FinanceLooker

Excrept from filing document 2024-12-31

On June 28 2024 the last business day of the registrant s most recently completed second fiscal quarter the aggregate market value of 0 01 par value common stock the voting stock of the registrant held by non affiliates assuming for purposes of this computation only that the registrant had no affiliates was approximately 15 103 269 437
Portions of Owens Corning s proxy statement to be delivered to stockholders in connection with the Annual Meeting of Stockholders to be held on or about April 15 2025 the 2025 Proxy Statement are incorporated by reference into Part III hereof
Owens Corning is a residential and commercial building products leader committed to building a sustainable future through material innovation Its roofing products and systems enhance curb appeal and protect people s homes Its insulation products conserve energy and improve acoustics fire resistance and air quality in the spaces where people live work and play Its doors and door systems provide comfort safety and style for the interior and exterior of homes Its fiberglass composites make thousands of products lighter stronger and more durable
We are global in scope human in scale with more than 25 000 employees in 31 countries dedicated to generating value for our customers and shareholders and making a difference in the communities where we work and live Founded in 1938 and based in Toledo Ohio Owens Corning recorded net sales in 2024 of 11 0 billion
On February 13 2025 the Company entered into a definitive agreement for the sale of our global glass reinforcements GR business for a purchase price of approximately 436 million less costs to sell The GR business part of the Company s Composites segment manufactures fabricates and sells glass fiber reinforcements for a wide variety of applications in wind energy infrastructure industrial transportation and consumer markets In 2024 the GR business generated annual revenues of approximately 1 1 billion The sale will complete Owens Corning s review of strategic alternatives for the business announced on February 9 2024 and aligns with the strategy to reshape the Company to focus on residential and commercial building products in North America and Europe
The transaction is expected to close in 2025 and is subject to customary regulatory approvals and other conditions The Company expects to incur a material loss on disposal which cannot be estimated at this time
The transaction represents a strategic shift that has a major effect on the Company s operations and financial results and therefore beginning with the quarterly report on Form 10 Q for the period ending March 31 2025 the GR business financial results will be reflected in the Company s consolidated financial statements as discontinued operations for all periods presented The Company intends to reorganize its operations and reporting structure and begin to manage its operations under three reporting segments
On May 15 2024 the Company acquired all of the outstanding shares of Masonite International Corporation Masonite a leading global designer manufacturer marketer and distributor of interior and exterior doors and door systems for 3 2 billion primarily funded with debt proceeds and cash on hand The acquisition of Masonite s market leading doors business creates a new growth platform for the Company strengthening the Company s position in building and construction and expanding the Company s offering of branded residential building products Masonite s operating results and preliminary purchase price allocation have been included in the Company s newly established Doors reportable segment from May 15 2024 within the Consolidated Financial Statements
At December 31 2024 the Company had an integrated business model with four reportable segments Roofing Insulation Doors and Composites which accounted for approximately 36 32 13 and 19 of our total reportable segment net sales respectively in 2024
Our primary products in the Roofing segment are laminate and strip asphalt roofing shingles Other products include roofing components and oxidized asphalt We have been able to service the growing demand for longer lasting aesthetically attractive laminate products with efficient capital investment
We sell shingles and roofing components primarily through distributors home centers and lumberyards in the United States Oxidized asphalt is a significant input used in the production of our asphalt roofing shingles We are vertically integrated and have manufacturing facilities that process asphalt for use in our roofing shingles manufacturing process In addition we sell processed asphalt to other shingle manufacturers to roofing contractors for built up roofing asphalt systems and to manufacturers in a variety of other industries including automotive chemical rubber and construction Asphalt input costs and third party asphalt sales prices are correlated to crude oil prices
Demand for products in our Roofing segment is generally driven by both residential repair and remodeling activity and by new residential construction Roofing damage from major storms can significantly increase demand in this segment As a result sales in this segment do not always follow seasonal home improvement remodeling and new construction industry patterns as closely as our Insulation segment
Our Roofing segment competes primarily with asphalt shingle manufacturers in the United States According to various industry reports and Company estimates Owens Corning s Roofing segment is the second largest producer of asphalt roofing shingles in the United States Principal methods of competition include innovation and product design proximity to customers quality and price
Our manufacturing operations are generally continuous in nature and we warehouse much of our production prior to sale since we operate with relatively short delivery cycles One of the raw materials important to this segment is sourced from a sole supplier We have a long term supply contract for this material and have no reason to believe that any availability issues will exist If this supply was to become unavailable our production could be interrupted until such time as the supplies again became available or the Company reformulated its products Additionally the supply of asphalt another significant raw material in this segment has been constricted at times Although this has not caused a significant interruption of our production in the past prolonged asphalt shortages would restrict our ability to produce products in this segment
Our insulating products provide a variety of benefits such as energy conservation thermal functionality improved acoustical performance and convenience of installation and use Our Insulation segment includes a diverse portfolio of high mid and low temperature products with a geographic mix of United States Canada Europe Asia Pacific and Latin America a market mix of residential commercial industrial and other markets and a channel mix of retail contractor and distribution
Our products in the North American residential market include thermal and acoustical batts loosefill insulation spray foam foam sheathing and accessories and are sold under well recognized brand names and trademarks such as Owens Corning PINK
Next Gen FIBERGLAS Insulation Our products in the commercial and industrial markets include glass fiber pipe insulation energy efficient flexible duct media bonded and granulated stone wool insulation cellular glass insulation and foam insulation used in above and below grade construction applications and are sold under well recognized brand names and trademarks such as FOAMULAR
Demand for Owens Corning s insulating products is driven by North American new residential construction repair and remodeling activity commercial and industrial construction activity in the United States Canada Europe Asia Pacific and Latin America and increasingly stringent building codes and the growing need for energy efficiency Demand in the segment typically follows seasonal home improvement remodeling and renovation and residential commercial and industrial construction industry patterns Demand for residential insulation in North America typically follows housing starts on a three month lagged basis although the new residential construction cycle can elongate due to labor availability and other factors beyond our control The peak season for home construction and remodeling in our geographic markets generally corresponds with the second and third calendar quarters Demand for commercial and industrial applications is more heavily tied to industrial production growth commercial construction activity and overall economic conditions in the global markets we serve
Our Insulation segment competes primarily with fiberglass insulation manufacturers in the United States with an international presence in Canada Europe Asia Pacific and Latin America According to industry reports and Company estimates Owens Corning is North America s largest producer of residential commercial and industrial fiberglass insulation Principal methods of competition include innovation and product design service location quality price and compatibility of systems solutions
Our primary products in the Doors segment are residential interior and exterior doors made of wood glass fiberglass and metal and door components such as frames sills weather stripping hinges and locks Other products in this segment are aluminum framed glass doors and window solutions for luxury homes Our doors are available in good better and best options and provide a range of benefits including energy efficiency comfort privacy and security and curb appeal
We serve the needs of the residential repair remodel and new construction markets in the United States Canada and the United Kingdom Doors are sold through wholesale and retail distribution channels In the wholesale channel we sell through distribution partners to homebuilders contractors lumberyards dealers and building products retailers One step distributors sell doors directly to homebuilders and remodeling contractors while two step distributors purchase doors in bulk quantities for local door dealers who often perform additional value added services such as pre hanging or pre finishing the door before installation The retail channel serves consumers and contractors through retail home centers both in store and online
Demand for products in Owens Corning s Doors segment is driven by new construction and overall economic conditions in the markets we serve The Doors segment s vertically integrated operations extend from raw material to final assembly and fabrication According to various industry reports and Company estimates Owens Corning is one of North America s largest producers of interior and exterior doors Primary methods of competition include service quality innovation and product customization
Owens Corning glass fiber materials can be found in over 40 000 end use applications primarily within three markets building and construction renewable energy and infrastructure Such end use applications include building structures roofing shingles tubs and showers pools decking flooring marine auto pipes and tanks poles electrical equipment and wind energy turbine blades Our products are manufactured and sold worldwide We primarily sell our products directly to parts molders and fabricators Within the building and construction market our Composites segment sells glass fiber and or glass mat directly to a small number of major shingle manufacturers including our own Roofing segment
Our Composites segment includes vertically integrated material solutions The Company manufactures fabricates and sells glass reinforcements in the form of fiber and mats Glass reinforcement materials are also used downstream by the Composites segment to manufacture and sell glass fiber products in the form of non wovens fabrics and composite lumber
Demand for composites is driven by general global economic activity and more specifically by the increasing replacement of traditional materials such as aluminum wood paper and steel with composites that offer lighter weight improved strength lack of conductivity and corrosion resistance
We compete with glass fiber and building material manufacturers worldwide According to various industry reports and Company estimates our Composites segment is a world leader in the production of glass fiber reinforcement and other building materials Primary methods of competition include innovation quality customer service global geographic reach sustainability and product customization
The Company relies on a combination of intellectual property laws as well as confidentiality procedures and contractual provisions to protect our intellectual property proprietary technology and our brands Through continuous and extensive use of the color PINK
brands the Company has registered and applied for the registration of U S and international trademarks service marks and domain names Additionally the Company owns numerous U S and international patents and patent applications covering certain of our proprietary technology resulting from research and development efforts Over time the Company has assembled a portfolio of intellectual property rights including patents trademarks service marks copyrights domain names know how and trade secrets covering our products services and manufacturing processes Our proprietary technology is not dependent on any single or group of intellectual property rights and the Company does not expect the expiration of existing intellectual property to have a material adverse effect on the business as a whole The Company believes the duration of our patents is adequate relative to the expected lives of our products Although the Company protects its intellectual property and proprietary technology any significant impairment of or third party claim against our intellectual property rights could harm our business or our ability to compete
Owens Corning has established policies and procedures that are intended to ensure that its operations are conducted in compliance with all relevant laws and regulations and that enable the Company to meet its high standards for corporate sustainability and environmental stewardship Our manufacturing facilities are subject to numerous foreign federal state and local laws and regulations relating to the presence of hazardous materials pollution and protection of the environment including emissions to air reductions of greenhouse gases discharges to water management of hazardous materials handling and disposal of solid wastes use of chemicals in our manufacturing processes and remediation of contaminated sites All Company manufacturing facilities are either ISO 14001 certified or deploy environmental management systems based on ISO 14001 principles The Company s 2030 Sustainability Goals include targets related to significant global reductions in energy use water consumption waste to landfill and emissions of greenhouse gases fine particulate matter and volatile organic air emissions and protection of biodiversity The Company is dedicated to continuous improvement in its environmental health and safety performance and to achieving its 2030 Sustainability Goals
The Company has not experienced a material adverse effect upon its capital expenditures or competitive position as a result of environmental control legislation and regulations Operating costs associated with environmental compliance were approximately 59 million in 2024 The Company continues to invest in equipment and process modifications to remain in compliance with applicable environmental laws and regulations worldwide
Our manufacturing facilities are subject to numerous national state and local environmental protection laws and regulations Regulatory activities of particular importance to our operations include those addressing air pollution water pollution waste disposal and chemical control It is possible that new laws and regulations will specifically address climate change volatile organic compounds ozone forming emissions and fine particulate matter New environmental and chemical regulations could impact our ability to expand production or construct new facilities in geographic regions in which we operate However based on information known to the Company including the nature of our manufacturing operations and associated air emissions at this time we do not expect any of these new laws regulations or activities to have a material adverse effect on our results of current operations financial condition or long term liquidity
Owens Corning is involved in remedial response activities and is responsible for environmental remediation at a number of sites including certain of its currently owned or formerly owned plants These responsibilities arise under a number of laws including but not limited to the Federal Resource Conservation and Recovery Act and similar state or local laws pertaining to the management and remediation of hazardous materials and petroleum The Company has also been named a potentially responsible party under the United States Federal Superfund law similar state or local laws pertaining to the management and remediation of hazardous materials and petroleum The Company became involved in these sites as a result of government action or in connection with business acquisitions At the end of 2024 the Company was involved with a total of 24 sites worldwide including 9 Superfund and state or country equivalent sites and 15 owned or formerly owned sites None of the liabilities for these sites are individually significant to the Company
Remediation activities generally involve a potential range of activities and costs related to soil groundwater and sediment contamination This can include pre cleanup activities such as fact finding and investigation risk assessment feasibility studies remedial action design and implementation where actions may range from monitoring to removal of contaminants to installation of longer term remediation systems A number of factors affect the cost of environmental remediation including the number of parties involved in a particular site the determination of the extent of contamination the length of time the remediation may require the complexity of environmental regulations variability in clean up standards the need for legal action and changes in remediation technology Taking these factors into account Owens Corning estimates the costs of remediation to be paid over a period of years The Company accrues an amount on an undiscounted basis when a liability is probable and reasonably estimable Actual cost may differ from these estimates for the reasons mentioned above
At December 31 2024 the Company had an accrual totaling 4 million for its environmental liabilities of which the current portion is 2 million Changes in required remediation procedures or timing of those procedures at existing legacy sites or discovery of contamination at additional sites could result in material increases to the Company s environmental obligations
For example trade regulations including tariffs or other import or export restrictions may increase the cost of some of our raw materials or cross border shipments and limit our ability to do business in certain countries or with certain individuals
Our business is also subject to competition laws in the various jurisdictions where we operate including the Sherman Antitrust Act and related federal and state antitrust laws in the United States as well as similar foreign laws and regulations These laws and regulations generally prohibit competitors from fixing prices boycotting competitors or engaging in other conduct that
unreasonably restrains competition and such laws and regulations may impact potential business relationships or transactions with third parties in the future In addition health and safety regulations have necessitated and may continue to necessitate increased operating costs or capital investments to promote a safe working environment The Company is also required to comply with increasingly complex and changing laws and regulations enacted to protect business and personal data in the United States and other jurisdictions regarding privacy data protection and data security including those related to the collection storage use transmission and protection of personal information and other consumer customer vendor or employee data Further an increasing number of laws and regulations focused on product and chemical hazards including regulations concerning the impact of product manufacturing and use on climate change and resulting preferential product selection could also impact our ability to manufacture and sell certain products or require significant research and development investment and capital expenditures to meet regulatory requirements With respect to the laws and regulations noted above as well as other applicable laws and regulations the Company s compliance programs may under certain circumstances involve material investments in the form of additional processes training personnel information technology and
As a worldwide leader in our industry our goal is to be at the forefront of corporate sustainability efforts It is our ambition to be a company whose positive impact of our people and products is greater than the negative impact of manufacturing our products We work to continually increase the good our people and products do while we concurrently strive to reduce the negative environmental impact of our operations
Our climate related sustainability efforts have led Owens Corning to develop a range of strategies and tactics that have had a significant impact on the way we conduct our business We strive to reduce the greenhouse gas emissions released throughout the entire life cycle of our products by improving the use phase impacts of our products making our manufacturing processes more energy efficient sourcing more renewable electricity improving our supply chain logistics increasing recycled content and developing end of life recycling solutions Together this work helps to reduce the environmental impact of our operations and lowers the embodied carbon in our products an attribute of growing importance to our customers
Many of Owens Corning s products are made using heavy industrialized manufacturing processes While we strive to continue our progress to reduce our impact our factories produce various emissions including greenhouse gases Owens Corning is subject to or has chosen to voluntarily participate in Emissions Trading Schemes around the world Broad and gradual tightening of national regional and state government limits on emissions could disrupt our access to energy sources or specific raw materials which in turn could disrupt the manufacturing of products dependent upon them Owens Corning invests in research and development on climate related risks and opportunities
The Company s long term success is dependent upon its access to and development of management and primary employees who are sufficiently skilled and capable of the work necessary to achieve the Company s short and long term business objectives To maintain employee engagement Owens Corning strives to ensure its people feel valued included and engaged from recruitment to retirement That is why Owens Corning is dedicated to fostering an environment of learning and growth within a supportive caring culture We are committed to providing a safe healthy workplace and a meaningful engaging employee experience
As of December 31 2024 Owens Corning had approximately 25 000 employees of which approximately 12 000 were located outside the United States Approximately 60 of hourly employees are subject to collective bargaining agreements The Company regularly engages its salaried non represented and represented primary employees to collect feedback In 2024 the Company engaged in the Pulse Survey a new biannual survey that is designed to improve the employee experience which had a 71 participation rate Out of the 19 000 employees that participated approximately 80 found their work engaging and were satisfied with their jobs In 2023 the Company also engaged in an Employee Value Proposition survey and considered employee feedback in formulating its value proposition including changes to compensation and benefits offerings such as sick leave enhancements for primary employees and improvements to our facilities including the roll out of personal dignity spaces
One of our primary objectives is the safety and well being of our employees Working safely is an unconditional organization wide expectation at Owens Corning which we believe directly benefits employees lives improves our manufacturing processes and reduces our costs The Company maintains comprehensive safety programs focused on identifying hazards and eliminating risks that can lead to severe injuries Since 2023 the Company has utilized its employee developed Safer Together initiative which is intended to increase employee focus and collective engagement on safety One of our primary safety measures is the Recordable Incident Rate RIR as defined by the United States Bureau of Labor Statistics For the year ended December 31 2024 our RIR excluding the impact from our Doors segment as a result of the recent Masonite acquisition was 0 48 compared to 0 60 as reported in the same period for the prior year
Additionally with our Healthy Living platform we provide a multifaceted well being program designed to drive sustainable long term change improve the health and lives of employees and strengthen the culture and work experience
We also focus on evaluating and managing employee performance development succession planning and turnover Our goal is to create a high performance culture and teams that are diverse capable and engaged We strive to have clear objectives effective performance management and a structure that includes regular feedback talent reviews succession planning development and compensation analysis
Another objective we pursue is maintaining a corporate culture focused on inclusion and diversity ethics and compliance training and positive employee relations and engagement The Company believes its success and sustainability are enhanced by an inclusive and diverse workforce We believe that inclusion and diversity add value to the business by fostering an environment that leads to high engagement and innovative thinking in the workplace
Ethics and compliance efforts include our support of the Owens Corning Code of Conduct Code of Conduct which is dedicated to encouraging compliance with a range of legal guidelines and our corporate values Our training efforts encompass the Code of Conduct and other areas of compliance and development as relevant to employees We also seek to foster positive and productive relations with the labor organizations representing them
Owens Corning employees contribute service hours to boards special causes and nonprofit organizations in the communities where they live and operate These programs aim to enable the Company s employees to connect with the community further improve its reputation locally and globally and instill a sense of pride in the workforce
Owens Corning makes available free of charge through its website the Company s Annual Report on Form 10 K Quarterly Reports on Form 10 Q Current Reports on Form 8 K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission the SEC These documents are available through the Investor Relations page of the Company s website at www owenscorning com Copies of any materials we file with the SEC can also be obtained free of charge through the SEC s website at http www sec gov The information on our website is not and will not be deemed to be a part of this Annual Report on Form 10 K or incorporated into any of our other filings with the SEC
In an enterprise as diverse as ours a wide range of factors could affect future performance We discuss in this section some of the risk factors that could materially and adversely affect our business financial condition value and results of operations You should not interpret the disclosure of any risk factor to imply that the risk has not already materialized You should consider these risk factors in connection with evaluating the forward looking statements contained in this Annual Report on Form 10 K because these risk factors could cause our actual results and financial condition to differ materially from those projected in forward looking statements
The Company maintains processes that aim to manage enterprise risks through identification and mitigation of those risks Despite our efforts we may fail to identify or mitigate certain risks which could have a material and adverse impact on our business financial condition value and results of operations in future periods
A large portion of our products are used in the markets for residential and commercial construction and repair and remodeling Demand for certain of our products is affected in part by the level of new residential construction in the United States and elsewhere although typically not until a number of months after the change in the level of construction Lower demand in the regions and markets where our products are sold could result in lower revenues and lower profitability Historically construction activity has been cyclical and is influenced by prevailing economic conditions including the level of interest rates and availability of financing inflation employment levels consumer spending habits consumer confidence and other macroeconomic factors outside our control Interest rates increased substantially in the past few years remained elevated in 2024 and are currently expected to decrease slightly but stay relatively high in 2025 The combination of high interest rates and high levels of inflation reduces the affordability of mortgages and other financing options and increases the cost of home improvement projects These trends have likely resulted in reduced levels of repair and remodel as well as new construction activity and demand for our products Additionally market reactions to the new U S federal administration s trade policies deregulation efforts and stance towards the Federal Reserve could create economic uncertainty potentially leading to fluctuations in inflation and interest rates Due to this uncertainty we cannot predict if or when interest rates or inflation levels will stabilize or the impact that this uncertainty may have on repair and remodel activity new construction activity demand for our products our business generally or our financial condition
Residential and commercial construction is also affected by the cost and availability of skilled labor which could impact both the cost and pace of construction activity as well as the construction methods used all of which could adversely affect demand for our products
Some of our products particularly in our Insulation business are used in industrial applications such as piping and storage tanks Lower levels of industrial production and other macroeconomic factors affecting industrial construction activity could lessen demand for those products and lead to lower revenues or profitability
We may be exposed to cost increases or reduced availability of raw materials or transportation which could reduce our margins and have a material adverse impact on our business financial condition and results of operations
Our business relies heavily on certain commodities and raw materials used in our manufacturing processes Additionally we spend a significant amount on inputs that are influenced by energy prices such as asphalt chemicals resins and transportation Price increases for these inputs could raise costs and reduce our margins if we are not able to offset them by increasing the prices of our products improving productivity or hedging where appropriate
Availability of certain of the raw materials we use has occasionally been limited and our sourcing of some of these raw materials from a limited number of suppliers and in some cases a sole supplier increases the risk of unavailability For example if one of the raw materials important to our business is sourced from a sole supplier our production could be interrupted regardless of whether we have a long term supply contract for the material Global economic conditions may also result in global or regional supply chain issues that adversely impact our access to raw materials and supplies Despite our contractual supply agreements with many of our suppliers and despite any programs we may undertake to mitigate supply risks it is possible that we could experience a lack of certain raw materials that limits our ability to manufacture our products thereby materially and adversely impacting our business financial condition and results of operations
In addition steps taken by the United States government to apply or increase tariffs on certain products and materials could potentially disrupt our existing supply chains and impose additional costs on our business including costs with respect to raw materials upon which our business depends The increased costs may negatively impact our margins as we may not be able to pass on the additional costs to customers by increasing the prices of our products For example market reactions to the new U S federal administration s proposed tariffs and evolving trade policies with countries such as Canada Mexico and China could disrupt our supply chains increase our costs for raw materials and negatively impact our business margins and financial results
We are also dependent on third party freight carriers to transport some of our raw materials and products We may be unable to transport our raw materials or products in a timely manner or at economically favorable rates in certain circumstances particularly in cases of adverse market conditions or disruptions to transportation infrastructure
The cost of producing our products is sensitive to the price of energy including its impact on transport costs which is subject to factors outside of our control Energy prices in particular oil and natural gas have fluctuated in recent years For example natural gas forms the primary energy source for our European operations and our European operations can be directly affected by volatility in the cost and availability of natural gas Natural gas supply shortages could lead to additional price increases energy supply rationing or temporary reduction in our European operations which could have a material adverse impact on our business or results of operations
difficulties and costs associated with complying with a wide variety of complex and changing laws including securities laws climate related laws tax laws employment and pension related laws competition laws U S and foreign export and trading laws and laws governing improper business practices treaties and regulations
changes to tax currency or other laws or policies that may adversely impact our ability to repatriate cash from non United States subsidiaries make cross border investments or engage in other intercompany transactions
We may have difficulty anticipating and effectively managing these and other risks that our international operations may face which may adversely impact our business financial condition and results of operations
In addition we operate in many parts of the world that have experienced governmental corruption and we could be adversely affected by violations of the Foreign Corrupt Practices Act FCPA and similar worldwide anti corruption laws The FCPA and similar anti corruption laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to officials for the purpose of obtaining or retaining business Although we mandate compliance with these anti corruption laws and maintain an anti corruption compliance program these measures may not prevent our employees or agents from violating these laws If we were found liable for violations of anti corruption laws we could be liable for criminal or civil penalties or other sanctions which could have a material adverse impact on our business financial condition and results of operations
Our sales may fall rapidly in response to declines in demand because of customer concentration in certain segments and because we do not operate under long term volume agreements to supply our customers
Many of our customer volume commitments are short term therefore we do not have a significant manufacturing backlog As a result we do not benefit from the visibility provided by long term volume contracts against downturns in customer demand and sales Further we are not able to immediately adjust our costs in response to declines in sales Our ability to sell some of the products in our Insulation Roofing and Doors segments is dependent on a limited number of customers who account for a significant portion of such sales In 2024 we had two customers that represented 13 and 11 of our annual net sales The loss of one or more of these key customers a consolidation of key customers or a significant reduction in sales to those customers could significantly reduce our revenues from these products In addition if key customers experience financial pressure or consolidate they could attempt to demand more favorable contractual terms which would place additional pressure on our margins and cash flows Lower demand for our products loss of key customers and material changes to contractual terms could materially and adversely impact our business financial condition and results of operations Furthermore some of our sales are concentrated in certain geographic areas and market growth that is skewed to other geographic areas may negatively impact our rate of growth or market share
