Owens Corning said Wednesday its signature insulation business had its best quarter in six years and is firmly on track to return to profitability this year.
In announcing its third-quarter results, the Toledo-based maker of building materials and other fiber-glass composites said net sales of insulation were up 12 percent in the quarter to $431 million. That helped push OC to a profit of $51 million, or 43 cents per share. The Toledo-based company reported third-quarter earnings of $44 million, or 37 cents per share, last year.
Net sales also were up this year to $1.32 billion in the quarter from $1.28 billion in 2012.
But the company missed analysts’ estimates by 11 cents, and OC shares were driven down Wednesday by a little more than 3.5 percent to $38.34 on the New York Stock Exchange.
“Our year has not been without challenges,” company Chief Executive Officer Mike Thaman said on a morning conference call with investors and analysts. “We’ve had some unexpected market headwinds, notably a declining roofing market and an overall weaker global economy.”
Mr. Thaman said he was pleased with moves OC has made to control costs, maintain profit margins, and manage production. OC continues to expect a $100 million increase in earnings before interest and taxes over last year.
OC said net sales in its composites segment were $453 million in the third quarter, down slightly from last year. Sales in the building materials segment were up 5 percent to $902 million on continused improvement in the insulation segment.
“We really think we’re starting to see an insulation business that will become a big theme in the financial performance of our company and certainly in the outlook to our stock price,” Mr. Thaman said.
OC came into the year anticipating a flat roofing market, but the company says demand is slightly lower than last year. That’s hurt the company in both its roofing segment and in composites sales, as OC is a leading supplier of fiber-glass mat for roofing.
Mr. Thaman noted on the call that the housing market seems to be in “a bit of a flat spot.” “It’s not that it’s gone into decline, but that rate of growth we maybe saw through the first five or six months of the year has slowed down a bit,” he said.
Still, with low mortgage rates, a multiyear lull in housing starts, and demographics that show an increasing rate of household formation, OC remains bullish for the future.
“When you have that stew of activity in the marketplace, it certainly says to us this is a pause in an inexorable rise in housing activity, which is what’s really important to us,” he said.
Contact Tyrel Linkhorn at email@example.com or 419-724-6134.