OC - Earnings call transcript Q1 2020

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Operator

Good day, and welcome to the Owens Corning First Quarter 2020 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded.

I would now like to turn the conference over to Scott Cripps, VP of Investor Relations. Please go ahead.

Scott Cripps

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

Chief Chambers, Chief Interim Officer. Corning's Brian Gandhi, Financial are today and Prith us Chairman Joining and Executive Officer; our Owens

to presentation our call we [Operator Instructions]. this X will Following questions. open morning, hour this your

for Earlier that detailed XX-Q this filed the quarter and first a morning, we release issued XXXX. financial a results news our

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

You and press Refer future presentation to access of the and recording home Corporate will Form owenscorning.com. slides link Investors XX-Q our under the this available for call can and website the slides on earnings our the section reference. supporting website, transcript at be A our of release, page.

reminders. couple Please reference offer we Slide a where X we begin, of before

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

in and tables press presentation, available financial to which measures reconciliations both non-GAAP on earnings slides presentation GAAP text release measures. contain and financial found Explanations be of the today's and our and are non-GAAP Second, remarks owenscorning.com. of may of the

we our that representative Consistent excluded measure in of items is tax effective per believe certain adjust have compare potential of measure our we arriving adjusted the and meaningful share. adjusted our rate and EBIT for adjusted have not of believe at effect with adjusted calculating results. significant our our historical when Adjusted we investors to earnings. it's quarter-to-quarter practice, EBIT operations comparisons, period-over-period and a primary fluctuations, be to earnings ongoing the We which remove to are earnings

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

interim Then of Brian and opening those along now Chairman before following our Brian we'll on our will remarks you session. presentation, begin Chambers, cover For CEO, with Slide our Q&A will Gandhi. X. CFO, from Prith followed by outlook who slide be And Brian? the

Brian Chambers

morning, Thanks, for joining thank Scott. Good you everyone, us. and

create we a for the responded recovery virus, including that been is and support, unprecedented times will virus. of need, with is and prevent acts of to company. devastating work with have are together or for in directly are extraordinary All take continue full result. to around has teams fast operating live care pandemic. the to the and the and for the to we are in this COVID-XX you as communities work those the essential what our businesses offer and loved your seeing we precautions to ensure spread the we of actions, necessary take extraordinary who wish the a affected and challenges work. opportunity Corning, world our dealing help us sincerest as and But It everyone the to of crisis indirectly individual of the impact ones. And by of Within around the OC compassion how Owens many change continue has Through our and globe Foundation, this will

and we'll but first remainder quarter pandemic. the of first Prith make come then environment, our details the how then year. current additional financial will of managing discuss on the spend COVID-XX the some time on provide a will my a safety through business majority few comments our the back I'll second and on results views Given we performance, to the I quarter, on and quarter our are

Our commitment recordable which COVID-XX with very that rate constant a year; Europe to in first as incident million, well as the and in improvement was of difficult consistent unconditional. everyone with line has safety X%, year. outlined conditions. our call, Financially, proud remained a performance, currency quickly last the despite is expectations the very X.XX, workplace in during XXXX. actions quarter, ability In we adjusted the delivered last and we injury-free quarter, our this EBIT were in basis on creating period I'm $XXX execution Revenues time. market the during last team's respond I'm to XX% March. our changing with challenging quarter environment was with market from compared same pleased this impact started focused our earnings same an for the additional this in $X.X governmental the with X% compared on America outbreak in down and North billion, to results

valuation in our earnings created COVID-XX charges the pandemic. more provide announced noncash near-term also of we quarter of first $XXX his Prith the economic triggered decline million, this uncertainties the on company's were comments. impairment in will part release, recent and by by details market which As

slides, please along the following turn you're to If Slide X. with

During focused continuity the business. and this X our areas extraordinary ensure strength on of are time, we to key

employees our safe. First, key and other stakeholders healthy and keeping

our to our connected our markets. and closely suppliers staying Second, customers,

our us with managing through this By sheet success. adapting rapidly ensuring balance capital conditions we believe fourth, changes come near-term than will Third, stronger strong a to well, as I on ever. positioning areas X needed. long-term access in market these focused And crisis to businesses while for remaining

January, COVID-XX Pacific team business through In outbreak our coronavirus we the in dedicated Asia to formed response to leaders a manage assist China.

shelter-in-place ensure spread work safe our world, to global through with the team virus restrictions. and coordination throughout remain the operations team executive expanded to effective we daily As this the many in our

enhanced protocols safety time, their ensure and operating of to our employees, and implemented families the stakeholders. our During we've this well-being

protective procedures, screenings, every Prevention, We for social taking guidance with requirements including Control Disease all consistent employee the Centers Health restrictions home government and and Organization local of are work equipment, distancing, personal locations, and on precaution, robust U.S. health the travel of mandates. our World from state at of business use and cleaning

both In enhanced maintaining schedules financial health have U.S. And we've opportunity given care addition, for salaried time. employees care health benefits work. of recently relieve difficult demands and them benefits of outside to the provide and assistance during we our while their sick leaves and this other work employees, to hardship reduce to inside our balance

also customers have and the from continuing come our serve to committed high-quality are to expect We products to with services us. they

other U.S. the Our have been operations and global essential deemed locations. products across and

