Earnings call transcript Q1 2023

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Operator

Hello everyone. And welcome to the Owens Corning First Quarter 2023 Earnings Call. My name is Daisy and I'll be coordinating the call today. [Operator Instructions]

I'll now like hand the call over to your host, Amber Wohlfarth from Owens Corning to begin. Ms. ahead. go please Amber,

Amber Wohlfarth

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

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

question order we please many as call as possible, this Following this call accommodate our morning, presentation to to X-hour yourselves only. to one limit open will your questions. In participants

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

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

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

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

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

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

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

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

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

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

Brian Chambers

Good Amber. you Thanks, everyone. us. thank for joining morning, And

I'll a our Corning environment. And first discuss results market our very what we're near strong I'll outlook. delivered strengthen a doing back within work our will grow company. broad further During Ken and call our provide morning, to our and overview performance details come dynamic first quarter we're the our quarter in provide then Owens more term quarter markets first this of and on to results. seeing

our demand leading to respond rates interest the inflation, teams continued global number manage market and lower the markets. tensions, to and During and demonstrate a quarter, geopolitical our in ongoing higher impacts end the economic ability to which continue of shifting slower as we conditions is global growth of react to

performance. quarter our our a unconditional. always Owens as I is safety to At commitment with the of will review begin Corning safety

during with first period our year. quarter, X.XX was the performance in the line our rate recordable During same last incident

facing financial of both markets, we challenging XX% first $X.X execution, we've of margin another down quarter. adjusted the injury million with an and million adjusted positioned for Adjusted of structural Despite the facilities past billion to $XXX and delivered of nearly EBITDA to us of our XX worked and Over to global EBITDA strong similar XX% $XXX year. EBIT Financially, one half EBIT have positions more XXXX. were months, of delivering generate quarter improvements our of disciplined versus free. prior quarter businesses, made leading our end results, market combined adjusted the margin revenue

partnerships, flow the of through our of flow market And we customer and especially free we strategy, performed our our $XXX a of cash our terms well and million strength relative value quarter, demonstrated normal of each a in cash our seasonal company. of reflecting capital conditions, more our the allocation quarter, $XXX In lines, with American to of consistent dividends business, investors In brand. the outflow product segments which share to North had power million, the our for returned repurchases. cash Residential trend the

In our the in volumes Insulation, residential benefits of price solid businesses, and the and we good technical impacts to realization realize offsetting demand, and ongoing insulation inflation. of slowing continue global

customers well the we slower their in market. as levels realization price in our resetting demand, resulting In to outperform and divestitures. production Roofing, announced of saw tied in Composite, of impact to And better demand see curtailment strong products, as we inventory our market earnings expected, previously volumes as continue and that the loss the for

our done by of to earnings to team the to results the the start year our Our highlight continue company. strengthen power work

growth term networks, performance, make performance continue strategic manufacturing to addition supporting we expand that and in our enhance longer our to around and strong goals. improving centered the our our cost financial will near optimizing positions our also potential growth In driving investments term, earnings

Following Clara, in up started and the initiative, of Santa March the our this facility of as closure the month. insulation in site with Utah network insulation expectations optimization Nephi expanded completed have line facility California our our in sale QX, the part we of

action our make in be lines. making year to This shingles. expand to our including our to expand production on market leading capacity, to laminate capacity investments will several also strip We convertible a meet across investments laminate shingles, manufacturing and needed increase the facility comes system. roofing transition product line The major network residential our key Medina, well ability to with as demand heels for continue support components in roofing of last the capacity shingles. business, laminate to Ohio smaller investment and an support our entire which our hip Medina and ridge line as a growing duration shingle to as roofing starter will produce investment manufacturing the we shingles, productivity our such To existing

line running We to have of the this by and expect new XXXX. end up

building needs formalized Foamular customers, the in buildings. further and industry. our a spanning build contributing Russellville, new commercial provides applications our create solutions recently in we insulation in our both ability reduction with residential polystyrene NGX extruded Within investments, capacity significant continue for startup with XXXX, process Foamular accelerate previously our announced targeted manufacturing the growing embodied will serve sustainable also we to insulation to innovation. the plant our NGX for plant business, and Along plans materials carbon, our to product new to Arkansas, of the

During for low This foam. products or stringent addition refreshed the and environment. platforms our increasingly foam line any building note VOC insulation new comprehensive summer. demand codes last of supports roofing, homeowner adds quality and Of quarter, spanning energy The our which solutions we first acquired air healthier from of particular insulation for array to indoor businesses. and insulation that product contribute to products launched newest virtually was we XX composites polymers, in Ultra-Pure spray product natural introduction core the spray

additional customers product market grow our our in efficiencies, market, investments growth for they strengthening and when innovation, in further These and improve positions. leading new capacity help company, opportunities operating the create our our

ethical the we right company, we committed and our grow remain Corning Ethisphere one the consecutive the of most construction industry, this one to just honor. continue recognized to recognized of building practices. In business leading we Owens underscoring with way. year XXXX world's our marking was As and in March, two standard highest the operating been the at in and were sixth integrity commitment companies, market by to ethical materials but as winning we've honorees prioritizing

