With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Industries included in the sector are building materials, forest products, metals, and packaging.

Fortune Sector Leaders: Materials

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

This year’s Fortune 500 marks the 68th running of the list.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-413-Owens Corning

Owens Corning is a building materials producer that makes roofing, fiberglass, and insulation.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-431-Owens-Corning

A maker of insulation and roofing, Owens Corning was founded in 1938.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Founded in 1938, Owens Corning produces residential and commercial building products. The company is best known for inventing and popularizing fiberglass, a material widely used as building insulation. Owens Corning has been a mainstay on the annual Fortune 500 ranking every year since the list launched in 1955. The company has provided building material for various structures around the world including the 9/11 memorial fountains at New York City’s World Trade Center and the Hajj Terminal at King Abdulaziz International Airport in Jeddah, Saudi Arabia.

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Owens Corning (OC): Company Profile, Stock Price, News, Rankings

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Owens Corning

owens corning

Hello, everyone, and welcome to Owens Corning's First Quarter twenty twenty five Earnings Call. My name is Lydia, and I'll be your operator today. After prepared remarks, there'll be an opportunity to ask questions. I'll now hand you over to Amber Wolfa, Vice President of Corporate Affairs and Investor Relations 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 first quarter twenty twenty five. Joining us today are Brian Chambers, Owens Corning's Chair and Chief Executive Officer and Todd Pfister, our Chief Financial Officer. Earlier this morning, we issued a news release and filed a 10 Q that detailed our financial results for the first quarter twenty twenty five. For the purposes of our discussion today, we have prepared presentation slides summarizing 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, where we offer a few 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 Investors section of our website, owenscorning.com. Third, financials and metrics for current and historical periods discussed on this call will be for continuing operations, except for capital expenditures and cash flow measures, which include amounts related to glass reinforcement until the closing of the sale of the business.

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 today. During our call, I will provide an update on our overall performance in the first quarter, including some color on the operating environment we are navigating as well as the progress we are making on our strategic priorities and actions being taken to position us for future success. Todd will then provide a more detailed review of our quarterly performance, and then I'll come back and discuss our outlook for Q2. Our team delivered another strong quarter to start the year demonstrating the durability of our earnings and the power of the enterprise to outperform in any operating environment.

Our results continue to reflect the positive impact of the structural changes we have made to focus Owens Corning in high value building product categories where we can build market leading positions for our unique commercial capabilities and disciplined operational execution. As always, underpinning our performance is our ongoing focus on the safety of our people. Our team's commitment to working safely resulted in a recordable incident rate for the first quarter of zero point five four, which is 80% lower than the manufacturing industry average. Our enterprise safety results now includes our DOORS business, which has been on a journey of continuous safety improvement. I'm pleased with how quickly our DOORS team has integrated the OC Safer Together operating framework to build on a strong safety culture.

Turning to other first quarter performance highlights. We delivered revenue of $2,500,000,000 an increase of 25% year over year compared to the prior year's revenue of $2,000,000,000 Adjusted EBITDA in the first quarter totaled $565,000,000 for an adjusted EBITDA margin of 22%. This marks our nineteenth consecutive quarter of delivering adjusted EBITDA margins above 20% as we continue our track record of sustaining strong and resilient margins in any operating environment. We also remain focused on our operating cash flow, delivering results in the quarter consistent with the seasonality we historically see to start the year. Given the cash generative power of each of our businesses through the year, we continue to fund high return organic investments.

These phased investments in our roofing and insulation businesses coming online over the next three years will add needed capacity to support our long term growth as well as provide network flexibility with improved cost positions. In addition to these strategic investments, we returned significant cash to shareholders through our dividend and share repurchases. Looking to the broader building products market in North America and Europe, we entered 2025 with a mixed environment. Overall demand for repair and remodel has remained challenged with the exception of non discretionary re roof activity, which has remained solid. New residential construction, which accounts for about a quarter of our enterprise revenue, started the year slower as interest rates remain elevated.

And finally, our non residential markets, which account for about 20% of our business, remain fairly stable overall. Like all companies, we continue to evaluate and adjust to the impact of tariffs on our business. Given the localized nature of our production to meet demand and the fact that our products are USMCA compliant, we would expect to see modest direct impact from current tariffs. The impact of future tariffs however and the potential impact on North America and European economies remains uncertain. Todd will provide additional information on potential impacts on our financial results and the mitigation actions we are implementing.

