OC - Earnings call transcript Q1 2022

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Operator

Hello and welcome to the Owens Corning Q1 2022 earnings call. My name is Katie and I’ll be coordinating your call today.

If you would like to ask a question during the presentation, you may do so by pressing star, one on your telephone keypad. I will now hand over to your host, Amber Wohlfarth to begin. Amber, please go ahead.

Amber Wohlfarth

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

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

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

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

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

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

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

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

along you of slide our we on with those will For presentation, begin following Slide X.

from CEO, and remarks Brian? Chair Brian Chambers. opening our Now

Brian Chambers

Thanks you joining Amber. stay Good safe. to today’s of I are for and healthy continuing morning all everyone hope thank call. for you us and

outlook additional and and continue results value to we I’ll provide morning, and financial resilient come to investments addressable generate more During expand markets, Ken details then quarter our about talk business trends. first on shareholders. broader our provide will our back the quarter for second a our deliver higher, our broad and of the make to this performance I’ll overview strategic to call our earnings,

to quarter, a war take Before the to into our address Ukraine. discussion I’d on like moment moving the in

tragically who invasion the thoughts foremost, others condemn are First atrocities been taking the in and Russia’s so We and impacted. place there. have and Ukrainians all our will region

sale resolution, be exit of through that became decision transfer it therefore, a a this to and While Russia of our hope not clear would the we was troops for case; or peaceful withdrawal the made our increasingly facilities. a

an employees not this process, the of is working our As assure overnight the security region exit. intently work, our I can Through and we appreciate, can in top to safety but this are will expedite you most our priority. remain

continue nearby through and Corning efforts company will and in countries to humanitarian Owens the Ukraine efforts our We also Foundation. support

to performance first turn quarter our is the results, we Underpinning I’ll to XXXX. an momentum continued Now from to the build industry. and this innovation, to our where where continue performance ongoing commitment our outstanding lead sustainability on safety,

rate the Financially, quarter, first half our More than compared safety world-class months, teams’ period to further have a improved reflecting recordable past the over During year, injury worked same XX% sites of performance. safety we our XX global our incident performance achieving of first last of the free the we record of of of increase quarter year-over-year, $XXX XXXX, of an $XXX million, quarter XX% adjusted resulted EBITDA margin first adjusted XX% EBITDA the for quarter. over revenue up This EBIT XX% delivered $X.X EBIT X.XX. XX% and a adjusted million. in margin billion, of and adjusted

dividends and through addition, investors share flow returned cash million cash In to $XXX generated of million we of and repurchases. $XX free

made new robust, to quarter, the continued to strong backlogs see construction Residential in material generate headwinds the both key company continue price and realization costs, positive manufacturing capitalizing end products, execution and and During operational to building have businesses energy energy are offset see our we are we strong remodeling demand input in in improvements that markets. backdrop, renewable the and and high construction commercial cost, the performance and leveraging this transportation. construction and U.S. our and impacting geographies we on in for structural and commercial to including the across Against Europe infrastructure. our we remain inflation

generate taking strengthening of our are for future. energy last November, near investor strategy and Corning to of technology. mission our our day pivoting is market on build which and to sustainable our construction, material also A material the business and composites At utilize in efficient the value, by we strategy science core we expertise, and renewable performance our core into pleased Today capital our reviewed more knowledge, future capabilities. strategy higher, our new into key infrastructure, applications updates our accelerate Owens I’m directly two manufacturing growth all above-market expanding deliver applications and focused investing fiber businesses build that we through resilient earnings and products actions to As more and term, building to share a leverage higher our which glass element and support innovation. our

continue to We performance taking business. work results actions financial to strengthen see of through this additional the our the and are further

strategic last for we the announced ducts have business, we completed which of First, alternatives October. review our

that is representatives all by reviews employee second our fiber and had for reminder, in European sell of now includes produce of this and this quarter. the end products other converted to From needed applications, support which complete a primarily applications. Chambéry, in revenues portion is supplying business, to a product close plant, received construction three process through of located the approximately million decided the we required as manufacturing two consultation a could be manufactured assets facility We $XXX facilities We XXXX. in glass to other which binding automotive As this will our going generated is facilities building in the and offer France. line, by material manufacturing in The growth used law. with review, French ducts recently in

high new expected we premium quarter, options. with product growth science our billion commercial other of we signed see acquire earnings a these expected With $XX applications. close strengthen American opportunities executing addition, than decking WearDeck, the actions decking of creates more performance year, we producer to for material weather-resistant glass JR product more opportunity making and composite which to of most revenues accelerate Corporation stronger the a residential later an and Both category. our $X of power to this accelerate The In decking fiber demonstrate North versatile Plastics this a material our progress conversion in to company. agreement leverage are is market inside the and that is to strategy with transaction, the in enterprise approximately fast-growing than million

