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    OC
    Earnings call· Jun 2026(Q2 FY26)

    Owens Corning Q2 FY26 earnings call OC

    Aug 5, 2026 Source

    Executive summary

    Owens Corning Q2 FY26 — Strong Execution Drives Resilient Performance Amidst Market Pressures

    Owens Corning delivered robust Q2 FY26 results, showcasing the resilience of its reshaped portfolio and operational discipline amidst challenging market conditions. The company's strategic pivot to a residential-focused building products model, coupled with strong execution in commercial and operational initiatives, enabled it to outperform. While facing inflationary pressures and some market softness, particularly in residential construction, OC continues to generate strong cash flow and invest in growth, positioning itself for long-term value creation.

    Highlights

    5

    • Achieved adjusted EBITDA of $660 million with a 24% margin, demonstrating strong profitability.

    • Exceeded Doors acquisition synergy target, achieving $135 million in run-rate enterprise cost synergies, surpassing the original $125 million commitment.

    • Generated strong free cash flow of $199 million, an improvement from $129 million prior year, driven by disciplined working capital management.

    • Roofing segment outperformed the broader market in shingle and components volumes, reflecting strong demand and contractor engagement.

    • Insulation segment delivered 4% sales growth, driven by higher volumes in European and North American non-residential businesses, with strong commercial execution.

    Concerns

    5

    • Adjusted EBITDA included $30 million in net cost inflation related to the Iran conflict, with an anticipated $40 million impact in Q3 FY26.

    • Roofing EBITDA decreased by $16 million year-over-year due to higher inflation, including transportation, resulting in negative price-cost despite relatively flat pricing.

    • Doors segment sales were down 7% year-over-year, primarily due to strategic business exits, and EBITDA decreased due to lower volumes and higher transportation costs.

    • Insulation EBITDA was down year-over-year due to slightly lower pricing and continued inflation, resulting in negative price-cost in Q3 FY26.

    • Discretionary remodel activity and new residential construction are expected to remain under pressure in Q3 FY26.

    Guidance & targets

    17
    CategoryTargetConfidence
    General corporate EBITDA expenses
    $245 million to $255 million
    medium materiality
    High
    Effective tax rate
    24% to 26%
    medium materiality
    High
    Depreciation and amortization
    approximately $680 million
    medium materiality
    High
    Capital additions
    around $800 million
    medium materiality
    High
    Cash return to shareholders
    $1 billion
    high materiality
    High
    Total revenue
    $2.6 billion to $2.7 billion
    high materiality
    High
    Adjusted EBITDA margin
    approximately 20% to 22%
    high materiality
    High
    Roofing revenue growth
    down mid- to high single digits
    medium materiality
    High
    Roofing Armor shipments
    down high single digits
    medium materiality
    High
    Roofing EBITDA margin
    approximately 30%
    medium materiality
    High
    Insulation revenue growth
    mid-single-digit
    medium materiality
    High
    North American residential revenue (Insulation)
    relatively flat
    medium materiality
    High
    North American nonresidential revenue (Insulation)
    up low double digits
    medium materiality
    High
    Europe Insulation revenue
    up versus prior year
    medium materiality
    High
    Insulation EBITDA margin
    in line with Q2, which was 22%
    medium materiality
    High
    Doors revenue growth
    down mid-single digits
    medium materiality
    High
    Doors EBITDA margin
    approximately 10%
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Roofing
    Strength driven by favorable product mix and demand for high-value products. Market up due to elevated restocking. Storm activity in line with historic averages. EBITDA down $16 million due to higher inflation and negative price-cost.
    Shingles and components volumes: slightly ahead of broader marketOverall asphalt shingles and components market: up slightly vs prior yearNonwovens volumes: lower (due to low-margin contract exit)
    		$1.3 billionup slightly—34%
    Insulation
    Driven by higher volumes and modest currency benefit. Q2 is final quarter impacted by China Building Materials divestiture ($130M annual revenue). EBITDA down due to slightly lower pricing and continued inflation.
    North American residential revenue: up slightly vs last yearNorth American nonresidential revenue: increased vs prior yearEurope revenue: grew (strong commercial performance, improving core markets)
    		$971 million4%—22%
    Doors
    Primarily driven by strategic business exits (divestiture of distribution business in Q1 FY26 with $70M annual net revenue; sale of Oregon components facility in Q4 FY25 with $50M annual sales). Combined net revenue impact of these actions was $30 million. EBITDA down due to lower volumes and higher transportation costs, but ahead of guide due to tariff refunds.
    		$513 milliondown 7%—11%

    Operational metrics

    28
    Adjusted EBITDA margin
    18%
    2015-2020

    Annual adjusted EBITDA margins increased from an average of about 18% from 2015 through 2020 to low to mid-20% since then.

