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    OC
    Earnings call· Mar 2026(Q1 FY26)

    Owens Corning Q1 FY26 earnings call OC

    May 6, 2026 Source

    Executive summary

    Owens Corning Q1 FY26 — Strong Margins Despite Volume Declines, Positive Outlook for H2

    Owens Corning demonstrated resilient performance in Q1 FY26, maintaining strong margins despite market headwinds like declining volumes and affordability challenges. The company is leveraging structural improvements, an integrated go-to-market strategy, and operational efficiencies to drive durable profitability. With portfolio transformation complete, OC is positioned for future growth as market conditions improve, while actively managing inflationary pressures and returning capital to shareholders.

    Highlights

    5

    • Generated $2.3 billion in revenue and $369 million in adjusted EBITDA with an adjusted EBITDA margin of 16%.

    • Roofing delivered an EBITDA margin of 24% despite lower volumes and negative price-cost.

    • Insulation achieved a 19% EBITDA margin, demonstrating strong and relatively stable performance.

    • Achieved approximately $135 million in run-rate enterprise cost synergies by midyear, exceeding the $125 million commitment.

    • Achieved a first quarter recordable incident rate of 0.46, one of the best quarters on record.

    Concerns

    5

    • Revenue declined 10% year-over-year, largely due to the market environment.

    • Free cash flow was a net outflow of $387 million in Q1, reflecting seasonal working capital and higher capital expenditures.

    • Roofing U.S. shingle and component volumes were slightly behind the overall market in Q1.

    • Expected approximately $60 million in costs related to the Iran conflict to impact Q2 results.

    • Anticipate negative price-cost in Roofing and Insulation for Q2 due to ongoing input and transportation inflation.

    Guidance & targets

    16
    CategoryTargetConfidence
    Q2 FY26 Revenue
    approximately $2.6 billion to $2.7 billion
    high materiality
    High
    Q2 FY26 Adjusted EBITDA margin
    approximately 20% to 22%
    high materiality
    High
    Roofing Q2 FY26 Revenue
    down low to mid-single digits
    medium materiality
    High
    Roofing Q2 FY26 EBITDA margin
    low 30% range
    medium materiality
    High
    Insulation Q2 FY26 Revenue
    down low single digits
    medium materiality
    High
    Insulation Q2 FY26 EBITDA margin
    approximately 20%
    medium materiality
    High
    Doors Q2 FY26 Revenue
    down mid-single digits
    medium materiality
    High
    Doors Q2 FY26 EBITDA margin
    high single digits
    medium materiality
    High
    General Corporate EBITDA Expense
    between $245 million and $255 million
    low materiality
    High
    Effective Tax Rate
    24% to 26%
    low materiality
    High
    Depreciation and Amortization
    approximately $680 million
    low materiality
    High
    Capital Additions
    around $800 million
    medium materiality
    High
    Cash Return to Shareholders
    $1 billion
    high materiality
    High
    Additional Cash from Excess Alloy Sales
    $50 million to $70 million
    low materiality
    High
    Run Rate Enterprise Cost Synergies
    approximately $135 million
    medium materiality
    High
    Structural Cost Improvements (Doors)
    additional $75 million
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Roofing
    Sales declined primarily due to lower volumes, driven by low storm-related carryover demand and severe weather. Restocking activity late in Q1 provided some boost. EBITDA was impacted by lower volume and higher cost inventory, including ~$30M in curtailment costs (partially offset by productivity). Experienced negative price-cost in the quarter.
    U.S. asphalt shingle market: down ~10% YoYOC shingle and component volumes: slightly behind overall market in Q1EBITDA: $231M
    		$960M-14%—24% EBITDA margin
    Insulation
    Total sales decreased due to lower North American residential volumes. North American nonresidential revenue was flat with pockets of strength. Europe saw stable markets and currency benefits. Disciplined inventory management led to incremental production downtime. Targeted price moves and additional inflation resulted in lower EBITDA.
    North American residential volumes: declinedNorth America nonresidential revenue: flat YoYEBITDA: $167M
    		$867M-5%—19% EBITDA margin
    Doors
    Operated in a challenging demand environment with pressure across residential construction markets. Sales were impacted by lower market volumes and recent strategic actions, including the divestiture of the distribution business and the sale of the Oregon components facility, which had a combined net revenue impact of ~$24M in Q1.
    EBITDA: $34M
    		$475M-12%—7% EBITDA margin

    Operational metrics

    21
    Adjusted EBITDA
    $369M
    Q1 FY26

    Company-wide adjusted EBITDA for continuing operations.

