Owens Corning Stock price
Compare with Peer Group
📊 Peer Group
📈 What is it?
The peer group consists of the companies with the most similar business model. They serve as a benchmark for putting a stock into context.
🧮 How is it selected?
Based on similarity of business model, meaning companies from the same industry with comparable products and a similar customer base. That's the only way to compare apples to apples.
🏛️ Why does it matter?
Whether a stock is cheap or expensive is best judged by comparison. A P/E of 18 or an EV/FCF of 20 can look cheap or expensive depending on the yardstick. The peer group gives you the most accurate one: companies with a similar business model that operate under the same conditions.
🎯 What does it mean for investors?
When a metric sits below the peer average, the stock is valued more cheaply relative to its competitors, and above the average more expensively. A discount to the peer group can be an opportunity, but it can also have a reason (for example lower growth). The comparison is a starting point, not a verdict.
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Invest better with AI
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👉 More detailed insights
👉 Exclusive perspectives on opportunities & risks
👉 Clear answers to your questions
Invest better with AI
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👉 More detailed insights
👉 Exclusive perspectives on opportunities & risks
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = $9.36b | Revenue (TTM) = $9.85b
Market Cap = $9.36b | Estimated Revenue = $10.27b
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = $14.28b | Revenue (TTM) = $9.85b
Enterprise Value = $14.28b | Forward Revenue = $10.27b
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF) | ex SBC
📈 What is it?
EV/FCF compares a company’s enterprise value with its free cash flow. The metric therefore shows the multiple of current free cash flow at which a company is valued. EV/FCF ex SBC additionally accounts for stock-based compensation (SBC). While SBC does not represent a direct cash outflow, issuing shares as compensation can dilute existing shareholders. Therefore, SBC is deducted from free cash flow in this adjusted version.
🧮 How is it calculated?
EV/FCF ex SBC = Enterprise Value ÷ (Free Cash Flow (TTM) − SBC)
🏛️ Why is it important?
EV/FCF provides a valuation based on free cash flow and therefore complements earnings-based valuation metrics such as the P/E ratio. The ex SBC version additionally accounts for the economic impact of stock-based compensation and provides a more conservative view from a shareholder perspective.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF means that enterprise value is low relative to current free cash flow. The reasons should always be considered in the context of the company and its industry.
- A high EV/FCF means that enterprise value is high relative to current free cash flow. This can, for example, reflect high growth expectations or temporarily weak cash generation.
- When SBC is positive and adjusted free cash flow remains positive, EV/FCF ex SBC is generally higher than the standard EV/FCF.
- The metric is particularly useful for companies with relatively stable and predictable cash flows.
- If free cash flow is negative or very low, EV/FCF has limited usefulness and should not be interpreted like a standard valuation multiple.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Dividend per Share (DPS)
📈 What is it?
Dividend per Share shows how much cash a company pays out to shareholders for each share they own – usually on an annual or quarterly basis.
🧮 How is it calculated?
🏛️ Why is it important?
DPS is the absolute value of the payout per share – crucial for income-focused investors and dividend strategies.
🧮 Calculation
🎯 What does this mean for investors?
- A stable or growing DPS often signals a strong, shareholder-friendly business.
- DPS alone doesn’t tell you how attractive the payout is – the stock price also matters (→ see Dividend Yield).
- Long-term dividend growth is often a hallmark of high-quality companies – like the dividend aristocrats.
📘 Dividend Yield
📈 What is it?
Dividend yield shows how large a company’s dividend is in relation to its current share price.
🧮 How is it calculated?
🏛️ Why is it important?
It allows investors to compare dividend payouts across stocks, regardless of price or payout size.
🧮 Calculation
🎯 What does this mean for investors?
- A stable yield can reflect reliable distributions.
- Comparing 1Y and 5Y yield shows whether dividend growth keeps pace with stock price appreciation.
- A low yield isn’t always negative – it can signal strong past performance or growth focus.
📘 Dividend Growth
📈 What is it?
Dividend growth shows how much a company has increased its dividend per share over time.
🧮 How is it calculated?
5Y: Compound Annual Growth Rate (CAGR)
🏛️ Why is it important?
Consistently rising dividends are often a sign of financial strength and shareholder orientation – especially relevant for long-term investors.
🧮 Calculation
🎯 What does this mean for investors?
- Stable dividend growth is a sign of sustainable earning power.
- High dividend growth can significantly boost your total return:
- If a company pays $1 in dividends and increases it by 15% annually over 5 years, you’ll receive $2 per share in year 5 – twice as much as at the start!
📘 Payout Ratio
📈 What is it?
The payout ratio shows what percentage of a company’s earnings (per share) is distributed to shareholders as dividends.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess whether the dividend is sustainable – especially in relation to the company’s profitability.
🧮 Calculation
🎯 What does this mean for investors?
- A low payout ratio means the company retains more earnings for reinvestment – typical for growth companies.
- A moderate payout (e.g. 25–50%) indicates a healthy balance between returns and reinvestment.
- High payout ratios may seem attractive but can carry risk if earnings decline.
📘 Consecutive Dividend Increases
📈 What is it?
This metric shows how many consecutive years a company has raised its dividend per share – without any cuts or pauses.
🧮 How is it calculated?
(Special dividends are not considered.)
🏛️ Why is it important?
A long track record of increases reflects financial strength, consistency, and shareholder commitment.
🎯 What does this mean for investors?
- A long dividend increase streak builds confidence – especially in volatile markets.
- Such companies are seen as reliable and income-friendly investments.
- The longer the streak, the stronger the company’s dividend discipline.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF) | ex SBC
📈 What is it?
Free cash flow shows how much cash remains after a company has covered its operating and capital expenditures. FCF ex SBC additionally deducts stock-based compensation (SBC) to adjust the cash flow for the effect of non-cash SBC.
🧮 How is it calculated?
Free Cash Flow ex SBC = Operating Cash Flow − SBC − Capital Expenditures (CAPEX)
🏛️ Why is it important?
FCF reflects a company’s actual financial strength – independent of reported accounting earnings. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction. FCF ex SBC also deducts stock-based compensation and shows how much cash generation remains after SBC.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow indicates that a company has strong financial strength – independent of reported earnings.
- It is often a solid basis for sustainable dividends and share buybacks.
- Declining FCF can be a warning sign, even if reported earnings remain stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net Margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free Cash Flow Margin | ex SBC
📈 What is it?
The Free Cash Flow Margin shows how much free cash flow a company generates relative to its revenue. In simplified terms, free cash flow is calculated as operating cash flow minus capital expenditures. The Free Cash Flow Margin ex SBC additionally accounts for stock-based compensation (SBC). While SBC does not represent a direct cash outflow, issuing shares as compensation can dilute existing shareholders. Therefore, SBC is deducted from free cash flow in this adjusted metric.
🧮 How is it calculated?
Free Cash Flow Margin ex SBC = (Free Cash Flow − SBC) ÷ Revenue × 100
🏛️ Why is it important?
The Free Cash Flow Margin shows how efficiently a company converts its revenue into free cash flow. Strong free cash flow can provide financial flexibility for dividends, share buybacks, debt repayment, or further investments. The ex SBC version additionally accounts for the economic impact of stock-based compensation and therefore provides a more conservative view of cash generation from a shareholder perspective.
🧮 Calculation
🎯 What does this mean for investors?
- A high Free Cash Flow Margin shows that a company converts a high proportion of its revenue into free cash flow.
- This can provide greater financial flexibility for dividends, share buybacks, debt repayment, or investments.
- The Free Cash Flow Margin ex SBC additionally accounts for potential shareholder dilution from stock-based compensation.
- The long-term trend is particularly important. Declining margins can, for example, result from higher investments, changes in working capital, or weaker operating performance.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 SBC | in % Revenue
📈 What is it?
SBC (Stock-Based Compensation) refers to equity-based compensation granted by a company to its employees and executives. The percentage shows SBC relative to revenue.
🧮 How is it calculated?
SBC as % of Revenue = (SBC ÷ Revenue) × 100
🏛️ Why is it important?
Stock-based compensation is a real cost factor for shareholders. It can increase the number of shares outstanding and therefore dilute existing shareholders. The percentage of revenue shows how heavily a company relies on equity-based compensation and how significant this form of compensation is relative to the size of the business.
🧮 Calculation
🎯 What does this mean for investors?
- A lower figure is generally positive: Stock-based compensation is relatively small compared with the company's revenue.
- A high figure can indicate greater reliance on stock-based compensation and a higher potential risk of dilution. However, it is also important to consider whether the company offsets dilution through share buybacks.
- The trend over time should also be considered. A high but declining percentage presents a different picture from a persistently high or increasing percentage.
- A single-digit SBC-to-revenue ratio is not unusual among many growth-oriented and technology companies.
📘 SBC as % of FCF
📈 What is it?
SBC (Stock-Based Compensation) refers to equity-based compensation granted by a company to its employees and executives. The percentage shows SBC relative to free cash flow (FCF).
🧮 How is it calculated?
SBC as % of FCF = (SBC ÷ Free Cash Flow) × 100
🏛️ Why is it important?
Stock-based compensation is a real cost factor for shareholders. It can increase the number of shares outstanding and therefore dilute existing shareholders. The percentage of free cash flow shows how significant SBC is relative to the cash generated by the company. Since SBC is non-cash compensation, it is typically not deducted as a cash outflow when calculating FCF.
🧮 Calculation
🎯 What does this mean for investors?
- A lower value is generally favorable. Stock-based compensation is relatively small compared with the company's cash generation.
- A high value means that SBC represents a significant portion of the company's reported free cash flow, even though SBC itself is non-cash.
- The higher the value, the more significant SBC can be as an economic cost to shareholders, particularly when it results in share dilution.
📘 SBC Growth 1Y
📈 What is it?
SBC Growth 1Y shows how much a company's stock-based compensation has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
SBC Growth shows whether stock-based compensation is becoming more or less significant for shareholders. If SBC increases significantly, it can lead to greater shareholder dilution over time. At the same time, SBC is a non-cash expense that reduces earnings on the income statement but is added back in the cash flow statement.
🧮 Calculation
🎯 What does this mean for investors?
- A high positive value is generally negative, as rising SBC can increase the burden on shareholders, particularly through potential dilution.
- What matters is whether the development of SBC is sustainable over the long term. Some level of SBC is common among many growth and technology companies.
📘 Share Count Growth 1Y
📈 What is it?
Share Count Growth 1Y shows how much the number of shares outstanding has increased or decreased over a one-year period.
🧮 How is it calculated?
🏛️ Why is it important?
The number of shares determines how many shares the company's earnings and assets are distributed across. If the share count decreases, existing shareholders' relative ownership increases. If it increases, existing shareholders are diluted. The metric therefore makes dilution and share buybacks directly visible.
🧮 Calculation
🎯 What does this mean for investors?
- A negative value is generally positive, as the number of shares outstanding is decreasing.
- A positive value indicates dilution of existing shareholders.
- A declining share count is not automatically positive: It also matters at what price the shares are repurchased and how the buybacks are financed.
📘 Shareholder Yield
📈 What is it?
Shareholder Yield measures how much capital a company returns to shareholders or uses to reduce debt relative to its market capitalization. It goes beyond dividend yield by also including share buybacks and debt reduction.
🧮 How is it calculated?
🏛️ Why is it important?
Dividend yield only tells part of the story. Companies can also return capital through share buybacks, while reducing debt can strengthen the balance sheet. Shareholder Yield combines all three components into one metric, giving investors a broader view of how a company uses its capital.
🧮 Calculation
🎯 What does this mean for investors?
- A higher Shareholder Yield generally indicates more capital being returned to shareholders or used to reduce debt.
- The mix matters: dividends, buybacks, and debt reduction can affect shareholders in different ways.
- Share buybacks are most beneficial when shares are repurchased at attractive valuations.
- Investors should also consider whether dividends, buybacks, and debt reduction are sustainable over time.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🧮 Calculation
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Revenue per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
- A high revenue per employee indicates a scalable and margin-strong business model.
- A low figure may reflect labor-intensive operations or lower value-add.
- Especially helpful when comparing tech companies to industrial or service sectors.
Owens Corning Stock Analysis
Analyst Opinions
28 Analysts have issued a Owens Corning forecast:
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28 Analysts have issued a Owens Corning forecast:
Owens Corning Events
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Q2 2026 Earnings Call
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StocksGuide Free
Owens Corning — Q2 2026 Earnings Call
1. Management Discussion
Thank you for joining us, and welcome to the Owens Corning Second Quarter 2026 Earnings Call.
[Operator Instructions]
I will now hand the conference over to Darren Garvin, Director of Investor Relations. Please go ahead.
Good morning, and thank you for joining us to discuss Owens Corning's Second Quarter 2026 Results. Joining me today are Brian Chambers, our Chair and Chief Executive Officer; and Todd Fister, our Chief Financial and Operating Officer. Our earnings release, Form 10-Q and presentation slides were issued earlier this morning and are available on the Investors section of our website at owenscorning.com.
[Operator Instructions]
Before we begin, please refer to Slide 2. Today's remarks will include forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially. We undertake no obligation to update these statements, except as required by law. Please refer to the cautionary statements and risk factors identified in our SEC filings for more detail. This presentation also includes non-GAAP financial measures. Explanations and reconciliations to GAAP measures can be found in our earnings release and presentation materials available on our website.
Financials and metrics discussed today reflect continuing operations, except for cash flow measures which include amounts related to glass reinforcements. With the completed divestiture of Glass reinforcement, Q2 will be the final quarter that cash flow includes the impact of discontinued operations. For those following along with the presentation, we will begin on Slide 4.
And with that, I'll turn the call over to our Chair and CEO, Brian Chambers.
Thanks, Darren. Good morning, everyone, and thank you for joining us today. During the call, I will provide an overview of our second quarter performance, including how our reshaped Owens Corning is continuing to outperform near-term markets while creating multiple paths for revenue, earnings and cash flow growth. Todd will then provide a more detailed review of our financial results, and I'll come back to share our outlook for the third quarter.
Our team delivered outstanding results in the second quarter, demonstrating the strength of the company we have built and our ability to execute at a high level in any market condition. This performance is a direct result of our strategic pivot to build a large-scale residential focused building products company with unique and unifying competitive advantages, our iconic brand, unparalleled commercial strength, leading product and process technologies and our winning cost positions. I'll share more about our financial performance in a moment. But first, I will begin, as always, with safety. We continue to demonstrate the engagement of our team and the strength of our safety processes through our Safer Together operating framework, delivering a second quarter recordable incident rate of 0.75.
In June, we celebrated our second annual Global Safety Week reinforcing our shared commitment to work safely every day. Turning to our financial results in the quarter. We delivered total revenue of $2.8 billion and adjusted EBITDA of $660 million for an adjusted EBITDA margin of 24%. Within current marketing conditions, our second quarter performance continued to be driven primarily by the strong execution of company-specific initiatives to grow revenues, improve productivity and increase earnings. We also generated strong cash flow and continue to return capital to shareholders through dividends and share repurchases.
Through the first half of the year, we returned $327 million, reflecting our confidence in the cash-generating capabilities of the enterprise and ongoing focus on long-term value creation. Overall, our performance demonstrates the strength of Owens Corning today, one of the largest and most profitable branded building products companies in the world.
We are best-in-class operators with market-leading positions in attractive categories, multiple path to deliver revenue and earnings growth and a disciplined capital allocation model that supports strong returns. These key performance drivers are creating value today and also support significant upside as we continue to execute and invest for the future. Over the past several years, Owens Corning has built a strong track record as a best-in-class operator consistently delivering high levels of performance across a wide range of market conditions.
During this time, we have demonstrated the strength of our teams and market positions by generating revenue growth strong cash flow and durable profitability through periods of inflation, interest rate changes and shifting market conditions. We have structurally improved the earnings power of the company with annual adjusted EBITDA margins that have increased from an average of about 18% from 2015 through 2020 to low to mid-20% since then.
For 5 consecutive years, we have delivered annual adjusted EBITDA margins above 20%, reflecting stronger execution and a higher performing operating model. And through the first half of this year, we continue to demonstrate our earnings resiliency even in the current market backdrop. We've applied our operational discipline across the company to leverage our enterprise scale and capabilities to reduce cost. This is evident in our Doors business.
When we acquired Doors in May 2024, we committed to delivering $125 million of run rate enterprise cost synergies by the end of year 2 of ownership. As we reach the end of that time period, we have achieved $135 million, exceeding our original commitment. In addition, we have identified another $75 million of structural cost improvements across our operations and are beginning to see that materialize in our results. Doors is a clear example of how we apply the Owens Corning playbook to strengthen performance and unlock additional value over time. Our ability to deliver consistently strong performance is also supported by the quality of our businesses and our market-leading positions. We have intentionally built a strategic business mix to outperform across cycles with leading positions in large, attractive markets, and complementary product categories that deliver market-leading margins.
Our resilient residential roofing business is uniquely positioned within a nondiscretionary product category and continues to demonstrate industry-leading performance. More than 80% of roofing demand is driven by repair and replacement, providing a durable foundation for performance across market cycles. We also benefit from the ongoing shift toward higher-value roofing systems, increasing demand for our roofing components as well as our market-leading duration laminate shingles. In fact, our premium duration products represent the majority of the shingles we sell, and our position continues to grow, supported by the ongoing expansion of our contractor network.
Our insulation business is an industry leader with strong long-term demand drivers. We have built a unique portfolio that spans North American residential construction, North American nonresidential applications and European markets giving us balanced exposure to the most attractive end markets. In North American Residential, the demand for more energy-efficient homes has steadily increased insulation requirements driving the need for approximately 30% more insulation per home than a decade ago, while an underbuilt U.S. housing market continues to support long-term demand.
In nonresidential markets, our products are essential in some of the fastest-growing construction segments. One example is data centers, which leveraged several of our product lines, including FOAMGLAS, mineral wool and fiberglass pipe insulation, to support critical thermal, acoustic and HVAC performance requirements.
In Europe, evolving energy efficiency regulations and renovation activity are changing construction practices and creating additional opportunities. And across our nonresidential geographies, we are capitalizing on increased substitution towards the types of high-performing insulation products we manufacture to deliver above-market growth.
Turning to our Doors business. we provide the most complete door and door system offering in North America, with leading positions across residential interior residential exterior, luxury exterior and components categories, the business benefits from a vertically integrated model, spanning components, door panels and finished systems. Our market-leading position is being further supported by applying the unique OC advantages to increase demand, optimize our production network and accelerate innovation.
Today, we are beginning to convert these strengths into results. One example is the broader placement we have earned with 2-step distributors, who value our iconic Owens Corning brand, commercial capabilities and enterprise product portfolio. We have entered new geographies, expanded placement with existing locations, and we see further opportunity to extend this momentum over time. Building from these leading positions, we have multiple paths to deliver growth by leveraging the OC advantages, delivering on our investments in new, highly efficient manufacturing assets, executing a more integrated go-to-market strategy and delivering on our operational plans to realize the full potential of the Doors business, we have several avenues to generate higher revenue, earnings and cash flow over time.
This year, we are investing $800 million in capital to strengthen our competitive positions. These investments position us to capitalize on the next phase of market growth while enhancing productivity, improving service levels and strengthening cost competitiveness across the enterprise. One of these investments, our new fiberglass line in Kansas City will strengthen our U.S. insulation network by providing flexible capacity to serve both residential and nonresidential applications, while improving our overall manufacturing efficiency as it comes online next year. Given the current residential new construction market, and the growing demand for our nonresidential product offering, we anticipate this line will be dedicated to service our commercial and industrial inflation applications.
We are also progressing in the construction of our new roofing plant in Alabama, which will add capacity to support our expanding residential contractor base within the largest asphalt roofing region in the U.S. We expect this capacity to be available mid-2028. In addition, we recently commissioned a new self-adhered underlayment line at our Houston Roofing plant that improves our cost position in a product category with attractive growth opportunities. Self-adhered underlayment is used across a broad range of roofing applications including asphalt, metal and tile, allowing us to participate regardless of the roofing material selected or the shingle brand installed.
This investment continues to strengthen our components portfolio which generates attractive margins and creates another avenue for profitable growth. As these investments come online, we have the commercial capabilities to turn capacity into profitable growth with our 3 complementary businesses, we're utilizing an integrated go-to-market strategy that leverages our iconic brand and unparalleled commercial strength to help our customers win and grow in the market.
Our comprehensive pull-through models continue to drive preference and loyalty where buying decisions are made, strengthening our relationships with contractors, builders, dealers and distribution channel partners. We are also using advanced analytics and AI to strengthen customer engagement and support growth.
In our Roofing business, we have recently deployed an AI model to analyze sales volume data and modify our commercial team of changes in customer purchase patterns. These insights allow us to engage customers earlier, protect existing commitments and pursue expansion opportunities. This capability is already generating value, and we are working to scale it across the enterprise. Our growth agenda is supported by a disciplined capital allocation framework. We have consistently taken a balanced approach investing to strengthen our market-leading businesses, returning significant cash to shareholders, maintaining the financial flexibility to pursue value-creating opportunities.
Since 2019, we've returned approximately $5 billion to shareholders through dividends and share repurchases and more than tripled our quarterly dividend per share payout. And over 2025 and 2026, we are on track to deliver on our commitment to return $2 billion in cash to shareholders.
Before closing, I would like to recognize our team for earning a place on the Fortune 500 for the 72nd consecutive year. This recognition reflects the long-term strength of our company, the dedication of our people and our unwavering focus on serving our customers and creating value for our shareholders. I would also like to acknowledge an important leadership transition. We recently announced that Jonathan Collins will be joining Owens Corning as Chief Financial Officer. With a decade of public company CFO experience, Jonathan brings both deep financial expertise and unique operational capabilities developed across a variety of industrial and technology companies. He will assume this role August 10 and join us for our third quarter earnings call.
As Jonathan steps into this role, Todd Fister will transition to President and Chief Operating Officer. Todd will lead the execution of key enterprise initiatives to accelerate growth and performance, leveraging our unique OC advantages to further integrate our go-to-market strategy and standardize work across the company.
In closing, our second quarter performance demonstrates the earnings power of the new Owens Corning with a focused portfolio, disciplined execution and continued investment, we are well positioned to deliver consistent performance and create long-term value for our shareholders. With that, I'll turn the call over to Todd
Thank you, Brian, and good morning, everyone.
Our second quarter results demonstrate the earnings power of our focused enterprise. Our strategy is to build a business that performs better through the cycle generates consistently attractive returns and operates with greater capital efficiency. This quarter's results include the impact of self-help initiatives, both commercial and operational and we still have significant room to grow the top and bottom line.
I'll begin on Slide 5 and walk through our enterprise results for continuing operations in the second quarter. Second quarter revenue was relatively flat compared to prior year. Adjusted EBITDA was $660 million, and we delivered an adjusted EBITDA margin of 24%, demonstrating our ability to deliver substantial profitability in the current environment. Our EBITDA results for the second quarter include $25 million in tariff refunds. About half of the impact was at our Doors business with the remainder across the enterprise. That refund partially offset the $30 million in net cost inflation we saw in Q2 related to the Iran conflict.
We anticipate the net cost impact of Iran in the third quarter to be approximately $40 million as inflation moves through inventory. This impact is included in the third quarter outlook that Brian will share in a moment. Roofing will continue to be the most impacted business. During the second quarter, we recorded $3 million of adjusting items. Adjusted earnings per diluted share for the quarter were $3.93.