our helping generate turn our to an and update to creating continue Finally, efforts, mission I'd fulfill by additional advantages like growth company's which provide I before to over sustainability and opportunities it on Ken, multiple purpose. to

through as we a encourage the report service world our important company. material every are are and an driver the XX,XXX mission highlight products, upon review highlights serving efforts environmental impact are Sustainability the build across our diversity and as proud it work and XXth to issuing how a employees sustainable operate, of and to of which day in impact and report to our our been annual our people, make double be footprint, ongoing protect live. inclusion our our has to positive and next in the core where will our month, we publication, positive you innovation. advance We we for future of working have differentiator to our achievements long who sustainability I aspirations communities who

of discuss our view and performance to our will now financial more in strategic I detail. Ken? Ken results turn With over initiatives, to that it

Ken Parks

Brian. everyone. good Thanks, And morning,

As Brian an we delivered economic strong commented, environment. and increasingly challenging quarter another

operational performance. and commercial be to execution in Our fundamental driving continue this

inflation, on three downtime. As in input continues to year-over-year to a in helped including offset production the headwinds beginning businesses, quarter in lower calls, the to overall these pricing and prior carryover demand, while impact moderate about we've all Positive talked impact have cost. offset the of inflation associated

the or for for Beginning Adjusted $XXX and share our margin the to $XXX X, same our was $X.X consistent first Consolidated the first the quarter in EBIT. to first XXXX quarter million, ago. net million compared million, Slide we $XXX shows Adjusted between closer XX%. the share, X year sales EBIT reconciliation EBIT the $X.XX at last a quarter or look quarter results. billion $X.XX take can adjusted for earnings were on XXXX with were quarter first $XX per diluted per XXXX. period slide at year. first down diluted compared reported Adjusted a million, remains solid of

recognize gain the adjusting of Clara, million California totaled sale We our the $XXX For million. the announced $XXX site. previously Santa quarter items approximately on

of $X ongoing also metals. recorded recognize sale $XX precious with in of actions. associated charges optimization million we of on addition, And the cost million We gains

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

We and Turning capital more of as remain for XXXX. the revenue, within and a productivity quarter additions Free our outflow and return million net quarter $XXX cash through Capital businesses. to of process from we to $XX slide first capital normal time, was additions, our for reducing first million, cash innovations. driven flow X% X, on timing or I'll intensity capital by generation $XXX focused patterns of our deployment. comment the million were over on up capital the working seasonal

of our combined result, $X.X availability had $X.X return XXXX. billion, liquidity of on approximately XX% the facilities. quarter end, a nearly of million As of on XX, consisting billion XX March At debt for our months, cash ending was $XXX the capital company and bank

We dividends. and XX% balance remain consistently our totaling quarter, returned X.X maintaining free and time of over first we paid focused $XXX repurchased and million. investment shareholders to dividend company. the through generating executing repurchases to while on million We million sheet for our cash a During stock returning strong business to million grow flow, $XXX shares share approximately common strategies an $XX investors grade cash

Now, over growth were in global both the year-over-year. a the turning more the than $XXX The strong, to slide quarter as of X, QX the I'll well and each XXXX year performance of technical of business and started EBIT residential. more revenues as on line with businesses. top XX% America insulation, increase grew provide X% North first Insulation million, details and bottom

the realization business announced and We across mix see to solid continue inflation. price on offsetting ongoing actions favorable

and grew revenue continued insulation, to tied global were to global price as a primarily well Volumes of to as headwind. within demand and our down softening wool technical mix, as currency prior broader due business. year the mineral positive slightly favorable result environment translation In a be macroeconomic versus

first and we the pricing of quarter. of of planned and Natural impact impact Residential $XX insulation million in first Russia. offset incremental from Volumes of EBIT of result from growth North production downtime full the compared XXXX. saw in Additionally, maintenance was fiberglass and first EBIT volumes, down investments. insulation than up mix communicated the the revenue and quarter price quarter more cost for delivered were prior the incremental previously ongoing $XXX margins sale the year. inflation, Polymers was and Positive of Overall, acquisition. the versus lower operations insulation American slightly our million, residential the for positive XX% to the in quarter

to as from to resulting quarter X for macroenvironment, the turn business. the down our of translation business as the from in which In volumes year down demand. slide by was the same million, continued quarter selling period prices. first production The partially XX% primarily please to headwinds due impact year, Composites were lower and EBIT partially offset currency decline manufacturing by the higher a and million continued was of and were for quarter, to Now, prior associated the inflation lower ago. volumes $XXX EBIT summary million, a compared selling higher downtime, well the offset Sales $XXX the $XX composites were experience the as prices. for costs, softer lower

our France contributed the Additionally, decline. delivered the sale manufacturing year to DUCS assets operations composites of and last Russia year-over-year the quarter. for in margins our Overall, EBIT X% Chambéry, in EBIT

