[Started Abruptly] Please note, this event is being recorded. I would now like to turn the conference over to Thierry Denis, Vice President of Investor Relations. Please go ahead..

Thank you, and good morning, everyone. Thank you for taking the time to join us for today’s conference call and review of our business results for the First Quarter 2019. Joining us today are Brian Chambers, Owens Corning’s Chief Executive Officer; and Michael McMurray, Chief Financial Officer.

Following our presentation this morning, we will open this one hour call to your questions. In order to accommodate as many call participants as possible, please limit yourselves to one question only. Earlier this morning, we issued a news release and filed a 10-Q that detailed our financial results for the first quarter 2019.

For the purposes of our discussion today, we have prepared presentation slides that summarize our performance and results, and we will 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 homepage. A transcript and recording of this call and the supporting slides will be available on our website for future reference. Please reference slide two 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, the presentation slides and today’s remarks contain non-GAAP financial measures. Explanation to reconciliations of non-GAAP to GAAP measures may be found in the text and financial tables of our earnings press release and presentation, both of which are available 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. Consistent with our historical practice, we have excluded certain items that we believe are not representative of our ongoing operations when calculating adjusted EBIT and adjusted earnings.

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.

We also use free cash flow and the free cash flow conversion of adjusted earnings as measures helpful to investors to evaluate the company’s ability to generate cash and utilize that cash to pursue opportunities or enhance shareholder value. For those of you following along with our slide presentation, we will begin on slide four.

And now, opening remarks from our CEO, Brian Chambers, who will be followed by Michael McMurray, CFO and our Q&A session.

Brian?.

Thank you, Thierry, and good morning, everyone. I’d like to begin my comments by recognizing the work and contributions of Mike Thaman. For almost two decades, first as CFO and then CEO, Mike has done an exceptional job leading our company. I have had the privilege of working with him throughout my career at Owens Corning.

Under his leadership, we built a safer, more sustainable, more global and more profitable company with three market leading businesses. I want to thank Mike for all he has done to make Owens Corning a better company and I look forward to continuing to work with him as Executive Chairman of our Board.

I am honored to have the opportunity to lead Owens Corning as the company’s eighth CEO and I am excited about what our company can achieve in the years to come. We have a strong team committed to the success of our customers, our shareholders and each other.

Over my 15 year career with the company, we have worked together to dramatically strengthen our earnings potential for a broader, more global set of businesses. When I started, we were a company much more dependent on earnings generated from U.S. residential new construction.

Today, we are more profitable, more financially resilient company, generating financial performance from a variety of product lines and markets, while still positioning us to benefit from an improving U.S. new construction market.

In 2006, at the height of the last housing cycle, our North American residential fiberglass insulation business accounted for a little over 40% of Owens Corning’s adjusted EBITDA. In 2018, our company produced almost 60% more EBITDA than 2006 with more than 85% of our total earnings generated outside of North American residential fiberglass.

Through our investments in roofing, composites and insulation, we are building a more valuable product portfolio, providing new growth opportunities and generating additional value for our shareholders. In roofing, we are expanding components and strengthening our unique duration product line.

In composites, we are creating customized glass non-woven solutions and improving our low delivered cost position in glass reinforcements. And in insulation, we are extending the global reach of our business with new product platforms that span across temperature ranges and applications.

Moving forward, we continue to see opportunities to leverage our enterprise capabilities to accelerate organic growth, drive improved operating efficiencies and generate strong free cash flow.

And now, on to our first quarter results where I will begin with safety, our recordable incident rate for the quarter was 0.54 compared with 0.51 in the first quarter of 2018. I am pleased to report that 83% of our sites have remained injury-free this year and 52% of our sites have remained injury-free for 12 or more months.

I am especially proud of the work that our colleagues from recent acquisitions have done around safety, which has resulted in an 85% reduction in injuries.

Our first quarter financial results reflected good operational execution across the company, continued price improvements in both roofing and insulation helped offset weaker demand and inflation, while volume growth and strong manufacturing performance in composites largely offset inflation.

During the quarter, we generated revenues of $1.7 billion, flat to prior year and adjusted EBITDA of $116 million, a decline of $36 million. In insulation, revenues were down slightly, while EBIT decreased to $15 million.

Our technical and other building insulation businesses continued to produce strong results with good commercial manufacturing performance generating volume growth, price gains and productivity. The integration of Paroc continues to go well, opening up growth opportunities in Europe and strengthening our global technical capabilities.

For our North American Residential Fiberglass Insulation business, we continue to gain price through a combination of carryover and our January increase. However, these improvements were more than offset by a weaker demand environment and the production curtailments we discussed during our fourth quarter call.

In composites, revenues were essentially flat to last year and EBIT was down $3 million to $57 million. Our commercial and operational performance is strong with volume growth and productivity largely offsetting inflation.

Our focus to grow in specific end-market applications and improved operating efficiencies help to generate good results in the quarter. In roofing, revenues declined 4% on lower volumes generating EBIT of $74 million, a $23 million decrease versus prior year.

Continued strong price realization helped to offset inflation and lower volumes, which largely tracked our regional markets. EBIT margins were compressed as a result of lower demand and manufacturing economics, but improved throughout the quarter with March performance consistent with our long-term guidance for the business.

Also in the quarter, we successfully launched our new Duration FLEX Shingles, which are engineered to deliver enhanced flexibility and superior performance in harsh weather conditions as compared with standard shingles. Turning to our outlook for the remainder of the year.

In insulation, we continue to expect our technical and other building insulation businesses to grow earnings in 2019, driven [Audio Gap].

… rejoin the question queue and an operator will be around to collect your information once again. We are going to restart our conference call. So I will turn it back over to Thierry Denis to begin the conference..

Thank you, 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 2019. Joining us today are Brian Chambers, Owens Corning’s Chief Executive Officer; and Michael McMurray, Chief Financial Officer.

Following our presentation this morning, we will open this one hour call to your questions. In order to accommodate as many call participants as possible, please limit yourselves to one question only. Earlier this morning, we issued a news release and filed a 10-Q that detailed our financial results for the first quarter 2019.

