OC - Earnings call transcript Q3 2021

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Operator

Good day. And welcome to the Owens Corning Third Quarter 2021 Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. to conference like Wohlfarth. to now would turn over the Amber I go Please ahead.

Amber Wohlfarth

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

Ken are and our us Executive today Chair Chief Officer. Chambers, Brian Joining Chief Corning’s Financial Owens and Officer; Parks,

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

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

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

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

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

and utilize value. shareholder measures pursue include XX-Q company’s of use generate cash financial cash also investors The today’s free to Form cash release to in tables earnings conversion and that flow free the adjusted flow news as opportunities detailed information. to to the cash We helpful and more to ability evaluate enhance

For those along now, following and And slide opening we remarks with Brian? on of four. CEO, our presentation, Brian you Chambers. our slide will from Chair begin

Brian Chambers

strong call. year. and half July third of today, morning, everyone, with the hope staying healthy posted safe. Owens you momentum outstanding of you an and building the joining and are Amber. quarter I today’s our Good for us Thanks, first on all of outlook Corning for thank results consistent

environment, to deliver overcoming global disruptions great very chain to as well continued a as Our extremely team in well supply execute dynamic inflation, some another higher quarter.

our demonstrate the our to company. and operational strength the of and durability of power continue the commercial Our our of of earnings the execution, results team, resiliency

about I our performance, to of the remainder During with back start for an will not this quarter outlook turning talk the provide will over come of details third year. to before it are who I’ll business results. call the Ken, overview additional morning, our then financial

I review my begin will safety. with always, As

X.XX, which than significant more half operating of our quarter, free a commitment same improvement last third with to than the compared During facilities the is safety injury our period year. more an a RIR of to for in year, resulted

While vaccinations, it’s the persist the are will of recent pandemic we generally clear encouraged in near-term. gradual cases increase by in the impacts COVID decrease the in and

and third continue our facilities to and enhance and of with compared will with same keep to $XXX healthy of period working XX% an suppliers of Financially, focus adjusted last year our We follow EBIT revenue $X.X we million. safe. on safety strong each operate delivered protocols our together other, increase billion, a customers the and record quarter

Demand cost adjusted lead as as delivering again all industrial production performance an QX especially the which commercial EBIT of with our operate This and combination supply chain Our products, businesses margins and extended tight of sales, to strong environment, with of positive needs in well extremely continue our in teams, fifth our great strong price and increase mix chain, this manufacturing, and manufacturing the double-digit during was meet times our products. margin hard service Within of of performance. volumes our many a to for customer for XX%, business for a quarter enterprise revenues, our with and products resulted our account we work quarter. continue execution, each market for supply to our consecutive remained half and global customers. residential about the three for company U.S. posting EBIT of outstanding in

share make focus the strengthen power opportunities product to and growth to to our us product our for continue the provide of we lines we doing now choices we’re allocating about would by sustainable our company two solution. strategic with can create market position like a future. take finish a the position work to the the of In to to additional moments where lines year resources I enhance strong, few to and more to earnings addition

will Next solutions, how today’s ongoing that launched August. Insulation positions, timelines this to building such example strength reinforcement’s on product in product market within used and assets products science A innovation strands. tight is develop million. PINK variety approximately a builders. we and to electronic product business can Product of be our focus Based line. and of across and divesting in sustainable process install and to renewable and decision is glass existing our of improve we energy As leading our as is part more is and to alternatives these This and market. leading repurposing The with core of applications, and growth, is value our line customers. innovation our to generates our and in The approach contractors on This to capabilities operating market construction, a continuously product relationships comfortable material faster space. decided drive the strategic of in our Gen technology work line Composites include leverages performance positions, product expectations or Fiberglas in great given valuation dry-use DUCS analysis, key important consistent our primarily and markets, part explore create manufacture focus of explore its for we production thermoplastic focus With for our of advanced the value integral particularly assets for to an products other fiber alternatives contributor to geographies, key one lines performance and chopped material evaluate applications product Composites of position compared to automotive a our to to high company latest annual these revenues our the create this build $XXX infrastructure. and have The we strategy. growth is business, continues where this our and

powered sustainability, to commitment I’m XXX% industry wind our Given note standard is pleased Insulation PINK an that Next and content. for recycled electricity Gen sets made with to

Our growth industry opportunities Owens and launch recent example Corning. for most is expanding Gen Next the of is our Fiberglas customers PINK how innovation of our leadership Insulation and

We’re new through With to to recycling We end lifecycle. developments to a more products recycled which specific about circular focus to decarbonization, their exciting these The of transparency, sustainability goals. the design their carbon financial as see results the including grow of both during to our on upcoming life company forward which details and and specifically leadership opportunities sustainability develop and embodied related growth more topics impact is now discuss includes our and enterprise customers help content the product also how excited we material more throughout collaboration and Ken? our engage will solutions, across more solutions, I turn economy, to future Day. achieve reduction, detail. that, Investor mission creating customers sharing to innovation for build with in to look our sustainable product our priority Ken over key it