addition In innovation sustainability in we to invest expanding and our leadership. and actions, our these accelerating process to product continue

businesses. shingles year’s During insulation tremendous last platforms, and and our new products puts company materials. and XX pace wool, This composite of us foam span product components, other the products well accomplishment our is for that XPS or launched non-woven, the across refreshed product launches. and quarter, roofing including wind, ahead first core global mineral These a

the aspects stakeholder by reinforces is issued our we to report significant priorities world Building a our like in two commitment reflect our to to you already I’d be and the sustainability last we O’Brien-Bernini, absolute published report and March, reduced encompasses we lowered developments Frank we Since has greenhouse of report titled annual The a so, Officer, of glass report, gas our XXXX, done share emissions than our making reduced who of our and which and Chief electricity announced to X, Scope are In Sustainability In which part I sustainability fundamental X that an the our XX to place. sustainability, have XX% commitment all you better X over will Finally, sources. use energy renewable from more is XXth comes we currently operate. how Future. under topics encourage review emissions. pounds stakeholders, approximately Sustainable XXXX, and aspirations various results billion haven’t if and X.X online. across who This XX% greenhouse longstanding Sharing his sustainability of of recycled consumed leadership and important gas retirement.

him a our our future the and public as that excited operations, company, past will view and led Corning financial Chief we our this and of are expertise a Frank I team, leader proven one into to we discuss into the a first David for over the results passion driving now years, our strong Sustainability further as processes. effective turn in integrate more our and As new sustainability to With May To a deep Officer, Ken of our world-class person David Owens has our sustainability is XX Rabuano within which for with CSOs it of work developing ideal our build detail. Ken? X. in capabilities, on building promote the to lead foundation, us priorities, products to sustainability business results. performance makes

Ken Parks

morning Thanks everyone. Brian, and good

commented, Brian revenue Corning the record year Owens quarter started with growth strong a delivering As earnings the across by enterprise. and

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

over XX% to quarter with million, three with talked calls, up of the the continues quarter, especially year. of price costs, positive transportation. material As other Adjusted asphalt more EBIT to of for inflation reconciliation was the petroleum-based $XXX growth XXXX million materials, input In $X.XX in in we’ve and XXXX about Adjusted costs, XXXX quarter compared the per nearly three in than basis impact shows We results. the all our businesses, quarter. quarter to can were offset between energy all than sales million reported prior first for each for along $XXX points diluted earnings same adjusted last first XX%, XXX higher billion take $X.X operating quarter the first the X, $XXX segments. quarter Slide per net look year. Beginning prior consolidated $XXX million margins first the Overall, than at period share, EBIT. first we in diluted on of the or or share and XXXX. closer X Slide more compared reached headwinds inflation first our $X.XX the reported up a

million. $XX announced on related approximately to For totaled gain previously a We adjusting facility items a $XX million quarter, recognized in closure a sale China. the

precious of gains metals. million on the $X recognized of sale also We

In recorded announced $X charges addition, actions. previously associated of we million restructuring with

items our quarter first of adjusted EBIT. All are from excluded these

what partially expenses us Turning XXXX. cash investments discipline around we continued resulted flow and along generation we more Slide up Free the quarter first additions in reducing drive of Earnings expansion cash working inventory capital investments capital to million, management and productivity. QX capital continue capital operating to on million during and levels. continue focused for down historically prior at and intensity expected while flow. $XX starting that year we replenish the we from discuss investor of capital, returned from was with X.X% quarter day, be to low $XX our X, to as cash shared for I’ll Capital spending strong deployment or through Consistent normal due productivity as to innovations. prioritizing process growth million were $XXX our first with revenue, XXXX

company of nearly For At improvement months, on XXX points of combined was end, approximately our full of than million more the and of the consisting availability billion, year basis facilities. XX versus $XXX an last $X.X return our XXXX. debt billion XX%, liquidity on capital of quarter bank had cash $X.X

the repurchases a and recently we stock during dividend The shareholders XX% cash dividends. XXXX, and EBIT with from least Slide free at increase balance and through has million XXXX to reflected over manufacturer of of shares signed our We WearDeck, enterprise strong X company. acquisition $XXX structural the recent outlined investment strategy of repurchased quarter first in investors acquire XXXX. the On share with premium to in approximately the announced overall lower common while step $XXX remain WearDeck EBITDA the dividends. prior day million flow, a million consistent paid returned in first summarizes of changes purchase the to to is lumber generate year maintaining generating XX, the by agreement During for quarter $XXX million. and our for million. business. to XXXX intensity. decking consistently investor We at April capital XX% adjusted strategies advancing composites an expected grade margins positive The business focused a executing quarter our quarterly revenue cash returning level on of sheet $XX full to is over time a we grow X.X and

XXXX year, $XXX prior segments the reaching quarter adjusted EBIT million delivered growth. increased three year-over-year All significant over First $XXX EBIT million.

