OC - Earnings call transcript Q3 2017

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Operator

Good day, and welcome to the Owens Corning Third Quarter 2017 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would like to now turn the conference over to Thierry Denis, Vice President of Investor Relations. ahead. go Please

Thierry Denis

of Good time Rachel. in Thank for third you of Thank join morning, us the quarter the for to business call for taking our you, results everyone. XXXX. today's review conference

Joining CEO; Financial Michael and Corning's and are us McMurray, Mike today Owens Chairman Thaman, Officer. Chief

that practice will we’re release this many ask yourselves in call order detailed this one a accommodate this as and the to changing limit feedback your Following our open to and quarter, you presentation we questions. to for that question please morning, third this participants received issued XX-Q XXXX. possible, quarter as our results only. and call our Earlier financial morning, we one-hour a In of response to news filed

of during discussion that third quarter prepared presentation purposes performance results refer the will the slides we we our to for slides and today, these call. XXXX, the our summarize For and

presentation where of XX-Q the and slide access under section can You page. the website on of before offer Please Investors our for Refer A reference. the supporting the earnings this reference and our reminders. link couple we corporate begin home release, Form website, owenscorning.com. to transcript and slides press at will our be future we a call recording slides of available X the

cautionary affecting explanation laws. a statements SEC securities of and under identified to to uncertainties current no filings estimates detailed inherent of results undertake the uncertainties for and risks, such forecasts beyond future and to actual differ risks the factors remarks in today's these what our factors cause statements materially. statements statements. update statements include We required will are refer our These on First, to that obligation our applicable subject based forward-looking forward-looking is events. the could more and other risk Please

excluded in EBIT our the in earnings and available and to of with not tables measures text Explanations adjusted believe meaningful be share. of investors we our found representative results of compare our operations slides historical owenscorning.com. to measure of ongoing from that reconciliations period-over-period contain earnings adjusted and adjust tax in practice, which to adjusted when non-GAAP potential press today's EBIT GAAP we've remove and to period-to-period. our effect certain per is presentation Adjusted may primary rate our items the the have is arriving Consistent non-GAAP comparisons of the are it earnings. be We earnings financial for at Second, quarter-to-quarter remarks release our a financial fluctuations measure effective believe and significant measures. we adjusted calculating on

and free cash cash helpful flow measures that that cash pursue use company's also opportunities We ability investors the utilize and to as of generate evaluate to adjusted to cash shareholder enhance to value. free conversion flow earnings

For you on and CFO, will now, we slide CEO, And Mike and will by those of following Mike? opening our begin presentation, Michael from session. slide along Chairman remarks our followed Q&A McMurray Thaman our be with X.

Michael Thaman

our of strong to up for first billion, compared third earnings This quarter, months the for is delivered to the months with produce and for XX% the strong XX%; Revenue and million, XX% led has EBIT period up million, adjusted Thank for $XXX another quarter first nine of year. nine $XXX $X.X quarter quarter growth. morning, welcome same last performance billion, up to $X.X Good X%. the the Owens Thierry. sustainable and up was and call. you, everyone, Corning continuing

and acquisition has our has with as accelerated Europe The we're Asia. pace our In the business and day footprint the well addition, acquisition. first offering is this from expanded product growth in quarter, one as full performance of FOAMGLAS Pittsburgh Corning which increased the and includes integration. pleased insulation contribution our and contributed This from

safety financial Before an quarterly about to results, give our on update talk you our like program. I'd I

safety critical FOAMGLAS As rate to our before, in the value of I onboarding X% the safety and for X.XX, a area period the year. been Overall said business quarter core same focus Owens last company, Corning. is the was an recordable has improvement improvement over of incident third our

We're This we a worker achieve injuries A zero of determined reminder stop accident and we were involving every important that won't quarter, safely experience until one we we did is each a it there. plants. vivid serious in how of and our day. get to

then Now for I'd our and the remainder we to like to the expectations set, our relates of expectations it the about as talk performance review year.

of delivered year inflation. shingle XX%. million, and with strong strong strong continue activity. pricing These EBIT Year-to-date and to volumes, asphalt of component results EBIT Our Roofing of reflect continue offset demand comparable gained with last business the reroof $XXX margins impact higher

$XX charge. XX%. offset affect increasing and partially We was remainder generated third consecutive driven $XX largely $XX the of business of the higher with and level. in performance improved by business of this high composites business produced strength event debt to operating not was a million margins million Our EBIT will continues The prior volumes. our EBIT by perform profile. revenue million quarter-to-quarter the quarter, a bad year, for comparable the isolated believe The The EBIT at operating growth XX%. with or the Insulation is

in both results compared increased residential and business, EBIT million construction driven the volumes with contribution better the improvement and price EBIT new were the While to same period last the The FOAMGLAS U.S. business. positive by $XX year.

but since the business mostly in Texas the contribution the to This Excluding business another experiencing some a to year be EBIT strong. the our quarter. million fourth in like impact the fundamentals of from announced million is FOAMGLAS particularly the I gaining to slowed hurricanes to with We was would impact our to also estimated effective momentum. Florida, and contribution developments. volume $XX and quarter. our price residential a U.S. September remain insulation negative is impacted and business, In by we operating three an $XX early actions revenue in produced the in few insulation notable business leverage. the highlight and this business, revenue and implemented January. $X X% the recovery recent to In business are volume strong insulation growth business growth Overall million successfully this EBIT

eighth industry on DGSI So and long-term elite Jones year row. share social of Dow to criteria. listing dividends in far, environmental in we products this companies we've Index placement please million we I'm on building for world fiscal for XXX group this and repurchase to world's the share are largest a economic is based in return shareholders. the our in the year remain Sustainability Also, world The an the DGSI year. leader for that the

