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 next 24 months. While business growth may drive increased investments and solid cash generation may result in higher shareholder distributions, we expect the company to sustain free operating cash to debt in the 15%-25% range over the next two to three years. Though less likely, we could downgrade Owens Corning over the next 24 months if: EBITDA declined by more than 35%, such that adjusted leverage rises above 3x with little prospects of a rapid recovery; Weaker earnings and cash flow generation resulted in free operating cash flow (FOCF) to debt falling below 15%,

...We believe ongoing strength in the roofing segment's results coupled with a strong recovery in the insulation and composites segments, have built up a credit cushion, and positioned Owens Corning better for the next downturn in business and housing cycles. We expect the company will end 2021 with adjusted net debt leverage below 2x and it could possibly remain at the lower end of the 2x-3x range over the next two to three years. These credit measures represent a high degree of cushion and therefore we believe Owens Corning's credit quality will be less susceptible to a potential downturn in business conditions. The boom in U.S. residential end markets, both repair and remodel as well as new construction, that initially benefited the roofing segment in the second half of 2020, continue to be a strong tailwind. It has resulted not only in growth for the roofing segment but also led to a rapid recovery in the insulation segment's performance in 2021. Furthermore, as the global economy recovers...

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