Turning to Slide 6. Free cash flow was $199 million for the quarter, an improvement from $129 million in the same period last year, driven by disciplined working capital management. Capital additions for continuing operations were $194 million, up $18 million from prior year. For the 12 months ending June 30, 2026, our return on capital was 10%. We ended the quarter with a debt-to-EBITDA ratio of 2.4x near the middle of our targeted 2 to 3x range.
At quarter end, the company had liquidity of $1.8 billion, consisting of $271 million in cash and $1.5 billion available under our bank debt facilities. We have $400 million of senior notes due in the third quarter that we intend to pay off using commercial paper. We returned $264 million to shareholders this quarter in the form of share repurchases and dividends. We repurchased common stock for $200 million and paid a cash dividend totaling $64 million. Year-to-date through the second quarter, we have returned $327 million to shareholders and remain committed to returning $1 billion in 2026 through dividends and share repurchases, in addition to the $1 billion we returned in 2025. Our strategy continues to be focused on generating strong operating cash flow, making targeted capital investments, returning excess cash to shareholders and maintaining an investment-grade balance sheet.
Now turning to Slide 7. I'll walk through segment results beginning with roofing. Roofing second quarter results continue to demonstrate the strength of this business. Sales were approximately $1.3 billion, up slightly compared to prior year, driven by favorable product mix as we saw good demand for our high-value products. The overall asphalt shingles and components market was up slightly versus the prior year, stronger than anticipated based on elevated restocking in the quarter. Through the second quarter, in year storm activity was broadly in line with historic averages and slightly behind prior year. Our shingles and components volumes were slightly ahead of the broader market, reflecting strong demand for our products and our uniquely positioned contractor engagement model. Strong roofing components attachment in the quarter also reflected the value customers place on our full system. The strength in shingles and components was impacted by lower nonwovens volumes tied to a low-margin contract exit.
EBITDA came in at $441 million, down $16 million from the prior year. The decrease was primarily driven by higher inflation, including transportation, that resulted in negative price cost as a result of relatively flat pricing in the quarter. We're seeing solid realization from the price increases announced in the market in the second quarter. Roofing produced an EBITDA margin of 34% in the quarter.
Turning to Slide 8, I'll discuss our Insulation business. Insulation continues to deliver resilient results. We saw particular strength in the European and nonresidential businesses in the quarter. Sales were $971 million, up 4% from last year, driven primarily by higher volumes along with a modest currency benefit. Q2 marks the final quarter impacted by the sale of our China Building Materials businesses, which had about $130 million of annual revenue. North American residential revenue was up slightly versus last year, with stronger volumes helping offset the impact of previously implemented pricing actions. North American nonresidential revenue increased versus prior year, driven by higher volumes and pockets of strong end market growth.
And in Europe, we delivered growth as a result of strong commercial performance in improving core markets. EBITDA was $213 million for the quarter, down from prior year as a result of slightly lower pricing and continued inflation. Our team continues executing in both residential and nonresidential markets, generating an EBITDA margin of 22% in the quarter, and we remain well positioned to capitalize on secular drivers tied to energy efficiency and building performance.
Moving to Slide 9. I'll provide an update on the Doors business. Doors continues to navigate current dynamics in the repair and remodel and new construction markets, while executing strategic commercial and operational improvements that position us for long-term margin expansion. Second quarter sales were $513 million, down 7% from the prior year, primarily driven by strategic business exits. As a reminder, we divested our distribution business in Q1, which had annual net revenue of approximately $70 million. We also sold our Oregon components facility in the fourth quarter of last year, which had annual sales of approximately $50 million. The combined net revenue impact of these actions and our second quarter results was $30 million. EBITDA in the quarter was $57 million, down compared to last year due to lower volumes and higher transportation costs. The business generated an EBITDA margin of 11% ahead of our guide, driven by the impact of tariff refunds.
Turning to Slide 10. I'll briefly cover corporate and outlook related items for continuing operations. For the full year, we continue to expect general corporate EBITDA expenses in the range of $245 million to $255 million. Our 2026 effective tax rate is expected to be in the range of 24% to 26%. Depreciation and amortization is expected to be approximately $680 million for the year, and capital additions are expected to be around $800 million, with more than half driving productivity and growth initiatives across the enterprise.
Finally, I am excited to partner with Brian and the entire OC team to accelerate our results as an enterprise focused on being the best brand building products company in North America and Europe. And I welcome Jonathan to the team.
With that, I'll hand it back to Brian.
Thank you, Todd. Our performance in the second quarter continues to demonstrate the durability of our business model and current market conditions. Our teams are executing with precision and the results demonstrate the strength of our strategy and the resiliency of our operating model. For the third quarter, we expect discretionary remodel activity in new residential construction to remain under some pressure.
In Roofing, we are planning for seasonal storm demand to be in line with historical averages, but expect to see the impact of heavier Q2 inventory stocking, reducing distributor purchases in the quarter. Nonresidential construction across North America is projected to remain stable. And in Europe, we continue to see signs of a gradual recovery in our core markets.
From an enterprise perspective, we expect third quarter revenue in the range of $2.6 billion to $2.7 billion, slightly below the same period last year. Our adjusted EBITDA margin is anticipated to be approximately 20% to 22%. Now consistent with prior calls, I'll provide a more detailed business specific outlook for the third quarter.
Starting with our roofing business, we anticipate revenue to be down mid- to high single digits compared with the prior year. Even with a more normalized storm season, we expect Armor shipments to be down high single digits in the third quarter as market volume was pulled forward into Q2 ahead of announced price increases. We anticipate our volumes to be broadly in line with the market. While we are seeing solid realization of our Q2 pricing actions in the third quarter, ongoing input and transportation inflation is expected to result in negative price cost. Overall, we expect Roofing to deliver an EBITDA margin of approximately 30%.
Moving on to our Insulation business. We anticipate mid-single-digit revenue growth compared to prior year. North American residential revenue is expected to be relatively flat to last year, with slightly higher volumes offset by the act of previously targeted pricing actions. Given our decision to start up our new Kansas City line focused on nonresidential products, combined with upcoming furnace rebuilds planned over the next 2 years, we plan to restart our Nifa-Utah plant in the fourth quarter. As a reminder, this is one of our smaller, more flexible production lines that can be used to service the residential market primarily on the West Coast.
For North American nonresidential, we expect revenue to be up low double digits on the strength of higher volume and pricing execution. And in Europe, we anticipate revenue to be up versus prior year, driven by strong volume pricing execution and a continued recovery in our core markets. Overall, for the business, we expect slightly positive pricing to be more than offset with ongoing costs and transportation inflation, resulting in negative price cost in the quarter. Given all that, we expect Q3 EBITDA margin for insulation to be in line with Q2, which was 22%.
Turning to our doors business. We expect revenue to be down mid-single digits compared to last year, primarily due to the divestitures Todd mentioned earlier. We expect to continue seeing the positive impacts of our cost optimization initiatives and enhanced go-to-market strategies. Pricing in the quarter is expected to be slightly positive, and we've implemented a price increase that will take effect near the end of the third quarter. But given ongoing material cost and transportation inflation, we expect negative price cost in the quarter.
Overall, for Doors, we expect a third quarter EBITDA margin of approximately 10%, in line with prior year. With that review of the business outlook, I want to close out with a few enterprise comments. Despite current market conditions, we remain focused on delivering on our strategy and leveraging the OC advantages to help our customers win and grow. We are positioning the company as a best-in-class performer with multiple levers for revenue growth earnings expansion and cash flow generation. Additionally, we are well positioned to benefit from several key secular trends such as energy efficiency and an aging housing stock that provides significant opportunities for long-term growth.
Finally, I want to recognize the hard work and commitment of our teams across the company. Their focus on safety, innovation and operational excellence to service our customers, continues to set us apart and puts us in the best position to achieve strong results regardless of market conditions. With that, we would like to open the call up for questions.
[Operator Instructions]
Your first question comes from the line of Stephen Kim with Evercore ISI.
2. Question Answer
Appreciate all the color. A lot we could talk about, but let's start with insulation, the degree of the volume strength surprised us I think you indicated that at a non-resi in the U.S. and Europe kind of drove some of the strength. But North American resi was also up slightly. So if we just sort of unpack that, your volume, I think, was up kind of high single digits. Can you give us a sense for a little bit more granularity as to where that strength in the top line came from. And then also, you talked about opening up [indiscernible], and I think you -- or reopening Niva. I think you mentioned that was going to be kind of like to offset some rebuild activity. So I was wondering if you could give a little more color like just when is the rebuild going to happen? How quickly is Nefi going to be open? And what is your longer-term intention with respect to keeping Nefi open?
Steve, thank you for the questions. Let me start with the volume strength piece, and then we could talk about how Nefi fits into the picture. When we look over a longer period of time, I mean, really, it's been almost a decade-long strategy now within our Insulation business. to really invest heavily in the non-res and European pieces of the business to support organic volume growth. And you see that most recently with the XPS line that we started up in Arkansas. We invested in our Stonewall facility in Sweden. And then we've got a Kansas City line coming up next year, which as Brian chair, will start up, focus more on the technical insulation piece of the business.
So we've been very much focused on organic growth there. We're really proud of how our teams executed in the quarter. When we look at nonres in Europe, markets are decent there in the nonres piece, we've got pockets of real strength in data centers which we would kind of put at 5% or less of our overall revenue, but it's growing at a fast enough rate that it is helping us on the top and bottom line in insulation, but we're also seeing strength in other pockets and pretty broad-based strength in the nonres pieces in North America.
Same story is true in Europe. We're seeing our core markets rebounding. We've been talking about green shoots and improvement there for a while. We're seeing that occur. But really, in both cases, we're seeing great commercial execution by our teams to serve our customers really well and just performed well in the current markets that we're in. And you can see that continue with the guide that we gave for Q3 as well. We expect those trends really to continue into the third quarter.
When we look at res, we talked last quarter that we were down a bit versus the market in Q1 in res we rebounded them to be a little better than the market in the second quarter. The guide for Q3 suggests again, compared to [indiscernible] housing starts would be a little bit better than like housing starts in Q3. But if you look at all 3 quarters together, we're more or less tracking the market. So we're happy with the commercial performance that we're seeing. I think we're benefiting somewhat from customer mix and geo mix of just where some of the strength in multifamily is occurring and some of the single-family dynamics. But generally, I would look at it more of a rolling basis through the year. rather than quarter-by-quarter because we do know there are some quarterly items that can move around.
When we look at Nefi, we are reopening Nefi, we designed Nefi to be a plant that would be relatively straightforward for us to take down and start up. It's one of our smaller lines. It is to support a couple of things. One, we've got rebuilds occurring in '27. We've got a couple of rebuilds in our system. So Nefi is an important part of making sure we can serve our customers well. As Brian shared, we intend to start up the Kansas City line focused more on the technical insulation piece, and Nefi also fits how we want to manage the network overall.
And I would just share in the short run, we don't expect much of a cost increase related to restarting Nefi. With diesel in transportation, where it's at, we can serve the West Coast more cost effectively with that asset running. So we'll start it up in Q4 and assuming everything stays the same around delivery cost, we're not going to have too much of a onetime cost impact from the start-ups. So that's the dynamic.
Your next question comes from the line of John Lovallo with UBS.
Relative to, I guess, the long-term targets, roofing EBITDA margins have been strong doors have shown some nice progress. Insulation margins, though have been under some pressure. I think there are a few hundred basis points below that long-term target of 24% and kind of sitting at the lower end of that 20% to 27% range. So could you just kind of help us with the path to get back towards closer to that 24% range over time?
Thanks, John. I appreciate the question. So when we look at the guide at Investor Day, we arranged that based on a housing market between 1.2 million and 1.6 million housing starts. So we've been at the lower end of that range, both in terms of new starts as well as resale activity has been fairly weak since we communicated that. When you look at the major driver of why we're a little lower than the 24%, it's really the price cost dynamics. We've absorbed quite a bit of inflation in this business over the last couple of years. And even now, we're absorbing some delivery inflation as well as other materials inflation in the business. It's been a couple of years since we've gotten price traction on the res side. We do have a price increase out in market now. It did get pushed to September, but pricing will be a part of that story given the amount of inflation that we've absorbed. The other piece of the story though is structurally nonres and European businesses are good mix for us. And as we grow disproportionately into those spaces, we also like the mix impact that we would see on EBITDA margins over time.
The final piece, I would say, is just continuing to work on productivity. We have a really good track record in that business of driving pretty consistent productivity really end to end through manufacturing, supply chain and network optimization. As we start up assets like our Russellville asset and XPS as well as Kansas City, we like those new modern assets because we tend to have lower ongoing operating costs from those locations. We also balance out our network a bit more to give us some supply chain benefits as we go forward. So there will be a price over cost element, there will be just a mix, business mix element, and then there will be a productivity element all of which should give us momentum to get closer to the 24% over time.
Your next question comes from the line of Trevor Allinson with Wolfe Research.
Congrats [indiscernible] Todd on the new role. First one -- question is on roofing price realization. I think you mentioned you're expecting good realization on that increase. How would you compare what you're expecting relative to historical standards? And then maybe just to put a finer point on that, if we look at your revenue guide and the volume numbers that you're talking about on one end of the range, it could imply something close to flatter pricing. Just wanted to see if you could provide any more color on what you're expecting in terms of year-over-year roof in pricing in the third quarter.
Yes, I think we're seeing very good price realization across the April and June increases. So on the last call, we talked about the April announcement in realization given the inflation pressures that we're seeing around asphalt costs, other input material costs, transportation, delivery costs, we announced the June increase and put that into the market. Combined, I think we continue to see good realization. I'd say in line with historic averages that we've seen in the past. So we feel like that momentum is building. So pricing was pretty flat in Q2, but we continue to see that price realization come through in our numbers, and we expect that to build in Q3 and then in Q4 in terms of helping us to recover some of that cost inflation. So we feel we're set up well there, and we continue to think we're going to see that realization increase in terms of a year-over-year impact on pricing as we go through Q3 and then in Q4.
Your next question comes from the line of Rafe Jadrosich with Bank of America.
I just wanted to sort of give you a chance to -- if you have any response to sort of the Carlyle headlines that are out there. And maybe, Brian, can you talk about how you think about the valuation today versus like the long-term opportunity?
Yes. I'm not going to comment on speculation raised in an article driven by anonymous sources. We believe our strategy is delivering great value for our customers. When I think about our investments in innovation and pull-through in the demand and helping our customers win in growing the market. We think our strategy is delivering great value for our shareholders, which I talked about in my prepared comments. When we look at the cash generation of the company and improvements we've made over time, we've returned now close to $5 billion to shareholders over the last -- since 2019. We've more than tripled the dividend. So we believe our strategy is generating great financial results that we continue to improve. It's increased the durability of our margins, our cash flows, and we've been very disciplined capital allocators to invest in our business sometimes that's it's going to be heavily weighted towards share buybacks given some of the valuation we see in the market today.
It's going to be investments in organic growth that we continue to strengthen our market positions. And then we want to be dedicated to returning capital to shareholders, which we've committed and had a committed strategy to return at least 50% over time. We've exceeded that over the last several years given the strong cash generation and the financial improvements we've made within the company. So we believe our strategy is generating great results -- we like our position. I talked quite a lot about the journey we've been on to reposition and refocus the company as a branded large-scale, residentially focused building products company with 3 very complementary market-leading businesses that we are driving more integration through and really bringing the OC advantages that we think is going to be able to accelerate growth and performance as we go forward.
So we believe all the moves we've made continues to create a compelling investment thesis for our shareholders. We believe we continue to invest in growth and the top line for the company, and that's going to service our customers well.
And lastly, I'd say I think our Q2 performance, our first half performance is just an ongoing proof point of the strength of our company, the strength of our businesses and the execution of our team. So we feel very good about how we're operating today. We feel very good about the strategy and direction of the company.
Your next question comes from the line of Susan Maklari with Goldman Sachs.
My question is on the roofing channel inventories. You mentioned that there was some pull forward in the quarter related to the pricing actions that came through. Can you just give us some sense of how much do you think is sitting out there? And if we do have an average storm season as we move through the late summer and into the fall, how long could it potentially take us to get some normalization back to that market?
Yes, thanks for the question. Yes, we did clearly see some pull forward, particularly around the June increase that impacted volumes in that quarter and then resulted in a little better volumes overall in the market and for our business. I'd characterize it probably as I think about it is when we look at the pull forward, previously when we were putting our guide in, we guided to a market that was going to be down kind of mid-single digits. We thought that was incorporating any kind of prebuying around the April increase. We finished significantly higher than that. The market finished pretty flat. So I would say when you look at that pull forward without it, we probably would have been getting on this call guiding to a market in Q3 year-over-year, that would have been pretty flat as opposed to down. So we think that difference in terms of that guide now is really the reflection of some of the inventory that was prebuilt around the June increase overall in the marketplace.
So I think when we look at Q2, Q3 volumes, we kind of put those together in terms of the market itself. I think the first half market was still impacted by some weaker storm activity, as Todd mentioned in his comments, the this in-year storm activity is kind of falling in line with historic averages, still a little weaker on a year-over-year basis. We also, just as a reminder, last year in the first half, had about 3 million squares of storm carryover that was being serviced. We didn't have any carryover really coming in this year.
So I would say there's been some regional variances in overall market demand emerging as we go through this year, where pockets in regions like the Midwest, Upper Midwest, Mid-Atlantic, we're seeing very good market demand and good volumes. -- areas in the Southwest, Southeast, which are a little bit more storm dependent, we're seeing a little weaker volume. So I think overall, I'd say distributor inventories are a little heavier than normal, but it's very regional in terms of where that market demand is. So to your question on how that kind of plays out through the year, if we have a more normal historically normal storm season, we think those volumes kind of work through Q3 into Q4.
If we have a little lighter year that could impact Q4 volumes a little bit as distributors try to restock the inventory. But I'd say the second half demand is going to be much more dependent on storm demand, and it's going to be much more regionally dependent than we've probably seen in the last couple of years.
Your next question comes from the line of Phil Ng with Jefferies.
Congrats on the strong quarter. I guess a question perhaps for Todd. You guys gave some color in terms of the tariff refunds for the quarter. How should we think about it for 3Q and there's always been a lot of movement on tariffs, including Section 338. You got some dynamics with your door business there. So just give us an update on how to think about that tariff refund dynamic? And then more broadly, inflation, you gave you some color on 3Q. Should we think later in the year that moderates? And does that price cost dynamic perhaps improve going into the fourth quarter?
Thanks, Phil. Appreciate the question. So just to recap what we shared about our Q2 results, we had about $25 million of net benefit from tariff refunds. About half of it endures the rest spread across the enterprise. There is -- you can see in our footnotes, there's a little over $20 million that we have pending as potential refunds in the future. We don't know for sure if it's going to hit Q3, Q4, it could even be spread across both quarters, we would anticipate that it would impact this calendar year, though. It's a very different shape, though, of what we saw in Q2. It's pretty spread across the businesses, and it's really not material for any 1 business going forward.
That has been excluded from our guide. So that was not included in any of the numbers that Brian shared on the outlook for Q3. So that could be a little bit of modest upside if we see that impact the quarter.
Overall, from an ongoing tariff standpoint, it's pretty steady, excluding the impact of the refunds. We continue to see tariffs across our businesses. it's impacting Doors disproportionately compared to the other businesses. And we don't really see that easing up here in the near term as we get certainly through the next couple of quarters. When we look at inflation broadly, a lot hinges on what happens with Iran.
So as we shared in our comments, we are giving a net inflation number now related to Iran. The reason we're doing that is some of the gross inflation is getting caught up on the balance sheet and is impacting subsequent quarters. So some of the gross inflation we saw in the second quarter is going to impact Q3. If we saw a sudden stop to the Iran inflation, there is a little bit of a tail impact here, of it continuing as we work through the value of that inflation in inventory in subsequent quarters. Overall, we don't know if Iran continues into the later part of this year. It's had an impact on asphalt cost. It's had an impact on transportation costs, and in particular, diesel fuel, which I mentioned earlier. It's also starting to come through some of the other materials that we buy, like, for example, polystyrene and our insulation business is inflated.
So we're seeing some of that impact come through, but a lot of it could taper off if we saw a resolution to Iran later this year. In terms of the price cost, price needs to be a part of this equation that we've got. So we're going to do everything we can on the inflation side to [indiscernible] and mitigate the impacts. But we do have price increases in the market now in all 3 of our businesses.
As Brian shared, we've seen good traction on the roofing increase -- we've seen good traction on our non-res and European increases. We're starting to see some traction on the doors increases in the market. And then we've got the price surcharges to offset the increased fuel cost also in market. So we're seeing some momentum on the pricing side, but that's an important part of the story, Phil.
Your next question comes from the line of Anthony Pettinari with Citi.
Just following up on Phil's question on the tariff refunds. It seems like some of your peers are using a portion of their refunds for growth initiatives. Are you contemplating that? Or should we just treat it as really an offset to inflation? And then maybe to broaden the question a little bit, in doors, where I guess the lion's share of the tariffs impact is how do you balance kind of investing in the business for future growth versus cutting and optimizing on cost?
Thanks, Anthony. I appreciate the question. So yes, I mean, when we look at the amount we've absorbed in terms of tariff impact and then I ran impact, in particular, for the Doors business, it is a really substantial impact to the EBITDA margins that we delivered in Q2, and then we guided to for Q3. So our view would be that the refunds offset significant costs we've incurred across Owens Corning as a result of the tariffs that were in place. When we look at investments, I mean, we continue to invest in our business. We invest in innovation. We invest in our brand. We invest in other marketing programs. We're really focused now on how do we serve our customers well across all 3 of our businesses. But that's really unrelated to anything that we're seeing from a tariff refund standpoint.
Your next question comes from the line of Mike Dahl with RBC Capital Markets.
Just to circle back on Roofing. Can you be a little more specific in terms of -- you said your shingle volume outperformed the market, but then you had some offsets on the nonwovens, can you help us understand kind of what volumes look like from a pure shingle standpoint? And then within the guide for 3Q, how much of an impact is that nonwovens contract going forward? And then the final piece would be, I think previously you expected roofing specifically get back to price cost positive in the fourth quarter by year-end. Can you just clarify, given all the moving pieces, if that's still your expectation?
Yes. [indiscernible]. So the underlying shingle components business in Q2 outperformed the market. I think this is a -- with a contract, a nonwovens customer that the contract ended at the end of last year. So the volumes kind of Q4, Q1 were a lot lighter on a year-over-year comp in Q2 was the heaviest buy. So it had a little bit more of an impact that phases out really in next quarter, Q3. So there wouldn't be any year-over-year impact there. But it was really kind of an anomaly around just a very large amount of volume purchased by this contract customer in Q2 of last year that kind of materialized through the numbers. But again, the core single components business saw volume growth in the quarter and outperforming the market on that piece. But again, this nonwovens impact, we shouldn't have a big impact in Q3, and then that drops off on a year-over-year comp.
On the price cost piece by Q4, again, this is going to be a little bit to Todd's comments earlier around I think it's going to be more dependent on the inflationary environment. We have seen inflation around material cost inputs, asphalt costs and roofing and particularly delivery costs really accelerating and continuing to move up in a way that we've got announced price increases that we should be able to offset if we see some stability there. But I think our Q4 outlook around price cost neutral on all inflationary costs.