Against this backdrop, our first quarter results once again demonstrated the strength of our businesses and resiliency of our earnings. As we move through the year, we will remain focused on the areas we can control, our customer share positions, our operating cost and our capital allocation. Regarding our longer term organic investments to strengthen our market leading positions, we continue to make good progress on all fronts. In roofing, we are on track to start up our laminate shingle production line in Medina, Ohio at the end of the second quarter to provide needed capacity to service our contractors and distributors. And we are narrowing our site selection for our new shingle manufacturing plant in the Southeastern U.

S. Both of these investments complement our broader effort to enhance needed roofing capacity with a winning cost position as we further modernize our U. S. Roofing manufacturing network. In insulation, we also made good progress on our major investments to meet residential and commercial customer needs as we look to strengthen our flexible cost effective fiberglass network with a new line in Kansas City, expand our Formula XBS capabilities with our new facility in Arkansas and improve our mineral wool manufacturing efficiency and capability by converting our plant in Sweden from coke fired furnaces to electric melting.

And in doors, we're actively driving margin improvement in the near term through our integration efforts, which are on track to exceed $125,000,000 in cost synergies as we position the business for future growth by applying the broad Owens Corning playbook. In addition to these growth investments, progress on our two strategic divestitures continue to track in line with our expectation to close both transactions later this year. The sale of Glass Reinforcements and our Building Materials business in China and Korea allow us to streamline our operations and focus on geographies and applications where we can build market leading positions. The combination of these growth investments and strategic divestitures show how we're reshaping the company into a branded building products leader and operating as the new Owens Corning, driving higher, more consistent returns and long term value creation. Overall, our company is well positioned for future growth and performance supported by key secular trends, including the age of existing U.

S. Housing stock and the significant amount of homeowner equity, the need for heightened investment in new housing capacity and the continued strength in U. S. Commercial construction applications and market opportunities emerging in Europe. In summary, our strategic investments and decisions combined with our disciplined operational execution create multiple paths to drive organic growth, deliver 20% or more adjusted EBITDA margins and generate significant cash flow and strong returns.

Before I close, I'd like to highlight a few other important recognitions. Last week, we announced the promotion of Rochelle Marcon to President of our Doors business. Most recently, she led our glass nonwovens business, which has delivered significant revenue and earnings growth for the company. We are excited to bring Rochelle's leadership capabilities and operational experiences to our doors business. In addition, this quarter, we published our nineteenth annual sustainability report that highlights our efforts to keep employees safe, reduce greenhouse gas emissions and waste to landfill, and advance our portfolio of products that help customers save energy and lower emissions.

I'm also proud to share that Owens Corning was once again recognized by Barron's as one of the hundred most sustainable companies in The US, ranking fourth on the annual list and showcasing the strength of our iconic brand and commitment to sustainable growth. Finally, I would like to remind everyone that we will host our twenty twenty five Investor Day on May 14 at our world headquarters in Toledo, Ohio. Todd, myself and other senior leaders look forward to sharing more about our vision, strategy and longer term financial goals for the new Owens Corning. With that, I'll turn it over to Todd.

Thank you, Brian, and good morning, everyone. As Brian mentioned, we had a strong start to the year. Our performance in the quarter demonstrates the strength of the enterprise as we sustain higher and more resilient earnings in mixed markets. I'd now like to turn to slide five to discuss the results for the quarter. As a reminder, these results are for continuing operations.

We started the year with revenue growth of 25% driven by the addition of our doors business. Adjusted EBITDA was $565,000,000 up 10% from prior year and adjusted EBITDA margin was 22%. Adjusted earnings per diluted share for the first quarter were $2.97 In the quarter, adjusting items did not materially impact EBITDA. Turning to slide six and moving on to our cash generation and capital deployment during Q1. Free cash flow for the quarter was a net outflow of $252,000,000 driven by the timing of working capital from seasonality in the business and by capital additions.

