Owens Corning (OC)
Q4 2010 Earnings Call
February 16, 2011 11:00 am ET
Michael McMurray - Vice President of Investor Relations and Treasurer
Duncan Palmer - Chief Financial Officer and Senior Vice President
Michael Thaman - Chairman of the Board, Chief Executive Officer, President and Chairman of Executive Committee
Kenneth Zener - KeyBanc Capital Markets Inc.
Josh Levin - Citigroup Inc
Robert Wetenhall - RBC Capital Markets, LLC
Dennis McGill - Zelman & Associates
Joshua Pollard - Goldman Sachs Group Inc.
Jonathan Ellis - BofA Merrill Lynch
Previous Statements by OC
» Owens CEO Discusses Q3 2010 Results - Earnings Call Transcript
» Owens Corning Q2 2010 Earnings Call Transcript
» Owens Corning Q1 2010 Earnings Call Transcript
Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2010 Owens Corning Earnings Conference Call. My name is Keisha, and I will be your operator for today. [Operator Instructions] I would now like to hand the call over to Mr. Michael McMurray, Vice President of Investor Relations and Treasurer. Please proceed.
Thank you, Keisha. Good morning, everyone. Thank you for taking time today to join us for today's conference call and review of our business results for the fourth quarter and full year 2010. 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. Please limit yourselves to one question and one follow-up.
Earlier this morning, we issued a news release and filed a 10-K that detailed our results for the quarter and the year. For the purposes of our discussion today, we’ve prepared presentation slides that summarize our performance and results for the fourth quarter and full year 2010. We will refer to these 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.
For those of you following along in our presentation, we will begin on Slide 4.
And now, opening remarks from our Chairman and CEO, Mike Thaman, followed by CFO, Duncan Palmer, and then our Q&A session. Mike.
Thank you, Michael, and good morning, everyone. Thank you for joining us today to discuss our results for the fourth quarter and full year 2010. Owens Corning completed another successful year. Our portfolio of market-leading businesses delivered strong profitability, despite markets that continue to perform well below their potential. This performance was highlighted by an impressive turnaround in Composites and continued strong performance in Roofing.
For the year 2010, adjusted earnings per share totaled $1.57, a 38% increase compared with 2009, and adjusted EBITDA of $381 million represented a 24% increase over the prior year. The substantial growth in earnings was achieved on a 4% increase in revenue, which totaled $5 billion for the year. It feels good to report positive top line performance.
As we enter 2010, we outlined a number of important objectives for the year. I'd like to spend a few moments sharing my assessment of our achievements in these key areas.
We said that we would continue our progress in creating an injury-free workplace. Our rate of injuries improved by 23% last year, marking our ninth consecutive year of safety improvement. Over this period, we've reduced the number of injuries by more than 90%. This is tremendous execution by all of the people of Owens Corning.
We said in our third quarter guidance that EBIT would be in the $360 million to $390 million range. Today, we reported full year adjusted EBIT of $381 million.
We said that we would return our Composites business to profitability. Adjusted EBIT in Composites was $175 million last year compared to a loss of $33 million in 2009. This represents more than 75% operating leverage on revenue growth. Needless to say, we are very proud of this result.
We said that our Roofing business would achieve operating margins greater than 20%. With actual margins of 22%, we accomplished this objective as well.
We said that although Insulation was likely to again lose money, we did expect to narrow our losses. We fell short on this objective. As you know, weak U.S. residential construction levels continue to challenge the entire market. As a result, adjusted EBIT for installation was basically flat with 2009. While we would have liked to see more progress in installation, I believe that we've took important actions to improve our outlook for 2011. I will speak more about this later in my prepared remarks.
Finally, I was pleased that we were able to complete the divestiture of Masonry Products to Boral at year end. This transaction demonstrates our ongoing commitment to evaluate our asset base and to drive return on capital for our shareholders.
Overall, I'm pleased with what we accomplished in the face of continued weakness in U.S. housing market and the still recovering global economy. Our execution and financial performance were strong, and we are positioned well entering 2011.
Now I'd like to turn to the businesses and our outlook. Composites executed an impressive turnaround in 2010, laying the foundation for an even stronger year in 2011.
Our newly installed capacity in Hangzhou was up and running at year end, and will enable us to further capitalize on demand growth in China, positively impacting earnings during the first half of the year. In addition, we are on track to complete the expansion of our facility in Gous-Khroustalny, Russia by the end of the year, which will further strengthen our global Composites footprint.