It's going to be highly dependent now in terms of what we see around asphalt and other energy cost inflation and delivery cost inflation. So we're going to continue to focus, as Todd talked about in terms of some price realization. Our teams continue to look for all ways to offset these incoming costs. Our sourcing team is working hard. Our supply chain team is working hard. Manufacturing teams are to find productivity offsets.
So we're going to look at trying to get price cost neutral, but we're also looking holistically of how we sustain margins in this inflationary environment. I will say though, over time, we've got a great track record of achieving and overcoming asphalt inflation through price and getting back to pricing that offsets all inflation. But depending on the market environment we face on some of the costs that are coming at us, it's going to be a little bit more dependent if we see that by Q4, if that trades into 2027.
Your next question comes from the line of Sam Reid with Wells Fargo.
Another question on roofing here. I've heard in the prepared remarks some comments on broader placement and perhaps some new geographies. And I believe that was specific to the roofing category. Did that -- any of that show up in the second quarter in the form of extra sell-in? Is there some sort of sell-in dynamic contemplated in your third quarter guidance? Just help us unpack that dynamic.
Yes. And actually, the comment was more on Doors specific than in Roofing. So in Roofing, look, we continue to invest in our contractor engagement model. We continue to add contractors to our network. We continue to see a larger portion of our shingle demand through that dedicated and very focused OC contractor network. So we continue to see that bridging in there. But in distribution and Roofing, we're very balanced. We continue to take that approach and see good results by giving our contractors the widest view in terms of how they want to service their business. My comments were more around the Doors business, where we continue to bring our commercial strength into that business and really following the same playbook we've done in roofing and insulation over time, which is we're investing heavily in downstream demand creation, particularly with dealers and builders.
We're starting to see that come through, and we saw that coming through in order volumes in our doors business in Q2. We continue to look at broader distribution that values the full product line of roofing insulation and doors, and we've been able to get some placement in the quarter that's generated some incremental volume in our Doors business, and we continue to see that strength continue to grow in terms of giving us some new locations in terms of where we can get stocking positions with our Doors business. So that's really the reference of what we're seeing in terms of the broad commercial strength, and we're building a lot of very good market momentum around our downstream pull-through strategy around our broad complementary product offering to distribution partners that want to stock all 3. And that's ultimately coming through with some better volumes that we saw in Q2 in the Doors business that we think continue in the back half of the year.
Your next question comes from the line of Brian Biros with Thompson Research Group.
You talked in the prepared remarks about some, I believe, AI efforts to help kind of customers, I think, manage demand and help find new opportunities. And you said you're already seeing some value and kind of expect to roll this out further across the segments and the company. Can you just talk a little bit more about that and put a finer point to kind of the value you're seeing now, expectations for the future and timing for that kind of rollout?
Yes. I think like most companies, we're exploring a lot of use cases of how we're applying particularly agentic AI, generative AI into our business operations. And A lot of this focus has been on administrative functions and operations. Last call, I talked about how we're expanding AI into our manufacturing processes that we can evaluate data just much faster and make decisions around process improvements around our quality systems that we're deploying AI models and tools around.
And then this was an example commercially where we're doing it one example of many kind of use cases and pilots we're putting into the commercial teams. But this one specific to our ability now to look at a lot of our purchasing data from particularly distribution customers or contractor preferences and analyze large kinds of data, and now we can start to spot trends through this AI model in terms of any changes in purchasing patterns, purchasing behaviors, product choices, that now gets a summary report by location, by distributor, by customer in a way to our -- and directly out to our commercial sales team where they can look at that and then take some action and follow up and say what's driving that change in purchasing behaviors. And that's allowed us to be in front of some changes to identify opportunities inside our roofing business.
So we've done enough of the pilot now, and we've seen enough benefits from that in terms of giving our commercial teams access to the information that they can go take into our customers and have great conversations around that we're going to be rolling that out across the company. So I think one example, again, of how we're trying to deploy AI tools to be more efficient, more effective, be better service partners for our customers. And that's starting to see some results in roofing today that we expect will generate some good results in our installation and Doors businesses as we roll this out.
Your next question comes from the line of Adam Baumgarten with Vertical Research.
You mentioned a couple of insulation plant rebuilds in '27. Will the ramp-up of Nefi cover that capacity that will temporarily be down? Or I'm just trying to figure out how your net North America residential capacity will look in '27 versus '26?
Yes, let me tackle that. So Nefi will help. Nefi is a small asset, though, but having it up for a full year will offset some of the impact that we're seeing. What we really designed into the new Kansas City line is flexibility to serve multiple parts of the market. So Kansas City is a larger line. And while we started up on technical insulation, it has the benefit of also giving us flexibility then broader in the network to make sure we can meet expected customer demand as we get into the year.
Your next question comes from the line of Collin Verron with Deutsche Bank.
I was just hoping you can help bridge and quantify some of the moving pieces around the 400 basis point sequential decline in roofing EBITDA margin you're expecting from Q2 to Q3. you've taken some price in June. So I think there could be some benefit from price. So I guess I'm just trying to understand some of the headwinds that you might be seeing, how much of that is volume deleverage versus maybe the absence of tariff refunds or worsening price costs?
Yes. It really is primarily going to be driven by the volume and volume leverage. That's the biggest change on a quarter-to-quarter sequentially. We are seeing some incremental inflation. We're also expecting to see some incremental pricing. But -- so when we look at that price cost, we are still guiding to -- that's going to be negative. So that still creates a little bit of headwind. But I'd say the vast majority of that 400 basis points decline is tied to volume, primarily just volume loss and a little bit of volume leverage. And then third, smaller elements a little bit of negative price cost that embeds in there. But overall, again, I'd say, even with those changes down, if I just step back, the performance of the business is still very strong. These kind of volumes still generating 30% EBITDA margins prior to our guide. So we still feel like the strength and durability of the business is there, although there's a little bit of volatility quarter-to-quarter in terms of the volumes that we're seeing in shipments.
Your next question comes from the line of Matthew Bouley with Barclays.
I wanted to go back to the insulation volumes this kind of strong volume outlook in both North America nonres. You mentioned data center and then in Europe, you mentioned building changes. And I heard you loud and clear that this is also the reflection of a lot of the investments you've been making in the past kind of coming to fruition here. So I know you obviously kind of kept the forward view capped here at the Q3 guide, and you're not going to guide beyond that, but my question is, do you have some visibility to the backlog here? Or if there is kind of a sense if there's a broader or longer trend going on here in these 2 categories, or if there's anything we should understand around sort of near-term lumpiness that's helping you right now?
So our view would be the commercial strength we're seeing there is a combination of structural changes that we've made, investments that we've made, the product portfolio that we have, the geography focus, the product segment focus in both of those businesses, combined with some pockets of good market conditions. So when we look at Europe, Europe has been weak since the Ukraine invasion. We're starting to see some green shoots in the markets that we serve in Europe that are encouraging. Much like the U.S., Europe is underbuilt though because it's been a number of years of seeing construction activity below long-term averages. So our view would be that Europe is due for sort of a stronger market conditions, and we're really well positioned to serve those markets. When the rebuilding of Ukraine starts to really heat up, that could be another catalyst for strength in Europe over time. And we really haven't seen that in our results yet.
When we look at nonres in North America, the pockets of strength are related to data centers, health care has been good. Some of the interiors businesses have been good. We're seeing the reindustrialization of the U.S. benefit us from a process technology as well as a building insulation standpoint. So that should continue for a bit longer. At some point, that may taper off as a result of companies that have kind of onshore back to the U.S. that won't do it again. But for the near term, we're seeing good strength in that North American nonres piece of the business as well.
There are no further questions at this time. I will now turn the call back to Brian Chambers for closing remarks.
Great. Thanks. I want to thank everyone for making time to join us on today's call and for your ongoing interest in Owens Corning. We look forward to speaking to you again on our third quarter call. Thanks, and have a safe day.
This concludes today's call. Thank you for attending. You may now disconnect.
Owens Corning — Q2 2026 Earnings Call
Owens Corning — Q2 2026 Earnings Call
OC reported resilient Q2: $2.8B revenue, $660M adjusted EBITDA (24%), strong cash returns while investing in capacity expansion.
📊 Quarter at a Glance
- Revenue: $2.8B (roughly flat YoY)
- Adj. EBITDA: $660M with a 24% margin (adjusted EBITDA is operating profit before interest, taxes, depreciation)
- EPS: Adjusted diluted EPS $3.93
- Free Cash Flow: $199M; returned $264M this quarter; YTD returns $327M
- Balance Sheet: Net debt/EBITDA ~2.4x; $1.8B liquidity (cash + available facilities)
🎯 What Management Says
- Strategic pivot: Company is focused on a large-scale, residential‑focused building products platform leveraging brand, contractor pull‑through and cross-selling across Roofing, Insulation and Doors.
- Doors execution: Achieved $135M of run‑rate synergies (vs. $125M target) and identified an additional $75M of structural cost improvements.
- Capex & tech: $800M capex plan (Kansas City fiberglass line online next year; new Alabama roofing plant mid‑2028); deploying AI for commercial analytics to improve customer engagement.
🔭 Outlook & Guidance
- Q3 guide: Revenue $2.6B–$2.7B; enterprise adjusted EBITDA margin ~20%–22%.
- Segment outlook: Roofing revenue down mid‑ to high‑single digits (EBITDA ~30%); Insulation revenue up mid‑single digits (EBITDA ~22%); Doors revenue down mid‑single digits (EBITDA ~10%).
- Risks: Iran‑related cost inflation included (~$40M net impact expected in Q3 as inventory turns); tariff refund timing excluded from guide (Q2 had ~$25M benefit; ~$20M pending).
❓ Analyst Q&A
- Insulation volumes & capacity: Strength driven by North American nonresidential and Europe; Nefi (small West Coast line) to restart in Q4 to help cover 2027 rebuilds; Kansas City line adds flexible capacity next year.
- Roofing dynamics: Q2 pull‑forward from price announcements left heavier distributor inventories; pricing realization improving (in line with historic norms) and expected to help across Q3/Q4 but Q4 recovery depends on inflation trends.
- Tariffs & inflation: Q2 received $25M in tariff refunds; ~$20M more pending (could hit later this year); continued diesel/asphalt inflation and Iran uncertainty drive near‑term negative price‑cost.
⚡ Bottom Line
- Conclusion: Owens Corning delivered a profitable, cash‑generative quarter and is returning capital while investing to expand capacity and margins; near‑term headwinds include Iran‑linked inflation, tariff timing and distributor inventory dynamics, but structural portfolio mix, Doors synergies and capex position the company for longer‑term growth.
Owens Corning — Q1 2026 Earnings Call
1. Management Discussion
Ladies and gentlemen, thank you for joining us, and welcome to Owens Corning First Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to Darren Garvin, Director of Investor Relations. Please go ahead.
Good morning, and thank you for joining us to discuss Owens Corning's First Quarter 2026 Results. Joining me today are Brian Chambers, our Chair and Chief Executive Officer; and Todd Fister, our Chief Financial and Operating Officer. Our earnings release, Form 10-Q and presentation slides were issued earlier this morning and are available on the Investors section of our website at owenscorning.com. Following our prepared remarks, we will open the call for Q&A. To allow for broad participation, please limit yourself to one question.
Before we begin, please refer to Slide 2. Today's remarks will include forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially. We undertake no obligation to update these statements, except as required by law. Please refer to the cautionary statements and risk factors identified in our SEC filings for more detail.
This presentation also includes non-GAAP financial measures. Explanations and reconciliations to GAAP measures can be found in our earnings release and presentation materials available on our website.
Financial metrics discussed today reflect continuing operations except for cash flow measures, which include amounts related to glass reinforcements. With the completed divestiture of glass reinforcements, Q2 will be the final quarter that cash flow includes the impact of discontinued operations. For those following along with the presentation, we will begin on Slide 4.
And with that, I'll turn the call over to our Chair and CEO, Brian Chambers.
Thanks, Darren. Good morning, everyone, and thank you for joining us today. I know many of you have had the opportunity to speak with Darren, who recently assumed leadership of our Investor Relations function, and I want to welcome him to his first earnings call in this role. I also want to recognize and thank [ Ameren Wolford ] for all of her great work leading Investor Relations and wish her well in her new role leading our finance team in Roofing.
To begin, I'll provide a brief overview of our first quarter performance and then discuss our progress in reshaping Owens Corning as a more focused and more integrated building products leader, which generates consistently strong margins and cash flows. Todd will then provide a detailed review of our first quarter financial results, and I'll come back to share our outlook for the second quarter.
Entering the year, we continue to perform at a high level, despite current residential market conditions. Repair and remodel demand and new residential construction activity continue to reflect affordability challenges and consumer uncertainty. Roofing activity was boosted by end of quarter inventory restocking, but remained impacted by low carryover demand from the uniquely quiet storm season in the second half of last year.
Against that backdrop, our team executed well and delivered strong operating performance. For the past several quarters, we've been operating through markets with declining volumes, but our ability to consistently deliver solid results highlights the strength of our enterprise and the structural improvements we have made.
We are demonstrating the durable performance of the new Owens Corning, a focused building products company that outperforms through the cycles and is poised for significant growth as repair and remodel investments and new construction activity increases in the future. I'll share more about our financial performance in a moment.
But first, I'll lead with safety. Our Safer Together operating framework is driving improved results as we start the year. with a first quarter recordable incident rate of 0.46. Our team's commitment to working safely achieved one of the best quarters on record in each of our businesses with nearly 85% of our sites working recordable injury free.
Turning to first quarter financial performance. We generated $2.3 billion in revenue and $369 million in adjusted EBITDA with an adjusted EBITDA margin of 16%. We also returned $63 million to shareholders through a cash dividend. This reflects our ongoing commitment to return $1 billion of cash to shareholders in 2026.
For the past year, we've delivered strong margins on lower market volumes in Roofing and Insulation. In fact, when we compare today's results to similar market conditions over the past 10 years, we have improved margins across both businesses by over 500 basis points.
Across the company, we are seeing the impact of structural improvements made to strengthen our market positions and streamline our operating cost. In Roofing, we are expanding our contractor base through an industry-leading engagement model. growing our high-margin components business and increasing capacity to service a sustained shift toward premium laminate shingles.
In our Insulation business, we've invested in a more profitable mix of products and applications and restructured our manufacturing network to be more efficient and more flexible.
And in Doors, we are applying the same commercial and operational playbook used to increase revenues and improve margins in Roofing and Insulation, utilizing an integrated go-to-market strategy to increase our customer share positions while achieving significant operating cost synergies.
Taken together, these actions reflect how a more focused and integrated Owens Corning is operating today. by leveraging our unique OC advantages to drive growth and productivity and deliver structurally higher and more durable margins.
One key part of the playbook is our integrated go-to-market strategy that combines the breadth and depth of our distribution network with our downstream demand pull-through model. Commercially, we've built one of the strongest distribution networks in building products and are leveraging that strength across the enterprise.
We serve over 4,100 home center locations and more than 8,000 distributed locations, providing broad access to our product categories, which gives our downstream customers with the widest choice of service platforms. Our network has grown through commercial strength that is unparalleled in the market.
Home center customers value our in-store service, merchandising capabilities, unique product portfolio and highly recognized brand, both on the shelf and online, which helps drive traffic and increase average ticket size. As a result, we've earned additional placement across all 3 of our product categories at Lowe's, and we're recently recognized in their annual vendor partner awards for our ability to deliver quality products, innovation, value and service.
Distributors choose Owens Corning because we provide easy-to-sell products, and they increasingly see value in offering a complete residential package, Roofing, Insulation and Doors, as we help them grow with our down channel customers across all 3 product categories.
Through our unique customer engagement model, we've built deep and loyal partnerships with the contractors, builders, dealers and specifiers, who utilize our iconic brand, our wide array of products and our robust marketing and merchandising programs to help them grow their businesses. This partnership accelerates demand creation, deepens distribution partnerships and is a meaningful source of differentiation for Owens Corning.
And we continue to focus on increasing and expanding our network. In Roofing alone, we've grown our contractor network to over 30,000 members. Operationally, alongside our commercial strength, we are leveraging the full scale and capabilities of the enterprise to deliver a winning cost position.
Over the past several years, we've optimized our manufacturing network, improved flexibility and invested in productivity and efficiency across our businesses. This includes expanding our use of intelligent monitoring and AI-enabled tools to improve asset reliability, reduce unplanned downtime and support a structurally lower cost position.
Today, we are monitoring and analyzing over 20,000 process sensors in our plants, using AI to provide real-time alerts that help our teams predict risk before they impact safety, quality or productivity. These capabilities are deployed in nearly 40 plants across our 3 businesses, with plans to continue expanding.
We are also capturing meaningful cost synergies in our Doors business as we leverage enterprise manufacturing and supply chain capabilities and processes. Currently, we are on track to achieve approximately $135 million in run rate enterprise cost synergies by midyear, exceeding the $125 million we committed to. We are also making progress to deliver an additional $75 million of structural cost improvements within our operations. These actions are reducing the cost structure of the business and supporting a path to improve margins.
At the same time, we're simplifying and standardizing work across the company to reduce complexity and improve operating expense efficiency. By continuously identifying opportunities and maintaining a best-in-class cost structure, we are strengthening our ability to self-fund growth initiatives and reinvest in our OC Advantages. Through this work, we are enhancing our ability to perform in today's environment while positioning us to grow revenues and earnings as volumes increase.
We've also taken decisive portfolio actions to unlock cash and deploy capital to the opportunities that best support growth and returns. A key milestone in this effort was the recently completed sale of our glass reinforcement business. As a result, we will see cash proceeds from the transaction of approximately $280 million and expect to generate additional cash of $50 million to $70 million from excess alloy sales over the next year.
With the reshaping of Owens Corning complete, we are positioned to operate as a more integrated company and capture the full value of our complementary product platforms.
To help drive this next phase forward, we recently expanded Todd Fister role to Chief Financial and Operating Officer. Todd's deep strategic and operational expertise, along with his knowledge of our people and the building products industry, will be key to our ability to unlock efficiencies, streamline execution and accelerate organic growth by fully leveraging the OC Advantages across the enterprise. Todd will provide both operational and financial leadership as we conduct a search for a Chief Financial Officer.
Before I turn it over to Todd, I also want to provide a brief update on our sustainability journey, which is fundamental to how we operate and build a strong company. We continue to embed sustainability into our operations by reducing emissions and waste to landfill and increasing the use of recycled materials, actions at lower cost, improve efficiency and support both our winning cost position and our growth in Europe.
In recognition, we were recently honored by S&P Global as a top 1% performer in the Sustainability Yearbook for the building products industry placing us among a select group of sustainability leaders worldwide. We look forward to sharing more details on our progress in the upcoming release of our 20th annual sustainability report.
In summary, our first quarter results demonstrate the strength of the operating model we have built. Moving forward, we will remain focused on leveraging the OC Advantages across our complementary businesses to create value for both our customers and our shareholders.
With that, I'll turn it over to Todd.
Thank you, Brian, and good morning, everyone. Our first quarter results once again demonstrate the benefits of the structural improvements and portfolio transformation we've been executing. As the macro environment improves, we have room to grow the top line and bottom line significantly from this level.
The actions we've executed have meaningfully changed the earnings profile and cash generation potential of Owens Corning, resulting in a business that is more resilient through the cycle, better positioned to manage different markets and capable of generating consistently attractive returns with better capital efficiency.
I'll begin on Slide 5 and walk through our enterprise results for continuing operations in the first quarter. Against this backdrop, first quarter revenue declined 10% year-over-year, largely due to the market environment. Adjusted EBITDA for the quarter was $369 million, and we delivered an adjusted EBITDA margin of 16%.
While these results clearly reflect the impact of market demand, they also highlight the positive durability of our margin structure particularly when compared to prior cycles in Roofing and Insulation.
During the quarter, we recorded $75 million of adjusting items, including amounts related to our continued cost optimization efforts as we operate now as a focused building products company in charges related to a previously disclosed recall in our [ Paroc ] business. We do not expect to incur additional material charges related to the recall products. Adjusted earnings per diluted share for the quarter were $1.22.
Tuning to Slide 6. Free cash flow in the first quarter was a net outflow of $387 million. This use of cash reflects the seasonal working capital we typically experience early in the year in addition to higher capital expenditures. With the completed divestiture of glass reinforcements, Q2 will be the final quarter that cash flow includes the impact of discontinued operations.
Capital additions for continuing operations were $210 million in the quarter, up from last year. We are investing in elevated but targeted levels to support long-term growth, expand capacity and drive productivity and efficiency across the enterprise. For the 12 months ending March 31, 2026, our return on capital was 10%. Our debt-to-EBITDA ratio was 2.5x at the middle of our targeted 2 to 3x range.
At quarter end, the company had liquidity of $1.8 billion, consisting of $272 million in cash and $1.5 billion available under our bank debt facilities. Maintaining a strong investment-grade balance sheet remains a priority.
During the quarter, we returned $63 million to shareholders through a cash dividend. We did not repurchase shares in the first quarter, reflecting the seasonal use of cash for working capital. We remain committed to returning $1 billion to shareholders in 2026 through dividends and share repurchases in addition to the $1 billion we returned to shareholders in 2025,
With the glass reinforcements business sale complete, we plan to use the proceeds to fund organic growth initiatives and return cash to shareholders, consistent with our existing capital allocation priorities. We are focused on generating strong operating cash flow, reinvesting in the business to support our long-term strategy, returning capital to shareholders and maintaining a strong balance sheet.
Now turning to Slide 7. I'll walk through segment results, beginning with Roofing. Overall roofing performance in the first quarter reflects both the realities of the current demand environment and the strength of the business. Our vertically integrated cost position, pricing discipline and contractor engagement model continued to result in attractive margins.
Roofing sales were $960 million, down 14% year-over-year, driven primarily by lower volumes. The U.S. asphalt shingle market was down approximately 10% compared to the prior year. The main drivers were lower storm-related carryover demand and severe weather in parts of the country. and the roofing market was stronger than expected, driven by a pickup in restocking activity late in the first quarter.
While our U.S. shingle and component volumes were slightly behind the overall market, we believe this was related to timing. The sellout of OC products through distribution was good, and we have outperformed the market over the last 12 months.
EBITDA in Roofing was $231 million, down compared to last year, driven by lower volume and the impact of higher cost inventory. In line with our expectation, roughly $30 million in curtailment costs carried over into Q1, with approximately half of that impact offset by favorable productivity in the quarter. Modest inflation outside of asphalt and slightly lower pricing resulted in negative price cost in the quarter.
Despite these impacts, Roofing delivered an EBITDA margin of 24%, which highlights the durability of our business model.
Turning to Slide 8, I'll discuss our Insulation business. Insulation continues to deliver strong and relatively stable performance in current markets. Total sales were $867 million, a 5% decrease from Q1 last year. North American residential volumes declined as expected due to the housing market.
In North America nonresidential, revenue was flat versus prior year as the business continues to perform well with pockets of strength. And in Europe, we continue to see stable markets and benefited from the impact of currency. We remain disciplined in inventory management, which resulted in incremental production downtime versus the prior year.
In addition, targeted price moves and additional inflation resulted in adjusted EBITDA of $167 million, down $58 million from prior year at 19% EBITDA margins. This performance reflects the strength of our broad end market exposure, operational discipline and pricing execution as well as the improvements we've made to the cost structure.
