Earnings call transcript Q2 2023

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Operator

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

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

Amber Wohlfarth

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

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

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

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

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

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

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

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

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

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

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

The financial the release more today's tables include XX-Q and Form news in detailed information.

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

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

Brian Chambers

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

details our outlook. quarter more our discuss our a what second we morning, our in and provide doing I'll company. near-term to and the strengthen Ken our provide I'll our currently back results. we will are of markets overview then this broad then And work are call grow performance seeing quarter and second come During on to

the by operating our and and positions capability company. Overall, performance another value highlighting resilient earnings. the in of earnings efficiencies, QX, product driven of driving be our of lines the more our strengthen the This our initiatives quarter, by Corning the to Owens the commercial implemented actions years several outstanding improve over to delivered higher, our power and past teams, team strong continues

of few performance. a as speak I'll with review our further our commitment quarter, now Owens is moments. At unconditional. begin the our to in safety always, to we'll But this safety Corning,

year. half for environment RIR maintained very a this we over so have and of year of During injury-free X.XX. safe the a quarter, with have facilities Two-thirds than our second an operated more done

an adjusted EBITDA quarter. the billion, similar up adjusted X% EBITDA of EBIT resulting company of adjusted of the for and margin year-over-year, $XXX with second delivered we EBIT to of in XXXX, in XX% XX% and Financially, revenue million, margin $X.X $XXX adjusted quarter of million,

$XXX quarter, free the allocation flow through share $XXX consistent million and In generated strategy, cash we And of our similar we million to period to addition, returned with investors capital in last repurchases. dividends the year. same

demand our During realization, the conditions, the positive of well moderating Composites, In segments expected, quarter, continued costs offset our we highlight lower These we while volumes. impact favorable. continued market price margins. stabilizing trends work and each increased demand the to benefits company position by saw the continue and result stronger American by to company's And teams leading us in to to of for good helped Roofing, mid-teens and of In especially positions. business Insulation, we the to relative extremely perform done leveraging earnings North long-term driving attributes strengthen of businesses. to market unique the the impact price results in remained as power realization see success saw our storm our which activity of

partnerships increasing investing automation a solutions, customer reflects realization and optimizing and achieving at process technologies are and in innovating products efficiencies on stronger value targeted expansions. our increase manufacturing our our digital expanding pace, Commercially, that and productivity faster making our Operationally, to we building capacity focused and of price the we factory brand. are networks,

framework our sustainable expertise new secular not expanding years This market the capitalizes All material market key long-term it our adjacencies manufacturing core and two changing positions, product in of create on developing new leverages housing, only multi-material construction ways, around opportunities is practices, launched solutions. focused which strategy into solutions and our this trends our and building work strengthening science, for we company. ago, growth connected more and enterprise of almost which on prefabricated and product through strategy,

platforms executing improve few our and us each improvements businesses, enterprise Within that our solutions. have investments efficient the to past we productivity leverage Over increase product more additional fixed new significantly initiatives capabilities our both we number strategic as structural strategy, a continues of within for need while optimization of growth capacity core have years, through new our potential network in the position made energy position and the and our performance improved which investing installation, cost world growth. and to

construction, applications markets platforms lumber value by lines new as are and decking. on in renewable product composite Within pivoting such such product and infrastructure investing building focused the higher structural as non-wovens key expanding and and Composites, to energy we

continue within on And we new expand multi-material Overall, contractor rates driving to expanding offering. our investments be higher flow. cash our attachment higher component operating more system our generate grow to built our company a and shingle at Roofing, and consistent efficient, and free produce through focus faster we significant earnings, our execution, more continue our our to capacity rate, and network, increasing have as we innovating roofing products, capital

the a that Corning and discipline today, In even is company more conditions, have continue performing short, challenging we Owens stronger keep to and at the operating substantially high strategy, to we within a level. the team, demonstrate market

innovation be Our commitment leader improved performance in by and is sustainability. to a our also driven

XXXX, first our platforms the Composite product our Insulation and launches we businesses. XX used provides WearDeck Notable last among of new products year’s Corning of an structural lumber launching deck and process steel. material an a quarter spanning OC framing, traditional alternative extension innovation, to that for second introduction our the half our wood acquisition, to lumber core continued of composite and During is in offering Roofing, accelerate newer refreshed was Owens

just salt This technology like mildew, a mold, corrosion-free displace durability freshwater with and decking material acquire that and to and structures, we our product commercial adds didn’t fiberglass, resist permits strength across reinforced and and With lines traditional opportunities new is proprietary contact installs with pest to materials wood. Advantex and a our company. residential just expand

bigger win helping grow We OC creating new innovation and enter in our investments a business. and much new new the market conversion and opportunities. avenues great company structural to and a customers market lumber through is gained a addition of our a and great our example growth of to leading how and material for product products are technology while build family capability solutions, markets

before material pursuing sustainability published I employees are turn on world an over a our sustainability to XXth Finally, which mission delivering our our through innovation. how sustainable annual for as we the a provide report, across to future to serves update Ken, I’d and like In build it XX,XXX efforts. May, blueprint our on

supply a to XXXX. reducing electricity agreement expected achievement accomplishments in through The for our significant completion carbon online Among is stages noteworthy to our contribution renewable our the major come a of first emissions. a was represents half which agreement, and company major overall Europe in

our to science will addition support XXX% and virtual supplying wind-driven already and centers and operation European means renewable agreement in Finland In power to in new technology purchase by Sweden, sustainability sites electricity production our goals. of contracts covered be our agreements that the