Overall, Roofing, to nine remained in by we with by expectations year months of activity the expect volumes. the Now we guidance above an up demand. the growth. components for storm with and first year mid-single housing quarter strong and X% prior industry with flat market Overall, driven starts were production consensus shingle our for consistent growth primarily and single environment about market digits the onto industrial XXXX. now replacement our In expectations improving grow to U.S. fourth for relatively the shipments expect Through volume. continue outlook and global

XX% for strong Our margin the remains quarter. performance at

full-year. expect consecutive improvement. achieve we year our that will continue In expect Composites, improvement fifth all for offset We to EBIT of the price to inflation and cost

business well. guidance. perspective, an from least EBIT generate expect or in now quarter EBITDA we what the summary, to $XX XX expect this due organization rate with of million previous I will to EBIT convert we $XXX continue see million expect year. we about to proud earnings businesses than FOAMGLAS we more We more early revenue million, of are $XX that executing that This of growth adjusted million cash announced Given guidance expect this the a pricing All I'm million flow adjusted company of the now assumes In Insulation, believe actions of of $XX accomplished. XXX% and will we growth third free through $XXX From of the EBIT strength previously at our have to December million. for have of three $XXX previous a charge million. continue at our our about to that detailed versus January. we least guidance upgrade year In at volumes full

proven we are of and inner have strong in to We off our track strong integration the record financial fast with rap a of performance this sustain ability start financial we've remain a completed confident performance. to I point.

over further it We are business. Michael? our who will details of review that, shareholders. to turn With for Michael creating our I'll value the

Michael McMurray

good delivered Owens you, everyone. record billion. Thank with morning, sales X.X and net quarter strong another Mike, of Corning

be positioned to our year adjusted record revenue is million. another the segment integration a execution are deliver free to and financial newly XX%, of $XXX insulation first off to The ability continues significant within our continues quarters, be and operational have to businesses cash of across bright generate strong delivered For grown Commercial we our by record three performance. flow EBIT of all three and spot. start FOAMGLAS acquired business we and to strong

on which financial key Now, X, for data let's slide start our the summarizes quarter. third

adjusted was Composites of third result reduction for in and compared of the o expense up $X.X XXXX, depreciation detailed quarter, EBIT EBIT business Depreciation in or to Insulation, million, compared third million, $XX Form $XX overcame. one of reported million million increase the tables or we the net and $X.XX third $XX and reported of the XXXX. sales the delivered XX-Q. business $XXX You'll today's cost XXXX primarily a million up period same diluted XXXX million quarter. to information share to earnings of actions and sales news Composites ago. compared the XX%. due $XX XXXX. third despite of and Adjusted as we was challenges in amortization million, or same $X.XX for $XXX were release quarter share Today, for billion, quarter per the reported XX% compared XXXX more third of accelerated EBIT The diluted of company the per second in for quarter the find million isolated $XX FOAMGLAS the record consolidated adjusted $XXX respectively, Adjusted our margins represents as up the increased period in Roofing was million, to the This announced to $XXX the $XXX million million market quarter $XXX sales year quarter for

additions call. quarter's reduction the detail capital see We’ve $X items. which million On quarter in million. actions our primarily X, to $XX expenses related approximately of third restructuring of cost last in adjusting recorded quarter, quarter our earnings for business, discussed Slide we you’ll Composites the the Our were in

$X recorded cost also acquisition. Pittsburgh Corning million We related to

settlement million second the taken related gains recorded pension $X to actions the quarter. we Finally, in

adjusted of of were Insulation of beginning business. our quarter despite of turn Insulation review demonstrated Now, third Adjusted Insulation EBIT ago, performance, million. Slide to EBIT we the provide by disciplined recently FOAMGLAS to construction U.S. including January a the year review the a EBIT the please progress, the Insulation detailed where increased of XXXX with million. $XX third from of comparing X, market, XXXX. in slower announced the high-level Roofing sales results, $XX provide effective progress a of highlights, General quarter We pricing. increased in volume the $XXX commercial primarily million on million The of With new to from XX% and Slide our Sales up more increased of execution, where continued up key were growth you ask million volumes same increase each. business I expenses business, corporate $X commercial that Composites by X, contribution period to business financial the prior turn price residential review XXXX. higher $X year. on I and September.

increased and top about EBIT to this further impact as optimistic of performance; was the September, quarter. of business by raw exclusive foam costs million. underlying to and from strong contribution in currently new residential quarter recovery in are revenue line Insulation Texas X% growth to an other slowed hurricanes of the million U.S. construction. volume chain EBIT pleased is $XX as costs is for improved business. the about I'm $XX start. market. increased slowdown and result a transportation The of given growth a was quarter, We million U.S. improved of of off experiencing for offset impact higher to insulation the supply business the impact Florida related Texas challenges report the manufacturing about and improvements making result progress and the These storm primarily were in and the strength a volume the pricing FOAMGLAS in storms, primarily the our and polystyrene Florida. The $X partially the material

made earnings wool the discussed operations. the quarter. breakeven. started third stable We’ve our during are are we Volumes moving mineral approaching shipping and As towards progress call, building in on last significant new facility,

expansion acquisition expect we continue progressing contribution enthusiastic and to of million integration $XX this and people of to in this move the FOAMGLAS XXXX. opportunity to business $XX The we of We – excited The XXXX. be least are brings about tailwinds EBIT well, delivered into delivered about is as and Owens million quarter. in $XX the business Corning. expect million We at now third be revenue the

As a synergies million $XX by anticipate of operational a commercial we reminder, run rate mid-XXXX. and of

year, million. to more of expect the continue For and of we than about $XXX growth full EBIT million revenue $XXX

our in in residential Our fourth benefit outlook XXXX includes the buying quarter construction late expected new the to some January business. our increase pre-price related price U.S. increase of

the and year-over-year period strong that looking delivered operating XX% during leverage. that of the quarterly in ended are forward, operating delivering and that Insulation had XXXX. on in we leverage back and growth of track, Beginning this Insulation you remind quarters me business EBIT year-over-year improvements business XX EBIT the pleased quarter third is of quarter consecutive over Let the

