Owens Corning Completes Acquisition of Masonite, Strengthening Leadership in Building and Construction Materials
Owens Corning has completed the acquisition of Masonite International for $3.9 billion, or $133.00 per share. This acquisition is expected to bolster Owens Corning's position in the building and construction materials sector by adding a line of interior and exterior doors and door systems. The integration promises to leverage Owens Corning's operational and innovation capabilities, generating approximately $125 million in cost synergies. The company's annual revenue is projected to rise to $12.5 billion with an adjusted EBITDA of $2.9 billion. Chris Ball has been appointed President of the newly formed Doors business. Masonite's shares will be delisted from the NYSE.
- Acquisition of Masonite for $3.9 billion strengthens Owens Corning's market position.
- Expected increase in annual revenue to $12.5 billion.
- Projected adjusted EBITDA of $2.9 billion.
- Anticipated $125 million in cost synergies.
- Chris Ball appointed as President of the Doors business, adding experienced leadership.
- Reduction in ongoing capital intensity.
- ROIC expected to exceed the cost of capital by Year 3 post-close.
- Acquisition cost of $3.9 billion could increase financial leverage.
- Masonite shares will be delisted from NYSE, affecting liquidity for existing shareholders.
- Potential integration risks in merging operations and cultures of the two companies.
Insights
The acquisition of Masonite by Owens Corning for
From a financial perspective, the acquisition is expected to generate strong free cash flow and achieve approximately
For retail investors, it's vital to understand the implications of this acquisition. Firstly, the ability to generate strong free cash flow supports the company's capital allocation strategy, which can include debt reduction, dividend payments and share buybacks, all of which are favorable for shareholder value. Secondly, the cost synergies and improved financial metrics bolster the company's competitive edge in the market.
In simple terms, this acquisition is a strategic move aimed at solidifying Owens Corning's market leadership while also providing significant financial benefits and growth potential.
This acquisition positions Owens Corning to tap into new growth opportunities within the residential doors market, which complements its existing portfolio of construction materials.
The combined capabilities of both companies in terms of commercial, operational and innovation aspects are likely to drive growth and expand market share. For example, leveraging Masonite's established manufacturing and distribution network, with 64 facilities and over 10,000 employees, provides Owens Corning with a scalable platform for growth.
Additionally, the integration of Masonite's product offerings into Owens Corning's portfolio is expected to enhance brand value and customer loyalty. By offering a comprehensive range of building materials, Owens Corning can meet a broader spectrum of customer needs, leading to potential upselling and cross-selling opportunities, thereby driving revenue growth.
Retail investors should note that the strategic expansion into the door systems market will likely provide a more diversified revenue stream, reducing dependency on any single product line, which is beneficial for long-term stability and growth.
From an operational perspective, the acquisition allows Owens Corning to integrate Masonite’s extensive manufacturing capabilities, which is key to scaling their operations efficiently.
The expected
Investors should consider the operational benefits that come with this acquisition. Effective integration can result in significant cost savings and operational improvements, directly contributing to enhanced profitability and competitive positioning in the market.
- Expands Owens Corning’s leadership position in branded residential products with a complementary line of innovative interior and exterior doors and door systems
- Creates a scalable new growth platform leveraging combined commercial, operational, and innovation capabilities
- Enhances Owens Corning’s attractive financial profile
- Generates strong free cash flow to support consistent capital allocation strategy
- Names Chris Ball President of Doors business
“The addition of Masonite to Owens Corning marks a significant milestone for our company, as we further strengthen our position as a market leader in building and construction materials,” said Brian Chambers, Chair and Chief Executive Officer of Owens Corning. “Over the past several years, Owens Corning has been on a journey to transform and grow our company through strategic choices and strong execution. The completion of this acquisition represents the start of an exciting next chapter that allows us to leverage our proven commercial, operational, and innovation capabilities to increase our offering of highly valued branded building materials for our customers. We are excited about expanding into this new growth platform and for the opportunities ahead.”
Founded in 1925, Masonite is a leading global provider of interior and exterior doors and door systems serving both repair and remodel and new construction demand. Masonite operates 64 manufacturing and distribution facilities, primarily in
With the completion of the acquisition, Owens Corning’s annual revenue grows to
Masonite shareholders voted to approve the transaction at the Special Meeting of Shareholders held on April 25, 2024. With the completion of the acquisition, Masonite’s common shares will cease trading on the New York Stock Exchange and will be delisted.
Doors Business President Named
Owens Corning has named Chris Ball as President of its Doors business. Ball previously served as President of Masonite’s Global Residential business. He will report directly to Chair and Chief Executive Officer Brian Chambers and serve as a member of the company’s Executive Committee.
“We are pleased to welcome Chris to the Owens Corning executive team. His proven track record of growing businesses and developing talent, as well as his strong commercial execution, operational knowledge, and customer focus, will be instrumental as he leads this business into the future,” said Chambers. “Today we are combining two highly talented teams with a shared focus on keeping each other safe, helping our customers win and grow in the market, and delivering value for our shareholders. We look forward to working together with Chris and all of our new colleagues from Masonite.”
Ball joined Masonite as President of its Global Residential business in September 2021. Previously he held leadership roles at several Fortune 500 companies. He was President of the
He holds a bachelor’s degree from Indiana University’s Kelley School of Business and a Master of Business Administration from the executive master’s program at Northwestern University’s Kellogg School of Management.
