Owens Corning

The stable outlook reflects S&P Global Ratings' view that Owens Corning will maintain adjusted leverage in line with historical levels in the 2x–3x range over the 24 months. Our base case scenario incorporates slower demand across the three segments and some EBITDA margin compression as well. However, we believe reduced capital spending, strong free cash flow generation (FOCF; operating cash flow less capital spending) and balance sheet cash, will help the company sustain free operating cash to debt in excess of 15% over the next few years. We could downgrade Owens Corning over the next 24 months if: EBITDA declined by more than 25%, such that adjusted leverage rises above 3x with little prospects of a rapid recovery Weaker earnings

...We regard the continued strong earnings' contribution from the nondiscretionary roof replacement demand as a strength for Owens Corning. In the last housing cycle, the relatively less volatile repair and remodel end markets serviced by the roofing segment offset the more severe declines from the insulation and composites segments. Similarly, during the current slowdown, after an initial decline in demand in the months of April and May this year, we have seen a quick recovery in the roofing segment beginning in June. The roof replacement segment has underpinned this recovery, reflecting its resiliency and less discretionary nature, counterbalancing the somewhat slower expected pace of recovery in the insulation and composite segments. As a result, less cyclical earnings from the roofing segment mitigates some of the volatility in the overall earnings and cash flows for Owens Corning....

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