OC - Earnings call transcript Q2 2020

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Operator

Good day. And welcome to the Owens Corning Second Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask question. [Operator Instructions] Please note, this event is being recorded. to Investor conference Relations. like Cripps, to now President, Vice would turn over the Scott I Please ahead. go

Scott Cripps

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

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

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

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

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

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

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

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

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

Brian Chambers

changing today. relative care our on market Scott. maintaining thank our other, the incredible joining quarter, Thanks, to continuously morning, has and to supporting financial Throughout customers, of market performance global demonstrated us this resiliency conditions for focus everyone. Good you And maximizing opportunity. team each our taking adapting tremendous past and an

was will start we come the improvement second uncertainty. slight financial and provide Owens of the our with quarter, company guiding of Prith well quarter, this the this us to and the incident with served challenges safety long Corning. unconditional our caring additional this has quarter And year. In of provide details will quarter address rate the has a for we’re been commitment each and performance call our kept results, of the principle I’ll back second COVID-XX. to everything at results. our An managing this second how XXXX. has I’ll I other, remainder second During our morning, compared and outlook forefront safety an during pleased I’m overview that quarter of then then do. the the on everyone for the safety with and our third discuss period X.XX, recordable quarter of to

our as cleaning I the update protective equipment, in better enterprise to we quarter. our Over we change. as end delivered stakeholders. market and effective our recovery The to process with businesses, cost performance as the remain our capabilities, safe restrictions and is like work-from-home the company technologies use our health travel their families, conditions global our strong manufacturing risk call, unique in now in improve past innovative earnings monitor protocols, team our on several last we of We move product our financial robust would faster and and operating strength financial months, and and levels during other dedicated leading executive COVID-XX enterprise, our for procedures, response business on to health controls. vigilant results team particularly in personal options, actively residential have employees, than what US, of worked screenings, outlined a remain and leverage markets, ensure local capitalize key the operations

the continuity compared been adjusted XX%, a The XX% and $X.X million. revenues pandemic, EBIT business. start second last and strength was period year, ensure of quarter of areas to focused we’ve Since our the $XXX same four the constant basis were the with on down on billion, currency key

key I employees and as and other healthy First, keeping our safe, discussed. just stakeholders

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

with focused I remain these four fourth, conditions, And a Third, capital on businesses success. strong our balance managing ensuring as needed. well. rapidly positioning access confident that for adapting us changes market to sheet to by remaining term priorities near in term long while

the remainder this will well performance to We for XXXX. position strong deliver company continue for the year, and of

May see in a shelter-in-place at began to conditions. improved drop our of quarter, our lift increased as restrictions have increased. customers shifting the uncertainty, experiencing significant markets, products of understand we and During demand order most of start to closely in to stayed with After our end and volumes June, for to second and time our we respond business connected this demand suppliers continue in and market the

industrial solid Installation, been earlier, markets of North our slower, of in residential and business, mentioned And many had residential has we’ve we run markets, the which recovery at increasing to in impacted service parts housing. construction temporarily have to curtailing As in second than with quarter new early after and necessary capacity US, the and recover also production anticipated, pace continue our Europe, In a full up business, Roofing positively demand. to in seen most in take expected we ramped faster the our at US due in American our near-term to demand recovery results. operations fiberglass quarter, we the Within strong our to demand. balance experienced actions end commercial production the

of quickly of we the localized nature adjusting been inventories. supply changing to managing and to provide products the manufacturing essential we’ve the our in customers, able while needs Given our our our operate effectively chain, productively, network

cost In our addition, team during around results great the control. has delivered quarter

have over the last operating discretionary and with reduced million on by $XX expenses We minimizing year. postponing compared quarter expenses in focused or

changes well-structured In in optimization Composite, actions structural the year. in and also the to the network and the balance manufacturing our which results are access costs, we maintained a And late liquidity in longer-term businesses. the despite with to to maintained impact are We the profile. implemented last Installation Installation, benefits network made we've productivity seeing consistent evident the we Composite and we strong from focus our market conditions. in on realizing optimization prior clearly sheet debt pandemic We of lower delivered is quarter, challenging a maturity

an position a favorable markets This XX-year financial the cash. we along $XXX liquidity at to approximately successfully completed our capital in increase almost available CapEx our led of controls and our strong. the billion, May, quarter OpEx million While bond $XXX In advantage took with and working beginning and $X.X including of management million capital in was issuance. to

During our existing facility. million credit down $XXX revolving on we the second quarter, paid

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

have have Owens are issues Last to for best aspire extraordinary the Prith list other health and that second improving only employees’ continue standout we create and associated the and in challenges financial environment all global all one live. have environmental, for a which compounded XXXX impact honor believe the and injustices, heard XXXX entire for we I These twice. one racial of on our social and which have governance of small do. is environmental, on continuing we our appreciated high where all discuss will At is is how issues to systems our that earned companies business value. Corning, item results diversity standards, number highlight. this quarter other list tremendous number commitment and the power Owens The ranked XXX into governance Before the uncertainties of that critical a our We in over index one ESG would today Russell pandemic. the the were is month, and inequalities to face to work like ranks detail. and our COVID-XX of We evidence unique performances. commitment economic to more in social this by it integrate turning and community corporate addressing There to and the we believe recognition, to companies for an to been of by with voices social with Corning honored