Our to maintain structures. and help industrial necessary of protect, products safety our homes the and are commercial and critical repair other

our in of the for essential thanking are transportation to other businesses continuity We've and supply, letters thankful such construction. doing are from and materials addition, for our to maintaining customers infrastructure, of as critical same. areas energy, continuity we us In received numerous the suppliers

against and We in operating that essential issues essential keep the materials efforts equipment the are structures help that cases, and some the and to working all COVID-XX. are in solve providing effectively, supply to chain common together

disruptions serve. our to materials within customers and deliver facilities majority This has customers. or proven raw limited our our are products the locally secure beneficial in of manufacturing design, of has country to located the By ability we and region the

Our remained and teams creative safely and suppliers and work with operate find well have to partners customers, effectively. ways resilient continue to our community to

slow demand in seen customer dramatically have As expected, we weeks. recent

have As curtailed a to with temporarily we and balance adequate operations steps network at facilities result, inventory meet taken demand. to across have our near-term proactive production

manufacturing needs customers and forward, of to manage Moving we the market to the meet our evaluate inventories. our continue and adjust will environment our

have We Over to balance the we a in sheet liquidity available debt with have liquidity, currently $XXX million maturity $XXX of ensure a taken to past about strong several including profile. cash. years, million and well-structured access actions

facility capital strengthen normal During seasonal cash the existing quarter, and first our million needs $XXX borrowed credit for revolving working position. to our we on

expenses, capital we reducing Given market focused postponing on investments. noncritical including the environment, uncertain or are

maturity remaining from in near-term term due only our $XXX the Our February XXXX. is debt million loan

strong, our our reinforce market. continue financial the develop we options trends see and current in our needs is liquidity as we position sheet to will evaluate balance While to

resiliency sheet, positions balance quarter, Throughout crisis demonstrated attitude. team first our and strong this stronger to through has tremendous positive This, and come combined a the us connections with customer ever. than our

our Prith Corning has week, and turning to other to to drives our longstanding basis. Before our of sustainability is XX,XXX ambitious over goals. detailing to it recognizes is it a our daily sustainability. our review commitment as item purpose our XXth you highlights Owens progress to central there metrics highlight. and results, goals efforts we actions new toward our It report, would XXXX to quantify would introducing quarter on to I our Last achievements and I annual the published one our progress our a sustainability toward XXXX and discuss employees. report encourage like first

to Prith, turn outlook. Prith? I'll about then return With talk that, I'll over it our to and

Prithvi Gandhi

Thank you, Brian, morning, good and everyone.

difficulties find As their all challenging conditions. strong through with quarter in efforts, unprecedented market Driven events. face who the colleagues first COVID-XX of in ourselves am the for Brian are thankful delivered the globe the strength our managing mentioned, we dealing the performance by across the I of the company pandemic. of

in for today's the key first Please release and news XX-Q turn more the to tables quarter Slide of include information. summarizes detailed X, The data Form XXXX. which financial financial

to to offset was a EBIT per QX $XX or the October. million or to X% I for consolidated depreciation performance restructuring Net per reduced lower XXXX $XX Corning to quarter basis. volumes XXXX For billion, quarter share drove and $X.XX diluted from the compared amortization in XXXX. storm the of accelerated $XXX last due $X.X compared $XX expense to $XX insulation moment. net as of Adjusted about of to in constant improvement for XXXX, was Roofing. million, $X.XX compared lower primarily the and first Composites majority Insulation distributors. loss earnings the share on in will due quarter demand XXXX that versus prior announced attributable the Owens QX Depreciation to Adjusted $XXX we first in slightly was earnings first a million for first down actions flat charges quarter, the quarter carryover discuss up impairment a year to the in as QX to diluted of for million, million decline $XXX by EBIT was Lower of net and due million sales currency earnings were shipments Roofing a million the reported XXXX

Our first $XX versus the capital approximately XXXX. million, million additions $XX were quarter down for

our our $XXX of $XXX loss EBIT see adjusted quarter will you to million. items, X, Slide of adjusting million XXXX EBIT our first On reconciling reported

associated goodwill primarily deterioration pandemic costs, During quarter, the restructuring we last announced $X the we economic near-term interim the optimization October. first market insulation in The impairment and and an recorded test capitalization network of with our uncertainty assets. of COVID-XX intangible million actions March in triggered amid

As we a driven charges MD&A are in of Insulation by the described impairment testing, rates related segment. in discount These cash our result the the The the recognized $XXX impairments our were and on effect detail valuation flows. of mostly XX-Q. pandemic notes Form of of and to million COVID-XX this charges near-term more

metals recognized production we in gains of million tooling. sales used Finally, in precious of our $XX

modify below-the-line the holdings our EPS. precious affected manufacturing tooling process we There million Form result one foreign adjusted lower adjustments been have designs $XX these metal item tax noncash and production QX, technology, jurisdictions. the to assets able These As of and in adjustments are was domestic to certain due In income our to tax certain outlook XX-Q. allowance against QX. productivity sell a notes out a that deferred we charges and of earnings in the in valuation to described related of

