OC - Earnings call transcript Q4 2017

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Operator

Good morning and welcome to the Owens Corning Fourth Quarter and Fiscal Year 2017 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Thierry Denis, Vice President of Investor Relations. ahead. go Please

Thierry Denis

quarter and the Kate call everyone. you the Thank review XXXX. Thank to good join taking fourth for results time our conference full us for year of you, business morning, and for in today's

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

Earlier questions. as this accommodate only. as to for presentation open morning, possible, full our one and order limit this we Following to this year one-hour financial fourth the a and call participants issued In will morning, call please yourselves XXXX. quarter that results to news your a filed we many detailed question release our XX-K

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

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

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

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

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

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

Mike Thaman

same led performance XX% first than revenue. compared has $X delivering year for Thierry. cash operating morning and the strong $X you, the cash with all $XXX sustainable results. achieved year and strategy. XX% lean $XXX operational with XX% We billion winning have the market cost was to our another improvements adjusted EBITDA Corning the growth of million, of results last three time, free from flow had quarter. We the produced Owens and operating Thank company quarter, and flow for revenue build with $XXX year, billion, up periods for great and These fourth record million, cash execution Revenue XX% everyone. This million. the up proven revenue to $X.X performing financial businesses, flow. we Good a In have through up portfolio, been short, of people. up of leadership, high generated XX% billion all more businesses three strong for $X.X of billion, both XXXX,

earnings Importantly, at Paroc our and of Europe now our expands China. to flow broadens major insulation geographic markets, high, This scope we our across acquisition Group. converted ranges low all portfolio. completed to free of a temperature this cash in adjusted We acquisition rate the North the month, XXX%. we medium, and Europe three products Earlier America, and product have

to the about are excited fast bring, off are We will with a we Paroc and integration. start opportunities

give in results detail, an program. I about our talk Before to on update you I'd our business like safety

injury is an As our goal before, safety advance our free said to continue we I to workplace. have of critical as creating company,

the incident rapidly is rate moved to business, particularly safety integration rigorous new slight meaningful, of more employees keep the given This X.X, improvement Foamglas a was where and we implement year for safe. recordable Our standards, over our XXXX. the

that $XX review by as I'd Now business, performance, then more and on higher we increase about to like talk expectations improved for and to relates XXXX, XXXX. to the for million said we operating our In it EBIT our expected Composites expectations set performance or we volumes. our

up $XXX For with last This up EBIT EBIT Composites Composites prior of with goal. million fourth the reported the fifth EBIT is the consecutive growth an of compared year. we $XX with met million year. strong XXXX, year, XX% $XX the or for In quarter, in generated business. year million, this this results, of XX% compared

EBIT margins strong another full of XX% $XXX of achieved up profile. on gains contribute in Roofing EBIT We to prior margin necessary achieve XX% year, growth remodeling fourth markets quarter an year. to to with of fourth $XXX up EBIT the X% grew of and in compared construction with XXXX, results, XX% to in the XX%. of EBIT higher XX% Composites million, delivered of operations delivered the These Roofing for with were Industry leadership year quarter margins consecutive asphalt. Components shipments XXXX. quarter, EBIT by pleased the the results, the the million, outstanding for margins reported estimates, sixth grew produce In our For continued results In volumes XXXX, delivered environment strong new low favorable particularly these By and were inflationary respectively, XX%. and and shingle cost and business. the and product price about

well For strong more that demand momentum. than the was million The growth been above in has building average. expect $XXX we XXXX. of said We Insulation year, business revenue

also that said about based upon We of generate this line top expected strong to we million. EBIT growth, $XXX

our mineral EBIT $XX by driven million improvement and Foamglas, In XX%. expected, For contribution the fiber expectations. $XXX of or in increased business, or was sales EBIT XXXX, revenue price $XX XXXX Insulation as the fourth as over facility expected. XX% Foamglas been volume, the glass U.S. by grew our increased year, of pace Insulation This XX%. new growth, our than the was which or from consistent $XX million million was quarter, market. in slower quarter has by million EBIT Fourth with residential expectations, wool U.S. higher building improvement contributed below

are culture Ethisphere unchanged. we Michael will ethics detail results. is companies few mineral quarter. cash one our Last the wool onetime more honor the recognizes the developments; confident of Institute's recorded December We U.S. also tax believe position world's in achieving that non-cash advantaged with named we list during in discuss deliver in in the to legislation, improvement to ethical highlight that remarks. reform his earnings substantial demonstrate week, $XX a of business and will as I'd companies. the broadly corporate in million this other like XXXX. most charge business short, we were But This tax a

XXX effectiveness measured Inaugural assess in among five doing Drucker List. corporate the that the we I Institute's am as Finally, Management This defined December, proud core a right ranked companies to well. ranking, set things of on XXnd against principles

demand on production U.S. growth. continued starts an consistent with growth result In the to in a global both new to overall historical would shingle mid A of averages, industrial return and guidance. we Overall, Now, environment remodeling asphalt Roofing, XXXX we decline U.S. our expectations and single market. in the consensus for markets. in construction housing digit expect expect strong

our components at grow business rates. digit to We double expect

recover asphalt additional plan we inflation cost expect pricing actions. We that to through

