LP Building Solutions Reports Third Quarter 2023 Results and Reaffirms Full Year Siding Guidance

Louisiana-Pacific Corporation (“LP”), a leading manufacturer of high-performance building products, today reported its financial results for the three and nine months ended September 30, 2023.

Key Highlights for Third Quarter 2023, Compared to Third Quarter 2022

• Siding Net sales decreased by 13% to $345 million on lower volumes partially offset by higher prices
• Oriented Strand Board (OSB) Net sales decreased by 14% to $335 million, primarily due to lower volumes partially offset by higher prices
• Consolidated Net sales decreased by 15% to $728 million
• Income attributed to LP from continuing operations decreased by $11 million to $118 million
• Income attributed to LP from continuing operations per diluted share decreased $0.11 to $1.63 per share
• Adjusted EBITDA⁽¹⁾ was $190 million, a decrease of $10 million
• Adjusted Diluted EPS⁽¹⁾ was $1.62 per share, a decrease of $0.10 per share
• Cash provided by operating activities was $187 million

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

Capital Allocation Update

• Paid $49 million in capital expenditures during the third quarter
• Paid $17 million in cash dividends during the third quarter
• Declared a quarterly cash dividend of $0.24 per share
• Fully repaid all outstanding amount under the Amended Credit Facility as of September 30, 2023
• Cash and cash equivalents of $160 million and borrowing availability under our revolving credit facility of $550 million as of September 30, 2023, resulting in total liquidity of approximately $710 million
• Availability of $200 million remaining under the share repurchase program authorized in May 2022

“As expected, Siding sales volume, price, and net sales all increased sequentially compared to the second quarter, and we believe Siding inventories have normalized,” said Brad Southern, Chair and Chief Executive Officer. “I want to thank all LP employees for their dedication and execution, and for the strong results they delivered in the third quarter.”

Outlook

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 full-year 2023 Net sales is expected to decrease year-over-year by approximately 10%
• OSB fourth quarter 2023 Net sales is expected to be sequentially lower than the third quarter 2023 by approximately 30%, assuming that OSB prices published by Random Lengths remain unchanged from those published on October 27, 2023 (this is an assumption for modeling purposes and not a price forecast)
• Under these assumptions, fourth quarter 2023 Adjusted EBITDA⁽²⁾ is expected to be $60 million to $80 million
• Given our current outlook, capital expenditures for 2023 are expected to be in the range of $280 million to $295 million, including $100 million to $105 million for mill conversions, $130 million to $135 million for sustaining maintenance, and $50 million to $55 million for other strategic growth projects.

(2) This is a non-GAAP financial measure. With respect to Adjusted EBITDA for the fourth quarter of 2023, certain items that affect net income on a GAAP basis, such as business exit charges, product discontinuance charges, other operating credits and charges, net, loss on early debt extinguishment, investment income, and other non-operating items, that would be required to be included in the comparable forecasted GAAP measures cannot be reasonably predicted at this time, and LP is unable to quantify such amounts that would be required to be included in the comparable forecasted GAAP measures, without unreasonable effort. As such, LP is unable to provide a reasonable estimate of GAAP net income, or a corresponding reconciliation of Adjusted EBITDA to net income.

Third Quarter 2023 Highlights

Net sales for the third quarter of 2023 decreased year-over-year by $124 million (or 15%). This included a decrease in Siding segment revenue of $50 million, or 13%, due to 16% lower volumes partially offset by 3% higher prices. OSB segment revenue decreased by $53 million, or 14%, driven by 19% lower volumes and 6% higher average selling prices. The remaining decrease in Net sales was related to decreases in the South America segment and other revenue of $9 million and $13 million, respectively.

Income attributed to LP from continuing operations for the third quarter of 2023 decreased year-over-year by $11 million (or 9%) to $118 million, or $1.63 per diluted share. This primarily reflects a $10 million decrease in Adjusted EBITDA.

First Nine Months of 2023 Highlights

Net sales for the first nine months of 2023 decreased year-over-year by $1,226 million (or 39%), including a decrease in OSB revenue of $1,051 million or 58%, due to 47% lower prices and 22% lower volumes. Siding segment revenue decreased by $87 million or 8%, due to 14% lower volumes offset by 6% higher prices. The remaining decrease in Net sales was related to decreases in the South America segment and other revenue of $38 million and $51 million, respectively.