XX our Slide top million, Sales provides and to prior compared volume the mid-single Roofing performance. basis year, overview volumes outperforming volume line demand partially up down year. in offset strong US X% by the roofing for shingle quarter on quarter compared US as Positive the market. business was an were our the digit of with XX% shingle The declines. business. bottom first delivered $XXX The to price was a asphalt realization prior market

EBIT quarter, to strong EBIT offset margins ongoing with $XXX price inflation. taken million, remain lower in primarily by and downtime $XX costs up the QX XX%. higher positive was million related manufacturing impact For volumes. of partially at The

provided financial between $XXX full are summarizes year from million. $XX expenses to is million. million unchanged XXXX which guidance of expense between outlook corporate million range items XX Interest for remain $XXX and all $XXX range February. estimated key expected General Slide and to our our in

to pretax be XX% is cash XX% full earnings, be of Our expected rate earnings. rate of to to tax effective is tax pretax XX% year XX% our and expected adjusted adjusted to

additions capital amortization, which below be depreciation are at Finally, million, between $XXX is range and expected anticipated $XXX million approximately to to $XXX or estimated and million.

slide I'll Brian Brian? XX. discuss call turn back please the to And further our to turn Now, to outlook.

Brian Chambers

you, Thank Ken.

our quarter broad and us XXXX strong demonstrating with the products. start teams the performance Our of of provided a our to capability first value

decisions, slower residential, economic move consumer we and continue as interest conditions to through and higher remain patterns buying impacted industrial QX, market as see we commercial more by challenging, investment As expect to as we rates well growth. be

continue opportunities expect over for construction term, and these energy in we sustainable the While, efficiency, and housing, company. factors materials influence to building more performance near trends our create the growth the for to need secular significant

categories in on near Pricing second announced we in the positive is as prior we expect our the actions. our of continue to Given to benefits pricing volumes remain underlying to market the slower versus many term the in year demand. realize quarter product quarter of outlook, decline based carryover market previously expected from

inflationary the Given a cost this moderate we ongoing maintain anticipate in of and the and for costs positive price offsetting the impact more a quarter. expectation input environment, inflation

margins. generate expect sales the net EBIT versus for in a year QX in prior mid teen moderate company, we result Overall performance we decline in continue to to while our

realization insulation impact lower inflation housing in Now, US, of our offset for on announced continued macroenvironment acquisitions continued the consistent demand and offsets business, price the as our to slowdown American prior starts. with with we previously as Europe, to in for than as to but America. we prior market broader to demand moderate backlog price costs versus with and as similar realization outlook starts the more offset increases and from Starting a housing cost lagged to to insulation their a by softer positive. previously announced business, resulting the anticipate and provide expect technical tied well we the for quarter in In materials North headwind prior continue quarter. insulation resulting and increases year divestitures calls, be to our revenue as detailed North the continued lower in our energy in our perspective, closer decline remain through business From as from price ongoing in begins I'll to more In well track demand expect more Europe. insulation to be global a we specific expect Residential volumes lagged builders realization work lower remaining than second price year, demand businesses, the net

downtime to similar QX. and We see production investments to also maintenance planned expect

this, business. we Given teen margins for the mid to all expect deliver EBIT

Moving exit digits be two versus the second be impacted to the will see reductions operation. quarter versus and we pricing Composites. down of pricing. pricing year's flat The sale will quarter, offset by in last to by in product prior year duct spot be expect Russian anticipate In the contract improve double on composites relatively we favorable prior as volume declines to revenue also line We quarters. begin low as

costs to price inflation anticipate quarter. expect headwind we the we While in will a be moderate,

prior trends volumes as key demand overall regions down been reset. to have versus expect be But see customer year. inventory our levels in We stabilizing do

As continue proactive expect levels. double production the quarter. to will we in demand in evaluate digits EBIT market adjusting conditions, we anticipated be to Overall, of margins low we our second

in Roofing, with in shingle And the market modestly largely we in be mid-single digits anticipate quarter We our to be line expected down volumes to to market. anticipate would prior [inaudible] revenue year. and the versus down shipments with track

inflation expect in we've input quarter, cost seen in some the neutral of moderate materials. to We fairly be as our

While season. enter paving to increase have we as asphalt costs begun into

quarter We quarter generating manufacturing to margins a offset be cost. year-over-year the perspective, anticipate price input expect we price roofing, increases, and EBIT cost carryover and for but from QX. narrowing similar to higher QX. Overall From announced partially inflation from based impact deflationary slightly previously materials primarily deliver the to other another from on in positive expect we