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

Ken Parks

Brian, good morning, everyone. Thanks, and

to X. Turning Slide

million. another billion with delivered adjusted of and we strong of EBIT mentioned, As Brian sales net $XXX consolidated $X.X quarter

continued which partially carryover realize revenue segments. two positive year, pricing, from offset we benefit our in last the lower the to of impact volumes We of of including took actions

quarter moderate per of with margins earnings with per the cost XX%. execution the In Adjusted continued addition, quarter million input EBIT million $XXX along same $X.XX ongoing $XXX diluted share in commercial $X.XX or adjusted and compared resulted in this or were record inflation operational XXXX. for diluted to of second share,

and the between our shows second X reconciliation EBIT. adjusted Slide XXXX quarter reported

costs rationalization ongoing adjusting million, actions. which with product with related and to the periods, all cost our these charges $XX of adjusted quarter are excluded items second EBIT. from our For totaled approximately line associated prior Consistent quarter, optimization

Turning cash The XXXX. capital and the quarter of of million to revenue strength our of our free up second $XXX Slide earnings of operating the around flow working additions $XX were cash continued $XXX X% deployment. for management along capital, or million X. investments, generation million Capital generated expenses, for I’ll comment from and quarter. capital discipline on with

We and remain process through innovations. time productivity reducing capital our on intensity focused over

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

to shareholders shares returned and cash quarter, dividends, a of we we the total the paid shareholders million dividend bringing common $XXX quarter, stock for to million. to $XXX year-to-date repurchases X.X million second the During In share $XX and million through million. repurchased $XXX totaling return cash

strategies sheet strong investors maintaining to company. business to We returning time on an executing flow, focused approximately grow on cash XX% generating free over our balance consistently remain our investment grade while and

and Slide second EBIT performance a business were X, Now expansion the both strong year-over-year X% quarter to with X% the The from businesses. XXXX, while decrease $XXX I’ll year-over-year. quarter of of margin more revenues second details a the provide each turning of grew QX Insulation million, sequentially. delivered on

pricing I and year-over-year slightly to favorable actions mix offsetting versus primarily lower prior business offset technical more the across price solid positive mix volumes down was environment the ongoing by with and continued macro overall customer and lower realization and We to inflation. previously revenue In and see more global year. than insulation, volumes than tied within of the announced product Europe favorable weaker impact

Additionally, the overall the insulation revenue insulation for in sale our contributed in down revenue of the to decline. with year-over-year revenue North segment. was American line Residential decline the Russia operations

pricing Polymers As volumes. were and than expected, lower from incremental the by acquisition Natural revenue offset positive more

second to continued up price began XX% impact closer moderating compared insulation XXXX. volumes was EBIT work than their lower of more As mix for the and million, the quarter $X Overall, of offset housing builders $XXX inflation. insulation margins to lagged through to Positive backlog, in delivered for residential and Insulation the EBIT favorable second demand quarter. million starts. to track

which Before related for with meet took reviewing cooperating I its at to The and certain specific to products withdraw the matter business. in safety regulatory and matter. market a accounted our products products XXXX. to the to requirements. as issue our during approximately from relevant on sales within recall customers review marine business, authorities revenue address updates voluntary fire steps turn address Composites insulation million issue the the $X subsidiary like may matter and this Paroc Paroc currently provide of We’ll is necessary. Paroc an with line, a I’d to not insulation is of

of summary impact the second Composites of Composites Now, to please experience business. quarter, environment. In a the softer business continued our macro to Slide turn X the for the

volumes volumes anticipated $XX million were acquisitions. a quarter from production As decline headwind downtime. primarily $XXX due lower from quarter divestitures compared lower down the period and to year was and on sales EBIT for net the the down was million, associated EBIT XX% million the The the for $XX same ago. year to prior and

Additionally, manufacturing last France our assets Chambéry, to in the year-over-year DUCS in EBIT sale our year and of Russia decline. contributed the operations

we saw another delivered maintained quarter. for price the positive price cost quarter, deflationary. but moderate and We continued Composites EBIT to become inflation experience in Overall, quarter the pressure as of margins XX% transportation

Roofing our realization its quarter, prior overview compared the drove Slide up the an of billion, in XX provides were and top to quarter strongest business. line XX% quarter related Higher business performance. storm in price bottom Roofing the delivered $X.X Sales including positive The increase. demand year-over-year stronger the demand year. and of

quarter, year market, Through lower the U.S. on our compared with trailing the our volumes of shingle of primarily was volumes due inventory year, level up shingle market. the prior to to volume the throughout the exited as we In the basis market half and our a outperformed asphalt XX% shingles QX. QX the first U.S.

