Owens Corning (OC) 15 Feb 232022 Q4 Earnings call transcript

Hello and welcome to the Owens Corning Q4 Full Year 2022 Earnings Call. My name is Alex and I'll be coordinating the call today. [Operator Instructions]

I'll now hand over to your host, Amber Wohlfarth, to begin. Please go ahead.

morning, good and you everyone. Thank full taking Thank for for to and us time conference you the call quarter results for today's business and join our the review XXXX. year fourth of

Officer; are Brian Financial Corning's Chief our Joining us and Chambers, Parks, today Ken Chair Owens and Executive Officer. Chief

will only. this limit call call participants possible, this please to accommodate your Following our open to many presentation questions. to as question one yourselves morning, we X-hour In order as

release news quarter and a this XXXX. morning, a Earlier results fourth issued detailed that the financial and filed our we XX-K year for full

For discussion and presentation results purposes slides we performance slides refer we'll have call. to these the prepared of our and during our that summarize this today,

XX-K website, the A at slides and the for access available call can home of of You presentation reference. this on owenscorning.com. our link the under to and Form our the Corporate Investors section and recording page. our supporting the earnings transcript release, future be Refer slides will website press

reference begin, reminders. before offer we we where X of couple a Please Slide

actual of risk affecting explanation update factors these detailed based in under the could is First, such factors filings estimates to to our the and include a forward-looking what applicable required other more will identified uncertainties securities statements risks forward-looking on today's to to results our beyond inherent subject We statements laws. Please and statements. cautionary refer for the future materially. undertake statements SEC are no and events. current of forecasts our These remarks cause differ statements risks, and that obligation uncertainties

are to the measures and on remarks press owenscorning.com. financial contain of text may and our of reconciliations slides be and of financial non-GAAP Second, which in both today's measures. presentation, the release tables available earnings and found Explanations GAAP non-GAAP presentation

We our ongoing have a of excluded our effective operations it EBIT potential share. for when rate tax we calculating we primary that earnings quarter-to-quarter we earnings. per believe remove Consistent at historical meaningful certain our representative to effect have results. with period-over-period be of arriving adjusted our is to measure and earnings comparisons compare Adjusted believe practice, adjusted which are is and not the fluctuations to measure of adjust and our items adjusted significant in adjusted EBIT the investors

We news also use Form helpful and measures cash that XX-K evaluate financial The adjusted to the cash the as include opportunities pursue free value. free company's that investors release to cash generate and to conversion flow enhance flow ability and shareholder in more today's earnings detailed utilize to tables cash of information.

you presentation, For those begin will with slide following on of along Slide X. our we

opening Chair our remarks CEO, Brian? Brian And from Chambers. now and

for Amber. you Good morning, us. Thanks, thank joining everyone and

and and markets update on fourth beyond. what first outlook quarter. Ken in and discuss full I'll XXXX our back for our for the in continued results and seeing quarter we're to an start overview how During will and with our then fourth performance of details year year our our come morning, we provide the success quarter provide for XXXX positioning are on and call an this I'll full the company

outstanding delivered results our Corning the serve. we outperforming achieving across performance record and businesses Owens all consistently in XXXX, markets financial

the challenges war in marketplace year and the significant reset of the markets many included changing that labor disruptions. to end macroeconomic chain As ongoing unfolded, began to supply our as environment adjusted Europe, a inflation,

enterprise product a strategy our face in In our outstanding material mission customer so, advance we innovation through capabilities. great and continue and of build future partnerships, of strengthen team to to the company and global demonstrated the by unique innovation. doing and earnings sustainable power support our deliver driven in challenges Our of our resourcefulness process to results resolve manufacturing financial these strong

I'll results. our safety. always, to Moving begin, as with

critical component and deliver a remains we safety continue in commitment to safety world-class XXXX. Our to our performance success to

During with safety injury-free decade. to in the global of our best of recordable incident quarter year sites quarter, of year. XXXX X.XX, X/X a a throughout we RIR nearly our This achieved X.XX lowered operating performance rate the fourth our full

market billion, for quarter, fourth the we adjusted in adjusted XX% in delivered prior and $XXX revenue EBITDA inventory by million of Adjusted declined lines areas of levels. available quarter the demand and offset in Financially, of our driven XXXX. execution of This adjusted fourth end-of-year capitalize adjusted number increase customers an up a as managed million on as X% downtimes X% a quarter. an inflation, of and to team's strong versus most needed margin EBIT volumes in $X.X and year. and maintenance These results of margin $XXX of EBITDA product XX% EBIT to resulted opportunity both manage the over were production our were slowing

billion. XX% up revenues the Adjusted margins billion financial in For represented $X.X earnings EBITDA EBIT XX% with of and XX% XXXX of adjusted year, resulted XX% performance the over was full of $X.X XX% adjusted year-over-year EBITDA delivered $X.X year. of billion EBIT and net adjusted we record of a billion, $X.X This increase for of and increase. a margins