General Composites compared million decreased to to of $XX XXXX year decreased corporate comparing flat increased year. Insulation prior Slide $XXX flat $XX $XX by and million Please $XX million. a full last turn EBIT of EBIT million EBIT review to which the were X, to expenses by to as XXXX. year. Roofing EBIT of last year. high-level million Adjusted was provides adjusted EBIT

up X, to detailed QX more million, please basis. constant provides $XXX Slide which from beginning the a X% turn quarter with Insulation. currency of on Sales Now review business a XXXX for results, first were

insulation insulation partially January favorable categories this affected segment exception a improvement our was lower which by building and growth curtailment the American we improvement the our COVID-XX. across volume earnings overall technical by million increase China. During price growth XXXX. to with China, growth delivered The selling all price except In volume $XX favorable last volumes, quarter improvement broad-based This the helped and fiberglass sales as a in was of performance both residential fiberglass from realization was year. for first North prices. manufacturing offset by partially EBIT saw negative other compared million, offset in EBIT $XX quarter, The the carryover business, was businesses costs. driven to residential higher and lower was we from

please first XXXX headwinds. primarily versus Slide XX quarter further review down as overcoming in business. Now X% the slightly, the Sales from decline same million to ago, and demand a were down our same for continued industrial offset in for turn EBIT growth period million, The from of with than on glass a strong to for global more COVID-XX. currency was prices. constant Composites selling the X% a applications specialty in to downstream period negative offset in impacts primarily million, Pacific up a performance production in manufacturing by Asia in were year $XXX on due in balancing pricing basis, quarter. Volumes $XX were related Composites quarter $XX the lower declines the down production demand

Slide sales quarter. prior March, favorable from the lack carryover exited the shipments Selling was Roofing million, for COVID-XX. down due relatively business. overview with we slightly, shingle as to of volumes storm relationship strong down year, with onset quarter. EBIT input down from QX more in resulting than deflation. quarter our the XXXX, the tracking QX cost this volumes of but to cash the $XXX a lower was a were cost compared Roofing were to the lower decrease were in in XX% million, for $XX the and prices We offset by XX due provides maintained close Volumes to distributors market. of contribution primarily an $XX the margins million and quarter price

trail performance manufacturing our demand favorable from as did benefited quarter. until also end We the the not off of

QX result, with was margin EBIT year. for the performance our a As in prior line

XXXX. working Please turn XX, growth lower where for of financial capital $XXX as the inventories. I cash improved improvement compared Slide by highlights the first flow seasonal Free driven XXXX. lower of growth, to in was quarter quarter to The discuss will significant by over million first mainly

We are production proactively have inventories and operations adequate balancing will markets. temporarily that demand curtail against service to

XXXX. period We our million of of on previously pay our term focused liquidity down in quarter, We to we $XX are loan. And Paroc also through first managing very balance this the in indicated uncertainty. intent paid the the loan towards that

We XXXX, assuming continue remaining the in possibility of will closer evaluate in we the the loan to date now XXXX. due the are February that balance to but repay paying term

facility and addition, cash equivalents. $XXX on hold have In $XXX and our drawn revolving credit million of we million

a in million $XXX to As expense we to currently $XXX our guidance result, be million of expect between previous $XXX XXXX and interest compared million.

to Moving reinforce position. potential we options evaluate to continue our liquidity forward, will strong

discuss company. Brian? the to the to Brian Now as return for over outlook please I XX, Slide turn to call our

Brian Chambers

Thank Prith. you,

in very mentioned of challenging earlier, proud how performed I'm environment. has this I team our As

to clear term, manage the priorities at near all longer both business our have We in value the creating operating shareholders. aimed for and

leading our products the market and process and place, creates our and And have have a success model innovative technologies strong value. an We enterprise shareholders. to customers that team we differentiated dedicated in of businesses,

various the could and market will year over We well balance position XXXX. face of the this perform conditions have to that in taken actions us decisive we into

global housing be market industrial construction move by U.S. we activity. including starts As industrial factors, and our performance several year, continue will the through global to commercial and production, influenced

the duration pandemic. by market be impacted full the the caused disruptions Our depth will year and of COVID-XX by performance financial

full and my each April on could federal, then in the state, experienced of that year I'll actions managing enterprise-wide local our to few will my through close on businesses. continued impact in impact our the have second we short-term and for foreign governmental a uncertainty perspectives performance. they trends on the quarter we results I'll key focus initiatives our response with comments based the with the Given pandemic, face outlook upon

fiberglass North completions home. Insulation North American we that both technical we expect and are start the Within business, I'll impact insulation businesses. times in our American will seeing normal lag the of and builds residential we our business our to restrictions residential delay business extend with see our insulate the and shelter-in-place global a

expect over we tied versus drop we strong and growth the on volume balance normally XX% volume declines activity this would quarter. further While could housing increasing to construction depending of starts, of currently year, experiencing about the April prior light are in

XX%. to and insulation declined businesses, have technical April Switching our XX% volumes and between other

could various quarter European actions, Eastern impact more the seen Given construction and orders governmental area Nordic believe further and we versus our where we in due volume mineral resiliency showing country business project of less have is parts delays wool decrease as Europe. other One the to progresses. markets, state

reductions, technical production quarter. and volume temporarily both the actions, we have balancing insulation second expected curtailed several with facilities. see Prices and stable decremental business American other margins our with and in these North Given our residential remained and about have manufacturing we But relatively businesses. April could XX% of are curtailment volumes in in proactively in expected Insulation the reduced demand,

complete flat relatively with In the restrictions, which for no the impact various up this the contractors' new industry quarter. business shingle longer associated far shelter-in-place year, projects Roofing, limited has we so and given ability U.S. to sign shipments expect

month. on in of sales manufacturers' volumes, quarter, of out-the-door storm realize activity. to manage their second we has we significantly distributors been an could shipments a result in as inventory significant quarter seen expect lag this second As has asphalt Based have from stable Similar it several to goods. current pricing depending deflation through to distributors. cost down oil this the April drop near-term additional prices In quarter orders through environment And flow a Insulation, for our won't takes there impact this approximately in recently, existing the demand, relatively we slowdown our while positions. remained on reducing XX%, the to be of shipments months the

