Thierry Denis - Director, Investor Relations Mike Thaman - Chairman and Chief Executive Officer Michael McMurray - Chief Financial Officer.

Stephen Kim - Barclays George Staphos - Bank of America Merrill Lynch Mike Wood - Macquarie Kathryn Thompson - Thompson Research Group Keith Hughes - SunTrust Garik Shmois - Longbow Research Philip Ng - Jefferies Dennis McGill - Zelman & Associates James Armstrong - Vertical Research Partners John Baugh - Stifel Al Kaschalk - Wedbush Securities.

Good day and welcome to the Owens Corning First Quarter 2015 Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference call over to Mr. Thierry Denis, Director of IR. Mr. Denis the floor is yours Sir..

Thank you Mike, and good morning everyone. Thank you for taking the time to join us for today’s conference call in review of our business results for the first quarter 2015. Joining us today are Mike Thaman, Owens Corning’s Chairman and CEO; and Michael McMurray, Chief Financial Officer.

Following our presentation this morning, we will open this one-hour call to your questions. Please limit yourself to one question and one follow-up. Earlier this morning, we issued a news release and filed a 10-Q that detailed our financial results for the first quarter.

For the purposes of our discussion today, we’ve prepared presentation slides that summarize our performance and results for the first quarter of 2015. We will refer to these slides during this call. You can access the earnings press release, Form 10-Q and a presentation slide at our website, owenscorning.com.

Refer to the Investor’s link on the bottom right-side 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 to slide 2 before we begin, where we offer a couple of reminders.

First, today’s remarks will include forward-looking statements based on our current forecasts and estimates of future events. These statements 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 a more detailed explanation of the inherent risks and uncertainties affecting such forward-looking statements.

Second, this presentation and today’s prepared remarks contain non-GAAP financial measures. Reconciliations of a non-GAAP to GAAP measures may be found within the financial tables of our earnings release on owenscorning.com.

Adjusted EBIT is our primary measure of period-over-period comparisons, and we believe it is a meaningful measure for investors to compare our results from period-to-period.

Consistent with our historical practice, we have excluded non-recurring items, and items that we believe are not representative of our ongoing operations when calculating adjusted EBIT.

We adjust our effective tax rate to remove the effect of quarter-to-quarter fluctuations, which have the potential to be significant in arriving at adjusted earnings and adjusted earnings per share.

In the first quarter, we have utilized an effective tax rate of 31%, in line with our anticipated annual effective tax rate on adjusted earnings for 2015. For those of you following along with our slide presentation, we will begin on slide 4.

And now, opening remarks from our Chairman and CEO, Mike Thaman, who would be followed by CFO Michael McMurray, Mike will then provide comments on our outlook prior to the Q&A session.

Mike?.

Thank you Thierry and good morning everyone. We appreciate you joining us today to discuss our first quarter results. Owens Corning had a good start to 2015, with first-quarter performance that was consistent with the expectations we set coming into the year. Insulation continues to benefit from growth in U.S. housing starts.

Results in Composites reflect strong execution and operational performance. In Roofing, first quarter revenues and margins were weak.

However, the Roofing business did not experience the discounting and inventory build in the channel that we saw in the same quarter last year, positioning the business to deliver higher volumes for the remainder of the year. The company earned $60 million in adjusted EBIT for the quarter, on consolidated revenue of $1.2 billion.

Adjusted earnings were $22 million. During our fourth quarter 2014 call in February, I discussed a number of expectations for sustained or improved performance across our businesses in 2015. Let me review them now, starting with safety. We said that we would continue to make progress toward our goal of creating an injury-free workplace.

The company experienced an increase in recordable injuries in the first quarter with 25 recordable injuries compared to 21 in the prior year. Safety performance in March and April has been much improved and we remain committed to improving our overall safety performance.

In Insulation, we said the business should continue to benefit from growth in U.S. residential new construction, improved pricing and operating leverage. Insulation delivered EBIT improvement of $6 million. The business has improved EBIT performance for 15 consecutive quarters.

First-quarter operating leverage of 25% was impacted by the timing of expense items and in-line with expectations. I also want to highlight that today we announced an investment that will drive growth in our Insulation business.

In June 2013, Owens Corning acquired Thermafiber, a mineral wool insulation manufacturer, to support growth in the North American construction markets. Thermafiber has been a great addition to our portfolio, and has been operating close to capacity in a growing market.

Anticipating continued growth, our Board of Directors approved a $90 million investment for the construction of a new mineral wool plant, to be built in the United States, and operational in late 2016. In Composites, we said we expected 2015 EBIT improvement commensurate with 2014, partially offset by the negative impact of a stronger U.S. dollar.

First quarter Composites EBIT was $60 million, an increase of $33 million, representing the 7th consecutive quarter of EBIT improvement. Selling prices continued their improvement trend and the business is off to a strong start. Results reflect strong execution and operational performance.

Our performance in the first quarter has raised our outlook for full-year results, which I will discuss more fully later in my remarks. In Roofing, we said the outlook would be largely determined by competitive pricing dynamics, the timing and value of asphalt cost deflation, and overall market demand.

Roofing performance was consistent with our expectations, delivering midsingle digit EBIT margins on lower sales, lower production volumes, and lower pricing in comparison to the previous year. Shipments by U.S.

asphalt shingle manufacturers declined significantly during the first-quarter as we did not see the broad discounting or channel inventory build that occurred in 2014. This is in line with our expectation of a more balanced distribution of shipments throughout the year. Asphalt cost deflation has largely tracked with expectations.

We still expect full-year deflation of over $50 million, with the bulk of benefit in the second half. Now let me summarize the expectations we have for the remainder of 2015. The Insulation business should continue to benefit from growth in U.S. residential new construction, improved pricing and operating leverage.

We continue to expect average operating leverage of 50% through the recovery, with 2015 leverage tracking slightly below that goal. Market momentum is positive and we are positioned to deliver another year of strong growth.