up on offset was million, volumes by primarily $XX million manufacturing price For partially EBIT higher costs. the quarter, higher $XXX and positive costs

as and delivery. deflation asphalt well benefited continued costs for We primarily see to as quarter in the materials, from overall input moderate

of All XX%. of in margins EBIT this resulted

performance our outlook reflecting driven $XXX Slide range outlook XX the million $XXX are based our Interest and on income prior now corporate between to lower year expenses increase key cash outlook higher interest This from is strength range General reflects compensation higher and full our and million is now for to expected of estimated our summarizes than expense between items. our XXXX and an $XX financial million balances. $XX by prior results. million.

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

below additions which depreciation at amortization million is $XXX and $XXX range million, at is Finally, approximately to estimated or our $XXX outlook and million. between capital for unchanged

XX to Brian outlook. and our Now turn please further Slide to I’ll call to turn the back discuss Brian?

Brian Chambers

Ken. Thank you,

made performance of results earnings. Our higher, elevating second have we to the quarter continued enterprise the generate more to the in demonstrate progress resilient

up. geopolitical but sentiment quarter, higher inflation growth. stable term sequentially turning to U.S. moderate, within pricing in to remaining continued many significant storm said, the roofing driven markets the the non-residential outlook result quarter, housing As many we anticipate the tensions to more end positive continuing interest we expect activity to to for global robust expect hold impact economic rates relatively positive, market relatively Based businesses with our move uncertainty That be of our our key first third by and overall on year-over-year. of we being the of continue ongoing into slower to near the market market stable verticals in third and we volumes half be with and this

company, Additionally, costs to we teen anticipate moderate margins. to input quarter. costs the sales continue for year, performance in result leading price the prior to to generating the to EBIT in while Overall our similar net high expect we QX positive in

calls, in spending. a revenue business, and prior provide In for to Europe be more Now, expect technical are currency softening as year revenue demand to insulation than year. consistent specific quarter. and lower our price versus with favorable prior outlook with global detailed we lagged U.S. decline low-single-digits Starting flat realization lower the and I’ll be business expect our resulting starts, by third housing we versus businesses, down the positive from insulation offset relatively in prior demand commercial more

the demand price realization in as to macro our which to QX lower Europe, and Continued Russian offset to and increases, environment well are volumes of currency announced by softer from anniversary sale broader operation. tied impact as our expected we previously America resulting in begin the favorable the be in North of

the for as housing Natural In year our energy through track their we in lower to input to anniversary backlog versus volume perspective, similar expect starts. beginning of and narrowing acquisition builders but cost materials, delivery work the closer insulation resulting Also residential we From a and we saw lagged of continues Polymers. the to moderate, business, to anticipate at North price American quarter for demand demand continue insulation inflation and the to we cost. in neutral August, decline positive, will QX, prior fairly

downtime investments realize the the quarter. to We maintenance also of and expect planned impact in production

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

operation. with market versus by Asia. anticipate last In negative pressures favorable pricing of price be negative prior comparison down prior The Russian offset year-over-year are will lower revenues we Moving will price QX more quarter. on we largely year and be volumes lower in impacted contract to year’s and exit year spot pricing expect composite to We These the mid-single-digits be see the peak by the than year-over-year by slightly sale composites. driven becoming quarter, spot third as versus pricing realized also in pricing. being in declines XXXX versus

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

glass Given we saw current mid-single-digits. evaluate will margins we will the continue And balance similar reinforcements and demand conditions for year, to levels in slower revenue we in to in in we quarter our be up environment to roofing, capital. we composites production Overall, to third manage versus the expect anticipate prior market demand working QX. as be what

to In the market with in anticipate quarter digits be up largely mid-single volumes terms tracking volumes, line our we the market. shipments prior of ARMA year versus in with shingle

In we made we tailwind. basis roofing in lower as to previous a EBIT asphalt Deflation we transportation QX. quarter, announcements sequentially, anticipate approaching to in costs more a anticipated what price generating remains our to this the continue price year-over-year and expect from costs on third Overall but remain continue margins for meaningful increase positive to year. is become realize delivered quarter, the

With few our enterprise with comments. businesses, that a of close view I’ll

resilient earnings, as and company start As also our our an capital built sheet, and which returns stronger cash consistently to execution on of more in flow, which investors. have balance leverage will strong returns We’ve we at I to and through can to built investing the our the continue incredibly seen which allocation our ability shared ultimately through performance we be We the a XX% focused the strengthen investments, strong leverage committed flow call, unique organic dividends approach share and to investments, growth productivity remain a to a time cash free and manufacturing market with of capital we approximately and balanced acquisitions of returning company. repurchases. over expertise science, strategy shareholders long-term on material and generate

financial will the on focused delivering As success. forward, we we positioning move strong company and long-term remain for results

open With questions. will the now call we up that, for

Operator

question go [Operator Our today UBS. John, John Lovallo first Instructions] you. ahead. comes Thank from from please

open. is line Your

John Lovallo

I you to second sort question. help bridge XX% Thank maybe whether or more can is margin in over guys. guess how of EBIT like those us And question level? you that in the closer you roofing be, my think taking second time? this morning margin sustainable you Good for seems it’s would sequentially do just that’s XX% quarter, the the It you. margins quarter. sustainable, at importantly, Thank were But that we think least trend year-over-year? to

Brian Chambers

Thanks, John.

