Owens Corning OC reported impressive results for fourth-quarter 2024, wherein earnings and net sales surpassed the Zacks Consensus Estimate, given the success of its strategic initiatives and structural improvements, leading to strong cash flow and higher margins despite challenging market conditions. This marks the eighth consecutive earnings beat for the company.
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The company successfully executed strategic initiatives, including acquisitions, divestitures and capital investments, to strengthen its position in North America and Europe. While certain end markets faced mixed conditions, Owens Corning continued to demonstrate resilience and profitability.
While some headwinds remain, particularly in residential and commercial construction markets, the company’s diversified portfolio and strong pricing power should help sustain profitability in 2025.
Owens Corning's shares lost 1.6% during the trading session and 1.2% during the after-hour trading session yesterday.
Owens Corning Inc Price, Consensus and EPS Surprise
Owens Corning Inc Price, Consensus and EPS Surprise
The company reported adjusted earnings per share (EPS) of $3.22, which topped the consensus mark of $2.87 by 12.2% and increased a cent from $3.21 a year ago.
Net sales of $2.84 billion topped the consensus mark of $2.78 billion by 2.3% and increased 23.3% year over year.
Owens Corning’s Segment Details
Net sales in the Composites segment remained almost flat year over year at $515 million. Despite a challenging environment, the composites segment delivered stable revenues and improved margins in the fourth quarter, driven by strong execution and price realization in its nonwovens business. The nonwovens segment experienced positive pricing and strong demand in North America, contributing to higher margins.
Earnings before interest and taxes (EBIT) margin expanded to 9% from 5% in the year-ago period. EBITDA margins of 18% also increased 500 basis points (bps) from a year ago.
The Insulation segment’s net sales were $926 million, down 0.5% year over year. While the North America’s residential insulation market benefited from strong price realization, international markets, particularly Europe, continued to face headwinds due to weak construction activity.
EBIT margin rose 100 bps year over year to 17%. EBITDA margin of 23% was up 100 bps from the year-ago period.
The Roofing net sales were steady at $912 million, slightly down by 1.7% from a year ago. The U.S. asphalt shingle market grew 1%, with strong demand in Florida, the Southwest and the Southeast. Despite lower component volumes, price increases implemented in April and August helped offset inflationary pressures.
EBIT and EBITDA margins remained flat year over year at 31% and 32% in the quarter, respectively.
The Doors segment reported net sales of $564 million during the fourth quarter. Market conditions in North America and Europe remained challenging, impacting pricing power. EBIT and EBITDA margins were 5% and 15%, respectively.
Operating Highlights of Owens Corning
Adjusted EBIT and adjusted EBITDA improved 10% and 21%, respectively, on a year-over-year basis. Adjusted EBIT margin of 15% was down 200 bps from the prior year, while adjusted EBITDA margin remained flat at 22%.
OC’s Other Developments
Owens Corning’s composites business underwent significant changes in 2024, culminating in its decision to divest glass reinforcements business to Praana Group for $755 million. This move marked a key step in Owens Corning’s transformation into a pure-play building products company, focusing on its core markets in North America and Europe.
The transaction, expected to close later in 2025, includes an enterprise value of $755 million, with net after-tax proceeds estimated at $360 million, including $225 million in notes issued to Owens Corning by the buyer. Additionally, the company anticipates selling approximately $100 million worth of excess metal alloy from the glass reinforcements business after the transaction closes.
OC’s Financials
As of Dec. 31, 2024, the company had cash and cash equivalents of $361 million compared with $1.62 billion at 2023-end. Long-term debt, net of the current portion, totaled $5.12 billion, up from $2.62 billion at 2023-end.
In 2024, net cash provided by operating activities was $1.89 billion, up from $1.72 billion in the previous year. Free cash flow was $1.25 billion in 2024, up from $1.19 billion a year ago.
OC’s Q1 2025 Guidance
Revenues are anticipated to grow in the mid-20% range year over year after adjusting for the divestiture of the glass reinforcements business.
Enterprise EBITDA margins are expected to remain in the low 20% range.
Segment-wise, the Roofing segment is expected to post revenues in line with the prior year, driven by steady demand for shingles and distributor inventory replenishment. Roofing EBITDA margins are expected to be around 30%.
For Insulation, revenues are anticipated to be slightly lower year over year. The segment’s EBITDA margin is expected to be in the low 20% range in the quarter.
The Doors segment is expected to experience slightly lower revenues sequentially, due to lower pricing and volume. For the first quarter, the segment’s EBITDA margin is expected to be in the low double-digit to low teens range.
What OC Expects for 2025
The company expects general corporate expenses to be approximately $240-$260 million.
Interest expenses are still estimated to be within $250-$260 million.
Capital additions are estimated at an approximate value of $800 million and depreciation and amortization are expected to be $650 million. The company expects an effective tax rate of 24-26%.
OC's Zacks Rank & Recent Construction Releases
Owens Corning currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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