we through or addition, cash returned generated free million flow and of to In and XX% repurchases. dividends of billion cash investors free $X.X flow $XXX share

new reflected innovation. our divestitures, our capabilities This progress in and new addressable and our our core and expand organic knowledge, capacity building market expertise and significant results acquisitions strategy growth progress has made product that and strategic adjacencies targeted year additions advancing highlight businesses full increasing to in leverage process while construction strengthen and product investments in into array markets. total material of balanced Our our our science team the through manufacturing is

decking Natural acquiring structural expanded of producer of course residential insulation. the and premium new polyurethane XXXX, applications; WearDeck, product a Over composite of spray and into Polymers, lines, manufacturer for innovative lumber commercial we an foam and

high-value both acquired We the interest announcing and a and technology U.S.-based producing construction, and rebar remaining Composites Composites lines, support in in existing our new that fiberglass also took which renewable pivot our industry-leading applications energy applications, with expand the joint for and Pultron into building to XX% a of strengthen core nonwoven fiberglass business actions applications. product more infrastructure in joint higher-value, roofing venture glass produce to capital-efficient venture our leverage mat fiber

completed dry-use strands addition, the In the our completed product And divestiture of we chopped in December, line. we in of Russia. operations portion of European sale our the

the facility in insulation As the part optimization QX new up on our California insulation initiative in year, second the we begin of we Clara, down start quarter. we complete track to as are network facility Nephi, our fiberglass sale closed Santa Utah and of which expanded our land

our product key continue lines. We in also manufacturing to to make expand capacity investments

FOAMULAR sustainable significant a embodied a many growing process new accelerate in and our innovation. of launch solution. we is successful one of NGX we to in been for insulation product this as we our production facility carbon, Following product provides lines demand This building the which XXXX investing meet reduction adding are have

them of XXXX, as Composites In the were launched XX our across balanced brings core refreshed and the to product platforms our value in we performance, across product XX% to sustainability the Insulation customers increasing our additional we durability market. year. and Roofing, a products These in new global innovations help grow businesses, win over well our or focus prior which offerings on and increase

growth And XXXX, continue asphalt providing over to company's to landfills. and aspiration efforts by including intend November, circular Jones Ken, the turn to the creating to By shingle update U.S. of shingles for multiple recycling leadership partnership we advance our keeping by environmental, additional and enhanced I'd we a shingles of matters. Dow X year, will recycle I purpose. earned fulfill economy advantages opportunities Index that a our our out to before recognition our place in December, it generate an Sustainability announced of in World like further recycling consecutive we provide XXth Now pilot million helping which efforts, tons annually In social on serve sustainability governance in the on shingle to

strong which create in strength we challenging earnings to businesses demonstrated beyond. the our Our our times of continue the company forward demonstrating conditions. resiliency and of in Challenging XXXX changing XXXX great the amid opportunities market look power our and and to differentiate performance of team,

that results discuss over Ken I With Ken? and performance to will now of financial detail. to initiatives, more view strategic our our in turn it

and Brian everyone. good morning, Thanks,

quarter, commented, record a Brian in and revenue we earnings year-over-year another with resulting in growth XXXX year As delivered enterprise. solid the across

to in this Our fundamental operational driving continue execution be disciplined commercial and performance.

and As input material in about all to inflation quarter in continues year costs, the along calls, price offset most we've Positive talked costs in prior businesses. headwinds X impact the in and transportation. these inflation with energy

the $XXX fourth at $XXX on for fourth take sales quarter, of earnings X, for $X.XX Adjusted XXXX. can per Adjusted million, quarter a for our diluted million $X.X up EBIT up over or X% million results. reported Beginning per X% we was quarter closer compared the share XXXX. billion net quarter Slide quarter consolidated the from were of same look fourth share diluted to $XXX in the or in $X.XX XXXX. the We

year was year. up prior For EBIT $X.X over And XXXX, million billion, $X.X full billion, from consolidated sales XXXX. adjusted up net XX% the the reached $XXX

$X.X $XX.XX share $X.XX to per $XXX or year in full Our diluted diluted XXXX. million billion adjusted earnings or were per compared share

our between the shows year reported X full Slide and adjusted reconciliation EBIT.