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Prith? our the turn future. far and to we've about a accomplish return of will company, I'm outlook I Prith what As quarter. so the then I done people, we for With know to third our talk work in it proud over that, the I'll and will

Prithvi Gandhi

the Through Thank a delivered you, and our financial colleagues, of Brian. Corning in environment. solid morning the And second of good quarter collective face resilience Owens in everyone. XX,XXX challenging agility performance the

adjusting and on We dynamic throughout investments market discipline to maintaining quarter. to capital operating respond have and the conditions by expenses production continued

In navigate summarizes a quarter information. and our turn include liquidity key release to taken of and addition, Please of the the XXXX, we second reinforce financial the position, data for financial uncertainty tables by more to caused strength Form today’s gives detailed increase five, us financial to actions XXQ news COVID-XX. which number cash in which slide and have the flexibility

on XXXX constant down versus sales were segments decline For the COVID-XX. consolidated down all Revenues $X.X we second billion from of basis. quarter, in the currency result as a a net reported demand XX% three of

earnings and was attributable of compared recovery markets $XXX to Net Adjusted for robust the Corning to million, diluted slowdown the share second than $XXX May more Owens due were the million particularly have to decline QX XXXX. would EBIT in shelter-in-place restrictions. were in million the has million QX been US, as $X.XX $XX or second quarter to million million, for per many $XX amortization $XXX prior from was million million and driven up by the XXXX year, in $XX expected the initial the for Although, in compared of compared share residential expense slightly XXXX down earnings to compared per June, what largely in quarter the Adjusted QX or quarter XXXX. Depreciation quarter in XXXX. and $XXX for $XX diluted to second $X.XX Composites.

quarter XXXX to additions capital second $XXX $XXX of adjusted second reconciling the versus million see quarter our EBIT $XX you was $XX million Our six, slide reported of million, million. adjusting XXXX. down items, will On EBIT our for our

costs recorded took quarter, $X and personnel we with second actions reduce these associated costs to actions. the restructuring segment our in million, a During Composite

used X our tooling. In recognize addition, precious gains metals on in we of sale of production million

EBIT $XXX by year. decreased second Please our slide down we quarter us in by decreased certain of $X by enabled million have due modify decreased reducing expenses allowing as tooling process As were prior million and the production manufacturing EBIT Installation metal last $XX XXXX. the of to versus our productivity and to call, was holdings Roofing in million, corporate million. comparing initiatives to further to to million to primarily by in $XX of a General million, XXXX $XX adjusted down second needed, seven, Adjusted quarter compared the EBIT, review controls. provides XXXX. sell Composites developments last our quarters of our which disciplined high-level technology EBIT discussed year, $XX thus EBIT million cost precious of $XX us the metal designs precious and turn

for to the turn provides more beginning were a a eight, $XXX from please QX basis. Sales with results, detailed review XXXX constant business of quarter on Now currency X% down insulation. slide which second million,

fiberglass $X and building price were favorable In to During sales million partially insulation, were year-over-year. down American consistent the the segment negative volumes technical QX price carryover last were throughout some prices with helped Within quarter, volumes on North increase and offset our impacted residential the by largely volumes overall and other XXXX, price from realization year. COVID-XX selling January down. are Installation,

However, our million we by year-over-year. in the the US, quarter. as mineral EBIT to within resiliency in maintained businesses sequential We the wool million, were improvement lower which compared was primarily for saw encouraged due $XX second the quarter volumes XXXX, flat down and sales Europe volumes. to $XX of

continuing us We favorable downturns. prior insulation, proactively expected the curtailment Installation see manufacturing better in to production costs higher results by allowing are production technical were residential and fiberglass and demand. performance quarter, North balance versus in leverage with In stronger American largely other to offset

and down in the Composites downstream and period in production Despite in specialty prices mix margins primarily primarily prices. million, and the to that asphalt and in XX% a $X in million XX these with than lower million, of costs to due our market discussed lower down volumes. due performance applications, foreign to operating compared benefit turn glassfiber performance Roofing cash other manufacturing conditions, for still including sales EBIT shingle by negative continued productivity $XXX from a positive sales translation. business driven for was was million please prices the curtailments strong to of $XX sales slightly production sales lower an quarter delivered costs flow was the quarter for same global million, $XX by Roofing overview basis, Volumes currency by non-wovens, selling volumes. currency due slightly impacts slide of lower previously. $XXX The our around specialty and Slide ago, a have remaining quarter XX% improvements lower third-party customer and on The on Composites year were volumes Sales The initiatives QX selling was negative difficult productivity Now, lower review constant business. more transportation offset offset the wind lower the selling business. decline unfavorable were to for applications. quarter. due the we down and from volumes, second EBIT XXXX of quarter and our provides lower outperformed Composites nine, sales. in focus

$XXX by the distribution market. April. quarter, with yielding and US for $X prior at second decline the early impact demand and lower market down million The asphalt sales just production in shingle tracked volumes close Our quarter. relatively partially was the coupled lower million, offset overall with quarter the lower margins was administrative shingle early EBIT and EBIT curtailments quarter the year We out-the-door by believe driven was destocking marketing in for the volumes XX% negative from of expenses.