In Composites, we’re very pleased with our performance in the first quarter and expect to benefit from continued moderate global industrial production growth.

Based on a strong start to the year, we now anticipate a full-year EBIT improvement of up to $45 million, comprised of up to $70 million in improvement on a constant currency basis less the foreign exchange impact of $25 million at current exchange rates.

In Roofing, we continue to anticipate a flat market for 2015 with a more balanced distribution of shipments throughout the year. On our call in February, I indicated that Roofing performance for 2015 would be determined by the timing of shipments, stability of pricing and timing of asphalt deflation. That view is unchanged.

With that, I’ll now turn it over to Michael, who will review further details of our business and corporate performance. I’ll then return to recap and open it up for questions.

Michael?.

Thank you Mike and good morning everyone. As Mike mentioned earlier, we are off to a good start to 2015. We expect our Insulation business to continue to benefit from growth in U.S. housing starts and results in our Composites business reflect strong execution and operational performance.

In Roofing, we are positioned to deliver stronger volumes at better margins for the remainder of the year. Now let’s start on slide 5, which summarizes our key financial data for the first quarter. You will find more detailed financial information in the tables of today’s news release and the Form 10-Q.

Today, we reported first quarter 2015 consolidated net sales of $1.2 billion, which were down slightly compared to sales reported for the same period in 2014. Net sales in our Insulation business increased $24 million, primarily on higher sales volumes.

In our Composites business, higher selling prices and higher sales volumes were offset by the impact of foreign currency translation. In our Roofing business, net sales were down 21% from the prior year, primarily on lower sales volumes and, to a lesser extent, lower selling prices.

In a moment, I’ll review our reconciliation of items to get to adjusted EBIT, our primary measure to look at period to period comparisons. Adjusted EBIT for the first quarter of 2015 was $60 million, down $17 million compared to the same period one year ago.

Adjusted earnings for the first quarter of 2015 were $22 million, or $0.19 per diluted share compared to $35 million or $0.29 per diluted share in 2014. Depreciation and amortization expense for the quarter was $75 million, essentially flat as compared to the first quarter of 2014. Our capital expenditures for the quarter were $56 million.

Now on slide 6, let me reconcile 2015 first quarter adjusted EBIT of $60 million to our reported EBIT of $58 million. We have adjusted out $2 million related to the closure of two melters we announced last year; one in Japan and one in Canada.

As a reminder, these actions will allow us to exceed our 75% low delivered cost goal in the Composites business. Now please turn to slide 7 where we provide a high-level review of our adjusted EBIT performance, comparing the first quarter of 2015 with the first quarter of 2014. Adjusted EBIT decreased by $17 million.

The $33 million improvement in our Composites business and the $6 million improvement in our Insulation business were more than offset by $60 million decline in our Roofing business. General corporate expenses were slightly lower versus the previous year.

With that review of key financial highlights, I ask you to turn to slide 8 where we provide a more detailed review of our business results, beginning with our Insulation business. Sales in Insulation of $379 million were up 7% from the same period a year ago, primarily on improved volumes.

The business delivered EBIT of $7 million in the first quarter compared to $1 million in the same period one year ago, primarily on higher selling prices. This was our 15th consecutive quarter of EBIT improvement in our Insulation business.

As previously disclosed, we anticipated that both EBIT and operating leverage in the first quarter would be impacted by the timing of expense items. As we have discussed on previous calls, we expect average operating leverage of 50% through the recovery, although 2015 operating leverage will track slightly below that goal.

Looking forward, we continue to expect the Insulation business to benefit from volume growth, improved pricing and operating leverage. Now I will ask you to turn your attention to slide 9 for a review of our Composites business. Sales in our Composites business for the first quarter were $478 million, flat compared to the same period in 2014.

Higher volumes, improved selling prices and favorable product mix were offset by the impact of foreign exchange translation. Selling prices continued their sequential improvement for the seventh consecutive quarter.

EBIT for the quarter was $60 million, more than double compared to the $27 million in the same period last year, primarily due to improved selling prices and favorable product mix. In Composites, this was our seventh consecutive quarter of EBIT improvement. We had some positive contribution from specialty glass sales in the fourth quarter of 2014.

This accelerated in the first quarter of 2015, with stronger specialty glass sales contributing about $12 million of the year-on-year EBIT improvement. We expect sales associated with this campaign to end in April 2015.

Looking forward, we expect the positive momentum delivered in the first quarter along with higher base glass volumes to drive significant earnings growth in the second quarter, but we expect results to be slightly down sequentially as a result of lower specialty glass sales.

For the year, we continue to expect moderate global industrial production growth. Based on a strong start to the year, we now expect a full-year EBIT improvement of up to $70 million before the impact of foreign currency translation.

At current spot rates, foreign currency translation is expected to negatively impact revenue by about $200 million and EBIT by about $25 million. As a reminder, on the fourth quarter call we said that rebuild expense and costs associated with the start-up of our U.S.

non-wovens facility should roughly equal 2014 rebuild expenses and that the timing of these costs would fall in the later two-thirds of the year. As a result of expense timing and lower specialty glass sales in the second half of 2015, we would expect second half 2015 EBIT performance to be broadly in-line with the second half of 2014.

Slide 10 provides an overview of our Roofing business. Roofing sales for the quarter were $393 million, a 21% decrease compared with the same period a year ago. About three fourths of the decline in net sales was driven by lower sales volumes. Lower selling prices drove the remaining decline.

EBIT in the quarter was $20 million, down $60 million compared to the same period in 2014. More than half of the decline in EBIT was driven by lower sales and production volumes and the remainder was driven by lower selling prices. Let me take this opportunity to set some context.

Over the period from 2012 to 2014, we experienced aggressive discounting and inventory build within the channel during the first quarter. During this period, first quarter industry shipments averaged about 35% of full-year demand and first half shipments averaged about 60% of full year demand.

