Owens Corning Q2: $3.93 EPS, $660M EBITDA, Roofing Margin to Slip

Owens Corning reported second-quarter revenue of $2.8 billion and adjusted EBITDA of $660 million, a 24% margin. Adjusted earnings per share were $3.93. Free cash flow rose to $199 million from $129 million a year earlier. The company returned $264 million to shareholders through $200 million of buybacks and $64 million in dividends.

Chair and CEO Brian Chambers called the results “outstanding.” He pointed to the company’s ability to execute in any market condition.

Third-quarter revenue is expected at $2.6 billion to $2.7 billion. The adjusted EBITDA margin should land between 20% and 22%. Roofing, the strongest segment in the second quarter, is expected to weaken. Insulation should grow.

The roofing segment posted $1.3 billion in sales with a 34% EBITDA margin. EBITDA was $441 million, down $16 million from a year earlier. Chief Financial and Operating Officer Todd Fister said inflation in transportation and other costs created negative price-cost dynamics because pricing was flat during the period. The company has announced price increases and expects those to build through the third and fourth quarters, it said.

For the third quarter, Owens Corning expects roofing revenue to fall by a mid-to-high single-digit percentage year over year, with an EBITDA margin around 30%. Management sees asphalt roofing market shipments declining by a high single-digit percentage. It attributes that to volume pulled forward ahead of the price increases and heavier distributor inventories. Chambers said inventories are “a little heavier than normal” but vary by region. Second-half roofing demand will depend on storm activity and regional trends, he said.

Fister said second-quarter EBITDA included a $25 million benefit from tariff refunds, with about half in the doors business. Those refunds partially offset $30 million of net cost inflation related to the Iran conflict. The company expects the net Iran-related cost impact to be about $40 million in the third quarter as inflation moves through inventory. Roofing is expected to be the most affected segment. Fister said more than $20 million in potential additional tariff refunds are pending, though timing is uncertain. Those potential refunds were not included in the third-quarter outlook.

Insulation revenue rose 4% to $971 million. EBITDA was $213 million, below the prior year, with a 22% margin. The company cited strength in North American non-residential and European markets. North American residential revenue was up slightly, with higher volumes offsetting earlier pricing actions. Fister said non-residential demand has drawn support from data centers, healthcare, interiors and reindustrialization activity. For the third quarter, the company expects insulation revenue to grow by a mid-single-digit percentage and the segment's EBITDA margin to hold at 22%.

Doors revenue fell 7% to $513 million, largely because of strategic divestitures. The company sold its distribution business in the first quarter and an Oregon components facility late last year. Those actions reduced second-quarter revenue by about $30 million. EBITDA was $57 million, down year over year. The segment generated an 11% margin, above guidance due to the tariff refunds. Management said it has achieved $135 million of run-rate enterprise cost synergies in doors, exceeding its $125 million target. Chambers said the company has identified another $75 million of structural cost improvements across operations. Owens Corning expects doors revenue to decline by a mid-single-digit percentage in the third quarter and deliver an EBITDA margin around 10%.

The company ended the quarter with $1.8 billion of liquidity, including $271 million in cash. Its debt-to-EBITDA ratio was 2.4 times. Owens Corning intends to pay off $400 million of senior notes due in the third quarter using commercial paper.

For the full year, Owens Corning expects roughly $800 million of capital additions, more than half allocated to productivity and growth. The company is building a new Fiberglas line in Kansas City expected to begin operating next year. It is also constructing a roofing plant in Alabama with capacity expected by mid-2028. The company plans to restart its smaller Nephi, Utah, insulation plant in the fourth quarter.

Chambers said Jonathan Collins will join as CFO on Aug. 10. Fister will transition to president and chief operating officer, leading enterprise initiatives aimed at accelerating growth and improving performance.