OC - Earnings call transcript Q2 2022

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Operator

Hello, everyone, and welcome to the Owens Corning Second Quarter 2022 Earnings Call. My name is Daisy, and I'll be coordinating today's call. [Operator Instructions] I would now like to hand over to your host, Amber Wohlfarth, to begin.

So Amber, please go ahead.

Amber Wohlfarth

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

Chief Brian Financial Chief Corning's Joining Parks, Officer. Chambers, today and Ken are Chair us 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 second release we to In many call detailed XXXX. quarter yourselves for

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

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

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

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

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

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

Brian Chambers

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

outlook come second of our view strengthen and and power trends. business quarter of earnings about results strategic ability team expand conditions. the in making several all markets, then quarter back our this continue our During details is our performance addressable provide talk will for to on results, strong to on third financial high-level and the supporting delivering diverse market I'll our to Ken our growth progress and broader I'll morning, our call accelerate the a company, provide our investments

call. that we during shared our in April I'll quarter the turn Now another to you our results, where line with we quarter, second delivered outstanding with expectations

of begin performance. our we'll safety a always, As with review

to second have billion, focus XX% quarter above in record remain daily we injury-free $XXX result delivered X.XX. XXXX; recordable second quarter. of worked adjusted an priority $XXX XX% incident X/X injury-free was In must This of our As the sites on adjusted adjusted was XX margin order our of reminds our EBIT over top Year-to-date, company. X/X injury-free our of of year-over-year; This increase XX% you an for a workplace. facilities of safety XX% the a the Financially, for achieve rate and EBITDA a EBIT our have past quarter quarter, margin know, the up safety XXXX of adjusted global the quarter in approximately million, we $X.X EBITDA of second million. months. of is us over and revenue second resulted and performance and

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

global our and inflation. our continue X transportation each financial Positive in to energy, price incredibly disruptions, businesses. material inflation quarter, realization strong and customers ongoing service execute high supply of of our the well chain the During impacts teams despite results to COVID regional quarter offset raw once deliver again and in

As in recently leverage growth or optimize generate science expertise earnings capabilities. growth-oriented expanding our stronger driven support across by manufacturing Corning positions shared experienced. strategy higher The build future. are a share market for making, core mission elevated and great our a us we and Owens to accelerate Owens resilient our company's exceptional networks, market the now that execution and we to at we our results our material to sustainable also even as into innovation. future new the Investor through and if term, strategy earnings our our from This investments products levels to strong shift increased the and outperform applications and delivering knowledge, are and strengthening focused, investing with establishes to directly November, build actions near continue the manufacturing market foundation our by several updates continue I'll company the potential. conditions highly we've performance teams, from Last businesses Corning taking Day, we progress that material

venture quarter, This the our acquisition offering completed applications. and science an North expand and $XX our accelerate coming more The residential including a Fiberglas improve In PINKBAR+ access rebar years we product commercial Composites, joint Composites. a knowledge market, flatwork market nonwoven our building for million, that the $X for Pultron manufacturing material we an to the Pultron expect producer up over a producer decking high-value current agreement annual potential rebar of our the opportunity in with acquire this to conversion XX% our new product second approximately we sustainable, industry-leading produces with makes used fiberglass a revenues fast-growing expands venture July, see our leverage market space third June, Continuing with With WearDeck, interest premium will of of category. in see we for of composite into billion capability close to significantly with rebar. product solution. less entered American fiberglass to acquisition and the a the we new quarter. joint And in solution. applications. and joint this weather-resistant Rebar fiber announced we into the mat in existing that venture grow During of the to products, durable material X% high-value in than based remaining Today, and fiberglass residential glass U.S. in

Chambéry, portion sale our X, located the which July France. these composites on includes to of the completed line, investments, assets European we addition in manufacturing our strand dry-use of In product chopped

a that spray for building make Switching foam Our with products construction, the renewable building and higher-value, seen into continued capital will other in attractive polyurethane we a spray to an over advancements applications double-digit applications. combination technology, Polymers several sustainable knowledge, of manufacturer long-term, more our years, our us Composites construction solutions. our next more much Insulation. innovative featuring foam glass to to to and leverage solution. pivot construction in Natural growth X the signed sales about which of The energy moves annual agreement fiber In needed on to technology. focused DUCS Polymers $XXX glass an the material customers in offering, insulation of of significant these capital-efficient science acquire product support infrastructure, with applications. June, being other in minimal material building repurposed all broader insulation In with to Natural million and Natural enable recent Polymers, core are investment with growth facilities and expects we've produce deliver years. industry manufacturing our Each fiber provide support