All of the markets we serve are highly competitive We compete with manufacturers and distributors both within and outside the United States Some of our competitors may have superior financial technical marketing and other resources In some cases we face competition from manufacturers in countries able to produce similar products at lower costs Price competition or overcapacity may limit our ability to raise prices for our products may force us to reduce prices and may also result in reduced levels of demand for our products and cause us to lose market share We also face competition from the introduction of new products or technologies by competitors that may address our customers needs in a better manner whether based on considerations of pricing usability effectiveness sustainability quality or other features or benefits In addition to effectively compete we must continue to develop new products that meet changing consumer preferences and successfully develop manufacture and market these new products If we are not able to successfully commercialize our innovation efforts we may lose market share Our inability to effectively compete could result in the loss of customers and reduce the sales of our products which could have a material adverse impact on our business financial condition and results of operations
Although price is a significant basis of competition in our industry we also compete on the basis of on time delivery and our reputation for quality and customer service If we fail to maintain our current standards for product quality the scope of our distribution capabilities or our customer relationships our reputation financial condition results of operations and cash flows could be adversely affected
Some of the ways we have historically grown or restructured our business have been through acquisitions including our 2024 acquisition of Masonite joint ventures the expansion of our production capacity and divestitures including the divestiture of our GR business Our ability to grow or restructure our business depends upon our ability to identify negotiate and finance suitable arrangements If we cannot successfully execute on such arrangements or receive any required regulatory approvals on a timely basis we may be unable to generate desired returns and our expectations of future results of operations including cost savings and synergies may not be achieved Acquisitions joint ventures production capacity expansions and divestitures involve substantial risks including
Our failure to address these risks or other problems encountered in connection with our past or future acquisitions including the acquisition of Masonite investments and divestitures including the divestiture of our GR business could cause us to fail to realize the anticipated benefits of such transactions incur unanticipated liabilities and harm our business generally On February 13 2025 the Company entered into a definitive agreement for the sale of our GR business see Item 1 Business Overview There can be no assurance that we will obtain the required regulatory or third party approvals and consents to the sale or that we will close the sale within the anticipated time period or at all Future acquisitions and investments could also result in dilutive issuances of our equity securities the incurrence of debt contingent liabilities or amortization expenses or write offs of goodwill any of which could have a material adverse impact on our business financial condition and results of operations Also the anticipated benefits of our investments may not materialize
The benefits that are expected to result from the acquisition of Masonite will depend in part on our ability to realize the anticipated growth opportunities and cost synergies as a result of the acquisition Our success in realizing these growth opportunities and cost synergies and the timing of this realization depends on the successful integration of Masonite There can be no assurance that we will successfully or cost effectively integrate Masonite The failure to do so could have a material adverse effect on our business financial condition and results of operations
Even if we are able to integrate Masonite successfully this integration may not result in the realization of the full benefits of the growth opportunities and cost synergies that we currently expect from this integration and we cannot guarantee that these benefits will be achieved within anticipated time frames or at all While it is anticipated that certain expenses will be incurred to achieve cost synergies such expenses are difficult to estimate accurately and may exceed current estimates Accordingly the benefits from the acquisition may be offset by costs incurred to or delays in integrating the businesses
The Company s business may be materially and adversely impacted by changes in United States or global economic conditions including inflation deflation interest rates availability of capital consumer spending rates energy availability and commodity prices trade laws and the effects of governmental initiatives to manage economic conditions Changes in and or new laws regulations and policies that may be enacted in the United States or elsewhere could also materially impact economic conditions and the Company s business and results of operations These changes and conditions could materially and adversely impact the Company s operations financial results and or liquidity including
one or more of the financial institutions associated with our credit facilities could cease to fulfill their funding obligations or the amount of eligible receivables under our receivables securitization facility could decrease which could materially and adversely impact our liquidity
With the volatility in the current global economic climate inflation and geopolitical events around the world it is difficult for us to predict the future impact of the foregoing matters on our business and results of operations
Uncertainty about global economic conditions may also cause consumers of our products to reduce or postpone spending or purchase alternative products in response to tighter credit negative financial news and or declines in income or asset values This could have a material adverse impact on the demand for our products and on our financial condition and operating results A deterioration of economic conditions may exacerbate these adverse effects and could result in a wide ranging and prolonged impact on general business conditions thereby negatively impacting our operations financial results and or liquidity
We are subject to risks relating to our information technology systems including cybersecurity risks and any failure to adequately protect our critical information technology systems could materially affect our operations and financial results
We rely on information technology systems including information technology systems of our third party business partners across our operations including for management supply chain and financial information and various other processes and transactions Our ability to effectively manage our business depends on the security reliability and capacity of these systems Our information technology systems some of which are dependent on services provided by third parties may be vulnerable to damage interruption or shutdown due to any number of causes outside of our control such as catastrophic events natural disasters fires power outages systems failures telecommunications failures employee error or malfeasance security breaches computer viruses or other malicious codes ransomware unauthorized access attempts denial of service attacks phishing or other social engineering attempts hacking and other cybersecurity incidents Cybersecurity threat actors also may attempt to exploit vulnerabilities in software that is commonly used by companies in cloud based services and bundled software In addition our operations in certain geographic locations may be particularly vulnerable to cybersecurity incidents or other problems Any such damage interruption or shutdown could cause delays or cancellation of customer orders or impede the manufacture or shipment of products processing of transactions or reporting of financial results A cybersecurity incident or other problem with our systems could also result in the disclosure of proprietary information about our business or confidential information concerning our customers suppliers or employees which could result in significant damage to our business and our reputation
We have established a range of security measures that are designed to protect against the unauthorized access to and misappropriation of our information corruption or alteration of data intentional or unintentional disclosure of confidential information or disruption of operations However advanced cybersecurity threats such as malware ransomware and phishing attacks attempts to access information and other security breaches are persistent and continue to evolve making them increasingly difficult to identify and prevent Protecting against these threats requires significant resources and is expected to continue to require significant resources and we may not be able to implement measures that will protect against all of the significant risks to our information technology systems In addition we rely on a number of third party business partners to execute certain business processes and maintain certain information technology systems and infrastructure evaluate defenses and implement recommendations and any breach of security on their part could impair our ability to effectively operate
Although we experience cybersecurity incidents from time to time as part of our operations we have not identified any risks from cybersecurity threats including as a result of previous cybersecurity incidents that have had or are reasonable likely to have a material impact on our business strategy results of systems operations or financial condition Any breach of our security measures or those of our third party business partners could result in unauthorized access to and misappropriation of our information corruption or alteration of data or disruption of operations or transactions any of which could have a material adverse effect on our business strategy results of operations or financial condition including costs related to remediation or the payment of ransom litigation including individual claims or consumer class actions commercial litigation administrative and civil or criminal investigations or actions regulatory intervention and sanctions or fines investigation and remediation costs damage to our reputation and relationships with our business partners and possible prolonged negative publicity
Additionally we regularly move data across national borders to conduct our operations and consequently are subject to a variety of laws and regulations in the United States and other jurisdictions regarding privacy data protection and data security including those related to the collection storage handling use disclosure transfer and security of personal data including the European Union General Data Protection Regulation Our efforts to comply with privacy and data protection laws may impose significant costs and challenges that are likely to increase over time
Emerging issues related to our development integration and use of artificial intelligence AI could give rise to legal or regulatory action damage our reputation or otherwise materially harm our business
Our development integration and use of AI technology in our operations remains in the early phases We have started to assess the use of AI technology to drive productivity and data analytics While we aim to develop integrate and use AI responsibly
we may ultimately be unsuccessful in identifying or resolving issues such as accuracy issues cybersecurity risks unintended biases and discriminatory outputs before they arise AI is a new and emerging technology in early stages of commercial use and presents a number of risks inherent in its use by us our customers suppliers and other business partners and third party providers or through the use of third party hardware and software These risks include but are not limited to ethical considerations public perception intellectual property protection regulatory compliance privacy concerns and data security all of which could have a material adverse effect on our business results of operations and financial position As a result we cannot predict future developments in AI and related impacts to our business and our industry If we are unable to successfully and accurately develop integrate and use AI technology as well as address the risks and challenges associated with AI our business results of operations and financial position could be negatively impacted Additionally if the content analyses or recommendations that AI applications assist in producing are or are alleged to be deficient inaccurate or biased our reputation business financial condition and results of operations may be materially adversely affected
Weather phenomena associated with climate change such as flooding or altered storm activity may impact our ability to operate our manufacturing facilities and corporate offices in some locations For example our Doors headquarters is located in Tampa Florida a coastal area that is susceptible to hurricanes and tropical storms In addition customer preferences for lower carbon and more environmentally friendly solutions could impact demand for our products Although we believe that some of our product categories such as insulation and composites could experience increased demand due to environmental benefits such as energy efficiency and renewable energy the timing and impact of such increased demand is uncertain
Lower demand for our products as a result of either of these weather related scenarios could have a material adverse impact on our business financial condition and results of operations Additionally severely low or high temperatures may lead to significant and immediate spikes in costs of natural gas electricity and other commodities that could negatively affect our results of operations
Many of our business activities globally involve substantial investments in manufacturing facilities and many products are produced at a limited number of locations These facilities could be materially damaged by natural disasters such as floods tornados hurricanes fires earthquakes pandemics or by theft or sabotage We could incur uninsured losses and liabilities arising from such events including damage to our reputation and or suffer material losses in operational capacity which could have a material adverse impact on our business financial condition and results of operations
We could face potential product liability and warranty claims we may not accurately estimate costs related to such claims and we may not have sufficient insurance coverage available to cover such claims
Our products are used and have been used in a wide variety of residential commercial and industrial applications We face an inherent business risk of exposure to product liability or other claims in the event our products are alleged to be defective or that the use of our products is alleged to have resulted in harm to others or to property We may in the future incur liability if product liability lawsuits against us are successful Moreover any such lawsuits whether or not successful could result in adverse publicity to us which could cause our sales to decline We maintain insurance coverage to protect us against product liability claims but that coverage may not be adequate to cover all claims that may arise or we may not be able to maintain adequate insurance coverage in the future at an acceptable cost Any liability not covered by insurance or that exceeds our established reserves could materially and adversely impact our business financial condition and results of operations
For example during the second quarter of 2023 the Company s subsidiary Paroc Group OY Paroc which was acquired in 2018 notified the appropriate European maritime regulatory authorities that specific insulation products in its marine insulation product line may not meet certain fire safety requirements in accordance with their certifications Paroc voluntarily withdrew these specific products from the market issued recalls and suspended distribution and sales of these products Paroc is cooperating with the applicable regulatory and government authorities and continues to work with its customers and end users to assist with remediation Although we established an estimated liability for expected future costs related to this matter it is reasonably possible that additional product recall costs could be incurred that exceed the estimated liability by amounts that could be material to our consolidated financial statements Due to these nonconformances the Company reviewed the Paroc insulation product portfolio The review has concluded In addition to addressing the recalled marine products the Company continues to assess potential nonconformances related to certain ventilation duct and steel beam insulation products These matters may also result in harm to our reputation and results of operations
In addition consistent with industry practice we provide warranties on many of our products We may experience costs of warranty claims when the product is not performing to the satisfaction of the claimant even though it has not caused harm to others or property We estimate our future warranty costs based on historical trends and product sales but we may fail to accurately estimate those costs and thereby fail to establish adequate warranty reserves for them Warranty claims are not insurable
Our manufacturing facilities are subject to numerous foreign federal state and local laws and regulations relating to the presence of hazardous materials pollution and the protection of the environment including those governing emissions to air discharges to water use storage and transport of hazardous materials storage treatment and disposal of waste remediation of contaminated sites and protection of worker health and safety We are also subject to laws rules and regulations relating to certain raw materials used in our business or in our products
Liability under these laws involves inherent uncertainties Environmental liability estimates may be affected by changing determinations of what constitutes an environmental exposure or an acceptable level of cleanup For example remediation activities generally involve a potential range of activities and costs related to soil and groundwater contamination This can include pre cleanup activities such as fact finding and investigation risk assessment feasibility studies remedial action design and implementation where actions may range from monitoring to removal of contaminants to installation of longer term remediation systems Please see Item 1 Business Environmental Control for information on costs and accruals related to environmental remediation To the extent that the required remediation procedures or timing of those procedures change additional contamination is identified or the financial condition of other potentially responsible parties is adversely affected the estimate of our environmental liabilities may change Change in required remediation procedures or timing of those procedures at existing legacy sites or discovery of contamination at additional sites could result in increases to our environmental obligations Violations of environmental health and safety laws are subject to civil and in some cases criminal sanctions
As a result of these uncertainties we may incur unexpected interruptions to operations fines penalties or other reductions in income which could adversely impact our business financial condition and results of operations It is possible that new laws and regulations will specifically address climate change toxic air emissions ozone forming emissions and fine particulate matter New environmental and chemical regulations could impact our ability to expand production or construct new facilities in every geographic region in which we operate Continued and increased government and public emphasis on environmental issues is expected to result in increased future investments for environmental controls at ongoing operations which will be charged against income from future operations Present and future environmental laws and regulations applicable to our operations and changes in their interpretation may require substantial capital expenditures or may require or cause us to modify or curtail our operations which may have a material adverse impact on our business financial condition and results of operations
Although emerging in nature an increasing number of laws and regulations focused on product and chemical hazards including regulations concerning the impact of product manufacturing and use on climate change and resulting preferential product selection could also impact our ability to manufacture and sell certain products or require significant research and development investment and capital expenditures to meet regulatory requirements
We believe that ongoing scientific and political focus on climate change may lead to new and more restrictive environmental laws and regulations in certain jurisdictions which may impact our financial condition results of operations and cash flows Foreign federal state and local regulatory and legislative bodies have enacted or proposed various legislative and regulatory measures relating to increased transparency and standardization of reporting matters that may include climate change regulating GHG emissions water usage deforestation recycling of plastic materials and energy policies including waste tax and other governmental charges and mandates As a result we expect to be subject to overlapping yet distinct climate related disclosure requirements in multiple jurisdictions Compliance with foreign federal state and local legislation and regulations concerning climate related disclosures including compliance with the European Commission s Corporate Sustainability Reporting Directive and climate disclosure requirements that may be implemented by the SEC may result in additional costs and capital expenditures and the failure to comply with such legislation and regulations could result in fines to us and could affect our business financial condition results of operations and cash flows In addition judicial decisions or executive actions limiting the authority of regulatory agencies or decisions impacting current regulations and policies implemented by such agencies could create uncertainty regarding the regulatory landscape and impact the Company s ability to plan for future investments We could also face increased costs related to defending and resolving legal claims and other litigation related to climate change and the alleged impact of our operations on climate change In addition energy prices could increase as a result of climate change legislation or other environmental mandates which could have an adverse effect on our results of operations
In addition from time to time we establish targets strategies and expectations related to climate change and other environmental matters Our ability to achieve any such targets strategies or expectations is subject to risks and uncertainties many of which are outside of our control These risks and uncertainties include but are not limited to our ability to execute our strategies and achieve our goals within the currently projected costs and expected timeframes availability use and success of on and off site renewable energy evolving regulatory and other standards processes and assumptions the pace of scientific and technological developments increased costs and availability of requisite financing market trends that may alter business opportunities the conduct of third party manufacturers and suppliers constraints or disruptions to our supply chain and changes in carbon markets There are no assurances that we will be able to successfully execute our strategies and achieve our targets Failures or delays whether actual or perceived to achieve our targets or strategies related to climate change and other environmental matters could damage our reputation customer and investor relationships adversely affect our business operations and increase risk of litigation
Our intellectual property rights may not provide meaningful commercial protection for our products or brands and third parties may assert that we violate their intellectual property rights which could have a material adverse impact on our business financial condition and results of operations
We rely on our intellectual property including numerous patents trademarks trade secrets confidential information as well as our licensed intellectual property to differentiate our products and brands in the marketplace We monitor and protect against activities that might infringe dilute or otherwise harm our intellectual property and rely on the laws of the United States and other countries to protect our rights However in some instances we may be unaware of unauthorized use of our intellectual property To the extent we cannot protect our innovations or are unable to enforce our intellectual property rights unauthorized use and misuse of our intellectual property or innovations could harm our competitive position and have a material adverse impact on our business financial condition and results of operations In addition the laws of some foreign jurisdictions provide less protection for our proprietary rights than the laws of the United States and we therefore may not be able to effectively enforce our intellectual property rights in these jurisdictions If we are unable to maintain certain exclusive licenses our brand recognition and sales could be adversely impacted Current employees contractors and suppliers have and former employees contractors and suppliers may have access to trade secrets and confidential information regarding our operations that could be disclosed improperly and in breach of contract to our competitors or otherwise used to harm us
Third parties may also claim that we are infringing upon their intellectual property rights If we are unable to successfully defend or license such alleged infringing intellectual property or if we are required to substitute similar technology from another source our operations could be adversely affected Even if we believe that such intellectual property claims are without merit defending such claims can be costly time consuming and require significant resources Claims of intellectual property infringement also may require us to redesign affected products pay costly damage awards or face injunctions prohibiting us from manufacturing importing marketing or selling certain of our products Even if we have agreements to indemnify us indemnifying parties may be unable or unwilling to do so
We are subject to various legal and regulatory proceedings including litigation in the ordinary course of business and uninsured judgments or a rise in insurance premiums may have a material adverse impact on our business financial condition and results of operations
In the ordinary course of business we are subject to various legal and regulatory proceedings which may include but are not limited to those involving antitrust tax trade environmental intellectual property data privacy and other matters including general commercial litigation Any claims raised in legal and regulatory proceedings whether with or without merit could be time consuming and expensive to defend and could divert management s attention and resources Additionally the outcome of legal and regulatory proceedings may differ from our expectations because the outcomes of these proceedings are often difficult to predict reliably Various factors and developments can lead to changes in our estimates of liabilities and related insurance receivables where applicable or may require us to make additional estimates including new or modified estimates that may be appropriate due to a judicial ruling or judgment a settlement regulatory developments or changes in applicable law A future adverse ruling settlement or unfavorable development could result in charges that could have a material adverse effect on our results of operations in any particular period
In accordance with customary practice we maintain insurance against some but not all of these potential claims In the future we may not be able to maintain insurance at commercially acceptable premium levels In addition the levels of insurance we maintain may not be adequate to fully cover any and all losses or liabilities If any significant judgment or claim is not fully insured or indemnified against it could have a material adverse impact on our business financial condition and results of operations
In connection with our acquisition of Masonite we significantly increased our outstanding indebtedness including the issuance of 2 0 billion of senior notes At December 31 2024 we had total debt of approximately 5 1 billion As a result our debt service obligations for 2025 and beyond have increased from prior amounts
The credit agreement governing our senior revolving credit facility the indentures governing our senior notes and the receivables purchase agreement governing our receivables securitization facility contain various covenants that impose operating and financial restrictions on us and our subsidiaries Additionally instruments and agreements governing our future indebtedness may impose other restrictive conditions or covenants that could restrict our ability to conduct our business operations or pursue growth strategies
Our credit ratings are important to our cost of capital The major debt rating agencies routinely evaluate our debt based on a number of factors which include financial strength and business risk as well as transparency with rating agencies and timeliness of financial reporting A downgrade in our debt rating could result in increased interest on our existing variable interest rate debt increased interest and other expenses for future borrowings and reduced ability for our suppliers to utilize supply chain financing programs Downgrades in our debt rating could also restrict our access to capital markets and affect the value and marketability of our outstanding senior notes
Our businesses are capital intensive and regularly require capital expenditures to expand operations maintain equipment increase operating efficiency and comply with applicable laws and regulations leading to high fixed costs including depreciation expense Increased regulatory requirements for our operations could lead to additional or higher fixed costs in the future We are limited in our ability to reduce fixed costs quickly in response to reduced demand for our products and these fixed costs may not be fully absorbed resulting in higher average unit costs and lower gross margins if we are not able to offset this higher unit cost with price increases Alternatively we may be limited in our ability to quickly respond to unanticipated increased demand for our products which could result in an inability to satisfy demand for our products and loss of market share
Our cost reduction and productivity efforts including those related to our existing operations production capacity expansions new manufacturing platforms or other capital expenditures may not produce anticipated results Our ability to achieve cost savings and other benefits within expected time frames is subject to many estimates and assumptions These estimates and assumptions are subject to significant economic competitive legal and other uncertainties some of which are beyond our control If these estimates and assumptions are incorrect if we experience delays or if other unforeseen events occur our business financial condition and results of operations could be adversely impacted
In connection with our sustainability goals to reduce GHG and toxic air emissions we entered into contracts pursuant to which we have agreed to purchase renewable generated electricity from third parties Under these contracts we do not take physical delivery of renewable generated electricity The generated electricity is instead sold by our counterparties to local grid operators at the prevailing market price and we obtain the associated non tax renewable energy credits The prevailing market pricing for renewable generated electricity can be affected by factors beyond our control and is subject to significant period over period volatility For example renewable generated energy output fluctuates due to climactic and other factors beyond our control and can be constrained by available transmission capacity thereby significantly impacting pricing Due to this potential volatility it is possible that these contracts or similar contracts we execute in the future could have an impact on our results of operations in a given reporting period
To mitigate short term variation in our operating results due to commodity price fluctuations in certain geographic markets we may hedge a portion of our near term exposure to the cost of energy The results of our hedging practices could be positive neutral or negative in any period depending on price changes of the hedged exposures
Our hedging activities are not designed to mitigate long term commodity price fluctuations and therefore would not protect us from long term commodity price increases In addition in the future our hedging positions may not correlate to our actual energy costs which would cause acceleration in the recognition of unrealized gains and losses on our hedging positions in our operating results
If we were required to write down all or part of our goodwill or other indefinite lived intangible assets our results of operations or financial condition could be materially adversely affected in a particular period
Declines in our business may result in an impairment of our tangible and intangible assets which could result in a material non cash charge A significant or prolonged decrease in our market capitalization including a decline in stock price a negative long term performance outlook or an increase in discount rates could result in an impairment of our tangible and intangible assets which results when the carrying value of the Company s assets exceed their fair value
At least annually we assess our goodwill and intangible assets for impairment When we utilize a discounted cash flow methodology to calculate the fair value of our reporting units weak demand for a specific product line or business could result in an impairment
As a result of the acquisition of Masonite in 2024 we acquired 1 5 billion in goodwill and 1 4 billion in intangible assets The Company has not yet finalized the valuation of these acquired assets as of December 31 2024 Additional adjustments may be recorded to the fair value of goodwill and intangible assets during the measurement period a period not to exceed 12 months from the acquisition date Accordingly any determination requiring the write off of a significant portion of goodwill or intangible assets could negatively impact our results of operations
We depend on our senior management team and other skilled and experienced personnel to operate our business effectively and the loss of any of these individuals or the failure to attract additional qualified personnel could adversely impact our business financial condition and results of operations
We are highly dependent on the skills and experience of our senior management team and other skilled and experienced personnel These individuals possess sales marketing manufacturing logistical financial business strategy and administrative skills that are important to the operation of our business We cannot assure that we will be able to retain all of our existing senior management personnel and skilled and experienced personnel The loss of any of these individuals or an inability to attract additional qualified personnel could prevent us from implementing our business strategy and could adversely impact our business and our future financial condition or results of operations The current and future labor markets may impact our ability to retain these individuals
Our operations depend on the availability and relative costs of labor and maintaining good relations with our personnel and the labor unions Several factors have had and may continue to have adverse effects on the labor force available to us including general economic uncertainty government regulations laws and regulations related to workers health and safety inflation wage and hour practices and immigration Labor shortages and increased turnover rates within our personnel have led to and could in the future lead to increased costs such as increased costs associated with training new employees and increased wage rates to attract and retain employees An overall or prolonged labor shortage lack of skilled labor increased turnover or labor inflation could have a material adverse impact on our operations results of operations liquidity and cash flows
We are also subject to the risk that labor strikes or other types of conflicts with personnel may arise or that we may become the subject of union organizing activity at additional facilities Renewal of collective bargaining agreements typically involves negotiation with the potential for work stoppages or increased costs at affected facilities