Ken Parks

Thanks, everyone. Brian, and good morning,

and As strong delivered earnings outstanding Brian another Owens commented, businesses. growth with quarter revenue across all three Corning

us allowing and we markets was remain chain this While execution serve, to supply performance, driving our demand the accelerating fundamental ongoing manage conditions to challenges strong inflation. through across

quarter other petroleum-based offset inflation material call, almost the energy about year-to-date. and quarter inflation second more to materials, with headwind realization transportation price input talked and we businesses and Overall As positive all along than in impact continues in in the asphalt three costs, costs. our especially all

management healthy basis third quarter working combined and result, drove reached cash higher investments and quarter free a earnings XX%, As same capital The the last conversion free flow capital than period focus operating year-to-date. flow in margins with points generation cash XXX nearly the year. strong expanded

XX% billion reported slide for and XXXX over look take of a segments. produce third revenue sales in We up on results. consolidated beginning we growth five, closer Now, all our that’s can $X.X quarter, three the double-digit at net

fifth diluted diluted million, conditions were to earnings results, in million in XXXX. quarter of $XXX amortization third Our $XXX XXXX compared up the the three or delivering $XXX businesses quarter $XXX the for these Depreciation $X.XX prior $X quarter to and disruptions serve compared instrumental QX for quarter. the we Earnings margins share $X.XX inventories. for demand million operational million in chain EBIT expense XXXX. share, the overcame Adjusted remain the supply year-over-year per EBIT third or were commercial Adjusted as markets year. quarter per compared third limited double-digit in and was resulting in to million consecutive for million, and $XXX up grew with execution all we strong the of was

$XXX spending, Our quarter year. up million, capital third as of our last the of flow adjusted We’ll capital $XX compared strong cash that on to of $XX prioritizing million million third we six as third and were Slide our the quarter to reconciles additions disciplined be reported productivity. to in continue for quarter EBIT $XXX our growth free EBIT investments million. and focus delivering drive

which $XX offset quarter, auctions, we recorded on the million facility sale. of Those partially sale of for associated with previously related a a previously were gain costs announced by During restructuring $XX million announced includes land $XX the to charges million closure. the Clara facility Santa

EBIT. quarter acquisition-related overview Slide seven $X which quarter. are acquired for segments of EBIT charges from addition, and supply adjusted increased quarter inflation, had adjusted million items Vliepa, the to in was These XXXX changes we third million an prior year QX excluded the from provides In of our year-over-year growth. chain third over million. accelerating adjusted all reaching challenges three XXXX. delivered the EBIT to Despite during $XXX EBIT $XXX

Fiberglass global serve remained strong we capacity pricing we for year. In over insulation, incremental performance year-over-year expansion. markets eight, the XXX XX% and double-digit and basis The with year of construction by volumes specified build delivering saw versus year-over-year the the we the year-over-year reflecting and strong the as million, business Residential growth positive the our pricing mineral solid growth strength and more double the well U.S. slide both EBIT on increase provide I’ll QX. of and North positive additions across from points highly in past wool. quarter QX the driven revenues from commercial Insulation saw were benefiting demand In technical We announced demonstrated America of and end details most $XXX both to business, globally. EBIT XXXX. with America again each on Pricing turning margin a volume and QX, phone of new North to what than actions, Now, products growth growth in realization in more continued achieved businesses. notable continued performance Insulation as third in was on coming glass over Europe, prior growth stronger

maintain positive business offset price than to Insulation of the continue overall the positive accelerating For In in energy, a insulation, material and face price inflation. transportation mix the impact of more cost inflation. accelerating residential we

inflation, narrowed cost insulation global lagged considerably and price technical versus the While got QX. price

higher EBIT and our operations and We from recovery of million million continue in absorption of manufacturing million, execute on record $XX the fixed in well $XX XXXX. delivered and $XXX to margins up of third of of from We benefited the a cost production. quarter quarterly XX%

prior the Composites business strong for higher third performance the to strategy mix, XX% million, Composites than with which up favorable year. nine business. business of slide Sales another record focus commercial applications to slightly The was the were ongoing more produced growth quarter. compared a The turn for please our Now review our quarter $XXX volumes. driven lower driving by on in value topline to offset earnings

for to demand local valued continue as demand well geographies local see and supply our is higher where applications, strength being We demand customers. model in value for our key as by

in energy XX%. from continue from negotiations, $XX the XX% materials, positive prior market last The in Roofing Composites also pricing continue recovery quarter million costs. third record Roofing slightly year were with of prior our of for offset shingle asphalt strong solid we to manufacturing year-over-year. year, quarter, third quarter, XX The $XXX Composites, was while million, price business delivered Operationally, and up non-contractual a and the up $XX well U.S. compared over of year. as to produced million prior margins U.S. transportation X% to see the higher the were and well costs. to business. EBIT execute compared up curtailment an the provides $XXX In performance QX Sales resulting We as price shingle quarter. more In as contract headwinds inflation EBIT volumes business. overview increases in million, positive reached Slide year our than the down