America from volumes, wool positive to markets benefiting we capacity incremental of resulted and in energy, cost highly residential once strong remains as In and started products and Now the of over and million, global, business provide demand EBIT Foamular. was first Slide year North technical residential on technical X, businesses. were and and million, the growth insulation, XX% growth stronger from most pricing increase realization American in XXXX. from as notable modest sequentially, insulation growth year-over-year $XXX fiberglass each I’ll quarter to and accelerating price strong The North well Pricing of U.S. new end strength volume revenues more QX for specified American the productivity. XX% XXXX. positive. details and globally. In top additions resulting global was than $XX insulation, ongoing for inflation. insulation resulted both turning a performance improved as well global our EBIT Europe, year-over-year. with in continued commercial the global North growth construction what both positive quarter EBIT up and The material both million double from compared again solid first increase price and $XXX the as we more line positive in including residential resulting Overall, serve mineral as transportation and offsetting technical realized was nearly QX. reflects growth price in the the

Additionally, margins delivered benefited manufacturing first quarter. the XX% well in operations. our execute to from EBIT in continuing of Insulation we

from the prior contract million, The price realization quarter. results line through of Now the commercial the spot review and our business continues higher please was turn to additional recent that accelerate to strong first The also favorable top benefited resulting to were year. mix. We Slide our composites move a consecutive pricing expectation in focus record the generated XX business. of with favorable negotiations composites value driven strategy fourth to in the on Sales for as for from XX% inflation $XXX by the compared year. we as phase quarter quarter we solutions, ongoing growth performance up into

accelerating our were by driven million mix shifts strong. lesser year, the expect quarter Overall million, delivered more on ago, favorability the forward, slightly already the the as EBIT remain XX% growth, $XX price addition the favorable price impact an transportation year the from flat by was line compared year-over-year inflation quarter. year prior margins see overview EBIT Going market. inventory the up its but energy, the delivered leverage $XXX basis components of and XX% up The volume volumes asphalt up we provides to same of quarter bottom quarter U.S. to the for shingle offsetting with and business roofing shingle execution improved positive slightly prior Sales Slide strongest XX Composites realization in was with shingles top more maintaining business. million, stocking. expected commercial The roofing U.S. and a market resulting our as offset of performance. a the year-over-year material year and QX outperforming compared generating mix. improved first in mix. to volumes relatively $XXX production for from than were versus volume to prior period normal in while positive impact

For $XXX as material, the inflation with QX, EBIT service offset that was market other than more strong into margins and strong XX%. to $XX demand the prior EBIT positive we million, at asphalt, continued million and the up quarter, pricing continue remaining delivery from year

Turning between our $XXX outlook guidance from February. estimated million. items. expected provided million. expense and discuss I’ll unchanged to $XXX $XXX General in Interest $XXX corporate for to Slide between key expenses million XXXX previous remain XX, are and be our All financial is range million to

expect XXXX earnings. to our of We XX% XX% rate to XX% pre-tax rate XX% to tax adjusted cash adjusted be of earnings effective be and our to pre-tax tax

Finally, are of million, depreciation to million. be amortization capital anticipated approximately approximately and is expected additions $XXX below $XXX which

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

Brian Chambers

Ken. you Thank

each announced accelerating pricing improvements of across as business positive segments the from realize we deliver remain quarter with to our anticipate and we to another Our previously start inflation, expect our commercial an and QX as residential U.S. us Based expect end positions to actions. higher markets, global us with businesses the quarter, price outstanding to in construction we year. the in second Even performance strong. also markets, perspective and strong a building demand on current as provided well first continue quarter. we trends, XXXX our in well maintain From to in cost inflation

Moving the closely forward, year. the prior we of continue ongoing impacts manage we company, expect and inflation, our adjusted net of Overall on businesses. EBIT disruptions, regional another versus impacts chain will growth the for to quarter have COVID of sales supply and to

Eloy for business-specific calls, the teens volume a supported residential our and be with driven revenue In to American prior single ongoing insulation, price growth. consistent of a we detailed and start-up our prior high our continued by volumes expect outlook the anticipate grow productivity prior Now of North versus year, versus to efforts. through to more Starting appreciation fiberglass I’ll up provide mid with combination low modest digits quarter. business, year, second we facility

price as sales expect of expect a the insulation, We to in modestly first our as as price be sales remains and percent realization quarter. we percent versus In would residential volumes our experienced construction insulation global a global building in demand similar what products should to in applications prior of year similar we we up experienced for businesses, what and Like solid. realization QX. technical