We continually review our manufacturing operations to address market conditions and have reorganized portions of our operations from time to time We expect to continue to implement initiatives necessary or desirable to improve our business portfolio address underperforming assets improve our cost structure and generate additional cash The optimization of our manufacturing operations and cost savings programs involve substantial planning and may require additional capital investment consolidation integration and upgrading of facilities functions and systems These actions could result in a decrease in our short term earnings as a result of restructuring charges and related impairments and other expenses including severance costs
While we expect these initiatives to result in profit opportunities and savings throughout our organization our estimated profits and savings are based on assumptions that may prove to be inaccurate and as a result there can be no assurance that we will realize profits and cost savings or that if realized these profits and cost savings will be sustained Failure to achieve or delays in achieving projected levels of efficiencies and cost savings from such measures or unanticipated inefficiencies resulting from in process or contemplated manufacturing and administrative reorganization actions could adversely affect our business financial condition results of operations and cash flows
Significant changes in the factors and assumptions used to measure our defined benefit plan obligations actual investment returns on pension assets and other factors could have a negative impact on our financial condition or liquidity
We have certain defined benefit pension plans and other post employment benefit OPEB plans Our future funding requirements for defined benefit pension and OPEB plans depend upon a number of factors and assumptions including our actual experience against assumptions with regard to interest rates used to determine funding levels return on plan assets benefit levels participant experience e g mortality and retirement rates health care cost trends and applicable regulatory changes To the extent actual results are less favorable than our assumptions there could be a material adverse impact on our financial condition and results of operations
Additional risks exist due to the nature and magnitude of our investments including the implementation of or changes to the investment policy insufficient market capacity to absorb a particular investment strategy or high volume transactions and the inability to quickly rebalance illiquid and long term investments
If our cash flows and capital resources are insufficient to fund our pension or OPEB obligations we could be forced to reduce or delay investments and capital expenditures seek additional capital or restructure or refinance our indebtedness
The market price of our common stock could be subject to wide fluctuations in response to numerous factors many of which are beyond our control These factors include actual or anticipated variations in our operational results and cash flow our earnings relative to our competition changes in financial estimates by securities analysts trading volume sales by holders of large amounts of our common stock short selling market conditions within the industries in which we operate seasonality of our business operations the general state of the securities markets and the market for stocks of companies in our industry governmental legislation or regulation and currency and exchange rate fluctuations as well as general economic and market conditions such as recessions
As a holding company most of our assets are held by our direct and indirect subsidiaries and we will primarily rely on dividends and other payments or distributions from our subsidiaries to meet our debt service and other obligations and to enable us to pay dividends The ability of our subsidiaries to pay dividends or make other payments or distributions to us will depend on their respective operating results and may be restricted by among other things the laws of their jurisdiction of organization which may limit the amount of funds available for the payment of dividends or other payments agreements of those subsidiaries agreements with any co investors in non wholly owned subsidiaries the terms of our credit and receivables facilities and senior notes and the covenants of any future indebtedness we or our subsidiaries may incur
Provisions in our amended and restated certificate of incorporation and bylaws or Delaware law may discourage delay or prevent a change in control of the Company or changes in our management and therefore depress the trading price of our common stock
Our amended and restated certificate of incorporation and bylaws contain provisions that could depress the trading price of our common stock through provisions that may discourage delay or prevent a change in control of the Company or changes in our management that our stockholders may deem advantageous
Additionally we are subject to Section 203 of the Delaware General Corporation Law which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any interested stockholder for a period of three years following the date on which the stockholder became an interested stockholder and which may discourage delay or prevent a change in control of our company
Since February 2014 our Board of Directors has declared a quarterly dividend on our common stock The payment of any future cash dividends to our stockholders is not guaranteed and will depend on decisions that will be made by our Board of Directors and will depend on then existing conditions including our operating results financial conditions contractual restrictions corporate law restrictions capital agreements applicable laws of the State of Delaware and business prospects
We have a range of security measures that are designed to protect against the unauthorized access to and misappropriation of our information corruption of data intentional or unintentional disclosure of confidential information or disruption of operations These security measures include controls security processes and monitoring of our manufacturing systems We have cloud security and other tools and governance processes designed to assess identify and manage material risks from cybersecurity threats In addition we maintain an information security training program designed to address phishing and email security password security data handling security cloud security operational technology security processes and cybersecurity incident response and reporting processes
Our cybersecurity strategy includes defense in depth zero trust and standards based controls intended to protect our information technology systems We perform incident response tabletop exercises that include members of the Company s senior management team to validate test and assess the effectiveness and adequacy of certain roles and decision making processes in the event of a cybersecurity incident We also assess identify and manage cybersecurity risk associated with divestiture and merger and acquisition activities
The oversight of our cybersecurity risk management process is integrated into our overall risk management process The risk committee is responsible for overseeing and monitoring our risk assessment and mitigation related actions including with respect to cybersecurity risks The risk committee is not a committee of our Board of Directors It is a cross functional committee that includes members across many areas of expertise and is structurally independent of our business lines The risk committee s membership is designed to provide diversity of thought and perspective related to risk including cybersecurity risks The risk committee identifies risks and mitigation strategies and it provides key updates to executive officers and the Audit Committee of our Board of Directors
We use third party service providers to execute certain business processes maintain certain information systems and infrastructure evaluate defenses and implement recommendations We periodically have external information security assessments performed by third parties to analyze our information technology systems and to stay informed of information security risks Additionally we have a supplier validation process which provides for review and approval by our cybersecurity group for cloud services
Although we experience cybersecurity incidents from time to time as part of our operations we have not identified any risks from cybersecurity threats including as a result of previous cybersecurity incidents that have had or are reasonably likely to have a material impact on our business strategy results of operations or financial condition Any breach of our security measures or those of our third party service providers could result in unauthorized access to and misappropriation of our information corruption of data or disruption of systems operations or transactions any of which could have a material adverse effect on our business strategy results of operations or financial condition See Item 1A Risk Factors of this Annual Report on Form 10 K for further discussion of the risks related to cybersecurity threats
The Board of Directors is responsible for overseeing risk for the Company and has delegated to the Audit Committee responsibility for overseeing the cybersecurity risk management strategy for the Company The Audit Committee receives regular updates on our cybersecurity risk management process from members of management including our Chief Information Officer CIO The Audit Committee reviews our comprehensive cybersecurity framework including reviewing our cybersecurity reporting protocol that provides for the notification escalation and communication of significant cybersecurity events to a crisis management team and appropriate levels of management including our CIO as well as to the Audit Committee Management also provides the Audit Committee with a cybersecurity dashboard which the full Board of Directors can access as well Additionally the Audit Committee regularly provides updates to the Board on the status of the Company s cybersecurity risk management process
The Company s cybersecurity program is overseen by our CIO who is responsible for global information technology including cybersecurity Our Vice President Global Information Security is primarily responsible for assessing and managing material risks from cybersecurity threats including monitoring the measures used for prevention detection mitigation and remediation of cybersecurity incidents Our CIO is responsible for our information security organization which is comprised of internal Owens Corning employees and external security suppliers Our information security organization provides security monitoring and response and provides regular reports to our CIO and Vice President Global Information Security These regular reports inform our CIO and Vice President Global Information Security as they monitor the prevention detection mitigation and remediation of cybersecurity incidents under the oversight of the risk committee Our Global Information Services team is regularly engaged in cybersecurity training and awareness and incorporates relevant reviews in technology design and development
Our Vice President Global Information Security has 28 years of experience in the cybersecurity industry including previous experience in the U S Air Force consulting and 22 years with Owens Corning and reports directly to our CIO
Our principal executive offices are located at the Owens Corning World Headquarters in Toledo Ohio an owned facility of approximately 400 000 square feet Our research and development activities are primarily conducted at our Science and Technology Center located on approximately 500 acres of land owned by the Company outside of Granville Ohio It consists of approximately 20 structures totaling more than 650 000 square feet In addition we have application development and other product and market focused research and development centers in various locations As of December 31 2024 we operated in 152 manufacturing facilities of which 110 were owned The following table summarizes manufacturing facilities by reportable segment and geographical region
The name age and business experience during the past five years of Owens Corning s executive officers are set forth below Each executive officer holds office until his or her successor is elected and qualified or until his or her earlier resignation retirement or removal All of the listed executive officers have been employees of Owens Corning during the past five years except as indicated below
President Doors since May 2024 formerly President of the Global Residential Door Business Masonite a door manufacturer to the residential construction industry formerly NYSE DOOR 2021 formerly President Americas Cooper Tire Rubber Company a tire manufacturing company formerly NYSE CTB 2018
Executive Vice President General Counsel and Corporate Secretary since June 2021 formerly Executive Vice President General Counsel and Corporate Secretary of Nordson Corporation a precision technology manufacturing company NASDAQ NDSN 2018
Executive Vice President Chief Human Resources Officer since January 2021 formerly Senior Vice President Chief Human Resources Officer December 2019 formerly Vice President Chief Human Resources Officer April 2019
Information in parentheses indicates year during the past five years in which service in position began The last item listed for each individual represents the position held by such individual at the beginning of the five year period
The payment of any future cash dividends to our stockholders will depend on decisions that will be made by our Board of Directors and will depend on then existing conditions including our operating results financial conditions contractual restrictions corporate law restrictions capital agreements applicable laws of the State of Delaware and business prospects
Under the credit agreement applicable to our senior revolving credit facility the Company may not declare a cash dividend if a default or event of default exists or would come to exist at the time of declaration or if a dividend declaration violates the provisions of our formation documents or other material agreements
The Company s subsidiaries are subject to certain restrictions on their ability to pay dividends under the agreements governing our senior revolving credit facility and our receivables securitization facility
On December 1 2022 the Board of Directors approved a new share repurchase program under which the Company is authorized to repurchase up to an aggregate of 10 million shares of the Company s outstanding common stock the Repurchase Authorization The Repurchase Authorization enables the Company to repurchase shares through the open market privately negotiated or other transactions The actual number of shares repurchased will depend on timing market conditions and other factors and will be at the Company s discretion The Company repurchased 0 5 million shares of its common stock for 101 million inclusive of applicable taxes during the three months ended December 31 2024 under the Repurchase Authorization As of December 31 2024 6 4 million shares remain available for repurchase under the Repurchase Authorization
The annual changes for the five year period shown in the graph below are based on the assumption that 100 had been invested in Owens Corning OC stock the Standard Poor s 500 Stock Index S P 500 and a peer group index on December 31 2019 and that all quarterly dividends were reinvested The total cumulative dollar returns shown on the graph represent the value that such investments would have had on December 31 2024 We chose to use a self selected peer group consisting of the companies noted below to include in the performance graph as we believe this peer group aligns with our specific industry markets and global exposure The criteria used in determining this peer group included the size of the companies measured in terms of annual revenue and market capitalization industries and geographies in which the companies operate stock price correlation and volatility relative to Owens Corning and increased representation of comparator companies used by shareholder advisory firms
The peer group index is comprised of the following companies A O Smith Corporation Advance Drainage Systems Inc Allegion plc Armstrong World Industries Inc Ball Corporation Builders FirstSource Inc Carlisle Companies Incorporated Carrier Global Corporation Celanese Corporation Eastman Chemical Company Fortune Brands Innovations Inc Greif Inc JELD WEN Holding Inc Johnson Controls International plc Lennox International Inc Louisiana Pacific Corporation Masco Corporation Mohawk Industries Inc O I Glass Inc PPG Industries Inc Resideo Technologies Inc RPM International Inc Stanley Black Decker Inc The Sherwin Williams Company Trane Technologies Trex Company Inc and UFP Industries Inc
is intended to help investors understand Owens Corning our operations and our present business environment MD A is provided as a supplement to and should be read in conjunction with our Consolidated Financial Statements and the accompanying Notes thereto contained in this Annual Report on Form 10 K Unless the context requires otherwise the terms Owens Corning Company we its and our in this Annual Report on Form 10 K refer to Owens Corning and its subsidiaries
This section of this Annual Report on Form 10 K generally discusses 2024 and 2023 items and year to year comparisons between 2024 and 2023 Discussions of 2022 items and year to year comparisons between 2023 and 2022 that are not included in this Form 10 K can be found in Management s Discussion and Analysis of Financial Condition and Results of Operations in Part II Item 7 of the Company s Annual Report on Form 10 K for the fiscal year ended December 31 2023
Owens Corning is a residential and commercial building products leader committed to building a sustainable future through material innovation The Company has four reportable segments Roofing Insulation Doors and Composites Through these lines of business the Company manufactures and sells products worldwide We are a market leader in many of our major product categories
Net earnings attributable to Owens Corning were 647 million in 2024 compared to 1 196 million in 2023 The Company generated 2 038 million in adjusted earnings before interest and taxes Adjusted EBIT in 2024 compared to 1 805 million in 2023 See the Adjusted Earnings Before Interest and Taxes paragraph of the MD A for further information regarding Adjusted EBIT including the reconciliation to net earnings attributable to Owens Corning Segment earnings before interest and taxes EBIT performance compared to 2023 increased 124 million in our Roofing segment increased 63 million in our Insulation segment and decreased 27 million in our Composites segment The Doors segment contributed revenues of 1 448 million and EBIT of 99 million to the Company for the period from May 15 2024 to December 31 2024 Within our Corporate Other and Eliminations category General corporate expenses and other increased by 26 million
On February 13 2025 the Company entered into a definitive agreement for the sale of our global glass reinforcements GR business for a purchase price of approximately 436 million less costs to sell The GR business part of the Company s Composites segment manufactures fabricates and sells glass fiber reinforcements for a wide variety of applications in wind energy infrastructure industrial transportation and consumer markets In 2024 the GR business generated annual revenues of approximately 1 1 billion The sale will complete Owens Corning s review of strategic alternatives for the business announced on February 9 2024 and aligns with the strategy to reshape the Company to focus on residential and commercial building products in North America and Europe During 2024 the Company incurred 46 million of costs related to this review
The transaction is expected to close in 2025 and is subject to customary regulatory approvals and other conditions The Company expects to incur a material loss on disposal which cannot be estimated at this time
The transaction represents a strategic shift that has a major effect on the Company s operations and financial results and therefore beginning with the quarterly report on Form 10 Q for the period ending March 31 2025 the GR business financial results will be reflected in the Company s consolidated financial statements as discontinued operations for all periods presented The Company intends to reorganize its operations and reporting structure and begin to manage its operations under three reporting segments
During the fourth quarter of 2024 the Company determined that certain asset groups should be tested for recoverability primarily as a result of the progression of the strategic review of the GR business The comparison indicated that the GR asset group was not recoverable As a result of the analysis performed the Company recorded pre tax asset impairment charges for the amount by which the carrying value exceeds its fair value of 483 million for the year ended December 31 2024 which is included in Impairment due to strategic review on the Consolidated Statements of Earnings These charges include 439 million related to property plant and equipment 30 million related to operating lease right of use assets and 14 million related to definite lived intangible assets
On November 4 2024 the Company entered into a related party agreement to sell its building materials business in China and Korea to a member of the business management team meeting the assets held for sale criteria The transaction includes six insulation manufacturing facilities in China and a roofing manufacturing facility in Korea The building materials business within the Insulation segment represents annual revenues of approximately 130 million The Company reclassified 2 million as held for sale within Other current liabilities on the Consolidated Balance Sheets The Company recorded the assets at the fair value less cost to sell which was less than the carrying value and resulted in an impairment of 91 million related primarily to Property Plant and Equipment and Goodwill The transaction is expected to close mid 2025 and any additional loss on disposal is expected to be immaterial
On May 15 2024 the Company acquired all of the outstanding shares of Masonite International Corporation Masonite a leading global designer manufacturer marketer and distributor of interior and exterior doors and door systems for 3 2 billion primarily funded with debt proceeds and cash on hand The acquisition of Masonite s market leading doors business creates a new growth platform for the Company strengthening the Company s position in building and construction and expanding the Company s offering of branded residential building products Masonite s operating results and preliminary purchase price allocation have been included in the Company s newly established Doors reportable segment from May 15 2024 within the Consolidated Financial Statements The Company issued 2 0 billion of senior notes the proceeds of which were used to repay a portion of the outstanding borrowings under the 364 Day Credit Facility which was used to fund a portion of the acquisition and to pay related fees and expenses Refer to Liquidity Capital Resources and Other Related Matters for further discussions on the current year debt instruments
During the second quarter of 2023 the Company s subsidiary Paroc Group OY Paroc which the Company acquired in 2018 notified the appropriate European maritime regulatory authorities that specific products in its marine insulation product line may not meet certain fire safety requirements in accordance with their certifications Paroc voluntarily withdrew these specific products from the market issued recalls and suspended distribution and sales of these products the Recalled Products Paroc continues to cooperate with the applicable regulatory and government authorities and work with its customers and end users to assist with remediation for the recall The Company has included an estimated liability for expected future costs related to the Recalled Products on its Consolidated Balance Sheets as of December 31 2024 and December 31 2023
Due to these nonconformances the Company reviewed the Paroc insulation product portfolio The review has concluded In addition to addressing the Recalled Products the Company continues to assess potential nonconformances related to certain ventilation duct and steel beam insulation products Paroc suspended sales of these affected insulation products as a precautionary measure while it reviews the potential nonconformances but has not issued recalls We expect to incur costs associated with the resolution of this matter The amount or range of any potential loss cannot be reasonably estimated at this time
The Consolidated Results discussion below provides a summary of our results and the trends affecting our business and should be read in conjunction with the more detailed Segment Results discussion that follows
Net sales increased 1 298 million in 2024 compared to 2023 The increase in net sales was primarily driven by the revenues from our Doors segment as a result of the Masonite acquisition which was partially offset by lower sales volumes
Gross margin increased 571 million in 2024 compared to 2023 The increase was primarily driven by the margins from our Doors segment as a result of the Masonite acquisition Also contributing to the increase were higher selling prices slightly offset by lower sales volumes
Marketing and administrative expenses increased 213 million in 2024 compared to 2023 The increase was primarily driven by the addition of the Doors segment selling general and administrative expenses and ongoing inflationary pressures throughout the organization
In 2024 the Company entered into a related party agreement to sell its building materials business in China and Korea As a result of classifying the business as held for sale at December 31 2024 we recorded a loss of 91 million included in Loss on sale of business on the Consolidated Statements of Earnings
As a result of the ongoing strategic review of the glass reinforcements business in 2024 the Company recorded a 483 million impairment charge included in Impairment due to strategic review on the Consolidated Statements of Earnings and was included in the Corporate Other and Eliminations reporting category
Interest expense net increased 136 million in 2024 compared to 2023 The increase was driven by higher interest on the 364 Day Credit Facility and higher long term debt balances in connection with the Masonite acquisition
Income tax expense for 2024 was 275 million compared to 401 million in 2023 The Company s effective tax rate for 2024 was 30 on pre tax income of 916 million The difference between the 30 effective tax rate and the U S federal statutory tax rate of 21 is primarily due to U S state and local income tax expense valuation allowances and uncertain tax positions
The Company s effective tax rate for 2023 was 25 on pre tax income of 1 591 million The difference between the 25 effective tax rate and the U S federal statutory tax rate of 21 is primarily attributable to U S state and local income tax expense
The Company has incurred restructuring transaction and integration costs related to acquisitions and divestitures along with restructuring and other exit costs in connection with our global cost reduction product line and productivity initiatives and growth strategy These costs are recorded within Corporate Other and Eliminations Please refer to Note 13 of the Consolidated Financial Statements for further information on the nature of these costs
Adjusted EBIT is a non GAAP measure that excludes certain items that management does not allocate to our segment results because it believes they are not representative of the Company s ongoing operations Adjusted EBIT is used internally by the Company for various purposes including reporting results of operations to the Board of Directors of the Company analysis of performance and related employee compensation measures Although management believes that these adjustments result in a measure that provides a useful representation of our operational performance the adjusted measure should not be considered in isolation or as a substitute for Net earnings loss attributable to Owens Corning as prepared in accordance with accounting principles generally accepted in the United States
EBIT by segment consists of net sales less related costs and expenses and is presented on a basis that is used internally for evaluating segment performance Certain items such as general corporate expenses or income and certain other expense or income items are excluded from the internal evaluation of segment performance Accordingly these items are not reflected in EBIT for our reportable segments and are included in the Corporate Other and Eliminations category which is presented following the discussion of our reportable segments
Earnings before interest taxes depreciation and amortization EBITDA by segment is a non GAAP measure that consists of EBIT plus depreciation and amortization Segment EBITDA is used internally by the Company for analysis of our performance However segment EBIT is the principal measure used by the chief operating decision maker CODM to assess segment performance and make decisions on the allocation of resources
In our Roofing segment EBIT increased 124 million in 2024 compared to 2023 driven primarily by higher selling prices of 165 million favorable product mix and favorable delivery of 22 million slightly offset by lower sales volumes and input cost inflation
In our Roofing segment the Company expects residential repair and remodeling activity to remain solid Other uncertainties that may impact Roofing demand include demand from storms and other weather related events competitive pricing pressure and the cost and availability of raw materials particularly asphalt
In our Insulation segment 2024 net sales increased 24 million compared to 2023 The increase was driven primarily by higher selling prices of 81 million and favorable product mix partially offset by lower sales volumes of approximately 2 and unfavorable customer mix
In our Insulation segment EBIT increased 63 million in 2024 compared to 2023 The increase was driven by higher selling prices of 81 million favorable delivery of 34 million lower start up costs and favorable product mix which more than offset higher manufacturing costs of 35 million higher operating expenses inclusive of incremental costs associated with evaluating manufacturing investments lower sales volumes and unfavorable customer mix
The outlook for Insulation demand is driven by North American new residential construction remodeling and repair activity as well as commercial and industrial construction activity in the United States Canada Europe Asia Pacific and Latin America Demand in commercial and industrial insulation markets is most closely correlated to industrial production growth and overall economic activity in the global markets we serve Demand for residential insulation is most closely correlated to U S housing starts
During the fourth quarter of 2024 the average Seasonally Adjusted Annual Rate SAAR of U S housing starts was approximately 1 379 million starts which is down from 1 454 million starts in the fourth quarter of 2023
The Company expects the new residential construction market in North America to be temporarily challenged as the market starts to return to a more normal seasonal pattern while the North America commercial and industrial construction markets are expected to remain stable However due to a period of slow economic growth the global commercial and industrial construction markets are expected to remain soft temporarily The Company continues to concentrate on managing costs capital expenditures and working capital as we position ourselves to expand capacity within our existing manufacturing network
The outlook for the Doors segment is driven by the residential new construction and residential repair and remodeling markets in North America and Europe The Company expects the North America residential new construction market to be temporarily challenged with discretionary residential repair and remodeling activity in North America to remain soft Due to a weaker macroeconomic outlook and higher interest rates in Europe the Company expects these markets to remain challenged The Company will concentrate on managing costs capital expenditures and working capital
Net sales in our Composites segment decreased 168 million in 2024 compared to 2023 The decrease was primarily driven by lower selling prices of 83 million lower sales volumes of approximately 1 unfavorable customer mix and 11 million of unfavorable impact of translating sales denominated in foreign currencies into United States dollars
EBIT in our Composites segment decreased 27 million in 2024 compared to 2023 Lower selling prices of 83 million unfavorable customer mix higher start up costs of 18 million higher production downtime of 13 million and 7 million of unfavorable impact of translating sales denominated in foreign currencies into United States dollars which more than offset lower manufacturing costs of 90 million and 23 million of favorable delivery and input costs
Global glass reinforcements market demand has several economic indicators including residential non residential construction and manufacturing production indices as well as global wind installations The Company anticipates continued impacts of economic uncertainty in a dynamic global environment as well as competitive pricing pressure The Company remains focused on managing costs capital expenditures and working capital
Certain items such as general corporate expenses or income and certain other expense or income items are excluded from the internal evaluation of segment performance Accordingly these items are not reflected in EBIT for our reportable segments and are included within Corporate Other and Eliminations
The impact on EBIT from Corporate Other and Eliminations in 2024 was 798 million higher compared to 2023 The increase was primarily driven by impairment charges on the glass reinforcements strategic review the prior year pre tax gain on the sale of the Santa Clara California site loss on the sale of our building materials business in China and Korea in the current year as well as higher acquisition related costs partially offset by gains on sales of precious metals and lower year over year restructuring charges
The Company s primary sources of liquidity are its balance of Cash and cash equivalents of 361 million as of December 31 2024 its senior revolving credit facility the Senior Revolving Credit Facility and Receivables Securitization Facility
The Company has a 1 0 billion Senior Revolving Credit Facility that has been amended from time to time The Senior Revolving Credit Facility was most recently amended in March 2024 to increase the borrowing limit from 800 million to 1 0 billion and extend the maturity date to March 2029 No other significant terms impacting liquidity were amended
The Company has a 300 million Receivables Securitization Facility that has been amended from time to time The Receivables Securitization Facility was most recently amended in March 2024 to increase the borrowing limit from 280 million to 300 million and extend the maturity date to February 2025 No other significant terms impacting liquidity were amended With the maturity of our Receivables Securitization Facility we may consider other sources of liquidity including the issuance of commercial paper
The agreements governing our Senior Revolving Credit Facility and Receivables Securitization Facility contain various covenants that we believe are usual and customary These covenants include a maximum allowed leverage ratio We were in compliance with these covenants as of December 31 2024
As a holding company we have no operations of our own and most of our assets are held by our direct and indirect subsidiaries Dividends and other payments or distributions from our subsidiaries will be used to meet our debt service and other obligations and to enable us to pay dividends to our stockholders Please refer to the Risk Factors disclosed in Item 1A of this Annual Report on Form 10 K for details on the factors that could inhibit our subsidiaries abilities to pay dividends or make other distributions to the parent company
We have no material off balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition results of operations liquidity capital expenditures or other resources
Cash and cash equivalents were 361 million as of December 31 2024 compared to 1 6 billion as of December 31 2023 Cash and cash equivalents held by foreign subsidiaries may be subject to foreign withholding taxes upon repatriation to the U S As of December 31 2024 and December 31 2023 the Company had 95 million and 114 million respectively in cash and cash equivalents in certain of its foreign subsidiaries The Company continues to assert indefinite reinvestment in accordance with Accounting Standards Codification ASC 740 based on the laws as of enactment of the tax legislation commonly known as the U S Tax Cuts and Jobs Act of 2017
Net cash flow provided by operating activities increased by 173 million for the twelve months ended December 31 2024 compared to the same period in 2023 The increase in cash provided by operating activities was primarily due to lower increases in accounts payable and higher decreases in inventory when compared to the same period in 2023 These were slightly offset by increases in accounts receivable during the period
Net cash flow used for investing activities increased by 3 0 billion for the twelve months ended December 31 2024 compared to the same period in 2023 The increase was primarily driven by the Masonite acquisition and lower proceeds from sale of assets in 2024 due to the sale of the Santa Clara site in 2023