Contribution our good offsetting remain accelerating other We increases continue material delivery to and see strong. announced inflation. more asphalt, price realization than on margins

million year, XX% prior achieving from EBIT quarter $XXX the $XX was EBIT margins. million, up the For

cash same $XXX XX, Free capital Year-to-date with the flow. to financial and expansion XXXX up million, year. and third full along to significant bringing year discuss period management the cash XXXX. investments around quarter Turning slide for over of working I’ll for cash of flow the discipline year-to-date $X.X conversion flow quarter by strong already million, the the Earnings remains third our was cash operating in free highlights free $XXX flow sheet due our balance flow continued resulted quarter solid strengthened cash expenses strong. $XXX consisting senior million last $XXX on our XXXX ample notes. At we in further and this on investment had the of grade performance, company $X combined remaining approximately nearly With billion repaying million $XXX of debt cash bank liquidity of million end, quarter capital, of billion, facilities. availability

XXXX, consistently XX% common X.X repurchases returning of approximately stock on cash repurchased remain quarter million. strong Through free year-to-date over flow, investment third $XXX equating company sheet. to XX% the returned company During XXXX, of the the to flow. for an We and $XXX balance maintaining least grade million cash focused through shares investors million XX, September time of at shareholders share and free generating to dividends,

approximately be are depreciation million. financial $XXX our Now key items. additions expected turning of to expected million, to outlook million. $XXX between General amortization expenses to below range are corporate XXXX million $XXX and expected is and approximately for which Capital $XXX

range For our effective to finally, XX% $XXX pre-tax be of between and XXXX to interest million And expense, rate rate cash XX% earnings. adjusted we adjusted be we’ve our tax and expect pre-tax XX% XX% to be to narrowed $XXX million. tax earnings our to of estimated

turn please outlook call for I’ll to to slide our Now, return Brian? and XX company. further the discuss to the Brian

Brian Chambers

you, Thank Ken.

slightly seeing we we trends inflation QX. industrial of the we across above finish quarter, and at our to giving or as markets, repair experienced the our end company markets new anticipate During be quarter, third and the in to commercial well, U.S. what to we residential current Based year. global end as great momentum us expect strong. we well on fourth the construction continued perform as the In enterprise, remain remodeling and are impact

actions year, Given mix price QX. throughout we the our positive of to pricing expect the in each businesses cost a maintain

quarter year, quarters to closely impacts we of our operational inflation, delivering results three Moving the through and financial in first and close earnings regional and the year. the has to commercial our supply chain strong this the expect quarter, generated COVID disruptions we continue in continue businesses. last will QX, the and manage Through to execution of monitor on

with in year. consistent American mid-to-high versus volumes the we our up Insulation Fiberglass anticipate to prior Residential quarter. I’ll Now business expect more calls, Insulation, outlook and single a North business specific detailed fourth growth our Starting with provide prior for be digits year-over-year

low-to-mid price grow year. global similar and to technical In into with single to We QX. businesses, expect in applications. in of what volumes residential quarter to in realization we as next having insulation businesses realization saw be to price QX, construction with global increase December insulation, our products what more should building demand announced digits, experienced first impact the these we get recently our the Similar ongoing would for we and similar expect in we

the QX, in material we increases quarter in quarter. continued terms higher what inflation, to the price and mix than in positive result In price be that a we and energy cost of expect in will cost realization fourth experienced anticipate

$X to our by expect million prior versus fixed year. we costs absorption approximately Additionally, improve

strong growth year approximately Given all to of with this, we earnings QX versus margins expect see prior EBIT XX%. in

the XXXX. strong the by largely with the impact expected to Roofing of QX margins chain mid-teens, would curtailment versus based quarter of difficult prior earnings And our Overall, on EBIT Roofing, the pricing quarter million expect with the pricing XX%. realize approximately to of we less mid-single inflation to we fourth expect is in more a quarter mid-single in the Moving supply comparison realization We Composites, digits expect by market. be the more we price prior the up winter of due than demand increases, anticipate favorable in fourth digits, expect although declines quarter, than storm the will lower track offset market expectation which primarily anticipate for quarter. to Composites driven in recovery the volumes of volume of $XX year but vines and lower should year, the revenue improve a continued our and to in for disruptions. from ongoing growth previously we continued driven saw pricing with for realization more on in offsetting costs likelihood that QX, $XX million to to down We expect normal we year-over-year, we announced line year, to the season, would what favorable market additional and versus mix, to improve the benefit volumes. to by of of fourth finish

Additionally, revenue, volumes the in quarter, of saw but a positive in with anticipate we With terms headwind of mix in to we of QX. lower expect that and narrowing, a our quarter cost couple items. enterprise a from view I’ll close approximately a XX%, of we price Overall, Roofing EBIT what margins similar businesses, fourth mix.

Our remains and generating free committed team to flow. strong cash operating

our In growth especially our balance terms over through allocation, on business, initiatives, remain and repurchases, flow in and capital of least share an sheet. returning reinvesting XX% maintaining of investment free time and productivity focused at priorities cash shareholders grade organic dividends to

you’ll Please are outstanding closing, in addition, November to market grow by for strategic and I’d help that initiatives to delivered be the event. discuss on win details up press this leadership acquisitions team for and Investor be With and financial offering. we stakeholder leverage to our third the will excited the will call we geographic the to back will last joined open session, a and our by strengths, moving and to company, questions. and and is reference have construction two and our In system us our priorities, of I performance like opportunities team Wednesday, the material deliver release members investments before to One company’s we our financial hope operational operational drive weeks. commercial, value value. remind XXth. now executive everyone more I the long-term Q&A In Amber? important turn join our building objectives in evaluate Amber product of earnings it Ken continue the the quarter, hosting We note in around proud our Day to we shareholders. to customers virtual to on and that, expand and

Amber Wohlfarth

you, Thank Brian.

ready begin We to are now Q&A the session.