Capital additions for the quarter were $2.00 $3,000,000 up $51,000,000 from the same quarter prior year. At quarter end, the company had liquidity of 1,900,000,000 consisting of approximately $400,000,000 of cash and $1,500,000,000 of availability on our bank debt facility. In Q1, we established a commercial paper program and completed issuance of $500,000,000 of short term notes. During the first quarter, we returned $159,000,000 to through share repurchases and dividends. We repurchased common stock for $100,000,000 and paid a cash dividend totaling $59,000,000 In February, the Board declared a cash dividend of $0.69 per share.

Our commitment to our capital allocation strategy remains focused on generating strong free cash flow, returning approximately 50% to investors over time and maintaining an investment grade balance sheet, all while executing on our business strategies to grow the company. Now turning to Slide seven, I'll provide additional details at our segment results. As a reminder, the roofing segment now includes our vertically integrated glass nonwovens business and our structural lumber business. Additionally, the two glass fiber plants that supply nonwovens and external customers now operate in the insulation segment. The roofing business started the year delivering a great first quarter as demand for our shingles remained strong.

Sales in the quarter were $1,100,000,000 up 2% from prior year on a like for like basis. Positive price realization from previous announcements and strong demand for our nonwovens products more than offset the impact of lower components volumes due to normalized attachment rates. We expect Q1 to be the last quarter of a negative year over year comp from attachment rates. The U. S.

Asphalt shingle market on a volume basis was down slightly compared to the prior year. Lower demand in areas of the country impacted by winter weather was largely offset by growth in the Southeast. Our U. S. Shingle volume was in line with the market.

EBITDA was $332,000,000 for the quarter, down slightly versus prior year. We saw higher manufacturing costs as we continue to invest in our assets to meet the high level of demand for our products and absorb the cost of maintenance. We also saw modest cost inflation. Overall for the quarter, we delivered EBITDA margins of 30%. Now please turn to Slide eight for a summary of our Insulation business.

The Insulation business started the year strong, expanding margins and delivering its sixteenth consecutive quarter of 20 plus percent EBITDA margins. Q1 revenues were $9.00 $9,000,000 a 5% decrease from Q1 last year. In North America residential, volume was down due to market uncertainty tied to the broader U. S. Macro environment.

During the quarter, we continue to realize positive price from our mid-twenty twenty four increase. In North American non residential, volume was down in line with the market. In Europe, volume was relatively in line with prior year as we've continued to see market stabilization. These businesses both recognized positive price in the quarter. Insulation EBITDA for the first quarter was $225,000,000 up slightly compared to prior year.

Strong operational performance in the quarter resulted in favorable manufacturing cost. As expected, we incurred input cost inflation but maintained a positive price cost for the business overall. Insulation delivered EBITDA margins of 25% in the first quarter. Moving to slide nine, I'll provide an overview of the doors business. Overall, the business performed well in a challenging market.

In the quarter, the business generated revenue of $540,000,000 in line with the outlook we provided on our last call. Revenue was down modestly from Q4 primarily on lower volume in North America and Europe. EBITDA for the quarter was $68,000,000 with EBITDA margins of 13%. The integration is progressing very well. When we closed on the acquisition, we had line of sight to delivering $125,000,000 of enterprise synergies by the end of year two with about half hitting the doors business.

We are on track to exceed the enterprise commitment and we'll share more at our upcoming Investor Day. Overall for the company, there was minimal impact from tariffs on our financial results in q one. Our sourcing and supply chain teams responded immediately to the tariff announcements and focused on negotiating with our suppliers, shifting sources of supply and purchasing additional inventory ahead of tariffs. As a result, we expect to reduce the approximately $50,000,000 gross tariff exposure in the second quarter to a net impact of around $10,000,000 primarily in the doors business. This impact is included in the outlook Brian will share in a moment.

Owens Corning is well positioned to address rising tariffs with our primarily local for local manufacturing and USMCA compliant product portfolio, but we would expect a step up in net tariff exposure in the second half of twenty twenty five. The net impact of tariffs in the second half of the year could be in the range of 1% to 2% of cost of goods sold assuming current tariff policies. Moving on to slide 10, I will discuss our full year 2025 outlook for key financial items. General corporate EBITDA expenses are expected to range from $240,000,000 to $260,000,000 This year over year increase includes our best view of expenses for the glass reinforcement business that will not be included in discontinued operations. As a reminder, our corporate eliminations changed with the resegmentation.