We high-quality recorded and indefinite-lived charge approximately million interest costs gain year, million existing divestitures. $XX wet-formed gains million an roofing losses for million. joint We in of acquiring XX% certain $XX of on execution the assets totaled and the the to metals. of an of impairment well intangible recognized applications adjusting produces $XXX remaining on precious that For million as items from a acquisitions venture as and $XX mat sale $XX related

of In restructuring associated addition, million with we recorded $XX charges actions. net

XXXX items our adjusted these excluded are of from All EBIT.

up year from discipline I'll to bringing and XXXX. flow XXXX Turning focused for innovations. flow operating along on the year or free up X.X% Earnings from We of and through XXX%. free investments, XXXX. during was cash discuss resulted XXXX. million around $XXX capital in and expansion, capital, $XXX reducing deployment process our remain million management million Full conversion quarter, revenue, X, cash to were strong capital billion, our expenses productivity with of free capital generation cash million continued Slide additions of $XXX flow full intensity $X.X $XX capital cash working

As for this year. the on XX% earnings growth, capital a result return reached our of our and

combined facilities. of $X.X the availability of $X.X of year-end, billion, and consisting cash on billion bank liquidity approximately billion our had of debt At company $X.X approximately

During the shares XXXX, stock repurchased quarter X fourth of for the $XXX common million. of million company

$XXX quarterly approximately to new flow. dividends. share company approximately full equaling an It a repurchase compared the XX% During cash of shares. per million the Board the share declared additional dividend repurchases $X.XX million and through of authorization cash to a returned to XX prior increase for approved dividends, XX% free December, of shareholders year, also common share, In up

available strategies were sheet generating returning repurchase repurchase shares executing As million maintaining an remain strong focused cash time under free existing We for investors on share over to while of to our balance of business XX% investment-grade consistently our the end grow company. XXXX, XX.X authorizations. and flow, approximately

Now build the fourth on of to turning The were on quarter XXXX. X, of details And million, the EBIT Slide quarters the first grew year-over-year. strong year. through I'll provide $XXX more XX% the approximately an the Insulation QX XX% X performance businesses. of demonstrated the continued revenues over each business to performance increase

We on announced favorable ongoing the actions inflation. continued to and business, solid realization see mix pricing offsetting across

to was to residential in revenue result fiberglass well business. mix due year. were our price grew positive positive from as Volumes and prior within continued insulation, currency result as were revenue insulation versus pricing global and wool prior primarily technical acquisition. Natural China incremental primarily headwind of demand relatively a down quarter Polymers growth North and the mineral favorable year Europe translation flat a versus global softening Volumes American as residential and of be the for in the In

mix previously the Insulation price was of EBIT Overall, lower EBIT the to up quarter. investments. quarter inflation, of ongoing planned manufacturing production margins and costs maintenance compared fourth the downtime million, volumes, Positive favorable $XX in more and communicated than XXXX. incremental for XX% other million impact the offset of delivered fourth $XXX and cost

EBIT billion sales and prices production mix and manufacturing selling XX% energy, net slightly volumes. as Insulation selling currency with of and prices compared higher which to planned and on year, offset EBIT million increased full a result headwinds million XX% the offsetting inflation, than For costs. with higher lower $X.X increased XXXX $XXX other $XXX ongoing downtime more to material transportation favorable margins

modestly prices. as Composites the experienced our selling currency X turn business please for review the the quarter, the Slide Now compared higher Sales of fourth headwinds the to year for of down offset by lower were a continued prior business. the demand accelerated were an million, from environment. to impact largely volumes quarter softening Composites $XXX translation In in and

EBIT for inflation, costs by have from energy ago. European had portion driven a offset the down end downtime the towards manufacturing stepped and $XX results The other which of impact million substantial our prices. volumes higher the quarter partially A by period estimated were quarter million, selling was peak down same production was to a associated which the ongoing inflation year lower of on quarter. $XX impact and is in

Additionally, sale delivered assets the France year-over-year operations XX% for our the in Composites our of contributed to margins EBIT in and EBIT DUCS Russia manufacturing quarter. Chambéry, decline. the Overall,

increased of was XXXX lower due mix, $X.X full primarily the to to net For EBIT and XX% to EBIT and selling favorable input cost which offset as cost line transportation higher prices impact increased million Composites headwinds. volumes prices partially growth costs. on lower and other $XXX with currency with billion in ongoing increased by margins and $XXX selling year, inflation Top sales as well XX% higher in manufacturing customer million compared offset volumes XXXX. the

basis an $XXX prior million, The a of by top strong offset asphalt overview compared and market demand volume strong. the Roofing XX% bottom our partially the XX% for as volume price outperforming market with remained shingle was volumes as the prior the provides U.S. our on another was year products were U.S. declines. business Roofing mid-single-digit our XX down Sales as realization performance. up to delivered business. shingle in compared of quarter quarter The line to year. Strong Slide

price at of For million, strong the positive EBIT offset impact up by partially and the ongoing XX%. costs was $XXX million with lower volumes. $XX manufacturing inflation, margins quarter, other remained EBIT

basis The mainly we with sales volumes demand For offset prices, asphalt the on $XX saw XX% manufacturing inflation, selling full increased billion the outperforming margins volumes. down partially products. million million to as to selling XX% for market higher due shingle a $X.X U.S. market year shingle by with lower X% offset increased asphalt with to costs. cost which U.S. other EBIT to Roofing as our was volume and compared continued due to prices the higher XXXX year, $XXX our compared primarily primarily EBIT strong prior

