Owens Corning

After the prepared remarks, there'll be an opportunity to ask questions. If you'd like to ask a question during the Q&A, you can do so by pressing star followed by one on your telephone keypad. I'll now hand you over to Amber Wolfer, Vice President of Investor Relations, Corporate Affairs to begin. Please go ahead.

Good morning. 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 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 second quarter of 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, owenscoring.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 and today's remarks contain non-GAAP financial measures. Explanations and reconciliations of non-GAAP to GAAP measures may be found in our earnings press release and presentation, available on the investor section of our website, owenscorning.com. 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? Thank you, Amber. Good morning, everyone, and thank you for joining us. During our call today, I'll begin with an overview of our second quarter performance. and provide an update on our two big strategic moves to reshape Owens Corning into a more focused building products company. After that, Todd will go into more detail about our financial results for the second quarter, and then I'll come back to discuss the market environment and our outlook for the third quarter. Turning to our overall performance in Q2, Owens Corning continued to deliver outstanding financial results within a very dynamic market, demonstrating the broad capability of our team, the value of our product offering, and the earnings power of our company. In addition to delivering another quarter of strong operating performance, we completed the acquisition of Masonite, expanding our portfolio of branded residential building products, and continued the review of our glass reinforcements business. Both of these strategic moves are key parts of our ongoing transformation to a more focused residential and commercial building products company that leverages key ownership advantages to accelerate our growth and increase our earnings. I'll share more about our transformational efforts in a few moments. First, I'll begin with a review of our safety performance. Our global team made additional progress in our safety performance with a recordable incident rate of .46 for our legacy on corning business in the second quarter. Three-fourths of our facilities have operated injury-free in 2024. More than half have done so for over a year. Combined with a positive first quarter, Our number of recordable injuries year to date is 40% lower than the same time last year. As we add our new DOORS business to the company, which is not included in this data, consistent with Owens Corning's unconditional commitment to safety, a priority of our integration team is advancing safety processes, systems, and culture through our Safer Together operating framework. We look forward to carrying out this work through the remainder of the year and integrating DOORS safety data into our overall reporting in early 2025. Financially in the quarter, we continue to achieve earnings that are structurally higher and more resilient. In Q2, the company delivered an adjusted EBIT margin of 21% and an adjusted EBITDA margin of 27%, with net sales that grew as a result of the acquisition of Masonite. With this performance, our team has achieved a significant milestone of delivering 16 consecutive quarters of mid-teens or better adjusted EBIT margins and 20% of better adjusted EBITDA margins. Sales and margin growth generated adjusted diluted earnings per share of $4.64 in the second quarter, our strongest result to date. In addition, we generated $336 million of free cash flow, returning $52 million to shareholders through dividends in the quarter. Moving on to our businesses, each of our segments performed well in the quarter relative to market conditions. In roofing, our strong margin performance was driven by positive price realization and favorable mix. as ARMA market shipments moved lower versus prior year as expected, based on more normalized storm demand. Insulation revenues increased slightly over prior year as the segment continued to perform well in North America, which partially offset a weaker macro environment in Europe. Positive price, favorable mix, and lower delivery costs were key drivers of the segment's performance in the quarter. Our recently added door segment contributed to our top and bottom line growth for the second half of the quarter, as we began our integration process. And in composites, as expected, we saw lower but stabilizing demand and pricing in our glass reinforcements business while demand and pricing in our nonwovens business remained solid. These results highlight the value our team delivers to our customers and shareholders as we maximize operating performance within our businesses while continuing our strategic shift to be a more focused company. We are capturing opportunities in our core markets and investing in new capacity and product categories where we can leverage our durable ownership advantages. This drives value creation by strengthening our market-leading businesses to grow faster and achieve higher margins and stronger free cash flow. In addition, we continue to transform the company through significant initiatives and investments that position Owens Corning for future growth. Turning to slide five, one of those initiatives, the acquisition of Masonite, is key to our long-term growth strategy. The