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Owens Corning (OC)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue of $2.684B (-3% y/y) and adjusted EBITDA margin of 24% reflected resilient execution in a softer U.S. residential backdrop and uniquely quiet storm season; adjusted EPS was $3.67, while GAAP EPS was $(5.93) due to a $780M non‑cash goodwill impairment in Doors .
  • Results were slightly below S&P Global consensus: revenue $2.684B vs $2.699B* and adjusted EPS $3.67 vs $3.72*, driven by lower volumes in Roofing (storm-driven) and Doors (new construction and discretionary R&R softness) and negative price/cost in Doors* .
  • Q4 outlook calls for revenue of $2.1–$2.2B and adjusted EBITDA margins of ~16–18% as distributors destock into year-end and storm activity remains low; management expects inventory restocking to begin in early 2026 .
  • Cash generation and capital returns remained strong: Q3 operating cash flow $918M and FCF $752M; $278M returned via buybacks and dividends as OC advances its $2B 2025–26 capital return plan .
  • Stock reaction catalysts: softer Q4 guide and Doors impairment may pressure near-term sentiment, offset by structurally higher margins, strong cash returns, and clarity on 2026 restocking and secular tailwinds in non-res and Europe .

What Went Well and What Went Wrong

  • What Went Well

    • Structural margin durability: OC delivered 24% adjusted EBITDA margin despite revenue down 3% y/y, citing structural improvements and capital‑efficient investments; CEO emphasized the “new Owens Corning” operating with greater efficiency and outperforming prior cycles .
    • Roofing resilience and pricing: Roofing EBITDA was $423M with 34% margin (flat y/y) as positive price offset cost inflation; OC outperformed a low double‑digit market decline in shingles volumes during an unusually quiet storm season .
    • Strong cash generation and returns: Q3 operating cash flow $918M and FCF $752M; $278M returned to shareholders (1.4M shares repurchased plus $58M dividend) .

  • What Went Wrong

    • Doors headwinds and impairment: Doors revenue fell 5% y/y with 10% EBITDA margin and negative price/cost due to ongoing inflation (primarily tariffs); OC recorded a $780M non‑cash goodwill impairment tied to weaker near‑term macro assumptions .
    • Residential demand and storm activity: U.S. residential new construction and R&R softened; roofing repair demand declined significantly on minimal storms (no named U.S. landfalls in Q3), pressuring volumes and Q4 outlook .
    • Destocking and curtailments: Year‑end inventory reductions at distributors and additional production downtime are expected to weigh on Q4 revenue/margins (enterprise guide: revenue $2.1–$2.2B; adjusted EBITDA margin ~16–18%) .

Financial Results

Overall results (actuals)

MetricQ1 2025Q2 2025Q3 2025
Net Sales ($USD Billions)$2.530 $2.747 $2.684
GAAP Diluted EPS$2.95 $3.91 $(5.93)
Adjusted Diluted EPS$2.97 $4.21 $3.67
Adjusted EBITDA Margin %22% 26% 24%

Q3 vs. prior year and prior quarter context

  • Net sales down 3% y/y ($2.684B vs $2.763B) and adjusted EBITDA down 10% y/y ($638M vs $705M) .
  • Sequentially, revenue slightly below Q2 ($2.684B vs $2.747B) and margins normalizing seasonally (24% vs 26%) .

Segment breakdown – Q3 2025

SegmentNet Sales ($USD Billions)EBITDA ($USD Millions)EBITDA Margin
Roofing$1.240 $423 34%
Insulation$0.941 $212 23%
Doors$0.545 $56 10%

KPIs and other quantitative items

KPIQ3 2025Notes
Operating Cash Flow ($USD Millions)$918 Q3 cash from ops
Free Cash Flow ($USD Millions)$752 Q3 FCF
Shareholder Returns ($USD Millions)$278 $220M buybacks + $58M dividend
Debt / EBITDA (x)2.0x At low end of 2–3x target
Safety – Recordable Incident Rate0.56 Q3 RIR
Tariff Net Impact ($USD Millions)~$12 (Q3) Doors most exposed