For the purposes of our discussion today, we have prepared presentation slides that summarize our performance and results, and we will 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 homepage. A transcript and recording of this call and the supporting slides will be available on our website for future reference. Please reference slide two 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, 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 the text and financial tables of our earnings press release and presentation, both of which are available 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. Consistent with our historical practice, we have excluded certain items that we believe are not representative of our ongoing operations when calculating adjusted EBIT and adjusted earnings.

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

We also use free cash flow and the free cash flow conversion of adjusted earnings as measures helpful to investors to evaluate the company’s ability to generate cash and utilize that cash to pursue opportunities or enhance shareholder value. For those of you following along with our slide presentation, we will begin on slide four.

And now, opening remarks from our CEO, Brian Chambers, who will be followed by Michael McMurray, CFO and our Q&A session.

Brian?.

Thank you, Thierry, and good morning, everyone. I’d like to begin my comments by recognizing the work and contributions of Mike Thaman. For almost two decades, first as CFO and then CEO, Mike has done an exceptional job leading our company. I have had the privilege of working with him throughout my career at Owens Corning.

Under his leadership, we built a safer, more sustainable, more global and more profitable company with three market leading businesses. I want to thank Mike for all he has done to make Owens Corning a better company and I look forward to continuing to work with him as Executive Chairman of our Board.

I am honored to have the opportunity to lead Owens Corning as the company’s eighth CEO and I am excited about what our company can achieve in the years to come. We have a strong team committed to the success of our customers, our shareholders and each other.

Over my 15 year career with the company, we worked together to dramatically strengthen our earnings potential for a broader, more global set of businesses. When I started, we were a company much more dependent on earnings generated from U.S. residential new construction.

Today, we are more profitable, more financially resilient company generating financial performance from a variety of product lines and markets, while still positioning us to benefit from an improving U.S. new construction market.

In 2006, at the height of the last housing cycle, our North American Residential Fiberglass Insulation business accounted for a little over 40% of Owens Corning’s adjusted EBITDA. In 2018, our company produced almost 60% more EBITDA than 2006 with more than 85% of our total earnings generated outside of North American Residential Fiberglass.

Through our investments in roofing, composites and insulation, we are building a more valuable product portfolio providing new growth opportunities and generating additional value for our shareholders. In roofing, we are expanding components and strengthening our unique duration product line.

In composites, we are creating customized glass non-woven solutions and improving our low delivered cost position in glass reinforcement. And in insulation, we are extending the global reach of our business with new product platforms that span across temperature ranges and applications.

Moving forward, we continue to see opportunities to leverage our enterprise capabilities to accelerate organic growth, drive improved operating efficiencies and generate strong free cash flow.

And now, on to our first quarter results where I will begin with safety, our recordable incident rate for the quarter was 0.54, compared with 0.51 in the first quarter of 2018. I am pleased to report that 83% of our sites have remained injury-free this year and 52% of our sites have remained injury-free for 12 or more months.

I am especially proud of the work that our colleagues from recent acquisitions have done around safety, which has resulted in an 85% reduction in injuries.

Our first quarter financial results reflected good operational execution across the company, continued price improvements in both roofing and insulation helped offset weaker demand and inflation, while volume growth and strong manufacturing performance in composites largely offset inflation.

During the quarter, we generated revenues of $1.7 billion, flat to prior year and adjusted EBIT of $116 million, a decline of $36 million. In insulation, revenues were down slightly, while EBIT decreased to $15 million.

Our technical and other building insulation businesses continued to produce strong results, with good commercial manufacturing performance generating volume growth, price gains and productivity. The integration of Paroc continues to go well, opening up growth opportunities in Europe and strengthening our global technical capabilities.

For our North American Residential Fiberglass Insulation business, we continue to gain price through a combination of carryover in our January increase. However, these improvements were more than offset by a weaker demand environment and the production curtailments we discussed during our fourth quarter call.

In composites, revenues were essentially flat to last year and EBIT was down $3 million to $57 million. Our commercial and operational performance was strong, with volume growth and productivity largely offsetting inflation.

Our focus to grow in specific end market applications and improved operating efficiencies help to generate good results in the quarter. In roofing, revenues declined 4% on lower volumes, generating EBIT of $74 million, a $23 million decrease versus prior year.

Continued strong price realization helped to offset inflation and lower volumes, which largely tracked our regional markets. EBIT margins were compressed as a result of lower demand and manufacturing economics, but improved throughout the quarter with March performance consistent with our long-term guidance for the business.

Also in the quarter, we successfully launched our new Duration FLEX shingles which are engineered to deliver enhanced flexibility and superior performance in harsh weather conditions as compared with standard shingles. Turning to our outlook for the remainder of the year.

In insulation, we continue to expect our technical and other building insulation businesses to grow earnings in 2019, driven by improved operating performance and growth in global construction and industrial insulation markets.

In our North American Residential Fiberglass business, fourth quarter weakness in housing starts has persisted through the first quarter, leading to a weaker first half demand for our business. For 2019, we now expect positive pricing to be more than offset by lower volumes and production curtailments.

Looking forward, we are seeing positive indicators, including lower interest rates and more favorable builder reports, which suggest that housing starts should strengthen throughout the remainder of the year. This combined with seasonal increases should create an improved demand environment for insulation in the second half and into 2020.

In composites, we continue to expect growth in the glass fiber market consistent with global industrial production growth. While the market outlook has softened somewhat, primarily in Europe, we still expect volume growth and improved operating performance to offset inflation. In roofing, we continue to expect relatively flat U.S.

shingle end market demand, assuming an average storm here with Owens Corning full year shipments slightly above the market. First quarter contribution margins and our demonstrated ability to recover asphalt cost inflation with price positioned the business for continued strong performance in 2019.

Finally, I am proud to report that for the second consecutive year, Owens Corning has been recognized by the Ethisphere Institute as one of the World’s Most Ethical Companies. We were one of four honorees in the construction and building materials industry.

This recognition underscores our commitment to leading with integrity and prioritizing ethical business practices.