Let bridge we the with – a to me maybe our guide. bit little start

of guided I One in kind were range. into was And uplift we margins QX, in around in the few QX. XX% up that think significant the into step quarter. in those a for came we a volume. numbers As factored We things

overall we in and the activity accelerated quarter. if really market in and manufacturing the storm throughout quarter, a shipments increase at QX in demand pretty the in events look So significant weather saw we that

shipments about a ARMA XX record – fact, there. million shipped a In of QX recorded flow a material in lot of of squares, so number record manufacturing

to outperformed the quarter, ground. We’ve a some shipments so pace with think less we more quarter that couldn’t over meet the ARMA very the with inventory we keep level. on those few demand little volumes into we – but strong I manufacturers in the Our inventory that last did were came quarters, had

a our of quarter bit we drive market lagged helped but shipments. step that little margin So performance the overall in up the saw a volumes

big was factor I it. in think a that

immediately that some margins. We of to because and strong material and through resulted deflation continued additional in came flow asphalt volumes, deflations through some that the some roll to of costs stronger I roll P&L those also P&L see through and the through and such mean kind

components We then business. And there. in is third up a step say our the really nice factor roofing I’d saw demand in

service inventory levels saw these think high and As of some that roofing weather-related for And of and significant a restocking us, part step in we’re stronger margin I events. lower business. anticipation demand distributors, our we that’s to business up

think of I performance. those kind factors three the up that were So margin the stepped

customers an as team, outstanding servicing the continued need. and said, But they delivered them the roofing getting quarter, focus business materials great by you just execution on our

to half and activity of get the as two. So a back within or pivot we kind is storm into year, lot of this going go that of a the quarter serviced not

sustain we robust guide the price with along into back a think stronger year. thought probably half gave as pretty move through I that kind and we margins. So QX third quarter continued demand we these that the a of do of those And volumes some realization, think the creates environment we we to could

say a ARMA. QX difference shipments a lot a I manufacturers that have cleared is out. to little expect lot sequentially between think we We our to bit QX would other mere inventory, and of of closer that of

I So shipping think mere capacity going kind rates are rates. of to

the quarter so year-over-year, up little they to but be be shipments in are a sequentially. we lower our think are going going And to

in that’s I So a to little the QX margins. guide think bit

these as cylinders continue look the costs see running really in team. near-term good forward. is performance all then we material as margin clearly continue levels. going as good we the on go the of execution into we’re but for the really track, year, think by to of go we And performance, And play out how some we’ll run us business, to next at business going But at to the we to we’re the

Operator

Thank you.

question from go Kathryn, from is Group. Thompson please next ahead. Kathryn Our Research Thompson

Your is open. line

Kathryn Thompson

taking for you question Thank today. my Hi.

Focusing U.S. on a question composites, two-part and Europe

shingle you going similar end in just did trend a your pricing are And volumes? you little Thank roofing bit composites or hear see pricing Did Chinese more the for you to composites We’re your starting the in clarification for extent a to specifically about on producers? being To For Europe, from seeing as pressure a market Chinese them. you imports U.S. you. talked for Europe standpoint down. pricing for then roofing spot pressure what a volume

Ken Parks

Thanks good and Kathryn Thanks, the question. morning. for

is have not On a the I we’ve of Europe seen I the say we Chinese seen maybe in European imports from within Pacific pricing region. what pressure would question, amount guess Asia this, as similar

producers up demand. we significantly the of that local the On seen product the as calls about China and markets talked market last India. We’ve for the fact couple in the more stepping of moving not into such Chinese Chinese

And Europe year. where if set have the pricing pricing the our as spot business to those is know, heavily you prior in majority into tied to U.S. we environment about contract a Asia. versus really and think you of we in pricing, of focused going more The contract pricing. And on spot is kind

does So to out of it of pressure Asia, this Chinese spot such going that call in about specifically. India. is where to pricing Asia Europe, incremental little imports, to other There’s would but as markets probably Europe, a what you more but and talked in going we nothing most we’re exactly less seeing run bit

moved what then XXXX only we in I to we’ve fact we’ve not seen that really our kind the coming contract stick calling through haven’t of exactly kind kind around they’ve we’ve agreed the the as we’re But kind but customers for stabilized that is they’ve far U.S. with last Europe, year to as in step in in in of of down that step Europe they runs QX a to to saw think what we had XXXX like XXXX well terms from to in level the of feels so down. and And U.S. It volumes QX. as and arrangements. And kind of seen as moved to continued a in