Net cash flow provided by financing activities increased by 1 2 billion for the twelve months ended December 31 2024 compared to the same period in 2023 The increase was primarily driven by net proceeds from long term debt related to the Masonite acquisition as well as lower treasury stock repurchases These were slightly offset by payments related to the tender offer to purchase Masonite senior notes due 2028 and the repayment at maturity of the Company s 2024 senior notes
Our anticipated uses of cash include capital expenditures working capital needs share repurchases meeting financial obligations payments of any dividends authorized by our Board of Directors acquisitions restructuring actions and pension contributions We expect that our cash on hand coupled with future cash flows from operations and other available sources of liquidity including our Senior Revolving Credit Facility and our Receivables Securitization Facility will provide ample liquidity to enable us to meet our cash requirements for at least the next 12 months and foreseeable future thereafter
The following discussion of material cash requirements evaluates known contractual and other obligations but does not include amounts that are contingent on events or other factors that are uncertain or unknown at this time including legal contingencies and uncertain tax positions among others The amounts presented are based on various estimates including estimates regarding the timing of payments prevailing interest rates the occurrence of certain events and other factors Actual results may vary materially from the amounts discussed below
Our capital expenditures are primarily related to the maintenance and rebuild of our long term assets as well as investing in projects that support growth and innovation to further our enterprise strategy Our capital expenditures were 647 million in 2024 We expect to have capital expenditures of approximately 800 million in 2025 The anticipated increase in capital expenditures in 2025 is primarily driven by growth manufacturing productivity and sustainability projects We expect that capital expenditures will be funded through cash flows from operations See Note 2 and Note 6 of the Consolidated Financial Statements for additional information on Property plant and equipment
As of December 31 2024 the Company had 5 1 billion of total debt which mostly consists of long term debt relating to various outstanding senior notes In addition the Company s current portion of long term debt of 38 million primarily relates to the current portion of finance leases In the fourth quarter of 2024 the Company repaid the 2024 senior notes of 400 million at maturity Further discussion of the amount and timing of the future scheduled maturities of our senior notes can be found in Note 14 of the Consolidated Financial Statements There were no outstanding borrowings on our Senior Revolving Credit Facility or our Receivables Securitization Facility as of December 31 2024
We are obligated to make periodic interest payments at fixed rates depending on the terms of the applicable debt agreements Based on interest rates and scheduled maturities as of December 31 2024 these interest obligations range from 199 million to 242 million annually over the next five years
Our finance lease obligations primarily consist of real estate oxygen plants computers and software and fleet vehicles As of December 31 2024 we had a total of 463 million of minimum finance lease payments Further discussion of the future maturities of these lease liabilities can be found in Note 10 of the Consolidated Financial Statements
Our operating lease obligations primarily consist of real estate and material handling equipment As of December 31 2024 we had a total of 580 million of minimum operating lease payments Further discussion of the future maturities of these lease liabilities can be found in Note 10 of the Consolidated Financial Statements
Purchase obligations are commitments to suppliers to purchase goods or services and include take or pay arrangements capital expenditures and contractual commitments to purchase equipment As of December 31 2024 the total of these obligations was 411 million inclusive of 287 million payable in the next 12 months The Company did not include ordinary course of business purchase orders in this amount as the majority of such purchase orders may be canceled and are reflected in historical operating cash flow trends The Company does not believe such purchase orders will adversely affect our liquidity position
The Company has several defined benefit pension plans The Company made cash contributions of 7 million and 18 million to the plans during the twelve months ended December 31 2024 and 2023 respectively The Company expects to contribute 20 million in cash to its pension plans during 2025 Actual contributions to the plans may change as a result of several factors including changes in laws that impact funding requirements The ultimate cash flow impact to the Company if any of the pension plan liability and the timing of any such impact will depend on numerous variables including future changes in actuarial assumptions legislative changes to pension funding laws and market conditions Further discussion of the Company s defined benefit pension plans can be found in Note 15 of the Consolidated Financial Statements
On December 1 2022 the Board of Directors approved a new share repurchase program under which the Company is authorized to repurchase up to an aggregate of 10 million shares of the Company s outstanding common stock the Repurchase Authorization The Repurchase Authorization enables the Company to repurchase shares through the open market privately negotiated or other transactions The actual number of shares repurchased will depend on timing market conditions and other factors and will be at the Company s discretion The Company repurchased 2 6 million shares of the Company s common stock for 433 million inclusive of applicable taxes under previously announced repurchase authorizations As of December 31 2024 6 4 million shares remained available for repurchase under the repurchase authorizations
We will evaluate and consider payments of any dividends authorized by our Board of Directors strategic acquisitions joint ventures debt repurchases or repayments and other transactions to create stockholder value and enhance financial performance Such transactions may require cash expenditures beyond current sources of liquidity or generated proceeds
On March 1 2024 the Company entered into an unsecured term loan agreement in an aggregate principal amount of 3 0 billion the 364 Day Credit Facility On May 15 2024 to fund a portion of the Masonite acquisition the Company borrowed 2 8 billion using Term SOFR plus a spread on the 364 Day Credit Facility As a result of the borrowing the Company incurred approximately 16 million of financing fees which were amortized to Interest expense net on the Consolidated Statements of Earnings During the second quarter of 2024 the Company completely repaid the 364 Day Credit Facility with a combination of proceeds from the issuance of new senior notes borrowings on the Receivables Securitization Facility and cash on hand Based on terms of the agreement no further amounts can be drawn
On April 15 2024 in connection with the acquisition of Masonite we commenced a tender offer the Tender Offer to purchase any and all of Masonite s outstanding 5 375 Senior Notes due 2028 the Masonite 2028 notes with an aggregate value of 501 million On May 13 2024 94 25 of the outstanding Masonite 2028 notes were validly tendered with Owens Corning making a cash payment on May 16 2024 of approximately 480 million inclusive of 7 million of interest and 1 million premium on tender Following the settlement of the Tender Offer approximately 29 million of the Masonite 2028 notes that were not tendered remain outstanding which has been recorded on the Consolidated Balance Sheets Interest on the Masonite 2028 notes is payable semiannually in arrears on February 1 and August 1 each year
On May 1 2024 in connection with the acquisition of Masonite we commenced an offer to exchange the Exchange Offer any and all of Masonite s outstanding 3 50 Senior Notes due 2030 the Masonite 2030 notes for new 3 50 Senior Notes due 2030 of Owens Corning the Owens Corning 2030 notes On May 22 2024 99 51 of the outstanding Masonite 2030 notes were exchanged and we issued 373 million of aggregate principal amount of Owens Corning 2030 notes Interest on the notes is payable semiannually in arrears on February 15 and August 15 each year beginning on August 15 2024 Following the settlement of the Exchange Offer approximately 2 million of the Masonite 2030 notes that were not exchanged remain outstanding which has been recorded on the Consolidated Balance Sheets
On May 15 2024 the Company initially borrowed 295 million under the Receivables Securitization Facility which was used to pay down a portion of the 364 Day Credit Facility Subsequent to the May 15 2024 borrowing the Company repaid and re borrowed on the Receivables Securitization Facility throughout the year principally to pay down the 364 Day Credit Facility As of December 31 2024 there was no outstanding balance on the Receivables Securitization Facility
On May 31 2024 the Company issued 500 million of 2027 senior notes with an annual interest rate of 5 500 800 million of 2034 senior notes with an annual interest rate of 5 700 and 700 million of 2054 senior notes with an annual interest rate of 5 950 These senior notes are net of discounts and issuance costs of 4 million 11 million and 17 million respectively The proceeds from these notes were used to repay a portion of the outstanding borrowings under the 364 Day Credit Facility that was used to fund a portion of the Masonite acquisition in the second quarter of 2024 and to pay related fees and expenses
We review supplier terms and conditions on an ongoing basis and have negotiated payment terms extensions in recent years in connection with our efforts to reduce working capital and improve cash flow Separate from those terms extension actions certain of our subsidiaries have entered into paying agency agreements with third party administrators These voluntary supply chain finance programs collectively the Programs generally give participating suppliers the ability to sell or otherwise
pledge as collateral their receivables from the Company to the participating financial institutions at the sole discretion of both the suppliers and financial institutions The Company is not a party to the arrangements between the suppliers and the financial institutions The Company s obligations to its suppliers including amounts due and scheduled payment dates are not impacted by the suppliers decisions to sell or otherwise pledge as collateral amounts under these arrangements The Company s payment terms to the financial institutions including the timing and amount of payments are based on the original supplier invoices One of the Programs includes a parent guarantee to the participating financial institution for a certain U S subsidiary that at the time of the respective program s inception in 2015 was a guarantor subsidiary of the Company s credit agreement The obligations are presented as Accounts payable within Total current liabilities on the Consolidated Balance Sheets and all activity related to the obligations is presented within operating activities on the Consolidated Statements of Cash Flow
The desire of suppliers and financial institutions to participate in the Programs could be negatively impacted by among other factors the availability of capital committed by the participating financial institutions the cost and availability of our suppliers capital a credit rating downgrade or deteriorating financial performance of the Company or its participating subsidiaries or other changes in financial markets beyond our control We do not expect these risks or potential long term growth of our Programs to materially affect our overall financial condition as we expect a significant portion of our payments to continue to be made outside of the Programs Accordingly we do not believe the Programs have materially impacted our current period liquidity and do not believe that the Programs are reasonably likely to materially affect liquidity in the future
Our discussion and analysis of our financial condition and results of operations is based upon our Consolidated Financial Statements which have been prepared in accordance with accounting principles generally accepted in the United States The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period On an ongoing basis management evaluates its estimates and judgments related to these assets liabilities revenues and expenses We believe these estimates to be reasonable under the circumstances Management bases its estimates and judgments on historical experience expected future outcomes and on various other factors that are believed to be reasonable under the circumstances the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources Actual results may differ from these estimates
Assets acquired and liabilities assumed in a business combination are recorded at their estimated fair values on the date of acquisition The difference between the purchase price amount and the net fair value of assets acquired and liabilities assumed is recognized as goodwill on the balance sheet if the purchase price exceeds the estimated net fair value or as a bargain purchase gain on the income statement if the purchase price is less than the estimated net fair value We apply significant judgment in estimating the fair value of assets acquired and liabilities assumed which involves the use of significant estimates and assumptions Changes in these judgments or estimates can have a material impact on the valuation of the respective assets and liabilities acquired and our results of operations in periods after acquisition The allocation of the purchase price is preliminary for up to one year after the acquisition date as more information is obtained about the fair value of assets acquired and liabilities assumed See Note 7 of the Consolidated Financial Statements for further information on the fair values of assets acquired and liabilities assumed in recent business combinations as well as the measurement period adjustments to the purchase price allocation
On May 15 2024 the Company completed the acquisition of Masonite for a total purchase price of 3 2 billion As part of the acquisition the Company acquired 979 million of intangible assets related to customer relationships which mainly consists of one customer relationship The fair value of customer relationships was determined using the multi period excess earnings method Key assumptions under this method are the revenue growth rate adjusted EBITDA margin including the adjusted terminal EBITDA margin customer attrition rate discount rate tax rate and contributory asset charges
The determination of our tax provision is complex due to operations in several tax jurisdictions outside the United States We apply a more likely than not recognition threshold for all tax uncertainties Such uncertainties include any claims by the Internal Revenue Service for income taxes interest and penalties attributable to audits of open tax years
In addition we record a valuation allowance to reduce our deferred tax assets to the amount that we believe is more likely than not to be realized We estimate future taxable income and the effect of tax planning strategies in our consideration of whether deferred tax assets will more likely than not be realized In the event we were to determine that we would not be able to realize all or part of our net deferred tax assets in the future an adjustment to reduce the net deferred tax assets would be charged to earnings in the period such determination was made Conversely if we were to determine that we would be able to realize our net deferred tax assets in the future in excess of their currently recorded amount an adjustment to increase the net deferred tax assets would be credited to earnings in the period such determination was made
The Company exercises judgment in evaluating assets for impairment Goodwill and other indefinite lived intangible assets are tested for impairment annually or when circumstances arise which indicate there may be an impairment Long lived assets are tested for impairment when economic conditions or management decisions indicate an impairment may exist These tests require comparing recorded values to estimated fair values for the assets under review
The Company has recorded its goodwill and conducted testing for potential goodwill impairment at a reporting unit level Our reporting units represent a business for which discrete financial information is available and segment management regularly reviews the operating results The Company has four reporting units Roofing Insulation Doors and Composites
Goodwill is an intangible asset that is not subject to amortization however annual tests are required to be performed to determine whether impairment exists Prior to performing the impairment testing process described in ASC 350 20 the guidance permits companies to assess qualitative factors to determine if it is more likely than not that a reporting unit s fair value is less than its carrying value If based on the review of the qualitative factors we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying value we would bypass the quantitative impairment test Events and circumstances we consider in performing the qualitative assessment include macro economic conditions market and industry conditions internal cost factors and the operational stability and the overall financial performance of the reporting units If it is more likely than not that a reporting unit s fair value is less than or close to its carrying value then the quantitative impairment test must be performed to determine if impairment is required
When it is determined necessary for the Company to perform the quantitative impairment process for goodwill we estimate fair values using a discounted cash flow approach from the perspective of a market participant as well as the market approach Significant assumptions used in the discounted cash flow approach are the revenue growth rates and EBIT margins used in estimating discrete period cash flow forecasts of the reporting unit the discount rate the reporting unit tax rate and the long term revenue growth rate and EBIT margin used in estimating the terminal business value The cash flow forecasts of the reporting unit are based upon management s long term view of our markets and are the forecasts that are used by senior management and the Board of Directors to evaluate operating performance The discount rate utilized is management s estimate of what the market s weighted average cost of capital is for a company with a similar debt rating and stock volatility as measured by beta The reporting unit specific tax rate is based on blended global historical rates The terminal business value is determined by applying the long term growth rate to the latest year for which a forecast exists For the market approach we use market multiples derived from a set of similar companies As part of our goodwill quantitative testing process the Company evaluates whether there are reasonably likely changes to management s estimates that would have a material impact on the results of the goodwill impairment testing
The annual impairment tests performed in the fourth quarter of 2023 indicated that the business enterprise value of the Composites reporting unit exceeded its carrying value by approximately 5 Given this narrow cushion of Composites reporting unit fair value in excess of carrying value and the ongoing strategic review of the glass reinforcements business the Company performed an interim goodwill impairment test as of September 30 2024 for the Composites reporting unit The interim testing indicated that the business enterprise value of the Composites reporting unit exceeded its carrying value by less than 10
Our annual test of goodwill for impairment was conducted as of October 1 2024 The Company elected to perform the qualitative approach on all of its reporting units After evaluating and weighing all relevant events and circumstances we concluded it is more likely than not that the fair value of the Roofing and Insulation reporting units exceeds their respective carrying value amounts while the Doors reporting unit business enterprise value approximates its carrying value given the acquisition that occurred in May 2024 Given the narrow cushion of the Composites reporting unit fair value in excess of carrying value as a result of the third quarter impairment testing the Company performed a quantitative analysis for the Composites reporting unit as of October 1 2024 Testing indicated that the cushion remained less than 10
Due to the passage of time since the last quantitative analysis the Company elected to perform a quantitative analysis for the Roofing and Insulation reporting units The fair value of each of our reporting units was in excess of its carrying value and thus no impairment exists The fair value of the Roofing and Insulation reporting units substantially exceeded the carrying value as of the date of our assessment
Subsequent to the annual test for the Composites reporting unit the Company performed an interim goodwill impairment test during the fourth quarter of 2024 primarily as a result of the progression of the strategic review of the glass reinforcements business As a result of this test we determined that no impairment existed for the reporting unit Testing indicated that the business enterprise value for the Composites reporting unit exceeded its carrying value by less than 5
There was uncertainty as to the outcome of the strategic review of our glass reinforcements business and the macroeconomic factors that impact this reporting unit The likelihood of a future impairment could be increased by a sustained downturn in these macroeconomic factors a change in the long term revenue growth rate or profitability for this reporting unit or the outcome of the strategic review The most significant assumptions used in our analysis to determine the fair value of the Composites reporting unit are the revenue growth rates EBIT margins long term growth rate and the discount rate
If all other assumptions remain constant a 2 decrease in the base year revenue would decrease the fair value by approximately 1 a 1 decrease in the revenue growth rates would decrease the fair value by approximately 1 a 50 basis point decrease in forecasted annual EBIT margins would decrease the fair value by approximately 2 a 50 basis point decrease in the selected long term growth rate of 2 would decrease the fair value by approximately 2 and a 50 basis point increase in the selected discount rate of 11 5 would decrease the fair value by approximately 3
Fair values used in testing for potential impairment of our trademarks and trade names are calculated by applying an estimated market value royalty rate to the forecasted revenues of the businesses that utilize those assets The assumed cash flows from this calculation are discounted at a rate based on a market participant discount rate Our annual test of indefinite lived intangibles was conducted as of October
Testing indicated that the fair value of a trade name used by our European building and technical insulation business exceeded its carrying values by 3 A change in the estimated long term revenue growth rate or increase in the discount rate assumption could increase the likelihood of a future impairment for this asset If all other assumptions remain constant a 50 basis point increase in the selected discount rate of 11 5 would decrease the fair value by approximately 5 and a 50 basis point decrease in the selected long term growth rate of 2 0 would decrease the fair value by approximately 4 The carrying value of the European building and technical insulation trade name is 84 million as of December 31 2024 This asset is included within the Insulation segment
The recoverable value for long lived asset testing are calculated by estimating the undiscounted cash flows from the use and ultimate disposition of the asset For impairment testing long lived assets are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities The Company groups long lived assets based on manufacturing facilities that produce similar products either globally or within a geographic region Management tests asset groups for potential impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable
During the fourth quarter of 2024 the Company determined that certain asset groups should be tested for recoverability primarily as a result of the progression of the strategic review of the glass reinforcements business Recoverability of the long lived assets was measured by comparing the carrying amount of the asset groups to the future net undiscounted cash flows expected to be generated by the asset groups Specifically for the glass reinforcements asset group the Company used an undiscounted cash flow model giving consideration to probability weighted cash flows of differing outcomes of the strategic review The comparison indicated that one of the asset groups the glass reinforcements asset group was not recoverable
Fair value of the glass reinforcements asset group was calculated using a discounted cash flow model and market information obtained through the strategic review to estimate the fair value of the asset group with weighting applied As a result of the analysis performed the Company recorded pre tax asset impairment charges for the amount by which the carrying value exceeded its fair value of 483 million for the year ended December 31 2024 which is included in Impairment due to strategic review on the Consolidated Statements of Earnings These charges include 439 million related to property plant and equipment 30 million related to operating lease right of use assets and 14 million related to definite lived intangible assets
The most significant assumption used in the fair value analysis was the weighting of the discounted cash flow model and market information If all other assumptions remain constant a 5 change in the weighting would change the fair value of the asset group by approximately 2
However changes in management intentions market conditions operating performance and other similar circumstances could affect the assumptions used in these impairment tests Changes in the assumptions could result in additional impairment charges that could be material to our Consolidated Financial Statements in any given period
The Company records a liability for warranty obligations at the date the related products are sold Most significant are the standard warranties on our roofing products The standard warranties generally provide full coverage of labor and materials for a period of 5 10 years from the original installation date and prorated materials for the remaining life of the roof
Our estimated cost of our standard warranty obligations is calculated using a 10 year historical average of claims paid for each major product category the estimated future cost to manufacture the replacement shingles and the estimated future cost for contractor labor subject to the applicable warranty coverage for a 20 year period from the date of installation
Additionally the Company sells contractors extended warranties that extend coverage beyond our standard product warranty The extended warranties revenue is deferred and recognized over the related coverage period ranging from 16 to 20 years
Accounting for pensions and other postretirement benefits involves estimating the cost of benefits to be provided well into the future and attributing that cost over the time period each employee works To accomplish this extensive use is made of assumptions about investment returns discount rates inflation mortality turnover and medical costs Changes in assumptions used could result in a material impact to our Consolidated Financial Statements in any given period
Two key assumptions that could have a significant impact on the measurement of pension liabilities and pension expense are the discount rate and the expected return on plan assets For our largest plan the United States plan the discount rate used for the December 31 2024 measurement date is based on a yield curve approach where the expected future benefit payments are matched with a yield curve derived from certain AA rated corporate bonds
The result supported a discount rate of 5 65 at December 31 2024 compared to 5 00 at December 31 2023 A 25 basis point increase decrease in the discount rate would decrease increase the December 31 2024 projected benefit obligation for the United States pension plan by approximately 8 million A 25 basis point increase decrease in the discount rate would decrease increase 2025 net periodic pension cost by less than 1 million
The expected return on plan assets in the United States was derived by taking into consideration the target plan asset allocation historical rates of return on those assets projected future asset class returns and net out performance of the market by active investment managers and plan related and investment related expenses paid from the plan trust The Company uses the target plan asset allocation because we rebalance our portfolio to target on at least a quarterly basis An asset return model was used to develop an expected range of returns on plan investments over a 20 year period with the expected rate of return selected from a best estimate range within the total range of projected results This process resulted in the selection of an expected return of 6 00 at the December 31 2024 measurement date which is used to determine net periodic pension cost for the year 2025 The expected return selected at the December 31 2023 measurement date was 5 75 which was used to determine the net periodic pension cost for the year 2024 A 25 basis point decrease in return on plan assets assumption would result in a respective increase of 2025 net periodic pension cost by less than 1 million
The discount rate for our United States postretirement plan was selected using the same method as described for the pension plan The result supported a discount rate of 5 55 at December 31 2024 compared to 4 90 at December 31 2023 A 25 basis point increase decrease in the discount rate would decrease increase the United States postretirement benefit obligation by approximately 2 million and decrease increase 2025 net periodic postretirement benefit cost by less than 1 million
Our disclosures and analysis in this report including Management s Discussion and Analysis of Financial Condition and Results of Operations contain forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 the Exchange Act Forward looking statements present our current forecasts and estimates of future events These statements do not strictly relate to historical or current results and can be identified by words such as anticipate appear assume believe estimate expect forecast intend likely may plan project seek should strategy will and other terms of similar meaning or import in connection with any discussion of future operating financial or other performance These forward looking statements are subject to risks uncertainties and other factors and actual results may differ materially from those results projected in the statements These risks uncertainties and other factors include without limitation
our ability to complete the announced divestiture of our GR business on the expected terms and within the anticipated time period or at all which is dependent on the parties ability to satisfy certain closing conditions
All forward looking statements in this Annual Report on Form 10 K should be considered in the context of the risks and other factors described herein and in Item 1A above and as detailed from time to time in the Company s filings with the U S Securities and Exchange Commission Any forward looking statements speak only as of the date the statement is made and we undertake no obligation to update or revise any forward looking statements whether as a result of new information future events or otherwise except as required by federal securities laws It is not possible to identify all of the risks uncertainties and other factors that may affect future results In light of these risks and uncertainties the forward looking events and circumstances discussed in this Annual Report on Form 10 K may not occur and actual results may differ materially from those anticipated or implied in the forward looking statements Accordingly users of this Annual Report on Form 10 K are cautioned not to place undue reliance on the forward looking statements
The Company is exposed to the impact of changes in foreign currency exchange rates interest rates and the prices of various commodities used in the normal course of business To mitigate some of the near term volatility in our earnings and cash flows the Company manages certain of our exposures through the use of financial contracts contracts for physical delivery of a particular commodity and derivative financial instruments The Company s objective with these instruments is to reduce exposure to near term fluctuations in earnings and cash flows The Company s policy enables the use of foreign currency interest rate and commodity derivative financial instruments only to the extent necessary to manage exposures as described above The Company does not enter into such transactions for trading purposes
A discussion of the Company s accounting policies for derivative financial instruments as well as the Company s exposure to market risk is included in Notes 1 and 4 to the Consolidated Financial Statements Please refer to Note 4 for details of the fair values of derivative financial instruments and their classification on the Consolidated Balance Sheets
For purposes of disclosing the market risk inherent in its derivative financial instruments the Company uses sensitivity analysis disclosures that express the potential loss in fair values of market rate sensitive instruments resulting from changes in interest rates foreign currency exchange rates and commodity prices that assume instantaneous parallel shifts in exchange rates interest rate yield curves and commodity prices The following analysis provides such quantitative information regarding market risk There are certain shortcomings inherent in the sensitivity analysis presented primarily due to the assumption that exchange rates change instantaneously and that interest rates change in a parallel fashion In addition the analyses are unable to reflect the complex market reactions that normally would arise from the market shifts modeled
The Company has transactional foreign currency exposures related to buying selling and financing in currencies other than the local currencies in which it operates The Company enters into various forward contracts which change in value as foreign currency exchange rates change to preserve the carrying amount of foreign currency denominated assets liabilities commitments and certain anticipated foreign currency transactions Exposures in U S Dollars primarily relate to the Indian Rupee Brazilian Real South Korean Won Chinese Yuan Hong Kong Dollar and the European Euro exchange rates In addition exposures in European Euro primarily relate to the Polish Złoty Danish Krone and the U S Dollar These transactional risks are mitigated through the use of derivative financial instruments and balancing of cash deposits and loans The net fair value of derivative financial instruments used to limit exposure to foreign currency risk was a liability of less than 1 million as of December 31 2024 As of December 31 2024 the potential change in fair value for such financial instruments from an increase of 10 in the quoted foreign currency exchange rates would be a decrease of approximately 6 million
We have translation exposure resulting from translating the financial statements of foreign subsidiaries into United States Dollars Our most significant translation exposures are the European Euro Canadian Dollar Chinese Yuan Polish Złoty and Great Britain Pound in relation to the United States Dollar
The Company is subject to market risk from exposure to changes in interest rates due to its financing investing and cash management activities The Company has a Senior Revolving Credit Facility Receivables Securitization Facility other floating rate debt and cash and cash equivalents which are exposed to floating interest rates and may impact cash flow As of December 31 2024 and 2023 the Company had no borrowings on its Senior Revolving Credit Facility or Receivables Securitization Facility with the balance of other floating rate debt of 1 million Cash and cash equivalents were 361 million and 1 6 billion at December 31 2024 and 2023 respectively Based on the year end outstanding balances on floating rate debt a one percentage point increase in interest rates at December 31 2024 would increase our annual net interest expense by less than 1 million
The fair market value of the Company s senior notes are subject to interest rate risk The following table shows how a one percentage point increase in interest rates would impact the fair market value of the senior notes
