Owens Corning (OC)
Q1 2012 Earnings Call
April 25, 2012 11:00 am ET
Thierry Denis -
Michael H. Thaman - Chairman, Chief Executive Officer, President and Chairman of Executive Committee
Duncan J. Palmer - Chief Financial Officer and Senior Vice President
Michael Rehaut - JP Morgan Chase & Co, Research Division
Kenneth R. Zener - KeyBanc Capital Markets Inc., Research Division
Joshua Pollard - Goldman Sachs Group Inc., Research Division
Mike Wood - Macquarie Research
Dennis McGill - Zelman & Associates, Research Division
Previous Statements by OC
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Good day, ladies and gentlemen, and welcome to the First Quarter 2012 Owens Corning Earnings Conference Call. My name is Keisha, and I will be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to hand the conference over to Thierry Denis, Director of Investor Relations. Please proceed.
Thank you, Keisha. Good morning, everyone. Thank you for taking the time today to join us for today's conference call in review of our business results for the first quarter 2012. Joining us today are Mike Thaman, Owens Corning's Chairman and Chief Executive Officer; and Duncan Palmer, Chief Financial Officer. Following our presentation this morning, we will open this one-hour call to your questions. [Operator Instructions]
Earlier this morning, we issued a news release and filed the 10-Q that detailed our results for the quarter. For the purposes of our discussion today, we've prepared presentation slides that summarize our performance and results for the first quarter 2012. We will refer to those slides during this call. You can access the slides at owenscorning.com. We have a link on our homepage and a link on the Investors section of our website. This call and the supporting slides will be recorded and available on our website for future reference.
Please reference Slide 2 before we begin. We offer a couple of reminders. First, today's presentation will include forward-looking statements based on our current forecasts and estimates of future events. Second, these statements are subject to risks, uncertainties and other factors that could cause our actual results to differ materially. Please refer to the cautionary statements and the risk factors identified in our SEC filings for a more detailed explanation of the inherent limitations of such forward-looking statements. This presentation and today's prepared remarks contain non-GAAP financial measures. Reconciliations of GAAP to non-GAAP are found within the financial tables of our earnings release.
Consistent with our historical practice, we have excluded items that we believe are unrepresentative of our ongoing operations to arrive at adjusted EBIT, our primary measure to look at period-over-period comparisons. We typically exclude significant nonrecurring items such as the impact of the restructuring actions announced in our last earnings call. We believe that adjusted EBIT is helpful to investors for comparing our results from period to period.
It was mentioned on our last earnings call, we will continue to adjust our effective tax rate to remove the effect of quarter-to-quarter fluctuations, which have the potential to be significant in arriving at adjusted earnings and adjusted earnings per share. In the first quarter, we have adjusted our effective tax rate to 25%, in line with our anticipated annual effective tax rate on adjusted earnings for 2012. For those of you following along with our slide presentation, we will begin on Slide 4.
Now opening remarks from our Chairman and CEO, Mike Thaman, will be followed by CFO, Duncan Palmer. Mike will then provide comments on our outlook prior to the Q&A session. Mike?
Michael H. Thaman
Thanks, Thierry, and good morning, everyone. We appreciate you joining us today to discuss our first quarter 2012 results. Owens Corning's first quarter performance was consistent with our expectations coming into the year. Improvements in the U.S. housing market and growth in global industrial production contributed to volume gains in all of our businesses and supported our outlook for delivering adjusted EBIT growth and strong cash generation in 2012.
First quarter revenue was $1.3 billion, up 9% compared with the same period last year on higher sales revenue in our Roofing and Insulation businesses. First quarter adjusted EBIT was $43 million compared to $61 million in the same period last year.
As I do each quarter, let me review our performance against the outlook I have previously provided. We continue to make progress towards our goal of creating an injury-free workplace. During the quarter, our rate of injuries improved by 23% over our full year 2011 performance.
We said we expected another great year for our Roofing business in 2012, reflecting some carryover of 2011 strong demand, improvement in the reroof market and modest improvement in the new construction market. We are on track for another strong financial performance in this business. We saw Roofing volumes grow in the quarter due to the storm demand carryover, stronger market conditions and prebuying by our customers ahead of our announced price increase in April.
We said our Insulation business would significantly narrow losses in 2012. Insulation volumes grew over the same period in 2011 and we narrowed the losses in the quarter from $47 million last year to $34 million in the current quarter. We said we would transform our Composites operation into a global network of low-delivered-cost assets with a commitment to achieving significant progress in 2012. We have previously announced the restructuring of our European assets and are on track with the execution of this plan, as well as the startup of low-delivered-cost assets in Mexico and Russia later this year, supporting our outlook of returning to double-digit margins for this business in 2013.
We said we would grow adjusted EBIT this year. While our adjusted EBIT for the quarter was lower than the comparable period last year, it was in line with our expectations. We will see acceleration of our performance across all of our businesses as the year progresses. We said 2012 would be a year of strong cash generation. Based on this outlook, the Board of Directors has authorized of the repurchase of up to 10 million additional shares of Owens Corning common stock. While we continue to face macro market uncertainty, as a result of our first quarter performance, we remain confident that we will achieve our 2012 outlook of adjusted EBIT growth and strong cash generation based on an improving U.S. housing market and continued growth in global industrial production.