are Turning is estimated between I'll million expected discuss outlook Interest to for and range financial year between $XXX Slide corporate our million to $XXX key XXXX and full range XX, $XX General million. million. expense items. expenses $XXX to

is of rate is to to tax to XX% to adjusted expected and effective pretax be our XX% XX% of XXXX earnings Our be earnings. pretax cash expected adjusted tax XX% rate

million. Finally, expected capital and approximately million amortization be and depreciation $XXX between $XXX to additions $XXX or estimated range below anticipated are at million is to which

call Now the Slide please Brian? I'll to further outlook. the to turn discuss Brian return XX to and

great market financial Throughout flexibility teams Ken. results. demonstrated and strong to to our you, Thank changing respond XXXX, global and commercial deliver operational conditions

conditions to slower XXXX, and geopolitical will to demonstrate shifting into move respond ongoing leading ability continued to global market the and impacts rates of demand. react uncertainties inflation, we interest As growth we we and as to economic higher our quickly continue lower proven see

the quarter benefits we prior and in quarter ongoing expected market impact on to this of more inflation. realize decline environment, we many to expect from volumes Given categories in actions. continue previously first in we uncertainty anticipate is pricing energy Pricing our remain as product our the the the positive Overall, as outlook. and continue to markets announced in versus view customers the material end of carryover offsetting year to of given ordering cautious a have the

Overall the as headwinds net EBIT decline Composites also to and to Insulation realize our to businesses currency we from mid-teens. announced continue of an expect for to previously sales well as expect company, in moderate We a impact divestitures. and our modest in low adjusted margins see

continued offsets In lower business-specific continued with ongoing in currency Starting outlook by price offset prior calls, the we resulting Insulation global be impact year and with we modestly I'll revenue prior announced consistent Now technical headwinds. primarily to the from than price volumes and provide our headwinds. up increases insulation and mineral to as businesses, wool expect business, detailed our global realization more a of expect demand quarter. versus for ongoing lower more our currency previously realization be

American versus business, realization announced backlog In work price North flat continued our under volumes prior increases year anticipate we residential contractors previously solid our relatively continue to on a with of homes as through construction.

be in with expect operations to continue Russia. partially of offset but the materials sale revenue quarter we Additionally, insulation to the Polymers and our to headwind of positive the acquisition inflation Natural price/cost narrowing. we a From cost be in energy a from expect perspective, from remaining by

Given margins for the EBIT mid-teen all expect we business. this,

Moving on to Composites.

reset We to the continue year in based and impacted improve get the factors revenues through we versus our XXXX of we the down current be levels QX as in several business first on some slightly of market what saw inventory inventory. considerably down and we that expect move versus rest In the outlook but higher-cost we work in as to QX. through quarter anticipate QX customer QX,

compared the year, the the the Russian As product of the quarter first operations. impacts from will the by volumes, exit prior be to of the impacted sale and line DUCS lower

we Additionally, remain headwind. currency to a expect

lower QX, we year ongoing we our the reset production as of evaluate be our of a most We with remaining the order product energy inventory Chinese in these experienced digits favorable margins overall continue in we to Overall, by single with adjusting and anticipate a modest in absorb of the to volumes, inflation a will volume for start costs what expect first with demand their adjusting expect reductions to we trends impacted as production Year, in in price to lines and we positions demand. related Similar our our a of in to From the as similar customers patterns. impact spot proactive levels. reduction demand the quarter New benefit contract standpoint, impact QX, line we to offset manage than production we more pricing. additional pricing expected EBIT to see lower headwind spot pricing high year-over-year in curtailments as

anticipate And We on trends volumes the QX. digits continue We availability. anticipate down a shipments remain shingle of reset in line with our to in demand as in Roofing, our single many improved would track inventory versus distributor market year flat anticipate materials the relatively to and based revenue to regional market. prior inflation product levels high ARMA quarter largely in headwind in with we

fairly Asphalt which deliver QX, continued increase normal their exit XX%. to from have December Overall further are as we QX expected quarter. declined of price/cost through costs paving move we season. positive consistent EBIT margins we anticipate to for with enter into and to a perspective, expect seasonality, From Roofing, lows up and another approximately