The Company is exposed to changes in prices of commodities used in its operations primarily associated with energy such as natural gas and raw materials such as asphalt and polystyrene The Company enters into cash settled natural gas swap contracts in certain markets to protect against changes in natural gas prices that mature within 15 months however no financial instruments are currently used to protect against changes in raw material costs At December 31 2024 the net fair value of such swap contracts was an asset of 3 million An increase of 10 in the underlying commodity prices would result in an increase in fair value of 4 million as of December 31 2024 This amount excludes the offsetting impact of the price risk inherent in the physical purchase of the underlying commodities
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rules 13a 15 f and 15d 15 f under the Securities Exchange Act of 1934
Management has assessed the effectiveness of the Company s internal control over financial reporting as of December 31 2024 based on criteria established in the Internal Control Integrated Framework in 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission COSO
On May 15 2024 the Company completed its acquisition of Masonite International Corporation Masonite As a result the Company s management excluded the operations of Masonite from its assessment of internal control over financial reporting as of December 31 2024 Masonite represented 11 of the Company s consolidated total assets as of December 31 2024 and 13 of the Company s consolidated Net sales for the year ended December 31 2024 SEC guidelines permit companies to omit an acquired entity s internal control over financial reporting from its management assessment during the first year of the acquisition We plan to fully integrate Masonite into our internal control over financial reporting in 2025
PricewaterhouseCoopers LLP has audited the effectiveness of the internal controls over financial reporting as of December 31 2024 as stated in their Report of Independent Registered Public Accounting Firm within Item 8 Financial Statements and Supplementary Data
We have audited the accompanying consolidated balance sheets of Owens Corning and its subsidiaries the Company as of December 31 2024 and 2023 and the related consolidated statements of earnings of comprehensive earnings of stockholders equity and of cash flows for each of the three years in the period ended December 31 2024 including the related notes collectively referred to as the consolidated financial statements We also have audited the Company s internal control over financial reporting as of December 31 2024 based on criteria established in
In our opinion the consolidated financial statements referred to above present fairly in all material respects the financial position of the Company as of December 31 2024 and 2023 and the results of its operations and its cash flows for each of the three years in the period ended December 31 2024 in conformity with accounting principles generally accepted in the United States of America Also in our opinion the Company maintained in all material respects effective internal control over financial reporting as of December 31 2024 based on criteria established in
The Company s management is responsible for these consolidated financial statements for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management s Report on Internal Control Over Financial Reporting Our responsibility is to express opinions on the Company s consolidated financial statements and on the Company s internal control over financial reporting based on our audits We are a public accounting firm registered with the Public Company Accounting Oversight Board United States PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement whether due to error or fraud and whether effective internal control over financial reporting was maintained in all material respects
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the consolidated financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the consolidated financial statements Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk Our audits also included performing such other procedures as we considered necessary in the circumstances We believe that our audits provide a reasonable basis for our opinions
As described in Management s Report on Internal Control Over Financial Reporting management has excluded Masonite International Corporation from its assessment of internal control over financial reporting as of December 31 2024 because it was acquired by the Company in a purchase business combination during 2024 We have also excluded Masonite International Corporation from our audit of internal control over financial reporting Masonite International Corporation is a wholly owned subsidiary whose total assets and total revenues excluded from management s assessment and our audit of internal control over financial reporting represent 11 and 13 respectively of the related consolidated financial statement amounts as of and for the year ended December 31 2024
A company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles A company s internal control over financial reporting includes those policies and procedures that i pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company ii provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and iii provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that i relate to accounts or disclosures that are material to the consolidated financial statements and ii involved our especially challenging subjective or complex judgments The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements taken as a whole and we are not by communicating the critical audit matters below providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate
As described in Notes 1 and 7 to the consolidated financial statements on May 15 2024 the Company completed the acquisition of Masonite for a total purchase price of 3 2 billion Of the acquired intangible assets certain customer relationships made up the majority of total customer relationships recorded of 979 million The fair value of customer relationships was determined using the multi period excess earnings method Key assumptions under this method are the revenue growth rate adjusted EBITDA margin including the adjusted terminal EBITDA margin customer attrition rate discount rate tax rate and contributory asset charges
The principal considerations for our determination that performing procedures relating to the valuation of certain customer relationships acquired in the acquisition of Masonite is a critical audit matter are i the significant judgment by management when developing the fair value estimate of the customer relationships acquired ii a high degree of auditor judgment subjectivity and effort in performing procedures and evaluating management s significant assumptions related to the revenue growth rates adjusted terminal EBITDA margin customer attrition rate discount rate tax rate and contributory asset charges and iii the audit effort involved the use of professionals with specialized skill and knowledge
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements These procedures included testing the effectiveness of controls relating to the acquisition accounting including controls over management s valuation of certain customer relationships acquired These procedures also included among others i reading the purchase agreement ii testing management s process for developing the fair value estimate of the customer relationships acquired iii evaluating the appropriateness of the multi period excess earnings method used by management iv testing the completeness and accuracy of the underlying data used in the multi period excess earnings method and v evaluating the reasonableness of the significant assumptions used by management related to the revenue growth rates adjusted terminal EBITDA margin customer attrition rate discount rate tax rate and contributory asset charges Evaluating management s assumptions related to the revenue growth rates adjusted terminal EBITDA margin and tax rate involved considering i the current and past performance of the Masonite business ii the consistency with external market and industry data and iii whether the assumptions were consistent with evidence obtained in other areas of the audit Professionals with specialized skill and knowledge were used to assist in evaluating i the appropriateness of the multi period excess earnings method and ii the reasonableness of the customer attrition rate discount rate and contributory asset charges assumptions
As described in Notes 1 and 5 to the consolidated financial statements the Company s goodwill balance was 2 8 billion as of December 31 2024 and the goodwill associated with the Composites reporting unit was 423 million Management tests goodwill for impairment as of October 1 each year or more frequently should circumstances change or events occur that would
more likely than not reduce the fair value of a reporting unit below its carrying amount Subsequent to the annual test for the Composites reporting unit management performed an interim goodwill impairment test during the fourth quarter of 2024 primarily as a result of the progression of the strategic review of the glass reinforcements business which resulted in no impairment for the reporting unit Management estimates fair value using a discounted cash flow approach from the perspective of a market participant as well as the market approach Significant assumptions used to determine fair value of the Composites reporting unit are the revenue growth rates earnings before interest and taxes EBIT margins long term growth rate and the discount rate
The principal considerations for our determination that performing procedures relating to the interim goodwill impairment test of the Composites reporting unit is a critical audit matter are i the significant judgment by management when developing the fair value estimate of the Composites reporting unit ii a high degree of auditor judgment subjectivity and effort in performing procedures and evaluating management s significant assumptions in the discounted cash flow approach related to revenue growth rates EBIT margins the long term growth rate and discount rate for a portion of the Composites reporting unit and iii the audit effort involved the use of professionals with specialized skill and knowledge
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements These procedures included testing the effectiveness of controls relating to management s goodwill impairment test including controls over the valuation of the Composites reporting unit These procedures also included among others i testing management s process for developing the fair value estimate ii evaluating the appropriateness of the discounted cash flow and market approaches used by management iii testing the completeness and accuracy of data used in the discounted cash flow and market approaches and iv evaluating the reasonableness of the significant assumptions used by management related to the revenue growth rates EBIT margins long term growth rate and discount rate for a portion of the Composites reporting unit Evaluating management s assumptions related to the revenue growth rates and EBIT margins for a portion of the Composites reporting unit involved evaluating whether the assumptions used by management were reasonable considering i the current and past performance of a portion of the Composites reporting unit ii the consistency with external market and industry data and iii whether the assumptions were consistent with evidence obtained in other areas of the audit Professionals with specialized skill and knowledge were used to assist in evaluating i the appropriateness of the discounted cash flow and market approaches and ii the reasonableness of the long term growth rate and discount rate assumptions
Owens Corning a Delaware corporation is a residential and commercial building products leader committed to building a sustainable future through material innovation The Company operates within four segments Roofing Insulation Doors and Composites Through these lines of business Owens Corning manufactures and sells products worldwide We are a market leader in many of our major product categories
On May 15 2024 the Company acquired all of the outstanding shares of Masonite International Corporation Masonite at a purchase price of 133 00 per share the Arrangement Masonite is a leading global designer manufacturer marketer and distributor of interior and exterior doors and door systems for residential new construction and residential repair and remodeling The addition of Masonite s market leading doors business creates a new growth platform for the Company strengthening the Company s position in building and construction and expanding its offering of branded residential building products
Masonite s operating results and preliminary purchase price allocation have been included in the Company s newly established Doors reportable segment from May 15 2024 the effective date of the Arrangement within the Consolidated Financial Statements Please refer to Note 7 of the Consolidated Financial Statements for further information
On February 13 2025 the Company entered into a definitive agreement for the sale of the global glass reinforcements GR business for a purchase price of approximately 436 million less costs to sell The sale will complete Owens Corning s review of strategic alternatives for the business announced on February 9 2024 and aligns with the strategy to reshape the Company to focus on residential and commercial building products in North America and Europe During 2024 the Company incurred 46 million of costs related to this review Please refer to Note 23 of the Consolidated Financial Statements for further information
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period Actual results could differ materially from those estimates
We recognize revenue as the amount of consideration that we expect to receive in exchange for transferring promised goods or services to customers We do not adjust the transaction price for the effects of a significant financing component as the time period between control transfer of goods and services and expected payment is one year or less At the time of sale we estimate provisions for different forms of variable consideration discounts rebates returns and other refund liabilities based on historical experience current conditions and contractual obligations as applicable The estimated transaction price is typically not subject to significant reversals We adjust these estimates when the most likely amount of consideration we expect to receive changes although these changes are typically minor Sales value added and other similar taxes that we collect are excluded from revenue
Many of our customer volume commitments are short term and our performance obligations are generally limited to single purchase orders Substantially all of our revenue is recognized at a point in time when control of goods transfers to the customer Control transfer typically occurs when goods are shipped from our facilities or at other predetermined control transfer points for instance destination terms or consignment arrangements
We typically do not satisfy performance obligations without obtaining an unconditional right to payment from customers and therefore do not carry contract asset balances on the Consolidated Balance Sheets Contract liability balances are recorded separately from receivables on the Consolidated Balance Sheets in either Total current liabilities or Other liabilities depending on the timing of performance obligation satisfaction
We sell separately priced warranties that extend certain product and workmanship coverages beyond our standard product warranty which is described in Note 12 The up front consideration on extended warranty contracts is deferred and recognized as revenue over time based on the respective coverage period ranging from 16 to 20 years On an annual basis we expect to recognize approximately 9 million of revenue associated with these extended warranty contracts Additionally in certain limited cases we receive consideration before goods or services are transferred to the customer These customer down payments and deposits are deferred and typically recognized as revenue in the following quarters when we satisfy the related performance obligations
As of December 31 2024 our contract liability balances for extended warranties down payments and deposits collectively totaled 118 million As of December 31 2023 our contract liability balances totaled 101 million of which 21 million was recognized as revenue throughout 2024 As of December 31 2022 our contract liability balances for extended warranties down payments and deposits collectively totaled 89 million of which 18 million was recognized as revenue throughout 2023 As of December 31 2021 our contract liability balances for extended warranties down payments and deposits collectively totaled 76 million of which 17 million was recognized as revenue throughout 2022
As a practical expedient we recognize incremental costs of obtaining a contract if any as an expense when incurred if the amortization period of the asset would have been one year or less We do not have any costs to obtain or fulfill a contract that are capitalized under Accounting Standards Codification
Cost of sales includes material labor energy and manufacturing overhead costs including depreciation and amortization expense associated with the manufacture and distribution of the Company s products Provisions for warranties are provided in the same period that the related sales are recorded and are based on historical experience current conditions and contractual obligations as applicable Distribution costs include inbound freight costs purchasing and receiving costs inspection costs warehousing costs shipping and handling costs which include costs incurred relating to preparing packaging and shipping products to customers and other costs of the Company s distribution network We account for shipping and handling activities that occur after control of the related good transfers as fulfillment activities instead of performance obligations All shipping and handling costs billed to the customer are included as net sales in the Consolidated Statements of Earnings
Marketing and administrative expenses on the Consolidated Statements of Earnings are primarily related to employee salary and benefits outside service fees contributions to retirement plans healthcare plans and other administrative expenses Marketing and advertising expenses are included in Marketing and administrative expenses These costs include advertising and marketing communications which are expensed the first time the advertisement takes place Marketing and advertising expenses for the years ended December 31 2024 2023 and 2022 were 148 million 134 million and 125 million respectively
The Company incurs certain expenses related to science and technology These expenses include salaries building and equipment costs utilities administrative expenses materials and supplies associated with the improvement and development of the Company s products and manufacturing processes These costs are expensed as incurred
Basic earnings per share are computed using the weighted average number of common shares outstanding during the period Diluted earnings per share reflect the dilutive effect of common equivalent shares and increased shares that would result from the conversion of equity securities The effects of anti dilution are not presented
The Company defines cash and cash equivalents as cash and time deposits with maturities of three months or less when purchased Restricted cash primarily represents amounts received from a counterparty related to its performance assurance on an executory contract and is included in Other current assets on the Consolidated Balance Sheets These amounts are contractually required to be set aside and the counterparty can exchange the cash for another form of performance assurance at its discretion Please refer to Note 22 for additional disclosures related to Supplemental Cash Flow Information
Trade accounts receivable are recorded at the invoiced amount and do not bear interest Consistent with the requirements of ASU 2016 13 Financial Instruments Credit Losses Topic 236 the allowance for credit losses is based on the Company s assessment of the expected losses of customer accounts The Company regularly reviews the allowance by considering factors such as historical experience credit quality the age of the accounts receivable balances and current economic conditions that may affect a customer s ability to pay Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered
Inventory costs include material labor and manufacturing overhead costs including depreciation and amortization expense associated with the manufacture and distribution of the Company s products Inventories are stated at lower of cost or net realizable value and expense estimates are made for excess and obsolete inventories Cost is determined by the first in first out FIFO method
The Company accounts for investments in affiliates of 20 to 50 ownership when the Company does not have a controlling financial interest using the equity method under which the Company s share of earnings and losses of the affiliate is reflected in earnings and dividends are credited against the investment in affiliate when declared I
nvestments in affiliates are recorded in Other non current assets on the Consolidated Balance Sheets and as of December 31 2024 and 2023 the total value of investments was 86 million and 29 million respectively
Goodwill assets are not amortized but are tested for impairment on at least an annual basis The Company has the option to use a qualitative approach to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value as a basis for determining whether it is necessary to perform a quantitative test In the current year as part of the annual assessment the Company used both a qualitative and quantitative approach to determine whether the fair value of a reporting unit was less than its carrying amount
Events and circumstances we consider in performing the qualitative assessment include macro economic conditions market and industry conditions internal cost factors and the operational stability and the overall financial performance of the reporting units When it is determined necessary for the Company to perform the quantitative testing process for goodwill the Company estimates fair values using a discounted cash flow approach from the perspective of a market participant Significant assumptions used in the discounted cash flow approach are revenue growth rates and earnings before interest and taxes EBIT margins used in estimating discrete period cash flow forecasts of the reporting unit the discount rate and the long term revenue growth rate and EBIT margin used in estimating the terminal business value The cash flow forecasts of the reporting units are based upon management s long term view of our markets and are the forecasts that are used by senior
management and the Board of Directors to evaluate operating performance The discount rate utilized is management s estimate of what the market s weighted average cost of capital is for a company with a similar debt rating and stock volatility as measured by beta The terminal business value is determined by applying the long term growth rate to the latest year for which a forecast exists As part of our goodwill quantitative testing process we would evaluate whether there are reasonably likely changes to management s estimates that would have a material impact on the results of the goodwill impairment testing
Other indefinite lived intangible assets are not amortized but are tested for impairment on at least an annual basis or when determined to have a finite useful life Substantially all of the indefinite lived intangible assets are in trademarks and trade names The Company uses the royalty relief approach to determine whether it is more likely than not that the fair value of these assets is less than its carrying amount This review is performed annually or when circumstances arise which indicate there may be impairment When applying the royalty relief approach the Company performs a discounted cash flow analysis based on the value derived from owning these trademarks and trade names and being relieved from paying royalty to third parties Significant assumptions used include the discrete period revenue growth rates long term revenue growth rate royalty rates discount rates and terminal value
The inputs for the goodwill and indefinite lived intangible tests are considered Level 3 inputs under the fair value hierarchy as they are the Company s own data and are unobservable in the marketplace Indefinite lived intangible assets purchased through acquisitions are generally tested qualitatively for impairment in the first year following the acquisition before transitioning to the standard methodology described herein in subsequent years
The Company is allotted carbon emission credit allowances emissions rights from several of the governments under which it operates These emissions rights are recorded at market value as of the date of issuance and are classified as Intangible assets on the Consolidated Balance Sheets When the Company emits more than the allotted amounts additional emissions rights must be purchased
Property plant and equipment are stated at cost and depreciated over their estimated useful lives using the straight line method The range of useful lives for the major components of the Company s property plant and equipment is as follows
When assets are retired or otherwise disposed their carrying values and accumulated depreciation are removed from the accounts and any gain or loss is included in the Consolidated Statements of Earnings Expenditures for normal maintenance and repairs are expensed as incurred
Precious metals used in our production tooling are included in property plant and equipment and are depleted as they are consumed during the production process Depletion typically represents an annual expense of 2 of the outstanding value and is recorded in Cost of sales on the Consolidated Statements of Earnings
The Company leases certain equipment and facilities under both operating and finance leases expiring on various dates through 2050 The nature of these leases generally fall into the following five categories real estate material handling equipment fleet vehicles office equipment and energy equipment
For leases with initial terms greater than 12 months we consider these our right of use assets and record the related asset and obligation at the present value of lease payments over the term For leases with initial terms equal to or less than 12 months we do not consider them as right of use assets and instead consider them short term lease costs that are recognized on a straight line basis over the lease term
Our leases may include escalation clauses renewal options and or termination options that are factored into our determination of lease payments when reasonably certain These options to extend or terminate a lease are at our discretion We have elected to take the practical expedient and not separate lease and non lease components of contracts We estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement Our lease agreements do not contain any material residual value guarantees
The Company evaluates tangible and intangible long lived assets for impairment when triggering events have occurred This requires significant assumptions including projected cash flows projected income tax rate and terminal business value These inputs are considered Level 3 inputs under the fair value hierarchy as they are the Company s own data and are unobservable in the marketplace Changes in management intentions market conditions or operating performance could indicate that impairment charges might be necessary that could be material to the Company s Consolidated Financial Statements in any given period
We review supplier terms and conditions on an ongoing basis and have negotiated payment terms extensions in recent years in connection with our efforts to reduce working capital and improve cash flow Separate from those terms extension actions certain of our subsidiaries have entered into paying agency agreements with third party administrators These voluntary supply chain finance programs collectively the Programs generally give participating suppliers the ability to sell or otherwise pledge as collateral their receivables from the Company to the participating financial institutions at the sole discretion of both the suppliers and financial institutions The Company is not a party to the arrangements between the suppliers and the financial institutions The Company s obligations to its suppliers including amounts due and scheduled payment dates are not impacted by the suppliers decisions to sell or otherwise pledge as collateral amounts under these arrangements The Company s payment terms to the financial institutions including the timing and amount of payments are based on the original supplier invoices One of our Programs includes a parent guarantee to the participating financial institution for a certain U S subsidiary that at the time of the respective program s inception in 2015 was a guarantor subsidiary of the Company s credit agreement The obligations are presented as Accounts payable within Total current liabilities on the Consolidated Balance Sheets and all activity related to the obligations is presented within operating activities on the Consolidated Statements of Cash Flow
The Company recognizes current tax liabilities and assets for the estimated taxes payable or refundable on the tax returns for the current year Deferred tax balances reflect the impact of temporary differences between the carrying amount of assets and liabilities and their tax basis Amounts are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered In addition realization of certain deferred tax assets is dependent upon our ability to generate future taxable income The Company records a valuation allowance to reduce its deferred tax assets to the amount that it believes is more likely than not to be realized In addition the Company estimates tax reserves to cover potential taxing authority claims for income taxes and interest attributable to audits of open tax years Please refer to Note 21 for additional disclosures related to Income Taxes
Taxes are assessed by various governmental authorities at different rates on many different types of transactions The Company charges sales tax or value added tax VAT on sales to customers where applicable as well as captures and claims back all available VAT that has been paid on purchases VAT is recorded in separate payable or receivable accounts and does not affect Net Sales or Cost of Sales line items on the Consolidated Statement of Earnings VAT receivable is recorded as a percentage of qualifying purchases at the time the vendor invoice is processed VAT payable is recorded as a percentage of qualifying sales at the time an Owens Corning sale to a customer subject to VAT occurs Amounts are paid to the taxing authority according to the method and collection prescribed by local regulations Where applicable VAT payable is netted against VAT receivable The Company also pays sales tax to vendors who include a tax required by government regulations to the purchase price charged to the Company
Accounting for pensions and other postretirement benefits involves estimating the cost of benefits to be provided well into the future and attributing that cost over the time period each employee works To accomplish this extensive use is made of assumptions about investment returns discount rates inflation mortality turnover and medical costs Please refer to Notes 15 and 16 for additional disclosures related to pension plans and other postretirement benefits respectively
The Company performs an analysis for effectiveness of its derivatives designated as hedging instruments at the end of each quarter based on the terms of the contracts and the underlying items being hedged The change in the fair value of cash flow hedges is deferred in Accumulated other comprehensive deficit AOCI and is subsequently recognized in Cost of sales for commodity and foreign currency cash flow hedges on the Consolidated Statements of Earnings in order to mirror the location of the hedged items impacting earnings Cash settlements for commodity and foreign currency hedges qualifying as cash flow hedges are included in Operating activities in the Consolidated Statements of Cash Flows
The Company has translation exposure resulting from translating the financial statements of foreign subsidiaries into U S Dollars which is recognized in Currency translation adjustment a component of AOCI The Company uses cross currency forward contracts to hedge portions of the net investment in foreign subsidiaries against fluctuations in foreign exchange rates The changes in fair values of these derivative instruments are recognized in Currency translation adjustment a component of AOCI with recognition of the excluded components amortized to Interest expense net on the Consolidated Statements of Earnings Cash settlements for derivatives qualifying as net investment hedges are included in Investing activities in the Consolidated Statements of Cash Flows
The Company uses forward currency exchange contracts to manage existing exposures to foreign exchange rate risks related to assets and liabilities recorded on the Consolidated Balance Sheets Gains and losses resulting from the changes in fair value of these instruments are recorded in Other expense net on the Consolidated Statements of Earnings and are substantially offset by net revaluation impacts on foreign currency denominated balance sheet exposures which are also recorded in Other expense net Cash settlements for non designated derivatives are included in the Consolidated Statements of Cash Flows in the category that is consistent with the nature of the derivative instrument which is generally the same category as the underlying item being hedged
Please refer to Notes 4 7 14 15 and 16 for fair value disclosures of derivative financial instruments acquisitions long term debt pension plans and postemployment and postretirement benefits other than pensions
The functional currency of the Company s subsidiaries is generally the applicable local currency Assets and liabilities of foreign subsidiaries are translated into United States Dollars at the period end rate of exchange and their Statements of Earnings Loss and Statements of Cash Flows are converted at the monthly average rate The resulting translation adjustment is included in AOCI in the Consolidated Balance Sheets and Consolidated Statements of Stockholders Equity Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are recorded in Other expense net in the Consolidated Statements of Earnings as incurred As discussed in the Derivative Financial Instruments section above the Company uses non designated foreign currency derivative financial instruments to mitigate this risk The Company recorded foreign currency transactional losses net of associated derivative activity of less than 1 million for the year ended December 31 2024 The Company recorded foreign currency transactional losses net of associated derivative activity of 2 million and 4 million during the years ended December 31 2023 and 2022 respectively Please refer to Note 4 for additional disclosures related to non designated derivatives
In the first quarter of 2021 a related party relationship was established as a result of a member of the Company s Board of Directors being named an executive officer of one of the Company s preexisting suppliers The related party transactions with this supplier consist of the purchase of raw materials Purchases from the related party supplier were 100 million 92 million and 129 million for the twelve months ended December 31 2024 2023 and 2022 respectively As of December 31 2024 2023 and 2022 amounts due to the related party supplier were 3 million 5 million and 3 million respectively
In the fourth quarter of 2023 the Company signed a municipal tax incentive agreement as part of which the Company sold its Fort Smith Arkansas plant and equipment together the facility to the municipality of Fort Smith for cash of 165 million The Company then on the same day entered into an agreement to lease the facility from the municipality of Fort Smith over ten years for a total lease liability of 165 million and immediately purchased ten year municipal bonds at 6 7 interest issued by the municipality of Fort Smith with cash of 165 million In the Consolidated Statements of Cash Flows the cash proceeds from the sale of the facility and the cash used for the bond purchase are presented on a net basis within the Net cash flows used by investing activities
The monthly lease payments under the financing lease obligation and the semi annual bond coupon payments associated with the bond investment are legally offset and as such the offset lease obligation and bond investment amounts are presented on a net basis on the Consolidated Balance Sheets There will be no cash payments made by either party over the ten year period At the termination of the lease agreement a non cash exchange will occur where the municipality will call the bond and return title of the facility to the Company
