Owens Corning

My name is Lydia and I'll be your operator today. If you'd like to ask a question after the prepared remarks, you can do so by pressing star followed by the number one on your telephone keypad. We kindly ask that you limit yourself to one question only. I'll now hand you over to Amber Woolfarb, Vice President of Investor Relations, to begin. Please go ahead when you're ready.

Good morning. Thank you for taking the time to join us for today's conference call and review of our business results for the first quarter of 2024. Joining us today are Brian Chambers, Owens-Corning's Chair and Chief Executive Officer, and Todd Pfister, 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 2024. For the purposes of our discussion today, We have prepared presentation slides summarizing our performance and results, and we'll refer to these slides during this call. You can access the earnings press release, form 10Q, and the presentation slides at our website, owenscorning.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, where we offer a couple of reminders. First, Today's remarks will include forward-looking statements that 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 more detail. Second, the presentation slides in today's remarks contain non-GAAP financial measures. Explanations and reconciliations of non-gap-to-gap measures may be found in our earnings press release and presentation, available on the investor section of our website, owenscourting.com. 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?

Thank you, Amber. Good morning, everyone, and thank you for joining us. During today's call, I will walk through highlights of our first quarter performance and provide an update on the Masonite acquisition and the review of strategic alternatives for our glass reinforcements business that we announced earlier in the year. After that, Todd will discuss our first quarter financial results in more detail, and I will come back to share our outlook for the second quarter. Owens Corning delivered another great quarter to start the year, highlighting our strong execution and broad capability to deliver robust results within a very dynamic market environment. Our results continue to reflect the strength of our market-leading positions and enterprise focus to capitalize on key secular trends that accelerate our growth and strengthen the earnings power of the company. Now I will begin a review of the quarter, as always, with our safety performance. At Owens Corning, our commitment to safety is unconditional. As part of this commitment, we continuously renew and refresh our approach to safety as we strive to eliminate injuries and work safer together. Through this work, I'm pleased to report that our recordable incident rate in the first quarter was 0.31, a more than 50% improvement from the same period last year, and our best start to the year in over two decades. Looking now at our first quarter financial performance, we continue to execute our key strategic and operating priorities, resulting in strong earnings to start the year. The company delivered an adjusted EBIT margin of 19% and an adjusted EBITDA margin of 25%, with net sales that were in line with prior years. This earnings performance marks the 15th consecutive quarter of mid-teens or better adjusted EBIT margins and 20% or better adjusted EBITDA margins for Owens Corning as we continue to execute our enterprise strategy, leading to higher, more consistent earnings. Our top line and margin performance generated adjusted diluted earnings per share of $3.59 in the first quarter. And consistent with our capital allocation strategy, the company returned 182 million to shareholders through dividends and share repurchases during the quarter. Market conditions for our North American residential and commercial businesses remain favorable to start the year, while our European businesses continue to face more challenging conditions. Within this dynamic environment, all three of our segments perform well, driven by our team's strong execution and highly valued product offering. In roofing, Strong margins during the quarter were driven by continued good pricing and favorable product mix within shingles and components as contractors continue to recognize the value of selling our complete roofing system. In insulation, we continue to see solid demand in North America for both our residential and technical insulation products, while Europe continued to be impacted by a weak macro environment. Positive price cost and favorable mix help fuel our results. And in composites, While overall revenues were down as expected, demand trends within our glass reinforcements business have begun to stabilize in most of our end markets. Volumes in our non-wovens business remained solid in the first quarter due to the strength of the roofing market and continued demand for non-residential building products. Across the enterprise, we are leveraging our brand leadership, product innovations, focus on sustainable solutions, and channel and customer knowledge to differentiate Owens Corning. strategically positioning us to continue driving results in delivering further growth. Let me share a few of our latest updates on product innovation and sustainability. During the first quarter, we launched 13 new or improved products. In our roofing business, we launched a new weather resistant barrier house wrap under the pink wrap brand. We are excited about this new product and believe the combination of our manufacturing capabilities, service platforms, and existing relationships with contractors and distributors put us in a strong position to create additional value for our customers and grow this product category. I would also like to share an update on our sustainability progress. In March, we issued our 18th Annual Sustainability Report. This report reflects the global impact of our people and our products in the many ways we work to make the world a better place. We are firm believers that sustainability is not just good for the environment, it's good business, and we are proud of the progress we've made toward our long-term goals. For example, waste to landfill has been a challenge for us over the years, but in 2023, we had a breakthrough, achieving a 14% absolute reduction compared to 2022. Also highlighted in the report, in 2023, 59% of the company's revenue came from products that help customers save energy and lower emissions, with 14 of our products certified as being made with 100% renewable electricity. These are products that our customers want and need, and our ability to deliver in a sustainable way creates a competitive advantage. In addition, we achieved a 28% reduction in scope one and two emissions from the 2018 baseline, putting us more than halfway toward our goal of 50% by 2030. To further reduce our emissions, I'm pleased to share that we are converting our Helicus Sweden insulation plant from coke-fired furnaces to electric melting. This will help reduce carbon emissions and lower the embodied carbon in the products produced. which brings us closer to reaching the greenhouse gas targets we have set for ourselves. This also strengthens our market-leading position and improves our manufacturing efficiency, while ensuring we continue to meet our valued European customers' expectations. I am very proud of the commitment by our teams to deliver on our mission to build a sustainable future through material innovation and the progress we continue to make in areas such as circular economy, waste reduction, and employee safety. I encourage you to review our sustainability report if you haven't already done so. Before turning it over to Todd, I want to provide an update on the two transformational moves we announced in early February. While we are very pleased with our strong and consistent financial results, we are excited about the opportunity to better align our business units with our overall enterprise strategy to focus on building and construction solutions and to create new opportunities for Owens Corning. Let me start with the Masonite acquisition. As we shared during our call at the time of the acquisition announcement, the addition of Masonite helps us expand our leadership position in the branded residential building product space and adds a product category that complements our current interior and exterior residential offerings. The acquisition also creates a scalable new growth platform, expanding our total addressable market to $75 billion. Lastly, it enhances our attractive financial profile by growing our revenue and earnings, lowering ongoing capital intensity, and increasing free cash flow generation. The proposed transaction has been well received by our customers. Our strong distribution partnerships, combined with our best-in-class contractor engagement model, position us well for further success within this new product category. Since the announcement, we've been working closely together on integration planning and regulatory procedures, and continue to work toward a mid-year close of the acquisition. We look forward to welcoming the Masonite team to Owens Corning. Adding this market-leading provider of interior and exterior doors strategically fits into our company, expanding our offering of branded residential building material products with customers, channels, and markets we know very well, while providing several opportunities to improve operating efficiencies as a combined entity, leading to cost synergies. Owens Corning is a recognized leader in the building and construction materials space, and we believe that this acquisition strengthens our position in the near term while creating exciting opportunities for the future. In February, we also announced the strategic review of our glass reinforcements business, which is part of our composite segment. While the business is a market leader in several regions and applications industrial nature of the applications and customers does not fit with our strategic choice to invest in and grow our residential and commercial building materials offering. Given our discipline capital allocation approach and best owner operating philosophy we've initiated this process and engage Morgan Stanley is our financial advisor. We'll share more about our progress as new information is available. In closing, I want to thank our global teams for their dedication and commitment to consistently delivering for our customers and shareholders. Our employees are the driving force that propel our company forward to continue executing on our growth strategy while maintaining our high standards for delivering strong results and winning the right way. With that view of our performance and strategic initiatives, I will now turn it over to Todd to discuss our first quarter financial results in more detail. Todd?