The $39,000,000 in revenue eliminations we saw in Q1 should serve as a good proxy for the remainder of the year. Capital additions are expected to be approximately $800,000,000 This level of capital investment reflects the strategic investments Brian mentioned in his opening. We have several multiyear organic investments to bring on new manufacturing capacity and drive long term growth. This CapEx continues to include glass reinforcements. We expect CapEx to remain elevated in the near term as we work towards completing the high return capital efficient projects we've discussed on this call.

Now please turn to Slide 11, and I'll turn

the call back to Brian to further discuss our outlook. Brian?

Thank you, Todd. Our first quarter results highlight the impact of the structural changes and strategic choices we've made to generate higher, more resilient earnings within very dynamic markets. As we move through Q2, we expect our building products end markets in North America and Europe to provide solid but mixed opportunities.

North America, we expect near term demand for non discretionary re move activity to remain solid, while residential new construction and other remodeling activity is expected to remain weaker through the first half of the year as interest rates remain elevated and consumers remain cautious. With non residential construction in North America, we are starting to see some market headwinds emerge. But in Europe, we expect market conditions to gradually improve throughout the year. Given this near term outlook, we anticipate second quarter revenue for continuing operations to grow high single digits compared to prior year's revenue of $2,500,000,000 For adjusted EBITDA, we expect to deliver another strong quarter with margins in the low to mid-twenty percent range for the enterprise. Now consistent with prior calls, I'll provide a more detailed business specific outlook for the second quarter.

Earlier this week, we provided updated historical financials that reflect the resegmentation by quarter for 2024, which serves as the baseline for the year over year changes I will discuss. Starting with our roofing business, we anticipate revenue growth of low single digits. While demand for shingles remains solid as we enter peak roofing season, we expect ARMA market shipments to decline by low to mid single digits compared to prior year due primarily to more normalized storm demand. We expect our shingle volumes to track largely in line with the market. We anticipate normalized attachment rates and components with growth in nonwovens to partially offset lower shingle volumes.

Compared to Q2 of last year, we expect higher manufacturing costs as we invest in our assets to continue to meet the high level of demand for our products and absorb the necessary maintenance costs. We also anticipate moderate cost inflation during the quarter. For the business, we expect positive price from our previous announcements to drive year over year top line growth and positive price cost. Overall for Roofing, we expect to generate an EBITDA margin slightly below prior year. Moving on to our insulation business, we anticipate revenue to decline mid single digits compared to the prior year with ongoing price realization slightly offsetting lower volumes and currency headwinds.

In our North American residential insulation business, we expect revenue to be down low to mid teens versus prior year due to lower demand as we work through a step down in light housing starts and customers adjust to ongoing market uncertainty. For North American non residential, we expect revenue to remain relatively in line with prior year driven by steady demand for our products. And in Europe, we anticipate revenue to be similar to prior year. Overall for the Insulation business this quarter, we expect cost inflation to be offset by positive pricing. Given all this, we expect EBITDA margin for insulation near the mid-twenty percent range.

Turning to our doors business, we continue to perform well relative to market conditions and expect Q2 revenue to increase low single digits sequentially driven by slightly stronger seasonal demand. Additionally, we anticipate ongoing synergies and cost controls to largely offset the impact of announced tariffs. In the near term, Doors faces the most tariff exposure due to cross border product moves into Canada, which actively working to mitigate. Overall for Doors, we expect EBITDA margin in the low double digits to low teens for the quarter, similar to Q1. As Todd mentioned, another factor that could impact our enterprise results in Q2 is the implementation of additional tariffs.

While most of our products are made with local materials and sold in local markets, our integrated supply chain spans Canada, Mexico, and The US, which could result in additional cost. We will continue to look for opportunities to mitigate the impact of tariffs as they unfold. In summary, our team continued to deliver strong results in the first quarter within a very dynamic marketing environment. As we progress through the year, we will remain focused on delivering value to our customers and shareholders as we invest to further strengthen Owens Corning as a building products leader. We are well positioned to capitalize on key secular trends that provide significant long term growth opportunities for our company.

Although we anticipate mixed near term market conditions, we are confident in our ability to continue outperforming the market. With that, we would like to open the call up for questions.

Thank you. Our first question today comes from Michael Rehaut with JPMorgan. Please go ahead. Your line is open.