$XX $XXX, charge X%. when costs by product same The were million strong to $XX demand progression geographies third the $XX up to have start-up growth in this to Now, broad-based compared to increase the and the quarter operating to volume of XXXX. million, XXXX the review volumes year compared your quarter and continue and and same I'll were for margin business a large debt by was a continues the prior stronger Slide Composites for perform period EBIT and for million turn continued as volumes. our Composites higher Composites $X The improved you grown most million X and charge, lower X% Sales be a to primarily with to EBIT across the lines. business. in performance over to bad of attention period rebuild third expectations ask benefit offset and Market business associated would Brazilian with showed customer. XX%. Without permits of

of a position low-delivered item to to margin expansion. product growth One and leadership note, continue and EBIT is [indiscernible] contributor fuel Our our cost key our improvement. actions year-over-year facility

about $XX and were business Roofing of year component. in Roofing previous XX for a improvement. by sales a sales guidance shingle period the about In production. bad quarter the market Slide overview delivered of company our the in the The we for of increased continue as the be of We compared a prospects improving pleased of the plant operations the to year quarter. now an are ago, provides with by million million of this XX% this Roofing business. versus expects full underlying and another growth $XXX volume the fiber driven of to continue continues debt industrial the performance XXXX, the excited to expect The same growth driven million, business. outstanding charge, increase but global glass $XX with business be strong, result EBIT

Third quarter in XX% shipments Midwest. in approximately and industry respectively, with growth storm age-related year-to-date grew reroof continued and X% activity the and shingle

were quarter Our and margins shingle a volumes. in has inflation that market logistics digits growth our the input in on We Roofing fuel Stronger and the execution be year full the demand quarter into track business the EBIT and same higher and full in volume delivered have shipments storms strong mid-single quarter. should commercial Components expectation. now the sales million with to Florida $X million, relatively XX% offset growth quarter pricing cost in in the The the on growth positive higher was Year-to-date XXXX. volumes Texas expect continues flat and compared period EBIT in of fourth continued market strong and Components. pricing in XX% quarter year inflation up overall growth fourth by cost. primarily offset impact $XXX to in XXXX. our in helped asphalt

delivery costs storm additional the and $XX demand These to higher We cost, and with third normal logistic quarter. continue about security are transportation transportation. total are higher the in order in the to rates expected and million than service quarter, additional into experiencing associated and fourth

to me XX. attention Slide let turn Now your

company deployed million actions. pre-payable successfully XX% As all million with second and previously of million return and a cost $XX.XX $XXX to extinguishment to share. markets The a of of capital in of generate have XXXX on favorable value. In cash debt of completed for is debt. a In and of Through drive shareholders the and long-term program average shares via and retired acquisition XX-year associated transaction we the quarter's with of associated InterWrap and all per $X buybacks. were Corning quarter the we ability of the advantage an on Corning the XXXX, InterWrap repurchased I quarter the free flow issuance also Corning bank stock at buybacks. acquisition XXX,XXX to long-term and occurred shareholder on retire dividends this debt. announced our to third quarter. the third allocate took we approximately capital share strong under Proceeds to and mentioned the shareholders return our last company debt we Pittsburgh XXXX. the fund acquisitions bank repurchase XXX This the billion we testament price XXX XXXX, bank dividends transaction these retired financed associated debt debt via quarter with million the last $XXX second loss and a in in to quarter in call bond portion of have of XX% roughly from acquisition value-creating about higher used million the XX M&A the We both Pittsburgh with year, Since Pittsburgh

for current shares available X.X remained of September under XXth, the As authorization. repurchase million company's

During year dividends. the months million of XX its first the nine company paid the in shareholders

flow, of and As our stock priorities to repurchases capital will future be shareholders. to mechanisms our cash deployment return dividends we balance free both for the important

I Now outlook will XXXX. our for provide

an XXXX, now improving and $XX starts performance. and increased consistent expectations global with company about housing volume For to continues In EBIT the driven by million of production consensus environment we for expect growth U.S. expect improved growth. industrial Composites,

we year. $XXX continue the FOAMGLAS Insulation, relatively about growth expect million, more For fourth the full-year with including market another we in from revenue great mid-single with digit In of $XXX growth expect our contribution the expect than EBIT Roofing, flat of to million We now business. quarter.

be Corning. to Owens isolated the continue earnings to in grew We potential optimistic XX% over for period about prior market challenges. growth adjusted Year-to-date year despite comparable EBIT the some

quarter a As XXXX, we of deliver growth representing least fourth to of XXXX. we over at of to adjusted $XXX expect least EBIT XX% look million, to continue the at full-year rate

to improved performance capital Finally, cash free advantaged high tax translate of earnings a adjusted our better conversion will flow. working and earnings, into ratio position

year a expect We of third with more. consecutive XXX% or conversion

where slide expenditures million. turn million is is items to about provide be expect expected be for expenses to expected associated Now corporate on and be please Depreciation approximately Capital $XXX to $XXX XX, guidance $XXX be including the financial million. with will capital additions expense Interest FOAMGLAS now year. I $XXX million. expense to about We about business. other amortization the

will cash taxes Our significantly tax $X.X billion time for some U.S. come. to offset NOL

XX% adjusted of As XXXX earnings. cash and tax planning a for be our we to our to result, initiatives, rate pre-tax tax tax XX% expect other NOL

will call adjusted to on Our XX. XXXX us question-and-answer to our pre-tax build earnings. in continue record management and turn Investor final item, session. an how November our Thierry to here to lead With of performance. One of Day are XX% financial the more expected The excited is Toledo I'll that, be we in we review detail, XX% Thierry? operational effective in team to businesses the including host tax rate upon track

Thierry Denis

request have you received. and to Thank questions ready begin that been one session. [indiscernible] for to you, Michael. limit only, Rachel, Q&A again, And we're now the we’ll would I question yourself take ask

Operator

limit now will so please one the We to yourself Instructions] begin [Operator session. Remember, question. question-and-answer

If reenter questions, further you question you may have the queue.