With turn a I'll that of view items. few businesses, our enterprise to

macro shifting improvements and the continue previous us expect and structural combined environment near disciplined results cycles. execution, to to well with to outperform our strong the leading in generating to position continue our end positions market the we term, to financial While made impact businesses, markets our

broaden addition, despite the In near-term demand construction and practices sustainable solutions new housing more several changing growth around growth opportunities challenges, and our we market trends create reach. renovation, believe secular for and

of to material manufacturing more multi-material earnings priorities these enterprise and science, our leverage our drive products and company. position the solutions. current and strategic addressable and trends investment our long-term and expertise markets, our market expand strengthen and the expand power adjacencies into prefabricated Each core that construction These of develop product increase markets new strategy in choices

our manufacturing of strength, capital performance continue plan do, dividends which market strong strengthen balanced growth acquisitions share company sheet incredibly an approximately material flow companies long-term a leverage of organic financial to built science, through productivity also the repurchases. great to our XX% and on focused through and as investing allocation We've strategy expertise; investments; leverage to returning and over free balance cash shareholders to and and unique the time

to deliver investments and our customers win our shareholders. company excited about are for the are we in market, our help we the value making Overall, grow

focused remain our And financial start company Our we for XXXX, delivering results future. and we strengthening great delivered on team the on in our XXXX. as commitments

it like would we to questions. that, With open for up

first for Instructions] from JPMorgan. [Operator from comes question Our Michael today Rehaut

I wanted to get a Insulation sense for business. the

price that's realization. know if And for should result in quarter additions the how You secondly, working in announced the January, that's kind I think industry on price just December, And I'm increases capacity a prior how first here in XXXX? industry's for curious as XXXX. comment mentioned the about but for if topic in of price kind the of earlier progress or continued increase I'm of second from you the outlook we on earlier price, the progressing. one of we could

thanks. Mike, Okay.

price Just we'll talk a realization. little bit about

quarter we of expect positive guided to. we price/cost overall, to as So another deliver

announce in those industry, of capacity December would We majority actions were We through loosefill, from on all and price and realization as up the brought were been is online I that additions continued think that well that From loosefill we see and batts good pricing of in a the good market. have in previously the demand but is continued actions. rolls coming there. online. announced I both that strong brought previously the say realization those announced and I'd earlier announced a say ones through carryover in seeing is on increase price did XXXX. increase that

come that. a until not get market I seen those and batts the one into been up on really rolls So any impact absorbed we was we've announced, increases slated not think previously XXXX. on based into to that demand perspective, have even think, the and the is From I

for on of So any increases. any see capacity XXXX, wouldn't we additional impact those

we about our as our quarter. last we For work continued have through network, talked to progression

to expand, down track. upgrading there. batts the So Nephi on then facility That's Clara we in facility Santa all QX. in of rolls process and make our We're to shut

quarter. we're start-up it planning in -- came down down of second Santa a still as facility for facilities, and that Nephi is Clara down came the those So planned. sometime

Our next question ISI. comes from Kim Stephen of Evercore

here. Appreciate the color

their product sense different of have wondering us of more within of for markets business that know I weakness very I'm been a talked they the particular, may a similar Composites deterioration a you higher about products On Was the value-add if business. bit saw demand. could segment moving in how regions. a by Insulation whether end In weakening And been you technical little give some business, a or curious a not. that whether the large then has into, Composites in you've or similar kind vein,

So up trends curious maybe a some could whether if side, business. thinking you technical better comment particularly holding about seeing you're Pittsburgh little commodity-oriented in than the Is products? the bit that your I'm Corning of the more

Stephen. Thanks,

the did Let Insulation effectively I in me On jump products, touch then that regions in Brian quarter, we the on and a Composites probably bit all question little will will volumes Composites. across on across Composites, you all see question. and lower tell the

Now of into we saw last what really really early latter moved moved some be the of weaker we we a as of that. the to our the is we drove happen half quarter the was coming quarter, bit the performance anticipated we outlook. American What quarter our saw the volumes as through part into start which North versus

specifically levels North in looking comments, their to customers started at were mentioned America. products looking simple the fourth all more this quarter. all of of inventory those -- including a where that as end they that, little a in you're his lower general, a customers volumes. value-added about, products, America buying, environment, uncertain point: again, bit towards market And Brian adjust in So their talking higher regions, patterns the North in decelerated result of and saw

us to happen, them about at of curtail. that the way lower carry reason pleased even the to measures a simply reacting a by into we business. where first started in bit team margin is down wanted really heard And to operating saw be the maybe where to are that in the slightly take because keep level put, proactive fourth sure to needed across as you look lower Very to we And part that actually making levels started be inventory curtail first a step we actually we the that production we that's the What to you take to did into quarter. the will quarter to the volumes, where guide margins quarter. move as operating actually, they needed that order

XXXX, you to color couple early important give think they're points the in One were in as XXXX. because fourth take of a result of what quarter, that a Composites a trends I'll specifically just you curtailment color the first on I actions as continue quarter. think is -- the about we'll in

So that Insulation business business puts a margins. use the because opportunity heavily as of an pressure a Composites as well little also the costs bit make take natural little the to energy on of affecting about gas. their I'll are comment which business of Composite a but more just

works And would kind comments of hedging kind moderate and programs -- natural of our costs You losses. costs heard in what you fourth is gas expect. peaked gains program say me fluctuations kind on way energy that in defer my of scripted quarter. or hedging of the exactly that the the impact Hedging and the us the in