U.S. and step down We say in the those I a markets, the we seeing bit reasons the second mat, into for other seeing up. things only that hold construction to what construction building call going volumes a you with of the composites Now, are and is which that the better. kind we the are housing other leads whether of such you places market it’s that operating see U.S., volumes? spaces or up far question, little as as solutions, but are would as are plumbing roofing obviously the out, holds as did your in building where in where not fixtures U.S. And

a of other We in are seeing markets markets, areas, glass end of end other goes the into. other bit fibers headwind little some that

seen we things guys just that saying we’ve and it this as about finalize move solidifies further of is glass from this want I well, around, to value just the – further of by sure reinforcement further only saying what to this see to you down move stream. reinforcements stream composites us, that make volumes glass the the specifically, confirms that we’re while solutions one value pivot

around whatever whether shingles across in U.S. it’s to specified arrangements that glass Europe, mat, One seeing be. into customers. China. of offset that volumes in the or such as materials, film start non-woven veil are boards those So fibers we’re are reinforcement some stickier the But that be right? glass gypsum it’s other of of downstream the our or the turning best whether They’re products, we more volatility solution, whether that for our markets world, or have into might examples with further to non-woven moving in things that, as to the tend

Asia reality gives question. pricing a seeing you for that we’re contractual hopefully we’re but the little more bit So market. and affect really pricing think is color, thanks the spot hold the But seeing movements I that good the

Operator

Thank you.

Stephen Our is from Stephen, Evercore. ahead. next Kim please go from question

line is open. Your

Stephen Kim

I to ask composite was info the very the much Thanks that about and But Great wanted Thanks you helpful. business all on insulation for Yes. guys. pricing quarter. very particularly that outlook.

start out, all have but We starts the coming lag know, recent as data have we particularly – and that’s census you family certainly yesterday’s from a lot the extremely been starts, single strong. regarding more – the about news single talked family

You could thinking the Paroc they about are you for couple then are increases last than the opportunity stronger just curious you. was was starts So sense, is versus had about in December. particular, price last side implemented additional briefly could seen your the provide a be technical you to what thinking saw I for we've Thank talk from I what census, the of pricing like in an expectation numbers data you that I could of that over wanted – in expected? one Europe. could given in previously December? months last you if that get talk on another the those outlook, one. we seen. what business, your from And I'm And the this you've if due dynamic looks overseas that it

Brian Chambers

with it continuing terms start in Maybe optimistic Stephen. than the strength in us year. we recovery said the started certainly well move through the we're of Thanks, we and you've I res seeing U.S. year I makes probably more think think question. as And housing the

the over as So last by our you've than business completion more light demand about several quarters talked starts. driven housing – rates has the been res really in

backlog builders our like strong that very some of expected start that saw are continue get start to through trend that markets are to in still that demand come we We and through. to and working see QX backlog. saw housing that historic follow would through We There's markets. more worked of in that But starts. to

see to in that expect We QX.

we through. rates to comments inventory stronger and housing. strong the housing certainly has getting fundamental underbuilt. we're of Housing your that of still that is some the mean, to seeing and been interest the seeing what in There's for more I in think, recently. We're the consumers very terms U.S. fundamental work need of But market higher reset in no demand around point, expected builder we

shorter. or the to slowdown maintain to would continued believe continue shallower shallower And duration previous that and in we've be So impact be duration in would much that. cycles than we any

quarter, in starts, to through at quarter than you rate. actually the higher second your starts. seeing and first the second than June quarter higher that of permits all I together When where starts look coming were kind And a million really at X.X we're think point, completion activity, coming

stepping that continues. that's So And up. think we

would So certainly I think market housing positive. is turning more the our view be

next we trends the year. and bodes that year well finish And demand into for as go

the as year and there's opportunities might the So of finding Sequentially, into volume quarters declines finish we few year-over-year growth basis. we're in on near-term, going be year. then stable. next it a some think And a we

sets outlook I the So on good I think a for us. for res that well overall that's, think, up housing view

pricing, Around We're at a and managing at in management the looking been We're future very we've demand costs. price good looking maintaining future business. trends.

a a is we on those the thought we terms we’ll little in further But as the pricing, decisions actions, the have move and started pricing seen certainly, to basis. look we've as demand down technical a environment inflation With demand future regards we would than make year. step So year. down in year-over-year stronger take up a of setting

outlook, we're the hold sequentially I talked as volume those about seeing stable. and But trends pretty in

So the stabilize good current that's those at management, been even to trends see team has demand been very price well. the levels. very, And

We're realization lines, good inflation Europe. across announced on see increases. previously So in including product to continue we price seeing technical our that

that's think guide so of continue we of And And QX. to we going previously a where give on continued there. price announced that's realization kind increases into

Operator

Thank you.

