Company: OC
Filing Date: 2025-02-24
Form Type: 10-K
Source: 0001370946-25-000077
Chunk: 157

Company: Owens Corning
Filing Date: 2025-02-24
Form: 10-K
Item: Item 1
Chunk 157
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 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.

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Table of ContentsITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Third Quarter Goodwill Triggering Event

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%.

Annual Goodwill Testing

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