Owens Corning (OC)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis (“MD&A”) is intended to help investors understand Owens Corning, our operations and our present business environment. MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying Notes thereto contained in this report. Unless the context requires otherwise, the terms “Owens Corning,” “Company,” “we” and “our” in this report refer to Owens Corning and its subsidiaries.

GENERAL

Owens Corning is a branded building products leader with three complementary businesses providing roofing, insulation and doors primarily for residential markets in North America and Europe. As described below, the Company has three reportable segments: Roofing, Insulation and Doors. Through these lines of business, the Company manufactures and sells products that provide durable, sustainable and energy-efficient solutions. We are a market leader in many of our major product categories.

EXECUTIVE OVERVIEW

Net earnings from continuing operations attributable to Owens Corning were earnings of $310 million in the second quarter of 2026, compared to earnings of $334 million in the second quarter of 2025. The Company generated $660 million in adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) from continuing operations in the second quarter of 2026, compared to $703 million in the second quarter of 2025. See the Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization From Continuing Operations section of the MD&A for further information regarding Adjusted EBITDA from continuing operations, including the reconciliation to Net earnings from continuing operations attributable to Owens Corning. Second quarter of 2026 segment earnings before interest, taxes, depreciation and amortization (“EBITDA”) performance compared to the second quarter of 2025 decreased $16 million in our Roofing segment, decreased $12 million in our Insulation segment and decreased $18 million in our Doors segment. Within our Corporate, Other and Eliminations category, General corporate expenses and other increased by $3 million.

Glass Reinforcements Divestiture

On February 13, 2025, the Company entered into a definitive agreement ("GR Agreement") for the sale of our global glass reinforcements ("GR") business, historically reported within the Composites segment, for a purchase price of approximately $436 million, less costs to sell. The GR business manufactured, fabricated, and sold glass fiber reinforcements for a broad range of end markets.

The transaction represented a strategic shift that has a major effect on the Company's operations and financial results. Accordingly, beginning with the quarterly report on Form 10-Q for the period ended March 31, 2025 and ending with the close of the transaction, the financial results of the GR business are reflected in the Company’s consolidated financial statements as discontinued operations for all periods presented.

Upon classification as held for sale, the Company allocated $98 million of goodwill from the former Composites reporting unit to the discontinued operation based on relative fair values.

On April 14, 2026, the Company entered into an amendment to the GR Agreement ("Amendment") based on changes in market conditions, including a $110 million decrease in the purchase price, the transfer of approximately $32 million in carrying value of additional assets at closing, and the elimination of previously contemplated $225 million seller financing. The Company completed the sale on April 30, 2026 for proceeds of $370 million, net of cash divested and a deposit received at the announcement of the deal. The final proceeds are subject to customary post-closing adjustments. The sale completed Owens Corning’s review of strategic alternatives for the business, announced on February 9, 2024, and aligns with the strategy to reshape the Company to focus on residential and commercial building products in North America and Europe.

During the three and six months ended June 30, 2026, the Company recognized a pre-tax gain of $7 million and a pre-tax loss of $175 million, respectively, primarily reflecting the revised transaction terms. The loss was measured as the excess of the carrying value of the discontinued operation over the fair value of consideration received and is presented within Net (loss) earnings from discontinued operations attributable to Owens Corning, net of tax, on the Consolidated Statements of Earnings.

The Company does not expect to recognize material incremental charges related to the transaction, although final amounts remain subject to customary post-closing adjustments.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Tariff and Trade Uncertainties

Beginning in the first quarter of 2025, the U.S. government announced additional tariffs on goods imported into the U.S. from numerous countries and multiple nations have responded with reciprocal tariffs and other actions. Following the decision of the U.S. Supreme Court in the first quarter of 2026, the Company may be entitled to a refund of tariffs previously paid on certain imported products under the International Emergency Economic Powers Act. The Company estimates that approximately $50 million of tariff payments may be eligible for refund as a result of the decision. During the six months ended June 30, 2026, $25 million of the total estimated amount was recognized within Cost of sales.