well. business EBIT million. recover EBIT will and experiencing in by market, another productivity acquisitions, glass and XXXX, improved we higher substantial roofing XXXX. improvement from of fiber earnings the increasing improvements, through in costs. realization We pricing deliver improvement pricing we earnings $XX the higher adjusted of outlook actions, the and later the in to year, as be residential accelerated Similar improvement for We annual and are we expect offset which inflation This growth Foamglas will XXX%. year from actions by include year. intend progress benefit to in partially construction transportation Paroc growth mineral cash market in we in pricing Composites, the In about anticipate of to include This not wool through price implemented our the full about company further convert a EBIT increases price company of support carryover the any XXXX million the primarily pricing from and free January conditions provided new at on our increases. to From U.S. price we our flow about could price year. perspective, about be U.S. in additional rebuild actions, primarily EBIT primarily costs, In expect driven business. from from expect to about million $XX These $XX believe guidance by Overall, also impact from potential full Insulation, contribution the previously million, does last strong $XXX XXXX

all we generating As company. our than XXXX, and the XXX% strong further businesses, milestones I value flow. should Michael? will it positioned free digit revenue, deliver over for that, achieving details three of double in build review a well for earnings Michael, and important converting our XXXX, Market will enter cash who to billion conditions in margins With more we are $X to operating of number to turn business. results again, of support

Michael McMurray

adjusted strong of businesses, execution Across Thank outstanding array strength for revenue, operational our Corning. We you, flow. EBIT, good records across year three the cash for free an all XXXX morning everyone. these and a Commercial broad adjusted set and portfolio. EPS Owens and was results and of metrics, Mike, was financial demonstrate

grew year, adjusted a For translating $X flow $X.X The free by full flow. operating adjusted XX%, earnings to of generated cash of into XXX%, of cash cash at we of million. rate EBITDA company flow delivered free billion $XXX and billion the revenue converted

approximately in €XXX completed Paroc successfully We of for February, also acquisition million. early the

deployed M&A. the successfully we eight creating have Over last about on $X billion quarters, value

$X.X run to rate million. in remarks. Corning. attractive Paroc prepared expected million my $XXX $XX these additions more will to revenue, Looking forward These of about EBITDA incremental comment in Owens later approximately acquisitions and acquisition of I contribute are XXXX, to about synergies billion on the are

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

consolidated of XXXX financial detailed in quarter more compared billion, $XX This the Form represents compared adjusted the net as Today, $XXX of of XXXX. quarter reported and same tables million, up find was in fourth and period EBIT for reported $X.X year release $XX fourth Adjusted sales XX% million $XXX sales reported Composites the will increased in Roofing we ago. respectively. to million news for for $XXX Insulation, million quarter. sales You a information same million for the the up the million, today's $XX XXXX period XX-K. and fourth record EBIT to

our For quarter the quarter, $XX $X.XX the XXXX. fourth diluted year-over-year. compared year. the the or or about share points Depreciation was and prior XX.X%, quarter million adjusted which EBIT million, up were Adjusted in expense to $X.XX per to XXXX margin $XXX per for XXX diluted was flat for million was amortization share fourth $XXX earnings basis

For expense business. amortization in was and Composites, million. and accelerated for previously amortization $XXX year, year, million, our which of depreciation $XX Foamglas were of Capital restructuring announced $XX includes million depreciation and for addition the for million actions, the full the depreciation $XXX

to will full of detail EBIT XXXX reconciling on EBIT of our adjusted items, X, Now, our $XXX million you XXXX see our year slide adjusted reported of million. the $XXX

For earlier quarter were the of totaled items year, on costs second adjusted million. call. our in discussed these About our half the recognized $XXX and year

items recorded in fourth The new other related primarily quarter. to the half

to risk this announced a from pension integration low have related to actions, $XX expenses $XX We the mitigation transaction delivered quarter the million related we restructuring $XX year, million of adjusted related our charges, the earlier U.S. for cost Composites of acquisition. restructuring Pittsburgh $XX We adjusted non-cash plan. in For fourth year, primarily which charges of our out million adjusted Corning charge non-cash strengthen year to includes to out actions primarily the position. million this actions

million out earlier We also a adjusted this favorable year legal for $XX settlement.

described ago. years site EPS; also we over company $XX Finally, owned we out related $XX the legislation, implications my to out details detail legislation. million income that in more provide environmental XX for forward-looking the which will tax the to enacted notes reform of in issues later XX-K. quarter, U.S. fourth to provision of adjusted adjusted One a tax an further operations more adjusted ceased remarks have non-cash is related the I the recently our charge expected million in about resolve prepared item this in

to three high Adjusted adjusted please where businesses. performance, for strong Now, $XXX turn XX% EBIT by XXXX. we EBIT the top X, a slide to level growth line XXXX our of fueled year, over last year, provide in all by comparing million or increased

where pricing. by Insulation am of quarter business. for in January on provide our of For period review to fourth with business were $XXX same our and volumes increase residential and XXXX. one the ask record continued I expenses the million. compared of up pleased in $XX Foamglas highlights, strong of Foamglas performance commercial EBIT we buying business to that of results, the year market volumes primarily to and the was our beginning the period has to the your that our in were our progress progress With on XXXX. business. business. that ago, with XX.X%. inflation our continued $XXX execution, demonstrated primarily quarter, ago, delivered driven quarter more X, adjusted General XX% I part same you contribution strength related increases Sales strong higher recovery price improved year, contribution continued sales progress we and and company corporate U.S. to a into the report, significant January made Insulation operational year were Sales the the in price detailed residential, the prepriced the in business, financial manufacturing The million margins a U.S. of million full from on $XX million, turn early for EBIT the the slide review attention key and during

XXXX. and growth EBIT For the wool significant full the accelerating below facility We for the up of year, about finished million improvement. EBIT third $XX Insulation our residential X% for full XX% quarter progress our year, the million with to billion, improvement Insulation the than growth, volume the company's to making contributor compared strong performance XXXX, organic higher of The largest on price the $X our M&A in previous fell sales in slightly Insulation and were performance U.S. the our that of mineral the $XXX business short agenda. as business was was year we year our new expectations expectation set on underlying call.