QX of program as works. to the impact just market, some because for based we upon QX on anticipate, cost U.S. gas us in and that in expecting we're way rates hedging would natural into the benefit what start what for QX QX. seeing as in cost European be to we we'll We're saw out both we energy from that the relatively But of move see that similar

that work of that kind bit little sure that. and proactively how So, the Composites you team I making demand hopefully we think color of through within a is the on gives

Maybe to about I'll talk give it Insulation. with Brian that, to

Yes. Thanks, Ken.

offering trends a data the our lot commercial diversified of very there. in we've different think business. technical on see hospitals, we airports, say and U.S. product I centers, to global insulation business, continue I'd got a We're Stephen, in areas. good

we're us, office for say showing good a and category that of like kind But seeing the trends I'd some are there. high-rise So bit we overall, construction weakness. of strength the

area specifically Pitt LNG line Corning, around quoting you mentioned, FOAMGLAS big do see One that applications. is strength and activity, our big pickup for we -- and a product in and strength

a bit terminals quite over the around So and piping. is then and the X project tank LNG used that that pick in months up base we've seen these all the extensively last

forward. we think but to increase that's picking can is So these see multiyear that -- good And to we as a quote an for us segment or activity grow -- are going lead in I up it sorry, that's and as that order we go we go projects think along. orders

Our next Lovallo question comes from from UBS. John

product The question now versus the it's as any divergence the on OC's expect first, I for are right forward? move we mentioned that roofing do in inventory guess is, levels how the you you focused in channel? the remained destocking demand really, really industry. the volume I very the And know strong.

Yes. Thanks, in would saw kind demand becoming saw brands of were characterize much standpoint selective and available a John. product QX, as on in really from and trends the more of of on more we distributors we continuation QX products What buying them. to a what local they I based

their down in of all So QX, to particularly saw We outside more it Midwest, talked we storm looking trends of as we a in emerging I acutely saw rightsize about we considerably QX. markets, couple inventories. think upper that volumes much manufacturing area. were shipment And these that. distributors In saw Florida,

demand. available rightsize were is a to And their what there a more product quarters availability than distributors ago. So I to from seeing local big few we of they're in think terms inventories certainly, is push widespread

QX. QX, impacted that's think I So

considerably, though stepped quarter, in the you kind last fourth if to line volumes, characterize, quarter years in volumes down I they X, of average fourth they look just would average more volume. the with the over X though, say were the even

in step-down of good from what we're still couple purchasing think I QX. activity, characterize And seeing I that's just a years. significant would So pretty last the

in inventory step-down the market a keep or as rightsizing to in in in inventory. distributors guiding QX, their purchases again, we're manufacturer So

really divergence of demand is strength the think strong our based I products the on continued contractor for our network. our

build commercial contractors So converting well key business. part unique several and years this which our been is our business has our team our helping through on strategy and executing products, capabilities Roofing The a tools. digital focus brand, and for to skills in last is to of their the our incredibly

great drawing that just strength we product. in our see And in continue of to so I terms think

we of in bit distributor our to And for products QX. those and think strength think And a demand think seeing year the overall here talked a we remained is set purchases so we're divergence up some some that continue the we and disconnect QX. I going while that good of step-down into through standpoint, And products getting were strong Roofing. from for you that markets And was our in a softer quarter. in about for

Bank. Joseph comes next Deutsche question Ahlersmeyer Our from from

Congrats on the business residential results, guys.

you. Thank

America. talk you is the question just North about My resilience could in in volumes if the

for volumes? that rest visibility. were is, a bottoming might up you some since what think if really on your starts question be ahead resi flat are I single-family are help quarter I of just guess first with to XQ quarter, starts volumes about, the -- have your summer might the America talk just year volumes based last you think that But to know could us the only for done flat. we shape if and my be I in seeing XQ surprised North expected that -- hypothetically tend how starts your

talk driven little being than been rates completion me our Yes. we've more strong. on this for you're they've starting products on think, about seen, where is for bit held And year, strong. our because a maybe QX, have last starts. volumes I Joe, Demand let demand very up right, QX products

to at that X.X seem are So material labor top starts we when by out of and look constraints at availability. back half kind we even grew, around availability, that believe into in of really XXXX coming what million completion they as driven saw units emerge you XXXX rates,

backlog starts continued cycle. completion didn't the created elongated while that grow, and so a to has construction rates and And

back year we down, the seen starts X.X great in still therefore, evened and coming starts out. units. strength finish we've building kind the of year, start residential saw what in business, of finally were kind think of last year. driven line completion QX, about above that's half even though that they I the We what's great in So backlog. with And saw completion rates roughly still to in November, our the strength million December rates, to And