Roofing across drop, margins to recent are to cash while by the margins temporarily manufacturing EBIT demand quarter and similar overall lower impacted QX. expected shingle our second network production margins the With negatively business for strong, volumes contribution leading curtailed inventories. we have remain the curtailments, And to be manage to in our

resilient as aged very or replacing homeowners, be the is to cycles, damage driven We the economy as proven by true caused believe from recovering has largely roofs same needs business pandemic. Roofing in business of by nondiscretionary recessionary past is be the Our repairing likely the to the storms. starts

a Composites, having global impact impact In the on is COVID-XX demand. dramatic of

in Our in the trend about is term. the are continue lower this Volumes year, down construction and last our second roofing on glass and April business, specialty in volumes are reinforcements better applications, will quarter. negatively expect than versus expect although we nonwovens volumes which building performing to our XX% business, focused primarily we near impact

more wind we Our blade wind manufacturing up. see resilient also ramp is beginning energy to back as proving business

the In into expecting came price a headwinds decline first million quarter. terms reported and year in we some of pricing, the $XX of

continue We the quarter. second expect trend this will in

other throughout our curtail managing inventory with As are the quarter. businesses, and will proactively we manufacturing

second of we approximately could in see As a result, Composites margins quarter. in XX% decremental the

the businesses, enterprise of view that a focus discuss areas. I'll With few

second would $XX million improved. we recovery The and operating make has taking second the versus capital expenses expect reductions investments. quarter how trend significantly but would operating year for last the million a be the second the to half to if year. we good uncertain down of $XX we the reduce out, will In be dependent full outlook indicator total not quarter, on demand be to the Given plays expenses environment, actions company market are

our addition, below million expect year. year of plan, have In million investment capital to $XXX full spending reprioritized and range we capital in the now $XXX last

so strong least over some and and million our share long-term returning XX% free repurchases Regarding longer-term investors have committed generating and target far dividends. to time, commitments, flow at to through of we to returned remain this our of already $XXX year cash

not anticipate the For we share of any the buybacks. year, do further remainder

plans have will market our dividend, continue Regarding closely our policy. dividend to respond said Having we that, currently to we modify do not and accordingly. will conditions monitor

As environment the call, I beginning dynamic. current operating extremely stated is at our of the

conditions taking to momentum positioning Our on see broad focus improve set end market to thoughtful, our is while be geographies our market across regain the current applications. actions businesses environment, of as responsive quickly to and decisive we market

Our safely, our team servicing value our remains operating to customers for committed creating shareholders. and

Scott I'll turn that, for to up With the questions. to over call back Scott? open

Scott Cripps

now Brian. you, We'll for Thank questions. call the open

Operator

Instructions]. [Operator

Thompson today The from first of question Thompson comes Research. Kathryn

Kathryn Thompson

geographic focusing of you into a on that's impact as out this demand also most impact responding have break And relative little the how detail, understanding likely the in Europe could a terms have greater in break seen Composites? XXXX. you of volumes color particularly, remainder how earnings from they're going if to are And give you to and they I and headwinds? impacts of lower company's in and a appreciate Asia the and recovery? out results, Composites look, for out, that Could terms along First what to in and greater of year further then bit the the but into --

Brian Chambers

for Thanks the Kathryn. morning, question. Good

So going businesses, by performance saying, for in guess, and on want is very outlook start Composites. to of that our this start our about I terms we I'd to QX, look, when includes talking in volume dependent I Composites, guess, performance our be

but necessarily certainly our of our XXXX, QX what at terms materialize we're back year in of of indicative looking So business. it's the performance into in near-term may how isn't half through outlook the the

Roofing last around that's customer market India. product leadership, year strategic said, in in first have process Europe, you by very applications. America, pretty And on look where when we've April in to volumes support. held Kathryn, think a focusing performing some the those But our through got well a materialized, much very focus were in and take I market North a lesser in our of it's North how terms but is of geographies great for extent. first say we regionally America the Europe at then us there, China business do then and quarter. North saw business end in in orders business impacted I'd and And March probably most that our technologies, we areas the America great was But key We business, of really the clearly, in Europe well by quarter, have we and the also our our Composites including up play some diverse what as over out. mix Composites has So shelter-in-place and

when I'd to So we is volumes down about business. here about in with April, our XX% impact XX% share being Composites in at Europe look Europe. in you you, started look, geographically, it if of And

seen shelter-in-place consistent some pretty probably saw in America So the April. we of these above XX% strength and those think, down us tracking other with hold then, we've I market outlook order regional what volumes as But terms applications restrictions in sector the of taking we automotive I little key as of North mix, tracked in kind in gives tracked mark just of our kind end that overall we Europe a gave some the in on think forward. went U.S. recovery. the

we You confinement, through That reopening a phases other through mentioned look recovery. the as us and blueprint a where gives will is markets they to and work China. how potentially work of place actually

in prior demand was XX% returning about in our levels back year. So business China April versus actually to to

XX% a decline. about So only

March. So we dramatically April, And then profile again And of trending first that recovered down track saw in part upwards then in again. it's the in the really demand gradually, quarter.

our could in North for business and continues XX% dependent We think America to reopen one India is the the more near of very what we is term, be very, probably the start plays down very in It recovery how we're contained. our down India where and occur diversity in though, said plays impact. of spot do month. in I this seen again, and And kind the the geographic in to out. again, Europe March. in terms have locked markets that's how So favor.

terms So headwind regions probably there in forward. go are we the biggest But operations that's QX create going up. back slowly other to of our in our as ramping