The for and business the announced year. XXXX, make in We is but Foamglas early previously product the and and addition applications. extend extension technologies of Paroc, these our and progressing insulation footprint progress The the temperature be continued a well, Insulation with and are integration our Paroc, the and in confident strategy expect producer product Insulation expand produces we technical commercial industrial a margins on of further business through will Xth, acquisition strong building significantly two platform, facility, February acquisition for continue leading our of the offering cycle. global and spectrum. strengthen the The of across was geographic mineral the in with consistent acquisition the will acquisitions portfolio geographic stable and together wool Insulation our company's meaningful the of tailwind On at business. that headwinds significantly to closed

our contributions dependent our but approximately mineral pricing realization we price business. additional for the improvement the wool XXXX, driven in potential of EBIT actions, and business. additional million, For be and the the see from will Foamglas new full previously of in Paroc earnings the of this We actions $XXX residential growth, U.S. year expect implemented growth benefit by on construction primarily

X. the to be includes a and One our other Insulation to ownership, our half outlook volumes American on February businesses, second As stronger tend item year. has in transaction year North reminder, as of partial as a similar the seasonality Paroc Paroc closed of note, to the

to to you ask will of your our turn business. X I a for Now, Composites attention slide review

EBIT period best Full most for rebuild driven earnings the lower history, business record the up year Composites Throughout business $XXX period from were roofing X%. Composites of fourth year delivered product quarter broad EBIT fifth the on in $X.X million sales period for full furnished same EBIT one in in compared on consecutive the quarter in benefitted same year and our performance across particularly X% XX% its the Composites X% market of costs. geographies up delivered ago. consecutive delivered the and margin year, performance. of billion; non-woven With Sales fourth market million third X% million, volumes same growth. broad global to and $XX fourth Sales volumes based its growth. quarter, year. by volumes primarily and $XX last were U.S. the sales compared year to a EBIT of startup and the lines, The based for stronger XXXX, continued up XXXX, was representing margins million, in have the strength markets. the were for the up $XXX we higher quarter

leadership XXXX, and growth. growth production global operating fiber Our fuel the and expansion market, we cost growth continue actions in XXXX. and produce low industrial position by margin delivered In to expect margins XX% driven glass product continued in

$XX We EBIT financial performance expect of fourth about growth with deliver of million. record a to consecutive year

the in of restocking. growth early in by volume partially digit EBIT to and we inflation Composites, the difficult item costs. first by results produced quarter, for we rebuild XXXX and benefit anticipate expect be for growth One higher part double higher and note additional market We a comparison driven accelerated as pricing to offset

wind the a to regulatory related stoppage temporary Indian market in we experienced changes. Additionally,

We overall in half will have second confidence of the of XXXX. strong. quite wind Indian market, glass this the Outside resolve remains market the

of the higher disproportionately quarter results. two Looking costs will major for facilities rebuild ahead, our second timing impact

As we a in producing to year, in quarter a With for sales had than an remodeling, business. for XX%, Roofing Roofing it's nice first our increase second half, in a million, compared shingles year. same construction growth were an The approximately and year. $XX negatively industry grew result, full expect shipments demand overview last and EBIT. sales Southwest delivering period Fourth Roofing million EBIT and comp of the recovery and with Slide primarily $XXX the second business provides of outstanding continued to stronger components. ever quarters the the XX% XX best sales growth the quarter a ago, volumes year with and regions. new higher Southeast of anticipated in storm

cost the in was Rate higher volumes strong shingle XX% logistics period XX% billion, million, market. XXXX, were business order rates. a XXXX. another stronger $XXX normal by we partially the of transportation $XXX higher shingles were on up primarily the transportation a The is to input million Roofing expected costs. strong over positioned in strong track In successfully year, and higher to Components delivered and driven Stronger delivering XXXX. along deliver back full the in compared Components. prior was the based The pricing year growth same inflation components. in we higher higher offset half in growth was Full record into the asphalt XXXX. $X.X a the and to in Our experienced million prices. inflation, inflation is with shingle quarter EBIT higher selling primarily costs, volumes XX% and year EBIT delivery in demand, with for to year Sales logistics volumes margins. growth continue volumes Throughout than year, in the increase serve XXXX. for cost $XX and year, EBIT offset EBIT, by

mid at We market results digits. expect term historical construction single demand averages, new continued growth and demand remodeling in in being shingles. for Storm the down long

components grow also to continue to business expect the rates. digit at We double

effective more announced full much that We for that or XXXX, transportation we in prices. will and March. crude year be expect On costs. increase basis, our We a outlook we as in inflation expect asphalt price on inflation our a based actions current to than be pricing will cover experienced asphalt

the advantage slide and credit $XXX a your record turn provides successfully matters. an Corning. to issuance In me bond Paroc used million took to we low let of attention XX, completed which financial Now, markets for These a favorable year fund spread of January, with significant a acquisition. capital of Owens proceeds overview were XX portion

deployed XXXX creating XXXX. acquisition last and the Pittsburgh in quarters, billion Paroc successfully XXXX, in the InterWrap early $X eight have Corning of in Over M&A, value on with we about

have company's $XXX debt strong capital two XXXX bank cash repurchased a and to authorization. stock end Our for million our our a repurchase of shares the a to available and shareholders, year strong average March return of of retire since XXXX dividend priority our is its declared shareholder payable long with the the and company's allocate current the of of prepayable drives free to allowed free acquisitions has and buybacks. value. X.X total XXXX, directors flow in returned The to associated grown on term shareholders. testament us of last X% We as generate record generation of X, as XXXX board leaving under cash million In XXXX to April years, per ability X, X.X the to This inception. share to we of The shares dividends via dividend flow share in capital company's XXXX. that of per $X.XX shareholders million cash

will a balance our will be deployment cash of stock important free be term to to retiring flow, priority. the capital XXXX, return dividends mechanisms Paroc shareholders. we As and future In both the repurchases loan priorities our for

where turn XX, outlook our provide for to slide please XXXX. I Now,

XXXX, consensus global housing starts industrial environment production expects U.S. an and consistent company with the for growth. For expectations