The Company will have the opportunity to purchase additional bonds representing the incremental capital expenditures up to 240 million In the fourth quarter of 2024 the Company sold additional equipment purchased after the initial bonds for cash of 15 million Accordingly on December 27 2024 the Company purchased additional ten year municipal bonds at 6 7 interest issued by the municipality of Fort Smith with cash of 15 million based on eligible spend incurred in 2024 In the Consolidated Statements of Cash Flows the cash proceeds from the sale of the equipment and the cash used for the bond purchase are presented on a net basis within the Net cash flows used by investing activities
The transactions did not qualify for sale leaseback treatment under ASC 842 and therefore the plant s net book value as well as the net book value of the equipment sold remains in Property plant and equipment net on the Consolidated Balance Sheets Depreciation expense on the assets sold remains within Cost of Sales on the Consolidated Statements of Earnings
The following table summarizes recent Accounting Standard Updates ASU issued by the Financial Accounting Standards Board FASB that could have an impact on the Company s Consolidated Financial Statements
The amendment in this update clarifies the effective date of update 2024 03 which is that public business entities are required to adopt the guidance in interim periods within annual reporting periods beginning after December 15 2027
We are currently assessing the impact adopting this standard will have on our Consolidated Financial Statement disclosures We do not believe the adoption of this guidance will have a material effect on our results of operations
We are currently assessing the impact adopting this standard will have on our Consolidated Financial Statement disclosures We do not believe the adoption of this guidance will have a material effect on our results of operations
This amendment adds an illustrative example to demonstrate how an entity should apply the scope guidance in paragraph 718 10 15 3 to determine whether profits interest and similar awards should be accounted for in accordance with Topic 718
This standard modifies the rate reconciliation and income taxes paid disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation as well as requiring income taxes paid to be disaggregated by jurisdiction
We are currently assessing the impact adopting this standard will have on our Consolidated Financial Statement disclosures We do not believe the adoption of this guidance will have a material effect on our results of operations
The Company has four reportable segments Roofing Insulation Doors and Composites Accounting policies for the segments are the same as those for the Company The Company s four reportable segments are defined as follows
Within our Insulation segment the Company manufactures and sells thermal and acoustical batts loosefill insulation spray foam insulation foam sheathing and accessories It also manufactures and sells glass fiber pipe insulation energy efficient flexible duct media bonded and granulated stone wool insulation cellular glass insulation and foam insulation used in above and below grade construction applications
Within our Composites segment the Company manufactures fabricates and sells glass reinforcements in the form of fiber Glass reinforcement materials are also used by the Composites segment to manufacture and sell high value applications in the form of non wovens fabrics and composite lumber
The following tables show a disaggregation of our net sales by segment and geographic region Corporate eliminations shown below largely reflect intercompany sales from Composites to Roofing External customer sales are attributed to geographic region based upon the location from which the product is sold to the external customer
Our contracts with customers are broadly similar in nature throughout our reportable segments but the amount timing and uncertainty of revenue and cash flows may vary in each reportable segment due to geographic and end market economic factors
The Company had two customers that exceeded 10 of consolidated net sales for the twelve months ended December 31 2024 The first customer which is a customer of the Roofing Insulation and Doors segments accounted for approximately 13 of the Company s consolidated net sales in 2024 The second customer which is a customer of both the Roofing and Insulation segments accounted for approximately 11 of the Company s consolidated sales in 2024 and 2023 No individual customers accounted for 10 or more of consolidated sales in 2022
In the United States sales are primarily related to the residential housing market and commercial and industrial applications Residential market demand is driven by housing starts and repair and remodeling activity influenced by existing home sales seasonal home improvement and damage from major storms Significant portions of our residential products across our
reportable segments are used interchangeably in both new construction and repair and remodeling and our customers typically distribute or use the products for both applications U S commercial and industrial revenues are largely driven by U S industrial production growth commercial construction activity and overall economic conditions in the U S
Outside of the United States Europe Asia Pacific and Rest of world sales are primarily related to commercial and industrial applications and to a lesser extent residential applications in certain countries Throughout the international regions demand is primarily driven by industrial production growth commercial construction activity and overall economic conditions in each respective geographical region
The Company identifies the Chief Executive Officer as the chief operating decision maker CODM In applying the criteria set forth in the standards for reporting information about segments in financial statements we have determined that we have four reportable segments Roofing Insulation Doors and Composites The key factors used to identify these reportable segments are the organization and alignment of our internal operations and the nature of our products The CODM uses Earnings Before Interest and Taxes EBIT for each reportable segment to assess segment performance and make decisions on the allocation of resources Segment EBIT targets are established on an annual basis and used by the CODM throughout the year to compare with actual results Quarterly forecasts supplement annual targets and provide incremental information utilized to assess the performance of a segment Segment EBIT variance analysis further provides insight into segment operational cost optimization
The Company does not regularly provide significant segment expense detail to the CODM EBIT by segment consists of net sales less related costs and expenses which are mainly comprised of cost of sales and marketing and administrative costs EBIT is presented on a basis that is used internally for evaluating segment performance Certain items such as general corporate expenses or income and certain other expense or income items are excluded from the internal evaluation of segment performance Accordingly these items are not reflected in EBIT for our reportable segments and are included within Corporate Other and Eliminations
In 2024 2023 and 2022 General corporate depreciation and amortization expense included 13 million 101 million and 26 million respectively of accelerated depreciation and amortization related to restructuring actions further explained in Note 13 to the Consolidated Financial Statements
The Company is exposed to among other risks the impact of changes in commodity prices foreign currency exchange rates and interest rates in the normal course of business The Company s risk management program is designed to manage the exposure and volatility arising from these risks and utilizes derivative financial instruments to offset a portion of these risks The Company uses derivative financial instruments only to the extent necessary to hedge identified business risks and does not enter into such transactions for trading purposes
The Company generally does not require collateral or other security with counterparties to these financial instruments and is therefore subject to credit risk in the event of nonperformance however the Company monitors credit risk and currently does not anticipate nonperformance by other parties Contracts with counterparties generally contain right of offset provisions These provisions effectively reduce the Company s exposure to credit risk in situations where the Company has gain and loss positions outstanding with a single counterparty It is the Company s policy to offset on the Consolidated Balance Sheets the amounts recognized for derivative instruments with any cash collateral arising from derivative instruments executed with the same counterparty under a master netting agreement As of December 31 2024 and 2023 the Company did not have any amounts on deposit with any of its counterparties nor did any of its counterparties have any amounts on deposit with the Company
Our derivatives consist of natural gas forward swaps cross currency swaps foreign exchange forward contracts and U S treasury rate lock agreements all of which are over the counter and not traded through an exchange The Company uses widely accepted valuation tools to determine fair value such as discounting cash flows to calculate a present value for the derivatives The models use Level 2 inputs which are observable market based inputs or unobservable inputs that are corroborated by market data Examples include forward curves and other commonly quoted observable transactions and prices The fair value of our derivatives and hedging instruments are all classified as Level 2 investments within the three tier hierarchy
Gains losses related to foreign currency derivatives were substantially offset by net revaluation impacts on foreign currency denominated balance sheet exposures which were also recorded in Other expense net Please refer to the Other Derivatives section below for additional detail
The Company uses a combination of derivative financial instruments which qualify as cash flow hedges and physical contracts to manage forecasted exposure to electricity and natural gas prices As of December 31 2024 and 2023 the notional amounts of these natural gas forward swaps were 7 million MMBTu or MMBTu equivalent based on U S and European indices The Company has designated these natural gas forward swaps as cash flow hedges with the last hedge maturing no later than March 2026 A net unrecognized gain of 3 million related to these natural gas forward swaps was included in AOCI as of December 31 2024 3 million of which is expected to be reclassified into earnings in the next 12 months
In 2020 the Company entered into a 175 million forward U S Treasury rate lock agreement to manage the U S Treasury portion of its interest rate risk associated with the anticipated issuance of certain 10 year fixed rate senior notes The Company designated this outstanding forward U S Treasury rate lock agreement which expired on December 15 2022 as a cash flow hedge The locked fixed rate of this agreement was 0 994 In September 2022 a gain of 6 million was recognized as a result of a change in the forecasted issuance of certain senior notes In December 2022 the Company received cash of 37 million upon the settlement of the rate lock agreement of which 31 million will be amortized as a component of interest expense upon the future issuance of senior notes In May 2024 the Company issued new senior notes and began amortizing the 31 million over the life of the Company s 5 700 senior notes due 2034 of which 1 million was recognized during the twelve months ended December 31 2024 The unrecognized gain of 30 million was included in AOCI as of December 31 2024
The Company has translation exposure resulting from translating the financial statements of foreign subsidiaries into U S Dollars which is recognized in Currency translation adjustment a component of AOCI In the second quarter of 2022 the Company terminated the remaining cross currency forward contracts related to the hedged portions of the net investment in foreign subsidiaries resulting in cash proceeds of 11 million
The Company uses forward currency exchange contracts to manage existing exposures to foreign exchange risk related to assets and liabilities recorded on the Consolidated Balance Sheets As of December 31 2024 the Company had notional amounts of 176 million for non designated derivative financial instruments related to foreign currency exposures in U S Dollars primarily related to the Indian Rupee Brazilian Real South Korean Won Chinese Yuan Hong Kong Dollar and the European Euro In addition the Company had notional amounts of 98 million for non designated derivative financial instruments related to foreign currency exposures in European Euro primarily related to the Polish Złoty Danish Krone and the U S Dollar
The Company tests goodwill and indefinite lived intangible assets for impairment as of October 1st each year or more frequently should circumstances change or events occur that would more likely than not reduce the fair value of a reporting unit below its carrying amount
The annual impairment tests performed in the fourth quarter of 2023 indicated that the business enterprise value of the Composites reporting unit exceeded its carrying value by approximately 5 Given this narrow cushion of Composites reporting unit fair value in excess of carrying value and the ongoing strategic review of the glass reinforcements business the Company performed an interim goodwill impairment test as of September 30 2024 for the Composites reporting unit The interim testing indicated that the business enterprise value of the Composites reporting unit exceeded its carrying value by less than 10
The annual tests performed in the fourth quarter of 2024 and 2023 resulted in no impairment of goodwill The Company elected to perform the qualitative approach on all of its reporting units After evaluating and weighing all relevant events and circumstances we concluded it is more likely than not that the fair value of the Roofing and Insulation reporting units exceeds their respective carrying value amounts while the Doors reporting unit business enterprise value approximates its carrying value given the acquisition that occurred in May 2024
Given the narrow cushion of Composites reporting unit fair value in excess of carrying value as a result of the third quarter of 2024 impairment testing the Company performed a quantitative analysis for the Composites reporting unit as of October 1 2024 Testing indicated that the cushion remained less than 10
Due to the passage of time since the last quantitative analysis the Company elected to perform a quantitative analysis for the Roofing and Insulation reporting units The fair value of each of our reporting units was in excess of its carrying value and thus no impairment exists The fair value of the Roofing and Insulation reporting units continues to substantially exceeded the carrying value as of the date of our assessment
Subsequent to the annual test for the Composites reporting unit the Company performed an interim goodwill impairment test during the fourth quarter of 2024 primarily as a result of the progression of the strategic review of the glass reinforcements business As a result of this test we determined that no impairment existed for the reporting unit Testing indicated that the business enterprise value for the Composites reporting unit exceeded its carrying value by less than 5
There was uncertainty as to the outcome of the strategic review of our glass reinforcements business and the macroeconomic factors that impact this reporting unit The likelihood of a future impairment could be increased by a sustained downturn in these macroeconomic factors a change in the long term revenue growth or profitability for this reporting unit or the outcome of the strategic review
As part of our quantitative testing process for goodwill of the Composites reporting unit we estimate fair value using a discounted cash flow approach from the perspective of a market participant as well as the market approach For the market approach we use market multiples derived from a set of similar companies Significant assumptions used in the discounted cash flow approach are the revenue growth rates EBIT margins long term growth rate and the discount rate The terminal business value is determined by applying the long term growth rate to the latest year for which a forecast exists
Fair values used in testing for potential impairment of our trademarks and trade names are calculated using the relief from royalty method by applying an estimated market value royalty rate to the forecasted revenues of the businesses that utilize those assets The assumed cash flows from this calculation are discounted at a rate based on a market participant discount rate
As of December 31 2024 there is one indefinite lived intangible asset that is at an increased risk of impairment of which is used by our Insulation segment and was partially impaired in the fourth quarter of 2022 A change in the estimated long term revenue growth rate or discount rate for the segment could increase the likelihood of a future impairment The following table presents the carrying values of this asset as of December 31 2024
The annual test performed in the fourth quarter of 2023 resulted in no impairment of indefinite lived intangible assets As of December 31 2023 there were two indefinite lived intangible assets that were at an increased risk of impairment both of which are used by our Insulation segment and were partially impaired in the fourth quarter of 2022
The annual tests performed in the fourth quarter of 2022 resulted in impairment of five of the Company s indefinite lived intangible assets Based on the results of this testing the Company recorded pre tax non cash impairment charges totaling 96 million in the fourth quarter of 2022 These charges were recorded in Other expense net on the Consolidated Statements of Earnings and were included in the Corporate Other and Eliminations reporting category
These charges included the following within the Insulation segment a pre tax impairment charge of 63 million for a trade name used by our European building and technical insulation business due to the effect of a higher discount rate associated with rising interest rates and general economic and geopolitical uncertainty within the European markets resulting in a slightly lower profitability outlook a pre tax impairment charge of 12 million related to a trademark used on global cellular glass insulation products due to the effect of a higher discount rate associated with rising interest rates and general economic and geopolitical uncertainty within the European markets a pre tax impairment charge of 8 million for a trademark used on stone wool insulation products sold in the United States due to forecasted profitability of the product line
The remaining 13 million pre tax impairment charge for trademarks used within the components business in our Roofing segment was due to the effect of a higher discount rate associated with rising interest rates and forecasted profitability of a specific product line
The Company amortizes the cost of other intangible assets over their estimated useful lives which individually range up to 25 years The Company s future cash flows are not materially impacted by its ability to extend or renew agreements related to its amortizable intangible assets
During the fourth quarter of 2024 the Company determined that certain asset groups should be tested for recoverability primarily as a result of the progression of the strategic review of the glass reinforcements business Recoverability of the long lived assets was measured by comparing the carrying amount of the asset groups to the future net undiscounted cash flows expected to be generated by the asset groups Specifically for the glass reinforcements asset group the Company used an undiscounted cash flow model giving consideration to probability weighted cash flows of differing outcomes of the strategic review The comparison indicated that one of the asset groups the glass reinforcements asset group was not recoverable
Fair value of the glass reinforcements asset group was calculated using a discounted cash flow model and market information obtained through the strategic review to estimate the fair value of the asset group with weighting applied As a result of the analysis performed the Company recorded pre tax asset impairment charges for the amount by which the carrying value exceeded its fair value of 483 million for the year ended December 31 2024 which is included in Impairment due to strategic review on the Consolidated Statements of Earnings These charges include 439 million related to property plant and equipment 30 million related to operating lease right of use assets and 14 million related to definite lived intangible assets
The primary assumption used in the fair value analysis was the weighting of the discounted cash flow model and market information The fair value measurements are classified as Level 3 within the fair value hierarchy as defined in ASC 820 Fair Value Measurement due to the unobservable inputs used
Amortization expense for intangible assets for the years ended December 31 2024 2023 and 2022 was 132 million 94 million and 55 million respectively In 2023 amortization expense included 25 million of accelerated amortization related to restructuring actions further explained in Note 13 to the Consolidated Financial Statements
Machinery and equipment includes certain precious metals used in our production tooling which comprise approximately 7 and 10 of total machinery and equipment as of December 31 2024 and December 31 2023 respectively
Our production tooling needs in our Composites segment are changing due to a strategic shift in the Company s metal ownership portfolio as well as in response to changes in economic and technological factors As a result the Company sold certain precious metals resulting in gains of 19 million for the twelve months ended months ended December 31 2024 There were no significant sales of precious metals resulting in gains or losses during the twelve months ended December 31 2023 and December 31 2022 These gains are included in Other expense net on the Consolidated Statements of Earnings and are reflected in the Corporate Other and Eliminations reporting category
From time to time we also exchange certain precious metals used in production tooling for certain other precious metals to be used in production tooling There were no significant non cash exchanges during the twelve months ended December 31 2024 and December 31 2023 During the twelve months ended December 31 2022 these non cash exchanges resulted in a net increase to Machinery and equipment of 18 million and gains totaling 18 million These gains are included in Other expense net on the Consolidated Statements of Earnings and reflected in the Corporate Other and Eliminations reporting category These non cash investing activities are not included in Net cash flow used by investing activities in the Consolidated Statements of Cash Flows We do not expect these non cash exchanges to materially impact our current or future capital expenditure requirements or rate of depletion
During the fourth quarter of 2024 the Company determined that certain asset groups should be tested for recoverability primarily as a result of the progression of the strategic review of the glass reinforcements business Recoverability of the long lived assets was measured by comparing the carrying amount of the asset groups to the future net undiscounted cash flows expected to be generated by the asset groups Specifically for the glass reinforcements asset group the Company used an undiscounted cash flow model giving consideration to probability weighted cash flows of differing outcomes of the strategic review The comparison indicated that one of the asset groups the glass reinforcements asset group was not recoverable
Fair value of the glass reinforcements asset group was calculated using a discounted cash flow model and market information obtained through the strategic review to estimate the fair value of the asset group with weighting applied As a result of the analysis performed the Company recorded pre tax asset impairment charges for the amount by which the carrying value exceeded its fair value of 483 million for the year ended December 31 2024 which is included in Impairment due to strategic review on the Consolidated Statements of Earnings These charges include 439 million related to property plant and equipment 30 million related to operating lease right of use assets and 14 million related to definite lived intangible assets
The primary assumption used in the fair value analysis was the weighting of the discounted cash flow model and market information The fair value measurements are classified as Level 3 within the fair value hierarchy as defined in ASC 820 Fair Value Measurement due to the unobservable inputs used
For the years ended December 31 2024 2023 and 2022 depreciation expense was 503 million 481 million and 447 million respectively which includes depletion expense related to precious metals used in our production tooling In 2024 2023 and 2022 depreciation expense included 13 million 76 million and 26 million respectively of accelerated depreciation related to restructuring actions further explained in Note 13 to the Consolidated Financial Statements
On February 8 2024 the Company entered into an Arrangement Agreement the Arrangement Agreement with Masonite International Corporation a British Columbia corporation Masonite pursuant to which the Company agreed to acquire all of the issued and outstanding common shares of Masonite at a purchase price of 133 00 per share the Arrangement On May 15 2024 as determined by the Arrangement Agreement the Company completed the acquisition of 100 of the issued and outstanding shares of Masonite for 133 00 per share in cash without interest for a total purchase price of 3 2 billion The acquisition was funded primarily with debt proceeds of 2 8 billion and cash on hand Please refer to the discussion under 364 Day Credit Facility in Note 14 of the Consolidated Financial Statements for further information
Masonite is a leading global designer manufacturer marketer and distributor of interior and exterior doors and door systems for the residential new construction and residential repair and remodeling markets The addition of Masonite s market leading doors business creates a new growth platform for the Company strengthening the Company s position in building and construction and expanding its offering of branded residential building products
Masonite s operating results and preliminary purchase price allocation have been included in the Company s newly established Doors reportable segment from May 15 2024 the effective date of the Arrangement within the Consolidated Financial Statements Doors contributed revenues of 1 448 million and earnings of 74 million to the Company for the period from May 15 2024 to December 31 2024 Please refer to Note 2 of the Consolidated Financial Statements for further information
For the twelve months ended months ended December 31 2024 the Company incurred 49 million of transaction costs related to the Arrangement These expenses are included in Other expense net on the Company s Consolidated Statements of Earnings
The closing cash as part of preliminary estimated consideration was calculated at the price of 133 00 per outstanding Masonite common share At the close of the acquisition of Masonite there were 22 07 million Masonite common shares outstanding
The preliminary estimated fair value of Owens Corning common stock underlying Masonite outstanding equity awards that have been converted into awards with respect to Owens Corning common stock is calculated as follows
a Represents the Masonite stock awards that have been converted into Owens Corning equity awards upon completion of the acquisition of Masonite based on awards outstanding at May 15 2024 Masonite equity awards include awards issued under various stock incentive plans of Masonite
b The exchange rate was determined by the consideration amount divided by the volume weighted average closing sale price of one share of Owens Corning common stock for the ten consecutive trading days ended May 15 2024 in accordance with the terms of the Arrangement Agreement
On May 15 2024 the effective date of the Arrangement the Company transferred consideration to Masonite to repay the Masonite 2027 term loan facility the Masonite term loan facility This repayment was required by the change in control provision within the terms of the Masonite term loan facility
The Company has applied the acquisition method of accounting in accordance with Accounting Standards Codification ASC Topic 805 Business Combinations and recognized assets acquired and liabilities assumed at their fair values as of the effective date of the Arrangement with the excess purchase consideration recorded to goodwill The Company has not yet finalized the valuation of the assets acquired and liabilities assumed as of December 31 2024 The Company is continuing to obtain information to complete its valuation of certain assets and liabilities and during the twelve months ended December 31 2024 the Company recorded measurement period adjustments to the purchase price allocation Additional adjustments may be recorded to the fair value of intangible assets property plant and equipment goodwill and deferred income taxes among other items during the measurement period a period not to exceed 12 months from the acquisition date
The following table summarizes the preliminary acquisition date fair value net of measurement period adjustments of net tangible and intangible assets acquired net of liabilities assumed as part of the Arrangement
Preliminary purchase consideration allocation resulted in 1 5 billion in goodwill During the twelve months ended December 31 2024 the Company increased the value of goodwill by 183 million as a result of measurement period adjustments The goodwill is not deductible for tax purposes The factors contributing to the recognition of the amount of goodwill are based on several strategic and synergistic benefits that are expected to be realized from the acquisition
The fair value of inventory was determined by the market selling price of the inventory less the remaining manufacturing and selling costs and a normal profit margin on those manufacturing and selling efforts The fair value of inventory has been stepped up by 18 million this amount has been fully amortized to Cost of Sales as the inventory was sold
The preliminary fair value of property plant and equipment is 859 million and was determined using cost and market approaches The cost approach reflects the amount that would be required to replace the asset to service capacity this approach was used where there was historical data available Where there was not historical data available the market approach was used this approach reflects recent sales of identical or comparable assets
The preliminary fair value of acquired intangible assets is 1 4 billion During the twelve months ended December 31 2024 the Company reduced the value of acquired intangibles by 221 million as we continue to obtain information used to determine the fair value during the measurement period There were no material impacts to the Consolidated Statements of Earnings as a result of this adjustment The fair value of customer relationships was determined using the multi period excess earnings method Key assumptions under this method are the revenue growth rate adjusted EBITDA margin including the adjusted terminal EBITDA margin customer attrition rate discount rate tax rate and contributory asset charges The fair value of trade names were determined using the relief from royalty method Key assumptions under this method are future cash flow estimates royalty rate and discount rate
The Company s acquisition of Masonite included joint ventures with Dominance Industries Inc 45 owned and Vanair Design Inc 30 owned The acquisition also included a 25 non controlling interest in Sacopan Inc for the portion owned by a third party and a 50 non controlling interest in Magna Foremost SDN BHD for the portion owned by a third party The value of these investments and non controlling interests were determined using an equally weighted value from the income approach and the market approach
The following table summarizes on an unaudited pro forma basis the combined results of operations of the Company for the twelve months ended December 31 2024 and 2023 assuming the acquisition had occurred on January 1 2023
The pro forma financial information includes certain adjustments to adhere to the Company s accounting policies and adjustments to the historical results with pro forma adjustments net of tax that assume the acquisition occurred on January 1 2023 This includes removing the results of the Architectural segment that was sold by Masonite prior to the close of the Arrangement an adjustment to cost of goods sold to expense the step up of inventory to fair value increased depreciation expense to reflect the fair value of property plant and equipment and increased amortization expense related to the fair value of identifiable amortizable intangible assets Adjustments were also made to recognize transaction costs incurred by the Company in the beginning of the comparative pro forma period and remove Masonite transaction costs In addition adjustments were made to reflect the interest and financing costs of the 364 Day Credit Facility as defined below used to fund the purchase price and the interest discount amortization and capitalized financing cost amortization for the 2027 2034 and 2054 senior notes that were issued to pay off the 364 Day Credit Facility in the comparative pro forma period see Note 14 for further detail Finally adjustments were made to remove interest expense for the pro forma period related to the Masonite term loan facility that was paid off at closing as part of the consideration for the Arrangement
Net sales were decreased by 119 million and 337 million for the twelve months ended December 31 2024 and 2023 respectively to remove the sales of the Architectural segment that was sold by Masonite prior to the close of the Arrangement
Net earnings were decreased by 7 million and 70 million for the twelve months ended December 31 2024 and 2023 respectively to reflect increased amortization expense related to the fair value of identified amortizable intangible assets
Net earnings were decreased by 49 million and 107 million for the twelve months ended December 31 2024 and 2023 respectively to reflect the interest expense discount amortization and capitalized financing cost amortization for the 2027 2034 and 2054 senior notes that were issued to pay off the 364 Day Credit Facility
The pro forma financial information does not reflect any anticipated synergies or dis synergies operating efficiencies or cost savings that may result from the Arrangement and integration costs that may be incurred
On September 1 2022 the Company acquired the remaining 50 interest in Fiberteq LLC Fiberteq the joint venture between Owens Corning and IKO Industries Ltd which produces high quality wet formed fiberglass mat for roofing applications for 140 million net of cash acquired During the third quarter of 2023 an additional 6 million of consideration was paid as a result of final working capital adjustments The acquisition advances the Composites strategy to focus on high value material solutions and expands Owens Corning s capacity to produce non woven mat The Company s 50 interest in Fiberteq was accounted for as an equity method investment and had a carrying value of 17 million at the acquisition date The Company used the discounted cash flow method to remeasure the previously held equity method investment to its fair value of 147 million resulting in the recognition of a gain of 130 million which is recorded in Gain on equity method investment on the 2022 Consolidated Statements of Earnings The operating results for Fiberteq have been included in the Composites segment within the Consolidated Financial Statements since the date of the acquisition The purchase price allocation included 58 million in intangible assets which primarily consists of customer relationships with an estimated weighted average life of 3 years a 62 million unfavorable contract liability and 242 million in goodwill
On August 1 2022 the Company acquired Natural Polymers LLC Natural Polymers an innovative manufacturer of spray polyurethane foam insulation for building and construction applications for 111 million net of cash acquired The acquisition advances the Owens Corning strategy to strengthen the Company s core building and construction products and expand its addressable markets into higher growth segments The operating results for Natural Polymers have been included in the Insulation segment within the Consolidated Financial Statements since the date of the acquisition The purchase price allocation included 44 million in intangible assets and 62 million in goodwill of which all is tax deductible The intangible assets consist of definite lived trademarks of 5 million with an estimated weighted average life of 10 years technology of 12 million with an estimated weighted average life of 6 years and customer relationships of 27 million with an estimated weighted average life of 17 years