In Europe, we the realization in expect quarter. accelerate but in increases, anticipate terms in will that cost in price to the experienced price positive what of and inflation, quarter first to result especially cost material continue we energy from

expect see business. earnings all margins in this, to EBIT growth Given we with prior the QX mid-teen for versus year

benefit and and quarter quarter. pricing increase digit in Moving mid second the impact single driven mid-XX% we continued spot We pricing realize price composite realization year-over-year, from in we of primarily as growth strong to our onto anticipate contract the remain low negotiations. volume both the the will by composites, revenue to expect

the are in year believe accelerate, XX%. for Overall, margins to versus growth we we While approximately strong inflation to in market. the price expect our digits largely positioned In earnings quarter of single with to with to quarter versus We anticipate shipments mid in a we positive EBIT expect prior anticipate would roofing, the we strong in year. deliver of digits volumes the ARMA down we prior realize quarter line continue track revenue quarter. shingle cost the market comp high to a second single growth with

to we of Overall, With price view businesses, cost positive other with few increases. price and mid-April that earnings asphalt, increase low and we flat I’ll a January in expect realization items. the to our close quarter relatively roofing. our higher. with transportation to From with quarter from for other deliver As perspective, in inflation EBIT anticipate mid-XXs material a businesses, our of moving costs with we expect another margins resulting enterprise

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

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

acquisition science, to and and as manufacturing addition, our material by markets. we and announced expand leverage to investments acquisitions expertise WearDeck, evidenced recently unique strategic market In actively continuing are evaluate the our addressable of

market system our strategy building We and and are development process innovation also product expanding support of product our and in enterprise grow continuing our offerings. to through and accelerate to construction

we customers’ around in While secular changing term, near trends capitalize also positioning focused housing on in Corning remain our we to and and renewable term Owens energy demand renovation, are the construction specific on practices, infrastructure. servicing longer investments growth and

market, will back We open improvements grow to it generate shareholders. up customers closing, to and in are the our the making call With the the to quarter drive Amber Amber? growth that, excited win by continued and I revenue and we resilient to and value turn for deliver driven higher, another team more our delivered execution investments about now In for structural outstanding help we strong are earnings. company, have our questions. strategic opportunities our

Amber Wohlfarth

Brian. you Thank

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

Operator

Stephen, first from instructions] please Evercore. Stephen We ahead. go question our [Operator Kim from take

Stephen Kim

there of as positive related if late talked things year, is any us two about think and term business, stickiness Yes, negotiations had outlook well to composites I’m you suggested specifically Great help to to thanks margin margin. within the composites was lot is the of I through positives as going if the outpacing what think lot update the you that, obviously, guess dramatically mid-teens. a spot. I I a to, a could was a the focus was last price which but wondering guess, the lot, in you guys. of quarter, previously longer things, I One highlight, on -

us that utilization, is, talk composites sense could give Just wondering could is the the power you if in you for how second doing durable ducts, you you’re thing example, Then negotiating maybe from for stuff. a just think network. about think you [ph] a - things sense give related a Can net WearDeck the actions bunch of Leapa effect these might be? you what margin you Thanks. M&A and us know, of capacity

Ken Parks

great questions. Stephen, Thanks

we Let’s the start margin Think way is it third - with rate. we contracts fact of about the two-thirds about ahead the of and it contracts come out like year, into and pricing the we year. talked that early composites about those of this a us we’ve we were business tied were as inflation on through those about we having into as is discussions, XXXX, as looked through the thinking what as to about of therefore finalized not, certainly curve and our as the end them composites we got the moved XXXX

is larger so got themselves, the are therefore that and the contract through was year, accelerate we slightly into probably the the just consistently, to between built expecting to moved a first what specifically of as inflation quarter, composites inflation into pricing expectation of in in you’re the and very seeing said because on moved business, the side, you’ve at least inflation we we therefore spread stronger. As margins XXXX continue were kind contracts

to expect strong. them remain We

and do over into look asked as other good at those might along not Those does that customers, business ago, relationship long teens our a think the and come time, the with called about a becomes talked value become as to what taking acquisitions that higher been hold we growth I pretty tell running capacity at value are mid in, that with stickier, we good that growth and in and applications business. strong, very over is key that We more remain shifting in from have utilization new pricing pivot environment would you a I’ll most the product does the forward. only in for well of you a business, line, teens saw We’ve even strong over lot opportunity we time composites higher between our that mid strength onto go sticky, and us value the these rate, a ducts remains so so several demand. more capacity the composites as across still pricing the I that you applications. early stickiness high at little and we’re call nice some think was new work conversation very applications we that and Europe day rate good we markets. therefore and to stickier the Americas it’s in and utilization pricing for the step-up business running performance. move ducts as tell of and the the year but year, higher so years term where had business pricing, good about a you and we demand of solutions probably The said a investor a taking business. we bit to good

rates. in, I do think these that nice acquisitions with in come margin they we’re bringing

and to cases some than business. composites I better in overall similar margin rates the think be the of will slightly they

are that one is point has at company in helped important capital Another and lower overall. and that for that and as business, invested higher we’re we margins of drive at about to higher on we well that talked capital us our the as requirements, EBITDA that is looking return the the things composites they look key

things asked most touched that I’ve think you of the about. I on

very very, of the business pleased with and that performance are work the the the We composites team doing. is