Operator

The today Wood question of comes Instinet. next Nomura from Mike

Michael Wood

exposure energy on Composite April. Can I Corning markets? perhaps facing the your And providing recall has business, LNG specifically, it. have for and Insulation which Pittsburgh data Thanks I about exposure. just you talk all you the appreciate that also

you're business? Just about seeing What if to potential adjust you talk maybe what that to you're could declines there? steps taking in

Brian Chambers

impact energy dislocation we've Mike. to rolling clearly, I'd through in say, Thanks, little Composites and Insulation terms the have an probably going that's it's here are some QX the of near-term And stabilization more operations. to in of how in to oil seen we the oil expect consumed going would both terms materials there's bit Composites, future then impact is start an Yes, business. the have in foreseeable overall, in in the markets until in the impact our and in markets. business for a

the part, you our that industrial the With regards is does with share stages that segment. most that go into projects. projects lot in towards to materials I'd to business those a end of FOAMGLAS, and particularly Insulation, a the for

construction but seen time lines, not in we've delays some those So cancellations. any

of projects near going to get could year, really term, we're we're completed. potentially what as is to in how into then we kind to those those expenditure kind the projects going progressing. think end again, natural or at come any this as around because are impact And But we the in of So through in in would it's see big tail gas going impact and facilities. watching expect terms place of we probably capital that year, not for of we And go well that. this have be 'XX, an changes of this 'XX oil

Operator

of Bouley question Barclays. from comes The next Matthew

Matthew Bouley

more What you months few your that quarter trying you the so could the for off? what amidst flex sort little beyond kind the least sort or across -- of business, term, a more to decremental beyond of wanted the to level ask around near very cost of quarter. quick costs? understand flex in of, can for second next at decremental color the in the I fixed sort as volume kind what this is margins I'm second drop mean of margins of that

Brian Chambers

Thanks, at demands depending quarter. the could looking outlook business. volume on that forward, dependent for on Matt. decremental rest be the the and kind our in of we're the through very our is our margins are of that materialize continue going Yes. much QX volume April, that through to declines But very in go we Again, as margins, seeing decremental

think these So fixed term, assets in the really is of have. cost I deterioration we lot being the caused that near a by margin

the get margin fixed Insulation and absorption by melting looking -- every more So our much to second is how these in we're is looking deterioration. And glass so as we're we're out businesses, we business, is impacted to certainly, of curtailing clearer these at second now, Composites declines those at here volume for materials, the half of how take idle cost we're the continue facilities. bulk raw materialize. view our cost while going in labor a can assets to But energy the we and bulk while cost, idling maintain going going terms operations, energy we're business hot get is see going and so some cost to quarter, of the to the these to decremental right higher, our where

of in past, can how that we're now, volume lines with would hot what a the are be a we margins that the going on really furnaces materializes. and business based second lot But that we operating while near cold, actions taking a we've these decline volume see absorb P&L. or the done of would to to assets the those we indication in fixed term, then in are other the other costs the term, lot good right costs and which taking remove going in costs environment idle So Longer pretty the half to holding take around see on are certain quarter second based these and of energy associated other us cold that.

Operator

Your comes question next Stephen Kim ISI. of from Evercore

Stephen Kim

if environment thought the really your wondering Insulation, they that you sense But you whether on were in from outlook, into get little hoping that, in something how see in benefits -- going forward across manufacturing your things to more improvements those environment we were that be provide color. Composites COVID just environment what sufficiently related elaborate could way what talk -- bit, or would manufacturing your Obviously, through was paints I performance a we're we to your that actually may specifically, color influence that whether was I some reductions I the those more and little that, and think, can way Roofing. made a you the any all that so there in related were you cause particular, and I could bit Appreciate can about the Q X a quarter? picture. was the expect were of favorable they would divisions: about on going that increase there mentioned were for all as difficult COVID performance if helpful. I improvements to can you -- that this

Brian Chambers

Stephen. Thanks, Yes.

efficiency. Our focus one key the really priorities of which improved talked driving last on operating I that improving our was operating is about year, manufacturing performance

the last our efficiencies for have other been overall uses at disciplines. hard operating manufacturing advanced manufacturing company work the several around So years of we techniques, across through improving

is delivered become Those costs COVID-XX efficient, year. improve QX think enterprise. productivity, we of good just maintenance that are manufacturing more in in to of are the across actions focused were to are what we performance the delivering day so terms indicative every those unit taking reduce very And not dependent. last we results cost we And to

So I that that work think to actually good solid is is going continue.

we're good volumes to a incremental improve operating just And that glass see to businesses. that's forward. helped in and curtailment in has that's because I unit be going continue offset some productivity, improvement to of going terms we we melting start able think going margin to that absorbing generate of our costs think benefit as the also I to are cost

I think to start help we're through our improvements we going to manufacturing this come as a to we the better improvements base have that's as going go see margin and businesses. across volume and forward, cost

Operator

question Next Dahl Capital comes RBC Markets. from Mike of

Michael Dahl

it's some we're when thinking terms volume that some slightly or seems consolidated speaking these April through incrementals in just EBIT to of maybe business above at standpoint. So the putting in from declines commentary it XQ, of an of breakeven the like you're and

well. saying. -- down But today. years regions, to fixed for question of you been markets guess the end I fair businesses those past think some across as just When is, then, on last a, in had your changes cost cycle. based high cycle, businesses b, question to EBIT have the you're wanted Composites There what that on And Steve's kind speaks Insulation, from to about confirm that's bigger it another obviously, adjusted downturn So, an the standpoint. significant we're over across like side, flip of kind synchronized

environment. and ability to businesses, in thoughts those Composites So just on wanted their remain to profitable current the your get just Insulation,

