Owens Corning (NYSE: OC) reported Q4 EPS of $1.13, in-line with the analyst estimate of $1.13. Revenue for the quarter came in at $1.69 billion versus the consensus estimate of $1.69 billion.

Company Delivered Net Sales of $7.2 Billion, Generated Record Operating Cash Flow of $1 Billion in 2019

• Company delivered $405 million of net earnings and adjusted EBIT of $828 million
• Roofing improved EBIT by $21 million to $455 million
• Insulation delivered $230 million of EBIT
• Composites generated $247 million of EBIT, and 12% EBIT margins
• Improved free cash flow by $324 million to $590 million

“Owens Corning delivered record revenues and operating cash flow in 2019. I’m proud of the progress we’ve made as a company against our priorities – accelerating organic growth, driving improved operating efficiencies, and generating strong free cash flow – and the impact our discipline is having on our results,” said Chief Executive Officer Brian Chambers. “We are well positioned to continue to execute on our priorities and capitalize on market opportunities to deliver attractive returns for our investors in 2020.”

2020 Outlook

• The company’s outlook is based on an environment consistent with consensus expectations for global industrial production, U.S. housing starts, and global commercial and industrial construction indices.
• In Insulation, the company expects a favorable market outlook for U.S. new residential construction and modest growth in global construction and industrial markets. In this business, the company expects strong earnings growth primarily driven by volume growth and operating leverage in the North America residential fiberglass insulation business and continued earnings improvement in the technical and other building insulation businesses.
• In Composites, the company expects a weaker glass fiber market in the first-half of the year which is expected to strengthen in the second-half, consistent with global industrial production. The business will continue to focus on growth in higher-value downstream applications and strong operating performance.
• In Roofing, the company expects relatively flat U.S. shingle industry shipments, assuming average storm demand. The impact of the newly effective International Maritime Organization (IMO) 2020 regulations on marine sector emissions is not currently expected to have a significant impact on asphalt costs for the business. Cash contribution margins entering 2020 position the business for continued strong performance.
• The company estimates an effective tax rate of 26% to 28%, and a cash tax rate of 10% to 12% on adjusted pre-tax earnings, which is due to the company’s foreign tax credit carryforwards.
• The company expects general corporate expenses of $125 million to $135 million. Capital additions are expected to be in line with depreciation and amortization of approximately $460 million. Interest expense is expected to be approximately $115 million.
• The company anticipates sustaining strong conversion of adjusted earnings into free cash flow. The company plans to prioritize free cash flow to ongoing dividends and reduction of the term loan associated with the purchase of Paroc. Additionally, free cash flow could be deployed for share repurchases. As of the end of 2019, 3.6 million shares were available for repurchase under the current authorization. The company continues to target returning at least 50% of free cash flow to shareholders over time.

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