to to close transaction shared, previously in quarter. expect this the exit third as forward And the moving We are market. also Russian we

to While as complete invest leadership. is environment transfer or are through transactions, to we expanding our strategic complement facilities. product continue as to and sustainability options moves, process the our these through sell growth innovation organic in To we the accelerating also working well our such complex

refreshed particular or in the than leading energy. year, in Insulation the the on During global our many span in half products These our launch our market platforms products position more note second new the products businesses. the company of Composites and XX across wind launched was supporting of businesses. X focused Of quarter core Roofing, of the first

transform solutions and functionality demonstration product and a growth. into lines insights in refreshed progress continued ability developing our is new customer Our of business to that new promote

performance Corporate our I'd Before the for in May, spot I more we front. on row. the companies. earn Best like and This of achievements U.S. to to walk outstanding through turn among demonstrate recognizes making a performance in year were XXX brief commitment top on share financial the sustainability detail, is governance transparency honored XX,XXX update Ken over list an fourth to to ESG. it that the largest In of a ranking impact the Citizens employees to This an traded and in environmental, one social several recent publicly unprecedented our

the our thrive. that Ken inspires products, aim goals performance While toward initiatives, communities results the to is team to I to impacts turn we now discuss increase more reinforces our and we it. over of detail. and it the to impacts employees reduce of it activities, positive of do the do our And help of and in way will the our and work view financial strategic operations negative continue our it recognition the our Ken? our With of never our importance

Kenneth Parks

everyone. good Thanks, and morning, Brian,

strong As Brian record quarter with growth another and across revenue earnings commented, enterprise. delivered the we

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

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

adjusting of $X of totaled metals. recognized million on quarter, million. the approximately precious items the We $XX sale For gains

DUCS charge also product of our million $XX associated sale the We with of a European the line. recognized portion

of million our In announced charges $XX actions. addition, we associated recorded restructuring already with

announced $X the we of Finally, acquisitions related in million to costs recorded quarter.

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

replenish discipline inventory of working capital, management Turning operating Earnings QX during capital investments, to around for cash discuss along remain and additions resulted and and Slide Capital our strong of the second prioritizing million return innovations. continued XXXX. X% as low with drive free productivity beginning for quarter or we expansion, levels. $XXX to while expenses flow up cash of $XXX capital and X. the while our generation deployment with XXXX I'll on continue quarter focused million investments of $XX in historically growth shared process Consistent productivity. at intensity through to we spending were we capital Day, reducing that we million Investor what more from revenue, capital normal

million months the As end, consisting June the XX% of billion our of our growth, and quarter return At reached $XXX approximately XX on XXXX. a continued liquidity to of and nearly $X.X bank availability had and earnings cash combined on our debt this expand for company result facilities. ending billion, of XX, capital $X.X of

on shareholders During cash the the XXXX, repurchased balance $XXX for over share shares to at XXXX million. business We returning changes of dividend executing maintaining in to of $XX dividends, generating remain returned quarter, XX% $XX returned shareholders and sheet we flow, and X million by million quarter bringing common the and cash consistently investors stock second from time Slide while year-to-date second our cash paid of quarter company. a strong we million to repurchases grow our focused total least to free the XXXX strategies business. million. through $XXX X to to an investment-grade adjusted EBIT In summarizes

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

insulation on Slide record provide performance to continued Insulation business in the resulted quarter of second North on of increase In strong of I'll and X. technical delivering for positive results strong the over XX% products. global details QX QX, from American insulation, Now growth. businesses. more fiberglass growth turning to build our specified volume modest residential the a each revenues The $XXX quarter. demand the were second momentum highly remains million, with pricing XXXX.