Insulation continues to benefit from secular drivers tied to energy efficiency, building performance and regulatory standards. We are well positioned for these trends, which should create long-term organic growth opportunities.
Moving to Slide 9, I'll provide an update to the Doors business. Stores continues to operate in a challenging demand environment with ongoing pressure across residential construction markets, including existing home sales that are impacted by higher mortgage rates.
Sales in the quarter were $475 million, down 12% from prior year, driven by lower market volumes and the impact of our recent strategic actions. As previously announced, we divested our distribution business late in Q1 and which had net annual revenues of approximately $70 million.
We also sold our Oregon components facility in the fourth quarter of last year, which had annual sales of approximately $50 million and will be a headwind to volume throughout most of the year. The combined net revenue impact of these actions to our first quarter results was approximately $24 million, which will step up in subsequent quarters.
EBITDA was $34 million, representing a margin of 7%, in line with Q4 margins. We are encouraged by the progress in doors and remain confident that the actions underway will meaningfully improve earnings performance as markets strengthen. Overall, for the company, there was about $13 million in net impact from tariffs in Q1 versus prior year.
As a result of the recent Supreme Court ruling on tariffs, the company may be eligible for approximately $50 million in refunds across the enterprise. We already have submitted for approximately $25 million in refunds that could benefit the second quarter, the tariff refunds are not reflected in the outlook that Brian will share in a moment.
In addition, the majority of inflation stemming from the conflict in Iran is expected to impact our results on a lagged basis. The costs associated with the Iran conflict for the second quarter are expected to be approximately $60 million. About half of the cost will impact our roofing business, with the remainder split between insulation and doors. These costs are included in the second quarter outlook.
Turning to Slide 10. I'll briefly cover corporate and outlook-related items for continuing operations. General corporate EBITDA expense is expected to be between $245 million and $255 million for the year. Our effective tax rate for 2026 is expected to be in the range of 24% to 26%.
Depreciation and amortization is expected to be approximately $680 million for the year. And capital additions are expected to be around $800 million, with more than half driving productivity and growth initiatives across the enterprise.
In closing, we are pleased with how our teams executed during the quarter, continuing to deliver resilient performance in the current markets. We remain focused on controlling what we could control, positioning the business for sustained value creation and delivering strong returns for shareholders over the long term.
Finally, having spent over 11 years on Corning in a range of leadership roles, including Insulation President and CFO, I am more excited about our future than ever. As Chief Operating Officer, I look forward to working even closer with our teams to strengthen execution and accelerate organic growth by helping our customers win with the OC Advantages.
And with that, I'll turn the call back to Brian.
Thank you, Todd. Our first quarter performance within current market conditions reflects the impact of the structural improvements we've made and the disciplined execution of our teams.
In terms of the market outlook for the second quarter, we expect discretionary remodel activity and residential new construction in the U.S. to remain under pressure. Absent major storm activity, nondiscretionary reroof demand should remain solid but slightly down versus prior year. Nonresidential construction in North America is expected to remain stable. And in Europe, we anticipate a gradual market recovery.
Given this near-term outlook, we anticipate second quarter revenue of approximately $2.6 billion to $2.7 billion, slightly below prior year. For adjusted EBITDA, we expect to deliver a margin of approximately 20% to 22% for the enterprise.
Now consistent with prior calls, I'll provide a more detailed business specific outlook for the second quarter. Starting with our Roofing business, we anticipate revenue will be down low to mid-single digits versus prior year. While current year storm demand is tracking in line with historical averages, we expect armor market shipments to be down low to mid-single digits in the second quarter based on limited prior-year storm carryover and some pull forward of restocking activity into Q1.
We expect our shingle volumes in the quarter to be above the market, supported by our customer mix and contractor engagement model, driving strong demand for the OC brand. We anticipate components to be in line with single demand. While we are seeing good realization of our April price increase, we expect pricing to be down slightly versus prior year, with ongoing input and transportation inflation resulting in negative price costs in the second quarter.
Given the increased inflation we are seeing in the business, particularly in asphalt, we recently announced another price increase effective June 1. Given our strong market position, we expect Roofing EBITDA margin to be in the low 30% range.
Moving on to our Insulation business, we anticipate revenue to be down low single digits versus prior year, inclusive of the sale of our Building Materials business in China. As a reminder, this business had approximately $130 million of annual revenue, and that transaction closed mid-2025.
Within the business, we expect North American residential revenue to be down low single digits, driven by previous pricing actions in addition to slightly lower volumes. In North America nonresidential, we expect revenue to be up low single digits, driven by slightly positive pricing.
In Europe, we anticipate revenue will be up versus prior year, supported by gradual market recovery and currency tailwinds.
Overall, for the Insulation business, we expect price to be roughly flat. At the same time, we expect ongoing input costs and transportation inflation to result in negative price cost. We also expect continued idle impact from lower production versus last year as we manage inventory levels and working capital. Given all that, we expect Insulation EBITDA margins to be approximately 20%.
Moving to our Doors business. We expect the market to remain soft, driven by low levels of discretionary remodel and new construction activity. We anticipate second quarter revenue will be down mid-single digits versus prior year, driven primarily by our recent divestitures that Todd discussed.
We expect to continue to see the benefits of our integrated go-to-market commercial strategy and ongoing cost optimization work to scale throughout the year. Additionally, we expect relatively flat pricing, coupled with an ongoing inflationary environment inclusive of transportation. Overall, for Doors, we expect second quarter EBITDA margin to sequentially improve to high single digits.
With that review of our business outlook, I want to close with a few enterprise comments. Within current market conditions, we remain focused on disciplined execution of our strategy and leveraging our unique OC advantages to help customers win and grow in the market. Those strengths have supported our performance through a wide range of market conditions and they position us to continue to build Owens Corning as a best-in-industry performer that generates higher or durable margins and cash flows.
We are well positioned to capitalize on key secular trends in housing and energy efficiency that support long-term growth opportunities. And we will stay committed to investing in our people, our capabilities, our brand and our customer relationships while keeping a sharp focus on operational discipline.
Finally, I want to recognize and thank our teams for their ongoing commitment to working safely, taking care of our customers and delivering on our cost and productivity initiatives. That focus is what enables us to perform at a high level in any market environment.
With that, we would like to open the call up for questions.
[Operator Instructions] Your first question comes from the line of John Lovallo with UBS. Please go ahead.
2. Question Answer
If I missed this, I apologize, but I know last quarter, you talked about expecting to see market improvement as you move through 2026 with top and bottom line results largely in line with current consensus. Are you still comfortable with that? Or have you guys guys kind of backed away, just given some of the uncertainty in the market?
I think the year has started out very consistent with what we expected when we talked about it in the last call. We've seen actually good progression and a little bit of improvement in terms of the performance in Q1, our Q2 guide is, again, right in line getting back to the sticky kind of 20% plus EBITDA margins for the company within all of the current market environment and some of the uncertainty.
So I think it really shows the confidence we have in the business performance, our execution and the strength of our company. And so we feel very good about kind of how the year is starting out consistent with what we talked about last time. And we think we've got a good year ahead of us. given how we're setting up the frame of the company.
So yes, we feel good about our performance at the start of the year. We think it's very consistent with what we talked about on the last call.
Your next question comes from the line of Michael Rehaut with JPMorgan.
Congrats, Todd, on your new role. Wanted to focus on Roofing for a moment. if you could just kind of walk through the drivers of the upside on the margin. And also when you talked about kind of underperforming the market a little bit in the first quarter, I'm curious on the drivers of that, if you maybe were already fully represented in the channel and therefore, there wasn't the same opportunity maybe as some of the other suppliers out there into the channel. And by contrast, what's driving the outlook for outperformance in the second quarter?
When we talk about the upside for Q1, I'd say it's primarily volume driven. So we came into the year expecting that we were going to have a step back in volumes versus prior year. big part of that driven by really very little storm activity and demand carrying over into Q1. And then we thought the timing of the quarter would be based on a little bit of when the restocking activity was going to occur.
With free supply of shingles we thought some of that could be pushed into Q2. So we saw a little acceleration of that towards the end of the quarter relative to the price increase we have in the market. And so that additional volume really just gave us some additional leverage.
I'd say the other piece of it was really within our productivity. The manufacturing team started up and got the operations going exceptionally well, given the harsh winter weather. And so we were able to offset some of that $30 million carryover with better productivity and performance in our manufacturing operations. So those were two of the big drivers in that.
So we underperformed Q1. That's not unusual for us, given our retail presence in the markets, we have a pretty strong retail presence. So retail generally does not participate in any stocking activity. They carry a pretty stable inventory levels to feed through the year.
So generally, Q1, where wholesale distribution may participate in restocking activities, retail doesn't. So we -- it's a little bit about of our customer mix. that drives that. And that feeds into kind of our Q2 outperformance because generally, when we get even on all forms of our distribution buying now to market demand, we see that accelerate a little bit for us, given that presence.
And then based on just the strength of our performance in the business overall, our contractor growth, the other thing -- the other commercial activities we're working, we just see that really coming to fruition to drive some additional volume for us here in Q2.
Your next question comes from the line of Stephen Kim with Evercore ISI.
Yes. Appreciate all the color. And again, let me add my congrats to Todd for the new role. I guess I wanted to maybe focus on Insulation, if I could. I'm curious, you provided a little bit of detail regarding North America resi being down, but then nonres being flat, I think you said Europe was stable with an FX benefit. .
Curious if you could give us a little bit of insight into what you're seeing in the supply die demand dynamics across those 3 as we think about the rest of the year. For example, in North American resi, what is your expectation around what starts are going to do? And how does industry capacity downtime look like in your view, in '26 versus '25?
And then if you look into the other segments or subsegments, are there any things we should be watching for in terms of EBITDA supply or the demand dynamic?
Thanks, Steven. I appreciate the question, and thank you for the congratulations as well. I'd be happy to go through segment by segment and give a little more color on what we're seeing.
So let me start with North America res. Everyone has seen the strong print we saw in March for new starts at around 1.5 million starts for the month. We expect to see the benefit of that start to come through late in Q2, and that was good news as we get into the spring selling season.
When we think about the full year for res, we use consensus. We look at what consensus estimates are for the year and plan accordingly. Consensus has been relatively stable for res it may tick up a bit if we see continued starts activity strong like we saw in March, but we all know the starts bounce around a bit month-to-month depending on overall dynamics. For res, we would go back to what we've shared before, which is we believe the industry can support between 1.4 million and 1.5 million housing starts with the current installed base of capacity given the current heavier mix for multifamily versus single family, we would expect to be at the higher end of that range.
We continue to take idle in our network to manage inventory levels appropriately. -- we typically build inventory in the early part of the year to support the peak season into Q2 and in Q3, but we continue to be disciplined in how much inventory we're building -- we assume that's occurring across the industry as well because we're not seeing a lot of inventory kind of unusual levels of inventory to make its way into the market. So res, we would describe is pretty stable conditions really right now with some encouraging growth coming off of the March starts print.
When we look at nonres, there are pockets of real strength in nonres where we're in very strong demand environment. Anything related to AI data centers the reindustrialization of North America has been strong for us on the nonres side. So in some of those areas, we're close to being sold out or are sold out in specific product lines that feed into those high-growth segments within non-res.
And when we look at Europe, Europe, we're seeing pockets of strength in Europe as well. It's been relatively stable overall. Germany has been a bit weaker. Some of the other regions have been stronger in Europe. But we've got an ability to serve that market. And we've been disciplined in taking downtime in Europe as well throughout this period.
So overall, as we look at the back half of the year, we're somewhere between stable and positive, depending on what happens with North American new residential construction in the year. and we've been disciplined around how we're managing our production network through this period.
Your next question comes from the line of Phil Ng with Jefferies.
Congrats on the strong quarter, and congrats to you, Todd and your new role. I guess to kind of kick things off, a question for Todd. -- given the -- you called out inflation for 2Q, is that like a full ramp? How does that kind of progress as we kind of look through the back half?
And I think, implied in Brian's guidance for 2Q, it's calling for a negative price cost spread for most of your segments. Given the increases you guys have announced, I think, 2 in Roofing and more recently won for Insulation. As we look out to the back half, assuming you get decent traction, should you get back to like a neutral price cost spread or maybe even a little positive? How should we think about that dynamic as we think about the back half?
Thanks, Bill. Let me start with the -- what we're seeing in Q2 from Iran-related inflation, and then we could talk about the price over cost dynamics.
So the $60 million that we discussed in our prepared comments, around half of that is impacting our Roofing business. The remaining half is impacting Insulation and Doors. It skews more towards Insulation though, than Doors. So you could think of roof insulation and then doors last in terms of a relative impact.
When we look at categories of inflation, there's three big categories we're seeing right now. There's asphalt inflation, which is entirely in our Roofing business. We then see delivery inflation, which is a mix of delivery to our customers as well as interplant delivery that we have in our network. And then we have purchased materials that we use as inputs into our process, especially chemicals. We know what's happening with asphalt inflation now very directly as oil goes up,
Historically, we've been able to offset asphalt inflation with price in the Roofing business on a bit of a lag. It takes some time for the price to hit the market and offset the asphalt inflation. Likewise, for customer deliveries, we had fuel surcharges that are long established in our roofing and insulation businesses. Those operate on about a 60-day lag. So it takes some time for for us to get a new fuel index, and then we pass the surcharge on into the market. So there's a bit of a lag there.
And then finally, on the purchase materials, we are seeing inflation on some materials that are really tied to oil. So you look at something like polystyrene and our Insulation business, that's tied to benzene inflation, and we have seen inflation there. So some of those materials we're absorbing right away.
When we think about the outlook, $60 million, when you look at asphalt and diesel, if oil stays about where it's at and those two commodities stay about where they're at we would expect that to be a pretty stable run rate then into the back half of the year.
On purchased materials, it depends how much of that price starts to come through in our purchases of those materials in the back half. So we could see some ramp in purchase materials inflation in the back half. But if oil stays where it's at, we would expect that the first two categories of asphalt and delivery to stay relatively stable.
We're not seeing a lot of benefit of the June price increases in the Q2 guide that Brian highlighted for Roofing or for Insulation. So we would expect a more positive benefit from those in Q3 and Q4, assuming good market traction, which would then start to offset the inflation that we're seeing come through. So Q2 is is the quarter where we're feeling the most pressure of the inflation coming through without corresponding price increases to offset it.
And Brian is going to add one comment as well.
Yes. So maybe just to add to it as well. I think we always want to try to manage our price cost to a positive setup. But there are other levers we are pulling consistently inside the company around cost efficiencies, productivity. And I think the underlying margins that we're guiding to in terms of Roofing getting back to around 30%, Insulation at 20%, a step-up in margins in doors even inside this inflation environment. So we're going to always try to manage price cost to get to a positive level.
But when you look at the underlying margin performance, we got a lot of other levers that we're pulling in terms of bringing that durability to life. And I think ultimately, that's what we're trying to achieve is how do we get to those kind of stable, high durable margins over time through any kind of inflationary environment or any kind of pricing environment we face in the market.
Your next question comes from the line of Susan Maklari with Goldman Sachs.
Building on the last answer to the last question, can you talk a bit more about the efficiencies and the cost improvements, where we are in that process? How do you think about the opportunities across all 3 of these segments? And how we should think about them flowing through to the business over the next 12 to 18 months?
Thanks,. I'll take that one. When we look at the big categories we're driving improvement in we're really focused on how do we drive consistent productivity through operations, sourcing, supply chain in our cost structure. And we have quite a bit of that already in the first quarter of this year. as well as the second quarter. And typically, those projects build through the year as we execute on it and then we start to see run rate benefits come through. .
We're also focused on the step change improvement in efficiency in our Doors business. Brian highlighted the success we've seen on synergies at $135 million run rate. Much of that is already in our P&L for Doors and for the enterprise. But then we're also focused on the additional $75 million of COGS efficiencies in the business. that we're just now starting to see the benefit come through our P&L in Q1 and then into Q2 and building through the course of the year and even into next year.
So we're -- we still have room to go on these, but we are seeing a lot of the benefit of the self-help come through to drive the kind of margin stability that Brian talked about in Q2 where we're, again, above 30% margins in Roofing, right around that 20% level for Insulation. And then we're seeing good performance in Doors relative to overall what the industry seeing.
Your next question comes from the line of Trevor Allinson with Wolfe Research.
I'll go the congratulations to Todd. I want to follow up on the commentary on roofing pricing with 2Q not really seeing a whole lot of benefit from the increases you guys have announced. Is it your expectation that you're going to see normal realization on these increases and that it just is taking some time for those of you in the market, especially with the distributors taking on some inventory in 1Q?
And then if that is the case, as we get into the back half of the year, when these are more fully realized, what are you expecting pricing to be up on a year-over-year basis in the second half of the year in Roofing specifically?
Trevor. So let me make sure you heard the comments. When we talked about the price realizations in Roofing, so we are seeing very good realization in April. And so that is absolutely embedded in, and that's going to continue to progress as we go into the back half of the year.
We've got a little bit in, but not a lot is going to be sitting in the June increase just because it's late in the quarter. So we still expect given current market conditions, that we're going to see good realization off of that June increase as well. It's just going to have a little bit more minimal impact as we finish Q2, but we would expect that then to accelerate in terms of pricing realization as we move into the back half of the year.
So on a year-over-year basis, I guess, just to kind of walk through that comp. We talked about making some targeted moves into Q4, Q1 to reset some programs with distribution customers. So that was creating a bit of a headwind coming into the year in the first quarter that you saw.
So as we move through the year, we're going to see positive realization on the April increase positively June, and we think that could get to a positive price point as we move through the year. But that's kind of the step through and the progression going forward.
But at the end of the day, right now, we're seeing very good realization on April. And given current market conditions, we would expect to see good realization of the June increase as well.
Your next question comes from the line of Anthony Pettinari with Citi.
Good morning. I was wondering if you could talk a little bit more about the tariff refunds and any color on timeline, steps involved kind of relative certainty of receiving these? And I think you indicated that they are not included in your outlook, but I'm not sure if I heard that right. So any color there?
Anthony, happy to give color. So first, you're correct. We have not included any tariff refunds in the Q2 guide. So if we see any of that come through, that would be potential upside to what Brian discussed.
When we look at the process, there is an established process for filing to receive these. We filed for about $25 million of the $50 million potential refund we could receive. We would anticipate filing for the other $25 million when we're able to later this year.
When we look at the timing of this, it could benefit us late in Q2 or potentially into Q3. So we are unsure of the timing of this coming through. When we look at whether or not we should receive the 25. I mean the answer is we should. And in fact, some companies are monetizing now their tariff recoveries for $0.90 or more on the dollar for these near-term recoveries.
So the market is saying it's highly likely to receive these. But the timing is uncertain when we received the first 25 or the second 25, which is why we did not include it in our guidance.
Your next question comes from the line of Mike Dahl with RBC Capital Markets.
I just wanted to go back to Roofing one more time. On the price realization, I mean, when you say very good realization, can you quantify that? Or sense has been kind of mid-single digits and then maybe like low to mid-single digits gets realized on June, which effectively would cumulatively be what you need to cover not just the asphalt inflation, but some of the other inflationary dynamics you're seeing in that business. So can you talk about is that ballpark the right way to think about it?
And then when you think about what the prebuy represented for the industry in 1Q, what's your perception of where channel inventories stand today?
Mike. On the price realization, I continue to say we're seeing very good realization. So I'd say we don't ever cut those down in terms of exact amounts, but a little better than historical, I would say. And if you think about how we look at that on average. So we're seeing a little better realization than we'd historically see. And again, I think that's tied to the market environment, the inflationary environment we're getting.
And then the June increase, we would expect again, given current market conditions that we would continue to see very good realization. We announced a little higher rate in the June amount. So that's reflective of kind of the inflationary environment we're running in.
Over time, our history has proven that we're able to recover asphalt inflation through price, And it generally lags a couple of quarters, given the acceleration of asphalt inflation relative to the price realization rates, and we're seeing that play out this year. But we have high confidence that with our business model and with our strength in the market, we can recover asphalt inflation through price.
Whether we can recover all inflation, that's going to depend a little bit on how the inflationary environment plays out. going forward and if we have to make any other pricing moves relative to that inflation environment. So that will be yet to be seen as the rest of the year plays out.
When I look at the restocking and the buys in Q1, the restocking efforts in Q1 I'd say it had a couple of percent probably move in the industry relative to -- we talked about a market outlook of potentially down up to 20%. It was down close to 10%. So we saw some acceleration coming through over time. But we came into the year expecting to have a weaker first half in overall demand relative to last year. But relative to historical averages, the year is shaping up to be pretty average year for Roofing. So we had a bit of a headwind on no storm carryover coming into the year.
But the setup is still for a solid Roofing year, very constructive roofineer, probably in line with kind of the historical kind of 10-year average for the full year, assuming we get kind of normalized weather patterns. -- that we started to see here in Q2 and if we see that play out in the back half, I think you'd see a first half that's probably down on a year-over-year basis in terms of market shipments. In the second half, that could be up. to get to that kind of construct for a full year that's pretty in line with the averages.
So we feel like the year is shaping up to be another good year. It's going to be a little different shaping in terms of volumes, first half and second half versus last year. but we didn't -- don't expect to see anything that's different from our original outlook for how the year is playing out. Along with as soon as we get -- or as long as we get his weather patterns kind of to a historical [ learn ].
Your next question comes from the line of Matthew Bouley with Barclays.
You have [ An Ku ] on for Matt side. In terms of what you're seeing in the market today, what have you seen in terms of competitive capacity? Are others also taking some capacity down? And just what is the general industry discipline been around this?
Are you talking specific to Roofing or Insulation or general? .
Roofing, yes. .
Roofing. Yes, Roofing capacity, again, no changes in terms of capacity outlooks that we've talked about in the past. So Roofing though is -- it's a material conversions business. So generally, price and margin performance doesn't align to capacity utilization rates like some of the other industries we talked about. We talked about insulation in that frame.
So Roofing being a material conversion business, we feel like we have an advantage given our vertically integrated supply chain and puts us in an advantaged cost position in the market. and that gives us the opportunity to drive the kind of margins and performance in the business that we're seeing today and our guide in terms of Q2.
If I just step and look at some of the capacity additions coming into the market, we started up our [ Medina ] capacity end of last year. That's been very helpful in giving us needed land capacity to service the Midwest region this year. That's coming up. We've got a few other competitors that have announced some line expansions.
But we've also seen some competitors that have announced line closures, and that's kind of how we see the capacity and Roofing playing out over the next 2 or 3 years. We think there's going to be some additions. But we also think there's going to be capacity coming out in some of the older assets coming out in lieu of more efficient assets being added into the market.
So the other thing I've talked about in the past is we continue to see this mix shift from strip shingles to laminate shingles, and that continues to grow. So there is going to be an ongoing need for more laminate capacity in the industry. So some of this capacity is met just to meet the industry needs that we see evolving over the next 2 or 3 years.
Your next question comes from the line of Rafe Jadrosich with Bank of America.
.
You called out some market share gains at Lowe's. Can you just give a little bit more color by segment what the key driver was? And then is there additional opportunity that you see in that channel had retail to take share?
