and Architectural Specialties segments. The company remains focused on advancing digital and healthy spaces initiatives and pursuing attractive, bolt-on acquisitions.