Owens Corning

Hello everyone and welcome to the Owens Corning Q3 2022 earnings call. My name is Daisy and I'll be coordinating your call today. If you would like to ask a question ready for the Q&A session, please press star followed by one on your telephone keypad. Please kindly only ask one question to allow others the chance. I will now hand over to your host, Amber Wolfe 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 third 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 third quarter 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 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 a measure is 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 10Q 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. Owens Corning posted record third quarter results today in line with the expectations we shared with you in July. During the quarter, our global team once again executed at an extremely high level in what continues to be a very dynamic environment, delivering strong commercial and operational performance in support of our growth strategy and in service of our mission to build a sustainable future through material innovation. During our call this morning i'll provide an overview of our results and what we are doing to continue to outperform the market in the near term, while investing to strengthen and grow our company for the future. can will then provide details on our third quarter performance and i'll come back to talk about our business outlook for the remainder of the year. Now i'll turn to our third quarter results beginning, as always, with a review of our safety performance. At owens corning our commitment to safety is unconditional year today. 54% of our global facilities remain injury-free, and nearly one-half of our sites have worked injury-free over the past 12 months. In the third quarter, our recordable incident rate was 0.64, consistent with our third quarter 2021 performance. Financially, we delivered third quarter revenue of $2.5 billion, a 14% increase over the third quarter of 2021, adjusted EBIT of $487 million, up 22% year-over-year, an adjusted EBITDA of $608 million. This resulted in an adjusted EBIT margin of 19% and an adjusted EBITDA margin of 24% for the quarter. In addition, we generated free cash flow of $367 million and returned $239 million of cash to investors through dividends and share repurchases. In the third quarter, we repurchased approximately 2.5 million shares. During the quarter, we saw many of our end markets beginning to reset as we all adjust to a changing macroeconomic environment with higher inflation, higher interest rates, and continued uncertainty in Europe created by the war in Ukraine. Despite these challenges, our global team continued to deliver great financial results driven by our strong customer partnerships, unique product and process innovation, and resilient supply chain and manufacturing performance. The results generated this quarter and over the past several quarters continue to highlight the progress our team has made on key strategic initiatives to outperform the market in the near term, while positioning us for sustainable long-term performance as we expand into new addressable markets and strengthen the earnings power of our company. In July, we highlighted several recent investments to accelerate the company's growth and generate higher, more resilient earnings by executing our strategy to strengthen our core businesses and expand into new products and applications that leverage our market knowledge material science expertise and manufacturing capabilities. Since our last call we completed the acquisition of natural polymers in August and have been hard at work integrating the team and its technologies into our broader installation product offering similar work is underway with where deck and our joint venture with poltron in the composite business. supporting our pivot into higher value, more capital efficient applications focused on building and construction, renewable energy, and infrastructure. As previously shared, we are also moving forward to exit the Russian market and have entered an agreement to sell our Russian operations, which is now moving through the regulatory approval process. To build on our acquisitions, we are also investing in organic growth through new product and process innovation, as well as targeted new capacity additions. Through the third quarter, the company launched 46 new or refreshed products across our global businesses. These products span many of the core platforms in our roofing, insulation, and composites businesses, including roofing components as we expand our self-adhered and synthetic product offerings, and our nonwovens business as we add to improve our offerings in key building and construction segments. In addition to accelerating our product and process innovation, We also continue to invest in new production capacity to meet our customer demand. To support our new nonwoven production line, scheduled to come online mid to late next year at our Fort Smith, Arkansas site, we will be adding additional capacity to apply specialized coatings to our materials to meet the growing demand for our products in building materials such as gypsum and poly iso insulation. As we make these growth investments, We remain focused across the company on ensuring we have the most cost-effective and flexible manufacturing networks. For example, in insulation, our network optimization efforts within our North American fiberglass business remain on track as we wind down our operations in Santa Clara, California here in the fourth quarter and prepare to start up our expanded NEFI Utah production line in the spring of next year. The combination of our NEFI facility and our Eloy, Arizona plan, which we started earlier this year, provides us with greater flexibility to service our West Coast customer base. The progress we are making in all these key areas, driven by the resilience and creativity of our teams, our unique operating model, and our discipline execution focus, establishes Owens Corning as a stronger company with increased earnings potential. This strong foundation positions us to continue delivering outstanding results even as market conditions shift from recent levels. Before I turn it over to Ken, I'd like to share how our sustainability leadership is bringing additional value to our customers. Over the past two decades, sustainability has become core to who we are and how we operate at Owens Corning. But now more than ever, our aspiration to be a net positive company is a shared pursuit within and beyond our company. Increasingly, our sustainability performance is recognized as an important differentiator by our customers. Earlier this month, Lowe's honored Owens Corning by naming us their 2022 Sustainability Partner of the Year based on our commitment to reducing our environmental impact and building a sustainable future through material innovation. In delivering the award, Lowe's cited our company as a critical partner in the progress it has made on its sustainability goals. including increasing the number of eco products provided to customers and reducing emissions across its entire value chain. During the third quarter, we were also recognized as the 2022 supplier of the year by Avion, a global manufacturer of composites materials. Once again, our focus on sustainability was cited as a driver for the award with specific reference to our EcoVedas Platinum certification as a critical indicator of our ability to provide supply security even in times of extreme supply chain challenges. These are just two recent examples of how collaborating with our customers on sustainability is generating meaningful benefits for one another and building a sustainable future for all. With that review of our performance and strategic initiatives, I will now turn it over to Ken to discuss our financial results in more detail. Ken?