products government In our The an US $XX related XXX addition, benefited years. over provided recently a we the one-time to last gain basis points a deflation realized lower million exclusion that certain XXXX. negative lower from tariffs paid margins costs on imported dating two by the more and China late tariff Input of exclusion than selling prices. we that offset cuts covering back certain to year-over-year transportation impact components

of discuss XXXX. a price-cost for to contribution As will quarter. we we where maintained in and result, quarter financial slide relationship quarter, were solid highlights margins second exited a turn I the cash the the significant Please favorable XX, as

working are capital unpredictable capital the operating Given take manage actions balances and market both investments. to expenses to continuing environment, we reduce our and

half lower the of compared XXXX As $XX earnings. to year-over-year a higher, first half was result, flow XXXX cash first free on million in as

to adequate demand. service will temporarily We operations market near-term are that and proactively have inventory curtail managing inventories

uncertainty. below our period capital to of million advantage $XXX high favorable managing continue be yield on markets and took successfully our We May, a position with bond we issuance of reinforce liquidity cash through focused In this to completed X%. XX-year a

swaps. a of US $XXX we free we also first ago, million Near increase quarter. With drew moment second We dollar-euro $XXX the metals balance. the cash and the cash financial that balance second certain our discussed related down the the revolver to in paid cross-currency cash I good quarter of end revolver actions I quarter, and cash described to from settlements precious on earlier the the generated the our sales of million flow year-to-date to

XX, June approximately of the and of availability liquidity cash billion, company facility. equivalents of $XXX had and of and million consisting revolver nearly As of combined $X.X our million receivable securitization $XXX on

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

balance on Moving forward, are with to access capital focused sheet needed. a strong we as ensuring

remaining the $XXX possibility balance paying evaluate term XXXX. in of to million the continue We loan

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

Brian Chambers

Prith. Thank you,

into caused impacted and performance of As we pandemic. the year, duration continue will to by financial be our COVID-XX the move by second the of half depth the disruptions market the

continued key potential and based Given perspectives the pace. impact on in Broadly full-year outlook that residential end could each the pandemic initiatives a while businesses. end close then will on we the our on experienced government trends uncertainties for responses, few markets, my our enterprise-wide industrial with results a third markets face July I’ll speaking, that comments I'll short-term focus impact our we three faster my and at with quarter a slower following are our have commercial performance. recovery of

quarter. we second completion revenues saw company continue housing our in business, Given details Within the the delay through continued be generate with shelter-in-place third will which business, third and residential sequentially of in quarter backlog, starts, this earnings a to creating Insulation. the additional restrictions the impact the I’ll in from some expect quarter. worked by higher American the North to recovery, we provide starting

volumes versus along could other last of in in down are we are in flat single building digits We technical seeing our businesses, QX XXXX. and seasonal July order year, high work, versus far to In lead with normal expect book so which backlog relatively July. our increases, this volumes insulation July

anticipate versus in in in quarter QX, our technical businesses. we third based expect but sequential industrial improvement American stable insulation the steady, markets. slower on recovery residential have our this North and both relatively will year-over-year other commercial through continue While we July remained end Prices trend volumes a and and

quarter, business and we our margins uncertainties, market expected levels. second balance Given production incremental shingle the the versus tracking XX% relatively with In in demand third approximately control volumes quarter. down to second our our Insulation Roofing, to with Overall, expect tightly continue the realize inventory were market. of quarter proactively for to shipments we about to X%, close industry

believe recover we we be seen in demand, fully have positive momentum recent delayed for difficult COVID-XX has to been months, to it While in will due which XXXX.

XXXX, shipments trends, depending on on we have open. prior quarter higher up Based market than could remain volume states assuming started July and the versus see the storm digits year. current quarter volumes of third mid-single Our

quarter, an from the current environment year-over-year to in lack the headwind remained increase. increasing stable, a continue expect has relatively to pricing price spring While the face of we third

some increase offset announced August this could impact. recently have that of an We partially

Although in to costs asphalt steadily there the increased, at was a prices did then, trend resulting asphalt significant have costs well. WTI April, as drop beginning Since in level. down and March not increase in oil costs same

Composites, margins we impact through expect realize QX, improve factors, than impact Prith our other could global combined to the Based quarter. asphalt Roofing we be quarter recovery greater overall in we a second utilization COVID-XX on remarks. slightly benefit to his paving the that While deflation the having the while in the demand expect third In in businesses. with is all volumes demand low second of impact for will asphalt move as strong than on refinery additional the mentioned normalized versus do point margins, cost our EBIT better from tariff quarter in rates, these XXX-basis quarter,

such in of July and applications specialty perform we term. in volumes have year, is low will as continued than other automotive. which some building our double are continue markets end business, primarily near our and better Our trend industrial construction versus non-wovens business down the and digits focused our on this Volumes last wind expect to

came contract to our end in We remain and stable. expecting terms of reported based will remained tightly QX pricing completed to impact manufacturing from to third margins quarter, inventory continue the Sequentially, a the key pricing, million year third the decline businesses, outlook QX In headwinds to which transactional performance higher our decremental QX, incremental sequential in into I’ll be in of to of of areas. levels, We due discuss on similar businesses, production our of has in a With of slightly meet other volume to growth, we expect range impact quarter. at about relatively few focus current the Similar negotiations expect as last With committed demand. XX%. a some a QX we that volumes. improving $X to margins enterprise view curtail experienced managing we we in year. our

