Owens Corning Reports Record Sales and Earnings
TOLEDO, Ohio, Jan. 25 - Owens Corning (NYSE: OWC) today reported record sales and earnings for the full year ending December 31, 1999, driven by excellent results in the company's Building Materials Systems business and a strong year for the Composites Systems business.
Net sales for the year were $5.048 billion, compared to $5.009 billion in 1998. Net income for 1999 was $270 million, or $4.67 per diluted share, compared to net income before special items of $204 million, or $3.59 per diluted share on an ongoing basis in 1998.
Sales in the fourth quarter were $1.275 billion, compared to $1.262 billion in the fourth quarter of 1998. Fourth quarter 1999 net income was $61 million, or $1.05 per diluted share, compared to $59 million, or $1.03 per diluted share, excluding special items, in the fourth quarter of 1998. Earnings in the fourth quarter were driven by a strong Composites business and lower corporate expenses.
"We are very proud of our company's achievements in 1999," said Glen H. Hiner, Owens Corning chairman and chief executive officer. "While benefiting from a strong market for Building Materials, we have achieved our goals of increasing efficiencies, generating additional cost savings and improving our profitability and working capital, while laying the groundwork for continued growth through our System Thinking(TM) initiatives."
Composites Systems
Sales in Composites Systems during the fourth quarter increased 5 percent over the fourth quarter of 1998, to $284 million. Fourth quarter earnings increased 10 percent, reflecting cost reductions, manufacturing productivity and asset optimization.
Adjusted for the formation in 1998 of a joint venture for the company's Yarns business, sales for the full year of 1999 were up 5 percent to $1.051 billion, and earnings were $159 million, compared to $160 million in 1998. During 1998 and 1999, the Composites Systems growth agenda generated new business that completely replaced the revenues lost with the formation of the Yarns joint venture.
"Our global operations played an important role this year, with the dedication of our new plant in Taloja, India," said Heinz Otto, president of Owens Corning's Composites Systems Business. "Our Asian composites business has finally turned the corner after a long economic downturn, with an especially strong performance in our Kimchon, Korea operations."
"Throughout the year, Composites simultaneously focused on operational efficiency and investing in future growth," Otto said. "We focused our System Thinking strategy by greatly enhancing our ability to provide composite-based systems and services to the automotive and building markets. Highlights during the year were new pick-up truck beds for both Ford and General Motors, and new Silentex(TM) muffler systems for five Toyota models," he said.
Building Materials Systems
Fourth quarter Building Materials Systems sales of $1.013 billion were comparable to the extremely strong fourth quarter of 1998. Earnings in Building Materials were $85 million, compared to $100 million in the record fourth quarter of 1998.
For the year, Building Materials earnings were up 64 percent on a 5 percent revenue increase compared to 1998.
"1999 was a fantastic year for our Building Materials business," said Domenico Cecere, president of Owens Corning's Building Materials Systems business. "Not only did we enjoy strong demand throughout the year, we also benefited from the synergies of our 1997 acquisitions in Exterior Systems."
Cecere added: "Strategically, we also put in place the foundation for significant future growth through our new internet strategy and the business relationships with ImproveNet and BuildNet. Our Acoustic Systems business, which serves the noise control and sound quality segments of the acoustics market, has introduced two new systems and five new products since it was established one year ago. The re-opening of our Candiac, Quebec insulation plant, allowed us to effectively satisfy customer demand, and the implementation of our RHOAD(TM) technology platform will continue to provide productivity improvements at our Insulation facilities."
Highlights
- The company was successful in maintaining total funded debt under $2 billion at year end through a 22 percent improvement in operating cash flow, before asbestos payments and proceeds, through increased earnings and improved working capital management.
- The company has broken ground for its new Cultured Stone(R) manufacturing plant in Chester County, South Carolina. The new facility will support Cultured Stone's growth agenda, and will complement existing plants in Napa, California and Navarre, Ohio.
- In 1999, visitors to Owens Corning's Web site, http://www.owenscorning.com , found an assortment of customer-oriented tools and information. As a result of the company's expanded relationship with ImproveNet, consumers can find more home improvement information and Owens Corning Preferred Contractors by using the "Do It For Me(TM)" link on the Web site. During the first three months of the partnership, the company referred over 5000 leads to its Preferred Contractors.
- The company also formed a partnership with BuildNet, the leading e-business and project management software provider for the U.S. residential construction industry. Owens Corning's new internet partnerships are helping to position the company as the leading building materials company on the Web.
- In Turkey, Owens Corning and Yapi Merkezi, an international heavy construction contractor and leading builder of mass housing and Light Rail Transit Systems, built a pilot project of affordable homes for families displaced by the earthquakes in Turkey. Owens Corning and Yapi Merkezi first became partners in 1996 in a joint venture making large- diameter glass-fiber-reinforced pipe for water and wastewater projects.
- The National Settlement Program is working. During 1999, nearly half of the claims in the Owens Corning backlog were paid through the program. It will become increasingly clear throughout the year 2000 that the NSP has provided a settlement vehicle which makes the company's cash flow predictable and fairly compensates claimants, while allowing the company to fund its growth agenda.
- In January 2000, Owens Corning announced an agreement to sell the Falcon Foam expanded polystyrene business to Atlas Roofing. This action is part of Owens Corning's commitment to raise cash and focus on its core businesses by divesting certain non-strategic assets. Closing is anticipated by the end of the first quarter.
- Owens Corning's position in the rapidly growing specialty roofing systems market was greatly expanded through the acquisition of the Vail metal roofing technology and manufacturing assets for MiraVista(R) designer metal and copper roofing. Owens Corning is already producing these metal roofing systems at its plant in Denver, and the company is planning further expansion in 2001.
Outlook
"We delivered terrific results in 1999. In the year 2000 we will continue that momentum by improving our operations, while at the same time satisfying the requirements of our National Settlement Program," Hiner said.
"We are focused on efficiency through the continued implementation of our SAP-based Advantage 2000 information systems and our Six Sigma quality initiatives," Hiner added. "We will continue to explore and implement unique business relationships which lead us into new systems and services and increase returns and shareholder value."
"Finally, we are prepared to take full advantage of e-commerce through our partnerships and our leading-edge consumer and customer-focused Web site. Through these initiatives, Owens Corning will continue to be recognized as the materials, systems and services leader in building materials and the global composites markets," Hiner said.
Owens Corning is a world leader in building materials systems and composites systems. The company has sales of $5 billion and employs approximately 20,000 people worldwide. For more information, please visit Owens Corning's Web site at http://www.owenscorning.com .
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these statements. Further information on factors that could affect the company's financial and other results are included in the company's Form 10-Q and 10-K, filed with the Securities and Exchange Commission.