With that, I will turn it over to Michael to provide a more detailed review of our financial performance, Michael?.

Thank you, Brian, and good morning, everyone. As Brian mentioned earlier, we had good commercial and operational execution in the first quarter and we are positioned to deliver another year of strong earnings performance. Revenue was slightly below last year, as continued price improvement was offset by lower volumes.

Adjusted earnings in the first quarter declined primarily as a result of lower sales and production volumes in our insulation and roofing businesses. Global growth and U.S. housing expectations have softened since our last earnings call. However, our execution to-date has been strong.

Now, let’s start on slide five, 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 2019 consolidated net sales of $1.7 billion, down 1% compared to sales reported for the same period in 2018, primarily as a result of lower sales volumes in roofing and insulation.

Adjusted EBIT for the first quarter of 2019 was $116 million, down $36 million compared to the same period one year ago, driven by lower sales and production volumes in roofing and insulation. Net earnings attributable to Owens Corning for the first quarter were $44 million, compared to $92 million in the same period last year.

Adjusted earnings for the first quarter of 2019 were $60 million or $0.54 per diluted share compared to $92 million or $0.82 per diluted share in 2018. Depreciation and amortization expense for the quarter was $113 million, up slightly as compared to the same period a year ago. Our capital additions for the quarter were $80 million.

On slide six, you will see the detail of our first quarter adjusting items, reconciling our 2019 reported EBIT of $118 million to our adjusted EBIT of $160 million.

For the first quarter, our adjusting items amounted to a $2 million net gain, which was primarily related to the contract restructuring associated with the previously announced composites low-delivered cost actions. I’d like to highlight one item related to adjusted EPS.

We have adjusted out a $12 million non-cash income tax charge related to the proposed regulations that were issued in the first quarter associated with U.S. Corporate Tax Reform. The adjustment is described in more detail in the notes of our 10-Q.

Now, please turn to slide seven, where we will provide a high level review of our adjusted EBIT performance comparing 2019 to 2018. Adjusted EBIT decreased by $36 million, composites EBIT decreased by $3 million as compared to the prior year, insulation EBIT decreased by $17 million and roofing EBIT decreased by $23 million.

General corporate expenses were $30 million, a $7 million improvement versus the prior year. With that review of key financial highlights, I ask you to turn to slide eight, where we will provide a more detailed review of our business results, beginning with our insulation business.

Sales in insulation for the first quarter were $591 million, down 1% for the same period a year ago. The negative impact of lower sales volumes, primarily in our North American Residential Fiberglass Insulation business was partially offset by the contribution of the Paroc acquisition and higher selling prices.

EBIT for the quarter was $15 million, down $17 million compared to the same period in 2018. The progress in our technical and other building insulation businesses was more than offset by anticipated lower sales and production volumes in our North American Residential Fiberglass business. Inflation was a modest headwind in the quarter.

Performance in the technical and other insulation businesses was strong as a result of solid commercial and operational execution. Earnings and revenue growth were driven by growth in global construction and industrial insulation markets, improved operating performance and pricing.

We continue to expect this portfolio of businesses to generate solid earnings growth in 2019, driven by improved operating performance in our U.S. business and good organic growth in global construction and industrial markets.

In our North American residential fiberglass insulation business, we continued to improve price including some realization of the January price increase.

As expected, lower demand and the impact of production curtailment actions in this business more than offset the earnings growth in the technical and other insulation businesses and drove the year-over-year decline in EBIT for the insulation segment.

As a reminder, we previously highlighted the difficult volume comparison we would face in the first quarter and the first half of this year in this business as a result of some share loss and a more difficult macro. On the previous call, we had the expectation for a flat full year macro outlook for the North American Fiberglass Insulation business.

We also set the expectation that price carryover from 2018 progress from our early 2019 announcement and any additional pricing actions would be offset by the financial impact of lower volumes in production curtailments. In the time since our last call, data for U.S.

housing starts has been released for December 2018 and the first quarter of 2019, all of which were below consensus expectations. In addition, November starts were revised downward.

As a reminder, we experienced demand on a 90-day lag from the actual start, because of the weaker fourth quarter and first quarter housing data, lagged housing starts for the first half of the year will compare negatively to last year tracking down about 8%. Based on current consensus estimates for U.S.

housing starts, it would suggest that 2019 full year lag starts would be down about 3%. As a result, we now expect positive price to be more than offset by lower volumes and production curtailments, driven by a softer macro outlook for this business. Our outlook for the second half is stronger based on the expectation of improving U.S.

starts and normal seasonality. We expect the volume trends we experienced in our North American Residential Fiberglass Insulation business for the first quarter to continue into the second quarter, although to a lesser degree. In addition, the second quarter of 2018 was impacted by operational headwinds from furnace rebuild and start-up cost.

As a result, we expect second quarter 2019 EBIT results for the insulation segment to comp negative to the previous year, but not as negative as the first quarter of 2019. Now, I will ask you turn your attention to slide nine for a review of our composites business.

Sales in composites for the first quarter were $513 million, flat compared to the same period in 2018. During the quarter, sales volumes grew by 4%, despite a weaker U.S. roofing market. This revenue growth was offset by negative foreign currency translation.

EBIT for the quarter was $57 million, down compared to $60 million in the same period last year. The decrease was primarily driven by higher inflation and planned furnace rebuild costs, partially offset by higher sales volumes and productivity. Manufacturing performance and productivity gains were strong in the quarter.

Composites continues to maintain double-digit margins, delivering quarterly EBIT and EBITDA margins of 11% and 19%, respectively .From a cost perspective, we expect that our recently completed, low cost India facility expansion, our high strength glass strategic supply lines with CPIC in China and our previously announced high cost smelter restructuring actions will drive manufacturing productivity and improve our cost position in 2019 and beyond.

While our first quarter volumes were positive, the global industrial production growth outlook has softened since our original guidance, primarily in Europe and our outlook for inflation this year has somewhat moderated. In 2019 we expect growth in the glass fiber market consistent with global industrial production growth.