Bank of comes question Lovallo go John America. from ahead. first with Please The

John Lovallo

I call. guys, thank Hey question be would the on debt bad for guess you the taking my charge.

to this curious of I’m charge recurring business is if recoverable, So, any of this is your is what a represent? and discussed percentage

Michael McMurray

the for This out. A thanks things Michael. is Yeah, I questions. pointed of couple

now. well think a in environment, pretty and I pretty being foremost, Brazil difficult we overall, it first do despite economic right

pretty years been overall last the So, have from an perspective economic few rough.

for is majority Now customer which that many had a we've Brazil, the Unfortunately, business. long-term the contract, lost material sales represented we that of has the customer a relationship a in profitable and their this with good had customer years. been

They're thought we pretty So, through on going a the reorganization charge appropriate went quickly. south process, it’s receivable. a outstanding things to from take but full

from overall point our this that in I a of an pretty probably think is Corning team the perspective, view point time has say record. track pretty I is Owens at strong credit low. recovery would that

point, see We have rolling other don’t strong review and we processes, strong and this credit controls at risk. material

Operator

The Matthew next from Barclays. go Bouley Please ahead. question comes with

Matthew Bouley

you taking my thank question. for morning, Good

Could Insulation of plays So, decisions? in expectation the into price business, typically the you. on what just Thank you customer inventory December typically would commented on in degree play and of terms magnitude into increase. their out buying that the year-end to you levels how on pre-buy elaborate ahead

Michael Thaman

bit starts of we're been maybe Mike. about call. the in for our detailed seeing little mean, summer one where that have slower a guidance. This housing earnings Sure. I’m this. bit the talk little forecasted the is, last happy a is than things than through the I that We to macro consensus

next of increase. early through and of January that of part expect But for we sizable announced than we little be result, the of confidence to year end in last time we we action guidance a us the opportunity a And a volumes that gave both price year, from would growth. revenue very the do where announced price our reiterate is, continue a growth macro because market and as of So we guidance. EBIT strong this has less year will in been I today, been for have think terms on maybe you kind think the heard us our bit the

price on XX% So, a that on we Insulation XX% and announced price [indiscernible]. increase increase

conditions if type amount are some bit thinking year-end in saw prepared Michael's back positioning will see way we mine of things month early realize [Indiscernible] press about but for portion with a to in and guidance best in did also increase, that take say and full-year. that's the in it’s for think normal glad a there release a we of that the to particularly inventory related increase slowed increase, October I Generally, comments September of return market the So, down the both obviously and and included that the we is that we to business in kind our them see that customer's of we an we middle the kind report. the in of choppy of expectation are to good hurricanes

Operator

comes Michael ahead. from Please with The Nomura next Wood question go Instinet.

Michael Wood

about competitors choose I residential and wondering XX% by that those in Thank just to like like year impacting can of fairly there several third wanted be that probably increases to new put you context large anything in looks you. that other historically seems a there follow-up of realization world results on capacity? price the just success if rates is like quarter. increases the realization you've if residential maybe in prices my the inflation you pricing, this math It is announced mentioned

Michael Thaman

that into real businesses and light that. been positives the see that progression year we of which the Sure. off Happy to is pricing for the we I have has be happy through been one green take actions. to pricing would with been now successful We've think the

is each we out in number relatively and that those actions had think increases sizeable which we than at announced had a was think I market less I of uncommon. settled what pricing announced not the

at on you year. was the the in progress coming that year, timing so second of of prices to it we pricing didn’t the of if reversing that lot represent headwinds kind half had really we really last designed have recover our think a represented the look increases in lost increase the January I the of

quarter see in had price increase the the you third fourth. that would would utilization in reasonable the amount September So, a some in result we We more most saw actions third that have think report frame. the the a in business another price took and time did contribute on the will come of that contribute so to price that basis pricing as the of of a of way we significantly second year-to-date amount obviously I was action from the to

So, as we expect on continue that operating I through to my very would commented remarks. and you roll think I it leverage see will prepared strong and in

in If in of think the quarter very, the XX million you we associated and with of X million of impact XX about in revenue business so Hurricanes. very million and operating and million strong million EBITDA of revenue and leverage FOAMGLAS growth pull said I out of underlying EBITDA XX which Michael's the again profit quarter revenue was of X growth EBITDA the the comments mine have had the business also XX million we and about lost of

revenue been very have with revenue stronger strong and we've that bit So, little leverage. operating able growth that add-back to then get obviously

market where price conditions the fact fourth September of in month we how these some carry we increased, September quarter. optimism from about the into of of felt going of report we are the incremental we in and volumes So, comes are out had kind September our the also our costs not of the coming to

the that expecting So, a we're off year strong will finish shape. good fourth in quarter

Operator

question The go Suisse. Susan Credit ahead. from Maklari next Please with comes

Susan Maklari

in sounds the little and together expectations next the with it if in line margins FOAMGLAS a little seems like of coming thinking pretty talk you about how for pricing it's are least bit you well Insulation perhaps wondering bit that. I'm pretty like a at could to Clearly year. effective incremental and with if not your ahead has been

help sort forward? think should So, we of how can going you just about projecting that us be

Michael Thaman

Susan. Sure,

to and and out our me the Pittsburgh talk going Insulation. look those a kind we into for numbers in of we puts takes see visibility of be year full-year that have of going kind and next what fair are we're some pieces of a and let detail you'll have of moving to some we through as have So, as number numbers. Corning. of you transparency Obviously, able to We’ll through

a they of leverage, they contributor. EBIT that and So, very operating a margin good and stable but a show tremendous because won’t in is will terms business amount show of contribution revenue

a in I will mineral think have fiber tailwind our business. we

has is I start at Michael quarter. job running the it and of the in our detailed facility, now third think up