If you look back over the previous decade, a time period where we did not experience heavy first quarter discounting or the related channel inventory build, industry first quarter shipments averaged about 25% of full-year demand and first half shipments averaged about 53% of full year demand.

On the fourth quarter call, we indicated that if first quarter shipments were closer to 25% of full-year demand, industry volumes could be down as much as 25% in the quarter. You will recall that we trailed the market in the first quarter of 2014.

Given our expectation to ship at our historic share for all of 2015, we anticipated our first quarter 2015 volumes could be down more than 10%. We believe there was limited discounting and less inventory build in the channel.

As a result, we now estimate that industry volumes were down by at least 25% in the first quarter, although official industry data has not been published. Our shingle volumes were down about 20% in the quarter, which would represent some recovery of first quarter market share. We continue to expect a flat market for 2015.

Based on a more historical distribution of shipments for the year, we would expect industry volumes for the first half of the year to be closer to 50% of full-year demand.

As a result, we anticipate second quarter industry volumes to be up about 5% to 15% and therefore we would expect Owens Corning’s volumes to be up a bit more as we trailed the market in the second quarter of 2014. During the first quarter, the market environment was constructive as evidenced by limited winter discounting.

Compared to last year, prices were down mid-single digits, primarily as a result of competitive actions taken in 2014. There were some sequential price movements as we made some competitive adjustments early in the first quarter. Prices have since been stable and we have announced a price increase effective May 1.

We continue to see asphalt deflation as a constructive way to improve our margins later in the year. Asphalt cost deflation has largely tracked with expectations, although price declines flattened somewhat in April with increased paving demand.

We expect to see some asphalt benefit in our financial results in the second quarter with the bulk of the impact in the second half of 2015. We continue to estimate that this could translate into asphalt deflation of over $50 million in 2015 based on the current outlook for crude prices.

Higher sales volumes combined with higher production volumes and some asphalt deflation would position the business to deliver second quarter EBIT margins similar to last year. Now let me turn your attention to slide 11.

In the first quarter under a previously announced share repurchase program, we repurchased about 340,000 shares of the company’s common stock for $13 million at an average price of $39.21. As of March 31, 7.4 million shares remain available for repurchase under the company’s current authorization.

As we balance our priorities for the future deployment of our free cash flow, both dividends and stock repurchases will be important mechanisms to return capital to shareholders. Our current market outlook is for continued growth in U.S. housing starts and moderate global industrial production growth. Expectations for 2015 U.S.

housing starts range between 1.1 million and 1.2 million units. Now please turn to slide 12 where I provide other financial guidance for the year. We continue to expect full year corporate expenses to be in the range of $120 million to $130 million. Capital spending will be about $380 million.

This includes an additional $25 million related to the construction of our mineral wool plant. Depreciation and amortization expense is expected to be about $310 million. Interest expense is expected to be about $110 million. Our $2.2 billion U.S. tax NOL will significantly offset cash taxes for some time to come.

As a result of our tax NOL and other tax planning initiatives, we expect our 2015 cash tax rate to be approximately 10% to 12% of adjusted pretax earnings. Our 2015 adjusted effective tax rate is expected to be approximately 30% to 32% of adjusted pretax earnings. Thank you and I will now hand the call back to Mike.

Mike?.

Thank you, Michael. Owens Corning is a better company when all three businesses are making meaningful contributions to our financial results. Both Insulation and Composites showed strong improvement in the first quarter and contributed materially to our performance, continuing their momentum from 2014.

Both businesses should continue to benefit from growth in U.S. housing starts and global industrial production as the year progresses. We also believe Roofing is positioned to deliver improved performance for the remainder of the year. With that, I would like to turn the call over to Thierry, who will lead us in the question-and-answer session.

Thierry?.

Thank you, Mike. Mike, we are now ready to begin the Q&A session..

Yes, sir. Thank you. [Operator Instructions] First we have Stephen Kim of Barclays. Please go ahead..

Hey, guys. Congratulations on a strong quarter..

Thank you, Stephen..

I wanted to start off – let’s start off with the roofing. Obviously, you gave a lot of detail and we are hearing some very positive things in the industry not least of which is the fact that you’ve seen pricing behavior as you head into the second quarter be much better, not just on your account, but also across the board.

I guess my first question is sort of just a general question. Why do you think that you are seeing a more sort of, let’s say, defensive posture from the manufacturers in terms of sort of protecting their pricing and margins this year versus prior? And let me just throw out a possibility.

One of the things we’ve heard is that perhaps your margins are as much as 1,000 basis points better than your peers and so – your smaller peers, particularly, and so as your margin sort of get into the low teens, it sort of causes the smaller players to sort of scrape along the bottom and maybe that’s what sort of driving it.

Can you just sort of opine on that a little bit?.

Sure. I think the dynamic in the first quarter, which I think Michael spoke to at length, was a more constructive environment than what we’ve seen in the last couple of years where there was very less of discounting and a big inventory build.

I think the inventory build from our perspective is that manufacturer did not serve us well as we had to bring a lot of production into the early part of the year in order to service that and then we had kind of weak demand through the – in two and three quarters.

I think you’ve heard discussions from some of our customers in the industry talking about it didn’t necessarily serve them well and then it created a lot of inventory out in the channel and it was very difficult for them through the year to understand kind of where retail pricing is or where the pricing of the product should be in the marketplace.

So, I think there were a lot of alignments in the second half of the year that many of the participants were unhappy with the level of profitability and level of performance both on the manufacturing side as well as the distribution side.

And from a manufacturer’s perspective, we didn’t really have the economics coming into the early part of this year to offer discounts. I mean we limped our way out of last year with margins that didn’t look like the kind of margins we’ve grown accustomed to.