We continue to expect volume growth in line with the broader market and improved operating performances to be offset by inflation. Slide 10 provides an overview of our roofing business. Roofing sales for the quarter were $614 million, down 4% compared with the same period a year ago.

Lower sales volumes, partially offset by higher selling prices, primarily drove the decline. In the first quarter, U.S. asphalt shingle market declined by 6%. Our volumes slightly trailed the national average, but our regional performance was in line with our expectations.

Although, the roofing selling season got off to a slow start in early 2019, volumes were very strong in March and remained very strong in April. EBIT for the quarter was $74 million, a $23 million decrease from the prior year, primarily due to lower sales volumes.

For the quarter, roofing delivered pricing improvements that exceeded asphalt and transportation inflation. We implemented a further price increase in April to offset asphalt inflation. Asphalt inflation has been tracking slightly higher than anticipated, which is expected to persist into the second half of the year.

Although, our cash contribution margins for the first quarter were healthy, our EBIT margin was negatively impacted by lower sales volumes in the quarter and lower production volumes in the fourth quarter of 2018 and early 2019.

Higher cost inventories were largely depleted in February and EBIT margins in March were consistent with our long-term guidance. The roofing business is positioned to deliver another strong year in 2019. We expect relatively flat U.S. asphalt shingle end market demand with industry shipments slightly below last year, assuming average storm demand.

As discussed on last quarter’s call, we continue to expect an above market volume opportunity for Owens Corning, resulting from favorable geographic mix and a higher share of industry shipments in 2019. Now, please turn to slide 11, where I will provide more context on our business outlook for 2019.

The company’s outlook is based on an environment, consistent with consensus expectations for global industrial production growth, U.S. housing starts and global commercial and industrial construction growth.

In insulation, the company expects earnings growth in the technical and other building insulation businesses, driven by improved operating performance and growth in global construction and industrial insulation markets.

In the North American Residential Fiberglass Insulation business, the company now expects positive pricing to be more than offset by lower volumes and production curtailments as a result of the softer macro outlook. In composites, the company expects growth in the glass fiber market consistent with global industrial production growth.

The company expects volume growth and improved operating performance to be offset by inflation. In roofing, the company expects relatively flat end market demand with industry shipment slightly below last year, assuming average storm demand.

For Owens Corning, the company anticipates a favorable geographic mix comparison and a higher share of industry shipments in 2019. Contribution margins in the first quarter of 2019 positioned the business for continued strong performance. Now, please turn to slide 12, where I will provide guidance on other financial items for the year.

Over the last four years, improved earnings, better working capital performance and our advantaged tax position translated into a strong conversion ratio of adjusted earnings to free cash flow in excess of 100%. Looking forward, we have actions in place to sustain strong free cash flow conversion in 2019.

During the first quarter, we repurchased 1 million shares of the company’s stock at an average price of $48.06 per share, leaving 3.6 million shares available for repurchase under our current authorization. At this time, the company plans to prioritize free cash flow to ongoing dividends and making progress in paying down our term loan.

Additional free cash flow could be available for share repurchases under the company’s existing authorization. We expect corporate expenses of $140 million to $150 million with the year-over-year growth primarily due to the reset of performance based compensation.

Capital additions are expected to total approximately $500 million and include capital for the completion of our new insulation capacity in Poland, the relocation of our Shanghai insulation plant and investments in productivity. Depreciation and amortization expense is expected to be about $460 million.

Interest expense is expected to be about a $130 million. As a result of our tax NOL, foreign tax credits and other planning initiatives, we expect our 2019 cash tax rate to be 10% to 12% of adjusted pretax earnings. Our 2019 effective tax rate is expected to be 26% to 28% of adjusted pretax earnings.

With that, I will turn the call over to Thierry to lead us in the question-and-answer session.

Thierry?.

Thank you, Michael. We are now ready to begin the Q&A session..

[Operator Instructions] First question will come from John Lovallo of Bank of America..

Hey, guys. Thank you for taking my question. Could you help us frame the magnitude of the expected inflation EBIT decline in 2Q? I know you mentioned it’s going to be less than the decline we experienced in the first quarter, but I mean, can we frame that a little bit, is it 50% of the decline, 75% of the decline, any help there would be appreciated..

Hi, John. This is Brian. Thanks for the question. First off, I guess, I’d like to start just apologizing for the disruption with our prepared comments. It’s certainly a memorable start for my first call as CEO.

We didn’t know where we cut-off in the comments, so we wanted to just start over and replay that out, but we are going to extend the call for the question, so..

He was asking Brian just to kind of talk through going from Q1 to Q2 in insulation, something about any change..

Yeah. Okay. Thanks for that. I think, we talked about in terms of the comps that that are kind of changing over in Q2 versus Q1, John.

So I think as we kind of walk it quarter-over-quarter, we are certainly expecting to see a strong performance from our technical insulation business that continues to be a strong revenue and earnings generator for the business ,and that’s going to be a big part of our improvement as we continue to go through the year in our insulation business.

And then from a volume standpoint, Q1 was a very tough comp on volumes for our resi business. I think we talked about that on the last call, part of the comp was tied to market, part of it was some more tied to Owens Corning.

Frankly, last year in the first quarter, we picked up some discretionary useful business where another manufacturer had some manufacturing issues. And then we had some retail business that that we were not going to see repeated into the first quarter in terms of volumes in terms of changes we made there.

So a little bit of Q1 volume comp was market, a big part of the comp was kind of some year-over-year changes in some of our res volume that we don’t foresee going forward in terms of as we get into Q2, Q3, Q4, we don’t have those negative comps on some of those pieces.

So as we go forward into Q2, we expect strong growth in our TI business to continue to generate revenue and earnings growth. We continue to expect to get a little bit of volume growth in our res side and little bit of price appreciation as we move through the year..

The next question will come from Scott Schrier of Citi..

Hi. Good morning. I wanted to ask a little bit about your roofing shipments outlook and if we are thinking about roofing shipments versus 2018 and then in 2018, we had the highest level of R&R shipments that over the past dozen or so years, while the weather related shipments were lighter than the two previous years.