    Capital additions
    $194 millionup $18 million from prior year
    Q2 FY26

    Capital additions for continuing operations were $194 million, up $18 million from prior year.

    Annual revenue from divested business
    $130 million
    annual

    Q2 marks the final quarter impacted by the sale of our China Building Materials businesses, which had about $130 million of annual revenue.

    Housing starts
    1.2 million to 1.6 million
    long-term

    When we look at the guide at Investor Day, we arranged that based on a housing market between 1.2 million and 1.6 million housing starts.

    Adjusted EBITDA
    $660 million
    Q2 FY26

    We delivered total revenue of $2.8 billion and adjusted EBITDA of $660 million for an adjusted EBITDA margin of 24%.

    Adjusted EBITDA margin
    24%
    Q2 FY26

    We delivered total revenue of $2.8 billion and adjusted EBITDA of $660 million for an adjusted EBITDA margin of 24%.

    Run-rate enterprise cost synergies
    $135 millionexceeding original $125 million commitment
    end of year 2 of ownership

    When we acquired Doors in May 2024, we committed to delivering $125 million of run rate enterprise cost synergies by the end of year 2 of ownership. As we reach the end of that time period, we have achieved $135 million, exceeding our original commitment.

    Structural cost improvements
    $75 million
    ongoing

    In addition, we have identified another $75 million of structural cost improvements across our operations and are beginning to see that materialize in our results.

    Annual adjusted EBITDA margins
    above 20%
    5 consecutive years

    For 5 consecutive years, we have delivered annual adjusted EBITDA margins above 20%, reflecting stronger execution and a higher performing operating model.

    Return on capital
    10%
    12 months ending June 30, 2026

    For the 12 months ending June 30, 2026, our return on capital was 10%.

    Debt-to-EBITDA ratio
    2.4xnear the middle of our targeted 2 to 3x range
    quarter end

    We ended the quarter with a debt-to-EBITDA ratio of 2.4x near the middle of our targeted 2 to 3x range.

    Liquidity
    $1.8 billion
    quarter end

    At quarter end, the company had liquidity of $1.8 billion, consisting of $271 million in cash and $1.5 billion available under our bank debt facilities.

    Senior notes due
    $400 million
    Q3 FY26

    We have $400 million of senior notes due in the third quarter that we intend to pay off using commercial paper.

    Capital returned to shareholders
    $264 million
    Q2 FY26

    We returned $264 million to shareholders this quarter in the form of share repurchases and dividends.

    Capital returned to shareholders
    $327 million
    YTD Q2 FY26

    Year-to-date through the second quarter, we have returned $327 million to shareholders

    Capital returned to shareholders
    approximately $5 billion
    since 2019

    Since 2019, we've returned approximately $5 billion to shareholders through dividends and share repurchases

    Quarterly dividend per share payout
    more than tripled
    since 2019

    and more than tripled our quarterly dividend per share payout.

    Tariff refunds
    $25 million
    Q2 FY26

    Our EBITDA results for the second quarter include $25 million in tariff refunds. About half of the impact was at our Doors business with the remainder across the enterprise.

    Net cost inflation
    $30 million
    Q2 FY26

    That refund partially offset the $30 million in net cost inflation we saw in Q2 related to the Iran conflict.

    Net cost impact
    approximately $40 million
    Q3 FY26

    We anticipate the net cost impact of Iran in the third quarter to be approximately $40 million as inflation moves through inventory.

    Adjusting items
    $3 million
    Q2 FY26

    During the second quarter, we recorded $3 million of adjusting items.

    Adjusted earnings per diluted share
    $3.93
    Q2 FY26

    Adjusted earnings per diluted share for the quarter were $3.93.