And we certainly were hoping that we could get through the first part of this year with a little bit better pricing environment and then maybe use some of the asphalt deflation as a way to repair our margins, which obviously were under pressure here in the first quarter.

The theory that – there are some advantage on Owens Corning as a manufacturer in the marketplace. It would be hard for me to try to quantify that for you.

I would say, we believe we have very good brands and very good products and that we believe that our products are able to be sold at a price premium than some of the other manufacturers in the industry.

We also believe we have very good manufacturing economics and very good material science, which allows us to compose a shingle at very competitive costs, potentially costs that are more competitive than some of the other players in the industry.

So you can get a little bit of higher price and you have a little bit of lower cost that’s obviously going to put even more margin pressure on some of our competitors.

So that would be our intention in how we run the business is to build competitive advantage on the product side, both in terms of the prices we can achieve, as well as the cost we manufacture and that should put some margin stability in our business.

So, hopefully, that is what we are seeing, but we can’t know for sure that in fact that’s the dynamic that’s driving the current performance..

The next question we have comes from George Staphos, Bank of America Merrill Lynch..

Thanks. Hi, everyone. Good morning..

Good morning, George..

Congratulations on the quarter and thanks for all the details. Maybe following up on that question, recognizing that there is good logic and rationale to understand why manufacturers would like to see margins improve in the roofing business.

Mike, does there come a shipment threshold where maybe you start worrying about the asphalt deflation being able to repair margins and then perhaps being dealt back.

I know you are expecting, from your commentary, shipments would be up 5% to 15% in the second quarter with something materially below that begin to, in your view, question whether you could repair margins to the degree.

And kind of the question behind the question, should we worry at all about what’s been somewhat of a weak start to housing starts, hopefully, most of that being related weather-related, but nonetheless it is what it is, somehow feeding back and to repair, remodel and roofing over the course of the year? Thank you and good luck in the quarter..

Thank you. So kind of the overarching assumption in our discussion today about the roofing business is that we are expecting the overall year in terms of manufacturer shipments to be about flat to last year.

And we do I think a pretty good job in our investor relations materials laying out the composition of the roofing market, the portion that’s new construction, the portion that’s reroof and remodel, and then the portion that’s been driven by major storms.

And the way you get to the assumption of an overall flat market would be for new construction to be up slightly, which is less than 20% of the overall market, the storm market about flat to last year, which was about an average or unremarkable type year for storms.

And then you need that core repair and remodel market to be about flat or maybe down just a touch, offset by a little bit of growth in new construction. So we are not really forecasting strong growth in any of the pieces of the market and we think the overall market goes sideways.

Now if that’s the case and we don’t have any indication today that causes to believe that’s not a good assumption, most of what we are hearing from our customers is that they are out the door sales either through the first quarter, through the first 15 weeks of the year including kind of what we’ve seen through April is that they are flat to up a bit versus last year.

So we think our customers are selling through at a reasonable rate. Michael went through some math that said it’s not unusual for us to see shipments in the first quarter that represent about 25% of the overall year’s demand. And that typically when that happened, you saw first half shipments that were kind of 53% of the overall year’s demand.

That’s not the profile we’ve seen in the last three years. So we take ‘11, ‘12, ‘13 I am sorry ‘12, ‘13, ‘14 and get a different result where those numbers were closer to 35% and 60%. But if you go to the period 2001 to 2011, you get numbers more in 25% first quarter and 53% first half.

If we were that kind of profile, we would expect to see a volume uptick in the second quarter. We would expect to see our volumes track that uptick and I think that would be consistent with the assumption that the overall market is flat for the full year.

I think if we were to see volumes flat quarter-on-quarter, you could probably get to still supporting I believe for the overall markets flat for the full year because that would say you’ve now shipped a quarter of the year in the first year, a quarter of the year in the second quarter and then you still have half the year to go in the second half of the year.

We’ve seen some years where that’s the profile. I think we probably feel more confident coming out of the second quarter if in fact we saw some growth. I can tell you last year we saw our business really fall off a cliff at the end of the first quarter. We had shipped a lot of volume into the channels by the end of March.

The channel was pretty saturated and we started the second quarter very weak. We’ve seen a different profile because of the early start to the quarter this year. In that we kind of came out of the first quarter and continued at about the same shipping rates in April that we were at in March.

So we don’t think we’ve seen any early indications that could cause us to believe that overall market is weaker than what we expect..

Mike, it’s very helpful. Thank you very much..

Thank you..

Next we have Mike Wood of Macquarie..

Hi, good afternoon.

You talked, Mike, about the roofing inventory being relatively low referring obviously to the lack of the incentive the distributors had to pre-buy, but how are the manufacturers such as yourself building inventory ahead of the uncertainty as to when the demand from the distributors actually come given the unusual cadence this year relative to last year?.

Yeah. We talked about this a fair amount on the fourth quarter call that we were coming into the year cautious about first quarter volumes and in fact ended up shipping even less than what we had anticipated. So on the fourth quarter call, we had set we thought the market would be down as much as 25% and then we would be down double digits or more.

On today’s call, we said we think the market was down more than 25%. Our volumes were down about 20% on the asphalt shingle side. So we had a positive gap to the market we believe.

Although Michael did mentioned in his comments that we have not gotten the official report from the Roofing Manufacturers Association, so we are working off a little bit more qualitative data on this quarter than we traditionally do and we relied a bit on some of the analyst channel checks and other things as well as their own competitive intelligence to believe that we think we are right that the market shipments were down 25% or more.

So all of that kind of gave us a bit of a positive gap which restored our position in the market, but I would say overall the quarter was still a little bit weaker in terms of shipments than we had expected when we were on the call in February. Net-net, we say that’s a good thing.

Because of our perspective on this coming into the year, we had planned lower production levels in the first quarter, so production in the first quarter for us was well below 2014 levels. So our inventory position is improved versus where we would have been had we produced at the levels we were out last year.