So in your outlook, you noted more normal weather shipments, which would be a little bit of a step up.

So I am curious how you think about the growth potential and what you are seeing on the ground on the R&R side of things from roofing shipments?.

Yeah. Thanks Scott. I think we came into this year expecting to have a little bit of different shape of the year in terms of our shipments in terms of Q1 and going through the year.

I think Q1 played out kind of largely as expected in terms of we brought in a little less storm carryover from into 2019 versus last year, a little bit of the timing of shipments from distribution tied to some price increase announcements we had last year versus this year. So I think Q1 volumes shaped up pretty similar to what we expected.

I think in terms of end market demand, we feel -- we still feel good that we are in an environment that we are seeing good re-roofing, good remodeling activities.

We have had a little bit slower start in some parts of the country around out-the-door sales from our distribution partners, but our contractor connections report really good backlogs and a good outlook for the year.

So I think as we think of the big demand drivers for the business, we continue to believe that the re-roofing modeling part of the business is going to potentially see a little bit of growth this year with investments in remodeling. On the storm side, we always kind of plan for an average storm year.

So last year was a little below the prior year’s, prior two years before that we are a little above. So we think on an average storm year that creates a little bit of demand upside. And then new construction is a little softer to start the year, but it’s a much smaller part of the overall demand in our residential roofing business.

So on balance we continue to think that we are going to see a pretty flat year in terms of end market demand and a constructive environment for roofing..

The next question will come from Kathryn Thompson of Thompson Research..

Hi. Thank you for taking my questions today. I wanted to focus on the composites segment.

First wanted to see if you have an additional color on pricing trends in early 2019 and how you see that progressing over the next 12 months to 18 months, particularly in light of a little softer outlook, particularly in the European market? And also wanted to get your thoughts and any color on the potential for additional tariffs coming out of Europe on composites out of the Middle East? Thank you so much..

Thank you, Kathryn. It’s Michael. I mean, I’d say, our outlook on pricing is kind of largely unchanged from what we took you through on the first quarter.

I’d say utilization rates overall for the composites business remained relatively high and even though global growth is -- it has slowed just a little bit predominantly in Europe, I think, growth overall remains pretty constructive.

I will remind you from the restructuring that we did in Europe about five or six years ago, we designed our business really to be kind of net short in Europe, so those assets run hard and run full. So what we are seeing a pricing environment that overall remains stable as I have laid out on our previous call.

Kind of looking forward to the next kind of 12 months to 18 months, I guess, it’s -- I guess anybody’s guess, I think, with kind of continued global growth and a constructive industry utilization rates that the potential for price exist. We are facing just some inflation again this year our competitors are facing a deflation as well.

And then in regards to tariffs in Europe, yeah, there is the possibility of some anti-dumping on tariffs, but that’s probably all I am going to say at this point..

The next question will come from Mike Eisen of RBC Capital Markets..

Good morning. Thanks for taking the questions. Maybe you guys can help me out on the insulation business a little bit. When thinking of the curtailment actions you have take -- taken, it now seems that the technical and industrial business is about 70% of the segment.

So can you help us think about this segment expecting growth in earnings, offsetting that of the residential side of the business and how we should think about the overall segment and where the levels of profitability differ in these two businesses?.

Okay. Thanks for the question. So let me start with, we have talked about the curtailment units that’s primarily been inside our residential business. As we talked about on the last call, we came into the year expecting to have a little bit of volume weakness.

And then we are going to take a look at how we are going to curtail activity to the balance to meet that end market demand and also our working capital and cash flow commitment and some of our inventory target. So we are really balancing those curtailments in the res side, so the expected demand and where we want to finish the year.

I think we have continued to expect that we are going to take you through those curtailment actions as we sit here into Q2 and a little bit into Q3 relative to the demand environment. Now from a comp basis, I mean, we look at total cost of idle offset by certain rebuild costs and start-up costs.

So last year in the second quarter we had a little bit higher rebuild costs, we are not going to see that. So it will be a little bit of an offset in Q2 around some of those curtailment costs.

But then as we get into the back half of the year, it’s going to be very dependent in terms of just end market demand and how we see the housing markets recover in terms of what kind of further curtailment actions we are going to be taking.

But when we look inside the second insulation business, I mean that’s really what we have said starting out with our guidance in terms of that growth. The growth we are expecting to see in that portfolio of businesses continues to be very strong.

Our investments in mineral wool with the Paroc acquisition, work we are doing in North America, we can see growth and opportunity there, revenue and earnings growth, the foam glass part of the business where we are seeing good strong specification work and we are seeing earnings growth there.

Our North American pipe and mechanical and the distribution businesses are seeing opportunities in commercial and industrial application. So when we kind of get values for the insulation business, we have said that growth in our TI portfolio is going to generate earnings.

And in the res side with a more timid macro outlook here in the near-term, we think that our positive pricing actions and movement is going to be more than offset by some of the volume of curtailment. So that’s kind of how we balance the guidance in terms of the overall insulation segment..

The next question will come from Stephen Kim of Evercore ISI..

Thanks guys. I can’t hear hardly a thing, hopefully everybody else can. I didn’t hear the answer to your question from Mike, but I am going to give it a whirl anyway here.

I guess just from -- I didn’t hear a clear response to the question of whether or not in insulation for the full year you thought that segment EBIT could be up, but your guidance doesn’t really delineate between technical and resi other than to say that one’s going to be up, one’s going to be down, but I would generally think technical is bigger than resi fiberglass.

So I would think I would imply.

So I just wanted to get some confirmation on that? And then I wanted to be clear, when you said 2Q EBIT was going to be down year-over-year but not as bad as 1Q, was that in dollars or was that in percent? And then lastly if you could comment on anything in insulation with respect to industry competitor capacity additions, there has been a lot of talk about that.

I imagine you are more plugged in than the street probably is. And so my question is, do you -- what is your expectation for capacity additions in the industry and what would be OC’s likely response? Thanks..

Okay. Stephen thanks for the question. Sorry you weren’t able to kind of hear some of the last things. I guess let me start with the overall segment guidance.