go please Our from next Research. is ahead. from Patterson Wolfe question Truman Truman,

line open. is Your

Trevor Allinson

come can deflationary on in questions. Allinson in I in have that have on taking to considerably I Trevor my the wanted Natural pretty prices of gas And Truman. for natural both businesses. is you down and your place Composites U.S. hedging Thank some potential you touch actually and programs impact benefits Europe. Insulation that the Hi, gas recognize. you this know for

into estimates you through so, XQ? you see flow do that in some start if to from natural It looks modest timing to like can see perspective just baking actually actually quantify in, XQ for a Are to start you inflation. benefits? to potentially of any expect Composites, deflation curious, year-over-year I'm deflation? you're maybe when expecting start about you not, your talking then what those actually are gas If And you benefits those?

Ken Parks

Sure.

that just more So quickly outlining help I'll color. hedge the question. will out how we I'll because again then start by bit little give you a answer And to

on As natural wherever we've very we're approach for gas kind looking a been and while, have a prices and in quarters we're place we out both hedging can, Europe. the talked of where that's in quarter, disciplined about, the in we in U.S. always every five

you of just think So layers constantly at always looking if there's that. hedging about

peaked pricing and – you get that back about had So placed in and quarter the certain around highest gas their a have of layers year. last to of environment We And hedging XXXX. that kind economic QX if in let's third started the to QX, XXXX. think to about go about of environment number of frame, question the would the of think at if QX you QX prices natural prices of time your

are certainly if at to you some we're So that as roll layering something today's closer that market, got we on all to right? QX, there what that hedges, as is in hedges together, means we've get that

that much is that inflation. the at that past in are will in quarters hedge pay year What got back or price than QX more what when QX of little of is put think market we But bit net we we in five layers see itself. also current of We've get start roll it's still running rate affected four QX, were rate. to where some Maybe when we off higher QX, that by comparable are the peak a going of that past QX, we probably a about last saw means year. to last place

few what's happening as where market along any hedge. case, hedge effectively, happening the in kind be next moving it would and you're of it today you the quarters So program, in taking what's via you're is

we more lower And both to you in Composites we're the our to that's pricing benefit our the kind pricing this see play our lower just of going because the like all see we I we of a benefit and in where the getting in should quantify year are And QX, it. from more prices. into now QX, demand benefit better we But it from higher-priced We're Insulation and point But our as in that of and hedges will market in time seeing business in business. QX move those off energy saw yet included of won't outlook. already forward. the see are and prices. rolling that to results

Operator

Thank you.

Phil Our go ahead. Ng please Jefferies. from Phil, from is next question

open. is line Your

Phil Ng

great Congrats on managing curious, on I out Hey, guys. see pricing the how that pricing that hold pricing as on pretty strong about to color quarter. profile? called And Composites. yourself feel mean, some But Ken, comfortable should that XXXX you the appreciate do pretty that out think resets? you contract just looking margin pressure. you up contract side we how well? will Do all

Ken Parks

it's we my Yes, at point make do a say this to fully contracts. prediction back always to have on in hard comment time. would But go I where

move who at more We can as it the are lot kind to products cost. discussion relationship a we contractual those the pricing, provides to who run part more to make like that’s the because purchase. provide what And lot they Europe. is The is the reason those discussions, under of specific with our And have doesn’t got saw customers contracts just other that that it’s much the contracts offering right? us and specificity for much business sold love contracts the being the in as that to want last of pricing commodity, them run DUCS who of we're The about and versus arrangements. decision it looking the the now around to is solutions tend DUCS think about around less U.S., that providing lowest in and year of we products, you in have and primarily thinking value product the of can – to

a under lot of That say the one look around pricing more providing we negotiation So what it’s contracts only we’re looks but a now element. not at elements, the the like a is solution. portfolio and

comparatively in much just several are arrangements discussion. better years, over or into going place last price pricing a contract as So a contract not where it’s we we’re the

tougher I XX kind continue discussions market, as likely been market in around to pricing Asia, called of operate months. production as those in last the continues market, as used And spot in it’s India the continues other of months And tell it prior for as at in earlier we call. exported to the being markets domestic Chinese will is XX to but will the you, in to a fully this levels Now be pricing see at places. well local some not kind as I’ve to quarters its Chinese being out

like are the and be but could where markets and I having into there that U.S. discussions fact Europe. delivering good we we in well that the the tougher, beyond contracts have pricing in pricing we’re in that discussions So go solution

Phil Ng

Appreciate the Thank you. color.

Operator

you. Thank

JPMorgan. Our is Michael, please Rehaut ahead. next Michael go from question from

line Your is open.