$XX expect about we Composites, EBIT growth of For million.

actions $XXX historical market business. construction. demand growth new offset expect averages year, expect of about U.S. would additional more at in price in In million, remodeling another growth. this the than with For and we any the growth Storm we Insulation, which good EBIT excludes Roofing, residential of benefits

Now, the tax please capital year. had last flow guidance position. and performance, XX, conversion XXX% a I to items turn of of financial over We improved our earnings, slide other for result cash free provide three on working where better years, as delivered the advantaged

flow Looking of XXX% a provided XXXX. year in expect strong year, year rate forward the conversion we about and to in EBIT cash free be year. Similar another later will of last full guidance

$XXX fourth expect corporate line million new began additions about and be includes expense to is be Poland, related $XXX the between of We million, a expense are be total expenses and Capital in million. to $XXX primarily $XXX to Paroc expected expected that to related Depreciation $XXX in Interest million expected acquisition, amortization to this million. construction quarter $XX is is $XXX million million. XXXX. of and about CapEx between which to

ability will come. Corning Post rate other long large time some tax effective undistributed XXXX benefits XX, utilize for come. outcome Now, our taxes will credits, turn NOL and free substantially we U.S. by believe NOL, long act including been foreign we cash significantly offset subject that with time Tax tax amount have our and The cash expected foreign flow. of reform, Owens to by unchanged. where Cuts Owens tax Owens some of million impact to carry-forwards U.S. Jobs EPS $XXX offset to taxes credit was Corning. Federal term, the term impact remaining enactment the not tax reform, slide positively offset income, tax the U.S. expect The taxes discuss for of to the tax to generated has of reduction reforms. I onetime lower will This metrics earnings. over along for that the please tax income had that a a future cash our tax believe NOL, U.S. great on is for Pre-tax other recent of We that key Corning. U.S. to Therefore, the is and broadly financial

XXXX expect our planning tax to adjusted of previous and consistent tax our XX% other we As which a to foreign NOL, result cash credits guidance. pre-tax our is rate tax with earnings, XX% initiatives, be of

to XXXX to six to expected the be Thierry? session. call pre-tax lead point new reduction to in which rate our a effective Thierry adjusted Our from that, of turn I is XX% us tax approximately With historical is over values. will the XX% question-and-answer earnings,

Thierry Denis

you, the now Kate, begin Q&A session. we Michael. Thank are to ready

Operator

Instructions]. [Operator

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

John Lovallo

guess, for some guys, now question. you maybe Joplin know, the of I XQ breakeven you about my you in little Hey bit you be challenges do talk can expect a and thanks the facility at to taking when there? that experienced

Mike Thaman

this question. that John, to take I'd happy Mike. is be Sure

we exception what to note, fourth deliver, I the So have think good in it's important thought, of comments, that our really quarter in did was quarter, what the the Joplin. we continued Insulation in very a noted with of we struggles at had

learning to very strong strong able that Initially, were and we in way with curve was of of being be our Foamglas. type very impact revenue that with ramping recognize ongoing expected. actually the we impact that leverage the facility in the business, get had challenges I specific operating just up, exclude had the of which acquisition facility and to we want you challenge stuff, associated we didn't when the to So if growth, operational think

going as think, we quarter, I have have to that we we gotten that has a the bit. the the with but that extensive, targets with production reengineering associated process, parts the fourth The reengineer dragged it, is order goals. into process to capital to we had associated of and that not are efficiency in cost some concluded in deeper timing and issues hit actually

I second the get into that get that the quarter, facility we then -- us expect think get into a have to here that allows drag quarter the in solution we still to as a have a that good implemented. breakeven, will we we of we solution I would think first bit hand, in we got this as probably and fully year, year,

look XXXX, within much If if million a said summary you we million where us you in total pour kind for was in the reverse it and through at of and you to in probably was our that then of that expect EBIT, Q-by-Q loss XXXX, go headwind improvement we $XXX $XX in K, would about numbers, guidance. our pretty if the guidance that for

Operator

The next question is go from Group. Thompson Kathryn Thompson of Please ahead. Research

Kathryn Thompson

QX for and acquisitions Hi. my first, this acquisitions for into that And acquisitions these late on for completed results? This you contribute EBIT line really early today. did assumption going parts, taking year, was the Thank in XXXX? or last what what top year. Two question focuses Thank contribution estimated were you.