I think our guidance for the insulation business is that we expect our strengths in terms of our TI business portfolio with mineral wool, foam glass, with our Titan Mechanical businesses that we expect to see revenue and earnings growth in those portfolios this year.

In our first quarter performance we feel very good about the progress we made in Q1 and continuing to accelerate earnings and revenues in that set of businesses as we go through the year. And then on the res side, we said that our pricing outlook was going to be more than offset by some of the volume shortages and some of the curtailments.

So I mean that’s the guidance we have tried to frame in the insulation business both in the TI portfolio, on the res side positive pricing we have gained and are seeing it is going to be more than that offset as we sit here today in terms of looking at the macro environment in market opportunity, probably, more than offset by some of the volumes and curtailment actions we would have to take.

So that kind of frames that up. I think in our Q2, our EBIT guidance that was a walk in terms of dollars. So, again, we said that in Q2 we expected the comp negative to last year’s Q2 in terms of dollars, but not as bad as Q1.

So we continue to make progress in terms of we are seeing growth in TI part of the business, we expect to see some volume growth as we get more into the season, in the res side a little bit of price depreciation.

So we are continuing to see that as a walk up from Q1 to Q2, but year-over-year we think that we are going to still comp a little negatively. And then in terms of the industry utilizations, I think, we certainly keep an eye on industry utilization rates in the market. Last year there were a couple of insulation lines that were brought online.

But -- and that’s overall today as we sit here we think we are still running at relatively high utilization rates in the industry and we are going through a bit of an air pocket on demand. So we are probably seeing a little bit weaker industry utilization rates but we think that continues to improve and get stronger as we work through the year.

We are still optimistic that we are getting good reports from builders and we are seeing the demographics of the U.S. that we should see broke in housing starts as we continue to work through the year.

I think that’s going to create an environment in the second half for us where we see that contribution starting to create additional demand, some normal seasonality improvements that we always see in the back half in our insulation business that creates a more positive demand environment and that should create an opportunity as we build a little bit of momentum in the business as we go into 2020..

The next question will come from Matthew Bouley of Barclays..

Hi. Thank you for taking my question. I just wanted to follow up on insulation, just hoping you could elaborate on the change in your residential outlook. It sounded like you guys had some comments around the first half versus the second half that you are saying that kind of the lagged housing starts activity is driving a softer first half outlook.

But at the same time you called out some signs of a recovering residential market. So if you could just provide some more color on exactly what that means, how your second half outlook is changed in residential insulation on the volume side and then how that would play into any potential further price increases there? Thank you..

Okay. Thanks for the question. Yeah.

I think what we are trying to frame up is as we came into the year on the res side we thought we would see a little bit weaker housing activity that would spillover and create a little bit weaker demand in the first part of the year and then that demand would accelerate as we work through the year where we would see housing continue to improve in ‘19 and also we get seasonally just a stronger back half of the year.

I think what’s changed a little bit in the macro environment is we were able to receive some information where housing starts in Q4 were actually a little weaker than consensus estimates as we came into the year.

The first quarter, we haven’t seen the acceleration in housing starts that that we would hope to see and that’s I think many believe was going to materialize. So it’s just created a little bit weaker demand environment in the first part of the year. So when we came into the year, we felt lagged starts were going to be fairly flat.

We now look at the shape of how housing starts to materialize in Q4 and Q1 and are looking at a lagged housing start probably being down 3% or 4% for the year.

So that’s where we have said that bulk of that we think still comes through in the first half, it creates a more weaker environment in first half, but then start to continue to grow and we move into the back half a little bit stronger volume environment as long as starts kind of materializes as we would expect there.

So I think that’s where we have kind of reshaped the demand environment a little bit weaker first half on lower housing starts, but then we -- again we continue to see positive signs from our conversations with our customers, from builders, housing formations continue to grow, the economy continues to stay strong.

So I think all those things support that housing should accelerate through the year and then that creates a better demand environment for us as we move into the second half of the year and into 2020. So that’s kind of the shape on the demand side.

I think from a pricing standpoint, we came into the year with the pricing outlook that we would see price appreciation in the business from carryover in 2018, a January increase and then we looked to see if we could get some additional price as we have gone through the year. So I think our pricing outlook has tempered a bit.

We have been able to get good carryover from last year. We have been able to get some positive pricing in from the January increase. But given the little weaker demand environment we are seeing now, we have had to make some adjustments to be competitive and to maintain our current share position, which we are going to do in terms of going forward.

I think as the year progresses, if we continue to see housing starts growth in the market that’s going to create a little better demand as we move into the back half of the year. And generally where we see a strong demand environment, we see high utilization rates, we see a positive outlook on housing.

All those things create an environment where we could look at taking some additional pricing actions..

The next question will come from Phil Ng of Jefferies..

Hey, guys. You called out pretty strong trends in roofing in March and April.

I am just curious what’s driving that, was that storm activity from places like the south or you started recapturing some of that share? And then the other piece is just as you guys kind of highlighted on the inflation front, asphalt prices haven’t really come down as much as you expected.

So the spring price increase is probably more important going forward. How do you kind of think about price costs over the course of the year? Thanks..

Thanks, Phil. Let me start kind of with the market volumes. Again, I think, Q1 market volumes in terms of industry shipments played out pretty similar to what we would have expected. We thought we would have a little bit of weaker environment and we did see that.

I think our comments were there is always a bit of timing of when distributors place orders with the individual manufacturers to start to build some inventory stock. We saw our orders come through probably a little later in Q1, so our order book really started to fill up kind of back half of February and into March.

So we saw an acceleration of shipments as we went through the first quarter and finished very strong. We saw that order activity kind of continue in our book of business here in April.

So I think that’s a very positive sign in terms of kind of market outlook as we move into the season and I think that’s where we got in terms of our market shipments relative or our shipments relative to the market, there was just a little bit of timing between Q1 and Q2 that we think impacted our volumes.

But when we look at the business regionally, which is how we run the business, there was a little bit more shipments on the east coast where we tend to have a little less than our national share, it was a little weaker in the Midwest, southwest markets where we have a little stronger share.