Michael Rehaut

a Insulation results. bit or a out just and trying I on Great. wanted congrats outlook focus here. couple to drivers the Thanks very to just much in of the and also little on parse understand

EBIT XQ downtime driven want I by slight off, mostly sequentially that understand make in First steps and maintenance to that’s investments. into down the planned sure if margin production

or environment? improved how back remind for of price given increases current recently guess of a question the potential looking pricing thinking around I more have echoing historically for the there’s market, half, can stabilized in which you’re that business half, enact you starts, increases the the in with usually if that about if does you And into business if just when in then little around any just normal back could us of the interplay the how for remind price terms back and earlier half, does a an cadence us typically the a bit,

Brian Chambers

Michael. Thanks, Yes.

sequential QX. on margins little versus moves the a QX talk Let’s EBIT bit in

planned of couple quarter. mentioned, are to a you very of is One that, been think the running that. downtime I to as a drivers expecting We’ve hard. assets in take these demand little maintenance more service inside we bit

finish to and QX. that then to to higher us trying next address maintenance of we those annual stagger demand can maybe with require They we’re in some get recovery little come issues these to where the bit But hit year this be maintenance at we into QX, anticipated out do a trying here front starts and to we those that year. in and and have think in

in how service drives that to that conscious up getting to gets way on we’re drives that able also make very the sets we need anticipation maintenance So equipment a downtimes with year needed think demand. to we’re cost as I planning our into our that next us that productivity, efficiencies, stronger well we’re we go the our of but volumes manufacturing upgrades

gets And that year QX against I in are that the to to it some some of of rolled going have some be off. some going to comping narrowing costs. we’re we And think to around going price that increases there’s be So question, is pricing last then price this hit.

we’re I think that that’s price around but other new not narrowing, cost, the guide, last So year piece. we – a talked positive been on really year outs this has and in versus our that in about there fact increases

two those the way going bit through to our try be pricing about goods can to to in communicated builders and those So can a sequentially If to on we historically generally the is business. that just through in question, and in a little pressure into your and they Insulation, performance put I Res that increases homes. their to customers overall, of of as put downward margin back time think our combination of estimates they’re building cost step

the for that generally, try at our to we year. end in something at look we look historically fall allows year So sure, customers sometimes the increase announcements to for of plan following

to in continue business. going at input I inflation going we’re think cost to again, the labor starts our historic the costs, So relative forward to cost not then just decisions the to around some that’s to material we’ll as look the that other And at been cadence areas look best seeing question that’s how the finishing overall, environment out back play your that out business, relative half in increasing how And demand of we’ll year. at of costs make we at appropriate when pricing. look those we’re and we the to going look

Operator

Thank you.

Rafe Our go Rafe, of ahead. from is Bank next please question Jadrosich America. from

Your line is open.

Rafe Jadrosich

each questions. weathered then. at some segments Investor the that tough given and It’s Hi, Thanks sort your margin XXXX good the some uncertainty ranges In since taking of set were my of pretty appropriate your and Day, wide long-term you Rafe. for conditions probably November you’ve for morning. at time market out

looking time. you And have the were better than what generally at for margins performed

through margins a structurally performance on think of of of sort of that that changed margins is of ranges those kind is And your Do higher anything kind forward? the How environments. range – given about there your range going of some Just forward? think do floor kind will higher longer-term? going you you margin macro you that’s give

Brian Chambers

of has this the tried that, Thanks, made ongoing strategic we’ve business, couple calls to a the our that investments Rafe changes at talk we’ve frame in about the business, basis through on that a And we that the made Day to for years outlined all structural ago. communications question. I the these our around is quarterly we’ve been think Investor

more we we lot And every step the and then time, to create billion business talked company, that the look revenue more in talked having we could were next overall margin increase up higher about only the to company. And focus we that about business resilient a and thought not believe a get margins at would that We at the a to for year, which margin going sustainable $XX significant within were where and to. growth innovation. profile by acquisitions. performances actions in the initiatives We a we’ve but a up get tracking revenue the company track been they we of taking and

margin operationally, that all doing really of at And we and more operating accumulation in that cash free CapEx And return the higher, to the make step our not that work work the is do have outlined through shareholders, investments strategic then how investments they’re cash to rates commercially, strategy. also look up growth is we we specific up capital how we flow, step it rate, allocation just resilient, of more been of kind efficiently deployment. and that, they’re really to the continue

basis we taking around that at these And have were raising networks been about our margin today, improvements profile and what we’ve working We margin could the said structural we points. the process we in are look by of to. automation our get doing XXX the technologies, optimization insulation. were talking particularly been investments performances thought and So profile, productivity we change when insulation in businesses to of we in we margin structurally

coming that’s think I through.