We our manage continue and investments. operating capital to closely expenses

be expenses the company $XXX $XXX in XX% We cash committed million $XXX of to to to strong We at guidance. million, capital over to our remain free with the least range to be for $XXX time. consistent both expect to and returning to target prior investors broadly of investments in flow the million generating range and corporate of million

have $XXX and dividend and million we we’ll dividends of repurchases returned So week. next year, quarter approximately million through share our this far $XX second pay

sheet move our dividend. evaluate maintaining the balance through of continue the will deleveraging we second our liquidity and As and year, market based needs the we prioritize half to conditions on

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

is on conditions capitalizing being thoughtful, taking decisive actions, opportunities. quickly market the and our on responsive Our to focus current

turn call for over up I’ll Scott and for Our shareholders. it team to to With our the back open questions. Scott? safely, to value remains committed operating servicing customers our creating that,

Scott Cripps

ready session. Thank We're Q&A now you, the Brian. to begin

Operator

you. Thank

question [Operator go question-and-answer the Wells from Please Fargo. now will is Patterson Truman We of Instructions] session. today first Our ahead. begin

Truman Patterson

Hi, my good morning. Nice taking quarter for question. and thanks

that distributor it was behind inventory were April. do think where How then roofing we the know, some a for a we’ve little the behind XQ? be know, among of any you balances you heard with this the recently time Are seems shortages? some bit might hikes? like argue little of production. speaking, schedule in the contractor last possible Brian, announced of about traction today be should distributor we hearing Roofing, You on And or backlog first about could you backlogs? exiting So also additional price Should see shingle load bit manufacturers it

Brian Chambers

comment. quarter, Good Thanks decline really the the if Roofing on jobs. volumes through towards the just of as progression the kind and of talked the a order the March, volumes about Truman. saw morning, of couldn’t to kind we kind we through steep for Yeah, of tied then walk of last time, really get we contractors end shelter-in-place, in

out I the distributors our so, And destocking considerably. at the a time, slowed uncertainty. contractor went from most sales just mode, into door I And really think of the because think distributors,

of we significantly. the And As time. quarter the I shelter-in-place testament that talk up resiliency June, recovery, being to April pick really saw business out, the bit. play saw then saw of Roofing about kind is lifted, restrictions the we a really We into demand volumes our which we contractor a were all down saw quite as

Midwest have also Southwest, in storms in quarter, We that later kind a increasing sales. of door out and particularly quite of seen second the few all the the

think trends distributors went demand going become a in to than June, were they mode. kind more becoming So really that of the of And originally into starting in apparent I I much stocking anticipated. volume think were stronger

those only outdoor levels trying demand, get but the not to inventory the back more up. So buying service,

forward. vary I their have think, do are But destocking big because, to regionally, phase, bit. historical working think, going overall, they to through below inventory inventory quite levels a a averages probably going distributor been again, are increase inventories I stocks went

of materialize in restocking So order some June. book our I think in we did that see

seen on for I’d aren’t I to kind said to there's historical if it COVID-XX. tied continue the distributors towards around to of is I depend out a expect think some inventory we’re mean, But end to that I build. continued surge so back inventory think But them, still July. distributors. think of of July, in going that part in and needs uncertainty the that, big we’ve I don’t see the having levels inventory normal I overall, season know levels of front finish that

so So, in of But markets, our I we’ve seen going We think really some increased strong there’s talked activity. a door overall, the into. sales. really we kind We out see play we as order lot that’s see a think about, of July backlogs book building to storm up. contractor the

So opportunity at, I August in strength regards year. side, in and we to seeing that’s And price And announce the book we of increase. good order that an think through think an market, of increase digits. some mid-single that we’re realize a as contributing and terms where this half of the back could view and to We and volumes announced up we on the seeing there’s certainly of increase our we’ve a quarter that didn’t with spring our third outlook the increase we see the kind based what of pricing go we’re normally to in and historically, do year. volumes would

Operator

go Kim come will ISI. Evercore question ahead. Please of Stephen next Our from

Stephen Kim

was that this, of because But cliff cliff to on hasn’t Brian. Yeah. be a business. fiberglass about volumes very of that in talk there materialized. bit and This little to housing expectation the XQ all what dip. going color. I weigh was is in curious I’m really starts the North American a and Insulation, Appreciate April the that Thanks little bit if we’ve a a We wanted heard, there you much. could lot heard in particularly

quickly pandemic. right people just Some thinking, recovery of how because it’s you maybe also how been has before and And are violent backlogs came know, on. the the the long construction V-shape it

really basically, going to so thought there’s that XQ materialize isn't after all. cliff And this

also to that capacity able full hearing does at are the running out, the of build time pretty typically not your this industry manufacturers inventories year. is much it still as We’re but

So emerge. to in fact, shortages are starting

So business American I in on think Insulation of going do what's an am you curious as to of accurate whether fiberglass right the kind or North that’s now? depiction not

Brian Chambers

Good morning, Yeah. Stephen.

yeah. overall, think, I

same starts, of increase materialize. a the year. generally in get didn’t we saw where been light the the housing volumes those result we the overall lot crews starts just we But saw progress some that restrictions, flattish get start we Those to to first restrictions thing kind of versus of create kind about can in of and – we the increase really And prior by – because volumes. those initial construction would tied housing shelter-in-place saw big we driven a in in kind just think quarter that temporary think the that's higher of I quarter through talked the of them QX shelter-in-place, because pretty completed.