With few that to items. I'll view enterprise turn of our a businesses,

combined to previous continue to well cycles. the position to our the strong we financial market the While term, businesses, in markets have expect near discipline our generating outperform and continue leading results execution macroenvironment positions improvements make shifting us and to in impact and end with we continue our made structural

we addition, we as construction and our new our science, more the to material develop operating enterprise and deliver solutions. construction In strategy make growth material and market reduces to investments product strategic of and opportunities margins. more higher, our creates of that pillars new overall the our as adjacencies prefabricated to core we expertise in markets, company strengthen power products product leverage continue execute and expand manufacturing building position intensity these increases as earnings multi expanded material Each we sustainable our offering, and capital

sheet growth as a and our balance acquisitions, capital leverage and through company which an leverage shareholders drive strategy strengthen organic long-term approximately returning We've the focused incredibly to balanced which of XX% over also strong cash time flow we continue which the on dividends and performance to share repurchases. productivity expertise, plan market through investing built allocation we manufacturing material unique to science of and free investments

and In team creating We strengthen value a winning deliver on commitments our future. to committed the in our the quarter financial strong in to market for continue our as we helping company remain results shareholders delivered closing, environment. our for very market dynamic safely, customers first our operating and grow

With like for open up to it would questions. that, we

Operator

Instructions] [Operator

Matthew from Our first Barclays. from question today comes Bouley

Matthew Bouley

the Good taking Maybe morning, in roofing just sort relative industry. own to for them ask question. volume Thank the I'll you everyone. outperformance your of

expect some that little out, at driver, that curious a resulted add point. Thank in happening what's we geographies? reverse sort over kind And forecast whether sort you. we more that of should as year, that an of look next may and to of Just the with being around have detail

Brian Chambers

has very Good year. start to remained morning, question. demand OC strong the for thanks the for products certainly Yes,

is then driven out factors. level distributors door I sales. OC we're QX, other the think good, we at really demand, through play the increasing very out of two relative pull inventory And strong in continued what a QX dynamic brands. seeing what One saw to to is in by contractor similar

those and factors both think I in So QX. played QX two

a bit today. So call because this I over talked step back want past about to little the we've earnings few

to the more products think brands end particular where distribution looking be selective levels distributors They of to talked to saw year. we were levels the products restocked. our size they we I needed starting n level in and centers inventory roofing had inventory be were looking broadly much in to the to finish we that at buying. inventory of about to were right the year, continued be And

right out And year. closing to as the so that QX, in levels inventory drove year. they were to in that of the new saw us out some size additional We set play continued for kind dynamic for were really up is QX, as which sales being

very inventory I of OC think, again, in remain lean products distribution levels channels.

the into. season, So to ready come be starting there for which of continued to we're just restocking get needs the to heart

brands So distributors and out the And products. invest play I a then contractor demand our sales good of and our and helping we our create to of demand the dynamics their products. over quarters, door conversion and businesses contractors our for continue was think good last that those and big couple strategy continue in products, around build our

I terms right got the both out. in products largely think and it we've forward, think are do comments our in playing going size channel. levels I other for of your inventory in both So we around think that are QX products

it's going sell sales, I now last be more door quarters in distributor that So effective out the of say the couple would buy versus of dynamics run the out we think to other QX we distribution as saw well. little buy-in have stronger. words, think We a that sellout In the trends been fairly in in has we've seen been and much lopsided. less

I would closely products So other to for correlate buy-in we and sellout to distribution forward, that our expect would as the of trends see going more trends go forward. products

set for levels are set in up roofing up being all given though good inventory The materials a QX think good a of think buying in a And even down the year-over-year on saw of that stepped for we basis. QX I we still year. year think still we kind strong. relatively was we're So roofing

Operator

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

Kathryn Thompson

question you thank my taking for Hi, today.

also pricing, pricing impacted color in of but for earnings negotiations your much domestic side If and kind year, segment that how for in the composites, you. this outlook quarter expectations and the any that how the particular, and also roofing you could businesses this the the impacts impacts composites. of the with, year Thank the ‘XX of on how as clarify not part for and outlook start

Ken Parks

Thanks, Kathryn. Good morning.

clearly Let's We've per Russia year. was France piece for the $XXX talk revenue side And about that DUCS quarters. divestiture that the assets pretty of first. revenue Chambéry, of said revenue And think a about equation, that million think sighs $XXX our of of the in we year. were I you about pretty million assets the the number similar over very can about ratably divestitures

kind the As should you But far through I characterize Russia move composites you year. side, be the able we as end of it done demand it'll overall, to on year. that DUCS divestiture level would it's, probably mid-year, was closely it those better very maybe it each as of pretty size the at a affect this, was And quarters. done one the just to us as year, that, last probably effectively how of similar profitability very, probably of profitability had level the remind strong of a profitability with to the it DUCS as while slightly to was because

you'll the from that four all throughout quarters. impacts one So have

while is Asia of is that contracts spot are bit as heavily more where two a about of pricing both of contracts. contracts market. North you're another continued information America, that weighted Brian of are, about think more businesses we we've about the that seen to think pricing made comments As couple thirds to to tied through composites is Europe when made good a contract thinking we about and our a that pricing, I and think piece And about

would in expect So based pricing, business. pressure those pressure as about together, quarter second while we upon offset as different Brian positive negotiated have different in seen in lines. the has outlook, the contract pricing and spot contract you more from how And in product contribution in held play commented continued coming what to on the think nicely, pricing we pricing into the spot but we markets XXXX,