Operator

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

Matthew Bouley

how thoughts taking now update on program know, you around longer that an a I’m it the half, your but increased, of several wanted prior question. past, you’ve thinking timing even the around phases second gas the question into just for Obviously the sort thank stays and of in where have over half, everyone, in of in months thought those second you’re margins the you. ask out Morning hedging Thank seems any it XXXX? it’s or the for follow-up sort and you cost like the I described natural is. just to about curious, to futures your gas. natural impacts your but on how

Ken Parks

that in is we inflation in the could aggregate costs of have things that I first which We an disclosures, quoted what the general to we overall energy X% tell full and the that couple think XXXX, look as energy one Europe, quarter of big sector place the points, the be COGS accounted can for very, a of corporation is coming half for of out number first saw X% and is in energy accelerating. almost Yes, in is on X% majority to in I and the about I primarily million Europe. quarter even of most what that you’ll a XXXX the already into saw overall. clearly see about X% saw energy probably XXXX, $XXX it of through of inflation year last of the and up inflation very that the we from step is we’re with hedges we’re the the seeing level, watching chunk we at our do time, so inflation, talked of about in in of and you we A even of number closely, of could so COGS, that

We’re certainly aware it. of

run hedges place. year. a we the We our in it inflation at now expectation similarly on pretty energy, running will healthy have in it’s do rate probably the move right and think through I as

a that. the doing then haven’t where of changed lesser really we and about we a We approach current quarter amount we step XX% to closer on to probably current follow XX% four those we of our then forward quarters, the to hedge and up basis as get to following a quarter, hedge range. the We at into XX% something path and rolling XX% top the

keeping there through. see bit You’ll in that cost. some it’s the move of around quarter, probably think continue a at on disclosures keep can out energy the hedges or a about around I million there’s our whether see disciplined it for kind place, the far first energy in and as we’ll us XX% those covered like that approach of XX% benefit costs the those in little think very around during have the you our XX-Q, We that and program, hedges, current offsetting while would and we quarter, quarter, come $XX called like the benefited that the that in as it look disciplined may I of

Operator

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

Kathryn Thompson

on the circle Hi, continuing questions thank just and picture, what in operations, composites your operations you composite I taking for today. your wanted back see shutdown has to impact my on thoughts a and peers of bigger exit Shanghai going China standpoint? leave--exit forward in and choosing from managing of your one light decision of to Thank on completely How about you business you. global this Russia domestic the do think China.

Ken Parks

well. say, it bit a continues softening, business. would are China--we of a very to call wouldn’t our from business level. I soft, in [Indiscernible] call little The in I seeing down China would our operate strong I it

to geopolitical relates watching it as closely it concerns. We are

doing We have anything decisions in different made term China. about no long

Asia grown expected to and so grow business the composites nicely nothing bit overall of we’ll concern doing has But very India between so order in softening in closely. China us. a is is really Our far, and little is nicely but good, rates going India, spread very and forward, of China and well, any Pacific watch for

Operator

question ahead, go Please from from Mike have JP a we Morgan. Mike. Rehaut Next

Mike Rehaut

is itself and Thanks Obviously mix say, good terms rapidly between information you the I any residential Thanks, is the points in market, acquisition, res-commercial about couple a again a although specifically detail my split, in the question. everyone. for little of if large on certain and just maybe positioning commercial. in a could already in market. on the growing very of I the somewhat curious was it and curious guess the around the there. advantage terms of geographic more with consolidated, or morning price space taking players WearDeck presence getting the I’m what market has

Brian Chambers

good the Thanks there. Mike, morning. Thanks for question

the business line company. our WearDeck and to the adding really about product We’re excited