Income attributed to LP from continuing operations for the first nine months of 2023 decreased year-over-year by $779 million (or 87%) to $119 million, or $1.65 per diluted share. The decrease primarily reflects a $940 million decrease in Adjusted EBITDA, $35 million of business exit charges (of which $31 million were non-cash charges) related to an off-site framing operation (Entekra Holdings, LLC), and a $16 million settlement of OSB patent-related claims, partially offset by a $218 million lower income tax provision.

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^TM (collectively referred to as Siding Solutions).

The effects of list price increases drove year-over-year increases in the average net selling price for the three and nine months ended September 30, 2023. The volume decreases for the three and nine months ended September 30, 2023 were driven by record results in the comparable periods and challenging new and existing home selling markets in the current periods.

Adjusted EBITDA decreased year-over-year by $19 million in the third quarter of 2023, reflecting the net impact of lower volumes and $5 million of press rebuild costs, partially offset by higher average selling prices and $9 million in lower inflationary costs including freight, raw materials, and labor. Adjusted EBITDA decreased year-over-year by $53 million for the nine months ended September 30, 2023, which reflects the net impact of lower volumes, $8 million in discretionary investments to support future growth (including siding mill conversions and sales and marketing costs), and $5 million in press rebuild costs, partially offset by higher average selling prices and $13 million in lower inflationary costs (including freight, raw materials, and labor).

Oriented Strand Board (OSB)

The OSB segment manufactures and distributes OSB structural panel products including our value-added OSB portfolio known as LP^® Structural Solutions (which includes LP^® TechShield^® Radiant Barrier, LP WeatherLogic^® Air & Water Barrier, LP Legacy^® Premium Sub-Flooring, LP NovaCore^® Thermal Insulated Sheathing, LP^® FlameBlock^® Fire-Rated Sheathing, and LP^® TopNotch^® 350 Durable Sub-Flooring). OSB is manufactured using wood strands arranged in layers and bonded with resins.

The year-over-year Net sales decrease of $53 million for the three months ended September 30, 2023 reflects a $28 million increase in OSB prices, a $33 million decrease in sales volumes primarily from market curtailments, and $43 million less production volume due to the conversion of our Sagola, Michigan mill to siding production. The year-over-year Net sales decrease of $1,051 million for the nine months ended September 30, 2023 reflects an $813 million decrease in OSB prices, a $115 million decrease in sales volumes primarily from market curtailments, and a $98 million decrease related to production volumes from the conversion of the Sagola mill to siding production.

Adjusted EBITDA increased year-over-year by $7 million in the third quarter of 2023, reflecting the net impact of higher OSB commodity prices and lower mill-related costs, partially offset by lower sales volumes. Adjusted EBITDA decreased year-over-year by $860 million for the nine months ended September 30, 2023, which reflects the net impact of lower OSB commodity prices and sales volumes, partially offset by lower mill-related costs.

South America

LP’s 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 Argentina, Brazil, Chile, Colombia, Mexico, Paraguay, and Peru.

South America Net sales decreased year-over-year by $8 million and $38 million for the three and nine months ended September 30, 2023, respectively, predominantly driven by lower OSB sales volumes and average selling prices. 

The year-over-year decreases in Adjusted EBITDA of $7 million and $34 million for the three and nine months ended September 30, 2023, respectively, reflect the lower sales volumes and average selling prices (described above) and equipment relocation cost of $3 million.

For the full third quarter results, 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^TM), LP^® Structural Solutions (LP^® TechShield^® Radiant Barrier, LP WeatherLogic^® Air & Water Barrier, LP Legacy^® Premium Sub-Flooring, LP^® FlameBlock^® Fire-Rated Sheathing, LP NovaCore^® Thermal Insulated Sheathing, and LP^® TopNotch^® 350 Durable 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 stockholders build lasting value. Headquartered in Nashville, Tennessee, LP operates 23 plants across the U.S., Canada, Chile, and Brazil through foreign subsidiaries, and operates additional facilities through a joint venture.  For more information, visit LPCORP.COM.

Contact:

Aaron Howald – Investor Contact – Aaron.Howald@lpcorp.com – (615) 986-5792

Source: Louisiana-Pacific Corporation