Thanks. Good morning, everyone. Thanks for taking my questions. Wanted to start off, I think there's some concern in the marketplace with some of the scheduled capacity additions in the insulation section sector rather over the next year to two years. And I was hoping if you could kind of review not just your plans, but maybe more broadly the industry as you see it today, particularly as at least for the last few years single family starts have been relatively steady not showing too much growth.

And the near term you could argue is still somewhat uncertain from a macro standpoint.

Good morning, Mike. This is Todd. I appreciate the question. Let me start with a little bit of context about where we're at overall with capacity. We clearly have seen the cutoff line in McGregor, Texas come online and we're seeing that capacity even now in the market.

And we've seen other competitors announce capacity that will come online in future years. It is important in insulation to differentiate between capacity that produces bats and rolls and capacity that produces loose fill. Bat and roll capacity is what, analysts typically think of when they think of insulation capacity. These tend to be larger assets. They tend to be assets that you, you run consistently.

You can't turn them on and off, frequently. Loose fill assets, you can turn on and off as needed to to meet market demand. We've said historically, we thought the installation industry could support a market between one point four and one point five million starts depending on single family mix, depending on codes growth, depending on other factors. We also know that over time, consistently, codes growth has driven, greater volume per unit for for residential housing, increasing demand.

And the third thing we know is that housing in The US has been under built now for well over over a decade. So long term, we do see a rising need for for insulation materials. In the short run, the the market will bounce around. We do know this is an industry that has a wide range of cost structures. Some assets are very cost effective.

Other assets are less cost effective. And we and, you know, presumably other manufacturers continue to work through, how they balance capacity to to supply in any market condition that that we're in. But long term, we continue to see, North America housing is being under built and the secular demand for translation to be good and provide support for incremental capacity additions. Thank you, Mike.

Our next question comes from John Lovallo with UBS. Please go ahead.

Good morning, guys. Thanks for taking my question. Sticking on the insulation side, if North American residential insulation revenue is expected to be down low to mid teens in the second quarter, I mean how are you thinking about fiberglass insulation pricing? Is that going to be down year over year?

Thank you, John. This is Todd. I'll take that one as well. When you look at the the shape of pricing last year and this year, we did have a mid year increase in 2024 that got good traction for for residential insulation. That drove pricing in the back half of last year, but then also into the the first half of this year is we have a a good year on year comp.

We're certainly watching, market dynamics very closely in in res to make sure we're, we're staying on top of of share positions and and where we're we're placed. But certainly in the second half, we still benefit from that favorable year on year comp and when we got the price increase last year. You you have certainly seen analyst reports that suggest a limited uptake on the 2025 increase. And that's certainly consistent with what we're seeing in in the market. But as you saw in the first quarter, we did have positive price.

And even in the second quarter, we're guiding overall for positive price in in the installation segment. Thank you, John.

Next in queue, we have Stephen Kim with Evercore ISI. Please go ahead.

Hi. This is Atish on for Steve. Thanks for taking the question. I just wanted to touch on some of the tariff exposure that you spoke to. Specifically, what mitigation efforts will be used to kind of offset the impact in 2Q and in the back half?

That mostly pricing? And, I don't if you could expand on that a little bit, that'd be helpful.

Thanks, Satish. I'll take that one as as well. Let me go back to what we shared on the last call on tariffs and then bring it forward to the guidance and then the mitigation actions. So in the last call, we we shared that we thought less than 5% of our total, cost, could be impacted by tariffs. We also said it would disproportionately impact our doors business, with about two thirds of the impact, and then insulation with about one third of the impact with little net impact on on roofing.

Since then, we've seen a couple things move around. As Brian shared in in his prepared comments, we've got a lot of goods movement that occurs between The US, Canada, and and Mexico. The good news is our products are are largely USMCA compliant, so those tariffs are are no longer impacting us. We also, though, saw higher tariffs on Chinese imports, which are now around a 45%, which is higher than what we knew of on on the last call. So when we look at the shape of of the quarters and the impact in our mitigation efforts, we saw very little impact in the first quarter from tariffs in in the results that we just shared.