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue (enterprise)Q4 2025—~$2.1B–$2.2B New
Adjusted EBITDA Margin (enterprise)Q4 2025—~16%–18% New
General Corporate EBITDA ExpensesFY 2025$240M–$260M (Q2) ~ $240M Narrowed to low end
Interest ExpenseFY 2025$250M–$260M (Q2) $250M–$260M Maintained
Effective Tax Rate on Adjusted EarningsFY 202524%–26% (Q2) 24%–26% Maintained
Capital AdditionsFY 2025~ $800M (Q2) ~ $800M Maintained
Depreciation & AmortizationFY 2025~ $650M (Q2) ~ $650M Maintained
Tariffs – Net ImpactQ4 2025~$10M net (Q3 commentary) ~$10M net (reduce ~$50M exposure) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025 and Q2 2025)Current Period (Q3 2025)Trend
Tariffs / InflationMinimal net impact targeted at ~$10M in Q2; mitigation in place ~$12M net impact in Q3; Q4 net ~$10M; Doors most exposed Stable, mitigated headwind
Supply chain & InventoryQ2 outlook highlighted mixed markets; less focus on destocking Year-end destocking across distribution; additional production curtailments Destocking pressure intensifies into Q4
Roofing performanceQ1 margin ~30% ; Q2 margin 35% Q3 margin 34% with flat volumes vs market down; Q4 guide mid‑20% margin Strong structure, seasonal downshift
Insulation performanceQ1 margin 25% ; Q2 margin 24% Q3 margin 23%; Q4 guide slightly above 20% as RES demand softens Holding 20%+ despite RES softness
Doors integrationDoors added in 2024; synergy framework in place On track to exceed $125M cost synergies by mid‑2026; +$75M structural savings; near‑term margins pressured Execution on synergies; near‑term margin headwinds
Regional trendsEurope gradual improvement expected in 2H 2025 Europe gradually improving; non‑res NA slightly down; Mexico project delays Europe improving; NA non‑res mixed
Strategic portfolioGlass reinforcements divestiture progressing for 2025 close Targeted to complete in 2025, subject to approvals On track

Management Commentary

  • Strategy and margin durability: “Because of the strategic choices and structural improvements we have made, the new Owens Corning continues to operate with greater efficiency, outperforming prior cycles.”
  • Roofing market dynamics: “No named storms in the Atlantic made landfall in the U.S. in the third quarter for the first time in a decade… U.S. shingle volume, down slightly, outperformed the market… delivered EBITDA margins of 34%.”
  • Doors impairment and outlook: “Adjusting items of $784M, primarily due to a non‑cash goodwill impairment charge in our doors business… driven by updates to macro assumptions due to near‑term market weakness, not a change in our longer‑term view.”
  • Q4 setup and destocking: “We anticipate fourth‑quarter revenue… approximately $2.1–$2.2 billion… adjusted EBITDA margin… ~16–18%... distributors reduce end‑of‑year inventories.”
  • Capital allocation: “Debt‑to‑EBITDA of 2x… returned $278 million to shareholders this quarter; on track to return $2 billion in 2025–26 while maintaining investment‑grade balance sheet.”

Q&A Highlights

  • Roofing pricing and margins: Management sees typical Q4 seasonal pricing moves but continues to realize positive price y/y; expects negative price/cost in Q4 given ongoing inflation and downtime. Roofing margins guided to mid‑20% in Q4, consistent with historical seasonality .
  • Insulation demand and pricing: Non‑res projects experienced delays (U.S. and Mexico), with some shifts into 2026; pricing mostly stable with targeted Q3 actions carrying into Q4; margins expected slightly above 20% in Q4 .
  • Doors impairment details: Goodwill model sensitive to near‑term macro; impairment triggered by revenue decline; no change in long‑term earnings view; synergies tracking slightly ahead of $125M goal with additional $75M structural savings identified .
  • Destocking magnitude: Roofing Q4 volume decline driven roughly “half and half” by storm activity and inventory reductions; restocking expected to begin in early 2026 as distributors rebuild .
  • Capacity utilization and downtime: Insulation took cold idle at NEFI and is using Q4 maintenance downtime; Roofing will see more extensive downtimes, elevating costs that may spill into Q1 .

Estimates Context

Q3 performance vs S&P Global consensus

MetricConsensusActualSurprise
Revenue ($USD Billions)$2.700*$2.684 Slight miss*
Adjusted EPS ($)$3.72*$3.67 Slight miss*

Trend vs prior quarters (consensus vs actuals, S&P Global)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$2.514* vs $2.530 $2.706* vs $2.747 $2.700* vs $2.684
Adjusted EPS ($)$2.87* vs $2.97 $3.82* vs $4.21 $3.72* vs $3.67

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Structural margins intact: Despite revenue down 3% y/y, adjusted EBITDA margin of 24% and Roofing at 34% underscore structural cost position and pricing power through cycles .
  • Near-term softness priced in: Q4 revenue/margin guide (down mid‑to‑high teens; 16%–18% margin) reflects destocking and low storm activity; distributors are expected to restock as 2026 begins .
  • Doors is a fix‑and‑build story: Non‑cash impairment acknowledges near‑term macro pressure, but synergy capture is pacing ahead and additional $75M structural savings targeted to lift margins as volumes normalize .
  • Cash returns remain a backstop: Q3 FCF of $752M and $278M returned this quarter support the $2B 2025–26 commitment while maintaining 2x leverage and investment‑grade flexibility .
  • Tariffs manageable: Net tariff headwind ~$12M in Q3 and ~$10M in Q4 with mitigation primarily in Doors; continues to be contained at enterprise level .
  • Watch storm season and non‑res trends: Roofing volumes are highly sensitive to storm activity; non‑res (U.S./Mexico) project timing and Europe’s gradual recovery are key swing factors for 2026 trajectory .
  • Medium-term thesis: With durable mid‑20% enterprise margin targets and secular non‑residential and European tailwinds, OC is positioned to re‑accelerate as destocking fades and demand stabilizes .