as about. move having depending was America, as volumes that saw we're I do very or a be continuing this how And what discussions year, kind we or we with based it now we're negotiations bit North that on seeing give around the contract see little balance the into of the move good the stepped these of your had kind in we would through composites in you upon progressing, on actually discussions, see say that we're we of down color. We year-over-year quarters saw specific, of in XXXX. it'll line our more question Because the contract in in North seen increase background maybe I we right volumes to Europe contract last first through what American but of quarter. regions couple

of Asia the will probably then us to probably we're Investor solutions, Day we providing as curve the contracts out be in our work just products, quality we're with the value kind composites end of them discussing the bit on XXXX relationships with spot with a exactly not but our much that of with very also a as customers, into about because customers, what what we with products, put the our or since about But them more down move that not need proximity pricing with will price, to customers, helps the little that's more providing where but going the see with at more just really and how our we we with in it we're curve get becomes right right of to place. time providing, dynamic. importantly, the talked optimistic And what we've the headwinds.

any impact in because watch of and good the spot anticipating roofing the significant on really the year side I'll pricing? markets composites closely. the let we'll happening roofing The pricing what's on well. we the of for of about far contract, So pricing Brian for are of composites, roofing comment feeling side this moves as on impact

Brian Chambers

would No, add on nothing I that.

Operator

from Ng Next is Jefferies. Phil question from

Phil Ng

I guys, would last carry you that congrats second for strong quarter you the through Hey quarter think backlogs had you Brian, insulation. another quarter. for mentioned fiberglass

playing see the side the demand kind half? next Will think mindful concerns going do backdrop you the been I back ripple should start of year. constructive season out early this rate the you through And spring that so that things on be has on half selling of we in any And to seeing of second pretty side? front destocking for far. half inventory how

Brian Chambers

kind how first in at completion but the builders them we've of they've some part started constraint insulation And up units. of hold we look XXXX. XXXX, starts seen Yes, thanks, that Phil, our when also And at this I material demand complete products looking that trend X.X there really strong accelerating, we've a several insulation few demand quarters ability the good insulation, strength about dropping we've starts of talking that we in to a think And the insulation strength is I was we've we've been past good seen the the been we at million ‘XX. other to saw business we even this and resident think though seen this building factor about headline that's quarters, delivering over business. back out all another really throughout topped of homes. the ramping think for of big continuation And And goes residential of is last the for quarter, their starts seen rates.

really impacting extended we constraints, cycles, to So labor material saw in construction constraints, that. due

continue create staying that backlog be this even year, we completion and came been finished starts kind that going of rates we homes to down, saw we into in headline have steady. demand to out. was good And to though been have saw play QX as So pretty of

are part see to across cleared, the look where those through As getting we're And their regions builders now country. guide, backlog. starting working we are our completion rates of

which historic the that's into our demand to trending housing so to going is starts we're do the of metric, light rates, going move And see, completion the we more as probably versus going towards drive we half the year, start back forward.

I a And last completion the that, above of rate, family. single said is kind half. been any permits having we've impact Now, downturn X.X starts while or flattening of couple mean, seen we've have in of of mostly us not terms housing in terms kind multifamily, some which around increasing, rates back in encouraging months, at the seen and million demand those of that unit

steady, in last quarters. of what kind be terms to they've several seem of running rates completion family been single in So the

very that of X.X if units that impact housing think we to continue move think market even next the by play for demand. through, at we the light demand trend that forward, certainly when good starts into for that's can start starts. driven as kind around all would convert products minimize that year. any housing in to a and to we We going half So if our And you constructive back us more million for

some seen said that need is housing so to if as think I needs really demand the to rates in just which we worked of are on and see we've we the to reset the this inventory any couple couple the coming interest there's channel permits no through I'd is consumers X% other that duration, more is be for well and downturn because housing, depth repeatedly, kind choppiness, good near even be in last see some short fundamental why the drivers, back for to term A of think comments, of that going the pretty months. kind starts we're terms market, I've of starting broad say the prints demographic do in lived of

the energy at in There is the we new last year, rates crisis in this taking last as I’d as partisan say We play a the we for just credit. pretty see And were might year creates think -- good us homeowners we half there lived. realization this the back to the more Reduction that that tax we housing us move a would in I Act become that within expect going and aware a passed. of was back a consumers for insulation homeowners it's create macro as tax demand save, half short we is opportunities including advantage of be Inflation that level saw fairly piece after insulation. could So some legislation move there that. but saw also section business the think slowdown the tailwind credits tax out and that potential might for the re last We around some by credit. of would to investments, of to

year construction we into opportunities for creates that XXXX. the and move mitigator think new that any of back us can be we slowdown some half the So in demand as through another

Operator

Our next from Lovallo John is question from UBS.