On June 1 2022 the Company acquired all of the outstanding assets of WearDeck a premium producer of composite weather resistant decking for commercial and residential applications for 133 million net of cash acquired The acquisition advances the Composites business growth strategy to focus on high value material solutions within the building and construction industry The operating results for WearDeck have been included in the Composites segment within the Consolidated Financial Statements since the date of the acquisition The purchase price allocation included 38 million in intangible assets and 68 million in goodwill
The intangible assets consist of definite lived trademarks of 7 million with an estimated average life of 10 years technology of 10 million with an estimated weighted average life of 11 years and customer relationships of 21 million with an estimated weighted average life of 15 years
On March 3 2023 the Company finalized the sale of its Insulation site in Santa Clara California for total proceeds of 234 million net of transaction fees Total proceeds included a non refundable deposit of 50 million received in the third quarter of 2021 As a result of this sale the Company recognized a pre tax gain of 189 million in the first quarter of 2023 which is recorded in Gain on sale of site on the Consolidated Statements of Earnings
On November 24 2022 the Company finalized the sale of its Russian operations within the Composites and Insulation segments As a result of this sale the Company received 104 million net of cash sold in consideration and recorded a pre tax loss of 33 million in Other expense net on the Consolidated Statements of Earnings
On July 1 2022 the Company finalized the sale of the European portion of the dry use chopped strands DUCS product line located in Chambéry France within the Composites segment As a result of this sale the Company received 80 million net of cash sold in consideration and recorded a pre tax loss of 30 million in Other expense net on the Consolidated Statements of Earnings
On November 4 2024 the Company entered into a related party agreement to sell its building materials business in China and Korea to a member of the business management team At this time the Company met the assets held for sale criteria The disposal further aligns with the Company s strategy to be a more North America and Europe focused business The transaction includes six insulation manufacturing facilities in China and a roofing manufacturing facility in Korea The building materials business within the Insulation segment represents annual revenues of approximately 130 million
The Company reclassified 2 million as held for sale within Other current liabilities on the Consolidated Balance Sheets The Company recorded the assets at the fair value less cost to sell which was less than the carrying value and resulted in an impairment of 91 million primarily related to Property Plant and Equipment and Goodwill The impairment is included in Loss on sale of business on the Consolidated Statements of Earnings The Company estimated the fair value of these assets less cost to sell using Level 3 inputs
During the fourth quarter of 2024 the Company determined that certain asset groups should be tested for recoverability primarily as a result of the progression of the strategic review of the glass reinforcements business Recoverability of the long lived assets was measured by comparing the carrying amount of the asset groups to the future net undiscounted cash flows expected to be generated by the asset groups Specifically for the glass reinforcements asset group the Company used an undiscounted cash flow model giving consideration to probability weighted cash flows of differing outcomes of the strategic review The comparison indicated that one of the asset groups the glass reinforcements asset group was not recoverable
Fair value of the glass reinforcements asset group was calculated using a discounted cash flow model and market information obtained through the strategic review to estimate the fair value of the asset group with weighting applied As a result of the analysis performed the Company recorded pre tax asset impairment charges for the amount by which the carrying value exceeded its fair value of 483 million for the year ended December 31 2024 which is included in Impairment due to strategic review on the Consolidated Statements of Earnings These charges include 439 million related to property plant and equipment 30 million related to operating lease right of use assets and 14 million related to definite lived intangible assets
The primary assumption used in the fair value analysis was the weighting of the discounted cash flow model and market information The fair value measurements are classified as Level 3 within the fair value hierarchy as defined in ASC 820 Fair Value Measurement due to the unobservable inputs used
The table below reconciles the undiscounted cash flows for each of the first five years and the total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet as of December 31 2024
The Company records a liability for warranty obligations at the date the related products are sold Adjustments are made as new information becomes available Please refer to Note 1 for information about our separately priced extended warranty contracts A reconciliation of the warranty liability is as follows
The Company may incur restructuring transaction and integration costs related to acquisitions and divestitures and may incur restructuring and other exit costs in connection with our global cost reduction product line and productivity initiatives and the Company s growth strategy
On November 4 2024 the Company entered into a related party agreement to sell its Insulation segment s building materials business in China and Korea to a member of the business management team The Company recorded the assets at the fair value less cost to sell which was less than the carrying value and resulted in an impairment of 91 million related primarily to Property Plant and Equipment and Goodwill
Following the signing of the agreement the Company took actions to reduce headcount and implement cost savings initiatives These actions are expected to result in cumulative costs of approximately 15 million primarily related to severance and other exit costs During 2024 the Company recorded 6 million of cash charges primarily related to severance
Following the acquisition of Masonite within the Company s Doors segment the Company took actions to realize expected synergies from the newly acquired operations These actions include the decision to exit the Santiago Chile facility within the segment
During 2024 the Company recorded 55 million of charges of which 28 million were non cash charges primarily related to the accelerated vesting of equity awards and 27 million of cash charges primarily related to severance The Company is continuing to review synergies as a result of this acquisition and expects to incur a material amount of incremental costs into future years
In December 2023 the Company took actions to reduce costs throughout our global Composites segment given current market conditions primarily through global workforce reductions as well as streamlining manufacturing and supply chain operations These actions primarily include salaried workforce reductions and the relocation of the Changzhou China operations to Hangzhou China
In connection with these actions the Company estimates it will incur cash charges in the range of 20 million to 30 million primarily related to severance and other exit costs including termination costs and non cash charges in the range of 15 million to 20 million primarily related to accelerated depreciation
During 2024 the Company recorded 17 million of charges of which 10 million were non cash charges primarily related to accelerated depreciation and 7 million of cash charges primarily related to severance and other exit costs
In December 2023 the Company took actions to further its ongoing cost optimization strategy for the Insulation segment by permanently closing the Xi an China facility which had previously ceased operations and permanently closing one idled production line at the Guangde China facility These actions resulted in cumulative costs of approximately 20 million primarily related to accelerated depreciation During 2024 the Company did not incur any charges relating to this project and does not expect any future charges
In May 2023 the Company made the decision to exit the Protective Packaging business within the Roofing segment including the production and sale of wood packaging metal packaging and custom products Exiting Protective Packaging will allow the Company to focus resources on the growth of its building materials products which supports the future growth aspirations of the enterprise With the exit of the Protective Packaging business the Company closed its plants in Dorval Quebec and Mission British Columbia Canada The Company also ceased operations at its Qingdao China facility
In connection with the exit of the Protective Packaging business the Company estimated that it would incur cash charges of approximately 15 million primarily related to severance and other exit costs Additionally the Company estimated that it would incur total non cash charges in the range of 70 to 75 million primarily related to accelerated depreciation of property plant and equipment and accelerated amortization of definite lived intangibles
In April 2023 the Company took actions to support its strategy to operate a flexible and cost efficient manufacturing network through decisions to relocate the Wabash Indiana mineral wool operations to Joplin Missouri and to exit the U S granulated mineral wool market These actions resulted in cumulative costs of approximately 30 million primarily related to severance and accelerated depreciation
In March 2023 the Company took actions to optimize the operating structure of its segments across Europe to increase its competitiveness These actions are expected to result in cumulative costs of approximately 20 million primarily related to severance and other exit costs During 2024 the Company recorded 3 million of charges primarily related to severance costs The Company does not expect to recognize significant incremental costs related to these actions
On July 1 2022 the Company finalized the sale of the European portion of the DUCS product line located in Chambéry France within the Company s Composites segment The Company recorded a pre tax charge of 30 million in Other expense net on the Consolidated Statements of Earnings in 2022 to reflect the fair value less cost to sell the assets The Company also took actions to convert the DUCS manufacturing facilities located in Anderson South Carolina and Kimchon Korea to produce other glass fiber products needed to support our growth strategy in building and construction applications During 2023 the Company recorded 2 million of charges primarily related to other exit costs During 2024 the Company did not incur any charges relating to this project and does not expect any future charges
In December 2021 the Company took actions to restructure operations within the Roofing segment s components product line by relocating production assets from China to India which allowed the business to optimize its manufacturing network and support a tariff mitigation strategy During 2022 the Company recorded 3 million of charges primarily related to severance and other exit costs During 2023 the Company recorded 2 million of charges primarily related to other exit costs During 2024 the Company did not incur any charges relating to this project and does not expect any further charges
During the third quarter of 2021 the Company entered into a sales agreement for the Company s Insulation site in Santa Clara California as part of the Company s on going strategy to operate a flexible cost efficient manufacturing network and geographically locate its assets to better serve its customers On March 3 2023 the Company finalized the sale of this site for total proceeds of 234 million net of transaction fees Total proceeds included a non refundable deposit of 50 million received in the third quarter of 2021 During 2024 the Company did not incur any charges relating to this project and does not expect any further charges
The following table presents the impact and respective location of total restructuring acquisition and divestiture related costs on the Consolidated Statements of Earnings which are included within Corporate Other and Eliminations
As previously stated we have engaged in restructuring programs over the past several years For the purposes of this table the Building Materials Asia Pacific Optimization Composites Strategic Realignment Actions Roofing Restructuring Actions and Santa Clara Insulation Site restructuring programs have been aggregated as Other Programs for this note As of December 31 2024 we do not expect to incur any material future charges related to the Other Programs
The fair values of the Company s outstanding long term debt instruments were estimated using market observable inputs including quoted prices in active markets market indices and interest rate measurements Within the hierarchy of fair value measurements these are Level 2 fair values
The Company issued 500 million of 2027 senior notes with an annual interest rate of 5 500 800 million of 2034 senior notes with an annual interest rate of 5 700 and 700 million of 2054 senior notes with an annual interest rate of 5 950 on May 31 2024 These senior notes are net of discounts and issuance costs of 4 million 11 million and 17 million respectively The proceeds from these notes were used to repay a portion of the outstanding borrowings under the 364 Day Credit Facility as defined below that was used to fund a portion of the purchase of Masonite in the second quarter of 2024 and to pay related fees and expenses
On May 1 2024 in connection with the acquisition of Masonite we commenced an offer to exchange the Exchange Offer any and all of Masonite s outstanding 3 50 Senior Notes due 2030 the Masonite 2030 notes for new 3 50 Senior Notes due 2030 of Owens Corning the Owens Corning 2030 notes On May 22 2024 99 51 of the outstanding Masonite 2030 notes were exchanged and we issued 373 million aggregate principal amount of Owens Corning 2030 notes which was a non cash financing transaction for the Company Interest on the notes is payable semiannually in arrears on February 15 and August 15 each year beginning on August 15 2024 Following the settlement of the Exchange Offer approximately 2 million of the Masonite 2030 notes that were not exchanged remain outstanding which has been recorded on the Consolidated Balance Sheets
On April 15 2024 in connection with the acquisition of Masonite we commenced a tender offer the Tender Offer to purchase any and all of Masonite s outstanding 5 375 Senior Notes due 2028 the Masonite 2028 notes with an aggregate value of 501 million On May 13 2024 94 25 of the outstanding Masonite 2028 notes were validly tendered with Owens Corning making a cash payment on May 16 2024 of approximately 480 million inclusive of 7 million of interest and 1 million premium on tender Following the settlement of the Tender Offer approximately 29 million of the Masonite 2028 notes that were not tendered remain outstanding which has been recorded on the Consolidated Balance Sheets Interest on the Masonite 2028 notes is payable semiannually in arrears on February 1 and August 1 each year
The Company issued 300 million of 2030 senior notes on May 12 2020 Interest on the notes is payable semiannually in arrears on June 1 and December 1 each year beginning on December 1 2020 The proceeds from these notes were used for general corporate purposes
The Company issued 450 million of 2029 senior notes on August 12 2019 Interest on the notes is payable semiannually in arrears on February 15 and August 15 each year beginning on February 15 2020 The proceeds from these notes were used to repay 416 million of our 2022 senior notes and 34 million of our 2036 senior notes
The Company issued 400 million of 2048 senior notes on January 25 2018 Interest on the notes is payable semiannually in arrears on January 30 and July 30 each year beginning on July 30 2018 The proceeds from these notes were used along with borrowings on a 600 million term loan commitment and borrowings on the Receivables Securitization Facility as defined below to fund the purchase of Paroc in the first quarter of 2018
The Company issued 600 million of 2047 senior notes on June 26 2017 Interest on the notes is payable semiannually in arrears on January 15 and July 15 each year beginning on January 15 2018 A portion of the proceeds from these notes was used to fund the purchase of Pittsburgh Corning in 2017 and for general corporate purposes The remaining proceeds were used to repay 144 million of our 2019 senior notes and 140 million of our 2036 senior notes
The Company issued 400 million of 2026 senior notes on August 8 2016 Interest on the notes is payable semiannually in arrears on February 15 and August 15 each year beginning on February 15 2017 A portion of the proceeds from these notes was used to redeem 158 million of our 2016 senior notes
The Company issued 400 million of 2024 senior notes on November 12 2014 Interest on the notes is payable semiannually in arrears on June 1 and December 1 each year beginning on June 1 2015 A portion of the proceeds from these notes was used to repay 242 million of our 2016 senior notes and 105 million of our 2019 senior notes The remaining proceeds were used to pay down our Senior Revolving Credit Facility as defined below finance general working capital needs and for general corporate purposes In the fourth quarter of 2024 the Company fully repaid the 2024 senior notes of 400 million at maturity
The Company issued 550 million of 2036 senior notes on October 31 2006 Interest on the notes is payable semiannually in arrears on June 1 and December 1 each year beginning on June 1 2007 The proceeds of these notes were used to pay certain unsecured and administrative claims finance general working capital needs and for general corporate purposes
Collectively the Company s senior notes above other than the Masonite 2028 notes or the Masonite 2030 notes are referred to as the Senior Notes The Senior Notes are general unsecured obligations of the Company and rank
with all existing and future senior unsecured indebtedness of the Company The Company has the option to redeem all or part of the Senior Notes at any time at a make whole redemption price The Company is subject to certain covenants in connection with the issuance of the Senior Notes that it believes are usual and customary The Company was in compliance with these covenants as of December 31 2024
On March 1 2024 the Company entered into an amended and restated senior revolving credit facility the Senior Revolving Credit Facility to increase the available principal amount from 800 million to 1 0 billion and to extend the maturity to March 2029 The Senior Revolving Credit Facility includes both borrowings and letters of credit Borrowings under the Senior Revolving Credit Facility may be used for general corporate purposes and working capital The Company has the discretion to borrow under multiple options which provide for varying terms and interest rates including the United States prime rate federal funds rate plus a spread or forward looking term rate based on the Secured Overnight Financing Rate Term SOFR plus a spread In May 2023 the Senior Revolving Credit Facility was amended to formally adopt Term SOFR plus a spread as the benchmark reference rate in anticipation of the June 30 2023 discontinuation of the London Interbank Offered Rate
The Senior Revolving Credit Facility contains various covenants including a maximum allowed leverage ratio that the Company believes are usual and customary for a senior unsecured credit agreement The Company was in compliance with these covenants as of December 31 2024 Please refer to the Credit Facility Utilization section below for liquidity information as of December 31 2024
For the receivables securitization facility the Receivables Securitization Facility the Company has a Receivables Purchase Agreement RPA that is accounted for as secured borrowings in accordance with ASC 860 Accounting for Transfers and Servicing Owens Corning Sales LLC and Owens Corning Receivables LLC each a subsidiary of the Company have an RPA with certain financial institutions On March 1 2024 the Company amended and restated the RPA to increase the facility limit from 280 million to 300 million and to extend the scheduled maturity date to February 2025 Under the RPA the Company has the ability to borrow at the lenders cost of funds which approximates Term SOFR plus a spread alternatively the Company may borrow at the higher of the United States prime rate or the Overnight Bank Funding Rate plus a spread
The RPA contains various covenants including a maximum allowed leverage ratio that the Company believes are usual and customary for a securitization facility The Company was in compliance with these covenants as of December 31 2024 Please refer to the Credit Facility Utilization section below for liquidity information as of December 31 2024
Owens Corning Receivables LLC s sole business consists of the purchase or acceptance through capital contributions of trade receivables and related rights from Owens Corning Sales LLC and the subsequent retransfer of or granting of a security interest in such trade receivables and related rights to certain purchasers who are party to the RPA Owens Corning Receivables LLC is a separate legal entity with its own separate creditors who will be entitled upon its liquidation to be satisfied out of Owens Corning Receivables LLC s assets prior to any assets or value in Owens Corning Receivables LLC becoming available to Owens Corning Receivables LLC s equity holders The assets of Owens Corning Receivables LLC are not available to pay creditors of the Company or any other affiliates of the Company or Owens Corning Sales LLC
On May 15 2024 the Company initially borrowed 295 million on the Receivables Securitization Facility which was used to pay down a portion of the 364 Day Credit Facility Subsequent to the May 15 2024 borrowing the Company repaid and re borrowed on the Receivables Securitization Facility throughout the year to pay down the 364 Day Credit Facility and support working capital needs As of December 31 2024 there was no outstanding balance on the Receivables Securitization Facility Please refer to the Credit Facility Utilization section below for liquidity information as of December 31 2024
On March 1 2024 the Company entered into an unsecured term loan agreement in an aggregate principal amount of 3 0 billion which matures 364 days after the facility is initially funded with a single drawing the 364 Day Credit Facility
In May 2024 to fund a portion of the purchase of Masonite the Company borrowed 2 8 billion using Term SOFR plus a spread on the 364 Day Credit Facility As a result of the borrowing the Company incurred approximately 16 million of financing fees which were amortized to Interest expense net on the Consolidated Statements of Earnings During the second quarter of 2024 the Company completely repaid the 364 Day Credit Facility with a combination of proceeds from the issuance of new senior notes borrowings on the Receivables Securitization Facility and cash on hand Based on terms of the agreement no further amounts can be drawn
The aggregate maturities for all outstanding long term debt borrowings for each of the five years following December 31 2024 and thereafter are presented in the table below The maturities below are the aggregate par amounts of the outstanding senior notes and finance lease liabilities
At December 31 2024 and December 31 2023 short term borrowings were approximately 1 million The short term borrowings for both periods consisted of various operating lines of credit The weighted average interest rate on all short term borrowings was approximately 3 8 and 5 1 for December 31 2024 and December 31 2023 respectively
The Company sponsors defined benefit pension plans Under the plans pension benefits are based on an employee s years of service and for certain categories of employees qualifying compensation Company contributions to these pension plans are determined by an independent actuary to meet or exceed minimum funding requirements In our U S plan the unrecognized cost of any retroactive amendments and actuarial gains and losses are amortized over the average remaining life expectancy of inactive participants In all of our Non U S plans the unrecognized cost of any retroactive amendments and actuarial gains and losses are amortized over the average future service period of plan participants expected to receive benefits
During the fourth quarter of 2023 the Company entered into two agreements to purchase non participating annuity contracts from insurance companies to transfer 291 million of the Company s outstanding pension projected benefit obligation PBO related to certain U S and non U S pension plans These transactions were funded with pension plan assets of 268 million As a result of these transactions the Company recognized a pre tax settlement charge of 145 million in the fourth quarter of 2023 from the accelerated recognition of a pro rata portion of plan actuarial losses This charge was recorded in Non operating income expense net on the Consolidated Statements of Earnings These transactions did not have a material effect on the plans funded statuses
For the twelve months ended December 31 2024 the actuarial gain of 34 million was largely the result of increased discount rates In the U S plan the actuarial gain was primarily driven by the increase in the discount rate along with a small gain due to the impact of differences between expected and actual pension experience In the Non U S plans the actuarial gain was primarily driven by an increase in discount rates across a majority of the plans offset by an actuarial loss due to the impact of differences between expected and actual pension experience in Canada
For the twelve months ended December 31 2023 the actuarial gain of 12 million was largely the result of the impacts related to the annuity purchase settlement offset by losses due to decreased discount rates In the U S plan the actuarial gain was primarily driven by the settling of the annuity purchase at a lower value relative to the PBO held at the time The gain was slightly offset by an actuarial loss due to the decrease in the discount rate In the Non U S plans the actuarial loss was primarily driven by a decrease in the discount rates across all the plans
The expected return on plan assets assumption is derived by taking into consideration the target plan asset allocation historical rates of return on those assets projected future asset class returns and net outperformance of the market by active investment managers An asset return model is used to develop an expected range of returns on plan investments over a 30 year period with the expected rate of return selected from a best estimate range within the total range of projected results The result is then rounded down to the nearest 25 basis points
The tables in this section show pension plan asset fair values and fair value leveling information The assets are categorized into one of the three levels of the fair value hierarchy or are not subject to leveling in the case of investments that are valued using the net asset value per share or its equivalent practical expedient NAV
The current targeted asset allocation for the United States pension plan is to have 15 of assets invested in equities 67 in intermediate and long term fixed income securities high yield and cash and 18 in other strategies Assets are rebalanced at least quarterly to conform to policy tolerances The Company actively evaluates the reasonableness of its asset mix given changes in the projected benefit obligation and market dynamics Our investment policy and asset mix for the non United States pension plans varies by location and is based on projected benefit obligation and market dynamics
The Company expects to contribute 20 million in cash to its defined benefit pension plans during 2025 Actual contributions to the plans may change as a result of a variety of factors including changes in laws that impact funding requirements
The Company sponsors two defined contribution plans which are available to substantially all United States employees The Company matches a percentage of employee contributions up to a maximum level The Company recognized expense of 73 million 65 million and 57 million during the years ended December 31 2024 2023 and 2022 respectively related to these plans
The Company maintains health care and life insurance benefit plans for certain retired employees and their dependents The health care plans in the United States are non funded and pay either 1 stated percentages of covered medically necessary expenses after subtracting payments by Medicare or other providers and after stated deductibles have been met or 2 fixed amounts of medical expense reimbursement
Employees hired on or before December 31 2005 become eligible to participate in the United States health care plans upon retirement if they have accumulated 10 years of service after age 45 48 or 50 depending on the category of employee For employees hired after December 31 2005 the Company does not provide subsidized retiree health care Some of the plans are contributory with some retiree contributions adjusted annually The Company has reserved the right to change or eliminate these benefit plans subject to the terms of collective bargaining agreements
The following table provides a reconciliation of the change in the projected benefit obligation and the net amount recognized in the Consolidated Balance Sheets for the years ended December 31 2024 and 2023
The following table presents health care cost trend rates used to determine net periodic postretirement benefit income as well as information regarding the ultimate rate and the year in which the ultimate rate is reached
The Company may also provide benefits to former or inactive employees after employment but before retirement under certain conditions These benefits include continuation of benefits such as health care and life insurance coverage The accrued postemployment benefits liability was 5 million at December 31 2024 and 2023 The net periodic postemployment benefit expense for the years ended December 31 2024 2023 and 2022 was approximately 1 million
The Company may be involved in various legal and regulatory proceedings relating to employment antitrust tax product liability environmental contracts intellectual property and other matters collectively Proceedings The Company regularly reviews the status of such Proceedings along with legal counsel Liabilities for such Proceedings are recorded when it is probable that the liability has been incurred and when the amount of the liability can be reasonably estimated Liabilities are adjusted when additional information becomes available Except as set forth below under Litigation and Regulatory Proceedings management believes that the amount of any reasonably possible losses in excess of any amounts accrued if any with respect to such Proceedings or any other known claim including the matters described below under the caption Environmental Matters the Environmental Matters are not material to the Company s financial statements While the likelihood is remote the disposition of the Proceedings and Environmental Matters could have a material impact on the results of operations cash flows or liquidity in any given reporting period
The Company is involved in litigation and regulatory proceedings from time to time in the regular course of its business The Company believes that adequate provisions for resolution of all contingencies claims and pending matters have been made for probable losses that are reasonably estimable
During the second quarter of 2023 the Company s subsidiary Paroc Group OY Paroc which the Company acquired in 2018 notified the appropriate European maritime regulatory authorities that specific products in its marine insulation product line may not meet certain fire safety requirements in accordance with their certifications Paroc voluntarily withdrew these specific products from the market issued recalls and suspended distribution and sales of these products the Recalled Products Paroc continues to cooperate with the applicable regulatory and government authorities and work with its customers and end users to assist with remediation for the recall The Company has included an estimated liability for expected future costs related to the Recalled Products on its Consolidated Balance Sheets as of December 31 2024 and December 31 2023 The estimated liability is primarily based on claims received as well as assumptions related to the estimated costs of the remedy for the Recalled Products At this time we cannot estimate a range of loss for any additional costs related to the Recalled Products that exceed the current estimated liability We reevaluate these assumptions each period and the related liability may be adjusted when factors indicate that the liability is either not sufficient to cover or exceeds the estimated costs related to the Recalled Products Based on the factors currently known we believe the appropriate liability has been established at this time It is reasonably possible that additional costs related to the Recalled Products could be incurred that exceed the estimated liability by amounts that could be material to our Consolidated Financial Statements
Due to these nonconformances the Company reviewed the Paroc insulation product portfolio The review has concluded In addition to addressing the Recalled Products the Company continues to assess potential nonconformances related to certain ventilation duct and steel beam insulation products Paroc suspended sales of these affected insulation products as a precautionary measure while it reviews the potential nonconformances but has not issued recalls We expect to incur costs associated with the resolution of this matter The amount or range of any potential loss cannot be reasonably estimated at this time
The Company has established policies and procedures designed to ensure that its operations are conducted in compliance with all relevant laws and regulations and that enable the Company to meet its high standards for corporate sustainability and environmental stewardship Our manufacturing facilities are subject to numerous foreign federal state and local laws and regulations relating to the presence of hazardous materials pollution and protection of the environment including emissions to air reductions of greenhouse gases discharges to water management of hazardous materials handling and disposal of solid wastes use of chemicals in our manufacturing processes and remediation of contaminated sites All Company manufacturing facilities are either ISO 14001 certified or deploy environmental management systems based on ISO 14001 principles The Company s 2030 Sustainability Goals include significant global reductions in energy use water consumption waste to landfill and emissions of greenhouse gases fine particulate matter and volatile organic air emissions and protection of biodiversity
Owens Corning is involved in remedial response activities and is responsible for environmental remediation at a number of sites including certain of its currently owned or formerly owned plants These responsibilities arise under a number of laws including but not limited to the Federal Resource Conservation and Recovery Act and similar state or local laws pertaining to the management and remediation of hazardous materials and petroleum The Company has also been named a potentially responsible party under the U S Federal Superfund law similar state or local laws pertaining to the management and remediation of hazardous materials and petroleum The Company became involved in these sites as a result of government action or in connection with business acquisitions As of December 31 2024 the Company was involved with a total of 24 sites worldwide including 9 Superfund and state or country equivalent sites and 15 owned or formerly owned sites None of the liabilities for these sites are individually significant to the Company
Remediation activities generally involve a potential range of activities and costs related to soil groundwater and sediment contamination This can include pre cleanup activities such as fact finding and investigation risk assessment feasibility studies remedial action design and implementation where actions may range from monitoring to removal of contaminants to installation of longer term remediation systems A number of factors affect the cost of environmental remediation including the number of parties involved in a particular site the determination of the extent of contamination the length of time the remediation may require the complexity of environmental regulations variability in clean up standards the need for legal action and changes in remediation technology Taking these factors into account Owens Corning reasonably estimates the costs of remediation to be paid over a period of years The Company accrues an amount on an undiscounted basis when a liability is probable and reasonably estimable Actual cost may differ from these estimates for the reasons mentioned above At December 31 2024 the Company had an accrual totaling 4 million for these costs of which the current portion is 2 million Changes in required remediation procedures or timing of those procedures or discovery of contamination at additional sites could result in material increases to the Company s environmental obligations
