Todd Fister: 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.
Operator: Thank you. Our next question is from Susan Maklari from Goldman Sachs. Susan, please go ahead. Your line is open.
Susan Maklari: 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?
Brian Chambers: 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.
Operator: 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.
Mike Dahl: 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?
Brian Chambers: 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.
Operator: Thank you. This is all the questions we have time for today. So I’d like to hand back for any closing remarks.
Brian Chambers: 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.
Operator: Thank you everyone for joining today’s call. You may now disconnect your line and have a lovely day.