Yes. Thanks. So we really use the Lowe's as much as an example of what our now very complementary product offering is bringing to our customers. So Lowe's is an example of a distribution partner that sells roofing, insulation and doors. And when we can bring our full offering to them now and leverage our iconic brand, our merchandising capabilities to help them grow their businesses it really creates a great partnership where they want to grow with us, given our bringing our broad product offering, given our demand pull-through capabilities in the market.
So we saw that as a great example that we're actually taking to other distributors and other distribution partners that we're starting to see some traction around really leveraging this commercial playbook to grow our business and to help our distribution partners grow their business.
So Lowe's was an example of that. They've been a good partner for us for many years. in the space. And so we're excited that we get the opportunity to kind of expand in our product offering with them and help them grow their business in the market.
Your next question comes from the line of Sam Reid with Wells Fargo. Please go ahead.
Wanted to also talk market share but from a slightly different angle, specifically just looking for any quantification on how much the contractor network share gains might have benefited your roofing business in Q2 -- or Q1, I should say, and what that will look like in Q2?
And then just give us a sense, are those gains kind of narrowing or are they staying kind of relatively consistent?
Thanks, Sam. Yes, I'd say overall, we service today now about 30,000 contractors again they estimated universe of approximately 100,000 plus kind of roofing contractors in the U.S. market. So we think we've got a lot of opportunity to continue to grow and scale our contractor engagement model.
And so -- and we've seen this kind of steady drumbeat of growth over the last few years. We expect that to continue this year and into next. So we still think we've got some upside and opportunity to grow our contractor network. And really, it's demonstrating the value that they're seeing by partnering with us, our brand, our pull-through capabilities, our product offering, our merchandising capabilities, which is really expansive around not just providing a great product but how we train, how we do in marketing efforts, how we do in-home sales training tools.
We do a lot of work in terms of providing digital capabilities and expanding their ability to market in their local markets. So it's really a full service suite that we provide our contractors that really is why we continue to see this growth overall in our contractor base and expect that to continue.
In terms of how that impacted Q1, I would say it's very difficult to kind of target where that contractor strength is coming through. It's early in the year. So generally, given just strong, we don't see the benefits of these contracted conversion until we get into season. So I'd say pretty limited impact in Q1. But certainly, Q2, Q3, we get through the rest of the year, we're going to continue to see the benefits of that expanded base, generating demand for our product as we move forward.
Your next question comes from the line of Collin Verron with Deutsche Bank.
Just wanted to ask one on Doors. I think the guide is for revenue down mid-single digits. You have some divestitures going on there. So any more color sort of what you're seeing from an underlying organic volume perspective and how you're viewing potential demand for the rest of the year? Are we nearing the bottom? Or do you guys still see more headwinds as we move through the rest of the year?
Yes. Thanks, Collin. I think overall, we feel we're making great progress really bringing the OC playbook into our doors business. So from an operational standpoint, Todd talked earlier about the cross synergies we're seeing the operational efficiencies through network optimization, that's really helping to improve the margin performance, and we think that continues to grow as we move through the year. And then from a volume standpoint, we saw in Q1, volumes pretty stable versus Q4, which was a positive sign given some of the market dynamics we faced in the back half of last year and actually saw the order book accelerating to finish the quarter kind of coming into this quarter.
So I think we feel good that we're able to go out and generate some incremental volume for our business relative to this integrated commercial playbook, we're we're going to market with. I talked about Lowe's. One of the categories that we saw an increase with them was in the doors category. We've seen that across our dealer network that I talked about on the last call that we're driving more volume with our distribution network because of the strength of our total portfolio and our brand.
And then we're making quite a lot of investment in that downstream pull-through, particularly with dealers and builders that really benefits our doors pull-through in terms of volume and capacity as we go forward through the year.
So I think we've got a lot of, again, self-help initiatives in place around our commercial activities that we're starting to see some benefits of some of the order but growing. And then that's kind of falling now against a market backdrop that we do think is stabilizing and would expect to see pretty solid performance in new construction. As Todd talked about, hopefully, some solid performance in R&R. But I think we're positioning the business to increase margins kind of sequentially as we go through the year with some big upside as we actually start to see market dynamics get even better.
Your next question comes from the line of Adam Baumgarten with Vertical Research Partners. Please go ahead.
Just back to the roofing price topic, just on the slight decline you're expecting in 2Q. Is that just despite the pretty good realization you were talking about, is that just a product of pricing maybe falling sequentially a bit through the back half and maybe 1 and then you're going to get that increase, but you can't quite overcome some of the maybe slippage you saw earlier?
Yes, Adam, I think that's a fair way to phrase it. We saw some declines, again, based on some targeted pricing moves we made to start the year that felt that flowed through the first quarter. So as we kind of move into Q2, we're seeing some of that carryover. We're seeing the increase from the April increase in good realization. And then we've got the June 1 that's out there and depending on kind of the realization rates of that one.
That's what's kind of causing a little bit of a cautious outlook to say we could still be a little bit negative on price as we go through the quarter.
We have reached the end of the Q&A session. Pardon me, -- we have one more question. This question comes from the line of Keith Hughes with Truist.
Questions on Europe. You called that out as a positive on the guidance. I guess the question, there's a lot of input inflation there kind of more in the United States. How does that square up for the rest of the year?
Thanks, Keith. When we look at Europe, so we see a few things in Europe. Over a long period of time, we've been able to get price consistently in Europe, and we've got price increases in the market right now. We will see some inflation on the energy side, in particular, over time in Europe. But we hedged quite a bit of our energy usage, both in North America and Europe, which tempers the impact of any short-term variability in Q2, Q3.
And Europe is still poised for long-term growth. We've got pockets of Europe that are strong right now. That's being offset with the German market that is still sluggish to recover. So overall, we remain bullish on Europe longer term in terms of the ability to drive top line with really attractive bottom line performance, given all of the self-help work our team has done there to get the cost structure right and poised to rebound in a better market.
There are no further questions at this time. I will now turn the call back to Brian Chambers for closing remarks.
All right. Well, I want to thank everyone for making time to join us on today's call and for your ongoing interest in Owens Corning. We look forward to speaking to you again on our second quarter call. Thanks, and have a safe day.
This concludes today's call. Thank you for attending. You may now disconnect.
Owens Corning — Q1 2026 Earnings Call
Owens Corning — Q1 2026 Earnings Call
OC kicks off 2026 with durable margins as it reshapes into an integrated building-products company.
📊 Quarter at a Glance
- Revenue: $2.3B (-10% YoY)
- Adjusted EBITDA: $369M (16% margin)
- Adjusted EPS: $1.22
- Free cash flow: -$387M
- Shareholder returns: $63M in Q1; reaffirmed $1B planned for 2026
🎯 What Management Says
- Strategy focus: Owens Corning is a more focused, integrated building-products leader with durable margins and cash flow, anchored by the OC Advantages and an integrated go-to-market model.
- Operational progress: cost synergies in Doors ($135M run rate by midyear), additional $75M in structural cost improvements, and an expanded contractor network enhance profitability.
- Portfolio actions: completed sale of the glass-reinforcement business; proceeds to fund growth and shareholder returns; Todd Fister expanded to Chief Financial and Operating Officer; CFO search underway.
🔭 Outlook & Guidance
- Q2 outlook: Revenue about $2.6–$2.7B; Adjusted EBITDA margin 20–22% for the enterprise; Roofing near low- to mid-30% margins, Insulation ~20%, Doors in high single digits.
- Risks & upside: tariff refunds up to $50M not in guidance; Iran-related inflation about $60M in Q2; June price increases supportive; 2026 capex around $800M.
❓ Analyst Q&A
- Key topics: Roofing price realization timing (April/June increases) and impact on Q2; potential tariff refunds upside not in guidance; progress on Doors cost synergies and the broader OC Advantages go-to-market drive.
⚡ Bottom Line
OC’s Q1 shows durable, higher-margin performance from a reshaped, integrated model, even as demand remains uneven. The Q2 guide reinforces a trajectory of margin stability and cash generation, supported by cost actions, pricing progression, and capital returns.
Owens Corning — Q4 2025 Earnings Call
1. Management Discussion
Good morning, and welcome to the Owens Corning Q4 FY '25 earnings call -- '26. My name is Carla, and I will be coordinating your call today. [Operator Instructions]
I will now hand you over to Amber Wohlfarth to begin. Please go ahead when you're ready, Amber.
Good morning. Thank you for taking the time to join us for today's conference call and review of our business results for the fourth quarter and full year 2025.
Joining us today are Brian Chambers, Owens Corning's Chair and Chief Executive Officer; and Todd Fister, our Chief Financial Officer. Following our presentation this morning, we will open this 1-hour call to your questions. [Operator Instructions]
Earlier this morning, we issued a news release and filed a 10-K that detailed our financial results for the fourth quarter and full year 2025. For the purposes of our discussion today, we have prepared presentation slides summarizing our performance and results, and we'll refer to these slides during this call. You can access the earnings press release, Form 10-K 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 2, 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 2025 capital expenditures and cash flow measures, which include amounts related to glass reinforcement. For those of you following along with our slide presentation, we will begin on Slide 4.
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 this morning, I'll provide a brief overview of our fourth quarter and full year 2025 results and then highlight the actions we've taken throughout the year to deliver consistently strong performance while positioning Owens Corning for future growth. Todd will discuss our fourth quarter and full year financial results in more detail, and I'll come back to share our outlook for the first quarter and end market expectations for the full year.
2025 was a year of progressively more challenging market conditions with weakening U.S. residential trends and distribution destocking in the back half of the year. This included a uniquely quiet storm season in the second half with no major storms making landfall in the U.S. for the first time in a decade which weighed heavily on nondiscretionary roofing repair demand. Despite this backdrop, our team continued to successfully execute our enterprise strategy. delivering strong margins and making great progress on key initiatives to enhance our operational efficiency and accelerate our organic growth. I'll share more about our financial performance and strategic highlights in a moment. But first, I'll begin with our unconditional commitment to safety.
Throughout 2025, we delivered improved results through our Safer Together operating framework. Our recordable incident rate for the year was 0.60, which is industry-leading among U.S. manufacturers. Notably, more than half of our sites operated injury-free, a reflection of the deep personal commitment our employees bring to working safely every day.
Turning to our financial performance. We delivered fourth quarter results consistent with our enterprise guidance with revenue of $2.1 billion and adjusted EBITDA of $362 million with an adjusted EBITDA margin of 17%. For the full year, we generated revenue of $10.1 billion and adjusted EBITDA of $2.3 billion with an adjusted EBITDA margin of 22%. Through a combination of our strong market positions, improved operating efficiencies and favorable product mix shifts, we are generating higher margins on lower market volumes. Our higher earnings profile and working capital focus also enables us to generate significant operating and free cash flow. And through our disciplined capital allocation strategy, we returned $1 billion through dividends and share repurchases in 2025 and have returned over $4 billion of cash to shareholders since 2020. In December, we announced a 15% dividend increase, tripling our quarterly per share payout compared to 5 years ago. This marks our 12th consecutive year of dividend growth and supports our Investor Day commitment of returning another $1 billion of cash to shareholders by the end of 2026.
In the near term, we are proving that the structural improvements and strategic choices made over the past few years to reshape Owens Corning into a leading building products company are delivering significantly better financial results within weaker markets. At the same time, we are also creating multiple paths for revenue and earnings growth as market conditions improve, and we see the benefits of our capacity additions and growth initiatives.
As part of our effort to reshape and focus the company. We have made major strategic moves to shift into more residential product categories that leverage our customer and channel expertise and further strengthen our long-term financial performance. This includes completing the sale of our business in China and Korea which streamlined our geographic footprint and announcing the divestiture of our glass reinforcements business, which serves industrial markets. We've made steady progress in advancing regulatory approvals towards closing, which we expect to take place in the next few months.
We also continue to make good progress integrating our new Doors business. As we have discussed on previous calls, the market environment has been challenging for Doors, with lower housing starts and softer discretionary R&R activity pressuring demand with the added disruption from tariffs. Despite this environment, our team has executed well, streamlining operations, reducing costs and increasing our share of wallet with customers through a more integrated market approach aligned with our commercial strategy.
We are exceeding the $125 million in run rate enterprise cost synergies we committed to by mid-2026, and are on track to deliver an additional $75 million of structural cost improvements within our operations including our recent decision to sell a small distribution business to a major customer.
While near-term results are being weighed down by weak market demand, our team is strengthening the business in ways that will significantly grow the earnings and cash flow of the company as markets recover. Moving forward, we see additional opportunities across the enterprise to grow revenue and earnings as we begin to realize more benefits from a broader residential product offering with an increased repair and remodel focus that now accounts for more than 50% of our revenue including a significant portion from nondiscretionary reroofing.
With an attractive set of complementary building products, we are unlocking the full power of the enterprise to accelerate our performance by leveraging a set of capabilities that are truly unique to Owens Corning and create the OC Advantage. Our iconic brand, unparalleled commercial strength, leading technology and winning cost position, all of which combined to strengthen our market leadership and create multiple paths to deliver revenue and earnings growth.
Owens Corning has industry-leading brand awareness and favorability with homeowners and contractors. This creates exciting pull-through opportunities for our products as we invest to expand its use and impact. Our iconic brand, recognizable by the color pink and The Pink Panther and supported by 90 years of history in building products, provides a high-quality, trustworthy platform for customers that creates loyalty and differentiates us in the market. This brand trust has been highlighted through several recognitions, including being named America's most trusted insulation brand and receiving the Women's Choice Award as a most trusted and recognized roofing brand for 9 consecutive years.
Our unparalleled commercial strength is driven by deep channel expertise, unmatched customer partnerships and a downstream engagement model that helps our contractors, builders and dealers win and grow in the market, while creating pull-through demand for our distribution partners. One example of this is our Pink Advantage Dealer Program, which supports growing the estimated 4,000 privately owned lumber and building materials dealers across the U.S. In 2025, we grew program enrollments 38% by leveraging the learnings from our roofing contractor engagement model and utilizing a more integrated product and marketing offering, featuring our residential insulation, roofing and doors. In 2026, we expect to continue increasing enrollments, creating more loyalty to OC products and significantly increasing our revenues.
Applying a similar model to homebuilders, we are also realizing new opportunities to grow our business through the use of our integrated product offering and enhanced marketing tools. Our leading technology continues to fuel growth through customer-focused innovation and process improvements. In 2025, we launched over 30 new or improved products, maintaining our 20% plus product vitality index by continuing to expand our R&D capabilities to bring new solutions to the market faster to meet customer needs.
To help accelerate the pace of innovation even further, in the fourth quarter, we announced the promotion of José Méndez-Andino to the roll of Chief Innovation Officer. He will lead a center of excellence in innovation, reflecting our focus on product and process leadership to drive organic growth. Last, our winning cost position reflects best-in-class execution, network optimization and vertical integration to drive cost efficiency and productivity gains supporting our commitment to deliver a mid-20% adjusted EBITDA margin profile over the long term.
Through our factory modernization initiative, we continue to improve our manufacturing cost position and increase capacity through targeted capital-efficient investments in our manufacturing network, several of which came online in 2025. In Roofing, we started up our new highly efficient laminate shingle line in Ohio and a high-speed nonwovens line in Arkansas. In Insulation, we expanded our capabilities to serve the growing demand for XPS foam insulation with a new low-cost plant in Arkansas. And in Doors, we are applying our enterprise operational playbook to drive significant structural cost improvements through network optimization actions, including the closure and consolidation of five manufacturing and fabrication facilities as well as focused automation and productivity investments.
We are also enhancing our winning cost position through the use of advanced analytics and AI to drive efficiency, support customer growth and strengthen market leadership. For example, we are applying AI through the use of supply chain optimization agents that help us respond quickly to network adjustments and maintain strong service levels at reduced cost. This capability is being used in our North American fiberglass insulation business today, but will be scaled to our other businesses throughout the year.
To accelerate our digital efforts, Annie Baymiller was recently promoted to the role of Executive Vice President and Chief Information Officer. She will lead the advancement of our digital technology capabilities and next-generation tools, including generative and agentic AI that will be instrumental to unlocking new capabilities and generating additional value.
Before I turn it over to Todd, I want to thank our team for their outstanding efforts in 2025. Owens Corning was again named one of Wall Street Journal's top 250 Best-Managed Companies, ranking 73rd overall and 10th in customer satisfaction. This recognition reflects the dedication of our team to support our customers and drive the success of our company.
In summary, while 2025 was a challenging year for our markets, our performance demonstrated the strength of the company we have built. Our team stayed focused, working safely, controlling our costs, helping our customers win and grow and delivering on our capital allocation commitments. Through disciplined execution, we generated market-leading financial results and continued investing in the growth of the enterprise. As we begin 2026, we are excited by the opportunities we see to continue growing the company and creating value for our customers and shareholders through the execution of our enterprise strategy and implementation of the OC Advantage.
With that, I'll turn the call over to Todd.
Thank you, Brian, and good morning, everyone. As Brian shared, we are navigating soft end markets in all three businesses while demonstrating the resilience of our earnings, cash flows and return of cash to shareholders. Despite near-term market headwinds, we have multiple paths to deliver strong results by leveraging the OC Advantage, delivering on the multiple organic growth investments in new highly efficient manufacturing plants and executing our strategic plans to deliver the full potential of the Doors business. The impact of these structural improvements and investments will be amplified as residential markets recover later in 2026 and into 2027. I'll begin with Slide 5 and review our results for continuing operations for the quarter and full year.
In the fourth quarter, we executed well despite weaker market demand in each of our three businesses. We continue to outperform prior cycles in Roofing and Insulation while delivering overall results in line with guidance. For the full year, we delivered adjusted EBITDA of $2.3 billion at a margin of 22%, marking our fifth consecutive year of 20% plus EBITDA margins. For the year, adjusting items totaled $1.2 billion, primarily due to $1.1 billion of noncash goodwill impairment charges in our Doors business during the third and fourth quarters. These impairments were driven by updated macroeconomic assumptions in our valuation model, given near-term market softness that continued to weaken and do not reflect a change in our longer-term expectations for the earnings potential of the business. Acquisitions with goodwill are particularly sensitive to impairment when market conditions worsen as we have seen in Doors.
Turning to Slide 6. For the year, we generated $1.8 billion of operating cash flow and returned $1 billion of cash to shareholders. Free cash flow for the fourth quarter was $333 million, and free cash flow for the full year was $962 million, down $283 million from last year, primarily due to higher capital additions. Full year capital additions were $824 million, with roughly half of our capital focused on long-term cost efficiency and growth. Our return on capital is 12% for the 12 months ending December 31, 2025. As a reminder, at our Investor Day last year, we gave a long-term target of mid-teens or better return on capital. While currently below mid-teens, there is no change to our long-term target. Year-end debt-to-EBITDA was 2.1x at the low end of our targeted 2 to 3x range.
At year-end, the company had liquidity of $1.8 billion, consisting of $345 million of cash and $1.5 billion of availability under our bank debt facilities. During the fourth quarter, we returned $286 million to shareholders through share repurchases and dividends. Throughout the year, we repurchased 5.9 million shares supporting our Investor Day commitment of $2 billion in cash returned to shareholders in 2025 and 2026.
In December, the Board declared a cash dividend of $0.79 per share, an increase of approximately 15%. Our capital allocation strategy remains centered on generating strong free cash flow, delivering mid-teens return on capital, returning cash to shareholders and maintaining an investment-grade balance sheet while investing in high-return growth opportunities.
Now turning to Slide 7. I'll provide additional details on our segment results. Starting with our Roofing business. We benefited from the strength of our commercial team and their work with our contractors which allowed us to outperform the market in 2025, although the market slowed significantly in the back half of the year. Fourth quarter sales were $774 million, down 27% from the prior year primarily due to lower shingle volumes. The U.S. asphalt shingle market declined a similar percentage year-over-year, driven by unusually low second half storm activity and a reduction in inventory levels at distribution. Our volumes were in line with the market.
The significant decline in volume resulted in EBITDA for the quarter of $199 million, down from prior year. While pricing remained relatively flat in the quarter, inflation continued, resulting in negative price/cost. Additionally, due to the weaker markets, we took production curtailments to manage inventory and perform maintenance. We recognized some impact of the curtailment in Q4 and will have a bigger impact in Q1 as we sell through the higher cost inventory. Despite the significant decline in the market, EBITDA margins for the quarter were 26%.
For the full year, Roofing delivered sales of $4.4 billion, down 4%. The U.S. asphalt shingle market declined approximately 10% for the year, with a strong first half followed by a much weaker second half as a result of very weak storm demand. Our contractor engagement model continued to support demand, resulting in volumes that outperformed the market overall. Full year EBITDA was $1.4 billion with strong EBITDA margins of 32%, supported by positive pricing that more than offset inflation and curtailment.
Turning to Slide 8. The Insulation business delivered another strong year, achieving its fifth consecutive year of 20% plus EBITDA margins. Fourth quarter revenues were $916 million, down 7%, driven by the sale of our building materials business in China as well as lower volumes in North American residential and nonresidential markets. Europe remained stable and benefited from currency tailwinds.
Insulation generated fourth quarter EBITDA of $186 million, down $42 million year-over-year. Slightly negative pricing and modest inflation resulted in negative price/cost for the quarter, and we continue to curtail assets to manage inventory levels. EBITDA margins were 20%. For the year, Insulation delivered net sales of $3.7 billion, down 6% compared to prior year. The decline was primarily due to lower North American residential demand and the divestiture in China. Positive pricing and strong manufacturing performance partially offset inflation and downtime. Full year EBITDA was $848 million with a margin of 23%.
Moving to Slide 9, I'll provide an overview of the Doors business. Throughout the year, the Doors market continued to be extremely challenged due to the weakness in both new construction and unusually low existing home sale that negatively impacted remodeling activity. The business generated fourth quarter revenue of $486 million, down 14% from the prior year, driven by lower volumes across both new construction and discretionary repair/remodel. Additionally, the previously announced sale of a non-core components facility in Oregon resulted in a $13 million revenue headwind in the quarter. On an annual basis, this business generated revenues of approximately $50 million. EBITDA was $33 million with EBITDA margins of 7%. Price/cost remained negative as modestly positive price was more than offset by continued inflation, particularly due to tariffs.
For the full year, Doors net sales were $2.1 billion, and EBITDA was $232 million with an 11% margin. Despite market headwinds, the integration continues to progress well. We have achieved our $125 million enterprise run rate synergy commitment to date, with approximately 40% captured within Doors and 60% captured across the broader enterprise. Demonstrating our ability to scale the OC Advantage through the same playbook that has structurally improved Roofing and Insulation over time. Additionally, as Brian shared, we've taken a number of actions to improve the network efficiency of the business to drive an additional $75 million of cost improvements. These are just starting to show in our earnings.
Across the company, our gross tariff exposure in 2025 was approximately $110 million that was mitigated to a net tariff impact of approximately $30 million, primarily in the Doors business. Our sourcing and supply chain teams continue to demonstrate agility in mitigating tariff exposure and preserving margins. Looking ahead to Q1, based on tariffs in place at the start of the quarter, we anticipate approximately $20 million of gross tariff exposure that will net to an impact of roughly $10 million after mitigating actions, primarily in the Doors business. We are monitoring the dynamic tariff environment due to the recent Supreme Court decision which could have an impact on our overall tariff exposure as the situation evolves.