That gets us quickly through layers of asphalt cost, so we can start getting more quickly to maybe some lower cost asphalt but that’s still going to be on a lag.

It takes two to four months for oil prices to get through the refinery, it takes two or three months for asphalt cost to get through our supply chain and get to the market and show up in our economics.

So we are not really looking at significantly improved economics in the second quarter from an asphalt cost point of view, but we are going to get some improvement by taking production levels up a bit because we were pretty disappointed from a production point of view in the first quarter..

Understood, but there is no issue. You are ramping up production to meet that potential pre-buy ahead of the nay demand or to meet price increase.

I guess that’s what I am really just trying to ask, if there is issues in production? If there is a thing like in the math?.

Where we sit today we feel comfortable. We’ve got the flexibility in both our inventory position and our productive capacity to be able to meet surges in demand. I think probably the one outlier on that would be potentially if you saw some big storms. That tends to stress regional assets.

So while on making comments nationally, then I think broadly or probably correct for us. And I would say probably for most of the other manufacturers, you do see if you have a concentration of storms in a specific geography that might stress one region’s ability to service demand.

But generally I would say that it’s still a free supply type environment in terms of capacity..

Next we have Kathryn Thompson of Thompson Research Group..

Hi, thank you for taking my questions today. We’re going to switch from roofing over to composites. First, it is a two-part question.

First, could give you a little bit more color on the higher mix of specialty glass in quarter and why you will see this dissipate as we progress into 2015? And then the second leg of the composite question is how much of the new European Chinese composite imports helped in the quarter versus just core improvement in the European market in it of itself.

Thank you..

Hi, Kathryn, it’s Michael. I’ll take that question. So we called out actually that there were a fair amount of specialty glass sales in the quarter. I actually gave some specifics to that that was in the quarter itself on a year-on-year basis, it added about $12 million of EBIT.

Some of our specialty glass volumes and some of our specialty glass sales can be kind of lumpy throughout the year. And this specific campaign ramped up late last year that the bulk of the sales were in the first quarter this year and it will ramp down in April. That said, we are pleased with the quarter overall.

We’ve made a lot of progress on a number of fronts both from a manufacturing point of view, volumes in general. So volumes in general across the regions and across our various lines of business were pretty good.

Save the step that we pointed out in the fourth quarter that we expected to be a little bit weak which was roofing volumes obviously were a bit weak in the first quarter and then we said that oil and gas demand was going to be a bit weak as well.

And then your second quarter was related to the anti-dumping in Europe and specifically how that’s helping us.

I don’t think I can quantify it specifically for you, but I think clearly the Euro versus the dollar and the Euro versus the RMB is helpful for our composites business in Europe and then the anti-dumpiness is helpful as well, but I can’t quantify for you specifically..

Okay, thank you very much..

Next we have Keith Hughes of SunTrust..

Yes. My question is in insulation.

Can you talk about the pricing increases in insulation in residential versus your industrial and commercial, was there variation there?.

Yeah, thanks Keith. We had a price increase kind of late 2014, early 2015. It spread across most of our fiberglass product lines. There was a little bit different levels of price announced in the residential markets where the price increases that were announced where kind of in the mid-teens.

The industrial type markets tend to damp a little bit lower price announcements. In the fourth quarter call, which was in the middle of February, we had some visibility to how that was progressing and we characterized it at that time as we were seeing pretty good realization of the price increases that we had announced in the first quarter.

I would say that our view on that is pretty much unchanged from where we were 90 days ago..

The number was 2% on round numbers 2% struck me as kind of low given what seems to be going out of residential insulation and you breakout what the price change was in residential insulation in the first quarter..

Yes. So if I understand your math, we talked about the primary driver of improvement for the quarter and insulation was price, insulation improved by about $6 million of EBIT. So if you take that $6 million of EBIT on the entire business, you’re going to get a number like 2%.

There is a lot of moving pieces inside that Insulation segment, so we have geographic mix, we’ve got obviously Canada, is an important business for us. Asia is an important business for us.

We also have some non-fiber glass products where we make some extruded polystyrene foam products, which were not included in some of the price announcements that we had made in the early part of this year.

So, in total I think you have to look across the whole portfolio of businesses inside that segment, as well as the timing of the increases and I think probably doing the math the way you did it and I understand how you come to that conclusion and conclusion that we only got two points of prices, probably on the low end where we would think pricing is in the market today..

Garik Shmois, Longbow Research..

Just a follow-up question on Composites and the mix benefit in the quarter. And I think it implies that there is an additional $8 million of favorable mix in addition to the specialty glass benefit.

Can you talk about how we should think about mix as it relates to your improved Composites guidance for the year, specifically how much additional mix is baked in?.

Yes. That is a good question Garik. So, I spoke specifically around the $12 million of mix related to specialty glass and if you take a look at our queue for the first quarter and pick it apart you will see that in total there is about $20 million coming from favorable mix.

Now, if you think about our portfolio of business, clearly roofing sales or glass that goes into roofing is down pretty significantly in the first quarter, that’s a lower calorie business for us.

And then – but overall volumes are up for the quarter and so we are actually selling more higher calorie glass and less lower calorie glass both in the first quarter.

And excluding the specialty glass that I called out we probably expect some of that trend to continue for the balance of the year, but we haven’t given specific guidance for the year on mix..

Okay thanks. And then just quickly on Insulation.

The mineral wool capacity addition, can you provide a little bit of context on how much additional capacity this might provide for you moving forward?.

Let me make one additional comment on Michael’s answer to your question about Composites and then I will talk for a moment about mineral wool. We did upgrade our outlook for Composites today.

We had previously said that that we thought the business would track about the same amount of improvement versus prior year on a constant currency basis and then would have a currency headwind today. We upgraded the amount of improvement.

We also increased the amount of currency headwind to produce some $45 million net improvement year-over-year in the guidance we gave today.