    Adjusted EPS
    $1.22
    Q1 FY26

    Adjusted earnings per diluted share for continuing operations.

    Capital Additions
    $210Mup from last year
    Q1 FY26

    Investments in elevated but targeted levels to support long-term growth, capacity expansion, and productivity.

    Return on Capital
    10%
    12 months ending March 31, 2026

    Trailing twelve months return on capital.

    Debt-to-EBITDA Ratio
    2.5x
    Q1 FY26

    At the middle of the targeted 2x to 3x range.

    Liquidity
    $1.8B
    Q1 FY26

    Total liquidity at quarter end.

    Cash Dividend
    $63M
    Q1 FY26

    Cash returned to shareholders through dividends.

    Cost Optimization Adjusting Items
    $75M
    Q1 FY26

    Includes amounts related to cost optimization and charges for a previously disclosed recall in Paroc business.

    Roofing Curtailment Costs
    $30M
    Q1 FY26

    Carried over into Q1.

    Iran Conflict Cost Impact
    $60M
    Q2 FY26

    Expected costs associated with the Iran conflict, included in Q2 outlook.

    Run Rate Enterprise Cost Synergies
    $135Mexceeding $125M committed
    midyear

    Achieved through leveraging enterprise manufacturing and supply chain capabilities.

    Structural Cost Improvements
    $75M
    ongoing

    Additional improvements being made within operations to reduce cost structure and improve margins.

    Glass Reinforcement Sale Proceeds
    $280M
    Q1 FY26

    Cash proceeds from the completed divestiture of the glass reinforcement business.

    Excess Alloy Sales Cash
    $50M-$70M
    next year

    Expected additional cash generation following glass reinforcement divestiture.

    Contractor Network Members
    >30,000
    Q1 FY26

    Expanded network through industry-leading engagement model.

    Process Sensors Monitored by AI
    >20,000
    Q1 FY26

    Used to provide real-time alerts and improve asset reliability.

    Plants with AI Capabilities
    ~40
    Q1 FY26

    Across the three businesses, with plans for continued expansion.

    Divested Doors Distribution Business Annual Revenue
    $70M
    annual

    Net annual revenues of the distribution business divested late in Q1.

    Sold Oregon Components Facility Annual Sales
    $50M
    annual

    Annual sales of the facility sold in Q4 last year, creating a volume headwind.

    Divested China Building Materials Business Annual Revenue
    $130M
    annual

    Annual revenue of the business whose transaction closed mid-2025.

    Tariff Refunds Potential
    $50M
    ongoing

    Potential refunds across the enterprise as a result of a recent Supreme Court ruling on tariffs.

    Industry KPIs

    1
    MetricValueDetails
    Price cost$13MUSD

    Deals & partnerships

    4
    Glass Reinforcement BusinessSale of the glass reinforcement business~$280M

    Key milestone in reshaping Owens Corning as a more focused building products leader.

    Doors Distribution BusinessDivestiture of the distribution business

    Divested late in Q1, impacting Doors segment sales.

    Oregon Components FacilitySale of the Oregon components facility

    Sold in Q4 last year, impacting Doors segment sales.

    China Building Materials BusinessSale of the Building Materials business in China

    Transaction closed mid-2025, impacting Insulation segment revenue.

    Risks & headwinds

    4
    Residential Market ConditionsQ1 FY26, expected to continue in Q2 FY26

    Roofing sales down 14% YoY; Doors sales down 12% YoY; Insulation North American residential volumes declined.

    Mitigation: Leveraging integrated go-to-market strategy, cost optimization, expanding contractor network, positioning for future growth as market improves.

    Inflationary Environment (Iran Conflict)Q2 FY26 and potentially beyond

    Expected ~$60M cost impact in Q2 FY26, with approximately half in Roofing and the remainder split between Insulation and Doors.

    Mitigation: Announced price increases (April and June 1 for Roofing), fuel surcharges, focus on cost efficiencies and productivity.

    Negative Price-Cost SpreadQ1 FY26, Q2 FY26

    Experienced negative price-cost in Roofing in Q1; expected negative price-cost in Roofing and Insulation for Q2.