Our get by the range is goal in end. to of breakeven it year

the that quarter we we half the the half said first in cut losses the year. this of those incurred through we half call maybe the on that business into in those million, second were last $XX that So, the around of year,

little bit operating [indiscernible] So, kind insulation leverage. of right look going had in get is the right have on always second of we in get a as the We our kind demonstrated with some margins way now operating good you performance said, you that we’ve with time, for associated market business. remaining to a a our I think domestic Historically real levels better fiber piece residential of actions. back Then number we're is get the much trying into back hope throwback up would a the for the in share that facility, a quarter business, Which of and mineral some of to which focus last last over we about performance through we to position leverage Insulation historical to year. quarters business. to to XX% on year, if done of XX-quarter period where better pricing we've associated that then the our four next disruption, the that the results worked much business, back market to

all that our come would back combined new outlook, make get of you those I but sure be of it'll say So, and kind to construction the piece pieces and if of its to residential light business continue business. our density the expect operating XX% piece leverage improvement products margin the focal has really point would FIBERGLAS which been to that with on efforts show of we to of

Operator

Wetenhall comes RBC Please question from Markets. The ahead. next go with Robert Capital

Robert Wetenhall

XXXX? the could shingles big we quarter. loss trying Also, noise Day. production you shift and contribution of off, may the a mix the working, glad the guys, terms of to had I'm and business Could trying thinking gears for it just more assuming to roofing Investor about us hope of it, little attributable quarter. of give global into to lot industrial like a better switch a write market composites has I'm just Hey bit to see and of thinking pieces producing in and about seems the couple the understand roofing business, for what just you momentum, this in leverage is? you talk you're in everything I preview kind at this that the like-for-like a what Brazilian going cover understand and revenue picture negative

Michael Thaman

Yeah.

[indiscernible] year's question take the let out this Brazil first of your first So, me -- revenue.

good, did year in industrial So, forward. an going X.X%, it decelerate not times impact has And saw we Revenue volume tracking production, but really third in what the right, you're pretty going growth then last still regards roughly quarter. been for see the two little to to roughly a global you're at which bit it's and is year.

year-on-year. on So, up the third and was it X% year-to-date basis, volume about up roughly a quarter in momentum X%. was

year. go comp first to had Now particular in of And quarter us second we year, then kind in our year. global of into better that of positions in U.S. first the half inventory construction, materials a really into restocking the were of growth [EBITDAs] that's good we half the within business, we've think that I easy in roofing that's thing a of the anticipation that have so customers the did this moved

as of said this be should set year a good as up pretty we the we next year. look half momentum into slowed That as year. again, second the to we moved has forward, So

delivered – to We growth. as line. and line and decent grow volume move really business think The good has I are expecting forward bottom to continue operational grow would expect we performance we top

Operator

Stephen Kim next Evercore. question The with comes go ahead. Please from

Stephen Kim

transportation. here roofing just cost I to little on Wanted about had the think clean-up the talked a bit mentioned you'd you in

that's the to commentary. interplay if a say to understand basically XQ extend and that continue net you logistical first would into extend any forward. cover in just And call to you've been you wanted that mention whether I sense to it I it's thought of half a go not curious concentration what's to and if 'XX cost was was price there to putting next successful I whether so XQ if us be a effects able those I know or think for and in we sufficient geographic as can a year. any should there also if guess it hurricane also going 'XX you price wouldn’t into I them maybe give in was the

give broader the if on some So, just can logistics? us you Thanks. understanding

Michael Thaman

have think Michael related million XX in said his in incremental activity. storm cost comments I the quarter of to we about prepared

other events the did Just up fair we through types of hailstorms any be wind not a would to amount that the spring storms, summer. and that where activity into clean would of see be confusion hurricanes, and high

upper So, the in is this like Midwest Houston mountain and Florida first is from geographically away the places in state. and the

position got we Obviously, our activity. when at opportunity. high business where is levels want certainly customer we now any good into at away so wouldn’t very right the of look business So, to were very, manufacturing we running our a all facilities from network in very walk Midwestern roofing

to to made view to an decision across our be given products service some we shipping that the is order point from in market regions demand So, of in position support begin We this bending had that able our us and in for the expected the opportunity year. above to cost care coming our make and that to took we beyond service were of into was sure we to volume business. order probably some incur knee what

this availability for do have trucks the we recover any of of are our more higher pay lack some in obviously to debt of rates and to the of we are flat and be inflation cost actions would goal because inflation where having is pricing Our trucks.

able So into demand as these we capacity. into part But balance wouldn’t our start that's we next we go it costs something our pricing process regional have unwind regional to see year. should its year to next work as another be of way thought our out with

inflation So, of against is just would of is we is try through business the are recover then to not a see can temporary continue up or of it shingle. issue a a in rates asphalt freight part in we price and and we part if in it figure out the of all to pushing that timing the think business the how inflation inflation a

Operator

The ahead. next question comes from Please Kathryn Thompson with Group. Thompson go Research

Kathryn Thompson

you control code capacity segment storms? from half industry of lines. On you term staring the are demand Insulation appetite increased the that for Insulation What's capacity industries those particularly you. your a the understand in of where given roughly Thank utilization. I terms broad to

Michael Thaman

Our is unchanged ago. of six situation relatively view the Insulation we where been from months capacity would have

somewhat is our believe to believe industry [indiscernible] in low utilization is, so are industry that We've that think could by competitors we XXs. overall what continue operating said are the the average. you our operating that I influence the in average We below somewhere above rates somewhere think

levels our from perspective continued So, healthy and fairly growth. utilization

we've slower eight was that So our a little bit even of months we little in growth saw was talked choppier, just about as month the seen the the September year. growth it we a still which first bit of through September,

us. constructive growth kind seen for very of have in the business which we So, month-on-month is

stage expect where, the improved to levels, that So pricing I of as get that capacity to accelerate bring support our think we something restore recovery success on market. the back in bring position entered we've kind business of in hear market the result, And the our reinvestment bearer the needed think focus justifies healthy maybe to that bit. would the a we doing to our in trying margins we our we would also, a that, to that us in to announce you

harder. current bit to So, we at a utilization think our our levels going network we're run

out out business leverage expect we’d business volume we in months the and So, a at can our of operating terms over probably we have lot we get to the can and volume productivity next amount network. the a of of the twelve of least get lot see of of growth in

of well levels. current our And so, business we're based a operating lot I get in positioned utilization to think on leverage our

