Owens Corning

Hello and welcome to the Owens Corning Q1 2022 earnings call. My name is Katie and I'll be coordinating your call today. If you would like to ask a question during the presentation, you may do so by pressing star 1 on your telephone keypad. I'll now hand over to your host, Amber Waldsparth, to begin. Amber, please go ahead.

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 first quarter 2022. 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 first quarter of 2022. For the purposes of our discussion today, we've 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 risks 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-GAAP to GAAP 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 even is our primary measure of period over period comparison 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 even 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 and the Form 10-Q include more detailed financial information. For those of you following along with our slide presentation, we'll 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 continuing to stay healthy and safe. During our call this morning, I'll provide a broad overview of our performance and the strategic investments we continue to make to expand our addressable markets, generate higher, more resilient earnings, and deliver additional value to our shareholders. Ken will then provide details on our first quarter financial results, and I'll come back to talk about our outlook for the second quarter and broader business trends. Before moving into our discussion on the quarter, I'd like to take a moment to address the war in Ukraine. First and foremost, our thoughts are with all Ukrainians and others in the region who have been so tragically impacted. We condemn Russia's invasion and the atrocities taking place there. While our hope was for a withdrawal of troops and peaceful resolution, it became increasingly clear that this would not be the case. Therefore, we made the decision to exit Russia through a transfer or sale of our facilities. As most can appreciate, this is not an overnight process, but I can assure you we are working intently to expedite our exit. Through this work, the safety and security of our employees in the region will remain our top priority. We will also continue to support humanitarian efforts in Ukraine and nearby countries through our company efforts and the Owens Corning Foundation. Now, I'll turn to our first quarter results, where our performance continued to build on the momentum from an outstanding 2021. Underpinning this performance is our ongoing commitment to safety, sustainability, and innovation, where we continue to lead the industry. During the first quarter, we improved our safety performance 22% compared to the same period last year, achieving a recordable incident rate of 0.51. More than half of our global sites have worked injury-free over the past 12 months, further reflecting our team's world-class safety performance. Financially, We delivered record first quarter revenue of $2.3 billion, a 23% increase over the first quarter of 2021, adjusted EBIT of $417 million, up 48% year-over-year, and adjusted EBITDA of $543 million. This resulted in an adjusted EBIT margin of 18% and adjusted EBITDA margin of 23% for the quarter. In addition, we generated free cash flow of $51 million, and returned $264 million of cash to investors through dividends and share repurchases. During the quarter, we continue to see high demand in our key geographies and building and construction and markets. Residential remodeling and new construction in both the US and Europe remain robust, and we continue to see strong backlogs for our commercial construction products, including renewable energy and infrastructure. Against this backdrop, we are capitalizing on the structural improvements we have made in the businesses and leveraging our commercial and operational execution across the company to generate strong manufacturing performance and positive price realization to offset inflationary headwinds that are impacting energy costs, material input costs, and transportation. As we deliver above market performance in the near term, we are also investing and taking actions to build Owens Corning for the future. At our Investor Day last November, we reviewed our strategy to accelerate our growth and generate higher, more resilient earnings by strengthening our core businesses and expanding into new products and applications, which utilize our market knowledge, material science expertise, and manufacturing capabilities. Today, I'm pleased to share two updates that directly support our strategy and our mission to build a sustainable future through material innovation. A key element of our strategy is pivoting our composites business into higher value, more capital-efficient applications focused on building and construction, renewable energy, and infrastructure, all of which leverage our core glass fiber technology. We continue to see the results of this work through our financial performance and are taking additional actions to further strengthen the business. First, we have completed the review of strategic alternatives for our ducts business, which we announced last October. As a reminder, this product line, which is primarily used in automotive applications, is manufactured in three facilities and generated approximately $270 million in revenues in 2021. From this review, we have decided to sell the European portion of the business, which includes our manufacturing assets located in Chambury, France. We recently received a binding offer for this facility that is now going through a consultation process with employee representatives of the plant as required by French law. We could complete all reviews and close by the end of second quarter. The two other manufacturing facilities supplying ducts material will be converted to produce other glass fiber products needed to support our growth in building and construction applications. In addition, We signed an agreement with JR Plastics Corporation to acquire WearDeck, a premium producer of composite weather-resistant decking for commercial and residential applications. The transaction, which is expected to close later this quarter, creates new opportunities to leverage our glass fiber material science in a fast-growing product category. With expected revenues of approximately $60 million this year, We see the opportunity to accelerate material conversion inside the more than $7 billion North American decking market with a high performance product that is stronger and more versatile than most other decking options. Both of these actions demonstrate the progress we are making in executing our enterprise strategy to accelerate growth and strengthen the earnings power of our company. In addition to these actions, we continue to invest in accelerating our product and process innovation and expanding our sustainability leadership. During the first quarter, the company launched 16 new or refreshed products across our global businesses. These products span our core product platforms, including roofing shingles and components, insulation XPS foam and mineral wool, and wind, nonwovens, and other composite materials. This is a tremendous accomplishment that puts us well ahead of last year's pace for product launches. Finally, I'd like to share two significant developments in sustainability, which is fundamental to who we are and how we operate. In March, we issued our 16th annual sustainability report titled Building a Sustainable Future. The report encompasses 16 topics that reflect stakeholder priorities across various aspects of sustainability and reinforces our longstanding commitment to making the world a better place. Since 2007, we have reduced our absolute greenhouse gas emissions by approximately 60%. And currently, over 50% of our electricity comes from renewable sources. In 2021, we consumed more than 1.4 billion pounds of recycled glass, which reduced energy use and lowers scope one, two, and three greenhouse gas emissions. Sharing our results and aspirations is an important part of our commitment to all stakeholders. And if you haven't already done so, I encourage you to review our sustainability report online. This report will be the last published under the leadership of Chief Sustainability Officer Frank O'Brien Bernini, who has announced his retirement. As one of the first CSOs of a public company, Frank has led our sustainability work for the past 15 years, developing our capabilities, building a world-class team, and driving our results. To build on this strong foundation, We are excited to promote David Rabuano as our new Chief Sustainability Officer, effective May 1st. David is a proven business leader within Owens Corning with a passion for sustainability and deep expertise in our operations, which makes him the ideal person to lead us into the future as we further integrate sustainability into our products and processes. With that view of our performance and priorities, I will now turn it over to Ken to discuss our financial results in more detail. Ken?