an However, inflation. in from was continued saw to accelerating positive offset slightly the overall insulation. we in impact the for global lower and quarter COVID and Pricing China technical volumes contributing to restrictions

second increase currency also $XX The a EBIT primarily up accelerating as positive quarter. We EBIT headwind XXXX. from the larger the inflation. to energy, offsetting million, compared resulted in became transportation mix, product and was positive price while million than $XXX material more for recognized quarter

quarter. Insulation our from of delivered solid benefited in second favorable manufacturing and XX% we the execution Additionally, margins EBIT mix operations. in

continue by of volume perspective, to in COVID business to another prior line a realization quarter the quarterly for review performance. China for the mix. price in compared down quarter strong addition XX% energy, the Sales XX The the more volume impact up to The year, from turn the for anticipated our decline. the than asphalt by overall partially quarter. U.S. XX% lower material contributing Roofing from the period and XX% million, resulting for prior $X We we in slightly trailing pricing offset on for of transportation compared shingle price the margins restrictions were compared with Slide market positive modestly as face price were from volume mid-single-digit the a of year. benefited EBIT the our realization delivered inflation. Composites performance a favorable million U.S. business and offsetting saw $XX the was $XXX same bottom in year-over-year. with prior an The with quarter line business was X% ongoing EBIT up commercial XX top impact quarter. driven market. as XX% basis another to we QX Composites and growth billion, of year business. year please delivered volumes ago, and strong shingle the $XXX inflation contract growth into also overview the quarter provides positive Slide million, favorable favorable was quarter delivered as Composites of delivered Composites From up Now spot accelerating EBIT top to a mix. the business. record to the from volumes to an in Sales our Roofing The

along from EBIT year XX%. than was and EBIT with million at costs. the asphalt, quarter, demand, accelerating strong more continued prior offsetting market $XX we to margins from the the material $XXX service remained as up For delivery pricing million, strong inflation positive other

corporate partially our expected expense million XX. cost an strong results, $XXX higher This prior financial $XXX ongoing around to our for range to expenses discuss to from Interest is due estimated million offset controls. discipline items. Slide key now reflects million. performance-based our and outlook outlook are between driven increase $XXX is Turning General be I'll XXXX million. compensation to and by and $XXX between

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

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

to Now the call Brian? XX, discuss I'll please Slide and Brian outlook. turn to the further return to

Brian Chambers

Ken. Thank you,

global our strategic to Our and focused business our teams total positions investments market-leading addressable enhancing our making drive customers, forward, expand markets. our servicing on to continue

demand continued As global face markets, to our anticipate construction most in we residential geographies third in interest well on to good maintain in businesses in the conditions through QX markets Based we we our each even we of to and of expect of this inflation, our realize high positive as applications move our to benefits we U.S. rising remain across the our costs most key in all In of announced quarter, inflation Even positive current and commercial inflation significantly the as solutions. expect end of also rates. businesses. trends, as actions. for our with from pricing impact we price/cost anticipate continue

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

Now consistent with I'll Insulation. a for provide quarter, third business-specific starting the more outlook calls, detailed prior with

anticipate be facility QX. We Eloy high of modest to North similar up our by our continued efforts. by a the offset year, volumes to should year, to American supported headwinds, versus appreciation by teens ongoing which our mid- versus continued combination currency impact In start-up expect volume fiberglass of the slightly we and growth, be grow revenue of residential business, and productivity prior partially prior price to driven

of volumes expect to flat to of a In realization be businesses, to global as technical in what experienced quarter. QX. stable. We expect would second sales we products price similar to demand remain and realization we the what percent in our remains global experienced we our applications versus percent similar building and as expect We insulation price a prior sales as for year and relatively construction

inflation, what increase of material second realization the will in we terms experienced In we the expect quarter overall energy result to and in positive costs that price/cost quarter. price in and from anticipate

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

slightly Moving restrictions In volume the digits continued partially increase year-over-year to by business we as the our DUCS as saw the with that the from by what QX China on of double will started of to entered XXXX. of of composites price well increases year-over-year, the a anniversary currency versus we continued impact we revenue some driven COVID comp in third Composites. we We steady offset sale lower remain headwinds. some quarter, anticipate pricing impact primarily continuing realization, as in low expect spot Europe, begin as in into second the half to pricing

growth While to growth we our prior anticipate to demand we quarter. in ARMA replenishment of anticipate headwind, line to anticipate believe opportunities. market. solid expect the by inventory quarter EBIT driven repair we positioned deliver relatively volumes would high teens are market we a inflation And be year, the the strong a and for with shingle prior We ongoing regional earnings positive to in realize price/cost margins. flat and to Roofing, continue track quarter to remodel in revenue high-teen Overall, with largely the year with versus we shipments in

Overall, XXs view our few realization a price/cost in of earnings EBIT costs other I'll our expect August. growth remain to items. the low that a we close enterprise continuing From in increase. asphalt of headwind including another increase inflation with prior quarter year versus with businesses, As positive perspective, Roofing. and anticipate With upcoming we quarter, transportation a our we from with deliver meaningful expect for businesses, effective to margins to in