addition of the doors product line expands our leadership position in residential building products through a complimentary category that extends our offering of essential building materials and grows our revenue base from residential building construction to approximately 70% of the company. Through durable ownership advantages, including our brand leadership commercial strength product and process innovation and operational expertise. We can drive improved financial results and strengthen this market-leading residential building products business. The doors and door systems category is a great fit for us given our customer and channel positions, especially in wholesale distribution and home centers. Our track record in applying material science innovation to drive value and differentiation and our effective use of sourcing and manufacturing operating systems to optimize production networks, which improve service and quality while reducing costs. We continue to get positive customer feedback as we discuss the addition of doors to our product offering. As we near 90 days post-closing, we see tremendous opportunities to leverage the capabilities of Masonite and Owens Corning to build a new OC. As we work through the integration process, we remain focused on providing great products and service to our customers while combining our businesses. We have a strong team in place leading this work and are making considerable progress in achieving our plan 125 million in enterprise cross synergies. While ensuring we maintain the competitive strengths that have allowed the doors business to be successful and support future growth. we've captured early wins through sourcing synergies, including price harmonization for general equipment and maintenance parts. lateralizing volume discounts with shared suppliers and leveraging the strength of our network to improve transportation costs. We look forward to opportunities ahead for Owens Corning through this new product platform as we benefit from our expanded portfolio of market leading products to advance our enterprise strategy and deliver even greater value for our customers and shareholders. And now I'll turn to the strategic review of our glass reinforcements business. As a reminder, our glass reinforcements business is part of our composite segment and manufactures, fabricates, and sells a wide variety of glass fibers. TAB, Mark McIntyre, or we hold a leading market position in several key regions and product applications. TAB, Mark McIntyre, The business service customers and industrial segments outside the residential and commercial building product space or owns corning is focused today and into the future. TAB, Mark McIntyre, Since the announcement, our team has made good progress in evaluating options to both maximize value to shareholders and determine the best growth path for the business. TAB, Mark McIntyre, While we were not able to share more details today, we will provide additional updates throughout the second half of the year. As we sharpen our focus through these strategic moves, we also continue to make targeted investments in our existing businesses to increase capacity and meet the growing demand for our products. Most recently, this has included a glass non-woven plant expansion, which we are beginning to bring online, a new coating facility, a new Formular NGX insulation plant, and a new laminate shingle production capacity to complement the other line of braids we have made throughout our roofing manufacturing network. We've also been enhancing our U.S. fiberglass insulation network by making smart investments that improve productivity and flexibility in a cost-effective way. The market demand for our products is robust, and the ongoing secular trends in housing and energy efficiency indicate strong potential for growth. Given this long-term demand outlook for our insulation products, as we shared during our last call, we continue to evaluate options to expand capacity within our existing manufacturing network. This investment will further support a cost-effective and flexible network designed to meet future needs for our fiberglass installation in both residential and commercial applications. We expect to share more in this capacity expansion as we finalize the details over the next few months. As we invest for growth, we will continue to be strategic in our choices, focusing on markets and product lines where we can lead and add unique value. Over the past several years, We have proven our ability to grow our business while consistently enhancing shareholder value through a disciplined capital allocation strategy of returning approximately 50% of free cash flow to investors over time through dividends and share repurchases. As a result, in the past three years, we've more than doubled our dividend payout. And since 2020, we have bought back more than 20% of our outstanding shares. This demonstrates both the cash-generating power of Owens Corning and our disciplined approach to growing the business. In closing, I want to thank our global teams for their consistent execution and drive to excel that has helped deliver another outstanding quarter and first half for our company. Through our talented people and highly valued customer partnerships, we continue to outperform the market as we transform and grow into an even stronger residential and commercial building products company for the future. Now, I will pass the call over to Todd for a detailed review of our second quarter results.