So on a regional basis, we think that they have played out largely in line with our expectation as we go forward. So I think that’s where we kind of see the volume environment materializing here in Q2. Around asphalt cost, yeah, it’s -- asphalt cost had stayed just stubbornly high.

We didn’t see any big decline from some of the oil drop off late last year. I think a couple of reasons we are seeing -- the lot of asphalt capacity kind of has come out of the market in terms of manufacturing capacity over the last year and a half. We saw some refinery turnarounds earlier this year.

So I think all those kind of worked to keep asphalt costs pretty high. We saw that in Q1. We announced in April price increase which we have implemented and that’s really to kind of stay on top of that asphalt inflation. I think our business has a very good track record of being able to recover asphalt inflation with price.

Last year as prices inflated, we had to work hard every to kind of get on top of asphalt inflation, we finally did that at the back of the year.

This year our April increase, we think we are getting out and staying in pace with asphalt inflation and then as far as other pricing actions, I think, we are going to see kind of how the asphalt inflation environment and how the market materializes on that, okay?.

The next question will come from Truman Patterson of Wells Fargo..

Hey. Good morning guys. Just following up on roofing, it seems like you guys have lost a little bit of share the past couple of quarters. I know you guys have mentioned geographical mismatch a little bit over a few times here.

But do you think any of this loss was due to holding the line on pricing and have you guys seen any competitors become more aggressive with pricing in 2019 so far? And then, finally, just really hoping you guys can walk us through your ability to recapture some of the market share that’s embedded in your old guidance? Thanks..

Yeah. Thanks, Truman. Yeah. When we think about market share in roofing, we really try to look at over the course of kind of four quarters or a full year basis, not quarter-to-quarter. There is a lot of volatility in quarter-to-quarter share numbers.

There’s a lot of difference between the timing of when distributors bring in product to their outdoor sales. So one of our big measurements is kind of as we track and work with our contractors are we maintaining our contractor base, are we seeing growth with them and that’s a big indicator.

So we spend a lot of time and a lot of our commercial efforts really downstream working with contractors, making sure that they are building their business, they are around our products, our brands and we feel very good about that in terms of where we are positioned today.

So I think Q4, Q1, there is some inventory adjustments inside of that, there were some stocking of distributor inventories inside those numbers. We think that’s going to play out as we go through the year. But, overall, we feel very good about our market share position. We think we have got a great product offering.

We just launched a new product to -- into the market to address a segment that’s looking for an impact resisting kind of shingle and 2218 shingle in storm markets, we think that positions us for some growth. So, overall, in the business we feel we are positioned well..

The next question will come from Mike Wood of Nomura Instinet..

Hi. Thanks for taking my question. I wanted to ask again about insulation, curious with your strategy, if there is a housing growth rate where your strategy to curtail capacity really pays off and I am curious if you can give some framework around what it would look like when residential construction returns to growth.

How much better than the industry would you anticipate growing your volume? Thank you..

I think we continue to operate the business within the res side really believing that we are going to see growth in terms of volumes coming back to us and as the market grows, we are going to have available capacity to service that.

So it’s really been our strategy around balance sheet in the near-term, our hot idle capacity to serve near-term demand to give us the best flexibility and option to service that market when it comes back and that’s really what we are always balancing in terms of near-term curtailments and the capacity we maintain.

We continue to operate the business believing that we are not at the top of the housing cycle. We think there’s a lot more room to run in terms of housing growth in the market and I think we have seen over the last 12 months and certainly 2018 when demand was pretty good around start as they work today. We saw good demand.

We saw good capacity utilizations and an ability to go get price in that environment. So I think as starts to grow, we continue to believe we are sitting with available capacity to service that growth.

We think that volume returns to us in that environment when capacity get tighter and we hold a really good share position and we think we can get some leverage in acceleration to improve our operating leverage in the business once we -- once that occur. So I think we are well positioned to service the growth.

We feel like we are holding the right kind of capacity to service as it comes out. And we are taking some near-term actions as to balance our near-term demand and working capital expectations..

The next question will come from Keith Hughes of SunTrust..

Thank you. A question in composites, the non-residential piece seems to do very well in the U.S. non-residential.

Could you talk a little bit about how, why, what’s going on in that business? And then just one other one on roofing, just want to make sure I understand, do you feel like industry inventories are kind of where they need to be heading into the spring season had such an up and down six months?.

Hey, Keith, repeat your first question, because I don’t understand..

Within composites you break it out your different regions and U.S.

non-residential was very strong, just wondered what was driving that?.

Yeah. Yeah. Yeah. So listen, so the segment itself grew 4% within the quarter, but roofing volumes were very weak obviously, roofing volumes are all in North America. Therefore, it’s looking like the other segment disproportionately grew..

The next question will come from Susan Maklari of Credit Suisse..

Thank you. Going back to composite, you have talked to the lack of pricing there and therefore the focus and productivity to drive those margins.

Can you just give us some color on the initiatives that you have in place there and how we should be thinking about those benefits starting to come through?.

Yeah. Listen, great question. So a couple of things that we have been doing really over the last couple of years that are driving productivity this year, but also going to drive productivity into next year as well. So one is the low cost melter strategy that we have been executing on, that’s taking cost out.

We brought up our low cost India facility last year. So that is driving cost benefits this year. You also heard me talk about in my prepared remarks that we signed what we -- we started up a low cost asset with CPIC that makes high strength glass. That will start to deliver benefits towards the latter part of this year as well.

The other thing that I’d also point out from a kind of a productivity and manufacturing point of view is we didn’t have a great year last year. This year the assets are running very well and we do expect to deliver on a fair amount of productivity. We had three big issues last year, right? We dropped a melter, which is a very unusual event.

Then we had two very large complicated capital projects that were bit of a drag on our manufacturing costs during the year. So that was the India new furnace. We also had a large rebuild in India and then we had a very complicated and big furnace rebuild in France as well. Looking at this year, we really don’t have any kind of complicated projects.

And so, again, you heard me say that assets are running well. So we think that we are going to deliver good productivity in 2019 and as we get into ‘20, it should start to accelerate..

