LP Building Solutions Reports Fourth Quarter and Full Year 2021 Results and Q1 2022 Outlook

Louisiana-Pacific Corporation (LP) reported its financial results for the fourth quarter and year ended December 31, 2021, and announced strategic updates.

Key Highlights for the Fourth Quarter, Compared to the Fourth Quarter of the Prior Year:

• Net sales increased by 15% to $992 million
• Siding Solutions net sales increased by 9% to $279 million
• OSB net sales increased by 10% to $470 million
• Net income attributed to LP decreased by $62 million to $194 million ($2.20 per diluted share)
• Adjusted Diluted EPS(1) was $2.24 per share, an increase of $0.23 per share
• Adjusted EBITDA(1) was $305 million, a decrease of $23 million
• Cash provided by operating activities was $201 million, a decrease of $120 million largely due to cash taxes paid

Key Highlights for the Full Year, Compared to Prior Year:

• Net sales increased by 63% to $4.6 billion
• Siding Solutions net sales increased by 27% to $1.2 billion
• OSB net sales increased by $1.2 billion to $2.4 billion
• Net income attributed to LP increased by $0.9 billion to $1.4 billion ($14.09 per diluted share)
• Adjusted Diluted EPS(1) was $13.97 per share, an increase of $9.66 per share
• Adjusted EBITDA(1) was $2.0 billion, an increase of $1.2 billion
• Cash provided by operating activities was $1.5 billion, an increase of $0.8 billion

(1) This is a non-GAAP financial measure. See “Use of Non-GAAP Information” and “Reconciliation of Net Income to Non-GAAP Adjusted EBITDA, Non-GAAP Adjusted Income, and Non-GAAP Diluted EPS” below.

Capital Allocation Update

• For the full year, LP paid $1.3 billion to repurchase 21.1 million of its common shares, leaving 85.6 million common shares outstanding at December 31, 2021
• $500 million share repurchase authorization remains
• Paid $66 million in dividends in 2021
• Full year capital expenditures in 2021 of $254 million, including $103 million for Siding mill conversions
• Cash of $358 million as of December 31, 2021
• Declared a 22% increase in quarterly cash dividends to $0.22 per share
• We expect capital expenditures for 2022 to be in the range of $400 million to $430 million, including $190 million to $200 million for Siding mill conversions, $130 million to $140 million for sustaining maintenance, and $80 million to $90 million for other strategic growth projects.

“The last quarter of 2021 was a strong finish to a remarkable year despite ongoing logistics challenges and raw material inflation,” said LP Chairman and Chief Executive Officer Brad Southern. “To meet customer demand for our specialty products and accelerate our strategic transformation, LP plans to invest over $400 million in capital projects in 2022, growing our capacity to produce SmartSide, ExpertFinish, and value-added Structural Solutions products.”

Fourth Quarter 2021 Highlights

Net sales for the fourth quarter of 2021 increased year-over-year by $132 million (or 15%), including Siding Solutions growth of $22 million (or 9%), a $42 million (or 10%) increase in OSB revenue (14% higher volumes partially offset by 4% lower OSB prices), an EWP revenue increase of $49 million (or 45%) due to price increases in response to significantly higher raw material input costs, and $13 million (or 26%) of increased revenue in South America, net of $9 million in unfavorable currency movements.

Net income attributed to LP for the fourth quarter of 2021 decreased year-over-year by $62 million (or 24%) to $194 million ($2.20 per diluted share). The decrease in net income attributable to LP reflects the non-recurrence of a $29 million reversal of uncertain tax positions in the prior year, a $23 million drop in Adjusted EBITDA, and slightly higher depreciation and stock compensation charges.

Full Year 2021 Highlights

Net sales for 2021 increased year-over-year by $1,765 million (or 63%), including Siding Solutions growth of $243 million (or 27%), $1,113 million from higher OSB prices, an EWP revenue increase of $249 million (or 64%) due to price increases in response to significantly higher raw material input costs, and an increase of $96 million (or 57%) in South America due to higher prices.

Net income attributed to LP increased by $878 million (or 176%) over the prior year to $1,377 million ($14.09 per diluted share) primarily due to the record OSB prices. Adjusted EBITDA increased by $1,191 million (or 153%) over the prior year to $1,972 million.

Segment Results

Siding

The Siding segment serves diverse end markets with a broad product offering of engineered wood siding, trim, and fascia, including LP® SmartSide® Trim & Siding, LP® SmartSide® ExpertFinish® Trim & Siding, LP BuilderSeries® Lap Siding, and LP® Outdoor Building Solutions® (collectively referred to as Siding Solutions).

During the fourth quarter, a major scheduled maintenance project lowered production capacity by 9%. Despite this, Siding sales volume decreased year-over-year by only 2%. Average net selling prices increased year-over-year by 11%, offsetting lower volumes to result in 9% net sales growth. The decrease in Adjusted EBITDA of $29 million reflects price growth offset by $25 million of raw material & freight cost inflation and $25 million of discretionary investments in support of future growth, including capacity expansions, equipment maintenance, and sales & marketing.

For the full year, Siding net sales increased year-over-year by 22%, primarily due to a 27% increase in Siding Solutions revenue offset by the discontinuation of fiber in 2020. The increase in Adjusted EBITDA of $43 million reflects revenue growth offset by $66 million of raw material & freight cost inflation and $36 million of discretionary investments in support of future growth, including capacity expansions, equipment maintenance, and sales & marketing.