In the second quarter, we expect to see a 50,000,000 of gross tariff, impact. But when we look at all the mitigation steps that we've taken, and I'll have color on that in a minute, the net impact is down to about 10,000,000, and that's mostly in the doors business. Now what did we do to go from 50,000,000 of gross to 10,000,000 of of net exposure? Our sourcing and supply chain teams stepped in immediately on the announcement of of the tariffs to do a few things. Where we could, we position inventory in The US in advance of the tariffs taking effect.

So you you do see a bit more cash use in the first quarter than we typically have as a result of us building inventory to to make sure we're well positioned, in advance of of the tariffs. We also though did did other things. We worked with our suppliers, where possible to reduce the impact of of tariffs, on us. We're also seeking sources of supply, outside of China. Obviously, with China at a 45 tariffs, that that's a big number on anything we're importing from China.

So we're doing what we can to to offset that. So with with all of those moves, some of which are longer term, the the work we're doing to move supply out of China, the work that we're doing in negotiation with our suppliers, that tends to be longer term. The work to position inventory in advance of tariffs is clearly, short term. So when we guide to the back half of the year, we talked about the exposure, the net exposure from tariffs under current policies ranging between 12% of cost of goods sold. You could think of the high end of that range, the the 2% number is being our current mitigation plans tracking into to the back half of the year.

You could think of 1% as being, we, we do additional mitigation steps. Everything I described as well as working, in Canada to address some of the reciprocal tariffs that we're still facing in our doors business and looking very closely at our own supply chain and product portfolio to make sure we mitigate tariff exposure. We're looking at all of that to try to to offset as much of the gross tariff exposure as we can in the back half. But those are plans in in progress, which is why we guided to that one to to two percent range. So clearly, it's a dynamic environment.

Tariffs could move, before the the next time we connect on our next call. But our teams have proven over the last five years through very dynamic market conditions, whether it's COVID, whether it's supply chain challenges, whether it's inflation, whether it's now the tariff scenario, that we react very quickly, to, to address this. And Brian and I are both very proud of what our teams are doing in this environment to deliver the lowest cost we can. Thank you.

Our next question comes from Brian Burrows with Thompson Research. Your line is open. Please go ahead.

Hey, good morning. Thanks for taking my question. How are you thinking about balancing taking market share versus defending margins in the current environment of rising prices and trying to pass on price increases into the challenging market conditions that are out there? Thank you.

Yes. Thanks, Brian. I think we continue to operate with the same playbook in terms of how we always balance price and share. We want to invest in the items that can bring value for our customers and help them win and grow in market. We make investments in innovation and marketing tools, our brand, our commercial teams, all that helps them grow their businesses that results in a value that then we can charge for our products into the market.

So we continue to be value focused in terms of bringing more to our customers that they wanna partner with us and do more business with us. When we come into environments that we start to see demand challenges or we start to see pricing pressures, we clearly are are gonna wanna retain and maintain our competitiveness in the market. Most of our product categories, we are able to maintain some price premiums relative to that value we bring over other manufacturers, and we look to maintain that. But we are gonna be competitive in the market, to the market dynamics we're facing. And then we continue to work the value side, with our customers, and we continue to work the cost side internally to make sure we're optimizing our network, we're sourcing in the best way, and we are being the most efficient with a winning cost position that allows us to flex our pricing and still maintain high and and, sustainable to these strong margins in, for the each of the businesses we operate in.

And that's generally been our philosophy in in all economic conditions, and that's one we certainly are gonna continue and the playbook we're gonna continue to run-in the market conditions we're facing here in the near term.

The next question comes from Matthew Bouley with Barclays. Please go ahead.

Hey, good morning everyone. Thank you for taking the question. I wanted to follow-up on the insulation capacity side. In the context that, you know, you guys in the past have have been really disciplined and and I would say flexible around capacity. You know, it's not easy to do, but you both opened and closed capacity where it's right to do so over the years.

So I wanted to kind of press on your thoughts around being flexible with capacity decisions here. I guess not knowing how your competitors may act, but I guess at what point would you make a decision to adjust your capacity investments? Or are there other higher cost facilities in the network today or lines where where you could be more flexible? So I I really, what I'm asking is kind of what is the risk of the industry becoming over capacitized for a period? Thank you.