that a So backlog maybe created to going just normally, we with normal XX% think work need sequentially that’s We kind some on of that XX% increased of seasonality, that QX. seasonal see increases. could combination now we’d get lead into think QX backlog And volume of to quarter-over-quarter. into to coming some continue volumes increases, then normal seasonal completed, with pretty demand, of starts to flat that’s along

catch think early I and residential think, roofing. housing maybe the that, others we volumes. that in of But anticipated. well, a been in from of I air industry rolling than through bit housing little the starts in and drop regarding see big capacity all wouldn’t as tightness curtailments we in pocket your a and stronger to playing, tiers kind took we’ve trimming did So recovery point, Because April quarter, up of to much terms

tightening took seeing that bringing running, back as that we are up capacity in we capacity to service the rates early and we go forward So our were quarter we’re online. demand. But and that curtailments back utilization

And efficiencies and about continue QX we’ve around the the But footprint, as to So back good we’re demand. that we about that well we normal QX, through we the feel productivity, produce to service process made think running. in more we inventory existing have investments the to demand. in ability we get to here up get been out us haven’t able near-term play for service our All to normally the would near-term business build the to talked throughput are in done. I going

Operator

ahead. from Our will Jefferies. next of go question Ng come Phil Please

Phil Ng

great whether you seeing the residential-focused helpful. industrial-focused footprint? in your That anything composite, you you substantial businesses? momentum. in Whether And But thoughts, cost, of Brian, be optimizing months? lot. can guys. do and Hey, your non-res obviously terms Thanks it's do on to recovery the nine more your how insulation see to kind is The recovery share a would it's the do materializing, six super more next your need of business

Brian Chambers

currently, Thanks, residential Phil. at broadly, pace. market a certainly what recovering we've is our faster Yes, said I think is

our residential And expand has key volume growth with that think recovery insulation to a in wanted would to all talk our some in we applications technical are with line insulation and and commercial our product the we’ve product been include kind technical little inside and product our reach. performance our about where really this continue and And And industrial acquisitions, in our growth composites. focus, serving in markets. of very industrial broaden insulation. geographic pleased commercial businesses, about been markets part that insulation a of that our strong outlook that’s and we've strategy out We recent evolving very variety a offering end our and seeing able build of led our bit our in space. industrial our been sequential of I business. of in offering, to We’ve insulation to QX, talked commercial, let me a organic And

our into base. Insulation pretty a in applications, our business insulation insulation our business, of commercial commercial application technical business, technical about really is and half our it's business, tied broad-based So

data and but office just airports, spaces, not centers, So, buildings museums.

more our technical about of tied gives opportunities, us is I that we see as business half But growth exposure, a end little into applications. So lot are going also forward. applications. as some to And the markets think, better has recovering and been market the and a diversified commercial more residential industrial

So much is our the recovery a industrial in are oil we and work tied to But that clearly Insulation seeing LNG slower that gas, to continue and seeing progress. business.

us again, recover industrials our are think, our of into non-woven, work we’re continuing, seeing at coming about in those like comments, well. that I think I I volumes of business, the other But back slower So, building restart. kind our And talked lag Composites, strong have a in I seen rate. ‘XX, year, segments we’re at that overall, that but sets. industrial going started, to more next done bit out energy is applications, see we we’ve recovery, looking and seeing where probably that delayed, be segment industrial we That’s we our where closely well gas, some through specialty as think they’ve look that into wind to to and the – think, these so that that's in particularly. like to markets is some recovery going projects a where look in were been little and construction much focused, before be year we inside I recovery oil And there automotive,

Operator

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

Matt Bouley

if wanted I segments. Thank side Hey, guess, the of And the I guess, flow than Thank again. good that how some severe there little questions. Composite to of Can of to going going more recovering you to plants, that for were allow you those that taking color curtailment into kind morning. some are is put to the you. industrial you around restart a the Obviously, the the other I half? curtailment second costs were, costs ask curtailed? little on regions and a production, business

Brian Chambers

very capital great to cash really Composites we very the be In focus. our call. been inventories, free continue strong of Yeah. tight managing quarter Thanks. really working last the and across to controls our and and focused company, business, this about that’s on talked been flow, We’ve generate focused

our builds Insulation, to really how also demand off curtailment Composites generation. the We minimize inventory actions board network And that Roofing the saw took in quarter. we to of Composites, kind flow and we took to cash in and drive and near-term pretty in where curtail impacted broad-based. really the across quick in business actions So production really drop was

like the a government that shelter-in-place just big we in COVID-XX it I saw of countries saw terms that Europe. saw think in we pandemic in more America, focused restrictions North heavily India, of impact where minimized operations, but we

the see think fairly some broad-based actions I did geographically, operations inventory start recovery were us levels. and So, to curve. ahead they’re a overall for in of But improvements our the China bit little as curtailment there we to manage

an uptick our in improve in down in we Now QX, book so is order July of Composites sequentially volumes. seen July. start order as seen and kind in that we’ve through And in progress into the that QX some of are QX, we seeing here low double we’ve digits,

continue quarter. curtailment going we in but to that them order in go we expect we and book us through the cost, have as should they be see So volume overall we’re increase of than composites, to less terms significantly QX, the as for

Operator

next The of John ahead. from question Bank Lovallo Please go of America. is

John Lovallo

then Thanks the capacity North you we going for And the all obviously, capacity than has down to now later Maybe By into you have bring move activity, how the view? are mean, needed? pricing Insulation side. measures, I in I industry right taking as lot cold guys. finally, quickly to been strong does just expected. line year? thinking in this place pretty Hey, handle resi my could coming Housing your on how the about starts back question. pipe. of stronger there’s mean, American wave the a a