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

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

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

and we also our enterprise grow development, product offerings. strategy excited our support our product are expanding through the market, invest help and and construction we to and We organic shareholders. market the deliver our system in making are for growth our through innovation and investments building continuing of customers our in about company to to value are process win Overall, grow in

and With up through delivering it success. for for the positioning second As we I will questions. Amber focused back strong on remain will the half we company results to move to Amber? now of call year, the open turn that, the financial long-term

Amber Wohlfarth

Brian. Thank you,

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

Operator

first from [Operator Our Kim Evercore. Instructions] Stephen question from is

Stephen Kim

questions, all stick great the got bunch Really but of Thanks for to information. a results. I've I'll one.

business, historical late as period. to your discounting, But quickly time levels. [advent] again, kind the it the [margins] On roughly well assume in [high,] following And that GFC. and housing this in where years. got one to was winter 'XX and Roofing collapsed there form the was And still other of was the you've from as of your were continued happened, going caused just economy margins which market that recovering the isn't it the happen I when

a talk year. level how as more course would it years, that there today, of you seems So you knowing but Roofing I'm to far this that few you fundamentally this also also your abrupt. like we activity you that the drop, perhaps descent there's is if And the dynamics think that so why about could in the better, about normalized margins gradual over wondering back storm it's something opposed time, next if look faring could the and affect uncertainty about a might out when to recognizing see at talk

Brian Chambers

Great. Thanks, Stephen.

little was around a kind it progresses how and margins out I of activity. bit, that but all cutting storm Roofing think were You and

Roofing margins. me So let about talk

in terms how that recollections of and out. right You're played the

think demand, period. the in I of to couple now a and Inside there's one, is what we've we're seen I step-up think that our things years. one different: last over inside that market, operations I inside and couple of roofing the are time then a that seeing of the think, relative market;

shift coming that roofs. really we margins kind were out -- were a of 'XX, coming they those secular the life where more technology, that of So laminate installations of collapsed cycle saw into a extending

that replacement on kind new and seeing other a market We're of we higher that shift. in low cycle. period, were So the relative to demand side of to that shift

So seen steady pretty we've a cycle. now replacement

I bodes of terms demand forward. well we think So that higher in as roofing go

built are We a all you emerging a a into the early and also XXXXs replacement really the market the when the homes we that. think cycle, several repair that because to coming on pretty up over replacement some are that's good where see opportunities of market. next at period on you go We XX-year back look in drive years, going in coming good

I demand think see asphalt few years. And historically, over maintain trends costs. we to strong -- relative to market the good, we've price then of So seen dynamic, a from continuing we ability next good kind

shingles, are with asphalt options, most a relative asphalt cost-effective up elevated homeowners choose. still the cost, we've stepped to though roofing to more still even So for other shingle solution

by we little point there's than to higher demand good continues replacement are bit even sitting fundamental cycles, roofing drivers being driven the be economical think at a we So and opportunity going price an choice today. of

market. in that's the So

in For we've structurally, us, our made changes operations.

also getting throughput. which our our better that of efficient over business, we've conversion of also, our our a more over to margin And expanded better. we've become our much is We're components part in conversion now produce bigger a decades, the efficient I earnings shingle and last greatly more performance. think revenue, costs and bigger of part a time, So are

were our also So through margin for time but options give internally, to we're more not feel we that only performance, performance, through components our like us better good we at structured business. shingle than

So a I of we number we particularly last about the that quarter second that a of that Midwest trailing stepped we're quarter, came the Through the in the for was country see next Relative we demand, kind as parts as the few talked did call, second of of up the and fair card to up I storms second wild other very bit into the smaller storm demand. half. of demand, set well and years. kind think storm go in a through

So kind the country the lot but say of slightly like are that still smaller category, another very certain storm storm hail we've level Mountain of that pick in storm seen we Rocky a There are we've major pick broadly, are activity of up. regions, I'd not the trailing demand probably seen season. that regions really kind storms seeing up. light of But

we're to quarter. think coming now I QX another big in storm

we creating think storm how getting be to I'd next volumes, environment and few going it's and think I 'XX that's about kind But as on right gotten So QX the better it's dependent now, evolves a us. season good months. of better, over the demand say for