Moving on to Slide 10, I will discuss our full year 2026 outlook for key financial items, all of which exclude the impacts of our glass reinforcement business. General corporate EBITDA expenses are expected to be approximately $245 million to $255 million. We expect our 2026 effective tax rate to be 24% to 26%. Depreciation and amortization is expected to be approximately $680 million. Capital additions are expected to be approximately $800 million in 2026. Over half of this capital will be deployed in strategic investments we are making to expand capacity and improve efficiency. We expect CapEx to remain elevated in the near term as we work towards completing the high-return capital-efficient projects underway. We remain optimistic about our ability to return significant cash to shareholders as markets recover and our results show the benefits of recent investments and structural improvements.
I'll now turn the call back to Brian to discuss our outlook in more detail.
Thank you, Todd. Our results in 2025 continue to demonstrate the strength of the company. Our strong commercial positions, improved operating efficiencies and favorable product mix shifts positioned us to deliver market-leading financial performance as we work through a weaker demand environment. For 2026, we expect the near-term market environment to remain challenging with conditions improving in the second half of the year. Even within these market conditions, we are confident in our ability to generate strong financial results with multiple levers to pull to outperform the market.
Turning to our first quarter outlook for the market. We expect North American residential new construction and discretionary repair and remodel activity to remain soft, reflecting the lowest level of quarterly housing starts in the past 6 years and unusually low existing home sales.
Within Roofing, we expect to see weaker manufacturing shipments resulting from lower storm carryover and delayed restocking activity. Nonresidential construction activity in North America is expected to be relatively stable. With softness in certain commercial categories, offset by strength in institutional and infrastructure-related projects. And in Europe, market conditions are anticipated to remain stable, while volumes remain below mid-cycle levels. stable market trends and favorable currency tailwinds are supporting improvement, particularly in Insulation.
As Todd shared, we remain disciplined in our inventory management with lower demand. As a result, we will see the production curtailment we took in Q4, work its way through the P&L in Q1, most notably in Roofing as we sell through higher cost inventory. Given this market outlook, we anticipate first quarter revenue from continuing operations of approximately $2.1 billion to $2.2 billion, in line with Q4. We expect to generate adjusted EBITDA margin from continuing operations in the mid-teens. While the near-term environment remains challenged, we expect to see improvements in many of our end markets as the year progresses. Overall, for the full year, we expect North American residential new construction activity to be relatively flat versus 2025. And with a favorable mix shift toward single-family homes.
For discretionary repair and remodeling activity in North America, we anticipate demand to be up slightly with a more challenging comp through Q2 that improves in the back half of the year. In Roofing, we expect the slow start in Q1 to continually improve throughout the year with full year demand in line with historical averages, reflecting a more normal level of in-year storm activity.
For nonresidential construction in North America, we expect to see activity improve throughout the year. And in Europe, we anticipate market conditions to gradually improve with currency benefits throughout the year. Based on this view of our end markets for 2026, our full year outlook for revenue and adjusted EBITDA is largely aligned with current consensus estimates.
Now consistent with prior calls, I'll provide a more detailed business-specific outlook for the first quarter. Starting with Roofing, we anticipate ARMA market shipments to be down low 20% versus the prior year, reflecting a historically quiet second half 2025 storm season, which reduced storm-related repair demand carried into 2026. Delayed distributor restocking activity and more severe winter weather in many parts of the country, impacting repair and remodel as well as new construction activity early in the year.
We anticipate our roofing shingle volumes to be down in line with the market in Q1. And resulting in a revenue decline of low 20% versus prior year. While near-term demand is pressured, we expect nondiscretionary reroofing demand to improve throughout the year with more normalized weather patterns. In components and nonwovens, we anticipate volumes to decline with reduced shingle demand. Pricing is expected to be down slightly to start the year, while inflation continues to pressure price cost. Earlier this month, we announced an April price increase for our roofing products, which we would expect to see realization on in Q2.
From a cost standpoint, we anticipate production curtailment costs carried over from Q4 and incurred in Q1 to result in roughly $30 million of headwind as we see higher cost inventory flow through the P&L. Additionally, we expect to incur modest inflation, including some tariff headwind that we are starting to see for the roofing underlayments we produce and import from India. Overall for Roofing, we expect first quarter EBITDA margin of low 20%, down from Q4, primarily due to the curtailment cost carryover.
In Insulation, we anticipate first quarter revenue to be down mid- to high single digits versus the prior year. This is primarily driven by lower residential volumes and the sale of our building materials business in China. As a reminder, this business had approximately $130 million of revenue annually and we completed the sale midyear 2025.
In our North American residential insulation business, we expect revenue to be down low double digits year-over-year, reflecting a step down in housing starts and continued market uncertainty. For North American nonresidential, we expect revenue to be largely in line with prior year. And in Europe, we anticipate revenue to increase, driven by relatively stable demand and continued currency tailwinds.
Overall, for the Insulation business, we expect price to be down slightly year-over-year, driven primarily by targeted actions in the North American residential market made last year partially offset by positive price in our nonresidential business. While inflation and production curtailments persist, strong operational performance and prior structural cost actions position the business to deliver EBITDA margins just below the 20% level achieved in Q4, even in a softer demand environment.
Turning to our Doors business. We expect the market to remain challenged to start the year with continued weakness in discretionary repair and remodel spending and low levels of new residential construction. We anticipate first quarter revenue to be down mid-teens versus prior year, driven primarily by lower volume and the strategic sale of our Oregon components facility and company-owned distribution business, which combined had annual revenues of approximately $150 million. Pricing is expected to be down slightly, while inflation, including tariffs continues to pressure price cost. Importantly, we are realizing the impact of our enterprise synergies and expect to begin seeing the benefits of our network optimization scale throughout the year, which will help offset market headwinds. As a result, we expect EBITDA margin in the first quarter to be in line to the 7% we delivered in Q4 on similar demand.
With that review of our businesses, I want to close out by recognizing the strong results our team delivered in 2025, while positioning Owens Corning for 2026 and beyond. The actions we have taken over the last few years and are continuing to take today are setting the stage for meaningful earnings and cash flow growth as markets improve. We continue to expect secular trends including pent-up demand for new housing, the growing need to renovate and remodel older existing housing, and the demand for more energy-efficient homes to create meaningful growth opportunities for OC. And with our attractive set of complementary building products we will leverage an integrated go-to-market strategy and unique set of capabilities within the OC Advantage to deliver strong financial results and strengthen our market-leading positions.
We have built multiple paths to drive revenue growth and achieve 20% or more adjusted EBITDA margins, mid-teen returns on invested capital and significant cash flow. The new OC is built to outperform in today's market and in the future.
With that, we would like to open the call up for questions.
[Operator Instructions] And our first question comes from John Lovallo with UBS.
2. Question Answer
I guess how comfortable are you with your visibility into 2Q to 4Q? I believe that you're on track to meet the consensus estimates? And then which estimates are you referring to specifically?
John, I'd say the visibility is kind of a ramp-up based on the market expectations that I just spoke about. I think we expect as I kind of walk through the businesses, the roofing demand profile to continue to increase throughout the year as we get to a more kind of normalized roofing year with weather patterns in the back half that represents kind of more normal storm demand. So we're assuming that kind of market progression.
I think in the discretionary repair/remodel, we expect a challenging first half that gets better in the back half, as we see kind of continuing improvements there, and hopefully, more people investing in repair and remodeling of their homes. And then on the new construction front, we expect a pretty flat environment year-over-year with a little bit of opportunity on the single-family front, which creates a little bit more volume with both our Doors and our Insulation business.
So I think our outlook in the near term is pretty clear to start the quarter. We're seeing volume progression improve throughout the quarter in all three of our businesses. So that gives us confidence. We're seeing the cost improvements coming through the P&L. So near term, we feel very confident. Over the longer term, I think we're going to see and expect to see some market improvements that are going to help drive some of the volumes and overall environment for us.
So I think that's our view as we kind of come into the year and why we wanted to give visibility to a guide of kind of this general consensus estimate. So if we look across all the estimates that have been created for the company. We think the average is right in line with kind of how we see the year playing out on a full year basis. Even though it's a little weaker start, we expect that to progressively improve quarter-over-quarter throughout the rest of the year.
And the next question comes from Michael Rehaut with JPMorgan.
I wanted to focus actually on the CapEx guide for $800 million. I wanted to understand, particularly given the divestiture of the glass reinforces business, which was a more capital-intensive business. What types of investments are contemplated in the $800 million that sounded to be a little bit more growth-oriented or productivity-oriented. And also how you think about an ongoing normalized annual run rate for CapEx in 2027 and beyond?
Mike, this is Todd. I'll take this one. So when you look at the $800 million, you're correct, that does exclude the impact of the glass reinforcements business. So this is across the Roofing, Insulation and Doors, building products core. When you look at what's in the $800 million, it's largely the previously announced projects for Roofing and for Insulation in Prattville and Kansas City that are driving that number to be higher than it has been historically.
When we look at both of those investments, there are investments that support growth, especially in the Roofing business, but also in Insulation. And there are investments that support ongoing cost efficiency and productivity as we upgrade the overall fleet of assets that we have. Those are really temporary, though. I mean we're making those investments. They're onetime investments in our business in both Roofing and in Insulation. So when we look at the long term, we go back to the guide that we gave at our Investor Day that we would expect to return to about 4% CapEx as a percentage of revenue on a structural basis going forward.
We've got a couple of years of stepped-up CapEx in '26 and '27 to get us through some of these major projects that we've already announced. But on an ongoing basis, we end up with a fleet of assets that have lower structural capital requirements on an ongoing basis than what we have today. So we're confident in that step down back that we guided to at Investor Day. But to your point, a slight step-up in '26 and '27.
And the next question comes from Stephen Kim with Evercore ISI.
Yes, I guess first question would be -- I guess, the question would be on your D&A kind of surprised us, it looks like it kind of missed your targets. Could you just talk a little bit about where that upside surprise occurred? What drove it? And then you mentioned in Roofing that your price -- you put a price increase through in April or effective April and should benefit in 2Q. So I just want to make sure I'm clear. Are you assuming that, that price increase or some part of it sticks in your guidance for the full year?
Thanks, Stephen. I appreciate the question. I'll take the D&A question and then turn it over to Brian for the Roofing price context.
So when we looked at D&A, there's a few things that came in a bit higher on capital projects as we think about completing those and having that come through into our results for the year. Largely, we were in line with the guide that we gave overall for D&A. So there's not a whole lot of news there really. There's always some normal noise in D&A on a quarter-to-quarter basis. But our view would be we're in line with the guide, and we would expect to be in line with the guide that we just gave on today's call for 2026 as well.
And then, Stephen, on Roofing pricing, you saw in our guide, we expect pricing to be down slightly to start the year. But I'd say overall, pricing has held up relatively well to start the year. We've made some targeted moves just to address some of the competitive gaps as we start the year, but nothing dramatic. And I'd say nothing unusual to the moves that we make to start the year given some of the regional variations we see in our price points and some of the product demand. So nothing unusual there to start the year and relatively good pricing visibility and stability.
So in terms of the outlook, yes, we've announced a price increase for April 1. I would say we do expect to see some realization beginning in Q2 and moving through the rest of the year, historically, where we see a constructive roofing market, and we expect that to occur this year with Roofing volumes kind of in historical 10-year average ranges, more normalized seasonal weather patterns. And then when we do expect to see continued inflation in the business. So historically, we've been able to get some realization from a spring price increase where we've seen good demand trends and inflationary trends that we're able to offset with price increases. So we would expect to see some realization from that increase as we go through the year.
The next question comes from Anthony Pettinari with Citi.
In Roofing, given we had kind of a strange year last year with no storms and weak demand in the second half. Is it possible to talk a little bit more about sort of where channel inventories are? Have those been kind of completely drawn down? Or are they kind of maybe more seasonally normal? And I'm wondering, related question, if you could talk about the impact of maybe severe weather in December and year-to-date, if that is near-term negative, long-term positive or any view on that?
Yes. So maybe I'll start with that one first. Yes, I think some of the restocking delays is tied to just a really rough start and a lot of winter weather throughout the country which is impacting the ability to get on the roof and do any work, particularly in southern areas of the country, but also impacting the ability for distributors to buy inventory and bring it in. So that has impacted some of the restocking activity to start the year. But I would say, over the course of the year, generally a tough winter results into some additional repair and reroofing activity as the year goes along. So it could potentially give us some volume upside as we take through the year.
You're right, and last year was a very different kind of pattern of demand throughout the year. We saw a pretty significant drop off in the back half of the year to our guide that we gave in the fourth quarter. And on last call, I did indicate that I thought that would kind of spill over into this year in terms of a slower start. But to answer your question on destocking, now we think that destocking was really at an end of the year phenomenon for just distribution to kind of reset their inventory levels to close out the year.
And I said I expected that restocking to kind of come back. Last quarter, we talked about half of that volume decline in Q4 tied to lower out-the-door sales, weaker storm demand, about half tied to destocking, we thought that would come back. And we still expect that in terms of our guide. But I do think that's going to be kind of a Q1, Q2 ramp-up on the restocking efforts. But we've not seen any permanent kind of changes in inventory levels that distribution is holding. We think that's going to be a ramp-up to get to seasonal inventory levels that they're going to want to carry to service demand, and we expect that to really increase again in the back half of Q1 to close out Q1 and then really to start Q2.
The next question comes from Matthew Bouley with Barclays.
I wanted to ask about this contractor pull-through opportunities you were speaking about. Obviously, that's been a hallmark of the Roofing business. It sounded like you're speaking to leveraging that across the rest of the company and maybe doing the same with homebuilders. So I'm curious if you can lay out, I mean, is this really specifically a change or an enhancement to what you've been previously doing? And then kind of remind us what the benefits were in Roofing that you would be looking to replicate elsewhere.
Yes. This is a big area that we're very excited about. When we talk about unparalleled commercial strength, and it's been a focus and a hallmark of our ability to create downstream demand with contractors, builders, dealers that create pull-through then for our distribution partners. And so we've had a very successful contractor engagement model. We've talked about it a number of times. We increased that contractor network. We did that so in 2025 as well.
And it's really based on not just a product offering, but training, merchandising, marketing, co-branding, digital support services. So it's a full suite of services that really help our contractors win and grow in the market with our products and our brand. And so we've leveraged those learnings to say, how can we take that then to lumber and building material dealers, more than 4,000. These are family run, generally smaller dealer networks that will service rural areas with a broad product offering. Roofing, Insulation and Doors.
So the engagement model, we've taken some of the parts of training and merchandising and co-branding from our roofing contractor engagement. We brought that over to the dealer side and have brought that into the market this year with really a lot of interest and a lot of support and a significant increase in enrollments of dealers now that are committing to the OC brand and the full suite of products, because they're very complementary to what they're taking into the market. So 38% increase in enrollments. We think that we can continue that kind of double-digit rate of enrollment increase in '26. That creates a lot of pull-through and some significant revenue opportunities for us.
So I think we're excited about that. It's kind of a green shoot. If I go back to John's earlier question, when we think about the progression of the year playing out for us as well, clearly, we want to see some market improvements but there are a lot of self-help initiatives on both the commercial and operational front that are going to kind of roll through the rest of the year. This would be one of them. As these enrollments engage as we start to see product demand pull through when we get into the season, we think that's going to drive some incremental revenue for us.
And then I also commented on the builder front, we're kind of taking that model as well now and taking that to homebuilders. Again, a full suite of residential products, Insulation, Roofing and Doors, valuable iconic brand that the builders can use to co-brand some merchandising capabilities. So we're excited on how this downstream and pull-through model is really growing, and we're starting to see some early indications through enrollments that we think are going to lead to product pull-through and additional revenue as we go through the rest of the year and beyond.
And the next question comes from Trevor Allinson with Wolfe Research.
The question is on the full year potential for Roofing. 1Q is going to be down pretty significantly, as you've articulated, but you've got some pretty easy comps in the back half of the year. Just with that in mind, how are you thinking about full year revenue potential in Roofing? Is a flat year still on the table? Or does it really weak 1Q due to lack of storms here set you back too far for that to be a realistic scenario in 2026?
Yes. Not sure if we get back all the way to a full year kind of depends on how the dynamics play out. But I'd say from a volume standpoint, again, we think it's going to be a weaker start. But I would say it's pretty consistent with what we saw emerging in Q4. So when I talked about our guide in Q4 stepping down and a weaker Q1. So I would say there is nothing new in our near-term market outlook that has changed from when we were on the last call. I think we expected a slower ramp up to start the year. So I think that wouldn't impact.
I think if you think about the volume progression, we would expect to see, I think you would see Q2, Q3, Q4 more in line with 10-year averages. That would be our expectation as we go through the year after a slower start. And that is going to lead to some revenue growth opportunities sequentially throughout the year, but not sure if it will get us all the way back. I think that's going to depend largely on the market dynamics, if we see a stronger storm season, some higher opportunities there, and a little bit on the pricing dynamic and see how that plays out through the rest of the year.
And the next question comes from Philip Ng with Jefferies.
You called out some targeted pricing action in Insulation and Doors. Brian, perhaps you can give us a little more perspective on size and the magnitude? Were there price gaps that you want to close out? And from here on, increasing demand is still a little murky. Should we expect price stability? And were there any share gain opportunities as a result of this?
Yes. I'd start, and maybe I can have Todd come in on some of the Insulation pricing. On Doors, again, I'd say pricing has held up relatively well in a pretty challenging demand environment, which is, I think, a positive sign in terms of the value of the doors and how that can progress going forward with a little bit of upside volume and some potential pricing opportunities later in the year and into next. So I'd say that they are very targeted moves, very regional moves on the Doors front and nothing terribly dramatic, but really responding to more competitive pressures to start the year and to reset some programs to start the year with some of the growth initiatives we have in place.
But I would say, overall, fairly stable to finish the year and to start the year, some targeted moves to address some of those competitive gaps and program adjustments we were going to make. But I think it gives us a platform for growth potentially as we go forward and we get into a more constructive demand environment, the opportunity for some pricing going forward.
And Phil, I'll give a little more color on the Insulation side. When we look at the non-res part of insulation, we're still in a fairly constructive pricing environment, where we're able to get price in parts of that business that you see coming through our results in Q4 and our guide in Q1.
When we look at res, I would describe these targeted actions is fairly normal targeted competitive responses that we have in the market. Nothing really unusual. Despite the weakness that we've seen in single-family starts and lagged starts overall. It's been a relatively stable pricing environment overall in res. But we're still absorbing significant inflation. So we are seeing margin compression in that business, as a result of some of the targeted price actions that we've taken, but also the inflation in labor and materials that we continue to absorb in the business. But overall, I'd describe it as a relatively stable pricing environment in res and still positive and constructive in non-res.
The next question comes from Sam Reid with Wells Fargo.
I believe on the prepared remarks, you alluded to some asset curtailment on the Insulation side. So maybe just characterize and perhaps quantify the level of curtailment there that you might have undertaken in Q4 and maybe early Q1? And then also, any views on industry capacity utilization and not to be greedy, but perhaps a split on how that might look in that batts and rolls versus loosefill.
Thanks, Sam. I appreciate the question. So let me start with how we're operating the business right now on the assets, and then I'll give color on capacity utilization. So we previously announced we curtailed one of our manufacturing plants in Utah already. We did that relatively early in the process to get that production out to manage our inventory levels. And we've been continuing to manage inventory levels carefully through the end of the year.
The back half of '25 was a bit of a catch-up, though, because the market did decline in the back half versus the first half. So we were sitting on more inventory than we wanted coming out of Q2 that we then work down progressively in Q3 and Q4, and then we anticipate working down inventory again with curtailment in first quarter. Now we do have some normal seasonal build that we do in the first quarter to support the season. So we're also contemplating that.
The curtailment that we're taking, it tends to be more hot idle curtailment versus cold idle curtailments. In Nephi, we took completely cold. We furloughed employees in the manufacturing plant. And other plants were taking hot idle, which means we're not producing, but we're leaving the furnaces operational so we can start up when the market recovers.
When we look at the overall magnitude of this, I mean it's a big impact for us. It was a big impact in the back half of last year including the catch-up that we had to do from the first half where we built a bit of inventory. And it's also a significant impact for us in Q1 of '26 in the guide. When we look at capacity utilization for the industry, it is different for batts and rolls then loosefill. Loosefill is tight right now. We've seen a couple of our competitors have some operational challenges that we've been able to take advantage of in Q4 and into Q1. But it also means our inventory levels are low because we did everything we could to support customers in that period. We are in free supply for batts and rolls. So there is available supply in that space.
Overall, for the industry, what we've said historically is we think industry capacity can support 1.4 million to 1.5 million starts. When you look at the mix of single-family and multifamily, single-family has been fairly weak. Multifamily has been a little better. A single-family start has about 30% more pounds of insulation than a multifamily start. So we're probably at the higher end of that 1.4 million to 1.5 million range in terms of what the industry could support today. So you can do the math based on the housing starts and where we landed in Q4 and Q1, it's below the 90% level which historically has been more constructive for price in res, but we're probably somewhere in the 80s based on that math.
And the next question comes from Mike Dahl with RBC Capital Markets.
I just want to go back to Roofing, a 2-part question. On the volume declines, is that what you're seeing already year-to-date? Because I appreciate the weather has been difficult and there's still some carryover dynamic, but our sense is that sell-through volumes haven't been down quite that much broadly speaking. And then the second one being kind of dovetailing that into price that you do expect to get price realization on the April increase, how quickly do you need to see volumes come back in March or April to see that in your view? Because it seems like it would be a tough setup with a little sequential price fade and volumes down 20-plus for two straight quarters to get a lot on that.
Yes. No, I appreciate the question. Just in terms of the volume side, just on the -- some of this is going to be a little bit of a year-over-year comp. So I would agree, I think everything that we talk about with our customers, I think the sell-through is down, but not down as much. But if you look at kind of the restocking activity last year versus what we're seeing the pace of restocking this year, that is down a little more. So it's a combination of lower out-the-door sales and then a little bit on a year-over-year comp of just less inventory restocking that we're seeing in the quarter.
Now again, I don't think that's a permanent issue, I think that flows into some higher volumes in Q2. I think it's a little bit of just timing. And the rough weather to start has actually kind of slowed that restocking activity down in the northern parts of the country. It's tough to even start that in January and here in early February. So we think it's going to be more loaded into March to close out the quarter and then to start April.
So when we look at our order entry and our backlogs, they continue to grow throughout the quarter. We expect to have a pretty good March shipping pattern emerge. And then we think that's going to continue into April and early May. So I think the setup to restock is in place. It's just being a little delayed, and that's why it's impacting a little bit more of the year-over-year decline from our manufacturing shipments.
But again, I think that environment sets us up where we think it would be constructive to realize some incremental pricing as we expect demand to improve. And as I said, I think as we go through Q2, Q3, we expect that to continue to improve. We're seeing inflationary pressures that we need to overcome. So I think that's something that we would expect to start to get some realization into Q2 and beyond with the pricing announcement.
The next question comes from Brian Biros with Thompson Research.
Can you just revisit the synergies from the Doors acquisition? It sounds like you're still on track to realize those even in a tough environment that probably wasn't factored in at the time of the purchase. So maybe just remind us how those synergy targets are being achieved in the absence of growth or even in the absence of a flat environment for that business?