John Lovallo

my for the pricing has maybe opportunities you pretty guys. pricing guess morning, favorable Thank each move talk actions year? you been carryover taking incremental of question. the across businesses. I Good the through for Can about as we

Brian Chambers

the John, exceptional inflation challenging high environment really company price manage very I last over across would the several a environment, have done a quarters. to say I think our commercial through teams work

and continue we continue this to actions environment, the at demand we the come continue as are required. into look additional then terms decisions at to environment, inflationary make we'll of So to we look that in year, pricing

inflation an materials. some As are lower recently you that on And look roofing business benefit and to supply going seen, other that date other into we we year. the with as near in markets the while in some in to the half constraints we're move the create oil mid-May, effective at going things term on costs, the asphalt continue supply announced a our seeing we're of in think bit about business an still could our our roofing of overall, of frankly, might drivers of in here cuts little inflation see we back increase have concerned the we

calls terms we'll similar forward, that, forward. terms three made or as we to out managing But implementation. we've we plays see us, I demonstrated quarters, of as as how in move here of we're think weeks, we're I we'll manage So front announcement, inflation pricing, see to going make from continue in those we're the in weeks of going that we away realization, that need we've to think historically the four several and past very that over

Operator

is Kim question Stephen next Evercore. Our from from

Stephen Kim

a guys. Yes, question results. that particular, side thanks very technical to Wanted business. ask much Good about insulation, on the in of

lot the in of very some North suggests and lot pricing the color side time technical segment. had a business. good curious of gave It the that of around I'm the America. your and you've a of part business performance price the spent about resi But You've in the other

the some if some the seems think like called understood. very you of are So of what's you good understand I achieved fiberglass what [inaudible] it in pretty outside about in driving wanted Because there. America pricing markets, But you've pricing good resi pricing, is explain international the North to think could little having I more sort a well bit dynamics also North help the us out America. see Thanks.

Brian Chambers

good as appreciate and been but insulation, in the technical to Steve. business. have part in the aspects our call and rightly Thanks, had to And, out, fact, not thirds of you wool, has the of years strengthened the the businesses lines working mineral that And for of us of insulation this grow and for very big actions, and within to can area that's about investment kind an out past we innovation us in two just yes, Yes. terms we've been global develop. the of really And that comments. think product now over focused foam performance several pricing line are other glass, to product opportunities continue is foam that business. we really strengthen that

our of we fortunate of breadth in is really in So we're about the that type product of nonresidential focused commercial And industrial as of applications. because a offering, of lot thirds you different pointed out, operate two verticals. business

we're not facilities have to but of centers of wide markets result. I that generate, variety that up a really data are and products business much we variety really industrial can these ability less of see very So in price this applications earnings in we've of that move seen is think, given and like, historically much office more, airports that sensitive. generally that's The just And we healthcare the movements and key so it's while lot around down, part and good volumes the lot us wide because buildings, a specified. end

applications provide structural that terms performance in characteristics into performance. of performance, embedded They're unique thermal

price that our applications. gives are the in those And than ability sticky price of us So more these some values. historically relative to to we've generally points residential seen

kind look when seen we've very good European challenging really market. in performance So I Europe, a by of, team, our take I'll

good of we're would given as played out. And maintaining started year, cost start strong performance. that, the last But that on seen price the We a price that kind So again, we've then price down that on And team year. points last seeing we now recall, you if we we seen that step market. top volumes expected environment. in price Europe this year. macroeconomic cost. mid-year, by and year very the our got those we've to gotten worked was And top of cost lagged the We've on of holding we're

these stable, seen expect dynamics stepped part demand, I as say we're in down we've the the through demand So I we of the to managing things but would think and But stay year demand. QX, Europe, seeing environment we're of stable would first move around fairly products. in through

down. I great a bit In applications that And down start year step there. commercial very team again, a North in of just a price manage the America, in we slowdown to well, saw broadly. to has very job of But terms general step tied again to a done moderate little think industrial in we've volumes the able been

with cost a price down. we've step been maintain so And positive some able mix, even to that of

industrial good we're get generate as expecting are to projects as think to move I And commercial near through some be to we markets we our slowdowns, going forward, So managing continue think that reset. we're term going results. volume

I'd we're for say product this think around very real and is drive thing a where one application. foam growing And of we glass, actually a coding going have in seen Last stay a LNG in is category, that US us product And And some seeing uplift there that activity. kind growth going that's Europe forward. segments our demand both seeing And we in I gets particularly industrial to think we're segments. us. markets for and line backlog the used solid

product liked So good the we've there. seen it's line. positioned. we're overall, And I our think very We team well by execution

Operator

Hughes from Truist. Our Keith is question next from

Keith Hughes

next quarter paving asphalt, the Thank for season, I asphalt on in based as prepared and over is about you. two into some or we now. your head we're on you sort heading your how usually that. talked guess inflation roofing comments where expectation on the industry in inputs my right asphalt question year-over-year, of Question there's into

Brian Chambers

Yes, thanks, Keith.

pick on we basis, saw into into as the as to asphalt got a up QX. month year month over costs we So coming far that starting

In roofing applications. into month costs paving So pickup. month historically, guide, of come when we used saw asphalt majority season, asphalt are not the see traditionally move see expect QX costs in summer to in we've in season, our we those over we that paving, the that continue up, asphalt and

would that governments. season expect So And and the in that of lot infrastructure federal going states we're with structure drive that made to tends the being paving we are business. pretty a investments a cost by the see heavy to

