Owens Corning

Hello and welcome to the Owens Corning Q2 2021 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note, Today's event is being recorded. I now would like to turn the conference over to Amber Wolfarth. Ms. Wolfarth, please go ahead.

Amber Wolfarth Thank you and good morning, everyone. Thank you for taking the time to join us for today's conference call and review of our business results for the second quarter 2021. Joining us today are Brian Chambers, Owens Corning's Chair and Chief Executive Officer, and Ken Parks, our Chief Financial Officer. Following our presentation this morning, we will open this one-hour call to your questions. In order to accommodate as many call participants as possible, please limit yourselves to one question only. Earlier this morning, we issued a news release and filed a 10-Q that detailed our financial results for the second quarter of 2021. For the purposes of our discussion today, we have prepared presentation slides that summarize our performance and results, and we'll refer to these slides during this call. You can access the earnings press release, Form 10-Q, and the presentation slides at our website, owenscorning.com. Refer to the Investors link under the Corporate section of our homepage. A transcript and recording of this call and the supporting slides will be available on our website for future reference. Please reference slide two before we begin, where we offer a couple of reminders. First, today's remarks will include forward-looking statements based on our current forecasts and estimates of future events. These statements are subject to risk uncertainties and other factors that could cause our actual results to differ materially. We undertake no obligation to update these statements beyond what is required under applicable securities laws. Please refer to the cautionary statements and the risk factors identified in our SEC filings for a more detailed explanation of the inherent risks and uncertainties affecting such forward-looking statements. Second, the presentation slides and today's remarks contain non-GAAP financial measures. Explanations and reconciliations of non-gap-to-gap measures may be found in the text and financial tables of our earnings press release and presentation, both of which are available on owenscorning.com. Adjusted EBIT is our primary measure of period-over-period comparisons, and we believe it is a meaningful measure for investors to compare our results. Consistent with our historical practice, we have excluded certain items that we believe are not representative of our ongoing operations when calculating adjusted EBIT and adjusted earnings. We adjust our effective tax rate to remove the effect of quarter-to-quarter fluctuations, which have the potential to be significant in arriving at adjusted earnings and adjusted earnings per share. We also use free cash flow and free cash flow conversion of adjusted earnings as measures helpful to investors to evaluate the company's ability to generate cash and utilize that cash to pursue opportunities that enhance shareholder value. The tables in today's news release in the Form 10-Q include more detailed financial information. For those of you following along with our slide presentation, we will begin on slide four. And now, opening remarks from our chair and CEO, Brian Chambers. Brian?

Thanks, Amber. Good morning, everyone, and thank you for joining us for today's call. I hope all of you are staying healthy and safe. Owens Corning posted record second quarter results today, contributing to an outstanding first half of 2021. During the quarter, we continue to see broad strength across many of our end markets. But our results are not only being driven by favorable market conditions. As Ken and I will discuss today, our commercial and operational execution continues to accelerate our performance and create new opportunities for growth. This puts us in a great position to consistently generate strong earnings and cash flows. and continue to deliver greater value to our customers and shareholders over the long term. During our call this morning, I'll start with an overview of our second quarter results before turning it over to Ken, who will provide additional details on our financial performance. I'll then come back to talk about our business outlook for the third quarter. As always, I will begin my review with safety. During the second quarter, we maintained a very safe environment with an RIR of 0.51, significant improvement compared with the second quarter last year. Nearly two-thirds of our facilities have remained injury-free this year, and over half have done so for more than a year. And while we are seeing an increased risk associated with the Delta variant, we continue to operate all of our facilities with a strong focus on working together to keep each other, our customers, and our suppliers healthy and safe. Financially, We delivered record second quarter revenue of $2.2 billion, an increase of 38% compared with the same period last year, up 35% on a constant currency basis, an adjusted EBIT of $408 million, which is a record for any quarter historically. Our global team continues to perform at a high level, executing well in a dynamic market environment. The outstanding financial results we are delivering against this backdrop demonstrate the exceptional operational capability of our people, and earnings power of our company. Our performance during the quarter was driven by strong volumes, broad price realization, and high manufacturing efficiencies across all of our businesses. This resulted in an adjusted EBIT margin for the company of 18%, with all three of our businesses posting double-digit EBIT margins for a fourth consecutive quarter. Demand for our US residential products, which account for about half of our enterprise revenues, remained robust in Q2. and we continue to see higher demand levels within our commercial and industrial applications. Many of our end markets are now operating at or above pre-pandemic levels, as markets have recovered from the challenges of the past 18 months. While underlying market demand for our products remained strong during the quarter, our operating priorities, investments, and execution enabled us to capitalize on this volume to deliver record financial results. Commercially, we continue to work hard to meet the needs of our customers in a tight supply environment while implementing needed pricing actions to offset substantial inflation headwinds. And across the enterprise, we continue to invest in product innovation and select growth and productivity initiatives to service our customers and enhance our operating performance. I'll take a few moments now to share our most recent updates. Within installation, We announced today that we have entered into an agreement to sell our installation site in Santa Clara, California to commercial real estate developer, Panettone. This is part of our ongoing strategy to operate a flexible and cost efficient manufacturing network with facilities geographically located to best service our customers. We plan to continue to run the plant through the third quarter of next year and expect to complete the transaction in the first quarter of 2023. Ken will share some further detail on the transaction during his comments. I want to emphasize that this action is about optimizing our network assets. The net impact will not reduce our production capacity or our ability to service our customers. While we continue to operate the plant over the next year, we will be investing in new capacity to service the West Coast, expanding production at our NEFI Utah plant and restarting our Eloy, Arizona facility. Overall, These moves allow us to create a more flexible, cost-effective manufacturing footprint to better serve the market. And we continue to have other capacity expansion options available if we see long-term housing demand trend higher. In our composites business, we continue to invest to grow in higher-value downstream applications, such as building and construction, renewable energy, and infrastructure. Earlier this month, we announced the acquisition of Alepa GmbH, which specializes in the coating, printing, and finishing of glass nonwovens and other materials for the building materials industry. Based in Germany, FLIPA brings technology and a team with great capabilities that complement our significant nonwovens portfolio and will enable us to better serve European customers and accelerate growth of building and construction market applications in the region. All of these investments are enabled by our enterprise operating model, which leverages our commercial strength material science capabilities, and global operating scale to expand our growth opportunities, improve our operating efficiencies, and generate strong free cash flow. Before I turn it over to Ken to walk through our financial performance in more detail, I'd like to share a brief update on the sustainability front. In May, we were honored to earn the top ranking on the 100 Best Corporate Citizens list for an unprecedented third year in a row. This is one of several recent achievements that demonstrate the commitment of our 19,000 employees to making an impact in ESG. One of the most rewarding aspects of this recognition is that it has spurred customers to approach us to learn and collaborate on their goals in this space. Specifically, our customers are expressing growing interest in reduced embodied carbon products and circular economy solutions, including both recycled content products and end of life solutions. This is providing new opportunities for us to deliver value to our customers by collaborating on work that is core to our purpose and increasingly important to them. We look forward to providing further updates on our progress and outcomes in this area. With that, I will now turn it over to Ken to discuss our financial results in more detail. Ken?