Michael McMurray

Thank you, Kathryn.

our because two this we acquisitions, most into focus acquisition fully which part say XXXX business, growth and our similar kind So the our is Roofing recent Roofing the has Components did if operating margin discussion Components point, of of business and digit business. InterWrap our at and at integrated business, to of we we on revenue our now double been ongoing in a which

So for obviously, business as a good we on of XX%. the With our Pittsburgh Corning, XX% to that revenue margins and company. as very refer had us adjusted which historical that of basis, business to million EBITDA that continues a business of to $XXX inside business, now we about be had Foamglas characterize kind

business, relatively progress given that had markets, of So good to expect seeing growth. basis, a we flat that the expectation forward because in we good see some we on would are the go and revenue

through One Corning, of the gas natural for Pittsburgh markets a market, of we know is downturn. bit liquefied the is critical going which

by capture, then we through see coming of head a the kind we'd about capture we synergy are to continuation excited million XXXX. expect to that rate, kind beginning that pipeline, But see $XX of the margin rate, revenue as so of are some of expected We out XXXX, middle XXXX. into where and synergy of projects growth we and past coming

I think said we disclosure, of I helps Pittsburgh and in about contributed that out $XX revenue our $X you So million Corning, the think frame EBIT. for Foamglas quarter of about fourth million and

million to Paroc, basis basis So an annual revenue of on $XXX about specific adjusted the on on EBIT EBITDA, million quarter. annual we or $XXX that's $XX basis. of and annual an an of said million about

DA of some is case, down accounting, of very million EBITDA as we situations, that's to other of a -- million rich $XXX have a this drop accounting In pretty of capital do our somewhat the have amount that's fair purchase intensive. EBIT, $XX fair We the amount EBIT. to so where going we think, cash unlike of

So little it's bit better that. a than contributor

XX-XX expected we In effectively of on that And than on because we synergies have terms million deal this closed that year, cash X. of said, we will XXXX. less have see the end about million, €XX we by flow, February $XX of little of a

Operator

Please The Stephen of is go Wells from East ahead. Fargo. next question

Truman Patterson

This guys, Truman Hey good on actually for Patterson morning. is Stephen.

Michael McMurray

Truman. morning Good

Truman Patterson

bit quite and price price the so guys hike you the little a guess, not your didn't move just on guys segment the could is or we of in Just us then be these you XXXX? wanted far there from a this through the about the of million pricing, stuck fourth cadence talk occurred hike $XXX was there maybe XXXX million? stuck of hike that amount of January give did hear, overview EBIT an as about price I months? price the included that that again. since in Could past pricing sticking, to touch -- guidance you three more included just $XX January could I January XX the the Insulation your growth with magnitude in what's from so guidance, far, and

Michael McMurray

either making is correct, record heard or the wasn't number, Sure, thank or got bit sure a I hope XX. that I XX sure whether complicated Well clarifying because and as a I said you, you. we of I XX you am

heard concerned, it am I I XX. maybe So

produce So $XX a of January from the this saying at XXXX, from realization in any about it's would in combined improvement additional $XX have million, than million $XX that our price is actions. which million exclusive $XX annualized guidance million of price in and the about XXXX, are we improvement and little of carryover is total for million of that pricing total, that of XXXX we less increases, point $XX pricing price

the March. In end our of fact, week, earlier before [indiscernible] announce did product we increase another price in this line

are I market typically somewhat this prepared that supportive seasonally keep and in the as say currently had we point, we of the we in characterize cycles. and said the look are Those is extended at at as would it's the product additional weak, the to when I So year, and quite are this market year, production think market are that shipping actions, the market, extended are very time not pricing today is conditions parts is on Though I would There of on lines shipping tight. struggling market allocation. on demand. the cycles, as of my that early with remarks, up

this expect going on, are capacity XXXX, come year. environment on some with to needed think coming to demand capacity meet and through So going the part in announced through that of that to be expected we even better is we we is the

also bought we to we market. I and capacity, our think that see a follow are believe environment be that, know us can demand that who that to that's most to would bring investors we available we prepared online, do have us, if that of the some cause to

Obviously, improve Our priority business the this term our decade. has near for to in a to been margins. suffered try has

business margin need on Insulation lot XXXX the to come profile the we a and at call Corning business. seeing think right, So what we our earnings on Insulation is, our from expecting Owens I to are leadership you in today's are of get

think all four it years, of Over producing leadership. has across businesses, been five earnings or three last lot I the a broad

improvements powering of expecting I improvement big seeing think the earnings really acceleration and are big with we a are inflection in Insulation this insulation the our year. and strengthening business, results we corporate that in in

Operator

ahead. from go is Michael Nomura question next of Wood The Please Instinet.

Michael Wood

Wanted outside residential construction; for it price any And would the on taking reflect is the similar question. end that of on markets, of pricing and we that that my price to residential know to are correct is Thanks why does clarify, in back said increases I it release Insulation; regards be to not Hi. markets? remodeling pricing, most different? the if XXXX, any follow-up look with channel

Michael McMurray

Thanks for the question.

we thing a year, the look price comp. negative year one with you XXXX, is entered last actually at if So we the said

XXXX. we a actually good got, coming mean, So into performance XXXX carrying struggle, progress I had challenge. say fact that we made we good had to it in think a now, a positive negative really and had carryover for was with but I price coming in through we would a we the into was are into we and XXXX. the negative XXXX, fight it pricing year, a We carryover,

key I we So that the that think into as lot of it's point with really XXXX, being complicated, positive a about U.S. completely a market, talk starting is drives a a are Without we that lot comp. pricing residential different we Insulation the Insulation overly lever the in our environment, come business.

are residential seeing talk residential the Insulation that But tend terms. to product. Those sit platforms in go tends of products we the asset just lines base that are as asset product opposed not fact, as to other the realize material Insulation product that that on the and as markets. base, asset to the type HVAC have, markets, products kind on to supports markets makes that In about also ability that the pricing commercial base. made we it we that into Really, market, follow the like those some pricing, across

construction lines, the to the by new that's demand the the and tight, the in us So environment and we product codes, causing new and term, in lines, would capacity construction is building in some product try both that. all improve creating of really impacted get the remodel, to be improvement margins that's HVAC pulling lines, in say pricing some get our But near would some additional of light the our that's residential growth back. the to and it's commercial of allowing product

Operator

ahead. The Zelman from of Scott Associates. Rednor is Please next go question and

Scott Rednor

beat on I Insulation, Hey hoping couple moving good horse to could the of clarify a not but morning. Mike, was dead you just pieces.

