Hello, everyone, and welcome to Owens Corning Third Quarter 2023 Earnings Call. My name is Daisy, and I'll be coordinating your call today. [Operator Instructions] I would now like to hand it to your host, Amber Wohlfarth from Owens Corning to begin. Amber, 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 third quarter of 2023. Joining us today are Brian Chambers, Owens Corning's Chair and Chief Executive Officer; and Todd Fister, our Chief Financial Officer. Following our presentation this morning, we will open this 1 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 third quarter of 2023. For the purposes of our discussion today, we have prepared presentation slides that summarize our performance and results and we'll 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 2 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 of quarter-to-quarter fluctuations, which have the potential to be significant in arriving at adjusted earnings per share. We also use free cash flow and 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 that enhance shareholder value. The tables in today's news release and the Form 10-Q include more detailed financial information. For those of you following along with our slide presentation, we will begin on Slide 4. And now opening remarks from our Chair and CEO, Brian Chambers. Brian?

Thanks, Amber. Good morning, everyone, and thanks for joining us today. I would like to begin by welcoming our new Chief Financial Officer, Todd Fister, to our call this morning. Some of you had a chance to hear from Todd in his most recent role as President of our Insulation business. He brings more than 25 years of financial, operational and strategic experience to his new role, along with deep industry knowledge and valuable customer perspective. Todd and I've worked closely together over the past several years, and I look forward to continuing to partner with him as our CFO. During our call this morning, I will start with a broad overview of our performance, including some of the key focus areas driving our success. Todd will then provide further detail on our third quarter results. And I will come back to discuss what we are currently seeing in our markets and our near-term outlook. Overall, Owens Corning delivered another strong quarter as our global teams continued to execute at a high-level in response to dynamic market conditions. The sustained quality and consistency of our performance reflects the strength of our team, our market positions and our strategy. I will speak more about this shortly. But first, I will begin our review of the quarter, as always, with our safety performance. At Owens Corning, our commitment to safety is unconditional. During the third quarter, we maintained a very safe environment with an RIR of 0.66 with half of our global locations operating injury-free for a year or more. Financially, we delivered revenue of $2.5 billion, similar to third quarter 2022, with adjusted EBIT of $518 million, up 6% year-over-year, and adjusted EBITDA of $644 million, resulting in an adjusted EBIT margin of 21% and adjusted EBITDA margin of 26% for…

Thank you, Brian, and good morning, everyone. I'm excited to be on the call with you today. I've met some of you as Insulation President and look forward to engaging with all of you as CFO. During my time leading Insulation, I worked closely with Brian and our management team as we built the enterprise strategy we shared at our 2021 Investor Day. Over the last few years, I've been executing that strategy to drive structural margin improvements in Insulation, resulting in a stronger and more resilient business. I am thrilled to continue to deliver on that enterprise strategy as CFO. I'd now like to turn to Slide 5 to discuss the results for the third quarter. As Brian mentioned, we delivered a strong quarter with consolidated net sales of $2.5 billion in line with the same quarter last year. Adjusted EBIT of $518 million and adjusted EBITDA of $644 million were both 6% higher than the same quarter last year. Overall, we continue to realize the benefit of positive pricing which tempered the revenue impact of lower volumes in two of our segments. In addition, overall input material and delivery costs were deflationary in the quarter. This, along with ongoing commercial and operational execution, resulted in adjusted EBIT margins of 21% and adjusted EBITDA margins of 26%. Net earnings attributable to Owens Corning for the third quarter were $337 million, or $3.71 per diluted share, compared to $470 million or $4.84 per diluted share in the same quarter of 2022. The difference was driven primarily by $130 million gained on our investment in Fiberteq in the third quarter of 2022. Adjusted earnings for the third quarter were $377 million, or $4.15 per diluted share, compared to $351 million, or $3.61 per diluted share in the same quarter of 2022.…