Brian Chambers

Okay, John.

them of catch Let and through to walk me think, all I those, here. we’ll try kind

terms - I’ll step I start, clearly In mean, guess, of back. overall capacity I

very is see. seen to new rapid strong and recovery construction have We a good in which and housing

our industry. starts. out the And this is others capacity across a surge inventory normally mean, to and going taking would of time part we where in in capacity to at the think network I a is serve back in of I this in the just place, network. building be and

you be absolute year-over-year. look forecasted starts, when housing mean, down I they slightly at still So are to

a year inventory near-term run we’re rest an into play didn’t would here is improvement because coming even think, we overall, normally seeing there like see capacity the this in sufficient at we to are having that we But for catch-up the to service build QX. to operations and bit of So us little XXXX. of rapid we recovery, I demand and

year, improvements we we have that cold. and kind to to up talked of terms and In last We product and few our this But productivity more footprint. available process that around capacity, smaller have of and us deliver a really are us. again, our manufacture focus do bringing quarter about and lines through have last a allowed generate when cold enhancements

to us this January we on we’re as So to and came on to want longer uptick kind into a of XXXX. year we housing ahead think, for surge capacity fourth the at point, it the available year terms if pretty do increase. And very a finish then bring have quarter seeing we significant a And we this see, into additional see we but of go pandemic would outlook term positive impact. What of first I us to that in of the with in terms pricing, announced of the in quarter. the price strength is

we’ve we been pricing relatively the And in have seen stable of realize some market. that. to as talked We able about,

utilization. actions. I while good at additional look mean, see housing historically, So demand to future that start environment growth, we pricing positive that sees us a creates for an

Operator

go RBC question of Capital. Dahl ahead. next Mike Our Please from is

Mike Dahl

for Thanks taking Hi. my question.

on on top-line Insulation, more sure we the make right. Just commentary to this to follow-up have

on high stable relatively guess, res, tech price you - if other think, new I in expecting second roll am effectively the mid XQ? add kind you still I we that that I comps down single-digit, half in to year-on-year, US said single-digit year. Brian, of of of together, and that the But top-line for right flat high year-on-year new off the and tougher down installation price sequentially. hearing some you’re

Brian Chambers

could how about the of think play-out way it of we've talked in I Mike, some that volumes. terms Yes.

inflation. to in if then seen kind to yes, of that of though kind In QX then I'll talk to see being pretty business, So the declines technical we would in insulation some of do technical res coming the we flat we going backlog going some the - volumes, side, see And our in because of through, we’re here in sequentially. lead that’s expect believe industry that res high res with have down And volumes volume probably book digits. growth expect year-over-year. to We increases. that that seasonal continues single the an order

up would it’s QX while on versus res, a in flat year-over-year growth demand the in sequentially So, basis, QX. be

again, sequentially, that see As well technical year-over-year would increase. as see QX we a might to in QX, inflation, we but decline,

pricing we basis here looking starting been would that’s a we July prominently then we in on I order pricing last sit see share market and on some face our year, So roll to out at would around And have through a because adjustments QX year-over-year made today, That headwind, we we headwind volumes the as materializing would position. QX. where say of play to kind continue our in were the - book. more just

comp. on some we’re be seeing in stable a relatively year-over-year the call would basis, to on negative year-over-year current terms environment, of headwind pricing. we again, pricing But going So, still

Operator

Bank. question from is next Seldon go Our Clarke of Please Deutsche ahead.

Seldon Clarke

Hey, good for morning. Thanks the question.

the You rebound along they in are where obviously, ago. mentioned oil. year But asphalt recent were with below still have come back well prices a prices

to expect long So, Roofing some remain you of from grow if do things to kind you’re rate at material of and these the continues stable on raw think to how segment? that here benefits you expecting, demand would the in hold

Brian Chambers

Thanks, Yes. Seldon.

a refineries past less buys we the our structural changes same some less just a lighter did asphalt that expect asphalt. the in of April headline asphalt - cost. the relative see haul of And mass first see some big drop little a WTI into seasonal magnitude about deflation Coming in deflation cost we stay did going normal in cruise didn’t some we cost, to more use realize a the some saw. of quarter asphalt talked materialize kind suppliers to and been produce And and asphalt that I've high of and second but for And of to the of disconnect to in has of in drop stubbornly in cost. to and in then environment. I the WTI kind May, talk by tied quarter, bit Just a while around is think the asphalt the

really So, currently it is we’re I managing few dynamics then rates. through the that to is shorter think refinery than asphalt the tied a was utilization And supply back. years

is the product residual a process. asphalt refining of So,

and based refiners diesel, very, COVID-XX, low and jet the historically. on gasoline So, are fuels demand very rates from low utilization fuel refining

So, producing if running, they’re not asphalt. not they're

on look supply largest and for And what's the is and watch and rates, consumer in manage utilization the So, balance terms stayed side, and then it the asphalt on going growth of of in demand side. pretty through the driver impacts that we refinery first solid paving continue to has and half.