I million reversing from there, in clarify rough volume $XX seem Doesn't is of moving guidance, and could math hoping So from those like incremental $XX the provided just within probably acquisitions, $XX so million the lot you from Joplin a maybe think the there is price. million then $XXX you million I pieces? whole in assumption was

Mike Thaman

said, sure think very math I we that mean, call. Scott, that's we trying your well the have what are we I is close kind communicated on to to So would out, thought make of

inflation, add, and pieces. four to We we got think So talk then you you obviously some so going have the headwinds, as those some inflation. are I numbers have about

talk Now in about about than Insulation differently talk I I would inflation it Roofing. in will

issue our for Roofing, recover and inflation asphalt we to are costs. We in Roofing. are ordinary is are also costs some both and spoke which kind inflation transportation us Insulation Roofing, costs of push of inflation. specifically in about seeing a in because bigger transportation That's seeing we seeing is focus key It in pricing on we that a

in way thinking we pricing. about in Insulation, the think we I realization above will real price are have inflation,

of in little believe is have little movement bit opportunity of We of volume segments. some some the always XXXX. in movements we share, There market in marketplace movement in terms in different bit a of market the

growth We outlook the of relying a year. as XXXX lot a part our in are for not volume of on

the Our to to really improve side. incremental to margin to much in today's to margin continue you'd so market, not on that want priority margins, there try the been work change is you still in has volume really go and would want

share believe cold. disproportionate capacity currently -- ourselves I a we a that in that's of though, bit quickly. put bit can of more facilities a we A or As a very bring have said sitting in available we we that than position of where is up lot existing the

little So the aren't capacity, we growth up would our if volume expect what that able a competitors our plan, with, we we growth is be. a or faster do keep environment, we outstretches volume see where than market see see or to bit volume in competitive

manufacturing Corning the a in seeing much margin a improvement. network. sit year position more can here of for volume our a price volume are to and we through market with are But own as bring Owens today, we where We the market environment type as back we tepid stronger

Operator

is Matthew Barclays. The Please Bouley next of from question ahead. go

Matthew Bouley

just question. Thank on you Insulation. my I to taking guess for Hi. stick

out, path call years, industry So you can where looking to outline a looks maxed it two like out. it utilization Mike, is nearly one,

to years they two process. have and go is it also invest incentives even about are some following understanding tax greenfield to takes about one capital capacity. here, You had My thinking to recent that reform,

guess, on the potential the this what greenfield at capacity and Thank your in cycle. you. take the So is in I industry, point for

Mike Thaman

It's question. a great

industry, let's starts just we me the in have terms -- ability think housing to. of pace where could with let where to start we So the do get

We $X.X -- somewhere be around is capacity. mid XXs, in some forecast There additional hot the said, year I sidelines. are We this million. the would is probably of the think operating terms on industry consensus capacity in

land talk growth constrained and probably meet run, be, is only X% the X% well or as we in or about I could market. we gypsum some industry labor, years if the Insulation the a that market, you truthfully, all which would putting in And couple then materials, years boards, start we can possibly X% a of that be it of and the hot, think sense of is starts more needs as of the about, effectively the on wouldn't availability housing entitlement the Our that talking land. growth as more obviously of the as other have turned of which business, time, X% in the but everything running couple

difficult. be in bottleneck very in the the would upside can don't we that think the bottleneck. we we to as Insulation housing believe solely are greenfield whether Having believe a that, this at, look I said be industry, So business we economics

couple from it characterize are the get You maybe would the permit. years you two years. of you a We say one time as probably to out

for learning in from Joplin, other would to effects. take a similar engineering, was It -- of and then of new production, you be the it would three we it facility that mineral got construction to years terms curve to decision marketplace, the and time Insulation probably be approval have plant. the good fiber, which and a experience in Our what a build different would

to you you that market If continue grow the forever, assume housing numbers those work. will make can

are at a have and point, that assume you is some going to housing If you the that downturn. market cyclical,

you the You really is turn the built have facility brand model new facility then to as economics, you off. though just the

paybacks, need really long or utility assets. on quick very sizable the cash paybacks a term peaker, electrical cash as three it peaker the a than operates like a you'd in more And two to investment. based industry So get year

labor has on other what need housing a the itself divorces housing happened So that based has from unless cycle economic land where from somehow because of on view different things, are could my on our we paradigm to demographics for in that the actually and am pressed changed, what getting economic that happened it. cycle, be and housing outpaces on itself reality. availability, and may the somehow cycle. hard the least a way we based than that at in industry into you about I Then imagine, think experience divorce the economic

would would see see we that downturn downturn expect So we'd a a some point at housing. we economy, in in the

need be Now having support next said downturn we demographics, we historically; because we ongoing pent-up expect have less much demand the for that, to there the than in less that than seen think would housing. do dramatic housing dramatic last what the probably and is one,

an So think I view then there be is base supports that more some think cycles that and environment, is our very a there where I sealing, small and asset sealing, in are off we of well. likely much to

Operator

The next go from Stephen of ahead. Evercore question ISI. Please is Kim

Stephen Kim

Yeah. Thanks guys. very much

starts instance. That if anything, labor volume single expect I grow, in least big that expect be need I around anticipation digits at is nearly a up, am I low certainly forth, family What commentary, levels Mike, so I growth that, constraints or anybody's your running on drywall at very volume you to given be think pretty double be concern to, will think wouldn't you Despite XXXX, significant if you say, industry follow-up the the in of hearing for to to capacity the side, Insulation. most and to on prepared Just your that is is in fact people term. surprise, near the are be.