Thanks, Matt. Appreciate the the question. Let me add a a bit more color here. And, you know, let me step back and say we we've we've made a number of operating choices and strategic choices in the installation business over the last five years to position our business for exactly market conditions, like these. We've created a business that can do well whether housing starts are at 1.5, one point four, one point three, one point two based on, the moves that that we've made, which includes, the work to build a more flexible network, including, the the exit of our Santa Clara facility and the addition of a much more flexible facility in in Nephi to support the West Coast.

So we believe we're well positioned to deal with a market like this. We're also entering this market environment with low inventories. We've been largely in sold out conditions in our insulation business for an extended period of time. So we're in a position where, we would seek to rebuild our our inventories to better serve our customers going forward. And this market condition allows us actually to to do that.

That positions us better for both customer service and and future growth coming out of this. We're always very disciplined about understanding the market, understanding our inventory levels, understanding how we wanna be positioned. As I alluded to earlier, we continue to have high cost and low cost assets within our network. In markets like this, there's always opportunities to make sure low cost assets continue to to operate and produce, and we mix manage on the cost side to have the most cost effective network that that we can. That's, that's our plan going forward.

What I would say is, certainly, we're in two quarters now of relatively weak leg starts, But this also is a market that can change quickly as we think about the future. So we wanna make sure we're well positioned not just for today, but to serve our customers very well in what could be a strengthening market in future quarters. Thank you.

Our next question comes from Sam Reid with Wells Fargo. Please go ahead.

bit on Insulation just to keep on that topic. Could you just aggregate the pricing that's embedded in your guidance for Q2, specifically between resi insulation and commercial end market insulation? It sounds like overall price is going to be positive based on what you're telling us. But are there any deviations between expected pricing on the resi side versus the nonresi side that we should be contemplating here? Thanks.

Thanks. Appreciate the the question. I'll add a bit more color on our q two outlook. Let let me start with our our nonres in Europe piece of the business, which, which actually now is the majority of our business in insulation. We're seeing we're seeing good pricing dynamics in in both of those markets.

We've talked about the improving conditions in in Europe. And certainly starting with, the the Ukraine conflict, Europe has been a relatively weak market overall for for insulation. But we're seeing green shoots, in market for for volume growth, and Europe has a lot of pent up demand for both new construction as well as repair and remodel and ultimately, reconstruction in in Ukraine that all should be constructive in terms of future volume trends for, for for Europe. We're also seeing a good price environment for our products in in Europe. The same thing is true in non res for, for North America.

We're seeing a a good backdrop for our products. It certainly is an inconsistent market in North America. There are pockets of real strength in manufacturing, partially as a result of of onshoring, but also in sectors like data centers that continue to be robust. Both of those sectors use a lot of our installation, not just for, the buildings, but also for the process technologies that occur within those within those structures. But there are pockets of weakness also in in res around retail and and some other areas of of commercial and and health care.

But within that backdrop, we're still seeing positive price in non res for for North America in a constructive, price environment. Within res, as I shared earlier, we are we are seeing carryover price from the mid year increase. Now some of that is the comp that, we do have an easier comp against q one and q two last year where we don't have a price increase in in that number. The comp gets harder as we get into q three, q four when we start to lap that increase, And we did not see a lot of traction on the the 2025, price increase that was in in market. So, we're not we're not guiding to q three, q '4 today, but certainly we're considering that as we look at at the back half of the year.

And we're following starts and late starts very closely to understand pricing dynamics in the res market.

The next question comes from Philip Ng with Jefferies. Line is open.

Hey guys. Question for Brian. I mean, a lot of focus on installation and doors. Give us an update what you're seeing on the roofing side. It sounds like demand is pretty resilient there.

Give us some color on carryover storm demand and any storm activity this year. And certainly, you got a price increase out there for roofing, for spring. You see any traction in that? And just lastly, on the Medina Ramp, how should we think about that impact, whether it's a demand standpoint or any headwind from a start up cost standpoint? Sorry.

Alright. Phil, thanks. Let me let me take them kind of one at a time. To start with just with the overall roofing market, we continue to see very good demand in the business, started with first quarter in our guide in Q2, even down a little, but this is down off of very strong market conditions in the first half of last year. So overall, a very good demand environment for our roofing business.