    Mitigation: Implementing price increases, driving cost efficiencies, and leveraging productivity to maintain durable margins.

    Seasonal Working Capital and Capital ExpendituresQ1 FY26 (seasonal)

    Free cash flow was a net outflow of $387M in Q1 FY26.

    Mitigation: Disciplined inventory management, targeted investments to support long-term growth and productivity.

    What to watch in Q2 FY26

    5

    Roofing price-cost spread

    H2 FY26
    CurrentNegative in Q1, expected negative in Q2
    TargetNeutral or positive

    Why it matters

    Determines profitability trajectory in an inflationary environment and the effectiveness of price increases.

    So Q2 is is the quarter where we're feeling the most pressure of the inflation coming through without corresponding price increases to offset it. ... So we would expect a more positive benefit from those in Q3 and Q4, assuming good market traction, which would then start to offset the inflation that we're seeing come through.

    Q&A highlights

    7

    Is management still comfortable with the previously stated expectation of market improvement through 2026 and results largely in line with current consensus, given market uncertainty?

    Management remains comfortable with the full-year outlook, stating that the year has started consistent with expectations. Q1 performance and Q2 guidance (20%+ EBITDA margins) demonstrate confidence in business execution despite market uncertainty.

    “I think the year has started out very consistent with what we expected when we talked about it in the last call. We've seen actually good progression and a little bit of improvement in terms of the performance in Q1, our Q2 guide is, again, right in line getting back to the sticky kind of 20% plus EBITDA margins for the company within all of the current market environment and some of the uncertainty.”

    asked by John Lovallo · answered by Brian Chambers

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 Performance Amidst Market Headwinds

    Owens Corning delivered strong operating performance in Q1 FY26, generating $2.3 billion in revenue and $369 million in adjusted EBITDA, despite challenging residential market conditions. Repair and remodel demand and new residential construction activity continued to reflect affordability challenges and consumer uncertainty🌐. Roofing activity was boosted by late-quarter inventory restocking but was impacted by low storm-related carryover demand. The company's ability to deliver solid results on lower market volumes highlights the effectiveness of structural improvements.

    02

    Structural Improvements and Margin Durability

    The company has significantly improved margins across its Roofing and Insulation businesses by over 500 basis points compared to similar market conditions over the past decade. These improvements stem from strengthening market positions and streamlining operating costs. In Roofing, efforts include expanding the contractor base and increasing capacity for premium laminate shingles. Insulation has benefited from a more profitable product mix and a restructured, more efficient manufacturing network. The Doors business is applying a similar commercial and operational playbook to improve margins.

    03

    Integrated Go-to-Market Strategy and Distribution Strength

    Owens Corning leverages a unique integrated go-to-market strategy, combining its broad distribution network with a downstream demand pull-through model. The company serves over 4,100 home center locations and more than 8,000 distributed locations, providing wide access to its product categories. This approach has led to additional product placement at major retailers like Lowe's and has grown the Roofing contractor network to over 30,000 members, driving demand creation and deepening distribution partnerships.

    04

    Operational Efficiency and AI Adoption

    Operationally, Owens Corning is utilizing the full scale of its enterprise to achieve a winning cost position. This includes optimizing its manufacturing network, improving flexibility, and investing in productivity. The company monitors over 20,000 process sensors in nearly 40 plants using AI-enabled tools to provide real-time alerts, predict risks, and support a structurally lower cost position. These capabilities are being expanded across the three businesses.

    05

    Portfolio Transformation and Capital Allocation

    The company completed the sale of its glass reinforcement business, generating approximately $280 million in cash proceeds and expecting an additional $50 million to $70 million from excess alloy sales over the next year. This divestiture marks the completion of Owens Corning's reshaping into a more focused building products leader. The proceeds will fund organic growth initiatives and support the commitment to return $1 billion to shareholders in 2026, maintaining a strong investment-grade balance sheet.

    06

    Leadership Changes and Sustainability Focus

    Todd Fister's role has been expanded to Chief Financial and Operating Officer, aiming to unlock efficiencies, streamline execution, and accelerate organic growth. The company also highlighted its sustainability efforts, embedding practices to reduce emissions and waste, and increase recycled materials. Owens Corning was recognized by S&P Global as a top 1% performer in the Building Products industry for sustainability, underscoring its commitment to responsible operations.

    AI-generated summary of the company’s earnings call. Not investment advice.