Operator

[Operator Barclays. from comes Instructions] Bouley question with Our Matthew today first

Matthew Bouley

for Good taking congrats Thanks question in here, and operating morning, the pretty the everyone. environment. a on challenging results

on really is lower do the normalize being little about that gave you a and comment question that’s actually I’m Roofing a due we sequentially less if pricing pricing price, that you the a just to bit very think the slipping alongside should see than that? Just that Thank curious comment price to business little into alongside is, question QX much. QX particularly volumes? volumes. if about XXXX, And lower broader how continue volumes you in

Brian Chambers

questions. thanks, for and the comments Matt, Well,

pricing, to realization me our let of Just clarify. In points. expect good price to QX we Roofing in continue see

slip we’re the So not things seeing in market.

volumes, was just more around of in pricing would on the the that little realization think product. based that strength market total price anything a be being I less not lower the reflection today commentary of on a our be

continue we into expect that to good continue realization So see QX. to

So probably volumes, in this. more think, that are be a in see terms basis. -- But year-over-year volumes we’ll I to on about going overall up we talk of

in was buy invested saw and work the increased at more saw QX we and back very really half year. last where low comparison shutdowns in lot what if comp contractor look year, in you QX build year, distribution a here in think we’re I a a home. demand QX of to the with is just as We uncertainty little and last homeowners bit seeing in COVID difficult dramatically

think very overall. I strong market So in a we’re Roofing still

We’re we’re bit quarter in then just and little comp third guiding seeing QX. comparisons in that a to you of

market. been operate to in asphalt other continue for pricing we’ve strong several in good to fashion So in time, we’ve expect Roofing moving to last we been inflation that and to we the and able that actions. Over recover able through forward. in think market. demonstrate strong we’re quarters our be Historically, a business, very We’d a able

Operator

ISI. Stephen from comes question next with Kim Evercore Our

Stephen Kim

a kind mix, guys. results. I ask I terms comment generally the across, -- guess about business. also this effects in mix that could contracts, of within Composites And your relative in annual of of price of you very on Good me, had mean, historically, wanted across lot excuse Yeah. then, is much to I has benefit. terms? sort what question driving which a pricing Thanks I alluded as as, some some I segment Insulation percentage Composites, think the nice to. had and Roofing, well In and think, mixed you you price, and

curious to will, Just as we How that much this of due in of sort XQ? in was what to segment saw renegotiations? spot you pricing, if successful versus

Ken Parks

Thanks, Stephen. question. for the Thanks

Let’s first the can composites maybe about business. mix then talk about talk price and across we

Composites correct, years, before capacity of environment. pretty the very the is, is You’re value solutions say answering couple we’re the of a has what high would for quarter I specific another a operating driven higher which kind driving today, towards for strong about the and is in I we’ve really utilization actually this which question, our And environment talking what well. result been delivering is more customers business of with that think,

able more focus higher so bit market We’re the because is strong. demand on those value a applications, to

mix. is, this what and as deliver As is driving positive our we and to of result, applications, you’re out a those value in the mix higher you’re solutions falling more higher benefit, therefore, shifting seeing seeing mix value which calculation as

be to focus that’s think I here the a we continuing continue part as that’s mean, to I I of think on. what business, we really stay. are that, going to to something that’s ship

would that for quarters couple to we of last and it expect seen the continue. You’ve

pricing. that the is third that, do is to about say, in two-thirds a you’re as On it, Composites spot and our I of price tied have on we would side, tied which about of contracts business, general, correct well to then,

of were them strengthened into even in situation a the came contracts As process and demand and some many that into dynamics strong negotiated, as in then environment of the we contracts we we XXXX, of to some moved because contracts, further. within being into allowed those moving pricing were XXXX, annual build good us the when are

from is last we that tell carry-through came would you price side, pricing on year. the positive I seeing negotiations negotiations through what So the that contract are our

We are this equivalently customers from environment seeing solutions closely quality where a are benefiting we from that that looking are think are we geographically. And spot environment I good what and production pricing demand for fact comes achievable really on also local call that within our local for basis. good the readily

comes from I from as as from spot pricing. the well both contract negotiations, So think pricing the benefit that

Brian Chambers

And trends done Stephen, the price action, add, I the go through I mix across then which the the if one million this think, I That’s about for recognized and third at the we the you really results, I’ll maybe cost think across is of is delivered enterprise Brian. translated job price a cost probably each emerged another I has if attributed. each they’ve in positive into of believe -- see this maintain guess, mix businesses that costs enterprise, and inflation our fantastic these we’ve businesses. $XX team quarter positive look we seeing you’d price our enterprise. as a and an throughout year. of We’ve the impact one

headwinds do as terms we we’re of the continue continue that, in unfortunately, this environment, think in need XXXX. going to the into we’re that’s inflation to in forward look to we that and QX continue So, first will to probably inflationary part what of seeing

our pricing So to identifying it, of us and our actions executing our I think reflective and the of customers. I is are services getting realization well that in think we’re products terms value teams bringing in the it, seeing of price