Thank you, Todd. Our third quarter results continued to demonstrate the sustained quality and consistency of our enterprise earnings. As we move into the fourth quarter, we expect to continue to face a very dynamic market with the impact of higher interest rates and ongoing geopolitical tensions, resulting in slower global economic growth. Looking at our end markets, we continue to see good opportunities in most of our building and construction markets as we finished the year with increasing pressure in some of our industrial and international markets. We expect U.S roofing demand to remain robust, driven by storm activities through the first three quarters, and many of the key verticals within our non-residential building and construction businesses in the U.S and Europe to remain relatively stable. Overall for the company, we expect our performance in Q4 to result in net sales slightly below prior year on generating mid teen EBIT margins. Now, consistent with prior calls, I'll provide a more detailed business specific outlook for the fourth quarter. Starting with Roofing, we expect revenue to be up mid to high single digits. We anticipate our volumes to be up mid single digits, but would expect to trail ARMA market shipments in the quarter due to our strong performance in Q4 of last year. In the quarter, we expect to realize price from our previous announcements made this year and maintain positive price costs as we finished the year. Consistent with prior years, we also plan to take needed downtimes for maintenance and productivity improvements. Overall for Roofing in the fourth quarter, we anticipate generating EBIT margins of mid to high 20%. Moving on to our Insulation business, we expect revenues to be down mid single digits versus prior year. Positive price realization along with favorable mixing currency are expected…

[Operator Instructions] Our first question today is from Stephen Kim from Evercore. Stephen, please go ahead. Your line is open.

Yes, thanks very much guys. Good results and thanks for all the commentary. My question is going to be a little more general about market share and margins. There's been a lot of volatility in ARMA shipments relative to your roofing volumes quarter-to-quarter. But, overall, industry volume and pricing has been strong in roofing. And then meanwhile, in insulation, you've taken a lot of capacity actions. But pricing has also been strong and sounds like there's pent-up rebuild activity needed there. So I'm hoping you can speak to kind of market share versus margins generally across your businesses. And so looking back over the past few years, can you assess for us how your market share has trended in your view, particularly in roofing and insulation, and how you think about market share versus margins going forward in those two segments.

All right. Thanks, Stephen. Appreciate the comments and the questions. Let me get started. I'll maybe talk a little about Roofing and then I'll kick it to Todd to talk about Insulation. I think, in general, over the last few years, we've been very pleased with both our market share and our margins in our Roofing and our Insulation segments. So I think, we work constantly to balance that approach in terms of the market where we want to continue to work with our customers help them grow and win in the market. And that generally results in and better volumes for us. And ultimately, we'd like that to lead to higher market share for our products. And so that's always a continued focus. But it always starts with an approach to how can we help our customers win and grow in the market. And the result of that being gains in market share AND the result of that being increases in margins, because we're helping them be more successful in the market. So that's our general approach. I think overall, in Roofing, I'll walk through the last few years. We've been very pleased with the performance of our Roofing business. We delivered another great quarter. But a lot of that work has been focused on commercially how reposition the product line to succeed longer term. And we got a great duration product line, we continue to invest in innovation around new colors, new styles, we've been growing our roofing components business as part of that. And that's part of the mix related margin gains we're seeing in the business as we continue to grow share in that category. And we're seeing contractors increase their attachment rates and sell multi material systems on the roof, we think that continues to…

Great. Thanks, Brian. So Stephen, I'll give a little bit of context on margin and then talk about the shares as well. We view our margin improvement in the last few years is being driven by a number of aspects. I mean, certainly the productivity and the network optimization moves that we've made, but also our -- really strong commercial execution in the markets and the value that we brought to customers in the last couple of years when market conditions were really strong. So, we're happy with the improvement in margins that we've seen over time. When we look at share, we ran our assets very hard in 2022 in order to support our customers as much as we could in that environment. We've had some necessary downtime that we've had to take on some of our larger assets this year, which has impacted share a bit as we've got it into the back half of 2023. As Brian said, we're happy with our share positions. We're adding a lot of value to customers in the market. And by historic standards, these are pretty normal market shares for us in the residential business.

Thank you. Our next question today is from Michael Rehaut from JPMorgan. Michael, please go ahead. Your line is open.