During the first quarter of 2024 the Procuraduría Federal de Protección al Ambiente PROFEPA issued a ruling to Owens Corning Mexico S de R L de C V a subsidiary of the Company OC Mexico citing violations of Mexico s air emissions regulations at OC Mexico s facility in Mexico City Mexico and imposing monetary sanctions of approximately 1 million OC Mexico previously performed all related corrective action and as of the date of this report is in compliance with applicable federal and local environmental laws OC Mexico is in the process of appealing PROFEPA s ruling and the resulting monetary sanctions
On April 20 2023 the Company s stockholders approved the Owens Corning 2023 Stock Plan the 2023 Stock Plan which authorizes grants of stock options stock appreciation rights stock awards including restricted stock awards restricted stock units and bonus stock awards performance share awards and performance share units At December 31 2024 the number of shares remaining available under the 2023 Stock Plan for all stock awards was 3 0 million
The Company has granted restricted stock units RSUs under its stockholder approved stock plans Generally all outstanding RSUs will fully settle in stock Compensation expense for RSUs is measured based on the closing market price of the stock at date of grant and is recognized on a straight line basis over the vesting period which is typically three or four years The Stock Plan allows alternate vesting schedules for death disability and retirement
On May 15 2024 the Company converted outstanding Masonite stock based incentive awards to Masonite employees at a 0 8 equity award exchange ratio Masonite equity awards include outstanding and unvested awards of restricted stock units and performance stock units PRSUs under the Masonite International Corporation 2021 Omnibus Incentive Plan Masonite Stock Plan that were held by employees of Masonite which were exchanged for time vesting restricted stock units of Owens Corning RSUs in connection with the completion of the transactions contemplated by the Arrangement Agreement The converted stock based incentive awards include 0 2 million PRSUs and 0 3 million restricted stock units
The equity award exchange ratio was determined by the consideration amount of 133 per share divided by the volume weighted average closing sale price of one share of Owens Corning common stock for the ten consecutive trading days ended March 15 2024 of 174 03 per share in accordance with the terms of the Arrangement Agreement
In accordance with the Arrangement Agreement the number of Masonite shares underlying the PRSUs was equal to i 107 33 of target for PRSUs granted in February 2022 ii 100 of target for PRSUs granted in August 2022 and iii 122 of target for PRSUs granted in February 2023
The fair value of the Owens Corning RSUs issued for Masonite outstanding equity awards was 85 million as of the date of acquisition of which 35 million was related to pre combination expense and was included in the purchase price The remaining portion of 50 million relates to post combination expense of which 25 million was accelerated as of December 31 2024 As of December 31 2024 the future unrecognized expense related to the converted outstanding RSUs was approximately 14 million which will be recognized over the remaining service period of approximately 1 63 years Please refer to Note 7 and 13 of the Consolidated Financial Statements for further information Future equity based awards to Company employees who were former Masonite employees may be granted from the remaining available shares under the Masonite Stock Plan At December 31 2024 the number of shares remaining available under the Masonite Stock Plan was 0 6 million shares of Owens Corning common stock
As of December 31 2024 there was 51 million of total unrecognized compensation cost related to RSUs This total includes 14 million of unrecognized compensation related to converted Masonite equity awards and 37 million related to Owens Corning Stock Plans That cost is expected to be recognized over a weighted average period of 1 82 years The total grant date fair value of stock vested during the years ended December 31 2024 2023 and 2022 was 80 million 27 million and 22 million respectively
The Company has granted performance share units PSUs as a part of its long term incentive plan All outstanding PSUs will fully settle in stock The amount of shares ultimately distributed from the 2024 2023 and 2022 grants is contingent on meeting internal company based metrics or an external based stock performance metric
The internal Company based metric PSUs are based on various Company metrics and typically vest after a three year period The amount of stock distributed will vary from 0 to 200 of PSUs awarded depending on each award s design and performance versus the Company based metrics
The initial fair value for all internal Company based metric PSUs assumes that the performance goals will be achieved and is based on the grant date stock price This assumption is monitored quarterly and if it becomes probable that such goals will not be achieved or will be exceeded compensation expense recognized will be adjusted and previous surplus compensation expense recognized will be reversed or additional expense will be recognized The expected term represents the period from the grant date to the end of the three year performance period Pro rata vesting may be utilized in the case of death disability or retirement and awards if earned will be paid at the end of the three year period
The external based metric PSUs vest after a three year period Outstanding grants issued in or after 2018 until 2022 were based on the Company s total stockholder return relative to the performance of the Dow Jones U S Construction Materials Index Outstanding grants issued in or after 2023 are based on the Company s total stockholder return relative to a peer group The amount of stock distributed will vary from 0 to 200 of PSUs awarded depending on the relative stockholder return performance The fair value of external based metric PSUs has been estimated at the grant date using a Monte Carlo simulation that uses various assumptions
The risk free interest rate was based on zero coupon United States Treasury STRIPS at the grant date The expected term represents the period from the grant date to the end of the three year performance period
As of December 31 2024 there was 16 million total unrecognized compensation cost related to PSUs That cost is expected to be recognized over a weighted average period of 1 65 years The total grant date fair value of shares vested during the years ended December 31 2024 2023 and 2022 was 21 million 21 million and 9 million respectively
The Owens Corning Employee Stock Purchase Plan ESPP is a tax qualified plan under Section 423 of the Internal Revenue Code The purchase price of shares purchased under the ESPP is equal to 85 of the lower of the fair market value of shares of Owens Corning common stock at the beginning or ending of the offering period which is a six month period ending on May 31 and November 30 of each year On April 16 2020 the Company s stockholders approved the Amended and Restated Owens Corning Employee Stock Purchase Plan which increased the number of shares available for issuance under the plan by 4 2 million shares As of December 31 2024 3 0 million shares remain available for purchase
Included in total stock based compensation expense is 8 million 7 million and 6 million of expense related to the Company s ESPP for the years ended December 31 2024 2023 and 2022 respectively As of December 31 2024 the Company had 4 million of total unrecognized compensation costs related to the ESPP
Amounts reclassified from loss gain on cash flow hedges are reclassified from AOCI to income when the hedged item affects earnings and is recognized in Cost of sales or Interest expense net depending on the hedged item See Note 4 for additional information
Basic earnings per share is calculated by dividing earnings attributable to Owens Corning by the weighted average number of shares of the Company s common stock outstanding during the period Outstanding shares consist of issued shares less treasury stock
On December 1 2022 the Board of Directors approved a new share repurchase program under which the Company is authorized to repurchase up to 10 million shares of the Company s outstanding common stock the Repurchase Authorization The Repurchase Authorization enables the Company to repurchase shares through the open market privately negotiated or other transactions The actual number of shares repurchased will depend on timing market conditions and other factors and will be at the Company s discretion The Company repurchased 2 6 million shares of its common stock for 433 million inclusive of applicable taxes during the twelve months ended December 31 2024 under the Repurchase Authorization As of December 31 2024 6 4 million shares remained available for repurchase under the Repurchase Authorization The Company repurchased 5 4 million shares of its common stock for 629 million inclusive of applicable taxes during the twelve months ended December 31 2023
For the years ended December 31 2024 December 31 2023 and December 31 2022 the Company did not have any non vested restricted stock units or non vested performance share units that had an anti dilutive effect on earnings per share
The Company continues to assert indefinite reinvestment on the majority of its foreign subsidiaries and affiliates in accordance with ASC 740 based on the laws as of enactment of the Tax Act During the fourth quarter of 2024 the Company removed the permanent reinvestment assertion related to certain business divestitures including the business operations that are subject to Held for Sale accounting The Company accrued deferred tax liabilities of 8 million as a result of the current year changes As of December 31 2024 the Company has not provided for withholding or income taxes on approximately 1 4 billion of undistributed reserves of the foreign subsidiaries and affiliates that are considered by management to be permanently reinvested Quantification of the deferred tax liability associated with these undistributed reserves is not practicable
The following table summarizes the amount and expiration dates of our deferred tax assets related to operating loss and tax credit carryforwards and foreign tax credit carryforwards at December 31 2024
The use of certain of the Company s domestic loss carryforwards is limited pursuant to Internal Revenue Code IRC Section 382 IRC Section 382 imposes an annual limitation on a corporation s ability to use loss carryforwards that arose before a change in control A change in control is generally defined as a cumulative change of more than 50 in the ownership positions of certain stockholders during a rolling three year period The Company believes that these limitations will not result in the loss of any of the loss carryforwards
The foreign net operating losses NOLs are related to various jurisdictions that provide for both indefinite carryforward periods and others with carryforward periods that range from the tax years 2025 to 2035
Deferred income taxes are provided for temporary differences between amounts of assets and liabilities for financial reporting purposes and the basis of such assets and liabilities as measured under enacted tax laws and regulations as well as NOLs tax credits and other tax carryforwards We have a variety of deferred tax assets in numerous tax jurisdictions These deferred tax assets are subject to periodic assessment as to recoverability and if it is determined that it is more likely than not that the benefits will not be realized valuation allowances are recognized In evaluating whether it is more likely than not that we would recover these deferred tax assets future taxable income the reversal of existing temporary differences and tax planning strategies are considered
We believe that our estimates for the valuation allowances recorded against deferred tax assets are appropriate based on current facts and circumstances During the fourth quarter of 2024 we recorded 76 million of valuation allowances related to the announced business divestitures As of December 31 2024 we had 213 million of valuation allowances on deferred tax assets on a tax effected basis primarily related to U S federal foreign tax credit carryforwards and certain foreign deferred tax attributes as it is more likely than not that some portion or all of these tax attributes will not be realized
We file a consolidated federal income tax return in the United States as well as tax returns in multiple state local and foreign jurisdictions In the normal course of business the Company is subject to examination by the taxing authorities in each of the jurisdictions where we file tax returns During 2024 the U S Internal Revenue Service IRS initiated an audit of the Company s 2021 consolidated federal income tax return The IRS also initiated an audit of Masonite International Corporation s pre acquisition amended U S income tax filings The Company is no longer subject to U S federal tax examinations for years before 2021 or state and foreign examinations for years before 2014
We have on going audits in various stages of completion in several state and foreign jurisdictions one or more of which may conclude within the next 12 months Such settlements could involve some or all of the following the payment of additional taxes the adjustment of certain deferred taxes and or the recognition of unrecognized tax benefits The resolution of these matters in combination with the expiration of certain statutes of limitations in various jurisdictions make it reasonably possible that our unrecognized tax benefits may decrease as a result of either payment or recognition by up to 10 million in the next 12 months excluding interest
The Company recognizes all interest and penalties related to unrecognized tax benefits as a component of income tax expense Accrued interest and penalties which are not presented in the rollforward table above were 6 million 9 million and 7 million as of December 31 2024 2023 and 2022 respectively Related to interest and penalties we recognized an income tax benefit of 5 million as of December 31 2024 As of December 31 2023 and 2022 we recognized income tax expense of 2 million and 1 million respectively
On February 13 2025 the Company entered into a definitive agreement for the sale of the GR business for a purchase price of approximately 436 million less costs to sell The purchase price is inclusive of 225 million of promissory notes to be issued to the Company by the purchasers The GR business part of the Company s Composites segment manufactures fabricates and sells glass fiber reinforcements for a wide variety of applications in wind energy infrastructure industrial transportation and consumer markets In 2024 the GR business generated annual revenues of approximately 1 1 billion The sale will complete Owens Corning s review of strategic alternatives for the business announced on February 9 2024 and aligns with the Company s strategy to reshape the Company to focus on residential and commercial building products in North America and Europe
The transaction is expected to close in 2025 and is subject to customary regulatory approvals and other conditions The Company expects to incur a material loss on disposal which cannot be estimated at this time
The Company maintains a disclosure controls and procedures as such term is defined in Rules 13a 15 e and 15d 15 e under the Exchange Act and b internal control over financial reporting as such term is defined in Rules 13a 15 f and 15d 15 f under the Exchange Act
Management with the participation of the Company s Chief Executive Officer and Chief Financial Officer has evaluated the effectiveness of the Company s disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10 K Based on such evaluation the Company s Chief Executive Officer and Chief Financial Officer have concluded that as of the end of such period the Company s disclosure controls and procedures are effective
There has been no change in the Company s internal control over financial reporting during the quarter ended December 31 2024 that materially affected or is reasonably likely to materially affect the Company s internal control over financial reporting
On May 15 2024 the Company completed its acquisition of Masonite International Corporation Masonite As a result the Company s management excluded the operations of Masonite from its assessment of internal control over financial reporting as of December 31 2024 Masonite represented 11 of the Company s consolidated total assets as of December 31 2024 and 13 of the Company s consolidated Net sales for the year ended December 31 2024 SEC guidelines permit companies to omit an acquired entity s internal control over financial reporting from its management assessment during the first year of the acquisition We plan to fully integrate Masonite into our internal control over financial reporting in 2025
A report of the Company s management on the Company s internal control over financial reporting is included in Management s Report on Internal Control Over Financial Reporting within Item 8 Financial Statements and Supplementary Data PricewaterhouseCoopers LLP s report on the effectiveness of internal control over financial reporting is included in the Report of Independent Registered Public Accounting Firm within Item 8 Financial Statements and Supplementary Data
On November 8 2024 Gina A Beredo the Company s Executive Vice President General Counsel and Corporate Secretary entered into a written plan for the sale of up to 4 511 shares of Company common stock intended to satisfy the affirmative defense conditions of Rule 10b5 1 c under the Exchange Act This plan is scheduled to terminate no later than March 31 2025
On November 8 2024 Nicolas Del Monaco the Company s President Insulation entered into a written plan for the sale of up to 1 750 shares of Company common stock intended to satisfy the affirmative defense conditions of Rule 10b5 1 c under the Exchange Act This plan is scheduled to terminate no later than November 7 2025
On November 12 2024 Todd W Fister the Company s Executive Vice President and Chief Financial Officer entered into a written plan for the sale of up to 17 211 shares of Company common stock intended to satisfy the affirmative defense conditions of Rule 10b5 1 c under the Exchange Act This plan is scheduled to terminate no later than November 7 2025
On November 22 2024 Marcio A Sandri the Company s President Composites entered into a written plan for the sale of up to 11 127 shares of Company common stock intended to satisfy the affirmative defense conditions of Rule 10b5 1 c under the Exchange Act This plan is scheduled to terminate no later than November 21 2025 Effective February 13 2025 in connection with the signing of the agreement to divest our GR business Mr Sandri no longer serves as an executive officer of the Company
Information with respect to directors corporate governance and compliance with Section 16 a of the Exchange Act will be presented in the 2025 Proxy Statement in the sections titled Information Concerning Directors Governance Information and Delinquent Section 16 a Reports and such information is incorporated herein by reference Information with respect to the Company s insider trading policy and procedures will be presented in the 2025 Proxy Statement in the section titled The Company s Policies on Business Ethics and Conduct and such information is incorporated herein by reference
Owens Corning has adopted an Ethics Policy for Chief Executive and Senior Financial Officers Ethics Policy that applies to our Chief Executive Officer Chief Financial Officer and Controller This Ethics Policy is available on our website www owenscorning com under the Corporate Governance tab located in the Investors section and print copies will be made available free of charge upon request to the Corporate Secretary of the Company To the extent required by applicable SEC rules or New York Stock Exchange listing standards the Company intends to post any amendments or waivers to the above referenced codes of ethics to our website under the tab entitled Corporate Governance
Information regarding executive officer and director compensation will be presented in the 2025 Proxy Statement under the section titled Executive Compensation exclusive of the subsection titled Compensation Committee Report and the section titled 2024 Non Management Director Compensation and such information is incorporated herein by reference
Information regarding security ownership of certain beneficial owners and management and related stockholder matters as well as equity compensation plan information will be presented in the 2025 Proxy Statement under the sections titled Beneficial Ownership of Shares Security Ownership of Executive Officers and Directors and Equity Compensation Plan Information and such information is incorporated herein by reference
Information regarding certain relationships and related transactions and director independence will be presented in the 2025 Proxy Statement under the sections titled Review Approval or Ratification of Transactions with Related Persons Director Qualifications Standards and Director Independence and such information is incorporated herein by reference
Information regarding principal accounting fees and services will be presented in the 2025 Proxy Statement under the sections titled Principal Accountant Fees and Services and such information is incorporated herein by reference
Pursuant to the rules and regulations of the SEC the Company has filed or incorporated by reference certain agreements as exhibits to this Annual Report on Form 10 K These agreements may contain representations and warranties by the parties These representations and warranties have been made solely for the benefit of the other party or parties to such agreements and i may have been qualified by disclosures made to such other party or parties ii were made only as of the date of such agreements or such other date s as may be specified in such agreements and are subject to more recent developments which may not be fully reflected in the Company s public disclosure iii may reflect the allocation of risk among the parties to such agreements and iv may apply materiality standards different from what may be viewed as material to investors Accordingly these representations and warranties may not describe the Company s actual state of affairs at the date hereof and should not be relied upon
Arrangement Agreement dated as of February 8 2024 among Owens Corning Masonite International Corporation and MT Acquisition Co ULC incorporated by reference to Exhibit 2 1 to Owens Corning s Current Report on Form 8 K File No 1 33100 filed February 9 2024
Indenture dated as of October 31 2006 by and among Owens Corning each of the guarantors named therein and LaSalle Bank National Association as trustee incorporated by reference to Exhibit 4 1 to Owens Corning s Current Report on Form 8 K File No 1 33100 filed November 2 2006
First Supplemental Indenture dated as of April 13 2007 by and among Owens Corning each of the guarantors named therein and LaSalle Bank National Association as trustee incorporated by reference to Exhibit 4 1 to Owens Corning s Current Report on Form 8 K File No 1 33100 filed April 13 2007
Second Supplemental Indenture dated as of December 12 2007 by and among Owens Corning each of the guarantors named therein and LaSalle Bank National Association as trustee incorporated by reference to Exhibit 4 3 to Owens Corning s Annual Report on Form 10 K File No 1 33100 for the year ended December 31 2007
Third Supplemental Indenture dated as of April 24 2008 by and among Owens Corning each of the guarantors named therein and LaSalle Bank National Association as trustee incorporated by reference to Exhibit 4 1 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended June 30 2008
Fourth Supplemental Indenture dated as of May 26 2010 by and among Owens Corning each of the guarantors named therein and Wells Fargo Bank National Association as trustee incorporated by reference to Exhibit 4 1 to Owens Corning s Current Report on Form 8 K File No 1 33100 filed May 28 2010
Fifth Supplemental Indenture dated as of October 3 2016 by and among Owens Corning each of the guarantors named therein and Wells Fargo Bank National Association as trustee incorporated by reference to Exhibit 4 7 to Owens Corning s Annual Report on Form 10 K File No 1 33100 for the year ended December 31 2017
Sixth Supplemental Indenture dated as of February 27 2017 by and among Owens Corning each of the guarantors named therein and Wells Fargo Bank National Association as trustee incorporated by reference to Exhibit 4 8 to Owens Corning s Annual Report on Form 10 K File No 1 33100 for the year ended December 31 2017
Seventh Supplemental Indenture dated as of August 23 2017 by and among Owens Corning the guarantor named therein and Wells Fargo Bank National Association as trustee incorporated by reference to Exhibit 4 5 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended September 30 2017
Indenture dated as of June 2 2009 by and among Owens Corning certain of Owens Corning s subsidiaries and Wells Fargo Bank National Association as trustee incorporated by reference to Exhibit 4 1 to Owens Corning s Registration Statement on Form S 3 File No 333 159689 filed June 3 2009
Third Supplemental Indenture dated as of October 22 2012 by and among Owens Corning certain subsidiaries and Wells Fargo Bank National Association as trustee incorporated by reference to Exhibit 4 1 to Owens Corning s Current Form 8 K File No 1 33100 filed October 22 2012
Fourth Supplemental Indenture dated as of November 12 2014 by and among Owens Corning the guarantors named therein and Wells Fargo Bank National Association as trustee incorporated by reference to Exhibit 4 1 to Owens Corning s Current Report on Form 8 K File No 1 33100 filed November 12 2014
Fifth Supplemental Indenture dated as of August 8 2016 by and among the Owens Corning the guarantors party thereto and Wells Fargo Bank National Association as trustee incorporated by reference to Exhibit 4 1 to Owens Corning s Current Report on Form 8 K File No 1 33100 filed August 8 2016
Sixth Supplemental Indenture dated as of October 3 2016 by and among Owens Corning the guarantors party thereto and Wells Fargo Bank National Association as trustee incorporated by reference to Exhibit 4 9 to Post Effective Amendment No 1 to Owens Corning s Registration Statement on Form S 3 Registration No 333 202011 filed June 21 2017
Seventh Supplemental Indenture dated as of February 27 2017 by and among Owens Corning the guarantors party thereto and Wells Fargo Bank National Association as trustee incorporated by reference to Exhibit 4 10 to Post Effective Amendment No 1 to Owens Corning s Registration Statement on Form S 3 Registration No 333 202011 filed June 21 2017
Eighth Supplemental Indenture dated as of June 26 2017 by and among Owens Corning the guarantors party thereto and Wells Fargo Bank National Association as trustee incorporated by reference to Exhibit 4 1 to Owens Corning s Current Report on Form 8 K File No 1 33100 filed June 26 2017
Ninth Supplemental Indenture dated as of August 23 2017 by and among Owens Corning the guarantor named therein and Wells Fargo Bank National Association as trustee incorporated by reference to Exhibit 4 6 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended September 30 2017
Tenth Supplemental Indenture dated as of January 25 2018 by and among Owens Corning the guarantors party thereto and Wells Fargo Bank National Association as trustee incorporated by reference to Exhibit 4 1 to Owens Corning s Current Report on Form 8 K File No 1 33100 filed January 25 2018
Eleventh Supplemental Indenture dated as of August 12 2019 by and between Owens Corning and Wells Fargo Bank National Association as trustee incorporated by reference to Exhibit 4 1 to Owens Corning s Current Report on Form 8 K File No 1 33100 filed August 12 2019
Twelfth Supplemental Indenture dated as of May 12 2020 by and between Owens Corning and Wells Fargo Bank National Association as trustee incorporated by reference to Exhibit 4 1 to Owens Corning s Current Report on Form 8 K File No 1 33100 filed May 12 2020
Thirteenth Supplemental Indenture dated as of May 22 2024 by and between Owens Corning and Computershare Trust Company N A as Trustee incorporated by reference to Exhibit 4 1 to Owens Corning s Current Report on From 8 K File No 1 33100 filed May 22 2024
Registration Rights Agreement dated as of May 22 2024 by and among Owens Corning Morgan Stanley Co LLC and Wells Fargo Securities LLC incorporated by reference to Exhibit 4 3 to Owens Corning s Current Report on Form 8 K File No 1 33100 filed May 22 2024
Fourteenth Supplemental Indenture dated as of May 31 2024 by and between Owens Corning and Computershare Trust Company N A as trustee incorporated by reference to Exhibit 4 1 to Owens Corning s Current Report on Form 8 K File No 1 33100 filed May 31 2024
Fifteenth Supplemental Indenture dated as of May 31 2024 by and between Owens Corning and Computershare Trust Company N A as trustee incorporated by reference to Exhibit 4 3 to Owens Corning s Current Report on Form 8 K File No 1 33100 filed May 31 2024
Sixteenth Supplemental Indenture dated as of May 31 2024 by and between Owens Corning and Computershare Trust Company N A as trustee incorporated by reference to Exhibit 4 5 to Owens Corning s Current Report on Form 8 K File No 1 33100 filed May 31 2024
Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934 incorporated by reference to Exhibit 4 26 to Owens Corning s Annual Report on Form 10 K File No 1 33100 for the year ended December 31 2019
Second Amended and Restated Credit Agreement dated as of March 1 2024 by and among Owens Corning as borrower the lenders signatory thereto and Wells Fargo Bank National Association as administrative agent incorporated by reference to Exhibit 10 1 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended March 31 2024
Third Amended and Restated Receivables Purchase Agreement dated as of March 1 2024 by and among Owens Corning Sales LLC Owens Corning Receivables LLC PNC Bank National Association and other parties thereto incorporated by reference to Exhibit 10 2 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended March 31 2024
Amended and Restated Purchase and Sale Agreement dated as of March 1 2024 by and between Owens Corning Sales LLC Owens Corning Receivables LLC and other parties thereto incorporated by reference to Exhibit 10 3 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended March 31 2024
Second Amended and Restated Performance Guaranty dated as of March 1 2024 between Owens Corning as performance guarantor and PNC Bank National Association as administrator incorporated by reference to Exhibit 10 4 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended March 31 2024
Term Loan Agreement dated as of March 1 2024 by and among Owens Corning the lenders referred to therein and Morgan Stanley Senior Funding Inc as administrative agent incorporated by reference to Exhibit 10 5 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended March 31 2024
Form of Key Management Severance Agreement for Executive Officers incorporated by reference to Exhibit 10 10 to Owens Corning s Annual Report on Form 10 K File No 1 33100 for the year ended December 31 2013
Owens Corning Executive Supplemental Benefit Plan 2009 Restatement incorporated by reference to Exhibit 10 28 to Owens Corning s Annual Report on Form 10 K File No 1 33100 for the year ended December 31 2008
Owens Corning Supplemental Executive Retirement Plan as amended and restated effective as of January 1 2009 incorporated by reference to Exhibit 10 30 to Owens Corning s Annual Report on Form 10 K File No 1 33100 for the year ended December 31 2008
Owens Corning Amended and Restated Deferred Compensation Plan effective as of January 1 2021 incorporated by reference to Exhibit 10 17 to Owens Corning s Annual Report on Form 10 K File No 1 33100 for the year ended December 31 2020
Amended and Restated Owens Corning Employee Stock Purchase Plan effective April 16 2020 incorporated by reference to Exhibit 10 1 to Owens Corning s Current Report on Form 8 K File No 1 33100 filed April 21 2020
Form of Owens Corning 2018 Long Term Incentive Program Award Agreement for Performance Share Units incorporated by reference to Exhibit 10 2 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended March 31 2018
Form of Owens Corning 2018 Long Term Incentive Program Award Agreement for Restricted Stock incorporated by reference to Exhibit 10 3 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended March 31 2018
Form of Owens Corning 2019 Long Term Incentive Program Award Agreement pursuant to the Owens Corning 2016 Stock Plan for Restricted Stock Unit Award incorporated by reference to Exhibit 10 2 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended March 31 2019
Form of Long Term Incentive Program Award Agreement for Restricted Stock Unit incorporated by reference to Exhibit 10 33 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended June 30 2015
Form of Long Term Incentive Program Award Agreement for Performance Share Unit incorporated by reference to Exhibit 10 34 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended June 30 2015
Form of Owens Corning 2020 Long Term Incentive Program Award Agreement pursuant to the Owens Corning 2019 Stock Plan for Performance Share Unit Award incorporated by reference to Exhibit 10 30 to Owens Corning s Annual Report on Form 10 K File No 1 33100 for the year ended December 31 2020
Form of Long Term Incentive Program Award Agreement for Restricted Stock incorporated by reference to Exhibit 10 35 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended June 30 2015
Form of Owens Corning 2020 Long Term Incentive Program Award Agreement pursuant to the Owens Corning 2019 Stock Plan for Restricted Stock Unit Award incorporated by reference to Exhibit 10 32 to Owens Corning s Annual Report on Form 10 K File No 1 33100 for the year ended December 31 2020
Form of Owens Corning 2022 Long Term Incentive Program Award Agreement pursuant to the Owens Corning 2019 Stock Plan for Restricted Stock Unit Award incorporated by reference to Exhibit 10 1 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended March 31 2022
Form of Owens Corning 2022 Long Term Incentive Program Award Agreement pursuant to the Owens Corning 2019 Stock Plan for Performance Share Unit Award incorporated by reference to Exhibit 10 2 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended March 31 2022
Form of Owens Corning Restricted Stock Unit Award Agreement incorporated by reference to Exhibit 10 2 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended September 30 2023
Form of Owens Corning Long Term Incentive Program Award Agreement pursuant to the Owens Corning 2023 Stock Plan for Performance Share Unit Awards for grants beginning in 2024 incorporated by reference to Exhibit 10 7 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended March 31 2024
Form of Owens Corning Long Term Incentive Program Award Agreement pursuant to the Owens Corning 2023 Stock Plan for Restricted Stock Unit Awards for grants beginning in 2024 incorporated by reference to Exhibit 10 8 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended March 31 2024
Form of Owens Corning Restricted Stock Unit Award Agreement for grants beginning in 2024 incorporated by reference to Exhibit 10 9 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended March 31 2024
Retention and Transaction Bonus Opportunity Agreement dated as of March 1 2024 by and between Owens Corning and Marcio Sandri incorporated by reference to Exhibit 10 6 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended March 31 2024
Restricted Stock Unit Award Agreement by and between Owens Corning and Marcio Sandri dated as of February 1 2024 incorporated by reference to Exhibit 10 10 to Owens Corning s Quarterly Report on Form 10 Q File No 1 33100 for the quarter ended March 31 2024
The following materials from the Annual Report on Form 10 K for Owens Corning for the period ended December 31 2024 formatted in iXBRL Inline Extensible Business Reporting Language i Consolidated Statements of Earnings ii Consolidated Statements of Comprehensive Earnings iii Consolidated Balance Sheets iv Consolidated Statements of Stockholders Equity v Consolidated Statements of Cash Flows vi related notes to these financial statements and vii document and entity information
Schedules and similar attachments have been omitted from this filing pursuant to Item 601 a 5 of Regulation S K A copy of any omitted schedule or similar attachment will be furnished to the Securities and Exchange Commission upon request
Owens Corning agrees to furnish to the U S Securities and Exchange Commission upon request copies of all instruments defining the rights of holders of long term debt of Owens Corning where the total amount of securities authorized under each issue does not exceed 10 of the total assets of Owens Corning and its subsidiaries on a consolidated basis
Pursuant to the requirements of Section 13 or 15 d of the Securities Exchange Act of 1934 the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized
Pursuant to the requirements of the Securities Exchange Act of 1934 this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated

Company Name	Owens Corning Vist SEC web-site
Category	ABRASIVE ASBESTOS & MISC NONMETALLIC MINERAL PRODUCTS
Trading Symbol	OC