Operator

Exane Bromehead BNP comes question next Yves with from Paribas. Our

Yves Bromehead

inputs side question. the what’s to types other energy and you taking bit Thank with happening my of on Europe. just in morning. get inflation, in of Good especially wanted Hi. for a on I a the gas U.S. and the better more understand that’s support Could hedging and U.S., would the to what’s Owens Europe on sort you if any strategy, if into if the and appreciated? to so, that of that and into maybe more there’s any comment or help us understanding Corning be

Ken Parks

Yeah. question. with mean, Great we’re I all dealing Thanks, think, Yves. I it.

of to which attempting Corning, think it all Brian And just we’re it. about, address obviously talked think through are talking at I constantly looking Owens proactively and we it we is both what America, I quarter, through what continue area saw kind to if offset ahead are see that in place to think the appropriate third kind the sure have we that the third North the we and to of that making about the specifically, in primarily quarter. the to inflation in most year, the On mechanisms of seeing Europe were we the say, quarter, the energy -- that. I way seen and have at far inflation pricing I actively so impact not energy surprisingly, fourth expecting first and was where we we’re three environment would quarters and

So this expect inflation the do The place. is impact some second way do we we first manage couple where have -- we biggest year the versus is quarters. for it biggest that half of actually hedges see and energy of to in

for of kind are because but we as in We United a the probably primarily I that it have are we do the energy don’t in typically, and volatile don’t see at hedges Europe quite more probably hedging. the anticipated the than a we or Our of we bit majority And in hedging needs. hedge spend energy. the is say, would States, hedge market Europe overall, in majority or of the Europe

Operator

from Phil comes Our question next Jefferies. with Ng

Phil Ng

tougher guys. next you’ll see Roofing, on year. lap fear tough this there impressive out Congrats performance a in and little your quarter that in Hey growth big flattening I a bit in with correction is and guess, comps a really backdrop.

you when here, you when on normalizing, but comments XXXX? growth you on still allocation at thinking channel sounds just that and benign this and color see product on any pretty Roofing look Your how about inventory

Brian Chambers

for Thanks, comments. your Phil,

remaining Roofing would very overall, is think, demand again, strong. characterize I I

I that you our QX comment unseasonally I was we we’re and going trying some comps about another was that had winter A the be put stepping versus tough demand. perspective, rebuild of though a really that historic strong think those be about lot the think in weather. To and last high inventory market year warm storms strong influence to really and down of even mid-teens last I’d when of for think year. bit make lapping, we guide a that to quite think

So at XXXX, it about guide when talk for and I square. fourth out quarter I that, we look XX down stepping about a XXXX averages just if back to averages XXXX, think million from

in is that historic of average. fourth increase about guide versus our mid-teens quarter kind So

setting basis, So, for with the fundamentals. continued up in of a I We in for that’s a we market we QX, we network look down think think, that our we some Roofing strength guide to strong very and XXXX the be still while overall contractor start backlogs to strong very work see at see frankly, contractor the on closely. when through the comp is going

I of to our then, kind numbers year-over-year through very, but like to their for still product see in into some the in see Midwest, come repairs continue storm you that spaces, in that a continue have see that’s would demand and down in trend southwest, home to continuing. of that demand homeowners as investments remodeling improve and said, very we comping consumers Mountains, the storms and ARMA going XXXX. We you the as home parts southeast, would recently, And market We strong. living Rocky other characterize, their where moves see and is be carryover

everything still are shipping We and producing can we make.

geography. depending inventory to distributor think on starting a get levels better little I are

are now I distributors they probably managed, brands, being we think very I think But on the are levels in strong. would levels getting our that to inventory the very lean close story products, are out levels think our facilities, more but very colors getting a year. are is And overall, inventory I little as regional think buying our where selective it for inventory in a are being distribution, products I I manufacturing are better. demand the now say,

into more to think kind prioritizing product good a good, inventory very making the to we’re business of in We’ll that. of to that good we increases But XXXX. be the the remodeling, against still is have repair to good -- quarter backdrop storm monitor then to react that a manufacturing and forward this given a good we’re of up start demand seeing against any we’ll through the I fourth our demand, again, go us distributors as and to levels that continue line feel again, price think some product the XXXX. of sets for shipments. a we going And inflation able to line are good given in think, we inflation But, strength environment, choices we of and finish continue strong realization come I seeing. some carryover So in the

Operator

next Our Securities. question with comes from Deepa Fargo Raghavan Wells

Deepa Raghavan

for morning. question. Thanks Good Hi. taking my

on that any the down that and tag thoughts that Roofing in XX% came you just out, me ARMA quarter. data the was along you ask if have Let

nicely. part Your question. the pretty one held roofing That’s pretty up of

if first can I do that’s Second, talk Ida of in to translates autos benefits so off it question. my that, later but that, based revenue you’re coming quantify, to to some able probably appreciate seeing Hurricane any on, you you’re and from

Brian Chambers

Sure. Okay. Thanks.

