Owens Corning

Hello everyone and welcome to the Owens Corning second quarter 2022 earnings call. My name is Daisy and I'll be coordinating today's call. You will have the opportunity to ask a question at the end of the presentation. If you would like to register a question, please press star followed by one on your telephone keypad. Please kindly only ask one question to allow others the chance. I would now like to hand over to your host. Amber Wolfoff to begin, so 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 second quarter of 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 yourself 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 2022. For the purposes of our discussion today, we have prepared presentation slides that summarize our performance and results and will 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 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 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 high level view of our performance and the progress our team is making on several strategic investments to expand our addressable markets, accelerate growth, and strengthen the earnings power of our company, all supporting our ability to continue delivering strong results in diverse market conditions. Ken will then provide details on our second quarter financial results, and I'll come back to talk about our outlook for the third quarter and broader business trends. Now, I'll turn to our second quarter results, where we delivered another outstanding quarter in line with the expectations that we shared with you during our April call. As always, we'll begin with a review of our safety performance. As you know, safety is a top priority for our company. Year to date, approximately two-thirds of our global facilities remain injury-free, and one-half of our sites have worked injury-free over the past 12 months. In the second quarter, our recordable incident rate was 0.81. This result was above our second quarter 2021 performance and reminds us of the daily focus we must have on safety in order to achieve an injury-free workplace. Financially, we delivered second quarter revenue of 2.6 billion, a 16% increase over the second quarter of 2021, adjusted EBIT of 525 million, up 29% year-over-year, and adjusted EBITDA of 656 million, This resulted in a record adjusted EBIT margin of 20% and an adjusted EBITDA margin of 25% for the quarter. In addition, we generated free cash flow of 361 million and returned 136 million of cash to investors through dividends and share repurchases. During the quarter, our global teams continued to execute incredibly well to service our customers and deliver strong financial results despite ongoing supply chain disruptions regional impacts of COVID, and high inflation. Positive price realization in the quarter once again offset energy, raw material, and transportation inflation in each of our three businesses. As we continue to outperform the market in the near term, we're also investing and taking actions to build Owens Corning for the future. Last November at our Investor Day, we shared our strategy to accelerate the company's growth and generate higher, more resilient earnings by strengthening our core businesses and expanding into new products and applications that leverage our market knowledge, material science expertise, and manufacturing capabilities. The progress we are making, driven by great execution from our teams, optimized performance across our manufacturing networks, and highly focused, growth-oriented investments, establishes Owens Corning as a stronger company with increased earnings potential. This strong foundation positions us to continue delivering exceptional results, even if market conditions shift from the elevated levels we've recently experienced. I'll now share several updates that directly support our strategy and our mission to build a sustainable future through material innovation. During the second quarter, we completed our acquisition of WearDeck, a premium producer of composite weather resistant decking for commercial and residential applications. This acquisition expands our product offering into a new, high-value building material solution. With current annual revenues of approximately $60 million, we see the opportunity to leverage our glass fiber science and market knowledge to accelerate material conversion in this fast-growing product category. Continuing with composites, in June, we announced a new joint venture with Pultron Composites, a producer of our industry-leading fiberglass rebar. Today, fiberglass rebar makes up less than 1% of the $9 billion North American rebar market. And we see the potential to significantly grow in this space over the coming years with a more sustainable, durable product solution. The joint venture with Poltron will expand our manufacturing capability and improve market access for our products, including pink bar plus fiberglass rebar used for flat work and residential applications. And in July, We entered into an agreement to acquire the remaining 50% interest in an existing joint venture based in the US that produces high value non woven fiberglass mat that we expect to close in the third quarter. In addition to these investments on July 1 we completed the sale of the European portion of our composites dry use chop strand product line, which includes our manufacturing assets located in chambray France. Our two other ducts manufacturing facilities are being repurposed with minimal capital investment to produce other glass fiber products needed to support our growth in building and construction applications. Each of these moves support our pivot and composites 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. Switching to insulation, In June, we signed an agreement to acquire Natural Polymers, an innovative manufacturer of spray polyurethane foam insulation for building and construction applications. In recent years, we've seen significant advancements in the spray foam industry that make the material a much more attractive solution. The Natural Polymers technology, in combination with our material science knowledge, will enable us to provide customers with a broader insulation product offering featuring long-term sustainable solutions. Natural Polymers expects to deliver annual sales of about 100 million with continued double-digit growth over the next several years. We expect to close this transaction in the third quarter. And as previously shared, we are also moving forward to exit the Russian market. While the environment is complex to complete such transactions, we are working through the options to transfer or sell our facilities. To complement these strategic moves, We also continue to invest in accelerating our organic growth through product and process innovation, as well as expanding our sustainability leadership. During the first half of the year, the company launched more than 30 new or refreshed products across our global businesses. These products span many of the core platforms in our roofing, insulation, and composites businesses. A particular note in the second quarter was the launch of seven products focused on supporting our leading market position in wind energy. Our continued progress in developing new and refreshed product lines is a demonstration of our ability to transform customer insights into new functionality and solutions that promote business growth. 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 spot on the 100 best corporate citizens list for an unprecedented fourth year in a row. This ranking recognizes outstanding environmental, social, and governance performance and transparency among the largest publicly traded US companies. This is one of several recent achievements that demonstrate the commitment of our 20,000 employees to making an impact in ESG. While recognition is never the aim of our activities, it reinforces the importance of the work we do and the way we do it and It inspires our team to continue toward our goals to increase the positive impacts of our products, reduce the negative impacts of our operations, and help our employees and communities thrive. With that view of our performance and strategic initiatives, I will now turn it over to Ken to discuss our financial results in more detail. Ken?