Owens Corning (OC)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered durable growth and margins: Net sales from continuing operations rose 25% to $2.53B, driven by the new Doors segment ($540M), with adjusted EBITDA margin of 22%—the 19th consecutive quarter at 20%+; adjusted EPS was $2.97 . Versus S&P Global consensus, OC posted small beats on revenue (+$15.6M) and EPS (+$0.10)*.
• Guidance: For Q2 2025, management expects high-single-digit revenue growth YoY and enterprise adjusted EBITDA margin in the low-to-mid 20% range; tariff headwinds are mitigated to a net ~$10M impact in Q2 (mostly Doors) .
• Segment mix: Roofing EBITDA margin remained strong at 30% (maintenance/Medina startup costs weigh near term), Insulation expanded to 25% EBITDA margin despite lower volume, and Doors posted 13% EBITDA margin with synergy ramp offset by tariffs .
• FY25 financial outlook maintained: Corporate EBITDA expenses $240–$260M, interest expense $250–$260M, ETR 24–26%, Capex ~$800M, D&A ~$650M—unchanged vs February guidance .
• Potential stock catalysts: demonstrated beat-and-raise credibility (small beats with resilient margins), clear mitigation of tariff risks, and Investor Day updates—raised long-term margin targets (enterprise mid-20% adj. EBITDA; Roofing 30%; Insulation 24%; Doors 18–20% with $200M synergies) plus new 12M-share buyback authorization .

What Went Well and What Went Wrong

• What Went Well

  • Margin durability: 22% adjusted EBITDA margin (19th straight quarter at or above 20%) despite mixed markets and inflation; adjusted EPS of $2.97 . CEO: “durability of our earnings… the power of the enterprise to outperform in any operating environment” .
  • Insulation execution: EBITDA margin expanded to 25% on positive price/cost and favorable manufacturing costs, even with revenue down 5% YoY . CFO: “Insulation delivered EBITDA margins of 25%… favorable manufacturing costs” .
  • Doors integration: $68M EBITDA (13% margin) with synergy progress; management on track to exceed the $125M enterprise synergy commitment and sees further network optimization upside .

• What Went Wrong

  • Roofing cost headwinds: Roofing EBITDA margin slipped 100 bps YoY to 30% on higher maintenance and Medina startup costs (Q1 ~$19M manufacturing cost headwind expected to persist near term) .
  • Working capital seasonality and Capex: Operating cash outflow ($49M) and FCF outflow ($252M) reflected seasonal working capital and higher capital additions ($203M) .
  • Tariffs: While net Q2 impact is mitigated to ~$10M, management still expects a step-up in 2H25 net tariff exposure to ~1%–2% of COGS under current policies (Doors most exposed due to cross-border finished goods) .

Financial Results

Consolidated performance (oldest → newest):

Consensus vs actual (S&P Global; oldest → newest):

Estimate values marked with * are from S&P Global. Values retrieved from S&P Global.

Segment performance (Q1 2025 continuing operations):

KPIs (Q1 2025):

• Safety RIR: 0.54 (includes Doors)
• Shareholder returns: $159M (dividends $59M; buybacks $100M; 0.7M shares repurchased; 5.7M remaining authorization)
• Liquidity: $1.9B (cash ~$400M; revolver availability ~$1.5B); established $500M commercial paper program in Q1

Note: Beginning Q1 2025, glass reinforcements are classified as discontinued operations and segments are reorganized into Roofing, Insulation, and Doors .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Owens Corning delivered its 19th consecutive quarter of 20% or better adjusted EBITDA margins, demonstrating the durability of our earnings and the power of the enterprise to outperform in any operating environment.” — Brian Chambers, CEO .
• “Free cash flow for the quarter was a net outflow of $252 million, driven by the timing of working capital from seasonality in the business and by capital additions… liquidity of $1.9 billion… we established a commercial paper program and completed issuance of $500 million of short-term notes.” — Todd Fister, CFO .
• “We are on track to exceed the enterprise commitment [for Doors synergies]… we anticipate ongoing synergies and cost controls to largely offset the impact of announced tariffs.” — Todd Fister .
• “We announced an April [Roofing] increase. We're seeing good realization of that to start the quarter… Medina [laminate] line… start up at the end of the second quarter; ramp Q3/Q4.” — Brian Chambers .

Q&A Highlights

• Insulation capacity and pricing: Industry capacity additions differentiated between batts/rolls (less flexible) and loosefill (more flexible); OC believes secular demand supports additions; near-term, maintaining positive price with carryover from mid-2024 increase; limited traction on 2025 price but Q2 price remains positive .
• Tariffs: Q2 gross ~$50M mitigated to net ~$10M via inventory positioning, supplier negotiations, shifting supply outside China (now ~145% tariffs), and seeking relief on Canadian retaliatory tariffs; 2H net impact estimated at 1%–2% of COGS under current policies .
• Roofing margins: Year-on-year dip driven by ~$19M maintenance/startup costs (Medina) in Q1 with similar headwind in Q2; otherwise price/cost positive and volumes stable; margins would be higher excluding these costs .
• Doors profitability path: Cost synergies (OpEx/sourcing), network optimization, and volume recovery expected to lift margins; tariff exposure is primarily finished goods flows across USMCA, not raw materials .
• Macro read-through: Stable nondiscretionary R&R in Roofing; softer new resi and R&R elsewhere; nonresidential pockets of strength (manufacturing/data centers) offsetting retail/healthcare softness; Europe gradually improving .

Estimates Context

• Q1 2025: OC beat EPS ($2.97 vs $2.87, +$0.10) and revenue ($2.53B vs $2.514B, +$15.6M), continuing a multi-quarter beat pattern on both lines. Prior quarters: Q4 2024 EPS beat +$0.31 and revenue beat +$68.2M; Q3 2024 EPS beat +$0.33 and revenue beat +$1.25M. Values retrieved from S&P Global.
• Implications: Consensus likely to adjust upward modestly for 2025 given high-single-digit Q2 revenue growth outlook, low-to-mid 20% margin guide, and sustained pricing/mix benefits in Roofing and Insulation .

Estimate values marked with * are from S&P Global. Values retrieved from S&P Global.

Key Takeaways for Investors

• Resilient margin structure: Sustained 20%+ adjusted EBITDA margins through cycle support premium valuation versus building products peers; near-term Roofing maintenance/startup costs are transient .
• Modest upside to consensus: Small Q1 beats and constructive Q2 guide (HSD revenue growth; low-to-mid 20% margins) suggest steady estimate drift higher absent macro shocks . Values retrieved from S&P Global.
• Tariff risk managed near term: Q2 net impact trimmed to ~$10M; watch 2H 1%–2% COGS exposure and Canada cross-border developments, especially for Doors .
• Doors margin path intact: Synergies trending above plan ($125M+) and network optimization should offset tariff drag; medium-term EBITDA margin target of ~18% (with line of sight to 20%) reiterated at Investor Day .
• Capacity investments are catalysts: Medina line and future SE plant expand high-margin laminate shingles; Insulation Kansas City line and European electrification underpin cost position and growth .
• Capital deployment remains shareholder-friendly: $159M returned in Q1; new 12M-share buyback authorization enhances flexibility alongside strong liquidity .
• Watch demand mix: Roofing nondiscretionary R&R stable; new construction and discretionary R&R softer; Europe showing early signs of improvement—segment exposures matter for quarterly cadence .