expect think end would starts those the to that get through. do the to I down backlog we of we're below as And first we I worked say this early quarter. start Now, is expect that through regionally, to completion as they trend continue some going -- would and falling rates, of that work

on, starts below running starts rate, you we rates. continue bottom sidelines rates. where continuation X.X key that's we continue are one But second When think look Some we clearly, will into that stabilize, kind the the to they're much out, are down come how markets might the if element mortgage market. to the of market. But said, million going that wanting kind see consumers we where of going higher And to be start relative think, at that's going mortgage the future into talked get I quarter. of today, about They're continue to terms to in the consumers as we think demand. into we've depend come rates believe in to once resetting to to on to that sit past They reset. impact

formations slowdown in should given and we many work There been household high is think in so still for little for Demographics to of any be require kind a the housing. inventory We've no to through. there's underbuilt So shorter inventory housing. that demand years. channel very duration

going more coming the be seen think foot even they homes. going positive some here that more at saw people we of previous than hovered back duration we're kind X%, that and quickly. see and We above the any to of interest a when seeing glimmer cycles into think lot in a depth of stabilize, traffic And when comments So slowdown more from pretty builders January rates interest is a looking around we've I shallow in start rates, we little and market shorter. once to X%,

going play shorter be shallower. to So a and that, that's any we would hope of kind stabilize out, rates interest slowdown and

term, get for of the of So we But little fundamentals quarters. very couple the business. a it next the feel choppy good about long might

Research. comes question Wolfe Patterson next of Truman from Our

for or home This on and easier shipments being guiding Truman. where guidance ARMA But thinking Trevor in you're for pricing year softness. full are, Allinson are just not volumes high is and the throughout there to you're sales XXXX? about progressively 'XX we down Can industry some you looking at the Appreciating but talk giving roofing how year full about existing you're XQ comps starts expect single become housing year. be where digits

bottom year. So just year-over-year how industry full maybe represents XQ for you're if volumes you're the curious thinking the on and basis thinking a about maybe

business, over just drivers demand our Trevor. Yes. into little XX% at I question, When than is and the remodeling construction. XX% Roofing of the repair little Thanks for a a look demand, new less

be going think construction when So new we big driven demand the portion to about by small drivers, a is starts.

XX in based on my we last slowdown over a previous have housing seen conversation, So months. the

we that would heavily and more into forward that's roofing are more Moving impactful new lower could XXXX, volumes certain impact that construction. expect in markets

In demand efforts. see contractor we and remodeling terms remodeling good of fundamental When investing homes. regionally repair at we're drivers business. for remodeling, still of People are still backlogs overall, variable. and it's look backlogs, contractor good But their in seeing the we still our

volumes. uncertainty still It demand around given we The take bigger back storm demand think year. that's average, stay XX% to always -- about and is step So a steady. steady. in of storm that's but pretty could On going pretty a the

could for year. that's terms really of for until the get in a get QX And to more so terms of in something full feel we into that not going demand evolve we're how that

think expecting I probably we're volume I think I more their line the first purchases But years. buying. of So, seeing cautious lot as to of think couple in the we've historical in a We're said, seen with averages distributors in than I get quarter wait remodeling a last what what pretty play construction the out, kind start going season how QX to into further into then -- of how we and these investments the new this is storm demand to going we out to be forward. need continue little and bit see plays ultimately, see we as year,

I Midwest, in that in Minnesota. look think We're think to markets We expect. say, good probably get the we like would good of at still last the -- do in Upper completed. as I demand think Florida. takes seeing we storm We're work seeing repair year is we most the when demand strength going the still thing I'd Florida, it

tough generated picks activity. in Now it's a storms in particularly spring. roof up And the but has here a California, we then in lot market back of West, out in think to some that February quote

go the at year around good, out plays year. pockets, as storm think strong, how But and to still I see continue again, good to And we expect we'll XXXX forward. so market the in going then a roofing we're the of And storm overall. to the demand other start see of the we have renovation events healthy rest

Our Capital Mike from next Dahl comes of question Markets. RBC

a pricing had I on dynamic. composite follow-up the

but You spot. mentioned some the contract lower that you be you still have to expect offset tailwinds now pricing from by

the Given spot, you're the we can year? roll contract spot on then us thinking then and help that -- as kind prices what mix should about contracts versus be your your through seeing what of pieces that between of how you size just

Yes. Thanks, Mike. Great question.

So a little more color on Composites pricing.