Big part of that upgrade is exactly what Michael spoke to in his answer to your question, which is we came into the year pretty certain that we were going to have some volume headwinds in the roofing side of the business, as well as the oil and gas side in the U.S.

I think we came out of the quarter feeling pretty good about what we have seen in terms of demand in the other parts of the business that we actually did show growth in tonnage or dollars in the first quarter and I think that’s really where the improved dollars come from.

So we are pretty happy right now with where the composites demand is relative to where we think it could have been given a couple of the headwinds we have and that’s really the primary driver of the upgrade in our outlook there.

Related to the mineral wool capacity, we are building a scale facility here so with the board’s approval of the expenditure we will build a facility that gives us good capacity there are loses to cover. In different parts of the market we see there is a decent amount of opportunity out there in the commercial construction market.

There is some opportunity in the residential construction market, although not as big, but growing at a reasonable pace and then there is also some opportunity in the industrial type markets, where we also participate in fiberglass.

So, we are going to build an asset that gives us the flexibility to be able to have some capacity across those markets and because of that and because of our foot print in those market, the capacity that we put in will more than double what we have in the mineral fiber market..

Philip Ng of Jefferies..

Good morning.

What’s the early rate on the May roofing price increase and what kind of feedback are you getting from the distributors, are you seeing pretty good support from industry overall?.

Yeah. First of all it is generally our practice not to kind of talk perspectively or speculate on what we are seeing in terms of price increases. So, I’m not going to be able to answer your question directly.

The one thing I would say is there has been a fair number of price increase announcements on the part of the distributors, who we sell to and I think generally it’s viewed in the industry that if you have price environment where prices are going up that’s good for our customers and it’s good for us.

Whether in fact you know that’s something we are able to achieve here in the second quarter, something to be seen..

Okay. That’s helpful.

The reason why asked you is when I look at your 2Q guidance for flattish type roofing margin year-over-year, it seems fairly conservative because if your volumes are up 5 to mid-teens and you got to lower some benefit from lower asphalt, what’s the missing piece because if you are getting any type of pricing it just seems somewhat conservative, but just want to figure it out, get a better feel for what the I guess assets are?.

Well, I mean just to make sure that we are clear in our guidance on this. In Michael’s comments he said he expected that second quarter roofing margins would be similar to the roofing margins we produced in the second quarter of last year.

In the second quarter of last year roofing margins were quite a bit better than the roofing margins we just delivered in the first quarter. So the first we here we were kind of mid-single digits to last year in the second quarter we were low teens.

We were expecting that better production, shipping a little bit more volume and maybe starting to see a little bit of asphalt cost deflation would be the steps that would help us get there plus potentially more positive price environment..

Okay that’s helpful. Thanks..

Dennis McGill of Zelman & Associates.

Hi thank you guys.

First question just wanted to be on Insulation, can you just walk through what’s happening on the home center channel right now, I know you won some business at Lowes and maybe help us understand where you are in the load end of that business and if there is any offset to expect through the year on the other side from Home Depot?.

Yeah. The – I don’t remember which call we talked a little bit about home center, so let me give you an update on that.

What I would say is probably 5 years or 6 years ago, I don’t remember the exact date, we really saw a big trend in the home center channel to kind of go single brand and at that point in time, we were a 100% in our roofing business with Lowes and we were a 100% in our insulation business with Home Depot and our competitors obviously had the Home Depot roofing business and our competitors had the Lowes insulation business.

I think Home Depot probably has led a bit of a move away from that strategy and towards a multi-brand strategy, so we went through wind reviews with most of major home centers last year where they looked at all the manufacturers. What came out of that is we did see some insulation volume at Home Depot go to our competition.

We also did pick-up some locations at Lowes. So, we now have both those home centers with Owens Corning insulation in their stores. We have not commented on kind of what the net of that was, but I think what you see now is both of them have us in and a secondary brand or another brand in the home center.

We really experienced kind of the same thing on the roofing side of the business as well, which is we had had a 100% of Lowes business. They’ve now brought one of our competitors in and so they are now multi-line in the roofing business and we were able to get better business at Home Depot and we’ve got some Home Depot stores now.

So, I think it was a tense time obviously for us, these are big and very, very important customers to us and we believe we enjoy very good relationships with both of them. We also think we do a very good job in the Home Center channel of supporting them at the store level.

So, we weren’t surprised that we were given the opportunity to do business with both of them and we would be able to win business with both of them. So, we were very happy with the outcome and I think we’ve gotten through to a fairly stable result..

That’s very helpful.

I can just, if you don’t want to speak to the net benefit are both retails chains set now with the new allocations?.

Yeah, I mean this is, you work through this, you tend to work on a – at least in the building materials category you tend to work on a regional basis with the home center, so they will give you a region, all of that has been identified.

The regions that we lost, you know we’re seeing our volumes come out of those regions where we are no longer shipping those stores of the regions that we won. We are seeing that we are beginning to ship into those. So, I think that the timing of either benefit or loss for us will for the most part offset as we go through the year..

Next we have James Armstrong of Vertical Research Partners..

Good morning. Thanks for taking my question.

Could you talk a little bit more about the specialty glass in composites? What end markets are you seeing the most strength from?.

Yeah, thanks, James, it’s Michael. The specialty glass business for us, I mean – so it is a global business and represented in the Americas, Europe, and China, or Asia-Pacific. One of the area that’s been strong this year versus last year is wind.

And so this type of glass tends to be high-strength and have different performance characteristics and go into more sophisticated applications than you’d see in some of our lower-priced glass. But it’s global and we’ve seen some strength for specialty glass really kind of evenly across the entire globe..

Okay..

Mike, anything you want to add?.

I guess the only thing I would add is, I mean, I think Michael characterized it as these tend to be glass formulation driven, so we make a lot of different product forms, but then occasionally we will have a customer in the end market that will come to us and say, can you actually change the formulation of the glass and create a glass chemistry that gives them different performance characteristics normally around strength.

