Owens Corning Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Spencer Kaufman - UBS Securities LLC - Analyst : This is actually Spencer Kaufman on for John. Thank you for the question. Apologies if I missed this, but how much incremental capacity will the new insulation line in Kansas City be bringing online in 2027? And are you concerned about any certain competitors that are also bringing capacity online? Or is the North American resi market just simply running too tight right now? Thanks.

Question: Stephen Kim - Evercore ISI - Analyst : Yeah, thanks a lot guys. Appreciate it. Just sort of a follow-up a little bit on insulation. Just with respect to your 4Q guide, you mentioned some hurricane aspects. I was wondering if you could quantify that. And then also, with respect to, I guess, the big news last night, in the situation where you've got a Republican sweep -- I know the House is still up for grabs, but assuming you did get a Republican sweep, do you think there's risk to the HUD energy code mandate? And if that were to actually be reversed, I'm curious how that would affect your calculus around the Kansas City expansion. Yeah. So we'll just -- we'll go with that. Thanks.

Question: Philip Ng - Jefferies LLC - Analyst : Hey, guys. Congrats on another strong quarter. On roofing, can you size up any potential uplift from some of the recent hurricanes and how do you see that kind of getting layered in perhaps 2025? The demand backdrop on roofing has obviously been really strong last year. So as you lap that, just curious your ability to grow, to sustain, call it, low 30% margins, and perhaps to even drive prices higher as we look out to next year.

Question: Anthony Pettinari - Citi - Analyst : Hi, good morning. I was wondering if you could talk about underlying demand from doors and how that's kind of trended versus expectations since you closed the acquisition, if there's any kind of finer point you draw on interior versus exterior or US versus rest of world. And then assuming we do have a stronger R&R backdrop next year, can you maybe just talk broadly about the prospect for volume improvement and maybe price improvement in doors next year?

Question: Sam Reid - Wells Fargo Securities, LLC - Analyst : Awesome. Thanks so much. I actually wanted to piggyback off the last question on Masonite, but maybe drill down a bit more on pricing. So when you talk about pricing giveback, could you just aggregate between repair/remodel pricing and maybe what you're seeing on price in terms of what you're selling into the new build channel? It sounds like most of the weakness was on the repair/remodel side but would just like to maybe hear a finer point on that. And then if we were to see discretionary repair/remodel spend recover in 2025 kind of consistent with your expectations, do you think that would have a corresponding impact -- positive impact on pricing in Masonite? Thanks.

Question: Trevor Allinson - Wolfe Research, LLC - Analyst : Hey, good morning. Thank you for taking my question. One follow-up on ARMA shipments. They were better than you were anticipating. It looks like your volumes are kind of right in line with your guidance. Can you talk about what helped the market perform better than you anticipated? Was that just less distributor destocking than you were looking for? And then was it capacity limitations or planned downtime? Or what was it that kept your volumes from also being better than what you were anticipating leading into the quarter given a better market? Just trying to understand your capacity and your ability to take advantage of some of the tailwinds you're talking about prior to Medina coming online next year. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2024 / 2:00PM, OC.N - Q3 2024 Owens Corning Earnings Call

Question: Adam Baumgarten - Zelman & Associates - Analyst : Hey, thanks, good morning. Just on the sale of the China and Korea building materials businesses, any impact on earnings from that sale? I know you gave the revenue. And then I may have missed this, but when do you expect it to close?

Question: Keith Hughes - Truist Securities - Analyst : Thank you. And you've given us the guidance for EBITDA margin for Masonite in the fourth quarter. It's a little fuzzy on what that compares to. Would that compare to a high single-digit EBITDA margin fourth quarter of last year given where the structure of the business is?

Question: Mike Dahl - RBC Capital Markets Wealth Management - Analyst : Hi, thanks. I want to focus on roofing. So continued strength in margins. When you think about the margin in fourth quarter, I know you talked about the manufacturing cost. Can you quantify the manufacturing costs, and then where you are on kind of input and delivery cost? Because it seems like you still had some sequential price realization. And then the second part, if I can, would be, as you look into '25, given the strength in demand and potentially some continued price offset by maybe some of these laminate investments, can you give us a view on how you think about roofing margins setting up into '25?

Question: Susan Maklari - Golman Sachs & Company, Inc. - Analyst : Thank you. Good morning, everyone. As you think about the changes that you're making to the portfolio with the additions and exiting some of the other businesses and regions, can you talk a bit about what that will mean for the cash flow dynamics of the business over time? And with that, just any comments on priorities for that capital allocation and how you're thinking about that balance between deleveraging and the shareholder returns, especially with the buybacks that you did this quarter?

Question: Garik Shmois - Loop Capital - Analyst : Hi, thank you. Sorry if this was asked since my line was dropped earlier. But on composites, did I hear you correctly that pricing, while down year on year, really hasn't weakened sequentially? Is that right? Is that on spot primarily? And then maybe just some thoughts ahead of the contract negotiations and pricing going into next year.

Question: Matthew Bouley - Barclays - Analyst : Good morning, everyone. Thank you for taking the question. Wanted to ask on insulation and volumes, just given you're guiding the volumes to flip a little bit negative here exiting 2024. Wanted to get your thoughts on kind of how you're thinking about the first half of '25 given that exit rate. Obviously, these can be sort of high fixed cost manufacturing assets. So kind of any near-term thoughts on the volume decrementals and if any kind of need to rightsize production if we do still have that volume headwind early next year? Thank you.

Question: Kathryn Thompson - Thompson Research Group - Analyst : Hi, thank you for taking my question today. You touched this earlier in the Q&A just around pricing in the doors segment in particular. But if we step back and take a look at balancing value over volume, this certainly has been, I wouldn't say an issue, but a focus area in doors. But as we look at you getting out of Asia for certain products and that continued push to nearshoring or reshoring, how does Owens Corning approach the value over volume? And how do you think that changes over the next three years? Thank you.