    Pending tariff refunds
    a little over $20 million
    future quarters

    There is -- you can see in our footnotes, there's a little over $20 million that we have pending as potential refunds in the future.

    In-year storm activity
    broadly in line with historic averages and slightly behind prior year
    through Q2 FY26

    Through the second quarter, in year storm activity was broadly in line with historic averages and slightly behind prior year.

    Roofing EBITDA
    down $16 millionfrom prior year
    Q2 FY26

    EBITDA came in at $441 million, down $16 million from the prior year. The decrease was primarily driven by higher inflation, including transportation, that resulted in negative price cost as a result of relatively flat pricing in the quarter.

    Annual net revenue from divested business
    approximately $70 million
    annual

    As a reminder, we divested our distribution business in Q1, which had annual net revenue of approximately $70 million.

    Annual sales from sold facility
    approximately $50 million
    annual

    We also sold our Oregon components facility in the fourth quarter of last year, which had annual sales of approximately $50 million.

    Net revenue impact of divestitures
    $30 million
    Q2 FY26

    The combined net revenue impact of these actions and our second quarter results was $30 million.

    Industry KPIs

    2
    MetricValueDetails
    Price cost—
    Data center hvac exposure5% or less%

    Product announcements

    1
    ProductTypeDetails
    Self-adhered underlayment linemilestone

    Deals & partnerships

    4
    DoorsAcquisition of Doors business

    Acquired in May 2024, committed to delivering $125 million of run rate enterprise cost synergies by the end of year 2 of ownership, achieved $135 million.

    nullDivestiture of distribution business

    Divested in Q1 FY26, had annual net revenue of approximately $70 million.

    nullSale of Oregon components facility

    Sold in Q4 FY25, had annual sales of approximately $50 million.

    nullDivestiture of Glass Reinforcements business

    Divestiture completed, Q2 FY26 is the final quarter that cash flow includes the impact of discontinued operations related to Glass Reinforcements.

    Capital programs

    2
    Kansas City fiberglass lineunderway

    Benefit: strengthen U.S. insulation network by providing flexible capacity to serve both residential and nonresidential applications, while improving overall manufacturing efficiency

    One of these investments, our new fiberglass line in Kansas City will strengthen our U.S. insulation network by providing flexible capacity to serve both residential and nonresidential applications, while improving our overall manufacturing efficiency as it comes online next year. Given the current residential new construction market, and the growing demand for our nonresidential product offering, we anticipate this line will be dedicated to service our commercial and industrial inflation applications.

    Alabama roofing plantunderway

    Benefit: add capacity to support our expanding residential contractor base within the largest asphalt roofing region in the U.S.

    We are also progressing in the construction of our new roofing plant in Alabama, which will add capacity to support our expanding residential contractor base within the largest asphalt roofing region in the U.S. We expect this capacity to be available mid-2028.

    Risks & headwinds

    6
    Net cost inflation from Iran conflictQ2 FY26, Q3 FY26

    $30 million in Q2 FY26; anticipated $40 million in Q3 FY26

    Mitigation: Price increases in market across all businesses, sourcing, supply chain, manufacturing productivity offsets.

    Discretionary remodel activity and new residential construction pressureQ3 FY26

    expected to remain under some pressure

    Mitigation: Leveraging OC advantages, integrated go-to-market strategy, investments in new manufacturing assets.

    Distributor inventory restocking impact on Roofing volumesQ3 FY26

    heavier Q2 inventory stocking, reducing distributor purchases in Q3 FY26

    Mitigation: Anticipating volumes broadly in line with the market, focusing on price realization.

    Negative price-cost in RoofingQ2 FY26, Q3 FY26

    EBITDA down $16 million from prior year in Q2 FY26; expected in Q3 FY26

    Mitigation: Solid realization from Q2 price increases, ongoing focus on price realization and cost offsets.

    Negative price-cost in InsulationQ3 FY26

    expected in Q3 FY26

    Mitigation: Slightly positive pricing, but offset by ongoing costs and transportation inflation; focus on productivity, mix, and price traction.

    Negative price-cost in DoorsQ3 FY26

    expected in Q3 FY26

    Mitigation: Implemented price increase taking effect near end of Q3; cost optimization initiatives and enhanced go-to-market strategies.