The Company continues to monitor the impact of evolving trade policies and tariff programs.

Based on current tariff policies, the Company expects to partially offset the operating profit impact of enacted tariffs through mitigation actions, including supply chain adjustments and productivity and cost savings actions. However, additional tariffs, changes in trade policies or retaliatory measures by foreign governments, or the Company's inability to fully offset related impacts could adversely affect demand for our products, revenue, profitability and cash flows.

RESULTS OF OPERATIONS

Consolidated Results

The Consolidated Results discussion below provides a summary of our results and the trends affecting our business, and should be read in conjunction with the more detailed Segment Results discussion that follows.

NET SALES

Net sales increased $9 million and decreased $256 million in the second quarter and year-to-date 2026, respectively, compared to the same periods in 2025. For the second quarter, the increase was primarily driven by higher volumes in the Insulation segment and the favorable impact from translating sales denominated in foreign currencies into United States dollars, which was mostly offset by the unfavorable impact of divestitures in the Insulation and Doors segments. Year-to-date, the decrease was primarily driven by lower volumes in the Roofing and Doors segments and the unfavorable impact of divestitures, which was partially offset by the favorable impact from translating sales denominated in foreign currencies into United States dollar.

GROSS MARGIN

Gross margin decreased $65 million and decreased $280 million in the second quarter and year-to-date 2026, respectively, compared to the same periods in 2025. For the second quarter, higher delivery costs, input cost inflation net of tariff recovery, and the impact of production downtime were partially offset by higher volumes in the Insulation segment and favorable mix. Year-to-date, the decrease was primarily driven by lower sales volumes in the Doors and Roofing segments, input cost inflation, the impact of production downtime, higher delivery costs and lower selling prices.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

MARKETING AND ADMINISTRATIVE EXPENSES

Marketing and administrative expenses decreased $11 million and decreased $14 million in the second quarter and year-to-date 2026 compared to the same periods in 2025, respectively. For the second quarter and year-to-date 2026, the decrease was primarily driven by lower marketing spend and labor expenses due to cost control initiatives.

OTHER EXPENSE, NET

Other expense, net decreased $5 million and increased $70 million in the second quarter and year-to-date 2026 compared to the same periods in 2025, respectively. For the second quarter, the decrease was primarily driven by lower acquisition-related transaction costs and gain related to the sale of a site that was part of a previous restructuring action in the Roofing segment. For year-to-date, the increase was primarily driven by higher restructuring costs and an increase in the liability for the Paroc marine recall.

INTEREST EXPENSE, NET

Interest expense, net increased $6 million and increased $8 million in the second quarter and year-to-date 2026 compared to the same periods in 2025, respectively. For the second quarter and year-to-date 2026, the increase was driven by lower interest income, partially offset by lower interest on commercial paper balances.

INCOME TAX EXPENSE

Income tax expense for the three and six months ended 2026 was $102 million and $117 million, respectively. The Company’s effective tax rate for the second quarter 2026 and the six months ended June 30, 2026 was 25%. The difference between the 25% effective tax rate and the U.S. federal statutory tax rate of 21% is primarily due to U.S. state and local income tax expense and foreign tax effects.

The realization of deferred tax assets depends on achieving a certain minimum level of future taxable income. Management currently believes that it is not reasonably possible that the minimum level of taxable income will be met within the next 12 months to reduce the valuation allowances of certain foreign jurisdictions.

Income tax expense for the three and six months ended 2025 was $110 million and $198 million, respectively. The Company’s effective tax rate for the second quarter 2025 and the six months ended June 30, 2025 was 25%. The difference between the 25% effective tax rate and the U.S. federal statutory tax rate of 21% is primarily due to U.S. state and local income tax expense and foreign rate differential.

