Owens Corning

Hello everyone and welcome to the Owens Corning first quarter 2023 earnings call. My name is Daisy and I'll be coordinating your call today. If you would like to register a question please press star followed by one on your telephone keypad. On today's call you will only be allowed to ask one question to allow others the chance. I would now like to hand the call over to your host Amber Wolfarth from Owens Corning 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 first quarter 2023 joining us today are Brian chambers owens corning 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 2023. 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, owenscording.com. Refer to the investors link under the corporate section of our homepage. The 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 in 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 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 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. During our call this morning, I'll provide a broad overview of our first quarter performance and the work we are doing to further strengthen and grow our company. Ken will then provide more details on our first quarter results, and I'll come back to discuss what we are seeing in our markets and our near-term outlook. Owens Corning delivered strong first quarter results within a very dynamic market environment. During the quarter, our global teams continued to demonstrate the ability to react and respond to shifting market conditions as we manage the impacts of ongoing inflation, higher interest rates, and continued geopolitical tensions, which is leading to slower global economic growth and lower demand in a number of our end markets. I will begin a review of the quarter, as always, with our safety performance. At Owens Corning, our commitment to safety is unconditional. During the first quarter, our recordable incident rate was .64, in line with our performance during the same period last year. Over the past 12 months, nearly one-half of our global facilities have worked injury-free. Financially, we delivered revenue of $2.3 billion, similar to first quarter 2022. Adjusted EBIT of $361 million and adjusted EBITDA of $487 million were both down versus prior year. Despite facing more challenging end markets, the structural improvements we've made to our businesses combined with our leading market positions and disciplined execution positioned us to generate another quarter of strong financial results, delivering an adjusted EBIT margin of 15% and adjusted EBITDA margin of 21% for the quarter. In terms of free cash flow in the quarter, we had a cash outflow of $322 million, reflecting a more normal seasonal cash flow trend for our company. And consistent with our capital allocation strategy, we returned $183 million to investors through dividends and share repurchases. Each of our segments performed well relative to market conditions, especially our North American residential businesses, which demonstrated the strength of our customer partnerships, the value of our product lines, and the power of our brand. In insulation, we continue to realize the benefits of good price realization and solid residential insulation demand, offsetting the impacts of slowing volumes in our technical and global businesses and ongoing inflation. In composites, As expected, we saw the impact of customers resetting their inventory levels and slower market demand, as well as production curtailment and the loss of earnings tied to our previously announced divestitures. And in roofing, we continue to see strong demand for our products, resulting in better price realization in volumes that outperform the market. Our results to start the year continue to highlight the work done by our team to strengthen the earnings power of our company. In addition to driving strong financial performance in the near term, we also continue to make strategic investments that will expand our growth potential and enhance our earnings performance centered around optimizing our manufacturing networks, improving our cost positions and supporting our longer term growth goals. Following the closure of the Santa Clara California insulation facility in Q4 as part of our network optimization initiative, we completed the sale of the site in March and, in line with our expectations, have started up our expanded Nephi, Utah insulation facility this month. We also continue to make investments to expand our production capacity in key product lines. To support our roofing business, we will be making a major investment in our Medina, Ohio facility to expand our laminate manufacturing capacity, including our market-leading duration shingles. This action comes on the heels of several smaller investments last year, to increase productivity and capacity across our entire shingle manufacturing network to meet the growing demand for laminate shingles. The Medina investment will transition an existing strip line to a convertible line with the ability to produce laminate shingles, as well as needed roofing components such as hip and ridge and starter shingles, which support our residential roofing system. We expect to have this new line up and running by the end of 2025. Within our insulation business, We recently formalized our previously announced plans to build the new Formula NGX manufacturing plant in Russellville, Arkansas. Also targeted for startup in 2025, the new plant will serve the growing needs of our extruded polystyrene insulation customers. With applications spanning both residential and commercial buildings, Formula NGX provides a significant reduction in embodied carbon, further contributing to our ability to create sustainable solutions for the building materials industry. Along with our capacity investments, we continue to accelerate our product and process innovation. During the first quarter, we launched 11 new or refreshed products, spanning core platforms in our roofing, insulation, and composites businesses. Of particular note was the introduction of UltraPure spray foam, the newest product line addition from Natural Polymers, which we acquired last summer. This low VOC spray foam insulation product supports increasingly stringent energy codes and homeowner demand for products that contribute to a healthier indoor air quality and adds to our comprehensive array of insulation solutions for virtually any building environment. These investments in additional capacity and product innovation help our customers win and grow in the market, improve our operating efficiencies, and create new growth opportunities for our company, further strengthening our market-leading positions. As we continue to grow our company, we remain committed to operating at the highest standard and winning in the market the right way. In March, we were recognized by Ethisphere as one of 2023 world's most ethical companies, marking the sixth consecutive year we've been recognized with this honor. Owens Corning was one of just two honorees in the construction and building materials industry, underscoring our commitment to leading with integrity and prioritizing ethical business practices. Finally, before I turn it over to Ken, I'd like to provide an update on our sustainability efforts, which continue to generate multiple advantages by creating additional growth opportunities and helping to fulfill our company's mission and purpose. We are proud to be issuing our 17th Annual Sustainability Report next month, which will highlight our ongoing aspirations to double the positive impact of our products, have our environmental footprint, protect our people, advance inclusion and diversity, and make a positive impact in the communities where we work and live. Sustainability has long been core to who we are and how we operate, serving as an important driver and differentiator for our company. I encourage you to review our report upon publication as it highlights the efforts and achievements of our 19,000 employees across the world who are working every day in service of our mission to build a sustainable future through material innovation. 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.