Kenneth Parks

about of question look in new said, between the all is completions and housing And did been have certainly gradual it. what starts the might move. other bit the thing very is a move we were like month tracking. that what's kind going But if almost what watch the as that think that new how change kind the we rest completions view of little over to we've through completions, as this next -- where of like We -- gap may your let around meet of of new of quarters, the I -- change. it while new starts and piece is of descent, housing housing to housing me piece just few and watches term, and housing this the bit also that isn't months, if kind been that how watching landing single-family few market, industry the were. use may happen Brian obviously, still those my see you have can add one of But of little drives does to right, provide I a the homes, varying the that the just one thing because to everything starts, coverage saw we And soft I closely we housing market market think a happen, especially a agree of the largest a housing but next starts kind while know with for

Operator

is question next from from Bouley Barclays. Our Matthew

Matthew Bouley

I have sort of an all-around question on Composites.

Looking going demand there of million think the to could guess your sort overall question pricing continued, And step-up were of inflation maybe hedges $XX be need particularly the energy the the with in quarter. the what in it a I might sort gas are if sort given Europe. maintaining is I on speak on natural what's the to you you'll through in XX-Q, then here? a benefit costs energy like we of environment, that would what here, thoughts guess, offset looked

Kenneth Parks

out and look because to very be whether to for that has Europe we're production demand what not in for the apply as continue across COVID we desire only environment local competitive are in to some called Yes. China do we're continues And continuing is Thanks, closer seeing little was to be they be where rest local it bit -- a on the cost in comments hedge business blip number, the start I while that we were see $XX movement The as the the last but We returns the or we about to of second But couple talk saw the may for is a especially is a $XX The Matt. as a activity inflation we certainly on talked pretty benefit. number bit million COVID China solutions bit demand continuing ground, see natural and a somewhere our the you that Composites think in we a where restrictions, for consistently Q the our significant to water but we our Transportation, business. of both and see bit providing Great and benefit, is lifted, across Composites is it's they a the about were hedges did natural the little the little actual in at be a our we Insulation probably business. quarters half and Composites needs gas normal $XX in million between our strong certainly world did think question. I've the driving million Europe the itself. it. which quarter the place. that restrictions a And demand. strategy we impact that to think and little first of gas a scenario of that of of in more

with sticky and keep So especially last what to the Europe WearDeck, inflation that inflation the see continue continue we're also to are in but And to will our we year us out contract are them. but while call now, other as we think Europe. -- pricing that portfolio anticipating we're components. that would some we're pricing well into the energy pricing, to as did spot sense where we with as pieces actions cost we our the strong. for did pricing value stick But the solutions seeing especially getting look fiberglass think that and seeing a add that step positive like like do up, ratio. that inflation we to the energy rebar, solutions those as in contracted providing little negotiated they think right remains coming sufficient be, just not the like a customers new pricing we negotiations we We We is that think what quarter in are that both in XXXX we

a to do continue might we spread a spread in that pricing/cost narrow So business. bit, positive but the little see

Operator

next from is Phil Ng Our Jefferies. question from

Philip Ng

and really a performance execution. Congrats really good on strong

I and shapes with the how market, housing of to a a up more months, it's macro U.S. next backdrop. of to it, market you kind alluded be terms guys choppy lookout few affordability going in think

So I'm little if things just how in bit, curious, Have what's the any you much do noticeable perhaps going visibility down slow seen have? managing your change game a a business plan And differently forward? patterns? in order do you

Brian Chambers

see strong. we kind say these question horizon, the products Thanks of on our for clouds Yes, to the as comments. and demand -- said, for our you, I'd remains but the you

in volumes, bit a here volume growth insulation up here res particularly to was We business, some Our our guided in QX. in modest little QX.

to are big to see think, starts going you having said So quarters. our the the said, products reset pretty between the in But of delta business occur completions, near in We're tailwinds at Ken that look been housing have environment. demand just in here drive as several But that, term. for that's seeing Certainly, to that we in our the market believe and good a interest us. last continue front continue we is that see, when good rate as I -- higher supporting the do we near term. to alluded delta to this to, you

of months. think work there's a through several next So backlog the we over to quite bit

underbuilt then think, demographics need longer While the about talked still little the tailwinds to demand we into continued there's as be drive as going quarters construction And I going And go to we I going for several for demand new the see think market call, has to housing driven to just strong that years on that get this U.S. 'XX housing. resets, the for we for a good in strong more as drive very we've term, and been the forward. our last continue products. so that's by requirements are many and, that