Restructuring Costs

The Company has incurred restructuring and other exit costs in connection with its global cost reduction, product line and productivity initiatives. These costs are recorded within Corporate, Other and Eliminations. Please refer to Note 9 of the Consolidated Financial Statements for further information on the nature of these costs.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis (“MD&A”) is intended to help investors understand Owens Corning, our operations and our present business environment. MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying Notes thereto contained in this Annual Report on Form 10-K. Unless the context requires otherwise, the terms “Owens Corning,” “Company,” “we,” “its,” and “our” in this Annual Report on Form 10-K refer to Owens Corning and its subsidiaries.

This section of this Annual Report on Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

GENERAL

Owens Corning is a building products leader committed to building a sustainable future through material innovation. As described below, the Company has three reportable segments: Roofing, Insulation and Doors. Through these lines of business, the Company manufactures and sells products that provide durable, sustainable and energy-efficient solutions. We are a market leader in many of our major product categories.

EXECUTIVE OVERVIEW

Net (loss) earnings from continuing operations attributable to Owens Corning were a loss of $188 million in 2025, compared to earnings of $947 million in 2024. The Company generated $2,268 million in adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) from continuing operations in 2025, compared to $2,468 million in 2024. See the Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization From Continuing Operations section of the MD&A for further information regarding Adjusted EBITDA from continuing operations, including the reconciliation to Net (loss) earnings from continuing operations attributable to Owens Corning. Segment earnings before interest, taxes, depreciation and amortization (“EBITDA”) performance compared to 2024 decreased $121 million in our Roofing segment, decreased $97 million in our Insulation segment and remained flat in our Doors segment. Within our Corporate, Other and Eliminations category, General corporate expenses and other decreased by $18 million.

Goodwill Impairment

In 2025, as a result of interim goodwill impairment testing, we recorded $1,135 million in pre-tax non-cash impairment charges, equal to the excess of the Doors reporting unit's carrying value over its fair value. The remaining balance of goodwill for the Doors reporting unit of $380 million as of December 31, 2025 continues to be at risk for future impairment.

2025 Share Repurchase Program

On May 13, 2025, the Board of Directors approved the 2025 Repurchase Authorization. The 2025 Repurchase Authorization enables the Company to repurchase shares through the open market, privately negotiated, or other transactions. The actual number of shares repurchased will depend on timing, market conditions and other factors and will be at the Company’s discretion. This authorization is in addition to the previously announced share repurchase program.

Glass Reinforcements Divestiture

On February 13, 2025, the Company entered into the GR agreement for the sale of our global GR business for a purchase price of approximately $436 million, less costs to sell. As of December 31, 2025, the estimated purchase price was $474 million, net of cash, and less costs to sell. The change since signing is due to the changes in customary and transaction-specific price adjustments which are subject to further changes through the date of the final closing adjustments. The GR business, historically part of the Company’s Composites segment, manufactures, fabricates, and sells glass fiber reinforcements for a wide variety of applications in wind energy, infrastructure, industrial, transportation and consumer markets. The sale will complete Owens Corning’s review of strategic alternatives for the business, announced on February 9, 2024, and aligns with the strategy to reshape the Company to focus on residential and commercial building products in North America and Europe. The transaction is expected to close in the first few months of 2026 and is subject to customary regulatory approvals and other conditions.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

The transaction represents a strategic shift that has a major effect on the Company's operations and financial results. Effective January 1, 2025, the GR business’ financial results are reflected in the Company’s consolidated financial statements as discontinued operations for all periods presented. During the twelve months ended December 31, 2025, net loss from discontinued operations attributable to Owens Corning was $334 million on the Consolidated Statement of Earnings, primarily related to the loss recognized upon the classification of the GR business into discontinued operations. The loss on discontinued operations was determined by comparing the carrying value of the discontinued operation to the fair value of the business, as derived from the signed GR Agreement, less estimated costs to sell.