that are else, seeing outlook is signs you curious lose business you was this Insulation if simply somebody a prepared is to in to of, about I -- and if if so some in for think just currently, you this actually And the why volume? would bit would be you not forsake talk something attractive that that definitive more share or you your be XXXX little could and being conservative

Mike Thaman

our Thanks characterize on view Stephen. of I will point this.

our demand Our is think transacting are stewards we to investors business, market that think be going and and same this where certainly growth be, is of currently, going would, sense of have to Where I position share. to the is demand position going and been, doing to market I be, try market we our the good market the to is macros year. mean, market our estimates make -- demand good market expect way what most I going use growth there would in of in to some we would be. of be we demand

customer's are make the sure and the talked day, get about business that we in we to to we them. certainly every share market our So have with of agreed competing that

shareholders are We our way, business doing and obviously very that invest forthright, to rewards business attractive have that that an margins this been we a in kind and in of good produces that in. the business make a

there I market price. chase you on the think that is can in business always

the decision our market that it we assets. of don't would that be would of we year, so use price view I a see if that would in that reinvestment our valuable, general Our on very paying market are this which as the think be, capacity, think we good to those and what is segments and price, continue as the we for that, much saying there that's make in result is has that volume in to chased us, a business growth, business is, to justify are not

big is here. I a there don't think story So

guidance growth of hand the of into better our X% guidance, got annualized to or marginally to market, If the think volume would the sway than you the current threw we guidance in you'd we that our belief the year. we million think get X% rates, I But maybe look relative $XX starting at that number margin you the price and given price provided. actions at additional get our opportunity that guidance, this, overall I given don't is, point throughout the have if

Operator

Shmois ahead. go Longbow Please of Garik is question next from Research. The

Garik Shmois

you. thank Hi,

switch Roofing. wanted to Just to

outlined normal the you in that, confidence Just along be of passing inflation a wondering had your target a you at your context down volume year, weather in environment. can in the confidence in also, your Day. Analyst talk what margin XX% would if And EBIT about in that

fourth was the stronger some from I quarter demand perspective, forward which from potentially volume think pulled a XXXX.

So the at as targets outlined confidence margin Analyst as just well your costs? to on Day, trying that your reconcile price you

Michael McMurray

Garik, great question.

of declining XXXX, I estimate produce top a broad on our suggest and be or that. where market of math we'd to think guess this that our single year, take and same back in we storm say remodel, the mid you do And I then market I given average -- the mid we on construction math in sense storm average an the see know, a we which that the in said market, of would our construction down momentum add is and of think at growth demand, would probably new sense. amount the demand single we we to way, and exactly would time tend And new that's a continued could digits. reversion the digits remodel, still in probably is

market currently very at demand think If today, from storms is look the from last carryover We year the is the year. you way ended operating we there strong.

probably that's extent the we to So second than effect first half effect. to decline, a half more a of think market the were

least market Our the run pretty from half. that manufacturer's is there is, a that will right first now, strong sense of point through demand out the at there enough view,

the pretty environment, kind Given inflation talked for our we said easy that, around we Historically, of price to an that we we every I about would thought expect should process compete that ability this of primarily time was inflation. our be pass have reframed never at good, order, year, as asphalt. and

trucks seeing us You they which number drivers, transpiration there, and which it's is actually out the to have today, about price tend related, related handle that of and transportation mile. the rate we to on inflation base not are are diesel getting through heard is related, per inflator. paid we the of what number costs, But asphalt a are talking because

we have hand. process pricing do, our So we that and work into our sure got to that that issue make in we well to thought and have strategy, believe gets that

and expect transportation through we So the enough we volume that pretty be we cost have to visibility recover business we asphalt of should first that and we got gotten costs, believe visibility have believe also should would the we able be pricing inflation half a business year.

to stable good But our have on Roofing generally, business and the the see So and second second could market in position kind have very-very have the way look pricing confidence factors, w where half years, That what execution We we think the our in our can margin. of we second our better the why we the commercial year. of also to of storms, we to the market. half. give in question lot ability the a of lines the But impact the in today, don't what performance couple an outlook to we we clearer two does environment? given those a of that's going some like? where much fundamentally [ph] gotten the have kind real a of half, see Are are we seen Once our product reason portion business, and see guidance in terms of Roofing inflationary with I more get did manage the declines last middle on is of in in second half.

Operator

go question of Please Keith next is SunTrust. ahead. from The Hughes

Keith Hughes

Thank revenue you. the more half, that earlier that? margins that of along stronger Will pace Composites; first kind the on half. during in with Question the be you of the during Will follow the year? and passed highlighted call, on also EBIT you that even second

Michael McMurray

pretty Michael. two consistently pace throughout the with it's exceptions. track year the that revenue Keith, of I'd say should

was As so quarter double on remarks the you growth last year the of my unusually in strong, heard call, digit first prepared rate.

first for into comp up second stopped difficult year, specifically, pretty have the quarter, backed to of a heard kind implications the business remarks quarter we the expect the that's Have revenue things and have half as going well, in last to then some year. some the of get improve, we prepared fully things of the as within start that there. second of wind you and or for by should backed we kind in so, And half it my And Indian to be but time implications well. second

Operator

Phil The next question is from of Jefferies. go ahead. Please Ng

Phil Ng

guys. Hey

in you Are marketplace things? you out lost change since Insulation ask market to but different considering question least have the allocation, little way you any business and in flash of already, at in already Thanks. a on price have you the this there? any side a [indiscernible] guys seeing does Sorry surprising, is of here parts increase market, seem the a