So sequentially. are that to up going move expecting are asphalt to costs continue we're

that with costs. Now to next to a of to deflation cuts see continue half expect going in through I'd the have move move year-over-year we move basis, prices, the we the forward over play that's we're kind line have though, impact into how of quarters, back expect costs do we a overall just in seasonal demand our the as costs. asphalt on of patterns. concern And those are announced And been that couple asphalt in quarter, say would to up again, of bit the the to year. little bit of to big as of And then is, terms supply oil see which ultimately we impact paving going the unknown

Operator

Michael from is JPMorgan. Rehaut next Our from question

Michael Rehaut

And in margin might low higher higher quarter, low year. of quarters. we like would going on a as Thanks. of think to first if EBIT quarter. potentially Good low anything to be bit couple quarter. to than perhaps the that's morning, about be we revenue should expecting this half first better driven double sense think that results still the on everyone. decently little second digits a I last double digits, there's on double zero of the down down the also get holding you're double that digit back low the from have purely But a still this in the wanted And about if And EBIT number performance congrats by Wanted into digits. some margins composites. new compared back revenues looks

Ken Parks

Mike. Thanks, Thanks of just one little Yes. apart each those let's take kind of bit. for the questions. And a

you've thinking on of is one part really that. from really right? we that's the America, Asia, called back mid-teens we're step margin to points, to driven of one help volumes in anticipating we to to absolutely drivers are dealing volumes we'll where think to one North quarter the which about that's is won't about is drivers. up Now in driving certainly how around is and higher that bit that volumes would around one what the that that You've in just going in the be with we're as up the out runs thing second of operating up? see the by this us New volumes, better QX that really in long seeing, which And sequentially question, Chinese composite And step a business of specifically But important step to rate. we're QX, little those and fact of be talk moving a margins expect Year closer the your falls focused term, bit

and as we Europe energy peak, in it energy costs important One last in of cost last is year. saw things the also specifically think about to the quarter of

let's make say We costs we that of customers on also to on of, were peak, while the sure had start last energy were seeing the right hand. we call talked about levels or that inventory seeing they our kind also rationalize

the that little books first costs bit So it quarter. their it, as carrying works, a about that the Therefore, that to product as because that P&L. hits were just on door rolls we the actually goes how a out built on buying then with quarter, bit of over inventory ended in we that into energy patterns gets up our kind it finished inventory the that out more the value, had higher and we back think fourth pulled

guided QX down QX. as exactly for the performed variables much And So pretty certainly saw. like business and first that That's step that what quarter. between margins what we had and And we we of caused anticipated. the that's operating was one the noted we the

we TTF were about know not end we the have only the the energy as for sizably, to in peak QX, rates year-over-year, pretty the where as and/or US, in but of XXXX. go cost, those down watching US levels Europe, but the stepped per at only Now in all not rates

through QX, we we performance kind up feel contributor are, that continue stay and through of we energy this a So provide as of absorbed be higher our really margin fact that's energy up part the step if confident where absorbing move last we to related, because to year into feel expect the as due will that, only not they cost to about that lift volume have that we're the step good a as and well. to move us QX we rates positive QX the composites year. business And would in performance that our

the for wrap and answer say kind the that that, but a is adjust we'll out, QX, kind we say of improvements operating to kind of across up as this we And bit we're back So the declined, margins, to some the about say that means and I'll are really to seeing curtailment And I higher markets incremental through to our towards certainly we're because is flow take kind see board comment little fact what holding energy our see costs seeing certainly do performance? bottomed we I me business performance believe back things move And business. that more you what this is that the the downtime volumes that won't we saw question forward. solidly, those the does yes. absorbing of, did kind ask what that that absorbed of we're we're absorbing I of move mean, XXXX? we'll going mid- some teens of we're margin seeing in the in to fact is, mean,

feel we've executed composite QX, come seen the this and like business we really them theme it's kind good that QX, headwinds said, getting to feel structural of So about how pivoting as through in which the is say the value qX, they've to margins. through and all is be and solutions, more we to mid-teens back on we improvements is to where exactly operating going towards then tracking

Operator

Our from from Anthony Pettinari next is question Citi.

Unidentified Analyst

thanks detailed taking discussion. morning. Good the on Andrew my question. Greg is And This Thanks for Anthony. for for

in for And targeted of insulation, size, quick roofing there's there's can just from related cost gains like more M&A these makes you're just and appreciated. a be valuations, if both could the greatly follow wondering like touch or question, color attractive in maybe opportunities, of a provide the in And what could current M&A you and marketplace. Whether what projects seeing I'm wondering on on sizable kind of current in you landscape. shortage expansionary just just And in returns or surplus on would in any pipeline of be So type I Arkansas realize I'm a level returns projects what or of you IRR in whether metric. projects curve think another Ohio. if projects ROIC the it this. for as this