Brian Chambers

question. Yes, Thanks. great that's a

profitability I terms that the operating materialize of consolidated, is very, quickly in dependent overall say, reopen. think how and on the on to very volumes going markets be quarter, the I'd

the we biggest is can piece. of and CapEx, and managing in control, -- really really I capital quarter by good on inventories year. So flow and going tightly the think, some half quarter managing generating driver, on is minimizing be the of that's this good But cash our Composites going back focus the so great the through free inside going the really Insulation flow we items profitability can volume of OpEx this forward and into cash generate working solid to free our reductions,

to on performance year. to EBIT performance, as is dependent the feel, into free very the be the of we flow half quarter So we the But going volumes. and going our solid cash through is be back go

other how to bit question, to just might regard little have back with think your Stephen's things changed. I a on maybe

capacity, to of what certainly a terms we've we've were the improved -- last start cost actions both think in the of our some reduced housing we melting res about and lower residential allows the has I manufacturing both position year, glass in base and really businesses, insulation business, a looking the the at profitability cost and a our that certainly cost base productivity Insulation, the lot Insulation way been where although lower our last think downturn. business, of In improving produce the business work last that housing us of restructured terms efficiencies, I we we've since think I of recession. part Composites talked in at there's in a

So better there. think positioned we're I

I of able more the of has side business earnings as the value technical products to and diverse. diversify think well higher been some Insulation the in potential for really we've strengthened investments our geographic business into different the where

So I of think kind the this overall Insulation business than is the in perform in through downturn a cycle. much last better position to well

you I'd similar much our we're versus today has America, key been look and our big decade And ago, Composites And and our great very during growing strategy, I We're focused, in positions especially the share share energy. Brazil. the in applications made especially in subscale part have markets, stronger at when downstream at more of had base, are we the a business asset over for melters When fixed like nonwovens, in business. progress focused North say, positions, then much India, last wind a that a is which of downturn. look lot Europe,

all those gotten out have network. We of the

have much is productivity assets, our performance manufacturing We higher-performing and scalable more better.

Our unit costs are improved.

volume much than through to a come we we're this last kind of position downturn the recession. I positioned produce better So results in better during think were and

Operator

comes Phil Jefferies. question next The Ng from of

Philip Ng

in kind April And going your expected. Because are levels up around your still sounded for to starts are certainly down us April, business? much Curious your inventory probably do than have? appreciating how you noticeably Insulation of holding better of be commentary probably pretty how backlog most

Brian Chambers

Yes.

So thanks.

inside year. we value, positions, some inventory when were very position flat levels pretty we're We our in say quarterly finished in think overall you the Insulation. inventory look where that our we good I'd terms a worked just down. in dollar I of at

because are decline expect. the little production seasonal our in in Roofing up to half demand a Roofing March. and I think of the of we we the back shipments running volumes started inventories build saw for really we bit to in And normally,

So demand the April. of the March, taken we've little some Roofing of at that build in some bit with when we dropped here inventory we've of a saw end off kind in curtailment corrected actions

through sure or So building out us ahead continued to inventories the I demand think a to tightly. into to manage not that very going area terms in of make going we're for be want inventories next quarter we're getting We as going out to want of that's focus key year.

manage tightly. inventories going we're to So continue to

as we our we're manufacturing efficiencies so the year, operations year. that can we in So out finish a which we think volumes up -- if ramp back possibility improve and good half get occur, to prepared the we there's for the of good

Operator

Fargo. comes The from next question Truman of Patterson Wells

Truman Patterson

healthy. everybody's hear to Glad

looking were it's can year of then looking started on some I'm resi and roll the you XX%. has only update are U.S. all expecting slowed initiatives, side, the supply. some the how op Could nice into hear residential XXXX, XXXX We little next in Insulation at pricing April two. to late back? I an you on more to or plays kind something But And also you were out clearly, meaningfully. pricing, update give of out just down productivity competitors severe. whether know a margins supply give first, an bringing that So with hoping decremental just think

Brian Chambers

through prepared again, Yes. business. stable said On the seen residential I my for relatively in remain comments, pricing, pricing April as Thanks question, the we've Truman. in

that a in of through P&L January with came environment. and some have light the prices we began into We month. pricing announced here We the QX, increase. So housing volume year relatively good of the good through our starts realizing increasing maintained and stability kind

of a markets. evaluate the right remained play stable. So year, how to through competitive. We'll to relatively might in keep respond rest out the of through we'll now, we're going keep close terms accordingly. eye. they've this the But continue We'll month, And the

to I the stream, coming don't It's a feel in on adds commentary and very when of capacity different are how supply those they're -- doing be we that. announced. other going have don't to really good about kind were adds have on question on -- when -- capacity and or your thinking any regards So that environment to

going adds we So sure if capacity see are come impact to of not around the in announcements the if terms adds so could any do what we're sure going have they for knowing 'XX wait those potentially without those through get -- year. stream. how of on that But rest with and there to as are to

Operator

Justin of Associates. & Next Zelman question comes from Speer

Justin Speer

in the sense situations, any give if perspective, the on So what you seeing at context from love for and volume just shaping sense I'd side, currently? -- how Roofing up Roofing pricing and and can inventory on us color April any some just are a those you're