Oriented Strand Board (OSB)

The OSB segment manufactures and distributes OSB structural panel products, including the value-added OSB portfolio known as LP Structural Solutions (LP® TechShield® Radiant Barrier, LP WeatherLogic® Air & Water Barrier, LP Legacy® Premium Sub-Flooring, and LP® FlameBlock® Fire-Rated Sheathing) and LP® TopNotch® Sub-Flooring. OSB is manufactured using wood strands arranged in layers and bonded with resins.

During the fourth quarter, OSB net sales increased year-over-year by 10%, primarily due to increased volume, partially offset by 4% (or $19 million) lower OSB prices. The decrease in Adjusted EBITDA of $18 million reflects the drop in prices, with the impact of higher volumes offset by $20 million of increased raw material prices and $13 million of maintenance and Peace Valley restart costs.

For the full year, OSB net sales increased year-over-year by 96%, largely due to $1,113 million in increased OSB prices. Adjusted EBITDA increased by $1,012 million, with price increases partially offset by $41 million of increased raw material costs and $38 million of maintenance and Peace Valley restart costs.

Engineered Wood Products (EWP)

The EWP segment is comprised of LP® SolidStart® I-Joist (I-Joist), Laminated Veneer Lumber (LVL), and Laminated Strand Lumber (LSL) and other related products. This segment also includes the sales of I-Joist and LVL products produced by our joint venture and sales of plywood produced as an ancillary product of the LVL production process. During 2021, we ceased LSL production at our Houlton, Maine facility to begin the conversion of that facility to Siding Solutions production.

Net sales for EWP increased year-over-year for the fourth quarter and full year 2021, predominantly due to price increases in response to significantly higher raw material costs. Resulting increases in Adjusted EBITDA reflect the net effect of these price and cost increases.

South America

Our South America segment manufactures and distributes OSB structural panel and siding products in South America and certain export markets. This segment has manufacturing operations in two countries, Chile and Brazil, and operates sales offices in Chile, Brazil, Peru, Columbia, Argentina, and Paraguay.

Net sales in South America increased year-over-year for the fourth quarter and full year 2021, predominantly due to higher OSB and siding prices. Increased Adjusted EBITDA reflects the effect of these price increases, partially offset by higher costs of imported raw material.

Q1 2022 Outlook and 2022 Capital Expenditure Guidance

Our guidance is based on current plans and expectations and is subject to a number of known and unknown uncertainties and risks, including those set forth below under “Forward-Looking Statements.”

• Siding Solutions first quarter of 2022 year-over-year revenue growth expected to be approximately 10%
• OSB revenue in the first quarter of 2022 expected to be sequentially higher than the fourth quarter of 2021 by about 40%
• Adjusted EBITDA(2) for the first quarter of 2022 expected to be greater than $500 million
• Siding Solutions full year 2022 year-over-year revenue growth expected to be greater than 15%
• Given our current outlook, we expect capital expenditures for 2022 to be in the range of $400 million to $430 million, including $190 million to $200 million for the mill conversions, $130 million to $140 million for sustaining maintenance, and $80 million to $90 million for other strategic growth projects

(2) This is a non-GAAP financial measure. With respect to Adjusted EBITDA for the first quarter of 2022, certain items that affect net income on a GAAP basis, such as product-line discontinuance charges, other operating credits and charges, net, loss on early debt extinguishment, investment income, pension settlement charges, and other non-operating items, cannot be reasonably predicted at this time, and LP is unable to quantify such amounts (some of which may be non-cash) that would be required to be included in the comparable forecasted GAAP measures without unreasonable effort. The amounts and timing of these items are uncertain and could be material to LP’s results. As such, LP is unable to provide a reasonable estimate of GAAP net income or a corresponding reconciliation of Adjusted EBITDA to net income.

For the complete press release, click here.

About LP Building Solutions

As a leader in high-performance building solutions, Louisiana-Pacific Corporation (LP Building Solutions, NYSE: LPX) manufactures engineered wood building products that meet the demands of builders, remodelers, and homeowners worldwide. LP’s extensive offerings include innovative and dependable building products and accessories, such as Siding Solutions (LP® SmartSide® Trim & Siding, LP® SmartSide® ExpertFinish® Trim & Siding, LP BuilderSeries® Lap Siding, and LP® Outdoor Building Solutions®), LP Structural Solutions (LP® TechShield® Radiant Barrier, LP WeatherLogic® Air & Water Barrier, LP Legacy® Premium Sub-Flooring, and LP® FlameBlock® Fire-Rated Sheathing and more), LP® TopNotch® Sub-Flooring, and oriented strand board (OSB). In addition to product solutions, LP provides industry-leading customer service and warranties. Since its founding in 1972, LP has been Building a Better World™ by helping customers construct beautiful, durable homes while our shareholders build lasting value. Headquartered in Nashville, Tennessee, LP operates 25 plants across the U.S., Canada, Chile, and Brazil. For more information, visit LPCorp.com.

Contact:

Aaron Howald – Investor Relations – aaron.howald@lpcorp.com – (615) 986-5792

Source: Louisiana-Pacific Corporation