About Owens Corning
Owens Corning is a global building and construction materials leader committed to building a sustainable future through material innovation. Our four integrated businesses – Roofing, Insulation, Doors, and Composites – provide durable, sustainable, energy-efficient solutions that leverage our unique material science, manufacturing, and market knowledge to help our customers win and grow. 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
Use of Non-GAAP Measures
Owens Corning uses non-GAAP measures that are intended to supplement investors' understanding of the company's financial information. These non-GAAP measures include adjusted EBITDA. A reconciliation for adjusted EBITDA to the corresponding GAAP measures are included in the financial tables of this press release. For purposes of internal review of Owens Corning's year-over-year operational performance, management excludes from net earnings attributable to Owens Corning certain items it believes are not representative of ongoing operations. The non-GAAP financial measures resulting from these adjustments (including adjusted EBITDA) are used internally by Owens Corning for various purposes, including reporting results of operations to the Board of Directors, analysis of performance, and related employee compensation measures. Management believes that these adjustments result in a measure that provides a useful representation of its operational performance; however, the adjusted measures should not be considered in isolation or as a substitute for net earnings attributable to Owens Corning as prepared in accordance with GAAP.
Forward-Looking Statements
This news release contains 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. These forward-looking statements are subject to risks, uncertainties and other factors and actual results may differ materially from any results projected in the statements. These risks, uncertainties and other factors include, without limitation: levels of residential and commercial or industrial construction activity; demand for our products; industry and economic conditions including, but not limited to, supply chain disruptions, recessionary conditions, inflationary pressures, interest rate and financial markets volatility, and the viability of banks and other financial institutions; availability and cost of energy and raw materials; levels of global industrial production; competitive and pricing factors; relationships with key customers and customer concentration in certain areas; issues related to acquisitions, divestitures and joint ventures or expansions; climate change, weather conditions and storm activity; legislation and related regulations or interpretations, in
1Based on 2023 actual results plus
Table 1
The reconciliation from Net earnings attributable to Owens Corning to EBITDA and Adjusted EBITDA for 2023 is shown in the table below (in millions):
|
Year Ended |
||
|
December 31, 2023 |
||
NET EARNINGS ATTRIBUTABLE TO OWENS CORNING |
$ |
1,196 |
|
Net loss attributable to non-redeemable and redeemable non-controlling interests |
|
(3 |
) |
NET EARNINGS |
|
1,193 |
|
Equity in net earnings of affiliates |
|
3 |
|
Income tax expense |
|
401 |
|
EARNINGS BEFORE TAXES |
|
1,591 |
|
Interest expense, net |
|
76 |
|
EARNINGS BEFORE INTEREST AND TAXES |
|
1,667 |
|
Depreciation and amortization |
|
609 |
|
EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION (EBITDA) |
|
2,276 |
|
Less: Adjusting items (below) |
|
(138 |
) |
Accelerated depreciation and amortization included in restructuring |
|
(101 |
) |
ADJUSTED EBITDA |
$ |
2,313 |
|
|
|
||
ADJUSTING ITEMS TO EBITDA |
|
||
Restructuring costs |
$ |
(169 |
) |
Pension settlement losses |
|
(145 |
) |
Paroc marine recall |
|
(15 |
) |
Gains on asset sales |
|
191 |
|
TOTAL ADJUSTING ITEMS (a) |
$ |
(138 |
) |
(a) Please refer to the 2023 10-K filing in the "Adjusted Earnings Before Interest and Taxes ("Adjusted EBIT") paragraph of Management's Discussion and Analysis for additional information on these adjusting items. |
|||
Source: Owens Corning SEC Filings; Annual Report on Form 10-K for the year ended December 31, 2023 filed on February 14, 2024. |
|||
Table 2
The reconciliation from Net income attributable to Masonite International Corporation ("Masonite") to adjusted EBITDA (in thousands):
|
Year Ended |
||
|
December 31, 2023 |
||
Net income attributable to Masonite |
$ |
118,227 |
|
Plus: |
|
||
Depreciation |
|
91,145 |
|
Amortization |
|
32,976 |
|
Share based compensation expense |
|
23,638 |
|
Loss on disposal of property, plant and equipment |
|
4,434 |
|
Restructuring costs |
|
10,130 |
|
Asset impairment |
|
33,063 |
|
Interest expense, net |
|
50,822 |
|
Other income, net |
|
(2,087 |
) |
Income tax expense |
|
40,941 |
|
Other items (a) |
|
12,311 |
|
Net income attributable to non-controlling interest |
|
3,042 |
|
Adjusted EBITDA |
$ |
418,642 |
|
(a) In 2023, other items include |
|||
Source: Masonite SEC Filings; Annual Report on Form 10-K for the year ended December 31, 2023 filed on February 29, 2024. |
|||
Table 3
The following table combines Owens Corning and Masonite EBITDA; inclusive of projected synergies (in millions):
|
Year Ended December 31, 2023 |
|
|
|
|
||
|
Owens Corning |
+ |
Masonite |
+ |
Synergies (a) |
= |
Combined |
Net Sales |
|
|
|
|
— |
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
(a) Owens Corning projects to achieve approximately |
|||||||
Please see Table 1 for the reconciliation from Net earnings attributable to Owens Corning to EBITDA and Adjusted EBITDA and Table 2 for the reconciliation from Net income attributable to Masonite to Adjusted EBITDA. |
|||||||
Source: Owens Corning SEC Filings; Annual Report on Form 10-K for the years ended December 31, 2023 filed on February 14, 2024; Masonite SEC Filings; Annual Report on Form 10-K for the year ended December 31, 2023 filed on February 29, 2024. |
|||||||
Owens Corning Company News / Owens Corning Investor Relations News
View source version on businesswire.com: https://www.businesswire.com/news/home/20240514879383/en/
Owens Corning
Megan James
Media Relations
megan.james@owenscorning.com
419.348.0768
Amber Wohlfarth
Investor Relations
amber.wohlfarth@owenscorning.com
419.248.5639
Source: Owens Corning
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