Brian Chambers

thanks. Yes,

like the year, be we coming really felt So strong to Roofing year. it another was into going

we a a down thought in said we little through And be year. to we volumes last So pretty bringing And bit with little year-over-year carryover. expected volumes were restrictions as And get we quarter, were were overall on that the was because we more flat dropped March storm going going less in that laid the volumes. last starting impact call felt volumes the that response to shelter-in-place U.S. were with to in, just about that think we the I to talked in

outlook caused think start their pull materialize might picture that of us, that those buying to to least, I over were purchases, to clearer the at manage back there So demand quarter. a distributors what from the inventories on was until

their our managing expected In towards end we've customers March. kind demand. very in continued drop that as tightly saw to the buying are we April, book distribution of of inventories So order our probably conservative seen

I quarter, probably sit lag as we shipments our as in that's why the out-the-door manufacturers that will believe today, sales. here So

materializes to shelter-in-place restrictions We still the of lead the over deemed of trends have and so some generation but continuing. that from some our that essential, occur, -- construction allowed how June. contractors and project seen lot that, work that that's business concern in as is A May

we're So of Distributors to a QX. is again, bit see inventories. expecting that I manage think what we're here going slowdown in a

we investment resilient start in very get a nondiscretionary be reopen. then a kind home. half, to markets But has back into as It's we Roofing of proven the product. seeing

third of robust lifted, demand or we improvements work demand back come into for a more into as second on and states of as storm going down the very we're near we quarter, quarter. level, come for repairs see these to they're think the to to expecting more reopen inventories, as that we could at outlook -- could to on continue dependent order that accelerate and manage storm we're restrictions work the through replacements, the starts, going second our XX%. think But contractors and going get are very quarter which that's to recovery and in volumes half. pace as in some term, improve creates improve being also as that and that, dependent the activity, it's people shelter-in-place and and I which and again, we how But as So are

Operator

next Michael comes question from The Rehaut JPMorgan. of

Michael Rehaut

versus a as drop end June be kind seeing into you're standpoint? from demand or sense production And in about comments we or everyone any April fall and comments they the just around volumes look what XQ different volume the more of American and there's to what down progresses. commentary, love about business more that from a perhaps certainly kind so to I'd also parts, could XX% further from saying down talked wanted across your moment. standpoint was talked res, you around in And if you perhaps an frame hope to back Europe circle what -- North of the I to down kind due facilities a I your driving curtailing global those is the further the if year-over-year, of And way the and being fact for as to healthy that appreciate about XX% was a businesses, company. XX%, prices and in on both could facilities get global production those Insulation to are safe shut for terms of the business of portion such. you're May of particularly that? a when But

Brian Chambers

Okay.

is clear, recovery tied a and not the rate the So around to more to market of production. be anything demand commentary comment,

start. quickly on reopen very say, technical could would materialize just think really looking and/or are in it business I or businesses recovery and our we're states on the how efforts June. May countries how within at insulation commentaries further I much decline in dependent the very demand both could

where it that's residential if technical declines place into today, some both -- again, decremental So that shelter-in-place if June, are remain the terms outlook business. in our demand extended May of those and in into get volume and our in restrictions and see we could

context reopen of that that longer assuming a kind that's for takes and the little So to slows. It's it the get markets recovery while statement. the

site So get are again, just and is lifted, see from just crews further listed potentially decline a on it on longer I'd and share build. start and completion to houses don't with construction take tied lag because to, get get decline limited to that the we -- really housing side, don't downward home restrictions you then extended the of to the get shelter-in-place could res where get

we see limits homeowner that begun might start of further was I And any delayed wants the there that kind extend actually that and that far it demand. hasn't think until potential get So then impact. that or a a impacts spec home, building, so where could isn't buy to along

are those the So possibilities.

than have good with some last I homebuilder started application would certainly see early week-over-week. that I the think though, to that this, as over come indicators by a a been spot has rates share recessionary started improve just there's been few announcement we through with we're cycle major to the you, some in And last different because weekly improvements, housing mortgage not days overbuilt. an sales

overbuilt restrictions in situation, recover even So around an a coming at lifted kind these equal of housing getting it shelter-in-place pace. because think And opportunity quicker an I back. not there's could and it's

shelter-in-place it around getting much and dependent recovery of could our faster. factors think the lifted, restrictions timing So begins. that, very And those then fast I res, recover outlook what's how the on is

in On view how get the U.S. here in broad is the and this orders side, of technical shelter-in-place kind Europe. around lifted insulation again, a then

of for versus terms performing other wool parts actually Nordics, parts better volumes in Europe. we're mineral the in of example, is seeing Europe, So business in relatively in

again, where lifted shelter-in-place could for And place entire quarter, remain is could there's we think, get out, continuing it's they there's different today if the I it improvements. some So of construction restrictions, we decline. see terms different indicator in restrictions. demand of if see where in the an those But that

So the of that the helps statement. context I frame hope kind of

Operator

Zener of The next question Ken from KeyBanc. comes

Kenneth Zener

there's fiberglass we I'm area, different very San have impact are these the South Central the construction other how allowed of Francisco regional I in as you no That's located I talk wanted has Can comments. plants to California and in -- Because trends the your Appreciate Florida. the part. down opposed the plant network? about which because to Northern parts or ask the in some mandate. your idles better probably perhaps extreme first that go most is no regions, to hot assume U.S., Texas just shelter-in-place, comments. construction

terms So of talk terms how impairment context could about you further? you works your comment Prith, you the and little And could point? you just idle perhaps how then, that price the on if demand think in hot give about versus system us of a managing in