the composites of fits this so product used knowledge distributors, in anything marine market. along We channel that, that used and technology, pull to think capital we decking certainly little benefit marine material terms make other docks, billion-plus this us, grow up use you specifically our addressable two-step decking great--it and I relative and primarily I out about, and product about, bit well margin in expand think terms strength, business capital more you that to versus material, we’ve just knowledge, strategically glass of an of a fall, capital up this really continue bit decking our so in commercial channel fiber little there. our think decking product, got it think our new business great into think we a more product. intensity, for like leverage leverages market - and that’s products growth. convert leverage the is It’s mechanism innovate to is southeast feel offerings. proposition into outlined like and this the applications fiber as expanding in great parks, contractors and product with I dock first, through the scaling think and North lot process, built in continue do business, construction and to is really which composition see The being leverages decking, with knowledge today, through about so really to glass used it about efficient primarily who something this material product is commercial reinforcing really in pivot, so they’ve with we EBITDA in knowledge roofing enterprise residential this a and as is and brings can and that as can drive that continued unique a know, adds supports that’s of categories. a value than durability, that think business fiber that decking we lower materials really our a that that’s and out asked this. really distribution, product to capital create the our model When opens - like $X science material us, this opportunity great product, sold do other we scaling distribution customer and as we WearDeck around it’s commercial this the think channel some about you very strategy what we strategically product that that a a particular the there gives of as up. really glass we the higher also and water, expanding, our we you service and stronger our into to expansion, a talked so Ken is particular our and of new knowledge in as very, It’s Ken efficient plan day some be channel to category the products talked high we applications that We the can expand through it because our in we we very it that last durable strength that some of product It great from us do great and I and that investor America. value, about efficient it about is so would a products in we would that Decking expertise, new a to the manufacturing science attracted and material sits inside at grow, our unique very start where want decking WearDeck I’d building space, well to invest

it opportunities product We’re line, forward. we to business the as and the to think growth gives of the going team excited company, the add part us great

Operator

a from Please Phil. ahead, go Ng question have from we Phil Jefferies. Next,

Phil Ng

volatility on good business guess but are whether the rates just back, guys, second differently of that pocket led hit extended and color it’s to you period, we half is Congrats this in putting X% to business. that Brian, are far how manage really better results. and your volatility. little and really businesses, both you up - us a your really certainly for up I resi I set saw in mortgage ’XX maybe that some strong equipped to year? your commercial Helpful guys results, going me, there perspective suspect strong morning. how any time kind some insulation last Then out, sold potentially for give certainly are Hey an air backlogs your range,

Brian Chambers

comments. the appreciate Phil, thanks Yes,

as trends our see continue profile, both and our demand indicated. demand of throughout insulation commercial you terms and backlogs side, the favorable in business technical residential, our we on First to really

see to to create term rising longer XXXX, certainly of we headlines, are but we trends in lot coming a impact housing talk been near lot who run to that’s both residential so we and particularly into for secular to side, continuing to and demand insulation millennial dominating the to seeing last rates, the see about about for of an the interest interest starts, we we’re think into trends the on of environment. of in continue and is tailwind a continue the in through, we We rates saw that’s continued foreseeable think European about so cohort going into There’s housing be lines, the we that, interest the to and on kind and the did that housing product market, cycles foreseeable our something When we need move that good technical really term. demand is into continue I going going going market good future, really future. time talked wanting demand extended U.S. guide housing continue rates those think a a in are that so volume both the and QX think that growth

is to if Nephi, automation, in invested productivity. two driving We’ve three more more scale that. capabilities focused start and with the so through a we that lot To to invested there’s completion terms variations making in lot starts, our place in in cost lagging, the we’ve Santa Then the are I’ve that the Clara we long network quite good manufacturing United really so adjust made point, that for continuously, rising We’ve of support place in when decade, but we’re about lot about and needs investments been our back with term cost kind high these States we year. facilities going we’ve last the to inside up improvements demand, see and which made so for of we’re tailwinds invest been of think fundamental We structural with to residential and renovation, cost-efficient rates will demand network we insulation pivots to If the to rates spaces a pandemic even even environment. still carry do with the down the near of years great we’re people going for flexible, think great go that there’s continue We’ve more cost and of flexible, that under-built in demand to remodeling, much that to last manufacturing these we’ve believe being believe see, kind U.S. of in this environment a the as any of placed of the done continue to slow, sale We that’s give market I in position this business result to continue are term, rate to we starting and we while, the living Eloy talked can on the increase later capacity, building growth housing create over a base. a a to create construction us flexible, also we for the good that we catch-up long us that forward. think in to going effective a tailwinds your has and housing of premium to a going a efficient more your to change, we point, out see term. secular in take talked think a to there’s on We’ve creating are think take new and base. that.

Operator

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

Susan Maklari

potential in change Can outlook, and underlying morning the to geopolitical is quarters? to or several that back you within anticipating to the everyone. that for as change macro you’ve Europe. good going your demand down any there you, events the the business Thank you’re you look in macro question given My or outlook talk next anything the seen

Ken Parks

near that demand we the you what Europe Sue, I we’re order stay has to that so book in I know, continues tell continue remains it. through you the based running can today, last and in watch been to strong, be term, remains But quarter we a that think Europe strong. way It closely some over be You to can tell strong. there upon it Ukraine, seeing several the sizeable we’re we ignoring and as or I Russia on well. discounting next think or to Certainly in have not and work quarters we’ll even and to it that attention we in and not to to do our between what’s so good over going through the Poland, has paying that seems strong several been date, business close tailwinds quarters, have everything

Operator

go Fargo. Raghavan next The Wells question from is Deepa Please from ahead.