Great. Thanks very much. Good morning, everyone. My question has to focus -- is focusing on industry capacity, and over the next year, how should we think about across Insulation and Roofing? The potential for our capacity additions across, again, both sectors, North American Residential Insulation and roofing shingles, asphalt shingles and against that, if there's any anticipated significant changes, let's say in utilization rates. Thank you.

Thanks, Mike. Good morning to you as well. Again, I'll start and I'll kick it to Todd. From a Roofing standpoint, let's say, we continue to see in the overall market a continued market shift of more laminates and less strip shingles. And so this is continued over the last 5 or 6 years, it's actually accelerating. So there is a need in the roofing market for more laminate shingles. And I think you've seen and probably heard some announcements from other manufacturers, including ourselves for additional laminate capacity. But I would say our belief is that continues to be adding capacity that's needed for the market conversion that we see taking place. So we still feel like it's a well structured industry and good balance in terms of the production capabilities to meet demand. But we are going to need to see some more laminate capacity being added so. Our approach has been pretty constant view over the last year or so to continue to go into each one of our facilities and find opportunities to unlock trap capacity to increase efficiencies and we've been doing that pretty steadily. And so we've been able to increase our laminate production over the last 12 months pretty dramatically. And we're seeing that in some of the growth we're in our mix shift, we're seeing in the roofing business today. We announced a new laminator for our Medina plant that really services the Midwest. I think the other thing to keep in mind in roofing is that it's more of a regional business. This product doesn't travel long distances. So a lot of the capacity adds are going to be in regions that we see growth, regions where we see continuous laminate conversion and growth opportunities. And so that's what's driving our investment decisions to try to increase the lam capacity to maintain our position in the market.

I'll give a bit of context on the North America Residential business as well. Right now we view utilization rates as being very healthy for the industry. When we look at September's data on starts and completions and permits, as well as where this year is landing on a leg starts basis, we're in this range of about 1.4 million starts in the U.S. We've shared before, we think the industry has capacity to serve a market in the range of 1.4 million to 1.5 million starts. And I'd say that's inclusive of some of the announced capacity moves by competitors into 2024. As Brian shared for roofing, it's a similar story for North America Residential. We're very much focused on how we leverage process innovations and productivity work to unlock trap capacity from our existing assets. We've had good success with that. The last few years we continue to focus on that is the most efficient and highest return source of capacity for us going forward.

Thank you. Our next question today is from Kathryn Thompson from Thompson Research Group. Kathryn, please go ahead. Your line is open.

Hi, thank you for taking my question today. A lot of focus on the commercial, non-res end market. And the question today, as you look across your major operating segments, both in the U.S and Europe, could you give color in terms of where you see the commercial? What is working? What isn't working? And how that colors your view over the next 3 to 9 months? Thank you.

Thanks, Kathryn. Well, let me start by giving some context on our markets outside of North America. And then I can come back to North America. And I'll start with Europe. In Europe, it's important to understand the -- both last year 2022 as well as this year. We were off to a really good start last year and Europe really strong market conditions in Q1 and even into Q2, before we started to see the impact of energy and inflation. And then more recently, interest rates impact construction activity in Europe. So as we said now, we've been sequentially pretty stable in terms of European demand, it's stable off of a low level, but it is stable from Q2 into Q3. And then we expect that stability, again, from Q3 into Q4, we continue to see good activity in Europe in certain end markets, particular for our film glass business, we've had good demand for LNG and that sort of a global phenomenon. But Europe, we see good stability into Q4. But then we need the economies in Europe to really sort through inflation and interest rates and perhaps also Ukraine, for us to see a return to where we were in the first half of last year. Likewise, Asia is a very similar story. We are seeing weak end market demand broadly in our Asia business for Insulation. North America has real bright spots. When we look at North America activity for manufacturing construction, when we look at some of the larger projects, and again, LNG that we saw quite a bit of our film glass business into, we are seeing good activity in pockets of commercial in North America. We're seeing stability in other pockets. And as you would expect, in smaller pieces of our business like office buildings, we are seeing some weakness. So overall, as we look forward, certainly for fourth quarter, we expect stability in our commercial business. And then we'll discuss 2024 more as we get into the February call.

