Owens Corning Forecasts Weak Q4 Sales Amid Housing Market Pressure

Owens Corning Inc (NYSE:OC) shares fell premarket on Wednesday after the company reported weaker-than-expected third-quarter results and issued below-consensus fourth-quarter sales guidance.

Adjusted EPS was $2.44, missing the analyst estimate of $3.06.

Revenue fell 7% year over year to $2.489 billion, below the $2.624 billion consensus estimate.

CEO Brian Chambers said challenging residential market conditions were compounded by a second consecutive year of subdued storm activity and a sharp increase in transportation and raw material costs.

Profitability & Cash Flow

Operating cash flow reached $813 million, while free cash flow totaled $622 million.

During the third quarter, the company returned $337 million to shareholders, including $275 million used to repurchase 1.9 million common shares and $62 million distributed through quarterly dividends.

Owens Corning also repaid $299 million in debt while maintaining net leverage within its target range of 2x to 3x.

Management Transition

The company promoted Todd Fister to President and Chief Operating Officer. In his new role, Fister will focus on improving efficiency, strengthening operational execution and driving organic growth.

Jonathan Collins joined the company in August as Executive Vice President and Chief Financial Officer, replacing Fister. Collins brings extensive financial leadership experience and a track record of expanding and evolving businesses.

Fourth-Quarter Outlook

For the fourth quarter, Owens Corning expects sales of $2 billion to $2.2 billion, below analysts’ expectations of $2.253 billion.

The company forecasts an adjusted EBITDA margin of 10% to 12%, reflecting inflation, higher transportation costs, seasonality and additional downtime.

Management expects continued weakness in existing home sales, remodeling activity and new residential construction. North American non-residential construction is expected to show pockets of strength, while European markets are projected to remain stable.

In Roofing, demand is expected to remain under pressure from a second consecutive year of subdued storm activity and distributor destocking. Higher input and transportation costs, combined with limited pricing gains, are also expected to weigh on margins.

COO Todd Fister said the company is focused on cost improvements, strengthening commercial capabilities and driving long-term earnings growth.

OC Stock Price Activity: Owens-Corning shares were down 4.10% at $112.93 during premarket trading Wednesday.

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