Oct. 28, 2009 (PR Newswire) -- TOLEDO, Ohio, Oct. 28 /PRNewswire-FirstCall/ -- Owens Corning (NYSE: OC) today reported consolidated net sales of $1.3 billion during the third quarter of 2009, compared with $1.6 billion in the third quarter of 2008.

The third quarter was highlighted by continued outstanding performance in the Company's Roofing business. Composites returned to profitability due to successful cost-reduction actions and steadily improving Composites demand.

Owens Corning's third-quarter 2009 adjusted earnings were $78 million, or $0.61 per adjusted diluted share, compared with $73 million, or $0.57 per adjusted diluted share, in 2008. The Company reported third-quarter 2009 net earnings of $80 million, or $0.63 per diluted share, compared with a loss of $807 million, or a loss of $6.35 per diluted share, in 2008, which included a non-cash charge of $901 million to establish an accounting valuation allowance against net U.S. deferred tax assets related to net operating losses. See Tables 1 through 3 for a discussion and reconciliation of these items.

Consolidated Third-Quarter 2009 Results

--  Earnings Before Interest and Taxes (EBIT) for the third quarter ended
Sept. 30, 2009, were $120 million, compared with EBIT of $113 million
during the same period in 2008. Adjusted EBIT for the third quarter of
2009 was $135 million, compared with $126 million in the third quarter
of 2008. See Table 2.
--  EBIT was $190 million for the first nine months of 2009, compared with
EBIT of $208 million during the same period of 2008. Adjusted EBIT for
the first nine months of 2009 was $275 million, compared with $269
million during the same period of 2008.
--  The Company generated $332 million in free cash flow during the third
quarter of 2009, compared with $8 million during the same quarter in
2008. See Table 7.
--  Gross margin as a percentage of sales was 21 percent in the third
quarter of 2009, compared with 17 percent in the same period of 2008.
--  Third-quarter 2009 Marketing and Administrative expenses were $16
million less than the same period in 2008.

--  In the nine months ended Sept. 30, 2009, the Company's safety
performance improved approximately 8 percent compared with performance
throughout 2008.

"I'm pleased with our excellent third-quarter results," said Mike Thaman, chairman and chief executive officer. "The aggressive actions we've taken to reduce our costs and inventory are paying off. We sustained strong financial performance and generated significant cash flow driven by our outstanding results in Roofing. Our Composites segment returned to profitability. Our balance sheet remains strong. We will maintain our focus on cash generation and finish the year well-positioned to enter 2010."

Outlook

Owens Corning is on track to surpass $160 million in cost savings during 2009. The Company is also on track to meet its capital spending target of $225 million, which is a reduction of about $140 million compared with 2008, in each case excluding precious metal purchases. Depreciation and Amortization is estimated to be $320 million for the year.

Given the Company's strong cash generation in the third quarter, free cash flow in 2009 could be as much as $300 million. This represents a strengthening from the Company's prior guidance. Free cash flow for the period is calculated as the change in debt less cash on hand from the beginning of the period to the end of the period. This calculation includes adjustments to exclude the cash impact of issuing new stock, repurchasing treasury stock and paying stockholder dividends.

In the Composites segment, the Company believes demand will generally continue to trend upward as global industrial demand improves. Owens Corning has begun increasing production, although production still remains below demand. The Composites segment will continue to realize the benefits of synergies from the 2007 acquisition and the cost-reduction actions taken in 2008 and 2009.

Demand in the Company's Building Materials segment is expected to be affected through the remainder of 2009 by weakness in the U.S. housing industry. Roofing performance is expected to more than offset weakness in Insulation for the remainder of the year.

Cash taxes in 2009 are expected to be less than the $33 million paid in 2008. The Company estimates a long-term effective tax rate of 25 percent based on the blend of its U.S. and non-U.S. operations.

Fourth-quarter and full-year 2009 results are scheduled to be announced on Wednesday, Feb. 17, 2010.

Other Financial Items

--  In the third quarter and first nine months of 2009, actions were taken
that will result in significant cost savings during the year. Costs
related to these actions were $4 million in the third quarter of 2009
and total $45 million for the first nine months of the year.
--  At the end of the third quarter of this year, Owens Corning had net debt
of $1.8 billion, comprised of $2.2 billion of short- and long-term debt
and cash on hand of $387 million. See Table 7.
--  Current cash on hand coupled with future cash flows and other sources of
liquidity will provide sufficient liquidity to meet the Company's cash
requirements. Owens Corning has no significant debt maturities until the
fourth quarter of 2011 and remains well within compliance with the
financial covenants in its senior revolving credit facility and senior
term-loan facility.
--  Owens Corning's federal tax net operating loss carryforward was $2.6
billion at the end of the third quarter of 2009.