Ken Parks

each create it's projects, of and let start But these itself as is I'll out you What's the are as building start out for IRR you that what are a trying out imagine but the an discounted also returns? material also then business. about the like? we're metrics, of capability, points as contribution. as financial outlined, what just you that far look I'll positive and said, you've the times, lay cash in flow? heard look from in our out, these take what And does the project can say And really Arkansas would things say of kind look strategy insulation midst many these to at one this. of grow. Brian manufacturing And right as market science what the facility the has non-wovens some or of where it, M&A not commercial think I we the our we that of Brian we're Every building composites that to the we've at is We part one you and projects, that processes.

that about, out November continue businesses to good from how projects, does we kind returns, financial Again, to we going in are only we grow have of laid and it today. started we the look Investor it XXXX, these So we fits at our say, as therefore, of that have that we and Day, in strategy. but not expand

have how go And we're they an kinds exactly those we as both will out the the returns. all as return that of confident investment these so side from And side. laid deliver investment to well

our our ourselves for grow be surprised look Now, do business Or about M&A M&A, hear organic landscape at we to and job not is look build things strategy. look won't the things we out buckets, out to add pick that do how do on in part both our think the as we at things organically? and front, to at internally do this to exactly how growth to we those look a all that, we M&A And lay you portfolio of then we how of, at do necessarily growth? choice on it's but projects the there's

Brian Chambers

organic at One and on product we in to in organic add here, look we're projects to when within Ken initiatives core us, productivity then positions, strengthen lines, about. the and big returns, great as talked balanced invest growth to focused opportunities for those these allocation our And generate we three growth market to grow see strategy, our great pillars. is continue and would think, I I really capital

in a our that's part initiatives growth of capital performance So strategy allocation the can we and where internally into productivity drive look always of of terms key to the business.

did year, we saw opportunities decking in great expanded composite new in big insulation provides of adjacencies that through and leverage capabilities, we capabilities can new which lumber capabilities, a is science into we into acquisitions and of think look in expand think our material, our that part to structural marketing, little material the of last materials. we I you the growth look and at manufacturing really bit acquisitions second that terms our a some our product a category, the that think moved I broaden

of targeted businesses we're company. we of product and those within performance adjacencies faster think a those at think grow I So rate, our strengthen the can around that overall kind really we

the third looking always we is back then cash one And how to at shareholders. return also

through dividends, so to share return very And approach a over we XX% balanced time repurchases. have approximately

our in of going creation. growth to priorities we make performance and best So be think kind of around that term the think and company those value we decisions choices the terms long terms of shareholders and I capital evaluate are allocation interest in three of

Operator

Goldman today for time from have Susan we Sachs. comes Maklari question last Our from

Susan Maklari

morning, can here cash question, on business, talk conditions especially of can perhaps Good pandemic? you. flow Thank how building in your to as free you level everyone. where and thinking a we Brian, comments the relative about to prior the were the bit normalize, generation you of last you're the generate the cash about

Brian Chambers

our very to think the on Sure, with been reducing pleased focus focus cash the company, at that conversion flow, rates. resulted topping in think, of $X.X last businesses, the we've the our $X.X performance close to cash I I capital, on capital cash is so operating flow and billion, intensive working within operating very year, year, XXX% of flow to around about performance close terms last free billion strong

metrics those are opportunities, generate so my capital cash to company to that a across those strong look to the as operating last cash structure we've that that very operating we continue think that priorities. say an and about free then I flows, And can deploy created very allocation the flows, answer build we cash at give strong talked us in

generate performance feel flows and capital a CapEx continue going and forward. operating of operating the cash within in to strong built we've engine as management we free terms go working company we So great to that's management,

Ken Parks

the good capital out performance just perspective, bit performance. maybe a a as really I'll cash on points flow it's point Brian to little think to and I that, And working the add of from out, business important

I been cash that with, think middle out that we this we've And do this think light people was in cycle US years. tax the couple we to be them since to I we've about stepping consistently always carry in basically inflationary where for In operating may want But able into also coming there to that to started of pricing is what concerns inflation. decade been the been that, generation not had our anticipated that XXXX. mechanisms in our that we've have point with done last of last forward you exhausted. or of flow loss been have up, cash tax free operating also know rate, the the so as cash the a recover

certainly the to right really you we reducing And way, and us think as years Last time, We tax our were I capital kind products, market X.X% normalized see to ago. also, them on X% the think also in we over the something last getting So go down. about by we that working of attributes at saw focused a And just that further essentially the to ran about of our the can number. zero capital work year, the tick closely. good is, point a overall about managing from more making rate few on X%. that business I profitability sure of cash are US intensity that we think

business this in all operating So pretty generating we all of are on or flows margins. profitability we really, that those that things really focus sustaining and much strong maintains continue environments the cash to growing, ensure

Operator

This is questions have time you. all for we Thank today. the

for back closing I'd hand like Brian to remarks. over any to So

Brian Chambers

really with in second time appreciate to And to forward your and We everyone our look your you your during want for speaking questions. thanks quarter Daisy. today Thanks, again just Owens and call. to Corning interest say

So and have a thanks day. great

Operator

everyone joining you Thank for today's call.

day. You may lines. now disconnect have your a lovely And

Owens Corning (OC) 26 Apr 232023 Q1 Earnings call transcript