Thank you. Our next question is from Adam Baumgarten from Zelman Associates. Adam, please go ahead. Your line is open.

Hey, good morning. Just on Roofing, I was just curious what kind of demand trends you're seeing in the non-storm impacted markets at this point?

Yes. Thanks, Adam. I think when we look across the U.S., most regions of the country have been impacted in some form or fashion by some increased storm activity. I'd say the regions that probably stand out is -- the least impacted would be the kind of the Pacific Northwest and then the Northeast. There, we've not seen that kind of storm demand and volatility in terms of increase in demand. And I'd say that the remodeling and R&R activity has been steady. Again, a big part of our offering is a repair replacement model, and we still see those demand trends pretty solid. So I think as we look through the incremental storm band to your question as well, I think we see fundamentally underlying still good, strong repair remodeling activity going on across the roofing business. Now again, it's been accelerated through a lot of incremental storm demand. But I think the fundamentals are still pretty solid. And then a smaller part of the business is tied to new construction. We actually think going into 2024, that becomes more of a tailwind because we do think housing starts are going to continue to grow. So while I think the storm activity is carrying a lot of the headlines this year, and it is at an extremely high-level, multiyear high. We think that's going to carry on into next year. We are still seeing good repair replacement activity in those non-impacted regions.

Thank you. Our next question today comes from Sam Reid from Wells Fargo. Sam, please go ahead. Your line is open.

Awesome. Thanks so much guys for taking my question. Quick one on Insulation. You guys have been calling out favorable mix now for several quarters, and it looks like that continued this quarter in Insulation. Just curious as to how sustainable you think those mix benefits could be? And then maybe could you break out some of the mix tailwinds that you might be seeing on the technical side versus the residential side as well. Thanks.

Great. Thanks, Sam. Sure, I'd be happy to give more context on mix and what we see going forward. A big part of our mix really relates back to the previous question on commercial end markets. And we are seeing good mix out of Europe right now, in part because we've seen good stability in our film glass business and some of our technical insulation product lines within the mineral wool category in Europe. As we've talked about technical and global businesses before, we've talked about the properties of these products being a little more complex than the properties of our residential products, where we deliver thermal performance, but we also deliver other properties with our insulation material that tends to create really close partnerships with customers and contractors on the use of our materials in these end markets. So we've seen relatively stable demand in some of those categories compared to overall conditions in Europe that's driving favorable mix. Our growth in technical and global continues to be a priority for us. We continue to invest in innovation as well as our own processes in order to support growth in that business going forward. So I would continue to expect those to be strong pieces of our business.

Thank you. Our next question today comes from John Lovallo from UBS. John, please go ahead. Your line is open.

Good morning, guys. Thanks for taking my question. Maybe just switching gears to Composites. It looks like Composite volume is expected to be down in the fourth quarter on a year-over-year basis. But I guess the question is, should it be down less year-over-year than what happened in the third quarter given the easing comps in Europe and Asia. And along the same lines, contract pricing seems like it held up but it sounds like it may turn negative in the fourth quarter. Is that the right way to think about it? Thank you.

Yes. Thanks, John. Let me start this overall Composites -- our Composites -- we delivered a good quarter relative to some of the glass reinforced volume weaknesses that we're seeing in the market. And really, I think we continue to face headwinds in our industrial markets and in our international markets. So Kathryn had asked about that a little bit earlier as well in terms of Europe and Asia. So I think the volume decline we are seeing is across the board. But I would say that we are starting to see some stabilization in several regions. So the volume declines, we would expect would start to be less severe than what we saw in Q3 in terms of some of the year-over-year comps. But it is a headwind that we continue to face in the market. And really, when we look at industrial production globally, we still see that pretty weak in several regions. It's still negative. I think probably the bright spots, I'd say we see is North America. We've seen volumes hold up better in North America. We've seen volumes hold up better in India in terms of performance. So regionally, I think we are seeing some areas that are stabilizing, but we are still seeing weakness in Europe. We are still seeing weakness in China, and those are going to be some of the headwinds that we face going forward in terms of volume opportunities. Just to finish that cut though, I would say part of our strategy has been to focus on applications that we think we can have unique advantages, primarily building and construction, renewable energy, infrastructure. I'd say our Building and Construction segment, though, particularly in Europe and North America, are holding up very well. We talked about that in our comments around…

Thank you. Our next question today is from Joe Ahlersmeyer from Deutsche Bank. Joe, please go ahead. Your line is open. Joe, your line is open. Please check [indiscernible].