to interest consumers it rates, we of does X% to big and range. that now they're a in I bounds. out that not we're think even So reset reset But create shift that's as higher go through. a reset still going Historically, in

new going some for forward. to going that while for strong near-term think and construction, fundamentals term, for demand I I very see the our the believe we're remain long choppiness, supports certainly So products good need

structural talk business making across years, the see when last do and Insulation manufacturing optimizing our In on to Insulation as the changes slowdown been our you several network. we been as we've in come, slowdown, think think I a really we if focused about when a company. focusing really for and well on I improvements have particular, So in

ago Clara our with and up forward of we up going started of our exit the smaller, move sale in facility. flexible which our -- plans Eloy We're Santa are facility that there. terms a in to be outlined year continue Nephi, about our assets. to more investing We starting facility, facility We're very we capital-intensive large

we operational the business. slowdown to that changes productivity, good in these Insulation cost are driven time be comes, the going very we think through seen we a declines that improvements would So we've volume network in able have margins through when automation, stronger last some that really produce than if and think to we through and good results

see of think, this for And just have quarters, terms how I great So think teams next that how preparing the I feel few we'll spot. a day. been -- over the doing good in emerges work, market we but in the we're

Operator

from is Thompson question Research next from Kathryn Thompson Group. Our

Kathryn Thompson

I wanted focus Composites particular. on segment in the to

business greater clarification both different forward. a understanding a performance more mix volume U.S. whether comments which markets. your just outlook going for clarification understandable, that and a and and pricing quarter that greater mix But end was differentiation with market. for outlook is helpful just the for what driver are and European in volumes, very is little your and a on greater that guidance of is some terms First, get in business, in those your had the bit it China you color what lower means And on or on

Kenneth Parks

larger Yes. than pricing impact Thanks, the quarter, Kathryn. was mix. a definitely In

And actually extent, -- And across our moving of was in impact. bit and quarter-over-quarter, favorable, bigger approach -- anticipated that we up did impact over but holding to we that period to little an price to moved was seen. globe, into it about of that we're negotiated difference the a that's saw in driven most spot would and of solutions But nice is adjusting but And that. some be not And the down calls, still customers. the only strong my those and had accelerating of a that a next value it be of demand and kind between the positive that into step seen good a relatively parts wasn't that mix apart that, start but in take also providing talked to improvement price able fact favorable have we to by incremental as positive bit that less We we'll impact little provide and contractual improvement we certainly quarter, next pricing. we costs as of year, as this because in the we good we move realization see comments. a and the the pricing the further in the mix X the last stream kind through quarters products the we are see

quarter. So good those the combination the X provide benefit of in a

and for U.S. Europe, as say remains U.S. of Now I volumes outlooks kind strong. would far the across very as very,

tell $XXX step question quarter, products, strong, work for different of it heavily are building that and very as little in even very saw very, a as probably attribute very a well. our of China, Europe, the COVID But that products just our we how had demand We you a we accounts the through strong composites mix Our China. Composites is yes, million bit down construction that composites In you I business. on-the-ground The of see remain look million, about India specifically China space. European business. seeing impacted market. lower second bit. China within is the and a demand the for of But total would strong for volumes also we very $XXX And do kind a restrictions little revenue. year to remain products that's

through on third about we of and value solutions, moving continuing good think feel that in with that expect demand quarter. the to we So what's seeing are at on our the the higher-value focus We products this we down chain good continue business. for going least further because

we right locations. as it update all look things to But continue now, we'll solid within change. see books order those the So

Operator

question is from next John Lovallo Our UBS. from

John Lovallo

signs there Are least heard on any seeing that It's others might stabilization. you on continued front? be that there. the from chain, mentioned or stabilization encouragement of gives challenges at supply some that We've you you anything

Brian Chambers

Thanks, Yes. John.

we getting continue by better overall, but I'd little supply think a say they're and of to impacted -- our disruptions in I chain. many parts be

improvements in see our to I'd we're in of to tell So you having terms year overcome would to are we to I But think start again, minor impact have disruption. the the some continues I the we products. to we progression operations that it our inputs -- that many today, make just from starting of to as we say, yes, where were where the

and work teams times. say the high tremendous but having we the in guess shipments shorter are it, duration, and continue just still, the disruptions Most done lead I'd of still tremendous of they're operation the our and of overcome make that for very on to products. our other areas terms supply our work getting of little to having have do issues. to over minimizing I customers I'd teams, to of a because demand year we've talked last I think as chain -- So piece And manufacturing, have say our say getting they're about, better, operations, our on impact on our our minimizing seamless product impact still extended kind in the our I'd

term. us here that something is manage to to the is manage the by have that that So to have teams tremendous. But we're we and, through through the in think, still front overcome the it been here to work has in going of quarter in near we