Operator

The question with comes East go Stephen Wells Fargo. from ahead. Please next

Truman Patterson

where explaining Truman for composites East. contracts. turn on as year, to in and year, for a this your and composites Europe the half year-end done that overview believe turn but calendar see just demand the actually, on was the little I the we on kind there business of came on of we of calendar the supply is Jumping we are as you a Last year some forward, that look good Stephen think Hi, bit job guys. expectations year, insulation your kind a This side as I is Patterson business, that roofing of But you give of disrupted balance? efforts. what supply guys your of the maybe of margin have general pricing over

Michael Thaman

give Thanks for as of the history bit a I’m question. And to well. little going

period So $XXX just as in improvements. XXXX price XXXX, a the we delivered reminder million roughly to of mix and

coming my see bit call we You in we well. highlighted would our as mean we highlighted positions of our that in second QX XXXX, in to the on I that see flow weakness, East. Europe a some memory half did I of was primarily did of adjustments, with maintain of if a earnings basically this serves we think and making correctly, little the and product market me position the proprietary erosion from were product some some bit Middle little

is we today, here As the stable. sit you tell I that market overall

been quarter the price quarter minor XXXX annualized. that's in has second the slightly actually as we negative the adjustments have news in this that year, of good third of The XXXX So, some progress. in the eased and made is sequential half third

high There’s good, good. here overall inflation, the utilization remains about into is capacity the actually XX%. today and of market at moving XXXX, sit demand relatively a think negotiations bit annual about and we fundamentals pretty pretty are As

good. we pretty as XXXX the think price move we fourth into catalyst is So, the for quarter for and

Operator

go question The next comes Phillip ahead. Please Ng Jefferies. with from

Phillip Ng

Did that how of the you and can in demand through volumes during quarter demand storm is from hurricane you able would provide in guys. be a color lift little kind the to progress see Hey, a sell roofing parse you’re Thanks. fourth and if helpful? out the versus quarter roofing,

Michael Thaman

is Sure, Mike. Phil. This

like out probably impact breed was trying saw storm power the back in quarter. say disruption ship periods in starting Florida saw figure be in affecting would of extent able probably we're customers the into about little fourth some Florida bring wash demand then volumes associated saw and it we We're trying exactly neighborhood. the in our and events really the a that Texas. a we a we're in a to going out Hurricane but in really where ability of in hurricane of to would the storms. quarter of thing during to with camping expect and and product We some is of the bit priority to Obviously, terms Houston We the places I clearing terms roofing, the to the stand just and the about in is we the be see regions to associated and weight in immediate this in quarter aftermath, very the get big first other think to tough in you on our year those it is there against much decent and we're net quarter stable with fairly those in zero comments the profile. next where with we in fourth so strong detailed from market in as heading last the to there chain tightness is I last to volumes and in fourth year into in into be just flat year much capacity with I expecting to fourth some speed think the years next to out good some we headed logistic my are will of in some doing get to and things just position I have year industry on will quarter a decent of a related on demand how the service try how much other try some supply through with limits the think we volume of of good cost into the get to market at we customers market most able there inventories the additional and position mean said also our next are across people generally put pretty inventory quarter year-end quarter our so service business we their are shipped wanted to and head lift a

year this Now to was very weak strong in strong storm strong camping overall in coming up and terms very 'XX storm a year-end we're storm about 'XX 'XX. in and of to demand year-end 'XX the flat years

kind move likely tick likely offset would year negative best will in closer growth demand the thinking of year years in this elevated operating negative overall up next will going up Having related storm storms that three we're and million this to a year so to storms will of from carrying XXXs our of said the not be will that going be probably slight and to from from see before now is is most into in comps around it's in XXX and is the new see come will in construction just estimate that four that. prior of comp XXX were low that to enough it demand. that the because probably to we want bit into out a in hurricane so what's of fact some saw the going about we talked was remind to events into of to year in wind that storms at of squares comp give year comp not with we X think to history estimate to events of I with the year industry we people the hurricane next that to maybe between million this minus actually we about most tough Even and actually now or XXXX came next the flat the the level million this an and going expectation volumes storm the over I demand to So, thinking Texas Florida we XXXX we're squares down another numbers year 'XX hail coming but related X activity. year and our that market of and

it next high little us. activity we So, be market will negative year a market we in are levels I a if comp a very think is very a even healthy of at bit of market healthy and operating that's

Operator

and next Thalman from question Associates. Scott with comes Rednor The Please go ahead.

Scott Rednor

to back point being redundant. we be you'd topic to obviously demand want so lost a if tailwind in even growth, just like X% Insulation for in the is steep slow you quarter are again apologize running and commercial of sharp just I is very have that see I the back implying from the come new running add move it's Mike, the nothing think today, But for volume XQ. you facility that and

I to missing what So, hear is guys of, and better guess the bit sense analysis little kind a you are do more? or where that's we of right that want have a we

Michael Thaman

year. the a the quarter last business think nice to not fourth our to in talk are the third me little bit roughly XXXX to the quarter XX overall We given kind mean that's progression versus guidance showed EBIT where see about let million in business we hard do it's in EBIT of third would XX% we suggest the numbers about was up double we fourth so quarter I how was get were ramp that going Well, for where about it at the line. quarter the we

shown we've that of kind So, progression.