Hey, everybody. Sorry, I was on mute. I will get right to my question then. The 4Q margin guide, just following up on Composites. Is it right to think maybe that, that margin in 4Q that you've guided do not necessarily representative of what full year next year could look like. I recognize you don't get in to guide beyond the quarter, but maybe there's two things. The price might be hitting you a little bit quicker than the deflation works through inventory. And then on that inventory point, maybe your near-term production under absorption is also more severe upfront as you're managing those inventories. Is that the right way to think about it?

Yes, Joe, it is the right way to think about it. I wouldn't -- we are not guiding out to 2024, but I wouldn't want anybody taking that fourth quarter performance and thinking that's a long-term guide in terms of what the performance of the business can deliver on into next year. But certainly, in the quarter, you're right, we are facing some downward price pressure incrementally. We are also very conscious and focused on managing our inventories and our working capital to generate strong cash flow. So we are going to manage those inventories against this current demand environment. That's going to lead to some incremental production downtimes. Now we'll leverage those downtimes to do maintenance and other things. So we take advantage of that. So when volumes do come back, we are in a great position to service that demand going forward but that is going to be something that impacts us here in Q4 incrementally in terms of that downtime. So that's the combination that we are working through in the near term. But yes, I wouldn't want that to be perceived as any kind of a guide going into 2024.

Thank you. Our next question today comes from Matthew Bouley from Barclays. Matthew, please go ahead. Your line is open.

Hey, good morning, everyone. Thanks for taking the question. I wanted to ask on Roofing margins running over 30% in the past couple of quarters. Think your fourth quarter guide implies you may set all around somewhere in the high 20s for the year. You've obviously made a lot of investments in Roofing and components and your contractor network. So really, the question is the longer these margins stay where they are, it begs the question of what is the new normal. Maybe oil prices are rising. My question is mechanically, what would it take for Roofing margins to normalize from here? And do you have any kind of color around where those margins may settle over time. Thank you.

Yes. Thanks, Matt, and I appreciate you calling out the strength of the margins that we are seeing. And I guess I'd answer it this way. I mean, when we look at what's driving the margin performance in the business, I'd say we are very focused on what we have done and are doing to the business to drive incrementally higher margins. It is around our product mix and more laminates versus strips. It is around our components growth and the actions we are taking there to expand the product line that also generates very strong margins. We are getting great manufacturing performance. We are getting good price realization for the value of the products we are bringing to our customers and how they're growing. So all those are things that we control in terms of our investments in commercial tools and digital tools and innovation and new products and helping our customers in the market. So we think those are sustainable in terms of margin performance in the business in the space. I think we are benefiting this year with some deflation, particularly in asphalt. That is always kind of moves around in terms of inflation and deflationary environments, but we've got a great track record of managing the performance of the business through those dynamics. But that's always going to be something that fluctuates margins as we go forward in terms of input cost materials primarily in asphalt and then overall volume in terms of the demand environment. So those are all the factors that kind of go into the margins. And certainly, we're seeing a lot of those swing towards a very positive away here in the last couple of quarters in terms of not just great operational performance by our team but then the price/cost dynamics and some very strong volumes that are playing in. But as we go forward, I think we continue to look at what is that right long-term performance that we should expect, accounting for some of the market dynamics around inflationary pressures or volumes. And I think we'll be prepared to talk more about that as we move into next year, but we feel really good about how the business is positioned to finish this year strong, start next year strong and continue to deliver very high margins.

Thank you. Our next question today is from Keith Hughes from Truist. Keith, please go ahead. Your line is open.