XXXX, negotiated, we're all working carryover each contracts. first in As existing be contracts or kind positive are nature the for positive. of kind pricing XXXX, that in were mentioned overall of quarters renegotiations through quarter to on contract contracts. of new in to were good pricing like anticipating on that pricing of -- up the We were the neutral that and of we're in were quarter that contracts those for renewal and/or mentioned, that positive very be we last of the clear, for call discussions The we those seeing those Composites multiyear seeing either

XXXX. pricing we be expect the to first contract positive of So in quarter

That, some contract favorability pricing number fully offset bring say down a pressure also pricing the that see we pricing. of it kind to expect did us you hear don't on contract we the but bit. Now from will little spot

kind that started as And end from at we we XXXX with of pricing. If into out strong in then good we in of of contract saw XXXX. with you through spot were uplift the the negotiations the XXXX, pricing some the really the remember especially first half, markets strength operating in, came we

we places, the in probably up adjust. certain pressure start more are not a bit quarter soften move reset little a bit just as anticipating pricing markets the and/or but first the year to we spot as through at in little So

yet. in reset well necessarily spot I'll that of our America is where seeing big pricing all, the and Asian of most Asian as pricing producers that very also there, fact not of markets. pricing really on, we're North of kind as contract the hasn't you economy the China by But tell Chinese fully We're pressure and economy specifically an that reopened Europe. driven a Chinese lot seeing it that is the are in spot significant first move. And

And moving India. more specifically of So both pressure, pricing in that we're and spot some product markets, other into India. we the seeing where that's China some see of

Jefferies. Our question comes next from Phil Ng from

us the Insulation With price soften staying demand just year, in Composites? and how do your you year of on guys to You framework production downside terms neutral? your at businesses? costs, the cost expected through in fixed did we a Should that. Investor margin Help side cost-intensive have those us of ahead mid-teen to place And think through then in kind particularly of that an Day. be and of businesses in kind managing scenario the you X deliver things. the that do to you awesome expect on last in plan of job And levers your gave

thanks. Phil, Yes.

QX production, we are maybe well, tag we our the how as out, Ken working to demand team were proactive Insulation. -- that going trying done little proactive bit balance be going optimization as be we've as we cost to a particularly us in always we the in to got flexible of very cash that. saw And where in think structure Roofing believe front of of that on demand the on better of terms I in continue challenge and be think got try versus talked work a on manage and to flow. in We've because this. think I and we front that. in conscious we very to But have in about terms work, to I network we're But is demand I that great will We we be capital more manage soften maintaining Composites, we that. assets great our

go we more we've again, we cost-effective balance and think we in operating network to So curtailments a to to more going network that flexible as facilities made year. I structural want the forward. are a us going manage But that to through our those costs our improvements give continue as

to In of forward and been manage mean, terms we've and price price/cost, able it. going you're I right.

anticipated our inflation. I we're something these to of terms of trends throughout of We fantastic did going teams the be inflation of in think a work continue to that's commercial outlook price. XXXX to in positive getting and front manage price year start terms price/cost with in

we've and in some categories expected excess in gotten businesses, some Now inflation. price of

to So we're to trends us manage but we're going see price up going some cost. catch still inflation that. to over that's a And maintaining of view balanced

manufacturing feel with Insulation our push We is these offering. think we in a business. And put all if we is gives remains our commercial very we've we productivity to the confident roll in from other guide. feel guides will still forward. in the our that a become more comfortable continue Composites us something to have through productivity. piece also offset that think important and that and made important in that more you our But the as strategies the and there I And capability mid-teens more operational focus access to think inflation on think we very cycle that up, product the profitable we've we and place go I businesses, us heavily comfortable given improvements

Yes.

that those X chain all the on issues less. would through which move expect the think of inflationary environment with I by tiny feeling way, dealing resolution and it we about Brian we pretty as came out of we inflation thing significantly We're expecting but across markets is the that just globe to moves we're what better we us a of And some a just still give covered and we're environment add going good of but as is ours inflation all kind year. not be that see softer the -- were COVID. to in only markets, question. the seeing I everything The think softer lot supply

You the see guys numbers.

but You overall our we And XX-K in just all -- of that level, now, rounded some can that should looking number see price/cost last numbers to trends I'll costs. energy an the the off, and also of it's as at across right kind see inflation is $X year. conditions upon market mix. those tied of is about the X asphalt-related businesses about relief And of based see probably X/X billion there we at what true helps in which we we're just, saw

question Adam for of Associates. Baumgarten Our comes today Zelman final from &

the offset pick to you need seeing Roofing, of given and you're some price other inflation? asphalt on the inflation further Just raise to to back are expecting -- up, that

we're year. still seeing start price/cost the today, mix as Adam, to sit positive we

very we'll the to record as trends watch make environments price needed. inflation we'll I But forward of as a So continue think adjustments inflationary got we environments. deflationary or to good to go and track manage relative we've able being

and we continue as the to that play we'll see So year out. manage closely those decisions make

Q&A concludes session today. That the for

So I'll any remarks. hand back to for Brian further Chambers

our thanks, again interest Corning everyone, appreciate and to first quarter and your during We and your have you all today Alex really forward day. speaking look with Hope in Thanks, all questions. a Okay. Owens call. time you your for great

call. today's all you for Thank joining

your now may You disconnect lines.