Core Insights - Owens Corning has set ambitious financial goals for 2028, focusing on revenue growth and margin resilience through a revamped enterprise strategy [1][2][5] Financial Targets - The company aims for annual revenues to reach $12.5 billion by 2028, up from $10.6 billion pro forma revenues in 2024 [5] - Adjusted EBITDA margin targets for 2028 are set at 30% for Roofing, 24% for Insulation, and 18% for Doors [4] - Consolidated adjusted EBITDA margin is expected to be in the mid-20% range, with return on capital projected to exceed mid-teens percentage [5] Cash Flow and Shareholder Returns - Cumulative free cash flow is anticipated to be $5.5 billion from 2025 to 2028, with $2 billion earmarked for shareholder returns through dividends and share repurchases by the end of 2026 [6] - The board has approved a share repurchase authorization for up to 12 million shares, adding to the existing program [6] Enterprise Strategy - The new enterprise strategy focuses on three priorities: strengthening market positions, leveraging enterprise scale, and extending product offerings [7] - The strategy is supported by the OC Advantage, which includes brand strength, technology leadership, and cost efficiency [8] Market Performance - Owens Corning's stock has decreased by 16.6% year-to-date, compared to a 7% decline in the Zacks Building Products - Miscellaneous industry [9] - Despite current market risks, the company is positioned to manage macroeconomic challenges effectively [9] Return on Equity - The trailing 12-month return on equity (ROE) stands at 25%, significantly higher than the industry average of 13.4%, indicating efficient use of shareholder funds [10]

Financial Data and Key Metrics Changes - In Q1 2025, the company reported net sales of $290 million, reflecting a 6.8% decrease from $311 million in Q1 2024, with an organic decline of 5% [7][26] - Adjusted EBITDA for Q1 2025 was $41 million, or 14.1% of sales, down from $54.9 million and 17.7% in the prior year [32] - GAAP net income for Q1 2025 was $13.1 million compared to $28.4 million in the prior year, impacted by lower net sales and increased costs related to ERP and restructuring [24][25] Business Line Data and Key Metrics Changes - Equipment sales declined by 9%, and parts and consumables sales decreased by 4.7%, while service and other saw organic growth, but overall service revenue was negatively impacted by foreign exchange [28] - The AMR segment experienced a 30% sales growth compared to Q1 2024, contributing approximately 5% to net sales [17] Market Data and Key Metrics Changes - In The Americas, organic net sales decreased by 6.9%, but order rates increased by 20% compared to the prior year [11] - EMEA saw a 2% growth on a constant currency basis, driven by acquisitions and pricing realization, while APAC faced a 7.5% decline due to demand issues in China and Australia [12][29] Company Strategy and Development Direction - The company is focused on executing its enterprise strategy, which includes pricing discipline, innovative product launches, and targeted market investments [13][15] - The introduction of the Clean360 program aims to enhance AMR adoption by offering a subscription model that reduces upfront costs for customers [20][76] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing economic uncertainty due to tariffs and trade wars but noted stable demand for products and strong order rates [21][22] - The company anticipates order growth of 3.5% to 7% for 2025, despite challenges in translating order growth into equivalent sales growth due to prior backlog reductions [10][21] Other Important Information - The company expects to offset approximately $40 million in tariff-related costs through pricing and sourcing strategies [35][56] - Capital expenditures for 2025 are projected at approximately $20 million, with a commitment to return capital to shareholders [37][33] Q&A Session Summary Question: Margin guidance and EBITDA margin improvement - Management explained that the margin decline was due to a backlog headwind and a mix of strategic customer shipments, but they expect a return to normalized margins as the year progresses [42][44] Question: Impact of price hikes on demand - Management noted that it is too early to assess the impact of announced price hikes on demand, but they are monitoring customer behavior closely [64][66] Question: Clean360 program and AMR adoption - The Clean360 program was developed in response to customer feedback regarding high initial costs, aiming to facilitate AMR adoption through a subscription model [75][76]

Financial Data and Key Metrics Changes - Fourth quarter net sales were $444 million, a decline of 5% year-over-year or 3% lower on a constant currency basis [9][37] - Gross margins were 35.2% in the fourth quarter, impacted by manufacturing absorption, raw material cost increases, and customer production levels [11][40] - Adjusted EBITDA for the fourth quarter was $65 million, with a full year total of $311 million [12][43] - Operating cash flow for 2024 was $205 million, supporting capital allocation priorities including dividends and acquisitions [12][54] Business Line Data and Key Metrics Changes - Asia Pacific segment net sales increased approximately 5% year-over-year, driven by a 5% increase in sales volumes [44] - EMEA segment net sales decreased by 7% year-over-year, with a decline in sales volumes of approximately 4% [46] - Americas segment net sales declined by 8% year-over-year, impacted by lower selling prices and a 1% decline in total sales volumes [49] Market Data and Key Metrics Changes - Market conditions were persistently soft throughout 2024, with a low to mid single-digit decline in aggregate end markets [9][10] - The company expects end markets to grow approximately 1% to 2% in 2025, primarily in the second half of the year [31][81] Company Strategy and Development Direction - The company aims to return to growth, reduce complexity, and enhance shareholder value through disciplined capital deployment [17][30] - Focus on globalizing operations and aligning resources with faster-growing regions, including India and Southeast Asia [20][21] - Emphasis on customer intimacy and improving operational efficiencies to support organic growth [23][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver above-market performance despite challenging conditions [10][34] - Expectations for gross margins to be comparable to 2024 levels, with revenue, adjusted EBITDA, and earnings growth anticipated in 2025 [34][81] - The long-term fundamentals of the industry are viewed positively, with a focus on managing controllable factors while investing in capabilities [35][58] Other Important Information - The company completed two acquisitions in 2024 and recently acquired Chemical Solutions & Innovations in South Africa [29][56] - A new $20 million cost action plan has been identified, expected to drive approximately $15 million in savings [27][58] Q&A Session Summary Question: Gross margin performance in Q4 and future targets - Management indicated that the historical gross margin target of 37% to 38% is still relevant, with expectations for recovery in Q1 [65][68] Question: Performance in Asia Pacific and growth opportunities - Asia Pacific's success is attributed to new business wins, with plans to replicate this success in other regions [71][76] Question: Expectations for revenue and EBITDA growth in 2025 - Management anticipates gradual market improvement, with a focus on new business gains and a healthy pipeline [80][84] Question: Raw materials expectations for 2025 - Stability in raw materials is expected, with no significant volatility anticipated [90] Question: Volume trends in the Americas - Improvement is expected in the second half of 2025, following a decline in the first half [92] Question: Impact of new capacity coming online - New capacity is expected across Asia and the US, contributing to growth [95][96] Question: Cost savings initiatives and SG&A expectations - Cost savings are primarily targeting SG&A, with expectations for SG&A to be flat to modestly up in 2025 [106][107] Question: Details on the acquisition of CSI - CSI enhances the portfolio in South Africa, supporting growth in the region [109] Question: Capital allocation priorities - The focus remains on investing in the business through M&A and organic growth, with share repurchases considered as opportunities arise [112]