Deepa Raghavan

of Thank that easing Also, there, very the update announced for housing Is pretty any just March, the Are Thanks on a much an morning. Can the outlook good the ask roofing. I’d in tight you allocations? fundamental from the on on rates? you price given the us X% industry give industry Hi, question still headwinds of seeing taking some question. sticking? to allocation? that you much. was how increase is

Brian Chambers

Yes, last I’ll with one. start thanks. Maybe the

overall drive are and in overall say with realization, getting In with back seeing what about and good demand, seeing remodeling terms here certainly and came on to wildcard construction real to We to an We roofing I for drive product, overall repair the in there. for remain still that was demand the been new mid-April think the is increases materialized year and demand We demand. realization. of so demand overall into storm for be year accounts previous as we I’d through demand, strong see business. remodeling, with new roofing going announced If strong strong. our good still we’ve and fundamental repair as the XX% reminder, the just continue the demand storm growth a the roofing consistent very very market, good the realization, expectation market demand, going step our that would we the how demand fundamentals the of was price construction for

quarter. strong, into is we XX market. shipments much market was the quarter the around very in square that’s as for what Historically, of first a think XX outlook million an I first million very set-up expected of well quarter in of indication that the with The line terms so distributors’ squares, coming

however overall but here a be to We’re and QX off continuing so watch coming well high that’s the to roofing to get a going that. that’s into demand. drivers strong tracking are the year a of watch half think market back guiding setting demand in for really storm down good some Storm the to historically QX, so and challenges below mid-single we year, that is demand date we year, continue average, to up we still year, could we’re digits create last demand in we’ll as strong

point, constrained other the terms to still in I customers. servicing your supply to thing, our of our we’re demand think

more get that manufacture work there. and to to hard continue material out We

parts know, just probably restocking. are restocking to up you more terms distributors I bit in of - a early on parts midwest, think progress that’s, west, what in terms that-where and region, inventory but regions their see of in the broadly of getting distributors starting to industry, positions we’re starting I the we’re little some of think, mountain the making see

that little choices forward, and variation manufacturers to demand product more distributors very brand-specific more we’re going again for think have year. going be I to to going might and probably cycles, demand, think get think variation, more regional another and purchasing we’re different product as think regional built, there making separation I there’s up, specific. more more little brand be inventories I set overall, and bit bit a and so I some forward, going good think, But service different rates I a because much capacity see very

a contractors, to so model stay we’re strong year. that’s season, we come the work good continues up our into and of backlog, as I a part contractor with Our going big to be to think our set for

Operator

David a Longbow question Research. from go have from David. Please ahead, we Next, MacGregor

David MacGregor

I clearly very composite you think price? what good everyone, now, on morning to composites, how percentage for Yes, strong ask but sensitive quarter. about right to and strong base OC of pricing and wanted a do sensitivity price sales demand, environment the and congratulations to about is

Ken Parks

contracts, or I’ll to There’s price, that comments of contract clauses sometimes sensitivity always period pricing. call kind maybe just term to Two-thirds we years, business there but kind be, term many so for can think near about some a inflation right, and into had the of couple it two potential pricing contract and which year, that tied gets be cases, will that repeat the set short built is the it’s that. pricing, of the of in period before, the is a

get pricing contract the the kind will business, So of that. sensitivity while work there’s we’ll two-thirds and for set with of

that’s spot about The significantly so outlook composites very and probably maybe term not of been bit there’s outlook would the the tell to that priced tied there seen products third the sensitivity We products the demand, levels leading at we the and the it of being very see not contracts, has with sticky. is well now a we is we We very strong. to been pricing before right the in near that spot having demand pretty we’ve see even business across that XXXX, be up but tied prices board in contract as for us. driven third the business are comfort the know, being more renegotiated more be by so and price us for strong has going probably downward contracts, the solid pricing, really some see that’s strong that going on into shift to that which anything don’t to see contracts to--you strong

Operator

Our from comes ahead, John Lovallo John. go UBS. next from question Please

John Lovallo

outlook thinking Maybe of of the currently, billion investor questions. you’re way my that was business taking XXXX, be over next day organic acquisitions, combination which by change the for you going revenue the about and thank just to your for two? your year a considering about thinking guys, strength acquisitions does organic morning $XX or in Good