Brian Chambers

Ken. I'll start, Thanks, and over it Prith. to Yes. I'll turn

of in and our operations, our in products So to of have how they our of our essential points terms operations of facilities. value mean deemed really products again, I are. the been essential the terms

-- what looking about we're And has at looking So are the we're demand to talking what relative environment. even remained. in Clara in our Santa curtailment operations actions and about California, really

on we're environment we position, working can managing focus generate our to very CapEx in and capital and to maintaining good reducing So again, this maintaining levers cash cost around the focused tight inventories, flow. control good control

to proactive not make more business, across demand. our Composites we're So that our ahead board, we're our of being Roofing expected curtailment probably the inventory in sure of in terms building businesses business, and our Insulation actions

minimize temporary ramp into market production get but see. that the the to that full us we're hot we to So back on inventory, to recovery rates and flexibility allows idling depending want actions because take up very quickly we

disruptions. our to where the near-term generally we're we for hot furnaces that's demand going balance. idle in And So balance

volumes So at different would a have -- and if to again, just make we recovering be choices decision we'll expect. would that we could inventories, manage then we a to saw rate make those going that to we weren't

you our taking So The We've with maintained overall. really over costs the Prith, manage I'll talk the hot are impairment. idle production we're -- to are inventories curtailment but turn to maybe them. about it associated operations actions essential.

Prithvi Gandhi

question. Yes. for Thanks, Ken, the

likelihood in impairment of XX% had value a Insulation the our any factors So look, result could and we we February, about XX-K macroeconomic deterioration small Insulation when carrying cushion an business described in fair also an annual that we that charge. as its increased indicated our in time, the we value influence of our At testing. did of in the between

a value, our to level And so big changes. what market testing. declining cap with interim some there March happened here our X below to And in do book had we are

DCF methodology So we based is terms the in business. valuing a -- impairment testing the fair of the on value of

our October the in And test were between in so X there big current testing and March. changes our parameters

of So premium. COVID-XX first, has because increased financial risk the pandemic, a resulting higher uncertainty market much significantly, equity in

affected charges -- factor really made those in things of by the we second changing the near-term impairment the charge of cash by our pandemic the that together October used really big flows And rate factors. in on and majority those the valuation. then was the -- caused in that our X the So one increasing March discount used we it significantly. That to effect X

Brian Chambers

is about you you coming XXXX, on was guess in emergence associated just in when million $X.X $XXX Ken, I item accounting it if to fresh of that we I'd And at business, of bankruptcy. billion at of one actually Insulation we was look that Prith. tack Insulation. had that, ended at look goodwill out where with Thanks, start goodwill about our

was when at at to that's of level, that. a tied housing was Insulation 'XX that time, the and majority that million X And the earnings. So large generating chunk back starts

that. a to the key what of little goodwill in of the context carrying put the insulation around and attributes So just we were size were

Scott Cripps

think I for have question. Elisa, we time one more

Operator

Clarke Bank. comes of Seldon from Deutsche question today last The

Seldon Clarke

shoes this range just situation. You we or given is Roofing worst the that just about the you second if be how slowdown? the type help a demand in could saw in nature L-shape down it? an talked typically thinking remind about quarter. shipments how sense Or And obviously I in should kind about the the Nike back just us timing resilient might around this we half unprecedented would you're of the in being the Roofing think recovery, frame of dynamics us us back of XX% you recovery more the that XX% realize And trends give half, an a business? year? down Could of But how

Brian Chambers

event, dropped for has Even in recessionary a the Yes. that this cycles, word been or replacement overused, question. but it's repair. Roofing unprecedented say know very Thanks and a I business nondiscretionary would the of intact. in work I a trend for around is work in bit the normally our because little back, kind can you demand core or of a cycles, recessionary go little because shingles new repair activity, there's stayed past bit but has construction discretionary remodeling

quarter health recessionary-driven dramatic is is more around, the in think drop crisis, event. a global not I the this a

been So pushing materialize, the job work. sites, think, of shelter-in-place to candidly, place. in And I restrictions, limited get ability off do contractors' having to to homeowners the just has I make so a these think terms have projects sheltering -- everybody in

the going And coming nondiscretionary lifted, shelter-in-place of to expect quarter. very, would up again, expect in We get business a back, bit is we drop the demand similar cycles, that construction to little repair, very expect profile which is recessionary that in a well. as holds would restrictions the we activity. the other kind it's what of would unprecedented think in an demand return And the it is the demand and performance Roofing return. dramatic of it I So outdoor

are sure certainly of to and contractors terms there. helps distancing are doing current outside the wanting that and the practicing people social how in work view in So good make

to this So I demand it's drop. unusual of think again, have kind

the this recessionary and similar would business, past driven perform But health would cycles. that demand in it's expect I by crisis. we return it think to would

Operator

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

Scott Cripps

for Elisa, Thank I'll for closing back With a thanks, to everyone, turn it that, and joining few call. over you, Brian today's remarks.

Brian Chambers

Thanks, right. incredibly Scott. In our And team's ability strong All for thanks, in this results to environment. everyone, dynamic proud of morning. questions closing, this and deliver your I'm execution

the our market face ever. ability highly We have to company in the business stronger to conditions, we manage need of than a emerges and ensure how confident clear our I'm on these team's challenging in focus

families time to call. your for forward the safe. hope remain you want We Thank quarter morning. and you I I you your again this then, healthy to So and thank speaking look second to until during And you.

Operator

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

You may now disconnect.

Owens Corning (OC) 29 Apr 202020 Q1 Earnings call transcript