And because of that, when you change the glass formulation in a melter, you go through a transition period where you don’t make very good glass for a period of time, you were on a bit of a campaign where you then make glass that meets the specification and then you have to transition back out of that which is why this business, when we have the opportunity to make some speciality glasses for a customer, it tends to be a very good opportunity from a profitability point of view.

But operationally, we think we are advantaged in this market because we have the largest fleet of melters in the world, we have the ability to kind of reassign assets.

And so, we tend to be very open in the marketplace that if you have a need and we could make you a glass, we would like to have the opportunity to see if we can make something that would fit your needs.

And some of these are very long cycle cells where we go two or three years working on a project and eventually we have a couple or three months of production. So we knew coming into the year that we were going to have good speciality glass performance in the first quarter.

The fact that we produced this result in the first quarter had really no bearing or impact on upgrading our guidance. This was included in the way we saw the year coming into the year.

It’s really the other things we saw in the business in the first quarter in terms of volumes, operating performance, pricing, that cause us to get more optimistic about our outlook for composites..

Okay. That helps.

With the 2- to 3-year lead times on these projects, as we go into the out years are there other similar projects that you have in the pipeline?.

We would always have a group of projects in the pipeline based on the set of customers that we talk to in these markets. A lot of times, if it’s another place where you might see these types of products go would be, say, military.

A lot of it would come back to does that customer win the project and then they are going to turn on and come back to us and say, okay, can you make glass that would help us fulfill that. So, sometimes we are working with a customer who is also in a long cycle cell.

So even if we have a list of projects that we are working on that might provide an opportunity for us. We don’t know whether those are real opportunities until our customer is successful in their long cycle cells.

So we called it out of the numbers today because we didn’t want the rate of improvement of the business to be at all misleading and in the second quarter Michael said that we think we will comp sequentially down a bit, but we are quite optimistic about the quarter because I think if you pull speciality out of the first quarter, we would expect to comp sequentially positive on a little bit better volume.

So the underlying momentum in the business is still quite good as we head into the second quarter..

John Baugh of Stifel.

Thank you and good morning. I just wanted to confirm on roofing, you’re talking about $15 million deflation in asphalt, I believe, for the year.

Can you refresh our memory roughly what the asphalt spend in 2014 was? And I know you don’t want to forecast roofing prices, but is there any better view on how that delta between asphalt pricing for the rest of the year may look versus pricing? And what is sort of your oil assumption or asphalt cost assumption going forward? Thank you..

Okay. I’m happy to talk that through. So, really our oil price assumption is no different than where it was kind of 90 days ago on the fourth quarter call. The forward curve for oil has not moved appreciably.

And we’ve been giving our guidance and working off of the forward curve for oil assuming that those oil prices will be the price that the refiner will experience and that that will, therefore, drive asphalt prices.

We have a lot of data as you might imagine that goes back multiple years or decades on looking at the different relationships between the price we pay for asphalt and the price of oil based on different conditions, what was the condition of the gasoline market or the paving market or the other potential end-use markets for the refiner and how did that influence that ratio of asphalt cost to oil cost.

Clearly, coming out of the latter part of last year, asphalt was quite inflated relative to the underlying oil prices and we expected that asphalt would start to trade in against oil.

We had not really began to see asphalt cost fall much even through the fourth quarter last year, it was really starting at the end of last year that we started to see some prices from the refiner that indicated oil prices are going to come through our economics. They are not working their way through our supply chain.

Our supply chain includes tanks of hot asphalts, we then manufacture shingles from that asphalt, we then carry a finished goods inventory of shingles and then we ship them. So it’s not until we ship an invoice that we would start to see it come through our cost of goods. So this part of our business is a fairly long supply chain.

We have a second piece of our business where we also process and sell roofing asphalt to other roofing manufacturers. Now that business tend to be very much of a processing cost or cost plus kind of business where the changes in the economics of asphalt get translated directly through to the change in price that we sell the processed asphalt.

And as a result of that, we don’t really put that into our price calculations that would really skew our price calculation, that’s much more of a processing and pass through business. In terms of our overall cost of goods, we have not disclosed on that.

I think I can give you a little bit of help, in today’s presentation on the roofing business slide, we breakout which portion of the business is commercial and industrial versus which portion of the business is residential.

That 16% that’s commercial and industrial that tends to be the part of the business that’s much more us processing asphalt and selling it through the market.

So even though that might show up as being a portion of our asphalt purchases, we would say asphalt deflation or inflation is – we’re relatively insulated from inflation or deflation in that portion of the business. The remaining 84% is really our shingle and our accessories business.

So a sizable portion of that remaining 84% would be asphalt shingles. Our real asphalt spend that would be driven off of this would be whatever portion of that 84% is our asphalt cost of goods. But we have not disclosed on what percent of our overall cost of goods is asphalt..

Mike, this is Thierry, we have time for one more question..

Yes, sir. That question will come from Al Kaschalk of Wedbush Securities..

Good morning. I got a couple of clean up questions actually.

On the composites side, can you talk a little bit about the benefit in the quarter that came from or for the year that have come from the closed plants and in particular the volume? And then I would like to [indiscernible] the discussion exclude the specialty sales of specialty glass, if we could?.

So, Al is the question, what’s the benefit that’s going to come from the closure of the plant in Japan and the one in Canada?.

Well, throughout the commentary has been that you’ve benefited from manufacturing and operational improvements and I believe that included last year some closed plants.

So I don’t know if you can articulate it, I was just trying to understand the benefit from an operational standpoint that you are getting that we should continue to see because if we look at what you did in the quarter and your guidance, I think it implies closer to more of a 9%, 10% type of segment margin.

I’m just trying to get the components of that..

