Owens Corning (OC) Tops Q4 EPS by 21c

Owens Corning (NYSE: OC) reported Q4 EPS of $0.66, $0.21 better than the analyst estimate of $0.45. Revenue for the quarter came in at $1.3 billion versus the consensus estimate of $1.29 billion.

Outlook

We anticipate all three businesses will grow earnings in 2016 based on consensus expectations for U.S. housing starts and moderate global growth.

In Composites, we expect continued growth in the glass fiber market driven by moderate global industrial production growth. Following very strong earnings growth in 2015, we expect Composites to increase EBIT by at least $20 million in 2016, on price and volume improvements.

In Roofing, we anticipate modest market growth in 2016, primarily driven by growth in new construction markets. Weaker oil prices should provide opportunity for further asphalt cost deflation.

In Insulation, the company expects revenue growth will be slightly weaker than the growth experienced in 2015. While we expect margin expansion, the magnitude of the improvement could fall below that experienced in 2015 and is dependent upon the progression of pricing and volume in the U.S. residential new construction market.

The company estimates an effective tax rate of 32 percent to 34 percent, and a cash tax rate of 10 percent to 12 percent on adjusted pre-tax earnings, due to the company’s $2.0 billion U.S. tax net operating loss carryforward.

The company expects general corporate expenses to be $120 million to $130 million in 2016. Capital additions in 2016 are expected to total approximately $385 million, including an estimated $50 million for the completion of the previously announced mineral fiber insulation facility. Interest expense is expected to be about $110 million.

For earnings history and earnings-related data on Owens Corning (OC) click here.

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