Thank you. A question on residential insulation down, as you mentioned in the prepared segment. Can you talk about how much of a sell-through or was there an inventory adjustments on any of the channels in that product?

Thanks, Keith. Good morning. Really, we are not seeing a lot of inventory adjustments in the channel right now. We've seen relatively normal inventory levels in the channel this year. So a lot of what we're seeing is sell-through. And as we shared, we're starting to see demand track a little closer to lagged housing starts as we work through a bit of the backlog in starts earlier this year. And so really it's more of a sell-through story than it is an inventory adjustment story.

Thank you. Our next question is from Phil Ng from Jefferies. Phil, please go ahead. Your line is open.

Hey, guys. My question is on Insulation. I just want to get a sense how much line of sight do you have? And how should we think about the volume cadence progressing in that business in the next few quarters with interest rates approaching 8%. Brian, you sounded pretty optimistic on the new construction piece. Certainly, the public builders are calling for growth in 2024, but multifamily looks a little softer. And then Todd, you highlighted how you're upbeat on the commercial industrial side in the U.S. So kind of help us unpack all those components, how we should think about the volume cadence, call it, the next 6 to 12 months in your Insulation business?

Sure. Thanks, Phil. I'd be happy to give a bit of context here. So let me start with what's really happened this year is we've seen mortgage rates increase through the year. I think it had a bit of a surprising impact on the market, which is the resale -- the availability of resale homes is so limited now that is actually pushing demand towards new residential construction. And I think the builders have done a great job in a 7% to 8% mortgage rate environment of finding ways to get homeowners into new homes. As we see mortgage rates continue to increase around this 8% range, again, it makes it even more difficult for existing homeowners to leave really low rate mortgages and move and have those existing homes on the market. So as we look at -- our single best number would be the starts and permitting activity that we saw last month, which incorporates a lot of this new news around interest rates and mortgage rates. Starts activity remained pretty solid at about 1.35 million starts. In permitting activity, as you've commented on, was a bit above that. We actually benefit as well from the shift to single-family. So when you look at take per unit for Insulation, it's structurally higher on single-family properties than it is on multifamily properties. So this mix shift as well within the starts number towards single-family ultimately is a net positive for us. So we've guided to relatively stable demand in the fourth quarter. We'll know more as we get into next year on starts through the next quarter. But certainly, we've seen the builders and new construction be more resilient than I think a lot of folks expected coming into 2023.

Thank you. Our next question today is from Truman Patterson from Wolfe Research. Truman, please go ahead. Your line is open.

Hey, good morning, everyone. Thanks for taking my question. Could you talk about the success you've had so far in your -- both your August roofing price increase as well as your fall insulation price increase? I'm just trying to understand what assumptions you made in regard to both of those in your fourth quarter guidance?

Thanks, Truman. Yes, in terms of the roofing price increase, and I'll have Todd comment on insulation. But on the roofing side, we announced that early August and we're seeing good realization on that, and I put that into the guide in terms of the expectation in Q4 to close out the year. So we've seen good demand in the market for the products. And I think part of this is also we're seeing asphalt deflation, but asphalt costs have been running pretty stable. And normally, we'd expect to see a little bit of a decrease even in Q4. We are not seeing that. I think that's tied a little bit to WTI oil prices moving up a little bit, and I think that's creating some uncertainty as we go into next year in terms of oil cost, asphalt costs. So overall, we are seeing good realization of that August increase.

From an Insulation standpoint, we announced an increase effective September. It's going to have a pretty modest impact here on Q4, but really starts to set up the conversations with our customers for 2024. It's pretty unusual for us to have a Q4 increase. We saw some expectations for some inflation and some of our costs heading into Q4 and we announced, but the net impact of it is going to be pretty modest in the quarter and included in the discussion Brian had of our expectations for Q4.

Thank you. Our next question is from Susan Maklari from Goldman Sachs. Susan, please go ahead. Your line is open.

Thank you. Good morning, everyone. Maybe thinking more strategically about the business, you've made a lot of changes in the last couple of years between acquisitions and some divestitures. As you think about a slower global macro environment, are there opportunities that you can take advantage of within that and perhaps maybe even build on some of these smaller bolt-ons that you've done more recently?

