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Owens Corning (OC) Lags Q2 Earnings and Sales Estimates

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Owens Corning (OC - Free Report) posted second-quarter 2018 results, with earnings and revenues missing the Zacks Consensus Estimate. The company’s performance was marred to some extent due to operational headwinds. Shares declined 8.7% in yesterday’s trading session.

The company reported earnings per share of $1.17 in the quarter, which missed the consensus mark of $1.44 cents by 18.8%. Earnings declined 1.7% from the year-ago quarter’s figure of $1.19.

Net sales of $1.82 billion in the quarter missed the consensus mark of $1.87 billion. The same improved 14% on a year-over-year basis, courtesy of contributions from acquisitions and successful pricing actions in Roofing and Insulation.

Segment Sales Details

The company has three reportable segments — the Composites, Insulation and Roofing segment.

Sales in the Composites segment was $541 million, up 1% year over year. Sales in the Insulation segment surged 55% to $682 million, while the same for the Roofing segment fell 4% to $659 million.

Balance Sheet

As of Jun 30 2018, the company had cash and cash equivalents of $149 million compared with $246 million as on Dec 31, 2017.

During second-quarter 2018, Owens Corning repurchased 252,000 shares of its common stock for $20 million. At the end of the quarter, 6.2 million shares were available for repurchase under the current authorization.

2018 Earnings Outlook

In Roofing, the company expects the U.S. asphalt shingle market to be down mid-single digits on lower storm demand. The impact of asphalt and transportation inflation is expected to be offset by strong pricing performance.

In Composites, the company expects consistent growth in the glass fiber market and expects EBIT to be slightly below the prior-year quarter’s tally owing to higher manufacturing costs, lower volume and higher-than-anticipated inflation.

In Insulation, the company continues to expect EBIT growth of $150 million.

The company estimates an effective tax rate of 26% to 28%. The company expects general corporate expenses between $135 million and $140 million in 2018 compared with $140-$150 million expected earlier.

The company expects to convert adjusted earnings into free cash flow at about 100%.

Owens Corning Inc Price, Consensus and EPS Surprise

 

Zacks Rank & Key Picks

Owens Corning currently carries a Zacks Rank #4 (Sell). A few better-ranked stocks in the same sector are Boise Cascade Company (BCC - Free Report) , Louisiana-Pacific Corporation (LPX - Free Report) and PotlatchDeltic Corporation (PCH - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here

Boise Cascade, Louisiana-Pacific and PotlatchDeltic’s 2018 earnings are expected to grow 84.3%, 30.5% and 4.7%, respectively.

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