The next question will come from Garik Shmois of Longbow Research..

Hi. Thanks. A question on roofing cost inflation, you have been pacing around $20 million to $30 million of asphalt inflation per quarter.

Just wondering if you are going to help us with when that starts to anniversary off this year and also wanted to get confirmation to some of your view on these April price increases and the level of traction, and again, just reconfirm your confidence around offsetting this type of inflation?.

Hi. Thanks Garik. It’s a great question on the asphalt cost. I mean it’s one that we continue to track. But we continue to realize asphalt inflation in Q1. We are continuing to realize asphalt inflation in Q2 in terms of where price points are at. So, again, I’d say that asphalt costs remained stubbornly high for a variety of reasons.

But our ability to offset asphalt inflation with price, we have got a very good track record historically to do that, we demonstrated that last year in an environment that was a little down in terms of volumes versus the prior year, we were still able to get pricing to offset asphalt inflation.

So I feel confident in our ability to do that as we continue to move forward.

We announced the April price increase because we did see this inflation coming through our P&L in Q1 and we knew this was going to continue and so we -- and so far our realization, we are feeling good about that and we believe that we are going to be able to offset that asphalt inflation this year with the price that we have -- we are putting in the market.

So, again, overall, market is I think firming up or starting to come in the season from a volume standpoint and our ability to capture price to offset asphalt inflation historically has been very strong and we feel like we can do that again this year..

The next question will come from Reuben Garner of Seaport Global Securities..

Thanks. Good morning, everyone.

So you are -- the $16 million in lower fixed cost absorption that you sighted in insulation, is that the right way to think about what the quarterly impact will be throughout the rest of 2019? And then trying to understand how that impacts profitability, do you feel like you are going to be getting enough price and savings from that move to offset the $16 million and then just trying to balance that with your comments that you are going to be a little bit more aggressive to maintain your share position in insulation.

Can you elaborate on those items?.

Yeah. Thanks for the question. So in terms of the absorption, we have provided that in the MD&A for the first quarter. Again, absorption costs are going to be quarter-to-quarter based on how we are running the assets to meet demand and to meet our inventory targets.

So I think in Q2 we are going to see continued low weakness in demand environment, we expected that. So as I go back when we -- our outlook for the year was we thought we are going to come see a little weaker first half demand environment. We are going to take some curtailment actions to balance our inventories to service that demand.

Q1 that’s what we did. Q2, we are going to continue to do that and then we think as we get in the back half, our curtailment actions are going to be very dependent on just how the demand environment materializes in our position in the market.

So Q2, we are going to be a little -- comp differently versus Q2 last year, because we had some rebuild and startup costs that’s going to offset some of those curtailment costs this quarter.

But in terms of how we think about curtailment, how planning through that, we do have curtailment actions planned in Q2 and then as we get in the back half of the year, the level of curtailment is going to depend on the demand environment that we see unfold.

So we think that is the right decision for us to hold that hot idle capacity available for demand as it comes back. We do believe that we are running through a bit of an air pocket on housing starts and demand. We do believe housing starts are going to grow from here and create a stronger second half.

So I think we are positioning ourselves to take advantage of that growth as it comes back to us. So I think we feel good about that. I think the comments in terms of adjusting our prices currently to maintain our share is about just how we are operating through this softer demand environment.

Our pricing strategies continue to be leveraged the housing grow to gain price to improve the performance of the business. Quarter-to-quarter we have been willing to put some volume at risk to execute that, but we have always balanced that out relative to the demand environment and I think that’s what we are doing right now.

We are just relative to demand environment, we are making adjustments, we are going to maintain our current share, but we believe the long-term strategy of the business is intact..

Hey, Karrie. It’s Thierry. I think we have time for one more question..

Our last question then will come from Justin Speer of Zelman & Associates..

Thank you, guys. One question for me or actually two questions, just I don’t think you touched on the inventories distribution, you mentioned last quarter that there were a couple of large distributors that took advantage of a rebate from a competitor.

And I don’t know if you have any insights there, but like you to maybe touch on the inventories as you see it through the lens of your customers and catching that with that price increase, you mentioned you expect that will be successful.

How long does it take for you to determine whether or not it’s successful through distribution?.

Thanks, Justin. In terms of roofing distributor inventories, I mean, it varies widely. So I’d hate to make any general comments around distribution inventories at this point. I think that there is an appropriate amount of inventory that’s been built up to service the market demand that we see in front of us this year.

So, clearly, the level of distribution inventories always dependent on the full year market in terms of how that materializes. So I think given the expectations for how the market’s going to materialize, I think, distribution inventories would be relatively sound positioned.

But there certainly are probably some regions where there is a little bit higher inventory level versus last year just depending on the buys and the seasonality of the business. So I think it’s going to very much depend on the geography.

And then terms of price realization, normally we get a good feel 30 days to 60 days into a price announcement, realization rate. And as I said, we sit here today, we feel good about the order activity, we feel good about the price realization we have announced in April..

This concludes our question-and-answer session. I would now like to turn the conference back over to Thierry Denis for any closing remarks..

Well, thank you, Karrie, and thank you, everybody. I want to apologize again for the technical difficulty that we faced during this call. Thanks for staying with us a little longer as well. And with that, I’d like to turn it back over to Brian for closing remarks..

All right. Thanks, Thierry. Well, to recap, we have started 2019 with good operational execution across the company. We are investing in each of our businesses to strengthen our earnings potential and are well-positioned to capitalize on market opportunities and deliver attractive returns for our shareholders.

In insulation, we are excited about the momentum of our technical and other insulation businesses to grow earnings and believe we are in a favorable position to capitalize on a strengthening new construction market.

In composites, we continue to expect volume growth and strong operating performance to offset inflation and in roofing we are well positioned to realize continued strong margins and performance. As I stated earlier, we have an incredibly talented team committed to the success of our customers and our shareholders.

We look forward to making Owens Corning even stronger in the years to come. So thank you everyone for your interest in our company and for your time today..

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect your lines. Have a great day..