Yes, thanks. Appreciate the question. The answer is yes. I think we see opportunities both within our core businesses in terms of where we see continued organic growth investments we can make. I think we see additional investments we can make to improve the efficiencies of our operations that even further strengthen our margin profile within our core businesses. So when we think about just broad capital allocation, I think we focus on organic growth and productivity. And given our returns on invested capital, I think we continue to look even more on where we can make investments organically to drive growth, also to drive productivity through our existing assets. So I think that's a big focal point of investment opportunity. And we continue to look for acquisitions where we can leverage our material science capabilities, our market and channel knowledge, our manufacturing expertise. And we think we've got a broad set of capabilities that we could apply to additional product categories. The one that -- we've demonstrated that through some of the smaller acquisitions in terms of expanding into new categories were deck and decking and structural lumber is something we are excited about can grow. We've expanded into some different insulation products. So we do see opportunities to deploy capital to acquisitions. Now we are going to be very disciplined in that approach in the space in terms of how we allocate capital to that. But I think, again, we've got a core set of capabilities now. I think we've got a proven track record around execution and operational performance that we think we could utilize in some new product categories, and that's going to be a part of our focus around capital allocation as we go into next year.

Thank you. The last question we have time for today is from Mike Dahl from RBC Capital Markets. Mike, please go ahead. Your line is open.

Good morning. Thanks for putting me in. I want to go back to Roofing and talk about kind of the top line and the industry environment. Our sense is the sell-through trends have been in excess or in line with the industry's capacity to ship units, and that looks set to continue in the fourth quarter? I know there's always some seasonality. Your guidance is for revenues to be down about 20% sequentially 3Q versus 4Q. So again, I understand the difficult year-on-year comp versus the market, but you did just deliver a quarter that was just under $1.1 billion in revenues, and the demand seems to be there in terms of kind of stable sequentially. So help us bridge the difference? Like what -- do you not see the market that way? Are you baking in some seasonality or unfavorable weather? Is it the downtime? If it's the downtime, I know there's multiple parts, but if it is the downtime, why take the downtime now when demand is strong versus waiting until some of the storm demand subsides. Just help us think through that kind of sequential trend a little bit more in Roofing and your expectation versus the market?

Yes, sure. Thanks, Mike. Yes, and it's -- I guess I'll start with we expect that the market demand is going to stay strong, okay? There's incremental storm demand. That demand, we don't believe, based on material and labor availability is going to get all serviced this year and going to carry over into next year. So what you're seeing in our guide is not a reflection of a market slowdown. It is exactly, as you said, a reflection of two fronts. One is that there is expected seasonality. We are going to come into a time of year where just historically, we've seen more rain and snow that impact the ability to get roof work done on a broad scale and we think that is going to slow down a little bit. We also do see the impact of -- and that's, I'd say, the primary impact. We just think there's going to be a seasonal effect to that. So that could vary a little bit depending on how weather patterns play out. But that would be into our guidance, we would expect a more normal seasonality in terms of where regions are going to slow down. We are embedding into that a little bit of our own downtime, but I'd say we are still going to produce and ship more shingles in the fourth quarter than we did last year. So we are trying to keep pace with that demand. But some of the downtime, unfortunately, is something we just have to do in terms of just equipment upgrades and maintenance. So we just can't run the assets beyond certain maintenance schedules, and we need to be particularly sensitive to that. So we are able to actually service and run at the efficiency levels we need to when demand ramps back up in the first part of next year. So -- but I wouldn't want there to be any confusion that our guide is set around a slowdown in the market. But the bulk of that outlook is really based on seasonal weather patterns in terms of what we would normally see and what we are expecting to see here in Q4.

Thank you. This is all the questions we have time for today. So I'd like to hand back for any closing remarks.

Okay. Thanks, Daisy. Let me just say I want to thank everyone to making time for joining us on today's call and for your interest in Owens Corning, and we look forward to speaking with you again during our fourth quarter call. Thanks, and take care.

Thank you everyone for joining today's call. You may now disconnect your line and have a lovely day.