Buyback Wednesdays – Owens Corning Announces an Additional 10 Million Share Buyback

Buyback activity almost doubled last week with 18 companies announcing buybacks compared to only 8 companies in the prior week. The biggest buyback announcement in dollar  terms was by Mastercard Incorporated (MA). Mastercard announced a $9 billion share buyback following the completion of its previous share repurchase program of $8 billion announced in November 2021. The company has bought back more than 7% of its shares outstanding since Q3 2018. During the third quarter of 2022, Mastercard repurchased 4.7 million shares at a cost of $1.6 billion and paid $474 million in dividends. Investment research services provider, Morningstar, Inc. (MORN) also announced a new three-year $500 million share buyback today representing around 5% of its market cap at announcement.

The stock that caught our attention this week was Owens Corning (OC). It also tops our list with a 10 million additional buyback representing around 11% of its market cap at announcement. OC is a global building and construction materials manufacturer. The company’s main business segments are insulation, roofing, composites, and other building products.

The company has been consistently buying back its stock. It has repurchased a little less than 6 million shares so far in 2022. In the third quarter, the company repurchased 2.5 million shares of common stock for $206 million. This is its second buyback announcement this year. The first one was also an additional 10 million buyback that was announced on February 16, 2022, and represented around 10.4% of its market cap at announcement. A total of 17.4 million shares now remain available for purchase from both these buyback programs.  OC also announced a 50% increase in its dividend to 0.52/share for the third quarter of 2022. This puts the company’s forward dividend yield at a modest 2.34% with a 11.25% payout ratio.

OC’s revenue has increased at a steady clip over the last seven years except for a slight dip during the pandemic. Revenue jumped more than 20% to $8.5 billion in 2021 and it is possible we might see some mean reversion in the coming years.  It has grown its revenue and earnings at a CAGR of over 10% and 44% respectively over the last 3 years.

Through the third quarter, the company launched 46 new or improvised products across its global businesses and reported strong Q3 2022 results.  The company grew its revenue in all its segments with third-quarter revenue of $2.5 billion, a 14% increase over Q3 2021. The insulation, composites and roofing business recorded strong sales of $965 million, $638 million and $1 billion, an increase of 18%, 8% and 15% respectively from Q3 2021. While the U.S. contributes 67% of Owens Corning’s revenue, its international business is growing, particularly in Europe. The firm’s European revenue grew from just 10% of total revenue in 2015 to 16% TTM.

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