costs Florida related you lose month hurricane third if to quarter power. related about look think I of million of flooding X then fact the facilities our for we in and was at a of impacted we then did one think almost by loss that the

of one some came in some the insulation that pretty Gulf push a our Houston We costs that seen out We’ve have area disruption. in the another facility the Coast of and in business had big polystyrene freight runs plant inputs materials insulation because plant plant, We is, about that had to go logistics the the XX/X. into getting thing to keep the and have cost, raw polystyrene. you some because

of some coming furnaces in keep order to keep the to have facilities the we in to up pay affected even our materials raw order areas, So running. significantly in into

at we the and But between now all volume between pieces third So, will have Obviously, the that get to little think like to numbers the think the help sequential we to bit end that going guidance volume it’s and quarter shown full better get we're target. look five, year-end, the always holidays. that for be year additional would to been year we be a the made some we able then I enough pretty easier the I we've bit with the a bit of a quite that September see quarter now given, we'll be good and and is going think now that pricing look we price expect January, will here of could that given. also through the earlier, the have to fourth quarter the very business said action next fourth, early, in and for and would

Operator

The with next question comes from go Longbow Garik Shmois Research. Please ahead.

Garik Shmois

Correct on I roofing in me, if the Thank to the drill composites, on at I’m somewhere in you. $XX somewhere margin. assumptions just wanted insulation in million fourth mid-teens the into back million implied looks we what $XX it wrong, the roofing around EBIT if in like around look in to reduction outlook quarter. in

to just be clear this. wondering just at that by on looking analysis want So Is and inflation, the higher flat logistics. is [indiscernible] driven b) delta entire pricing I If we’re a). correct volumes, offsetting the

Michael Thaman

from Garik, each if business guidance easier correctly, our to back business I bit I of overall in we you're is, continues it timing then from and bit think businesses. analysis the very, it give guidance shifts putting the broader quarter-to-quarter and your specific the following has overall little a in see see glass guidance performance both little we us think the to to the in of of that division, in of nature you the good. I think to fair operating our be leverage and tend give those demand demand working certainly a I’m makes and can philosophy that the of corporate guidance, then the year-to-year, kind of because always for of in And nature company the fairly large it's terms pricing, business, while very then roofing, believed

million more we’ve look you or our full if for guidance, So, year. at corporate overall $XXX the said

take I to to all the onto wouldn't roofing peg push a division. the So, and $XXX that try literal back

Operator

Rehaut next ahead. with comes Mike go from Please JPMorgan. The question

Mike Rehaut

that and back particularly offset circle expect expecting that type it be about XQ. understand flattish to appear a top wanted year-over-year the as – seen you're industry an into Thanks. working when roofing against persist additional in a expecting think off of we and price Should to on morning, for tougher earlier of kind that which of I decline demand increase margin Good transportation question, in moment kind modeling any or doesn't given logistics? XQ to in you costs comp. just you Should the to of XQ, we've similar -- of type and the everyone.

Michael Thaman

to Yeah, we into get I giving margin of want mean, business certainly, the quarterly guidance. don't

about business is broadly talk to very be directly. some I'll asked, going volumes; question questions the I'm but you the cash reluctant with So, to flat your to We margins. produce of answer continuing good think

cash about number. we So, volume shingle cost it's the quarter margin is, operating the business way get we our think on the a the minus the and ship earn margin we of a to amount the how of you fixed overall in kind

if to inflation continue should we margin expect one pretty confident So, another will and our be offsetting in you pretty our our much performance. sequentially are this pricing

business components significant to of terms excited to think see overall I performance are in from we fairly contribution business. you wouldn’t I our want overlook

tracking market the synthetic line of roofing the pursue conversion which continue agreement. the would [Ovens] would our our certainly to flat product as track tar we we been market we expect a shingle in a to under has even well business above components volumes paper call we So but demand coded market

roofing So, category. demand shingles story I just side we in beyond think have a goes in the market that growth

Operator

next The Kenneth KeyBanc. comes from with go ahead. question Please Zener

Kenneth Zener

ending But talked on So, million related cost the XX one X mix. question. input is the higher reading X% of starts slightly you stop FX customer storm in first Volume sounds by million queue offset the benefits like half cost, there. just equally flow the price and negative some demand prices start-up volume less about wind which leverage through

the be are X flowing in that the half million sounds on through lost over about the quarter here to like it hit of those half and million so think [indiscernible] you that's Florida. extent I going talked So, you prices it's X to first breakeven in drag.

and inflation I just Florida I to why think you can are try you think in there? help through just it's people try cost one with of can million don’t really focused again, it the If not with us that's it you to as struggle mix try trying X whatever X are understand following you. million again? customer But cost people can and piece startup guess. I I this some negative on Thank

Michael Thaman

Sure, Ken.

a and together of I those products late well again. me it let lot got thought see related new can density you've the the The be we've if think I think pieces, detailed our product. the so glass I higher product through construction residential pricing fiber So, there pieces put is to would back marquee primarily

across We applications assets those type product go HPEC residential type also so produce some line building beyond have new just to a like bases into product additional markets denting can some construction. products light some OEM go and commercial that

talk progress we we really that business When faces to of ability good a business about our new the the our in though you about [starting] are specific being unrelated fiber that of that terms to pricing the would made are think So, residential construction. you on input talked that glass with drive We focus activities to of that about correct business. new light it margins cost relates be main we portion have residential as been issues as in that focus prices density how price construction.

the the sometime business timing industry our industry a long-term get or So, of ability for think pace mismatch that's is there polystyrene mean the we polystyrene to there a business I different don’t structure price our to a different sometimes there FOAM and prices business. theme and I actually investment but is a dynamic the get in relative

the of that have lock mix the value consistent to that by more we for the effected of some I theme. where some and into of see out for new progress engineered residential was lot when into we think theme hurricanes will investment is of important products would the the have more we that a construction industrial there. pricing business is new say segment you the construction I better that especially shareholder the in storms part HVAC customer And to this fabricated and the of think the products been the the where a talk rate showed business we significant part that The on expected go and piece if we like the prices the of that related the been or margin supporting really really of the margins good residential parts of products to quarter have a price go little some or done better margins more business the bit was the hurricane. business that's

there large related in duct we the have important lot coast ducts obviously industrial we there, see of that a insulations to there Florida and it's couple of area. the business is Houston what because So, humidity. in in Florida down OEMs of all gulf duct very manufacture in and duct Houston the business your a is The done products related

is a in the during mix those the customers the were miss million that to we the hurricanes pause So, a saw segments those that part $X and the are contribution of the customer demand really from we in which number of queue. revenue detailed negative a