I for performance, for a some to XX%. the third quarter down regards market yeah, and this bit a us. Again, the comp ARMA think is of of

quarter, some did we saw some in bit that think in I regions third of a little with Roofing see variation the regionally declines.

storm storm that lower I lower of comments kind a around think demand year-over-year tied volumes to on my and basis. some

I think Midwest the in seen region and space. Rocky regions that in kind Mountain that we’ve of

also supply and business asphalt seen I We transportation I that major us disruptions. others. we’ve carrier that. the have able that went think to transports some think But that saw we’ve minimize bottlenecks. of impacted exited know out a seen in quarter We’ve and chain would materials impacted transportation been we

in business, our mat order supply own that book. see We own we continue and to tightness our about in hear

of manufacturing those think I relative there to shipments a are impacting that the things some strong of So was again environment. market some very

that QX One that occur would manufacturers more couple over about for to of not year. little think this I inventory We We last a year. little comping aspects we that. in talked year. that have is from had year of other think last we year a a were performance, this last lost our ship did

last timing a comping we on that to issue orders expected and maintain of book said through So a year relationships. share as bit the that. going year, at saw this we I was our our just positions to order we and be good that And thought this come we contract time were certainly and we

that. So I we benefit think from

thing from supply a we chain. second vertically benefit is I integrated think

We asphalt, sites. so own -- So mat. many of our fibers, we produce on process our our own

in terms a of we our kind quarter. our I that have in in of through So, think, chain supply ability of came vertically bit integrated to advantage the an there produce ship and

market, I that’s on was QX the against demand. again the So think good and performance and backdrop of our more

of It very that work beginning of seen million storm. take some in we to squares a think majority X of probably sizable of more this that. terms to of have there, expect of the of the demand kind the Ida, I’ve repair squares high into in place. to repairs, seen the would see get We to side and next impact because it’s total. out certainly impact size I X we’d was an scale the year. pushed estimates maybe of But million think

we So first beginning, work continuation get into to the that to going half that’s think is but of XXXX complete. -- work a I be the

Operator

Thompson Research Our with next question Thompson Group. comes from Kathryn

Brian Biros

Thank and Brian or driven a decision, if guess alternatives And Biros like ago? Can is the This just my on glass the certain or ROI. decision by for came versus question. is or now decision Yeah. market for Thank trigger that something you two position you. you at why to Kathryn. the first actually I you for asset I year morning. the margins Good metrics like happened now guess this to about maybe looking Hey. from decisions around how talk taking

Brian Chambers

for Thanks It question. market Thanks. positioning decision. is a Sure. absolutely the

and So coming see effective years in talked out we’ve process controls about I manufacturing within that very network, about. past in that in focus we investments heard investments few the through me lot Ken results you’ve flexible our over talk build Composites a cost to made, our think automation a productivity and

I is commercially renewable Composites are doing building solutions can talked for invest we and construction aspect value material think we’ve very other applications and our areas and in these specification we’ve and energy, differentiate continue about innovation us growing been we’re focus with well to infrastructure, grow. where and that focused on the And higher around applications, work. of

business used So resins mixed a with line applications but have in require we and is investment and and would a appliances. and don’t the us, in it small good fiber a for looking at a gets we product leading market believe build significant that our automotive that to position DUCS business in this electronics, chop It’s that.

to strategic that to talent we’ve of material where offerings. we within expand capabilities, or Composites, reflection construction or strategy areas our made other a or opportunities of decision our product our investments not and growth build higher our our teams it’s positions focus a So really us for and see and manufacturing fits enterprise it’s in building

We decision. right the the is thought it. time made to we do So now

on forward into process to divesting and that Composites evaluation give either products and and other or manufacturing Our assets really the fitting those growth were forward. focus going going we business produce margin better opportunity our repurposing strategy see us

is market at leader. with next continuously But was that look as And investments decision being of now within to we’re this and at these product market our things and felt of really a months. product positions, where our DUCS the make we we grow kind over be evaluating and assess the with choices we’ll consistent working company Composites how around add, and and we the driver through strategy. I’d So that build the that’s I positions, in moving time we several just assess the to the a make we probably process just assess line company the forward say, right

Operator

Our with comes from next question Loop Shmois Garik Capital.

Garik Shmois

Great. Thank you.

had and in more next year, you increases speak confidence magnitude just of Insulation I for price another your to announced price pushing the even you and could pricing given You increases year? Insulation if secured just this you December, mentioned number wondered

Brian Chambers

carrying and to in decisions we these headwinds our of other been we’re we’re the certainly costs. they I input the as announce the costs it We operating which mean, offset this continue plans and think consistent to sell we and us Insulation their terms another business monitor strengths Insulation and an Garik. evaluate Thanks, process, needed into we’ve that can in building believe environment come the about, give visibility think it’s Yeah. pretty the relative That part that first to increase inflation market. service increasing as these we we that make market is so at how customers to and builders and they that in going enough the to and right demand December, forward, to XXXX these businesses time inflationary talking announce looking conditions is our led in and are will need -- given but start impact out. for that

very strong. I the Insulation in So market remains think

see to strength the going growing continue. going for continue market. to in products construction to We continue We to good service construction marketplace. housing our are that’s We think demand the our housing think

throughout So of we year product good to this announced and the in given that a good like feel our realization offering demand the we’ve see we position price increases this given increase. strength previously delivered like realization from feel of feel environment the we’re

Operator

question next Our from comes Michael with Rehaut JPMorgan.