of see basis a to continue asphalt So, at on that increase, the bit, in they the to to asphalt manage was expect a comments the to we’re but weren’t WTI. quarter, in going see costs that dropped would quite then magnitude to that while same the month-over-month we’ve which normally costs is those season. And we started what

focus So, we’re in going asphalt ability, our potential for basis certainly see on mix, to good we terms a And to increase. to of on the costs volume demand. managing continue we price/cost that but month-over-month see

be going trying positive and price/cost to And of the we’re there, through that rest we’ll quarter. momentum to how think well maintain that, our balance a so our the to as mix pricing, I plays given out see as third

Operator

JPMorgan. ahead. Rehaut Please Next question of is Michael go from

Michael Rehaut

the here. Hi. Good all Hope pandemic is and guys for question. you my morning. well by Thanks all taking of

to you might just if that And quarter, up second quarter then benefit around secondly, in And in break and question to was costs the of what go to? my third the in up, if obviously, appreciate itself? just my color, the all the kind real of a costs clarity Composites. Just question. contract core of point to go then out what know perhaps benefit it’s didn’t around I and expect possible I prices. asphalt asphalt that is

think sense generic made where rates how more If before, utilization today the next you you some and about us where should You’ve how any months? glass directionally, but are commodity comments the over capacity six, about on pricing? you’re three, could give we think of reinforcements, XX pricing thinking

Brian Chambers

sure pricing want make pricing, Composites that just our in view? business, the I you’re talking of And kind on to

Michael Rehaut

Correct.

Brian Chambers

thanks. Okay,

to set, come deflation QX mean I million about the on have and here, across just to in try I’m realize overall, would asphalt did just asphalt $XX through. cost. looking So we get that

mix said, a headwind we transportation. deflation cost we that’s something that asphalt to absolute do some positive We look think million number what a deflation will QX. take on positives that a on against allowed $XX I maintain the saw price, cost increase pricing the we us some close we when pretty expect into saw and at

expect, made seeing what would QX we’re would that deflation. we we we additional in see So given purchases that

things the rates has of Some magnitude on of materializing and of costs so. how deflation I utilization the out to going month-over-month talked But depend here performed expect a would to that the depend well, realize The stayed the environment play basis. see on to standpoint, in stable. I volume very deflation Composite in note think the It’s we just overall, really more relatively absolute QX of refinery significant - is on asphalt about. additional pricing kind going the And has then some business from we declines. QX again, overall, an given in than Composites again,

see decline back some from price really we in that’s to So pricing we quarter negotiations tied made. quarter, did fourth pricing headwinds the the

contracts. large of annualized a kind Composites percentage So our is business on of

do them generally we So fourth contracts quarter. those the up in and finish

space. overall QX. transactional points, the that But I a we see on headwind was those positives side pricing the stable in on with the relatively pricing expected into the of decline based We were, So this see drop, coming business in did price the even volume year. think to

we near-term actions would we we’re environment want to that I probably pricing I in to So stronger would for an see going work. think from think us. a quarter demand expect some headwinds much about think, volumes before But again, increase to and continue historically, pricing fourth

Operator

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

Kathryn Thompson

for utilization your for taking in you three categories the the our you’ve for and segments, the you segments today. given buckets, of for of each of But puts when of top Thank lot could segments. at takes commodity you terms pricing and look your margin three drivers concisely, quarter. if great and look and color a in Hi. Really my different at performance questions

frame better how impacting with we going can should us So we margins midterm? in at Just so levels? factors near it the forward, of versus was think production most help Thank how you. Roofing, least the about much lower important for instance, cost to

Brian Chambers

Kathryn. talking Thanks, correct? And you're about QX,

Kathryn Thompson

Correct.

Brian Chambers

Yes. Yes.

to a volume versus I we think saw mix increases able the we just was were volume price, relative those quarter big Roofing, the better were and contributors. it that leverage saw, I in would say, cost positive maintain the price to deflation we through declines much broadly, and

million business. call will that was good XX% positive Insulation, But we on and cost In the it a in out, were mix was out, a price, volume even recovery. I lower Now res around on margins us favorable cost say $XX when you that keep margins better a in pull tariff to that But there there. volume I cash allowed leverage very would base. the was contribution

the just of and even continue great to by control. able But then that generate strength and was Composites, the market of we do And think growth were again, Insulation generate good took residential earnings cost to volume So position drivers overall we really flat with declines the last cost did it some technical leverage, benefited in last probably res volume a network And I leverage even very side. our the there. us very in insulation optimization year. on part pull driven out, two we then because that business, through actions on on quarter year our big the capacity big good volumes, positive to our were earnings was the work cost

But $XX the other costs volume lot about productivity other able and of lost in So reductions business. and in leverage of manufacturing to OpEx through curtailments, a we we million quarter. were curtailment the offset cost that

cost insulation the in would and say I driver EBIT controls drop even good allowed manufacturing XX% revenue us to generate with So positive was and again, the really business. that performance

Operator

of question Goldman is next go from Our Maklari Please Sachs. Susan ahead.