Mike Thaman

out terms business Mike. in material this that our on the of disclosure mix talk to are to We Phil, is don't there where is XXXX to XXXX second going the we going of timeframe, restore then we of major any I go think volumes, the to volumes had came a trends how to to were and of about lot XXXX. were the our half kind and day-to-day through competition in and we get business. the market, where

in talked about we as really mean, that terms a relatively the and with pretty position It market came of think we XXXX, we bit. flat, in our more now around came with I market, have characterize market of heading would share. that our we has in of I make moves always that, XXXX, share the trying out to in happy shifted today as share are where our the make I we little valuable, into we more XXXX. profitable. out sure position, focus being as to

has we support the visibility marketplace get volume, the margins internally, to that not ability volume that the and business volume in among lot a to of the I [indiscernible] growth our of a drive concern supports extent would want we certainly we have our where investors, the from you And great our outlook. margin and some team for to tell that is sure growth to So business. either I go, guidance creating a view don't outlook make to that's the a operational in have. that's order we lot or that, aggressive the think that

Operator

from go question The next Please of is Susan Suisse. Maklari Credit ahead.

Susan Maklari

Thank you. Good morning.

Mike Thaman

Good morning.

Susan Maklari

more highlighted I are color? again, perhaps bit know Composites you of the costs little some a us year. through that can rebuild coming you just give On the this higher

if where Can remind the that, XX, how and as of facilities, are quantify about of and us? going the you with just us think that. out? through over those we be go should for could cyclicality the costs, that cadence that costs just months And sort through next thinking of maybe then, of you kind you in So about with like we guess and those I rebuild the almost the that -- comes XX coming

Michael McMurray

it's Susan, Thanks Michael.

can think help I you. I

roughly our given So we rebuilt period, XXXX to XXXX, previously, had that the over guidance of we capacity. XX% had

well, time. so had talked XX% XXXX, that's said had of guidance we forward about, serves period as years capacity me and to two we some a that XXXX the gave that the during And then over rebuilt period about of ago, we correctly. my we probably about our view memory if at And time, same

just about We reminder. during CapEx, $XXX a to of also that it as an so a that would be gave million, time down by result as outlook period

you be right, can lumpy. a little rebuilds So are bit

and rebuild XXXX, our forward didn't of XX% so XXXX, fact, we to rebuilds, any looking about XXXX capacity. have to we have period then In over of in the

seven that about large year, XX%. We to points rebuild to that of have this eight are melters we going two which represents

have year, any to represents hopefully, some rebuilds we a gives rebuilds XXXX that have of have about some will points. in eight XX%, seven rebuilds XXXX So didn't as well. got that will of kind XXXX, which you that so we sense, will have But this we in that -- we do and means we two in

Thierry Denis

time for this Kate, Thierry. one probably is question. Hey looks It have like we more

Operator

question come RBC next will Markets. The of from go Michael Capital Please ahead. Eisen

Michael Eisen

taking more for the guys, question. thanks Hey one

is over coming have following well, industry about few change guys think guys thinking competition activities, Just up about you better rebuild next in the less that there Have you a where seen way on comments; years you talked the lot these and any Composites investing? and any as are the to that, about the market. guys into

Mike Thaman

mean a a -- to at perspective, couple the utilization. utilization things. capacity of I operate XX% plus continues From capacity Yeah. is industry operating

capacity very five years last where four New on the some and I'd that a were or NEG. by operations, former over trends front, interesting consolidation picked the in Europe responsible PPG out the point up be would Probably U.S. come in on both way. have

that, as merging event they next China, laid then the will So over out have merged, well. be months. two and companies that couple in past years, manufacturers composite the occurred that positive they the intent was largest the have of within a the their And consolidated XX of operations parent

are in the I events consolidating So think trends those industry attractive are that as occurring well.

Operator

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

Thierry Denis

Very good. call. for that, with closing And us turn Thaman Well over today's a thank you I for everyone joining it back for to Mike few remarks. will

Mike Thaman

both call, of the pleased think we their financially the messages the we financial proud the are very made today's with company. for XXXX. feel great and XXXX. that, is think are the a We on really Obviously on Each and working and business of key we hard progress Thierry. performance, had sustainability in that great performance of strategically very year and Thanks we financial the outcome improving of

strong we you XXXX, to I ahead on think as foundation. look building are that

shown We are last the competitiveness. expect momentum. each that which to businesses, over building businesses years, have significant we all improvement their continue the in five on improve The will see of

revenue, margins, this in terms the I in been time, the about moment today's operating significant point expecting margin talking think of we financially, also terms moving of and ahead the from with acquisition an big both with are the call. in on we terms business, have business pricing Insulation we in to clear of that in investments our view, Insulation it's now accretive that have of company at from leadership see

acquisition and to very and point investor of think that managed us big news, that strategy balance can of, which on from All is good his to continued great growth of an built look an I that. think have last with back that all come couple Michael sheet, effectively ahead the I from of really over caused a team XXXX, years, the and see view, very it's

of three finally are hit We full on one things Insulation, inflection We that at we its now potential, two within bullish maybe when only for been in eagerly us, So in an full do happening that or very awaiting see have we see maybe to each know great XXXX. and point performing the businesses. Insulation visibility believe can have are years, those we we potential, and upon days reach is this us. maybe company its we

look forward you call we talking in in exciting our your for quarter again for to first interest Thanks year on to an So company. April. XXXX, our

Operator

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

You disconnect. may now

Owens Corning (OC) 21 Feb 182017 Q4 Earnings call transcript