And I think this really highlights the nondiscretionary nature of this business when you look at the repair and reroof activity that is still being needed out there and the work that's still being done. So overall, good demand, and we think that continues into to q two here. Around storm volumes, I kind of break that out, we we talked on the last quarter's call that we were coming into the year with a little less carryover than than the prior year, but still good carryover from from some of the storms that were taking place in the back half of last year. And we saw some of that materialize in terms of stronger demand in Florida and North Carolina as they continue to do that storm repair work. We think a lot of that gets done here through the second quarter.

A little bit of that carries over into q three. When we think about q two now in terms of overall opportunity in terms of the market, We think repair work that's ongoing is strong. Contractor backlogs are still pretty strong in most parts of the country, so that that underlying repair and reroof business is staying pretty solid. For storm demand into q two, we're just kinda coming into the season, but we've seen a a pickup of in some activity here over the last few weeks. So a big part of our guide when we say q two could be down low to mid single digits is really gonna depend on how the storm season materializes.

Q two, q '3 is where we see the bulk of the storms coming through The US market, but we're assuming in our guide a more normalized kind of q two storm environment, but that could change and fluctuate, here over the next four, five weeks depending on how how hail season materializes and and any other kind of storm damage we see. But I think we're we're set up relatively well in terms of of how we're positioning the market. For price realization, given that market demand and given the strength of our contractor engagement model, we are we announced an April increase. We're seeing good realization of that, to start the quarter, so we would expect that to to continue as we carry on into q three and into the back half of the year. And then lastly, on Medina, you know, this is one we're we're really excited to be bringing up this new capacity.

The laminate growth we've seen in the market and the laminate growth we've seen inside our business over the last few years has exceeded our ability to even continue to optimize and expand capacity on our existing network. So this will be a new laminate line that we're gonna be starting up at the end of the second quarter. We're excited to bring that capacity online here starting kinda q three and really ramping up through q three and q four to service our customers, with additional land products. Part of the, the the operating cost and some of the manufacturing costs that are a little higher as we came into the year, we talked about this as well on on last quarter's call, that we did expect to see a step up in some of the manufacturing costs in the business. Really, set up in two buckets.

One was ongoing maintenance of existing assets that we just continue to run our assets full out, and we've needed to just take some downtime here in the first half of the year to to make needed, just updates and modernizations and and, service that equipment. And then the second part of it is gonna be tied to some startup of some new assets, and Medina is one of them. So that is gonna create a little bit of a manufacturing cost headwind here in q two, probably spill over into q three as we start that lineup. But the teams have done great work to to bring that asset in line. We're on track to start that up at the end of the quarter and we're excited to bring some needed capacity into the market.

Our next question today comes from Mike Dahl with RBC Capital Markets. Your line is open.

Good morning. Thanks for taking my question. I guess I'll stick with roofing, but maybe broaden out a little bit. Can we talk about non tariff related costs on the input side? Obviously, like it still seems like you're absorbing some higher costs maybe in 2Q, but you've seen a big decline in oil.

You've seen some pullback in natural gas. Walk us through the timeline and magnitude of how that may impact roofing. And then in your in your insulation business, maybe how that how the pullback in natural gas would would impact you as we look out over the next couple of quarters.

Yeah. Thanks. So when we look overall at the inflation we're seeing inside roofing business, big buckets are one large material input cost. Big bucket has always been asphalt. I'd say we historically see asphalt cost rise through the first and second quarter as we get into the heart of paving season.

We expect to see that today and we expect to realize that as we come into Q2 with asphalt costs kind of rising seasonally. But right now, we've not seen some any dramatic decreases coming through related to WTI oil, cost reductions. And I and I think when we look inside of that, we you know, we've seen some of the asphalt market pricing disconnect from WTI over the last couple of years. Part of that is because with with lighter crudes being processed, there's less asphalt being done, so it's less sensitive. And asphalt inventory levels have actually been running pretty low over the last twelve months.

So we've not seen any of that WTI cost really impact the asphalt cost in a significant way. Now having said that, as we come through the year, if oil costs stay low, that's gonna keep our asphalt costs running at similar levels. So we we would probably see a little bit of seasonal inflation as we work through the year, but not as high as we've seen in some historical years. So I think that could be a net positive in terms of moderating asphalt inflation as we move through the year depending on what WTI does. On in terms of nat gas, maybe I'll ask Todd to talk a bit about that in terms of impact in insulation.

Owens Corning (OC) Q1 2025 Earnings Call Transcript

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