Yeah, Al, this is Mike. Let me try to put some color around that. I think we characterized – obviously, we doubled the EBIT in the quarter, so we had a significant pickup from $27 million of EBIT last year to $60 million of EBIT this year.

If you add back the specialty or subtract out the specialty, we still went from kind of $27 million to about $50 million. So you’ve got more than $20 million of improvement quarter-on-quarter on relatively flat volumes.

Some of that improvement is coming from the fact that we have a little bit sweeter mix and I think Michael went into a good amount of detail on that, which is our volumes were down in the end market for roofing and that tends to be a lower margin simpler product line and we are able to find enough business in the market to offset that decline and keep volume growth in the quarter in some of our more heavily engineered products where we can get better value and better margins.

So, I think, if you are looking for reconciliation kind of on that, $20 million of improvement from last year to this year, excluding specialty, I think a portion of it is price and a little bit better mix in the volume we did sell and then a sizable portion of the remainder is, are just manufacturing at lower costs and are operating better.

So, you’re really now seeing, I think in material ways, the benefit of all the cost restructuring we are doing coming through in sustainable margin structure for the business and really I think a step change in the sustainable margin structure of the business..

That’s very helpful. That helps.

And then, finally, on the mineral wool side, is a fairly well bracketed in terms of the costs of this plant and getting this up and running? I think it was – you indicated it increased $25 million, I’m not sure that’s the size of the spent for that facility, but just talk about maybe a little bit of the -- I won’t say complications, but what needs to get done? Is this a simple facility or is it a little bit more complicated?.

Thanks. So we disclosed today that the overall cost of the facility will be about $90 million and that it would come into operation in the second half of next year. In our CapEx guidance for this year, we increased our guidance for the amount of capital we will deploy this year by about $25 million, which represents $25 million of the $90 million.

So, in order to get the project to be available for production and sales in the second half of next year, we will now begin spending money on site preparation and improvements and some long lead items around equipment and we will see – we think about $25 million of that spend this year, which will leave the balance or about $65 million in our outlook for next year.

This is the first mineral wool facility that Owens Corning has built, so I’m not going to underestimate some of the potential challenges associated with this.

Although, I would say, over the course of the last 10 years, since 2006, we built the new composites facility in China, we built a significant increased capacity in Russia, we are in the process of building a non-wovens facility in North Carolina, we’ve done a lot of reconfiguration of our insulation assets to respond to the downturn.

So from an engineering and construction point of view, I think we do a reasonably good job and we tend to hit our estimates. So I am not terribly concerned on the capital side, I think we can build it for this amount of money.

You always are focused and it’s very important that the start-up goes well and that you can get the equipment to run effectively.

If we were not able to do that, that obviously would be would be a headwind in the second half of next year if we had a facility that had an opportunity to ship product and we weren’t able to achieve the production economics we expect. We will have a big team of people very focused on making sure that we do that effectively.

So it is a risk like any other capacity expansion, but it’s growth, and one of the things that we’re very proud of and what we have been able to achieve over the last five years is a lot of the capital that we spent on behalf of our shareholders went into some very cash intensive restructurings in Europe, it went into some capacity expansions in composites that offset melters that were not competitive that we had shut down.

So we did a lot of balance sheet work and investment to get our operations more effective. We think we are heading out of that phase. Our EcoTouch conversion in insulation was large done. Our low cost conversion in composites is largely done.

We think the cash restructuring you can see has really come down to a very small number in our adjusted numbers and we are now actually starting to deploy capital towards places we can grow like non-wovens and like mineral fibers.

So we think it’s a positive mix because we are actually changing the EBIT generating footprint of our company by giving more top line opportunity and more bottom line opportunity to our investors. Thierry was that – I think that was the last question. So maybe I will make a few summary comments and then I will let you close the call..

Sure. Thank you..

So, let me just say thank you again for joining us on today’s call. Obviously, in my opening comments, I said, I thought we were off to a good start in 2015, we feel good about the underlying momentum in our composites and our insulation business. I think both of them are beginning to look like the kinds of businesses we knew that they could be.

I think probably over the course of the last two or three years, it’s been easier to see that progression in insulation kind of quarter-on-quarter as we put together 15 consecutive quarters. I think the jury was maybe a bit more out on composites a couple of years ago.

We were very focused in our execution, believe that we could get to low cost, that we could innovate and bring some new products to the marketplace, believe that we could extend some competitive advantage. And I think the quarter we just put up is a bit of a down payment on our belief in that strategy and what we think that business can be for us.

So it’s heartening for the team here to see the progress in composites and see this quarter come through. So really now our two big glass businesses that benefit from volume growth, operating leverage, and a positive price environment.

We’re really seeing those two businesses side-by-side with very, very similar dynamics, decent growth in demand, providing operating leverage, providing a positive price environment and really underpinning strong performance across the company. We’ve always loved our roofing business.

For a number of years, it was the game in town at Owens Corning where we were not making money in insulation or composites, roofing was the business that got all the attention. I think through the course of the last year when we had a challenging year in roofing, we saw the portfolio balance out.

On the fourth quarter call, I said, I actually think that with the portfolio balancing out, we now coming into 2015 with the believes that maybe we have an opportunity to see all of our businesses improve.

Certainly, as we come out of this first quarter, we would expect to see the businesses improving from here to the end of the year with roofing having better volume opportunities ahead of it and with continued improvement in terms of composites and insulation volumes.

So, we feel like we started the year right, one quarter obviously does not make a year, and the company and the team have a lot of work to do to make sure that we deliver a great year, but we were pleased to be out of the gates the way we expected and we would probably talking to you again on the second quarter call.

Thierry, any closing comments?.

Thank you, Mike, and thank you everybody for joining us for today call. And Mike, the operator, we are ready to close the call now..

Thank you, sir, and to the rest of the management team for your time today. The conference call is now concluded. At this time, you may disconnect your lines. Thank you and take care everyone..