Brian Chambers

Thanks John. our changes know acquisitions. don’t view I it of if

business, our more create additional material can enterprise acquisitions us, where capital We continue opportunities growth we that resilient channel grow the opportunity so that for same we and our of kind grow at to acquisition terms want at stay the for revenues utilize our to to create the earnings, our to would support that and knowledge, outlined manufacturing the strategy, scale in lower investor acquisitions. look day for the our I knowledge pace outlook science, through desire of think intensity,

wouldn’t I think what innovation we I to think so point, our acquisitions. we’re tied a to rate organic growth your for is that to outlook more much investing are in, seeing accelerated it pricing, tied of change the

in for it I think the company. acquisitions. us $XX we just target layer tailwinds then think forward to continue creative and to more as we to few probably organically these could us as gives that revenue continue We potentially go grow it years pull grow the forward next over billion value

Operator

Dahl Mike ahead. from is go from RBC. next The Please question

Mike Dahl

thanks taking question. Hi, my for

conversion, we the should can more thinking any impacts ramp-up capex be, that any through characteristics Just the you’re bit repurposing, the what around or that about be needs, you ducts what will operational about the a timing little talk year? two that other facilities entails,

Ken Parks

conversion a already U.S. in have melting. some would The they’re that it one you therefore be will tell two conversion. be it the Mike. but way in the not step-up, quick capex. significant I take thanks one a be will It in of much Asia, already capital, Yes, and of that will and furnaces, those facilities, should relatively the the nothing They

that already be of fairly so facility is going the the it’s of rest that of provided that would risk a to there. the it, the the facility minimal fact, that making shift conversion. as into facility, think we’ve additions a have and very outlook it’s good of not this the already ground the have In the you minimal on we for going we U.S. and see the in year. already believe impacts is to operational some part will to to It’s lot because to, for we knowledge Overall, capital built capital all we products

Operator

go is The Citigroup. next Please from from ahead. Pettinari question Anthony

Asher Sohnen

business decking business think composites dynamics business that the driven the term, term if near see the how products HDPE In to over Anthony. of for my should M&A Hi, being for this and should are near deflationary you mix a that price given prices elevated targeted about trajectory as on about pricing taking environment in for is building do shift just present, then by itself, quite on maybe cost Thanks we Asher largely Sohnen how WearDeck question. think that your at of within mostly the light or materializes? organic? we acquisition, the the Then

Ken Parks

will me Let out well. start in and probably jump then Brian as

keep not the activity in the organic is in line. the from side construction the come the going to It’s product come acquisition the the as that product our upward innovation, is shift it’s that of business it as away really through facilitate shift shift which M&A value to ducts talked The industry. we’ve I shift duct On higher that applications, of primarily itself WearDeck the both business things. couple the building so our shifting the to ducts also of spaces that does in the of think line and well supports, portfolio, to the from moves equation automotive exits about going but mind would the going through M&A the to as the both some growth, trying infrastructure, shift in a is business or because to organic, call about also renewables through

Brian Chambers

building infrastructure. know, XX% construction, kind shift composites more, our that business, I areas so the we to when of guess construction, XX% shift about I about renewable would about infrastructure, big currently the about and XX% building and said we renewable were three going those roughly we and sustainable Yes, in add was talked in about to of about--you in that energy, XX% continue invest was

strategy acquisition we into our fits building into where mix a knowledge, more well we that channel think construction The continues this. certainly and so expertise think shift like really growth lot applications, I there. got and we’ve WearDeck it of and

Amber Wohlfarth

we Katie, probably have time for last question. one

Operator

final go Thank Please Adam. you, Adam so Baumgarten Zelman. ahead, our from we take question from

Marius Morar

taking Adam. you for Marius this Hi, for question. Thank my

going plans take do Just If curious current to space? push WearDeck, about term distribution market. your when playing XX the residential let’s you. term to back just Thank a how to product using that view, into I’m now, years relationships longer your large longer we you the it yourself try in see role say a from comes to

Brian Chambers

of well this I expand manufacturing up of capital utilize to we relationships and try grow. then We that category very third of it channel knowledge, going as very then see in scale-up. We the how distribution, to and and we is expand customer to is way knowledge, do positioned a that, scale as and up, customers our distribution Part is opportunities to think goal the help and our and be expand so be an I too the we’re I continue to we see leveraging as think but a of to important business significant little to customer the again networks efficient part for part then manufacturing, how growth kind forward, which a of innovation, us, terms putting think really longer start to In think we go we the longer term revenue could sizeable kind capabilities, of margin we before base. term early believe we good it’s so get a application. scale our very product, product around targets and is it the part the of that the it great part customer

Operator

call the Chambers to hand over closing now for Brian back I any remarks.

Brian Chambers

families our to July I for during then, certainly you Okay, Thanks. your Owens with Until We today well forward second time remain in speaking questions. interest thanks and and everyone in again your quarter call. Corning look your you and healthy hope and appreciate safe. your again

Operator

lines. your today’s all for now for call. disconnect This Thank Please concludes joining. you

Owens Corning (OC) 27 Apr 222022 Q1 Earnings call transcript