our rate seen get to new to in contractor offering. a our business growth level network would Kenneth optimization, higher network talked shift shingle And products expand would drive about and to that around margin product investments innovation to better Composites and the we’ve products bring that laminate result a the and talked at investments, in expand Roofing, a that we and lot to we’ve investments value We around And talked and our demand talked make in we that shift about contractor that components laminator. our Medina would about higher that capacity up. attachment service investments profile, in about that standing our that

with very as in rates, think through to of improve think actions we’ve partnerships, structures, of capacity strengthen innovation, through performance. of customer other as the brand. all the our value of taken through terms And structurally products and focused kind productivity, I I So every coming is fruition investments performance margin cost well commercially really in to operating to the utilization business, that

seeing price We’re with in in a step now utilization realization, seeing rates. volumes, good down good value we’re optimization we’re getting factory cost and

and We’re efficiencies seeing out. those we’re seeing good productivity play

really to downturn position us potential overall terms but start margin to working of this and we very, when us volumes in some in these growth very been all we’re what So the have we’re well. that that, businesses. laid out. well teams all And able envisioned. to a The we’ve The this think that A ago, doing take when around of initiatives. proud through positions weather our And today volumes, I inside kind is to of well company very it’s we lot again, accomplish. these we but I on, teams the for really just of executing are extraordinarily think uplift of work this years the few of been see for

and to grow company. pleased at happy we’re So the date very we’re continue and with opportunity to see more to performance where the we

Ken Parks

And just that well, seems time covered which a really it’s ago. November Brian I great think ago, everything Rafe, since a say be it really long this, which add, to not long remiss think wasn’t opportunity. XXXX, if would – I’d because like I I is but

is kind in be, of results? through and the of of proof it portfolio fact All the while point we’ve to changes we you said, company telling the structural what markets changes which and knew that year do the story cylinders, kind our this been get working that hitting So been to exactly changes needs all right? have are the markets see out until all doing while and guys come on where market for hitting, that waiting the the we we everybody’s of the

would results And higher margins, for going each delivered XXXX at we have on operating the may in us, mixed I in you markets, And and said markets the again, an story continued that you higher different QX with to guys softer say, we QX kind including structurally to realize only not challenge as of just our world. look in outlook we or were kind same gave of we exactly in do now just to mixed of of we want in in QX. more even regions what

to points good to and I delivering of track the important we So quarterly so organization feel what points going do. three are ourselves were that two I a just far now to we proof that think and said exactly that say executed and in we delivered because I remind that on proof deliver has point of it’s saying really

Operator

Thank you.

go Mike please Our Capital RBC next Markets. Mike, from Dahl question from comes ahead.

Your open. line is

Mike Dahl

Good morning. Thanks for the question.

of on dynamics, storms, unable it were get in to on XQ, correctly, of XQ. that’s in ground you we some follow-up you demand just some while guess started service to shifting inventory they correctly, if dynamics of I front could the XQ, part demand through first competitors of to probably that heard some you roofing waiting that be continued say accurate? some the to equalized, Just kind some to XQ when – but sure your I is the meant come it, first now in was When of geographic had understand of kind strong it’s which out maybe between make on

the XQ more when think the restocks? same great for I of be that inventory in think spot. And you’re address there, you you kind out? Second is manufacturers, think will all you you basically few if increased be about about Sorry, in that you’re matching could there know is, kind get production think of intentionally guide you do those. inventory sell now versus the do there’s try or your that the kind to some is Have across to outlook with but XQ, in would so lean out, you sell of parts a when

Brian Chambers

them, going I’m Mike. but hit try We’ll try maybe to reverse Sure. to order.

demand yes, shipments. ARMA had volumes. We’d you’ve so our I had – versus solid relative the QX, QX, very QX think volumes think QX I outperform in characterized kind to of we ARMA been QX market. versus Yes,

that felt coming other manufacturers carrying we So were inventory. into probably the more quarter,

a distributors you a there’s rest lot inventory of when the can period for storm why that So volumes ourselves what of then purchase that’s match the they that have on a shipped surge that and believe produced be to QX and event service cleared our guide what always can out. back be because able out kind industry to surge shorter were in, a or of orders put think the time We ground. in we for of

outperformed demand, we a I We’ve first share we fundamentally great believe and in have position. think got contractor So the great contractor support. strong the we very half market

shipments of QX a and we quarters a timing this coming of repeats in bit shipments QX. think I terms is between some inventory think of issue don’t So in out just to demand that

that tough sellout versus buying sell in market – equivalent particularly patterns to it’d of to storm their it’s always distribution would QX although, equivalent, is and I think their buy sellout going predict but of in. the the in, volumes, I markets, demands to kind given of would be think strength

even think and demand I to of going see in pretty we’re terms So that.

brand fact, production, our our the than and incredibly first given demand increased given remain we the our half laminate capacity ever In in terms our investments. laminates have more produce products for we investments, productivity production, in our of strong. But

demand to market. So position We customers. hard a going about work here to it’s service and think share and QX. to continue try strong our be in going we’re it’s robust service good feel in we to QX to But that our

Operator

we time today. Q&A is all have This you. for Thank the

So I would closing Brian now like to hand for remarks. any to back

Brian Chambers

call. joining moment Stacy. during forward call Thanks want And quarter in us to and on to again your and for our Corning, thanks, I today’s Well, Owens you take look third we interest a speaking for just thank to everyone. with everyone

Operator

Thank everyone joining today’s for you call.

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

Owens Corning (OC) 26 Jul 232023 Q2 Earnings call transcript