Susan Maklari

Thank you. Good morning.

last margins the how kind versus of start have How in to of talk up on sense kind especially the in across back? that more quarter? And picking Just your place come cost some of should that much is much the commentary, of benefit you structural maybe discretionary? put can you volumes of early controls the give as operations, some about even of some us the Brian,

Brian Chambers

a had little our took we I on question. I to will Overall, year. we then playing the where insulation of on discretionary just projects. the any help bit our we costs and I side, get would that see just mean OpEx to and it's Insulation so some on good T&E cost I Insulation expected of been say leverage side, call call the about And of discretion in on our in place in Susan, as tight in travel improve. kind are out benefit That's space. these took space. OpEx the majority structural restructuring the business kind million Thanks, restricted, obviously the tightened are say our the up that that in a really Composites res what network. would we've would year We I But would this Yes. upside discretionary will been say We've that volumes we on $XX see in and great more, cost bulk really manufacturing as have cost optimize actions, the actions of more charge, cost any particularly those changes, both out expected. spending structural in and been of last And us extraordinarily has very there that the I earnings controls. was

costs continue come and would probably our the productivity, that the helped. to an over generate to pretty annualized on some over to to there. small of so very that the a just capacity and that's And a continue global take quarter. in better shift in structural opportunities and addition business, last of $X about lot actions, getting then structural And improvements taking for there. million out business done several work then manufacturing half. small Composites, ongoing that's basis. we this similar We in through inefficient And leverage expect in restructuring operation streamline melters would cost We've So we years announced that, look a we second to Composites better - our

but has So structurally I performance the in cost to just and think actions primarily overall mix. company it The cost across near-term the and improve then discretionary, we Insulation have primarily a taken Composites. been saving

Operator

ahead. Garik question Please next will Shmois come go Our from Loop Capital. of

Garik Shmois

you. Thank Great.

drivers fully on demand you demand expect Just that to year that Roofing be to the comment Does And in year? imply due next volumes, and then on the COVID. that, the hear volumes clear Did carry the business. the I that recover just over will right? into this pent-up to

in about a But on business? new some housing the obviously up recently, are bulk you storms bit the You that markets re-roofing the talked makes recovering. of more seeing what side traditional

Brian Chambers

a Good Garik, year morning, full heard me on Yeah. you thanks. right. Yeah, basis,

and drop given to be I demand in on off going to the loss think back of of just full of couple year's contracting the given difficult to months the get kind work kind it's a year volumes, March April, of basis, think probably in in we a last of business.

on in what work. that limits that roofing activity, Now, get will the up just the winter quarter. I of crews lot that of Roofing lot just generally fourth depend the And days weather business and to on early do shut a say down we can That's it and tends in that, if because Northern the and the a weather depends get climates. storm

So I mean, there's some around variables that.

I the primarily But because absolutely doesn't buying mean it. year, to you're I all repair not People their are think certainly, if demand replace is discretionary a there. need purchase. right. done is roofs is to – it get they Roofing this a

demand So carry year, we've first year work expect next that if think fundamental this into get of overall. drivers, recovering. doesn't do the seen done I demand half over the And then to the we

value higher placing think this much shelter-in-place. of theme the their I of living experiences overall, of look, in think, trend space people because a this I on

opportunity quarter. neutralized are home some we as higher think new of seeing saw in side, renovation construction strong we housing. in storm lot going through remodeling on I around forward some think so we we're I then of we again work benefit renovation the demand seeing And work, And investments work, saw. a terms the But did renovation

of economic here. demonstrated QX through business. expansion been that through in we has their just is shocks, very people Roofing previous again, that in seen certainly drivers stronger invest into think materialized last that re-roof been, demand homes, and It's resilient demand I couple remodeling It as structural that's So the a going the forward. we've and think, really a the some storm But quarter. I think quarter

Scott Cripps

Allison, this Scott. is

we time think have I for one more question.

Operator

Thank you.

question Yves is ahead. of BNP go Exane Please from next Bromehead Our Paribas.

Yves Bromehead

morning, your feeling to for taking a around volumes question. what pricing. European installation I and get wanted of Good you just gentlemen. Thank my thinking

pricing And I think would really in you some Thank on recover, feel direction which shut been 'XX? so was your But Europe. helpful. for volumes the also much. capacity to there side, volume be that down of terms has are across what's HX trying as the

Brian Chambers

Thanks the Yeah. for question.

terms called have of the our we I bit a geographic a the terms European things in of And get of that think Insulation that of business impacted business the really we I strength our quarter. benefit presence. in of One, mineral volumes. of in of was think overall part our things wool out a couple

European in So Central we're Northern more countries.

probably Germany, of less the Poland, the shelter-in-place Nordics, saw restrictions. some we in impact So

I And hold markets at So But basis we've on countries seeing and impact clearly, heavily. would broadly we're have get terms other more where clearly, for little a seen some worse we're where Europe, get located think France, steady customers I reopen geographically. think, and But impacted little restrictions. we heard because into restarted we our just speaking, of saw UK, of shelter-in-place materialize in pretty those bit less conditions projects again. recovery were us and saw mean, you as It a the in other volumes we're a that the that of though, of if I us through the had parts year-over-year on market that.

quarter. environment, versus our And as projects the stable expect pretty similar we these through So, countries portfolio across relatively pricing QX sequential again, the and would some QX volume improvement in then reopen for product get overall, restarted. comments,

Operator

this remarks. our Ladies Brian session. will over and Chambers any time, gentlemen, back to closing turn conference at this conclude the like And to question-and-answer for I'd

Brian Chambers

been to Thank be superior We've on tough customer together of despite your Throughout of market questions. has us results half continued which difficult strong focused service the everyone execute you stronger a how for will and team the year, remain through have ultimately well. proud I'm company. your we and resilient. worked delivering a conditions. to time, incredibly position We first our and really time thanks,

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

Operator

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

disconnect You lines. may your now

Owens Corning (OC) 29 Jul 202020 Q2 Earnings call transcript