    What to watch in Q3 FY26

    5

    Roofing price-cost neutrality

    Q4 FY26 or 2027
    Currentnegative price cost
    Targetprice cost neutral

    Why it matters

    Determines the profitability trajectory of the largest segment, especially given ongoing inflation.

    I think our Q4 outlook around price cost neutral on all inflationary costs. It's going to be highly dependent now in terms of what we see around asphalt and other energy cost inflation and delivery cost inflation. So we're going to look at trying to get price cost neutral, but we're also looking holistically of how we sustain margins in this inflationary environment.

    Q&A highlights

    8

    Seeking granularity on insulation volume drivers (non-res, Europe, resi) and details on the Nifa-Utah plant reopening, including timing, purpose (offsetting rebuilds), and long-term intentions.

    Management attributed insulation strength to a decade-long strategy of investing in non-res and European businesses, with strong commercial execution and decent market conditions in those segments. Data centers (less than 5% of revenue) are a strong growth pocket. North American residential volumes are tracking the market on a rolling basis. Nifa-Utah is a small, flexible plant reopening in Q4 FY26 to support customer service during 2027 rebuilds and manage the network, with minimal cost impact due to transportation savings.

    “When we look at nonres in Europe, markets are decent there in the nonres piece, we've got pockets of real strength in data centers which we would kind of put at 5% or less of our overall revenue, but it's growing at a fast enough rate that it is helping us on the top and bottom line in insulation, but we're also seeing strength in other pockets and pretty broad-based strength in the nonres pieces in North America.”

    asked by Stephen Kim · answered by Brian Chambers

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Portfolio Transformation

    Owens Corning has strategically reshaped its portfolio to focus on residential building products, leveraging its iconic brand, commercial strength, and leading technologies. This pivot has structurally improved the company's earnings power, with annual adjusted EBITDA margins consistently above 20% for five consecutive years, compared to an average of 18% from 2015-2020. The company aims to outperform across cycles with market-leading positions in attractive categories, creating multiple paths for revenue, earnings, and cash flow growth.

    02

    Operational Excellence and Cost Synergies

    The company continues to apply its operational discipline, achieving $135 million in run-rate enterprise cost synergies from the Doors acquisition, exceeding the original $125 million commitment by the end of year two of ownership. An additional $75 million in structural cost improvements have been identified across operations, beginning to materialize in results. This 'Owens Corning playbook' is strengthening performance and unlocking additional value over time⏳, contributing to the company's track record as a best-in-class operator.

    03

    Investment in Capacity and Productivity

    Owens Corning is investing $800 million in capital in 2026 to strengthen competitive positions, enhance productivity, and improve service levels. Key investments include a new fiberglass line in Kansas City, expected online next year and dedicated to commercial/industrial insulation applications, and a new roofing plant in Alabama, which will add capacity by mid-2028 to support the expanding residential contractor base. A new self-adhered underlayment line was recently commissioned in Houston, improving cost position in a high-growth product category.

    04

    Integrated Go-to-Market Strategy and AI Adoption

    The company is leveraging an integrated go-to-market strategy across its three complementary businesses, utilizing its iconic brand and unparalleled commercial strength to help customers succeed. Advanced analytics and AI are being deployed, with an AI model in the Roofing business analyzing sales volume data to identify changes in customer purchase patterns. This allows commercial teams to engage customers earlier, protect commitments, and pursue expansion opportunities, a capability that is generating value and being scaled across the enterprise.

    05

    Insulation Segment Strength and Network Optimization

    The Insulation business demonstrated resilience with 4% sales growth, driven by strong performance in European and North American non-residential markets, including data centers. To support future demand and manage planned furnace rebuilds in 2027, the company plans to restart its Nifa-Utah plant in Q4 FY26. This smaller, flexible production line can service the West Coast residential market cost-effectively, balancing the network and ensuring customer service.

    06

    Leadership Transition

    Owens Corning announced an important leadership transition: Jonathan Collins will join as Chief Financial Officer on August 10, bringing deep financial expertise and operational capabilities. Todd Fister will transition to President and Chief Operating Officer, where he will lead the execution of key enterprise initiatives to accelerate growth and performance, leveraging the company's unique advantages to further integrate go-to-market strategies and standardize work.

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