Yes, happy to kind of walk that through. So at the time of the acquisition, we said that we expected about $125 million of cost synergies through the acquisition. Those are going to be primarily OpEx-related synergies as we brought the businesses together. We expected about 40% of that to realize in the Doors P&L, about 60% throughout the rest of the enterprise. And in my comments, Todd's comments, we're on track to achieve that and actually exceed that by mid-2026. We probably see now visibility to maybe even $10 million to $15 million more upside to that as we go through the first half of the year. So I think the team has done great work finding those operational cost synergies and with respect to a weaker demand environment, that has not slowed us down in terms of looking for those operational cost efficiencies, and we've been able to drive those and realize those through the P&L.
I think in addition to that, we talked about another $75 million of operational cost synergies really tied to our manufacturing network. So about 1/3 of that tied to network optimization, about 1/3 tied to automation, about 1/3 to kind of general productivity initiatives that we have in place. And we've announced some closure consolidations. So we're right on track to delivering on that $25 million to $30 million of additional operational cost improvements through network optimization. We think that feathers in through the year, but we think we finished the year on that run rate. And then we still have opportunities around productivity, automation, some of those other efficiency gains that we're applying that we think, again, scale through the rest of the year.
So disappointed in the market opportunity, and we certainly have been challenged by market volumes and the volume deleverage. But from an operational cost and the structural cost improvements we expected to put into the business, those are in place and actually, I think, exceeding what we thought we could achieve, which gives us a really great cost platform as we see market volumes improve. We see our organic growth initiatives increase. We really think we see some great incremental operating leverage as we take the business forward.
The next question comes from Susan Maklari with Goldman Sachs.
My question is around your commitment to shareholder returns. Can you talk about how you're thinking of that given the environment that we are all in, the target you set out at your Investor Day for $2 billion over 2025, 2026. And I guess within that, are there any potential divestitures that you're thinking about today as you look across the entire business? Anything else that you think of that could be non-core in there?
Thanks. I appreciate the question. So we remain committed to the $2 billion return of cash to shareholders in '25 and '26. We returned about $1 billion last year in markets that are similar to what we expect to see in '26. We increased our dividend 15% in December to also support continued growth in our dividend, as Brian highlighted earlier in his comments. So we remain committed to what we said at Investor Day. We're in a very good spot from a leverage standpoint at 2.1x EBITDA at year-end. So we have ample capacity both in terms of the really strong operating cash flows we continue to see in the business even in these down market conditions as well as our balance sheet.
When we look at divestitures, as Brian highlighted, we have a small divestiture. We just completed in our Doors business, the Doors distribution business. We also are continuing to work on the glass reinforcements divestiture. So both sides are working actively through regulatory work to get clearances as well as all the work to make sure we're set up for a successful day 1 post close on glass reinforcements.
And our final question comes from Adam Baumgarten with Vertical Research Partners.
Just curious on the Insulation side, how long you plan to curtail production given the weakness in the markets? And then switching gears to the non-res side, maybe where you're seeing strength, where you're seeing maybe relative weakness and positioning in terms of the data center construction wave and how you can kind of share in that.
Thanks, Adam. Let me start with the second part of that on the non-res side. We do continue to see strength in data centers as well as in industrial process applications for our insulation materials. So when you look at some of the pipe and mechanical insulation that we sell, when you look at the FOAMGLAS product line globally, those are really nice products for us. We're seeing strength in some institutional markets as well. There are some pockets of weakness. Some of it is related to just overall economic uncertainty and some project delays that are occurring, in particular, in our Latin America business, which is part of our North American non-res. But overall, we would describe that as good demand for our products, especially on the data center side and the industrial side.
When we look at curtailment, we're matching our production to what we anticipate needing for the peak season that we have. So we're going to be disciplined in our management of inventory and working capital to make sure we're managing cash flows appropriately through the year. But we also want to make sure we have an eye towards supporting our customers in the market when the market does come back. And we're balancing both of those when we think about the curtailment choices that we're making today.
And being conscious of time, we will conclude the question-and-answer session. And I will hand back over to you now, Brian, for any final comments.
Thanks, Carla. Well, I want to thank everyone for making time to join us on today's call and for your ongoing interest in Owens Corning, and we look forward to speaking to you again on our first quarter call. Thanks, and have a safe day.
This concludes today's call. Thank you, everyone, for joining. You may now disconnect. Have a great rest of your day.
Owens Corning — Q4 2025 Earnings Call
Owens Corning — Q3 2025 Earnings Call
1. Management Discussion
Hello, everyone, and welcome to Owens Corning's Third Quarter 2025 Earnings Call. My name is Lydia, and I will be your operator today. [Operator Instructions] I'll now hand you over to Amber Wohlfarth, Vice President, Corporate FP&A 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 third quarter 2025.
Joining us today are Brian Chambers, Owens Corning's Chair and Chief Executive Officer; and Todd Fister, our Chief Financial Officer.
Following our presentation this morning, we will open this 1-hour call to your questions. In order to accommodate as many call participants as possible, please limit yourself to 1 question only.
Earlier this morning, we issued a news release and filed a 10-Q that detailed our financial results for the third quarter 2025. For the purposes of our discussion today, we have prepared presentation slides summarizing our performance and results, and we'll 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 home page. A transcript and recording of this call and the supporting slides will be available on our website for future reference.
Now please reference Slide 2 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 4.
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'll provide an overview of our third quarter results and our work to continue outperforming the market in the near term while investing to strengthen and grow our company for the future. Todd will then provide more detail on our financial performance and I'll come back to discuss what we're currently seeing in the market and our outlook for the remainder of the year.
In the third quarter, we delivered solid results despite challenging market conditions, demonstrating the strength and agility of our team and the power of our operating model. Because of the strategic choices and structural improvements we have made, the new Owens Corning continues to operate with greater efficiency outperforming prior cycles. I'll share more about our financial performance in a moment, but first, I'll begin with safety.
In October, we celebrated our annual manufacturing appreciation month, which includes recognizing our teams for their unconditional commitment to safety as they produce the high-quality products our customers rely on. That ongoing commitment was reflected in our third quarter safety performance where our recordable incident rate was 0.56.
Financially, in the quarter, we generated $2.7 billion in revenue and $638 million in adjusted EBITDA, delivering an adjusted EBITDA margin of 24%. We also generated strong cash flow and continued to return capital to shareholders through dividends and share repurchases. Through the first 3 quarters of the year, we have returned over $700 million of the $2 billion we committed to returning over this year and next. This performance reflects our disciplined capital allocation and confidence in our ongoing cash-generating capabilities.
Our financial results continue to reflect our ability to perform at a high level in challenging market conditions as we see weakening residential trends in the U.S. impacting our volumes in both repair and remodel and new construction product lines. In Roofing, market demand in the quarter was impacted by a uniquely quiet storm season with no named storms making landfall in the U.S. in the third quarter for the first time in a decade. In Insulation, we saw our nonresidential and European markets remain relatively stable, but continue to see the impact of slower housing starts in our residential insulation business.
Despite these weakening residential trends, both businesses continue to benefit from the structural improvements made over the past several years. In fact, when we compare today's results to similar market conditions seen over the past 10 years, we have improved margins by over 500 basis points in both our Roofing and Insulation businesses.
In our Doors business, volumes continue to be impacted by both slower discretionary spending and repair and remodel and weaker new construction activity, resulting in lower-than-expected earnings. Even with these headwinds, we continue to make good progress on achieving the anticipated costs and operational synergies and are beginning to see the benefits of our unique commercial position working with common customers.
While I'm disappointed in the current financial performance, I am pleased with how our team is responding to position the business for long-term success and remain confident in our ability to achieve our margin and cash flow goals for the business. In fact, across all three businesses, we see revenue and margin growth potential, driven by our execution and the favorable long-term secular tailwinds in North America and Europe, two of the largest and most attractive building products markets globally. In the U.S., mortgage rates are slowly coming down, improving housing affordability, which we expect to trigger residential market activity as we move through 2026.
We also see increasing investments in several nonresidential segments, including data centers, manufacturing and energy. And in Europe, macro indicators continue to improve, which will lead to growth, particularly in the nonresidential sector.
Our financial performance to date and into the future, reflects the strength of the company we've built, one that can sustain annual EBITDA margins above 20% even as markets fluctuate. In the near term, we will continue to be disciplined operators focused on our cost, our customer share and our capital allocation. We will leverage our structurally improved cost positions that we have achieved through network optimization and operational efficiencies, while making strategic investments that strengthen our market-leading positions and support our growth.
In Roofing, this includes unlocking efficiencies and creating network flexibility through ongoing debottlenecking efforts, the successful start-up of our new laminate shingle line in Medina earlier this year and the future addition of a new plant located in the Southeast, the largest asphalt shingle region in the country. This facility, which will be built in Alabama, will include leading technology and have the capacity to produce approximately 6 million squares of laminate shingles annually, enhancing service across our network.
As we continue to invest for growth in Roofing, we're also building loyalty and demand through our industry-leading contractor engagement model. Since the beginning of the year, our contractor network has grown by about 9%, with that growth accelerating throughout the year, reflecting our unparalleled commercial strength and the value we create for our customers.
In Insulation, the strategic investments we have made give us more balanced end market exposure across residential and nonresidential applications and we continue to make structural improvements to maintain a winning cost position, such as our new state-of-the-art fiberglass line in Kansas City, which will provide us with the low-cost flexible production line capable of serving both nonresidential and residential customers, depending on market demand.
We're also capitalizing on the growing demand in both residential and commercial applications for XBS foam with a new low-cost plant in Arkansas. We recently celebrated the grand opening of this facility which is on track to be fully operational in early 2026.
In Doors, we're capturing cost synergies and applying the same commercial and operational playbook that has driven success in Roofing and Insulation. Over one year into the integration, we have line of sight to achieving all of the $125 million in enterprise cost synergies we committed to by the end of year two of ownership. In addition, we have identified an additional $75 million of structural cost savings through operational improvements and plant consolidations, giving us a lower cost position to leverage as volumes increase.
We're also starting to see the benefit of our commercial strength as we expand the success of our contractor engagement model in Roofing to shape the PINK Advantage dealer program in our Doors business. Through this program, we can serve the more than 4,000 small privately owned dealers across the U.S. while creating downstream demand and product pull-through distribution. We are seeing acceleration in dealer sign-ups and have increased the membership count by more than 35% this year.
In addition, we are starting to see the power of our enterprise retail capabilities, creating new opportunities for Doors in home centers by leveraging our highly recognized and valued brand with homeowners and small contractors, as well as our in-store service and merchandising capabilities. By utilizing the unique capabilities of the OC advantage in Doors, we are positioning the business for increased revenue and margin growth.
Through our reshaped product and geographic focus, we built a company powered by three market-leading businesses with multiple opportunities to win and grow. In line with our building products focused strategy, we continue to make progress on the divestiture of our glass reinforcements business, targeting completion by the end of the year as we work through closing and regulatory approvals.
Before turning it over to Todd, I would like to thank and congratulate my Owens Corning colleagues for their role in our most recent recognition. We have been named to the 100 Best Corporate Citizens list which ranks the largest publicly traded U.S. companies on their environmental, social and governance performance and transparency. Owens Corning ranked third, marking our eighth consecutive year in the top 10 and reflecting our commitment to doing business the right way.
Overall, for the quarter, we delivered solid results in a challenging environment, outperforming previous cycles and operating with greater efficiency and resiliency. Our durable margins and strong cash generation reflect the power of our operating playbook and the strength of our market positions. As we navigate near-term market dynamics and seasonal inventory controls, we remain committed to serving our customers, maximizing our performance and investing in the growth of the enterprise, creating multiple paths to deliver long-term value.
With that, I'll turn it over to Todd.
Thank you, Brian, and good morning, everyone. As Brian said, our performance in the third quarter demonstrates the impact of our structural improvements in portfolio transformation, delivering more resilient earnings in challenging markets.
I'd now like to turn to Slide 5 to discuss the results for continuing operations for the quarter. In the third quarter, we continued to build on a strong first half and execute well despite weaker end markets. While revenue decreased 3% over prior year as a result of lower volumes, we still generated adjusted EBITDA of $638 million and adjusted EBITDA margins of 24%. In the quarter, we had adjusting items of $784 million primarily due to a noncash goodwill impairment charge in our Doors business of $780 million. This impairment is driven by updates to the macro assumptions in our accounting valuation model due to near-term market weakness, not a change in our longer-term view of the earnings potential of the business. Adjusted earnings per diluted share for the third quarter were $3.67.
Turning to Slide 6. Free cash flow for the quarter was $752 million compared to $558 million in the same period last year. We benefited from disciplined working capital management as well as lower cash taxes as a result of the tax bill updates earlier this year, which more than offset the impact of higher capital investments. We continue to invest in capital projects at elevated levels in the near term to drive improvement in long-term efficiency and growth. As a result, capital additions for the quarter were $166 million, up $25 million from the same quarter prior year.
Our return on capital was 13% for the 12 months ending September 30, 2025. As a reminder, at our Investor Day earlier this year, we gave a long-term target of mid-teens or better return on capital. While currently below mid-teens due to the Doors acquisition, there is no change to our long-term target. At quarter end, the company had debt-to-EBITDA of 2x at the low end of our targeted range of 2 to 3x.
During the third quarter, we returned $278 million to shareholders through share repurchases and dividends. We repurchased common stock for $220 million and paid a cash dividend totaling $58 million. Year-to-date through the third quarter, we've returned more than $700 million to shareholders and we are on track to meeting our commitment of returning $2 billion to shareholders between 2025 and 2026.
Our capital allocation strategy remains focused on generating strong free cash flow, delivering mid-teens returns on capital, returning cash to shareholders and maintaining an investment-grade balance sheet while we invest in attractive capital projects for growth. Our capital allocation strategy is focused on compounding long-term value for shareholders.
Now turning to Slide 7, I'll provide additional details on our segment results. Starting with our Roofing business. Our results in the third quarter continue to demonstrate the power of our contractor engagement strategy and vertically integrated cost position to outperform the market and deliver resilient earnings. Sales in the third quarter were $1.2 billion, up 2% from prior year. In the quarter, revenue growth was driven by positive price realization on our April increase with volumes relatively flat. The U.S. asphalt shingle market on a volume basis was down low double digits compared to the prior year.
The big driver of the year-over-year decline was lower storm-related demand. As Brian shared, for the first time in a decade, no named storms in the Atlantic made landfall in the U.S. Our U.S. shingle volume down slightly outperformed the market as we continue to see good demand for our shingles and ongoing contractor pull-through distribution. We had another strong quarter of EBITDA performance as we navigated a declining shingles market. EBITDA was $423 million for the quarter, up slightly from prior year. Positive price more than offset the impact of cost inflation. Overall, for the quarter, we delivered EBITDA margins of 34%, in line with prior year.
Now please turn to Slide 8 for a summary of our Insulation business. In the third quarter, Insulation sustained 20-plus percent EBITDA margins in more difficult markets, showing the impact of the structural improvements we have made. We continue to deliver results above historical performance in similar markets, highlighting our ability to create value for customers. Q3 revenues were $941 million, a 7% decrease from Q3 last year. The decline was primarily due to lower demand for residential products in North America and the sale of our building materials business in China. In North America residential, we saw volume decline in line with our expectations for fiberglass due to ongoing weakness in demand for residential new construction.
In North America nonresidential, revenue was down slightly versus prior year on the timing of projects in the U.S. and Mexico. And in Europe, we continue to see stable markets. Strong operational performance partially offset the impact of lower demand that resulted in additional production downtime as we remain disciplined in inventory management. Insulation delivered EBITDA margins of 23% in the third quarter, resulting in EBITDA of $212 million, down $36 million from prior year.
Moving to Slide 9. I'll provide an overview of the Doors business. Overall, the business is responding well to a challenging market. In the quarter, the business generated revenue of $545 million, down 5% from prior year. The decline in revenue was primarily due to lower volumes as the Doors business continues to navigate challenging market conditions for both new residential construction and discretionary repair and remodel. We are also seeing a decline in EBITDA versus prior year as a result of lost leverage.
Price cost was negative in the quarter as pricing was down slightly and inflation, primarily tariffs, continues to impact the business. Despite these market headwinds, the integration is progressing well. We are run rating slightly ahead of our $125 million of enterprise synergies. To date, we have captured about 40% of our synergies in Doors and the other 60% across the remainder of the enterprise. This reflects our ability to scale the OC advantage while applying the same playbook that structurally improve margins and Roofing and Insulation over time.
We continue to take actions in support of achieving these savings and driving network optimization, which include the decision we made in the third quarter to close a facility in Texas and another announcement this week to close a facility in Canada. EBITDA for the quarter was $56 million with EBITDA margins of 10%. Overall for the company, there was about $12 million in net impact from tariffs in Q3. Our sourcing and supply chain teams have continued to demonstrate agility and discipline mitigating tariff exposure and preserving margins. We expect net tariff exposure to continue at a similar rate in Q4, with the biggest headwind in the Doors business.
As a reminder, last year in Doors, we also saw a $14 million onetime benefit from tariff recovery efforts in Q4 that will not repeat this year. This impact is included in the outlook Brian will share in a moment.
Moving on to Slide 10, I will discuss our full year 2025 outlook for key financial items. General corporate EBITDA expenses are expected to be approximately $240 million, at the low end of the range we had previously shared of $240 million to $260 million. We expect our 2025 effective tax rate to be 24% to 26%, anticipate a cash tax benefit of approximately $100 million in the year for the recent tax bill. Capital additions are expected to be approximately $800 million. This level of capital investment reflects the strategic choices we are making to expand capacity and drive improved efficiency. This CapEx continues to include glass reinforcements which is expected to be approximately $80 million in 2025.
We expect CapEx to remain elevated in the near term as we work towards completing the high-return capital-efficient projects currently underway. We remain focused on executing our strategy, delivering strong returns and compounding long-term value for our shareholders.
Now please turn to Slide 11, and I'll turn the call back to Brian to further discuss our outlook. Brian?
Thank you, Todd. In the third quarter, our team continued to perform well, responding to slowing demand trends in most of our product lines. For the fourth quarter, we expect residential new construction and remodeling to remain challenged, with softer market conditions and customers carefully managing year-end inventory. For nondiscretionary roofing repair activity, we expect the market to be down significantly on lower second half storm activity and Q4 seasonality.
Nonresidential construction activity in North America is expected to decline slightly and market conditions in Europe are anticipated to gradually improve. As Todd shared, we remain disciplined in our inventory management in this environment. As a result, we will realize additional year-over-year production curtailment in the fourth quarter.
Given this near-term outlook, we anticipate fourth quarter revenue for continuing operations to be approximately $2.1 billion to $2.2 billion, down mid- to high teens versus prior year. For adjusted EBITDA, we expect to deliver margins of approximately 16% to 18% for the enterprise.
Now consistent with prior calls, I'll provide a more detailed business specific outlook for the fourth quarter. Starting with our Roofing business, we anticipate our revenue to be down mid-20% versus prior year. While we typically see a decline in roofing shipments in the fourth quarter due to colder weather, we expect to see a more significant drop this year due to much lower storm activity and a more pronounced reduction in end-of-year inventory levels at distribution versus prior year.
Given this environment, we expect a high 20% decline in ARMA market shipments. Based on our strong contractor engagement model, we would expect our volume to decline slightly less than the market overall. We anticipate volume declines for components and nonwovens to be down a similar amount tied to lower demand for shingles. For the quarter, we expect pricing to be up slightly versus prior year, but with ongoing inflation, we anticipate seeing negative price cost for the fourth quarter.
We also expect to take additional production curtailment to manage inventory and perform needed maintenance on our production lines. partially offset by productivity. Overall, for Roofing, we expect to generate a mid-20% EBITDA margin in the fourth quarter.
Moving on to our Insulation business. We anticipate overall revenue to decline high single digits compared to the prior year, primarily due to a volume decline in North American residential and the sale of our building materials business in China. As a reminder, this business had approximately $130 million of revenue annually. In our North American residential insulation business, we expect revenue to be down low double digits versus prior year due to lower demand as we work through a step down in housing starts and overall market uncertainty.
Additionally, we anticipate targeted price moves to result in slightly lower price year-over-year. For North American nonresidential, we expect revenues to be down slightly versus prior year, in line with the declines Todd shared for the third quarter tied to lower project-related demand in North America. And in Europe, we anticipate revenue to be up versus prior year as we see gradual market recovery and currency tailwinds.
Overall, for the Insulation business, we expect ongoing cost inflation resulting in negative price cost in the quarter. Additionally, we anticipate strong operational performance and cost controls to largely offset the incremental production curtailment tied to the volume decline from the market pressure in North American Residential.
Given all this, we expect EBITDA margin for the Insulation to be slightly above 20%.
Turning to Doors. We expect our business to continue to be challenged by slower discretionary repair and remodel spending and weaker new construction activity. Also in the quarter, similar to our other residential product lines, we expect to see distributors reduce end-of-year inventories. As a result, we expect revenue in Q4 to decline high single digits versus prior year, driven primarily by lower demand. While we anticipate synergies and cost control realization to continue, we expect EBITDA to be impacted by lower volume and the resulting leverage loss from production curtailment.
Additionally, we expect price cost to remain negative with relatively flat pricing and ongoing inflation driven primarily by tariffs. Overall, for Doors, we expect fourth quarter EBITDA margin of approximately 10%, similar to Q3.
With that review of business outlook, I want to close out with a few enterprise comments. Based on this outlook for the fourth quarter, we expect 2025 revenue for the enterprise to be up modestly versus prior year, inclusive of the full year impact of the Doors business. Despite ongoing market challenges throughout the year, we expect to deliver full year EBITDA margin of approximately 22% to 23%. As we finish the year, we remain focused on executing our strategy with discipline, leveraging our reshaped portfolio, structurally advantaged cost position and the unique capabilities of the OC advantage.
These strengths position us well to navigate near-term market pressures, while continuing to invest in the long-term efficiency and growth of our enterprise to achieve the targets shared at Investor Day in May. Moving forward, we remain energized by the opportunities to continue positioning Owens Corning as a best-in-industry performer. We are building a stronger, more resilient company, one that delivers higher earnings and cash flow, creates lasting value for our shareholders and is built to outperform.
In closing, I want to recognize the continued dedication and resilience of our global Owens Corning team. Their commitment to safety, operational excellence and customer service is what enables us to perform at such a high level in any market environment.
With that, we would like to open the call for questions.
[Operator Instructions] Our first question today comes from Stephen Kim with Evercore ISI.
2. Question Answer
I appreciate all the color. Obviously, a tough market out there. I'm going to focus on Roofing and particularly the margins. I think you've guided for margin -- sorry, pricing in 4Q to be up slightly year-over-year. But we have been understanding that there's some growing pricing pressure sequentially in Roofing. And I'm wondering if you could describe where do you feel more pressure? Is it more prevalent among manufacturing peers, distribution, retail or end users? And how does your pricing strategy generally change if the pressure comes from one channel versus another?
Stephen, thanks for the question. I think pricing has continued to remain positive all year. We've talked about that in terms of our realization. And it's really driven by the value that we're bringing to our contractors and distributors, through our brand, through our innovation, through our commercial strength in the market. So that positioning in the market, that investments we've made to build out all of those capabilities, I think, reflect a strong pricing for our products, and that's retained and been maintained throughout the year.
And typically, we see some pricing moves as we close out the year, and we see that more generally in a more normalized roofing market, which clearly we are facing today with limited storm activity, Q4 seasonality, distributors taking a harder look at inventory levels. So in the fourth quarter, particularly, we normally see some pricing moves to -- make some pricing moves as distribution adjust their end-of-year inventories. And we've made some of those pricing moves to remain competitive, and those have been very targeted. When we look at pricing actions like that in Roofing or in Insulation or in Doors, we're very targeted. We're very focused regionally. We're very focused on specific product lines.