--  On Oct. 8, 2009, Standard & Poor's Ratings Services affirmed its BBB-
rating on Owens Corning and improved the outlook to stable from
negative.

Business Segment Highlights

Composites

NET SALES

The rapid and significant global economic slowdown in the fourth quarter of 2008 dramatically reduced overall demand for composite materials. Demand for the Company's Reinforcements products was approximately 45-percent lower in December 2008, compared to the average monthly demand in 2008 through November. Demand has been steadily trending upward since that time, but it has not yet recovered to levels seen in the first nine months of 2008. These declines represented approximately one-half, and approximately two-thirds, of the decrease in net sales for each of the three and nine months ended Sept. 30, 2009, respectively, as compared to the same periods in the prior year.

Third-quarter 2009 sales were negatively impacted by unfavorable product mix, lower selling prices and unfavorable currency translation, compared to the same period in 2008. Year-to-date 2009 sales, compared with the first nine months of 2008, were negatively impacted by unfavorable currency translation and the May 2008 divestiture of two composite manufacturing plants in Battice, Belgium, and Birkeland, Norway.

EBIT

Composites segment EBIT was significantly lower in the three and nine months ended Sept. 30, 2009, as compared to the same periods in 2008. Lower sales volumes, including the impact of underutilization of production capacity and lower selling prices, drove these declines.

In response to market conditions, the Company took aggressive actions in this segment in the first half of 2009 to reduce inventories and operating costs focusing on cash generation. Headcount was reduced and production levels were decreased by idling and shutting down production lines. The Company managed production capacity below demand beginning in the first quarter of 2009 and continuing through the third quarter. The EBIT margin improved in this segment from the second quarter of 2009 to the third quarter of 2009 as a result of cost-reduction actions and improved demand.

Building Materials

NET SALES

This segment includes the Insulation, Roofing and Other businesses.

Net sales in Owens Corning's Building Materials segment were lower in the three and nine months ended Sept. 30, 2009, as compared to the same periods of 2008, primarily driven by demand weakness resulting from lower U.S. housing starts.

In the Roofing business, lower sales volumes decreased net sales by approximately 10 percent in the 2009 periods as compared to 2008. These volume declines were a result of lower demand associated with storm activity and new residential construction. Offsetting the impact of lower sales volumes was the impact of higher selling prices. Selling prices had been increasing to recover inflation in raw material costs, particularly asphalt, leading up to the fourth quarter of 2008. Selling prices have been generally stable since that time.

In Insulation, declines in demand drove the decreases in net sales, representing approximately three-fourths and substantially all of the decline for the three month and the year-to-date comparison, respectively. Owens Corning's experience is that the Company's residential insulation demand lags residential housing starts by approximately three months. Second-quarter 2009 U.S. housing starts were 46-percent lower than those in the second quarter of 2008, according to data reported by the U.S. Census Bureau. The Company's Insulation business includes a diverse portfolio with a geographic mix of U.S., Canada, Asia-Pacific and Latin America; a market mix of residential, commercial, industrial, and other markets; and a channel mix of retail, contractor and distribution. Weakness seen in many of these sectors has become more pronounced in the last two quarters.

EBIT

Building Materials segment EBIT improved substantially during the current year. This improvement was driven by unit margin improvements in the Company's Roofing business, partially offset by lower margins in the Insulation business.

In Owens Corning's Roofing business, unit margin improvements accounted for substantially all of the increase in EBIT for the three and nine months ended Sept. 30, 2009, as compared to the same periods in 2008. Roofing unit margins began improving in the second quarter of 2008 as selling price increases outpaced inflation. For the three-month comparison, the Company also experienced lower raw material costs in 2009 than in 2008. Additional factors impacting the third-quarter comparison were improvements in material efficiencies and lower sales volumes.

In the Insulation business, lower sales volumes, including the impact of underutilization of production capacity, accounted for substantially all of the decrease in EBIT.

Owens Corning took actions across the Building Materials segment throughout 2008 and into the first half of 2009 to reduce production capacity and align the Company's cost structure with market demand in response to the continued weak U.S. housing market. The Company will continue to manage production capacity relative to seasonal demand.

Conference Call and Presentation
Wednesday, Oct. 28, 2009
11 a.m. ET

All Callers
Live dial-in telephone number: U.S. 1-866-356-4281 or 1-617-597-5395
(Please dial in 10 minutes before conference call start time)
Passcode: 89627367

Presentation
To view the slide presentation during the conference call, please log on
to the live webcast at www.owenscorning.com/investors.

A telephone replay will be available through Nov. 4, 2009, at 1-888-286-
8010 or 1-617-801-6888. Passcode: 34480300. A replay of the webcast will
also be available at www.owenscorning.com/investors.

About Owens Corning

Owens Corning (NYSE: OC) is a leading global producer of residential and commercial building materials, glass-fiber reinforcements and engineered materials for composite systems.