Operator

question from Citi. from Pettinari Anthony next is Our

Asher Sohnen

unlock Anthony. Asher with on talk for Polymers compare fiberglass about more little rationale on the to insulation spray How foam acquired synergies business? Natural acquisition? And your bit the of you to do fiberglass what behind strategic insulation? maybe margins Sohnen foam existing business the there just a spray This is Can are kind

Brian Chambers

Natural question. great addition our Great. the be business, we a of Thanks for to company Insulation reasons. Polymers, our going think, to is a to number really for

it really strategy. with First, enterprise aligns our

and good focused us fits company. new and intensity capital potential, margin really new the than into puts at Insulation strategy growth some other in lower business parts applications This businesses much core then in solution in and when great category, a It talk well on construction. strategy. inside expanding our our our of a So about and enterprise product our enhancing of building we product performance

it think well capital and our I So supports growth, margins lower stable efficiency. and focus on higher really enterprise

This our that offering. been evaluating it product strengthens long I a product we've is think category business for Insulation a time.

this. into Our us get to wanted have customers

really their insulation customers, they we And to so similar broaden of up sale our to today. the our through we're can similar the distribution us to operating offering there. so customers -- think needs, this we really complement fit product well goes whatever customers' solution of sets need channels And that and this, and does how now fit they

it believe we as great and up. category So now we there's can scale synergy take product this

has felt, low attracted we are up. this really to Third, unique a They scale think just to product I'd in was and health but say application very tremendous and this, their grow and have been product formulations and benefits business. about, give us safety a about a very address had and guidelines we the the at this VOCs. unique health we've time. that, opportunity us, this what look category. concerns us Natural very that I formulations safety Polymers, formulation with for performance talked that product in diligently have I think and issues company, advancements and we've around standards the We category They been And been there's as application from insulation great evaluating product concerns did a long

add the very continue we margins grow an portfolio, and this and think product a the Insulation business our excited and to we're line it So gives us to opportunity with to is to offering and product unique expand it.

Operator

Maklari Susan from from is next question Our Sachs. Goldman

Susan Maklari

of M&A uncertainty allocation further near-term perhaps the nature? can things how thinking about around come just talk and returns, about a up housing, think those that buybacks, bit shareholder about deals may capital we you're As relative to you

Brian Chambers

Thanks, Sue. Yes.

sheet. cash our been this. on allocation on when and flow, focused -- allocation we've changes great about strategy, we very don't our see we've investment-grade We're broad any very, think capital capital purposeful And an We're terms, think, talked that. in current in think and focused strategy. diligent in I balance we I free I generating

look and continue said allocation, going that investments then capital to then returning we XX% share And going over we in are But investing organic do we we through through we to continue flow want growth, in through capital free organic to say and on November, step at the were cash back through continue we We enterprise make shareholders the But that to be time we and going growth would also on our of in acquisitions. to to organic to last focus invest focus business repurchases. acquisitions. growth that. I'd dividends we and about through that investments CapEx when were to include to innovation, and strategy through outlined

be and these in I very at the make are pay. acquisitions market want look So price in expansion. we're We sure uniqueness of or and terms to we thoughtful with bring And that product we looking -- points diligent we we acquisitions. at think technology very think to terms that the that multiples purposeful be doing want of to

bad balance of companies that. balance So to strong invest pipeline. good building making would around a But going of that going do long-term one because -- want and we we're good we when to very thing incredibly look continue sheet. we the we things we're thoughtful that you, make sheet with sure we're pricing very focused going to great times an be sheet, share probably the And use is evaluate and to very we the I is so balance on performance a the last are The the at have investments. sure want company, to in to strong decisions, we've times that and strengthening make to those been I'd that are make we say to very

So be to growth while to invest market, do longer to going to feel we we the continue that term, near-term in that. to in the want we we're on want a will company, depending like and to make adjustments the position of

Operator

question Our is Rehaut Michael from from next JPMorgan.