Michael Rehaut

on kind been a us many update have question. levels inventory across Hi. of has your year, pretty on their in was Obviously, my inventory been each allocation, through tight and taking product Good could believe, you morning. of sense particular categories Insulation. I channels. if give businesses, I are for this Thanks hoping most respective where an of in

to can and update that on you they’ve Roofing, in inventory still any and is times lead started increase the We’ve how for channel come give heard, our of, allocation? in started terms their anything to up if If example, where own. inventory levels are, rebuilding again, just us in on still you’re if if them,

Brian Chambers

are Yeah. historically. lines I levels product lines. And that as most to of my going across inventories very customers a product our is very see the across mean, and many inventories most carry Thanks, of low add, continue of company lean question we Mike. then would inventory our also our we to lean and general be

our think are inventory distribution getting seeing level in in in we and levels started -- I inventory So of levels. about some both process just rebuild

would I be So think very statement. that broad a

very just Roofing I materials levels you in -- our Roofing, our walk inventory lean. kind through talked I think about, remains of businesses, within if within the

to can service We to customer we’re everything and that point produce demand. continue we much we the at as shipping can as produce then

specific again, think, So very sales and to specific very channels, a I seeing product inventory and think and it’s market bit little probably we’re broadly speaking, build. in But relative outdoor markets to it’s colors. I Roofing and the geographic end of lines

brands, see think to bit probably certain colors of certain certain product a starting lines, are So I little rebuild.

We are seeing line. product our in that not

lean Insulation in I think we I run very Resi, think, with and we inventories. again, continue see to

produce any we capacity year. ability making supply we kind So next brought are through of comes of into some going disruption of talked customers on and that committed can. kind as adds we’re and but our unfortunately, to that our to continuing We the as service to much we about changes

So we also products Resi that levels remain we part to inventory continue for for historically Insulation service most lean the business, to try quarter-over-quarter low. more to customer inventories but are produce our and think channel

the technical thing be same, certainly for is would a very, but main very outdoor bag, inventory again, the sales, which us a levels light low historically. generally inventory mixed levels and on think I Insulation strong side,

think to maybe comment… then Ken I moving Composites,

Ken Parks

Sure.

Brian Chambers

Composites. …on

Ken Parks

Yeah. And to the going not is be story difference. much that

half second then quarter the is significantly of third up quarter on second the we on from side pretty tell year-over-year, if portfolio, that, a the hand to the as kind fact, think the the a quarter about In of year, step good you and we I we end inventory pretty would market into you XXXX. moved with of amount as of last started to in move of what Composites --

end quarter to levels much would still pretty levels lower actually a as we that, on delivering on working XXXX. production we’re Roofing levels inventory within And the are talking third delivering and and product through high continued I inventory as Brian’s ability Insulation, Then hand utilization than they overall inventory. capacity pretty as are the well But which are a in net of of we probably about saw we So is at and all end relatively same producing be low. we the at level, XXXX, so move to products. from deliver what kind as Composites quarter deliver that we’re and situation, everything produce say remain of the our the actually that is with good were to at product,

of have running the ability move pretty of and levels, we Insulation as replenish start the XXXX have the are just XXXX kind those we into to Roofing. still rest opportunity XXXX lean through still to in we So, like but inventory to

Operator

next question Our Wolfe comes with from Patterson Truman Research.

Truman Patterson

morning, my everyone. Hey. question. Thanks for Good taking

are But you online have Just It north Insulation sounds of large and some want year are little continue the or business. parts have still lean. the to Residential and at excuse on moving all assuming me, that a you further capacity. with running pretty Inventories full your inventories bit a over pretty capacity XXXX. moving builders homes coming two, -- in touch backlog like next starts offline all U.S.

understand have actually Just to demand? service that to wanting of capacity some also you

Brian Chambers

the for question, Thanks Truman.

in I moves to kind of network, cost in additional continue think have a the that for we housing are cycle to cost network. in capacity to efficient focus service to very but making, gives spot terms bring go continue on just we also environment are as we gives us some flexible, we any to a us flexibility us starts we the very XXXX. good the the operate to feel market the effectively, very the opportunity a today building efficient front overall demand estimates said of that into and what of We’ve consensus cost

to continue we -- we’re balance that. think I So

year though, last. as to I talked think more than all we’re the significantly Insulation volumes about, we’ve made I’ve moves going this produce

in got line year. be this changes. moving the the coming those We’ve all talked produce third in are We and Nefa up kind next facility about what Eloy able to with in last to expect forward And moves bring of, manufacturing work we’ve next up I then with the here to more with quarter-ish of capacity we terms year Insulation first year the the quarter. expect quarter got volumes in that