As a result of classifying the GR business as a discontinued operation, a portion of the Goodwill from our former Composites reporting unit was allocated to the Balance Sheets of the discontinued operation as of March 31, 2025 and December 31, 2024. As of the date of classification of the GR business as a discontinued operation, the Company determined the amount of Goodwill to allocate based on the relative fair values of the discontinued operation and the former Composites reporting unit. This resulted in an allocation of $98 million of Goodwill to the discontinued operation.

After allocating Goodwill to the discontinued operation, the Company compared the carrying value of the discontinued operation to the fair value of the discontinued operation, defined as the sale price less estimated selling costs. During the twelve months ended December 31, 2025, the Company incurred a pre-tax loss on classification as discontinued operations of $451 million.

Changes in Reportable Segments

Effective January 1, 2025, due to a strategic shift in how we manage our business as a result of the GR Agreement and the classification of the GR business as a discontinued operation, we changed the composition of our reportable segments. As a result, all prior period information was recast to reflect this change. The Company now has three reportable segments: Roofing, Insulation and Doors.

Tariff and Trade Uncertainties

Beginning in the first quarter of 2025, the U.S. government announced additional tariffs on goods imported into the U.S. from numerous countries and multiple nations have responded with reciprocal tariffs and other actions. The Company continues to monitor the economic effects of such announcements. The Company has implemented short- and long-term mitigation efforts. Based on the current tariff policies, the Company expects to partially offset the operating profit impact of the enacted tariffs with supply chain adjustments and productivity and cost savings actions. To the extent additional tariffs or other trade restrictions are enacted and the Company is unable to offset the tariffs or the tariffs negatively impact demand, the Company’s revenue and profitability could be adversely impacted.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

RESULTS OF OPERATIONS

Consolidated Results

The Consolidated Results discussion below provides a summary of our results and the trends affecting our business, and should be read in conjunction with the more detailed Segment Results discussion that follows.

NET SALES

Net sales increased $252 million in 2025 compared to 2024. The increase was primarily driven by the a full year of revenues from our Doors segment and higher selling prices for our Roofing and Insulation segments, which were partially offset by lower sales volumes across all three segments.

GROSS MARGIN

Gross margin decreased $203 million in 2025 compared to 2024. The decrease was primarily driven by lower sales volumes across all three segments, which were partially offset by a full year of margins from our Doors segment and higher selling prices for our Roofing and Insulation segments.

MARKETING AND ADMINISTRATIVE EXPENSES

Marketing and administrative expenses increased $55 million in 2025 compared to 2024. The increase was primarily driven by a full-year impact of the Doors segment's selling, general, and administrative expenses, and ongoing inflationary pressures throughout the organization, partially offset by cost savings actions.

GOODWILL IMPAIRMENT CHARGE

In 2025, as a result of goodwill impairment testing, we recorded $1,135 million in pre-tax non-cash impairment charges, equal to the excess of the Doors reporting unit's carrying value over its fair value.

OTHER EXPENSE, NET

Other expense, net decreased $268 million in 2025 compared to 2024. The decrease was primarily driven by lower acquisition-related, strategic review-related and restructuring costs and higher gains on sale of certain precious metals.

INTEREST EXPENSE, NET

Interest expense, net increased $48 million in 2025 compared to 2024. The increase was driven by interest on the higher long-term debt balances and lower interest income due to lower cash balances.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

INCOME TAX EXPENSE

Income tax expense for 2025 was $293 million compared to $334 million in 2024. The Company’s effective tax rate for 2025 was 282% on pre-tax income of $104 million. The difference between the 282% effective tax rate and the U.S. federal statutory tax rate of 21% is primarily due to non-deductible goodwill impairment, U.S. state and local income tax expense, and foreign tax effects.

The Company’s effective tax rate for 2024 was 26% on pre-tax income of $1,275 million. The difference between the 26% effective tax rate and the U.S. federal statutory tax rate of 21% is primarily attributable to U.S. state and local income tax expense.

See Note 21 for additional information.

Restructuring Costs

The Company has incurred restructuring and other exit costs in connection with its global cost reduction, product line and productivity initiatives. These costs are recorded within Corporate, Other and Eliminati

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