So we've made some of those moves. So I'd say the pricing environment though is fairly typical to what we have seen in past fourth quarter cycles, nothing unusual given any of the distribution changes or any of the consolidation moves out there. So those are what I would call pretty typical seasonal pressures. And we're still, as we said in our guide, maintaining a positive price in the quarter. But we are seeing some continued inflation. So we're going to have a negative price/cost mix when we take into account the ongoing inflation in the quarter.
So in terms of the overall pricing strategy, we remain consistent with how we price our products. We want to be competitive in the market, but we also want to be recognized for the value we bring relative to our brand, our innovation, our service, our commercial skills and capabilities, and that's how we'll continue to price our roofing products and all our products as we go forward.
Our next question comes from Anthony Pettinari with Citi.
In insulation, I think you discussed North America nonres revenue down slightly in 3Q with the timing of projects, I think you cited. And you also discussed revenue slightly down. And I'm just wondering if you can give us some background on nonres demand? And are these projects -- are they moving from 3Q to 4Q or '25 to '26 or any further detail on the nonres side?
Anthony, thank you for the question. I can give more detail in both Q3 and Q4. We're seeing some project delays in both the U.S. and in Mexico. When we think about the delays, we do view it as shifts from quarter-to-quarter, but potentially also shifts from '25 into '26. We've seen some customers in the space share similar data for the commercial and industrial segment that they're also seeing some project delays. So we don't think this is unique to us. We think it's more a broad phenomenon that we're seeing in the industry.
We are seeing a bit of a slowdown in construction activity in Mexico, where we do report that through our North American nonres piece of the business. Some of those delays appear to be related to just overall economic activity in Mexico. This could be delayed a bit longer into next year. But in the U.S., we think it's more related to just normal kind of delays we see in projects that occur from time to time. So not too unusual relative to what we've often seen.
Our next question comes from John Lovallo with UBS.
Maybe just sliding over to the Door segment to round it out here. You took a sizable impairment based on the outlook for the business. However, it does seem like you guys are outperforming your largest peers. So I guess the question to part one, do you still think you're gaining share in this business despite the softer market? And then what assumptions within the kind of the fair value analysis changed the most in that and should we expect further impairments in the fourth quarter?
Well, John, let me start with some more detail on the impairment itself, and then I'll kick it over to Brian to share more on the business and what we're doing from a share standpoint. So as a reminder for everybody, when we finalize goodwill, by definition, there's 0 cushion between the value of the goodwill and the assumptions that we have in the model. And then on an accounting basis, if we have triggering events in a quarter, we have to retest that model and all the assumptions.
So we did have a triggering event in Q3, which was the revenue decline that we saw. And when you look at these goodwill models, they're really sensitive to early year dynamics, in particular around market growth rates and then the subsequent impact on our margins. So when we look at the business, we did need to take an impairment in the quarter based on the accounting model. We remain confident that we're going to see margin improvement over time, but the model has put a heavy weight on the near-term results as we discount some of those future year results just as we look at the math of it.
So really, from our standpoint, no fundamental change in long term, how we view the business, how we view the earnings potential. It's just we're facing in the near-term market weakness here that is different from what we assumed when we calculated goodwill originally in the models.
And John, maybe I'll pick it up from that. I think we continue to stay very focused on the actions we can take to position the business for success in both the near term in this environment and then longer term. We've talked about the ongoing focus on cost synergies. We continue to see good realization there and on track to the $125 million in overall enterprise synergies. We announced another $75 million of targeted production efficiencies, and we're making very good progress on that.
And then I talked last quarter on some green shoots that were emerging around some of the commercial opportunities we saw in the market. And I think we continue to see those come through, and I highlighted some of those in the prepared comments. We continue to see great conversion at the lumber dealer level. And these are dealers that are servicing very local communities with a wide variety of products, but inclusive of the doors, and we're seeing some increased interest in positioning as we bring the broad product offering of Owens Corning to these dealers in Roofing, Insulation and Doors that they can take in the market, build their business and grow their business through our brand and our marketing and merchandising capabilities.
So we're seeing some business pick up in that -- in that specific area. And then we continue to see a lot of interest across broad distribution around the full product offering we bring and have been able to differentiate ourselves around our service proposition and quality, and the teams have done really, really great work to build a really strong value proposition around service and quality that we think is benefiting in the market today.
And then the last one I talked about was around the home center. Again, back to leveraging the OC capabilities, the brand, our merchandising capabilities, we've seen some pickups there and some business opportunities. Unfortunately, a lot of that in the near term is getting overshadowed by the market declines, but we do see that accelerating. As we see kind of market volumes pick up as we move into next year, we see some more of those volumes coming through, and we think that's going to give us some great incremental operating leverage as we take the business forward.
Our next question comes from Michael Rehaut with JPMorgan.
Wanted to zero in on hopefully a couple of areas, if you don't mind. One is, just trying to get a sense and parse out in Roofing and it sounds like a little bit perhaps in Insulation. In terms of the year-over-year revenue expected decline in 4Q, if it's possible to try and break out, how much of that was due to inventory reduction in the channel? And then secondly, in Insulation, maybe if you could just describe what's going on from a pricing standpoint sequentially and if that's something that you would expect to persist into '26 absent any rebound in demand?
Mike, let me start with roofing and then I'll have Todd kind of come in on the Insulation front. On the Roofing step down in the quarter, it's probably a combination of three factors that are driving the more substantial kind of decline in the quarterly volumes. One is, as we work through the year, I think we've seen the market resetting to more normalized storm volumes. And we saw that in Q2. We expected in Q3, we're going to see some declines relative to some lower storm activity versus prior year. In fact, in Q3, we saw really no major storm activity, as we talked about first time in the decade.
So we saw that kind of step down more dramatically. So I think in Q4 now, when you look at the big sequential and both -- and the year-over-year decline, I mean best guess is we probably say maybe it's probably half and half, half tied to a bigger step down in storm activity that's limiting volume and about half in terms of more dramatic inventory corrections versus prior year on lower overall demand. So as I look at the opportunities in the quarter, it's probably been a few years since we've seen this kind of significant step down, Q4 2022 is probably the last time we saw a pretty weak second half storm year in '22, and we saw that step down in volume.
So we have seen these kind of big decreases. That was about a 20% decrease in Q4. This one is a little more impactful, though, because of the lower storm activity we feel. So best view about half and half. The good news is that inventory reduction generally comes back in the first part of next year as distributors start to restock for the new season. But I think we're going to see a pretty cautious buying behavior across all of our distribution customers to close out this year, given the market uncertainty.
I'll comment on what we're seeing in the Insulation market in Q4 and then sequential pricing in res Insulation. So when we look at the res side of the story in Q4, we are seeing a decline in lagged housing starts in Q4 on a year-over-year basis. We're expecting the market to decline more than the decline in lagged starts. So why is that? Some of that is the mix of single-family versus multifamily. We're seeing a bit weaker mix on the single-family side. But some of that also is just conservative inventory posture as Brian just described on the Roofing side, also in Insulation. We are in free supply now. There's enough capacity to serve our customers' needs.
So there's less of a need for folks to build large inventory positions at year-end. So it's hard to put a specific number on the destocking that we expect. We believe more of it is driven by the slowdown in res housing and just overall demand for the market. But we do think destocking is a part of the story.
When we look at pricing in Q3, we made surgical pricing moves on the res side, as we talked about on the last call, targeting specific product lines, specific regions, specific areas where we needed to respond to competitive issues. Overall, though, we expect a relatively stable pricing environment into Q4. So while the guide includes a bit of year-over-year pricing down on res, that's really the carryover of that Q3 set of surgical actions that we made into Q4 rather than new actions that we anticipate in the quarter.
Our next question comes from Trevor Allinson with Wolfe Research.
I wanted to ask about capacity utilization rates. Can you comment about on where those were in both your U.S. resi Insulation and Roofing businesses in 3Q? And then given anticipated softer market conditions, where you expecting utilization rates to move into the fourth quarter?
Trevor, I'll start with the res side, and then Brian can talk through the Roofing side. So the highest level, we still view the industry, if all assets are running in the industry, is capable of supporting 1.4 million to 1.5 million starts. When we look at Q3 and Q4, we are tracking below that 1.4 million to 1.5 million range. As I shared before, we're seeing a weaker mix of single-family versus multifamily. And just again, as a reminder, single-family starts carry about 30% more pounds of insulation per unit than multifamily starts.
Now what's happening is we are taking idle. So we took our NiFi plant cold and we talked in the last call about hot idle versus cold idle. We decided to take the NiFi line down completely. We also have maintenance downtime that we're taking in the fourth quarter. That's fairly normal on our assets, but we're able to fit a little more maintenance into the quarter now that we've got time to do it. So both of those for us are reducing the amount of production we've got in the quarter.
We suspect that competitors are taking similar opportunities to do maintenance. We know of a couple of lines that also have been curtailed in the industry. So it's really hard today to point to a specific number in terms of capacity utilization. But what I would share is we've done a good job of maintaining relatively stable sequential share from Q2 into Q3. And then we're positioned to maintain pretty stable sequential share now in the fourth quarter.
So we're balancing out with that sequential stability in share. We're taking idle to make sure we maintain the right level of inventory in our assets in our businesses.
Yes, Trevor. And then for Roofing, clearly, with the step-down in demand, capacity utilization rates are going to come down. For us, we're going to take advantage of that in the fourth quarter to do some maintenance on our assets. It's going to be the first quarter in a while -- fourth quarter and while we can take some more extended downtimes to do that preventative maintenance work. But overall, I'd say in Roofing, we don't track capacity utilization rates the same as Insulation. It's a material conversion business. So the pricing and margin dynamics in the business are generally not tied to capacity utilization rates.
They're tied value and price capture over inflation and tied to those material conversion economics of efficiency. So we don't see the same dynamics and trends in terms of the margin of the Roofing business because of the nature of a material conversion side of it. I will say, though, we will see in Q4 as we take down some of the production curtailments that, that does create some higher cost inventory that does generally spill over into the next quarter. So we would expect with some more extended downtimes this year, that's going to have an impact in terms of Q1 margin rates in the business on some higher cost inventory that we're going to have to work through.
That's fairly normal in the seasonal business of Roofing. But I think we've not seen kind of this level of downtime in the last several years. So that's going to have a little bit bigger impact as we take that inventory into Q1 and sell it.
Our next question comes from Matthew Bouley with Barclays.
So on Insulation, I guess the volume declines have been fairly sharp for 3 quarters at this point, more so in North America residential while still holding the EBITDA margin above 20%. I think back to the Investor Day, you spoke to the Insulation margin range. I believe, it was 20% to 27% on a full year basis on 1.2 million total starts at the low end. So understanding you're not guiding beyond 1 quarter, but do you have a view that in that light, we could be reaching a trough on Insulation margins or is this more just going to be dependent on utilization and pricing? I'm just curious on the ability to hold the line on that low end there.
Overall, there's no change to our guide from Investor Day in terms of where we view Insulation margins on a full year basis in that 20% to 27% range. We are seeing pressure on the margins in Q3 and Q4 as we see a relatively stable pricing environment, but we are still absorbing cost inflation in the business. We're also taking on idle to catch up for a bit of a heavier inventory position as we ended the first half of the year that we're correcting now in the back half as we've seen the market continue to be relatively weak from a volume standpoint. So that starts to get spread out more as we get into next year as we reset inventory levels at year-end.
So fundamentally, no change to the guide on the business. in terms of what we expect to see. And we were really happy with the execution in the third quarter as we see the strategy play out of really focusing over time on growth in the non-res and European pieces of the business, that are holding up really well from a volume standpoint, but also a pricing standpoint. And while res pricing, we've had to make some selective moves, we are seeing some product lines and end markets within the non-res and Europe piece where we're seeing positive price in our market.
So the long-term strategy is -- continues to pay off for us. In terms of relative stability in the Insulation business, but we are working through this choppier period on the res side.
Our next question comes from Philip Ng with Jefferies.
I appreciate all the great color. Brian, I guess, from an inventory destock, whether it's your system or the channel, how long do you expect this to kind of take to flush out? Is this a 1 quarter event? Or is it going to take a few quarters? And when I look at your Roofing margin guidance for the fourth quarter, you're calling for a mid-20% EBITDA margin, certainly magnified by the destock and the seasonal dynamic. But as inventory and store demand normalizes at these lower levels, the 27% to 35% EBITDA Roofing margins you provided at your Investor Day, is there a good way to think about that as we kind of settle at these levels looking out to 2026?
Yes. Thanks, Phil. Let me start and then I'll talk about the destock. The margin profile of the routing business, when we set the guide of approximately 30% annual on average in that range, was really contemplating at the 30% level, a more normal seasonal business. And I think we're going to see that. So normally, in the Roofing business, you got to go back a few years, but we would see lower margin performance in Q4 and in Q1 coming out of the downtimes and some higher cost inventory. And then Q2, Q3 is where we see an acceleration in margins based on operating leverage and just higher demand.
So that seasonality in that cycle where we would call the Q4 at mid-20% would not take us away from our expectation that we can still operate on an annualized basis around that 30% EBITDA margin business. So I think it's just we have not seen the seasonality in the business for several years. And so that cycle and that performance through the year, that moves up in the mid part of the year and then comes back down fourth quarter and then Q1 is more typical, more normal. And given the guide we're setting, we still think we have the ability to achieve that 30% on average annual margin profile for the business.
So on the inventory destocking, I think we normally see things in Q4 get destocked and then restocked in Q1. I would say because of probably the cautious buying nature in distribution that we're seeing this quarter, it might take into the second quarter, into the first half to really see everything get restocked. We would normally see a big portion of that come through in Q1 as distributors are getting ready for the season. But I think some of that's going to kind of play out in terms of the beginnings of Q2 storm season, how people are going to buy and set up for the year. But I would expect that distributors will get back to more normalized inventory levels, but that might, depending on the start of the year, take more into the second quarter.
Our next question comes from Michael Dahl with RBC.
Yes, Brian, I just want to follow up on that, just so we're clear because if I think about what this implies for 4Q, I think this is going to be the lowest Roofing volumes in a decade if your guide is correct. And so I guess the first part of the question is, I didn't get the sense that inventories were necessarily that elevated. So just the -- like as you go into year-end, do you have a more quantitative sense of where channel inventories would be relative to normal? And then to your point in response to Phil, I think the last time we saw this in kind of '22, you did see a similar year-on-year decline in 1Q of '23. We still have a tough comp against 1Q '25 when we flip to next year. So should we still be thinking about a 20%-plus decline in shipments in 1Q? Is that kind of the order of magnitude that you're thinking about at least initially?
Yes, Mike, in short, yes, I think you're describing it how we're kind of seeing it play out in real time. I think the -- it would be the lowest Roofing volume in about a decade, given the fact that there has been no named storms here in Q3 on top of a pretty light overall storm season. So the combination of those two factors are just leading to some lower storm activity as we finish the year. That on top of just normal Q4 seasonality, I think -- and I think a little bit more cautious on distributor buying behaviors given that. So the last time we saw this in '23, you're exactly right. We saw our Q1 that was also down 22%, 23% in terms of prior year shipments and that could be the set up.
We're not guiding to Q1, but that certainly feels like a realistic setup to how 2026 is going to start. Now that you also saw more normalized storm volumes coming through, and we saw the margin progression in the business and the volume progression in the business throughout the year. But I think the next couple of quarters for Roofing volumes are going to be pretty light, relative to the last couple of years, and we'd probably take on that shape of the year.
Our next question comes from Garik Shmois with Lake Capital Markets.
Just to follow up on that point. On Roofing, historically, the industry has done a good job of pricing to recover cost inflation, just given these volume run rates that you're describing. As we get into the next season, do you anticipate any change in the industry's ability to recover the cost inflation you're seeing right now? Or is there anything changing perhaps competitively or from a capacity standpoint or anything happening in distribution that might give you some pause?
At this point, I would say no, nothing that would change our view of kind of the historical pricing practices that we've had in the business and the overall ability to recover inflation through price. I go back to roofing shingles are still the most affordable roofing material in the market. It is still architecturally the most widely used product in the market. So there are a number of fundamental demand drivers. It is a nondiscretionary repair and replace product category. So I think we're seeing some adjustments and resetting on more normalized storm volume.
But when I look at kind of the fundamental repair remodeling drivers of the business, those are still staying very strong in terms of the need for roofing materials when a roof is damaged. So I think those underlying drivers of nondiscretionary repair business, the ability -- the fact that it's the lowest-cost roofing material in the market, but the fact that it's architecturally the most desired, I still think create demand drivers even though it's stepping down on a year-over-year basis on an absolute basis, that would still allow us to get pricing in the market and the expectation that we'd be able to recover inflation over time.
Our next question comes from Susan Maklari with Goldman Sachs.
I want to change a bit and talk about capital allocation. Understanding that 1 or 2 quarters doesn't necessarily change the longer-term needs. But can you talk about what you're looking for to determine if you need to make any changes to plans to add capacity across the different segments? And then with that as well, can you just talk about your priorities for capital allocation in this kind of an environment? And anything that has changed relative to the last couple of quarters?
Thanks, I appreciate the question. From a capital allocation standpoint, as we think about the major projects we've got underway, these are multiyear projects that generally are going to add capacity in the out years, in 2027 and beyond. When we look at our markets, we still have a lot of confidence in the long-term tailwinds that support both the new construction and repair and remodel activity in North America and in Europe. So there's no fundamental change long term to our outlook for the business. And we know we're in short-cycle businesses where things could change very quickly on the upside as well around market conditions in really all 3 of our businesses.
When we look at those larger projects, there's no change today in our work underway against those, in part because they support growth, but they also support cost efficiency and capital efficiency for us going forward. So these are important projects for us as we think about generating long-term EBITDA growth and cash flow growth for investors. Right now, our priority from a balance sheet standpoint is staying very, very disciplined when it comes to working capital. As you've heard throughout the call today, we're taking idle and curtailment on our existing assets to make sure we keep enough inventory to serve our customers, but we remain appropriately postured for the current market environment in terms of total inventory in the business.
As a result of that and focus on accounts payable, we're maintaining good cash flows in a fairly challenging market environment today that's enabling us to continue to invest in these longer-term projects to support earnings and cash flow growth. It's enabling us to continue to make great progress on our target of returning $2 billion to shareholders this year and next year through dividends and repurchases. We are $700 million along that journey already this year. But then at the same time, we're preserving a really strong balance sheet at the low end of our targeted range of 2 to 3x.
So really no change in terms of how we're thinking about capital allocation in today's market environment, even with the challenging market conditions that we're seeing, which speaks again to the new Owens Corning and the cash generation power of the business that we've created.
Next in queue we have Sam Reid with Wells Fargo.
One more on Roofing. I was just hoping you could disaggregate some of the inventory comments, but perhaps in the context of the components business, just thinking through that destock, stock up dynamic that you talked to on some of the prior answers, I would just love to know if the components business is going to follow a similar path or whether there could be a divergence between shingles and components?
Yes. Thanks for the question, Sam. The -- we would expect that the inventory destocking on components would follow a similar path to shingles. Generally, distribution will buy those products in tandem. They'll manage the balance of out-the-door sales of shingles and the level of components and attachment rates and keep those inventory positions in balance. So we would expect a similar step down in terms of volumes in our components business in Q4. And then we also talked about nonwovens. We're vertically integrated, which gives us a great cost and innovation advantage, but we'd expect to see a similar step down there.
But in the component side, I think it followed the same path. And then again, when we think about the first part of 2026 and distributors starting to rebuild those inventories, I would also expect the same restocking mindset towards components to match the shingle restocking that we would expect to see in the first part of next year.
Next, we have Rafe Jadrosich from Bank of America.
Can you just walk us through the downtime that your impact to EBITDA that you're assuming for Roofing, Insulation and Doors in the fourth quarter? And then if the macro sort of stays consistent and soft into next year, is that something that you would expect to persist? Or is any of that related to temporary sort of maintenance downtime?
I think overall -- maybe I'll give an overarching answer because it's going to vary a little bit by business, but you can see some of the downtime curtailments. I'd say in Insulation, we've been able to manage those really, really well. You look at third quarter downtimes. We've been able to offset by the productivity. And then some of that, you can see in the MD&A. We'd expect to continue similar trends here in Q4 in terms of that.
Roofing will be a more significant sequential and year-over-year impact because of the extent of downtimes we're going to start to take in the business. But when we think about the decremental margins in Q4 year-over-year, it is primarily all volume and deleverage that fits inside of that. So the bulk of that volume and then a little bit more incremental. And then in Doors, you'll see that come through some higher manufacturing costs in Q3. We think that continues into Q4 with kind of similar levels.
So as we move into next year, I think given the volumes that we're running at today, we might see some more incremental depending on the business in terms of how we set up the year to stay very disciplined around working capital and inventory management and cash flow. But I think the bigger impact will probably be on the year-over-year comps in the businesses where you'll see a higher amount of production downtime going forward versus prior year. That will impact some of the margin performance in all three businesses to start the year. But we'll have to see how the rest of the year plays out if that would continue.
But we are going to be very disciplined in terms of managing working capital and inventories as we operate the business going forward.
This concludes our Q&A session. So I'll pass you back over to Brian Chambers for any closing comments.
Thanks, Lydia. I'd like to thank everyone for making time to join us on today's call and for your ongoing interest in Owens Corning. We look forward to speaking to you again in the fourth quarter call. Thanks, and have a very safe day.
This concludes today's call. Thank you very much for joining.
Owens Corning — Q3 2025 Earnings Call
Financial data from Owens Corning
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| Jun '26 |
+/-
%
|
||
| Revenue | 9,847 9,847 |
12%
12%
100%
|
|
| - Direct Costs | 7,239 7,239 |
8%
8%
74%
|
|
| Gross Profit | 2,608 2,608 |
21%
21%
26%
|
|
| - Selling and Administrative Expenses | 1,000 1,000 |
10%
10%
10%
|
|
| - Research and Development Expense | 150 150 |
1%
1%
2%
|
|
| EBITDA | 2,035 2,035 |
21%
21%
21%
|
|
| - Depreciation and Amortization | 712 712 |
0%
0%
7%
|
|
| EBIT (Operating Income) EBIT | 1,323 1,323 |
29%
29%
13%
|
|
| Net Profit | -671 -671 |
302%
302%
-7%
|
|
In millions USD.
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Owens Corning Stock News
Company Profile
Owens Corning engages in the development, manufacture, and marketing of insulation, roofing, and fiberglass composites. It operates through the following segments: Composites, Insulation and Roofing. The Composites segment manufactures, fabricates, and sells glass reinforcements in the form of fiber, and also includes vertically integrated downstream activities. The Insulation segment provides insulating products which help customers conserve energy; provide improved acoustical performance; and offer convenience of installation and use. The Roofing segment offers laminate and strip asphalt roofing shingles and other products including oxidized asphalt and roofing accessories. The company was founded on October 31, 1938 and is headquartered in Toledo, OH.
StocksGuide Premium
| Head office | United States |
| CEO | Mr. Chambers |
| Employees | 25,000 |
| Founded | 1938 |
| Website | www.owenscorning.com |