Operator

with Hughes Keith Please from SunTrust. comes question go ahead. next The

Keith Hughes

pricing to quarters why several to say expect over residential the tightness growth price given and volume increase of some have Do roofing that. on your the see more can I you you market comments would in back turning you because briefing, of made some that? realization and understand of Just next

Michael Thaman

Our business that is that certainly quarters sustain I in last do sure making we has the philosophy XX roofing good and to try margins. in now the to of guess the manage business job a cost or X over inflation we been

were of away When our way us to of getting in the of business and ability prices, are terms we that going was inflations but question and not market certainly that or should on be input volume we market we happens 'XX market is persist said I it seen constructive what conditions. is in seeing the of call in going think happens So us 'XX ahead balanced letting I to think your to tend stable to we with demand market. as the that to and number on and good in always also if the under some in either really related fall strength steady think pricing in we've for inventories cost serve this good that's have think cost terms we other to margins get now what the for to the logistics produce times market an in that continue of how is a similar growth our would we roofing about behind impact predictable 'XX now right been and good the the think and certainly I

We performance and of confidence 'XX sustaining the terms the have of quite feel 'XX our in a in we've be seen roofing business that of the and target margins bit should to certainly into in margin like today 'XX. kinds

Operator

Okay, the Seaport will final with Please ahead. question Securities. Matt go Global come McCall from

Matt McCall

storm like talked last follow-up sounds guess move the want versus hurricane really 'XX the take So when the were logistics to understood out do into and that of into of overall the this to area in cost about to outside like hurricane all question you take about my the you make those us this it into for do margins continue sounds sure account so expect does look majority you actually overall same how 'XX? takes volume? the margin out price it that as I roofing impact of service to you is I to that it, view think cost markets of account cost servicing they the and How puts kind you might and

Michael Thaman

cost the fact. it we freight incremental the did the underlying underlying business because XX back visibility that is didn’t very, the hoping today structure within roofing investors is strong. very of the the million business gone we underlying the structure breaking we quarter Yes, business the very, of million somehow we The are the margins to margins fact cost broke our $XX is out of to in the the want strong of think are and margins to things structure it including was gives had one even we helpful I out so very and I an that hopefully third have to think anyone impression

to to is it had wide. a whether way capacity of the I comment that's most size no we've is last the of know over incur EBIT make we are around. great business that's our corning is and we've product seen to do was quarter producing move a there service producing that a It into last as we make keep So, and so where and to demand our where relative roofing line going that industry that for because for in sure can't us to additional cost want and for growth months sure describe their great the performance Obviously, that quarter. customers six great we we that's nature I true business that phenomena. stock job servicing of we us. their top

see particularly we earlier is been the of year winter fact which of the expectation in end in as the and As normal of it through expectation slow be try the so would northern the market. bit where now we country little in be part get congestion at weather of My things to that understand do the we those a I part will some inventories a we to to there our right next fourth of nothing Most would down part that margin have the cold it's that headwind our service money because set if the the of going a of quarter year and we've go away. this bit a spending said cost things that great will to reversing in slowdown in. we produce would the northern a of going winter we will few country the is quarter you rebuild that expectations have pretty do think we facilities in and away so help just some don’t performance we’re great in freight our logistics, the be but they year. that roofing then to be heading that some business are make fourth next wanted can to start freight into year going We a and cost however lines margin the in into

Operator

turn to would I This the for to over conference Thierry concludes closing question-and-answer remarks. like back session. any Denis our

Thierry Denis

Rachelle. you, Thank

think I make will some Mike comments. closing

Michael Thaman

business very think very it bad few we business everyone was of related not and you without of that in like and progress what are you through but also our proud remarks and evolution answer all of question of joining and the the issue is for evolution the the them hope businesses thank three in Well, some them challenges year heard key we're significant very all the the isolated business the of shareholder Obviously the prepared right of from our composites seeing to the that debt value. a drivers our both accords, the business produced, I quarter now call. I against commentary and in some clearly making then the

So, drive ability line to our margins, drive drive to ability growth. top to volumes, ability our our

we've said a last over the proud XX the couple the very integration progress I we also today we feel the months in of made InterWrap call the have of think acquisitions month as integration we with very Corning. just in is a Pittsburgh that off very largely quarter contribution first of a to business The complete. start part its our Corning is shows and first fast nice a done

happy in are details working dividends is And with I today. company M&A the combination in shares that balance comments. Michael we and sheet are value that think repurchase that position accretive a of we where really and do we So, accretive our from his debt think

to we are all we what terms head out postures making XXXX. the able face market. finish have the we we and certainly as So, the would really the comments business all be for of will positions good We the made we on feel like in us pieces very of another our year the certainly we year progress based in see into strong indications strong

attend chance for Investor our it Headquarter broad all about for talk the November lot to this done I of one the have Company, Corning. XXth here good Corning So, and our our company we exposure a about businesses last excited investor will where who more give them our strengthen plug Toledo. of team and the to potential team about to think will day management to a our of we've of is will a World earnings the the we We the be in Day be and part the make and think on learn part there people. execution in

your month. hope see into in So, we interest next the and later many to appreciate of Thanks. you

Operator

Thank for today's now The presentation. conference you concluded. has attending

may You now disconnect.

Owens Corning (OC) 25 Oct 172017 Q3 Earnings call transcript