good coming feel a with we on. in like spot So we’re that’s those capacity

footprint, strategy. good part us our investments in is in our a which throughput very a spot more and process in that of productivity improvements to through our We’re key continues and existing automation, in give

that market kind operating all up to we’re million X.X environment housing of in starts think, I think I in work, services So of this today. a

we think bring at have the cost that also that ability I very could that some do effectively, we we timely. step do to do could on change capacity very

to housing about in it’s additional capacity. continue step probably as and going continue need I production that we to think is our starts we forward. change, I X.X, we think would feel increases beyond see though, think going about right now, quarter-over-quarter the to we think a what good But

our to So we can feel something we more if on certainly we this traditional bring product levers assess position we like pull with this where to some get we like do to the we of again, caught up capacity, feel have and times a is lead continuously servicing categories. back environment, we’re to kind in get But need in that. market additional

Ken Parks

And I think I just to add that. would

an Clara Santa about in that the of worth to have it’s point at after call, the the incredible continuing and the Santa employees business. done the think making last made local job I Clara we the operate announcement team

As work that team on there. tough out be we going like and that to the opportunity tough able impacted. people good continue to the shout be the are they’re are a for great to to all know, decisions it’s ultimately do to they But this

Operator

Our next question Truist. Keith comes from Hughes with

Keith Hughes

you. specifically there fourth details some what’s Question called as you in headwind? about give we more out a and quarter the negative heading this the call. on lot talked happening Can mix mix in quarter Roofing, into that’s and into just turning Thank a you third a

Brian Chambers

really Thanks QX in The Components is mix Keith, question. for Sure. segment. our the thanks. impact we within saw

system past, that So as we’ve build to the continue components the Roofing and into talked around we grow about out the roof. the go in build to

starter particular two that hip and we going be business, underlayments pieces in Owens and attributed go ridge starter shingles. So products and ventilation our to arrays those product parts all And the that hip and these to roof. and that are our Corning lines, and more are installing had into Components

and types other little Corning our bit the other specific Hip or offering with of Owens Roofing more be Components under to products. of line. matching rest a manufacturers starters the and can product ridge used shingle So

saw market. So buying of of in first year, the a the just materials the kind shingles to I and try distribution of we to think both service lot part component

be of and inventory bit our think with QX saw relative our create decisions. QX And kind ridge hip at be the was kind and expect would that again, what distributors similar versus we we’re just headwind in comps last of look a ridge in of we and rebalancing what think in starter going levels I much to inventory to seeing and this bought to that is hip and saw inventories in shipments. year of quarter is year shingle in was, we that -- what of our relative if mixed QX year-over-year going products to terms starter bought fourth a how we next those shingle we

think don’t a relative ridge It’s QX starter our offering. there’s our just of in of So rebalancing products and to impact a or in our products distribution the we shingle hip timing around mix QX. our structural there’s to issues around and a -- bit I inventory expect no issue that and impacted Components and any

Amber Wohlfarth

Amber. is Thank you. This

question. one We last have time for

Operator

comes Susan Goldman today from Sachs. Maklari question with final Our

Susan Maklari

squeezing maybe year? look kind down about we and morning. you about you. as and best you bit areas you Thank talk staying for across to Good about see any you of the a profitability opportunity Thank three think the segments expand or of even XXXX, you that next where kind should potentially my can And flat question. think

Ken Parks

Susan. Thanks, Yeah.

XXXX feel a think, more again, say, start we call. on XXXX like about across the markets strength our get the that into resi I our We we strong on very the carryovers enterprise. and the next continuing I’d Roofing in starts when quarterly about demand strong. we and to set side, we’re to overall, We’ve we’ll of outlooks, But think move into position get talked housing Insulation stay XXXX. talked some up

Composites, then higher construction, energy insulation and some think, kind technical commercial get work good we’re global building that’s increasing demand see renewable project multi-material and around and And volumes in businesses, infrastructure. to growing realization. On of systems solutions these we and price in I value the focus starting our

inventory for see great housing, think investments. efficiency, impact impact focus the secular trends I sustainable on focus energy -- growth solutions, on need we more that infrastructure that a a

those product offering relative secular all where today I of So think think, investing going to up of trends, set and well we’re very forward. big our kind to I grow

our be and up continue to and revenues So well I a grow continue to generate good really cash we’re able think say, right as flow. company to now, very we’d to set earnings

we So in going we’re forward growth the trends in I us. here market up very secular of company and how think sit pretty and we’re optimistic trends today seeing set the that well position terms we as are key for

Operator

This concludes remark. the question-and-answer session. hand Brian Chambers to any for like closing our over to call I’d back

Brian Chambers

our I’d much, thanks, you two very We event today hope virtual many in of time on this Day first we’re on very thank of you XXth. performance for with our XXXX execution to three we again at your closing, and everyone, Investor as pleased building we weeks connect say, and Well, the then questions. to momentum And forward strong. your and November with the In close year. quarters of look

families then, you hope and today. for healthy your joining you and Thank until safe. us I remain So,

Operator

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

You may now disconnect.

Owens Corning (OC) 27 Oct 212021 Q3 Earnings call transcript