Michael Rehaut

approach, to different was patterns. a the you of what for volumes terms around you comments obviously, wanted demand a And inventory I business Europe. circle also in on are maybe if in U.S. at the inventory of relates just on And a curious risk guidance levels across the the I kind if the few temporary little of in do to and review third extent could around that and reflecting that of customers topic least impact basis. is markets, begin But where bit make segment more the businesses, X gave as clear cautious addition patterns you of expect to softer maybe back the type and your a by quarter. inventory end of to to composites, it order there in any might take particularly some

Kenneth Parks

third start, thanks, in fact cash little to it. nowhere the if want generation across we in over little thin of is a expecting quarter. working started -- very comments years, first collectively level, on the we building And little true really demand you we've second couple place in inventory about itself. I inventory we're levels that between a end, across we pockets We're own and that bit, to of actually has of a $XXX million much which has tell our would movement the And I with board, But bit where But that is distribution levels. inventory. where quarter think have inventory quarter we the added believe were ourselves of channel bit bit. about the in last the added we and the built second probably also Mike, of that. around in inventory not to and tell Brian concerned peaked Maybe we And all but the again and good have inventory I'll start a been top are in be highest little quarter, jump what businesses. would we've the on maybe demand a may sitting up rebuild I'm on-hand What and sure the and X would that heard at you distribution -- I level, patterns this not kind change to in you channel a

focused levels through be demand they In from all the having more these where base as and continuing bit really our on opportunity the stable to against on inventory to balance our we a to we strong and X strengthen deliver businesses year, are. move fact, patterns customer the of would relatively

closer with hand and concern norms. still more opportunity inventory historical much no too get on to level So to

Brian Chambers

Roofing, of Yes. Composites. that's think, just I same add, distribution. I points and levels the replenished we're get I seeing our Insulation in in customers would generally, and do think inventory

across level. there's So we our but at not where do see customer an seeing that board, overbuild we're the anywhere inventory of

market customer moving Now environment having becoming every environment think said is macro with more the I and that, demand and the patterns concerned forward.

been would level. what So seen more And very is how buying in running they're that buildup I as at lean a said, inventory thoughtfulness think we've But in then cause and there the not inventories. we've any with customer correction Ken they're buying.

when we're see to if inventory do to to So to to think demand levels just near the operations we to in and get our service normalized levels. we to run needing start slow, our be going back able up refill be get to term

few more So to that months work would take a through.

Operator

final question We will Keith Truist. Hughes our take from from

Keith Hughes

is you into the quarter dollars the Q, the indexes? they dollars into ask Or material some that one third raw a flat in period commodity terms flow-through to the quick you the guidance as quarter? be would the some discussed and relatively be the lag as -- of in you the I'll there third with of in here given, latent just going expect look you do

Kenneth Parks

you Keith, asking don't clarify a what with mind, a bit -- little you're if raw materials about flow-through. clarify little bit

mind, that don't rephrase you a little. If

Keith Hughes

Yes.

million, Roofing. raw some increased, dollars materials you So inflation? more as do from through -- discussed are you of in that that to $XX Q, in hitting know you the the peak? for larger a Or what Is you the going today, number get of flow you example, number

Brian Chambers

escalate, costs. in asphalt costs Roofing to on see think I continue specific, No, absolute Keith, asphalt, we

the We quarter, So third that second month-over-month expect to first we see and saw in through quarter. month-over-month costs to saw the that we quarter. in increase those continue the

and costs looking we in are dollar P&L. are impacting we're asphalt seeing those coming our coming So absolute numbers the at, of that And we most increases inflationary seeing through. through

we and price/cost, position got particularly materials we're to escalating other continue we think and our increases a roofing and place asphalt in we've and but businesses. good price stay see with other to again, in So in that positive the for cost a keep in inflation many in

Kenneth Parks

Yes. that's for you And yes, right. And clarification. the thank

energy, as all, production chemicals Brian seeing we're it seeing continue specifically Obviously, process, asphalt, continue which inflate. into the So roofing, in said, going to to also inflate. is but

last QX. living to environment we've we're been anticipating few So in quarters the continue the that for into

Operator

Thank you.

We have no further questions.

I'll So hand over remarks closing back for to Brian. the

Brian Chambers

in questions. rest forward your Thanks. and speaking Corning, during quarter the again a Thank time your safe and Owens our today you great, look to third I summer. you, thanks, for with interest you and We families of then, call. and And appreciate have hope everyone, your until your

Operator

call. you, Thank everyone, joining for today's

may disconnect day. your have lovely You a now and lines,

Owens Corning (OC) 27 Jul 222022 Q2 Earnings call transcript